WSR Whitestone REIT

Maryland		001-34855		76-0594970
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

	2600 South Gessner, Suite 500,		77063
	Houston, Texas
	(Address of principal executive offices)		(Zip Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule #14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, par value $0.001 per share	WSR	New York Stock Exchange

Exhibit Number			Description
99.1 99.2			Whitestone REIT Press Release dated December 13, 2023 Letter from Whitestone REIT to Erez dated December 13, 2023
99.3			Letter from Erez to Whitestone REIT dated November 6, 2023
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

		Whitestone REIT
		(Registrant)
Date:	December 13, 2023	By: /s/ David K. Holeman
		Name: David K. Holeman Title: Chief Executive Officer

Exhibit 99.1

 

Whitestone REIT Board of Trustees Responds to Proposal from Bruce Schanzer / Erez Asset Management, LLC (“Erez”)

 

Houston, Dec. 13, 2023 – Whitestone REIT (NYSE:WSR) (“Whitestone” or the “Company”) announced today that, after careful review and consideration, the Board of Trustees of Whitestone has unanimously rejected a proposal by Bruce Schanzer, Chairman of Erez, demanding a majority change in our Board of Trustees with the sole purpose of embarking on an immediate sale or liquidation of Whitestone, without regard for maximizing long-term value for shareholders.

 

For the sake of transparency, to maintain open communication with its shareholders, and to minimize misinformation regarding this matter, the Board has decided to release its response publicly.

 

The full text of the Whitestone Board of Trustees’ response to Bruce Schanzer / Erez, along with the original letter sent to us on November 6, 2023, can be found in this morning’s 8k filing:

 

Whitestone SEC Filings

 

 

About Whitestone REIT

 

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country:  Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. 

 

Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities.  The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy.  For additional information, please visit the Company's investor relations website.

 

Forward-Looking Statements

 

This Report contains forward-looking statements within the meaning of the federal securities laws, including discussion and analysis of our financial condition, pending acquisitions and the impact of such acquisitions on our financial condition and results of operations, anticipated capital expenditures required to complete projects, amounts of anticipated cash distributions to our shareholders in the future and other matters. These forward-looking statements are not historical facts but are the intent, belief or current expectations of our management based on its knowledge and understanding of our business and industry. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “potential,” “predicts,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or the negative of such terms and variations of these words and similar expressions, although not all forward-looking statements include these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

 

Factors that could cause actual results to differ materially from any forward-looking statements made in this Report include: 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; uncertainties related to the national economy, the real estate industry in general and in our specific markets; legislative or regulatory changes, including changes to laws governing REITs; adverse economic or real estate developments or conditions in Texas or Arizona, Houston and Phoenix in particular, including the potential impact of COVID-19 on our tenants’ ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments; inflation and increases in interest rates, operating costs or general and administrative expenses; availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures; decreases in rental rates or increases in vacancy rates; litigation risks; lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants; our inability to renew tenant leases or obtain new tenant leases upon the expiration of existing leases; our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine; the need to fund tenant improvements or other capital expenditures out of operating cash flow; and the risk that we are unable to raise capital for working capital, acquisitions or other uses on attractive terms or at all 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.

 

 

Investor and Media Contact:

 

David Mordy

Director of Investor Relations

Whitestone REIT

(713) 435-2219

ir@whitestonereit.com

 

Exhibit 99.2

 

 

 

December 13, 2023

 

Bruce Schanzer

Chairman, Erez Asset Management, LLC

 

 

Dear Mr. Schanzer,

 

This letter is written in response to your proposal dated November 6, 2023, and the follow-up virtual meeting you had with Whitestone management on December 6, 2023. Our management team has shared the proposal with us and fully briefed us on the details of your discussion with them. We understand Erez owns shares of Whitestone and that you intend to nominate four Board members (two of which you have identified: yourself and a former employee of Cedar Realty Trust, “Cedar”). The Board of Trustees continuously evaluates all avenues to maximize value for our shareholders and is always committed to advance their best interests.

 

After carefully reading your letter dated November 6, 2023, and reviewing the discussion with management on December 6, 2023, we understand that you view “a sale of assets or of the company outright” as the only way to drive value at the Company. However, the proposal consists of replicating the strategy employed at Cedar, without giving much consideration to how our portfolio, capital structure and business strategy might differ from that of Cedar. Furthermore, you do not seem to account for how current market conditions (including interest rates, valuation levels, transaction activity and debt financing) stand in contrast to those under which the Cedar transaction occurred. Finally, you ignore the strong total shareholder returns we have generated recently. Since the beginning of 2022, Whitestone has delivered +26% total shareholder return, far outpacing the average total shareholder return of negative (7%) for other shopping center REITs ⁽¹⁾. This underscores the progress the Company has made since early 2022 under its new management team by staying focused on executing its business strategy.

 

Your primary argument to justify your demand for four Board seats and the immediate actions outlined in your letter is that small cap REITs, such as Whitestone and Cedar, are forever precluded from achieving attractive results, driving shareholder value or bridging the gap to NAV. We strongly disagree as our business strategy has already achieved significant value creation for our shareholders and represents a clearer route to successfully maximize shareholder value. Once again, we think that our shareholder returns under our new CEO and executive team since early 2022 speak for themselves.

 

With respect to your threat to nominate four Board members for election at our 2024 annual meeting: given the size of our current Board (six Trustees), your proposed four candidates would constitute a change in the majority of the Board. This is particularly concerning since your only stated objective is to embark on an immediate sale or liquidation of the Company, and you seem otherwise unable to articulate other means to drive shareholder value and unable to explain how any of your proposed Board nominees would add value to our Board and our shareholders.

 

As a Board focused on the best interests of its shareholders, we take our fiduciary duties seriously and we have been proactive in both Board refreshment and in expanding the diversity and skillset of our Board. We have established procedures to consider any Board nominations, but we obviously cannot do so for unidentified nominees. While decisions on Board composition ultimately rest with our shareholders, we reject a proposal for majority Board change with the sole purpose of immediately effecting a sale or liquidation of Whitestone without regard for maximizing long-term value for shareholders.

 

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(1) Includes simple average of the total returns from January 1, 2022 to December 11, 2023 for the following shopping center REITs: AKR, BRX, FRT, IVT, KIM, KRG, PECO, REG, ROIC, SITC and UE.

 

 

 

 

 

Sincerely,

 

 

Whitestone Board of Trustees:

 

David T. Taylor

 

Nandita V. Berry

 

Julia B. Buthman

 

Amy S. Feng

 

David K. Holeman

 

Jeffrey A. Jones

 

Exhibit 99.3

 

 

 

 

 

 

v3.23.3

Document And Entity Information	Dec. 13, 2023
Document Information [Line Items]
Entity, Registrant Name	Whitestone REIT
Document, Type	8-K
Document, Period End Date	Dec. 13, 2023
Entity, Incorporation, State or Country Code	MD
Entity, File Number	001-34855
Entity, Tax Identification Number	76-0594970
Entity, Address, Address Line One	2600 South Gessner, Suite 500
Entity, Address, Postal Zip Code	77063
Entity, Address, City or Town	Houston
Entity, Address, State or Province	TX
City Area Code	713
Local Phone Number	827-9595
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Shares of Beneficial Interest
Trading Symbol	WSR
Security Exchange Name	NYSE
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001175535

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