Whitestone REIT - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - Whitestone REIT	exhibit991pressreleaseofwh.htm
8-K - 8-K - Whitestone REIT	wsr8-kearningsrelease2020x.htm



TABLE OF CONTENTS

	Page

Corporate Profile	1
First Quarter 2020 Earnings Release	2
Financial Results
Consolidated Balance Sheets	9
Consolidated Statements of Operations and Comprehensive Loss	11
Consolidated Statements of Cash Flows	14
Reconciliation of Non-GAAP Measures	16
Same Store Property Analysis	17
Other Financial Information	18
Market Capitalization and Selected Ratios	19
Summary of Outstanding Debt and Debt Maturities	21
Summary of Occupancy and Top Tenants	22
Summary of Tenant Types	25
Summary of Leasing Activity	26
Lease Expirations	29
Property Details	30



CORPORATE PROFILE

NYSE: WSR	Whitestone REIT (NYSE: WSR) is a self-managed fully integrated real estate investment trust that primarily
Common Shares	owns, manages and redevelops high quality retail properties which we refer to as Community Centered
	Properties^®. As of March 31, 2020, we wholly owned 58 Community Centered Properties^® with
58 Community Centers	approximately 5.0 million square feet of gross leasable area, located in six of the top markets in the United States in
5.0 Million Sq. Ft. of gross	terms of population growth: Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix and San Antonio.
leasable area	Headquartered in Houston, Texas, we were founded in 1998. We also own an 81.4% interest in eight properties with
1,404 tenants	approximately 0.9 million square feet of gross leasable area through our equity investment in Pillarstone
	Capital REIT Operating Partnership LP (“Pillarstone OP”).

6 Top Growth Markets	We focus on value creation in our properties, as we market, lease and manage our properties. We invest in
Austin	properties that are or can become Community Centered Properties^® from which our tenants deliver needed services
Chicago	to the surrounding community. We focus on properties with smaller rental spaces that present opportunities for
Dallas-Fort Worth	attractive returns.
Houston
Phoenix	Our strategic efforts target entrepreneurial, service-oriented tenants at each property who provide services to their
San Antonio	respective surrounding communities. Operations include an internal management structure providing cost-effective
	services to locally-oriented, smaller space tenants. Multi-cultural community focus sets us apart from traditional
Fiscal Year End	commercial real estate operators. We value diversity on our team and maintain in-house leasing, property
12/31	management, marketing, construction and maintenance departments with culturally diverse and multi-lingual
	associates who understand the particular needs of our tenants and neighborhoods.
Common Shares &
Units Outstanding*:	We have a diverse tenant base concentrated on service offerings such as specialty retail, grocery, restaurants,
Common Shares: 42.1 Million	medical, educational and financial services and entertainment. These tenants tend to occupy smaller spaces (less
Operating Partnership Units:	than 3,000 square feet) and, as of March 31, 2020, provided a 44% premium rental rate compared to our larger
0.9 Million	space tenants. The largest of our 1,404 tenants at our wholly owned properties comprised only 2.9% of our
	annualized base rental revenues for the three months ended March 31, 2020.
Distribution (per share / unit)*:
Quarter: $ 0.1050	Investor Relations:
Annualized: $ 0.42	Whitestone REIT			ICR Inc.
Dividend Yield: 7.3%**	Kevin Reed, Director of Investor Relations			Brad Cohen
	2600 South Gessner, Suite 500, Houston, Texas 77063			203.682.8211
Board of Trustees:	713.435.2219 email: ir@whitestonereit.com
Nandita V. Berry	website: www.whitestonereit.com
Jeffrey A. Jones
Donald F. Keating	Analyst Coverage:
Paul T. Lambert	B. Riley FBR	Ladenburg Thalmann	Maxim Group
Jack L. Mahaffey	Craig Kucera	John J. Massocca	Michael Diana
James C. Mastandrea	540.277.3366	212.409.2543	212.895.3641
David F. Taylor	ckucera@brileyfbr.com	jmassocca@ladenburg.com	mdiana@maximgrp.com
Trustee Emeritus:
Daniel G. DeVos

* As of May 6, 2020
** Based on common share price
of $5.77 as of close of market on
May 6, 2020.
	We are followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding our performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of our management. We do not by our reference above or distribution imply our endorsement of or concurrence with such information, conclusions or recommendations.

WHITESTONE REIT

REPORTS FIRST QUARTER 2020 RESULTS & PROVIDES COVID-19 UPDATE

- Provides Rent Collection Update -

Houston, Texas, May 7, 2020 - Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today announced its operating and financial results for the quarter ended March 31, 2020 and provided information regarding financial and operational activities due to the ongoing COVID-19 pandemic. Whitestone is a pure-play community-centered retail REIT that acquires, owns, manages, develops and redevelops high quality “e-commerce resistant” neighborhood, community and lifestyle retail centers principally located in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone’s optimal mix of national, regional and local tenants provide daily necessities, needed services and entertainment to their respective communities which are not readily available online.

All per share amounts are on a diluted per common share and operating partnership (“OP”) unit basis unless stated otherwise.

First Quarter Operating and Financial Highlights:


•	Earnings: Other than the impacts from the COVID-19 pandemic, earnings were on target with initial expectations:


◦	Results for the first quarter include $0.9 million credit loss and straight-line rent reserve, primarily associated with the COVID-19 pandemic.


◦	Net Income attributable to common shareholders for the quarter ended March 31, 2020 was $1.6 million, or $0.04 per diluted share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic.


◦	Funds from Operations (“FFO”) for the quarter ended March 31, 2020 was $9.3 million, or $0.21 per share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic.


◦	FFO Core for the quarter ended March 31, 2020 was $10.6 million or $0.24 per share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic.


•	Rental rates on new and renewal leases signed for the twelve months ended March 31, 2020 increased 7.2% and 10.4%, respectively, on a GAAP basis;


•	Annualized Base Rent per leased square foot grew 1% to $19.77 from $19.58 at March 31, 2019;


•	Decrease in same-store NOI of 0.9% for the first quarter primarily as a result of credit loss reserves of approximately 180 basis points associated with the COVID-19 pandemic.

COVID-19 Update Summary (as of May 5, 2020)


•	All 58 community centers are open and operating


•	63% of total tenants are open and operating (based on ABR)


•	64% of total April 2020 base rent and CAM has been paid to date


•	40% of total May 2020 base rent and CAM has been paid to date, representing approximately the same percentage of collections as April at this point in time


•	One mortgage debt maturing in 2020 for approximately $9 million; and no debt maturities in 2021


•	Acquisition activity suspended as previously communicated


•	2020 guidance suspended as previously communicated


•	Second Quarter 2020 dividend reduced by 63% to $0.105 per share

Jim Mastandrea, Chairman and Chief Executive Officer of Whitestone REIT commented, “Our properties primarily located in the growth markets of Arizona and Texas performed well in the first quarter, as they generated positive same store NOI growth excluding the impact of the COVID-19 reserve recorded in the quarter. However, our service focused community centered properties were not immune to the unprecedented crisis that continues to evolve. First and foremost our focus is on protecting the health of our employees, tenants and the communities that we serve. During this difficult time, we continue to work diligently and thoughtfully with our valued tenants as U.S., state and local plans evolve to begin to reopen the economies in which we operate. As these economies recover, we plan to build on the progress we demonstrated to start the year in our efforts to position the Company to drive same store NOI while continuing to align G&A, and strengthen our balance sheet.”

