Forward-Looking Statements

This quarterly report on Form 10-Q, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) disruptions in financial markets, (ii) general economic and local real estate conditions, (iii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business,
(iv) financing risks, such as the inability to obtain equity, debt, or other sources of financing on favorable terms, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates, (vii) the availability of suitable acquisition opportunities, (viii) changes in expected development activity, (ix) increases in operating costs, (x) tax matters, including failure to qualify as a real estate investment trust, could have adverse consequences, (xi) investments through real estate joint ventures and partnerships involve risks not present in investments in which we are the sole investor and (xii) changes in merchant development activity. Accordingly, there is no assurance that our expectations will be realized.

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Our results of operations and financial condition, as reflected in the accompanying consolidated financial statements and related footnotes, are subject to management's evaluation and interpretation of business conditions, retailer performance, changing capital market conditions and other factors which could affect the ongoing viability of our tenants.

Executive Overview

Weingarten Realty Investors is a real estate investment trust ("REIT") organized under the Texas Real Estate Investment Trust Act. We, and our predecessor entity, began the ownership and development of shopping centers and other commercial real estate in 1948. Our primary business is leasing space to tenants in the shopping and industrial centers we own or lease. We also manage centers for joint ventures in which we are partners or for other outside owners for which we charge fees.

We operate a portfolio of rental properties which includes neighborhood and community shopping centers and industrial properties of approximately 72.5 million square feet. We have a diversified tenant base with our largest tenant comprising only 2.7% of total rental revenues during 2009.

Our long-term strategy is to focus on increasing funds from operations ("FFO") and growing dividend payments to our common shareholders. We do this through hands-on leasing, management and selected redevelopment of the existing portfolio of properties, through disciplined growth from selective acquisitions and new developments, and through the disposition of assets that no longer meet our ownership criteria. We do this while remaining committed to maintaining a conservative balance sheet, a well-staggered debt maturity schedule and strong credit agency ratings. The depressed economic environment and capital markets have caused us to refocus our efforts on maintaining our operating properties at current levels and managing our capital resources to ensure adequate liquidity. In April 2009, we issued 32.2 million common shares of beneficial interest ("common shares") resulting in additional liquidity of $439.3 million.

We strive to maintain a strong, conservative capital structure, which provides ready access to a variety of attractive capital sources. We carefully balance obtaining low cost financing with minimizing exposure to interest rate movements and matching long-term liabilities with the long-term assets acquired or developed. The turmoil in the current capital markets has adversely affected both the pricing and the availability of both debt and equity capital. Our strategy for the upcoming year is focused on the sourcing of new capital whether it is in the form of proceeds from asset dispositions, joint venture relationships, new financings or new equity issuances.

At March 31, 2009, we owned or operated under long-term leases, either directly or through our interest in real estate joint ventures or partnerships, a total of 382 developed income-producing properties and 25 properties under various stages of construction and development. The total number of centers includes 323 neighborhood and community shopping centers, 81 industrial projects and three other operating properties located in 23 states spanning the country from coast to coast.

We also owned interests in 30 parcels of land held for development that totaled approximately 29.8 million square feet.

We had approximately 7,200 leases with 5,300 different tenants at March 31, 2009.

Leases for our properties range from less than a year for smaller spaces to over 25 years for larger tenants. Rental revenues generally include minimum lease payments, which often increase over the lease term, reimbursements of property operating expenses, including ad valorem taxes, and additional rent payments based on a percentage of the tenants' sales. The majority of our anchor tenants are supermarkets, value-oriented apparel/discount stores and other retailers or service providers who generally sell basic necessity-type goods and services. Through this challenging economic environment, we believe stability of our anchor tenants, combined with convenient locations, attractive and well-maintained properties, high quality retailers and a strong tenant mix, should ensure the long-term success of our merchants and the viability of our portfolio.

In assessing the performance of our properties, management carefully tracks the occupancy of the portfolio. The weakened economy contributed to a drop in our occupancy from 93.7% at March 31, 2008 to 91.5% at March 31, 2009. While we will continue to monitor the economy and the effects on our retailers, we believe the significant diversification of our portfolio both geographically and by tenant base will allow us to maintain occupancy levels of above 90% as we move through the year, absent bankruptcies by multiple national or regional tenants. Another important indicator of performance is the spread in rental rates on a same-space basis as we complete new leases and renew existing leases. We completed 272 new leases or renewals during the first three months of 2009 totaling 1.6 million square feet, increasing rental rates an average of 6.4% on a cash basis.

