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

ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
Western Investment Real Estate Trust ("The Trust") is a real estate investment trust ("REIT") and qualifies as such under Sections 856 and 960 of the Internal Revenue Code. The Trust was organized under the laws of the State of California in 1962 and commenced real estate operations in 1964.
In order that the Trust may continue to qualify as a real estate investment trust: (i) more than 75% of the Trust's total assets must be invested in real estate, cash, cash items or government securities, (ii) at least 75% of the Trust's gross income must be derived from real estate assets, (iii) the Trust can hold no property primarily for sale to customers in the ordinary course of business, (iv) beneficial ownership of the Trust must be held by more than 100 persons during at least 335 days of each taxable year, and (v) the Trust must distribute annually to its shareholders an amount equal to or exceeding 95% of its real estate investment trust taxable income. Under the terms of its Declaration of Trust, the Trust is permitted to invest its funds in ownership of real estate, mortgages, deeds of trust and certain financial instruments as permitted by law. Substantially all of the Trust's funds have been invested in the ownership of real estate.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The Trust is not engaged in different segments of a business nor is the Trust engaged in more than one line of business.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
The Trust, which at December 31, 1994 employed 48 people, is in the business of acquiring, managing, leasing and developing retail, commercial and industrial properties. At December 31, 1994, the Trust owned 49 retail properties, 10 commercial properties and 2 industrial properties with a combined gross leasable area of 4.7 million square feet.
The Trust has its executive office at 3450 California Street, San Francisco, California, 94118, and can be reached at (415) 929-0211. Additionally, the Trust maintains two branch offices in Granite Bay and Fresno, California.
The Trust's portfolio of 61 properties at December 31, 1994 is summarized as follows:
At December 31, 1994, Occupancy for each Property Type is as follows:
The following table summarizes the composition of the Trust's real estate investments as of December 31, 1994 by type based on amounts invested by the Trust.
During 1993, the Trust obtained two parcels of undeveloped land by deed-in lieu of foreclosure. Since these parcels were adjacent to two shopping centers already owned by the Trust, the Trust incorporated this undeveloped land into the total land area of the two existing shopping centers. During 1994, the Trust developed 4,500 square feet of previously undeveloped land in Elko (Phase II) and is currently negotiating other developments to this same parcel including a 47,000 square foot Ernst Home Center to be constructed on six acres. Because it is the Trust's intention to develop both of these properties, the Trust has chosen to break out and report these parcels as separate shopping center properties.
In addition to the parcel development described more fully in the preceding paragraph, the Trust owns 20 unimproved pads located in its shopping centers that are available for development and leasing.
The weighted average age of the Trust's 61 properties is 11.9 years. The weighted average age of the Trust's commercial, industrial and retail properties is 19.9 years, 14.7 years and 11.5 years, respectively. This calculation is weighted by Gross Leasable Area and is based on the original construction date of the property. As such, construction or renovation occurring subsequent to the original construction date is not reflected in this calculation.
CURRENT ECONOMIC CLIMATE
Over the past few years the Trust's operating results have been negatively impacted by the sluggish California economy. While the magnitude of the California economic recovery is uncertain, improvement in economic conditions should help strengthen the Trust's operating results in 1995. Rising interest rates resulting from increasing economic activity could dampen the benefit to the Trust's operating performance. Recent property acquisitions have been completely or partially funded with advances under the Trust's variable rate line of credit. If interest rates were to increase substantially the interest rate under the line of credit could approach, or exceed the yield on the property acquisitions. However, improving economic conditions, which could lead to higher interest rates, should lead to improved occupancy and rental rates.
FINANCING
In February 1994, the Trust raised $50 million through a public offering of 7 7/8% ten-year senior notes. The proceeds from this offering, as well as the proceeds from the sale of five properties and funds available under the bank line of credit, were used to acquire six retail properties and to pay off borrowings under a previous line of credit. The senior notes contain certain covenants that impose limitations on the incurrence of debt and other restrictions.
