Form 10-K for the year ended 2006
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________________
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
(Mark
One)
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x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the fiscal year ended December 31, 2006
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OR
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¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the transition period from [__________________] to
[________________]
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Commission
file number 1-9876
WEINGARTEN
REALTY INVESTORS
(Exact
name of registrant as specified in its charter)
TEXAS
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74-1464203
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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2600
Citadel Plaza Drive
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P.O.
Box 924133
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Houston,
Texas
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77292-4133
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(Address
of principal executive offices)
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(Zip
Code)
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(713)
866-6000
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(Registrant's
telephone number)
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Securities
registered pursuant to Section 12(b) of the
Act:
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Title
of Each Class
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Name
of Each Exchange on Which Registered
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Common
Shares of Beneficial Interest, $0.03 par value
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New
York Stock Exchange
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Series
D Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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Series
E Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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Series
F Cumulative Redeemable Preferred Shares, $0.03 par value
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer (as defined
in
Rule 405 of the Securities Act). YES
x NO
¨.
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. YES
¨ NO
x.
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
YES
x NO
¨.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. x.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer x Accelerated
filer ¨ Non-accelerated
filer ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES
¨ NO
x.
The
aggregate market value of the common shares held by non-affiliates (based upon
the closing sale price on the New York Stock Exchange of $38.28) on June 30,
2006 was $3,003,015,509. As of June 30, 2006, there were 89,704,771 common
shares of beneficial interest, $.03 par value, outstanding.
As
of
February 2, 2007 there were 85,857,373 common shares outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Registrant's Proxy Statement relating to its Annual Meeting of
Shareholders to be held May 3, 2007 are incorporated by reference in Part
III.
Item
No.
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Page
No.
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PART
I
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1.
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2
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1A.
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4
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1B.
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9
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2.
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10
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3.
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23
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4.
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23
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PART
II
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5.
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24
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6.
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26
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7.
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27
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7A.
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44
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8.
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45
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9.
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74
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9A.
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74
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9B.
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77
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PART
III
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10.
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77
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11.
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77
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12.
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78
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13.
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78
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14.
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78
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PART
IV
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15.
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79
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Forward-Looking
Statements
This
annual report on Form 10-K, together with other statements and information
publicly disseminated by us, contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We intend such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and include this statement for purposes of complying with these
safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “project,” or similar expressions. You should not rely
on forward-looking statements since they involve known and unknown risks,
uncertainties and other factors, which are, in some cases, beyond our control
and which could materially affect actual results, performances or achievements.
Factors which may cause actual results to differ materially from current
expectations include, but are not limited to, (i) general economic and local
real estate conditions, (ii) the inability of major tenants to continue paying
their rent obligations due to bankruptcy, insolvency or general downturn in
their business, (iii) financing risks, such as the inability to obtain equity,
debt, or other sources of financing on favorable terms, (iv) changes in
governmental laws and regulations, (v) the level and volatility of interest
rates, (vi) the availability of suitable acquisition opportunities and (vii)
changes in operating costs. Accordingly, there is no assurance that our
expectations will be realized.
For
these
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You are cautioned not to place undue reliance on our forward-looking statements,
which speak only as of the date of this annual report on Form 10-K or the date
of any document incorporated by reference. All subsequent written and oral
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained
or referred to in this section. We do not undertake any obligation to release
publicly any revisions to our forward-looking statements to reflect events
or
circumstances after the date of this Form 10-K.
PART
I
General.
Weingarten Realty Investors is a real estate investment trust organized under
the Texas Real Estate Investment Trust Act. We, and our predecessor entity,
began the ownership and development of shopping centers and other commercial
real estate in 1948. Our primary business is leasing space to tenants in the
shopping and industrial centers we own or lease. We also manage centers for
joint ventures in which we are partners or for other outside owners for which
we
charge fees.
At
December 31, 2006, we owned or operated under long-term leases, either directly
or through our interest in joint ventures or partnerships, a total of 363
developed income-producing properties and 26 properties under various stages
of
construction and development. The total number of centers includes 322
neighborhood and community shopping centers located in Arizona, Arkansas,
California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana,
Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon,
Tennessee, Utah, Texas, South Carolina and Washington. We also owned 67
industrial projects located in California, Florida, Georgia, Tennessee and
Texas. The portfolio of properties is approximately 65 million square feet.
We
also
owned interests in 15 parcels of unimproved land held for future development
that totaled approximately 5.7 million square feet.
At
December 31, 2006, we employed 457 full-time persons and our principal executive
offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and
our
phone number is (713) 866-6000. We also have 13 regional offices located in
various parts of the United States.
Investment
and Operating Strategy. Our
investment strategy is to increase cash flow and the value of our portfolio
through intensive hands-on management of our existing portfolio of assets,
selective remerchandising and renovation of properties and the acquisition
and
development of income-producing real estate assets where the returns on such
investments exceed our blended long-term cost of capital. We have expanded
our
new development program to include both operating properties and a merchant
developer component where we will build, lease and then sell the developed
real
estate. Our estimated gross investment in the 26 properties currently under
development or predevelopment is $657 million.
To
help
fund our growth strategy we pursue the disposition of selective noncore assets
as circumstances warrant when we believe the sales proceeds can be effectively
redeployed into assets with higher growth potential.
At
December 31, 2006, neighborhood and community shopping centers generated 89.7%
of total revenue and industrial properties accounted for 9.8%. We expect to
continue to focus the future growth of the portfolio in neighborhood and
community centers and bulk and office/service industrial properties in markets
where we currently operate as well as other markets primarily throughout the
United States. While we do not anticipate significant investment in other
classes of real estate such as multi-family or office assets, we remain open
to
opportunistic uses of our undeveloped land.
We
may
either purchase or lease income-producing properties in the future, and may
also
participate with other entities in property ownership through partnerships,
joint ventures or similar types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such financing
or indebtedness may be incurred in connection with acquiring such investments.
We
may
invest in mortgages; however, we currently have only invested in first mortgages
to joint ventures or partnerships in which we own an equity interest. We may
also invest in securities of other issuers for the purpose, among others, of
exercising control over such entities, subject to the gross income and asset
tests necessary for REIT qualification.
Our
operating strategy consists of intensive hands-on management and leasing of
our
properties. In acquiring and developing properties, we attempt to accumulate
enough properties in a geographic area to allow for the establishment of a
regional office, which enables us to obtain in-depth knowledge of the market
from a leasing perspective and to have easy access to the property and our
tenants from a management viewpoint.
Diversification
from both a geographic and tenancy perspective is a critical component of our
operating strategy. While over 38% of the building square footage of our
properties is located in the State of Texas, we continue to expand our holdings
outside the state. With respect to tenant diversification, our two largest
merchants accounted for 3.0% and 1.6%, respectively, of our total rental
revenues for the year-end December
31, 2006. No other tenant accounted for more than 1.5% of our total rental
revenues.
We
finance our growth and working capital needs in a conservative manner. We have
a
credit rating of A- from Standard & Poors and Baa1 from Moody's Investor
Services. We intend to maintain a conservative approach to managing our balance
sheet, which, in turn, gives us many options to raising debt or equity capital
when needed. At December 31, 2006, our fixed charge coverage ratio was 2.4
to 1
and our debt to total market capitalization was 40.6%.
Our
policies with respect to the investment and operating strategies discussed
above
are reviewed by our Board of Trust Managers periodically and may be modified
without a vote of our shareholders.
Location
of Properties. Our
properties are located in 22 states, primarily throughout the southern half
of
the country. Of our 389 properties that were owned or operated under long-term
leases, either directly or through our interest in joint ventures or
partnerships, as of December 31, 2006, 77 are located in the Houston
metropolitan area and an additional 96 properties are located in other parts
of
Texas. We also have 15 parcels of unimproved land, nine of which are located
in
the Houston area and four of which are located in other parts of Texas. Because
of our investments in the Houston area, as well as in other parts of Texas,
the
Houston and Texas economies affect, to a degree, our business and operations.
Economic
Factors.
The
national economy remained strong in 2006. The US economy is expected to continue
to grow in 2007, although at a more moderate pace. While the housing market
and
energy prices may indicate economic uncertainty, we are strategically positioned
in markets that are forecasted to exceed the national average according to
many
economic measures. Many of our operating areas throughout the United States
are
showing high employment growth and higher than average rent growth among larger
metropolitan areas. Any downturn in the economy could adversely affect us;
however, the vast majority of our properties are located in densely populated
metropolitan areas and are anchored by supermarkets and discount stores, which
generally provide basic necessity-type items and tend to be less affected by
economic changes.
Competition.
We
compete with numerous other developers and real estate companies (both public
and private), financial institutions and other investors engaged in the
development, acquisition and operation of shopping centers and commercial
property in our trade areas. This results in competition for the acquisition
of
both existing income-producing properties and prime development sites. There
is
also competition for tenants to occupy the space that is developed, acquired
and
managed by our competitors or us.
We
believe that the principal competitive factors in attracting tenants in our
market areas are location, price, anchor tenants and maintenance of properties.
We also believe that our competitive advantages include the favorable locations
of our properties, knowledge of markets and customer bases, our ability to
provide a retailer with multiple locations with anchor tenants and the practice
of continuous maintenance and renovation of our properties.
Materials
Available on Our Website.
Copies
of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports, as well as Reports on
Forms 3, 4 and 5 regarding Officers, Trustees or 10% Beneficial Owners of the
Company, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the
Securities Exchange Act of 1934 are available free of charge through our website
(www.weingarten.com)
as soon
as reasonably practicable after we electronically file the material with, or
furnish it to, the Securities and Exchange Commission. We have also made
available on our website copies of our Audit Committee Charter, Management
Development and Compensation Committee Charter, Governance Committee Charter,
Code of Conduct and Ethics and Governance Policies. In the event of any changes
to these charters or the code or guidelines, changed copies will also be made
available on our website. You may also read and copy any materials we file
with
the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549.
Financial
Information.
Additional financial information concerning us is included in the Consolidated
Financial Statements located on pages 45 through 72 herein.
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;
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§ |
Local
conditions such as an oversupply of space or a reduction in demand
for
real estate in the area;
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§ |
The
attractiveness of the properties to
tenants;
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§ |
Competition
from other available space;
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§ |
Our
ability to provide adequate management services and to maintain our
properties;
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§ |
Increased
operating costs, if these costs cannot be passed through to tenants;
and
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§ |
The
expense of periodically renovating, repairing and releasing
spaces.
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Our
properties consist primarily of neighborhood and community shopping centers
and,
therefore, our performance is linked to general economic conditions in the
market for retail space. The market for retail space has been and may continue
to be adversely affected by weakness in the national, regional and local
economies where our properties are located, the adverse financial condition
of
some large retailing companies, the ongoing consolidation in the retail sector,
the excess amount of retail space in a number of markets and increasing consumer
purchases through catalogues and the Internet. To the extent that any of these
conditions occur, they are likely to affect market rents for retail space.
In
addition, we may face challenges in the management and maintenance of the
properties or encounter increased operating costs, such as real estate taxes,
insurance and utilities, which may make our properties unattractive to
tenants.
Our
acquisition activities may not produce the cash flows that we expect and may
be
limited by competitive pressures or other factors.
We
intend
to acquire existing retail properties to the extent that suitable acquisitions
can be made on advantageous terms. Acquisitions of commercial properties involve
risks such as:
§ |
Our
estimates on expected occupancy and rental rates may differ from
actual
conditions;
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§ |
Our
estimates of the costs of any redevelopment or repositioning of acquired
properties may prove to be
inaccurate;
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§ |
We
may be unable to operate successfully in new markets where acquired
properties are located, due to a lack of market knowledge or understanding
of local economies;
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§ |
We
may be unable to successfully integrate new properties into our existing
operations; or
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§ |
We
may have difficulty obtaining financing on acceptable terms or paying
the
operating expenses and debt service associated with acquired properties
prior to sufficient occupancy.
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In
addition, we may not be in a position or have the opportunity in the future
to
make suitable property acquisitions on advantageous terms due to competition
for
such properties with others engaged in real estate investment. Our inability
to
successfully acquire new properties may have an adverse effect on our results
of
operations.
Our
dependence on rental income may adversely affect our ability to meet our debt
obligations and make distributions to our shareholders.
The
substantial majority of our income is derived from rental income from real
property. As a result, our performance depends on our ability to collect rent
from tenants. Our income and funds for distribution would be negatively affected
if a significant number of our tenants, or any of our major tenants (as
discussed in more detail below):
§ |
Delay
lease commencements;
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§ |
Decline
to extend or renew leases upon
expiration;
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§ |
Fail
to make rental payments when due; or
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§ |
Close
stores or declare bankruptcy.
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Any
of
these actions could result in the termination of the tenant’s leases and the
loss of rental income attributable to the terminated leases. Lease terminations
by an anchor tenant or a failure by that anchor tenant to occupy the premises
could also result in lease terminations or reductions in rent by other tenants
in the same shopping centers under the terms of some leases. In addition, we
cannot be sure that any tenant whose lease expires will renew that lease or
that
we will be able to re-lease space on economically advantageous terms. The loss
of rental revenues from a number of our tenants and our inability to replace
such tenants may adversely affect our profitability and our ability to meet
debt
and other financial obligations and make distributions to the
shareholders.
Our
development and construction activities could affect our operating
results.
We
intend
to continue the selective development and construction of retail properties
in
accordance with our development and underwriting policies as opportunities
arise. Our development and construction activities include risks
that:
§ |
We
may abandon development opportunities after expending resources to
determine feasibility;
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§ |
Construction
costs of a project may exceed our original
estimates;
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§ |
Occupancy
rates and rents at a newly completed property may not be sufficient
to
make the property profitable;
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§ |
Rental
rates per square foot could be less than
projected;
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§ |
Financing
may not be available to us on favorable terms for development of
a
property;
|
§ |
We
may not complete construction and lease-up on schedule, resulting
in
increased debt service expense and construction costs; and
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§ |
We
may not be able to obtain, or may experience delays in obtaining
necessary
zoning, land use, building, occupancy and other required governmental
permits and authorizations.
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Additionally,
the time frame required for development, construction and lease-up of these
properties means that we may have to wait years for a significant cash return.
If any of the above events occur, the development of properties may hinder
our
growth and have an adverse effect on our results of operations. In addition,
new
development activities, regardless of whether or not they are ultimately
successful, typically require substantial time and attention from
management.
Real
estate property investments are illiquid, and therefore we may not be able
to
dispose of properties when appropriate or on favorable
terms.
Real
estate property investments generally cannot be disposed of quickly. In
addition, the federal tax code imposes restrictions on the ability of a REIT
to
dispose of properties that are not applicable to other types of real estate
companies. Therefore, we may not be able to vary our portfolio in response
to
economic or other conditions promptly or on favorable terms, which could cause
us to incur extended losses and reduce our cash flows and adversely affect
distributions to shareholders.
Our
cash flows and operating results could be adversely affected by required
payments of debt or related interest and other risks of our debt
financing.
We
are
generally subject to risks associated with debt financing. These risks
include:
§ |
Our
cash flow may not satisfy required payments of principal and
interest;
|
§ |
We
may not be able to refinance existing indebtedness on our properties
as
necessary or the terms of the refinancing may be less favorable to
us than
the terms of existing debt;
|
§ |
Required
debt payments are not reduced if the economic performance of any
property
declines;
|
§ |
Debt
service obligations could reduce funds available for distribution
to our
shareholders and funds available for
acquisitions;
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§ |
Any
default on our indebtedness could result in acceleration of those
obligations and possible loss of property to foreclosure; and
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§ |
The
risk that necessary capital expenditures for purposes such as re−leasing
space cannot be financed on favorable
terms.
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If
a
property is mortgaged to secure payment of indebtedness and we cannot make
the
mortgage payments, we may have to surrender the property to the lender with
a
consequent loss of any prospective income and equity value from such property.
Any of these risks can place strains on our cash flows, reduce our ability
to
grow and adversely affect our results of operations.
Property
ownership through partnerships and joint ventures could limit our control of
those investments and reduce our expected return.
Partnership
or joint venture investments may involve risks not otherwise present for
investments made solely by us, including the possibility that our partner or
co-venturer might become bankrupt, that our partner or co-venturer might at
any
time have different interests or goals than us, and that our partner or
co-venturer may take action contrary to our instructions, requests, policies
or
objectives. Other risks of joint venture investments could include impasse
on
decisions, such as a sale, because neither our partner or co-venturer nor we
would have full control over the partnership or joint venture. These factors
could limit the return that we receive from those investments or cause our
cash
flows to be lower than our estimates.
Our
financial condition could be adversely affected by financial covenants.
Our
credit facilities and public debt indentures under which our indebtedness is,
or
may be, issued contain certain financial and operating covenants, including,
among other things, certain coverage ratios, as well as limitations on our
ability to incur secured and unsecured indebtedness, sell all or substantially
all of our assets and engage in mergers and consolidations and certain
acquisitions. These covenants could limit our ability to obtain additional
funds
needed to address cash shortfalls or pursue growth opportunities or transactions
that would provide substantial return to our shareholders. In addition, a breach
of these covenants could cause a default under or accelerate some or all of
our
indebtedness, which could have a material adverse effect on our financial
condition.
If
we fail to qualify as a REIT in any taxable year, we will be subject to U.S.
federal income tax as a regular corporation and could have significant tax
liability.
We
intend
to operate in a manner that allows us to qualify as a REIT for U.S. federal
income tax purposes. However, REIT qualification requires us to satisfy numerous
requirements (some on an annual or quarterly basis) established under highly
technical and complex provisions of the Internal Revenue Code, for which there
are a limited number of judicial or administrative interpretations. Our status
as a REIT requires an analysis of various factual matters and circumstances
that
are not entirely within our control. Accordingly, it is not certain we will
be
able to qualify and remain qualified as a REIT for U.S. federal income tax
purposes. Even a technical or inadvertent violation of the REIT requirements
could jeopardize our REIT qualification. Furthermore, Congress or the IRS might
change the tax laws or regulations and the courts might issue new rulings,
in
each case potentially having retroactive effect that could make it more
difficult or impossible for us to qualify as a REIT. If we fail to qualify
as a
REIT in any tax year, then:
§ |
We
would be taxed as a regular domestic corporation, which, among other
things, means that we would be unable to deduct distributions to
our
shareholders in computing our taxable income and would be subject
to U.S.
federal income tax on our taxable income at regular corporate
rates;
|
§ |
Any
resulting tax liability could be substantial and would reduce the
amount
of cash available for distribution to shareholders, and could force
us to
liquidate assets or take other actions that could have a detrimental
effect on our operating results; and
|
§ |
Unless
we were entitled to relief under applicable statutory provisions,
we would
be disqualified from treatment as a REIT for the four taxable years
following the year during which we lost our qualification, and our
cash
available for distribution to our shareholders therefore would be
reduced
for each of the years in which we do not qualify as a
REIT.
|
Even
if
we remain qualified as a REIT, we may face other tax liabilities that reduce
our
cash flow. We may also be subject to certain U.S. federal, state and local
taxes
on our income and property either directly or at the level of our subsidiaries.
Any of these taxes would decrease cash available for distribution to our
shareholders.
Compliance
with REIT requirements may negatively affect our operating decisions.
To
maintain our status as a REIT for U.S. federal income tax purposes, we must
meet
certain requirements, on an ongoing basis, including requirements regarding
our
sources of income, the nature and diversification of our assets, the amounts
we
distribute to our shareholders and the ownership of our shares. We may also
be
required to make distributions to our shareholders when we do not have funds
readily available for distribution or at times when our funds are otherwise
needed to fund capital expenditures.
As
a
REIT, we must distribute at least 90% of our annual net taxable income
(excluding net capital gains) to our shareholders. To the extent that we satisfy
this distribution requirement, but distribute less than 100% of our net taxable
income, we will be subject to U.S. federal corporate income tax on our
undistributed taxable income. From time to time, we may generate taxable income
greater than our income for financial reporting purposes, or our net taxable
income may be greater than our cash flow available for distribution to our
shareholders. If we do not have other funds available in these situations,
we
could be required to borrow funds, sell a portion of our securities at
unfavorable prices or find other sources of funds in order to meet the REIT
distribution requirements.
Dividends
paid by REITs generally do not qualify for reduced tax rates.
In
general, the maximum U.S. federal income tax rate for dividends paid to
individual U.S. shareholders is 15% (through 2008). Unlike dividends received
from a corporation that is not a REIT, our distributions to individual
shareholders generally are not eligible for the reduced rates.
Our
real estate investments may contain environmental risks that could adversely
affect our operating results.
The
acquisition of certain assets may subject us to liabilities, including
environmental liabilities. Our operating expenses could be higher than
anticipated due to the cost of complying with existing or future environmental
laws and regulations. In addition, under various federal, state and local laws,
ordinances and regulations, we may be considered an owner or operator of real
property or to have arranged for the disposal or treatment of hazardous or
toxic
substances. As a result, we may become liable for the costs of removal or
remediation of certain hazardous substances released on or in our
property.
We
may
also be liable for other potential costs that could relate to hazardous or
toxic
substances (including governmental fines and injuries to persons and property).
We may incur such liability whether or not we knew of, or were responsible
for,
the presence of such hazardous or toxic substances. Any liability could be
of
substantial magnitude and divert management’s attention from other aspects of
our business and, as a result, could have a material adverse effect on our
operating results and financial condition, as well as our ability to make
distributions to the shareholders.
An
uninsured loss or a loss that exceeds the policies on our properties could
subject us to lost capital or revenue on those properties.
Under
the
terms and conditions of the leases currently in force on our properties, tenants
generally are required to indemnify and hold us harmless from liabilities
resulting from injury to persons, air, water, land or property, on or off the
premises, due to activities conducted on the properties, except for claims
arising from our negligence or intentional misconduct or that of our agents.
Tenants are generally required, at the tenant’s expense, to obtain and keep in
full force during the term of the lease, liability and property damage insurance
policies. We have obtained comprehensive liability, casualty, property, flood
and rental loss insurance policies on our properties. All of these policies
may
involve substantial deductibles and certain exclusions. In addition, we cannot
assure the shareholders that the tenants will properly maintain their insurance
policies or have the ability to pay the deductibles. Should a loss occur that
is
uninsured or in an amount exceeding the combined aggregate limits for the
policies noted above, or in the event of a loss that is subject to a substantial
deductible under an insurance policy, we could lose all or part of our capital
invested in, and anticipated revenue from, one or more of the properties, which
could have a material adverse effect on our operating results and financial
condition, as well as our ability to make distributions to the
shareholders.
Compliance
with the Americans with Disabilities Act and fire, safety and other regulations
may require us to make unintended expenditures that adversely affect our cash
flows.
All
of
our properties are required to comply with the Americans with Disabilities
Act
(ADA). The ADA has separate compliance requirements for “public accommodations”
and “commercial facilities,” but generally requires that buildings be made
accessible to people with disabilities. Compliance with the ADA requirements
could require removal of access barriers, and noncompliance could result in
imposition of fines by the U.S. government or an award of damages to private
litigants, or both. While the tenants to whom we lease properties are obligated
by law to comply with the ADA provisions, and typically under tenant leases
are
obligated to cover costs associated with compliance, if required changes involve
greater expenditures than anticipated, or if the changes must be made on a
more
accelerated basis than anticipated, the ability of these tenants to cover costs
could be adversely affected. As a result, we could be required to expend funds
to comply with the provisions of the ADA, which could adversely affect the
results of operations and financial condition and our ability to make
distributions to shareholders. In addition, we are required to operate the
properties in compliance with fire and safety regulations, building codes and
other land use regulations, as they may be adopted by governmental agencies
and
bodies and become applicable to the properties. We may be required to make
substantial capital expenditures to comply with those requirements, and these
expenditures could have a material adverse effect on our ability to meet the
financial obligations and make distributions to our shareholders.
None.
At
December 31, 2006, our real estate properties consisted of 389 locations in
22
states. A complete listing of these properties, including the name, location,
building area and land area:
|
|
|
|
Building
|
|
Land
|
|
Center
and Location
|
|
|
|
Total
|
|
Total
|
|
|
|
|
|
|
|
|
|
Houston
and Harris County, Total
|
|
|
|
|
|
6,804,000
|
|
|
23,395,000
|
|
Alabama-Shepherd,
S. Shepherd at W. Alabama
|
|
|
|
|
|
56,000
|
|
|
176,000
|
|
Bayshore
Plaza, Spencer Hwy. at Burke Rd.
|
|
|
|
|
|
122,000
|
|
|
196,000
|
|
Bellaire
Boulevard, Bellaire at S. Rice
|
|
|
|
|
|
35,000
|
|
|
137,000
|
|
Braeswood
Square, N. Braeswood at Chimney Rock
|
|
|
|
|
|
103,000
|
|
|
422,000
|
|
Centre
at Post Oak, Westheimer at Post Oak Blvd.
|
|
|
|
|
|
184,000
|
|
|
505,000
|
|
Champions
Village, F.M. 1960 at Champions Forest Dr.
|
|
|
|
|
|
408,000
|
|
|
1,391,000
|
|
Crestview,
Bissonnet at Wilcrest
|
|
|
|
|
|
9,000
|
|
|
35,000
|
|
Cullen
Place, Cullen at Reed
|
|
|
|
|
|
7,000
|
|
|
30,000
|
|
Cullen
Plaza, Cullen at Wilmington
|
|
|
|
|
|
85,000
|
|
|
318,000
|
|
Cypress
Pointe, F.M. 1960 at Cypress Station
|
|
|
|
|
|
288,000
|
|
|
737,000
|
|
Eastpark,
Mesa Rd. at Tidwell
|
|
|
|
|
|
113,000
|
|
|
664,000
|
|
Edgebrook,
Edgebrook at Gulf Fwy.
|
|
|
|
|
|
78,000
|
|
|
360,000
|
|
Fiesta
Village, Quitman at Fulton
|
|
|
|
|
|
30,000
|
|
|
80,000
|
|
Fondren/West
Airport, Fondren at W. Airport
|
|
|
|
|
|
62,000
|
|
|
223,000
|
|
Glenbrook
Square, Telephone Road
|
|
|
|
|
|
76,000
|
|
|
320,000
|
|
Griggs
Road, Griggs at Cullen
|
|
|
|
|
|
80,000
|
|
|
382,000
|
|
Harrisburg
Plaza, Harrisburg at Wayside
|
|
|
|
|
|
93,000
|
|
|
334,000
|
|
Heights
Plaza, 20th St. at Yale
|
|
|
|
|
|
72,000
|
|
|
228,000
|
|
Humblewood
Shopping Plaza, Eastex Fwy. at F.M. 1960
|
|
|
|
|
|
279,000
|
|
|
784,000
|
|
I-45/Telephone
Rd. Center, I-45 at Maxwell Street
|
|
|
|
|
|
164,000
|
|
|
819,000
|
|
Jacinto
City, Market at Baca
|
|
|
*
|
|
|
50,000
|
|
|
134,000
|
|
Landmark,
Gessner at Harwin
|
|
|
|
|
|
56,000
|
|
|
228,000
|
|
Lawndale,
Lawndale at 75th St.
|
|
|
|
|
|
54,000
|
|
|
177,000
|
|
Little
York Plaza, Little York at E. Hardy
|
|
|
|
|
|
117,000
|
|
|
483,000
|
|
Lyons
Avenue, Lyons at Shotwell
|
|
|
|
|
|
68,000
|
|
|
178,000
|
|
Market
at Westchase, Westheimer at Wilcrest
|
|
|
|
|
|
87,000
|
|
|
318,000
|
|
Northbrook
Center, Northwest Fwy. at W. 34th
|
|
|
|
|
|
174,000
|
|
|
655,000
|
|
North
Main Square, Pecore at N. Main
|
|
|
|
|
|
19,000
|
|
|
64,000
|
|
North
Oaks, F.M. 1960 at Veterans Memorial
|
|
|
|
|
|
425,000
|
|
|
1,646,000
|
|
North
Triangle , I-45 at F.M. 1960
|
|
|
|
|
|
16,000
|
|
|
113,000
|
|
Northway,
Northwest Fwy. at 34th
|
|
|
|
|
|
209,000
|
|
|
793,000
|
|
Northwest
Crossing, N.W. Fwy. at Hollister (75%)
|
|
|
*
!
|
|
|
299,000
|
|
|
884,000
|
|
Oak
Forest, W. 43rd at Oak Forest
|
|
|
|
|
|
164,000
|
|
|
541,000
|
|
Orchard
Green, Gulfton at Renwick
|
|
|
|
|
|
74,000
|
|
|
273,000
|
|
Randall's
/Cypress Station, F.M. 1960 at I-45
|
|
|
|
|
|
141,000
|
|
|
618,000
|
|
Randall's
/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy.
|
|
|
|
|
|
128,000
|
|
|
624,000
|
|
Randall's
/Norchester, Grant at Jones
|
|
|
|
|
|
108,000
|
|
|
475,000
|
|
Richmond
Square, Richmond Ave. at W. Loop 610
|
|
|
|
|
|
91,000
|
|
|
135,000
|
|
River
Oaks East, W. Gray at Woodhead
|
|
|
|
|
|
71,000
|
|
|
206,000
|
|
River
Oaks West, W. Gray at S. Shepherd
|
|
|
|
|
|
235,000
|
|
|
609,000
|
|
Sheldon
Forest North , North, I-10 at Sheldon
|
|
|
*
|
|
|
22,000
|
|
|
131,000
|
|
Sheldon
Forest South , North, I-10 at Sheldon
|
|
|
*
|
|
|
76,000
|
|
|
328,000
|
|
Shops
at Three Corners, S. Main at Old Spanish Trail (70%)
|
|
|
*
|
|
|
252,000
|
|
|
1,007,000
|
|
Southgate,
W. Fuqua at Hiram Clark
|
|
|
|
|
|
125,000
|
|
|
533,000
|
|
Spring
Plaza, Hammerly at Campbell
|
|
|
|
|
|
56,000
|
|
|
202,000
|
|
Steeplechase,
Jones Rd. at F.M. 1960
|
|
|
|
|
|
293,000
|
|
|
849,000
|
|
Stella
Link , Stella Link at S. Braeswood
|
|
|
|
|
|
68,000
|
|
|
261,000
|
|
Studemont,
Studewood at E. 14th St
|
|
|
|
|
|
28,000
|
|
|
91,000
|
|
Ten
Blalock Square, I-10 at Blalock
|
|
|
|
|
|
97,000
|
|
|
321,000
|
|
10/Federal,
I-10 at Federal
|
|
|
|
|
|
132,000
|
|
|
474,000
|
|
Village
Arcade, University at Kirby
|
|
|
|
|
|
191,000
|
|
|
413,000
|
|
Westbury
Triangle, Chimney Rock at W. Bellfort
|
|
|
|
|
|
67,000
|
|
|
257,000
|
|
Westchase
Center, Westheimer at Wilcrest
|
|
|
|
|
|
336,000
|
|
|
754,000
|
|
Westhill
Village, Westheimer at Hillcroft
|
|
|
|
|
|
131,000
|
|
|
479,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
(Excluding Houston & Harris Co.), Total
|
|
|
|
|
|
9,628,000
|
|
|
45,481,000
|
|
Bell
Plaza, 45th Ave. at Bell St., Amarillo
|
|
|
|
|
|
129,000
|
|
|
682,000
|
|
Coronado,
34th St. at Wimberly Dr., Amarillo
|
|
|
|
|
|
48,000
|
|
|
201,000
|
|
Puckett
Plaza, Bell Road, Amarillo
|
|
|
|
|
|
133,000
|
|
|
621,000
|
|
Wolflin
Village, Wolflin Ave. at Georgia St., Amarillo
|
|
|
|
|
|
193,000
|
|
|
421,000
|
|
Brodie
Oaks, South Lamar Blvd. at Loop 360, Austin
|
|
|
|
|
|
354,000
|
|
|
1,050,000
|
|
Southrigde
Plaza, William Cannon Dr. at S. 1st St., Austin
|
|
|
|
|
|
143,000
|
|
|
565,000
|
|
Calder,
Calder at 24th St., Beaumont
|
|
|
|
|
|
34,000
|
|
|
95,000
|
|
North
Park Plaza, Eastex Fwy. at Dowlen, Beaumont
|
|
|
*
!
|
|
|
238,000
|
|
|
636,000
|
|
Phelan
West, Phelan at 23rd St., Beaumont (67%)
|
|
|
*
!
|
|
|
83,000
|
|
|
89,000
|
|
Phelan,
Phelan at 23rd St, Beaumont
|
|
|
|
|
|
12,000
|
|
|
63,000
|
|
Southgate,
Calder Ave. at 6th St., Beaumont
|
|
|
|
|
|
34,000
|
|
|
118,000
|
|
Westmont,
Dowlen at Phelan, Beaumont
|
|
|
|
|
|
98,000
|
|
|
507,000
|
|
North
Towne Plaza, U.S. 77 and 83 at SHFM 802, Brownsville (75%)
|
|
|
#
*
|
|
|
-
|
|
|
1,629,000
|
|
Gateway
Station, I-35W and McAlister Rd., Burleson (70%)
|
|
|
#
*
|
|
|
-
|
|
|
344,000
|
|
Lone
Star Pavilions, Texas at Lincoln Ave., College Station
|
|
|
|
|
|
107,000
|
|
|
439,000
|
|
Rock
Prairie Marketplace, Rock Prairie Rd. at Hwy. 6, College
Station
|
|
|
#
|
|
|
-
|
|
|
2,590,000
|
|
Montgomery
Plaza, Loop 336 West at I-45, Conroe
|
|
|
|
|
|
317,000
|
|
|
1,179,000
|
|
River
Pointe, I-45 at Loop 336, Conroe
|
|
|
|
|
|
190,000
|
|
|
310,000
|
|
Moore
Plaza, S. Padre Island Dr. at Staples, Corpus Christi
|
|
|
|
|
|
535,000
|
|
|
1,491,000
|
|
Portairs,
Ayers St. at Horne Rd., Corpus Christi
|
|
|
|
|
|
117,000
|
|
|
416,000
|
|
Shoppes
at Deer Creek, FM 731 at FM 1137, Crowley
|
|
|
|
|
|
75,000
|
|
|
635,000
|
|
Golden
Beach Market Place, Golden Triangle Blvd. at N. Beach St., Ft.
Worth
|
|
|
|
|
|
83,000
|
|
|
340,000
|
|
Overton
Park Plaza, SW Loop 820/Interstate 20 at South Hulen St., Ft.
