(Mark One) | |
[x] | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2011 |
OR |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________ |
Commission file number 000-50256 |
WHITESTONE REIT |
(Exact Name of Registrant as Specified in Its Charter) |
Maryland | 76-0594970 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
2600 South Gessner, Suite 500 Houston, Texas | 77063 | |
(Address of Principal Executive Offices) | (Zip Code) |
Class | Outstanding as of November 4, 2011 | |
Class A Common Stock, $0.001 par value | 2,603,294 Shares | |
Class B Common Stock, $0.001 par value | 8,833,318 Shares |
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Real estate assets, at cost: | ||||||||
Property | $ | 241,488 | $ | 203,223 | ||||
Accumulated depreciation | (43,761 | ) | (38,989 | ) | ||||
Net operating real estate assets | 197,727 | 164,234 | ||||||
Real estate assets held-for-sale, net | — | 1,164 | ||||||
Total real estate assets | 197,727 | 165,398 | ||||||
Cash and cash equivalents | 32,660 | 17,591 | ||||||
Marketable securities | 4,579 | — | ||||||
Escrows and acquisition deposits | 4,092 | 4,385 | ||||||
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 5,309 | 4,691 | ||||||
Unamortized lease commissions and loan costs | 3,618 | 3,574 | ||||||
Prepaid expenses and other assets | 705 | 746 | ||||||
Other assets - discontinued operations | — | 60 | ||||||
Total assets | $ | 248,690 | $ | 196,445 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Notes payable | $ | 102,234 | $ | 100,941 | ||||
Accounts payable and accrued expenses | 7,800 | 7,208 | ||||||
Tenants' security deposits | 1,956 | 1,768 | ||||||
Dividends and distributions payable | 3,647 | 2,133 | ||||||
Other liabilities - discontinued operations | — | 112 | ||||||
Total liabilities | 115,637 | 112,162 | ||||||
Commitments and contingencies: | ||||||||
Equity: | ||||||||
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued | ||||||||
and outstanding at September 30, 2011 and December 31, 2010 | — | — | ||||||
Class A common shares, $0.001 par value per share; 50,000,000 shares authorized; | ||||||||
3,471,090 and 3,471,187 issued and outstanding as of September 30, 2011 and | ||||||||
December 31, 2010, respectively | 3 | 3 | ||||||
Class B common shares, $0.001 par value per share; 350,000,000 shares authorized; | ||||||||
7,511,269 and 2,200,000 issued and outstanding as of September 30, 2011 and | ||||||||
December 31, 2010, respectively | 7 | 2 | ||||||
Additional paid-in capital | 153,105 | 93,357 | ||||||
Accumulated other comprehensive loss | (1,545 | ) | — | |||||
Accumulated deficit | (38,413 | ) | (30,654 | ) | ||||
Total Whitestone REIT shareholders' equity | 113,157 | 62,708 | ||||||
Noncontrolling interests in subsidiary | 19,896 | 21,575 | ||||||
Total equity | 133,053 | 84,283 | ||||||
Total liabilities and equity | $ | 248,690 | $ | 196,445 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Property revenues | ||||||||||||||||
Rental revenues | $ | 7,075 | $ | 6,446 | $ | 20,354 | $ | 19,167 | ||||||||
Other revenues | 1,704 | 1,410 | 4,415 | 4,069 | ||||||||||||
Total property revenues | 8,779 | 7,856 | 24,769 | 23,236 | ||||||||||||
Property expenses | ||||||||||||||||
Property operation and maintenance | 2,355 | 2,090 | 6,238 | 5,952 | ||||||||||||
Real estate taxes | 1,259 | 948 | 3,367 | 2,978 | ||||||||||||
Total property expenses | 3,614 | 3,038 | 9,605 | 8,930 | ||||||||||||
Other expenses (income) | ||||||||||||||||
General and administrative | 1,495 | 1,263 | 4,737 | 3,735 | ||||||||||||
Depreciation and amortization | 2,162 | 1,816 | 6,098 | 5,281 | ||||||||||||
Interest expense | 1,430 | 1,401 | 4,277 | 4,210 | ||||||||||||
Interest, dividend and other investment income | (264 | ) | (7 | ) | (379 | ) | (19 | ) | ||||||||
Total other expense | 4,823 | 4,473 | 14,733 | 13,207 | ||||||||||||
Income from continuing operations before gain (loss) on disposal of | ||||||||||||||||
assets and income taxes | 342 | 345 | 431 | 1,099 | ||||||||||||
Provision for income taxes | (54 | ) | (56 | ) | (164 | ) | (211 | ) | ||||||||
Gain (loss) on sale or disposal of assets | 1 | (72 | ) | (17 | ) | (113 | ) | |||||||||
Income from continuing operations | 289 | 217 | 250 | 775 | ||||||||||||
Income (loss) from discontinued operations | (11 | ) | 17 | 36 | 49 | |||||||||||
Gain on sale of property from discontinued operations | 397 | — | 397 | — | ||||||||||||
Net income | 675 | 234 | 683 | 824 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 97 | 57 | 122 | 264 | ||||||||||||
Net income attributable to Whitestone REIT | $ | 578 | $ | 177 | $ | 561 | $ | 560 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Earnings per share - basic | ||||||||||||||||
Income from continuing operations attributable to Whitestone | ||||||||||||||||
REIT excluding amount attributable to unvested restricted shares | $ | 0.02 | $ | 0.04 | $ | 0.02 | $ | 0.14 | ||||||||
Income from discontinued operations attributable to Whitestone REIT | 0.03 | — | 0.05 | 0.01 | ||||||||||||
Net income attributable to common shareholders excluding | ||||||||||||||||
amounts attributable to unvested restricted shares | $ | 0.05 | $ | 0.04 | $ | 0.07 | $ | 0.15 | ||||||||
Earnings per share - diluted | ||||||||||||||||
Income from continuing operations attributable to Whitestone | ||||||||||||||||
REIT excluding amount attributable to unvested restricted shares | $ | 0.02 | $ | 0.04 | $ | 0.02 | $ | 0.14 | ||||||||
Income from discontinued operations attributable to Whitestone REIT | 0.03 | — | 0.05 | 0.01 | ||||||||||||
Net income attributable to common shareholders excluding | ||||||||||||||||
amounts attributable to unvested restricted shares | $ | 0.05 | $ | 0.04 | $ | 0.07 | $ | 0.15 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 10,797 | 4,020 | 8,285 | 3,517 | ||||||||||||
Diluted | 10,809 | 4,040 | 8,300 | 3,548 | ||||||||||||
Dividends declared per Class A common share | $ | 0.2850 | $ | 0.2850 | $ | 0.8550 | $ | 0.9075 | ||||||||
Dividends declared per Class B common share (1) | 0.2850 | 0.2850 | 0.8550 | 0.3810 | ||||||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||
Net income | $ | 675 | $ | 234 | $ | 683 | $ | 824 | ||||||||
Other comprehensive loss: | ||||||||||||||||
Unrealized loss on available-for-sale marketable securities | (1,672 | ) | — | (1,881 | ) | — | ||||||||||
Comprehensive income (loss) | (997 | ) | 234 | (1,198 | ) | 824 | ||||||||||
Less: Comprehensive income (loss) attributable to noncontrolling | ||||||||||||||||
interests | (143 | ) | 57 | (214 | ) | 264 | ||||||||||
Comprehensive income (loss) attributable to Whitestone REIT | $ | (854 | ) | $ | 177 | $ | (984 | ) | $ | 560 |
(1) | Class B common shares were issued on August 25, 2010 in connection with our initial public offering and listing on the NYSE-Amex. Class B shares received a pro-rated dividend in September 2010. From October 2010 forward, Class A and Class B shares received the same dividend. |
Accumulated | |||||||||||||||||||||||||||||||||||||||||
Class A | Class B | Additional | Other | Total | Noncontrolling | ||||||||||||||||||||||||||||||||||||
Common Shares | Common Shares | Paid-In | Accumulated | Comprehensive | Shareholders' | interests | Total | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Equity | Units | Dollars | Equity | |||||||||||||||||||||||||||||||
