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EX-99.1 - EXHIBIT 99.1 - Whitestone REIT Operating Partnership, L.P.exhibit991pressreleaseofwh.htm
8-K - 8-K - Whitestone REIT Operating Partnership, L.P.wrop8-kearningsrelease2013.htm









CORPORATE PROFILE
 
 
 
 
 
 
 
 
 
NYSE: WSR
 
Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust that owns,
Common Shares
 
operates and redevelops Community Centered Properties TM, which are visibly located properties in
 
 
established or developing, culturally diverse neighborhoods. As of December 31, 2013, we owned
 
 
60 Community Centered Properties TM with approximately 5.0 million square feet of gross leasable
60 Community Centers
 
area, located in five of the top markets in the United States in terms of population growth: Houston,
5.0 Million Sq. Ft. of gross
 
Dallas, San Antonio, Phoenix and Chicago. Headquartered in Houston, Texas, we were founded
leasable area
 
in 1998.
1,243 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, service-oriented tenants at each property who provide
Chicago
 
services to their respective surrounding communities. Operations include an internal management
 
 
structure providing cost-effective services to locally-oriented, smaller space tenants. Multi-cultural
Fiscal Year End
 
community focus sets us apart from traditional commercial real estate operators. We value diversity
12/31
 
on our team and maintain in-house leasing, property management, marketing, construction and
 
 
maintenance departments with culturally diverse and multi-lingual associates who understand the
Common Shares &
 
particular needs of our tenants and neighborhoods.
Units Outstanding*:
 
 
Common Shares: 22.0 Million
 
We have a diverse tenant base concentrated on service offerings such as medical, educational, casual
Operating Partnership Units:
 
dining and convenience services. These tenants tend to occupy smaller spaces (less than 3,000 square
     0.6 Million
 
feet) and, as of December 31, 2013, provided a 51% premium rental rate compared to our larger
 
 
space tenants. The largest of our 1,243 tenants comprised less than 2.0% of our annualized base
 
 
rental revenues for the three months ended December 31, 2013.
 
 
 
 
 
 
 
 
 
Distribution (per share / unit):
 
Investor Relations:
 
 
 
 
 
 
Quarter: $ 0.2850
 
Whitestone REIT
 
 
 
 
 
 
Annualized: $ 1.1400
 
Suzy Taylor, Director of Investor Relations
Dividend Yield: 8.1%**
 
2600 South Gessner Suite 500, Houston, Texas 77063
 
 
 
 
713.435.2219 email: ir@whitestonereit.com
 
website: www.whitestonereit.com
Board of Trustees:
 
 
 
 
 
 
James C. Mastandrea
 
ICR Inc. - Brad Cohen 203.682.8211
 
 
Daryl J. Carter
 
Analyst Coverage:
 
 
 
 
 
 
Donald F. Keating
 
BMO Capital Markets Corp.
 
J.J.B. Hilliard, W.L. Lyons, LLC
 
JMP Securities
 
Ladenburg Thalmann
Paul T. Lambert
 
Paul Adornato, CFA
 
Carol L. Kemple
 
Mitch Germain
 
Daniel P. Donlan
Jack L. Mahaffey
 
212.885.4170
 
502.588.1839
 
212.906.3546
 
212.409.2056
Trustee Emeritus:
 
Paul.Adornato@bmo.com
 
ckemple@hilliard.com
 
mgermain@jmpsecurities.com
 
ddonlan@ladenburg.com
Daniel G. DeVos
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* As of February 26, 2014
 
Robert W. Baird & Co.
 
Wunderlich Securities, Inc.
 
 
 
 
** Based on common share price
 
Jonathon Pong
 
Merril Ross
 
 
 
 
of $14.16 as of close of market on
 
203.425.2740
 
703.669.9255
 
 
 
 
February 25, 2014
 
jpong@rwbaird.com
 
mross@wundernet.com
 
 
 
 

1


Press Release

WHITESTONE REIT ANNOUNCES OPERATING RESULTS FOR FOURTH QUARTER AND FULL YEAR 2013

2013 Highlights
  
- Funds From Operations Core for 2013 Increased 16%, to $1.10 per share -
- 51% Year-Over Year Increase in Annual Funds From Operations Core -
- 33% Increase in Annual Revenue -
- Net Income Increased to $3.9 Million -
- Completed $131 Million in Acquisitions in 2013 -
- Occupancy Increased to 86.8% -
- Company Provides 2014 Guidance -

Houston, Texas, February 26, 2014 - Whitestone REIT (NYSE: WSR - “Whitestone” or the “Company”), a fully integrated real estate company that owns, re-develops, leases, manages, and operates Community Centered PropertiesTM, announced its financial results for the fourth quarter and full year 2013.

"We are proud of our strong results in 2013, particularly the fact that we added over $131 million of new Community Centered PropertiesTM and adjacent land parcels in our high-growth target markets of Arizona and Texas. For the second consecutive year, these acquisitions have been drivers of strong cash flow and earnings per share growth," stated James C. Mastandrea, Whitestone’s Chairman and Chief Executive Officer. “In addition to pursuing additional accretive opportunities, most importantly, we have provided the Company with a solid foundation that will support additional organic growth through leasing our space primarily to tenants that require less than 3,000 square feet. We have a singular focus to deliver our tenants great service and an ability to help them expand their needs for space as their businesses grow. We expect to build upon the progress we made this past year and foster additional success and growth in the coming years, in our efforts to continue to create value for our shareholders.”

Highlights: Fourth Quarter 2013 Compared to Fourth Quarter 2012** 

During the quarter ended December 31, 2013, the Company completed approximately $60 million in acquisitions of value-add Community Centered PropertiesTM and adjacent deployable land parcels in high growth target markets in the fourth quarter, that contributed only partially to 2013 results.

**The Company's 2012 fourth quarter results, except Funds From Operations (“FFO”)-Core, include a previously disclosed contingency that resulted in an expense of $2.2 million, or ($0.12) per fully diluted share and Operating Partnership ("OP") unit.

Total revenues increased 27% to $17.2 million compared to $13.5 million.

FFO-Core increased 48%, or approximately $2.0 million, to $6.2 million from $4.2 million. FFO-Core per diluted common share and OP unit was $0.28, as compared to $0.24 per diluted common share and OP unit for the same period in 2012. FFO-Core excludes non-cash share based compensation related to the vesting of restricted share grants of $0.8 million and $0.3 million in 2013 and 2012, respectively, or $0.04 and $0.02 per diluted common share and OP unit in 2013 and 2012, respectively. FFO-Core excludes acquisition expenses of $398,000 and $166,000 in 2013 and 2012, respectively. In addition 2012 FFO-Core, excludes a non-comparable expense of $2.2 million.

Net income was $1.3 million, up from $0.7 million excluding a non-comparable expense of $2.2 million in 2012.

FFO increased to $4.9 million or $0.22 per share, up from $1.5 million in 2012 which included the non-comparable expense of $2.2 million.

Occupancy increased to 86.8% up 200 basis points.

Property net operating income (“NOI”) increased 28% to $10.7 million compared to $8.4 million. The increase of $2.3 million is primarily attributable to new acquisitions.


2


Highlights: 2013 Compared to 2012** 

During the year ended December 31, 2013, the Company completed approximately $131 million in acquisitions of value-add Community Centered PropertiesTM and adjacent land parcels in high growth target markets. The Company’s acquisitions since 2011 exceed $300 million.

**The Company's 2012 results, except FFO-Core, include a previously disclosed contingency that resulted in an expense of $2.2 million, or ($0.12) per fully diluted share and OP unit.

Total revenues for 2013 increased 33% to $62.1 million versus $46.6 million.

FFO-Core increased 51%, or approximately $7.1 million, to $20.8 million as compared to $13.7 million.

FFO-Core per diluted common share and OP unit was $1.10, as compared to $0.95 per diluted common share and OP unit, a 16% improvement. FFO-Core excludes acquisition expenses of $1.0 million and $0.7 million in 2013 and 2012, respectively, legal settlement expenses of $0.1 million in 2012, and a non-comparable expense of $2.2 million in 2012.

FFO grew to $17.3 million, or $0.91 per diluted common share and OP unit, as compared to $10.3 million, or $0.71 per diluted common share and OP unit, for 2012. FFO in 2012 includes the non-comparable expense of $2.2 million.

Property NOI increased 34% to $38.6 million, as compared to $28.9 million. The increase of $9.7 million is primarily attributable to new acquisitions.
 
