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Whitestone REIT Reports Third Quarter 2023 Results

HOUSTON, Oct. 31, 2023 (GLOBE NEWSWIRE) -- Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today announced its operating and financial results for the third quarter of 2023. Whitestone creates neighborhood center communities in its high-quality open-air shopping centers that it acquires, owns, manages, develops, and redevelops primarily in the largest, fastest-growing, high-household-income markets in the Sunbelt.

“We delivered a very strong quarter operationally, with GAAP leasing spreads of 23.6% on new leases and 24.6% on renewal leases, revenue increasing by 4.9% and occupancy of 92.7%.  This extends our track record to 6 consecutive quarters with over 17% increases in combined GAAP leasing spreads.  We are reiterating the guidance from the 2nd quarter earnings call as we anticipate finishing the year with a strong 4th quarter.”

–    Dave Holeman, Chief Executive Officer

Third Quarter 2023 Operating and Financial Results
All per share amounts are on a diluted per common share and operating partnership (OP) unit basis unless stated otherwise.
Reconciliations of Net Income Attributable to Whitestone REIT to FFO, NOI and EBITDAre are included herein.

 Revenues of $37.1 million versus $35.4 million for the third quarter of 2022.


 Net Income attributable to common shareholders of $2.5 million, or $0.05 per diluted share, versus $3.9 million, or $0.08 per diluted share for the third quarter of 2022. 


 Funds from Operations (“FFO”) per diluted share of $0.23 versus $0.24 for the third quarter of 2022. The decrease was primarily the result of higher litigation and interest expenses, offset partially by increased property net operating income.


 EBITDAre of $20.4 million versus $19.4 million for the third quarter of 2022.


 Same-Store Net Operating Income (“NOI”) grew 4.9% to $23.2 million versus $22.1 million for the third quarter of 2022. 


 Net Effective Annual Base Rental Revenue per leased square foot was up 5.0% to $22.82, compared to the prior year quarter.


Operating Results

For the three-month periods ending September 30, 2023 and 2022, the Company’s operating highlights were as follows:

  Third Quarter 2023Third Quarter 2022
Occupancy:   
Wholly Owned Properties – All  92.7%  92.5% 
>10,000 Sq Ft Occupancy  96.0%  96.5% 
≤ 10,000 Sq Ft Occupancy  90.8%  90.1% 
Same Store Property Net Operating Income Change (1)  4.9%  4.5% 
Rental Rate Growth - Total (GAAP Basis):  24.4%  19.2% 
New Leases  23.6%  16.5% 
Renewal Leases  24.6%  20.0% 
Leasing Transactions:   
Number of New Leases  29  35 
New Leases - Lease Term Revenue (millions)  $11.2  $16.7 
Number of Renewal Leases  58  51 
Renewal Leases - Lease Term Revenue (millions)  $15.7  $12.3 


Balance Sheet and Debt Metrics

 As of September 30, 2023, Whitestone had total debt of $633.2 million, along with capacity and availability of $112.5 million each under its $250 million revolving credit facility.


 As of September 30, 2023, the Company has undepreciated real estate assets of $1.2 billion.

Dividend

On September 6, 2023, the Company declared a quarterly cash distribution of $0.12 per common share and OP unit for the fourth quarter of 2023, to be paid in three equal installments of $0.04 in October, November, and December of 2023. 

2023 Full Year Guidance

The Company is reiterating the guidance last updated on August 1, 2023, when it updated its 2023 full-year guidance.

  2023 Revised Guidance - 8/1/20232023 Original Guidance
  (unaudited, amounts in thousands except per share and percentages)
Net income attributable to Whitestone REIT $21,500 - $23,600$14,400 - $16,500
FFO (1) $45,750 - $47,850$48,300 - $50,400
    
Net income attributable to Whitestone REIT per share $0.43 - $0.47$0.29 - $0.33
FFO per diluted share and OP Unit (1) $0.90 - $0.94$0.95 - $0.99
    
Key Drivers:   
Same store net operating income growth (2) 2.5% - 4.5%2.5% – 4.5%
Bad debt as a percentage of revenue 0.75% - 1.50%0.75% – 1.50%
General and administrative expense $20,200 - $20,700$19,200 - $19,700
Deficit in earnings of real estate partnership $ (1,400) - $ (1,600)$0
Gain on sale of properties $9,621$0
Interest expense $31,700 - $33,200$31,700 - $33,200
Ending occupancy 93.5% - 94.5%93.5% - 94.5%
Net Debt to EBITDAre Ratio (3) 7.7X - 7.3X7.3X - 6.9X


(1) For the reconciliation of forward-looking non-GAAP financial measure to the comparable GAAP financial measure, see the "FFO per diluted share and OP unit" reconciliation table.


