Core Viewpoint - Western Star Resources Inc. has successfully closed the first tranche of a non-brokered private placement, raising gross proceeds of CAD$394,400 through the issuance of 2,629,333 units at a price of $0.15 per unit [1][2]. Group 1: Private Placement Details - Each unit consists of one common share and one share purchase warrant, which can be exercised at an exercise price of $0.30 per share, expiring on June 11, 2027 [2]. - The warrants include an acceleration clause that allows the company to shorten the exercise period if the share price reaches CAD$0.40 for 10 consecutive trading days [2]. - A finder's fee of $5,500 in cash was paid to Ventum Financial Corp for this placement [2]. Group 2: Use of Proceeds - The net proceeds from the private placement will be utilized to define high-priority drill targets at the Western Star Project, as well as for general working capital and market awareness [3]. Group 3: Consulting Agreement - The company has entered into a consulting services agreement with Capitaliz On It, a digital marketing agency, to enhance investor awareness and attract new investors [4]. - The agreement has an initial term of 3 months with a marketing budget of CAD$110,000, pending approval from the Canadian Securities Exchange [5]. - Services provided by Capitaliz will include developing a corporate marketing strategy and various digital marketing efforts [5]. Group 4: Company Overview - Western Star Resources Inc. is focused on mineral exploration and development, aiming to increase shareholder value through cost-effective exploration practices and partnerships [9]. - The company owns nine contiguous mineral claims totaling 2,797 hectares located in the Revelstoke mining division of British Columbia [9].

Core Points - Whitestone REIT has declared a monthly cash dividend of $0.045 per share for the third quarter of 2025, amounting to a quarterly total of $0.135 per share and an annualized total of $0.54 per share [1] - The dividend distribution schedule includes payments in July, August, and September 2025, with record dates and payment dates specified [1] Company Overview - Whitestone REIT is a community-centered real estate investment trust that focuses on acquiring, owning, operating, and developing open-air retail centers in rapidly growing markets such as Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio [2] - The company's retail centers are designed to provide convenience, featuring a mix of service-oriented tenants that include restaurants, grocers, health and fitness services, financial services, education, and entertainment [3] - Strong community connections and deep tenant relationships are considered key to the success of the company's current centers and acquisition strategy [3]

Whitestone REIT Conference Call Summary Company Overview - **Company**: Whitestone REIT (Ticker: WSR) - **Market Cap**: $630 million - **Focus**: Community center REIT primarily in Sunbelt markets, specifically Arizona and Texas - **Tenant Base**: 1,400 service-oriented tenants with shorter lease durations [1][2][4] Core Strategies and Financial Performance - **Portfolio Composition**: 77% of the portfolio consists of optimal 1,500 to 3,000 square foot spaces, catering to high demand [5] - **Earnings Growth**: Projected FFO per share growth of 5% to 7% in the future, with same-store NOI growth at a CAGR of 5.5% since 2021 [6] - **Dividend Growth**: Dividends have grown in tandem with earnings, alongside a strengthened balance sheet [6] Market Conditions and Leasing Trends - **Leasing Activity**: No significant slowdown in leasing despite macroeconomic uncertainties; longer build-out times noted [7][8] - **Rent Increases**: Significant rent increases observed, with pad rents nearly doubling from $50 to around $90 per square foot [8][42] - **Foot Traffic**: Foot traffic increased by approximately 7%, with some centers seeing over a 10% increase [9][12] Competitive Landscape - **Tenant Dynamics**: Service-focused tenants (medical, fitness, restaurants) outperforming soft goods merchants; incumbents facing challenges from emerging brands [10][11] - **Tenant Watch List**: All tenants are under scrutiny; focus on upgrading tenant quality due to favorable supply-demand dynamics [14][15] Occupancy and Retenanting Strategy - **Occupancy Rates**: Portfolio occupancy dipped to 92.9% but expected to rise to 94%-95% by year-end [18][25] - **Retenanting Initiatives**: Active retenanting of underperforming spaces, with a focus on bringing in stronger operators [20][16] Financial Strategy and Capital Management - **Leverage Improvement**: Debt to EBITDAre reduced from 10.4 times in 2020 to 6.6 times in 2024 [36] - **Liquidity Position**: Approximately $98 million in revolver availability with no maturities until 2025 [37] - **Investment Grade Rating**: Achieved in 2023, enhancing access to capital and reducing borrowing costs [37] Future Growth Opportunities - **Pad Site Redevelopment**: Plans for $20 million to $30 million in pad site redevelopment projects for 2025 and 2026, potentially lifting same-store NOI by 100 bps [50] - **Cap Rate Trends**: Cap rates for neighborhood centers are stabilizing; targeting smaller centers in the $20 million to $40 million range [54] Risks and Challenges - **Economic Sensitivity**: Retail sector is sensitive to economic fluctuations; focus on understanding community needs is critical [61][63] - **Market Competition**: Limited competition in target markets due to high barriers to entry for new developments [64] Conclusion - **Investment Thesis**: Whitestone REIT presents a compelling investment opportunity due to its strong geographic positioning, consistent earnings growth, and proactive tenant management strategies [58][60]

Core Viewpoint - Western Star Resources Inc. is initiating a non-brokered Private Placement to raise up to $555,000 through the issuance of 3,700,000 units priced at $0.15 each, aimed at funding exploration and operational activities [1][3]. Group 1: Private Placement Details - The Private Placement will consist of units that include one common share and one share purchase warrant, exercisable at $0.30 for two years [2]. - An acceleration clause is included, allowing the company to shorten the warrant term to 30 days if the share price reaches CAD$0.40 for 10 consecutive trading days [2]. - All securities issued will be subject to a four-month holding period [2]. Group 2: Use of Proceeds - The net proceeds from the Private Placement will be utilized to define high-priority drill targets at the Western Star Project, along with general working capital and market awareness initiatives [3]. Group 3: Company Overview - Western Star Resources is focused on mineral exploration and development, aiming to enhance shareholder value through cost-effective exploration and strategic partnerships [5]. - The company holds nine contiguous mineral claims totaling 2,797 hectares in the Revelstoke mining division of British Columbia, located approximately 50 kilometers southeast of Revelstoke [5].

