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 71.4 million square feet. We have a diversified tenant base with our largest tenant comprising only 2.5% of total rental revenues during 2009.

Our long-term strategy is to focus on increasing funds from operations ("FFO") and shareholder value. 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 needed to address our upcoming debt maturities. Accordingly, in April 2009, we issued 32.2 million common shares of beneficial interest ("common shares") resulting in additional liquidity of $439.1 million. These proceeds were used to fund the repurchases through July 2009 of $504.9 million principal of unsecured fixed rate medium term notes, 7% senior unsecured notes and 3.95% convertible senior unsecured notes, significantly reducing our debt maturities for the years 2009 through 2011. Although our 3.95% convertible senior unsecured notes do not mature till 2026, we believe market conditions make it highly probable they will be put back to us in 2011.

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 the pricing and the availability of both debt and equity capital. Our strategy for the 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 June 30, 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 378 developed income-producing properties and 24 properties under various stages of construction and development. The total number of centers includes 318 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 28.9 million square feet.

We had approximately 7,100 leases with 5,200 different tenants at June 30, 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 93.6% at June 30, 2008 to 90.9% at June 30, 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 603 new leases or renewals during the first six months of 2009 totaling 2.9 million square feet, increasing rental rates an average of 5.9% on a cash basis.

New Development
At June 30, 2009, we had 24 properties in various stages of development. We have invested $391.5 million to date on these projects and, at completion, we estimate our total investment to be $448.8 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, four properties are projected to stabilize during 2009 with our estimated total investment of $69.0 million and a projected return on investment of 9.2%.

We have approximately $119.2 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 $18.1 million from this program during the first half of 2009. Our 2009 business plan calls for no additional material 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 and current economic conditions have 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 first half of 2009 and we do not anticipate any purchases for the remainder of the year.

As of 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. While we continue to pursue new joint relationships, it is uncertain whether we will be successful in completing any additional transactions in 2009.

Joint venture fee income for the first half of 2009 was approximately $3.2 million or a decrease of $.3 million over the prior year. This fee income is based upon revenues, net income and in some cases appraised property values. Due to decreases in these factors at our unconsolidated joint ventures, joint venture fee income has declined. We anticipate these fees will remain consistent with the first half of 2009.

Dispositions
During the first half of 2009, we sold four operating properties and four buildings at three operating properties, for $62.7 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.

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 June 30, 2009 to the Three Months Ended June 30, 2008

Revenues
Total revenues were $146.9 million in the second quarter of 2009 versus $152.3 million in the second quarter of 2008, a decrease of $5.4 million or 3.5%. This decrease resulted from a decrease in net rental revenues.

This decrease in net rental revenues resulted primarily from a decline in occupancy and an increase in bad debt expense of $1.1 million from reserves associated with the weakened economy.

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

                    2009       2008

Shopping Centers     92.1 %     94.2 %
Industrial           87.7 %     91.9 %
Total                90.9 %     93.6 %

Expenses
Total expenses for the second quarter of 2009 were $91.8 million versus $89.7 million in the second quarter of 2008, an increase of $2.1 million or 2.3%.

This increase resulted primarily from an increase in operating expenses and net ad valorem taxes each totaling $1.4 million due primarily to new development completions and redevelopments. Operating expenses were further increased by management fees due to the increase in fair value of assets held in a grantor trust related to our deferred compensation plan. Contributing to the increase in net ad valorem taxes was the cessation of carrying cost capitalization for land that is held for development and development completions. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of net rental revenues were 32.3% and 29.3% in 2009 and 2008, respectively.

Interest Expense, net
Net interest expense totaled $39.5 million for the second quarter of 2009, down
$1.1 million or 2.6% from the second quarter of 2008. The components of net
interest expense were as follows (in thousands):

                                                           Three Months Ended
                                                                June 30,
                                                            2009          2008

Gross interest expense                                   $   41,648     $ 45,067
Amortization of convertible bond discount                     1,810        2,122
Over-market mortgage adjustment of acquired properties       (1,140 )     (1,675 )
Capitalized interest                                         (2,822 )     (4,962 )

Total                                                    $   39,496     $ 40,552

Gross interest expense totaled $41.6 million in the second quarter of 2009, down $3.4 million or 7.6% from the second quarter of 2008. The decrease in gross interest expense was due primarily to the decrease in the weighted average debt outstanding from $3.1 billion in 2008 to $2.8 billion in 2009. Offsetting this decrease is an increase in the weighted average interest rate from 5.5% in 2008 to 5.8% in 2009. Capitalized interest decreased $2.1 million as a result of development completions and the cessation of carrying costs capitalization on several new development projects.

Interest and Other Income, net
Net interest and other income was $3.6 million in the second quarter of 2009 versus $1.7 million in the second quarter of 2008, an increase of $1.9 million or 111.8%. This increase resulted primarily from the fair value increase of $1.5 million in the assets held in a grantor trust related to our deferred compensation plan.

Equity in Earnings of Real Estate Joint Ventures and Partnerships, net Our equity in earnings of real estate joint ventures and partnerships was $3.9 million in the second quarter of 2009 versus $5.1 million in the second quarter of 2008, a decrease of $1.2 million or 23.5%. This decrease results primarily from a decline in income from our investments due to the cessation of carrying cost capitalization on several new development properties, a decline in occupancy and completions of new development and other capital activities.