Financial Results

Reconciliations of Net Income Attributable to Whitestone REIT to FFO and FFO Core are included herein.

Net Income attributable to common shareholders for the quarter ended March 31, 2020 was $1.6 million, or $0.04 per diluted share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic. Net income attributable to common shareholders for the quarter ended March 31, 2019 was $2.8 million, or $0.07 per share.

FFO for the quarter ended March 31, 2020 was $9.3 million, or $0.21 per share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic. FFO for the quarter ended March 31, 2019 was $9.9 million, or $0.24 per share.

FFO Core for the quarter ended March 31, 2020 was $10.6 million or $0.24 per share, inclusive of $0.9 million, or $0.02 per share, related to credit loss and straight-line rent reserve, primarily due to COVID-19 pandemic. FFO Core for the quarter ended March 31, 2019 was $11.8 million, or $0.28 per share;

Operating Results

For the periods ending March 31, 2020 and 2019, the Company’s operating highlights were as follows:



	First Quarter -2020	First Quarter 2019
Occupancy:
Wholly Owned Properties	89.7%	90.1%
Same Store Property Net Operating Income Growth⁽¹⁾	(0.9)%	1.1%

Rental Rate Growth - Total (GAAP Basis):	7.3%	7.2%
New Leases	(3.8)%	9.3%
Renewal Leases	8.4%	7.0%

Leasing Transactions:
Number of New Leases	24	27
New Leases - Annualized Revenue (millions)	$6.0	$3.5
Number of Renewal Leases	56	54
Renewal Leases - Annualized Revenue (millions)	$15.9	$12.3

⁽¹⁾ Excludes straight-line rent, amortization of above/below market rates and lease termination fees in both periods.

Real Estate Portfolio Update

Community Centered Properties^TM Portfolio Statistics:

As of March 31, 2020, Whitestone wholly owned 58 Community Centered Properties^TM with 5.0 million square feet of gross leasable area ("GLA"). Five of the 58 Community Centered Properties^TM are land parcels held for future development. The portfolio is comprised of 30 properties in Texas, 27 in Arizona and one in Illinois. Whitestone’s Retail Community Centered Properties^TM are located in Austin (4), San Antonio (3), Chicago (1), Dallas-Fort Worth (8), Houston (15) and the greater Phoenix metropolitan area (27). In addition to being business friendly, these are six of the top markets in the country in terms of size, economic strength and population growth. 2017 estimates show the projected 5-year population growth rates for both Austin and Dallas-Fort Worth to be 9.7%, San Antonio to be 8.6%, Houston to be 8.0%, and Phoenix to be 6.6% ⁽¹⁾. The Company’s retail properties in these markets are generally located on the best retail corners embedded in affluent communities. The Company also owns an 81.4% equity interest in and manages eight properties containing 0.9 million square feet of GLA through its investment in Pillarstone OP.

At the end of the first quarter, the Company’s diversified tenant base was comprised of 1,404 tenants, with the largest tenant accounting for only 2.9% of annualized base rental revenues. Lease terms range from less than one year for smaller tenants to over 15 years for larger tenants. Whitestone’s leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance, and typically exclude restrictive lease clauses.

COVID-19 Update Summary

The following portfolio and tenant statistics are as of May 5, 2020, and reflect Whitestone’s most current information to date. It is expected that the following statistics will change, potentially significantly, going forward. All of Whitestone’s 58 community centers feature necessity-based tenants, and are open and operating in compliance with federal, state and local COVID-19 guidelines and mandates. 63% of Whitestone’s tenants are open and operating (based on ABR). Whitestone management is communicating with all of its tenants and is proactively engaged with those tenants temporarily closed. Due to reopening efforts in Whitestone’s markets, it is expected the percentage of tenants open and operating will increase significantly in May and June. To date, Whitestone has received 64% of its April billed revenue (includes contractual base rent and common area maintenance reimbursables). The Company has received 40% of May billed revenue, representing approximately the same percentage of collections as April at this point in time.

On March 24,2020, to enhance its liquidity position and maintain financial flexibility, Whitestone had drawn $30.0 million on its $515 million unsecured credit facility. Whitestone reduced its annual dividend, saving approximately $31 million. Whitestone withdrew its 2020 FFO Guidance. Additionally, Whitestone has suspended all acquisition activity, postponed and will carefully evaluate development and redevelopment activities on a case-by-case basis, reduced overhead by 10%, and minimized all expenses, including travel.

As of May 5, 2020, Whitestone had $36.2 million in cash and cash equivalents, $8.7 million of availability and $110.5 million of capacity under its credit facility.

In terms of future debt maturities, Whitestone has one $9 million mortgage loan and no debt maturing in 2021.

⁽¹⁾Source: Claritas, as of April 2017.

Balance Sheet and Liquidity

The Company has undepreciated real estate assets of $1.1 billion at March 31, 2020.

At March 31, 2020, 50 of the Company’s wholly owned 58 properties were unencumbered by mortgage debt, with an undepreciated cost basis of $804.0 million. At March 31, 2020, the Company had total real estate debt, net of cash, of $675.5 million, of which approximately 84% was subject to fixed interest rates. The Company’s weighted average interest rate on all fixed rate debt as of the end of the first quarter was 4.1% and the weighted average remaining term was 5.0 years.

At March 31, 2020, Whitestone had $36.8 million of cash available on its balance sheet, $8.7 million of availability and $110.5 million of capacity under its credit facility.

In addition, on April 30, 2020, the Company entered into a loan in the principal amount of $1,733,510 pursuant to the Paycheck Protection Program (the “PPP Loan”) of the CARES Act. The Company intends to use all proceeds from the PPP Loan to retain employees and maintain payroll and make mortgage payments, lease payments and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts are intended to be eligible for forgiveness pursuant to the provisions of the CARES Act. However, no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

Dividend

On March 24, 2020, we announced that, in further pursuit of ensuring our financial flexibility, our Board of Trustees (the “Board”) determined to conserve additional liquidity by reducing our dividend in response to the COVID-19 pandemic. The dividend reduction is expected to result in over $30 million of annualized cash savings. On March 20, 2020, the Company declared a quarterly cash distribution of $0.105 per common share and OP unit for the second quarter of 2020, to be paid in three equal installments of $0.035 in April, May, and June of 2020. Going forward, Whitestone’s Board of Trustees will continue to evaluate dividend declarations each quarter. Whitestone intends to maintain compliance with REIT taxable income distribution requirements.

Conference Call Information

In conjunction with the issuance of its financial results, the Company invites you to listen to the its earnings release conference call to be broadcast live on Friday, May 8, 2020 at 10:00 A.M. Central Time. The call will be led by James C. Mastandrea, Chairman and Chief Executive Officer, and David K. Holeman, Chief Financial Officer. Conference call access information is as follows:

Dial-in number for domestic participants: (800) 239-9838

Dial-in number for international participants: (323) 794-2551

The conference call will be recorded, and a telephone replay will be available through Friday, May 22, 2020. Replay access information is as follows:

Replay number for domestic participants: (844) 512-2921

Replay number for international participants: (412) 317-6671

Passcode (for all participants): 2898551

To listen to a live webcast of the conference call, click on the Investor Relations tab of the Company’s website, www.whitestonereit.com, and then click on the webcast link. A replay of the call will be available on Whitestone’s website via the webcast link until the Company’s next earnings release. Additional information about Whitestone can be found on the Company’s website.

