2018
ANNUAL
REPORT
2 0 1 8 A N N U A L R E P O R T
C O M PA N Y H I G H L I G H T S
YEAR ENDED DECEMBER 31,
FINANCIAL DATA (In thousands, except per share data):
2018
2017
2016
NET INCOME ATTRIBUTABLE TO
COMMON SHAREHOLDERS
FUNDS FROM OPERATIONS ATTRIBUTABLE TO
COMMON SHAREHOLDERS (NAREIT FFO) (1) - DILUTED
CORE FUNDS FROM OPERATIONS ATTRIBUTABLE TO
COMMON SHAREHOLDERS (CORE FFO) (1) - DILUTED
FFO WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING - DILUTED
$ 327,601
$ 335,274
$ 238,933
$ 307,934
$ 311,601
$ 293,652
$ 292,515
$ 318,446
$ 300,894
128,441
130,071
128,569
PER COMMON SHARE:
NAREIT FFO - Diluted
Core FFO - Diluted
$ 2.40
$ 2.28
$ 2.40
$ 2.28
$ 2.45
$ 2.34
Net Income Attributable to Common Shareholders - Diluted
$ 2.55
$ 2.60
$ 1.87
Cash Dividends
(2)
$ 2.98
$ 2.29
$ 1.46
NET DEBT TO CORE EBITDAre (3)
5.0x
5.3x
5.8x
PORTFOLIO DATA (At year end):
NUMBER OF PROPERTIES
TOTAL SQUARE FEET (4)
OWNED SQUARE FEET
SIGNED OCCUPANCY PERCENTAGE
AVERAGE BASE RENT
178
35,134
22,901
94.4%
204
41,279
26,351
94.8%
220
44,654
28,535
94.3%
$ 19.35
$ 18.69
$ 17.93
(1) NAREIT FFO is a non-GAAP financial measure commonly used in the real estate industry that we believe provides useful information to
investors. Core FFO, also a non-GAAP financial measure, is an additional supplemental measure we use as it is more reflective of the core
operating performance of our portfolio of properties. Please refer to Management’s Discussion and Analysis of Financial Condition and
Results of Operations in the accompanying Form 10-K for a definition of NAREIT FFO and Core FFO, and for a reconciliation of net income
attributable to common shareholders to NAREIT FFO and Core FFO.
(2) Includes a special dividend of $1.40 and $0.75 per common share for 2018 and 2017, respectively.
(3) Similar to NAREIT FFO above, EBITDAre is a non-GAAP financial measure defined by NAREIT and is commonly used in the real estate
industry. Additionally the non-GAAP measure, Core EBITDAre, is a supplemental measure we use to further reflect our core operating
performance of our portfolio of properties. EBITDAre and Core EBITDAre should not be considered as alternatives to net income or other
measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as
measures of liquidity. EBITDAre and Core EBITDAre do not reflect working capital changes, cash expenditures for capital improvements
or principal payments on indebtedness. Please refer to our Supplemental Financial Information filed in Exhibit 99.1 to the Form 8-K on
February 22, 2019 for a definition of EBITDAre and Core EBITDAre.
(4) Includes area available to be leased that is owned by WRI, our joint venture partners and others not under our management.
S T R O N G B A L A N C E S H E E T
H I G H LY P R O D U C T I V E G R O C E R S
Net Debt to Core
EBITDAre
Debt to Market
Capitalization
5.0x
35.8%
Fixed Charge
Coverage
Secured Debt
to
4.3x
7.1%
GROCERS SALES AVERAGE
$665 PSF
All Other
25%
Grocery
Anchored
75%
L E T T E R T O O U R S H A R E H O L D E R S
In 2018, we saw many of our merchants begin to reap the benefits of their successful omni-channel networks
which validated our long-held belief that a combination of an internet presence and well-located bricks and
mortar stores would be the key to success in the retail world. As merchants continue to refine this strategy,
the importance of outstanding shopping centers in great locations becomes undeniable. In reacting to market
signals, we continued to dispose of properties that no longer fit the profile of the shopping centers we want to own
going forward. While this has resulted in a much stronger portfolio and further strengthened our balance sheet, it
has been dilutive to Funds from Operations in the short-term. Nevertheless, our accomplishments in 2018 were
especially impressive as we continued our disposition strategy while remaining laser-focused on operating our
existing portfolio and producing strong results in 2018, generating the following highlights:
• Net income attributable to common shareholders (“Net Income”) was $2.55 per diluted share
(hereinafter “per share”) for the year compared to $2.60 per share in 2017;
• Core Funds From Operations Attributable to Common Shareholders (“Core FFO”) was $2.28
per share for the year ended 2018 compared to $2.45 per share for 2017;
• Same Property Net Operating Income (“SPNOI”) including redevelopments increased 2.5%
over the year ended 2017;
• Rental rates on new leases and renewals completed during the year were up 18.7% and
6.1%, respectively;
• Signed occupancy decreased slightly from 94.8% a year ago to 94.4% at year-end 2018 as we
fill the big boxes vacated by Toys R Us in 2018;
• Dispositions totaled $635 million in 2018;
• Balance sheet leverage was reduced with Net Debt to Adjusted EBITDAre of 5.0 times;
• Invested $139 million in new development and redevelopment projects in 2018; and
• Paid a special dividend of $1.40 per share to shareholders in December of 2018.
While we believe we will continue to experience some headwinds going forward, the significant transformation
of our portfolio over the last several years and the deleveraging of our balance sheet will allow us to proceed in a
controlled, confident manner. We believe that Weingarten Realty is properly positioned to generate solid returns
to our shareholders while maintaining a very conservative risk profile going forward.
G R E AT O P E R AT I O N S L E A D T O O U T S TA N D I N G O P E R AT I N G R E S U LT S
For the year ended December 31, 2018, Funds From Operations Attributable to Common Shareholders in
accordance with the National Association of Real Estate Investment Trusts definition (“NAREIT FFO”) was $307.9
million or $2.40 per share compared to $311.6 million or $2.40 per share for 2017. Core FFO, which we consider
to be the most important measure of our performance, was $292.5 million or $2.28 per share for 2018 compared
to $318.4 million or $2.45 per share for 2017. The net decrease is primarily due to increased income from the
existing portfolio, specifically increases in base minimum rent and lower interest expense offset by the impact of
our disposition program.
Among the most important operating metrics in our industry is SPNOI. During 2018, SPNOI, including the impact
of our redevelopment program, increased by 2.5% over 2017, driven primarily by an increase in base minimum
rent. Occupancy of our Same Property portfolio was 94.8%. We also produced solid leasing results during 2018
1
with 850 new leases and renewals totaling 3.5 million square feet and representing $66.3 million of annualized
revenue. The average rental rate increases on new leases and renewals signed during the year was 8.5%, with
rental rates on new leases up a very strong 18.7% and renewals up 6.1%, a testimony to the ever-increasing
quality of our transformed portfolio.
While we believe we will
continue to experience
some headwinds going
forward, the significant
transformation of our
portfolio over the last
several years and the
deleveraging of our
balance sheet will
allow us to proceed in
a controlled, confident
manner.
N E W D E V E L O P M E N T / R E D E V E L O P M E N T
P R O G R E S S I O N
We are making great progress on all of our projects under
development. West Alex is our development in Alexandria,
Virginia that will include 278 multi-family units and 100,000
square feet of retail anchored by a 62,000 square foot Harris
Teeter grocery store. Our net investment upon completion is
estimated at $197 million. Centro Arlington is our project in
Arlington, Virginia that we are developing in partnership with
a prominent residential developer. This project will include
366 multi-family units and 72,000 square feet of retail also
anchored by a 52,000 square foot Harris Teeter grocery store.
The Company’s share of the net investment upon completion
is estimated at $135 million before the sale of the residential
component, based on an ownership interest of 90%. We are
scheduled to begin residential pre-leasing activities in the latter
half of the year at both West Alex and Centro Arlington and expect to have a modest amount of revenue on-
line before year-end. At Centro, we expect Harris Teeter to open near the end of 2019. We are excited as both
projects will benefit from their close proximity to Amazon HQ2 and the strong northern Virginia market.
The Whittaker in West Seattle, Washington is a six-story, mixed-use project that has been co-developed with
Lennar. Our 63,000 square foot retail portion is now substantially leased with the Whole Foods expected to open
in the fall of 2019.
We continue to make progress on an exciting redevelopment project at our prominent River Oaks Shopping Center
in Houston, Texas. This is an incredible infill location adjacent to a premier residential community in Houston.
The Driscoll at River Oaks is a 30 story luxury high-rise that will include over 300 residential units with around
10,000 square feet of ground floor retail. The total project cost will approximate $150 million. This addition to our
property will clearly benefit all of our merchants and greatly enhance the value of this already outstanding asset.
We also have 15 active redevelopment projects, not including our River Oaks residential tower, where we will invest
about $90 million at returns averaging between 8% to 14%. During 2018, we invested about $38 million in these
redevelopment projects. With numerous additional projects in the pipeline, redevelopments will continue to be an
important investment vehicle for us in the future.
D I S P O S I T I O N S D R I V E A S T R O N G E R P O R T F O L I O A N D B A L A N C E S H E E T
With the differential between the value of our properties in the private real estate market and what the implied
value is based on our share price or public valuations, we feel the sale of additional properties was the best capital
allocation in 2018. As such, we sold properties totaling $635 million in 2018. We have focused on improving the
overall quality of our portfolio by reducing our exposure to tertiary markets and power centers while at the same
time providing capital for future growth, including our redevelopment and new development programs. We have
also utilized these disposition proceeds to pay down debt, which reduced our Net Debt to Adjusted EBITDA to a
very strong 5.0 times, which is among the lowest in our sector. Our debt maturities remain very favorably laddered
with no significant maturities through 2022.
2
3
With the significant gains generated by our 2018 dispositions, we paid a special dividend in December 2018 of
$1.40 per share. If we achieve our 2019 business plan for dispositions of between $250 million and $350 million,
we will likely also pay a special dividend in 2019.
S U S TA I N A B I L I T Y
We recognize environmental responsibility as an obligation
and an opportunity to add long-term value to our properties,
and to benefit our patrons, tenants and investors. As such,
we created the GreenForward program in order to officially
implement and track sustainable initiatives across our
portfolio. We commit ourselves to being a corporate partner to
the environment and the community we serve. Our Corporate
Sustainability Report is available online for an in-depth look at
our sustainability initiatives and accomplishments.
2 0 1 9 A N D B E Y O N D
We have also utilized
these disposition
proceeds to pay down
debt, which reduced
our Net Debt to
Adjusted EBITDA to a
very strong 5.0 times,
which is among the
lowest in our sector.
We expect challenges in our business, however our portfolio is significantly stronger than it has ever been and
continues to improve as we dispose of assets with higher risk profiles. While the magnitude of our dispositions in
2018 will negatively impact our results in 2019, this continues to improve the quality of our portfolio and positions
us to take advantage of future opportunities as they arise.
As always, we thank our associates and our Board of Trust Managers for their incredible efforts and renew our
pledge to you, our investors, to continue to do everything possible to enhance long-term shareholder value.
Andrew M. Alexander
Chairman/President/Chief Executive Officer
Stanford Alexander
Chairman Emeritus
2
3
O F F I C E R S
MANAGEMENT TEAM
Andrew M. Alexander
Chairman/President/Chief Executive Officer
Johnny L. Hendrix
Executive Vice President/Chief Operating Officer
Stanford Alexander
Chairman Emeritus
Stephen C. Richter
Executive Vice President/Chief Financial Officer
SENIOR VICE
PRESIDENTS
VICE
PRESIDENTS
Lee Brody
Senior Vice President/
Leasing
Joe D. Shafer
Senior Vice President/
Chief Accounting Officer
Darren Amato
Divisional Vice President/
Acquisitions
Kent Maxey
Regional Vice President/
Property Management
Richard H. Carson
Senior Vice President/
Development and
Acquisitions
Gerald Crump
Senior Vice President/
Leasing
Timothy M. Frakes
Senior Vice President/
Development and
Acquisitions
F. William Goeke III
Senior Vice President/
Property Management
Alan R. Kofoed
Senior Vice President/
Construction
Miles Sanchez
Senior Vice President/
Leasing
Mark D. Stout
Senior Vice President/
General Counsel
Karl Brinkman
Area Vice President/
Leasing
Frank Rollow
Regional Vice President/
Property Management
Michael Townsell
Senior Vice President/
Human Resources
Chris Byrd
Area Vice President/
Leasing
Kristen Seaboch
Divisional Vice President/
Controller
Steven R. Weingarten
Senior Vice President/
Leasing
William M. Crook
Divisional Vice President/
Associate General Counsel
Candy Tillack
Regional Vice President/
Property Management
Jenny Hyun
Divisional Vice President/
Associate General Counsel
Taylor Vaughan
Area Vice President/
Leasing
Marc A. Kasner
Divisional Vice President/
Associate General Counsel
Gary Wankum
Divisional Vice President/
Construction
Terri Klages
Divisional Vice President/
Assistant Controller
Michelle Wiggs
Vice President/
Investor Relations
Patrick Manchi
Area Vice President/
Leasing
Ken Wygle
Area Vice President/
Leasing
4
Table of Contents
(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9876
Weingarten Realty Investors
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation or
organization)
2600 Citadel Plaza Drive, Suite 125
Houston, Texas
(Address of principal executive offices)
Registrant’s telephone number, including area code
74-1464203
(I.R.S. Employer Identification No.)
77008
(Zip Code)
(713) 866-6000
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.03 par value
Title of Each Class
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YES NO
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.YES NO
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 NO
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). YES NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YES NO
The aggregate market value of the common shares of beneficial interest held by non-affiliates on June 29, 2018 (based upon the
most recent closing sale price on the New York Stock Exchange as of such date of $30.81) was $3.7 billion.
As of February 15, 2019, there were 128,626,309 common shares of beneficial interest outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement relating to its Annual Meeting of Shareholders to be held on April 29, 2019 have been
incorporated by reference to Part III of this Form 10-K.
Table of Contents
Item No.
PART I
TABLE OF CONTENTS
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Trust Managers, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
Certain Relationships and Related Transactions, and Trust Manager Independence
Principal Accountant Fees and Services
PART IV
15.
Exhibits and Financial Statement Schedules
Signatures
Page
No.
1
3
13
14
21
22
22
25
26
43
44
85
86
88
88
88
88
89
89
89
95
Table of Contents
Forward-Looking Statements
This annual report on Form 10-K, together with other statements and information publicly disseminated by us, contains
certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995 and include this statement for purposes of complying with those safe harbor provisions. Forward-
looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations,
are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar
expressions. You should not rely on forward-looking statements since they involve known and unknown risks,
uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual
results, performances or achievements. Factors which may cause actual results to differ materially from current
expectations include, but are not limited to, (i) disruptions in financial markets, (ii) general economic and local real
estate conditions, (iii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency
or general downturn in their business, (iv) financing risks, such as the inability to obtain equity, debt, or other sources
of financing on favorable terms and changes in LIBOR availability, (v) changes in governmental laws and regulations,
(vi) the level and volatility of interest rates, (vii) the availability of suitable acquisition opportunities, (viii) the ability to
dispose of properties, (ix) changes in expected development activity, (x) increases in operating costs, (xi) tax matters,
including the effect of changes in tax laws and the failure to qualify as a real estate investment trust, and (xii) investments
through real estate joint ventures and partnerships, which involve risks not present in investments in which we are the
sole investor. Accordingly, there is no assurance that our expectations will be realized. For further discussion of the
factors that could materially affect the outcome of our forward-looking statements and our future results and financial
condition, see “Item 1A. Risk Factors.”
PART I
ITEM 1. Business
General Development of Business. Weingarten Realty Investors is a real estate investment trust (“REIT”) organized
under the Texas Business Organizations Code. We, and our predecessor entity, began the ownership of shopping
centers and other commercial real estate in 1948. Our primary business is leasing space to tenants in the shopping
centers we own or lease. We also provide property management services for which we charge fees to either joint
ventures where we are partners or other outside owners.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and
the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K for
the year ended December 31, 2018, for information on certain recent developments of the Company.
Narrative Description of Business. We are in the business of owning, managing and developing retail shopping
centers. At December 31, 2018, we owned or operated under long-term leases, either directly or through our interest
in real estate joint ventures or partnerships, a total of 178 properties, which are located in 17 states spanning the
country from coast to coast. The portfolio of properties contains approximately 35.1 million square feet of gross leasable
area that is either owned by us or others. We also owned interests in 24 parcels of land held for development that
totaled approximately 14.0 million square feet.
Investment and Operating Strategy. Our goal is to remain a leader in owning and operating top-tier neighborhood
and community shopping centers in certain markets of the United States ("U.S."). We expect to achieve this goal by:
•
•
•
•
•
raising net asset value and cash flows through quality acquisitions, redevelopments and new developments;
focusing on core operating fundamentals through our decentralized operating platform built on local expertise
in leasing and property management;
disciplined growth from strategic acquisitions, redevelopments and new developments;
disposition of assets that no longer meet our ownership criteria, in which proceeds may be recycled by repaying
debt, purchasing new assets or reinvesting in currently owned assets or for other corporate purposes; and
commitment to maintaining a conservatively leveraged balance sheet, strong liquidity, a well-staggered debt
maturity schedule and strong credit agency ratings.
We may either purchase, develop or lease income-producing properties in the future, and may also participate with
other entities in property ownership through partnerships, joint ventures or similar types of co-ownership.
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We may invest in mortgages; however, we have traditionally invested in first mortgages to real estate joint ventures
or partnerships in which we own an equity interest or to obtain control over a real estate asset that we desire to own.
We may also invest in securities of other issuers for the purpose, among others, of exercising control over such entities,
subject to the gross income and asset tests necessary for REIT qualification.
In acquiring and developing properties, we attempt to accumulate enough properties in a geographic area to allow for
the establishment of a regional office, which enables us to obtain in-depth knowledge of the market from a leasing
perspective and to have easy access to the property and our tenants from a management viewpoint.
We expect to continue our focus on the future growth of the portfolio in neighborhood and community shopping centers
in markets where we currently operate throughout the U.S. Our markets of interest reflect high income and job growth,
as well as high barriers-to-entry. Our attention is also focused on high quality, supermarket-anchored and necessity-
based centers, which may include mixed-use properties containing this type of retail component.
Diversification from both a geographic and tenancy perspective is a critical component of our operating strategy. Our
largest markets are located in California, Florida and Texas, which represent 11.9%, 19.7% and 30.4%, respectively,
of our total properties' gross leasable area. Total revenues generated by our centers located in Houston and its
surrounding areas was 18.8% of total revenue for the year ended December 31, 2018, and an additional 8.7% of total
revenue was generated in 2018 from centers that are located in other parts of Texas. An additional 20.4% and 17.2%,
respectively, of total revenue was generated in 2018 in Florida and California. As of December 31, 2018, we also had
24 parcels of land held for development, five of which were located in Houston and its surrounding areas and 10 of
which were located in other parts of Texas. Because of our investments in Texas, including Houston and its surrounding
areas, Florida and California, these economies could affect our business and operations more so than in other
geographic areas.
With respect to tenant diversification, our two largest tenants, The Kroger Co. and TJX Companies, Inc., accounted
for 2.6% and 2.1%, respectively, of our total base minimum rental revenues for the year ended December 31, 2018.
No other tenant accounted for more than 1.7% of our total base minimum rental revenues. Our anchor tenants are
supermarkets, value-oriented apparel/discount stores and other retailers or service providers who generally sell basic
necessity-type goods and services. We believe the stability of our anchor tenants, combined with convenient locations,
attractive and well-maintained properties, high quality retailers and a strong tenant mix, should ensure the long-term
success of our merchants and the viability of our portfolio.
Strategically, we strive to finance our growth and working capital needs in a conservative manner, including managing
our debt maturities. Our senior debt credit ratings were BBB with a projected stable outlook from Standard & Poors
and Baa1 with a projected stable outlook from Moody’s Investor Services as of December 31, 2018. We intend to
maintain a conservative approach to managing our balance sheet, which, in turn, should give us many options for
raising debt or equity capital when needed. At December 31, 2018 and 2017, our debt to total assets before depreciation
ratio was 36.4% and 38.6%, respectively.
We have a $200 million share repurchase plan under which we may repurchase common shares of beneficial interest
("common shares") from time-to-time in open-market or privately negotiated purchases based on management's
evaluation of market conditions and other factors. As of the date of this filing, $181.5 million of common shares remained
available to be repurchased under the plan.
Our policies with respect to the investment and operating strategies discussed above are periodically reviewed by our
Board of Trust Managers and may be modified without a vote of our shareholders.
Competition. We compete with numerous other developers and real estate companies (both public and private),
financial institutions and other investors engaged in the development, acquisition and operation of shopping centers
in our trade areas. This results in competition for the acquisition of both existing income-producing properties and
prime development sites.
We also compete for tenants to occupy the space that is developed, acquired and managed by our competitors. The
principal competitive factors in attracting tenants in our market areas are location, price, anchor tenants and
maintenance of properties. We believe our key competitive advantages include the favorable locations of our properties,
the strong demographics surrounding our centers, knowledge of markets and customer bases, our ability to provide
a retailer with multiple locations with quality anchor tenants and the practice of continuous maintenance and renovation
of our properties.
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Table of Contents
Qualification as a Real Estate Investment Trust. As of December 31, 2018, we met the qualification requirements of
a REIT under the Internal Revenue Code, as amended. As a result, we will not be subject to federal income tax to the
extent we meet certain requirements of the Internal Revenue Code, with the exception of our taxable REIT subsidiary.
Employees. At December 31, 2018, we employed 254 full-time persons; our principal executive offices are located
at 2600 Citadel Plaza Drive, Houston, Texas 77008; and our phone number is (713) 866-6000. We also have nine
regional offices located in various parts of the U.S. Management considers its relations with their personnel to be good.
Company Website and SEC Filings. Our website may be accessed at www.weingarten.com. We use the Investors
section of our website as a channel for routine distribution of important information, including news releases, analyst
presentations and financial information. All of our filings with the Securities and Exchange Commission ("SEC") can
be accessed, and we post filings as soon as reasonably practicable after they are electronically filed with, or furnished
to, the SEC, including our annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, our proxy statements
and any amendments to those reports or statements. All such postings and filings are available on our website free
of charge. You may also view any materials we file with the SEC at the SEC’s Internet site at www.sec.gov.
Financial Information. Additional financial information concerning us is included in the Consolidated Financial
Statements located in Item 8 herein.
ITEM 1A. Risk Factors
The risks described below could materially and adversely affect our shareholders and our results of operations, financial
condition, liquidity and cash flows. In addition to these risks, our operations may also be affected by additional factors
not presently known or that we currently consider immaterial to our operations.
Disruptions in the financial markets could affect our liquidity and have other adverse effects on us and the
market price of our common shares of beneficial interest.
The U.S. and global equity and credit markets have experienced and may in the future experience significant price
volatility, dislocations and liquidity disruptions, which could cause market prices of many stocks to fluctuate substantially
and the spreads on prospective debt financings to widen considerably. These circumstances could materially impact
liquidity in the financial markets, making terms for certain financings less attractive, and in certain cases result in the
unavailability of certain types of financing. Uncertainties in the equity and credit markets may negatively impact our
ability to access additional financing at reasonable terms or at all, which may negatively affect our ability to complete
dispositions, form joint ventures or refinance our debt. A prolonged downturn in the equity or credit markets could
cause us to seek alternative sources of potentially less attractive financing, and require us to adjust our business plan
accordingly. In addition, these factors may make it more difficult for us to sell properties or adversely affect the price
we receive for properties that we do sell, as prospective buyers may experience increased costs of financing or
difficulties in obtaining financing. These events in the equity and credit markets may make it more difficult or costly for
us to raise capital through the issuance of our common shares or preferred shares. These disruptions in the financial
markets also may have a material adverse effect on the market value of our common shares and other adverse effects
on us or the economy generally. There can be no assurances that government responses to any disruptions in the
financial markets would restore consumer confidence, maintain stabilized markets or provide the availability of equity
or credit financing.
Among the market conditions that may affect the value of our common shares and access to the capital markets are
the following:
• The attractiveness of REIT securities as compared to other securities, including securities issued by other real
estate companies, fixed income equity securities and debt securities;
• Changes in revenues or earnings estimates or publication of research reports and recommendations by
financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
• The degree of interest held by institutional investors;
• The market's perception of the quality of our assets and our growth potential;
• The ability of our tenants to pay rent to us and meet their other obligations to us under current lease terms;
• Our ability to re-lease space as leases expire;
• Our ability to refinance our indebtedness as it matures;
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• Actual or anticipated quarterly fluctuations in our operating results and financial condition;
• Any changes in our dividend policy;
• Any future issuances of equity securities;
• Strategic actions by us or our competitors, such as acquisitions or restructurings;
• General market conditions and, in particular, developments related to market conditions for the real estate
industry; and
• Domestic and international economic and political factors unrelated to our performance.
The volatility in the stock market can create price and volume fluctuations that may not necessarily be comparable to
operating performance.
The economic performance and value of our shopping centers depend on many factors, each of which could
have an adverse impact on our cash flows and operating results.
The economic performance and value of our properties can be affected by many factors, including the following:
• Changes in the national, regional and local economic climate;
• Changes in existing laws and regulations, including environmental regulatory requirements including, but not
limited to, legislation on global warming, trade reform, health care reform, employment laws and immigration
laws;
•
Local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
• The attractiveness of the properties to tenants;
• Competition from other available space;
• Competition for our tenants from Internet sales and shifts in consumer shopping patterns;
• Our tenant's ability to anticipate or revise their marketing and/or sales approach to meet changes in consumer
shopping patterns;
• Our ability to provide adequate management services and to maintain our properties;
•
Increased operating costs, if these costs cannot be passed through to tenants;
• The cost of periodically renovating, repairing and releasing spaces;
• The consequences of any armed conflict involving, or terrorist attack against, the U.S.;
• Our ability to secure adequate insurance;
• Fluctuations in interest rates;
• Changes in real estate taxes and other expenses; and
• Availability of financing on acceptable terms or at all.
Our properties consist primarily of neighborhood and community shopping centers and, therefore, our performance is
linked to general economic conditions in the market for retail space. The market for retail space has been and could
in the future be adversely affected by weakness in the national, regional and local economies where our properties
are located, the adverse financial condition of some large retail companies, the ongoing consolidation in the retail
sector, the excess amount of retail space in a number of markets and increasing consumer purchases through the
Internet. To the extent that any of these conditions exist, they are likely to affect market rents for retail space. In addition,
we may face challenges in the management and maintenance of the properties or encounter increased operating
costs, such as real estate taxes, insurance and utilities, which may make our properties unattractive to tenants. A
significant decrease in rental revenue and an inability to replace such revenues may adversely affect our profitability,
the ability to meet debt and other financial obligations and pay dividends to shareholders.
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We have properties that are geographically concentrated, and adverse economic or other conditions in that
area could have a material adverse effect on us.
We are particularly susceptible to adverse economic or other conditions in markets where our properties are
concentrated, including California, Florida and Texas. These adverse conditions include increases in unemployment,
industry slowdowns, including declining oil prices, business layoffs or downsizing, decreases in consumer confidence,
relocations of businesses, changes in demographics, increases in real estate and other taxes, increases in regulations,
severe weather conditions and natural disasters, any of which could have an increased material adverse effect on us
than if our portfolio was more geographically diverse.
Our acquisition activities may not produce the cash flows that we expect and may be limited by competitive
pressures or other factors.
We intend to acquire existing commercial properties to the extent that suitable acquisitions can be made on
advantageous terms. Acquisitions of commercial properties involve risks such as:
• We may have difficulty identifying acquisition opportunities that fit our investment strategy;
• Our estimates on expected occupancy and rental rates may differ from actual conditions;
• Our estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be
inaccurate;
• We may be unable to operate successfully in new markets where acquired properties are located, due to a
lack of market knowledge or understanding of local economies;
• We may be unable to successfully integrate new properties into our existing operations; or
• We may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt
service associated with acquired properties prior to sufficient occupancy.
In addition, we may not be in a position or have the opportunity in the future to make suitable property acquisitions on
advantageous terms due to competition for such properties with others engaged in real estate investment. Our inability
to successfully acquire new properties may have an adverse effect on our results of operations.
Turmoil in capital markets could adversely impact acquisition activities and pricing of real estate assets.
Volatility in the capital markets could impact the availability of debt financing due to numerous factors, including the
tightening of underwriting standards by lenders and credit rating agencies. These factors directly affect a lender’s
ability to provide debt financing as well as increase the cost of available debt financing. As a result, we may not be
able to obtain debt financing on favorable terms or at all. This may result in future acquisitions generating lower overall
economic returns, which may adversely affect our results of operations and dividends paid to shareholders.
Furthermore, any turmoil in the capital markets could adversely impact the overall amount of capital available to invest
in real estate, which may result in price or value decreases of real estate assets.
Our real estate assets may be subject to impairment charges.
Periodically, we assess whether there are any indicators that the value of our real estate assets, including any capitalized
costs and any identifiable intangible assets, may be impaired. A property's value is impaired only if the estimate of the
aggregate future undiscounted cash flows without interest charges to be generated by the property are less than the
carrying value of the property. In estimating cash flows, we consider factors such as expected future income, trends
and prospects, the effects of demand, competition and other factors. If we are evaluating the potential sale of an asset
or development/redevelopment alternatives, the undiscounted future cash flows consider the most likely course of
action at the balance sheet date based on current plans, intended holding periods and available market information.
Determining whether a property is impaired and, if impaired, the amount of write-down to fair value requires a significant
amount of judgment by management and is based on the best information available to management at the time of
evaluation. If market conditions deteriorate or management’s plans for certain properties change, additional write-
downs could be required in the future, and any future impairment could have a material adverse effect on our results
of operations in the period in which the charge is taken.
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Reduction of rental income would adversely affect our profitability, our ability to meet our debt obligations
and our ability to pay dividends to our shareholders.
The substantial majority of our income is derived from rental income from real property. As a result, our performance
depends on our ability to collect rent from tenants. Our income and funds to pay dividends would be negatively affected
if a significant number of our tenants, or any of our major tenants (as discussed in more detail below):
• Delay lease commencements;
• Decline to extend or renew leases upon expiration;
• Fail to make rental payments when due; or
• Close stores or declare bankruptcy.
Any of these actions could result in the termination of the tenants’ lease and the loss of rental income attributable to
the terminated leases. In addition, lease terminations by an anchor tenant or a failure by that anchor tenant to occupy
the premises could also result in lease terminations or reductions in rent by other tenants in the same shopping center
under the terms of some leases. In these events, we cannot be sure that any tenant whose lease expires will renew
that lease or that we will be able to re-lease space on economically advantageous terms. Furthermore, certain costs
remain fixed even though a property may not be fully occupied. The loss of rental revenues from a number of our
tenants and our inability to replace such tenants, particularly in the case of a substantial tenant with leases in multiple
locations, may adversely affect our profitability, our ability to meet debt and other financial obligations and our ability
to pay dividends to the shareholders.
Adverse effects on the success and stability of our anchor tenants, could lead to reductions of rental income.
Our rental income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency
of, any anchor store or anchor tenant. Anchor tenants generally occupy large amounts of square footage, pay a
significant portion of the total rents at a property and contribute to the success of other tenants by drawing significant
numbers of customers to a property. The closing of one or more anchor stores at a property could adversely affect
that property and result in lease terminations or reductions in rent from other tenants, whose leases may permit
termination or rent reduction in those circumstances or whose own operations may suffer as a result. Furthermore,
tenant demand for certain of our anchor spaces may decrease, and as a result, we may see an increase in vacancy
and/or a decrease in rents for those spaces, which could have a negative impact to our rental income.
Adverse effects resulting from a shift in retail shopping from brick and mortar stores to online shopping may
impact our operating results.
Online sales for many retailers has become a fundamental part of their business in addition to operating brick and
mortar stores. Additionally, online sales from companies without physical stores has increased significantly. Although
many of the retailers operating in our properties sell groceries, value-oriented apparel and other necessity-based type
goods or provide services, including entertainment and dining, the shift to online shopping may cause certain of our
tenants to reduce the size or number of their retail locations in the future. As a result, this could negatively affect our
ability to lease space and our operating results.
We face significant competition in the leasing market, which may decrease or prevent increases in the
occupancy and rental rates of our properties.
We compete with numerous developers, owners and operators of retail properties, many of which own properties
similar to, and in the same market sectors as, our properties. If our competitors offer space at rental rates below current
market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants, or
we may be forced to reduce rental rates in order to attract new tenants and retain existing tenants when their leases
expire.
Also, if our competitors develop additional retail properties in locations near our properties, there may be increased
competition for customer traffic and creditworthy tenants, which may result in fewer tenants or decreased cash flows
from tenants, or both, and may require us to make capital improvements to properties that we would not have otherwise
made. Our tenants also face increasing competition from other forms of marketing of goods, such as direct mail and
Internet marketing, which may decrease cash flow from such tenants. As a result, our financial condition and our ability
to pay dividends to our shareholders may be adversely affected.
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We may be unable to collect balances due from tenants in bankruptcy.
A tenant that files for bankruptcy protection may not continue to pay us rent. A bankruptcy filing by or relating to one
of our tenants or a lease guarantor would bar all efforts by us to collect pre-bankruptcy debts from the tenant or the
lease guarantor, or their property, unless the bankruptcy court permits us to do so. A tenant or lease guarantor bankruptcy
could delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection
of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for
damages. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims
it holds, if at all.
Our development, redevelopment and construction activities could adversely affect our operating results.
