Whitestone REIT(US:WSR)2025-08-01 21:16PART I - FINANCIAL INFORMATION Item 1. Financial Statements The unaudited consolidated financial statements detail the company's financial position, performance, and cash flows for the period Consolidated Financial Statements The company's assets grew to $1.156 billion, with Q2 net income rising to $5.1 million year-over-year Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total real estate assets | $1,037,316 | $1,001,689 | | Total assets | $1,155,534 | $1,134,639 | | Notes payable | $670,345 | $631,518 | | Total liabilities | $722,527 | $690,805 | | Total equity | $433,007 | $443,834 | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $37,892 | $37,647 | $75,895 | $74,811 | | Net income attributable to Whitestone REIT | $5,054 | $2,592 | $8,755 | $11,932 | | Diluted EPS | $0.10 | $0.05 | $0.17 | $0.23 | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,917 | $23,782 | | Net cash used in investing activities | ($50,296) | ($33,023) | | Net cash provided by financing activities | $23,333 | $7,832 | Notes to Consolidated Financial Statements Notes detail property holdings, the Pillarstone investment redemption, debt increases, and recent transactions - Whitestone owned 56 commercial properties in Texas and Arizona as of June 30, 20253637 - The company is pursuing collection on its redeemed Pillarstone OP investment after Pillarstone's bankruptcy filing386883 - Total notes payable increased to $670.3 million from $631.5 million at year-end 20249194 - Q2 2025 real estate activity included two acquisitions for a total of $44.4 million and one disposition for $4.5 million169170175 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes financial results, liquidity, and capital resources, including non-GAAP measure reconciliations Results of Operations Q2 net income rose 95% to $5.1 million, while six-month net income fell due to a prior-year property sale gain Q2 2025 vs. Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $37,892 | $37,647 | $245 | 1% | | Total Operating Expenses | $24,578 | $26,000 | ($1,422) | (5)% | | Net Income Attributable to Whitestone REIT | $5,054 | $2,592 | $2,462 | 95% | | Same Store NOI | $25,049 | $24,432 | $617 | 3% | Six Months 2025 vs. Six Months 2024 Performance (in thousands) | Metric | Six Months 2025 | Six Months 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $75,895 | $74,811 | $1,084 | 1% | | Net Income Attributable to Whitestone REIT | $8,755 | $11,932 | ($3,177) | (27)% | | Same Store NOI | $49,316 | $47,467 | $1,849 | 4% | - The decline in six-month net income was driven by a $6.5 million gain on a property sale in 2024 not repeated in 2025252 Non-GAAP Financial Measures Reconciliations show Funds From Operations (FFO) increased to $13.5 million for Q2 2025 FFO and Core FFO Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Whitestone REIT | $5,054 | $2,592 | $8,755 | $11,932 | | FFO (NAREIT) | $13,473 | $11,270 | $26,621 | $23,088 | | Core FFO | $13,473 | $12,589 | $26,621 | $24,845 | Property Net Operating Income (NOI) Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Whitestone REIT | $5,054 | $2,592 | $8,755 | $11,932 | | NOI | $26,752 | $26,720 | $53,491 | $53,480 | Liquidity and Capital Resources The company maintains sufficient liquidity through operating cash flow and its credit facility to cover distributions - Operating cash flow of $16.9 million for the first six months of 2025 covered total distributions of $13.9 million264313 - The company had $68.7 million available under its 2022 Revolver as of June 30, 2025265 - A new Form S-3 shelf registration allows for the issuance of up to $750 million in securities267 - The quarterly distribution was increased to $0.135 per share effective January 2025311 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk with 80% of its debt at fixed rates - 80% of total debt ($539.9 million) is fixed-rate, mitigating interest rate risk319 - A 1% change in interest rates would impact annual net income by an estimated $1.3 million on its variable-rate debt320 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Disclosure controls and procedures were deemed effective as of June 30, 2025322 - No material changes to internal controls over financial reporting occurred during the quarter323 PART II - OTHER INFORMATION Item 1. Legal Proceedings Ongoing legal proceedings are not expected to have a material adverse effect on the company's financials - Ordinary course legal proceedings are not expected to have a material adverse effect on financial condition324 Item 1A. Risk Factors No material changes to risk factors have occurred since the 2024 Annual Report - No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K326 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 60,732 shares from employees for tax withholding purposes in Q2 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | — | $— | | June 2025 | 60,732 | $12.48 | | Total | 60,732 | $12.48 | - Share repurchases were conducted to satisfy employee tax withholding obligations on vested restricted shares329334 Item 5. Other Information No company insiders adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No trustees or officers adopted or terminated a Rule 10b5-1 trading plan in Q2 2025332