Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 16, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-15409 | |
Entity Registrant Name | PILLARSTONE CAPITAL REIT | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 39-6594066 | |
Entity Address, Address Line One | 2600 South Gessner | |
Entity Address, Address Line Two | Suite 555 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77063 | |
City Area Code | 832 | |
Local Phone Number | 810-0100 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 657,084 | |
Entity Central Index Key | 0000928953 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Property | $ 57,087,000 | $ 57,027,000 |
Accumulated depreciation | (8,861,000) | (8,754,000) |
Total real estate assets | 48,226,000 | 48,273,000 |
Cash and cash equivalents | 4,342,000 | 5,206,000 |
Escrows and utility deposits | 1,511,000 | 1,243,000 |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 1,412,000 | 1,260,000 |
Receivable due from related party | 1,221,000 | 1,011,000 |
Unamortized lease commissions and deferred legal cost, net | 436,000 | 464,000 |
Prepaid expenses and other assets | 358,000 | 126,000 |
Total assets | 57,506,000 | 57,583,000 |
Liabilities: | ||
Notes payable | 15,129,000 | 14,920,000 |
Accounts payable and accrued expenses | 1,048,000 | 1,691,000 |
Payable due to related party | 1,010,000 | 846,000 |
Convertible notes payable - related parties | 197,780 | 197,780 |
Accrued interest payable | 190,000 | 185,000 |
Tenants' security deposits | 803,000 | 827,000 |
Total liabilities | 18,378,000 | 18,667,000 |
Commitments and contingencies | 0 | 0 |
Shareholders' Equity: | ||
Common Shares - $0.01 par value, 400,000,000 authorized: 695,214 shares issued and 657,084 outstanding at March 31, 2022 and December 31, 2021 | 7,000 | 7,000 |
Additional paid-in capital | 28,493,000 | 28,493,000 |
Accumulated deficit | (23,899,000) | (23,882,000) |
Treasury stock, at cost, 38,130 shares | (801,000) | (801,000) |
Total Pillarstone Capital REIT shareholders' equity | 3,805,000 | 3,822,000 |
Noncontrolling interest in subsidiary | 35,323,000 | 35,094,000 |
Total equity | 39,128,000 | 38,916,000 |
Total liabilities and equity | 57,506,000 | 57,583,000 |
Preferred A Shares | ||
Shareholders' Equity: | ||
Preferred stock | 3,000 | 3,000 |
Preferred C Shares | ||
Shareholders' Equity: | ||
Preferred stock | $ 2,000 | $ 2,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Common stock, authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, issued (in shares) | 695,214 | 695,214 |
Common stock, outstanding (in shares) | 657,084 | 657,084 |
Treasury stock (in shares) | 38,130 | 38,130 |
Property | $ 57,087 | $ 57,027 |
Accumulated depreciation | (8,861) | (8,754) |
Real Estate Investment Property, Net | 48,226 | 48,273 |
Cash and cash equivalents | 4,342 | 5,206 |
Escrows and utility deposits | 1,511 | 1,243 |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 1,412 | 1,260 |
Receivable due from related parties | 1,221 | 1,011 |
Unamortized lease commissions and deferred legal cost, net | 436 | 464 |
Prepaid expenses and other assets | 358 | 126 |
Assets | 57,506 | 57,583 |
Accounts payable and accrued expenses | 1,048 | 1,691 |
Accrued interest payable | 190 | 185 |
Tenants' security deposits | 803 | 827 |
Total liabilities | 18,378 | 18,667 |
Variable Interest Entity | ||
Property | 57,084 | 57,023 |
Accumulated depreciation | (8,858) | (8,751) |
Real Estate Investment Property, Net | 48,226 | 48,272 |
Cash and cash equivalents | 4,136 | 4,900 |
Escrows and utility deposits | 1,511 | 1,243 |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 1,257 | 1,104 |
Receivable due from related parties | 1,222 | 1,011 |
Unamortized lease commissions and deferred legal cost, net | 436 | 464 |
Prepaid expenses and other assets | 347 | 33 |
Assets | 57,135 | 57,027 |
Notes payable | 15,129 | 14,920 |
Accounts payable and accrued expenses | 803 | 1,483 |
Payable due to related party | 989 | 827 |
Accrued interest payable | 64 | 64 |
Tenants' security deposits | 803 | 827 |
Total liabilities | $ 17,788 | $ 18,121 |
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, authorized (in shares) | 300,000 | 300,000 |
Preferred stock, issued (in shares) | 231,944 | 231,944 |
Preferred stock, outstanding (in shares) | 231,944 | 231,944 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues [Abstract] | ||
Rental | $ 2,310 | $ 2,180 |
Transaction and other fees | 16 | 10 |
Total revenues | 2,326 | 2,190 |
Operating expenses | ||
Depreciation and amortization | 484 | 497 |
Operating and maintenance | 771 | 718 |
Real estate taxes | 328 | 409 |
General and administrative | 187 | 207 |
Management fees | 140 | 139 |
Total operating expenses | 1,910 | 1,970 |
Other expenses (income) | ||
Interest expense, net | 197 | 203 |
Total other expenses | 197 | 203 |
Income before income taxes | 219 | 17 |
Provision for income tax benefit (expense) | (7) | 7 |
Net income | 212 | 24 |
Less: Noncontrolling interest in subsidiary | 229 | 109 |
Net loss attributable to Common Shareholders | $ (17) | $ (85) |
Basic loss per Common Share: | ||
Net income (loss) available to Common Shareholders (usd per share) | $ (0.03) | $ (0.14) |
Diluted loss per Common Share: | ||
Net income (loss) available to Common Shareholders (usd per share) | $ (0.03) | $ (0.14) |
Weighted average number of Common Shares outstanding: | ||
Basic (shares) | 657,084 | 595,000 |
Diluted (shares) | 657,084 | 595,000 |
Rental | ||
Rental revenues | $ 2,018 | $ 2,042 |
Recoveries | 307 | 178 |
Bad debt | (15) | (40) |
Total rental | $ 2,310 | $ 2,180 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes In Equity (Deficit) (Unaudited) - USD ($) $ in Thousands | Total | Total Shareholders' Equity (Deficit) | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Cost of Shares Held in Treasury | Noncontrolling Interest | Preferred A SharesPreferred Shares | Preferred C SharesPreferred Shares |
Beginning balance at Dec. 31, 2020 | $ 38,442 | $ 4,081 | $ 6 | $ 28,494 | $ (23,623) | $ (801) | $ 34,361 | $ 3 | $ 2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation | 15 | 15 | 15 | ||||||