The first quarter earnings release and supplemental data package will be located in the Investor Relations section of the Company’s website. For those without internet access, the 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.

Supplemental Financial Information

Supplemental materials and details regarding Whitestone's results of operations, communities and tenants are available on the Company's website at www.whitestonereit.com.

About Whitestone REIT

Whitestone is a community-centered retail REIT that acquires, owns, manages, develops and redevelops high quality "e-commerce resistant" neighborhood, community and lifestyle retail centers principally located in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone’s optimal mix of national, regional and local tenants provide daily necessities, needed services and entertainment to the communities in which they are located. Whitestone's properties are primarily located in business-friendly Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio, which are among the fastest growing U.S. population centers with highly educated workforces, high household incomes and strong job growth. For additional information, visit www.whitestonereit.com.

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 include statements about our earnings guidance, future liquidity, performance growth and expectations and other matters and can generally be identified by the Company’s use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “intend,” “anticipate,” “believe,” “continue,” “goals” or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters.

The following are additional 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: uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company’s business, employees and tenants, including, among others, (a) changes in tenant demand for the Company’s properties, (b) financial challenges confronting major tenants, including as a result of decreased customers’ willingness to frequent, and mandated stay in place orders that have prevented customers from frequenting, some of Company’s tenants’ businesses and the impact of these issues on the Company’s ability to collect rent from its tenants; (c) operational changes implemented by the Company, including remote working arrangements, which may put increased strain on IT systems and create increased vulnerability to cybersecurity incidents, (d) significant reduction in the Company’s liquidity due to the lack of further availability under its revolving credit facility and limited ability to access the capital markets and other sources of financing on attractive terms or at all, and (e) prolonged measures to contain the spread of COVID-19 or the premature easing of government-imposed restrictions implemented to contain the spread of COVID-19; the imposition of federal income taxes if we fail to qualify as a real estate investment trust (“REIT”) in any taxable year or forego an opportunity to ensure REIT status; the Company's ability to meet its long-term goals, 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; its ability to successfully identify, finance and consummate suitable acquisitions, and the impact of such acquisitions, including financing developments, capitalization rates and internal rates of return; the Company’s ability to reduce or otherwise effectively manage its general and administrative expenses; the Company’s ability to fund from cash flows or otherwise distributions to its shareholders at current rates or at all; 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, legislative and regulatory changes, including changes to laws governing REITs and the impact of the legislation commonly known as the Tax Cuts and Jobs Act; 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 of 1986, as amended; 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 from time to time.

Non-GAAP Financial Measures

This release contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”) including EBITDA, FFO, FFO Core, and NOI. Following are explanations and reconciliations of these metrics to their most comparable GAAP metric.

EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization: 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), adjustments for unconsolidated real estate partnership and general and administrative expenses. 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.

FFO: Funds From Operations: Management believes that FFO is a useful measure of the Company's operating performance. The Company computes FFO as defined by NAREIT, which states that FFO should represent net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. 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.

FFO Core: Funds From Operations 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, proxy contest fees, debt extension costs, non-cash share-based compensation expense and rent support agreement payments received from sellers on acquired 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. 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: Net Operating Income: 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, pro rata share of NOI of unconsolidated entities 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.

Same Store NOI: Management believes that Same Store NOI is a useful measure of the Company’s property operating performance because it includes only the properties that have been owned for the entire period being compared, and that it is frequently used by the investment community. Same Store NOI assists in eliminating differences in NOI due to the acquisition or disposition of properties during the period being presented, providing a more consistent measure of the Company’s performance. The Company defines Same Store NOI as operating revenues (rental and other revenues, excluding straight line rent adjustments, amortization of above/below market rents, and lease termination fees) less property and related expenses (property operation and maintenance and real estate taxes), Non-Same Store NOI, and NOI of our investment in Pillarstone OP (pro rata). We define “Non-Same Stores” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company's Same Store NOI may not be comparable to that of other REITs.

Investors Contact:

Kevin Reed, Director of Investor Relations

Whitestone REIT

(713) 435-2219

ir@whitestonereit.com



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

	March 31, 2020			December 31, 2019

ASSETS
Real estate assets, at cost
Property	$	1,101,118		$	1,099,955
Accumulated depreciation	(144,316		)	(137,933		)
Total real estate assets	956,802			962,022
Investment in real estate partnership	34,289			34,097
Cash and cash equivalents	36,774			15,530
Restricted cash	105			113
Escrows and acquisition deposits	6,320			8,388
Accrued rents and accounts receivable, net of allowance for doubtful accounts	22,896			22,854
Receivable due from related party	896			477
Unamortized lease commissions, legal fees and loan costs	8,775			8,960
Prepaid expenses and other assets⁽¹⁾	4,469			3,819
Total assets	$	1,071,326		$	1,056,260
LIABILITIES AND EQUITY
Liabilities:
Notes payable	$	675,409		$	644,699
Accounts payable and accrued expenses⁽²⁾	43,073			39,336
Payable due to related party	451			307
Tenants' security deposits	6,756			6,617
Dividends and distributions payable	4,519			12,203
Total liabilities	730,208			703,162
Commitments and contingencies:	—			—
Equity:
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of March 31, 2020 and December 31, 2019	—			—
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 42,135,048 and 41,492,117 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	41			41
Additional paid-in capital	556,729			554,816
Accumulated deficit	(206,886		)	(204,049		)
Accumulated other comprehensive loss	(16,212		)	(5,491		)
Total Whitestone REIT shareholders' equity	333,672			345,317
Noncontrolling interest in subsidiary	7,446			7,781
Total equity	341,118			353,098
Total liabilities and equity	$	1,071,326		$	1,056,260

Whitestone REIT and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands)



		March 31, 2020		December 31, 2019



⁽¹⁾ Operating lease right of use assets (net) (related to adoption of Topic 842)	$	1,105	$	1,328



⁽²⁾ Operating lease liabilities (related to adoption of Topic 842)	$	1,108	$	1,331

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)




	Three Months Ended March 31,
	2020			2019
Revenues
Rental⁽¹⁾	$	30,196		$	29,033
Management, transaction, and other fees	388			661
Total revenues	30,584			29,694

Operating expenses
Depreciation and amortization	6,971			6,464
Operating and maintenance	5,597			4,428
Real estate taxes	4,536			4,045
General and administrative	5,100			6,002
Total operating expenses	22,204			20,939

Other expenses (income)
Interest expense	6,693			6,533
Gain on sale of properties	(46		)	—
Loss on sale or disposal of assets	253			2
Interest, dividend and other investment income	(62		)	(245		)
Total other expense	6,838			6,290

Income before equity investments in real estate partnerships and income tax	1,542			2,465

Equity in earnings of real estate partnership	192			492
Provision for income tax	(87		)	(118		)

Net income	1,647			2,839

Less: Net income attributable to noncontrolling interests	35			65

Net income attributable to Whitestone REIT	$	1,612		$	2,774

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)





