ANNUAL
REPORT 2
9
1
0
2019 ANNUAL REPORT
COMPANY HIGHLIGHTS
YEAR ENDED DECEMBER 31,
FINANCIAL DATA (In thousands, except per share data):
2019
2018
2017
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
PER COMMON SHARE:
Net Income Attributable to Common
Shareholders - Diluted
NAREIT FFO - Diluted
Core FFO - Diluted
Cash Dividends(2)
NET DEBT to CORE EBITDAre(3)
PORTFOLIO DATA (At year end):
Number of Properties
Total Square Feet(4)
Owned Square Feet
Signed Occupancy Percentage
Average Base Rent
$ 315,435
$ 327,601
$ 335,274
$ 273,720
$ 307,934
$ 311,601
$ 273,730
$ 292,515
$ 318,446
130,116
128,441
130,071
$ 2.44
$ 2.10
$ 2.10
$ 1.58
$ 2.55
$ 2.40
$ 2.28
$ 2.98
$ 2.60
$ 2.40
$ 2.45
$ 2.29
5.17x
5.00x
5.30x
170
32,550
21,532
95.2%
178
35,134
22,901
94.4%
204
41,279
26,351
94.8%
$ 19.87
$ 19.35
$ 18.69
(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 26, 2020 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.
125
n
r
u
t
e
R
l
a
t
o
T
100
75
SOLID SHAREHOLDER PERFORMANCE
15.00%
Total Return %
12.52%
10.49%
10.00%
5.00%
0.00%
Since IPO
2014
2015
2016
2017
2018
2019
Weingarten Realty Investors
FTSE NAREIT Equity Shopping Centers Index
Weingarten Realty Investors
NAREIT Equity REIT Index
Comparison to FTSE NAREIT Equity Shopping Centers Index
LETTER TO OUR SHAREHOLDERS
At our Investors Day presentation in 2011, we laid out a plan to transform the Weingarten portfolio into one of the
best in the shopping center sector through a massive capital recycling program. We would dispose of those properties
that did not fit the profile of an asset we wanted to own for the long-term and redeploy the proceeds into quality
acquisitions and new development projects along with reducing leverage. Since 2011, we have disposed of $3.0 billion
of retail property or about 2/3 of our then existing retail portfolio, while at the same time acquiring $1.6 billion of
high quality properties and investing over $700 million in new development and redevelopment projects. We have
significantly improved the overall demographics of the portfolio, reduced our exposure to power centers, improved our
operational efficiency by exiting eight states including Arkansas, Louisiana and Kansas to name a few and significantly
reduced our exposure to watch list tenants. Our current portfolio is primarily composed of grocery anchored, urban,
infill locations that are geographically concentrated in stronger, high barrier-to-entry markets, which results in more
interest in our centers from users. Additionally, with our disposition proceeds greatly exceeding our investment
in acquisitions and new developments, we were able to significantly reduce our debt level resulting in a best-in-
class balance sheet, which will provide security to our shareholders in the event of a severe market disruption. This
transformation alone allowed us to return over $306 million to our shareholders in the form of special dividends over
the past few years due to the significant gains we realized on our dispositions.
Our accomplishments in 2019 were especially impressive as we continued our disposition strategy while remaining
laser-focused on producing strong results within our existing operating portfolio in 2019, generating the following results:
• Net income attributable to common shareholders (“Net Income”) was $2.44 per diluted share
(hereinafter “per share”) for the year compared to $2.55 per share in 2018;
• Core Funds From Operations Attributable to Common Shareholders (“Core FFO”) was $2.10 per share
for the year compared to $2.28 per share in 2018;
• Same Property Net Operating Income (“SPNOI”) including redevelopments increased by 3.3% over 2018;
• Rental rates on new leases completed during the year were up 15.5%;
• Signed occupancy at year-end was 95.2%, an increase of 0.8% from 94.4% at the end of 2018;
• Acquisitions totaled $246 million and dispositions totaled $452 million for the year;
• Balance sheet leverage remained among the lowest in the sector with Net Debt to Adjusted EBITDAre of
5.17 times;
• Renewed and extended our $500 million revolving credit facility through 2024; and
• Paid common dividends per share of $0.395 per quarter or $1.58 per share for the year.
GREAT OPERATIONS LEAD TO OUTSTANDING OPERATING RESULTS
The Company reported Net Income of $315.4 million or $2.44 per share for 2019 compared to $327.6 million or $2.55 per
share for 2018. Funds From Operations Attributable to Common Shareholders in accordance with the National Association
of Real Estate Investment Trusts definition (“NAREIT FFO”) was $273.7 million or $2.10 per share for 2019 compared to
$307.9 million or $2.40 per share for 2018.
Core FFO for the year ended December 31, 2019 was $273.7 million or $2.10 per share compared to $292.5 million or $2.28
per share for 2018. The decrease from the prior year was primarily due to dispositions of $452 million during 2019 coupled
with the full year effect of 2018 dispositions of $635 million. Also contributing to the decrease was an increase in general
and administrative expense due to the cessation of the capitalization of indirect leasing and legal costs in 2019 due to the
new lease accounting standard. Partially offsetting these decreases was an increase in SPNOI including redevelopments of
3.3% as well as the net operating income from our 2019 acquisitions.
Among the most important operating metrics in our industry is SPNOI. During 2019, SPNOI, including the impact of our
1
redevelopment program, increased by a strong 3.3% over 2018, driven primarily by an increase in base minimum rent.
Additionally, occupancy of our Same Property portfolio was 95.5% at year-end, an increase of 0.5% from 95.0% at the end of
2018. We also produced solid leasing results during 2019 with 783 new leases and renewals totaling 3.3 million square feet
and representing $62.9 million of annualized revenue. The average rental rate increases on new leases signed during the
year was a solid 15.5%, a testimony to the ever-increasing quality of our transformed portfolio.
DISPOSITIONS DRIVE A STRONG BALANCE SHEET
We feel our disposition program was the best strategy for 2019 given the differential between the value of our properties
in the private real estate market and the implied value based on our share price or public valuations. As such, we sold
properties totaling $452 million in 2019. We have focused on improving the overall quality of our portfolio by reducing
our exposure to tertiary markets and power centers. At the same time, the disposition proceeds have provided 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 EBITDAre to a very strong 5.17 times and increased
our fixed charge to 4.2 times, both of which are among the best in our sector. Our debt maturities remain very favorably
laddered with no significant maturities until 2022.
During the fourth quarter, we amended and extended our $500 million unsecured revolving credit facility. The facility
will mature in March 2024, with a provision to extend the maturity date for two consecutive six-month periods, at the
Company’s option. We also reduced the margin over LIBOR that we pay under the amended facility.
We continue to look
for great centers
in our target
markets that will
further improve
our transformed
portfolio.
CAPITAL RECYCLING
In 2019 we invested $246 million acquiring six shopping centers and
one land parcel. The demographics of all of the acquired centers are
extremely strong. We continue to look for great centers in our target
markets that will further improve our transformed portfolio.
We are making great progress on all of our projects under development.
Centro Arlington is our project in Arlington, Virginia that we are
developing in a partnership with a prominent residential developer who
owns 10% of the project. The complex will include 366 multi-family units
and 72,000 square feet of retail anchored by a 52,000 square foot Harris
Teeter (Kroger) grocery store. The residential units are over 50% leased
and around 44% occupied. The leasing activity for retail space is also strong with over 80% of the total retail space
already open, including Harris Teeter. The Company’s share of the investment upon completion is estimated at $135
million, based on our 90% ownership interest. West Alex is our development in Alexandria, Virginia that will include 278
multi-family units and 127,000 square feet of retail also anchored by a 62,000 square foot Harris Teeter grocery store.
We just commenced leasing activities and have 38 residential units leased and move-ins are under way. The leasing of
the retail portion of the center is progressing well with 75% already leased, including Harris Teeter which is expected to
open in 2021. Our investment upon completion is estimated at $200 million. Both projects will benefit from their close
proximity to the new Amazon Headquarters and the strong northern Virginia market.
We continue to make progress on an exciting development 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 and 11,000 square feet of ground
floor retail space. We should have residential units available in the second half of 2020. 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.
The Whittaker in West Seattle, Washington is a six-story, mixed-use project that was co-developed with Lennar. Our
63,000 square foot retail portion is fully leased and the Whole Foods opened in October of 2019.
2
3
We also have 11 active redevelopment projects where we will invest about $75 million with average returns of
8% to 12%. During 2019, we invested about $22 million in redevelopment projects. With numerous additional
projects in the pipeline, redevelopments will continue to be an important investment vehicle for us in the future.
SUSTAINABILITY
We recognize environmental responsibility as an obligation and
an opportunity to add long-term value to our properties and to
benefit all stakeholders. As such, we created the GreenForward
program to officially implement and track sustainable initiatives
across our portfolio. Through this program, we also communicate
sustainability initiatives and recommendations to our retailers. We
commit ourselves to being a corporate partner to the environment
and the communities we serve. Our Corporate Sustainability
Report is available online for an in-depth look at our sustainability
initiatives and accomplishments.
We commit
ourselves to
being a corporate
partner to the
environment and
the communities
we serve.
2020 AND BEYOND
We expect challenges in our business, however our portfolio is significantly stronger than it has ever been.
The effect of 2019 dispositions will impact 2020 Core FFO. However, earnings are expected to trend up
going forward with more normalized disposition activity beginning in 2020, investments in mixed-use new
developments totaling $485 million coming on line in 2020 and 2021 and our much improved portfolio of
properties. Combined with a best–in-class balance sheet, we believe that Weingarten Realty is properly positioned
to generate solid returns to our shareholders while maintaining a very conservative risk profile going forward.
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
MANAGEMENT TEAM
OFFICERS
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
Richard H. Carson
Senior Vice President/
Development and
Acquisitions
Joe D. Shafer
Senior Vice President/
Chief Accounting
Officer
Mark D. Stout
Senior Vice President/
General Counsel
Gerald Crump
Senior Vice President/
Leasing
Michael Townsell
Senior Vice President/
Human Resources
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
Darren Amato
Divisional Vice President/
Acquisitions
Terri Klages
Divisional Vice President/
Assistant Controller
Karl Brinkman
Area Vice President/
Leasing
Patrick Manchi
Area Vice President/
Leasing
Chris Byrd
Area Vice President/
Leasing
Kent Maxey
Regional Vice President/
Property Management
William E. Coats
Regional Vice President/
New Development
Frank Rollow
Regional Vice President/
Property Management
William M. Crook
Divisional Vice President/
Associate General
Counsel
Alexander C. Evans
Area Vice President/
Leasing
Scott A. Henson
Regional Vice President/
Construction
Jenny Hyun
Divisional Vice President/
Associate General
Counsel
Marc A. Kasner
Divisional Vice President/
Associate General
Counsel
Kristen Seaboch
Divisional Vice President/
Controller
Candy Tillack
Regional Vice President/
Property Management
Taylor Vaughan
Area Vice President/
Leasing
Gary Wankum
Divisional Vice President/
Construction
Michelle Wiggs
Vice President/
Investor Relations
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, 2019
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)
74-1464203
(I.R.S. Employer Identification No.)
2600 Citadel Plaza Drive, Suite 125
Houston, Texas
(Address of principal executive offices)
77008
(Zip Code)
(713) 866-6000
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.03 par value
Title of Each Class
Trading Symbol(s)
WRI
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 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 28, 2019 (based upon the
most recent closing sale price on the New York Stock Exchange as of such date of $27.42) was $3.3 billion.
As of February 21, 2020, there were 128,961,786 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, 2020 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
14
14
21
21
22
24
25
40
40
83
83
85
85
85
85
86
86
86
91
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, 2019 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. These centers may be mixed-use properties that have both retail and residential components. At December
31, 2019, we owned or operated under long-term leases, either directly or through our interest in real estate joint
ventures or partnerships, a total of 170 properties, which are located in 16 states spanning the country from coast to
coast. The portfolio of properties contains approximately 32.5 million square feet of gross leasable area that is either
owned by us or others. We also owned interests in 23 parcels of land held for development that totaled approximately
11.9 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.
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Table of Contents
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.
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 in addition to a
residential 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 10.0%, 21.4% and 31.8%, respectively,
of our total properties' gross leasable area. Total revenues generated by our centers located in Houston and its
surrounding areas was 20.0% of total revenue for the year ended December 31, 2019, and an additional 9.3% of total
revenue was generated in 2019 from centers that are located in other parts of Texas. An additional 19.8% and 17.9%
of total revenue was generated in 2019 by our centers located in Florida and California, respectively. As of December 31,
2019, we also had 23 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, changes in economic or real estate conditions in any of these areas
could more significantly affect our business and operations than changes in other geographic areas.
With respect to tenant diversification, our two largest tenants, TJX Companies, Inc. and The Kroger Co., accounted
for 2.6% and 2.5%, respectively, of our total base minimum rental revenues for the year ended December 31, 2019.
No other tenant accounted for more than 1.8% 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
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, 2019. We intend to
maintain a conservative approach to managing our balance sheet, which, in turn, should permit us to raise debt or
equity capital when needed. At December 31, 2019 and 2018, our debt to total assets before depreciation ratio was
34.3% and 36.4%, 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
and mixed-use properties in our geographical areas. This results in competition for the acquisition of both existing
income-producing properties and prime development sites.
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Table of Contents
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 to our properties 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.
Qualification as a Real Estate Investment Trust. As of December 31, 2019, 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, 2019, we employed 239 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.
Sustainability. We believe sustainability to be in the best interest of our tenants, investors, employees and the
communities we operate. We are committed to reducing our environmental impact and believe this commitment is not
only the right thing to do, but also supports us in achieving key strategic objectives in operations and development.
More information about our sustainability initiatives, performance and disclosures are available on our website at
www.weingarten.com.
Environmental Exposure. We are under various federal, state and local laws, ordinances and regulations that may
cause us to be liable for costs and damages to remove or remediate certain hazardous or toxic substances as an
operator and owner of real estate. For further information regarding our risks related to environmental exposure, see
Item 1A. "Risk Factors."
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 may 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.
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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;
• 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;
• The ongoing disruption and/or consolidation of the retail sector;
• 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
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• 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.
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.
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Our real estate assets may be subject to impairment charges.
Periodically, we assess whether there are any indicators that the value of our real estate assets, including any capitalized
costs and any identifiable intangible assets, may be impaired. A property's value is impaired only if the estimate of the
aggregate future undiscounted cash flows without interest charges to be generated by the property are less than the
carrying value of the property. In estimating cash flows, we consider factors such as expected future 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.
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.
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We face significant competition in the leasing market, which may decrease or prevent increases in the
occupancy and rental rates of our properties.
We compete with numerous developers, owners and operators of retail properties, many of which own properties
similar to, and in the same market sectors as, our properties. If our competitors offer space at rental rates below current
market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants, or
we may be forced to reduce rental rates in order to attract new tenants and retain existing tenants when their leases
expire.
