EX-99.2 3 exhibit992supplementaloper.htm EXHIBIT 99.2 Exhibit







CORPORATE PROFILE
 
 
 
 
 
 
 
 
 
NYSE: WSR
 
Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust that owns,
Common Shares
 
redevelops, repositions, leases, manages and operates value-add Community Centered Properties TM.
 
 
As of December 31, 2015, we owned 70 Community Centered PropertiesTM with approximately
70 Community Centers
 
6.0 million square feet of gross leasable area, located in six of the top markets in the United
6.0 Million Sq. Ft. of gross
 
States in terms of population growth: Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix
leasable area
 
and San Antonio. Headquartered in Houston, Texas, we were founded in 1998.
1,471 Tenants
 
 
 
 
We focus on value creation in our properties, as we market, lease and manage our properties. We
6 Top Growth Markets
 
invest in properties that are or can become Community Centered Properties TM from which our tenants
Austin
 
deliver needed services to the surrounding community. We focus on properties with smaller rental
Chicago
 
spaces that present opportunities for attractive returns.
Dallas-Fort Worth
 
 
Houston
 
Our strategic efforts target entrepreneurial, service-oriented tenants at each property who provide
Phoenix
 
services to their respective surrounding communities. Operations include an internal management
San Antonio
 
structure providing cost-effective services to locally-oriented, smaller space tenants. Multi-cultural
 
 
community focus sets us apart from traditional commercial real estate operators. We value diversity
Fiscal Year End
 
on our team and maintain in-house leasing, property management, marketing, construction and
12/31
 
maintenance departments with culturally diverse and multi-lingual associates who understand the
 
 
particular needs of our tenants and neighborhoods.
Common Shares &
 
 
Units Outstanding*:
 
We have a diverse tenant base concentrated on service offerings such as specialty retail, grocery,
Common Shares: 27.0 Million
 
restaurants and medical, educational and financial services. These tenants tend to occupy smaller spaces
Operating Partnership Units:
 
(less than 3,000 square feet) and, as of December 31, 2015, provided a 47% premium rental rate
     0.5 Million
 
compared to our larger space tenants. The largest of our 1,471 tenants comprised less than 2.6% of our
 
 
annualized base rental revenues for the three months ended December 31, 2015.
 
 
 
 
 
 
 
 
 
 
 
 
Distribution (per share / unit):
 
Investor Relations:
 
 
 
 
Quarter: $ 0.2850
 
Whitestone REIT
 
 
 
 
 
ICR Inc.
Annualized: $ 1.1400
 
Bob Aronson, Director of Investor Relations
 
 
 
Brad Cohen
Dividend Yield: 10.9%
 
2600 South Gessner, Suite 500, Houston, Texas 77063
 
 
 
203.682.8211
 
 
713.435.2219 email: ir@whitestonereit.com
 
 
Board of Trustees:
 
website: www.whitestonereit.com
 
 
James C. Mastandrea
 
 
 
 
Daryl J. Carter
 
Analyst Coverage:
 
 
 
 
 
 
Donald F. Keating
 
BMO Capital Markets
 
Hilliard Lyons
 
JMP Securities
 
Ladenburg Thalmann
Paul T. Lambert
 
Paul Adornato, CFA
 
Carol L. Kemple
 
Mitch Germain
 
Daniel P. Donlan
Jack L. Mahaffey
 
212.885.4170
 
502.588.1839
 
212.906.3546
 
212.409.2056
Trustee Emeritus:
 
Paul.Adornato@bmo.com
 
ckemple@hilliard.com
 
mgermain@jmpsecurities.com
 
ddonlan@ladenburg.com
Daniel G. DeVos
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* As of February 23, 2016
 
Maxim Group
 
Robert W. Baird & Co.
 
SunTrust Robinson Humphrey
 
Wunderlich Securities, Inc.
** Based on common share price
 
Michael Diana
 
RJ Milligan
 
Ki Bin Kim, CFA
 
Craig Kucera
of $10.42 as of close of market on
 
212.895.3641
 
813.273.8252
 
212.303.4124
 
540.277.3366
February 23, 2016.
 
mdiana@maximgrp.com
 
rjmilligan@rwbaird.com
 
kibin.kim@suntrust.com
 
ckucera@wundernet.com

1


WHITESTONE REIT ANNOUNCES 13% INCREASE IN FFO CORE PER SHARE AND 9% INCREASE IN INCOME FROM CONTINUING OPERATIONS PER SHARE FOR 2015; INTRODUCES 2016 FULL YEAR GUIDANCE

Houston, Texas, February 24, 2016 - Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today announced operating results for the fourth quarter and year ended December 31, 2015. All per share amounts presented in this news release are on a diluted per common share and operating partnership (“OP”) unit basis unless stated otherwise.

Company Highlights

For the year ended December 31, 2015 (Compared to 2014):

•
29.1% increase in revenues
•
31.4% increase in net operating income (“NOI”)
•
28.1% increase in income from continuing operations
•
27.0% increase in Funds From Operations (“FFO”) Core
•
12.5% increase in FFO Core to $1.35 on a per share basis
•
81.0% dividend to FFO Core ratio
•
9.4% increase in rental rates on new and renewal leases on a GAAP basis
•
$150 million in property acquisitions, the fourth consecutive year in excess of $100 million

For the quarter ended December 31, 2015 (Compared to Fourth Quarter of 2014):

•
33.3% increase in revenues
•
32.7% increase in NOI
•
133.8% increase in income from continuing operations
•
28.0% increase in FFO Core
•
6.3% increase in FFO Core to $0.34 on a per share basis
•
89.6% occupancy in the Company’s retail properties, up 90 basis points from December 31, 2014

Whitestone Overview

A quality portfolio of properties that offer significant growth potential meeting the daily necessities of fast-growing communities. Whitestone’s proven and differentiated approach to building the optimal mix of tenants that provide convenience and high-demand services reduces risk and generates superior financial results for both customers and Whitestone investors.

CEO Comments

“We are proud of our strong financial results for the quarter and the year,” said Jim Mastandrea, Chairman and Chief Executive Officer. “We are also pleased with the significant progress that we made this year with our 'internet-resistant' business model as we continued to focus on our goals of increasing occupancy, identifying growth opportunities within our portfolio, closing on accretive acquisitions in large, rapidly-growing markets and creating value for our shareholders.”


2

Mr. Mastandrea concluded, “Our neighborhood centers are located in the top growing markets of Austin, San Antonio, Dallas-Fort Worth, Houston and Phoenix and on the best retail corners of affluent communities with high household incomes. As I look ahead, I am optimistic that our innovative 'internet-resistant' operating model, supported by our flexible capital structure, will continue to generate strong financial results, provide us with the means to further grow our asset base through the redevelopment of core properties and the acquisition of new properties, provide strong coverage for our dividend and further enhance shareholder value.”
 
Real Estate Portfolio Update

Community Centered PropertiesTM Portfolio Statistics:
As of December 31, 2015, Whitestone owned 70 Community Centered PropertiesTM with 6.0 million square feet of gross leasable area. The portfolio is comprised of 44 properties in Texas, 25 in Arizona and one in Illinois that offer significant growth potential meeting the daily necessities of fast-growing communities. In Texas and Arizona, Whitestone’s Community Centered PropertiesTM are located in Austin (4), San Antonio (3), Dallas-Fort Worth (7), Houston (30) and Phoenix (25). In addition to being business friendly, these are five of the top markets in the country in terms of size, economic strength and population growth. Between 2000 and 2014, all of these cities experienced double-digit growth in population, with Austin at +35.8%, San Antonio at +23.4%, Dallas-Fort Worth at +20.5%, Phoenix at +15.8% and Houston at +13.2%. The neighborhood centers in these markets are located on the best retail corners embedded in affluent communities.

With its consumer-centric discipline, the Company strives for a tenant mix of national, regional and local tenants at each of its properties that meet the daily needs of the residents living in the surrounding neighborhoods. At the end of the fourth quarter, the Company's diversified tenant base was comprised of 1,471 tenants, with the largest tenant accounting for only 2.6% of annualized base rental revenues.  Lease terms range from less than one year for smaller tenants to over 15 years for larger tenants.  The leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance, and typically exclude restrictive lease clauses.

Leasing Activity:
During the fourth quarter, the leasing team signed 104 leases totaling 257,904 square feet in new, expansion and renewal leases, compared to 75 leases totaling 183,184 square feet in the fourth quarter of 2014. The total lease value added during the quarter was $19.0 million compared to $12.0 million during the same period last year. For the full year, total lease value added was $61.8 million, up 15.8% when compared to 2014.

The Company's total occupancy stood at 87.1% at year end.

Acquisition Activity:
In 2015, the Company spent a record $150 million acquiring six high-quality Community Centered PropertiesTM, which are all embedded in affluent, high income neighborhoods, and a strategic hard corner, at an existing center in our Phoenix market. The acquired properties added approximately 500,000 square feet to the Company’s portfolio. Reflecting the continuing diversification of Whitestone’s geographic footprint away from Houston, four of the retail properties are in Austin and one each is in San Antonio and Dallas.

Balance Sheet and Liquidity

Balance Sheet:
Reflecting the Company’s acquisition activity during the year and selective development and redevelopment, undepreciated real estate assets increased $161.9 million, or 24%, to $835.5 million at December 31, 2015 compared to December 31, 2014.


