Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
General. Weingarten Realty Investors (the "Company"), an unincorporated trust organized under the Texas Real Estate Investment Trust Act and its predecessor entity began the ownership and development of shopping centers and other commercial real estate in 1948. The Company, as of December 31, 1994, owned or had interests in 161 developed income-producing real estate projects, 141 of which were shopping centers, located in the Houston metropolitan area and in other parts of Texas and in Louisiana, Arkansas, Oklahoma, New Mexico, Arizona, Maine and Tennessee. The Company's other commercial real estate projects included sixteen industrial projects, three multi-family housing properties and one office building, which serves as the Company's headquarters. The Company's interests in these projects aggregated approximately 16.3 million square feet of building area and 71.2 million square feet of land area. The Company also owned interests in 24 parcels of unimproved land held for future development which aggregated approximately 8.3 million square feet.
The Company currently employs 163 persons, its principal executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its phone number is (713) 866-6000.
Reorganizations. In December 1984, the Company engaged in a series of transactions primarily designed to enable it to qualify as a real estate investment trust ("REIT") for federal income tax purposes for the 1985 calendar year and subsequent years. The Company contributed certain assets considered unsuitable for ownership by the Company as a REIT and $3.5 million in cash to WRI Holdings, Inc. ("Holdings"), a Texas corporation and a newly-formed subsidiary of the Company, in exchange for voting and non-voting common stock of Holdings (which was subsequently distributed to the Company's shareholders) and $26.8 million of mortgage bonds. For additional information concerning Holdings, refer to Note 8 of the Notes to Consolidated Financial Statements at page 26.
On March 22, 1988, the Company's shareholders approved the conversion of the Company's form of organization from a Texas corporation to an unincorporated trust organized under the Texas Real Estate Investment Trust Act. The conversion was effected by the Company's predecessor entity, Weingarten Realty, Inc., transferring substantially all of its assets and liabilities to the newly- formed Company in exchange for common shares of beneficial interest, $.03 par value ("Common Shares"), in the Company. The shareholders of the corporation received Common Shares for their shares of Common Stock of the corporation (on a share-for-share basis), and the trust continues the business that was previously conducted by the corporation. The change did not affect the registrant's assets, liabilities, management or federal income tax status as a REIT.
Management Services. Through December 31, 1992, the Company contracted with Weingarten Realty Management Company (the "Management Company"), whereby the Management Company performed certain services for the Company as an independent contractor. The Management Company provided leasing and management services with respect to the operation of substantially all of the Company's properties including collecting rent, making repairs, cleaning and providing maintenance. In addition, the Management Company performed acquisition and development services for the Company such as conducting feasibility studies on properties subject to purchase, constructing additional improvements on its existing properties, developing new properties or renovating existing improvements. The Management Company paid all operating expenses of the properties out of the rents collected from such properties and was required to maintain books and records and to furnish to the Company monthly and annual financial reports and annual budgets for each property. The Management Company was paid a fee under the management agreement for managing the Company's properties based on gross revenues from the Company's income producing properties and was paid additional fees for leasing services and for certain additional services specifically requested by the Company, including market research, advertising and promotion, development, acquisition and management information services. The Management Company was also reimbursed for certain of its costs and expenses. The Company continues to be "self-advised" and is now self-managed.
Effective January 1, 1993, the Management Company was acquired by the Company, thereby allowing direct management of its properties. This transaction was completed based on a favorable private letter ruling by the Internal Revenue Service. It formally integrated the management personnel of the Company with management personnel previously employed by the Management Company. The combination had no material effect on the Company's operations or financial position.
Location of Properties. Historically, the Company has emphasized investments in properties located primarily in the Houston area. Since 1987, the Company has actively acquired properties outside of Houston. Of the Company's 185 properties which were owned as of December 31, 1994, 81 of its 161 developed properties and 18 of its 24 parcels of unimproved land were located in the Houston metropolitan area. In addition to these properties, the Company owned 48 developed properties and 4 parcels of unimproved land located in other parts of Texas. Because of the Company's investments in the Houston area, as well as in other parts of Texas, the Houston and Texas economies affect, to some degree, the business and operations of the Company.
The 1994 economic performance of the southwestern United States in which the Company has its primary operations improved over 1993; however, this improvement still generally lagged the national economy. A deterioration in the Houston or Texas economies could adversely affect the Company. However, the Company's centers are generally anchored by grocery and drug stores under long- term leases, and such types of stores tend to be less affected by economic change.
Competition. There are other developers and operators engaged in the development, acquisition, and operation of shopping centers and commercial property who compete with the Company in its trade areas. This results in competition for both acquisitions of existing income-producing properties and also for prime development sites. There is also competition for tenants to occupy the space that the Company and its competitors develop, acquire and manage.
The Company believes that the principal competitive factors in attracting tenants in its market areas are location, price, anchor tenants and maintenance of properties and that the Company's competitive advantages include the favorable locations of its properties, its ability to provide a retailer with multiple locations in the Houston area with anchor tenants and its practice of continuous maintenance and renovation of its properties.
Financial Information. Certain additional financial information concerning the Company is included in the Company's Consolidated Financial Statements located on pages 17 through 32 herein.
ITEM 2.



ITEM 2. PROPERTIES
At December 31, 1994 the Company's real estate properties consisted of 185 locations in eight states. A complete listing of these properties, including the name, location, building area and land area, as applicable, is as follows:
SHOPPING CENTERS
General. In 1994, no single property accounted for more than 3.3% of the Company's total assets or 4.1% of gross revenues. Three properties, in the aggregate, represented approximately 9.5% of the Company's gross revenues for the year ended December 31, 1994; otherwise, none of the remaining properties accounted for more than 2.4% of the Company's gross revenues during the same period. The occupancy rate for all of the Company's improved properties as of December 31, 1994 was 91.9%.
Substantially all of the Company's properties are owned directly by the Company (subject in certain cases to mortgages), although the Company's interests in certain of its properties are held indirectly through its interests in joint ventures or under long-term leases. In the opinion of management of the Company, its properties are well maintained and in good repair, suitable for their intended uses, and adequately covered by insurance.
