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):  January 21, 2009 (January 16, 2009)

Whitestone REIT

(Exact name of registrant as specified in its charter)

Maryland	000-50256	76-0594970
(State or Other Jurisdiction of Incorporation)	(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 (see General Instruction A.2. below):

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement.

On January 16, 2009, Whitestone REIT (the “Company”),operating through Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), acquired Spoerlein Commons, a mixed use-garden style complex of retail, medical, and professional office tenants located in Buffalo Grove, Illinois (the “Property”).  The Operating Partnership acquired the Property pursuant to the terms and conditions of the purchase, sale and contribution agreement dated December 18, 2008 (the “Agreement”) between the Operating Partnership and Bank One, Chicago, NA, as trustee under the Trust Agreement dated January 29, 1986 and known as Trust Number TWB-0454 (“Seller”). Midwest Development Venture IV, an Illinois limited partnership (“Midwest”), is the sole beneficiary of the Seller under the Trust Agreement.

The Property represents an acquisition for the Company, and a substantial equity investment on behalf of the Seller. In exchange for the Property, the Operating Partnership paid Seller $5,500,000, received credit for net prorations of $275, 854and issued 703,912Units of the Operating Partnership (the “Units”), valued at $5.15 per Unit, for a total purchase price of $9,401,000.

Midwest, the sole beneficiary of the Seller, is entitled to all earnings and proceeds from the sale of the Property. James C. Mastandrea, our Chairman, President and Chief Executive Officer, is the controlling limited partner in Midwest and as such, had an ownership interest in the Property and is entitled to a portion of the proceeds from the sale of the Property to the Operating Partnership. Because of Mr. Mastandrea’s relationship with the Seller, a special committee of the independent members of the Board of Trustees including Donald F. Keating, Jack L. Mahaffey, and Chris A. Minton determined the terms of the transaction, which included the use of an independent appraiser to value the Property.

No brokerage commission was paid by the Company for this acquisition, and in relation to Mr. Mastandrea’s investment, there was no front end load, meaning that 100% of the amount paid is working for the benefit of the Company’s shareholders.

Item 3.02 Unregistered Sales of Equity Securities.

The disclosure contained in Item 1.01 above is incorporated in this Item 3.02 by reference.

In connection with the closing of the Property and the investment on behalf of the Seller, the Operating Partnership issued 703,912Units to Midwest for its contribution of the Property to the Operating Partnership.  The Units were issued in reliance on the exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended. The issuance was not effected using any form of general advertising or general solicitation and the issuance was made to a qualified investor.

The Units are convertible on a one-for-one basis into Common Shares of the Company at any time after July 1, 2009in accordance with the terms of the Operating Partnership’s Limited Partnership Agreement, as amended (the “Limited Partnership Agreement”).  The Seller will not be entitled to any dividends or distributions with respect to the Units prior to June 30, 2009.

In the event James C. Mastandrea is not re-elected as a trustee of the Company at the 2009 Annual Meeting of Shareholders and appointed Chairman, President and Chief Executive Officer for any reason, the Operating Partnership would be obligated to repurchase the Units or any Common Shares issued upon conversion of the Units (as the case may be),in cash for $5.15 for each Unit or Common Share issued to Midwest in connection with the sale of the Property discussed above.

Item 9.01		Financial Statements and Exhibits.
	(d)	Exhibits.
	Exhibit 99.1	Press Release dated January 21, 2009

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: January 21, 2009	WHITESTONE REIT
	By:	/s/ David K. Holeman
		David K. Holeman
		Chief Financial Officer

EX-99.1

Exhibit 99.1

PRESS RELEASE

WHITESTONE REIT ENTERS CHICAGO MARKET THROUGH ACQUISITION OF UPSCALE

MIXED-USE PROPERTY; CHAIRMAN MAKES SUBSTANTIAL INVESTMENT IN REIT

Houston, TX, January 21, 2009 – Whitestone REIT, a public, non-traded community business center real estate investment trust, today announced that Midwest Development Venture IV (“MDV IV”), an Illinois limited partnership controlled by James C. Mastandrea, Whitestone’s Chairman and CEO, has invested approximately $3.6 million in the Company through a transfer of equity in Spoerlein Commons, a commercial retail/office property located in Buffalo Grove, Illinois, a Chicago suburb.  Mr. Mastandrea is the majority owner and controlling partner of MDV IV. The contribution of the property to Whitestone REIT Operating Partnership in exchange for partnership units fulfills Mastandrea’s prior stated commitment to invest in Whitestone REIT.

