form8k_07acquisitionsfeb2008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): February 20,
2008
WEINGARTEN
REALTY INVESTORS
(Exact
name of Registrant as specified in its Charter)
Texas
|
1-9876
|
74-1464203
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
file number)
|
(I.R.S.
Employer
Identification
Number)
|
2600
Citadel Plaza Drive, Suite 300, Houston, Texas 77008
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (713) 866-6000
Not
applicable
(Former
name or former address, if changed since last report)
ITEM
2.01
COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
During
the period from January 1, 2007 through November 30, 2007, we acquired 13 retail
shopping centers and eight industrial projects. Also, we invested in
five unconsolidated real estate joint ventures and partnerships to acquire seven
retail and seven industrial properties. Our ownership interest ranges
from 10% to 25% in these unconsolidated real estate joint ventures and
partnerships.
Material
factors considered by us in evaluating acquisition opportunities include the
prospective financial performance of the center, credit quality of the tenancy,
local and regional demographics, location and competition, ad valorem tax rates,
condition of the property and the related anticipated level of capital
expenditures required. We are not aware of any other material factors
other than those listed above that would cause the reported financial
information not to be necessarily indicative of future operating
results.
Our total
investment in acquisitions and unconsolidated real estate joint ventures and
partnerships during 2007 was approximately $525 million. Audited
financial statements for approximately $285 million of those purchases (the
"Acquired Properties") are submitted in ITEM 9.01 below. Unaudited
pro forma financial information of the Acquired Properties and other
acquisitions (“Other Acquisitions”) are also included in ITEM 9.01
below.
ITEM
9.01
FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The
following financial statements, pro forma financial statements and exhibits are
filed as part of this report:
(a)
|
Financial
statements of businesses acquired:
|
|
|
|
|
1.
|
Bourn
Properties Portfolio
|
|
|
|
|
|
|
(i)
|
Independent
Auditors’ Report
|
|
|
|
|
|
|
(ii)
|
Combined
Statement of Revenues and Certain Expenses for the Year Ended December 31,
2006
|
|
|
|
|
|
|
(iii)
|
Notes
to Combined Statement of Revenues and Certain Expenses for the Year Ended
December 31, 2006
|
|
|
|
|
|
2.
|
Devon
Properties Portfolio
|
|
|
|
|
|
|
(i)
|
Independent
Auditors' Report
|
|
|
|
|
|
|
(ii)
|
Combined
Statements of Revenues and Certain Expenses for the Three Months Ended
March 31, 2007 (Unaudited) and for the Year Ended December 31,
2006
|
|
|
|
|
|
|
(iii)
|
Notes
to Combined Statements of Revenues and Certain Expenses for the Three
Months Ended March 31, 2007 (Unaudited) and for the Year Ended December
31, 2006
|
|
|
|
|
|
3.
|
Prudential
Properties Portfolio
|
|
|
|
|
|
|
(i)
|
Independent
Auditors' Report
|
|
|
|
|
|
|
(ii)
|
Combined
Statements of Revenues and Certain Expenses for the Six Months Ended June
30, 2007(Unaudited) and for the Year Ended December 31,
2006
|
|
|
|
|
|
|
(iii)
|
Notes
to Combined Statements of Revenues and Certain Expenses for the Six Months
Ended June 30, 2007 (Unaudited) and for the Year Ended December 31,
2006
|
(b)
|
Pro
Forma Condensed Consolidated Financial Statements (unaudited) of
Weingarten Realty Investors, the Bourn Properties Portfolio, the Devon
Properties Portfolio, the Prudential Properties Portfolio and Other
Acquisitions
|
|
|
|
|
|
1.
|
Pro
Forma Condensed Consolidated Statements of Income from Continuing
Operations for the Year Ended December 31, 2006 and the Nine Months Ended
September 30, 2007
|
|
|
|
|
|
2.
|
Pro
Forma Condensed Consolidated Balance Sheet as of September 30,
2007
|
|
|
|
|
|
3.
|
Notes
and Significant Assumptions to Proforma Condensed Financial
Statements
|
|
|
|
|
|
4.
|
Consolidated
Statement of Estimated Taxable Operating Results and Cash to be Made
Available by Operations for the Year Ended December 31,
2006
|
|
|
|
(c)
|
Exhibits:
|
|
|
|
|
|
Included
herewith is Exhibit No. 23.1, the Consent of Independent
Auditors
|
INDEPENDENT
AUDITORS’ REPORT
To the
Board of Trust Managers and Shareholders of Weingarten Realty
Investors:
We have
audited the accompanying combined statement of revenues and certain expenses
(the “Historical Summary”) of the Bourn Properties Portfolio (the “Portfolio”)
for the year ended December 31, 2006. This Historical Summary is the
responsibility of the Portfolio’s management. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the Historical Summary is
free of material misstatement. An audit includes consideration of internal
control over financial reporting as it relates to the Historical Summary as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Portfolio’s internal control over financial reporting as it relates to the
Historical Summary. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the Historical Summary. We believe that our audit provides a
reasonable basis for our opinion.
The
accompanying Historical Summary was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K of Weingarten Realty Investors) as
discussed in Note 2 to the Historical Summary and is not intended to be a
complete presentation of the Portfolio’s revenues and expenses.
In our
opinion, such Historical Summary presents fairly, in all material respects, the
combined revenues and certain expenses discussed in Note 2 to the Historical
Summary of the Bourn Properties Portfolio for the year ended December 31, 2006,
in conformity with accounting principles generally accepted in the United States
of America.