	Three Months Ended March 31,
	2020			2019
Basic Earnings Per Share:
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.04		$	0.07
Diluted Earnings Per Share:
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.04		$	0.07

Weighted average number of common shares outstanding:
Basic	42,048			39,649
Diluted	43,009			40,626

Consolidated Statements of Comprehensive Loss

Net income	$	1,647		$	2,839

Other comprehensive loss

Unrealized loss on cash flow hedging activities	(10,952		)	(3,470		)

Comprehensive loss	(9,305		)	(631		)

Less: Net income attributable to noncontrolling interests	35			65
Less: Comprehensive loss attributable to noncontrolling interests	(231		)	(80		)

Comprehensive loss attributable to Whitestone REIT	$	(9,109	)	$	(616	)

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)



		Three Months Ended March 31,
		2020		2019



⁽¹⁾Rental
Rental revenues	$	22,077		$	21,751
Recoveries	8,963			7,554
Bad debt	(844		)	(272		)
Total rental	$	30,196		$	29,033



Whitestone REIT and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	1,647		$	2,839
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,971			6,464
Amortization of deferred loan costs	282			237
Loss on sale or disposal of assets and properties	207			2
Bad debt	844			272
Share-based compensation	1,248			1,883
Equity in earnings of real estate partnership	(192		)	(492		)
Changes in operating assets and liabilities:
Escrows and acquisition deposits	2,068			1,825
Accrued rents and accounts receivable	(886		)	(1,376		)
Receivable due from related party	(419		)	(571		)
Distributions from real estate partnership	—			301
Unamortized lease commissions, legal fees and loan costs	(423		)	775
Prepaid expenses and other assets	(10,154		)	(2,245		)
Accounts payable and accrued expenses	3,737			(4,078		)
Payable due to related party	144			146
Tenants' security deposits	139			83
Net cash provided by operating activities	5,213			6,065
Cash flows from investing activities:
Additions to real estate	(1,593		)	(2,455		)
Net cash used in investing activities	(1,593		)	(2,455		)
Cash flows from financing activities:
Distributions paid to common shareholders	(11,928		)	(11,301		)
Distributions paid to OP unit holders	(258		)	(264		)
Proceeds from issuance of common shares, net of offering costs	2,241			—
Payments of exchange offer costs	(32		)	(6		)
Proceeds from bonds payable	—			100,000
Net proceeds from (payments of) credit facility	30,000			(90,200		)
Repayments of notes payable	(777		)	(6,202		)
Payments of loan origination costs	—			(3,981		)
Repurchase of common shares	(1,630		)	(762		)
Net cash provided by (used in) financing activities	17,616			(12,716		)
Net increase (decrease) in cash, cash equivalents and restricted cash	21,236			(9,106		)
Cash, cash equivalents and restricted cash at beginning of period	15,643			13,786
Cash, cash equivalents and restricted cash at end of period ⁽¹⁾	$	36,879		$	4,680


⁽¹⁾	For a reconciliation of cash, cash equivalents and restricted cash, see supplemental disclosures below.

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

	Three Months Ended March 31,
	2020			2019
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,461		$	6,268
Non cash investing and financing activities:
Disposal of fully depreciated real estate	$	24		$	89
Financed insurance premiums	$	1,431		$	1,238
Value of shares issued under dividend reinvestment plan	$	42		$	34
Value of common shares exchanged for OP units	$	44		$	5
Change in fair value of cash flow hedge	$	(10,952	)	$	(3,470	)



	March 31,
	2020		2019
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$	36,774	$	4,580
Restricted cash	105		100
Total cash, cash equivalents and restricted cash	$	36,879	$	4,680

Whitestone REIT and Subsidiaries

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share and per unit data)



	Three Months Ended
	March 31,
FFO (NAREIT) AND FFO CORE	2020		2019
Net income attributable to Whitestone REIT	$	1,612	$	2,774
Adjustments to reconcile to FFO:
Depreciation and amortization of real estate	6,909		6,395
Depreciation and amortization of real estate assets of real estate partnership (pro rata)	449		621
Loss on disposal of assets and properties	207		2
Loss on sale or disposal of properties or assets of real estate partnership (pro rata)	53		3
Net income attributable to noncontrolling interests	35		65
FFO (NAREIT)	9,265		9,860
Adjustments to reconcile to FFO Core:
Share-based compensation expense	1,326		1,951

FFO Core	$	10,591	$	11,811

FFO PER SHARE AND OP UNIT CALCULATION
Numerator:
FFO	$	9,265	$	9,860
Distributions paid on unvested restricted common shares	—		(41		)
FFO excluding amounts attributable to unvested restricted common shares	$	9,265	$	9,819
FFO Core excluding amounts attributable to unvested restricted common shares	$	10,591	$	11,770
Denominator:
Weighted average number of total common shares - basic	42,048		39,649
Weighted average number of total noncontrolling OP units - basic	904		928
Weighted average number of total common shares and noncontrolling OP units - basic	42,952		40,577

Effect of dilutive securities:
Unvested restricted shares	961		977
Weighted average number of total common shares and noncontrolling OP units - diluted	43,913		41,554

FFO per common share and OP unit - basic	$	0.22	$	0.24
FFO per common share and OP unit - diluted	$	0.21	$	0.24

FFO Core per common share and OP unit - basic	$	0.25	$	0.29
FFO Core per common share and OP unit - diluted	$	0.24	$	0.28

Whitestone REIT and Subsidiaries

RECONCILIATION OF NON-GAAP MEASURES

(continued)

(in thousands)



	Three Months Ended
	March 31,
PROPERTY NET OPERATING INCOME	2020			2019
Net income attributable to Whitestone REIT	$	1,612		$	2,774
General and administrative expenses	5,100			6,002
Depreciation and amortization	6,971			6,464
Equity in earnings of real estate partnership	(192		)	(492		)
Interest expense	6,693			6,533
Interest, dividend and other investment income	(62		)	(245		)
Provision for income taxes	87			118
Gain on sale of properties	(46		)	—
Management fee, net of related expenses	108			(8		)
Loss on sale or disposal of assets and properties	253			2
NOI of real estate partnership (pro rata)	1,096			1,759
Net income attributable to noncontrolling interests	35			65
NOI	21,655			22,972
Non-Same Store NOI ⁽¹⁾	(575		)	—
NOI of real estate partnership (pro rata)	(1,096		)	(1,759		)
NOI less Non-Same Store NOI and NOI of real estate partnership (pro rata)	19,984			21,213
Same Store straight line rent adjustments	350			(460		)
Same Store amortization of above/below market rents	(217		)	(272		)
Same Store lease termination fees	(30		)	(209		)
Same Store NOI⁽²⁾	$	20,087		$	20,272

⁽¹⁾

We define “Non-Same Store” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. For purposes of comparing the three months ended March 31, 2020 to the three months ended March 31, 2019, Non-Same Store includes properties acquired between January 1, 2019 and March 31, 2020 and properties sold between January 1, 2019 and March 31, 2020, but not included in discontinued operations.


⁽²⁾	We define “Same Store” as properties that have been owned during the entire period being compared. For purposes of comparing the three months ended March 31, 2020 to the three months ended March 31, 2019, Same Store includes properties owned before January 1, 2019 and not sold before March 31, 2020.

