EX-99.2 3 exhibit992supplementaloper.htm EXHIBIT 99.2 Exhibit







CORPORATE PROFILE
 
 
 
 
 
 
 
 
 
NYSE: WSR
 
Whitestone REIT (NYSE: WSR) is a self-managed fully integrated real estate investment trust that
Common Shares
 
primarily owns, manages and redevelops high quality retail properties which we refer to as Community
 
 
Centered Properties TM. As of June 30, 2016, we owned 69 Community Centered PropertiesTM with
69 Community Centers
 
approximately 5.9 million square feet of gross leasable area, located in six of the top markets in the
5.9 Million Sq. Ft. of gross
 
United 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.
1,478 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: 28.6 Million
 
restaurants, medical, educational and financial services and entertainment. These tenants tend to occupy
Operating Partnership Units:
 
smaller spaces (less than 3,000 square feet) and, as of June 30, 2016, provided a 44% premium rental
     0.5 Million
 
rate compared to our larger space tenants. The largest of our 1,478 tenants comprised less than 3.2% of
 
 
our annualized base rental revenues for the three months ended June 30, 2016.
 
 
 
 
 
 
 
 
 
 
 
 
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: 7.2%**
 
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 July 25, 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 $15.85 as of close of market on
 
212.895.3641
 
813.273.8252
 
212.303.4124
 
540.277.3366
July 25, 2016.
 
mdiana@maximgrp.com
 
rjmilligan@rwbaird.com
 
kibin.kim@suntrust.com
 
ckucera@wundernet.com
 
 
We are followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding our performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of our management. We do not by our reference above or distribution imply our endorsement of or concurrence with such information, conclusions or recommendations.

1

Whitestone REIT Reports Second Quarter Results; “Internet-Resistant” Business Model Produces Strong Year-Over-Year Increase of 14.4% in Revenues

Houston, Texas, July 27, 2016 - Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today announced operating results for the second quarter ended June 30, 2016. 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

Second Quarter 2016 Compared to Second Quarter 2015:

•
14.4% growth in revenues
•
Net income attributable to Whitestone REIT of $1.5 million in both periods
•
16.6% increase in net operating income (“NOI”)
•
13.0% increase in Funds From Operations (“FFO”)
•
8.9% increase in FFO Core
•
4.2% same store NOI growth
•
8.2% gain in rental rates on new and renewal leases signed during the last twelve months (GAAP basis)
•
Net income of $0.05 and FFO Core of $0.32 on a per share basis, respectively
•
86.0% dividend to FFO Core ratio
•
89.6% occupancy in the Company’s retail properties, a 170 basis points improvement

Whitestone Overview
Whitestone acquires, owns, manages, develops and redevelops high quality “internet-resistant” neighborhood, community and lifestyle retail centers principally located in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone’s optimal mix of national, regional and local tenants provide daily necessities, needed services and entertainment to the community which are not readily available online.

CEO Comments
“We are proud to deliver another quarter of profitable growth, driven by our innovative, sustainable and scalable business model,” stated Jim Mastandrea, Chairman and Chief Executive Officer. “Our model focuses on acquiring, developing and redeveloping go-to retail centers that provide daily necessities, needed services and entertainment which are not readily available online. By following this ‘internet-resistant’ strategy, we believe we are largely shielded from the threat of rising e-commerce sales.”

Mr. Mastandrea concluded, “The core of our business model is driving profitability and value. The successful execution of our model is best demonstrated by looking at our sustained results over the long-term, evidenced by the second quarter being our 23rd consecutive quarter of revenue and NOI growth, and our 24th consecutive quarter of FFO Core growth, on a year-over-year basis. Our pipeline of new acquisitions and leases remains active, and additional selective development and redevelopment of existing properties is ongoing, which gives us confidence that we will continue to drive profitable growth and shareholder value.”


2

Real Estate Portfolio Update

Leasing Activity:
During the second quarter, the leasing team signed 101 leases totaling 308,980 square feet in new, expansion and renewal leases, compared to 117 leases totaling 267,065 square feet in the second quarter of 2015. The total lease value added during the quarter was $24.7 million compared to $16.0 million during the same period last year.

The Company's total and retail properties occupancy stood at 87.2% and 89.6%, respectively, at quarter end.

Community Centered PropertiesTM Portfolio Statistics:
As of June 30, 2016, Whitestone owned 69 Community Centered PropertiesTM with 5.9 million square feet of gross leasable area producing annual NOI of approximately $70.0 million. The portfolio is comprised of 43 properties in Texas, 25 in Arizona and one in Illinois. In Texas and Arizona, Whitestone’s Community Centered PropertiesTM are located in Austin (4), San Antonio (3), Dallas-Fort Worth (7), Houston (29) 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 Company’s properties 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 “internet-resistant” 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 second quarter, the Company's diversified tenant base was comprised of 1,478 tenants, with the largest tenant accounting for only 3.2% 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.

Balance Sheet and Liquidity

Balance Sheet:
Reflecting the Company’s selective development and redevelopment activity during the quarter, offset somewhat by the sale of a non-core asset in the first quarter, at June 30, 2016, the Company had undepreciated real estate assets of $844.8 million compared to $835.5 million at December 31, 2015.

Liquidity, Debt and Credit Facility:
At June 30, 2016, 49 of the Company’s 69 properties were unencumbered by mortgage debt, with an undepreciated cost basis of $592.0 million. The Company had total real estate debt of $501.7 million, of which $371.6 million, or approximately 74.0%, was subject to fixed interest rates. The Company's weighted average interest rate on all fixed rate debt as of the end of the second quarter was 3.9% and the weighted average remaining term was 5.6 years.

At quarter end, Whitestone had $5.9 million of cash available on its balance sheet and $169.4 million of available capacity under its credit facility, before the $200 million accordion option.

Sale of Securities:
During the second quarter, Whitestone sold 735,755 shares of its common stock under its ATM program. The Company received net proceeds of approximately $10.6 million after paying fees and commissions. The funds were used to pay down debt and for general corporate purposes.

3


Dividend
On June 6, 2016, the Company declared a quarterly cash distribution of $0.285 per common share and OP unit for the third quarter of 2016, to be paid in three equal installments of $0.095 in July, August and September of 2016.

2016 Guidance
The Company's FFO Core guidance for 2016 is a range of $1.33 to $1.39 per share. The Company's net income attributable to Whitestone REIT guidance for 2016 is a range of $0.33 to $0.39 per share. 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” and “Reconciliation of Non-GAAP Measures - 2016 Financial Guidance” sections 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, which will take place on Thursday, July 28, 2016 at 11:00 A.M. Eastern Time. Conference call access information is as follows:

Dial-in number for domestic participants:         (877) 591-4959
Dial-in number for international participants:    (719) 325-4758

The conference call will be recorded and a telephone replay will be available through Thursday, August 11, 2016. Replay access information is as follows:

Replay number for domestic participants:        (877) 870-5176
Replay number for international participants:    (858) 384-5517
Pass Code (for all participants):            1744553

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.
 
The second quarter 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.


