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8-K - FORM 8-K - Whitestone REIT Operating Partnership, L.P.a8-kxearningsrelease2012x0.htm
EX-99.1 - EXHIBIT 99.1 - Whitestone REIT Operating Partnership, L.P.exhibit991pressreleaseofwh.htm









CORPORATE PROFILE
 
 
 
 
 
 
 
 
 
NYSE Amex: WSR
 
Whitestone REIT (NYSE Amex: WSR) is a fully integrated real estate investment trust that owns,
Class B Common Shares
 
operates and redevelops Community Centered Properties TM, which are visibly located properties in
 
 
established or developing, culturally diverse neighborhoods. As of March 31, 2012, we owned
 
 
45 Community Centered Properties TM with approximately 3.6 million square feet of gross leasable area, located in five of the top markets in the United States in terms of
45 Community Centers
 
population growth: Houston, Dallas, San Antonio, Phoenix and Chicago.
3.6 Million Sq. Ft. of GLA
 
Headquartered in Houston, Texas, we were founded in 1998.

941 Tenants
 
 
 
 
We focus on value-creation in our properties, as we market, lease and manage our properties. We
5 Top Growth Markets
 
invest in properties that are or can become Community Centered Properties TM from which our
Houston
 
tenants deliver needed services to the surrounding community. We focus on niche properties with
Dallas
 
smaller rental spaces that present opportunities for attractive returns.
San Antonio
 
 
Phoenix
 
Our strategic efforts target entrepreneurial tenants at each property who provide services to their
Chicago
 
respective surrounding communities. Operations include an internal management structure, providing
 
 
cost-effective services to locally-oriented smaller space tenants. Multi-cultural community focus sets
Fiscal Year End
 
us apart from traditional commercial real estate operators. We value diversity on our team and maintain
12/31
 
in-house leasing, property management, marketing, construction and maintenance departments with
 
 
culturally diverse and multi-lingual associates who understand the particular needs of our tenants
Common Shares &
 
and neighborhoods.
Units Outstanding:
 
 
Class B common: 10.2 Million*
 
We have a diverse tenant base concentrated on service offerings such as medical,
Class A common: 1.7 Million
 
educational and casual dining. These tenants tend to occupy smaller spaces (less than
Operating Partnership Units:
 
3,000 square feet) and , as of March 31, 2012, provided a 68% premium rental rate
0.9 Million
 
compared to our larger space tenants. The largest of our 941 tenants comprises less
 
 
than 2.0% of our revenues.
 
 
 
 
 
 
 
 
 
Distribution (per share / unit):
 
Investor Relations:
 
 
 
 
 
 
Quarter $0.2850
 
Whitestone REIT
 
 
 
 
 
 
Annualized $1.14
 
Anne I. Gregory, Vice President, Investor Relations & Marketing
Dividend Yield 8.4%**
 
2600 South Gessner Suite 500, Houston, Texas
 
77036
 
 
 
 
713.435.2221 email: ir@whitestonereit.com
 
website: www.whitestonereit.com
Board of Trustees:
 
 
 
 
 
 
James C. Mastandrea
 
ICR Inc. - Brad Cohen 203.682.8211
 
 
Daryl J. Carter
 
 
 
 
 
 
Daniel G. DeVos
 
Analyst Coverage:
 
 
 
 
 
 
Donald F. Keating
 
BMO Capital Markets Corp.
 
J.J.B. Hilliard, W.L. Lyons, LLC
 
JMP Securities
 
Wunderlich Securities, Inc.
Jack L. Mahaffey
 
Paul Adornato, CFA
 
Carol L. Kemple
 
Mitch Germain
 
Merril Ross
 
 
212.885.4170
 
502.588.1839
 
212.906.3546
 
703.669.9255
* As of May 8, 2012
 
Paul.Adornato@bmo.com
 
ckemple@hilliard.com
 
mgermain@jmpsecurities.com
 
mross@wundernet.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ladenburg Thalmann & Co. Inc
** Based on Class B common
 
 
 
 
 
 
 
Jeffrey S. Langbaum
share price of $13.51 as of close
 
 
 
 
 
 
 
212.409.2056
of market on May 8, 2012
 
 
 
 
 
 
 
jlangbaum@ladenburg.com

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Contact Whitestone REIT:
Anne Gregory, Vice President Marketing & Investor Relations
(713) 435 2221 ir@whitestonereit.com
 
 
WHITESTONE REIT ANNOUNCES OPERATING RESULTS FOR THE FIRST QUARTER 2012
 
Highlights (Year-Over-Year)
Occupancy of Operating Portfolio grew 3% to 87% as of March 31, 2012
Property net operating income of $6.8 million, an increase of 33%
FFO of $3.1 million, an increase of 48%
Net income of $793,000, an increase of 329%
EBITDA of $5.2 million, an increase of 41%


Houston, Texas, May 9, 2012 - Whitestone REIT (NYSE Amex: WSR - “Whitestone” or the “Company”), a fully integrated real estate company that owns, operates and re-develops Community Centered PropertiesTM, which are visibly located in established or developing culturally diverse neighborhoods, announced its financial results for the first quarter of 2012.
 
“Whitestone continues to acquire off market value add Community Center Properties at a discount to replacement cost.  During the past 18 months our new acquisitions have added to our core operating EBITDA, evidenced by the  year-over-year 41% increase in the first quarter of 2012.  A significant part of our growth is driven by our focus on our small space tenants that are entrepreneurial - community based service businesses that meet the needs of people living within a five mile radius of the properties we own," said James C. Mastandrea, Chairman and Chief Executive Officer.  "During the quarter, we continued pre-acquisition due diligence activities on many properties that meet our acquisition criteria, drawing from our substantial pipeline of community centered properties. We expect that over the coming quarters we will meaningfully add select properties to our portfolio. We are well positioned, with a strong balance sheet and an unsecured line of credit, to utilize our financial flexibility and be nimble and quick when the right opportunity is uncovered. Our experienced team of Whitestone associates continues to work together integrating our acquisitions with our operations to create additional long-term value for our shareholders.”
 
Highlights: First Quarter 2012 Compared to First Quarter 2011
 

Net income attributable to Whitestone REIT was $793,000, or $0.07 per diluted common share for the first quarter 2012, compared to $185,000 or $0.03 per diluted common share for the same period in 2011.