We intend to continue the selective development, redevelopment and construction of retail and/or mixed use properties
in accordance with our development and underwriting policies as opportunities arise. Our development, redevelopment
and construction activities include risks that:
• We may abandon development opportunities after expending resources to determine feasibility;
• Construction costs of a project may exceed our original estimates;
• Occupancy rates and rents at a newly completed or redeveloped property may not be sufficient to make the
property profitable;
• Rental rates could be less than projected;
• Delivery of multi-family units into uncertain residential environments may result in lower rents, sale price or
take longer periods of time to reach economic stabilization;
• Project completion may be delayed because of a number of factors, including weather, labor disruptions,
construction delays or delays in receipt of zoning or other regulatory approvals, adverse economic conditions,
acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods);
• Financing may not be available to us on favorable terms for development or redevelopment of a property; and
• We may not complete construction and lease-up on schedule, resulting in increased debt service expense
and construction costs.
Additionally, the time frame required for development, redevelopment, construction and lease-up of these properties
means that we may have to wait years for a significant cash return. If any of the above events occur, the development
and redevelopment of properties may hinder our growth and have an adverse effect on our results of operations,
including additional impairment charges. Also, new development activities, regardless of whether or not they are
ultimately successful, typically require substantial time and attention from management.
There is a lack of operating history with respect to any recent acquisitions and redevelopment or development
of properties, and we may not succeed in the integration or management of additional properties.
These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue
potential. It is also possible that the operating performance of these properties may decline under our management.
We also may not have the experience in developing and managing mixed-use properties and may need to rely on
external resources which may not perform as we expected. As we acquire additional properties, we will be subject to
risks associated with managing new properties, including lease-up and tenant retention. In addition, our ability to
manage our growth effectively will require us to successfully integrate any new acquisitions into our existing
management structure. We may not succeed with this integration or effectively manage additional properties. Also,
newly acquired properties may not perform as expected.
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Real estate property investments are illiquid, and therefore, we may not be able to dispose of properties when
desirable or on favorable terms.
Real estate property investments generally cannot be disposed of quickly. In addition, the Internal Revenue Code
imposes restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate
companies. Our ability to dispose of properties on advantageous terms depends on factors beyond our control, including
competition from other sellers and the availability of attractive financing for potential buyers of our properties. We
cannot predict the various market conditions affecting real estate investments that will exist at any particular time in
the future. Therefore, we may not be able to quickly vary our portfolio in response to economic or other conditions
promptly or on favorable terms, which could cause us to incur extended losses and reduce our cash flows and adversely
affect dividends paid to shareholders.
As part of our capital recycling program, we intend to sell our non-core assets and may not be able to recover
our investments, which may result in losses to us.
There can be no assurance that we will be able to recover the current carrying amount of all of our owned and partially
owned non-core properties and investments in the future. Our failure to do so would require us to recognize impairment
charges in the period in which we reached that conclusion, which could adversely affect our business, financial condition,
operating results and cash flows.
Credit ratings may not reflect all the risks of an investment in our debt or equity securities and rating changes
could adversely effect our revolving credit facility.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real
or anticipated changes in our credit ratings will generally affect the market value of our debt. Credit ratings may be
revised or withdrawn at any time by the rating agency at its sole discretion. Additionally, our revolving credit facility
fees are based on our credit ratings. We do not undertake any obligation to maintain the ratings or to advise holders
of our debt of any change in ratings. Each agency's rating should be evaluated independently of any other agency's
rating.
There can be no assurance that we will be able to maintain our current credit ratings. Adverse changes in our credit
ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and could
significantly reduce the market price of our publicly-traded securities.
Our cash flows and operating results could be adversely affected by required payments of debt or related
interest and other risks of our debt financing.
We are generally subject to risks associated with debt financing. These risks include:
• Our cash flow may not satisfy required payments of principal and interest;
• We may not be able to refinance existing indebtedness on our properties as necessary or the terms of the
refinancing may be less favorable to us than the terms of existing debt;
• Required debt payments are not reduced if the economic performance of any property declines;
• Debt service obligations could reduce funds available for dividends to our shareholders and funds available
for capital investment;
• Any default on our indebtedness could result in acceleration of those obligations and possible loss of property
to foreclosure; and
• The risk that capital expenditures necessary for purposes such as re-leasing space cannot be financed on
favorable terms.
If a property is mortgaged to secure payment of indebtedness and we cannot make the mortgage payments, we may
have to surrender the property to the lender with a consequent loss of any prospective income and equity value from
such property. Any of these risks can place strains on our cash flows, reduce our ability to grow and adversely affect
our results of operations.
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We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is
determined.
As of December 31, 2018, we had outstanding approximately $22.7 million of debt that was indexed to the London
Interbank Offered Rate (“LIBOR”). Central banks around the world, including the Federal Reserve, have commissioned
working groups of market participants and official sector representatives with the goal of finding suitable replacements
for LIBOR based on observable market transactions. It is expected that a transition away from the widespread use of
LIBOR to alternative rates will occur over the course of the next few years. The United Kingdom Financial Conduct
Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the
calculation of LIBOR after 2021.
Accordingly, there is considerable uncertainty regarding the publication of such rates beyond 2021. The Federal
Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions
relating to alternatives to United States dollar LIBOR (“USD-LIBOR”). The Alternative Reference Rates Committee
("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice
in the United States as the alternative to LIBOR for use in derivatives and other financial contracts that are currently
indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from LIBOR, and organizations
are currently working on industry wide and company specific transition plans as it relates to derivatives and cash
markets exposed to USD-LIBOR rates. Although the full impact of such reforms and actions, together with any transition
away from LIBOR, including the potential or actual discontinuance of LIBOR publication, remains unclear, these
changes may have a material adverse impact on the availability of financing, including LIBOR-based loans, and on
our financing costs.
Rising interest rates could increase our borrowing costs, thereby adversely affecting our cash flows and the
amounts available for dividends to our shareholders, and decrease our share price, if investors seek higher
yields through other investments.
We have indebtedness with interest rates that vary depending on market indices. Also, our credit facilities bear interest
at variable rates. We may incur variable-rate debt in the future. Increases in interest rates on variable-rate debt would
increase our interest expense, which would negatively affect net income and cash available for payment of our debt
obligations and dividends to shareholders. In addition, an increase in interest rates could adversely affect the market
value of our outstanding debt, as well as increase the cost of refinancing and the issuance of new debt or securities.
An environment of rising interest rates could also lead holders of our securities to seek higher yields through other
investments, which could adversely affect the market price of our shares. One of the factors which may influence the
price of our shares in public markets is the annual dividend rate we pay as compared with the yields on alternative
investments.
Our financial condition could be adversely affected by financial covenants.
Our credit facilities and public debt indentures under which our indebtedness is, or may be, issued contain certain
financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on our
ability to incur secured and unsecured indebtedness, restrictions on our ability to sell all or substantially all of our assets
and engage in mergers and consolidations and certain acquisitions. These covenants could limit our ability to obtain
additional funds needed to address cash shortfalls or pursue growth opportunities or transactions that would provide
substantial return to our shareholders. In addition, a breach of these covenants could cause a default under or accelerate
some or all of our indebtedness, which could have a material adverse effect on our financial condition.
Property ownership through real estate partnerships and joint ventures could limit our control of those
investments and reduce our expected return.
Real estate partnership or joint venture investments may involve risks not otherwise present for investments made
solely by us, including the possibility that our partner or co-venturer might become bankrupt, that our partner or co-
venturer might at any time have different interests or goals than us, and that our partner or co-venturer may take action
contrary to our instructions, requests, policies or objectives. Other risks of joint venture investments could include
impasse on decisions, such as a sale or refinance, because neither our partner or co-venturer nor we would have full
control over the partnership or joint venture. These factors could limit the return that we receive from those investments
or cause our cash flows to be lower than our estimates.
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Volatility in market and economic conditions may impact our partners’ ability to perform in accordance with
our real estate joint venture and partnership agreements resulting in a change in control or the liquidation
plans of its underlying properties.
Changes in control of our investments could result if any reconsideration events occur, such as amendments to our
real estate joint venture and partnership agreements, changes in debt guarantees or changes in ownership due to
required capital contributions. Any changes in control will result in the revaluation of our investments to fair value,
which could lead to an impairment. We are unable to predict whether, or to what extent, a change in control may result
or the impact of adverse market and economic conditions may have to our partners.
If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax as a regular
corporation and could have significant tax liability.
We intend to operate in a manner that allows us to qualify as a REIT for U.S. federal income tax purposes. However,
REIT qualification requires us to satisfy numerous requirements (some on an annual or quarterly basis) established
under highly technical and complex provisions of the Internal Revenue Code, for which there are a limited number of
judicial or administrative interpretations. Our status as a REIT requires an analysis of various factual matters and
circumstances that are not entirely within our control. Accordingly, it is not certain we will be able to qualify and remain
qualified as a REIT for U.S. federal income tax purposes. Even a technical or inadvertent violation of the REIT
requirements could jeopardize our REIT qualification. If we fail to qualify as a REIT in any tax year, then:
• We would be taxed as a regular domestic corporation, which, among other things, means that we would be
unable to deduct dividends paid to our shareholders in computing our taxable income and would be subject
to U.S. federal income tax on our taxable income at regular corporate rates;
• Any resulting tax liability could be substantial and would reduce the amount of cash available for dividends to
shareholders, and could force us to liquidate assets or take other actions that could have a detrimental effect
on our operating results; and
• Unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment
as a REIT for the four taxable years following the year during which we lost our qualification, and our cash
available for dividends to our shareholders would, therefore, be reduced for each of the years in which we do
not qualify as a REIT.
Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. We may also be
subject to certain U.S. federal, state and local taxes on our income and property either directly or at the level of our
subsidiaries. Any of these taxes would decrease cash available for dividends to our shareholders.
Tax laws have changed and may continue to change at any time, and any such legislative or other actions
could have a negative effect on us.
As most recently experienced in connection with the enactment of the Tax Cuts and Jobs Act of 2017 ("Tax Act") on
December 22, 2017, tax laws remain under constant review by persons involved in the legislative process, at the
Internal Revenue Service ("IRS") and the U.S. Department of the Treasury, and by various state and local tax authorities.
Changes to tax laws, regulations, or administrative interpretations, which may be applied retroactively, could adversely
affect us in a number of additional ways, including making it more difficult or more costly for us to qualify as a REIT or
decreasing real estate values generally.
We cannot predict whether, when, in what forms, or with what effective dates, the tax laws, regulations, and
administrative interpretations applicable to us or our shareholders may be further changed.
Compliance with REIT requirements may negatively affect our operating decisions.
To maintain our status as a REIT for U.S. federal income tax purposes, we must meet certain requirements, on an
ongoing basis, including requirements regarding our sources of income, the nature and diversification of our assets,
the amounts we distribute to our shareholders and the ownership of our common shares. We may also be required to
pay dividends to our shareholders when we do not have funds readily available for distribution or at times when our
funds are otherwise needed to fund capital expenditures or debt service obligations.
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As a REIT, we must distribute at least 90% of our annual net taxable income (excluding net capital gains) to our
shareholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable
income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. From time to
time, we may generate taxable income greater than our income for financial reporting purposes, or our net taxable
income may be greater than our cash flow available for distribution to our shareholders. If we do not have other funds
available in these situations, we could be required to borrow funds, sell a portion of our securities at unfavorable prices
or find other sources of funds in order to meet the REIT distribution requirements.
Our common shares dividend policy may change in the future.
The timing, amount and composition of any future dividends to our common shareholders will be at the sole discretion
of our Board of Trust Managers and will depend upon a variety of factors as to which no assurance can be given. Our
ability to make dividends to our common shareholders depends, in part, upon our operating results, overall financial
condition, the performance of our portfolio (including occupancy levels and rental rates), our capital requirements,
access to capital, our ability to qualify for taxation as a REIT and general business and market conditions. Any change
in our dividend policy could have an adverse effect on the market price of our common shares.
Our declaration of trust contains certain limitations associated with share ownership.
To maintain our status as a REIT, our declaration of trust prohibits any individual from owning more than 9.8% of our
outstanding common shares. This restriction is likely to discourage third parties from acquiring control without the
consent of our Board of Trust Managers, even if a change in control were in the best interests of our shareholders.
Also, our declaration of trust requires the approval of the holders of 80% of our outstanding common shares and the
approval by not less than 50% of the outstanding common shares not owned by any related person (a person owning
more than 50% of our common shares) to consummate a business transaction such as a merger. There are certain
exceptions to this requirement; however, the 80% approval requirement could make it difficult for us to consummate
a business transaction even if it is in the best interests of our shareholders.
There may be future dilution of our common shares.
Our declaration of trust authorizes our Board of Trust Managers to, among other things, issue additional common or
preferred shares or securities convertible or exchangeable into equity securities, without shareholder approval. We
may issue such additional equity or convertible securities to raise additional capital. The issuance of any additional
common or preferred shares or convertible securities could be substantially dilutive to holders of our common shares.
Moreover, to the extent that we issue restricted shares, options, or warrants to purchase our common shares in the
future and those options or warrants are exercised or the restricted shares vest, our shareholders may experience
further dilution. Holders of our common shares have no preemptive rights that entitle them to purchase a pro rata share
of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution
to our shareholders.
We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior
to our common shares as to distributions and in liquidation, which could negatively affect the value of our common
shares.
In the future, we may attempt to increase our capital resources by entering into unsecured or secured debt or debt-
like financings, or by issuing additional debt or equity securities, which could include issuances of medium-term notes,
senior notes, subordinated notes, secured debt, guarantees, preferred shares, hybrid securities, or securities
convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our
debt and, if any, preferred securities would receive distributions of our available assets before distributions to the
holders of our common shares. Because any decision to incur debt and issue securities in future offerings may be
influenced by market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing,
or nature of our future financings. Further, market conditions could require us to accept less favorable terms for the
issuance of our securities in the future.
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Our declaration of trust contains certain limitations that make removal of our Trust Managers difficult, which
could limit our shareholders ability to effect changes to our management.
Our declaration of trust provides that a Trust Manager may only be removed for cause upon the affirmative vote of
holders of two-thirds of the total votes authorized to be cast by shares outstanding and entitled to be voted. Vacancies
may be filled by either a majority of the remaining Trust Managers or elected by the vote of holders of at least two-
thirds of the outstanding shares at the Annual Meeting or a special meeting of the shareholders. These requirements
provide limitations to make changes in our management by removing and replacing Trust Managers and may prevent
a change of control that is in the best interests of our shareholders.
Loss of our key personnel could adversely affect the value of our common shares and operations.
We are dependent on the efforts of our key executive personnel. A significant number of persons in our management
group are eligible for retirement. Although we believe qualified replacements could be found for these key executives
and other members of our management group, the loss of their services could adversely affect the value of our common
shares and operations.
Changes in accounting standards may adversely impact our reported financial condition and results of
operations.
The Financial Accounting Standards Board (“FASB”), in conjunction with the SEC, continually engages in projects to
evaluate additions or changes to current accounting standards which could impact how we currently account for our
material transactions. We believe that these and other potential proposals could have varying degrees of impact on
us ranging from minimal to material. At this time, we are unable to predict with certainty which, if any, proposals may
be passed or what level of impact any such proposal could have on us, except as disclosed in Item 8.
We could be subject to litigation that may negatively impact our cash flows, financial condition and results
of operations.
From time to time, we may be a defendant in lawsuits and regulatory proceedings relating to our business. Due to the
inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of
any such litigation or proceedings. We could experience a negative impact to our cash flows, financial condition and
results of operations due to an unfavorable outcome.
Compliance with certain laws and governmental rules and regulations may require us to make unintended
expenditures that adversely affect our cash flows.
All of our properties are required to comply with certain laws and governmental rules and regulations, including the
Americans with Disabilities Act, fire and safety regulations, building codes and other land use regulations, as they may
be in effect or adopted by governmental agencies and bodies and become applicable to our properties. We may be
required to make substantial capital expenditures to comply with those requirements, and these expenditures could
have a material adverse effect on our ability to meet the financial obligations and pay dividends to our shareholders.
An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or
revenue on those properties.
Under the terms and conditions of the leases currently in force on our properties, tenants generally are required to
indemnify and hold us harmless from liabilities resulting from injury to persons, air, water, land or property, on or off
the premises, due to activities conducted on the properties, except for claims arising from our negligence or intentional
misconduct or that of our agents. Tenants are generally required, at the tenant’s expense, to obtain and keep in full
force during the term of the lease, liability and tenant's property damage insurance policies. We have obtained
comprehensive liability, casualty, property, flood, earthquake, environmental and rental loss insurance policies on our
properties. All of these policies may involve substantial deductibles and certain exclusions. In addition, we cannot
assure the shareholders that the tenants will properly maintain their insurance policies or have the ability to pay the
deductibles. Should a loss occur that is uninsured or in an amount exceeding the combined aggregate limits for the
policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, we
could lose all or part of our capital invested in, and anticipated revenue from, one or more of the properties, which
could have a material adverse effect on our operating results and financial condition, as well as our ability to pay
dividends to the shareholders.
12
Table of Contents
We may be subject to liability under environmental laws, ordinances and regulations.
Under various federal, state and local laws, ordinances and regulations, we may be considered an owner or operator
of real property or have arranged for the disposal or treatment of hazardous or toxic substances. As a result, we may
become liable for the costs of disposal or treatment of hazardous or toxic substances released on or in our property.
We may also be liable for certain other potential costs that could relate to hazardous or toxic substances (including
governmental fines and injuries to persons and property). We may incur such liability whether or not we knew of, or
were responsible for, the presence of such hazardous or toxic substances.
Natural disasters and severe weather conditions could have an adverse effect on our cash flow and operating
results.
Changing weather patterns and climatic conditions, such as global warming, may have added to the unpredictability
and frequency of natural disasters in some parts of the world and created additional uncertainty as to future trends
and exposures. Our operations are located in many areas that have experienced and may in the future experience
natural disasters and severe weather conditions such as hurricanes, tornadoes, earthquakes, droughts, floods and
fires. The occurrence of natural disasters or severe weather conditions can delay new development and redevelopment
projects, increase investment costs to repair or replace damaged properties, increase future property insurance costs,
and negatively impact the tenant demand for lease space. Additionally, these weather conditions may also disrupt our
tenants business, which could affect the ability of some tenants to pay rent and may reduce the willingness of residents
to remain in or move to the affected area. Intense weather conditions during the last decade have caused our cost of
property insurance to increase significantly. If insurance is unavailable to us or is unavailable on acceptable terms, or
if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or
capital resources could be adversely affected.
Our business and operations would suffer in the event of system failures.
Despite the implementation of security measures and the existence of a disaster recovery and business continuity
plans for our internal information technology systems, our systems are vulnerable to damages from any number of
sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and
telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in
a material disruption to our business. We may also incur additional costs to remedy damages caused by such
disruptions.
We face risks relating to cybersecurity attacks, loss of confidential information and other business disruptions.
Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized
access to our confidential data and other electronic security breaches. Such cybersecurity attacks can range from
individual attempts to gain unauthorized access to our information technology systems to more sophisticated security
threats. In addition to our own information technology systems, third parties have been engaged to provide information
technology services relating to several key business functions, such as payroll, human resources, electronic
communications and certain finance functions. While we and such third parties employ a number of measures to
prevent, detect and mitigate these threats including a defense in depth strategy of firewalls, intrusion sensors, malware
detection, password protection, backup servers, user training and periodic penetration testing, there is no guarantee
such efforts will be successful in preventing a cybersecurity attack. As our reliance on technology has increased, so
have the risks posed to our systems, both internal and those we have outsourced. Cybersecurity incidents could
compromise the confidential information of our tenants, employees and third-party vendors and disrupt and affect the
efficiency of our business operations.
ITEM 1B. Unresolved Staff Comments
None.
13
Table of Contents
ITEM 2. Properties
At December 31, 2018, we owned or operated under long-term leases, either directly or through our interest in real
estate joint ventures or partnerships, a total of 178 centers, primarily neighborhood, community and power shopping
centers, which are located in 17 states spanning the country from coast to coast with approximately 35.1 million square
feet of gross leasable area. Our centers are located principally in the South, West Coast and Southeast Coast of the
U.S. with concentrations in California, Florida, and Texas. We also owned interests in 24 parcels of land that totaled
approximately 14.0 million square feet at December 31, 2018 of which approximately 13.8 million square feet of land
may be used for new development or sold, and the remaining is adjacent to our existing operating centers, which may
be used for expansion of those centers.
In 2018, no single center accounted for more than 7.5% of our total assets or 3.7% of base minimum rental revenues.
The five largest centers, in the aggregate, represented approximately 12% of our base minimum rental revenues for
the year ended December 31, 2018; otherwise, none of the remaining centers accounted for more than 1.8% of our
base minimum rental revenues during the same period.
Our centers are designed to attract local area customers and are typically anchored by a supermarket or other national
tenants (such as Kroger, HEB or T.J. Maxx). The centers are primarily neighborhood and community shopping centers
that often include discounters, value-oriented retailers and specialty grocers as additional anchors or tenants, and
typically range in size from 50,000 to 600,000 square feet of building area. Very few of the centers have climate-
controlled common areas, but are designed to allow retail customers to park their automobiles in close proximity to
any retailer in the center. Our centers are customarily constructed of masonry, steel and glass, and all have lighted,
paved parking areas, which are typically landscaped with berms, trees and shrubs. They are generally located at major
intersections in close proximity to neighborhoods that have existing populations sufficient to support retail activities of
the types conducted in our centers.
We actively embrace various initiatives that support the future of environmentally friendly shopping centers. Our primary
areas of focus include energy efficiency, waste recycling, water conservation and construction/development best
practices. We recognize there are economic, environmental and social implications associated with the full range of
our sustainability efforts, and that a commitment to incorporating sustainable practices will add long-term value to our
centers.
As of December 31, 2018, the weighted average occupancy rate for our centers was 94.4% compared to 94.8% as
of December 31, 2017. The average base rent per square foot was approximately $19.35 in 2018, $18.69 in 2017,
$17.93 in 2016, $16.92 in 2015 and $16.24 in 2014 for our centers.
We have approximately 4,000 separate leases with 3,000 different tenants. Included among our top revenue-producing
tenants are: The Kroger Co., TJX Companies, Inc., Whole Foods Market, Inc., Ross Stores, Inc., H-E-B Grocery
Company, LP, PetSmart, Inc., Albertsons Companies, Inc., 24 Hour Fitness Worldwide, Inc., Home Depot, Inc., and
Bed, Bath & Beyond Inc. The diversity of our tenant base is also evidenced by the fact that our largest tenant, The
Kroger Co., accounted for only 2.6% of base minimum rental revenues during 2018.
14
Table of Contents
Tenant Lease Expirations
As of December 31, 2018, lease expirations for the next 10 years, assuming tenants do not exercise renewal options,
are as follows:
Number of
Expiring
Leases
Square Feet
of Expiring
Leases
(000’s)
Percentage of
Leaseable
Square Feet
Total
(000’s)
Per Square
Foot
Percentage of
Total Annual
Net Rent
Annual Rent of Expiring Leases
442
559
562
465
431
194
99
99
88
101
1,769
2,703
2,994
3,009
2,626
1,847
749
730
945
1,313
5.04% $
34,592 $
7.69%
8.52%
8.56%
7.47%
5.26%
2.13%
2.08%
2.69%
3.74%
51,005
53,131
54,808
45,104
29,359
14,702
15,051
16,953
22,608
19.55
18.87
17.75
18.21
17.18
15.90
19.63
20.62
17.94
17.22
9.64%
14.21%
14.80%
15.27%
12.56%
8.18%
4.10%
4.19%
4.72%
6.30%
Year
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
New Development
At December 31, 2018, we had four projects in various stages of development that were partially or wholly owned. We
have funded $246.6 million through December 31, 2018 on these projects. We estimate our aggregate net investment
upon completion to be $512.5 million. These projects are forecasted to have an average stabilized return on investment
of approximately 5.6% when completed. Effective January 1, 2019, we stabilized the development in Seattle,
Washington, moving it to our operating property portfolio, which added 63,000 square feet to the portfolio at an estimated
cost per square foot of $490.
Upon completion, the estimated costs and square footage to be added to the portfolio for the remaining three projects
are as follows:
Project
City, State
Project Type
Retail/
Office
Square
Feet
(000’s)
West Alex
Alexandria, Virginia
Mixed-Use
123
Centro Arlington (2)
Arlington, Virginia
Mixed-Use
The Driscoll at River
Oaks
___________________
Houston, Texas
Mixed-Use
72
11
Residential
Units
Net Estimated
Costs (1)
(000's)
Estimated
Year of
Completion
278
366
318
$196,623
135,000
150,000
2022
2020
2022
(1) Current net estimated costs represents WRI's share of capital expenditures net of any forecasted sales of land pads.
(2) Represents an unconsolidated joint venture where we have funded $73.4 million as of December 31, 2018, and we anticipate funding
an additional $57 million through 2020.
15
Table of Contents
Property Listing
The following table is a list of centers, summarized by state and includes our share of both consolidated and
unconsolidated real estate partnerships and joint ventures as of December 31, 2018:
ALL PROPERTIES BY STATE
Number of
Properties
Gross
Leasable
Area (GLA)
% of
Total GLA
Arizona
Arkansas
California
Colorado
Florida
Georgia
Kentucky
Maryland
Nevada
New Mexico
North Carolina
Oregon
Tennessee
Texas
Utah
Virginia
Washington
Total
18
1
22
5
28
12
1
2
5
1
12
3
4
2,945,265
180,200
4,175,306
1,675,502
6,941,116
2,414,144
218,107
212,111
1,471,184
145,851
1,968,334
276,923
662,221
54
10,676,487
1
3
6
304,899
250,811
615,621
178
35,134,082
8.4%
0.5%
11.9%
4.8%
19.7%
6.9%
0.6%
0.6%
4.2%
0.4%
5.6%
0.8%
1.9%
30.4%
0.9%
0.7%
1.7%
100%
___________________
GLA includes 4.4 million square feet of our partners’ ownership interest in these properties and 7.8 million square feet
not owned or managed by us. Additionally, encumbrances on our properties total $.3 billion. See Schedule III for
additional information.
The following table is a detailed list of centers by state and includes our share of both consolidated and unconsolidated
real estate partnerships and joint ventures as of December 31, 2018:
Center
CBSA (5)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Operating Properties
Arizona
Broadway Marketplace
Phoenix-Mesa-Scottsdale, AZ
Camelback Village Square
Phoenix-Mesa-Scottsdale, AZ
Desert Village Shopping
Center
Phoenix-Mesa-Scottsdale, AZ
Fountain Plaza
Laveen Village
Marketplace
Phoenix-Mesa-Scottsdale, AZ
Phoenix-Mesa-Scottsdale, AZ
Monte Vista Village Center
Phoenix-Mesa-Scottsdale, AZ
Phoenix Office Building
Phoenix-Mesa-Scottsdale, AZ
Pueblo Anozira Shopping
Center
Phoenix-Mesa-Scottsdale, AZ
Raintree Ranch Center
Phoenix-Mesa-Scottsdale, AZ
Red Mountain Gateway
Phoenix-Mesa-Scottsdale, AZ
Scottsdale Horizon
Phoenix-Mesa-Scottsdale, AZ
Scottsdale Waterfront
Phoenix-Mesa-Scottsdale, AZ
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
87,379
Office Max, Ace Hardware
240,951
Fry’s Supermarket
Office Max
107,071
AJ Fine Foods
CVS
306,107
Fry’s Supermarket
Dollar Tree, (Lowe's)
318,805
(Fry’s Supermarket)
(Home Depot)
108,551
(Safeway)
21,122
Weingarten Realty Regional Office, Endurance
Rehab
157,532
Fry’s Supermarket
Petco, Dollar Tree
133,020 Whole Foods
205,013
(Target), Bed Bath & Beyond, Famous Footwear
155,093
Safeway
CVS
93,334
Olive & Ivy, P.F. Chang's, David's Bridal, Urban
Outfitters
16
Table of Contents
Center
CBSA (5)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Squaw Peak Plaza
Phoenix-Mesa-Scottsdale, AZ
100.0%
60,713
Sprouts Farmers Market
Summit at Scottsdale
Phoenix-Mesa-Scottsdale, AZ
51.0%
(1)(3)
322,992
Safeway
(Target), CVS, OfficeMax, PetSmart
Entrada de Oro Plaza
Shopping Center
Madera Village Shopping
Center
Oracle Wetmore Shopping
Center
Tucson, AZ
Tucson, AZ
Tucson, AZ
Shoppes at Bears Path
Tucson, AZ
Arizona Total:
Arkansas
100.0%
100.0%
100.0%
100.0%
Markham West Shopping
Center
Little Rock-North Little Rock-
Conway, AR
100.0%
Arkansas Total:
California
8000 Sunset Strip
Shopping Center
Centerwood Plaza
The Westside Center
Westminster Center
Los Angeles-Long Beach-
Anaheim, CA
Los Angeles-Long Beach-
Anaheim, CA
Los Angeles-Long Beach-
Anaheim, CA
Los Angeles-Long Beach-
Anaheim, CA
Chino Hills Marketplace
Jess Ranch Marketplace
Riverside-San Bernardino-Ontario,
CA
Riverside-San Bernardino-Ontario,
CA
Jess Ranch Marketplace
Phase III
Riverside-San Bernardino-Ontario,
CA
Menifee Town Center
Riverside-San Bernardino-Ontario,
CA
Prospector's Plaza
Valley Shopping Center
Sacramento--Roseville--Arden-
Arcade, CA
Sacramento--Roseville--Arden-
Arcade, CA
El Camino Promenade
San Diego-Carlsbad, CA
Rancho San Marcos
Village
San Diego-Carlsbad, CA
San Marcos Plaza
San Diego-Carlsbad, CA
580 Market Place
Gateway Plaza
Greenhouse Marketplace
Cambrian Park Plaza
Silver Creek Plaza
San Francisco-Oakland-Hayward,
CA
San Francisco-Oakland-Hayward,
CA
San Francisco-Oakland-Hayward,
CA
San Jose-Sunnyvale-Santa Clara,
CA
San Jose-Sunnyvale-Santa Clara,
CA
Freedom Centre
Santa Cruz-Watsonville, CA
Stony Point Plaza
Santa Rosa, CA
Creekside Center
Vallejo-Fairfield, CA
Southampton Center
Vallejo-Fairfield, CA
California Total:
Colorado
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
109,075 Walmart Neighborhood Market
106,858
Safeway
Dollar Tree, Pet Club
343,278
68,371
2,945,265
180,200
180,200
(Home Depot), (Nordstrom Rack), Jo-Ann Fabric,
Cost Plus, PetSmart, Walgreens, Ulta Beauty
(CVS Drug)
Academy, Office Depot, Michaels, Dollar Tree
169,775
Trader Joe's
CVS, Crunch, AMC Theaters, CB2
75,486
Superior Grocers
Dollar Tree
36,540
Guitar Center
440,437
Albertsons
Home Depot, Ross Dress for Less, Petco, Rite Aid,
Dollar Tree, 24 Hour Fitness
310,913
Smart & Final Stores
Dollar Tree, 24 Hour Fitness, Rite Aid
307,826
(Winco Foods)
Burlington, PetSmart, Rite Aid, Big 5
194,342
(Winco Foods)
Best Buy, Cinemark Theatres, Bed Bath &
Beyond, 24 Hour Fitness
258,734
Ralph's
Ross Dress for Less, Dollar Tree
252,524
SaveMart
Kmart, CVS, Ross Dress for Less
107,191
Food 4 Less
129,676
134,420
Vons
81,086
(Albertsons)
T.J. Maxx, Staples, Dollar Tree, BevMo
24 Hour Fitness
100,097
Safeway
24 Hour Fitness, Petco
352,778
Raley’s
24 Hour Fitness
232,824
(Safeway)
(CVS), Jo-Ann Fabric, 99 Cents Only, Petco
170,925
Beverages & More, Dollar Tree
194,153
Sprouts Farmers Market
Walgreens
150,865
Safeway
Rite Aid, Big Lots
200,011
Food Maxx
Ross Dress for Less, Fallas Paredes
112,677
Raley’s
162,026
Raley’s
4,175,306
Ace Hardware, Dollar Tree
Aurora City Place
Denver-Aurora-Lakewood, CO
50.0%
(1)(3)
542,976
(Super Target)
Barnes & Noble, Ross Dress For Less, PetSmart,
Michaels, Conn's
Crossing at Stonegate
Denver-Aurora-Lakewood, CO
Edgewater Marketplace
Denver-Aurora-Lakewood, CO
Lowry Town Center
Denver-Aurora-Lakewood, CO
River Point at Sheridan
Denver-Aurora-Lakewood, CO
100.0%
100.0%
100.0%
100.0%
Colorado Total:
Florida
109,080
King Sooper’s
270,548
King Sooper's
Ace Hardware, (Target)
129,398
(Safeway)
623,500
1,675,502
(Target), (Costco), Regal Cinema, Michaels,
Conn's, PetSmart
Argyle Village Shopping
Center
Jacksonville, FL
100.0%
306,461
Publix
Atlantic West
Jacksonville, FL
50.0%
(1)(3)
188,378
(Walmart Supercenter)
Bed Bath & Beyond, T.J. Maxx, Jo-Ann Fabric,
Michaels
T.J. Maxx, HomeGoods, Dollar Tree, Shoe
Carnival, (Kohl's)
17
Table of Contents
Center
CBSA (5)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Epic Village St. Augustine
Jacksonville, FL
70.0%
(1)
64,180
(Epic Theaters)
Kernan Village
Jacksonville, FL
50.0%
(1)(3)
288,780
(Walmart Supercenter)
Ross Dress for Less, Petco
Boca Lyons Plaza
Deerfield
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
Embassy Lakes Shopping
Center
Miami-Fort Lauderdale-West Palm
Beach, FL
100.0%
100.0%
100.0%
117,423
Aroma Market & Catering
Ross Dress for Less
404,942
Publix
T.J. Maxx, Marshalls, Cinépolis, YouFit, Ulta
142,751
Ideal Food Basket
Tuesday Morning, Dollar Tree
Flamingo Pines
Hollywood Hills Plaza
Northridge
Pembroke Commons
Sea Ranch Centre
Tamiami Trail Shops
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
Miami-Fort Lauderdale-West Palm
Beach, FL
20.0%
(1)(3)
148,841
Publix
20.0%
(1)(3)
416,769
Publix
Target, Chewy.com
20.0%
(1)(3)
236,478
Publix
Petco, Ross Dress for Less, Dollar Tree
20.0%
(1)(3)
323,677
Publix
Marshalls, Office Depot, LA Fitness, Dollar Tree
100.0%
99,029
Publix
CVS, Dollar Tree
20.0%
(1)(3)
132,562
Publix
CVS
The Palms at Town &
County
Miami-Fort Lauderdale-West Palm
Beach, FL
TJ Maxx Plaza
Miami-Fort Lauderdale-West Palm
Beach, FL
Vizcaya Square Shopping
Center
Miami-Fort Lauderdale-West Palm
Beach, FL
Wellington Green
Commons
Miami-Fort Lauderdale-West Palm
Beach, FL
100.0%
100.0%
100.0%
100.0%
657,652
Publix
Kohl's, Marshalls, HomeGoods, Dick's Sporting
Goods, 24 Hour Fitness, Nordstrom Rack, CVS
161,429
Fresco Y Mas
T.J. Maxx, Dollar Tree
110,081 Winn Dixie
143,854 Whole Foods Market
Clermont Landing
Orlando-Kissimmee-Sanford, FL
75.0%
(1)(3)
354,418
Colonial Plaza
Orlando-Kissimmee-Sanford, FL
100.0%
497,693
(J.C. Penney), (Epic Theater), T.J. Maxx, Ross
Dress for Less, Michaels
Staples, Ross Dress for Less, Marshalls, Old Navy,
Stein Mart, Barnes & Noble, Petco, Big Lots,
Hobby Lobby
Phillips Crossing
Orlando-Kissimmee-Sanford, FL
Shoppes of South Semoran
Orlando-Kissimmee-Sanford, FL
100.0%
100.0%
145,644 Whole Foods
Golf Galaxy, Michaels
103,779 Walmart Neighborhood Market
Dollar Tree
The Marketplace at Dr.