Fourth Quarter 2013 Leasing Highlights

The Company's total occupancy was 86.8% as of the end of the fourth quarter of 2013, up 200 basis points from the fourth quarter of 2012. The occupancy of Whitestone's Operating Portfolio was 88.1% as of December 31, 2013, compared to 86.7% at December 31, 2012. The Company defines Operating Portfolio Occupancy Rate as physical occupancy in all properties, excluding 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.

During the fourth quarter of 2013, the leasing team signed 91 leases totaling 236,043 square feet in new, expansion, and renewal leases. The average lease size was 2,594 square feet. For the fourth quarter of 2013, total lease value added was $10.8 million, down 5% from total lease value added in the fourth quarter of 2012. For the twelve months ended December 31, 2013, total lease value added was $44.2 million, up 25% when compared to full year 2012.

Acquisition Activity

During the fourth quarter of 2013, Whitestone completed three acquisitions of Community Centered Properties in Phoenix and north Houston.

On October 7, 2013, the Company acquired Fountain Hills Plaza for approximately $20.6 million in cash and net prorations. The property is located in the 10,000 household master-planned community of Fountain Hills, a suburb of Phoenix. The purchase of the 111,289 square foot property includes the adjacent approximate one acre development-ready pad site that can accommodate an additional 7,000 square feet of multi-tenant retail space. Fountain Hills Plaza is dual-anchored by a 49,000 square foot Bashas' and a 27,000 square foot Ace Hardware and was 87% leased at the time of purchase.

On October 17, 2013, Whitestone acquired a 2.50 acre parcel for $2.8 million in cash and net prorations. The parcel is located in Spring, Texas, a suburb of Houston, and is contiguous to our Corporate Park Woodland property. At the time of purchase, the parcel had 16,220 square feet and was 63% leased. The property is located on Interstate 45 in north Houston and is in close proximity to the 385-acre Exxon Mobil campus scheduled to bring approximately 10,000 employees by 2015.

On December 5, 2013, the Company acquired Market Street at DC Ranch in Scottsdale, Arizona, for approximately $37.4 million in cash and net prorations. The 241,280-square-foot property, was 80% leased at the time of purchase and includes land to build and lease another 35,000 square feet. The property is located in the DC Ranch master planned community with a mix of retail and office space with national credit tenants including Safeway Supermarkets, Wells Fargo, Grimaldi's Pizza, McCormick & Co., Edward Jones and Fleming's Steakhouse.


3


Community Centered PropertiesTM Portfolio Statistics

As of December 31, 2013, Whitestone owned 60 Community Centered PropertiesTM with 5.0 million square feet of gross leasable area, including six 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 December 31, 2013, provided a 51% premium rental rate compared to Whitestone's larger space tenants. As of December 31, 2013, the Company serviced 1,243 tenants throughout its portfolio.  No single tenant accounted for more than 2.0% of the Company's annualized base rental revenues as of December 31, 2013.  

Balance Sheet
 
Undepreciated real estate assets increased 33% to $546.3 million as of December 31, 2013 as compared to the prior year end.

Real estate debt as a percentage of total market capitalization was 46% as of December 31, 2013 as compared to 43% as of December 31, 2012.

Whitestone had 41 properties unencumbered by mortgage debt as of December 31, 2013, with an undepreciated cost basis of $357.2 million. The total undepreciated value of the Company's real estate assets and real estate indebtedness was $546.3 million and $409.7 million as of December 31, 2013 and 2012, respectively. As of December 31, 2013, $179.5 million, or approximately 68%, of the Company's debt was subject to fixed interest rates. The Company's weighted average interest rate on all debt as of the end of the fourth quarter of 2013 was 3.1%.

On November 26, 2013, the Company entered into a $37.0 million promissory note (the "Jackson Life Note"), with a fixed interest rate of 3.76% payable to Jackson Life National Insurance Company and a maturity of December 1, 2020. Proceeds from the Jackson Life Note were used to repay our existing $26.9 million floating rate loan that matured on December 1, 2013. The remainder of the proceeds was used to pay off approximately $10.1 million in fixed rate indebtedness maturing in 2014.

The Jackson Life Note is a non-recourse loan secured by nine Whitestone properties, including Corporate Park Woodland, Holly Hall Industrial Park, Interstate 10, Main Park, Plaza Park, Westbelt Plaza, Westgate Service Center, Corporate Park West and Dairy Ashford.

On December 16, 2013, the Company entered into a $15.1 million promissory note (the "Anthem Note"), with a fixed interest rate of 4.99% payable to Citigroup Global Markets Realty Corporation and a maturity of January 6, 2024. Proceeds from the Anthem Note were used to repay a portion of our unsecured revolving credit facility.

On December 23, 2013, the Company entered into a $6.5 million promissory note (the "Woodlake Note"), with a fixed interest rate of 3.80% payable to Western Reserve Life Assurance Company of Ohio and a maturity of January 1, 2019. Proceeds from the Woodlake Note were used to repay a portion of the Company's unsecured revolving credit facility.

On October 8, 2013, the Company completed the sale of 4,000,000 common shares, $0.001 par value per share, and on October 28, 2013, upon the underwriters' exercise of the over-allotment option, the Company completed the sale of 600,000 additional common shares, at a price to the public of $13.54 per share. Total net proceeds from the offering, including the over-allotment shares, and after deducting the underwriting discount and offering expenses, were approximately $59.7 million.

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.

Dividend

On February 24, 2014, the Company declared a quarterly cash distribution of $0.285 per common share and OP unit for the second quarter of 2014, to be paid in three equal installments of $0.095 in April, May and June 2014. The dividend amount per share has remained the same since the distribution paid on July 8, 2010.


4


The record and payment dates for the second quarter 2014 dividend are as follows:    
    
Month
Record Date
Payment Date
April
4/2/2014
4/9/2014
May
5/5/2014
5/12/2014
June
6/2/2014
6/9/2014

Earnings Guidance

Whitestone provided initial earnings guidance for 2014 based on its current and expected views of the commercial real estate market and general economic conditions. Full-year 2014 FFO Core is expected to be $1.09 to $1.18 per diluted share, Full-year 2014 FFO is expected to be $0.88 to $0.97 per diluted share and full-year 2014 EPS is expected to be $0.22 to $0.30 per diluted share. Guidance for EPS excludes gains on real estate transactions.

The midpoint of the Company’s initial 2014 earnings guidance assumes acquisitions of $60 million, dispositions of $15 million, and development of $15 million during 2014. The net impact to 2014 FFO Core from projected 2014 acquisitions, net of dispositions and interest cost is approximately $0.03 to $0.05 per diluted share. Whitestone expects same-property NOI growth between 4% and 7%.

Whitestone intends to update its earnings guidance to the market on a quarterly basis. Additional information on the Company’s 2014 financial outlook and a reconciliation of expected net income attributable to common shareholders to expected FFO and FFO Core are included in the financial tables accompanying this press release.

Webcast and Conference Call

Whitestone will host a webcast and conference call for investors and other interested parties on Thursday, February 27, 2014, at 11:30 A.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-(888) 724-9493 for domestic participants or 1-(913) 312-1491 for international participants. 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 five to ten minutes prior to the start.

The conference call will be recorded and a telephone replay will be available through March 13, 2014, by dialing 1-(877) 870-5176 for domestic participants or 1-(858) 384-5517 for international participants and entering the pass code 8958227. Additionally, a replay of the call will be available on the Company’s website until its next earnings release.

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 fourth quarter 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) 435-2219.

About Whitestone REIT

Whitestone REIT (NYSE:WSR) is a fully integrated real estate investment trust ("REIT") that owns, operates and redevelops Community Centered PropertiesTM. Whitestone focuses on value creation in its community centers, concentrating on local service-oriented tenants that comprise approximately 70% of its tenants. Whitestone’s diversified tenant base provides service offerings including medical, education, casual dining, and convenience services. The largest of its 1,243 tenants comprised less than 2.0% of its annualized base rental revenues as of December 31, 2013. Founded in 1998, the Company is internally managed with a portfolio of 60 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 contains filings made with the Securities and Exchange Commission, news releases and financial reports.