Funds from Operations ("FFO") for the first quarter 2012 was $3.1 million, or $0.25 per diluted common share and operating partnership unit ("OP unit") , as compared to $2.1 million or $0.29 per diluted common share and OP unit for the first quarter 2011.

Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA") for the first quarter 2012 was $5.2 million as compared to $3.7 million for the first quarter 2011.
 
Property net operating income (“NOI”) increased 33% to $6.8 million for the first quarter 2012 as compared to $5.1 million for the same period in 2011. The increase of $1.7 million is primarily attributable to NOI of new acquisitions.
 
The Company declared a quarterly cash distribution of $0.285 per common share and OP unit, which was paid in three equal installments of $0.095 in January, February and March 2012. The distribution rate has remained the same since the distribution paid on July 8, 2010. In February 2012, the Company also declared its second quarter cash distribution of $0.285 per common share and OP unit, which has been paid or will be paid in three equal installments of $0.095 in April, May and June 2012.


 
First Quarter 2012 Leasing Highlights

The Company's Operating Portfolio Occupancy Rate increased to 87% as of March 31, 2012 from 84% as of March 31, 2011.

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The Company defines Operating Portfolio Occupancy Rate as physical occupancy in all properties, excluding (i) new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership and (ii) properties that are undergoing significant redevelopment or re-tenanting. Total physical property occupancy, which includes properties under redevelopment, undergoing significant retenanting and recent acquisitions, was 85% as of March 31, 2012, an increase of 3% from 82% as of March 31, 2011.

The Company signed 90 new and renewal leases representing 159,000 square feet during the first quarter of 2012, primarily with tenants that required less than 3,000 square feet in multi-cultural neighborhoods, which drives premium rents. A summary of leasing activity is shown below:
 
Increase in total number of tenants by 3% from year end 2011 to 941 from 915;
An increase of 13% in total lease value of new and renewal leases signed: $6.8 million in the first quarter of 2012 versus $6.0 million in the same period of 2011;
An increase of 13% in the number of new and renewal leases signed: 90 in the first quarter of 2012 versus 80 in the same period of 2011; and
Total new and renewal leases signed of 159,000 square feet in the first quarter of 2012, with an average size of 1,769 square feet as compared to 218,000 square feet and and average size of 2,721 in the same period of 2011.
 
Community Centered PropertiesTM Portfolio Statistics

As of March 31, 2012, Whitestone owned 45 Community Centered PropertiesTM with approximately 3.6 million square feet of gross leasable area, including two development land parcels, located in five of the top markets in the United States in terms of population growth: Houston, Dallas, San Antonio, Phoenix and Chicago.
 
The Company's strategic efforts target entrepreneurial tenants that provide services to the surrounding neighborhood at each Community Centered PropertyTM. These tenants tend to occupy smaller spaces (less than 3,000 square feet) and, as of March 31, 2012, provided a 68% premium rental rate compared to Whitestone's larger space tenants. The Company currently services 941 tenants throughout its portfolio.  No single tenant accounted for more than 2.0% of the Company's annualized base rental revenues as of March 31, 2012.

Balance Sheet
 
Whitestone had 19 properties, unencumbered by debt as of March 31, 2012, with an undepreciated cost basis of $115 million. The total undepreciated values of the Company's real estate assets and real estate indebtedness were $295 million and $134 million, respectively, as of March 31, 2012. As of March 31, 2012, 69% of the Company's debt was fixed-rate and the Company's weighted average interest rate for the quarter was 5.2%.
 
On February 27, 2012, Whitestone closed on a new three-year $125 million unsecured revolving credit facility. The new facility replaces the existing $20 million facility with Bank of Montreal. The Company plans to use the new facility for general corporate purposes, primarily for acquisitions and redevelopment of existing properties in its portfolio. BMO Capital Markets served as the Sole Lead Arranger and Sole Book Runner. Bank of Montreal also serves as the Administrative Agent. U. S. Bank National Association served as Syndication Agent, while Capital One, National Association, and Wells Fargo Bank, National Association served as Co-Documentation Agents. Also included in the lender group is MidFirst Bank. As of March 31, 2012, $107 million was available under the credit facility.
 
Supplemental Financial Information

Further details regarding Whitestone REIT's results of operations, communities and tenants can be accessed at the Company's website at www.whitestonereit.com.


Webcast and Conference Call

The Company will host a conference call for investors and other interested parties on Wednesday, May 9, 2012 at 5:00 p.m. (Eastern Time). Interested parties can listen to the call live on the internet through the Investor Relations section of the Company's website, www.whitestonereit.com, using the News/Events - Press Releases tab. The call is also accessible via telephone by dialing 1-(800) 575-5790 for domestic participants or 1-(719) 325-2122 for international participants and entering the passcode 4632897. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. Those dialing in should call in at least 10 minutes prior to the start.

3


 
The conference call will be recorded and a telephone replay will be available through May 23, 2012, by dialing 1-(877) 870-5176 for domestic participants or 1-(858) 384-5517 for international participants and entering the passcode 4632897. The replay of the call will also be available on the Company's website.
 
The earnings release and supplemental data package will be located in the Investor Relations section of the website on the News/Events Press Releases tab. For those without internet access, the first quarter 2012 earnings release and supplemental data package will be available by mail upon request. To receive a copy, please call the Company's Investor Relations line at (713) 435-2221.
 

About Whitestone REIT

Whitestone REIT (NYSE Amex: WSR) is a fully integrated real estate investment trust that owns, operates and redevelops Community Centered PropertiesTM, which are visibly located properties in established or developing culturally diverse neighborhoods.  Whitestone focuses on value-creation in its Centers, as it markets, leases and manages its Centers to match tenants with the shared needs of surrounding neighborhoods.  Operations are structured for providing cost-effective service to local service-oriented smaller space tenants (less than 3,000 square feet). Whitestone has a diversified tenant base concentrated on service offerings including medical, education, and casual dining. The largest of its 941 tenants comprise less than 2% of its rental revenues. Headquartered in Houston, Texas and founded in 1998, the Company is internally managed with a portfolio of commercial properties in Texas, Arizona, and Illinois. For additional information about the Company, please visit www.whitestonereit.com. The Investor Relations section of the Company's website has links to SEC filings, news releases, financial reports and investor newsletters.

