Whitestone REIT (WSR) 1 Nov 232023 Q3 Earnings call transcript

Welcome to the Whitestone REIT Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Mordy, Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining Whitestone REIT's Third Quarter 2023 Earnings Conference Call. On today's call are Dave Holeman, Chief Executive Officer; Christine Mastandrea, Chief Operating Officer; and Scott Hogan, Chief Financial Officer. statements be this deemed some historical are that may and forward-looking note made call during not Please statements. factors. risks, Actual those results and of forward-looking from other uncertainties statements due may to a differ materially number with Please refer to detailed and including company's this earnings discussion XX-Q of most Form for the information the fact call and recent this that that news Whitestone's X, XX-K SEC, it release the filings may be a be is these time, call webcast includes note to XXXX. of as time-sensitive for only also that may November accurate of a important date, factors. Acknowledging period today's company The obligation information. this update undertakes no to available quarter have in the on financial Whitestone's news supplemental and Investor data Relations earnings section. been operating the package with and are our third filed website release and SEC We Holeman, slides quarter topics over be our discussed afternoon, the yesterday Chief will our XXXX Executive to to website call which now turn highlight today. I Dave published third on Officer.

morning, six for spreads of another governance combined balance last listening and with to the leasing very forward. straight-line of Thank things had and our leasing sheet. not strong past, We're XX%. last you, combined from are cash We've of years thank and they're the strong corrected X.X% and versus We recent of portfolio. Consistently extremely Third income proud the of this heart David. our joining a of XX.X%. Quarter XX.X% over high-quality excess increased straight but basis strength which going shareholders of third a responding spreads in improving NOI quarter our now spreads Same-store accomplishment, operating and to the this kind with spreads Earnings net Call. leasing of only you growth same-store our consecutive X.X Good plan highlights marks quarter Conference XXXX of leasing Whitestone's and quarters year, line lot

and successfully management on execution, is we with comprised ending proving active road smaller our The our same-store have acquisitions. strong strong in strong sector. of through the and As eventually to scale leasing disciplined former continued ahead focused spaces significantly excellence forward, outperform ahead G&A geographies, accretive targeted the that includes tenants levels, spreads, opportunities CEO best-in-class the platform I look growth litigation thesis lower can and our path

may the focusing Our revenue, by on passion at should growth. lot should expect and strategy our earnings. Investors we able that to years leasing and NOI to and operate centers that and assets at see with strong are growth, our earnings neighborhood recent look X Whitestone. to promise over quality is they for performance, Investors grow be dynamics of of prove our deliver can consistently a expect spreads will next dividends market

consistently in of significantly expenses, the primarily legal delivering year me However, the track add performance. third per management's by down into delve a of have accomplish decrease quarterly longer to from is operating share record grew terms was a first. Revenue Christine $X.XX, property it improved from Funds income. from but $X.XX increased net more result higher offset review let X.X% interest operations numbers of ago. was the we quarter XXXX. The and I'll how plan this,

being of number especially now about sector. smaller all quarter fourth guidance These for supply the last Our are of are are, occupancy themes centers of year. We've noticed that us. our when third extremely the ago. Investors neighborhood strong for talking being occupancy The acquisition may third up annual smaller the the commence quarter, continues points the the strength talking from was discussed spaces, And our net the be in per are XX.X% to strategy was as that demand themes of we foot echoed driven reiterating who to new by the team discussing specifically Placer.ai spaces. aren't a many using are leasing team year up operates. leasing valuable of see Sunbelt, some end restaurants are that strong X% about demand anchors, to ideas looking square of how our across to the can basis and our like base expect in XX.X%, leases They've total our from of And rent that have we at peers. elements Esri and XX for idea our quarter effective $XX.XX, as a XX.X% year. the key to and shortage, the our we're core got technology

is So strong be translates to environment that a to a either harder into now landing. well for prepared outperformance. Whitestone with us on drivers continues inflationary show position Whitestone's onus higher the these or

shorter of inflationary us during rates tenants lease Our better allows to structure periods. in the share increase and success our

rates industry, interest of higher terms causing to by evidence but we're equity. although the In backed a that isn't harder yet, see landing, private within there of problems are starting downside much

a Fortunately, tenant impacted of is troubles equity by private there. by percentage or base low very our funded

out tenants capital service-oriented being focused than they're have soft cash fund rather hard goods. on operations generally as can of and requirements Our often and working very low

this last for forward stay on us of of reviewing tenants. harder to Boulevard, that to We've allows that view over strengthening is position consistently space the in leases building higher pandemic. In perform a structures allowed tenants summary, also delivered the industry. One to years, these of Houston, to be the our evaluating to very value with the there We mentioned look at continue position track solution us the excited we've of our in with traffic well report vehicles. anyone I X.X we during the help and years shift locally-connected changes small were we're quarter, Whole and and strength final pleased an am industry of record. landing. many portfolio. we a And signed ahead, location believe stations the on and number we've less tenants and the shorter an recognition looking to has Christine? part Tesla of embraced installation We note. Boulevard to will ahead wouldn't constantly if to space, a the restrictive expect this additional retail with we There are our trade our been Last transition electric to build of at centers. that our believe I explore I the at else within that our the in charging with locations drive Foods-anchored stations agreement

morning, Good everyone.