Also, if our competitors develop additional retail properties in locations near our properties, there may be increased
competition for customer traffic and 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.
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.
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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.
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
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• 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.
We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is
determined.
As of December 31, 2019, we had $17.4 million of secured debt and $0 outstanding debt on our $500 million unsecured
revolving credit facility, expiring in March 2024, which bears interest at a floating rate based on the London Interbank
Offered Rate (“LIBOR”) plus an applicable margin. We may incur additional debt indexed to LIBOR in the future. 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 U.S. 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 U.S.
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. We are not able to predict when
LIBOR will cease to be available or if SOFR, or another alternative reference rate, attains market traction as a LIBOR
replacement. If LIBOR ceases to exist, we will need to agree upon a benchmark replacement index with the bank, and
as such the interest rate on our revolving credit facility and certain secured debt may change. The new rate may not
be as favorable as those in effect prior to any LIBOR phase-out. Furthermore, the transition process may result in
delays in funding, higher interest expense, additional expenses, and increased volatility in markets for instruments
that currently rely on LIBOR. 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 and may span
several reporting periods, 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.
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Property ownership through real estate partnerships and joint ventures could limit our control of those
investments and reduce our expected return.
Real estate partnership or joint venture investments may involve risks not otherwise present for investments made
solely by us, including the possibility that our partner or co-venturer might become bankrupt, that our partner or co-
venturer might at any time have different interests or goals than us, and that our partner or co-venturer may take action
contrary to our instructions, requests, policies or objectives. Other risks of joint venture investments could include
impasse on decisions, such as a sale or refinance, because neither our partner or co-venturer nor we would have full
control over the partnership or joint venture. These factors could limit the return that we receive from those investments
or cause our cash flows to be lower than our estimates.
Volatility in market and economic conditions may impact our partners’ ability to perform in accordance with
our real estate joint venture and partnership agreements resulting in a change in control or the liquidation
plans of its underlying properties.
Changes in control of our investments could result if any reconsideration events occur, such as amendments to our
real estate joint venture and partnership agreements, changes in debt guarantees or changes in ownership due to
required capital contributions. Any changes in control will result in the revaluation of our investments to fair value,
which could lead to an impairment. We are unable to predict whether, or to what extent, a change in control may result
or the impact of adverse market and economic conditions may have to our partners.
If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax as a regular
corporation and could have significant tax liability.
We intend to operate in a manner that allows us to qualify as a REIT for U.S. federal income tax purposes. However,
REIT qualification requires us to satisfy numerous requirements (some on an annual or quarterly basis) established
under highly technical and complex provisions of the Internal Revenue Code, for which there are a limited number of
judicial or administrative interpretations. Our status as a REIT requires an analysis of various factual matters and
circumstances that are not entirely within our control. Accordingly, it is not certain we will be able to qualify and remain
qualified as a REIT for U.S. federal income tax purposes. Even a technical or inadvertent violation of the REIT
requirements could jeopardize our REIT qualification. 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.
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 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.
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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.
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.
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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.
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.
12
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An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or
revenue on those properties.
Under the terms and conditions of the leases currently in force on our properties, tenants generally are required to
indemnify and hold us harmless from liabilities resulting from injury to persons, air, water, land or property, on or off
the premises, due to activities conducted on the properties, except for claims arising from our negligence or intentional
misconduct or that of our agents. Tenants are generally required, at the tenant’s expense, to obtain and keep in full
force during the term of the lease, liability and tenant's property damage insurance policies. We have obtained
comprehensive liability, casualty, property, flood, 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.
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' businesses, which could affect the ability of some tenants to pay rent and may reduce the willingness of
tenants to remain in or move to the affected area. Intense weather conditions during the last decade, among other
factors, 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.
13
Table of Contents
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.
ITEM 2. Properties
At December 31, 2019, we owned or operated under long-term leases, either directly or through our interest in real
estate joint ventures or partnerships, a total of 170 centers, primarily neighborhood, community and power shopping
centers, which are located in 16 states spanning the country from coast to coast with approximately 32.5 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 23 parcels of land held for
development that totaled approximately 11.9 million square feet at December 31, 2019, of which approximately 11.7
million square feet may be used for new development or sold, and the remaining of which is adjacent to our existing
operating centers may be used for expansion of those centers.
In 2019, no single center accounted for more than 7.1% of our total assets or 4.3% of base minimum rental revenues.
The five largest centers, in the aggregate, represented approximately 13.4% of our base minimum rental revenues for
the year ended December 31, 2019; otherwise, none of the remaining centers accounted for more than 2% 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 should add long-term value to
our centers.
As of December 31, 2019, the weighted average occupancy rate for our centers was 95.2% compared to 94.4% as
of December 31, 2018. The average base rent per square foot was approximately $19.87 in 2019, $19.35 in 2018,
$18.69 in 2017, $17.93 in 2016 and $16.92 in 2015 for our centers.
We have approximately 3,800 separate leases with 2,900 different tenants. Included among our top revenue-producing
tenants are: TJX Companies, Inc., The Kroger Co., Whole Foods Market, Inc., H-E-B Grocery Company, LP, Ross
Stores, Inc., Albertsons Companies, Inc., Home Depot, Inc., PetSmart, Inc., 24 Hour Fitness Worldwide, Inc., and Bed,
Bath & Beyond Inc. The diversity of our tenant base is also evidenced by the fact that our largest tenant, TJX Companies,
Inc., accounted for only 2.6% of base minimum rental revenues during 2019.
14
Table of Contents
Tenant Lease Expirations
As of December 31, 2019, 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
Leasable
Square Feet
Total
(000’s)
Per Square
Foot
Percentage of
Total Annual
Net Rent
Annual Rent of Expiring Leases
449
525
517
413
384
156
93
80
95
87
1,754
2,553
2,921
2,408
2,652
1,265
650
857
1,323
818
5.39% $
35,652 $
7.84%
8.97%
7.40%
8.15%
3.89%
2.00%
2.63%
4.06%
2.51%
49,827
56,190
43,818
45,994
22,974
14,667
15,129
21,119
13,748
20.33
19.52
19.24
18.20
17.34
18.16
22.56
17.65
15.96
16.81
10.38%
14.50%
16.35%
12.75%
13.39%
6.69%
4.27%
4.40%
6.15%
4.00%
Year
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
New Development/Redevelopment
At December 31, 2019, we had three projects in various stages of construction that were partially or wholly owned.
We have funded $368.4 million through December 31, 2019 on these projects. We estimate our aggregate net
investment upon completion to be $485.0 million. These projects are forecasted to have an average stabilized return
on investment of approximately 5.5% when completed.
Upon completion, the estimated costs and square footage to be added to the portfolio for the three projects are as
follows:
Project
City, State
Project Type
Retail
Square
Feet
(000’s)
Residential
Units
Net Estimated
Costs (1)
(000's)
Estimated
Year of
Completion
West Alex
Alexandria, Virginia
Mixed-Use
127
Centro Arlington (2)
Arlington, Virginia
Mixed-Use
The Driscoll at River
Oaks
___________________
Houston, Texas
Mixed-Use
72
11
278
366
318
$200,000
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 $121.1 million as of December 31, 2019, and we anticipate funding
an additional $9 million through 2020.
15
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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, 2019:
ALL PROPERTIES BY STATE
Number of
Properties
19
Gross
Leasable
Area (GLA)
2,863,083
18
5
28
11
1
1
4
1
11
2
4
3,249,876
1,710,705
6,953,434
1,987,551
218,107
80,841
872,819
145,851
1,857,435
179,746
654,550
54
10,339,646
1
3
7
304,899
323,105
808,264
170
32,549,912
% of
Total GLA
8.8%
10.0%
5.3%
21.4%
6.1%
0.7%
0.2%
2.7%
0.4%
5.7%
0.5%
2.0%
31.8%
0.9%
1.0%
2.5%
100%
Arizona
California
Colorado
Florida
Georgia
Kentucky
Maryland
Nevada
New Mexico
North Carolina
Oregon
Tennessee
Texas
Utah
Virginia
Washington
Total
___________________
GLA includes 4.5 million square feet of our partners’ ownership interest in these properties and 6.5 million square feet
not owned or managed by us. Additionally, encumbrances on our properties total $263.4 million. 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, 2019:
Center
CBSA (7)
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 Miller Plaza
Phoenix-Mesa-Scottsdale, AZ
Camelback Village Square
Phoenix-Mesa-Scottsdale, AZ
Desert Village Shopping
Center
Phoenix-Mesa-Scottsdale, AZ
Fountain Plaza
Phoenix-Mesa-Scottsdale, AZ
Madison Village
Marketplace
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%
100.0%
87,379
Office Max, Ace Hardware
150,711
Sprouts Farmers Market
T.J. Maxx, PetSmart
240,951
Fry’s Supermarket
(LA Fitness)
107,071
AJ Fine Foods
CVS
304,107
Fry’s Supermarket
Dollar Tree, (Lowe's)
90,264
Safeway
108,551
21,122
(Wells Fargo)
Weingarten Realty Regional Office, Endurance
Rehab
157,532
Fry’s Supermarket
Petco, Dollar Tree
133,020 Whole Foods
204,928
(Target), Bed Bath & Beyond, Famous Footwear
155,046
Safeway
CVS
93,334
16
Olive & Ivy, P.F. Chang's, David's Bridal, Urban
Outfitters
Table of Contents
Center
CBSA (7)
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:
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
Valley Shopping Center
Riverside-San Bernardino-Ontario,
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
Stevens Creek Central
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
San Jose-Sunnyvale-Santa Clara,
CA
Freedom Centre
Santa Cruz-Watsonville, CA
Stony Point Plaza
Santa Rosa, 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
343,298
66,131
2,863,083
(Home Depot), (Nordstrom Rack), Jo-Ann Fabric,
Cost Plus World Market, PetSmart, Walgreens,
Ulta Beauty
(CVS Drug)
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
310,812
Smart & Final Stores
Dollar Tree, 24 Hour Fitness, Rite Aid
107,191
Food 4 Less
128,740
T.J. Maxx, Dollar Tree, BevMo
133,439
Vons
24 Hour Fitness
80,086
(Albertsons)
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
171,190
BevMo, Dollar Tree
201,716
Sprouts Farmers Market
Walgreens
195,863
Safeway
Marshalls, Total Wine, Cost Plus World Market
150,865
Safeway
Rite Aid, Big Lots
200,011
Food Maxx
Ross Dress for Less, Fallas Paredes
162,026
Raley’s
Ace Hardware, Dollar Tree
3,249,876
Aurora City Place
Denver-Aurora-Lakewood, CO
50.0%
(1)(3)
538,152
(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)
129,425
(Safeway)
663,500
1,710,705
(Target), (Costco), Regal Cinema, Michaels,
Conn's, PetSmart, Burlington
Argyle Village Shopping
Center
Jacksonville, FL
100.0%
306,506
Publix
Atlantic West
Jacksonville, FL
50.0%
(1)(3)
188,278
(Walmart Supercenter)
Bed Bath & Beyond, T.J. Maxx, Jo-Ann Fabric,
Michaels, American Signature Furniture
T.J. Maxx, HomeGoods, Dollar Tree, Shoe
Carnival, (Kohl's)
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%
117,597
Aroma Market & Catering
Ross Dress for Less
408,803
Publix
T.J. Maxx, Marshalls, Cinépolis, YouFit, Ulta
142,751
Tuesday Morning, Dollar Tree
17
Table of Contents
Center
Flamingo Pines
Hollywood Hills Plaza
Northridge
Pembroke Commons
Sea Ranch Centre
Tamiami Trail Shops
CBSA (7)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
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)
323,687
Publix
Marshalls, Office Depot, LA Fitness, Dollar Tree
100.0%
98,851
Publix
CVS, Dollar Tree
20.0%
(1)(3)
132,647
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%
657,638
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
136,556 Whole Foods Market
Clermont Landing
Orlando-Kissimmee-Sanford, FL
75.0%
(1)(3)
347,284
Colonial Plaza
Orlando-Kissimmee-Sanford, FL
100.0%
498,457
(J.C. Penney), (Epic Theater), T.J. Maxx, Ross
Dress for Less, Michaels
Hobby Lobby, Ross Dress for Less, Marshalls, Old
Navy, Staples, Stein Mart, Barnes & Noble, Petco,
Big Lots
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)
326,850
Publix
HomeGoods, Stein Mart, Morton's of Chicago,
Office Depot
Winter Park Corners
Orlando-Kissimmee-Sanford, FL
100.0%
93,311
Sprouts Farmers Market
Pineapple Commons
Port St. Lucie, FL
20.0%
(1)(3)
269,924
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Tampa-St. Petersburg-Clearwater,
FL
Countryside Centre
East Lake Woodlands
Largo Mall
Sunset 19 Shopping Center
Florida Total:
Georgia
Brownsville Commons
Atlanta-Sandy Springs-Roswell,
GA
Camp Creek Marketplace
II
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
Atlanta-Sandy Springs-Roswell,
GA
Gainesville, GA
Grayson Commons
Lakeside Marketplace
Mansell Crossing
North Decatur Station
Perimeter Village
Publix at Princeton Lakes
Roswell Corners
Roswell Crossing
Shopping Center
Thompson Bridge
Commons
Georgia Total:
Kentucky
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%
610,106
(Publix)
267,819
Sprouts Farmers Market
Marshalls, Bealls, PetSmart, Bed Bath & Beyond,
Staples, Michaels, (Target)
Hobby Lobby, Bed Bath & Beyond, Barnes &
Noble, Old Navy, Cost Plus World Market
6,953,434
81,913
(Kroger)
228,003
76,581
Kroger
Burlington, DSW, LA Fitness, American Signature
Furniture
332,699
(Super Target)
Ross Dress for Less, Petco
20.0%
(1)(3)
102,930
buybuy BABY, Ross Dress for Less, Party City
51.0%
(1)(3)
88,778 Whole Foods 365
100.0%
380,538 Walmart Supercenter
Hobby Lobby, Cost Plus World Market, DSW
20.0%
(1)(3)
72,205
Publix
100.0%
100.0%
100.0%
327,261
(Super Target), Fresh Market
T.J. Maxx
201,056
Trader Joe's
Office Max, PetSmart, Walgreens
95,587
(Kroger)
1,987,551
Festival on Jefferson Court
Louisville/Jefferson County, KY-IN
100.0%
218,107
Kroger
(PetSmart), (T.J. Maxx), Staples, Party City
Kentucky Total:
Maryland
Pike Center
Maryland Total:
Washington-Arlington-Alexandria,
DC-VA-MD-WV
100.0%
218,107
80,841
80,841
18
Pier 1, DXL Mens Apparel
Table of Contents
Center
Nevada
CBSA (7)
Owned %
Foot
Notes
GLA
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
Charleston Commons
Shopping Center
Las Vegas-Henderson-Paradise,
NV
College Park Shopping
Center
Las Vegas-Henderson-Paradise,
NV
Francisco Center
Rancho Towne & Country
Las Vegas-Henderson-Paradise,
NV
Las Vegas-Henderson-Paradise,
NV
100.0%
100.0%
100.0%
100.0%
Nevada Total:
New Mexico
366,952 Walmart
Ross Dress for Less, Office Max, 99 Cents Only,
PetSmart
195,215
El Super
Factory 2 U, CVS
148,815
La Bonita Grocery
(Ross Dress for Less)
161,837
Smith’s Food
872,819
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
North Carolina Total:
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)
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)
87,517
Lidl
127,106
Harris Teeter
77,803 Walmart Neighborhood Market
Dollar Tree
468,402
Food Lion
Target, Home Depot, Bed Bath & Beyond,
PetSmart
188,437
Harris Teeter
Stein Mart, Walgreens
1,857,435
Portland-Vancouver-Hillsboro, OR-
WA
Portland-Vancouver-Hillsboro, OR-
WA
20.0%
(1)(3)
140,226
(Winco Foods)
T.J. Maxx
20.0%
(1)(3)
39,520
New Seasons Market
Walgreens
179,746
14,490
88,108
Kroger
306,556
Walgreens
(Target), Best Buy, PetSmart, REI
245,396
Kroger
Marshalls, HomeGoods, Stein Mart
100.0%
100.0%
100.0%
100.0%
Oregon
Clackamas Square
Raleigh Hills Plaza
Oregon Total:
Tennessee
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
Rock Prairie Marketplace
College Station-Bryan, TX
Overton Park Plaza
Dallas-Fort Worth-Arlington, TX
100.0%
100.0%
100.0%
Preston Shepard Place
Dallas-Fort Worth-Arlington, TX
20.0%
(1)(3)
361,830
654,550
351,099
281,035
144,846
18,163
462,800
Sprouts Farmers Market
Marshalls, PetSmart, Bed Bath & Beyond, Home
Depot, Best Buy, Total Wine
(Target), Spec's, Kirkland's
(Lowe's)
Burlington, PetSmart, T.J. Maxx, (Home Depot),
buybuy BABY
Nordstrom, Marshalls, Stein Mart, Office Depot,
Petco, Burlington
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
Houston-The Woodlands-Sugar
Land, TX
15.0%
(1)
132,473
Sellers Bros.