 
Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology, such as "may," "will," "expect," "intend," "anticipate," "believe," "continue" or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters. Examples of such statements in this press release include, but are not limited to, the strength of the Company's leasing portfolio and lease renewal activities.
 
The following are some of the factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: the Company's ability to successfully identify and consummate suitable acquisitions; current adverse market and economic conditions; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic and regulatory changes; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code; and other factors detailed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q and other documents we file with the Securities and Exchange Commission.
 
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We cannot guarantee the accuracy of any such forward-looking statements contained in this press release, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 
Non-GAAP Financial Measures
This release contains the supplemental non-GAAP financial measures of FFO, FFO-Core, NOI and EBITDA. Following are definitions and reconciliations of these metrics to their most comparable GAAP metric.
 
FFO: Management believes that FFO is a useful measure of the Company's operating performance. The Company computes FFO as defined by the National Association of Real Estate Investment Trusts, or NAREIT, which states that FFO should

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represent net income (loss) available to common shareholders (computed in accordance with GAAP) plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures and excluding gains or losses on the sale of operating real estate assets and extraordinary items. In October 2011, NAREIT communicated to its members that the exclusion of impairment writedowns of depreciable real estate is consistent with the definition of FFO, and prior periods should be restated to be consistent with this guidance. As the Company has not had any impairments in the past five years, the Company was not required to restate our FFO for prior periods. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company's performance or to cash flow from operations as a measure of liquidity or ability to make distributions.

Further, other REITs may use different methodologies for calculating FFO, and accordingly, the Company's FFO may not be comparable to other REITs. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding OP units for the periods presented. Management considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, management believes that FFO provides a more meaningful and accurate indication of the Company's performance and useful information for the investment community to compare Whitestone to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.
 
FFO-Core: Management believes that the computation of FFO in accordance with NAREIT's definition includes certain items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of the Company's period-over-period performance. These items include, but are not limited to, legal and professional fees, gains and losses on insurance claim settlements and acquisition costs. Therefore, in addition to FFO, management uses FFO-Core, which the Company defines to exclude such items. Management believes that these adjustments are appropriate in determining FFO-Core as they are not indicative of the operating performance of the Company's assets. In addition, the Company believes that FFO-Core is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as many REITs provide some form of adjusted or modified FFO.
 
NOI: Management believes that NOI is a useful measure of the Company's property operating performance. The Company defines NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes and gain or loss on sale or disposition of assets, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact that factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company's property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties.
 
EBITDA: Management believes that EBITDA is an appropriate supplemental measure of operating performance to net income attributable to the Company. The Company defines EBITDA as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes) and general and administrative expenses. Other REITs may use different methodologies for calculating EBITDA, and accordingly, the Company's EBITDA may not be comparable to other REITs. Management believes that EBITDA provides useful information to the investment community about the Company's operating performance when compared to other REITs since EBITDA is generally recognized as a standard measure. However, EBITDA should not be viewed as a measure of the Company's overall financial performance since it does not reflect depreciation and amortization, involuntary conversion, interest expense, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties.



5



Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 
 
March 31, 2012
 
December 31, 2011
 
 
(unaudited)
 
 
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
295,184

 
$
292,360

Accumulated depreciation
 
(47,481
)
 
(45,472
)
Total real estate assets
 
247,703

 
246,888

Cash and cash equivalents
 
8,288

 
5,695

Marketable securities
 
4,034

 
5,131

Escrows and acquisition deposits
 
2,618

 
4,996

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
6,472

 
6,053

Unamortized lease commissions and loan costs
 
4,752

 
3,755

Prepaid expenses and other assets
 
875

 
975

Total assets
 
$
274,742

 
$
273,493

LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
134,208

 
$
127,890

Accounts payable and accrued expenses
 
6,049

 
9,017

Tenants' security deposits
 
2,277

 
2,232

Dividends and distributions payable
 
3,649

 
3,647

Total liabilities
 
146,183

 
142,786

Commitments and contingencies:
 
 
 
 
Equity:
 
 
 
 
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding at March 31, 2012 and December 31, 2011, respectively
 

 

Class A common shares, $0.001 par value per share; 50,000,000 shares authorized; 1,737,438 and 2,603,292 issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
 
1

 
2

Class B common shares, $0.001 par value per share; 350,000,000 shares authorized; 10,157,693 and 8,834,563 issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
 
9

 
8

Additional paid-in capital
 
162,870

 
158,127

Accumulated other comprehensive loss
 
(413
)
 
(1,119
)
Accumulated deficit
 
(43,692
)
 
(41,060
)
Total Whitestone REIT shareholders' equity
 
118,775

 
115,958

Noncontrolling interest in subsidiary
 
9,784

 
14,749

Total equity
 
128,559

 
130,707

Total liabilities and equity
 
$
274,742

 
$
273,493






6


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
Property revenues
 
 
 
 
Rental revenues
 
$
8,128

 
$
6,671

Other revenues
 
2,298

 
1,415

Total property revenues
 
10,426

 
8,086

 
 
 
 
 
Property expenses
 
 
 
 
Property operation and maintenance
 
2,352

 
1,954

Real estate taxes
 
1,310

 
1,020

Total property expenses
 
3,662

 
2,974

 
 
 
 
 
Other expenses (income)
 
 
 
 
General and administrative
 
1,641

 
1,464

Depreciation and amortization
 
2,544

 
1,989

Interest expense
 
1,712

 
1,402

Interest, dividend and other investment income
 
(70
)
 
(60
)
Total other expense
 
5,827

 
4,795

 
 
 
 
 
Income before loss on disposal of assets and income taxes
 
937

 
317

 
 
 
 
 
Provision for income taxes
 
(65
)
 
(53
)
Loss on sale or disposal of assets
 
(12
)
 
(18
)
 
 
 
 
 
Net income
 
860

 
246

 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
67

 
61

 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
793

 
$
185



7


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
Basic and Diluted Earnings Per Share:
 
 
 
 
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.07

 
$
0.03

 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
Basic
 
11,624

 
5,479

Diluted
 
11,638

 
5,499

 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
Net income
 
$
860

 
$
246

 
 
 
 
 
Other comprehensive gain
 
 
 
 
 
 
 
 
 
Unrealized gain on available-for-sale marketable securities
 
766

 

 
 
 
 