Shopping Centers. As of December 31, 1994, the Company owned, either directly or through its interests in joint ventures, 141 shopping centers with approximately 13.3 million square feet of building area. The shopping centers were located predominantly in Texas with other locations in Louisiana, Oklahoma, Arkansas, Arizona, New Mexico, Maine and Tennessee.
The Company's shopping centers are primarily community shopping centers which range in size from 100,000 to 400,000 square feet, as distinguished from small strip centers which generally contain 5,000 to 25,000 square feet and from large regional enclosed malls which generally contain over 500,000 square feet. Most of the centers do not have climatized common areas but are designed to allow retail customers to park their automobiles in close proximity to any retailer in the center. The Company's centers are customarily constructed of masonry, steel and glass and all have lighted, paved parking areas which are typically landscaped with berms, trees and shrubs. They are generally located at major intersections in close proximity to neighborhoods which have existing populations sufficient to support retail activities of the types conducted in the Company's centers.
The Company has approximately 2,600 separate leases with over 1,900 different tenants in its portfolio, including national and regional supermarket chains, other nationally or regionally known stores (including drug stores, discount department stores, junior department stores and catalog stores) and a great variety of other regional and local retailers. The large number of locations offered by the Company and the types of traditional anchor tenants help attract prospective new tenants. Some of the national and regional supermarket chains which are tenants in the Company's centers include Albertson's, Fiesta, Jewel, Smith's Fleming Foods, H.E.B., Kroger Company, Randall's Food Markets, Rice Food Markets and Super Value Holdings. In addition to these supermarket chains, the Company's nationally and regionally known retail store tenants include Eckerd, Walgreen and Osco drugstores; Kmart and Wal-Mart discount stores; Bealls, Palais Royal and Weiner's junior department stores; Marshall's, Office Depot, 50-Off, Office Max, Baby Superstore, Ross and T.J. Maxx off-price specialty stores; Luby's, Piccadilly, Furr's and Wyatt cafeterias; Academy sporting goods; Service Merchandise catalog stores; and the following restaurant chains: Arby's, Boston Chicken, Burger King, Champ's, Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, Kentucky Fried Chicken, China Coast, Pistol Pete Pizza, CiCi Pizza, Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut, Shoney's, Steak & Ale, Taco Bell, and Whataburger. The Company also leases space in 3,000 to 10,000 square foot areas to national chains such as Clothestime, The Gap, One Price Stores, Tempo, Payless Shoes (a division of the May Company) and Radio Shack.
The Company's shopping center leases have lease terms generally ranging from three to five years for tenant space under 5,000 square feet and from 10 to 35 years for tenant space over 10,000 square feet. Leases with primary lease terms in excess of 10 years, generally for anchor and out-parcels, frequently contain renewal options which allow the tenant to extend the term of the lease for one or more additional periods, each such period generally being of a shorter duration than the primary lease term. The rental rates paid during a renewal period are generally based upon the rental rate for the primary term, sometimes adjusted for inflation or for the amount of the tenant's sales during the primary term.
Most of the Company's leases provide for the monthly payment in advance of fixed minimum rentals, the tenants' pro rata share of ad valorem taxes, insurance (including fire and extended coverage, rent insurance and liability insurance) and common area maintenance for the center (based on estimates of the costs for such items) and for the payment of additional rentals based on a percentage of the tenants' sales ("percentage rentals"). Utilities are generally paid directly by tenants except where common metering exists with respect to a center, in which case the Company makes the payments for the utilities and is reimbursed by the tenants on a monthly basis. Generally, the Company's leases prohibit the tenant from assigning or subletting its space and require the tenant to use its space for the purpose designated in its lease agreement and to operate its business on a continuous basis. Certain of the lease agreements with
major tenants contain modifications of these basic provisions in view of the financial condition, stability or desirability of such tenants. Where a tenant is granted the right to assign or sublet its space, the lease agreement generally provides that the original lessee will remain liable for the payment of the lease obligations under such lease agreement.
During 1994, the Company added approximately .8 million square feet to its portfolio of shopping center properties through the acquisition of properties and another .1 million square feet of space through development. The Company continued to acquire shopping center properties outside the Houston metropolitan area. Four properties representing .5 million square feet were acquired in Phoenix, Arizona. Additionally, shopping centers were added to our existing portfolio in Oklahoma City, Oklahoma, San Antonio and College Station, Texas. All of the Company's new developments for 1994 were in Houston.
Industrial Properties. The Company currently owns a total of sixteen industrial projects, all of which are located in the greater Houston area. These projects include 58 buildings having a total of 2.7 million square feet of building area situated on 6.4 million square feet of land. These figures include the Company's interests in three joint ventures. Major tenants of the Company's industrial properties include Advo (a leading direct mail advertising company), Pepsico's PFS division, Stone Container Corporation, Iron Mountain Records Storage and Paul Arpin Van Lines.
Four of such buildings, containing approximately .6 million square feet of building space, are located in the Railwood Industrial Park, a master-planned industrial park in northeast Houston, which offers full utilities, loading docks and rail service in an architecturally controlled environment.
During 1994, the Company acquired two projects representing .3 million square feet of industrial space. These properties are located in Houston and had an average occupancy of 85% at the time of the acquisition. Additionally, through a joint venture, the Company added 64,000 square feet (our 50% ownership) of mini-warehouse space. These two properties were developed, and are managed by our joint venture partner, an experienced mini-warehouse operator. The properties were completed in the third and fourth quarter of 1994.
Office Building. The Company owns a seven-story, 121,000 square foot masonry office building with a detached, covered, three-level parking garage situated on 171,000 square feet of land fronting on North Loop 610 West in Houston. The building serves as the Company's corporate headquarters. Other than the Company, the major tenant of the building is Charter Bank, which occupies 22%.
Multi-family Residential Properties. At December 31, 1994, the Company owned, through joint venture interests, three apartment projects located in Houston and San Antonio, Texas and Shreveport, Louisiana. The Company's percentage ownership represents approximately 283 units of the projects' aggregate 833 units. All are garden-type projects complemented by landscaping, recreational areas and adequate parking. These projects are managed by our joint venture partners, all of whom are experienced apartment operators. Subsequent to December 31, 1994, the joint venture which owned the property in Louisiana sold the project. The Company owned a 50% interest in the joint venture.