Palais Royal, Harbor Freight Tools
100.0%
100.0%
100.0%
100.0%
59,120
Trader Joe's
PetSmart
Ashley Furniture, Cost Plus World Market, Barnes
& Noble, Michaels
241,149
43,891
Randall’s
97,277
99 Ranch Market
19
CBSA (7)
Owned %
Foot
Notes
Table of Contents
Center
Citadel Building
Galveston Place
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
Market at Westchase
Shopping Center
Oak Forest 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
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
The Centre at Post Oak
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
Houston-The Woodlands-Sugar
Land, TX
The Shops at Hilshire
Village
Houston-The Woodlands-Sugar
Land, TX
Tomball Marketplace
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
(1)
(1)
(1)
(1)
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%
(1)
(1)
100.0%
100.0%
70.0%
15.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Grocer Anchor
( ) indicates owned
by others
GLA
121,000
Other Anchors
( ) indicates owned by others
Weingarten Realty Investors Corporate Office
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, Harbor Freight Tools
129,467
81,441
Crunch Fitness, Spec’s
Blink Fitness
157,812
Kroger
Ross Dress for Less, Dollar Tree, PetSmart
126,397
Randall’s
CVS
92,657
Best Buy, Cost Plus World Market
71,265
Kroger
100.0%
(5)
230,026
Kroger
166,777
55,460
282,613
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
57.8%
(1)(3)
491,687
H-E-B
PetSmart, Academy, Nordstrom Rack, Burlington
124,453
Food-A-Rama
CVS, Family Dollar, Palais Royal
183,940
Marshalls, Old Navy, Grand Lux Café, Nordstrom
Rack, Arhaus
117,473
Kroger
Walgreens
326,545
(Academy), (Kohl's), Ross Dress For Less,
Marshalls
36,900
Pier 1
347,475 Whole Foods Market
(Target), Ross Dress for Less, Petco
130,851
Ross Dress for Less, Office Depot, 99 Cents Only
347,302
H-E-B
487,850
(H-E-B)
144,129
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)
245,057
(Walmart Supercenter)
Market at Sharyland Place
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
301,174
(Walmart Supercenter)
Kohl's, Dollar Tree
McAllen Center
McAllen-Edinburg-Mission, TX
50.0% (1)(3)(6)
103,702
H-E-B
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
75,066
15,000
Sharyland Towne Crossing
McAllen-Edinburg-Mission, TX
50.0%
(1)(3)
492,797
H-E-B
Trenton Crossing
McAllen-Edinburg-Mission, TX
100.0%
571,255
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
Parliament Square II
San Antonio-New Braunfels, TX
100.0%
100.0%
486,470
(H-E-B)
Marshalls, Bob Mills Furniture, Act III Theatres,
Stein Mart, Petco
54,541
Incredible Pizza
20
Table of Contents
Center
CBSA (7)
Owned %
Foot
Notes
Stevens Ranch
San Antonio-New Braunfels, TX
50.0%
(1)
San Antonio-New Braunfels, TX
100.0%
The Shoppes at Wilderness
Oaks
Thousand Oaks Shopping
Center
Texas Total:
Utah
Grocer Anchor
( ) indicates owned
by others
Other Anchors
( ) indicates owned by others
GLA
21,314
20,081
San Antonio-New Braunfels, TX
15.0%
(1)
161,807
H-E-B
Bealls, Tuesday Morning
10,339,646
West Jordan Town Center
Salt Lake City, UT
100.0%
304,899
Lucky Supermarket
(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
Covington Esplanade
Seattle-Tacoma-Bellevue, WA
100.0%
187,388
The Home Depot
Meridian Town Center
Seattle-Tacoma-Bellevue, WA
20.0%
(1)(3)
143,401
(Safeway)
Jo-Ann Fabric, Tuesday Morning
Queen Anne Marketplace
Seattle-Tacoma-Bellevue, WA
51.0%
(1)(3)
81,053 Metropolitan Market
Bartell's Drug
Rainier 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
The Whittaker
Seattle-Tacoma-Bellevue, WA
100.0%
63,663 Whole Foods
Washington Total:
Total Operating Properties
New Development
Virginia
808,264
32,477,618
Centro Arlington
West Alex
Virginia Total:
Washington-Arlington-Alexandria,
DC-VA-MD-WV
Washington-Arlington-Alexandria,
DC-VA-MD-WV
90.0% (1)(2)(3)
72,294
Harris Teeter
100.0%
(2)
— Harris Teeter
72,294
72,294
32,549,912
Total New Developments
Operating & New Development Properties
___________________
(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) River Oaks Shopping Center - West includes The Driscoll at River Oaks which is under development.
(6) McAllen Center formerly reported as South 10th St. HEB.
(7) 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.
ITEM 4. Mine Safety Disclosures
Not applicable.
21
Table of Contents
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 21,
2020, the number of holders of record of our common shares was 1,651.
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, 2019:
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
207,416
—
207,416
Number of
shares
remaining
available for
future issuance
under equity
compensation
plans
952,877
—
952,877
Weighted average
exercise price of
outstanding options,
warrants and rights
$23.84
—
$23.84
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, 2014, $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, 2014 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
2015
2016
2017
2018
2019
$
103.18 $
101.38
111.00 $
113.51
109.40 $
138.29
92.03 $
132.23
122.49
173.86
104.72
108.57
96.23
82.23
102.81
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.
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, 2019, 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.
23
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,
2017
2018 (1)
2016
2015
2019 (1)
Operating Data:
Revenues
Operating expenses
Interest expense, net
Interest and other income, net
Gain on sale of property
$
486,625
$
531,147
$
573,163
$
549,555
$
512,844
327,095
356,820
395,356
354,453
327,993
57,601
11,003
63,348
2,807
80,326
7,532
83,003
1,910
189,914
207,865
218,611
100,714
87,783
4,406
59,621
Income before income taxes and equity in earnings of
real estate joint ventures and partnerships, net
302,846
321,651
323,624
214,723
161,095
(Provision) benefit for income taxes
(1,040)
(1,378)
17
(6,856)
(52)
Equity in earnings of real estate joint ventures and
partnerships, net
Gain on sale and acquisition of real estate joint
venture and partnership interests
Net income
Less: net income attributable to noncontrolling
interests
20,769
25,070
27,074
20,642
19,300
—
—
—
322,575
345,343
350,715
48,322
276,831
879
181,222
(7,140)
(17,742)
(15,441)
(37,898)
(6,870)
(13,517)
Dividends and redemption costs of preferred shares
—
—
—
—
Net income attributable to common shareholders
$
315,435
$
327,601
$
335,274
$
238,933
$
160,835
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
$
$
2.47
$
2.57
$
2.62
$
1.90
$
1.31
127,842
127,651
127,755
126,048
123,037
2.44
$
2.55
$
2.60
$
1.87
$
1.29
Weighted average number of shares - diluted
130,116
128,441
130,071
128,569
124,329
Balance Sheet Data:
Property before accumulated depreciation
$ 4,145,249
$ 4,105,068
$ 4,498,859
$ 4,789,145
$ 4,262,959
Total assets
Debt, net
Total equity
Other Data:
3,937,934
3,826,961
4,196,639
4,426,928
3,901,945
1,732,338
1,794,684
2,081,152
2,356,528
2,113,277
1,876,160
1,750,699
1,809,842
1,716,896
1,545,010
Cash flows from operating activities
$
270,050
$
285,960
$
269,758
$
252,411
$
245,435
Cash flows from investing activities
Cash flows from financing activities
Cash dividends per common share
(16,026)
432,954
298,992
(366,172)
(197,132)
(274,870)
(664,111)
(588,695)
129,798
(126,248)
1.58
2.98
2.29
1.46
1.38
NAREIT funds from operations attributable to
common shareholders - basic (2)
NAREIT funds from operations attributable to
common shareholders - diluted (2)
Core funds from operations attributable to common
shareholders - diluted (2)
___________________
271,608
307,934
308,517
291,656
258,126
273,720
307,934
311,601
293,652
260,029
273,730
292,515
318,446
300,894
274,772
(1) See Note 2 in Item 8 for newly issued accounting pronouncements that were adopted using a modified retrospective approach during
the respective year and may affect the comparability of the above selected financial information.
(2) See Item 7 for the definition of funds from operations attributable to common shareholders for these non-GAAP measures.
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Table of Contents
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto
and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and
trends which might appear should not be taken as indicative of future operations. Our results of operations and financial
condition, as reflected in the accompanying consolidated financial statements and related footnotes, are subject to
management’s evaluation and interpretation of business conditions, retailer performance, changing capital market
conditions and other factors which could affect the ongoing viability of our tenants. Discussion regarding our results
of operations for fiscal year 2018 as compared to fiscal year 2017 is included in Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019.
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. These centers may be mixed-use
properties that have both retail and residential components. 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 32.5 million square feet of gross leasable area that is either owned by us or others. We have a diversified
tenant base with our largest tenant comprising only 2.6% of base minimum rental revenues during 2019.
At December 31, 2019, we owned or operated under long-term leases, either directly or through our interest in real
estate joint ventures or partnerships, a total of 170 properties, which are located in 16 states spanning the country
from coast to coast.
We also owned interests in 23 parcels of land held for development that totaled approximately 11.9 million square feet
at December 31, 2019.
We had approximately 3,800 leases with 2,900 different tenants at December 31, 2019. Rental revenue is primarily
derived from operating leases with terms of 10 years or less, and may include multiple options, upon tenant election,
to extend the lease term in increments up to five years. Many of our leases have increasing minimum rental rates
during the terms of the leases through escalation provisions. In addition, the majority of our leases provide for variable
rental revenues, such as reimbursements of real estate taxes, maintenance and insurance and may include an amount
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, most of which have adopted omni-channel models which help 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 and
mixed-use properties in certain markets of the United States. Our strategic initiatives include: (1) owning quality shopping
centers in preferred locations that attract strong tenants, (2) growing net income from our existing portfolio by increasing
occupancy and rental rates, (3) raising net asset value and cash flow through quality acquisitions and new
developments, (4) continuously redeveloping our existing shopping centers to increase cash flow and enhance the
value of the centers and (5) maintaining a strong, flexible consolidated balance sheet and a well-managed debt maturity
schedule. 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 changes in 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 remains 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 intend to continue
with this strategy, our dispositions are expected to decrease to a normalized level in 2020. We intend to utilize the
proceeds from dispositions to, among other things, fund acquisitions along with both new development and
redevelopment projects.
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Table of Contents
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 2019, 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 $451.7 million. We have approximately $96 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. For 2020, we expect the volume of dispositions will significantly decrease from those in 2019, and we anticipate
that our normal disposition recycling program will range from $100 million to $150 million.
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 significant amount of capital available in the market, it has been
difficult to participate at price points that meet our investment criteria. During 2019, we acquired six centers and other
property, of which five are grocery-anchored shopping centers and one is in a 51% unconsolidated real estate joint
venture, adding 828,000 square feet to the portfolio with our share of the aggregate gross purchase price totaling
$246.4 million. For 2020, we expect to complete acquisition investments in the range of $100 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. The opportunities for additional new development projects are limited at this
time primarily due to a lack of demand for new retail space. During 2019, we invested $150.4 million in two 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, and we invested $19.2 million in 11 redevelopment projects that were
partially or wholly owned. During 2019, we completed eight redevelopment projects, which added approximately
101,000 square feet to the portfolio with an incremental investment totaling $26.7 million. For 2020, we expect to invest
in new development and redevelopments in the range of $75 million to $125 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. During 2019, we repaid a $50 million secured fixed-rate mortgage with a 7% interest rate. Additionally, proceeds
from our disposition program and cash generated from operations further strengthened our balance sheet in 2019.
Due to the variability in the capital markets, there can be no assurance that favorable pricing and accessibility will be
available in the future.
Operational Metrics
In assessing the performance of our centers, management carefully monitors various operating metrics of the portfolio.
As a result of our strong leasing activity and low tenant fallout, the operating metrics of our portfolio remained strong
in 2019 as we focused on increasing rental rates and same property net operating income ("SPNOI" and see Non-
GAAP Financial Measures for additional information). Our portfolio delivered solid operating results with:
•
•
•
occupancy of 95.2% at December 31, 2019;
an increase of 3.3% in SPNOI that includes redevelopments for the twelve months ended December 31, 2019
over the same period of 2018; and
rental rate increases of 16.3% for new leases and 10.2% for renewals during the three months ended
December 31, 2019.
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Below are performance metrics associated with our signed occupancy, SPNOI growth and leasing activity on a pro
rata basis:
Anchor (space of 10,000 square feet or greater)
Non-Anchor
Total Occupancy
SPNOI Growth (including Redevelopments) (1)
_______________
December 31,
2019
2018
97.7%
90.8%
95.2%
96.6%
90.6%
94.4%
Three Months Ended
December 31, 2019
Twelve Months Ended
December 31, 2019
2.5%
3.3%
(1) See Non-GAAP Financial Measures for a definition of the measurement of SPNOI and a reconciliation to net income attributable to
common shareholders within this section of Item 7.
