Whitestone REIT(US:WSR)2025-07-31 13:30Financial Data and Key Metrics Changes - Core FFO per share increased by 5.4% year over year, reaching $0.26 for the quarter and $0.51 for the six months [9][25] - Same store NOI growth was 2.5% for the quarter and 3.9% for the six months, with a target range of 3% to 4.5% for the year [9][10][25] - Occupancy rose by 100 basis points sequentially from Q1 to 93.9% [4][5] Business Line Data and Key Metrics Changes - The company signed $33.2 million in total lease value, slightly up from Q1, with leasing spreads of 41.4% for new leases and 15.2% for renewals, resulting in a combined leasing spread of 17.9% for the quarter [13][25] - The addition of new tenants, such as Ace Hardware and the Pickler, is expected to enhance same store NOI growth in the future [5][14] Market Data and Key Metrics Changes - The company is focusing on high-growth Sunbelt markets, which are experiencing strong leasing environments [4][5] - Significant urban developments are occurring around the company's properties, such as the $1 billion Park 8 Place redevelopment in Houston and TSMC's $165 billion investment in Phoenix [9][20][19] Company Strategy and Development Direction - The company aims to leverage its leadership position in the high-value shop space to achieve core FFO growth of 5% to 7% and same store NOI growth of 3% to 5% [4][9] - Strategic acquisitions, such as San Clemente in Austin and South Hewlett in Fort Worth, align with the company's criteria for growth and neighborhood dynamics [6][8][21] - The company is committed to capital recycling, with an estimated $40 million in acquisitions and dispositions planned for the remainder of the year [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving future same store NOI growth due to strong leasing activity and tenant mix improvements [32][33] - The company is actively managing expenses, reducing G&A and interest expenses by about 6% from the previous year [11][28] - Management reiterated guidance for core FFO per share and year-end occupancy, indicating strong momentum heading into the second half of the year [25][26] Other Important Information - The company has a strong liquidity position with $5.3 million in cash and $69 million available under the credit facility [28] - The company is focused on maintaining a dividend payout of approximately 50% of FFO, with plans to grow the dividend in line with earnings growth [28] Q&A Session Summary Question: Concerns about same store comps in upcoming quarters - Management expressed confidence in meeting forecasts due to improved occupancy and leasing activity contributing to future same store NOI growth [30][32] Question: Impact of new tenants on same store NOI - Management indicated that new tenants like the Pickler will commence in the second half of the year, contributing minimally to same store NOI this year but expected to enhance future growth [34] Question: Details on acquisitions and dispositions - Management confirmed ongoing activities related to $40 million in acquisitions and dispositions, emphasizing the importance of capital recycling [35][36] Question: Interest expense forecast changes - Management clarified that the increase in interest expense is due to timing related to acquisitions and is expected to be offset by increased non-same store NOI [39] Question: Insights on recent acquisitions - Management highlighted the quality of neighborhoods and potential for rent increases in the recent acquisitions, indicating strong upside opportunities [42][43] Question: Cap rates and market pricing trends - Management noted stability in cap rates for recent acquisitions, with a focus on asset-specific evaluations rather than broad market trends [52][53] Question: Same store growth guidance and leasing activity - Management confirmed that the guidance is based on normal leasing activity, with a mix of routine leasing and larger spaces that will contribute to future growth [60][62]