On May 31, 1994, the Trust obtained a new unsecured line of credit in the amount of $60 million. The credit facility has a two-year term, expiring May 31, 1996. The interest rate was either LIBOR plus 2.0% or the participating banks' reference rate, at the Trust's election. This line of credit replaced the existing $35 million credit facility.
On March 14, 1995, the Trust successfully negotiated a reduction of the LIBOR interest rate on its unsecured bank line of credit. The amended $60 million credit facility now provides for an interest rate of LIBOR plus 1.6%, compared to the previous rate of LIBOR plus 2.0%. The reduced LIBOR interest rate provides for a reduction of 40 basis points, a substantial savings in the Trust's annual borrowing costs.
ACQUISITIONS AND DISPOSITIONS DURING 1994
The Trust's investment strategy is to seek superior quality retail, office and industrial properties. During 1994 the Trust acquired properties at prices ranging from $4.8 million to $14.7 million. Properties in this general price range allow the Trust to avoid undue investment concentration while still allowing for management efficiencies. The Trust acquires properties which can provide growth in cash flow and property value.
In 1994 the Trust acquired six retail properties in Northern California. Additionally, the Trust disposed of two retail properties, a commercial building, an industrial building and a parcel of land. The 1994 acquisitions and dispositions resulted in a net increase of gross leasable area of 324,000 square feet.
In particular:
- On January 27, 1994, the Trust sold its Marin General Hospital property in Larkspur, California. The sales price was $12.4 million, resulting in a gain of $3.6 million. The Trust used the net proceeds of the sale to reduce the outstanding balance on its previous line of credit.
- On May 10, 1994, pursuant to a tax-deferred exchange, the Trust sold its fifty percent (50%) interest in the Mid-Peninsula Plaza property and the adjoining wholly-owned Marshall's property located in Redwood City, California. The combined sales price of $7.3 million resulted in a gain of $1.7 million.
- On May 27, 1994, the Trust acquired a 99,000 square foot shopping center property located in Livermore, California, for $14.7 million. The purchase was funded from a portion of the proceeds received from the February, 1994 Senior Notes offering.
- On June 7, 1994, the Trust acquired three shopping center properties totaling 283,550 square feet located in Elk Grove, Fair Oaks and Manteca, California, for $34.3 million. These shopping center properties were purchased with (i) the remaining proceeds received from the Senior Notes offering, (ii) proceeds from the sale of the Mid-Peninsula Plaza and Marshall's properties, and (iii) funds from the bank line of credit.
- On July 18, 1994, the Trust acquired a 127,870 square foot shopping center property located in Hanford, California for $11 million. The acquisition was funded from a portion of the $60 million line of credit.
- On September 26, 1994, pursuant to a tax-deferred exchange, the Trust sold for $4.5 million, land located in Rocklin, California. This unimproved property was previously leased to Raley's. The sale resulted in a gain of $70,000.
- On November 22, 1994, the Trust acquired a 47,900 square foot Nob Hill Foods supermarket in Hollister, California, which is subject to a 25-year lease with Nob Hill General Store Inc. The Trust acquired this property from Nob Hill for $4.8 million. Proceeds of the sale of the Trust's property in Rocklin, California, substantially funded the purchase of the Hollister property pursuant to a tax-deferred exchange.
- On December 30, 1994, the Trust sold its industrial property in Oakland, California, which was previously leased to Safeway Stores. The sale was structured to provide for a total sales price of $1,225,000, of which $567,000 was received in cash. The balance represents the buyers' assumption of Western's accrued liability for environmental remediation expenses of $658,000. Under the terms of the sale agreement, the Trust is responsible for clean-up costs that exceed the sum of: (i) $658,000 and (ii) any amounts recovered by the buyer from third parties. After sales commission, legal and other fees, the Trust recorded a loss on disposition of $93,000. On the basis of the current facts and circumstances, the Trust has not recorded a provision for any future environmental liability resulting from this property. The Trust will continue to monitor the environmental remediation activity and status of this property.