3

Liquidity, Debt and Credit Facility:
At December 31, 2015, 50 of the Company’s 70 properties were unencumbered by mortgage debt, with an undepreciated cost basis of $584.6 million. The Company had total real estate debt of $499.7 million, of which $372.1 million, or approximately 74%, was subject to fixed interest rates. The Company's weighted average interest rate on all fixed rate debt as of the end of the fourth quarter was 3.9% and the weighted average remaining term was 6.1 years.

At quarter end, Whitestone had $2.6 million of cash available on its balance sheet and $172.4 million of available capacity under its credit facility, before the $200 million accordion option.

In November, the Company enhanced its capital structure by amending its $500 million unsecured credit facility. The amendment extended and laddered the maturity dates of the revolver and two term loans that existed at the time, and provided for the conversion of $100 million of then outstanding borrowings under the revolver to a new seven-year term loan.

Dividend

On December 18, 2015, the Company declared a quarterly cash distribution of $0.285 per common share and OP unit for the first quarter of 2016, to be paid in three equal installments of $0.095 in January, February and March of 2016.

2016 FFO Core Guidance

The Company’s FFO Core guidance for 2016 is a range of $1.33 to $1.39 per share. The Company’s FFO (defined in accordance with the National Association of Real Estate Investment Trust’s (“NAREIT”) definition) guidance is a range of $1.06 to $1.12. This guidance reflects the Board’s and management’s view of current and future market conditions, as well as the earnings impact of events referenced elsewhere in this release and during the Company’s conference call. This guidance does not include the operational or capital impact of any future unannounced acquisition or disposition activity. Please refer to the “2016 Financial Guidance” section of the supplemental data package for the full list of guidance information.

Conference Call Information

In conjunction with the issuance of its financial results, you are invited to listen to the Company’s earnings release conference call to be broadcast live on Thursday, February 25, 2016 at 11:00 A.M. Eastern Time. The call will be led by James C. Mastandrea, Chairman and Chief Executive Officer, and David K. Holeman, Chief Financial Officer. Conference call access information is as follows:

Toll-Free Number (for domestic participants):         (877) 780-3381
Toll Number (for international participants):        (719) 457-2607

The conference call will be recorded and a telephone replay will be available through Thursday, March 10, 2016. Replay access information is as follows:

Toll-Free Number (for domestic participants):        (877) 870-5176
Toll Number (for international participants):        (858) 384-5517
Pass Code (for all participants):                5960416

To listen to a live webcast of the conference call, click on the Investor Relations tab of the Company’s website, www.whitestonereit.com, and then click on the webcast link. A replay of the call will be available on Whitestone’s website via the webcast link until the Company’s next earnings release. Additional information about Whitestone can be found on the Company’s website.
 

4

The fourth quarter and full year earnings release and supplemental data package will be located in the Investor Relations section of the Company’s website. For those without internet access, the earnings release and supplemental data package will be available by mail upon request. To receive a copy, please call the Company’s Investor Relations line at (713) 435-2219.

Supplemental Financial Information

Supplemental materials and details regarding Whitestone's results of operations, communities and tenants are available on the Company's website at www.whitestonereit.com.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust (“REIT”) that owns, redevelops, repositions, leases, manages and operates Community Centered PropertiesTM. Whitestone focuses on value creation in its community centers, concentrating on local service-oriented tenants. Whitestone's diversified tenant base provides service offerings including grocery, dining, health and wellness, education, services, entertainment and specialty retail. Founded in 1998, the Company is internally managed with a portfolio of 70 commercial properties in Texas, Arizona and Illinois. For additional information about the Company, please visit www.whitestonereit.com.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by the Company's use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “intend,” “anticipate,” “believe,” “continue” or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters.

The following are some of the factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: the Company's ability to meet its assumptions regarding its earnings guidance, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; the Company's ability to successfully identify and consummate suitable acquisitions; current adverse market and economic conditions; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic and regulatory changes; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code; and other factors detailed in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files with the Securities and Exchange Commission.

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


5

Non-GAAP Financial Measures

This release contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”) including FFO, FFO Core, and NOI. Following are explanations and reconciliations of these metrics to their most comparable GAAP metric.

FFO: Management believes that FFO is a useful measure of the Company's operating performance. The Company computes FFO as defined by NAREIT, which states that FFO should represent net income available to common shareholders (computed in accordance with GAAP) excluding gains or losses from sales of operating assets, impairment charges and extraordinary items, plus depreciation and amortization of operating properties, including the Company's share of unconsolidated real estate joint ventures and partnerships. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company's performance or to cash flow from operations as a measure of liquidity or ability to make distributions and service debt.

Management considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, management believes that FFO provides a more meaningful and accurate indication of the Company's performance and useful information for the investment community to compare Whitestone to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

Other REITs may use different methodologies for calculating FFO, and accordingly, the Company's FFO may not be comparable to other REITs. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding OP units for the periods presented.

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

NOI: Management believes that NOI is a useful measure of the Company's property operating performance. The Company defines NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets and capital expenditures and leasing costs, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company's property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to that of other REITs.

6


Contact Whitestone REIT:
Bob Aronson
Director of Investor Relations
Direct: (713) 435-2219; Mobile: (832) 364-8314


7


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

 
 
December 31, 2015
 
December 31, 2014
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
835,538

 
$
673,655

Accumulated depreciation
 
(89,580
)
 
(71,587
)
Total real estate assets
 
745,958

 
602,068

Cash and cash equivalents
 
2,587

 
4,236

Restricted cash
 
121

 
—

Marketable securities
 
435

 
973

Escrows and acquisition deposits
 
6,668

 
4,092

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
15,466

 
11,834

Unamortized lease commissions and loan costs
 
9,970

 
8,879

Prepaid expenses and other assets
 
2,672

 
2,215

Total assets
 
$
783,877

 
$
634,297

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
499,747

 
$
394,093

Accounts payable and accrued expenses
 
24,051

 
15,882

Tenants' security deposits
 
5,254

 
4,372

Dividends and distributions payable
 
7,834

 
6,627

Total liabilities
 
536,886

 
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 December 31, 2015 and December 31, 2014, respectively
 
—

 
—

Common shares, $0.001 par value per share; 400,000,000 shares authorized; 26,991,493 and 22,835,695 issued and outstanding as of December 31, 2015 and December 31, 2014, respectively
 
27

 
23

Additional paid-in capital
 
359,971

 
304,078

Accumulated deficit
 
(116,895
)
 
(93,938
)
Accumulated other comprehensive loss
 
(129
)
 
(91
)
Total Whitestone REIT shareholders' equity
 
242,974

 
210,072

Noncontrolling interest in subsidiary
 
4,017

 
3,251

Total equity
 
246,991

 
213,323

Total liabilities and equity
 
$
783,877

 
$
634,297





8

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

 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Property revenues
 
 
 
 
 
 
Rental revenues
 
$
71,843

 
$
56,293

 
$
47,297

Other revenues
 
21,573

 
16,089

 
13,195

Total property revenues
 
93,416

 
72,382

 
60,492

 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
Property operation and maintenance
 
18,698

 
15,405

 
14,079

Real estate taxes
 
12,637

 
9,747

 
8,599

Total property expenses
 
31,335

 
25,152

 
22,678

 
 
 
 
 
 
 
Other expenses (income)
 
 
 
 
 
 
General and administrative
 
20,312

 
15,274

 
10,912

Depreciation and amortization
 
19,761

 
15,725

 
13,100

Interest expense
 
14,910

 
10,579

 
9,975

Interest, dividend and other investment income
 
(313
)
 
(90
)
 
(136
)
Total other expense
 
54,670

 
41,488

 
33,851

 
 
 
 
 
 
 
Income from continuing operations before loss on sale or disposal of assets and income taxes
 
7,411

 
5,742

 
3,963

 
 
 
 
 
 
 
Provision for income taxes
 
(372
)
 
(282
)
 
(293
)
Loss on sale or disposal of assets
 
(185
)
 
(111
)
 
(49
)
Income from continuing operations
 
6,854

 
5,349

 
3,621

 
 
 
 
 
 
 
Income from discontinued operations
 
11

 
510

 
298

Gain on sale of property from discontinued operations
 
—

 
1,887

 
—

Income from discontinued operations
 
11

 
2,397

 
298

 
 
 
 
 
 
 
Net income
 
6,865

 
7,746

 
3,919

 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
116

 
160

 
125

 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
6,749

 
$
7,586

 
$
3,794


9

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

 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Basic Earnings Per Share:
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.25

 
$
0.23

 
$
0.19

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.10

 
0.02

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.25

 
$
0.33

 
$
0.21

Diluted Earnings Per Share:
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.24

 
$
0.22

 
$
0.19

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.10

 
0.01

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.24

 
$
0.32

 
$
0.20

 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
Basic
 
24,631

 
22,278

 
18,027

Diluted
 
25,683

 
22,793

 
18,273

 
 
 
 
 
 
 
Distributions declared per common share / OP unit
 
$
1.1400

 
$
1.1400

 
$
1.1400

 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
6,865

 
$
7,746

 
$
3,919

 
 
 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on cash flow hedging activities
 
46

 
(136
)
 