Core Insights - Whitestone REIT will have its CEO Dave Holeman participate in a "Fireside Chat" at the Nareit's 2025 REITweek Investor Conference on June 3, 2025, at 9:30 AM Eastern [1] - The company focuses on community-centered real estate investment, acquiring and operating open-air retail centers in rapidly growing markets such as Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio [1][2] Company Overview - Whitestone REIT is a real estate investment trust (REIT) that emphasizes convenience by offering a mix of service-oriented tenants, including restaurants, grocers, health and fitness services, financial services, logistics, education, and entertainment [2] - The company believes that its strong community connections and deep tenant relationships are crucial for the success of its current centers and its acquisition strategy [2]

Core Insights - The article emphasizes the importance of identifying investment opportunities where intrinsic value diverges from market price, particularly focusing on undervalued companies [1] - A specialized interest in Real Estate Investment Trusts (REITs) is highlighted, suggesting that the REIT sector offers significant potential for long-term growth [1] - The investment approach is grounded in fundamental analysis, prioritizing financial health, competitive positioning, and management quality [1] Group 1 - The author has a solid foundation in finance, developed through academic studies and hands-on research projects [1] - There is a strong emphasis on thorough research and analysis across various companies to uncover hidden investment gems [1] - The goal is to generate sustainable returns by adhering to a disciplined investment philosophy [1] Group 2 - The article indicates that the REIT sector presents abundant opportunities for investors due to its unique dynamics [1] - The focus on due diligence is crucial, as it involves evaluating key factors that influence a company's performance [1] - The author aims to identify undervalued REITs that are poised for substantial appreciation [1]

Core Viewpoint - Whitestone REIT (WSR) has announced the acquisition of San Clemente, a restaurant-anchored retail center in Austin, TX, which has positively impacted its stock price, closing 5.2% higher on May 8, 2025, as investors reacted favorably to the purchase [1]. Company Strategy - The acquisition aligns with Whitestone's growth strategy to enhance its portfolio with properties that have strong dynamics and retailer relationships in affluent neighborhoods [2]. - San Clemente is the fifth addition to Whitestone's portfolio in Austin, benefiting from strong inbound migration and a booming tech sector [3]. Location and Demographics - The center is strategically located near major technology companies, including Apple and Tesla, and serves an affluent population with an average household income exceeding $280,000 [3][4]. - The center benefits from strict development restrictions that limit oversupply and has significant traffic support, with over 55,000 vehicles per day [4]. Market Dynamics - The acquisition is expected to enhance Whitestone's asset base in a solid trade area, with proximity to key river crossings and upcoming developments likely to drive foot traffic [6]. - Despite the positive aspects of the acquisition, the retail market is experiencing a shift towards online sales, which poses challenges for brick-and-mortar stores like WSR [7]. Financial Performance - Over the past three months, WSR shares have declined by 7.6%, underperforming the industry, which saw a slight decline of 0.3% [7]. - Comparatively, other REITs like Digital Realty Trust and Cousins Properties are performing better, with positive growth estimates for their funds from operations (FFO) [8][9].

Core Viewpoint - Whitestone REIT has announced the acquisition of the San Clemente shopping center in Austin, Texas, which is strategically located near major technology campuses and complements its existing retail presence in the area [1][2]. Acquisition Details - The San Clemente shopping center spans 31,832 square feet and is anchored by a restaurant, enhancing Whitestone's portfolio in Austin, which now includes five neighborhood shopping centers [1]. - The acquisition is positioned to leverage the strong market dynamics and existing retailer relationships to drive long-term growth [2]. Market Dynamics - San Clemente is located in an affluent submarket with an average home value of nearly $1.5 million and an average household income exceeding $280,000 [5]. - The area has seen no new retail development in the last seven years due to strict development restrictions, despite having less than 40% of Austin's average square retail feet per person [5]. - The center benefits from high traffic, with over 55,000 vehicles per day, and will gain from the completion of the Loop 360 project [5]. Community and Tenant Mix - The shopping center serves upscale neighborhoods such as Davenport Ranch, Westlake, Rob Roy, and Barton Creek, which are characterized by a robust job market and upwardly mobile families [6]. - The tenant mix includes local favorites like Fresa's, Iron Fitness, and Greenlake Energy, which align with Whitestone's community-focused strategy [8]. Strategic Growth - Whitestone's acquisition strategy is complemented by strong organic growth, as evidenced by its recent first-quarter earnings report [8].

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents Whitestone REIT's unaudited consolidated financial statements and management's analysis of financial condition [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements of Whitestone REIT and its subsidiaries, including balance sheets, statements of operations, changes in equity, and cash flows, along with detailed notes explaining accounting policies, debt, equity, and significant events [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time | Balance Sheet Item (in thousands) | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Total real estate assets | $998,822 | $1,001,689 | $(2,867) | | Cash and cash equivalents | $5,586 | $5,224 | $362 | | Total assets | $1,126,691 | $1,134,639 | $(7,948) | | Notes payable | $641,295 | $631,518 | $9,777 | | Total liabilities | $690,124 | $690,805 | $(681) | | Total equity | $436,567 | $443,834 | $(7,267) | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This section outlines the company's financial performance over a period, including revenues, expenses, and net income or loss | Income Statement Item (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenues | $38,003 | $37,164 | $839 | 2.26% | | Total operating expenses | $26,031 | $25,567 | $464 | 1.81% | | Total other expenses | $8,097 | $1,986 | $6,111 | 307.70% | | Net income | $3,748 | $9,464 | $(5,716) | (60.39)% | | Net income attributable to Whitestone REIT | $3,701 | $9,340 | $(5,639) | (60.37)% | | Basic Earnings Per Share | $0.07 | $0.19 | $(0.12) | (63.16)% | | Diluted Earnings Per Share | $0.07 | $0.18 | $(0.11) | (61.11)% | [Consolidated Statements of Changes in Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) This section details the changes in the company's equity accounts over a period, including net income, distributions, and other comprehensive income | Equity Item (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Balance, December 31, 2024 | N/A | $443,834 | | Distributions | $(6,898) | N/A | | Unrealized loss on cash flow hedge | $(3,482) | N/A | | Net income | $3,701 | N/A | | Balance, March 31, 2025 | $436,567 | N/A | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities over a period | Cash Flow Item (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $3,081 | $11,524 | $(8,443) | | Net cash used in investing activities | $(3,914) | $(4,584) | $670 | | Net cash provided by (used in) financing activities | $1,277 | $(5,365) | $6,642 | | Net increase in cash, cash equivalents and restricted cash | $444 | $1,575 | $(1,131) | | Cash, cash equivalents and restricted cash at end of period | $15,814 | $6,215 | $9,599 | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [1. Interim Financial Statements](index=13&type=section&id=1.