Pillarstone Capital Reit (PRLE) 10-Q 18 Sep 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Sep. 05, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	PILLARSTONE CAPITAL REIT
Entity Central Index Key	928,953
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018
Entity Common Stock, Shares Outstanding		405,169

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Jun. 30, 2018	Dec. 31, 2017
ASSETS1
Property	$ 84,430,000	$ 83,144,000
Accumulated depreciation	(4,454,000)	(2,934,000)
Total real estate assets	79,976,000	80,210,000
Cash and cash equivalents	2,596,000	2,991,000
Escrows and acquisition deposits	1,863,000	2,188,000
Accrued rents and accounts receivable, net of allowance for doubtful accounts	1,163,000	798,000
Receivable due from related party	1,067,000	1,304,000
Unamortized lease commissions and deferred legal costs, net	1,255,000	1,265,000
Prepaid expenses and other assets	271,000	160,000
Total assets	88,191,000	88,916,000
Liabilities:
Notes payable	63,714,000	64,313,000
Accounts payable and accrued expenses	2,544,000	3,586,000
Payable due to related party	772,000	1,005,000
Convertible notes payable - related parties	197,780	198,000
Accrued interest payable	52,000	42,000
Tenants' security deposits	1,368,000	1,191,000
Total liabilities	68,648,000	70,335,000
Commitments and contingencies	0	0
Shareholders' Equity:
Common Shares - $0.01 par value, 400,000,000 authorized: 443,299 shares issued and 405,169 outstanding at June 30, 2018 and December 31, 2017	4,000	4,000
Additional paid-in capital	28,147,000	28,147,000
Accumulated deficit	(27,481,000)	(27,635,000)
Treasury stock, at cost, 38,130 shares	(801,000)	(801,000)
Total Pillarstone Capital REIT shareholders' deficit	(126,000)	(280,000)
Noncontrolling interest in subsidiary	19,669,000	18,861,000
Total equity	19,543,000	18,581,000
Total liabilities and equity	88,191,000	88,916,000
Preferred A Shares
Shareholders' Equity:
Preferred stock	3,000	3,000
Preferred C Shares
Shareholders' Equity:
Preferred stock	2,000	2,000
Pillarstone Variable Interest Entity [Member]
ASSETS1
Property	84,427,000	83,141,000
Accumulated depreciation	(4,453,000)	(2,934,000)
Total real estate assets	79,974,000	80,207,000
Cash and cash equivalents	2,484,000	2,812,000
Escrows and acquisition deposits	1,863,000	2,188,000
Accrued rents and accounts receivable, net of allowance for doubtful accounts	1,163,000	798,000
Receivable due from related party	1,067,000	1,304,000
Unamortized lease commissions and deferred legal costs, net	1,255,000	1,265,000
Prepaid expenses and other assets	267,000	150,000
Total assets	88,073,000	88,724,000
Liabilities:
Notes payable	63,714,000	64,313,000
Accounts payable and accrued expenses	2,506,000	3,494,000
Payable due to related party	772,000	1,005,000
Tenants' security deposits	1,368,000	1,191,000
Total liabilities	$ 68,360,000	$ 70,003,000

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	400,000,000	400,000,000
Common stock, issued (in shares)	443,299	443,299
Common stock, outstanding (in shares)	405,169	405,169
Treasury stock (in shares)	38,130	38,130
Preferred A Shares
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	1,518,000	1,518,000
Preferred stock, issued (in shares)	256,636	256,636
Preferred stock, outstanding (in shares)	256,636	256,636
Preferred stock, liquidation preference (in dollars per share)	$ 10	$ 10
Preferred C Shares
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	300,000	300,000
Preferred stock, issued (in shares)	244,444	244,444
Preferred stock, outstanding (in shares)	244,444	244,444
Preferred stock, liquidation preference (in dollars per share)	$ 10	$ 10

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Property revenues
Rental revenues	$ 3,580	$ 3,520	$ 7,166	$ 7,056
Other revenues	583	658	1,375	1,286
Total property revenues	4,163	4,178	8,541	8,342
Property expenses
Property operation and maintenance	1,157	1,076	2,358	2,363
Real estate taxes	579	652	1,261	1,300
Total property expenses	1,736	1,728	3,619	3,663
Other expenses
General and administrative	100	45	293	326
Depreciation and amortization	896	855	1,752	1,571
Interest expense	693	683	1,365	1,358
Total other expense	1,689	1,583	3,410	3,255
Income before loss on disposal of assets and income taxes	738	867	1,512	1,424
Loss on disposal of assets	0	(5)	0	(11)
Provision for income taxes	(24)	(20)	(44)	(45)
Net income	714	842	1,468	1,368
Less: Non-controlling interest in subsidiary	613	715	1,313	1,268
Net income attributable to Common Shareholders	$ 101	$ 127	$ 155	$ 100
Net income available to common shareholders, basic (usd per share)	$ 0.25	$ 0.31	$ 0.38	$ 0.25
Net income available to common shareholders, diluted (usd per share)	$ 0.03	$ 0.04	$ 0.05	$ 0.03
Basic (shares)	405,169	405,169	405,169	405,169
Diluted (shares)	3,090,652	3,075,793	3,090,652	2,903,219

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 1,468	$ 1,368
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	(1,752)	(1,571)
Amortization of deferred loan costs	50	50
Loss on disposal of assets	0	11
Bad debt expense	100	78
Changes in operating assets and liabilities:
Accrued rents and accounts receivable	(465)	(352)
Receivable due from related party	192	327
Escrows and acquisition deposits	325	832
Unamortized lease commissions and deferred legal costs, net	(215)	(190)
Prepaid expenses and other assets	(111)	(120)
Accounts payable and accrued expenses	(1,033)	(930)
Payable due to related party	(233)	520
Tenants' security deposits	177	78
Net cash provided by operating activities	2,007	3,243
Cash flows from investing activities:
Additions to real estate	(1,248)	(508)
Net cash used in investing activities	(1,248)	(508)
Cash flows from financing activities:
Distributions paid to noncontrolling interest in Consolidated Partnership	(505)	(1,170)
Repayments of notes payable	(649)	(624)
Net cash used in financing activities	(1,154)	(1,794)
Net change in cash and cash equivalents	(395)	941
Cash and cash equivalents at beginning of period	2,991	1,243
Cash and cash equivalents at end of period	2,596	2,184
Supplemental disclosure of cash flow information:
Cash paid for interest	1,307	1,304
Cash paid for taxes	88	0
Non cash investing activities:
Disposal of fully depreciated real estate	47	2
Additions to real estate contributed by related party	$ 45	$ 722