/s/
Deloitte & Touche LLP
Houston,
Texas
January
28, 2008
BOURN
PROPERTIES PORTFOLIO
COMBINED
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR
THE YEAR ENDED DECEMBER 31, 2006
|
|
Year
Ended
December
31, 2006
|
|
REVENUES:
|
|
|
|
Rental
|
|
$ |
7,274,524 |
|
Tenant
reimbursements
|
|
|
1,190,547 |
|
Total
Revenues
|
|
|
8,465,071 |
|
|
|
|
|
|
CERTAIN
EXPENSES:
|
|
|
|
|
Property
operating and maintenance
|
|
|
610,347 |
|
Ad
valorem taxes
|
|
|
768,342 |
|
|
|
|
1,378,689 |
|
|
|
|
|
|
EXCESS
OF REVENUES OVER CERTAIN EXPENSES
|
|
$ |
7,086,382 |
|
See
accompanying notes to the combined statement of revenues and certain
expenses.
BOURN
PROPERTIES PORTFOLIO
NOTES
TO THE COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES FOR THE YEAR ENDED
DECEMBER 31, 2006
1.
Organization
The
accompanying combined statement of revenues and certain expenses (the
"Historical Summary") includes the operations of the Bourn Properties Portfolio
(the "Portfolio"). The Portfolio was purchased by Weingarten Realty
Investors (the "Company") in two components; four of the properties were
acquired on January 22, 2007 and the remaining two properties were acquired on
March 13, 2007. The Company’s investment in the Portfolio was
approximately $140 million.
The
following properties were acquired (Unaudited):
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Entrada
de Oro
|
01/22/2007
|
89,000
|
|
Tucson,
AZ
|
Wal-Mart,
Taco Bell, Eegee’s, KFC
|
|
81%
|
Oracle
Crossing
|
01/22/2007
|
254,000
|
|
Tucson,
AZ
|
Kohl’s,
Peter Piper Pizza, Sprouts Farmers Market
|
|
85%
|
Oracle
Wetmore
|
01/22/2007
|
287,000
|
|
Tucson,
AZ
|
Home
Depot, Circuit City, PetSmart, Walgreen’s, BJ’s Restaurant &
Brewery
|
|
89%
|
Scottsdale
Horizon
|
01/22/2007
|
10,000
|
|
Scottsdale,
AZ
|
Baja
Fresh, Century 21, Cold Stone Creamery, Hungry Howie’s
Pizza
|
|
100%
|
Madera
Village
|
03/13/2007
|
97,000
|
|
Tucson,
AZ
|
Safeway,
Walgreen’s, Ace Hardware
|
|
100%
|
Shoppes
at Bears Path
|
03/13/2007
|
44,000
|
|
Tucson,
AZ
|
Carondolet
Medical Group, Coldwell Banker, Leslie’s Poolmart
|
|
86%
|
The
Company is a Texas real estate investment trust, which is primarily involved in
the acquisition, development and management of real estate, consisting mostly of
neighborhood and community shopping centers and, to a lesser extent, industrial
properties.
2.
Summary of Significant Accounting Policies
Basis of
Presentation - The accompanying Historical Summary has been prepared for
the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC"), which
requires certain information with respect to real estate acquisitions to be
included with certain filings with the SEC. The Historical Summary
for the year ended December 31, 2006 includes the historical revenues and
certain operating expenses of the Portfolio, exclusive of interest, management
fees, corporate level general and administrative expenses and depreciation and
amortization, which may not be comparable to the future operations of the
Portfolio.
Revenue
Recognition - Rental revenue is generally recognized on a straight-line
basis over the life of the lease. An adjustment for straight line
rent increased rental revenue by $683,000 for the year ended December 31,
2006. Rental revenue includes revenue based on a percentage of
tenants' sales, which is recognized only after the tenant exceeds their sales
breakpoint. All leases have been accounted for as operating
leases. Tenant reimbursements represent revenues from tenants for
reimbursements of taxes, maintenance expenses and insurance, which are
recognized in the period the related expenses are recognized.
Certain
Expenses - Repairs and maintenance expenditures are expensed as
incurred. Ad valorem taxes are capitalized if costs are attributable
to construction activity. 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. For the year ended December 31, 2006, ad valorem taxes
capitalized totaled $68,000.
Use of
Estimates -
The preparation of the financial statement in conformity with accounting
principles generally accepted in the United States of America requires the
Portfolio’s management to make estimates and assumptions that affect amounts
reported in the financial statement as well as certain
disclosures. Actual results could differ from those
estimates.
3.
Rentals Under Operating Leases
Future
minimum rental revenue from non-cancelable operating leases at December 31, 2006
is as follows:
2007
|
|
$ |
8,033,949 |
|
2008
|
|
$ |
8,031,519 |
|
2009
|
|
$ |
7,396,134 |
|
2010
|
|
$ |
7,028,080 |
|
2011
|
|
$ |
6,919,149 |
|
Thereafter
|
|
$ |
81,693,035 |
|
The
future minimum lease payments do not include estimates for tenant reimbursements
nor amounts based on a percentage of the tenants' sales. Percentage
rental income and tenant reimbursements totaled $54,000 and $1.2 million,
respectively, for the year ended December 31, 2006.
4.
Tenant Concentration
Each of
the six properties has at least one anchor tenant. The anchor tenants
include Wal-Mart, Home Depot, PetSmart, Walgreen’s, Kohl’s, Circuit City and
Safeway. The largest tenant represented approximately 12% of the
total rental revenue recorded by the Portfolio for the year ended December 31,
2006.
INDEPENDENT
AUDITORS’ REPORT
To the
Board of Trust Managers and Shareholders of Weingarten Realty
Investors:
We have
audited the accompanying combined statement of revenues and certain expenses
(the “Historical Summary”) of the Devon Properties Portfolio (the “Portfolio”)
for the year ended December 31, 2006. This Historical Summary is the
responsibility of the Portfolio’s management. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the Historical Summary is
free of material misstatement. An audit includes consideration of internal
control over financial reporting as it relates to the Historical Summary as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Portfolio’s internal control over financial reporting as it relates to the
Historical Summary. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the Historical Summary. We believe that our audit provides a
reasonable basis for our opinion.