5


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"). The Company intends 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 the Company's use of forward-looking terminology, such as "may," "will," "plan," "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 meet its assumptions regarding its earnings guidance, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; 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 the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files 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. The Company cannot guarantee the accuracy of any such forward-looking statements contained in this press release, and the Company does 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 financial measures that are not calculated pursuant to U.S. generally accepted accounting principles ("GAAP") including FFO, FFO Core, and NOI. Following are explanations 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, ("NAREIT"), which states that FFO should represent net income available to common shareholders (computed in accordance with GAAP) excluding gains or losses from sales of operating assets, impairment charges and extraordinary items, plus depreciation and amortization of operating properties, including the Company's share of unconsolidated real estate joint ventures and partnerships. 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 and service debt.

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.

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.


6


FFO Core: Management believes that the computation of FFO in accordance with NAREIT's definition includes certain non-cash and non-comparable items that affect the Company's period-over-period performance. These items include, but are not limited to, legal settlements, non-cash share-based compensation expense, rent support agreement payments received from sellers on acquired assets and acquisition costs. 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. However, other REITs may use different adjustments, and the Company's FFO Core may not be comparable to the adjusted or modified FFO of other REITs.  

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). Because NOI excludes 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 capital expenditures and leasing costs, 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 of 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. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to that of other REITs.



7



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

 
 
December 31, 2013
 
December 31, 2012
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
546,274

 
$
409,669

Accumulated depreciation
 
(66,008
)
 
(53,920
)
Total real estate assets
 
480,266

 
355,749

Cash and cash equivalents
 
6,491

 
6,544

Marketable securities
 
877

 
1,403

Escrows and acquisition deposits
 
2,095

 
6,672

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
9,929

 
7,947

Related party receivable
 

 
652

Unamortized lease commissions and loan costs
 
6,227

 
4,160

Prepaid expenses and other assets
 
2,089

 
2,244

Total assets
 
$
507,974

 
$
385,371

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
264,277

 
$
190,608

Accounts payable and accrued expenses
 
12,773

 
13,824

Tenants' security deposits
 
3,591

 
3,024

Dividends and distributions payable
 
6,418

 
5,028

Total liabilities
 
287,059

 
212,484

Commitments and contingencies:
 

 

Equity:
 
 
 
 
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of December 31, 2013 and 2012
 

 

Common shares, $0.001 par value per share; 400,000,000 shares authorized; 21,943,700 and 16,943,098 issued and outstanding as of December 31, 2013 and 2012, respectively
 
22

 
16

Additional paid-in capital
 
291,571

 
224,237

Accumulated deficit
 
(75,721
)
 
(57,830
)
Accumulated other comprehensive loss
 
(54
)
 
(392
)
Total Whitestone REIT shareholders' equity
 
215,818

 
166,031

Noncontrolling interest in subsidiary
 
5,097

 
6,856

Total equity
 
220,915

 
172,887

Total liabilities and equity
 
$
507,974

 
$
385,371









8


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

 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Property revenues
 
 
 
 
 
 
Rental revenues
 
$
48,862

 
$
36,131

 
$
27,814

Other revenues
 
13,283

 
10,423

 
7,101

Total property revenues
 
62,145

 
46,554

 
34,915

 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
Property operation and maintenance
 
14,743

 
11,255

 
8,659

Real estate taxes
 
8,767

 
6,384

 
4,668

Total property expenses
 
23,510

 
17,639

 
13,327

 
 
 
 
 
 
 
Other expenses (income)
 
 
 
 
 
 
General and administrative
 
10,912

 
7,616

 
6,648

Depreciation and amortization
 
13,429

 
10,229

 
7,749

Executive relocation expense
 

 
2,177

 

Interest expense
 
10,150

 
8,732

 
6,344

Interest, dividend and other investment income
 
(136
)
 
(290
)
 
(460
)
Total other expense
 
34,355

 
28,464

 
20,281

 
 
 
 
 
 
 
Income before loss on sale or disposal of assets and income taxes
 
4,280

 
451

 
1,307

 
 
 
 
 
 
 
Provision for income taxes
 
(305
)
 
(286
)
 
(225
)
Loss on sale or disposal of assets
 
(56
)
 
(112
)
 
(146
)
Income before gain on sale of property
 
3,919

 
53

 
936

 
 
 
 
 
 
 
Gain on sale of property
 

 

 
397

 
 
 
 
 
 
 
Net income
 
3,919

 
53

 
1,333

 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
125

 
3

 
210

 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
3,794

 
$
50

 
$
1,123







9



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

 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Basic Earnings Per Share:
 
 
 
 
 
 
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.21

 
$
0.00

 
$
0.12

Diluted Earnings Per Share:
 
 
 
 
 
 
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.20

 
$
0.00

 
$
0.12

 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
Basic
 
18,027

 
13,496

 
9,028

Diluted
 
18,273

 
13,613

 
9,042

 
 
 
 
 
 
 
Distributions declared per common share / OP unit
 
$
1.1400

 
$
1.1400

 
$
1.1400

 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
3,919

 
$
53

 
$
1,333

 
 
 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain on cash flow hedging activities
 
173

 
1

 

Unrealized gain (loss) on available-for-sale marketable securities
 
180

 
920

 
(1,329
)
 
 
 
 
 
 
 
Comprehensive income
 
4,272

 
974

 
4

 
 
 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
136

 
57

 
1

 
 
 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
4,136

 
$
917

 
$
3











10


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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
Property revenues
 
(unaudited)
 
(unaudited)
 
 
 
 
Rental revenues
 
$
13,455

 
$
10,488

 
$
48,862

 
$
36,131

Other revenues
 
3,735

 
3,035

 
13,283

 
10,423

Total property revenues
 
17,190

 
13,523

 
62,145

 
46,554

 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
4,185

 
3,175

 
14,743

 
11,255

Real estate taxes
 
2,284

 
1,942

 
8,767

 
6,384

Total property expenses
 
6,469

 
5,117

 
23,510

 
17,639

 
 
 
 
 
 
 
 
 
Other expenses (income)
 
 
 
 
 
 
 
 
General and administrative
 
3,230

 
2,224

 
10,912

 
7,616

Depreciation and amortization
 
3,646

 
2,973

 
13,429

 
10,229

Executive relocation expense
 

 
2,177

 

 
2,177

Interest expense
 
2,486

 
2,408

 
10,150

 
8,732

Interest, dividend and other investment income
 
(22
)
 
(16
)
 
(136
)
 
(290
)
Total other expense
 
9,340

 
9,766

 
34,355

 
28,464

 
 
 
 
 
 
 
 
 
Income (loss) before loss on disposal of assets and income taxes
 
1,381

 
(1,360
)
 
4,280

 
451

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(78
)
 
(74
)
 
(305
)
 
(286
)
Loss on sale or disposal of assets
 
(8
)
 
(7
)
 
(56
)
 
(112
)
 
 
 
 
 
 
 
 
 
Net income (loss)
 
1,295

 
(1,441
)
 
3,919

 
53

 
 
 
 
 
 
 
 
 
Less: Net income (loss) attributable to noncontrolling interests
 
34

 
(104
)
 
125

 
3

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Whitestone REIT
 
$
1,261

 
$
(1,337
)
 
$
3,794

 
$
50


11


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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
 
 
(unaudited)
 
(unaudited)
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders excluding amounts attributable to unvested restricted shares (1)
 
$
0.06

 
$
(0.08
)
 
$
0.21

 
$
0.00

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders excluding amounts attributable to unvested restricted shares (1)
 
$
0.06

 
$
(0.08
)
 
$
0.20

 
$
0.00

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
21,323

 
16,733

 
18,027

 
13,496

Diluted
 
21,329

 
16,733

 
18,273

 
13,613

 
 
 
 
 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
$
1.1400

 
$
1.1400

 
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
1,295

 
$
(1,441
)
 
$
3,919

 
$
53

 
 
 
 
 
 
 
 
 
Other comprehensive gain
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain on cash flow hedging activities
 
11

 
10

 
173

 
1

Unrealized gain on available-for-sale marketable securities
 
4

 
29

 
180

 
920

 
 
 
 
 
 
 
 
 
Comprehensive income (loss)
 
1,310

 
(1,402
)
 
4,272

 
974

 
 
 
 
 
 
 
 
 
Less: Comprehensive income (loss) attributable to noncontrolling interests
 
33

 
(101
)
 
136

 
57

 
 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to Whitestone REIT
 
$
1,277

 
$
(1,301
)
 
$
4,136

 
$
917


(1)  
The sum of individual quarterly basic and diluted earnings per share amounts may not agree with the year-to-date basic and diluted earning per share amounts as the result of each period's computation being based on the weighted average number of common shares outstanding during that period.
    

