8-K: Whitestone REIT Reports Strong Fourth Quarter and Full Year 2024 Results, Core FFO Guidance Issued

Whitestone REIT announced positive operating and financial results for Q4 and full year 2024, with significant growth in Core FFO per share and Same Store NOI.

Summary

• Whitestone REIT reported its financial results for the three and twelve months ended December 31, 2024.
• Net income attributable to common shareholders per diluted share was $0.33 for Q4 2024, compared to $0.03 for Q4 2023.
• For the full year 2024, net income attributable to common shareholders per diluted share was $0.72, compared to $0.38 for 2023.
• Core FFO per share grew by 11% year-over-year.
• Same Store NOI grew by 5.1% for the full year 2024.
• The ratio of debt to EBITDAre was 6.6x in Q4 2024, an improvement from Q4 2023.
• Combined GAAP leasing spreads were 21.9% in Q4, marking 11 consecutive quarters above 17%.
• The first quarter 2025 dividend represents a 9% increase from the prior quarter.
• Initial 2025 Core FFO guidance range is $1.03 to $1.07 per share.
• Revenues for Q4 2024 were $40.8 million, compared to $37.5 million for Q4 2023.
• Core FFO for Q4 2024 was $14.7 million, compared to $12.4 million for Q4 2023.
• Same-Store NOI grew 5.8% to $25.0 million for Q4 2024, versus $23.7 million for Q4 2023.
• Net Effective Annual Base Rental Revenue per leased square foot was up 5% to $24.51 compared to the prior year quarter.
• Revenues for full year 2024 were $154.3 million versus $147.0 million for 2023.
• Core FFO per diluted share was $1.01 versus $0.91 for 2023.
• EBITDAre was $85.3 million versus $81.0 million for 2023.
• As of December 31, 2024, Whitestone had total debt of $632.5 million and $125.0 million capacity under its revolving credit facility.
• The company wholly owned 55 Community-Centered Properties with 4.9 million square feet of gross leasable area (GLA) as of December 31, 2024.
• The portfolio consists of 31 properties in Texas and 24 in Arizona.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and growth metrics, indicating a favorable sentiment.

Positives

• Net income attributable to common shareholders increased significantly for both Q4 and full year 2024.
• Core FFO per share showed strong year-over-year growth.
• Same Store NOI experienced healthy growth.
• The company improved its debt to EBITDAre ratio.
• Leasing spreads remained consistently high.
• The dividend was increased by 9% for Q1 2025.
• The company provided positive initial Core FFO guidance for 2025.
• Net Effective Annual Base Rental Revenue per leased square foot increased.
• The company has a well-diversified tenant base, reducing risk.
• Occupancy for properties greater than 10,000 sq ft is 97.4%.

Negatives

• Woodlake Plaza has a low occupancy of 57%.

Risks

• The report includes forward-looking statements that are subject to various risks and uncertainties.
• Factors such as economic conditions, interest rate changes, and natural disasters could impact future results.
• The company's geographic concentration in Texas and Arizona makes it susceptible to local economic downturns.
• There are risks related to generative artificial intelligence tools and language models, along with the potential interpretations and conclusions they might make regarding our business and prospects, particularly concerning the spread of misinformation.
• The company faces risks related to its inability to renew tenant leases or obtain new tenant leases upon the expiration of existing leases.
• The company faces risks related to the timing and the ultimate amount we will collect in connection with the redemption of our equity investment in Pillarstone Capital REIT Operating Partnership LP (Pillarstone or Pillarstone OP.).

Future Outlook

The company estimates GAAP net income available to common shareholders will be within the range of $0.33 to $0.37 per diluted share, and Core FFO will be within the range of $1.03 to $1.07 per diluted share and OP Unit for full year 2025.

Management Comments

• 'We are pleased to report strong fourth quarter and full year operating and financial results, highlighted by 11% year over year Core FFO per share growth, 5.1% Same Store NOI growth for the full year 2024 and a fourth quarter ratio of debt to EBITDAre of 6.6X, an improvement of almost one full turn over fourth quarter 2023,' said Dave Holeman, Chief Executive Officer.
• Management remains confident in the quality of their portfolio, the strength of their diversified tenant base, and their team's ability to execute opportunities.

Industry Context

Whitestone's focus on community-centered properties in high-growth Sunbelt markets aligns with broader trends in the retail REIT sector, where convenience and service-oriented tenants are increasingly valued.

Comparison to Industry Standards

• Whitestone's Same Store NOI growth of 5.1% is competitive with other retail REITs focusing on similar markets and property types.
• For example, Regency Centers Corporation, another retail REIT, reported comparable property NOI growth of 3.4% for the year ended December 31, 2023.
• Kimco Realty Corporation, a large retail REIT, reported comparable property NOI growth of 3.8% for the year ended December 31, 2023.
• Whitestone's focus on smaller rental spaces and service-oriented tenants is a strategy employed by other successful retail REITs like Retail Opportunity Investments Corp (ROIC), which focuses on necessity-based retail in the West Coast.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and positive financial performance.
• Tenants will benefit from the company's focus on creating community-centered properties.
• Employees will benefit from the company's continued growth and success.

Next Steps

• The company will hold an earnings release conference call on March 4, 2025, to provide further details on the results.
• The company will continue to focus on strategically focusing on sunbelt markets and leveraging our leadership position in high-value shop space.

Key Dates