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting. Pillarstone Capital REIT's (the “Company”, “Pillarstone”, “we”, “our”, or “us”) financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. Use of estimates. In order to conform with U.S. GAAP, management, in preparation of our consolidated financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of June 30, 2018 and December 31, 2017 , and the reported amounts of revenues and expenses for the three and six months ended June 30, 2018 and 2017 . Actual results could differ from those estimates. Significant estimates include fair value of properties acquired, estimated useful lives of properties, allowance for bad debt, impairment, deferred taxes and the related valuation allowance for deferred taxes, and these significant estimates, as well as other estimates and assumptions, may change in the near term. Cash and cash equivalents. We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents as of June 30, 2018 and December 31, 2017 consisted of demand deposits at commercial banks and brokerage accounts. We maintain our cash in bank accounts that are federally insured. Acquired Properties and Acquired Lease Intangibles. We allocate the purchase price of the acquired properties to land, building and improvements, identifiable intangible assets and to the acquired liabilities based on their respective fair values at the time of purchase. Identifiable intangibles include amounts allocated to acquired out-of-market leases, the value of in-place leases and customer relationship value, if any. We determine fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the property. Factors considered by management in our analysis of determining the as-if-vacant property value include an estimate of carrying costs during the expected lease-up periods considering market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and estimates of lost rentals at market rates during the expected lease-up periods, tenant demand and other economic conditions. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Intangibles related to out-of-market leases and in-place lease value are recorded as acquired lease intangibles and are amortized as an adjustment to rental revenue or amortization expense, as appropriate, over the remaining terms of the underlying leases. Premiums or discounts on acquired out-of-market debt are amortized to interest expense over the remaining term of such debt. Depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for improvements and buildings, respectively. Tenant improvements are depreciated using the straight-line method over the life of the improvement or remaining term of the lease, whichever is shorter. Impairment. We review our properties for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value. Management has determined that there has been no impairment in the carrying value of our real estate assets as of June 30, 2018 . Accrued Rents and Accounts Receivable. Included in accrued rent and accounts receivable are base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends. As of June 30, 2018 and December 31, 2017 , we had an allowance for uncollectible accounts of $639,000 and $539,000 , respectively. For the three and six months ended June 30, 2018 , we had bad debt expense of $60,000 and $100,000 , respectively. For the three and six months ended June 30, 2017 , we had bad debt expense of $8,000 and $78,000 , respectively. Unamortized Lease Commissions and Deferred Legal Costs. Leasing commissions and deferred legal costs are amortized using the straight-line method over the terms of the related lease agreements. Loan costs are amortized on the straight-line method over the terms of the loans, which approximates the interest method. Costs allocated to in-place leases whose terms differ from market terms related to acquired properties are amortized over the remaining life of the respective leases. Prepaids and Other assets . Prepaids and other assets include escrows established pursuant to certain mortgage financing arrangements for real estate taxes and insurance. Noncontrolling Interests. Noncontrolling interests are the portion of equity in a subsidiary not attributable to a parent. The ownership interests not held by the parent are considered noncontrolling interests. Accordingly, we have reported noncontrolling interest in equity on the consolidated balance sheets but separate from Pillarstone’s equity. On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Pillarstone and noncontrolling interest. Revenue recognition . All leases on our properties are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are capitalized or charged, as applicable, to accrued rents and accounts receivable. Percentage rents are recognized as rental income when the thresholds upon which they are based have been met. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We have established an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible. Stock-based compensation . The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation," which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 generally requires that these transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards. Income taxes . Because we have not elected to be taxed as a REIT for federal income tax purposes, we account for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the period in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. We are also subject to certain state and local income, excise and franchise taxes. The provision for state and local taxes has been reflected in provision for income taxes in the consolidated statements of operations and has not been separately stated due to its insignificance. The Company evaluates potential uncertain tax positions on an annual basis in conjunction with the board of trustees and its tax accountants. Authoritative literature provides a two-step approach to recognize and measure tax benefits when realization of the benefits is uncertain. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50% . The Company has no uncertain tax positions that required adjustments to our consolidated financial statements in 2018 or 2017. Concentration of Risk. Substantially all of our revenues are obtained from office and warehouse locations in the Dallas-Fort Worth and Houston metropolitan areas. We maintain cash accounts in major U.S. financial institutions. The terms of these deposits are on demand to minimize risk. The balances of these accounts sometimes exceed the federally insured limits, although no losses have been incurred in connection with these deposits. Recent accounting pronouncements . In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance, as amended in subsequent updates, establishing a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. The standard also requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. This guidance became effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We have adopted this guidance on a modified retrospective basis beginning January 1, 2018 and do not expect this standard to have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance requiring lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting will remain largely unchanged with the exception of changes related to costs which qualify as initial direct costs. The guidance will also require new qualitative and quantitative disclosures to help financial statement users better understand the timing, amount and uncertainty of cash flows arising from leases. This guidance will be effective for reporting periods beginning on or after December 15, 2018, with early adoption permitted. We will adopt this guidance on a modified retrospective basis beginning January 1, 2019, and such adoption will result in certain costs (primarily legal costs related to lease negotiations) being expensed rather than capitalized. We capitalized $3,000 in legal related costs for the six months ended June 30, 2018 . We did not capitalize any legal related costs for the three months ended June 30, 2018 . In November 2016, the FASB issued guidance requiring that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance effective January 1, 2018, and we have reconciled cash and cash equivalents and restricted cash and restricted cash equivalents on a retrospective basis, whereas under the previous guidance, we reported restricted cash and restricted cash equivalents under cash flows from financing activities. In January 2017, the FASB issued guidance clarifying the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance on a prospective basis beginning January 1, 2018 and believe the majority of our future acquisitions will qualify as asset acquisitions and the associated transaction costs will be capitalized as opposed to expensed under previous guidance. In February 2017, the FASB issued guidance clarifying the scope of asset derecognition guidance, added guidance for partial sales of nonfinancial assets and clarified recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance on a modified retrospective basis beginning January 1, 2018, and the adoption of this guidance did not have a material impact on our consolidated financial statements.