Net income (loss) | 24 | (85) | (85) | 109 | |||||
Ending balance at Mar. 31, 2021 | 38,481 | 4,011 | 6 | 28,509 | (23,708) | (801) | 34,470 | 3 | 2 |
Beginning balance at Dec. 31, 2021 | 38,916 | 3,822 | 7 | 28,493 | (23,882) | (801) | 35,094 | 3 | 2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | 212 | (17) | 0 | (17) | 229 | ||||
Ending balance at Mar. 31, 2022 | $ 39,128 | $ 3,805 | $ 7 | $ 28,493 | $ (23,899) | $ (801) | $ 35,323 | $ 3 | $ 2 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 212 | $ 24 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 484 | 497 |
Amortization of deferred loan costs | 7 | 7 |
Bad debt | 15 | 40 |
Share-based compensation | 0 | 15 |
Changes in operating assets and liabilities: | ||
Accrued rents and accounts receivable | (167) | (18) |
Receivable due from related party | (210) | 0 |
Escrows and utility deposits | (268) | 432 |
Unamortized lease commissions and deferred legal cost | (7) | (35) |
Prepaid expenses and other assets | 80 | (168) |
Accounts payable and accrued expenses | (638) | (1,417) |
Payable due to related party | 164 | 396 |
Tenants' security deposits | (24) | (31) |
Net cash provided provided by operating activities | (352) | (258) |
Cash flows from investing activities: | ||
Additions to real estate | (387) | (215) |
Net cash used in investing activities | (387) | (215) |
Cash flows from financing activities: | ||
Repayments of notes payable | (125) | (70) |
Net cash used in financing activities | (125) | (70) |
Net change in cash and cash equivalents | (864) | (543) |
Cash and cash equivalents at beginning of period | 5,206 | 5,109 |
Cash and cash equivalents at end of period | 4,342 | 4,566 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 190 | 197 |
Non cash investing activities: | ||
Disposal of fully depreciated real estate | 326 | 137 |
Financed insurance premium | $ 311 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
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 generally accepted accounting principles in the United States ("U.S. GAAP"), management, in preparation of our condensed 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 March 31, 2022 and December 31, 2021, and the reported amounts of revenues and expenses for the three months ended March 31, 2022 and 2021. Actual results could differ from those estimates. Significant estimates that we use include the estimated fair value of properties acquired, allowance for doubtful accounts, impairment, the estimated useful lives for depreciable and amortizable assets and costs, and deferred taxes and the related valuation allowance for deferred taxes. 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 March 31, 2022 and December 31, 2021 consisted of demand deposits at a commercial bank and a brokerage account. 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. 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 March 31, 2022. 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. We review the collectability of charges under our tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located, including the impact of the COVID-19 pandemic on tenants' businesses and financial condition. We recognize an adjustment to rental revenue if we deem it probable that the receivable will not be collected. Our review of collectability under our operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. As of March 31, 2022 and December 31, 2021, we had an allowance for uncollectible accounts of approximately $553,000 and $538,000, respectively. For the three months ended March 31, 2022 and 2021, we recorded an adjustment to rental revenue in the amount of approximately $15,000 and $40,000, respectively. For the three months ended March 31, 2022 and March 31, 2021 our adjustment to rental revenue included three and two cash basis tenants, respectively, resulting in an increase in bad debt of approximately $40,000. Unamortized Lease Commissions and Deferred Legal Cost. Leasing commissions and deferred legal cost are amortized using the straight-line method over the terms of the related lease agreements. 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. Prepaid expenses and Other assets . Prepaid expenses 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. Accordingly, we have reported noncontrolling interest in equity on the condensed consolidated balance sheets but separate from Pillarstone’s equity. On the condensed 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 noncancelable operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. For the three months ended March 31, 2022 and 2021 we did not have a straight-line rent reserve adjustment. 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. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We combine lease and nonlease components in lease contracts, which includes combining base rent and recoveries into a single line item, Rental , within the condensed consolidated statements of operations. We recognize lease termination fees in the year that the lease is terminated and collection of the fee is reasonably assured. Stock-based compensation . The Company accounts for stock-based compensation in accordance with ASC No. 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 No.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 asset and 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 condensed 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%. As of March 31, 2022, we had a net operating loss carry-forward of approximately $94,000, and as of March 31, 2022 and December 31, 2021, we had net deferred tax liabilities of approximately $31,000 and $36,000, respectively. Concentration of Risk. Substantially all of our revenues are obtained from office and warehouse locations in the Dallas 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 April 2020, the Financial Accounting Standards Board ("FASB") issued guidance on the application of Topic 842, relating to concessions being made by lessors in response to the COVID-19 pandemic. The guidance notes that it would be acceptable for entities to make an election to account for lease concessions relating to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed, even if such enforceable rights and obligations are not explicitly contained in the lease contract. Thus, for concessions relating to COVID-19, an entity would not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract, and would have the option to apply, or not to apply, the general lease modification guidance in Topic 842 as it stands. We have elected this option to account for lease concessions relating to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed. Therefore, such concessions are not accounted for as a lease modification under Topic 842. |