4

About Whitestone REIT
Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust (“REIT”) that acquires, owns, manages, develops and redevelops high quality “internet-resistant” neighborhood, community and lifestyle retail centers. Whitestone’s 69 properties are principally located in Austin, Dallas-Fort Worth, Houston, San Antonio and Phoenix, which are among the fastest-growing markets in the country with highly educated workforces, high household incomes and strong job growth. The Company’s strategy is to target shifting consumer behavior and purchasing patterns by creating a complementary mix of grocery, dining, health and wellness, education, services, entertainment and specialty retail in its properties. Whitestone’s national, regional and local tenants provide daily necessities, needed services and convenience to the community which are not readily available online. For additional information about Whitestone, 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; the Company’s ability to complete its transition to a pure-play retail REIT in the time frame it expects, or at all; current adverse market and economic conditions; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic and regulatory changes; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code; and other factors detailed in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files with the Securities and Exchange Commission.

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

Non-GAAP Financial Measures
This release contains 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.

5


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 other 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.


6

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.

Contact Whitestone REIT:
Bob Aronson
Director of Investor Relations
D: (713) 435-2219; M: (832) 364-8314
raronson@whitestonereit.com



7


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

 
 
June 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
ASSETS
Real estate assets, at cost
 
 
 
 
Property
 
$
844,807

 
$
835,538

Accumulated depreciation
 
(99,004
)
 
(89,580
)
Total real estate assets
 
745,803

 
745,958

Cash and cash equivalents
 
5,927

 
2,587

Restricted cash
 
117

 
121

Marketable securities
 
467

 
435

Escrows and acquisition deposits
 
5,824

 
6,668

Accrued rents and accounts receivable, net of allowance for doubtful accounts
 
16,717

 
15,466

Unamortized lease commissions and loan costs
 
8,039

 
8,178

Prepaid expenses and other assets
 
3,129

 
2,672

Total assets
 
$
786,023

 
$
782,085

 
 
 
 
 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
Notes payable
 
$
500,553

 
$
497,955

Accounts payable and accrued expenses
 
30,182

 
24,051

Tenants' security deposits
 
5,578

 
5,254

Dividends and distributions payable
 
8,169

 
7,834

Total liabilities
 
544,482

 
535,094

Commitments and contingencies:
 
—

 
—

Equity:
 
 
 
 
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
 
—

 
—

Common shares, $0.001 par value per share; 400,000,000 shares authorized; 28,138,047 and 26,991,493 issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
 
28

 
27

Additional paid-in capital
 
372,650

 
359,971

Accumulated deficit
 
(126,300
)
 
(116,895
)
Accumulated other comprehensive loss
 
(8,448
)
 
(129
)
Total Whitestone REIT shareholders' equity
 
237,930

 
242,974

Noncontrolling interest in subsidiary
 
3,611

 
4,017

Total equity
 
241,541

 
246,991

Total liabilities and equity
 
$
786,023

 
$
782,085





8

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

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
$
19,649

 
$
17,176

 
$
39,071

 
$
33,641

Other revenues
 
5,480

 
4,794

 
11,493

 
9,581

Total property revenues
 
25,129

 
21,970

 
50,564

 
43,222

 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
4,683

 
4,339

 
9,477

 
8,422

Real estate taxes
 
3,304

 
2,925

 
6,658

 
5,829

Total property expenses
 
7,987

 
7,264

 
16,135

 
14,251

 
 
 
 
 
 
 
 
 
Other expenses (income)
 
 
 
 
 
 
 
 
General and administrative
 
5,413

 
4,998

 
10,249

 
9,483

Depreciation and amortization
 
5,521

 
4,675

 
10,913

 
9,239

Interest expense
 
4,748

 
3,516

 
9,552

 
6,924

Interest, dividend and other investment income
 
(78
)
 
(162
)
 
(175
)
 
(171
)
Total other expense
 
15,604

 
13,027

 
30,539

 
25,475

 
 
 
 
 
 
 
 
 
Income from continuing operations before gain on sale or disposal of properties or assets and income taxes
 
1,538

 
1,679

 
3,890

 
3,496

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
(11
)
 
(91
)
 
(167
)
 
(174
)
Gain on sale of properties
 
—

 
—

 
2,890

 
—

Gain (loss) on sale or disposal of assets
 
(18
)
 
5

 
(16
)
 
(100
)
Income from continuing operations
 
1,509

 
1,593

 
6,597

 
3,222

 
 
 
 
 
 
 
 
 
Loss from discontinued operations
 
—

 
(33
)
 
—

 
(41
)
Loss from discontinued operations
 
—

 
(33
)
 
—

 
(41
)
 
 
 
 
 
 
 
 
 
Net income
 
1,509

 
1,560

 
6,597

 
3,181

 
 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
25

 
26

 
116

 
53

 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
1,484

 
$
1,534

 
$
6,481

 
$
3,128


9

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

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.05

 
$
0.06

 
$
0.23

 
$
0.13

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.00

 
0.00

 
0.00

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.05

 
$
0.06

 
$
0.23

 
$
0.13

Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
Income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares
 
$
0.05

 
$
0.06

 
$
0.22

 
$
0.12

Income from discontinued operations attributable to Whitestone REIT
 
0.00

 
0.00

 
0.00

 
0.00

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
 
$
0.05

 
$
0.06

 
$
0.22

 
$
0.12

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
26,819

 
22,869

 
26,712

 
22,724

Diluted
 
27,513

 
23,401

 
27,501

 
23,314

 
 
 
 
 
 
 
 
 
Distributions declared per common share / OP unit
 
$
0.2850

 
$
0.2850

 
$
0.5700

 
$
0.5700

 
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
1,509

 
$
1,560

 
$
6,597

 
$
3,181

 
 
 
 
 
 
 
 
 
Other comprehensive gain (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on cash flow hedging activities
 
(2,450
)
 
43

 
(8,491
)
 
(276
)
Unrealized gain (loss) on available-for-sale marketable securities
 
36

 
(139
)
 
31

 
(98
)
 
 
 
 
 
 
 
 
 
Comprehensive income (loss)
 
(905
)
 
1,464

 
(1,863
)
 
2,807

 
 
 
 
 
 
 
 
 
Less: Comprehensive income (loss) attributable to noncontrolling interests
 
(16
)
 
24

 
(33
)
 
47

 
 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to Whitestone REIT
 
$
(889
)
 
$
1,440

 
$
(1,830
)
 
$
2,760



10


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 
Six Months Ended June 30,
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net income from continuing operations
 
$
6,597

 
$
3,222

Net income (loss) from discontinued operations
 
—

 
(41
)
Net income
 
6,597

 
3,181

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

 
 

Depreciation and amortization
 
10,913

 
9,239

Amortization of deferred loan costs
 
784

 
601

Amortization of notes payable discount
 
145

 
149

Gain on sale of marketable securities
 
—

 
(44
)
Loss (gain) on sale or disposal of assets and properties
 
(2,874
)
 
100

Bad debt expense
 
763

 
771

Share-based compensation
 
3,844

 
3,359

Changes in operating assets and liabilities:
 
 
 
 
Escrows and acquisition deposits
 
844

 
(772
)
Accrued rent and accounts receivable
 
(2,014
)
 
(1,767
)
Unamortized lease commissions
 
(1,133
)
 
(610
)
Prepaid expenses and other assets
 
459

 
323

Accounts payable and accrued expenses
 
(2,537
)
 
(235
)
Tenants' security deposits
 
324

 
267

Net cash provided by operating activities
 
16,115

 
14,603

Net cash used in operating activities of discontinued operations
 
—

 
(41
)
Cash flows from investing activities:
 
 

 
 

Acquisitions of real estate
 
—

 
(51,800
)
Additions to real estate
 
(11,055
)
 