The
accompanying Historical Summary was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K of Weingarten Realty Investors) as
discussed in Note 2 to the Historical Summary and is not intended to be a
complete presentation of the Portfolio’s revenues and expenses.
In our
opinion, such Historical Summary presents fairly, in all material respects, the
combined revenues and certain expenses discussed in Note 2 to the Historical
Summary of the Devon Properties Portfolio for the year ended December 31, 2006,
in conformity with accounting principles generally accepted in the United States
of America.
/s/
Deloitte & Touche LLP
Houston,
Texas
January
28, 2008
DEVON
PROPERTIES PORTFOLIO
COMBINED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR
THE THREE MONTHS ENDED MARCH 31, 2007 (UNAUDITED) AND
FOR
THE YEAR ENDED DECEMBER 31, 2006
|
|
Three
Months Ended March 31, 2007
(Unaudited)
|
|
|
Year
Ended December 31, 2006
|
|
REVENUES:
|
|
|
|
|
|
|
Rental
|
|
$ |
421,192 |
|
|
$ |
1,508,749 |
|
Tenant
reimbursements
|
|
|
63,429 |
|
|
|
215,614 |
|
Total
Revenues
|
|
$ |
484,621 |
|
|
$ |
1,724,363 |
|
|
|
|
|
|
|
|
|
|
CERTAIN
EXPENSES:
|
|
|
|
|
|
|
|
|
Property
operating and maintenance
|
|
$ |
15,212 |
|
|
$ |
67,204 |
|
Ad
valorem taxes
|
|
|
41,766 |
|
|
|
166,931 |
|
Total
Certain Expenses
|
|
$ |
56,978 |
|
|
$ |
234,135 |
|
|
|
|
|
|
|
|
|
|
EXCESS
OF REVENUES OVER CERTAIN EXPENSES
|
|
$ |
427,643 |
|
|
$ |
1,490,228 |
|
See
accompanying notes to combined statements of revenues and certain
expenses.
DEVON
PROPERTIES PORTFOLIO
NOTES
TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE THREE MONTHS
ENDED MARCH 31, 2007 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31,
2006
1.
Organization
The
accompanying combined statements of revenue and certain expenses (the
"Historical Summary") include the operations of the Devon Properties Portfolio
(the "Portfolio"). The Portfolio was purchased by Weingarten Realty
Investors (the “Company”) in April 2007 and includes two industrial
buildings. The Company’s investment in the Portfolio was
approximately $26 million.
The
following properties were acquired (Unaudited):
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Walthall
D
|
04/20/2007
|
287,000
|
|
Colonial
Heights, VA
|
Sharper
Image, Recall Total Information Management
|
|
66%
|
Northlake
A
|
04/20/2007
|
215,000
|
|
Ashland,
VA
|
FedEx
Ground, Owens & Minor
|
|
100%
|
The
Company is a Texas real estate investment trust, which is primarily involved in
the acquisition, development and management of real estate, consisting mostly of
neighborhood and community shopping centers and, to a lesser extent, industrial
properties.
2.
Summary of Significant Accounting Policies
Basis of
Presentation - The accompanying Historical Summary has been prepared for
the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC"), which
requires certain information with respect to real estate acquisitions to be
included with certain filings with the SEC. The Historical Summary
for the year ended December 31, 2006 includes the historical revenues and
certain operating expenses of the Portfolio, exclusive of interest, management
fees, corporate level general and administrative expenses and depreciation and
amortization, which may not be comparable to the future operations of the
Portfolio.
Revenue
Recognition - Rental revenue is generally recognized on a straight-line
basis over the life of the lease. An adjustment for straight line
rent increased rental revenue by $58,000 for the year ended December 31, 2006
and $57,000 for the three months ended March 31, 2007
(unaudited). All leases have been accounted for as operating
leases. Tenant reimbursements represent revenues from tenants for
reimbursements of taxes, maintenance expenses and insurance, which are
recognized in the period the related expenses are recognized.
Repairs and
Maintenance - Expenditures for repairs and maintenance are expensed as
incurred.
Use of
Estimates -
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Portfolio’s management to make estimates and assumptions that affect amounts
reported in the financial statements as well as certain
disclosures. Actual results could differ from those
estimates.
3.
Rentals Under Operating Leases
Future
minimum rental revenue from non-cancelable operating leases at December 31, 2006
is as follows:
2007
|
|
$ |
1,560,291 |
|
2008
|
|
$ |
1,661,357 |
|
2009
|
|
$ |
1,458,021 |
|
2010
|
|
$ |
1,278,702 |
|
2011
|
|
$ |
837,065 |
|
Thereafter
|
|
$ |
3,105,448 |
|
The
future minimum lease payments do not include estimates for tenant
reimbursements. Tenant reimbursements totaled $216,000 for the year
ended December 31, 2006 and $63,000 for the three months ended March 31, 2007
(unaudited).
4.
Tenant Concentration
Tenants
of the Portfolio include Sharper Image, Recall Total Information
Management, FedEx Ground, Owens & Minor and VSE
Corporation. The two largest tenants represented approximately 29%
and 28% of the total rental revenue recorded by the Portfolio in 2006 and each
represented 25% of the total rental revenue recorded in
2007. The rental revenue from any of the remaining individual tenants
did not exceed 12% and 13% of the total rental revenue for the year ended
December 31, 2006 and for the three months ended March 31, 2007 (unaudited),
respectively.
INDEPENDENT
AUDITORS’ REPORT
To
the Board of Trust Managers and Shareholders of Weingarten Realty
Investors:
We
have audited the accompanying combined statement of revenues and certain
expenses (the “Historical Summary”) of the Prudential Properties Portfolio (the
“Portfolio”) for the year ended December 31, 2006. This Historical Summary is
the responsibility of the Portfolio’s management. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the Historical Summary is
free of material misstatement. An audit includes consideration of internal
control over financial reporting as it relates to the Historical Summary as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Portfolio’s internal control over financial reporting as it relates to the
Historical Summary. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the Historical Summary. We believe that our audit provides a
reasonable basis for our opinion.
