8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 24, 2008 (November 14, 2008)

Whitestone REIT

(Exact Name of Registrant as Specified in Its Charter)

Maryland	000-50256	76-0594970
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

2600 South Gessner, Suite 500, Houston, Texas  77063

(Address of principal executive offices)     (Zip Code)

(713) 827-9595

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01 Regulation FD Disclosure.

On November 14, 2008, the Company held a shareholder meeting in Houston, Texas.  At this meeting a presentation was made by James C. Mastandrea, Chairman  & CEO, which discussed the Company’s progress to date, the Company’s 3rd quarter financial results, the REIT industry, the global financial and credit crisis and the Company’s future plans.

A copy of that presentation is furnished herewith as Exhibit 99.1 to the Current Report on Form 8-K and is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Presentation to shareholders in Houston, Texas on November 14, 2008.

SIGNATURE

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

Date:  November 24, 2008	WHITESTONE REIT
	By:	/s/ David K. Holeman
		David K. Holeman
		Chief Financial Officer

EX-99.1

Exhibit 99.1

James C. Mastandrea Chairman & CEO
WHITESTONE REIT
Town Hall Meeting
      

SafeHarbor Statement

Statements included herein that state the Company’s or management’s

intentions, hopes, beliefs, expectations or predictions of the future

are “forward-looking” statements within the meaning of the Private

Securities Litigation Reform Act of 1995, which by their nature,

involve known and unknown risks and uncertainties.

The Company’s actual results, performance or achievements could

differ materially from those expressed or implied by these

statements. Reference is made to t he Company’s regulatory filings

with the Securities and Exchange Commission for information or

factors that may impact the Company’s performance.

WHITESTONE REIT

OUR MISSION IS TO SERVE OUR …

1) Shareholders by working diligently

and efficiently to maximize the value

of the enterprise and the real estate

properties we own.

2) Fellow Employees by providing

development and training while

encouraging the pursuit of

excellence.

WHITESTONE REIT

OUR MISSION IS TO SERVE OUR …

3) Tenants by providing quality rental

space and a professional community

atmosphere.

4) Community by working together in

an ethical and honest manner.

Today’s Agenda

• Whitestone REIT:

– Progress to Date

– Financial Report

• The REIT Industry

• Global Financial and Credit Crisis

• Whitestone’s Plan

Progress To Date

WHITESTONE

REIT

• Restructured Management

• Repositioned Properties

• Stabilized Balance Sheet

• Reduced Dividends

• Aligned Management Interest

w/Shareholders

Progress to Date

WHITESTONE REIT

OUR REAL ESTATE PROPERTIESOUR REAL ESTATE PROPERTIESWHITESTONEWHITESTONEREITREITLeasing

Management Team Management Team ––Vertically Integrated

Prop Mgt

Acquisitions

Capital

Markets

Asset

Mgt

Finance

Investor Relations

Restructured ManagementVertically Integrated

SHAREHOLDERS SHAREHOLDERS BOARD OF TRUSTEES BOARD OF TRUSTEES

Westchase Renovation

Repositioned Properties:

WHITESTONE

REIT

Before Renovation

Renovation in Progress

Westchase

During Renovation

Westchase

Renovation Near Completion

Westchase

Westchase

Expected Results from Renovation

• Capital investment of $0.11 per share

• Revenue increase of $0.01 per share

in 1st year

• Revenue increase by 5th year of $0.03

per share

Stabilized Balance Sheet

WHITESTONE

REIT

Stabilized Balance Sheet

• In a challenging credit market:

– Replaced short term debt with long

term debt

– Lowered our interest rate

– Generated additional investment

capital

Improved Balance SheetDebt Maturities

BEFORE

REFINANCING

AFTER

REFINANCING

(millions)

(millions)

Interest Rate Comparison Interest Rate Comparison Before & After Refinancing

Reduced Dividends

To Level Supported by FFO

WHITESTONE

REIT

Reduced Dividends – Why?

• Preserve capital during time when credit

markets are frozen

– Allocate cash for needed property repairs

– Softened Houston Market -tenant

revenue loss

– Align dividends with FFO

– Position to capitalize on opportunities

Aligned Management

Compensation

With Shareholders Interest

WHITESTONE

REIT

Suspended Raise/Bonus

• Suspended Raises

• Eliminated Bonuses

• Implemented Stock Ownership Program

tied to Performance of Company

• Occupancy

• Revenue

• Net Income

• Funds From

Operations

Financial Report

WHITESTONE

REIT

Occupancy

• Occupancy increased:

to 86% at September 30, 2008

from 85% at September 30, 2007

• 53 new & renewal leases totaling194,000 sq ft & $5.6 million in total value

• Tenant move-outs of approx. 50,000 sq ft

Occupancy

85%

86%

80%

82%

84%

86%

88%

90%

'Sep-07 'Sep-08

SEPT 2007 VS. SEPT 2008

Rent Per Square Foot

• Rent per square foot increased

to $12.06 in the 3rd quarter from

$11.44 last year, or 5%.