Accrued Rents and Accounts Rece
Accrued Rents and Accounts Receivable, Net | 3 Months Ended |
Mar. 31, 2022 | |
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): March 31, 2022 December 31, 2021 Tenant receivables $ 766 $ 733 Accrued rents and other recoveries 1,199 1,065 Allowance for doubtful accounts (553) (538) Total $ 1,412 $ 1,260 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | LEASES As a Lessor. All leases on our properties are classified as noncancelable 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, if applicable, 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 combine lease and nonlease components in lease contracts, which includes combining base rent, recoveries, and percentage rents into a single line item, Rental , within the condensed consolidated statements of operations. A summary of minimum future rents to be received (exclusive of renewals, tenant reimbursements, contingent rents, and collectability adjustments under Topic 842) under noncancelable operating leases in existence as of March 31, 2022 is as follows (in thousands): Years Ended December 31, Minimum Future Rents (1) 2022 (remaining) $ 5,036 2023 4,860 2024 3,052 2025 1,528 2026 915 Thereafter 299 Total $ 15,690 (1) These amounts do not reflect future rental revenues from the renewal or replacement of existing leases and exclude reimbursements of operating expenses and rental increases that are not fixed. |
Leases | LEASES As a Lessor. All leases on our properties are classified as noncancelable 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, if applicable, 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 combine lease and nonlease components in lease contracts, which includes combining base rent, recoveries, and percentage rents into a single line item, Rental , within the condensed consolidated statements of operations. A summary of minimum future rents to be received (exclusive of renewals, tenant reimbursements, contingent rents, and collectability adjustments under Topic 842) under noncancelable operating leases in existence as of March 31, 2022 is as follows (in thousands): Years Ended December 31, Minimum Future Rents (1) 2022 (remaining) $ 5,036 2023 4,860 2024 3,052 2025 1,528 2026 915 Thereafter 299 Total $ 15,690 (1) These amounts do not reflect future rental revenues from the renewal or replacement of existing leases and exclude reimbursements of operating expenses and rental increases that are not fixed. |
Unamortized Lease Commissions a
Unamortized Lease Commissions and Deferred Legal Cost, Net | 3 Months Ended |
Mar. 31, 2022 | |
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): March 31, 2022 December 31, 2021 Leasing commissions $ 1,338 $ 1,364 Deferred legal cost 12 12 Total cost 1,350 1,376 Less: leasing commissions accumulated amortization (902) (901) Less: deferred legal cost accumulated amortization (12) (11) Total cost, net of accumulated amortization $ 436 $ 464 |
Variable Interest Entity
Variable Interest Entity | 3 Months Ended |
Mar. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Variable Interest Entity | VARIABLE INTEREST ENTITYOn 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 the terms of the Contribution Agreement, 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”) that owned 14 real estate assets (the “Real Estate Assets” and, together with the Subsidiaries, the “Property”) for aggregate consideration of approximately $84 million, consisting of (1) 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 (2) the assumption of approximately $65.9 million of liabilities by Pillarstone OP. Pursuant to the Contribution Agreement, Pillarstone became the general partner of Pillarstone OP with an equity ownership interest in Pillarstone OP totaling approximately an 18.6% interest valued at $4.1 million as of the date of the Contribution 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 without the consent of a majority of the limited partners other than in connection with certain actions described therein. 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 Variable Interest Entity. 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. The carrying amounts and classification of certain assets and liabilities for Pillarstone OP in our condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 consists of the following (in thousands): March 31, 2022 December 31, 2021 (unaudited) Real estate assets, at cost Property $ 57,084 $ 57,023 Accumulated depreciation (8,858) (8,751) Total real estate assets 48,226 48,272 Cash and cash equivalents 4,136 4,900 Escrows and utility deposits 1,511 1,243 Accrued rents and accounts receivable, net of allowance for doubtful accounts 1,257 1,104 Receivable due from related party (1) 1,222 1,011 Unamortized lease commissions and deferred legal cost, net 436 464 Prepaid expenses and other assets 347 33 Total assets $ 57,135 $ 57,027 Liabilities Notes payable $ 15,129 $ 14,920 Accounts payable and accrued expenses 803 1,483 Payable due to related party 989 827 Accrued interest payable 64 64 Tenants' security deposits 803 827 Total liabilities $ 17,788 $ 18,121 (1) Excludes approximately $0.03 million in accounts receivable due from Pillarstone that was eliminated in consolidation as of March 31, 2022 and December 31, 2021. |
Real Estate
Real Estate | 3 Months Ended |
Mar. 31, 2022 | |