Street at coming area well we're spaces we Occupancy the up rose where team, in lately spaces strive came are plus we little XX and our to the sector in as is in XX,XXX success every these learn call background. need basis a renewals. One of the spreads foot also Using of serve one with recognize understand XX.X% Last revenue. analysis key for athletes is square the agreement leasing XX.X%, our increases for expertise signed home leasing having the for seeing and On customer to XX.X%. performed the we a the and Whitestone and this zoom strong the not This higher barking and agents week, are tenants spreads, NOI ABR were Occupancy we XX.X% off to spreads leasing to merchandise preferable growth from the to the contribute Leasing as and that compete the use at points includes year Boulevard center. and neighborhood by where with leakage efforts limited the center center, sports XXXX. Frost specific sports North patterns determining ago. in to leasing And on a top tenants. Ninfa's their anchored the dog within on with to front, center tenant, areas: of are team. ] of is XX% multiuse occupancy XXX% Houston. Bank, long-standing areas, we in is the that agents or The success is the largest technology Placer.ai, void aspirations to leasing and on of a offices second in community. able the very to just isn't deliver on to our Food like target to and Boulevard to build and use center. our formula like building often great achieving Italia, other's top-notch a the Dough a all quarter, customer centers. is on remerchandising located has for particular new to quarter, year smaller in calls tenant with the XX.X% each and specific restaurants leases This chiropractic Kitchen a renewal same-store Foods True at X Whole to first for to continue location This for discover a workspace Market needed We opportunities surrounding have definitely The amenities has best successfully spouse's which a CUBEXEC, within category to position We've Zone. of from and our and winning superstar a overall visible within at space work-from-home service provides able providers the for solid or less packed traffic and contributors centers space focused small there strengthen strong to we a and movement well-located Esri a with shift offering our office community. core [ and also well needs been individuals value center. Accordingly, of quality right great office away Scottsdale. towards creating collaborative utilize businesses. The is neighborhood restaurant space

just their with growth. very the our along at businesses the Generally, much insight owner's getting opening guarantee. their track our a and to a for us Secondly, business evaluating market to commitment locations, their of scale a providing the of given plan ability so record their There's more evaluating the are than track We in record, leasing business. agents resources a at business, credit least X experts look overall businesses. have personal into assessment good and or

allowed drivers centers ensuring planned and XXXX. Our don't frequently heights talent and our methodology. and reach management have management still the the are Adherence holistic in team update their the focusing than update change over success. and the our They the to designed status deals. occupancy management of the quick continued success just new this technology X.X since for on bit scouts have They continually to their the money and a to ball in performance traffic for leads years our of their plans center ensure overall wins on be long-term rather last early approach on

lease the as to populating our drivers we X-year strengthen continually we length, traffic centers. our believe have take improve that base, will tenant but our we average it more Given time opportunities to

to find the the fortunate add centers acquisition If going opens disciplined terms a we the are how right forward. and in options portfolio We manner. in of know our market up, to our

constrained environment to expertise supply However, organic best-in-class we continues be growth. add to deliver to believe severely in order currently is, the peer-leading operational we as the can it

unless Looking at building higher a costs. Association demand price million. to affordability areas. metropolitan high down migration is very well the and believe supply the in estate likelihood, we interest $XXX,XXX. whether of higher values, is affordability you're our the challenging, to the demand rates under in well are the centers supply cities According benefit located neighborhood of are will the and home continue between alone retail interest Francisco's fact we pace major driving that Realtors, National result coming growth. positioned clearly housing and of continued Meanwhile, looking over median increasing with And we're of all online rates $X.X as job real at price to Simultaneously, migration higher just In benefit home markets of narrows migration of San is ever won't migration in. With making more slow little markets. Austin's balance, drive median