Number
of
Leases
Square
Feet
('000's)
Average
New
Rent per
Square
Foot ($)
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, 2019
New leases (1)
Renewals
Not comparable spaces
Total
Twelve Months Ended December 31, 2019
New leases (1)
Renewals
Not comparable spaces
Total
_______________
49
109
37
195
172
483
128
783
160 $ 21.73 $ 18.69 $
19.75
17.93
434
153
60.86
—
16.3%
10.2%
747 $ 20.29 $ 18.14 $
16.43
11.9%
503 $ 25.34 $ 21.94 $
2,292
509
17.52
16.64
43.99
—
15.5%
5.2%
3,304 $ 18.92 $ 17.60 $
7.92
7.5%
(1) Average external lease commissions per square foot for the three and twelve months ended December 31, 2019 were $6.82 and $5.91,
respectively.
Changing shopping habits, driven by rapid expansion of internet-driven procurement, led to increased financial problems
for many retailers, which 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 models that integrate on-line shopping with in-store experiences that has further reinforced
the need for bricks and mortar locations. Despite some tenant bankruptcies, we continue to believe there is retailer
demand for quality space within strong, strategically located centers.
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While we anticipate occupancy in 2020 to increase slightly from 2019, 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 shift in negotiating leverage to the tenant. We expect
rental rates to continue to increase; however, we also expect the funding of tenant improvements and allowances will
increase as well, and 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 1.5% to 2.5% for 2020 assuming no significant tenant
bankruptcies, although there are no assurances that this will occur.
New Development/Redevelopment
At December 31, 2019, we had two mixed-use projects in the Washington D. C. market and a 30-story, high-rise
residential tower at our River Oaks Shopping Center in Houston that were in various stages of development and are
partially or wholly owned. We have funded $368.4 million through December 31, 2019 on these projects, and we
estimate our aggregate net investment upon completion to be $485.0 million. Overall, the average projected stabilized
return on investment for these multi-use properties, that include retail and residential components, is expected to
approximate 5.5% upon completion.
We have 11 redevelopment projects in which we plan to invest approximately $74.2 million. Upon completion, the
average projected stabilized return on our incremental investment on these redevelopment projects is expected to be
between 8.0% and 12.0%.
We had approximately $40.7 million in land held for development at December 31, 2019 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
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.
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Real Estate Joint Ventures and Partnerships
To determine the method of accounting for 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.
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. 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 real estate
joint ventures and partnerships 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, including right-of-use assets, is reviewed for impairment if events or changes in circumstances indicate
that the carrying amount of the property, any capitalized costs and any identifiable intangible assets, may not be
recoverable.
If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property
into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying
amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced
to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management
utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker or
appraisal estimates.
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 real estate joint ventures and partnerships is reviewed for impairment each reporting period. We
evaluate various factors, including operating results of the investee, our ability and intent to hold the investment and
our views on current market and economic conditions, when determining if there is a decline in the investment value.
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. The ultimate realization of impairment losses is dependent on a number
of factors, including the performance of each investment and market conditions. A considerable amount of judgment
by our management is used in this evaluation and may have a significant impact on the resulting factors analyzed for
these purposes.
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Results of Operations
Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018
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 2019 as compared to
the same period in 2018:
Revenues
Depreciation and amortization
Real estate taxes, net
Impairment loss
General and administrative expenses
Interest expense, net
Interest and other income, net
Gain on sale of property
Year Ended December 31,
2019
486,625 $
2018
531,147 $
$
135,674
60,813
74
35,914
57,601
11,003
161,838
69,268
10,120
25,040
63,348
2,807
189,914
207,865
Change
% Change
(44,522)
(26,164)
(8,455)
(10,046)
10,874
(5,747)
8,196
(17,951)
(8.4)%
(16.2)
(12.2)
(99.3)
43.4
(9.1)
292.0
(8.6)
Equity in earnings of real estate joint ventures and
partnerships, net
20,769
25,070
(4,301)
(17.2)
Revenues
The decrease in revenues of $44.5 million is attributable primarily to the $47.5 million impact of dispositions, a decrease
of $9.1 million from the write-off of lease intangibles due to the termination of tenant leases, which includes a write-
off of a $10.1 million below-market lease intangible in 2018, and $4.3 million of revenues for real estate taxes paid
directly by our tenants in 2018 that can no longer be recorded due to the adoption of the new lease accounting standard
on January 1, 2019. Partially offsetting this decrease is revenue from acquisitions, as well as increases in rental rates
and occupancy at our existing portfolio, new developments and redevelopments, which contributed $16.4 million.
Depreciation and Amortization
The decrease in depreciation and amortization of $26.2 million is attributable primarily to the $13.1 million write-off of
an in-place lease intangible from the termination of a tenant lease in 2018 and disposition activities of $15.1 million,
which is partially offset by an increase of $2.0 million primarily from acquisitions.
Real Estate Taxes, net
The decrease in real estate taxes, net of $8.5 million is attributable primarily to dispositions and $4.3 million of real
estate taxes paid directly by our tenants in 2018 that can no longer be recorded due to the adoption of the new lease
accounting standard on January 1, 2019.
Impairment Loss
The decrease in impairment loss of $10.0 million is attributable primarily to losses recognized in 2018 associated with
three centers that were sold.
General and Administrative Expenses
The increase in general and administrative expenses of $10.9 million is attributable primarily to a reduction in capitalized
indirect leasing costs of $10.2 million resulting from the adoption of the new lease accounting standard on January 1,
2019.
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Interest Expense, net
Net interest expense decreased $5.7 million or 9.1%. 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,
2019
2018
$
67,993 $
71,899
—
3,521
(327)
(13,586)
(3,759)
3,546
(400)
(7,938)
$
57,601 $
63,348
The decrease in net interest expense is attributable primarily 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. For the year ended
December 31, 2019, the weighted average debt outstanding was $1.8 billion at a weighted average interest rate of
4.0% as compared to $1.9 billion outstanding at a weighted average interest rate of 4.0% in the same period of 2018.
Additionally, net interest expense was impacted by an increase in capitalized interest of $5.6 million associated with
an increase in new development investment, and a $3.8 million gain on extinguishment of debt in the first quarter of
2018, including the effect of a swap termination.
Interest and Other Income, net
The increase of $8.2 million in interest and other income, net is attributable primarily to a fair value increase of $6.8
million for assets held in a grantor trust related to deferred compensation and an increase of $1.4 million associated
primarily with interest income from our short-term cash investments and other investments.
Gain on Sale of Property
The decrease of $18.0 million in gain on sale of property is attributable to the disposition of 15 centers and other
property during 2019 as compared to 21 centers and other property in 2018.
Equity in Earnings of Real Estate Joint Ventures and Partnerships, net
The decrease of $4.3 million in equity in earnings of real estate joint ventures and partnerships, net is attributable
primarily to impairment of interests in two joint ventures totaling $3.1 million.
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, thereby reducing our exposure to increases in costs and operating
expenses resulting from inflation. Under the current economic climate, inflation has been kept in check by the Federal
Reserve and looks to remain low for the foreseeable future.
Economic Conditions
The U.S. is currently in a long economic expansion. At the end of 2019, certain financial indicators, such as yield
curves, have declined or weakened somewhat, while other economic indicators, such as employment, remain strong.
We believe that regardless of any mixed messages provided by the various soft-data trends, the recent trend by the
U.S. leading economic indicators still points to continuing, if moderate, growth in the national economy. Our focus on
supermarket-anchored centers in densely populated major metropolitan areas should position our portfolio to take
advantage of a growing economy, and weather any downturns should the economy falter.
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With respect to Houston and other markets that are energy dependent, the economic recovery from the oil downturn
of 2015 to 2017 continued into its second year in 2019; however, future disruptions could impact the market in the
long-term. The outlook for Houston’s economy specifically remains positive due primarily to economic diversity. Job
growth throughout the Sunbelt is strong. Metros are becoming more economically diverse, with cities actively growing
their indigenous, non-energy sectors, like medical and high-tech. Houston has been particularly focused on growing
its data science, digital tech, and biotech clusters. Our presence in healthy, resilient metropolitan areas has been a
part of our strategy to ensure our continued healthy, resilient property portfolio.
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 2020
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 equity issuances; and cash generated from the sale of property or interests
in real estate joint ventures and partnerships 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, equity,
cash generated from the disposition of properties and cash flow generated by our operating properties.
As of December 31, 2019, we had available borrowing capacity of $497.9 million under our unsecured revolving credit
facility, and our debt maturities for 2020 total $22.7 million. As of December 31, 2019, we had cash and cash equivalents
available of $41.5 million. Currently, we anticipate our disposition activities to continue, albeit at a lower rate than
previous periods, and estimate between $100 million to $150 million in dispositions for 2020.
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, if necessary, 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 2019, our share of aggregate gross sales proceeds from dispositions of centers owned by us, either directly
or through our interest in real estate joint ventures or partnerships, totaled $451.7 million. 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, 2019, off-balance sheet mortgage debt for our unconsolidated real estate joint
ventures and partnerships totaled $264.8 million, of which our pro rata ownership is $86.8 million. Scheduled principal
mortgage payments on this debt, excluding deferred debt costs and non-cash related items totaling $(.6) million, at
100% are as follows (in millions):
2020
2021
2022
2023
2024
Thereafter
Total
$
$
3.1
173.0
2.1
2.2
2.3
82.7
265.4
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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 lender's consent for assets held in special purpose entities.
Investing Activities
Acquisitions
During 2019, we acquired six grocery-anchored shopping centers and other property, one of which is in a 51%
unconsolidated real estate joint venture, with our share of the aggregate gross purchase price totaling $246.4 million.
Dispositions
During 2019, we sold 15 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 $451.7 million and generated our share of the gains of approximately $190.8 million.
New Development/Redevelopment
At December 31, 2019, we had two mixed-use projects and a 30-story, high-rise residential tower at our River Oaks
Shopping Center under development with approximately .2 million of total square footage for retail and 962 residential
units, that were partially or wholly owned. We have funded $368.4 million through December 31, 2019 on these projects.
Upon completion, we expect our aggregate net investment in these multi-use projects to be $485.0 million.
At December 31, 2019, we had 11 redevelopment projects in which we plan to invest approximately $74.2 million.
Upon completion, the average projected stabilized return on our incremental investment on these redevelopment
projects is expected to be between 8.0% and 12.0%. During 2019, we completed eight redevelopment projects, which
added approximately 101,000 square feet to the portfolio with an incremental investment totaling $26.7 million.
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.
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):
Acquisitions
New Development
Redevelopment
Tenant Improvements
Capital Improvements
Other
Total
Year Ended December 31,
2019
2018
$
245,814 $
149,080
25,342
30,072
20,340
5,991
476,639 $
$
—
103,102
38,657
27,560
20,825
4,745
194,889
The increase in capital expenditures is attributable primarily to the acquisition of six centers and the net increased
activity from our new development and redevelopment centers.
For 2020, we anticipate our acquisitions to total approximately $100 million to $150 million. Our new development and
redevelopment investment for 2020 is estimated to be approximately $75 million to $125 million. For 2020, capital and
tenant improvements is expected to be consistent with 2019 expenditures. No assurances can be provided that our
planned activities will occur. Further, we have entered into commitments aggregating $98.5 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.
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Capital expenditures for additions described above relate to cash flows from investing activities as follows (in
thousands):
Acquisition of real estate and land, net
Development and capital improvements
Real estate joint ventures and partnerships - Investments
Total
Year Ended December 31,
2019
2018
$
$
218,849 $
183,188
74,602
476,639 $
1,265
155,528
38,096
194,889
Capitalized soft costs, including payroll and other general and administrative costs, interest, insurance and real estate
taxes, totaled $22.9 million and $16.2 million for the year ended December 31, 2019 and 2018, respectively.
Financing Activities
Debt
Total debt outstanding was $1.7 billion at December 31, 2019 and consisted of $17.4 million, which bears interest at
variable rates, and $1.7 billion, which bears interest at fixed rates. Additionally, of our total debt, $281.6 million was
secured by operating centers while the remaining $1.5 billion was unsecured.
At December 31, 2019, we have a $500 million unsecured revolving credit facility, which expires in March 2024 and
provides borrowing rates that float at a margin over LIBOR plus a facility fee. At December 31, 2019, the borrowing
margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, were 82.5 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 21, 2020, we had no amounts outstanding, and the available balance was $497.9 million, net of $2.1 million
in outstanding letters of credit.
At December 31, 2019, we have a $10 million unsecured short-term facility that we maintain for cash management
purposes. The facility, which matures in March 2021, 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 21,
2020, we had no amounts outstanding under this facility.
During 2019, the maximum balance and weighted average balance outstanding under both facilities combined were
$5.0 million and $.1 million, respectively, at a weighted average interest rate of 3.3%.
On July 1, 2019, we repaid a $50 million secured fixed-rate mortgage with a 7.0% interest rate with cash from our
disposition proceeds.
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,
2019.
Our most restrictive public debt covenant ratios, as defined in our indenture and supplemental indenture agreements,
were as follows at December 31, 2019:
Covenant
Debt to Asset Ratio
Secured Debt to Asset Ratio
Fixed Charge Ratio
Restriction
Less than 60.0%
Less than 40.0%
Greater than 1.5
Actual
35.9%
5.8%
4.6
Unencumbered Asset Test
Greater than 150%
299.7%
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Equity
Common share dividends paid totaled $203.3 million for the year ended December 31, 2019. 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, 2019 approximated 74.8% (see Non-GAAP Financial Measures
for additional information). Our Board of Trust Managers approved a first quarter 2020 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. At December 31, 2019 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.
Contractual Obligations
We have debt obligations related to our mortgage loans and unsecured debt, including any draws on our credit facilities
and payments for our finance lease obligation. We have shopping centers that are subject to ground leases where a
third party owns and has leased the underlying land to us to construct and/or operate a shopping center. The table
below excludes obligations related to our new development projects because such amounts are not fixed or
determinable, and commitments aggregating $98.5 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, 2019 (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
$ 1,648,315
$
53,375
$
404,456
$
604,889
$
585,595
349,146
109,660
94,698
35,306
2,696
65,485
49,128
5,161
29,213
91,421
4,616
173,291
97,187
Total Contractual Obligations
$ 2,201,819
$
156,862
$
487,958
$
700,926
$
856,073
_______________
(1)
Includes our finance lease obligation (see Note 7 for additional information) and principal and interest with interest on variable-rate debt
calculated using rates at December 31, 2019. Also, excludes a $57.4 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 2020, 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 15 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 $57.4 million remain outstanding
at December 31, 2019. 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, 2019.
Off Balance Sheet Arrangements
As of December 31, 2019, 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 $7.0 million were outstanding at December 31,
2019.