Worth
|
|
|
|
|
|
463,000
|
|
|
1,636,000
|
|
Southcliff,
I-20 at Grandbury Rd., Ft. Worth
|
|
|
|
|
|
116,000
|
|
|
568,000
|
|
Broadway
, Broadway at 59th St., Galveston
|
|
|
|
|
|
76,000
|
|
|
220,000
|
|
Galveston
Place, Central City Blvd. at 61st St., Galveston
|
|
|
|
|
|
210,000
|
|
|
828,000
|
|
Food
King Place, 25th St. at Avenue P, Galveston
|
|
|
|
|
|
28,000
|
|
|
78,000
|
|
Festival
Plaza, Helotes, TX
|
|
|
#
|
|
|
-
|
|
|
75,000
|
|
Killeen
Marketplace, 3200 E. Central Texas Expressway, Killeen
|
|
|
|
|
|
251,000
|
|
|
512,000
|
|
Cedar
Bayou, Bayou Rd., La Marque
|
|
|
|
|
|
46,000
|
|
|
51,000
|
|
North
Creek Plaza, Del Mar Blvd. at Hwy. I-35, Laredo
|
|
|
|
|
|
451,000
|
|
|
1,251,000
|
|
Plantation
Centre, Del Mar Blvd. at McPherson Rd., Laredo
|
|
|
|
|
|
135,000
|
|
|
596,000
|
|
League
City Plaza, I-45 at F.M. 518, League City
|
|
|
|
|
|
127,000
|
|
|
680,000
|
|
Central
Plaza, Loop 289 at Slide Rd., Lubbock
|
|
|
|
|
|
151,000
|
|
|
529,000
|
|
Northtown
Plaza, 1st St. at University Plaza, Lubbock
|
|
|
|
|
|
74,000
|
|
|
308,000
|
|
Town
and Country, 4th St. at University, Lubbock
|
|
|
|
|
|
51,000
|
|
|
339,000
|
|
Angelina
Village, Hwy. 59 at Loop 287, Lufkin
|
|
|
|
|
|
257,000
|
|
|
1,835,000
|
|
Independence
Plaza, Town East Blvd., Mesquite
|
|
|
|
|
|
179,000
|
|
|
787,000
|
|
South
10th St. HEB, S. 10th St. at Houston St., McAllen
|
|
|
*
!
|
|
|
104,000
|
|
|
368,000
|
|
Las
Tiendas Plaza, Expressway 83 at McColl Rd., McAllen
|
|
|
*
!
|
|
|
530,000
|
|
|
910,000
|
|
Market
at Nolana, Nolana Ave and 29th St., McAllen
|
|
|
#
* !
|
|
|
-
|
|
|
508,000
|
|
Northcross,
N. 10th St. at Nolana Loop, McAllen
|
|
|
*
!
|
|
|
76,000
|
|
|
218,000
|
|
Old
Navy Building, 1815 10th Street, McAllen
|
|
|
*
!
|
|
|
16,000
|
|
|
62,000
|
|
Market
at Sharyland Place, U.S. Expressway 83 and Shary Road,
Mission
|
|
|
#
* !
|
|
|
-
|
|
|
543,000
|
|
Sharyland
Towne Crossing, U.S. Expressway 83 and Shary Road, Mission
|
|
|
*
! #
|
|
|
7,000
|
|
|
2,008,000
|
|
North
Sharyland Crossing, Shary Rd. at North Hwy. 83, Mission
|
|
|
#
* !
|
|
|
-
|
|
|
966,000
|
|
Custer
Park, SWC Custer Road at Parker Road, Plano
|
|
|
|
|
|
181,000
|
|
|
376,000
|
|
Pitman
Corners, Custer Road at West 15th, Plano
|
|
|
|
|
|
190,000
|
|
|
699,000
|
|
Gillham
Circle, Gillham Circle at Thomas, Port Arthur
|
|
|
|
|
|
33,000
|
|
|
94,000
|
|
Starr
Plaza, U.S. Hwy. 83 at Bridge St., Rio Grande City
|
|
|
*
! #
|
|
|
170,000
|
|
|
742,000
|
|
Rockwall,
I-30 at Market Center Street, Rockwall
|
|
|
|
|
|
209,000
|
|
|
933,000
|
|
Plaza,
Ave. H at Eighth Street, Rosenberg
|
|
|
*
|
|
|
82,000
|
|
|
270,000
|
|
Rose-Rich,
U.S. Hwy. 90A at Lane Dr., Rosenberg
|
|
|
|
|
|
104,000
|
|
|
386,000
|
|
Lake
Pointe Market Center, Dalrock Rd. at Lakeview Pkwy.,
Rowlett
|
|
|
|
|
|
121,000
|
|
|
294,000
|
|
Boswell
Towne Center, Highway 287 at Bailey Boswell Rd., Saginaw
|
|
|
|
|
|
88,000
|
|
|
176,000
|
|
Fiesta
Trails, I-10 at DeZavala Rd., San Antonio
|
|
|
|
|
|
488,000
|
|
|
1,589,000
|
|
Oak
Park Village, Nacogdoches at New Braunfels, San Antonio
|
|
|
|
|
|
66,000
|
|
|
221,000
|
|
Parliament
Square, W. Ave. at Blanco, San Antonio
|
|
|
|
|
|
120,000
|
|
|
484,000
|
|
Thousand
Oaks, Thousand Oaks Dr. at Jones Maltsberger Rd., San
Antonio
|
|
|
|
|
|
163,000
|
|
|
730,000
|
|
Valley
View, West Ave. at Blanco Rd., San Antonio
|
|
|
|
|
|
90,000
|
|
|
341,000
|
|
Westover
Square, 151 and Ingram, San Antonio (67%)
|
|
|
#
*
|
|
|
-
|
|
|
501,000
|
|
First
Colony Commons, Hwy. 59 at Williams Trace Blvd., Sugar
Land
|
|
|
|
|
|
410,000
|
|
|
1,649,000
|
|
Market
at Town Center, Town Center Blvd., Sugar Land
|
|
|
|
|
|
345,000
|
|
|
1,733,000
|
|
New
Boston Road, New Boston at Summerhill, Texarkana
|
|
|
|
|
|
97,000
|
|
|
335,000
|
|
Island
Market Place, 6th St. at 9th Ave., Texas City
|
|
|
|
|
|
27,000
|
|
|
90,000
|
|
Palmer
Plaza, F.M. 1764 at 34th St., Texas City
|
|
|
|
|
|
197,000
|
|
|
367,000
|
|
Tomball
Marketplace, FM 2920 and Future 249, Tomball
|
|
|
#
|
|
|
-
|
|
|
2,431,000
|
|
Broadway,
S. Broadway at W. 9th St., Tyler
|
|
|
|
|
|
60,000
|
|
|
259,000
|
|
Crossroads,
I-10 at N. Main, Vidor
|
|
|
|
|
|
116,000
|
|
|
484,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida,
Total
|
|
|
|
|
|
7,217,000
|
|
|
30,934,000
|
|
Boca
Lyons, Glades Rd. at Lyons Rd., Boca Raton
|
|
|
|
|
|
117,000
|
|
|
545,000
|
|
Sunset
19, US Hwy. 19 at Sunset Pointe Rd., Clearwater
|
|
|
|
|
|
273,000
|
|
|
1,078,000
|
|
Embassy
Lakes, Sheraton St. at Hiatus Rd., Cooper City
|
|
|
|
|
|
180,000
|
|
|
618,000
|
|
Shoppes
at Paradise Isle, 34940 Emerald Coast Pkwy, Destin (25%)
|
|
|
*
!
|
|
|
172,000
|
|
|
765,000
|
|
Hollywood
Hills Plaza, Hollywood Blvd. at North Park Rd., Hollywood
|
|
|
|
|
|
365,000
|
|
|
1,429,000
|
|
Indian
Harbour Place, East Eau Gallie Boulevard, Indian Harbour Beach
(25%)
|
|
|
*
!
|
|
|
164,000
|
|
|
637,000
|
|
Argyle
Village, Blanding at Argyle Forest Blvd., Jacksonville
|
|
|
|
|
|
305,000
|
|
|
1,329,000
|
|
TJ
Maxx Plaza, 117th Avenue at Sunset Blvd., Kendall
|
|
|
|
|
|
162,000
|
|
|
540,000
|
|
Largo
Mall, Ulmerton Rd. at Seminole Ave., Largo
|
|
|
|
|
|
576,000
|
|
|
1,888,000
|
|
Palm
Lakes Plaza, Atlantic Boulevard and Rock Island Road, Maragate
(20%)
|
|
|
*
!
|
|
|
114,000
|
|
|
548,000
|
|
Lake
Washington Crossing, Wickham Rd. at Lake Washington Rd., Melbourne
(25%)
|
|
|
*
!
|
|
|
119,000
|
|
|
580,000
|
|
Lake
Washington Square, Wickham Rd. at Lake Washington Rd.,
Melbourne
|
|
|
|
|
|
112,000
|
|
|
688,000
|
|
Kendall
Corners, Kendall Drive and SW 127th Avenue, Miami (20%)
|
|
|
*
!
|
|
|
96,000
|
|
|
363,000
|
|
South
Dade, South Dixie Highway and Eureka Drive, Miami (20%)
|
|
|
*
!
|
|
|
220,000
|
|
|
1,229,000
|
|
Tamiami
Trail Shops, S.W. 8th St. at S.W. 137th Ave., Miami
|
|
|
|
|
|
111,000
|
|
|
515,000
|
|
Northridge,
E. Commercial Blvd. at Dixie Hwy., Oakland Park
|
|
|
|
|
|
235,000
|
|
|
901,000
|
|
Colonial
Plaza, E. Colonial Dr. at Primrose Dr., Orlando
|
|
|
|
|
|
488,000
|
|
|
2,009,000
|
|
Colonial
Landing, East Colonial Dr. at Maguire Boulevard, Orlando
|
|
|
*
#
|
|
|
266,000
|
|
|
980,000
|
|
International
Drive Value Center, International Drive and Touchstone Drive, Orlando
(20%)
|
|
|
*
!
|
|
|
186,000
|
|
|
985,000
|
|
Market
at Southside, Michigan Ave. at Delaney Ave., Orlando
|
|
|
|
|
|
162,000
|
|
|
349,000
|
|
Phillips
Crossing, Interstate 4 and Sand Lake Road, Orlando
|
|
|
#
|
|
|
-
|
|
|
697,000
|
|
Phillips
Landing, Turkey Lake Rd., Orlando
|
|
|
#
|
|
|
-
|
|
|
311,000
|
|
The
Marketplace at Dr. Phillips, Dr. Phillips Boulevard and Sand Lake
Road,
Orlando (20%)
|
|
|
*
!
|
|
|
328,000
|
|
|
1,496,000
|
|
Westland
Terrace Plaza, SR 50 at Apopka Vineland Rd., Orlando
|
|
|
|
|
|
251,000
|
|
|
361,000
|
|
Alafaya
Square, Alafaya Trail, Oviedo (20%)
|
|
|
*
!
|
|
|
176,000
|
|
|
917,000
|
|
University
Palms, Alafaya Trail at McCullough Rd., Oviedo
|
|
|
|
|
|
99,000
|
|
|
522,000
|
|
East
Lake Woodlands, East Lake Road and Tampa Road, Palm Harbor
(20%)
|
|
|
*
!
|
|
|
145,000
|
|
|
730,000
|
|
Shoppes
at Parkland, Hillsboro Boulevard at State Road #7,
Parkland
|
|
|
|
|
|
146,000
|
|
|
905,000
|
|
Flamingo
Pines, Pines Blvd. at Flamingo Rd., Pembroke Pines
|
|
|
|
|
|
362,000
|
|
|
1,447,000
|
|
Pembroke
Commons, University at Pines Blvd., Pembroke Pines
|
|
|
|
|
|
316,000
|
|
|
1,394,000
|
|
Publix
at Laguna Isles, Sheridan St. at SW 196th Ave., Pembroke
Pines
|
|
|
|
|
|
69,000
|
|
|
400,000
|
|
Vizcaya
Square, Nob Hill Rd. at Cleary Blvd., Plantation
|
|
|
|
|
|
108,000
|
|
|
521,000
|
|
Quesada
Commons, Quesada Avenue and Toledo Blade Boulevard, Port Charlotte
(25%)
|
|
|
*
!
|
|
|
59,000
|
|
|
313,000
|
|
Shoppes
of Port Charlotte, Toledo Blade Boulevard and Tamiami Trail, Port
Charlotte (25%)
|
|
|
*
!
|
|
|
41,000
|
|
|
276,000
|
|
Marketplace
at Seminole Towne Center, Central Florida Greenway and Rinehart Rd,
Sanford
|
|
|
|
|
|
494,000
|
|
|
1,743,000
|
|
Venice
Pines, Center Rd. at Jacaranda Blvd., Venice
|
|
|
|
|
|
97,000
|
|
|
525,000
|
|
Winter
Park Corners, Aloma Ave. at Lakemont Ave., Winter Park
|
|
|
|
|
|
103,000
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
California,
Total
|
|
|
|
|
|
4,013,000
|
|
|
14,451,000
|
|
Jess
Ranch Marketplace, Bear Valley Road at Jess Ranch Parkway, Apple
Valley
|
|
|
*
! #
|
|
|
-
|
|
|
-
|
|
Centerwood
Plaza, Lakewood Blvd. at Alondra Dr., Bellflower
|
|
|
|
|
|
71,000
|
|
|
333,000
|
|
Southampton
Center, IH-780 at Southampton Rd., Benecia
|
|
|
|
|
|
162,000
|
|
|
596,000
|
|
580
Market Place, E. Castro Valley at Hwy. I-580, Castro
Valley
|
|
|
|
|
|
100,000
|
|
|
444,000
|
|
Chino
Hills Marketplace, Chino Hills Pkwy. at Pipeline Ave., Chino
Hills
|
|
|
|
|
|
320,000
|
|
|
1,187,000
|
|
Buena
Vista Marketplace, Huntington Dr. at Buena Vista St.,
Duarte
|
|
|
|
|
|
91,000
|
|
|
322,000
|
|
El
Camino Promenade, El Camino Real at Via Molena, Encinitas
|
|
|
|
|
|
111,000
|
|
|
451,000
|
|
Freedom
Centre, Freedom Blvd. At Airport Blvd., Watsonville
|
|
|
|
|
|
151,000
|
|
|
543,000
|
|
Fremont
Gateway Plaza, Paseo Padre Pkwy. at Walnut Ave., Fremont
|
|
|
|
|
|
195,000
|
|
|
650,000
|
|
Hallmark
Town Center, W. Cleveland Ave. at Stephanie Ln., Madera
|
|
|
|
|
|
85,000
|
|
|
365,000
|
|
Menifee
Town Center, Antelope Rd. at Newport Rd., Menifee
|
|
|
|
|
|
248,000
|
|
|
658,000
|
|
Marshalls
Plaza, McHenry at Sylvan Ave., Modesto
|
|
|
|
|
|
79,000
|
|
|
218,000
|
|
Prospectors
Plaza, Missouri Flat Rd. at US Hwy. 50, Placerville
|
|
|
|
|
|
228,000
|
|
|
873,000
|
|
Shasta
Crossroads, Churn Creek Rd. at Dana Dr., Redding
|
|
|
|
|
|
252,000
|
|
|
520,000
|
|
Ralphs
Redondo, Hawthorne Blvd. at 182nd St., Redondo Beach
|
|
|
|
|
|
67,000
|
|
|
431,000
|
|
Arcade
Square, Watt Ave. at Whitney Ave., Sacramento
|
|
|
|
|
|
76,000
|
|
|
234,000
|
|
Discovery
Plaza, W. El Camino Ave. at Truxel Rd., Sacramento
|
|
|
|
|
|
93,000
|
|
|
417,000
|
|
Summerhill
Plaza, Antelope Rd. at Lichen Dr., Sacramento
|
|
|
|
|
|
134,000
|
|
|
704,000
|
|
Valley,
Franklin Boulevard and Mack Road, Sacramento
|
|
|
|
|
|
103,000
|
|
|
580,000
|
|
Silver
Creek Plaza, E. Capital Expressway at Silver Creek Blvd., San
Jose
|
|
|
|
|
|
196,000
|
|
|
573,000
|
|
Greenhouse
Marketplace, Lewelling Blvd. at Washington Ave., San
Leandro
|
|
|
|
|
|
238,000
|
|
|
578,000
|
|
Rancho
San Marcos Village, San Marcos Blvd. at Rancho Santa Fe Rd., San
Marcos
|
|
|
|
|
|
121,000
|
|
|
541,000
|
|
San
Marcos Plaza, San Marcos Blvd. at Rancho Santa Fe Rd., San
Marcos
|
|
|
|
|
|
81,000
|
|
|
116,000
|
|
Stony
Point Plaza, Stony Point Rd. at Hwy. 12, Santa Rosa
|
|
|
|
|
|
199,000
|
|
|
619,000
|
|
Sunset
Center, Sunset Ave. at State Hwy. 12, Suisun City
|
|
|
|
|
|
85,000
|
|
|
359,000
|
|
Creekside
Center, Alamo Dr. at Nut Creek Rd., Vacaville
|
|
|
|
|
|
116,000
|
|
|
400,000
|
|
Westminster
Center, Westminster Blvd. at Golden West St., Westminster
|
|
|
|
|
|
411,000
|
|
|
1,739,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Louisiana,
Total
|
|
|
|
|
|
3,058,000
|
|
|
9,206,000
|
|
Seigen
Plaza, Siegen Lane at Honore Lane, Baton Rouge
|
|
|
|
|
|
349,000
|
|
|
1,000,000
|
|
Park
Terrace, U.S. Hwy. 171 at Parish, DeRidder
|
|
|
|
|
|
137,000
|
|
|
520,000
|
|
Town
& Country Plaza, U.S. Hwy. 190 West, Hammond
|
|
|
|
|
|
227,000
|
|
|
645,000
|
|
Manhattan
Place, Manhattan Blvd. at Gretna Blvd., Harvey
|
|
|
|
|
|
258,000
|
|
|
894,000
|
|
Ambassador
Plaza, Ambassador Caffery at W. Congress, Lafayette
|
|
|
|
|
|
102,000
|
|
|
196,000
|
|
River
Marketplace, Ambassador Caffery at Kaliste Saloom, Lafayette
(20%)
|
|
|
*
!
|
|
|
343,000
|
|
|
1,031,000
|
|
Westwood
Village, W. Congress at Bertrand, Lafayette
|
|
|
|
|
|
141,000
|
|
|
942,000
|
|
Conn's
Building, Ryan at 17th St., Lake Charles
|
|
|
|
|
|
23,000
|
|
|
36,000
|
|
14/Park
Plaza, Hwy. 14 at General Doolittle, Lake Charles
|
|
|
|
|
|
207,000
|
|
|
535,000
|
|
K-Mart
Plaza, Ryan St., Lake Charles
|
|
|
*
!
|
|
|
210,000
|
|
|
126,000
|
|
Prien
Lake Plaza, Prien Lake Rd. at Nelson Rd., Lake Charles
|
|
|
|
|
|
252,000
|
|
|
730,000
|
|
Southgate,
Ryan at Eddy, Lake Charles
|
|
|
|
|
|
171,000
|
|
|
511,000
|
|
Orleans
Station, Paris, Robert E. Lee at Chatham, New Orleans
|
|
|
|
|
|
5,000
|
|
|
31,000
|
|
Danville
Plaza, Louisville at 19th, Monroe
|
|
|
|
|
|
144,000
|
|
|
539,000
|
|
University
Place, 70th St. at Youree Dr., Shreveport (20%)
|
|
|
*
!
|
|
|
376,000
|
|
|
1,077,000
|
|
Westwood,
Jewella at Greenwood, Shreveport
|
|
|
|
|
|
113,000
|
|
|
393,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Nevada,
Total
|
|
|
|
|
|
3,499,000
|
|
|
12,004,000
|
|
Eastern
Horizon, Eastern Ave. at Horizon Ridge Pkwy., Henderson
|
|
|
|
|
|
211,000
|
|
|
478,000
|
|
Best
in the West, Rainbow at Lake Mead Rd., Las Vegas
|
|
|
|
|
|
437,000
|
|
|
1,516,000
|
|
Charleston
Commons, Charleston and Nellis, Las Vegas
|
|
|
|
|
|
338,000
|
|
|
1,316,000
|
|
Francisco
Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas
|
|
|
|
|
|
148,000
|
|
|
639,000
|
|
Mission
Center, Flamingo Rd. at Maryland Pkwy, Las Vegas
|
|
|
|
|
|
208,000
|
|
|
570,000
|
|
Paradise
Marketplace, Flamingo Rd. at Sandhill, Las Vegas
|
|
|
|
|
|
149,000
|
|
|
537,000
|
|
Rainbow
Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas
|
|
|
|
|
|
410,000
|
|
|
1,548,000
|
|
Rancho
Towne & Country, Rainbow Blvd. at Charleston Blvd., Las
Vegas
|
|
|
|
|
|
87,000
|
|
|
350,000
|
|
Tropicana
Beltway, Tropicana Beltway at Fort Apache Rd., Las Vegas
|
|
|
*
!
|
|
|
638,000
|
|
|
1,466,000
|
|
Tropicana
Marketplace, Tropicana at Jones Blvd., Las Vegas
|
|
|
|
|
|
143,000
|
|
|
519,000
|
|
Westland
Fair North, Charleston Blvd. At Decatur Blvd., Las Vegas
|
|
|
|
|
|
566,000
|
|
|
2,344,000
|
|
College
Park S.C., E. Lake Mead Blvd. at Civic Ctr. Dr., North Las
Vegas
|
|
|
|
|
|
164,000
|
|
|
721,000
|
|
|
|
|
|
|
|
|
|
|
|
|
North
Carolina, Total
|
|
|
|
|
|
3,366,000
|
|
|
18,880,000
|
|
Capital
Square, Capital Blvd. at Huntleigh Dr., Cary
|
|
|
|
|
|
157,000
|
|
|
607,000
|
|
Harrison
Pointe, Harrison Ave. at Maynard Rd., Cary
|
|
|
|
|
|
124,000
|
|
|
1,343,000
|
|
High
House Crossing, NC Hwy 55 at Green Level W. Rd., Cary
|
|
|
|
|
|
90,000
|
|
|
606,000
|
|
Northwoods
Market, Maynard Rd. at Harrison Ave., Cary
|
|
|
|
|
|
78,000
|
|
|
431,000
|
|
Parkway
Pointe, Cory Parkway at S. R. 1011, Cary
|
|
|
|
|
|
80,000
|
|
|
461,000
|
|
Chatham
Crossing, US 15/501 at Plaza Dr., Chapel Hill (25%)
|
|
|
*
!
|
|
|
96,000
|
|
|
425,000
|
|
Galleria,
Galleria Boulevard and Sardis Road, Charlotte
|
|
|
|
|
|
316,000
|
|
|
799,000
|
|
Johnston
Road Plaza, Johnston Rd. at McMullen Creek Pkwy.,
Charlotte
|
|
|
|
|
|
80,000
|
|
|
466,000
|
|
Steele
Creek Crossing, York Rd. at Steele Creek Rd., Charlotte
|
|
|
|
|
|
77,000
|
|
|
491,000
|
|
Whitehall
Commons, NWC of Hwy. 49 at I-485, Charlotte
|
|
|
|
|
|
436,000
|
|
|
360,000
|
|
Bull
City Market, Broad St. at West Main St., Durham
|
|
|
|
|
|
43,000
|
|
|
112,000
|
|
Durham
Festival, Hillsborough Rd. at LaSalle St., Durham
|
|
|
|
|
|
134,000
|
|
|
487,000
|
|
Mineral
Springs Village, Mineral Springs Rd. at Wake Forest Rd.,
Durham
|
|
|
|
|
|
58,000
|
|
|
572,000
|
|
Ravenstone
Commons, Hwy 98 at Sherron Rd., Durham
|
|
|
|
|
|
60,000
|
|
|
374,000
|
|
Waterford
Village, US Hwy 17 & US Hwy 74/76, Leland (75%)
|
|
|
#
*
|
|
|
-
|
|
|
1,264,000
|
|
Pinecrest
Plaza, Hwy. 15-501 at Morganton Rd., Pinehurst
|
|
|
|
|
|
250,000
|
|
|
1,438,000
|
|
Avent
Ferry, Avent Ferry Rd. at Gorman St., Raleigh
|
|
|
|
|
|
117,000
|
|
|
669,000
|
|
Falls
Pointe, Neuce Rd. at Durant Rd., Raleigh
|
|
|
|
|
|
189,000
|
|
|
659,000
|
|
Leesville
Town Centre, Leesville Rd. at Leesville Church Rd.,
Raleigh
|
|
|
|
|
|
114,000
|
|
|
904,000
|
|
Lynnwood
Collection, Creedmoor Rd at Lynn Road, Raleigh
|
|
|
|
|
|
86,000
|
|
|
429,000
|
|
Six
Forks Station, Six Forks Rd. at Strickland Rd., Raleigh
|
|
|
|
|
|
468,000
|
|
|
1,843,000
|
|
Little
Brier Creek, Little Brier Creek Lane and Brier Leaf Lane,
Raleigh
|
|
|
|
|
|
63,000
|
|
|
90,000
|
|
Stonehenge
Market, Creedmoor Rd. at Bridgeport Dr., Raleigh
|
|
|
|
|
|
188,000
|
|
|
669,000
|
|
Surf
City Crossing, Highway 17 and Highway 210, Surf City
|
|
|
#
|
|
|
-
|
|
|
1,359,000
|
|
Heritage
Station, Forestville Rd. at Rogers Rd., Wake Forest
|
|
|
|
|
|
62,000
|
|
|
392,000
|
|
The
Shoppes at Caveness Farms, Capitol Blvd and Caveness Farms Ave, Wake
Forest
|
|
|
#
|
|
|
-
|
|
|
1,630,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona,
Total
|
|
|
|
|
|
2,132,000
|
|
|
7,186,000
|
|
Palmilla
Center, Dysart Rd. at McDowell Rd., Avondale
|
|
|
|
|
|
170,000
|
|
|
264,000
|
|
Raintree
Ranch, Ray Road at Price Road, Chandler
|
|
|
#
|
|
|
60,000
|
|
|
759,000
|
|
University
Plaza, Plaza Way at Milton Rd., Flagstaff
|
|
|
|
|
|
162,000
|
|
|
919,000
|
|
Val
Vista Towne Center, Warner at Val Vista Rd., Gilbert
|
|
|
|
|
|
216,000
|
|
|
366,000
|
|
Arrowhead
Festival S.C., 75th Ave. at W. Bell Rd., Glendale
|
|
|
|
|
|
177,000
|
|
|
157,000
|
|
Fry's
Ellsworth Plaza, Broadway Rd. at Ellsworth Rd., Mesa
|
|
|
|
|
|
74,000
|
|
|
58,000
|
|
Monte
Vista Village Center, Baseline Rd. at Ellsworth Rd., Mesa
|
|
|
|
|
|
104,000
|
|
|
353,000
|
|
Red
Mountain Gateway, Power Rd. at McKellips Rd., Mesa
|
|
|
|
|
|
206,000
|
|
|
353,000
|
|
Camelback
Village Square, Camelback at 7th Avenue, Phoenix
|
|
|
|
|
|
235,000
|
|
|
543,000
|
|
Laveen
Village Market, Baseline Rd. at 51st St., Phoenix
|
|
|
#
|
|
|
108,000
|
|
|
773,000
|
|
Rancho
Encanto, 35th Avenue at Greenway Rd., Phoenix
|
|
|
|
|
|
74,000
|
|
|
290,000
|
|
Squaw
Peak Plaza, 16th Street at Glendale Ave., Phoenix
|
|
|
|
|
|
61,000
|
|
|
220,000
|
|
Fountain
Plaza, 77th St. at McDowell, Scottsdale
|
|
|
|
|
|
105,000
|
|
|
445,000
|
|
Fry's
Valley Plaza, S. McClintock at E. Southern, Tempe
|
|
|
|
|
|
145,000
|
|
|
570,000
|
|
Broadway
Marketplace, Broadway at Rural, Tempe
|
|
|
|
|
|
83,000
|
|
|
347,000
|
|
Pueblo
Anozira, McClintock Dr. at Guadalupe Rd., Tempe
|
|
|
|
|
|
152,000
|
|
|
769,000
|
|
|
|
|
|
|
|
|
|
|
|
|
New
Mexico, Total
|
|
|
|
|
|
1,473,000
|
|
|
4,489,000
|
|
Eastdale,
Candelaria Rd. at Eubank Blvd., Albuquerque
|
|
|
|
|
|
118,000
|
|
|
601,000
|
|
North
Towne Plaza, Academy Rd. at Wyoming Blvd., Albuquerque
|
|
|
|
|
|
103,000
|
|
|
607,000
|
|
Pavillions
at San Mateo, I-40 at San Mateo, Albuquerque
|
|
|
|
|
|
196,000
|
|
|
791,000
|
|
Plaza
at Cottonwood, Coors Bypass Blvd. at Seven Bar Loop Rd.,
Albuquerque
|
|
|
|
|
|
418,000
|
|
|
386,000
|
|
Wyoming
Mall, Academy Rd. at Northeastern, Albuquerque
|
|
|
|
|
|
326,000
|
|
|
1,309,000
|
|
De
Vargas, N. Guadalupe at Paseo de Peralta, Santa Fe
|
|
|
|
|
|
312,000
|
|
|
795,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado,
Total
|
|
|
|
|
|
2,707,000
|
|
|
13,648,000
|
|
Aurora
City Place, E. Alameda at I225, Aurora
|
|
|
*
|
|
|
528,000
|
|
|
2,260,000
|
|
Bridges
at Smoky Hill, Smoky Hill Rd. at S. Picadilly St., Aurora
|
|
|
*
|
|
|
59,000
|
|
|
272,000
|
|
Buckingham
Square, Mississippi at Havana, Aurora
|
|
|
*
#
|
|
|
-
|
|
|
-
|
|
Academy
Place, Academy Blvd. at Union Blvd., Colorado Springs
|
|
|
|
|
|
261,000
|
|
|
404,000
|
|
Uintah
Gardens, NEC 19th St. at West Uintah, Colorado Springs
|
|
|
|
|
|
212,000
|
|
|
677,000
|
|
Green
Valley Ranch Towne Center, Tower Rd. at 48th Ave., Denver
(37%)
|
|
|
*
!
|
|
|
104,000
|
|
|
421,000
|
|
Lowry
Town Center, 2nd Ave. at Lowry Ave., Denver
|
|
|
*
|
|
|
131,000
|
|
|
246,000
|
|
Gold
Creek, Hwy. 86 at Elizabeth St., Elizabeth
|
|
|
*
|
|
|
80,000
|
|
|
160,000
|
|
CityCenter
Englewood, S. Santa Fe at Hampden Ave., Englewood (51%)
|
|
|
*
|
|
|
307,000
|
|
|
453,000
|
|
Glenwood
Meadows, Midland Ave. at W. Meadows, Glenwood Springs
(41%)
|
|
|
*
! #
|
|
|
350,000
|
|
|
1,288,000
|
|
Highlands
Ranch University Park, Highlands Ranch at University Blvd., Highlands
Ranch (40%)
|
|
|
*
!
|
|
|
88,000
|
|
|
534,000
|
|
Crossing
at Stonegate, Jordon Rd. at Lincoln Ave., Parker (51%)
|
|
|
*
|
|
|
109,000
|
|
|
870,000
|
|
River
Point at Sheridan, Highway 77 and Highway 88, Sheridan
|
|
|
#
*
|
|
|
-
|
|
|
4,270,000
|
|
Thorncreek
Crossing, Washington St. at 120th St., Thornton (51%)
|
|
|
*
|
|
|
386,000
|
|
|
1,157,000
|
|
Westminster
Plaza, North Federal Blvd. at 72nd Ave., Westminster
|
|
|
*
|
|
|
92,000
|
|
|
636,000
|
|
Kansas,
Total
|
|
|
|
|
|
251,000
|
|
|
454,000
|
|
Shawnee
Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee
|
|
|
|
|
|
135,000
|
|
|
10,000
|
|
Kohl's,
Wanamaker Rd. at S.W. 17th St., Topeka
|
|
|
|
|
|
116,000
|
|
|
444,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Oklahoma,
Total
|
|
|
|
|
|
174,000
|
|
|
682,000
|
|
Market
Boulevard , E. Reno Ave. at N. Douglas Ave., Midwest City
|
|
|
|
|
|
36,000
|
|
|
142,000
|
|
Town
and Country, Reno Ave at North Air Depot, Midwest City
|
|
|
|
|
|
138,000
|
|
|
540,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Arkansas,
Total
|
|
|
|
|
|
355,000
|
|
|
1,489,000
|
|
Markham
Square, W. Markham at John Barrow, Little Rock
|
|
|
|
|
|
127,000
|
|
|
514,000
|
|
Markham
West, 11400 W. Markham, Little Rock
|
|
|
|
|
|
178,000
|
|
|
769,000
|
|
Westgate,
Cantrell at Bryant, Little Rock
|
|
|
|
|
|
50,000
|
|
|
206,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Tennessee,
Total
|
|
|
|
|
|
656,000
|
|
|
3,396,000
|
|
Bartlett
Towne Center, Bartlett Blvd. at Stage Rd., Bartlett
|
|
|
|
|
|
179,000
|
|
|
774,000
|
|
Mendenhall
Commons, South Mendenahall Rd. and Sanderlin Avenue,
Memphis
|
|
|
|
|
|
80,000
|
|
|
250,000
|
|
Commons
at Dexter Lake, Dexter at N. Germantown, Memphis
|
|
|
|
|
|
229,000
|
|
|
1,013,000
|
|
Highland
Square, Summer at Highland, Memphis
|
|
|
|
|
|
14,000
|
|
|
84,000
|
|
Ridgeway
Trace, Memphis
|
|
|
#
|
|
|
-
|
|
|
715,000
|
|
Summer
Center, Summer Ave. at Waring Rd., Memphis
|
|
|
|
|
|
154,000
|
|
|
560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Missouri,
Total
|
|
|
|
|
|
259,000
|
|
|
1,307,000
|
|
Ballwin
Plaza, Manchester Rd. at Vlasis Dr., Ballwin
|
|
|
|
|
|
203,000
|
|
|
653,000
|
|
Western
Plaza, Hwy 141 at Hwy 30, Fenton
|
|
|
*
!
|
|
|
56,000
|
|
|
654,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia,
Total
|
|
|
|
|
|
2,167,000
|
|
|
8,199,000
|
|
Lakeside
Marketplace, Cobb Parkway (US Hwy 41), Acworth
|
|
|
|
|
|
322,000
|
|
|
736,000
|
|
Camp
Creek Marketplace II, Camp Creek Parkway and Carmia Drive,
Atlanta
|
|
|
|
|
|
196,000
|
|
|
724,000
|
|
Publix
at Princeton Lakes, Carmia Drive and Camp Creek Drive,
Atlanta
|
|
|
|
|
|
68,000
|
|
|
336,000
|
|
Brookwood
Square, East-West Connector at Austell Rd., Austell
|
|
|
|
|
|
253,000
|
|
|
971,000
|
|
Dallas
Commons, US Highway 278 and Nathan Dean Boulevard, Dallas
|
|
|
|
|
|
95,000
|
|
|
244,000
|
|
Reynolds
Crossing, Steve Reynolds and Old North Cross Rd., Duluth
|
|
|
|
|
|
116,000
|
|
|
407,000
|
|
Thompson
Bridge Commons, Thompson Bridge Rd. at Mt. Vernon Rd.,
Gainesville
|
|
|
|
|
|
78,000
|
|
|
540,000
|
|
Grayson
Commons, Grayson Hwy at Rosebud Rd., Grayson
|
|
|
|
|
|
77,000
|
|
|
510,000
|
|
Village
Shoppes of Sugarloaf, Sugarloaf Pkwy at Five Forks Trickum Rd.,
Lawrenceville
|
|
|
|
|
|
148,000
|
|
|
831,000
|
|
Sandy
Plains Exchange, Sandy Plains at Scufflegrit, Marietta
|
|
|
|
|
|
73,000
|
|
|
452,000
|
|
Brownsville
Commons, Brownsville Road and Hiram-Lithia Springs Road, Powder
Springs
|
|
|
|
|
|
82,000
|
|
|
205,000
|
|
Roswell
Corners, Woodstock Rd. at Hardscrabble Rd., Roswell
|
|
|
|
|
|
319,000
|
|
|
784,000
|
|
Brookwood
Marketplace, Peachtree Parkway at Mathis Airport Rd.,
Suwannee
|
|
|
|
|
|
340,000
|
|
|
1,459,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Utah,
Total
|
|
|
|
|
|
633,000
|
|
|
1,660,000
|
|
Alpine
Valley Center, Main St. at State St., American Fork (33%)
|
|
|
*
!
|
|
|
200,000
|
|
|
447,000
|
|
Taylorsville
Town Center, West 4700 South at Redwood Rd., Taylorsville
|
|
|
|
|
|
134,000
|
|
|
399,000
|
|
West
Jordan Town Center, West 7000 South at S. Redwood Rd., West
Jordan
|
|
|
|
|
|
299,000
|
|
|
814,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Illinois,
Total
|
|
|
|
|
|
394,000
|
|
|
1,268,000
|
|
Lincoln
Place, Hwy. 59, Fairview Heights
|
|
|
|
|
|
224,000
|
|
|
503,000
|
|
Lincoln
Place II, Route 159 at Hwy. 50, Fairview Heights
|
|
|
|
|
|
170,000
|
|
|
765,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Maine,
Total
|
|
|
|
|
|
205,000
|
|
|
963,000
|
|
The
Promenade, Essex at Summit, Lewiston (75%)
|
|
|
*
|
|
|
205,000
|
|
|
963,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Kentucky,
Total
|
|
|
|
|
|
683,000
|
|
|
3,176,000
|
|
Millpond
Center, Boston at Man O’War, Lexington
|
|
|
|
|
|
144,000
|
|
|
773,000
|
|
Tates
Creek, Tates Creek at Man O’ War, Lexington
|
|
|
|
|
|
185,000
|
|
|
660,000
|
|
Regency
Shopping Centre, Nicholasville Rd.& West Lowry Lane,
Lexington
|
|
|
|
|
|
136,000
|
|
|
590,000
|
|
Festival
at Jefferson Court, Outer Loop at Jefferson Blvd.,
Louisville
|
|
|
|
|
|
218,000
|
|
|
1,153,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington,
Total
|
|
|
|
|
|
617,000
|
|
|
1,888,000
|
|
Village
at Liberty Lake, E. Country Vista Dr. at N. Liberty Rd., Liberty
Lake
|
|
|
*
! #
|
|
|
143,000
|
|
|
142,000
|
|
Mukilteo
Speedway Center, Mukilteo Speedway, Lincoln Way, and Highway 99,
Lynnwood
(20%)
|
|
|
*
!
|
|
|
90,000
|
|
|
353,000
|
|
Meridian
Town Center, Meridian Avenue East and 132nd Street East, Puyallup
(20%)
|
|
*
!
|
|
143,000
|
|
535,000
|
|
South
Hill Center, 43rd Avenue Southwest and Meridian Street South, Puyallup
(20%)
|
|
|
*
!
|
|
|
134,000
|
|
|
514,000
|
|
Rainier
Square Plaza, Rainer Avenue South and South Charleston Street, Seattle
(20%)
|
|
|
*
!
|
|
|
107,000
|
|
|
344,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oregon
Total
|
|
|
|
|
|
177,000
|
|
|
382,000
|
|
Clackamas
Square, SE 82nd Avenue and SE Causey Avenue, Portland
(20%)
|
|
|
*
!
|
|
|
137,000
|
|
|
216,000
|
|
Raleigh
Hills Plaza, SW Beaverton-Hillsdale Hwy and SW Scholls Ferry Road,
Portland (20%)
|
|
|
*
!
|
|
|
40,000
|
|
|
166,000
|
|
|
|
|
|
|
|
|
|
|
|
|
South
Carolina, Total
|
|
|
|
|
|
87,000
|
|
|
436,000
|
|
Fresh
Market Shoppes, 890 William Hilton Head Pkwy, Hilton Head
(25%)
|
|
|
*
!