Unimproved Land. The Company owns, directly or through its interest in joint ventures, 24 parcels of unimproved land aggregating approximately 8.3 million square feet of land area located in Texas and Louisiana. These properties include approximately 5.0 million square feet of land adjacent to certain of the Company's existing developed properties, which may be used for expansion of these developments, as well as approximately 3.3 million square feet of land, which may be used for new development. Almost all of these unimproved properties are served by roads and utilities and are ready for development. Most of these parcels are suitable for development as shopping centers, and the Company intends to emphasize the development of these parcels for such purpose.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party or to which any of its properties is subject.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the executive officers of the Company as of February 24, 1995.
Mr. S. Alexander is the Company's Chairman and its Chief Executive Officer. He has been employed by the Company since 1955 and has served in his present capacity since January 1, 1993. Prior to becoming Chairman, Mr. Alexander served as President and Chief Executive Officer of the Company since 1962. Mr. Alexander is President, Chief Executive Officer and a Trust Manager of Weingarten Properties Trust and a member of the Houston Regional Advisory Board of Texas Commerce Bank National Association, Houston, Texas ("TCB").
Mr. Debrovner became President and Chief Operating Officer of the Company on January 1, 1993. Prior to assuming such position, Mr. Debrovner served as President of Weingarten Realty Management Company (the "Management Company") since the Company's reorganization in December 1984. Prior to such time, Mr. Debrovner was an employee of the Company for 17 years, holding the positions of Senior Vice President from 1980 until March 1984, and Executive Vice President until December 1984. As Executive Vice President, Mr. Debrovner was generally responsible for the Company's operations. Mr. Debrovner is also a Trust Manager of Weingarten Properties Trust.
Mr. Robertson is Executive Vice President of the Company and its Chief Financial Officer. Prior to becoming Executive Vice President, Mr. Robertson served as Senior Vice President and Chief Financial Officer since 1980. He has been with the Company since 1971. Mr. Robertson is also a Trust Manager of Weingarten Properties Trust, and a director of Paine Webber Retail Properties Investments, Inc.
Mr. A. Alexander became Executive Vice President/Asset Management on January 1, 1993. Prior to his present position, Mr. Alexander was Senior Vice President/Asset Management of the Management Company. Prior to such time, Mr. Alexander was Vice President of the Management Company and, prior to the Company's reorganization in December 1984, was Vice President and an employee of the Company since 1978. Mr. Alexander has been primarily involved with leasing operations at both the Company and the Management Company. Mr. Alexander is also a Trust Manager of Weingarten Properties Trust and a director of Charter Bank Houston, N.A.
Mr. Cunningham became Vice President/New Development and Acquisitions on January 1, 1993. For the five years prior to that time, he served as Vice President/New Development and Acquisitions of the Management Company.
Ms. DuFour became Vice President/Acquisitions and Secretary of the Company on January 1, 1993. From January 1986 until March 1989, she was Secretary/Treasurer and from March 1989 until December 1992 she was Vice President, Secretary and Treasurer of the Company.
Mr. Hendrix became Vice President/Leasing of the Company during January 1994. From January 1, 1993 until that time, he served as Associate Director/Leasing of the Company, and for the four years prior to that time, he served the Management Company as a leasing executive.
Mr. Karp became Vice President/Operating Properties of the Company on January 1, 1993. For the five years prior to that time, he served as Vice President/Operating Properties of the Management Company.
Mr. Marcisz became Vice President/Construction of the Company on January 1, 1993. For the five years prior to that time, he served as Vice President/Construction of the Management Company.
Mr. Richter became Vice President/Financial Administration and Treasurer of the Company on January 1, 1993. For the five years prior to that time, he served as Vice President/Financial Administration and Treasurer of the Management Company.
Mr. Tucker became Vice President/General Counsel of the Company on January 1, 1993. For the five years prior to that time, he served as Vice President, Secretary and General Counsel of the Management Company.
Mr. Weingarten became Vice President/Leasing of the Company during January 1994. From January 1, 1993 until that time, he served as Associate Director/Leasing of the Company, and for the four years prior to that time, he served the Management Company as a leasing executive.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND RELATED SHAREHOLDER MATTERS
The number of holders of record of the Company's Common Shares, as of February 24, 1995 was 2,690. The high and low sale prices per share of the Company's common shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the periods indicated were as follows:
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data with respect to the Company and should be read in conjunction with the Consolidated Financial Statements.
(1) Relates to prepayment penalties paid in connection with the early retirement of debt.
(2) Funds from operations do not represent cash flows from operations and should not be considered as an alternative to net income.
ITEM 7.

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.
BUSINESS ENVIRONMENT
Weingarten Realty Investors owned and operated 141 anchored shopping centers, 16 industrial properties, 3 multi-family residential projects, and one office building at December 31, 1994. Of the Company's 161 developed properties, 129 are located in Texas (including 81 in Houston and Harris County). The Company's remaining properties are located in Louisiana (11), Arizona (6), Arkansas (6), Oklahoma (4), New Mexico (3), Maine (1) and Tennessee (1). The Company has over 2,600 leases and 1,900 different tenants. Leases for the Company's properties range from less than a year for smaller spaces to over twenty five years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The Company's revenues and occupancy rates are directly affected by the square footage leased and the business environment and conditions of the markets in which the Company owns and operates its properties. The Company's results of operations are also significantly affected by the property operating expenses, cost of capital and acquisition and development of additional properties. Following is a summary of selected key indicators (in thousands, except for percentages):
The Company considers the renewal rental rate as one of the best indicators for changes in overall rental rates for the Company's properties. The rate presented herein is the percentage change in the weighted average rental rate for shopping center space renewed by existing non-anchor tenants. Renewals of anchor tenants are excluded from the computation, because their leases are of a much longer term (and therefore, generally result in significant increase upon renewal) and the extensive space leased by anchors could significantly skew the overall average rate.
