10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)
[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 001-34855

WHITESTONE REIT

(Exact Name of Registrant as Specified in Its Charter)

Maryland	76-0594970
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2600 South Gessner, Suite 500 Houston, Texas	77063
(Address of Principal Executive Offices)	(Zip Code)

(713) 827-9595

(Registrant's Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ýYes     ¨No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ýYes    ¨No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨                                                                                      Accelerated filer ý

Non-accelerated filer ¨                                                                                       Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨Yes   ý No

As of November 3, 2015, there were 26,985,799 common shares of beneficial interest, $0.001 par value per share, outstanding.

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	1
	Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014	1
	Consolidated Statements of Operations and Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2015 and 2014	2
	Consolidated Statement of Changes in Equity (Unaudited) for the Nine Months Ended September 30, 2015	4
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2015 and 2014	5
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	46
Item 4.	Controls and Procedures.	48

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	49
Item 1A.	Risk Factors.	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	49
Item 3.	Defaults Upon Senior Securities.	49
Item 4.	Mine Safety Disclosures.	49
Item 5.	Other Information.	49
Item 6.	Exhibits.	50
	Signatures	51
	Exhibit Index	52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Whitestone REIT and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Real estate assets, at cost
Property	$	831,425		$	673,655
Accumulated depreciation	(84,743		)	(71,587		)
Total real estate assets	746,682			602,068
Cash and cash equivalents	5,660			4,236
Restricted cash	86			—
Marketable securities	414			973
Escrows and acquisition deposits	5,537			4,092
Accrued rents and accounts receivable, net of allowance for doubtful accounts	14,099			11,834
Unamortized lease commissions and loan costs	8,333			8,879
Prepaid expenses and other assets	2,817			2,215
Total assets	$	783,628		$	634,297
LIABILITIES AND EQUITY
Liabilities:
Notes payable	$	498,468		$	394,093
Accounts payable and accrued expenses	21,828			15,882
Tenants' security deposits	5,043			4,372
Dividends and distributions payable	7,834			6,627
Total liabilities	533,173			420,974
Commitments and contingencies:	—			—
Equity:
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2015 and December 31, 2014, respectively	—			—
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 26,977,957 and 22,835,695 issued and outstanding as of September 30, 2015 and December 31, 2014, respectively	27			23
Additional paid-in capital	358,136			304,078
Accumulated deficit	(111,263		)	(93,938		)
Accumulated other comprehensive loss	(646		)	(91		)
Total Whitestone REIT shareholders' equity	246,254			210,072
Noncontrolling interest in subsidiary	4,201			3,251
Total equity	250,455			213,323
Total liabilities and equity	$	783,628		$	634,297

See accompanying notes to Consolidated Financial Statements

1

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Property revenues
Rental revenues	$	18,785		$	14,407		$	52,426		$	41,464
Other revenues	5,814			4,132			15,395			11,712
Total property revenues	24,599			18,539			67,821			53,176
Property expenses
Property operation and maintenance	4,823			4,000			13,245			11,537
Real estate taxes	3,474			2,591			9,303			7,073
Total property expenses	8,297			6,591			22,548			18,610
Other expenses (income)
General and administrative	5,687			4,212			15,170			10,751
Depreciation and amortization	5,149			3,924			14,388			11,587
Interest expense	3,740			2,762			10,664			7,525
Interest, dividend and other investment income	(73		)	(31		)	(244		)	(71		)
Total other expense	14,503			10,867			39,978			29,792
Income from continuing operations before loss on sale or disposal of assets and income taxes	1,799			1,081			5,295			4,774
Provision for income taxes	(100		)	(72		)	(274		)	(208		)
Loss on sale or disposal of assets	(148		)	—			(248		)	(111		)
Income from continuing operations	1,551			1,009			4,773			4,455
Income from discontinued operations	44			112			3			378
Income from discontinued operations	44			112			3			378
Net income	1,595			1,121			4,776			4,833
Less: Net income attributable to noncontrolling interests	25			18			78			105
Net income attributable to Whitestone REIT	$	1,570		$	1,103		$	4,698		$	4,728

See accompanying notes to Consolidated Financial Statements

2

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Basic Earnings Per Share:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.18		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.18		$	0.21
Diluted Earnings Per Share:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.17		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.17		$	0.21
Weighted average number of common shares outstanding:
Basic	26,476			22,482			23,988			22,182
Diluted	27,082			22,690			24,583			22,359
Distributions declared per common share / OP unit	$	0.2850		$	0.2850		$	0.8550		$	0.8550
Consolidated Statements of Comprehensive Income
Net income	$	1,595		$	1,121		$	4,776		$	4,833
Other comprehensive gain (loss)
Unrealized gain (loss) on cash flow hedging activities	(184		)	345			(460		)	48
Unrealized gain (loss) on available-for-sale marketable securities	(8		)	(56		)	(106		)	49
Comprehensive income	1,403			1,410			4,210			4,930
Less: Comprehensive income attributable to noncontrolling interests	22			26			69			107
Comprehensive income attributable to Whitestone REIT	$	1,381		$	1,384		$	4,141		$	4,823

See accompanying notes to Consolidated Financial Statements

3

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

(in thousands)

											Accumulated
					Additional						Other			Total			Noncontrolling
	Common Shares				Paid-In			Accumulated			Comprehensive			Shareholders'			interests					Total
	Shares		Amount		Capital			Deficit			Gain (Loss)			Equity			Units		Dollars			Equity
Balance, December 31, 2014	22,836		$	23	$	304,078		$	(93,938	)	$	(91	)	$	210,072		398		$	3,251		$	213,323
Exchange of noncontrolling interest OP units for common shares	10		—		83			—			1			84			(10	)	(84		)	—
Issuance of shares under dividend reinvestment plan	5		—		71			—			—			71			—		—			71
Issuance of common shares, net of offering costs	3,750		4		49,713			—			—			49,717			—		—			49,717
Issuance of OP units	—		—		—			—			—			—			120		1,333			1,333
Repurchase of common shares (1)	(73	)	—		(1,018		)	—			—			(1,018		)	—		—			(1,018		)
Share-based compensation	450		—		5,209			—			—			5,209			—		—			5,209
Distributions	—		—		—			(22,023		)	—			(22,023		)	—		(367		)	(22,390		)
Unrealized loss on change in value of cash flow hedge	—		—		—			—			(452		)	(452		)	—		(8		)	(460		)
Unrealized loss on change in fair value of available-for-sale marketable securities	—		—		—			—			(104		)	(104		)	—		(2		)	(106		)
Net income	—		—		—			4,698			—			4,698			—		78			4,776
Balance, September 30, 2015	26,978		$	27	$	358,136		$	(111,263	)	$	(646	)	$	246,254		508		$	4,201		$	250,455

⁽¹⁾  During the nine months ended September 30, 2015, the Company acquired common shares held by employees who tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares.

See accompanying notes to Consolidated Financial Statements

4

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income from continuing operations	$	4,773		$	4,455
Net income from discontinued operations	3			378
Net income	4,776			4,833
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,388			11,587
Amortization of deferred loan costs	902			636
Amortization of notes payable discount	222			229
Gain on sale of marketable securities	(44		)	—
Loss on sale or disposal of assets and properties	248			111
Bad debt expense	1,318			1,487
Share-based compensation	5,209			3,024
Changes in operating assets and liabilities:
Escrows and acquisition deposits	(1,445		)	(2,021		)
Accrued rent and accounts receivable	(3,583		)	(2,187		)
Unamortized lease commissions	(1,207		)	(1,109		)
Prepaid expenses and other assets	341			631
Accounts payable and accrued expenses	4,201			2,145
Tenants' security deposits	671			440
Net cash provided by operating activities	25,994			19,428
Net cash provided by operating activities of discontinued operations	3			440
Cash flows from investing activities:
Acquisitions of real estate	(147,950		)	(38,076		)
Additions to real estate	(7,954		)	(7,233		)
Proceeds from sales of marketable securities	496			—
Net cash used in investing activities	(155,408		)	(45,309		)
Net cash used in investing activities of discontinued operations	—			(183		)
Cash flows from financing activities:
Distributions paid to common shareholders	(20,791		)	(19,055		)
Distributions paid to OP unit holders	(346		)	(436		)
Proceeds from issuance of common shares, net of offering costs	49,717			6,458
Payments of exchange offer costs	—			(67		)
Proceeds from notes payable	—			28,300
Proceeds from revolving credit facility, net	105,500			15,300
Repayments of notes payable	(2,141		)	(1,736		)
Payments of loan origination costs	—			(434		)
Change in restricted cash	(86		)	—
Repurchase of common shares	(1,018		)	(24		)
Net cash provided by financing activities	130,835			28,306
Net cash used in financing activities of discontinued operations	—			(2,905		)
Net increase (decrease) in cash and cash equivalents	1,424			(223		)
Cash and cash equivalents at beginning of period	4,236			6,491
Cash and cash equivalents at end of period	$	5,660		$	6,268

See accompanying notes to Consolidated Financial Statements

5

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2015			2014
Supplemental disclosure of cash flow information:
Cash paid for interest	$	9,826		$	6,852
Cash paid for taxes	$	315		$	238
Non cash investing and financing activities:
Disposal of fully depreciated real estate	$	57		$	6,111
Financed insurance premiums	$	1,057		$	888
Value of shares issued under dividend reinvestment plan	$	71		$	71
Value of common shares exchanged for OP units	$	84		$	1,452
Change in fair value of available-for-sale securities	$	(106	)	$	49
Change in fair value of cash flow hedge	$	(460	)	$	48
Acquisition of real estate in exchange for OP units	$	1,333		$	—

See accompanying notes to Consolidated Financial Statements

6

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The use of the words “we,” “us,” “our,” “Company” or “Whitestone” refers to Whitestone REIT and our consolidated subsidiaries, except where the context otherwise requires.

1.  INTERIM FINANCIAL STATEMENTS

The consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2014 are derived from our audited consolidated financial statements as of that date.  The unaudited financial statements as of and for the period ended September 30, 2015 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to Form 10-Q.

The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of Whitestone and our subsidiaries as of September 30, 2015, and the results of operations for the three and nine month periods ended September 30, 2015 and 2014, the consolidated statements of changes in equity for the nine month period ended September 30, 2015 and cash flows for the nine month periods ended September 30, 2015 and 2014.  All of these adjustments are of a normal recurring nature.  The results of operations for the interim periods are not necessarily indicative of the results expected for a full year.  The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Business.  Whitestone was formed as a real estate investment trust (“REIT”) pursuant to the Texas Real Estate Investment Trust Act on August 20, 1998.  In July 2004, we changed our state of organization from Texas to Maryland pursuant to a merger where we merged directly with and into a Maryland REIT formed for the sole purpose of the reorganization and the conversion of each of our outstanding common shares of beneficial interest of the Texas entity into 1.42857 common shares of beneficial interest of the Maryland entity.  We serve as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership.  We currently conduct substantially all of our operations and activities through the Operating Partnership.  As the general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions.  As of September 30, 2015 and December 31, 2014, Whitestone owned and operated 70 and 63 commercial properties, respectively, in and around Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix and San Antonio.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation.  We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership.  As of September 30, 2015 and December 31, 2014, we owned a majority of the partnership interests in the Operating Partnership.  Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership.  All significant inter-company balances have been eliminated. Noncontrolling interests in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us.  Net income or loss is allocated to noncontrolling interests based on the weighted average percentage ownership of the Operating Partnership during the period.  Issuance of additional common shares of beneficial interest in Whitestone (the “common shares”) and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, common shares on a one-for-one basis (the “OP units”) changes the ownership interests of both the noncontrolling interests and Whitestone.

Basis of Accounting.  Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred.

Use of Estimates.   The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates that we use include the estimated fair values of properties acquired, the estimated useful lives for depreciable and amortizable assets and costs, the estimated allowance for doubtful accounts, the estimated fair value of interest rate swaps and the estimates supporting our impairment analysis for the carrying values of our real estate assets.  Actual results could differ from those estimates.

7

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Reclassifications.  We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation.  These reclassifications had no effect on net income, total assets, total liabilities or equity.

Restricted Cash. We classify all cash pledged as collateral to secure certain obligations and all cash whose use is limited as restricted cash. During the three months ended September 30, 2015, pursuant to the terms of our $15.1 million4.99% Note, due January 6, 2024 (See Note 6), which is collateralized by our Anthem Marketplace property, we were required by the lenders thereunder to establish a cash management account controlled by the lenders to collect all amounts generated by our Anthem Marketplace property in order to collateralize such promissory note. As a result, these amounts are reported in the consolidated statements of cash flows under cash flows from financing activities as change in restricted cash.

Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's (“FASB”) Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income.

Derivative Instruments and Hedging Activities. We occasionally utilize derivative financial instruments, principally interest rate swaps, to manage our exposure to fluctuations in interest rates. We have established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. We recognize our interest rate swaps as cash flow hedges with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Any ineffective portion of a cash flow hedges' change in fair value is recorded immediately into earnings. Our cash flow hedges are determined using Level 2 inputs under ASC 820. Level 2 inputs represent quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations whose inputs are observable. As of September 30, 2015, we consider our cash flow hedges to be highly effective.

Development Properties. Land, buildings and improvements are recorded at cost. Expenditures related to the development of real estate are carried at cost which includes capitalized carrying charges and development costs. Carrying charges (interest, real estate taxes, loan fees, and direct and indirect development costs related to buildings under construction), are capitalized as part of construction in progress. The capitalization of such costs ceases when the property, or any completed portion, becomes available for occupancy. For the three months ended September 30, 2015, approximately $25,000 and $16,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2015, approximately $83,000 and $53,000 in interest expense and real estate taxes, respectively, were capitalized. For the three months ended September 30, 2014, approximately $26,000 and $15,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2014, approximately $77,000 and $47,000 in interest expense and real estate taxes, respectively, were capitalized.

Share-Based Compensation.   From time to time, we award nonvested restricted common share awards or restricted common share unit awards, which may be converted into common shares, to executive officers and employees under our 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”).  The vast majority of the awarded shares and units vest when certain performance conditions are met.  We recognize compensation expense when achievement of the performance conditions is probable based on management's most recent estimates using the fair value of the shares as of the grant date. We recognized $1,859,000 and $1,485,000 in share-based compensation for the three months ended September 30, 2015 and 2014, respectively, and we recognized $5,202,000 and $3,092,000 in share-based compensation for the nine months ended September 30, 2015 and 2014, respectively.

8

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Noncontrolling Interests.  Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, we have reported noncontrolling interests in equity on the consolidated balance sheets but separate from Whitestone's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Whitestone and noncontrolling interests.  The consolidated statement of changes in equity is included for quarterly financial statements, including beginning balances, activity for the period and ending balances for shareholders' equity, noncontrolling interests and total equity.

See our Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion on significant accounting policies.

Recent Accounting Pronouncements.  In April 2014, the FASB issued guidance updating the criteria for reporting the disposal of a component of an entity as a discontinued operation. This guidance was effective for reporting periods beginning on or after December 15, 2014 with early adoption permitted only for disposals that have not been reported in financial statements previously issued or available for issuance. We have adopted the guidance beginning with the year ended December 31, 2014.

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This guidance is effective retrospectively for reporting periods beginning on or after December 15, 2015 with early adoption permitted only for financial statements that have not been previously issued. We are currently in the process of evaluating the impact of adoption on our consolidated balance sheets.

3. MARKETABLE SECURITIES

All of our marketable securities were classified as available-for-sale securities as of September 30, 2015 and December 31, 2014. Available-for-sale securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	654	$	—	$	(240	)	$	414
Total available-for-sale securities	$	654	$	—	$	(240	)	$	414

	December 31, 2014
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	1,106	$	—	$	(133	)	$	973
Total available-for-sale securities	$	1,106	$	—	$	(133	)	$	973

During the three months ended September 30, 2015, no available-for-sale securities were sold and during the nine months ended September 30, 2015, available-for-sale securities were sold for total proceeds of $496,000. The gross realized gain on these sales during the nine months ended September 30, 2015 were $44,000. During the three and nine months ended September 30, 2014, no available-for-sale securities were sold. For the purpose of determining gross realized gains and losses, the cost of securities sold is based on specific identification. A net unrealized holding loss on available-for-sale securities in the amount of $240,000 and $180,000 for the nine months ended September 30, 2015 and 2014, respectively, has been included in accumulated other comprehensive income.

9

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

4. ACCRUED RENTS AND ACCOUNTS RECEIVABLE, NET

Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands):

	September 30, 2015			December 31, 2014
Tenant receivables	$	9,855		$	7,998
Accrued rents and other recoveries	10,237			8,800
Allowance for doubtful accounts	(5,993		)	(4,964		)
Total	$	14,099		$	11,834

5. UNAMORTIZED LEASE COMMISSIONS AND LOAN COSTS

Costs which have been deferred consist of the following (in thousands):

	September 30, 2015			December 31, 2014
Lease commissions	$	6,566		$	5,936
Deferred financing cost	5,821			5,785
Total cost	12,387			11,721
Less: lease commissions accumulated amortization	(2,684		)	(2,373		)
Less: deferred financing cost accumulated amortization	(1,370		)	(469		)
Total cost, net of accumulated amortization	$	8,333		$	8,879

6. DEBT

Certain subsidiaries of Whitestone are the borrowers under various financing arrangements. These subsidiaries are separate legal entities and their respective assets and credit are not available to satisfy the debt of Whitestone or any of its other subsidiaries.

10

Debt consisted of the following as of the dates indicated (in thousands):

Description	September 30, 2015		December 31, 2014
Fixed rate notes
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)	$	10,280	$	10,460
$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 (2)	50,000		50,000
$37.0 million 3.76% Note, due December 1, 2020	35,386		36,090
$6.5 million 3.80% Note, due January 1, 2019	6,232		6,355
$19.0 million 4.15% Note, due December 1, 2024	19,000		19,000
$20.2 million 4.28% Note, due June 6, 2023	20,121		20,200
$14.0 million 4.34% Note, due September 11, 2024	14,000		14,000
$14.3 million 4.34% Note, due September 11, 2024	14,300		14,300
$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)	7,886		7,888
$2.6 million 5.46% Note, due October 1, 2023	2,559		2,583
$11.1 million 5.87% Note, due August 6, 2016	11,382		11,607
$0.9 million 2.97% Note, due November 28, 2015	212		—
Floating rate notes
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4)	225,600		120,100
$50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5)	50,000		50,000
	$	498,468	$	394,093

⁽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 previous unsecured revolving credit facility at 0.84%. On October 30, 2015, the maturity date of this loan was extended to October 30, 2020 (See Note 15).

⁽³⁾  Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term. As part of our acquisition of Paradise Plaza in August 2012, we recorded a discount on the note of $1.3 million, which amortizes into interest expense over the life of the loan and results in an imputed interest rate of 4.13%.

⁽⁴⁾  On October 30, 2015, the maturity date of the Revolver (as defined below) was extended to October 30, 2019 and $100 million of borrowings under the Revolver (as defined below) was converted to a new term loan under the Facility (as defined below) with a rate of LIBOR plus 1.65% to 2.25% and a maturity date of October 30, 2022 (See Note 15).

⁽⁵⁾  On October 30, 2015, the maturity date of this loan was extended to January 29, 2021 (See Note 15).

On December 24, 2014, we assumed a $2.6 million promissory note as part of our acquisition of the hard corner at Village Square at Dana Park (See Note 14). The 5.46% fixed interest rate note matures October 1, 2023.

On November 26, 2014, we, operating through our subsidiary, Whitestone Headquarters Village, LLC, a Delaware limited liability company, entered into a $19.0 million promissory note (the “Headquarters Note”), with a fixed interest rate of 4.15% payable to Morgan Stanley Bank, N.A. and a maturity date of December 1, 2024. Proceeds from the Headquarters Note were used to repay a portion of the Facility (as defined below).

11

On November 7, 2014, we, through our Operating Partnership, entered into an unsecured revolving credit facility (the “Facility”) with the lenders party thereto, with BMO Capital Markets, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and U.S. Bank, National Association, as co-lead arrangers and joint book runners, and Bank of Montreal, as administrative agent (the “Agent”). The Facility amended and restated our previous unsecured revolving credit facility. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital. We intend to use the additional proceeds from the Facility for general corporate purposes, including property acquisitions, debt repayment, capital expenditure, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital.

The Facility is comprised of three tranches:

• $400 million unsecured revolving credit facility (the “Revolver”);

• $50 million unsecured term loan (the “Term Loan 1”); and

• $50 million unsecured term loan (the “Term Loan 2”).

The Facility includes an accordion feature that will allow the Operating Partnership to increase the borrowing capacity to $700 million, upon the satisfaction of certain conditions. The Revolver will mature on November 7, 2018, with an option to extend for one additional year to November 7, 2019, subject to certain conditions, including payment of an extension fee. The Term Loan 1 will mature on February 17, 2017, and the Term Loan 2 will mature on November 7, 2019.

Borrowings under the Facility accrue interest (at the Operating Partnership's option) at a Base Rate or an Adjusted LIBOR plus an applicable margin based upon our then existing leverage. The applicable margin for Adjusted LIBOR borrowings ranges from 1.40% to 1.95% for the Revolver and 1.35% to 1.90% for the term loans. Base Rate means the higher of: (a) the Agent's prime commercial rate, (b) the sum of (i) the average rate quoted by the Agent by two or more federal funds brokers selected by the Agent for sale to the Agent at face value of federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1.00%, and (c) the LIBOR rate for such day plus 1.00%. Adjusted LIBOR means LIBOR divided by one minus the Eurodollar Reserve Percentage. The Eurodollar Reserve Percentage means the maximum reserve percentage at which reserves are imposed by the Board of Governors of the Federal Reserve System on eurocurrency liabilities.

We serve as the guarantor for funds borrowed by the Operating Partnership under the Facility. The Facility contains customary terms and conditions, including, without limitation, affirmative and negative covenants such as information reporting requirements, maximum secured indebtedness to total asset value, minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges, and maintenance of a minimum net worth. The Facility also contains customary events of default with customary notice and cure, including, without limitation, nonpayment, breach of covenant, misrepresentation of representations and warranties in a material respect, cross-default to other major indebtedness, change of control, bankruptcy and loss of REIT tax status. As of September 30, 2015, we were in compliance with all covenants under the Facility.

As of September 30, 2015, $325.6 million was drawn on the Facility, and our remaining borrowing capacity was $174.4 million. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and retenanting of properties in our portfolio and working capital. On October 30, 2015, we, through our Operating Partnership, entered into the first amendment to the Facility. See Note 15.

On September 3, 2014, we, operating through our subsidiary, Whitestone Pecos Ranch, LLC, a Delaware limited liability company, entered into a $14.0 million promissory note (the “Pecos Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Pecos Note were used to repay a portion of our previous unsecured revolving credit facility.

On August 26, 2014, we, operating through our subsidiary, Whitestone Shops at Starwood, LLC, a Delaware limited liability company, entered into a $14.3 million promissory note (the “Starwood Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Starwood Note were used to repay a portion of our previous unsecured revolving credit facility.

12

As of September 30, 2015, our $172.7 million in secured debt was collateralized by 20 properties with a carrying value of $214.4 million.  Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties.  As of September 30, 2015, we were in compliance with all loan covenants.