173

Unrealized gain (loss) on available-for-sale marketable securities
 
(85
)
 
96

 
180

 
 
 
 
 
 
 
Comprehensive income
 
6,826

 
7,706

 
4,272

 
 
 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
115

 
160

 
136

 
 
 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
6,711

 
$
7,546

 
$
4,136



10

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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2015
 
2014
 
2015
 
2014
Property revenues
 
(unaudited)
 
(unaudited)
 
 
 
 
Rental revenues
 
$
19,417

 
$
14,829

 
$
71,843

 
$
56,293

Other revenues
 
6,178

 
4,376

 
21,573

 
16,089

Total property revenues
 
25,595

 
19,205

 
93,416

 
72,382

 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
5,453

 
3,868

 
18,698

 
15,405

Real estate taxes
 
3,334

 
2,675

 
12,637

 
9,747

Total property expenses
 
8,787

 
6,543

 
31,335

 
25,152

 
 
 
 
 
 
 
 
 
Other expenses (income)
 
 
 
 
 
 
 
 
General and administrative
 
5,142

 
4,523

 
20,312

 
15,274

Depreciation and amortization
 
5,373

 
4,138

 
19,761

 
15,725

Interest expense
 
4,246

 
3,054

 
14,910

 
10,579

Interest, dividend and other investment income
 
(69
)
 
(19
)
 
(313
)
 
(90
)
Total other expense
 
14,692

 
11,696

 
54,670

 
41,488

 
 
 
 
 
 
 
 
 
Income from continuing operations before loss on sale or disposal of assets and income taxes
 
2,116

 
966

 
7,411

 
5,742

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(98
)
 
(74
)
 
(372
)
 
(282
)
(Loss) gain on sale or disposal of assets
 
63

 
(2
)
 
(185
)
 
(111
)
Income from continuing operations
 
2,081

 
890

 
6,854

 
5,349

 
 
 
 
 
 
 
 
 
Income from discontinued operations
 
8

 
136

 
11

 
510

Gain on sale of property from discontinued operations
 
—

 
1,887

 
—

 
1,887

Income from discontinued operations
 
8

 
2,023

 
11

 
2,397

 
 
 
 
 
 
 
 
 
Net income
 
2,089

 
2,913

 
6,865

 
7,746

 
 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
38

 
51

 
116

 
160

 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,051

 
$
2,862

 
$
6,749

 
$
7,586


11

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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2015
 
2014
 
2015
 
2014
 
 
(unaudited)
 
(unaudited)
 
 
 
 
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.07

 
$
0.04

 
$
0.25

 
$
0.23

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.08

 
0.00

 
0.10

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.07

 
$
0.12

 
$
0.25

 
$
0.33

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.07

 
$
0.03

 
$
0.24

 
$
0.22

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.09

 
0.00

 
0.10

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.07

 
$
0.12

 
$
0.24

 
$
0.32

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
26,540

 
22,564

 
24,631

 
22,278

Diluted
 
27,560

 
23,209

 
25,683

 
22,793

 
 
 
 
 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
$
1.1400

 
$
1.1400

 
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,089

 
$
2,913

 
$
6,865

 
$
7,746

 
 
 
 
 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on cash flow hedging activities
 
506

 
(184
)
 
46

 
(136
)
Unrealized gain (loss) on available-for-sale marketable securities
 
21

 
47

 
(85
)
 
96

 
 
 
 
 
 
 
 
 
Comprehensive income
 
2,616

 
2,776

 
6,826

 
7,706

 
 
 
 
 
 
 
 
 
Less: Comprehensive income attributable to noncontrolling interests
 
46

 
49

 
115

 
160

 
 
 
 
 
 
 
 
 
Comprehensive income attributable to Whitestone REIT
 
$
2,570

 
$
2,727

 
$
6,711

 
$
7,546




12


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Cash flows from operating activities:
 
 
 
 
 
 
Net income from continuing operations
 
$
6,854

 
$
5,349

 
$
3,621

Net income from discontinued operations
 
11

 
2,397

 
298

Net income
 
6,865

 
7,746

 
3,919

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

 
 

 
 
Depreciation and amortization
 
19,761

 
15,725

 
13,100

Amortization of deferred loan costs
 
1,212

 
899

 
1,046

Amortization of notes payable discount
 
295

 
304

 
463

Gain on sale of marketable securities
 
(44
)
 
—

 
(41
)
Loss on sale or disposal of assets and properties
 
185

 
111

 
49

Bad debt expense
 
1,974

 
1,602

 
1,638

Share-based compensation
 
7,337

 
4,631

 
2,284

Changes in operating assets and liabilities:
 
 
 
 
 
 
Escrows and acquisition deposits
 
(2,576
)
 
(1,998
)
 
4,920

Accrued rent and accounts receivable
 
(5,606
)
 
(3,668
)
 
(3,589
)
Related party receivable
 
—

 
—

 
652

Unamortized lease commissions
 
(1,918
)
 
(1,526
)
 
(1,170
)
Prepaid expenses and other assets
 
394

 
605

 
938

Accounts payable and accrued expenses
 
7,419

 
2,257

 
(1,242
)
Tenants' security deposits
 
882

 
900

 
561

Net cash provided by operating activities
 
36,169

 
25,191

 
23,230

Net cash provided by operating activities of discontinued operations
 
11

 
450

 
654

Cash flows from investing activities:
 
 

 
 

 
 
Acquisitions of real estate
 
(147,950
)
 
(129,439
)
 
(119,102
)
Additions to real estate
 
(12,719
)
 
(9,330
)
 
(6,138
)
Proceeds from sales of marketable securities
 
496

 
—

 
747

Net cash used in investing activities
 
(160,173
)
 
(138,769
)
 
(124,493
)
Net cash provided by (used in) investing activities of discontinued operations
 
—

 
7,311

 
(153
)
Cash flows from financing activities:
 
 

 
 

 
 
Distributions paid to common shareholders
 
(28,457
)
 
(25,539
)
 
(20,294
)
Distributions paid to OP unit holders
 
(489
)
 
(550
)
 
(691
)
Proceeds from issuance of common shares, net of offering costs
 
49,649

 
6,458

 
63,887

Payments of exchange offer costs
 
—

 
(136
)
 
(40
)
Proceeds from revolving credit facility, net
 
107,500

 
85,300

 
65,800

Proceeds from notes payable
 
—

 
47,300

 
105,710

Repayments of notes payable
 
(2,847
)
 
(3,306
)
 
(110,829
)
Payments of loan origination costs
 
(1,534
)
 
(3,036
)
 
(2,796
)
Change in restricted cash
 
(121
)
 
—

 
—

Repurchase of common shares
 
(1,357
)
 
(24
)
 
—

Net cash provided by financing activities
 
122,344

 
106,467

 
100,747

Net cash used in financing activities of discontinued operations
 
—

 
(2,905
)
 
(38
)
Net decrease in cash and cash equivalents
 
(1,649
)
 
(2,255
)
 
(53
)
Cash and cash equivalents at beginning of period
 
4,236

 
6,491

 
6,544

Cash and cash equivalents at end of period
 
$
2,587

 
$
4,236

 
$
6,491



13




Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosure
(in thousands)
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Supplemental disclosure of cash flow information:
 
 

 
 

 
 
Cash paid for interest
 
$
13,470

 
$
9,562

 
$
9,179

Cash paid for taxes
 
$
315

 
$
238

 
$
237

Non cash investing and financing activities:
 
 

 
 

 
 
Disposal of fully depreciated real estate
 
$
57

 
$
6,092

 
$
278

Financed insurance premiums
 
$
1,057

 
$
888

 
$
883

Value of shares issued under dividend reinvestment plan
 
$
95

 
$
94

 
$
99

Value of common shares exchanged for OP units
 
$
174

 
$
1,484

 
$
1,236

Change in fair value of available-for-sale securities
 
$
85

 
$
96

 
$
180

Change in fair value of cash flow hedge
 
$
(46
)
 
$
(136
)
 
$
173

Debt assumed with acquisitions of real estate
 
$
—

 
$
2,586

 
$
11,100

Interest supplement assumed with acquisition of real estate
 
$
—

 
$
—

 
$
932

Acquisition of real estate in exchange for OP units
 
$
1,333

 
$
—

 
$
—



14

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

 
 
Three Months Ended
 
Year Ended
 
 
December 31,
 
December 31,
FFO AND FFO CORE
 
2015
 
2014
 
2015
 
2014
 
2013
Net income attributable to Whitestone REIT
 
$
2,051

 
$
2,862

 
$
6,749

 
$
7,586

 
$
3,794

Depreciation and amortization of real estate assets (1)
 
5,342

 
4,203

 
19,646

 
15,950

 
13,339

Loss (gain) on disposal of assets (1)
 
(63
)
 
(1,885
)
 
185

 
(1,776
)
 
56

Net income attributable to noncontrolling interests (1)
 
38

 
51

 
116

 
160

 
125

FFO
 
7,368

 
5,231

 
26,696

 
21,920

 
17,314

 
 
 
 
 
 
 
 
 
 
 
Non cash share-based compensation expense
 
2,137

 
1,644

 
7,339

 
4,736

 
2,284

Acquisition costs
 
150

 
668

 
1,719

 
1,341

 
1,010

Rent support agreement payments received
 
—

 
—

 
—

 
156

 
188

FFO Core
 
$
9,655

 
$
7,543

 
$
35,754

 
$
28,153

 
$
20,796

 
 