 
Comprehensive income
 
1,626

 
246

 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
127

 
61

 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
1,499

 
$
185




8


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income
 
$
860

 
$
246

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
2,283

 
1,879

Amortization of deferred loan costs
 
261

 
110

Gain on sale of marketable securities
 
(1
)
 
(38
)
Loss on sale or disposal of assets
 
12

 
18

Bad debt expense
 
132

 
69

Share-based compensation
 
78

 
78

Changes in operating assets and liabilities:
 
 
 
 
Escrows and acquisition deposits
 
2,378

 
3,021

Accrued rent and accounts receivable
 
(551
)
 
(535
)
Unamortized lease commissions and loan costs
 
(280
)
 
(133
)
Prepaid expenses and other assets
 
177

 
266

Accounts payable and accrued expenses
 
(2,980
)
 
(2,220
)
Tenants' security deposits
 
45

 
19

Net cash provided by operating activities
 
2,414

 
2,780

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Additions to real estate
 
(2,893
)
 
(1,042
)
Investments in marketable securities
 
(750
)
 
(1,865
)
Proceeds from sales of marketable securities
 
2,614

 
908

Net cash used in investing activities
 
(1,029
)
 
(1,999
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Distributions paid to common shareholders
 
(3,322
)
 
(1,616
)
Distributions paid to OP unit holders
 
(301
)
 
(515
)
Payments of exchange offer costs
 
(225
)
 

Proceeds from notes payable
 
6,956

 
2,905

Repayments of notes payable
 
(713
)
 
(731
)
Payments of loan origination costs
 
(1,187
)
 
(81
)
Net cash provided by (used in) financing activities
 
1,208

 
(38
)
 
 
 
 
 
Net increase in cash and cash equivalents
 
2,593

 
743

Cash and cash equivalents at beginning of period
 
5,695

 
17,591

Cash and cash equivalents at end of period
 
$
8,288

 
$
18,334

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
1,671

 
$
1,404

Non cash investing and financing activities:
 
 
 
 
Disposal of fully depreciated real estate
 
$
11

 
$
1

Financed insurance premiums
 
31

 
550

Value of shares issued under dividend reinvestment plan
 
22

 

Accrued offering costs
 
54

 
138

Value of Class B shares exchanged for OP units
 
4,917

 

Change in fair value of available-for-sale securities
 
766

 



9


Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
FFO AND FFO-CORE
 
 
 
 
Net income attributable to Whitestone REIT
 
$
793

 
$
185

Depreciation and amortization of real estate assets
 
2,249

 
1,850

Loss on disposal of assets
 
12

 
18

Net income attributable to noncontrolling interests
 
67

 
61

FFO
 
3,121

 
2,114

 
 
 
 
 
Acquisition costs
 
64

 
1

Legal settlement
 
(131
)
 

FFO-Core
 
$
3,054

 
$
2,115

 
 
 
 
 
FFO PER SHARE AND OP UNIT CALCULATION:
 
 
 
 
Numerator:
 
 
 
 
FFO
 
$
3,121

 
$
2,114

Distributions paid on unvested restricted Class A common shares
 
(4
)
 
(6
)
FFO excluding amounts attributable to unvested restricted Class A common shares
 
3,117

 
2,108

FFO-Core excluding amounts attributable to unvested restricted Class A common shares
 
3,050

 
2,109

 
 
 
 
 
Denominator:
 
 
 
 
Weighted average number of total common shares - basic
 
11,624

 
5,479

Weighted average number of total noncontrolling OP units - basic
 
992

 
1,815

Weighted average number of total commons shares and noncontrolling OP units - basic
 
12,616

 
7,294

 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
Unvested restricted shares
 
14

 
20

Weighted average number of total common shares and noncontrolling OP units - dilutive
 
12,630

 
7,314

 
 
 
 
 
FFO per share and unit - basic
 
$
0.25

 
$
0.29

FFO per share and unit - diluted
 
$
0.25

 
$
0.29

 
 
 
 
 
FFO-Core per share and unit - basic
 
$
0.24

 
$
0.29

FFO-Core per share and unit - diluted
 
$
0.24

 
$
0.29






10


Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)
 
 
Three Months Ended March 31,
 
 
2012
 
2011
 
 
 
 
 
PROPERTY NET OPERATING INCOME ("NOI")
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
793

 
$
185

General and administrative expenses
 
1,641

 
1,464

Depreciation and amortization
 
2,544

 
1,989

Interest expense
 
1,712

 
1,402

Interest, dividend and other investment income
 
(70
)
 
(60
)
Provision for income taxes
 
65

 
53

Loss on disposal of assets
 
12

 
18

Net income attributable to noncontrolling interests
 
67

 
61

NOI
 
$
6,764

 
$
5,112

 
 
 
 
 
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
 
 
 
 
AND AMORTIZATION ("EBITDA")
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
793

 
$
185

Depreciation and amortization
 
2,544

 
1,989

Interest expense
 
1,712

 
1,402

Provision for income taxes
 
65

 
53

Loss on disposal of assets
 
12

 
18

Net income attributable to noncontrolling interests
 
67

 
61

EBITDA
 
$
5,193

 
$
3,708



 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2012
 
2011
 
2011
 
2011
Net income (loss) attributable to Whitestone REIT
 
$
793

 
$
556

 
$
578

 
$
(196
)
Depreciation and amortization
 
2,544

 
2,239

 
2,161

 
1,976

Interest expense
 
1,712

 
1,451

 
1,430

 
1,445

Provision for income taxes
 
65

 
60

 
54

 
58

Loss (gain) on disposal of assets
 
12

 
129

 
(1
)
 

Net income attributable to noncontrolling interests
 
67

 
94

 
97

 
(42
)
EBITDA
 
$
5,193

 
$
4,529

 
$
4,319

 
$
3,241




11


Whitestone REIT and Subsidiaries
OTHER FINANCIAL INFORMATION
(in thousands, except number of properties and employees)

 
 
Three Months Ended March 31,
 
 
2012
 
2011
 
 
 
 
 
Other Financial Information:
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
566

 
$
516

Leasing commissions (1)
 
$
204

 
$
136

Scheduled debt principal payments
 
$
694

 
$
604

Straight line rent income (loss)
 
$
(71
)
 
$
226

Market rent amortization income from acquired leases
 
$
4

 
$
9

Non-cash share-based compensation expense
 
$
78

 
$
78

Non-real estate depreciation and amortization
 
$
33

 
$
29

Amortization of loan fees
 
$
261

 
$
110

Acquisition costs
 
$
64

 
$
1

Undepreciated value of unencumbered properties
 
$
114,528

 
$
61,903

Number of unencumbered properties
 
19

 
14

Full time employees
 
59

 
52




(1)
Does not include first generation costs for tenant improvements and leasing commission costs needed for new acquisitions or redevelopment of a property to bring the property to operating standards for its intended use.