Scheduled maturities of our outstanding debt as of September 30, 2015 were as follows (in thousands):

Year	Amount Due
2015	$	730
2016	13,269
2017	60,212
2018	237,736
2019	58,049
Thereafter	128,472
Total	$	498,468

7.  DERIVATIVES AND HEDGING ACTIVITIES

The fair value of our interest rate swaps is as follows (in thousands):

	Balance Sheet Location	Estimated Fair Value
Interest rate swaps:
September 30, 2015	Accounts payable and accrued expenses	$	1,212
December 31, 2014	Accounts payable and accrued expenses	$	1,016

A summary of our interest rate swap activity is as follows (in thousands):

	Amount Recognized as Comprehensive Income (Loss)			Location of Loss Recognized in Earnings	Amount of Loss Recognized in Earnings (1)
Three months ended September 30, 2015	$	(184	)	Interest expense	$	(207	)
Three months ended September 30, 2014	$	345		Interest expense	$	(243	)
Nine months ended September 30, 2015	$	(460	)	Interest expense	$	(617	)
Nine months ended September 30, 2014	$	48		Interest expense	$	(625	)

⁽¹⁾  We did not recognize any ineffective portion of our interest rate swaps in earnings for the three and nine months ended September 30, 2015 and 2014.

8.  EARNINGS PER SHARE

Basic earnings per share for our common shareholders is calculated by dividing income from continuing operations excluding amounts attributable to unvested restricted shares and the net income attributable to noncontrolling interests by our weighted average common shares outstanding during the period.  Diluted earnings per share is computed by dividing the net income attributable to common shareholders excluding amounts attributable to unvested restricted shares and the net income attributable to noncontrolling interests by the weighted average number of common shares including any dilutive unvested restricted shares.

13

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Certain of our performance-based restricted common shares are considered participating securities that require the use of the two-class method for the computation of basic and diluted earnings per share.  During the three months ended September 30, 2015 and 2014, 435,440 and 425,080 OP units, respectively, were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive, and during the nine months ended September 30, 2015 and 2014, 406,277 and 495,280 OP units, respectively, were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive.

For the three months ended September 30, 2015 and 2014, distributions of $139,000 and $78,000, respectively, were made to holders of certain restricted common shares, $9,000 and $24,000, respectively, of which were charged against earnings. For the nine months ended September 30, 2015 and 2014, distributions of $427,000 and $195,000, respectively, were made to holders of certain restricted common shares, $27,000 and $68,000, respectively, of which were charged against earnings. See Note 11 for information related to restricted common shares under the 2008 Plan.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2015			2014			2015			2014
Numerator:
Income from continuing operations	$	1,551		$	1,009		$	4,773		$	4,455
Less: Net income attributable to noncontrolling interests	(25		)	(15		)	(78		)	(97		)
Distributions paid on unvested restricted shares	(130		)	(54		)	(400		)	(127		)
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	1,396			940			4,295			4,231
Income from discontinued operations	44			112			3			378
Less: Net income attributable to noncontrolling interests	—			(3		)	—			(8		)
Income from discontinued operations attributable to Whitestone REIT	44			109			3			370
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	1,440		$	1,049		$	4,298		$	4,601
Denominator:
Weighted average number of common shares - basic	26,476			22,482			23,988			22,182
Effect of dilutive securities:
Unvested restricted shares	606			208			595			177
Weighted average number of common shares - dilutive	27,082			22,690			24,583			22,359
Earnings Per Share:
Basic:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.18		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.18		$	0.21
Diluted:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.17		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.17		$	0.21

9. INCOME TAXES

Federal income taxes are not provided because we intend to and believe we qualify as a REIT under the provisions of the Internal Revenue Code (the “Code”) and because we have distributed and intend to continue to distribute all of our taxable income to our shareholders.  As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our shareholders and meet certain income sources and investment restriction requirements.  In addition, REITs are subject to a number of organizational and operational requirements.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.

Taxable income differs from net income for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and rental revenue. 

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

We are subject to the Texas Margin Tax, which is computed by applying the applicable tax rate (1% for us) to the profit margin, which generally will be determined for us as total revenue less a 30% standard deduction.  Although the Texas Margin Tax is not an income tax, FASB ASC 740, “Income Taxes” applies to the Texas Margin Tax.  For the three months ended September 30, 2015 and 2014, we recognized approximately $104,000 and $71,000 in margin tax provision, respectively, and for the nine months ended September 30, 2015 and 2014, we recognized approximately $292,000 and $180,000 in margin tax provision, respectively.

10.  EQUITY

Common Shares

Under our declaration of trust, as amended, we have authority to issue up to 400,000,000 common shares of beneficial interest, $0.001 par value per share, and up to 50,000,000 preferred shares of beneficial interest, $0.001 par value per share.

Equity Offerings

On June 26, 2015, we completed the sale of 3,750,000 common shares, $0.001 par value per share, at a purchase price of $13.3386 per share. Total net proceeds from the offering, after deducting offering expenses, were approximately $49.7 million, which we contributed to the Operating Partnership in exchange for OP units. The Operating Partnership used the net proceeds from this offering to repay a portion of the Facility and for general corporate purposes.

On June 19, 2013, we entered into five equity distribution agreements for an at-the-market distribution program.  On August 14, 2013, we entered into a sixth equity distribution agreement on substantially similar terms as the existing equity distribution agreements and amended the existing equity distribution agreements in order to add an additional placement agent (together, the “2013 equity distribution agreements”). Pursuant to the terms and conditions of the 2013 equity distribution agreements, we could issue and sell up to an aggregate of $50 million of our common shares. Actual sales would depend on a variety of factors to be determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and were made in transactions that were deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). We had no obligation to sell any of our common shares, and could at any time suspend offers under the 2013 equity distribution agreements or terminate the 2013 equity distribution agreements. During the three and nine months ended September 30, 2015, we did not sell any common shares under the 2013 equity distribution program. During the three and nine months ended September 30, 2014, we sold 377,983 common shares under the 2013 equity distribution program, with net proceeds to us of approximately $5.3 million. In connection with such sales, we paid compensation of $0.1 million to the placement agents.

On June 4, 2015, we entered into nine amended and restated equity distribution agreements (the “2015 equity distribution agreements”). Pursuant to the terms and conditions of the 2015 equity distribution agreements, we can issue and sell up to an aggregate of $50 million of our common shares. Actual sales will depend on a variety of factors to be determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and will be made in transactions that will be deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act. We have no obligation to sell any of our common shares, and can at any time suspend offers under the 2015 equity distribution agreements or terminate the 2015 equity distribution agreements. We have not sold any common shares under the 2015 equity distribution agreements.

Operating Partnership Units

Substantially all of our business is conducted through our Operating Partnership.  We are the sole general partner of the Operating Partnership.  As of September 30, 2015, we owned a 98.1% interest in the Operating Partnership.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Limited partners in the Operating Partnership holding OP units have the right to convert their OP units into cash or, at our option, common shares at a ratio of one OP unit for one common share.  Distributions to OP unit holders are paid at the same rate per unit as distributions per share to holders of Whitestone common shares.  As of September 30, 2015 and December 31, 2014, there were 27,364,852 and 22,926,599 OP units outstanding, respectively.  We owned 26,856,737 and 22,528,207 OP units as of September 30, 2015 and December 31, 2014, respectively. The balance of the OP units is owned by third parties, including certain trustees.  Our weighted average share ownership in the Operating Partnership was approximately 98.4% and 98.2% for the three months ended September 30, 2015 and 2014, respectively, and 98.4% and 97.8% for the nine months ended September 30, 2015 and 2014, respectively. During the three months ended September 30, 2015 and 2014, 1,693 and 64,226 OP units, respectively, were redeemed for an equal number of common shares, and during thenine months ended September 30, 2015 and 2014, 10,277 and 160,060 OP units, respectively, were redeemed for an equal number of common shares.

Distributions

The following table summarizes the cash distributions paid or payable to holders of common shares and to holders of noncontrolling OP units during each quarter during 2014 and the nine months ended September 30, 2015 (in thousands, except per share/unit data):

	Common Shares				Noncontrolling OP Unit Holders				Total
Quarter Paid	Distributions Per Common Share		Total Amount Paid		Distributions Per OP Unit		Total Amount Paid		Total Amount Paid
2015
Third Quarter	$	0.2850	$	7,664	$	0.2850	$	122	$	7,786
Second Quarter	0.2850		6,601		0.2850		111		6,712
First Quarter	0.2850		6,526		0.2850		113		6,639
Total	$	0.8550	$	20,791	$	0.8550	$	346	$	21,137
2014
Fourth Quarter	$	0.2850	$	6,484	$	0.2850	$	114	$	6,598
Third Quarter	0.2850		6,457		0.2850		126		6,583
Second Quarter	0.2850		6,367		0.2850		152		6,519
First Quarter	0.2850		6,231		0.2850		158		6,389
Total	$	1.1400	$	25,539	$	1.1400	$	550	$	26,089

11.  INCENTIVE SHARE PLAN

On July 29, 2008, our shareholders approved the 2008 Plan. On December 22, 2010, our board of trustees amended the 2008 Plan to allow for awards in or related to Class B common shares pursuant to the 2008 Plan. On June 27, 2012, our Class B common shares were redesignated as “common shares.” The 2008 Plan, as amended, provides that awards may be made with respect to common shares of Whitestone or OP units, which may be converted into cash or, at our option, common shares of Whitestone. The maximum aggregate number of common shares that may be issued under the 2008 Plan is increased upon each issuance of common shares by Whitestone so that at any time the maximum number of shares that may be issued under the 2008 Plan shall equal 12.5% of the aggregate number of common shares of Whitestone and OP units issued and outstanding (other than shares and/or OP units issued to or held by Whitestone).

17

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The Compensation Committee of our board of trustees administers the 2008 Plan, except with respect to awards to non-employee trustees, for which the 2008 Plan is administered by our board of trustees.  The Compensation Committee is authorized to grant share options, including both incentive share options and non-qualified share options, as well as share appreciation rights, either with or without a related option. The Compensation Committee is also authorized to grant restricted common shares, restricted common share units, performance awards and other share-based awards. 

On April 2, 2014, the Compensation Committee approved the modification of the vesting provisions with respect to awards of an aggregate of 633,704 restricted common shares and restricted common share units for 51 of our employees. The modified time-based shares will vest annually in three equal installments. The modified performance-based restricted common shares and restricted common share units were modified to include performance-based vesting based on achievement of certain absolute financial goals, as well as one to two years of time-based vesting post achievement of financial goals. Continued employment is required through the applicable vesting date. Additionally, 2,049,116 restricted performance-based common share units were granted with the same vesting conditions as the modified performance-based grants described above. If the performance targets are not met prior to December 31, 2018, any unvested performance-based restricted common shares and restricted common units will be forfeited.

On June 30, 2015, the Compensation Committee approved the grant of an aggregate of 143,000 time-based restricted common share units to James C. Mastandrea and David K. Holeman.

A summary of the share-based incentive plan activity as of and for the nine months ended September 30, 2015 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2015	2,411,068		$	14.45
Granted	318,630		13.53
Vested	(266,594	)	14.36
Forfeited	(99,269	)	14.49
Non-vested at September 30, 2015	2,363,835		$	14.33
Available for grant at September 30, 2015	963,401

A summary of our non-vested and vested shares activity for the nine months ended September 30, 2015 and years ended December 31, 2014, 2013, 2012 and 2011 is presented below:

	Shares Granted			Shares Vested
	Non-Vested Shares Issued	Weighted Average Grant-Date Fair Value		Vested Shares		Total Vest-Date Fair Value
						(in thousands)
Nine Months Ended September 30, 2015	318,630	$	13.53	(266,594	)	$	3,829
Year Ended December 31, 2014	2,058,930	14.40		(133,774	)	1,721
Year Ended December 31, 2013	328,005	15.43		(15,270	)	224
Year Ended December 31, 2012	99,700	13.03		(16,208	)	223
Year Ended December 31, 2011	—	—		(5,169	)	—

Total compensation recognized in earnings for share-based payments was $1,859,000 and $1,485,000 for the three months ended September 30, 2015 and 2014, respectively, and $5,202,000 and $3,092,000 for the nine months ended September 30, 2015 and 2014, respectively.

18

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Based on our current financial projections, we expect approximately 82%of the unvested awards to vest over the next42months. As ofSeptember 30, 2015, there was approximately $10.8 million in unrecognized compensation cost related to outstanding non-vested performance-based shares, which are expected to vest over a period of 42 months and approximately $4.2 million in unrecognized compensation cost related to outstanding non-vested time-based shares, which are expected to be recognized over a period of approximately 18 months beginning on October 1, 2015.

We expect to record approximately $7.1 millionin non-cash share-based compensation expense in 2015 and$13.2 millionsubsequent to 2015. The unrecognized share-based compensation cost is expected to vest over a weighted average period of28months.The dilutive impact of the performance-based shares will be included in the denominator of the earnings per share calculation beginning in the period that the performance conditions are expected to be met.

12. GRANTS TO TRUSTEES

On October 24, 2014, each of our four independent trustees and one trustee emeritus was granted 1,500 common shares, which vested immediately. The 7,500 common shares granted to our trustees had a grant date fair value of $14.53 per share. On December 9, 2014, two of our independent trustees elected to receive a total of 2,314 common shares with a grant date fair value of $14.69 in lieu of cash for board fees. The fair value of the shares granted were determined using quoted prices available on the date of grant.

13. SEGMENT INFORMATION

Historically, our management has not differentiated results of operations by property type or location and, therefore, does not present segment information.

14. REAL ESTATE

Property Acquisitions. On August 28, 2015, we acquired the hard corner at our Gilbert Tuscany Village property for approximately $1.7 million in cash and net prorations. The 14,603 square foot single-tenant property was vacant at the time of purchase and is located in Gilbert, Arizona.

On August 26, 2015, we acquired two parcels of undeveloped land totaling 3.12 acres for 120,000 OP units. The OP units, are convertible on a one-for-one basis for Whitestone REIT common shares, subject to certain restrictions. The undeveloped land parcels are adjacent to our Keller Place property.

On August 26, 2015, we acquired Keller Place, a property that meets our Community Centered Property™ strategy, for approximately $12.0 million in cash and net prorations. The 93,541 square foot property was 92% leased at the time of purchase and is located in the Keller suburb of Fort Worth, Texas.

On August 26, 2015, we acquired Quinlan Crossing, a property that meets our Community Centered Property™ strategy, for approximately $37.5 million in cash and net prorations. The 109,892 square foot property was 95% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village North, a property that meets our Community Centered Property™ strategy, for approximately $12.5 million in cash and net prorations. The 27,045 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village South, a property that meets our Community Centered Property™ strategy, for approximately $32.5 million in cash and net prorations. The 90,101 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On May 27, 2015, we acquired Davenport Village, a property that meets our Community Centered Property™ strategy, for approximately $45.5 million in cash and net prorations. The 128,934 square foot property was 85% leased at the time of purchase and is located in Austin, Texas.

19

WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

On March 31, 2015, we acquired City View Village, a property that meets our Community Centered Property™ strategy, for approximately $6.3 million in cash and net prorations. The 17,870 square foot property was 100% leased at the time of purchase and is located in San Antonio, Texas.

On December 24, 2014, we acquired the hard corner at our Village Square at Dana Park property for approximately $4.7 million, in exchange for the assumption of a $2.6 million non-recourse loan and cash of $2.1 million. The 12,047 square foot property was 88% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona.

On December 24, 2014, we acquired The Shops at Williams Trace, a property that meets our Community Centered Property™ strategy, for approximately $20.2 million in cash and net prorations. The 132,991 square foot property was 87% leased at the time of purchase and is located in Sugar Land, Texas.

On December 24, 2014, we acquired Williams Trace Plaza, a property that meets our Community Centered Property™ strategy, for approximately $20.4 million in cash and net prorations. The 129,222 square foot property was 95% leased at the time of purchase and is located in Sugar Land, Texas.

On December 19, 2014, we acquired a 1.39 acre parcel of undeveloped land for $0.9 million in cash and net prorations. The undeveloped land parcel is adjacent to our Fulton Ranch Towne Center property.

On November 5, 2014, we acquired Fulton Ranch Towne Center, a property that meets our Community Centered Property™strategy, for approximately$29.3 millionin cash and net prorations. The113,281square foot property was86%leased at the time of purchase and is located in Chandler, Arizona.

On November 5, 2014, we acquired The Promenade at Fulton Ranch, a property that meets our Community Centered Property™strategy, for approximately$18.6 millionin cash and net prorations. The98,792square foot property was76%leased at the time of purchase and is located in Chandler, Arizona.

On September 19, 2014, we acquired The Strand at Huebner Oaks, a property that meets our Community Centered Property™ strategy, for approximately $18.0 million in cash and net prorations. The 73,920 square foot property was 90% leased at the time of purchase and is located in San Antonio, Texas.

On July 1, 2014, we acquired Heritage Trace Plaza, a property that meets our Community Centered Property™strategy, for approximately$20.1 millionin cash and net prorations. The70,431square foot property was98%leased at the time of purchase and is located in Fort Worth, Texas.

Property Dispositions. On December 31, 2014, we completed the sale of three office buildings (Zeta, Royal Crest and Featherwood) located in the Clear Lake suburb of Houston, Texas, for $10.3 million. This disposition was pursuant to our strategy of recycling capital by disposing of non-core properties that do not fit our Community Centered Property™ strategy. As part of the transaction, we provided short-term seller financing of $2.5 million. We recorded a gain on sale of $4.4 million, including recognizing a $1.9 million gain on sale for the year ended December 31, 2014 and deferring the remaining $2.5 million gain on sale to be recognized upon receipt of principal payments on the financing provided by us.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The operating results for properties classified as discontinued operations consists of the following (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Property revenues	$	43		$	389	43			1,213
Property expenses	—			201		41			545
Depreciation and amortization	—			74		—			227
Interest expense	—			—		—			58
Provision for income taxes	—			2		—			7
Gain on sale or disposal of assets	(1		)	—		(1		)	(2		)
Income from discontinued operations	$	44		$	112	$	3		$	378

15. SUBSEQUENT EVENTS

On October 30, 2015, we, through our Operating Partnership, entered into the first amendment to the Facility (the “First Amendment”). Pursuant to the First Amendment, we made the following amendments to the Facility:

• extended the maturity date of the Revolver to October 30, 2019 from November 7, 2018;

• converted $100 million of outstanding borrowings under the Revolver to a new $100 million unsecured term loan under the Facility (“Term Loan 3”) with a maturity date of October 30, 2022.

• extended the maturity date of Term Loan 1 to October 30, 2020 from February 17, 2017; and

• extended the maturity date of Term Loan 2 to January 29, 2021 from November 7, 2019.

Borrowings under Term Loan 3 accrue interest (at the Operating Partnership's option) at a Base Rate or an Adjusted LIBOR plus an applicable margin based upon our then existing leverage. The applicable margin for Adjusted LIBOR borrowings ranges from 1.65% to 2.25% for Term Loan 3.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q (the “Report”), and the consolidated financial statements and the notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2014.  For more detailed information regarding the basis of presentation for the following information, you should read the notes to the unaudited consolidated financial statements included in this Report.

This Report contains forward-looking statements within the meaning of the federal securities laws, including discussion and analysis of our financial condition, anticipated capital expenditures required to complete projects, amounts of anticipated cash distributions to our shareholders in the future and other matters.  These forward-looking statements are not historical facts but are the intent, belief or current expectations of our management based on its knowledge and understanding of our business and industry.  Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “potential,” “predicts,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or the negative of such terms and variations of these words and similar expressions, although not all forward-looking statements include these words.  These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false.  You are cautioned not to place undue reliance on forward-looking statements, which reflect our management's view only as of the date of this Report.  We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.  Factors that could cause actual results to differ materially from any forward-looking statements made in this Report include:

• the imposition of federal taxes if we fail to qualify as a REIT in any taxable year or forego an opportunity to ensure REIT status;

• uncertainties related to the national economy, the real estate industry in general and in our specific markets;

• legislative or regulatory changes, including changes to laws governing REITs;

• adverse economic or real estate developments in Texas, Arizona or Illinois;

• increases in interest rates and operating costs;

• availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures;

• decreases in rental rates or increases in vacancy rates;

• litigation risks;

• lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants;

• our inability to renew tenants or obtain new tenants upon the expiration of existing leases;

• our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; and

• the need to fund tenant improvements or other capital expenditures out of operating cash flow.

The forward-looking statements should be read in light of these factors and the factors identified in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2014, as previously filed with the Securities and Exchange Commission (“SEC”) and of this Report below.

Overview

We are a fully integrated real estate company that owns, redevelops, repositions, leases, manages and operates Community Centered Properties^TM .  We define Community Centered Properties^TM as visibly located properties in established or developing culturally diverse neighborhoods in our target markets.  Founded in 1998, we are internally managed with a portfolio of commercial properties in Texas, Arizona and Illinois.

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In October 2006, our current management team joined the Company and adopted a strategic plan to acquire, redevelop, own and operate Community Centered Properties^TM.  We market, lease and manage our centers to match tenants with the shared needs of the surrounding neighborhood.  Those needs may include specialty retail, grocery, restaurants and medical, educational and financial services.  Our goal is for each property to become a Whitestone-branded business center or retail community that serves a neighboring five-mile radius around our property.  We employ and develop a diverse group of associates who understand the needs of our multicultural communities and tenants.

We serve as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership. We currently conduct substantially all of our operations and activities through the Operating Partnership. As the general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions.

As of September 30, 2015, we owned and operated 70 commercial properties consisting of:

Operating Portfolio

• 45 retail properties containing approximately 3.9 million square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of $578.2 million;

• four office properties containing approximately 0.5 million square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of $36.4 million; and

• 11 office/flex properties containing approximately 1.2 million square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of $37.0 million.

Redevelopment, New Acquisitions Portfolio

• four retail properties containing approximately 0.4 million square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of $85.1 million; and

• six parcels of land held for future development having a total carrying value of $10.0 million.

As of September 30, 2015, we had an aggregate of 1,445 tenants.  We have a diversified tenant base with our largest tenant comprising only 2.6% of our annualized rental revenues for the nine months ended September 30, 2015.  Lease terms for our properties range from less than one year for smaller tenants to over 15 years for larger tenants.  Our leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance.  We completed 304 new and renewal leases during the nine months ended September 30, 2015, totaling 707,993 square feet and approximately $42.8 million in total lease value.  This compares to 297 new and renewal leases totaling 678,878 square feet and approximately $41.4 million in total lease value during the same period in 2014.

We employed 88 full-time employees as of September 30, 2015.  As an internally managed REIT, we bear our own expenses of operations, including the salaries, benefits and other compensation of our employees, office expenses, legal, accounting and investor relations expenses and other overhead costs.

How We Derive Our Revenue

Substantially all of our revenue is derived from rents received from leases at our properties. We had rental income and tenant reimbursements of approximately $24.6 million and $18.5 million for the three months ended September 30, 2015 and 2014, respectively, and $67.8 million and $53.2 million for the nine months ended September 30, 2015 and 2014, respectively.