(5,009
)
Proceeds from sales of properties
 
3,957

 
—

Proceeds from sales of marketable securities
 
—

 
496

Net cash used in investing activities
 
(7,098
)
 
(56,313
)
Net cash used in investing activities of discontinued operations
 
—

 
—

Cash flows from financing activities:
 
 

 
 

Distributions paid to common shareholders
 
(15,497
)
 
(13,127
)
Distributions paid to OP unit holders
 
(277
)
 
(224
)
Proceeds from issuance of common shares, net of offering costs
 
10,600

 
49,725

Proceeds from revolving credit facility, net
 
3,000

 
9,500

Repayments of notes payable
 
(1,585
)
 
(1,336
)
Change in restricted cash
 
4

 
—

Repurchase of common shares
 
(1,922
)
 
(772
)
Net cash provided by (used in) financing activities
 
(5,677
)
 
43,766

Net cash used in financing activities of discontinued operations
 
—

 
—

Net increase in cash and cash equivalents
 
3,340

 
2,015

Cash and cash equivalents at beginning of period
 
2,587

 
4,236

Cash and cash equivalents at end of period
 
$
5,927

 
$
6,251






11

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosure
(unaudited)
(in thousands)
 
 
Six Months Ended June 30,
 
 
2016
 
2015
Supplemental disclosure of cash flow information:
 
 

 
 

Cash paid for interest
 
$
9,169

 
$
6,409

Cash paid for taxes
 
$
284

 
$
315

Non cash investing and financing activities:
 
 

 
 

Disposal of fully depreciated real estate
 
$
253

 
$
48

Financed insurance premiums
 
$
1,060

 
$
1,057

Value of shares issued under dividend reinvestment plan
 
$
53

 
$
47

Value of common shares exchanged for OP units
 
$
98

 
$
81

Change in fair value of available-for-sale securities
 
$
31

 
$
(98
)
Change in fair value of cash flow hedge
 
$
8,491

 
$
(276
)


12

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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
FFO AND FFO CORE
 
2016
 
2015
 
2016
 
2015
Net income attributable to Whitestone REIT
 
$
1,484

 
$
1,534

 
$
6,481

 
$
3,128

Depreciation and amortization of real estate assets
 
5,479

 
4,643

 
10,790

 
9,183

(Gain) loss on sale or disposal of assets and properties
 
18

 
(5
)
 
(2,874
)
 
100

Net income attributable to noncontrolling interests
 
25

 
26

 
116

 
53

FFO
 
7,006

 
6,198

 
14,513

 
12,464

 
 
 
 
 
 
 
 
 
Non cash share-based compensation expense
 
1,819

 
1,669

 
3,844

 
3,343

Acquisition costs
 
393

 
596

 
563

 
840

FFO Core
 
$
9,218

 
$
8,463

 
$
18,920

 
$
16,647

 
 
 
 
 
 
 
 
 
FFO PER SHARE AND OP UNIT CALCULATION
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
FFO
 
$
7,006

 
$
6,198

 
$
14,513

 
$
12,464

Distributions paid on unvested restricted common shares
 
(197
)
 
(163
)
 
(352
)
 
(270
)
FFO excluding amounts attributable to unvested restricted common shares
 
6,809

 
6,035

 
14,161

 
12,194

FFO Core excluding amounts attributable to unvested restricted common shares
 
$
9,021

 
$
8,300

 
$
18,568

 
$
16,377

 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
Weighted average number of total common shares - basic
 
26,819

 
22,869

 
26,712

 
22,724

Weighted average number of total noncontrolling OP units - basic
 
484

 
390

 
488

 
391

Weighted average number of total commons shares and noncontrolling OP units - basic
 
27,303

 
23,259

 
27,200

 
23,115

 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
Unvested restricted shares
 
694

 
532

 
789

 
590

Weighted average number of total common shares and noncontrolling OP units - diluted
 
27,997

 
23,791

 
27,989

 
23,705

 
 
 
 
 
 
 
 
 
FFO per common share and OP unit - basic
 
$
0.25

 
$
0.26

 
$
0.52

 
$
0.53

FFO per common share and OP unit - diluted
 
$
0.24

 
$
0.25

 
$
0.51

 
$
0.51

 
 
 
 
 
 
 
 
 
FFO Core per common share and OP unit - basic
 
$
0.33

 
$
0.36

 
$
0.68

 
$
0.71

FFO Core per common share and OP unit - diluted
 
$
0.32

 
$
0.35

 
$
0.66

 
$
0.69


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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
PROPERTY NET OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
1,484

 
$
1,534

 
$
6,481

 
$
3,128

General and administrative expenses
 
5,413

 
4,998

 
10,249

 
9,483

Depreciation and amortization
 
5,521

 
4,675

 
10,913

 
9,239

Interest expense
 
4,748

 
3,516

 
9,552

 
6,924

Interest, dividend and other investment income
 
(78
)
 
(162
)
 
(175
)
 
(171
)
Provision for income taxes
 
11

 
91

 
167

 
174

Gain on sale of properties
 
—

 
—

 
(2,890
)
 
—

(Gain) loss on disposal of assets
 
18

 
(5
)
 
16

 
100

Loss from discontinued operations
 
—

 
33

 
—

 
41

Net income attributable to noncontrolling interests
 
25

 
26

 
116

 
53

NOI
 
$
17,142

 
$
14,706

 
$
34,429

 
$
28,971


EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Whitestone REIT
 
$
1,484

 
$
1,534

 
$
6,481

 
$
3,128

Depreciation and amortization
 
5,521

 
4,675

 
10,913

 
9,239

Interest expense
 
4,748

 
3,516

 
9,552

 
6,924

Provision for income taxes
 
11

 
91

 
167

 
174

Gain on sale of properties
 
—

 
—

 
(2,890
)
 
—

(Gain) loss on disposal of assets
 
18

 
(5
)
 
16

 
100

Net income attributable to noncontrolling interests
 
25

 
26

 
116

 
53

EBITDA (1)
 
$
11,807

 
$
9,837

 
$
24,355

 
$
19,618


 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2016
 
2016
 
2015
 
2015
Net income attributable to Whitestone REIT
 
$
1,484

 
$
4,997

 
$
2,051

 
$
1,570

Depreciation and amortization
 
5,521

 
5,392

 
5,373

 
5,149

Interest expense
 
4,748

 
4,804

 
4,246

 
3,740

Provision for income taxes
 
11

 
156

 
98

 
100

Gain on sale of properties
 
—

 
(2,890
)
 
—

 
—

(Gain) loss on disposal of assets
 
18

 
(2
)
 
(63
)
 
148

Net income attributable to noncontrolling interests
 
25

 
91

 
38

 
25

EBITDA (1)
 
$
11,807

 
$
12,548

 
$
11,743

 
$
10,732




(1) 
Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”): Management believes that EBITDA is an appropriate supplemental measure of operating performance to net income attributable to the Company. The Company defines EBITDA as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes) and general and administrative expenses. 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.