COMPETITION
During the past several years, volume discount retailers, such as Wal-Mart and Costco, have entered certain areas of California and Nevada where Trust community shopping center properties are located. The Trust expects that these discounters may positively or negatively affect certain of the Trust's shopping center tenants. The Trust believes that its tenants could benefit if these discounters attract additional customers to nearby Trust properties and thereby generate increased sales for Trust tenants. Conversely, the Trust's tenants could be negatively affected if discounters draw customers away from the Trust's properties. The Trust believes that to date the trend has had no significant impact on the Trust's results of operations.
The Trust competes for quality properties with other investors and engages in a continuing effort to identify desirable properties for acquisition. As the number of prospective buyers of the types of properties the Trust considers for purchase increases, the prices of such properties may increase and the yield decrease. The Trust believes it can continue to compete effectively in the current real estate environment because of its experience in real estate investment, property management and leasing.
The Trust competes for tenants primarily on the basis of location, rental rates, services provided and the design and condition of the properties. In some of the geographic areas in which the Trust owns properties, the available supply of space for lease exceeds the demand by prospective tenants. In order to compete effectively, the Trust employs experienced property managers and leasing agents.
TENANTS
The Trust's principal shopping center and retail tenants include substantial, well-recognized businesses such as Food-4-Less, Kmart, Lucky Stores, J.C. Penney, Raley's, Ross Stores, Save Mart Supermarket and Thrifty Drug. The Trust's commercial tenants include Coast Federal Bank and Fireman's Fund.
No single property investment accounted for more than 5% of total revenues in 1994. However, at December 31, 1994, Raley's, the Trust's most significant tenant, a supermarket and super drug retailer, was a lessee in nineteen of the Trust's properties. Raley's, a privately owned company, currently operates 81 stores in Northern California and Nevada. The Raley's organization has released information indicating that its sales exceeded $1.7 billion in its most recently reported fiscal year ended June 25, 1994.
The following table provides the location, size and expiration of the Raley's leases: Lease Location Gross Leasable Area Expiration Date -------- ------------------- ---------------
1 Fallon, NV Note (1) 6/30/03 2 Fair Oaks, CA 59,231 3/31/06 3 Yuba City, CA 61,842 9/01/08 4 Carson City, NV 59,018 8/31/12 5 Redding, CA 60,000 5/31/14 6 Yreka, CA 60,000 11/30/14 7 Chico, CA 61,046 4/30/15 8 Winnemucca, NV 60,000 12/31/15 9 Fallon, NV 60,114 2/28/16 10 Reno, NV 61,046 3/31/16 11 Ukiah, CA 61,046 6/30/16 12 Elko, NV 61,000 1/31/17 13 Vallejo, CA 60,114 9/30/17 14 Folsom, CA 60,114 12/31/17 15 Turlock, CA 60,114 2/28/18 16 GrassValley, CA 60,114 4/30/18 17 Granite Bay, CA 60,114 6/30/18 18 Suisun City, CA 60,114 5/31/19 19 Oroville, CA 59,885 6/01/19
NOTE (1): Although Raley's no longer occupies this Fallon, Nevada, property, it guarantees the J. C. Penney and Hub leases and subsidizes a portion of the rental payments of the Fallon, Nevada, property.
NOTE (2): For the twelve months ended December 31, 1994, revenue received from Raley's represented 22%.
MAJOR PRODUCERS OF 1994 TOTAL REVENUE
The Trust receives sales and other information on a monthly, quarterly or annual basis from its retail tenants, including Raley's, under leases which provide for such reports. The Trust uses this information to monitor the payment of percentage rents. The Trust received $537,000 and $530,000 of percentage rents during 1994 and 1993, respectively. Virtually all of the Trust's existing leases include at least one of the following provisions for payment of additional rent: (1) scheduled increases, (2) percentage rent based on tenants' gross sales, or (3) CPI-based escalation clauses. The Trust endeavors to structure leases on a triple-net basis with the lessees being responsible for most operating expenses, such as real estate taxes, certain types of insurance, utilities, normal repairs and maintenance. To the extent such provisions cannot be negotiated and in regard to vacant space, the Trust pays such expenses from current operating income. Most of the Trust's leases require the tenant to carry liability insurance coverage on their leased premises. The Trust monitors tenant compliance with insurance coverage requirements. While the Trust believes its properties are adequately insured, the Trust does not carry earthquake or flood coverage (with the exception of the Hollister property which has earthquake insurance). Most of the Trust's properties are located in areas of California and Nevada where earthquakes have been known to occur. The Trust does not believe earthquake insurance is cost effective because of relatively high premiums charged for relatively limited coverage. Additionally, the Trust portfolio is geographically diversified, principally consisting of single story, relatively newly constructed buildings.