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Known Trends in Our Operations; Outlook for Future Results

Rental Income

We expect our rental income to increase year-over-year due to the addition of properties and rent increases on renewal leases. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. Over the past two years, we have seen modest improvement in the overall economy in our markets, which has allowed us to maintain overall occupancy rates, with slight increases in occupancy at certain of our properties, and to recognize modest increases in rental rates. We expect this trend to continue in 2015.

Scheduled Lease Expirations

We tend to lease space to smaller businesses that desire shorter term leases. As of September 30, 2015, approximately 20% of our gross leasable area was subject to leases that expire prior to December 31, 2016.  Over the last two years, we have renewed leases covering approximately 76% of the square footage subject to expiring leases. We routinely seek to renew leases with our existing tenants prior to their expiration and typically begin discussions with tenants as early as 18 months prior to the expiration date of the existing lease. While our early renewal program and other leasing and marketing efforts target these expiring leases, we hope to re-lease most of that space prior to expiration of the leases. In the markets in which we operate, we obtain and analyze market rental rates through review of third-party publications, which provide market and submarket rental rate data and through inquiry of property owners and property management companies as to rental rates being quoted at properties that are located in close proximity to our properties and we believe display similar physical attributes as our nearby properties. We use this data to negotiate leases with new tenants and renew leases with our existing tenants at rates we believe to be competitive in the markets for our individual properties. Due to the short term nature of our leases, and based upon our analysis of market rental rates, we believe that, in the aggregate, our current leases are at market rates. Market conditions, including new supply of properties, and macroeconomic conditions in our markets and nationally affecting tenant income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs and other matters, could adversely impact our renewal rate and/or the rental rates we are able to negotiate. We continue to monitor our tenants' operating performances as well as overall economic trends to evaluate any future negative impact on our renewal rates and rental rates, which could adversely affect our cash flow and ability to make distributions to our shareholders.

Acquisitions

We have continued to successfully grow our gross leasable area through the acquisition of additional properties, and we expect to actively pursue and consummate additional acquisitions in the foreseeable future. We believe that over the next few years we will continue to have excellent opportunities to acquire quality properties at historically attractive prices. We have extensive relationships with community banks, attorneys, title companies and others in the real estate industry, which we believe enables us to take advantage of these market opportunities and maintain an active acquisition pipeline.

Property Acquisitions

We seek to acquire commercial properties in high-growth markets. Our acquisition targets are properties that fit our Community Centered Properties^TM strategy.  We define Community Centered Properties^TM as visibly located properties in established or developing, culturally diverse neighborhoods in our target markets, primarily in and around Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix and San Antonio.  We may acquire properties in other high-growth cities in the future. We market, lease and manage our centers to match tenants with the shared needs of the surrounding neighborhood.  Those needs may include specialty retail, grocery, restaurants, medical, educational and financial services.  Our goal is for each property to become a Whitestone-branded business center or retail community that serves a neighboring five-mile radius around our property.

On August 28, 2015, we acquired the hard corner at our Gilbert Tuscany Village property for approximately $1.7 million in cash and net prorations. The 14,603 square foot single-tenant property was vacant at the time of purchase and is located in Gilbert, Arizona.

On August 26, 2015, we acquired two parcels of undeveloped land totaling 3.12 acres for 120,000 OP units. The OP units, are convertible on a one-for-one basis for Whitestone REIT common shares, subject to certain restrictions. The undeveloped land parcels are adjacent to our Keller Place property.

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On August 26, 2015, we acquired Keller Place, a property that meets our Community Centered Property™ strategy, for approximately $12.0 million in cash and net prorations. The 93,541 square foot property was 92% leased at the time of purchase and is located in the Keller suburb of Fort Worth, Texas.

On August 26, 2015, we acquired Quinlan Crossing, a property that meets our Community Centered Property™ strategy, for approximately $37.5 million in cash and net prorations. The 109,892 square foot property was 95% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village North, a property that meets our Community Centered Property™ strategy, for approximately $12.5 million in cash and net prorations. The 27,045 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village South, a property that meets our Community Centered Property™ strategy, for approximately $32.5 million in cash and net prorations. The 90,101 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On May 27, 2015, we acquired Davenport Village, a property that meets our Community Centered Property™ strategy, for approximately $45.5 million in cash and net prorations. The 128,934 square foot property was 85% leased at the time of purchase and is located in Austin, Texas.

On March 31, 2015, we acquired City View Village, a property that meets our Community Centered Property^TM strategy, for approximately $6.3 million in cash and net prorations. The 17,870 square foot property was 100% leased at the time of purchase and is located in San Antonio, Texas.

On December 24, 2014, we acquired the hard corner at our Village Square at Dana Park property for approximately $4.7 million, in exchange for the assumption of a $2.6 million non-recourse loan and cash of $2.1 million. The 12,047 square foot property was 88% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona.

On December 24, 2014, we acquired The Shops at Williams Trace, a property that meets our Community Centered Property^TM strategy, for approximately $20.2 million in cash and net prorations. The 132,991 square foot property was 87% leased at the time of purchase and is located in Sugar Land, Texas.

On December 24, 2014, we acquired Williams Trace Plaza, a property that meets our Community Centered Property^TM strategy, for approximately $20.4 million in cash and net prorations. The 129,222 square foot property was 95% leased at the time of purchase and is located in Sugar Land, Texas.

On December 19, 2014, we acquired a 1.39 acre parcel of undeveloped land for $0.9 million in cash and net prorations. The undeveloped land parcel is adjacent to our Fulton Ranch Towne Center property.

On November 5, 2014, we acquired Fulton Ranch Towne Center, a property that meets our Community Centered Property^TMstrategy, for approximately$29.3 millionin cash and net prorations. The113,281square foot property was86%leased at the time of purchase and is located in Chandler, Arizona.

On November 5, 2014, we acquired The Promenade at Fulton Ranch, a property that meets our Community Centered Property^TMstrategy, for approximately$18.6 millionin cash and net prorations. The98,792square foot property was76%leased at the time of purchase and is located in Chandler, Arizona.

On September 19, 2014, we acquired The Strand at Huebner Oaks, a property that meets our Community Centered Property^TM strategy, for approximately $18.0 million in cash and net prorations. The 73,920 square foot property was 90% leased at the time of purchase and is located in San Antonio, Texas.

On July 1, 2014, we acquired Heritage Trace Plaza, a property that meets our Community Centered Property^TMstrategy, for approximately$20.1 millionin cash and net prorations. The70,431square foot property was98%leased at the time of purchase and is located in Fort Worth, Texas.

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Leasing Activity

As of September 30, 2015, we owned 70 properties with 5,967,779 square feet of gross leasable area, which were approximately 86% occupied. Our occupancy rate for all properties was approximately 86% occupied as of both September 30, 2015 and September 30, 2014. The following is a summary of the Company's leasing activity for the nine months ended September 30, 2015:

	Number of Leases Signed	GLA Signed	Weighted Average Lease Term (2)	TI and Incentives per Sq. Ft. (3)		Contractual Rent Per Sq. Ft (4)		Prior Contractual Rent Per Sq. Ft. (5)		Straight-lined Basis Increase Over Prior Rent
Comparable (1)
Renewal Leases	170	355,493	3.0	$	1.86	$	14.94	$	13.91	13.4	%
New Leases	52	144,150	3.5	3.38		14.63		14.81		4.9	%
Total	222	499,643	3.1	$	2.30	$	14.85	$	14.17	10.9	%
	Number of Leases Signed	GLA Signed	Weighted Average Lease Term (2)	TI and Incentives per Sq. Ft. (3)		Contractual Rent Per Sq. Ft (4)
Non-Comparable
Renewal Leases	7	18,500	3.8	$	6.96	$	17.66
New Leases	75	222,945	4.8	10.48		13.62
Total	82	241,445	4.8	$	10.21	$	13.93

⁽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 lease term is determined on the basis of square footage.

⁽³⁾  Estimated amount per signed leases. Actual cost of construction may vary. Does not include first generation costs for tenant improvements (“TI”) and leasing commission costs needed for new acquisitions or redevelopment of a property to bring to operating standards for its intended use.

⁽⁴⁾  Contractual minimum rent under the new lease for the first month, excluding concessions.

⁽⁵⁾  Contractual minimum rent under the prior lease for the final month.

Contractual Expenditures

The following is a summary of the Company's capital expenditures for the three and nine months ended September 30, 2015 and 2014 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Capital expenditures:
Tenant improvements and allowances	$	1,658	$	884	$	3,762	$	3,151
Developments / redevelopments	1,145		1,187		2,771		3,203
Leasing commissions and costs	607		560		1,177		1,211
Maintenance capital expenditures	142		315		1,421		879
Total capital expenditures	$	3,552	$	2,946	$	9,131	$	8,444

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Critical Accounting Policies

In preparing the consolidated financial statements, we have made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results may differ from these estimates.  A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2014, under “Management's Discussion and Analysis of Financial Condition and Results of Operations.”There have been no significant changes to these policies during the nine months ended September 30, 2015.  For disclosure regarding recent accounting pronouncements and the anticipated impact they will have on our operations, please refer to Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2014.

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Results of Operations

Comparison of the Three Months Ended September 30, 2015 and 2014

The following table provides a summary comparison of our results of operations for the three months ended September 30, 2015 and 2014 (dollars in thousands, except per share and OP unit amounts):

	Three Months Ended September 30,
	2015			2014
Number of properties owned and operated (1)	70			59
Aggregate gross leasable area (sq. ft.) (1)	5,967,779			4,999,460
Ending occupancy rate - operating portfolio(2)	86		%	86		%
Ending occupancy rate - all properties	86		%	86		%
Total property revenues	$	24,599		$	18,539
Total property expenses	8,297			6,591
Total other expenses	14,503			10,867
Provision for income taxes	100			72
Loss on disposal of assets	148			—
Income from continuing operations	1,551			1,009
Income from discontinued operations, net of taxes	44			112
Net income	1,595			1,121
Less:  Net income attributable to noncontrolling interests	25			18
Net income attributable to Whitestone REIT	$	1,570		$	1,103
Funds from operations core (3)	$	9,452		$	6,946
Property net operating income (4)	16,302			11,948
Distributions paid on common shares and OP units	7,786			6,583
Distributions per common share and OP unit	$	0.2850		$	0.2850
Distributions paid as a percentage of funds from operations core	82		%	95		%

⁽¹⁾   Excludes 112,400 square feet of gross leasable area in three office buildings sold on December 31, 2014, Zeta, Royal Crest and Featherwood, located in Houston, Texas.

⁽²⁾   Excludes (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.

⁽³⁾   For a reconciliation of funds from operations core to net income, see “—Reconciliation of Non-GAAP Financial Measures—Funds From Operations Core (“FFO”)” below.

⁽⁴⁾   For a reconciliation of property net operating income to net income, see “—Reconciliation of Non-GAAP Financial Measures—Property Net Operating Income (“NOI”)” below.

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Property revenues. We had rental income and tenant reimbursements of approximately $24,599,000 for the three months ended September 30, 2015 as compared to $18,539,000 for the three months ended September 30, 2014, an increase of $6,060,000, or 33%. The three months ended September 30, 2015 included $5,851,000 in increased revenues from New Store operations. We define “New Stores” as properties acquired since the beginning of the period being compared. For purposes of comparing the three months ended September 30, 2015 to the three months ended September 30, 2014, New Stores include properties acquired between July 1, 2014 and September 30, 2015. Same Store revenues increased $209,000 for the three months ended September 30, 2015 as compared to the same period in the prior year. We define “Same Stores” as properties that have been owned since the beginning of the period being compared. For purposes of comparing the three months ended September 30, 2015 to the three months ended September 30, 2014, Same Stores include properties currently owned that were acquired before July 1, 2014. Same Store average occupancy increased to 85.8% for the three months ended September 30, 2015 from 85.7% for the three months ended September 30, 2014, increasing Same Store revenue $19,000. The Same Store average revenue per leased square foot increased $0.18 for the three months ended September 30, 2015 to $17.68 per leased square foot as compared to the average revenue per leased square foot of $17.50 for the three months ended September 30, 2014, resulting in an increase of Same Store revenues of $190,000.

Property expenses.  Our property expenses were approximately $8,297,000 for the three months ended September 30, 2015 as compared to $6,591,000 for the three months ended September 30, 2014, an increase of $1,706,000, or 26%.  The primary components of total property expenses are detailed in the table below (in thousands, except percentages):

	Three Months Ended September 30,
Overall Property Expenses	2015		2014		Change		% Change
Real estate taxes	$	3,474	$	2,591	$	883	34	%
Utilities	1,383		1,192		191		16	%
Contract services	1,339		1,069		270		25	%
Repairs and maintenance	709		573		136		24	%
Bad debt	551		401		150		37	%
Labor and other	841		765		76		10	%
Total property expenses	$	8,297	$	6,591	$	1,706	26	%

	Three Months Ended September 30,
Same Store Property Expenses	2015		2014		Change			% Change
Real estate taxes	$	2,395	$	2,580	$	(185	)	(7	)%
Utilities	1,211		1,191		20			2	%
Contract services	1,086		1,067		19			2	%
Repairs and maintenance	626		573		53			9	%
Bad debt	407		401		6			1	%
Labor and other	693		765		(72		)	(9	)%
Total property expenses	$	6,418	$	6,577	$	(159	)	(2	)%

	Three Months Ended September 30,
New Store Property Expenses	2015		2014		Change		% Change
Real estate taxes	$	1,079	$	11	$	1,068	Not meaningful
Utilities	172		1		171		Not meaningful
Contract services	253		2		251		Not meaningful
Repairs and maintenance	83		—		83		Not meaningful
Bad debt	144		—		144		Not meaningful
Labor and other	148		—		148		Not meaningful
Total property expenses	$	1,879	$	14	$	1,865	Not meaningful

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Real estate taxes.  Real estate taxes increased approximately $883,000, or 34%, during the three months ended September 30, 2015 as compared to the same period in 2014. Real estate taxes for New Store properties increased approximately $1,068,000 for the three months ended September 30, 2015. Same Store real estate taxes decreased approximately $185,000 during the three months ended September 30, 2015 as compared to the same period in 2014. We actively work to keep our valuations and resulting taxes low because a majority of these taxes are charged to our tenants through triple net leases, and we strive to keep these charges to our tenants as low as possible.

Utilities. Utilities expenses increased approximately $191,000, or 16%, during the three months ended September 30, 2015 as compared to the same period in 2014. Utilities expense increases attributable to New Store properties were approximately $171,000 for the three months ended September 30, 2015. Same Store utilities expenses increased approximately $20,000, during the three months ended September 30, 2015 as compared to the same period in 2014.

Contract services.  Contract services expenses increased approximately $270,000, or 25%, during the three months ended September 30, 2015 as compared to the same period in 2014. The increase in contract service expenses included $251,000 in increases for New Store properties for the three months ended September 30, 2015. Same Store contract service expenses increased approximately $19,000 during the three months ended September 30, 2015 as compared to the same period in 2014.

Repairs and maintenance. Repairs and maintenance expenses increased approximately $136,000, or 24%, during the three months ended September 30, 2015 as compared to the same period in 2014. Repairs and maintenance expenses for the three months ended September 30, 2015 included approximately $83,000 in increases for New Store properties. Same Store repairs and maintenance expenses increased approximately $53,000 during the three months ended September 30, 2015 as compared to the same period in 2014.

Bad debt.  Bad debt expenses increased approximately $150,000, or 37%, during the three months ended September 30, 2015 as compared to the same period in 2014. Bad debt expenses for the three months ended September 30, 2015 included approximately $144,000 in increases for New Store properties. Same Store bad debt increased approximately $6,000 during the three months ended September 30, 2015 as compared to the same period in 2014.

Labor and other.  Labor and other expenses increased approximately $76,000, or 10%, during the three months ended September 30, 2015 as compared to the same period in 2014. Labor and other expenses for the three months ended September 30, 2015 included approximately $148,000 in increased cost for New Store properties. Same Store labor and other expenses decreased approximately $72,000 during the three months ended September 30, 2015 as compared to the same period in 2014.

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Same Store and New Store net operating income. The components of Same Store, New Store and total property net operating income and net income are detailed in the table below (in thousands):

	Three Months Ended September 30,							Percent
	2015		2014		Change			Change
Same Store (51 properties, exclusive of land held for development)
Property revenues
Rental revenues	$	14,662	$	14,360	$	302		2	%
Other revenues	4,024		4,117		(93		)	(2	)%
Total property revenues	18,686		18,477		209			1	%
Property expenses
Property operation and maintenance	4,023		3,994		29			1	%
Real estate taxes	2,395		2,583		(188		)	(7	)%
Total property expenses	6,418		6,577		(159		)	(2	)%
Total Same Store net operating income	12,268		11,900		368			3	%
New Store (13 properties, exclusive of land held for development)
Property revenues
Rental revenues	4,123		47		4,076			Not meaningful
Other revenues	1,790		15		1,775			Not meaningful
Total property revenues	5,913		62		5,851			Not meaningful
Property expenses
Property operation and maintenance	800		6		794			Not meaningful
Real estate taxes	1,079		8		1,071			Not meaningful
Total property expenses	1,879		14		1,865			Not meaningful
Total New Store net operating income	4,034		48		3,986			Not meaningful
Total property net operating income	16,302		11,948		4,354			36	%
Less total other expenses, provision for income taxes and loss on disposal of assets	14,751		10,939		3,812			35	%
Income from continuing operations	1,551		1,009		542			54	%
Income (loss) from discontinued operations, net of taxes	44		112		(68		)	(61	)%
Net income	$	1,595	$	1,121	$	474		42	%

31

Other expenses.  Our other expenses were approximately $14,503,000 for the three months ended September 30, 2015, as compared to $10,867,000 for the three months ended September 30, 2014, an increase of $3,636,000, or 33%.  The primary components of other expenses are detailed in the table below (in thousands, except percentages):

	Three Months Ended September 30,
	2015			2014			Change			% Change
General and administrative	$	5,687		$	4,212		$	1,475		35	%
Depreciation and amortization	5,149			3,924			1,225			31	%
Interest expense	3,740			2,762			978			35	%
Interest, dividend and other investment income	(73		)	(31		)	(42		)	135	%
Total other expenses	$	14,503		$	10,867		$	3,636		33	%

General and administrative.  General and administrative expenses increased approximately $1,475,000, or 35%, for the three months ended September 30, 2015 as compared to the same period in 2014. The increase was comprised of $670,000 in legal fees expense, $374,000 in increased share-based compensation, $339,000 in increased acquisition costs, $44,000 in increased salaries and benefits, $35,000 in increased professional fees and $13,000 in other increases.

Total compensation recognized in earnings for share-based payments was $1,859,000 and $1,485,000 for the three months ended September 30, 2015 and 2014, respectively.

Based on our current financial projections, we expect approximately 82% of the unvested awards to vest over the next 42 months. As of September 30, 2015, there was approximately $10.8 million in unrecognized compensation cost related to outstanding non-vested performance-based shares, which are expected to vest over a period of 42 months and approximately $4.2 million in unrecognized compensation cost related to outstanding non-vested time-based shares, which are expected to be recognized over a period of approximately 18 months beginning on October 1, 2015.

We expect to record approximately $7.1 million in non-cash share-based compensation expense in 2015 and $13.2 million subsequent to 2015. The unrecognized share-based compensation cost is expected to vest over a weighted average period of 28 months. The dilutive impact of the performance-based shares will be included in the denominator of the earnings per share calculation beginning in the period that the performance conditions are expected to be met.

Depreciation and amortization. Depreciation and amortization increased $1,225,000, or 31%, for the three months ended September 30, 2015 as compared to the same period in 2014. Depreciation for improvements to Same Store properties increased $93,000 for the three months ended September 30, 2015 as compared to the same period in 2014. Lease commission amortization and depreciation of corporate assets increased $85,000 for the three months ended September 30, 2015 as compared to the same period in 2014. Depreciation for New Store properties increased $1,047,000.

Interest expense. Interest expense increased approximately $978,000, or 35%, for the three months ended September 30, 2015 as compared to the same period in 2014. The increase in interest expense is comprised of approximately $1,486,000 in increased interest expense resulting from a $166,771,000 increase in our average notes payable balance during the three months ended September 30, 2015 as compared to the same period in 2014, an increase in amortized loan fees included in interest expense of $69,000 for the three months ended September 30, 2015 and offset by decreased interest expense of $577,000 resulting from a decrease in the average effective interest rate on our average notes payable from 3.56% to 3.05% during the three months ended September 30, 2015 as compared to the same period in 2014.

Interest, dividend and other investment income. Interest, dividend and other investment income increased approximately $42,000, or 135%, for the three months ended September 30, 2015 as compared to the same period in 2014. The increase in interest, dividend and other investment income for the three months ended September 30, 2015 as compared to the same period in 2014 is comprised of approximately $53,000 in increased interest income and an $11,000 decrease in dividend income.

32

Discontinued operations. Discontinued operations are comprised of the three office buildings known as Zeta, Royal Crest and Featherwood, located in Houston, Texas. On December 31, 2014, we completed the sale of the three office buildings for $10.3 million. As part of the transaction, we provided short-term seller financing of $2.5 million. We recorded a gain on sale of $4.4 million, including recognizing a $1.9 million gain on sale for the year ended December 31, 2014 and deferring the remaining $2.5 million gain on sale to be recognized upon receipt of principal payments on the financing provided by us.

The primary components of discontinued operations are detailed in the table below (in thousands):

	Three Months Ended September 30,
	2015		2014
Property revenues
Rental revenues	$	43	$	404
Other revenues	—		(15		)
Total property revenues	43		389
Property expenses
Property operation and maintenance	—		157
Real estate taxes	—		44
Total property expenses	—		201
Other expenses
Interest expense	—		—
Depreciation and amortization	—		74
Total other expense	—		74
Income before loss on disposal of assets and income taxes	43		114
Provision for income taxes	—		(2		)
Gain on sale or disposal of property or assets in discontinued operations	1		—
Income from discontinued operations	$	44	$	112

33

Results of Operations

Comparison of the Nine Months Ended September 30, 2015 and 2014

The following table provides a summary comparison of our results of operations for the nine months ended September 30, 2015 and 2014 (dollars in thousands, except per share and OP unit amounts):

	Nine Months Ended September 30,
	2015			2014
Number of properties owned and operated (1)	70			59
Aggregate gross leasable area (sq. ft.) (1)	5,967,779			4,999,460
Ending occupancy rate - operating portfolio(2)	86		%	86		%
Ending occupancy rate - all properties	86		%	86		%
Total property revenues	$	67,821		$	53,176
Total property expenses	22,548			18,610
Total other expenses	39,978			29,792
Provision for income taxes	274			208
Loss on disposal of assets	248			111
Income from continuing operations	4,773			4,455
Income (loss) from discontinued operations, net of taxes	3			378
Net income	4,776			4,833
Less:  Net income attributable to noncontrolling interests	78			105
Net income attributable to Whitestone REIT	$	4,698		$	4,728
Funds from operations core (3)	$	26,099		$	20,610
Property net operating income (4)	45,273			34,566
Distributions paid on common shares and OP units	21,137			19,491
Distributions per common share and OP unit	$	0.8550		$	0.8550
Distributions paid as a percentage of funds from operations core	81		%	95		%

⁽¹⁾   Excludes 112,400 square feet of gross leasable area in three office buildings sold on December 31, 2014, Zeta, Royal Crest and Featherwood, located in Houston, Texas.

