SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-9876 WEINGARTEN REALTY INVESTORS (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 74-1464203 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 2600 Citadel Plaza Drive P.O. Box 924133 Houston, Texas 77292-4133 (Address of principal executive offices) (Zip Code) (713) 866-6000 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act. Title of Each Class Name of each exchange on which registered - ----------------------------------------------------------------- ----------------------------------------- Common Shares of Beneficial Interest, $0.03 par value New York Stock Exchange Series A Cumulative Redeemable Preferred Shares, $0.03 par value New York Stock Exchange Series C Cumulative Redeemable Preferred Shares, $0.03 par value New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark 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] The aggregate market value of the common shares held by non-affiliates (based upon the closing sale price on the New York Stock Exchange) on February 22, 2000 was approximately $952,676,135. As of February 22, 2000 there were 26,694,953 common shares of beneficial interest, $.03 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held April 24, 2000 are incorporated by reference in Part III. Exhibit Index beginning on Page 40 TABLE OF CONTENTS ITEM NO. PAGE NO. - -------- -------- PART I 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 13 4. Submission of Matters to a Vote of Shareholders . . . . . . . . . 13 Executive Officers of the Registrant. . . . . . . . . . . . . . . 14 PART II 5. Market for Registrant's Common Shares of Beneficial Interest and Related Shareholder Matters. . . . . . . . . . . . . 15 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 16 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 17 7A. Quantitative and Qualitative Disclosure about Market Risk . . . . 20 8. Financial Statements and Supplementary Data . . . . . . . . . . . 21 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . 39 PART III 10. Trust Managers and Executive Officers of the Registrant . . . . . 39 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . 39 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 13. Certain Relationships and Related Transactions. . . . . . . . . . 39 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . 39 PART I ITEM 1. BUSINESS General. Weingarten Realty Investors, an unincorporated trust organized under the Texas Real Estate Investment Trust Act, and its predecessor entity began the ownership and development of shopping centers and other commercial real estate in 1948. WRI is self-advised and self-managed. As of December 31, 1999, we owned or operated under long-term leases interests in 239 developed income-producing real estate projects. We owned 187 shopping centers located in the Houston metropolitan area and in other parts of Texas and in Louisiana, Arizona, Nevada, Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri, Illinois, Florida and Maine. We also owned 50 industrial projects located in Tennessee, Nevada and Houston, Austin and Dallas, Texas. Additionally, we owned one multi-family residential project and one office building, which serves, in part, as WRI's headquarters. Our interests in these projects aggregated approximately 27.8 million square feet of building area and 104.1 million square feet of land area. We also owned interests in 31 parcels of unimproved land under development or held for future development which aggregated approximately 8.2 million square feet. WRI currently employs 203 persons and its principal executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its phone number is (713) 866-6000. Location of Properties. Historically, WRI has emphasized investments in properties located primarily in the Houston area. Since 1987, we actively acquired properties outside of Houston. Of our 270 properties which were owned or operated under long-term leases as of December 31, 1999, 100 of our 239 developed properties and 14 of our 31 parcels of unimproved land were located in the Houston metropolitan area. In addition to these properties, we owned 79 developed properties and eight parcels of unimproved land 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 some degree, the business and operations of WRI. In 1999, the economies of Houston and Texas continued to grow, albeit at a slower pace than 1998, but still exceeding the national average; the economy of the entire southwestern United States, where WRI has its primary operations, also remained strong relative to the national average. The Houston economy, because of its strengths in energy and engineering and construction, has become much more integrated into the international economy and is somewhat affected by the international climate. Thus, while Houston's expansion slowed in 1999, it is expected to continue to expand in 2000 and beyond. A deterioration in the Houston or Texas economies could adversely affect WRI. However, WRI's centers are generally anchored by grocery and drug stores under long-term leases, and these types of stores, which deal in basic necessity-type items, tend to be less affected by economic change. Competition. There are other developers and owner-operators engaged in the development, acquisition and operation of shopping centers and commercial property who compete with us in our trade areas. This results in competition for both acquisitions of existing income-producing properties and also for prime development sites. There is also competition for tenants to occupy the space that WRI and its competitors develop, acquire and manage. 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, our ability to provide a retailer with multiple locations with anchor tenants in the Houston area and the practice of continuous maintenance and renovation of our properties. Financial Information. Additional financial information concerning WRI is included in the Consolidated Financial Statements located on pages 22 through 38 herein. ITEM 2. PROPERTIES At December 31, 1999, WRI's real estate properties consisted of 270 locations in fourteen states. A complete listing of these properties, including the name, location, building area and land area (in square feet), as applicable, is set forth below: SHOPPING CENTERS Building Name and Location Area Land Area - --------------------------------------------------------- --------- --------- HOUSTON AND HARRIS COUNTY, TOTAL. . . . . . . . . . . . . . . 7,647,000 29,720,000 Alabama-Shepherd, S. Shepherd at W. Alabama . . . . . . . . . 28,000 * 88,000 * Almeda Road, Almeda at Southmore. . . . . . . . . . . . . . . 17,000 37,000 Bayshore Plaza, Spencer Hwy. at Burke Rd. . . . . . . . . . . 36,000 196,000 Bellaire Boulevard, Bellaire at S. Rice . . . . . . . . . . . 35,000 137,000 Bellfort, Bellfort at Southbank . . . . . . . . . . . . . . . 48,000 167,000 Bellfort Southwest, Bellfort at Gessner . . . . . . . . . . . 30,000 89,000 Bellwood, Bellaire at Kirkwood. . . . . . . . . . . . . . . . 136,000 655,000 Bingle Square, U.S. Hwy. 290 at Bingle. . . . . . . . . . . . 46,000 168,000 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 Copperfield Village, Hwy. 6 at F.M. 529 . . . . . . . . . . . 157,000 712,000 Crestview, Bissonnet at Wilcrest. . . . . . . . . . . . . . . 9,000 35,000 Crosby, F.M. 2100 at Kenning Road (61%) . . . . . . . . . . . 36,000 * 124,000 * Cullen Place, Cullen at Reed. . . . . . . . . . . . . . . . . 7,000 30,000 Cullen Plaza, Cullen at Wilmington. . . . . . . . . . . . . . 81,000 318,000 Cypress Pointe, F.M. 1960 at Cypress Station. . . . . . . . . 191,000 737,000 Cypress Village, Louetta at Grant Road. . . . . . . . . . . . 25,000 134,000 Del Sol Market Place, Telephone at Monroe . . . . . . . . . . 21,000 87,000 Eastpark, Mesa Rd. at Tidwell . . . . . . . . . . . . . . . . 140,000 665,000 Edgebrook, Edgebrook at Gulf Fwy. . . . . . . . . . . . . . . 78,000 360,000 Fiesta Village, Quitman at Fulton . . . . . . . . . . . . . . 30,000 80,000 Fondren Southwest Village, Fondren at W. Bellfort . . . . . . 323,000 1,362,000 Fondren/West Airport, Fondren at W. Airport . . . . . . . . . 62,000 223,000 45/York Plaza, I-45 at W. Little York . . . . . . . . . . . . 218,000 840,000 Glenbrook Square, Telephone Road. . . . . . . . . . . . . . . 71,000 320,000 Griggs Road, Griggs at Cullen . . . . . . . . . . . . . . . . 85,000 422,000 Harrisburg Plaza, Harrisburg at Wayside . . . . . . . . . . . 95,000 334,000 Heights Plaza, 20th St. at Yale . . . . . . . . . . . . . . . 72,000 228,000 Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960 . . . . . 180,000 784,000 I-45/Telephone Rd. Center, I-45 at Maxwell Street . . . . . . 178,000 819,000 Inwood Village, W. Little York at N. Houston-Rosslyn. . . . . 68,000 305,000 Jacinto City, Market at Baca. . . . . . . . . . . . . . . . . 24,000 * 67,000 * Kingwood, Kingwood Dr. at Chestnut Ridge. . . . . . . . . . . 155,000 648,000 Landmark, Gessner at Harwin . . . . . . . . . . . . . . . . . 56,000 228,000 Lawndale, Lawndale at 75th St.. . . . . . . . . . . . . . . . 53,000 177,000 Little York Plaza, Little York at E. Hardy. . . . . . . . . . 118,000 486,000 Long Point, Long Point at Wirt (77%). . . . . . . . . . . . . 58,000 * 257,000 * Lyons Avenue, Lyons at Shotwell . . . . . . . . . . . . . . . 68,000 179,000 Market at Westchase, Westheimer at Wilcrest . . . . . . . . . 84,000 333,000 Miracle Corners, S. Shaver at Southmore . . . . . . . . . . . 87,000 386,000 Northbrook, Northwest Fwy. at W. 34th . . . . . . . . . . . . 204,000 656,000 North Main Square, Pecore at N. Main. . . . . . . . . . . . . 18,000 64,000 Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------- --------- ---------- North Oaks, F.M. 1960 at Veterans Memorial . . . . . . . . . . 322,000 1,246,000 North Triangle, I-45 at F.M. 1960. . . . . . . . . . . . . . . 16,000 113,000 Northway, Northwest Fwy. at 34th . . . . . . . . . . . . . . . 212,000 793,000 Northwest Crossing, N.W. Fwy. at Hollister (75%) . . . . . . . 135,000 * 671,000 * Northwest Park Plaza, F.M. 149 at Champions Forest . . . . . . 32,000 268,000 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/El Dorado, El Dorado at Hwy. 3 . . . . . . . . . . . 119,000 429,000 Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy. . 128,000 624,000 Randall's/Norchester, Grant at Jones . . . . . . . . . . . . . 109,000 475,000 Richmond Square, Richmond Ave. at W. Loop 610. . . . . . . . . 33,000 136,000 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, I-10 at Sheldon . . . . . . . . . . . . 22,000 131,000 Sheldon Forest, South, I-10 at Sheldon . . . . . . . . . . . . 38,000 * 164,000 * Shops at Three Corners, S. Main at Old Spanish Trail (70%) . . 183,000 * 803,000 * Southgate, W. Fuqua at Hiram Clark . . . . . . . . . . . . . . 115,000 533,000 Spring Plaza, Hammerly at Campbell . . . . . . . . . . . . . . 56,000 202,000 Steeplechase, Jones Rd. at F.M. 1960 . . . . . . . . . . . . . 193,000 849,000 Stella Link, North, Stella Link at S. Braeswood (77%). . . . . 40,000 * 156,000 * Stella Link, South, Stella Link at S. Braeswood. . . . . . . . 15,000 56,000 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 University Plaza, Bay Area at Space Center . . . . . . . . . . 96,000 424,000 The Village Arcade, University at Kirby. . . . . . . . . . . . 191,000 414,000 West Junction, Hwy. 6 at Keith Harrow Dr. . . . . . . . . . . 67,000 264,000 Westbury Triangle, Chimney Rock at W. Bellfort . . . . . . . . 67,000 257,000 Westchase, Westheimer at Wilcrest. . . . . . . . . . . . . . . 236,000 766,000 Westhill Village, Westheimer at Hillcroft. . . . . . . . . . . 131,000 480,000 Wilcrest Southwest, Wilcrest at Southwest Fwy. . . . . . . . . 26,000 78,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . 6,246,000 26,820,000 McDermott Commons, McDermott at Custer Rd., Allen. . . . . . . 12,000 72,000 Bell Plaza, 45th Ave. at Bell St., Amarillo. . . . . . . . . . 144,000 682,000 Coronado, S.W. 34th St. at Wimberly Dr., Amarillo. . . . . . . 49,000 201,000 Grand Plaza, Interstate Hwy 40 at Grand Ave., Amarillo . . . . 157,000 637,000 Puckett Plaza, Bell Road, Amarillo . . . . . . . . . . . . . . 133,000 621,000 Spanish Crossroads, Bell St. at Atkinsen St., Amarillo . . . . 72,000 275,000 Wolflin Village, Wolflin Ave. at Georgia St., Amarillo . . . . 191,000 421,000 Brodie Oaks, South Lamar Blvd. at Loop 360, Austin . . . . . . 245,000 1,050,000 Southridge Plaza, William Cannon Dr. at S. 1st St., Austin . . 143,000 565,000 Baywood, State Hwy. 60 at Baywood Dr., Bay City. . . . . . . . 40,000 169,000 Calder, Calder at 24th St., Beaumont . . . . . . . . . . . . . 34,000 129,000 North Park Plaza, Eastex Fwy. at Dowlen, Beaumont. . . . . . . 70,000 * 318,000 * Phelan West, Phelan at 23rd St., Beaumont (67%). . . . . . . . 16,000 * 59,000 * Southgate, Calder Ave. at 6th St., Beaumont. . . . . . . . . . 34,000 118,000 Westmont, Dowlen at Phelan, Beaumont . . . . . . . . . . . . . 95,000 507,000 Bryan Village, Texas at Pease, Bryan . . . . . . . . . . . . . 29,000 98,000 Parkway Square, Southwest Pkwy at Texas Ave., College Station. 158,000 685,000 Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- --------- Montgomery Plaza, Loop 336 West at I-45, Conroe. . . . . . . . . . . 315,000 1,156,000 River Pointe, I-45 at Loop 336, Conroe . . . . . . . . . . . . . . . 42,000 329,000 Moore Plaza, S. Padre Island Dr. at Staples, Corpus Christi. . . . . 360,000 1,492,000 Portairs, Ayers St. at Horne Rd., Corpus Christi . . . . . . . . . . 121,000 416,000 Dickinson, I-45 at F.M. 517, Dickinson (72%) . . . . . . . . . . . . 55,000 * 225,000 * Coronado Hills, Mesa at Balboa, El Paso. . . . . . . . . . . . . . . 127,000 575,000 Southcliff, I-20 at Grandbury Rd., Ft. Worth . . . . . . . . . . . . 116,000 568,000 Broadway, Broadway at 59th St., Galveston (77%). . . . . . . . . . . 58,000 * 167,000 * Galveston Place, Central City Blvd. at 61st St., Galveston . . . . . 206,000 828,000 Food King Place, 25th St. at Avenue P, Galveston . . . . . . . . . . 28,000 78,000 Fiesta, Belt Line Rd. at Marshall Dr., Grand Prairie . . . . . . . . 32,000 236,000 Cedar Bayou, Bayou Rd., La Marque. . . . . . . . . . . . . . . . . . 15,000 51,000 Corum South, I-45 at F.M. 518, League City . . . . . . . . . . . . . 112,000 680,000 Caprock Center, 50th at Boston Ave., Lubbock . . . . . . . . . . . . 375,000 1,255,000 Central Plaza, Loop 289 at Slide Rd., Lubbock. . . . . . . . . . . . 152,000 529,000 Town & Country, 4th St. at University, Lubbock . . . . . . . . . . . 134,000 339,000 Angelina Village, Hwy. 59 at Loop 287, Lufkin. . . . . . . . . . . . 254,000 1,835,000 Independence Plaza, Town East Blvd., Mesquite. . . . . . . . . . . . 179,000 787,000 McKinney Centre, US Hwy 380 at U.S.Hwy 75, McKinney . . . . . . . . 27,000 145,000 Murphy Crossing, F.M. 544 at Murphy Rd., Murphy. . . . . . . . . . . 8,000 71,000 University Park Plaza, University Dr. at E. Austin St., Nacogdoches. 78,000 283,000 Mid-County, Twin Cities Hwy. at Nederland Ave., Nederland. . . . . . 107,000 611,000 Gillham Circle, Gillham Circle at Thomas, Port Arthur. . . . . . . . 33,000 94,000 Village, 9th Ave. at 25th St., Port Arthur (77%) . . . . . . . . . . 39,000 * 185,000 * Porterwood, Eastex Fwy. at F.M. 1314, Porter . . . . . . . . . . . . 99,000 487,000 Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg. . . . . . . . . . . . . . 41,000 * 135,000 * Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg. . . . . . . . . . . 104,000 386,000 Bandera Village, Bandera at Hillcrest, San Antonio . . . . . . . . . 57,000 607,000 Oak Park Village, Nacogdoches at New Braunfels, San Antonio. . . . . 65,000 221,000 Parliament Square, W. Ave. at Blanco, San Antonio. . . . . . . . . . 65,000 260,000 San Pedro Court, San Pedro at Hwy. 281N., San Antonio. . . . . . . . 2,000 18,000 Valley View, West Ave. at Blanco Rd., San Antonio. . . . . . . . . . 89,000 341,000 Market at Town Center, Town Center Blvd., Sugar Land . . . . . . . . 392,000 1,732,000 Williams Trace, Hwy. 6 at Williams Trace, Sugar Land . . . . . . . . 