(2)Excludes straight-line rent, amortization of above/below market rates and lease termination fees for both periods.


(3)Fourth quarter annualized EBITDAre.


Portfolio Statistics

As of September 30, 2023, Whitestone wholly owned 56 Community-Centered Properties™ with 5.0 million square feet of gross leasable area ("GLA"). Five of the 56 Community-Centered Properties™ are land parcels held for future development. The portfolio is comprised of 29 properties in Texas, 26 in Arizona and 1 in Illinois. Whitestone’s Community-Centered Properties™ are located in the MSA's of Austin (5), Chicago (1), Dallas-Fort Worth (9), Houston (12), Phoenix (26), and San Antonio (3). The Company’s properties in these markets are generally in high-traffic locations, surrounded by high-household-income communities. The Company also owns an 81.4% equity interest in eight properties containing 0.9 million square feet of GLA through its investment in Pillarstone OP.

At the end of the third quarter, the Company’s diversified tenant base was comprised of 1,455 tenants, with the largest tenant accounting for only 2.2% of annualized base rental revenues. Lease terms range from less than one year for smaller tenants to more than 15 years for larger tenants. Whitestone’s leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance, and typically exclude restrictive lease clauses.

Conference Call Information

In conjunction with the issuance of its financial results, the Company invites you to listen to its earnings release conference call to be broadcast live on Wednesday, November 1, 2023, at 8:00 A.M Eastern Time / 7:00 A.M. Central Time. The call will be led by Dave Holeman, Chief Executive Officer. Conference call access information is as follows:

To listen to a 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.

Dial-in number for domestic participants:  1-877-407-0784
Dial-in number for international participants: 1-201-689-8560

The conference call will be recorded, and a telephone replay will be available through Wednesday, November 15, 2023. Replay access information is as follows:

Replay number for domestic participants:1-844-512-2921
Replay number for international participants:1-412-317-6671
Passcode (for all participants):13734726

Supplemental Financial Information

The third quarter earnings release and supplemental data package will be located in the “News and Events” and “Financial Reporting” tabs of the Investor Relations section of the Company’s website at www.whitestonereit.com. The earnings release and supplemental data package will also be available by mail upon request. To receive a copy, please call Investor Relations at (713) 435-2219.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio.

Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities. The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy. For additional information, please visit www.whitestonereit.com.

Forward-Looking Statements

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

Factors that could cause actual results to differ materially from any forward-looking statements made in this Report include: the imposition of federal income taxes if we fail to qualify as a real estate investment trust (“REIT”) in any taxable year or forego an opportunity to ensure REIT status; uncertainties related to the national economy, the real estate industry in general and in our specific markets; legislative or regulatory changes, including changes to laws governing REITs; adverse economic or real estate developments or conditions in Texas or Arizona, Houston and Phoenix in particular, including the potential impact of public health emergencies, such as COVID-19, on our tenants’ ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments; increases in interest rates, including as a result of inflation operating costs or general and administrative expenses; our current geographic concentration in the Houston and Phoenix metropolitan area makes us susceptible to local economic downturns, natural disasters, such as floods and hurricanes, which may increase as a result of climate change, increasing focus by stakeholders on environmental, social, and governance matters, financial institution disruption; availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures; decreases in rental rates or increases in vacancy rates; harm to our reputation, ability to do business and results of operations as a result of improper conduct by our employees, agents or business partners; litigation risks; lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants; our inability to renew tenant leases or obtain new tenant leases upon the expiration of existing leases; our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine; the need to fund tenant improvements or other capital expenditures out of operating cash flow; the extent to which our estimates regarding Pillarstone REIT Operating Partnership LP's financial condition and results of operations differ from actual results; and the risk that we are unable to raise capital for working capital, acquisitions or other uses on attractive terms or at all 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 from time to time.