Real Estate [Abstract] | |
Real Estate | REAL ESTATE As of March 31, 2022, Pillarstone OP owned eight Real Estate Assets in the Dallas and Houston areas comprised of approximately 0.9 million square feet of gross leasable area. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Mortgages and other notes payable consist of the following (in thousands): Description March 31, 2022 December 31, 2021 Fixed rate notes $16.5 million 4.97% Note, due September 26, 2023 $ 14,890 $ 14,968 $0.3 million 3.15% Note, due December 28, 2022 280 — Total notes payable principal 15,170 14,968 Less deferred financing costs, net of accumulated amortization (41) (48) Total notes payable $ 15,129 $ 14,920 Our mortgage debt was collateralized by one operating property as of March 31, 2022 and December 31, 2021 with a net book value of $21.3 million. Our loan contains restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and is secured by a deed of trust on our property and the assignment of certain rents and leases associated with the property. Our loan is subject to customary covenants. During the period ending March 31, 2022, we also entered into an additional loan related to our commercial property insurance policy. As of March 31, 2022, we were in compliance with all loan covenants. Scheduled maturities of notes payable as of March 31, 2022 were as follows (in thousands): Year Amount Due 2022 (remaining) $ 511 2023 14,659 Total $ 15,170 |
Convertible Notes Payable - Rel
Convertible Notes Payable - Related Parties | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable - Related Parties | DEBT Mortgages and other notes payable consist of the following (in thousands): Description March 31, 2022 December 31, 2021 Fixed rate notes $16.5 million 4.97% Note, due September 26, 2023 $ 14,890 $ 14,968 $0.3 million 3.15% Note, due December 28, 2022 280 — Total notes payable principal 15,170 14,968 Less deferred financing costs, net of accumulated amortization (41) (48) Total notes payable $ 15,129 $ 14,920 Our mortgage debt was collateralized by one operating property as of March 31, 2022 and December 31, 2021 with a net book value of $21.3 million. Our loan contains restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and is secured by a deed of trust on our property and the assignment of certain rents and leases associated with the property. Our loan is subject to customary covenants. During the period ending March 31, 2022, we also entered into an additional loan related to our commercial property insurance policy. As of March 31, 2022, we were in compliance with all loan covenants. Scheduled maturities of notes payable as of March 31, 2022 were as follows (in thousands): Year Amount Due 2022 (remaining) $ 511 2023 14,659 Total $ 15,170 |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | EARNINGS (LOSS) PER SHARE The Company applies the guidance of ASC 260, "Earnings Per Share," for all periods presented herein. Net earnings (loss) 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 earnings per Common Share calculations for the three month periods ended March 31, 2022 and 2021. For the three month periods ended March 31, 2022 and 2021, Class A Preferred Shares and Class C Preferred Shares were not included in net loss per weighted average number of Common Share outstanding-diluted, because the effect of the conversion would be anti-dilutive. During the three month periods ended March 31, 2022 and 2021, the Company had $197,780 of convertible notes payable as discussed in Note 8. The convertible notes payable were not included in the computation of diluted loss per share for the three months ended March 31, 2022 and 2021 because the effect of the conversion would be anti-dilutive. Three Months Ended March 31, (in thousands, except share and per share data) 2022 2021 Numerator: Net loss attributable to common shareholders $ (17) $ (85) Denominator: Weighted average number of common shares - basic 657,084 595,000 Weighted average number of common shares - dilutive 657,084 595,000 Loss Per Share: Basic loss per common share: Net loss available to common shareholders $ (0.03) $ (0.14) Diluted loss per common share: Net loss available to common shareholders $ (0.03) $ (0.14) |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS On December 8, 2016, the Company entered into the Contribution Agreement with Whitestone OP, a related party, resulting in the contribution of an equity ownership interest in Pillarstone OP by the Company valued at $4,121,312 and representing approximately 18.6% of the outstanding equity in Pillarstone OP. The terms of the Contribution Agreement were determined through arm's-length negotiations and were recommended to the board of trustees by a special committee of the board of trustees consisting solely of disinterested trustees of the Company and approved by the full board. Pursuant to the Contribution Agreement, the Company agreed to file with the Securities and Exchange Commission (the "SEC") on or prior to June 8, 2018, a shelf registration statement to register for sale under the Securities Act of 1933, as amended, the issuance of the common shares in the Company that may be issued upon redemption of the OP Units issued pursuant to the Contribution Agreement and the offer and resale of such common shares by the holders thereof. In addition, pursuant to the Contribution Agreement, in the event of a Change of Control (as defined therein) of Whitestone, Pillarstone OP shall have the right, but not the obligation, to repurchase the OP Units issued thereunder from Whitestone OP at their initial issue price of $1.331 per OP Unit. Pillarstone and Whitestone agreed to extend the filing of the shelf registration statement to the date that the Company closes a public equity offering. 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 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 (2) 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 condensed consolidated statement of operations for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, Location of Revenue (Expense) 2022 2021 Rent Rental $ 192 $ 225 Property management fees Management fees (95) (94) Asset management fees Management fees (45) (45) Rent expense Office expenses (6) (4) Receivables due from and payables due to related parties consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands): Location of Receivable (Payable) March 31, 2022 December 31, 2021 Tenant receivables and other receivables Receivable due from related party $ 1,221 $ 1,011 Accrued interest due to related party Accrued interest payable (126) (121) Other payables due to related party Payable due to related party (1,010) (846) |