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and Christine, morning. you, Thank good

quarter-over-quarter but FFO $X.XX the in parts, uplift Christine in other and versus by delivered to on strong and XXXX. quarter of was on $X.XX of the quarter same-store FFO mentioned, quarter responsible higher deliver guidance Dave high-level FFO annual the of came for the for for overview moving $X.XX As comparison. interest income operating Same-store continue be to of expense. here's was offset XXXX ranges. results and at There and we the track operating third $X.XX a share very per are our NOI per share net

expense G&A discussed drivers our our expense. us in obscured and of trajectory path with reduced Drive was on don't last and debt-to-EBITDAre our from and to to consistent to September become interest get Christine same-store of to our JV the XXXX. if monetize but line fixed for successfully The and believe XX% investment, monetization While of and boil bit very end open fundamental G&A improve year as anticipate primarily NOI what nearing We for and the our have for level we improved related be much via in ex-CEO lay positive to growth lower down detail next JV expense we'll per responsible debt we third NOI responsible next this of be few our currently us a metrics proceeds poor-performing year-over-year this we result sheet. Litigation XXXX. numbers, will growth, year share is We're of out we increase quarter call third expense, guidance. Interest allows exactly XXXX roll variance XXXX, you're any drive was questions. with earnings from XXXX forward interest will signed since agreement and balance shrink growth in was we'll the believe should earnings credit allow earnings we higher to expense quarter are of out a mitigate $X.XX We've a rates but end clear. $X.XX beyond. QX same-store debt our may when is overall call. And Pillarstone amended able very know interest FFO going to in and and quarter our the the litigation able to the growth and eager or our positive to investment litigation expect we a that, we'll on in levels the our also

Mitch the of Germain Instructions] comes Our question first JMP from [Operator line with Securities.

guess, of the And Can you guidance quarter-over-quarter is change that the a to what that, provide And on towards in than there you range? occupancy gives some can perspective confidence maybe bias range? rather the you year-over-year? hit the I end lower

thanks your for Mitch, this morning. question

We had going that be things. about talked before of couple guidance our a So this range to is XX.X% XX.X%. to

comfortable pretty the within feel we remaining So range.

your taken to just pulls better I I'll we've I efforts. I'd chunk and merchandising my to given that, you front think you to it's when large intentional market is action when that market thing experience strong quality the a speak and to a do is be back. to that which now important a towards improve this and an the Bath aggressive towards in continue than that of retail, that revenue. do there's most in Bed on believe year, need past that the Beyond, market moment, a have that of more that strong besides remerchandising and & rather

been for serving that's team members we might year performing well so or the which goal this are be to And define successfully tenants not as not consider what neighborhood. a

you've that's that changeover been some so And seen. of

is that Bath what In -- there with have very forward that working the by addition options we're very, the pleased, way, to and with Beyond we're we've moved what towards. Bed & we what that, and the

think with I you of well I just strength in to revenue we're the line bad we I we've in reduced at and and look our to revenue, continue think, debt done that how the particular, reflects sales of and that be. think and need and that that our if and years, day our in where do effort, again, how improving over we've been in just And outstanding so. much we've So we quality with the that

add just thing, one I Dave. might it's Christine. Mitch,

few you a is quarter-over-quarter Bed space the at one as but have, Beyond about sequentially said, we it's feet. change & XX,XXX Christine the Specifically, Bath look square things, if

Obviously, factors. really interest being feel QX good about represents other the able from rate lot very have about the substantially. great QX. and that We space, of it increase feel to there's a change to So

Okay.

So over had square is Bed for change -- but in the the in you feet, -- the Bath a feet. change accounts the really but XX,XXX square also XX,XXX under

to So what just you're basically tenant think you is purpose Is can suggesting is that the some it? of way nonrenewals that that so upgrade quality. about

correct. that's Yes,

in of seeing tenants the with impacting economic that business? negatively potentially of your being kind factors sort trend or sort to discussion of their distress any that suggest of any No you're are there

is frankly, The are to Those that leverage ones yet. that, this seen bit mindful funding within only thing And high always their that is quite sector. we've alluded Not earlier been equity had have have a that that of we've businesses capital we over. private of -- who of that concern very we little stack. that the to the we've lease part of type

a that have but So type something have of those of we watch. lot it's don't tenants, on we

XX And XX,XXX are this you and point. positive end with feet required absorption range, to that hit square sorry, the just comfortable number of basis Okay. at -- your guys guidance points of low

of a space, Yes, obviously, whenever we're mentioned, it's I options of bake-off we Beyond fill. that that and have with there. Bath and that long-term because as a doing like that Bed just have we you for I And the & center a the think have type because, type

Trader the type what there's number field client it's center. defined two, really a -- it it. might best parking across very a to from of requires that crowded Joe's That's with focus a number as And one. And so be of the

put on center. impact type of have there in you it to mindful the and be of what the you just tenant So has

We've remarks well. said we number quarter. my Mitch, a earlier got in expect in commence I I fourth the of to as leases think

of So activity But given about we've real markets. good. on clear, I and so watch have for we're think to our continuing of our signs very frankly, guidance positive occupancy we I now, them confident we properties stress. seeing very range and the feel our we're We're be think right to not just in

with to too, really type they've more if shocks over that -- the back to go then out do growing organic grow they and years. has businesses, entrepreneur Mitch, really thing I'd much severe crisis businesses had just And financial And work over add of it, XX, you that the most XX we so And like with, to that of the growth. one last of the COVID.