Phillips
Orlando-Kissimmee-Sanford, FL
20.0%
(1)(3)
326,870
Publix
Stein Mart, HomeGoods, Morton's of Chicago,
Office Depot
Winter Park Corners
Orlando-Kissimmee-Sanford, FL
100.0%
83,161
Sprouts Farmers Market
Pineapple Commons
Port St. Lucie, FL
20.0%
(1)(3)
269,449
Countryside Centre
East Lake Woodlands
Largo Mall
Sunset 19 Shopping Center
Florida Total:
Georgia
Brookwood Marketplace
Brownsville Commons
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Camp Creek Marketplace
II
Atlanta-Sandy Springs-Roswell,
GA
Grayson Commons
Lakeside Marketplace
Mansell Crossing
Perimeter Village
Publix at Princeton Lakes
Reynolds Crossing
Roswell Corners
Roswell Crossing
Shopping Center
Thompson Bridge
Commons
Georgia Total:
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Atlanta-Sandy Springs-Roswell,
GA
Gainesville, GA
Ross Dress for Less, Best Buy, PetSmart,
Marshalls, (CVS)
T.J. Maxx, HomeGoods, Dick's Sporting Goods,
Ross Dress for Less
100.0%
245,958
20.0%
(1)(3)
104,430 Walmart Neighborhood Market Walgreens
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
610,106
(Publix)
256,321
Sprouts Farmers Market
Bealls, Marshalls, PetSmart, Bed Bath & Beyond,
Staples, Michaels, (Target)
Bed Bath & Beyond, Barnes & Noble, Old Navy,
Hobby Lobby, Cost Plus World Market
6,941,116
397,295
(Super Target)
Home Depot, Bed Bath & Beyond, Office Max
81,913
(Kroger)
228,003
DSW, LA Fitness, Burlington, American Signature
76,581
Kroger
332,889
(Super Target)
Ross Dress for Less, Petco
20.0%
(1)(3)
102,930
buybuy BABY, Ross Dress for Less, Party City
100.0%
381,738 Walmart Supercenter
Cost Plus World Market, DSW, Hobby Lobby
20.0%
(1)(3)
72,205
Publix
100.0%
100.0%
100.0%
100.0%
115,983
(Kroger)
327,261
(Super Target), Fresh Market
T.J. Maxx
201,759
Trader Joe's
Office Max, PetSmart, Walgreens
95,587
(Kroger)
2,414,144
18
Table of Contents
Center
Kentucky
CBSA (5)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Festival on Jefferson Court
Louisville/Jefferson County, KY-IN
100.0%
218,107
Kroger
(PetSmart), (T.J. Maxx), Staples, Party City
Kentucky Total:
Maryland
218,107
Nottingham Commons
Baltimore-Columbia-Towson, MD
100.0%
131,270 MOM's Organic Market
T.J. Maxx, DSW, Petco
Pike Center
Maryland Total:
Nevada
Washington-Arlington-Alexandria,
DC-VA-MD-WV
100.0%
80,841
212,111
Pier 1, DXL Mens Apparel
Charleston Commons
Shopping Center
Las Vegas-Henderson-Paradise,
NV
College Park Shopping
Center
Las Vegas-Henderson-Paradise,
NV
Las Vegas-Henderson-Paradise,
NV
Las Vegas-Henderson-Paradise,
NV
Las Vegas-Henderson-Paradise,
NV
Francisco Center
Rancho Towne & Country
Westland Fair
Nevada Total:
New Mexico
100.0%
100.0%
100.0%
100.0%
100.0%
366,952 Walmart
Ross Dress for Less, Office Max, 99 Cents Only,
PetSmart
195,367
El Super
Factory 2 U, CVS
148,815
La Bonita Grocery
(Ross Dress for Less)
161,837
Smith’s Food
598,213
(Walmart Supercenter)
(Lowe’s), PetSmart, Office Depot, Michaels,
Smart & Final
1,471,184
North Towne Plaza
Albuquerque, NM
100.0%
145,851 Whole Foods Market
HomeGoods
New Mexico Total:
North Carolina
Galleria Shopping Center
Charlotte-Concord-Gastonia, NC-
SC
Bull City Market
Durham-Chapel Hill, NC
Hope Valley Commons
Durham-Chapel Hill, NC
Avent Ferry Shopping
Center
Capital Square
Falls Pointe Shopping
Center
Raleigh, NC
Raleigh, NC
Raleigh, NC
High House Crossing
Raleigh, NC
Leesville Towne Centre
Raleigh, NC
Northwoods Shopping
Center
Raleigh, NC
Six Forks Shopping Center
Raleigh, NC
Stonehenge Market
Raleigh, NC
Waterford Village
Wilmington, NC
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
145,851
324,704
(Walmart Supercenter)
Retro Fitness
40,875 Whole Foods Market
81,327
Harris Teeter
119,652
Food Lion
Family Dollar
143,063
Food Lion
198,549
Harris Teeter
(Kohl’s)
90,155
127,106
Harris Teeter
Walgreens
77,803 Walmart Neighborhood Market
Dollar Tree
468,414
Food Lion
Kmart, Home Depot, Bed Bath & Beyond,
PetSmart
188,437
Harris Teeter
Stein Mart, Walgreens
108,249
Harris Teeter
1,968,334
North Carolina Total:
Oregon
Clackamas Square
Oak Grove Market Center
Raleigh Hills Plaza
Oregon Total:
Tennessee
Portland-Vancouver-Hillsboro, OR-
WA
Portland-Vancouver-Hillsboro, OR-
WA
Portland-Vancouver-Hillsboro, OR-
WA
20.0%
(1)(3)
140,226
(Winco Foods)
T.J. Maxx
100.0%
97,177
20.0%
(1)(3)
39,520
New Seasons Market
Walgreens
Highland Square
Memphis, TN-MS-AR
Mendenhall Commons
Memphis, TN-MS-AR
Ridgeway Trace
Memphis, TN-MS-AR
Memphis, TN-MS-AR
The Commons at Dexter
Lake
Tennessee Total:
Texas
Mueller Regional Retail
Center
Austin-Round Rock, TX
100.0%
North Park Plaza
Beaumont-Port Arthur, TX
50.0%
(1)(3)
North Towne Plaza
Brownsville-Harlingen, TX
100.0%
276,923
14,490
88,108
Kroger
314,227
Walgreens
(Target), Best Buy, PetSmart, REI
245,396
Kroger
Stein Mart, Marshalls, HomeGoods
100.0%
100.0%
100.0%
100.0%
662,221
351,099
281,255
145,000
19
Marshalls, PetSmart, Bed Bath & Beyond, Home
Depot, Best Buy, Total Wine
(Target), Spec's, Kirkland's
(Lowe's)
Table of Contents
Center
CBSA (5)
Owned %
Rock Prairie Marketplace
College Station-Bryan, TX
Overton Park Plaza
Dallas-Fort Worth-Arlington, TX
100.0%
100.0%
Preston Shepard Place
Dallas-Fort Worth-Arlington, TX
20.0%
(1)(3)
363,335
10-Federal Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Alabama Shepherd
Shopping Center
Baybrook Gateway
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Bellaire Blvd. Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Blalock Market at I-10
Citadel Building
Cypress Pointe
Galveston Place
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Griggs Road Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Harrisburg Plaza
Houston-The Woodlands-Sugar
Land, TX
HEB - Dairy Ashford &
Memorial
Houston-The Woodlands-Sugar
Land, TX
Heights Plaza Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
I45/Telephone Rd.
League City Plaza
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Market at Westchase
Shopping Center
Houston-The Woodlands-Sugar
Land, TX
Northbrook Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Oak Forest Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Randalls Center/Kings
Crossing
Houston-The Woodlands-Sugar
Land, TX
Richmond Square
River Oaks Shopping
Center - East
River Oaks Shopping
Center - West
Shoppes at Memorial
Villages
Shops at Kirby Drive
Shops at Three Corners
Southgate Shopping Center
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Stella Link Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
The Centre at Post Oak
Tomball Marketplace
Houston-The Woodlands-Sugar
Land, TX
Houston-The Woodlands-Sugar
Land, TX
Village Plaza at Bunker
Hill
Houston-The Woodlands-Sugar
Land, TX
West Gray
Houston-The Woodlands-Sugar
Land, TX
Westchase Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Westhill Village Shopping
Center
Houston-The Woodlands-Sugar
Land, TX
Independence Plaza
Laredo, TX
North Creek Plaza
Laredo, TX
Plantation Centre
Laredo, TX
Foot
Notes
GLA
18,163
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
462,800
Sprouts Farmers Market
Burlington, PetSmart, T.J. Maxx, (Home Depot),
buybuy BABY
Stein Mart, Nordstrom, Marshalls, Office Depot,
Petco
15.0%
(1)
132,473
Sellers Bros.
Palais Royal, Harbor Freight Tools
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
15.0%
15.0%
100.0%
100.0%
15.0%
15.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
70.0%
15.0%
100.0%
100.0%
100.0%
(1)
(1)
(1)
(1)
(1)
(1)
59,120
Trader Joe's
PetSmart
241,149
43,891
Randall’s
97,277
99 Ranch Market
Ashley Furniture, Cost Plus World Market, Barnes
& Noble, Michaels
121,000
Weingarten Realty Investors Corporate Office
283,381
Kroger
210,361
Randall’s
Office Depot, Palais Royal, Spec's
80,093
93,620
36,874
Family Dollar, Citi Trends
dd's Discount
H-E-B Fulfillment Center
71,277
Kroger
Goodwill
171,600
Sellers Bros.
Famsa, Fallas Paredes, Harbor Freight Tools
129,467
83,127
Spec’s
174,181
El Rancho Supermarket
Office Depot, Dollar Tree
157,669
Kroger
Ross Dress for Less, Dollar Tree, PetSmart
126,397
Randall’s
CVS
92,657
Best Buy, Cost Plus
71,265
Kroger
232,489
Kroger
191,274
55,460
277,603
Fiesta
Barnes & Noble, Talbots, Ann Taylor, GAP, JoS.
A. Bank
Gulf Coast Veterinary Specialists
Freebirds Burrito
Ross Dress for Less, PetSmart, Office Depot, Big
Lots
124,453
Food-A-Rama
CVS, Family Dollar, Palais Royal
21,605
183,940
326,545
Spec’s
Marshalls, Old Navy, Grand Lux Café, Nordstrom
Rack, Arhaus
(Academy), (Kohl's), Ross Dress For Less,
Marshalls
57.8%
(1)(3)
491,773
H-E-B
PetSmart, Academy, Nordstrom Rack
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
37,384
Pier 1
350,320 Whole Foods Market
(Target), Ross Dress for Less, Palais Royal, Petco
130,851
Ross Dress for Less, Office Depot, 99 Cents Only
347,302
H-E-B
485,463
(H-E-B)
144,343
H-E-B
T.J. Maxx, Ross Dress for Less, Hobby Lobby,
Petco, Ulta Beauty
(Target), Marshalls, Old Navy, Best Buy,
HomeGoods
(Target), Dick's Sporting Goods, Conn's, Ross
Dress for Less, Marshalls, Office Depot,
(HomeGoods), (Forever 21)
Las Tiendas Plaza
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
500,084
Market at Nolana
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
244,549
(Walmart Supercenter)
20
Table of Contents
Center
CBSA (5)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Market at Sharyland Place
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
301,174
(Walmart Supercenter)
Kohl's, Dollar Tree
North Sharyland Crossing
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
Northcross
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
Old Navy Building
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
3,576
75,288
15,000
Sharyland Towne Crossing
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
492,325
H-E-B
South 10th St. HEB
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
103,702
H-E-B
Trenton Crossing
McAllen-Edinburg-Mission, TX
100.0%
569,741
Barnes & Noble
Old Navy
(Target), T.J. Maxx, Petco, Office Depot, Ross
Dress for Less
(Target), (Kohl's), Hobby Lobby, Ross Dress for
Less, Marshalls, PetSmart
Starr Plaza
Rio Grande City, TX
50.0%
(1)(3)
176,694
H-E-B
Bealls
Fiesta Trails
San Antonio-New Braunfels, TX
100.0%
478,670
(H-E-B)
Bob Mills Furniture, Act III Theatres, Marshalls,
Stein Mart, Petco
Parliament Square II
San Antonio-New Braunfels, TX
100.0%
54,541
Incredible Pizza
Thousand Oaks Shopping
Center
Texas Total:
Utah
San Antonio-New Braunfels, TX
15.0%
(1)
161,807
H-E-B
Bealls, Tuesday Morning
10,676,487
West Jordan Town Center
Salt Lake City, UT
100.0%
304,899
Albertsons
(Target), Petco
Utah Total:
Virginia
304,899
Hilltop Village Center
Washington-Arlington-Alexandria,
DC-VA-MD-WV
100.0%
(4)
250,811 Wegmans
L.A. Fitness
Virginia Total:
Washington
250,811
2200 Westlake
Seattle-Tacoma-Bellevue, WA
69.4%
(1)(3)
87,014 Whole Foods
Meridian Town Center
Seattle-Tacoma-Bellevue, WA
20.0%
(1)(3)
143,236
(Safeway)
Jo-Ann Fabric, Tuesday Morning
Queen Anne Marketplace
Seattle-Tacoma-Bellevue, WA
51.0%
(1)(3)
81,384 Metropolitan Market
Bartell's Drug
Rainer Square Plaza
Seattle-Tacoma-Bellevue, WA
20.0%
(1)(3)
111,735
Safeway
Ross Dress for Less
South Hill Center
Seattle-Tacoma-Bellevue, WA
20.0%
(1)(3)
134,010
Bed Bath & Beyond, Ross Dress for Less, Best
Buy
Washington Total:
Total Operating Properties
New Development
Virginia
557,379
35,075,840
Centro Arlington
West Alex
Virginia Total:
Washington
Washington-Arlington-Alexandria,
DC-VA-MD-WV
Washington-Arlington-Alexandria,
DC-VA-MD-WV
90.0% (1)(2)(3)
— Harris Teeter
100.0%
(2)
— Harris Teeter
—
The Whittaker
Seattle-Tacoma-Bellevue, WA
100.0%
(2)
58,242 Whole Foods
Washington Total:
Total New Developments
Operating & New Development Properties
___________________
58,242
58,242
35,134,082
(1) Denotes property is held by a real estate joint venture or partnership; however, the gross leasable area square feet figures include our
partners’ ownership interest in the property and property owned by others.
(2) Denotes property currently under development.
(3) Denotes properties that are not consolidated under generally accepted accounting principles.
(4) Denotes Hilltop Village Center, a 50/50 Joint Venture reflecting current 100% economics to WRI.
(5) CBSA represents the Core Based Statistical Area.
ITEM 3. Legal Proceedings
We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict
the amounts involved, our management and counsel believe that when such litigation is resolved, our resulting liability,
if any, will not have a material effect on our consolidated financial statements.
21
Table of Contents
ITEM 4. Mine Safety Disclosures
Not applicable.
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities
Our common shares are listed and traded on the New York Stock Exchange under the symbol “WRI.” As of February 15,
2019, the number of holders of record of our common shares was 1,694.
Securities Authorized for Issuance under Equity Compensation Plans
The following table summarizes the equity compensation plans under which our common shares may be issued as of
December 31, 2018:
Plan category
Equity compensation plans approved by
shareholders
Equity compensation plans not approved by
shareholders
Total
Number of
shares to
be issued upon
exercise of
outstanding
options,
warrants and
rights
279,877
—
279,877
Number of
shares
remaining
available for
future issuance
under equity
compensation
plans
1,287,267
—
1,287,267
Weighted average
exercise price of
outstanding options,
warrants and rights
$22.30
—
$22.30
22
Table of Contents
Performance Graph
The graph and table below provides an indicator of cumulative total shareholder returns for us as compared with the
S&P 500 Stock Index and the FTSE NAREIT Equity Shopping Centers Index, weighted by market value at each
measurement point. The graph assumes that on December 31, 2013, $100 was invested in our common shares and
that all dividends were reinvested by the shareholder.
Comparison of Five Year Cumulative Return
*$100 invested on December 31, 2013 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Source: SNL Financial LC
Weingarten Realty Investors
S&P 500 Index
FTSE NAREIT Equity Shopping
Centers Index
2014
2015
2016
2017
2018
$
133.42 $
113.69
137.67 $
115.26
148.10 $
145.97 $
129.05
157.22
122.80
150.33
129.96
136.10
141.10
125.06
106.87
There can be no assurance that our share performance will continue into the future with the same or similar trends
depicted in the graph above. We do not make or endorse any predications as to future share performance.
23
Table of Contents
Issuer Purchases of Equity Securities
We have a $200 million share repurchase plan. Under this plan, we may repurchase common shares from time-to-
time in open-market or in privately negotiated purchases. The timing and amount of any shares repurchased will be
determined by management based on its evaluation of market conditions and other factors. The repurchase plan may
be suspended or discontinued at any time, and we have no obligations to repurchase any amount of our common
shares under the plan. As of the date of this filing, $181.5 million of common shares remained available to be repurchased
under the plan. Also, for the three months ended December 31, 2018, no common shares were surrendered or deemed
surrendered to us to satisfy any employees' tax withholding obligations in connection with the vesting and/or exercise
of awards under our equity-based compensation plans.
24
Table of Contents
ITEM 6. Selected Financial Data
The following table sets forth our selected consolidated financial data and should be read in conjunction with “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” the Consolidated Financial Statements and
accompanying Notes in “Item 8. Financial Statements and Supplementary Data” and the financial schedules included elsewhere
in this Form 10-K.
(Amounts in thousands, except per share amounts)
Year Ended December 31,
2016
2015 (2)
2017
2018 (1)
2014 (2)
Operating Data:
Revenues (primarily real estate rentals)
$
531,147
$
573,163
$
549,555
$
512,844
$
514,406
Depreciation and Amortization
161,838
167,101
162,535
145,940
150,356
Impairment Loss
Interest Expense, net
Gain on Sale of Property
Gain on Sale and Acquisition of Real Estate Joint
Venture and Partnership Interests
(Provision) Benefit for Income Taxes
Equity in Earnings of Real Estate Joint Ventures and
Partnerships, net
Net Income
Net Income Adjusted for Noncontrolling Interests
Net Income Attributable to Common Shareholders
Per Share Data - Basic:
Net Income Attributable to Common Shareholders
Weighted Average Number of Shares - Basic
Per Share Data - Diluted:
Net Income Attributable to Common Shareholders
$
$
$
10,120
63,348
15,257
80,326
207,865
218,611
98
83,003
100,714
—
(1,378)
25,070
345,343
327,601
—
17
48,322
(6,856)
27,074
350,715
335,274
20,642
276,831
238,933
153
87,783
59,621
879
(52)
19,300
181,222
174,352
1,024
94,725
146,290
1,718
1,261
22,317
307,579
288,008
327,601
$
335,274
$
238,933
$
160,835
$
277,168
2.57
$
2.62
$
1.90
$
1.31
$
2.28
127,651
127,755
126,048
123,037
121,542
2.55
$
2.60
$
1.87
$
1.29
$
2.25
Weighted Average Number of Shares - Diluted
128,441
130,071
128,569
124,329
124,370
Balance Sheet Data:
Property (at cost)
Total Assets
Debt, net
Other Data:
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash Dividends per Common Share
Funds from Operations Attributable to Common
Shareholders- Basic (3)
___________________
$ 4,105,068
$ 4,498,859
$ 4,789,145
$ 4,262,959
$ 4,076,094
3,826,961
4,196,639
4,426,928
3,901,945
3,805,915
$ 1,794,684
$ 2,081,152
$ 2,356,528
$ 2,113,277
$ 1,930,009
$
285,960
$
269,758
$
252,411
$
245,435
$
240,674
432,954
298,992
(366,172)
(197,132)
293,990
(664,111)
(588,695)
129,798
(126,248)
(527,555)
2.98
2.29
1.46
1.38
1.55
$
307,934
$
308,517
$
291,656
$
258,126
$
254,518
(1) See Note 2 in Item 8 for newly issued accounting pronouncements that were adopted using a modified retrospective approach during
the most recent year and may affect the comparability of the above selected financial information.
(2) See Note 2 in Item 8 for newly issued accounting pronouncements that were adopted using a retrospective approach during the most
recent year, and amounts of the above selected financial information were made to conform to the current year presentation.
(3) See Item 7 for the National Association of Real Estate Investment Trusts definition of funds from operations attributable to common
shareholders for this non-GAAP measure.
25
Table of Contents
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto
and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and
trends which might appear should not be taken as indicative of future operations. Our results of operations and financial
condition, as reflected in the accompanying consolidated financial statements and related footnotes, are subject to
management’s evaluation and interpretation of business conditions, retailer performance, changing capital market
conditions and other factors which could affect the ongoing viability of our tenants.
Executive Overview
Weingarten Realty Investors is a REIT organized under the Texas Business Organizations Code. We, and our
predecessor entity, began the ownership of shopping centers and other commercial real estate in 1948. Our primary
business is leasing space to tenants in the shopping centers we own or lease. We also provide property management
services for which we charge fees to either joint ventures where we are partners or other outside owners.
We operate a portfolio of rental properties, primarily neighborhood and community shopping centers, totaling
approximately 35.1 million square feet of gross leaseable area that is either owned by us or others. We have a diversified
tenant base with our largest tenant comprising only 2.6% of base minimum rental revenues during 2018.
At December 31, 2018, we owned or operated under long-term leases, either directly or through our interest in real
estate joint ventures or partnerships, a total of 178 properties, which are located in 17 states spanning the country
from coast to coast.
We also owned interests in 24 parcels of land held for development that totaled approximately 14.0 million square feet
at December 31, 2018.
We had approximately 4,000 leases with 3,000 different tenants at December 31, 2018. Leases for our properties
range from less than a year for smaller spaces to over 10 years for larger tenants and may include options to extend
the lease term in increments up to five years. Rental revenues generally include minimum lease payments, which often
increase over the lease term, reimbursements of property operating expenses, including real estate taxes, and
additional rent payments based on a percentage of the tenants’ sales. Our anchor tenants are supermarkets, value-
oriented apparel/discount stores and other retailers or service providers who generally sell basic necessity-type goods
and services. Although there is a broad shift in shopping patterns, including internet shopping that continues to affect
our tenants, we believe our anchor tenants that drive foot traffic, combined with convenient locations, attractive and
well-maintained properties, high quality retailers and a strong tenant mix, should lessen the effects of these conditions
and maintain the viability of our portfolio.
Our goal is to remain a leader in owning and operating top-tier neighborhood and community shopping centers in
certain markets of the United States. Our strategic initiatives include: (1) raising net asset value and cash flow through
quality acquisitions, redevelopments and new developments, (2) maintaining a strong, flexible consolidated balance
sheet and a well-managed debt maturity schedule, (3) growing net income from our existing portfolio by increasing
occupancy and rental rates and (4) owning quality shopping centers in preferred locations that attract strong tenants.
We believe these initiatives will keep our portfolio of properties among the strongest in our sector. Due to current
capitalization rates in the market along with the uncertainty of the impact of increasing interest rates and various other
market conditions, we intend to continue to be very prudent in our evaluation of all new investment opportunities. We
believe the pricing of assets that no longer meet our ownership criteria remains reasonably stable while the price of
our common shares has dropped well below our net asset value. Given these conditions, we have been focused on
dispositions of properties with risk factors that impact our willingness to own them going forward, and although we will
continue with this strategy, our dispositions in 2019 will decrease compared to 2018. Additionally, we utilized the
proceeds to repurchase common shares, pay down our debt and fund both our new development and redevelopment
projects.
As we discussed above, we continuously recycle non-core operating centers that no longer meet our ownership criteria
and that will provide capital for growth opportunities. During 2018, we disposed of real estate assets, which were
owned by us either directly or through our interest in real estate joint ventures or partnerships, with our share of
aggregate gross sales proceeds totaling $633.6 million. We have approximately $269 million of dispositions currently
under contracts or letters of intent; however, there are no assurances that these transactions will close at such prices
or at all. Looking ahead to 2019, we currently intend to continue to opportunistically take advantage of the market
conditions; however, we expect the volume of dispositions will significantly decrease from those in 2018, and we
anticipate that our dispositions could potentially range from $250 million to $350 million.
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Table of Contents
We intend to continue to actively seek acquisition properties that meet our return hurdles and to actively evaluate other
opportunities as they enter the market. Due to the immense amount of capital available in the market, it has been
difficult to participate at price points that meet our investment criteria. For 2019, we expect to complete acquisition
investments in the range of $50 million to $150 million; however, there are no assurances that this will actually occur.
We intend to continue to focus on identifying new development projects as another source of growth, as well as continue
to look for redevelopment opportunities. Although we have recently begun the development of mixed-use projects, the
opportunities for additional new development projects are limited at this time due to a lack of demand for new retail
space. During 2018, we invested $102.5 million in three mixed-use new development projects that are partially or
wholly owned and a 30-story, high-rise residential tower at our River Oaks Shopping Center in Houston, Texas. Also
during 2018, we invested $37.9 million in 15 redevelopment projects that were partially or wholly owned. Effective
January 1, 2019, we stabilized the development in Seattle, Washington, moving it to our operating property portfolio,
which added 63,000 square feet to the portfolio at an estimated cost per square foot of $490. For 2019, we expect to
invest in new development and redevelopments in the range of $175 million to $225 million, but we can give no
assurances that this will actually occur.
We strive to maintain a strong, conservative capital structure which should provide ready access to a variety of attractive
long and short-term capital sources. We carefully balance lower cost, short-term financing with long-term liabilities
associated with acquired or developed long-term assets. We continue to look for transactions that will strengthen our
consolidated balance sheet and further enhance our access to various sources of capital, while reducing our cost of
capital. Due to the variability in the capital markets, there can be no assurance that favorable pricing and accessibility
will be available in the future. During 2018, we paid down debt totaling $251.0 million and repurchased $18.5 million
(before commissions) of our common shares. These transactions were funded with proceeds from our disposition
program and cash generated from operations to further strengthen our balance sheet.
Operational Metrics
In assessing the performance of our centers, management carefully monitors various operating metrics of the portfolio.
As a result of our strong leasing activity and low tenant fallout, the operating metrics of our portfolio remained strong
in 2018 as we focused on increasing rental rates and same property net operating income ("SPNOI" and see Non-
GAAP Financial Measures for additional information). Our portfolio delivered solid operating results with:
•
•
•
occupancy of 94.4% at December 31, 2018;
an increase of 3.4% in SPNOI that includes redevelopments for the three months ended December 31, 2018
over the same period of 2017; and
rental rate increases of 37.4% for new leases and 5.3% for renewals during the three months ended
December 31, 2018.
Below are performance metrics associated with our signed occupancy, SPNOI growth and leasing activity on a pro
rata basis:
Anchor (space of 10,000 square feet or greater)
Non-Anchor
Total Occupancy
SPNOI Growth (including Redevelopments) (1)
_______________
December 31,
2018
2017
96.5%
90.7%
94.4%
97.3%
90.5%
94.8%
Three Months Ended
December 31, 2018
Twelve Months Ended
December 31, 2018
3.4%
2.5%
(1) See Non-GAAP Financial Measures for a definition of the measurement of SPNOI and a reconciliation to net income attributable to
common shareholders within this section of Item 7.
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Number
of
Leases
Square
Feet
('000's)
Average
New
Rent per
Square
Foot ($)
Average
Prior
Rent per
Square
Foot ($)
Average Cost
of Tenant
Improvements
per Square
Foot ($)
Change in
Base Rent
on Cash
Basis
Leasing Activity:
Three Months Ended December 31, 2018
New leases (1)
Renewals
Not comparable spaces
Total
Twelve Months Ended December 31, 2018
New leases (1)
Renewals
Not comparable spaces
Total
_______________
39
116
26
181
178
572
100
850
144 $ 21.89 $ 15.94 $
15.59
14.81
597
96
23.33
—
37.4%
5.3%
837 $ 16.82 $ 15.03 $
4.53
11.9%
493 $ 24.28 $ 20.45 $
2,652
333
17.53
16.52
34.62
.04
18.7%
6.1%
3,478 $ 18.59 $ 17.13 $
5.46
8.5%
(1) Average external lease commissions per square foot for the three and twelve months ended December 31, 2018 were $5.35 and $5.42,
respectively.
Changing shopping habits, driven by rapid expansion of internet-driven procurement, has led to increased financial
problems for many retailers, which has had a negative impact on the retail real estate sector. We continue to monitor
the effects of these trends, including the impact of retail customer spending over the long-term. We believe the
desirability of our physical locations, the significant diversification of our portfolio, both geographically and by tenant
base, and the quality of our portfolio, along with its leading retailers and service providers that sell primarily grocery
and basic necessity-type goods and services, position us well to mitigate the impact of these changes. Additionally,
most retailers have implemented omni-channel networks that integrate on-line shopping with in-store experiences that
has further reinforced the need for bricks and mortar locations. Despite recent tenant bankruptcies, we continue to
believe there is retailer demand for quality space within strong, strategically located centers.
While we anticipate occupancy in 2019 to increase slightly from 2018, we may experience some fluctuations due to
announced bankruptcies and the repositioning of those spaces in the future. A reduction in the availability of quality
retail space, as well as continued retailer demand, contributed to the increase in overall rental rates on a same-space
basis as we completed new leases and renewed existing leases; however, the magnitude of these increases decreased
in comparison to previous years due to, among other factors, a recent shift in negotiating leverage to the tenant. We
expect rental rates to continue to increase and the funding of tenant improvements and allowances could increase;
however, the variability in the mix of leasing transactions as to size of space, market, use and other factors may impact
the magnitude of these increases, both positively and negatively. Leasing volume is anticipated to fluctuate due to the
uncertainty in tenant fallouts related to bankruptcies and tenant non-renewals. Our expectation is that SPNOI growth
including redevelopments will average between 2.0% to 3.0% for 2019 assuming no significant tenant bankruptcies,
although there are no assurances that this will occur.
New Development/Redevelopment
At December 31, 2018, we had three mixed-use projects and a 30-story, high-rise residential tower at our River Oaks
Shopping Center that were in various stages of development and are partially or wholly owned. We have funded $246.6
million through December 31, 2018 on these projects, and we estimate our aggregate net investment upon completion
to be $512.5 million. Overall, the average projected stabilized return on investment for these multi-use properties, that
include retail, office and residential components, is expected to approximate 5.6% upon completion.
We have 15 redevelopment projects in which we plan to invest approximately $90.8 million. Upon completion, the
average projected stabilized return on our incremental investment on these redevelopment projects is expected to be
between 8.0% and 14.0%.
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We had approximately $45.7 million in land held for development at December 31, 2018 that may either be developed
or sold. While we are experiencing some interest from retailers and other market participants in our land held for
development, opportunities for economically viable developments remain limited. We intend to continue to pursue
additional development and redevelopment opportunities in multiple markets; however, finding the right opportunities
remains challenging.
Acquisitions
Acquisitions are a key component of our long-term growth strategy. The availability of quality acquisition opportunities
in the market remains sporadic in our targeted markets. Intense competition, along with a decline in the volume of
high-quality core properties on the market, has driven pricing to very high levels. We intend to remain disciplined in
approaching these opportunities, pursuing only those that provide appropriate risk-adjusted returns.