Accrued Rents and Accounts Rece

Accrued Rents and Accounts Receivable, Net	6 Months Ended
	Jun. 30, 2018
Receivables [Abstract]
Accrued Rents and Accounts Receivable, Net	ACCRUED RENTS AND ACCOUNTS RECEIVABLE, NET Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands): June 30, 2018 December 31, 2017 Tenant receivables $ 897 $ 680 Accrued rents and other recoveries 905 657 Allowance for doubtful accounts (639 ) (539 ) Total $ 1,163 $ 798

Unamortized Lease Commissions A

Unamortized Lease Commissions And Deferred Legal Cost, Net	6 Months Ended
	Jun. 30, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Unamortized Lease Commissions And Deferred Legal Cost, Net	UNAMORTIZED LEASE COMMISSIONS AND DEFERRED LEGAL COST, NET Costs which have been deferred consist of the following (in thousands): June 30, 2018 December 31, 2017 Leasing commissions $ 1,666 $ 1,577 Deferred legal cost 50 47 Total cost 1,716 1,624 Less: leasing commissions accumulated amortization (445 ) (350 ) Less: deferred legal cost accumulated amortization (16 ) (9 ) Total cost, net of accumulated amortization $ 1,255 $ 1,265

Variable Interest Entity

Variable Interest Entity	6 Months Ended
	Jun. 30, 2018
Equity Method Investments and Joint Ventures [Abstract]
Variable Interest Entity	VARIABLE INTEREST ENTITY On December 8, 2016, Pillarstone and Pillarstone OP, entered into a Contribution Agreement (the “Contribution Agreement”) with Whitestone REIT Operating Partnership, L.P. (“Whitestone OP”), a subsidiary and the operating partnership of Whitestone REIT (“Whitestone”), both of which are related parties to Pillarstone and Pillarstone OP, pursuant to which Whitestone OP contributed to Pillarstone OP all of the equity interests in four of its wholly-owned subsidiaries (the “Subsidiaries”): Whitestone CP Woodland Ph. 2, LLC, a Delaware limited liability company; Whitestone Industrial-Office, LLC, a Texas limited liability company; Whitestone Offices, LLC, a Texas limited liability company; and Whitestone Uptown Tower, LLC, a Delaware limited liability company (“Uptown Tower”). The Subsidiaries own 14 real estate assets (the “Real Estate Assets” and, together with the Subsidiaries, the “Property”) for aggregate consideration of approximately $84 million , consisting of (i) approximately $18.1 million of Class A units representing limited partnership interests in Pillarstone OP (“OP Units”), issued at a price of $1.331 per OP Unit; and (ii) the assumption of approximately $65.9 million of liabilities by Pillarstone OP. Pillarstone is the general partner of Pillarstone OP and, as a result of the Contribution Agreement, has equity ownership interest in Pillarstone OP totaling approximately 18.6% valued at approximately $4.1 million as of the date of the agreement. In connection with the Contribution Agreement, on December 8, 2016, the Company, as the general partner of Pillarstone OP, entered into an Amended and Restated Agreement of Limited Partnership of Pillarstone OP (as amended and restated, the “Amended and Restated Agreement of Limited Partnership”). Pursuant to the Amended and Restated Agreement of Limited Partnership, subject to certain protective rights of the limited partners described below, the general partner has full, exclusive and complete responsibility and discretion in the management and control of Pillarstone OP, including the ability to cause Pillarstone OP to enter into certain major transactions including a merger of Pillarstone OP or a sale of substantially all of the assets of Pillarstone OP. The limited partners have no power to remove the general partner without the general partner's consent. In addition, pursuant to the Amended and Restated Agreement of Limited Partnership, the general partner may not conduct any business other than in connection with the ownership, acquisition and disposition of interest in the Operating Partnership and management of the business of the Operating Partnership without the consent of certain of the limited partners. The Company is deemed to exercise significant influence over Pillarstone OP as it has the power to direct the activities that most significantly impact Pillarstone OP's economic performance and the Company's right to receive benefits based on its ownership percentage in Pillarstone OP. Accordingly, the Company accounts for Pillarstone OP as a VIE. The Amended and Restated Agreement of Limited Partnership designates two classes of units of limited partnership interest in Pillarstone OP: the OP Units and LTIP units. In general, LTIP units are similar to the OP Units and will receive the same quarterly per-unit profit distributions as the OP Units. The rights, privileges, and obligations related to each series of LTIP units will be established at the time the LTIP units are issued. As profits interests, LTIP units initially will not have full parity, on a per-unit basis, with OP Units with respect to liquidating distributions. Upon the occurrence of specified events, LTIP units can over time achieve full parity with the OP Units and therefore accrete to an economic value for the holder equivalent to OP Units. If such parity is achieved, vested LTIP units may be converted on a one -for-one basis into OP Units, which in turn are redeemable by the holder for cash or, at the Company’s election, exchangeable for Common Shares on a one -for-one basis. During the period from December 8, 2016 through December 31, 2016, Pillarstone received a distribution in kind equal to the value of the original investment of $4.1 million . The carrying amounts and classification of certain assets and liabilities for Pillarstone OP in our consolidated balance sheet as of June 30, 2018 and December 31, 2017 consists of the following (in thousands): June 30, 2018 December 31, 2017 Real estate assets, at cost Property $ 84,427 $ 83,141 Accumulated depreciation (4,453 ) (2,934 ) Total real estate assets 79,974 80,207 Cash and cash equivalents 2,484 2,812 Escrows and acquisition deposits 1,863 2,188 Accrued rents and accounts receivable, net of allowance for doubtful accounts (1) 1,163 798 Receivable due from related party 1,067 1,304 Unamortized lease commissions and deferred legal costs, net 1,255 1,265 Prepaid expenses and other assets 267 150 Total assets $ 88,073 $ 88,724 Liabilities Notes payable $ 63,714 $ 64,313 Accounts payable and accrued expenses 2,506 3,494 Payable due to related party 772 1,005 Tenants' security deposits 1,368 1,191 Total liabilities $ 68,360 $ 70,003 (1) Excludes approximately $0.3 million in accounts receivable due from Pillarstone that was eliminated in consolidation as of June 30, 2018 and December 31, 2017 .

