Whitestone REIT Q1 FY2025 earnings call

• Redevelopment efforts are translating into same-store net operating income growth as expected, with $20 million to $30 million in capital over the next few years anticipated to deliver strong results. - Whitestone benefits from reshoring dynamics, with properties at the heart of this trend. In 2024, $8 million in capital was spent above 2023 level, translating to ~1% lift in same-store NOI growth. - Delivered core FFO per share of $0.25, up 4.2% y-o-y; same-store NOI growth 4.8%; leasing spreads 20.3%; annual net effective ABR per square foot up 4% y-o-y. - Acquisition and disposition activity since 2020, including selling 11 properties and acquiring several, which has raised average household income and ABR for properties. - Strong leasing activity in Q1 with $31 million of total lease value signed, highest first quarter amount ever, with 20.3% combined leasing spreads.

Core FFO per share for the quarter was $0.25, up 4.2% versus Q1 '24. Same-store net operating income growth was 4.8%, near the top of the forecasted range. Straight-line leasing spreads were 20.3%, the 12th consecutive quarter with leasing spreads in excess of 17%. Annual net effective ABR per square foot was raised 4% over Q1 '24. The same-store NOI growth breaks down to 2% from contractual escalators, 1% to 2% from new and renewal leasing, and up to 1% from redevelopment.

• Reiterating core FFO guidance. - Reiterating 3% to 4.5% same-store net operating income projection for 2025. - Longer-term 3% to 5% same-store NOI growth target, higher in anticipation of redevelopment projects. - Anticipate strong dividend growth in conjunction with earnings growth. - ~$50 million in acquisitions in the pipeline financed primarily through cash flow and dispositions.

• Economic uncertainty in the overall macroeconomic environment. - Potential impact of consumer pullback on service-based tenants, though not yet significantly affecting Whitestone as of the call. - Uncertainty around timing of proceeds from Pillarstone bankruptcy process affecting balance sheet leverage reduction.

Q: Gaurav Mehta asked about why occupancy went lower and details on acquisitions pipeline and leverage.

A: Scott Hogan said decline in occupancy was from retenanting at Terravita with 37,000 sq ft space; Dave Holeman said $50 million is estimate of acquisitions pipeline; Scott Hogan said expects to end 2025 with debt-to-EBITDA in low 6s.

Q: Mitch Germain asked about redevelopment projects contributing to same-store NOI lift and balance sheet notes.

A: Christine Mastandrea talked about redevelopment process evaluating lease terms and adjacent development activity; Scott Hogan said debt paid in Q1 was amortization on prudential bonds rolled into revolver, leverage reduction from earnings growth and operating cash flows.

Q: Mitch Germain asked about consumer pullback impact on tenants.

A: Christine Mastandrea said alcohol sales for restaurants decreased but not a big pullback yet; fitness traffic up; Dave Holeman said underwriting standards improved in tenant identification.

Q: John Massocca asked about occupancy with signed but not opened tenants and Dollar Tree exposure.

A: Dave Holeman said occupancy would be roughly flat; Christine Mastandrea said Dollar Tree exposure is less than 15% and not causing concern yet