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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.
As of December 31, 2019, 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, 2019. Also at December 31, 2019, 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
future funding of approximately $9 million associated with the mixed-use project through 2020.
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
Effective January 1, 2019, the National Association of Real Estate Investment Trusts ("NAREIT") defines NAREIT FFO
as net income (loss) attributable to common shareholders computed in accordance with GAAP, excluding gains or
losses from sales of certain real estate assets (including: depreciable real estate with land, land development property
and securities), changes in control of real estate equity investments, and interests in real estate equity investments
and their applicable taxes, plus depreciation and amortization related to real estate and impairment of certain real
estate assets 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.
Management believes 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 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 assets 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 and transactional costs associated with unsuccessful development
activities.
NAREIT FFO and Core FFO 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. NAREIT FFO and Core FFO do not reflect working capital changes, cash expenditures for capital
improvements or principal payments on indebtedness.
36
335,274
166,125
14,020
12,247
Table of Contents
NAREIT FFO and Core FFO is calculated as follows (in thousands):
Year Ended December 31,
2019
2018
2017
Net income attributable to common shareholders
$
315,435 $
327,601 $
Depreciation and amortization of real estate
134,772
160,679
Depreciation and amortization of real estate of unconsolidated real
estate joint ventures and partnerships
Impairment of properties and real estate equity investments
Gain on sale of property, investments securities 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 (3)
Income attributable to operating partnership units
NAREIT FFO – diluted (3)
Adjustments to Core FFO:
Provision (benefit) for income taxes (1)
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
12,152
3,144
12,454
9,969
(190,597)
(206,930)
(217,659)
(1,380)
133
(2,051)
271,608
2,112
273,720
—
—
—
—
—
—
—
10
(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
$
273,730 $
292,515 $
318,446
FFO weighted average shares outstanding – basic
127,842
127,651
127,755
Effect of dilutive securities:
Share options and awards
Operating partnership units
842
1,432
790
—
870
1,446
FFO weighted average shares outstanding – diluted
130,116
128,441
130,071
NAREIT FFO per common share – basic
NAREIT FFO per common share – diluted
Core FFO per common share – diluted
_______________
$
$
$
2.12 $
2.41 $
2.10 $
2.40 $
2.10 $
2.28 $
2.41
2.40
2.45
(1) The applicable taxes related to gains and impairments of operating and non-operating real estate assets.
(2) Related to gains, impairments and depreciation on operating properties and unconsolidated real estate joint ventures, where applicable.
(3) 2019 NAREIT FFO is presented in accordance with 2018 Restatement of "Nareit's Funds from Operations White Paper."
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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:
New Developments
Properties removed:
Dispositions
End of the period
Three Months Ended
December 31, 2019
Twelve Months Ended
December 31, 2019
159
—
(4)
155
171
1
(17)
155
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Table of Contents
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):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
Net income attributable to common shareholders
Add:
Net income attributable to noncontrolling interests
Provision 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, net
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
2019
75,218 $
$
2018
59,507 $ 315,435 $ 327,601
2018
2019
2,074
358
3,722
10
13,539
15,663
686
685
7,140
1,040
57,601
2,899
17,742
1,378
63,348
2,904
33,355
35,280
135,674
161,838
—
9,021
937
7,722
7,325
752
74
35,914
3,762
10,120
25,040
2,680
(45,951)
(34,788)
(189,914)
(207,865)
(2,989)
(3,594)
(3,817)
(5,737)
1,928
(3,022)
(20,769)
(11,003)
(14,871)
(25,070)
(2,807)
(25,007)
78,837
89,047
322,982
351,902
(2,589)
(14,780)
(23,312)
(62,520)
8,931
85,179
8,838
83,105
34,440
34,201
334,110
323,583
Less: Redevelopment Net Operating Income
(8,794)
(7,880)
(33,797)
(29,181)
Same Property Net Operating Income excluding
Redevelopments
___________________
$
76,385 $
75,225 $ 300,313 $ 294,402
(1) Other includes items such as environmental abatement costs, demolition expenses, lease termination fees and ground rent. Prior year
amounts were restated to conform to the current year presentation due to the adoption on January 1, 2019 of Accounting Standard
Codification 842.
(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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Table of Contents
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, 2019, we had fixed-rate debt of $1.7 billion and variable-rate debt of
$17.4 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 $.1 million and $75.9 million,
respectively.
ITEM 8. Financial Statements and Supplementary Data
WEINGARTEN REALTY INVESTORS
Index to Financial Statements
(A) Report of Independent Registered Public Accounting Firm
(B) Financial Statements:
Consolidated Statements of Operations for the year ended December 31, 2019, 2018 and
2017
Consolidated Statements of Comprehensive Income for the year ended December 31, 2019,
2018 and 2017
(i)
(ii)
(iii) Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Cash Flows for the year ended December 31, 2019, 2018 and
2017
(iv)
(v) Consolidated Statements of Equity for the year ended December 31, 2019, 2018 and 2017
(vi) Notes to Consolidated Financial Statements
(C) Financial Statement Schedules:
II
Valuation and Qualifying Accounts
III Real Estate and Accumulated Depreciation
IV Mortgage Loans on Real Estate
Page
41
43
44
45
46
47
48
93
94
100
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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Table of Contents
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, 2019 and 2018, the related consolidated statements of operations, comprehensive
income, equity, and cash flows, for each of the three years in the period ended December 31, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2019, 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, 2019, 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 27, 2020, 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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Investment in Real Estate Joint Ventures and Partnerships - Refer to Note 1 Summary of Significant Accounting
Policies of the 2019 Form 10-K
Critical Audit Matter Description
The Company’s evaluation of impairment for their investments in real estate joint ventures and partnerships involves
an initial assessment of various factors, including operating results of the investee and the Company's ability and intent
to hold the investment, to determine if there is a decrease in the investment value that may be other than temporary.
Changes in the assumptions could have a significant impact on the investments in real estate joint ventures and
partnerships identified for further analysis. Based on changes in management's intent for investments in real estate
joint ventures and partnerships, a $3.1 million impairment loss has been recognized for the year ended December 31,
2019.
Given the Company’s evaluation of its intent to hold the investment when evaluating if a decline in fair value is other
than temporary requires management to make significant assumptions, performing audit procedures to evaluate
whether management appropriately evaluated this factor required a high degree of auditor judgment.
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Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s evaluation of the Company’s intent to hold the investment in identifying
indicators of an other than temporary decline in fair value included the following:
• We tested the effectiveness of controls, including those related to the evaluation of the Company’s intent and
ability to hold their investments.
• We evaluated the investments to identify any indications that impairment may be other than temporary by
considering operating results of the investee and the Company’s intent to hold the investment. This included
performing corroborating inquiries with management.
• We evaluated the Company’s historical experience regarding the timely recognition of impairment by evaluating
real estate sales within the joint ventures to evaluate if they were sold at a gain and any subsequent changes to
the Company’s intent to hold the investment.
/s/ Deloitte & Touche LLP
Houston, Texas
February 27, 2020
We have served as the Company's auditor since 1963.
42
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
Interest and other income, net
Gain on sale of property
Total Other Income
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
2019
2018
2017
$
472,446
$
517,836
$
563,183
14,179
486,625
13,311
531,147
135,674
161,838
94,620
60,813
74
35,914
327,095
90,554
69,268
10,120
25,040
9,980
573,163
167,101
109,310
75,636
15,257
28,052
356,820
395,356
(57,601)
(63,348)
(80,326)
11,003
189,914
143,316
2,807
207,865
147,324
7,532
218,611
145,817
302,846
321,651
323,624
(1,040)
20,769
322,575
(7,140)
(1,378)
25,070
345,343
(17,742)
17
27,074
350,715
(15,441)
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
$
315,435
$
327,601
$
335,274
Earnings Per Common Share - Basic:
Net income attributable to common shareholders
Earnings Per Common Share - Diluted:
Net income attributable to common shareholders
$
$
2.47
$
2.57
$
2.62
2.44
$
2.55
$
2.60
See Notes to Consolidated Financial Statements.
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Table of Contents
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net Income
Cumulative effect adjustment of new accounting standards
Other Comprehensive (Loss) Income:
Net unrealized gain on investments, net of taxes
Realized gain on investments
Net unrealized gain on derivatives
Reclassification adjustment of derivatives and designated hedges into net
income
Retirement liability adjustment
Total
Comprehensive Income
Comprehensive Income Attributable to Noncontrolling Interests
Year Ended December 31,
2019
2018
2017
$
322,575
$
345,343
$
350,715
—
—
—
—
(887)
153
(734)
321,841
(7,140)
(1,541)
—
—
—
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)
Comprehensive Income Adjusted for Noncontrolling Interests
$
314,701
$
323,222
$
338,265
See Notes to Consolidated Financial Statements.
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Table of Contents
WEINGARTEN REALTY INVESTORS
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
Property
Accumulated Depreciation
Property, net *
ASSETS
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) *
Cash and Cash Equivalents *
Restricted Deposits and Escrows
Other, net
Total Assets
LIABILITIES AND EQUITY
Debt, net *
Accounts Payable and Accrued Expenses
Other, net
Total Liabilities
Commitments and Contingencies (see Note 16)
Equity:
Shareholders' Equity:
Common Shares of Beneficial Interest - par value, $.03 per share;
shares authorized: 275,000; shares issued and outstanding:
128,702 in 2019 and 128,333 in 2018
Additional Paid-In Capital
Net Income Less Than Accumulated Dividends
Accumulated Other Comprehensive Loss
Total Shareholders' Equity
Noncontrolling Interests
Total Equity
December 31,
2019
2018
$
4,145,249
$
4,105,068
(1,110,675)
(1,108,188)
3,034,574
2,996,880
427,947
353,828
3,462,521
3,350,708
148,479
142,014
83,639
41,481
13,810
97,924
65,865
10,272
188,004
160,178
3,937,934
$
3,826,961
1,732,338
$
1,794,684
111,666
217,770
113,175
168,403
2,061,774
2,076,262
—
—
$
$
3,905
3,893
1,779,986
1,766,993
(74,293)
(11,283)
(186,431)
(10,549)
1,698,315
1,573,906
177,845
176,793
1,876,160
1,750,699
Total Liabilities and Equity
$
3,937,934
$
3,826,961
* Consolidated variable interest entities' assets and debt included in the above balances (see Note 17):
Property, net
Accrued Rent, Accrued Contract Receivables and Accounts Receivable, net
Cash and Cash Equivalents
Debt, net
$
196,636
$
198,466
10,548
8,135
44,993
12,220
8,243
45,774
See Notes to Consolidated Financial Statements.
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Table of Contents
WEINGARTEN REALTY INVESTORS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2018
2017
2019
Cash Flows from Operating Activities:
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
Non-cash lease expense
Impairment loss
Equity in earnings of real estate joint ventures and partnerships, net
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, net
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 (used in) provided by 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 financing activities
Net (decrease) increase 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
Supplemental disclosure of cash flow information:
Cash paid for interest (net of amount capitalized of $13,586, $7,938 and
$4,868, respectively)
Cash paid for income taxes
Cash paid for amounts included in operating lease liabilities
$
322,575
$
345,343
$
350,715
135,674
3,194
1,241
74
(20,769)
(189,914)
20,083
10,001
(14,298)
(975)
3,164
270,050
(218,849)
(183,188)
445,319
(74,602)
2,482
—
10,375
2,437
(16,026)
—
(55,556)
(5,000)
—
1,098
(203,297)
(3,271)
(6,782)
326
(2,388)
(274,870)
(20,846)
76,137
55,291
55,413
1,526
2,785
$
$
$
$
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
$
(19,945)
41,279
21,334
65,507
1,545
$
$
— $
79,161
1,009
—
$
$
$
$
See Notes to Consolidated Financial Statements.
46
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4
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. These centers may be
mixed-use properties that have both retail and residential components. 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 32.5 million square
feet of gross leasable area that is either owned by us or others. We have a diversified tenant base, with our largest
tenant comprising only 2.6% of base minimum rental revenues during 2019. Total revenues generated by our centers
located in Houston and its surrounding areas was 20.0% of total revenue for the year ended December 31, 2019, and
an additional 9.3% of total revenue was generated in 2019 from centers that are located in other parts of Texas. Also,
in Florida and California, an additional 19.8% and 17.9%, respectively, of total revenue was generated in 2019.
Basis of Presentation
Our consolidated financial statements include the accounts of our subsidiaries, certain 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.
Leases
As part of our operations, we are primarily a lessor of commercial retail space. In certain instances, we are also a
lessee, primarily of ground leases associated with our operations. Our contracts are reviewed to determine if they
qualify, under the GAAP definition, as a lease. A contract is determined to be a lease when the right to obtain substantially
all of the economic benefits and to direct the use of an identified asset is transferred to a customer over a defined
period of time for consideration. During this review, we evaluate among other items, asset specification, substitution
rights, purchase options, operating rights and control over the asset during the contract period.
We have elected accounting policy practical expedients, both as a lessor and a lessee, to not separate any nonlease
components (primarily common area maintenance) within a lease contract for all classes of underlying assets (primarily
real estate assets). As a lessor, we have further determined that this policy will be effective only on a lease that has
been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of
components. We have determined to account for both the lease and nonlease components as a single component
when the lease component is the predominate component of a contract. Therefore, Accounting Standards Codification
("ASC") No. 842, “Leases” will be applied to these lease contracts for both types of components. Additionally, for lessee
leases, we have also elected not to apply the overall balance sheet recognition requirements to short-term leases that
are less 12 months from the lease commencement date.
Significant judgments and assumptions are inherent in not only determining if a contract contains a lease but also the
lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options with
the determination if they will be exercised, evaluation of implicit discount rates, assessment and consideration of “fixed”
payments for straight-line rent revenue calculations and the evaluation of asset identification and substitution rights.
The determination of the discount rate used in a lease is the incremental borrowing rate of the lease contract. For
lessee leases, this rate is often not readily determinable as the lessor’s initial direct costs and expected residual value
are at the end of the lease term and are unknown. Therefore, as the lessee, our incremental borrowing rate will be
used. Selected discount rates will reflect rates that we would have to pay to borrow on a fully collateralized basis over
a term similar to the lease. Additionally, we will obtain lender quotes with similar terms and if not available, we consider
the asset type, risk free rates and financing spreads to account for creditworthiness and collateral.
48
Table of Contents
Our lessor leases are principally related to our shopping centers. We believe risk of an inadequate residual value of
the leased asset upon the termination of these leases is low due to our ability to re-lease the space, the long-lived
nature of our real estate assets and the propensity of real estate assets to hold their value over a long period of time.
Revenue Recognition
At the inception of a revenue producing contract, we determine if a contract qualifies as a lease and if not, then as a
customer contract. Additionally, we exclude all taxes assessed by a governmental authority that is collected by us from
Revenue. Based on this determination, the appropriate GAAP is applied to the contract, including its revenue
recognition.