Non-GAAP Financial Measures

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

EBITDAre: The National Association of Real Estate Investment Trusts (“NAREIT”) defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense, depreciation and amortization and impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus losses and gains on the disposition of depreciable property, including losses/gains on change in control and adjustments to reflect the entity’s share of EBITDAre of the unconsolidated affiliates and consolidated affiliates with non-controlling interests. The Company calculates EBITDAre in a manner consistent with the NAREIT definition. Management believes that EBITDAre represents a supplemental non-GAAP performance measure that provides investors with a relevant basis for comparing REITs. There can be no assurance the EBITDAre as presented by the Company is comparable to similarly titled measures of other REITs. EBITDAre should not be considered as an alternative to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

FFO: Funds From Operations: The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We calculate FFO in a manner consistent with the NAREIT definition and also include adjustments for our unconsolidated real estate partnership.

Normalized Funds from Operations (“Normalized FFO”) is a non-GAAP measure. We define Normalized FFO as FFO excluding extinguishment of debt cost. 

Management uses FFO and Normalized FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income (loss) alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Because real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself. In addition, securities analysts, investors and other interested parties use FFO and Normalized FFO as the primary metric for comparing the relative performance of equity REITs. FFO and Normalized FFO should not be considered as an alternative to net income or other measurements under GAAP, as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity. FFO and Normalized FFO do not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness. Although our calculation of FFO is consistent with that of NAREIT, there can be no assurance that FFO and Normalized FFO presented by us is comparable to similarly titled measures of other REITs.

NOI: Net Operating Income: Management believes that NOI is a useful measure of our property operating performance. We define NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Other REITs may use different methodologies for calculating NOI and, accordingly, our NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, depreciation and amortization, equity or deficit in earnings of real estate partnership, interest expense, interest, dividend and other investment income, provision for income taxes, gain on sale of property from discontinued operations, management fee (net of related expenses) and gain or loss on sale or disposition of assets, and includes NOI of real estate partnership (pro rata) and net income attributable to noncontrolling interest, it provides a performance measure that, when compared year-over-year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. We use NOI to evaluate our operating performance since NOI allows us to evaluate the impact that factors such as occupancy levels, lease structure, lease rates and tenant base have on our results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about our property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of our overall financial performance since it does not reflect the level of capital expenditure and leasing costs necessary to maintain the operating performance of our properties, including general and administrative expenses, depreciation and amortization, equity or deficit in earnings of real estate partnership, interest expense, interest, dividend and other investment income, provision for income taxes, gain on sale of property from discontinued operations, management fee (net of related expenses) and gain or loss on sale or disposition of assets.

Same Store NOI: Management believes that Same Store NOI is a useful measure of the Company’s property operating performance because it includes only the properties that have been owned for the entire period being compared, and that it is frequently used by the investment community. Same Store NOI assists in eliminating differences in NOI due to the acquisition or disposition of properties during the period being presented, providing a more consistent measure of the Company’s performance. The Company defines Same Store NOI as operating revenues (rental and other revenues, excluding straight-line rent adjustments, amortization of above/below market rents, and lease termination fees) less property and related expenses (property operation and maintenance and real estate taxes), Non-Same Store NOI, and NOI of our investment in Pillarstone OP (pro rata). We define “Non-Same Stores” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company's Same Store NOI may not be comparable to that of other REITs.

Net debt: We present net debt, which we define as total debt net of insurance financing less cash plus our proportional share of net debt of real estate partnership, and net debt to pro forma EBITDAre, which we define as net debt divided by EBITDAre because we believe they are helpful as supplemental measures in assessing our ability to service our financing obligations and in evaluating balance sheet leverage against that of other REITs. However, net debt and net debt to pro forma EBITDAre should not be viewed as a stand-alone measure of our overall liquidity and leverage. In addition, our REITs may use different methodologies for calculating net debt and net debt to pro forma EBITDAre, and accordingly our net debt and net debt to pro forma EBITDAre may not be comparable to that of other REITs.