%20INTERIM%20FINANCIAL%20STATEMENTS) This note explains the basis of presentation for the unaudited interim financial statements, consistent with U.S. GAAP and annual audited statements. It also describes Whitestone REIT's business as a REIT owning 55 commercial properties in Texas and Arizona, and details the ongoing bankruptcy proceedings and redemption claim related to its investment in Pillarstone OP - Whitestone REIT operates **55 commercial properties** (50 wholly-owned, 5 land parcels for development) in major metropolitan areas of Texas and Arizona[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - The company exercised its redemption notice for substantially all of its investment in Pillarstone OP on January 25, 2024, and has filed a claim in the Pillarstone Bankruptcies for the redemption value plus interest and costs, believing the amount collected will exceed the current carrying value of the receivable[37](index=37&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting policies including basis of consolidation, equity method for investments (ceased for Pillarstone OP post-redemption notice), accrual basis of accounting, use of estimates, and reclassifications. It also details policies for restricted cash, like-kind exchanges, derivative instruments, development properties, share-based compensation, noncontrolling interests, accrued rents, and revenue recognition - The company consolidates the Operating Partnership due to majority ownership and full legal control. Noncontrolling interests represent the share of equity and earnings allocable to other partnership interest holders[39](index=39&type=chunk)[40](index=40&type=chunk) - Significant estimates include fair values of acquired properties, useful lives of assets, share-based compensation, allowance for doubtful accounts, fair value of interest rate swaps, impairment analysis, and estimates regarding Pillarstone OP's financial condition[44](index=44&type=chunk) - Rental income from operating leases is recognized on a straight-line basis, with tenant recoveries recognized as corresponding costs are incurred. Lease and nonlease components are combined into a single "Rental" line item[56](index=56&type=chunk)[61](index=61&type=chunk) [3. Leases](index=17&type=section&id=3.%20LEASES) This note details the company's role as both a lessor and a lessee. As a lessor, all property leases are noncancelable operating leases with rental income recognized straight-line. As a lessee, the company has operating leases for automobiles and office machines, and finance leases for a ground lease and an office machine Minimum Future Rents (as Lessor, in thousands) | Minimum Future Rents (as Lessor, in thousands) | Amount | | :--------------------------------------------- | :----- | | 2025 (remaining) | $78,168 | | 2026 | $93,399 | | 2027 | $80,314 | | 2028 | $65,346 | | 2029 | $50,562 | | Thereafter | $142,298 | | Total | $510,087 | Lease Liabilities (as Lessee, in thousands) | Lease Liabilities (as Lessee, in thousands) | Operating Leases | Finance Leases | | :---------------------------------------- | :--------------- | :------------- | | Total undiscounted rental payments | $54 | $3,039 | | Less imputed interest | $3 | $2,267 | | Total lease liabilities | $51 | $772 | [4. Accrued Rents and Accounts Receivable, Net](index=18&type=section&id=4.%20ACCRUED%20RENTS%20AND%20ACCOUNTS%20RECEIVABLE,%20NET) This note provides a breakdown of accrued rents and accounts receivable, net, showing a slight increase in total receivables from December 31, 2024, to March 31, 2025, primarily due to a decrease in the allowance for doubtful accounts Accrued Rents and Accounts Receivable (in thousands) | Accrued Rents and Accounts Receivable (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------- | :---------------- | | Tenant receivables | $15,814 | $17,285 | | Accrued rents and other recoveries | $29,887 | $29,964 | | Allowance for doubtful accounts | $(13,167) | $(14,720) | | Other receivables | $1,331 | $1,291 | | Total | $33,865 | $33,820 | [5. Unamortized Lease Commissions, Legal Fees and Loan Costs](index=18&type=section&id=5.%20UNAMORTIZED%20LEASE%20COMMISSIONS,%20LEGAL%20FEES%20AND%20LOAN%20COSTS) This note details the deferred costs, including leasing commissions, legal costs, and financing costs, net of accumulated amortization. Total net deferred costs decreased slightly from December 31, 2024, to March 31, 2025 Deferred Costs (in thousands) | Deferred Costs (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------- | :---------------- | | Total cost | $26,404 | $26,055 | | Less: accumulated amortization | $(12,136) | $(11,362) | | Total cost, net of accumulated amortization | $14,268 | $14,693 | [6. Investment in Real Estate Partnership](index=18&type=section&id=6.%20INVESTMENT%20IN%20REAL%20ESTATE%20PARTNERSHIP) This note discusses the company's former investment in Pillarstone OP, which ceased to be a majority interest after the redemption notice on January 25, 2024. Pillarstone OP subsequently filed for Chapter 11 bankruptcy. Whitestone has filed a claim for its redemption value and a subrogation claim for a loan guarantee payment, expecting to collect an amount exceeding the current carrying value of the receivable - Whitestone exercised its redemption notice for substantially all of its investment in Pillarstone OP on **January 25, 2024**, converting its equity investment into a receivable[67](index=67&type=chunk)[80](index=80&type=chunk) - Pillarstone OP and Pillarstone REIT filed for Chapter 11 bankruptcy on **March 4, 2024**. Whitestone has filed a claim for its redemption claim (approximately **$70 million**, including interest) and a secured subrogation claim for a **$13.6 million** loan guarantee payment[37](index=37&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - The company does not believe a probable loss will be incurred from the Pillarstone Bankruptcies and anticipates the amount collected will exceed the current carrying value of the receivable[79](index=79&type=chunk)[81](index=81&type=chunk) [7. Debt](index=22&type=section&id=7.