New Development
At March 31, 2009, we had 25 properties in various stages of development. We have invested $388.6 million to-date on these projects and, at completion, we estimate our total investment to be $465.8 million. These properties are slated to be completed over the next one to four years with a projected return on investment of approximately 8.1% when completed. Of these properties, five properties are projected to stabilize during 2009 with our estimated total investment of $79.8 million and a projected return on investment of 9.1%.

In 2009, we had $117.8 million in land held for development pending improvement in economic conditions. Due to our analysis of current economic considerations, including the effects of tenant bankruptcies, lack of available funding and halt of tenant expansion plans for new development projects and declines in the real estate values, our plans related to our new development properties including land held for development could change. While we will continue to monitor this market closely, we anticipate little if any investment in land held for development in 2009. Additionally, we do not anticipate any new projects in 2009 as we have refocused our efforts on obtaining additional liquidity.

Merchant development is a program where we acquire or develop a project with the objective of selling all or part of it, instead of retaining it in our portfolio on a long-term basis. Disposition of land parcels are also included in this program. We generated gains of approximately $14.1 million from this program during the first three months of 2009. Our 2009 business plan calls for no additional merchant development sales.

Acquisitions and Joint Ventures
Acquisitions are a key component of our long-term strategy, and joint venture arrangements are key to both our current and long-term strategy. However, the turmoil in the capital markets has significantly reduced transactions in the marketplace and, therefore, created uncertainty with respect to pricing. Partnering with institutional investors through real estate joint ventures enables us to acquire high quality assets in our target markets while also meeting our financial return objectives. We benefit from access to lower-cost capital, as well as leveraging our expertise to provide fee-based services, such as acquisition, leasing, property management and asset management, to the joint ventures.

There were no acquisitions of properties during the three months ended March 31, 2009.

During the three months ended March 31, 2009, we contributed the final four properties to the joint venture with Hines REIT Retail Holdings, LLC with an aggregate value of approximately $66.8 million, and aggregating approximately 0.4 million square feet. These four shopping centers are located one each in Florida and North Carolina and two in Georgia, and we received net proceeds of approximately $20.6 million. These contributions included loan assumptions on each of the properties, which transferred secured debt totaling approximately $34.6 million to the consolidated joint venture.

Joint venture fee income for the first three months of 2009 was approximately $1.8 million or an increase of $.1 million over the prior year. This is a direct result of our strategy initiative to develop new joint venture relationships. We expect continued growth in joint venture income during the year.

Dispositions
During the first three months of 2009, we sold two operating properties for $27.0 million. Although the availability of debt financing for prospective acquirers has decreased in the current capital markets, we expect to continue to dispose of non-core properties during 2009 as opportunities present themselves. Dispositions are a key component of our current liquidity strategy, and also part of our ongoing management process where we prune our portfolio of properties that do not meet our geographic or growth targets.
Dispositions provide capital, which may be recycled into properties that have barrier-to-entry locations within high growth metropolitan markets. Over time, we expect this to produce a portfolio with higher occupancy rates and stronger internal revenue growth.

Summary of Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A disclosure of our critical accounting policies which affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements is included in our Annual Report on Form 10-K for the year ended December 31, 2008 in Management's Discussion and Analysis of Financial Condition. There have been no significant changes to our critical accounting policies during 2009.

Results of Operations

Comparison of the Three Months Ended March 31, 2009 to the Three Months Ended March 31, 2008

Revenues
Total revenues were $149.3 million in the first quarter of 2009 versus $151.5 million in the first quarter 2008, a decrease of $2.2 million or 1.5%. This decrease resulted from a decrease in rental revenues of $3.6 million, which is offset by an increase in other income of $1.4 million.

The decrease in rental revenues of $3.6 million resulted primarily from a decrease in occupancy and an increase in bad debt expense of $1.6 million from write-offs associated with the weakened economy. The increase in other income of $1.4 million results primarily from an increase in lease cancellation income from various tenants.

Occupancy (leased space) of the portfolio as compared to the prior year was as follows:

                    2009       2008

Shopping Centers     91.7 %     94.8 %
Industrial           90.9 %     90.7 %
Total                91.5 %     93.7 %

Expenses
Total expenses for the first quarter 2009 were $87.4 million versus $93.3 million in the first quarter of 2008, a decrease of $5.9 million or 6.3%.

This decrease resulted primarily from decreases in depreciation and amortization expense and operating expenses of $3.7 million and $2.1 million, respectively. The decrease in depreciation and amortization resulted primarily from an acceleration of depreciation in the amount of $8.4 million for redevelopment activities in 2008, which is offset by the completions of our new developments and other capital activities in 2009. The decrease in operating expenses resulted primarily from a reduction in pre-acquisition and pre-development cost write-offs of $.8 million and a decline in environmental, demolition costs and insurance premiums from the prior period. Overall, direct operating costs and expenses (operating and ad valorem taxes) of operating our properties as a percentage of rental revenues were 29.3% and 29.5% in 2009 and 2008, respectively.