The total purchase price paid by Whitestone was $9,401,000, and was paid in the form of $5.5 million in cash and 703,912 units of Whitestone Operating Partnership (“OP Units”).  No dividends will be paid on the OP Units prior to June 30, 2009.

Because of Mr. Mastandrea’s relationship with both buyer and seller, a special committee comprised of three independent members of Whitestone REIT’s Board of Trustees represented the purchaser, including Jack Mahaffey, Don Keating, and Chris Minton. The special committee determined the terms of the transaction and was assisted by an independent appraisal firm in determining the value of the property.

 “My commitment to Whitestone REIT is unwavering,” stated Mr. Mastandrea. “This substantial investment represents my commitment to work shoulder-to-shoulder with our shareholders, my firm belief in the value driven strategic growth plan for our Company, and my confidence in our management team to attain Whitestone’s goals.”

Investment Facilitates Whitestone’s Entry into Chicagoland Market

Spoerlein Commons, a community center garden-style complex of retail, medical and professional office tenants, is Whitestone’s first Chicago-area property.  Located in upscale Buffalo Grove, 30 miles northwest of Chicago, Spoerlein is on one of the busiest intersections in the area on Route 83 at Arlington Heights Road. National tenants include Dunkin’ Donuts®, Kumon Math and Reading®, Subway® Restaurants, Allstate® Insurance, State Farm Insurance®, and Great Clips®.

The third largest city and one of the top 10 fastest growing cities in the USA, Chicago is a major business center with a diversified economy.  Chicago is home to some of the largest companies in the world, including Allstate® Insurance, McDonalds®, SaraLee Corporation, and Boeing®. Other companies headquartered in Chicago include John Deer®, OfficeMax®, Caterpillar, R.R. Donnelley & Sons®, and Abbot Laboratories®. Whitestone has clearly defined its market focus: in Houston, Dallas, San Antonio, Phoenix, and now Chicago. Of Whitestone’s 35 other properties, one is located near Phoenix, Arizona; the remainder are in Texas: 31 in Houston, two in Dallas and one in San Antonio.

“One of Whitestone’s strategic goals is to diversify both opportunities and risk by geographically expanding our portfolio outside of our heavy concentration in Houston, especially having recently experienced damage from Hurricane Ike in many of our properties. Further, as we move toward publicly listing our shares, institutional investors expect Whitestone to have investments in major growing markets, such as Phoenix and Chicago, both stable markets where property values appreciate over the long term amid a strong economic foundation. Spoerlein establishes our foothold in this new market, and positions us to identify additional Chicago area acquisition opportunities,” said Mr. Mastandrea.

 

About Whitestone REIT

Whitestone REIT specializes in enhancing shareholder value by Creating Business Communities in its Properties – it owns, manages and operates suburban and urban infill commercial properties providing employment centers and retail communities in Houston, Dallas, San Antonio, Texas and Phoenix, Arizona, and Chicago, Illinois.  The Company has 3,000,000 square feet of lease space in 35 properties as of December 31, 2008. Whitestone has approximately 650 tenants offering basic goods and services with lease spaces ranging in size from 500 to 55,000 square feet. Headquartered in Houston, Texas, Whitestone employs 48 people nationally.   For additional information about the Company, go to http://www.whitestonereit.com.

Forward-Looking Statements

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 the Company's regulatory filings with the Securities and Exchange Commission for information or factors that may impact the Company's performance.

Contact Whitestone REIT:

Anne Gregory, Asst. VP Marketing & Investor Relations

713.827.9595  EXT 3013   agregory@whitestonereit.com

Richard Stern, Stern & Company

212.888.0044  richstern@sternco.com