13

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

 
 
Three Months Ended
 
 
 
 
 
 
June 30,
 
 
 
Percent
 
 
2016
 
2015
 
Change
 
Change
Same store (57 properties, exclusive of land held for development) (1)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
$
17,212

 
$
16,837

 
$
375

 
2
 %
Other revenues
 
4,637

 
4,657

 
(20
)
 
—
 %
Total property revenues
 
21,849

 
21,494

 
355

 
2
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
4,196

 
4,271

 
(75
)
 
(2
)%
Real estate taxes
 
2,693

 
2,823

 
(130
)
 
(5
)%
Total property expenses
 
6,889

 
7,094

 
(205
)
 
(3
)%
 
 
 
 
 
 
 
 
 
Total same store net operating income
 
14,960

 
14,400

 
560

 
4
 %
 
 
 
 
 
 
 
 
 
Non-Same Store (6 properties, exclusive of land held for development)(2)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
2,437

 
339

 
2,098

 
Not meaningful

Other revenues
 
843

 
137

 
706

 
Not meaningful

Total property revenues
 
3,280

 
476

 
2,804

 
Not meaningful

 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
487

 
68

 
419

 
Not meaningful

Real estate taxes
 
611

 
102

 
509

 
Not meaningful

Total property expenses
 
1,098

 
170

 
928

 
Not meaningful

 
 
 
 
 
 
 
 
 
Total Non-Same Store net operating income
 
2,182

 
306

 
1,876

 
Not meaningful

 
 
 
 
 
 
 
 
 
Total property net operating income
 
17,142

 
14,706

 
2,436

 
17
 %
 
 
 
 
 
 
 
 
 
Less net total of other expenses, provision for income taxes, gain on sale of properties and loss on disposal of assets
 
15,633

 
13,113

 
2,520

 
19
 %
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
1,509

 
1,593

 
(84
)
 
(5
)%
Loss from discontinued operations, net of taxes
 
—

 
(33
)
 
33

 
(100
)%
 
 
 
 
 
 
 
 
 
Net income
 
$
1,509

 
$
1,560

 
$
(51
)
 
(3
)%



14


 
 
Six Months Ended
 
 
 
 
 
 
June 30,
 
 
 
Percent
 
 
2016
 
2015
 
Change
 
Change
Same Store (56 properties, exclusive of land held for development)(1)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
$
33,953

 
$
33,121

 
$
832

 
3
 %
Other revenues
 
9,532

 
9,341

 
191

 
2
 %
Total property revenues
 
43,485

 
42,462

 
1,023

 
2
 %
 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
8,430

 
8,292

 
138

 
2
 %
Real estate taxes
 
5,366

 
5,685

 
(319
)
 
(6
)%
Total property expenses
 
13,796

 
13,977

 
(181
)
 
(1
)%
 
 
 
 
 
 
 
 
 
Total Same Store net operating income
 
29,689

 
28,485

 
1,204

 
4
 %
 
 
 
 
 
 
 
 
 
Non-Same Store (7 properties, exclusive of land held for development)(2)
 
 
 
 
 
 
 
 
Property revenues
 
 
 
 
 
 
 
 
Rental revenues
 
5,118

 
520

 
4,598

 
Not meaningful

Other revenues
 
1,961

 
240

 
1,721

 
Not meaningful

Total property revenues
 
7,079

 
760

 
6,319

 
Not meaningful

 
 
 
 
 
 
 
 
 
Property expenses
 
 
 
 
 
 
 
 
Property operation and maintenance
 
1,047

 
130

 
917

 
Not meaningful

Real estate taxes
 
1,292

 
144

 
1,148

 
Not meaningful

Total property expenses
 
2,339

 
274

 
2,065

 
Not meaningful

 
 
 
 
 
 
 
 
 
Total Non-Same Store net operating income
 
4,740

 
486

 
4,254

 
Not meaningful

 
 
 
 
 
 
 
 
 
Total property net operating income
 
34,429

 
28,971

 
5,458

 
19
 %
 
 
 
 
 
 
 
 
 
Less net total of other expenses, provision for income taxes, gain on sale of properties and loss on disposal of assets
 
27,832

 
25,749

 
2,083

 
8
 %
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
6,597

 
3,222

 
3,375

 
105
 %
Income (loss) from discontinued operations, net of taxes
 
—

 
(41
)
 
41

 
(100
)%
 
 
 
 
 
 
 
 
 
Net income
 
$
6,597

 
$
3,181

 
$
3,416

 
107
 %


15

(1) 
We define “Same Stores” as properties that have been owned during the entire period being compared. For purposes of comparing the three months ended June 30, 2016 to the three months ended June 30, 2015, Same Stores include properties currently owned during the entire period from April 1, 2015 to June 30, 2016. For purposes of comparing the six months ended June 30, 2016 to the six months ended June 30, 2015, Same Stores include properties currently owned during the entire period from January 1, 2015 to June 30, 2016.

(2) 
We define “Non-Same Stores” as properties that have been owned since the beginning of the period being compared. For purposes of comparing the three months ended June 30, 2016 to the three months ended June 30, 2015, Non-Same Stores include properties that were not owned during the entire period from April 1, 2015 to June 30, 2016. For purposes of comparing the six months ended June 30, 2016 to the six months ended June 30, 2015, Non-Same Stores include properties that were not owned during the entire period from January 1, 2015 to June 30, 2016.


16

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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
Other Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant improvements (1)
 
$
726

 
$
333

 
$
1,184

 
$
1,202

Leasing commissions
 
$
575

 
$
328

 
$
1,011

 
$
570

Maintenance capital
 
$
598

 
$
765

 
$
1,189

 
$
1,279

Scheduled debt principal payments
 
$
540

 
$
406

 
$
1,041

 
$
808

Straight line rent income
 
$
359

 
$
393

 
$
835

 
$
591

Market rent amortization income from acquired leases
 
$
65

 
$
44

 
$
40

 
$
83

Non-cash share-based compensation expense
 
$
1,819

 
$
1,669

 
$
3,844

 
$
3,343

Non-real estate depreciation and amortization
 
$
41

 
$
32

 
$
123

 
$
55

Amortization of loan fees
 
$
315

 
$
301

 
$
630

 
$
601

Acquisition costs
 
$
393

 
$
596

 
$
563

 
$
840

Undepreciated value of unencumbered properties
 
$
591,994

 
$
480,496

 
$
591,994

 
$
480,496

Number of unencumbered properties
 
49

 
45

 
49

 
45

Full time employees
 
95

 
83

 
95

 
83


(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.



17

Whitestone REIT and Subsidiaries
MARKET CAPITALIZATION AND SELECTED RATIOS
(in thousands, except per share amounts and percentages)
 
 
As of June 30, 2016
MARKET CAPITALIZATION:
 
Percent of Total Equity
 
Total Market Capitalization
 
Percent of Total Market Capitalization
Equity Capitalization:
 
 
 
 
 
 
Common shares outstanding
 
98.3
%
 
28,138

 
 
Operating partnership units outstanding
 
1.7
%
 
484

 
 
Total
 
100.0
%
 
28,622

 
 
 
 
 
 
 
 
 
Market price of common shares as of
 
 
 
 
 
 
June 30, 2016
 
 
 
$
15.08

 
 
 
 
 
 
 
 
 
Total equity capitalization
 
 
 
431,620

 
47
%
 
 
 
 
 
 
 
Debt Capitalization:
 
 
 
 
 
 
Outstanding debt
 
 
 
$
502,192

 
 
Less: Cash and cash equivalents
 
 
 
(5,927
)
 
 
 
 
 
 
496,265

 
53
%
 
 
 
 
 
 
 
Total Market Capitalization as of
 
 
 
 
 
 
June 30, 2016
 
 
 