TENANT LEASE EXPIRATIONS AND RENEWALS
The following table shows tenant lease expirations as of December 31, 1994 for the next ten years assuming none of the tenants exercise renewal options:
ASSET MANAGEMENT
The Trust is a fully integrated REIT which provides full asset management services to all but two of its properties. Asset management includes property management, leasing, marketing, accounting and legal support. Internal management provides for regular interaction between the Trust and its tenants and close supervision of properties.
The Trust directly manages 59 of its 61 properties. In order to facilitate its present and future asset management activities, the Trust maintains two branch offices which are centrally located to the properties. The offices are located at the Trust's Country Gables shopping center in Granite Bay, California and at the Victorian Walk shopping center in Fresno, California.
Internal management permits the Trust to provide value added services to its tenants. For example, the Trust's marketing staff works with the Trust's tenants on promotional and advertising activities to draw consumers to the shopping centers. These activities help the Trust attract and retain the national, regional and local retail tenants which serve the Northern California and Nevada markets. The Trust believes that the cost of internal property management and leasing is generally less expensive than employing independent property management, marketing and leasing firms due to lower commissions and fees and certain economies of scale.
Two of the 61 properties are managed by independent property managers. G & W Management Co. provides management services for the property leased to Fireman's Fund Insurance Company, in Petaluma, California, for fees equal to 3.5% of gross receipts. The Trust's property is part of a larger office park which is managed by G & W Management Co. Commercial Real Estate Service (CRES) provides management services with respect to Serra Center, located in Colma, California, for fees equal to 4% of gross rents attributable to the Trust's 30% interest in the center. CRES is an affiliate of the co-owner of the Serra Center and has been managing the property for approximately 20 years. Neither one of the above-named property managers are affiliated with the Trust, its trustees, officers or any shareholder owning 5% or more of the Trust's shares. Repairs and maintenance of the Trust's properties not undertaken by tenants under the terms of the Trust's triple-net leases are performed by independent contractors not affiliated with the Trust, its trustees or officers, or any shareholder owning 5% or more of the Trust's shares.
POTENTIAL ENVIRONMENTAL RISKS
Investments in real property create a potential for environmental liability on the part of the owner of such real property. If hazardous substances are discovered on or emanating from any of the Trust's properties, the Trust and/or others may be held strictly liable for all costs and liabilities relating to the clean-up of such hazardous substances.
The Trust, as far as it is aware, owns only 3 properties which presently contain underground storage tanks. The Trust has no knowledge of any leakage or contamination resulting from these tanks. There are, however, reported low levels of soil contamination from underground storage tanks removed from the Heritage Place Shopping center in Tulare, California, prior to its acquisition by the Trust. The prior owner is currently proceeding with testing and remediation of this property and has been approved for funding by the California Leaking Underground Storage Tank Fund. Should the prior owner fail to remediate and should funding be declined, the Trust's exposure would be approximately $230,000 per the initial estimate by an environmental consultant. In addition, there is a potential for contamination from reported off-site leaking petroleum underground storage tanks located on properties adjacent to certain Trust properties.
In order to mitigate environmental risks, in 1989 the Trust adopted a policy of obtaining at least a Phase I environmental study (a preliminary site assessment which does not include environmental sampling, monitoring or laboratory analysis) on each property it seeks to acquire. From time to time, when the Trust deems it appropriate, we have acquired independent environmental analyses on properties acquired prior to 1989. Although the Trust has no knowledge that any material environmental contamination has occurred, no assurance can be given that hazardous substances are not located under any of the properties. The Trust carries no express insurance coverage for the type of environmental risk described above.
