EX-99.2 3 exhibit992supplementaloper.htm EXHIBIT 99.2 Exhibit 99.2 Supplemental Operating Data, dated May 5, 2014







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, 2014, we owned
 
 
60 Community Centered Properties TM with approximately 5.0 million square feet of gross leasable
60 Community Centers
 
area, located in five of the top markets in the United States in terms of population growth: Houston,
5.0 Million Sq. Ft. of gross
 
Dallas, San Antonio, Phoenix and Chicago. Headquartered in Houston, Texas, we were founded
leasable area
 
in 1998.
1,225 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: 22.4 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
     0.5 Million
 
feet) and, as of March 31, 2014, provided a 47% premium rental rate compared to our larger
 
 
space tenants. The largest of our 1,225 tenants comprised less than 1.9% of our annualized base
 
 
rental revenues for the three months ended March 31, 2014.
 
 
 
 
 
 
 
 
 
Distribution (per share / unit):
 
Investor Relations:
 
 
 
 
 
 
Quarter: $ 0.2850
 
Whitestone REIT
 
 
 
 
 
 
Annualized: $ 1.1400
 
Suzy Taylor, Director of Investor Relations
Dividend Yield: 8.1%**
 
2600 South Gessner, Suite 500, Houston, Texas 77063
 
 
 
 
713.435.2219 email: ir@whitestonereit.com
 
website: www.whitestonereit.com
Board of Trustees:
 
 
 
 
 
 
James C. Mastandrea
 
ICR Inc. - Brad Cohen 203.682.8211
 
 
Daryl J. Carter
 
Analyst Coverage:
 
 
 
 
 
 
Donald F. Keating
 
BMO Capital Markets Corp.
 
J.J.B. Hilliard, W.L. Lyons, LLC
 
JMP Securities
 
Ladenburg Thalmann
Paul T. Lambert
 
Paul Adornato, CFA
 
Carol L. Kemple
 
Mitch Germain
 
Daniel P. Donlan
Jack L. Mahaffey
 
212.885.4170
 
502.588.1839
 
212.906.3546
 
212.409.2056
Trustee Emeritus:
 
Paul.Adornato@bmo.com
 
ckemple@hilliard.com
 
mgermain@jmpsecurities.com
 
ddonlan@ladenburg.com
Daniel G. DeVos
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* As of May 5, 2014
 
Robert W. Baird & Co.
 
Wunderlich Securities, Inc.
 
 
 
 
** Based on common share price
 
Jonathon Pong
 
Merril Ross
 
 
 
 
of $13.99 as of close of market on
 
203.425.2740
 
703.669.9255
 
 
 
 
May 2, 2014.
 
jpong@rwbaird.com
 
mross@wundernet.com
 
 
 
 

1

Press Release
WHITESTONE REIT ANNOUNCES OPERATING RESULTS
FOR FIRST QUARTER 2014

- 19.2% Increase in Funds From Operations Core to $0.31 per share -
- Net Income more than Doubled to $2.4 Million -
- Revenue Increased 28% to $17.8 Million -
- Property Net Operating Income Grew 31% to $11.8 Million -
- Realized Rent Growth on New and Renewal Leases of 4.4% on a Cash Basis and 12.0% on a GAAP Basis -
- Leased 231,720 Square Feet Adding $11.5 Million in Lease Value -
- Company Reiterates 2014 Annual Guidance -


Houston, Texas, May 5, 2014 - Whitestone REIT (NYSE: WSR - “Whitestone” or the “Company”), a fully integrated real estate company that owns, re-develops, leases, manages, and operates Community Centered PropertiesTM, announced its financial results for the first quarter of 2014.
 
"Whitestone's well positioned portfolio of value-add Community Centered PropertiesTM and the momentum of our ongoing leasing efforts in our high-growth markets of Arizona and Texas continues to drive meaningful per share increases in our key cash flow and earnings metrics," said James C. Mastandrea, Whitestone’s Chairman and Chief Executive Officer. Mastandrea added, "Leasing, redevelopment and growth from acquisitions will continue to drive our growth as we strive to attain an industry leading valuation multiple on an FFO per share basis.” Mastandrea concluded, “We will commence two developments on land we currently own and expect that this will provide us with additional inventory in 2015.”

Financial Results: First Quarter 2014 Compared to First Quarter 2013

•
Funds From Operations ("FFO") Core increased 55%, or approximately $2.5 million, to $7.0 million from $4.5 million.
•
FFO Core per diluted common share and Operating Partnership ("OP") unit was $0.31, as compared to $0.26 per diluted common share and OP unit for the same period of 2013. FFO Core excludes non-cash share-based compensation expense related to the expected vesting of restricted share and unit grants of $0.4 million, or $0.02 per diluted common share and OP unit in both periods. FFO Core also excludes acquisition expenses of $0.1 million in both periods and includes rental support payments of $0.1 million in 2014.
•
FFO increased 59% to $6.4 million, or $0.28 per diluted common share and OP unit as compared to $4.0 million, or $0.23 per diluted common share and OP unit.
•
Net Income was $2.4 million or $0.11 per diluted common share as compared to $1.0 million, or $0.06 per diluted common share in the prior year.
•
Total revenues increased 28% to $17.8 million compared to $13.9 million.
•
Property net operating income ("NOI") increased by 31% to $11.8 million as compared to $9.0 million.
•
Same-store NOI growth improved 3.2% or $0.3 million.

Leasing Activity

The leasing team signed 113 leases totaling 232,000 square feet in new, expansion, and renewal leases in the first quarter of 2014 as compared to 71 leases totaling 131,000 square feet in the first quarter of 2013. The average lease size in the first quarter of 2014 was 2,594 square feet with the total lease value added increasing 6.5% to $11.5 million from the fourth quarter of 2013.


2

The Company’s total occupancy was 85.8% as of the end of the first quarter 2014, a 1.8% increase over the prior year, and down 1.0% from the prior quarter. The physical occupancy of the Operating Portfolio, which excludes new acquisitions and properties that are undergoing significant redevelopment or re-tenanting, was 86.1% as of March 31, 2014, up 0.6% from the prior year and down 2.0% from the previous quarter. The impact on occupancy from the previous quarter is primarily a result of re-tenanting in the Company's Houston market.