Rentals, net
Rental revenue is primarily derived from operating leases and, therefore, is generally recognized on a straight-line
basis over the term of the lease, which typically begins the date the tenant takes control of the space. Variable rental
revenue consists primarily of tenant reimbursements of taxes, maintenance expenses and insurance, is subject to our
interpretation of lease provisions and is recognized over the term of a lease as services are provided. Additionally,
variable rental revenue based on a percentage of tenants’ sales is recognized only after the tenant exceeds its 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. Further, at the lease commencement date and on an ongoing basis, we consider the collectability of a lease
when determining revenue to be recognized. Prior to the adoption of ASC No. 842, rental revenues were recognized
under ASC No. 840, “Leases.”
Other
Other revenue consists of both customer contract revenue and income from contractual agreements with third parties
or 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 applicable agreement.
We have identified primarily three types of customer contract revenue: (1) management contracts with 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
Licensing and
Occupancy
Agreements
Performance Obligation Description
• Management and asset management services
• Construction and development services
• Marketing services
• Leasing and legal preparation services
• Sales commissions
• 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.
49
Table of Contents
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 a nonfinancial 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. 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 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.
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 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.
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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. 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.
Upon the adoption of ASC No. 842, such costs include outside broker commissions and other independent third party
costs, as well as internal leasing commissions paid directly related to completing a lease and are amortized over the
life of the lease on a straight-line basis. Prior to the adoption of ASC No. 842, such costs included 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 salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities are charged
to expense as incurred. Also included are in place lease costs which are amortized over the life of the applicable lease
term on a straight-line basis.
Accrued Rent, Accrued Contract Receivables and Accounts Receivable, net
Receivables include rental revenue, 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. Upon the adoption
of ASC No. 842, individual leases are assessed for collectability and upon the determination that the collection of rents
is not probable, accrued rent and accounts receivables are reduced as an adjustment to rental revenues. Revenue
from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is
determined to be probable. Further, we assess whether operating lease receivables, at a portfolio level, are appropriately
valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends. An
allowance for the uncollectible portion of the portfolio is recorded as an adjustment to rental revenues. Prior to the
adoption of ASC No. 842, an allowance for the uncollectible portion of accrued rents and accounts receivable was
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.
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 Escrows
Restricted deposits are held or restricted for a specific use or in a qualified escrow account for the purposes of completing
like-kind exchange transactions. Escrows consist of deposits held by third parties or lenders for a specific use; including,
capital improvements, rental income and taxes.
Our restricted deposits and escrows consist of the following (in thousands):
Restricted deposits
Escrows
Total
51
December 31,
2019
2018
$
$
12,793 $
1,017
8,150
2,122
13,810 $
10,272
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Other Assets, net
Other assets include an asset related to the debt service guaranty (see Note 6 for further information), tax increment
revenue bonds, right-of-use assets, investments, investments held in a grantor trust, deferred tax assets (see Income
Taxes), the net value of above-market leases and deferred debt costs associated with our revolving credit facilities.
Right-of-use assets are amortized to achieve the recognition of rent expense on a straight-line basis after adjusting
for the corresponding lease liabilities’ interest over the lives of the leases. 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 18 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.
Other Liabilities, net
Other liabilities include non-qualified benefit plan liabilities (see Retirement Benefit Plans and Deferred Compensation
Plan), lease liabilities and the net value of below-market leases. Lease liabilities are amortized to rent expense using
the effective interest rate method, over the lease life. Below-market leases are amortized as adjustments to rental
revenues over terms of the acquired leases.
Sales of Real Estate
Sales of real estate include the sale of tracts of land, property adjacent to shopping centers, operating properties,
newly developed properties, investments in real estate joint ventures and partnerships and partial sales of real estate
joint ventures and partnerships in which we participate.
These sales primarily fall under two types of contracts (1) sales of nonfinancial assets (primarily real estate) and (2)
sales of investments in real estate joint ventures and partnerships of substantially nonfinancial assets. 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, including right-of-use assets, is reviewed for impairment if events or changes in circumstances indicate
that the carrying amount of the property, any capitalized costs and any identifiable intangible assets, may not be
recoverable.
If such an event occurs, a comparison is made of the current and projected operating cash flows of each such property
into the foreseeable future, with consideration of applicable holding periods, on an undiscounted basis to the carrying
amount of such property. If we determine the carrying amount is not recoverable, our basis in the property is reduced
to its estimated fair value to reflect impairment in the value of the asset. Fair values are determined by management
utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker or
appraisal estimates.
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.
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Our investment in real estate joint ventures and partnerships is reviewed for impairment each reporting period. We
evaluate various factors, including operating results of the investee, our ability and intent to hold the investment and
our views on current market and economic conditions, when determining if there is a decline in the investment value.
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. The ultimate realization is dependent on a number of factors, including
the performance of each investment and market conditions. 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 real estate joint ventures and partnerships.
See Note 10 for additional information regarding impairments.
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.
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act of 2017 ("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 11 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.
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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 6% 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.
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.
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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.
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
and investment securities, 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.
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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.
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 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):
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
Balance, January 1, 2017
Change excluding amounts reclassified from
accumulated other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
Net other comprehensive (income) loss
Balance, December 31, 2017
Cumulative effect adjustment of accounting
standards
Change excluding amounts reclassified from
accumulated other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
Net other comprehensive loss (income)
Balance, December 31, 2018
Change excluding amounts reclassified from
accumulated other comprehensive loss
Amounts reclassified from accumulated
other comprehensive loss
Net other comprehensive loss (income)
Balance, December 31, 2019
$
___________________
651
(577)
(1,541)
1,541
—
—
—
—
—
—
—
—
42 (1)
(1,021)
(7,424)
(1,475) (2)
(1,393)
15,135
—
—
(1,379)
1,143
4,302 (1)
2,923
(4,501)
(1,228) (2)
(85)
15,050
—
1,044
887 (1)
887
(1,197) (2)
(153)
(2,209)
(782)
(2,991)
6,170
1,541
(236)
3,074
2,838
10,549
1,044
(310)
734
$
(3,614)
$
14,897
$
11,283
(1) This reclassification component is included in interest expense.
(2) This reclassification component is included in the computation of net periodic benefit cost (see Note 15 for additional information).
Additionally, as of December 31, 2019 and 2018, the net gain balance in accumulated other comprehensive loss
relating to previously terminated cash flow interest rate swap contracts was $3.6 million and $4.5 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.
Reclassifications
We have reclassified prior years’ miscellaneous lease-related revenues identified during our implementation of ASC
No. 842 of $1.3 million and $2.5 million for the year ended December 31, 2018 and 2017, respectively, to Rentals, net
from Other revenue in our Consolidated Statements of Operations to conform to the current year presentation (see
Note 2 for further information).
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Note 2. Newly Issued Accounting Pronouncements
Adopted
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU")
No. 2016-02, "Leases." This ASU was further updated by ASU No. 2018-01, "Land Easement Practical Expedient for
Transition for Topic 842," ASU No. 2018-10, "Codification Improvements to Topic 842," ASU No. 2018-11, "Targeted
Improvements for Topic 842," ASU No. 2018-20, "Narrow-Scope Improvements for Lessors" and ASU No. 2019-01,
"Codification Improvements to Topic 842." 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 nonlease 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. We adopted this guidance as of January 1, 2019 and applied it on
a modified retrospective approach and elected not to restate comparative periods.
Upon adoption, we applied the following practical expedients:
• 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
lease component under certain conditions.
• As an accounting policy election, a lessee 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
lease component.
• 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.
The adoption resulted in the following changes as of January 1, 2019:
• 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 are no longer
capitalized and are recorded in General and administrative expenses in our Consolidated Statement
of Operations in the period of adoption prospectively. We continue to capitalize direct costs as defined
within the ASU.
We are entitled to receive tenant reimbursements for operating expenses for common area
maintenance (“CAM”). These ASUs have defined CAM reimbursement revenue as a nonlease
component, which would need to be accounted for in accordance with Topic 606. However, we have
applied the practical expedient for all of our real estate related leases, to account for the lease and
nonlease components as a single, combined operating lease component as long as the nonlease
component is not the predominate component of the combined components within a contract.
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We previously accounted for real estate taxes that are paid directly by the tenant on a gross basis 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, we have excluded
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 and $4.6 million for the year ended December 31, 2018 and 2017, respectively.
• From the Lessee Perspective:
On January 1, 2019, we were the lessee under ground lease agreements for land underneath all or
a portion of 12 centers and under four administrative office leases that we accounted for as operating
leases. Also, we had one finance lease in which we were the lessee of two centers with a $21.9 million
lease obligation.
We recognized right-of-use assets for our operating leases in Other Assets, along with corresponding
lease liabilities in Other Liabilities on January 1, 2019 in the amounts of $44.2 million and $42.9 million,
respectively, in the Consolidated Balance Sheet. The difference between the right-of-use assets and
the lease liabilities is primarily associated with intangibles related to ground leases. For these existing
operating leases, we continue to recognize a single lease expense for both our ground and office
leases, currently included in Operating expenses and General and administrative expenses,
respectively, in the Consolidated Statements of Operations.
We continue to recognize our finance lease asset balance in Property and our finance lease liability
in Debt in our Consolidated Balance Sheets. The finance lease charges a portion of the payment to
both asset amortization and interest expense.
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.
Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, "Measurement of Credit Losses on Financial Instruments." This
ASU was further updated by ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments - Credit
Losses, "ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses," ASU No.
2019-05, "Targeted Transition Relief" and ASU No. 2019-11, "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 ASU No. 2016-13, as amended in subsequently
issued amendments, were effective for us as of January 1, 2020.
In identifying all of our financial instruments covered under this guidance, the majority of our instruments result from
operating leasing transactions, which are not within the scope of the new standard and are to remain governed by the
recently issued leasing guidance and other previously issued guidance. Upon adoption at January 1, 2020, we
recognized the cumulative effect for credit losses which has decreased retained earnings and other assets by $.7
million, respectively. In addition, we evaluated controls around the implementation of this ASU and have concluded
there will be no significant impact on our control structure.
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 were 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 have been applied retrospectively. The adoption
of this ASU did not have a material impact to our consolidated financial statements.
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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.
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes." This ASU
clarifies/simplifies current disclosures and removes several disclosures requirements. Simplification includes franchise
taxes based partially on income as an income-based tax; entities should reflect enacted tax law and rate changes in
the interim period that includes the enactment date; and allowing entities to allocate consolidated tax amounts to
individual legal entities under certain elections. The provisions of ASU No. 2019-12 are effective for us as of January
1, 2021, 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,
2019
2018
$
911,521 $
919,237
40,667
53,076
2,898,867
241,118
45,673
55,793
2,927,954
156,411
$
4,145,249 $
4,105,068
During the year ended December 31, 2019, we sold 15 centers and other property. Aggregate gross sales proceeds
from these transactions approximated $464.1 million and generated gains of approximately $189.8 million. Also, for
the year ended December 31, 2019, we acquired five grocery-anchored shopping centers and other property with an
aggregate gross purchase price of approximately $219.6 million, and we invested $109.7 million in new development
projects.
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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 2019 and 2018.
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
Total
Gain on dispositions
Net Income
December 31,
2019
2018
$ 1,378,328 $ 1,268,557
(331,856)
(305,327)
1,046,472
108,366
963,230
104,267
$ 1,154,838 $ 1,067,497
$
264,782 $
269,113
11,972
25,498
302,252
852,586
11,732
24,717
305,562
761,935
$ 1,154,838 $ 1,067,497
Year Ended December 31,
2019
2018
2017
$
135,258 $
133,975 $
137,419
32,126
9,664
25,046
18,070
551
133
85,590
2,009
32,005
11,905
24,112
18,839
696
138
87,695
9,495
34,818
11,836
23,876
18,865
623
112
90,130
12,492
$
51,677 $
55,775 $
59,781
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 $9.0 million and $5.2 million
at December 31, 2019 and 2018, respectively, are generally amortized over the useful lives of the related assets.
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We recorded joint venture fee income included in Other revenues for the year ended December 31, 2019, 2018 and
2017 of $6.5 million, $6.1 million and $6.2 million, respectively.
During 2019, a parcel of land was sold with gross sales proceeds of approximately $2.3 million, of which our share of
the gain, included in equity earnings in real estate joint ventures and partnerships, totaled $1.1 million. In July 2019,
a 51% owned unconsolidated real estate joint venture acquired a center with a gross purchase price of $52.6 million.
Also during 2019, we invested $47.6 million in a 90% owned unconsolidated real estate joint venture for a mixed-use
new development.
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.
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,
2019
2018
$
23,830 $
38,181
$
$
(12,145)
196,207
(92,918)
(19,617)
193,658
(99,352)
114,974 $
112,870
95,240 $
85,742
(32,326)
(27,745)
3,446
(1,987)
3,446
(1,660)
$
64,373 $
59,783
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 $4.6 million, $12.8 million
and $3.7 million in 2019, 2018 and 2017, respectively. The significant year over year change in rental revenues in
2019 to 2018 is primarily due to a write-off of a below-market lease intangible from the termination of a tenant's lease
in 2018. 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):
2020
2021
2022
2023
2024
$
4,883
4,604
4,255
4,141
4,048
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The amortization of the in place lease intangible assets recorded in depreciation and amortization, was $14.9 million,
$29.8 million and $21.0 million in 2019, 2018 and 2017, respectively. The significant year over year change in
depreciation and amortization from 2019 to 2018 is primarily due to the write-off of in-place lease intangibles from the
termination of tenant leases in 2018. The estimated amortization of these intangible assets will increase depreciation
and amortization for each of the next five years as follows (in thousands):
2020
2021
2022
2023
2024
$
15,762
13,512
11,118
9,351
7,926
The net amortization of above-market assumed mortgages decreased net interest expense by $.3 million, $.7 million
and $1.1 million in 2019, 2018 and 2017, 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):
2020
2021
2022
2023
2024
$
327
287
141
136
136
The following table details the identified intangible assets and liabilities and the remaining weighted-average
amortization period associated with our asset acquisitions in 2019 as follows:
Identified intangible assets and liabilities subject to amortization (in thousands):
Assets:
In place leases
Above-market leases
Liabilities:
Below-market leases
Identified intangible assets and liabilities remaining weighted-average amortization period (in
years):
Assets:
In place leases
Above-market leases
Liabilities:
Below-market leases
$
30,253
1,323
13,762
11.0
7.2
13.5
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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
Finance lease obligation
Total
___________________
December 31,
2019
1,653,154 $
2018
1,706,886
$
—
57,380
21,804
5,000
60,900
21,898
$
1,732,338 $
1,794,684
(1) At December 31, 2019, interest rates ranged from 3.3% to 7.0% at a weighted average rate of 3.9%. At December 31, 2018, interest
rates ranged from 3.3% to 7.0% 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
December 31,
2019
2018
$ 1,714,890 $ 1,771,999
17,448
22,685
$ 1,732,338 $ 1,794,684
$ 1,450,762 $ 1,457,432
281,576
337,252
$ 1,732,338 $ 1,794,684
We maintain a $500 million unsecured revolving credit facility, which was amended and extended on December 11,
2019. This facility expires in March 2024, provides for two consecutive six-month extensions upon our request, and
borrowing rates that float at a margin over LIBOR plus a facility fee. At December 31, 2019 and 2018, the borrowing
margin and facility fee, which are priced off a grid that is tied to our senior unsecured credit ratings, were 82.5 and 15
basis points and 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 January 3,
2020, that we maintain for cash management purposes, which matures in March 2021. At both December 31, 2019
and 2018, 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.