The
accompanying Historical Summary was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K of Weingarten Realty Investors) as
discussed in Note 2 to the Historical Summary and is not intended to be a
complete presentation of the Portfolio’s revenues and expenses.
In
our opinion, such Historical Summary presents fairly, in all material respects,
the combined revenues and certain expenses discussed in Note 2 to the Historical
Summary of the Prudential Properties Portfolio for the year ended December 31,
2006, in conformity with accounting principles generally accepted in the United
States of America.
/s/
Deloitte & Touche LLP
Houston,
Texas
January
28, 2008
PRUDENTIAL
PROPERTIES PORTFOLIO
COMBINED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR
THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) AND
FOR
THE YEAR ENDED DECEMBER 31, 2006
|
|
Six
Months Ended
June
30, 2007
(Unaudited)
|
|
|
Year
Ended
December
31,
2006
|
|
REVENUES:
|
|
|
|
|
|
|
Rental
|
|
$ |
3,852,108 |
|
|
$ |
7,699,829 |
|
Tenant
reimbursements
|
|
|
1,294,263 |
|
|
|
2,323,211 |
|
Total
Revenues
|
|
$ |
5,146,371 |
|
|
$ |
10,023,040 |
|
|
|
|
|
|
|
|
|
|
CERTAIN
EXPENSES:
|
|
|
|
|
|
|
|
|
Property
operating and maintenance
|
|
$ |
393,645 |
|
|
$ |
708,153 |
|
Ad
valorem taxes
|
|
|
979,385 |
|
|
$ |
1,942,682 |
|
Total
Certain Expenses
|
|
$ |
1,373,030 |
|
|
$ |
2,650,835 |
|
|
|
|
|
|
|
|
|
|
EXCESS
OF REVENUES OVER CERTAIN EXPENSES
|
|
$ |
3,773,341 |
|
|
$ |
7,372,205 |
|
See
accompanying notes to combined statements of revenues and certain
expenses.
PRUDENTIAL
PROPERTIES PORTFOLIO
NOTES
TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE SIX MONTHS ENDED
JUNE 30, 2007 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 2006
1.
Organization
The
accompanying combined statements of revenues and certain expenses (the
"Historical Summary") include the operations of the Prudential Properties
Portfolio (the "Portfolio"). The Portfolio was purchased by
Weingarten Realty Investors (the “Company”) in July 2007 and includes two retail
shopping centers. The Company’s investment in the Portfolio was
approximately $118 million. The following properties were acquired
(Unaudited):
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Perimeter
Village
|
07/03/2007
|
388,000
|
|
Atlanta,
GA
|
Borders,
Cost Plus, DSW, Wal-Mart
|
|
86%
|
Burbank
Station
|
07/03/2007
|
304,000
|
|
Burbank,
IL
|
Babies
‘R Us, Home Depot, Office Max, PetSmart, Sports Authority
|
|
100%
|
The
Company is a Texas real estate investment trust, which is primarily involved in
the acquisition, development and management of real estate, consisting mostly of
neighborhood and community shopping centers and, to a lesser extent, industrial
properties.
2.
Summary of Significant Accounting Policies
Basis of
Presentation - The accompanying Historical Summary has been prepared for
the purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC"), which
requires certain information with respect to real estate acquisitions to be
included with certain filings with the SEC. The Historical Summary
for the year ended December 31, 2006 includes the historical revenues and
certain operating expenses of the Portfolio, exclusive of interest, management
fees, corporate level general and administrative expenses and depreciation and
amortization, which may not be comparable to the future operations of the
Portfolio.
Revenue
Recognition - Rental revenue is generally recognized on a straight-line
basis over the life of the lease. An adjustment for straight line
rent decreased rental revenue by $244,000 for the year ended December 31, 2006
and $113,000 for the six months ended June 30, 2007
(unaudited). Rental revenue includes revenue based on a percentage of
tenants' sales, which is recognized only after the tenant exceeds their sales
breakpoint. All leases have been accounted for as operating
leases. Tenant reimbursements represent revenues from tenants for
reimbursements of taxes, maintenance expenses and insurance, which are
recognized in the period the related expenses are recognized.
Repairs and
Maintenance - Expenditures for repairs and maintenance are expensed as
incurred.
Use of
Estimates -
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Portfolio’s management to make estimates and assumptions that affect amounts
reported in the financial statements as well as certain
disclosures. Actual results could differ from those
estimates.
3.
Rentals Under Operating Leases
Future
minimum rental revenue from non-cancelable operating leases at December 31, 2006
is as follows:
2007
|
|
$ |
7,892,234 |
|
2008
|
|
$ |
7,694,523 |
|
2009
|
|
$ |
7,092,238 |
|
2010
|
|
$ |
6,061,366 |
|
2011
|
|
$ |
4,078,402 |
|
Thereafter
|
|
$ |
23,325,976 |
|
The
future minimum lease payments do not include estimates for tenant reimbursements
nor amounts based on a percentage of the tenants' sales. Tenant
reimbursements totaled $2.3 million for the year ended December 31, 2006 and
$1.3 million for the six months ended June 30, 2007
(unaudited). There was no percentage rent recorded in either
period.
4.
Tenant Concentration
Each
property has at least one anchor tenant. Anchor tenants include Home
Depot, PetSmart, Babies ‘R Us, Sports Authority, Wal-Mart, DSW, Borders, Office
Max, and Cost Plus. The largest tenant represented approximately 12%
and 11% of the total rental revenue recorded by the Portfolio for the year ended
December 31, 2006 and the six months ended June 30, 2007 (unaudited),
respectively.