The Trust assesses on an ongoing basis measures necessary to comply with environmental laws and regulations. The probable overall costs of these measures cannot be determined at this time due to uncertainty about the extent of environmental risks and the Trust's responsibility, the complexity of environmental laws and regulations, and the selection of alternative compliance approaches. However, the Trust is not aware of any environmental conditions which will have a material impact on its financial position or results of operations except as described herein.
On December 30, 1994, the Trust sold its industrial property in Oakland, California, which was previously leased to Safeway Stores. The sale was structured to provide for a total sales price of $1,225,000, of which $567,000 was received in cash. The balance represents the buyer's assumption of Western's accrued liability for environmental remediation expenses of $658,000. Under the terms of the sale agreement, the Trust is responsible for clean-up costs that exceed the sum of: (i) $658,000 and (ii) any amounts recovered by the buyer from third parties. On the basis of the current facts and circumstances, the Trust has not recorded a provision for any future environmental liability resulting from this property. The Trust will continue to monitor the environmental remediation activity and status of this property.
ITEM 2.



ITEM 2. PROPERTIES.
Property information is presented on the following pages.
ITEM 2: PROPERTIES
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
The Trust is involved in various legal actions arising in the normal course of business.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Principal Market:
The shares of beneficial interest, without par value, of the Trust are listed on the American Stock Exchange under the symbol "WIR". The following table sets forth the high and low sales prices of the shares as reported by the American Stock Exchange:
Approximate number of equity security holders:
Title of Class Number of Record Holders -------------- ------------------------ (as of December 31, 1994)
Shares of Beneficial Interest, without par value 2,542
The Trust estimates that there were over 18,000 beneficial owners of shares, including owners whose shares were held in brokerage and trust accounts.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Trust anticipates that cash flows provided by operating activities will continue to provide adequate funds for all current principal and interest payments as well as dividend payments in accordance with REIT requirements. Cash on hand, borrowings under its existing bank line of credit, as well as other debt and equity alternatives, will provide the necessary funds to achieve future growth. The Trust has only one loan secured by one of its properties. Additionally, the Trust jointly owns one property where the co-owner is obligated under a note that is secured by the property. Any incurrence of additional debt would be subject to limitations imposed by the Indenture executed in connection with the senior notes and the Trust's bank line of credit.
As of December 31, 1994, the Trust had approximately $36.4 million available under its $60 million bank line of credit. This facility, which has certain covenants (including minimum shareholders' equity, maximum ratio of debt to net worth and income coverage requirements), will be used to fund acquisitions and other cash requirements. The bank line of credit's interest rate is either LIBOR plus 2.0% or the participating banks' reference rate, at the Trust's election. This facility expires May 31, 1996, at which time the Trust intends to renew it.
In February 1994, the Trust raised $50 million through a public offering of 7 7/8% ten-year senior notes. The proceeds from this offering, as well as the proceeds from the sale of five properties and funds available under the bank line of credit, were used to acquire six retail properties and to pay off borrowings under a previous line of credit. The senior notes contain certain covenants that impose limitations on the incurrence of debt and other restrictions.
RESULTS OF OPERATIONS
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1993
Funds From Operations (as defined by NAREIT) decreased $282,000, or 1.4%, to $20.6 million from $20.9 million. The major components of this decrease are the provision for environmental costs related to the Oakland, California, property and increased interest expense partially offset by increased minimum rents. Funds From Operations for the year ended December 31, 1994, was calculated by reducing net income of $15,266,000 by the gains on sales of real estate investments ($5,355,000), and adding back: (i) the Oakland property write-down of $463,000, (ii) depreciation and amortization ($9,879,000) and (iii) amortization of deferred debt issuance costs ($319,000). The Trust, along with most industry analysts, considers Funds From Operations to be an appropriate supplemental measure of the operating performance of an equity REIT. Funds From Operations does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity.