%20DEBT) This note details the company's debt structure, including fixed and floating rate notes, and the unsecured credit facility. It highlights a new $56.34 million fixed-rate mortgage loan and the terms of the 2022 Facility, including its revolving credit and term loans. The company was in compliance with all loan covenants as of March 31, 2025 Debt Type (in thousands) | Debt Type (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Fixed rate notes | $539,911 | $547,483 | | Floating rate notes | $102,300 | $75,000 | | Total notes payable principal | $642,211 | $632,483 | - A new **$56.34 million** mortgage loan with a fixed interest rate of **6.23%** was entered into on **June 21, 2024**, secured by three properties, with proceeds used to pay down existing floating rate indebtedness[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - The 2022 Facility includes a **$250 million** unsecured revolving credit facility, a **$265 million** unsecured term loan, and a **$20 million** unsecured incremental term loan. As of March 31, 2025, **$437.3 million** was drawn, with **$97.7 million** remaining availability under the revolver[112](index=112&type=chunk)[114](index=114&type=chunk) Debt Maturities (in thousands) | Debt Maturities (in thousands) | Amount Due | | :----------------------------- | :--------- | | 2025 (remaining) | $0 | | 2026 | $169,443 | | 2027 | $97,414 | | 2028 | $302,823 | | 2029 | $17,867 | | Thereafter | $54,664 | | Total | $642,211 | [8. Derivatives and Hedging Activities](index=28&type=section&id=8.%20DERIVATIVES%20AND%20HEDGING%20ACTIVITIES) This note describes the company's use of interest rate swaps as cash flow hedges to manage exposure to interest rate fluctuations. The fair value of these swaps decreased significantly from December 31, 2024, to March 31, 2025, resulting in an unrealized loss on cash flow hedging activities Interest Rate Swaps (in thousands) | Interest Rate Swaps (in thousands) | March 31, 2025 (Estimated Fair Value) | December 31, 2024 (Estimated Fair Value) | | :--------------------------------- | :------------------------------------ | :--------------------------------------- | | Prepaid expenses and other assets | $2,280 | $5,792 | | Accounts payable and accrued expenses | $(15) | N/A | Interest Rate Swap Activity (in thousands) | Interest Rate Swap Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Recognized as Comprehensive Income (Loss) | $(3,526) | $5,007 | | Income (Loss) Recognized in Earnings | $781 | $1,699 | [9. Earnings Per Share](index=29&type=section&id=9.%20EARNINGS%20PER%20SHARE) This note explains the calculation of basic and diluted earnings per share, which decreased significantly for the three months ended March 31, 2025, compared to the same period in 2024 Earnings Per Share Data (in thousands, except per share data) | Earnings Per Share Data (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common shareholders | $3,701 | $9,340 | | Weighted average number of common shares - basic | 50,890 | 49,940 | | Basic Earnings Per Share | $0.07 | $0.19 | | Diluted Earnings Per Share | $0.07 | $0.18 | [10. Income Taxes](index=30&type=section&id=10.%20INCOME%20TAXES) This note states that the company generally does not provide for federal income taxes as it intends to qualify as a REIT, distributing at least 90% of its taxable income. It is subject to Texas Margin Tax, recognizing approximately $126,000 in provision for the three months ended March 31, 2025 - Whitestone REIT aims to qualify as a REIT, distributing at least **90%** of its taxable income to shareholders, and is therefore generally exempt from federal income tax[130](index=130&type=chunk) Tax Provision (in thousands) | Tax Provision (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Texas Margin Tax | $126 | $120 | [11. Equity](index=30&type=section&id=11.%20EQUITY) This note details the company's common and preferred share authorization, its universal shelf registration for up to $500 million in securities, and its at-the-market equity distribution program (no sales in Q1 2025 or Q1 2024). It also outlines the ownership structure of the Operating Partnership, with Whitestone owning 98.7% interest, and summarizes cash distributions to shareholders and OP unit holders - Whitestone REIT has authority to issue up to **400 million** common shares and **50 million** preferred shares. A universal shelf registration allows for the issuance of up to **$500 million** in various securities[132](index=132&type=chunk)[133](index=133&type=chunk) - The company owns a **98.7%** interest in the Operating Partnership. No shares were sold under the at-the-market equity distribution program in Q1 2025 or Q1 2024[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) Distributions (in thousands, except per share/unit) | Distributions (in thousands, except per share/unit) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Distributions Per Common Share / OP Unit | $0.1350 | $0.1200 | | Total Amount Paid | $6,932 | $6,049 | [12. Incentive Share Plan](index=32&type=section&id=12.%20INCENTIVE%20SHARE%20PLAN) This note describes the 2018 Long-Term Equity Incentive Ownership Plan, which allows for the issuance of up to 3,433,831 common shares and OP units. It details various grants of TSR Units and time-based restricted common share units to employees, their vesting conditions, and the recognized share-based compensation expense - The 2018 Plan authorizes the issuance of up to **3,433,831** common shares and OP units, with awards vesting based on performance conditions (TSR Units) or time-based installments[140](index=140&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk) Share-Based Compensation (in thousands) | Share-Based Compensation (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Total compensation recognized in earnings | $1,132 | $936 | - As of March 31, 2025, there was approximately **$2.8 million** in unrecognized compensation cost for TSR Units (expected to vest over **21 months**) and **$2.5 million** for time-based shares (expected to vest over **27 months**)[153](index=153&type=chunk) [13. Grants to Trustees](index=36&type=section&id=13.%20GRANTS%20TO%20TRUSTEES) This note reports the grant of 42,746 common shares to seven independent trustees on December 24, 2024, which vested immediately, with a grant date fair value of $14.15 per share - On December 24, 2024, **42,746** common shares were granted to seven independent trustees, vesting immediately, with a fair value of **$14.15 per share**[155](index=155&type=chunk) [14. Segment Information](index=36&type=section&id=14.%20SEGMENT%20INFORMATION) This note states that the company operates as a single reportable segment, as the Chief Operating Decision Maker (CODM) evaluates performance and allocates resources at the portfolio level, not geographically. Net income attributable to Whitestone REIT and total assets are key metrics used by the CODM - Whitestone REIT operates as a single reportable segment, with the CEO (CODM) evaluating performance and allocating resources at the portfolio level[156](index=156&type=chunk) - Key metrics for performance assessment and resource allocation include Net income attributable to Whitestone REIT and total assets[157](index=157&type=chunk) [15. Real Estate](index=38&type=section&id=15.