-Strengthens Diversity and Leadership of
Board with Addition of Two New Independent
Trustees--Reaffirms Full Year 2017
Guidance-
Whitestone REIT (NYSE:WSR) (“Whitestone” or the “Company”) today
announced operating and financial results for the third quarter
ended September 30, 2017. Whitestone 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 national, regional and local tenants
provide daily necessities, needed services and entertainment not
readily available online to the communities they serve.
Highlights
- Strengthens Board of Trustees (the “Board”) by adding two
independent trustees, increasing cognitive and gender
diversity
- Inclusion into the S&P SmallCap 600 Index on September 8,
2017
- Operating Portfolio occupancy climbs above 90%
- Reaffirms full year 2017 guidance
Third Quarter 2017 Compared to Third
Quarter 2016:All per share amounts presented in this news
release are on a diluted per common share and operating partnership
(“OP”) unit basis unless stated otherwise.
- Net Income Attributable to Whitestone REIT (“Net Income”) of
$3.0 million
- 133% growth in Net Income per share to $0.07
- 60% growth in Funds from Operations (“FFO”) to $10.1
million
- 19% growth in FFO per share to $0.25
- 33% growth in FFO Core to $13.1 million. FFO Core per
share of $0.33 in both periods
- 32% growth in revenues to $33.7 million
- 30% growth in Net Operating Income (“NOI”)
- 4.7% same store NOI growth in wholly owned properties.
2.9% same store growth in all properties, including consolidated
partnership properties (“non-core” legacy assets)
- 20.3% increase in annualized base rent per square foot for
wholly owned properties to $18.84
- 7.6% rental rate increase on new and renewal leases executed in
wholly owned properties (GAAP Basis, Trailing Twelve Months)
- Increase in Operating Portfolio occupancy to 90.1% from
87.6%
“We continue to see strong results from our
neighborhood centers located in targeted communities with high
household incomes, educated workforces, and positive household
growth projections, as evidenced by our 4.7% same store NOI growth
and Operating Portfolio occupancy climbing above 90%,” commented
Jim Mastandrea, Chairman and Chief Executive Officer. “With a
heightened focus on driving efficiencies throughout our operating
platform and overall cost structure, Whitestone increased year over
year gross real estate assets by more than $225 million and
revenues by 32%. We also took steps to enhance our corporate
governance and ensure that our practices align with our culture by
adding two new trustees who bring independence, diversity and
leadership experience to our Board. Our commitment to serving
e-commerce resistant retailers and providing daily essential
services is what differentiates Whitestone from our peers, and
positions the Company to continue delivering strong results and
driving shareholder value.”
Real Estate Portfolio
Update
Community Centered Properties® Portfolio
Statistics:
As of September 30, 2017, Whitestone wholly owned 58 Community
Centered Properties® with 5.0 million square feet of gross leasable
area ("GLA"). The portfolio comprises 30 properties in Texas, 27 in
Arizona and one in Illinois. Whitestone’s retail Community Centered
Properties® are located in Austin (4), San Antonio (3), Dallas-Fort
Worth (6), Houston (17) and the greater Phoenix metropolitan area
(27). In addition to being business friendly, these are five of the
top markets in the country in terms of size, economic strength and
population growth. Between 2000 and 2014, all of these cities
experienced double-digit growth in population, with Austin at
+35.8%, San Antonio at +23.4%, Dallas-Fort Worth at +20.5%, Phoenix
at +15.8% and Houston at +13.2%.
The Company’s properties in these markets are
located on the best retail corners embedded in affluent
communities. The Company also owns a majority interest in and
manages 14 properties containing 1.5 million square feet of GLA
through its investment in Pillarstone Capital REIT Operating
Partnership L.P.
At the end of the third quarter of 2017, the
Company's diversified tenant base comprised approximately 1,649
tenants, with the largest tenant accounting for only 2.6% of
annualized base rental revenues. Lease terms range from less
than one year for smaller tenants to more than 15 years for larger
tenants. In addition to minimum monthly rent payments, the leases
generally include reimbursements for payment of taxes, insurance
and maintenance, and typically exclude restrictive lease
clauses.