Net income increased $3.7 million, or 31.7%, to $15.3 million, or $0.915 per share, in 1994 from $11.6 million, or $0.701 per share, in 1993. This increase reflects the gains realized from the sales of real estate investments and increases achieved in revenues from the Trust's six 1994 acquisitions, offset by increased interest expense and reduced revenues due to property dispositions.
Minimum rents increased $1.9 million to $34.1 million, a 5.8% increase over the 1993 total of $32.2 million. This growth reflects rental revenues from the acquisition of six properties, offset by reduced rental revenues due to the dispositions of two retail properties, a commercial building, an industrial building and a parcel of land. The 1994 acquisitions and dispositions resulted in a net increase of 324,000 square feet to the portfolio.
Other income increased $937,000, or 86.8%, to $2,017,000 in 1994 from $1,080,000 for the comparable period in 1993. Most of this increase is due to (i) a lease termination fee of $600,000 and (ii) investment income from the senior notes proceeds earned prior to the completion of several acquisitions.
Interest expense increased by $2.3 million in 1994 to $10.1 million from $7.8 million in 1993. This 29.4% increase is due to the Trust's increased borrowings to fund property acquisitions and higher interest rates. On February 24, 1994, the Trust issued $50 million of 7 7/8 % senior notes due February 15, 2004. Proceeds from the sale of the senior notes were used in part to pay the outstanding balance on the previous bank line of credit of $17.6 million. The remaining proceeds were used to acquire additional properties. On May 31, 1994, the Trust obtained a two-year unsecured $60 million bank line of credit (replacing the previous $35 million bank line of credit), which the Trust has drawn upon to fund additional acquisitions. For the years 1994 and 1993, the daily weighted average amount owing to the bank under the line of credit was $13.7 million and $31.5 million, respectively. The weighted average interest rate during these periods was 7.17% and 6.25%, respectively.
COMPARISON OF YEARS ENDED DECEMBER 31, 1993 AND 1992
Funds From Operations increased $549,000 to $20.9 million in 1993, a 2.7% increase over the 1992 figure of $20.3 million. Net income increased $271,000, or 2.4%, to $11,594,000 in 1993 compared to $11,323,000 in 1992. The significant components of this change include increased rental income offset by decreased interest income on mortgage loans receivable and increased other operating expenses.
Minimum rents increased $1.3 million in 1993 to $32.2 million, a 4.3% increase over $30.9 million earned in 1992. This increase resulted from increased rental rates, collection of prior year rents and $612,000 of deferred rent receivable.
Other operating expenses increased by 51.2%, or $1.1 million, to $3.1 million in 1993 as compared to $2 million in 1992. This increase is primarily the result of developing internal asset management capabilities that include leasing, marketing and property management.
IMPACT OF THE ECONOMY
Substantially all of the Trust's properties are leased on a triple-net basis which reduces the Trust's exposure to increases in property operating expenses resulting from inflation. Future increases in inflation would likely increase rental income and thereby further protect the Trust from the impact of inflation. Rental income increases could be realized through CPI-based escalation of rents, percentage rents based on tenants' gross sales and inflation-adjusted base rents on new leases.
Increases in interest rates could increase the Trust's borrowing costs. As of December 31, 1994, the Trust had $23.6 million outstanding on its unsecured variable rate bank line of credit. This amount represents approximately 16% of the Trust's total liabilities and approximately 6% of the Trust's historical cost of real estate owned.
The continuing recovery of the California economy should lead to increases in employment, personal income and retail spending. Improving economic conditions should help strengthen the Trust's operating results in 1995 as occupancy continues to increase and rental rates continue to stabilize and improve.