Weingarten
Realty Investors
Pro
Forma Condensed Consolidated Statements of Income From Continuing
Operations
Year
Ended December 31, 2006
(in
thousands, except per share amounts)
(Unaudited)
These
unaudited Pro Forma Condensed Consolidated Statements of Income From Continuing
Operations for the year ended December 31, 2006 and the nine months ended
September 30, 2007 are presented as if the acquisition of the Bourn Properties
Portfolio, the Devon Properties Portfolio, the Prudential Properties Portfolio
and the other properties acquired from January 1, 2007 through November 30, 2007
(the “Other Acquisitions”), as set forth in the Notes and Significant
Assumptions, had occurred as of the beginning of the periods
presented. In management's opinion, all adjustments necessary to
reflect the effects of these transactions have been made. These
unaudited Pro Forma Condensed Consolidated Statements of Income From Continuing
Operations are not necessarily indicative of what actual results of operations
would have been had these transactions occurred on January 1, 2006, nor do they
purport to represent the results of operations for future
periods. The unaudited Pro Forma Condensed Consolidated Statement of
Income from Continuing Operations for the year ended December 31, 2006 includes
an adjustment for discontinued operations that resulted from dispositions of
real estate assets during the period from January 1, 2007 through September 30,
2007 in accordance with Statement of Financial Accounting Standards No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets.”
|
|
As
Reported
|
|
|
Adjustment
for
Discontinued
Operations
|
|
|
Adjustment
for
Bourn,
Devon
&
Prudential
Properties
Portfolios
|
|
|
Adjustment
for
Other
Acquisitions
|
|
|
Pro
Forma
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentals
|
|
$ |
554,361 |
|
|
$ |
(21,082 |
) |
|
$ |
20,213 |
|
|
$ |
13,050 |
|
|
$ |
566,542 |
|
Other
|
|
|
7,019 |
|
|
|
(93 |
) |
|
|
|
|
|
|
|
|
|
|
6,926 |
|
Total
|
|
|
561,380 |
|
|
|
(21,175 |
) |
|
|
20,213 |
|
|
|
13,050 |
|
|
|
573,468 |
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
127,613 |
|
|
|
(5,844 |
) |
|
|
5,211 |
|
|
|
3,395 |
|
|
|
130,375 |
|
Operating
|
|
|
91,422 |
|
|
|
(2,879 |
) |
|
|
1,386 |
|
|
|
1,631 |
|
|
|
91,560 |
|
Ad
valorem taxes
|
|
|
65,528 |
|
|
|
(2,724 |
) |
|
|
2,878 |
|
|
|
1,734 |
|
|
|
67,416 |
|
General
and administrative
|
|
|
23,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,801 |
|
Total
|
|
|
308,364 |
|
|
|
(11,447 |
) |
|
|
9,475 |
|
|
|
6,760 |
|
|
|
313,152 |
|
Operating
Income
|
|
|
253,016 |
|
|
|
(9,728 |
) |
|
|
10,738 |
|
|
|
6,290 |
|
|
|
260,316 |
|
Interest
Expense
|
|
|
(146,943 |
) |
|
|
1,291 |
|
|
|
(12,188 |
) |
|
|
(10,830 |
) |
|
|
(168,670 |
) |
Interest
and Other Income
|
|
|
9,045 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
9,044 |
|
Equity
Earnings of Real Estate Joint Ventures and Partnerships,
net
|
|
|
14,655 |
|
|
|
|
|
|
|
|
|
|
|
2,742 |
|
|
|
17,397 |
|
Income
Allocated to Minority Interests
|
|
|
(6,414 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,414 |
) |
Gain
on Sale of Properties
|
|
|
22,467 |
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
22,493 |
|
Gain
on Land and Merchant Development Sales
|
|
|
7,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,166 |
|
Provision
for Income Taxes
|
|
|
(1,366 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,366 |
) |
Income
(Loss) From Continuing Operations
|
|
$ |
151,626 |
|
|
$ |
(8,412 |
) |
|
$ |
(1,450 |
) |
|
$ |
(1,798 |
) |
|
$ |
139,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) From Continuing Operations Available to Common
Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
141,525 |
|
|
$ |
(8,412 |
) |
|
$ |
(1,450 |
) |
|
$ |
(1,798 |
) |
|
$ |
129,865 |
|
Diluted
|
|
$ |
146,978 |
|
|
$ |
(8,412 |
) |
|
$ |
(1,450 |
) |
|
$ |
(1,798 |
) |
|
$ |
135,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
From Continuing Operations per Common Share – Basic
|
|
$ |
1.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.48 |
|
Income
From Continuing Operations per Common Share – Diluted
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
87,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,719 |
|
Diluted
|
|
|
91,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,779 |
|
See
accompanying notes and significant assumptions to pro forma condensed financial
statements.
