EX-99.2 3 exhibit992supplementaloper.htm EXHIBIT 99.2 Exhibit 99.2 Supplemental Operating Data, dated May 6, 2013







CORPORATE PROFILE
 
 
 
 
 
 
 
 
 
NYSE: WSR
 
Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust that owns,
Common Shares
 
operates and redevelops Community Centered Properties TM, which are visibly located properties in
 
 
established or developing, culturally diverse neighborhoods. As of March 31, 2013, we owned
 
 
52 Community Centered Properties TM with approximately 4.4 million square feet of gross leasable
52 Community Centers
 
area, located in five of the top markets in the United States in terms of population growth: Houston,
4.4 Million Sq. Ft. of gross
 
Dallas, San Antonio, Phoenix and Chicago. Headquartered in Houston, Texas, we were founded
leasable area
 
in 1998.
1,101 Tenants
 
 
 
 
We focus on value creation in our properties, as we market, lease and manage our properties. We
5 Top Growth Markets
 
invest in properties that are or can become Community Centered Properties TM from which our
Houston
 
tenants deliver needed services to the surrounding community. We focus on niche properties with
Dallas
 
smaller rental spaces that present opportunities for attractive returns.
San Antonio
 
 
Phoenix
 
Our strategic efforts target entrepreneurial, service-oriented tenants at each property who provide
Chicago
 
services to their respective surrounding communities. Operations include an internal management
 
 
structure providing cost-effective services to locally-oriented, smaller space tenants. Multi-cultural
Fiscal Year End
 
community focus sets us apart from traditional commercial real estate operators. We value diversity
12/31
 
on our team and maintain in-house leasing, property management, marketing, construction and
 
 
maintenance departments with culturally diverse and multi-lingual associates who understand the
Common Shares &
 
particular needs of our tenants and neighborhoods.
Units Outstanding*:
 
 
Common Shares: 17.0 Million
 
We have a diverse tenant base concentrated on service offerings such as medical, educational, casual
Operating Partnership Units:
 
dining and convenience services. These tenants tend to occupy smaller spaces (less than 3,000 square
     0.6 Million
 
feet) and, as of March 31, 2013, provided a 60% premium rental rate compared to our larger
 
 
space tenants. The largest of our 1,101 tenants comprised less than 1.1% of our annualized base
 
 
rental revenues for the three months ended March 31, 2013.
 
 
 
 
 
 
 
 
 
Distribution (per share / unit):
 
Investor Relations:
 
 
 
 
 
 
Quarter: $ 0.2850
 
Whitestone REIT
 
 
 
 
 
 
Annualized: $ 1.1400
 
David K. Holeman, Chief Financial Officer
Dividend Yield: 6.9%**
 
2600 South Gessner Suite 500, Houston, Texas 77063
 
 
 
 
713.435.2227 email: ir@whitestonereit.com
 
website: www.whitestonereit.com
Board of Trustees:
 
 
 
 
 
 
James C. Mastandrea
 
ICR Inc. - Brad Cohen 203.682.8211
 
 
Daryl J. Carter
 
 
 
 
 
 
Daniel G. DeVos
 
Analyst Coverage:
 
 
 
 
 
 
Donald F. Keating
 
BMO Capital Markets Corp.
 
J.J.B. Hilliard, W.L. Lyons, LLC
 
JMP Securities
 
Wunderlich Securities, Inc.
Paul T. Lambert
 
Paul Adornato, CFA
 
Carol L. Kemple
 
Mitch Germain
 
Merril Ross
Jack L. Mahaffey
 
212.885.4170
 
502.588.1839
 
212.906.3546
 
703.669.9255
 
 
Paul.Adornato@bmo.com
 
ckemple@hilliard.com
 
mgermain@jmpsecurities.com
 
mross@wundernet.com
* As of May 2, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
** Based on common share price
 
 
 
 
 
 
 
 
of $16.50 as of close of market on
 
 
 
 
 
 
 
 
May 2, 2013
 
 
 
 
 
 
 
 

1

PRESS RELEASE
Contact Whitestone REIT:
David K. Holeman, Chief Financial Officer
(713) 435 2227 ir@whitestonereit.com
 
 
WHITESTONE REIT ANNOUNCES OPERATING RESULTS FOR FIRST QUARTER 2013
 
Highlights (Year-Over-Year)
•
34% increase in quarterly revenues
•
32% increase in quarterly property net operating income ("NOI")
•
35% increase in quarterly Funds From Operations Core ("FFO Core"); FFO Core Per Share of $0.24
•
$25.7 million in Community Centered Property acquisitions in the first quarter of 2013
•
$141.1 million, or 48%, increase in gross real estate assets since March 31, 2012
•
20% increase in net income attributable to Whitestone REIT
 
Houston, Texas, May 6, 2013 - Whitestone REIT (NYSE: WSR - “Whitestone” or the “Company”), a fully integrated real estate company that owns, operates and re-develops Community Centered PropertiesTM, which are visibly located in established or developing culturally diverse neighborhoods, announced its financial results for the first quarter of 2013.
 
“Our Value-Add growth strategy continues to produce solid results, which is evidenced in our year over year increases in revenue, net operating income (NOI), and funds from operations core (FFO Core), “ stated James C. Mastandrea, Chairman and Chief Executive Officer of Whitestone.  Mastandrea continued, “On the operating side, our strategic focus on the small space business model continues to drive improvement in our leasing efforts and margins. On the acquisitions side, we continue to complete acquisitions at a regular pace, completing our first acquisition for 2013 in March, closing on a fully leased Community Centered property in Plano, Texas for $25.7 million, and expect to close another property we currently have under contract within the next 60 days.  The acquisitions we made previously and the ones we expect to make during the balance of 2013, along with the economies of scale we realize in leasing and management, will benefit FFO/share in 2013 and beyond.  As we move forward, we plan to utilize our strong balance sheet to opportunistically target accretive acquisitions and select redevelopments from our deep and growing pipeline of off-market properties in high growth markets, and internal redevelopment opportunities.” 
  
 
 Highlights: First Quarter 2013 Compared to First Quarter 2012
 
During the first quarter of 2013, the Company deployed approximately $25.7 million towards acquisitions of value-add Community Centered PropertiesTM in its target markets which contributed only partially to 2013 results.

•
Total revenues for the first quarter of 2013 were $13.9 million, an increase of $3.5 million, or 33%, as compared to the first quarter of 2012.