Incentive Equity Plan
Incentive Equity Plan | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Incentive Equity Plan | INCENTIVE EQUITY PLAN At the 2016 Annual Meeting of Shareholders, our shareholders approved the 2016 Equity Plan ("2016 Plan"). The 2016 Plan provides that awards may be made in Common Shares of the Company or units in the Company’s operating partnership, which may be converted into Common Shares. Subject to adjustment as provided by the terms of the 2016 Plan, the maximum aggregate number of Common Shares with respect to which awards may be granted under the 2016 Plan will be increased based on future issuances of Common Shares and units of the operating partnership, including issuances pursuant to the 2016 Plan, so that at any time the maximum number of shares that may be issued under the 2016 Plan shall equal 12.5% of the aggregate number of Common Shares and units of the operating partnership issued and outstanding (other than treasury shares and/or units issued to or held by the Company). The Management, Organization and Compensation Committee (the “Committee”) administers the 2016 Plan, except with respect to awards to non-employee trustees, for which the 2016 plan is administered by the board of trustees. Subject to the terms of the 2016 Plan, the Committee is authorized to select participants, determine the type and number of awards to be granted, determine and later amend (subject to certain limitations) the terms and conditions of any award, interpret and specify the rules and regulations relating to the 2016 Plan, and make all other determinations which may be necessary or desirable for the administration of the 2016 Plan. The 2016 Plan includes the types of awards for grants and types of financial performance measures. As of the three months ended March 31, 2022, the following shares are available for grant: Description Shares Available for grant at March 31, 2022 2,086,655 As of March 31, 2022 the Company did not recognize any stock-based compensation expense for trustee compensation. As of March 31, 2021 the Company recognized approximately $15,000 in employee stock-based compensation expense and did not recognize any stock-based compensation expense for trustee compensation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS During the first quarter of 2022, based on a legal review of the Pillarstone OP operating partnership agreement dated December 8, 2016, between Pillarstone, as general partner, and Whitestone OP, as limited partner, (the "Operating Partnership Agreement"), Pillarstone determined that its operating and administrative expenses should be reimbursed by Pillarstone OP on a historical and on-going basis. Accordingly, Pillarstone notified Whitestone OP, which manages Pillarstone OP's properties and provides the accounting function for both Pillarstone and Pillarstone OP, to transfer cash of $1,819,729 from Pillarstone OP to Pillarstone as reimbursement for Pillarstone's operating and administrative expenses for the years ended 2017 through 2021. In April 2022, Whitestone and Whitestone OP contested the expense reimbursement. Pillarstone and Pillarstone OP recorded the expense reimbursement of $1,819,729 with a reserve of $1,819,729 on each company’s separate books and records in the first quarter 2022 although these amounts are eliminated in the consolidated financial statements herein. The reserve was recorded due to Whitestone and Whitestone OP's contesting the expense reimbursement. Pillarstone intends to pursue the collection of the expense reimbursement from Pillarstone OP based on the provisions of the Operating Partnership Agreement. In April 2022, Pillarstone determined the expense reimbursement of $176,593 was due from Pillarstone OP for Pillarstone's operating and administrative expenses for the first quarter of 2022. Pillarstone OP transferred $117,186 to Pillarstone in May 2022. The difference of $59,407 between the expense reimbursement $176,593 and the cash transferred $117,186 are Pillarstone expenses contested by Whitestone and Whitestone OP. Pillarstone and Pillarstone OP recorded the expense reimbursement of $176,593 with an allowance of $59,407 on each company’s separate books and records in the first quarter 2022 although these amounts are eliminated in the consolidated financial statements herein. Pillarstone intends to pursue reimbursement of the contested expenses based on the provisions of the Operating Partnership Agreement. After Pillarstone notified Whitestone of the $1,819,729 expense reimbursement required from Pillarstone OP, Whitestone and Whitestone OP made a claim to Pillarstone and Pillarstone OP to be reimbursed for construction and lease commission expenditures of $1,425,972 paid by Whitestone OP on behalf of Pillarstone OP during 2017 and 2018. Pillarstone requested additional information for the $1,425,972 expenditures to determine if any of the items claimed should have been prorated between Pillarstone OP and Whitestone OP when the December 8, 2016 transaction occurred for Pillarstone OP’s acquisition of the Real Estate Assets. Whitestone OP is an 81.4% limited partner of Pillarstone OP and Pillarstone is the general partner owning the remaining 18.6% of Pillarstone OP. The $1,425,972 expenditures were recorded on Pillarstone OP in 2017 and 2018 as an increase in the Whitestone OP limited partner investment account and as assets of Pillarstone OP that have been depreciated and amortized to expense over their useful lives. The amount due Whitestone OP for these expenditures, if any, has not been determined. If Pillarstone OP reimburses any amounts to Whitestone OP, the payment would reduce the Whitestone OP limited partner investment account. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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 generally accepted accounting principles in the United States ("U.S. GAAP"), management, in preparation of our condensed 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 March 31, 2022 and December 31, 2021, and the reported amounts of revenues and expenses for the three months ended March 31, 2022 and 2021. Actual results could differ from those estimates. Significant estimates that we use include the estimated fair value of properties acquired, allowance for doubtful accounts, impairment, the estimated useful lives for depreciable and amortizable assets and costs, and deferred taxes and the related valuation allowance for deferred taxes. |
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 March 31, 2022 and December 31, 2021 consisted of demand deposits at a commercial bank and a brokerage account. 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. 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. We review the collectability of charges under our tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located, including the impact of the COVID-19 pandemic on tenants' businesses and financial condition. We recognize an adjustment to rental revenue if we deem it probable that the receivable will not be collected. Our review of collectability under our operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. |
Unamortized Lease Commissions | Unamortized Lease Commissions and Deferred Legal Cost. Leasing commissions and deferred legal cost are amortized using the straight-line method over the terms of the related lease agreements. 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 | Prepaid expenses and Other assets . Prepaid expenses 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. Accordingly, we have reported noncontrolling interest in equity on the condensed consolidated balance sheets but separate from Pillarstone’s equity. On the condensed 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 noncancelable operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. For the three months ended March 31, 2022 and 2021 we did not have a straight-line rent reserve adjustment. 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. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We combine lease and nonlease components in lease contracts, which includes combining base rent and recoveries into a single line item, Rental |
Stock-based compensation | Stock-based compensation . The Company accounts for stock-based compensation in accordance with ASC No. 718, "Compensation - Stock Compensation," |
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 asset and 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 condensed consolidated statements of operations and has not been separately stated due to its insignificance. |
Concentration of Risk | Concentration of Risk. Substantially all of our revenues are obtained from office and warehouse locations in the Dallas 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 April 2020, the Financial Accounting Standards Board ("FASB") issued guidance on the application of Topic 842, relating to concessions being made by lessors in response to the COVID-19 pandemic. The guidance notes that it would be acceptable for entities to make an election to account for lease concessions relating to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed, even if such enforceable rights and obligations are not explicitly contained in the lease contract. Thus, for concessions relating to COVID-19, an entity would not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract, and would have the option to apply, or not to apply, the general lease modification guidance in Topic 842 as it stands. We have elected this option to account for lease concessions relating to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed. Therefore, such concessions are not accounted for as a lease modification under Topic 842. |
Accrued Rents and Accounts Re_2
Accrued Rents and Accounts Receivable, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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): March 31, 2022 December 31, 2021 Tenant receivables $ 766 $ 733 Accrued rents and other recoveries 1,199 1,065 Allowance for doubtful accounts (553) (538) Total $ 1,412 $ 1,260 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of Minimum Future Rent Payments | A summary of minimum future rents to be received (exclusive of renewals, tenant reimbursements, contingent rents, and collectability adjustments under Topic 842) under noncancelable operating leases in existence as of March 31, 2022 is as follows (in thousands): Years Ended December 31, Minimum Future Rents (1) 2022 (remaining) $ 5,036 2023 4,860 2024 3,052 2025 1,528 2026 915 Thereafter 299 Total $ 15,690 (1) These amounts do not reflect future rental revenues from the renewal or replacement of existing leases and exclude reimbursements of operating expenses and rental increases that are not fixed. |
Unamortized Lease Commissions_2