|
|
|
87,000
|
|
|
436,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston
and Harris County, Total
|
|
|
|
|
|
5,242,000
|
|
|
13,308,000
|
|
1919
North Loop West, Hacket Drive at West Loop 610 North
|
|
|
|
|
|
140,000
|
|
|
157,000
|
|
Beltway
8 Business Park, Beltway 8 at Petersham Dr.
|
|
|
|
|
|
158,000
|
|
|
499,000
|
|
Blankenship
Building, Kempwood Drive
|
|
|
|
|
|
59,000
|
|
|
175,000
|
|
Brookhollow
Business Center, Dacoma at Directors Row
|
|
|
|
|
|
133,000
|
|
|
405,000
|
|
Central
Park Northwest VI, Central Pkwy. at Dacoma
|
|
|
|
|
|
175,000
|
|
|
518,000
|
|
Central
Park Northwest VII, Central Pkwy. at Dacoma
|
|
|
|
|
|
103,000
|
|
|
283,000
|
|
Claywood
Industrial Park, Clay at Hollister
|
|
|
|
|
|
330,000
|
|
|
1,761,000
|
|
Crosspoint
Warehouse, Crosspoint
|
|
|
|
|
|
73,000
|
|
|
179,000
|
|
Jester
Plaza Office Service Center, West T.C. Jester
|
|
|
|
|
|
101,000
|
|
|
244,000
|
|
Kempwood
Industrial, Kempwood Dr. at Blankenship Dr.
|
|
|
|
|
|
113,000
|
|
|
327,000
|
|
Kempwood
Industrial, Kempwood Dr. at Blankenship Dr. (20%)
|
|
|
*
!
|
|
|
207,000
|
|
|
531,000
|
|
Lathrop
Warehouse, Lathrop St. at Larimer St. (20%)
|
|
|
*
!
|
|
|
253,000
|
|
|
435,000
|
|
Navigation
Business Park, Navigation at N. York (20%)
|
|
|
*
!
|
|
|
238,000
|
|
|
555,000
|
|
Northway
Park II, Loop 610 East at Homestead (20%)
|
|
|
*
!
|
|
|
304,000
|
|
|
746,000
|
|
Railwood
F, Market at U.S. 90 (20%)
|
|
|
*
!
|
|
|
300,000
|
|
|
559,000
|
|
Railwood
Industrial Park, Mesa at U.S. 90
|
|
|
|
|
|
616,000
|
|
|
1,651,000
|
|
Railwood
Industrial Park, Mesa at U.S. 90 (20%)
|
|
|
*
!
|
|
|
498,000
|
|
|
1,061,000
|
|
South
Loop Business Park, S. Loop at Long Dr.
|
|
|
*
!
|
|
|
92,000
|
|
|
206,000
|
|
Southport
Business Park 5, South Loop 610
|
|
|
|
|
|
161,000
|
|
|
358,000
|
|
Southwest
Park II Service Center, Rockley Road
|
|
|
|
|
|
68,000
|
|
|
216,000
|
|
Stonecrest
Business Center, Wilcrest at Fallstone
|
|
|
|
|
|
111,000
|
|
|
308,000
|
|
West-10
Business Center, Wirt Rd. at I-10
|
|
|
|
|
|
129,000
|
|
|
331,000
|
|
West
10 Business Center II, Wirt Rd. at I-10
|
|
|
|
|
|
83,000
|
|
|
147,000
|
|
Westgate
Service Center, Park Row Drive at Whiteback Dr.
|
|
|
|
|
|
119,000
|
|
|
499,000
|
|
West
Loop Commerce Center, W. Loop N. at I-10
|
|
|
|
|
|
34,000
|
|
|
91,000
|
|
610
and 11th St. Warehouse, Loop 610 at 11th St.
|
|
|
|
|
|
105,000
|
|
|
202,000
|
|
610
and 11th St. Warehouse, Loop 610 at 11th St. (20%)
|
|
|
*
!
|
|
|
244,000
|
|
|
539,000
|
|
610/288
Business Park , Cannon Street (20%)
|
|
|
*
!
|
|
|
295,000
|
|
|
482,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
(excluding Houston & Harris Co.), Total
|
|
|
|
|
|
3,879,000
|
|
|
9,515,000
|
|
Midpoint
I-20 Distribution Center, New York Avenue and Arbrook Boulevard,
Arlington
|
|
|
|
|
|
253,000
|
|
|
593,000
|
|
Randol
Mill Place, Randol Mill Road, Arlington
|
|
|
|
|
|
55,000
|
|
|
178,000
|
|
Braker
2 Business Center, Kramer Ln. at Metric Blvd., Austin
|
|
|
|
|
|
27,000
|
|
|
93,000
|
|
Corporate
Center Park I and II, Putnam Dr. at Research Blvd., Austin
|
|
|
|
|
|
117,000
|
|
|
326,000
|
|
Oak
Hills Industrial Park, Industrial Oaks Blvd., Austin
|
|
|
|
|
|
90,000
|
|
|
340,000
|
|
Rutland
10 Business Center, Metric Blvd. At Centimeter Circle,
Austin
|
|
|
|
|
|
54,000
|
|
|
139,000
|
|
Southpark
A,B,C, East St. Elmo Rd. at Woodward St., Austin
|
|
|
|
|
|
78,000
|
|
|
238,000
|
|
Southpoint
Service Center, Burleson at Promontory Point Dr., Austin
|
|
|
|
|
|
54,000
|
|
|
234,000
|
|
Wells
Branch Corporate Center, Wells Branch Pkwy., Austin
|
|
|
|
|
|
59,000
|
|
|
183,000
|
|
1625
Diplomat Drive, SWC Diplomat Dr. at McDaniel Dr.,
Carrollton
|
|
|
|
|
|
106,000
|
|
|
199,000
|
|
Midway
Business Center, Midway at Boyington, Carrollton
|
|
|
|
|
|
141,000
|
|
|
309,000
|
|
Manana
Office Center, I-35 at Manana, Dallas
|
|
|
|
|
|
223,000
|
|
|
473,000
|
|
Newkirk
Service Center, Newkirk near N.W. Hwy., Dallas
|
|
|
|
|
|
106,000
|
|
|
223,000
|
|
Northaven
Business Center, Northaven Rd., Dallas
|
|
|
|
|
|
151,000
|
|
|
178,000
|
|
Northeast
Crossing Office/Service Center, East N.W. Hwy. at Shiloh,
Dallas
|
|
|
|
|
|
79,000
|
|
|
199,000
|
|
Northwest
Crossing Office/Service Center, N.W. Hwy. at Walton Walker,
Dallas
|
|
|
|
|
|
127,000
|
|
|
290,000
|
|
Redbird
Distribution Center, Joseph Hardin Drive, Dallas
|
|
|
|
|
|
111,000
|
|
|
233,000
|
|
Regal
Distribution Center, Leston Avenue, Dallas
|
|
|
|
|
|
203,000
|
|
|
318,000
|
|
Space
Center Industrial Park, Pulaski St. at Irving Blvd.,
Dallas
|
|
|
|
|
|
265,000
|
|
|
426,000
|
|
McGraw
Hill Distribution Center, 420 E. Danieldale Rd, DeSoto
|
|
|
|
|
|
418,000
|
|
|
888,000
|
|
Freeport
Commerce Center, Sterling Street and Statesman Drive,
Irving
|
|
|
|
|
|
51,000
|
|
|
196,000
|
|
Central
Plano Business Park, Klein Rd. at Plano Pkwy., Plano
|
|
|
|
|
|
138,000
|
|
|
415,000
|
|
Jupiter
Service Center, Jupiter near Plano Pkwy., Plano
|
|
|
|
|
|
78,000
|
|
|
234,000
|
|
Sherman
Plaza Business Park, Sherman at Phillips, Richardson
|
|
|
|
|
|
101,000
|
|
|
312,000
|
|
Interwest
Business Park, Alamo Downs Parkway, San Antonio
|
|
|
|
|
|
218,000
|
|
|
742,000
|
|
Isom
Business Park, 919-981 Isom Road, San Antonio
|
|
|
|
|
|
175,000
|
|
|
462,000
|
|
O'Connor
Road Business Park, O’Connor Road, San Antonio
|
|
|
|
|
|
150,000
|
|
|
459,000
|
|
Freeport
Business Center, 13215 N. Promenade Blvd., Stafford
|
|
|
|
|
|
251,000
|
|
|
635,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia,
Total
|
|
|
|
|
|
1,568,000
|
|
|
4,343,000
|
|
Atlanta
Industrial Park II & VI, Atlanta Industrial Pkwy. at Atlanta
Industrial Dr., Atlanta
|
|
|
|
|
|
552,000
|
|
|
1,755,000
|
|
Sears
Logistics, 3700 Southside Industrial Way, Atlanta (20%)
|
|
|
*
!
|
|
|
403,000
|
|
|
890,000
|
|
Southside
Industrial Parkway, Southside Industrial Pkwy at Jonesboro Rd.,
Atlanta
|
|
|
|
|
|
72,000
|
|
|
242,000
|
|
Kennesaw
75, 3850-3900 Kennesaw Prkwy, Kennesaw
|
|
|
|
|
|
178,000
|
|
|
491,000
|
|
6485
Crescent Drive, I-85 at Jimmy Carter Blvd., Norcross (20%)
|
|
|
*
!
|
|
|
363,000
|
|
|
965,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Tennessee,
Total
|
|
|
|
|
|
1,142,000
|
|
|
2,658,000
|
|
Crowfarn
Drive Warehouse, Crowfarn Dr. at Getwell Rd., Memphis
(20%)
|
|
|
*
!
|
|
|
161,000
|
|
|
316,000
|
|
Outland
Business Center, Outland Center Dr., Memphis (20%)
|
|
|
*
!
|
|
|
410,000
|
|
|
1,215,000
|
|
Southpoint
I & II, Pleasant Hill Rd. at Shelby Dr., Memphis
|
|
|
|
|
|
571,000
|
|
|
1,127,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida,
Total
|
|
|
|
|
|
1,496,000
|
|
|
3,700,000
|
|
Lakeland
Industrial Center, I-4 at County Rd., Lakeland
|
|
|
|
|
|
600,000
|
|
|
1,535,000
|
|
1801
Massaro, 1801 Massaro Blvd., Tampa
|
|
|
|
|
|
159,000
|
|
|
337,000
|
|
Hopewell
Industrial Center, Old Hopewell Boulevard and U.S. Highway 301,
Tampa
|
|
|
|
|
|
224,000
|
|
|
486,000
|
|
Tampa
East Industrial Portfolio, 1841 Massaro Blvd., Tampa
|
|
|
|
|
|
513,000
|
|
|
1,342,000
|
|
|
|
|
|
|
|
|
|
|
|
|
California,
Total
|
|
|
|
|
|
1,043,000
|
|
|
2,548,000
|
|
1725
Dornoch, Donroch Court, San Diego
|
|
|
|
|
|
112,000
|
|
|
268,000
|
|
1855
Dornoch, Donroch Court, San Diego
|
|
|
|
|
|
205,000
|
|
|
520,000
|
|
Siempre
Viva Business Park, Siempre Viva Rd. at Kerns St., San Diego
(20%)
|
|
|
*
!
|
|
|
726,000
|
|
|
1,760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIMPROVED
LAND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston
& Harris County, Total
|
|
|
|
|
|
|
|
|
2,402,000
|
|
Bissonnet
at Wilcrest
|
|
|
|
|
|
|
|
|
175,000
|
|
Citadel
Plaza at 610 North Loop
|
|
|
|
|
|
|
|
|
137,000
|
|
East
Orem
|
|
|
|
|
|
|
|
|
122,000
|
|
Kirkwood
at Dashwood Drive
|
|
|
|
|
|
|
|
|
322,000
|
|
Mesa
Road at Tidwell
|
|
|
|
|
|
|
|
|
901,000
|
|
Northwest
Freeway at Gessner
|
|
|
|
|
|
|
|
|
422,000
|
|
Shaver
at Denham
|
|
|
|
|
|
|
|
|
17,000
|
|
West
Little York at Interstate 45
|
|
|
|
|
|
|
|
|
161,000
|
|
West
Loop North at Interstate 10
|
|
|
|
|
|
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
(excluding Houston & Harris Co.), Total
|
|
|
|
|
|
|
|
|
1,121,000
|
|
River
Pointe Drive at Interstate 45, Conroe
|
|
|
#
|
|
|
|
|
|
590,000
|
|
NEC
of US Hwy 380 & Hwy 75, McKinney
|
|
|
|
|
|
|
|
|
87,000
|
|
9th
Ave. at 25th St., Port Arthur
|
|
|
|
|
|
|
|
|
243,000
|
|
Highway
3 at Highway 1765, Texas City
|
|
|
|
|
|
|
|
|
201,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louisiana,
Total
|
|
|
|
|
|
|
|
|
462,000
|
|
U.S.
Highway 171 at Parish, DeRidder
|
|
|
|
|
|
|
|
|
462,000
|
|
|
|
|
|
|
|
|
|
|
|
|
North
Carolina, Total
|
|
|
|
|
|
|
|
|
1,750,000
|
|
The
Shoppes at Caveness Farms
|
|
|
|
|
|
|
|
|
1,750,000
|
|
Weingarten
Realty Investors
|
|
Property
Listing at December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER
OF
|
|
BUILDING
|
|
LAND
|
|
ALL
PROPERTIES-BY LOCATION
|
|
PROPERTIES
|
|
TOTAL
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
|
389
|
|
|
64,925,000
|
|
|
246,781,000
|
|
Texas
(excluding Houston and Harris County)
|
|
|
96
|
|
|
13,507,000
|
|
|
56,117,000
|
|
Houston
& Harris County
|
|
|
77
|
|
|
12,046,000
|
|
|
39,105,000
|
|
Florida
|
|
|
41
|
|
|
8,713,000
|
|
|
34,634,000
|
|
California
|
|
|
30
|
|
|
5,056,000
|
|
|
16,999,000
|
|
North
Carolina
|
|
|
26
|
|
|
3,366,000
|
|
|
20,630,000
|
|
Louisiana
|
|
|
16
|
|
|
3,058,000
|
|
|
9,668,000
|
|
Arizona
|
|
|
16
|
|
|
2,132,000
|
|
|
7,186,000
|
|
Colorado
|
|
|
15
|
|
|
2,707,000
|
|
|
13,648,000
|
|
Georgia
|
|
|
18
|
|
|
3,735,000
|
|
|
12,542,000
|
|
Nevada
|
|
|
12
|
|
|
3,499,000
|
|
|
12,004,000
|
|
Tennessee
|
|
|
9
|
|
|
1,798,000
|
|
|
6,054,000
|
|
New
Mexico
|
|
|
6
|
|
|
1,473,000
|
|
|
4,489,000
|
|
Oklahoma
|
|
|
2
|
|
|
174,000
|
|
|
682,000
|
|
Arkansas
|
|
|
3
|
|
|
355,000
|
|
|
1,489,000
|
|
Utah
|
|
|
3
|
|
|
633,000
|
|
|
1,660,000
|
|
Kentucky
|
|
|
4
|
|
|
683,000
|
|
|
3,176,000
|
|
Kansas
|
|
|
2
|
|
|
251,000
|
|
|
454,000
|
|
Missouri
|
|
|
2
|
|
|
259,000
|
|
|
1,307,000
|
|
Illinois
|
|
|
2
|
|
|
394,000
|
|
|
1,268,000
|
|
Maine
|
|
|
1
|
|
|
205,000
|
|
|
963,000
|
|
Washington
|
|
|
5
|
|
|
617,000
|
|
|
1,888,000
|
|
South
Carolina
|
|
|
1
|
|
|
87,000
|
|
|
436,000
|
|
Oregon
|
|
|
2
|
|
|
177,000
|
|
|
382,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLPROPERTIES-BY
CLASSIFICATION
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
|
389
|
|
|
64,925,000
|
|
|
246,781,000
|
|
Shopping
Centers
|
|
|
322
|
|
|
50,555,000
|
|
|
204,974,000
|
|
Industrial
|
|
|
67
|
|
|
14,370,000
|
|
|
36,072,000
|
|
Unimproved
Land
|
|
|
0
|
|
|
|
|
|
5,735,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
square footage includes 465,000 square feet of building area and
11,933,000 square
feet of land leased from others.
_______________
|
*
|
|
Denotes
partial ownership. Our interest is 50% except where noted. The square
feet
figures represent the total property
amounts.
|
|
|
# |
Denotes
property under
development.
|
|
!
|
|
Denotes
properties of an unconsolidated joint venture. These properties are
not
consolidated in our financial
statements.
|
General.
In 2006
no single property accounted for more than 2.1% of our total assets or 1.5%
of
gross revenues. Five properties, in the aggregate, represented approximately
7.0% of our gross revenues for the year ended December 31, 2006; otherwise,
none
of the remaining properties accounted for more than 1.3% of our gross revenues
during the same period. The weighted average occupancy rate for all of our
improved properties as of December 31, 2006 was 94.1% compared to 94.2% as
of
December 31, 2005.
Substantially
all of our properties are owned directly by us (subject in some cases to
mortgages), although our interests in some properties are held indirectly
through interests in joint ventures or under long-term leases. In our opinion,
our properties are well maintained and in good repair, suitable for their
intended uses, and adequately covered by insurance.
We
participate in 65 joint ventures or partnerships that hold 103 of our
properties. Our ownership interest ranges from 20% to 99%; we are normally
the
managing or operating partner and receive a fee for acting in this capacity.
We
may
use a DownREIT operating partnership structure in the acquisition of some real
estate properties. In these transactions, a fair value purchase price is agreed
upon between us, as general partner of the DownREIT, and the seller where the
seller receives operating partnership units in exchange for some or all of
its
ownership interest in the property. Each operating partnership unit is the
equivalent of one of our common shares of beneficial interest. These units
generally allow our partners the right to put their limited partnership units
interest to us on or after the first anniversary of the entity’s formation. We
may acquire these limited partnership units for either cash or a fixed number
of
our common shares at our discretion.
Shopping
Centers.
At
December 31, 2006, we owned or operated under long-term leases, either directly
or through our interest in joint ventures or partnerships, a total of 297
developed income-producing properties and 25 properties under various stages
of
construction and development. Our shopping centers are located Arizona,
Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky,
Louisiana, Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma,
Oregon, South Carolina, Tennessee, Texas, Utah and Washington.
Our
shopping centers are primarily neighborhood and community shopping centers
that
range in size from 100,000 to 600,000 square feet of building area, as
distinguished from small strip centers, which generally contain 5,000 to 25,000
square feet, and from large regional enclosed malls. Almost none of the
centers have climatized common areas, but are designed to allow retail
customers to park their automobiles in close proximity to any retailer in the
center. Our centers are customarily constructed of masonry, steel and glass,
and
all have lighted, paved parking areas, which are typically landscaped with
berms, trees and shrubs. They are generally located at major intersections
in
close proximity to neighborhoods that have existing populations sufficient
to
support retail activities of the types conducted in our centers.
We
have
approximately 6,600 separate leases with 4,800 different tenants. Included
among
our top revenue-producing tenants are: The Kroger Co., T.J.X. Companies, Ross
Stores, Safeway, Publix, Office Depot, Blockbuster Video, Home Depot, Barnes
& Noble, and the Gap. The diversity of our tenant base is also evidenced by
the fact that our largest tenant accounted for only 3.0% of rental revenues
during 2006.
In
the
ordinary course of business, we have tenants who cease making payments under
their leases or who file for bankruptcy protection. We are unable to predict
or
forecast the timing of store closings or unexpected vacancies; however, we
believe the effect of this will not have a material impact on our financial
position, results of operations, or our liquidity due to the significant
diversification of our tenant base.
Our
shopping center leases have lease terms generally ranging from three to five
years for tenant space under 5,000 square feet and from 10 to 25 years for
tenant space over 10,000 square feet. Leases with primary lease terms in excess
of 10 years, generally for anchor and out-parcels, frequently contain renewal
options which allow the tenant to extend the term of the lease for one or more
additional periods, with each of these periods generally being of a shorter
duration than the primary lease term. The rental rates paid during a renewal
period are generally based upon the rental rate for the primary term; sometimes
adjusted for inflation, market conditions or an amount of the tenant's sales
during the primary term.
Most
of
our leases provide for the monthly payment in advance of fixed minimum rentals,
the tenants' pro rata share of ad valorem taxes, insurance (including fire
and
extended coverage, rent insurance and liability insurance) and common area
maintenance for the center (based on estimates of the costs for these items).
They also provide for the payment of additional rentals based on a percentage
of
the tenants' sales. Utilities are generally paid directly by tenants except
where common metering exists with respect to a center. In this case we make
payments for the utilities, and the tenants on a monthly basis reimburse us.
Generally, our leases prohibit the tenant from assigning or subletting its
space. They also require the tenant to use its space for the purpose designated
in its lease agreement and to operate its business on a continuous basis. Some
of the lease agreements with major tenants contain modifications of these basic
provisions in view of the financial condition, stability or desirability of
those tenants. Where a tenant is granted the right to assign its space, the
lease agreement generally provides that the original lessee will remain liable
for the payment of the lease obligations under that lease
agreement.
During
2006 we invested approximately $781 million in the acquisition of operating
retail properties. Approximately $402 million was invested in 17 shopping
centers and $54 million was invested in two unconsolidated joint ventures to
acquire 11 retail properties. We also invested $325 million in the Woolbright
Properties Portfolio, 80% of which was subsequently bought from us as part
of a
joint venture arrangement with TIAA-CREF Global Real Estate. These combined
acquisitions added 4.0 million square feet to our share of the portfolio.
In
March
2006 we acquired Fresh Market Shoppes Shopping Center, an 87,000 square foot
shopping center located in Hilton Head, South Carolina. Fresh Market and
Bonefish Grill anchor this specialty retail center. We also acquired The Shoppes
at Paradise Isle, a 172,000 shopping center located in Destin, Florida. Best
Buy, Linens-N-Things, PetsMart and Office Depot anchor this property. Both
of
these shopping centers were acquired through a 25%-owned unconsolidated joint
venture.
In
April
2006 Valley Shopping Center, a 103,000 square foot shopping center anchored
by
Raley’s Supermarket was acquired. The center has below-market rents providing
strong growth opportunities and is in close proximity to our regional office
in
Sacramento.
In
May
2006 Brownsville Commons, an 82,000 square foot shopping center including a
54,000 square foot (corporate owned) Kroger supermarket, was acquired in Powder
Springs, Georgia, a suburb of Atlanta. The Shoppes of Parkland, was also
acquired, which is a 146,000 square foot shopping center located in Parkland,
Florida and is anchored by BJ’s Wholesale. This center services two upper income
neighborhoods, Parkland and Boca Raton.
In
June
2006 we purchased a property in California and acquired a shopping center in
Florida through a 25%-owned unconsolidated joint venture. Freedom Centre,
anchored by Ralph’s and Rite Aid, is a 151,000 square foot shopping center
located in Freedom, California. Indian Harbour Place is a 164,000 square foot
shopping center located in Melbourne, Florida and is anchored by Publix.
In
July
2006 we acquired Mendenhall Commons, an 80,000 square foot grocery-anchored
neighborhood shopping center located in the affluent East Memphis submarket
of
Memphis, Tennessee. Kroger anchors the center. We also acquired the Regency
Shopping Center, located in Lexington, Kentucky, and Little Brier Creek Lane
in
Raleigh, North Carolina. Regency Shopping Center is a 136,000 square foot
shopping center, which is anchored by Kroger (corporate owned), Michael’s and TJ
Maxx. Little Brier Creek Lane is a 63,000 square foot shopping center anchored
by Pei Wei.
Quesada
Commons, a 59,000 square foot shopping center, and Shoppes of Port Charlotte,
a
41,000 square foot shopping center, were acquired through a 25%-owned
unconsolidated joint venture in July 2006. Both centers are located in Port
Charlotte, Florida and are recently constructed shopping centers. Publix,
Florida’s dominant supermarket chain, anchors Quesada Commons, and Petco and
Panera Bread anchor the Shoppes of Port Charlotte.
In
August
2006 we acquired the North American Properties portfolio consisting of five
retail properties, including four properties in metropolitan Atlanta, Georgia
and one in Sanford, Florida, a suburb north of Orlando. The properties are
all
new construction and are anchored by strong national tenants as described in
the
below table:
Center
Name
|
Square
Feet of Property*
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Brookwood
Marketplace
|
253,000
|
|
Suwannee
(Atlanta), GA
|
SuperTarget*,
Home Depot, OfficeMax
|
|
96%
|
Camp
Creek Phase II
|
196,000
|
|
Atlanta,
GA
|
SuperTarget*,
Circuit City
|
|
99%
|
Lakeside
Marketplace
|
322,000
|
|
Acworth
(Atlanta), GA
|
SuperTarget*,
Circuit City, Ross Dress for Less, PETCO, OfficeMax
|
|
100%
|
Publix
at Princeton Lakes
|
68,000
|
|
Atlanta,
GA
|
Publix
|
|
100%
|
Marketplace
at Seminole Towne Center
|
494,000
|
|
Sanford
(Orlando), FL
|
SuperTarget*,
Circuit City, Linens ‘n Things, Marshalls, PETCO
|
|
99%
|
* Target
owns its own property and is not part of the transaction.
The
purchase agreement allows for the subsequent development and leasing of an
additional phase of Brookwood Marketplace by the property seller. If the terms
of the purchase agreement are met by the seller, the purchase price would be
increased by approximately $6.9 million. This agreement expires in August
2008.
In
September 2006 Dallas Commons and Reynolds Crossing were acquired in Atlanta,
Georgia. Dallas Commons is a 95,000 square foot shopping center and Reynolds
Crossing is an 116,000 square foot shopping center. Both centers are anchored
by
a 70,000 square foot (corporate owned) Kroger supermarket.
The
Woolbright Properties Portfolio was acquired, which consisted of seven
neighborhood/community anchored retail shopping centers. Five of the centers
were purchased in September 2006 with Alafaya Square and the Marketplace at
Dr.
Phillips purchased in early October 2006. This acquisition added 1.3 million
square feet to our portfolio, and represented a total investment of $325
million. All seven properties are located in highly desirable locations within
Florida’s three largest metropolitan markets of South Florida, Orlando, and
Tampa/St. Petersburg. The centers are leased to a diverse mix of strong national
retailers as described in the table below:
Center
Name
|
Square
Feet of Property
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Alafaya
Square
|
176,000
|
|
Oviedo
(Orlando), FL
|
Publix,
Planet Fitness
|
|
100%
|
Marketplace
at Dr. Phillips
|
328,000
|
|
Orlando,
FL
|
Albertson’s,
Stein Mart, HomeGoods, Office Depot
|
|
99%
|
East
Lake Woodlands
|
145,000
|
|
Palm
Harbor (Tampa), FL
|
Publix,
Walgreens
|
|
91%
|
International
Drive
Value Center
|
186,000
|
|
Orlando,
FL
|
Bed
Bath & Beyond, Ross, TJ Maxx
|
|
100%
|
Kendall
Corners
|
96,000
|
|
Miami,
FL
|
Ashley
Furniture
|
|
100%
|
Palm
Lakes Plaza
|
114,000
|
|
Maragate
(Ft. Lauderdale), FL
|
Publix,
CVS
|
|
99%
|
South
Dade Shopping Center
|
220,000
|
|
Miami,
FL
|
Publix,
Bed Bath & Beyond, PETCO
|
|
100%
|
In
November 2006, 80% of the Woolbright Properties Portfolio was sold as part
of a
joint venture arrangement with TIAA-CREF Global Real Estate.
In
November 2006 we purchased six properties, four in Washington and two in Oregon
through a 20%-owned unconsolidated joint venture. The centers are leased to
a
diverse mix of strong national retailers as described in the table
below:
Center
Name
|
Square
Feet of Property
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Mukilteo
Speedway Center
|
90,000
|
|
Lynnwood
(Seattle), WA
|
Food
Emporium, Bartell Drug
|
|
96%
|
Meridian
Town Center
|
143,000
|
|
Puyallup
(Tacoma), WA
|
Safeway,
JoAnn’s
|
|
100%
|
Rainier
Valley Square
|
107,000
|
|
Seattle,
WA
|
Safeway,
Long Drugs
|
|
100%
|
South
Hill Center
|
134,000
|
|
Puyallup
(Tacoma), WA
|
Best
Buy, Bed Bath & Beyond and Ross
|
|
99%
|
Clackamas
Square
|
137,000
|
|
Portland,
OR
|
TJ
Maxx
|
|
100%
|
Raleigh
Hills Plaza
|
40,000
|
|
Portland,
OR
|
Walgreen,
New Season Market
|
|
100%
|
In
December 2006 we acquired Galleria Shopping Center in Charlotte, North Carolina
and Charleston Commons in Las Vegas, Nevada. Galleria is a 316,000 square foot
shopping center anchored by Cato Corporation and Dollar Tree. Charleston
Commons, a 338,000 square foot shopping center, is anchored by Walmart, Office
Max, Ross and PetSmart. We also acquired our partner’s share of Heritage
Station, which is located in Wake Forest, North Carolina. Heritage Station
is a
62,000 square foot shopping center that is anchored by Harris
Teeter.
In
2006
we sold 19 wholly-owned shopping centers totaling 2.9 million square feet of
building area. We also sold two joint venture properties totaling 97,000 square
feet. Sales proceeds from these dispositions totaled $300 million and generated
gains of $145 million.
Industrial
Properties. At
December
31, 2006, we owned, either directly or through our interest in joint ventures
or
partnerships, 67 industrial projects with approximately 50.6 million square
feet
of building area. We have approximately 690 tenants and 749 leases. Our
industrial properties consist of bulk warehouse, business distribution and
office-service center assets ranging in size from 27,000 to 616,000 square
feet.
Similar to our shopping centers, these properties are customarily constructed
of
masonry, steel and glass, and have lighted, concrete parking areas and are
well
landscaped. The national and regional tenants in our industrial centers include
Hitachi Transport Systems, Sears Logistics, Publix, Shell, Rooms to Go, UPS
Supply Chain Solutions, Sanderson Industries, Stone Container, General Electric
Company, G.E. Polymershapes, Inc., Interline Brands, Inc., Constar
International, Inc., Rooftop Systems Inc., Wells Fargo Bank, and Iron Mountain.
Its properties are located in California, Florida, Georgia, Tennessee and Texas.
During 2006 we invested approximately $82 million in the acquisition of seven
industrial properties totaling 1.4 million square feet.
In
February 2006 we acquired the McGraw Hill Distribution Center, a single tenant
warehouse of 418,000 square feet located in De Soto, Texas.
In
June
2006 we acquired two vacant industrial warehouse buildings in San Diego,
California at 1725 and 1855 Dornoch Court. These state-of-the-art buildings,
aggregating 317,000 square feet, are located within one and a half miles of
our
Siempre Viva Business Park. Based on the high demand for top quality space
in
this area, we anticipate leasing both newly acquired buildings within the next
year.
In
October 2006 we acquired Midpoint I-20 Distribution Center, a 253,000 square
foot property located in Arlington, Texas.
In
November 2006
we
acquired Hopewell Industrial Center in
Tampa,
Florida and Freeport Commerce Center located in Irving, Texas. These centers
aggregate 224,000 and 51,000 square feet, respectively.
In
December 2006 we acquired 1919 North Loop West, an office building adjacent
to
our corporate headquarters in Houston, Texas where we intend to relocate some
of
our administrative operations. The building contains 140,000 square feet.
During
2006 we sold four industrial properties totaling 616,000 square feet. We also
formed an industrial joint venture where five properties totaling 2.1 million
square feet were contributed to a joint venture, and we retained a 20% interest.
Sales proceeds from these dispositions totaled $115 million and generated gains
of $26 million.
Other.
In 2005
we began development of a 224-unit apartment complex within a multi-use master
planned project. This represents Phase II of a project where the initial phase
was completed in 2001 and sold in 2002. We anticipate completing the project
in
2007.
Unimproved
Land.
At
December 31, 2006, we owned 15 parcels of unimproved land consisting of
approximately 5.7 million square feet of land area located in Texas, Louisiana
and North Carolina. These properties include approximately 2.8 million
square feet of land adjacent to certain of our existing developed properties,
which may be used for expansion of these developments, as well as approximately
2.9 million square feet of land, which may be used for new development. Almost
all of these unimproved properties are served by roads and utilities and are
ready for development. Most of these parcels are suitable for development as
shopping centers or industrial projects, and we intend to emphasize the
development of these parcels for such purpose.
New
Development Properties. At
December 31, 2006, we had 26 projects under construction or in preconstruction
stages. The total square footage is approximately 7.6 million.
We
are
involved in various matters of litigation arising in the normal course of
business. While we are unable to predict with certainty the amounts involved,
our management and counsel believe that when such litigation is resolved, our
resulting liability, if any, will not have a material adverse effect on our
consolidated financial statements.
None.
PART
II
Our
common shares are listed and traded on the New York Stock Exchange under the
symbol "WRI." The number of holders of record of our common shares as of January
31, 2007 was 3,317. The closing high and low sale prices per common share as
reported on the New York Stock Exchange, and dividends per share paid for the
fiscal quarters indicated were as follows:
|
|
High
|
|
Low
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
2006:
|
|
|
|
|
|
|
|
Fourth
|
|
$
|
47.83
|
|
$
|
42.72
|
|
$
|
.465
|
|
Third
|
|
|
43.26
|
|
|
38.19
|
|
|
.465
|
|
Second
|
|
|
40.56
|
|
|
37.10
|
|
|
.465
|
|
First
|
|
|
41.76
|
|
|
38.66
|
|
|
.465
|
|
|
|
|
|
|
|
|
|
|
|
|
2005:
|
|
|
|
|
|
|
|
|
|
|
Fourth
|
|
$
|
38.98
|
|
$
|
33.99
|
|
$
|
.44
|
|
Third
|
|
|
40.50
|
|
|
36.83
|
|
|
.44
|
|
Second
|
|
|
39.32
|
|
|
34.08
|
|
|
.44
|
|
First
|
|
|
39.97
|
|
|
33.49
|
|
|
.44
|
|
In
February 2006 our board of trust managers authorized up to $100 million for
the
purchase of outstanding common shares of beneficial interest in 2006. Share
repurchases may be made in the open market or in privately negotiated
transactions. In July 2006 our board of trust managers revised the authorized
repurchase amount of our common shares of beneficial interest to a total
of $207
million, and we used $167.6 million of the net proceeds from the $575 million
debt offering to purchase 4.3 million common shares of beneficial interest
at
$39.26 per share.
Performance
Graph
The
graph
below provides an indicator of cumulative total shareholder returns for us
as
compared with the S&P 500 Stock Index and the NAREIT All Equity Index,
weighted by market value at each measurement point. The graph assumes that
$100
was invested on December 31, 2001 in our common shares and that all dividends
were reinvested by the shareholder.
Comparison
of Five Year Cumulative Return
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weingarten
|
|
|
122.54
|
|
|
155.85
|
|
|
221.88
|
|
|
219.11
|
|
|
279.34
|
|
S&P
500 Index
|
|
|
77.90
|
|
|
100.24
|
|
|
111.15
|
|
|
116.61
|
|
|
135.03
|
|
The
NAREIT All Equity Index
|
|
|
103.82
|
|
|
142.37
|
|
|
187.33
|
|
|
210.12
|
|
|
283.78
|
|
There
can
be no assurance that our share performance will continue into the future with
the same or similar trends depicted in the graph above. We will not make or
endorse any predications as to future share performance.