Real Estate

Real Estate	6 Months Ended
	Jun. 30, 2018
Real Estate [Abstract]
Real Estate	REAL ESTATE As of June 30, 2018 , Pillarstone OP owned 14 commercial properties in the Dallas and Houston areas comprised of approximately 1.5 million square feet of gross leasable area. Pillarstone OP results of operations. Revenue and net income attributable to the Property of $4.2 million and $0.8 million , respectively, have been included in our results of operations for the three months ended June 30, 2018 . Revenue and net income attributable to the Property of $8.5 million and $1.6 million , respectively, have been included in our results of operations for the six months ended June 30, 2018 . Revenue and net income attributable to the Property of $4.2 million and $0.9 million , respectively, have been included in our results of operations for the three months ended June 30, 2017 . Revenue and net income attributable to the Property of $8.3 million and $1.6 million , respectively, have been included in our results of operations for the six months ended June 30, 2017 .

Debt

Debt	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Debt	DEBT Mortgages and other notes payable consist of the following (in thousands): Description June 30, 2018 December 31, 2017 Fixed rate notes $37.0 million 3.76% Note, due December 1, 2020 $ 32,624 $ 33,148 $16.5 million 4.97% Note, due September 26, 2023 15,932 16,058 Floating rate notes Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 15,473 15,473 Total notes payable principal 64,029 64,679 Less deferred financing costs, net of accumulated amortization (315 ) (366 ) Total notes payable $ 63,714 $ 64,313 Our mortgage debt was collateralized by 10 operating properties as of June 30, 2018 with a combined net book value of $62.8 million . Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and the assignment of certain rents and leases associated with those properties. Certain other of our loans are subject to customary covenants. As of June 30, 2018 , we were in compliance with all loan covenants. Scheduled maturities of notes payable as of June 30, 2018 were as follows: Year Amount Due (in thousands) 2018 $ 16,167 2019 1,376 2020 31,286 2021 308 2022 323 Thereafter 14,569 Total $ 64,029 CONVERTIBLE NOTES PAYABLE - RELATED PARTIES On November 20, 2015, five trustees on our board of trustees at that time loaned $197,780 to the Company in exchange for convertible notes payable. The convertible notes payable accrue interest at 10% per annum and mature on November 20, 2018. The convertible notes payable can be converted by the noteholders into Common Shares at the rate of $1.331 per Common Share at any time. After six months, the Company can convert the notes payable into Common Shares. At maturity or when the Company chooses to convert the convertible notes payable into Common Shares, the noteholders have the option to receive cash plus accrued interest or convert the convertible notes payable into Common Shares.

Convertible Notes Payable - Rel

Convertible Notes Payable - Related Parties	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Convertible Notes Payable - Related Parties	DEBT Mortgages and other notes payable consist of the following (in thousands): Description June 30, 2018 December 31, 2017 Fixed rate notes $37.0 million 3.76% Note, due December 1, 2020 $ 32,624 $ 33,148 $16.5 million 4.97% Note, due September 26, 2023 15,932 16,058 Floating rate notes Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 15,473 15,473 Total notes payable principal 64,029 64,679 Less deferred financing costs, net of accumulated amortization (315 ) (366 ) Total notes payable $ 63,714 $ 64,313 Our mortgage debt was collateralized by 10 operating properties as of June 30, 2018 with a combined net book value of $62.8 million . Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and the assignment of certain rents and leases associated with those properties. Certain other of our loans are subject to customary covenants. As of June 30, 2018 , we were in compliance with all loan covenants. Scheduled maturities of notes payable as of June 30, 2018 were as follows: Year Amount Due (in thousands) 2018 $ 16,167 2019 1,376 2020 31,286 2021 308 2022 323 Thereafter 14,569 Total $ 64,029 CONVERTIBLE NOTES PAYABLE - RELATED PARTIES On November 20, 2015, five trustees on our board of trustees at that time loaned $197,780 to the Company in exchange for convertible notes payable. The convertible notes payable accrue interest at 10% per annum and mature on November 20, 2018. The convertible notes payable can be converted by the noteholders into Common Shares at the rate of $1.331 per Common Share at any time. After six months, the Company can convert the notes payable into Common Shares. At maturity or when the Company chooses to convert the convertible notes payable into Common Shares, the noteholders have the option to receive cash plus accrued interest or convert the convertible notes payable into Common Shares.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Earnings Per Share	EARNINGS PER SHARE Net earnings per weighted average Common Share outstanding, basic and diluted, is computed based on the weighted average number of Common Shares outstanding for the period. The following table shows the weighted average number of Common Shares outstanding and reconciles the numerator and denominator of both earnings (loss) per Common Share calculations for the three and six month periods ended June 30, 2018 and 2017 . During the three and six month periods ended June 30, 2018 and 2017 , the Company had $197,780 of convertible notes payable as discussed in Note 7. The convertible notes payable were not included in the computation of diluted earnings per share for the six month period ended June 30, 2017, because the effect of conversion would be anti-dilutive. Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2018 2017 2018 2017 Numerator: Net income (loss) available to common shareholders $ 101 $ 127 $ 155 $ 100 Dilutive effect of interest from convertible notes payable 5 5 — — Net income (loss) available to common shareholders with assumed conversion $ 106 $ 132 $ 155 $ 100 Denominator: Weighted average number of common shares - basic 405,169 405,169 405,169 405,169 Effect of dilutive securities: Assumed conversion of Preferred A Shares 53,610 53,610 53,610 53,610 Assumed conversion of Preferred C Shares 2,444,440 2,444,440 2,444,440 2,444,440 Assumed conversion of convertible notes payable 187,433 172,574 187,433 — Weighted average number of common shares - dilutive 3,090,652 3,075,793 3,090,652 2,903,219 Earnings (Loss) Per Share: Basic income (loss) per common share: Net income (loss) available to common shareholders $ 0.25 $ 0.31 $ 0.38 $ 0.25 Diluted income (loss) per common share: Net income (loss) available to common shareholders $ 0.03 $ 0.04 $ 0.05 $ 0.03