 
 
 
 
 
 
 
 
 
FFO PER SHARE AND OP UNIT CALCULATION
 
 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
 
 
FFO
 
$
7,368

 
$
5,231

 
$
26,696


$
21,920

 
$
17,314

Distributions paid on unvested restricted common shares
 
(128
)
 
(74
)
 
(528
)
 
(201
)
 
(50
)
FFO excluding amounts attributable to unvested restricted common shares
 
7,240

 
5,157

 
26,168

 
21,719

 
17,264

FFO Core excluding amounts attributable to unvested restricted common shares
 
$
9,527

 
$
7,469

 
$
35,226

 
$
27,952

 
$
20,746

 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
Weighted average number of total common shares - basic
 
26,540

 
22,564

 
24,631

 
22,278

 
18,027

Weighted average number of total noncontrolling OP units - basic
 
500

 
400

 
430

 
471

 
596

Weighted average number of total commons shares and noncontrolling OP units - basic
 
27,040

 
22,964

 
25,061

 
22,749

 
18,623

 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Unvested restricted shares
 
1,020

 
645

 
1,052

 
515

 
246

Weighted average number of total common shares and noncontrolling OP units - dilutive
 
28,060

 
23,609

 
26,113

 
23,264

 
18,869

 
 
 
 
 
 
 
 
 
 
 
FFO per common share and OP unit - basic
 
$
0.27

 
$
0.22

 
$
1.04

 
$
0.95

 
$
0.93

FFO per common share and OP unit - diluted
 
$
0.26

 
$
0.22

 
$
1.00

 
$
0.93

 
$
0.91

 
 
 
 
 
 
 
 
 
 
 
FFO Core per common share and OP unit - basic
 
$
0.35

 
$
0.33

 
$
1.41

 
$
1.23

 
$
1.11

FFO Core per common share and OP unit - diluted
 
$
0.34

 
$
0.32

 
$
1.35

 
$
1.20

 
$
1.10

(1)  
Includes amounts from discontinued operations.
Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(continued)
(in thousands, except per share and per unit data)

 
 
Three Months Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2015
 
2014
 
2015
 
2014
 
2013
PROPERTY NET OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,051

 
$
2,862

 
$
6,749

 
$
7,586

 
$
3,794

General and administrative expenses
 
5,142

 
4,523

 
20,312

 
15,274

 
10,912

Depreciation and amortization
 
5,373

 
4,138

 
19,761

 
15,725

 
13,100

Interest expense
 
4,246

 
3,054

 
14,910

 
10,579

 
9,975

Interest, dividend and other investment income
 
(69
)
 
(19
)
 
(313
)
 
(90
)
 
(136
)
Provision for income taxes
 
98

 
74

 
372

 
282

 
293

Loss (gain) on disposal of assets
 
(63
)
 
2

 
185

 
111

 
49

Income from discontinued operations
 
(8
)
 
(136
)
 
(11
)
 
(510
)
 
(298
)
Gain on sale of property from discontinued operations
 
—

 
(1,887
)
 
—

 
(1,887
)
 
—

Net income attributable to noncontrolling interests
 
38

 
51

 
116

 
160

 
125

NOI
 
$
16,808

 
$
12,662

 
$
62,081

 
$
47,230

 
$
37,814


EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
2,051

 
$
2,862

 
$
6,749

 
$
7,586

 
$
3,794

Depreciation and amortization (1)
 
5,373

 
4,225

 
19,761

 
16,039

 
13,429

Interest expense (1)
 
4,246

 
3,054

 
14,910

 
10,637

 
10,150

Provision for income taxes (1)
 
98

 
77

 
372

 
292

 
305

Loss (gain) on disposal of assets (1)
 
(63
)
 
(1,885
)
 
185

 
(1,776
)
 
56

Net income attributable to noncontrolling interests
 
38

 
51

 
116

 
160

 
125

EBITDA (2)
 
$
11,743

 
$
8,384

 
$
42,093

 
$
32,938

 
$
27,859


 
 
Three Months Ended
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
2015
 
2015
 
2015
 
2015
Net income attributable to Whitestone REIT
 
$
2,051

 
$
1,570

 
$
1,534

 
$
1,594

Depreciation and amortization (1)
 
5,373

 
5,149

 
4,675

 
4,564

Interest expense (1)
 
4,246

 
3,740

 
3,516

 
3,408

Provision for income taxes (1)
 
98

 
100

 
91

 
83

Loss (gain) on disposal of assets (1)
 
(63
)
 
148

 
(5
)
 
105

Net income attributable to noncontrolling interests
 
38

 
25

 
26

 
27

EBITDA (2)
 
$
11,743

 
$
10,732

 
$
9,837

 
$
9,781


(1)  
Includes amounts from discontinued operations.

(2) 
Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”): Management believes that EBITDA is an appropriate supplemental measure of operating performance to net income attributable to the Company. The Company defines EBITDA as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes) and general and administrative expenses. Management believes that EBITDA provides useful information to the investment community about the Company's operating performance when compared to other REITs since EBITDA is generally recognized as a standard measure. However, EBITDA should not be viewed as a measure of the Company's overall financial performance since it does not reflect depreciation and amortization, involuntary conversion, interest expense, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating EBITDA and, accordingly, the Company's EBITDA may not be comparable to other REITs.


15

Whitestone REIT and Subsidiaries
SAME STORE PROPERTY ANALYSIS
(in thousands)

 
 
Year Ended
 
 
 
 
 
 
December 31,
 
Increase
 
% Increase
 
 
2015
 
2014
 
(Decrease)
 
(Decrease)
Same store (52 properties, exclusive of land held for development) (1)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
$
57,045

 
$
54,596

 
$
2,449

 
4
 %
Other revenues
 
15,468

 
15,516

 
(48
)
 
—
 %
Total property revenues
 
72,513

 
70,112

 
2,401

 
3
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
16,029

 
15,199

 
830

 
5
 %
Real estate taxes
 
9,511

 
9,397

 
114

 
1
 %
Total property expenses
 
25,540

 
24,596

 
944

 
4
 %
 
 
 
 
 
 
 
 
 
Total same store net operating income
 
46,973

 
45,516

 
1,457

 
3
 %
 
 
 
 
 
 
 
 
 
New store (12 properties, exclusive of land held for development)(2)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
14,798

 
1,697

 
13,101

 
772
 %
Other revenues
 
6,105

 
573

 
5,532

 
965
 %
Total property revenues
 
20,903

 
2,270

 
18,633

 
821
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
2,669

 
206

 
2,463

 
1,196
 %
Real estate taxes
 
3,126

 
350

 
2,776

 
793
 %
Total property expenses
 
5,795

 
556

 
5,239

 
942
 %
 
 
 
 
 
 
 
 
 
Total new store net operating income
 
15,108

 
1,714

 
13,394

 
781
 %
 
 
 
 
 
 
 
 
 
Total property net operating income
 
62,081

 
47,230

 
14,851

 
31
 %
 
 
 
 
 
 
 
 
 
Less total other expenses, provision for income taxes and loss on disposal of assets
 
55,227

 
41,881

 
13,346

 
32
 %
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
6,854

 
5,349

 
1,505

 
28
 %
Income from discontinued operations, net of taxes
 
11

 
2,397

 
(2,386
)
 
(100
)%
 
 
 
 
 
 
 
 
 
Net income
 
$
6,865

 
$
7,746

 
$
(881
)
 
(11
)%






16

(1) 
We define “Same Stores” as properties that have been owned since the beginning of the period being compared. For purposes of comparing the year ended December 31, 2015 to the year ended December 31, 2014, Same Stores include properties owned from January 1, 2014 to December 31, 2015.

(2) 
We define “New Stores” as properties that have been owned since the beginning of the period being compared. For purposes of comparing the year ended December 31, 2015 to the year ended December 31, 2014, New Stores include properties acquired between January 1, 2014 and December 31, 2015.


17

Whitestone REIT and Subsidiaries
SAME STORE PROPERTY ANALYSIS
(in thousands)

 
 
Three Months Ended
 
 
 
 
 
 
December 31,
 
Increase
 
% Increase
 
 
2015
 
2014
 
(Decrease)
 
(Decrease)
Same store (54 properties, exclusive of land held for development) (1)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
$
15,272

 
$
14,237

 
$
1,035

 
7
 %
Other revenues
 
4,425

 
4,189

 
236

 
6
 %
Total property revenues
 
19,697

 
18,426

 
1,271

 
7
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
4,686

 
3,758

 
928

 
25
 %
Real estate taxes
 
2,554

 
2,573

 
(19
)
 
(1
)%
Total property expenses
 
7,240

 
6,331

 
909

 
14
 %
 
 
 
 
 
 
 
 
 
Total same store net operating income
 
12,457

 
12,095

 
362

 
3
 %
 
 
 
 
 
 
 
 
 
New store (10 properties, exclusive of land held for development)(2)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
4,145

 
592

 
3,553

 
600
 %
Other revenues
 
1,753

 
187

 
1,566

 
837
 %
Total property revenues
 
5,898

 
779

 
5,119

 
657
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
767

 
110

 
657

 
597
 %
Real estate taxes
 
780

 
102

 
678

 
665
 %
Total property expenses
 
1,547

 
212

 
1,335

 
630
 %
 
 
 
 
 
 
 
 
 
Total new store net operating income
 
4,351

 
567

 
3,784

 
667
 %
 
 
 
 
 
 
 
 
 
Total property net operating income
 
16,808

 
12,662

 
4,146

 
33
 %
 
 
 
 
 
 
 
 
 
Less total other expenses, provision for income taxes and net gain or loss on disposal of assets
 
14,727

 
11,772

 
2,955

 
25
 %
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
2,081

 
890

 
1,191

 
134
 %
Income from discontinued operations, net of taxes
 
8

 
2,023

 
(2,015
)
 
(100
)%
 
 
 
 
 
 
 
 
 
Net income
 
$
2,089

 
$
2,913

 
$
(824
)
 
(28
)%







18

(1) 
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 December 31, 2015 to the three months ended December 31, 2014, Same Stores include properties owned before October 1, 2014.