The 1994 economic performance of the southwestern United States in which the Company has its primary operations improved over 1993; however, this improvement still generally lagged the national economy. The overall economic conditions of these areas can be illustrated through increases in total retail sales (as distinguished from same store sales), and leading economic indicators as published:
ACQUISITION AND NEW DEVELOPMENT ACTIVITIES
Since occupancy rates have remained constant and rental rates have only shown modest increases in the past three years, increases in revenues are mainly due to the acquisition and new development of additional properties. Such activities had the following effects (in thousands) on the Company's rental revenues from:
In the above schedule, "base property" includes property acquired or developed before 1992 and "acquired and developed property" includes property acquired or developed during 1992 through 1994.
RESULTS OF OPERATIONS
Rental revenues increased by 17.2% or $16.4 million from $95.8 million in 1993 to $112.2 million in 1994 and by 12.4% or $10.6 million from $85.2 million in 1992 to $95.8 million in 1993. Of these increases, property acquisitions and new development contributed $13.0 million in 1994 and $10.3 million in 1993. Since occupancy rates have remained consistent during the periods, the remaining portion of these increases is due primarily to increased rental rates obtained from re-leasing and renewals of existing space.
Interest income was $3.4 million in 1992, $5.3 million in 1993 and $5.8 million in 1994. This increased income is mainly the result of investing approximately $50 million of excess funds from a stock offering in March 1993 in marketable debt securities.
Equity in earnings of real estate joint ventures and partnerships has increased from $.7 million in 1992 to $1.1 million in 1993 to $1.3 million in 1994. These increases are the result of additional investment in entities accounted for under the equity method. Other income increased from $.6 million in 1992 to $1.1 million in 1993 to $1.5 million in 1994. These increases were primarily due to lease cancellation income.
Direct costs and expenses of operating the Company's properties (i.e., depreciation and amortization, operating and ad valorem tax expenses) increased from $47.3 million in 1992 to $53.6 million in 1993 to $61.6 million in 1994. These increases are primarily due to property acquired and developed during these periods. Overall, direct operating costs and expenses as a percent of rental revenues have remained relatively constant at 56% in 1992 and 1993 and 55% in 1994.
Interest incurred on debt outstanding during the periods increased from $11.2 million in 1993 to $12.4 million in 1994. This increase was due to an increase in the weighted average debt outstanding from $138.3 million in 1993 to $181.6 million in 1994, offset partially by a decrease in the weighted average interest rate of 8.1% in 1993 to 6.8% in 1994. Interest expense increased in 1994 by only $.6 million due to the decrease in the average interest rate mentioned above and an increase in the amount of interest capitalized as a result of additional projects under development during 1994. Interest incurred on debt outstanding decreased from $20.7 million in 1992 to $11.2 million for 1993. This decrease was due almost entirely to a decrease of $129.4 million in the weighted average amount of debt outstanding as a result of the use of proceeds from a public offering of common shares that were used to reduce debt and the conversion of all the Company's convertible debt during 1993. The Company capitalized $.9 million less interest in 1993 than in 1992 due to reduced levels of development in 1993. As a result, interest expense decreased from $18.7 million in 1992 to $10.0 million in 1993.
The majority of the change in gains (loss) on sales of property and securities from 1993 to 1994 related to the gains realized in 1993 as a result of fires at two of the Company's properties; there were no similar occurrences in 1994. The fires had no material impact on the Company's earnings for 1993 or 1994. The $1.8 million gain in 1992 was the result of selling the Company's investment in government backed debt securities and two small tracts of undeveloped land. Additionally, the Company had a $1.2 million extraordinary charge for the early retirement of debt in 1992; no such charges occurred in 1993 or 1994.
As a result of these changes, net income increased from $20.1 million in 1992 to $36.2 million (an 80.1% increase) in 1993 to $43.8 million (a 21.0% increase) in 1994. Net income per common share increased from $1.15 in 1992 to $1.50 (a 30.4% increase) in 1993 to $1.67 (an 11.3% increase) in 1994.
FUNDS FROM OPERATIONS
The Company considers funds from operations (defined by the National Association of Real Estate Investment Trusts as net income plus depreciation and amortization, less gains (loss) on sales of property and securities) to be an alternate measure of the performance of any equity REIT since such measure does not recognize depreciation and amortization expenses as operating expenses. Management believes that reductions for these charges are not meaningful in evaluating income-producing real estate, which historically has not depreciated. Funds from operations do not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity.
Funds from operations increased to $70.9 million in 1994 compared to $58.0 million in 1993 and $40.7 million in 1992. The majority of the increase relates to the impact of the Company's acquisitions and new development programs. For further information on the changes between years, see "Results of Operations" above.
CAPITAL RESOURCES AND LIQUIDITY
The Company anticipates that cash flow from operating activities will continue to provide adequate capital for all principal payments as well as dividend payments in accordance with REIT requirements, and that cash on hand, borrowings under its existing credit facilities, the use of corporate and project financing, as well as other debt and equity alternatives will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows increased to $65.5 million for 1994 from $57.6 million for 1993 and $38.3 million for 1992.
Cash dividends increased to $59.7 million in 1994, compared to $52.3 million in 1993 and $36.2 million in 1992. The Company satisfied its REIT requirement of distributing at least 95% of ordinary taxable income for each of the three years ending December 31, 1994 and, accordingly, federal income taxes were not provided in these years. The Company's dividend payout ratio for 1994 and 1993 approximated 84.2% and 90.2% of the 1994 and 1993 funds from operations (defined as net income plus depreciation and amortization, less gains (loss) on sales of property and securities), respectively. Recently, the Company's Board of Trust Managers approved an increase in the quarterly dividend per common share from $.57 to $.60.
In 1994, the Company continued to expand its portfolio of income-producing properties. This growth resulted from acquisitions of existing properties, both shopping centers and industrial property, and development of new shopping centers. The Company added, in millions, $100.5, $91.0 and $61.9 of new property during 1994, 1993 and 1992, respectively.
Total debt outstanding at December 31, 1994 was $229.6 million compared to $147.7 million at December 31, 1993, and $243.6 million at December 31, 1992. In 1994, the Company increased total debt $81.9 million primarily to fund the acquisition and new development programs. Three of the Company's acquisitions were financed, in part, through the assumption of $13.4 million of debt with interest rates ranging from 7.5 to 9.75%. The remainder of the purchase price of the acquisitions was financed through the use of revolving credit debt and the issuance of 300,000 common shares.