12


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Cash flows from operating activities:
 
 
 
 
 
 
Net income
 
$
3,919

 
$
53

 
$
1,333

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

 
 

Depreciation and amortization
 
13,429

 
10,229

 
7,749

Amortization of deferred loan costs
 
1,046

 
1,426

 
616

Amortization of notes payable discount
 
463

 
317

 

Gain on sale of marketable securities
 
(41
)
 
(110
)
 
(192
)
Loss (gain) on sale or disposal of assets and properties
 
56

 
112

 
(251
)
Bad debt expense
 
1,658

 
1,004

 
615

Share-based compensation
 
2,284

 
725

 
310

Changes in operating assets and liabilities:
 
 
 
 
 
 
Escrows and acquisition deposits
 
4,920

 
(1,104
)
 
(519
)
Accrued rent and accounts receivable
 
(3,640
)
 
(2,930
)
 
(1,939
)
Related party receivable
 
652

 
(652
)
 

Unamortized lease commissions
 
(1,221
)
 
(994
)
 
(995
)
Prepaid expenses and other assets
 
962

 
(525
)
 
296

Accounts payable and accrued expenses
 
(1,170
)
 
2,875

 
993

Tenants' security deposits
 
567

 
792

 
436

Net cash provided by operating activities
 
23,884

 
11,218

 
8,452

Cash flows from investing activities:
 
 

 
 

 
 

Acquisitions of real estate
 
(119,102
)
 
(98,350
)
 
(65,910
)
Additions to real estate
 
(6,291
)
 
(10,815
)
 
(7,568
)
Proceeds from sale of property
 

 

 
1,567

Investments in marketable securities
 

 
(750
)
 
(13,520
)
Proceeds from sales of marketable securities
 
747

 
5,508

 
7,252

Net cash used in investing activities
 
(124,646
)
 
(104,407
)
 
(78,179
)
Cash flows from financing activities:
 
 

 
 

 
 

Distributions paid to common shareholders
 
(20,294
)
 
(15,324
)
 
(10,045
)
Distributions paid to OP unit holders
 
(691
)
 
(1,004
)
 
(1,974
)
Proceeds from issuance of common shares, net of offering costs
 
63,887

 
58,679

 
59,683

Payments of exchange offer costs
 
(40
)
 
(479
)
 

Proceeds from revolving credit facility, net
 
65,800

 
58,000

 
11,000

Proceeds from notes payable
 
105,710

 

 
2,905

Repayments of notes payable
 
(110,867
)
 
(4,146
)
 
(3,128
)
Payments of loan origination costs
 
(2,796
)
 
(1,688
)
 
(610
)
Net cash provided by financing activities
 
100,709

 
94,038

 
57,831

Net increase (decrease) in cash and cash equivalents
 
(53
)
 
849

 
(11,896
)
Cash and cash equivalents at beginning of period
 
6,544

 
5,695

 
17,591

Cash and cash equivalents at end of period
 
$
6,491

 
$
6,544

 
$
5,695


13


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures
(in thousands)
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Supplemental disclosure of cash flow information:
 
 

 
 

 
 

Cash paid for interest
 
$
9,179

 
$
7,137

 
$
5,719

Cash paid for taxes
 
$
237

 
$
326

 
$
215

Non cash investing and financing activities:
 
 

 
 

 
 

Disposal of fully depreciated real estate
 
$
295

 
$

 
$
238

Financed insurance premiums
 
$
883

 
$
856

 
$
649

Value of shares issued under dividend reinvestment plan
 
$
99

 
$
90

 
$
6

Acquired interest rate swap
 
$

 
$
1,901

 
$

Debt discount on acquired note payable
 
$

 
$
(1,329
)
 
$

Value of common shares exchanged for OP units
 
$
1,236

 
$
7,272

 
$
4,972

Change in fair value of available-for-sale securities
 
$
180

 
$
920

 
$
(1,329
)
Change in fair value of cash flow hedge
 
$
173

 
$
1

 
$

Debt assumed with acquisitions of real estate
 
$
11,100

 
$
9,166

 
$
15,425

Interest supplement assumed with acquisition of real estate
 
$
932

 
$

 
$






14


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

 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
 
2011
FFO AND FFO CORE
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Whitestone REIT
 
$
1,261

 
$
(1,337
)
 
$
3,794

 
$
50

 
$
1,123

Depreciation and amortization of real estate assets
 
3,623

 
2,948

 
13,339

 
10,108

 
7,625

(Gain) loss on disposal of assets
 
8

 
7

 
56

 
112

 
(251
)
Net income (loss) attributable to noncontrolling interests
 
34

 
(104
)
 
125

 
3

 
210

FFO
 
4,926

 
1,514

 
17,314

 
10,273

 
8,707

 
 
 
 
 
 
 
 
 
 
 
Non cash share-based compensation expense
 
783

 
341

 
2,284

 
725

 
310

Acquisition costs
 
398

 
166

 
1,010

 
698

 
666

Rent support agreement payments received
 
97

 

 
188

 

 

Executive relocation expense
 

 
2,177

 

 
2,177

 

Legal settlement
 

 

 

 
(131
)
 
254

FFO-Core
 
$
6,204

 
$
4,198

 
$
20,796

 
$
13,742

 
$
9,937

 
 
 
 
 
 
 
 
 
 
 
FFO PER SHARE AND OP UNIT CALCULATION:
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
FFO
 
$
4,926

 
$
1,514

 
$
17,314

 
$
10,273

 
$
8,707

Distributions paid on unvested restricted common shares
 
(18
)
 
(11
)
 
(50
)
 
(22
)
 
(17
)
FFO excluding amounts attributable to unvested restricted common shares
 
$
4,908

 
$
1,503

 
$
17,264

 
$
10,251

 
$
8,690

FFO-Core excluding amounts attributable to unvested restricted common shares
 
$
6,186

 
$
4,187

 
$
20,746

 
$
13,720

 
$
9,920

 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
Weighted average number of total common shares - basic
 
21,323

 
16,733

 
18,027

 
13,496

 
9,028

Weighted average number of total noncontrolling OP units - basic
 
569

 
735

 
596

 
848

 
1,705

Weighted average number of total commons shares and noncontrolling OP units - basic
 
21,892

 
17,468

 
18,623

 
14,344

 
10,733

 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Unvested restricted shares
 
265

 
121

 
246

 
117

 
14

Weighted average number of total common shares and noncontrolling OP units - dilutive
 
22,157

 
17,589

 
18,869

 
14,461

 
10,747

 
 
 
 
 
 
 
 
 
 
 
FFO per common share and OP unit - basic
 
$
0.22

 
$
0.09

 
$
0.93

 
$
0.71

 
$
0.81

FFO per common share and OP unit - diluted
 
$
0.22

 
$
0.09

 
$
0.91

 
$
0.71

 
$
0.81

 
 
 
 
 
 
 
 
 
 
 
FFO-Core per common share and OP unit - basic
 
$
0.28

 
$
0.24

 
$
1.11

 
$
0.96

 
$
0.92

FFO-Core per common share and OP unit - diluted
 
$
0.28

 
$
0.24

 
$
1.10

 
$
0.95

 
$
0.92

 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
 
2011
PROPERTY NET OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Whitestone REIT
 
$
1,261

 
$
(1,337
)
 
$
3,794

 
50

 
$
1,123

General and administrative expenses
 
3,230

 
2,224

 
10,912

 
7,616

 
6,648

Depreciation and amortization
 
3,646

 
2,973

 
13,429

 
10,229

 
7,749

Executive relocation expense
 

 
2,177

 

 
2,177

 

Interest expense
 
2,486

 
2,408

 
10,150

 
8,732

 
6,344

Interest, dividend and other investment income
 
(22
)
 
(16
)
 
(136
)
 
(290
)
 
(460
)
Provision for income taxes
 
78

 
74

 
305

 
286

 
225

Loss on disposal of assets
 
8

 
7

 
56

 
112

 
146

Gain on sale of property
 

 

 

 

 
(397
)
Net income (loss) attributable to noncontrolling interests
 
34

 
(104
)
 
125

 
3

 
210

NOI
 
$
10,721

 
$
8,406

 
$
38,635

 
$
28,915

 
$
21,588


EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Whitestone REIT
 
$
1,261

 
$
(1,337
)
 