Balance Sheet and Liquidity

As of March 31, 2014, Whitestone had $264.7 million of real estate debt with a consolidated debt to annualized first quarter 2014 earnings before interest, taxes, depreciation and amortization ("EBITDA") of 7.45x. Real estate debt as a percentage of total market capitalization was 45% as of March 31, 2014 and the Company's ratio of EBITDA to interest expense was 4.1x in the first quarter of 2014.

Whitestone had 41 properties unencumbered by mortgage debt as of March 31, 2014, with an undepreciated cost basis of $358.9 million. The total undepreciated value of the Company's real estate assets and real estate indebtedness was $548.2 million and $436.3 million as of March 31, 2014 and 2013, respectively. As of March 31, 2014, $179.8 million, or approximately 68%, of the Company's debt was subject to fixed interest rates. The Company's weighted average interest rate on all debt and on fixed-rate debt as of the end of the first quarter of 2014 was 3.3% and 3.8%, respectively.

At quarter end, Whitestone had $3.4 million of cash available on its balance sheet and $90.2 million of available capacity under its credit facility, including the accordion option.

Dividend

The Company declared a quarterly cash distribution of $0.285 per common share and OP unit for the second quarter of 2014, paid or to be paid in three equal installments of $0.095 in April, May and June 2014. The dividend amount per share has remained the same since the distribution paid on July 8, 2010.

Earnings Guidance

Whitestone is reiterating its 2014 guidance:

•
FFO Core in the range of $1.09 to $1.18 per diluted share and OP unit;
•
FFO in the range of $0.88 to $0.97 per diluted share and OP unit; and
•
EPS in the range of $0.22 to $0.30 per diluted share. Guidance for EPS excludes gains on real estate transactions.

The midpoint of the Company’s 2014 earnings guidance assumes acquisitions of $60 million, dispositions of $15 million, and development of $15 million during 2014. The net impact to 2014 FFO Core from projected 2014 acquisitions, net of dispositions and interest cost is approximately $0.03 to $0.05 per diluted share. Whitestone expects same-property NOI growth between 4% and 7%.

Additional information on the Company’s 2014 financial outlook and a reconciliation of expected net income attributable to common shareholders to expected FFO and FFO Core are included in the financial tables accompanying this press release.


3

Webcast and Conference Call

Whitestone will host a webcast and conference call for investors and other interested parties on Tuesday, May 6, 2014 at 11:30 A.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) 708-5699 for domestic participants or 1-(913) 312-1503 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, 2014, by dialing 1-(877) 870-5176 for domestic listeners or 1-(858) 384-5517 for international listeners and entering the pass code 5618206. 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. Whitestone focuses on value creation in its community centers, concentrating on local service-oriented tenants that comprise approximately 70% of its tenants. Whitestone’s diversified tenant base provides service offerings including medical, education, casual dining, and convenience services. The largest of its 1,225 tenants comprised less than 1.9% of its annualized base rental revenues as of March 31, 2014. Founded in 1998, the Company is internally managed with a portfolio of 60 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 made with the Securities and Exchange Commission, news releases and financial reports.

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"). The Company intends 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 the Company's 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.


4

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 meet its assumptions regarding its earnings guidance, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; 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 the Company's 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.

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, ("NAREIT"), which states that FFO should represent net income 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.


5

FFO Core: Management believes that the computation of FFO in accordance with NAREIT's definition includes certain non-cash and non-comparable items that affect the Company's period-over-period performance. These items include, but are not limited to, legal settlements, non-cash share-based compensation expense, rent support agreement payments received from sellers on acquired assets and acquisition costs. 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. However, other REITs may use different adjustments, and the Company's FFO Core may not be comparable to the adjusted or modified FFO 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 that of other REITs.

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. 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.


Contact Whitestone REIT:

Suzy Taylor, Director of Investor Relations
(713) 435-2219 staylor@whitestonereit.com




6


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

 
 
March 31, 2014
 
December 31, 2013
 
 
(unaudited)
 
 
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
548,221

 
$
546,274

Accumulated depreciation
 
(69,509
)
 
(66,008
)
Total real estate assets
 
478,712

 
480,266

Cash and cash equivalents
 
3,442

 
6,491

Marketable securities
 
960

 
877

Escrows and acquisition deposits
 
2,191

 
2,095

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
10,523

 
9,929

Unamortized lease commissions and loan costs
 
6,083

 
6,227

Prepaid expenses and other assets
 
2,781

 
2,089

Total assets
 
$
504,692

 
$
507,974

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
264,649

 
$
264,277

Accounts payable and accrued expenses
 
12,546

 
12,773

Tenants' security deposits
 
3,717

 
3,591

Dividends and distributions payable
 
6,428

 
6,418

Total liabilities
 
287,340

 
287,059

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, 2014 and December 31, 2013
 
—

 
—

Common shares, $0.001 par value per share; 400,000,000 shares authorized; 21,962,409 and 21,943,700 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively
 
22

 
22

Additional paid-in capital
 
292,040

 
291,571

Accumulated deficit
 
(79,598
)
 
(75,721
)
Accumulated other comprehensive loss
 
(10
)
 
(54
)
Total Whitestone REIT shareholders' equity
 
212,454

 
215,818

Noncontrolling interest in subsidiary
 
4,898

 
5,097

Total equity
 
217,352

 
220,915

Total liabilities and equity
 
$
504,692

 
$
507,974





7

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

 
 
Three Months Ended March 31,
 
 
2014
 
2013
Property revenues
 
 
 
 
Rental revenues
 
$
13,973

 
$
11,001

Other revenues
 
3,814

 
2,868

Total property revenues
 
17,787

 
13,869

 
 
 
 
 
Property expenses
 
 
 
 
Property operation and maintenance
 
3,660

 
3,065

Real estate taxes
 
2,310

 
1,798

Total property expenses
 
5,970

 
4,863

 
 
 
 
 
Other expenses (income)
 
 
 
 
General and administrative
 
2,957

 
2,444

Depreciation and amortization
 
3,908

 
3,073

Executive relocation expense
 
—

 
—

Interest expense
 
2,372

 
2,449

Interest, dividend and other investment income
 
(21
)
 
(19
)
Total other expense
 
9,216

 
7,947

 
 
 
 
 
Income before loss on disposal of assets and income taxes
 
2,601

 
1,059

 
 
 
 