Following is the percentage of the Company's debt to equity and debt to total capitalization as of December 31:
During 1994, the Company replaced its two existing secured bank revolving credit agreements totaling $100 million with a new syndicated bank agreement. This new $150 million revolver, in addition to being unsecured, is also at a more favorable rate. The agreement has an initial three year term with an annual option to request a one year extension. The Company is currently negotiating with the syndicate to increase the amount available under the credit agreement.
At December 31, 1994, the Company had approximately $63 million of funds available to support the growth of the Company. These funds were available through a combination of $4 million available under the revolving line of credit,
$29 million of unencumbered government debt securities and a $30 million closed but unfunded loan from an insurance company.
In 1993, the Company had reduced total debt by calling all $123 million of outstanding convertible note and debenture issues. The issues were converted into 3.9 million common shares, all of which had a beneficial anti-dilutive effect on earnings per share. During March 1993, the Company raised $113 million of new capital through an equity offering of 2.8 million common shares. Although a large portion of these proceeds was initially used to reduce short- term revolving credit debt, the proceeds were ultimately the primary source of the Company's capital needs for the year. Approximately $91.0 million was invested in new assets, consisting of acquisitions totaling 1.3 million square feet, the development of new shopping centers and capital improvements to existing properties.
EFFECTS OF INFLATION
The rate of inflation was on the rise in 1994, but was inconsequential to the Company's operations. The Company has structured its leases, however, in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions with the Company to receive rentals based on the tenants' gross sales. Many leases provide for increasing minimum rentals during the terms of the leases through escalation provisions. In addition, many of the Company's leases are for terms of less than ten years, which allows the Company to adjust rentals to changing market conditions when the leases expire. Most of the Company's leases require the tenant to pay a large portion of operating expenses. As a result of these lease provisions, increases due to inflation, as well as tax rate increases which are usually anticipated to occur, generally do not have a significant adverse effect upon the Company's operating results.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Weingarten Realty Investors:
We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors as of December 31, 1994 and 1993, and the related statements of consolidated income and cash flows for each of the three years in the period ended December 31, 1994. Our audits also included the financial statement schedules listed in the Index at Item 14. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Weingarten Realty Investors at December 31, 1994 and 1993, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Houston, Texas February 22, 1995
STATEMENTS OF CONSOLIDATED INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED CASH FLOWS (AMOUNTS IN THOUSANDS)
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations of Weingarten Realty Investors, a Texas business trust, consist of one business segment--acquiring, developing and leasing of real estate, primarily community shopping centers, in Texas and throughout the southwestern part of the United States. The Company currently operates and intends to operate in the future as a real estate investment trust ("REIT").
Consolidated financial statements include the accounts of the Company, its subsidiaries and its interest in 50% or more-owned joint ventures and partnerships. All significant intercompany balances and transactions have been eliminated. Joint ventures, effectively owned more than 20%, but less than 50%, are accounted for using the equity method.
Carrying charges, principally interest and ad valorem taxes, of land under development and buildings under construction are capitalized as part of projects under development and buildings and improvements to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value.
Property is carried at cost plus capitalized carrying charges. Depreciation is computed using the straight-line method, generally over estimated useful lives of 18-50 years for buildings and 10-20 years for parking lot surfacing and equipment. Maintenance and repairs are expensed. Major replacements are capitalized and the replaced asset and corresponding accumulated depreciation is removed from the accounts.
Marketable debt securities (held-to-maturity), consisting of U. S. government agency guaranteed pass-through certificates and U.S. Treasury Notes, are carried at amortized cost. Premiums and discounts are amortized (accreted) to operations over the estimated remaining lives of the mortgage-backed securities using the constant yield method.
Unamortized debt and lease costs are amortized primarily on a straight-line basis over the terms of the debt and over the lives of leases, respectively.
Rental revenue is generally recognized on a straight-line basis over the life of the lease for operating leases and over the lease terms using the interest method for direct financing leases. Contingent rentals (payments for taxes, maintenance and insurance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year.
Income per common share is computed using the weighted average number of common shares outstanding during the period and excludes the negligible dilutive effect of shares issuable in connection with share options and awards.
Cash flows are computed using the indirect method. For cash flow purposes, the Company considers all highly liquid debt instruments with a maturity of less than three months as cash equivalents.
Dollar amounts presented in the tabulations in the notes to consolidated financial statements are stated in thousands of dollars, except per share amounts.
Reclassifications have been made to prior years' amounts to conform with the current year presentation.
NOTE 2. DEBT The Company's debt consists of the following:
At December 31, 1994, the variable interest rate for notes payable under the revolving credit agreement and the reverse repurchase agreement was 6.8% and 6.7%, respectively. The weighted average interest rate for the Company's short term debt for 1994 was 4.4%.
The Company's debt can be summarized as follows:
Scheduled principal payments on the Company's debt (excluding $145.0 million potentially due under the Company's revolving credit agreement in 1997 and $16.2 million of reverse repurchase agreements) are due during the following years:
Certain debt is collateralized by various direct financing leases or other property and current and future rentals from these leases and properties. At December 31, 1994 and 1993, the carrying value of such property aggregated $257 million and $328 million, respectively.
The Company has an unsecured $150 million revolving credit agreement with a bank syndication (the "Banks"). Although the agreement expires in November 1997, the Company has an annual option to request a one year extension of the agreement. Unless all of the banks in the syndication agree to the requested extension by the Company, the agreement expires on the scheduled date and all loans outstanding under the credit agreement are payable on the agreement's expiration. The Company intends to request an extension of the agreement in 1995 and expects that the Banks will agree to their request. During 1994, the maximum balance and weighted average balance outstanding under this agreement was $145 million and $98 million, (at 6.3%) respectively. The revolving credit agreement is subject to normal banking terms and conditions and does not adversely restrict the Company's operations or liquidity.
The Company made cash payments for interest on debt, net of amounts capitalized, of $10.1 million in 1994, $9.4 million in 1993 and $18.3 million in 1992.