WESTERN INVESTMENT REAL ESTATE TRUST
Financial Statements
Form 10-K Item 8



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



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to the trustees and executive officers of the Trust is incorporated by reference to the section entitled "Trustees and Executive Officers" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 11, 1995, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is incorporated by reference to the sections entitled "Compensation of Trustees", Compensation of Executive Officers", "Compensation Pursuant to Plans", "Trustee Emeritus Program and Death and Disability Program", "Stock Option Grants and Exercises" and "Report of Compensation Committee on Executive Compensation" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 11, 1995, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to security ownership of certain beneficial owners and management is incorporated by reference to the section entitled "Trustees and Executive Officers" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 11, 1995, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Trust, its employees, officers or trustees are not engaged in any related transactions with the Trust. Additionally, the Trust has never made any loans to its management.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements - Included in Item 8 Page ----
Report of Independent Certified Public Accountants 22 Balance Sheets - December 31, 1994 and 1993 23 Financial Statements for the Years Ended December 31, 1994, 1993 and 1992: Statements of Income 24 Statements of Shareholders' Equity 25 Statements of Cash Flows 26 Notes to Financial Statements 27 to 33
2. Financial Statement Schedule III: Real Estate and Accumulated Depreciation 34 to 36
3. Additional Information: 1994 Building Improvement and Leasing Commission Additions (unaudited) 37
(b) 1. Reports on Form 8-K.
Form 8-K dated December 30, 1994. This report contains Item 5.
Page ----
(c) Exhibits.
(3) Declaration of Trust, as amended (filed as Exhibit 3.1 to Registration Statement on Form S-3 No.33-22893 and incorporated herein by reference).
(4.1) Form of Indenture relating to the 8% Convertible Debentures (filed as Exhibit 4.1 to Registration Statement on Form S-3 No. 33-22893 and incorporated herein by reference).
(4.2) Form of Indenture relating to the Senior Notes (filed as Exhibit 4.1 to Registration Statement on Form S-3 No.33-71270 and incorporated herein by reference).
(4.3) Form of Senior Notes (filed as Exhibit 4.2 to Registration Statement on Form S-3 No.33-71270 and incorporated herein by reference).
(10.1)** Trust's Nonqualified Stock Option Plan (filed as Exhibit 4.2 to Registration Statement on Form S-8 No. -33-22893 and incorporated herein by reference).
(10.2)** Trust's Trustee Emeritus Plan (filed as Exhibit to Proxy Statement dated March 25, 1986 and incorporated herein by reference).
(23)* Consent of Independent Certified Public Accountants. 41
------------------ * Filed with this report. ** Management contract or compensatory plan or arrangement.
Consent of Independent Certified Public Accountants
The Trustees Western Investment Real Estate Trust:
We consent to incorporation by reference in the registration statement (No. 33- 27016) on Form S-8 of Western Investment Real Estate Trust of our report dated February 1, 1995, except as to Note 16 which is as of February 16, 1995, relating to the balance sheets of Western Investment Real Estate Trust as of December 31, 1994 and 1993, and the related statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994, and the related schedule, which report appears in the December 31, 1994, annual report on Form 10-K of Western Investment Real Estate Trust.
San Francisco, California KPMG PEAT MARWICK LLP March 29, 1995
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.
WESTERN INVESTMENT REAL ESTATE TRUST (Registrant)
By: s/ Dennis D. Ryan -------------------------------------- Dennis D. Ryan Vice President and Dated: March 29, 1995 Chief Financial Officer --------------
Pursuant to the requirements of the Security 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 --------- ----- ----
s/ O. A. Talmage Chairman of the March 29, 1995 ---------------------------- Board, President, -------------- O. A. Talmage Chief Executive Officer and Trustee
s/ Dennis D. Ryan Vice President, March 29, 1995 ---------------------------- Chief Financial Officer -------------- Dennis D. Ryan and Trustee
s/ William A. Talmage Executive Vice President, March 29, 1995 ---------------------------- Chief Operating Officer -------------- William A. Talmage and Trustee
s/ Chester R. MacPhee, Jr. Trustee March 29, 1995 ---------------------------- -------------- Chester R. MacPhee, Jr.
s/ Reginald B. Oliver Trustee March 29, 1995 ---------------------------- -------------- Reginald B. Oliver
s/ James L. Stell Trustee March 29, 1995 ---------------------------- -------------- James L. Stell
s/ John R. Beckett Trustee March 29, 1995 ---------------------------- -------------- John R. Beckett