Dispositions
Dispositions are also a key component of our ongoing management process where we selectively prune properties
from our portfolio that no longer meet our geographic or growth targets. Dispositions provide capital, which may be
recycled into properties that are high barrier-to-entry locations within high growth metropolitan markets, and thus have
higher long-term growth potential. Additionally, proceeds from dispositions may be used to reduce outstanding debt,
further deleveraging our consolidated balance sheet, to repurchase our common shares and/or debt, dependent upon
market prices, or to fund new development and redevelopment projects.
Summary of Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate
our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. We believe the following
critical accounting policies require more significant judgments and estimates used in the preparation of our consolidated
financial statements.
Real Estate Joint Ventures and Partnerships
To determine the method of accounting for partially owned real estate joint ventures and partnerships, management
determines whether an entity is a variable interest entity (“VIE”) and, if so, determines which party is the primary
beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the
obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and
assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations,
future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We
consolidate a VIE when we have determined that we are the primary beneficiary.
Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations
or making additional contributions to fund the entities’ operations or capital activities.
Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling
financial interest are consolidated in our consolidated financial statements. In determining whether we have a controlling
financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and
substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a
controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity
method.
Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned
above, to determine if the consolidation treatment remains appropriate. Decisions regarding consolidation of partially
owned entities frequently require significant judgment by our management. Errors in the assessment of consolidation
could result in material changes to our consolidated financial statements.
Impairment
Our property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of
the property, including any capitalized costs and any identifiable intangible assets, may not be recoverable.
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If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property
into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying
amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced
to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management
utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker or
appraisal estimates in accordance with our fair value measurements accounting policy.
We review current economic considerations each reporting period, including the effects of tenant bankruptcies, the
suspension of tenant expansion plans for new development projects, declines in real estate values and any changes
to plans related to our new development projects including land held for development, to identify properties where we
believe market values may be deteriorating. Determining whether a property is impaired and, if impaired, the amount
of write-down to fair value requires a significant amount of judgment by management and is based on the best information
available to management at the time of evaluation. The evaluations used in these analyses could result in incorrect
estimates when determining carrying values that could be material to our consolidated financial statements.
Our investment in partially owned real estate joint ventures and partnerships is reviewed for impairment each reporting
period. The ultimate realization is dependent on a number of factors, including the performance of each investment
and market conditions. We will record an impairment charge if we determine that a decline in the estimated fair value
of an investment below its carrying amount is other than temporary. A considerable amount of judgment by our
management is used in this evaluation. Our overall future plans for the investment, our investment partner’s financial
outlook and our views on current market and economic conditions may have a significant impact on the resulting factors
analyzed for these purposes.
Results of Operations
Comparison of the Year Ended December 31, 2018 to the Year Ended December 31, 2017
The following table is a summary of certain items in income from continuing operations from our Consolidated
Statements of Operations, which we believe represent items that significantly changed during 2018 as compared to
the same period in 2017:
Revenues
Depreciation and amortization
Operating expenses
Real estate taxes, net
Impairment loss
General and administrative expenses
Interest expense, net
Interest and other income (expense)
Gain on sale of property
Year Ended December 31,
2018
2017
Change
% Change
$
531,147 $
161,838
90,554
69,268
10,120
25,040
63,348
2,807
573,163 $
167,101
109,310
75,636
15,257
28,052
80,326
7,532
207,865
218,611
(42,016)
(5,263)
(18,756)
(6,368)
(5,137)
(3,012)
(16,978)
(4,725)
(10,746)
(7.3)%
(3.1)
(17.2)
(8.4)
(33.7)
(10.7)
(21.1)
(62.7)
(4.9)
Revenues
The decrease in revenues of $42.0 million is primarily attributable to the $62.6 million impact of dispositions. Offsetting
this decrease, the existing portfolio, including new development and redevelopment properties, contributed $10.5
million resulting from increases in rental rates and changes in occupancy. We also realized a $10.1 million increase
associated with the write-off of a below-market lease intangible from the termination of a tenant's lease.
Depreciation and Amortization
The decrease in depreciation and amortization of $5.3 million is primarily attributable to the $16.3 million impact of our
dispositions, which is offset by the write-off and amortization of in-place lease intangibles of $9.6 million and other
capital activities.
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Operating Expenses
The decrease in operating expenses of $18.8 million is primarily attributable to dispositions of $7.5 million, a $3.1
million lease termination fee paid in 2017, $4.9 million in management fees associated primarily with a reduction in
compensation expense, $1.9 million in insurance costs associated with hurricane costs recognized in 2017 and $3.6
million in costs associated with the deferred compensation plan. Offsetting the above decreases is an increase in other
miscellaneous operating expenses of $2.2 million associated primarily with repairs and maintenance.
Real Estate Taxes, net
The decrease in net real estate taxes of $6.4 million is primarily attributable to the impact of dispositions between the
respective periods.
Impairment Loss
The impairment loss in 2018 is associated primarily with the disposition of three centers as compared to the losses in
2017 associated with the disposition of four centers, interests in two 50% unconsolidated joint ventures and the
disposition of an unimproved land parcel.
General and Administrative Expenses
The decrease in general and administrative expenses of $3.0 million is primarily attributable to a reduction in salary
expense associated with a fair value decrease of $1.8 million for assets held in a grantor trust related to deferred
compensation and a decrease in restricted share compensation due to unanticipated reductions in our share valuation,
as well as a reduction in personnel.
Interest Expense, net
Net interest expense decreased $17.0 million or 21.1%. The components of net interest expense were as follows (in
thousands):
Gross interest expense
Gain on extinguishment of debt including related swap activity
Amortization of debt deferred costs, net
Over-market mortgage adjustment
Capitalized interest
Total
Year Ended December 31,
2018
2017
$
71,899 $
82,404
(3,759)
3,546
(400)
(7,938)
—
3,890
(1,100)
(4,868)
$
63,348 $
80,326
The decrease in net interest expense is primarily attributable to a reduction in the weighted average debt outstanding
due to the pay down of debt with proceeds from dispositions and cash generated from operations, and a $3.8 million
gain on extinguishment of debt during 2018, which includes the effect of a swap termination. For the year ended
December 31, 2018, the weighted average debt outstanding was $1.9 billion at a weighted average interest rate of
4.0% as compared to $2.2 billion outstanding at a weighted average interest rate of 3.8% in the same period of 2017.
Also the increase in capitalized interest of $3.1 million is associated with an increase in new development activities.
Interest and Other Income (Expense)
The decrease of $4.7 million in interest and other income (expense) is attributable primarily to a fair value decrease
of $5.4 million for assets held in a grantor trust related to deferred compensation, which is offset by a net $.6 million
increase primarily associated with fair value changes associated with commercial paper, money market and other
investments.
Gain on Sale of Property
The decrease of $10.7 million in gain on sale of property is attributable primarily to the disposition of 21 centers and
other property in 2018 as compared to 16 centers and other property in 2017.
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Comparison of the Year Ended December 31, 2017 to the Year Ended December 31, 2016
The following table is a summary of certain items in income from continuing operations from our Consolidated
Statements of Operations, which we believe represent items that significantly changed during 2017 as compared to
the same period in 2016:
Revenues
Depreciation and amortization
Operating expenses
Real estate taxes, net
Impairment loss
Interest expense, net
Interest and other income (expense)
Gain on sale of property
Gain on sale and acquisition of real estate joint
venture and partnership interests
Benefit (provision) for income taxes
Equity in earnings of real estate joint ventures and
partnerships, net
Year Ended December 31,
2017
2016
Change
% Change
$
573,163 $
549,555 $
167,101
109,310
75,636
15,257
80,326
7,915
218,611
162,535
98,855
66,358
98
83,003
2,569
100,714
—
17
48,322
(6,856)
23,608
4,566
10,455
9,278
15,159
(2,677)
5,346
117,897
(48,322)
6,873
4.3%
2.8
10.6
14.0
15,468.4
(3.2)
208.1
117.1
(100.0)
(100.2)
27,074
20,642
6,432
31.2
Revenues
The increase in revenues of $23.6 million is primarily attributable to our acquisitions and new development completions
that totaled $27.8 million. The existing portfolio and redevelopment properties contributed $18.1 million due to increases
in rental rates and changes in occupancy, which is offset by our dispositions of $22.3 million.
Depreciation and Amortization
The increase in depreciation and amortization of $4.6 million is primarily attributable to our acquisitions and new
development completions that totaled $11.7 million, which is offset by our dispositions and other capital activities.
Operating Expenses
The increase in operating expenses of $10.5 million is primarily attributable to our acquisitions and new development
completions of $5.3 million, a $3.1 million lease termination fee paid in 2017, insurance costs of $1.8 million primarily
associated with hurricanes, an increase of $2.4 million in costs associated with our deferred compensation plan, and
an overall increase at our existing portfolio and redevelopment properties associated primarily with the timing of repairs,
which is offset by our dispositions of $4.0 million and a $.9 million write-off of pre-development costs in 2016.
Real Estate Taxes, net
The increase in net real estate taxes of $9.3 million is primarily attributable to rate and valuation changes for the
portfolio, as well as our acquisitions and new development completions, which were offset by our dispositions of $2.7
million.
Impairment Loss
The increase in impairment loss of $15.2 million is primarily attributable to losses recognized in 2017. The impairment
loss in 2017 is associated with the disposition of four centers, interests in two 50% unconsolidated joint ventures and
the disposition of an unimproved land parcel as compared to the losses in 2016 associated with the disposition of two
unimproved land parcels.
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Interest Expense, net
Net interest expense decreased $2.7 million or 3.2%. The components of net interest expense were as follows (in
thousands):
Gross interest expense
Gain on extinguishment of debt
Amortization of debt deferred costs, net
Over-market mortgage adjustment
Capitalized interest
Total
Year Ended December 31,
2017
2016
$
82,404 $
85,134
—
3,890
(1,100)
(4,868)
(2,037)
3,515
(953)
(2,656)
$
80,326 $
83,003
The decrease in gross interest expense is primarily attributable to a reduction in the weighted average interest rates
between the respective periods. For the year ended December 31, 2017, the weighted average debt outstanding was
$2.2 billion at a weighted average interest rate of 3.8% as compared to $2.2 billion outstanding at a weighted average
interest rate of 3.9% in the same period of 2016. The $2.0 million gain on debt extinguishment in 2016 was associated
with the refinancing of a secured note. The $2.2 million increase in capitalized interest is primarily attributable to an
increase in our new development activities in 2017.
Interest and Other Income (Expense)
The increase in interest and other income (expense) of $5.3 million is primarily attributable to an increase in the fair
value of assets held in a grantor trust related to our deferred compensation plan of $3.6 million, a pre-development
cost recovery of $.9 million and $.7 million associated with gains from the sale of investments.
Gain on Sale of Property
The increase of $117.9 million is primarily attributable to the gain on sale of 16 centers and other property in 2017 as
compared to 12 centers and other property in 2016.
Gain on Sale and Acquisition of Real Estate Joint Venture and Partnership Interests
The gain in 2016 of $48.3 million is associated with the remeasurement of our 51% unconsolidated real estate
partnership interest to fair value associated with the exchange of properties among the partners, the acquisition of our
partner's 50% interest in a previously unconsolidated tenancy-in-common arrangement and the realization of changes
in fair value upon the consolidation of that entity, and the remeasurement of a land parcel from an unconsolidated real
estate joint venture to fair value.
Benefit (Provision) for Income Taxes
The increase in benefit (provision) for income taxes is primarily attributable to activities in our taxable REIT subsidiary.
In 2017, a tax benefit of $1.6 million was realized associated primarily with impairment losses and an NOL carryforward
from disposition activities as compared to a tax provision of $5.8 million in the same period of 2016 associated primarily
with the gain from the exchange of properties among the partners of an unconsolidated real estate joint venture and
the disposition of the development in Raleigh, North Carolina.
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net
The increase of $6.4 million in the equity in earnings of real estate joint ventures and partnerships is primarily attributable
to an increase of $2.3 million in our share of the gain on sale from disposition activities within the respective periods,
an acquisition of a center in 2016, which contributed $1.8 million, and an increase in equity preferential earnings.
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Effects of Inflation
We have structured our leases in such a way as to remain largely unaffected should significant inflation occur. Many
leases provide for increasing minimum rental rates during the terms of the leases through escalation provisions. In
addition, many of our leases are for terms of less than 10 years, allowing us to adjust rental rates to changing market
conditions when the leases expire. Some of our leases also contain percentage rent provisions whereby we receive
increased rentals based on the tenants’ gross sales. Most of our leases also require the tenants to pay their proportionate
share of operating expenses and real estate taxes. As a result of these lease provisions, increases in operating
expenses due to inflation, as well as real estate tax rate increases, generally do not have a significant adverse effect
upon our operating results as they are absorbed by our tenants. Under the current economic climate, inflation has
been rising slowly.
Economic Conditions
We believe that underlying economic fundamentals continue to show positive, albeit slow, growth. Consumer confidence
recently hit a near all-time high before declining slightly in recent months. With the election cycle over, we believe that
consumer confidence could continue to remain high due to strong economic indicators, low unemployment rates, wage
growth and changes in the tax law. Personal income and housing prices are continuing to increase in our primary
markets. We believe there is a direct correlation between housing wealth and consumption, and we expect rising home
prices will further strengthen retail fundamentals, including rent growth and operating results. Our focus on supermarket-
anchored centers in densely populated major metropolitan areas should position our portfolio to take advantage of the
ever-changing retail landscape.
With respect to Houston and other markets that are energy dependent, a strong petroleum market has positively
impacted the local economy and has favorably affected the office and multifamily real estate sectors. If oil prices should
decline again for an extended duration, the performance of our centers in the Houston market could be affected.
However, we believe that any potential negative impact to our Houston properties will be mitigated by our positioning
of properties in dense, high-income areas of Houston, coupled with below average amount of retail square feet delivered
in recent years and with the diversification of Houston's economy.
The trade areas for our portfolio of centers have seen robust growth in personal income and home values over the
past year. As strengthening retail fundamentals drive demand for investments in top-tier retail real estate, we continue
to dedicate internal resources to identify and evaluate available assets in our markets so that we may purchase the
best assets and properties with the strongest upside potential. Also, we continue to look for redevelopment opportunities
within our existing portfolio by repositioning our anchor tenants and new development opportunities to spur growth.
Capital Resources and Liquidity
Our primary operating liquidity needs are paying our common share dividends, maintaining and operating our existing
properties, paying our debt service costs, excluding debt maturities, and funding capital expenditures. Under our 2019
business plan, cash flows from operating activities are expected to meet these planned capital needs.
The primary sources of capital for funding any debt maturities, acquisitions, new developments and redevelopments
are our excess cash flow generated by our operating properties; credit facilities; proceeds from both secured and
unsecured debt issuances; proceeds from common and preferred equity issuances; and cash generated from the sale
of property and the formation of joint ventures. Amounts outstanding under the unsecured revolving credit facility are
retired as needed with proceeds from the issuance of long-term debt, common and preferred equity, cash generated
from the disposition of properties and cash flow generated by our operating properties.
As of December 31, 2018, we had available borrowing capacity of $492.9 million under our unsecured revolving credit
facility, and our debt maturities for 2019 total $73.0 million. As of December 31, 2018, we had cash and cash equivalents
available of $65.9 million. During 2018, we used excess cash on hand to prepay our $200 million unsecured term loan,
to repay $51.0 million of outstanding debt, which included $14.2 million of unsecured debt purchased on the open
market, to repurchase $18.5 million (before commissions) of our common shares, to invest $141.8 million in new
development and redevelopment projects and to pay a special dividend of $179.7 million. Currently, we anticipate our
disposition activities to continue and estimate between $250 million to $350 million in dispositions for 2019.
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We believe net proceeds from planned capital recycling, combined with our available capacity under the revolving
credit and short-term borrowing facilities, will provide adequate liquidity to fund our capital needs, including acquisitions,
redevelopment and new development activities and special dividends. In the event our capital recycling program does
not progress as expected, we believe other debt and equity alternatives are available to us. Although external market
conditions are not within our control, we do not currently foresee any impediments to our entering the capital markets
if needed.
During 2018, aggregate gross sales proceeds from our dispositions totaled $633.6 million, which were owned by us
either directly or through our interest in real estate joint ventures or partnerships. Operating cash flows from assets
disposed are included in net cash from operating activities in our Consolidated Statements of Cash Flows, while
proceeds from these disposals are included as investing activities.
We have non-recourse debt secured by acquired or developed properties held in several of our real estate joint ventures
and partnerships. At December 31, 2018, off-balance sheet mortgage debt for our unconsolidated real estate joint
ventures and partnerships totaled $269.1 million, of which our pro rata ownership is $89.2 million. Scheduled principal
mortgage payments on this debt, excluding deferred debt costs and non-cash related items totaling $(.8) million, at
100% are as follows (in millions):
2019
2020
2021
2022
2023
Thereafter
Total
$
$
6.0
71.0
173.0
2.1
2.2
15.6
269.9
We generally have the right to sell or otherwise dispose of our assets except in certain cases where we are required
to obtain our joint venture partners’ consent or a third party consent for assets held in special purpose entities that are
100% owned by us.
Investing Activities
Dispositions
During 2018, we sold 25 centers and other property, including real estate assets owned through our interest in
unconsolidated real estate joint ventures and partnerships. Our share of aggregate gross sales proceeds from these
transactions totaled $633.6 million and generated our share of the gains of approximately $203.4 million.
New Development/Redevelopment
At December 31, 2018, we had three mixed-use projects and a 30-story, high-rise residential tower at our River Oaks
Shopping Center under development with approximately .3 million of total square footage for retail and office space
and 962 residential units, that were partially or wholly owned. We have funded $246.6 million through December 31,
2018 on these projects. Upon completion, we expect our aggregate net investment in these multi-use projects to be
$512.5 million. Effective January 1, 2019, we stabilized the development in Seattle, Washington, moving it to our
operating property portfolio, which added 63,000 square feet to the portfolio at an estimated cost per square foot of
$490.
At December 31, 2018, we had 15 redevelopment projects in which we plan to invest approximately $90.8 million.
Upon completion, the average projected stabilized return on our incremental investment on these redevelopment
projects is expected to be between 8.0% and 14.0%.
We typically finance our new development and redevelopment projects with proceeds from our unsecured revolving
credit facility, as it is our general practice not to use third party construction financing. Management monitors amounts
outstanding under our unsecured revolving credit facility and periodically pays down such balances using cash
generated from operations, from debt issuances, from common and preferred share issuances and from the disposition
of properties.
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Capital Expenditures
Capital expenditures for additions to the existing portfolio, acquisitions, tenant improvements, new development,
redevelopment and our share of investments in unconsolidated real estate joint ventures and partnerships are as
follows (in thousands):
New Development
Redevelopment
Tenant Improvements
Capital Improvements
Other
Total
Year Ended December 31,
2018
2017
$
103,102 $
38,657
27,560
20,825
4,745
93,120
31,693
24,823
20,391
2,384
$
194,889 $
172,411
The increase in capital expenditures is attributable primarily to increased activity at our new development and
redevelopment centers.
For 2019, we anticipate our acquisitions to total approximately $50 million to $150 million. Our new development and
redevelopment investment for 2019 is estimated to be approximately $175 million to $225 million. For 2019, capital
and tenant improvements is expected to be consistent with 2018 expenditures. No assurances can be provided that
our planned activities will occur. Further, we have entered into commitments aggregating $190.7 million comprised
principally of construction contracts which are generally due in 12 to 36 months and anticipated to be funded under
our unsecured revolving credit facility or through the use of excess cash.
Capital expenditures for additions described above relate to cash flows from investing activities as follows (in
thousands):
Acquisition of real estate and land
Development and capital improvements
Real estate joint ventures and partnerships - Investments
Total
Year Ended December 31,
2018
2017
$
$
1,265 $
155,528
38,096
194,889 $
1,902
133,336
37,173
172,411
Capitalized soft costs, including payroll and other general and administrative costs, interest, insurance and real estate
taxes, totaled $16.2 million and $13.4 million for the year ended December 31, 2018 and 2017, respectively.
Financing Activities
Debt
Total debt outstanding was $1.8 billion at December 31, 2018 and consists of $22.7 million, which bears interest at
variable rates, and $1.8 billion, which bears interest at fixed rates. Additionally, of our total debt, $337.3 million was
secured by operating centers while the remaining $1.5 billion was unsecured.
At December 31, 2018, we have a $500 million unsecured revolving credit facility, which expires in March 2020 and
provides borrowing rates that float at a margin over LIBOR plus a facility fee. At December 31, 2018, the borrowing
margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, were 90 and 15
basis points, respectively. The facility also contains a competitive bid feature that allows us to request bids for up to
$250 million. Additionally, an accordion feature allows us to increase the facility amount up to $850 million. As of
February 15, 2019, we had no amounts outstanding, and the available balance was $497.9 million, net of $2.1 million
in outstanding letters of credit.
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At December 31, 2018, we have a $10 million unsecured short-term facility that we maintain for cash management
purposes. The facility, which matures in March 2019, provides for fixed interest rate loans at a 30-day LIBOR rate plus
borrowing margin, facility fee and an unused facility fee of 125, 10, and 5 basis points, respectively. As of February
15, 2019, we had no amounts outstanding under this facility.
During 2018, the maximum balance and weighted average balance outstanding under both facilities combined were
$26.5 million and $1.1 million, respectively, at a weighted average interest rate of 2.9%.
During 2018, we prepaid our $200 million unsecured variable-rate term loan, swapped to a fixed rate of 2.5%, and
terminated the associated interest rate swap contracts (see Note 7 for additional information). Additionally during 2018,
we paid at par $51.0 million of outstanding debt. These transactions resulted in a net gain upon their extinguishment
of $.4 million, excluding the effect of the swap termination.
Our five most restrictive covenants, composed from both our public debt and revolving credit facility, include debt to
asset, secured debt to asset, fixed charge, unencumbered asset test and unencumbered interest coverage ratios. We
are not aware of any non-compliance with our public debt and revolving credit facility covenants as of December 31,
2018.
Our most restrictive public debt covenant ratios, as defined in our indenture and supplemental indenture agreements,
were as follows at December 31, 2018:
Covenant
Debt to Asset Ratio
Restriction
Less than 60.0%
Secured Debt to Asset Ratio
Less than 40.0%
Fixed Charge Ratio
Unencumbered Asset Test
Greater than 1.5
Greater than 150%
Actual
38.1%
7.1%
4.9
284.0%
As of December 31, 2018, we had no active interest rate swap contracts. During the year ended December 31, 2018,
associated with the prepayment of an unsecured note, we terminated three interest rate swap contracts that had an
aggregate notional amount of $200 million, and we recognized a $3.4 million gain due to the probability that the related
hedged forecasted transactions would no longer occur.
Equity
Common share dividends paid totaled $382.5 million for the year ended December 31, 2018, which includes a special
dividend paid in December 2018 in the amount of $1.40 per common share or $179.7 million, which was distributed
due to the gains on dispositions of property. Our dividend payout ratio (as calculated as dividends paid on common
shares divided by core funds from operations attributable to common shareholders - basic) for the year ended December
31, 2018 approximated 130.8% (see Non-GAAP Financial Measures for additional information). Our Board of Trust
Managers approved a first quarter 2019 dividend of $.395 per common share.
We have a $200 million share repurchase plan. Under this plan, we may repurchase common shares from time-to-
time in open-market or in privately negotiated purchases. The timing and amount of any shares repurchased will be
determined by management based on its evaluation of market conditions and other factors. The repurchase plan may
be suspended or discontinued at any time, and we have no obligations to repurchase any amount of our common
shares under the plan.
For the year ended December 31, 2018, we repurchased .7 million common shares at an average price of $27.10 per
share. At December 31, 2018 and as of the date of this filing, $181.5 million of common shares remained available to
be repurchased under this plan.
We have an effective universal shelf registration statement which expires in September 2020. We will continue to
closely monitor both the debt and equity markets and carefully consider our available financing alternatives, including
both public offerings and private placements.
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Contractual Obligations
We have debt obligations related to our mortgage loans and unsecured debt, including any draws on our credit facilities.
We have shopping centers that are subject to non-cancelable long-term ground leases where a third party owns and
has leased the underlying land to us to construct and/or operate a shopping center. In addition, we have non-cancelable
operating leases pertaining to office space from which we conduct our business. The table below excludes obligations
related to our new development projects because such amounts are not fixed or determinable, and commitments
aggregating $190.7 million comprised principally of construction contracts which are generally due in 12 to 36 months.
The following table summarizes our primary contractual obligations as of December 31, 2018 (in thousands):
Mortgages and Notes Payable (1)
Unsecured Debt
Secured Debt
Lease Payments
Other Obligations (2)
Payments due by period
Total
Less than 1
year
1 - 3 years
3 - 5 years
More than 5
years
$ 1,719,399
$
68,766
$
111,750
$
686,115
$
852,768
421,503
111,552
98,099
88,620
2,779
71,533
46,848
4,870
26,566
100,217
4,601
185,818
99,302
Total Contractual Obligations
$ 2,350,553
$
231,698
$
190,034
$
790,933
$ 1,137,888
_______________
(1)
Includes principal and interest with interest on variable-rate debt calculated using rates at December 31, 2018. Also, excludes a $60.9
million debt service guaranty liability. See Note 6 for additional information.
(2) Other obligations include income and real estate tax payments, commitments associated with our secured debt and other employee
payments. Included in 2019, is the estimated contribution to our pension plan, which meets or exceeds the minimum statutory funding
requirements; however, we have the right to discontinue contributions at any time. See Note 16 for additional information.
Related to a development project in Sheridan, Colorado, we have provided a guaranty for the payment of any debt
service shortfalls on tax increment revenue bonds issued in connection with the project. The Sheridan Redevelopment
Agency ("Agency") issued Series A bonds used for an urban renewal project, of which $60.9 million remain outstanding
at December 31, 2018. The bonds are to be repaid with incremental sales and property taxes and a public improvement
fee ("PIF") to be assessed on current and future retail sales and, to the extent necessary, any amounts we may have
to provide under a guaranty. The incremental taxes and PIF are to remain intact until the earlier of the payment of the
bond liability in full or 2040. The debt associated with this guaranty has been recorded in our consolidated financial
statements as of December 31, 2018.
Off Balance Sheet Arrangements
As of December 31, 2018, none of our off-balance sheet arrangements had a material effect on our liquidity or availability
of, or requirement for, our capital resources. Letters of credit totaling $2.1 million were outstanding under the unsecured
revolving credit facility at December 31, 2018.
We have entered into several unconsolidated real estate joint ventures and partnerships. Under many of these
agreements, we and our joint venture partners are required to fund operating capital upon shortfalls in working capital.
As operating manager of most of these entities, we have considered these funding requirements in our business plan.
Reconsideration events, including changes in variable interests, could cause us to consolidate these joint ventures
and partnerships. We continuously evaluate these events as we become aware of them. Some triggers to be considered
are additional contributions required by each partner and each partner’s ability to make those contributions. Under
certain of these circumstances, we may purchase our partner’s interest. Our material unconsolidated real estate joint
ventures are with entities which appear sufficiently stable; however, if market conditions were to deteriorate and our
partners are unable to meet their commitments, there is a possibility we may have to consolidate these entities. If we
were to consolidate all of our unconsolidated real estate joint ventures, we would continue to be in compliance with
our debt covenants.
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As of December 31, 2018, one unconsolidated real estate joint venture was determined to be a VIE through the issuance
of a secured loan, since the lender had the ability to make decisions that could have a significant impact on the
profitability of the entity. Our maximum risk of loss associated with this VIE was limited to $34.0 million at December
31, 2018. Also at December 31, 2018, another joint venture arrangement for the future development of a mixed-use
project was determined to be a VIE. We are not the primary beneficiary as the substantive participating rights associated
with the entity are shared, and we do not have the power to direct the significant activities of the entity. We anticipate
funding approximately $57 million associated with the mixed-use project through 2020.
Effective December 31, 2018, a real estate limited partnership agreement with a foreign institutional investor was
amended to include potential acquisitions of real estate approved by the institutional investor of up to $61 million
through December 31, 2019 with an option to extend an additional one-year period with consent of the institutional
investor. Our ownership in this unconsolidated real estate limited partnership agreement is 51%, and as of the date
of this filing, no assets have been purchased under this agreement.
Non-GAAP Financial Measures
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these
measures along with our GAAP financial statements in order to evaluate our operating results. We believe these
additional measures provide users of our financial information additional comparable indicators of our industry, as well
as, our performance.
Funds from Operations Attributable to Common Shareholders
The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations attributable to
common shareholders ("NAREIT FFO") as net income (loss) attributable to common shareholders computed in
accordance with GAAP, excluding extraordinary items and gains or losses from sales of operating real estate assets
and interests in real estate equity investments and their applicable taxes, plus depreciation and amortization of operating
properties and impairment of depreciable real estate and in substance real estate equity investments, including our
share of unconsolidated real estate joint ventures and partnerships. We calculate NAREIT FFO in a manner consistent
with the NAREIT definition.
We believe NAREIT FFO is a widely recognized measure of REIT operating performance which provides our
shareholders with a relevant basis for comparison among other REITs. Management uses NAREIT FFO as a
supplemental internal measure to conduct and evaluate our business because there are certain limitations associated
with using GAAP net income by itself as the primary measure of our operating performance. Historical cost accounting
for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes
predictably over time. Since real estate values instead have historically risen or fallen with market conditions,
management believes that the presentation of operating results for real estate companies that uses historical cost
accounting is insufficient by itself. There can be no assurance that NAREIT FFO presented by us is comparable to
similarly titled measures of other REITs.
We also present core funds from operations attributable to common shareholders (“Core FFO”) as an additional
supplemental measure as it is more reflective of the core operating performance of our portfolio of properties. Core
FFO is defined as NAREIT FFO excluding charges and gains related to non-cash, non-operating and other transactions
or events that hinder the comparability of operating results. Specific examples of items excluded from Core FFO
include, but are not limited to, gains or losses associated with the extinguishment of debt or other liabilities, impairments
of land, transactional costs associated with acquisition and development activities, certain deferred tax provisions/
benefits, redemption costs of preferred shares and gains on the disposal of non-real estate assets.
NAREIT FFO and Core FFO should not be considered as alternatives to net income or other measurements under
GAAP as indicators of our operating performance or to cash flows from operating, investing or financing activities as
measures of liquidity. NAREIT FFO and Core FFO do not reflect working capital changes, cash expenditures for capital
improvements or principal payments on indebtedness.
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NAREIT FFO and Core FFO is calculated as follows (in thousands):
Year Ended December 31,
2018
2017
2016
Net income attributable to common shareholders
$
327,601 $
335,274 $
Depreciation and amortization of real estate
160,679
166,125
238,933
162,989
Depreciation and amortization of real estate of unconsolidated real
estate joint ventures and partnerships
Impairment of operating properties and real estate equity
investments
Impairment of operating properties of unconsolidated real estate
joint ventures and partnerships
Gain on acquisition including associated real estate equity
investment
Gain on sale of property and interests in real estate equity
investments
Gain on dispositions of unconsolidated real estate joint ventures
and partnerships
Provision (benefit) for income taxes (1)
Noncontrolling interests and other (2)
NAREIT FFO – basic
Income attributable to operating partnership units
NAREIT FFO – diluted
Adjustments to Core FFO:
Provision (benefit) for income taxes (3)
Acquisition costs
Other impairment loss
Gain on extinguishment of debt including related swap activity
Lease terminations
Severance costs
Storm damage costs
Recovery of pre-development costs
Other
Core FFO – diluted
FFO weighted average shares outstanding – basic
Effect of dilutive securities:
Share options and awards
Operating partnership units
12,454
14,020
15,118
9,969
12,247
—
—
—
—
—
326
(46,398)
(206,930)
(217,659)
(101,124)
(6,300)
2,223
8,238
307,934
—
307,934
(1,488)
—
134
(3,131)
(10,023)
—
—
—
(911)
(6,187)
(711)
5,408
308,517
3,084
311,601
(729)
—
3,031
—
—
1,378
1,822
(949)
2,292
(3,693)
—
25,505
291,656
1,996
293,652
7,024
1,782
98
(1,679)
—
—
—
—
17
$
292,515 $
318,446 $
300,894
127,651
127,755
126,048
790
—
870
1,446
1,059
1,462
FFO weighted average shares outstanding – diluted
128,441
130,071
128,569
NAREIT FFO per common share – basic
NAREIT FFO per common share – diluted
Core FFO per common share – diluted
$
$
$
2.41 $
2.41 $
2.40 $
2.40 $
2.28 $
2.45 $
2.31
2.28
2.34
_______________
(1) Effective January 1, 2017 includes the applicable taxes related to gains and impairments of operating properties.
(2) Related to gains, impairments and depreciation on operating properties and unconsolidated real estate joint ventures, where applicable.
(3) Effective January 1, 2017 includes only the applicable taxes related to gains and impairments of non-operating assets.
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Same Property Net Operating Income
We consider SPNOI an important additional financial measure because it reflects only those income and expense
items that are incurred at the property level, and when compared across periods, reflects the impact on operations
from trends in occupancy rates, rental rates and operating costs. We calculate this most useful measurement by
determining our proportional share of SPNOI from all owned properties, including our share of SPNOI from
unconsolidated joint ventures and partnerships, which cannot be readily determined under GAAP measurements and
presentation. Although SPNOI is a widely used measure among REITs, there can be no assurance that SPNOI
presented by us is comparable to similarly titled measures of other REITs. Additionally, we do not control these
unconsolidated joint ventures and partnerships, and the assets, liabilities, revenues or expenses of these joint ventures
and partnerships, as presented, do not represent our legal claim to such items.