Leasing Activity:
During the third quarter, the leasing team
signed 92 leases totaling 276,000 square feet of new, expansion and
renewal leases, compared to 113 leases totaling 270,000 square feet
in the third quarter of 2016. The total lease value added
during the quarter was $19.2 million compared to $16.3 million
during the same period last year. The Company's total
Operating Portfolio occupancy stood at 90.1% at quarter end.
Balance Sheet and Liquidity
Balance Sheet:
Reflecting the Company's activities over the last twelve months,
the Company’s undepreciated cost basis real estate assets grew by
$226.0 million to $1.14 billion at September 30, 2017, compared to
$918.6 million at September 30, 2016.
Liquidity, Debt and Credit
Facility:
At September 30, 2017, 48 of the Company’s
wholly-owned 58 properties were unencumbered by mortgage debt, with
an aggregate undepreciated cost basis of $732.9
million. The Company had total real estate debt, net of cash,
of $656.1 million, of which approximately 66%, was subject to fixed
interest rates. The Company's weighted average interest rate
on all fixed rate debt as of the end of the third quarter was 3.9%
and the weighted average remaining term was 5.4 years.
At quarter end, Whitestone had $6.3 million of
cash available on its balance sheet and $72.8 million of available
capacity under its credit facility, not including a $200 million
accordion option.
Dividend
On September 13, 2017, the Company declared a
quarterly cash distribution of $0.285 per common share and OP unit
for the fourth quarter of 2017, to be paid in three equal
installments of $0.095 in October, November, and December 2017.
Board of Trustees
During the third quarter, the Company expanded the size of its
Board to seven, adding Nandita Berry and Najeeb A. Khan.
Ms. Berry previously served as the 109th Secretary of State for
Texas and was recently inducted into the Texas Women’s Hall of Fame
in recognition of her exceptional business achievements. With a
distinguished record as a civil servant and previously as a legal
advisor in the private sector, Ms. Berry brings substantial
experience overseeing financial and strategic planning, leading
government and international relations and engaging with key
stakeholders.
Mr. Khan is the President and Chief Executive Officer of
Interlogic Outsourcing Inc., a company he founded in 2001 and
helped grow into one of the nation’s leading cloud-based payroll
and human resources management solutions providers. Mr. Khan is a
technology and human resources veteran with a proven track record
of entrepreneurial success as well as extensive venture and real
estate investment experience.
Each of Ms. Berry and Mr. Khan has been determined by the Board
to meet the independence standards of the New York Stock Exchange
and the Securities and Exchange Commission. Ms. Berry has
been appointed to the Audit Committee of the Board. Mr. Khan has
been appointed to the Nominating and Governance Committee of the
Board.
About Nandita BerryMs. Berry recently served as the 109th
Secretary of State of Texas. In that capacity, her many roles and
responsibilities included Economic Ambassador, Chief Elections
Officer, Border Commerce Coordinator and Chief International
Protocol Officer. Prior to her position as Secretary of State, Ms.
Berry served on the University of Houston System Board of Regents,
including as Vice Chairman of The Board of Regents, as well as
Chairman of the Audit and Compliance Committee. Additionally, she
was a member of both the Finance and Administration Committee and
the Academic and Student Success Committee. Previously, Ms. Berry
was Senior Counsel for Locke Lord LLP, a full-service international
law firm, and for El Paso Energy Corporation, a Fortune 500 natural
gas company. In addition to being inducted into the Texas Women’s
Hall of Fame in 2014 for exceptional business achievement and being
recognized as one of Houston’s 50 Most Influential Women by Houston
Woman Magazine, she has also served as a member of the Board of
Directors for the Houston Zoo, Inc., South Asian Chamber of
Commerce, and Community Family Center of Houston. Ms. Berry holds a
Bachelor’s Degree in Economics and Political Science from both the
University of Houston and Mt. Carmel College, Bangalore, India. In
addition, she holds a Juris Doctorate from the University of
Houston Law Center.
About Najeeb KhanMr. Khan is President and Chief Executive
Officer of Interlogic Outsourcing Inc. (IOI), a company he founded
in 2001 that succeeds Interlogic Systems, Inc. (ISI), a company
that Mr. Khan established in 1987. Under his leadership, IOI has
grown from a local operation to one of the nation’s leading, award
winning cloud-based payroll and human resources management
solutions providers. Prior to founding ISI, Mr. Khan served as Vice
President of Commercial Services for Midwest Commerce Data
Corporation, a wholly owned subsidiary of NBD Midwest Commerce
Bank, where he was responsible for the commercial services division
that provided outsourcing solutions for payroll, accounting and
inventory controls to diverse businesses. Mr. Khan currently serves
as a Director of 1st Source Bank (SRCE), where he is a member of
the Audit Committee and chairs the Loan and Fund Committee. Mr.