The
following table sets forth our selected consolidated financial data and should
be read in conjunction with "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Consolidated Financial
Statements and accompanying Notes in "Item 8. Financial Statements and
Supplementary Data" and the financial schedules included elsewhere in this
Form
10-K.
|
|
(Amounts
in thousands, except per share amounts)
|
|
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
(primarily real estate rentals)
|
|
$
|
561,380
|
|
$
|
510,401
|
|
$
|
460,914
|
|
$
|
372,016
|
|
$
|
317,119
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
127,613
|
|
|
117,062
|
|
|
103,870
|
|
|
80,776
|
|
|
65,803
|
|
Other
|
|
|
180,751
|
|
|
152,932
|
|
|
143,178
|
|
|
113,128
|
|
|
97,253
|
|
Total
|
|
|
308,364
|
|
|
269,994
|
|
|
247,048
|
|
|
193,904
|
|
|
163,056
|
|
Operating
income
|
|
|
253,016
|
|
|
240,407
|
|
|
213,866
|
|
|
178,112
|
|
|
154,063
|
|
Interest
expense
|
|
|
(146,943
|
)
|
|
(130,761
|
)
|
|
(117,096
|
)
|
|
(90,269
|
)
|
|
(67,171
|
)
|
Interest
and other income
|
|
|
9,045
|
|
|
2,867
|
|
|
1,390
|
|
|
1,563
|
|
|
1,053
|
|
Loss
on redemption of preferred shares
|
|
|
|
|
|
|
|
|
(3,566
|
)
|
|
(2,739
|
)
|
|
|
|
Equity
in earnings of joint ventures, net
|
|
|
14,655
|
|
|
6,610
|
|
|
5,384
|
|
|
4,681
|
|
|
3,930
|
|
Income
allocated to minority interests
|
|
|
(6,414
|
)
|
|
(6,060
|
)
|
|
(4,928
|
)
|
|
(2,723
|
)
|
|
(3,553
|
)
|
Gain
on land and merchant development sales
|
|
|
7,166
|
|
|
804
|
|
|
|
|
|
|
|
|
|
|
Gain
on sale of properties
|
|
|
22,467
|
|
|
22,306
|
|
|
1,562
|
|
|
665
|
|
|
188
|
|
Provision
for Income Taxes
|
|
|
(1,366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
151,626
|
|
|
136,173
|
|
|
96,612
|
|
|
89,290
|
|
|
88,510
|
|
Income
from discontinued operations (1)
|
|
|
153,384
|
|
|
83,480
|
|
|
44,769
|
|
|
26,990
|
|
|
43,357
|
|
Net
income
|
|
$ |
305,010
|
|
$
|
219,653
|
|
$
|
141,381
|
|
$
|
116,280
|
|
$
|
131,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
$
|
294,909
|
|
$
|
209,552
|
|
$
|
133,911
|
|
$
|
97,880
|
|
$
|
112,111
|
|
Per
share data - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$
|
1.61
|
|
$
|
1.41
|
|
$
|
1.04
|
|
$
|
.92
|
|
$
|
.89
|
|
Net
income
|
|
$
|
3.36
|
|
$
|
2.35
|
|
$
|
1.55
|
|
$
|
1.24
|
|
$
|
1.44
|
|
Weighted
average number of shares
|
|
|
87,719
|
|
|
89,224
|
|
|
86,171
|
|
|
78,800
|
|
|
77,866
|
|
Per
share data - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$
|
1.60
|
|
$
|
1.41
|
|
$
|
1.04
|
|
$
|
.92
|
|
$
|
.89
|
|
Net
income
|
|
$
|
3.27
|
|
$
|
2.31
|
|
$
|
1.54
|
|
$
|
1.24
|
|
$
|
1.43
|
|
Weighted
average number of shares
|
|
|
91,779
|
|
|
93,166
|
|
|
89,511
|
|
|
81,574
|
|
|
80,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
(at cost)
|
|
$
|
4,445,888
|
|
$
|
4,033,579
|
|
$
|
3,751,607
|
|
$
|
3,200,091
|
|
$
|
2,695,286
|
|
Total
assets
|
|
$
|
4,375,540
|
|
$
|
3,737,741
|
|
$
|
3,470,318
|
|
$
|
2,923,094
|
|
$
|
2,423,241
|
|
Debt
|
|
$
|
2,900,952
|
|
$
|
2,299,855
|
|
$
|
2,105,948
|
|
$
|
1,810,706
|
|
$
|
1,330,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
$
|
242,592
|
|
$
|
200,525
|
|
$
|
203,886
|
|
$
|
162,316
|
|
$
|
167,095
|
|
Cash
flows from investing activities
|
|
$
|
(314,686
|
)
|
$
|
(105,459
|
)
|
$
|
(349,654
|
)
|
$
|
(331,503
|
)
|
$
|
(182,161
|
)
|
Cash
flows from financing activities
|
|
$
|
100,407
|
|
$
|
(97,791
|
)
|
$
|
170,928
|
|
$
|
168,623
|
|
$
|
23,451
|
|
Cash
dividends per common share
|
|
$
|
1.86
|
|
$
|
1.76
|
|
$
|
1.66
|
|
$
|
1.56
|
|
$
|
1.48
|
|
Funds
from operations: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
$
|
294,909
|
|
$
|
209,552
|
|
$
|
133,911
|
|
$
|
97,880
|
|
$
|
112,111
|
|
Depreciation
and amortization
|
|
|
131,792
|
|
|
125,742
|
|
|
114,342
|
|
|
90,367
|
|
|
78,111
|
|
Gain
on sale of properties
|
|
|
(172,056
|
)
|
|
(87,561
|
)
|
|
(26,316
|
)
|
|
(7,273
|
)
|
|
(18,614
|
)
|
Total
|
|
$
|
254,645
|
|
$
|
247,733
|
|
$
|
221,937
|
|
$
|
180,974
|
|
$
|
171,608
|
|
______________
(1)
|
SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets"
requires the operating results and gain (loss) on the sale of operating
properties to be reported as discontinued
operations.
|
(2)
|
The
National Association of Real Estate Investment Trusts defines funds
from
operations as net income (loss) available to common shareholders
computed
in accordance with generally accepted accounting principles, excluding
gains or losses from sales of operating properties and extraordinary
items, plus depreciation and amortization of real estate assets,
including
our share of unconsolidated partnerships and joint ventures. We calculate
FFO in a manner consistent with the NAREIT definition. We believe
FFO is
an appropriate supplemental measure of operating performance because
it
helps investors compare our operating performance relative to other
REITs.
There can be no assurance that FFO presented by us is comparable
to
similarly titled measures of other REITs. FFO should not be considered
as
an alternative to net income or other measurements under GAAP as
an
indicator of our operating performance or to cash flows from operating,
investing or financing activities as a measure of liquidity. FFO
does not
reflect working capital changes, cash expenditures for capital
improvements or principal payments on
indebtedness.
|
The
following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the comparative summary of selected
financial data appearing elsewhere in this report. Historical results and trends
which might appear should not be taken as indicative of future operations.
Our
results of operations and financial condition, as reflected in the accompanying
financial statements and related footnotes, are subject to management's
evaluation and interpretation of business conditions, retailer performance,
changing capital market conditions and other factors which could affect the
ongoing viability of our tenants.
Executive
Overview
Weingarten
Realty Investors is a real estate investment trust organized under the Texas
Real Estate Investment Trust Act. We, and our predecessor entity, began the
ownership and development of shopping centers and other commercial real estate
in 1948. Our primary business is leasing space to tenants in the shopping and
industrial centers we own or lease. We also manage centers for joint ventures
in
which
we are partners or for other outside owners for which we charge fees.
We
operate a portfolio of properties includes neighborhood and community shopping
centers and industrial properties of approximately 65 million square feet.
We
have a diversified tenant base with our largest tenant comprising only 3% of
total rental revenues during 2006.
We
focus
on increasing Funds from Operations and growing dividend payments to our common
shareholders. We do this through hands-on leasing, management and selected
redevelopment of the existing portfolio of properties, through disciplined
growth from selective acquisitions and new developments, and through the
disposition of assets that no longer meet our ownership criteria. We do this
while remaining committed to maintaining a conservative balance sheet, a
well-staggered debt maturity schedule and strong credit agency ratings.
We
continue to maintain a strong, conservative capital structure, which provides
ready access to a variety of attractive capital sources. We carefully balance
obtaining low cost financing with minimizing exposure to interest rate movements
and matching long-term liabilities with the long-term assets acquired or
developed.
At
December 31, 2006, we owned or operated under long-term leases, either directly
or through our interest in joint ventures or partnerships, a total of 363
developed income-producing properties and 26 properties under various stages
of
construction and development. The total number of centers includes 322
neighborhood and community shopping centers located in Arizona, Arkansas,
California, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana,
Maine, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South
Carolina,
Tennessee, Utah, Texas, and Washington. We also owned 67 industrial projects
located in California, Florida, Georgia, Tennessee and Texas.
We
also
owned interests in 15 parcels of unimproved land held for future development
that totaled approximately 5.7 million square feet.
We
have
approximately 7,400 leases with 5,500 different tenants at December 31, 2006.
Leases
for our properties range from less than a year for smaller spaces to over 25
years for larger tenants. Rental revenues generally include minimum lease
payments, which often increase over the lease term, reimbursements of property
operating expenses, including ad valorem taxes, and additional rent payments
based on a percentage of the tenants' sales. The majority of our anchor tenants
are supermarkets, value-oriented apparel/discount stores and other retailers
or
service providers who generally sell basic necessity-type goods and services.
We
believe stability of our anchor tenants, combined with convenient locations,
attractive and well-maintained properties, high quality retailers and a strong
tenant mix, should ensure the long-term success of our merchants and the
viability of our portfolio.
In
assessing the performance of our properties, management carefully tracks the
occupancy of the portfolio. Occupancy for the total portfolio was 94.1% at
December 31, 2006 compared to 94.2% at December 31, 2005. We expect occupancy
to
remain at this high level or improve slightly in 2007. Another important
indicator of performance is the spread in rental rates on a same-space basis
as
we complete new leases and renew existing leases. We completed 1,264 new leases
or renewals during 2006 totaling 6.1 million square feet, increasing rental
rates an average of 7.5% on a cash basis.
In
the
first quarter of 2006, we articulated a new long-term growth strategy with
a
planned three-year implementation. The key elements of this strategy are as
follows:
· |
A
much greater focus on new development, including merchant development,
with $300 million in annual new development completions beginning
in 2009.
|
· |
Increased
use of joint ventures for acquisitions including the recapitalization
(or
partial sale) of existing assets, which provide the opportunity to
further
increase returns on investment through the generation of fee income
from
leasing and management services we will provide to the
venture.
|
· |
Further
recycling capital through the active disposition of non-core properties
and reinvesting the proceeds into properties with barriers to entry
within
high growth metropolitan markets. This, combined with our continuous
focus
on our assets, produces a higher quality portfolio with higher occupancy
rates and much stronger internal revenue
growth.
|
During
2006, we made excellent progress in the execution of this long-term growth
strategy as described in the following sections on new development, acquisitions
and joint ventures, and dispositions.
New
Development
At
December 31, 2006, we had 26 properties in various stages of development, up
from 10 properties under development at the end of 2005. We have invested $204
million to-date on these projects and, at completion, we estimate our total
investment to be $485 million. These properties are slated to open over the
next
two years with a projected return on investment of approximately 9% when
completed.
In
addition to these projects, we have significantly increased our development
pipeline with nine development sites under contract, which will represent an
investment of approximately $218 million. In addition to the nine development
sites under contract, we have another 22 development sites under preliminary
pursuit.
Merchant
development is a new program in which we develop a project with the objective
of
selling all or part of it, instead of retaining it in our portfolio on a
long-term basis. We generated $6.9 million (after-tax) from this program in
2006
adding $0.08 of earnings and FFO per share.
We
are
making excellent progress in new development including merchant development
activities. During 2006, we almost tripled the number of properties under
development and invested $167 million in our new development program.
Acquisitions
and Joint Ventures
In
2006,
we completed a record $1 billion of acquisitions, including $194 million bought
on behalf of joint venture partners. Properties acquired in 2006 included 34
shopping centers and seven industrial properties that added a total of 4.0
million square feet under management. During 2006, just over half of our
acquisitions were with institutional joint ventures.
We
formed
the following new joint venture partnerships in 2006:
· |
We
acquired seven neighborhood/community shopping centers in South Florida
in
a new joint venture with TIAA-CREF Global Real Estate;
|
· |
In
partnership with AEW Capital Management, on behalf of its institutional
client, we acquired four grocery-anchored centers and two power centers
in
Oregon and Washington, marking our entry into two desirable markets
-
Portland, Oregon and Seattle/Tacoma, Washington;
|
· |
We
also formed a joint venture with Mercantile Real Estate Advisors
and its
client, the AFL-CIO Building Investment Trust, to acquire and operate
industrial properties within target markets across the United States.
We
sold $123 million of our existing assets to the joint venture upon
formation. Including the $123 million, the partners plan to invest
up to
$500 million in total capital over the next two
years.
|
Acquisitions
are critical to our growth and a key component of our strategy. However, intense
competition for good quality assets has driven asset prices up and returns
down.
Partnering with institutional investors through joint ventures enables us to
acquire high quality assets in our target markets while also meeting our
financial return objectives. We benefit from access to lower-cost capital as
well as leveraging our expertise to provide fee-based services, such as the
acquisition, leasing, and management of properties, to the joint
ventures.
Dispositions
During
2006, we sold 21 shopping centers and four industrial projects representing
3.6
million square feet from our share of the portfolio. Sale proceeds from these
dispositions totaled $316 million and generated gains of $150 million. We also
sold an 80% interest in two property portfolios to two joint ventures totaling
$358 million. The proceeds from these dispositions, combined with the joint
venture program, provided more than 70% of the capital required for the 2006
acquisitions and reduced the need to issue additional common equity or incur
additional debt.
Capitalizing
on strong demand and favorable prices for real estate assets during 2006, we
completed a record level of asset sales. Dispositions are part of an on-going
portfolio management process where we prune our portfolio of properties that
do
not meet our geographic or growth targets and provide capital to recycle into
properties that have barrier-to-entry locations within high growth metropolitan
markets. Over time we expect this to produce a portfolio with higher occupancy
rates and much stronger internal revenue growth.
Summary
of Critical Accounting Policies
Our
discussion and analysis of financial condition and results of operations is
based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities
and contingencies as of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. We evaluate
our
assumptions and estimates on an on-going basis. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.
Revenue
Recognition
Rental
revenue is generally recognized on a straight-line basis over the life of the
lease, which begins the date the leasehold improvements are substantially
complete, if owned by us, or the date the tenant takes control of the space,
if
the leasehold improvements are owned by the tenant. Revenue from tenant
reimbursements of taxes, maintenance expenses and insurance is recognized in
the
period the related expense is recorded. Revenue based on a percentage of
tenants' sales is recognized only after the tenant exceeds their sales
breakpoint.
Partially
Owned Joint Ventures and Partnerships
To
determine the method of accounting for partially owned joint ventures or
partnerships, we first apply the guidelines set forth in FASB Interpretation
No.
46R, "Consolidation of Variable Interest Entities." Based upon our analysis,
we
have determined that we have no variable interest entities.
Partially
owned joint ventures or partnerships over which we exercise financial and
operating control are consolidated in our financial statements. In determining
if we exercise financial and operating control, we consider factors such as
ownership interest, authority to make decisions, kick-out rights and substantive
participating rights. Partially owned joint ventures and partnerships where
we
have the ability to exercise significant influence, but do not exercise
financial and operating control, are accounted for using the equity
method.
Property
Real
estate assets are stated at cost less accumulated depreciation, which, in the
opinion of management, is not in excess of the individual property's estimated
undiscounted future cash flows, including estimated proceeds from disposition.
Depreciation is computed using the straight-line method, generally over
estimated useful lives of 18-40 years for buildings and 10-20 years for parking
lot surfacing and equipment. Major replacements where the betterment extends
the
useful life of the asset are capitalized and the replaced asset and
corresponding accumulated depreciation are removed from the accounts. All other
maintenance and repair items are charged to expense as incurred.
Acquisitions
of properties are accounted for utilizing the purchase method and, accordingly,
the results of operations of an acquired property are included in our results
of
operations from the respective dates of acquisition. We have used estimates
of
future cash flows and other valuation techniques to allocate the purchase price
of acquired property among land, buildings on an "as if vacant" basis, and
other
identifiable intangibles. Other identifiable intangible assets and liabilities
include the effect of out-of-market leases, the value of having leases in place
(lease origination and absorption costs), out-of-market assumed mortgages and
tenant relationships.
Property
also includes costs incurred in the development of new operating properties
and
properties in our merchant development program. These properties are
carried at costs and no depreciation is recorded on these assets. These costs
include preacquisition costs directly identifiable with the specific project,
development and construction costs, interest and real estate taxes. Indirect
development costs, including salaries and benefits, travel and other related
costs that are clearly attributable to the development of the property, are
also
capitalized. The capitalization of such costs ceases at the earlier of one
year
from the completion of major construction or when the property, or any completed
portion, becomes available for occupancy.
Property
also includes costs for tenant improvements paid by us, including reimbursements
to tenants for improvements that are owned by us and will remain our property
after the lease expires.
Our
properties are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount of the property may not be recoverable. In
such an event, a comparison is made of either the current and projected
operating cash flows of each such property into the foreseeable future on an
undiscounted basis or the estimated net sales price to the carrying amount
of
such property. Such carrying amount is adjusted, if necessary, to the estimated
fair value to reflect an impairment in the value of the asset.
Some
of
our properties are held in single purpose entities. A single purpose entity
is a
legal entity typically established at the request of a lender solely for the
purpose of owning a property or group of properties subject to a mortgage.
There
may be restrictions limiting the entity’s ability to engage in an activity other
than owning or operating the property, assume or guaranty the debt of any other
entity, or dissolve itself or declare bankruptcy before the debt has been
repaid. Most of our single purpose entities are 100% owned by us and are
consolidated in our financial statements.
Interest
Capitalization
Interest
is capitalized on land under development and buildings under construction based
on rates applicable to borrowings outstanding during the period and the weighted
average balance of qualified assets under development/construction during the
period.
Deferred
Charges
Debt
and
lease costs are amortized primarily on a straight-line basis, which approximates
the effective interest method, over the terms of the debt and over the lives
of
leases, respectively. Lease costs represent the initial direct costs incurred
in
origination, negotiation and processing of a lease agreement. Such costs include
outside broker commissions and other independent third party costs as well
as
salaries and benefits, travel and other related internal costs incurred in
completing the leases. Costs related to supervision, administration,
unsuccessful origination efforts and other activities not directly related
to
completed lease agreements are charged to expense as incurred.
Sales
of Real Estate
Sales
of
real estate include the sale of shopping center pads, property adjacent to
shopping centers, shopping center properties, merchant development properties
and investments in real estate ventures.
We
recognize profit on sales of real estate, including merchant development sales,
in accordance with SFAS No. 66, “Accounting for Sales of Real Estate.” Profits
are not recognized until (a) a sale is consummated; (b) the buyer’s initial and
continuing investments are adequate to demonstrate a commitment to pay; (c)
the
seller’s receivable is not subject to future subordination; and (d) we have
transferred to the buyer the usual risks and rewards of ownership in the
transaction, and we do not have a substantial continuing involvement with the
property.
We
recognize gains on the sale of real estate to joint ventures in which we
participate to the extent we receive cash from the joint
venture.
Accrued
Rent and Accounts Receivable
Receivable
balances outstanding include base rents, tenant reimbursements and receivables
attributable to the straight-lining of rental commitments. An allowance for
the
uncollectible portion of accrued rents and accounts receivable is determined
based upon an analysis of balances outstanding, historical bad debt levels,
tenant credit worthiness and current economic trends.
Income
Taxes
We
have
elected to be treated as a Real Estate Investment Trust (REIT) under the
Internal Revenue Code of 1986, as amended. As a REIT, we generally will not
be
subject to corporate level federal income tax on taxable income we distribute
to
our shareholders. To be taxed as a REIT we must meet a number of requirements
including meeting defined percentage tests concerning the amount of our assets
and revenues that come from, or are attributable to, real estate operations.
As
long as we distribute at least 90% of the taxable income of the REIT to our
shareholders as dividends, we will not be taxed on the portion of our income
we
distribute as dividends unless we have ineligible transactions.
The
Tax
Relief Extension Act of 1999 gave REITs the ability to conduct activities which
a REIT was previously precluded from doing as long as they are performed in
entities which have elected to be treated as taxable REIT subsidiaries under
the
IRS code. These activities include buying or developing properties with the
express purpose of selling them. We conduct certain of these activities in
taxable REIT subsidiaries that we have created. We calculate and record income
taxes in our financial statements based on the activities in those entities.
We
also record deferred taxes for the temporary tax differences that have resulted
from those activities as required under SFAS No. 109, “Accounting for Income
Taxes.”
Results
of Operations
Comparison
of the Year Ended December 31, 2006 to the Year Ended December 31,
2005
Revenues
Total
revenues were $561.4 million for the year ended 2006 versus $510.4 million
for
the year ended 2005, an increase of $51.0 million or 10%. This increase resulted
primarily from an increase in rental revenues of $50.4 million.
Property
acquisitions and new development activity contributed $35.6 million of the
rental income increase. The remaining increase of $14.8 million resulted from
1,264 renewals and new leases, comprising 6.1 million square feet at an average
rental rate increase of 7.5%.
Occupancy
(leased space) of the portfolio as compared to the prior year was as
follows:
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
|
95.0
|
%
|
|
94.6
|
%
|
Industrial
|
|
|
91.2
|
%
|
|
93.1
|
%
|
Total
|
|
|
94.1
|
%
|
|
94.2
|
%
|
Expenses
Total
expenses for 2006 were $308.4 million versus $270.0 million in 2005, an increase
of $38.4 million or 14.2%.
The
increases in 2006 for depreciation and amortization expense ($10.5 million),
operating expenses ($14.8 million), ad valorem taxes ($6.6 million) and general
and administrative expenses ($6.4 million) were primarily a result of the
properties acquired and developed during the year, an increase in property
insurance expenses as a result of the hurricanes experienced in 2005, and
increases associated with headcount increases related to the growth of the
portfolio. Overall, direct operating costs and expenses (operating and ad
valorem tax expense) of operating our properties as a percentage of rental
revenues were 28% in 2006 and 27% in 2005.
Interest
Expense
Interest
expense totaled $146.9 million for 2006, up $16.1 million or 12.3% from 2005.
The components of interest expense were as follows (in thousands):
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Gross
interest expense
|
|
$
|
161,894
|
|
$
|
140,317
|
|
Over-market
mortgage adjustment of acquired properties
|
|
|
(7,335
|
)
|
|
(6,927
|
)
|
Capitalized
interest
|
|
|
(7,616
|
)
|
|
(2,629
|
)
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
146,943
|
|
$
|
130,761
|
|
Gross
interest expense totaled $161.9 million in 2006, up $21.6 million or 15.4%
from
2005. The increase in gross interest expense was due to an increase in the
average debt outstanding from $2.2 billion in 2005 to $2.5 billion in 2006
at a
weighted average interest rate of 6.0% in 2006 and 6.1% for 2005. Capitalized
interest increased $5.0 million due to an increase in new development activity,
and the over-market mortgage adjustment increased by $.4 million.
Interest
and Other Income
Interest
and other income was $9.0 million in 2006 versus $2.9 million in 2005, an
increase of $6.1 million or 210%. This increase was attributable to interest
earned from a qualified escrow account for the purposes of completing like-kind
exchanges, construction loans associated with our new development activities,
excess proceeds from our $575 million Convertible Debt Offering and assets
held
in a grantor trust related to our deferred compensation plan.
Equity
in Earnings of Joint Ventures
Our
equity in earnings of joint ventures was $14.7 million in 2006 versus $6.6
million in 2005, an increase of $8.1 million or 123%. This increase was
attributable primarily to our share of the gains generated from the disposition
of two shopping centers in Texas totaling $4.0 million, a gain of $1.1 million
associated with land and merchant development activities in Texas and Washington
and incremental income from our investments in newly formed joint ventures
in
2005 and 2006 for the acquisition and development of retail and industrial
properties.
Gain
on Sale of Properties
The
gain
of $22.5 million and $22.3 million in 2006 and 2005, respectively, resulted
primarily from the sale of an 80% interest in five industrial properties in
the
San Diego, Memphis and Atlanta markets and two retail centers in Louisiana,
respectively, in which we retained a continuing 20% operating
interest.
Gain
on Land and Merchant Development Sales
Gain
on
land and merchant development sales of $7.1 million in 2006 resulted from the
gain from the sale of the Timber Springs shopping center in Orlando, Florida
and
the sale of three parcels of land in Arizona (1) and Texas (2). The activity
in
2005 resulted from the sale of a parcel of land in Orlando,
Florida.
Provision
for Income Taxes
The
amount reported in 2006 includes the tax expense in our taxable REIT subsidiary
and the deferred tax impact attributable to the Texas margin tax enacted in
the
second quarter of 2006.
Income
from Discontinued Operations
Income
from discontinued operations was $153.4 million in 2006 versus $83.5 million
in
2005, an increase of $69.9 million or 83.7%. This increase was due to the
disposition of 23 properties totaling 3.5 million square feet that provided
sales proceeds of $308.2 million and generated gains of $145.5 million. The
2005
caption includes the operating results of properties disposed in 2006 and 2005
as well as the gain from the disposition of 16 properties and a vacant building
totaling 1.3 million square feet that provided sales proceeds of $133.8 million
and generated gains of $65.5 million.
Results
of Operations
Comparison
of the Year Ended December 31, 2005 to the Year Ended December 31,
2004
Revenues
Total
revenues increased by $49.5 million or 10.7% in 2005 ($510.4 million in 2005
versus $460.9 million in 2004). This increase resulted primarily from the
increase in rental revenues of $51.4 million and a decrease in other income
of
$1.9 million. Property acquisitions and new development activity contributed
$41.3 million of the rental income increase with $14.2 million resulting from
our existing properties, based on the occupancy and average rental rate factors
described below. Offsetting these rental income increases was a decrease of
$4.1
million, which resulted from the sale of an 80% interest in two retail centers
in Louisiana.
Occupancy
(leased space) of the portfolio as compared to the prior year was as
follows:
|
|
December
31,
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
|
94.6
|
%
|
|
94.8
|
%
|
Industrial
|
|
|
93.1
|
%
|
|
92.6
|
%
|
Total
|
|
|
94.2
|
%
|
|
94.3
|
%
|
In
2005
we completed 1,298 renewals and new leases comprising 6.8 million square feet
at
an average rental rate increase of 7.0%.
Other
income decreased by $1.9 million or 22.9% in 2005 ($6.4 million in 2005 versus
$8.3 million in 2004). This decrease was due primarily to a decrease in lease
cancellation payments from various tenants.
Expenses
Total
expenses increased by $23.0 million or 9.3% in 2005 ($270.0 million in 2005
versus $247.0 million in 2004).
The
increases in 2005 for depreciation and amortization expense ($13.2 million),
operating expenses ($5.1 million) and ad valorem taxes ($6.9 million) were
primarily a result of the properties acquired and developed during the year.
Overall, direct operating costs and expenses (operating and ad valorem tax
expense) of operating our properties as a percentage of rental revenues were
27%
in both 2005 and 2004.
General
and administrative expenses increased by $1.3 million or 8.1% in 2005 ($17.4
million in 2005 versus $16.1 million in 2004). This increase resulted primarily
from normal compensation increases as well as increases in staffing necessitated
by the growth in the portfolio. General and administrative expense as a
percentage of rental revenues was 3% in 2005 and 4% in 2004.
Impairment
loss of $3.6 million in 2004 related to a parcel of land held for development
in
Houston, Texas, which was sold in December 2004, and one retail property in
Houston and one retail property in Port Arthur, Texas.
Interest
Expense
Interest
expense increased by $13.7 million or 11.7% in 2005 ($130.8 million in 2005
versus $117.1 million in 2004). The components of interest expense were as
follows (in thousands):
|
|
Year
Ended December 31,
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Gross
interest expense
|
|
$
|
140,317
|
|
$
|
125,069
|
|
Interest
on preferred shares subject to mandatory redemption
|
|
|
|
|
|
2,007
|
|
Over-market
mortgage adjustment of acquired properties
|
|
|
(6,927
|
)
|
|
(4,988
|
)
|
Capitalized
interest
|
|
|
(2,629
|
)
|
|
(4,992
|
)
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
130,761
|
|
$
|
117,096
|
|
Gross
interest expense increased $15.2 million ($140.3 million in 2005 versus $125.1
million in 2004) due to an increase in the average debt outstanding from $2.0
billion in 2004 to $2.2 billion in 2005 and an increase in the weighted average
interest rate between the two periods from 5.9% in 2004 to 6.1% in 2005. The
increase in the over-market mortgage adjustment of $1.9 million resulted from
our property acquisitions. Capitalized interest decreased $2.4 million due
to
completion of new development projects in 2004.
Loss
on Redemption of Preferred Shares
Loss
on
redemption of preferred shares of $3.6 million in 2004 represents the
unamortized original issuance costs related to the Series C Cumulative Preferred
Shares redeemed in April 2004.
Equity
in Earnings of Joint Ventures
Equity
in
earnings of joint ventures increased by $1.2 million or 22.2% in 2005 ($6.6
million in 2005 versus $5.4 million in 2004). This increase is due primarily
to
the acquisition of three retail properties in two newly formed unconsolidated
joint ventures during 2005 and a gain from the disposition of an unimproved
land
tract. Also contributing to this increase is the sale of an 80% interest in
two
retail properties during 2005, which are held in tenancy-in-common arrangements
in which we retained a 20% interest, and the acquisitions of five retail
properties in 2004, each through a 50% unconsolidated joint venture.
Income
Allocated to Minority Interests
Income
allocated to minority interests increased by $1.2 million or 24.5% in 2005
($6.1
million in 2005 versus $4.9 million in 2004). This increase resulted primarily
from the acquisition of five retail properties during 2004 and three retail
properties in June 2005 through limited partnerships utilizing the DownREIT
structure. These limited partnerships are consolidated in our consolidated
financial statements because we exercise financial and operating control.
Gain
on Sale of Properties
Gain
on
sale of properties increased by $20.8 million in 2005 ($22.3 million in 2005
versus $1.5 million in 2004). The increase was due primarily to the sale of
an
80% interest in two shopping centers in Lafayette and Shreveport, Louisiana
totaling 295,000 square feet. Due to our continuing involvement with the leasing
and managing of operations for both properties, the operating results of these
properties have not been reclassified and reported as discontinued operations.
The gain on the sale of our 80% interest in these two properties totaled $21.7
million.
Gain
on Land and Merchant Development Sales
Gain
on
land sales of $.8 million represents the gain from the sale of an unimproved
land tract in Orlando, Florida.
Income
from Discontinued Operations
Income
from discontinued operations increased by $38.7 million ($83.5 million in 2005
versus $44.8 million in 2004). Included in this caption for 2005 are the
operating results of properties disposed in 2006 and the disposition of 16
properties and a vacant building totaling 1.3 million square feet that provided
sales proceeds of $133.8 million and generated gains of $65.5 million. Included
in this caption for 2004 are the operating results of properties disposed in
2006 and 2005 plus the disposition of five properties and one free-standing
building totaling .7 million square feet in 2004. The 2004 dispositions provided
sales proceeds of $49.9 million and generated gains of $24.9 million.
Effects
of Inflation
We
have
structured our leases in such a way as to remain largely unaffected should
significant inflation occur. Most of the leases contain percentage rent
provisions whereby we receive increased rentals based on the tenants' gross
sales. Many leases provide for increasing minimum rentals during the terms
of
the leases through escalation provisions. In addition, many of our leases are
for terms of less than ten years, which allow us to adjust rental rates to
changing market conditions when the leases expire. Most of our leases also
require the tenants to pay their proportionate share of operating expenses
and
ad valorem taxes. As a result of these lease provisions, increases due to
inflation, as well as ad valorem tax rate increases, generally do not have
a
significant adverse effect upon our operating results as they are absorbed
by
our tenants.
Capital
Resources and Liquidity
Our
primary liquidity needs are payment of our common and preferred dividends,
maintaining and operating our existing properties, payment of our debt service
costs, and funding planned growth. We anticipate that cash flows from operating
activities will continue to provide adequate capital for all common and
preferred dividend payments and debt service costs, as well as the capital
necessary to maintain and operate our existing properties.
Primary
sources of capital for funding our acquisitions and new development programs
are
our $400 million revolving credit facility, cash generated from sales of
properties that no longer meet our investment criteria, cash flow generated
by
our operating properties and proceeds from capital issuances as needed. Amounts
outstanding under the revolving credit agreement are retired as needed with
proceeds from the issuance of long-term unsecured debt, common and preferred
equity, cash generated from dispositions of properties, and cash flow generated
by our operating properties. As of December 31, 2006 the balance outstanding
on
our $400 million revolving credit facility was $18.0 million, and there were
no
borrowings under our $20 million credit facility, which we use for cash
management purposes.
Our
capital structure also includes nonrecourse secured debt that we assume in
conjunction with our acquisitions program. We also have nonrecourse debt secured
by acquired or developed properties held in several of our joint ventures.
We
hedge the future cash flows of certain debt transactions, as well as changes
in
the fair value of our debt instruments, principally through interest rate swaps
with major financial institutions. We generally have the right to sell or
otherwise dispose of our assets except in certain cases where we are required
to
obtain a third party consent, such as assets held in entities in which we have
less than 100% ownership.
Investing
Activities:
Acquisitions
Retail
Properties.
During
2006 we invested approximately $781 million in the acquisition of operating
retail properties. Approximately $402 million was invested in 17 shopping
centers and $54 million was invested in two
unconsolidated joint ventures
to
acquire 11 retail properties. We also invested $325 million in the Woolbright
properties portfolio, 80% of which was subsequently bought from us as part
of a
joint venture arrangement with TIAA-CREF Global Real Estate. These combined
acquisitions added 4.0 million square feet to our share of the portfolio.
In
March
2006 we acquired Fresh Market Shoppes Shopping Center, an 87,000 square foot
shopping center located in Hilton Head, South Carolina. Fresh Market and
Bonefish Grill anchor this specialty retail center. We also acquired The Shoppes
at Paradise Isle, a 172,000 shopping center located in Destin, Florida. Best
Buy, Linens-N-Things, PetsMart and Office Depot anchor this property. Both
of
these shopping centers were acquired through a 25%-owned unconsolidated joint
venture.
In
April
2006 Valley Shopping Center, a 103,000 square foot shopping center anchored
by
Raley’s Supermarket was acquired. The center has below-market rents providing
strong growth opportunities and is in close proximity to our regional office
in
Sacramento.
In
May
2006 Brownsville Commons, an 82,000 square foot shopping center including a
54,000 square foot (corporate owned) Kroger supermarket, was acquired in Powder
Springs, Georgia, a suburb of Atlanta. The Shoppes of Parkland, was also
acquired, which is a 146,000 square foot shopping center located in Parkland,
Florida and is anchored by BJ’s Wholesale. This center services two upper income
neighborhoods, Parkland and Boca Raton.
In
June
2006 we purchased a property in California and acquired a shopping center in
Florida through a 25%-owned unconsolidated joint venture. Freedom Centre,
anchored by Ralph’s and Rite Aid, is a 151,000 square foot shopping center
located in Freedom, California. Indian Harbour Place is a 164,000 square foot
shopping center located in Melbourne, Florida and is anchored by Publix.
In
July
2006 we acquired Mendenhall Commons, an 80,000 square foot grocery-anchored
neighborhood shopping center located in the affluent East Memphis submarket
of
Memphis, Tennessee. Kroger anchors the center. We also acquired the Regency
Shopping Center, located in Lexington, Kentucky, and Little Brier Creek Lane
in
Raleigh, North Carolina. Regency Shopping Center is a 136,000 square foot
shopping center, which is anchored by Kroger (corporate owned), Michael’s and TJ
Maxx. Little Brier Creek Lane is a 63,000 square foot shopping center anchored
by Pei Wei.
Quesada
Commons, a 59,000 square foot shopping center, and Shoppes of Port Charlotte,
a
41,000 square foot shopping center, were acquired through a 25%-owned
unconsolidated joint venture in July 2006. Both centers are located in Port
Charlotte, Florida and are recently constructed shopping centers. Publix,
Florida’s dominant supermarket chain, anchors Quesada Commons, and Petco and
Panera Bread anchor the Shoppes of Port Charlotte.
In
August
2006 we acquired the North American Properties portfolio consisting of five
retail properties, including four properties in metropolitan Atlanta, Georgia
and one in Sanford, Florida, a suburb north of Orlando. The properties are
all
new construction and are anchored by strong national tenants as described in
the
below table:
Center
Name
|
Square
Feet of Property*
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Brookwood
Marketplace
|
253,000
|
|
Suwannee
(Atlanta), GA
|
SuperTarget*,
Home Depot, OfficeMax
|
|
96%
|
Camp
Creek Phase II
|
196,000
|
|
Atlanta,
GA
|
SuperTarget*,
Circuit City
|
|
99%
|
Lakeside
Marketplace
|
322,000
|
|
Acworth
(Atlanta), GA
|
SuperTarget*,
Circuit City, Ross Dress for Less, PETCO, OfficeMax
|
|
100%
|
Publix
at Princeton Lakes
|
68,000
|
|
Atlanta,
GA
|
Publix
|
|
100%
|
Marketplace
at Seminole Towne Center
|
494,000
|
|
Sanford
(Orlando), FL
|
SuperTarget*,
Circuit City, Linens ‘n Things, Marshalls, PETCO
|
|
99%
|
* Target
owns its own property and is not part of the transaction.
The
purchase agreement allows for the subsequent development and leasing of an
additional phase of Brookwood Marketplace by the property seller. If the terms
of the purchase agreement are met by the seller, the purchase price would be
increased by approximately $6.9 million. This agreement expires in August
2008.
In
September 2006 Dallas Commons and Reynolds Crossing were acquired in Atlanta,
Georgia. Dallas Commons is a 95,000 square foot shopping center and Reynolds
Crossing is an 116,000 square foot shopping center. Both centers are anchored
by
a 70,000 square foot (corporate owned) Kroger supermarket.
The
Woolbright Properties Portfolio was acquired, which consisted of seven
neighborhood/community anchored retail shopping centers. Five of the centers
were purchased in September 2006 with Alafaya Square and the Marketplace at
Dr.
Phillips purchased in early October 2006. This acquisition added 1.3 million
square feet to our portfolio, and represented a total investment of $325
million. All seven properties are located in highly desirable locations within
Florida’s three largest metropolitan markets of South Florida, Orlando, and
Tampa/St. Petersburg. The centers are leased to a diverse mix of strong national
retailers as described in the table below:
Center
Name
|
Square
Feet of Property
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Alafaya
Square
|
176,000
|
|
Oviedo
(Orlando), FL
|
Publix,
Planet Fitness
|
|
100%
|
Marketplace
at Dr. Phillips
|
328,000
|
|
Orlando,
FL
|
Albertson’s,
Stein Mart, HomeGoods, Office Depot
|
|
99%
|
East
Lake Woodlands
|
145,000
|
|
Palm
Harbor (Tampa), FL
|
Publix,
Walgreens
|
|
91%
|
International
Drive
Value Center
|
186,000
|
|
Orlando,
FL
|
Bed
Bath & Beyond, Ross, TJ Maxx
|
|
100%
|
Kendall
Corners
|
96,000
|
|
Miami,
FL
|
Ashley
Furniture
|
|
100%
|
Palm
Lakes Plaza
|
114,000
|
|
Maragate
(Ft. Lauderdale), FL
|
Publix,
CVS
|
|
99%
|
South
Dade Shopping Center
|
220,000
|
|
Miami,
FL
|
Publix,
Bed Bath & Beyond, PETCO
|
|
100%
|
In
November 2006, 80% of the Woolbright Properties Portfolio was sold as part
of a
joint venture arrangement with TIAA-CREF Global Real Estate.