(2) 
We define “New Stores” as properties that have been owned since the beginning of the period being compared. For purposes of comparing the three months ended December 31, 2015 to the three months ended December 31, 2014, New Stores include properties acquired between October 1, 2014 and December 31, 2015.


19

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

 
 
Three Months Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2015
 
2014
 
2015
 
2014
Other Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
679

 
$
669

 
$
2,802

 
$
2,707

Leasing commissions
 
$
641

 
$
365

 
$
1,818

 
$
1,576

Maintenance capital
 
$
566

 
$
137

 
$
1,987

 
$
1,199

Scheduled debt principal payments
 
$
494

 
$
372

 
$
1,789

 
$
1,429

Straight line rent income
 
$
517

 
$
70

 
$
1,513

 
$
893

Market rent amortization income (loss) from acquired leases
 
$
102

 
$
(14
)
 
$
282

 
$
(209
)
Non-cash share-based compensation expense
 
$
2,137

 
$
1,644

 
$
7,339

 
$
4,736

Non-real estate depreciation and amortization
 
$
32

 
$
23

 
$
116

 
$
90

Amortization of loan fees
 
$
310

 
$
263

 
$
1,212

 
$
899

Acquisition costs
 
$
150

 
$
668

 
$
1,719

 
$
1,341

Undepreciated value of unencumbered properties
 
$
584,575

 
$
425,877

 
$
584,575

 
$
425,877

Number of unencumbered properties
 
50

 
43

 
50

 
43

Full time employees
 
95

 
81

 
95

 
81


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



20

Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(in thousands, except per share amounts and percentages)
 
 
As of December 31, 2015
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
Equity Capitalization:
 
 
 
 
 
 
Common shares outstanding
 
98.2
%
 
26,991

 
 
Operating partnership units outstanding
 
1.8
%
 
497

 
 
Total
 
100.0
%
 
27,488

 
 
 
 
 
 
 
 
 
Market price of common shares as of
 
 
 
 
 
 
December 31, 2015
 
 
 
$
12.01

 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
330,131

 
40
%
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
Outstanding debt
 
 
 
$
499,747

 
 
Less: Cash and cash equivalents
 
 
 
(2,587
)
 
 
 
 
 
 
497,160

 
60
%
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
December 31, 2015
 
 
 
$
827,291

 
100
%


SELECTED RATIOS:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
2015
 
2015
 
2015
 
2015
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA (1)
 
$
11,743

 
$
10,732

 
$
9,837

 
$
9,781

Interest expense, excluding amortization of loan fees (1)
 
3,936

 
3,439

 
3,215

 
3,108

Ratio of EBITDA to interest expense
 
3.0

 
3.1

 
3.1

 
3.1

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Outstanding debt (1)
 
$
499,747

 
$
498,468

 
$
403,287

 
$
403,524

Less: Cash
 
(2,587
)
 
(5,660
)
 
(6,251
)
 
(4,320
)
Outstanding debt after cash
 
$
497,160

 
$
492,808

 
$
397,036

 
$
399,204

 
 
 
 
 
 
 
 
 
Undepreciated real estate assets (1)
 
$
835,538

 
$
831,425

 
$
730,165

 
$
682,571

 
 
 
 
 
 
 
 
 
Ratio of debt to real estate assets
 
60
%
 
59
%
 
54
%
 
58
%


21

Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(continued)
(in thousands, except per share amounts and percentages)

 
 
Three Months Ended
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
2015
 
2015
 
2015
 
2015
Debt/EBITDA Ratio
 
 
 
 
 
 
 
 
Outstanding debt (1)
 
$
499,747

 
$
498,468

 
$
403,287

 
$
403,524

Less: Cash
 
(2,587
)
 
(5,660
)
 
(6,251
)
 
(4,320
)
Outstanding debt after cash
 
497,160

 
492,808

 
397,036

 
399,204

 
 
 
 
 
 
 
 
 
EBITDA (1)
 
$
11,743

 
$
10,732

 
$
9,837

 
$
9,781

Non-cash share based compensation
 
2,137

 
1,859

 
1,669

 
1,674

EBITDA, adjusted
 
13,880

 
12,591

 
11,506

 
11,455

 
 
 
 
 
 
 
 
 
Impact of partial quarter acquisitions and dispositions
 
—

 
515

 
516

 
121

 
 
 
 
 
 
 
 
 
Pro forma quarterly EBITDA
 
13,880

 
13,106

 
12,022

 
11,576

 
 
 
 
 
 
 
 
 
Pro forma annualized EBITDA (2)
 
55,520

 
52,424

 
48,088

 
46,304

 
 
 
 
 
 
 
 
 
Ratio of debt to EBITDA
 
8.95

 
9.40

 
8.26

 
8.62


(1)  
Includes amounts from discontinued operations.

(2) 
Pro forma annualized EBITDA represents pro forma quarterly EBITDA multiplied by four.


22

 Whitestone REIT and Subsidiaries
SUMMARY OF OUTSTANDING DEBT AND DEBT MATURITIES
TOTAL OUTSTANDING DEBT
(in thousands)

Description
 
December 31, 2015
 
December 31, 2014
Fixed rate notes
 
 
 
 
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)
 
$
10,220

 
$
10,460

$50.0 million, 0.84% plus 1.35% to 1.90% Note, due October 30, 2020 (2)
 
50,000

 
50,000

$50.0 million, 1.50% plus 1.35% to 1.90% Note, due January 29, 2021 (3)
 
50,000

 
50,000

$100.0 million, 1.73% plus 1.65% to 2.25% Note, due October 30, 2022 (4)
 
100,000

 
—

$37.0 million 3.76% Note, due December 1, 2020
 
35,146

 
36,090

$6.5 million 3.80% Note, due January 1, 2019
 
6,190

 
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
 
20,040

 
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% Note, due December 29, 2017 (5)
 
7,886

 
7,888

$2.6 million 5.46% Note, due October 1, 2023
 
2,550

 
2,583

$11.1 million 5.87% Note, due August 6, 2016
 
11,305

 
11,607

Floating rate notes
 
 
 
 
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due October 30, 2019
 
127,600

 
120,100

 
 
$
499,747

 
$
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 five-year $50 million term loan under our unsecured credit facility at 0.84% through February 3, 2017 and 1.75% beginning February 3, 2015 through October 30, 2020.

(3) 
Promissory note includes an interest rate swap that fixed the LIBOR portion of our six-year $50 million term loan under our unsecured credit facility at 1.50%.

(4) 
Promissory note includes an interest rate swap that fixed the LIBOR portion of our $100 million term loan under our unsecured credit facility at 1.73%.

(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%.


23

SCHEDULE OF DEBT MATURITIES AS OF DECEMBER 31, 2015
(in thousands)
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2016
 
$
2,144

 
$
11,125

 
$
13,269

 
2.7
%
2017
 
2,374

 
7,839

 
10,213

 
2.0
%
2018
 
2,576

 
9,560

 
12,136

 
2.4
%
2019
 
2,392

 
133,257

 
135,649

 
27.1
%
2020
 
2,876

 
79,951

 
82,827

 
16.6
%
Thereafter
 
6,370

 
239,283

 
245,653

 
49.2
%
Total
 
$
18,732

 
$
481,015

 
$
499,747

 
100.0
%

24

Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS

 
 
Gross Leasable Area as of
 
Occupancy % as of
 
 
December 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
Community Centered Properties
 
2015
 
2015
 
2015
 
2015
 
2015
Retail
 
4,002,644

 
90
%
 
88
%
 
88
%
 
88
%
Office/Flex
 
1,190,404

 
85
%
 
84
%
 
87
%
 
86
%
Office
 
521,134

 
80
%
 
79
%
 
77
%
 
77
%
Total - Operating Portfolio
 
5,714,182

 
88
%
 
86
%
 
87
%
 
86
%
Redevelopment, New Acquisitions (1)
 
242,329

 
74
%
 
81
%
 
83
%
 
85
%
Total
 
5,956,511

 
87
%
 
86
%
 
86
%
 
86
%
 
(1) 
Includes (i) new acquisitions through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.

