Financial Data and Key Metrics Changes - Whitestone REIT achieved a 94.2% occupancy rate, an increase of 30 basis points from Q2 2025, indicating strong leasing performance [5][34] - The company reported a 4.8% growth in same store net operating income (NOI) for the quarter, driven by increases in shop space leases across Texas and Arizona [5][12] - Average base rent rose to $25.59, reflecting an 8.2% increase year-over-year and a 26% increase compared to four years ago, translating to a 5.9% compound annual growth rate [7] - Core FFO per share was reported at $0.26, with expectations for a slight increase in Q4 due to new lease commencements [7][20] - Revenue for the quarter increased by 6%, with improved quality of revenue evidenced by a reduction in uncollectible accounts [22] Business Line Data and Key Metrics Changes - The company signed $29.1 million in total lease value, with new leases showing spreads of 22.5% and renewals at 18.6%, resulting in a combined straight-line leasing spread of 19.3% [12] - Foot traffic across the portfolio increased by 4% compared to Q3 2024, indicating healthy consumer engagement [12] Market Data and Key Metrics Changes - The markets in Texas and Arizona continue to show significant strength, supported by business-friendly environments and strong demographic trends [11] - The Houston metro area has added nearly 2 million people over the last 15 years, while the Phoenix metro area has added 1 million residents, contributing to demand for retail space [17] Company Strategy and Development Direction - The company aims to deliver consistent earnings growth and achieve a long-term core FFO per share growth target of 5% to 7% [6][9] - Whitestone REIT is focused on asset recycling, having disposed of one property this quarter and planning further acquisitions and dispositions to enhance portfolio value [10][47] - The company is actively redeveloping properties, with projects expected to contribute to same store NOI growth in 2026 [6][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain strong leasing demand and occupancy rates, with no signs of weakening in leasing spreads [24][30] - The company is optimistic about the fourth quarter, traditionally its strongest leasing period, and anticipates a strong finish to the year [5][35] - Management highlighted the importance of understanding consumer behavior and adapting to changes in the market to sustain growth [15][18] Other Important Information - The company amended and extended its credit facility, improving its valuation cap rate to 6.75% and enhancing its financial flexibility [20][21] - The dividend is well-covered with a healthy payout ratio, and the company expects to grow the dividend in line with earnings growth [22] Q&A Session Summary Question: What are the expectations for rent expirations in 2026? - Management indicated that there is strong leasing demand and no unique factors affecting next year's rental rates, expecting similar leasing spreads as in recent quarters [23][24] Question: Can you provide details on the change in occupancy? - Management explained that the decrease in occupancy in smaller centers is due to taking back space to attract higher revenue and stronger quality tenants [30][31] Question: Any updates on the Pillarstone JV? - Management confirmed nearing the end of the collection phase, with a settlement agreement filed with the court expected to be approved, leading to a distribution of proceeds in December [36][37] Question: What are the assumptions driving leverage lower in Q4? - Management noted improvements in operations and expected strong performance in Q4, which typically sees sales break points hit [44][46] Question: What is the strategy for site developments? - Management stated that decisions on whether to hold or sell pad sites are made on a case-by-case basis, focusing on maximizing shareholder value [91][92]

Financial Data and Key Metrics Changes - Core FFO per share was $0.61 for the quarter and $2.40 for the year, representing an increase of 4.8% compared to 2023 [15] - Cash available for distribution totaled $370 million in 2024, with approximately $95 million of free cash flow retained after dividends paid [15] - Same store cash NOI grew 4.4% for the quarter and achieved record same store cash NOI growth of 5.8% for the year [15][16] - Net debt to annualized run rate adjusted EBITDA was 5.2x at year-end with liquidity of $623 million [15] Business Line Data and Key Metrics Changes - Leasing activity for the quarter included 23 leases totaling 2.4 million square feet, generating cash and straight-line leasing spreads of 19.4% and 34.9% respectively [15] - For the year, cash and straight-line leasing spreads were 28.3% and 41.8% respectively [15] - The company has already leased 70% of its operating portfolio square feet expected for 2025, achieving cash leasing spreads of 23.8% [9][16] Market Data and Key Metrics Changes - The national industrial leasing demand in 2024 was muted compared to recent years, but many markets remain healthy from both supply and demand standpoints [7] - The strongest market rent growth was observed in non-coastal and manufacturing markets [8] - Active tenant industries included commercial services, building products, and air freight and logistics [8] Company Strategy and Development Direction - The company anticipates a continued contraction in the supply pipeline, with deliveries down over 30% expected to persist into 2025 [7] - The company is focusing on airshoring and onshoring projects, which are expected to drive warehouse demand [8] - The company has entered a joint venture development partnership to construct approximately 400,000 square feet across two buildings in the Charlotte market, with a project cost of approximately $56 million [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in tenant demand since the election, spanning a broad array of industries [7] - The company expects same store cash NOI growth to range between 3.5% to 4% for 2025, with retention rates projected between 70% to 75% [17] - Management expressed optimism about the acquisition market gaining momentum as the year progresses [11] Other Important Information - Acquisition volume for the fourth quarter totaled $294 million, consisting of 15 buildings with cash and straight-line cap rates of 6.2% and 6.9% respectively [10] - The company sold two buildings for aggregate proceeds of $29 million during the quarter [11] Q&A Session Summary Question: Leasing spreads and 2025 leasing expectations - Management indicated that Q4 leasing spreads were lower due to fixed-rate renewal options, but excluding those, spreads would have been 34% [22] - For 2025, management expects leasing spreads to be around 24% to 25% [23] Question: Development yields and specific asset performance - Management expects mid-6% yields for the Tampa assets and noted leasing activity in Spartanburg is increasing [28][29] Question: Impact of tariffs on tenants - Management stated there is uncertainty regarding tariffs, with tenants unsure of the impact and timing [36][38] Question: Trends in the private transaction market - Management noted a pause in the private market but expects an uptick in transaction activity as the year progresses [42][43] Question: Leasing activity post-election - Management observed a material uptick in tours and inquiries across various markets, indicating increased leasing activity [50] Question: Clarification on occupancy loss and leasing expectations - Management explained that the expected leasing for 2025 includes both new speculative leasing and renewals [55][61]