Whitestone REIT Provides Update on Disposition Activities

Rhea-AI Summary

Whitestone REIT (NYSE:WSR) announced the completion of approximately $36 million in property dispositions since Q3 2022, yielding net proceeds of about $34 million. The sales, completed at a 5.6% capitalization rate, are part of the Company's asset management strategy. The proceeds will be allocated for debt reduction and future acquisitions aimed at enhancing earnings and improving debt metrics. Key properties sold include locations in Houston and Phoenix, with an occupancy rate of 90.3% and average base rent of $14.51.

Positive

• Completed property dispositions totaling approximately $36 million, enhancing liquidity.
• Generated net proceeds of about $34 million, allowing for potential debt reduction.
• Sales executed at a favorable capitalization rate of 5.6%, indicating strong portfolio value.
• Proceeds anticipated to be invested in accretive acquisitions to drive future growth.

Negative

• None.

HOUSTON, Dec. 06, 2022 (GLOBE NEWSWIRE) -- Whitestone REIT (NYSE:WSR) (“Whitestone” or the “Company”) announced today the completion of approximately $36 million in property dispositions since the third quarter of 2022. The dispositions are part of the Company’s ongoing asset management strategy and resulted in net proceeds received of approximately $34 million after prorations and transaction costs.

“We believe the overall transaction cap rate on these property sales highlights the value of Whitestone’s portfolio of properties, which are located in some of the fastest growing and most desirable markets in the country. We anticipate using the proceeds for debt reduction and future accretive acquisitions with greater upside than the properties which were sold. We are pleased with the execution of these property sales which are consistent with our previously communicated 2022 property disposition goals and will allow us to advance our objectives to grow earnings and improve our debt metrics and equity market valuation,” said Whitestone REIT Chief Executive Officer Dave Holeman.

The combined sales were completed at a capitalization rate of 5.6%, based on the 2022 annualized nine-month property net operating income of approximately $2.0 million divided by sales price. Occupancy for the combined group stood at 90.3% while average base rent was $14.51.

The following properties were sold:

• South Richey (Houston)
• Bissonnet / Beltway (Houston)
• Desert Canyon (Phoenix)
• Pima Norte (Phoenix)
• Gilbert Tuscany Village Hard Corner (Phoenix)
• Pad Site at Spoerlien Commons (Chicago)

For more information on Whitestone properties, please reference the Company’s supplemental materials and other disclosures found on the Company website.

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
Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements include statements about our earnings guidance, future liquidity, performance growth and expectations and other matters and can generally be identified by the Company’s use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “intend,” “anticipate,” “believe,” “continue,” “goals” or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters. The following are additional factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic, and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company’s business, employees and tenants, including, among others, (a) changes in tenant demand for the Company’s properties, (b) financial challenges confronting major tenants, including as a result of decreased customers’ willingness to frequent, and mandated stay in place orders that have prevented customers from frequenting, some of Company’s tenants’ businesses and the impact of these issues on the Company’s ability to collect rent from its tenants, (c) operational changes implemented by the Company, including remote working arrangements, which may put increased strain on IT systems and create increased vulnerability to cybersecurity incidents, (d) significant reduction in the Company’s liquidity due to a reduced borrowing base under its revolving credit facility and limited ability to access the capital markets and other sources of financing on attractive terms or at all, and (e) prolonged measures to contain the spread of COVID-19 or the fluctuating government-imposed restrictions implemented to contain the spread of COVID-19; adverse economic or real estate developments or conditions in Texas or Arizona, Houston and Phoenix in particular, including as a result of any resurgences in COVID-19 cases in such areas and the impact on our tenants’ ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments; 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; the Company's ability to meet its long-term goals, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; its ability to successfully identify, finance and consummate suitable acquisitions, and the impact of such acquisitions, including financing developments, capitalization rates and internal rates of return; the Company’s ability to reduce or otherwise effectively manage its general and administrative expenses; the Company’s ability to fund from cash flows or otherwise distributions to its shareholders at current rates or at all; current adverse market and economic conditions including, but not limited to, the significant volatility and disruption in the global financial markets caused by the COVID-19 pandemic; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic, legislative and regulatory changes, including changes to laws governing REITs and the impact of the legislation commonly known as the Tax Cuts and Jobs Act; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended; 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.

Investor and Media Contact:

David Mordy
Director of Investor Relations
Whitestone REIT
(713) 435-2219
ir@whitestonereit.com

FAQ

What were the key property dispositions completed by Whitestone REIT in December 2022?

Whitestone REIT completed dispositions of properties in Houston and Phoenix, totaling approximately $36 million.

What capitalization rate did Whitestone REIT achieve on its property sales in December 2022?

The properties were sold at a capitalization rate of 5.6%.

How much net proceeds did Whitestone REIT receive from its property dispositions?

Whitestone REIT received approximately $34 million in net proceeds after transaction costs.

What is the occupancy rate of the properties sold by Whitestone REIT?

The combined occupancy rate of the sold properties was 90.3%.

How does Whitestone REIT plan to use the proceeds from property sales?

The proceeds are intended for debt reduction and future accretive acquisitions.