Rent Per Square Foot

$11.44

$12.06

$10.25

$11.25

$12.25

'Sep-07 'Sep-08

SEPT 2007 VS. SEPT 2008

Revenues

• Revenues for the nine months ended

September 2008 were $23.1 million versus

$21.7 million in 2007, an increase of $1.4

million or 6%.

• Revenues for the 3rd quarter 2008 were

$7.6 million vs $7.4 million in 2007, an

increase of $0.2 million or 3%.

$21.7 $23.1

$7.4 $7.6

$0

$5

$10

$15

$20

$25

9 Mos 3 Mos

2007 2008

9 AND 3 MONTHS ENDED SEPT 30: 2007 VS. 2008

(millions)

Revenue

Property Net Operating Income

• Property NOI for the nine months ended

September 2008 was $13.6 million versus

$12.9 million in 2007, an increase of $0.7

million or 5%

• Property NOI for the 3rd quarter 2008 was

$4.3 million vs $4.3 million in 2007

Property Net Operating Income

9 AND 3 MONTHS ENDED SEPT 30: 2007 VS. 2008

(millions)

$12.9 $13.6

$4.3 $4.3

$0

$2

$4

$6

$8

$10

$12

$14

9 Mos 3 Mos

2007 2008

Net Income

• Net Income for the nine months ended Sept 2008:

was $1.3 million

versus $0.2 million in 2007,

an increase of $1.1 million

– Gain from litigation settlement of $2.3 million

– Offset by:

• Loan fees from extension of $0.7 million

• Interest Cost of $0.4 million

Net Income (cont.)

• Net loss for the quarter was $0.2 million versus

net income of $0.2 million in 2007, a decrease of

$0.4 million

– Eliminated litigation cost of $0.2 million

– Offset by

• Loan fees from extension of $0.3 million

• Interest cost of $0.2 million

Net Income

9 AND 3 MONTHS ENDED SEPT 30: 2007 VS. 2008(millions)

$0.2

$1.3

$0.2

-$0.2

-$0.5

$0.0

$0.5

$1.0

$1.5

9 Mos 3 Mos

2007 2008

Funds From Operations (FFO)

• FFO was $2.9 million for the nine months

ended September 2008 vs. $4.7 million in

2007, a decrease of $1.6 million or 34%

– Loan fees from extension of $1 million

– Interest Cost of $0.6 million

Funds From Operations (FFO)

(cont.)

• FFO was $1.2 million for the quarter vs.

$1.7 million in 2007, a decrease of $0.5

million or 29%

– Eliminated litigation cost of $0.3 million

– Offset by

• Loan fees from extension of $0.4

million

• Interest Cost of $0.3 million

Funds From Operations (FFO)

(millions)

9 AND 3 MONTHS ENDED SEPT 30: 2007 VS. 2008

$4.7

$2.9

$1.7

$1.2

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

9 Mos 3 Mos

2007 2008

• Dividends were lower than previous year

due to fewer shares and OP units

outstanding

Dividends

Dividends

9 AND 3 MONTHS ENDED SEPT 30: 2007 VS. 2008

$7.1 $6.8

$2.4 $2.2

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

9 Mos 3 Mos

2007 2008

(millions)

WHITESTONE

REIT

Balance SheetBalance Sheet

Total Assets

• Total Assets decreased by $7 million from

December 2007

– Two properties exchanged for stock

$4 million

– Distribution in excess of net income of

$3 million

Assets

$175 $168

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'Dec-07 'Sep-08

(millions)

Liabilities

• Total liabilities increase by $4.3 million

from December 2007

– Increased mortgage loans of $5.2

– Decreased dividends payable of

$0.7 million

Liabilities

$83.4

$10.8

$88.6

$9.9

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

'Dec-07 'Dec-08

Equity

• Shareholders equity decreased by

$5.7 million

– Treasury shares exchanged for

properties of $2.5 million

– Dividends in excess of net income

of $3.2 million

Equity (cont.)