•
FFO Core for the first quarter 2013 increased 35%, or approximately $1.1 million, to $4.2 million as compared to $3.1 million in the first quarter of 2012. FFO Core per diluted common share and unit of limited partnership interest in the Company's operating partnership ("OP unit") remained at $0.24 for the first quarter of 2013, as compared to $0.24 per diluted common share and OP unit for the same period in 2012. FFO Core excludes acquisition expenses of $138,000 and $64,000 in the first quarter of 2013 and 2012, respectively, and a legal settlement of $131,000 in the first quarter of 2012.
 
•
FFO for the first quarter 2013 was $4.0 million, or $0.23 per diluted common share and OP unit, as compared to $3.1 million, or $0.25 per diluted common share and OP unit for the first quarter 2012.
 
•
Property NOI increased 32% to $9.0 million for the first quarter 2013 as compared to $6.8 million for the same period in 2012. The increase of $2.2 million is attributable to same store growth of 4% and acquisitions since March 31, 2012.
 
•
Net income attributable to Whitestone REIT was $949,000, or $0.06 per diluted common share, for the first quarter 2013, compared to $793,000, or $0.07 per diluted common share, for the same period in 2012.
 

2

•
The Company declared a quarterly cash distribution of $0.285 per common share and OP unit for the second quarter of 2013, paid or to be paid in three equal installments of $0.095 in April, May and June 2013. The distribution rate has remained the same since the distribution paid on July 8, 2010.

First Quarter 2013 Leasing Highlights

The Company's Operating Portfolio Occupancy Rate was 86% as of March 31, 2013, a 1% decrease from March 31, 2012. The decrease in occupancy was primarily the result of re-tenanting efforts to continue to strengthen the overall tenant base and revenues. The Company defines Operating Portfolio Occupancy Rate as physical occupancy in all properties, excluding new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership and properties that are undergoing significant redevelopment or re-tenanting. Total physical property occupancy, which includes properties under redevelopment, undergoing significant re-tenanting and recent acquisitions, increased to 84% as of March 31, 2013 from 83% as of March 31, 2012.

The Company signed 71 new and renewal leases representing 131,000 square feet during the first quarter of 2013 primarily with tenants that required less than 3,000 square feet in multi-cultural neighborhoods, which drives premium rents. The Company also added 160 new tenants to its roster since March 31, 2012, and now has over 1,100 primarily small entrepreneurial retail service business tenants, an increase of 17% over March 31, 2012.

Community Centered PropertiesTM Portfolio Statistics

As of March 31, 2013, Whitestone owned 52 Community Centered PropertiesTM with approximately 4.4 million square feet of gross leasable area, including three development land parcels, located in five of the top markets in the United States in terms of population growth: Houston, Dallas, San Antonio, Phoenix and Chicago.
 
The Company's strategic efforts target entrepreneurial tenants that provide services to the surrounding neighborhood at each Community Centered PropertyTM. These tenants tend to occupy smaller spaces (less than 3,000 square feet) and, as of March 31, 2013, provided a 60% premium rental rate compared to Whitestone's larger space tenants. As of March 31, 2013, the Company serviced 1,101 tenants throughout its portfolio.  No single tenant accounted for more than 1.1% of the Company's annualized base rental revenues as of March 31, 2013.  

Balance Sheet
 
Undepreciated real estate assets increased 48%, or $141.1 million, to $436.3 million as of March 31, 2013 as compared to March 31, 2012.

Real estate debt as a percentage of total market capitalization was 45% as of March 31, 2013 as compared to 43% as of March 31, 2012.

Whitestone had 25 properties unencumbered by mortgage debt as of March 31, 2013, with an undepreciated cost basis of $232.9 million. The total undepreciated value of the Company's real estate assets was $436.3 million and $295.2 million as of March 31, 2013 and 2012, respectively. As of March 31, 2013, $90.1 million, or approximately 42%, of the Company's debt was subject to fixed interest rates. The Company's weighted average interest rate on all debt as of the end of the first quarter was 4.4%.

On February 4, 2013, Whitestone, through its operating partnership, closed on an amended and restated credit facility that amended its existing $125 million unsecured revolving credit facility. The amended and restated credit facility increased the total borrowing capacity to $175 million, including a $50 million term loan, added an accordion feature that will allow borrowing capacity under the facility to further increase to a total of $225 million, reduced the interest rate by approximately 1% (LIBOR plus a margin of 1.75% - 2.50% based on overall corporate leverage), and extended the term by two years to February 3, 2017, which maturity date maybe extended for an additional year subject to certain conditions, including the payment of an extension fee.

On March 8, 2013, Whitestone, through its operating partnership, entered into an interest rate swap, beginning on January 7, 2014, that fixes the LIBOR portion of the $50 million term loan under the credit facility at 0.84%.



 

3

Supplemental Financial Information

Further details regarding Whitestone REIT's results of operations, communities and tenants can be accessed at the Company's website at www.whitestonereit.com.

Webcast and Conference Call

The Company will host a conference call for investors and other interested parties on Monday, May 6, 2013 at 5:00 p.m. (Eastern Time). Interested parties can listen to the call live on the internet through the Investor Relations section of the Company's website, www.whitestonereit.com, using the News/Events - Press Releases tab. The call is also accessible via telephone by dialing 1-888-481-2862 for domestic participants or 1-719-325-2332 for international participants. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. Those dialing in should call in at least five to ten minutes prior to the start.
The conference call will be recorded and a telephone replay will be available through May 20, 2013, by dialing 1-877-870-5176 for domestic participants or 1-858-384-5517 for international participants and entering the pass code 3964064. Additionally, a replay of the call will be available on the Company’s website until its next earnings release.
The earnings release and supplemental data package will be located in the Investor Relations section of the website on the News/Events - Press Releases tab. For those without internet access, the first quarter earnings release and supplemental data package will be available by mail upon request. To receive a copy, please call the Company’s Investor Relations line at (713) 435-2219.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust ("REIT") that owns, operates and redevelops Community Centered PropertiesTM, which are visibly located properties in established or developing culturally diverse neighborhoods.  Whitestone focuses on value creation in its community centers, as it markets, leases and manages its centers to match tenants with the shared needs of surrounding neighborhoods.  Operations are structured for providing cost-effective service to local service-oriented, smaller space tenants (less than 3,000 square feet). Whitestone has a diversified tenant base concentrated on service offerings including medical, education, casual dining, and convenience services. The largest of its approximately 1,100 tenants comprised less than 1.1% of its annualized base rental revenues as of March 31, 2013. Founded in 1998, the Company is internally managed with a portfolio of commercial properties in Texas, Arizona, and Illinois. For additional information about the Company, please visit www.whitestonereit.com. The Investor Relations section of the Company's website contains filings with the Securities and Exchange Commission, news releases, financial reports and investor newsletters.
 
Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology, such as "may," "will," "plan," "expect," "intend," "anticipate," "believe," "continue" or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters. Examples of such statements in this press release include, but are not limited to, the strength of the Company's leasing portfolio and lease renewal activities.
 
The following are some of the factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: the Company's ability to successfully identify and consummate suitable acquisitions; current adverse market and economic conditions; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic and regulatory changes; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code; and other factors detailed in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files with the Securities and Exchange Commission.
 

4

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company cannot guarantee the accuracy of any such forward-looking statements contained in this press release, and the Company does not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 

Non-GAAP Financial Measures

This release contains the supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles ("GAAP") including FFO, FFO Core, and NOI. Following are explanations and reconciliations of these metrics to their most comparable GAAP metric.
 
FFO: Management believes that FFO is a useful measure of the Company's operating performance. The Company computes FFO as defined by the National Association of Real Estate Investment Trusts, or NAREIT, which states that FFO should represent net income (loss) available to common shareholders (computed in accordance with GAAP) excluding gains or losses from sales of operating assets, impairment charges and extraordinary items, plus depreciation and amortization of operating properties, including the Company's share of unconsolidated real estate joint ventures and partnerships. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company's performance or to cash flow from operations as a measure of liquidity or ability to make distributions and service debt.

Management considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, management believes that FFO provides a more meaningful and accurate indication of the Company's performance and useful information for the investment community to compare Whitestone to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.
 
Other REITs may use different methodologies for calculating FFO, and accordingly, the Company's FFO may not be comparable to other REITs. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding OP units for the periods presented.
 
FFO Core: Management believes that the computation of FFO in accordance with NAREIT's definition includes certain items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of the Company's period-over-period performance. These items include, but are not limited to, extraordinary non-recurring expenses, such as those incurred in connection with the relocation agreement entered into with the Company's Chief Executive Officer, legal settlements, legal and professional fees, gains and losses on insurance claim settlements and acquisition costs. Therefore, in addition to FFO, management uses FFO Core, which the Company defines to exclude such items. Management believes that these adjustments are appropriate in determining FFO Core as they are not indicative of the operating performance of the Company's assets. In addition, the Company believes that FFO Core is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as many REITs provide some form of adjusted or modified FFO, although other REITs may use different adjustments, and the Company's FFO Core may not be comparable to the adjusted or modified FFOs of other REITs.
 
NOI: Management believes that NOI is a useful measure of the Company's property operating performance. The Company defines NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets and capital expenditures and leasing costs it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company's property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs.

5


Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 
 
March 31, 2013
 
December 31, 2012
 
 
(unaudited)
 
 
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
436,331

 
$
409,669

Accumulated depreciation
 
(56,600
)
 
(53,920
)
Total real estate assets
 
379,731

 
355,749

Cash and cash equivalents
 
2,843

 
6,544

Marketable securities
 
1,705

 
1,403

Escrows and acquisition deposits
 
4,529

 
6,672

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
9,059

 
7,947

Related party receivable
 
—

 
652

Unamortized lease commissions and loan costs
 
5,025

 
4,160

Prepaid expenses and other assets
 
2,939

 
2,244

Total assets
 
$
405,831

 
$
385,371

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
216,935

 
$
190,608

Accounts payable and accrued expenses
 
11,453

 
13,824

Tenants' security deposits
 
3,151

 
3,024

Dividends and distributions payable
 
5,028

 
5,028

Total liabilities
 
236,567

 
212,484

Commitments and contingencies:
 
—

 
—

Equity:
 
 
 
 
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of March 31, 2013 and December 31, 2012
 
—

 
—

Common shares, $0.001 par value per share; 400,000,000 shares authorized; 17,024,323 and 16,943,098 issued and outstanding as of March 31, 2013 and December 31, 2012, respectively
 
17

 
16

Additional paid-in capital
 
225,365

 
224,237

Accumulated other comprehensive loss
 
(360
)
 
(392
)
Accumulated deficit
 
(61,697
)
 
(57,830
)
Total Whitestone REIT shareholders' equity
 
163,325

 
166,031

Noncontrolling interest in subsidiary
 
5,939

 
6,856

Total equity
 
169,264

 
172,887

Total liabilities and equity
 
$
405,831

 
$
385,371









6

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
(in thousands, except per share data)


 
 
Three Months Ended March 31,
 
 
2013
 
2012
Property revenues
 
 
 
 
Rental revenues
 
$
11,001

 
$
8,128

Other revenues
 
2,868

 
2,298

Total property revenues
 
13,869

 
10,426

 
 
 
 
 
Property expenses
 
 
 
 
Property operation and maintenance
 
3,065

 
2,352

Real estate taxes
 
1,798

 
1,310

Total property expenses
 
4,863

 
3,662

 
 
 
 
 
Other expenses (income)
 
 
 
 
General and administrative
 
2,444

 
1,641

Depreciation and amortization
 
3,073

 
2,283

Interest expense
 
2,449

 
1,973

Interest, dividend and other investment income
 
(19
)
 
(70
)
Total other expense
 
7,947

 
5,827

 
 
 
 
 
Income before loss on sale or disposal of assets and income taxes
 
1,059

 
937

 
 
 
 
 
Provision for income taxes
 
(65
)
 
(65
)
Loss on sale or disposal of assets
 
(8
)
 
(12
)
 
 
 
 
 
Net income
 
986

 
860

 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
37

 
67

 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
949

 
$
793






7


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
(in thousands, except per share data)



 
 
Three Months Ended
 
 
March 31,
 
 
2013
 
2012
Basic and Diluted Earnings Per Share:
 
 
 
 
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.06

 
$
0.07

 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
Basic
 
16,819

 
11,624

Diluted
 
16,939

 
11,638

 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
Net income
 
$
986

 
$
860

 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
Unrealized loss on cash flow hedging activities
 
(268
)
 
—

Unrealized gain on available-for-sale marketable securities
 
303

 
766

 
 
 
 
 
Comprehensive income
 
1,021

 
1,626

 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
38

 
127

 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
983

 
$
1,499








8


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

 
 
Three Months Ended March 31,
 
 
2013
 
2012
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income
 
$
986

 
$
860

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
3,073

 
2,283

Amortization of deferred loan costs
 
273

 
261

Amortization of notes payable discount
 
149

 
—

Gain on sale of marketable securities
 
—

 
(1
)
Loss on sale or disposal of assets
 
8

 
12

Bad debt expense
 
317

 
132

Share-based compensation
 
356

 
78

Changes in operating assets and liabilities:
 