263,000 1,187,000 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 Mainland, Hwy. 1765 at Hwy. 3, Texas City. . . . . . . . . . . . . . 69,000 279,000 Palmer Plaza, F.M. 1764 at 34th St., Texas City. . . . . . . . . . . 97,000 367,000 Broadway, S. Broadway at W. 9th St., Tyler (77%) . . . . . . . . . . 46,000 * 197,000 * Crossroads, I-10 at N. Main, Vidor . . . . . . . . . . . . . . . . . 116,000 516,000 Watauga Towne Center, Hwy. 377 at Bursey Rd., Watauga. . . . . . . . 22,000 120,000 LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343,000 5,504,000 Park Terrace, U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . 137,000 520,000 Town & Country Plaza, U.S. Hwy. 190 West, Hammond. . . . . . . . . . 215,000 915,000 Westwood Village, W. Congress at Bertrand, Lafayette . . . . . . . . 141,000 942,000 East Town, 3rd Ave. at 1st St., Lake Charles . . . . . . . . . . . . 33,000 * 117,000 * 14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles. . . . . . 207,000 654,000 Kmart Plaza, Ryan St., Lake Charles. . . . . . . . . . . . . . . . . 105,000 * 406,000 * Southgate, Ryan at Eddy, Lake Charles. . . . . . . . . . . . . . . . 171,000 628,000 Danville Plaza, Louisville at 19th, Monroe . . . . . . . . . . . . . 143,000 539,000 Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- ---------- LOUISIANA, (CONT'D.) Orleans Station, Paris, Robert E. Lee at Chatham, New Orleans. . . . 5,000 31,000 Southgate, 70th at Mansfield, Shreveport . . . . . . . . . . . . . . 73,000 359,000 Westwood, Jewella at Greenwood, Shreveport . . . . . . . . . . . . . 113,000 393,000 NEVADA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,091,000 4,397,000 Francisco Centre, E. Desert Inn Rd. at S. Eastern Ave., Las Vegas. . 116,000 639,000 Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas . . . . . . 152,000 570,000 Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas. . . . . . 149,000 536,000 Rainbow Plaza, Rainbow Blvd. at Charleston Blvd., Las Vegas. . . . . 280,000 1,062,000 Rancho Towne & Country, Rancho Dr. at Charleston Blvd., Las Vegas. . 87,000 350,000 Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas . . . . . 143,000 519,000 College Park, E. Lake Mead Blvd. at Civic Ctr. Dr., North Las Vegas. 164,000 721,000 ARIZONA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,058,000 4,733,000 Palmilla Center, Dysart Rd. at McDowell Rd., Avondale. . . . . . . . 6,000 31,000 University Plaza, Plaza Way at Milton Rd., Flagstaff . . . . . . . . 166,000 918,000 Arrowhead Festival, 75th Ave. at W. Bell Rd., Glendale . . . . . . . 26,000 157,000 Camelback Village Square, Camelback at 7th Avenue, Phoenix . . . . . 135,000 543,000 Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix. . . . . . . 61,000 220,000 Rancho Encanto, 35th Avenue at Greenway Rd., Phoenix . . . . . . . . 71,000 259,000 Fountain Plaza, 77th St. at McDowell, Scottsdale . . . . . . . . . . 112,000 460,000 Broadway Marketplace, Broadway at Rural, Tempe . . . . . . . . . . . 86,000 347,000 Fry's Valley Plaza, S. McClintock at E. Southern, Tempe. . . . . . . 145,000 570,000 Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe . . . . . . . 152,000 769,000 Desert Square Shopping Center, Golf Links at Kolb, Tucson. . . . . . 98,000 459,000 NEW MEXICO, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 893,000 3,787,000 Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque. . . . . . . . 111,000 601,000 North Towne Plaza, Academy Rd. at Wyoming Blvd., Albuquerque . . . . 103,000 607,000 Valle del Sol, Isleta Blvd. at Rio Bravo, Albuquerque. . . . . . . . 106,000 475,000 Wyoming Mall, Academy Rd. at Northeastern, Albuquerque . . . . . . . 326,000 1,309,000 DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe . . . . . . . . 247,000 795,000 OKLAHOMA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 702,000 3,173,000 Bryant Square, Bryant Ave. at 2nd St., Edmond. . . . . . . . . . . . 282,000 1,259,000 Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City. . . 36,000 142,000 Town & Country, Reno Ave at North Air Depot, Midwest City. . . . . . 138,000 540,000 Windsor Hills Center, Meridian at Windsor Place, Oklahoma City . . . 246,000 1,232,000 ARKANSAS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 596,000 2,322,000 Evelyn Hills, College Ave. at Abshier, Fayetteville. . . . . . . . . 154,000 750,000 Broadway Plaza, Broadway at W. Roosevelt, Little Rock. . . . . . . . 43,000 148,000 Geyer Springs, Geyer Springs at Baseline, Little Rock. . . . . . . . 153,000 414,000 Markham Square, W. Markham at John Barrow, Little Rock . . . . . . . 134,000 535,000 Markham West, 11400 W. Markham, Little Rock (35%). . . . . . . . . . 62,000 * 269,000 * Westgate, Cantrell at Bryant, Little Rock. . . . . . . . . . . . . . 50,000 206,000 Table continued on next page Building Name and Location Area Land Area - ---------------------------------------------------------------- --------- ---------- KANSAS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . 466,000 2,231,000 West State Plaza, State Ave. at 78th St., Kansas City. . . . . . 94,000 401,000 Westbrooke Village, Quivira Road at 75th St., Shawnee. . . . . . 237,000 1,269,000 Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee . 135,000 561,000 MISSOURI, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . 338,000 1,101,000 Ballwin Plaza, Manchester Rd. at Vlasis Dr., Ballwin . . . . . . 203,000 653,000 PineTree Plaza, U.S. Hwy. 50 at Hwy. 291, Lee's Summit . . . . . 135,000 448,000 FLORIDA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . 316,000 1,394,000 Pembroke Commons, University at Pines Blvd., Pembroke Pines. . . 316,000 1,394,000 COLORADO, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . 217,000 902,000 Carefree, Academy Blvd. at N. Carefree Circle, Colorado Springs. 127,000 460,000 Academy Place, Academy Blvd. at Union Blvd., Colorado Springs. . 84,000 407,000 Gold Creek Center, Hwy. 86 at Elizabeth St., Elizabeth . . . . . 6,000 * 35,000 * MAINE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 482,000 The Promenade, Essex at Summit, Lewiston . . . . . . . . . . . . 124,000 * 482,000 * ILLINOIS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . 93,000 464,000 Lincoln Place Centre, Hwy. 59, Fairview Heights (99%). . . . . . 93,000 * 464,000 * TENNESSEE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 20,000 84,000 Highland Square, Summer at Highland, Memphis . . . . . . . . . . 20,000 84,000 Building INDUSTRIAL Area Land Area - ---------------------------------------------------------------- --------- ---------- HOUSTON AND HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . 3,330,000 9,537,000 Beltway 8 Business Park, Beltway 8 at Petersham Dr.. . . . . . . 52,000 166,000 Blankenship Building, Kempwood Drive . . . . . . . . . . . . . . 59,000 175,000 Brookhollow Business Center, Dacoma at Directors Row . . . . . . 133,000 405,000 Cannon/So. Loop Business Park, Cannon Street (20%) . . . . . . . 59,000 * 96,000 * Central Park North, W. Hardy Rd. at Kendrick Dr. . . . . . . . . 155,000 466,000 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, 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%) . . . 42,000 * 106,000 * Lathrop Warehouse, Lathrop St. at Larimer St. (20%). . . . . . . 51,000 * 87,000 * Levitz Furniture Warehouse, Loop 610 South . . . . . . . . . . . 184,000 450,000 Little York Mini-Storage, West Little York . . . . . . . . . . . 32,000 * 124,000 * Navigation Business Park, Navigation at N. York (20%). . . . . . 47,000 * 111,000 * Northway Park II, Loop 610 East at Homestead (20%) . . . . . . . 61,000 * 149,000 * Park Southwest, Stancliff at Brooklet. . . . . . . . . . . . . . 52,000 160,000 Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- ----------- HOUSTON AND HARRIS COUNTY, (CONT'D) Railwood Industrial Park, Mesa at U.S. 90. . . . . . . . . . . . . . 616,000 1,651,000 Railwood Industrial Park, Mesa at U.S. 90 (20%). . . . . . . . . . . 99,000 * 213,000 * South Loop Business Park, S. Loop at Long Dr.. . . . . . . . . . . . 46,000 * 103,000 * Southport Business Park 5, South Loop 610. . . . . . . . . . . . . . 157,000 358,000 Southwest Park II, 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. . . . . . . . . . . . . . 141,000 331,000 West-10 Business Center II, Wirt Rd. at I-10 . . . . . . . . . . . . 83,000 149,000 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%) . . . . . . . 48,000 * 108,000 * TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . . 2,197,000 5,085,000 Randol Mill Place, Randol Mill Road, Arlington . . . . . . . . . . . 55,000 178,000 Corporate Center I & II, Putnam Dr. at Research Blvd., Austin. . . . 117,000 326,000 Southpoint Service Center, Burleson at Promontory Point Dr., Austin. 54,000 234,000 Walnut Creek Office Park, Cameron Rd., Austin. . . . . . . . . . . . 34,000 122,000 Wells Branch Corporate Center, Wells Branch Pkwy., Austin. . . . . . 60,000 183,000 Midway Business Center, Midway at Boyington, Carrollton. . . . . . . 142,000 309,000 River Pointe Mini-Storage, I-45 at Hwy. 336, Conroe. . . . . . . . . 32,000 * 97,000 * 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 Off/Svc Ctr., East N.W. Hwy. at Shiloh, Dallas. . 79,000 199,000 Northwest Crossing Off/Svc Ctr., N.W. Hwy. at Walton Walker, Dallas. 127,000 290,000 Redbird Distribution Center, Joseph Hardin Drive, Dallas . . . . . . 111,000 234,000 Regal Distribution Center, Leston Avenue, Dallas . . . . . . . . . . 203,000 318,000 Space Center Industrial Park, Pulaski St. at Irving Blvd., Dallas. . 265,000 426,000 Walnut Trails Business Park, Walnut Hill Lane, Dallas. . . . . . . . 103,000 311,000 DFW-Port America, Port America Place, Grapevine. . . . . . . . . . . 45,000 110,000 Jupiter Service Center, Jupiter near Plano Pkwy., Plano. . . . . . . 78,000 234,000 Sherman Plaza Business Park, Sherman at Phillips, Richardson . . . . 100,000 312,000 Nasa One Business Center, Nasa Road One at Hwy. 3, Webster . . . . . 112,000 328,000 TENNESSEE, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 679,000 1,470,000 Southwide Warehouse # 2, Federal Compress Ind. Pk., Memphis. . . . . 124,000 302,000 Southwide Warehouse # 3, Federal Compress Ind. Pk., Memphis. . . . . 112,000 209,000 Southwide Warehouse # 4, Federal Compress Ind. Pk., Memphis. . . . . 120,000 220,000 Thomas Street Warehouse, N. Thomas Street, Memphis . . . . . . . . . 164,000 423,000 Crowfarn Drive Warehouse, Crowfarn Dr. at Getwell Rd., Memphis . . . 159,000 316,000 NEVADA, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,000 162,000 East Sahara Off/Svc Ctr., E. Sahara Blvd., Las Vegas . . . . . . . . 66,000 162,000 Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- ---------- OFFICE BUILDING HOUSTON & HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . . . . 121,000 171,000 Citadel Plaza, N. Loop 610 at Citadel Plaza Dr.. . . . . . . . . . . 121,000 171,000 MULTI-FAMILY RESIDENTIAL TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . . 236,000 595,000 River Pointe Drive at I-45, Conroe . . . . . . . . . . . . . . . . . 236,000 595,000 UNIMPROVED LAND HOUSTON & HARRIS COUNTY, TOTAL . . . . . . . . . . . . . . . . . . . 3,875,000 Beltway 8 at W. Belfort. . . . . . . . . . . . . . . . . . . . . . . 333,000 Bissonnet at Wilcrest. . . . . . . . . . . . . . . . . . . . . . . . 773,000 Citadel Plaza at 610 N. Loop . . . . . . . . . . . . . . . . . . . . 137,000 East Orem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000 Kirkwood at Dashwood Dr. . . . . . . . . . . . . . . . . . . . . . . 322,000 Lockwood at Navigation . . . . . . . . . . . . . . . . . . . . . . . 163,000 Mesa Rd. at Tidwell. . . . . . . . . . . . . . . . . . . . . . . . . 901,000 Mowery at Cullen . . . . . . . . . . . . . . . . . . . . . . . . . . 118,000 Northwest Fwy. at Gessner. . . . . . . . . . . . . . . . . . . . . . 484,000 Redman at W. Denham. . . . . . . . . . . . . . . . . . . . . . . . . 17,000 Sheldon at I-10. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000 W. Little York at I-45 . . . . . . . . . . . . . . . . . . . . . . . 322,000 W. Little York at N. Houston-Rosslyn . . . . . . . . . . . . . . . . 19,000 W. Loop N. at I-10 . . . . . . . . . . . . . . . . . . . . . . . . . 145,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL. . . . . . . . . . . . 1,657,000 McDermott Drive at Custer Rd., Allen . . . . . . . . . . . . . . . . 297,000 Phelan Blvd., Beaumont . . . . . . . . . . . . . . . . . . . . . . . 63,000 US Hwy 380 (University Drive) and US Hwy 75, McKinney. . . . . . . . 189,000 F.M. 544 at Murphy Rd., Murphy . . . . . . . . . . . . . . . . . . . 293,000 River Pointe Dr. at I-45, Conroe . . . . . . . . . . . . . . . . . . 186,000 Hillcrest, Sunshine at Quill, San Antonio. . . . . . . . . . . . . . 171,000 Hwy. 3 at Hwy. 1765, Texas City. . . . . . . . . . . . . . . . . . . 184,000 Hwy 377 at Bursey Road, Watauga. . . . . . . . . . . . . . . . . . . 274,000 LOUISIANA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1,480,000 U.S. Hwy. 171 at Parish, DeRidder. . . . . . . . . . . . . . . . . . 462,000 Ambassador Caffery Pkwy. at Congress St., Lafayette. . . . . . . . . 196,000 Woodland Hwy., Plaquemines Parish (5%) . . . . . . . . . . . . . . . 822,000 * Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- ---------- UNIMPROVED LAND (CONT'D.) ARIZONA, TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 606,000 Dysart Rd. at McDowell Rd., Avondale . . . . . . . . . . . . . . . . 240,000 Warner Rd. at Val Vista, Gilbert . . . . . . . . . . . . . . . . . . 366,000 COLORADO, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 507,000 Jordan Rd. at Lincoln Ave., Parker (38%) . . . . . . . . . . . . . . 326,000 * Smokey Hill Rd. at S. Picadilly St. , Aurora . . . . . . . . . . . . 136,000 * Hwy. 86 at Elizabeth St., Elizabeth. . . . . . . . . . . . . . . . . 45,000 * ILLINOIS, TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 34,000 Lincoln Place Centre, SBI Rt. 159 at Matilda , Fairview Heights (99%) 34,000 * Table continued on next page Building Name and Location Area Land Area - -------------------------------------------------------------------- ---------- ----------- ALL PROPERTIES-BY LOCATION GRAND TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,779,000 112,293,000 Houston & Harris County. . . . . . . . . . . . . . . . . . . . . . . 11,098,000 43,303,000 Texas (excluding Houston & Harris County). . . . . . . . . . . . . . 8,679,000 34,157,000 Louisiana. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343,000 6,984,000 Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,157,000 4,559,000 Arizona. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,058,000 5,339,000 New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893,000 3,787,000 Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702,000 3,173,000 Tennessee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,000 1,554,000 Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596,000 2,322,000 Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,000 2,231,000 Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,000 1,101,000 Florida. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,000 1,394,000 Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,000 1,409,000 Maine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,000 482,000 Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,000 498,000 ALL PROPERTIES-BY CLASSIFICATION GRAND TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,779,000 112,293,000 Shopping Centers . . . . . . . . . . . . . . . . . . . . . . . . . . 21,150,000 87,114,000 Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,272,000 16,254,000 Multi-Family Residential . . . . . . . . . . . . . . . . . . . . . . 236,000 595,000 Office Building. . . . . . . . . . . . . . . . . . . . . . . . . . . 121,000 171,000 Unimproved Land. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,159,000 <FN> Note: Total square footage includes 8,041,000 square feet of land leased and 450,000 square feet of building leased from others. * Denotes partial ownership. WRI's interest is 50% except where noted. The square feet figures represent WRI's proportionate ownership of the entire property. General. In 1999, no single property accounted for more than 2.9% of WRI's total assets or 2.6% of gross revenues. Four properties, in the aggregate, represented approximately 9.27% of our gross revenues for the year ended December 31, 1999; otherwise, none of the remaining properties accounted for more than 1.9% of our gross revenues during the same period. The weighted average occupancy rate for all of our improved properties as of December 31, 1999 was 91.3%. Substantially all of our properties are owned directly by WRI (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. Shopping Centers. As of December 31, 1999, WRI owned or operated under long-term leases, either directly or through its interests in joint ventures, 187 shopping centers with approximately 21.1 million square feet of building area. The shopping centers were located predominantly in Texas with other locations in Louisiana, Arizona, Nevada, Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri, Illinois, Florida and Maine. WRI's shopping centers are primarily community shopping centers which range in size from 100,000 to 400,000 square feet, as distinguished from small strip centers which generally contain 5,000 to 25,000 square feet and from large regional enclosed malls which generally contain over 500,000 square feet. Most of the centers do not 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 which have existing populations sufficient to support retail activities of the types conducted in our centers. We have approximately 4,200 separate leases with 3,300 different tenants, including national and regional supermarket chains, drug stores, discount department stores, junior department stores, other nationally or regionally known stores and a great variety of other regional and local retailers. The large number of locations offered by WRI and the types of traditional anchor tenants help attract prospective new tenants. Some of the national and regional supermarket chains which are tenants in our centers include Albertson's, Fiesta, Smith's, H.E.B., Kroger Company, Randall's Food Markets, Fry's Food Stores and Safeway. In addition to these supermarket chains, WRI's nationally and regionally known retail store tenants include Eckerd, Walgreen and Osco drugstores; Kmart discount stores; Bealls, Palais Royal and Weiner's junior department stores; Marshall's, Office Depot, Office Max, Babies 'R' Us, Ross, Stein Mart and T.J. Maxx off-price specialty stores; Luby's, Piccadilly and Furr's cafeterias; Academy sporting goods; FAO Schwarz toy store; Cost Plus Imports; Linens 'N Things; Barnes & Noble bookstore; Home Depot; CompUSA; and the following restaurant chains: Arby's, Burger King, Champ's, Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, CiCi Pizza, Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut, Shoney's, Steak & Ale, Taco Bell and Whataburger. We also lease space in 3,000 to 10,000 square foot areas to national chains such as the Limited Store, The Gap, One Price Stores, Eddie Bauer and Radio Shack. WRI's 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 35 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 or for the 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, WRI makes the payments for the utilities and is reimbursed by the tenants on a monthly basis. 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 1999, we added approximately 2.8 million square feet to our portfolio of properties through acquisitions and another .4 million square feet of space through development. Regarding the retail portfolio, we purchased three anchored shopping centers in Texas, a supermarket-anchored retail center in Florida and a building adjacent to one of our shopping centers in Houston, Texas. We also purchased our joint venture partner's 77% interest in a shopping center in Santa Fe, New Mexico and executed a lease on a retail center in Ballwin, Missouri, a suburb of St. Louis. These transactions increased our retail portfolio by 1.4 million square feet of building area and represent an investment of $107.3 million. With respect to new development, construction was completed on .1 million square feet of retail space. WRI currently has seven retail centers under development and has investments in three additional retail centers in joint ventures with our Denver-based development partner. Industrial Properties. At December 31, 1999, WRI owned a total of 50 industrial projects. During 1999, we purchased twelve facilities, including seven facilities in the Dallas/Fort Worth metroplex and our first industrial project in Las Vegas, Nevada. We also acquired three buildings in Austin, Texas, and one facility in Houston, Texas. These projects added 1.4 million square feet to the industrial portfolio and represent an investment of $43.2 million. During 1999, WRI completed the development of one 52,500 square foot building of a three-building office/service facility in Houston, Texas. The remaining two buildings are currently under development. In December 1999, WRI sold seven industrial properties totaling 2.0 million square feet of building area to a joint venture in which we retained a 20% ownership interest, with the other 80% purchased by American National Insurance Company. Office Building. We own a seven-story, 121,000 square foot masonry office building with a detached, covered, three-level parking garage situated on 171,000 square feet of land fronting on North Loop 610 West in Houston. The building serves as our headquarters. Other than WRI, the major tenant of the building is Bank of America, which currently occupies 9% of the office space. Multi-family Residential Properties. WRI completed development of a 260-unit luxury apartment complex within a multi-use master-planned project we developed in a suburb north of Houston. An unrelated Houston-based multi-family operator manages the property on our behalf. Unimproved Land. At December 31, 1999, WRI owned, directly or through its interest in a joint venture, 31 parcels of unimproved land aggregating approximately 8.2 million square feet of land area located in Texas, Louisiana, Arizona, Colorado and Illinois. These properties include approximately 2.6 million square feet of land adjacent to certain of our existing developed properties, which may be used for expansion of these developments, as well as approximately 5.6 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 WRI intends to emphasize the development of these parcels for such purpose. In December 1999, WRI and WRI Holdings, Inc., an affiliated company, sold 28.5 acres and 102.6 acres, respectively, of undeveloped land to American National Insurance Company with WRI retaining the right to co-develop this land with American National. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business or litigation we believe is substantially covered by insurance, to which WRI is a party or to which any of its properties are subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS None. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information with respect to the executive officers of WRI as of February 22, 2000. All executive officers of WRI are elected annually by our Board of Trust Managers and serve until the successors are elected and qualified. Name Age Position Stanford Alexander. . . . . . . 71 Chairman/Chief Executive Officer Martin Debrovner. . . . . . . . 63 Vice Chairman Andrew M. Alexander . . . . . . 43 President Joseph W. Robertson, Jr.. . . . 52 Executive Vice President/Chief Financial Officer Stephen C. Richter. . . . . . . 45 Senior Vice President/Financial Administration and Treasurer Mr. S. Alexander is WRI's Chairman and its Chief Executive Officer. He has been employed by WRI since 1955 and has served in his present capacity since January 1, 1993. Prior to becoming Chairman, Mr. Alexander served as President and Chief Executive Officer of WRI since 1962. Mr. Alexander is President, Chief Executive Officer and a Trust Manager of Weingarten Properties Trust. Mr. Debrovner became Vice Chairman of WRI on February 25, 1997. Prior to assuming such position, Mr. Debrovner served as President and Chief Operating Officer since January 1, 1993. Mr. Debrovner served as President of Weingarten Realty Management Company since WRI's reorganization in December 1984. Prior to such time, Mr. Debrovner was an employee of WRI for 17 years, holding the positions of Senior Vice President from 1980 until March 1984 and Executive Vice President until December 1984. As Executive Vice President, Mr. Debrovner was generally responsible for WRI's operations. Mr. Debrovner is also a Trust Manager of Weingarten Properties Trust. Mr. A. Alexander became President of WRI on February 25, 1997. Prior to his present position, Mr. Alexander was Executive Vice President/Asset Management of WRI and President of Weingarten Realty Management Company. Prior to such time, Mr. Alexander was Senior Vice President/Asset Management of the Management Company. He also served as Vice President of the Management Company and, prior to WRI's reorganization in December 1984, was Vice President and an employee of WRI since 1978. Mr. Alexander has been primarily involved with leasing operations at both WRI and the Management Company. Mr. Alexander is also a Trust Manager of Weingarten Properties Trust and a Director of Academy Sports and Outdoors, Inc. Mr. Robertson became Executive Vice President of WRI and its Chief Financial Officer on January 1, 1993. Prior to becoming Executive Vice President, Mr. Robertson served as Senior Vice President and Chief Financial Officer since 1980. He has been with WRI since 1971. Mr. Robertson is also a Trust Manager of Weingarten Properties Trust. Mr. Richter became Senior Vice President/Financial Administration and Treasurer on January 1, 1997. Prior to his present position, Mr. Richter served as Vice President/Financial Administration and Treasurer of WRI since January 1, 1993. For the five years prior to that time, he served as Vice President/Financial Administration and Treasurer of the Management Company. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND RELATED SHAREHOLDER MATTERS WRI's 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 February 22, 2000 was 3,324. The high and low sale prices per share of our common shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the fiscal quarters indicated were as follows: HIGH LOW DIVIDENDS --------- --------- --------- 1999: Fourth. . . $ 39 3/8 $ 37 $ 0.71 Third . . . 42 7/16 37 1/4 0.71 Second. . . 43 7/16 38 1/4 0.71 First . . . 45 5/8 38 3/8 0.71 1998: Fourth. . . $ 46 7/8 $ 39 3/4 $ 0.67 Third . . . 43 35 15/16 0.67 Second. . . 44 15/16 40 5/8 0.67 First . . . 45 5/8 43 7/8 0.67 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial data with respect to WRI 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) Years Ended December 31, 1999 1998 1997 1996 1995 ----------- ----------- ----------- --------- --------- Revenues (primarily real estate rentals). $ 230,469 $ 198,467 $ 174,512 $151,123 $134,197 ----------- ----------- ----------- --------- --------- Expenses: Depreciation and amortization . . . . 49,612 41,946 37,976 33,769 30,060 Interest. . . . . . . . . . . . . . . 33,186 33,654 30,009 21,975 16,707 Other . . . . . . . . . . . . . . . . 71,947 61,995 54,888 47,004 42,614 ----------- ----------- ----------- --------- --------- Total. . . . . . . . . . . . . . 154,745 137,595 122,873 102,748 89,381 ----------- ----------- ----------- --------- --------- Income before gain (loss) on sales of property and securities and extraordinary charge. . . . . . . . . . 75,724 60,872 51,639 48,375 44,816 Gain (loss) on sales of property and securities. . . . . . . . . . . . . . . 20,596 885 3,327 5,563 (14) ----------- ----------- ----------- --------- --------- Income before extraordinary charge. . . . 96,320 61,757 54,966 53,938 44,802 Extraordinary charge (early retirement of debt) . . . . . . . . . . . . . . . (190) (1,392) ----------- ----------- ----------- --------- --------- Net income . . . . . . . . . . . . . . . $ 96,130 $ 60,365 $ 54,966 $ 53,938 $ 44,802 =========== =========== =========== ========= ========= Net income available to common shareholders . . . . . . . . . . . . . $ 76,537 $ 54,484 $ 54,966 $ 53,938 $ 44,802 =========== =========== =========== ========= ========= Cash flows from operations . . . . . . . $ 118,476 $ 97,464 $ 89,902 $ 76,299 $ 72,498 =========== =========== =========== ========= ========= Per share data - basic: Income before extraordinary charge . $ 2.88 $ 2.09 $ 2.06 $ 2.03 $ 1.69 Net income . . . . . . . . . . . . . $ 2.87 $ 2.04 $ 2.06 $ 2.03 $ 1.69 Weighted average number of shares. . 26,690 26,667 26,638 26,555 26,464 Per share data - diluted: Income before extraordinary charge . $ 2.86 $ 2.08 $ 2.05 $ 2.03 $ 1.69 Net income . . . . . . . . . . . . . $ 2.85 $ 2.03 $ 2.05 $ 2.03 $ 1.69 Weighted average number of shares. . 26,890 26,869 26,771 26,598 26,493 Cash dividends per common share. . . . . $ 2.84 $ 2.68 $ 2.56 $ 2.48 $ 2.40 Property (at cost) . . . . . . . . . . . $1,514,139 $1,294,632 $1,118,758 $970,418 $849,894 Total assets . . . . . . . . . . . . . . $1,309,396 $1,107,043 $ 946,793 $831,097 $734,824 Debt . . . . . . . . . . . . . . . . . . $ 594,185 $ 516,366 $ 507,366 $389,225 $289,339 Other data: Funds from operations (1) Net income available to common shareholders. . . . . . . . . . . $ 76,537 $ 54,484 $ 54,966 $ 53,938 $ 44,802 Depreciation and amortization. . . 49,256 41,580 37,544 33,414 29,813 (Gain) loss on sales of property and securities. . . . . . . . . . (20,596) (885) (3,327) (5,563) 14 Extraordinary charge (early retirement of debt) . . . . . . . . . . . . . . . 190 1,392 ----------- ----------- ----------- --------- --------- Total . . . . . . . . . . . . . $ 105,387 $ 96,571 $ 89,183 $ 81,789 $ 74,629 =========== =========== =========== ========= ========= <FN> (1) Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of WRI's operating performance or to cash flows as a measure of liquidity. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Weingarten Realty Investors owned or operated under long-term leases 187 shopping centers, 50 industrial properties, one multi-family residential project and one office building at December 31, 1999. Of our 239 developed properties, 179 are located in Texas (including 100 in Houston and Harris County). Our remaining properties are located in Louisiana (11), Arizona (11), Nevada (8), Arkansas (6), New Mexico (5), Oklahoma (4), Tennessee (4), Kansas (3), Colorado (3), Missouri (2), Illinois (1), Florida (1) and Maine (1). WRI has nearly 4,200 leases and 3,300 different tenants. Leases for our properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of our anchor tenants are supermarkets, drugstores, value-oriented apparel and discount stores and other retailers, which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY WRI anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements. Cash on hand, internally-generated cash flow, borrowings under our existing credit facilities, issuance of unsecured debt and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows increased to $118.5 million for 1999 from $97.5 million for 1998 and $89.9 million for 1997. Common and preferred dividends increased to $95.4 million in 1999, compared to $77.3 million in 1998 and $68.2 million in 1997. WRI satisfied its REIT requirement of distributing at least 95% of ordinary taxable income for each of the three years ended December 31, 1999, and, accordingly, federal income taxes were not required to be paid in these years. Our dividend payout ratio on common equity for 1999, 1998 and 1997 approximated 71.9%, 74.4% and 76.4%, respectively, based on funds from operations for the applicable year. WRI invested $150.5 million in acquisitions in 1999, adding 2.8 million square feet to its portfolio of properties. Regarding the retail portfolio, we purchased three anchored shopping centers in Texas, a supermarket-anchored retail center in Florida and a building adjacent to one of our shopping centers in Houston, Texas. We also purchased our joint venture partner's 77% interest in a shopping center in Santa Fe, New Mexico and executed a lease on a retail center in Ballwin, Missouri, a suburb of St. Louis. These transactions increased our retail portfolio by 1.4 million square feet of building area and represent an investment of $107.3 million. WRI currently owns a total of 50 industrial projects. During 1999, we purchased twelve properties, including seven facilities in the Dallas/Fort Worth metroplex and our first industrial project in Las Vegas, Nevada. We also acquired three buildings in Austin, Texas, and one facility in Houston, Texas. These projects added 1.4 million square feet to the industrial portfolio and represent an investment of $43.2 million. In December 1999, we sold seven industrial properties totaling 2.0 million square feet to a joint venture in which we retained 20% ownership, with the remainder owned by American National Insurance Company. Additionally, American National purchased 131 acres of undeveloped land in our Railwood Industrial Park. WRI retained the right to co-develop this land with American National. WRI owned 28.5 acres of this land and WRI Holdings, Inc., an affiliated entity, owned 102.6 acres. The proceeds of $8.1 million received by WRI Holdings were remitted to WRI in payment of mortgage bonds and notes. Including the payment received from WRI Holdings, these transactions provided WRI with $21 million of cash and a six-month $33 million note receivable from American National. We have retained the leasing and management of the properties and also contracted to lease and manage an additional 1.4 million square feet of Houston industrial properties owned by American National. With respect to new development, construction was completed on retail and industrial space totaling .2 million square feet. An additional .2 million square feet was added with the completion of a 260-unit luxury apartment complex within a multi-use master-planned project WRI developed in a suburb north of Houston. WRI currently has several other facilities under development, including seven retail centers, an industrial office/service center and three additional retail centers in joint ventures with our Denver-based development partner. The projects under construction or completed in 1999 represent an estimated investment by WRI of approximately $77 million and will add .9 million square feet to our portfolio. Additionally, WRI has an ongoing program for maintaining and renovating its existing portfolio of properties. Capitalized expenditures for acquisitions, new development and additions to the existing portfolio were, in millions, $224.3, $176.5 and $152.6 during 1999, 1998 and 1997, respectively. All of the acquisitions and new development during 1999 were either initially financed under WRI's revolving credit facility, funded with excess cash balances or funded with excess cash flow from our existing portfolio of properties. In January 1999, we issued $115 million of 7.0% Series C cumulative redeemable preferred shares with a liquidation preference of $50 per share and no stated maturity. We can elect to redeem these shares anytime after March 15, 2004. The Series C preferred shares are redeemable by the holder only upon their death and are also redeemable in either cash or common shares at WRI's option. There are limitations on the number of shares per shareholder and in the aggregate that may be redeemed per year. The proceeds of this offering were used to pay down all amounts outstanding under our revolving credit facilities and retire $82 million of variable-rate, unsecured medium term notes, resulting in an extraordinary loss of $.2 million. Any redemption of preferred shares initiated by WRI must be funded with proceeds from an offering of additional common or preferred shares. In July 1999, WRI issued $20 million of ten-year 7.35% fixed-rate, unsecured medium term notes. Including the effect of a loss of $1.2 million on the sale of Treasury locks, which were designated as a hedge against future issuance of fixed-rate notes, the effective interest rate is 8.0%. In January 2000, WRI issued $10.5 million of ten-year 8.25% fixed-rate, unsecured medium term notes. In connection with this debt issuance, we entered into a ten-year interest rate swap agreement with a notional amount of $10.5 million to swap 8.25% fixed-rate interest for floating-rate interest. WRI has a $200 million unsecured revolving credit facility which expires in November of 2000. WRI has an annual option to request a one-year extension of the commitment. Upon expiration, we have an option to convert amounts outstanding under the facility to a term loan payable over a two-year period. Additionally, WRI has an unsecured and uncommitted overnight credit facility totaling $20 million to be used for cash management purposes. WRI will maintain adequate funds available under the $200 million revolving credit facility at all times to cover the outstanding balance under the $20 million facility. WRI has three interest rate swap contracts with an aggregate notional amount of $40 million which fix interest rates on variable-rate debt at 8.1% and expire through 2004. Subsequent to year-end, WRI finalized an additional $100 million revolving credit agreement with a major bank. This one-year facility became effective on March 1, 2000 and is renewable at our option for an additional two-year period. We also filed a new $400 million shelf registration statement in August of this year, all of which was available at year-end. Total debt outstanding increased to $594.2 million at December 31, 1999 from $516.4 million at December 31, 1998, primarily to fund acquisitions and new development. WRI will continue to closely monitor both the debt and equity markets and carefully consider its available alternatives, including both public and private placements. FUNDS FROM OPERATIONS Industry analysts generally consider funds from operations to be an appropriate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Management believes that reductions for these charges are not meaningful in evaluating income-producing real estate, which historically has not depreciated. The National Association of Real Estate Investment Trusts defines funds from operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of properties. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of WRI's operating performance or to cash flows as a measure of liquidity. Funds from operations increased to $105.4 million in 1999, as compared to $96.6 million in 1998 and $89.2 million in 1997. These increases relate primarily to the impact of WRI's acquisitions, new developments and activity at its existing properties. For further information on changes between years, see "Results of Operations" below. RESULTS OF OPERATIONS Rental revenues increased 15.7%, or $30.6 million, from $194.6 million in 1998 to $225.2 million in 1999 and by 15.1%, or $25.6 million, from $169.0 million in 1997. Of these increases, property acquisitions and new development contributed $24.8 million in 1999 and $18.4 million in 1998. The remaining portion of these increases is due to activity at our existing properties. Occupancy of our shopping centers, industrial properties and total portfolio decreased to 91% at December 31, 1999 from 93% at the end of 1998. This is primarily the result of the loss of certain large tenants in the latter half of the year. Among the larger losses were Builders Square, which occupied a 105,000 square foot space in Corpus Christi, Texas, a 91,500 square foot Kmart in Houston, Texas, a 63,000 square foot Service Merchandise in Lake Charles, Louisiana and a 60,000 square foot Pay & Save in Lubbock, Texas. In 1999, we completed 894 renewals or new leases comprising 4.8 million square feet at an average rental rate increase of 9.5%. Net of the amortized portion of capital costs for tenant improvements, the increase averaged 5.9%. Occupancy of our total portfolio increased to 93% at December 31, 1998 from 92% at the end of 1997. In 1998, we completed 830 renewals or new leases comprising 3.4 million square feet at an average rental rate increase of 5.8%. Net of the amortized portion of capital costs for tenant improvements, the increase averaged 3.2%. Interest income totaled $3.1 million in 1999, $2.1 million in 1998 and $2.5 million in 1997. The increase in income in 1999 is due to the funding of loans to our joint venture partners. The decrease from 1997 to 1998 was due to the sale of $12.2 million of marketable debt securities during the first quarter of 1998. Equity in earnings of real estate joint ventures and partnerships totaled $.2 million in 1999, $.3 million in 1998 and $1.0 million in 1997. The decrease in 1999 and 1998 is due to the purchase at December 31, 1997 of our joint venture partner's 85% interest in four shopping centers and the purchase of our joint venture partner's 77% interest in a shopping center in July 1999. Direct costs and expenses of operating our properties (i.e., operating and ad valorem tax expenses) increased to $64.4 million in 1999 from $54.8 million in 1998 and $49.2 million in 1997. These increases are primarily due to property acquired and developed during these periods. Overall, direct operating costs and expenses as a percentage of rental revenues were 29% in 1999, 28% in 1998 and 29% in 1997. Depreciation and amortization have increased to $49.6 million in 1999 from $41.9 million in 1998 and $38.0 million in 1997, also as a result of the properties acquired and developed during these periods. General and administrative expense has increased to $7.5 million in 1999 from $7.1 million in 1998 and $5.6 million in 1997. The increase in 1998 results primarily from the adoption of a new Emerging Issues Task Force consensus decision which required that internal costs of identifying and acquiring operating property incurred subsequent to March 19, 1998 be expensed. WRI realized an increase in expense of $1.1 million in 1998 due to the adoption of this standard. The remainder of the increase in 1998 and the majority of the increase in 1999 are due to normal compensation increases as well as slight increases in staffing. Gross interest costs, before capitalization of interest to development projects, increased from $35.0 million in 1998 to $35.9 million in 1999. This increase in interest cost was due mainly to an increase in the average debt outstanding from $492.2 million for 1998 to $501.6 million for 1999. The weighted-average interest rate increased from 7.11% in 1998 to 7.15% in 1999. Interest expense, net of amounts capitalized, decreased $.5 million from 1998. The amount of interest capitalized increased to $2.7 million in 1999 from $1.4 million in 1998 due to an increase in the amount of development activity during the year. Comparing 1998 to 1997, gross interest costs increased from $30.8 million in 1997 to $35.0 million in 1998. This was due to an increase in the average debt outstanding from $422.9 million in 1997 to $492.2 million in 1998. The weighted-average interest rate decreased between the two periods from 7.27% in 1997 to 7.11% in 1998. Interest expense, net of amounts capitalized, increased $3.6 million from 1997. The amount of interest capitalized increased by $.6 million in 1998 due to an increase in the amount of development activity during the year. Included in interest expense during 1997 was $.7 million related to repurchase agreements collateralized by our investment in marketable debt securities which were sold during the first quarter of 1998. The gain on sale of $20.6 million in 1999 was due primarily to the sale of 28.5 acres of undeveloped land and an 80% interest in certain industrial properties to American National Insurance Company. EFFECTS OF INFLATION The rate of inflation was relatively unchanged in 1999. WRI has structured its leases, however, in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions whereby WRI receives 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 WRI's leases are for terms of less than ten years, which allows WRI to adjust rental rates to changing market conditions when the leases expire. Most of WRI's leases 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 WRI's operating results. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued. This statement requires that an entity recognize all derivatives as either assets or liabilities and measure the instruments at fair value. The accounting for changes in fair value of a derivative depends upon its intended use. WRI will adopt the provisions of this statement in the first quarter of fiscal year 2001. WRI is still evaluating the effects of adopting this statement, however, we do not expect the impact to be material to our operating results or our financial position. In December 1999, the SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" was issued. This bulletin requires that revenue based on a percentage of tenants' sales be recognized only after the tenant exceeds their sales breakpoint. Implementation of this bulletin is expected to reduce revenue by $.6 million in 2000. YEAR 2000 Based on a review of our mission critical and non-mission critical software and hardware, we concluded that our company's systems were Year 2000 compliant. No significant problems related to the Year 2000 were experienced or are expected in the future. Our major tenants, financial institutions and utility companies represented to us that they also were Year 2000 compliant. While we have not been affected by any Year 2000 issues experienced by these third parties, we have no guarantee that these third-party systems will continue to operate as represented. FORWARD-LOOKING STATEMENTS This Annual Report includes certain forward-looking statements reflecting WRI's expectations in the near term that involve a number of risks and uncertainties; however, many factors may materially affect the actual results, including demand for our properties, changes in rental and occupancy rates, changes in property operating costs, interest rate fluctuations, and changes in local and general economic conditions. Accordingly, there is no assurance that WRI's expectations will be realized. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK WRI uses fixed and floating-rate debt to finance its capital requirements. These transactions expose WRI to market risk related to changes in interest rates. Derivative financial instruments are used to manage a portion of this risk. We do not engage in the trading of derivative financial instruments in the normal course of business. During 1998, we entered into and settled three forward Treasury lock agreements with a total notional amount of $85 million as a hedge against potential changes in interest rates of prospective issuances of fixed-rate debt. Amounts paid or received upon settlement of these contracts are deferred and amortized as an adjustment to interest expense over the life of the fixed-rate debt. At December 31, 1999, WRI had fixed-rate debt of $499.9 million and variable-rate debt of $94.3 million, after adjusting for the effect of interest rate swaps. We also had variable-rate notes receivable totaling $44.8 million at year-end. In the event that interest rates were to increase 100 basis points, the fair value of fixed-rate debt would decrease by $21.8 million and net income, funds from operations and future cash flows would decrease $.5 million based upon the variable-rate debt and notes receivable outstanding at December 31, 1999. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEPENDENT AUDITORS' REPORT To the Board of Trust Managers and Shareholders of Weingarten Realty Investors: We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors (the "Company") as of December 31, 1999 and 1998, and the related statements of consolidated income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedules listed in the Index at Item 14. 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 generally accepted auditing standards. 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 at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. 