Investor and Media Relations:
David Mordy
Director, Investor Relations
Whitestone REIT
(713) 435-2219
ir@whitestonereit.com


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


  September 30, 2023  December 31, 2022 
         
ASSETS 
Real estate assets, at cost        
Property $1,227,532  $1,199,041 
Accumulated depreciation  (225,636)  (208,286)
Total real estate assets  1,001,896   990,755 
Investment in real estate partnership  33,200   34,826 
Cash and cash equivalents  2,976   6,166 
Restricted cash  97   189 
Escrows and acquisition deposits  10,545   12,827 
Accrued rents and accounts receivable, net of allowance for doubtful accounts (1)  28,983   25,570 
Receivable due from related party  1,505   1,377 
Unamortized lease commissions, legal fees and loan costs  12,741   12,697 
Prepaid expenses and other assets(2)  15,156   7,838 
Finance lease right-of-use assets  10,450   10,522 
Total assets $1,117,549  $1,102,767 
         
LIABILITIES AND EQUITY 
Liabilities:        
Notes payable $632,750  $625,427 
Accounts payable and accrued expenses(3)  35,148   36,154 
Payable due to related party  1,577   1,561 
Tenants' security deposits  8,445   8,428 
Dividends and distributions payable  6,022   6,008 
Finance lease liabilities  725   735 
Total liabilities  684,667   678,313 
Commitments and contingencies:      
Equity:        
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2023 and December 31, 2022      
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 49,584,705 and 49,422,716 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively  50   49 
Additional paid-in capital  626,815   624,785 
Accumulated deficit  (212,551)  (212,366)
Accumulated other comprehensive income  12,491   5,980 
Total Whitestone REIT shareholders' equity  426,805   418,448 
Noncontrolling interest in subsidiary  6,077   6,006 
Total equity  432,882   424,454 
Total liabilities and equity $1,117,549  $1,102,767 


 
Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands)


  September 30, 2023  December 31, 2022 
(1) Accrued rents and accounts receivable, net of allowance for doubtful accounts        
Tenant receivables $16,719  $16,828 
Accrued rents and other recoveries  24,989   22,103 
Allowance for doubtful accounts  (14,184)  (13,822)
Other receivables  1,459   461 
Total accrued rents and accounts receivable, net of allowance for doubtful accounts $28,983  $25,570 
         
(2) Operating lease right of use assets (net) $129  $124 
(3) Operating lease liabilities $132  $129 


Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands)


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
Revenues                
Rental(1) $36,667  $35,029  $108,405  $103,500 
Management, transaction, and other fees  467   354   1,040   1,003 
Total revenues  37,134   35,383   109,445   104,503 
                 
Operating expenses                
Depreciation and amortization  8,332   7,889   24,538   23,661 
Operating and maintenance  6,862   7,317   19,847   19,253 
Real estate taxes  4,693   4,513   14,168   13,867 
General and administrative  5,392   4,832   15,651   13,063 
Total operating expenses  25,279   24,551   74,204   69,844 
                 
Other expenses (income)                
Interest expense  8,400   6,816   24,563   19,111 
(Gain) loss on sale of properties  (5)     (9,626)  7 
Loss on disposal of assets, net  480   7   500   5 
Interest, dividend and other investment income  (11)  (13)  (49)  (43)
Total other expenses  8,864   6,810   15,388   19,080 
                 
Income before equity investment in real estate partnership and income tax  2,991   4,022   19,853   15,579 
                 
Equity (deficit) in earnings of real estate partnership  (375)  65   (1,627)  304 
Provision for income tax  (95)  (112)  (339)  (313)
Net Income  2,521   3,975   17,887   15,570 
                 
Less: Net income attributable to noncontrolling interests  35   60   248   239 
                 
Net income attributable to Whitestone REIT $2,486  $3,915  $17,639  $15,331 


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


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
Basic Earnings Per Share:                
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares $0.05  $0.08  $0.36  $0.31 
Diluted Earnings Per Share:                
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares $0.05  $0.08  $0.35  $0.31 
                 
Weighted average number of common shares outstanding:                
Basic  49,534   49,274   49,472   49,211 
Diluted  50,637   50,129   50,399   49,916 
                 
