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, 1995 employed 51 people, is in the business of acquiring, managing, leasing and developing retail, commercial and industrial properties. At December 31, 1995, the Trust owned 50 retail properties, 10 commercial properties and 2 industrial properties with a combined gross leasable area of 4.8 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 regional offices in California.
The Trust's portfolio of 62 properties at December 31, 1995 is summarized as follows:
At December 31, 1995, occupancy for each property type is as follows:
Property Type Occupancy Rate (1) ------------- ------------------ Shopping Center and Retail 93.8% Commercial 93.1% Industrial 100.0%
Average Occupancy for All Property Types 93.9%
(1) Once a space is subject to an executed lease, the space is then included in occupied space. A space continues to be incorporated in our occupancy percentage until: (1) the related lease expires and the tenant is no longer in legal possession, or (2) the related lease is formally terminated and the tenant is no longer in legal possession.
The following table summarizes the composition of the Trust's real estate investments as of December 31, 1995 by type based on amounts invested by the Trust.
PORTFOLIO SUMMARY DECEMBER 31, 1995
The Trust owns 23 unimproved pads located within or adjacent to the property lines of its shopping centers that are available for development and leasing. Additionally, the Trust owns a total of 25 acres of undeveloped land adjacent to its North Hills and Elko Shopping Centers in Nevada.
The weighted average age of the Trust's 62 properties is 12.5 years. The weighted average age of the Trust's commercial, industrial and retail properties is 21.5 years, 15.4 years and 12.05 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
After a number of false starts in recent years, California's economy has experienced solid improvement. Additionally, many economists believe California's future is brighter. According to the Center for Continuing Study of the California Economy (Palo Alto, California), total personal income rose 7.2 percent during the first half of 1995. This, in conjunction with a 1.8 percent increase in consumer prices, produced the first substantial boost in real spending power since 1990. Some economists believe that California is once again ready to take its place as an engine of growth for the U.S. economy. California's strengths of foreign trade, entertainment and business services are producing gains in jobs, income and spending that will likely continue into 1996 and the decade ahead. While the strength of the California economic recovery is uncertain, improvement in economic conditions should help improve the Trust's operating results in 1996. Recent property acquisitions and improvements 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 also lead to improved occupancy and rental rates.
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 experienced staff and management team.
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, Nob Hill Foods, PayLess Drugs, Pak N Save, Raley's, Safeway, Save Mart Supermarket and Thrifty Drug. The Trust's commercial tenants include Coast Federal Bank and Fireman's Fund Insurance Company. In addition, the Trust has other major retail tenants such as Lucky Stores and J.C. Penney.
No single property investment accounted for more than 5% of total revenues in 1995. At December 31, 1995, Raley's, the Trust's most significant tenant, a supermarket and super drug retailer, was a lessee in nineteen of the Trust's properties and accounted for 20% of the Trust's 1995 total revenues. 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 $1.8 billion in its most recently reported fiscal year ended June 24, 1995. The Trust receives audited financial statements annually from Raley's and uses them to monitor Raley's financial position and results of operations.
The following table provides the location, size and expiration of the Raley's leases:
NOTE (1): Although Raley's no longer occupies this Fallon, Nevada, property, it guarantees the J. C. Penney and Hub leases and makes supplemental lease payments to the Trust.
MAJOR PRODUCERS OF 1995 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 where leases so provide. The Trust recognized $559,000 and $537,000 of percentage rents during 1995 and 1994, respectively. Virtually all of the Trust's existing leases include at least one of the following provisions for payment of additional rent: (1) scheduled fixed 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 incorporated into a lease 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. Most of the Trust's properties are located in areas of California and Nevada where earthquakes have been known to occur. The Trust periodically considers the merits of purchasing earthquake insurance. To date the Trust has not purchased earthquake insurance because of (i) the high premiums and deductibles and (ii) the geographically diversified portfolio that reduces the likelihood of an earthquake resulting in a material loss to the Trust. Furthermore, the majority of properties in the portfolio principally comprise single-story, relatively new buildings.
TENANT LEASE EXPIRATIONS AND RENEWALS
The following table shows lease expirations for the leases in effect as of December 31, 1995, 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 and accounting support. Internal management provides for regular interaction between the Trust and its tenants and close supervision of properties.
The Trust directly manages 60 of its 62 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 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 Trust's 62 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 plus tenant administrative and management fees paid by the tenants 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.
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. In conducting its assessments, the Trust has identified the following matters:
OAKLAND, CALIFORNIA
During 1994, the Trust concluded the sale of its industrial property in Oakland, California. Under the terms of the sale agreement, the Trust is responsible for environmental 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 because the Trust believes the likelihood of incurring any liability is remote. The Trust will continue to monitor the environmental remediation activity and status of this property.
VALLEJO, CALIFORNIA
The Trust has agreed to guarantee the performance of the restoration work related to disturbance of wetlands by, and to provide certain financial accommodations to, the developer of the Trust's Park Place Shopping Center in Vallejo, California. During July 1995, the developer declared Chapter 11 bankruptcy. The Trust received an initial estimate for the wetlands restoration from an environmental consulting firm, which projected total costs of as much as $250,000. Approximately $200,000 has already been funded by the Trust.