Khan previously served as a Trustee of Memorial Health Foundation,
on the Investment Committee of Community Foundation of St. Joseph
County, Studebaker Museum and as a member of the Finance Committees
for WNIT Public Television, and Holy Cross College. He holds a
Bachelor of Science Degree in Mathematics and Computer Science from
Grand Valley State University.
2017 Guidance
The Company reaffirms its previously released guidance for 2017
and expects net income attributable to Whitestone REIT for 2017 to
range from $0.26 to $0.31 per share and FFO and FFO Core to range
from $0.97 to $1.02 and $1.29 to $1.34 per share, respectively.
This guidance reflects the Board’s and management’s view of current
and future market conditions, as well as the earnings impact of
events referenced elsewhere in this release and during the
Company’s conference call. This guidance does not include the
operational or capital impact of any future unannounced acquisition
or disposition activity. Please refer to the “2017 Financial
Guidance” and “Reconciliation of Non-GAAP Measures - 2017 Financial
Guidance” sections of the supplemental data package for the full
list of guidance information.
Conference Call InformationIn
conjunction with the issuance of its financial results, you are
invited to listen to the Company’s earnings release conference call
to be broadcast live on Thursday, November 2, 2017 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: |
(888) 471-3843 |
Dial-in number for
international participants: |
(719) 325-4748 |
The conference call will be recorded and a telephone replay will
be available through Thursday, November 16, 2017. 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): |
6378678 |
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 third 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 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
provides daily necessities, needed services and entertainment to
the community which are not readily available on the internet.
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. As of October 31, 2017, Whitestone's total
shareholder return ranks #1 of 17, #4 of 17, and #4 of 14, of the
U.S. public shopping center REITs for the one-year, three-year, and
five-year periods, respectively. Visit
www.whitestonereit.com for additional information.
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.
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; its ability to successfully
identify, finance and consummate suitable acquisitions, and the
impact of such acquisitions, including financing developments,
capitalization rates and internal rate of return; 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 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 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.
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.
Whitestone REIT and Subsidiaries |
|
CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
(unaudited) |
|
|
|
ASSETS |
|
Real estate assets, at
cost |
|
|
|
|
|
Property |
|
$ |
1,144,558 |
|
|
$ |
920,310 |
|
|
Accumulated depreciation |
|
|
(124,268 |
) |
|
|
(107,258 |
) |
|
Total
real estate assets |
|
|
1,020,290 |
|
|
|
813,052 |
|
|
Cash and cash
equivalents |
|
|
6,338 |
|
|
|
4,168 |
|
|
Restricted cash |
|
|
105 |
|
|
|
56 |
|
|
Marketable
securities |
|
|
242 |
|
|
|
517 |
|
|
Escrows and acquisition
deposits |
|
|
9,116 |
|
|
|
6,620 |
|
|
Accrued rents and
accounts receivable, net of allowance for doubtful accounts |
|
|
22,212 |
|
|
|
19,951 |
|
|
Unamortized lease