⁽²⁾   Excludes (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.

⁽³⁾   For a reconciliation of funds from operations core to net income, see “—Reconciliation of Non-GAAP Financial Measures—Funds From Operations Core (“FFO”)” below.

⁽⁴⁾   For a reconciliation of property net operating income to net income, see “—Reconciliation of Non-GAAP Financial Measures—Property Net Operating Income (“NOI”)” below.

34

Property revenues. We had rental income and tenant reimbursements of approximately $67,821,000 for the nine months ended September 30, 2015 as compared to $53,176,000 for the nine months ended September 30, 2014, an increase of $14,645,000, or 28%. The nine months ended September 30, 2015 included $13,374,000 in increased revenues from New Store operations. For purposes of comparing the nine months ended September 30, 2015 to the nine months ended September 30, 2014, New Stores include properties acquired between January 1, 2014 and September 30, 2015. Same Store revenues increased $1,271,000 for the nine months ended September 30, 2015 as compared to the same period in the prior year. For purposes of comparing the nine months ended September 30, 2015 to the nine months ended September 30, 2014, Same Stores include properties currently owned that were acquired before January 1, 2014. Same Store average occupancy was 85.6% for the nine months ended September 30, 2015 and 85.8% for the nine months ended September 30, 2014, decreasing Same Store revenues $101,000. The Same Store average revenue per leased square foot increased $0.44 for the nine months ended September 30, 2015 to $17.30 per leased square foot as compared to the average revenue per leased square foot of $16.86 for the nine months ended September 30, 2014, resulting in an increase of Same Store revenues of $1,372,000.

Property expenses.  Our property expenses were approximately $22,548,000 for the nine months ended September 30, 2015 as compared to $18,610,000 for the nine months ended September 30, 2014, an increase of $3,938,000, or 21%.  The primary components of total property expenses are detailed in the table below (in thousands, except percentages):

	Nine Months Ended September 30,
Overall Property Expenses	2015		2014		Change			% Change
Real estate taxes	$	9,303	$	7,073	$	2,230		32	%
Utilities	3,515		3,186		329			10	%
Contract services	3,849		3,218		631			20	%
Repairs and maintenance	2,039		1,584		455			29	%
Bad debt	1,351		1,456		(105		)	(7	)%
Labor and other	2,491		2,093		398			19	%
Total property expenses	$	22,548	$	18,610	$	3,938		21	%

	Nine Months Ended September 30,
Same Store Property Expenses	2015		2014		Change			% Change
Real estate taxes	$	7,151	$	6,955	$	196		3	%
Utilities	3,164		3,175		(11		)	—	%
Contract services	3,254		3,182		72			2	%
Repairs and maintenance	1,791		1,600		191			12	%
Bad debt	1,137		1,447		(310		)	(21	)%
Labor and other	2,082		2,086		(4		)	—	%
Total property expenses	$	18,579	$	18,445	$	134		1	%

	Nine Months Ended September 30,
New Store Property Expenses	2015		2014			Change		% Change
Real estate taxes	$	2,152	$	118		$	2,034	Not meaningful
Utilities	351		11			340		Not meaningful
Contract services	595		36			559		Not meaningful
Repairs and maintenance	248		(16		)	264		Not meaningful
Bad debt	214		9			205		Not meaningful
Labor and other	409		7			402		Not meaningful
Total property expenses	$	3,969	$	165		$	3,804	Not meaningful

35

Real estate taxes.  Real estate taxes increased approximately $2,230,000, or 32%, during the nine months ended September 30, 2015 as compared to the same period in 2014. Real estate taxes for New Store properties increased approximately $2,034,000 for the nine months ended September 30, 2015. Same Store real estate taxes increased approximately $196,000 during the nine months ended September 30, 2015 as compared to the same period in 2014. We actively work to keep our valuations and resulting taxes low because a majority of these taxes are charged to our tenants through triple net leases, and we strive to keep these charges to our tenants as low as possible.

Utilities. Utilities expenses increased approximately $329,000, or 10%, during the nine months ended September 30, 2015 as compared to the same period in 2014. Utilities expense increases attributable to New Store properties were approximately $340,000 for the nine months ended September 30, 2015. Same Store utilities expenses decreased approximately $11,000 during the nine months ended September 30, 2015 as compared to the same period in 2014.

Contract services.  Contract services increased approximately $631,000, or 20%, during the nine months ended September 30, 2015 as compared to the same period in 2014. The increase in contract services expenses included $559,000 in increases for New Store properties for the nine months ended September 30, 2015. Same Store contract service expenses increased approximately $72,000 during the nine months ended September 30, 2015 as compared to the same period in 2014.

Repairs and maintenance. Repairs and maintenance expenses increased approximately $455,000, or 29%, during the nine months ended September 30, 2015 as compared to the same period in 2014. Repairs and maintenance expenses for the nine months ended September 30, 2015 included approximately $264,000 in increases for New Store properties. Same Store repairs and maintenance expenses increased approximately $191,000 during the nine months ended September 30, 2015 as compared to the same period in 2014.

Bad debt.  Bad debt expenses decreased approximately $105,000, or 7%, during the nine months ended September 30, 2015 as compared to the same period in 2014. Bad debt expenses for the nine months ended September 30, 2015 included approximately $205,000 in increases for New Store properties. Same Store bad debt decreased approximately $310,000 during the nine months ended September 30, 2015 as compared to the same period in 2014.

Labor and other.  Labor and other expenses increased approximately $398,000, or 19%, during the nine months ended September 30, 2015 as compared to the same period in 2014. Labor and other expenses for the nine months ended September 30, 2015 included approximately $402,000 in increased cost for New Store properties. Same Store labor and other expenses decreased approximately $4,000 during the nine months ended September 30, 2015 as compared to the same period in 2014.

36

Same Store and New Store net operating income. The components of Same Store, New Store and total property net operating income and net income are detailed in the table below (in thousands):

	Nine Months Ended September 30,							Percent
	2015		2014		Change			Change
Same Store (52 properties, exclusive of land held for development)
Property revenues
Rental revenues	$	42,542	$	41,116	$	1,426		3	%
Other revenues	11,406		11,561		(155		)	(1	)%
Total property revenues	53,948		52,677		1,271			2	%
Property expenses
Property operation and maintenance	11,428		11,482		(54		)	—	%
Real estate taxes	7,151		6,963		188			3	%
Total property expenses	18,579		18,445		134			1	%
Total Same Store net operating income	35,369		34,232		1,137			3	%
New Store (12 properties, exclusive of land held for development)
Property revenues
Rental revenues	9,884		348		9,536			Not meaningful
Other revenues	3,989		151		3,838			Not meaningful
Total property revenues	13,873		499		13,374			Not meaningful
Property expenses
Property operation and maintenance	1,817		55		1,762			Not meaningful
Real estate taxes	2,152		110		2,042			Not meaningful
Total property expenses	3,969		165		3,804			Not meaningful
Total New Store net operating income	9,904		334		9,570			Not meaningful
Total property net operating income	45,273		34,566		10,707			31	%
Less total other expenses, provision for income taxes and loss on disposal of assets	40,500		30,111		10,389			35	%
Income from continuing operations	4,773		4,455		318			7	%
Income from discontinued operations, net of taxes	3		378		(375		)	(99	)%
Net income	$	4,776	$	4,833	$	(57	)	(1	)%

37

Other expenses.  Our other expenses were $39,978,000 for the nine months ended September 30, 2015, as compared to $29,792,000 for the nine months ended September 30, 2014, an increase of $10,186,000, or 34%.  The primary components of other expenses are detailed in the table below (in thousands, except percentages):

	Nine Months Ended September 30,
	2015			2014			Change			% Change
General and administrative	$	15,170		$	10,751		$	4,419		41	%
Depreciation and amortization	14,388			11,587			2,801			24	%
Interest expense	10,664			7,525			3,139			42	%
Interest, dividend and other investment income	(244		)	(71		)	(173		)	244	%
Total other expenses	$	39,978		$	29,792		$	10,186		34	%

General and administrative.  General and administrative expenses increased approximately $4,419,000, or 41%, for the nine months ended September 30, 2015 as compared to the same period in 2014. The increase was comprised of $2,110,000 in share-based compensation expense, $871,000 in increased legal fees, $754,000 in increased acquisition costs, $282,000 in increased salaries and benefits, $252,000 in increased office expenses and $150,000 in other expenses.

Total compensation recognized in earnings for share-based payments was $5,202,000 and $3,092,000 for the nine months ended September 30, 2015 and 2014, respectively.

Based on our current financial projections, we expect approximately 82% of the unvested awards to vest over the next 42 months. As of September 30, 2015, there was approximately $10.8 million in unrecognized compensation cost related to outstanding non-vested performance-based shares, which are expected to vest over a period of 42 months and approximately $4.2 million in unrecognized compensation cost related to outstanding non-vested time-based shares, which are expected to be recognized over a period of approximately 18 months beginning on October 1, 2015.

We expect to record approximately $7.1 million in non-cash share-based compensation expense in 2015 and $13.2 million subsequent to 2015. The unrecognized share-based compensation cost is expected to vest over a weighted average period of 28 months. The dilutive impact of the performance-based shares will be included in the denominator of the earnings per share calculation beginning in the period that the performance conditions are expected to be met.

Depreciation and amortization. Depreciation and amortization increased approximately $2,801,000, or 24%, for the nine months ended September 30, 2015 as compared to the same period in 2014. Depreciation for improvements to Same Store properties increased $213,000 for the nine months ended September 30, 2015 as compared to the same period in 2014. Lease commission amortization and depreciation of corporate assets increased $169,000 for the nine months ended September 30, 2015 as compared to the same period in 2014. Depreciation for New Store properties increased $2,419,000.

Interest expense. Interest expense increased approximately $3,139,000, or 42%, for the nine months ended September 30, 2015 as compared to the same period in 2014. The increase in interest expense is comprised of approximately $3,839,000 in increased interest expense resulting from a $152,009,000 increase in our average notes payable balance during the nine months ended September 30, 2015 as compared to the same period in 2014, an increase in amortized loan fees included in interest expense of $266,000 for the nine months ended September 30, 2015 and offset by decreased interest expense of $966,000 resulting from a decrease in the average effective interest rate on our average notes payable from 3.37% to 3.06% during nine months ended September 30, 2015 as compared to the same period in 2014.

Interest, dividend and other investment income. Interest, dividend and other investment income increased approximately $173,000, or 244%, for the nine months ended September 30, 2015 as compared to the same period in 2014. The increase in interest, dividend and other investment income for the nine months ended September 30, 2015 as compared to the same period in 2014 is comprised of approximately $143,000 in increased interest income, $44,000 in increased gains on sales of available-for-sale securities and a $14,000 decrease in dividend income.

38

Discontinued operations. Discontinued operations are comprised of the of three office buildings known as Zeta, Royal Crest and Featherwood, located in Houston, Texas. On December 31, 2014, we completed the sale of the three office buildings for $10.3 million. As part of the transaction, we provided short-term seller financing of $2.5 million. We recorded a gain on sale of $4.4 million, including recognizing a $1.9 million gain on sale for the year ended December 31, 2014 and deferring the remaining $2.5 million gain on sale to be recognized upon receipt of principal payments on the financing provided by us.

The primary components of discontinued operations are detailed in the table below (in thousands):

	Nine Months Ended September 30,
	2015		2014
Property revenues
Rental revenues	$	43	$	1,159
Other revenues	—		54
Total property revenues	43		1,213
Property expenses
Property operation and maintenance	41		422
Real estate taxes	—		123
Total property expenses	41		545
Other expenses
Interest expense	—		58
Depreciation and amortization	—		227
Total other expense	—		285
Income before loss on disposal of assets and income taxes	2		383
Provision for income taxes	—		(7		)
Gain on sale or disposal of property or assets in discontinued operations	1		2
Income from discontinued operations	$	3	$	378

39

Reconciliation of Non-GAAP Financial Measures

Funds From Operations (“FFO”)

The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) available to common shareholders computed in accordance with U.S. GAAP, excluding gains or losses from sales of operating real estate assets, impairment charges on properties held for investment and extraordinary items, plus depreciation and amortization of operating properties, including our share of unconsolidated real estate joint ventures and partnerships.  We calculate FFO in a manner consistent with the NAREIT definition.

Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using U.S. GAAP net income (loss) alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time.  Because real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself.  In addition, securities analysts, investors and other interested parties use FFO as the primary metric for comparing the relative performance of equity REITs.  

FFO should not be considered as an alternative to net income or other measurements under U.S. GAAP, as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity.  FFO does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness. Although our calculation of FFO is consistent with that of NAREIT, there can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs.

Funds From Operations Core (“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 our operating portfolio and affect the comparability of our 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. Therefore, in addition to FFO, management uses FFO Core, which we define 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 our assets. In addition, we believe that FFO Core is a useful supplemental measure for the investing community to use in comparing us to other REITs as many REITs provide some form of adjusted or modified FFO. However, there can be no assurance that FFO Core presented by us is comparable to the adjusted or modified FFO of other REITs.

Below are the calculations of FFO and FFO Core and the reconciliations to net income, which we believe is the most comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
FFO AND FFO CORE	2015		2014		2015		2014
Net income attributable to Whitestone REIT	$	1,570	$	1,103	$	4,698	$	4,728
Depreciation and amortization of real estate assets (1)	5,121		3,975		14,304		11,747
Loss on disposal of assets (1)	148		—		248		109
Net income attributable to noncontrolling interests (1)	25		18		78		105
FFO	6,864		5,096		19,328		16,689
Non cash share-based compensation expense	1,859		1,485		5,202		3,092
Acquisition costs	729		365		1,569		673
Rent support agreement payments received	—		—		—		156
FFO Core	$	9,452	$	6,946	$	26,099	$	20,610

⁽¹⁾  Includes amounts from discontinued operations.

40

Property Net Operating Income (“NOI”)

Management believes that NOI is a useful measure of our property operating performance and is useful to securities analysts in estimating the relative net asset values of REITs. We define NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Other REITs may use different methodologies for calculating NOI and, accordingly, our NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes and gain or loss on sale or disposition of assets, 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. We use NOI to evaluate our operating performance since NOI allows us to evaluate the impact that factors such as occupancy levels, lease structure, lease rates and tenant base have on our results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about our 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 our 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 and gain or loss on sale or disposition of assets, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties.

Below is the calculation of NOI and the reconciliations to net income, which we believe is the most comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
PROPERTY NET OPERATING INCOME	2015			2014			2015			2014
Net income attributable to Whitestone REIT	$	1,570		$	1,103		$	4,698		$	4,728
General and administrative expenses	5,687			4,212			15,170			10,751
Depreciation and amortization	5,149			3,924			14,388			11,587
Interest expense	3,740			2,762			10,664			7,525
Interest, dividend and other investment income	(73		)	(31		)	(244		)	(71		)
Provision for income taxes	100			72			274			208
Loss on disposal of assets	148			—			248			111
Income from discontinued operations	(44		)	(112		)	(3		)	(378		)
Net income attributable to noncontrolling interests	25			18			78			105
NOI	$	16,302		$	11,948		$	45,273		$	34,566

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of distributions to holders of our common shares and OP units, including those required to maintain our REIT status and satisfy our current quarterly distribution target of $0.2850 per share and OP unit, recurring expenditures, such as repairs and maintenance of our properties, non-recurring expenditures, such as capital improvements and tenant improvements, debt service requirements, and, potentially, acquisitions of additional properties.

     During the nine months ended September 30, 2015, our cash provided from operating activities was $25,994,000 and our total distributions were $21,137,000.  Therefore, we had cash flow from operations in excess of distributions of approximately $4,857,000. We anticipate that cash flows from operating activities and our borrowing capacity under our unsecured revolving credit facility will provide adequate capital for our working capital requirements, anticipated capital expenditures and scheduled debt payments in the short term. We also believe that cash flows from operating activities and our borrowing capacity will allow us to make all distributions required for us to continue to qualify to be taxed as a REIT for federal income tax purposes.

41

Our long-term capital requirements consist primarily of maturities under our longer-term debt agreements, development and redevelopment costs, and potential acquisitions. We expect to meet our long-term liquidity requirements with net cash from operations, long-term indebtedness, sales of common shares, issuance of OP units, sales of underperforming properties and other financing opportunities, including debt financing. We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to access the equity markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about our Company.

We expect that our rental income will increase as we continue to acquire additional properties, subsequently increasing our cash flows generated from operating activities. We intend to continue acquiring such additional properties that meet our Community Centered Property™ strategy through equity issuances and debt financing.

As discussed in Note 10 (Equity) to the accompanying consolidated financial statements, on June 26, 2015, we completed the sale of 3,750,000 common shares at a purchase price of $13.3386 per share. Total net proceeds from the offering, after deducting offering expenses, were approximately $49.7 million, which we contributed to the Operating Partnership in exchange for OP units. The Operating Partnership used the net proceeds from this offering to repay a portion of the Facility and for general corporate purposes. In addition, on June 4, 2015, we entered into the 2015 equity distribution agreements, as discussed in Note 10 to the accompanying consolidated financial statements.  Pursuant to the terms and conditions of the 2015 equity distribution agreements, we can issue and sell up to an aggregate of $50 million of our common shares into the existing trading market at current market prices or at negotiated prices through the placement agents over a period of time and from time to time. We have not sold any common shares under the 2015 equity distribution agreements.  We anticipate using net proceeds from common shares issued pursuant to the 2015 equity distribution agreements for general corporate purposes, which may include acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment and/or re-tenanting of properties in our portfolio, working capital and other general purposes.

Our capital structure includes non-recourse mortgage debt that we have assumed or originated on certain properties. We may hedge the future cash flows of certain variable rate debt transactions principally through interest rate swaps with major financial institutions. See Note 7 (Derivatives and Hedging Activities) to the accompanying consolidated financial statements for a description of our current cash flow hedges.

As discussed in Note 2 (Summary of Significant Accounting Policies) to the accompanying consolidated financial statements, pursuant to the terms of our $15.1 million4.99% Note, due January 6, 2014 (See Note 6 (Debt) to the accompanying consolidated financial statements), which is collateralized by our Anthem Marketplace property, we were required by the lenders thereunder to establish a cash management account controlled by the lenders to collect all amounts generated by our Anthem Marketplace property in order to collateralize such promissory note. Amounts in the cash management account are classified as restricted cash.

Cash and Cash Equivalents

We had cash and cash equivalents of approximately $5,660,000 as of September 30, 2015, as compared to $4,236,000 on December 31, 2014.  The increase of $1,424,000 was primarily the result of the following:

Sources of Cash

• Cash flow from operations of $25,994,000 for the nine months ended September 30, 2015;

• Proceeds of $105,500,000 from the Facility;

• Net proceeds of $49,717,000 from issuance of common shares;

• Proceeds from sales of marketable securities of $496,000;

• Cash flow from discontinued operations of $3,000;

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Uses of Cash

• Payment of distributions to common shareholders and OP unit holders of $21,137,000;

• Additions to real estate of $7,954,000;

• Acquisitions of real estate of $147,950,000;

• Repurchase of common shares of $1,018,000;

• Payments of notes payable of $2,141,000; and

• Change in restricted cash of $86,000;

     We place all cash in short-term, highly liquid investments that we believe provide appropriate safety of principal.

Debt

Debt consisted of the following as of the dates indicated (in thousands):

Description	September 30, 2015		December 31, 2014
Fixed rate notes
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)	$	10,280	$	10,460
$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 (2)	50,000		50,000
$37.0 million 3.76% Note, due December 1, 2020	35,386		36,090
$6.5 million 3.80% Note, due January 1, 2019	6,232		6,355
$19.0 million 4.15% Note, due December 1, 2024	19,000		19,000
$20.2 million 4.28% Note, due June 6, 2023	20,121		20,200
$14.0 million 4.34% Note, due September 11, 2024	14,000		14,000
$14.3 million 4.34% Note, due September 11, 2024	14,300		14,300
$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)	7,886		7,888
$2.6 million 5.46% Note, due October 1, 2023	2,559		2,583
$11.1 million 5.87% Note, due August 6, 2016	11,382		11,607
$0.9 million 2.97% Note, due November 28, 2015	212		—
Floating rate notes
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4)	225,600		120,100
$50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5)	50,000		50,000
	$	498,468	$	394,093

⁽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 previous unsecured revolving credit facility at 0.84%. On October 30, 2015, the maturity date of this loan was extended to October 30, 2020 (See Note 15).

⁽³⁾  Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term. As part of our acquisition of Paradise Plaza in August 2012, we recorded a discount on the note of $1.3 million, which amortizes into interest expense over the life of the loan and results in an imputed interest rate of 4.13%.

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⁽⁴⁾  On October 30, 2015, the maturity date of the Revolver (as defined below) was extended to October 30, 2019 and $100 million of borrowings under the Revolver (as defined below) was converted to a new term loan under the Facility (as defined below) with a rate of LIBOR plus 1.65% to 2.25% and a maturity date of October 30, 2022 (See Note 15).

⁽⁵⁾  On October 30, 2015, the maturity date of this loan was extended to January 29, 2021 (See Note 15).

On December 24, 2014, we assumed a $2.6 million promissory note as part of our acquisition of the hard corner at Village Square at Dana Park (See Note 14 (Real Estate) to the accompanying consolidated financial statements). The 5.46% fixed interest rate note matures October 1, 2023.

On November 26, 2014, we, operating through our subsidiary, Whitestone Headquarters Village, LLC, a Delaware limited liability company, entered into a $19.0 million promissory note (the “Headquarters Note”), with a fixed interest rate of 4.15% payable to Morgan Stanley Bank, N.A. and a maturity date of December 1, 2024. Proceeds from the Headquarters Note were used to repay a portion of our unsecured revolving credit facility.

On November 7, 2014, we, through our Operating Partnership, entered into an unsecured revolving credit facility (the “Facility”) with the lenders party thereto, with BMO Capital Markets, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and U.S. Bank, National Association, as co-lead arrangers and joint book runners, and Bank of Montreal, as administrative agent (the “Agent”). The Facility amended and restated our previous unsecured revolving credit facility. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital. We intend to use the additional proceeds from the Facility for general corporate purposes, including property acquisitions, debt repayment, capital expenditure, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital.

The Facility is comprised of three tranches:

• $400 million unsecured revolving credit facility (the “Revolver”);

• $50 million unsecured term loan (the “Term Loan 1”); and

• $50 million unsecured term loan (the “Term Loan 2”).

The Facility includes an accordion feature that will allow the Operating Partnership to increase the borrowing capacity to $700 million, upon the satisfaction of certain conditions. The Revolver will mature on November 7, 2018, with an option to extend for one additional year to November 7, 2019, subject to certain conditions, including payment of an extension fee. The Term Loan 1 will mature on February 17, 2017, and the Term Loan 2 will mature on November 7, 2019.