Properties are included in the SPNOI calculation if they are owned and operated for the entirety of the most recent
two fiscal year periods, except for properties for which significant redevelopment or expansion occurred during either
of the periods presented, and properties that have been sold. While there is judgment surrounding changes in
designations, we move new development and redevelopment properties once they have stabilized, which is typically
upon attainment of 90% occupancy. A rollforward of the properties included in our same property designation is as
follows:
Beginning of the period
Properties added:
Acquisitions
New Developments
Redevelopments
Properties removed:
Dispositions
Other
End of the period
Three Months Ended
December 31, 2018
Twelve Months Ended
December 31, 2018
176
—
—
—
(5)
—
171
183
6
1
4
(22)
(1)
171
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We calculate SPNOI using net income attributable to common shareholders and adjusted for net income attributable
to noncontrolling interests, other income (expense), income taxes and equity in earnings of real estate joint ventures
and partnerships. Additionally to reconcile to SPNOI, we exclude the effects of property management fees, certain
non-cash revenues and expenses such as straight-line rental revenue and the related reversal of such amounts upon
early lease termination, depreciation and amortization, impairment losses, general and administrative expenses and
other items such as lease cancellation income, environmental abatement costs, demolition expenses and lease
termination fees. Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing
commissions and other direct leasing costs are excluded from SPNOI. A reconciliation of net income attributable to
common shareholders to SPNOI is as follows (in thousands):
Net income attributable to common shareholders
Add:
Net income attributable to noncontrolling interests
Provision (benefit) for income taxes
Interest expense, net
Property management fees
Depreciation and amortization
Impairment loss
General and administrative
Other (1)
Less:
Gain on sale of property
Equity in earnings of real estate joint ventures and
partnership interests, net
Interest and other income/expense
Revenue adjustments (2)
Adjusted income
Less: Adjusted income related to consolidated entities not
defined as same property and noncontrolling interests
Add: Pro rata share of unconsolidated entities defined as
same property
Same Property Net Operating Income
Less: Redevelopment Net Operating Income
Same Property Net Operating Income excluding
Redevelopments
___________________
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018
2017
2018
2017
$
59,507 $ 167,967 $ 327,601 $ 335,274
3,722
10
2,686
2,018
15,663
18,921
685
649
17,742
1,378
63,348
2,904
15,441
(17)
80,326
2,902
35,280
40,986
161,838
167,101
7,722
7,325
84
245
7,800
(798)
10,120
25,040
51
15,257
28,052
3,586
(34,788)
(132,045)
(207,865)
(218,611)
(5,737)
1,928
(3,022)
(9,108)
(3,322)
(4,308)
(25,070)
(27,074)
(2,807)
(7,532)
(25,007)
(16,877)
88,379
91,691
349,273
377,828
(6,499)
(12,319)
(29,114)
(66,366)
8,861
90,741
8,366
87,738
34,285
34,203
354,444
345,665
(8,705)
(7,691)
(32,939)
(30,725)
$
82,036 $
80,047 $ 321,505 $ 314,940
(1) Other includes items such as environmental abatement costs, demolition expenses and lease termination fees.
(2) Revenue adjustments consist primarily of straight-line rentals, lease cancellation income and fee income primarily from real estate joint
ventures and partnerships.
Newly Issued Accounting Pronouncements
See Note 2 to our consolidated financial statements in Item 8 for additional information related to recent accounting
pronouncements.
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ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
We use fixed and floating-rate debt to finance our capital requirements. These transactions expose us to market risk
related to changes in interest rates. Derivative financial instruments may be used to manage a portion of this risk,
primarily interest rate contracts with major financial institutions. These agreements expose us to credit risk in the event
of non-performance by the counter-parties. We do not engage in the trading of derivative financial instruments in the
normal course of business. At December 31, 2018, we had fixed-rate debt of $1.8 billion and variable-rate debt of
$22.7 million. In the event interest rates were to increase 100 basis points and holding all other variables constant,
annual net income and cash flows for the following year would decrease by approximately $.2 million associated with
our variable-rate debt, including the effect of the interest rate contracts. The effect of the 100 basis points increase
would decrease the fair value of our variable-rate and fixed-rate debt by approximately $.3 million and $86.8 million,
respectively.
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ITEM 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trust Managers of Weingarten Realty Investors
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors and subsidiaries (the
"Company") as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive
income, equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related
notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 28, 2019, expressed an unqualified opinion on the
Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Houston, Texas
February 28, 2019
We have served as the Company's auditor since 1963.
44
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Table of Contents
Revenues:
Rentals, net
Other
Total Revenues
Operating Expenses:
Depreciation and amortization
Operating
Real estate taxes, net
Impairment loss
General and administrative
Total Operating Expenses
Other Income (Expense):
Interest expense, net
Year Ended December 31,
2018
2017
2016
$
516,502
$
560,643
$
537,265
14,645
531,147
161,838
90,554
69,268
10,120
25,040
12,520
573,163
167,101
109,310
75,636
15,257
28,052
356,820
395,356
12,290
549,555
162,535
98,855
66,358
98
26,607
354,453
(63,348)
(80,326)
(83,003)
2,807
7,532
1,910
207,865
218,611
100,714
—
—
147,324
145,817
48,322
67,943
321,651
323,624
263,045
(1,378)
25,070
345,343
(17,742)
17
27,074
350,715
(15,441)
(6,856)
20,642
276,831
(37,898)
Interest and other income (expense)
Gain on sale of property
Gain on sale and acquisition of real estate joint venture and partnership
interests
Total Other Income
Income Before Income Taxes and Equity in Earnings of Real Estate Joint
Ventures and Partnerships
(Provision) Benefit for Income Taxes
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net
Net Income
Less: Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Common Shareholders
$
327,601
$
335,274
$
238,933
Earnings Per Common Share - Basic:
Net income attributable to common shareholders
Earnings Per Common Share - Diluted:
Net income attributable to common shareholders
$
$
2.57
$
2.62
$
1.90
2.55
$
2.60
$
1.87
See Notes to Consolidated Financial Statements.
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Net Income
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended December 31,
2018
2017
2016
$
345,343
$
350,715
$
276,831
Cumulative effect adjustment of new accounting standards (see Note 2)
(1,541)
—
Other Comprehensive (Loss) Income:
Net unrealized gain on investments, net of taxes
Realized gain on investments
Realized loss on derivatives
Net unrealized gain (loss) on derivatives
Reclassification adjustment of derivatives and designated hedges into net
income
Retirement liability adjustment
Total
Comprehensive Income
Comprehensive Income Attributable to Noncontrolling Interests
—
—
—
1,379
(4,302)
85
(2,838)
340,964
(17,742)
1,228
(651)
—
1,063
(42)
1,393
2,991
353,706
(15,441)
—
407
—
(2,084)
(1,204)
1,531
(167)
(1,517)
275,314
(37,898)
Comprehensive Income Adjusted for Noncontrolling Interests
$
323,222
$
338,265
$
237,416
See Notes to Consolidated Financial Statements.
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WEINGARTEN REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
ASSETS
Property
Accumulated Depreciation
Property Held for Sale, net
Property, net *
Investment in Real Estate Joint Ventures and Partnerships, net *
Total
Unamortized Lease Costs, net
Accrued Rent, Accrued Contract Receivables and Accounts Receivable (net of
allowance for doubtful accounts of $6,855 in 2018 and $7,516 in 2017) *
Cash and Cash Equivalents *
Restricted Deposits and Mortgage Escrows
Other, net
Debt, net *
Total Assets
LIABILITIES AND EQUITY
Accounts Payable and Accrued Expenses
Other, net
Total Liabilities
Commitments and Contingencies (see Note 18)
Equity:
Shareholders' Equity:
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 275,000; shares issued and outstanding:
128,333 in 2018 and 128,447 in 2017
Additional Paid-In Capital
Net Income Less Than Accumulated Dividends
Accumulated Other Comprehensive Loss
Total Shareholders' Equity
Noncontrolling Interests
Total Equity
December 31,
2018
2017
$
4,105,068
$
4,498,859
(1,108,188)
(1,166,126)
—
54,792
2,996,880
3,387,525
353,828
317,763
3,350,708
3,705,288
142,014
181,047
97,924
65,865
10,272
160,178
104,357
13,219
8,115
184,613
3,826,961
$
4,196,639
1,794,684
$
2,081,152
113,175
168,403
116,463
189,182
2,076,262
2,386,797
—
—
$
$
3,893
3,897
1,766,993
1,772,066
(186,431)
(10,549)
(137,065)
(6,170)
1,573,906
1,632,728
176,793
177,114
1,750,699
1,809,842
Total Liabilities and Equity
$
3,826,961
$
4,196,639
* Consolidated variable interest entities' assets and debt included in the above balances (see Note 19):
Property, net
Accrued Rent, Accrued Contract Receivables and Accounts Receivable, net
Cash and Cash Equivalents
Debt, net
$
198,466
$
207,969
12,220
8,243
45,774
12,011
9,025
46,253
See Notes to Consolidated Financial Statements.
47
Table of Contents
Cash Flows from Operating Activities:
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Net Income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of debt deferred costs and intangibles, net
Impairment loss
Equity in earnings of real estate joint ventures and partnerships, net
Gain on sale and acquisition of real estate joint venture and partnership
interests
Gain on sale of property
Distributions of income from real estate joint ventures and partnerships
Changes in accrued rent, accrued contract receivables and accounts
receivable, net
Changes in unamortized lease costs and other assets, net
Changes in accounts payable, accrued expenses and other liabilities, net
Other, net
Net cash provided by operating activities
Cash Flows from Investing Activities:
Acquisition of real estate and land
Development and capital improvements
Proceeds from sale of property and real estate equity investments, net
Real estate joint ventures and partnerships - Investments
Real estate joint ventures and partnerships - Distributions of capital
Purchase of investments
Proceeds from investments
Other, net
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Proceeds from issuance of debt
Principal payments of debt
Changes in unsecured credit facilities
Repurchase of common shares of beneficial interest, net
Proceeds from issuance of common shares of beneficial interest, net
Common share dividends paid
Debt issuance and extinguishment costs paid
Distributions to noncontrolling interests
Contributions from noncontrolling interests
Other, net
Net cash (used in) provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
equivalents
Cash, cash equivalents and restricted cash equivalents at January 1
Cash, cash equivalents and restricted cash equivalents at December 31
Interest paid during the period (net of amount capitalized of $7,938, $4,868 and
$2,656, respectively)
Income taxes paid during the period
Year Ended December 31,
2017
2016
2018
$
345,343
$
350,715
$
276,831
161,838
3,146
10,120
(25,070)
—
(207,865)
19,605
(2,807)
(8,632)
(2,315)
(7,403)
285,960
(1,265)
(155,528)
607,486
(38,096)
6,936
—
1,500
11,921
432,954
638
(257,028)
5,000
(18,564)
6,760
(382,464)
(1,271)
(19,155)
1,465
508
(664,111)
167,101
2,790
15,257
(27,074)
—
(218,611)
1,321
(18,964)
(13,299)
4,970
5,552
269,758
(1,902)
(133,336)
433,661
(37,173)
28,791
(5,730)
8,502
6,179
298,992
—
(28,723)
(245,000)
—
1,588
(294,073)
(488)
(19,342)
—
(2,657)
(588,695)
54,803
21,334
76,137
65,507
1,545
$
$
$
(19,945)
41,279
21,334
79,161
1,009
$
$
$
$
$
$
162,535
2,562
98
(20,642)
(48,322)
(100,714)
1,149
(14,488)
(16,900)
8,963
1,339
252,411
(500,421)
(101,179)
234,952
(52,834)
51,714
(4,740)
1,250
5,086
(366,172)
249,999
(144,788)
95,500
—
137,460
(185,100)
(5,396)
(9,563)
—
(8,314)
129,798
16,037
25,242
41,279
79,515
958
See Notes to Consolidated Financial Statements.
48
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Business
Weingarten Realty Investors is a REIT organized under the Texas Business Organizations Code. We currently operate,
and intend to operate in the future, as a REIT.
We, and our predecessor entity, began the ownership of shopping centers and other commercial real estate in 1948.
Our primary business is leasing space to tenants in the shopping centers we own or lease. We also provide property
management services for which we charge fees to either joint ventures where we are partners or other outside owners.
We operate a portfolio of neighborhood and community shopping centers, totaling approximately 35.1 million square
feet of gross leaseable area that is either owned by us or others. We have a diversified tenant base, with our largest
tenant comprising only 2.6% of base minimum rental revenues during 2018. Total revenues generated by our centers
located in Houston and its surrounding areas was 18.8% of total revenue for the year ended December 31, 2018, and
an additional 8.7% of total revenue was generated in 2018 from centers that are located in other parts of Texas. Also,
in Florida and California, an additional 20.4% and 17.2%, respectively, of total revenue was generated in 2018.
Basis of Presentation
Our consolidated financial statements include the accounts of our subsidiaries, certain partially owned real estate joint
ventures or partnerships and VIEs which meet the guidelines for consolidation. All intercompany balances and
transactions have been eliminated.
Our financial statements are prepared in accordance with GAAP. Such statements require management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. We have evaluated subsequent events for recognition
or disclosure in our consolidated financial statements.
Revenue Recognition
Rentals, net
Rental revenue is generally recognized on a straight-line basis over the term of the lease, which generally begins the
date the tenant takes control of the space. Revenue from tenant reimbursements of taxes, maintenance expenses
and insurance is subject to our interpretation of lease provisions and is recognized in the period the related expense
is recognized. Both of these revenues have been recognized under Accounting Standards Codification No. 840,
“Leases.” Revenue based on a percentage of tenants’ sales is recognized only after the tenant exceeds their sales
breakpoint. In circumstances where we provide a tenant improvement allowance for improvements that are owned by
the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the
lease.
Other
Other revenue consists of both customer contract revenue and income from contractual agreements with third parties,
tenants or partially owned real estate joint ventures or partnerships, which do not meet the definition of a lease or a
customer contract. Revenues which do not meet the definition of a lease or customer contract are recognized as the
related services are performed under the respective agreements.
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We have identified primarily three types of customer contract revenue; (1) management contracts with partially-owned
real estate joint ventures or partnerships or third parties, (2) licensing and occupancy agreements and (3) certain non-
tenant contracts. At contract inception, we assess the services provided in these contracts and identify any performance
obligations that are distinct. To identify the performance obligation, we consider all services whether explicitly stated
or implied by customary business practices. We have identified the following substantive services, which may or may
not be included in each contract type, that represent performance obligations:
Contract Type
Management
Agreements
Performance Obligation Description
• Management and asset management services
• Construction and development services
• Marketing services
• Leasing and legal preparation services
• Sales commissions
Licensing and
Occupancy
Agreements
• Rent of non-specific space
• Set-up services
Non-tenant
Contracts
• Placement of miscellaneous items at our
centers that do not qualify as a lease, i.e.
advertisements, trash bins, etc.
• Set-up services
Elements of
Performance
Obligations
• Over time
• Right to invoice
• Long-term contracts
• Point in time
• Long-term contracts
• Over time
• Right to invoice
• Short-term contracts
• Point in time
• Right to invoice
• Point in time
• Long-term contracts
• Point in time
• Right to invoice
Payment Timing
Typically monthly
or quarterly
Typically monthly
Typically monthly
We also assess collectability of the customer contract revenue prior to recognition. None of these customer contracts
include a significant financing component. Customer contract revenue for the year ended December 31, 2018 does
not include any amounts that were from obligations satisfied (or partially satisfied) in prior periods, or was a contract
liability at January 1, 2018.
Property
Real estate assets are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line
method, generally over estimated useful lives of 18-40 years for buildings and 10-20 years for parking lot surfacing
and equipment. Major replacements where the betterment extends the useful life of the asset are capitalized, and the
replaced asset and corresponding accumulated depreciation are removed from the accounts. All other maintenance
and repair items are charged to expense as incurred.
Acquisitions of properties are accounted for utilizing the acquisition of an asset method and, accordingly, the results
of operations of an acquired property are included in our results of operations from the date of acquisition. Estimates
of fair values are based upon estimated future cash flows and other valuation techniques in accordance with our fair
value measurements accounting policy. Fair values are used to allocate and record the purchase price of acquired
property among land, buildings on an “as if vacant” basis, tenant improvements, other identifiable intangibles and any
goodwill or gain on purchase. Other identifiable intangible assets and liabilities include the effect of out-of-market
leases, the value of having leases in place (“as is” versus “as if vacant” and absorption costs), out-of-market assumed
mortgages and tenant relationships. Depreciation and amortization is computed using the straight-line method,
generally over estimated useful lives of 40 years for buildings and over the lease term which includes bargain renewal
options for other identifiable intangible assets. Costs associated with the successful acquisition of an asset are
capitalized as incurred.
Property also includes costs incurred in the development and redevelopment of operating properties. These properties
are carried at cost, and no depreciation is recorded on these assets until rent commences or no later than one year
from the completion of major construction. These costs include preacquisition costs directly identifiable with the specific
project, development and construction costs, interest, insurance and real estate taxes. Indirect development costs,
including salaries and benefits, travel and other related costs that are directly attributable to the development of the
property, are also capitalized. The capitalization of such costs ceases at the earlier of one year from the completion
of major construction or when the property, or any completed portion, becomes available for occupancy.
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Property also includes costs for tenant improvements paid by us, including reimbursements to tenants for improvements
that are owned by us and will remain our property after the lease expires.
Property identified for sale is reviewed to determine if it qualifies as held for sale based on the following criteria:
management has approved and is committed to the disposal plan, the assets are available for immediate sale, an
active plan is in place to locate a buyer, the sale is probable and expected to qualify as a completed sale within a year,
the sales price is reasonable in relation to the current fair value, and it is unlikely that significant changes will be made
to the sales plan or that the sales plan will be withdrawn. Upon qualification, these properties are segregated and
classified as held for sale at the lower of cost or fair value less costs to sell. Our individual property disposals do not
qualify for discontinued operations presentation; thus, the results of operations through the disposal date and any
associated gains are included in income from continuing operations.
Some of our properties are held in single purpose entities. A single purpose entity is a legal entity typically established
at the request of a lender solely for the purpose of owning a property or group of properties subject to a mortgage.
There may be restrictions limiting the entity’s ability to engage in an activity other than owning or operating the property,
assuming or guaranteeing the debt of any other entity, or dissolving itself or declaring bankruptcy before the debt has
been repaid. Most of our single purpose entities are 100% owned by us and are consolidated in our consolidated
financial statements.
Real Estate Joint Ventures and Partnerships
To determine the method of accounting for partially owned real estate joint ventures and partnerships, management
determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether
we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially
significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this
analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections,
the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we
have determined that we are the primary beneficiary.
Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations
or making additional contributions to fund the entities’ operations or capital activities.
Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling
financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling
financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and
substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a
controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity
method.
Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned
above, to determine if the consolidation or equity method treatment remains appropriate.
Unamortized Lease Costs, net
Lease costs represent the initial direct costs incurred in origination, negotiation and processing of a lease agreement.
Such costs include outside broker commissions and other independent third party costs, as well as salaries and
benefits, travel and other internal costs directly related to completing a lease and are amortized over the life of the
lease on a straight-line basis. Costs related to supervision, administration, unsuccessful origination efforts and other
activities not directly related to completed lease agreements are charged to expense as incurred. Also included are
in place lease costs which are amortized over the life of the applicable lease terms on a straight-line basis.
Accrued Rent, Accrued Contract Receivables and Accounts Receivable, net
Receivables include base rents, tenant reimbursements, amounts billed and currently due from customer contracts
and receivables attributable to straight-line rental commitments. Accrued contract receivables includes amounts due
from customers for contracts that do not qualify as a lease in which we earned the right to the consideration through
the satisfaction of the performance obligation, but before the customer pays consideration or before payment is due.
An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon an
analysis of balances outstanding, historical bad debt levels, tenant creditworthiness and current economic trends.
Additionally, estimates of the expected recovery of pre-petition and post-petition claims with respect to tenants in
bankruptcy are considered in assessing the collectability of the related receivables. Management’s estimate of the
collectability of accrued rents and accounts receivable is based on the best information available to management at
the time of evaluation.
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Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered cash equivalents. Cash
and cash equivalents are primarily held at major financial institutions in the U.S. We had cash and cash equivalents
in certain financial institutions in excess of federally insured levels. We have diversified our cash and cash equivalents
amongst several banking institutions in an attempt to minimize exposure to any one of these entities. We believe we
are not exposed to any significant credit risk and regularly monitor the financial stability of these financial institutions.
Restricted Deposits and Mortgage Escrows
Restricted deposits and mortgage escrows consist of escrow deposits held by lenders primarily for property taxes,
insurance and replacement reserves and restricted deposits that are held for a specific use or in a qualified escrow
account for the purposes of completing like-kind exchange transactions.
Our restricted deposits and mortgage escrows consists of the following (in thousands):
Restricted deposits
Mortgage escrows
Total
December 31,
2018
2017
$
$
8,150 $
2,122
10,272 $
6,291
1,824
8,115
Other Assets, net
Other assets include an asset related to the debt service guaranty (see Note 6 for further information), tax increment
revenue bonds, investments, investments held in a grantor trust, deferred tax assets, prepaid expenses, interest rate
derivatives, the value of above-market leases and the related accumulated amortization, deferred debt costs associated
with our revolving credit facilities and other miscellaneous receivables. Investments held in a grantor trust and
investments in mutual funds are adjusted to fair value at each period with changes included in our Consolidated
Statements of Operations. Investments held to maturity are carried at amortized cost and are adjusted using the interest
method for amortization of premiums and accretion of discounts. Our tax increment revenue bonds have been classified
as held to maturity and are recorded at amortized cost offset by a recognized credit loss (see Note 20 for further
information). Above-market leases are amortized as adjustments to rental revenues over terms of the acquired leases.
Deferred debt costs, including those classified in debt, are amortized primarily on a straight-line basis, which
approximates the effective interest rate method, over the terms of the debt. Other miscellaneous receivables have a
reserve applied to the carrying amount when it becomes apparent that conditions exist that may lead to our inability
to fully collect on outstanding amounts due. Such conditions include delinquent or late payments on receivables,
deterioration in the ongoing relationship with the borrower and other relevant factors. We establish a reserve when
expected loss conditions exist by reviewing the borrower’s ability to generate revenues to meet debt service
requirements and assessing the fair value of any collateral.
Sales of Real Estate
Sales of real estate include the sale of tracts of land within a shopping center development, property adjacent to
shopping centers, operating properties, newly developed properties, investments in real estate joint ventures and
partnerships and partial sales to real estate joint ventures and partnerships in which we participate.
These sales primarily fall under two types of contracts (1) sales of nonfinancial assets and (2) sales of investments in
real estate joint ventures and partnerships. We review the sale contract to determine appropriate accounting guidance.
Profits on sales of real estate are primarily not recognized until (a) a contract exists including: each party’s rights are
identifiable along with the payment terms, the contract has commercial substance and the collection of consideration
is probable; and (b) the performance obligation to transfer control of the asset has occurred; including transfer to the
buyer of the usual risks and rewards of ownership.
We recognize gains on the sale of real estate to joint ventures and partnerships in which we participate to the extent
we receive consideration from the joint venture or partnership, if it meets the sales criteria in accordance with GAAP.
Impairment
Our property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of
the property, including any capitalized costs and any identifiable intangible assets, may not be recoverable.
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If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property
into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying
amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced
to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management
utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker or
appraisal estimates in accordance with our fair value measurements accounting policy.
We review economic considerations at each reporting period, including the effects of tenant bankruptcies, the
suspension of tenant expansion plans for new development projects, declines in real estate values, and any changes
to plans related to our new development properties including land held for development, to identify properties where
we believe market values may be deteriorating. Determining whether a property is impaired and, if impaired, the amount
of write-down to fair value requires a significant amount of judgment by management and is based on the best information
available to management at the time of evaluation. If market conditions deteriorate or management’s plans for certain
properties change, additional write-downs could be required in the future.
Our investment in partially owned real estate joint ventures and partnerships is reviewed for impairment each reporting
period. The ultimate realization is dependent on a number of factors, including the performance of each investment
and market conditions. We will record an impairment charge if we determine that a decline in the estimated fair value
of an investment below its carrying amount is other than temporary. There is no certainty that impairments will not
occur in the future if market conditions decline or if management’s plans for these investments change.
Our investments in tax increment revenue bonds are reviewed for impairment, including the evaluation of changes in
events or circumstances that may indicate that the carrying amount of the investment may not be recoverable.
Realization is dependent on a number of factors, including investment performance, market conditions and payment
structure. We will record an impairment charge if we determine that a decline in the value of the investment below its
carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment
will be held to maturity.
Accrued contract receivables are reviewed for impairment based on changes in events or circumstances effecting our
customers that may indicate that the carrying value of the asset may not be recoverable. An impairment charge will
be recorded if we determine that the decline in the asset value is other than temporary or recovery of the cost basis
is uncertain. Factors to be considered include current economic trends such as bankruptcy and market conditions
affecting our investments in partially owned real estate joint ventures and partnerships.
Income Taxes
We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended. As a REIT, we
generally will not be subject to corporate level federal income tax on taxable income we distribute to our shareholders.
To be taxed as a REIT, we must meet a number of requirements including defined percentage tests concerning the
amount of our assets and revenues that come from, or are attributable to, real estate operations. As long as we distribute
at least 90% of the taxable income of the REIT (without regard to capital gains or the dividends paid deduction) to our
shareholders as dividends, we will not be taxed on the portion of our income we distribute as dividends unless we
have ineligible transactions.
The Tax Relief Extension Act of 1999 gave REITs the ability to conduct activities which a REIT was previously precluded
from doing as long as such activities are performed in entities which have elected to be treated as taxable REIT
subsidiaries under the IRS code. These activities include buying or developing properties with the express purpose
of selling them. We conduct certain of these activities in a taxable REIT subsidiary that we have created. We calculate
and record income taxes in our consolidated financial statements based on the activities in this entity. Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between our
carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit
carry-forwards. These are measured using enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. A valuation allowance for deferred tax assets is established for those assets
when we do not consider the realization of such assets to be more likely than not.
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On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act made broad and complex changes to
the Internal Revenue Code including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from
35% to 21%, (2) establishing a 20% deduction for REIT dividends (other than any portion that is a capital gain dividend),
(3) limiting the deductibility of business interest, (4) allowing full expensing of certain qualifying property, (5) eliminating
the corporate Alternative Minimum Tax (“AMT”) and changing how existing AMT credits can be realized, (6) limiting
current net operating loss deductions and providing an indefinite carryforward and (7) limiting the deductibility of certain
executive compensation. Management’s evaluation of deferred taxes and the associated valuation allowance includes
the impact of the Tax Act (see Note 12 for additional information).
Additionally, GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition
of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the consolidated
financial statements if it is more likely than not that the tax position will be sustained upon examination. We believe it
is more likely than not that our tax positions will be sustained in any tax examinations.
In addition, we are subject to the State of Texas business tax (“Texas Franchise Tax”), which is determined by applying
a tax rate to a base that considers both revenues and expenses. Therefore, the Texas Franchise Tax is considered
an income tax and is accounted for accordingly.
Share-Based Compensation
We have both share options and share awards outstanding. Since 2012, our employee long-term incentive program
under our Amended and Restated 2010 Long-Term Incentive Plan grants only awards that incorporate both service-
based and market-based measures for share awards to promote share ownership among the participants and to
emphasize the importance of total shareholder return. The terms of each grant vary depending upon the participant's
responsibilities and position within the Company. All awards are recorded at fair value on the date of grant and earn
dividends throughout the vesting period; however, the dividends are subject to the same vesting terms as the award.
Compensation expense is measured at the grant date and recognized over the vesting period. All share awards are
awarded subject to the participant’s continued employment with us.
The share awards are subject to a three-year cliff vesting basis. Service-based and market-based share awards are
subject to the achievement of select performance goals as follows:
• Service-based awards and accumulated dividends typically vest three years from the grant date. These grants
are subject only to continued employment and not dependent on future performance measures. Accordingly,
if such vesting criteria are not met, compensation cost previously recognized would be reversed.
• Market-based awards vest based upon the performance metrics at the end of a three-year period. These
awards are based 50% on our three-year relative total shareholder return (“TSR”) as compared to the FTSE
NAREIT U.S. Shopping Center Index. The other 50% is tied to our three-year absolute TSR, which is currently
compared to an 8% hurdle. At the end of a three-year period, the performance measures are analyzed; the
actual number of shares earned is determined; and the earned shares and the accumulated dividends vest.
The probability of meeting the market criteria is considered when calculating the estimated fair value on the
date of grant using a Monte Carlo simulation. These awards are accounted for as awards with market criteria,
with compensation cost recognized over the service period, regardless of whether the market criteria are
achieved and the awards are ultimately earned and vest.
Restricted shares granted to trust managers and share awards granted to retirement eligible employees are expensed
immediately. Restricted shares and share awards have the same rights of a common shareholder, including the right
to vote and receive dividends, except as otherwise provided by our Management Development and Executive
Compensation Committee.
Options generally expire upon the earlier of termination of employment or 10 years from the date of grant, and all
restricted shares are granted at no purchase price. Our policy is to recognize compensation expense for equity awards
ratably over the vesting period, except for retirement eligible amounts.
Retirement Benefit Plans
Defined Benefit Plan:
We sponsor a noncontributory cash balance retirement plan (“Retirement Plan”) under which an account is maintained
for each participant. Annual additions to each participant’s account include a service credit ranging from 3%-5% of
compensation, depending on years of service, and an interest credit of 4.5%. Vesting generally occurs after three
years of service.
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Investments of Plan Assets
Our investment policy for our plan assets has been to determine the objectives for structuring a retirement savings
program suitable to the long-term needs and risk tolerances of participants, to select appropriate investments to
be offered by the plan and to establish procedures for monitoring and evaluating the performance of the investments
of the plan. Our overall plan objectives for selecting and monitoring investment options are to promote and optimize
retirement wealth accumulation; to provide a full range of asset classes and investment options that are intended
to help diversify the portfolio to maximize return within reasonable and prudent levels of risk; to control costs of
administering the plan; and to manage the investments held by the plan.
The selection of investment options is determined using criteria based on the following characteristics: fund history,
relative performance, investment style, portfolio structure, manager tenure, minimum assets, expenses and
operation considerations. Investment options selected for use in the plan are reviewed at least on a semi-annual
basis to evaluate material changes from the selection criteria. Asset allocation is used to determine how the
investment portfolio should be split between stocks, bonds and cash. The asset allocation decision is influenced
by investment time horizon; risk tolerance; and investment return objectives. The primary factor in establishing
asset allocation is demographics of the plan, including attained age and future service. A broad market diversification
model is used in considering all these factors, and the percentage allocation to each investment category may
also vary depending upon market conditions. Re-balancing of the allocation of plan assets occurs semi-annually.
Defined Contribution Plans:
We have two separate and independent nonqualified supplemental retirement plans (“SRP”) for certain employees
that are classified as defined contribution plans. These unfunded plans provide benefits in excess of the statutory limits
of our noncontributory cash balance retirement plan. For active participants, annual additions to each participant’s
account include an actuarially-determined service credit ranging from 3% to 5% and an interest credit of 4.5%. Vesting
generally occurs between five and 10 years of service. We have elected to use the actuarial present value of the vested
benefits to which the participant was entitled if the participant separated immediately from the SRP, as permitted by
GAAP.
The SRP participants' account balances prior to 2012 no longer receive service credits but continue to receive a 7.5%
interest credit for active participants. All inactive participants receive a December 31, 90-day LIBOR rate plus .50%
interest credit.
We have a Savings and Investment Plan pursuant to which eligible employees may elect to contribute from 1% of their
salaries to the maximum amount established annually by the IRS. Employee contributions are matched by us at the
rate of 50% for the first 6% of the employee's salary. The employees vest in the employer contributions ratably over
a five-year period.
Deferred Compensation Plan
We have a deferred compensation plan for eligible employees allowing them to defer portions of their current cash
salary or share-based compensation. Deferred amounts are deposited in a grantor trust, which are included in Other,
net Assets, and are reported as compensation expense in the year service is rendered. Cash deferrals are invested
based on the employee’s investment selections from a mix of assets selected using a broad market diversification
model. Deferred share-based compensation cannot be diversified, and distributions from this plan are made in the
same form as the original deferral.
Our deferred compensation plan was amended, effective April 1, 2016, to permit participants in this plan to diversify
their holdings of our common shares six months after vesting. Thus, as of April 1, 2016, the fully vested share awards
and the proportionate share of nonvested share awards eligible for diversification were reclassified from additional
paid-in capital to temporary equity in our Consolidated Balance Sheet. In February 2017, the deferred compensation
plan was amended to provide that participants in the plan would no longer have the right to diversify their common
shares six months after vesting. Thus, the fully vested share awards and the proportionate share of nonvested share
awards eligible for diversification at the amendment date were reclassified from temporary equity into additional paid-
in capital in our Consolidated Balance Sheet.
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The following table summarizes the eligible share award activity since inception through the February 2017 plan
amendment date (in thousands):
Balance at beginning of the period/inception
Change in redemption value
Change in classification
Diversification of share awards
Amendment reclassification
Balance at end of period
December 31,
2018
2017
— $
44,758
—
—
—
—
— $
619
988
—
(46,365)
—
$
$
Fair Value Measurements
Certain financial instruments, estimates and transactions are required to be calculated, reported and/or recorded at
fair value. The estimated fair values of such financial items, including debt instruments, impaired assets, acquisitions,
investment securities and derivatives, have been determined using a market-based measurement. This measurement
is determined based on the assumptions that management believes market participants would use in pricing an asset
or liability; including, market capitalization rates, discount rates, current operating results, local economics and other
factors. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a
fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from
sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy)
and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within
Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the
ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities
in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as
interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable
inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related
market activity. In instances where the determination of the fair value measurement is based on inputs from different
levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement
falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment
of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the asset or liability. The fair value of such financial instruments, estimates and transactions was
determined using available market information and appropriate valuation methodologies as prescribed by GAAP.