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. DELOITTE & TOUCHE LLP Houston, Texas February 22, 2000 STATEMENTS OF CONSOLIDATED INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, ------------------------------- 1999 1998 1997 --------- --------- --------- Revenues: Rentals . . . . . . . . . . . . . . . . . . . . . $225,244 $194,624 $169,041 Interest: Affiliates. . . . . . . . . . . . . . . . . . . 2,403 1,578 1,434 Securities and Other. . . . . . . . . . . . . . 721 511 1,053 Equity in earnings of real estate joint ventures and partnerships. . . . . . . . . . . . . . . . 213 342 1,003 Other . . . . . . . . . . . . . . . . . . . . . . 1,888 1,412 1,981 --------- --------- --------- Total . . . . . . . . . . . . . . . . . . . 230,469 198,467 174,512 --------- --------- --------- Expenses: Depreciation and amortization . . . . . . . . . . 49,612 41,946 37,976 Operating . . . . . . . . . . . . . . . . . . . . 36,112 30,413 27,131 Interest. . . . . . . . . . . . . . . . . . . . . 33,186 33,654 30,009 Ad valorem taxes. . . . . . . . . . . . . . . . . 28,323 24,436 22,110 General and administrative. . . . . . . . . . . . 7,512 7,146 5,647 --------- --------- --------- Total . . . . . . . . . . . . . . . . . . . 154,745 137,595 122,873 --------- --------- --------- Income Before Gain on Sales of Property and Extraordinary Charge. . . . . . . . . . . . . 75,724 60,872 51,639 Gain on Sales of Property . . . . . . . . . . . . . 20,596 885 3,327 --------- --------- --------- Income Before Extraordinary Charge. . . . . . . . . 96,320 61,757 54,966 Extraordinary Charge (early retirement of debt) . . (190) (1,392) --------- --------- --------- Net Income. . . . . . . . . . . . . . . . . . . . . $ 96,130 $ 60,365 $ 54,966 ========= ========= ========= Net Income Available to Common Shareholders . . . . $ 76,537 $ 54,484 $ 54,966 ========= ========= ========= Net Income Per Common Share - Basic: Income Before Extraordinary Charge. . . . . . . $ 2.88 $ 2.09 $ 2.06 Extraordinary Charge. . . . . . . . . . . . . . (.01) (.05) --------- --------- --------- Net Income. . . . . . . . . . . . . . . . . . . $ 2.87 $ 2.04 $ 2.06 ========= ========= ========= Net Income Per Common Share - Diluted: Income Before Extraordinary Charge. . . . . . . $ 2.86 $ 2.08 $ 2.05 Extraordinary Charge. . . . . . . . . . . . . . (.01) (.05) --------- --------- --------- Net Income. . . . . . . . . . . . . . . . . . . $ 2.85 $ 2.03 $ 2.05 ========= ========= ========= See Notes to Consolidated Financial Statements. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31, ------------------------ 1999 1998 ----------- ----------- ASSETS Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,514,139 $1,294,632 Accumulated Depreciation. . . . . . . . . . . . . . . . . . . . . . . (328,645) (296,989) ----------- ----------- Property - net. . . . . . . . . . . . . . . . . . . . . . . . . . 1,185,494 997,643 Investment in Real Estate Joint Ventures and Partnerships . . . . . . 2,006 2,741 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,187,500 1,000,384 Mortgage Bonds and Notes Receivable from: Real Estate Joint Ventures and Partnerships . . . . . . . . . . . . 52,824 23,388 Affiliate (net of deferred gain of $3,050 in 1999 and $4,487 in 1998) 3,907 13,444 Marketable Debt Securities. . . . . . . . . . . . . . . . . . . . . . 14,951 Unamortized Debt and Lease Costs. . . . . . . . . . . . . . . . . . . 29,986 25,612 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $908 in 1999 and $888 in 1998). . . . . . . . . . . . . 16,874 15,197 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 5,842 1,672 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,463 12,395 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . $1,309,396 $1,107,043 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 594,185 $ 516,366 Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . 57,518 49,269 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,791 8,229 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663,494 573,864 ----------- ----------- Commitments and Contingencies Shareholders' Equity: Preferred Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 10,000 7.44% Series A cumulative redeemable preferred shares of beneficial interest; 3,000 shares issued and outstanding; liquidation preference $25 per share. . . . . . . . . . . . . 90 90 7.125% Series B cumulative redeemable preferred shares of beneficial interest; 3,600 shares issued and outstanding; liquidation preference $25 per share. . . . . . . . . . . . . 108 108 7.0% Series C cumulative redeemable preferred shares of beneficial interest; 2,300 shares issued and 2,297 shares outstanding; liquidation preference $50 per share. . . . . . 69 Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 26,695 in 1999 and 26,673 in 1998 . . . . . . . . . . . . . . . . 801 800 Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 753,030 641,180 Accumulated Dividends in Excess of Net Income . . . . . . . . . . . (108,193) (108,926) Deferred Compensation Obligation. . . . . . . . . . . . . . . . . . (3) (73) ----------- ----------- Shareholders' Equity. . . . . . . . . . . . . . . . . . . . . . 645,902 533,179 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . $1,309,396 $1,107,043 =========== =========== See Notes to Consolidated Financial Statements. STATEMENTS OF CONSOLIDATED CASH FLOWS (AMOUNTS IN THOUSANDS) Years Ended December 31, --------------------------------- 1999 1998 1997 ---------- ---------- ---------- Cash Flows from Operating Activities: Net income. . . . . . . . . . . . . . . . . . . . . . . $ 96,130 $ 60,365 $ 54,966 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . 49,612 41,946 37,976 Equity in earnings of real estate joint ventures and partnerships . . . . . . . . . . . . . . . . . . . . (213) (342) (1,003) Gain on sales of property . . . . . . . . . . . . . . (20,596) (885) (3,327) Extraordinary charge (early retirement of debt) . . . 190 1,392 Changes in accrued rent and accounts receivable . . . (1,532) (621) (2,462) Changes in other assets . . . . . . . . . . . . . . . (12,616) (12,662) (6,105) Changes in accounts payable and accrued expenses. . . 6,924 7,614 9,113 Other, net. . . . . . . . . . . . . . . . . . . . . . 577 657 744 ---------- ---------- ---------- Net cash provided by operating activities . . . . 118,476 97,464 89,902 ---------- ---------- ---------- Cash Flows from Investing Activities: Investment in properties. . . . . . . . . . . . . . . . (198,741) (172,470) (136,632) Mortgage bonds and notes receivable: Advances. . . . . . . . . . . . . . . . . . . . . . . (8,187) (12,598) (1,501) Collections . . . . . . . . . . . . . . . . . . . . . 9,719 3,745 2,090 Proceeds from sales and disposition of property . . . . 15,010 1,109 11,741 Purchase of marketable debt securities. . . . . . . . . (14,951) Proceeds from sales of marketable debt securities . . . 15,000 12,229 Real estate joint ventures and partnerships: Investments . . . . . . . . . . . . . . . . . . . . . (1,643) (453) (59) Distributions . . . . . . . . . . . . . . . . . . . . 216 345 808 Other, net. . . . . . . . . . . . . . . . . . . . . . . (4) 241 2,517 ---------- ---------- ---------- Net cash used in investing activities . . . . . . (168,630) (182,803) (121,036) ---------- ---------- ---------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt. . . . . . . . . . . . . . . . . . . . . . . . . 124,100 136,575 104,526 Common shares of beneficial interest. . . . . . . . . 546 301 1,325 Preferred shares of beneficial interest . . . . . . . 111,263 159,552 Principal payments of debt. . . . . . . . . . . . . . . (85,532) (134,443) (3,644) Common and preferred dividends paid . . . . . . . . . . (95,397) (77,347) (68,200) Other, net. . . . . . . . . . . . . . . . . . . . . . . (656) (381) (288) ---------- ---------- ---------- Net cash provided by financing activities . . . . 54,324 84,257 33,719 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents. . . 4,170 (1,082) 2,585 Cash and cash equivalents at January 1. . . . . . . . . . 1,672 2,754 169 ---------- ---------- ---------- Cash and cash equivalents at December 31. . . . . . . . . $ 5,842 $ 1,672 $ 2,754 ========== ========== ========== See Notes to Consolidated Financial Statements. STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (AMOUNTS IN THOUSANDS) Years Ended December 31, 1999, 1998 and 1997 Preferred Common Accumulated Shares of Shares of Dividends in Deferred Beneficial Beneficial Capital Excess of Compensation Interest Interest Surplus Net Income Obligation ----------- ----------- --------- -------------- -------------- Balance, January 1, 1997 . . . . . . . . . . . . $ 797 $478,911 $ (78,710) Net income . . . . . . . . . . . . . . . . . . 54,966 Shares exchanged for property. . . . . . . . . 1 275 Shares issued under benefit plans. . . . . . . 2 1,733 Dividends declared - common shares . . . . . . (68,200) Other. . . . . . . . . . . . . . . . . . . . . 211 ----------- ----------- --------- -------------- -------------- Balance, December 31, 1997 . . . . . . . . . . . 800 481,130 (91,944) Net income . . . . . . . . . . . . . . . . . . 60,365 Issuance of Series A preferred shares. . . . .$ 90 72,422 Issuance of Series B preferred shares. . . . . 108 86,932 Shares issued under benefit plans. . . . . . . 696 Dividends declared - common shares . . . . . . (71,466) Dividends declared - preferred shares. . . . . (5,881) Adjustment for cumulative effect of adopting accounting for deferred compensation plan: Common shares held in plan . . . . . . . . $ (3,531) Deferred compensation obligation . . . . . 3,458 ----------- ----------- --------- -------------- -------------- Balance, December 31, 1998 . . . . . . . . . . . 198 800 641,180 (108,926) (73) Net income . . . . . . . . . . . . . . . . . . 96,130 Issuance of Series C preferred shares. . . . . 69 111,119 Shares issued under benefit plans. . . . . . . 1 883 Dividends declared - common shares . . . . . . (75,804) Dividends declared - preferred shares. . . . . (19,593) Redemption of Series C preferred shares. . . . (152) Deferred compensation obligation . . . . . . . 70 ----------- ----------- --------- -------------- -------------- Balance, December 31, 1999 . . . . . . . . . . .$ 267 $ 801 $753,030 $ (108,193) $ (3) =========== =========== ========= ============== ============== See Notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Weingarten Realty Investors, a Texas real estate investment trust, is engaged in the acquisition, development and management of real estate, primarily anchored neighborhood and community shopping centers and, to a lesser extent, industrial properties. Over 74% of WRI's properties are located in Texas, with the remainder located primarily throughout the southwestern part of the United States. WRI's major tenants include supermarkets, drugstores and other retailers who generally sell basic necessity-type commodities. WRI currently operates and intends to operate in the future as a real estate investment trust. Basis of Presentation The consolidated financial statements include the accounts of WRI, its subsidiaries and its interest in joint ventures and partnerships over which WRI exercises control. All significant intercompany balances and transactions have been eliminated. Investments in less than 50%-owned joint ventures and partnerships where WRI does not exercise control are accounted for using the equity method. Revenue Recognition Rental revenue is generally recognized on a straight-line basis over the life of the lease. 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 estimated and accrued ratably over the year. Beginning January 1, 2000, such revenue will be recognized only after the tenant exceeds their sales breakpoint, in accordance with the SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." Implementation of this bulletin is expected to reduce revenue by $.6 million in 2000. 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 18-50 years for buildings and 10-20 years for parking lot surfacing and equipment. Major replacements 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. Capitalization Carrying charges, principally interest and ad valorem taxes, on land under development and buildings under construction are capitalized as part of land under development and buildings and improvements. WRI had also capitalized the direct internal costs of identifying and acquiring operating property. In March 1998, the Emerging Issues Task Force of the Financial Accounting Standards Board reached a consensus decision on Issue No. 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions." This consensus requires that internal costs of identifying and acquiring operating property incurred subsequent to March 19, 1998 be expensed. Such amounts capitalized totaled $.2 million and $1.1 million in 1998 and 1997, respectively. Deferred Charges Debt and lease costs are amortized primarily on a straight-line basis over the terms of the debt and over the lives of leases, respectively. Marketable Debt Securities WRI's investment in marketable securities is classified as "available for sale." The securities are carried at market with any unrealized gains or losses included as a component of shareholders' equity. Use of Estimates The preparation of financial statements requires management to make use of estimates and assumptions that affect amounts reported in the financial statements as well as certain disclosures. Actual results could differ from those estimates. 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): 1999 1998 1997 ------- ------- ------- Numerator: Net income available to common shareholders - basic. . . . . . $76,537 $54,484 $54,966 Income attributable to operating partnership units . . . . . . 141 37 ------- ------- ------- Net income available to common shareholders - diluted. . . . . $76,678 $54,521 $54,966 ======= ======= ======= Denominator: Weighted average shares outstanding - basic. . . . . . . . . . 26,690 26,667 26,638 Effect of dilutive securities: Share options and awards . . . . . . . . . . . . . . . . . 58 132 132 Operating partnership units. . . . . . . . . . . . . . . . 142 70 1 ------- ------- ------- Weighted average shares outstanding - diluted. . . . . . . . . 26,890 26,869 26,771 ======= ======= ======= Options to purchase 550,200, 13,200 and 800 common shares in 1999, 1998 and 1997, 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. Statements of Cash Flows WRI considers all highly liquid investments with original maturities of three months or less as cash equivalents. WRI issued .1 million common shares of beneficial interest in 1997 valued at $.2 million in connection with purchases of property. We assumed debt and/or capital lease obligations totaling $39.1 million, $6.7 million and $17.3 million in connection with purchases of property during 1999, 1998 and 1997, respectively. We issued limited partnership interests in exchange for property valued at $4.0 million and $1.7 million in 1998 and 1997, respectively. In connection with the sale of improved properties in 1999, we received notes receivable totaling $33.1 million. Comprehensive Income WRI adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" in 1998. Net income differs from comprehensive income by less than $50,000 in each year presented. Reclassifications Certain reclassifications of prior years' amounts have been made to conform with the current year presentation, including the classification of "accumulated dividends in excess of net income" as a separate caption on the Consolidated Balance Sheets. NOTE 2. DEBT WRI's debt consists of the following (in thousands): DECEMBER 31, --------------------- 1999 1998 ---------- --------- Fixed-rate debt payable to 2015 at 6.0% to 10.5% . . . . . . . $ 423,906 $ 404,061 Variable-rate unsecured notes payable. . . . . . . . . . . . . 82,000 Unsecured notes payable under revolving credit agreements. . . 114,000 10,250 Obligations under capital leases . . . . . . . . . . . . . . . 48,467 12,467 Industrial revenue bonds payable to 2015 at 5.6% to 6.4% . . . 