Borrowings under the Facility accrue interest (at the Operating Partnership's option) at a Base Rate or an Adjusted LIBOR plus an applicable margin based upon our then existing leverage. The applicable margin for Adjusted LIBOR borrowings ranges from 1.40% to 1.95% for the Revolver and 1.35% to 1.90% for the term loans. Base Rate means the higher of: (a) the Agent's prime commercial rate, (b) the sum of (i) the average rate quoted by the Agent by two or more federal funds brokers selected by the Agent for sale to the Agent at face value of federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1.00%, and (c) the LIBOR rate for such day plus 1.00%. Adjusted LIBOR means LIBOR divided by one minus the Eurodollar Reserve Percentage. The Eurodollar Reserve Percentage means the maximum reserve percentage at which reserves are imposed by the Board of Governors of the Federal Reserve System on eurocurrency liabilities.

We serve as the guarantor for funds borrowed by the Operating Partnership under the Facility. The Facility contains customary terms and conditions, including, without limitation, affirmative and negative covenants such as information reporting requirements, maximum secured indebtedness to total asset value, minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges, and maintenance of a minimum net worth. The Facility also contains customary events of default with customary notice and cure, including, without limitation, nonpayment, breach of covenant, misrepresentation of representations and warranties in a material respect, cross-default to other major indebtedness, change of control, bankruptcy and loss of REIT tax status. As of September 30, 2015, we were in compliance with all covenants under the Facility.

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As of September 30, 2015, $325.6 million was drawn on the Facility, and our remaining borrowing capacity was $174.4 million. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and retenanting of properties in our portfolio and working capital. On October 30, 2015, we, through our Operating Partnership, entered into the first amendment to the Facility. See Note 15 to the accompanying consolidated financial statements.

On September 3, 2014, we, operating through our subsidiary, Whitestone Pecos Ranch, LLC, a Delaware limited liability company, entered into a $14.0 million promissory note (the “Pecos Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Pecos Note were used to repay a portion of our previous unsecured revolving credit facility.

On August 26, 2014, we, operating through our subsidiary, Whitestone Shops at Starwood, LLC, a Delaware limited liability company, entered into a $14.3 million promissory note (the “Starwood Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Starwood Note were used to repay a portion of our previous unsecured revolving credit facility.

As of September 30, 2015, our $172.7 million in secured debt was collateralized by 20 properties with a carrying value of $214.4 million.  Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties.  As of September 30, 2015, we were in compliance with all loan covenants.

Scheduled maturities of our outstanding debt as of September 30, 2015 were as follows (in thousands):

Year	Amount Due
2015	$	730
2016	13,269
2017	60,212
2018	237,736
2019	58,049
Thereafter	128,472
Total	$	498,468

Capital Expenditures

We continually evaluate our properties’ performance and value. We may determine it is in our shareholders’ best interest to invest capital in properties that we believe have potential for increasing value. We also may have unexpected capital expenditures or improvements for our existing assets. Additionally, we intend to continue investing in similar properties outside of the markets on which we focus in cities with exceptional demographics to diversify market risk, and we may incur significant capital expenditures or make improvements in connection with any properties we may acquire.

Contractual Obligations

During the nine months ended September 30, 2015, there were no material changes outside of the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, 2014.

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Distributions

The following table summarizes the cash distributions paid or payable to holders of our common shares and noncontrolling OP units during each quarter during 2014 and the nine months ended September 30, 2015 (in thousands, except per share data):

	Common Shares				Noncontrolling OP Unit Holders				Total
Quarter Paid	Distributions Per Common Share		Total Amount Paid		Distributions Per OP Unit		Total Amount Paid		Total Amount Paid
2015
Third Quarter	$	0.2850	$	7,664	$	0.2850	$	122	$	7,786
Second Quarter	0.2850		6,601		0.2850		111		6,712
First Quarter	0.2850		6,526		0.2850		113		$	6,639
Total	$	0.8550	$	20,791	$	0.8550	$	346	$	21,137
2014
Fourth Quarter	$	0.2850	$	6,484	$	0.2850	$	114	$	6,598
Third Quarter	0.2850		6,457		0.2850		126		6,583
Second Quarter	0.2850		6,367		0.2850		152		6,519
First Quarter	0.2850		6,231		0.2850		158		6,389
Total	$	1.1400	$	25,539	$	1.1400	$	550	$	26,089

Taxes

We elected to be taxed as a REIT under the Code beginning with our taxable year ended December 31, 1999.  As a REIT, we generally are not subject to federal income tax on income that we distribute to our shareholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates.  We believe that we are organized and operate in a manner to qualify and be taxed as a REIT, and we intend to operate so as to remain qualified as a REIT for federal income tax purposes.

Environmental Matters

Our properties are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which our operations are conducted. From our inception, we have incurred no significant environmental costs, accrued liabilities or expenditures to mitigate or eliminate future environmental contamination.

Off-Balance Sheet Arrangements

We had no significant off-balance sheet arrangements as of September 30, 2015 and December 31, 2014.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Our future income, cash flows and fair value relevant to our financial instruments depend upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Based upon the nature of our operations, we are not subject to foreign exchange rate or commodity price risk. The principal market risk to which we are exposed is the risk related to interest rate fluctuations. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to interest rate risk. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, we manage our exposure to fluctuations in market interest rates for our borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable.

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All of our financial instruments were entered into for other than trading purposes.

Fixed Interest Rate Debt

As of September 30, 2015, $222.9 million, or approximately 45% of our outstanding debt, was subject to fixed interest rates, which limit the risk of fluctuating interest rates. Though a change in the market interest rates affects the fair market value of our fixed interest rate debt, it does not impact net income to shareholders or cash flows. Our total outstanding fixed interest rate debt had an average effective interest rate as of September 30, 2015 of approximately 3.78% per annum with scheduled maturities ranging from 2015 to 2024 (see Note 6 (Debt) to the accompanying consolidated financial statements for further detail). Holding other variables constant, a 1% increase or decrease in interest rates would cause an $8.7 million decline or increase, respectively, in the fair value for our fixed rate debt.

Variable Interest Rate Debt

As of September 30, 2015, $275.6 million, or approximately 55% of our outstanding debt, was subject to floating interest rates of LIBOR plus 1.35% to 1.95% and not currently subject to a hedge. The impact of a 1% increase or decrease in interest rates on our non-hedged variable rate debt would result in a decrease or increase of annual net income of approximately $2.8 million, respectively.

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Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The management of Whitestone REIT, under the supervision and with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, including ensuring that such information is accumulated and communicated to Whitestone REIT's management, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of September 30, 2015 (the end of the period covered by this Report).

Changes in Internal Control Over Financial Reporting

During the three months ended September 30, 2015, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of business.  These matters are generally covered by insurance.  While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A. Risk Factors.

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of Whitestone's Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.

(b) Not applicable.

(c) Issuer Purchases of Equity Securities

During the three months ended September 30, 2015, certain of our employees tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares issued under the 2008 Plan. The following table summarizes all of these repurchases during the three months ended September 30, 2015.

Period	Total Number of Shares Purchased (1)	Average Price Paid for Shares		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2015 through July 31, 2015	—	$	—	N/A	N/A
August 1, 2015 through August 31, 2015	—	—		N/A	N/A
September 1, 2015 through September 30, 2015	21,281	11.53		N/A	N/A
Total	21,281	$	11.53

⁽¹⁾    The number of shares purchased represents common shares held by employees who tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares issued under the 2008 Plan. With respect to these shares, the price paid per share is based on the fair market value at the time of tender.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The exhibits listed on the accompanying Exhibit index are filed, furnished and incorporated by reference (as stated therein) as part of this Report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		WHITESTONE REIT
Date:	November 6, 2015	/s/ James C. Mastandrea
		James C. Mastandrea
		Chief Executive Officer
		(Principal Executive Officer)

Date:	November 6, 2015	/s/ David K. Holeman
		David K. Holeman
		Chief Financial Officer
		(Principal Financial and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No. Description

3.1.1 Articles of Amendment and Restatement of Declaration of Trust (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on July 31, 2008)

3.1.2 Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3(i).1 to the Registrant's Current Report on Form 8-K, filed on December 6, 2006)

3.1.3 Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.4 Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.5 Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.6 Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.1 to the Registrant's Current Report on Form 8-K, filed on June 27, 2012)

3.1.7 Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.2 to Registrant's Current Report on Form 8-K, filed on June 27, 2012)

3.2 Amended and Restated Bylaws (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 9, 2008)

12.1* Statement of Calculation of Consolidated Ratio of Earnings to Fixed Charges.

31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1** Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2** Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS***	XBRL Instance Document
101.SCH***	XBRL Taxonomy Extension Schema Document
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document

 ________________________

*       Filed herewith.

**     Furnished herewith.

***    The following financial information of the Registrant for the quarter ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014, (ii) the Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2015 and 2014 (unaudited), (iii) the Consolidated Statements of Changes in Equity for the nine months ended September 30, 2015 (unaudited), (iv) the Consolidated Statement of Cash Flows for the nine months ended September 30, 2015 and 2014 (unaudited) and (v) the Notes to the Consolidated Financial Statements (unaudited).

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

EX-12.1

Exhibit 12.1

Whitestone REIT

Calculation of Consolidated Ratio of Earnings to Fixed Charges

(dollars in thousands)

	Nine Months
	Ended September 30,		Year Ended December 31,
	2015		2014		2013		2012			2011
Earnings
Income (loss) from continuing operations	$	4,773	$	5,349	$	3,621	$	(165	)	$	496
Plus: Taxes	274		282		293		275			214
Plus: Fixed charges	10,830		10,672		10,089		9,084			6,224
Total earnings	$	15,877	$	16,303	$	14,003	$	9,194		$	6,934
Fixed charges
Interest expense	$	9,845	$	9,680	$	8,929	$	7,482		$	5,608
Plus: Capitalized Interest	83		93		114		176			—
Plus: Amortization of deferred financing costs	902		899		1,046		1,426			616
Total fixed charges	$	10,830	$	10,672	$	10,089	$	9,084		$	6,224
Ratio of earnings to fixed charges	1.47		1.53		1.39		1.01			1.11

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James C. Mastandrea, certify that:

1. I have reviewed this quarterly report on Form 10-Q, for the period ended September 30, 2015, of Whitestone REIT;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2015

/s/ James C. Mastandrea

James C. Mastandrea

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, David K. Holeman, certify that:

1. I have reviewed this quarterly report on Form 10-Q, for the period ended September 30, 2015, of Whitestone REIT;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2015

/s/ David K. Holeman

David K. Holeman

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Whitestone REIT, a Maryland real estate investment trust (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James C. Mastandrea, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James C. Mastandrea

James C. Mastandrea

Chairman and Chief Executive Officer

Date: November 6, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Whitestone REIT, a Maryland real estate investment trust (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David K. Holeman, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David K. Holeman

David K. Holeman

Chief Financial Officer

Date: November 6, 2015

XML

Debt (Schedule of Maturities of Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Debt Disclosure [Abstract]
2015	$ 730
2016	13,269
2017	60,212
2018	237,736
2019	58,049
Thereafter	128,472
Total	$ 498,468	$ 394,093

XML

Real Estate (Details) $ in Thousands													3 Months Ended		9 Months Ended
	Aug. 28, 2015 USD ($) ft²	Aug. 26, 2015 USD ($) a ft² parcel shares	Jul. 02, 2015 USD ($) ft²	May. 27, 2015 USD ($) ft²	Mar. 31, 2015 USD ($) ft²	Dec. 31, 2014 USD ($)	Dec. 24, 2014 USD ($) ft²	Dec. 19, 2014 USD ($) a	Nov. 05, 2014 USD ($) ft²	Sep. 19, 2014 USD ($) ft²	Jul. 01, 2014 USD ($) ft²	Jul. 22, 2011 USD ($)	Sep. 30, 2015 USD ($) shares	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) shares	Sep. 30, 2014 USD ($)
Real Estate [Line Items]
Payments to acquire property															$ 147,950	$ 38,076
Conversion basis for common shares to OP units | shares													1		1
Loss on sale or disposal of assets and properties															$ (248)	(111)
Schedule of operating results for properties classified as discontinued operations
Income from discontinued operations													$ 44	$ 112	$ 3	378
Gilbert Tuscany Village [Member]
Real Estate [Line Items]
Payments to acquire property	$ 1,700
Gross leasable area (in square feet) | ft²	14,603
Keller Place [Member]
Real Estate [Line Items]
Payments to acquire property		$ 12,000
Gross leasable area (in square feet) | ft²		93,541
Property percentage occupied		92.00%
Number of undeveloped parcels | parcel		2
Area of land (in acres) | a		3.12
Issuance of OP units (in shares) | shares		120,000
Conversion basis for common shares to OP units | shares													1		1
Quinlan Crossing [Member]
Real Estate [Line Items]
Payments to acquire property		$ 37,500
Gross leasable area (in square feet) | ft²		109,892
Property percentage occupied		95.00%
Parkside Village North [Member]
Real Estate [Line Items]
Payments to acquire property			$ 12,500
Gross leasable area (in square feet) | ft²			27,045
Property percentage occupied			100.00%
Parkside Village South [Member]
Real Estate [Line Items]
Payments to acquire property			$ 32,500
Gross leasable area (in square feet) | ft²			90,101
Property percentage occupied			100.00%
Davenport Village [Member]
Real Estate [Line Items]
Payments to acquire property				$ 45,500
Gross leasable area (in square feet) | ft²				128,934
Property percentage occupied				85.00%
City View Village [Member]
Real Estate [Line Items]
Payments to acquire property					$ 6,300
Gross leasable area (in square feet) | ft²					17,870
Property percentage occupied					100.00%
Village Square at Dana Park Hard Corner [Member]
Real Estate [Line Items]
Payments to acquire property							$ 2,100
Gross leasable area (in square feet) | ft²							12,047
Property percentage occupied							88.00%
Property acquisitions, purchase price							$ 4,700
Face amount of debt							2,600
The Shops at Williams Trace [Member]
Real Estate [Line Items]
Payments to acquire property							$ 20,200
Gross leasable area (in square feet) | ft²							132,991
Property percentage occupied							87.00%
Williams Trace Plaza [Member]
Real Estate [Line Items]
Payments to acquire property							$ 20,400
Gross leasable area (in square feet) | ft²							129,222
Property percentage occupied							95.00%
Fulton Ranch Towne Center Adjacent Parcel [Member]
Real Estate [Line Items]
Payments to acquire property								$ 900
Area of land (in acres) | a								1.39
Fulton Ranch Towne Center [Member]
Real Estate [Line Items]
Payments to acquire property									$ 29,300
Gross leasable area (in square feet) | ft²									113,281
Property percentage occupied									86.00%
The Promenade at Fulton Ranch [Member]
Real Estate [Line Items]
Payments to acquire property									$ 18,600
Gross leasable area (in square feet) | ft²									98,792
Property percentage occupied									76.00%
The Strand at Huebner Oaks [Member]
Real Estate [Line Items]
Payments to acquire property										$ 18,000
Gross leasable area (in square feet) | ft²										73,920
Property percentage occupied										90.00%
Heritage Trace Plaza [Member]
Real Estate [Line Items]
Payments to acquire property											$ 20,100
Gross leasable area (in square feet) | ft²											70,431
Property percentage occupied											98.00%
Zeta, Royal Crest and Featherwood [Member]
Real Estate [Line Items]
Proceeds from the sale of real estate												$ 10,300
Seller financing													$ 2,500		$ 2,500
Loss on sale or disposal of assets and properties						$ 4,400									1,900
Gain on sale of property													2,500		2,500
Schedule of operating results for properties classified as discontinued operations
Property revenues													43	389	43	1,213
Property expenses													0	201	41	545
Interest expense													0	74	0	227
Interest expense													0	0	0	58
Provision for income taxes													0	2	0	7
Gain on sale or disposal of assets													(1)	0	(1)	(2)
Income from discontinued operations													$ 44	$ 112	$ 3	$ 378

XML

Incentive Share Plan (Schedule of Nonvested and Vested Shares Activity) (Details) - 2008 Long-Term Equity Incentive Ownership Plan [Member] - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Granted, Non-Vested Shares Isused (in shares)	318,630	2,058,930	328,005	99,700	0
Shares Granted, Weighted-Average Grant Date Fair Value, Granted (in dollars per share)	$ 13.53	$ 14.40	$ 15.43	$ 13.03	$ 0.00
Shares, Vested (in shares)	(266,594)	(133,774)	(15,270)	(16,208)	(5,169)
Shares Vested, Total Vest-Date Fair Value	$ 3,829	$ 1,721	$ 224	$ 223	$ 0

XML

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Conversion basis for common shares to OP units	1		1
Debt Instrument [Line Items]
Interest expense capitalized	$ 25	$ 26	$ 83	$ 77
Real estate tax capitalized	16	15	53	47
Share-based compensation	1,859	$ 1,485	5,202	$ 3,092
Anthem Marketplace Note [Member]
Debt Instrument [Line Items]
Face amount of debt	$ 15,100		$ 15,100
Stated interest rate	4.99%		4.99%

XML

Unamortized Leasing Commissions and Loan Costs (Tables)

9 Months Ended

Sep. 30, 2015

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Unamortized Leasing Comissions and Loan Costs

Costs which have been deferred consist of the following (in thousands):

	September 30, 2015			December 31, 2014
Lease commissions	$	6,566		$	5,936
Deferred financing cost	5,821			5,785
Total cost	12,387			11,721
Less: lease commissions accumulated amortization	(2,684		)	(2,373		)
Less: deferred financing cost accumulated amortization	(1,370		)	(469		)
Total cost, net of accumulated amortization	$	8,333		$	8,879

XML

Income Taxes (Details) - Texas [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Contingency [Line Items]
Applicable tax rate used to determine state margin tax			1.00%
Standard deduction rate used to determine state margin tax			30.00%
Margin tax provision recognized	$ 104	$ 71	$ 292	$ 180

XML

Debt (Schedule of Debt) (Details) - USD ($)			9 Months Ended
	Oct. 30, 2015	Nov. 07, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Aug. 08, 2012
Debt Instrument [Line Items]
Notes payable			$ 498,468,000		$ 394,093,000
Fixed rate notes | $10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 | LIBOR Rate
Debt Instrument [Line Items]
Notes payable			10,280,000		10,460,000
Face amount of debt			$ 10,500,000		10,500,000
Basis spread on variable rate			2.00%	2.00%
Fixed rate notes | $50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017
Debt Instrument [Line Items]
Notes payable			$ 50,000,000		50,000,000
Face amount of debt			$ 50,000,000		$ 50,000,000
Imputed interest rate			0.84%		0.84%
Fixed rate notes | $50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			1.75%	1.75%
Fixed rate notes | $50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			2.50%	2.50%
Fixed rate notes | $37.0 million 3.76% Note, due December 1, 2020
Debt Instrument [Line Items]
Notes payable			$ 35,386,000		$ 36,090,000
Stated interest rate			3.76%		3.76%
Face amount of debt			$ 37,000,000		$ 37,000,000
Fixed rate notes | $6.5 million 3.80% Note, due January 1, 2019
Debt Instrument [Line Items]
Notes payable			$ 6,232,000		$ 6,355,000
Stated interest rate			3.80%		3.80%
Face amount of debt			$ 6,500,000		$ 6,500,000
Fixed rate notes | $19.0 million 4.15% Note, due December 1, 2024
Debt Instrument [Line Items]
Notes payable			$ 19,000,000		$ 19,000,000
Stated interest rate			4.15%		4.15%
Face amount of debt			$ 19,000,000		$ 19,000,000
Fixed rate notes | $20.2 million 4.28% Note, due June 6, 2023
Debt Instrument [Line Items]
Notes payable			$ 20,121,000		$ 20,200,000
Stated interest rate			4.28%		4.28%
Face amount of debt			$ 20,200,000		$ 20,200,000
Fixed rate notes | $14.0 million 4.34% Note, due September 11, 2024
Debt Instrument [Line Items]
Notes payable			$ 14,000,000		$ 14,000,000
Stated interest rate			4.34%		4.34%
Face amount of debt			$ 14,000,000		$ 14,000,000
Fixed rate notes | $14.3 million 4.34% Note, due September 11, 2024
Debt Instrument [Line Items]
Notes payable			$ 14,300,000		$ 14,300,000
Stated interest rate			4.34%		4.34%
Face amount of debt			$ 14,300,000		$ 14,300,000
Fixed rate notes | $16.5 million 4.97% Note, due September 26, 2023
Debt Instrument [Line Items]
Notes payable			$ 16,450,000		$ 16,450,000
Stated interest rate			4.97%		4.97%
Face amount of debt			$ 16,500,000		$ 16,500,000
Fixed rate notes | $15.1 million 4.99% Note, due January 6, 2024
Debt Instrument [Line Items]
Notes payable			$ 15,060,000		$ 15,060,000
Stated interest rate			4.99%		4.99%
Face amount of debt			$ 15,100,000		$ 15,100,000
Fixed rate notes | $9.2 million, Prime Rate less 2.00%, due December 29, 2017
Debt Instrument [Line Items]
Unamortized discount						$ 1,300,000
Imputed interest rate						4.13%
Fixed rate notes | $9.2 million, Prime Rate less 2.00%, due December 29, 2017 | Prime Rate
Debt Instrument [Line Items]
Notes payable			7,886,000		7,888,000
Face amount of debt			$ 9,200,000		9,200,000
Basis spread on variable rate			2.00%	2.00%
Fixed rate notes | $2.6 million 5.46% Note, due October 1, 2023
Debt Instrument [Line Items]
Notes payable			$ 2,559,000		$ 2,583,000
Stated interest rate			5.46%		5.46%
Face amount of debt			$ 2,600,000		$ 2,600,000
Fixed rate notes | $11.1 million 5.87% Note, due August 6, 2016
Debt Instrument [Line Items]
Notes payable			$ 11,382,000		$ 11,607,000
Stated interest rate			5.87%		5.87%
Face amount of debt			$ 11,100,000		$ 11,100,000
Fixed rate notes | $0.9 million 2.97% Note, due November 28, 2015
Debt Instrument [Line Items]
Notes payable			212,000		0
Floating rate notes | Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4) | LIBOR Rate
Debt Instrument [Line Items]
Notes payable			$ 225,600,000		120,100,000
Floating rate notes | Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4) | Minimum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate			1.40%	1.40%
Floating rate notes | Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4) | Maximum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate			1.95%	1.95%
Floating rate notes | $50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5)
Debt Instrument [Line Items]
Face amount of debt			$ 50,000,000		50,000,000
Floating rate notes | $50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5) | LIBOR Rate
Debt Instrument [Line Items]
Notes payable			$ 50,000,000		$ 50,000,000
Floating rate notes | $50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5) | Minimum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate			1.35%	1.35%
Floating rate notes | $50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5) | Maximum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate			1.90%	1.90%
Interest rate swap | $10.5 million, LIBOR plus 2.00% Note, due September 24, 2018
Debt Instrument [Line Items]
Stated interest rate			3.55%
Interest rate swap | $50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017
Debt Instrument [Line Items]
Stated interest rate			0.84%
Interest rate swap | $9.2 million, Prime Rate less 2.00%, due December 29, 2017
Debt Instrument [Line Items]
Stated interest rate			5.72%
Term loan
Debt Instrument [Line Items]
Face amount of debt		$ 50,000,000
Term loan | Subsequent Event
Debt Instrument [Line Items]
Face amount of debt	$ 100,000,000
Term loan | Minimum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.35%
Term loan | Minimum | LIBOR Rate | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate	1.65%
Term loan | Maximum | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.90%
Term loan | Maximum | LIBOR Rate | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%
Term loan | $50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017
Debt Instrument [Line Items]
Face amount of debt			$ 50,000,000

XML

Grants to Trustees (Details) - Individual Trustee Grant Agreements [Member]	Dec. 09, 2014 trustee $ / shares shares	Oct. 24, 2014 trustee $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of independent trustees (in trustees)	2	4
Number of trustee emeritus (in trustees)		1
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted to each trustee (in shares) | shares	2,314	7,500
Restricted stock granted to trustees, vested in period (in shares) | shares		1,500
Restricted stock granted to trustees, weighted-average grant date fair value (in dollars per share) | $ / shares	$ 14.69	$ 14.53

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Marketable Securities

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

MARKETABLE SECURITIES

All of our marketable securities were classified as available-for-sale securities as of September 30, 2015 and December 31, 2014. Available-for-sale securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	654	$	—	$	(240	)	$	414
Total available-for-sale securities	$	654	$	—	$	(240	)	$	414

	December 31, 2014
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	1,106	$	—	$	(133	)	$	973
Total available-for-sale securities	$	1,106	$	—	$	(133	)	$	973

During the three months ended September 30, 2015, no available-for-sale securities were sold and during the nine months ended September 30, 2015, available-for-sale securities were sold for total proceeds of $496,000. The gross realized gain on these sales during the nine months ended September 30, 2015 were $44,000. During the three and nine months ended September 30, 2014, no available-for-sale securities were sold. For the purpose of determining gross realized gains and losses, the cost of securities sold is based on specific identification. A net unrealized holding loss on available-for-sale securities in the amount of $240,000 and $180,000 for the nine months ended September 30, 2015 and 2014, respectively, has been included in accumulated other comprehensive income.