Whitestone REIT and Subsidiaries RECONCILIATION OF NON-GAAP MEASURES (continued) (in thousands)

	Three Months Ended
	March 31,
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION	2020			2019

Net income attributable to Whitestone REIT	$	1,612		$	2,774
Depreciation and amortization	6,971			6,464
Equity in earnings of real estate partnership	(192		)	(492		)
Interest expense	6,693			6,533
Provision for income taxes	87			118
Gain on sale of properties	(46		)	—
Management fee, net of related expenses	108			(8		)
Loss on sale or disposal of assets and properties	253			2
EBITDA adjustments for real estate partnership	887			1,671
Net income attributable to noncontrolling interests	35			65
EBITDA	$	16,408		$	17,127

Whitestone REIT and Subsidiaries

SAME STORE PROPERTY ANALYSIS

(in thousands)



	Three Months Ended March 31,
	2020			2019			Change			Percent Change
Same Store (51 properties, excluding development land)
Property revenues
Rental	$	29,352		$	29,033		$	319		1	%
Management, transaction and other fees	196			428			(232		)	(54	)%
Total property revenues	29,548			29,461			87			—	%

Property expenses
Property operation and maintenance	5,221			4,203			1,018			24	%
Real estate taxes	4,343			4,045			298			7	%
Total property expenses	9,564			8,248			1,316			16	%

Total property revenues less total property expenses	19,984			21,213			(1,229		)	(6	)%

Same Store straight line rent adjustments	350			(460		)	810			(176	)%
Same Store amortization of above/below market rents	(217		)	(272		)	55			(20	)%
Same Store lease termination fees	(30		)	(209		)	179			(86	)%

Same Store NOI ⁽¹⁾	$	20,087		$	20,272		$	(185	)	(1	)%


⁽¹⁾	For a reconciliation of Same Store NOI, see previous section “Reconciliation of Non-GAAP Measures.”

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

	Three Months Ended
	March 31,
	2020			2019
Other Financial Information:

Tenant improvements ^{(1) (2)}	$	494		$	562
Leasing commissions ^{(1) (2)}	$	370		$	458
Maintenance capital⁽¹⁾	$	1,086		$	969
Scheduled debt principal payments⁽¹⁾	$	483		$	521
Straight line rent income⁽¹⁾	$	(382	)	$	538
Market rent amortization income from acquired leases⁽¹⁾	$	207		$	261
Non-cash share-based compensation expense⁽¹⁾	$	1,326		$	1,951
Non-real estate depreciation and amortization⁽¹⁾	$	62		$	69
Amortization of loan fees⁽¹⁾	$	283		$	257
Undepreciated value of unencumbered properties	$	803,952		$	759,202
Number of unencumbered properties	50			49
Full time employees	92			97


⁽¹⁾	Includes pro-rata share attributable to real estate partnership.


⁽²⁾	Does not include first generation costs needed for new acquisitions, development or redevelopment of a property to bring the property to operating standards for its intended use.

Whitestone REIT and Subsidiaries

MARKET CAPITALIZATION AND SELECTED RATIOS

(in thousands, except per share amounts and percentages)



	As of March 31, 2020
MARKET CAPITALIZATION:	Percent of Total Equity		Total Market Capitalization			Percent of Total Market Capitalization
Equity Capitalization:
Common shares outstanding	97.9	%	42,135
Operating partnership units outstanding	2.1	%	904
Total	100.0	%	43,039

Market price of common shares as of
March 31, 2020			$	6.20

Total equity capitalization			266,842			29	%

Debt Capitalization:
Outstanding debt			$	676,550
Less: Cash and cash equivalents			(36,774		)
Total debt capitalization			639,776			71	%

Total Market Capitalization as of
March 31, 2020			$	906,618		100	%



SELECTED RATIOS:

	Three Months Ended
	March 31,
INTEREST COVERAGE RATIO	2020			2019
EBITDA/Interest Expense
EBITDA	$	16,408		$	17,127

Interest expense	6,693			6,533
Pro rata share of interest expense from real estate partnership	156			424
Less: amortization of loan fees	(283		)	(257		)
Interest expense, excluding amortization of loan fees	6,566			6,700

Ratio of EBITDA to interest expense	2.5			2.6

Whitestone REIT and Subsidiaries

MARKET CAPITALIZATION AND SELECTED RATIOS

(continued)

(in thousands, except per share amounts and percentages)




LEVERAGE RATIO	March 31,
	2020			2019
Debt/Undepreciated Book Value
Outstanding debt	$	675,469		$	623,300
Less: Cash	(36,774		)	(4,580		)
Add: Proportional share of net debt of real estate partnership	10,162			33,705
Outstanding debt after cash	$	648,857		$	652,425

Undepreciated real estate assets	$	1,101,118		$	1,054,889
Add: Proportional share of real estate from unconsolidated partnership	45,630			63,876
Undepreciated real estate assets	$	1,146,748		$	1,118,765
Ratio of debt to real estate assets	57		%	58		%



	Three Months Ended
	March 31,
	2020			2019
Debt/EBITDA Ratio
Outstanding debt	$	675,469		$	623,300
Less: Cash	(36,774		)	(4,580		)
Add: Proportional share of net debt of unconsolidated real estate partnership	10,162			33,705
Total Net Debt	$	648,857		$	652,425

EBITDA	$	16,408		$	17,127
Share based compensation	1,326			1,951
EBITDA, adjusted	$	17,734		$	19,078

Pro forma annualized EBITDA, adjusted	$	70,936		$	76,312

Ratio of debt to pro forma EBITDA, adjusted	9.1			8.5

Whitestone REIT and Subsidiaries

SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES

TOTAL OUTSTANDING DEBT

(in thousands)



Description	March 31, 2020			December 31, 2019
Fixed rate notes
$10.5 million, 4.85% Note, due September 24, 2020 ⁽¹⁾	$	9,200		$	9,260
$100.0 million, 1.73% plus 1.35% to 1.90% Note, due October 30, 2022 ⁽²⁾	100,000			100,000
$165.0 million, 2.24% plus 1.35% to 1.90% Note, due January 31, 2024 ⁽³⁾	165,000			165,000
$80.0 million, 3.72% Note, due June 1, 2027	80,000			80,000
$19.0 million 4.15% Note, due December 1, 2024	18,922			19,000
$20.2 million 4.28% Note, due June 6, 2023	18,518			18,616
$14.0 million 4.34% Note, due September 11, 2024	13,421			13,482
$14.3 million 4.34% Note, due September 11, 2024	14,186			14,243
$15.1 million 4.99% Note, due January 6, 2024	14,348			14,409
$2.6 million 5.46% Note, due October 1, 2023	2,374			2,386
$50.0 million, 5.09% Note, due March 22, 2029	50,000			50,000
$50.0 million, 5.17% Note, due March 22, 2029	50,000			50,000
$1.1 million 4.53% Note, due November 28, 2020	1,081			—
Floating rate notes
Unsecured line of credit, LIBOR plus 1.40% to 1.90%, due January 31, 2023	139,500			109,500
Total notes payable principal	676,550			645,896
Less deferred financing costs, net of accumulated amortization	(1,141		)	(1,197		)
Total notes payable	$	675,409		$	644,699


⁽¹⁾	Promissory note includes an interest rate swap that fixed the interest rate at 3.55% for the duration of the term through September 24, 2018 and 4.85% beginning September 25, 2018 through September 24, 2020.