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2018
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONS During the ordinary course of business, we have transactions with Whitestone that include, but are not limited to, rental income, interest expense, general and administrative costs, commissions, management and asset management fees, and property expenses. In connection with the Contribution Agreement, on December 8, 2016, the Company and Pillarstone OP entered into a Management Agreement (collectively, the “Management Agreements”) with Whitestone TRS, Inc., a subsidiary of Whitestone (“Whitestone TRS”). Pursuant to the Management Agreements with respect to each property, other than Uptown Tower, Whitestone TRS agreed to provide certain property management, leasing and day-to-day advisory and administrative services to such properties in exchange for (1) a monthly property management fee equal to 5.0% of the monthly revenues of each property and (2) a monthly asset management fee equal to 0.125% of GAV (as defined in each Management Agreement as, generally, the purchase price of the respective property based upon the purchase price allocations determined pursuant to the Contribution Agreement, excluding all indebtedness, liabilities or claims of any nature) of such property. Pursuant to the Management Agreement with respect to Uptown Tower, Whitestone TRS agreed to provide certain property management, leasing and day-to-day advisory and administrative services in exchange for (1) a monthly property management fee equal to 3.0% of the monthly revenues of Uptown Tower and (y) a monthly asset management fee equal to 0.125% of GAV of Uptown Tower. The following table presents the revenue and expenses with Whitestone included in our consolidated statement of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, Location of Revenue (Expense) 2018 2017 2018 2017 Rent Rental revenues $ 203 $ 196 $ 405 $ 381 Property management fees Property operation and maintenance $ (185 ) $ (176 ) $ (374 ) $ (368 ) Asset management fees Property operation and maintenance $ (66 ) $ (80 ) $ (132 ) $ (146 ) Interest expense Interest expense $ (147 ) $ (132 ) $ (286 ) $ (256 ) Receivables due from related parties consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Construction in process (1) $ — $ 45 Tenant receivables and other 1,067 1,259 Total $ 1,067 $ 1,304 (1) Amount relates to future tenant and building improvement expenditures implicit within the Contribution Agreement to be paid by Whitestone and capitalized by the Company in subsequent periods when placed in service. Payables due to related parties consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Payables due to related party $ 772 $ 1,005 Total $ 772 $ 1,005