Consolidated Statements of Comprehensive Income                
                 
Net income $2,521  $3,975  $17,887  $15,570 
                 
Other comprehensive income                
                 
Unrealized gain on cash flow hedging activities  4,094   5,962   6,602   14,623 
                 
Comprehensive income  6,615   9,937   24,489   30,193 
                 
Less: Net income attributable to noncontrolling interests  35   60   248   239 
Less: Comprehensive income attributable to noncontrolling interests  56   90   91   223 
                 
Comprehensive income attributable to Whitestone REIT $6,524  $9,787  $24,150  $29,731 


 
Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands)


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
(1) Rental                
Rental revenues $26,521  $25,244  $78,780  $75,023 
Recoveries  10,535   10,152   30,571   29,092 
Bad debt  (389)  (367)  (946)  (615)
Total rental $36,667  $35,029  $108,405  $103,500 


 
Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


  Nine Months Ended
September 30,
 
  2023   2022  
Cash flows from operating activities:        
Net income $17,887   $15,570  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  24,538    23,661  
Amortization of deferred loan costs  820    824  
(Gain) loss on sale of properties  (9,626)   7  
Loss on disposal of assets  500    5  
Bad debt  946    615  
Share-based compensation  2,485    239  
(Equity) deficit in earnings of real estate partnership  1,627    (304) 
Amortization of right-of-use assets - finance leases  72      
Changes in operating assets and liabilities:        
Escrows and acquisition deposits  2,282    (1,006) 
Accrued rents and accounts receivable  (4,359)   (3,403) 
Receivable due from related party  (128)   (486) 
Unamortized lease commissions, legal fees and loan costs  (2,644)   (1,575) 
Prepaid expenses and other assets  2,432    (6,266) 
Accounts payable and accrued expenses  (1,011)   4,642  
Payable due to related party  16    563  
Tenants' security deposits  17    373  
Net cash provided by operating activities  35,854    33,459  
Cash flows from investing activities:        
Acquisitions of real estate  (25,474)     
Additions to real estate  (12,748)   (10,118) 
Proceeds from sales of properties  13,447      
Net cash used in investing activities  (24,775)   (10,118) 
Cash flows from financing activities:        
Distributions paid to common shareholders  (17,754)   (17,049) 
Distributions paid to OP unit holders  (249)   (263) 
Net proceeds from (payments of) credit facility  34,000    (5,000) 
Repayments of notes payable  (29,823)   (2,705) 
Payments of loan origination costs      (4,144) 
Repurchase of common shares  (525)   (527) 
Payment of finance lease liability  (10)     
Net cash used in financing activities  (14,361)   (29,688) 
Net decrease in cash, cash equivalents and restricted cash  (3,282)   (6,347) 
Cash, cash equivalents and restricted cash at beginning of period  6,355    15,914  
Cash, cash equivalents and restricted cash at end of period (1) $3,073   $9,567  


(1) For a reconciliation of cash, cash equivalents and restricted cash, see supplemental disclosures below.


 
Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures
(in thousands)


  Nine Months Ended
September 30,
 
  2023  2022 
Supplemental disclosure of cash flow information:        
Cash paid for interest $23,223  $18,980 
Cash paid for taxes $435  $366 
Non cash investing and financing activities:        
Disposal of fully depreciated real estate $864  $80 
Financed insurance premiums $3,002  $1,846 
Value of shares issued under dividend reinvestment plan $55  $49 
Value of common shares exchanged for OP units $16  $616 
Change in fair value of cash flow hedge $6,602  $14,623 


  September 30, 
  2023  2022 
Cash, cash equivalents and restricted cash        
Cash and cash equivalents $2,976  $9,504 
Restricted cash  97   63 
Total cash, cash equivalents and restricted cash $3,073  $9,567 