Weingarten
Realty Investors
Pro
Forma Condensed Consolidated Statements of Income From Continuing
Operations
Nine
Months Ended September 30, 2007
(in
thousands, except per share amounts)
(Unaudited)
|
|
As
Reported
|
|
|
Adjustment
for Bourn, Devon & Prudential Properties Portfolios
|
|
|
Adjustment
for Other Acquisitions
|
|
|
Pro
Forma
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentals
|
|
$ |
436,353 |
|
|
$ |
6,675 |
|
|
$ |
6,659 |
|
|
$ |
449,687 |
|
Other
|
|
|
9,766 |
|
|
|
|
|
|
|
|
|
|
|
9,766 |
|
Total
|
|
|
446,119 |
|
|
|
6,675 |
|
|
|
6,659 |
|
|
|
459,453 |
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
98,042 |
|
|
|
1,517 |
|
|
|
1,488 |
|
|
|
101,047 |
|
Operating
|
|
|
76,534 |
|
|
|
518 |
|
|
|
808 |
|
|
|
77,860 |
|
Ad
valorem taxes
|
|
|
53,195 |
|
|
|
1,135 |
|
|
|
789 |
|
|
|
55,119 |
|
General
and administrative
|
|
|
19,650 |
|
|
|
|
|
|
|
|
|
|
|
19,650 |
|
Total
|
|
|
247,421 |
|
|
|
3,170 |
|
|
|
3,085 |
|
|
|
253,676 |
|
Operating
Income
|
|
|
198,698 |
|
|
|
3,505 |
|
|
|
3,574 |
|
|
|
205,777 |
|
Interest
Expense
|
|
|
(110,384 |
) |
|
|
(3,887 |
) |
|
|
(5,240 |
) |
|
|
(119,511 |
) |
Interest
and Other Income
|
|
|
6,838 |
|
|
|
|
|
|
|
|
|
|
|
6,838 |
|
Equity
in Earnings of Real Estate Joint Ventures and Partnerships,
net
|
|
|
12,513 |
|
|
|
|
|
|
|
1,184 |
|
|
|
13,697 |
|
Income
Allocated to Minority Interests
|
|
|
(7,678 |
) |
|
|
|
|
|
|
|
|
|
|
(7,678 |
) |
Gain
on Sale of Properties
|
|
|
3,010 |
|
|
|
|
|
|
|
|
|
|
|
3,010 |
|
Gain
on Land and Merchant Development Sales
|
|
|
8,150 |
|
|
|
|
|
|
|
|
|
|
|
8,150 |
|
Provision
for Income Taxes
|
|
|
(1,933 |
) |
|
|
|
|
|
|
|
|
|
|
(1,933 |
) |
Income
(Loss) From Continuing Operations
|
|
$ |
109,214 |
|
|
$ |
(382 |
) |
|
$ |
(482 |
) |
|
$ |
108,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) From Continuing Operations Available to Common
Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
92,729 |
|
|
$ |
(382 |
) |
|
$ |
(482 |
) |
|
$ |
91,865 |
|
Diluted
|
|
$ |
96,040 |
|
|
$ |
(382 |
) |
|
$ |
(482 |
) |
|
$ |
95,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
From Continuing Operations per Common Share - Basic
|
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
$ |
1.07 |
|
Income
From Continuing Operations per Common Share - Diluted
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
$ |
1.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
85,914 |
|
|
|
|
|
|
|
|
|
|
|
85,914 |
|
Diluted
|
|
|
89,410 |
|
|
|
|
|
|
|
|
|
|
|
89,410 |
|
See
accompanying notes and significant assumptions to pro forma condensed financial
statements.
Weingarten
Realty Investors
Pro
Forma Condensed Consolidated Balance Sheet
As
of September 30, 2007
(in
thousands)
(Unaudited)
This
unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if the
investment in an unconsolidated real estate joint venture and the acquisition of
two industrial properties in October 2007 as set forth in the Notes and
Significant Assumptions had occurred as of September 30, 2007. The
allocation of the purchase price of certain acquired properties is based upon
preliminary estimates and assumptions. Accordingly, these allocations
are subject to revision when they have been completed. However, in
management's opinion, all adjustments necessary to reflect the effects of these
transactions have been made.
|
|
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
As
Reported
|
|
|
Acquisitions
|
|
|
Pro
Forma
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
|
|
$ |
4,852,683 |
|
|
$ |
16,915 |
|
|
$ |
4,869,598 |
|
Accumulated
Depreciation
|
|
|
(750,676 |
) |
|
|
|
|
|
|
(750,676 |
) |
Property
Held for Sale, net
|
|
|
6,012 |
|
|
|
|
|
|
|
6,012 |
|
Property
– net
|
|
|
4,108,019 |
|
|
|
16,915 |
|
|
|
4,124,934 |
|
Investment
in Real Estate Joint Ventures and Partnerships
|
|
|
297,397 |
|
|
|
5,858 |
|
|
|
303,255 |
|
Total
|
|
|
4,405,416 |
|
|
|
22,773 |
|
|
|
4,428,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
Receivable from Real Estate Joint Ventures and
Partnerships
|
|
|
61,537 |
|
|
|
|
|
|
|
61,537 |
|
Unamortized
Debt and Lease Costs
|
|
|
115,208 |
|
|
|
268 |
|
|
|
115,476 |
|
Accrued
Rent and Accounts Receivable, net
|
|
|
77,811 |
|
|
|
|
|
|
|
77,811 |
|
Other
|
|
|
224,450 |
|
|
|
(6,683 |
) |
|
|
217,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
4,884,422 |
|
|
$ |
16,358 |
|
|
$ |
4,900,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
$ |
3,055,545 |
|
|
$ |
15,901 |
|
|
$ |
3,071,446 |
|
Accounts
Payable and Accrued Expenses
|
|
|
139,496 |
|
|
|
|
|
|
|
139,496 |
|
Other
|
|
|
85,906 |
|
|
|
457 |
|
|
|
86,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,280,947 |
|
|
|
16,358 |
|
|
|
3,297,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
Interest
|
|
|
96,710 |
|
|
|
|
|
|
|
96,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
1,506,765 |
|
|
|
|
|
|
|
1,506,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
4,884,422 |
|
|
$ |
16,358 |
|
|
$ |
4,900,780 |
|
See
accompanying notes and significant assumptions to pro forma condensed financial
statements.
Weingarten
Realty Investors
Notes
and Significant Assumptions to Pro Forma Condensed Financial
Statements
(Unaudited)
Note
1.
Bourn, Devon and Prudential Properties Portfolios
The
aggregate investment for the acquisitions described below was approximately $285
million and was allocated 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. At the date of acquisition, these
purchases were funded either using our revolving line of credit, an assumed
mortgage, the available cash generated from dispositions of properties or cash
flow generated by our operating properties. Pro forma revenues and
expenses, other than interest and depreciation, are based on the historical
amounts of the Acquired Properties.