Internally developed and third party fair value measurements, including the unobservable inputs, are evaluated by
management with sufficient experience for reasonableness based on current market knowledge, trends and
transactional experience in the real estate and capital markets. Our valuation policies and procedures are determined
by our Accounting Group, which reports to the Chief Financial Officer and the results of significant impairment
transactions are discussed with the Audit Committee on a quarterly basis.
Fair value estimates are based on limited available market information for similar transactions, including our tax
increment revenue bonds, investments held to maturity and debt, and there can be no assurance that the disclosed
value of any financial instrument could be realized by immediate settlement of the instrument. The following provides
information about the methods used to estimate the fair value of our financial instruments, including their estimated
fair values:
Cash Equivalents and Restricted Cash
Cash equivalents and restricted cash are valued based on publicly-quoted market prices for identical assets.
Investments and Deferred Compensation Plan Obligations
Investments in mutual funds held in a grantor trust and mutual funds are valued based on publicly-quoted market
prices for identical assets. The deferred compensation plan obligations corresponds to the value of our investments
held in a grantor trust. Investments held to maturity are carried at amortized cost and are adjusted using the interest
method for amortization of premiums and accretion of discounts.
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Derivative Instruments
We used interest rate contracts with major financial institutions to manage our interest rate risk. The valuation of
these instruments was determined based on assumptions that management believed market participants would
use in pricing, using widely accepted valuation techniques including discounted cash flow analysis on the expected
cash flows of each derivative. The analysis reflected the contractual terms of the derivatives, including the period
to maturity, and used observable market-based inputs, including interest rate curves and implied volatilities. The
fair values of our interest rate contracts have been determined using the market standard methodology of netting
the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or
receipts). The variable cash payments (or receipts) were based on an expectation of future interest rates (forward
curves) derived from observable market interest rate curves.
Tax Increment Revenue Bonds
The fair value estimates of our held to maturity tax increment revenue bonds, which were issued by the Agency
in connection with our investment in a development project in Sheridan, Colorado, are based on assumptions that
management believes market participants would use in pricing, using widely accepted valuation techniques
including discounted cash flow analysis based on the expected future sales tax revenues of the development
project. This analysis reflects the contractual terms of the bonds, including the period to maturity, and uses
observable market-based inputs, such as market discount rates and unobservable market-based inputs, such as
future growth and inflation rates.
Debt
The fair value of our debt may be based on quoted market prices for publicly-traded debt, on a third-party established
benchmark for inactively traded debt and on the discounted estimated future cash payments to be made for non-
traded debt. For inactively traded debt, our third-party provider establishes a benchmark for all REIT securities
based on the largest, most liquid and most frequent investment grade securities in the REIT bond market. This
benchmark is then adjusted to consider how a market participant would be compensated for risk premiums such
as, longevity of maturity dates, lack of liquidity and credit quality of the issuer. The discount rates used approximate
current lending rates for loans or groups of loans with similar maturities and credit quality, assumes the debt is
outstanding through maturity and considers the debt’s collateral (if applicable). We have utilized market information
as available or present value techniques to estimate the amounts required to be disclosed.
Reportable Segments
Our primary focus is to lease space to tenants in shopping centers that we own, lease or manage. We evaluate the
performance of the reportable segments based on net operating income, defined as total revenues less operating
expenses and real estate taxes. Management does not consider the effect of gains or losses from the sale of property
or interests in real estate joint ventures and partnerships in evaluating segment operating performance.
No individual property constitutes more than 10% of our revenues or assets, and we have no operations outside of
the United States of America. Therefore, our properties have been aggregated into one reportable segment since such
properties and the tenants thereof each share similar economic and operating characteristics.
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Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component consists of the following (in thousands):
Balance, December 31, 2017
Cumulative effect adjustment of accounting
standards (see Note 2)
Change excluding amounts reclassified from
accumulated other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
Net other comprehensive loss (income)
Gain
on
Investments
(1,541)
$
Gain on
Cash Flow
Hedges
Defined
Benefit
Pension
Plan
Total
$
(7,424)
$
15,135
$
6,170
1,541
—
—
—
—
—
—
(1,379)
1,143
4,302 (1)
2,923
(1,228) (2)
(85)
1,541
(236)
3,074
2,838
Balance, December 31, 2018
$
$
(4,501)
$
15,050
$
10,549
Balance, December 31, 2016
Change excluding amounts reclassified from
accumulated other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
Net other comprehensive (income) loss
Gain
on
Investments
(964)
$
Gain
on
Cash Flow
Hedges
Defined
Benefit
Pension
Plan
Total
$
(6,403)
$
16,528
$
9,161
(1,228)
(1,063)
82
651 (3)
(577)
42 (1)
(1,021)
(7,424)
(1,475) (2)
(1,393)
$
15,135
$
(2,209)
(782)
(2,991)
6,170
Balance, December 31, 2017
$
(1,541)
$
___________________
(1) This reclassification component is included in interest expense (see Note 7 for additional information).
(2) This reclassification component is included in the computation of net periodic benefit cost (see Note 16 for additional information).
(3) This reclassification component is included in interest and other income (expense).
Retrospective Application of Accounting Standard Update
The retrospective application of adopting Accounting Standard Update ("ASU") No. 2017-07, "Improving the
Presentation of Net Periodic Pensions Cost and Net Periodic Postretirement Benefit Cost" on prior year's Consolidated
Statements of Operations was made to conform to the current year presentation (see Note 2 for additional information).
Note 2. Newly Issued Accounting Pronouncements
Adopted
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This ASU's core objective
is for an entity to recognize revenue based on the consideration it expects to receive in exchange for goods or services.
Additionally, this ASU requires entities to use a single model in accounting for revenues derived from contracts with
customers. ASU No. 2014-09 replaces prior guidance regarding the recognition of revenue from sales of real estate,
except for revenue from sales that are part of a sale-leaseback transaction. The provisions of ASU No. 2014-09, as
amended in subsequently issued amendments, were effective for us on January 1, 2018. We adopted this guidance
as of January 1, 2018 and applied it on a modified retrospective approach upon adoption.
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The adoption resulted in the identification of primarily three types of customer contracts: (1) management contracts
with partially owned real estate joint ventures or partnerships or third parties, (2) licensing and occupancy agreements
and (3) certain non-tenant contracts. We will continue to recognize these fees as we currently do with the exception
of the timing associated with the performance obligation in our management contracts related to leasing and lease
preparation related services. Upon adoption, we recognized the cumulative effect for these fees which has increased
retained earnings and accrued rent, accrued contract receivables and accounts receivable, net each by $.3 million. In
addition, we evaluated controls around the implementation of this ASU and have concluded there was no significant
impact on our control structure. We have included our customer contract revenues under the caption Other revenues
in the Consolidated Statements of Operations and have expanded our disclosures related to this ASU in Note 1.
In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial
Liabilities." This ASU will require equity investments, excluding those investments accounted for under the equity
method of accounting or those that result in consolidation of the investee, to be measured at fair value with the changes
in fair value recognized in net income; will simplify the impairment assessment of those investments; will eliminate the
disclosure of the method(s) and significant assumptions used to estimate the fair value for financial instruments
measured at amortized cost and change the fair value calculation for those investments; will change the disclosure in
other comprehensive income for financial liabilities that are measured at fair value in accordance with the fair value
options for financial instruments; and will clarify that a deferred asset related to available-for-sale securities should be
included in an entity's evaluation for a valuation allowance. The provisions of ASU No. 2016-01 were effective for us
as of January 1, 2018 and are required to be applied on a modified retrospective approach. Upon adoption, we
recognized the cumulative effect for the fair value of equity investments which has increased retained earnings and
accumulated other comprehensive loss each by $1.5 million and includes the stranded tax effects of ASU No. 2018-02,
"Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income."
In February 2017, the FASB issued ASU No. 2017-05, "Clarifying the Scope of Asset Derecognition Guidance and
Accounting for Partial Sales of Nonfinancial Assets." The ASU clarifies that a financial asset is within the scope of
Subtopic 610-20 if it meets the definition, as amended, of an in substance nonfinancial asset. If substantially all of the
fair value of assets that are promised to a counterparty in a contract is concentrated in nonfinancial assets, then all of
the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic
610-20, including a parent transferring control of a nonfinancial asset through a transfer of ownership interests of a
consolidated subsidiary. The provisions of ASU No. 2017-05 were effective for us as of January 1, 2018 and depending
on the contract type may be recorded on a retrospective or modified retrospective approach. As a result of our contract
analysis under ASU 2014-09, the majority of our contracts relate to property sales to be accounted for under this ASU
and could result in future gains being recognized sooner. Upon adoption, we applied the modified retrospective approach
for all contract types and for contracts considered not completed. We recognized the cumulative effect for in substance
nonfinancial assets in which gains would have been realized and have increased each of retained earnings and other
assets by $3.6 million at January 1, 2018.
In March 2017, the FASB issued ASU No. 2017-07, "Improving the Presentation of Net Periodic Pensions Cost and
Net Periodic Postretirement Benefit Cost." The ASU requires the service cost component to be reported as
compensation costs arising from services rendered by pertinent employees during the period. The other components
of net periodic benefit cost are required to be presented in the income statement separately from the service cost
component and outside income from operations. Additionally, only the service cost component will be eligible for
capitalization when applicable. The provisions of ASU No. 2017-07 were effective for us as of January 1, 2018 on a
retrospective basis for the presentation within the income statement and prospectively for the capitalization of costs.
The adoption of this ASU did not have a material impact to our consolidated financial statements. We have elected to
use the practical expedient in determining estimates for applying the retrospective presentation requirements. For the
year ended December 31, 2017 and 2016, net periodic benefit cost originally included in General and administrative
expenses, excluding the service cost component, of $.4 million and $.7 million, respectively, was included in Interest
and Other Income (Expense) in our Consolidated Statements of Operations.
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In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging - Targeted Improvements to Accounting
for Hedging Activities." The ASU amends current hedge accounting recognition and presentation requirements. Items
focused on include: alignment of an entity’s risk management activities and its financial reporting for hedging
relationships, the use of hedge accounting for risk components in hedging relationships involving nonfinancial risk and
interest rate risk, updates for designating fair value hedges of interest rate risk and measuring the related change in
fair value of the hedged item, alignment of the recognition and presentation of the effects of the hedging instrument
and the hedged item, and permits an entity to exclude certain amounts related to currency swaps. Lastly, the ASU
also provides additional relief on effectiveness testing methods and disclosures. The provisions of ASU No. 2017-12
are effective for us as of January 1, 2019, and early adoption is permitted. We have adopted this ASU as of January
1, 2018, which required the modified retrospective transition method upon adoption. The adoption of this ASU did not
have a material impact to our consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income." ASU No. 2018-02 allows for the reclassification of the stranded tax effects resulting from the
Tax Cuts and Jobs Act to retained earnings. The provisions of ASU No. 2018-02 are effective for us as of January 1,
2019, were to be applied either at the beginning of the period of adoption or retrospectively, and early adoption was
permitted. We adopted this ASU along with the adoption of ASU No. 2016-01 on January 1, 2018 and reclassified the
related stranded tax effects of $.8 million in accumulated other comprehensive loss into retained earnings.
Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, "Leases." This ASU was further updated by ASU 2018-01, "Land
Easement Practical Expedient for Transition for Topic 842", ASU 2018-10, "Codification Improvements to Topic 842",
ASU 2018-11, "Targeted Improvements for Topic 842" and ASU 2018-20, "Narrow-Scope Improvements for Lessors."
These ASUs set out the principles for the recognition, measurement, presentation and disclosure of leases for both
lessees and lessors. The ASUs require lessees to adopt a right-of-use asset approach that will bring substantially all
leases onto the balance sheet, with the exception of short-term leases. The subsequent accounting for this right-of-
use asset will be based on a dual-model approach, under which the lease will be classified as either a finance or an
operating lease. The lessor accounting model under these ASUs is similar to current guidance, but certain underlying
principles in the lessor model have been aligned with the new revenue recognition standard. A practical expedient was
added for lessors to elect, by class of underlying assets, to account for lease and non-lease components as a single
lease component if certain criteria are met. The provisions of these ASUs were effective for us as of January 1, 2019
and applied on a modified retrospective approach.
Upon adoption, we applied the following practical expedients:
• The transition method in which the application date of January 1, 2019 is the beginning of the reporting period
that we first applied the new guidance.
• The practical expedient package which allows an entity not to reassess (1) whether any expired or existing
contracts are or contain leases; (2) the lease classification for expired or existing leases; and (3) initial direct
costs for any existing leases.
• The practical expedient which allows an entity not to reassess whether any existing or expired land easements
that were not previously accounted for as a lease or if the contract contains a lease.
• As an accounting policy election, a lessor may choose not to separate the nonlease components, by class of
underlying assets, from the lease components and instead account for both types of components as a single
component under certain conditions.
• As an accounting policy election, a lessee may choose by class of the underlying asset, not to apply the
recognition requirements to short-term leases.
We evaluated the impact to our lessor leases and other lessee leases that the adoption of this ASU will have on our
consolidated financial statements. Based on our analysis, we have identified the following changes resulting from the
adoption of the new pronouncement on January 1, 2019:
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• From the Lessor Perspective:
Our existing leases will continue to be classified as operating leases, however, leases entered into or
modified after January 1, 2019 may be classified as either operating or sales-type leases, based on
specific classification criteria. We believe the majority of our leases will continue to be classified as
operating leases, and all operating leases will continue to have a similar pattern of recognition as
under current GAAP.
Capitalization of leasing costs has been limited under the new ASU which no longer allows indirect
costs to be capitalized. Therefore indirect, internally-generated leasing and legal costs will no longer
be capitalized upon adoption and will result in an increase in General and administrative expenses in
our Consolidated Statement of Operations in the period of adoption prospectively. Also, we will continue
to capitalize direct costs as defined within the ASU. We capitalized internal costs of $9.2 million, $9.5
million and $9.0 million for the year ended December 31, 2018, 2017 and 2016, respectively.
We are entitled to receive tenant reimbursements for operating expenses for common area
maintenance (“CAM”). These ASUs have defined CAM reimbursement revenue as a non-lease
component, which would need to be accounted for in accordance with Topic 606 (ASU No. 2014-09
as discussed above). However, we have elected to apply the practical expedient for all our real estate
related leases, to account for the lease and nonlease components as a single, combined operating
lease component as long as the non-lease component is not predominate to the combined components
within a contract.
We previously accounted for real estate taxes that are paid directly by the tenant in our consolidated
financial statements. These ASUs have indicated that a lessor should exclude from variable payments,
lessor costs paid by a lessee directly to a third party. Therefore, beginning January 1, 2019, we are
excluding any costs paid directly by the tenant from our revenues and expenses and will only include
as variable payments those which are reimbursed to us by our tenants. Real estate taxes paid directly
by our tenants was $4.3 million, $4.6 million and $4.2 million for the year ended December 31, 2018,
2017 and 2016, respectively.
• From the Lessee Perspective:
We have ground lease agreements in which we are the lessee for land underneath all or a portion of
12 centers and four administrative office leases that we account for as operating leases. Also, we
have one finance lease in which we are the lessee of two centers with a $21.9 million lease obligation.
Based on current estimates for operating leases, we will recognize right of use assets in Other Assets,
along with corresponding lease liabilities in Other Liabilities that are estimated to range between $40
million and $45 million in the Consolidated Balance Sheets. For these existing operating leases, we
will continue to recognize a single lease expense for its existing ground and office operating leases,
currently included in Operating expenses and General and administrative expenses, respectively, in
the Consolidated Statements of Operations.
We will continue to recognize our finance lease asset balance in Property and our financing lease
liability in Debt in our Consolidated Balance Sheets. Finance leases will charge a portion of the payment
to both asset amortization and interest expense.
In addition, we evaluated controls around the implementation of these ASUs and have concluded there was no significant
impact on our control structure.
In June 2016, the FASB issued ASU No. 2016-13, "Measurement of Credit Losses on Financial Instruments." This
ASU was further updated by ASU 2018-19, "Codification Improvements to Topic 326, Financial Instruments - Credit
Losses." These ASUs amend prior guidance on the impairment of financial instruments, and adds an impairment model
that is based on expected losses rather than incurred losses with the recognition of an allowance based on an estimate
of expected credit losses. The provisions of the ASUs are effective for us as of January 1, 2020, and early adoption
is permitted for fiscal years beginning after December 15, 2018. We are currently assessing the impact, if any, that
the adoption of the ASUs will have on our consolidated financial statements.
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In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting."
This ASU amends prior employee share-based payment guidance to include nonemployee share-based payment
transactions for acquiring services or property. This ASU now aligns the determination of the measurement date, the
accounting for performance conditions, and the accounting for share-based payments after vesting in addition to other
items. The provisions of ASU No. 2018-07 were effective for us as of January 1, 2019 using a modified transition
method upon adoption. The adoption of this ASU did not have a material impact to our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, "Changes to the Disclosure Requirements for Fair Value
Measurement." This ASU amends and removes several disclosure requirements including the valuation processes for
Level 3 fair value measurements. The ASU also modifies some disclosure requirements and requires additional
disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3
fair value measurements and requires the range and weighted average of significant unobservable inputs used to
develop Level 3 fair value measurements. The provisions of ASU No. 2018-13 are effective for us as of January 1,
2020 using a prospective transition method for amendments effecting changes in unrealized gains and losses,
significant unobservable inputs used to develop Level 3 fair value measurements and narrative description on
uncertainty of measurements. The remaining provisions of the ASU are to be applied retrospectively, and early adoption
is permitted. Although we are still assessing the impact of this ASU's adoption, we do not believe this ASU will have
a material impact to our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, "Changes to the Disclosure Requirements for Defined Benefit
Plans." This ASU clarifies current disclosures and removes several disclosures requirements including accumulated
other comprehensive income expected to be recognized over the next fiscal year and amount and timing of plan assets
expected to be returned to the employer. The ASU also requires additional disclosures for the weighted-average interest
crediting rates for cash balance plans and explanations for significant gains and losses related to changes in the benefit
plan obligation. The provisions of ASU No. 2018-14 are effective for us as of December 31, 2020 using a retrospective
basis for all periods presented, and early adoption is permitted. Although we are still assessing the impact of this ASU's
adoption, we do not believe this ASU will have a material impact to our consolidated financial statements.
Note 3. Property
Our property consists of the following (in thousands):
Land
Land held for development
Land under development
Buildings and improvements
Construction in-progress
Total
December 31,
2018
$
919,237 $
45,673
55,793
2,927,954
156,411
2017
1,068,022
69,205
48,985
3,232,074
80,573
$
4,105,068 $
4,498,859
During the year ended December 31, 2018, we sold 22 centers and other property. Aggregate gross sales proceeds
from these transactions approximated $557.3 million and generated gains of approximately $162.4 million. Also, for
the year ended December 31, 2018, we invested $74.1 million in new development projects.
At December 31, 2018, no property was classified as held for sale. At December 31, 2017, three centers, totaling $78.7
million before accumulated depreciation, were classified as held for sale. None of these centers qualified to be reported
in discontinued operations, and gains of $45.5 million were generated from these centers during the year ended
December 31, 2018.
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Note 4. Investment in Real Estate Joint Ventures and Partnerships
We own interests in real estate joint ventures or limited partnerships and have tenancy-in-common interests in which
we exercise significant influence, but do not have financial and operating control. We account for these investments
using the equity method, and our interests ranged for the periods presented from 20% to 90% in both 2018 and 2017.
Combined condensed financial information of these ventures (at 100%) is summarized as follows (in thousands):
Combined Condensed Balance Sheets
ASSETS
Property
Accumulated depreciation
Property, net
Other assets, net
Total Assets
LIABILITIES AND EQUITY
Debt, net (primarily mortgages payable)
Amounts payable to Weingarten Realty Investors and Affiliates
Other liabilities, net
Total Liabilities
Equity
Total Liabilities and Equity
Combined Condensed Statements of Operations
Revenues, net
Expenses:
Depreciation and amortization
Interest, net
Operating
Real estate taxes, net
General and administrative
Provision for income taxes
Impairment loss
Total
December 31,
2018
2017
$ 1,268,557 $ 1,241,004
(305,327)
(285,033)
963,230
104,267
955,971
115,743
$ 1,067,497 $ 1,071,714
$
269,113 $
298,124
11,732
24,717
305,562
761,935
12,017
24,759
334,900
736,814
$ 1,067,497 $ 1,071,714
Year Ended December 31,
2018
2017
2016
$
133,975 $
137,419 $
138,316
32,005
11,905
24,112
18,839
696
138
—
34,818
11,836
23,876
18,865
623
112
—
38,242
16,076
26,126
17,408
816
113
1,303
87,695
90,130
100,084
Gain on sale of non-operating property
—
—
373
Gain on dispositions
Net Income
9,495
12,492
14,816
$
55,775 $
59,781 $
53,421
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Our investment in real estate joint ventures and partnerships, as reported in our Consolidated Balance Sheets, differs
from our proportionate share of the entities’ underlying net assets due to basis differences, which arose upon the
transfer of assets to the joint ventures. The net positive basis differences, which totaled $5.2 million and $2.2 million
at December 31, 2018 and 2017, respectively, are generally amortized over the useful lives of the related assets.
Our real estate joint ventures and partnerships have determined from time to time that the carrying amount of certain
centers was not recoverable and that the centers should be written down to fair value. There was no impairment
charges for both the year ended December 31, 2018 and 2017. For the year ended December 31, 2016, our
unconsolidated real estate joint ventures and partnerships recorded an impairment charge of 1.3 million, associated
primarily with various centers that have been marketed and sold during the period.
During 2018, a center was sold through a series of partial sales with gross sales proceeds of approximately $33.9
million, of which our share of the gain, included in equity in earnings in real estate joint ventures and partnerships,
totaled $6.3 million.
During 2017, two centers were sold with aggregate gross sales proceeds of approximately $19.6 million, of which our
share of the gain, included in equity earnings in real estate joint ventures and partnerships, totaled $6.2 million. In
June 2017, a venture acquired land with a gross purchase price of $23.5 million for a mixed-use development project,
and we simultaneously increased our ownership interest to 90%.
Note 5. Identified Intangible Assets and Liabilities
Identified intangible assets and liabilities associated with our property acquisitions are as follows (in thousands):
Identified Intangible Assets:
Above-market leases (included in Other Assets, net)
Above-market leases - Accumulated Amortization
In place leases (included in Unamortized Lease Costs, net)
In place leases - Accumulated Amortization
Identified Intangible Liabilities:
Below-market leases (included in Other Liabilities, net)
Below-market leases - Accumulated Amortization
Above-market assumed mortgages (included in Debt, net)
Above-market assumed mortgages - Accumulated Amortization
December 31,
2018
2017
$
$
$
38,181 $
(19,617)
193,658
(99,352)
44,231
(17,397)
224,201
(96,202)
112,870 $
154,833
85,742 $
105,794
(27,745)
(28,072)
3,446
(1,660)
$
59,783 $
10,063
(6,081)
81,704
These identified intangible assets and liabilities are amortized over the applicable lease terms or the remaining lives
of the assumed mortgages, as applicable.
The net amortization of above-market and below-market leases increased rental revenues by $12.8 million, $3.7 million
and $2.1 million in 2018, 2017 and 2016, respectively. The significant year over year change in rental revenues in
2018 to 2017 is primarily due to a write-off of a below-market lease intangible from the termination of a tenant's lease.
The estimated net amortization of these intangible assets and liabilities will increase rental revenues for each of the
next five years as follows (in thousands):
2019
2020
2021
2022
2023
$
2,668
2,741
2,712
2,560
2,529
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The amortization of the in place lease intangible assets recorded in depreciation and amortization, was $29.8 million,
$21.0 million and $18.0 million in 2018, 2017 and 2016, respectively. The significant year over year change in
depreciation and amortization from 2018 to 2017 is primarily due to the write-off of in-place lease intangibles from the
termination of tenant leases. The estimated amortization of these intangible assets will increase depreciation and
amortization for each of the next five years as follows (in thousands):
2019
2020
2021
2022
2023
$
13,539
12,564
10,501
8,472
7,285
The net amortization of above-market assumed mortgages decreased net interest expense by $.7 million, $1.1 million
and $1.0 million in 2018, 2017 and 2016, respectively. The estimated net amortization of these intangible liabilities will
decrease net interest expense for each of the next five years as follows (in thousands):
2019
2020
2021
2022
2023
$
327
327
287
141
136
Note 6. Debt
Our debt consists of the following (in thousands):
Debt payable, net to 2038 (1)
Unsecured notes payable under credit facilities
Debt service guaranty liability
Obligations under capital leases
Total
___________________
December 31,
2018
2017
$
1,706,886 $
1,996,007
5,000
60,900
21,898
—
64,145
21,000
$
1,794,684 $
2,081,152
(1) At December 31, 2018, interest rates ranged from 3.3% to 7.0% at a weighted average rate of 4.0%. At December 31, 2017, interest
rates ranged from 2.6% to 7.9% at a weighted average rate of 4.0%.
The allocation of total debt between fixed and variable-rate as well as between secured and unsecured is summarized
below (in thousands):
As to interest rate (including the effects of interest rate contracts):
Fixed-rate debt
Variable-rate debt
Total
As to collateralization:
Unsecured debt
Secured debt
Total
66
December 31,
2018
2017
$ 1,771,999 $ 2,063,263
22,685
17,889
$ 1,794,684 $ 2,081,152
$ 1,457,432 $ 1,667,462
337,252
413,690
$ 1,794,684 $ 2,081,152
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We maintain a $500 million unsecured revolving credit facility, which was amended and extended on March 30, 2016.
This facility expires in March 2020, provides for two consecutive six-month extensions upon our request, and borrowing
rates that float at a margin over LIBOR plus a facility fee. At both December 31, 2018 and 2017, the borrowing margin
and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, were 90 and 15 basis
points, respectively. The facility also contains a competitive bid feature that allows us to request bids for up to $250
million. Additionally, an accordion feature allows us to increase the facility amount up to $850 million.
Additionally, we have a $10 million unsecured short-term facility, which was amended and extended on March 27,
2018, that we maintain for cash management purposes, which matures in March 2019. At both December 31, 2018
and 2017, the facility provided for fixed interest rate loans at a 30-day LIBOR rate plus a borrowing margin, facility fee
and an unused facility fee of 125, 10, and 5 basis points, respectively.
The following table discloses certain information regarding our unsecured notes payable under our credit facilities (in
thousands, except percentages):
Unsecured revolving credit facility:
Balance outstanding
Available balance
Letter of credit outstanding under facility
Variable interest rate (excluding facility fee) at end date
Unsecured short-term facility:
Balance outstanding
Variable interest rate at end date
Both facilities:
Maximum balance outstanding during the year
Weighted average balance
Year-to-date weighted average interest rate (excluding facility fee)
December 31,
2018
2017
$
5,000
$
—
492,946
2,054
3.3%
$
— $
—%
493,610
6,390
—%
—
—%
$
26,500
$
245,000
1,096
133,386
2.9%
1.8%
Related to a development project in Sheridan, Colorado, we have provided a guaranty for the payment of any debt
service shortfalls until a coverage rate of 1.4x is met on tax increment revenue bonds issued in connection with the
project. The bonds are to be repaid with incremental sales and property taxes and a PIF to be assessed on current
and future retail sales and, to the extent necessary, any amounts we may have to provide under a guaranty. The
incremental taxes and PIF are to remain intact until the earlier of the date the bond liability has been paid in full or
2040. Therefore, a debt service guaranty liability equal to the fair value of the amounts funded under the bonds was
recorded. As of December 31, 2018 and 2017, we had $60.9 million and $64.1 million outstanding for the debt service
guaranty liability, respectively.
During the year ended December 31, 2018, we prepaid, without penalty, our $200 million unsecured variable-rate term
loan, swapped to a fixed rate of 2.5%, and terminated the associated interest rate swap contracts (see Note 7 for
additional information). Additionally during the year ended December 31, 2018, we paid at par $51.0 million of
outstanding debt. These transactions resulted in a net gain upon their extinguishment of $.4 million, excluding the
effect of the swap termination (see Note 7 for additional information).
Various leases and properties, and current and future rentals from those leases and properties, collateralize certain
debt. At December 31, 2018 and 2017, the carrying value of such assets aggregated $.6 billion and $.7 billion,
respectively. Additionally at December 31, 2018, investments of $5.2 million in Restricted Deposits and Mortgage
Escrows are held as collateral for letters of credit totaling $5.0 million.
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Scheduled principal payments on our debt (excluding $5.0 million unsecured notes payable under our credit facilities,
$21.9 million of certain capital leases, $(4.6) million net premium/(discount) on debt, $(6.9) million of deferred debt
costs, $1.8 million of non-cash debt-related items, and $60.9 million debt service guaranty liability) are due during the
following years (in thousands):
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Thereafter
Total
$
73,004
5,296
18,434
307,922
347,815
252,153
293,807
277,291
38,288
92,159
10,435
$ 1,716,604
Our various debt agreements contain restrictive covenants, including minimum interest and fixed charge coverage
ratios, minimum unencumbered interest coverage ratios, minimum net worth requirements and maximum total debt
levels. We are not aware of any non-compliance with our public debt and revolving credit facility covenants as of
December 31, 2018.
Note 7. Derivatives and Hedging
The fair value of all our interest rate swap contracts was reported as follows (in thousands):
Designated Hedges:
December 31, 2018
December 31, 2017
Assets
Liabilities
Balance Sheet
Location
Amount
Balance Sheet
Location
Amount
Other Assets, net $
— Other Liabilities, net $
Other Assets, net
2,035 Other Liabilities, net
—
—
The gross presentation, the effects of offsetting for derivatives with a right to offset under master netting agreements
and the net presentation of our interest rate swap contracts is as follows (in thousands):
Gross Amounts Not
Offset in Balance
Sheet
Gross
Amounts
Recognized
Gross
Amounts
Offset in
Balance
Sheet
Net
Amounts
Presented
in Balance
Sheet
Financial
Instruments
Cash
Collateral
Received
Net Amount
December 31, 2018
Assets
$
— $
— $
— $
— $
— $
—
December 31, 2017
Assets
2,035
—
2,035
—
—
2,035
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Cash Flow Hedges
As of December 31, 2018, we had no active interest rate swap contracts. During the year ended December 31, 2018,
associated with the prepayment of an unsecured note, we terminated three interest rate swap contracts that had an
aggregate notional amount of $200 million, and we recognized a $3.4 million gain due to the probability that the related
hedged forecasted transactions would no longer occur.
As of December 31, 2017, we had three interest rate swap contracts, maturing through March 1, 2020, with an aggregate
notional amount of $200 million that were designated as cash flow hedges and fixed the LIBOR component of the
interest rates at 1.5%.
As of December 31, 2018 and 2017, the net gain balance in accumulated other comprehensive loss relating to previously
terminated cash flow interest rate swap contracts was $4.5 million and $7.4 million, respectively, which will be reclassified
to net interest expense as interest payments are made on the originally hedged debt. Within the next 12 months,
approximately $.9 million in accumulated other comprehensive loss is expected to be reclassified as a reduction to
interest expense related to our interest rate contracts.
A summary of cash flow interest rate swap contract hedging activity is as follows (in thousands):
Derivatives in
Cash Flow
Hedging
Relationships
Amount
of (Gain) Loss
Recognized in
Other
Comprehensive
Income (Loss)
on Derivative
Location of Gain
(Loss) Reclassified
from Accumulated
Other
Comprehensive
Loss into Income
Location of Gain
(Loss)
Reclassified
from
Accumulated
Other
Comprehensive
Loss into
Income as a
Result That a
Forecasted
Transaction is
No Longer
Probable of
Occurring
Amount of Gain
(Loss)
Reclassified
from
Accumulated
Other
Comprehensive
Loss into
Income as a
Result That a
Forecasted
Transaction is
No Longer
Probable of
Occurring
Amount of Gain
(Loss)
Reclassified
from
Accumulated
Other
Comprehensive
Loss into
Income
Total Amount
of Interest
Expense, net
Presented in
the
Consolidated
Statement of
Operations
Year Ended
December 31, 2018
$
Interest expense,
(1,379)
net
$
912
Interest expense,
net
$
3,390
$
(63,348)
Year Ended
December 31, 2017
(1,063)
Interest expense,
net
Interest expense,
net
42
—
(80,326)
Year Ended
December 31, 2016
3,192
Interest expense,
net
(1,435)
Interest expense,
net
(96)
(83,003)
Fair Value Hedges:
Associated with the refinancing of a secured note, on June 24, 2016, we terminated two interest rate swap contracts
that were designated as fair value hedges and had an aggregate notional amount of $62.9 million. Upon settlement,
we received $2.2 million, which was recognized as part of the gain on extinguishment of debt related to the hedged
debt.
A summary of fair value interest rate swap contract hedging activity is as follows (in thousands):
Year Ended December 31, 2016
Interest expense, net
_______________
Gain (Loss)
on
Contracts
Gain (Loss)
on
Borrowings
Net Settlements
and Accruals
on Contracts (1) (3)
Amount of Gain
(Loss)
Recognized in
Income (2) (3)
$
(418) $
418
$
3,140
$
3,140
(1) Amounts in this caption include gain (loss) recognized in income on derivatives and net cash settlements.
(2) No ineffectiveness was recognized during the respective periods.
(3)
Included in each caption for the year ended December 31, 2016 is $2.2 million received upon the termination of two interest rate swap
contracts.