25

Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS
(continued)
Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)
 
Percentage of Total Annualized Base Rental Revenues (1)
 
Initial Lease Date
 
Year Expiring
Safeway Stores Incorporated (2)
 
Phoenix, Houston and Austin
 
$
2,022

 
2.6
%
 
11/14/1982, 5/8/1991, 7/1/2000, 4/1/2014 and 4/1/2014
 
2017, 2020, 2021, 2024 and 2034
Bashas' Inc. (3)
 
Phoenix
 
823

 
1.1
%
 
10/9/2004 and 4/1/2009
 
2024 and 2029
Haggens Food & Pharmacy (4)
 
Phoenix
 
660

 
0.9
%
 
2/27/1996 and 7/12/2000
 
2020 and 2022
Wells Fargo & Company (5)
 
Phoenix
 
645

 
0.9
%
 
10/24/1996 and 4/16/1999
 
2016 and 2018
Alamo Drafthouse Cinema
 
Austin
 
639

 
0.8
%
 
2/1/2012
 
2027
Walgreens & Co. (6)
 
Phoenix and Houston
 
530

 
0.7
%
 
11/14/1982, 11/2/1987 and 11/3/1996
 
2017, 2027 and 2049
Dollar Tree (7)
 
Phoenix and Houston
 
530

 
0.7
%
 
8/10/1999, 6/29/2001, 11/8/2009, 12/17/2009 and 5/21/2013
 
2016, 2017, 2020, 2020 and 2023
University of Phoenix
 
San Antonio
 
520

 
0.7
%
 
10/18/2010
 
2018
Petco (8)
 
Phoenix and Houston
 
484

 
0.6
%
 
7/6/1998 and 10/15/2006
 
2019 and 2026
Kroger Co.
 
Dallas
 
483

 
0.6
%
 
12/15/2000
 
2022
Ross Dress for Less, Inc. (9)
 
San Antonio, Phoenix and Houston
 
472

 
0.6
%
 
2/11/2009, 6/18/2012 and 2/7/2013
 
2020, 2023 and 2023
Paul's Ace Hardware
 
Phoenix
 
460

 
0.6
%
 
3/1/2008
 
2018
Rock Solid Images
 
Houston
 
372

 
0.5
%
 
4/1/2004
 
2016
Sterling Jewelers Inc.
 
Phoenix
 
354

 
0.5
%
 
11/23/2004
 
2020
Super Bravo, Inc.
 
Houston
 
349

 
0.5
%
 
6/15/2011
 
2023
 
 
 
 
$
9,343

 
12.3
%
 
 
 
 

 (1) 
Annualized Base Rental Revenues represents the monthly base rent as of December 31, 2015 for each applicable tenant multiplied by 12.



26

(2) 
As of December 31, 2015, we had five leases with the same tenant occupying space at properties located in Phoenix, Houston and Austin. The annualized rental revenue for the lease that commenced on April 1, 2014, and is scheduled to expire in 2034, was $997,000, which represents 1.3% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 1, 2014, and is scheduled to expire in 2024, was $42,000, which represents less than 0.1% of our annualized base rental revenue. The annualized rental revenue for the lease that commenced on May 8, 1991, and is scheduled to expire in 2021, was $344,000, which represents 0.5% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 1, 2000, and is scheduled to expire in 2020, was $321,000, which represents 0.4% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 14, 1982, and is scheduled to expire in 2017, was $318,000, which represents 0.4% of our total annualized base rental revenue.

(3) 
As of December 31, 2015, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on October 9, 2004, and is scheduled to expire in 2024, was $119,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 1, 2009, and is scheduled to expire in 2029, was $704,000, which represents 0.9% of our total annualized base rental revenue.

(4) 
As of December 31, 2015, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on February 27, 1996, and is scheduled to expire in 2022, was $235,000, which represents 0.3% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 12, 2000, and is scheduled to expire in 2020, was $425,000, which represents 0.6% of our total annualized base rental revenue.

(5) 
As of December 31, 2015, we had two leases with the same tenant occupying space at properties located in Phoenix. The annualized rental revenue for the lease that commenced on October 24, 1996, and is scheduled to expire in 2016, was $114,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on April 16, 1999, and is scheduled to expire in 2018, was $531,000, which represents 0.7% of our total annualized base rental revenue.

(6) 
As of December 31, 2015, we had three leases with the same tenant occupying space at properties located in Phoenix and Houston. The annualized rental revenue for the lease that commenced on November 3, 1996, and is scheduled to expire in 2049, was $279,000, which represents 0.4% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 2, 1987, and is scheduled to expire in 2027, was $169,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 14, 1982, and is scheduled to expire in 2017, was $82,000, which represents 0.1% of our total annualized base rental revenue.

(7) 
As of December 31, 2015, we had five leases with the same tenant occupying space at properties in Houston and Phoenix. The annualized rental revenue for the lease that commenced on June 29, 2001, and is scheduled to expire in 2016, was $108,000, which represents 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on November 8, 2009, and is scheduled to expire in 2017, was $146,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on August 10, 1999, and is scheduled to expire in 2020, was $55,000, which represents less than 0.1% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on December 17, 2009, and is scheduled to expire in 2020, was $110,000, which represents 0.2% of our total annualized base rental revenue. The lease that commenced on May 21, 2013, and is scheduled to expire in 2023, was $110,000, which represents 0.2% of our total annualized base rental revenue.

(8) 
As of December 31, 2015, we had two leases with the same tenant occupying space at properties located in Phoenix and Houston. The annualized rental revenue for the lease that commenced on October 15, 2006, and is scheduled to expire in 2026, was $260,000, which represents 0.3% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on July 6, 1998, and is scheduled to expire in 2019, was $224,000, which represents 0.3% of our total annualized base rental revenue.

(9) 
As of December 31, 2015, we had three leases with the same tenant occupying space at properties located in San Antonio, Phoenix and Houston. The annualized rental revenue for the lease that commenced on June 18, 2012, and is scheduled to expire in 2023, was $175,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on February 11, 2009, and is scheduled to expire in 2020, was $187,000, which represents 0.2% of our total annualized base rental revenue. The annualized rental revenue for the lease that commenced on February 7, 2013, and is scheduled to expire in 2023, was $110,000, which represents 0.2% of our total annualized base rental revenue.

27

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2015
 
2014
 
2015
 
2014
RENEWALS
 
 
 
 
 
 
 
 
Number of Leases
 
56

 
37

 
233

 
189

Total Square Feet (1)
 
125,155

 
108,981

 
493,331

 
471,888

Average Square Feet
 
2,235

 
2,945

 
2,117

 
2,497

Total Lease Value
 
$
7,854,000

 
$
4,904,000

 
$
27,225,000

 
$
25,732,000

NEW LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
48

 
38

 
175

 
183

Total Square Feet (1)
 
132,749

 
74,203

 
472,566

 
390,174

Average Square Feet
 
2,766

 
1,953

 
2,700

 
2,132

Total Lease Value
 
$
11,135,000

 
$
7,105,000

 
$
34,544,000

 
$
27,629,000

TOTAL LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
104

 
75

 
408

 
372

Total Square Feet (1)
 
257,904

 
183,184

 
965,897

 
862,062

Average Square Feet
 
2,480

 
2,442

 
2,367

 
2,317

Total Lease Value
 
$
18,989,000

 
$
12,009,000

 
$
61,769,000

 
$
53,361,000


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


28

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
Prior Contractual Rent Per Sq. Ft. (5)
 
Annual Increase (Decrease) in Contractual Rent
 
Cash Basis Increase (Decrease) Over Prior Rent
 
Annual Increase (Decrease) in Straight-lined Rent
 
Straight-lined Basis Increase (Decrease) Over Prior Rent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
69

 
$
9,141,269

 
151,437

 
3.2

 
$
575,486

 
$
3.80

 
$
16.62

 
$
16.60

 
$
3,581

 
0.1
 %
 
$
132,699

 
5.5
 %
3rd Quarter 2015
 
71

 
10,628,119

 
164,753

 
3.4

 
434,254

 
2.64

 
16.27

 
15.92

 
57,850

 
2.2
 %
 
197,144

 
8.0
 %
2nd Quarter 2015
 
91

 
9,872,988

 
205,989

 
3.1

 
429,689

 
2.09

 
13.56

 
12.46

 
226,025

 
8.8
 %
 
387,419

 
15.8
 %
1st Quarter 2015
 
60

 
5,726,868

 
128,901

 
2.7

 
285,369

 
2.21

 
15.10

 
14.66

 
56,538

 
3.0
 %
 
147,624

 
8.1
 %
Total - 12 months
 
291

 
$
35,369,244

 
651,080

 
3.1

 
$
1,724,798

 
$
2.65

 
$
15.26

 
$
14.73

 
$
343,994

 
3.6
 %
 
$
864,886

 
9.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
16

 
$
1,543,395

 
29,291

 
3.6

 
$
237,044

 
$
8.09

 
$
13.29

 
$
14.09

 
$
(23,438
)
 
(5.7
)%
 
$
(3,214
)
 
(0.8
)%
3rd Quarter 2015
 
18

 
3,075,982

 
44,348

 
3.3

 
185,976

 
4.19

 
17.61

 
18.91

 
(57,268
)
 