UNDERGROUND STORAGE TANKS
The Trust, as far as it is aware, owns only three properties which presently contain underground storage tanks. The Trust has no knowledge of any leakage or contamination resulting from these tanks that will have a material impact on its financial position or results of operations. 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 has been ordered by the Tulare County environmental officials to clean up suspected soil contamination and has been approved for and received funding from the California Leaking Underground Storage Tank Fund. Should the prior owner fail to complete remediation, the Trust's exposure could be as much as $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.
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 that it believes will have a material impact on its financial position or results of operations.
ITEM 2.
ITEM 2. PROPERTIES.
Property information is presented on the following pages.
ITEM 2: PROPERTIES
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ITEM 2: PROPERTIES
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ITEM 2: PROPERTIES
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ITEM 2: PROPERTIES
(1) Once a space is subject to an executed lease, the space is then included in occupied space. A space continues to be incorporated in our occupied percentage until: 1) the related lease expires and the tenant is no longer in legal possession, or 2) the related lease is formally terminated and the tenant is no longer in legal possession. (2) Sold in 1994. (3) Acquired in 1994. (4) Acquired in 1995. (5) Investment converted to equity ownership through a deed in lieu of foreclosure in 1993. (6) Included in Other Income.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
The Trust is involved in various legal actions arising in the normal course of business. After taking into consideration legal counsel's evaluation of such actions, management is of the opinion that their outcome will not have a material adverse effect on the Trust's financial statements.
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 of the Trust, without par value, 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:
(1) Paid March 15, 1996.
Approximate number of equity security holders:
Title of Class Number of Record Holders -------------- ------------------------- (as of December 31, 1995)
Shares of Beneficial Interest, without par value 2,428
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
(1) Revenues comprise minimum rents, percentage rents, recoveries from tenants and other income.
(2) The Trust, along with most industry analysts, considers Funds From Operations (FFO) to be an appropriate supplemental measure of the operating performance of an equity REIT. Funds From Operations, as defined in 1991 by the National Association of Real Estate Investment Trusts (NAREIT), is: net income excluding gains or losses from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated joint ventures. 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.
Funds From Operations presented in the Selected Financial Data schedule is calculated in accordance with the 1991 NAREIT definition of FFO. In 1995, NAREIT interpreted its definition of Funds From Operations. The effect of the 1995 interpretation on the Trust's calculation of FFO is to require exclusion from the add-backs to net income of: (i) amortization of deferred financing costs and (ii) depreciation of personal property. When calculated in accordance with NAREIT'S 1995 interpretation, FFO would be $21,017,000, $20,084,000, $20,522,000, $20,017,000 and $22,566,000 for the year ended December 31, 1995, 1994, 1993, 1992 and 1991, respectively. The Trust will adopt the 1995 interpretation in 1996.
(3) Real estate owned reflects acquisition costs and capitalized costs of improvements before deduction of depreciation and amortization.
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 and 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 two properties where a co-owner is obligated under a note that is secured by the property.
Any incurrence of additional debt by the Trust would be subject to limitations imposed by the Indenture Agreement executed in connection with the Trust's senior notes and the bank line of credit.
As of December 31, 1995, the Trust had approximately $30.8 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), could be used to fund acquisitions, improvements to real estate and other cash requirements. The interest rate on the bank line of credit is either LIBOR plus 1.6% or the participating banks' reference rate, at the Trust's election. The weighted average interest rate on the bank line of credit at December 31, 1995, was 7.57%. This facility expires May 31, 1996, at which time the Trust intends to renew it.
RESULTS OF OPERATIONS
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994
Net income decreased $5 million to $10.3 million, or $0.61 per share, in 1995, from $15.3 million, or $0.92 per share, in 1994. This 33% decrease is principally due to the 1994 gains realized from the sales of real estate investments. Additionally, the decrease is due to increased interest expense, depreciation and amortization, and property operating costs, as well as decreased other income, partially offset by the absence of the 1994 provision for loss on real estate investment.
Funds From Operations (NAREIT 1991 definition) increased $969,000 to $21.5 million in 1995, an increase of more than 4% over the 1994 figure of $20.6 million. The major components of this increase are increased minimum rents, increased recoveries from tenants and the absence of a 1994 provision for environmental costs relating to the Oakland, California, property, offset in part by increased interest expense, property operating costs and decreased other income. 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.
Minimum rents increased $3.5 million in 1995 to $37.6 million, a 10% increase over $34.1 million in 1994. This increase resulted from (i) the Trust's seven acquisitions during 1994 and 1995, partially offset by five dispositions in 1994 and (ii) occupancy gains.
Recoveries from tenants increased by 12%, or $738,000, to $6.8 million in 1995 as compared to $6.1 million in 1994. This increase is primarily the result of the Trust's seven acquisitions and occupancy gains referred to above.