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Basis of Presentation	Basis of Accounting. Pillarstone Capital REIT's (the “Company”, “Pillarstone”, “we”, “our”, or “us”) financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred.
Use of estimates	Use of estimates. In order to conform with U.S. GAAP, management, in preparation of our consolidated financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of June 30, 2018 and December 31, 2017 , and the reported amounts of revenues and expenses for the three and six months ended June 30, 2018 and 2017 . Actual results could differ from those estimates. Significant estimates include fair value of properties acquired, estimated useful lives of properties, allowance for bad debt, impairment, deferred taxes and the related valuation allowance for deferred taxes, and these significant estimates, as well as other estimates and assumptions, may change in the near term.
Cash and cash equivalents	Cash and cash equivalents. We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents as of June 30, 2018 and December 31, 2017 consisted of demand deposits at commercial banks and brokerage accounts. We maintain our cash in bank accounts that are federally insured.
Acquired Properties and Acquired Lease Intangibles	Acquired Properties and Acquired Lease Intangibles. We allocate the purchase price of the acquired properties to land, building and improvements, identifiable intangible assets and to the acquired liabilities based on their respective fair values at the time of purchase. Identifiable intangibles include amounts allocated to acquired out-of-market leases, the value of in-place leases and customer relationship value, if any. We determine fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the property. Factors considered by management in our analysis of determining the as-if-vacant property value include an estimate of carrying costs during the expected lease-up periods considering market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and estimates of lost rentals at market rates during the expected lease-up periods, tenant demand and other economic conditions. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Intangibles related to out-of-market leases and in-place lease value are recorded as acquired lease intangibles and are amortized as an adjustment to rental revenue or amortization expense, as appropriate, over the remaining terms of the underlying leases. Premiums or discounts on acquired out-of-market debt are amortized to interest expense over the remaining term of such debt.
Depreciation	Depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for improvements and buildings, respectively. Tenant improvements are depreciated using the straight-line method over the life of the improvement or remaining term of the lease, whichever is shorter.
Impairment	Impairment. We review our properties for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value.
Accrued Rents and Accounts Receivable	Accrued Rents and Accounts Receivable. Included in accrued rent and accounts receivable are base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends.
Unamortized Lease Commissions and Loan Costs	Unamortized Lease Commissions and Deferred Legal Costs. Leasing commissions and deferred legal costs are amortized using the straight-line method over the terms of the related lease agreements. Loan costs are amortized on the straight-line method over the terms of the loans, which approximates the interest method. Costs allocated to in-place leases whose terms differ from market terms related to acquired properties are amortized over the remaining life of the respective leases.
Prepaids and Other assets	Prepaids and Other assets . Prepaids and other assets include escrows established pursuant to certain mortgage financing arrangements for real estate taxes and insurance.
Noncontrolling Interests	Noncontrolling Interests. Noncontrolling interests are the portion of equity in a subsidiary not attributable to a parent. The ownership interests not held by the parent are considered noncontrolling interests. Accordingly, we have reported noncontrolling interest in equity on the consolidated balance sheets but separate from Pillarstone’s equity. On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to Pillarstone and noncontrolling interest.
Revenue recognition	Revenue recognition . All leases on our properties are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are capitalized or charged, as applicable, to accrued rents and accounts receivable. Percentage rents are recognized as rental income when the thresholds upon which they are based have been met. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We have established an allowance for doubtful accounts against the portion of tenant accounts receivable which is estimated to be uncollectible.
Stock-based compensation	Stock-based compensation . The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation," which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 generally requires that these transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards.
Income Taxes	Income taxes . Because we have not elected to be taxed as a REIT for federal income tax purposes, we account for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the period in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. We are also subject to certain state and local income, excise and franchise taxes. The provision for state and local taxes has been reflected in provision for income taxes in the consolidated statements of operations and has not been separately stated due to its insignificance. The Company evaluates potential uncertain tax positions on an annual basis in conjunction with the board of trustees and its tax accountants. Authoritative literature provides a two-step approach to recognize and measure tax benefits when realization of the benefits is uncertain. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50% .
Concentration of Risk	Concentration of Risk. Substantially all of our revenues are obtained from office and warehouse locations in the Dallas-Fort Worth and Houston metropolitan areas. We maintain cash accounts in major U.S. financial institutions. The terms of these deposits are on demand to minimize risk. The balances of these accounts sometimes exceed the federally insured limits, although no losses have been incurred in connection with these deposits.
Recent accounting pronouncements	Recent accounting pronouncements . In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance, as amended in subsequent updates, establishing a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. The standard also requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. This guidance became effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We have adopted this guidance on a modified retrospective basis beginning January 1, 2018 and do not expect this standard to have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance requiring lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting will remain largely unchanged with the exception of changes related to costs which qualify as initial direct costs. The guidance will also require new qualitative and quantitative disclosures to help financial statement users better understand the timing, amount and uncertainty of cash flows arising from leases. This guidance will be effective for reporting periods beginning on or after December 15, 2018, with early adoption permitted. We will adopt this guidance on a modified retrospective basis beginning January 1, 2019, and such adoption will result in certain costs (primarily legal costs related to lease negotiations) being expensed rather than capitalized. We capitalized $3,000 in legal related costs for the six months ended June 30, 2018 . We did not capitalize any legal related costs for the three months ended June 30, 2018 . In November 2016, the FASB issued guidance requiring that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance effective January 1, 2018, and we have reconciled cash and cash equivalents and restricted cash and restricted cash equivalents on a retrospective basis, whereas under the previous guidance, we reported restricted cash and restricted cash equivalents under cash flows from financing activities. In January 2017, the FASB issued guidance clarifying the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance on a prospective basis beginning January 1, 2018 and believe the majority of our future acquisitions will qualify as asset acquisitions and the associated transaction costs will be capitalized as opposed to expensed under previous guidance. In February 2017, the FASB issued guidance clarifying the scope of asset derecognition guidance, added guidance for partial sales of nonfinancial assets and clarified recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. This guidance will become effective for the reporting periods beginning on or after December 15, 2017, and interim periods within those fiscal years. We adopted this guidance on a modified retrospective basis beginning January 1, 2018, and the adoption of this guidance did not have a material impact on our consolidated financial statements.

Accrued Rents and Accounts Re16

Accrued Rents and Accounts Receivable, Net (Tables)	6 Months Ended
	Jun. 30, 2018
Receivables [Abstract]
Schedule of Accrued Rents and Accounts Receivable, Net	Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands): June 30, 2018 December 31, 2017 Tenant receivables $ 897 $ 680 Accrued rents and other recoveries 905 657 Allowance for doubtful accounts (639 ) (539 ) Total $ 1,163 $ 798

Unamortized Lease Commissions17

Unamortized Lease Commissions And Deferred Legal Cost, Net (Tables)	6 Months Ended
	Jun. 30, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Tablular Disclosure of Unamortized Lease Commissions	Costs which have been deferred consist of the following (in thousands): June 30, 2018 December 31, 2017 Leasing commissions $ 1,666 $ 1,577 Deferred legal cost 50 47 Total cost 1,716 1,624 Less: leasing commissions accumulated amortization (445 ) (350 ) Less: deferred legal cost accumulated amortization (16 ) (9 ) Total cost, net of accumulated amortization $ 1,255 $ 1,265

Variable Interest Entity (Table

Variable Interest Entity (Tables)	6 Months Ended
	Jun. 30, 2018
Equity Method Investments and Joint Ventures [Abstract]
Schedule of Variable Interest Entities	The carrying amounts and classification of certain assets and liabilities for Pillarstone OP in our consolidated balance sheet as of June 30, 2018 and December 31, 2017 consists of the following (in thousands): June 30, 2018 December 31, 2017 Real estate assets, at cost Property $ 84,427 $ 83,141 Accumulated depreciation (4,453 ) (2,934 ) Total real estate assets 79,974 80,207 Cash and cash equivalents 2,484 2,812 Escrows and acquisition deposits 1,863 2,188 Accrued rents and accounts receivable, net of allowance for doubtful accounts (1) 1,163 798 Receivable due from related party 1,067 1,304 Unamortized lease commissions and deferred legal costs, net 1,255 1,265 Prepaid expenses and other assets 267 150 Total assets $ 88,073 $ 88,724 Liabilities Notes payable $ 63,714 $ 64,313 Accounts payable and accrued expenses 2,506 3,494 Payable due to related party 772 1,005 Tenants' security deposits 1,368 1,191 Total liabilities $ 68,360 $ 70,003 (1) Excludes approximately $0.3 million in accounts receivable due from Pillarstone that was eliminated in consolidation as of June 30, 2018 and December 31, 2017 .