$
3,794

 
$
50

 
$
1,123

Depreciation and amortization
 
3,646

 
2,973

 
13,429

 
10,229

 
7,749

Executive relocation expense
 

 
2,177

 

 
2,177

 

Interest expense
 
2,486

 
2,408

 
10,150

 
8,732

 
6,344

Provision for income taxes
 
78

 
74

 
305

 
286

 
225

Loss on disposal of assets
 
8

 
7

 
56

 
112

 
146

Net income (loss) attributable to noncontrolling interests
 
34

 
(104
)
 
125

 
3

 
210

EBITDA(1)
 
$
7,513

 
$
6,198

 
$
27,859

 
$
21,589

 
$
15,797


 
 
Three Months Ended
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
2013
 
2013
 
2013
 
2013
Net income attributable to Whitestone REIT
 
$
1,261

 
$
614

 
$
970

 
$
949

Depreciation and amortization
 
3,646

 
3,450

 
3,260

 
3,073

Executive relocation expense
 

 

 

 

Interest expense
 
2,486

 
2,602

 
2,613

 
2,449

Provision for income taxes
 
78

 
90

 
72

 
65

Loss on disposal of assets
 
8

 

 
40

 
8

Net income attributable to noncontrolling interests
 
34

 
21

 
33

 
37

EBITDA(1)
 
$
7,513

 
$
6,777

 
$
6,988

 
$
6,581


(1) 
Earnings Before Interest, Tax, Depreciation and Amortization ("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, excluding executive relocation costs related to the disposition of the Chief Executive Officer's residence in Cleveland, Ohio pursuant to the executive relocation arrangement approved by the Company's Compensation Committee. 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. Other REITs may use different methodologies for calculating EBITDA and, accordingly, the Company's EBITDA may not be comparable to other REITs.

15


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

 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
Other Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
784

 
$
448

 
$
3,428

 
$
1,923

Leasing commissions (1)
 
$
211

 
$
245

 
$
1,311

 
$
841

Scheduled debt principal payments
 
$
573

 
$
814

 
$
2,579

 
$
2,981

Straight line rent income
 
$
419

 
$
157

 
$
1,390

 
$
422

Market rent amortization income (loss) from acquired leases
 
$

 
$
(31
)
 
$
63

 
$
(38
)
Non-cash share-based compensation expense
 
$
783

 
$
339

 
$
2,284

 
$
723

Non-real estate depreciation and amortization
 
$
23

 
$
24

 
$
90

 
$
120

Amortization of loan fees
 
$
223

 
$
363

 
$
1,046

 
$
1,426

Acquisition costs
 
$
398

 
$
166

 
$
1,010

 
$
698

Undepreciated value of unencumbered properties
 
$
357,217

 
$
206,824

 
$
357,217

 
$
206,824

Number of unencumbered properties
 
41

 
24

 
41

 
24

Full time employees
 
68

 
67

 
68

 
67


(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.



16


Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(in thousands, except per share amounts and percentages)
 
 
As of December 31, 2013
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
Equity Capitalization:
 
 
 
 
 
 
Common shares outstanding
 
97.5
%
 
21,944

 
 
Operating partnership units outstanding
 
2.5
%
 
562

 
 
Total
 
100.0
%
 
22,506

 
 
 
 
 
 
 
 
 
Market price of common shares as of
 
 
 
 
 
 
December 31, 2013
 
 
 
$
13.37

 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
300,905

 
54
%
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
Outstanding debt
 
 
 
$
264,277

 
 
Less: Cash and cash equivalents
 
 
 
(6,491
)
 
 
 
 
 
 
257,786

 
46
%
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
December 31, 2013
 
 
 
$
558,691

 
100
%


SELECTED RATIOS:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31, 2013
 
September 30, 2013
 
June 30, 2013
 
March 31, 2013
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA
 
$
7,513

 
$
6,777

 
$
6,988

 
$
6,581

Interest expense, excluding amortization of loan fees
 
2,264

 
2,334

 
2,331

 
2,176

Ratio of interest expense to EBITDA
 
3.3

 
2.9

 
3.0

 
3.0

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Undepreciated real estate assets
 
$
546,274

 
$
483,379

 
$
481,939

 
$
436,331

 
 
 
 
 
 
 
 
 
Outstanding debt
 
$
264,277

 
$
266,260

 
$
266,401

 
$
216,935

Less: Cash
 
(6,491
)
 
(9,506
)
 
(6,020
)
 
(2,843
)
Outstanding debt after cash
 
$
257,786

 
$
256,754

 
$
260,381

 
$
214,092

Ratio of debt to real estate assets
 
47
%
 
53
%
 
54
%
 
49
%

17


 Whitestone REIT and Subsidiaries
SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES

TOTAL OUTSTANDING DEBT
(in thousands)

Description
 
December 31, 2013
 
December 31, 2012
Fixed rate notes
 
 
 
 
$1.1 million 4.71% Note, due December 31, 2013
 
$
1,087

 
$
1,087

$20.2 million 4.28% Note, due June 6, 2023 (1)
 
20,200

 
13,850

$3.0 million 6.00% Note, due March 31, 2021 (2)
 
2,905

 
2,943

$10.0 million 6.04% Note, due March 1, 2014
 

 
9,142

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

 
1,444

$11.2 million 6.52% Note, due September 1, 2015
 

 
10,609

$21.4 million 6.53% Notes, due October 1, 2013
 

 
18,865

$24.5 million 6.56% Note, due October 1, 2013
 

 
23,135

$9.9 million 6.63% Notes, due March 1, 2014
 

 
8,925

$9.2 million, Prime Rate less 2.00%, due December 29, 2017 (3)
 
7,875

 
7,854

$11.1 million 5.87% Note, due August 6, 2016
 
11,900

 

$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (4)
 
10,500

 

$16.5 million 4.97% Note, due September 26, 2023
 
16,450

 

$37.0 million 3.76% Note, due December 1, 2020
 
37,000

 

$6.5 million 3.80% Note, due January 1, 2019
 
6,500

 

$15.1 million 4.99% Note, due January 6, 2024
 
15,060

 

$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 3, 2017 (5)
 
50,000

 

$0.7 million 2.97% Note, due November 28, 2013
 

 
15

Floating rate notes
 
 
 
 
Unsecured credit facility, LIBOR plus 1.75% to 2.50%, due February 3, 2017
 
84,800

 
69,000

$26.9 million, LIBOR plus 2.86% Note, due December 1, 2013
 

 
23,739

 
 
$
264,277

 
$
190,608


(1)
Promissory note had an original balance of $14.1 million and an interest rate of 5.695%, due in 2013, which was refinanced in May 2013.
(2)
The 6.00% interest rate is fixed through March 30, 2016. On March 31, 2016, the interest rate will 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.
(3) 
Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term.
(4) 
Promissory note includes an interest rate swap that fixed the interest rate at 3.55% for the duration of the term.
(5) 
We have entered into an interest rate swap that fixed the LIBOR portion of our $50 million term loan under our unsecured credit facility at 0.84%. The swap began on January 7, 2014.



18


SCHEDULE OF DEBT MATURITIES AS OF DECEMBER 31, 2013
(in thousands)
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2014
 
$
1,412

 
$
1,087

 
$
2,499

 
0.9
%
2015
 
1,866

 

 
1,866

 
0.7
%
2016
 
2,152

 
11,125

 
13,277

 
5.0
%
2017
 
2,334

 
142,638

 
144,972

 
55.0
%
2018
 
2,351

 
9,560

 
11,911

 
4.5
%
2019 and thereafter
 
6,926

 
82,826

 
89,752

 
34.0
%
Total
 
$
17,041

 
$
247,236

 
$
264,277

 
100.1
%

19


Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS

 
 
Gross Leasable Area as of
 
Occupancy % as of
Community Centered Properties
 
December 31, 2013
 
December 31, 2013
 
September 30, 2013
 
June 30,
2013
 
March 31,
 2013
Retail
 
2,333,147

 
90
%
 
87
%
 
89
%
 
87
%
Office/Flex
 
1,201,672

 
91
%
 
88
%
 
87
%
 
87
%
Office
 
633,534

 
75
%
 
77
%
 
79
%
 
77
%
Total - Operating Portfolio
 
4,168,353

 
88
%
 
86
%
 
87
%
 
86
%
Redevelopment, New Acquisitions (1)
 
797,977

 
80
%
 
77
%
 
74
%
 
72
%
Total
 
4,966,330

 
87
%
 
85
%
 
86
%
 
84
%
 
(1) 
Includes (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.

Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)
 
Percentage of Total Annualized Base Rental Revenues (1)
 
Initial Lease Date
 
Year Expiring
 
 
 
 
 
 
 
 
 
 
 
Safeway Stores Incorporated (2)
 
Phoenix
 
$
1,061

 
2.0
%
 
7/12/2000, 5/8/1991 and 7/1/2000
 
2020, 2020 and 2021
Bashas' Inc. (3)
 
Phoenix
 
859

 
1.6
%
 
12/9/1993, 10/9/2004 and 4/1/2009
 
2014, 2024 and 2029
Wells Fargo & Company (4)
 
Phoenix
 
627

 
1.2
%
 
10/24/1996 and 4/16/1999
 
2016 and 2018
University of Phoenix
 
San Antonio
 
500

 
0.9
%
 
10/18/2010
 
2018
Sports Authority
 
San Antonio
 
495

 
0.9
%
 
1/1/2004
 
2015
Walgreens Co. (5)
 
Phoenix
 
448

 
0.8
%
 
11/3/1996 and 11/2/1987
 
2049 and 2027
Paul's Ace Hardware
 
Phoenix
 
400

 
0.7
%
 
3/1/2008
 
2018
Super Bravo, Inc.
 
Houston
 
349

 
0.6
%
 
6/15/2011
 
2023
Rock Solid Images
 
Houston
 
342

 
0.6
%
 
4/1/2004
 
2015
Sterling Jewelers, Inc.
 
Phoenix
 
326

 
0.6
%
 
11/23/2004
 
2020
KinderCare Learning Centers LLC (6)
 
Phoenix
 
322

 
0.6
%
 
5/7/2001 and 7/15/2000
 
2021 and 2035
Midland Financial Co.
 
Phoenix
 
315

 
0.6
%
 
1/1/2006
 
2015
Barnes & Noble Booksellers, Inc.
 
Phoenix
 
314

 
0.6
%
 
4/5/2004
 
2015
X-Ray X-Press Corporation
 
Houston
 
291

 
0.5
%
 
7/1/1998
 
2019
Air Liquide America, L.P.
 
Dallas
 
275

 
0.5
%
 
8/1/2001
 
2018
 
 
 
 
$
6,924

 
12.7
%
 
 
 
 


20


 (1) 
Annualized Base Rental Revenues represents the monthly base rent as of December 31, 2013 for each applicable tenant multiplied by 12.

(2) 
As of December 31, 2013, we had three leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on July 12, 2000, and is scheduled to expire in 2020, was $425,000, which represents 0.8% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on May 8, 1991, and is scheduled to expire in 2021, was $344,000, which represents 0.7% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 1, 2000, and is scheduled to expire in 2020, was $292,000, which represents 0.5% of our total annualized base rental revenue.

(3) 
As of December 31, 2013, we had three leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on December 9, 1993, and is scheduled to expire in 2014, was $61,000, which represents 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on October 9, 2004, and is scheduled to expire in 2024, was $119,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 1, 2009, and is scheduled to expire in 2029, was $679,000, which represents 1.3% of our total annualized base rental revenue.

(4) 
As of December 31, 2013, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on October 24, 1996, and is scheduled to expire in 2016, was $114,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 16, 1999, and is scheduled to expire in 2018, was $513,000, which represents 1.0% of our total annualized base rental revenue.

(5) 
As of December 31, 2013, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on November 5, 1996, and is scheduled to expire in 2049, was $279,000, which represents 0.5% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 2, 1987, and is scheduled to expire in 2027, was $169,000, which represents 0.3% of our total annualized base rental revenue.

(6) 
As of December 31, 2013, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on May 7, 2001, and is scheduled to expire in 2021, was $267,000, which represents 0.5% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 15, 2000, and is scheduled to expire in 2035, was $55,000, which represents 0.1% of our total annualized base rental revenue.


21


Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended
December 31,
 
Twelve Months Ended December 31,
 
 
2013
 
2012
 
2013
 
2012
RENEWALS
 
 
 
 
 
 
 
 
Number of Leases
 
46

 
37

 
162

 
151

Total Square Feet (1)
 
87,129

 
102,202

 
374,454

 
343,145

Average Square Feet
 
1,894

 
2,762

 
2,311

 
2,272

Total Lease Value
 
$
2,990,000

 
$
3,312,000

 
$
16,385,000

 
$
13,936,000

NEW LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
45

 
41

 
185

 
172

Total Square Feet (1)
 
148,914

 
90,174

 
460,466

 
341,885

Average Square Feet
 
3,309

 
2,199

 
2,489

 
1,988

Total Lease Value
 
$
7,763,000

 
$
7,942,000

 
$
27,769,000

 
$
21,288,000

TOTAL LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
91

 
78

 
347

 
323

Total Square Feet (1)
 
236,043

 
192,376

 
834,920

 
685,030

Average Square Feet
 
2,594

 
2,466

 
2,406

 
2,121

Total Lease Value
 
$
10,753,000

 
$
11,254,000

 
$
44,154,000

 
$
35,224,000


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


22


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 Sq. Ft.
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
59

 
$
4,135,630

 
102,893

 
2.5

 
$
247,271

 
$
2.40

 
$
15.01

 
$
14.81

 
$
20,698

 
1.4
 %
 
$
83,231

 
5.7
 %
3rd Quarter 2013
 
53

 
5,753,820

 
156,660

 
2.9

 
534,534

 
3.41

 
12.91

 
13.72

 
(127,771
)
 
(5.9
)%
 
(60,495
)
 
(2.9
)%
2nd Quarter 2013
 
28

 
3,059,381

 
48,620

 
3.2

 
117,774

 
2.42

 
14.44

 
14.89

 
(21,921
)
 
(3.0
)%
 
44,137

 
6.3
 %
1st Quarter 2013
 
44

 
2,177,934

 
64,759

 
2.5

 
79,790

 
1.23

 
12.95

 
13.12

 
(11,028
)
 
(1.3
)%
 
40,186

 
4.9
 %
Total - 12 months
 
184

 
$
15,126,765

 
372,932

 
2.8

 
$
979,369

 
$
2.63

 
$
13.70

 
$
14.07

 
$
(140,022
)
 
(2.6
)%
 
$
107,059

 
2.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
13

 
$
1,145,166

 
15,764

 
4.4

 
$
204,187

 
$
12.95

 
$
18.98

 
$
18.33

 
$
10,184

 
3.5
 %
 
$
18,471

 
6.7
 %
3rd Quarter 2013
 
21

 
1,313,538

 
34,583

 
3.0

 
117,321

 
3.39

 
10.99

 
12.30

 
(45,062
)
 
(10.7
)%
 
(28,611
)
 
(7.0
)%
2nd Quarter 2013
 
9

 
524,647

 
15,182

 
2.2

 
64,652

 
4.26

 
9.08

 
10.22

 
(17,280
)
 
(11.2
)%
 
9,852

 
6.9
 %
1st Quarter 2013
 
8

 
456,268

 
12,577

 
2.8

 
20,581

 
1.64

 
11.41

 
11.48

 
(948
)
 
(0.6
)%
 
19,284

 
14.6
 %
Total - 12 months
 
51

 
$
3,439,619

 
78,106

 
3.1

 
$
406,741

 
$
5.21

 
$
12.30

 
$
12.98

 
$
(53,106
)
 
(5.2
)%
 
$
18,996

 
2.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
46

 
$
2,990,464

 
87,129

 
2.1

 
$
43,084

 
$
0.49

 
$
14.29

 
$
14.17

 
$
10,514

 
0.8
 %
 
$
64,760

 
5.5
 %
3rd Quarter 2013
 
32

 
4,440,282

 
122,077

 
2.9

 
417,213

 
3.42

 
13.45

 
$
14.13

 
(82,709
)
 
(4.8
)%
 
(31,884
)
 
(1.9
)%
2nd Quarter 2013
 
19

 
2,534,734

 
33,438

 
3.7

 
53,122

 
1.59

 
16.88

 
17.02

 
(4,641
)
 
(0.8
)%
 
34,285

 
6.2
 %
1st Quarter 2013
 
36

 
1,721,666

 
52,182

 
2.4

 
59,209

 
1.13

 
13.32

 
13.51

 
(10,080
)
 