The Bourn
Properties Portfolio consists of six shopping centers in Arizona totaling
781,000 square feet and was acquired for a total investment of approximately
$140 million. This purchase transaction includes an earnout provision
of approximately $29 million, which is contingent upon the subsequent
development of space by the seller. This contingency agreement
expires in 2010. As of September 30, 2007, $5.2 million of this
obligation has been paid and $4.2 million has been accrued. The
centers are leased to a diverse mix of strong national retailers as described in
the table below:
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Entrada
de Oro
|
01/22/2007
|
89,000
|
|
Tucson,
AZ
|
Wal-Mart,
Taco Bell, Eegee’s, KFC
|
|
81%
|
Oracle
Crossing
|
01/22/2007
|
254,000
|
|
Tucson,
AZ
|
Kohl’s,
Peter Piper Pizza, Sprouts Farmers Market
|
|
85%
|
Oracle
Wetmore
|
01/22/2007
|
287,000
|
|
Tucson,
AZ
|
Home
Depot, Circuit City, PetSmart, Walgreen’s, BJ’s Restaurant &
Brewery
|
|
89%
|
Scottsdale
Horizon
|
01/22/2007
|
10,000
|
|
Scottsdale,
AZ
|
Baja
Fresh, Century 21, Cold Stone Creamery, Hungry Howie’s
Pizza
|
|
100%
|
Madera
Village
|
03/13/2007
|
97,000
|
|
Tucson,
AZ
|
Safeway,
Walgreen’s, Ace Hardware
|
|
100%
|
Shoppes
at Bears Path
|
03/13/2007
|
44,000
|
|
Tucson,
AZ
|
Carondolet
Medical Group, Coldwell Banker, Leslie’s Poolmart
|
|
86%
|
The Devon
Properties Portfolio consists of two industrial properties located in
Virginia. This acquisition adds 502,000 square feet to our portfolio
and represents a total investment of approximately $26 million. This
purchase transaction includes an earnout provision of approximately $6 million,
which is contingent upon the lease up of vacant space by the property
seller. As of September 30, 2007, $3.9 million of this obligation has
been accrued. This contingency agreement expires in
2009. The properties are used as warehouse space by several
nationally known tenants as described in the table below:
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Walthall
D
|
04/20/2007
|
287,000
|
|
Colonial
Heights, VA
|
Sharper
Image, Recall Total Information Management
|
|
66%
|
Northlake
A
|
04/20/2007
|
215,000
|
|
Ashland,
VA
|
FedEx
Ground, Owens & Minor
|
|
100%
|
The
Prudential Properties Portfolio consists of two shopping centers located in
Atlanta, Georgia and Chicago, Illinois. This acquisition adds 692,000
square feet to our portfolio and represents a total investment of approximately
$118 million. Anchor tenants include several strong national
retailers as shown in the table below:
Center
Name
|
Acquisition
Date
|
Total
Square Feet
|
|
Location
|
Anchors
|
|
Occupancy
at Acquisition Date
|
Perimeter
Village
|
07/03/2007
|
388,000
|
|
Atlanta,
GA
|
Borders,
Cost Plus, DSW, Wal-Mart
|
|
86%
|
Burbank
Station
|
07/03/2007
|
304,000
|
|
Burbank,
IL (Chicago)
|
Babies
‘R Us, Home Depot, Office Max, PetSmart, Sports Authority
|
|
100%
|
Note
2.
Other Acquisitions
The
aggregate investment for the Other Acquisitions described below was $171
million, of which $23 million was acquired after September 30,
2007. This investment is allocated 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. An
additional $69 million was invested in unconsolidated real estate joint ventures
and partnerships to acquire seven retail and seven industrial
properties. At the date of acquisition, these purchases were funded
either using our revolving line of credit, an assumed mortgage, the available
cash generated from dispositions of properties or cash flow generated by our
operating properties. Pro forma revenues and expenses, other than
interest and depreciation, are based on the historical amounts of the Other
Acquisitions.
Retail
Properties:
Cherokee
Plaza, acquired in January 2007, is a 99,000 square foot grocery-anchored
neighborhood center located in the prestigious Buckhead area in Atlanta,
Georgia. The 100% occupied property is anchored by a 57,000 square
foot Kroger.
Sunrise
West Shopping Center, acquired in January 2007, is a 76,000 square foot
grocery-anchored neighborhood center located in Sunrise (Miami),
Florida. This 98% occupied property is anchored by a 44,000 square
foot Publix. Cole Park Plaza, acquired in February 2007, is an 82,000
square foot retail development located in Chapel Hill (Durham), North Carolina
next to our existing Chatham Crossing shopping center. Both of these
properties were acquired through an existing 25%-owned unconsolidated real
estate joint venture with AEW Capital Management.
Oak Grove
Market Center, acquired in June 2007, is a 97,000 square foot grocery-anchored
shopping center located in Portland, Oregon. The 100% occupied center
is anchored by a 53,000 square foot Safeway.
In July
2007, we acquired a portfolio of three retail power centers, adding 715,000
square feet to our portfolio under management. These retail power
centers are located in Florida, Georgia and Texas and were acquired through a
new unconsolidated real estate joint venture with PNC Realty Investors on behalf
of its institutional client, AFL-CIO Building Investment Trust (the
“BIT”). We own 20% of this joint venture with the BIT owning
80%.
Countryside
Centre, a 243,000 square foot community center located in the St.
Petersburg/Clearwater Area of Florida, was also acquired in July
2007. This center is anchored by Albertson’s, TJ Maxx, Home Goods and
Shoe Carnival.
Stella
Link Shopping Center is a 29,000 square foot shopping center located in Houston,
Texas, which was acquired in August 2007. The center is anchored by
Sellers Brothers and Burke’s Outlet.
The
Shoppes at South Semoran is a 102,000 square foot shopping center located in
suburban Orlando, Florida, which was acquired in September 2007. This
100% occupied center is anchored by a 57,000 square foot Winn
Dixie.