%20REAL%20ESTATE) This note details recent property acquisitions and dispositions. In late 2024 and early 2025, the company acquired four properties totaling $55.9 million and disposed of three properties for $64.1 million, recording significant gains on sales - Acquisitions in late 2024 and early 2025 include Village Shops at Dana Park (**$5.6 million**, Dec 2024), Scottsdale Commons (**$22.2 million**, Apr 2024), Anderson Arbor Pad (**$0.9 million**, Apr 2024), and Garden Oaks Shopping Center (**$27.2 million**, Feb 2024)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - Dispositions in 2024 include Providence (**$16.3 million**, **$11.9 million** gain), Fountain Hills Plaza (**$21.3 million**, **$3.6 million** gain), and Mercado at Scottsdale Ranch (**$26.5 million**, **$6.6 million** gain)[165](index=165&type=chunk)[166](index=166&type=chunk) [16. Related Party Transactions](index=39&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) This note discusses the historical related party relationships with Pillarstone REIT, involving former executives and a trustee. It reiterates the cessation of equity method accounting for Pillarstone OP after the redemption notice and reclassification of the investment to a receivable - Former Chairman/CEO James C. Mastandrea and former COO John J. Dee held significant equity interests in Pillarstone REIT. A former Trustee, Paul T. Lambert, also served as a Trustee of Pillarstone REIT[168](index=168&type=chunk) - Following the redemption notice on **January 25, 2024**, the company ceased using the equity method for Pillarstone OP and reclassified its investment to a receivable[169](index=169&type=chunk) [17. Commitments and Contingencies](index=39&type=section&id=17.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines significant legal proceedings and claims, including the company's guarantee of Pillarstone OP's loan (now a subrogation claim in bankruptcy), litigation with Pillarstone REIT, and lawsuits involving former COO and CEO. Management believes these matters will not have a material adverse effect on financial position, results of operations, or liquidity - Whitestone OP guaranteed a **$14.4 million** loan for Pillarstone OP's Uptown Tower property, which went into default. Whitestone paid **$13.6 million** to satisfy the loan and asserted a subrogation claim in Pillarstone's bankruptcy[170](index=170&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) - The company is involved in litigation with Pillarstone REIT regarding a shareholder rights agreement and lawsuits with former COO John Dee and former CEO James Mastandrea concerning employment termination[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Management believes the final outcome of all legal proceedings and claims will not have a material adverse effect on the company's financial position, results of operations, cash flows, or liquidity[178](index=178&type=chunk)[184](index=184&type=chunk) [18. Subsequent Events](index=41&type=section&id=18.%20SUBSEQUENT%20EVENTS) This note states that there are no subsequent events to report - No subsequent events were reported as of the filing date[185](index=185&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business strategy, recent performance, and discussions on liquidity, capital resources, and market risks. It also reconciles non-GAAP financial measures like FFO and NOI [Forward-Looking Statements](index=42&type=section&id=Forward-Looking%20Statements) This section cautions readers that the report contains statements about future events that are subject to risks and uncertainties - The report contains forward-looking statements, which are not guarantees of future performance and are subject to risks and uncertainties[188](index=188&type=chunk)[189](index=189&type=chunk) - Key risk factors include failure to qualify as a REIT, economic conditions, real estate value fluctuations, legislative changes, interest rate increases, natural disasters, and litigation risks[190](index=190&type=chunk) [Overview](index=44&type=section&id=Overview) This section provides a general description of Whitestone REIT's business, property portfolio, and operational strategy - Whitestone REIT is an internally managed company owning **55 commercial properties** (50 operating, 5 development land parcels) in Texas and Arizona, adhering to a "Community Centered Properties®" strategy[193](index=193&type=chunk)[194](index=194&type=chunk)[196](index=196&type=chunk) - The company has **1,456 tenants**, with the largest comprising **2.2%** of annualized rental revenues. In Q1 2025, **84 new and renewal leases** were completed, totaling **199,610 square feet** and **$31.3 million** in value, an increase from Q1 2024[198](index=198&type=chunk) - The company employed **69 full-time employees** as of March 31, 2025, bearing its own operating expenses as an internally managed REIT[199](index=199&type=chunk) [Inflation](index=45&type=section&id=Inflation) This section discusses how the company's lease structures and terms help mitigate the impact of inflation on its financial performance - The majority of leases are triple-net or pass-through operating expenses, and many have terms less than **five years**, allowing for rental rate adjustments to mitigate inflation effects[201](index=201&type=chunk) [Rising Interest Rates](index=45&type=section&id=Rising%20Interest%20Rates) This section analyzes the company's exposure to rising interest rates, particularly on its floating-rate debt, and potential impacts on net income - As of March 31, 2025, **$102.3 million (16%)** of outstanding debt is subject to floating interest rates (SOFR plus **1.50% to 2.10%**)[202](index=202&type=chunk) - A **1%** change in interest rates on non-hedged variable rate debt would result in an approximate **$1.0 million** decrease or increase in annual net income[202](index=202&type=chunk) [How We Derive Our Revenue](index=45&type=section&id=How%20We%20Derive%20Our%20Revenue) This section explains the primary sources of the company's revenue and factors influencing its generation Revenue (in thousands) | Revenue (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :--------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenues | $38,003 | $37,164 | $839 | 2.26% | [Rental Income](index=45&type=section&id=Rental%20Income) This section discusses trends and factors affecting the company's rental income, including property additions and bad debt adjustments - Rental income is expected to increase year-over-year due to property additions and rent increases on renewal leases[204](index=204&type=chunk) - Bad debt adjustments decreased rental revenue by **$0.3 million** in Q1 2025, compared to **$0.6 million** in Q1 2024, indicating an improvement in collectability[204](index=204&type=chunk) [Scheduled Lease Expirations](index=46&type=section&id=Scheduled%20Lease%20Expirations) This section outlines the percentage of gross leasable area subject to expiring leases and the company's renewal strategies - Approximately **24%** of GLA is subject to leases expiring by December 31, 2026[205](index=205&type=chunk) - The company has renewed approximately **69%** of expiring leases over the last three calendar years and actively seeks to re-lease space prior to expiration[205](index=205&type=chunk) [Acquisitions](index=46&type=section&id=Acquisitions) This section describes the company's strategy for growing