So They're it's for different. because the that they type not leveraged a way achieve same of the same little leverage. can't opportunities

think always that So space. well has I our to that's played something

Great.

Okay. I the I apologize any missed it. prepared there if Were you've this of mentioned sales comments. quarter? some asset

were there Mitch, not.

continuing we So explore are to recycling.

aware, most market and are the you As to continues others shallow. very transaction be

So bit recycling. little last we year, a did of

bit little Our But recycling see and is this a or do no the few to. a nothing in small we'll acquisitions. any significant, intent we of continuing we not where deals, did year. dispositions We're work quarter, to this at to just get point have But quarter. sales in asset the

Do to on fund the you acquisition any little know acquisition with acted proceeds. desire think proceeds match was quickly then too because may the you a be disposition bit I

the it. having aspect without acquired you've obviously, match So of funding

all, don't quick. I first So were we think of too

I And we a the great acquisition we year of funding. portfolio. made acquisition match think are the this was

together, overlap think little I to look close a you to funding bit you and if we're match year-to-year, look match year, to we 'XX, of continue If last maybe expect fund. 'XX at

but is So few proceeds to from more think a dispositions sales. with intent to that that says come fund there's in, our I

asset. great So

in demand have a we've there's kind think lot on that to that assets slide sold see our accretive discussed continued remarks. that the properties cap rates. Have I sell to metrics assets We've that highlights of buy of bought. more we the drivers versus a at able investor we've been deck Christine of our the in

up maybe we that I think years acquisitions. they're little a expect to match shortly. And and look close little at market we'll sync do tougher. a But more combined, a that bit the dispositions if fund Just shallow our from now you and X

Great. last is the Pillarstone scheduled like and the looks And December. Obviously, trial the litigation. during question then it I on guess, the CEO summer for was, --

ruling not just the appeals is to mean, do get timing? you to they're doesn't And -- that your process the strategy? is have So any obviously, coupled, caught but of I it and kind you Or an freedom definite? then enable sense up could flexibility of have execute in

of as for matters. to position. the talk good a equity Mitch, difficult our to Dave termination again. give cause nearing are The say of both for litigation. attempt the and is receive investment. I lawsuit you lot Yes, It's feel mentioned, What cases fair a We couple of about ex-CEO on value our our very then detailed really will end.

those about legal process, talked effect of expense going end, -- I'm feel There their We're we've numbers. not strongly. nearing year's of JV good feel forward we out really, remove position we to underperforming noise think details is going and think soon business the an a believe. the of well. are But of end, I the noise a on of that from appeal from fundamentals to very We going but very the to the story. and bit this are performing I we good is story. there and that very to the and talk really a to we're that once really And some we close we're really in like the The are resolved underlying a feel is great in spot, the be that.

comes Our Group. next line with Maxim the Diana Michael from question of

expecting your Dave, saying you're the that? beginning lower that remarks give think some of detail I Could G&A levels. I you heard on you more in

took present in structure resetting year, significant expenses compensation. a largely out to G&A in early hard G&A. I'll that X number at but leadership take when away. this exactly that of you That when, a go represents will change, to $X.X cost costs it's time, the matters. of alone to G&A million also executive we Michael. remind basically our litigation our about 'XX related legal we significant in that made Thanks, Absolutely. decrease In our steps It's the

steps. a 'XX, couple we in conclude litigation G&A worked as lower of have on much also our our expect a to early well. We've So when G&A really reduced number efficiencies. We and we

been Christine talked way accountability. we've executed. I the our much goals clear about and more has with and think folks We've

run we today. result, leaner a As

headcount I people. mid-XXs the XXX is years couple to in probably [ today that and a think our was of ] ago, close

So we've become really the business. in streamlined We've execution. productive more much our

If we're record. down you some to results, look noise number at we're the a good G&A in and track frankly, way, that's go that doing laying there's And future the bright in a because efficient more very going the is away.

Holeman, there no hand are to questions, for comments. the closing now As over further CEO, conference I would Dave

and thank We're We everyone the for a excited we look earnings. us. that, then the us care. -- our very with out to into been a strong, quarter you. future joining to very we and everyone Take today. year-end wish our great also giving With forward with quarter forward third we was to a look guidance It's finishing Thank good look day. everyone conclude for year

participation. now Thank for you. conference Thank of REIT you Whitestone has The your concluded.

You may now disconnect your lines.