6,141 6,262 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,671 1,326 --------- --------- Total. . . . . . . . . . . . . . . . . . . . . . . . $ 594,185 $ 516,366 ========= ========= WRI has an unsecured $200 million revolving credit agreement with a syndicate of banks. The agreement expires in November 2000, but WRI has an annual option to request a one-year extension of the agreement. All members of the bank syndicate must agree to the requested extension or the agreement expires on the scheduled date, at which time WRI has the option to convert all amounts outstanding under the credit agreement to a term loan payable over a two-year period. We also have an agreement for an unsecured and uncommitted overnight credit facility totaling $20 million with a bank to be used for cash management purposes. We will maintain adequate funds available under our revolving credit facilities at all times to cover the outstanding balance under the $20 million facility. WRI also has letters of credit totaling $16.0 million outstanding under the $200 million revolving credit facility at December 31, 1999. The revolving credit agreements are subject to normal banking terms and conditions and do not adversely restrict our operations or liquidity. Subsequent to year-end, we finalized an additional $100 million revolving credit agreement with a bank which became effective March 1, 2000. This one-year facility is renewable at our option for an additional two-year period. At December 31, 1999, the variable interest rate for notes payable under the $20 million revolving credit agreement was 5.3%. During 1999, the maximum balance and weighted average balance outstanding under both credit facilities were $114.0 million and $53.2 million, respectively, at an average interest rate of 6.0%. WRI made cash payments for interest on debt, net of amounts capitalized, of $32.3 million in 1999, $32.6 million in 1998 and $27.4 million in 1997. Various leases and properties and current and future rentals from those leases and properties collateralize certain debt. At December 31, 1999 and 1998, the carrying value of such property aggregated $174 million and $177 million, respectively. WRI has three interest rate swap contracts with an aggregate notional amount of $40 million. Such contracts, which expire through 2004, have been outstanding since their purchase in 1992. We intend to hold such contracts through their expiration date and to use them as a means of managing interest rate risk by fixing the interest rate on a portion of our variable-rate debt. The interest rate swaps have an effective interest rate of 8.1%. The difference between the interest received and paid on the interest rate swaps is recognized as interest expense as incurred. The interest rate swaps increased interest expense and decreased net income by $1.0 million in 1999 and $.9 million in both 1998 and 1997. The interest rate swaps increased the average interest rate for our debt by .2% for 1999, 1998 and 1997. WRI could be exposed to credit losses in the event of non-performance by the counterparty; however, the likelihood of such non-performance is remote. In February 1999, WRI retired $82 million of variable-rate, unsecured medium term notes resulting in an extra-ordinary charge to earnings of $.2 million. In July 1999, we issued $20 million of ten-year 7.35% fixed-rate, unsecured medium term notes. Including the effect of a loss of $1.2 million on the sale of Treasury locks which were designated as a hedge against future issuance of fixed-rate notes, the effective interest rate is 8.0%. WRI's debt can be summarized as follows (in thousands): DECEMBER 31, -------------------- 1999 1998 --------- --------- As to interest rate (including the effects of interest rate swaps): Fixed-rate debt . . . . . . . . . . . . . . . . . $ 499,919 $ 444,060 Variable-rate debt. . . . . . . . . . . . . . . . 94,266 72,306 --------- --------- Total . . . . . . . . . . . . . . . . . . . . $ 594,185 $ 516,366 ========= ========= As to collateralization: Unsecured debt. . . . . . . . . . . . . . . . . . $ 482,671 $ 440,433 Secured debt. . . . . . . . . . . . . . . . . . . 111,514 75,933 --------- --------- Total . . . . . . . . . . . . . . . . . . . . $ 594,185 $ 516,366 ========= ========= Scheduled principal payments on our debt (excluding $114.0 million potentially due under our revolving credit agreements and $36 million of capital leases) are due during the following years (in thousands): 2000. . . . . . . . . $ 32,480 2001. . . . . . . . . 30,152 2002. . . . . . . . . 33,636 2003. . . . . . . . . 27,709 2004. . . . . . . . . 51,921 2005 through 2009 . . 237,769 2010 through 2014 . . 29,345 Thereafter. . . . . . 936 In the event our $200 million revolving credit agreement expires in November 2000 and we elect to convert amounts outstanding under the revolver at that time to a term loan, such amounts would be payable as follows; 50% in 2001 and 50% in 2002. Various debt agreements contain restrictive covenants, the most restrictive of which requires WRI to produce annual consolidated distributable cash flow, as defined by the agreements, of not less than 250% of interest payments, to limit total debt to no more than 60% of total assets (as defined) and to maintain uncollateralized assets equal to at least 150% of unsecured debt. Management believes that WRI is in compliance with all restrictive covenants. In the third quarter of 1999, WRI filed a $400 million shelf registration statement with the SEC which allows for the issuance of debt or equity securities or warrants. The shelf registration was totally available at December 31, 1999. In January 2000, WRI issued $10.5 million of ten-year 8.25% fixed-rate, unsecured medium term notes. In connection with this debt issuance, we entered into a ten-year interest rate swap agreement with a notional amount of $10.5 million to swap 8.25% fixed-rate interest for floating-rate interest. NOTE 3. PREFERRED SHARES In February 1998, WRI issued $75 million of 7.44% Series A cumulative redeemable preferred shares with a liquidation preference of $25 per share. The shares are callable at WRI's option any time after March 31, 2003 and have no stated maturity. In October 1998, WRI issued $90 million of 7.125% Series B cumulative redeemable preferred shares with a liquidation preference of $25 per share and no stated maturity. WRI can elect to redeem the shares anytime after October 20, 2003. The Series B shares are redeemable by the holder only upon their death and are also redeemable in either cash or common shares at our option. There are limitations on the number of shares per shareholder and in the aggregate that may be redeemed per year. In January 1999, WRI issued $115 million of 7.0% Series C cumulative redeemable preferred shares with a liquidation preference of $50 per share and no stated maturity. WRI can elect to redeem these shares anytime after March 15, 2004. The redemption rights of the shareholders and the related restrictions are effectively the same as for the Series B preferred shares. The proceeds of these offerings were used to pay down amounts outstanding under WRI's revolving credit facilities, to fund acquisition and new development activity, to retire $35 million of 9.11% secured notes payable and to retire $82 million of variable-rate, medium term notes due in 2000. Any redemption of preferred shares initiated by WRI must be funded with proceeds from an offering of additional common or preferred shares. NOTE 4. PROPERTY WRI's property consists of the following (in thousands): DECEMBER 31, ---------------------- 1999 1998 ---------- ---------- Land . . . . . . . . . . . . . . $ 279,871 $ 236,221 Land held for development. . . . 24,509 30,156 Land under development . . . . . 12,139 13,024 Buildings and improvements . . . 1,189,687 1,009,166 Construction in-progress . . . . 7,933 6,065 ---------- ---------- Total. . . . . . . . . . . $1,514,139 $1,294,632 ========== ========== The following carrying charges were capitalized (in thousands): DECEMBER 31, ---------------------- 1999 1998 1997 ------ ------ ------ Interest . . . . . . . . . . . . $2,722 $1,375 $ 812 Ad valorem taxes . . . . . . . . 333 50 33 ------ ------ ------ Total. . . . . . . . . . . $3,055 $1,425 $ 845 ====== ====== ====== During 1999, WRI purchased five shopping centers and twelve industrial facilities. Additionally, we purchased a building adjacent to a WRI-owned shopping center and purchased our joint venture partner's 77% interest in a shopping center. These transactions added 2.8 million square feet to our portfolio and represent an investment of $150.5 million. We also completed new development totaling $35.4 million, which added .4 million square feet to the portfolio. In December 1999, WRI sold 28.5 acres of undeveloped land and an 80% interest in 2.0 million square feet of industrial properties for $46.4 million, resulting in a gain of $20.6 million. NOTE 5. MARKETABLE DEBT SECURITIES WRI's investment in marketable debt securities at December 31, 1998 consisted of short-term commercial paper that matured January 4, 1999. The proceeds were used to pay down amounts outstanding under our $20 million credit facility. NOTE 6. RELATED PARTY TRANSACTIONS WRI has mortgage bonds and notes receivable from WRI Holdings, Inc. of $3.9 million and $13.4 million, net of deferred gain of $3.0 million and $4.5 million at December 31, 1999 and 1998, respectively. WRI and WRI Holdings share certain directors and are under common management. Unimproved land and an investment in a joint venture which owns and manages a motor hotel collateralize these receivables. The bonds and notes bear interest at rates of 16% and prime plus 1%, respectively. However, due to WRI Holdings' poor financial condition, WRI has limited the recognition of interest income for financial statement purposes to the amount of cash payments received. WRI did not receive any interest payments in 1999 and does not anticipate receiving such payments in the near term. Interest income recognized for financial reporting purposes was $.1 million in 1997. In the second quarter of 1998, WRI purchased 13.7 acres of undeveloped land from WRI Holdings to be used for the development of a luxury apartment complex in Conroe, Texas. The purchase price was $2.2 million and was based upon an independent third party appraisal. WRI Holdings used the proceeds to pay down amounts outstanding under mortgage bonds and notes payable to WRI. In December 1999, undeveloped land from WRI Holdings of 102.6 acres was sold and the net proceeds of $8.1 million were used to pay down amounts outstanding under mortgage bonds and notes payable to WRI. Management of WRI believes that the fair market value of the security collateralizing debt from WRI Holdings approximates the net investment in such debt and that there would not be a charge to operations if WRI were to foreclose on the debt. If foreclosure were required, the net investment in such debt would become WRI's basis of the repossessed assets. WRI's management believes that the net investment in the mortgage bonds and notes receivable from WRI Holdings is not impaired. WRI's unrecorded receivable for interest on the mortgage bonds and notes receivable was $20.9 million and $31.1 million at December 31, 1999 and 1998, respectively. Interest income not recognized by WRI for financial reporting purposes aggregated, in millions, $4.2, $4.8 and $4.0 for 1999, 1998 and 1997, respectively. WRI does not anticipate recovery of the unrecorded receivable in the future. WRI owns interests in several joint ventures and partnerships. Notes receivable from these entities bear interest at 8% to 10.5% at December 31, 1999, are due at various dates through 2028 and are generally secured by real estate assets. WRI recognized interest income on these notes as follows, in millions: $2.3 in 1999; $1.5 in 1998 and $1.4 in 1997. Chase Bank of Texas, National Association is a significant participant in and the agent for the banks that provide WRI's $200 million revolving credit agreement and is a counterparty in three interest rate swap agreements with WRI. An executive officer of Chase serves on the WRI Board of Trustees. NOTE 7. FEDERAL INCOME TAX CONSIDERATIONS Federal income taxes are not provided because WRI believes it qualifies as a REIT under the provisions of the Internal Revenue Code. Shareholders of WRI include their proportionate taxable income in their individual tax returns. As a REIT, we must distribute at least 95% of our ordinary taxable income to our shareholders and meet certain income source and investment restriction requirements. 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 installment gains on sales of property. As a result of these differences, the book value of our net assets exceeds the tax basis by $23.3 million at December 31, 1999. For federal income tax purposes, the cash dividends distributed to common shareholders are characterized as follows: 1999 1998 1997 ------ ------ ------ Ordinary income . . . . . . . . . . . . . . . 84.2% 97.0% 95.9% Return of capital (generally non-taxable) . . 4.0 2.1 2.9 Capital gain distributions. . . . . . . . . . 11.8 .9 1.2 ------ ------ ------ Total . . . . . . . . . . . . . . 100.0% 100.0% 100.0% ====== ====== ====== NOTE 8. LEASING OPERATIONS WRI's lease terms range from less than one year for smaller tenant spaces to over twenty-five 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 for an amount based on a percentage of the tenants' sales). Future minimum rental income from non-cancelable tenant leases at December 31, 1999, in millions, is: $172.4 in 2000; $151.5 in 2001; $127.6 in 2002; $107.9 in 2003; $90.5 in 2004 and $627.5 thereafter. The future minimum rental amounts do not include estimates for contingent rentals. Such contingent rentals, in millions, aggregated $44.4 in 1999, $40.9 in 1998, and $36.8 in 1997. NOTE 9. COMMITMENTS AND CONTINGENCIES WRI leases land and one shopping center from the owners and then subleases these properties to other parties. Future minimum rental payments under these operating leases, in millions, are: $1.8 in 2000; $1.7 in 2001; $1.7 in 2002; $1.6 in 2003; $1.4 in 2004 and $11.7 thereafter. Future minimum rental payments on these leases have not been reduced by future minimum sublease rentals aggregating $22.1 million through 2036 that are due under various non-cancelable subleases. Rental expense (including insignificant amounts for contingent rentals) for operating leases aggregated, in millions: $4.9 in 1999, $2.6 in 1998 and $2.0 in 1997. Sublease rental revenue (excluding amounts for improvements constructed by WRI on the leased land) from these leased properties was as follows, in millions: $2.9 in 1999 and 1998 and $2.4 in 1997. Property under capital leases, consisting of five shopping centers, aggregated $41.1 and $12.3 million, respectively, at December 31, 1999 and 1998 and is included in buildings and improvements. Amortization of property under capital leases is included in depreciation and amortization expense. Future minimum lease payments under these capital leases total $89.6 million, with annual payments due, in millions, of $3.2 in each of 2000 through 2002; $18.3 in 2003; $1.9 in 2004; and $59.8 thereafter. The amount of these total payments representing interest is $41.1 million. Accordingly, the present value of the net minimum lease payments is $48.5 million at December 31, 1999. In 1998 and 1997, WRI formed limited partnerships to acquire certain property. WRI controls the partnerships and consolidates their operations in the accompanying consolidated financial statements. The partnership agreements allow for the outside limited partners to put their interests to the partnership after the second anniversary of the agreement for the original consideration of $4.0 million and $1.7 million in 1998 and 1997, respectively, payable in cash or WRI common shares at the option of WRI. Subsequent to year-end, one limited partner put its interest in a partnership to WRI. We expect to issue common shares or remit cash to the limited partner in early 2000. WRI is involved in various matters of litigation arising in the normal course of business. While WRI is unable to