$
927,885

 
100
%


SELECTED RATIOS:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2016
 
2016
 
2015
 
2015
INTEREST COVERAGE RATIO
 
 
 
 
 
 
 
 
EBITDA/Interest Expense
 
 
 
 
 
 
 
 
EBITDA (1)
 
$
11,807

 
$
12,548

 
$
11,743

 
$
10,732

 
 
 
 
 
 
 
 
 
Interest expense
 
4,748

 
4,804

 
4,246

 
3,740

Less: amortization of loan fees
 
(315
)
 
(315
)
 
(310
)
 
(301
)
Interest expense, excluding amortization of loan fees (1)
 
4,433

 
4,489

 
3,936

 
3,439

 
 
 
 
 
 
 
 
 
Ratio of EBITDA to interest expense
 
2.7

 
2.8

 
3.0

 
3.1

 
 
 
 
 
 
 
 
 
LEVERAGE RATIO
 
 
 
 
 
 
 
 
Debt/Undepreciated Book Value
 
 
 
 
 
 
 
 
Outstanding debt (1)
 
$
502,192

 
$
507,053

 
$
499,747

 
$
498,468

Less: Cash
 
(5,927
)
 
(2,447
)
 
(2,587
)
 
(5,660
)
Outstanding debt after cash
 
$
496,265

 
$
504,606

 
$
497,160

 
$
492,808

 
 
 
 
 
 
 
 
 
Undepreciated real estate assets (1)
 
$
844,807

 
$
838,220

 
$
835,538

 
$
831,425

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


18

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

 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2016
 
2016
 
2015
 
2015
Debt/EBITDA Ratio
 
 
 
 
 
 
 
 
Outstanding debt (1)
 
$
502,192

 
$
507,053

 
$
499,747

 
$
498,468

Less: Cash
 
(5,927
)
 
(2,447
)
 
(2,587
)
 
(5,660
)
Outstanding debt after cash
 
496,265

 
504,606

 
497,160

 
492,808

 
 
 
 
 
 
 
 
 
EBITDA (1)
 
$
11,807

 
$
12,548

 
$
11,743

 
$
10,732

Non-cash share based compensation
 
1,819

 
2,025

 
2,137

 
1,859

Acquisition costs
 
393

 
170

 
150

 
729

EBITDA, adjusted
 
14,019

 
14,743

 
14,030

 
13,320

 
 
 
 
 
 
 
 
 
Impact of partial quarter acquisitions and dispositions
 
—

 
—

 
—

 
515

 
 
 
 
 
 
 
 
 
Pro forma quarterly EBITDA, adjusted
 
14,019

 
14,743

 
14,030

 
13,835

 
 
 
 
 
 
 
 
 
Pro forma annualized EBITDA, adjusted (2)
 
56,076

 
58,972

 
56,120

 
55,340

 
 
 
 
 
 
 
 
 
Ratio of debt to pro forma EBITDA, adjusted
 
8.85

 
8.56

 
8.86

 
8.91


(1)  
Includes amounts from discontinued operations.

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


19

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

Description
 
June 30, 2016
 
December 31, 2015
Fixed rate notes
 
 
 
 
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018 (1)
 
$
10,100

 
$
10,220

$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

 
100,000

$37.0 million 3.76% Note, due December 1, 2020
 
34,661

 
35,146

$6.5 million 3.80% Note, due January 1, 2019
 
6,105

 
6,190

$19.0 million 4.15% Note, due December 1, 2024
 
19,000

 
19,000

$20.2 million 4.28% Note, due June 6, 2023
 
19,876

 
20,040

$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
 
16,412

 
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)
 
7,878

 
7,886

$2.6 million 5.46% Note, due October 1, 2023
 
2,531

 
2,550

$11.1 million 5.87% Note, due August 6, 2016
 
11,152

 
11,305

$1.1 million 2.97% Note, due November 28, 2016
 
517

 
—

Floating rate notes
 
 
 
 
Unsecured line of credit, LIBOR plus 1.40% to 1.95%, due October 30, 2019
 
130,600

 
127,600

Total notes payable principal
 
502,192

 
499,747

Less deferred financing costs, net of accumulated amortization
 
(1,639
)
 
(1,792
)
 
 
$
500,553

 
$
497,955


(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%.

(5) 
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%.


20

SCHEDULE OF DEBT MATURITIES AS OF JUNE 30, 2016
(in thousands)
 
Year
 
Scheduled Amortization Payments
 
Scheduled Maturities
 
Total Scheduled Maturities
 
Percentage of Debt Maturing
 
 
 
 
 
 
 
 
 
2016
 
$
1,622

 
$
11,100

 
$
12,722

 
2.5
%
2017
 
2,374

 
7,839

 
10,213

 
2.0
%
2018
 
2,576

 
9,560

 
12,136

 
2.4
%
2019
 
2,392

 
136,257

 
138,649

 
27.6
%
2020
 
2,876

 
79,951

 
82,827

 
16.5
%
Thereafter
 
6,362

 
239,283

 
245,645

 
49.0
%
Total
 
$
18,202

 
$
483,990

 
$
502,192

 
100.0
%

21

Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS

 
 
Gross Leasable Area as of
 
Occupancy % as of
 
 
June 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
Community Centered Properties
 
2016
 
2016
 
2016
 
2015
 
2015
Retail
 
4,101,436

 
90
%
 
89
%
 
90
%
 
88
%
Office/Flex
 
1,115,647

 
82
%
 
85
%
 
85
%
 
84
%
Office
 
521,134

 
81
%
 
81
%
 
80
%
 
79
%
Total - Operating Portfolio
 
5,738,217

 
87
%
 
88
%
 
88
%
 
86
%
Redevelopment, New Acquisitions (1)
 
143,537

 
78
%
 
68
%
 
74
%
 
81
%
Total
 
5,881,754

 
87
%
 
87
%
 
87
%
 
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.

22

Whitestone REIT and Subsidiaries
SUMMARY OF OCCUPANCY AND TOP TENANTS
(continued)
Tenant Name
 
Location
 
Annualized Base Rental Revenue (in thousands)(1)
 
Percentage of Total Annualized Base Rental Revenues
 
Initial Lease Date
 
Year Expiring
Safeway Stores Incorporated (2)
 
Phoenix, Houston and Austin
 
$
2,447

 
3.2
%
 
11/14/1982, 5/8/1991, 7/1/2000, 7/12/2000, 4/1/2014 and 4/1/2014
 
2017, 2020, 2020, 2021, 2024 and 2034
Bashas' Inc. (3)
 
Phoenix
 
936

 
1.2
%
 
10/9/2004 and 4/1/2009
 
2024 and 2029
Wells Fargo & Company (4)
 
Phoenix
 
655

 
0.8
%
 
10/24/1996 and 4/16/1999
 
2016 and 2018
Alamo Drafthouse Cinema
 
Austin
 
639

 
0.8
%
 
2/1/2012
 
2027
Dollar Tree (5)
 
Phoenix and Houston
 
552

 
0.7
%
 
8/10/1999, 6/29/2001, 11/8/2009, 12/17/2009 and 5/21/2013
 
2017, 2020, 2020, 2021 and 2023
University of Phoenix
 
San Antonio
 
530

 
0.7
%
 
10/18/2010
 
2018
Walgreens & Co. (6)
 
Phoenix and Houston
 
530

 
0.7
%
 
11/14/1982, 11/2/1987 and 11/3/1996
 
2017, 2027 and 2049
Petco (7)
 
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. (8)
 
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
Super Bravo, Inc.
 