 
 
 
Escrows and acquisition deposits
 
2,143

 
2,378

Accrued rents and accounts receivable
 
(777
)
 
(551
)
Unamortized lease commissions
 
(263
)
 
(280
)
Prepaid expenses and other assets
 
162

 
177

Accounts payable and accrued expenses
 
(2,621
)
 
(2,980
)
Tenants' security deposits
 
127

 
45

Net cash provided by operating activities
 
3,933

 
2,414

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Acquisitions of real estate
 
(25,700
)
 
—

Additions to real estate
 
(1,197
)
 
(2,893
)
Investments in marketable securities
 
—

 
(750
)
Proceeds from sales of marketable securities
 
—

 
2,614

Net cash used in investing activities
 
(26,897
)
 
(1,029
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Distributions paid to common shareholders
 
(4,807
)
 
(3,322
)
Distributions paid to OP unit holders
 
(194
)
 
(301
)
Payments of exchange offer costs
 
(34
)
 
(225
)
Proceeds from notes payable
 
—

 
6,956

Proceeds from revolving credit facility, net
 
26,400

 
—

Repayments of notes payable
 
(1,017
)
 
(713
)
Payments of loan origination costs
 
(1,085
)
 
(1,187
)
Net cash provided by financing activities
 
19,263

 
1,208

 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
(3,701
)
 
2,593

Cash and cash equivalents at beginning of period
 
6,544

 
5,695

Cash and cash equivalents at end of period
 
$
2,843

 
$
8,288


9



Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

 
 
Three Months Ended March 31,
 
 
2013
 
2012
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
2,146

 
$
1,671

Non cash investing and financing activities:
 
 
 
 
Disposal of fully depreciated real estate
 
$
130

 
$
11

Financed insurance premiums
 
$
883

 
$
31

Value of shares issued under dividend reinvestment plan
 
$
23

 
$
22

Accrued offering costs
 
$
20

 
$
54

Value of common shares exchanged for OP units
 
$
782

 
$
4,917

Change in fair value of available-for-sale securities
 
$
303

 
$
766

Change in fair value of cash flow hedge
 
$
(268
)
 
$
—





10

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)

 
 
Three Months Ended March 31,
 
 
2013
 
2012
FFO AND FFO-CORE
 
 
 
 
Net income attributable to Whitestone REIT
 
$
949

 
$
793

Depreciation and amortization of real estate assets
 
3,050

 
2,249

Loss on disposal of assets
 
8

 
12

Net income attributable to noncontrolling interests
 
37

 
67

FFO
 
4,044

 
3,121

 
 
 
 
 
Acquisition costs
 
138

 
64

Legal settlement
 
—

 
(131
)
FFO-Core
 
$
4,182

 
$
3,054

 
 
 
 
 
FFO PER SHARE AND OP UNIT:
 
 
 
 
Numerator:
 
 
 
 
FFO
 
$
4,044

 
$
3,121

Distributions paid on unvested restricted common shares
 
(11
)
 
(4
)
FFO excluding amounts attributable to unvested restricted common shares
 
$
4,033

 
$
3,117

FFO Core excluding amounts attributable to unvested restricted common shares
 
$
4,171

 
$
3,050

 
 
 
 
 
Denominator:
 
 
 
 
Weighted average number of total common shares - basic
 
16,819

 
11,624

Weighted average number of total noncontrolling OP units - basic
 
653

 
992

Weighted average number of total commons shares and noncontrolling OP units - basic
 
17,472

 
12,616

 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
Unvested restricted shares
 
120

 
14

Weighted average number of total common shares and noncontrolling OP units - dilutive
 
17,592

 
12,630

 
 
 
 
 
FFO per common share and OP unit - basic
 
$
0.23

 
$
0.25

FFO per common share and OP unit - diluted
 
$
0.23

 
$
0.25

 
 
 
 
 
FFO Core per common share and OP unit - basic
 
$
0.24

 
$
0.24

FFO Core per common share and OP unit - diluted
 
$
0.24

 
$
0.24



11

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)
 
 
Three Months Ended March 31,
 
 
2013
 
2012
PROPERTY NET OPERATING INCOME
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
949

 
$
793

General and administrative expenses
 
2,444

 
1,641

Depreciation and amortization
 
3,073

 
2,283

Interest expense
 
2,449

 
1,973

Interest, dividend and other investment income
 
(19
)
 
(70
)
Provision for income taxes
 
65

 
65

Loss on disposal of assets
 
8

 
12

Net income attributable to noncontrolling interests
 
37

 
67

NOI
 
$
9,006

 
$
6,764

 
 
 
 
 
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
949

 
$
793

Depreciation and amortization
 
3,073

 
2,283

Interest expense
 
2,449

 
1,973

Provision for income taxes
 
65

 
65

Loss on disposal of assets
 
8

 
12

Net income attributable to noncontrolling interests
 
37

 
67

EBITDA (1)
 
$
6,581

 
$
5,193

 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2013
 
2012
 
2012
 
2012
Net income (loss) attributable to Whitestone REIT
 
$
949

 
$
(1,380
)
 
$
163

 
$
431

Depreciation and amortization
 
3,073

 
2,973

 
2,683

 
2,290

Executive relocation expense
 
—

 
2,177

 
—

 
—

Interest expense
 
2,449

 
2,408

 
2,244

 
2,107

Provision for income taxes
 
65

 
74

 
77

 
70

Loss on disposal of assets
 
8

 
7

 
77

 
16

Net income (loss) attributable to noncontrolling interests
 
37

 
(61
)
 
9

 
31

EBITDA (1)
 
$
6,581

 
$
6,198

 
$
5,253

 
$
4,945

(1) 
Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA"): Management believes that EBITDA is an appropriate supplemental measure of operating performance to net income attributable to the Company. The Company defines EBITDA as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes) and general and administrative expenses, excluding executive relocation costs related to the disposition of the Chief Executive Officer's residence in Cleveland, Ohio pursuant to the executive relocation arrangement approved by the Company's compensation committee. Management believes that EBITDA provides useful information to the investment community about the Company's operating performance when compared to other REITs since EBITDA is generally recognized as a standard measure. However, EBITDA should not be viewed as a measure of the Company's overall financial performance since it does not reflect depreciation and amortization, involuntary conversion, interest expense, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating EBITDA and, accordingly, the Company's EBITDA may not be comparable to other REITs.