Balance, | |||||||||||||||||||||||||||||||||||||||||
December 31, 2010 | 3,471 | $ | 3 | 2,200 | $ | 2 | $ | 93,357 | $ | (30,654 | ) | $ | — | $ | 62,708 | 1,815 | $ | 21,575 | $ | 84,283 | |||||||||||||||||||||
Issuance of common | |||||||||||||||||||||||||||||||||||||||||
shares | — | — | 5,310 | 5 | 59,678 | — | — | 59,683 | — | — | 59,683 | ||||||||||||||||||||||||||||||
Dividend | |||||||||||||||||||||||||||||||||||||||||
reinvestment plan | — | — | 1 | — | (16 | ) | — | — | (16 | ) | — | — | (16 | ) | |||||||||||||||||||||||||||
Share-based | |||||||||||||||||||||||||||||||||||||||||
compensation | — | — | — | — | 86 | — | — | 86 | — | — | 86 | ||||||||||||||||||||||||||||||
Dividends and | |||||||||||||||||||||||||||||||||||||||||
distributions | — | — | — | — | — | (8,320 | ) | — | (8,320 | ) | — | (1,465 | ) | (9,785 | ) | ||||||||||||||||||||||||||
Unrealized loss on | |||||||||||||||||||||||||||||||||||||||||
change in fair value | |||||||||||||||||||||||||||||||||||||||||
of available-for-sale | |||||||||||||||||||||||||||||||||||||||||
marketable | |||||||||||||||||||||||||||||||||||||||||
securities | — | — | — | — | — | — | (1,545 | ) | (1,545 | ) | — | (336 | ) | (1,881 | ) | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | 561 | — | 561 | — | 122 | 683 | ||||||||||||||||||||||||||||||
Balance, | |||||||||||||||||||||||||||||||||||||||||
September 30, 2011 | 3,471 | $ | 3 | 7,511 | $ | 7 | $ | 153,105 | $ | (38,413 | ) | $ | (1,545 | ) | $ | 113,157 | 1,815 | $ | 19,896 | $ | 133,053 |
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Income from continuing operations | $ | 250 | $ | 775 | ||||
Income from discontinued operations | 433 | 49 | ||||||
Net income | 683 | 824 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,098 | 5,281 | ||||||
Gain on sale of marketable securities | (192 | ) | — | |||||
Loss on sale or disposal of assets | 17 | 113 | ||||||
Bad debt expense | 379 | 339 | ||||||
Share-based compensation | 233 | 219 | ||||||
Changes in operating assets and liabilities: | ||||||||
Escrows and acquisition deposits | 385 | 3,893 | ||||||
Accrued rent and accounts receivable | (994 | ) | (213 | ) | ||||
Unamortized lease commissions and loan costs | (728 | ) | (514 | ) | ||||
Prepaid expenses and other assets | 599 | 515 | ||||||
Accounts payable and accrued expenses | 97 | (2,141 | ) | |||||
Tenants' security deposits | 188 | 74 | ||||||
Net cash provided by operating activities | 6,332 | 8,341 | ||||||
Net cash provided by (used in) operating activities of discontinued operations | (8 | ) | 69 | |||||
Cash flows from investing activities: | ||||||||
Additions to real estate | (3,966 | ) | (2,439 | ) | ||||
Real estate acquisitions | (34,020 | ) | (2,225 | ) | ||||
Investments in marketable securities | (13,520 | ) | — | |||||
Proceeds from sales of marketable securities | 7,252 | — | ||||||
Net cash used in investing activities | (44,254 | ) | (4,664 | ) | ||||
Net cash provided by investing activities of discontinued operations | 1,553 | — | ||||||
Cash flows from financing activities: | ||||||||
Dividends paid | (6,852 | ) | (3,534 | ) | ||||
Distributions paid to OP unit holders | (1,544 | ) | (1,742 | ) | ||||
Proceeds from issuance of common shares | 59,667 | 23,020 | ||||||
Proceeds from notes payable | 2,905 | 1,430 | ||||||
Repayments of notes payable | (2,356 | ) | (2,231 | ) | ||||
Payments of loan origination costs | (374 | ) | (98 | ) | ||||
Repurchase of common shares | — | (249 | ) | |||||
Net cash provided by financing activities | 51,446 | 16,596 | ||||||
Net increase in cash and cash equivalents | 15,069 | 20,342 | ||||||
Cash and cash equivalents at beginning of period | 17,591 | 6,275 | ||||||
Cash and cash equivalents at end of period | $ | 32,660 | $ | 26,617 |
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 4,271 | $ | 4,217 | ||||
Cash paid for taxes | 215 | 262 | ||||||
Non cash investing and financing activities: | ||||||||
Disposal of fully depreciated real estate | $ | 162 | $ | 468 | ||||
Financed insurance premiums | 649 | 616 | ||||||
Change in fair value of available-for-sale securities | (1,881 | ) | — | |||||
Change in par value of Class A common shares | — | 7 |
September 30, 2011 | December 31, 2010 | |||||||
Tenant receivables | $ | 1,729 | $ | 1,700 | ||||
Accrued rent and other recoveries | 4,764 | 4,256 | ||||||
Allowance for doubtful accounts | (1,184 | ) | (1,265 | ) | ||||
Total | $ | 5,309 | $ | 4,691 |
September 30, 2011 | December 31, 2010 | |||||||
Leasing commissions | $ | 5,361 | $ | 4,939 | ||||
Deferred financing cost | 2,720 | 2,307 | ||||||
Total cost | 8,081 | 7,246 | ||||||
Less: leasing commissions accumulated amortization | (3,027 | ) | (2,661 | ) | ||||
Less: deferred financing cost accumulated amortization | (1,436 | ) | (1,011 | ) | ||||
Total cost, net of accumulated amortization | $ | 3,618 | $ | 3,574 |
Description | September 30, 2011 | December 31, 2010 | ||||||
Fixed rate notes | ||||||||
$3.0 million 6.00% Note, due 2021 (1) | $ | 2,986 | $ | — | ||||
$10.0 million 6.04% Note, due 2014 | 9,370 | 9,498 | ||||||
$1.5 million 6.50% Note, due 2014 | 1,477 | 1,496 | ||||||
$11.2 million 6.52% Note, due 2015 | 10,800 | 10,908 | ||||||
$21.4 million 6.53% Notes, due 2013 | 19,683 | 20,142 | ||||||
$24.5 million 6.56% Note, due 2013 | 23,708 | 24,030 | ||||||
$9.9 million 6.63% Notes, due 2014 | 9,292 | 9,498 | ||||||
$0.5 million 5.05% Notes, due 2011 | 158 | 13 | ||||||
Floating rate note | ||||||||
$26.9 million LIBOR + 2.82% Note, due 2013 | 24,760 | 25,356 | ||||||
$ | 102,234 | $ | 100,941 |
(1) | The 6.00% interest rate is fixed through March 30, 2016. On March 31, 2016 the interest rate will reset to the rate of interest for a five year balloon note with a thirty year amortization as published by the Federal Home Loan Bank. |
Amount Due | ||||
Year | (in thousands) | |||
2011 | $ | 795 | ||
2012 | 2,636 | |||
2013 | 66,488 | |||
2014 | 19,191 | |||
2015 | 10,315 | |||
2016 and thereafter | 2,809 | |||
Total | $ | 102,234 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Numerator: | ||||||||||||||||
Income continuing operations | $ | 289 | $ | 217 | $ | 250 | $ | 775 | ||||||||
Less: Net income attributable to noncontrolling interests | (41 | ) | (53 | ) | (45 | ) | (248 | ) | ||||||||
Dividends paid on unvested restricted shares | (4 | ) | (6 | ) | (13 | ) | (21 | ) | ||||||||
Undistributed earnings attributable to unvested restricted shares | — | — | — | — | ||||||||||||
Income from continuing operations atributable to Whitestone | ||||||||||||||||
REIT excluding amounts attributable to unvested restricted shares | 244 | 158 | 192 | 506 | ||||||||||||
Income from discontinued operations | 386 | 17 | 433 | 49 | ||||||||||||
Less: Net income attributable to noncontrolling interests | (56 | ) | (4 | ) | (77 | ) | (16 | ) | ||||||||
Income from discontinued operations attributable to Whitestone REIT | 330 | 13 | 356 | 33 | ||||||||||||
Net income attributable to common shareholders excluding | ||||||||||||||||
amounts attibutable to unvested restricted shares | $ | 574 | $ | 171 | $ | 548 | $ | 539 | ||||||||
Denominator: | ||||||||||||||||
Weighted average number of common shares - basic | 10,797 | 4,020 | 8,285 | 3,517 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Unvested restricted shares | 12 | 20 | 15 | 31 | ||||||||||||