Houston
 
402

 
0.5
%
 
6/15/2011
 
2023
Rock Solid Images
 
Houston
 
372

 
0.5
%
 
4/1/2004
 
2016
Air Liquide America, L.P.
 
Dallas
 
356

 
0.5
%
 
8/1/2001
 
2018
Sterling Jewelers Inc.
 
Phoenix
 
354

 
0.5
%
 
11/23/2004
 
2020
 
 
 
 
$
9,672

 
12.5
%
 
 
 
 

 (1) 
Annualized Base Rental Revenues represents the monthly base rent as of June 30, 2016 for each applicable tenant multiplied by 12.



23

(2) 
As of June 30, 2016, we had six 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 approximately 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 approximately 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 approximately 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 approximately 0.4% 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 approximately 0.6% of our total annualized base rental revenue.

(3) 
As of June 30, 2016, 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 $232,000, which represents approximately 0.3% 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 approximately 0.9% of our total annualized base rental revenue.

(4) 
As of June 30, 2016, 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 approximately 0.1% 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 $540,000, which represents approximately 0.7% of our total annualized base rental revenue.

(5) 
As of June 30, 2016, 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 2021, was $108,000, which represents approximately 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 approximately 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 $77,000, which represents approximately 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 approximately 0.1% 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 approximately 0.1% of our total annualized base rental revenue.

(6) 
As of June 30, 2016, 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 approximately 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 approximately 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 approximately 0.1% of our total annualized base rental revenue.

(7) 
As of June 30, 2016, 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 approximately 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 approximately 0.3% of our total annualized base rental revenue.

(8) 
As of June 30, 2016, 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 approximately 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 approximately 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 approximately 0.1% of our total annualized base rental revenue.

24

Whitestone REIT and Subsidiaries
SUMMARY OF LEASING ACTIVITY

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
RENEWALS
 
 
 
 
 
 
 
 
Number of Leases
 
52

 
77

 
132

 
121

Total Square Feet (1)
 
159,872

 
158,966

 
336,319

 
242,216

Average Square Feet
 
3,074

 
2,064

 
2,548

 
2,002

Total Lease Value
 
$
9,953,000

 
$
7,889,000

 
$
18,293,000

 
$
11,250,000

NEW LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
49

 
40

 
91

 
72

Total Square Feet (1)
 
149,108

 
108,099

 
257,863

 
221,250

Average Square Feet
 
3,043

 
2,702

 
2,834

 
3,073

Total Lease Value
 
$
14,715,000

 
$
8,089,000

 
$
22,476,000

 
$
13,278,000

TOTAL LEASES
 
 
 
 
 
 
 
 
Number of Leases
 
101

 
117

 
223

 
193

Total Square Feet (1)
 
308,980

 
267,065

 
594,182

 
463,466

Average Square Feet
 
3,059

 
2,283

 
2,664

 
2,401

Total Lease Value
 
$
24,668,000

 
$
15,978,000

 
$
40,769,000

 
$
24,528,000


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


25

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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
66

 
$
11,033,542

 
186,939

 
3.2

 
$
492,214

 
$
2.63

 
$
15.50

 
$
15.45

 
$
8,617

 
0.3
 %
 
$
183,738

 
6.6
 %
1st Quarter 2016
 
90

 
10,387,956

 
207,065

 
3.1

 
416,376

 
2.01

 
13.99

 
13.29

 
144,276

 
5.3
 %
 
335,284

 
12.8
 %
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
 %
Total - 12 months
 
296

 
$
41,190,886

 
710,194

 
3.2

 
$
1,918,330

 
$
2.70

 
$
15.48

 
$
15.18

 
$
214,324

 
2.0
 %
 
$
848,865

 
8.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
15

 
$
1,662,877

 
30,818

 
3.7

 
$
90,600

 
$
2.94

 
$
13.84

 
$
16.22

 
$
(73,479
)
 
(14.7
)%
 
$
(26,196
)
 
(5.7
)%
1st Quarter 2016
 
11

 
1,813,074

 
27,167

 
4.6

 
140,487

 
5.17

 
14.50

 
12.37

 
57,977

 
17.2
 %
 
87,898

 
28.5
 %
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

 
3,075,892

 
44,348

 
3.3

 
185,976

 
4.19

 
17.61

 
18.91

 
(57,268
)
 
(6.9
)%
 
16,681

 
2.2
 %
Total - 12 months
 
60

 
$
8,095,238

 
131,624

 
3.8

 
$
654,107

 
$
4.97

 
$
15.13

 
$
15.86

 
$
(96,208
)
 
(4.6
)%
 
$
75,169

 
3.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
51

 
$
9,370,665

 
156,121

 
3.1

 
$
401,614

 
$
2.57

 
$
15.83

 
$
15.30

 
$
82,096

 
3.5
 %
 
$
209,934

 
9.1
 %
1st Quarter 2016
 
79

 
8,574,882

 
179,898

 
2.9

 
275,889

 
1.53

 
13.91

 
13.43

 
$
86,299

 
3.6
 %
 
247,386

 
10.7
 %
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
 %
Total - 12 months
 
236

 
$
33,095,558

 
578,570

 
3.1

 
$
1,264,223

 
$
2.19

 
$
15.56

 
$
15.02


$
310,532

 
3.6
 %
 
$
773,696

 
9.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

26

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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
35

 
$
13,634,576

 
127,352

 
6.5

 
$
1,408,130

 
$
11.06

 
$
15.39

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
32

 
6,597,013

 
111,090

 
4.9

 
913,349

 
8.22

 
10.35

 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
35

 
9,933,418

 
110,320

 
5.5

 
1,577,769

 
14.30

 
14.28

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
40

 
7,623,794

 
110,471

 
4.7

 
942,226

 
8.53

 
13.63

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
142

 
$
37,788,801

 
459,233

 
5.4

 
$
4,841,474

 
$
10.54

 
$
13.48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable New Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
34

 
$
13,052,233

 
123,601

 
6.5

 
$
1,296,154

 
$
10.49

 
$
15.23

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
31

 
6,521,851

 
109,815

 
4.9

 
912,696

 
8.31

 
10.25

 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
32

 
9,593,047

 
103,458

 
5.7

 
1,564,050

 
15.12

 
14.20

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
37

 
7,054,723

 
99,099

 
4.9

 
908,352

 
9.17

 
13.29

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
134

 
$
36,221,854

 
435,973

 
5.5

 
$
4,681,252

 
$
10.74

 
$
13.29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Comparable Renewal Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
1

 
$
582,343

 
3,751

 
7.4

 
$
111,976

 
$
29.85

 
$
20.50

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
1

 
75,162

 
1,275

 
3.0

 
653

 
0.51

 
19.65

 
 
 
 
 
 
 
 
 
 
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

 
—

 
16.61

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
8

 
$
1,567,037

 
23,260

 
3.6

 
$
160,222

 
$
6.89

 
$
17.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

27

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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
101