Debt (Tables)

Debt (Tables)	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Schedule of Debt	Mortgages and other notes payable consist of the following (in thousands): Description June 30, 2018 December 31, 2017 Fixed rate notes $37.0 million 3.76% Note, due December 1, 2020 $ 32,624 $ 33,148 $16.5 million 4.97% Note, due September 26, 2023 15,932 16,058 Floating rate notes Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 15,473 15,473 Total notes payable principal 64,029 64,679 Less deferred financing costs, net of accumulated amortization (315 ) (366 ) Total notes payable $ 63,714 $ 64,313
Debt Maturity Schedule	Scheduled maturities of notes payable as of June 30, 2018 were as follows: Year Amount Due (in thousands) 2018 $ 16,167 2019 1,376 2020 31,286 2021 308 2022 323 Thereafter 14,569 Total $ 64,029

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2018 2017 2018 2017 Numerator: Net income (loss) available to common shareholders $ 101 $ 127 $ 155 $ 100 Dilutive effect of interest from convertible notes payable 5 5 — — Net income (loss) available to common shareholders with assumed conversion $ 106 $ 132 $ 155 $ 100 Denominator: Weighted average number of common shares - basic 405,169 405,169 405,169 405,169 Effect of dilutive securities: Assumed conversion of Preferred A Shares 53,610 53,610 53,610 53,610 Assumed conversion of Preferred C Shares 2,444,440 2,444,440 2,444,440 2,444,440 Assumed conversion of convertible notes payable 187,433 172,574 187,433 — Weighted average number of common shares - dilutive 3,090,652 3,075,793 3,090,652 2,903,219 Earnings (Loss) Per Share: Basic income (loss) per common share: Net income (loss) available to common shareholders $ 0.25 $ 0.31 $ 0.38 $ 0.25 Diluted income (loss) per common share: Net income (loss) available to common shareholders $ 0.03 $ 0.04 $ 0.05 $ 0.03

Related Party Transactions (Tab

Related Party Transactions (Tables)	6 Months Ended
	Jun. 30, 2018
Related Party Transactions [Abstract]
Schedule of Related Party Transactions	The following table presents the revenue and expenses with Whitestone included in our consolidated statement of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, Location of Revenue (Expense) 2018 2017 2018 2017 Rent Rental revenues $ 203 $ 196 $ 405 $ 381 Property management fees Property operation and maintenance $ (185 ) $ (176 ) $ (374 ) $ (368 ) Asset management fees Property operation and maintenance $ (66 ) $ (80 ) $ (132 ) $ (146 ) Interest expense Interest expense $ (147 ) $ (132 ) $ (286 ) $ (256 ) Receivables due from related parties consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Construction in process (1) $ — $ 45 Tenant receivables and other 1,067 1,259 Total $ 1,067 $ 1,304 (1) Amount relates to future tenant and building improvement expenditures implicit within the Contribution Agreement to be paid by Whitestone and capitalized by the Company in subsequent periods when placed in service. Payables due to related parties consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Payables due to related party $ 772 $ 1,005 Total $ 772 $ 1,005

Summary of Significant Accoun22

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Impairment of real estate			$ 0
Allowance for doubtful accounts	$ 639,000		639,000		$ 539,000
Bad debt expense	60,000	$ 8,000	$ 100,000	$ 78,000
Uncertain tax position to be recognized based on maximum cumulative probability percentage			50.00%
Unrecognized tax benefits	$ 0		$ 0		$ 0
Capitalized lease contract cost			$ 3,000
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives			5 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives			39 years

Accrued Rents and Accounts Re23

Accrued Rents and Accounts Receivable, Net (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Receivables [Abstract]
Tenant receivables	$ 897,000	$ 680,000
Accrued rents and other recoveries	905,000	657,000
Allowance for doubtful accounts	(639,000)	(539,000)
Total	$ 1,163,000	$ 798,000

Unamortized Lease Commissions24

Unamortized Lease Commissions And Deferred Legal Cost, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Leasing commissions	$ 1,666	$ 1,577
Deferred legal cost	50	47
Total cost	1,716	1,624
Less: leasing commissions accumulated amortization	(445)	(350)
Less: deferred legal cost accumulated amortization	(16)	(9)
Total cost, net of accumulated amortization	$ 1,255	$ 1,265

Variable Interest Entity (Detai

Variable Interest Entity (Details) $ / shares in Units, $ in Millions	1 Months Ended
	Dec. 31, 2016USD ($)	Dec. 08, 2016USD ($)propertysubsidiary$ / shares
Schedule of Equity Method Investments [Line Items]
Dividends, paid-in-kind	$ 4.1
Pillarstone OP [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage		18.60%
Accrued rents and accounts receivable, net of allowance for doubtful accounts		$ 4.1
Whitestone [Member] | Pillarstone Variable Interest Entity [Member]
Schedule of Equity Method Investments [Line Items]
Number of wholly-owned subsidiaries contributed to variable interest entity | subsidiary		4
Number of non-core properties contributed to variable interest entity | property		14
Consideration amount		$ 84
Consideration, limited partnership interest		$ 18.1
Consideration, limited partnership interest (in dollars per share) | $ / shares		$ 1.331
Liabilities assumed		$ 65.9

