Whitestone REIT(US:WSR)2023-03-01 21:27Financial Data and Key Metrics Changes - Whitestone REIT achieved a FFO per share of $1.03 in 2022, representing a nearly 20% increase from the previous year [11] - The company improved its debt-to-EBITDA ratio to 7.8x from 9.1x a year ago, indicating significant progress in financial health [12] - G&A expenses were reduced by $4.6 million compared to 2021, contributing positively to the overall financial performance [12][29] Business Line Data and Key Metrics Changes - The company reported a same-store NOI growth of nearly 8% for 2022, with a 7.9% increase specifically noted [11][19] - Occupancy rates improved by 240 basis points to 93.7%, with nearly 60% of properties achieving 95% or greater occupancy by year-end [11][14] - Straight-line leasing spreads were reported at 16.6% for the year and 23.5% for the fourth quarter, indicating strong leasing performance [12] Market Data and Key Metrics Changes - The company benefited from macroeconomic trends such as hybrid work and migration to suburban markets, which supported demand for its properties [9][10] - The focus on smaller spaces, which comprise over 60% of leasable square footage, is expected to drive higher demand and premium rents [14][15] Company Strategy and Development Direction - Whitestone REIT aims to create value through a focus on convenience-oriented shopping centers in growing markets, emphasizing a mix of tenants that meet community needs [7][8] - The company plans to continue its disciplined approach to acquisitions and dispositions, with a focus on recycling capital to improve leverage and FFO per share [17][35] - The strategy includes remerchandising properties to better align with community needs and enhance tenant success [20][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disconnect between the current strong economic environment and the expectations of Fed-focused investors, emphasizing a focus on long-term strategies [16] - The company anticipates continued positive momentum in 2023, driven by strong tenant demand and operational discipline [10][25] Other Important Information - Whitestone REIT received an investment-grade credit rating, which is expected to improve access to debt markets and potentially lower borrowing costs in the future [13][42] - The company is committed to corporate responsibility, with improvements in governance and ESG scores recognized by ISS [13] Q&A Session Summary Question: Inquiry about leverage reduction outlook - Management indicated that leverage reduction will primarily come from improved earnings and operating cash flow, with some capital recycling planned for 2023 [32][33] Question: Strategy on acquisitions and dispositions - The company plans to be patient and disciplined regarding acquisitions, focusing on recycling capital from properties where value has been maximized [34][35] Question: Expectations for bad debt in 2023 - Management forecasted bad debt to be between 0.75% to 1.5%, with no significant downward pressure on collections observed so far [36] Question: Insights on Pillarstone assets - Management expressed a desire to monetize their interest in Pillarstone, with ongoing legal activities to advance this effort [38] Question: Leasing spreads for 2023 guidance - The company expects strong leasing spreads similar to the previous year, with a focus on remerchandising to enhance traffic and rents [39][40] Question: Impact of investment-grade rating on credit pricing - While there is no immediate pricing break from the investment-grade rating, management anticipates improved access to debt markets and potential pricing reductions in the future [42][43]