Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today
provided a business update related to the impact of COVID-19.
“The health and safety of our employees, tenants and communities
are Whitestone’s top priority,” said Jim Mastandrea, Chairman and
Chief Executive Officer. “Given the important role of our shopping
centers in the communities we serve, we are carefully monitoring
the spread and impact of COVID-19 and taking proactive measures to
maintain the strength of our business and ensure the continuity of
operations, as local conditions permit. During this extraordinary
period of uncertainty, we are taking a prudent pause in making
acquisitions, and carefully evaluating development and
redevelopment activities on a case-by-case basis. We are
maintaining an open line of communication with our tenants, working
closely and helping them apply for potential government subsidies
when available.”
“We believe that our business model is resilient, as many stores
at our properties currently remain open to provide essential goods
and services to communities, such as grocery stores, convenience
stores and pharmacies,” Mr. Mastandrea added. “Additionally, many
restaurants at our community-centered properties remain open and
are providing take-out and/or delivery service to local
neighborhoods. We are proud to continue serving the communities
that rely on us for daily essentials, located in some of the
largest markets in Texas and Arizona. All of us at Whitestone
greatly appreciate the hard work of our employees, our tenants and
the heroes on the front lines of this crisis – including our local
police, fire and EMS professionals, and nurses, doctors and other
health care providers.”
Business Performance Update
Whitestone completed 2019 with a strong balance sheet,
profitable operating statements, minimal store closures, and a
stable and well-diversified tenant base. The Company achieved
profitable growth in 2019 driven by operational excellence,
successful redevelopment and development initiatives, and
value-enhancing acquisitions and divestitures. As in the past,
Whitestone intends to be a judicious steward of capital, and as
such, is pausing acquisitions at this time.
Whitestone has put in place a temporary response team to address
tenant concerns during this unprecedented time.
Financial Update
Balance Sheet
At December 31, 2019, the Company had $15.5 million of cash
available on its balance sheet and $30.9 million of availability
under its credit facility. To ensure adequate liquidity for a
sustained period, Whitestone recently drew down $30 million of the
availability of the revolving credit facility as a precautionary
measure to preserve the Company’s financial flexibility. As a
result, Whitestone currently has utilized its full capacity under
its revolving credit facility, subject to future changes in the
borrowing base.
At December 31, 2019, Whitestone had total real estate debt, net
of cash, of $630.4 million, of which approximately 85% was subject
to fixed interest rates. The Company’s weighted average interest
rate on all fixed rate debt was 4.1% and the weighted average
remaining term was 5.3 years.
Operating Expenses
The Company is proactively implementing expense reductions at
the property level to minimize cost pass-throughs to our tenants
and at the corporate level to preserve profitability.
2020 Guidance Update
Given the uncertainty due to COVID-19, Whitestone is withdrawing
its 2020 guidance previously announced on February 26, 2020. The
Company is not providing updated guidance at this time, primarily
due to uncertainty regarding the underlying assumptions of bad
debt, occupancy and same store net operating income growth.
Second Quarter of 2020 Dividend; Prudent Dividend Reduction
In further pursuit of ensuring the financial flexibility of
Whitestone, Whitestone’s Board of Trustees (the “Board”) determined
to conserve additional liquidity by reducing its dividend in
response to the COVID-19 pandemic. The dividend reduction will
result in over $30 million of annualized cash savings. The Board
has declared a monthly cash dividend of $0.035 per share on
the Company’s common shares and operating partnership units. The
dividend amount of $0.035 per share represents a quarterly amount
of $0.105, and an annualized amount of $0.42 per share. The
dividend being paid is a reduction from the $0.095 per share
monthly cash dividend previously paid, which represented a
quarterly amount of $0.285, and an annualized amount of $1.14 per
share. The Board will regularly reassess the dividend, particularly
as there is more clarity on the duration and severity of the
national COVID-19 crisis and as business conditions improve.
The second quarter dividend distribution for 2020 will be as
detailed below:
Month |
|
Record Date |
|
Payment Date |
April |
|
April 7, 2020 |
|
April 15, 2020 |
May |
|
May 4, 2020 |
|
May 13, 2020 |
June |
|
June 2, 2020 |
|
June 12, 2020 |
Mr. Mastandrea concluded, “Given the unprecedented impact of the
global pandemic, we are taking appropriate steps to provide
stability and financial flexibility while continuing to pay a
dividend to shareholders. As we’ve emphasized over the past several
years, we have outstanding assets in favorable markets and a strong
balance sheet, and we remain laser focused on enhancing the quality
of our assets to mitigate risk. We are fortunate to have an
outstanding team that, since our IPO, has actively and successfully
built and managed the Company’s portfolio and capital structure,
putting Whitestone in a position of strength prior to the onset of
this crisis.”
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 provides 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 StatementsCertain matters
within this press release, including with respect to the details of
the Company’s acquisition and development and redevelopment
activity, activities of its tenants, business performance,
liquidity and capital balance sheet position, operating expense
reductions and dividend policy and amounts, are discussed using
forward-looking language as specified in the Private Securities
Litigation Reform Act of 1995, and, as such, may involve known and
unknown risks, uncertainties and other factors that may cause the
actual results or performance to differ from those projected in the
forward-looking statements. The Company’s actual future results and
trends may differ materially from expectations depending on a
variety of factors discussed in the Company’s filings with the
Securities and Exchange Commission. These factors include, without
limitation: (a) the impact of the coronavirus (COVID-19) pandemic
on macroeconomic conditions and economic conditions in the markets
in which the Company operates, including, among others: (i)
disruptions in, or a lack of access to, the capital markets or
disruptions in the Company’s ability to draw amounts under its
credit facility, (ii) adverse impacts to the Company’s tenants’ and
other third parties’ businesses that adversely affect the ability
and willingness of the Company’s tenants to satisfy their
obligations to the Company, (iii) the ability and willingness of
the Company’s tenants to continue to pay rent on time or at all,
renew their leases with the Company upon expiration of the leases
or to re-lease the Company’s properties on the same or better terms
in the event of nonrenewal or early termination of existing leases,
and (iv) federal and state government initiatives to mitigate the
impact of the coronavirus pandemic, including additional
restrictions on business activities and potential shelter-in-place
other restrictions, either nationally or in Texas or the Phoenix,
Arizona areas and the timing and amount of economic stimulus or
other initiatives; (b) the Company’s ability to accurately assess
and predict the impact of the coronavirus pandemic on its results
of operations, financial condition, acquisition and disposition
activities and growth opportunities; and (c) the information under
the heading “Risk Factors” included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019 and in other
filings the Company makes from time to time with the Securities and
Exchange Commission.
Contact Whitestone REIT: Kevin Reed Director of
Investor Relations (713) 435-2219 ir@whitestonereit.com
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