• Minority interest decreased by $6.2 million

– OP units exchanged for properties of

$4.7 million

– Distributions in excess of net income of

$1.5 million

Equity

$52.8

$47.1

$21.9 $28.0

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

'Dec-07 'Sep-08

Minority Interest Shareholders' Equity

(millions)

ike WHITESTONE

REIT

Challenges

99 Cent Only & CircuitCity

• 99 Cent Only Stores pulling

out of Texas

– Two Whitestone

properties (Houston)

• CircuitCity filed Chapter 11

– One Whitestone property

99 Cent Only + CircuitCity

• $0.02 lost revenue per share

• $0.02 lost revenue per share

• 31 Properties damaged

• Public Adjuster hired

• Property and business

interruption insurance in place

• Cost to Whitestone pending

insurance settlement

Hurricane Ike

ike

Global Financial & Credit Crisis:

The Challenge for Public REITs

WHITESTONE

REIT

Challenge -Earnings

Growth

• REIT earnings increase limited by leases

• Internally generated capital

– Limited by 90% payout requirement

• Capital gains are not recurring

– Can be retained if offset by capital losses

– Can be retained if the required tax is paid

– Can be distributed to shareholders

Challenge: Attracting

Investor Capital During

Crisis

• Operational and financial trends

• Active redevelopment program

• Pipeline of attractive acquisitions

• Geographic diversification

• Strong balance sheet

• Management ownership

• Experienced Board

• Proven Investment Banker

Challenge – Sustaining

Dividends

As of Nov 5th, 16 US and 4 Canadian

REITs cut or suspended dividends and

more are expected to follow.

Dividend Cuts: % Cut

6 out of 16 in this example cut dividends by 100%

Source: SNLi : Dada Dispatch: REIT, REOC

dividend cuts and suspensions Nov 5, 2008

Dividend Cuts

“REITs would be well served to reduce their

dividends to between 90% and 100% of

taxable net income and use the dividend

savings to shore up balance sheets”

-RBC Capital Market Analysts 10/9/08 Report

Dow JonesDow Jones

IndustrialIndustrial

AverageAverage

Dow Jones Equity

All REIT Index

Current Economic Crisis

• Government bailout

• Unemployment rising

• Economy slowing into a Recession

• Consumer confidence low

• Declining retail sales

• Capital markets frozen

Public REITS “Facing a

BloodBath”

“Concerns about the credit market and

economy primarily drove the 13% drop

in REITs over the past four days”

“REITs now trade at a 31.3% discount

to the Street’s mean estimate of real

estate NAV.”

SNLi Nov. 7, 2008

General Growth Properties

Facing Chapter 11 if unable to

refinance or extend $1 billion debt

due next month. Another $3.1 billion

in debt is due next year.

Houston properties:

Baybrook Mall

Deerbrook Mall

First Colony Mall

Woodlands Mall

Willowbrook Mall

The Woodlands

- Houston Chronicle Nov 12, 2008

General Growth Properties

STOCK PRICE MAY 08 TO OCT 08

May-Jun-Jul-08 Aug-Sep-Oct0808 080808

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

GGP

Developers Diversified

STOCK PRICE MAY 08 TO OCT 08

May-Jun-Jul-08 Aug-Sep-Oct0808 080808

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

DDR

Developers Diversified

STOCK PRICE MAY 08 TO OCT 08

May-Jun-Jul-08 Aug-Sep-Oct0808 080808

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

Prologis

STOCK PRICE MAY 08 TO OCT 08

May-Jun-Jul-08 Aug-Sep-Oct-08

0808 0808

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

PLD

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

May-08

Jun-08

Jul-08 Aug-08

Sep-08

Oct-08

WRI

WeingartenWeingartenSTOCK PRICE MAY 08 TO OCT 08

Weingarten Realty Investors

NYSE:WRI3 months 8/13/08 – 11/12/08

High $17.08

Low $15.91 – 52 wk low

(52.34%) 8/13/08 to 11/12/08

AmREIT

STOCK PRICE MAY 08 TO OCT 08

May-Jun-Jul-08 Aug-Sep-Oct-08

0808 0808

$5.40

$5.60

$5.80

$6.00

$6.20

$6.40

$6.60

$6.80

$7.00

$7.20

AMY

AmREIT AMEX:AMY

3 months 8/13/08 – 11/12/08

High $4.45

Low $3.82 – 52 wk low

(40.43%) 8/13/08 to 11/12/08

KIMCO Realty NYSE:KIM

3 months 8/13/08 – 11/12/08

High $19.33

Low $16.85 52 wk low=$16.65

(17.85%) 8/13/08 to 11/12/08

• Redevelop

• Occupancy &

Revenue

•Geographic

Diversification

•Disposition/Acquisition

Restructure Balance

Sheet

•Public ListingOur Strategic Plan

WHITESTONE

REIT

James C. Mastandrea

Chairman & CEO

Question/Answer

Thank You.