⁽¹⁾	Promissory note includes an interest rate swap that fixed the LIBOR portion of the interest rate at 1.73%.


⁽³⁾	Promissory note includes an interest rate swap that fixed the LIBOR portion of the interest rate at an average rate of 2.24% for the duration of the term through January 31, 2024.

SCHEDULE OF DEBT MATURITIES AS OF MARCH 31, 2020

(in thousands)



Year	Amount Due

2020	$	11,605
2021	1,611
2022	101,683
2023	167,363
2024	228,573
Thereafter	165,715
Total	$	676,550

Whitestone REIT and Subsidiaries SUMMARY OF OCCUPANCY AND TOP TENANTS

	Gross Leasable Area as of	Occupancy % as of
	March 31,	March 31,		December 31,		September 30,		June 30,
Community Centered Properties^®	2020	2020		2019		2019		2019
Whitestone	4,953,571	90	%	90	%	90	%	89	%

Unconsolidated real estate partnership	926,798	69	%	75	%	77	%	77	%

Whitestone REIT and Subsidiaries

SUMMARY OF OCCUPANCY AND TOP TENANTS

(continued)



Tenant Name	Location	Annualized Rental Revenue (in thousands)		Percentage of Total Annualized Base Rental Revenues ⁽¹⁾		Initial Lease Date	Year Expiring

Safeway Stores Incorporated ⁽²⁾	Austin, Houston and Phoenix	$	2,529	2.9	%	11/14/1982, 5/8/1991, 7/1/2000, 4/1/2014, 4/1/2014 and 10/19/16	2021, 2021, 2022, 2024, 2025 and 2034
Whole Foods Market	Houston	2,247		2.6	%	9/3/2014	2035
Frost Bank	Houston	1,910		2.2	%	7/1/2014	2024
Newmark Real Estate of Houston LLC	Houston	1,029		1.2	%	10/1/2015	2026
Verizon Wireless⁽³⁾	Houston and Phoenix	948		1.1	%	8/16/1994, 2/1/2004, 5/10/2004, 1/27/2006 and 5/1/2014	2020, 2022, 2023, 2024 and 2024
Walgreens & Co. ⁽⁴⁾	Houston and Phoenix	946		1.1	%	11/14/1982, 11/2/1987, 8/24/1996 and 11/3/1996	2022, 2027, 2049 and 2056
Bashas' Inc. ⁽⁵⁾	Phoenix	848		1.0	%	10/9/2004 and 4/1/2009	2024 and 2029
Alamo Drafthouse Cinema	Austin	690		0.8	%	2/1/2012	2027
Dollar Tree ⁽⁶⁾	Houston and Phoenix	635		0.7	%	8/10/1999, 6/29/2001, 11/8/2009, 12/17/2009, and 5/21/2013	2021, 2023, 2025, 2025 and 2027
Wells Fargo & Company ⁽⁷⁾	Phoenix	565		0.6	%	10/24/1996 and 4/16/1999	2022 and 2023
Kroger Co.	Dallas	483		0.5	%	12/15/2000	2022
Ruth's Chris Steak House Inc.	Phoenix	466		0.5	%	1/1/1991	2030
Regus Corporation	Houston	442		0.5	%	5/23/2014	2025
Paul's Ace Hardware	Phoenix	427		0.5	%	3/1/2008	2023
Original Ninfas LP	Houston	395		0.5	%	8/29/2018	2029
		$	14,560	16.7	%


⁽¹⁾	Annualized Base Rental Revenues represents the monthly base rent as of March 31, 2020 for each applicable tenant multiplied by 12.

⁽²⁾

As of March 31, 2020, we had six leases with the same tenant occupying space at properties located in Phoenix, Houston and Austin. The annualized rental revenue for the lease that commenced on April 1, 2014, and is scheduled to expire in 2034, was $1,047,000, which represents approximately 1.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 1, 2014, and is scheduled to expire in 2024, was $42,000, which represents less than 0.1% of our 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 approximately 0.4% 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 2025, was $353,000, which represents approximately 0.4% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 14, 1982, and is scheduled to expire in 2022, was $318,000, which represents approximately 0.4% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on October 19, 2016, and is scheduled to expire in 2021, was $425,000, which represents approximately 0.5% of our total annualized base rental revenue.

⁽³⁾

As of March 31, 2020, we had five leases with the same tenant occupying space at properties located in Phoenix and Houston. The annualized rental revenue for the lease that commenced on August 16, 1994, and is scheduled to expire in 2020, was $21,000, which represents less than 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on January 27, 2006, and is scheduled to expire in 2023, was $134,000, which represents approximately 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on February 1, 2004, and is scheduled to expire in 2024, was $38,000, which represents less than 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on May 1, 2014, and is scheduled to expire in 2024, was $749,000, which represents approximately 0.9% of our total annualized rental revenue. The annualized rental revenue for the lease that commenced on May 10, 2004, and is scheduled to expire in 2022, was $6,000, which represents less than 0.1% of our total annualized base rental revenue.

⁽⁴⁾

As of March 31, 2020, we had four leases with the same tenant occupying space at properties located in Phoenix and Houston. The annualized rental revenue for the lease that commenced on November 3, 1996, and is scheduled to expire in 2049, was $279,000, which represents approximately 0.3% 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 $189,000, which represents approximately 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 14, 1982, and is scheduled to expire in 2022, was $181,000, which represents approximately 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on August 24, 1996, and is scheduled to expire in 2056, was $298,000, which represents approximately 0.3% of our total annualized rental revenue.

⁽⁵⁾

As of March 31, 2020, 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 9, 2004, and is scheduled to expire in 2024, was $119,000, which represents approximately 0.1% 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 $729,000, which represents approximately 0.8% of our total annualized base rental revenue.

⁽⁶⁾

As of March 31, 2020, we had five leases with the same tenant occupying space at properties in Houston and Phoenix. The annualized rental revenue for the lease that commenced on August 10, 1999, and is scheduled to expire in 2025, was $88,000, which represents approximately 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on December 17, 2009, and is scheduled to expire in 2025, was $118,000, which represents approximately 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on June 29, 2001, and is scheduled to expire in 2021, was $169,000, which represents approximately 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on May 21, 2013, and is scheduled to expire in 2023, was $110,000, which represents approximately 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 8, 2009, and is scheduled to expire in 2027, was $151,000, which represents approximately 0.2% of our total annualized base rental revenue.

⁽⁷⁾

As of March 31, 2020, 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 2022, was $131,000, which represents approximately 0.1% 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 2023, was $434,000, which represents approximately 0.5% of our total annualized base rental revenue.