commissions and loan costs |
|
|
8,397 |
|
|
|
8,083 |
|
|
Prepaid expenses and
other assets |
|
|
3,448 |
|
|
|
2,762 |
|
|
Total
assets |
|
$ |
1,070,148 |
|
|
$ |
855,209 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
Liabilities: |
|
|
|
|
|
Notes
payable |
|
$ |
662,675 |
|
|
$ |
544,020 |
|
|
Accounts
payable and accrued expenses |
|
|
35,041 |
|
|
|
28,692 |
|
|
Tenants'
security deposits |
|
|
6,746 |
|
|
|
6,125 |
|
|
Dividends
and distributions payable |
|
|
11,401 |
|
|
|
8,729 |
|
|
Total
liabilities |
|
|
715,863 |
|
|
|
587,566 |
|
|
Commitments and
contingencies: |
|
|
— |
|
|
|
— |
|
|
Equity: |
|
|
|
|
|
Preferred
shares, $0.001 par value per share; 50,000,000 shares authorized;
none issued and outstanding as ofSeptember 30, 2017 and December
31, 2016, respectively |
|
|
— |
|
|
|
— |
|
|
Common
shares, $0.001 par value per share; 400,000,000 shares authorized;
38,524,480 and 29,468,563 issued andoutstanding as of September 30,
2017 and December 31, 2016, respectively |
|
|
38 |
|
|
|
29 |
|
|
Additional paid-in capital |
|
|
509,774 |
|
|
|
396,494 |
|
|
Accumulated deficit |
|
|
(167,397 |
) |
|
|
(141,695 |
) |
|
Accumulated other comprehensive gain |
|
|
1,004 |
|
|
|
859 |
|
|
Total
Whitestone REIT shareholders' equity |
|
|
343,419 |
|
|
|
255,687 |
|
|
Noncontrolling
interests: |
|
|
|
|
|
Redeemable operating partnership units |
|
|
11,002 |
|
|
|
11,941 |
|
|
Noncontrolling interest in Consolidated Partnership |
|
|
(136 |
) |
|
|
15 |
|
|
Total
noncontrolling interests |
|
|
10,866 |
|
|
|
11,956 |
|
|
Total
equity |
|
|
354,285 |
|
|
|
267,643 |
|
|
Total
liabilities and equity |
|
$ |
1,070,148 |
|
|
$ |
855,209 |
|
|
Whitestone REIT and Subsidiaries |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME |
|
(unaudited) |
|
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Property
revenues |
|
|
|
|
|
|
|
|
|
Rental
revenues |
|
$ |
24,891 |
|
|
$ |
19,844 |
|
|
$ |
69,197 |
|
|
$ |
58,915 |
|
|
Other
revenues |
|
|
8,762 |
|
|
|
5,664 |
|
|
|
22,931 |
|
|
|
17,157 |
|
|
Total
property revenues |
|
|
33,653 |
|
|
|
25,508 |
|
|
|
92,128 |
|
|
|
76,072 |
|
|
|
|
|
|
|
|
|
|
|
|
Property
expenses |
|
|
|
|
|
|
|
|
|
Property
operation and maintenance |
|
|
6,104 |
|
|
|
4,904 |
|
|
|
16,973 |
|
|
|
14,381 |
|
|
Real
estate taxes |
|
|
5,181 |
|
|
|
3,414 |
|
|
|
13,588 |
|
|
|
10,072 |
|
|
Total
property expenses |
|
|
11,285 |
|
|
|
8,318 |
|
|
|
30,561 |
|
|
|
24,453 |
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income) |
|
|
|
|
|
|
|
|
|
General
and administrative |
|
|
5,581 |
|
|
|
6,218 |
|
|
|
17,598 |
|
|
|
16,467 |
|
|
Depreciation and amortization |
|
|
7,247 |
|
|
|
5,449 |
|
|
|
19,936 |
|
|
|
16,362 |
|
|
Interest
expense |
|
|
6,376 |
|
|
|
4,669 |
|
|
|
17,158 |
|
|
|
14,221 |
|
|
Interest,
dividend and other investment income |
|
|
(142 |
) |
|
|
(164 |
) |
|
|
(381 |
) |
|
|
(339 |
) |
|
Total
other expense |
|
|
19,062 |
|
|
|
16,172 |
|
|
|
54,311 |
|
|
|
46,711 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before
gain (loss) on sale or disposal of properties or assets and income
taxes |
|
|
3,306 |
|
|
|
1,018 |
|
|
|
7,256 |
|
|
|
4,908 |
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
(126 |
) |
|
|
(80 |
) |
|
|
(296 |
) |
|
|
(247 |
) |
|
Gain on
sale of properties |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
2,890 |
|
|
Gain
(loss) on sale or disposal of assets |
|
|
(40 |
) |
|
|
26 |
|
|
|
(135 |
) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
3,140 |
|
|
|
964 |
|
|
|
6,841 |
|
|
|