predict with certainty the amounts involved, WRI's management and counsel are of the opinion that, when such litigation is resolved, WRI's resulting liability, if any, will not have a material effect on WRI's consolidated financial statements. NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of WRI's financial instruments was determined using available market information and appropriate valuation methodologies as of December 31, 1999. Unless otherwise described below, all other financial instruments are carried at amounts which approximate their fair values. Based on rates currently available to WRI for debt with similar terms and average maturities, fixed-rate debt with carrying values of $499.9 million and $444.1 million have fair values of approximately $485.6 million and $443.9 million at December 31, 1999 and 1998, respectively. The fair value of WRI's variable-rate debt approximates its carrying values of $94.3 million and $72.3 million at year-end 1999 and 1998, respectively. The fair value of the interest rate swap agreements is based on the estimated amounts WRI would receive or pay to terminate the contracts. If WRI had terminated these agreements at December 31, 1999 and 1998, WRI would have paid $1.1 million and $3.8 million at each year-end, respectively. The fair value of the mortgage bonds and notes receivable from WRI Holdings was not determined because it is not practicable to reasonably assess the credit adjustment that would be applied in the marketplace for such bonds and notes receivable. NOTE 11. SHARE OPTIONS AND AWARDS WRI had an incentive share option plan which provided for the issuance of options and share awards up to a maximum of 700,000 common shares that expired in December 1997. Options granted under this plan become exercisable in equal increments over a three-year period. WRI has an additional share option plan which grants 100 share options to every employee of WRI, excluding officers, upon completion of each five-year interval of service. This plan, which expires in 2002, provides options for a maximum of 100,000 common shares. Options granted under this plan are exercisable immediately. For both of these share option plans, options are granted to employees of WRI at an exercise price equal to the quoted fair market value of the common shares on the date the options are granted and expire upon termination of employment or ten years from the date of grant. In 1999, WRI granted 16,000 share options under a compensatory incentive share plan. This plan, which expires in 2002, provides for the issuance of up to 1,750,000 shares, either in the form of restricted shares or share options. The restricted shares generally vest over a ten-year period, with potential acceleration of vesting due to appreciation in the market value of our common shares. The share options generally vest over a three-year period beginning one year after the date of grant. Share options were granted at the quoted fair market value on the date of grant. Restricted shares are issued at no cost to the employee, and as such we recognized compensation expense relating to restricted shares as follows, in millions: $.3 in 1999, 1998 and 1997. WRI does not recognize compensation cost for share options when the option exercise price equals or exceeds the quoted fair market value on the date of the grant. Had we determined compensation cost for our share option and award plans based on the fair value of the options granted at the grant dates, our proforma net income available to common shareholders would have been as follows, in millions: $75.9, $53.8 and $54.3 in 1999, 1998 and 1997, respectively. Proforma net income per common share - basic would have been $2.84, $2.02 and $2.04 in 1999, 1998 and 1997, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing method with the following weighted-average assumptions in 1999, 1998 and 1997, respectively: dividend yield of 7.3%, 6.5% and 6.0%; expected volatility of 18.1%, 18.1% and 18.0%; expected lives of 6.9, 6.9 and 6.9 and risk-free interest rates of 6.6%, 4.8% and 6.5%. Following is a summary of the option activity for the three years ended December 31, 1999: SHARES WEIGHTED UNDER AVERAGE OPTION EXERCISE PRICE ----------- -------------- Outstanding, January 1, 1997 . . . . . . . 687,735 $ 35.40 Granted. . . . . . . . . . . . . . . . . . 558,600 40.25 Canceled . . . . . . . . . . . . . . . . . (9,400) 37.60 Exercised. . . . . . . . . . . . . . . . . (61,910) 32.00 ----------- Outstanding, December 31, 1997 . . . . . . 1,175,025 37.85 Granted. . . . . . . . . . . . . . . . . . 14,900 42.99 Canceled . . . . . . . . . . . . . . . . . (7,802) 40.14 Exercised. . . . . . . . . . . . . . . . . (29,344) 34.01 ----------- Outstanding, December 31, 1998 . . . . . . 1,152,779 37.99 Granted. . . . . . . . . . . . . . . . . . 17,900 41.29 Canceled . . . . . . . . . . . . . . . . . (14,800) 40.23 Exercised. . . . . . . . . . . . . . . . . (39,089) 32.95 ----------- Outstanding, December 31, 1999 . . . . . . 1,116,790 $ 38.19 =========== The number of share options exercisable at December 31, 1999, 1998 and 1997 was 728,000, 432,000 and 296,000, respectively. Options exercisable at year-end 1999 had a weighted average exercise price of $37.74. The weighted average fair value of share options granted during 1999, 1998 and 1997 was $4.25, $4.05 and $5.35, respectively. Share options outstanding at December 31, 1999 had exercise prices ranging from $25.00 to $45.81 and a weighted average remaining contractual life of 5.7 years. Approximately 89% of the options outstanding at year-end 1999 have exercise prices between $37.00 and $40.25 and a weighted average contractual life of 6.0 years. There were 1,011,000 common shares available for the future grant of options or awards at December 31, 1999. NOTE 12. EMPLOYEE BENEFIT PLANS WRI has a Savings and Investment Plan to which eligible employees may elect to contribute from 1% to 12% of their salaries. Employee contributions are matched by WRI 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 $.3 million in 1999 and 1998 and $.2 million in 1997. Effective April 1, 1999, WRI adopted an Employee Share Purchase Plan under which 250,000 WRI common shares have been authorized. These shares, as well as common shares purchased by WRI 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 with WRI. During 1999, a total of 8,028 shares were purchased by employees at an average price of $33.01. WRI has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee's compensation during the last five years of service. Our funding policy is to make annual contributions as required by applicable regulations, however, we have not been required to make contributions for any of the past three years. Reconciliations of the benefit obligation, plan assets at fair value and the funded status of the plan are as follows (in thousands): 1999 1998 -------- -------- Benefit obligation at beginning of year . . . . . . . $10,485 $ 9,318 Service cost. . . . . . . . . . . . . . . . . . . . . 533 457 Interest cost . . . . . . . . . . . . . . . . . . . . 729 663 Actuarial (gain) loss . . . . . . . . . . . . . . . . (841) 245 Benefit payments. . . . . . . . . . . . . . . . . . . (203) (198) -------- -------- Benefit obligation at end of year . . . . . . . . . . $10,703 $10,485 ======== ======== Fair value of plan assets at beginning of year. . . . $10,676 $10,348 Actual return on plan assets. . . . . . . . . . . . . 1,584 526 Benefit payments. . . . . . . . . . . . . . . . . . . (203) (198) -------- -------- Fair value of plan assets at end of year. . . . . . . $12,057 $10,676 ======== ======== Plan assets at fair value less benefit obligation . . $ 1,354 $ 191 Unrecognized prior service cost . . . . . . . . . . . 8 Unrecognized gain . . . . . . . . . . . . . . . . . . (3,096) (1,681) -------- -------- Pension liability . . . . . . . . . . . . . . . . . . $(1,742) $(1,482) ======== ======== The components of net periodic pension cost are as follows (in thousands): 1999 1998 1997 ------ ------ ------ Service cost . . . . . . . . . . . . . . . . . . . $ 533 $ 457 $ 430 Interest cost. . . . . . . . . . . . . . . . . . . 729 663 587 Expected return on plan assets . . . . . . . . . . (950) (923) (703) Amortization of transition asset . . . . . . . . . (54) Prior service cost . . . . . . . . . . . . . . . . 8 47 47 Recognized gains . . . . . . . . . . . . . . . . . (59) (124) (44) ------ ------ ------ Total. . . . . . . . . . . . . . . . . . $ 261 $ 120 $ 263 ====== ====== ====== Assumptions used to develop periodic expense and the actuarial present value of the benefit obligations were: 1999 1998 1997 ------ ------ ------ Weighted average discount rate . . . . . . . . . . 7.5% 6.7% 7.0% Expected long-term rate of return on plan assets . 9.0% 9.0% 9.0% Rate of increase in compensation levels. . . . . . 5.0% 5.0% 5.0% WRI also has a non-qualified supplemental retirement plan for officers of WRI which provides for benefits in excess of the statutory limits of its defined benefit pension plan. The obligation is funded in a grantor trust with our common shares. We recognized expense as follows, in millions: $.3 in 1999, 1998 and 1997. NOTE 13. SEGMENT INFORMATION The operating segments presented are the segments of WRI 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. WRI evaluates the performance of its 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 Texas, Louisiana, Arizona, Nevada, Arkansas, New Mexico, Oklahoma, Tennessee, Kansas, Colorado, Missouri, Illinois, Florida and Maine. The customer base includes supermarkets, 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 Texas, Nevada and Tennessee, 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 WRI's reportable segments is as follows (in thousands): SHOPPING CENTER INDUSTRIAL OTHER TOTAL --------- ----------- -------- ------------ 1999: Revenues . . . . . . . . . $ 197,084 $ 28,331 $ 5,054 $ 230,469 Net operating income . . . 140,191 20,127 5,716 166,034 Total assets . . . . . . . 1,025,090 173,502 110,804 1,309,396 Capital expenditures . . . 189,445 56,461 12,777 258,683 1998: Revenues . . . . . . . . . $ 176,269 $ 18,574 $ 3,624 $ 198,467 Net operating income . . . 125,949 13,342 4,327 143,618 Total assets . . . . . . . 898,805 133,379 74,859 1,107,043 Capital expenditures . . . 118,746 54,790 6,051 179,587 1997: Revenues . . . . . . . . . $ 154,979 $ 14,912 $ 4,621 $ 174,512 Net operating income . . . 109,776 10,855 4,640 125,271 Total assets . . . . . . . 816,852 88,091 41,850 946,793 Capital expenditures . . . 138,365 16,908 2,985 158,258 Net operating income reconciles to income before extraordinary charge as shown on the Statements of Consolidated Income as follows (in thousands): ------------------------------- 1999 1998 1997 --------- --------- --------- Total segment net operating income . . $166,034 $143,618 $125,271 Less: Depreciation and amortization. . . 49,612 41,946 37,976 Interest . . . . . . . . . . . . . 33,186 33,654 30,009 General and administrative . . . . 7,512 7,146 5,647 Gain on sales of property. . . . . (20,596) (885) (3,327) --------- --------- --------- Income before extraordinary charge . . $ 96,320 $ 61,757 $ 54,966 ========= ========= ========= Equity in earnings of real estate joint ventures and partnerships as shown on the Statements of Consolidated Income and the corresponding investment balances are included in net operating income of the shopping center segment. NOTE 14. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) During the year ended December 31, 1999, WRI acquired five retail centers, a building adjacent to a WRI-owned shopping center, a joint venture partner's 77% interest in a retail center and twelve industrial projects for a total of $150.5 million. The pro forma financial information for the years ended December 31, 1999 and 1998 is based on the historical statements of WRI after giving effect to the acquisitions as if such acquisitions took place on January 1, 1999 and 1998, respectively. The pro forma financial information shown below is presented for informational purposes only and may not be indicative of results that would have actually occurred if the acquisitions had been in effect at the dates indicated, nor does it purport to be indicative of the results that may be achieved in the future (in thousands, except per share amounts). DECEMBER 31, ------------------ 1999 1998 -------- -------- Pro forma revenues . . . . . . . . . . . . . . . . . . . . . . $241,091 $219,827 ======== ======== Pro forma net income available to common shareholders. . . . . $ 78,544 $ 57,977 ======== ======== Pro forma net income per common share - basic. . . . . . . . . $ 2.94 $ 2.17 ======== ======== Pro forma net income per common share - diluted. . . . . . . . $ 2.93 $ 2.16 ======== ======== NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data is as follows (in thousands, except per share amounts): FIRST SECOND THIRD FOURTH ------- ------- ------- ------- 1999: Revenues . . . . . . . . . . . . . . . . . . . . . $54,764 $56,312 $58,387 $61,006 Net income available to common shareholders. . . . 13,524 14,174 14,562 34,277 (1) Net income per common share - basic. . . . . . . . 0.51 0.53 0.55 1.28 (1) Net income per common share - diluted. . . . . . . 0.50 0.53 0.54 1.28 (1) 1998: Revenues . . . . . . . . . . . . . . . . . . . . . $46,962 $48,808 $49,955 $52,742 Net income available to common shareholders. . . . 12,329 13,682 14,304 14,169 Net income per common share - basic. . . . . . . . 0.46 0.51 0.54 0.53 Net income per common share - diluted. . . . . . . 0.46 0.51 0.53 0.53 <FN> (1) Increase is primarily the result of a gain on the sale of property during the quarter. NOTE 16. PRICE RANGE OF COMMON SHARES (UNAUDITED) The high and low sale prices per share of WRI's common shares, as reported on the New York Stock Exchange composite tape, and dividends per common share paid for the fiscal quarters indicated were as follows: HIGH LOW DIVIDENDS --------- --------- --------- 1999: Fourth. . . $ 39 3/8 $ 37 $ 0.71 Third . . . 42 7/16 37 1/4 0.71 Second. . . 43 7/16 38 1/4 0.71 First . . . 45 5/8 38 3/8 0.71 1998: Fourth. . . $ 46 7/8 $ 39 3/4 $ 0.67 Third . . . 43 35 15/16 0.67 Second. . . 44 15/16 40 5/8 0.67 First . . . 45 5/8 43 7/8 0.67 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Information with respect to WRI's Trust Managers is incorporated herein by reference to the "Election of Trust Managers" section of WRI's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2000. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference to the "Executive Compensation" and "Pension Plan" sections of WRI's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2000. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated herein by reference to the "Election of Trust Managers" section of WRI's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated herein by reference to the "Compensation Committee Interlocks and Insider Participation" section of WRI's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2000. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements and Financial Statement Schedules: PAGE ---- (1) (A) Independent Auditors' Report . . . . . . . . . . . . . . 21 (B) Financial Statements (i) Statements of Consolidated Income for the years ended December 31, 1999, 1998 and 1997. . . . . . 22 (ii) Consolidated Balance Sheets as of December 31, 1999 and 1998 . . . . . . . . . . . . . . . . . 23 (iii) Statements of Consolidated Cash Flows for the years ended December 31, 1999, 1998 and 1997. . . 24 (iv) Statements of Consolidated Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997.. . . . . . . . . . . . . . . . . 25 (v) Notes to Consolidated Financial Statements. . . . . 26 (2) Financial Statement Schedules: SCHEDULE PAGE -------- ---- II Valuation and Qualifying Accounts . . . . . . . . . . 45 III Real Estate and Accumulated Depreciation. . . . . . 46 IV Mortgage Loans on Real Estate . . . . . . . . . . . 