Unamortized Lease Commissions and Deferred Legal Cost, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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): March 31, 2022 December 31, 2021 Leasing commissions $ 1,338 $ 1,364 Deferred legal cost 12 12 Total cost 1,350 1,376 Less: leasing commissions accumulated amortization (902) (901) Less: deferred legal cost accumulated amortization (12) (11) Total cost, net of accumulated amortization $ 436 $ 464 |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 consists of the following (in thousands): March 31, 2022 December 31, 2021 (unaudited) Real estate assets, at cost Property $ 57,084 $ 57,023 Accumulated depreciation (8,858) (8,751) Total real estate assets 48,226 48,272 Cash and cash equivalents 4,136 4,900 Escrows and utility deposits 1,511 1,243 Accrued rents and accounts receivable, net of allowance for doubtful accounts 1,257 1,104 Receivable due from related party (1) 1,222 1,011 Unamortized lease commissions and deferred legal cost, net 436 464 Prepaid expenses and other assets 347 33 Total assets $ 57,135 $ 57,027 Liabilities Notes payable $ 15,129 $ 14,920 Accounts payable and accrued expenses 803 1,483 Payable due to related party 989 827 Accrued interest payable 64 64 Tenants' security deposits 803 827 Total liabilities $ 17,788 $ 18,121 (1) Excludes approximately $0.03 million in accounts receivable due from Pillarstone that was eliminated in consolidation as of March 31, 2022 and December 31, 2021. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Mortgages and other notes payable consist of the following (in thousands): Description March 31, 2022 December 31, 2021 Fixed rate notes $16.5 million 4.97% Note, due September 26, 2023 $ 14,890 $ 14,968 $0.3 million 3.15% Note, due December 28, 2022 280 — Total notes payable principal 15,170 14,968 Less deferred financing costs, net of accumulated amortization (41) (48) Total notes payable $ 15,129 $ 14,920 |
Debt Maturity Schedule | Scheduled maturities of notes payable as of March 31, 2022 were as follows (in thousands): Year Amount Due 2022 (remaining) $ 511 2023 14,659 Total $ 15,170 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The convertible notes payable were not included in the computation of diluted loss per share for the three months ended March 31, 2022 and 2021 because the effect of the conversion would be anti-dilutive. Three Months Ended March 31, (in thousands, except share and per share data) 2022 2021 Numerator: Net loss attributable to common shareholders $ (17) $ (85) Denominator: Weighted average number of common shares - basic 657,084 595,000 Weighted average number of common shares - dilutive 657,084 595,000 Loss Per Share: Basic loss per common share: Net loss available to common shareholders $ (0.03) $ (0.14) Diluted loss per common share: Net loss available to common shareholders $ (0.03) $ (0.14) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following table presents the revenue and expenses with Whitestone included in our condensed consolidated statement of operations for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, Location of Revenue (Expense) 2022 2021 Rent Rental $ 192 $ 225 Property management fees Management fees (95) (94) Asset management fees Management fees (45) (45) Rent expense Office expenses (6) (4) Receivables due from and payables due to related parties consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands): Location of Receivable (Payable) March 31, 2022 December 31, 2021 Tenant receivables and other receivables Receivable due from related party $ 1,221 $ 1,011 Accrued interest due to related party Accrued interest payable (126) (121) Other payables due to related party Payable due to related party (1,010) (846) |
Incentive Equity Plan (Tables)
Incentive Equity Plan (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Schedule of Share-Based Incentive Plan Activity | As of the three months ended March 31, 2022, the following shares are available for grant: Description Shares Available for grant at March 31, 2022 2,086,655 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | ||
Mar. 31, 2022USD ($)tenant | Mar. 31, 2021USD ($)tenant | Dec. 31, 2021USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Impairment of real estate | $ 0 | ||
Allowance for doubtful accounts | 553,000 | $ 538,000 | |
Rental revenue adjustment | $ 15,000 | $ 40,000 | |
Uncertain tax position to be recognized based on maximum cumulative probability percentage | 50.00% | ||
Straight-line rent adjustments | $ 0 | $ 0 | |
Operating loss carry-forwards | 94,000 | ||
Deferred tax liabilities | $ 31,000 | $ 36,000 | |
Number of tenants | tenant | 3 | 2 | |
Rental revenue adjustment due to COVID-19 | $ 40,000 | $ 40,000 | |
Minimum | Building and Building Improvements | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Estimated useful lives | 5 years | ||
Maximum | Building and Building Improvements | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Estimated useful lives | 39 years |
Accrued Rents and Accounts Re_3
Accrued Rents and Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Tenant receivables | $ 766 | $ 733 |
Accrued rents and other recoveries | 1,199 | 1,065 |
Allowance for doubtful accounts | (553) | (538) |
Total | $ 1,412 | $ 1,260 |
Leases - Minimum Future Rent Pa
Leases - Minimum Future Rent Payments (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Leases [Abstract] | |
2021 (remaining) | $ 5,036 |
2022 | 4,860 |
2023 | 3,052 |
2024 | 1,528 |
2025 | 915 |
Thereafter | 299 |
Total | $ 15,690 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2022USD ($)ft² | Mar. 31, 2021USD ($) | Jun. 08, 2021ft² | |
Lessee, Lease, Description [Line Items] | |||
Gross leasable area (sqft.) | 900,000 | ||
2600 S. Gessner Road, Suite 555 Houston, Texas 77063 | |||
Lessee, Lease, Description [Line Items] | |||
Gross leasable area (sqft.) | 678 | ||
Operating lease cost | $ | $ 5,670 | $ 3,780 |
Unamortized Lease Commissions_3
Unamortized Lease Commissions and Deferred Legal Cost, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Leasing commissions | $ 1,338 | $ 1,364 |
Deferred legal cost | 12 | 12 |
Total cost | 1,350 | 1,376 |
Less: leasing commissions accumulated amortization | (902) | (901) |
Less: deferred legal cost accumulated amortization | (12) | (11) |
Total cost, net of accumulated amortization | $ 436 | $ 464 |
Variable Interest Entity - Narr
Variable Interest Entity - Narrative (Details) $ / shares in Units, $ in Millions | Mar. 31, 2022 | Dec. 08, 2016USD ($)subsidiaryproperty$ / shares |
Pillarstone OP | ||
Schedule of Equity Method Investments [Line Items] | ||
Conversion ratio, LTIP units to OP units (in shares) | 1 | |
Conversion ratio, OP units to common shares (in shares) | 1 | |
Whitestone | Variable Interest Entity | ||
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 | |