(6.9
)%
 
16,681

 
2.2
 %
2nd Quarter 2015
 
16

 
2,048,659

 
49,713

 
4.3

 
123,958

 
2.49

 
9.55

 
9.29

 
12,940

 
2.8
 %
 
42,780

 
9.7
 %
1st Quarter 2015
 
18

 
2,737,615

 
50,089

 
2.7

 
177,579

 
3.55

 
17.03

 
16.66

 
18,726

 
2.2
 %
 
40,067

 
4.9
 %
Total - 12 months
 
68

 
$
9,405,651

 
173,441

 
3.5

 
$
724,557

 
$
4.18

 
$
14.40

 
$
14.69

 
$
(49,040
)
 
(2.0
)%
 
$
96,314

 
4.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
53

 
$
7,597,874

 
122,146

 
3.1

 
$
338,442

 
$
2.77

 
$
17.42

 
$
17.20

 
$
27,019

 
1.3
 %
 
$
135,913

 
6.6
 %
3rd Quarter 2015
 
53

 
7,552,137

 
120,405

 
3.4

 
248,278

 
2.06

 
15.77

 
14.82

 
$
115,118

 
6.4
 %
 
180,463

 
10.6
 %
2nd Quarter 2015
 
75

 
7,824,329

 
156,276

 
2.8

 
305,731

 
1.96

 
14.83

 
$
13.47

 
213,085

 
10.1
 %
 
344,639

 
17.2
 %
1st Quarter 2015
 
42

 
2,989,253

 
78,812

 
2.7

 
107,790

 
1.37

 
13.86

 
13.38

 
37,812

 
3.6
 %
 
107,557

 
10.9
 %
Total - 12 months
 
223

 
$
25,963,593

 
477,639

 
3.0

 
$
1,000,241

 
$
2.09

 
$
15.57

 
$
14.75


$
393,034

 
5.6
 %
 
$
768,572

 
11.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

29

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-comparable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Total Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
35

 
$
9,933,418

 
110,320

 
5.5

 
$
2,216,295

 
$
20.09

 
$
14.28

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
40

 
7,623,794

 
110,471

 
4.7

 
1,051,225

 
9.52

 
13.63

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
26

 
6,105,128

 
62,156

 
5.6

 
978,342

 
15.74

 
16.87

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
16

 
2,822,752

 
68,818

 
4.1

 
434,677

 
6.32

 
11.75

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
117

 
$
26,485,092

 
351,765

 
5.0

 
$
4,680,539

 
$
13.31

 
$
14.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
32

 
$
9,593,047

 
103,458

 
5.7

 
$
2,202,576

 
$
21.29

 
$
14.20

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
37

 
7,054,633

 
99,099

 
4.9

 
1,017,351

 
10.27

 
13.29

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
24

 
6,040,110

 
59,466

 
5.8

 
978,342

 
16.45

 
16.96

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
14

 
2,450,862

 
64,380

 
3.8

 
339,851

 
5.28

 
11.03

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
107

 
$
25,138,652

 
326,403

 
5.1

 
$
4,538,120

 
$
13.90

 
$
13.80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
3

 
$
340,371

 
6,862

 
3.0

 
$
13,719

 
$
2.00

 
$
15.55

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
3

 
569,161

 
11,372

 
2.8

 
33,874

 
2.98

 
16.61

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
2

 
65,018

 
2,690

 
1.6

 
—

 
—

 
14.71

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
2

 
371,890

 
4,438

 
7.9

 
94,826

 
—

 
22.15

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
10

 
$
1,346,440

 
25,362

 
3.6

 
$
142,419

 
$
5.62

 
$
17.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

30

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY
(continued)
Type
 
Number of Leases Signed
 
Lease Value Signed
 
GLA Signed
 
Weighted Average Lease Term (2)
 
TI and Incentives (3)
 
TI and Incentives per Sq. Ft.
 
Contractual Rent Per Sq. Ft. (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New & Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
104

 
$
19,074,687

 
261,757

 
4.2

 
$
2,791,781

 
$
10.67

 
$
15.64

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
111

 
18,251,913

 
275,224

 
3.7

 
1,485,479

 
5.40

 
15.21

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
117

 
15,978,116

 
268,145

 
3.2

 
1,408,031

 
5.25

 
14.33

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
76

 
8,549,620

 
197,719

 
3.3

 
720,046

 
3.64

 
13.93

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
408

 
$
61,854,336

 
1,002,845

 
3.8

 
$
6,405,337

 
$
6.39

 
$
14.83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
48

 
$
11,136,442

 
132,749

 
5.2

 
$
2,439,620

 
$
18.38

 
$
14.00

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
55

 
10,130,615

 
143,447

 
4.4

 
1,203,327

 
8.39

 
14.63

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
40

 
8,088,769

 
109,179

 
5.1

 
1,102,300

 
10.10

 
13.59

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
32

 
5,188,477

 
114,469

 
3.3

 
517,430

 
4.52

 
13.66

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
175

 
$
34,544,303

 
499,844

 
4.5

 
$
5,262,677

 
$
10.53

 
$
14.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
56

 
$
7,938,245

 
129,008

 
3.1

 
$
352,161

 
$
2.73

 
$
17.32

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
56

 
8,121,298

 
131,777

 
3.4

 
282,152

 
2.14

 
15.84

 
 
 
 
 
 
 
 
 
 
2nd Quarter 2015
 
77

 
7,889,347

 
158,966

 
2.7

 
305,731

 
1.92

 
14.83

 
 
 
 
 
 
 
 
 
 
1st Quarter 2015
 
44

 
3,361,143

 
83,250

 
2.9

 
202,616

 
2.43

 
14.31

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
233

 
$
27,310,033

 
503,001

 
3.0

 
$
1,142,660

 
$
2.27

 
$
15.65

 
 
 
 
 
 
 
 
 
 

(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 lease. Actual cost of construction may vary. Does not include first generation costs for tenant improvements and leasing commission costs needed for new acquisitions or redevelopment of a property to bring the property to operating standards for its intended use.
(4) 
Contractual rent represents contractual minimum rent under the new lease for the first month, excluding concessions.
(5) 
Prior contractual rent represents contractual minimum rent under the prior lease for the final month.


31

Whitestone REIT and Subsidiaries
LEASE EXPIRATIONS(1) 

 
 
 
 
 
 
 
 
Annualized Base Rent(2)
 
 
 
 
Gross Leasable Area
 
as of December 31, 2015
Year
 
Number of
Leases
 
Square Feet
 
Percent
of Gross Leasable Area
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2016
 
410

 
1,038,717

 
17.4
%
 
$
13,507

 
17.8
%
 
$
13.00

2017
 
265

 
756,554

 
12.7
%
 
11,725

 
15.5
%
 
15.50

2018
 
244

 
850,346

 
14.3
%
 
12,992

 
17.1
%
 
15.28

2019
 
186

 
555,628

 
9.3
%
 
9,329

 
12.3
%
 
16.79

2020
 
156

 
707,357

 
11.9
%
 
10,027

 
13.2
%
 
14.18

2021
 
72

 
294,519

 
4.9
%
 
3,982

 
5.2
%
 
13.52

2022
 
47

 
314,818

 
5.3
%
 
4,150

 
5.5
%
 
13.18

2023
 
25

 
182,554

 
3.1
%
 
2,341

 
3.1
%
 
12.82

2024
 
26

 
188,295

 
3.2
%
 
2,690

 
3.5
%
 
14.29

2025
 
20

 
64,434

 
1.1
%
 
1,217

 
1.6
%
 
18.89

Total
 
1,451

 
4,953,222

 
83.2
%
 
$
71,960

 
94.8
%
 
$
14.53


(1) 
Lease expirations table reflects rents in place as of December 31, 2015, and does not include option periods.

(2) 
Annualized Base Rent represents the monthly base rent as of December 31, 2015 for each tenant multiplied by 12.


32

Whitestone REIT and Subsidiaries
2016 Financial Guidance
 
 
 
 
 
 
 
 
2016 Guidance
FFO Core per common share and OP unit - diluted
 
$1.33 - $1.39
FFO per common share and OP unit - diluted
 
$1.06 - $1.12
Same Store Property NOI
 
3% - 5%
Total Operating Portfolio Occupancy at Year End
 
89% - 91%


Note: Guidance reflects management’s view of current and future market conditions, as well as the earnings impact of events referenced in our earnings release and supplemental data package. This guidance does not include the operational or capital impact of any future unannounced acquisition or disposition activity. We will update our guidance, on a quarterly basis, or more often as needed, reflecting the impact of acquisition volume and other factors.