Various debt agreements contain restrictive covenants, the most restrictive of which requires the Company to produce annual consolidated distributable cash flow, as defined by the agreements, of not less than 250% (2.5 times) of interest payments, to limit the payment of dividends to no more than 100% of the Company's annual consolidated cash flow, to limit short term debt (as defined) to the greater of 33% of total debt or $200 million and uncollateralized assets must be at least 150% of unsecured debt. Management believes that the Company is in compliance with all restrictive covenants.
In October 1992, the Company purchased three interest rate swap contracts with an aggregate notional amount of $40 million. Such contracts, which expire through 2004, have been outstanding since their purchase. The Company intends to hold such contracts through their expiration date and to use them as a means of fixing a portion of the Company's variable rate debt. The interest rate swaps have an effective interest rate of 8.1%. The difference between the interest received and paid on the interest rate swaps is recognized as interest expense as incurred. The interest rate swaps increased interest expense and decreased net income as follows, in millions: $1.4 in 1994, $1.9 in 1993 and $.3 in 1992. The interest rate swaps increased the average interest rate for the Company's debt by the following amounts: .8% for 1994, 1.3% for 1993 and .1% for 1992. The Company currently has no financial exposure, in the unlikely event of default by the counterparty, because the Company has paid a higher rate of interest than it has received under these agreements.
Note 3. PROPERTY
The Company's property consists of the following:
The following carrying charges were capitalized:
NOTE 4. LEASING OPERATIONS
Leasing Arrangements
The Company's lease terms range from less than one year for smaller tenant spaces to thirty-five years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals.
Rentals under Operating Leases
Future minimum rental income from non-cancelable operating leases at December 31, 1994, in millions, is: $83.3 in 1995; $73.5 in 1996; $63.0 in 1997; $54.5 in 1998; $46.4 in 1999 and $349.4 thereafter. The future minimum rental amounts do not include estimates for contingent rentals. Such contingent rentals, in millions, aggregated $24.6 in 1994, $21.4 in 1993 and $19.5 in 1992.
Property under Direct Financing Leases
Leases that are, in substance, the financing of an asset purchase by the party leasing the property are recorded as property under direct financing leases. The Company, in its capacity as lessor, has removed the leased property from the books and recorded the future lease payments receivable using the following components:
The Company recognized rental revenue from direct financing leases as follows, in millions: $1.5 in 1994; $1.6 in 1993 and $2.0 in 1992. At December 31, 1994, minimum lease payments to be received in each of the five succeeding years, in millions, are: $1.9 in 1995; $1.8 in 1996 and 1997; $1.7 in 1998 and $1.5 in 1999. The future minimum lease payments do not include amounts for contingent rentals; contingent rental income on properties leased under direct financing leases, in millions, was $.8 in 1994, $.6 in 1993 and $.8 in 1992.
NOTE 5. LEASE COMMITMENTS
Operating Leases
The Company leases land and a shopping center from the owners, and then subleases these properties to other parties. Future minimum rentals under these operating leases, in millions, are: $1.4 in 1995; $1.3 in 1996; $1.2 in 1997 and 1998; $1.1 in 1999 and $14.9 thereafter.
Future minimum rental payments on these leases have not been reduced by future minimum sublease rentals aggregating $15.7 million through 2017 that are due under various non-cancelable subleases. Rental expense (including insignificant amounts for contingent rentals) for operating leases aggregated, in millions: $1.6 in 1994; $1.6 in 1993 and $1.5 in 1992. Sublease rental revenue (excluding amounts for improvements constructed by the Company on the leased land) from these leased properties were as follows, in millions: $2.1 in 1994; $2.0 in 1993 and $1.6 in 1992.
Capital Leases
Leases which transfer substantially all of the risks and benefits of ownership associated with the underlying property to the Company are considered capital leases, and the present value of the required lease payments are recorded as property and the related debt is recorded as obligations under capital leases. The debt is amortized as each lease payment is made. Property under capital leases, consisting of a shopping center aggregating $6.5 million, is included in buildings and improvements at December 31, 1994 and 1993.
Future minimum lease payments under these capital leases total $12.2 million, with annual payments due of $.6 million in 1995 through 1999, and $9.3 million thereafter. The amount of these total payments representing interest is $6.1 million. Accordingly, the present value of the net minimum lease payments is $6.0 million at December 31, 1994.
The Company subleases this property to other parties. The minimum lease payments discussed above have not been reduced by minimum sublease rentals aggregating $3.2 million due under non-cancelable subleases. Minimum sublease rentals do not include estimates for contingent rentals that aggregated approximately $.2 million in 1994, 1993, and 1992.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company and Weingarten Realty Management Company (the "Management Company") were related parties during 1992 because the Management Company was owned by directors and shareholders of the Company. As the Company had only a few employees, its operations were primarily performed by employees of the Management Company through a contract to lease, manage and develop the Company's properties. The Company and WRI Holdings, Inc. ("Holdings") are related parties because they share certain directors and are under common management. See Note 8 for related party information about Holdings.
Effective January 1, 1993, the assets of the Management Company, which were not material in relation to the Company's consolidated balance sheet, were acquired by the Company through the assumption of less than $.1 million of net liabilities from the shareholders of the Management Company. This event did not have a significant effect on 1993 earnings because the additional salaries paid as the result of this merger were offset by the various fees no longer being paid to the Management Company.
The Management Company charged the Company fees aggregating $8.0 million for 1992, in connection with services rendered under the management contract. Fees paid under the management contract were generally based upon
a specified percent of revenues, minimum lease rentals of space leased and costs incurred for acquisition, construction and development of the Company's properties.
The Company owns an interest in several joint ventures and partnerships. Notes receivable from these entities bear interest at 4.0% to 10.5% at December 31, 1994 and are due at various dates through 2020. The Company recognized interest income on these notes aggregating, in millions: $.9 in 1994; $1.0 in 1993 and $.7 in 1992.
Texas Commerce Bank National Association ("TCB") is a significant participant in and the agent for the Banks that provide the Company's $150 million syndicated revolving credit agreement. The Company and TCB have two common directors.