Weighted average number of common shares - dilutive | 10,809 | 4,040 | 8,300 | 3,548 | ||||||||||||
Earnings Per Share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income from continuing operations attributable to Whitestone | ||||||||||||||||
REIT excluding amounts attributable to unvested restricted shares | $ | 0.02 | $ | 0.04 | $ | 0.02 | $ | 0.14 | ||||||||
Income from discontinued operations attributable to Whitestone REIT | 0.03 | — | 0.05 | 0.01 | ||||||||||||
Net income attributable to common shareholders excluding | ||||||||||||||||
amounts attributable to unvested restricted shares | $ | 0.05 | $ | 0.04 | $ | 0.07 | $ | 0.15 | ||||||||
Diluted: | ||||||||||||||||
Income from continuing operations attributable to Whitestone | ||||||||||||||||
REIT excluding amounts attributable to unvested restricted shares | $ | 0.02 | $ | 0.04 | $ | 0.02 | $ | 0.14 | ||||||||
Income from discontinued operations attributable to Whitestone REIT | 0.03 | — | 0.05 | 0.01 | ||||||||||||
Net income attributable to common shareholders excluding | ||||||||||||||||
amounts attributable to unvested restricted shares | $ | 0.05 | $ | 0.04 | $ | 0.07 | $ | 0.15 |
Class A Common Shareholders | Class B Common Shareholders | Noncontrolling OP Unit Holders | Total | |||||||||||||||||||||||||
Quarter Paid | Dividend Per Common Share | Total Amount Paid | Dividend Per Common Share | Total Amount Paid | Distribution Per OP Unit | Total Amount Paid | Total Amount Paid | |||||||||||||||||||||
2011 | ||||||||||||||||||||||||||||
Third Quarter | $ | 0.2850 | $ | 974 | $ | 0.2850 | $ | 2,141 | $ | 0.2850 | $ | 514 | $ | 3,629 | ||||||||||||||
Second Quarter | 0.2850 | 989 | 0.2850 | 1,132 | 0.2850 | 515 | 2,636 | |||||||||||||||||||||
First Quarter | 0.2850 | 989 | 0.2850 | 627 | 0.2850 | 515 | 2,131 | |||||||||||||||||||||
Total | $ | 0.8550 | $ | 2,952 | $ | 0.8550 | $ | 3,900 | $ | 0.8550 | $ | 1,544 | $ | 8,396 | ||||||||||||||
2010 | ||||||||||||||||||||||||||||
Fourth Quarter | $ | 0.2850 | $ | 989 | $ | 0.2850 | $ | 627 | $ | 0.2850 | $ | 514 | $ | 2,130 | ||||||||||||||
Third Quarter | 0.2850 | 992 | 0.0960 | 211 | 0.2850 | 515 | 1,718 | |||||||||||||||||||||
Second Quarter | 0.3375 | 1,176 | — | — | 0.3375 | 610 | 1,786 | |||||||||||||||||||||
First Quarter | 0.3375 | 1,163 | — | — | 0.3375 | 610 | 1,773 | |||||||||||||||||||||
Total | $ | 1.2450 | $ | 4,320 | $ | 0.3810 | $ | 838 | $ | 1.2450 | $ | 2,249 | $ | 7,407 |
Shares | Weighted-Average Grant Date Fair Value (1) | ||||||
Non-vested at January 1, 2011 | 522,441 | $ | 12.48 | ||||
Granted | — | — | |||||
Vested | (5,169 | ) | 15.45 | ||||
Forfeited | (13,249 | ) | 11.17 | ||||
Non-vested as of September 30, 2011 | 504,023 | $ | 12.48 | ||||
Available for grant at September 30, 2011 | 1,245,638 |
(1) | The fair value of the Class A common shares granted were determined based on observable market transactions occurring near the date of the grants. |
Shares Granted | Shares Vested | |||||||||||||
Non-Vested Shares Issued | Weighted-Average Grant-Date Fair Value | Vested Shares | Total Vest-Date Fair Value | |||||||||||
(in thousands) | ||||||||||||||
Nine months ended September 30, 2011 | — | $ | — | (5,169 | ) | $ | 80 | |||||||
Year ended December 31, 2010 | 31,858 | 14.09 | (55,699 | ) | 695 | |||||||||
Year ended December 31, 2009 | 600,731 | 12.37 | — | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Property revenues | ||||||||||||||||
Rental revenues | $ | 10 | $ | 43 | $ | 107 | $ | 133 | ||||||||
Other revenues | 2 | 34 | 71 | 105 | ||||||||||||
Total property revenues | 12 | 77 | 178 | 238 | ||||||||||||
Property expenses | ||||||||||||||||
Property operation and maintenance | 20 | 37 | 89 | 121 | ||||||||||||
Real estate taxes | 3 | 8 | 23 | 24 | ||||||||||||
Total property expenses | 23 | 45 | 112 | 145 | ||||||||||||
Other expenses (income) | ||||||||||||||||
Depreciation and amortization | — | 14 | 29 | 42 | ||||||||||||
Total other expense | — | 14 | 29 | 42 | ||||||||||||
Income before loss on disposal of assets and income taxes | (11 | ) | 18 | 37 | 51 | |||||||||||
Provision for income taxes | — | (1 | ) | (1 | ) | (2 | ) | |||||||||
Loss on sale or disposal of assets | 397 | — | 397 | — | ||||||||||||
Income from discontinued operations | $ | 386 | $ | 17 | $ | 433 | $ | 49 |
• | the imposition of federal taxes if we fail to qualify as a REIT in any taxable year or forego an opportunity to ensure REIT status; |
• | uncertainties related to the national economy, the real estate industry in general and in our specific markets; |
• | legislative or regulatory changes, including changes to laws governing REITs; |
• | adverse economic or real estate developments in Texas, Arizona or Illinois; |
• | increases in interest rates and operating costs; |
• | inability to obtain necessary outside financing; |
• | decreases in rental rates or increases in vacancy rates; |
• | litigation risks; |
• | lease-up risks; |
• | inability to renew tenant or obtain new tenants upon the expiration of existing leases; |
• | inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; and |
• | the potential need to fund tenant improvements or other capital expenditures out of operating cash flow. |
• | nineteen retail centers containing approximately 1.3 million square feet of leasable space and having a total carrying amount (net of accumulated depreciation) of $94.3 million; |
• | seven office centers containing approximately 0.6 million square feet of leasable space and having a total carrying amount (net of accumulated depreciation) of $44.5 million; |
• | eleven office/flex centers containing approximately 1.2 million square feet of leasable space and having a total carrying amount (net of accumulated depreciation) of $41.0 million; and |
• | four retail Community Centered properties containing approximately 0.3 million square feet of leasable space and having a total carrying amount (net of accumulated depreciation) of $18.0 million. |
Three Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Number of properties owned and operated | 41 | 37 | ||||||
Aggregate gross leasable area (sq. ft.)(1) | 3,428,844 | 3,042,811 | ||||||
Ending occupancy rate - Operating Portfolio(2) | 86 | % | 83 | % | ||||
Ending occupancy rate - all properties | 84 | % | 82 | % | ||||
Total property revenues | $ | 8,779 | $ | 7,856 | ||||
Total property expenses | 3,614 | 3,038 | ||||||
Total other expenses | 4,823 | 4,473 | ||||||
Provision for income taxes | 54 | 56 | ||||||
Loss on disposal of assets | (1 | ) | 72 | |||||
Income from continuing operations | 289 | 217 | ||||||
Income from discontinued operations | 386 | 17 | ||||||
Net income | 675 | 234 | ||||||
Less: Net income attributable to noncontrolling interests | 97 | 57 | ||||||
Net income attributable to Whitestone REIT | $ | 578 | $ | 177 | ||||
Funds from operations (3) | $ | 2,210 | $ | 2,007 | ||||
Property net operating income (4) | 5,154 | 4,835 | ||||||
Dividends and distributions paid on common shares and OP Units | 3,629 | 1,718 | ||||||
Per common share and OP Unit | $ | 0.2850 | $ | 0.3375 | ||||
Dividends paid as a percentage of funds from operations | 164 | % | 86 | % |
(1) | During the first quarter of 2010, we concluded that approximately 25,000 square feet at our Kempwood Plaza and Centre South locations were no longer leasable, therefore such area is no longer included in the gross leasable area. |