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Note 8. Common Shares of Beneficial Interest
We have a $200 million share repurchase plan where we may repurchase common shares from time-to-time in open-
market or in privately negotiated purchases. The timing and amount of any shares repurchased will be determined by
management based on its evaluation of market conditions and other factors. The repurchase plan may be suspended
or discontinued at any time, and we have no obligations to repurchase any amount of our common shares under the
plan.
During the year ended December 31, 2018, we repurchased .7 million common shares at an average price of $27.10
per share. At December 31, 2018 and as of the date of this filing, $181.5 million of common shares remained available
to be repurchased under this plan.
Common dividends declared per share were $2.98, $2.29 and $1.46 for the year ended December 31, 2018, 2017
and 2016, respectively. The regular dividend rate per share for our common shares for each quarter of 2018 and 2017
was $.395 and $.385, respectively. Also in each December 2018 and 2017, we paid a special dividend for our common
shares in an amount per share of $1.40 and $.75, respectively, which was due to the significant gains on dispositions
of property. Subsequent to December 31, 2018, a first quarter dividend of $.395 per common share was approved by
our Board of Trust Managers.
Note 9. Noncontrolling Interests
The following table summarizes the effect of changes in our ownership interest in subsidiaries on the equity attributable
to us as follows (in thousands):
Net income adjusted for noncontrolling interests
Transfers from the noncontrolling interests:
Net increase in equity for the acquisition of noncontrolling
interests
Change from net income adjusted for noncontrolling interests
and transfers from the noncontrolling interests
Note 10. Leasing Operations
Year Ended December 31,
2018
2017
2016
$
327,601 $
335,274 $
238,933
—
—
2,139
$
327,601 $
335,274 $
241,072
Many of our leases are for terms of less than 10 years and may include multiple options to extend the lease term in
increments up to five years. In addition to minimum lease payments, most of the leases provide for contingent rentals
(payments for real estate taxes, maintenance and insurance by lessees and an amount based on a percentage of the
tenants’ sales).
Future minimum rental income from non-cancelable tenant leases, excluding estimated contingent rentals, at
December 31, 2018 is as follows (in thousands):
2019
2020
2021
2022
2023
Thereafter
Total
$
347,476
305,404
253,269
198,414
151,538
473,416
$ 1,729,517
Contingent rentals recognized in Rentals, net for the year ended December 31, are as follows (in thousands):
2018
2017
2016
$
118,703
129,635
114,505
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Note 11. Impairment
The following impairment charges were recorded on the following assets based on the difference between the carrying
amount of the assets and the estimated fair value (see Note 20 for additional fair value information) (in thousands):
Year Ended December 31,
2018
2017
2016
Continuing operations:
Properties held for sale, under contract for sale or sold (1)
Land held for development and undeveloped land (1)
Other
Total impairment charges
Other financial statement captions impacted by impairment:
Equity in earnings of real estate joint ventures and partnerships, net
Net income attributable to noncontrolling interests
$
9,969 $ 12,203 $
151
—
2,719
335
10,120
15,257
—
(17)
—
21
Net impact of impairment charges
$ 10,103 $ 15,278 $
98
—
—
98
326
—
424
___________________
(1) Amounts reported were based on changes in management's plans for the properties, third party offers, recent comparable market
transactions and/or a change in market conditions.
Note 12. Income Tax Considerations
We qualify as a REIT under the provisions of the Internal Revenue Code, and therefore, no tax is imposed on our
taxable income distributed to shareholders. To maintain our REIT status, we must distribute at least 90% of our ordinary
taxable income to our shareholders and meet certain income source and investment restriction requirements. Our
shareholders must report their share of income distributed in the form of dividends.
Taxable income differs from net income for financial reporting purposes primarily because of differences in the timing
of recognition of depreciation, rental revenue, repair expense, compensation expense, impairment losses and gain
from sales of property. As a result of these differences, the book value of our net fixed assets is in excess of tax basis
by $211.0 million and $193.4 million at December 31, 2018 and 2017, respectively.
The following table reconciles net income adjusted for noncontrolling interests to REIT taxable income (in thousands):
Year Ended December 31,
2018
2017
2016
Net income adjusted for noncontrolling interests
Net (income) loss of taxable REIT subsidiary included above
Net income from REIT operations
Book depreciation and amortization
Tax depreciation and amortization
Book/tax difference on gains/losses from capital transactions
Deferred/prepaid/above and below-market rents, net
Impairment loss from REIT operations
Other book/tax differences, net
REIT taxable income
Dividends paid deduction (1)
Dividends paid in excess of taxable income
___________________
$
327,601 $
(13,496)
314,105
335,274 $
4,220
339,494
158,607
(89,700)
19,807
(15,589)
10,008
(13,718)
383,520
162,964
(95,512)
6,261
(11,146)
5,071
(244)
238,933
(14,497)
224,436
162,534
(104,734)
(64,917)
(13,114)
369
(2,694)
406,888
201,880
(383,520)
(406,888)
(201,880)
$
— $
— $
—
(1) For 2018, 2017 and 2016, the dividends paid deduction includes designated dividends of $105.7 million, $112.8 million and $16.8 million
from 2019, 2018 and 2017, respectively.
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For federal income tax purposes, the cash dividends distributed to common shareholders are characterized as follows:
Ordinary income
Capital gain distributions
Total
Year Ended December 31,
2018
2017
2016
42.2%
57.8%
23.0%
77.0%
80.7%
19.3%
100.0%
100.0%
100.0%
Our deferred tax assets and liabilities, including a valuation allowance, consisted of the following (in thousands):
Deferred tax assets:
Impairment loss (1)
Allowance on other assets
Interest expense
Net operating loss carryforwards (2)
Straight-line rentals
Book-tax basis differential
Other
Total deferred tax assets
Valuation allowance (3)
Total deferred tax assets, net of allowance
Deferred tax liabilities:
Book-tax basis differential (1)
Other
Total deferred tax liabilities
___________________
December 31,
2018
2017
$
4,732 $
3
—
11,132
1,391
1,800
198
19,256
(12,787)
7,220
15
5,703
7,428
916
1,676
188
23,146
(15,587)
$
$
$
6,469 $
7,559
6,005 $
398
6,403 $
6,618
517
7,135
(1)
Impairment losses and book-tax basis differential liabilities will not be recognized until the related properties are sold. Realization of
impairment losses is dependent upon generating sufficient taxable income in the year the property is sold.
(2) We have net operating loss carryforwards of $35.4 million that expire between the years of 2029 and 2037 and $17.6 million that is an
indefinite carryforward.
(3) Management believes it is more likely than not that a portion of the deferred tax assets, which primarily consists of impairment losses,
interest expense and net operating losses, will not be realized and established a valuation allowance. However, the amount of the deferred
tax asset considered realizable could be reduced if estimates of future taxable income are reduced.
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We are subject to federal, state and local income taxes and have recorded an income tax provision (benefit) as follows
(in thousands):
Net income (loss) before taxes of taxable REIT subsidiary
Federal provision (benefit) (1)
Valuation allowance decrease
Effect of change in statutory rate on net deferrals
Other
Federal income tax (benefit) provision of taxable REIT subsidiary (2)
State and local taxes, primarily Texas franchise taxes
Total
___________________
Year Ended December 31,
2018
2017
2016
$
$
13,480 $
2,831 $
(5,788) $
(2,026) $
(2,800)
—
(46)
(15)
1,393
—
282
176
(1,568)
1,551
$
1,378 $
(17) $
20,295
7,103
(1,251)
—
(54)
5,798
1,058
6,856
(1) At statutory rate of 21% for the year ended December 31, 2018 and 35% for both the year ended December 31, 2017 and 2016.
(2) All periods from December 31, 2015 through December 31, 2018 are open for examination by the IRS.
Also, a current tax obligation of $1.5 million and $1.6 million has been recorded at December 31, 2018 and 2017,
respectively, in association with these taxes.
Note 13. Supplemental Cash Flow Information
Cash, cash equivalents and restricted cash equivalents consists of the following (in thousands):
Cash and cash equivalents
Restricted deposits and mortgage escrows (see Note 1)
Total
December 31,
2018
2017
2016
$
$
65,865 $
13,219 $
10,272
76,137 $
8,115
21,334 $
16,257
25,022
41,279
Non-cash investing and financing activities are summarized as follows (in thousands):
Year Ended December 31,
2018
2017
2016
Accrued property construction costs
$
11,135 $
7,728 $
5,738
Increase in equity for the acquisition of noncontrolling interests in
consolidated real estate joint ventures
Reduction of debt service guaranty liability
Property acquisitions and investments in unconsolidated real estate
joint ventures:
Increase in property, net
Decrease in real estate joint ventures and partnerships -
investments
Consolidation of joint ventures:
Increase in property, net
Increase in security deposits
Increase in debt, net
Increase (decrease) in equity associated with deferred
compensation plan (see Note 1)
—
(3,245)
—
(2,980)
2,139
(2,710)
—
—
—
—
—
—
—
—
—
—
—
10,573
(2,315)
58,665
169
48,727
44,758
(44,758)
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Note 14. Earnings Per Share
Earnings per common share – basic is computed using net income attributable to common shareholders and the
weighted average number of shares outstanding – basic. Earnings per common share – diluted includes the effect of
potentially dilutive securities. Earnings per common share – basic and diluted components for the periods indicated
are as follows (in thousands):
Numerator:
Net income
Year Ended December 31,
2018
2017
2016
$
345,343 $
350,715 $
276,831
Net income attributable to noncontrolling interests
(17,742)
(15,441)
(37,898)
Net income attributable to common shareholders – basic
Income attributable to operating partnership units
327,601
—
335,274
3,084
238,933
1,996
Net income attributable to common shareholders – diluted
$
327,601 $
338,358 $
240,929
Denominator:
Weighted average shares outstanding – basic
127,651
127,755
126,048
Effect of dilutive securities:
Share options and awards
Operating partnership units
790
—
870
1,446
1,059
1,462
Weighted average shares outstanding – diluted
128,441
130,071
128,569
Anti-dilutive securities of our common shares, which are excluded from the calculation of earnings per common share
– diluted, are as follows (in thousands):
Year Ended December 31,
2017
2016
2018
Share options (1)
Operating partnership units
Total anti-dilutive securities
___________________
—
1,432
1,432
—
—
—
2
—
2
(1) Exclusion results as exercise prices were greater than the average market price for each respective period.
Note 15. Share Options and Awards
In April 2011, our Long-Term Incentive Plan for the issuance of options and share awards expired, and issued options
of .1 million remain outstanding as of December 31, 2018.
Under our Amended and Restated 2010 Long-Term Incentive Plan (as amended) 4.0 million common shares are
reserved for issuance, and options and share awards of 1.3 million are available for future grant at December 31,
2018. This plan expires in April 2028.
Compensation expense, net of forfeitures, associated with share options and restricted shares totaled $7.3 million in
2018, $8.6 million in 2017 and $8.5 million in 2016, of which $1.1 million in 2018, $1.7 million in 2017 and $1.9 million
in 2016 was capitalized.
Options
The fair value of share options issued prior to 2012 was estimated on the date of grant using the Black-Scholes option
pricing method based on the expected weighted average assumptions.
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Following is a summary of the option activity for the three years ended December 31, 2018:
Outstanding, January 1, 2016
Forfeited or expired
Exercised
Outstanding, December 31, 2016
Forfeited or expired
Exercised
Outstanding, December 31, 2017
Forfeited or expired
Exercised
Outstanding, December 31, 2018
Shares
Under
Option
2,366,650 $
(460,722)
(971,727)
934,201
(4,042)
(101,805)
828,354
(196,159)
(352,318)
279,877 $
Weighted
Average
Exercise
Price
27.26
47.42
21.95
22.85
43.37
16.11
23.58
32.22
19.78
22.30
The total intrinsic value of options exercised was $3.6 million in 2018, $1.7 million in 2017 and $14.9 million in 2016.
All share options were vested, and there was no unrecognized compensation cost related to share options.
The following table summarizes information about share options outstanding and exercisable at December 31, 2018:
Range of
Exercise Prices
Number
Outstanding
Exercisable
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(000’s)
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(000’s)
Number
$11.85 - $17.78
35,372
0.2 years
$17.79 - $26.69
244,505
1.8 years
Total
279,877
1.6 years
$
$
$
11.85
23.81
35,372
0.2 years
244,505
1.8 years
22.30
$
702
279,877
1.6 years
$
$
$
11.85
23.81
22.30
$
702
Share Awards
The fair value of the market-based share awards was estimated on the date of grant using a Monte Carlo valuation
model based on the following assumptions:
Dividend yield
Expected volatility (1)
Expected life (in years)
Risk-free interest rate
_______________
Year Ended December 31, 2018
Minimum
Maximum
0.0%
18.5%
N/A
1.8%
5.5%
20.4%
3
2.4%
(1)
Includes the volatility of the FTSE NAREIT U.S. Shopping Center Index and Weingarten Realty Investors.
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A summary of the status of unvested share awards for the year ended December 31, 2018 is as follows:
Outstanding, January 1, 2018
Granted:
Service-based awards
Market-based awards relative to FTSE NAREIT U.S. Shopping Center
Index
Market-based awards relative to three-year absolute TSR
Trust manager awards
Vested
Forfeited
Outstanding, December 31, 2018
Unvested
Share
Awards
Weighted
Average
Grant
Date Fair
Value
619,606 $
33.81
137,182
60,909
60,908
34,328
(228,698)
(9,942)
674,293 $
28.11
29.69
13.68
27.95
33.58
32.40
30.26
As of December 31, 2018 and 2017, there was approximately $1.8 million and $2.2 million, respectively, of total
unrecognized compensation cost related to unvested share awards, which is expected to be amortized over a weighted
average of 1.7 years at both December 31, 2018 and 2017.
Note 16. Employee Benefit Plans
Defined Benefit Plan:
The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our pension
plan as well as the components of net periodic benefit costs, including key assumptions (in thousands). The
measurement dates for plan assets and obligations were December 31, 2018 and 2017.
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss (1)
Benefit payments
Benefit obligation at end of year
Change in Plan Assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefit payments
Fair value of plan assets at end of year
Unfunded status at end of year (included in accounts payable and accrued
expenses in 2018 and 2017)
Accumulated benefit obligation
Net loss recognized in accumulated other comprehensive loss
___________________
December 31,
2018
2017
$
58,998 $
52,975
1,295
2,056
(4,478)
(2,112)
55,759 $
53,808 $
(1,894)
1,000
(2,112)
50,802 $
1,223
2,123
4,502
(1,825)
58,998
45,498
7,635
2,500
(1,825)
53,808
(4,957) $
(5,190)
55,683 $
58,860
15,050 $
15,135
$
$
$
$
$
$
(1) The change in actuarial (gain) loss is associated primarily to census and mortality table updates and an increase in the discount rate in
2018.
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The following is the required information for other changes in plan assets and benefit obligation recognized in other
comprehensive (income) loss (in thousands):
Net loss
Amortization of net loss (1)
Total recognized in other comprehensive (income) loss
Total recognized in net periodic benefit cost and other
comprehensive (income) loss
___________________
Year Ended December 31,
2018
2017
2016
1,143 $
82 $
(1,228)
(1,475)
(85) $
(1,393) $
1,719
(1,552)
167
767 $
213 $
2,103
$
$
$
(1) The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next
fiscal year is $1.2 million.
The following is the required information with an accumulated benefit obligation in excess of plan assets (in thousands):
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
The components of net periodic benefit cost are as follows (in thousands):
December 31,
2018
2017
$
55,759 $
55,683
50,802
58,998
58,860
53,808
Year Ended December 31,
2017
2016
2018
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss
Total
$
$
1,295 $
1,223 $
2,056
(3,727)
1,228
2,123
(3,215)
1,475
852 $
1,606 $
1,277
2,078
(2,971)
1,552
1,936
The components of net periodic benefit cost other than the service cost component are included in Interest and Other
Income (Expense) in the Consolidated Statements of Operations.
The assumptions used to develop net periodic benefit cost are shown below:
Year Ended December 31,
2017
2016
2018
Discount rate
Salary scale increases
Long-term rate of return on assets
3.50%
3.50%
7.00%
4.01%
3.50%
7.00%
4.11%
3.50%
7.00%
The selection of the discount rate is made annually after comparison to yields based on high quality fixed-income
investments. The salary scale is the composite rate which reflects anticipated inflation, merit increases, and promotions
for the group of covered participants. The long-term rate of return is a composite rate for the trust. It is derived as the
sum of the percentages invested in each principal asset class included in the portfolio multiplied by their respective
expected rates of return. We considered the historical returns and the future expectations for returns for each asset
class, as well as the target asset allocation of the pension portfolio. This analysis resulted in the selection of 7.00%
as the long-term rate of return assumption for 2018.
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The assumptions used to develop the actuarial present value of the benefit obligation are shown below:
Discount rate
Salary scale increases
Year Ended December 31,
2018
2017
2016
4.12%
3.50%
3.50%
3.50%
4.01%
3.50%
The expected contribution to be paid for the Retirement Plan by us during 2019 is approximately $1.0 million. The
expected benefit payments for the next 10 years for the Retirement Plan is as follows (in thousands):
2019
2020
2021
2022
2023
2024-2028
$
2,395
2,462
2,618
2,761
2,920
15,774
The participant data used in determining the liabilities and costs for the Retirement Plan was collected as of January
1, 2018, and no significant changes have occurred through December 31, 2018.
At December 31, 2018, our investment asset allocation compared to our benchmarking allocation model for our plan
assets was as follows:
Cash and Short-Term Investments
U.S. Stocks
International Stocks
U.S. Bonds
International Bonds
Other
Total
Portfolio
Benchmark
5%
49%
11%
29%
5%
1%
4%
54%
10%
29%
3%
—%
100%
100%
The fair value of plan assets was determined based on publicly quoted market prices for identical assets, which are
classified as Level 1 observable inputs. The allocation of the fair value of plan assets was as follows:
Cash and Short-Term Investments
Large Company Funds
Mid Company Funds
Small Company Funds
International Funds
Fixed Income Funds
Growth Funds
Total
December 31,
2018
2017
20%
33%
7%
6%
8%
18%
8%
17%
36%
6%
6%
10%
16%
9%
100%
100%
Concentrations of risk within our equity portfolio are investments classified within the following sectors: technology,
financial services, healthcare, consumer cyclical goods and industrial, which represents approximately 23%, 17%,
16%, 14% and 10% of total equity investments, respectively.
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Defined Contribution Plans:
Compensation expense related to our defined contribution plans was $3.8 million in 2018, $3.9 million in 2017 and
$3.5 million in 2016.
Note 17. Related Parties
Through our management activities and transactions with our real estate joint ventures and partnerships, we had net
accounts receivable of $.5 million and $2.0 million outstanding as of December 31, 2018 and 2017, respectively. We
also had accounts payable and accrued expenses of $.7 million and $.4 million outstanding as of December 31, 2018
and 2017, respectively. We recorded joint venture fee income included in Other revenues for the year ended
December 31, 2018, 2017 and 2016 of $6.1 million, $6.2 million and $5.1 million, respectively.
In October 2016, an unconsolidated joint venture distributed land to both us and our partner, and we recognized a
gain of $1.9 million associated with the remeasurement of the land parcel. In September 2016, we acquired a partner's
50% interest in an unconsolidated tenancy-in-common arrangement for approximately $13.5 million that we had
previously accounted for under the equity method, and we recognized a gain of $9.0 million on the fair value
remeasurement of our equity method investment. In February 2016, in exchange for our partners' aggregate 49%
interest in a venture and $2.5 million in cash, we distributed one center to our partners, and we re-measured our
investment in this venture to its fair value, and recognized a gain of $37.4 million.
Note 18. Commitments and Contingencies
Leases
We are engaged in the operation of shopping centers, which are either owned or, with respect to certain shopping
centers, operated under long-term ground leases. These ground leases expire at various dates through 2069, with
renewal options and in some cases, options to purchase the underlying asset by either the lessor or lessee. Space in
our shopping centers is leased to tenants pursuant to agreements that provide for terms of less than 10 years and
may include multiple options to extend the lease term in increments up to five years, for annual rentals subject to
upward adjustments based on operating expense levels, sales volume, or contractual increases as defined in the lease
agreements.
Scheduled minimum rental payments under the terms of all non-cancelable operating leases in which we are the
lessee, principally for shopping center ground leases, for the subsequent five years and thereafter ending December 31,
are as follows (in thousands):
2019
2020
2021
2022
2023
Thereafter
Total
$
2,779
2,536
2,334
2,318
2,283
99,302
$
111,552
Rental expense for operating leases was, in millions: $3.1 in 2018; $2.9 in 2017 and $3.0 in 2016, which was recognized
in Operating expense. Minimum revenues under subleases, applicable to the ground lease rentals, under the terms
of all non-cancelable tenant leases was, in millions: $22.8 million in 2018; $27.1 million in 2017 and $27.0 million in
2016.
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The scheduled future minimum revenues under subleases, applicable to the ground lease rentals, under the terms of
all non-cancelable tenant leases, assuming no new or renegotiated leases or option extensions for the subsequent
five years and thereafter ending December 31, are as follows (in thousands):
2019
2020
2021
2022
2023
Thereafter
Total
$
22,528
20,903
18,886
17,245
15,128
43,439
$
138,129
Property under capital leases that is included in buildings and improvements consisted of two centers totaling $15.7
million and $16.8 million at December 31, 2018 and 2017, respectively. Amortization of property under capital leases
is included in depreciation and amortization expense, and the balance of accumulated depreciation associated with
these capital leases was $14.1 million and $15.5 million at December 31, 2018 and 2017, respectively. Future minimum
lease payments under these capital leases total $29.4 million, of which $7.5 million represents interest. Accordingly,
the remaining balance of the related lease liability included in Debt, net in the Consolidated Balance Sheet was $21.9
million at December 31, 2018.
The annual future minimum lease payments under capital leases as of December 31, 2018 are as follows (in thousands):
2019
2020
2021
2022
2023
Total
$
$
1,642
1,635
1,627
1,618
22,878
29,400
Total future minimum revenues under subleases, applicable to these capital leases, under the terms of all non-
cancelable tenant leases, assuming no new or renegotiated leases or option extensions as of December 31, 2018,
are $14.4 million.
Commitments and Contingencies
As of December 31, 2018 and 2017, we participated in two real estate ventures structured as DownREIT partnerships
that have centers in Arkansas, North Carolina and Texas. We have operating and financial control over these ventures
and consolidate them in our consolidated financial statements. These ventures allow the outside limited partners to
put their interest in the partnership to us, and we have the option to redeem the interest in cash or a fixed number of
our common shares, at our discretion. We also participate in a real estate venture that has a property in Texas that
allows its outside partner to put operating partnership units to us. We have the option to redeem these units in cash
or a fixed number of our common shares, at our discretion. The aggregate redemption value of these interests was
approximately $36 million and $47 million as of December 31, 2018 and 2017, respectively.
As of December 31, 2018, we have entered into commitments aggregating $190.7 million comprised principally of
construction contracts which are generally due in 12 to 36 months.
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We issue letters of intent signifying a willingness to negotiate for acquisitions, dispositions or joint ventures, as well
as other types of potential transactions, during the ordinary course of our business. Such letters of intent and other
arrangements are non-binding to all parties unless and until a definitive contract is entered into by the parties. Even
if definitive contracts relating to the acquisition or disposition of property are entered into, these contracts generally
provide the purchaser a time period to evaluate the property and conduct due diligence. The purchaser, during this
time, will have the ability to terminate a contract without penalty or forfeiture of any deposit or earnest money. No
assurance can be provided that any definitive contracts will be entered into with respect to any matter covered by
letters of intent, or that we will consummate any transaction contemplated by a definitive contract. Additionally, due
diligence periods for property transactions are frequently extended as needed. An acquisition or disposition of property
becomes probable at the time the due diligence period expires and the definitive contract has not been terminated.
Our risk is then generally extended only to any earnest money deposits associated with property acquisition contracts,
and our obligation to sell under a property sales contract.
We are subject to numerous federal, state and local environmental laws, ordinances and regulations in the areas where
we own or operate properties. We are not aware of any contamination which may have been caused by us or any of
our tenants that would have a material effect on our consolidated financial statements.
As part of our risk management activities, we have applied and been accepted into state sponsored environmental
programs which will limit our expenses if contaminants need to be remediated. We also have an environmental insurance
policy that covers us against third party liabilities and remediation costs.
While we believe that we do not have any material exposure to environmental remediation costs, we cannot give
absolute assurance that changes in the law or new discoveries of contamination will not result in additional liabilities
to us.
Litigation
We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict
the amounts involved, our management and counsel are of the opinion that, when such litigation is resolved, any
additional liability, if any, will not have a material effect on our consolidated financial statements.
Note 19. Variable Interest Entities
Consolidated VIEs:
At both December 31, 2018 and 2017, nine of our real estate joint ventures, whose activities primarily consisted of
owning and operating 21 and 22 neighborhood/community shopping centers, respectively, were determined to be
VIEs. Based on a financing agreement by one of our real estate joint ventures that has a bottom dollar guaranty, which
is disproportionate to our ownership, we have determined that we are the primary beneficiary and have consolidated
this joint venture. For the remaining real estate joint ventures, we concluded we are the primary beneficiary based
primarily on our significant power to direct the entities' activities without any substantive kick-out or participating rights.
A summary of our consolidated VIEs is as follows (in thousands):
Assets Held by VIEs
Assets Held as Collateral for Debt (1)
Maximum Risk of Loss (1)
___________________
December 31,
2018
2017
$
225,388 $
235,713
40,004
29,784
42,979
29,784
(1) Represents the amount of debt and related assets held as collateral associated with the bottom dollar guaranty at one real estate joint
venture.
Restrictions on the use of these assets can be significant because they may serve as collateral for debt. Further, we
are generally required to obtain our partner's approval in accordance with the joint venture agreement for any major
transactions. Transactions with these joint ventures on our consolidated financial statements have primarily been
positive as demonstrated by the generation of net income and operating cash flows, as well as the receipt of cash
distributions. We and our partners are subject to the provisions of the joint venture agreements which include provisions
for when additional contributions may be required to fund operating cash shortfalls, development expenditures and
unplanned capital expenditures.
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Unconsolidated VIEs:
At both December 31, 2018 and 2017, two unconsolidated real estate joint ventures were determined to be VIEs. We
have determined that one entity was a VIE through the issuance of a secured loan, since the lender had the ability to
make decisions that could have a significant impact on the success of the entity. Based on the associated agreements
for the future development of a mixed-use project, we concluded that the other entity was a VIE, but we are not the
primary beneficiary as the substantive participating rights associated with the entity are shared, and we do not have
the power to direct the significant activities of the entity. Our analysis considered that all major decisions require
unanimous member consent and those decisions include significant activities such as development, financing, leasing
and operations of the entity.
A summary of our unconsolidated VIEs is as follows (in thousands):
Investment in Real Estate Joint Ventures and Partnerships, net (1)
Other Liabilities, net (2)
Maximum Risk of Loss (3)
___________________
December 31,
2018
2017
$
76,575 $
6,592
34,000
36,784
5,799
34,000
(1) The carrying amount of the investment represents our contributions to a real estate joint venture, net of any distributions made and our
portion of the equity in earnings of the real estate joint venture. The increase between the periods represents new development funding
of a mixed-use project.
Includes the carrying amount of an investment where distributions have exceeded our contributions and our portion of the equity in
earnings for a real estate joint venture.
(2)
(3) The maximum risk of loss has been determined to be limited to our debt exposure for the real estate joint ventures. Additionally, our
investment, including contributions and distributions, associated with a mixed-use project is disclosed in (1) above.
We and our partners are subject to the provisions of the joint venture agreements that specify conditions, including
operating shortfalls, development expenditures and unplanned capital expenditures, under which additional
contributions may be required. With respect to our future development of a mixed-used project, we anticipate funding
approximately $57 million through 2020.
Note 20. Fair Value Measurements
Recurring Fair Value Measurements:
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017, aggregated by
the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):
Quoted Prices
in Active
Markets for
Identical
Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value at
December 31,
2018
Assets:
Cash equivalents, primarily money market funds (1) $
Restricted cash, primarily money market funds (1)
Investments, mutual funds held in a grantor trust (1)
Investments, mutual funds (1)
54,848
5,254
30,996
6,635
$
97,733 $
— $
— $
54,848
5,254
30,996
6,635
97,733
Total
Liabilities:
Deferred compensation plan obligations
Total
___________________
$
$
$
30,996
30,996 $
— $
$
— $
30,996
30,996
(1) For the year ended December 31, 2018, a net gain of $1.4 million was included in Interest and Other Income (Expense), of which $(3.0)
million represented an unrealized loss.
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Assets:
Investments, mutual funds held in a grantor trust
Investments, mutual funds
Derivative instruments:
Interest rate contracts
Total
Liabilities:
Deferred compensation plan obligations
Total
Quoted Prices
in Active
Markets for
Identical
Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value at
December 31,
2017
$
$
$
$
31,497
7,206
$
38,703 $
2,035
2,035 $
31,497
31,497 $
— $
$
— $
$
— $
31,497
7,206
2,035
40,738
31,497
31,497
Nonrecurring Fair Value Measurements:
Property Impairments
Property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the
property, including any identifiable intangible assets, site costs and capitalized interest, may not be recoverable. In
such an event, a comparison is made of the current and projected operating cash flows of each such property into the
foreseeable future on an undiscounted basis to the carrying amount of such property. If we conclude that an impairment
may have occurred, estimated fair values are determined by management utilizing cash flow models, market
capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates, appraisals, bona
fide purchase offers or the expected sales price of an executed sales agreement in accordance with our fair value
measurements accounting policy. Market capitalization rates and market discount rates are determined by reviewing
current sales of similar properties and transactions, and utilizing management’s knowledge and expertise in property
marketing.
No assets were measured at fair value on a nonrecurring basis at December 31, 2018. Assets measured at fair value
on a nonrecurring basis at December 31, 2017 aggregated by the level in the fair value hierarchy in which those
measurements fall, are as follows (in thousands):
Quoted Prices
in Active
Markets for
Identical
Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
Total Gains
(Losses) (1)
$
$
— $
12,901
12,901
$
$
4,184
4,184
$
$
17,085
17,085
$
$
(7,828)
(7,828)
Property (2)
Total
____________
(1) Total gains (losses) exclude impairments on disposed assets because they are no longer held by us.
(2)
In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying
amount of $24.9 million was written down to a fair value of $17.1 million, resulting in a loss of $7.8 million, which was included in earnings
for the first quarter of 2017. Management’s estimate of fair value of these properties was determined using a bona fide purchase offer
for the Level 2 inputs. See the quantitative information about the significant unobservable inputs used for our Level 3 fair value
measurements table below.
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Fair Value Disclosures:
Unless otherwise listed below, short-term financial instruments and receivables are carried at amounts which
approximate their fair values based on their highly-liquid nature, short-term maturities and/or expected interest rates
for similar instruments.
Schedule of our fair value disclosures is as follows (in thousands):
December 31,
2018
Fair Value
Using
Significant
Other
Observable
Inputs
(Level 2)
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
2017
Fair Value
Using
Significant
Other
Observable
Inputs
(Level 2)
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
$
20,009
$
25,000 $
22,097
$
25,000
3,000 $
2,988
4,489 $
4,479
1,771,999
22,685
1,761,215
2,063,263
23,131
17,889
2,109,658
16,393
Other Assets:
Tax increment revenue bonds (1)
Investments, held to maturity (2)
Debt:
Fixed-rate debt
Variable-rate debt
___________________
(1) At December 31, 2018 and 2017, the credit loss balance on our tax increment revenue bonds was $31.0 million.
(2)
Investments held to maturity are recorded at cost. As of December 31, 2018 and 2017, these investments had unrealized losses of $12
thousand and $10 thousand, respectively.
The quantitative information about the significant unobservable inputs used for our Level 3 nonrecurring fair value
measurements as of December 31, 2017 reported in the above table, is as follows:
Fair Value at
December 31,
2017
Range
Minimum
Maximum
Description
(in thousands)
Valuation Technique
Unobservable Inputs
2017
2017
10.5%
8.8%
5
12.0%
10.0%
10
2.0%
3.0%
2.0%
20.0%
70.0%
$
$
11.00
10.00
$
$
16.00
35.00
Property
$
4,184 Discounted cash flows
Discount rate
_______________
(1) Only applies to one property valuation.
Capitalization rate
Holding period (years)
Expected future inflation rate (1)
Market rent growth rate (1)
Expense growth rate (1)
Vacancy rate (1)
Renewal rate (1)
Average market rent rate (1)
Average leasing cost per square foot (1)
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Note 21. Quarterly Financial Data (Unaudited)
Summarized quarterly financial data is as follows (in thousands):
2018
Revenues
Net income
Net income attributable to
common shareholders
Earnings per common
share – basic
Earnings per common
share – diluted
2017
Revenues
Net income
Net income attributable to
common shareholders
Earnings per common
share – basic
Earnings per common
share – diluted
___________________
First
Second
Third
Fourth
$
132,452
(1)
$
142,086
148,969 (2)(3)
146,824 (2)(3)
1.15 (2)(3)
1.13 (2)(3)
79,871
78,289
.61
.61
(1)
(1)(2)
(4)
(1)(2)
(4)
(1)(2)
(4)
(1)(2)
(4)
$
128,790
(1) $
127,819
(1)
53,274 (2)(4)
(2)(4)
42,981
.34
.34
(5)
(2)(4)
(5)
(2)(4)
(5)
63,229 (2)(4)
59,507 (2)(4)
.47 (2)(4)
.46 (2)(4)
$
143,663
$
146,023
$
144,110
$
139,367
(2)(4)
(6)
(2)(4)
(5)(6)
(2)(4)
(5)(6)
(2)(4)
(5)(6)
36,396
30,826
.24
.24
69,193
(2)
63,852 (2)(5)
.50 (2)(5)
.49 (2)(5)
74,473
72,629
.57
.56
(2)
(2)
(2)
(2)
170,653 (2)(6)
167,967 (2)(6)
1.31 (2)(6)
1.30 (2)(6)
(1) The quarter results include revenues associated with dispositions, which totaled $11.9 million, $8.3 million, $7.0 million and $4.1 million
for the three months ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively. Additionally, a
$10.0 million write-off of a below-market lease intangible from the termination of a tenant's lease increased revenues for the three months
ended June 30, 2018.