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company was contingently liable at December 31, 1994 for $1.2 million of notes payable executed by various joint ventures and partnerships.
The Company is committed to lend Holdings an additional $5.2 million. The Company remains contingently liable for $.9 million of notes payable by Hospitality Venture which were transferred to Holdings in 1988.
The Company is involved in various matters of litigation arising in the normal course of business. While the Company is unable to predict with certainty the amounts involved, the Company's management and counsel are of the opinion that, when such litigation is resolved, the Company's resulting liability, if any, will not have a significant effect on the Company's consolidated financial position.
In connection with the acquisition of certain property in exchange for the Company's common shares in 1994, the Company entered into an agreement with the seller under which the Company essentially guarantees that its shares would exceed a specified value on a certain future date. If the shares' market value does not exceed the threshold specified in the agreement, the Company has the option to pay the seller the difference in cash, issue additional shares (based upon the then market value of the shares) for the difference or settle the difference by a combination of paying cash and issuing shares. The Company has the option to settle the agreement in June 1996, December 1996 or June 1997. If the Company had settled this agreement at December 31, 1994, the cash settlement amount would have been $1.5 million or a maximum of 40,561 shares would have been issued. The settlement amount would be considered additional consideration paid for the property, and would have been included in the basis of the property, provided such additional basis would not make the carrying value of the property exceed its fair market value.
NOTE 8. INVESTMENT IN MORTGAGE BONDS AND NOTES RECEIVABLE FROM AN AFFILIATE
Concurrent with the Company being organized as a REIT in 1984, certain property and investments in joint ventures, which were considered to be incompatible with a REIT's operation and $3.5 million were transferred to Holdings in exchange for $26.8 million of mortgage bonds. The transfer price for the assets was based upon independent appraisals. The appraised values exceeded the Company's carrying value of the assets; however, because Holdings is a related party, the gain of $17.3 million was deferred by the Company. Holdings currently owns three investments: a 50% interest in Hospitality Venture, which owns and operates eight motor hotels in Florida and Alabama ("Hospitality"); unimproved land in a multi-use land development north of Houston ("River Pointe") and unimproved land in a major industrial park in Houston ("Railwood").
The mortgage bonds and notes receivable from Holdings, and related deferred gain, were as follows:
Before 1988, Holdings was current on the payments of all interest; accordingly, the Company had recognized interest income on all the Holdings debt at the stated interest pay rates. During the fourth quarter of 1988, Holdings' cash flow and capital resources became insufficient to meet the full interest requirements on the mortgage bonds. The accrual of interest income on the River Pointe and Railwood mortgage bonds has been suspended and interest income on the Hospitality mortgage bonds has been limited to Holdings' pro rata share of cash flow from Hospitality Venture. Interest income from the mortgage bonds and notes receivable recognized by the Company for financial reporting purposes, in millions, aggregated $1.6 for 1994, $2.1 for 1993 and $1.6 for 1992. At December 31, 1994 and 1993, accrued interest receivable from Holdings was $.2 million and $.4 million, respectively.
The Company had an unrecorded receivable for interest of $28.6 million and $22.3 million at December 31, 1994 and 1993, respectively. Of these amounts, $6.0 million and $5.4 million represent the difference between the accrual rate and the pay rate on the Railwood and River Pointe mortgage bonds at 1994 and 1993, respectively. Interest income not recognized by the Company for financial reporting purposes aggregated, in millions, $6.3, $5.2 and $4.9 for 1994, 1993 and 1992, respectively.
Management of the Company believes that the fair market value of the security collateralizing debt from Holdings is greater than the net investment in such debt (cost less related deferred gain) and that there would not be a charge to operations if the Company were to foreclose on the debt. If foreclosure were required, the net investment in such debt would become the Company's basis of the repossessed assets. However, the Company does not currently anticipate foreclosure on Holdings' properties due to certain restrictions imposed on such assets in connection with the Company's REIT status. The Company's management presently does not believe that the net investment in the mortgage bonds and notes receivable from Holdings has been impaired nor that a reserve for any such impairment is currently required.
NOTE 9. FEDERAL INCOME TAX CONSIDERATIONS
Federal income taxes are not provided because the Company believes it qualifies as a REIT under the provisions of the Internal Revenue Code. Shareholders of the Company include their proportionate taxable income in their
individual tax returns. As a REIT, the Company must distribute at least 95% of its ordinary taxable income to its shareholders and meet certain income source and investment restriction requirements.
Taxable income differs from net income for financial reporting purposes principally because of differences in the timing of recognition of interest, ad valorem taxes, depreciation, rental revenue, pension expense and installment gains on sales of property. As a result of these differences, the book value of the Company's net assets exceeds its tax basis by $30.8 million at December 31, 1994. Such differences of books over (under) tax are primarily due to the following, in millions: $50.6 for property basis and depreciation and ($19.1) for additional interest income recognized for tax purposes on Holdings' debt.
For federal income tax purposes, the cash dividends distributed to shareholders are characterized as follows:
NOTE 10. SHARE OPTIONS AND AWARDS
The Company has an incentive Share Option Plan (the "Plan") which expires in December 1997. During 1991, the Company amended the Plan to add awards of shares of beneficial interest, at nominal cost to the recipient, in addition to options. The Plan provides options and awards for a maximum of 500,000 common shares. The Company has an additional share option plan which grants 100 share options to every employee of the Company, excluding executive officers, upon completion of each five year interval of service. This plan, which expires in 2002, provides options for a maximum of 100,000 common shares. For both of the share option plans, options are granted to employees of the Company at an exercise price equal to the quoted fair market value of the common shares on the date the options are granted. All options and awards that are granted expire upon termination of employment or ten years from the date of the grant.
Following is a summary of the option activity of the Plans for the three years ended December 31, 1994:
At December 31, 1994, 140,034 common shares were available for the future grant of options or awards and options for 159,933 shares were exercisable.
On January 3, 1994, the Company issued 62,900 restricted shares and granted 434,400 share options under a compensatory Incentive Share Plan for key officers of the Company. This plan, which expires in 2003, provides for a total of 500,000 shares, either in the form of restricted shares or options. The restricted shares generally vest over a ten year period, with potential acceleration of vesting due to appreciation in the market value of the Company's shares. The share options vest over a five year period beginning two years after the date of grant. Share options were granted at the market price on the date of grant. The Company recognized $.2 million in compensation expense during 1994 relating to the restricted shares.