XML

Equity (Details) $ / shares in Units, $ in Thousands		3 Months Ended							9 Months Ended		12 Months Ended
	Jun. 26, 2015 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2015 USD ($) $ / shares	Mar. 31, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($) $ / shares shares	Sep. 30, 2014 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares	Mar. 31, 2014 USD ($) $ / shares	Sep. 30, 2015 USD ($) $ / shares shares	Sep. 30, 2014 USD ($) shares	Dec. 31, 2014 USD ($) $ / shares shares	Jun. 04, 2015 USD ($) agreement	Jun. 19, 2013 USD ($) agreement
Class of Stock [Line Items]
Common shares, authorized (in shares)		400,000,000			400,000,000				400,000,000		400,000,000
Common shares, par value per share (in dollars per share) | $ / shares	$ 0.001	$ 0.001			$ 0.001				$ 0.001		$ 0.001
Preferred shares, shares authorized (in shares)		50,000,000			50,000,000				50,000,000		50,000,000
Preferred shares, par value per share (in dollars per share) | $ / shares		$ 0.001			$ 0.001				$ 0.001		$ 0.001
Common shares, issued (in shares)	3,750,000	26,977,957			22,835,695				26,977,957		22,835,695
Share price (in dollars per share) | $ / shares	$ 13.3386
Proceeds from issuance of common shares, net of offering costs | $	$ 49,700								$ 49,717	$ 6,458
Payments of exchange offer costs | $									$ 0	$ 67
Equity distribution agreements, authorized amount | $												$ 50,000	$ 50,000
Number of equity distribution agreements | agreement												9	5
Ownership interest in operating partnership									98.10%
Conversion basis for common shares to OP units		1							1
Weighted-average share ownership in operating partnership		98.40%				98.20%			98.40%	97.80%
Common Stock [Member] | ATM Program [Member]
Class of Stock [Line Items]
Stock issued (in shares)										377,983
Proceeds from issuance of equity | $										$ 5,300
Payments of exchange offer costs | $										$ 100
Preferred Stock [Member]
Class of Stock [Line Items]
Preferred shares, shares authorized (in shares)		50,000,000							50,000,000
Preferred shares, par value per share (in dollars per share) | $ / shares		$ 0.001							$ 0.001
OP Units [Member]
Class of Stock [Line Items]
OP units outstanding (in shares)		27,364,852			22,926,599				27,364,852		22,926,599
OP units owned (in shares)		26,856,737			22,528,207				26,856,737		22,528,207
Conversion of stock, shares converted (in shares)		1,693				64,226			10,277	160,060
Cash Distribution [Member]
Class of Stock [Line Items]
Cash distribution paid | $		$ 7,786	$ 6,712	$ 6,639	$ 6,598	$ 6,583	$ 6,519	$ 6,389	$ 21,137		$ 26,089
Cash Distribution [Member] | Common Stock [Member]
Class of Stock [Line Items]
Cash distribution paid (in dollars per share) | $ / shares		$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.8550		$ 1.1400
Cash distribution paid | $		$ 7,664	$ 6,601	$ 6,526	$ 6,484	$ 6,457	$ 6,367	$ 6,231	$ 20,791		$ 25,539
Cash Distribution [Member] | OP Units [Member]
Class of Stock [Line Items]
Cash distribution paid (in dollars per share) | $ / shares		$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.2850	$ 0.8550		$ 1.1400
Cash distribution paid | $		$ 122	$ 111	$ 113	$ 114	$ 126	$ 152	$ 158	$ 346		$ 550

XML

Equity (Tables)

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Schedule of Distributions

The following table summarizes the cash distributions paid or payable to holders of common shares and to holders of noncontrolling OP units during each quarter during 2014 and the nine months ended September 30, 2015 (in thousands, except per share/unit data):

	Common Shares				Noncontrolling OP Unit Holders				Total
Quarter Paid	Distributions Per Common Share		Total Amount Paid		Distributions Per OP Unit		Total Amount Paid		Total Amount Paid
2015
Third Quarter	$	0.2850	$	7,664	$	0.2850	$	122	$	7,786
Second Quarter	0.2850		6,601		0.2850		111		6,712
First Quarter	0.2850		6,526		0.2850		113		6,639
Total	$	0.8550	$	20,791	$	0.8550	$	346	$	21,137
2014
Fourth Quarter	$	0.2850	$	6,484	$	0.2850	$	114	$	6,598
Third Quarter	0.2850		6,457		0.2850		126		6,583
Second Quarter	0.2850		6,367		0.2850		152		6,519
First Quarter	0.2850		6,231		0.2850		158		6,389
Total	$	1.1400	$	25,539	$	1.1400	$	550	$	26,089

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Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2015			2014			2015			2014
Numerator:
Income from continuing operations	$	1,551		$	1,009		$	4,773		$	4,455
Less: Net income attributable to noncontrolling interests	(25		)	(15		)	(78		)	(97		)
Distributions paid on unvested restricted shares	(130		)	(54		)	(400		)	(127		)
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	1,396			940			4,295			4,231
Income from discontinued operations	44			112			3			378
Less: Net income attributable to noncontrolling interests	—			(3		)	—			(8		)
Income from discontinued operations attributable to Whitestone REIT	44			109			3			370
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	1,440		$	1,049		$	4,298		$	4,601
Denominator:
Weighted average number of common shares - basic	26,476			22,482			23,988			22,182
Effect of dilutive securities:
Unvested restricted shares	606			208			595			177
Weighted average number of common shares - dilutive	27,082			22,690			24,583			22,359
Earnings Per Share:
Basic:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.18		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.18		$	0.21
Diluted:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.17		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.17		$	0.21

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Incentive Share Plan (Narrative) (Details) $ in Thousands			3 Months Ended		9 Months Ended
	Jun. 30, 2015 shares	Apr. 02, 2014 employee shares	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 22, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 1,859	$ 1,485	$ 5,202	$ 3,092
Minimum | Time-Based Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		1 year
Maximum | Time-Based Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		2 years
Restricted Common Shares and Restricted Share Units [Member] | Time and Performance-Based Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees granted an award | employee		51
Aggregate shares granted (in shares) | shares		633,704
Restricted Common Shares and Restricted Share Units [Member] | Time-Based Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares granted (in shares) | shares	143,000
Restricted Common Shares and Restricted Share Units [Member] | Performance Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares granted (in shares) | shares		2,049,116
Non-Cash Share Based Compensation in 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost			7,100		7,100
Non-Cash Share Based Compensation Subsequent to 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost			$ 13,200		$ 13,200
Unrecognized compensation cost, period for recognition					28 months
2008 Long-Term Equity Incentive Ownership Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of maximum number of shares issued under plan to aggregate shares							12.50%
2008 Long-Term Equity Incentive Ownership Plan [Member] | Restricted Common Shares and Restricted Share Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			82.00%		82.00%
2008 Long-Term Equity Incentive Ownership Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost			$ 10,800		$ 10,800
Award vesting period					42 months
2008 Long-Term Equity Incentive Ownership Plan [Member] | Non-Vested Time Based Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost			$ 4,200		$ 4,200
Unrecognized compensation cost, period for recognition					18 months

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Incentive Share Plan (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-Based Incentive Plan Activity

A summary of the share-based incentive plan activity as of and for the nine months ended September 30, 2015 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2015	2,411,068		$	14.45
Granted	318,630		13.53
Vested	(266,594	)	14.36
Forfeited	(99,269	)	14.49
Non-vested at September 30, 2015	2,363,835		$	14.33
Available for grant at September 30, 2015	963,401

Schedule of Nonvested and Vested Shares Activity

A summary of our non-vested and vested shares activity for the nine months ended September 30, 2015 and years ended December 31, 2014, 2013, 2012 and 2011 is presented below:

	Shares Granted			Shares Vested
	Non-Vested Shares Issued	Weighted Average Grant-Date Fair Value		Vested Shares		Total Vest-Date Fair Value
						(in thousands)
Nine Months Ended September 30, 2015	318,630	$	13.53	(266,594	)	$	3,829
Year Ended December 31, 2014	2,058,930	14.40		(133,774	)	1,721
Year Ended December 31, 2013	328,005	15.43		(15,270	)	224
Year Ended December 31, 2012	99,700	13.03		(16,208	)	223
Year Ended December 31, 2011	—	—		(5,169	)	—

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Real Estate (Tables)

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Schedule of operating results for properties classified as discontinued operations

The operating results for properties classified as discontinued operations consists of the following (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Property revenues	$	43		$	389	43			1,213
Property expenses	—			201		41			545
Depreciation and amortization	—			74		—			227
Interest expense	—			—		—			58
Provision for income taxes	—			2		—			7
Gain on sale or disposal of assets	(1		)	—		(1		)	(2		)
Income from discontinued operations	$	44		$	112	$	3		$	378

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation.  We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership.  As of September 30, 2015 and December 31, 2014, we owned a majority of the partnership interests in the Operating Partnership.  Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership.  All significant inter-company balances have been eliminated. Noncontrolling interests in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us.  Net income or loss is allocated to noncontrolling interests based on the weighted average percentage ownership of the Operating Partnership during the period.  Issuance of additional common shares of beneficial interest in Whitestone (the “common shares”) and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, common shares on a one-for-one basis (the “OP units”) changes the ownership interests of both the noncontrolling interests and Whitestone.

Basis of Accounting.  Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred.

Use of Estimates.   The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates that we use include the estimated fair values of properties acquired, the estimated useful lives for depreciable and amortizable assets and costs, the estimated allowance for doubtful accounts, the estimated fair value of interest rate swaps and the estimates supporting our impairment analysis for the carrying values of our real estate assets.  Actual results could differ from those estimates.

Reclassifications.  We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation.  These reclassifications had no effect on net income, total assets, total liabilities or equity.

Restricted Cash. We classify all cash pledged as collateral to secure certain obligations and all cash whose use is limited as restricted cash. During the three months ended September 30, 2015, pursuant to the terms of our $15.1 million4.99% Note, due January 6, 2024 (See Note 6), which is collateralized by our Anthem Marketplace property, we were required by the lenders thereunder to establish a cash management account controlled by the lenders to collect all amounts generated by our Anthem Marketplace property in order to collateralize such promissory note. As a result, these amounts are reported in the consolidated statements of cash flows under cash flows from financing activities as change in restricted cash.

Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's (“FASB”) Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income.

Derivative Instruments and Hedging Activities. We occasionally utilize derivative financial instruments, principally interest rate swaps, to manage our exposure to fluctuations in interest rates. We have established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. We recognize our interest rate swaps as cash flow hedges with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Any ineffective portion of a cash flow hedges' change in fair value is recorded immediately into earnings. Our cash flow hedges are determined using Level 2 inputs under ASC 820. Level 2 inputs represent quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations whose inputs are observable. As of September 30, 2015, we consider our cash flow hedges to be highly effective.

Development Properties. Land, buildings and improvements are recorded at cost. Expenditures related to the development of real estate are carried at cost which includes capitalized carrying charges and development costs. Carrying charges (interest, real estate taxes, loan fees, and direct and indirect development costs related to buildings under construction), are capitalized as part of construction in progress. The capitalization of such costs ceases when the property, or any completed portion, becomes available for occupancy. For the three months ended September 30, 2015, approximately $25,000 and $16,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2015, approximately $83,000 and $53,000 in interest expense and real estate taxes, respectively, were capitalized. For the three months ended September 30, 2014, approximately $26,000 and $15,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2014, approximately $77,000 and $47,000 in interest expense and real estate taxes, respectively, were capitalized.

Share-Based Compensation.   From time to time, we award nonvested restricted common share awards or restricted common share unit awards, which may be converted into common shares, to executive officers and employees under our 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”).  The vast majority of the awarded shares and units vest when certain performance conditions are met.  We recognize compensation expense when achievement of the performance conditions is probable based on management's most recent estimates using the fair value of the shares as of the grant date. We recognized $1,859,000 and $1,485,000 in share-based compensation for the three months ended September 30, 2015 and 2014, respectively, and we recognized $5,202,000 and $3,092,000 in share-based compensation for the nine months ended September 30, 2015 and 2014, respectively.

Noncontrolling Interests.  Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, we have reported noncontrolling interests in equity on the consolidated balance sheets but separate from Whitestone's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Whitestone and noncontrolling interests.  The consolidated statement of changes in equity is included for quarterly financial statements, including beginning balances, activity for the period and ending balances for shareholders' equity, noncontrolling interests and total equity.

See our Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion on significant accounting policies.

Recent Accounting Pronouncements.  In April 2014, the FASB issued guidance updating the criteria for reporting the disposal of a component of an entity as a discontinued operation. This guidance was effective for reporting periods beginning on or after December 15, 2014 with early adoption permitted only for disposals that have not been reported in financial statements previously issued or available for issuance. We have adopted the guidance beginning with the year ended December 31, 2014.

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This guidance is effective retrospectively for reporting periods beginning on or after December 15, 2015 with early adoption permitted only for financial statements that have not been previously issued. We are currently in the process of evaluating the impact of adoption on our consolidated balance sheets.

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Interim Financial Statements (Details)	1 Months Ended
	Jul. 31, 2004 shares	Sep. 30, 2015 CommercialProperties	Dec. 31, 2014 CommercialProperties
Real Estate Properties [Line Items]
Reorganization and conversion, number of common shares (in shares)	1.42857
Wholly Owned Properties [Member]
Real Estate Properties [Line Items]
Number of commercial properties (in commercial properties) | CommercialProperties		70	63

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Derivatives and Hedging Activities (Details) - Interest Rate Swaps [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Interest Expense [Member]
Derivative [Line Items]
Amount Recognized as Comprehensive Income (Loss)	$ (184)	$ 345	$ (460)	$ 48
Amount of Gain (Loss) Recognized in Earnings	(207)	$ (243)	(617)	$ (625)
Accounts Payable and Accrued Expenses [Member]
Derivative [Line Items]
Estimated Fair Value	$ 1,212		$ 1,212		$ 1,016

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real estate assets, at cost
Property	$ 831,425	$ 673,655
Accumulated depreciation	(84,743)	(71,587)
Total real estate assets	746,682	602,068
Cash and cash equivalents	5,660	4,236
Restricted cash	86	0
Marketable securities	414	973
Escrows and acquisition deposits	5,537	4,092
Accrued rents and accounts receivable, net of allowance for doubtful accounts	14,099	11,834
Unamortized lease commissions and loan costs	8,333	8,879
Prepaid expenses and other assets	2,817	2,215
Total assets	783,628	634,297
Liabilities:
Notes payable	498,468	394,093
Accounts payable and accrued expenses	21,828	15,882
Tenants' security deposits	5,043	4,372
Dividends and distributions payable	7,834	6,627
Total liabilities	533,173	420,974
Commitments and contingencies:	0	0
Equity:
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2015 and December 31, 2014, respectively	0	0
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 26,977,957 and 22,835,695 issued and outstanding as of September 30, 2015 and December 31, 2014, respectively	27	23
Additional paid-in capital	358,136	304,078
Accumulated deficit	(111,263)	(93,938)
Accumulated other comprehensive loss	(646)	(91)
Total Whitestone REIT shareholders' equity	246,254	210,072
Noncontrolling interest in subsidiary	4,201	3,251
Total equity	250,455	213,323
Total liabilities and equity	$ 783,628	$ 634,297

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Incentive Share Plan (Schedule of Share-Based Incentive Plan Activity) (Details) - 2008 Long-Term Equity Incentive Ownership Plan [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares, Non-vested (in shares)	2,411,068
Weighted-Average Grant Date Fair Value, Non-vested (in dollars per share)	$ 14.45
Shares, Granted (in shares)	318,630	2,058,930	328,005	99,700	0
Weighted-Average Grant Date Fair Value, Granted (in dollars per share)	$ 13.53	$ 14.40	$ 15.43	$ 13.03	$ 0.00
Shares, Vested (in shares)	(266,594)	(133,774)	(15,270)	(16,208)	(5,169)
Weighted-Average Grant Date Fair Value, Vested (in dollars per share)	$ 14.36
Shares, Forfeited (in shares)	(99,269)
Weighted-Average Grant Date Fair Value, Forfeited (in dollars per share)	$ 14.49
Shares, Non-vested (in shares)	2,363,835	2,411,068
Weighted-Average Grant Date Fair Value, Non-vested (in dollars per share)	$ 14.33	$ 14.45
Shares, Available for grant (in shares)	963,401

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Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income from continuing operations	$ 4,773,000	$ 4,455,000
Income from discontinued operations	3,000	378,000
Net income	4,776,000	4,833,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,388,000	11,587,000
Amortization of deferred loan costs	902,000	636,000
Amortization of notes payable discount	222,000	229,000
Gain on sale of marketable securities	(44,000)	0
Loss on sale or disposal of assets and properties	248,000	111,000
Bad debt expense	1,318,000	1,487,000
Share-based compensation	5,209,000	3,024,000
Changes in operating assets and liabilities:
Escrows and acquisition deposits	(1,445,000)	(2,021,000)
Accrued rent and accounts receivable	(3,583,000)	(2,187,000)
Unamortized lease commissions	(1,207,000)	(1,109,000)
Prepaid expenses and other assets	341,000	631,000
Accounts payable and accrued expenses	4,201,000	2,145,000
Tenants' security deposits	671,000	440,000
Net cash provided by operating activities	25,994,000	19,428,000
Net cash provided by operating activities of discontinued operations	3,000	440,000
Cash flows from investing activities:
Acquisitions of real estate	(147,950,000)	(38,076,000)
Additions to real estate	(7,954,000)	(7,233,000)
Proceeds from sales of marketable securities	496,000	0
Net cash used in investing activities	(155,408,000)	(45,309,000)
Net cash used in investing activities of discontinued operations	0	(183,000)
Cash flows from financing activities:
Distributions paid to common shareholders	(20,791,000)	(19,055,000)
Distributions paid to OP unit holders	(346,000)	(436,000)
Proceeds from issuance of common shares, net of offering costs	49,717,000	6,458,000
Payments of exchange offer costs	0	(67,000)
Proceeds from notes payable	0	28,300,000
Proceeds from revolving credit facility, net	105,500,000	15,300,000
Repayments of notes payable	(2,141,000)	(1,736,000)
Payments of loan origination costs	0	434,000
Change in restricted cash	(86,000)	0
Repurchase of common shares	(1,018,000)	(24,000)
Net cash provided by financing activities	130,835,000	28,306,000
Net cash used in financing activities of discontinued operations	0	(2,905,000)
Net increase (decrease) in cash and cash equivalents	1,424,000	(223,000)
Cash and cash equivalents at beginning of period	4,236,000	6,491,000
Cash and cash equivalents at end of period	5,660,000	6,268,000
Supplemental disclosure of cash flow information:
Cash paid for interest	9,826,000	6,852,000
Cash paid for taxes	315,000	238,000
Non cash investing and financing activities:
Disposal of fully depreciated real estate	57,000	6,111,000
Financed insurance premiums	1,057,000	888,000
Value of shares issued under dividend reinvestment plan	71,000	71,000
Value of common shares exchanged for OP units	84,000	1,452,000
Change in fair value of available-for-sale securities	(106,000)	49,000
Change in fair value of cash flow hedge	(460,000)	48,000
Acquisition of real estate in exchange for OP units	$ 1,333,000	$ 0

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Accrued Rents and Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Tenant receivables	$ 9,855	$ 7,998
Accrued rents and other recoveries	10,237	8,800
Allowance for doubtful accounts	(5,993)	(4,964)
Total	$ 14,099	$ 11,834

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation.  We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership.  As of September 30, 2015 and December 31, 2014, we owned a majority of the partnership interests in the Operating Partnership.  Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership.  All significant inter-company balances have been eliminated. Noncontrolling interests in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us.  Net income or loss is allocated to noncontrolling interests based on the weighted average percentage ownership of the Operating Partnership during the period.  Issuance of additional common shares of beneficial interest in Whitestone (the “common shares”) and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, common shares on a one-for-one basis (the “OP units”) changes the ownership interests of both the noncontrolling interests and Whitestone.

Basis of Accounting

Basis of Accounting.  Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred.

Use of Estimates

Use of Estimates.   The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates that we use include the estimated fair values of properties acquired, the estimated useful lives for depreciable and amortizable assets and costs, the estimated allowance for doubtful accounts, the estimated fair value of interest rate swaps and the estimates supporting our impairment analysis for the carrying values of our real estate assets.  Actual results could differ from those estimates.

Reclassifications

Reclassifications.  We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation.  These reclassifications had no effect on net income, total assets, total liabilities or equity.

Marketable Securities

Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's (“FASB”) Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income.