12


Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(in thousands)
 
 
As of March 31, 2012
 
 
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
 
 
Equity Capitalization:
 
 
 
 
 
 
 
 
Class A common shares outstanding
 
13.6
%
 
1,737

 
 
 
 
Class B common shares outstanding
 
79.3
%
 
10,158

 
 
 
 
Operating partnership units outstanding
 
7.1
%
 
907

 
 
 
 
Total
 
100.0
%
 
12,802

 
 
 
 
 
 
 
 
 
 
 
 
 
Market price of Class B common shares as of
 
 
 
 
 
 
 
 
March 31, 2012
 
 
 
$
13.04

 
 
 
 
 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
166,938

 
57
%
 
 
 
 
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
 
 
Outstanding debt
 
 
 
$
134,208

 
 
 
 
Less: Cash and cash equivalents
 
 
 
(8,288
)
 
 
 
 
 
 
 
 
125,920

 
43
%
 
 
 
 
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
 
 
March 31, 2012
 
 
 
$
292,858

 
100
%
 
 


SELECTED RATIOS:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2012
 
2011
 
2011
 
2011
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA
 
$
5,193

 
$
4,529

 
$
4,319

 
$
3,241

Interest expense
 
1,712

 
1,451

 
1,430

 
1,445

Ratio of interest expense to EBITDA
 
3.0

 
3.1

 
3.0

 
2.2

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Undepreciated real estate assets
 
$
295,184

 
$
292,360

 
$
241,488

 
$
215,651

 
 
 
 
 
 
 
 
 
Outstanding debt
 
$
134,208

 
$
127,890

 
$
102,234

 
$
103,050

Less: Cash
 
(8,288
)
 
(5,695
)
 
(32,660
)
 
(57,776
)
Outstanding debt after cash
 
$
125,920

 
$
122,195

 
$
69,574

 
$
45,274

Ratio of debt to real estate assets
 
43
%
 
42
%
 
29
%
 
21
%

13


 Whitestone REIT and Subsidiaries
SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES
As of December 31, 2011
(in thousands)


TOTAL OUTSTANDING DEBT

Description
 
March 31, 2012
 
December 31, 2011
Fixed rate notes
 
 
 
 
$1.4 million 5.00% Note, due 2012
 
$
1,335

 
$
1,318

$14.1 million 5.695% Note, due 2013
 
14,062

 
14,110

$3.0 million 6.00% Note, due 2021 (1)
 
2,969

 
2,978

$10.0 million 6.04% Note, due 2014
 
9,281

 
9,326

$1.5 million 6.50% Note, due 2014
 
1,464

 
1,471

$11.2 million 6.52% Note, due 2015
 
10,726

 
10,763

$21.4 million 6.53% Notes, due 2013
 
19,363

 
19,524

$24.5 million 6.56% Note, due 2013
 
23,484

 
23,597

$9.9 million 6.63% Notes, due 2014
 
9,149

 
9,221

$0.5 million 3.25% Note, due 2012
 
18

 
23

Floating rate note
 
 
 
 

Unsecured line of credit LIBOR plus 2.75% to 3.75%, due 2015
 
18,000

 
11,000

$26.9 million LIBOR + 2.86% Note, due 2013
 
24,357

 
24,559

 
 
$
134,208

 
$
127,890



(1) 
The 6.00% interest rate is fixed through March 30, 2016. On March 31, 2016, the interest rate will be reset to the rate of interest for a five-year balloon note with a thirty year amortization as published by the Federal Home Loan Bank.


SCHEDULE OF DEBT MATURITIES
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2012
 
$
2,184

 
$
1,387

 
$
3,571

 
2.7
%
2013
 
2,644

 
77,677

 
80,321

 
59.8
%
2014
 
312

 
18,879

 
19,191

 
14.3
%
2015
 
169

 
28,146

 
28,315

 
21.1
%
2016
 
49

 

 
49

 
%
2017 and thereafter
 
236

 
2,525

 
2,761

 
2.1
%
Total
 
$
5,594

 
$
128,614

 
$
134,208

 
100.0
%



14


Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS

 
 
Gross Leasable Area as of
 
Occupancy as of
Community Center Properties
 
March 31, 2012
 
March 31, 2012
 
December 31, 2011
 
September 30, 2011
 
June 30, 2011
Retail
 
1,538,717

 
90
%
 
90
%
 
90
%
 
84
%
Office/Flex
 
1,201,672

 
87
%
 
86
%
 
86
%
 
85
%
Office
 
631,841

 
79
%
 
79
%
 
80
%
 
79
%
Total - Operating Portfolio
 
3,372,230

 
87
%
 
87
%
 
86
%
 
84
%
Redevelopment, New Acquisitions (1)
 
223,078

 
51
%
 
50
%
 
47
%
 
48
%
Total
 
3,595,308

 
85
%
 
84
%
 
84
%
 
81
%
 
(1) 
Includes new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership, and properties that are undergoing significant redevelopment or re-tenanting.

Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)
 
Percentage of Total Annualized Base Rental Revenues (2)
 
Initial Lease Date
 
Year Expiring
 
 
 
 
 
 
 
 
 
 
 
Sports Authority
 
San Antonio
 
$
495

 
1.5
%
 
1/1/2004
 
2015
University of Phoenix
 
San Antonio
 
415

 
1.3
%
 
10/18/2010
 
2018
Air Liquide America, L.P.
 
Dallas
 
387

 
1.2
%
 
8/1/2001
 
2013
Safeway Stores, Incorporated
 
Phoenix
 
344

 
1.0
%
 
12/22/2011
 
2021
X-Ray X-Press Corporation
 
Houston
 
280

 
0.8
%
 
7/1/1998
 
2019
Walgreen's #3766
 
Phoenix
 
279

 
0.8
%
 
8/9/2011
 
2049
Rock Solid Images
 
Houston
 
249

 
0.8
%
 
4/1/2004
 
2012
Eligibility Services
 
Dallas
 
249

 
0.7
%
 
6/6/2000
 
2012
Marshall's
 
Houston
 
248

 
0.7
%
 
5/12/1983
 
2013
Merrill Corporation
 
Dallas
 
248

 
0.7
%
 
12/10/2001
 
2014
Albertson's #979
 
Phoenix
 
235

 
0.7
%
 
8/9/2011
 
2022
Compass Insurance
 
Dallas
 
222

 
0.7
%
 
1/1/2006
 
2013
Fitness Alliance, LLC
 
Phoenix
 
216

 
0.7
%
 
8/17/2011
 
2021
River Oaks L-M, Inc.
 
Houston
 
212

 
0.6
%
 
10/15/1993
 
2014
Petsmart, Inc
 
San Antonio
 
199

 
0.6
%
 
1/1/2004
 
2018
 
 
 
 
$
4,278

 
12.8
%
 
 
 
 

(2) 
Annualized Base Rental Revenues represents the monthly base rent as of March 31, 2012 for each applicable tenant multiplied by 12.


15


Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended March 31,
 
 
2012
 
2011
RENEWALS
 
 
 
 
Number of Leases
 
48

 
43

Total SF (1)
 
77,655

 
121,099

Average SF
 
1,618

 
2,816

Total Lease Value
 
$
2,846,000

 
$
2,724,000

NEW LEASES
 
 
 
 
Number of Leases
 
42

 
37

Total SF (1)
 
81,512

 
96,593

Average SF
 
1,941

 
2,611

Total Lease Value
 
$
3,984,000

 
$
3,273,000

TOTAL LEASES
 
 
 
 
Number of Leases
 
90

 
80

Total SF (1)
 
159,167

 
217,692

Average SF
 
1,769

 
2,721

Total Lease Value
 
$
6,830,000

 
$
5,997,000




(1) 
Represents the square footage as the result of new, renewal, expansion and contraction leases.


16


Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per SF
 
Contractual Rent Per Sq. Ft. (4)
 
Prior Contractual Rent Per Sq. Ft. (5)
 
Annual Increase (Decrease) in Contractual Rent
 
Cash Basis Increase (Decrease) Over Prior Rent
 
Annual Increase (Decrease) in Straight-lined Rent
 
Straight-lined Basis Increase (Decrease) Over Prior Rent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
55

 
$
3,193,832

 
103,905

 
2.2

 
$
93,657

 
$
0.90

 
$
10.83

 
$
11.31

 
$
(49,133
)
 
(4
)%
 
$
15,847

 
1
 %
4th Quarter 2011
 
48

 
4,579,194

 
99,733

 
3.5

 
377,372

 
3.78

 
12.52

 
12.84

 
(25,744
)
 
(2
)%
 
147,687

 
12
 %
3rd Quarter 2011
 
42

 
1,794,549

 
72,165

 
2.6

 
95,407

 
1.32

 
9.64

 
10.78

 
(91,856
)
 
(11
)%
 
(61,707
)
 
(5
)%
2nd Quarter 2011
 
50

 
9,057,363

 
254,912

 
4.9

 
1,710,550

 
6.71

 
8.07

 
8.69

 
(156,257
)
 
(7
)%
 
(19,542
)
 
(1
)%
Total - 12 months
 
195

 
$
18,624,938

 
530,715

 
3.8

 
$
2,276,986

 
$
4.29

 
$
9.67

 
$
10.28

 
$
(322,990
)
 
(6
)%
 
$
82,285

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
11

 
$
543,891

 
18,634

 
3.2

 
$
18,444

 
$
0.99

 
$
9.91

 
$
12.36

 
$
(45,645
)
 
(20
)%
 
$
(26,157
)
 
(12
)%
4th Quarter 2011
 
11

 
2,019,419

 
35,866

 
4.7

 
282,255

 
7.87

 
10.60

 
10.62

 
(6,506
)
 
 %
 
112,079

 
38
 %
3rd Quarter 2011
 
19

 
1,192,312

 
39,147

 
3.0

 
77,725

 
1.99

 
8.53

 
9.59

 
(44,416
)
 
(11
)%
 
(24,749
)
 
(6
)%
2nd Quarter 2011
 
9

 
3,395,023

 
54,519

 
8.8

 
1,271,790

 
23.33

 
8.75

 
7.95

 
43,210

 
10
 %
 
13,053

 
3
 %
Total - 12 months
 
50

 
$
7,150,645

 
148,166

 
5.6

 
$
1,650,214

 
$
11.14

 
$
9.34

 
$
9.58

 
$
(53,357
)
 
(3
)%
 
$
74,226

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
44

 
$
2,649,941

 
85,271

 
2.0

 
$
75,213

 
$
0.88

 
$
11.03

 
$
11.07

 
$
(3,488
)
 
 %
 
$
42,004

 
5
 %
4th Quarter 2011
 
37

 
2,559,775

 
63,867

 
2.7

 
95,117

 
1.49

 
13.59

 
14.18

 
(19,238
)
 
(4
)%
 
35,608

 
2
 %
3rd Quarter 2011
 
23

 
602,237

 
33,018

 
2.1

 
17,682

 
0.54

 
10.95

 
12.34

 
(47,440
)
 
(11
)%
 
(36,958
)
 
(5
)%
2nd Quarter 2011
 
41

 
5,662,340

 
200,393

 
3.8

 
438,760

 
2.19

 
7.89

 
8.89

 
(199,467
)
 
(11
)%
 
(32,595
)
 
(2
)%
Total - 12 months
 
145

 
$
11,474,293

 
382,549

 
3.1

 
$
626,772

 
$
1.64

 
$
9.80

 
$
10.56

0
$
(269,633
)
 
(7
)%
 
$
8,059

 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

17


Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per SF
 
Contractual Rent Per Sq. Ft. (4)
 
Prior Contractual Rent Per Sq. Ft. (5)
 
Annual Increase (Decrease) in Contractual Rent
 
Cash Basis Increase (Decrease) Over Prior Rent
 
Annual Increase (Decrease) in Straight-lined Rent
 
Straight-lined Basis Increase (Decrease) Over Prior Rent
Non-comparable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
35