 
Provision for income taxes
 
(84
)
 
(65
)
Loss on sale or disposal of assets
 
(85
)
 
(8
)
 
 
 
 
 
Net income
 
2,432

 
986

 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
60

 
37

 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,372

 
$
949


8

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

 
 
Three Months Ended March 31,
 
 
2014
 
2013
Basic and Diluted Earnings Per Share:
 
 
 
 
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.11

 
$
0.06

 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
Basic
 
21,823

 
16,819

Diluted
 
21,949

 
16,939

 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
Net income
 
$
2,432

 
$
986

 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
Unrealized loss on cash flow hedging activities
 
(38
)
 
(268
)
Unrealized gain on available-for-sale marketable securities
 
83

 
303

 
 
 
 
 
Comprehensive income
 
2,477

 
1,021

 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
61

 
38

 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
2,416

 
$
983



    

9

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
Cash flows from operating activities:
 
 
 
 
Net income
 
$
2,432

 
$
986

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
3,909

 
3,073

Amortization of deferred loan costs
 
202

 
273

Amortization of notes payable discount
 
76

 
149

Loss on sale or disposal of assets and properties
 
85

 
8

Bad debt expense
 
389

 
317

Share-based compensation
 
373

 
356

Changes in operating assets and liabilities:
 
 
 
 
Escrows and acquisition deposits
 
(96
)
 
2,143

Accrued rent and accounts receivable
 
(983
)
 
(777
)
Unamortized lease commissions
 
(297
)
 
(263
)
Prepaid expenses and other assets
 
118

 
162

Accounts payable and accrued expenses
 
(353
)
 
(2,621
)
Tenants' security deposits
 
126

 
127

Net cash provided by operating activities
 
5,981

 
3,933

Cash flows from investing activities:
 
 

 
 

Acquisitions of real estate
 
—

 
(25,700
)
Additions to real estate
 
(2,123
)
 
(1,197
)
Net cash used in investing activities
 
(2,123
)
 
(26,897
)
Cash flows from financing activities:
 
 

 
 

Distributions paid to common shareholders
 
(6,231
)
 
(4,807
)
Distributions paid to OP unit holders
 
(158
)
 
(194
)
Payments of exchange offer costs
 
(14
)
 
(34
)
Proceeds from revolving credit facility, net
 
—

 
26,400

Repayments of notes payable
 
(504
)
 
(1,017
)
Payments of loan origination costs
 
—

 
(1,085
)
Net cash provided by (used in) financing activities
 
(6,907
)
 
19,263

Net decrease in cash and cash equivalents
 
(3,049
)
 
(3,701
)
Cash and cash equivalents at beginning of period
 
6,491

 
6,544

Cash and cash equivalents at end of period
 
$
3,442

 
$
2,843


10

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures
(unaudited)
(in thousands)
 
 
Three Months Ended March 31,
 
 
2014
 
2013
Supplemental disclosure of cash flow information:
 
 

 
 

Cash paid for interest
 
$
2,137

 
$
2,146

Non cash investing and financing activities:
 
 

 
 

Disposal of fully depreciated real estate
 
$
45

 
$
130

Financed insurance premiums
 
$
888

 
$
883

Value of shares issued under dividend reinvestment plan
 
$
26

 
$
23

Accrued offering costs
 
$
—

 
$
20

Value of common shares exchanged for OP units
 
$
103

 
$
782

Change in fair value of available-for-sale securities
 
$
83

 
$
303

Change in fair value of cash flow hedge
 
$
(38
)
 
$
(268
)





11

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

 
 
Three Months Ended March 31,
 
 
2014
 
2013
FFO AND FFO CORE
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,372

 
$
949

Depreciation and amortization of real estate assets
 
3,901

 
3,050

Loss on disposal of assets
 
85

 
8

Net income attributable to noncontrolling interests
 
60

 
37

FFO
 
6,418

 
4,044

 
 
 
 
 
Non cash share-based compensation expense
 
373

 
356

Acquisition costs
 
146

 
138

Rent support agreement payments received
 
80

 
—

FFO-Core
 
$
7,017

 
$
4,538

 
 
 
 
 
FFO PER SHARE AND OP UNIT CALCULATION:
 
 
 
 
Numerator:
 
 
 
 
FFO
 
$
6,418

 
$
4,044

Distributions paid on unvested restricted common shares
 
(19
)
 
(11
)
FFO excluding amounts attributable to unvested restricted common shares
 
$
6,399

 
$
4,033

FFO-Core excluding amounts attributable to unvested restricted common shares
 
$
6,998

 
$
4,527

 
 
 
 
 
Denominator:
 
 
 
 
Weighted average number of total common shares - basic
 
21,823

 
16,819

Weighted average number of total noncontrolling OP units - basic
 
556

 
653

Weighted average number of total commons shares and noncontrolling OP units - basic
 
22,379

 
17,472

 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
Unvested restricted shares
 
126

 
120

Weighted average number of total common shares and noncontrolling OP units - dilutive
 
22,505

 
17,592

 
 
 
 
 
FFO per common share and OP unit - basic
 
$
0.29

 
$
0.23

FFO per common share and OP unit - diluted
 
$
0.28

 
$
0.23

 
 
 
 
 
FFO-Core per common share and OP unit - basic
 
$
0.31

 
$
0.26

FFO-Core per common share and OP unit - diluted
 
$
0.31

 
$
0.26

 
 
Three Months Ended March 31,
 
 
2014
 
2013
PROPERTY NET OPERATING INCOME
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,372

 
$
949

General and administrative expenses
 
2,957

 
2,444

Depreciation and amortization
 
3,908

 
3,073

Interest expense
 
2,372

 
2,449

Interest, dividend and other investment income
 
(21
)
 
(19
)
Provision for income taxes
 
84

 
65

Loss on disposal of assets
 
85

 
8

Net income attributable to noncontrolling interests
 
60

 
37

NOI
 
$
11,817

 
$
9,006


EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,372

 
$
949

Depreciation and amortization
 
3,908

 
3,073

Interest expense
 
2,372

 
2,449

Provision for income taxes
 
84

 
65

Loss on disposal of assets
 
85

 
8

Net income attributable to noncontrolling interests
 
60

 
37

EBITDA
 
$
8,881

 
$
6,581


 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2014
 
2013
 
2013
 
2013
Net income attributable to Whitestone REIT
 
$
2,372

 
$
1,261

 
$
614

 
$
970

Depreciation and amortization
 
3,908

 
3,646

 
3,450

 
3,260

Interest expense
 
2,372

 
2,486

 
2,602

 
2,613

Provision for income taxes
 
84

 
78

 
90

 
72

Loss on disposal of assets
 
85

 
8

 
—

 
40

Net income attributable to noncontrolling interests
 
60

 
34

 
21

 
33

EBITDA
 
$
8,881

 
$
7,513

 
$
6,777

 
$
6,988



12

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

 
 