Restricted Cash

Restricted Cash. We classify all cash pledged as collateral to secure certain obligations and all cash whose use is limited as restricted cash. During the three months ended September 30, 2015, pursuant to the terms of our $15.1 million4.99% Note, due January 6, 2024 (See Note 6), which is collateralized by our Anthem Marketplace property, we were required by the lenders thereunder to establish a cash management account controlled by the lenders to collect all amounts generated by our Anthem Marketplace property in order to collateralize such promissory note. As a result, these amounts are reported in the consolidated statements of cash flows under cash flows from financing activities as change in restricted cash.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities. We occasionally utilize derivative financial instruments, principally interest rate swaps, to manage our exposure to fluctuations in interest rates. We have established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. We recognize our interest rate swaps as cash flow hedges with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Any ineffective portion of a cash flow hedges' change in fair value is recorded immediately into earnings. Our cash flow hedges are determined using Level 2 inputs under ASC 820. Level 2 inputs represent quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations whose inputs are observable. As of September 30, 2015, we consider our cash flow hedges to be highly effective.

Development Properties

Development Properties. Land, buildings and improvements are recorded at cost. Expenditures related to the development of real estate are carried at cost which includes capitalized carrying charges and development costs. Carrying charges (interest, real estate taxes, loan fees, and direct and indirect development costs related to buildings under construction), are capitalized as part of construction in progress. The capitalization of such costs ceases when the property, or any completed portion, becomes available for occupancy. For the three months ended September 30, 2015, approximately $25,000 and $16,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2015, approximately $83,000 and $53,000 in interest expense and real estate taxes, respectively, were capitalized. For the three months ended September 30, 2014, approximately $26,000 and $15,000 in interest expense and real estate taxes, respectively, were capitalized, and for the nine months ended September 30, 2014, approximately $77,000 and $47,000 in interest expense and real estate taxes, respectively, were capitalized.

Share-Based Compensation

Share-Based Compensation.   From time to time, we award nonvested restricted common share awards or restricted common share unit awards, which may be converted into common shares, to executive officers and employees under our 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”).  The vast majority of the awarded shares and units vest when certain performance conditions are met.  We recognize compensation expense when achievement of the performance conditions is probable based on management's most recent estimates using the fair value of the shares as of the grant date. We recognized $1,859,000 and $1,485,000 in share-based compensation for the three months ended September 30, 2015 and 2014, respectively, and we recognized $5,202,000 and $3,092,000 in share-based compensation for the nine months ended September 30, 2015 and 2014, respectively

Noncontrolling Interests

Noncontrolling Interests.  Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, we have reported noncontrolling interests in equity on the consolidated balance sheets but separate from Whitestone's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Whitestone and noncontrolling interests.  The consolidated statement of changes in equity is included for quarterly financial statements, including beginning balances, activity for the period and ending balances for shareholders' equity, noncontrolling interests and total equity.

Recent Accounting Pronouncements

Recent Accounting Pronouncements.  In April 2014, the FASB issued guidance updating the criteria for reporting the disposal of a component of an entity as a discontinued operation. This guidance was effective for reporting periods beginning on or after December 15, 2014 with early adoption permitted only for disposals that have not been reported in financial statements previously issued or available for issuance. We have adopted the guidance beginning with the year ended December 31, 2014.

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This guidance is effective retrospectively for reporting periods beginning on or after December 15, 2015 with early adoption permitted only for financial statements that have not been previously issued. We are currently in the process of evaluating the impact of adoption on our consolidated balance sheets.

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Unamortized Leasing Commissions and Loan Costs (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Lease commissions	$ 6,566	$ 5,936
Deferred financing cost	5,821	5,785
Total cost	12,387	11,721
Less: lease commissions accumulated amortization	(2,684)	(2,373)
Less: deferred financing cost accumulated amortization	(1,370)	(469)
Total cost, net of accumulated amortization	$ 8,333	$ 8,879

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Accrued Rents and Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Schedule of Accrued Rent and Accounts Receivable, Net

Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands):

	September 30, 2015			December 31, 2014
Tenant receivables	$	9,855		$	7,998
Accrued rents and other recoveries	10,237			8,800
Allowance for doubtful accounts	(5,993		)	(4,964		)
Total	$	14,099		$	11,834

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Interim Financial Statements

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

INTERIM FINANCIAL STATEMENTS

The consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2014 are derived from our audited consolidated financial statements as of that date.  The unaudited financial statements as of and for the period ended September 30, 2015 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to Form 10-Q.

The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of Whitestone and our subsidiaries as of September 30, 2015, and the results of operations for the three and nine month periods ended September 30, 2015 and 2014, the consolidated statements of changes in equity for the nine month period ended September 30, 2015 and cash flows for the nine month periods ended September 30, 2015 and 2014.  All of these adjustments are of a normal recurring nature.  The results of operations for the interim periods are not necessarily indicative of the results expected for a full year.  The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Business.  Whitestone was formed as a real estate investment trust (“REIT”) pursuant to the Texas Real Estate Investment Trust Act on August 20, 1998.  In July 2004, we changed our state of organization from Texas to Maryland pursuant to a merger where we merged directly with and into a Maryland REIT formed for the sole purpose of the reorganization and the conversion of each of our outstanding common shares of beneficial interest of the Texas entity into 1.42857 common shares of beneficial interest of the Maryland entity.  We serve as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership.  We currently conduct substantially all of our operations and activities through the Operating Partnership.  As the general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions.  As of September 30, 2015 and December 31, 2014, Whitestone owned and operated 70 and 63 commercial properties, respectively, in and around Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix and San Antonio.

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred shares, par value per share (in dollars per share)	$ 0.001	$ 0.001
Preferred shares, shares authorized (in shares)	50,000,000	50,000,000
Preferred shares, shares issued (in shares)	0	0
Preferred shares, shares outstanding (in shares)	0	0
Common shares, par value per share (in dollars per share)	$ 0.001	$ 0.001
Common shares, authorized (in shares)	400,000,000	400,000,000
Common shares, issued (in shares)	26,977,957	22,835,695
Common shares, outstanding (in shares)	26,977,957	22,835,695

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Incentive Share Plan

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Incentive Share Plan

INCENTIVE SHARE PLAN

On July 29, 2008, our shareholders approved the 2008 Plan. On December 22, 2010, our board of trustees amended the 2008 Plan to allow for awards in or related to Class B common shares pursuant to the 2008 Plan. On June 27, 2012, our Class B common shares were redesignated as “common shares.” The 2008 Plan, as amended, provides that awards may be made with respect to common shares of Whitestone or OP units, which may be converted into cash or, at our option, common shares of Whitestone. The maximum aggregate number of common shares that may be issued under the 2008 Plan is increased upon each issuance of common shares by Whitestone so that at any time the maximum number of shares that may be issued under the 2008 Plan shall equal 12.5% of the aggregate number of common shares of Whitestone and OP units issued and outstanding (other than shares and/or OP units issued to or held by Whitestone).

The Compensation Committee of our board of trustees administers the 2008 Plan, except with respect to awards to non-employee trustees, for which the 2008 Plan is administered by our board of trustees.  The Compensation Committee is authorized to grant share options, including both incentive share options and non-qualified share options, as well as share appreciation rights, either with or without a related option. The Compensation Committee is also authorized to grant restricted common shares, restricted common share units, performance awards and other share-based awards. 

On April 2, 2014, the Compensation Committee approved the modification of the vesting provisions with respect to awards of an aggregate of 633,704 restricted common shares and restricted common share units for 51 of our employees. The modified time-based shares will vest annually in three equal installments. The modified performance-based restricted common shares and restricted common share units were modified to include performance-based vesting based on achievement of certain absolute financial goals, as well as one to two years of time-based vesting post achievement of financial goals. Continued employment is required through the applicable vesting date. Additionally, 2,049,116 restricted performance-based common share units were granted with the same vesting conditions as the modified performance-based grants described above. If the performance targets are not met prior to December 31, 2018, any unvested performance-based restricted common shares and restricted common units will be forfeited.

On June 30, 2015, the Compensation Committee approved the grant of an aggregate of 143,000 time-based restricted common share units to James C. Mastandrea and David K. Holeman.

A summary of the share-based incentive plan activity as of and for the nine months ended September 30, 2015 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2015	2,411,068		$	14.45
Granted	318,630		13.53
Vested	(266,594	)	14.36
Forfeited	(99,269	)	14.49
Non-vested at September 30, 2015	2,363,835		$	14.33
Available for grant at September 30, 2015	963,401

A summary of our non-vested and vested shares activity for the nine months ended September 30, 2015 and years ended December 31, 2014, 2013, 2012 and 2011 is presented below:

	Shares Granted			Shares Vested
	Non-Vested Shares Issued	Weighted Average Grant-Date Fair Value		Vested Shares		Total Vest-Date Fair Value
						(in thousands)
Nine Months Ended September 30, 2015	318,630	$	13.53	(266,594	)	$	3,829
Year Ended December 31, 2014	2,058,930	14.40		(133,774	)	1,721
Year Ended December 31, 2013	328,005	15.43		(15,270	)	224
Year Ended December 31, 2012	99,700	13.03		(16,208	)	223
Year Ended December 31, 2011	—	—		(5,169	)	—

Total compensation recognized in earnings for share-based payments was $1,859,000 and $1,485,000 for the three months ended September 30, 2015 and 2014, respectively, and $5,202,000 and $3,092,000 for the nine months ended September 30, 2015 and 2014, respectively.

Based on our current financial projections, we expect approximately 82%of the unvested awards to vest over the next42months. As ofSeptember 30, 2015, there was approximately $10.8 million in unrecognized compensation cost related to outstanding non-vested performance-based shares, which are expected to vest over a period of 42 months and approximately $4.2 million in unrecognized compensation cost related to outstanding non-vested time-based shares, which are expected to be recognized over a period of approximately 18 months beginning on October 1, 2015.

We expect to record approximately $7.1 millionin non-cash share-based compensation expense in 2015 and$13.2 millionsubsequent to 2015. The unrecognized share-based compensation cost is expected to vest over a weighted average period of28months.The dilutive impact of the performance-based shares will be included in the denominator of the earnings per share calculation beginning in the period that the performance conditions are expected to be met.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 03, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Whitestone REIT
Entity Central Index Key	0001175535
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		26,985,799

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Grants to Trustees

9 Months Ended

Sep. 30, 2015

Grants to Trustees [Abstract]

Grants To Trustees

GRANTS TO TRUSTEES

On October 24, 2014, each of our four independent trustees and one trustee emeritus was granted 1,500 common shares, which vested immediately. The 7,500 common shares granted to our trustees had a grant date fair value of $14.53 per share. On December 9, 2014, two of our independent trustees elected to receive a total of 2,314 common shares with a grant date fair value of $14.69 in lieu of cash for board fees. The fair value of the shares granted were determined using quoted prices available on the date of grant.

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Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Property revenues
Rental revenues	$ 18,785	$ 14,407	$ 52,426	$ 41,464
Other revenues	5,814	4,132	15,395	11,712
Total property revenues	24,599	18,539	67,821	53,176
Property expenses
Property operation and maintenance	4,823	4,000	13,245	11,537
Real estate taxes	3,474	2,591	9,303	7,073
Total property expenses	8,297	6,591	22,548	18,610
Other expenses (income)
General and administrative	5,687	4,212	15,170	10,751
Depreciation and amortization	5,149	3,924	14,388	11,587
Interest expense	3,740	2,762	10,664	7,525
Interest, dividend and other investment income	(73)	(31)	(244)	(71)
Total other expense	14,503	10,867	39,978	29,792
Income from continuing operations before loss on sale or disposal of assets and income taxes	1,799	1,081	5,295	4,774
Provision for income taxes	(100)	(72)	(274)	(208)
Loss on sale or disposal of assets	(148)	0	(248)	(111)
Income from continuing operations	1,551	1,009	4,773	4,455
Income from discontinued operations	44	112	3	378
Net income	1,595	1,121	4,776	4,833
Less: Net income attributable to noncontrolling interests	25	18	78	105
Net income attributable to Whitestone REIT	$ 1,570	$ 1,103	$ 4,698	$ 4,728
Basic Earnings Per Share:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares (in dollars per share)	$ 0.05	$ 0.04	$ 0.18	$ 0.19
Income from discontinued operations attributable to Whitestone REIT (in dollars per share)	0.00	0.01	0.00	0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares (in dollars per share)	0.05	0.05	0.18	0.21
Diluted Earnings Per Share:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares (in dollars per share)	0.05	0.04	0.17	0.19
Income from discontinued operations attributable to Whitestone REIT (in dollars per share)	0.00	0.01	0.00	0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares (in dollars per share)	$ 0.05	$ 0.05	$ 0.17	$ 0.21
Weighted average number of common shares outstanding:
Basic (in shares)	26,476	22,482	23,988	22,182
Diluted (in shares)	27,082	22,690	24,583	22,359
Distributions declared per common share / OP unit (in dollars per share)	$ 0.2850	$ 0.2850	$ 0.8550	$ 0.8550
Consolidated Statements of Comprehensive Income
Net income	$ 1,595	$ 1,121	$ 4,776	$ 4,833
Other comprehensive gain (loss)
Unrealized gain (loss) on cash flow hedging activities	(184)	345	(460)	48
Unrealized gain (loss) on available-for-sale marketable securities	(8)	(56)	(106)	49
Comprehensive income	1,403	1,410	4,210	4,930
Less: Comprehensive income attributable to noncontrolling interests	22	26	69	107
Comprehensive income attributable to Whitestone REIT	$ 1,381	$ 1,384	$ 4,141	$ 4,823

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Debt

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Debt Disclosure

DEBT

Certain subsidiaries of Whitestone are the borrowers under various financing arrangements. These subsidiaries are separate legal entities and their respective assets and credit are not available to satisfy the debt of Whitestone or any of its other subsidiaries.

Debt consisted of the following as of the dates indicated (in thousands):

Description	September 30, 2015		December 31, 2014
Fixed rate notes
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)	$	10,280	$	10,460
$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 (2)	50,000		50,000
$37.0 million 3.76% Note, due December 1, 2020	35,386		36,090
$6.5 million 3.80% Note, due January 1, 2019	6,232		6,355
$19.0 million 4.15% Note, due December 1, 2024	19,000		19,000
$20.2 million 4.28% Note, due June 6, 2023	20,121		20,200
$14.0 million 4.34% Note, due September 11, 2024	14,000		14,000
$14.3 million 4.34% Note, due September 11, 2024	14,300		14,300
$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)	7,886		7,888
$2.6 million 5.46% Note, due October 1, 2023	2,559		2,583
$11.1 million 5.87% Note, due August 6, 2016	11,382		11,607
$0.9 million 2.97% Note, due November 28, 2015	212		—
Floating rate notes
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4)	225,600		120,100
$50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5)	50,000		50,000
	$	498,468	$	394,093

⁽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 previous unsecured revolving credit facility at 0.84%. On October 30, 2015, the maturity date of this loan was extended to October 30, 2020 (See Note 15).

⁽³⁾  Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term. As part of our acquisition of Paradise Plaza in August 2012, we recorded a discount on the note of $1.3 million, which amortizes into interest expense over the life of the loan and results in an imputed interest rate of 4.13%.

⁽⁴⁾  On October 30, 2015, the maturity date of the Revolver (as defined below) was extended to October 30, 2019 and $100 million of borrowings under the Revolver (as defined below) was converted to a new term loan under the Facility (as defined below) with a rate of LIBOR plus 1.65% to 2.25% and a maturity date of October 30, 2022 (See Note 15).

⁽⁵⁾  On October 30, 2015, the maturity date of this loan was extended to January 29, 2021 (See Note 15).

On December 24, 2014, we assumed a $2.6 million promissory note as part of our acquisition of the hard corner at Village Square at Dana Park (See Note 14). The 5.46% fixed interest rate note matures October 1, 2023.

On November 26, 2014, we, operating through our subsidiary, Whitestone Headquarters Village, LLC, a Delaware limited liability company, entered into a $19.0 million promissory note (the “Headquarters Note”), with a fixed interest rate of 4.15% payable to Morgan Stanley Bank, N.A. and a maturity date of December 1, 2024. Proceeds from the Headquarters Note were used to repay a portion of the Facility (as defined below).

On November 7, 2014, we, through our Operating Partnership, entered into an unsecured revolving credit facility (the “Facility”) with the lenders party thereto, with BMO Capital Markets, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and U.S. Bank, National Association, as co-lead arrangers and joint book runners, and Bank of Montreal, as administrative agent (the “Agent”). The Facility amended and restated our previous unsecured revolving credit facility. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital. We intend to use the additional proceeds from the Facility for general corporate purposes, including property acquisitions, debt repayment, capital expenditure, the expansion, redevelopment and re-tenanting of properties in our portfolio and working capital.

The Facility is comprised of three tranches:

• $400 million unsecured revolving credit facility (the “Revolver”);

• $50 million unsecured term loan (the “Term Loan 1”); and

• $50 million unsecured term loan (the “Term Loan 2”).

The Facility includes an accordion feature that will allow the Operating Partnership to increase the borrowing capacity to $700 million, upon the satisfaction of certain conditions. The Revolver will mature on November 7, 2018, with an option to extend for one additional year to November 7, 2019, subject to certain conditions, including payment of an extension fee. The Term Loan 1 will mature on February 17, 2017, and the Term Loan 2 will mature on November 7, 2019.

Borrowings under the Facility accrue interest (at the Operating Partnership's option) at a Base Rate or an Adjusted LIBOR plus an applicable margin based upon our then existing leverage. The applicable margin for Adjusted LIBOR borrowings ranges from 1.40% to 1.95% for the Revolver and 1.35% to 1.90% for the term loans. Base Rate means the higher of: (a) the Agent's prime commercial rate, (b) the sum of (i) the average rate quoted by the Agent by two or more federal funds brokers selected by the Agent for sale to the Agent at face value of federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1.00%, and (c) the LIBOR rate for such day plus 1.00%. Adjusted LIBOR means LIBOR divided by one minus the Eurodollar Reserve Percentage. The Eurodollar Reserve Percentage means the maximum reserve percentage at which reserves are imposed by the Board of Governors of the Federal Reserve System on eurocurrency liabilities.

We serve as the guarantor for funds borrowed by the Operating Partnership under the Facility. The Facility contains customary terms and conditions, including, without limitation, affirmative and negative covenants such as information reporting requirements, maximum secured indebtedness to total asset value, minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges, and maintenance of a minimum net worth. The Facility also contains customary events of default with customary notice and cure, including, without limitation, nonpayment, breach of covenant, misrepresentation of representations and warranties in a material respect, cross-default to other major indebtedness, change of control, bankruptcy and loss of REIT tax status. As of September 30, 2015, we were in compliance with all covenants under the Facility.

As of September 30, 2015, $325.6 million was drawn on the Facility, and our remaining borrowing capacity was $174.4 million. Proceeds from the Facility were used for general corporate purposes, including property acquisitions, debt repayment, capital expenditures, the expansion, redevelopment and retenanting of properties in our portfolio and working capital. On October 30, 2015, we, through our Operating Partnership, entered into the first amendment to the Facility. See Note 15.

On September 3, 2014, we, operating through our subsidiary, Whitestone Pecos Ranch, LLC, a Delaware limited liability company, entered into a $14.0 million promissory note (the “Pecos Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Pecos Note were used to repay a portion of our previous unsecured revolving credit facility.

On August 26, 2014, we, operating through our subsidiary, Whitestone Shops at Starwood, LLC, a Delaware limited liability company, entered into a $14.3 million promissory note (the “Starwood Note”), with a fixed interest rate of 4.34% payable to Wells Fargo Bank, National Association and a maturity date of September 11, 2024. Proceeds from the Starwood Note were used to repay a portion of our previous unsecured revolving credit facility.

As of September 30, 2015, our $172.7 million in secured debt was collateralized by 20 properties with a carrying value of $214.4 million.  Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties.  As of September 30, 2015, we were in compliance with all loan covenants.

Scheduled maturities of our outstanding debt as of September 30, 2015 were as follows (in thousands):

Year	Amount Due
2015	$	730
2016	13,269
2017	60,212
2018	237,736
2019	58,049
Thereafter	128,472
Total	$	498,468

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Unamortized Leasing Commissions and Loan Costs

9 Months Ended

Sep. 30, 2015

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Unamortized Leasing Comissions and Loan Costs

UNAMORTIZED LEASE COMMISSIONS AND LOAN COSTS

Costs which have been deferred consist of the following (in thousands):

	September 30, 2015			December 31, 2014
Lease commissions	$	6,566		$	5,936
Deferred financing cost	5,821			5,785
Total cost	12,387			11,721
Less: lease commissions accumulated amortization	(2,684		)	(2,373		)
Less: deferred financing cost accumulated amortization	(1,370		)	(469		)
Total cost, net of accumulated amortization	$	8,333		$	8,879

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Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-Sale Securities

All of our marketable securities were classified as available-for-sale securities as of September 30, 2015 and December 31, 2014. Available-for-sale securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	654	$	—	$	(240	)	$	414
Total available-for-sale securities	$	654	$	—	$	(240	)	$	414

	December 31, 2014
	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value
Real estate sector common stock	$	1,106	$	—	$	(133	)	$	973
Total available-for-sale securities	$	1,106	$	—	$	(133	)	$	973

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Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Historically, our management has not differentiated results of operations by property type or location and, therefore, does not present segment information.

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Federal income taxes are not provided because we intend to and believe we qualify as a REIT under the provisions of the Internal Revenue Code (the “Code”) and because we have distributed and intend to continue to distribute all of our taxable income to our shareholders.  As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our shareholders and meet certain income sources and investment restriction requirements.  In addition, REITs are subject to a number of organizational and operational requirements.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.

Taxable income differs from net income for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and rental revenue. 

We are subject to the Texas Margin Tax, which is computed by applying the applicable tax rate (1% for us) to the profit margin, which generally will be determined for us as total revenue less a 30% standard deduction.  Although the Texas Margin Tax is not an income tax, FASB ASC 740, “Income Taxes” applies to the Texas Margin Tax.  For the three months ended September 30, 2015 and 2014, we recognized approximately $104,000 and $71,000 in margin tax provision, respectively, and for the nine months ended September 30, 2015 and 2014, we recognized approximately $292,000 and $180,000 in margin tax provision, respectively.

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Derivatives and Hedging Activities

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

DERIVATIVES AND HEDGING ACTIVITIES

The fair value of our interest rate swaps is as follows (in thousands):

	Balance Sheet Location	Estimated Fair Value
Interest rate swaps:
September 30, 2015	Accounts payable and accrued expenses	$	1,212
December 31, 2014	Accounts payable and accrued expenses	$	1,016

A summary of our interest rate swap activity is as follows (in thousands):

	Amount Recognized as Comprehensive Income (Loss)			Location of Loss Recognized in Earnings	Amount of Loss Recognized in Earnings (1)
Three months ended September 30, 2015	$	(184	)	Interest expense	$	(207	)
Three months ended September 30, 2014	$	345		Interest expense	$	(243	)
Nine months ended September 30, 2015	$	(460	)	Interest expense	$	(617	)
Nine months ended September 30, 2014	$	48		Interest expense	$	(625	)

⁽¹⁾  We did not recognize any ineffective portion of our interest rate swaps in earnings for the three and nine months ended September 30, 2015 and 2014.

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Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per share for our common shareholders is calculated by dividing income from continuing operations excluding amounts attributable to unvested restricted shares and the net income attributable to noncontrolling interests by our weighted average common shares outstanding during the period.  Diluted earnings per share is computed by dividing the net income attributable to common shareholders excluding amounts attributable to unvested restricted shares and the net income attributable to noncontrolling interests by the weighted average number of common shares including any dilutive unvested restricted shares.