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


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
FFO (NAREIT) AND NORMALIZED FFO                
Net income attributable to Whitestone REIT $2,486  $3,915  $17,639  $15,331 
Adjustments to reconcile to FFO:(1)                
Depreciation and amortization of real estate assets  8,294   7,846   24,417   23,534 
Depreciation and amortization of real estate assets of real estate partnership (pro rata) (2)  403   403   1,209   1,209 
Loss on disposal of assets, net  480   7   500   5 
(Gain) loss on sale of properties  (5)     (9,626)  7 
Net income attributable to noncontrolling interests  35   60   248   239 
FFO (NAREIT) $11,693  $12,231  $34,387  $40,325 
Adjustments to reconcile to Normalized FFO:                
Early debt extinguishment costs     147      147 
Normalized FFO $11,693  $12,378  $34,387  $40,472 
                 
FFO PER SHARE AND OP UNIT CALCULATION                
Numerator:                
FFO $11,693  $12,231  $34,387  $40,325 
Normalized FFO $11,693  $12,378  $34,387  $40,472 
Denominator:                
Weighted average number of total common shares - basic  49,534   49,274   49,472   49,211 
Weighted average number of total noncontrolling OP units - basic  694   752   694   753 
Weighted average number of total common shares and noncontrolling OP units - basic  50,228   50,026   50,166   49,964 
                 
Effect of dilutive securities:                
Unvested restricted shares  1,103   855   927   705 
Weighted average number of total common shares and noncontrolling OP units - diluted  51,331   50,881   51,093   50,669 
                 
FFO per common share and OP unit - basic $0.23  $0.24  $0.69  $0.81 
FFO per common share and OP unit - diluted $0.23  $0.24  $0.67  $0.80 
                 
Normalized FFO per common share and OP unit - basic $0.23  $0.25  $0.69  $0.81 
Normalized FFO per common share and OP unit - diluted $0.23  $0.24  $0.67  $0.80 


(1)Includes pro-rata share attributable to real estate partnership.


(2)We rely on reporting provided to us by our third party partners for financial information regarding the Company's investment in Pillarstone OP. Because Pillarstone OP financial statements as of September 30, 2023 have not been made available to us, we have estimated depreciation and amortization of real estate assets based on the information available to us at the time of this Report.


 
Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(continued)
(in thousands)


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
PROPERTY NET OPERATING INCOME                
Net income attributable to Whitestone REIT $2,486  $3,915  $17,639  $15,331 
General and administrative expenses  5,392   4,832   15,651   13,063 
Depreciation and amortization  8,332   7,889   24,538   23,661 
(Equity) deficit in earnings of real estate partnership (1)  375   (65)  1,627   (304)
Interest expense  8,400   6,816   24,563   19,111 
Interest, dividend and other investment income  (11)  (13)  (49)  (43)
Provision for income taxes  95   112   339   313 
(Gain) loss on sale of properties  (5)     (9,626)  7 
Management fee, net of related expenses     31   16   112 
Loss on disposal of assets, net  480   7   500   5 
NOI of real estate partnership (pro rata)(1)  667   723   1,883   2,429 
Net income attributable to noncontrolling interests  35   60   248   239 
NOI $26,246  $24,307  $77,329  $73,924 
Non-Same Store NOI (2)  (1,092)  (725)  (2,786)  (2,232)
NOI of real estate partnership (pro rata) (1)  (667)  (723)  (1,883)  (2,429)
NOI less Non-Same Store NOI and NOI of real estate partnership (pro rata)  24,487   22,859   72,660   69,263 
Same Store straight-line rent adjustments  (759)  (421)  (2,193)  (1,105)
Same Store amortization of above/below market rents  (218)  (224)  (647)  (677)
Same Store lease termination fees  (300)  (92)  (600)  (115)
Same Store NOI (3) $23,210  $22,122  $69,220  $67,366 


(1)We rely on reporting provided to us by our third party partners for financial information regarding the Company's investment in Pillarstone OP. Because Pillarstone OP financial statements as of September 30, 2023 have not been made available to us, we have estimated (equity) deficit in earnings and pro rata share of NOI of real estate partnership based on the information available to us at the time of this Report.


(2)We define “Non-Same Store” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. For purposes of comparing the three months ended September 30, 2023 to the three months ended September 30, 2022, Non-Same Store includes properties owned before July 1, 2022 and not sold before September 30, 2023, but not included in discontinued operations. For purposes of comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022, Non-Same Store includes properties owned before January 1, 2022 and not sold before September 30, 2023, but not included in discontinued operations. 