During 1991, 56,000 shares of beneficial interest were granted as awards to certain key officers of the Company and the Management Company. All of these common shares had vested and were issued at December 31, 1994. Compensation expense relating to the share awards aggregated, in millions, $.5 in 1994, $.6 in 1993 and $.4 in 1992.
NOTE 11. CHANGES IN OPERATING ACCOUNTS
The effect of changes in the operating accounts on cash flows from operating activities is as follows:
During 1994, the Company issued .3 million common shares valued at $11.4 million and assumed $13.4 million of debt in connection with the purchase of property. During 1993, $123.0 million in convertible debentures and notes were converted into 3.9 million common shares of beneficial interest. During 1992, the Company converted $4.1 million of convertible debentures into .1 million common shares and .4 million common shares valued at $14.6 million to a partner for the purchase of the partner's interest in a joint venture.
NOTE 12. SHAREHOLDERS' EQUITY
Following is a summary of changes in the Company's shareholders' equity for the three years ended December 31, 1994:
NOTE 13. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by the Company, using available market information and appropriate valuation methodologies as of December 31, 1994. However, considerable judgment is necessary to interpret market data and develop the related estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize upon disposition of the asset. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Unless otherwise described below, all other financial instruments of the Company are carried at amounts which approximate their fair values.
Marketable debt securities held-to-maturity have an estimated market value of $45.8 million. Such securities include $16.5 million of U.S. government agency guaranteed pass-through certificates which mature through 2008 and $29.3 million of U.S. Treasury Notes which mature in 2000. The Company estimates that these securities will mature, in millions, as follows: $1.5 in 1995; $38.1 in 1996 through 2000 and $10.3 thereafter.
Mortgage bonds and notes receivable from an affiliate were not fair valued because it is not practicable to reasonably assess the credit adjustment that would be applied in the marketplace for such bonds and notes receivable. However, management of the Company believes that the fair value of the security collateralizing such bonds and notes receivable is greater than the net investment in such instruments (cost less related deferred gain).
Fixed rate debt with carrying values of $102.3 million have fair values of $103.3 million, which were estimated based on interest rates currently available to the Company for issuance of debt with similar terms and remaining maturities. The Company believes that the carrying value of its $127.3 million of variable rate debt is equivalent to its fair value.
Interest rate swap agreements are valued at amounts at which they could be settled. Settlement amounts are based upon estimates obtained from dealers. If the Company had settled these agreements with the counterparty at December 31, 1994, the Company would have received $.4 million from the counterparty.
The fair value estimates represented herein are based on pertinent information available to management as of December 31, 1994. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented herein.
NOTE 14. PENSION PLAN
Effective January 1, 1993, the Company acquired the assets of the Management Company, including a defined benefit pension plan covering substantially all of its employees. This plan was merged with the plan of the Company, effective January 1, 1993. The benefit formula for both pre-existing plans is identical to the formula for the surviving merged plan.
The benefits are based on years of service and the employee's compensation during the last five years of service. The Company's funding policy is to make annual contributions as required by applicable regulations.
The following table sets forth the plan's funded status and amounts recognized in the Company's balance sheet at:
The components of net periodic pension cost for the years ended December 31, 1994 and 1993 are as follows:
Assumptions used to develop periodic pension expense and the actuarial present value of projected benefit obligations for:
Disclosure for the Company's pension plan for 1992 is not included since such plan was not significant prior to the merger of the Management Company.
Note 15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 1994 and 1993 is as follows:
NOTE 16. PRICE RANGE OF COMMON SHARES (UNAUDITED)
The high and low sale prices per share of the Company's shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the periods indicated were as follows:
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information with respect to the Company's trust managers is incorporated by reference from pages 3 through 6 of the Company's Proxy Statement in connection with the Annual Meeting of Shareholders to be held April 27,
(b) See "Executive Officers of the Registrant" above.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from pages 11 through 13 of the Company's Proxy Statement in connection with the Annual Meeting of Shareholders to be held April 27, 1995.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from pages 2 through 4 of the Company's Proxy Statement in connection with the Annual Meeting of Shareholders to be held April 27, 1995.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from pages 16 through 18 of the Company's Proxy Statement in connection with the Annual Meeting of Shareholders to be held April 27, 1995.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules:
(2) Financial Statement Schedules:
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements and notes hereto.
(b) No reports on Form 8-K were filed during the last quarter of the period covered by this annual report.
(c) Exhibits:
- --------------- * Filed with this report.
+ Management contract or compensatory plan or arrangement.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Weingarten Realty Investors
By: Stanford Alexander --------------------------- Stanford Alexander, President
Date: March 22, 1995
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:
SCHEDULE II
WEINGARTEN REALTY INVESTORS VALUATION AND QUALIFYING ACCOUNTS DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS IN THOUSANDS)
Note A - Write-offs of accounts receivable previously reserved.
SCHEDULE III
WEINGARTEN REALTY INVESTORS REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS)
- -------------- Note A - Encumbrances do not include $145 million outstanding under the revolving credit agreement and $35 million outstanding under the 14-year term loan payable to a group of insurance companies secured by a property collateral pool including all or part of 5 shopping centers.
SCHEDULE III (CONTINUED)
The changes in total cost of the properties for the years ended December 31, 1994, 1993 and 1992 were as follows:
The changes in accumulated depreciation for the years ended December 31, 1994, 1993 and 1992 were as follows:
- -------------- Note B - Transferred from net investment in direct financing leases.
SCHEDULE IV
WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31,1994
(AMOUNTS IN THOUSANDS)
SCHEDULE IV (CONTINUED)
- --------------- Note A - Changes in mortgage loans for the years ended December 31, 1994, 1993 and 1992 are summarized below:
- --------------- Note B - The aggregate cost at December 31, 1994 for federal income tax purposes is $27,137.
Note C - Principal payments are due monthly to the extent of cash flow generated by the underlying property.