(2) | Excludes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties which are undergoing significant redevelopment or re-tenanting. |
(3) | For a reconciliation of funds from operations to net income, see "Funds From Operations" below. |
(4) | For a reconciliation of property net operating income to net income, see "Property Net Operating Income" below. |
Three Months Ended September 30, | |||||||||||||||
2011 | 2010 | Increase | % Increase | ||||||||||||
Real estate taxes | $ | 1,259 | $ | 948 | $ | 311 | 33 | % | |||||||
Utilities | 676 | 568 | 108 | 19 | % | ||||||||||
Contract services | 590 | 500 | 90 | 18 | % | ||||||||||
Repairs and maintenance | 387 | 366 | 21 | 6 | % | ||||||||||
Bad debt | 165 | 133 | 32 | 24 | % | ||||||||||
Labor and other | 537 | 523 | 14 | 3 | % | ||||||||||
Total property expenses | $ | 3,614 | $ | 3,038 | $ | 576 | 19 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
Same Store | New Store | Total | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
Property revenues | $ | 7,987 | $ | 7,856 | $ | 792 | $ | — | $ | 8,779 | $ | 7,856 | ||||||||||||
Property expenses | 3,254 | 3,038 | 360 | — | 3,614 | 3,038 | ||||||||||||||||||
Continuing operations property | ||||||||||||||||||||||||
net operating income | 4,733 | 4,818 | 432 | — | 5,165 | 4,818 | ||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||
net operating income | (11 | ) | 17 | — | — | (11 | ) | 17 | ||||||||||||||||
Property net operating income | $ | 4,722 | $ | 4,835 | $ | 432 | $ | — | $ | 5,154 | $ | 4,835 |
Three Months Ended September 30, | Increase / | % Increase / | |||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | ||||||||||||
General and administrative | $ | 1,495 | $ | 1,263 | $ | 232 | 18 | % | |||||||
Depreciation and amortization | 2,162 | 1,816 | 346 | 19 | % | ||||||||||
Interest expense | 1,430 | 1,401 | 29 | 2 | % | ||||||||||
Interest, dividend and other investment income | (264 | ) | (7 | ) | (257 | ) | (3,671 | )% | |||||||
Total other expenses | $ | 4,823 | $ | 4,473 | $ | 350 | 8 | % |
Three Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Property revenues | ||||||||
Rental revenues | $ | 10 | $ | 43 | ||||
Other revenues | 2 | 34 | ||||||
Total property revenues | 12 | 77 | ||||||
Property expenses | ||||||||
Property operation and maintenance | 20 | 37 | ||||||
Real estate taxes | 3 | 8 | ||||||
Total property expenses | 23 | 45 | ||||||
Other expenses | ||||||||
General and administrative | — | — | ||||||
Depreciation and amortization | — | 14 | ||||||
Total other expense | — | 14 | ||||||
Income before loss on disposal of assets and income taxes | (11 | ) | 18 | |||||
Provision for income taxes | — | (1 | ) | |||||
Gain on sale of property in discontinued operations | 397 | — | ||||||
Income from discontinued operations | $ | 386 | $ | 17 |
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Number of properties owned and operated | 41 | 37 | ||||||
Aggregate gross leasable area (sq. ft.)(1) | 3,428,844 | 3,042,811 | ||||||
Ending occupancy rate - Operating Portfolio(2) | 86 | % | 83 | % | ||||
Ending occupancy rate - all properties | 84 | % | 82 | % | ||||
Total property revenues | $ | 24,769 | $ | 23,236 | ||||
Total property expenses | 9,605 | 8,930 | ||||||
Total other expenses | 14,733 | 13,207 | ||||||
Provision for income taxes | 164 | 211 | ||||||
Loss on disposal of assets | 17 | 113 | ||||||
Income from continuing operations | 250 | 775 | ||||||
Income from discontinued operations | 433 | 49 | ||||||
Net income | 683 | 824 | ||||||
Less: Net income attributable to noncontrolling interests | 122 | 264 | ||||||
Net income attributable to Whitestone REIT | $ | 561 | $ | 560 | ||||
Funds from operations (3) | $ | 5,913 | $ | 5,867 | ||||
Property net operating income (4) | 15,200 | 14,355 | ||||||
Dividends and distributions paid on common shares and OP Units | 8,396 | 5,276 | ||||||
Per common share and OP Unit | $ | 0.8550 | $ | 0.9600 | ||||
Dividends paid as a percentage of funds from operations | 142 | % | 90 | % |
(1) | During the first quarter of 2010, we concluded that approximately 25,000 square feet at our Kempwood Plaza and Centre South locations were no longer leasable, therefore such area is no longer included in the gross leasable area. |
(2) | Excludes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties which are undergoing significant redevelopment or re-tenanting. |
(3) | For a reconciliation of funds from operations to net income, see "Funds From Operations" below. |
(4) | For a reconciliation of property net operating income to net income, see "Property Net Operating Income" below. |
Nine Months Ended September 30, | Increase / | % Increase / | |||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | ||||||||||||
Real estate taxes | $ | 3,367 | $ | 2,978 | $ | 389 | 13 | % | |||||||
Utilities | 1,815 | 1,696 | 119 | 7 | % | ||||||||||
Contract services | 1,690 | 1,543 | 147 | 10 | % | ||||||||||
Repairs and maintenance | 914 | 900 | 14 | 2 | % | ||||||||||
Bad debt | 379 | 339 | 40 | 12 | % | ||||||||||
Labor and other | 1,440 | 1,474 | (34 | ) | (2 | )% | |||||||||
Total property expenses | $ | 9,605 | $ | 8,930 | $ | 675 | 8 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
Same Store | New Store | Total | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
Property revenues | $ | 23,450 | $ | 23,236 | $ | 1,319 | $ | — | $ | 24,769 | $ | 23,236 | ||||||||||||
Property expenses | 8,868 | 8,930 | 737 | — | 9,605 | 8,930 | ||||||||||||||||||
Continuing operations property | ||||||||||||||||||||||||
net operating income | 14,582 | 14,306 | 582 | — | 15,164 | 14,306 | ||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||
net operating income | 36 | 49 | — | — | 36 | 49 | ||||||||||||||||||
Property net operating income | $ | 14,618 | $ | 14,355 | $ | 582 | $ | — | $ | 15,200 | $ | 14,355 |
Nine Months Ended September 30, | Increase / | % Increase / | |||||||||||||
2011 | 2010 | (Decrease) | (Decrease) | ||||||||||||
General and administrative | $ | 4,737 | $ | 3,735 | $ | 1,002 | 27 | % | |||||||
Depreciation and amortization | 6,098 | 5,281 | 817 | 15 | % | ||||||||||
Interest expense | 4,277 | 4,210 | 67 | 2 | % | ||||||||||
Interest, dividend and other investment income | (379 | ) | (19 | ) | (360 | ) | (1,895 | )% | |||||||
Total other expenses | $ | 14,733 | $ | 13,207 | $ | 1,526 | 12 | % |
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Property revenues | ||||||||
Rental revenues | $ | 107 | $ | 133 | ||||
Other revenues | 71 | 105 | ||||||
Total property revenues | 178 | 238 | ||||||
Property expenses | ||||||||
Property operation and maintenance | 89 | 121 | ||||||
Real estate taxes | 23 | 24 | ||||||
Total property expenses | 112 | 145 | ||||||
Other expenses | ||||||||
General and administrative | — | — | ||||||
Depreciation and amortization | 29 | 42 | ||||||
Total other expense | 29 | 42 | ||||||
Income before loss on disposal of assets and income taxes | 37 | 51 | ||||||
Provision for income taxes | (1 | ) | (2 | ) | ||||
Gain on sale of property in discontinued operations | 397 | — | ||||||
Income from discontinued operations | $ | 433 | $ | 49 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
FFO and FFO-Core | ||||||||||||||||
Net income attributable to Whitestone REIT | $ | 578 | $ | 177 | $ | 561 | $ | 560 | ||||||||