Three Months Ended March 31,
 
 
2014
 
2013
 
 
 
 
 
Other Financial Information:
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
1,093

 
$
242

Leasing commissions (1)
 
$
356

 
$
362

Scheduled debt principal payments
 
$
405

 
$
759

Straight line rent income
 
$
366

 
$
225

Market rent amortization income (loss) from acquired leases
 
$
(91
)
 
$
33

Non-cash share-based compensation expense
 
$
373

 
$
356

Non-real estate depreciation and amortization
 
$
8

 
$
23

Amortization of loan fees
 
$
202

 
$
273

Acquisition costs
 
$
146

 
$
138

Undepreciated value of unencumbered properties
 
$
358,836

 
$
232,902

Number of unencumbered properties
 
41

 
25

Full time employees
 
75

 
68


(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, 2014
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
Equity Capitalization:
 
 
 
 
 
 
Common shares outstanding
 
97.6
%
 
21,962

 
 
Operating partnership units outstanding
 
2.4
%
 
551

 
 
Total
 
100.0
%
 
22,513

 
 
 
 
 
 
 
 
 
Market price of common shares as of
 
 
 
 
 
 
March 31, 2014
 
 
 
$
14.44

 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
325,088

 
55
%
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
Outstanding debt
 
 
 
$
264,649

 
 
Less: Cash and cash equivalents
 
 
 
(3,442
)
 
 
 
 
 
 
261,207

 
45
%
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
March 31, 2014
 
 
 
$
586,295

 
100
%


SELECTED RATIOS:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2014
 
December 31, 2013
 
September 30, 2013
 
June 30, 2013
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA
 
$
8,881

 
$
7,513

 
$
6,777

 
$
6,988

Interest expense, excluding amortization of loan fees
 
2,170

 
2,264

 
2,334

 
2,331

Ratio of interest expense to EBITDA
 
4.1

 
3.3

 
2.9

 
3.0

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Undepreciated real estate assets
 
$
548,221

 
$
546,274

 
$
483,379

 
$
481,939

 
 
 
 
 
 
 
 
 
Outstanding debt
 
$
264,649

 
$
264,277

 
$
266,260

 
$
266,401

Less: Cash
 
(3,442
)
 
(6,491
)
 
(9,506
)
 
(6,020
)
Outstanding debt after cash
 
$
261,207

 
$
257,786

 
$
256,754

 
$
260,381

Ratio of debt to real estate assets
 
48
%
 
47
%
 
53
%
 
54
%

14

 Whitestone REIT and Subsidiaries
SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES

TOTAL OUTSTANDING DEBT
(in thousands)

Description
 
March 31, 2014
 
December 31, 2013
Fixed rate notes
 
 
 
 
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)
 
$
10,500

 
$
10,500

$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 3, 2017 (2)
 
50,000

 
50,000

$37.0 million 3.76% Note, due December 1, 2020
 
36,776

 
37,000

$6.5 million 3.80% Note, due January 1, 2019
 
6,474

 
6,500

$20.2 million 4.28% Note, due June 6, 2023
 
20,200

 
20,200

$1.0 million 4.75% Note, due December 31, 2014
 
1,000

 
1,087

$16.5 million 4.97% Note, due September 26, 2023
 
16,450

 
16,450

$15.1 million 4.99% Note, due January 6, 2024
 
15,060

 
15,060

$9.2 million, Prime Rate less 2.00%, due December 29, 2017 (3)
 
7,880

 
7,875

$11.1 million 5.87% Note, due August 6, 2016
 
11,826

 
11,900

$3.0 million 6.00% Note, due March 31, 2021 (4)
 
2,894

 
2,905

$0.9 million 2.97% Note, due November 28, 2014
 
789

 
—

Floating rate notes
 
 
 
 
Unsecured line of credit, LIBOR plus 1.75% to 2.50%, due February 3, 2017
 
84,800

 
84,800

 
 
$
264,649

 
$
264,277


(1) 
Promissory note includes an interest rate swap that fixed the interest rate at 3.55% for the duration of the term.

(2) 
Promissory note includes an interest rate swap that fixed the LIBOR portion of our $50 million term loan under our unsecured credit facility at 0.84%.

(3) 
Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term.

(4) 
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.

SCHEDULE OF DEBT MATURITIES AS OF MARCH 31, 2014
(in thousands)
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2014
 
$
1,866

 
$
1,000

 
$
2,866

 
1.1
%
2015
 
1,866

 
—

 
1,866

 
0.7
%
2016
 
2,152

 
11,125

 
13,277

 
5.0
%
2017
 
2,338

 
142,638

 
144,976

 
54.8
%
2018
 
2,351

 
9,560

 
11,911

 
4.5
%
2019 and thereafter
 
6,927

 
82,826

 
89,753

 
33.9
%
Total
 
$
17,500

 
$
247,149

 
$
264,649

 
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, 2014
 
March 31, 2014
 
December 31, 2013
 
September 30, 2013
 
June 30,
2013
Retail
 
2,762,335

 
88
%
 
90
%
 
87
%
 
89
%
Office/Flex
 
1,201,672

 
87
%
 
91
%
 
88
%
 
87
%
Office
 
633,534

 
75
%
 
75
%
 
77
%
 
79
%
Total - Operating Portfolio
 
4,597,541

 
86
%
 
88
%
 
86
%
 
87
%
Redevelopment, New Acquisitions (1)
 
368,789

 
83
%
 
80
%
 
77
%
 
74
%
Total
 
4,966,330

 
86
%
 
87
%
 
85
%
 
86
%
 
(1) 
Includes (i) new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.
Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)
 
Percentage of Total Annualized Base Rental Revenues (1)
 
Initial Lease Date
 
Year Expiring
Safeway Stores Incorporated (2)
 