 
$
3,636,434

 
96,600

 
4.1

 
$
492,660

 
$
5.10

 
$
9.03

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
40

 
2,628,065

 
127,943

 
7.7

 
683,094

 
5.34

 
9.11

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
25

 
3,469,728

 
144,081

 
7.2

 
1,989,773

 
13.81

 
8.04

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
27

 
4,748,641

 
92,815

 
4.9

 
545,959

 
5.88

 
11.80

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
127

 
$
14,482,868

 
461,439

 
6.2

 
$
3,711,486

 
$
8.04

 
$
9.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter
 
31

 
$
3,440,224

 
85,866

 
4.4

 
$
444,899

 
$
5.18

 
$
9.04

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
33

 
2,344,450

 
95,993

 
5.0

 
505,116

 
5.26

 
9.12

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
20

 
2,490,258

 
116,625

 
8.0

 
1,973,200

 
16.92

 
7.77

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
21

 
3,266,160

 
56,571

 
4.9

 
429,472

 
7.59

 
11.83

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
105

 
$
11,541,092

 
355,055

 
5.8

 
$
3,352,687

 
$
9.44

 
$
9.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter
 
4

 
$
196,210

 
10,734

 
1.7

 
$
47,761

 
$
4.45

 
$
9.00

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
7

 
283,615

 
31,950

 
15.9

 
177,978

 
5.57

 
9.08

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
5

 
979,470

 
27,456

 
3.9

 
16,573

 
0.60

 
9.19

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
6

 
1,482,481

 
36,244

 
4.9

 
116,487

 
3.21

 
11.76

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
22

 
$
2,941,776

 
106,384

 
7.6

 
$
358,799

 
$
3.37

 
$
10.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

18


Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per SF
 
Contractual Rent Per Sq. Ft. (4)
 
Prior Contractual Rent Per Sq. Ft. (5)
 
Annual Increase (Decrease) in Contractual Rent
 
Cash Basis Increase (Decrease) Over Prior Rent
 
Annual Increase (Decrease) in Straight-lined Rent
 
Straight-lined Basis Increase (Decrease) Over Prior Rent
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New & Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
90

 
$
6,830,266

 
200,505

 
3.1

 
$
586,317

 
$
2.92

 
$
9.96

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
88

 
7,207,259

 
227,676

 
5.8

 
1,060,466

 
4.66

 
10.61

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
67

 
5,264,277

 
216,246

 
5.6

 
2,085,180

 
9.64

 
8.57

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
77

 
13,806,004

 
347,727

 
4.9

 
2,256,509

 
6.49

 
9.09

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
322

 
$
33,107,806

 
992,154

 
4.9

 
$
5,988,472

 
$
6.04

 
$
9.48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
42

 
$
3,984,115

 
104,500

 
4.2

 
$
463,343

 
$
4.43

 
$
9.19

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
44

 
4,363,869

 
131,859

 
4.9

 
787,371

 
5.97

 
9.58

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
39

 
3,682,570

 
155,772

 
6.7

 
2,050,925

 
13.17

 
7.96

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
30

 
6,661,183

 
111,090

 
6.7

 
1,701,262

 
15.31

 
10.36

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
155

 
$
18,691,737

 
503,221

 
5.8

 
$
5,002,901

 
$
9.94

 
$
9.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2012
 
48

 
$
2,846,151

 
96,005

 
2.0

 
$
122,974

 
$
1.28

 
$
10.81

 
 
 
 
 
 
 
 
 
 
4th Quarter 2011
 
44

 
2,843,390

 
95,817

 
7.1

 
273,095

 
2.85

 
12.09

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2011
 
28

 
1,581,707

 
60,474

 
2.9

 
34,255

 
0.57

 
10.15

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
47

 
7,144,821

 
236,637

 
4.0

 
555,247

 
2.35

 
8.48

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
167

 
$
14,416,069

 
488,933

 
4.1

 
$
985,571

 
$
2.02

 
$
10.4

 
 
 
 
 
 
 
 
 
 

(1) 
Comparable leases represent leases signed on spaces for which there was a former tenant within the last twelve months and the new or renewal square footage was within 25% of the expired square footage.
(2) 
Weighted average is determined on the basis of square footage.
(3) 
Estimated amount per signed lease. Actual cost of construction may vary. Does not include first generation costs for tenant improvements and leasing commission costs needed for new acquisitions or redevelopment of a property to bring the property to operating standards for its intended use.
(4) 
Contractual rent represents contractual minimum rent under the new lease for the first month, excluding concessions.
(5) 
Prior contractual rent represents contractual minimum rent under the prior lease for the final month.


19


Whitestone REIT
LEASE EXPIRATIONS

 
 
 
 
 
 
 
 
Annualized Base Rent
 
 
 
 
Gross Leasable Area
 
as of March 31, 2012
Year
 
Number of
Leases
 
Approximate
Square Feet
 
Percent
of Leasable Square Feet
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2012
 
262

 
500,164

 
13.9
%
 
$
6,125

 
18.3
%
 
$
12.25

2013
 
194

 
569,637

 
15.8
%
 
6,722

 
20.1
%
 
11.80

2014
 
185

 
563,615

 
15.7
%
 
6,226

 
18.6
%
 
11.05

2015
 
105

 
380,546

 
10.6
%
 
4,045

 
12.1
%
 
10.63

2016
 
98

 
341,697

 
9.5
%
 
4,078

 
12.2
%
 
11.93

2017
 
41

 
158,123

 
4.4
%
 
1,441

 
4.3
%
 
9.11

2018
 
15

 
106,554

 
3.0
%
 
1,347

 
4.0
%
 
12.64

2019
 
8

 
61,326

 
1.7
%
 
668

 
2.0
%
 
10.89

2020
 
7

 
51,045

 
1.4
%
 
588

 
1.8
%
 
11.52

2021
 
11

 
124,893

 
3.5
%
 
1,030

 
3.1
%
 
8.25

Total
 
926

 
2,857,600

 
79.5
%
 
$
32,270

 
96.5
%
 
$
11.29


(1) 
Lease expirations table reflects rents in place as of March 31, 2012, and does not include option periods.
(2) 
Annualized Base Rent represents the monthly base rent as of March 31, 2012 for each tenant multiplied by 12.


