• Core FFO per Share: $0.25 for the quarter, up 4.2% versus Q1 '24.
• Same-Store Net Operating Income Growth: 4.8%, near the top of the forecasted range.
• Leasing Spreads: 20.3% for the quarter, with new leases at 22.6% and renewals at 19.9%.
• Annual Net Effective ABR per Square Foot: Increased by 4% over Q1 '24.
• Total Lease Value Signed: $31 million, the highest first-quarter amount ever signed.
• Debt-to-EBITDA Ratio: 7.2 times, down from 7.8 times a year ago.
• Liquidity: $16 million in cash and $98 million available under the credit facility.
• Dividend Payout Ratio: Nearly 50%, with anticipated strong dividend growth.

• Warning! GuruFocus has detected 6 Warning Signs with WSR.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Whitestone REIT (NYSE:WSR) reported a 4.2% increase in core FFO per share for the quarter, reaching $0.25.
• Same-store net operating income (NOI) growth was 4.8%, near the top of their forecasted range.
• Leasing spreads were strong, with new leases at 22.6% and renewals at 19.9%, resulting in a combined leasing spread of 20.3%.
• The company is benefiting from the reshoring trend, with significant investments from companies like TSMC and Apple in their markets.
• Whitestone REIT (NYSE:WSR) has a proactive approach to tenant management, ensuring tenants align with community needs, which provides better downside protection.

Negative Points

• Occupancy declined slightly due to retenanting efforts, particularly at the Terravita location.
• Debt-to-EBITDA ratio is relatively high at 7.2 times, though expected to decrease by year-end.
• There is some uncertainty in the macroeconomic environment, which could impact future performance.
• Alcohol sales in restaurants have decreased, potentially indicating a shift in consumer behavior.
• The company is exposed to potential risks from tariffs, although they have a lower percentage of tenants selling hard goods.

Q & A Highlights

Q: Can you provide more color on why the occupancy went lower this quarter? A: The decline in occupancy is primarily due to a retenanting effort at Terravita. We took back a 37,000 square foot space that was formerly a grocery store to bring in two new tenants, the Picklr and Ace Hardware, which caused a 0.7% decline in occupancy. Scott Hogan, Chief Financial Officer

Q: Regarding the $50 million in acquisitions in the current pipeline, is this an amount you are looking at or something already under contract? A: The $50 million is an estimate of our current expectations for acquisitions this year. We are actively looking for opportunities that match our criteria and have historically funded acquisitions through cash flow and dispositions. David Holeman, Chief Executive Officer

Q: Your debt-to-EBITDA is at 7.2 times, which is higher than 6.6 times in 4Q. What are your expectations for leverage levels this year? A: We expect to end the year in the low 6s. The increase in leverage is partly due to seasonal factors, such as higher percentage rent in the fourth quarter. We are committed to strengthening our balance sheet and expect to continue reducing leverage. Scott Hogan, Chief Financial Officer

Q: Can you provide more details on the redevelopment efforts and their contribution to same-store NOI growth? A: Redevelopment efforts, such as those at Lion Square and Williams Trace, are expected to contribute significantly to NOI growth. We focus on retenanting and improving the quality of revenue, often in areas with adjacent development activity. These efforts are planned to drive returns and are already underway for completion in the coming years. Christine Mastandrea, Chief Operating Officer

Q: Are you seeing any indications of a consumer pullback among your service and restaurant tenants? A: We have observed a trend of decreased alcohol sales, possibly due to health-conscious choices, but no significant pullback in fitness or restaurant traffic. We continue to monitor the situation closely, but so far, there hasn't been a major impact on sales. Christine Mastandrea, Chief Operating Officer

For the complete transcript of the earnings call, please refer to the full earnings call transcript.