33

Whitestone REIT and Subsidiaries
Property Details
As of December 31, 2015

 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable
Square Feet
 
Percent
Occupied at
12/31/2015
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Retail Communities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ahwatukee Plaza
 
Phoenix
 
1979
 
72,650

 
92
%
 
$
914

 
$
13.67

 
$
13.48

Anthem Marketplace
 
Phoenix
 
2000
 
113,293

 
94
%
 
1,578

 
14.82

 
15.80

Bellnott Square
 
Houston
 
1982
 
73,930

 
43
%
 
319

 
10.03

 
10.22

Bissonnet Beltway
 
Houston
 
1978
 
29,205

 
95
%
 
360

 
12.98

 
12.87

Centre South
 
Houston
 
1974
 
39,134

 
82
%
 
266

 
8.29

 
8.82

The Citadel
 
Phoenix
 
2013
 
28,547

 
95
%
 
378

 
13.94

 
16.19

City View Village
 
San Antonio
 
2005
 
17,870

 
100
%
 
510

 
28.54

 
28.82

Corporate Park Woodland II
 
Houston
 
1972
 
16,220

 
80
%
 
188

 
14.49

 
14.57

Desert Canyon
 
Phoenix
 
2000
 
62,533

 
91
%
 
739

 
12.99

 
13.43

Fountain Hills Plaza
 
Phoenix
 
2009
 
111,289

 
91
%
 
1,728

 
17.06

 
17.36

Fountain Square
 
Phoenix
 
1986
 
118,209

 
87
%
 
1,584

 
15.40

 
16.37

Fulton Ranch Towne Center
 
Phoenix
 
2005
 
113,281

 
89
%
 
1,762

 
17.48

 
18.27

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
88
%
 
739

 
16.99

 
18.35

Heritage Trace Plaza
 
Dallas
 
2006
 
70,431

 
100
%
 
1,521

 
21.60

 
22.01

Holly Knight
 
Houston
 
1984
 
20,015

 
85
%
 
363

 
21.34

 
20.63

Headquarters Village
 
Dallas
 
2009
 
89,134

 
92
%
 
2,157

 
26.30

 
28.10

Keller Place
 
Dallas
 
2001
 
93,541

 
93
%
 
830

 
9.54

 
11.54

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
92
%
 
895

 
9.63

 
9.55

Lion Square
 
Houston
 
2014
 
117,592

 
86
%
 
1,095

 
10.83

 
11.06

The Marketplace at Central
 
Phoenix
 
2012
 
111,130

 
98
%
 
799

 
7.34

 
8.40

Market Street at DC Ranch
 
Phoenix
 
2003
 
242,459

 
91
%
 
4,298

 
19.48

 
19.44

Mercado at Scottsdale Ranch
 
Phoenix
 
1987
 
118,730

 
67
%
 
1,549

 
19.47

 
19.86

Paradise Plaza
 
Phoenix
 
1983
 
125,898

 
92
%
 
1,554

 
13.42

 
14.04

Parkside Village North
 
Austin
 
2005
 
27,045

 
100
%
 
758

 
28.03

 
29.84

Parkside Village South
 
Austin
 
2012
 
90,101

 
98
%
 
2,184

 
24.73

 
26.39

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
96
%
 
1,928

 
17.76

 
17.88

Providence
 
Houston
 
1980
 
90,327

 
98
%
 
830

 
9.38

 
9.22

Quinlan Crossing
 
Austin
 
2012
 
109,892

 
96
%
 
2,387

 
22.63

 
23.75

Shaver
 
Houston
 
1978
 
21,926

 
85
%
 
197

 
10.57

 
12.93

Shops at Pecos Ranch
 
Phoenix
 
2009
 
78,767

 
95
%
 
1,509

 
20.17

 
20.45

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
97
%
 
1,461

 
27.19

 
29.97

The Shops at Williams Trace
 
Houston
 
1985
 
132,991

 
94
%
 
1,556

 
12.45

 
14.52

South Richey
 
Houston
 
1980
 
69,928

 
100
%
 
802

 
11.47

 
9.85

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
83
%
 
710

 
20.63

 
20.37

The Strand at Huebner Oaks
 
San Antonio
 
2000
 
73,920

 
94
%
 
1,439

 
20.71

 
21.05

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
92
%
 
978

 
11.19

 
11.55

Sunridge
 
Houston
 
1979
 
49,359

 
82
%
 
430

 
10.62

 
10.28

Sunset at Pinnacle Peak
 
Phoenix
 
2000
 
41,530

 
90
%
 
602

 
16.11

 
16.72

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
94
%
 
1,324

 
13.71

 
13.21

Torrey Square
 
Houston
 
1983
 
105,766

 
84
%
 
687

 
7.73

 
8.30

Town Park
 
Houston
 
1978
 
43,526

 
94
%
 
840

 
20.53

 
20.82

Village Square at Dana Park
 
Phoenix
 
2009
 
323,026

 
90
%
 
5,871

 
20.19

 
20.23

Webster Pointe
 
Houston
 
1984
 
26,060

 
74
%
 
164

 
8.50

 
11.62

Westchase
 
Houston
 
1978
 
49,573

 
81
%
 
522

 
13.00

 
12.70

Williams Trace Plaza
 
Houston
 
1983
 
129,222

 
94
%
 
1,629

 
13.41

 
13.92

Windsor Park
 
San Antonio
 
2012
 
196,458

 
82
%
 
1,813

 
11.25

 
10.95

Total/Weighted Average
 
 
 
 
 
4,002,644

 
90
%
 
56,747

 
15.75

 
16.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

34

 Whitestone REIT and Subsidiaries
Property Details
As of December 31, 2015
(continued)

 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable
Square Feet
 
Percent
Occupied at
12/31/2015
 
Annualized Base
Rental Revenue 
(in thousands) (1)
 
Average
Base Rental
Revenue Per
Sq. Ft. (2)
 
Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3)
Office Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
71
%
 
$
1,222

 
$
13.67

 
$
14.29

Pima Norte
 
Phoenix
 
2007
 
35,110

 
63
%
 
371

 
16.77

 
18.08

Uptown Tower
 
Dallas
 
1982
 
253,981

 
80
%
 
3,535

 
17.40

 
17.21

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
96
%
 
1,753

 
17.20

 
17.17

Total/Weighted Average
 
 
 
 
 
521,134

 
80
%
 
6,881

 
16.50

 
16.61

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Brookhill
 
Houston
 
1979
 
74,757

 
85
%
 
$
241

 
$
3.79

 
$
3.92

Corporate Park Northwest
 
Houston
 
1981
 
174,359

 
85
%
 
1,763

 
11.90

 
11.96

Corporate Park West
 
Houston
 
1999
 
175,665

 
87
%
 
1,603

 
10.49

 
10.57

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
88
%
 
852

 
9.69

 
9.93

Dairy Ashford
 
Houston
 
1981
 
42,902

 
99
%
 
267

 
6.29

 
6.22

Holly Hall Industrial Park
 
Houston
 
1980
 
90,000

 
91
%
 
723

 
8.83

 
8.32

Interstate 10 Warehouse
 
Houston
 
1980
 
151,000

 
99
%
 
721

 
4.82

 
4.84

Main Park
 
Houston
 
1982
 
113,410

 
77
%
 
653

 
7.48

 
7.74

Plaza Park
 
Houston
 
1982
 
105,530

 
51
%
 
546

 
10.14

 
9.70

Westbelt Plaza
 
Houston
 
1978
 
65,619

 
74
%
 
497

 
10.24

 
9.56

Westgate Service Center
 
Houston
 
1984
 
97,225

 
74
%
 
579

 
8.05

 
8.69

Total/Weighted Average
 
 
 
 
 
1,190,404

 
85
%
 
8,445

 
8.35

 
8.37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average - Operating Portfolio
 
 
 
 
 
5,714,182

 
88
%
 
72,073

 
14.33

 
14.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davenport Village
 
Austin
 
1999
 
128,934

 
79
%
 
$
2,500

 
$
24.54

 
$
25.52

Gilbert Tuscany Village Hard Corner
 
Phoenix
 
2009
 
14,603

 
—
%
 
—

 
—

 
—

The Promenade at Fulton Ranch
 
Phoenix
 
2007
 
98,792

 
78
%
 
1,291

 
16.75

 
18.00

Total/Weighted Average - Development Portfolio (4)
 
 
 
 
 
242,329

 
74
%
 
3,791

 
21.14

 
22.23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthem Marketplace
 
Phoenix
 
N/A
 
—

 
—

 
$
—

 
$
—

 
$
—

Dana Park Development
 
Phoenix
 
N/A
 
—

 
—

 
—

 
—

 
—

Fountain Hills
 
Phoenix
 
N/A
 
—

 
—

 
—

 
—

 
—

Market Street at DC Ranch
 
Phoenix
 
N/A
 
—

 
—

 
—

 
—

 
—

Pinnacle Phase II
 
Phoenix
 
N/A
 
—

 
—

 
—

 
—

 
—

Shops at Starwood Phase III
 
Dallas
 
N/A
 
—

 
—

 
—

 
—

 
—

Total/Weighted Average - Property Held For Development (5)
 
 
 
 
 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total/Weighted Average
 
 
 
 
 
5,956,511

 
87
%
 
$
75,864

 
$
14.64

 
$
15.05


(1)   
Calculated as the tenant's actual December 31, 2015 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of December 31, 2015. Because annualized base rental revenue is not derived from historical results that were accounted for in accordance with generally accepted accounting principles, historical results differ from the annualized amounts. Total abatements for leases in effect as of December 31, 2015 equaled approximately $197,000 for the month ended December 31, 2015.
 
(2)   
Calculated as annualized base rent divided by gross leasable area leased as of December 31, 2015.  Excludes vacant space as of December 31, 2015.


35

(3) 
Represents (i) the contractual base rent for leases in place as of December 31, 2015, adjusted to a straight-line basis to reflect changes in rental rates throughout the lease term and amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (ii) square footage under commenced leases of December 31, 2015.

(4) 
Includes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.

(5) 
As of December 31, 2015, these parcels of land were held for development and, therefore, had no gross leasable area.


36