12

Whitestone REIT and Subsidiaries
OTHER FINANCIAL INFORMATION
(in thousands, except number of properties and employees)

 
 
Three Months Ended March 31,
 
 
2013
 
2012
 
 
 
 
 
Other Financial Information:
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
242

 
$
566

Leasing commissions (1)
 
$
362

 
$
204

Scheduled debt principal payments
 
$
759

 
$
694

Straight line rent income (loss)
 
$
225

 
$
(71
)
Market rent amortization income (loss) from acquired leases
 
$
33

 
$
4

Non-cash share-based compensation expense
 
$
356

 
$
78

Non-real estate depreciation and amortization
 
$
23

 
$
33

Amortization of loan fees
 
$
273

 
$
261

Acquisition costs
 
$
138

 
$
64

Undepreciated value of unencumbered properties
 
$
232,902

 
$
114,528

Number of unencumbered properties
 
25

 
19

Full time employees
 
68

 
59


(1)
Does not include first generation costs for tenant improvements and leasing commission costs needed for new acquisitions or redevelopment of a property to bring the property to operating standards for its intended use.



13

Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(in thousands, except per share amounts and percentages)
 
 
As of March 31, 2013
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
Equity Capitalization:
 
 
 
 
 
 
Common shares outstanding
 
96.6
%
 
17,024

 
 
Operating partnership units outstanding
 
3.4
%
 
607

 
 
Total
 
100.0
%
 
17,631

 
 
 
 
 
 
 
 
 
Market price of common shares as of
 
 
 
 
 
 
March 31, 2013
 
 
 
$
15.14

 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
266,933

 
55
%
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
Outstanding debt
 
 
 
$
216,935

 
 
Less: Cash and cash equivalents
 
 
 
(2,843
)
 
 
 
 
 
 
214,092

 
45
%
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
March 31, 2013
 
 
 
$
481,025

 
100
%


SELECTED RATIOS:  (dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2013
 
2012
 
2012
 
2012
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA
 
$
6,581

 
$
6,198

 
$
5,253

 
$
4,945

Interest expense, excluding amortization of loan fees
 
2,176

 
2,101

 
1,947

 
1,863

Ratio of interest expense to EBITDA
 
3.0

 
3.0

 
2.7

 
2.7

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Undepreciated real estate assets
 
$
436,331

 
$
409,669

 
$
389,280

 
$
304,517

 
 
 
 
 
 
 
 
 
Outstanding debt
 
$
216,935

 
$
190,608

 
$
167,816

 
$
140,051

Less: Cash
 
(2,843
)
 
(6,544
)
 
(8,339
)
 
(3,863
)
Outstanding debt after cash
 
$
214,092

 
$
184,064

 
$
159,477

 
$
136,188

Ratio of debt to real estate assets
 
49
%
 
45
%
 
41
%
 
45
%

14

 Whitestone REIT and Subsidiaries
SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES




TOTAL OUTSTANDING DEBT
(in thousands)

Description
 
March 31, 2013
 
December 31, 2012
Fixed rate notes
 
 
 
 
$1.1 million 4.71% Note, due 2013
 
$
1,087

 
$
1,087

$14.1 million 5.695% Note, due 2013
 
13,773

 
13,850

$3.0 million 6.00% Note, due 2021 (1)
 
2,933

 
2,943

$10.0 million 6.04% Note, due 2014
 
9,095

 
9,142

$1.5 million 6.50% Note, due 2014
 
1,437

 
1,444

$11.2 million 6.52% Note, due 2015
 
10,569

 
10,609

$21.4 million 6.53% Notes, due 2013
 
18,694

 
18,865

$24.5 million 6.56% Note, due 2013
 
23,015

 
23,135

$9.9 million 6.63% Notes, due 2014
 
8,848

 
8,925

$0.9 million 2.97% Note, due 2013
 
694

 
15

Floating rate notes
 
 
 
 

Unsecured credit facility, LIBOR plus 1.75% to 2.50%, due 2017 (2)
 
95,400

 
69,000

$9.2 million, Prime Rate less 2.00%, due 2017
 
7,860

 
7,854

$26.9 million, LIBOR plus 2.86% Note, due 2013
 
23,530

 
23,739

 
 
$
216,935

 
$
190,608


(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.

(2) 
We have entered into an interest rate swap that fixed the LIBOR portion of our $50 million term loan under our unsecured credit facility at 0.84%. The swap will begin on January 7, 2014 and will mature on February 3, 2017.


SCHEDULE OF DEBT MATURITIES AS OF MARCH 31, 2013
(in thousands)
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2013 (remainder of year)
 
$
2,364

 
$
78,953

 
$
81,317

 
37.5
%
2014
 
293

 
18,879

 
19,172

 
8.8
%
2015
 
171

 
10,146

 
10,317

 
4.8
%
2016
 
73

 
—

 
73

 
—
%
2017
 
104

 
103,238

 
103,342

 
47.6
%
2018 and thereafter
 
185

 
2,529

 
2,714

 
1.3
%
Total
 
$
3,190

 
$
213,745

 
$
216,935

 
100.0
%



15

Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS

 
 
Gross Leasable Area as of
 
Occupancy % as of
Community Centered Properties
 
March 31, 2013
 
March 31, 2013
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
Retail
 
2,059,594

 
87
%
 
88
%
 
88
%
 
90
%
Office/Flex
 
1,201,672

 
87
%
 
89
%
 
89
%
 
89
%
Office
 
631,841

 
77
%
 
78
%
 
78
%
 
79
%
Total - Operating Portfolio
 
3,893,107

 
86
%
 
87
%
 
87
%
 
87
%
Redevelopment, New Acquisitions (1)
 
470,718

 
72
%
 
70
%
 
70
%
 
68
%
Total
 
4,363,825

 
84
%
 
85
%
 
85
%
 
87
%
 
(1) 
Includes new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership, and properties that are undergoing significant redevelopment or re-tenanting.

Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)
 
Percentage of Total Annualized Base Rental Revenues (1)
 
Initial Lease Date
 
Year Expiring
 
 
 
 
 
 
 
 
 
 
 
Sports Authority
 
San Antonio
 
$
495

 
1.1
%
 
1/1/2004
 
2015
Air Liquide America, L.P.
 
Dallas
 
387

 
0.9
%
 
8/1/2001
 
2013
Safeway Stores, Incorporated
 
Phoenix
 
344

 
0.8
%
 
12/22/2011
 
2021
Barnes & Noble Booksellers, Inc
 
Phoenix
 
314

 
0.7
%
 
9/21/2012
 
2014
X-Ray Press Corporation
 
Houston
 
291

 
0.7
%
 
7/1/1998
 
2019
Walgreens #3766
 
Phoenix
 
279

 
0.6
%
 
8/9/2011
 
2049
Sterling Jewelers Inc
 
Phoenix
 
277

 
0.6
%
 
9/21/2012
 
2020
Rock Solid Images
 
Houston
 
266

 
0.6
%
 
4/1/2004
 
2013
Marshall's
 
Houston
 
264

 
0.6
%
 
5/12/1983
 
2018
Merrill Corporation
 
Dallas
 
261

 
0.6
%
 
12/10/2001
 
2014
Skechers USA, Inc (2)
 
Houston and San Antonio
 
250

 
0.6
%
 
02/17/2012 and 05/25/2012
 
2017
Mini Skool Early Learning Centers, Inc.
 
Phoenix
 
249

 
0.6
%
 
12/28/2012
 
2019
Superior Abstract & Title
 
Dallas
 
239

 
0.5
%
 
3/28/2013
 
2017
Albertson's #979
 
Phoenix
 
235

 
0.5
%
 
8/9/2011
 
2022
California Pizza Kitchen, Inc.
 
Phoenix
 
234

 
0.5
%
 
9/21/2012
 
2017
 
 
 
 
$
4,385

 
9.9
%
 
 
 
 

(1) 
Annualized Base Rental Revenues represents the monthly base rent as of March 31, 2013 for each applicable tenant multiplied by 12.

(2) 
As of March 31, 2013, we had two leases with the same tenant occupying space at properties located in San Antonio and Houston. The San Antonio lease commenced on May 25, 2012 and expires in 2017. The annualized rental revenue for this location was $120,000, which represents 0.3% of our total annualized base rental revenue. The Houston lease commenced on February 17, 2012 and expires in 2017. The annualized rental revenue was $129,500, which represents 0.3% of our total annualized base rental revenue.

16

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended March 31,
 
 
2013
 
2012
RENEWALS
 
 
 
 
Number of Leases
 
45

 
48

Total Square Feet (1)
 
73,887

 
77,655

Average Square Feet
 
1,642

 
1,618

Total Lease Value
 
$
3,549,000

 
$
2,846,000

NEW LEASES
 
 
 
 
Number of Leases
 
26

 
42

Total Square Feet (1)
 
57,010

 
81,512

Average Square Feet
 
2,193

 
1,941

Total Lease Value
 
$
3,531,000

 
$
3,984,000

TOTAL LEASES
 
 
 
 
Number of Leases
 
71

 
90

Total Square Feet (1)
 
130,897

 
159,167

Average Square Feet
 
1,844

 
1,769

Total Lease Value
 
$
7,080,000

 
$
6,830,000



(1) 
Represents the square footage as the result of new, renewal, expansion and contraction leases.


17

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
Prior Contractual Rent Per Sq. Ft. (5)
 
Annual Increase (Decrease) in Contractual Rent
 
Cash Basis Increase (Decrease) Over Prior Rent
 
Annual Increase (Decrease) in Straight-lined Rent
 
Straight-lined Basis Increase (Decrease) Over Prior Rent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
44

 
$
2,177,934

 
64,759

 
2.5

 
$
79,790

 
$
1.23

 
$
12.95

 
$
13.12

 
$
(11,028
)
 
(1.3
)%
 
$
40,186

 
4.9
 %
4th Quarter 2012
 
45

 
3,137,053

 
125,999

 
3.2

 
398,310

 
3.16

 
11.36

 
11.62

 
(32,232
)
 
(2.2
)%
 
39,065

 
3.3
 %
3rd Quarter 2012
 
35

 
3,292,250

 
85,990

 
5.3

 
450,340

 
5.24

 
8.56

 
9.99

 
(121,968
)
 
(14.3
)%
 
(57,361
)
 
(7.0
)%
2nd Quarter 2012
 
54

 
5,900,931

 
132,857

 
3.8

 
388,076

 
2.92

 
11.62

 
11.47

 
5,121

 
1.3
 %
 
79,903

 
6.0
 %
Total - 12 months
 
178

 
$
14,508,168

 
409,605

 
3.7

 
$
1,316,516

 
$
3.21

 
$
11.11

 
$
11.46

 
$
(160,107
)
 
(3.1
)%
 
$
101,793

 
2.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
8

 
$
456,268

 
12,577

 
2.8

 
$
20,581

 
$
1.64

 
$
11.41

 
$
11.48

 
$
(948
)
 
(0.6
)%
 
$
19,284

 
14.6
 %
4th Quarter 2012
 
11

 
735,111

 
19,142

 
3.2

 
117,495

 
6.14

 
11.45

 
13.15

 
(32,549
)
 
(12.9
)%
 
(15,744
)
 
(6.6
)%
3rd Quarter 2012
 
16

 
2,115,518

 
47,862

 
7.4

 
347,194

 
7.25

 
7.41

 
9.01

 
(76,257
)
 
(17.8
)%
 
(55,920
)
 
(14.0
)%
2nd Quarter 2012
 
17

 
1,433,816

 
35,918

 
4.1

 
301,248

 
8.39

 
11.07

 
9.85

 
43,851

 
12.4
 %
 
29,443

 
9.0
 %
Total - 12 months
 
52

 
$
4,740,713

 
115,499

 
5.2

 
$
786,518

 
$
6.81

 
$
9.66

 
$
10.23

 
$
(65,903
)
 
(5.6
)%
 
$
(22,937
)
 
(2.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
36

 
$
1,721,666

 
52,182

 
2.4

 
$
59,209

 
$
1.13

 
$
13.32

 
$
13.51

 
$
(10,080
)
 
(1.4
)%
 
$
20,902

 
3.1
 %
4th Quarter 2012
 
34

 
2,401,942

 
106,857

 
3.2

 
280,815

 
2.63

 
11.34

 
11.34

 
317

 
—
 %
 
54,809

 
5.8
 %
3rd Quarter 2012
 
19

 
1,176,732

 
38,128

 
2.6

 
103,146

 
2.71

 
10.01

 
11.20

 
(45,711
)
 
(10.6
)%
 
50,460

 
(0.4
)%
2nd Quarter 2012
 
37

 
4,467,115

 
96,939

 
3.6

 
86,828

 
0.90

 
11.82

 
12.06

 
(38,730
)
 
(2.0
)%
 
42,004

 
6.0
 %
Total - 12 months
 
126

 
$
9,767,455

 
294,106

 
3.1

 
$
529,998

 
$
1.80

 
$
11.68

 
$
11.95


$
(94,204
)
 
(2.2
)%
 
$
168,175

 
4.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

18

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-comparable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
27