20



Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2012
 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied at
03/31/2012
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Retail Communities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ahwatukee Plaza
 
Phoenix
 
1979
 
72,650

 
100
%
 
$
894

 
$
12.31

 
$
12.53

Bellnott Square
 
Houston
 
1982
 
73,930

 
39
%
 
309

 
10.72

 
9.47

Bissonnet/Beltway
 
Houston
 
1978
 
29,205

 
100
%
 
322

 
11.03

 
10.82

Centre South
 
Houston
 
1974
 
39,134

 
81
%
 
273

 
8.61

 
8.52

The Citadel
 
Phoenix
 
1985
 
28,547

 
59
%
 
118

 
7.01

 
16.15

Holly Knight
 
Houston
 
1984
 
20,015

 
100
%
 
345

 
17.24

 
17.39

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
100
%
 
841

 
8.33

 
8.44

Lion Square
 
Houston
 
1980
 
117,592

 
95
%
 
871

 
7.80

 
9.00

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
100
%
 
2,339

 
20.68

 
21.07

Providence
 
Houston
 
1980
 
90,327

 
99
%
 
766

 
8.57

 
8.07

Shaver
 
Houston
 
1978
 
21,926

 
98
%
 
254

 
11.82

 
11.59

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
98
%
 
1,398

 
25.76

 
27.16

South Richey
 
Houston
 
1980
 
69,928

 
77
%
 
204

 
3.79

 
8.90

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
93
%
 
776

 
20.13

 
19.95

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
92
%
 
867

 
9.92

 
9.97

Sunridge
 
Houston
 
1979
 
49,359

 
99
%
 
554

 
11.34

 
11.13

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
100
%
 
1,562

 
15.20

 
15.63

Torrey Square
 
Houston
 
1983
 
105,766

 
98
%
 
856

 
8.26

 
8.08

Town Park
 
Houston
 
1978
 
43,526

 
100
%
 
793

 
18.22

 
17.97

Webster Point
 
Houston
 
1984
 
26,060

 
100
%
 
291

 
11.17

 
10.86

Westchase
 
Houston
 
1978
 
49,573

 
85
%
 
476

 
11.30

 
10.89

Windsor Park
 
San Antonio
 
1992
 
192,458

 
76
%
 
1,434

 
9.80

 
9.39

 
 
 
 
 
 
1,538,717

 
90
%
 
16,543

 
11.95

 
12.33

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Brookhill
 
Houston
 
1979
 
74,757

 
76
%
 
$
232

 
$
4.08

 
$
4.05

Corporate Park Northwest
 
Houston
 
1981
 
185,627

 
73
%
 
1,435

 
10.59

 
10.32

Corporate Park West
 
Houston
 
1999
 
175,665

 
87
%
 
1,380

 
9.03

 
8.79

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
96
%
 
825

 
8.60

 
8.68

Dairy Ashford
 
Houston
 
1981
 
42,902

 
100
%
 
237

 
5.52

 
5.90

Holly Hall
 
Houston
 
1980
 
90,000

 
100
%
 
730

 
8.11

 
8.26

Interstate 10
 
Houston
 
1980
 
151,000

 
93
%
 
665

 
4.74

 
4.71

Main Park
 
Houston
 
1982
 
113,410

 
81
%
 
519

 
5.65

 
5.65

Plaza Park
 
Houston
 
1982
 
105,530

 
77
%
 
743

 
9.14

 
8.79

Westbelt Plaza
 
Houston
 
1978
 
65,619

 
85
%
 
389

 
6.97

 
7.30

Westgate
 
Houston
 
1984
 
97,225

 
100
%
 
565

 
5.81

 
5.70

 
 
 
 
 
 
1,201,672

 
87
%
 
7,720

 
7.38

 
7.32


21


 Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2012
(continued)

 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied at
03/31/2012
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Office Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
67
%
 
$
1,272

 
$
15.08

 
$
14.90

Featherwood
 
Houston
 
1983
 
49,760

 
93
%
 
609

 
13.16

 
12.71

Pima Norte
 
Phoenix
 
2007
 
33,417

 
17
%
 
109

 
19.19

 
18.66

Royal Crest
 
Houston
 
1984
 
24,900

 
75
%
 
238

 
12.74

 
12.53

Uptown Tower
 
Dallas
 
1982
 
253,981

 
85
%
 
3,785

 
17.53

 
17.66

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
88
%
 
1,378

 
14.75

 
14.43

Zeta Building
 
Houston
 
1982
 
37,740

 
91
%
 
560

 
16.31

 
16.39

 
 
 
 
 
 
631,841

 
79
%
 
7,951

 
15.93

 
15.84

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total - Operating Portfolio
 
 
 
 
 
3,372,230

 
87
%
 
32,214

 
10.98

 
11.13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Desert Canyon
 
Phoenix
 
2000
 
62,533

 
77
%
 
551

 
11.44

 
12.13

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
28
%
 
227

 
16.41

 
23.13

MarketPlace At Central
 
Phoenix
 
2000
 
111,130

 
46
%
 
451

 
8.82

 
9.10

Total - Development Portfolio
 
 
 
 
 
223,078

 
51
%
 
1,229

 
10.80

 
12.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pinnacle Phase II
 
Phoenix
 
 
 

 
%
 

 

 

Shops at Starwood Phase III
 
Dallas
 
 
 

 
%
 

 

 

Total - Property Held For Development (4)
 
 
 
 
 

 
%
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Totals
 
 
 
 
 
3,595,308

 
85
%
 
$
33,443

 
$
10.94

 
$
11.13




(1)  
Calculated as the tenant's actual March 31, 2012 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of March 31, 2012. Because annualized base rental revenue is not derived from historical results that were accounted for in accordance with generally accepted accounting principles, historical results differ from the annualized amounts. Total abatements for leases in effect as of December 31, 2011 equaled approximately $79,000 for the month ended March 31, 2012.
 
(2) 
Calculated as annualized base rent divided by net rentable square feet leased as of March 31, 2012. Excludes vacant space as of March 31, 2012.

(3) 
Represents (i) the contractual base rent for leases in place as of March 31, 2012, calculated on a straight-line basis to reflect changes in rental rates throughout the lease term and amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (ii) square footage under commenced leases as of March 31, 2012.

(4) 
As of March 31, 2012, these properties are held for development with no gross leasable area.


22