48 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) No reports on Form 8-K were filed during the last quarter of the period covered by this annual report. (c) Exhibits: 3.1 - Restated Declaration of Trust (filed as Exhibit 3.1 to WRI's Registration Statement on Form S-3 (No. 33-49206) 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 - Amended and Restated Bylaws of WRI (filed as Exhibit 3.2 to WRI's Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference). 4.1 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to WRI in the original principal amount of $16,682,000 (filed as Exhibit 10.10 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.2 - 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28, 1984, payable to WRI in the original principal amount of $3,150,000 (filed as Exhibit 10.8 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.2.1* - Sixth Bonds Renewal and Extension Agreement, effective December 28, 2000, for the 16% Mortgage Bonds of WRI Holdings, Inc., payable to WRI in the original principal amount of 3,150,000. 4.3 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as Exhibit 10.9 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.3.1 - Supplemental Indenture of Trust, dated February 22, 1995, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) relating to the 16% Mortgage Bonds due December 28, 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as Exhibit 10.4.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 4.4* - Sixth Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Trust Company of New York), as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000. 4.5 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.11 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.5.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Trust Company of New York), as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.7.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 4.6 - Third Amended Promissory Note, as restated, effective as of January 1, 1992, executed by WRI Holdings, Inc., pursuant to which it may borrow up to the principal sum of $40,000,000 from WRI (filed as Exhibit 10.8 to WRI's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.7 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to WRI in the original principal amount of $7,000,000 (filed as Exhibit 10.13 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.8 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.14 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.8.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Trust Company of New York), as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.10.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 4.9 - Agreement Correcting Trust Indenture, dated February 11, 1985, relating to 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.15 to WRI's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 4.10 - Amendment to Note Purchase Agreement, dated March 31, 1991, amending loan agreement, dated August 6, 1987, Life and Accident Insurance Company for $5,000,000, American General Life Insurance Company of Delaware for $5,000,000, Republic National Life Insurance Company for $3,000,000 and American Amicable Life Insurance Company of Texas for 2,000,000 (filed as Exhibit 10.15.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 4.11 - Promissory Note in the amount of $12,000,000 between WRI, as payee, and Plaza Construction, Inc., as maker (filed as Exhibit 10.23 to WRI's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 4.11.1* - Eleventh Renewal and Extension of Promissory Note in the amount of $12,000,000, effective as of December 1, 2000, between WRI, as payee, and Plaza Construction, Inc., as maker. 4.12 - Amended and Restated Master Swap Agreement dated as of January 29, 1992, between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 10.24 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 4.12.1 - Rate Swap Transaction, dated as of May 15, 1992, between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 10.24.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 4.12.2 - Rate Swap Transaction, dated as of June 24, 1992, between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 10.24.2 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 4.12.3 - Rate Swap Transaction, dated as of July 2, 1992, between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 10.24.3 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 4.13 - Amended and Restated Credit Agreement dated as of November 21, 1996 between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as Agent, and individually as a Bank, and the Banks defined therein (filed as Exhibit 10.17 to WRI's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.13.1 - First, Second and Third Amendments to the Amended and Restated Credit Agreement dated November 21, 1996 between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association) (filed as Exhibit 10.17.1 to WRI's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.14 - Note Purchase Agreement, dated April 1, 1994, between The Variable Annuity Life Insurance Company, American General Life Insurance Company and WRI in the amount of $30,000,000 (filed as Exhibit 10.25 to WRI's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 4.15 - 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, 1998 and incorporated herein by reference). 4.16 - Distribution Agreement among WRI and the Agents dated November 15, 1996 relating to the Medium Term Notes (filed as Exhibit 1.1 to WRI's Current Report of Form 8-K dated November 15, 1996 and incorporated herein by reference). 4.17 - Senior Indenture dated as of May 1, 1995 between WRI and Chase Bank of Texas, National Association (formerly, Texas Commerce Bank National Association), as trustee (filed as Exhibit 4(a) to WRI's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference). 4.18 - 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). 4.19 - 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). 4.20 - 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). 4.21 - 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). 4.22 - 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). 4.23 - Statement of Designation of 7.44% Series A Cumulative Redeemable Preferred Shares (filed as Exhibit 99 to WRI's Current Report on Form 8-A dated February 18, 1998 and incorporated herein by reference). 4.24 - Statement of Designation of 7.125% Series B Cumulative Redeemable Preferred Shares (filed as Exhibit 4.2 to WRI's Current Report on Form 8-K dated October 28, 1998 and incorporated herein by reference). 4.25 - Statement of Designation of 7.00% Series C Cumulative Redeemable Preferred Shares (filed as Exhibit 4.1 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference). 4.26 - 7.44% Series A Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4 to WRI's Current Report on Form 8-K dated February 23, 1998 and incorporated herein by reference). 4.27 - 7.125% Series B Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.1 to WRI's Current Report on Form 8-K dated October 28, 1998 and incorporated herein by reference). 4.28 - 7.00% Series C Cumulative Redeemable Preferred Share Certificate (filed as Exhibit 4.2 to WRI's Registration Statement on Form 8-A dated January 19, 1999 and incorporated herein by reference). 4.29 - Distribution Agreement among WRI and the Agents dated August 10, 1998 relating to the Medium Term Notes (filed as Exhibit 1.1 to WRI's current report on Form 8-K dated August 12, 1998 and incorporated herein by reference). 4.30* - Credit Agreement, dated January 6, 2000, between WRI and Bank of America, N.A. 4.30.1* - First Amendment to Credit Agreement, dated February 24, 2000, between WRI and Bank of America, N.A. 4.31* - Promissory Note in the amount of $100,000,000, or aggregate principal amount outstanding under Credit Agreement, between WRI, as payee, and Bank of America, N.A., as maker, dated January 6, 2000. 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** - Weingarten Realty Investors Supplemental Retirement Account Plan, as amended and restated (filed as Exhibit 10.26 to WRI's Annual Report on Form 10-K for the year ended December 31, 1992 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** - 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). 10.5** - 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). 10.6*** - 1999 WRI Employee Share Purchase Plan 12.1* - Computation of Fixed Charges Ratios. 21.1* - Subsidiaries of the Registrant. 23.1* - Consent of Deloitte & Touche LLP. 27.1* - Financial Data Schedule. <FN> * Filed with this report. ** Management contract or compensatory 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: Stanford Alexander --------------------------------- Stanford Alexander Chairman/Chief Executive Officer Date: March 17, 2000 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: Stanford Alexander Chairman and Trust Manager March 17, 2000 ------------------------ Stanford Alexander (Chief Executive Officer) By: Andrew M. Alexander President March 17, 2000 ------------------------ Andrew M. Alexander and Trust Manager By: Robert J. Cruikshank Trust Manager March 17, 2000 ------------------------ Robert J. Cruikshank By: Martin Debrovner Vice Chairman March 17, 2000 ------------------------ Martin Debrovner and Trust Manager By: Melvin Dow Trust Manager March 17, 2000 ------------------------ Melvin Dow By: Stephen A. Lasher Trust Manager March 17, 2000 ------------------------ Stephen A. Lasher By: Joseph W. Robertson, Jr. Executive Vice President and March 17, 2000 ------------------------ Joseph W. Robertson, Jr. Trust Manager (Chief Financial Officer) By: Douglas W. Schnitzer Trust Manager March 17, 2000 ------------------------ Douglas W. Schnitzer By: Marc J. Shapiro Trust Manager March 17, 2000 ------------------------ Marc J. Shapiro By: J.T. Trotter Trust Manager March 17, 2000 ------------------------ J.T. Trotter By: Stephen C. Richter Senior Vice President/ March 17, 2000 ------------------------ Stephen C. Richter Financial Administration and Treasurer (Principal Accounting Officer) SCHEDULE II WEINGARTEN REALTY INVESTORS VALUATION AND QUALIFYING ACCOUNTS DECEMBER 31, 1999, 1998 AND 1997 (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 - ----------------------------------- ----------- --------- -------- ----------- ---------- 1999: Allowance for Doubtful Accounts. . . $ 888 $ 1,047 $ 1,027 $ 908 1998: Allowance for Doubtful Accounts. . . $ 1,000 $ 683 $ 795 $ 888 1997: Allowance for Doubtful Accounts. . . $ 1,236 $ 877 $ 1,113 $ 1,000 _________ Note A - Write-offs of accounts receivable previously reserved. SCHEDULE III WEINGARTEN REALTY INVESTORS REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (AMOUNTS IN THOUSANDS) Total Cost ------------------------------------- Buildings Projects and Under Total Accumulated Encumbrances Land Improvements Development Cost Depreciation (A) -------- ------------- ------------ ---------- ------------- -------------- SHOPPING CENTERS: Texas . . . . . . . . . . .$167,757 $ 659,682 $ 827,439 $ 230,568 $ 11,709 Other States. . . . . . . . 78,388 316,309 394,697 61,746 23,948 -------- ------------- ------------ ---------- ------------- -------------- Total Shopping Centers. . 246,145 975,991 1,222,136 292,314 35,657 INDUSTRIAL: Texas . . . . . . . . . . . 28,404 133,564 161,968 20,234 3,974 Other States. . . . . . . . 2,512 10,665 13,177 317 -------- ------------- ------------ ---------- ------------- -------------- Total Industrial. . . . . 30,916 144,229 175,145 20,551 3,974 OFFICE BUILDING: Texas . . . . . . . . . . . 534 15,650 16,184 10,782 -------- ------------- ------------ ---------- ------------- -------------- MULTI-FAMILY RESIDENTIAL: Texas . . . . . . . . . . . 2,276 12,724 15,000 215 -------- ------------- ------------ ---------- ------------- -------------- Total Improved Properties . . . . . . . 279,871 1,148,594 1,428,465 323,862 39,631 -------- ------------- ------------ ---------- ------------- -------------- LAND UNDER DEVELOPMENT OR HELD FOR DEVELOPMENT: Texas . . . . . . . . . . . $ 29,544 29,544 Other States. . . . . . . . 7,104 7,104 -------- ------------- ------------ ---------- ------------- -------------- Total Land Under Development or Held for Development. . . . . 36,648 36,648 -------- ------------- ------------ ---------- ------------- -------------- LEASED PROPERTY (SHOPPING CENTER) UNDER CAPITAL LEASE: Other States. . . . . . . . 41,093 41,093 4,783 5,857 -------- ------------- ------------ ---------- ------------- -------------- CONSTRUCTION IN PROGRESS: Texas . . . . . . . . . . . 5,240 5,240 Other States. . . . . . . . 2,693 2,693 -------- ------------- ------------ ---------- ------------- -------------- Total Construction in Progress . . . . . . . . 7,933 7,933 -------- ------------- ------------ ---------- ------------- -------------- TOTAL OF ALL PROPERTIES. . . . . . . . . .$279,871 $ 1,189,687 $ 44,581 $1,514,139 $ 328,645 $ 45,488 ======== ============= ============ ========== ============= ============== ____________ <FN> Note A - Encumbrances do not include $24.9 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, 1999, 1998 and 1997 were as follows: 1999 1998 1997 ----------- ----------- ----------- Balance at beginning of year. . . . . . . $1,294,632 $1,118,758 $ 970,418 Additions at cost . . . . . . . . . . . . 258,683 179,587 158,258 Retirements or sales. . . . . . . . . . . (39,176) (3,713) (9,918) ----------- ----------- ----------- Balance at end of year. . . . . . . . . . $1,514,139 $1,294,632 $1,118,758 =========== =========== =========== The changes in accumulated depreciation for the years ended December 31, 1999, 1998 and 1997 were as follows: 1999 1998 1997 ----------- ----------- ----------- Balance at beginning of year. . . . . . . $ 296,989 $ 262,551 $ 233,514 Additions at cost . . . . . . . . . . . . 43,930 35,678 32,226 Retirements or sales. . . . . . . . . . . (12,274) (1,240) (3,189) ----------- ----------- ----------- Balance at end of year. . . . . . . . . . $ 328,645 $ 296,989 $ 262,551 =========== =========== =========== SCHEDULE IV WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1999 (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 (Note B). . . 8% 10-31-09 $335 $ 2,300 $ 2,288 Annual P & I Main/O.S.T., Ltd. Houston, TX. . . . . . . . 9.3% 02-01-20 $476 4,800 4,524 Annual P & I ($1,241 balloon) INDUSTRIAL: FIRST MORTGAGES: River Pointe, Conroe,TX (Note C) . . . . . . . . . Prime 11-30-03 Varying 2,133 1,891 +2% Little York, Houston, TX (Note C) . . . . . . . . . Prime 12-31-03 Varying 1,922 1,760 +2% AN/WRI Partnership, Ltd. Houston, TX. . . . . . . . Libor 06-05-00 Varying 33,149 33,149 +2% South Loop Business Park Houston, TX. . . . . . . . 9.25% 11-01-07 $74 439 410 Annual P & I Schedule continued on next page SCHEDULE IV (CONTINUED) WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1999 (AMOUNTS IN THOUSANDS) FINAL PERIODIC FACE CARRYING INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF RATE DATE TERMS MORTGAGES MORTGAGES(A) -------- -------- --------- --------- ------------ UNIMPROVED LAND: SECOND MORTGAGE: River Pointe Conroe, TX . . . . . . . . Prime 12-01-00 Varying $ 12,000 $ 3,806 +1% ($3,806 balloon) --------- ------------ TOTAL MORTGAGE LOANS ON REAL ESTATE (Note D) . . . . $ 56,743 $ 47,828 ========= ============ <FN> Note A - The aggregate cost at December 31, 1999 for federal income tax purposes is $47,828. Note B - The periodic payment terms were 6% interest only through October 31, 1999 and 8% interest and principal commencing November 1, 1999 through the maturity date. Note C - Principal payments are due monthly to the extent of cash flow generated by the underlying property. Note D - Changes in mortgage loans for the years ended December 31, 1999, 1998 and 1997 are summarized below: --------- --------- --------- 1999 1998 1997 --------- --------- --------- Balance, Beginning of Year . . . . $ 28,359 $ 25,653 $ 27,157 New Mortgage Loans. . . . . . . . . 33,588 3,116 Additions to Existing Loans . . . . 1,773 1,560 589 Collections of Principal. . . . . . (15,892) (1,970) (2,093) --------- --------- --------- Balance, End of Year . . . . . . . $ 47,828 $ 28,359 $ 25,653 ========= ========= =========