Depreciation and amortization of real estate assets (1) | 1,933 | 1,701 | 5,610 | 4,930 | ||||||||||||
Loss (gain) on disposal of assets (1) | (398 | ) | 72 | (380 | ) | 113 | ||||||||||
Net income attributable to noncontrolling interests (1) | 97 | 57 | 122 | 264 | ||||||||||||
FFO | $ | 2,210 | $ | 2,007 | $ | 5,913 | $ | 5,867 | ||||||||
Acquisition costs | $ | 185 | $ | 10 | $ | 327 | $ | 11 | ||||||||
Legal and professional costs (recoveries), net | (103 | ) | — | 254 | — | |||||||||||
FFO-Core | $ | 2,292 | $ | 2,017 | $ | 6,494 | $ | 5,878 |
(1) | Including amounts for discontinued operations. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Property Net Operating Income | ||||||||||||||||
Net income attributable to Whitestone REIT | $ | 578 | $ | 177 | $ | 561 | $ | 560 | ||||||||
General and administrative expenses | 1,495 | 1,263 | 4,737 | 3,735 | ||||||||||||
Depreciation and amortization | 2,162 | 1,816 | 6,098 | 5,281 | ||||||||||||
Interest expense | 1,430 | 1,401 | 4,277 | 4,210 | ||||||||||||
Interest, dividend and other investment income | (264 | ) | (7 | ) | (379 | ) | (19 | ) | ||||||||
Provision for income taxes | 54 | 56 | 164 | 211 | ||||||||||||
Gain (loss) on disposal of assets | (1 | ) | 72 | 17 | 113 | |||||||||||
Gain on sale of property from discontinued operations | (397 | ) | — | (397 | ) | — | ||||||||||
Net income attributable to noncontrolling interests | 97 | 57 | 122 | 264 | ||||||||||||
NOI | $ | 5,154 | $ | 4,835 | $ | 15,200 | $ | 14,355 |
• | Cash flow from operations of $6,332,000 for the nine months ended September 30, 2011; |
• | Net proceeds of $59,667,000 from the issuance of common shares; |
• | Net proceeds of $2,531,000 million from issuance of notes payable net of origination costs; |
• | Proceeds from sales of marketable securities of $7,252,000 million; |
• | Net proceeds $1,545,000 from the sale and operations of our discontinued operations; |
• | Payment of dividends and distributions to common shareholders and OP Unit holders of $8,396,000; |
• | Investments in marketable securities of $13,520,000; |
• | Real estate acquisitions of $34,020,000; |
• | Additions to real estate of $3,966,000; |
• | Payments of loans of $2,356,000. |
Description | September 30, 2011 | December 31, 2010 | ||||||
Fixed rate notes | ||||||||
$3.0 million 6.00% Note, due 2021 (1) | $ | 2,986 | $ | — | ||||
$10.0 million 6.04% Note, due 2014 | 9,370 | 9,498 | ||||||
$1.5 million 6.50% Note, due 2014 | 1,477 | 1,496 | ||||||
$11.2 million 6.52% Note, due 2015 | 10,800 | 10,908 | ||||||
$21.4 million 6.53% Notes, due 2013 | 19,683 | 20,142 | ||||||
$24.5 million 6.56% Note, due 2013 | 23,708 | 24,030 | ||||||
$9.9 million 6.63% Notes, due 2014 | 9,292 | 9,498 | ||||||
$0.5 million 5.05% Notes, due 2011 | 158 | 13 | ||||||
Floating rate note | ||||||||
$26.9 million LIBOR + 2.82% Note, due 2013 | 24,760 | 25,356 | ||||||
$ | 102,234 | $ | 100,941 |
(1) | The 6.00% interest rate is fixed through March 30, 2016. On March 31, 2016 the interest rate will reset to the rate of interest for a five year balloon note with a thirty year amortization as published by the Federal Home Loan Bank. |
Amount Due | ||||
Year | (in thousands) | |||
2011 | $ | 795 | ||
2012 | 2,636 | |||
2013 | 66,488 | |||
2014 | 19,191 | |||
2015 | 10,315 | |||
2016 and thereafter | 2,809 | |||
Total | $ | 102,234 |
Class A Common Shareholders | Class B Common Shareholders | Noncontrolling OP Unit Holders | Total | |||||||||||||||||||||||||
Quarter Paid | Dividend Per Common Share | Total Amount Paid | Dividend Per Common Share | Total Amount Paid | Distribution Per OP Unit | Total Amount Paid | Total Amount Paid | |||||||||||||||||||||
2011 | ||||||||||||||||||||||||||||
Third Quarter | $ | 0.2850 | $ | 974 | $ | 0.2850 | $ | 2,141 | $ | 0.2850 | $ | 514 | $ | 3,629 | ||||||||||||||
Second Quarter | 0.2850 | 989 | 0.2850 | 1,132 | 0.2850 | 515 | 2,636 | |||||||||||||||||||||
First Quarter | 0.2850 | 989 | 0.2850 | 627 | 0.2850 | 515 | 2,131 | |||||||||||||||||||||
Total | $ | 0.8550 | $ | 2,952 | $ | 0.8550 | $ | 3,900 | $ | 0.8550 | $ | 1,544 | $ | 8,396 | ||||||||||||||
2010 | ||||||||||||||||||||||||||||
Fourth Quarter | $ | 0.2850 | $ | 989 | $ | 0.2850 | $ | 627 | $ | 0.2850 | $ | 514 | $ | 2,130 | ||||||||||||||
Third Quarter | 0.2850 | 992 | 0.0960 | 211 | 0.2850 | 515 | 1,718 | |||||||||||||||||||||
Second Quarter | 0.3375 | 1,176 | — | — | 0.3375 | 610 | 1,786 | |||||||||||||||||||||
First Quarter | 0.3375 | 1,163 | — | — | 0.3375 | 610 | 1,773 | |||||||||||||||||||||
Total | $ | 1.2450 | $ | 4,320 | $ | 0.3810 | $ | 838 | $ | 1.2450 | $ | 2,249 | $ | 7,407 |
(a) | During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933. |
(b) | Not applicable. |
(c) | On September 2, 2011, we commenced an offer to exchange Class B common shares on a one-for-one basis for (i) up to 867,789 outstanding Class A common shares; and (ii) up to 453,642 outstanding OP units (the “Exchange Offer”). The Exchange Offer expired at 5:00 p.m., EDT, on Monday, October 3, 2011, and 867,789 Class A common shares and 453,642 OP units were accepted for exchange. |
WHITESTONE REIT | ||||
Date: | November 7, 2011 | /s/ James C. Mastandrea | ||
James C. Mastandrea | ||||
Chief Executive Officer | ||||
(Principal Executive Officer) |
Date: | November 7, 2011 | /s/ David K. Holeman | ||
David K. Holeman | ||||
Chief Financial Officer | ||||
(Principal Financial and Principal Accounting Officer) |
EXHIBIT INDEX |
Exhibit No. | Description |
3.1.1 | Articles of Amendment and Restatement of Declaration of Trust of Whitestone REIT (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on July 31, 2008) |
3.1.2 | Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3(i).1 to the Registrant's Current Report on Form 8-K, filed on December 6, 2006) |
3.1.3 | Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010) |
3.1.4 | Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010) |
3.1.5 | Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010) |
3.2 | Amended and Restated Bylaws (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 9, 2008) |
4.1 | Dividend Reinvestment Plan (previously filed as and incorporated by reference to Exhibit A of the Registrant's Registration Statement of Form S-3 (No. 333-174608), filed on May 13, 2011) |
31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1** | Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2** | Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS*** | XBRL Instance Document |
101. SCH*** | XBRL Taxonomy Extension Schema Document |
101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB*** | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF*** | XBRL Taxonomy Extension Definition Linkbase Document |
1. | I have reviewed this Quarterly Report on Form 10-Q, for the period ended September 30, 2011, of Whitestone REIT; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q, for the period ended September 30, 2011, of Whitestone REIT; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ James C. Mastandrea |
James C. Mastandrea |
Chairman and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David K. Holeman |
David K. Holeman |
Chief Financial Officer |
Consolidated Balance Sheets Parenthetical (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Preferred shares, par value per share | $ 0.001 | $ 0.001 |
Preferred shares, shares authorized | 50,000,000 | 50,000,000 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 3,471,090 | 3,471,187 |
