Whitestone REIT(US:WSR)2025-05-01 12:30Financial Data and Key Metrics Changes - Core FFO per share for the quarter was $0.25, up 4.2% compared to Q1 2024 [8] - Same store net operating income (NOI) growth was 4.8%, near the top of the forecasted range [9] - Straight line leasing spreads were 20.3%, marking the twelfth consecutive quarter with spreads exceeding 17% [9] - Annual net effective average base rent (ABR) per square foot increased by 4% over Q1 2024 [9] - Debt to EBITDAre ratio improved to 7.2 times from 7.8 times a year ago [24] Business Line Data and Key Metrics Changes - Redevelopment efforts contributed to a 1% lift in same store NOI growth, with $8 million spent in capital above 2023 levels [7] - The company anticipates redevelopment projects will create up to 100 basis points of same store NOI growth lift in 2026, 2027, and 2028 [7] - Total lease value signed for the quarter was $31 million, the highest first quarter amount in a decade, representing a 40% increase over the average of the last decade [13] Market Data and Key Metrics Changes - Green Street's population forecast for the company's footprint is 50 to 70 basis points higher than the national average, with job growth CAGR forecasted to be 40 basis points above the national average [11] - Phoenix, the largest market for the company, leads the country in industrial construction underway [11] Company Strategy and Development Direction - The company is focused on capitalizing on the reshoring dynamic, with a strategy designed to benefit from economic changes [6] - The operational model is set up to provide accelerated growth and greater durability of cash flows in varying economic conditions [5] - The company aims for a long-term core FFO growth target of 5% to 7%, supported by redevelopment and acquisitions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform in different economic cycles, despite current macroeconomic uncertainties [67] - The company is optimistic about the future of service-based businesses in the Sunbelt region [11] - Management is closely monitoring tenant performance and market trends, indicating no significant pullback in sales yet [48][52] Other Important Information - The company has approximately $50 million in acquisitions in the current pipeline, primarily financed through cash flow and dispositions [24] - The dividend payout ratio remains nearly 50%, with expectations for strong dividend growth in line with earnings growth [25] Q&A Session Summary Question: Why did occupancy decline? - The decline in occupancy was primarily due to a retenanting effort at Terra Vida, where a low-paying tenant was replaced by higher-performing tenants [27][28] Question: Is the $50 million in acquisitions already under contract? - The $50 million is an estimate of current opportunities being pursued, not necessarily under contract yet [29][30] Question: What are the expectations for leverage levels this year? - The company expects to end the year in the low sixes for the debt to EBITDA ratio, with improvements anticipated from increased earnings and cash flow [32][34] Question: What redevelopment projects are contributing to same store NOI growth? - Key projects include Lions Square and Williams Trace, with ongoing efforts to improve tenant quality and revenue [39][42] Question: Are tenants seeing any consumer pullback? - While there are indications of changing consumer behavior, particularly in restaurant sales, overall traffic and sales have not significantly declined [48][52]