In
November 2006 we purchased six properties, four in Washington and two in Oregon
through a 20%-owned unconsolidated joint venture. The centers are leased to
a
diverse mix of strong national retailers as described in the table
below:
Center
Name
|
Square
Feet of Property
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Mukilteo
Speedway Center
|
90,000
|
|
Lynnwood
(Seattle), WA
|
Food
Emporium, Bartell Drug
|
|
96%
|
Meridian
Town Center
|
143,000
|
|
Puyallup
(Tacoma), WA
|
Safeway,
JoAnn’s
|
|
100%
|
Rainier
Valley Square
|
107,000
|
|
Seattle,
WA
|
Safeway,
Long Drugs
|
|
100%
|
South
Hill Center
|
134,000
|
|
Puyallup
(Tacoma), WA
|
Best
Buy, Bed Bath & Beyond and Ross
|
|
99%
|
Clackamas
Square
|
137,000
|
|
Portland,
OR
|
TJ
Maxx
|
|
100%
|
Raleigh
Hills Plaza
|
40,000
|
|
Portland,
OR
|
Walgreen,
New Season Market
|
|
100%
|
In
December 2006 we acquired Galleria Shopping Center in Charlotte, North Carolina
and Charleston Commons in Las Vegas, Nevada. Galleria is a 316,000 square foot
shopping center anchored by Cato Corporation and Dollar Tree. Charleston
Commons, a 338,000 square foot shopping center, is anchored by Walmart, Office
Max, Ross and PetSmart. We also acquired our partner’s share of Heritage
Station, which is located in Wake Forest, North Carolina. Heritage Station
is a
62,000 square foot shopping center that is anchored by Harris
Teeter.
Industrial
Properties.
During
2006 we invested approximately $82 million in the acquisition of seven
industrial properties totaling 1.4 million square feet.
In
February 2006 we acquired the McGraw Hill Distribution Center, a single tenant
warehouse of 418,000 square feet located in De Soto, Texas.
In
June
2006 we acquired two vacant industrial warehouse buildings in San Diego,
California at 1725 and 1855 Dornoch Court. These state-of-the-art buildings,
aggregating 317,000 square feet, are located within one and a half miles of
our
Siempre Viva Business Park. Based on the high demand for top quality space
in
this area, we anticipate leasing both newly acquired buildings within the next
year.
In
October 2006 we acquired Midpoint I-20 Distribution Center, a 253,000 square
foot property located in Arlington, Texas.
In
November 2006
we
acquired Hopewell Industrial Center in
Tampa,
Florida and Freeport Commerce Center located in Irving, Texas. These centers
aggregate 224,000 and 51,000 square feet, respectively.
In
December 2006 we acquired 1919 North Loop West, an office building adjacent
to
our corporate headquarters in Houston, Texas where we intend to relocate some
of
our administrative operations. The building contains 140,000 square feet.
The
cash
requirements for these acquisitions were initially financed under our revolving
credit facilities, using available cash generated from dispositions of
properties or using cash flow generated by our operating properties.
Dispositions
Retail
Properties. In
2006
we sold 19 wholly-owned shopping centers totaling 2.9 million square feet of
building area. Sales proceeds from these retail dispositions totaled $292
million and generated gains of $141 million. We also sold two joint venture
properties totaling 97,000 square feet, and sales proceeds totaled $8 million
and generated gains of $4 million.
Industrial
Properties. During
2006 we sold four industrial properties totaling 616,000 square feet. We also
formed an industrial joint venture where five properties totaling 2.1 million
square feet were contributed to a joint venture, and we retained a 20% interest.
Sales proceeds from these dispositions totaled $115 million and generated gains
of $26 million.
New
Development and Capital Expenditures
At
December 31, 2006, we had 26 projects under construction or in preconstruction
stages. The total square footage is approximately 7.6 million. These properties
are slated to open over the next two years.
Our
new
development projects are financed initially under our revolving credit
facilities, using available cash generated from dispositions of properties
or
using cash flow generated by our operating properties.
Capital
expenditures for additions to the existing portfolio, acquisitions, new
development and our share of investments in unconsolidated joint ventures
totaled $1.1 billion in 2006 and $455.1 million in
2005.
Financing
Activities:
Debt
Total
debt outstanding increased to $2.9 billion at December 31, 2006 from $2.3
billion at December 31, 2005, due primarily to funding of acquisitions and
new
development activity. Total debt at December 31, 2006 includes $2.8 billion
of
which interest rates are fixed and $115 million, which bears interest at
variable rates, including the effect of $75 million of interest rate swaps.
Additionally, debt totaling $1 billion was secured by operating properties
while
the remaining $1.9 billion was unsecured.
In
February 2006 we amended and restated our $400 million unsecured revolving
credit facility held by a syndicate of banks. This amended facility has an
initial four-year term and provides a one-year extension option available at
our
request. Borrowing rates under this facility float at a margin over LIBOR,
plus
a facility fee. The borrowing margin and facility fee, which are currently
37.5
and 12.5 basis points, respectively, are priced off a grid that is tied to
our
senior unsecured credit rating. This facility includes a competitive bid feature
where we are allowed to request bids for borrowings up to $200 million from
the
syndicate banks. Additionally, the facility contains an accordion feature,
which
allows us to increase the facility amount up to $600 million. The available
balance under our revolving credit agreement was $371.9 million and $175.1
million at December 31, 2006 and 2005, respectively. As of February 15, 2007,
there was no outstanding balance under this facility. We also maintain a $20
million unsecured and uncommitted overnight facility that is used for cash
management purposes and as of February 15, 2007 there were no borrowings under
this facility. We are in full compliance with the covenants of our $400 million
unsecured revolving credit facility.
In
August
2006 we issued $575 million of 3.95% convertible senior notes due 2026. The
net
proceeds from the sale of the debentures were used for general business purposes
including the repurchase of 4.3 million of our common shares of beneficial
interest and to reduce amounts outstanding under our revolving credit
facilities. The debentures are convertible under certain circumstances for
our
common shares of beneficial interest at an initial conversion rate of 20.3770
common shares per $1,000 of principal amount of debentures (an initial
conversion price of $49.075). Upon the conversion of notes, we will deliver
cash
for the principal return, as defined, and cash or common shares, at our option,
for the excess of the conversion value, as defined, over the principal return.
The debentures are redeemable for cash at our option beginning in 2011 for
the
principal amount plus accrued and unpaid interest. Holders of the debentures
have the right to require us to repurchase their debentures for cash equal
to
the principal of the notes plus accrued and unpaid interest in 2011, 2016
and
2021 and in the event of a change in control.
In
December 2006 we issued $75 million of ten year unsecured fixed rate medium
term
notes at 6.1% including the effect of an interest rate swap that hedged the
transaction. Proceeds from this issuance were used to repay balances under
our
revolving credit facilities, to cash settle a forward hedge and for general
business purposes.
At
December 31, 2006, we had five interest rate swap contracts designated as fair
value hedges with an aggregate notional amount of $75 million that convert
fixed
rate interest payments at rates ranging from 4.2% to 6.8% to variable interest
payments. Also, at December 31, 2006, we had two forward-starting interest
rate
swap contracts with an aggregate notional amount of $118.6 million. These
contracts have been designated as cash flow hedges and mitigate the risk of
increasing interest rates on forecasted long-term debt issuances over a maximum
period of two years.
In
May
2006 we entered into a forward-starting interest rate swap with a notional
amount of $74.0 million. In December 2006 we terminated this rate swap in
conjunction with the issuance of $75.0 million of medium term notes. The
termination fee of $4.1 million is being amortized over the life of the medium
term note.
In
June
2006 a $5 million swap matured in conjunction with the maturity of the
associated medium term note. This contract was designated as a fair value
hedge.
The
interest rate swaps increased interest expense and decreased net income by
$.5
million, $1.3 million, and $3.5 million in 2006, 2005, and 2004, respectively,
and increased the average interest rate of our debt by .02%, .1%, and .2% in
2006, 2005, and 2004, respectively. We could be exposed to credit losses in
the
event of nonperformance by the counter-party; however, management believes
the
likelihood of such nonperformance is remote.
In
conjunction with acquisitions completed during 2006 and 2005, we assumed
$140.7
million and $135.3 million, respectively, of non-recourse debt secured by
the
related properties.
Equity
Common
and preferred dividends increased to $173.0 million in 2006, compared to $167.2
million for 2005. The dividend rate for our common shares of beneficial interest
for each quarter of 2006 was $.465 compared to $.44 for the same periods in
2005. Our dividend payout ratio on common equity for 2006, 2005 and 2004
approximated 64.0%, 63.4% and 65.3%, respectively, based on basic funds from
operations for the respective periods.
In
February 2006 our board of trust managers authorized up to $100 million for
the
purchase of outstanding common shares of beneficial interest in 2006. Share
repurchases may be made in the open market or in privately negotiated
transactions. In July 2006 our board of trust managers authorized the
repurchase of our common shares of beneficial interest to a total of $207
million, and we used $167.6 million of the net proceeds from the $575 million
debt offering to purchase 4.3 million common shares of beneficial interest
at
$39.26 per share.
On
January 30, 2007, we issued $200 million of depositary shares. Each depositary
share represents one-hundredth of a 6.5% Series F Cumulative Redeemable
Preferred Share. The depositary shares are redeemable, in whole or in part,
on
or after January 30, 2012 at our option, at a redemption price of $25 per
depositary share, plus any accrued and unpaid dividends thereon. The depositary
shares are not convertible or exchangeable for any of our other property or
securities. The Series F Preferred Shares pay a 6.5% annual dividend and have
a
liquidation value of $2,500 per share. Net proceeds of $194.4 million were
used to repay amounts outstanding under our credit facilities and for general
business purposes.
In
September 2004 the SEC declared effective two additional shelf registration
statements totaling $1.55 billion, of which $1.35 billion was available as
of
February 15, 2007. In addition, we have $85.4 million available as of February
15, 2007 under our $1 billion shelf registration statement, which became
effective in April 2003. We will continue to closely monitor both the debt
and
equity markets and carefully consider our available financing alternatives,
including both public and private placements.
Contractual
Obligations
The
following table summarizes our principal contractual obligations as of December
31, 2006 (in thousands):
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
Thereafter
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgages
and Notes Payable:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
Debt
|
|
$
|
196,651
|
|
$
|
154,680
|
|
$
|
121,802
|
|
$
|
138,090
|
|
$
|
665,301
|
|
$
|
1,207,200
|
|
$
|
2,483,724
|
|
Secured
Debt
|
|
|
93,857
|
|
|
246,031
|
|
|
129,297
|
|
|
111,517
|
|
|
136,720
|
|
|
626,882
|
|
|
1,344,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ground
Lease Payments
|
|
|
1,876
|
|
|
1,782
|
|
|
1,737
|
|
|
1,691
|
|
|
1,626
|
|
|
39,459
|
|
|
48,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
to Acquire Projects
|
|
|
218,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
to Develop Projects
|
|
|
149,614
|
|
|
71,312
|
|
|
37,891
|
|
|
22,796
|
|
|
|
|
|
|
|
|
281,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Contractual Obligations
|
|
$
|
660,320
|
|
$
|
473,805
|
|
$
|
290,727
|
|
$
|
274,094
|
|
$
|
803,647
|
|
$
|
1,873,541
|
|
$
|
4,376,134
|
|
(1) Includes
principal and interest with interest on variable-rate debt calculated using
rates at December 31, 2006 excluding the effect of interest rate swaps.
As
of
December 31, 2006 and December 31, 2005, we did not have any off-balance
sheet
arrangements that would materially affect our liquidity or availability of,
or
requirement for, our capital resources. We
have
not guaranteed the debt of any of our joint ventures in which we own an
interest.
Funds
from Operations
The
National Association of Real Estate Investment Trusts defines funds from
operations as net income (loss) available to common shareholders computed in
accordance with generally accepted accounting principles, excluding gains or
losses from sales of real estate assets and extraordinary items, plus
depreciation and amortization of operating properties, including our share
of
unconsolidated partnerships and joint ventures. We calculate FFO in a manner
consistent with the NAREIT definition.
We
believe FFO is an appropriate supplemental measure of operating performance
because it helps investors compare our operating performance relative to other
REITs. Management also uses FFO as a supplemental measure to conduct and
evaluate our business because there are certain limitations associated with
using GAAP net income by itself as the primary measure of our operating
performance. Historical cost accounting for real estate assets in accordance
with GAAP implicitly assumes that the value of real estate assets diminishes
predictably over time. Since real estate values instead have historically risen
or fallen with market conditions, management believes that the presentation
of
operating results for real estate companies that uses historical cost accounting
is insufficient by itself. There can be no assurance that FFO presented by
us is
comparable to similarly titled measures of other REITs.
FFO
should not be considered as an alternative to net income or other measurements
under GAAP as an indicator of our operating performance or to cash flows from
operating, investing or financing activities as a measure of liquidity. FFO
does
not reflect working capital changes, cash expenditures for capital improvements
or principal payments on indebtedness.
Funds
from operations is calculated as follows (in thousands):
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
$
|
294,909
|
|
$
|
209,552
|
|
$
|
133,911
|
|
Depreciation
and amortization
|
|
|
126,713
|
|
|
122,203
|
|
|
111,211
|
|
Depreciation
and amortization of unconsolidated joint ventures
|
|
|
5,079
|
|
|
3,539
|
|
|
3,131
|
|
Gain
on sale of properties
|
|
|
(168,004
|
)
|
|
(87,569
|
)
|
|
(26,403
|
)
|
(Gain)
loss on sale of properties of unconsolidated joint
ventures
|
|
|
(4,052
|
)
|
|
8
|
|
|
87
|
|
Funds
from operations
|
|
|
254,645
|
|
|
247,733
|
|
|
221,937
|
|
Funds
from operations attributable to operating partnership
units
|
|
|
5,453
|
|
|
5,218
|
|
|
3,798
|
|
Funds
from operations assuming conversion of OP units
|
|
$
|
260,098
|
|
$
|
252,951
|
|
$
|
225,735
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic
|
|
|
87,719
|
|
|
89,224
|
|
|
86,171
|
|
Effect
of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
Share
options and awards
|
|
|
926
|
|
|
860
|
|
|
827
|
|
Operating
partnership units
|
|
|
3,134
|
|
|
3,082
|
|
|
2,513
|
|
Weighted
average shares outstanding - diluted
|
|
|
91,779
|
|
|
93,166
|
|
|
89,511
|
|
Newly
Adopted Accounting Pronouncements
In
December 2004 the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
establishes accounting standards for all transactions in which an entity
exchanges its equity instruments for goods and services. This accounting
standard focuses primarily on equity transactions with employees. On January
1,
2006, we adopted SFAS No. 123(R) using the modified prospective application
method, and accordingly, prior period amounts have not been restated. We
began
recording compensation expense on any unvested awards granted prior to January
1, 2003 during the remaining vesting periods. Through December 31, 2005,
we
recorded compensation expense over the vesting period on awards granted since
January 1, 2003. Compensation expense was not recorded on awards granted
prior
to January 1, 2003, but its pro forma impact on net income was disclosed.
The
impact in 2006 from the adoption of SFAS No. 123(R) was an additional expense
of
$2.1 million, which decreased both Income from Continuing Operations and Net
Income and decreased both Net Income per Common Share - Basic and Net Income
per
Common Share - Diluted by $.02.
The
following table illustrates the effect on Net Income Available to Common
Shareholders and Net Income per Common Share if the fair value-based method
had
been applied to all outstanding and unvested share option awards for the period
prior to the adoption of SFAS No. 123(R) (in thousands, except per share
amounts):
|
|
Year
Ended December 31,
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
$
|
209,552
|
|
$
|
133,911
|
|
Stock-based
employee compensation included in net income available to common
shareholders
|
|
|
434
|
|
|
193
|
|
Stock-based
employee compensation determined under the fair value-based method
for all
awards
|
|
|
(849
|
)
|
|
(567
|
)
|
|
|
|
|
|
|
|
|
Pro
forma net income available to common shareholders
|
|
$
|
209,137
|
|
$
|
133,537
|
|
|
|
|
|
|
|
|
|
Net
income per common share:
|
|
|
|
|
|
|
|
Basic
- as reported
|
|
$
|
2.35
|
|
$
|
1.55
|
|
Basic
- pro forma
|
|
$
|
2.34
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per common share:
|
|
|
|
|
|
|
|
Diluted
- as reported
|
|
$
|
2.31
|
|
$
|
1.54
|
|
Diluted
- pro forma
|
|
$
|
2.30
|
|
$
|
1.53
|
|
In
May
2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - A
Replacement of APB Opinion No. 20 and SFAS No. 3.” SFAS No. 154 changes the
requirements for the accounting and reporting of a change in accounting
principle by requiring retrospective application to prior periods’ financial
statements of the change in accounting principle, unless it is impracticable
to
do so. This statement also redefines ”restatement” as the revising of previously
issued financial statements to reflect the correction of an error. SFAS No.
154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The adoption of SFAS No. 154 did not
have a material effect on our financial position, results of operations or
cash
flows.
In
June
2005 the FASB ratified the consensus in EITF Issue No. 04-5, “Determining
Whether a General Partner, or the General Partners as a Group, Controls a
Limited Partnership or Similar Entity When the Limited Partners Have Certain
Rights.” EITF Issue No. 04-5 expands the definition of when a general partner,
or general partners as a group, controls a limited partnership or similar
entity. In July 2005 the FASB issued FSP No. SOP 78-9-1, “Interaction of AICPA
Statement of Position 78-9 and EITF Issue No. 04-5.” FSP No. SOP 78-9-1
eliminates the concept of “important rights” and replaces it with concepts of
“kick-out rights” and “substantive participating rights” as defined in EITF
Issue No. 04-5. FSP No. SOP 78-9-1 and EITF Issue No. 04-5 are effective
for all
general partners of partnerships formed or modified after June 29, 2005,
and for
all other partnerships the first reporting period beginning after December
15,
2005. We have applied FSP No. SOP 78-9-1 and EITF Issue No. 04-5 to our joint
ventures and concluded that these pronouncements did not require consolidation
of additional entities.
In
June
2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.” FIN 48
clarifies the accounting for uncertainty in income taxes recognized in the
financial statements. The interpretation prescribes a recognition threshold
and
measurement attribute for the financial statement recognition of a tax position
taken, or expected to be taken, in a tax return. A tax position may only
be
recognized in the financial statements if it is more likely than not that
the
tax position will be sustained upon examination. There are also several
disclosure requirements. The interpretation is effective for fiscal years
beginning after December 15, 2006. We have assessed the potential impact
of FIN
48 and have concluded that the adoption of this interpretation will not have
a
material effect on our financial position, results of operations or cash
flows.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
Statement defines fair value and establishes a framework for measuring fair
value in generally accepted accounting principles. The key changes to current
practice are (1) the definition of fair value, which focuses on an exit price
rather than an entry price; (2) the methods used to measure fair value, such
as
emphasis that fair value is a market-based measurement, not an entity-specific
measurement, as well as the inclusion of an adjustment for risk, restrictions
and credit standing and (3) the expanded disclosures about fair value
measurements. This Statement does not require any new fair value measurements.
This
Statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. We are required to adopt SFAS No. 157 in the first quarter of 2008,
and
we are currently evaluating the impact that this Statement will have on
our financial financial position, results of operations or cash flows.
In
September 2006, the FASB issued FASB Statement No. 158, “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans - An Amendment of
FASB Statements No. 87, 88, 106, and 132R.” This new standard requires an
employer to: (a) recognize in its statement of financial position an asset
for a
plan’s over funded status or a liability for a plan’s under funded status; (b)
measure a plan’s assets and its obligations that determine its funded status as
of the end of the employer’s fiscal year (with limited exceptions); and (c)
recognize changes in the funded status of a defined benefit postretirement
plan
in the year in which the changes occur. These changes will be reported in
comprehensive income of a business entity. The requirement to recognize the
funded status of a benefit plan and the disclosure requirements (the
“Recognition Provision”) are effective as of the end of the fiscal year ending
after December 15, 2006. We recognized an additional liability of $803 thousand
as a result of the adoption of the Recognition Provision of SFAS No. 158. The
requirement to measure plan assets and benefit obligations as of the date of
the
employer’s fiscal year-end statement of financial position (the “Measurement
Provision”) is effective for fiscal years ending after December 15, 2008. We
have assessed the potential impact of SFAS No. 158 and concluded that the
adoption of the Measurement Provision of SFAS No. 158 will not have a material
effect on our financial position, results of operations or cash
flows.
In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (“SAB 108”), which becomes effective for the first fiscal
period ending after November 15, 2006. SAB 108 provides guidance on the
consideration of the effects of prior period misstatements in quantifying
current year misstatements for the purpose of a materiality assessment. SAB
108
provides for the quantification of the impact of correcting all misstatements,
including both the carryover and reversing effects of prior year misstatements,
on the current year financial statements. The adoption of SAB 108 on December
31, 2006 did not have a material effect on our financial position, results
of
operations or cash flows.
In
February 2007, the FASB issued Statement No. 159, “The
Fair
Value Option for Financial Assets and Financial Liabilities.”
SFAS No.
159 expands opportunities to use fair value measurement in financial reporting
and permits entities to choose to measure many financial instruments and
certain
other items at fair value. This Statement is effective for fiscal years
beginning after November 15, 2007. We have not decided if we will early adopt
SFAS No. 159 or if we will choose to measure any eligible financial assets
and
liabilities at fair value.
ITEM
7A. Quantitative
and Qualitative Disclosures About Market Risk
We
use
fixed and floating-rate debt to finance our capital requirements. These
transactions expose us to market risk related to changes in interest rates.
Derivative financial instruments are used to manage a portion of this risk,
primarily interest rate swap agreements with major financial institutions.
These
swap agreements expose us to credit risk in the event of non-performance by
the
counter-parties to the swaps. We do not engage in the trading of derivative
financial instruments in the normal course of business. At December 31, 2006,
we
had fixed-rate debt of $2.8 billion and variable-rate debt of $115.4 million,
after adjusting for the net effect of $75 million notional amount of interest
rate swaps. At December 31, 2005, we had fixed-rate debt of $2.0 billion and
variable-rate debt of $313.8 million, after adjusting for the net effect of
$80.0 million notional amount of interest rate swaps. In the event interest
rates were to increase 100 basis points, net income and future cash flows would
decrease by $1.2 million and $3.1 million based upon the variable-rate debt
and
notes receivable outstanding at December 31, 2006 and 2005, respectively, and
the fair value of fixed-rate debt at December 31, 2006 and 2005 would decrease
by $200.7 million and $129.6 million, respectively.
To
the
Board of Trust Managers and Shareholders of
Weingarten
Realty Investors
We
have
audited the accompanying consolidated balance sheets of Weingarten Realty
Investors and subsidiaries (the “Company”) as of December 31, 2006 and 2005, and
the related consolidated statements of income and comprehensive income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2006. Our audits also included the financial statement
schedules listed in the Index at Item 15. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedules based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of Weingarten Realty Investors and subsidiaries
at December 31, 2006 and 2005, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2006,
in
conformity with accounting principles generally accepted in the United States
of
America. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken
as a
whole, present fairly, in all material respects, the information set forth
therein.
We
have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of the Company's internal
control over financial reporting as of December 31, 2006, based on the criteria
established in Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission and
our
report dated March 1, 2007 expressed an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over financial
reporting and an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.
DELOITTE
& TOUCHE LLP
Houston,
Texas
March
1,
2007
(In
thousands, except per share amounts)
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Rentals
|
|
$
|
554,361
|
|
$
|
504,034
|
|
$
|
452,567
|
|
Other
|
|
|
7,019
|
|
|
6,367
|
|
|
8,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
561,380
|
|
|
510,401
|
|
|
460,914
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
127,613
|
|
|
117,062
|
|
|
103,870
|
|
Operating
|
|
|
91,422
|
|
|
76,630
|
|
|
71,540
|
|
Ad
valorem taxes
|
|
|
65,528
|
|
|
58,923
|
|
|
51,966
|
|
General
and administrative
|
|
|
23,801
|
|
|
17,379
|
|
|
16,122
|
|
Impairment
loss
|
|
|
|
|
|
|
|
|
3,550
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
308,364
|
|
|
269,994
|
|
|
247,048
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
253,016
|
|
|
240,407
|
|
|
213,866
|
|
Interest
Expense
|
|
|
(146,943
|
)
|
|
(130,761
|
)
|
|
(117,096
|
)
|
Interest
and Other Income
|
|
|
9,045
|
|
|
2,867
|
|
|
1,390
|
|
Loss
on Redemption of Preferred Shares
|
|
|
|
|
|
|
|
|
(3,566
|
)
|
Equity
in Earnings of Joint Ventures, net
|
|
|
14,655
|
|
|
6,610
|
|
|
5,384
|
|
Income
Allocated to Minority Interests
|
|
|
(6,414
|
)
|
|
(6,060
|
)
|
|
(4,928
|
)
|
Gain
on Sale of Properties
|
|
|
22,467
|
|
|
22,306
|
|
|
1,562
|
|
Gain
on Land and Merchant Development Sales
|
|
|
7,166
|
|
|
804
|
|
|
|
|
Provision
for Income Taxes
|
|
|
(1,366
|
)
|
|
|
|
|
|
|
Income
from Continuing Operations
|
|
|
151,626
|
|
|
136,173
|
|
|
96,612
|
|
Operating
Income from Discontinued Operations
|
|
|
7,864
|
|
|
18,021
|
|
|
19,886
|
|
Gain
on Sale of Properties from Discontinued Operations
|
|
|
145,520
|
|
|
65,459
|
|
|
24,883
|
|
Income
from Discontinued Operations
|
|
|
153,384
|
|
|
83,480
|
|
|
44,769
|
|
Net
Income
|
|
$
|
305,010
|
|
$
|
219,653
|
|
$
|
141,381
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
on Preferred Shares
|
|
|
(10,101
|
)
|
|
(10,101
|
)
|
|
(7,470
|
)
|
Net
Income Available to Common Shareholders
|
|
$
|
294,909
|
|
$
|
209,552
|
|
$
|
133,911
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income Per Common Share - Basic:
|
|
|
|
|
|
|
|
|
|
|
Income
from Continuing Operations
|
|
$
|
1.61
|
|
$
|
1.41
|
|
$
|
1.04
|
|
Income
from Discontinued Operations
|
|
|
1.75
|
|
|
.94
|
|
|
.51
|
|
Net
Income
|
|
$
|
3.36
|
|
$
|
2.35
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income Per Common Share - Diluted:
|
|
|
|
|
|
|
|
|
|
|
Income
from Continuing Operations
|
|
$
|
1.60
|
|
$
|
1.41
|
|
$
|
1.04
|
|
Income
from Discontinued Operations
|
|
|
1.67
|
|
|
.90
|
|
|
.50
|
|
Net
Income
|
|
$
|
3.27
|
|
$
|
2.31
|
|
$
|
1.54
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
305,010
|
|
$
|
219,653
|
|
$
|
141,381
|
|
Other
Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
Unrealized
loss on derivatives
|
|
|
(2,861
|
)
|
|
(1,943
|
)
|
|
(4,038
|
)
|
Amortization
of loss on derivatives
|
|
|
364
|
|
|
340
|
|
|
236
|
|
Minimum
pension liability adjustment
|
|
|
(1,150
|
)
|
|
(1,704
|
)
|
|
(590
|
)
|
Other
Comprehensive Loss
|
|
|
(3,647
|
)
|
|
(3,307
|
)
|
|
(4,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income
|
|
$
|
301,363
|
|
$
|
216,346
|
|
$
|
136,989
|
|
See
Notes
to Consolidated Financial Statements.
(In
thousands, except per share amounts)
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
$
|
4,445,888
|
|
$
|
4,033,579
|
|
Accumulated
Depreciation
|
|
|
(707,005
|
)
|
|
(679,642
|
)
|
Property
- net
|
|
|
3,738,883
|
|
|
3,353,937
|
|
Investment
in Real Estate Joint Ventures
|
|
|
203,839
|
|
|
84,348
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,942,722
|
|
|
3,438,285
|
|
|
|
|
|
|
|
|
|
Notes
Receivable from Real Estate Joint Ventures and
Partnerships
|
|
|
3,971
|
|
|
42,195
|
|
Unamortized
Debt and Lease Costs
|
|
|
112,873
|
|
|
95,616
|
|
Accrued
Rent and Accounts Receivable (net of allowance for doubtful accounts
of
$5,995 in 2006 and $4,673 in 2005)
|
|
|
78,893
|
|
|
60,905
|
|
Cash
and Cash Equivalents
|
|
|
71,003
|
|
|
42,690
|
|
Restricted
Deposits and Mortgage Escrows
|
|
|
94,466
|
|
|
11,747
|
|
Other
|
|
|
71,612
|
|
|
46,303
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,375,540
|
|
$
|
3,737,741
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
$
|
2,900,952
|
|
$
|
2,299,855
|
|
Accounts
Payable and Accrued Expenses
|
|
|
132,821
|
|
|
102,143
|
|
Other
|
|
|
128,306
|
|
|
102,099
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,162,079
|
|
|
2,504,097
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
87,680
|
|
|
83,358
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
|
Preferred
Shares of Beneficial Interest - par value, $.03 per share; shares
authorized: 10,000
|
|
|
|
|
|
|
|
6.75%
Series D cumulative redeemable preferred shares of beneficial interest;
100 shares issued and outstanding in 2006 and 2005; liquidation preference
$75,000
|
|
|
3
|
|
|
3
|
|
6.95%
Series E cumulative redeemable preferred shares of beneficial interest;
29
shares issued and outstanding in 2006 and 2005; liquidation preference
$72,500
|
|
|
1
|
|
|
1
|
|
Common
Shares of Beneficial Interest - par value, $.03 per share; shares
authorized: 150,000; shares issued and outstanding: 85,765 in 2006
and
89,403 in 2005
|
|
|
2,582
|
|
|
2,686
|
|
Additional
Paid-In Capital
|
|
|
1,136,481
|
|
|
1,288,432
|
|
Accumulated
Dividends in Excess of Net Income
|
|
|
(786
|
)
|
|
(132,786
|
)
|
Accumulated
Other Comprehensive Loss
|
|
|
(12,500
|
)
|
|
(8,050
|
)
|
Shareholders'
Equity
|
|
|
1,125,781
|
|
|
1,150,286
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,375,540
|
|
$
|
3,737,741
|
|
See
Notes
to Consolidated Financial Statements.
(In
thousands)
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
305,010
|
|
$
|
219,653
|
|
$
|
141,381
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
131,992
|
|
|
128,573
|
|
|
117,053
|
|
Impairment
loss
|
|
|
|
|
|
|
|
|
3,550
|
|
Loss
on redemption of preferred shares
|
|
|
|
|
|
|
|
|
3,566
|
|
Equity
in earnings of joint ventures, net
|
|
|
(14,655
|
)
|
|
(6,681
|
)
|
|
(5,572
|
)
|
Income
allocated to minority interests
|
|
|
6,414
|
|
|
6,060
|
|
|
4,928
|
|
Gain
on land and merchant development sales
|
|
|
(7,166
|
)
|
|
(804
|
)
|
|
|
|
Gain
on sale of properties
|
|
|
(167,987
|
)
|
|
(87,765
|
)
|
|
(26,418
|
)
|
Distributions
of income from unconsolidated entities
|
|
|
2,524
|
|
|
2,603
|
|
|
1,204
|
|
Changes
in accrued rent and accounts receivable
|
|
|
(18,056
|
)
|
|
(3,281
|
)
|
|
(17,926
|
)
|
Changes
in other assets
|
|
|
(37,607
|
)
|
|
(30,769
|
)
|
|
(36,122
|
)
|
Changes
in accounts payable and accrued expenses
|
|
|
43,641
|
|
|
(27,964
|
)
|
|
17,342
|
|
Other,
net
|
|
|
(1,518
|
)
|
|
900
|
|
|
900
|
|
Net
cash provided by operating activities
|
|
|
242,592
|
|
|
200,525
|
|
|
203,886
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
Investment
in properties
|
|
|
(880,471
|
)
|
|
(259,730
|
)
|
|
(403,987
|
)
|
Proceeds
from sales and disposition of property, net
|
|
|
661,175
|
|
|
201,363
|
|
|
52,475
|
|
Changes
in restricted deposits and mortgage escrows
|
|
|
(79,737
|
)
|
|
1,764
|
|
|
488
|
|
Notes
receivable:
|
|
|
|
|
|
|
|
|
|
|
Advances
|
|
|
(54,800
|
)
|
|
(30,852
|
)
|
|
(24,920
|
)
|
Collections
|
|
|
47,617
|
|
|
5,278
|
|
|
43,224
|
|
Real estate joint ventures and partnerships:
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
(21,547
|
)
|
|
(29,233
|
)
|
|
(24,906
|
)
|
Distributions
|
|
|
13,077
|
|
|
5,951
|
|
|
7,972
|
|
Net
cash used in investing activities
|
|
|
(314,686
|
)
|
|
(105,459
|
)
|
|
(349,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of:
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
780,782
|
|
|
148,347
|
|
|
443,770
|
|
Common
shares of beneficial interest
|
|
|
4,570
|
|
|
2,829
|
|
|
221,578
|
|
Preferred
shares of beneficial interest
|
|
|
|
|
|
|
|
|
70,000
|
|
Redemption
of preferred shares of beneficial interest
|
|
|
|
|
|
|
|
|
(112,940
|
)
|
Repurchase
of common shares of beneficial interest
|
|
|
(167,573
|
)
|
|
|
|
|
|
|
Principal
payments of debt
|
|
|
(327,601
|
)
|
|
(82,810
|
)
|
|
(300,144
|
)
|
Common
and preferred dividends paid
|
|
|
(173,010
|
)
|
|
(167,196
|
)
|
|
(152,390
|
)
|
Debt
issuance cost paid |
|
|
(13,681 |
) |
|
|
|
|
|
|
Other,
net
|
|
|
(3,080
|
)
|
|
1,039
|
|
|
1,054
|
|
Net
cash provided by (used in) financing activities
|
|
|
100,407
|
|
|
(97,791
|
)
|
|
170,928
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
28,313
|
|
|
(2,725
|
)
|
|
25,160
|
|
Cash
and cash equivalents at January 1
|
|
|
42,690
|
|
|
45,415
|
|
|
20,255
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at December 31
|
|
$
|
71,003
|
|
$
|
42,690
|
|
$
|
45,415
|
|
See
Notes
to Consolidated Financial Statements.
(In
thousands, except per share amounts)
Year
Ended December 31, 2006, 2005, and 2004
|
|
Preferred
|
|
Common
|
|
|
|
Accumulated
|
|
Accumulated
|
|
|
|
Shares
of
|
|
Shares
of
|
|
Additional
|
|
Dividends
in
|
|
Other
|
|
|
|
Beneficial
|
|
Beneficial
|
|
Paid-In
|
|
Excess
of
|
|
Comprehensive
|
|
|
|
Interest
|
|
Interest
|
|
Capital
|
|
Net
Income
|
|
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2004
|
|
$
|
3
|
|
$
|
2,488
|
|
$
|
993,657
|
|
$
|
(174,234
|
)
|
$
|
(351
|
)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
141,381
|
|
|
|
|
Issuance
of Series E preferred shares
|
|
|
1
|
|
|
|
|
|
69,999
|
|
|
|
|
|
|
|
Issuance
of common shares
|
|
|
|
|
|
168
|
|
|
219,256
|
|
|
|
|
|
|
|
Shares
issued in exchange for interests in limited partnerships
|
|
|
|
|
|
1
|
|
|
852
|
|
|
|
|
|
|
|
Valuation
adjustment on shares issued in exchange for interests in limited
partnerships
|
|
|
|
|
|
|
|
|
(2,934
|
)
|
|
|
|
|
|
|
Shares
issued under benefit plans
|
|
|
|
|
|
15
|
|
|
2,440
|
|
|
|
|
|
|
|
Dividends
declared - common shares (1)
|
|
|
|
|
|
|
|
|
|
|
|
(144,920
|
)
|
|
|
|
Dividends
declared - preferred shares (2)
|
|
|
|
|
|
|
|
|
|
|
|
(7,470
|
)
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,392
|
)
|
Balance,
December 31, 2004
|
|
|
4
|
|
|
2,672
|
|
|
1,283,270
|
|
|
(185,243
|
)
|
|
(4,743
|
)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
219,653
|
|
|
|
|
Shares
issued in exchange for interests in limited partnerships
|
|
|
|
|
|
1
|
|
|
1,302
|
|
|
|
|
|
|
|
Valuation
adjustment on shares issued in exchange for interests in limited
partnerships
|
|
|
|
|
|
|
|
|
550
|
|
|
|
|
|
|
|
Shares
issued under benefit plans
|
|
|
|
|
|
13
|
|
|
3,310
|
|
|
|
|
|
|
|
Dividends
declared - common shares (1)
|
|
|
|
|
|
|
|
|
|
|
|
(157,095
|
)
|
|
|
|
Dividends
declared - preferred shares (3)
|
|
|
|
|
|
|
|
|
|
|
|
(10,101
|
)
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,307
|
)
|
Balance,
December 31, 2005
|
|
|
4
|
|
|
2,686
|
|
|
1,288,432
|
|
|
(132,786
|
)
|
|
(8,050
|
)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
305,010
|
|
|
|
|
Shares
issued in exchange for interests in limited partnerships
|
|
|
|
|
|
7
|
|
|
7,988
|
|
|
|
|
|
|
|
Shares
cancelled
|
|
|
|
|
|
(128
|
)
|
|
(167,445
|
)
|
|
|
|
|
|
|
Shares
issued under benefit plans
|
|
|
|
|
|
17
|
|
|
7,506
|
|
|
|
|
|
|
|
Dividends
declared - common shares (1)
|
|
|
|
|
|
|
|
|
|
|
|
(162,909
|
)
|
|
|
|
Dividends
declared - preferred shares (3)
|
|
|
|
|
|
|
|
|
|
|
|
(10,101
|
)
|
|
|
|
Adjustment
to initially apply FASB Statement No. 158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(803
|
)
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,647
|
)
|
Balance,
December 31, 2006
|
|
$
|
4
|
|
$
|
2,582
|
|
$
|
1,136,481
|
|
$
|
(786
|
)
|
$
|
(12,500
|
)
|
(1)
|
Common
dividends per share were $1.86, $1.76 and $1.66 for the year ended
December 31, 2006, 2005 and 2004, respectively.
|
(2)
|
Series
D and Series E preferred dividends per share were $50.63 and $83.01,
respectively.
|
(3)
|
Series
D and Series E preferred dividends per share were $50.63 and $173.75,
respectively.
|
See
Notes
to Consolidated Financial Statements.
