Weingarten Realty Investors
Employs a Ticklish Tactic

For the past two years, shopping-center owner Weingarten Realty Investors wooed Wall Street with a development strategy intended to generate $300 million in projects a year by 2009.

But Weingarten has an atypical way of presenting its case. The Houston real-estate investment trust capitalizes the interest cost of its projects at a rate equal to its highest-cost debt, according to research firm Green Street Advisors Inc. Meanwhile, Weingarten's peers capitalize interest costs using the weighted average cost of their total debt, Green Street says.

Green Street analyst Jim Sullivan calculates that Weingarten's method adds two cents to three cents a share to its annual funds from operations. Weingarten has forecast FFO for this year at the "top end" of its range of $2.98 to $3.04 a share. Mr. Sullivan says Weingarten's "unusually aggressive" accounting leaves the REIT's credibility "blemished."

Weingarten officials say their method adheres to generally accepted accounting principles. They say Weingarten uses corporate debt to finance its developments rather than project financing from a bank. Thus, accounting guidelines state that Weingarten can select the interest costs it capitalizes based on pools of its debt with the highest interest rates, says Joe Shafer, Weingarten's chief accounting officer.

Vineyard Ventures

California vineyards are on the upswing as investors move to capitalize on surging demand for wine, brokers say. Among the buyers are private-equity firms as well as investment groups that specialize in wine-related projects. Industry insiders "are convinced there will be a grape shortage, and that's driving up prices for vineyard land," says David Ashcraft a broker associate at Bergman-Euro National, a Napa Valley real-estate agency.

In October, a vineyard near St. Helena sold the day it was listed, he says. The $13.5 million price translates to about $225,000 per usable acre for planting, well above average, Mr. Ashcraft says. The upturn is limited so far to high-quality vineyards in Northern California and, to some extent, along the central coast, he says.

Tony Ford of Full Spectrum Properties cites the $250 million-plus purchase of Duckhorn Wine Co. by private-equity firm GI Partners LLP as evidence of the trend. Buyers "want to move into a more conservative mid- to long-term investment, and given the demand for wine, that fits the vineyard market," he says.

Sold Cheap, Goat Included

The bankrupt Lajitas Resort, on 25,000 acres of desert in southwestern Texas, fetched $13.5 million at auction. Creditors, led by Prime Asset Funding GP LLC, with its $14 million claim, had hoped for a haul in the $20 million range.

Austin millionaire Steve Smith had developed a luxury hotel, golf course and private runway on the property to transform it into a destination for the reclusive and well-to-do. Alas, the amenities, and even a resident beer-drinking goat, couldn't lure enough visitors to offset costs.

Dallas gas-and-propane businessman Kelcy Warren claimed the prize. His attorney declined to comment.

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