(1.4
)%
 
20,902

 
3.1
 %
Total - 12 months
 
133

 
$
11,687,146

 
294,826

 
2.7

 
$
572,628

 
$
1.94

 
$
14.07

 
$
14.36


$
(86,916
)
 
(2.0
)%
 
$
88,063

 
2.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

23


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 Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-comparable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
32

 
$
6,617,801

 
142,661

 
6.1

 
$
702,071

 
$
4.92

 
$
7.70

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
45

 
7,256,999

 
109,219

 
3.9

 
1,120,481

 
10.26

 
12.48

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
59

 
10,250,630

 
220,446

 
4.2

 
1,131,700

 
5.13

 
10.42

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
27

 
4,902,083

 
87,641

 
4.9

 
637,970

 
7.28

 
11.21

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
163

 
$
29,027,513

 
559,967

 
4.7

 
$
3,592,222

 
$
6.42

 
$
10.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
32

 
$
6,617,801

 
142,661

 
6.1

 
$
702,071

 
$
4.92

 
$
7.70

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
43

 
7,223,892

 
106,019

 
4.0

 
1,120,170

 
10.57

 
12.53

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
41

 
7,412,645

 
137,293

 
4.4

 
803,627

 
5.85

 
11.22

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
18

 
3,074,881

 
57,506

 
5.3

 
370,645

 
6.45

 
9.90

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
134

 
$
24,329,219

 
443,479

 
5.0

 
$
2,996,513

 
$
6.76

 
$
10.23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 

 
$

 

 

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
2

 
33,107

 
3,200

 
0.9

 
311

 
0.10

 
10.50

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
18

 
2,837,985

 
83,153

 
3.9

 
328,073

 
3.95

 
9.11

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
9

 
1,827,202

 
30,135

 
4.2

 
267,325

 
8.87

 
13.71

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
29

 
$
4,698,294

 
116,488

 
3.9

 
$
595,709

 
$
5.11

 
$
10.34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

24


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 Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New & Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
91

 
$
10,753,431

 
245,554

 
4.6

 
$
949,342

 
$
3.87

 
$
10.76

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
98

 
13,010,819

 
265,879

 
3.3

 
1,655,015

 
6.22

 
12.73

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
87

 
13,310,011

 
269,066

 
4.1

 
1,249,474

 
4.64

 
11.15

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
71

 
7,080,017

 
152,400

 
3.9

 
717,760

 
4.71

 
11.95

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
347

 
$
44,154,278

 
932,899

 
4.0

 
$
4,571,591

 
$
4.90

 
$
11.63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
45

 
$
7,762,967

 
158,425

 
5.9

 
$
906,258

 
$
5.72

 
$
8.82

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
64

 
8,537,430

 
140,602

 
3.7

 
1,237,491

 
8.80

 
12.16

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
50

 
7,937,292

 
152,475

 
4.2

 
868,279

 
5.69

 
11.01

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
26

 
3,531,149

 
70,083

 
4.9

 
391,226

 
5.58

 
10.17

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
185

 
$
27,768,838

 
521,585

 
4.7

 
$
3,403,254

 
$
6.52

 
$
10.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
46

 
$
2,990,464

 
87,129

 
2.1

 
$
43,084

 
$
0.49

 
$
14.29

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
34

 
4,473,389

 
125,277

 
2.0

 
417,524

 
3.33

 
13.38

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
37

 
5,372,719

 
116,591

 
3.9

 
381,195

 
3.27

 
11.34

 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
45

 
3,548,868

 
82,317

 
3.0

 
326,534

 
3.97

 
13.46

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
162

 
$
16,385,440

 
411,314

 
3.0

 
$
1,168,337

 
$
2.84

 
$
13.01

 
 
 
 
 
 
 
 
 
 

(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 of tenant improvements (TI) and incentives 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 TI 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.


25


Whitestone REIT and Subsidiaries
LEASE EXPIRATIONS(1) 

 
 
 
 
 
 
 
 
Annualized Base Rent(2)
 
 
 
 
Gross Leasable Area
 
as of December 31, 2013
Year
 
Number of
Leases
 
Square Feet
 
Percent
of Gross Leasable Area
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2014
 
414

 
996,649

 
20.1
%
 
$
12,536

 
23.0
%
 
$
12.58

2015
 
233

 
733,611

 
14.8
%
 
9,025

 
16.6
%
 
12.30

2016
 
206

 
587,016

 
11.8
%
 
7,647

 
14.0
%
 
13.03

2017
 
132

 
430,480

 
8.7
%
 
6,106

 
11.2
%
 
14.18

2018
 
121

 
537,445

 
10.8
%
 
7,210

 
13.2
%
 
13.42

2019
 
44

 
219,993

 
4.4
%
 
2,690

 
4.9
%
 
12.23

2020
 
22

 
199,911

 
4.0
%
 
2,326

 
4.3
%
 
11.64

2021
 
16

 
143,907

 
2.9
%
 
1,817

 
3.3
%
 
12.63

2022
 
23

 
159,310

 
3.2
%
 
1,949

 
3.6
%
 
12.23

2023
 
13

 
135,753

 
2.7
%
 
833

 
1.5
%
 
6.14

Total
 
1,224

 
4,144,075

 
83.4
%
 
$
52,139

 
95.6
%
 
$
12.58


(1) 
Lease expirations table reflects rents in place as of December 31, 2013, and does not include option periods.
(2) 
Annualized Base Rent represents the monthly base rent as of December 31, 2013 for each tenant multiplied by 12.


26


Whitestone REIT and Subsidiaries
2014 Financial Guidance

Guidance Summary
 
 
 
 
 
 
 
2013
 
2014 Projected
 
 
Actual
 
Low
 
High
Base Property NOI (1)
 
$
38,635,000

 
$
45,000,000

 
$
46,300,000

 
 
 
 
 
 
 
Same Store Property NOI Growth (2)
 
 
 
4
%
 
7
%
 
 
 
 
 
 
 
Base Property % Leased at period end (1)
 
86.8
%
 
87.0
%
 
89.0
%
 
 
 
 
 
 
 
Acquisitions
 
$
131,000,000

 
$
40,000,000

 
$
80,000,000

Dispositions
 
$

 
$
10,000,000

 
$
20,000,000

New Development
 
$

 
$
10,000,000

 
$
20,000,000

 
 
 
 
 
 
 
FFO Core per common share and OP unit
 
$
1.10

 
$
1.09

 
$
1.18

 
 
 
 
 
 
 
FFO per common share and OP unit
 
$
0.91

 
$
0.88

 
$
0.97


Guidance Rollforward
 
 
 
 
 
 
 
2014 Projected
 
 
Low
 
High
2013 FFO Core per common share and OP unit
 
$
1.10

 
$
1.10

 
 
 
 
 
NOI
 
 
 
 
   Same Store Property Growth (2)
 
0.06

 
0.11

   Full Year NOI from 2013 Acquisitions (3)
 
0.20

 
0.22

   2014 Acquisitions
 
0.05

 
0.10

   2014 Dispositions
 
(0.01
)
 
(0.02
)
 
 
 
 
 
General and administrative
 
(0.04
)
 
(0.05
)
Net Interest Expense
 
(0.03
)
 
(0.04
)
 
 
 
 
 
Before change in weighted average shares
 
$
1.33

 
$
1.42

 
 
 
 
 
Change in Weighted Average Shares
 
(0.24
)
 
(0.24
)
 
 
 
 
 
2014 FFO Core Range
 
$
1.09

 
$
1.18


(1) 
Reflects properties owned as of December 31, 2013.
(2) 
Reflects properties owned for the full year ended December 31, 2013.
(3) 
Reflects difference between full year of NOI for properties acquired in 2013 and partial year in 2013.