 
$
4,902,083

 
87,641

 
4.9

 
$
637,970

 
$
7.28

 
$
11.21

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
33

 
8,116,860

 
116,384

 
4.9

 
1,351,377

 
11.61

 
13.70

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
28

 
4,381,167

 
93,111

 
4.4

 
493,052

 
5.30

 
15.01

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
38

 
3,565,197

 
99,396

 
3.6

 
509,581

 
5.13

 
10.26

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
126

 
$
20,965,307

 
396,532

 
4.5

 
$
2,991,980

 
$
7.55

 
$
12.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
18

 
$
3,074,881

 
57,506

 
5.3

 
$
370,645

 
$
6.45

 
$
9.90

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
30

 
7,206,883

 
103,297

 
4.9

 
1,217,136

 
11.78

 
13.67

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
23

 
3,647,742

 
70,728

 
5.2

 
449,193

 
6.35

 
14.51

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
33

 
2,164,761

 
69,804

 
3.1

 
426,724

 
6.11

 
10.13

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
104

 
$
16,094,267

 
301,335

 
4.6

 
$
2,463,698

 
$
8.18

 
$
12.33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
9

 
$
1,827,202

 
30,135

 
4.2

 
$
267,325

 
$
8.87

 
$
13.71

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
3

 
909,977

 
13,087

 
4.7

 
134,241

 
10.26

 
13.95

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
5

 
733,425

 
22,383

 
2.1

 
43,859

 
1.96

 
16.58

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
5

 
1,400,436

 
29,592

 
4.7

 
82,857

 
2.80

 
10.56

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
22

 
$
4,871,040

 
95,197

 
3.9

 
$
528,282

 
$
5.55

 
$
13.44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New & Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
71

 
$
7,080,017

 
152,400

 
3.9

 
$
717,760

 
$
4.71

 
$
11.95

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
78

 
11,253,913

 
242,383

 
4.0

 
1,749,687

 
7.22

 
12.48

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
63

 
7,673,417

 
179,101

 
4.8

 
943,392

 
5.27

 
11.91

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
92

 
9,466,128

 
232,253

 
3.7

 
897,657

 
3.86

 
11.04

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
304

 
$
35,473,475

 
806,137

 
4.1

 
$
4,308,496

 
$
5.34

 
$
11.84

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
26

 
$
3,531,149

 
70,083

 
4.9

 
$
391,226

 
$
5.58

 
$
10.17

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
41

 
7,941,994

 
122,439

 
4.6

 
1,334,631

 
10.90

 
13.32

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
39

 
5,763,260

 
118,590

 
6.1

 
796,387

 
6.72

 
11.65

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
50

 
3,598,577

 
105,722

 
3.4

 
727,972

 
6.89

 
10.45

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
156

 
$
20,834,980

 
416,834

 
4.8

 
$
3,250,216

 
$
7.80

 
$
11.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2013
 
45

 
$
3,548,868

 
82,317

 
3.0

 
$
326,534

 
$
3.97

 
$
13.46

 
 
 
 
 
 
 
 
 
 
4th Quarter 2012
 
37

 
3,311,919

 
119,944

 
3.3

 
415,056

 
3.46

 
11.63

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2012
 
24

 
1,910,157

 
60,511

 
2.4

 
147,005

 
2.43

 
12.44

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2012
 
42

 
5,867,551

 
126,531

 
3.9

 
169,685

 
1.34

 
11.53

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
148

 
$
14,638,495

 
389,303

 
3.3

 
$
1,058,280

 
$
2.72

 
$
12.11

 
 
 
 
 
 
 
 
 
 

(1) 
Comparable leases represent leases signed on spaces for which there was a former tenant within the last twelve months and the new or renewal square footage was within 25% of the expired square footage.
(2) 
Weighted average of tenant improvements (TI) and incentives is determined on the basis of square footage.
(3) 
Estimated amount per signed lease. Actual cost of construction may vary. Does not include first generation costs for TI and leasing commission costs needed for new acquisitions or redevelopment of a property to bring the property to operating standards for its intended use.
(4) 
Contractual rent represents contractual minimum rent under the new lease for the first month, excluding concessions.
(5) 
Prior contractual rent represents contractual minimum rent under the prior lease for the final month.


20

Whitestone REIT
LEASE EXPIRATIONS(1) 

 
 
 
 
 
 
 
 
Annualized Base Rent(2)
 
 
 
 
Gross Leasable Area
 
as of March 31, 2013
Year
 
Number of
Leases
 
Square Feet
 
Percent
of Gross Leasable Area
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2013
 
266

 
567,053

 
13.0
%
 
$
7,989

 
17.9
%
 
$
14.09

2014
 
255

 
711,060

 
16.3
%
 
8,807

 
19.7
%
 
12.39

2015
 
177

 
553,925

 
12.7
%
 
6,188

 
13.9
%
 
11.17

2016
 
136

 
407,737

 
9.3
%
 
5,347

 
12.0
%
 
13.11

2017
 
116

 
397,236

 
9.1
%
 
5,597

 
12.5
%
 
14.09

2018
 
54

 
308,081

 
7.1
%
 
2,595

 
5.8
%
 
8.42

2019
 
26

 
154,033

 
3.5
%
 
2,352

 
5.3
%
 
15.27

2020
 
14

 
71,545

 
1.6
%
 
1,102

 
2.5
%
 
15.40

2021
 
14

 
129,429

 
3.0
%
 
1,402

 
3.1
%
 
10.83

2022
 
19

 
151,571

 
3.5
%
 
1,616

 
3.6
%
 
10.66

Total
 
1,077

 
3,451,670

 
79.1
%
 
$
42,995

 
96.3
%
 
$
12.46


(1) 
Lease expirations table reflects rents in place as of March 31, 2013, and does not include option periods.
(2) 
Annualized Base Rent represents the monthly base rent as of March 31, 2013 for each tenant multiplied by 12.