In
September 2007, we acquired a 10% interest in Tully Corners Shopping Center
through a tenancy-in-common arrangement. This 116,000 square foot
grocery-anchored shopping center located in San Jose, California is 97% leased
and is anchored by Food Maxx, Petco and Party City.
In
October 2007, we acquired a 10% interest in Paradise Key Shopping Center through
a tenancy-in-common arrangement. This 272,000 square foot
grocery-anchored shopping center is located in Destin, Florida.
Industrial
Properties:
Lakeland
Business Park, acquired in January 2007, is a 100% leased 168,000 square foot
industrial business center located in Lakeland (Tampa), Florida.
In April
and May 2007, we acquired a portfolio of seven industrial properties located in
Richmond, Virginia. These properties were acquired through an
existing 20%-owned unconsolidated real estate joint venture with PNC Realty
Investors on behalf of its institutional client, the BIT. This
portfolio added 2.0 million square feet under management.
Town
& Country Commerce Center, acquired in June 2007, is a 206,000 square foot
industrial distribution center located in Houston, Texas. The
property is 100% leased to Arizona Tile and Seitel Solution Tech
Center.
Riverview
Distribution Center, acquired in August 2007, is a 265,000 square foot
industrial center located in Atlanta, Georgia. It is anchored by
109,000 square foot CHEP USA.
In
October 2007, we acquired Westlake Industrial Centre, a 154,000 square foot
industrial building, and South Park Industrial Centre, a 235,000 square foot
industrial center, both of which are located in Atlanta,
Georgia.
Note
3.
Interest, Depreciation and Intangibles
The
buildings are being depreciated over a period of 40 years. 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. The identified intangible assets and liabilities are
amortized over the terms of the acquired leases or the remaining lives of the
assumed mortgages. The weighted average lease term of the leases in
place ranges from 17 months to 236 months.
Interest
expense was calculated as if the properties were acquired as of January 1, 2006
by first considering the interest rate of any mortgages secured by the related
properties. After consideration of any mortgages, a ratio of revolver
debt to total Property, net and Investment in Real Estate Joint Ventures and
Partnerships as of December 31, 2006 and September 30, 2007 was applied to the
remaining purchase price balance.
The
remaining term of the assumed mortgages ranged from 37 months to 101 months and
had stated rates that ranged from 5.0% to 7.1%. The weighted average
number of months remaining was 75 months at a weighted average stated rate of
5.7%.
The
revolver debt ratio equated to 74% and 69% at December 31, 2006 and September
30, 2007, respectively. The weighted average interest rate of the
revolver for the year ended December 31, 2006 and the nine months ended
September 30, 2007 was 6.1% and 7.1%, respectively.
Weingarten
Realty Investors
Consolidated
Statement of Estimated Taxable Operating Results
and
Cash to be Made Available By Operations
For
the Year Ended December 31, 2006
(in
thousands)
(Unaudited)
The
following unaudited statement is a pro forma estimate of consolidated taxable
operating results and cash to be made available by operations for the year ended
December 31, 2006. The pro forma statement is based on our historical
operating results for the year ended December 31, 2006 adjusted for the effect
of the acquisition of the Bourn Properties Portfolio, the Devon Properties
Portfolio, the Prudential Properties Portfolio and the Other Acquisitions, as
set forth in the notes and significant assumptions to the pro forma financial
statements, and the adjustment for discontinued operations that resulted from
dispositions of real estate assets during the period from January 1, 2007
through September 30, 2007 in accordance with Statement of Financial Accounting
Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.” This statement does not purport to forecast actual operating
results for any future periods.
Revenue
|
|
$ |
573,468 |
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Depreciation
and amortization
|
|
|
130,375 |
|
Operating
|
|
|
91,560 |
|
Ad
valorem taxes
|
|
|
67,416 |
|
General
and administrative
|
|
|
23,801 |
|
Total
Expenses
|
|
|
313,152 |
|
|
|
|
|
|
Operating
Income
|
|
|
260,316 |
|
Interest
Expense
|
|
|
(168,670 |
) |
Interest
and Other Income
|
|
|
9,044 |
|
Equity
in Earnings of Real Estate Joint Ventures and Partnerships,
net
|
|
|
17,397 |
|
Income
Allocated to Minority Interests
|
|
|
(6,414 |
) |
Gain
on Sale of Properties
|
|
|
22,493 |
|
Gain
on Land and Merchant Development Sales
|
|
|
7,166 |
|
Provision
for Income Taxes
|
|
|
(1,366 |
) |
Income
from Discontinued Operations
|
|
|
161,796 |
|
Estimated
Taxable Operating Income
|
|
|
301,762 |
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Depreciation
and amortization
|
|
|
140,598 |
|
Equity
in earnings of real estate joint ventures and partnerships,
net
|
|
|
(17,397 |
) |
Income
allocated to minority interests
|
|
|
6,414 |
|
Gain
on sale of properties
|
|
|
(22,467 |
) |
Distributions
of income from unconsolidated entities
|
|
|
2,524 |
|
Changes
in accrued rent and accounts receivable
|
|
|
(18,056 |
) |
Changes
in other assets
|
|
|
(37,607 |
) |
Changes
in accounts payable and accrued expenses
|
|
|
43,641 |
|
Other,
net
|
|
|
(1,518 |
) |
|
|
|
|
|
Estimated
Cash to be Made Available from Operations
|
|
$ |
397,894 |
|
Exhibits
|
|
|
|
Exhibit Number
|
Description
|
23.1
|
Consent
of Deloitte & Touche LLP
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: February
20, 2008
|
WEINGARTEN
REALTY INVESTORS
|
|
(Registrant)
|
|
|
|
|
|
|
|
By:
|
/s/
Joe D. Shafer
|
|
|
Joe
D. Shafer
|
|
|
Vice
President/Chief Accounting Officer
|
|
|
(Principal
Accounting Officer)
|
24