27


Whitestone REIT and Subsidiaries
2014 Financial Guidance
(continued)

Reconciliation of FFO and FFO Core Guidance to Net Income Per Share
(All numbers are per diluted share)
 
 
 
 
 
 
 
Funds from Operations Guidance:
 
Full Year 2013
 
Full Year 2014 Projected
 
 
Actual
 
Low
 
High
Net income attributable to Whitestone REIT
 
$
0.20

 
$
0.21

 
$
0.30

 
 
 
 
 
 
 
Adjustments to reconcile net income to FFO:
 
 
 
 
 
 
Depreciation expense, amortization and other amounts
 
0.71

 
0.67

 
0.67

 
 
 
 
 
 
 
Funds from Operations
 
$
0.91

 
$
0.88

 
$
0.97

 
 
 
 
 
 
 
Adjustments to reconcile FFO to FFO Core:
 
 
 
 
 
 
All other non-core amounts
 
0.19

 
0.21

 
0.21

 
 
 
 
 
 
 
Funds from Operations Core
 
$
1.10

 
$
1.09

 
$
1.18




28



Whitestone REIT and Subsidiaries
Property Details
As of December 31, 2013
 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied
 
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
%
 
$
942

 
$
12.97

 
$
12.59

Anthem Marketplace
 
Phoenix
 
2000
 
113,293

 
100
%
 
1,505

 
13.28

 
13.28

Bellnott Square
 
Houston
 
1982
 
73,930

 
41
%
 
321

 
10.59

 
10.82

Bissonnet Beltway
 
Houston
 
1978
 
29,205

 
100
%
 
337

 
11.54

 
11.44

Centre South
 
Houston
 
1974
 
39,134

 
94
%
 
289

 
7.86

 
9.00

The Citadel
 
Phoenix
 
1985
 
28,547

 
83
%
 
374

 
15.78

 
22.07

Desert Canyon
 
Phoenix
 
2000
 
62,533

 
83
%
 
554

 
10.67

 
11.68

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
65
%
 
510

 
15.88

 
17.34

Holly Knight
 
Houston
 
1984
 
20,015

 
100
%
 
368

 
18.39

 
18.12

Headquarters Village
 
Dallas
 
2009
 
89,134

 
94
%
 
2,211

 
26.39

 
27.59

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
94
%
 
814

 
8.57

 
8.80

Lion Square
 
Houston
 
1980
 
117,592

 
78
%
 
987

 
10.76

 
10.90

MarketPlace At Central
 
Phoenix
 
2000
 
111,130

 
86
%
 
429

 
4.49

 
6.62

Mercado at Scottsdale Ranch
 
Phoenix
 
1987
 
118,730

 
97
%
 
1,632

 
14.17

 
14.17

Paradise Plaza
 
Phoenix
 
1993
 
125,898

 
97
%
 
1,698

 
13.90

 
16.80

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
95
%
 
1,915

 
17.82

 
18.78

Providence
 
Houston
 
1980
 
90,327

 
87
%
 
652

 
8.30

 
8.27

Shaver
 
Houston
 
1978
 
21,926

 
93
%
 
203

 
9.96

 
12.36

Shops at Pecos Ranch
 
Phoenix
 
2009
 
78,767

 
93
%
 
1,509

 
20.60

 
20.60

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
100
%
 
1,424

 
25.71

 
28.13

South Richey
 
Houston
 
1980
 
69,928

 
98
%
 
636

 
9.28

 
9.15

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
90
%
 
751

 
20.13

 
20.10

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
100
%
 
1,036

 
10.90

 
10.72

Sunridge
 
Houston
 
1979
 
49,359

 
92
%
 
431

 
9.49

 
9.56

Sunset at Pinnacle Peak
 
Phoenix
 
2000
 
41,530

 
70
%
 
544

 
18.71

 
18.71

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
96
%
 
1,341

 
13.60

 
13.72

Torrey Square
 
Houston
 
1983
 
105,766

 
83
%
 
722

 
8.22

 
7.86

Town Park
 
Houston
 
1978
 
43,526

 
100
%
 
826

 
18.98

 
18.79

Webster Pointe
 
Houston
 
1984
 
26,060

 
79
%
 
223

 
10.83

 
10.15

Westchase
 
Houston
 
1978
 
49,573

 
88
%
 
545

 
12.49

 
12.42

Windsor Park
 
San Antonio
 
1992
 
196,458

 
97
%
 
1,653

 
8.67

 
9.33

 
 
 
 
 
 
2,333,147

 
90
%
 
27,382

 
13.04

 
13.65

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Brookhill
 
Houston
 
1979
 
74,757

 
87
%
 
$
243

 
$
3.74

 
$
3.72

Corporate Park Northwest
 
Houston
 
1981
 
185,627

 
82
%
 
1,543

 
10.14

 
11.34

Corporate Park West
 
Houston
 
1999
 
175,665

 
93
%
 
1,538

 
9.41

 
9.13

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
100
%
 
954

 
9.55

 
9.39

Dairy Ashford
 
Houston
 
1981
 
42,902

 
99
%
 
271

 
6.38

 
6.19

Holly Hall Industrial Park
 
Houston
 
1980
 
90,000

 
100
%
 
757

 
8.41

 
8.26


29


 Whitestone REIT and Subsidiaries
Property Details
As of December 31, 2013
(continued)

 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied
 
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)
Interstate 10 Warehouse
 
Houston
 
1980
 
151,000

 
99
%
 
723

 
4.84

 
4.83

Main Park
 
Houston
 
1982
 
113,410

 
90
%
 
713

 
6.99

 
6.99

Plaza Park
 
Houston
 
1982
 
105,530

 
67
%
 
699

 
9.89

 
9.74

Westbelt Plaza
 
Houston
 
1978
 
65,619

 
84
%
 
487

 
8.84

 
8.29

Westgate Service Center
 
Houston
 
1984
 
97,225

 
100
%
 
589

 
6.06

 
6.01

 
 
 
 
 
 
1,201,672

 
91
%
 
8,517

 
7.79

 
7.84

Office Communities:
 
 
 
 
 
  
 
 
 
 
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
58
%
 
$
1,015

 
$
13.90

 
$
14.44

Featherwood
 
Houston
 
1983
 
49,760

 
86
%
 
762

 
17.81

 
18.55

Pima Norte
 
Phoenix
 
2007
 
35,110

 
26
%
 
150

 
16.43

 
16.10

Royal Crest
 
Houston
 
1984
 
24,900

 
65
%
 
196

 
12.11

 
11.80

Uptown Tower
 
Dallas
 
1982
 
253,981

 
81
%
 
3,834

 
18.64

 
17.88

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
91
%
 
1,457

 
15.08

 
13.84

Zeta Building
 
Houston
 
1982
 
37,740

 
85
%
 
546

 
17.02

 
15.43

 
 
 
 
 
 
633,534

 
75
%
 
7,960

 
16.75

 
16.20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average- Operating Portfolio
 
 
 
 
 
4,168,353

 
88
%
 
43,859

 
11.96

 
12.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Park Woodland II
 
Houston
 
1972
 
16,220

 
87
%
 
$
240

 
$
17.01

 
$
17.01

Fountain Hills Plaza
 
Phoenix
 
2009
 
111,289

 
89
%
 
1,594

 
$
16.09

 
19.52

Fountain Square
 
Phoenix
 
1986
 
118,209

 
73
%
 
1,296

 
$
15.02

 
18.04

Market Street at DC Ranch
 
Phoenix
 
2003
 
241,280

 
81
%
 
3,434

 
17.57

 
17.57

Village Square at Dana Park
 
Phoenix
 
2009
 
310,979

 
78
%
 
4,003

 
16.50

 
17.39

Total/Weighted Average - Development Portfolio
 
 
 
 
 
797,977

 
80
%
 
10,567

 
16.55

 
17.83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthem Marketplace
 
Phoenix
 
N/A
 

 
%
 
$

 
$

 
$

Dana Park Development
 
Phoenix
 
N/A
 

 
%
 

 

 

Fountain Hills
 
Phoenix
 
N/A
 

 
%
 

 

 

Market Street at DC Ranch
 
Phoenix
 
N/A
 

 
%
 

 

 

Pinnacle Phase II
 
Phoenix
 
N/A
 

 
%
 

 

 

Shops at Starwood Phase III
 
Dallas
 
N/A
 

 
%
 

 

 

Total/Weighted Average - Property Held For Development (4)
 
 
 
 
 

 
%
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total/Weighted Average
 
 
 
 
 
4,966,330

 
87
%
 
$
54,426

 
$
12.60

 
$
13.03



30


(1)  
Calculated as the tenant's actual December 31, 2013 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of December 31, 2013. 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, 2013 equaled approximately $101,000 for the month ended December 31, 2013.
 
(2) 
Calculated as annualized base rent divided by square feet leased as of December 31, 2013. Excludes vacant space as of December 31, 2013.

(3) 
Represents (i) the contractual base rent for leases in place as of December 31, 2013, adjusted to 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 December 31, 2013.

(4) 
As of December 31, 2013, these properties are held for development and, therefore, had no gross leasable area.

31