Common Stock, Shares, Outstanding | 3,471,090 | 3,471,187 |
Common Class B [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 350,000,000 | 350,000,000 |
Common Stock, Shares, Issued | 7,511,269 | 2,200,000 |
Common Stock, Shares, Outstanding | 7,511,269 | 2,200,000 |
Document and Entity Information | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 04, 2011
Common Class A [Member] | Nov. 04, 2011
Common Class B [Member] | |
Entity Information [Line Items] | |||
Entity Registrant Name | Whitestone REIT | ||
Entity Central Index Key | 0001175535 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2011 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 2,603,292 | 8,833,318 | |
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes |
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Debt | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure | DEBT Debt consists of the following (in thousands):
As of September 30, 2011, our debt was collateralized by 24 properties with a carrying value of $111.6 million. Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of certain rents and leases associated with those properties. As of September 30, 2011, we are in compliance with all loan covenants. On June 14, 2011, Whitestone, through our Operating Partnership, entered into an agreement with Harris Bank, part of BMO Financial Group, effective June 13, 2011 for an unsecured revolving credit facility (the "Facility") with an initial committed amount of $20 million. The Facility is expandable to $75 million and matures two years from closing, with a 12-month extension available upon lender approval. We will use the Facility for general corporate purposes, including acquisitions and redevelopment of existing properties in our portfolio. Borrowings under the Facility accrue interest (at our option), based on total indebtedness to total asset value ratio, at either the Eurodollar Loan Rate or the Base Rate at 3.5% to 4.5% and 2.5% to 3.5%, respectively. Base Rate means the higher of: (i) (a) the bank's prime commercial rate, (b) the average rate quoted the bank by two or more Federal funds brokers selected by the bank for sale to the bank at face value of Federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1%, and (c) the LIBOR rate for such day plus 1.00%. Eurodollar Loan Rate means LIBOR divided by the Eurodollar Reserve Percentage. The Eurodollar Reserve Percentage means the maximum reserve percentage at which reserves are imposed by the Board of Governors of the Federal Reserve System. The Facility contains customary terms and conditions, including, without limitation, affirmative and negative covenants, such as information reporting requirements, maximum total indebtedness to total asset value, minimum earnings before interest, tax, depreciation and amortization ("EBITDA") to fixed charges, and maintenance of net worth. The Facility also contains customary events of default with customary cure and notice, including, without limitation, nonpayment, breach of covenant, misrepresentation of representations and warranties in a material respect, cross-default to other major indebtedness, change of control, bankruptcy, and loss of REIT tax status. We are currently in compliance with these covenants. As of September 30, 2011, no amounts were drawn on the Facility, and our borrowing capacity was $20 million. Scheduled maturities of our debt as of September 30, 2011 are as follows (in thousands):
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Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | COMMITMENTS AND CONTINGENCIES We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our consolidated financial statements. Executive Relocation. On July 9, 2010, upon the unanimous recommendation of our Compensation Committee, we entered into an arrangement with Mr. Mastandrea with respect to the disposition of his residence in Cleveland, Ohio. Under the relocation arrangement, we will pay Mr. Mastandrea the shortfall, if any, in the amount realized from the sale of the Cleveland residence, below $2,450,000, not to exceed $700,000, plus tax on the amount of such payment at the maximum federal income tax rate. Any amount payable in excess of $450,000 will be paid in common shares over four consecutive quarters at the market value of the shares, as determined in the reasonable judgment of the Board, as of the time of the sale of the residence. In addition, the arrangement requires us to continue paying the previously agreed upon cost of housing expenses for the Mastandrea family in Houston, Texas for a period of one year following the date of sale of the residence. We also previously agreed to reimburse Mr. Mastandrea for out of pocket moving costs including packing, temporary storage, transportation and moving supplies. See also Note 8 above. |
Interim Financial Statements | 9 Months Ended |
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Sep. 30, 2011 | |
Interim Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure | INTERIM FINANCIAL STATEMENTS The consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2010 are derived from our audited consolidated financial statements at that date. The unaudited financial statements as of September 30, 2011 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to Form 10-Q. The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of Whitestone and our subsidiaries as of September 30, 2011, and the results of operations for the three and nine month periods ended September 30, 2011 and 2010, the consolidated statement of changes in equity for the nine month period ended September 30, 2011 and cash flows for the nine month periods ended September 30, 2011 and 2010. All of these adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results expected for a full year. The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2010. Business. Whitestone was formed as a real estate investment trust (“REIT”), pursuant to the Texas Real Estate Investment Trust Act on August 20, 1998. In July 2004, Whitestone changed its state of organization from Texas to Maryland. Whitestone serves as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership. Whitestone currently conducts substantially all of its operations and activities through the Operating Partnership. As the general partner of the Operating Partnership, Whitestone has the exclusive authority to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions. As of September 30, 2011 and December 31, 2010, Whitestone owned and operated 41 and 38 commercial properties, respectively, in and around Houston, Dallas, San Antonio, Chicago and Phoenix. |
Income Taxes | 9 Months Ended |
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Sep. 30, 2011 | |
Income Taxes [Abstract] | |
