Whitestone REIT Q3 FY2024 earnings call

• David Holeman highlighted strong momentum with 10th consecutive quarter of leasing spreads above 17%, combined total straight line leasing spreads of 25.3% for the quarter, same store NOI growth of 4.6% in Q3, occupancy at 94.1%, debt-to-EBITDA RE metric at 7.2 times, and aim to improve leverage in 2025. - Christine Mastandrea discussed the leasing team's daily meetings, remerchandising initiative, occupancy improvement to 94.1%, anchor and small space occupancy increases, renewal and new leasing spreads, and successful tenant acquisitions like [Indiscernible] at Lakeside Market and Sun Wing at Lion Square. - Scott Hogan mentioned core FFO of $0.25 per share, raised same store NOI guidance range, debt management including term loan addition and revolver paydown, and one disposition in the quarter with average disposition cap rate of 6.4%.

No detailed breakdown of product segments' financial performance provided in the transcript.

• Reiterates target of 11% core FFO per share growth for 2024. - Increased same store net operating income target range, raising the midpoint 50 basis points. - Aim to achieve year-end debt-to-EBITDA RE metric of 6.6 to 7 times. - Progress with Pillarstone settlement, but timing uncertainty due to bankruptcy process. - Same store NOI guidance for 2025 expected to be strong.

• Potential impact of consumer pullback on restaurant sector, but focus on middle to higher income customers with careful underwriting. - Tax rate changes in Harris County leading to increased tax accruals. - Uncertainty in monetization of Pillarstone settlement due to bankruptcy process.

Q: What were the characteristics of the asset sold that made it a candidate for sale versus other assets in the portfolio?

A: Primary characteristic was looking at potential growth and value add versus recycling capital to buy an asset where they could apply strategy and add value.

Q: Are you seeing pullback in restaurant sector customers?

A: Not much pullback in their customers, as they focus on middle to higher income customers and are careful in underwriting. Pullback seen on lower end spectrum like McDonald's.

Q: Any specific lease driving the spread this quarter?

A: No specific lease, but due to remerchandising efforts and serving local community.

Q: Update on Pillarstone deleveraging?

A: Making progress with Pillarstone collection, have a plan of liquidation with a third party plan agent, but timing uncertain due to bankruptcy.

Q: Characteristics of assets for future sales in asset recycling program?

A: Looking at potential growth and value add to recycle capital for better value through acquiring other assets.

Q: Drivers of same store NOI guidance low and high end?

A: Largely timing of leasing activity and new leases, with same store growth in 4Q expected to be strong but with some variation from prior years.

Q: Leasing pipeline impact on 4Q same-store NOI growth forecast?

A: No signs of slowdown, just comparing to strong prior year quarter, and same store NOI guidance raised.

Q: External acquisitions and capital recycling?

A: Disciplined acquisitions, actively looking for accretive opportunities with disciplined underwriting.

Q: Strategic alternatives process?

A: Board reviews best ways to add value for shareholders, actively evaluating options.

Q: Real estate taxes increase?

A: Due to talk of higher tax rates in Harris County, increased tax accruals with tax bills to be trueed up in 4Q.

Q: Longer term leverage goal?

A: Aim to continue deleverage, with low sixes to high fives as a great place to end up, having made progress from over 10 times previously.