Note
1. Summary
of Significant Accounting Policies
Business
Weingarten
Realty Investors is a real estate investment trust organized under the Texas
Real Estate Investment Trust Act. We, and our predecessor entity, began the
ownership and development of shopping centers and other commercial real estate
in 1948. Our primary business is leasing space to tenants in the shopping and
industrial centers we own or lease. We also manage centers for joint ventures
in
which
we are partners or for other outside owners for which we charge fees.
We
operate a portfolio of properties includes neighborhood and community shopping
centers and industrial properties of approximately 65 million square feet.
We
have a diversified tenant base with our largest tenant comprising only 3% of
total rental revenues during 2006.
We
currently operate, and intend to operate in the future, as a real estate
investment trust.
Basis
of Presentation
Our
consolidated statements include the accounts of our subsidiaries and certain
partially owned joint ventures or partnerships which meet the guidelines for
consolidation. All significant intercompany balances and transactions have
been
eliminated.
Our
financial statements are prepared in accordance with accounting principles
generally accepted in the United States. Such statements require management
to
make estimates and assumptions that affect the reported amounts on our
consolidated financial statements.
Revenue
Recognition
Rental
revenue is generally recognized on a straight-line basis over the life of the
lease, which begins the date the leasehold improvements are substantially
complete, if owned by us, or the date the tenant takes control of the space,
if
the leasehold improvements are owned by the tenant. Revenue from tenant
reimbursements of taxes, maintenance expenses and insurance is recognized in
the
period the related expense is recorded. Revenue based on a percentage of
tenants' sales is recognized only after the tenant exceeds their sales
breakpoint.
Partially
Owned Joint Ventures and Partnerships
To
determine the method of accounting for partially owned joint ventures or
partnerships, we first apply the guidelines set forth in FASB Interpretation
No.
46R, “Consolidation of Variable Interest Entities.” Based upon our analysis, we
have determined that we have no variable interest entities.
Partially
owned joint ventures or partnerships over which we exercise financial and
operating control are consolidated in our financial statements. In determining
if we exercise financial and operating control, we consider factors such as
ownership interest, authority to make decisions, kick-out rights and substantive
participating rights. Partially owned joint ventures and partnerships where
we
have the ability to exercise significant influence, but do not exercise
financial and operating control, are accounted for using the equity
method.
Property
Real
estate assets are stated at cost less accumulated depreciation, which, in the
opinion of management, is not in excess of the individual property's estimated
undiscounted future cash flows, including estimated proceeds from disposition.
Depreciation is computed using the straight-line method, generally over
estimated useful lives of 18-40 years for buildings and 10-20 years for parking
lot surfacing and equipment. Major replacements where the betterment extends
the
useful life of the asset are capitalized and the replaced asset and
corresponding accumulated depreciation are removed from the accounts. All other
maintenance and repair items are charged to expense as incurred.
Acquisitions
of properties are accounted for utilizing the purchase method and, accordingly,
the results of operations are included in our results of operations from the
respective dates of acquisition. We have used estimates of future cash flows
and
other valuation techniques to allocate the purchase price of acquired property
among land, buildings on an "as if vacant" basis, and other identifiable
intangibles. Other identifiable intangible assets and liabilities include the
effect of out-of-market leases, the value of having leases in place (lease
origination and absorption costs), out-of-market assumed mortgages and tenant
relationships.
Property
also includes costs incurred in the development of new operating properties
and
properties in our merchant development program. These properties are
carried at cost and no depreciation is recorded on these assets. These costs
include preacquisition costs directly identifiable with the specific project,
development and construction costs, interest and real estate taxes. Indirect
development costs, including salaries and benefits, travel and other related
costs that are clearly attributable to the development of the property, are
also
capitalized. The capitalization of such costs ceases at the earlier of one
year
from the completion of major construction or when the property, or any completed
portion, becomes available for occupancy.
Property
also includes costs for tenant improvements paid by us, including reimbursements
to tenants for improvements that are owned by us and will remain our property
after the lease expires.
Our
properties are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount of the property may not be recoverable. In
such an event, a comparison is made of either the current and projected
operating cash flows of each such property into the foreseeable future on an
undiscounted basis or the estimated net sales price to the carrying amount
of
such property. Such carrying amount is adjusted, if necessary, to the estimated
fair value to reflect an impairment in the value of the asset.
Some
of
our properties are held in single purpose entities. A single purpose entity
is a
legal entity typically established at the request of a lender solely for the
purpose of owning a property or group of properties subject to a mortgage.
There
may be restrictions limiting the entity’s ability to engage in an activity other
than owning or operating the property, assume or guaranty the debt of any other
entity, or dissolve itself or declare bankruptcy before the debt has been
repaid. Most of our single purpose entities are 100% owned by us and are
consolidated in our financial statements.
Interest
Capitalization
Interest
is capitalized on land under development and buildings under construction based
on rates applicable to borrowings outstanding during the period and the weighted
average balance of qualified assets under development/construction during the
period.
Deferred
Charges
Debt
and
lease costs are amortized primarily on a straight-line basis, which approximates
the effective interest method, over the terms of the debt and over the lives
of
leases, respectively. Lease costs represent the initial direct costs incurred
in
origination, negotiation and processing of a lease agreement. Such costs include
outside broker commissions and other independent third party costs as well
as
salaries and benefits, travel and other related internal costs incurred in
completing the leases. Costs related to supervision, administration,
unsuccessful origination efforts and other activities not directly related
to
completed lease agreements are charged to expense as incurred.
Sales
of Real Estate
Sales
of
real estate include the sale of shopping center pads, property adjacent to
shopping centers, shopping center properties, merchant development properties,
investments in real estate ventures, and partial sales to joint ventures in
which we participate.
We
recognize profit on sales of real estate, including merchant development sales,
in accordance with SFAS No. 66, “Accounting for Sales of Real Estate.” Profits
are not recognized until (a) a sale is consummated; (b) the buyer’s initial and
continuing investments are adequate to demonstrate a commitment to pay; (c)
the
seller’s receivable is not subject to future subordination; and (d) we have
transferred to the buyer the usual risks and rewards of ownership in the
transaction, and we do not have a substantial continuing involvement with the
property.
We
recognize gains on the sale of real estate to joint ventures in which we
participate to the extent we receive cash from the joint
venture.
Accrued
Rent and Accounts Receivable
Receivable
balances outstanding include base rents, tenant reimbursements and receivables
attributable to the straight lining of rental commitments. An allowance for
the
uncollectible portion of accrued rents and accounts receivable is determined
based upon an analysis of balances outstanding, historical bad debt levels,
customer credit worthiness and current economic trends. Additionally, estimates
of the expected recovery of pre-petition and post-petition claims with respect
to tenants in bankruptcy are considered in assessing the collectibility of
the
related receivables.
Restricted
Deposits and Mortgage Escrows
Restricted
deposits and mortgage escrows consist of escrow deposits held by lenders
primarily for property taxes, insurance and replacement reserves and restricted
cash that is held in a qualified escrow account for the purposes of completing
like-kind exchange transactions. At December 31, 2006, we had $79.4 million
held
for like-kind exchange transactions and $15.1 million held in escrow related
to
our mortgages. At December 31, 2005, we had $11.7 million held in escrow related
to our mortgages.
Other
Assets
Other
assets in our consolidated financial statements include investments held in
grantor trusts, prepaid expenses, the value of above-market leases and assumed
mortgages and the related accumulated amortization, deferred tax assets and
other miscellaneous receivables. Investments held in grantor trusts are adjusted
to fair market value at each period end. Above-market leases and assumed
mortgages are amortized over terms of the acquired leases and the remaining
life
of the mortgage, respectively.
Per
Share Data
Net
income per common share - basic is computed using net income available to common
shareholders and the weighted average shares outstanding. Net income per common
share - diluted includes the effect of potentially dilutive securities for
the
periods indicated as follows (in thousands):
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net
income available to common shareholders - basic
|
|
$
|
294,909
|
|
$
|
209,552
|
|
$
|
133,911
|
|
Income
attributable to operating partnership units
|
|
|
5,453
|
|
|
5,218
|
|
|
3,798
|
|
Net
income available to common shareholders - diluted
|
|
$
|
300,362
|
|
$
|
214,770
|
|
$
|
137,709
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic
|
|
|
87,719
|
|
|
89,224
|
|
|
86,171
|
|
Effect
of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
Share
options and awards
|
|
|
926
|
|
|
860
|
|
|
827
|
|
Operating
partnership units
|
|
|
3,134
|
|
|
3,082
|
|
|
2,513
|
|
Weighted
average shares outstanding - diluted
|
|
|
91,779
|
|
|
93,166
|
|
|
89,511
|
|
Options
to purchase, in millions: .5, .9 and .4 common
shares of beneficial interest in 2006, 2005 and 2004, respectively, were not
included in the calculation of net income per common share - diluted as the
exercise prices were greater than the average market price for the
year.
We
have
elected to be treated as a real estate investment trust (“REIT”) under the
Internal Revenue Code of 1986, as amended. As a REIT, we generally will not
be
subject to corporate level federal income tax on taxable income we distribute
to
our shareholders. To be taxed as a REIT we must meet a number of requirements
including meeting defined percentage tests concerning the amount of our assets
and revenues that come from, or are attributable to, real estate operations.
As
long as we distribute at least 90% of the taxable income of the REIT to our
shareholders as dividends, we will not be taxed on the portion of our income
we
distribute as dividends unless we have ineligible transactions.
The
Tax
Relief Extension Act of 1999 gave REITs the ability to conduct activities which
a REIT was previously precluded from doing as long as they are done in entities
which have elected to be treated as taxable REIT subsidiaries under the IRS
code. These activities include buying or developing properties with the express
purpose of selling them. We conduct certain of these activities in taxable
REIT
subsidiaries that we have created. We calculate and record income taxes in
our
financial statements based on the activities in those entities. We also record
deferred taxes for the temporary tax differences that have resulted from those
activities as required under SFAS No. 109, “Accounting for Income
Taxes.”
Cash
Flow Information
All
highly liquid investments with original maturities of three months or less
are
considered cash equivalents. We issued common shares of beneficial interest
valued at $8.0 million, $1.3 million and $.9 million during 2006, 2005 and
2004,
respectively, in exchange for interests in limited partnerships, which had
been
formed to acquire properties. In association with property acquisitions, we
assumed debt and a capital lease obligation totaling $140.7 million, $135.3
million, and $140.7 million, and we issued operating partnership units valued
at
$11.1 million, $6.9 million and $23.4 million, during 2006, 2005 and 2004,
respectively. Also, we accrued $6.5 million, $4.9 million and $7.2 million
during 2006, 2005 and 2004, respectively, associated with the construction
of
property. Cash payments for interest on debt, net of amounts capitalized, of
$139.1 million, $135.4 million, and $117.0 million were made during 2006, 2005,
and 2004, respectively. A cash payment of $.6 million for federal income taxes
was made during 2006. In connection with the sale of an 80% interest in 12
properties in 2006 and two properties in 2005, we retained a 20% unconsolidated
investment of $90.6 million and $14.7 million, respectively. In connection
with
the sale of improved properties, we received notes receivable totaling $2.6
million in 2006, a $15.5 million capital lease obligation was settled, and
debt
of $11.1 million was assumed in 2005, respectively. In satisfaction of
obligations under mortgage bonds and notes receivable of $2.9 million, we
acquired 9.7 acres of land in 2004.
Reclassifications
Certain
reclassifications of prior years’ amounts have been made to conform to the
current year presentation, which includes the reclassification of the operating
results of certain properties to discontinued operations. For additional
information see Note 8, “Discontinued Operations.”
Note
2. Newly
Adopted Accounting Pronouncements
In
December 2004 the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
establishes accounting standards for all transactions in which an entity
exchanges its equity instruments for goods and services. This accounting
standard focuses primarily on equity transactions with employees. On January
1,
2006, we adopted SFAS No. 123(R) using the modified prospective application
method, and accordingly, prior period amounts have not been restated. We began
recording compensation expense on any unvested awards granted prior to January
1, 2003 during the remaining vesting periods. Through December 31, 2005, we
recorded compensation expense over the vesting period on awards granted since
January 1, 2003. Compensation expense was not recorded on awards granted prior
to January 1, 2003, but its pro forma impact on net income was disclosed.
The
impact in 2006 from the adoption of SFAS No. 123(R) was an additional expense
of
$2.1 million, which decreased both Income from Continuing Operations and Net
Income and decreased both Net Income per Common Share - Basic and Net Income
per
Common Share - Diluted by $.02.
The
following table illustrates the effect on Net Income Available to Common
Shareholders and Net Income per Common Share if the fair value-based method
had
been applied to all outstanding and unvested share option awards for the period
prior to the adoption of SFAS No. 123(R) (in thousands, except per share
amounts):
|
|
Year
Ended December 31,
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
$
|
209,552
|
|
$
|
133,911
|
|
Stock-based
employee compensation included in net income available to common
shareholders
|
|
|
434
|
|
|
193
|
|
Stock-based
employee compensation determined under the fair value-based method
for all
awards
|
|
|
(849
|
)
|
|
(567
|
)
|
|
|
|
|
|
|
|
|
Pro
forma net income available to common shareholders
|
|
$
|
209,137
|
|
$
|
133,537
|
|
|
|
|
|
|
|
|
|
Net
income per common share:
|
|
|
|
|
|
|
|
Basic
- as reported
|
|
$
|
2.35
|
|
$
|
1.55
|
|
Basic
- pro forma
|
|
$
|
2.34
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per common share:
|
|
|
|
|
|
|
|
Diluted
- as reported
|
|
$
|
2.31
|
|
$
|
1.54
|
|
Diluted
- pro forma
|
|
$
|
2.30
|
|
$
|
1.53
|
|
In
May
2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - A
Replacement of APB Opinion No. 20 and SFAS No. 3.” SFAS No. 154 changes the
requirements for the accounting and reporting of a change in accounting
principle by requiring retrospective application to prior periods’ financial
statements of the change in accounting principle, unless it is impracticable
to
do so. This statement also redefines ”restatement” as the revising of previously
issued financial statements to reflect the correction of an error. SFAS No.
154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The adoption of SFAS No. 154 did not
have a material effect on our financial position, results of operations or
cash
flows.
In
June
2005 the FASB ratified the consensus in EITF Issue No. 04-5, “Determining
Whether a General Partner, or the General Partners as a Group, Controls a
Limited Partnership or Similar Entity When the Limited Partners Have Certain
Rights.” EITF Issue No. 04-5 expands the definition of when a general partner,
or general partners as a group, controls a limited partnership or similar
entity. In July 2005 the FASB issued FSP No. SOP 78-9-1, “Interaction of AICPA
Statement of Position 78-9 and EITF Issue No. 04-5.” FSP No. SOP 78-9-1
eliminates the concept of “important rights” and replaces it with concepts of
“kick-out rights” and “substantive participating rights” as defined in EITF
Issue No. 04-5. FSP No. SOP 78-9-1 and EITF Issue No. 04-5 are effective for
all
general partners of partnerships formed or modified after June 29, 2005, and
for
all other partnerships the first reporting period beginning after December
15,
2005. We have applied FSP No. SOP 78-9-1 and EITF Issue No. 04-5 to our joint
ventures and concluded that these pronouncements did not require consolidation
of additional entities.
In
June
2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.” FIN 48
clarifies the accounting for uncertainty in income taxes recognized in the
financial statements. The interpretation prescribes a recognition threshold
and
measurement attribute for the financial statement recognition of a tax position
taken, or expected to be taken, in a tax return. A tax position may only be
recognized in the financial statements if it is more likely than not that the
tax position will be sustained upon examination. There are also several
disclosure requirements. The interpretation is effective for fiscal years
beginning after December 15, 2006. We have assessed the potential impact of
FIN
48 and have concluded that the adoption of this interpretation will not have
a
material effect on our financial position, results of operations or cash
flows.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
Statement defines fair value and establishes a framework for measuring fair
value in generally accepted accounting principles. The key changes to current
practice are (1) the definition of fair value, which focuses on an exit price
rather than an entry price; (2) the methods used to measure fair value, such
as
emphasis that fair value is a market-based measurement, not an entity-specific
measurement, as well as the inclusion of an adjustment for risk, restrictions
and credit standing and (3) the expanded disclosures about fair value
measurements. This Statement does not require any new fair value measurements.
This
Statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. We are required to adopt SFAS No. 157 in the first quarter of 2008,
and
we are currently evaluating the impact that this Statement will have on
our financial position, results of operations or cash flows.
In
September 2006, the FASB issued FASB Statement No. 158, “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans - An Amendment of
FASB Statements No. 87, 88, 106, and 132R.” This new standard requires an
employer to: (a) recognize in its statement of financial position an asset
for a
plan’s over funded status or a liability for a plan’s under funded status; (b)
measure a plan’s assets and its obligations that determine its funded status as
of the end of the employer’s fiscal year (with limited exceptions); and (c)
recognize changes in the funded status of a defined benefit postretirement
plan
in the year in which the changes occur. These changes will be reported in
comprehensive income of a business entity. The requirement to recognize the
funded status of a benefit plan and the disclosure requirements (the
“Recognition Provision”) are effective as of the end of the fiscal year ending
after December 15, 2006. We recognized an additional liability of $803 thousand
as a result of the adoption of the Recognition Provision of SFAS No. 158. The
requirement to measure plan assets and benefit obligations as of the date of
the
employer’s fiscal year-end statement of financial position (the “Measurement
Provision”) is effective for fiscal years ending after December 15, 2008. We
have assessed the potential impact of SFAS No. 158 and concluded that the
adoption of the Measurement Provision of SFAS No. 158 will not have a material
effect on our financial position, results of operations or cash
flows.
In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (“SAB 108”), which becomes effective for the first fiscal
period ending after November 15, 2006. SAB 108 provides guidance on the
consideration of the effects of prior period misstatements in quantifying
current year misstatements for the purpose of a materiality assessment. SAB
108
provides for the quantification of the impact of correcting all misstatements,
including both the carryover and reversing effects of prior year misstatements,
on the current year financial statements. The adoption of SAB 108 on December
31, 2006 did not have a material effect on our financial position, results
of operations or cash flows.
In
February 2007, the FASB issued Statement No. 159, “The
Fair
Value Option for Financial Assets and Financial Liabilities.”
SFAS No.
159 expands opportunities to use fair value measurement in financial reporting
and permits entities to choose to measure many financial instruments and
certain
other items at fair value. This Statement is effective for fiscal years
beginning after November 15, 2007. We have not decided if we will early adopt
SFAS No. 159 or if we will choose to measure any eligible financial assets
and
liabilities at fair value.
Note
3. Derivatives
and Hedging
We
occasionally hedge the future cash flows of our debt transactions, as well
as
changes in the fair value of our debt instruments, principally through interest
rate swaps with major financial institutions. At December 31, 2006, we had
five
interest rate swap contracts designated as fair value hedges with an aggregate
notional amount of $75.0 million that convert fixed interest payments at rates
ranging from 4.2% to 6.8% to variable interest payments. We have determined
that
they are highly effective in limiting our risk of changes in the fair value
of
fixed-rate notes attributable to changes in variable interest rates. Also,
at
December 31, 2006, we had two forward-starting interest rate swap contracts
with
an aggregate notional amount of $118.6 million which lock the swap rate at
5.2%
until January 2008. The purpose of these forward-starting swaps, which are
designated as cash flow hedges, is to mitigate the risk of future fluctuations
in interest rates on forecasted issuances of long-term debt. We have determined
that they are highly effective in offsetting future variable interest cash
flows
on anticipated long-term debt issuances.
In
May
2006 we entered into a forward-starting interest rate swap with a notional
amount of $74.0 million. In December 2006 we terminated this rate swap in
conjunction with the issuance of $75.0 million of medium term notes. The
termination fee of $4.1 million is being amortized over the life of the medium
term note.
In
June
2006 a $5 million swap matured in conjunction with the maturity of the
associated medium term note. This contract was designated as a fair value
hedge.
Changes
in the market value of fair value hedges as well as changes in the market value
of the hedged item are recorded in earnings each reporting period. For fiscal
year 2006 and 2005, these changes in fair market value offset with minimal
impact to earnings. The derivative instruments at December 31, 2006 and December
31, 2005 were reported at their fair values in Other Assets, net of accrued
interest, of $.1 million and $.4 million, respectively, and as Other
Liabilities, net of accrued interest, of $3.2 million and $4.4 million,
respectively.
As
of
December 31, 2006 and December 31, 2005, the balance in Accumulated Other
Comprehensive Loss relating to derivatives was $7.6 million and $5.1 million,
respectively, and amounts amortized to interest expense were $.4 million in
2006, $.3 million in 2005 and $.2 million in 2004. Within the next twelve
months, we expect to amortize to interest expense approximately $.9 million
of
the balance in Accumulated Other Comprehensive Loss.
The
interest rate swaps increased interest expense and decreased net income by
$.5
million, $1.3 million, and $3.5 million in 2006, 2005, and 2004, respectively,
and increased the average interest rate of our debt by .02%, .1%, and .2% in
2006, 2005, and 2004, respectively. We could be exposed to credit losses in
the
event of nonperformance by the counter-party; however, management believes
the
likelihood of such nonperformance is remote.
Note
4. Debt
Our
debt
consists of the following (in thousands):
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Debt
payable to 2030 at 4.5% to 8.9%
|
|
$
|
2,848,805
|
|
$
|
2,049,470
|
|
Unsecured
notes payable under revolving credit agreements
|
|
|
18,000
|
|
|
210,000
|
|
Obligations
under capital leases
|
|
|
29,725
|
|
|
33,460
|
|
Industrial
revenue bonds payable to 2015 at 4.0% to 6.19%
|
|
|
4,422
|
|
|
6,925
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,900,952
|
|
$
|
2,299,855
|
|
The
grouping of total debt between fixed and variable-rate as well as between
secured and unsecured is summarized below (in thousands):
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
As
to interest rate (including the effects of interest rate
swaps):
|
|
|
|
|
|
Fixed-rate
debt
|
|
$
|
2,785,553
|
|
$
|
1,986,059
|
|
Variable-rate
debt
|
|
|
115,399
|
|
|
313,796
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,900,952
|
|
$
|
2,299,855
|
|
|
|
|
|
|
|
|
|
As
to collateralization:
|
|
|
|
|
|
|
|
Unsecured
debt
|
|
$
|
1,910,216
|
|
$
|
1,457,805
|
|
Secured
debt
|
|
|
990,736
|
|
|
842,050
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,900,952
|
|
$
|
2,299,855
|
|
In
February 2006 we amended and restated our $400 million unsecured revolving
credit facility. The amended facility has an initial four-year term and provides
a one-year extension option available at our request. Borrowing rates under
this
amended facility float at a margin over LIBOR, plus a facility fee. The
borrowing margin and facility fee, which are currently 37.5 and 12.5 basis
points, respectively, are priced off a grid that is tied to our senior unsecured
credit ratings. This amended facility retains a competitive bid feature that
allows us to request bids for amounts up to $200 million from each of the
syndicate banks, allowing us an opportunity to obtain pricing below what
we
would pay using the grid. Additionally, the amended facility contains an
accordion feature, which allows us the ability to increase the facility up
to
$600 million.
At
December 31, 2006 and December 31, 2005, the balance outstanding under the
$400
million revolving credit facility was $18 million at an average variable
interest rate of 5.75% and $190 million at an average variable interest rate
of
4.5%, respectively. We also have an agreement for an unsecured and uncommitted
overnight facility totaling $20 million with a bank that is used for cash
management purposes, of which nothing was outstanding at December 31, 2006.
At
December 31, 2005, we had $20 million outstanding under this credit facility
at
a variable interest rate of 4.7%. Letters of credit totaling $10.1 million
and
$14.9 million were outstanding under the $400 million revolving credit facility
at December 31, 2006 and December 31, 2005, respectively. The available balance
under our revolving credit agreement was $371.9 million and $175.1 million
at
December 31, 2006 and 2005, respectively. During 2006 the maximum balance and
weighted average balance outstanding under both the $400 million and the $20
million revolving credit facilities combined were $368.2 million and $179.1
million, respectively, at a weighted average interest rate of 5.5%. During
2005
the maximum balance and weighted average balance outstanding under both the
$400
million and the $20 million revolving credit facilities combined were $210.0
million and $102.3 million, respectively, at a weighted average interest rate
of
5.1%.
In
conjunction with acquisitions completed during 2006 and 2005, we assumed $140.7
million and $135.3 million, respectively, of nonrecourse debt secured by the
related properties.
Various
leases and properties, and current and future rentals from those leases and
properties, collateralize certain debt. At December 31, 2006 and 2005, the
carrying value of such property aggregated $1.8 billion and $1.6 billion,
respectively.
Scheduled
principal payments on our debt (excluding $18.0 million due under our revolving
credit agreements, $18.6 million of capital leases and $2.7 million market
value
of interest rate swaps) are due during the following years (in thousands):
2007
|
$
|
114,098
|
|
2008
|
|
252,768
|
|
2009
|
|
113,624
|
|
2010
|
|
119,310
|
|
2011
|
|
890,450
|
|
2012
|
|
308,032
|
|
2013
|
|
324,696
|
|
2014
|
|
334,466
|
|
2015
|
|
176,228
|
|
Thereafter
|
|
233,284
|
|
Our
various debt agreements contain restrictive covenants, including minimum
interest and fixed charge coverage ratios, minimum unencumbered interest
coverage ratios and minimum net worth requirements and maximum total debt
levels. Management believes that we are in compliance with all restrictive
covenants.
In
December 2006 we issued $75 million of ten year unsecured fixed rate medium
term
notes at 6.1% including the effect of an interest rate swap that hedged the
transaction. Proceeds from this issuance were used to repay balances under
our
revolving credit facilities, to cash settle a forward hedge and for general
business purposes.
In
July
2006 we priced an offering of $575 million aggregate principal amount of 3.95%
convertible senior notes due 2026, which closed on August 2, 2006. Interest
is
payable semi-annually in arrears on February 1 and August 1 of each year,
beginning February 1, 2007. The net proceeds of $395.9 million from the sale
of
the notes were used for general business purposes, to repurchase 4.3 million
shares of our common shares of beneficial interest and to reduce amounts
outstanding under our revolving credit facility.
The
debentures are convertible under certain circumstances for our common shares
of
beneficial interest at an initial conversion rate of 20.3770 common shares
per
$1,000 of principal amount of debentures (an initial conversion price of
$49.075). In addition, the conversion rate may be adjusted if certain change
in
control transactions or other specified events occur on or prior to August
4,
2011. Upon the conversion of notes, we will deliver cash for the principal
return, as defined, and cash or common shares, at our option, for the excess
of
the conversion value, as defined, over the principal return. The debentures
are
redeemable for cash at our option beginning in 2011 for the principal amount
plus accrued and unpaid interest. Holders of the debentures have the right
to
require us to repurchase their debentures for cash equal to the principal of
the
notes plus accrued and unpaid interest in 2011, 2016 and 2021 and in the event
of a change in control.
Holders
may convert their notes based on the applicable conversion rate prior to the
close of business on the second business day prior to the stated maturity date
at any time on or after August 1, 2025 and also under any of the following
circumstances:
• during
any calendar quarter beginning after December 31, 2006 (and only during such
calendar quarter), if, and only if, the closing sale price of our common shares
for at least 20 trading days (whether or not consecutive) in the period of
30
consecutive trading days ending on the last trading day of the preceding
calendar quarter is greater than 130% of the conversion price per common share
in effect on the applicable trading day;
• during
the five consecutive trading-day period following any five consecutive
trading-day period in which the trading price of the notes was less than 98%
of
the product of the closing sale price of our common shares multiplied by the
applicable conversion rate;
• if
those
notes have been called for redemption, at any time prior to the close of
business on the third business day prior to the redemption date;
• if
our
common shares are not listed on a U.S. national or regional securities exchange
or quoted on the Nasdaq National Market for 30 consecutive trading
days.
In
connection with the issuance of these notes, we filed a shelf registration
statement related to the resale of the debentures and the common shares issuable
upon the conversion of the debentures. This registration statement has been
declared effective.
Note
5. Preferred
Shares
In
July
2004 we issued $72.5 million of depositary shares with each share representing
one-hundredth of a Series E Cumulative Redeemable Preferred Share. The
depositary shares are redeemable, in whole or in part, for cash on or after
July
8, 2009 at our option, at a redemption price of $25 per depositary share, plus
any accrued and unpaid dividends thereon. The depositary shares are not
convertible or exchangeable for any of our other property or securities. The
Series E Preferred Shares pay a 6.95% annual dividend and have a liquidation
value of $2,500 per share. Net proceeds of $70.2 million were utilized to pay
down amounts outstanding under our $400 million revolving credit facility.
In
April
2003 $75 million of depositary shares were issued with each share representing
one-thirtieth of a Series D Cumulative Redeemable Preferred Share. The
depositary shares are redeemable, in whole or in part, for cash on or after
April 30, 2008 at our option, at a redemption price of $25 per depositary share,
plus any accrued and unpaid dividends thereon. The depositary shares are not
convertible or exchangeable for any of our property or securities. The Series
D
Preferred Shares pay a 6.75% annual dividend and have a liquidation value of
$750 per share. Net proceeds of $73.0 million were used to redeem the 7.44%
Series A Cumulative Redeemable Preferred Shares.
On
January 30, 2007, we issued $200 million of depositary shares. Each depositary
share represents one-hundredth of a Series F Cumulative Redeemable Preferred
Share. The depositary shares are redeemable, in whole or in part, on or after
January 30, 2012 at our option, at a redemption price of $25 per depositary
share, plus any accrued and unpaid dividends thereon. The depositary shares
are
not convertible or exchangeable for any of our other property or securities.
The
Series F Preferred Shares pay a 6.5% annual dividend and have a liquidation
value of $2,500 per share. Net proceeds of $194.4 million were used to repay
amounts outstanding under our credit facilities and for general business
purposes.
Note
6. Common
Shares
In
February 2004 a three-for-two share split, effected in the form of a 50% share
dividend, was declared for shareholders of record on March 16, 2004, payable
March 30, 2004. We issued 28.5 million common shares of beneficial interest
as a
result of the share split. All references to the number of shares and per share
amounts have been restated to reflect the share split, and an amount equal
to
the par value of the number of common shares issued has been reclassified to
Common Shares of Beneficial Interest from Accumulated Dividends in Excess of
Net
Income.
In
March
2004 we issued 3.6 million common shares of beneficial interest. Net proceeds
to
us totaled $118.0 million. The proceeds from this offering were used primarily
to redeem our 7.0% Series C Cumulative Redeemable Preferred Shares on April
1,
2004. In August 2004 we issued an additional 3.2 million common shares of
beneficial interest. Net proceeds to us totaled $101.9 million. The proceeds
from this offering were used to pay down amounts outstanding under our $400
million revolving credit facility.
In
February 2006 our board of trust managers authorized up to $100 million for
the
purchase of outstanding common shares of beneficial interest in 2006. Share
repurchases may be made in the open market or in privately negotiated
transactions. In July 2006 our board of trust managers authorized the
repurchase of our common shares of beneficial interest to a total of $207
million, and we used $167.6 million of the net proceeds from the $575 million
debt offering to purchase 4.3 million common shares of beneficial interest
at
$39.26 per share.
Note
7. Property
Our
property consisted of the following (in thousands):
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Land
|
|
$
|
847,295
|
|
$
|
761,454
|
|
Land
held for development
|
|
|
21,405
|
|
|
20,634
|
|
Land
under development
|
|
|
146,990
|
|
|
16,895
|
|
Buildings
and improvements
|
|
|
3,339,074
|
|
|
3,195,207
|
|
Construction
in-progress
|
|
|
91,124
|
|
|
39,389
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,445,888
|
|
$
|
4,033,579
|
|
The
following carrying charges were capitalized (in thousands):
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
7,616
|
|
$
|
2,629
|
|
$
|
4,992
|
|
Ad
valorem taxes
|
|
|
780
|
|
|
293
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,396
|
|
$
|
2,922
|
|
$
|
5,645
|
|
Acquisitions
of properties are accounted for utilizing the purchase method and, accordingly,
the results of operations are included in our results of operations from
the
respective dates of acquisition. We have used estimates of future cash
flows and
other valuation techniques to allocate the purchase price of acquired property
among land, buildings on an "as if vacant" basis, and other identifiable
intangibles.
During
2006 we invested $484 million in the acquisition of operating properties. Of
this total, $402 million was invested in 17 shopping centers and $82 million
was
invested in seven industrial projects.
In
2006
we acquired land, either directly or through our interests in joint ventures
at
17 separate locations for the development of 17 retail centers. During 2006
we
invested $167 million in new developments.
Note
8. Discontinued
Operations
In
2006
we sold 19 shopping centers and four industrial properties, ten of which were
located in Texas, three in Kansas, two each in Arkansas, Oklahoma and Tennessee,
and one each in Arizona, Missouri, New Mexico and Colorado. In 2005 we sold
13
retail properties and a vacant building, ten of which were located in Texas
and
one each in Louisiana, Mississippi and Arkansas. Also in 2005, we sold two
industrial properties in Texas and one in Nevada. The operating results of
these
properties have been reclassified and reported as discontinued operations in
the
Statements of Consolidated Income and Comprehensive Income in accordance with
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
as well as any gains on the respective disposition for all periods presented.
Revenues recorded in Operating Income From Discontinued Operations related
to
our dispositions totaled $17.7 million in 2006, $39.0 million in 2005 and $44.9
million in 2004. Included in the Consolidated Balance Sheet at December 31,
2005
were $205.4 million
of Property and $59.6 million of Accumulated Depreciation related to properties
sold during 2006.
The
discontinued operations reported in 2006 and 2005 had no debt that was required
to be repaid upon their disposition. In addition, we elected not to allocate
other consolidated interest to discontinued operations since the interest
savings to be realized from the proceeds of the sale of these operations was
not
material.
Note
9. Related
Party Transactions
We
have
interests in several joint ventures and partnerships. Notes receivable from
these entities bear interest ranging from 6.0% to 10% at December 31, 2006,
are
due at various dates through 2028 and
are
generally secured by real estate assets. We recognized interest income on these
notes as follows, in millions: $1.3 in both 2006 and 2005 and $.8 in 2004.
Note
10. Investment
in Real Estate Joint Ventures
We
own
interests in joint ventures or limited partnerships in which we exercise
significant influence but do not have financial and operating control. These
partnerships are accounted for under the equity method. Our interests in these
joint ventures and limited partnerships range from 20% to 75%. Combined
condensed unaudited financial information of these ventures (at 100%) is
summarized as follows (in thousands):
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Combined
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
$
|
1,123,600
|
|
$
|
397,689
|
|
Accumulated
depreciation
|
|
|
(41,305
|
)
|
|
(32,032
|
)
|
Property
- net
|
|
|
1,082,295
|
|
|
365,657
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
118,642
|
|
|
61,543
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,200,937
|
|
$
|
427,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
$
|
327,695
|
|
$
|
136,182
|
|
Amounts
payable to Weingarten Realty Investors
|
|
|
22,657
|
|
|
43,239
|
|
Other
liabilities
|
|
|
39,967
|
|
|
12,081
|
|
Accumulated
equity
|
|
|
810,618
|
|
|
235,698
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,200,937
|
|
$
|
427,200
|
|
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Combined
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
65,002
|
|
$
|
41,059
|
|
$
|
32,117
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
17,398
|
|
|
10,565
|
|
|
7,061
|
|
Depreciation
and amortization
|
|
|
15,390
|
|
|
9,322
|
|
|
7,203
|
|
Operating
|
|
|
8,750
|
|
|
5,480
|
|
|
5,041
|
|
Ad
valorem taxes
|
|
|
6,187
|
|
|
4,756
|
|
|
3,645
|
|
General
and administrative
|
|
|
783
|
|
|
301
|
|
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
48,508
|
|
|
30,424
|
|
|
23,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on land sales
|
|
|
1,938
|
|
|
170
|
|
|
|
|
Gain
(loss) on sale of properties
|
|
|
5,991
|
|
|
(20
|
)
|
|
(182
|
)
|
Net
income
|
|
$
|
24,423
|
|
$
|
10,785
|
|
$
|
8,590
|
|
Our
investment in real estate joint ventures, as reported on the balance sheets,
differs from our proportionate share of the joint ventures' underlying net
assets due to basis differentials, which arose upon the transfer of assets
to
the joint ventures. This basis differential, which totaled $20.1 million and
$10.3 million at December 31, 2006 and 2005, respectively, is generally
amortized over the useful lives of the related assets.