 
$
24,668,118

 
314,291

 
4.5

 
$
1,900,344

 
$
6.05

 
$
15.45

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
122

 
16,984,969

 
318,155

 
3.7

 
1,329,725

 
4.18

 
12.72

 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
104

 
19,074,687

 
261,757

 
4.2

 
2,153,255

 
8.23

 
15.64

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
111

 
18,251,913

 
275,224

 
3.7

 
1,376,480

 
5.00

 
15.21

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
438

 
$
78,979,687

 
1,169,427

 
4.1

 
$
6,759,804

 
$
5.78

 
$
14.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
49

 
$
14,715,110

 
154,419

 
5.9

 
$
1,386,754

 
$
8.98

 
$
14.95

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
42

 
8,334,925

 
136,982

 
4.8

 
1,053,183

 
7.69

 
11.09

 
 
 
 
 
 
 
 
 
 
4th Quarter 2015
 
48

 
11,136,442

 
132,749

 
5.2

 
1,801,094

 
13.57

 
14.00

 
 
 
 
 
 
 
 
 
 
3rd Quarter 2015
 
55

 
10,130,615

 
143,447

 
4.4

 
1,094,328

 
7.63

 
14.63

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
194

 
$
44,317,092

 
567,597

 
5.1

 
$
5,335,359

 
$
9.40

 
$
13.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2016
 
52

 
$
9,953,008

 
159,872

 
3.2

 
$
513,590

 
$
3.21

 
$
15.94

 
 
 
 
 
 
 
 
 
 
1st Quarter 2016
 
80

 
8,650,044

 
181,173

 
2.9

 
276,542

 
1.53

 
13.95

 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
 
Total - 12 months
 
244

 
$
34,662,595

 
601,830

 
3.1

 
$
1,424,445

 
$
2.37

 
$
15.62

 
 
 
 
 
 
 
 
 
 

(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.
(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.


28

Whitestone REIT and Subsidiaries
LEASE EXPIRATIONS(1) 

 
 
 
 
 
 
 
 
Annualized Base Rent(2)
 
 
 
 
Gross Leasable Area
 
as of June 30, 2016
Year
 
Number of
Leases
 
Square Feet
 
Percent
of Gross Leasable Area
 
Amount
(in thousands)
 
Percent of
Total
 
Per Square Foot
2016
 
232

 
566,149

 
9.6
%
 
$
7,126

 
9.2
%
 
$
12.59

2017
 
299

 
825,376

 
14.0
%
 
12,537

 
16.2
%
 
15.19

2018
 
257

 
833,656

 
14.2
%
 
13,113

 
17.0
%
 
15.73

2019
 
223

 
624,859

 
10.6
%
 
10,908

 
14.1
%
 
17.46

2020
 
160

 
711,463

 
12.1
%
 
10,680

 
13.8
%
 
15.01

2021
 
146

 
495,336

 
8.4
%
 
7,499

 
9.7
%
 
15.14

2022
 
55

 
323,821

 
5.5
%
 
4,425

 
5.7
%
 
13.66

2023
 
32

 
210,162

 
3.6
%
 
2,565

 
3.3
%
 
12.20

2024
 
25

 
184,641

 
3.1
%
 
2,715

 
3.5
%
 
14.70

2025
 
21

 
66,352

 
1.1
%
 
1,431

 
1.9
%
 
21.57

Total
 
1,450

 
4,841,815

 
82.2
%
 
$
72,999

 
94.4
%
 
$
15.08


(1) 
Lease expirations table reflects rents in place as of June 30, 2016, and does not include option periods.

(2) 
Annualized Base Rent represents the monthly base rent as of June 30, 2016 for each tenant multiplied by 12.


29

Whitestone REIT and Subsidiaries
2016 FINANCIAL GUIDANCE
 
As of
 
As of
 
February 24, 2016
 
July 27, 2016
FFO Core per common share and OP unit - diluted
$1.33 - $1.39
 
$1.33 - $1.39
Net income attributable to Whitestone REIT per common share - diluted
$0.43 - $0.49
 
$0.33 - $0.39
FFO per common share and OP unit - diluted
$1.06 - $1.12
 
$0.99 - $1.05
Same Store Property NOI
3% - 5%
 
3% - 5%
Total Operating Portfolio Occupancy at Year End
89% - 91%
 
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.



30

RECONCILIATION OF NON-GAAP MEASURES - 2016 FINANCIAL GUIDANCE
(per diluted common share and OP unit)
 
 
 
 
 
Guidance:
 
As of July 27, 2016
Net income attributable to Whitestone REIT
 
$
0.33

 
$
0.39

 
 
 
 
 
Adjustments to reconcile net income to FFO:
 
 
 
 
Depreciation expense, amortization, gain on disposal of assets
 
0.66

 
0.66

    FFO
 
$
0.99

 
$
1.05

 
 
 
 
 
Adjustments to reconcile FFO to FFO Core:
 
 
 
 
Non-cash share based compensation expense
 
0.34

 
0.34

     FFO Core
 
$
1.33

 
$
1.39

 
 
 
 
 
 
 
 
 
 
Guidance:
 
As of February 24, 2016
Net income attributable to Whitestone REIT
 
$
0.43

 
$
0.49

 
 
 
 
 
Adjustments to reconcile net income to FFO:
 
 
 
 
Depreciation expense, amortization, gain on disposal of assets
 
0.63

 
0.63

    FFO
 
$
1.06

 
$
1.12

 
 
 
 
 
Adjustments to reconcile FFO to FFO Core:
 
 
 
 
Non-cash share based compensation expense
 
0.27

 
0.27

     FFO Core
 
$
1.33

 
$
1.39

 
 
 
 
 


31

Whitestone REIT and Subsidiaries
PROPERTY DETAILS
As of June 30, 2016
 
 
Community Name
 
 
 
