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Whitestone REIT Announces Operating Results For The Third Quarter 2012

Stocks in this article: WSR

Whitestone REIT (NYSE: WSR - “Whitestone” or the “Company”), a fully integrated real estate company that owns, operates and re-develops Community Centered Properties TM, which are visibly located in established or developing culturally diverse neighborhoods, announced its financial results for the third quarter of 2012.

“Our quarterly results reflect the work we have done to increase and strengthen our revenues and our overall enterprise value. We have improved our underlying property asset values through increasing occupancy, redeveloping and repositioning properties, and acquiring accretive Community Centered Properties,” stated James C. Mastandrea, Whitestone's Chairman and Chief Executive Officer. “In the third quarter we drove operating portfolio occupancy to 87%, which marked our fifth consecutive quarter of improving occupancy. These improvements resulted in the year-over-year increases in our overall financial results. Our Community Centered Property approach concentrates primarily on small service based tenants who meet community needs by providing medical, educational, casual dining and convenience services. This strategy has proven to be quite effective and results in premium rents for our smaller spaces. With $82 million in properties added in Arizona in the third quarter, we now own over one million square feet of leasable space in community centers in the Phoenix, Arizona market. Our pipeline of acquisition opportunities continues to be focused on properties in foreclosure, in loan default, and under stress. While our targeted acquisition approach may result in fluctuations in acquisitions activity quarter-to-quarter from a timing perspective, we expect the overall result of acquiring assets below replacement cost to add value on an annual basis and over the long-term.”

Highlights: Third Quarter 2012 Compared to Third Quarter 2011

  • Net income attributable to Whitestone REIT was $163,000, or $0.01 per diluted common share, compared to $578,000, or $0.05 per diluted common share.
  • Funds from Operations ("FFO") increased approximately 32% to $2.9 million, or $0.20 per diluted common share and operating partnership unit ("OP unit"), as compared to $2.2 million, or $0.17 per diluted common share and OP unit.
  • Funds from Operations-Core ("FFO-Core") increased 39% to $3.2 million, or $0.22 per diluted common share and OP unit, as compared to $2.3 million, or $0.18 per diluted common share and OP unit.
  • Property net operating income (“NOI”) increased 35% to $7.0 million as compared to $5.2 million. The increase of $1.8 million is primarily attributable to NOI of new acquisitions.
  • Whitestone raised approximately $59.0 million in net proceeds through the sale of 4.8 million common shares in August 2012, including the over-allotment option exercise.

Acquisition Activity

During the third quarter Whitestone completed acquisitions of three Community Centered Properties TM in the Phoenix area and one adjacent land parcel for an aggregate of $82.2 million in three off-market transactions, all at prices below replacement cost. They include:

  • Village Square at Dana Park was purchased for approximately $46.5 million. The 310,979 square foot center was 71% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona. In the same transaction, the Company also acquired several development parcels totaling 4.7 acres for approximately $4.0 million.
  • Fountain Square was acquired for approximately $15.4 million. The 118,209 square foot property was 76% leased at the time of purchase and is located in Scottsdale, Arizona.
  • Paradise Plaza was purchased in August 2012 for approximately $16.3 million. Paradise Plaza was 100% occupied at the time of purchase with 125,898 of square feet of gross leasable area, and is located in the Paradise Valley area of Scottsdale, Arizona.

Third Quarter 2012 Leasing Highlights

Operating Portfolio Occupancy increased to 87% as of September 30, 2012 as compared to 86% as of September 30, 2011. The Company defines Operating Portfolio Occupancy as physical occupancy in all properties, excluding (i) new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership and (ii) properties that are undergoing significant redevelopment or re-tenanting.

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