Variable Interest Entity (Sched

Variable Interest Entity (Schedules) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Equity Method Investments [Line Items]
Property	$ 84,430	$ 83,144
Accumulated depreciation	(4,454)	(2,934)
Total real estate assets	79,976	80,210
Cash and cash equivalents	2,596	2,991
Escrows and acquisition deposits	1,863	2,188
Accrued rents and accounts receivable, net of allowance for doubtful accounts	1,163	798
Receivable due from related party	1,067	1,304
Unamortized lease commissions and deferred legal costs, net	1,255	1,265
Prepaid expenses and other assets	271	160
Total assets	88,191	88,916
Notes payable	63,714	64,313
Accounts payable and accrued expenses	2,544	3,586
Payable due to related party	772	1,005
Tenants' security deposits	1,368	1,191
Total liabilities	68,648	70,335
Pillarstone Variable Interest Entity [Member]
Schedule of Equity Method Investments [Line Items]
Property	84,427	83,141
Accumulated depreciation	(4,453)	(2,934)
Total real estate assets	79,974	80,207
Cash and cash equivalents	2,484	2,812
Escrows and acquisition deposits	1,863	2,188
Accrued rents and accounts receivable, net of allowance for doubtful accounts	1,163	798
Receivable due from related party	1,067	1,304
Unamortized lease commissions and deferred legal costs, net	1,255	1,265
Prepaid expenses and other assets	267	150
Total assets	88,073	88,724
Notes payable	63,714	64,313
Accounts payable and accrued expenses	2,506	3,494
Payable due to related party	772	1,005
Tenants' security deposits	1,368	1,191
Total liabilities	68,360	70,003
Accounts receivable related party	$ 300	$ 300

Real Estate (Details)

Real Estate (Details) - Pillarstone OP [Member] ft² in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018USD ($)ft²property	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)ft²property	Jun. 30, 2017USD ($)
Real Estate [Line Items]
Number of real estate properties | property	14		14
Area of real estate (sqft.) | ft²	1.5		1.5
Revenue attributable to the Property	$ 4.2	$ 4.2	$ 8.5	$ 8.3
Net income attributable to the Property	$ 0.8	$ 0.9	$ 1.6	$ 1.6

Debt (Details)

Debt (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Nov. 20, 2015
Debt Instrument [Line Items]
Notes payable gross	$ 64,029,000	$ 64,679,000
Less deferred financing costs, net of accumulated amortization	(315,000)	(366,000)
Total notes payable	63,714,000	64,313,000
Interest rate			10.00%
$37.0 million 3.76% Note, due December 1, 2020
Debt Instrument [Line Items]
Notes payable gross	32,624,000	33,148,000
Debt Instrument, face amount	$ 37,000,000
Interest rate	3.76%
$16.5 million 4.97% Note, due September 26, 2023
Debt Instrument [Line Items]
Notes payable gross	$ 15,932,000	16,058,000
Debt Instrument, face amount	$ 16,500,000
Interest rate	4.97%
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018
Debt Instrument [Line Items]
Notes payable gross	$ 15,473,000	$ 15,473,000
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 | LIBOR | Minimum
Debt Instrument [Line Items]
Variable rate	1.40%
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 | LIBOR | Maximum [Member]
Debt Instrument [Line Items]
Variable rate	1.95%

Debt - Narrative (Details)

Debt - Narrative (Details) $ in Thousands	Jun. 30, 2018USD ($)property	Dec. 31, 2017USD ($)
Debt Instrument [Line Items]
Property	$ 84,430	$ 83,144
Mortgage debt
Debt Instrument [Line Items]
Number of real estate properties | property	10
Property	$ 62,800

Debt - Maturity Schedule (Detai

Debt - Maturity Schedule (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2,018	$ 16,167
2,019	1,376
2,020	31,286
2,021	308
2,022	323
Thereafter	14,569
Total	$ 64,029	$ 64,679

Convertible Notes Payable - R31

Convertible Notes Payable - Related Parties (Details Narrative)	Jun. 30, 2018USD ($)	Dec. 31, 2017USD ($)	Jun. 30, 2017USD ($)	Nov. 20, 2015USD ($)trustee$ / shares
Debt Disclosure [Abstract]
Number of trustees | trustee				5
Convertible notes payable - related parties | $	$ 197,780	$ 198,000	$ 197,780	$ 197,780
Interest rate				10.00%
Conversion price (in dollars per share) | $ / shares				$ 1.331

Earnings Per Share - Narrative

Earnings Per Share - Narrative (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Nov. 20, 2015
Earnings Per Share [Abstract]
Convertible notes payable - related parties	$ 197,780	$ 198,000	$ 197,780	$ 197,780

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income (loss) available to common shareholders	$ 101	$ 127	$ 155	$ 100
Dilutive effect of interest from convertible notes payable	5	5	0	0
Net income (loss) available to common shareholders with assumed conversion	$ 106	$ 132	$ 155	$ 100
Basic (shares)	405,169	405,169	405,169	405,169
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	187,433	172,574	187,433	0
Diluted (shares)	3,090,652	3,075,793	3,090,652	2,903,219
Net income available to common shareholders, basic (usd per share)	$ 0.25	$ 0.31	$ 0.38	$ 0.25
Net income available to common shareholders, diluted (usd per share)	$ 0.03	$ 0.04	$ 0.05	$ 0.03
Preferred A Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock	53,610	53,610	53,610	53,610
Preferred C Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock	2,444,440	2,444,440	2,444,440	2,444,440

Related Party Transactions (Det

Related Party Transactions (Details) - Whitestone [Member]	Dec. 08, 2016
Related Party Transaction [Line Items]
Property management fee (percentage)	5.00%
Asset management fee (percentage)	0.125%
Uptown Tower
Related Party Transaction [Line Items]
Property management fee (percentage)	3.00%
Asset management fee (percentage)	0.125%

Related Party Transactions - In

Related Party Transactions - Income Statement (Details) - Whitestone [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Rental revenues
Related Party Transaction [Line Items]
Rent	$ 203	$ 196	$ 405	$ 381
Property operation and maintenance
Related Party Transaction [Line Items]
Property management fees	(185)	(176)	(374)	(368)
Asset management fees	(66)	(80)	(132)	(146)
Interest expense
Related Party Transaction [Line Items]
Interest expense	$ (147)	$ (132)	$ (286)	$ (256)

Related Party Transactions - Ba

Related Party Transactions - Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Related Party Transaction [Line Items]
Receivable due from related party	$ 1,067	$ 1,304
Payable due to related party	772	1,005
Construction in process
Related Party Transaction [Line Items]
Receivable due from related party	0	45
Accounts receivable
Related Party Transaction [Line Items]
Receivable due from related party	$ 1,067	$ 1,259