Other income decreased $1.4 million to $584,000 from the 1994 amount of $2,017,000. The contributing factors to this decrease are the absence in 1995 of (i) a $600,000 lease termination fee recorded in 1994, (ii) investment income earned in 1994 from the senior notes net proceeds prior to the use of these proceeds for several 1994 acquisitions and (iii) mortgage interest income earned on a note retired during the second quarter of 1994.
Interest expense increased $1.4 million, or 14%, in 1995 to $11.5 million from $10.1 million in 1994. This increase primarily results from increased borrowings and higher interest rates under the Trust's bank line of credit. Additionally, interest expense increased as a result of twelve months of interest on the senior notes in 1995, compared to 10-1/2 months in 1994.
Property operating costs were $8.3 million in 1995 compared to $7.4 million in 1994. This $899,000, or 12% increase from the prior year, is primarily due to the 1994 and 1995 acquisitions. Ownership of the majority of these properties commenced mid-year 1994.
Depreciation and amortization expense increased $1 million to $10.9 million for the year ended December 31, 1995, from $9.9 million in 1994. This 10% increase results from a net increase in the depreciable basis of the Trust's portfolio of real estate investments due to additions made by the Trust beginning in mid-year 1994, net of dispositions.
Income from operations was $10.3 million, or $0.61 per share, for the twelve months ended December 31, 1995, a $650,000 decrease from the comparable 1994 figure of $10.9 million, or $0.65 per share. The primary reasons for this decrease are increased interest expense, depreciation and amortization, property operating costs, and decreased other income, partially offset by increased minimum rents and increased recoveries from tenants.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1993
Net income increased $3.7 million, or 32%, to $15.3 million, or $0.92 per share, in 1994 from $11.6 million, or $0.70 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.
Funds From Operations decreased $282,000, or 1%, 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.
Minimum rents increased $1.9 million to $34.1 million, a 6% 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 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 use of these proceeds for several 1994 acquisitions.
Interest expense increased by $2.3 million in 1994 to $10.1 million from $7.8 million in 1993. This 29% 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.
Income from operations was $10.9 million, or $0.65 per share, for the year ended December 31, 1994, as compared to $11.6 million, or $0.70 per share, for the same period in 1993. This 6% decrease results from increased interest expense, depreciation and amortization, and property operating costs partially offset by increased minimum rents and other income.
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 revenues and thereby further protect the Trust from the impact of inflation. Revenue 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, 1995, the Trust had $29.3 million outstanding under its unsecured variable-rate bank line of credit. This amount represents approximately 20% of the Trust's total liabilities and approximately 7% 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 1996 as occupancy continues to increase and rental rates continue to stabilize and improve.
ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued Financial Accounting Standards (FAS) 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and FAS 123, "Accounting for Stock-Based Compensation."
The Trust has adopted FAS 121 effective January 1, 1996, and believes that adoption will not have a material impact on the Trust's 1996 financial statements. The Trust will adopt the disclosure requirements of FAS 123 in 1996, but continue to account for its stock option plan under Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," as permitted under FAS 123.
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 9, 1996, 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 9, 1996, 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 9, 1996, 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.
Page ---- (a) 1. Financial Statements - Included in Item 8 Report of Independent Certified Public Accountants 21 Balance Sheets - December 31, 1995 and 1994 22 Financial Statements for the Years Ended December 31, 1995, 1994 and 1993: Statements of Income 23 Statements of Shareholders' Equity 24 Statements of Cash Flows 25 Notes to Financial Statements 26 to 34
2. Financial Statement Schedule III: Real Estate and Accumulated Depreciation 35 to 36
3. Additional Information: 1995 Building Improvement and Leasing Commission Additions (unaudited) 37
(b) 1. Reports on Form 8-K.
None.
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. 33-27016 and incorporated herein by reference).
(10.2)**Trust's Trustee Emeritus Plan (filed as an 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 January 29, 1996, relating to the balance sheets of Western Investment Real Estate Trust as of December 31, 1995 and 1994, and the related statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, and the related schedule, which report appears in the December 31, 1995, annual report on Form 10-K of Western Investment Real Estate Trust.
San Francisco, California KPMG PEAT MARWICK LLP March 21, 1996
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 Executive Vice President, Chief Financial Officer Dated: March 21, 1996 and Trustee --------------
Pursuant to the requirements of the Securities 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 Board, March 21, 1996 - ------------------------------ Chief Executive -------------- O. A. Talmage Officer and Trustee
s/ William A. Talmage President, March 21, 1996 - ------------------------------ Chief Operating Officer -------------- William A. Talmage and Trustee
s/ Dennis D. Ryan Executive Vice President, March 21, 1996 - ------------------------------ Chief Financial Officer -------------- Dennis D. Ryan and Trustee
s/ Chester R. MacPhee, Jr. Trustee March 21, 1996 - ------------------------------ -------------- Chester R. MacPhee, Jr.
s/ Reginald B. Oliver Trustee March 21, 1996 - ------------------------------ -------------- Reginald B. Oliver
s/ James L. Stell Trustee March 21, 1996 - ------------------------------ -------------- James L. Stell