(3)We define “Same Store” as properties that have been owned during the entire period being compared. For purposes of comparing the three months ended September 30, 2023 to the three months ended September 30, 2022, Same Store includes properties owned before July 1, 2022 and not sold before September 30, 2023. For purposes of comparing the nine months ended September 30, 2023 to the nine months ended September 30, 2022, Same Store includes properties owned before January 1, 2022 and not sold before September 30, 2023. Straight line rent adjustments, above/below market rents, and lease termination fees are excluded.


 
Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(continued)
(in thousands)


  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2023  2022  2023  2022 
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)         
                 
Net income attributable to Whitestone REIT $2,486  $3,915  $17,639  $15,331 
Depreciation and amortization  8,332   7,889   24,538   23,661 
Interest expense  8,400   6,816   24,563   19,111 
Provision for income taxes  95   112   339   313 
Net income attributable to noncontrolling interests  35   60   248   239 
(Equity) deficit in earnings of real estate partnership (1)  375   (65)  1,627   (304)
EBITDAre adjustments for real estate partnership (1)  223   662   169   2,093 
(Gain) loss on sale of properties  (5)     (9,626)  7 
Loss on disposal of assets, net  480   7   500   5 
EBITDAre $20,421  $19,396  $59,997  $60,456 


(1)We rely on reporting provided to us by our third party partners for financial information regarding the Company's investment in Pillarstone OP. Because Pillarstone OP financial statements as of September 30, 2023 have not been made available to us, we have estimated (equity) deficit in earnings and EBITDAre adjustments for real estate partnership based on the information available to us at the time of this Report.


 
Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
Original and Revised Full Year Guidance for 2023
(in thousands, except per share and per unit data)


  Projected Range Full Year
2023 (Revised - 8/1/2023)
  Projected Range Full Year
2023 (Original)
 
  Low   High  Low   High 
FFO per diluted share and OP unit                
                 
Net income attributable to Whitestone REIT $21,500  $23,600  $14,400  $16,500 
Depreciation and amortization of real estate assets  32,199   32,199   32,228   32,228 
Depreciation and amortization of real estate assets of real estate partnership (pro rata)  1,672   1,672   1,672   1,672 
Gain on sale of properties  (9,621)  (9,621)      
FFO $45,750  $47,850  $48,300  $50,400 
                 
Dilutive shares  50,327   50,327   50,327   50,327 
OP Units  738   738   738   738 
Dilutive share and OP Units  51,065   51,065   51,065   51,065 
                 
Net income attributable to Whitestone REIT per diluted share $0.43  $0.47  $0.29  $0.33 
FFO per diluted share and OP Unit $0.90  $0.94  $0.95  $0.99 


  
Whitestone REIT and Subsidiaries 
RECONCILIATION OF NON-GAAP MEASURES 
(in thousands) 
                 
  Projected Range
Fourth Quarter 2023
(Revised - 8/1/2023)
  Projected Range Fourth Quarter 2023 (Original) 
  Low  High  Low  High 
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)         
                 
Net income attributable to Whitestone REIT $5,031  $4,506  $5,573  $5,148 
Depreciation and amortization  8,142   8,142   8,142   8,142 
Interest expense  7,967   7,967   7,967   7,967 
Provision for income taxes  118   118   118   118 
Net income attributable to noncontrolling interests  82   82   82   82 
(Equity) deficit in earnings of real estate partnership  150   150       
EBITDAre adjustments for real estate partnership  422   422   572   572 
(Gain) loss on sale of properties            
(Gain) loss on disposal of assets            
EBITDAre $21,912  $21,387  $22,454  $22,029 
Annualized EBITDAre $87,648  $85,548  $89,816  $88,116 
                 
Outstanding debt, net of insurance financing  633,315   651,315   615,315   635,315 
Less: Cash  (2,962)  (2,962)  (4,425)  (4,425)
Add: Proportional share on net debt of unconsolidated real estate partnership  8,759   8,759   8,759   8,759 
Total net debt $639,112  $657,112  $619,649  $639,649 
                 
Ratio of Net Debt to EBITDAre  7.3   7.7   6.9   7.3 


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