Interest Expense, net
Interest expense totaled $39.6 million for the first quarter 2009, up $2.0
million or 5.4% from the first quarter 2008. The components of interest expense
were as follows (in thousands):

                                                           Three Months Ended
                                                                March 31,
                                                            2009          2008

Gross interest expense                                   $   41,793     $ 42,215
Amortization of convertible bond discount                     2,078        2,102
Over-market mortgage adjustment of acquired properties       (1,117 )     (1,601 )
Capitalized interest                                         (3,197 )     (5,178 )

Total                                                    $   39,557     $ 37,538

Capitalized interest decreased $2.0 million as a result of new development completions and the cessation of carrying costs capitalization on several new development projects.

Equity in Earnings of Real Estate Joint Ventures and Partnerships, net Our equity in earnings of real estate joint ventures and partnerships was $3.7 million in the first quarter of 2009 versus $5.2 million in the first quarter of 2008, a decrease of $1.5 million or 28.8%. This decrease resulted primarily from a decline in income at our investments due primarily to the cessation of carrying cost capitalization on several new development properties and the timing of merchant development gains and completions of new development and other capital activities.

Gain on Merchant Development Sales
The increase in gain on merchant development sales of $13.6 million resulted primarily from the gain on sale of a land parcel in New Mexico in 2009.

Provision for Income Taxes
The increase in provision for income taxes of $4.2 million resulted primarily from an increase in merchant development gains at our taxable REIT subsidiary.

Income from Discontinued Operations
Income from discontinued operations was $.9 million in the first quarter of 2009 versus $10.4 million in the first quarter of 2008, a decrease of $9.5 million or 91.3%. This decrease resulted primarily from a reduction to the gain on sale of a single property in both 2009 and 2008. Also, operating income from discontinued operations for 2008 includes the operating results of the properties disposed or classified as held for sale in 2009.

Gain on Sale of Property
The increase in gain on sale of property of $6.5 million resulted primarily from the gain on sale of two buildings at an operating property in Nevada in 2009.

Effects of Inflation

We have structured our leases in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions whereby we receive increased 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 our leases are for terms of less than 10 years, which allow us to adjust rental rates to changing market conditions when the leases expire. Most of our leases also require the tenants to pay their proportionate share of operating expenses and ad valorem taxes. As a result of these lease provisions, increases due to inflation, as well as ad valorem tax rate increases, generally do not have a significant adverse effect upon our operating results as they are absorbed by our tenants. Under the current economic climate, little to no inflation is occurring.

Capital Resources and Liquidity

Our primary liquidity needs are paying our common and preferred dividends, maintaining and operating our existing properties, paying our debt service costs and funding our existing new development program. Although we anticipate that cash flows from operating activities primarily in the form of rental revenues will decline due to tenant bankruptcies and store closings, we believe operating activities will continue to provide adequate capital for common and preferred dividends, debt service costs and the capital necessary to maintain and operate our existing properties. While we project our occupancy could drop to the 90% level during 2009, the operating cash flow generated at that occupancy should remain adequate to provide capital for these liquidity needs.

The primary sources of capital for funding any acquisitions and the new development program are our revolving credit facilities, cash generated from the sale of property and the formation of joint ventures, cash flow generated by our operating properties and proceeds from capital issuances, both debt and equity. Amounts outstanding under the revolving credit agreement are retired as needed with proceeds from the issuance of long-term debt, common and preferred equity, cash generated from disposition of properties and cash flow generated by our operating properties. As of March 31, 2009, the balance outstanding under our $575 million revolving credit facility was $408.0 million, and no amount was outstanding under our $30 million credit facility, which we use for cash management purposes. As of April 30, 2009, there were no outstanding balances under these facilities as the proceeds received from the equity offering of 32.2 million common shares were used to pay off these facilities.