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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,
2019
2018
— $
5,000
497,946
2,054
492,946
2,054
—%
3.3%
— $
—%
—
—%
5,000
$
26,500
123
3.3%
1,096
2.9%
$
$
$
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, 2019 and 2018, we had $57.4 million and $60.9 million outstanding for the debt service
guaranty liability, respectively.
During the year ended December 31, 2019, we repaid a $50 million secured fixed-rate mortgage with a 7.0% interest
rate from cash from our disposition proceeds.
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 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. 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.
Various leases and properties, and current and future rentals from those leases and properties, collateralize certain
debt. At December 31, 2019 and 2018, the carrying value of such assets aggregated $.5 billion and $.6 billion,
respectively. Additionally at December 31, 2019 and 2018, investments of $5.3 million and $5.2 million, respectively,
included in Restricted Deposits and Escrows are held as collateral for letters of credit totaling $5.0 million.
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Scheduled principal payments on our debt (excluding $21.8 million of a finance lease obligation, $(3.9) million net
premium/(discount) on debt, $(5.5) million of deferred debt costs, $1.5 million of non-cash debt-related items, and
$57.4 million debt service guaranty liability) are due during the following years (in thousands):
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Thereafter
Total
$
22,743
18,434
307,922
347,815
252,153
293,807
277,291
38,288
92,159
917
9,518
$ 1,661,047
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, 2019.
Note 7. Lease Obligations
We are engaged in the operation of shopping centers, which are either owned or, with respect to certain shopping
centers, operated under operating ground leases. These ground leases expire at various dates through 2069 with
renewal options ranging from five years to 20 years and in some cases, include options to purchase the underlying
asset by either the lessor or lessee. Generally, our ground lease variable payments for real estate taxes, insurance
and utilities are paid directly by us and are not a component of rental expense. Most of our leases have increasing
minimum rental rates during the terms of the leases through escalation provisions and also may include an amount
based on a percentage of operating revenues or sublease tenant revenue. Space in our shopping centers is leased
to tenants pursuant to agreements that generally provide for terms of 10 years or less 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.
Also, we have two properties under a finance lease that consists of variable lease payments with a purchase option.
The right-of-use asset associated with this finance lease at December 31, 2019 was $8.9 million. At December 31,
2018, the related assets associated with a capital lease in buildings and improvements totaled $15.7 million, and the
balance of accumulated depreciation was $14.1 million. Amortization of property under the finance lease is included
in depreciation and amortization expense. Note that amounts prior to January 1, 2019 were accounted for under ASC
No. 840.
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A schedule of lease costs including weighted average lease terms and weighted-average discount rates is as follows
(in thousands, except as noted):
Operating lease cost:
Included in Operating expense
Included in General and administrative expense
Finance cost:
Amortization of right-of-use asset (included in Depreciation and
Amortization)
Interest on lease liability (included in Interest expense, net)
Short-term lease cost
Variable lease cost
Sublease income (included in Rentals, net)
Total lease cost
$
$
Weighted-average remaining lease term (in years):
Operating leases
Finance lease
Weighted-average discount rate (percentage):
Operating leases
Finance lease
Year Ended December 31,
2019
3,044
302
174
1,642
44
309
(27,400)
(21,885)
December 31, 2019
41.5
4.0
4.9%
7.5%
A reconciliation of our lease liabilities on an undiscounted cash flow basis, which primarily represents shopping center
ground leases, for the subsequent five years and thereafter, as calculated as of December 31, 2019, is as follows (in
thousands):
Lease payments:
2020
2021
2022
2023
2024
Thereafter
Total
Lease liabilities(1)
Undiscounted excess amount
___________________
Operating
Finance
$
2,696 $
2,585
2,576
2,458
2,158
97,187
1,744
1,751
1,759
23,037
$
$
109,660 $
28,291
43,063
66,597 $
21,804
6,487
(1) Operating lease liabilities are included in Other Liabilities, and finance lease liabilities are included in Debt, net in
our Consolidated Balance Sheet.
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Scheduled minimum rental payments as defined under ASC No. 840, 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, as calculated as of December 31, 2018, were as follows (in thousands):
Lease payments:
2019
2020
2021
2022
2023
Thereafter
Total
Operating
Finance
$
2,779 $
2,536
2,334
2,318
2,283
99,302
1,642
1,635
1,627
1,618
22,878
$
111,552 $
29,400
Rental expense for operating leases as defined under ASC No. 840 was, in millions: $3.1 in 2018 and $2.9 in 2017,
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 and $27.1 million
in 2017.
Future undiscounted, sublease payments applicable to the ground lease rentals, under the terms of all non-cancelable
tenant leases, excluding estimated variable payments for the subsequent five years and thereafter ending
December 31, as calculated as of December 31, 2019 and 2018, were as follows (in thousands):
December 31,
2019
December 31,
2018
Sublease payments:
Finance lease(1)
Operating leases:
2019
2020
2021
2022
2023
2024
Thereafter
Total
___________________
$
$
10,279 $
14,382
$
24,137
22,168
20,400
18,583
13,567
39,111
22,528
20,903
18,886
17,245
15,128
43,439
138,129
$
137,966 $
(1) The sublease payments related to our finance lease represents cumulative payments through the lease term ending
in 2023.
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.
No common shares were repurchased during the year ended December 31, 2019, and .7 million common shares were
repurchased at an average price of $27.10 per share during the year ended December 31, 2018. At December 31,
2019 and as of the date of this filing, $181.5 million of common shares remained available to be repurchased under
this plan.
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Common dividends declared per share were $1.58, $2.98 and $2.29 for the year ended December 31, 2019, 2018
and 2017, respectively. The regular dividend rate per share for our common shares for each quarter of 2019, 2018
and 2017 was $.395, $.395 and $.385, respectively. No special dividend was paid in 2019, and for 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, 2019, a
first quarter dividend of $.395 per common share was approved by our Board of Trust Managers.
Note 9. Leasing Operations
As a commercial real estate lessor, generally our leases are for terms of 10 years or less and may include multiple
options, upon tenant election, to extend the lease term in increments up to five years. Our leases typically do not
include an option to purchase. Tenant terminations prior to the lease end date occasionally results in a one-time
termination fee based on the remaining unpaid lease payments including variable payments and could be material to
the tenant. Many of our leases have increasing minimum rental rates during the terms of the leases through escalation
provisions. In addition, the majority of our leases provide for variable rental revenues, such as, reimbursements of real
estate taxes, maintenance and insurance and may include an amount based on a percentage of the tenants’ sales.
Future undiscounted, lease payments for tenant leases, excluding estimated variable payments, at December 31,
2019 is as follows (in thousands):
2020
2021
2022
2023
2024
Thereafter
Total payments due
$
335,451
292,146
238,559
191,552
144,329
451,531
$ 1,653,568
Future minimum rental income as defined under ASC No. 840 from tenant leases, excluding estimated contingent
rentals, at December 31, 2018 is as follows (in thousands):
2019
2020
2021
2022
2023
Thereafter
Total payments due
$
347,476
305,404
253,269
198,414
151,538
473,416
$ 1,729,517
Variable lease payments recognized in Rentals, net are as follows (in thousands):
Variable lease payments
Contingent rentals recognized in Rentals, net are as follows (in thousands):
Year Ended
December 31,
2019
$
109,685
Contingent rentals
Year Ended December 31,
2018
118,703 $
2017
129,635
$
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Note 10. 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 18 for additional fair value information) (in thousands):
Operating expenses:
Properties held for sale, under contract for sale or sold (1)
Land held for development and undeveloped land (1)
Other
Total impairment charges
Year Ended December 31,
2019
2018
2017
$
— $
9,969 $ 12,203
74
—
74
151
—
2,719
335
10,120
15,257
Other financial statement captions impacted by impairment:
Equity in earnings of real estate joint ventures and partnerships, net (1)
Net income attributable to noncontrolling interests
3,070
(17)
—
(17)
—
21
Net impact of impairment charges
$
3,127 $ 10,103 $ 15,278
___________________
(1) Amounts reported were based on changes in management's plans or intent for the properties and/or investments in real estate joint
ventures and partnerships, third party offers, recent comparable market transactions and/or a change in market conditions.
Note 11. 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 real estate assets is in excess of tax
basis by $286.2 million and $211.0 million at December 31, 2019 and 2018, respectively.
The following table reconciles net income adjusted for noncontrolling interests to REIT taxable income (in thousands):
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)
Year Ended December 31,
2019
315,435 $
2018
327,601 $
2017
335,274
$
(32,225)
283,210
132,957
(75,824)
(89,217)
(9,332)
3,118
(21,358)
223,554
(223,554)
(13,496)
314,105
158,607
(89,700)
19,807
(15,589)
10,008
(13,718)
383,520
(383,520)
4,220
339,494
162,964
(95,512)
6,261
(11,146)
5,071
(244)
406,888
(406,888)
—
Dividends paid in excess of taxable income
$
— $
— $
___________________
(1) For 2019, 2018 and 2017, the dividends paid deduction includes designated dividends of $121.2 million, $105.7 million and $112.8 million
from 2020, 2019 and 2018, 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,
2019
2018
2017
65.4%
34.6%
42.2%
57.8%
23.0%
77.0%
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)
Net operating loss carryforwards (2)
Straight-line rentals
Book-tax basis differential
Other (4)
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,
2019
2018
$
4,692 $
3,206
—
1,101
177
9,176
(5,749)
4,732
11,132
1,391
1,800
201
19,256
(12,787)
$
$
$
3,427 $
6,469
1,547 $
155
1,702 $
6,005
398
6,403
(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 $15.3 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
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.
(4) Classification of prior year's amounts were made to conform to the current year presentation.
We are subject to federal, state and local income taxes and have recorded an income tax provision (benefit) as follows
(in thousands):
Year Ended December 31,
2018
2017
2019
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 provision (benefit) of taxable REIT subsidiary (2)
State and local taxes, primarily Texas franchise taxes
$
$
32,602 $
13,480 $
6,846 $
(7,038)
—
569
377
663
2,831 $
(2,800)
—
(46)
(15)
1,393
Total
___________________
$
1,040 $
1,378 $
(5,788)
(2,026)
—
282
176
(1,568)
1,551
(17)
(1) At statutory rate of 21% for both the year ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017.
(2) All periods from December 31, 2016 through December 31, 2019 are open for examination by the IRS.
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Also, a current tax obligation of $.7 million and $1.5 million has been recorded at December 31, 2019 and 2018,
respectively, in association with these taxes.
Note 12. Supplemental Cash Flow Information
Cash, cash equivalents and restricted cash equivalents consists of the following (in thousands):
Cash and cash equivalents
Restricted deposits and escrows (see Note 1)
Total
December 31,
2019
2018
2017
$
$
41,481 $
65,865 $
13,810
10,272
55,291 $
76,137 $
13,219
8,115
21,334
Supplemental disclosure of non-cash transactions is summarized as follows (in thousands):
Accrued property construction costs
Reduction of debt service guaranty liability
Right-of-use assets exchanged for operating lease liabilities
Increase in equity associated with deferred compensation plan
Note 13. Earnings Per Share
Year Ended December 31,
2019
2018
2017
$
8,014 $
11,135 $
(3,520)
43,729
—
(3,245)
—
—
7,728
(2,980)
—
44,758
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,
2019
2018
2017
$
322,575 $
345,343 $
350,715
Net income attributable to noncontrolling interests
(7,140)
(17,742)
(15,441)
Net income attributable to common shareholders – basic
Income attributable to operating partnership units
315,435
2,112
327,601
—
335,274
3,084
Net income attributable to common shareholders – diluted
$
317,547 $
327,601 $
338,358
Denominator:
Weighted average shares outstanding – basic
Effect of dilutive securities:
Share options and awards
Operating partnership units
Weighted average shares outstanding – diluted
127,842
127,651
127,755
842
1,432
130,116
790
—
128,441
870
1,446
130,071
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Anti-dilutive securities of our common shares, which are excluded from the calculation of earnings per common share
– diluted, are as follows (in thousands):
Operating partnership units
Total anti-dilutive securities
Note 14. Share Options and Awards
Year Ended December 31,
2019
2018
2017
—
—
1,432
1,432
—
—
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 1.0 million are available for future grant at December 31,
2019. This plan expires in April 2028.
Compensation expense, net of forfeitures, associated with share options and restricted shares totaled $8.3 million in
2019, $7.3 million in 2018 and $8.6 million in 2017, of which $.8 million in 2019, $1.1 million in 2018 and $1.7 million
in 2017 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.
Following is a summary of the option activity for the three years ended December 31, 2019:
Outstanding, January 1, 2017
Forfeited or expired
Exercised
Outstanding, December 31, 2017
Forfeited or expired
Exercised
Outstanding, December 31, 2018
Forfeited or expired
Exercised
Outstanding, December 31, 2019
Shares
Under
Option
934,201 $
(4,042)
(101,805)
828,354
(196,159)
(352,318)
279,877
(1,136)
(71,325)
207,416 $
Weighted
Average
Exercise
Price
22.85
43.37
16.11
23.58
32.22
19.78
22.30
11.85
17.98
23.84
The total intrinsic value of options exercised was $.9 million in 2019, $3.6 million in 2018 and $1.7 million in 2017. 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, 2019:
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
$22.68 - $24.87
207,416
0.8 years
$
23.84
1,535
207,416
0.8 years
$
23.84
1,535
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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, 2019
Minimum
Maximum
0.0%
19.3%
N/A
2.4%
5.5%
21.3%
3
2.6%
(1)
Includes the volatility of the FTSE NAREIT U.S. Shopping Center Index and Weingarten Realty Investors.
A summary of the status of unvested share awards for the year ended December 31, 2019 is as follows:
Outstanding, January 1, 2019
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, 2019
Unvested
Share
Awards
Weighted
Average
Grant
Date Fair
Value
674,293 $
30.26
179,825
80,848
80,847
27,768
(236,716)
(5,519)
801,346 $
28.61
30.20
32.91
29.17
32.13
29.86
29.56
As of December 31, 2019 and 2018, there was approximately $2.1 million and $1.8 million, respectively, of total
unrecognized compensation cost related to unvested share awards, which is expected to be amortized over a weighted
average of 1.8 years and 1.7 years at December 31, 2019 and 2018, respectively.
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Note 15. 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, 2019 and 2018.