Whitestone REIT and Subsidiaries SUMMARY OF TENANT TYPES


	% of GLA	% of ABR	April Collection %
Restaurants and Food Service	17%	23%	45	%
Grocery	15%	9%	99	%
Financial Services	6%	9%	98	%
Salons	6%	8%	47	%
Medical and Dental	6%	7%	70	%
Non Retail	5%	6%	80	%
General Retail	7%	5%	53	%
Apparel	5%	5%	39	%
Home Decor & Improvement	7%	5%	63	%
Education	5%	4%	50	%
Fitness	5%	4%	45	%
Local Services	3%	3%	79	%
Wireless	1%	2%	95	%
Off-Price	4%	2%	73	%
Pet Supply & Services	2%	2%	73	%
Entertainment	2%	2%	14	%
Pharmacy & Nutrition	2%	2%	89	%
Sporting Goods	1%	1%	51	%
Postal Services	1%	1%	98	%
Other	-	-	99	%
Total	100%	100%	64	%

Whitestone REIT and Subsidiaries SUMMARY OF LEASING ACTIVITY

	Three Months Ended
	March 31,
	2020		2019
RENEWALS
Number of Leases	56		54
Total Square Feet ⁽¹⁾	168,230		145,924
Average Square Feet	3,004		2,702
Total Lease Value	$	15,923,000	$	12,314,000
NEW LEASES
Number of Leases	24		27
Total Square Feet ⁽¹⁾	52,909		53,719
Average Square Feet	2,205		1,990
Total Lease Value	$	6,032,000	$	3,512,000
TOTAL LEASES
Number of Leases	80		81
Total Square Feet ⁽¹⁾	221,139		199,643
Average Square Feet	2,764		2,465
Total Lease Value	$	21,955,000	$	15,826,000


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

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:
1st Quarter 2020	63	$	16,883,447	179,014	4.4	$	447,816	$	2.50	$	20.67		$	20.26	$	73,787		2.0	%	$	256,566		7.3	%
4th Quarter 2019	58	22,877,760		261,520	5.1	446,371		1.71		16.16			15.48		177,777			4.4	%	553,623			14.4	%
3rd Quarter 2019	53	12,857,359		141,219	3.3	655,507		4.64		19.21			17.88		188,460			7.4	%	348,891			14.4	%
2nd Quarter 2019	74	19,815,722		224,467	3.6	512,015		2.28		18.56			18.91		(77,384		)	(1.9	)%	226,404			5.6	%
Total - 12 months	248	$	72,434,288	806,220	4.2	$	2,061,709	$	2.56	$	18.37		$	17.92	$	362,640		2.5	%	$	1,385,484		10.0	%

Comparable New Leases:
1st Quarter 2020	8	$	1,279,066	12,579	4.6	$	107,093	$	8.51	$	22.10		$	24.99	$	(36,405	)	(11.6	)%	$	(11,095	)	(3.8	)%
4th Quarter 2019	6	852,078		10,270	5.0	53,557		5.21		16.81			11.05		59,212			52.1	%	57,623			50.0	%
3rd Quarter 2019	11	3,489,257		18,604	5.8	347,513		18.68		28.09			28.56		(8,713		)	(1.6	)%	33,063			6.6	%
2nd Quarter 2019	19	5,068,397		31,505	5.8	259,037		8.22		23.87			24.77		(28,390		)	(3.6	)%	38,486			5.3	%
Total - 12 months	44	$	10,688,798	72,958	5.5	$	767,200	$	10.52	$	23.65		$	23.85	$	(14,296	)	(0.8	)%	$	118,077		7.2	%

Comparable Renewal Leases:
1st Quarter 2020	55	$	15,604,381	166,435	4.3	$	340,723	$	2.05	$	20.57		$	19.90	$	110,192		3.4	%	$	267,661		8.4	%
4th Quarter 2019	52	22,025,682		251,250	5.1	392,814		1.56		16.14			15.67		118,565			3.0	%	496,000			13.3	%
3rd Quarter 2019	42	9,368,102		122,615	2.9	307,994		2.51		17.86			16.25		197,173			9.9	%	315,828			16.4	%
2nd Quarter 2019	55	14,747,325		192,962	3.2	252,978		1.31		17.70			17.95		(48,994		)	(1.4	)%	187,918			5.7	%
Total - 12 months	204	$	61,745,490	733,262	4.1	$	1,294,509	$	1.77	$	17.84	1.00	$	17.33	$	376,936		2.9	%	$	1,267,407		10.4	%

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
1st Quarter 2020	80	$	21,955,258	221,139	4.4	$	999,160	$	4.52	$	20.85
4th Quarter 2019	76	27,445,320		293,646	5.2	889,152		3.03		17.06
3rd Quarter 2019	68	18,627,801		175,714	3.5	1,181,535		6.72		20.07
2nd Quarter 2019	92	26,144,460		283,777	4.1	1,728,883		6.09		18.30
Total - 12 months	316	$	94,172,839	974,276	4.4	$	4,798,730	$	4.93	$	18.82

New
1st Quarter 2020	24	$	6,032,328	52,909	4.4	$	583,553	$	11.03	$	20.58
4th Quarter 2019	21	4,744,807		36,206	5.3	461,538		12.75		22.46
3rd Quarter 2019	26	9,259,699		53,099	4.8	873,541		16.45		25.17
2nd Quarter 2019	35	10,711,818		83,510	6.0	1,390,932		16.66		19.75
Total - 12 months	106	$	30,748,652	225,724	5.2	$	3,309,564	$	14.66	$	21.65

Renewal
1st Quarter 2020	56	$	15,922,930	168,230	4.3	$	415,607	$	2.47	$	20.93
4th Quarter 2019	55	22,700,513		257,440	5.1	427,614		1.66		16.30
3rd Quarter 2019	42	9,368,102		122,615	2.9	307,994		2.51		17.86
2nd Quarter 2019	57	15,432,642		200,267	3.3	337,951		1.69		17.70
Total - 12 months	210	$	63,424,187	748,552	4.1	$	1,489,166	$	1.99	$	17.97


⁽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 lease term is determined on the basis of square footage.


⁽³⁾	Estimated amount per signed lease. Actual cost of construction may vary.


⁽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.

Whitestone REIT and Subsidiaries LEASE EXPIRATIONS⁽¹⁾

					Annualized Base Rent⁽²⁾
		Gross Leasable Area			as of March 31, 2020
Year	Number of Leases	Square Feet	Percent of Gross Leasable Area		Amount (in thousands)		Percent of Total		Per Square Foot
2020	342	599,993	12.1	%	$	10,911	12.4	%	$	18.19
2021	243	609,773	12.3	%	11,708		13.3	%	19.20
2022	204	691,650	14.0	%	12,660		14.4	%	18.30
2023	174	523,376	10.6	%	10,953		12.5	%	20.93
2024	182	678,396	13.7	%	14,461		16.5	%	21.32
2025	118	473,956	9.6	%	7,894		9.0	%	16.66
2026	29	200,049	4.0	%	4,134		4.7	%	20.66
2027	32	184,285	3.7	%	3,789		4.3	%	20.56
2028	21	107,029	2.2	%	2,464		2.8	%	23.02
2029	23	171,859	3.5	%	3,293		3.8	%	19.16
Total	1,368	4,240,366	85.7	%	$	82,267	93.7	%	$	19.40


⁽¹⁾	Lease expirations table reflects rents in place as of March 31, 2020, and does not include option periods.


⁽²⁾	Annualized Base Rent represents the monthly base rent as of March 31, 2020 for each tenant multiplied by 12.