The current credit market turmoil has significantly affected our ability to obtain additional capital; however, we have been able to complete some transactions and continue to pursue additional sources of capital. As described under Investing Activities and Financing Activities below, through May 7, 2009 we completed: 1) an offering for 32.2 million common shares with net proceeds totaling $439.3 million; 2) additional contributions of property to a joint venture that provided $20.6 million in cash; 3) dispositions including merchant development sales of $71.9 million; and 4) a new $103 million secured loan with a major life insurance company. We currently have two transactions in process including a $106 million industrial joint venture and a $200 million to $300 million retail joint venture. In the event we are unable to form these joint ventures either due to unacceptable terms or a lack of interest in the market, we would consider including all or some of these assets in our disposition or secured financing initiatives. Furthermore, we are currently planning to obtain an additional $300 million in secured det of which we have in excess of $325 million under review with various lenders. We presently have $23 million of dispositions under contract, one of which was deemed to be held for sale at March 31, 2009, and another $81 million under letters of intent. Additionally, we have more than $300 million of individual properties currently being marketed for sale with an additional $290 million of individual properties to follow. There can be no assurance that these transactions can be completed as planned. In addition, we have announced a reduction in our dividends from a quarterly rate per share of $.525 to $.25 commencing with the second quarter 2009 distribution.

Our annual business plan reflects cost reductions, cutbacks in new development expenditures and no operational growth, as well as, fully funding all new development and other capital needs including the $97 million of principal debt payments due in 2009, of which $4.7 million has been paid.

Without the availability of additional funds over the long-term, we may not be able to respond to competitive pressures, or take advantage of unanticipated opportunities. We believe we are in compliance with our debt covenants. Our most restrictive debt covenants including debt to assets, secured debt to assets, fixed charge and unencumbered interest coverage ratios, limit the amount of additional leverage we can add; however, we believe the sources of capital described above are adequate to execute our current business plan and remain in compliance with our debt covenants.

We have non-recourse debt secured by acquired or developed properties held in several of our real estate joint ventures and partnerships. We hedge the future cash flows of certain debt transactions, as well as changes in the fair value of our debt instruments, principally through interest rate swaps with major financial institutions. We generally have the right to sell or otherwise dispose of our assets except in certain cases where we are required to obtain our joint venture partners' consent or a third party consent for assets held in special purpose entities, which are 100% owned by us.

Investing Activities

Acquisitions and Joint Ventures
Retail Properties.
There were no acquisitions of retail properties in the first quarter of 2009.

During the first quarter of 2009, we contributed the final four properties to the joint venture with Hines REIT Retail Holdings, LLC with an aggregate value of approximately $66.8 million, and aggregating approximately 0.4 million square feet. These four shopping centers are located one each in Florida and North Carolina and two in Georgia, and we received net proceeds of approximately $20.6 million. These contributions included loan assumptions on each of the properties, which transferred secured debt totaling approximately $34.6 million to the joint venture.

Industrial Properties.
There were no acquisitions of industrial properties in the first quarter of 2009.

Dispositions
Retail Properties.
During the first quarter of 2009, we sold an operating property in Texas and two buildings at an operating property in Nevada. Sales proceeds from these dispositions totaled $27.0 million and generated gains of $7.2 million.

Subsequent to March 31, 2009, we sold a building at two operating properties each located in Nevada with sales proceeds of approximately $8.5 million.

Industrial Properties.
There were no sales of industrial properties in the first quarter of 2009.

Merchant Development
During the first quarter of 2009, we sold three pad sites located in Arizona, New Mexico, and Texas. Sales proceeds from these dispositions totaled $21.4 million and generated gains of $14.1 million.

Subsequent to March 31, 2009, we sold an unconsolidated joint venture interest in a property located in Colorado with sales proceeds of approximately $15.0 million, which were reduced by the release of a debt obligation of $11.7 million.

New Development and Capital Expenditures At March 31, 2009, we had 25 projects under construction or in preconstruction stages with a total square footage of approximately 6.7 million. These properties are slated to be completed over the next one to four years, and we expect our total investment on these properties to be $465.8 million.

Our new development projects are financed initially under our revolving credit facilities, using available cash generated from dispositions of properties, cash flow generated by our operating properties or proceeds from equity offerings.

Capital expenditures for additions to the existing portfolio, acquisitions, new development and our share of investments in unconsolidated real estate joint ventures and partnerships totaled $58.9 million and $97.1 million for the three months ended March 31, 2009 and 2008, respectively. We have entered into commitments aggregating $98.1 million comprised principally of construction contracts which are generally due in 12 to 36 months.

Financing Activities

Debt
Total debt outstanding was $3.2 billion at March 31, 2009. Total debt at March 31, 2009 included $2.7 billion of which interest rates are fixed and $478.3 million, including the effect of $50 million of interest rate swaps, that bears interest at variable rates. Additionally, debt totaling $1.0 billion was secured by operating properties while the remaining $2.1 billion was unsecured. At March 31, 2009, we had $30.6 million invested in overnight cash instruments.

We have a $575 million unsecured revolving credit facility held by a syndicate of banks. This unsecured revolving facility expires in February 2010 and provides a one year extension option available at our request. Borrowing rates . . .