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial loss (gain) (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 2019 and 2018)
Accumulated benefit obligation
Net loss recognized in accumulated other comprehensive loss
___________________
December 31,
2019
2018
$
55,759 $
58,998
1,090
2,257
7,889
(2,742)
1,295
2,056
(4,478)
(2,112)
64,253 $
55,759
50,802 $
53,808
10,356
1,000
(2,742)
(1,894)
1,000
(2,112)
59,416 $
50,802
(4,837) $
(4,957)
64,159 $
55,683
14,897 $
15,050
$
$
$
$
$
$
(1) The change in actuarial loss (gain) is attributable primarily to census and mortality table updates and a decrease in the discount rate in
2019.
The following is the required information for other changes in plan assets and benefit obligation recognized in other
comprehensive income (in thousands):
Net loss
Amortization of net loss (1)
Total recognized in other comprehensive income
Total recognized in net periodic benefit cost and other
comprehensive income
___________________
Year Ended December 31,
2019
2018
2017
1,044 $
1,143 $
(1,197)
(1,228)
(153) $
(85) $
82
(1,475)
(1,393)
880 $
767 $
213
$
$
$
(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.
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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,
2019
2018
$
64,253 $
64,159
59,416
55,759
55,683
50,802
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss
Total
Year Ended December 31,
2019
2018
2017
$
$
1,090 $
1,295 $
2,257
(3,511)
1,197
2,056
(3,727)
1,228
1,033 $
852 $
1,223
2,123
(3,215)
1,475
1,606
The components of net periodic benefit cost other than the service cost component are included in Interest and Other
Income, net in the Consolidated Statements of Operations.
The assumptions used to develop net periodic benefit cost are shown below:
Discount rate
Salary scale increases
Long-term rate of return on assets
Year Ended December 31,
2019
2018
2017
4.12%
3.50%
7.00%
3.50%
3.50%
7.00%
4.01%
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 2019.
The assumptions used to develop the actuarial present value of the benefit obligation are shown below:
Year Ended December 31,
2018
2017
2019
Discount rate
Salary scale increases
3.09%
3.50%
4.12%
3.50%
3.50%
3.50%
The expected contribution to be paid for the Retirement Plan by us during 2020 is approximately $1.0 million. The
expected benefit payments for the next 10 years for the Retirement Plan is as follows (in thousands):
2020
2021
2022
2023
2024
2025-2029
$
2,436
2,602
2,772
2,936
3,062
16,209
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The participant data used in determining the liabilities and costs for the Retirement Plan was collected as of January
1, 2019, and no significant changes have occurred through December 31, 2019.
At December 31, 2019, 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%
51%
14%
24%
5%
1%
4%
56%
10%
26%
3%
1%
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,
2019
2018
18%
34%
7%
7%
11%
15%
8%
100%
20%
33%
7%
6%
8%
18%
8%
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 21%, 17%,
15%, 12% and 11% of total equity investments, respectively.
Defined Contribution Plans:
Compensation expense related to our defined contribution plans was $3.9 million in 2019, $3.8 million in 2018 and
$3.9 million in 2017.
Note 16. Commitments and Contingencies
Commitments and Contingencies
As of December 31, 2019 and 2018, we participated in two real estate ventures structured as DownREIT partnerships.
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 $45 million and $36 million as of December 31,
2019 and 2018, respectively.
As of December 31, 2019, we have entered into commitments aggregating $98.5 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 17. Variable Interest Entities
Consolidated VIEs:
At December 31, 2019 and 2018, eight and nine of our real estate joint ventures, respectively, whose activities primarily
consisted of owning and operating 21 neighborhood/community shopping centers, 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,
2019
2018
$
228,954 $
39,782
29,784
225,388
40,004
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 in 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, 2019 and 2018, 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,
2019
2018
$
128,361 $
7,735
34,000
76,575
6,592
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-use project, we anticipate funding
of approximately $9 million through 2020.
Note 18. Fair Value Measurements
Recurring Fair Value Measurements:
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018, 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,
2019
Assets:
Cash equivalents, primarily money market funds (1) $
Restricted cash, primarily money market funds (1)
Investments, mutual funds held in a grantor trust (1)
Total
Liabilities:
Deferred compensation plan obligations
Total
___________________
$
$
$
28,330
9,916
38,378
76,624 $
38,378
38,378 $
$
— $
— $
28,330
9,916
38,378
76,624
— $
$
— $
38,378
38,378
(1) For the year ended December 31, 2019, a net gain of $9.4 million was included in Interest and Other Income, net, of which $6.7 million
represented an unrealized gain.
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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, net, of which $(3.0) million
represented an unrealized loss.
Nonrecurring Fair Value Measurements:
Investment in Real Estate Joint Ventures and Partnerships Impairments
Estimated fair values are determined by management utilizing the performance of each investment, the life and other
terms of the investment, holding periods, market conditions, cash flow models, market capitalization rates and market
discount rates, or by obtaining third-party broker valuation estimates, appraisals, 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, 2019 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)
$
$
— $
1,830
1,830
$
$
24,154
24,154
$
$
25,984
25,984
$
$
(3,070)
(3,070)
Investment in real estate joint ventures and
partnerships (2)
Total
____________
(1) Total gains (losses) presented in this table relate to assets that are still held by us at December 31, 2019.
(2)
In accordance with our policy of evaluating and recording impairments on the disposal of investments in real estate joint ventures and
partnerships, investments with a carrying amount of $29.1 million were written down to a fair value of $26.0 million, resulting in a loss of
$3.1 million, which was included in earnings for the fourth quarter of 2019. Management’s estimate of fair value of these investments
were determined using a bona fide purchase offer for the Level 2 inputs, and see the quantitative information about the significant
unobservable inputs used for our Level 3 fair value measurements in the 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,
2019
Fair Value
Using
Significant
Other
Observable
Inputs
(Level 2)
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
2018
Fair Value
Using
Significant
Other
Observable
Inputs
(Level 2)
Fair Value
Using
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
$
17,277
$
25,000 $
20,009
$
25,000
— $
—
3,000 $
2,988
1,714,890
17,448
1,787,663
1,771,999
17,426
22,685
1,761,215
23,131
Other Assets:
Tax increment revenue bonds (1)
Investments, held to maturity (2)
Debt:
Fixed-rate debt
Variable-rate debt
___________________
(1) At December 31, 2019 and 2018, 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, these investments had unrealized losses of $12 thousand.
The quantitative information about the significant unobservable inputs used for our nonrecurring Level 3 fair value
measurements as of December 31, 2019 reported in the above table, is as follows:
Description
Investment in real estate joint ventures
and partnerships
Fair Value at
December 31,
2019
(in
thousands)
Valuation Technique
Unobservable Inputs
2019
2019
Range
Minimum
Maximum
$
24,154 Discounted cash flows
Discount rate
Capitalization rate
Noncontrolling interest
discount
7.3%
5.8%
7.5%
8.0%
15.0%
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Note 19. Quarterly Financial Data (Unaudited)
Summarized quarterly financial data is as follows (in thousands):
2019
Revenues
Net income
Net income attributable to
common shareholders
Earnings per common
share – basic
Earnings per common
share – diluted
2018
Revenues
Net income
Net income attributable to
common shareholders
Earnings per common
share – basic
Earnings per common
share – diluted
___________________
First
Second
Third
Fourth
$
123,138
51,254
49,666
.39
.39
$
132,452
(1)
(2)
(2)
(2)
(2)
(1)
$
122,660
85,520
83,809
.66
.65
$
142,086
148,969 (2)(4)
(2)(4)
146,824
1.15
1.13
(5)
(2)(4)
(5)
(2)(4)
(5)
79,871
78,289
.61
.61
(1)
(2)
(2)
(2)
(2)
(1)
(1)(2)
(3)
(1)(2)
(3)
(1)(2)
(3)
(1)(2)
(3)
$
121,362
108,509
106,742
.83
.82
(1) $
(2)
(1)
119,465
77,292 (2)(3)
(2)
(2)
(2)
75,218 (2)(3)
.59 (2)(3)
.58 (2)(3)
$
128,790
(1) $
127,819
(1)
53,274 (2)(3)
(2)(3)
63,229 (2)(3)
(2)(3)
42,981
.34
.34
(5)
(2)(3)
(5)
(2)(3)
(5)
59,507
.47
.46
(5)
(2)(3)
(5)
(2)(3)
(5)
(1) The quarter results include revenues associated with dispositions and acquisitions. Revenue amounts associated with dispositions are:
$9.7 million, $8.8 million, $4.3 million and $1.3 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019
and December 31, 2019, respectively, and $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. Revenue amounts associated with acquisitions totaled
$.5 million, $1.6 million and $3.0 million for the three months ended June 30, 2019, September 30, 2019 and December 31, 2019,
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, and additional revenue of $1.1 million was realized from the termination of two
tenant leases for the three months ended September 30, 2019.
(2) The quarter results include significant gains on the sale of property and investments, including gains in equity in earnings from real estate
joint ventures and partnerships, net. Gain amounts are: $19.2 million, $52.7 million, $74.1 million and $46.0 million for the three months
ended March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019, respectively, and $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.
(3) The quarter results include $3.1 million, $2.4 million and $7.7 million of impairment losses for the three months ended December 31,
2019, September 30, 2018 and December 31, 2018, respectively. Additionally, the quarter results include a $13.1 million write-off of an
in-place lease intangible for the three months ended June 30, 2018.
(4) 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.
(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.
* * * * *
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ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
ITEM 9A. Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer,
management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures
(as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2019. 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, 2019.
There has been no change to our internal control over financial reporting during the quarter ended December 31, 2019
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, 2019 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, 2019.
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 27, 2020
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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, 2019, 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,
2019, 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, 2019, of the Company and our report dated February 27, 2020, 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 27, 2020
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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, 2020.
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, 2020.
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, 2020 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, 2019:
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
207,416
—
207,416
Number of
shares
remaining
available for
future issuance
under equity
compensation
plans
952,877
—
952,877
Weighted average
exercise price of
outstanding options,
warrants and rights
$23.84
—
$23.84
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, 2020 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, 2020 is incorporated
herein by reference.
PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(a)
(b)
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Financial Statements and Financial Statement Schedules:
— Weingarten Realty Investors 2019 financial statements and financial statement schedules, together
with the reports of Deloitte & Touche LLP, are listed in the index immediately preceding the financial
statements in Item 8, Financial Statements and Supplementary Data.
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).
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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
— 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).
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†
— 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).
— 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).
— 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).
— 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).
— 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. 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 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).
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10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
10.23†
10.24†
10.25†
10.26†
10.27†
10.28†
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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 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. 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. 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. 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).
— 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).
— 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).
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10.29†
10.30†
10.31†
10.32†
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
— 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).
— 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).
— 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).
— 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).
— Third Amended and Restated Credit Agreement dated December 11, 2019 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 U.S. Bank National Association, Wells Fargo Bank,
National Association, PNC Bank, National Association, Regions Bank, The Bank of Nova Scotia and
Truist Bank, as documentation agents (filed as Exhibit 10.1 to WRI's Form 8-K filed on December
12, 2019 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).
89
Table of Contents
10.43
10.44
10.45
21.1*
23.1*
31.1*
31.2*
— 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).
— 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).
— Tenth 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, 2019 (filed as Exhibit 10.1 to WRI's
Form 10-Q for the quarter ended March 31, 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 - the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL 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.
90
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 27, 2020
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.
91
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 27, 2020
By:
/s/ Stanford J. Alexander
Stanford J. Alexander
By:
/s/ Shelaghmichael C. Brown
Shelaghmichael C. Brown
By:
/s/ Stephen A. Lasher
Stephen A. Lasher
Chairman Emeritus
and Trust Manager
February 27, 2020
Trust Manager
February 27, 2020
Trust Manager
February 27, 2020
By:
/s/ Stephen C. Richter
Stephen C. Richter
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
February 27, 2020
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 27, 2020
Trust Manager
February 27, 2020
Senior Vice President/Chief Accounting Officer
(Principal Accounting Officer)
February 27, 2020
Trust Manager
February 27, 2020
Trust Manager
February 27, 2020
92
Table of Contents
WEINGARTEN REALTY INVESTORS
VALUATION AND QUALIFYING ACCOUNTS
December 31, 2019, 2018, and 2017
(Amounts in thousands)
Schedule II
Description
2019
Tax Valuation Allowance
2018
Allowance for Doubtful Accounts (2)
Tax Valuation Allowance
2017
Allowance for Doubtful Accounts
Tax Valuation Allowance
___________________
Balance at
beginning
of period
Charged
to costs
and
expenses
Deductions (1)
Balance
at end of
period
$
$
$
12,787 $
— $
7,038 $
5,749
7,516 $
2,361 $
15,587
—
3,022 $
2,800
6,855
12,787
6,700 $
25,979
4,255 $
—
3,439 $
10,392
7,516
15,587
(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.
(2) With the implementation of ASU No. 2016-02 as of January 1, 2019 (see Note 2), the current guidance clarified that uncollectible lease
payments were to be recognized as a reduction in revenues and were not considered an allowance. With this implementation, the
Allowance for Doubtful Accounts was re-characterized to be appropriately reflected as reductions in Revenues for uncollectible amounts.
93
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Table of Contents
WEINGARTEN REALTY INVESTORS
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2019
(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, 2019 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, 2019,
2018 and 2017.
100
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
2019 ANNUAL REPORT
SHAREHOLDER INFORMATION & SERVICES
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
Auditors
Deloitte & Touche LLP
Houston, Texas
Transfer Agent & Registrar
Computershare Trust Company, N.A.
462 South 4th Street, Suite 1600
Louisville, KY 40202
800-550-4689
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 505000
Louisville, KY 40233-5000
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 website 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 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 24, 2019. 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, 2019 as required by
Section 302 of the Sarbanes-Oxley Act.
Douglas W. Schnitzer
Chairman/Chief Executive Officer,
Senterra LLC
Member of Audit Committee and
Governance and Nominating 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
BOARD OF TRUST MANAGERS
Andrew M. Alexander
Chairman/President/Chief Executive
Officer, Weingarten Realty Investors
Chairperson of Executive Committee
Stanford Alexander
Chairman Emeritus,
Weingarten Realty Investors
Member of Executive 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
Stephen A. Lasher
President, The GulfStar Group, Inc.
Member of Audit Committee,
Management Development and
Executive Compensation Committee
and Executive Committee
Thomas L. Ryan
President/Chief Executive Officer,
Service Corporation International
Chairperson of Audit 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.”
ANNUAL
REPORT 2
9
1
0
2600 CITADEL PLAZA DR,
SUITE 125
HOUSTON, TEXAS 77008
PH: 713.866.6000
FAX: 713.866.6049
WWW.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 170 properties which are located in 16 states that
span the United States from coast-to-coast. The Company’s portfolio totals approximately 32.5 million square feet of gross leasable
area, of which our interest in these properties aggregate approximately 21.5 million square feet. To learn more about the Company’s
operations and growth strategies, please visit www.weingarten.com.