Certain of our performance-based restricted common shares are considered participating securities that require the use of the two-class method for the computation of basic and diluted earnings per share.  During the three months ended September 30, 2015 and 2014, 435,440 and 425,080 OP units, respectively, were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive, and during the nine months ended September 30, 2015 and 2014, 406,277 and 495,280 OP units, respectively, were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive.

For the three months ended September 30, 2015 and 2014, distributions of $139,000 and $78,000, respectively, were made to holders of certain restricted common shares, $9,000 and $24,000, respectively, of which were charged against earnings. For the nine months ended September 30, 2015 and 2014, distributions of $427,000 and $195,000, respectively, were made to holders of certain restricted common shares, $27,000 and $68,000, respectively, of which were charged against earnings. See Note 11 for information related to restricted common shares under the 2008 Plan.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2015			2014			2015			2014
Numerator:
Income from continuing operations	$	1,551		$	1,009		$	4,773		$	4,455
Less: Net income attributable to noncontrolling interests	(25		)	(15		)	(78		)	(97		)
Distributions paid on unvested restricted shares	(130		)	(54		)	(400		)	(127		)
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	1,396			940			4,295			4,231
Income from discontinued operations	44			112			3			378
Less: Net income attributable to noncontrolling interests	—			(3		)	—			(8		)
Income from discontinued operations attributable to Whitestone REIT	44			109			3			370
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	1,440		$	1,049		$	4,298		$	4,601
Denominator:
Weighted average number of common shares - basic	26,476			22,482			23,988			22,182
Effect of dilutive securities:
Unvested restricted shares	606			208			595			177
Weighted average number of common shares - dilutive	27,082			22,690			24,583			22,359
Earnings Per Share:
Basic:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.18		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.18		$	0.21
Diluted:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.05		$	0.04		$	0.17		$	0.19
Income from discontinued operations attributable to Whitestone REIT	0.00			0.01			0.00			0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.05		$	0.05		$	0.17		$	0.21

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Equity

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Equity

EQUITY

Common Shares

Under our declaration of trust, as amended, we have authority to issue up to 400,000,000 common shares of beneficial interest, $0.001 par value per share, and up to 50,000,000 preferred shares of beneficial interest, $0.001 par value per share.

Equity Offerings

On June 26, 2015, we completed the sale of 3,750,000 common shares, $0.001 par value per share, at a purchase price of $13.3386 per share. Total net proceeds from the offering, after deducting offering expenses, were approximately $49.7 million, which we contributed to the Operating Partnership in exchange for OP units. The Operating Partnership used the net proceeds from this offering to repay a portion of the Facility and for general corporate purposes.

On June 19, 2013, we entered into five equity distribution agreements for an at-the-market distribution program.  On August 14, 2013, we entered into a sixth equity distribution agreement on substantially similar terms as the existing equity distribution agreements and amended the existing equity distribution agreements in order to add an additional placement agent (together, the “2013 equity distribution agreements”). Pursuant to the terms and conditions of the 2013 equity distribution agreements, we could issue and sell up to an aggregate of $50 million of our common shares. Actual sales would depend on a variety of factors to be determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and were made in transactions that were deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). We had no obligation to sell any of our common shares, and could at any time suspend offers under the 2013 equity distribution agreements or terminate the 2013 equity distribution agreements. During the three and nine months ended September 30, 2015, we did not sell any common shares under the 2013 equity distribution program. During the three and nine months ended September 30, 2014, we sold 377,983 common shares under the 2013 equity distribution program, with net proceeds to us of approximately $5.3 million. In connection with such sales, we paid compensation of $0.1 million to the placement agents.

On June 4, 2015, we entered into nine amended and restated equity distribution agreements (the “2015 equity distribution agreements”). Pursuant to the terms and conditions of the 2015 equity distribution agreements, we can issue and sell up to an aggregate of $50 million of our common shares. Actual sales will depend on a variety of factors to be determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and will be made in transactions that will be deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act. We have no obligation to sell any of our common shares, and can at any time suspend offers under the 2015 equity distribution agreements or terminate the 2015 equity distribution agreements. We have not sold any common shares under the 2015 equity distribution agreements.

Operating Partnership Units

Substantially all of our business is conducted through our Operating Partnership.  We are the sole general partner of the Operating Partnership.  As of September 30, 2015, we owned a 98.1% interest in the Operating Partnership.

Limited partners in the Operating Partnership holding OP units have the right to convert their OP units into cash or, at our option, common shares at a ratio of one OP unit for one common share.  Distributions to OP unit holders are paid at the same rate per unit as distributions per share to holders of Whitestone common shares.  As of September 30, 2015 and December 31, 2014, there were 27,364,852 and 22,926,599 OP units outstanding, respectively.  We owned 26,856,737 and 22,528,207 OP units as of September 30, 2015 and December 31, 2014, respectively. The balance of the OP units is owned by third parties, including certain trustees.  Our weighted average share ownership in the Operating Partnership was approximately 98.4% and 98.2% for the three months ended September 30, 2015 and 2014, respectively, and 98.4% and 97.8% for the nine months ended September 30, 2015 and 2014, respectively. During the three months ended September 30, 2015 and 2014, 1,693 and 64,226 OP units, respectively, were redeemed for an equal number of common shares, and during thenine months ended September 30, 2015 and 2014, 10,277 and 160,060 OP units, respectively, were redeemed for an equal number of common shares.

Distributions

The following table summarizes the cash distributions paid or payable to holders of common shares and to holders of noncontrolling OP units during each quarter during 2014 and the nine months ended September 30, 2015 (in thousands, except per share/unit data):

	Common Shares				Noncontrolling OP Unit Holders				Total
Quarter Paid	Distributions Per Common Share		Total Amount Paid		Distributions Per OP Unit		Total Amount Paid		Total Amount Paid
2015
Third Quarter	$	0.2850	$	7,664	$	0.2850	$	122	$	7,786
Second Quarter	0.2850		6,601		0.2850		111		6,712
First Quarter	0.2850		6,526		0.2850		113		6,639
Total	$	0.8550	$	20,791	$	0.8550	$	346	$	21,137
2014
Fourth Quarter	$	0.2850	$	6,484	$	0.2850	$	114	$	6,598
Third Quarter	0.2850		6,457		0.2850		126		6,583
Second Quarter	0.2850		6,367		0.2850		152		6,519
First Quarter	0.2850		6,231		0.2850		158		6,389
Total	$	1.1400	$	25,539	$	1.1400	$	550	$	26,089

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Marketable Securities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 654,000		$ 654,000		$ 1,106,000
Gains in Accumulated Other Comprehensive Income	0		0		0
Losses in Accumulated Other Comprehensive Income	(240,000)		(240,000)		(133,000)
Estimated Fair Value	414,000		414,000		973,000
Proceeds from sales of marketable securities	0	$ 0	496,000	$ 0
Gross realized gains on available-for-sale securities			44,000
Net unrealized holding loss on available-for-sale securities			(240,000)	$ (180,000)
Real Estate Common Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	654,000		654,000		1,106,000
Gains in Accumulated Other Comprehensive Income	0		0		0
Losses in Accumulated Other Comprehensive Income	(240,000)		(240,000)		(133,000)
Estimated Fair Value	$ 414,000		$ 414,000		$ 973,000

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On October 30, 2015, we, through our Operating Partnership, entered into the first amendment to the Facility (the “First Amendment”). Pursuant to the First Amendment, we made the following amendments to the Facility:

• extended the maturity date of the Revolver to October 30, 2019 from November 7, 2018;

• converted $100 million of outstanding borrowings under the Revolver to a new $100 million unsecured term loan under the Facility (“Term Loan 3”) with a maturity date of October 30, 2022.

• extended the maturity date of Term Loan 1 to October 30, 2020 from February 17, 2017; and

• extended the maturity date of Term Loan 2 to January 29, 2021 from November 7, 2019.

Borrowings under Term Loan 3 accrue interest (at the Operating Partnership's option) at a Base Rate or an Adjusted LIBOR plus an applicable margin based upon our then existing leverage. The applicable margin for Adjusted LIBOR borrowings ranges from 1.65% to 2.25% for Term Loan 3.

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Debt (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of Debt

Debt consisted of the following as of the dates indicated (in thousands):

Description	September 30, 2015		December 31, 2014
Fixed rate notes
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)	$	10,280	$	10,460
$50.0 million, 0.84% plus 1.75% to 2.50% Note, due February 17, 2017 (2)	50,000		50,000
$37.0 million 3.76% Note, due December 1, 2020	35,386		36,090
$6.5 million 3.80% Note, due January 1, 2019	6,232		6,355
$19.0 million 4.15% Note, due December 1, 2024	19,000		19,000
$20.2 million 4.28% Note, due June 6, 2023	20,121		20,200
$14.0 million 4.34% Note, due September 11, 2024	14,000		14,000
$14.3 million 4.34% Note, due September 11, 2024	14,300		14,300
$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)	7,886		7,888
$2.6 million 5.46% Note, due October 1, 2023	2,559		2,583
$11.1 million 5.87% Note, due August 6, 2016	11,382		11,607
$0.9 million 2.97% Note, due November 28, 2015	212		—
Floating rate notes
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018 (4)	225,600		120,100
$50.0 million, LIBOR plus 1.35% to 1.90% Note, due November 7, 2019 (5)	50,000		50,000
	$	498,468	$	394,093

⁽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 previous unsecured revolving credit facility at 0.84%. On October 30, 2015, the maturity date of this loan was extended to October 30, 2020 (See Note 15).

⁽³⁾  Promissory note includes an interest rate swap that fixed the interest rate at 5.72% for the duration of the term. As part of our acquisition of Paradise Plaza in August 2012, we recorded a discount on the note of $1.3 million, which amortizes into interest expense over the life of the loan and results in an imputed interest rate of 4.13%.

⁽⁴⁾  On October 30, 2015, the maturity date of the Revolver (as defined below) was extended to October 30, 2019 and $100 million of borrowings under the Revolver (as defined below) was converted to a new term loan under the Facility (as defined below) with a rate of LIBOR plus 1.65% to 2.25% and a maturity date of October 30, 2022 (See Note 15).

⁽⁵⁾  On October 30, 2015, the maturity date of this loan was extended to January 29, 2021 (See Note 15).

Schedule of Maturities of Debt

Scheduled maturities of our outstanding debt as of September 30, 2015 were as follows (in thousands):

Year	Amount Due
2015	$	730
2016	13,269
2017	60,212
2018	237,736
2019	58,049
Thereafter	128,472
Total	$	498,468

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Subsequent Events (Details) - USD ($)	Oct. 30, 2015	Nov. 07, 2014
Revolving credit facility | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate		1.00%
Revolving credit facility | Minimum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate		1.40%
Revolving credit facility | Maximum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate		1.95%
Term loan
Subsequent Event [Line Items]
Face amount of debt		$ 50,000,000
Term loan | Minimum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate		1.35%
Term loan | Maximum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate		1.90%
Subsequent Event | Revolving credit facility
Subsequent Event [Line Items]
Credit facility outstanding	$ 100,000,000
Subsequent Event | Term loan
Subsequent Event [Line Items]
Face amount of debt	$ 100,000,000
Subsequent Event | Term loan | Minimum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate	1.65%
Subsequent Event | Term loan | Maximum | LIBOR Rate
Subsequent Event [Line Items]
Basis spread on variable rate	2.25%

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Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Distributions to holders of certain restricted common shares charged against earnings	$ 1,859	$ 1,485	$ 5,202	$ 3,092
Numerator:
Income from continuing operations	1,551	1,009	4,773	4,455
Less: Net income attributable to noncontrolling interests	(25)	(15)	(78)	(97)
Distributions paid on unvested restricted shares	(130)	(54)	(400)	(127)
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	1,396	940	4,295	4,231
Income from discontinued operations	44	112	3	378
Less: Net income attributable to noncontrolling interests	0	(3)	0	(8)
Income from discontinued operations attributable to Whitestone REIT	44	109	3	370
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$ 1,440	$ 1,049	$ 4,298	$ 4,601
Denominator:
Weighted average number of common shares - basic (in shares)	26,476,000	22,482,000	23,988,000	22,182,000
Effect of dilutive securities:
Unvested restricted shares (in shares)	606,000	208,000	595,000	177,000
Weighted average number of common shares - dilutive (in shares)	27,082,000	22,690,000	24,583,000	22,359,000
Basic:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares (in dollars per share)	$ 0.05	$ 0.04	$ 0.18	$ 0.19
Income from discontinued operations attributable to Whitestone REIT (in dollars per share)	0.00	0.01	0.00	0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares (in dollars per share)	0.05	0.05	0.18	0.21
Diluted:
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares (in dollars per share)	0.05	0.04	0.17	0.19
Income from discontinued operations attributable to Whitestone REIT (in dollars per share)	0.00	0.01	0.00	0.02
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares (in dollars per share)	$ 0.05	$ 0.05	$ 0.17	$ 0.21
OP Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
OP units excluded from diluted earnings per share because their effect would be anti-dilutive	435,440	425,080	406,277	495,280
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Distributions to holders of certain restricted common shares	$ 139	$ 78	$ 427	$ 195
Distributions to holders of certain restricted common shares charged against earnings	$ 9	$ 24	$ 27	$ 68

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Consolidated Statement of Changes in Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands		Total	Common Shares [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total Shareholders' Equity [Member]	Noncontrolling Interests [Member]
Beginning Balance, at Dec. 31, 2014		$ 213,323	$ 23	$ 304,078	$ (93,938)	$ (91)	$ 210,072	$ 3,251
Beginning Balance (in shares), at Dec. 31, 2014		22,835,695	22,836,000
Beginning Balance (in units), at Dec. 31, 2014								398,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exchange of noncontrolling interest OP units for common shares (in shares)			10,000					10,000
Exchange of noncontrolling interest OP units for common shares		$ 0	$ 0	83		1	84	$ (84)
Issuance of shares under dividend reinvestment plan (in shares)			5,000
Issuance of shares under dividend reinvestment plan		71		71			71
Issuance of common shares, net of offering costs (in shares)			3,750,000
Issuance of common shares, net of offering costs		49,717	$ 4	49,713			49,717
Issuance of OP units		1,333						$ 1,333
Issuance of OP units (in shares)								120,000
Repurchase of common shares (in shares)	[1]		(73,000)
Repurchase of common shares	[1]	(1,018)		(1,018)			(1,018)
Share-based compensation (in shares)			450,000
Share-based compensation		5,209		5,209			5,209
Distributions		(22,390)			(22,023)		(22,023)	$ (367)
Unrealized loss on change in value of cash flow hedge		(460)				(452)	(452)	(8)
Unrealized loss on change in fair value of available-for-sale marketable securities		(106)				(104)	(104)	(2)
Net income		4,776			4,698		4,698	78
Ending Balance, at Sep. 30, 2015		$ 250,455	$ 27	$ 358,136	$ (111,263)	$ (646)	$ 246,254	$ 4,201
Ending Balance (in shares), at Sep. 30, 2015		26,977,957	26,978,000
Ending Balance (in units), at Sep. 30, 2015								508,000

[1] During the nine months ended September 30, 2015, the Company acquired common shares held by employees who tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares.

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Accrued Rents and Accounts Receivable, Net

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Accrued Rent and Accounts Receivable, Net

ACCRUED RENTS AND ACCOUNTS RECEIVABLE, NET

Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands):

	September 30, 2015			December 31, 2014
Tenant receivables	$	9,855		$	7,998
Accrued rents and other recoveries	10,237			8,800
Allowance for doubtful accounts	(5,993		)	(4,964		)
Total	$	14,099		$	11,834

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Derivatives and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of activity and fair value of interest rate swaps

A summary of our interest rate swap activity is as follows (in thousands):

	Amount Recognized as Comprehensive Income (Loss)			Location of Loss Recognized in Earnings	Amount of Loss Recognized in Earnings (1)
Three months ended September 30, 2015	$	(184	)	Interest expense	$	(207	)
Three months ended September 30, 2014	$	345		Interest expense	$	(243	)
Nine months ended September 30, 2015	$	(460	)	Interest expense	$	(617	)
Nine months ended September 30, 2014	$	48		Interest expense	$	(625	)

⁽¹⁾  We did not recognize any ineffective portion of our interest rate swaps in earnings for the three and nine months ended September 30, 2015 and 2014.

The fair value of our interest rate swaps is as follows (in thousands):

	Balance Sheet Location	Estimated Fair Value
Interest rate swaps:
September 30, 2015	Accounts payable and accrued expenses	$	1,212
December 31, 2014	Accounts payable and accrued expenses	$	1,016

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Debt (Narrative) (Details)	Nov. 07, 2014 USD ($)	Sep. 30, 2015 USD ($) CollateralizedProperties	Dec. 24, 2014 USD ($)	Nov. 26, 2014 USD ($)	Sep. 03, 2014 USD ($)	Aug. 26, 2014 USD ($)
Debt Instrument [Line Items]
Secured debt		$ 172,700,000
Number of collateralized properties (in collateralized properties) | CollateralizedProperties		20
Carrying value of collateralized properties		$ 214,400,000
Village Square at Dana Park Note [Member]
Debt Instrument [Line Items]
Face amount of debt			$ 2,600,000
Stated interest rate			5.46%
Headquarters Note [Member]
Debt Instrument [Line Items]
Face amount of debt				$ 19,000,000
Stated interest rate				4.15%
Pecos Note [Member]
Debt Instrument [Line Items]
Face amount of debt					$ 14,000,000
Stated interest rate					4.34%
Starwood Note [Member]
Debt Instrument [Line Items]
Face amount of debt						$ 14,300,000
Stated interest rate						4.34%
Revolving credit facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 400,000,000
Credit facility, expanded maximum borrowing capacity	$ 700,000,000
Revolving credit facility | LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Revolving credit facility | LIBOR Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.40%
Revolving credit facility | LIBOR Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	1.95%
Revolving credit facility | Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018
Debt Instrument [Line Items]
Credit facility, remaining borrowing capacity		174,400,000
Term loan
Debt Instrument [Line Items]
Face amount of debt	$ 50,000,000
Term loan | LIBOR Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.35%
Term loan | LIBOR Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	1.90%
Floating rate notes | Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due November 7, 2018
Debt Instrument [Line Items]
Line of credit outstanding		$ 325,600,000
Existing term loan
Debt Instrument [Line Items]
Face amount of debt	$ 50,000,000

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Real Estate

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Real Estate Disclosure

REAL ESTATE

Property Acquisitions. On August 28, 2015, we acquired the hard corner at our Gilbert Tuscany Village property for approximately $1.7 million in cash and net prorations. The 14,603 square foot single-tenant property was vacant at the time of purchase and is located in Gilbert, Arizona.

On August 26, 2015, we acquired two parcels of undeveloped land totaling 3.12 acres for 120,000 OP units. The OP units, are convertible on a one-for-one basis for Whitestone REIT common shares, subject to certain restrictions. The undeveloped land parcels are adjacent to our Keller Place property.

On August 26, 2015, we acquired Keller Place, a property that meets our Community Centered Property™ strategy, for approximately $12.0 million in cash and net prorations. The 93,541 square foot property was 92% leased at the time of purchase and is located in the Keller suburb of Fort Worth, Texas.

On August 26, 2015, we acquired Quinlan Crossing, a property that meets our Community Centered Property™ strategy, for approximately $37.5 million in cash and net prorations. The 109,892 square foot property was 95% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village North, a property that meets our Community Centered Property™ strategy, for approximately $12.5 million in cash and net prorations. The 27,045 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On July 2, 2015, we acquired Parkside Village South, a property that meets our Community Centered Property™ strategy, for approximately $32.5 million in cash and net prorations. The 90,101 square foot property was 100% leased at the time of purchase and is located in Austin, Texas.

On May 27, 2015, we acquired Davenport Village, a property that meets our Community Centered Property™ strategy, for approximately $45.5 million in cash and net prorations. The 128,934 square foot property was 85% leased at the time of purchase and is located in Austin, Texas.

On March 31, 2015, we acquired City View Village, a property that meets our Community Centered Property™ strategy, for approximately $6.3 million in cash and net prorations. The 17,870 square foot property was 100% leased at the time of purchase and is located in San Antonio, Texas.

On December 24, 2014, we acquired the hard corner at our Village Square at Dana Park property for approximately $4.7 million, in exchange for the assumption of a $2.6 million non-recourse loan and cash of $2.1 million. The 12,047 square foot property was 88% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona.

On December 24, 2014, we acquired The Shops at Williams Trace, a property that meets our Community Centered Property™ strategy, for approximately $20.2 million in cash and net prorations. The 132,991 square foot property was 87% leased at the time of purchase and is located in Sugar Land, Texas.

On December 24, 2014, we acquired Williams Trace Plaza, a property that meets our Community Centered Property™ strategy, for approximately $20.4 million in cash and net prorations. The 129,222 square foot property was 95% leased at the time of purchase and is located in Sugar Land, Texas.

On December 19, 2014, we acquired a 1.39 acre parcel of undeveloped land for $0.9 million in cash and net prorations. The undeveloped land parcel is adjacent to our Fulton Ranch Towne Center property.

On November 5, 2014, we acquired Fulton Ranch Towne Center, a property that meets our Community Centered Property™strategy, for approximately$29.3 millionin cash and net prorations. The113,281square foot property was86%leased at the time of purchase and is located in Chandler, Arizona.

On November 5, 2014, we acquired The Promenade at Fulton Ranch, a property that meets our Community Centered Property™strategy, for approximately$18.6 millionin cash and net prorations. The98,792square foot property was76%leased at the time of purchase and is located in Chandler, Arizona.

On September 19, 2014, we acquired The Strand at Huebner Oaks, a property that meets our Community Centered Property™ strategy, for approximately $18.0 million in cash and net prorations. The 73,920 square foot property was 90% leased at the time of purchase and is located in San Antonio, Texas.

On July 1, 2014, we acquired Heritage Trace Plaza, a property that meets our Community Centered Property™strategy, for approximately$20.1 millionin cash and net prorations. The70,431square foot property was98%leased at the time of purchase and is located in Fort Worth, Texas.

Property Dispositions. On December 31, 2014, we completed the sale of three office buildings (Zeta, Royal Crest and Featherwood) located in the Clear Lake suburb of Houston, Texas, for $10.3 million. This disposition was pursuant to our strategy of recycling capital by disposing of non-core properties that do not fit our Community Centered Property™ strategy. As part of the transaction, we provided short-term seller financing of $2.5 million. We recorded a gain on sale of $4.4 million, including recognizing a $1.9 million gain on sale for the year ended December 31, 2014 and deferring the remaining $2.5 million gain on sale to be recognized upon receipt of principal payments on the financing provided by us.

The operating results for properties classified as discontinued operations consists of the following (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Property revenues	$	43		$	389	43			1,213
Property expenses	—			201		41			545
Depreciation and amortization	—			74		—			227
Interest expense	—			—		—			58
Provision for income taxes	—			2		—			7
Gain on sale or disposal of assets	(1		)	—		(1		)	(2		)
Income from discontinued operations	$	44		$	112	$	3		$	378