Income Tax Disclosure | INCOME TAXES Federal income taxes are not provided because we intend to continue to and believe we qualify as a REIT under the provisions of the Internal Revenue Code (the "Code") and because we have distributed and intend to continue to distribute all of our taxable income to our shareholders. Our shareholders include their proportionate taxable income in their individual tax returns. As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our shareholders and meet certain income sources and investment restriction requirements. In addition, REITs are subject to a number of organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates. During 2010, we discovered that we may have inadvertently violated the “5% asset test,” as set forth in Section 856(c)(4)(B)(iii)(I) of the Code, for the quarter ended March 31, 2009 as a result of utilizing a certain cash management arrangement with a commercial bank. If our investment in a commercial paper investment sweep account through such cash management agreement is not treated as cash, and is instead treated as a security of a single issuer for purposes of the “5% asset test,” then we failed the “5% asset test” for the first quarter of our 2009 taxable year. We believe, however, that if we failed the “5% asset test,” our failure would be considered due to reasonable cause and not willful neglect and, therefore, we would not be disqualified as a REIT for our 2009 taxable year. We would be, however, subject to certain reporting requirements and a tax equal to the greater of $50,000 or 35% of the net income from the commercial paper investment account during the period in which we failed to satisfy the “5% asset test.” The amount of such tax is $50,000, and we paid such tax on April 27, 2010. If the IRS were to assert that we failed the “5% asset test” for the first quarter of our 2009 taxable year and that such failure was not due to reasonable cause, and the courts were to sustain that position, our status as a REIT would terminate as of December 31, 2008. We would not be eligible to again elect REIT status until our 2014 taxable year. Consequently, we would be subject to federal income tax on our taxable income at regular corporate rates without the benefit of the dividends-paid deduction, and our cash available for distributions to shareholders would be reduced. Taxable income differs from net income for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and rental revenue. In May 2006, the State of Texas adopted the Texas Margin Tax effective with franchise tax reports filed on or after January 1, 2008. The Texas Margin Tax is computed by applying the applicable tax rate (1% for us) to the profit margin, which generally will be determined for us as total revenue less a 30% standard deduction. Although House Bill 3 states that the Texas Margin Tax is not an income tax, SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”) which is codified in FASB ASC 740, Income Taxes (“ASC 740”) applies to the Texas Margin Tax. For the three months ended September 30, 2011 and 2010, we recognized $54,000 and $56,000 in margin tax provision, respectively, and for the nine months ended September 30, 2011 and 2010, we recognized $164,000 and $161,000 in margin tax provision, respectively. |
Grants to Trustees | 9 Months Ended |
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Sep. 30, 2011 | |
Grants to Trustees [Abstract] | |
Trustee Incentive Shares | GRANTS TO TRUSTEES On March 25, 2009, each of our independent trustees was granted 1,667 restricted Class A common shares which vest in equal installments in 2010, 2011, and 2012. During the nine months ended September 30, 2011, 2,224 of these restricted shares vested. These restricted shares were granted pursuant to individual grant agreements and not pursuant to our 2008 Plan. The 8,333 Class A common shares granted to our five independent trustees had a weighted average grant date fair value of $14.81 per share, resulting in total unrecognized compensation cost of approximately $15,000 as of September 30, 2011, which is expected to be recognized over a weighted-average period of approximately one year. The fair value of the shares granted during 2009 was determined based on observable market transactions occurring near the date of the grants. |
Related Party Transactions | 9 Months Ended |
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Sep. 30, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | RELATED PARTY TRANSACTIONS Executive Relocation. On July 9, 2010, upon the unanimous recommendation of our Compensation Committee, we entered into an arrangement with Mr. Mastandrea with respect to the disposition of his residence in Cleveland, Ohio. Mr. Mastandrea listed the residence in the second half of 2007 and has had no offers. In the meantime, Mr. Mastandrea has continued to pay for security, taxes, insurance and maintenance expenses related to the residence. In May 2010, we engaged a professional relocation firm to market the home and assist in moving the Mastandrea family to Houston. Since the engagement of the relocation firm, no offers on the home have been received. Under the relocation arrangement, we will pay Mr. Mastandrea the shortfall, if any, in the amount realized from the sale of the Cleveland residence, below $2,450,000, not to exceed $700,000, plus tax on the amount of such payment at the maximum federal income tax rate. The first $450,000 plus any taxes will be paid in cash. Any amount payable in excess of $450,000 will be paid in common shares at the market value of the shares, as determined in the reasonable judgment of the Board, as of the time of the sale of the residence. The common shares payable to Mr. Mastandrea, if any, will be delivered over four consecutive quarters in equal installments. In addition, the arrangement requires us to continue paying the previously agreed upon cost of housing expenses for the Mastandrea family in Houston, Texas for a period of one year following the date of sale of the residence. We have previously agreed to reimburse Mr. Mastandrea for out of pocket moving costs including packing, temporary storage, transportation and moving supplies. |
Earnings Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share for Whitestone's common shareholders is calculated by dividing income from continuing operations excluding amounts attributable to unvested restricted shares, income from discontinued operations and the net income attributable to non-controlling interests by Whitestone's weighted-average common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income attributable to common shareholders excluding amounts attributable to unvested restricted shares, income from discontinued operations and the net income attributable to non-controlling interests by the weighted-average number of common shares including any dilutive unvested restricted shares. Certain of Whitestone's performance-based restricted common shares are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share. During the three months and nine months ended September 30, 2011 and 2010, 1,814,569 OP Units were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive. For the three and nine months ended September 30, 2011, distributions of $53,000 and $160,000, respectively, were made to the holders of certain restricted common shares, $49,000 and $147,000 of which were charged against earnings for the three and nine months ended September 30, 2011, respectively. For the three and nine months ended September 30, 2010, distributions of $58,000 and $196,000, respectively, were made to the holders of certain restricted common shares, $52,000 and $175,000 of which were charged against earnings for the three and nine months ended September 30, 2010, respectively. See Note 11 to our accompanying consolidated financial statements for information related to restricted common shares under the 2008 Plan.