its portfolio through property acquisitions in high-growth markets - The company seeks to grow GLA by acquiring properties that fit its "Community Centered Properties®" strategy in high-growth markets[206](index=206&type=chunk)[207](index=207&type=chunk) - Extensive relationships with community banks, attorneys, and title companies support an active acquisition pipeline[206](index=206&type=chunk) [Property Acquisitions, Dispositions and Development](index=46&type=section&id=Property%20Acquisitions,%20Dispositions%20and%20Development) This section details recent property transactions, including acquisitions and dispositions, and their financial impact - Acquisitions in late 2024 and early 2025 include Village Shops at Dana Park (**$5.6 million**, Dec 2024), Scottsdale Commons (**$22.2 million**, Apr 2024), Anderson Arbor Pad (**$0.9 million**, Apr 2024), and Garden Oaks Shopping Center (**$27.2 million**, Feb 2024)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Dispositions include Providence (**$16.3 million**, Nov 2024), Fountain Hills Plaza (**$21.3 million**, Aug 2024), and Mercado at Scottsdale Ranch (**$26.5 million**, Mar 2024), resulting in significant gains on sale[212](index=212&type=chunk)[213](index=213&type=chunk) [Leasing Activity](index=48&type=section&id=Leasing%20Activity) This section provides an overview of the company's leasing performance, including occupancy rates, new leases, and renewal terms - As of March 31, 2025, the company's occupancy rate for all properties was **93%**, slightly down from **94%** in Q1 2024[215](index=215&type=chunk) Leasing Activity (Q1 2025) | Leasing Activity (Q1 2025) | Number of Leases Signed | GLA Signed (sq. ft.) | Weighted Average Lease Term (years) | TI and Incentives per Sq. Ft. | Contractual Rent Per Sq. Ft. (New) | Prior Contractual Rent Per Sq. Ft. | Straight-lined Basis Increase Over Prior Rent | | :------------------------- | :---------------------- | :------------------- | :---------------------------------- | :---------------------------- | :--------------------------------- | :--------------------------------- | :-------------------------------------------- | | Comparable Renewal Leases | 58 | 136,618 | 4.4 | $3.44 | $32.29 | $28.48 | 19.9% | | Comparable New Leases | 13 | 21,889 | 6.5 | $39.46 | $37.75 | $34.46 | 22.6% | | Total Comparable Leases | 71 | 158,507 | 4.7 | $8.42 | $33.04 | $29.30 | 20.3% | | Total All Leases | 84 | 199,610 | 4.6 | $9.85 | $31.16 | N/A | N/A | [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that no significant changes occurred in the company's critical accounting policies and estimates during the quarter - No significant changes to critical accounting policies and estimates occurred during the three months ended March 31, 2025[217](index=217&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing key revenue and expense items between reporting periods [Comparison of the Three Months Ended March 31, 2025 and 2024](index=49&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) This section provides an overview of key operational and financial metrics for Q1 2025 compared to Q1 2024, showing a decrease in net income attributable to Whitestone REIT despite an increase in total revenues and Funds From Operations (FFO) Metric (in thousands, except percentages) | Metric (in thousands, except percentages) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenues | $38,003 | $37,164 | $839 | 2.26% | | Net income attributable to Whitestone REIT | $3,701 | $9,340 | $(5,639) | (60.37)% | | Funds from operations (FFO) | $13,148 | $11,818 | $1,330 | 11.25% | | Property net operating income (NOI) | $26,739 | $26,760 | $(21) | (0.08)% | | Distributions per common share and OP unit | $0.1350 | $0.1200 | $0.0150 | 12.50% | [Revenues](index=50&type=section&id=Revenues) Total revenues increased by 2% year-over-year, driven by a 4% increase in Same Store revenues, primarily from higher average rent per leased square foot and increased recoveries, partially offset by a decrease in Non-Same Store revenues due to property sales Revenue Component (in thousands) | Revenue Component (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Same Store Total | $36,628 | $35,269 | $1,359 | 3.85% | | Non-Same Store Total | $1,375 | $1,895 | $(520) | (27.44)% | | Total revenue | $38,003 | $37,164 | $839 | 2.26% | - Same Store rental revenues increased by **$672,000 (3%)** due to higher average rent per leased square foot (**$23.90 vs $23.19**), despite lower average leased square feet. Same Store recoveries increased by **$261,000 (3%)** due to increased operating expenses[223](index=223&type=chunk)[224](index=224&type=chunk) [Operating expenses](index=51&type=section&id=Operating%20expenses) Total operating expenses increased by 2% year-over-year. Same Store operating and maintenance expenses increased by 13% due to higher repairs, contract services, insurance, and utilities. General and administrative expenses decreased by 12% due to lower legal and proxy fees, partially offset by increased professional fees and share-based compensation Operating Expense Component (in thousands) | Operating Expense Component (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Same Store Operating and maintenance | $6,845 | $6,071 | $774 | 12.75% | | Same Store Real estate taxes | $4,085 | $4,080 | $5 | 0.12% | | General and administrative | $5,443 | $6,180 | $(737) | (11.93)% | | Total operating expenses | $26,031 | $25,567 | $464 | 1.81% | - General and administrative expenses decreased by **$737,000**, primarily due to reduced legal fees (**$565,000**) and proxy fees (**$400,000**), partially offset by increases in professional fees and share-based compensation[226](index=226&type=chunk) [Other expenses (income)](index=52&type=section&id=Other%20expenses%20(income)) Total other expenses increased significantly by 308% year-over-year, primarily due to the absence of a large gain on sale of properties recorded in Q1 2024, partially offset by a decrease in interest expense Other Expenses (Income) (in thousands) | Other Expenses (Income) (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Interest expense | $8,097 | $8,519 | $(422) | (4.95)% | | Gain on sale of properties | $0 | $(6,525) | $6,525 | N/A | | Loss on disposal of assets | $100 | $0 | $100 | N/A | | Total other expenses | $8,097 | $1,986 | $6,111 | 307.70% | - Interest expense decreased by **$422,000** due to a lower effective interest rate (**4.91% vs 5.14%**) and a decrease in the average outstanding notes payable balance[227](index=227&type=chunk) [Deficit in earnings of real estate partnership](index=52&type=section&id=Deficit%20in%20earnings%20of%20real%20estate%20partnership) The company reported no deficit in earnings from its real estate partnership for Q1 2025, compared to a $28,000 deficit in Q1 2024, following the redemption of its investment in Pillarstone OP on January 25, 2024 - No deficit in earnings from real estate partnership was reported for Q1 2025, compared to a **$28,000** deficit in Q1 2024, due to the redemption of the Pillarstone OP investment[229](index=229&type=chunk) [Same Store net operating income](index=52&type=section&id=Same%20Store%20net%20operating%20income) Same Store NOI increased