Phoenix
 
$
1,061

 
1.9
%
 
7/12/2000, 5/8/1991 and 7/1/2000
 
2020, 2020 and 2021
Bashas' Inc. (3)
 
Phoenix
 
859

 
1.6
%
 
12/9/1993, 10/9/2004 and 4/1/2009
 
2014, 2024 and 2029
Wells Fargo & Company (4)
 
Phoenix
 
627

 
1.1
%
 
10/24/1996 and 4/16/1999
 
2016 and 2018
University of Phoenix
 
San Antonio
 
510

 
0.9
%
 
10/18/2010
 
2018
Sports Authority
 
San Antonio
 
495

 
0.9
%
 
1/1/2004
 
2015
Paul's Ace Hardware
 
Phoenix
 
460

 
0.8
%
 
3/1/2008
 
2018
Walgreens Co. (5)
 
Phoenix
 
448

 
0.8
%
 
11/3/1996 and 11/2/1987
 
2049 and 2027
Ross Dress for Less, Inc. (6)
 
San Antonio, Phoenix and Houston
 
443

 
0.8
%
 
6/18/2012, 2/11/2009 and 2/7/2013
 
2023, 2020 and 2023
Rock Solid Images
 
Houston
 
363

 
0.7
%
 
4/1/2004
 
2015
Super Bravo, Inc.
 
Houston
 
349

 
0.6
%
 
6/15/2011
 
2023
Sterling Jewelers, Inc.
 
Phoenix
 
326

 
0.6
%
 
11/23/2004
 
2020
KinderCare Learning Centers LLC (7)
 
Phoenix
 
322

 
0.6
%
 
5/7/2001 and 7/15/2000
 
2021 and 2035
Midland Financial Co.
 
Phoenix
 
320

 
0.6
%
 
1/1/2006
 
2015
Barnes & Noble Booksellers, Inc.
 
Phoenix
 
314

 
0.6
%
 
4/5/2004
 
2015
X-Ray X-Press Corporation
 
Houston
 
301

 
0.5
%
 
7/1/1998
 
2019
 
 
 
 
$
7,198

 
13.0
%
 
 
 
 


16

 (1) 
Annualized Base Rental Revenues represents the monthly base rent as of March 31, 2014 for each applicable tenant multiplied by 12.

(2) 
As of March 31, 2014, we had three leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on July 12, 2000, and is scheduled to expire in 2020, was $425,000, which represents 0.8% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on May 8, 1991, and is scheduled to expire in 2021, was $344,000, which represents 0.6% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 1, 2000, and is scheduled to expire in 2020, was $292,000, which represents 0.5% of our total annualized base rental revenue.

(3) 
As of March 31, 2014, we had three leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on December 9, 1993, and is scheduled to expire in 2014, was $61,000, which represents 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on October 9, 2004, and is scheduled to expire in 2024, was $119,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 1, 2009, and is scheduled to expire in 2029, was $679,000, which represents 1.3% of our total annualized base rental revenue.

(4) 
As of March 31, 2014, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on October 24, 1996, and is scheduled to expire in 2016, was $114,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 16, 1999, and is scheduled to expire in 2018, was $513,000, which represents 0.9% of our total annualized base rental revenue.

(5) 
As of March 31, 2014, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on November 5, 1996, and is scheduled to expire in 2049, was $279,000, which represents 0.5% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 2, 1987, and is scheduled to expire in 2027, was $169,000, which represents 0.3% of our total annualized base rental revenue.

(6) 
As of March 31, 2014, we had three leases with the same tenant occupying space at properties located in San Antonio, Phoenix and Houston. The annualized rental revenue for the lease that commenced on June 18, 2012, and is scheduled to expire in 2023, was $175,000, which represents 0.3% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on February 11, 2009, and is scheduled to expire in 2020, was $158,000, which represents 0.3% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on February 7, 2013, and is scheduled to expire in 2023, was $110,000, which represents 0.2% of our total annualized base rental revenue.

(7) 
As of March 31, 2014, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on May 7, 2001, and is scheduled to expire in 2021, was $267,000, which represents 0.5% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 15, 2000, and is scheduled to expire in 2035, was $55,000, which represents 0.1% of our total annualized base rental revenue.


17

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended
March 31,
 
 
2014
 
2013
RENEWALS
 
 
 
 
Number of Leases
 
55

 
45

Total Square Feet (1)
 
95,061

 
73,887

Average Square Feet
 
1,728

 
1,642

Total Lease Value
 
$
4,667,000

 
$
3,549,000

NEW LEASES
 
 
 
 
Number of Leases
 
58

 
26

Total Square Feet (1)
 
136,659

 
57,010

Average Square Feet
 
2,356

 
2,193

Total Lease Value
 
$
6,830,000

 
$
3,531,000

TOTAL LEASES
 
 
 
 
Number of Leases
 
113

 
71

Total Square Feet (1)
 
231,720

 
130,897

Average Square Feet
 
2,051

 
1,844

Total Lease Value
 
$
11,497,000

 
$
7,080,000


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


18

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 2014
 
67

 
$
5,659,344

 
108,642

 
3.3

 
$
270,139

 
$
2.49

 
$
14.31

 
$
13.71

 
$
64,222

 
4.4
 %
 
$
169,843

 
12.0
 %
4th Quarter 2013
 
59

 
4,135,630

 
102,893

 
2.5

 
247,271

 
2.40

 
15.01

 
14.81

 
20,698

 
1.4
 %
 
83,231

 
5.7
 %
3rd Quarter 2013
 
53

 
5,753,820

 
156,660

 
2.9

 
534,534

 
3.41

 
12.91

 
13.72

 
(127,771
)
 
(5.9
)%
 
(60,495
)
 
(2.9
)%
2nd Quarter 2013
 
28

 
3,059,381

 
48,620

 
3.2

 
117,774

 
2.42

 
14.44

 
14.89

 
(21,921
)
 
(3.0
)%
 
44,137

 
6.3
 %
Total - 12 months
 
207

 
$
18,608,175

 
416,815

 
3.0

 
$
1,169,718

 
$
2.81

 
$
13.97

 
$
14.13

 
$
(64,772
)
 