7,561 |
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable operating partnership units |
|
|
84 |
|
|
|
15 |
|
|
|
201 |
|
|
|
131 |
|
|
Non-controlling interests in Consolidated Partnership |
|
|
63 |
|
|
|
— |
|
|
|
228 |
|
|
|
— |
|
|
Less: Net
income attributable to noncontrolling interests |
|
|
147 |
|
|
|
15 |
|
|
|
429 |
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Whitestone REIT |
|
$ |
2,993 |
|
|
$ |
949 |
|
|
$ |
6,412 |
|
|
$ |
7,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Whitestone REIT and Subsidiaries |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME |
|
(unaudited) |
|
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Basic Earnings
Per Share: |
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders excluding amounts attributable to unvested
restrictedshares |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
0.18 |
|
|
$ |
0.25 |
|
|
Diluted
Earnings Per Share: |
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholders excluding amounts attributable to unvested
restrictedshares |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
0.17 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
37,992 |
|
|
|
28,195 |
|
|
|
34,406 |
|
|
|
27,210 |
|
|
Diluted |
|
|
38,589 |
|
|
|
29,024 |
|
|
|
35,211 |
|
|
|
28,013 |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared per common share / OP unit |
|
$ |
0.2850 |
|
|
$ |
0.2850 |
|
|
$ |
0.8550 |
|
|
$ |
0.8550 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
3,140 |
|
|
$ |
964 |
|
|
$ |
6,841 |
|
|
$ |
7,561 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on cash flow hedging activities |
|
|
172 |
|
|
|
1,529 |
|
|
|
124 |
|
|
|
(6,962 |
) |
|
Unrealized gain (loss) on available-for-sale marketable
securities |
|
|
(7 |
) |
|
|
(11 |
) |
|
|
26 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
|
3,305 |
|
|
|
2,482 |
|
|
|
6,991 |
|
|
|
619 |
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net
income attributable to noncontrolling interests |
|
|
147 |
|
|
|
15 |
|
|
|
429 |
|
|
|
131 |
|
|
Less:
Comprehensive gain attributable to noncontrolling interests |
|
|
5 |
|
|
|
26 |
|
|
|
5 |
|
|
|
(120 |
) |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income attributable to Whitestone REIT |
|
$ |
3,153 |
|
|
$ |
2,441 |
|
|
$ |
6,557 |
|
|
$ |
608 |
|
|
Whitestone REIT and Subsidiaries |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(unaudited) |
|
(in thousands) |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
Net
income |
|
$ |
6,841 |
|
|
$ |
7,561 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
19,936 |
|
|
|
16,362 |
|
|
Amortization of deferred loan costs |
|
|
953 |
|
|
|
1,202 |
|
|
Amortization of notes payable discount |
|
|
447 |
|
|
|
241 |
|
|
Gain on
sale of marketable securities |
|
|
(5 |
) |
|
|
— |
|
|
Loss
(gain) on sale or disposal of assets and properties |
|
|
119 |
|
|
|
(2,900 |
) |
|
Bad debt
expense |
|
|
1,442 |
|
|
|
1,298 |
|
|
Share-based compensation |
|
|
7,347 |
|
|
|
6,874 |
|
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
Escrows
and acquisition deposits |
|
|
(2,496 |
) |
|
|
485 |
|
|
Accrued
rent and accounts receivable |
|
|
(3,703 |
) |
|
|
(2,802 |
) |
|
Unamortized lease commissions |
|
|
(2,196 |
) |
|
|
(2,126 |
) |
|
Prepaid
expenses and other assets |
|
|
411 |
|
|
|
725 |
|
|
Accounts
payable and accrued expenses |
|
|
(1,718 |
) |
|
|
261 |
|
|
Tenants'
security deposits |
|
|
621 |
|
|
|
812 |
|
|
Net cash
provided by operating activities |
|
|
27,999 |
|
|
|
27,993 |