Fees
earned by us for the management of these joint ventures totaled, in millions,
$1.9 in 2006, $.8 in 2005, and $.6 in 2004.
During
2006, we invested in a 25%-owned unconsolidated joint venture, which acquired
five shopping centers. Fresh Market Shoppes is located in Hilton Head, South
Carolina; Shoppes at Paradise Isle is located in Destin, Florida; Indian Harbor
Place is located in Melbourne, Florida, and both Quesada Commons and Shoppes
of
Port Charlotte are located in Port Charlotte, Florida. Two 50%-owned joint
ventures commenced development of a retail center each located in Mission,
Texas
and Apple Valley, California. Also, two shopping centers, one each in Crosby
and
Dickinson, Texas, were sold. Our share of the sales proceeds totaled $8.1
million and generated a gain of $4.1 million. Associated with our land and
merchant development activities, two parcels of land in Houston, Texas and
Liberty Lake, Washington were sold in a 75%-owned and a 50%-owned joint venture,
respectively, of which our share of the gain totaled $1.1 million. We also
acquired our partner’s share of Heritage Station, which is located in Wake
Forest, North Carolina. Heritage Station is a 62,000 square foot shopping center
that is anchored by Harris Teeter.
During
the third quarter of 2006, we formed a strategic joint venture with Mercantile
Real Estate Advisors, Inc. (“MREA”) to acquire and operate industrial properties
within target markets across the United States. MREA served as investment
advisor to the AFL-CIO Building Investment Trust (“BIT”). The joint venture is
80% owned by BIT and 20% by us. We will earn fees for operating the properties.
BIT as the majority owner will make or approve all significant decisions.
Acquisitions
will be focused on bulk warehouse and business distribution properties within
targeted markets. The partners plan to invest $500 million in total capital
over
the next two years including leverage targeted at approximately 50% of total
capital. As part of this transaction, we provided the initial seeding for the
joint venture, contributing 16 buildings at five properties with a total value
of $123 million and aggregating more than two million square feet. The sale
of
these properties to the joint venture resulted in a gain to us of $21.6 million.
The properties are located in the San Diego, Memphis, and Atlanta markets.
During
the fourth quarter of 2006, two new strategic joint ventures were formed with
TIAA-CREF Global Real Estate and AEW Capital Management on behalf of its
institutional clients, of which we own 20%. We provided the initial seeding
for
the TIAA-CREF Global Real Estate joint venture, whereby seven newly purchased
neighborhood/community shopping centers in South Florida were contributed by
us
with a total value of $325 million and aggregating more than 1.3 million square
feet. The AEW Capital Management joint venture acquired four grocery-anchored
centers and two power centers located in Oregon and Washington.
During
2005, we acquired our joint venture partners' interest in one of our existing
shopping centers located in Texas, and a 50%-owned unconsolidated joint venture
acquired an interest in a retail property located in McAllen, Texas, which
will
be redeveloped. We sold an 80% interest in two retail properties totaling
295,000 square feet in Lafayette and Shreveport, Louisiana. These properties
were held in tenancy-in-common arrangements in which we retained a 20% interest.
We acquired a 25% interest in Lake Washington Crossing, a 119,000 square foot
retail center in Melbourne, Florida, and a 25% interest in a 96,000 square
foot
retail center located in Chapel Hill, North Carolina. Additionally, a 50%-owned
unconsolidated joint venture commenced development on a 161,000 square foot
retail center located in Liberty Lake, Washington and two 50%-owned joint
ventures commenced construction on two retail centers in Mission,
Texas.
We
have
not guaranteed the debt of any of our joint ventures in which we own an
interest.
Note
11. Federal
Income Tax Considerations
We
qualify as a REIT under the provisions of the Internal Revenue Code, and
therefore, no tax is imposed on us for our taxable income distributed to
shareholders. To maintain our REIT status, we must distribute at least 90%
of
our ordinary taxable income to our shareholders and meet certain income source
and investment restriction requirements. Our shareholders must report their
share of income distributed in the form of dividends.
Taxable
income differs from net income for financial reporting purposes principally
because of differences in the timing of recognition of interest, ad valorem
taxes, depreciation, rental revenue, pension expense, and gain from sales of
property. As a result of these differences, the book value of our net fixed
assets exceeds the tax basis by $70.8 million at December 31, 2006.
The
following table reconciles net income to REIT taxable income for the years
ended
December 31, 2006, 2005 and 2004 (in thousands):
|
|
2006
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
305,010
|
|
|
|
$
|
219,653
|
|
$
|
141,381
|
|
Net
(income) loss of taxable REIT subsidiaries included above
|
|
|
(4,264
|
)
|
|
|
|
(923
|
)
|
|
143
|
|
Net
Income from REIT operations
|
|
|
300,746
|
|
|
|
|
218,730
|
|
|
141,524
|
|
Book
depreciation and amortization including discontinued
operations
|
|
|
127,613
|
|
|
|
|
117,062
|
|
|
103,870
|
|
Tax
depreciation and amortization
|
|
|
(86,002
|
)
|
|
|
|
(80,922
|
)
|
|
(76,432
|
)
|
Book/tax
difference on gains/losses from capital transactions
|
|
|
(128,628
|
)
|
|
|
|
(69,885
|
)
|
|
(12,716
|
)
|
Other
book/tax differences, net
|
|
|
(18,155
|
)
|
|
|
|
(22,468
|
)
|
|
(6,285
|
)
|
REIT
taxable income
|
|
|
195,574
|
|
|
|
|
162,517
|
|
|
149,961
|
|
Dividends
paid deduction
|
|
|
(195,574
|
)
|
(1)
|
|
|
(167,196
|
)
|
|
(155,029
|
)
|
Dividends
paid in excess of taxable income
|
|
$
|
0
|
|
|
|
$
|
(4,679
|
)
|
$
|
(5,068
|
)
|
(1)
|
The
dividend deduction includes designated dividends from 2007 of $22.5
million.
|
For
federal income tax purposes, the cash dividends distributed to common
shareholders are characterized as follows:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Ordinary
income
|
|
|
76.2
|
%
|
|
81.2
|
%
|
|
84.0
|
%
|
Return
of capital (generally nontaxable)
|
|
|
0.0
|
|
|
9.1
|
|
|
7.1
|
|
Capital
gain distributions
|
|
|
23.8
|
|
|
9.7
|
|
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
We
have
two taxable REIT subsidiaries that are subject to federal, state, and local
income tax. A minimal provision for federal income taxes was made in all three
years. Only minimal state income taxes were paid in these periods.
We
have
reviewed our tax positions under FASB Interpretation No. 48 (“FIN 48”),
“Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement
No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in the financial statements. The interpretation prescribes a
recognition threshold and measurement attribute for the financial statement
recognition of a tax position taken, or expected to be taken, in a tax return.
A
tax position may only be recognized in the financial statements if it is more
likely than not that the tax position will be sustained upon examination. We
believe it is more likely than not that our tax positions will be sustained
in
any tax examinations.
In
May
2006, the state of Texas enacted a margin tax, replacing the taxable capital
components of the current franchise tax with a new “taxable margin” component.
Most REIT’s are subject to the margin tax, where as they were previously exempt
from the franchise tax. The tax becomes effective for us beginning in calendar
year 2007. Since the tax base on the margin tax is derived from an income based
measure, we believe the margin tax is an income tax. As a result, the provisions
of SFAS 109, “Accounting for Income Taxes” applies to this tax. In accordance
with SFAS 109, the effect on deferred tax liabilities of a change in a tax
law
should be included in tax expense attributable to continuing operations in
the
period including the enactment date. We have calculated our deferred tax assets
and liabilities for Texas based on the new margin tax and the amount is
immaterial. We anticipate incurring an expense for this tax in 2007.
Note
12. Leasing
Operations
The
terms
of our leases range from less than one year for smaller tenant spaces to over
25
years for larger tenant spaces. In addition to minimum lease payments, most
of
the leases provide for contingent rentals (payments for taxes, maintenance
and
insurance by lessees and an amount based on a percentage of the tenants' sales).
Future minimum rental income from noncancelable tenant leases at December 31,
2006, in millions, is: $425.6 in 2007; $374.7 in 2008; $317.9 in 2009; $259.8
in
2010; $197.3 in 2011; and $779.5 thereafter. The future minimum rental amounts
do not include estimates for contingent rentals. Such contingent rentals, in
millions, aggregated $119.0 in 2006, $108.8 in 2005 and $101.3 in
2004.
Note
13. Commitments
and Contingencies
We
are
engaged in the operations of shopping centers, which are either owned or, with
respect to certain shopping centers, operated under long-term ground leases.
These ground leases expire at various dates through 2075, with renewal options.
Space in our shopping centers is leased to tenants pursuant to agreements that
provide for terms ranging generally from one month to 25 years and, in some
cases, for annual rentals subject to upward adjustments based on operating
expense levels, sales volume, or contractual increases as defined in the lease
agreements.
Scheduled
minimum rental payments under the terms of all non-cancelable operating leases
in which we are the lessee, principally for shopping center ground leases,
for
the subsequent five years and thereafter ending December 31, are as follows
(in
thousands):
2007
|
|
$
|
1,876
|
|
2008
|
|
|
1,782
|
|
2009
|
|
|
1,737
|
|
2010
|
|
|
1,691
|
|
2011
|
|
|
1,626
|
|
Thereafter
|
|
|
39,459
|
|
|
|
$
|
48,171
|
|
The
scheduled future minimum revenues, applicable to the ground lease rentals above,
under the terms of all non-cancelable tenant leases, assuming no new or
renegotiated leases or option extensions for the subsequent five years and
thereafter ending December 31, are as follows (in thousands):
2007
|
|
$
|
30,299
|
|
2008
|
|
|
25,897
|
|
2009
|
|
|
21,538
|
|
2010
|
|
|
18,062
|
|
2011
|
|
|
15,006
|
|
Thereafter
|
|
|
63,626
|
|
|
|
$
|
174,428
|
|
Property
under capital leases, consisting of four shopping centers at both December
31,
2006 and 2005, aggregated $29.1 million, and is included in buildings and
improvements. Amortization of property under capital leases is included in
depreciation and amortization expense, and the balance of Accumulated
Depreciation associated with these capital leases at December 31, 2006 and
2005
was $13.1 million and $11.9 million, respectively. Future minimum lease payments
under these capital leases total $52.0 million, with annual payments due, in
millions, of $1.9 in each of 2007 and 2008; $2.0 in each of 2009 and 2010;
$2.1
in 2011; and $42.1 thereafter. The amount of these total payments representing
interest is $22.3 million. Accordingly, the present value of the net minimum
lease payments was $29.7 million at December 31, 2006.
We
participate in nine ventures, structured as DownREIT partnerships, that have
properties in Arkansas, California, Florida, Georgia, North Carolina, Texas
and
Utah. As general partner we have operating and financial control over these
ventures and consolidate their operations in our consolidated financial
statements. These ventures allow the outside limited partners to put their
interest to the partnership for our common shares of beneficial interest or
an
equivalent amount in cash. We may acquire any limited partnership interests
that
are put to the partnership and we have the option to redeem the interest in
cash
or a fixed number of our common shares at our discretion. In 2006 and 2005
we
issued common shares of beneficial interest valued at $8.0 million and $1.3
million in exchange for certain of these limited partnership interests.
We
expect
to invest approximately $149.6 million in 2007, $71.3 million in 2008, $37.9
million in 2009, and $22.8 million in 2010 to complete construction of 26
properties under various stages of development. We also expect to invest $218.3
million to acquire projects in 2007.
In
August
2006 we purchased a portfolio of properties from North American Properties.
The
purchase agreement allows for the subsequent development and leasing of an
additional phase of Brookwood Marketplace by the property seller. If the terms
of the purchase agreement are met by the seller, the purchase price would be
increased by approximately $6.9 million. This agreement expires in August
2008.
We
are
subject to numerous federal, state and local environmental laws, ordinances
and
regulations in the areas where we own or operate properties. We are not aware
of
any material contamination, which may have been caused by us or any of our
tenants, that would have a material effect on our financial position, results
of
operation or cash flows.
As
part
of our risk management activities we have applied and been accepted into state
sponsored environmental programs which will limit our expenses if contaminants
need to be remediated. We also have an environmental insurance policy that
covers us against third party liabilities and remediation costs.
While
we
believe that we do not have any material exposure to environmental remediation
costs, we cannot give absolute assurance that changes in the law or new
discoveries of contamination will not result in increased liabilities to
us.
We
are
involved in various matters of litigation arising in the normal course of
business. While we are unable to predict with certainty the amounts involved,
our management and counsel are of the opinion that, when such litigation is
resolved, our resulting liability, if any, will not have a material effect
on
our consolidated financial statements.
Note
14. Identified
Intangible Assets and Liabilities
Identified
intangible assets and liabilities associated with our property acquisitions
are
as follows (in thousands):
|
|
December
31,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Identified
Intangible Assets:
|
|
|
|
|
|
Above-Market
Leases (included in Other Assets)
|
|
$
|
14,686
|
|
$
|
12,838
|
|
Above-Market
Leases - Accumulated Amortization
|
|
|
(5,277
|
)
|
|
(3,393
|
)
|
Above-Market
Assumed Mortgages (included in Other Assets)
|
|
|
1,653
|
|
|
|
|
Valuation
of In Place Lease (included in Unamortized Debt and Lease
Cost)
|
|
|
52,878
|
|
|
42,772
|
|
Valuation
of In Place Lease - Accumulated Amortization
|
|
|
(16,297
|
)
|
|
(10,822
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
47,643
|
|
$
|
41,395
|
|
|
|
|
|
|
|
|
|
Identified
Intangible Liabilities (included in Other Liabilities):
|
|
|
|
|
|
|
|
Below-Market
Leases
|
|
$
|
24,602
|
|
$
|
17,012
|
|
Below-Market
Leases - Accumulated Amortization
|
|
|
(6,569
|
)
|
|
(3,735
|
)
|
Below-Market
Assumed Mortgages
|
|
|
59,863
|
|
|
60,792
|
|
Below-Market
Assumed Mortgages - Accumulated Amortization
|
|
|
(18,123
|
)
|
|
(12,143
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
59,773
|
|
$
|
61,926
|
|
These
identified intangible assets and liabilities are amortized over the terms of
the
acquired leases or the remaining lives of the assumed mortgages.
The
net
amortization of above-market and below-market leases increased Revenues-Rentals
by $1.3 million, $.3 million, and $.04 million in 2006, 2005, and 2004,
respectively. The estimated net amortization of these intangible assets and
liabilities for each of the next five years is as follows (in
thousands):
2007
|
|
$
|
1,649
|
|
2008
|
|
|
1,477
|
|
2009
|
|
|
1,389
|
|
2010
|
|
|
753
|
|
2011
|
|
|
364
|
|
The
amortization of the in place lease intangible, which is recorded in Depreciation
and Amortization, was $7.6 million, $6.2 million, and $4.3 million in 2006,
2005, and 2004, respectively. The estimated amortization of this intangible
asset for each of the next five years is as follows (in thousands):
2007
|
|
$
|
6,797
|
|
2008
|
|
|
6,021
|
|
2009
|
|
|
5,127
|
|
2010
|
|
|
4,293
|
|
2011
|
|
|
3,379
|
|
The
amortization of above-market and below-market assumed mortgages decreased
Interest Expense by $7.3 million, $6.9 million, and $5.0 million in 2006, 2005,
and 2004, respectively. The estimated amortization of these intangible assets
and liabilities for each of the next five years is as follows (in
thousands):
2007
|
|
$
|
6,774
|
|
2008
|
|
|
6,011
|
|
2009
|
|
|
4,671
|
|
2010
|
|
|
4,019
|
|
2011
|
|
|
2,722
|
|
Note
15. Fair
Value of Financial Instruments
The
fair
value of our financial instruments was determined using available market
information and appropriate valuation methodologies as of December 31, 2006.
Unless otherwise described below, all other financial instruments are carried
at
amounts which approximate their fair values.
Based
on
rates currently available to us for debt with similar terms and average
maturities, fixed-rate debt with carrying values of $2.8 billion and $2.0
billion have fair values of approximately $2.7 billion and $2.1 billion at
December 31, 2006 and 2005, respectively. The fair value of our variable-rate
debt approximates its carrying values of $115.4 million and $313.8 million
at
year-end 2006 and 2005, respectively.
Note
16. Share
Options and Awards
In
1988
we adopted a Share Option Plan that provided for the issuance of options and
share awards up to a maximum of 1.6 million common shares. This plan expired
in
December 1997, but some awards made pursuant to it remain outstanding as of
December 31, 2006.
In
1992
we adopted the Employee Share Option Plan that grants 100 share options to
every
employee, excluding officers, upon completion of each five-year interval of
service. This plan expires in 2012 and provides options for a maximum of 225,000
common shares, of which .2 million is available for future grant of options
or
awards at December 31, 2006. Options granted under this plan are exercisable
immediately.
In
1993
we adopted the Incentive Share Option Plan that provided for the issuance of
up
to 3.9 million common shares, either in the form of restricted shares or share
options. This plan expired in 2002, but some awards made pursuant to it remain
outstanding as of December 31, 2006. The share options granted to nonofficers
vest over a three-year period beginning after the grant date, and for officers
vest over a seven-year period beginning two years after the grant date.
Restricted shares under this plan have multiple vesting periods. Prior to 2000,
restricted shares generally vested over a ten-year period. Effective in 2000,
the vesting period became five years. In addition, the vesting period for these
restricted shares can be accelerated based on appreciation in the market share
price. All restricted shares related to this plan vested prior to 2005.
In
2001
we adopted the Long-term Incentive Plan for the issuance of options and share
awards. In 2006 the maximum number of common shares issuable under this plan
was
increased to 4.8 million common shares of beneficial interest, of which 2.6
million is available for the future grant of options or awards at December
31,
2006. This plan expires in 2011. The share options granted to nonofficers vest
over a three-year period beginning after the grant date, and share options
and
restricted shares for officers vest over a five-year period after the grant
date. Restricted shares granted to trust managers and retirement eligible
employees are expensed immediately.
The
grant
price for the Employee Share Option Plan is equal to the quoted fair market
value of our common shares on the date of grant. The grant price of the
Long-term Incentive Plan is calculated as an average of the high and low of
the
quoted fair market value of our common shares on the date of grant. In both
plans, these options expire upon termination of employment or ten years from
the
date of grant. In the Long-term Incentive Plan restricted shares for officers
and trust managers are granted at no exercise price. Our policy is to recognize
compensation expense for equity awards ratably over the vesting period, except
for retirement eligible amounts. Compensation expense, net of forfeitures,
associated with share options and restricted shares totaled $4.9 million in
2006, $1.7 million in 2005 and $1.3 million in 2004, of which $1.3 million
in
2006 and $.5 million in both 2005 and 2004 was capitalized.
The
fair
value of share options and restricted shares is estimated on the date of grant
using the Black-Scholes option pricing method based on the expected weighted
average assumptions in the following table. The dividend yield is an average
of
the historical yields at each record date over the estimated expected life.
We
estimate volatility using our historical volatility data for a period of ten
years, and the expected life is based on historical data from an option
valuation model of employee exercises and terminations. The risk-free rate
is
based on the U.S. Treasury yield curve in effect at the time of grant. The
fair
value and weighted average assumptions are as follows:
|
|
Year
ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Fair
value per share
|
|
$
|
4.97
|
|
$
|
3.02
|
|
$
|
2.72
|
|
Dividend
yield
|
|
|
5.7
|
%
|
|
6.3
|
%
|
|
6.5
|
%
|
Expected
volatility
|
|
|
18.2
|
%
|
|
16.8
|
%
|
|
16.3
|
%
|
Expected
life (in years)
|
|
|
5.9
|
|
|
6.7
|
|
|
6.9
|
|
Risk-free
interest rate
|
|
|
4.4
|
%
|
|
4.4
|
%
|
|
4.1
|
%
|
Following
is a summary of the option activity for the three years ended December 31,
2006:
|
|
Shares
|
|
Weighted
|
|
|
|
Under
|
|
Average
|
|
|
|
Option
|
|
Exercise
Price
|
|
Outstanding,
January 1, 2004
|
|
|
3,092,536
|
|
$
|
22.01
|
|
Granted
|
|
|
380,071
|
|
|
39.69
|
|
Forfeited
or expired
|
|
|
(13,000
|
)
|
|
23.40
|
|
Exercised
|
|
|
(447,817
|
)
|
|
18.42
|
|
Outstanding,
December 31, 2004
|
|
|
3,011,790
|
|
|
24.77
|
|
Granted
|
|
|
537,319
|
|
|
37.40
|
|
Forfeited
or expired
|
|
|
(30,797
|
)
|
|
28.10
|
|
Exercised
|
|
|
(338,666
|
)
|
|
19.17
|
|
Outstanding,
December 31, 2005
|
|
|
3,179,646
|
|
|
27.47
|
|
Granted
|
|
|
544,346
|
|
|
47.41
|
|
Forfeited
or expired
|
|
|
(65,996
|
)
|
|
28.63
|
|
Exercised
|
|
|
(510,843
|
)
|
|
20.73
|
|
Outstanding,
December 31, 2006
|
|
|
3,147,153
|
|
$
|
31.99
|
|
The
total
intrinsic value of options exercised was $10.3 million in 2006, $6.4 million
in
2005 and $7.7 million in 2004. As of December 31, 2006, there was approximately
$4.9 million of total unrecognized compensation cost related to nonvested share
options, which is expected to be amortized over a weighted average of 3.00
years.
The
following table summarizes information about share options outstanding and
exercisable at December 31, 2006:
|
|
Outstanding
|
|
Exercisable
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
Weighted
|
|
Aggregate
|
|
|
|
Weighted
|
|
Average
|
|
Aggregate
|
|
|
|
|
|
Remaining
|
|
Average
|
|
Intrinsic
|
|
|
|
Average
|
|
Remaining
|
|
Intrinsic
|
|
Range
of
|
|
|
|
Contractual
|
|
Exercise
|
|
Value
|
|
|
|
Exercise
|
|
Contractual
|
|
Value
|
|
Exercise
Prices
|
|
Number
|
|
Life
|
|
Price
|
|
(000’s)
|
|
Number
|
|
Price
|
|
Life
|
|
(000’s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$17.89
- $26.83
|
|
|
1,273,216
|
|
|
4.78
years
|
|
$
|
21.72
|
|
|
|
|
|
844,091
|
|
$
|
21.20
|
|
|
4.54
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$26.84
- $40.26
|
|
|
1,333,391
|
|
|
7.98
years
|
|
$
|
35.53
|
|
|
|
|
|
600,580
|
|
$
|
34.21
|
|
|
7.60
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$40.27
- $47.50
|
|
|
540,546
|
|
|
9.92
years
|
|
$
|
47.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,147,153
|
|
|
7.02
years
|
|
$
|
31.99
|
|
$
|
44,438
|
|
|
1,444,671
|
|
$
|
26.61
|
|
|
5.81
years
|
|
$
|
28,171
|
|
A
summary
of the status of nonvested restricted shares for the year ended December 31,
2006 is as follows:
|
|
Nonvested
|
|
Weighted
|
|
|
|
Restricted
|
|
Average
Grant
|
|
|
|
Shares
|
|
Date
Fair Value
|
|
Outstanding,
January 1, 2006
|
|
|
142,268
|
|
|
36.32
|
|
Granted
|
|
|
83,057
|
|
|
46.34
|
|
Vested
|
|
|
(50,029
|
)
|
|
37.56
|
|
Forfeited
|
|
|
(3,041
|
)
|
|
36.24
|
|
Outstanding,
December 31, 2006
|
|
|
172,255
|
|
$
|
40.80
|
|
As
of
December 31, 2006, there was approximately $6.1 million of total unrecognized
compensation cost related to nonvested restricted shares, which is expected
to
be amortized over a weighted average of 3.66 years.
Note
17. Employee
Benefit Plans
We
have a
Savings and Investment Plan pursuant to which eligible employees may elect
to
contribute from 1% of their salaries to the maximum amount established annually
by the Internal Revenue Service. Employee contributions are matched by us at
the
rate of $.50 per $1.00 for the first 6% of the employee's salary. The employees
vest in the employer contributions ratably over a six-year period. Compensation
expense related to the plan was $.8 million in 2006, $.7 million in 2005 and
$.6
million in 2004.
We
also
have an Employee Share Purchase Plan under which .6 million of our common shares
have been authorized. These shares, as well as common shares purchased by us
on
the open market, are made available for sale to employees at a discount of
15%.
Shares purchased by the employee under the plan are restricted from being sold
for two years from the date of purchase or until termination of employment.
A
total of 24,181, 22,717 and 20,671 shares were purchased by employees at an
average price of $35.38, $30.89 and $28.27 during 2006, 2005 and 2004,
respectively.
Effective
April 1, 2002, we converted a noncontributory pension plan to a noncontributory
cash balance retirement plan ("Retirement Plan") under which each participant
received an actuarially determined opening balance. Annual additions to each
participant's account include a service credit ranging from 3-5% of
compensation, depending on years of service, and an interest credit based on
the
ten-year US Treasury Bill rate. Vesting generally occurs after five years of
service. Certain participants were grandfathered under the prior pension plan
formula. In addition to the plan described above, effective September 1, 2002,
we established a separate and independent nonqualified supplemental retirement
plan ("SRP") for officers, the assets of which are held in a grantor trust.
This
unfunded plan provides benefits in excess of the statutory limits of our
noncontributory cash balance retirement plan.
At
December 31, 2006, we adopted SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans.” As a result of the adoption we
recognized additional minimum liability directly to accumulated other
comprehensive income of $803 thousand.
The
estimated net loss, prior service cost, and transition obligation that will
be
amortized from accumulated other comprehensive income into net periodic benefit
cost over the next fiscal year are $307 thousand, ($117) thousand and zero,
respectively.
The
following tables summarize changes in the benefit obligation, the plan assets
and the funded status of our pension plans as well as the components of net
periodic benefit costs, including key assumptions. The measurement dates for
plan assets and obligations were December 31, 2006 and 2005.
|
|
Fiscal
Year End
|
|
|
|
2006
|
|
2005
|
|
Change
in Projected Benefit Obligation:
|
|
|
|
|
|
Benefit
obligation at beginning of year
|
|
$
|
32,456
|
|
$
|
27,207
|
|
Service
cost
|
|
|
3,090
|
|
|
2,641
|
|
Interest
cost
|
|
|
2,309
|
|
|
1,724
|
|
Plan
amendments
|
|
|
63
|
|
|
|
|
Actuarial
losses
|
|
|
1,882
|
|
|
1,539
|
|
Benefit
payments
|
|
|
(803
|
)
|
|
(655
|
)
|
Benefit
obligation at end of year
|
|
$
|
38,997
|
|
$
|
32,456
|
|
|
|
|
|
|
|
|
|
Change
in Plan Assets:
|
|
|
|
|
|
|
|
Fair
value of plan assets at beginning of year
|
|
$
|
15,213
|
|
$
|
13,019
|
|
Actual
return on plan assets
|
|
|
1,901
|
|
|
1,014
|
|
Employer
contributions
|
|
|
1,622
|
|
|
1,835
|
|
Benefit
payments
|
|
|
(803
|
)
|
|
(655
|
)
|
Fair
value of plan assets at end of year
|
|
$
|
17,933
|
|
$
|
15,213
|
|
|
|
|
|
|
|
|
|
Unfunded
Status at End of Year:
|
|
$
|
21,064
|
|
$
|
17,243
|
|
Unrecognized
actuarial loss
|
|
|
|
|
|
(4,607
|
)
|
Unrecognized
prior service credit
|
|
|
|
|
|
895
|
|
Pension
liability
|
|
|
|
|
$
|
13,531
|
|
|
|
|
|
|
|
|
|
Amounts
recognized in the balance sheets:
|
|
|
|
|
|
|
|
Pension
liabilities - SRP
|
|
$
|
16,262
|
|
$
|
16,438
|
|
Other
|
|
|
(58
|
)
|
|
|
|
Accumulated
other comprehensive loss - Retirement Plan
|
|
|
4,860
|
|
|
2,907
|
|
Net
amounts recognized
|
|
$
|
21,064
|
|
$
|
13,531
|
|
|
|
|
|
|
|
|
|
Accumulated
benefit obligation
|
|
$
|
38,194
|
|
$
|
31,653
|
|
|
|
|
|
|
|
|
|
Amounts
recognized in accumulated other comprehensive loss consist
of:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
5,565
|
|
|
N/A
|
|
Prior
service credit
|
|
|
(704
|
)
|
|
N/A
|
|
Total
amount recognized
|
|
$
|
4,861
|
|
|
N/A
|
|
|
|
Before
Application of SFAS No. 158
|
|
Adjustments
|
|
After
Application of SFAS No. 158
|
|
|
|
|
|
|
|
|
|
Liability
for pension benefits (included in Other Liabilities)
|
|
$
|
3,999
|
|
$
|
803
|
|
$
|
4,802
|
|
Total
liabilities
|
|
|
3,161,276
|
|
|
803
|
|
|
3,162,079
|
|
Accumulated
other comprehensive loss
|
|
|
11,697
|
|
|
803
|
|
|
12,500
|
|
Total
shareholders’ equity
|
|
|
1,126,584
|
|
|
803
|
|
|
1,125,781
|
|
Both
of
our pension plans are under funded. The following is the required information
for plans with an accumulated benefit obligation in excess of plan assets at
each year end:
|
|
2006
|
|
2005
|
|
Projected
benefit obligation
|
|
$
|
38,997
|
|
$
|
32,456
|
|
Accumulated
benefit obligation
|
|
|
38,194
|
|
|
31,653
|
|
Fair
value of plan assets
|
|
|
17,933
|
|
|
15,213
|
|
The
components of net periodic benefit cost for both plans are as follows (in
thousands):
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
|
3,090
|
|
$
|
2,641
|
|
$
|
2,004
|
|
Interest
cost
|
|
|
2,309
|
|
|
1,724
|
|
|
1,756
|
|
Expected
return on plan assets
|
|
|
(1,385
|
)
|
|
(1,192
|
)
|
|
(1,028
|
)
|
Prior
service cost
|
|
|
(128
|
)
|
|
(128
|
)
|
|
(128
|
)
|
Recognized
loss
|
|
|
407
|
|
|
159
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,293
|
|
$
|
3,204
|
|
$
|
2,714
|
|
The
assumptions used to develop periodic expense for both plans are shown
below:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
|
|
5.75
|
%
|
|
6.00
|
%
|
|
6.25
|
%
|
Salary
scale increases - Retirement Plan
|
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Salary
scale increases - SRP
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Long-term
rate of return on assets
|
|
|
8.50
|
%
|
|
8.50
|
%
|
|
8.75
|
%
|
The
selection of the discount rate follows the guidance provided in SFAS No. 87,
"Employers' Accounting for Pensions." The selection of the discount rate is
made
annually after comparison to yields based on high quality fixed-income
investments. The salary scale is the composite rate which reflects anticipated
inflation, merit increases, and promotions for the group of covered
participants. The long-term rate of return is a composite rate for the trust.
It
is derived as the sum of the percentages invested in each principal asset class
included in the portfolio multiplied by their respective expected rates of
return. We considered the historical returns and the future expectations for
returns for each asset class, as well as the target asset allocation of the
pension portfolio. This analysis resulted in the selection of 8.50% as the
long-term rate of return assumption for 2006.
The
assumptions used to develop the actuarial present value of the benefit
obligations at year-end for both plans are shown below:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
|
|
5.75
|
%
|
|
5.75
|
%
|
|
6.00
|
%
|
Salary
scale increases - Retirement Plan
|
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Salary
scale increases - SRP
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
The
expected contribution to be paid for both plans by us during 2007 is
approximately $4.5 million, of which $2.0 million relates to the Retirement
Plan. The expected benefit payments for the next ten years for both plans are
as
follows, in millions: $.8 in 2007; $7.9 in 2008; $.8 in 2009; $.9 in 2010,
$1.0
in 2011; and $9.1 in 2012 through 2016.
The
measurement dates of both plans were December 31, 2006 and December 31, 2005.
The participant data used in determining the liabilities and costs was collected
as of January 1, 2006.
The
allocation of the fair value of plan assets as provided by the plan trustee
was
as follows (in thousands):
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Cash
and short-term investments
|
|
|
3
|
%
|
|
3
|
%
|
Mutual
funds - equity
|
|
|
69
|
%
|
|
71
|
%
|
Mutual
funds - fixed income
|
|
|
28
|
%
|
|
26
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
100
|
%
|
Our
investment policy and strategy for plan assets require that plan assets be
allocated based on a "Broad Market Diversification" model. Approximately 70%
of
plan assets are allocated to equity investments and 30% to fixed income
investments. On a quarterly basis, the plan assets are reviewed in an effort
to
maintain this asset allocation. Selected investment funds are monitored as
reasonably necessary to permit our Investment Committee to evaluate any material
changes to the investment fund's performance.
We
also
have a deferred compensation plan for eligible employees allowing them to defer
portions of their current cash or share-based compensation. Amounts deferred
are
reported as compensation expense in the year service is rendered and are
deposited in a grantor trust. Cash deferrals are invested based on the
employee’s investment selections from a mix of assets similar to the
noncontributory cash balance retirement plan. Deferred share-based compensation
can not be diversified, and distributions from this plan are made in the same
form as the original deferral.
Note
18. Segment
Information
The
operating segments presented are the segments for which separate financial
information is available, and operating performance is evaluated regularly
by
senior management in deciding how to allocate resources and in assessing
performance. We evaluate the performance of the operating segments based on
net
operating income that is defined as total revenues less operating expenses
and
ad valorem taxes. Management does not consider the effect of gains or losses
from the sale of property in evaluating ongoing operating
performance.
The
shopping center segment is engaged in the acquisition, development and
management of real estate, primarily anchored neighborhood and community
shopping centers located in Arizona, Arkansas, California, Colorado, Florida,
Georgia, Illinois, Kansas, Kentucky, Louisiana, Maine, Missouri, Nevada, New
Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas,
Utah
and Washington. The customer base includes supermarkets, discount retailers,
drugstores and other retailers who generally sell basic necessity-type
commodities. The industrial segment is engaged in the acquisition, development
and management of bulk warehouses and office/service centers. Its properties
are
located in California, Florida, Georgia, Tennessee and Texas, and the customer
base is diverse. Included in "Other" are corporate-related items, insignificant
operations and costs that are not allocated to the reportable
segments.