(1.1
)%
 
$
236,716

 
4.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
18

 
$
1,865,865

 
35,063

 
4.5

 
$
177,176

 
$
5.05

 
$
12.08

 
$
11.42

 
$
23,296

 
5.8
 %
 
$
65,137

 
18.0
 %
4th Quarter 2013
 
13

 
1,145,166

 
15,764

 
4.4

 
204,187

 
12.95

 
18.98

 
18.33

 
10,184

 
3.5
 %
 
18,471

 
6.7
 %
3rd Quarter 2013
 
21

 
1,313,538

 
34,583

 
3.0

 
117,321

 
3.39

 
10.99

 
12.30

 
(45,062
)
 
(10.7
)%
 
(28,611
)
 
(7.0
)%
2nd Quarter 2013
 
9

 
524,647

 
15,182

 
2.2

 
64,652

 
4.26

 
9.08

 
10.22

 
(17,280
)
 
(11.2
)%
 
9,852

 
6.9
 %
Total - 12 months
 
61

 
$
4,849,216

 
100,592

 
3.6

 
$
563,336

 
$
5.60

 
$
12.33

 
$
12.62

 
$
(28,862
)
 
(2.3
)%
 
$
64,849

 
5.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
49

 
$
3,793,479

 
73,579

 
2.7

 
$
92,963

 
$
1.26

 
$
15.37

 
$
14.81

 
$
40,926

 
3.8
 %
 
$
104,706

 
9.9
 %
4th Quarter 2013
 
46

 
2,990,464

 
87,129

 
2.1

 
43,084

 
0.49

 
14.29

 
$
14.17

 
10,514

 
0.8
 %
 
64,760

 
5.5
 %
3rd Quarter 2013
 
32

 
4,440,282

 
122,077

 
2.9

 
417,213

 
3.42

 
13.45

 
14.13

 
(82,709
)
 
(4.8
)%
 
(31,884
)
 
(1.9
)%
2nd Quarter 2013
 
19

 
2,534,734

 
33,438

 
3.7

 
53,122

 
1.59

 
16.88

 
17.02

 
(4,641
)
 
(0.8
)%
 
34,285

 
6.2
 %
Total - 12 months
 
146

 
$
13,758,959

 
316,223

 
2.7

 
$
606,382

 
$
1.92

 
$
14.49

 
$
14.60


$
(35,910
)
 
(0.8
)%
 
$
171,867

 
3.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-comparable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
46

 
$
5,837,450

 
126,678

 
3.1

 
$
723,376

 
$
5.71

 
$
12.43

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
32

 
6,617,801

 
142,661

 
6.1

 
702,071

 
4.92

 
7.70

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
45

 
7,256,999

 
109,219

 
3.9

 
1,120,481

 
10.26

 
12.48

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
59

 
10,250,630

 
220,446

 
4.2

 
1,131,700

 
5.13

 
10.42

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
182

 
$
29,962,880

 
599,004

 
4.4

 
$
3,677,628

 
$
6.14

 
$
10.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
40

 
$
4,964,491

 
105,196

 
3.1

 
$
652,989

 
$
6.21

 
$
12.44

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
32

 
6,617,801

 
142,661

 
6.1

 
702,071

 
4.92

 
7.70

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
43

 
7,223,892

 
106,019

 
4.0

 
1,120,170

 
10.57

 
12.53

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
41

 
7,412,645

 
137,293

 
4.4

 
803,627

 
5.85

 
11.22

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
156

 
$
26,218,829

 
491,169

 
4.5

 
$
3,278,857

 
$
6.68

 
$
10.74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
6

 
$
872,959

 
21,482

 
3.0

 
$
70,387

 
3.28

 
$
12.42

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
2

 
33,107

 
3,200

 
0.9

 
311

 
0.10

 
10.50

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
18

 
2,837,985

 
83,153

 
3.9

 
328,073

 
3.95

 
9.11

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
26

 
$
3,744,051

 
107,835

 
3.7

 
$
398,771

 
$
3.70

 
$
9.81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

20

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 2014
 
113

 
$
11,496,794

 
235,320

 
3.2

 
$
993,515

 
$
4.22

 
$
13.30

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
91

 
10,753,431

 
245,554

 
4.6

 
949,342

 
3.87

 
10.76

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
98

 
13,010,819

 
265,879

 
3.3

 
1,655,015

 
6.22

 
12.73

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
87

 
13,310,011

 
269,066

 
4.1

 
1,249,474

 
4.64

 
11.15

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
389

 
$
48,571,055

 
1,015,819

 
3.8

 
$
4,847,346

 
$
4.77

 
$
11.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
58

 
$
6,830,356

 
140,259

 
3.4

 
$
830,165

 
$
5.92

 
$
12.35

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
45

 
7,762,967

 
158,425

 
5.9

 
906,258

 
5.72

 
8.82

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
64

 
8,537,430

 
140,602

 
3.7

 
1,237,491

 
8.80

 
12.16

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
50

 
7,937,292

 
152,475

 
4.2

 
868,279

 
5.69

 
11.01

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
217

 
$
31,068,045

 
591,761

 
4.4

 
$
3,842,193

 
$
6.49

 
$
11.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter 2014
 
55

 
$
4,666,438

 
95,061

 
2.8

 
$
163,350

 
$
1.72

 
$
14.70

 
 
 
 
 
 
 
 
 
 
4th Quarter 2013
 
46

 
2,990,464

 
87,129

 
2.1

 
43,084

 
0.49

 
14.29

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2013
 
34

 
4,473,389

 
125,277

 
2.0

 
417,524

 
3.33

 
13.38

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2013
 
37

 
5,372,719

 
116,591

 
3.9

 
381,195

 
3.27

 
11.34

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
172

 
$
17,503,010

 
424,058

 
3.0

 
$
1,005,153

 
$
2.37

 
$
13.30

 
 
 
 
 
 
 
 
 
 

(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.