by 5% for the three months ended March 31, 2025, driven by a 4% increase in total property revenues, partially offset by an 8% increase in total property expenses Same Store NOI Components (in thousands) | Same Store NOI Components (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Increase (Decrease) | % Increase (Decrease) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------ | :-------------------- | | Total property revenues | $36,628 | $35,269 | $1,359 | 3.85% | | Total property expenses | $10,930 | $10,151 | $779 | 7.67% | | Same Store NOI | $24,661 | $23,522 | $1,139 | 4.84% | [Reconciliation of Non-GAAP Financial Measures](index=54&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures, such as FFO and NOI, to their most directly comparable GAAP measures [Funds From Operations ("FFO") and Core FFO](index=54&type=section&id=Funds%20From%20Operations%20(%22FFO%22)%20and%20Core%20FFO) This section provides a reconciliation of FFO and Core FFO to net income. FFO increased by 11.25% year-over-year, and Core FFO also increased, reflecting adjustments for real estate depreciation/amortization, gains/losses on sales, and proxy contest costs - FFO and Core FFO are non-GAAP measures used by management and investors to evaluate operating performance, as GAAP net income alone is considered insufficient for real estate companies[233](index=233&type=chunk)[234](index=234&type=chunk) FFO and Core FFO (in thousands) | FFO and Core FFO (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net income attributable to Whitestone REIT | $3,701 | $9,340 | $(5,639) | (60.37)% | | FFO (NAREIT) | $13,148 | $11,818 | $1,330 | 11.25% | | Core FFO | $13,148 | $12,256 | $892 | 7.28% | [Property Net Operating Income ("NOI")](index=55&type=section&id=Property%20Net%20Operating%20Income%20(%22NOI%22)) This section defines NOI as operating revenues less property and related expenses, used by management to evaluate property operating performance. Total NOI remained relatively stable year-over-year - NOI is a non-GAAP measure defined as operating revenues less property and related expenses, used to evaluate property operating performance by reflecting revenues and expenses directly associated with owning and operating commercial real estate[237](index=237&type=chunk) NOI Reconciliation (in thousands) | NOI Reconciliation (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net income attributable to Whitestone REIT | $3,701 | $9,340 | $(5,639) | (60.37)% | | NOI | $26,739 | $26,760 | $(21) | (0.08)% | [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's short-term and long-term liquidity needs and how they are met. Short-term needs include distributions, operating expenses, and debt service, covered by operating cash flows and credit facility. Long-term needs involve debt maturities, development, and acquisitions, funded by cash from operations, debt, and equity issuances. The company increased its quarterly distribution and has $97.7 million available under its revolver - Short-term liquidity requirements include distributions, recurring/non-recurring expenditures, and debt service, met by operating cash flows and the 2022 Facility borrowing capacity[239](index=239&type=chunk)[240](index=240&type=chunk) - Long-term capital requirements for debt maturities, development, and acquisitions are expected to be met through net cash from operations, long-term indebtedness, and equity issuances[241](index=241&type=chunk)[246](index=246&type=chunk) - The quarterly distribution was increased to **$0.135 per common share and OP unit**, effective January 2025. As of March 31, 2025, **$97.7 million** remained available under the 2022 Revolver[241](index=241&type=chunk) [Cash, Cash Equivalents and Restricted Cash](index=57&type=section&id=Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) Cash, cash equivalents, and restricted cash increased slightly from December 31, 2024, to March 31, 2025. Operating cash flow decreased significantly, while financing activities shifted to a net cash provision Cash & Equivalents (in thousands) | Cash & Equivalents (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Cash, cash equivalents and restricted cash | $15,814 | $15,370 | - Cash flow from operations decreased from **$11.5 million** in Q1 2024 to **$3.1 million** in Q1 2025. Proceeds from the credit facility increased from **$23.0 million** to **$27.3 million**[252](index=252&type=chunk) [Debt](index=58&type=section&id=Debt) This section provides a detailed breakdown of the company's debt, including fixed and floating rate notes, scheduled maturities, and the terms of the 2022 Facility and Note Agreement. The company was in compliance with all loan covenants as of March 31, 2025 Debt Type (in thousands) | Debt Type (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Fixed rate notes | $539,911 | $547,483 | | Floating rate notes | $102,300 | $75,000 | | Total notes payable principal | $642,211 | $632,483 | - The 2022 Facility includes a **$250 million** unsecured revolving credit facility, a **$265 million** unsecured term loan, and a **$20 million** unsecured incremental term loan[265](index=265&type=chunk) - The company was in compliance with all loan covenants as of March 31, 2025, including maximum total indebtedness to total asset value ratio of **0.60 to 1.00** and minimum EBITDA to fixed charges ratio of **1.50 to 1.00**[269](index=269&type=chunk)[279](index=279&type=chunk) [Capital Expenditures](index=62&type=section&id=Capital%20Expenditures) Total capital expenditures increased by 9% for the three months ended March 31, 2025, compared to the same period in 2024, driven by higher maintenance capital expenditures and developments/redevelopments Capital Expenditures (in thousands) | Capital Expenditures (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Tenant improvements and allowances | $2,259 | $3,267 | $(1,008) | (30.86)% | | Developments / redevelopments | $1,737 | $1,471 | $266 | 18.08% | | Maintenance capital expenditures | $1,628 | $265 | $1,363 | 514.34% | | Total capital expenditures | $6,275 | $5,757 | $518 | 9.00% | [Distributions](index=64&type=section&id=Distributions) The company increased its quarterly distribution to $0.135 per common share and OP unit, effective January 2025. Total distributions paid increased by 14.6% for the three months ended March 31, 2025, compared to the same period in 2024 - The quarterly distribution was increased to **$0.135 per common share and OP unit**, effective January 2025[285](index=285&type=chunk) Distributions Paid (in thousands) | Distributions Paid (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total Amount Paid | $6,932 | $6,049 | $883 | 14.60% | [Taxes](index=65&type=section&id=Taxes) The company maintains its REIT status to avoid federal income tax on distributed income and is subject to the Texas Margin Tax - Whitestone REIT operates to qualify as a REIT, generally avoiding federal income tax on distributed income[288](index=288&type=chunk) [Environmental Matters](index=65&type=section&id=Environmental%20Matters) The company has not incurred significant environmental costs or accrued liabilities and does not anticipate material adverse effects from environmental laws and regulations - The company has not incurred significant environmental costs or accrued liabilities and does not anticipate material adverse effects from environmental laws and regulations[289](index=289&type=chunk) [Off-Balance Sheet Arrangements](index=65&type=section&id=Off-Balance%20Sheet%20Arrangements) The company may guarantee real estate partnership debt to obtain lower funding costs, but its former guarantee for Pillarstone OP's debt is no longer in effect - The company may guarantee real estate partnership debt to secure lower funding costs, but its former guarantee for Pillarstone OP's debt is no longer in effect[290](index=290&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section discusses the company's exposure to market risk, primarily interest rate fluctuations, and its strategies to manage it through fixed-rate debt and interest rate swaps. It also addresses credit risk related to macroeconomic factors [Fixed Interest Rate](index=66&type=section&id=Fixed%20Interest%20Rate) This section details the portion of the company's debt with fixed interest rates and the sensitivity of its fair value to rate changes - As of March 31, 2025, **$539.9 million (84%)** of total outstanding debt is at fixed interest rates, with an average effective rate of approximately **4.87%**[294](index=294&type=chunk) - A **1%** increase or decrease in interest rates would cause a **$12.1 million** decline or increase, respectively, in the fair value of fixed-rate debt[294](index=294&type=chunk) [Variable Interest Rate Debt](index=66&type=section&id=Variable%20Interest%20Rate%20Debt) This section outlines the company's exposure to floating interest rates on its unhedged debt and the potential impact on net income - As of March 31, 2025, **$102.3 million (16%)** of outstanding debt is subject to floating interest rates (SOFR plus **1.50% to 2.10%**) and is not currently hedged[295](index=295&type=chunk) - A **1%** increase or decrease in interest rates on non-hedged variable rate debt would result in an approximate **$1.0 million** decrease or increase in annual net income[295](index=295&type=chunk) [Credit Risk](index=66&type=section&id=Credit%20Risk) This section addresses the potential impact of macroeconomic factors on tenant payment ability and overall business operations - Macroeconomic factors such as inflation, rising interest rates, and financial institution disruptions may increase credit risk, potentially impacting tenant payments and business operations[296](index=296&type=chunk) [Item 4. Controls and Procedures.](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025. No material changes in internal control over financial reporting occurred during the quarter [Evaluation of Disclosure Controls and Procedures](index=66&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of March 31, 2025[297](index=297&type=chunk) [Changes in Internal Control Over Financial Reporting](index=66&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports that no material changes occurred in the company's internal control over financial reporting during the quarter - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025[298](index=298&type=chunk) [PART II - OTHER INFORMATION](index=67&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings.](index=67&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings and claims arising in the ordinary course of business, generally covered by insurance. Management believes these will not have a material adverse effect on financial position, results of operations, or liquidity - The company is subject to various legal proceedings and claims, which management believes will not have a material adverse effect on its financial position, results of operations, or liquidity[299](index=299&type=chunk) - Further details on legal proceedings are incorporated by reference from Note 17 to the Consolidated Financial Statements[300](index=300&type=chunk) [Item 1A. Risk Factors.](index=67&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[301](index=301&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company did not sell any unregistered equity securities during the period. It repurchased 106,592 common shares in January 2025 from employees to satisfy tax withholding obligations on restricted share vesting - No unregistered equity securities were sold during the period covered by the report[309](index=309&type=chunk) Period | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--------------------------- | :------------------------------- | :--------------------------- | | January 1, 2025 - January 31, 2025 | 106,592 | $14.17 | | February 1, 2025 - February 28, 2025 | — | — | | March 1, 2025 - March 31, 2025 | — | — | | Total | 106,592 | $14.17 | [Item 3. Defaults Upon Senior Securities.](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section confirms that no defaults occurred on the company's senior securities during the reporting period - No defaults upon senior securities were reported[305](index=305&type=chunk) [Item 4. Mine Safety Disclosures.](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This section states that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to Whitestone REIT[306](index=306&type=chunk) [Item 5. Other Information.](index=68&type=section&id=Item%205.%20Other%20Information.) This section reports that no Rule 10b5-1 trading arrangements were adopted or terminated by trustees or officers during the quarter - No trustee or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025[307](index=307&type=chunk) [Item 6. Exhibits.](index=68&type=section&id=Item%206.%20Exhibits.) Lists the exhibits filed, furnished, and incorporated by reference as part of the report, including articles of amendment, bylaws, certifications, and XBRL financial information - The report includes an Exhibit Index listing various corporate documents, certifications (302, 906), and XBRL financial information[308](index=308&type=chunk)[312](index=312&type=chunk) [Exhibit Index](index=69&type=section&id=Exhibit%20Index) Provides a detailed list of all exhibits included in the Form 10-Q filing, specifying their nature and previous filing references where applicable - The Exhibit Index details corporate governance documents (Articles of Amendment, Bylaws), certifications (31.1, 31.2, 32.1, 32.2), and financial data in Inline XBRL format (101, 104)[311](index=311&type=chunk)[312](index=312&type=chunk) [Signatures](index=71&type=section&id=Signatures) The report is duly signed on behalf of Whitestone REIT by its Chief Executive Officer and Chief Financial Officer - The report is signed by David K. Holeman (Chief Executive Officer) and John S. Hogan (Chief Financial Officer) on May 5, 2025[316](index=316&type=chunk)

Whitestone REIT (WSR) Q1 2025 Earnings Call May 01, 2025 08:30 AM ET Company Participants David Mordy - Director of Investor RelationsDavid Holeman - CEOChristine Mastandrea - President & Chief Operating OfficerJ. Scott Hogan - CFO & ControllerGaurav Mehta - Managing DirectorMitch Germain - Managing Director - Real Estate Research Conference Call Participants John Massocca - Senior Research Analyst Operator Ladies and gentlemen, greetings, and welcome to the Whitestone REIT First Quarter twenty twenty five ...