(2) The quarter results include significant gains on the sale of property, including gains in equity in earnings from real estate joint ventures
and partnerships, net. Gain amounts are: $111.4 million, $48.2 million, $19.8 million and $34.8 million for the three months ended March 31,
2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, and $15.8 million, $34.2 million, $38.6 million and
$136.3 million for the three months ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, respectively.
(3) The quarter results include a gain on extinguishment of debt including related swap activity totaling $3.8 million for the three months
ended March 31, 2018.
(4) The quarter results include a $13.1 million write-off of an in-place lease intangible for the three months ended June 30, 2018 and a $3.1
million lease termination fee for the three months ended March 31, 2017. Additionally, the quarter results include $2.4 million and $7.7
million of impairment losses for the three months ended September 30, 2018 and December 31, 2018, respectively, and $15.0 million of
impairment losses for the three months ended March 31, 2017.
(5) Associated primarily with the gains discussed in (2) above, amounts in net income attributable to noncontrolling interests are: $.5 million,
$8.6 million and $1.9 million for the three months ended March 31, 2018, September 30, 2018 and December 31, 2018, respectively, and
$3.9 million and $3.6 million for the three months ended March 31, 2017 and June 30, 2017, respectively.
(6) Deferred tax (benefit) amounts at our taxable REIT subsidiary include $(3.3) million and $1.5 million for the three months ended March 31,
2017 and December 31, 2017, respectively. These tax amounts result from gains associated with the disposition of centers and land.
Additionally, a change in the statutory rate was recognized as a result of the enactment of the Tax Act on December 22, 2017.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
* * * * *
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ITEM 9A. Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer,
management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures
(as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2018. Based
on that evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure
controls and procedures were effective as of December 31, 2018.
There has been no change to our internal control over financial reporting during the quarter ended December 31, 2018
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Weingarten Realty Investors and its subsidiaries (“WRI”) maintain a system of internal control over financial reporting,
as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act, which is a process designed under
the supervision of WRI’s principal executive officer and principal financial officer and effected by WRI’s Board of Trust
Managers, management and other personnel, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles.
WRI’s internal control over financial reporting includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of WRI’s assets;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of WRI are being made only in accordance with authorizations of management and trust
managers of WRI; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of WRI’s assets that could have a material effect on the financial statements.
WRI’s management has responsibility for establishing and maintaining adequate internal control over financial reporting
for WRI. Management, with the participation of WRI’s Chief Executive Officer and Chief Financial Officer, conducted
an evaluation of the effectiveness of WRI’s internal control over financial reporting as of December 31, 2018 based
on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Based on their evaluation of WRI’s internal control over financial reporting, WRI’s management along with the Chief
Executive Officer and Chief Financial Officer believe that WRI’s internal control over financial reporting is effective as
of December 31, 2018.
Deloitte & Touche LLP, WRI’s independent registered public accounting firm that audited the consolidated financial
statements and financial statement schedules included in this Form 10-K, has issued an attestation report on the
effectiveness of WRI’s internal control over financial reporting.
February 28, 2019
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trust Managers of Weingarten Realty Investors
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Weingarten Realty Investors and subsidiaries (the
“Company”) as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended
December 31, 2018, of the Company and our report dated February 28, 2019, expressed an unqualified opinion on
those financial statements and financial statement schedules.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Annual Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Houston, Texas
February 28, 2019
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ITEM 9B. Other Information
Not applicable.
PART III
ITEM 10. Trust Managers, Executive Officers and Corporate Governance
Information with respect to our trust managers and executive officers is incorporated herein by reference to the “Election
of Trust Managers - Proposal One," “Compensation Discussion and Analysis - Overview” and “Share Ownership of
Beneficial Owners and Management” sections of our definitive Proxy Statement for the Annual Meeting of Shareholders
to be held April 29, 2019.
Code of Conduct and Ethics
We have adopted a code of business and ethics for trust managers, officers and employees, known as the Code of
Conduct and Ethics. The Code of Conduct and Ethics is available on our website at www.weingarten.com. Shareholders
may request a free copy of the Code of Conduct and Ethics from:
Weingarten Realty Investors
Attention: Investor Relations
2600 Citadel Plaza Drive, Suite 125
Houston, Texas 77008
(713) 866-6000
www.weingarten.com
We have also adopted a Code of Ethical Conduct for Officers and Senior Financial Associates setting forth a code of
ethics applicable to our principal executive officer, principal financial officer, chief accounting officer and financial
associates, which is available on our website at www.weingarten.com. Shareholders may request a free copy of the
Code of Conduct for Officers and Senior Financial Associates from the address and phone number set forth above.
Governance Guidelines
We have adopted governance guidelines, known as the Governance Policies, which are available on our website at
www.weingarten.com. Shareholders may request a free copy of the Governance Policies from the address and phone
number set forth above under “Code of Conduct and Ethics.”
ITEM 11. Executive Compensation
Information with respect to executive compensation is incorporated herein by reference to the “Compensation
Discussion and Analysis,” “Trust Manager Compensation” including the "Trust Manager Compensation Table” section,
“Compensation Committee Report” and “Summary Compensation Table” sections of our definitive Proxy Statement
for the Annual Meeting of Shareholders to be held April 29, 2019.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The “Share Ownership of Beneficial Owners and Management” section of our definitive Proxy Statement for the Annual
Meeting of Shareholders to be held April 29, 2019 is incorporated herein by reference.
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The following table summarizes the equity compensation plans under which our common shares of beneficial interest
may be issued as of December 31, 2018:
Plan category
Equity compensation plans approved by
shareholders
Equity compensation plans not approved by
shareholders
Total
Number of
shares to
be issued upon
exercise of
outstanding
options,
warrants and
rights
279,877
—
279,877
Number of
shares
remaining
available for
future issuance
under equity
compensation
plans
1,287,267
—
1,287,267
Weighted average
exercise price of
outstanding options,
warrants and rights
$22.30
—
$22.30
ITEM 13. Certain Relationships and Related Transactions, and Trust Manager Independence
The “Governance,” "Compensation Committee Interlocks and Insider Participation” and "Certain Transactions" sections
of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 2019 are incorporated
herein by reference.
ITEM 14. Principal Accountant Fees and Services
The “Accounting Firm Fees” section within “Ratification of Independent Registered Public Accounting Firm - Proposal
Two” of our definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 2019 is incorporated
herein by reference.
PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
Page
(A) Report of Independent Registered Public Accounting Firm
(B) Financial Statements:
(i) Consolidated Statements of Operations for the year ended December 31, 2018, 2017 and
2016
(ii) Consolidated Statements of Comprehensive Income for the year ended December 31, 2018,
2017 and 2016
(iii) Consolidated Balance Sheets as of December 31, 2018 and 2017
(iv) Consolidated Statements of Cash Flows for the year ended December 31, 2018, 2017 and
2016
(v) Consolidated Statements of Equity for the year ended December 31, 2018, 2017 and 2016
(vi) Notes to Consolidated Financial Statements
(C) Financial Statement Schedules:
Valuation and Qualifying Accounts
II
III Real Estate and Accumulated Depreciation
IV Mortgage Loans on Real Estate
44
45
46
47
48
49
50
97
98
104
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to
require submission of the schedule or because the information required is included in the consolidated financial
statements and notes thereto.
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(b)
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
Exhibits:
— Restated Declaration of Trust (filed as Exhibit 3.1 to WRI’s Form 8-A dated January 19, 1999 and
incorporated herein by reference).
— Amendment of the Restated Declaration of Trust (filed as Exhibit 3.2 to WRI’s Form 8-A dated January
19, 1999 and incorporated herein by reference).
— Second Amendment of the Restated Declaration of Trust (filed as Exhibit 3.3 to WRI’s Form 8-A
dated January 19, 1999 and incorporated herein by reference).
— Third Amendment of the Restated Declaration of Trust (filed as Exhibit 3.4 to WRI’s Form 8-A dated
January 19, 1999 and incorporated herein by reference).
— Fourth Amendment of the Restated Declaration of Trust dated April 28, 1999 (filed as Exhibit 3.5 to
WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein
by reference).
— Fifth Amendment of the Restated Declaration of Trust dated April 20, 2001 (filed as Exhibit 3.6 to
WRI’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein
by reference).
— Amended and Restated Bylaws of WRI (filed as Exhibit 99.2 to WRI’s Form 8-A dated February 23,
1998 and incorporated herein by reference).
— Sixth Amendment of the Restated Declaration of Trust dated May 6, 2010 (filed as Exhibit 3.1 to
WRI’s Form 8-K dated May 6, 2010 and incorporated herein by reference).
— Amendment of Bylaws-Direct Registration System, Section 7.2(a) dated May 3, 2007 (filed as Exhibit
3.8 to WRI’s Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference).
— Second Amended and Restated Bylaws of Weingarten Realty Investors (filed as Exhibit 3.1 to WRI’s
Form 8-K on February 26, 2010 and incorporated herein by reference).
— Form of Indenture between Weingarten Realty Investors and The Bank of New York Mellon Trust
Company, N.A. (successor to J.P. Morgan Trust Company, National Association, successor to Texas
Commerce Bank National Association) (filed as Exhibit 4(a) to WRI’s Registration Statement on Form
S-3 (No. 33-57659) dated February 10, 1995 and incorporated herein by reference).
— Form of Indenture between Weingarten Realty Investors and The Bank of New York Mellon Trust
Company, N.A. (successor to J.P. Morgan Trust Company, National Association, successor to Texas
Commerce Bank National Association) (filed as Exhibit 4(b) to WRI’s Registration Statement on Form
S-3 (No. 33-57659) dated February 10, 1995 and incorporated herein by reference).
— First Supplemental Indenture, dated August 2, 2006, between Weingarten Realty Investors and The
Bank of New York Mellon Trust Company, N.A. (successor to J.P. Morgan Trust Company, National
Association, successor to Texas Commerce Bank National Association) (filed as Exhibit 4.1 to WRI’s
Form 8-K on August 2, 2006 and incorporated herein by reference).
— Second Supplemental Indenture, dated October 9, 2012, between Weingarten Realty Investors and
The Bank of New York Mellon Trust Company, N.A. (successor to J.P. Morgan Trust Company,
National Association, successor to Texas Commerce Bank National Association) (filed as Exhibit 4.1
to WRI’s Form 8-K on October 9, 2012 and incorporated herein by reference).
— 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).
— 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).
— 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).
— 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).
— Form of 3.375% Senior Note due 2022 (filed as Exhibit 4.2 to WRI’s Form 8-K on October 9, 2012
and incorporated herein by reference).
— Form of 3.50% Senior Note due 2023 (filed as Exhibit 4.1 to WRI’s Form 8-K on March 22, 2013 and
incorporated herein by reference).
— Form of 4.450% Senior Note due 2024 (filed as Exhibit 4.1 to WRI’s Form 8-K on October 15, 2013
and incorporated herein by reference).
— Form of 3.850% Senior Note due 2025 (filed as Exhibit 4.1 to WRI's Form 8-K on May 14, 2015 and
incorporated herein by reference).
— Form of 3.250% Senior Note due 2026 (filed as Exhibit 4.1 to WRI’s Form 8-K on August 11, 2016
and incorporated herein by reference).
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10.1†
— 2001 Long Term Incentive Plan (filed as Exhibit 10.7 to WRI’s Annual Report on Form 10-K for the
year ended December 31, 2001 and incorporated herein by reference).
10.2†
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
— Restatement of the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
August 4, 2006 (filed as Exhibit 10.35 to WRI’s Form 10-Q for the quarter ended September 30, 2006
and incorporated herein by reference).
— Restatement of the Weingarten Realty Investors Deferred Compensation Plan dated August 4, 2006
(filed as Exhibit 10.36 to WRI’s Form 10-Q for the quarter ended September 30, 2006 and incorporated
herein by reference).
— Restatement of the Weingarten Realty Investors Retirement Benefit Restoration Plan dated August
4, 2006 (filed as Exhibit 10.37 to WRI’s Form 10-Q for the quarter ended September 30, 2006 and
incorporated herein by reference).
— Amendment No. 1 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
December 15, 2006 (filed as Exhibit 10.38 to WRI’s Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference).
— Amendment No. 1 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated
December 15, 2006 (filed as Exhibit 10.39 to WRI’s Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference).
— Amendment No. 1 to the Weingarten Realty Investors Deferred Compensation Plan dated December
15, 2006 (filed as Exhibit 10.40 to WRI’s Annual Report on Form 10-K for the year ended December
31, 2006 and incorporated herein by reference).
— Amendment No. 2 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated
November 9, 2007 (filed as Exhibit 10.43 to WRI’s Annual Report on Form 10-K for the year ended
December 31, 2007 and incorporated herein by reference).
— Amendment No. 2 to the Weingarten Realty Investors Deferred Compensation Plan dated November
9, 2007 (filed as Exhibit 10.44 to WRI’s Annual Report on Form 10-K for the year ended December
31, 2007 and incorporated herein by reference).
— Amendment No. 2 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
November 9, 2007 (filed as Exhibit 10.45 to WRI’s Annual Report on Form 10-K for the year ended
December 31, 2007 and incorporated herein by reference).
— Amendment No. 3 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated
November 17, 2008 (filed as Exhibit 10.1 to WRI’s Form 8-K on December 4, 2008 and incorporated
herein by reference).
— Amendment No. 3 to the Weingarten Realty Investors Deferred Compensation Plan dated November
17, 2008 (filed as Exhibit 10.2 to WRI’s Form 8-K on December 4, 2008 and incorporated herein by
reference).
— Amendment No. 3 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
November 17, 2008 (filed as Exhibit 10.3 to WRI’s Form 8-K on December 4, 2008 and incorporated
herein by reference).
— Amendment No. 1 to the Weingarten Realty Investors 2001 Long Term Incentive Plan dated November
17, 2008 (filed as Exhibit 10.4 to WRI’s Form 8-K on December 4, 2008 and incorporated herein by
reference).
— First Amendment to the Weingarten Realty Retirement Plan, amended and restated, dated December
2, 2009 (filed as Exhibit 10.51 to WRI’s Annual Report on Form 10-K for the year ended December
31, 2009 and incorporated herein by reference).
— First Amendment to the Master Nonqualified Plan Trust Agreement dated March 12, 2009 (filed as
Exhibit 10.53 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and
incorporated herein by reference).
— Second Amendment to the Master Nonqualified Plan Trust Agreement dated August 4, 2009 (filed
as Exhibit 10.54 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and
incorporated herein by reference).
— Non-Qualified Plan Trust Agreement for Recordkept Plans dated September 1, 2009 (filed as Exhibit
10.55 to WRI’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated
herein by reference).
10.19†
— Amended and Restated 2010 Long-Term Incentive Plan (filed as Exhibit 99.1 to WRI’s Form 8-K
dated April 26, 2010 and incorporated herein by reference).
10.20†
— Amendment No. 4 to the Weingarten Realty Investors Deferred Compensation Plan dated February
26, 2010 (filed as Exhibit 10.57 to WRI’s Form 10-Q for the quarter ended March 31, 2010 and
incorporated herein by reference).
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10.21†
— Amendment No. 4 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
May 6, 2010 (filed as Exhibit 10.58 to WRI’s Form 10-Q for the quarter ended March 31, 2010 and
incorporated herein by reference).
10.22†
— 2002 WRI Employee Share Purchase Plan dated May 6, 2003 (filed as Exhibit 10.60 to WRI’s Form
10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
10.23†
10.24†
10.25†
10.26†
10.27†
10.28†
10.29†
10.30†
10.31†
10.32†
10.33†
10.34†
10.35†
10.36†
10.37†
10.38†
10.39†
10.40
— Amended and Restated 2002 WRI Employee Share Purchase Plan dated May 10, 2010 (filed as
Exhibit 10.61 to WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by
reference).
— Weingarten Realty Investors Executive Medical Reimbursement Plan and Summary Plan Description
(filed as Exhibit 10.59 to WRI’s Annual Report on Form 10-K dated December 31, 2010 and
incorporated herein by reference).
— Second Amendment to the Weingarten Realty Retirement Plan dated March 14, 2011 (filed as Exhibit
10.59 to WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
— Third Amendment to the Weingarten Realty Retirement Plan dated May 4, 2011 (filed as Exhibit 10.60
to WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
— Third Amendment to the Master Nonqualified Plan Trust Agreement dated April 26, 2011 (filed as
Exhibit 10.1 to WRI’s Form 10-Q for the quarter ended June 30, 2011 and incorporated herein by
reference).
— Fourth Amendment to the Weingarten Realty Retirement Plan dated March 2, 2012 (filed as Exhibit
10.2 to WRI's Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
— Amendment No. 4 to the Weingarten Realty Investors Retirement Benefit Restoration Plan dated
August 10, 2012 (filed as Exhibit 10.1 to WRI's Form 10-Q for the quarter ended September 30, 2012
and incorporated herein by reference).
— Amendment No. 5 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
August 10, 2012 (filed as Exhibit 10.2 to WRI's Form 10-Q for the quarter ended September 30, 2012
and incorporated herein by reference).
— Master Nonqualified Plan Trust Agreement dated August 23, 2006 (filed as Exhibit 10.53 to WRI's
Annual Report on Form 10-K for the year ended December 31, 2012 and incorporated herein by
reference).
— Restatement of the Weingarten Realty Retirement Plan dated November 17, 2008 (filed as Exhibit
10.54 to WRI's Annual Report on Form 10-K for the year ended December 31, 2012 and incorporated
herein by reference).
— Restatement of the Weingarten Realty Investors Retirement Plan dated December 23, 2013 (filed
as Exhibit 10.57 to WRI's Annual Report on Form 10-K for the year ended December 31, 2013 and
incorporated herein by reference).
— First Amendment to Weingarten Realty Investors Retirement Plan dated December 16, 2014 (filed
as Exhibit 10.59 to WRI's Annual Report on Form 10-K for the year ended December 31, 2014 and
incorporated herein by reference).
— Amended and Restated Weingarten Realty Investors Deferred Compensation Plan effective April 1,
2016 (filed as Exhibit 10.2 to WRI's Form 10-Q for the quarter ended March 31, 2016 and incorporated
herein by reference).
— Second Amendment to Weingarten Realty Investors Retirement Plan dated December 30, 2016 (filed
as Exhibit 10.49 to WRI's Annual Report on Form 10-K for the year ended December 31, 2016 and
incorporated herein by reference).
— Amendment No. 1 to Weingarten Realty Investors Deferred Compensation Plan as Restated Effective
April 1, 2016 (filed as Exhibit 10.51 to WRI's Annual Report on Form 10-K for the year ended December
31, 2016 and incorporated herein by reference).
— Amended and Restated Severance and Change in Control Agreement for Stephen C. Richter dated
July 23, 2018 (filed as Exhibit 99.1 to WRI's Form 8-K on August 1, 2018 and incorporated herein
by reference).
— Amended and Restated Severance and Change in Control Agreement for Johnny Hendrix dated July
20, 2018 (filed as Exhibit 99.2 to WRI's Form 8-K on August 1, 2018 and incorporated herein by
reference).
— Term Loan Agreement dated March 2, 2015 among Weingarten Realty Investors, the Lenders Party
Hereto and Regions Bank, as Administrative Agent, Region Capital Markets, a division of Regions
Bank and U.S. Bank National Association, as Joint Lead Arrangers and Joint Bookrunners, and U.S.
Bank National Association, as Syndication Agent (filed as Exhibit 10.1 to WRI’s Form 8-K on March
3, 2015 and incorporated herein by reference).
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10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
— Amended and Restated Credit Agreement dated March 30, 2016 among Weingarten Realty Investors,
the Lenders Party Hereto and JPMorgan Chase Bank, N.A., as administrative agent, and Bank of
America, N.A., as syndication agent, and Wells Fargo Bank, National Association, PNC Bank, National
Association, Regions Bank, U.S. Bank National Association and The Bank of Nova Scotia, as
documentation agents, and J.P.Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint book runners and joint lead arrangers (filed as Exhibit 10.1 to WRI's Form 8-
K filed on March 31, 2016 and incorporated herein by reference).
— Promissory Note with Reliance Trust Company, Trustee of the Trust under the Weingarten Realty
Investors Deferred Compensation Plan, Supplemental Executive Retirement Plan and Retirement
Benefit Restoration Plan dated March 12, 2009 (filed as Exhibit 10.57 to WRI’s Form 10-Q for the
quarter ended March 31, 2009 and incorporated herein by reference).
— First Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under Weingarten Realty Investors Supplemental Executive Retirement Plan
and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2010 (filed
as Exhibit 10.59 to WRI’s Form 10-Q for the quarter ended June 30, 2010 and incorporated herein
by reference).
— Second Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2011
(filed as Exhibit 10.58 to WRI’s Form 10-Q for the quarter ended March 31, 2011 and incorporated
herein by reference).
— Third Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated February 15, 2012
(filed as Exhibit 10.1 to WRI's Form 10-Q for the quarter ended March 31, 2012 and incorporated
herein by reference).
— Fourth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2013
(filed as Exhibit 10.2 to WRI's Form 10-Q for the quarter ended March 31, 2013 and incorporated
herein by reference).
— Fifth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2014
(filed as Exhibit 10.1 to WRI's Form 10-Q for the quarter ended March 31, 2014 and incorporated
herein by reference).
— Sixth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Weingarten Realty Investors Retirement Benefit Restoration Plan dated March 11, 2015
(filed as Exhibit 10.2 to WRI's Form 10-Q for the quarter ended March 31, 2015 and incorporated
herein by reference).
— Seventh Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Retirement Benefit Restoration Plan, dated March 8, 2016 (filed as Exhibit 10.50 to WRI's
Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by
reference).
— Eighth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Retirement Benefit Restoration Plan, dated March 11, 2017 (filed as Exhibit 10.52 to WRI's
Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by
reference).
10.51
10.52†
10.53†
— Ninth Amendment to Promissory Note with Reliance Trust Company, Trustee of the Master
Nonqualified Plan Trust under the Weingarten Realty Investors Supplemental Executive Retirement
Plan and Retirement Benefit Restoration Plan, dated March 11, 2018 (filed as Exhibit 10.1 to WRI's
Form 10-Q for the quarter ended March 31, 2018 and incorporated herein by reference).
— Third Amendment to the Weingarten Realty Investors Retirement Plan dated July 2, 2018 (filed as
Exhibit 10.1 to WRI's Form 10-Q for the quarter ended September 30, 2018 and incorporated herein
by reference).
— Amendment No. 6 to the Weingarten Realty Investors Supplemental Executive Retirement Plan dated
July 2, 2018 (filed as Exhibit 10.2 to WRI's Form 10-Q for the quarter ended September 30, 2018
and incorporated herein by reference).
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Table of Contents
10.54†
10.55†
21.1*
23.1*
31.1*
31.2*
— First Amendment to the Amended and Restated 2010 Long-Term Incentive Plan of Weingarten Realty
Investors (filed as Exhibit 4.3 to WRI's Registration Statement on Form S-8 dated July 31, 2018 (File
No. 333-226448) and incorporated herein by reference).
— Severance and Change in Control Agreement for Andrew M. Alexander dated February 21, 2019
(filed as Exhibit 99.1 to WRI's Form 8-K on February 25, 2019 and incorporated herein by reference).
— Listing of Subsidiaries of the Registrant.
— Consent of Deloitte & Touche LLP.
— Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
— Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32.1**
— Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-
Oxley Act of 2002 (Chief Executive Officer).
32.2**
— Certification pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-
Oxley Act of 2002 (Chief Financial Officer).
101.INS** — XBRL Instance Document
101.SCH** — XBRL Taxonomy Extension Schema Document
101.CAL** — XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** — XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** — XBRL Taxonomy Extension Labels Linkbase Document
101.PRE** — XBRL Taxonomy Extension Presentation Linkbase Document
*
**
†
Filed with this report.
Furnished with this report.
Management contract or compensation plan or arrangement.
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Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WEINGARTEN REALTY INVESTORS
By:
/s/ Andrew M. Alexander
Andrew M. Alexander
Chairman/President/Chief Executive Officer
Date: February 28, 2019
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of Weingarten Realty Investors, a real estate
investment trust organized under the Texas Business Organizations Code, and the undersigned trust managers and
officers of Weingarten Realty Investors hereby constitute and appoint Andrew M. Alexander, Stanford Alexander,
Stephen C. Richter and Joe D. Shafer or any one of them, its or his true and lawful attorney-in-fact and agent, for it
or him and in its or his name, place and stead, in any and all capacities, with full power to act alone, to sign any and
all amendments to this report, and to file each such amendment to the report, with all exhibits thereto, and any and
all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said
attorney-in-fact and agent full power and authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as it or he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
95
Table of Contents
Pursuant to the requirement of the Securities and Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
By:
/s/ Andrew M. Alexander
Andrew M. Alexander
Chairman/President/Chief Executive Officer
and Trust Manager
(Principal Executive Officer)
February 28, 2019
By:
/s/ Stanford J. Alexander
Stanford J. Alexander
By:
/s/ Shelaghmichael C. Brown
Shelaghmichael C. Brown
By:
/s/ James W. Crownover
James W. Crownover
By:
/s/ Stephen A. Lasher
Stephen A. Lasher
Chairman Emeritus
and Trust Manager
February 28, 2019
Trust Manager
February 28, 2019
Trust Manager
February 28, 2019
Trust Manager
February 28, 2019
By:
/s/ Stephen C. Richter
Stephen C. Richter
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
February 28, 2019
By:
/s/ Thomas L. Ryan
Thomas L. Ryan
By:
/s/ Douglas W. Schnitzer
Douglas W. Schnitzer
By:
By:
By:
/s/ Joe D. Shafer
Joe D. Shafer
/s/ C. Park Shaper
C. Park Shaper
/s/ Marc J. Shapiro
Marc J. Shapiro
Trust Manager
February 28, 2019
Trust Manager
February 28, 2019
Senior Vice President/Chief Accounting Officer
(Principal Accounting Officer)
February 28, 2019
Trust Manager
February 28, 2019
Trust Manager
February 28, 2019
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WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2018, 2017, and 2016
(Amounts in thousands)
Schedule II
Description
2018
Allowance for Doubtful Accounts
Tax Valuation Allowance
2017
Allowance for Doubtful Accounts
Tax Valuation Allowance
2016
Allowance for Doubtful Accounts
Tax Valuation Allowance
___________________
Balance at
beginning
of period
Charged
to costs
and
expenses
Deductions(1)
Balance
at end of
period
$
$
$
7,516 $
2,361 $
3,022 $
15,587
—
2,800
6,855
12,787
6,700 $
25,979
4,255 $
—
3,439 $
10,392
7,516
15,587
6,072 $
2,427 $
1,799 $
27,230
—
1,251
6,700
25,979
(1) The tax valuation allowance deductions for the year ended 2017 represents the effect of the change in the statutory tax rate as a result
of the enactment of the Tax Act on December 22, 2017. For other periods presented, deductions included write-offs of amounts previously
reserved.
97
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Table of Contents
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2018
(Amounts in thousands)
Schedule IV
State
Interest
Rate
Final
Maturity
Date
Periodic
Payment
Terms
Face
Amount of
Mortgages
Carrying
Amount of
Mortgages (1)
Shopping Centers:
First Mortgages:
College Park Realty Company
NV
7.00%
10/31/2053
At Maturity
Total Mortgage Loans on
Real Estate
___________________
$
$
3,410
3,410
$
$
3,410
3,410
(1) The aggregate cost at December 31, 2018 for federal income tax purposes is $3.4 million, and there are no prior liens to be disclosed.
As this is an interest only mortgage loan, there have been no changes in its carrying amount for each year ended December 31, 2018,
2017 and 2016.
104
SHAREHOLDER INFORMATION & SERVICES
BOARD OF TRUST MANAGERS
2 0 1 8 A N N U A L R E P O R T
Stock Listings
New York Stock Exchange
• Common Shares – WRI
Counsel
Dentons US LLP
Dallas, Texas
Memberships
National Association of
Real Estate Investment Trusts, and
International Council of
Shopping Centers
Transfer Agent & Registrar
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
800-550-4689
Auditors
Deloitte & Touche LLP
Houston, Texas
TTY for Hearing Impaired:
Main: 800-952-9245
Foreign: 781-575-4592
Foreign Shareholders:
+1-312-499-7078
Direct Stock Purchase & Dividend Reinvestment
We offer a convenient way to purchase our common shares of
beneficial interest and to automatically reinvest dividends. For a
complete information package on our Investor Services Program,
please contact:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
800-550-4689
www.computershare.com
Direct Deposit
We offer shareholders direct deposit of dividends. Interested
shareholders should contact Computershare Trust Company,
N.A. at 800-550-4689 or visit the investor Web site at www.
computershare.com.
Form 10-K
A copy of the Annual Report on Form 10-K filed with the
Securities and Exchange Commission is available without charge,
via our Web site. Simply go to www.weingarten.com, then go to
the “Investor Relations” tab. You can also contact our Investor
Relations department directly at 800-298-9974 or 713-866-6000
to request a copy.
Certifications
We filed a Section 12 (a) CEO certification with the New York
Stock Exchange (“NYSE”) without qualification regarding our
compliance with NYSE corporate governance listing standards
on May 17, 2018. In addition, we filed with the Securities and
Exchange Commission the CEO and CFO certifications regarding
the quality of the Company’s public disclosure as exhibits to our
Form 10-K for the year ended December 31, 2018 as required by
Section 302 of the Sarbanes-Oxley Act.
Andrew M. Alexander
Chairman/President/Chief Executive Officer,
Weingarten Realty Investors
Chairperson of Executive Committee
Thomas L. Ryan
President/Chief Executive Officer,
Service Corporation International
Chairperson of Audit Committee
Stanford Alexander
Chairman Emeritus,
Weingarten Realty Investors
Member of Executive Committee
Douglas W. Schnitzer
Chairman/Chief Executive Officer,
Senterra LLC
Member of Audit Committee
Shelaghmichael Brown
Former Senior Executive Vice President
and Executive Officer,
BBVA Compass Retail Banking
Chairperson of Governance and
Nominating Committee and
Member of Executive Committee
C. Park Shaper
Former President of Kinder Morgan, Inc.,
Kinder Morgan Energy Partners, L.P.,
Kinder Morgan Management, LLC
Chairperson of Management Development
and Executive Compensation Committee
and Member of Audit Committee
Marc J. Shapiro
Former Vice Chairman,
J.P. Morgan Chase & Co.,
Member of Management Development
and Executive Compensation Committee,
Governance and Nominating Committee
and Executive Committee
James W. Crownover
Former Director, McKinsey & Company
Member of Governance and
Nominating Committee and
Management Development and
Executive Compensation Committee
Stephen A. Lasher
President, The GulfStar Group, Inc.
Member of Audit Committee,
Management Development and
Executive Compensation Committee
and Executive Committee
FORWARD – LOOKING STATEMENTS
This Annual Report on Form 10-K, together with other statements and information
publicly disseminated by us, contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. We intend such forward-
looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and
include this statement for purposes of complying with those safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use of the
words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar
expressions. You should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors, which are, in some cases,
beyond our control and which could materially affect actual results, performances
or achievements. Factors which may cause actual results to differ materially from
current expectations include, but are not limited to, (i) disruptions in financial
markets, (ii) general economic and local real estate conditions, (iii) the inability of
major tenants to continue paying their rent obligations due to bankruptcy, insolvency
or general downturn in their business, (iv) financing risks, such as the inability to
obtain equity, debt, or other sources of financing on favorable terms and changes in
LIBOR availability, (v) changes in governmental laws and regulations, (vi) the level and
volatility of interest rates, (vii) the availability of suitable acquisition opportunities, (viii)
the ability to dispose of properties, (ix) changes in expected development activity, (x)
increases in operating costs, (xi) tax matters, including the effect of changes in tax
laws and the failure to qualify as a real estate investment trust, and (xii) investments
through real estate joint ventures and partnerships, which involve risks not present
in investments in which we are the sole investor. Accordingly, there is no assurance
that our expectations will be realized. For further discussion of the factors that could
materially affect the outcome of our forward-looking statements and our future results
and financial condition, see “Item 1A. Risk Factors.”
2018
ANNUAL
REPORT
2600 CITADEL PLAZA DR,
SUITE 125
HOUSTON, TEXAS 77008
PH: 713.866.6000
FAX: 713.866.6049
WEINGARTEN.COM
C O R P O R AT E P R O F I L E : Incorporated in 1948, Weingarten Realty Investors (NYSE: WRI) is one of the oldest real estate
investment trusts listed on the New York Stock Exchange. As a commercial real estate owner, manager and developer for over 70 years,
Weingarten remains focused on delivering solid returns to shareholders as the Company actively acquires, develops and intensively
manages properties that span the United States from coast-to-coast. The Company owns or operates under long-term leases, either
directly or through its interest in real estate joint ventures or partnerships, a total of 178 properties which are located in 17 states that
span the United States from coast-to-coast. The Company’s portfolio totals approximately 35.1 million square feet of gross leasable
area, of which our interest in these properties aggregate approximately 22.9 million square feet. To learn more about the Company’s
operations and growth strategies, please visit www.weingarten.com.