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Acquisitions of real estate |
|
|
(124,557 |
) |
|
|
(60,616 |
) |
|
Additions
to real estate |
|
|
(13,499 |
) |
|
|
(15,362 |
) |
|
Proceeds
from sales of properties |
|
|
26 |
|
|
|
3,957 |
|
|
Proceeds
from sales of marketable securities |
|
|
306 |
|
|
|
— |
|
|
Net cash
used in investing activities |
|
|
(137,724 |
) |
|
|
(72,021 |
) |
|
Cash flows from
financing activities: |
|
|
|
|
|
Distributions paid to common shareholders |
|
|
(29,494 |
) |
|
|
(23,606 |
) |
|
Distributions paid to OP unit holders |
|
|
(932 |
) |
|
|
(415 |
) |
|
Distributions paid to noncontrolling interest in Consolidated
Partnership |
|
|
(379 |
) |
|
|
— |
|
|
Proceeds
from issuance of common shares, net of offering costs |
|
|
107,619 |
|
|
|
26,686 |
|
|
Net
proceeds from credit facility |
|
|
40,600 |
|
|
|
64,000 |
|
|
Repayments of notes payable |
|
|
(2,788 |
) |
|
|
(13,552 |
) |
|
Payments
of loan origination costs |
|
|
(695 |
) |
|
|
— |
|
|
Change in
restricted cash |
|
|
(49 |
) |
|
|
18 |
|
|
Repurchase of common shares |
|
|
(1,987 |
) |
|
|
(2,904 |
) |
|
Net cash
provided by financing activities |
|
|
111,895 |
|
|
|
50,227 |
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents |
|
|
2,170 |
|
|
|
6,199 |
|
|
Cash and cash
equivalents at beginning of period |
|
|
4,168 |
|
|
|
2,587 |
|
|
Cash and cash
equivalents at end of period |
|
$ |
6,338 |
|
|
$ |
8,786 |
|
|
|
|
|
|
|
|
Whitestone REIT and Subsidiaries |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
Supplemental Disclosure |
|
(unaudited) |
|
(in thousands) |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
Cash paid
for interest |
|
$ |
16,311 |
|
|
$ |
13,700 |
|
|
Cash paid
for taxes |
|
|
329 |
|
|
|
284 |
|
|
Non cash
investing and financing activities: |
|
|
|
|
|
Disposal
of fully depreciated real estate |
|
$ |
995 |
|
|
$ |
544 |
|
|
Financed
insurance premiums |
|
$ |
1,115 |
|
|
$ |
1,060 |
|
|
Value of
shares issued under dividend reinvestment plan |
|
$ |
95 |
|
|
$ |
83 |
|
|
Value of
common shares exchanged for OP units |
|
$ |
206 |
|
|
$ |
125 |
|
|
Change in
fair value of available-for-sale securities |
|
$ |
26 |
|
|
$ |
20 |
|
|
Change in
fair value of cash flow hedge |
|
$ |
124 |
|
|
$ |
(6,962 |
) |
|
Acquisition of real estate in exchange for OP units |
|
$ |
— |
|
|
$ |
8,738 |
|
|
Reallocation of ownership percentage between parent and
subsidiary |
|
$ |
9 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Whitestone REIT and Subsidiaries |
|
RECONCILIATION OF NON-GAAP
MEASURES |
|
(in thousands, except per share and per unit
data) |
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
FFO AND FFO CORE |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net income attributable
to Whitestone REIT |
|
$ |
2,993 |
|
|
$ |
949 |
|
|
$ |
6,412 |
|
|
$ |
7,430 |
|
|
Adjustments to reconcile to FFO:(1) |
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate assets |
|
|
7,015 |
|
|
|
5,405 |
|
|
|
19,255 |
|
|
|
16,195 |
|
|
(Gain)
loss on sale or disposal of assets and properties |
|
|
37 |
|
|
|
(26 |
) |
|
|
114 |
|
|
|
(2,900 |
) |
|
Net
income attributable to exchangeable operating partnership
units |
|
|
84 |
|
|
|
15 |
|
|
|
201 |
|
|
|
131 |
|
|
FFO |
|
|
10,129 |
|
|
|
6,343 |
|
|
|
25,982 |
|
|
|
20,856 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile to FFO Core: |
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
2,704 |
|
|
|
3,042 |
|
|
|
7,545 |
|
|
|
6,886 |
|
|
Acquisition costs |
|
|
264 |
|
|
|
427 |
|
|
|
1,398 |
|
|
|
990 |
|