21


Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2013
 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Retail Communities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ahwatukee Plaza
 
Phoenix
 
1979
 
72,650

 
100
%
 
$
881

 
12.13

 
$
12.46

Bellnott Square
 
Houston
 
1982
 
73,930

 
41
%
 
291

 
9.60

 
9.37

Bissonnet/Beltway
 
Houston
 
1978
 
29,205

 
95
%
 
324

 
11.68

 
11.61

Centre South
 
Houston
 
1974
 
39,134

 
84
%
 
238

 
7.24

 
8.79

The Citadel
 
Phoenix
 
1985
 
28,547

 
85
%
 
355

 
14.63

 
16.32

Desert Canyon
 
Phoenix
 
2000
 
62,533

 
71
%
 
527

 
11.87

 
12.83

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
49
%
 
395

 
16.31

 
19.50

Holly Knight
 
Houston
 
1984
 
20,015

 
100
%
 
356

 
17.79

 
18.37

Headquarters Village
 
Dallas
 
2009
 
89,134

 
100
%
 
2,328

 
26.12

 
26.12

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
100
%
 
855

 
8.46

 
8.41

Lion Square
 
Houston
 
1980
 
117,592

 
100
%
 
1,116

 
9.49

 
9.67

MarketPlace At Central
 
Phoenix
 
2000
 
111,130

 
45
%
 
416

 
8.32

 
8.56

Paradise Plaza
 
Phoenix
 
1993
 
125,898

 
89
%
 
1,396

 
12.46

 
13.22

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
100
%
 
2,138

 
18.90

 
19.10

Providence
 
Houston
 
1980
 
90,327

 
88
%
 
734

 
9.23

 
8.42

Shaver
 
Houston
 
1978
 
21,926

 
93
%
 
252

 
12.36

 
11.73

Shops at Pecos Ranch
 
Phoenix
 
2009
 
78,767

 
100
%
 
1,762

 
22.37

 
22.37

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
100
%
 
1,481

 
26.74

 
27.41

South Richey
 
Houston
 
1980
 
69,928

 
83
%
 
385

 
6.63

 
8.81

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
92
%
 
784

 
20.56

 
20.27

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
100
%
 
1,026

 
10.80

 
12.13

Sunridge
 
Houston
 
1979
 
49,359

 
99
%
 
474

 
9.70

 
9.61

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
95
%
 
1,311

 
13.43

 
13.49

Torrey Square
 
Houston
 
1983
 
105,766

 
88
%
 
630

 
6.77

 
8.67

Town Park
 
Houston
 
1978
 
43,526

 
100
%
 
810

 
18.61

 
18.08

Webster Point
 
Houston
 
1984
 
26,060

 
79
%
 
221

 
10.73

 
10.20

Westchase
 
Houston
 
1978
 
49,573

 
88
%
 
521

 
11.94

 
11.86

Windsor Park
 
San Antonio
 
1992
 
196,458

 
85
%
 
1,153

 
6.90

 
9.50

 
 
 
 
 
 
2,059,594

 
87
%
 
23,160

 
12.93

 
13.51

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Brookhill
 
Houston
 
1979
 
74,757

 
86
%
 
$
313

 
$
4.87

 
$
5.09

Corporate Park Northwest
 
Houston
 
1981
 
185,627

 
73
%
 
1,466

 
10.82

 
10.96

Corporate Park West
 
Houston
 
1999
 
175,665

 
93
%
 
1,391

 
8.51

 
8.72

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
96
%
 
827

 
8.62

 
8.75

Dairy Ashford
 
Houston
 
1981
 
42,902

 
99
%
 
250

 
5.89

 
5.73

Holly Hall
 
Houston
 
1980
 
90,000

 
100
%
 
753

 
8.37

 
8.26

Interstate 10
 
Houston
 
1980
 
151,000

 
79
%
 
650

 
5.45

 
5.52

Main Park
 
Houston
 
1982
 
113,410

 
96
%
 
684

 
6.28

 
6.65

Plaza Park
 
Houston
 
1982
 
105,530

 
77
%
 
731

 
9.00

 
8.92


22

 Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2013
(continued)

 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable Area
 
Percent
Occupied
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Westbelt Plaza
 
Houston
 
1978
 
65,619

 
84
%
 
461

 
8.36

 
8.59

Westgate
 
Houston
 
1984
 
97,225

 
90
%
 
541

 
6.18

 
5.83

 
 
 
 
 
 
1,201,672

 
87
%
 
8,067

 
7.72

 
7.81

Office Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
72
%
 
$
1,408

 
$
15.54

 
$
15.61

Featherwood
 
Houston
 
1983
 
49,760

 
89
%
 
836

 
18.88

 
20.28

Pima Norte
 
Phoenix
 
2007
 
33,417

 
21
%
 
136

 
19.38

 
20.67

Royal Crest
 
Houston
 
1984
 
24,900

 
60
%
 
201

 
13.45

 
13.21

Uptown Tower
 
Dallas
 
1982
 
253,981

 
82
%
 
3,308

 
15.88

 
17.08

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
89
%
 
1,493

 
15.80

 
16.50

Zeta Building
 
Houston
 
1982
 
37,740

 
79
%
 
481

 
16.13

 
16.43

 
 
 
 
 
 
631,841

 
77
%
 
7,863

 
16.16

 
16.89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average- Operating Portfolio
 
 
 
 
 
3,893,107

 
86
%
 
39,090

 
11.68

 
12.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dana Park
 
Phoenix
 
2007
 
310,979

 
71
%
 
3,586

 
16.24

 
17.47

Fountain Square
 
Phoenix
 
1986
 
118,209

 
71
%
 
1,138

 
13.56

 
15.24

The Shops at Pinnacle Peak
 
Phoenix
 
2000
 
41,530

 
76
%
 
587

 
18.60

 
18.79

Total/Weighted Average - Development Portfolio
 
 
 
 
 
470,718

 
72
%
 
5,311

 
15.67

 
17.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dana Park Development
 
Phoenix
 
 
 
—

 
—
%
 
—

 
—

 
—

Pinnacle Phase II
 
Phoenix
 
 
 
—

 
—
%
 
—

 
—

 
—

Shops at Starwood Phase III
 
Dallas
 
 
 
—

 
—
%
 
—

 
—

 
—

Total/Weighted Average - Property Held For Development (4)
 
 
 
 
 
—

 
—
%
 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total/Weighted Average
 
 
 
 
 
4,363,825

 
84
%
 
$
44,401

 
$
12.11

 
$
12.66


(1)  
Calculated as the tenant's actual March 31, 2013 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of March 31, 2013. Because annualized base rental revenue is not derived from historical results that were accounted for in accordance with generally accepted accounting principles, historical results differ from the annualized amounts. Total abatements for leases in effect as of March 31, 2013 equaled approximately $189,000 for the month ended March 31, 2013.
 
(2) 
Calculated as annualized base rent divided by square feet leased as of March 31, 2013. Excludes vacant space as of March 31, 2013.

(3) 
Represents (i) the contractual base rent for leases in place as of March 31, 2013, calculated on a straight-line basis to reflect changes in rental rates throughout the lease term and amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (ii) square footage under commenced leases as of March 31, 2013.


23

(4) 
As of March 31, 2013, these properties are held for development with no gross leasable area.

24