Information
concerning our reportable segments is as follows (in thousands):
|
|
Shopping
|
|
|
|
|
|
|
|
|
|
Center
|
|
Industrial
|
|
Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
503,655
|
|
$
|
55,037
|
|
$
|
2,688
|
|
$
|
561,380
|
|
Net
operating income (loss)
|
|
|
366,426
|
|
|
38,409
|
|
|
(405
|
)
|
|
404,430
|
|
Equity
in earnings of joint ventures, net
|
|
|
13,713
|
|
|
377
|
|
|
565
|
|
|
14,655
|
|
Investment
in real estate joint ventures
|
|
|
174,587
|
|
|
25,156
|
|
|
4,096
|
|
|
203,839
|
|
Total
assets
|
|
|
3,517,733
|
|
|
324,343
|
|
|
533,464
|
|
|
4,375,540
|
|
Capital
expenditures
|
|
|
920,017
|
|
|
96,504
|
|
|
5,582
|
|
|
1,022,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
460,661
|
|
$
|
47,604
|
|
$
|
2,136
|
|
$
|
510,401
|
|
Net
operating income
|
|
|
339,661
|
|
|
34,302
|
|
|
885
|
|
|
374,848
|
|
Equity
in earnings of joint ventures, net
|
|
|
6,533
|
|
|
87
|
|
|
(10
|
)
|
|
6,610
|
|
Investment
in real estate joint ventures
|
|
|
82,092
|
|
|
480
|
|
|
1,776
|
|
|
84,348
|
|
Total
assets
|
|
|
3,035,964
|
|
|
355,848
|
|
|
345,929
|
|
|
3,737,741
|
|
Capital
expenditures
|
|
|
339,328
|
|
|
89,066
|
|
|
646
|
|
|
429,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
415,595
|
|
$
|
43,869
|
|
$
|
1,450
|
|
$
|
460,914
|
|
Net
operating income
|
|
|
305,556
|
|
|
31,413
|
|
|
439
|
|
|
337,408
|
|
Equity
in earnings of joint ventures, net
|
|
|
5,441
|
|
|
96
|
|
|
(153
|
)
|
|
5,384
|
|
Investment
in real estate joint ventures
|
|
|
46,861
|
|
|
539
|
|
|
982
|
|
|
48,382
|
|
Total
assets
|
|
|
2,897,772
|
|
|
288,480
|
|
|
284,066
|
|
|
3,470,318
|
|
Capital
expenditures
|
|
|
579,912
|
|
|
12,089
|
|
|
2,793
|
|
|
594,794
|
|
Net
operating income reconciles to Income from Continuing Operations as shown on
the
Statements of Consolidated Income and Comprehensive Income as follows (in
thousands):
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Total
segment net operating income
|
|
$
|
404,430
|
|
$
|
374,848
|
|
$
|
337,408
|
|
Depreciation
and amortization
|
|
|
(127,613
|
)
|
|
(117,062
|
)
|
|
(103,870
|
)
|
General
and administrative
|
|
|
(23,801
|
)
|
|
(17,379
|
)
|
|
(16,122
|
)
|
Impairment
loss
|
|
|
|
|
|
|
|
|
(3,550
|
)
|
Interest
expense
|
|
|
(146,943
|
)
|
|
(130,761
|
)
|
|
(117,096
|
)
|
Interest
and other income
|
|
|
9,045
|
|
|
2,867
|
|
|
1,390
|
|
Loss
on redemption of preferred shares
|
|
|
|
|
|
|
|
|
(3,566
|
)
|
Income
allocated to minority interests
|
|
|
(6,414
|
)
|
|
(6,060
|
)
|
|
(4,928
|
)
|
Equity
in earnings of joint ventures, net
|
|
|
14,655
|
|
|
6,610
|
|
|
5,384
|
|
Gain
on land and merchant development sales
|
|
|
7,166
|
|
|
804
|
|
|
|
|
Gain
on sale of properties
|
|
|
22,467
|
|
|
22,306
|
|
|
1,562
|
|
Provision
for income taxes
|
|
|
(1,366
|
)
|
|
|
|
|
|
|
Income
from Continuing Operations
|
|
$
|
151,626
|
|
$
|
136,173
|
|
$
|
96,612
|
|
Note
19. Quarterly
Financial Data (Unaudited)
Summarized
quarterly financial data is as follows (in thousands):
|
|
First
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
135,479
|
|
$
|
136,963
|
|
|
|
$
|
147,150
|
|
|
|
$
|
150,833
|
|
Net
income available to common shareholders
|
|
|
52,084
|
|
|
87,741
|
|
(1
|
)
|
|
103,223
|
|
(1
|
)
|
|
51,861
|
|
Net
income per common share - basic
|
|
|
0.58
|
|
|
0.98
|
|
(1
|
)
|
|
1.19
|
|
(1
|
)
|
|
0.61
|
|
Net
income per common share - diluted
|
|
|
0.57
|
|
|
0.95
|
|
(1
|
)
|
|
1.15
|
|
(1
|
)
|
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
123,270
|
|
$
|
127,614
|
|
|
|
$
|
131,307
|
|
|
|
$
|
131,077
|
|
Net
income available to common shareholders
|
|
|
34,037
|
|
|
67,679
|
|
(1
|
)
|
|
58,958
|
|
(1
|
)
|
|
48,878
|
|
Net
income per common share - basic
|
|
|
0.38
|
|
|
0.76
|
|
(1
|
)
|
|
0.66
|
|
(1
|
)
|
|
0.55
|
|
Net
income per common share - diluted
|
|
|
0.38
|
|
|
0.74
|
|
(1
|
)
|
|
0.65
|
|
(1
|
)
|
|
0.54
|
|
(1) The
quarter results include gains on the sale of properties.
****
Not
applicable
Under
the
supervision and with the participation of our principal executive officer and
principal financial officer, management has evaluated the effectiveness of
the
design and operation of our disclosure controls and procedures (as defined
in
Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of
December 31, 2006. Based on that evaluation, our principal executive officer
and
our principal financial officer have concluded that our disclosure controls
and
procedures were effective as of December 31, 2006.
There
has
been no change to our internal control over financial reporting during the
quarter ended December 31, 2006 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Weingarten
Realty Investors and subsidiaries ("WRI") maintain a system of internal control
over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under
the
Securities Exchange Act, which is a process designed under the supervision
of
the WRI's principal executive officer and principal financial officer and
effected by WRI's board of trust managers, management and other personnel,
to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
WRI's
internal control over financial reporting includes those policies and procedures
that:
§ Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of WRI's assets;
§ Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of WRI are being
made
only in accordance with authorizations of management and trust managers of
WRI;
and
§ Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of WRI's assets that could have a material
effect on the financial statements.
WRI's
management has responsibility for establishing and maintaining adequate internal
control over financial reporting for WRI. Management, with the participation
of
WRI's Chief Executive Officer and Chief Financial Officer, conducted an
evaluation of the effectiveness of WRI's internal control over financial
reporting as of December 31, 2006 based on the framework in Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
Based
on
their evaluation of WRI's internal control over financial reporting, WRI's
management along with the Chief Executive and Chief Financial Officers believe
that the WRI's internal control over financial reporting is effective as of
December 31, 2006.
Deloitte
& Touche LLP, WRI's independent registered public accounting firm that
audited the financial statements and financial statement schedules included
in
this Form 10-K, has issued an attestation report on management's assessment
of
WRI's internal control over financial reporting.
March
1,
2007
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Trust Managers and Shareholders of Weingarten Realty
Investors
We
have
audited management's assessment, included in the accompanying Management’s
Report on Internal Control over Financial Reporting, that Weingarten Realty
Investors and subsidiaries (the “Company”) maintained effective internal control
over financial reporting as of December 31, 2006, based on criteria established
in Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission. The
Company's management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion
on
management's assessment and an opinion on the effectiveness of the Company's
internal control over financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control
over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing
such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.
A
company's internal control over financial reporting is a process designed by,
or
under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by
the
company's board of directors (or trust managers), management, and other
personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1)
pertain to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary
to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors
(or trust managers) of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use,
or
disposition of the company's assets that could have a material effect on the
financial statements.
Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented
or
detected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In
our
opinion, management's assessment that the Company maintained effective internal
control over financial reporting as of December 31, 2006, is fairly stated,
in
all material respects, based on the criteria established in Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Also
in
our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2006, based on
the
criteria established in Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
We
have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements and
financial statement schedules as of and for the year ended December 31, 2006
of
the Company and our report dated March 1, 2007 expressed an unqualified opinion
on those financial statements and financial statement schedules.
DELOITTE
& TOUCHE LLP
Houston,
Texas
March
1,
2007
Not
applicable.
PART
III
Information
with respect to our trust managers and executive officers is incorporated herein
by reference to the "Election of Trust Managers" and "Executive Officers"
sections of our definitive Proxy Statement for the Annual Meeting of
Shareholders to be held May 3, 2007.
Code
of Ethics
We
have
adopted a code of business and ethics for trust managers, officers and
employees, known as the Code of Conduct and Ethics. The Code of Conduct and
Ethics is available on our website at www.weingarten.com.
Shareholders may request a free copy of the Code of Conduct and Ethics
from:
Weingarten
Realty Investors
Attention:
Investor Relations
2600
Citadel Plaza Drive, Suite 300
Houston,
Texas 77008
(713)
866-6000
www.weingarten.com
We
have
also adopted a Code of Conduct for Financial Managers setting forth a code
of
ethics applicable to our principal executive officer, principal financial
officer and financial managers, which is available on our website at
www.weingarten.com.
Shareholders may request a free copy of the Code of Conduct for Financial
Managers from the address and phone number set forth above.
Governance
Guidelines
We
have
adopted Trust Managers Governance Guidelines, which are available on our website
at www.weingarten.com.
Shareholders may request a free copy of the Trust Managers Governance Guidelines
from the address and phone number set forth above under "—Code of
Ethics."
Incorporated
herein by reference to the "Executive Compensation" section of our definitive
Proxy Statement for the Annual Meeting of Shareholders to be held May 3,
2007.
Incorporated
herein by reference to the "Share Ownership of Certain Beneficial Owners"
section of our definitive Proxy Statement for the Annual Meeting of Shareholders
to be held May 3, 2007.
The
following table summarizes the equity compensation plans under which our common
shares may be issued as of December 31, 2006:
|
|
Number
of shares to
|
|
Weighted
average
|
|
|
|
|
be
issued upon exercise
|
|
exercise
price of
|
|
Number
of shares
|
|
|
of
outstanding options,
|
|
outstanding
options,
|
|
remaining
available
|
Plan
category
|
|
warrants
and rights
|
|
warrants
and rights
|
|
for
future issuance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by shareholders
|
|
3,147,153
|
|
$
31.99
|
|
2,756,937
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by shareholders
|
|
―
|
|
―
|
|
―
|
|
|
|
|
|
|
|
Total
|
|
3,147,153
|
|
$
31.99
|
|
2,756,937
|
Incorporated
herein by reference to the "Compensation Committee Interlocks and Insider
Participation" section of our definitive Proxy Statement for the Annual Meeting
of Shareholders to be held May 3, 2007.
Incorporated
herein by reference to the "Principal Accounting Firm Fees" within Proposal
Two
of our definitive Proxy Statement for the Annual Meeting of Shareholders to
be
held May 3, 2007.
PART
IV
(a)
|
|
Financial
Statements and Financial Statement Schedules:
|
Page
|
|
|
|
|
|
|
(1)
|
(A)
|
|
45
|
|
|
(B)
|
Financial
Statements
|
|
|
|
|
(i)
|
|
46
|
|
|
|
(ii)
|
|
47
|
|
|
|
(iii)
|
|
48
|
|
|
|
(iv)
|
|
49
|
|
|
|
(v)
|
|
50
|
|
(2)
|
Financial
Statement Schedules:
|
|
|
|
|
|
|
|
Schedule
|
|
|
|
|
|
|
|
|
II
|
|
86
|
|
|
|
III
|
|
87
|
|
|
|
IV
|
|
89
|
All
other schedules are omitted since the required information is
not present
or is not present in amounts sufficient to require submission
of the
schedule or because the information required is included in the
consolidated financial statements and notes hereto.
|
|
|
|
|
(b)
|
|
Exhibits:
|
|
3.1
|
—
|
Restated
Declaration of Trust (filed as Exhibit 3.1 to WRI's Registration
Statement
on Form 8-A dated January 19, 1999 and incorporated herein by
reference).
|
3.2
|
—
|
Amendment
of the Restated Declaration of Trust (filed as Exhibit 3.2 to
WRI's
Registration Statement on Form 8-A dated January 19, 1999 and
incorporated
herein by reference).
|
3.3
|
—
|
Second
Amendment of the Restated Declaration of Trust (filed as Exhibit
3.3 to
WRI's Registration Statement on Form 8-A dated January 19, 1999
and
incorporated herein by reference).
|
3.4
|
—
|
Third
Amendment of the Restated Declaration of Trust (filed as Exhibit
3.4 to
WRI's Registration Statement on Form 8-A dated January 19, 1999
and
incorporated herein by reference).
|
3.5
|
—
|
Fourth
Amendment of the Restated Declaration of Trust dated April 28, 1999 (filed
as Exhibit 3.5 to WRI's Annual Report on Form 10-K for the year
ended
December 31, 2001 and incorporated herein by
reference).
|
3.6
|
—
|
Fifth
Amendment of the Restated Declaration of Trust dated April 20,
2001 (filed
as Exhibit 3.6 to WRI's Annual Report on Form 10-K for the year
ended
December 31, 2001 and incorporated herein by
reference).
|
3.7
|
—
|
Amended
and Restated Bylaws of WRI (filed as Exhibit 99.2 to WRI's Registration
Statement on Form 8-A dated February 23, 1998 and incorporated
herein by
reference).
|
4.1
|
—
|
Subordinated
Indenture dated as of May 1, 1995 between WRI and Chase Bank
of Texas,
National Association (formerly, Texas Commerce Bank National
Association)
(filed as Exhibit 4(a) to WRI's Registration Statement on Form
S-3 (No.
33-57659) and incorporated herein by reference).
|
4.2
|
—
|
Subordinated
Indenture dated as of May 1, 1995 between WRI and Chase Bank
of Texas,
National Association (formerly, Texas Commerce Bank National
Association)
(filed as Exhibit 4(b) to WRI's Registration Statement on Form
S-3 (No.
33-57659) and incorporated herein by reference).
|
4.3
|
—
|
Form
of Fixed Rate Senior Medium Term Note (filed as Exhibit 4.19
to WRI’s
Annual Report on Form 10-K for the year ended December 31, 1998
and
incorporated herein by reference).
|
4.4
|
—
|
Form
of Floating Rate Senior Medium Term Note (filed as Exhibit 4.20
to WRI’s
Annual Report on Form 10-K for the year ended December 31, 1998
and
incorporated herein by
reference).
|
4.5
|
—
|
Form
of Fixed Rate Subordinated Medium Term Note (filed as Exhibit 4.21
to
WRI’s Annual Report on Form 10-K for the year ended December 31, 1998
and
incorporated herein by reference).
|
4.6
|
—
|
Form
of Floating Rate Subordinated Medium Term Note (filed as Exhibit
4.22 to
WRI’s Annual Report on Form 10-K for the year ended December 31, 1998
and
incorporated herein by reference).
|
4.7
|
—
|
Statement
of Designation of 6.75% Series D Cumulative Redeemable Preferred
Shares
(filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated
April 17, 2003 and incorporated herein by reference).
|
4.8
|
—
|
Statement
of Designation of 6.95% Series E Cumulative Redeemable Preferred
Shares
(filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated
July 8, 2004 and incorporated herein by reference).
|
4.9
|
—
|
Statement
of Designation of 6.50% Series F Cumulative Redeemable Preferred
Shares
(filed as Exhibit 3.1 to WRI’s Registration Statement on Form 8-A dated
January 29, 2007 and incorporated herein by reference).
|
4.10
|
—
|
6.75%
Series D Cumulative Redeemable Preferred Share Certificate (filed
as
Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated April 17,
2003 and incorporated herein by reference).
|
4.11
|
—
|
6.95%
Series E Cumulative Redeemable Preferred Share Certificate (filed
as
Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated July 8, 2004
and incorporated herein by reference).
|
4.12
|
—
|
6.50%
Series F Cumulative Redeemable Preferred Share Certificate (filed
as
Exhibit 4.2 to WRI’s Registration Statement on Form 8-A dated January 29,
2007 and incorporated herein by reference).
|
4.13
|
—
|
Form
of Receipt for Depositary Shares, each representing 1/30 of a share
of
6.75% Series D Cumulative Redeemable Preferred Shares, par value
$.03 per
share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A
dated April 17, 2003 and incorporated herein by
reference).
|
4.14
|
—
|
Form
of Receipt for Depositary Shares, each representing 1/100 of a share
of
6.95% Series E Cumulative Redeemable Preferred Shares, par value
$.03 per
share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A
dated July 8, 2004 and incorporated herein by
reference).
|
4.15
|
—
|
Form
of Receipt for Depositary Shares, each representing 1/100 of a share
of
6.50% Series F Cumulative Redeemable Preferred Shares, par value
$.03 per
share (filed as Exhibit 4.3 to WRI’s Registration Statement on Form 8-A
dated January 29, 2007 and incorporated herein by
reference).
|
4.16
|
—
|
Form
of 7% Notes due 2011 (filed as Exhibit 4.17 to WRI’s Annual Report on Form
10-K for the year ended December 31, 2001 and incorporated herein
by
reference).
|
4.17
|
—
|
Form
of 3.95% Convertible Senior Notes due 2026 (filed as Exhibit 4.2
to WRI’s
Form 8-K on August 2, 2006 and incorporated herein by
reference).
|
10.1†
|
—
|
1988
Share Option Plan of WRI, as amended (filed as Exhibit 10.1 to WRI’s
Annual Report on Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference).
|
10.2†
|
—
|
The
Savings and Investment Plan for Employees of Weingarten Realty Investors
dated December 17, 2003 (filed as Exhibit 10.34 on WRI’s Annual Report on
Form 10-K for the year ended December 31, 2005 and incorporated herein
by
reference).
|
10.3†
|
—
|
The
Savings and Investment Plan for Employees of WRI, as amended (filed
as
Exhibit 4.1 to WRI’s Registration Statement on Form S-8 (No. 33-25581) and
incorporated herein by reference).
|
10.4†
|
—
|
First
Amendment to the Savings and Investment Plan for Employees of Weingarten
Realty Investors dated August 1, 2005 (filed as Exhibit 10.25 on
WRI’s
Form 10-Q for the quarter ended September 30, 2005 and incorporated
herein
by reference).
|
10.5†
|
—
|
The
Fifth Amendment to Savings and Investment Plan for Employees of WRI
(filed
as Exhibit 4.1.1 to WRI’s Post-Effective Amendment No. 1 to Registration
Statement on Form S-8 (No. 33-25581) and incorporated herein by
reference).
|
10.6†
|
—
|
Mandatory
Distribution Amendment for the Savings and Investment Plan for Employees
of Weingarten Realty Investors dated August 1, 2005 (filed as Exhibit
10.26 on WRI’s Form 10-Q for the quarter ended September 30, 2005 and
incorporated herein by reference).
|
10.7†
|
—
|
The
1993 Incentive Share Plan of WRI (filed as Exhibit 4.1 to WRI’s
Registration Statement on Form S-8 (No. 33-52473) and incorporated
herein
by reference).
|
10.8†
|
—
|
1999
WRI Employee Share Purchase Plan (filed as Exhibit 10.6 to WRI’s Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated
herein by reference).
|
10.9†
|
—
|
2001
Long Term Incentive Plan (filed as Exhibit 10.7 to WRI’s Annual Report on
Form 10-K for the year ended December 31, 2001 and incorporated herein
by
reference).
|
10.10
|
—
|
Master
Promissory Note in the amount of $20,000,000 between WRI, as payee,
and
Chase Bank of Texas, National Association (formerly, Texas Commerce
Bank
National Association), as maker, effective December 30, 1998 (filed
as
Exhibit 4.15 to WRI’s
Annual Report on Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference).
|
10.11†
|
—
|
Weingarten
Realty Retirement Plan restated effective April 1, 2002 (filed as
Exhibit
10.29 on WRI’s Annual Report on Form 10-K for the year ended December 31,
2005 and incorporated herein by reference).
|
10.12†
|
—
|
First
Amendment to the Weingarten Realty Retirement Plan, dated December
31,
2003 (filed as Exhibit 10.33 on WRI’s Annual Report on Form 10-K for the
year ended December 31, 2005 and incorporated herein by reference).
|
10.13†
|
—
|
First
Amendment to the Weingarten Realty Pension Plan, dated August 1,
2005
(filed as Exhibit 10.27 on WRI’s Form 10-Q for the quarter ended September
30, 2005 and incorporated herein by reference).
|
10.14†
|
—
|
Mandatory
Distribution Amendment for the Weingarten Realty Retirement Plan
dated
August 1, 2005 (filed as Exhibit 10.28 on WRI’s Form 10-Q for the quarter
ended September 30, 2005 and incorporated herein by
reference).
|
10.15†
|
—
|
Weingarten
Realty Investors Supplemental Executive Retirement Plan amended and
restated effective September 1, 2002 (filed as Exhibit 10.10 on WRI’s Form
10-Q for the quarter ended June 30, 2005 and incorporated herein
by
reference).
|
10.16†
|
—
|
First
Amendment to the Weingarten Realty Investors Supplemental Executive
Retirement Plan amended on November 3, 2003 (filed as Exhibit 10.11
on
WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated
herein by reference).
|
10.17†
|
—
|
Second
Amendment to the Weingarten Realty Investors Supplemental Executive
Retirement Plan amended October 22, 2004 (filed as Exhibit 10.12
on WRI’s
Form 10-Q for the quarter ended June 30, 2005 and incorporated herein
by
reference).
|
10.18†
|
—
|
Third
Amendment to the Weingarten Realty Investors Supplemental Executive
Retirement Plan amended October 22, 2004 (filed as Exhibit 10.13
on WRI’s
Form 10-Q for the quarter ended June 30, 2005 and incorporated herein
by
reference).
|
10.19†
|
—
|
Weingarten
Realty Investors Retirement Benefit Restoration Plan adopted effective
September 1, 2002 (filed as Exhibit 10.14 on WRI’s Form 10-Q for the
quarter ended June 30, 2005 and incorporated herein by
reference).
|
10.20†
|
—
|
First
Amendment to the Weingarten Realty Investors Retirement Benefit
Restoration Plan amended on November 3, 2003 (filed as Exhibit 10.15
on
WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated
herein by reference).
|
10.21†
|
—
|
Second
Amendment to the Weingarten Realty Investors Retirement Benefit
Restoration Plan amended October 22, 2004 (filed as Exhibit 10.16
on WRI’s
Form 10-Q for the quarter ended June 30, 2005 and incorporated herein
by
reference).
|
10.22†
|
—
|
Third
Amendment to the Weingarten Realty Pension Plan dated December 23,
2005
(filed as Exhibit 10.30 on WRI’s Annual Report on Form 10-K for the year
ended December 31, 2005 and incorporated herein by
reference).
|
10.23†
|
—
|
Weingarten
Realty Investors Deferred Compensation Plan amended and restated
as a
separate and independent plan effective September 1, 2002 (filed
as
Exhibit 10.17 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and
incorporated herein by reference).
|
10.24†
|
—
|
Supplement
to the Weingarten Realty Investors Deferred Compensation Plan amended
on
April 25, 2003 (filed as Exhibit 10.18 on WRI’s Form 10-Q for the quarter
ended June 30, 2005 and incorporated herein by
reference).
|
10.25†
|
—
|
First
Amendment to the Weingarten Realty Investors Deferred Compensation
Plan
amended on November 3, 2003 (filed as Exhibit 10.19 on WRI’s Form 10-Q for
the quarter ended June 30, 2005 and incorporated herein by
reference).
|
10.26†
|
—
|
Second
Amendment to the Weingarten Realty Investors Deferred Compensation
Plan,
as amended, dated October 13, 2005 (filed as Exhibit 10.29 on WRI’s Form
10-Q for the quarter ended September 30, 2005 and incorporated herein
by
reference).
|
10.27†
|
—
|
Trust
Under the Weingarten Realty Investors Deferred Compensation Plan
amended
and restated effective October 21, 2003 (filed as Exhibit 10.21 on
WRI’s
Form 10-Q for the quarter ended June 30, 2005 and incorporated herein
by
reference).
|
10.28†
|
—
|
Fourth
Amendment to the Weingarten Realty Investors Deferred Compensation
Plan,
dated December 23, 2005 (filed as Exhibit 10.31 on WRI’s Annual Report on
Form 10-K for the year ended December 31, 2005 and incorporated herein
by
reference).
|
10.29†
|
—
|
Trust
Under the Weingarten Realty Investors Retirement Benefit Restoration
Plan
amended and restated effective October 21, 2003 (filed as Exhibit
10.22 on
WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated
herein by reference).
|
10.30†
|
—
|
Trust
Under the Weingarten Realty Investors Supplemental Executive Retirement
Plan amended and restated effective October 21, 2003 (filed as Exhibit
10.23 on WRI’s Form 10-Q for the quarter ended June 30, 2005 and
incorporated herein by reference).
|
10.31†
|
—
|
First
Amendment to the Trust Under the Weingarten Realty Investors Deferred
Compensation Plan, Supplemental Executive Retirement Plan, and Retirement
Benefit Restoration Plan amended on March 16, 2004 (filed as Exhibit
10.24
on WRI’s Form 10-Q for the quarter ended June 30, 2005 and incorporated
herein by reference).
|
10.32†
|
—
|
Third
Amendment to the Weingarten Realty Investors Deferred Compensation
Plan
dated August 1, 2005 (filed as Exhibit 10.30 on WRI’s Form 10-Q for the
quarter ended September 30, 2005 and incorporated herein by
reference).
|
10.33
|
—
|
Amended
and Restated Credit Agreement dated February 22, 2006 among Weingarten
Realty Investors, the Lenders Party Hereto and JPMorgan Chase Bank,
N.A.,
as Administrative Agent (filed as Exhibit 10.32 on WRI’s Form 10-K for the
year ended December 31, 2005 and incorporated by
reference).
|
10.34†
|
—
|
Fifth
Amendment to the Weingarten Realty Investors Deferred Compensation
Plan
(filed as Exhibit 10.34 to WRI’s Form 10-Q for quarter ended June 30, 2006
and incorporated herein by reference).
|
10.35†
|
—
|
Restatement
of the Weingarten Realty Investors Supplemental Executive Retirement
Plan
dated August 4, 2006
(filed as Exhibit 10.35 to WRI’s Form 10-Q for the quarter ended September
31, 2006 and incorporated herein by reference).
|
10.36†
|
—
|
Restatement
of the Weingarten Realty Investors Deferred Compensation Plan dated
August
4, 2006
(filed as Exhibit 10.36 to WRI’s Form 10-Q for the quarter ended September
31, 2006 and incorporated herein by reference).
|
10.37†
|
—
|
Restatement
of the Weingarten Realty Investors Retirement Benefit Restoration
Plan
dated August 4, 2006
(filed as Exhibit 10.37 to WRI’s Form 10-Q for the quarter ended September
31, 2006 and incorporated herein by reference).
|
10.38†*
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Supplemental Executive Retirement
Plan dated December 15, 2006.
|
10.39†*
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Retirement Benefit Restoration
Plan dated December 15, 2006.
|
10.40†*
|
—
|
Amendment
No. 1 to the Weingarten Realty Investors Deferred Compensation Plan
dated
December 15, 2006.
|
10.41†*
|
—
|
Final
401(k)/401(m) Regulations Amendment dated December 15,
2006.
|
12.1*
|
—
|
Computation
of Fixed Charges Ratios.
|
14.1
|
—
|
Code
of Ethical Conduct for Senior Financial Officers - Andrew M. Alexander
(filed as Exhibit 14.1 to WRI’s Annual Report on Form 10-K for the year
ended December 31, 2003 and incorporated herein by
reference).
|
14.2
|
—
|
Code
of Ethical Conduct for Senior Financial Officers - Stephen C. Richter
(filed as Exhibit 14.2 to WRI’s Annual Report on Form 10-K for the year
ended December 31, 2003 and incorporated herein by
reference).
|
14.3
|
—
|
Code
of Ethical Conduct for Senior Financial Officers - Joe D. Shafer
(filed as
Exhibit 14.3 to WRI’s Annual Report on Form 10-K for the year ended
December 31, 2003 and incorporated herein by
reference).
|
21.1*
|
—
|
Subsidiaries
of the Registrant.
|
23.1*
|
—
|
Consent
of Deloitte & Touche LLP.
|
24.1*
|
—
|
Power
of Attorney (included on first signature page).
|
31.1*
|
—
|
Certification
pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief
Executive Officer).
|
31.2*
|
—
|
Certification
pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief
Financial Officer).
|
32.1**
|
—
|
Certification
pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906
of the
Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
|
32.2**
|
—
|
Certification
pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906
of the
Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
|
_______________
*
|
Filed
with this report.
|
**
|
Furnished
with this report.
|
†
|
Management
contract or compensation plan or
arrangement.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act
of
1934, the Registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
|
WEINGARTEN
REALTY INVESTORS
|
|
|
|
|
|
|
|
By:
|
/s/
Andrew M. Alexander
|
|
|
Andrew
M. Alexander
|
|
|
Chief
Executive Officer
|
Date:
March
1,
2007
POWER
OF
ATTORNEY
KNOW
ALL
MEN BY THESE PRESENTS that each of Weingarten Realty Investors, a real estate
investment trust organized under the Texas Real Estate Investment Trust Act,
and
the undersigned trust managers and officers of
Weingarten Realty Investors hereby
constitutes and appoints Andrew M. Alexander, Stanford Alexander, Martin
Debrovner, Stephen C. Richter and Joe D. Shafer or any one of them, its or
his
true and lawful attorney-in-fact and agent, for it or him and in its or his
name, place and stead, in any and all capacities, with full power to act alone,
to sign any and all amendments to this Report, and to file each such amendment
to the Report, with all exhibits thereto, and any and all other documents in
connection therewith, with the Securities and Exchange Commission, hereby
granting unto said attorney-in-fact and agent full power and authority to do
and
perform any and all acts and things requisite and necessary to be done in and
about the premises as fully to all intents and purposes as it or he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirement of the Securities and Exchange Act of 1934, this report
has
been signed below by the following persons on behalf of the Registrant and
in
the capacities and on the dates indicated:
|
Signature
|
Title
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Stanford Alexander
|
Chairman
|
March
1,
2007
|
|
Stanford
Alexander
|
and
Trust Manager
|
|
|
|
|
|
By:
|
/s/
Andrew M. Alexander
|
Chief
Executive Officer,
|
March
1,
2007
|
|
Andrew
M. Alexander
|
President
and Trust Manager
|
|
|
|
|
|
By:
|
/s/
James W. Crownover
|
Trust
Manager
|
March
1,
2007
|
|
James
W. Crownover
|
|
|
|
|
|
|
By:
|
/s/
Robert J. Cruikshank
|
Trust
Manager
|
March
1,
2007
|
|
Robert
J. Cruikshank
|
|
|
|
|
|
|
By:
|
/s/
Martin Debrovner
|
Vice
Chairman
|
March
1,
2007
|
|
Martin
Debrovner
|
|
|
By:
|
/s/
Melvin Dow
|
Trust
Manager
|
March
1,
2007
|
|
Melvin
Dow
|
|
|
|
|
|
|
By:
|
/s/
Stephen A. Lasher
|
Trust
Manager
|
March
1,
2007
|
|
Stephen
A. Lasher
|
|
|
|
|
|
|
By:
|
/s/
Stephen C. Richter
|
Executive
Vice President and
|
March
1,
2007
|
|
Stephen
C. Richter
|
Chief
Financial Officer
|
|
|
|
|
|
By:
|
/s/
Douglas W. Schnitzer
|
Trust
Manager
|
March
1,
2007
|
|
Douglas
W. Schnitzer
|
|
|
|
|
|
|
By:
|
/s/
Marc J. Shapiro
|
Trust
Manager
|
March
1,
2007
|
|
Marc
J. Shapiro
|
|
|
|
|
|
|
By:
|
/s/
Joe D. Shafer
|
Vice
President/Chief Accounting Officer
|
March
1,
2007
|
|
Joe
D. Shafer
|
(Principal
Accounting Officer)
|
|
WEINGARTEN
REALTY INVESTORS
VALUATION
AND QUALIFYING ACCOUNTS
December
31, 2006, 2005, and 2004
(Amounts
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged
|
|
|
|
|
|
|
|
|
|
Balance
at
|
|
to
costs
|
|
Charged
|
|
|
|
Balance
|
|
|
|
beginning
|
|
and
|
|
to
other
|
|
Deductions
|
|
at
end of
|
|
Description
|
|
of
period
|
|
expenses
|
|
accounts
|
|
(A)
|
|
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for Doubtful Accounts
|
|
$
|
4,673
|
|
$
|
3,917
|
|
|
|
|
$
|
2,595
|
|
$
|
5,995
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for Doubtful Accounts
|
|
$
|
4,205
|
|
$
|
3,720
|
|
|
|
|
$
|
3,252
|
|
$
|
4,673
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for Doubtful Accounts
|
|
$
|
4,066
|
|
$
|
3,325
|
|
|
|
|
$
|
3,186
|
|
$
|
4,205
|
|
_______________
Note
A -
Write-offs of accounts receivable previously reserved.
WEINGARTEN
REALTY INVESTORS
REAL
ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER
31, 2006
(Amounts
in thousands)
|
|
Total
Cost
|
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
|
Projects
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
Under
|
|
Total
|
|
Accumulated
|
|
Encumbrances
|
|
|
|
Land
|
|
Improvements
|
|
Development
|
|
Cost
|
|
Depreciation
|
|
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHOPPING
CENTERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
$
|
196,253
|
|
|
865,182
|
|
|
|
|
$
|
1,061,435
|
|
$
|
325,769
|
|
$
|
89,070
|
|
Other
States
|
|
|
573,845
|
|
|
2,109,904
|
|
|
|
|
|
2,683,749
|
|
|
293,748
|
|
|
838,562
|
|
Total
Shopping Centers
|
|
|
770,098
|
|
|
2,975,086
|
|
|
|
|
|
3,745,184
|
|
|
619,517
|
|
|
927,632
|
|
INDUSTRIAL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
46,272
|
|
|
226,916
|
|
|
|
|
|
273,188
|
|
|
59,361
|
|
|
|
|
Other
States
|
|
|
30,392
|
|
|
93,787
|
|
|
|
|
|
124,179
|
|
|
5,529
|
|
|
11,192
|
|
Total
Industrial
|
|
|
76,664
|
|
|
320,703
|
|
|
|
|
|
397,367
|
|
|
64,890
|
|
|
11,192
|
|
OTHER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
533
|
|
|
14,231
|
|
|
|
|
|
14,764
|
|
|
9,532
|
|
|
|
|
Total
Improved Properties
|
|
|
847,295
|
|
|
3,310,020
|
|
|
|
|
|
4,157,315
|
|
|
693,939
|
|
|
938,824
|
|
LAND
UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
|
|
|
|
|
$
|
63,912
|
|
$
|
63,912
|
|
|
|
|
|
|
|
Other
States
|
|
|
|
|
|
|
|
|
104,483
|
|
|
104,483
|
|
|
|
|
|
|
|
Total
Land Under Development or Held for Development
|
|
|
|
|
|
|
|
|
168,395
|
|
|
168,395
|
|
|
|
|
|
|
|
SHOPPING
CENTERS UNDER CAPITAL LEASE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
States
|
|
|
|
|
|
29,054
|
|
|
|
|
|
29,054
|
|
|
13,066
|
|
|
8,732
|
|
Total
Leased Property Under Capital Lease
|
|
|
|
|
|
29,054
|
|
|
|
|
|
29,054
|
|
|
13,066
|
|
|
8,732
|
|
CONSTRUCTION
IN PROGRESS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
|
|
|
|
|
|
29,984
|
|
|
29,984
|
|
|
|
|
|
|
|
Other
States
|
|
|
|
|
|
|
|
|
61,140
|
|
|
61,140
|
|
|
|
|
|
|
|
Total
Construction in Progress
|
|
|
|
|
|
|
|
|
91,124
|
|
|
91,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
OF ALL PROPERTIES
|
|
$
|
847,295
|
|
$
|
3,339,074
|
|
$
|
259,519
|
|
$
|
4,445,888
|
|
$
|
707,005
|
|
$
|
947,556
|
|
Note
A -
|
Encumbrances
do not include $17.2 million outstanding under a $30 million 20-year
term
loan, payable to a group of insurance companies secured by a property
collateral pool including all or part of three shopping
centers.
|
Schedule
III
(Continued)
The
changes in total cost of the properties for the years ended December 31, 2006,
2005 and 2004
were as
follows:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of year
|
|
$
|
4,033,579
|
|
$
|
3,751,607
|
|
$
|
3,200,091
|
|
Additions
at cost
|
|
|
1,022,103
|
|
|
429,040
|
|
|
594,794
|
|
Retirements
or sales
|
|
|
(609,794
|
)
|
|
(147,068
|
)
|
|
(43,278
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at end of year
|
|
$
|
4,445,888
|
|
$
|
4,033,579
|
|
$
|
3,751,607
|
|
The
changes in accumulated depreciation for the years ended December 31, 2006,
2005
and 2004
were as
follows:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of year
|
|
$
|
679,642
|
|
$
|
609,772
|
|
$
|
527,375
|
|
Additions
at cost
|
|
|
110,406
|
|
|
107,901
|
|
|
100,074
|
|
Retirements
or sales
|
|
|
(83,043
|
)
|
|
(38,031
|
)
|
|
(17,677
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at end of year
|
|
$
|
707,005
|
|
$
|
679,642
|
|
$
|
609,772
|
|
WEINGARTEN
REALTY INVESTORS
MORTGAGE
LOANS ON REAL ESTATE
DECEMBER
31, 2006
(Amounts
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final
|
|
Periodic
|
|
Face
|
|
Carrying
|
|
|
|
Interest
|
|
Maturity
|
|
Payment
|
|
Amount
of
|
|
Amount
of
|
|
|
|
Rate
|
|
Date
|
|
Terms
|
|
Mortgages
|
|
Mortgages(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHOPPING
CENTERS:
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
MORTGAGES:
|
|
|
|
|
|
|
|
|
|
|
|
Eastex
Venture
|
|
|
|
|
|
|
|
|
|
|
|
Beaumont,
TX
|
|
|
8.00
|
%
|
|
10-31-09
|
|
$
|
317
Annual P & I
|
|
$
|
1,693
|
|
$
|
1,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
363-410
Burma, LLC
|
|
|
6.50
|
%
|
|
07-01-11
|
|
$
|
212
Annual P & I
|
|
|
2,607
|
|
|
2,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIAL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
MORTGAGES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South
Loop Business Park
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston,
TX
|
|
|
9.25
|
%
|
|
11-01-07
|
|
$
|
74
Annual P & I
|
|
|
112
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHOPPING
CENTERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTRUCTION
LOANS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WRI
LLA Venture
|
|
|
7.75
|
%
|
|
12-31-07
|
|
|
At
Maturity
|
|
|
896
|
|
|
896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
MORTGAGE LOANS ON REAL ESTATE
|
|
|
|
|
|
|
|
|
|
|
$
|
5,308
|
|
$
|
5,308
|
|
Note
A -
|
The
aggregate cost at December 31, 2006 for federal income tax purposes
is
$5,308.
|
Note
B -
|
Changes
in mortgage loans for the years ended December 31, 2006, 2005, and
2004
are summarized below.
|
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
Balance,
Beginning of Year
|
|
$
|
2,791
|
|
$
|
3,057
|
|
$
|
3,621
|
|
Additions
to Existing Loans
|
|
|
3,347
|
|
|
339
|
|
|
|
|
Collections
of Principal
|
|
|
(830
|
)
|
|
(605
|
)
|
|
(564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
End of Year
|
|
$
|
5,308
|
|
$
|
2,791
|
|
$
|
3,057
|
|
89