21

Whitestone REIT and Subsidiaries
LEASE EXPIRATIONS(1) 

 
 
 
 
 
 
 
 
Annualized Base Rent(2)
 
 
 
 
Gross Leasable Area
 
as of March 31, 2014
Year
 
Number of
Leases
 
Square Feet
 
Percent
of Gross Leasable Area
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2014
 
322

 
799,265

 
16.1
%
 
$
9,691

 
17.6
%
 
$
12.12

2015
 
259

 
774,797

 
15.6
%
 
9,462

 
17.2
%
 
12.21

2016
 
214

 
589,734

 
11.9
%
 
7,974

 
14.5
%
 
13.52

2017
 
144

 
451,958

 
9.1
%
 
6,839

 
12.4
%
 
15.13

2018
 
125

 
548,059

 
11.0
%
 
7,579

 
13.8
%
 
13.83

2019
 
69

 
284,587

 
5.7
%
 
3,797

 
6.9
%
 
13.34

2020
 
23

 
204,978

 
4.1
%
 
2,369

 
4.3
%
 
11.56

2021
 
17

 
144,957

 
2.9
%
 
1,847

 
3.4
%
 
12.74

2022
 
23

 
159,310

 
3.2
%
 
1,943

 
3.5
%
 
12.20

2023
 
13

 
135,753

 
2.7
%
 
1,210

 
2.2
%
 
8.91

Total
 
1,209

 
4,093,398

 
82.3
%
 
$
52,711

 
95.8
%
 
$
12.88


(1) 
Lease expirations table reflects rents in place as of March 31, 2014, and does not include option periods.
(2) 
Annualized Base Rent represents the monthly base rent as of March 31, 2014 for each tenant multiplied by 12.


22

Whitestone REIT and Subsidiaries
2014 Financial Guidance

Guidance Summary
 
 
 
 
 
 
 
2013
 
2014 Projected
 
 
Actual
 
Low
 
High
Base Property NOI (1)
 
$
38,635,000

 
$
45,000,000

 
$
46,300,000

 
 
 
 
 
 
 
Same Store Property NOI Growth (2)
 
 
 
4
%
 
7
%
 
 
 
 
 
 
 
Base Property % Leased at period end (1)
 
86.8
%
 
87.0
%
 
89.0
%
 
 
 
 
 
 
 
Acquisitions
 
$
131,000,000

 
$
40,000,000

 
$
80,000,000

Dispositions
 
$
—

 
$
10,000,000

 
$
20,000,000

New Development
 
$
—

 
$
10,000,000

 
$
20,000,000

 
 
 
 
 
 
 
FFO Core per common share and OP unit
 
$
1.10

 
$
1.09

 
$
1.18

 
 
 
 
 
 
 
FFO per common share and OP unit
 
$
0.91

 
$
0.88

 
$
0.97


Guidance Rollforward
 
 
 
 
 
 
 
2014 Projected
 
 
Low
 
High
2013 FFO Core per common share and OP unit
 
$
1.10

 
$
1.10

 
 
 
 
 
NOI
 
 
 
 
   Same Store Property Growth (2)
 
0.06

 
0.11

   Full Year NOI from 2013 Acquisitions (3)
 
0.20

 
0.22

   2014 Acquisitions
 
0.05

 
0.10

   2014 Dispositions
 
(0.01
)
 
(0.02
)
 
 
 
 
 
General and administrative
 
(0.04
)
 
(0.05
)
Net Interest Expense
 
(0.03
)
 
(0.04
)
 
 
 
 
 
Before change in weighted average shares
 
$
1.33

 
$
1.42

 
 
 
 
 
Change in Weighted Average Shares
 
(0.24
)
 
(0.24
)
 
 
 
 
 
2014 FFO Core Range
 
$
1.09

 
$
1.18


(1) 
Reflects properties owned as of December 31, 2013.
(2) 
Reflects properties owned for the full year ended December 31, 2013.
(3) 
Reflects difference between full year of NOI for properties acquired in 2013 and partial year in 2013.


23

Whitestone REIT and Subsidiaries
2014 Financial Guidance
(continued)

Reconciliation of FFO and FFO Core Guidance to Net Income Per Share
(All numbers are per diluted share)
 
 
 
 
 
 
 
Funds from Operations Guidance:
 
Full Year 2013
 
Full Year 2014 Projected
 
 
Actual
 
Low
 
High
Net income attributable to Whitestone REIT
 
$
0.20

 
$
0.21

 
$
0.30

 
 
 
 
 
 
 
Adjustments to reconcile net income to FFO:
 
 
 
 
 
 
Depreciation expense, amortization and other amounts
 
0.71

 
0.67

 
0.67

 
 
 
 
 
 
 
Funds from Operations
 
$
0.91

 
$
0.88

 
$
0.97

 
 
 
 
 
 
 
Adjustments to reconcile FFO to FFO Core:
 
 
 
 
 
 
All other non-core amounts
 
0.19

 
0.21

 
0.21

 
 
 
 
 
 