Whitestone REIT and Subsidiaries Property Details As of March 31, 2020

Community Name	Location	Year Built/ Renovated	Gross Leasable Square Feet	Percent Occupied at 3/31/2020		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⁾
Whitestone Properties:
Ahwatukee Plaza	Phoenix	1979	72,650	83	%	$	818	$	13.57	$	13.17
Anthem Marketplace	Phoenix	2000	113,293	94	%	1,683		15.80		15.76
Anthem Marketplace Phase II	Phoenix	2019	6,853	100	%	183		26.70		33.85
Bissonnet Beltway	Houston	1978	29,205	85	%	372		14.99		14.54
BLVD Place	Houston	2014	216,944	99	%	8,971		41.77		44.65
The Citadel	Phoenix	2013	28,547	95	%	477		17.59		15.60
City View Village	San Antonio	2005	17,870	100	%	523		29.27		29.04
Davenport Village	Austin	1999	128,934	97	%	3,260		26.07		25.37
Desert Canyon	Phoenix	2000	62,533	90	%	823		14.62		14.30
Eldorado Plaza	Dallas	2004	219,287	97	%	3,220		15.14		15.26
Fountain Hills	Phoenix	2009	111,289	88	%	1,634		16.68		16.53
Fountain Square	Phoenix	1986	118,209	80	%	1,754		18.55		17.88
Fulton Ranch Towne Center	Phoenix	2005	120,575	92	%	1,908		17.20		19.28
Gilbert Tuscany Village	Phoenix	2009	49,415	100	%	979		19.81		19.49
Gilbert Tuscany Village Hard Corner	Phoenix	2009	14,603	100	%	124		8.49		8.90
Heritage Trace Plaza	Dallas	2006	70,431	98	%	1,490		21.59		23.20
Headquarters Village	Dallas	2009	89,134	78	%	2,079		29.90		30.82
Keller Place	Dallas	2001	93,541	98	%	1,006		10.97		10.88
Kempwood Plaza	Houston	1974	91,302	92	%	1,114		13.26		13.55
La Mirada	Phoenix	1997	147,209	88	%	2,871		22.16		23.07
Lion Square	Houston	2014	117,592	92	%	1,502		13.88		14.30
The Marketplace at Central	Phoenix	2012	111,130	100	%	1,070		9.63		9.39
Market Street at DC Ranch	Phoenix	2003	244,888	98	%	4,987		20.78		20.33
Mercado at Scottsdale Ranch	Phoenix	1987	118,730	83	%	1,648		16.72		15.86
Paradise Plaza	Phoenix	1983	125,898	90	%	1,564		13.80		13.11
Parkside Village North	Austin	2005	27,045	100	%	833		30.80		31.47
Parkside Village South	Austin	2012	90,101	91	%	2,097		25.58		26.58
Pima Norte	Phoenix	2007	35,110	60	%	372		17.66		18.94
Pinnacle of Scottsdale	Phoenix	1991	113,108	96	%	2,323		21.39		22.08
Pinnacle Phase II	Phoenix	2017	27,063	100	%	752		27.79		26.16
The Promenade at Fulton Ranch	Phoenix	2007	98,792	88	%	1,272		14.63		13.88
Providence	Houston	1980	90,327	96	%	1,026		11.83		11.89
Quinlan Crossing	Austin	2012	109,892	97	%	2,389		22.41		23.88
Seville	Phoenix	1990	90,042	81	%	2,553		35.00		35.28
Shaver	Houston	1978	21,926	94	%	329		15.96		15.91
Shops at Pecos Ranch	Phoenix	2009	78,767	79	%	1,691		27.18		26.45
Shops at Starwood	Dallas	2006	55,385	81	%	1,297		28.91		27.80
The Shops at Williams Trace	Houston	1985	132,991	93	%	1,976		15.98		16.02
South Richey	Houston	1980	69,928	100	%	698		9.98		12.38
Spoerlein Commons	Chicago	1987	41,455	82	%	711		20.92		20.95
Starwood Phase II	Dallas	2016	35,351	80	%	987		34.90		35.54
The Strand at Huebner Oaks	San Antonio	2000	73,920	95	%	1,622		23.10		23.01
SugarPark Plaza	Houston	1974	95,032	100	%	1,226		12.90		13.03
Sunridge	Houston	1979	49,359	79	%	532		13.64		12.59
Sunset at Pinnacle Peak	Phoenix	2000	41,530	82	%	651		19.12		18.44
Terravita Marketplace	Phoenix	1997	102,733	52	%	1,180		22.09		21.34
Town Park	Houston	1978	43,526	100	%	1,020		23.43		22.24
Village Square at Dana Park	Phoenix	2009	323,026	82	%	6,158		23.25		22.86
Westchase	Houston	1978	50,332	75	%	542		14.36		13.99
Williams Trace Plaza	Houston	1983	129,222	93	%	1,894		15.76		15.60
Windsor Park	San Antonio	2012	196,458	97	%	1,893		9.93		9.58
Woodlake Plaza	Houston	1974	106,169	63	%	966		14.44		13.98
Total/Weighted Average - Whitestone Properties			4,848,652	90	%	85,050		19.49		19.64

Development Properties:
Las Colinas Village	Dallas	2000	104,919	88	%	$	2,346	$	25.41	$	26.05
Total/Weighted Average - Development Properties⁽⁴⁾			104,919	88	%	$	2,346	$	25.41	$	26.05

Land Held for Development:
BLVD Phase II-B	Houston	N/A	—	—		—		—		—
Dana Park Development	Phoenix	N/A	—	—		—		—		—
Eldorado Plaza Development	Dallas	N/A	—	—		—		—		—
Fountain Hills	Phoenix	N/A	—	—		—		—		—
Market Street at DC Ranch	Phoenix	N/A	—	—		—		—		—
Total/Weighted Average - Land Held For Development ⁽⁵⁾			—	—		—		—		—

Grand Total/Weighted Average - Whitestone Properties			4,953,571	90	%	$	87,396	$	19.60	$	19.77


Properties owned in Unconsolidated Real Estate Partnership (81.4% ownership):
9101 LBJ Freeway	Dallas	1985	125,874	63	%	$	1,343	$	16.94	$	16.90
Corporate Park Northwest	Houston	1981	174,359	77	%	1,833		13.65		13.48
Corporate Park Woodland II	Houston	2000	14,344	100	%	244		17.01		16.93
Holly Hall Industrial Park	Houston	1980	90,000	49	%	305		6.92		7.30
Holly Knight	Houston	1984	20,015	100	%	413		20.63		21.63
Interstate 10 Warehouse	Houston	1980	151,000	48	%	352		4.86		4.73
Uptown Tower	Dallas	1982	253,981	74	%	4,240		22.56		22.11
Westgate Service Center	Houston	1984	97,225	94	%	689		7.54		8.06
Total/Weighted Average - Unconsolidated Properties			926,798	69	%	$	9,419	$	14.73	$	14.67

⁽¹⁾

Calculated as the tenant’s actual March 31, 2020 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of March 31, 2020. 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 March 31, 2020 equaled approximately $102,000 for the month ended March 31, 2020.


⁽²⁾	Calculated as annualized base rent divided by leased square feet as of March 31, 2020.


⁽³⁾	Represents (i) the contractual base rent for leases in place as of March 31, 2020, 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 of March 31, 2020.


⁽⁴⁾	Includes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant development, redevelopment or re-tenanting.


⁽⁵⁾	As of March 31, 2020, these parcels of land were held for development and, therefore, had no gross leasable area.

Whitestone REIT - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - May 7, 2020

Attached files

Whitestone REIT Reports