|
FFO Core |
|
$ |
13,097 |
|
|
$ |
9,812 |
|
|
$ |
34,925 |
|
|
$ |
28,732 |
|
|
|
|
|
|
|
|
|
|
|
|
FFO PER SHARE AND OP UNIT CALCULATION |
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
10,129 |
|
|
$ |
6,343 |
|
|
$ |
25,982 |
|
|
$ |
20,856 |
|
|
Distributions paid on unvested restricted common shares |
|
|
(148 |
) |
|
|
(146 |
) |
|
|
(344 |
) |
|
|
(498 |
) |
|
FFO
excluding amounts attributable to unvested restricted common
shares |
|
$ |
9,981 |
|
|
$ |
6,197 |
|
|
$ |
25,638 |
|
|
$ |
20,358 |
|
|
FFO Core
excluding amounts attributable to unvested restricted common
shares |
|
$ |
12,949 |
|
|
$ |
9,666 |
|
|
$ |
34,581 |
|
|
$ |
28,234 |
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
Weighted
average number of total common shares - basic |
|
|
37,992 |
|
|
|
28,195 |
|
|
|
34,406 |
|
|
|
27,210 |
|
|
Weighted
average number of total noncontrolling OP units - basic |
|
|
1,084 |
|
|
|
487 |
|
|
|
1,090 |
|
|
|
488 |
|
|
Weighted
average number of total common shares and noncontrolling OP units -
basic |
|
|
39,076 |
|
|
|
28,682 |
|
|
|
35,496 |
|
|
|
27,698 |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
dilutive securities: |
|
|
|
|
|
|
|
|
|
Unvested
restricted shares |
|
|
597 |
|
|
|
829 |
|
|
|
805 |
|
|
|
803 |
|
|
Weighted
average number of total common shares and noncontrolling OP units -
diluted |
|
|
39,673 |
|
|
|
29,511 |
|
|
|
36,301 |
|
|
|
28,501 |
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share
and OP unit - basic |
|
$ |
0.26 |
|
|
$ |
0.22 |
|
|
$ |
0.72 |
|
|
$ |
0.73 |
|
|
FFO per common share
and OP unit - diluted |
|
$ |
0.25 |
|
|
$ |
0.21 |
|
|
$ |
0.71 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
|
|
FFO Core per common
share and OP unit - basic |
|
$ |
0.33 |
|
|
$ |
0.34 |
|
|
$ |
0.97 |
|
|
$ |
1.02 |
|
|
FFO Core per common
share and OP unit - diluted |
|
$ |
0.33 |
|
|
$ |
0.33 |
|
|
$ |
0.95 |
|
|
$ |
0.99 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes pro-rata
share attributable to Pillarstone OP in 2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Whitestone REIT and Subsidiaries |
|
RECONCILIATION OF NON-GAAP
MEASURES |
|
(in thousands, except per share and per unit
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
PROPERTY NET OPERATING INCOME |
|
|
|
|
|
|
|
|
|
Net income attributable
to Whitestone REIT |
|
$ |
2,993 |
|
|
$ |
949 |
|
|
$ |
6,412 |
|
|
$ |
7,430 |
|
|
General
and administrative expenses |
|
|
5,581 |
|
|
|
6,218 |
|
|
|
17,598 |
|
|
|
16,467 |
|
|
Depreciation and amortization |
|
|
7,247 |
|
|
|
5,449 |
|
|
|
19,936 |
|
|
|
16,362 |
|
|
Interest
expense |
|
|
6,376 |
|
|
|
4,669 |
|
|
|
17,158 |
|
|
|
14,221 |
|
|
Interest,
dividend and other investment income |
|
|
(142 |
) |
|
|
(164 |
) |
|
|
(381 |
) |
|
|
(339 |
) |
|
Provision
for income taxes |
|
|
126 |
|
|
|
80 |
|
|
|
296 |
|
|
|
247 |
|
|
Gain on
sale of properties |
|
|
— |
|
|
|
— |
|
|
|
(16 |
) |
|
|
(2,890 |
) |
|
(Gain)
loss on disposal of assets |
|
|
40 |
|
|
|
(26 |
) |
|
|
135 |
|
|
|
(10 |
) |
|
Net
income attributable to noncontrolling interests |
|
|
147 |
|
|
|
15 |
|
|
|
429 |
|
|
|
131 |
|
|
NOI |
|
$ |
22,368 |
|
|
$ |
17,190 |
|
|
$ |
61,567 |
|
|
$ |
51,619 |
|
|
|
|
|
|
|
|
|
|
|
|
Contact Whitestone REIT:Kevin
ReedDirector of Investor Relations(713)
435-2219kreed@whitestonereit.com
Whitestone REIT (NYSE:WSR)
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From Mar 2024 to Apr 2024
Whitestone REIT (NYSE:WSR)
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From Apr 2023 to Apr 2024