 
Funds from Operations Core
 
$
1.10

 
$
1.09

 
$
1.18




24


Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2014
 
 
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
%
 
$
945

 
$
13.01

 
$
12.59

Anthem Marketplace
 
Phoenix
 
2000
 
113,293

 
100
%
 
1,503

 
13.27

 
13.27

Bellnott Square
 
Houston
 
1982
 
73,930

 
37
%
 
305

 
11.15

 
11.04

Bissonnet Beltway
 
Houston
 
1978
 
29,205

 
95
%
 
350

 
12.61

 
12.06

Centre South
 
Houston
 
1974
 
39,134

 
89
%
 
357

 
10.25

 
9.73

The Citadel
 
Phoenix
 
1985
 
28,547

 
91
%
 
434

 
16.71

 
12.86

Desert Canyon
 
Phoenix
 
2000
 
62,533

 
76
%
 
556

 
11.70

 
12.27

Fountain Square
 
Phoenix
 
1986
 
118,209

 
76
%
 
1,487

 
16.55

 
18.76

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
65
%
 
515

 
16.03

 
19.05

Holly Knight
 
Houston
 
1984
 
20,015

 
100
%
 
370

 
18.49

 
18.12

Headquarters Village
 
Dallas
 
2009
 
89,134

 
83
%
 
1,909

 
25.80

 
28.44

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
90
%
 
812

 
8.93

 
8.85

Lion Square
 
Houston
 
1980
 
117,592

 
76
%
 
952

 
10.65

 
10.85

MarketPlace At Central
 
Phoenix
 
2000
 
111,130

 
90
%
 
440

 
4.40

 
6.69

Mercado at Scottsdale Ranch
 
Phoenix
 
1987
 
118,730

 
95
%
 
1,615

 
14.32

 
14.32

Paradise Plaza
 
Phoenix
 
1993
 
125,898

 
93
%
 
1,704

 
14.55

 
14.67

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
97
%
 
2,010

 
18.32

 
18.48

Providence
 
Houston
 
1980
 
90,327

 
87
%
 
705

 
8.97

 
8.59

Shaver
 
Houston
 
1978
 
21,926

 
93
%
 
263

 
12.90

 
12.16

Shops at Pecos Ranch
 
Phoenix
 
2009
 
78,767

 
93
%
 
1,520

 
20.75

 
20.75

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
94
%
 
1,401

 
26.91

 
28.35

South Richey
 
Houston
 
1980
 
69,928

 
98
%
 
647

 
9.44

 
9.22

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
87
%
 
770

 
21.35

 
20.85

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
100
%
 
1,045

 
11.00

 
10.84

Sunridge
 
Houston
 
1979
 
49,359

 
92
%
 
420

 
9.25

 
10.48

Sunset at Pinnacle Peak
 
Phoenix
 
2000
 
41,530

 
83
%
 
573

 
16.62

 
16.62

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
96
%
 
1,353

 
13.72

 
13.84

Torrey Square
 
Houston
 
1983
 
105,766

 
80
%
 
727

 
8.59

 
8.28

Town Park
 
Houston
 
1978
 
43,526

 
100
%
 
830

 
19.07

 
19.18

Village Square at Dana Park
 
Phoenix
 
2009
 
310,979

 
82
%
 
4,436

 
17.40

 
18.58

Webster Pointe
 
Houston
 
1984
 
26,060

 
100
%
 
276

 
10.59

 
10.74

Westchase
 
Houston
 
1978
 
49,573

 
85
%
 
521

 
12.36

 
12.36

Windsor Park
 
San Antonio
 
1992
 
196,458

 
97
%
 
2,039

 
10.70

 
10.26

 
 
 
 
 
 
2,762,335

 
88
%
 
33,790

 
13.90

 
14.26

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Brookhill
 
Houston
 
1979
 
74,757

 
88
%
 
$
248

 
$
3.77

 
$
3.78

Corporate Park Northwest
 
Houston
 
1981
 
185,627

 
79
%
 
1,583

 
10.79

 
11.76

Corporate Park West
 
Houston
 
1999
 
175,665

 
95
%
 
1,587

 
9.51

 
9.22

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
100
%
 
973

 
9.74

 
9.56


25

 Whitestone REIT and Subsidiaries
Property Details
As of March 31, 2014
(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)
Dairy Ashford
 
Houston
 
1981
 
42,902

 
99
%
 
271

 
6.38

 
6.19

Holly Hall Industrial Park
 
Houston
 
1980
 
90,000

 
100
%
 
778

 
8.64

 
8.26

Interstate 10 Warehouse
 
Houston
 
1980
 
151,000

 
74
%
 
544

 
4.87

 
5.08

Main Park
 
Houston
 
1982
 
113,410

 
100
%
 
721

 
6.36

 
6.29

Plaza Park
 
Houston
 
1982
 
105,530

 
72
%
 
713

 
9.38

 
9.70

Westbelt Plaza
 
Houston
 
1978
 
65,619

 
68
%
 
428

 
9.59

 
9.12

Westgate Service Center
 
Houston
 
1984
 
97,225

 
96
%
 
560

 
6.00

 
5.90

 
 
 
 
 
 
1,201,672

 
87
%
 
8,406

 
8.04

 
8.08

Office Communities:
 
 
 
 
 
  
 
 
 
 
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
61
%
 
$
1,046

 
$
13.62

 
$
15.21

Featherwood
 
Houston
 
1983
 
49,760

 
88
%
 
818

 
18.68

 
18.61

Pima Norte
 
Phoenix
 
2007
 
35,110

 
35
%
 
199

 
16.19

 
16.11

Royal Crest
 
Houston
 
1984
 
24,900

 
75
%
 
196

 
10.50

 
10.23

Uptown Tower
 
Dallas
 
1982
 
253,981

 
77
%
 
3,500

 
17.90

 
17.18

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
92
%
 
1,502

 
15.38

 
15.44

Zeta Building
 
Houston
 
1982
 
37,740

 
85
%
 
390

 
12.16

 
16.80

 
 
 
 
 
 
633,534

 
75
%
 
7,651

 
16.10

 
16.37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average- Operating Portfolio
 
 
 
 
 
4,597,541

 
86
%
 
49,847

 
12.61

 
12.87

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Park Woodland II
 
Houston
 
1972
 
16,220

 
87
%
 
$
191

 
$
13.54

 
$
14.03

Fountain Hills Plaza
 
Phoenix
 
2009
 
111,289

 
89
%
 
1,655

 
16.71

 
17.22

Market Street at DC Ranch
 
Phoenix
 
2003
 
241,280

 
80
%
 
3,397

 
17.60

 
18.47

Total/Weighted Average - Development Portfolio
 
 
 
 
 
368,789

 
83
%
 
5,243

 
17.13

 
17.87

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthem Marketplace
 
Phoenix
 
N/A
 
—

 
—
%
 
$
—

 
$
—

 
$
—

Dana Park Development
 
Phoenix
 
N/A
 
—

 
—
%
 
—

 
—

 
—

Fountain Hills
 
Phoenix
 
N/A
 
—

 
—
%
 
—

 
—

 
—

Market Street at DC Ranch
 
Phoenix
 
N/A
 
—

 
—
%
 
—

 
—

 
—

Pinnacle Phase II
 
Phoenix
 
N/A
 
—

 
—
%
 
—

 
—

 
—

Shops at Starwood Phase III
 
Dallas
 
N/A
 
—

 
—
%
 
—

 
—

 
—

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

 
—
%
 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total/Weighted Average
 
 
 
 
 
4,966,330

 
86
%
 
$
55,090

 
$
12.90

 
$
13.19



26

(1)  
Calculated as the tenant's actual March 31, 2014 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of March 31, 2014. 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, 2014 equaled approximately $101,000 for the month ended March 31, 2014.
 
(2) 
Calculated as annualized base rent divided by square feet leased as of March 31, 2014. Excludes vacant space as of March 31, 2014.

(3) 
Represents (i) the contractual base rent for leases in place as of March 31, 2014, adjusted to 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, 2014.

(4) 
As of March 31, 2014, these properties are held for development and, therefore, had no gross leasable area.

27