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Consolidated Statements of Cash Flows (USD $) In Thousands | 9 Months Ended | |
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Sep. 30, 2011 | Sep. 30, 2010 | |
Cash flows from operating activities: | ||
Income from continuing operations | $ 250 | $ 775 |
Income from discontinued operations | 433 | 49 |
Net income | 683 | 824 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,098 | 5,281 |
Gain on sale of marketable securities | (192) | 0 |
Loss on sale or disposal of assets | 17 | 113 |
Bad debt expense | 379 | 339 |
Share-based compensation | 233 | 219 |
Changes in operating assets and liabilities: | ||
Escrows and acquisition deposits | 385 | 3,893 |
Accrued rent and accounts receivable | (994) | (213) |
Unamortized lease commissions and loan costs | (728) | (514) |
Prepaid expenses and other assets | 599 | 515 |
Accounts payable and accrued expenses | 97 | (2,141) |
Tenants' security deposits | 188 | 74 |
Net cash provided by operating activities | 6,332 | 8,341 |
Net cash provided by (used in) operating activities of discontinued operations | (8) | 69 |
Cash flows from investing activities: | ||
Additions to real estate | (3,966) | (2,439) |
Real estate acquisitions | (34,020) | (2,225) |
Investments in marketable securities | (13,520) | 0 |
Proceeds from sales of marketable securities | (7,252) | 0 |
Net cash used in investing activities | (44,254) | (4,664) |
Net cash provided by investing activities of discontinued operations | 1,553 | 0 |
Cash flows from financing activities: | ||
Dividends paid | (6,852) | (3,534) |
Distributions paid to OP unit holders | (1,544) | (1,742) |
Proceeds from issuance of common shares | 59,667 | 23,020 |
Proceeds from notes payable | 2,905 | 1,430 |
Repayments of notes payable | (2,356) | (2,231) |
Payments of loan origination costs | (374) | (98) |
Repurchase of common shares | 0 | (249) |
Net cash provided by financing activities | 51,446 | 16,596 |
Net increase in cash and cash equivalents | 15,069 | 20,342 |
Cash and cash equivalents at beginning of period | 17,591 | 6,275 |
Cash and cash equivalents at end of period | $ 32,660 | $ 26,617 |
Significant Accounting Policies | 9 Months Ended |
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Sep. 30, 2011 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Consolidation. We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership. As of September 30, 2011 and December 31, 2010, we owned a majority of the partnership interests in the Operating Partnership. Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership. All significant inter-company balances have been eliminated. Noncontrolling interest in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us. Net income or loss is allocated to noncontrolling interests based on the weighted-average percentage ownership of the Operating Partnership during the year. Issuance of additional Class A or Class B common shares of beneficial interest in Whitestone (collectively the "common shares") and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, Class A common shares on a one-for-one basis (the “OP units”) changes the ownership interests of both the noncontrolling interests and Whitestone. Basis of Accounting. Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates that we use include the estimated fair values of properties acquired, the estimated useful lives for depreciable and amortizable assets and costs, the estimated allowance for doubtful accounts and estimates supporting our impairment analysis for the carrying values of our real estate assets. Actual results could differ from those estimates. Reclassifications. We have reclassified certain prior fiscal year amounts in the accompanying consolidated financial statements in order to be consistent with the current fiscal year presentation. These reclassifications had no effect on net income or equity. Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's ("FASB") Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification ("ASC") 820, "Fair Value Measurements and Disclosures." Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income. We recognized a gain on the sale of marketable securities of approximately $154,000 and $192,000 for the three and nine months ended September 30, 2011, respectively. No gain or loss was recognized for the three or nine months ended September 30, 2010. As of September 30, 2011, our investment in available-for-sale marketable securities was approximately $4.6 million, which includes an aggregate unrealized loss of approximately $1.9 million. Share-Based Compensation. From time to time, we award nonvested restricted common share awards or restricted common share unit awards which may be converted into common shares, to executive officers and employees under our 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”). The vast majority of the awarded shares and units vest when certain performance conditions are met. We recognize compensation expense when achievement of the performance conditions is probable based on management's most recent estimates using the fair value of the shares as of the grant date. For the three months ended September 30, 2011 and 2010, we recognized $78,000 and $76,000 in share-based compensation expense, respectively, and for the nine months ended September 30, 2011 and 2010, we recognized $233,000 and $219,000, respectively. Noncontrolling Interests. Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent. The ownership interests not held by the parent are considered noncontrolling interests. Accordingly, we have reported noncontrolling interests in equity on the consolidated balance sheets but separate from Whitestone's equity. On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Whitestone and noncontrolling interests. Consolidated statements of changes in equity are included for quarterly financial statements, including beginning balances, activity for the period and ending balances for shareholders' equity, noncontrolling interests and total equity. See Whitestone's Annual Report on Form 10-K for the year ended December 31, 2010 for further discussion on significant accounting policies. Recent Accounting Pronouncements. There are no new unimplemented accounting pronouncements that are expected to have a material impact on our results of operations, financial position or cash flows. |
Accrued Rents and Accounts Receivable | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans, Notes, Trade and Other Receivables Disclosure | ACCRUED RENT AND ACCOUNTS RECEIVABLE, NET Accrued rent and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands):
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Incentive Share Plan | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Incentive Share Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Incentive Share Plan | INCENTIVE SHARE PLAN On July 29, 2008, our shareholders approved the 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”). On December 22, 2010, our Board amended the 2008 Plan to allow for awards in or related to Class B common shares pursuant to the 2008 Plan. The 2008 Plan, as amended, provides that awards may be made with respect to Class B common shares of Whitestone or OP units, which may be converted into cash or, at our option, Class A common shares of Whitestone. The maximum aggregate number of Class B common shares that may be issued under the 2008 Plan is increased upon each issuance of Class A or Class B common shares by Whitestone (including issuances pursuant to the 2008 Plan) so that at any time the maximum number of shares that may be issued under the 2008 Plan shall equal 12.5% of the aggregate number of Class A and Class B common shares of Whitestone and OP units issued and outstanding (other than treasury shares and/or units issued to or held by Whitestone). The Compensation Committee of Whitestone’s Board of Trustees administers the 2008 Plan, except with respect to awards to non-employee trustees, for which the 2008 Plan is administered by Whitestone’s Board of Trustees. The Compensation Committee is authorized to grant stock options, including both incentive stock options and non-qualified stock options, as well as stock appreciation rights, either with or without a related option. The Compensation Committee is also authorized to grant restricted Class B common shares, restricted Class B common share units, performance awards and other share-based awards. A summary of the share-based incentive plan activity as of and for the nine months ended September 30, 2011 is as follows:
A summary of our nonvested and vested shares activity for the nine months ended September 30, 2011 and years ended December 31, 2010, and 2009 is presented below:
Total compensation recognized in earnings for share-based payments was $69,000 and $68,000 for the three months ended September 30, 2011 and September 30, 2010, respectively, and $208,000 and $185,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively, which represents achievement of the first performance-based target and anticipated vesting of certain restricted shares with time-based vesting. With our current asset base, management does not expect to achieve the next performance-based target. Should we increase our asset base, we may achieve the next performance-based target. As of September 30, 2011, there was no unrecognized compensation cost related to outstanding nonvested performance-based shares based on management's current estimates. As of September 30, 2011, there was approximately $130,000 in unrecognized compensation cost related to outstanding nonvested time-based shares which are expected to be recognized over a weighted-average period of approximately two years. The fair value of the shares granted during the years ended December 31, 2010 and 2009 was determined based on observable market transactions occurring near the date of the grants. |
Unamortized Leasing Commissions and Loan Costs | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Unamortized Leasing Commissions and Loan Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Deferred Costs Disclosures | UNAMORTIZED LEASING COMMISSIONS AND LOAN COSTS Costs which have been deferred consist of the following (in thousands):
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Real Estate | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Disclosure | REAL ESTATE Property Acquisitions. On August 8, 2011, we acquired Terravita Marketplace, a property that meets our Community Centered Property strategy, containing 102,733 leasable square feet, inclusive of 51,434 square feet leased to two tenants under ground leases, located in Scottsdale, Arizona for approximately $16.1 million in cash and net prorations. Terravita Marketplace is surrounded by the gated golf course residential community of Terravita, which was developed by DelWebb Corporation/Pulte, with homes in the $250,000 to $1 million range. On August 16, 2011, we acquired Ahwatukee Plaza Shopping Center, a property that meets our Community Centered Property strategy for approximately $9.3 million in cash and net prorations. The center contains 72,650 leasable square feet, located in Ahwatukee Foothills neighborhood in south Phoenix, Arizona. Discontinued Operations. On July 22, 2011, we sold Greens Road Plaza, located in Houston, Texas, for $1.8 million in cash and net prorations. We expect to reinvest the proceeds from the sale of the 20,607 square foot property located in Northeast Houston in acquisitions of Community Centered Properties in our target markets in Arizona, Texas, and Illinois. As a result of the transaction, we have identified the financial results for the the property for the three and nine months ended September 30, 2011 and 2010 and presented them as Discontinued Operations.
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