Gain on Redemption of Convertible Senior Unsecured Notes The gain of $8.9 million resulted from the purchase and cancellation of $82.3 million of our 3.95% convertible senior unsecured notes at a discount to par value.

Gain on Merchant Development Sales
Gain on merchant development sales of $4.0 million in the second quarter of 2009 resulted primarily from the sale of an unconsolidated joint venture interest for a shopping center in Colorado. The gain in the second quarter of 2008 of $6.3 million resulted primarily from the sale of 10 land parcels and the realization of deferred gains of $3.7 million that related to the sale of two land parcels in prior periods.

Benefit (Provision) for Income Taxes
The increase in the tax benefit of $3.8 million is attributable to our taxable REIT subsidiary for the utilization of an interest expense disallowance and a NOL carry forward resulting from a change in the calculation of bonus depreciation.

Results of Operations
Comparison of the Six Months Ended June 30, 2009 to the Six Months Ended June 30, 2008

Revenues
Total revenues were $295.4 million in the first six months of 2009 versus $303.0 million in the first six months of 2008, a decrease of $7.6 million or 2.5%. This decrease resulted from a decrease in net rental revenues of $8.9 million, which is offset by an increase in other income of $1.3 million.

The decrease in net rental revenues of $8.9 million resulted primarily from a decline in occupancy and an increase in bad debt expense of $2.7 million from write-offs associated with the weakened economy. The increase in other income of $1.3 million resulted 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     92.1 %     94.2 %
Industrial           87.7 %     91.9 %
Total                90.9 %     93.6 %

Expenses
Total expenses in the first six months of 2009 were $178.7 million versus $182.5 million in the first six months of 2008, a decrease of $3.8 million or 2.1%.

This decrease resulted primarily from decreases in depreciation and amortization expense and general and administrative expenses of $4.2 million and $0.9 million, respectively. The decrease in depreciation and amortization resulted primarily from an acceleration of depreciation in the amount of $13.0 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 general and administrative expenses resulted primarily from a reduction in our workforce. Offsetting this $5.1 million decrease is an increase in net ad valorem taxes of $2.1 million, which is associated with development completions, redevelopments and the cessation of carrying cost capitalization for land that is held for development. Overall, direct operating costs and expenses (operating and net ad valorem taxes) of operating our properties as a percentage of rental revenues were 30.8% and 29.4% in 2009 and 2008, respectively.

Interest Expense, net
Net interest expense totaled $79.1 million in the first six months of 2009, up
$1.0 million or 1.2% from the first six months of 2008. The components of net
interest expense were as follows (in thousands):

                                                            Six Months Ended
                                                                June 30,
                                                           2009         2008

Gross interest expense                                   $ 83,441     $  87,282
Amortization of convertible bond discount                   3,888         4,224
Over-market mortgage adjustment of acquired properties     (2,257 )      (3,276 )
Capitalized interest                                       (6,019 )     (10,140 )

Total                                                    $ 79,053     $  78,090

Gross interest expense totaled $83.4 million in the first six months of 2009, down $3.8 million or 4.4% from the first six months of 2008. The decrease in gross interest expense was due primarily to the decrease in the weighted average debt outstanding from $3.1 billion in 2008 to $3.0 billion in 2009 and the decrease in the weighted average interest rate of from 5.5% in 2008 to 5.4% in 2009. The decrease in over-market mortgage adjustment of acquired properties of $1.0 million resulted primarily from loan payoffs in 2008. Capitalized interest decreased $4.1 million as a result of development completions and the cessation of carrying costs capitalization on several new development properties.

Interest and Other Income, net
Net interest and other income was $4.9 million in the first six months of 2009 versus $2.7 million in the first six months of 2008, an increase of $2.2 million or 81.5%. This increase resulted primarily from the fair value increase in the assets held in a grantor trust related to our deferred compensation plan.

Equity in Earnings of Real Estate Joint Ventures and Partnerships, net Our equity in earnings of real estate joint ventures and partnerships was $7.5 million in the first six months of 2009 versus $10.4 million in the first six months of 2008, a decrease of $2.9 million or 27.9%. This decrease results primarily from a decline in income from our investments due to the cessation of carrying cost capitalization on several new development properties, a decline in occupancy, the timing of merchant development gains and completions of new development and other capital activities.

Gain on Redemption of Convertible Senior Unsecured Notes The gain of $8.9 million resulted from the purchase and cancellation of $82.3 million of our 3.95% convertible senior unsecured notes at a discount to par value.

Gain on Merchant Development Sales
Gain on merchant development sales of $18.1 million in the first six months of 2009 resulted primarily from the gain on sale of a land parcel in New Mexico and the sale of an unconsolidated joint venture interest for a shopping center in Colorado. The gain on merchant development sales of $6.8 million in the first six months of 2008 resulted primarily from the sale of 12 land parcels plus the realization of the deferred gain totaling $2.1 million that related to the sale of a prior year land parcel.

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. We anticipate that cash flows from operating activities primarily in the form of rental revenues will 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 June 30, 2009, no amounts were outstanding under our $575 million revolving credit facility and our $30 million credit facility, which we use for cash management purposes. As of July 31, 2009, we had $320.0 million outstanding under these facilities.

The current credit market turmoil 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 July 31, 2009 we completed: 1) an . . .