Location
 
 
Year Built/
Renovated
 
Gross Leasable
Square Feet
 
Percent
Occupied at
6/30/2016
 
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
%
 
$
910

 
$
13.62

 
$
13.54

Anthem Marketplace
 
Phoenix
 
2000
 
113,293

 
93
%
 
1,662

 
15.77

 
15.83

Bellnott Square
 
Houston
 
1982
 
73,930

 
43
%
 
329

 
10.35

 
10.25

Bissonnet Beltway
 
Houston
 
1978
 
29,205

 
95
%
 
335

 
12.07

 
11.82

Centre South
 
Houston
 
1974
 
39,134

 
66
%
 
219

 
8.48

 
8.56

The Citadel
 
Phoenix
 
2013
 
28,547

 
95
%
 
401

 
14.79

 
16.08

City View Village
 
San Antonio
 
2005
 
17,870

 
100
%
 
511

 
28.60

 
28.76

Corporate Park Woodland II
 
Houston
 
1972
 
16,220

 
95
%
 
202

 
13.11

 
13.95

Desert Canyon
 
Phoenix
 
2000
 
62,533

 
91
%
 
792

 
13.92

 
14.02

Fountain Hills Plaza
 
Phoenix
 
2009
 
111,289

 
88
%
 
1,641

 
16.76

 
17.46

Fountain Square
 
Phoenix
 
1986
 
118,209

 
89
%
 
1,634

 
15.53

 
16.25

Fulton Ranch Towne Center
 
Phoenix
 
2005
 
113,281

 
86
%
 
1,767

 
18.14

 
17.94

Gilbert Tuscany Village
 
Phoenix
 
2009
 
49,415

 
100
%
 
793

 
16.05

 
18.50

Heritage Trace Plaza
 
Dallas
 
2006
 
70,431

 
100
%
 
1,538

 
21.84

 
22.28

Holly Knight
 
Houston
 
1984
 
20,015

 
85
%
 
328

 
19.28

 
18.57

Headquarters Village
 
Dallas
 
2009
 
89,134

 
98
%
 
2,415

 
27.65

 
30.82

Keller Place
 
Dallas
 
2001
 
93,541

 
94
%
 
891

 
10.13

 
10.18

Kempwood Plaza
 
Houston
 
1974
 
101,008

 
92
%
 
901

 
9.70

 
9.59

Lion Square
 
Houston
 
2014
 
117,592

 
87
%
 
1,167

 
11.41

 
11.39

The Marketplace at Central
 
Phoenix
 
2012
 
111,130

 
98
%
 
940

 
8.63

 
8.43

Market Street at DC Ranch
 
Phoenix
 
2003
 
242,459

 
90
%
 
4,266

 
19.55

 
20.28

Mercado at Scottsdale Ranch
 
Phoenix
 
1987
 
118,730

 
68
%
 
1,583

 
19.61

 
20.47

Paradise Plaza
 
Phoenix
 
1983
 
125,898

 
92
%
 
1,642

 
14.18

 
14.06

Parkside Village North
 
Austin
 
2005
 
27,045

 
100
%
 
782

 
28.91

 
29.69

Parkside Village South
 
Austin
 
2012
 
90,101

 
100
%
 
2,252

 
24.99

 
26.59

Pinnacle of Scottsdale
 
Phoenix
 
1991
 
113,108

 
98
%
 
2,028

 
18.30

 
18.61

The Promenade at Fulton Ranch
 
Phoenix
 
2007
 
98,792

 
60
%
 
924

 
15.59

 
16.72

Providence
 
Houston
 
1980
 
90,327

 
95
%
 
812

 
9.46

 
9.45

Quinlan Crossing
 
Austin
 
2012
 
109,892

 
96
%
 
2,438

 
23.11

 
24.08

Shaver
 
Houston
 
1978
 
21,926

 
85
%
 
253

 
13.58

 
12.98

Shops at Pecos Ranch
 
Phoenix
 
2009
 
78,767

 
90
%
 
1,449

 
20.44

 
20.55

Shops at Starwood
 
Dallas
 
2006
 
55,385

 
97
%
 
1,627

 
30.28

 
28.22

The Shops at Williams Trace
 
Houston
 
1985
 
132,991

 
96
%
 
1,764

 
13.82

 
14.06

South Richey
 
Houston
 
1980
 
69,928

 
96
%
 
795

 
11.84

 
9.30

Spoerlein Commons
 
Chicago
 
1987
 
41,455

 
84
%
 
683

 
19.61

 
20.65

The Strand at Huebner Oaks
 
San Antonio
 
2000
 
73,920

 
94
%
 
1,485

 
21.37

 
21.93

SugarPark Plaza
 
Houston
 
1974
 
95,032

 
85
%
 
943

 
11.67

 
11.69

Sunridge
 
Houston
 
1979
 
49,359

 
75
%
 
426

 
11.51

 
11.18

Sunset at Pinnacle Peak
 
Phoenix
 
2000
 
41,530

 
90
%
 
584

 
15.62

 
16.53

Terravita Marketplace
 
Phoenix
 
1997
 
102,733

 
94
%
 
1,338

 
13.86

 
13.71

Torrey Square
 
Houston
 
1983
 
105,766

 
83
%
 
759

 
8.65

 
8.48

Town Park
 
Houston
 
1978
 
43,526

 
93
%
 
846

 
20.90

 
20.97

Village Square at Dana Park
 
Phoenix
 
2009
 
323,026

 
90
%
 
6,103

 
20.99

 
20.79

Webster Pointe
 
Houston
 
1984
 
26,060

 
74
%
 
234

 
12.13

 
11.56

Westchase
 
Houston
 
1978
 
49,573

 
85
%
 
505

 
11.98

 
13.41

Williams Trace Plaza
 
Houston
 
1983
 
129,222

 
95
%
 
1,693

 
13.79

 
14.13

Windsor Park
 
San Antonio
 
2012
 
196,458

 
97
%
 
1,836

 
9.63

 
9.26

Total/Weighted Average
 
 
 
 
 
4,101,436

 
90
%
 
59,426

 
16.10

 
16.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
9101 LBJ Freeway
 
Dallas
 
1985
 
125,874

 
75
%
 
$
1,435

 
$
15.20

 
$
13.82

Pima Norte
 
Phoenix
 
2007
 
35,110

 
63
%
 
377

 
17.04

 
18.31

Uptown Tower
 
Dallas
 
1982
 
253,981

 
80
%
 
3,438

 
16.92

 
16.59

Woodlake Plaza
 
Houston
 
1974
 
106,169

 
97
%
 
1,867

 
18.13

 
17.93

Total/Weighted Average
 
 
 
 
 
521,134

 
81
%
 
7,117

 
16.86

 
16.41

Office/Flex Communities:
 
 
 
 
 
  
 
 
 
  
 
  
 
 
Corporate Park Northwest
 
Houston
 
1981
 
174,359

 
80
%
 
$
1,638

 
$
11.74

 
$
11.66

Corporate Park West
 
Houston
 
1999
 
175,665

 
82
%
 
1,507

 
10.46

 
11.30

Corporate Park Woodland
 
Houston
 
2000
 
99,937

 
93
%
 
894

 
9.62

 
10.08

Dairy Ashford
 
Houston
 
1981
 
42,902

 
55
%
 
190

 
8.05

 
7.97

Holly Hall Industrial Park
 
Houston
 
1980
 
90,000

 
91
%
 
739

 
9.02

 
8.30

Interstate 10 Warehouse
 
Houston
 
1980
 
151,000

 
99
%
 
673

 
4.50

 
4.76

Main Park
 
Houston
 
1982
 
113,410

 
84
%
 
673

 
7.06

 
7.42

Plaza Park
 
Houston
 
1982
 
105,530

 
54
%
 
525

 
9.21

 
10.21

Westbelt Plaza
 
Houston
 
1978
 
65,619

 
88
%
 
559

 
9.68

 
9.44

Westgate Service Center
 
Houston
 
1984
 
97,225

 
78
%
 
563

 
7.42

 
7.82

Total/Weighted Average
 
 
 
 
 
1,115,647

 
82
%
 
7,961

 
8.70

 
8.96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average - Operating Portfolio
 
 
 
 
 
5,738,217

 
87
%
 
74,504

 
14.92

 
15.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davenport Village
 
Austin
 
1999
 
128,934

 
87
%
 
$
2,676

 
$
23.86

 
$
26.27

Gilbert Tuscany Village Hard Corner
 
Phoenix
 
2009
 
14,603

 
—
%
 
—

 
—

 
—

Total/Weighted Average - Development Portfolio (4)
 
 
 
 
 
143,537

 
78
%
 
2,676

 
23.90

 
26.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
5,881,754

 
87
%
 
$
77,180

 
$
15.08

 
$
15.33


(1)   
Calculated as the tenant's actual June 30, 2016 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of June 30, 2016. 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 June 30, 2016 equaled approximately $179,000 for the month ended June 30, 2016.
 
(2)   
Calculated as annualized base rent divided by gross leasable area leased as of June 30, 2016.  Excludes vacant space as of June 30, 2016.

(3) 
Represents (i) the contractual base rent for leases in place as of June 30, 2016, 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 June 30, 2016.

(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 June 30, 2016, these parcels of land were held for development and, therefore, had no gross leasable area.


32