Whitestone | Pillarstone OP | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 18.60% | |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | $ 4.1 |
Variable Interest Entity - Sche
Variable Interest Entity - Schedules (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Schedule of Equity Method Investments [Line Items] | ||
Property | $ 57,087 | $ 57,027 |
Accumulated depreciation | (8,861) | (8,754) |
Total real estate assets | 48,226 | 48,273 |
Cash and cash equivalents | 4,342 | 5,206 |
Escrows and utility deposits | 1,511 | 1,243 |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 1,412 | 1,260 |
Receivable due from related parties | 1,221 | 1,011 |
Unamortized lease commissions and deferred legal cost, net | 436 | 464 |
Prepaid expenses and other assets | 358 | 126 |
Total assets | 57,506 | 57,583 |
Accounts payable and accrued expenses | 1,048 | 1,691 |
Accrued interest payable | 190 | 185 |
Tenants' security deposits | 803 | 827 |
Total liabilities | 18,378 | 18,667 |
Variable Interest Entity | ||
Schedule of Equity Method Investments [Line Items] | ||
Property | 57,084 | 57,023 |
Accumulated depreciation | (8,858) | (8,751) |
Total real estate assets | 48,226 | 48,272 |
Cash and cash equivalents | 4,136 | 4,900 |
Escrows and utility deposits | 1,511 | 1,243 |
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 1,257 | 1,104 |
Receivable due from related parties | 1,222 | 1,011 |
Unamortized lease commissions and deferred legal cost, net | 436 | 464 |
Prepaid expenses and other assets | 347 | 33 |
Total assets | 57,135 | 57,027 |
Notes payable | 15,129 | 14,920 |
Accounts payable and accrued expenses | 803 | 1,483 |
Payable due to related party | 989 | 827 |
Accrued interest payable | 64 | 64 |
Tenants' security deposits | 803 | 827 |
Total liabilities | 17,788 | 18,121 |
Accounts receivable related party | $ 30 | $ 30 |
Real Estate (Details)
Real Estate (Details) ft² in Millions | Mar. 31, 2022ft²property |
Real Estate [Abstract] | |
Number of real estate properties | property | 8 |
Gross leasable area (sqft.) | ft² | 0.9 |
Debt - Mortgages and Other Note
Debt - Mortgages and Other Notes Payable (Details) - Notes Payable - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Notes payable, gross | $ 15,170 | $ 14,968 |
Less deferred financing costs, net of accumulated amortization | (41) | (48) |
Total notes payable | 15,129 | 14,920 |
$16.5 million 4.97% Note, due September 26, 2023 | ||
Debt Instrument [Line Items] | ||
Notes payable, gross | 14,890 | 14,968 |
Debt Instrument, face amount | $ 16,500 | |
Stated interest rate | 4.97% | |
$0.3 million 3.15% Note, due December 28, 2022 | ||
Debt Instrument [Line Items] | ||
Notes payable, gross | $ 280 | $ 0 |
Debt Instrument, face amount | $ 300 | |
Stated interest rate | 3.15% |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Thousands | Mar. 31, 2022USD ($)property | Dec. 31, 2021USD ($)property |
Debt Instrument [Line Items] | ||
Number of real estate properties | property | 8 | |
Book value | $ | $ 57,087 | $ 57,027 |
Mortgage debt | ||
Debt Instrument [Line Items] | ||
Number of real estate properties | property | 1 | 1 |
Book value | $ | $ 21,300 | $ 21,300 |
Debt - Maturity Schedule (Detai
Debt - Maturity Schedule (Details) - Notes Payable - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
2022 (remaining) | $ 511 | |
2023 | 14,659 | |
Total | $ 15,170 | $ 14,968 |
Convertible Notes Payable - R_2
Convertible Notes Payable - Related Parties (Details Narrative) | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Nov. 20, 2015USD ($)trustee$ / shares |
Debt Instrument [Line Items] | |||
Convertible notes payable - related parties | $ 197,780 | $ 197,780 | |
Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Number of trustees | trustee | 5 | ||
Convertible notes payable - related parties | $ 197,780 | ||
Interest rate | 10.00% | ||
Conversion price (in dollars per share) | $ / shares | $ 1.331 | ||
Accrued interest due to related party | $ 126,000 | $ 121,000 |
Earnings (Loss) Per Share - Nar
Earnings (Loss) Per Share - Narrative (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Earnings Per Share [Abstract] | ||
Convertible notes payable - related parties | $ 197,780 | $ 197,780 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net loss attributable to common shareholders | $ (17) | $ (85) |
Weighted average number of common shares - basic (shares) | 657,084 | 595,000 |
Weighted average number of common shares - dilutive (shares) | 657,084 | 595,000 |
Basic loss per common share: | ||
Net loss available to common shareholders, basic (usd per share) | $ (0.03) | $ (0.14) |
Diluted loss per common share: | ||
Net loss available to common shareholders, diluted (usd per share) | $ (0.03) | $ (0.14) |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - Whitestone - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 08, 2016 | |
Related Party Transaction [Line Items] | ||
Consideration, limited partnership interest (in dollars per share) | $ 1.331 | |
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% | |
Pillarstone OP | ||
Related Party Transaction [Line Items] | ||
Accrued rents and accounts receivable, net of allowance for doubtful accounts | $ 4,121,312 | |
Ownership percentage | 18.60% |
Related Party Transactions - In
Related Party Transactions - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Asset management fees | $ (140) | $ (139) |
Rental | Whitestone | ||
Related Party Transaction [Line Items] | ||
Rent | 192 | 225 |
Management fees | Whitestone | ||
Related Party Transaction [Line Items] | ||
Property management fees | (95) | (94) |
Asset management fees | (45) | (45) |
Office expenses | Whitestone | ||
Related Party Transaction [Line Items] | ||
Rent expense | $ (6) | $ (4) |
Related Party Transactions - Ba
Related Party Transactions - Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Receivable due from related party | ||
Related Party Transaction [Line Items] | ||
Tenant receivables and other receivables | $ 1,221 | $ 1,011 |
Accrued interest payable | ||
Related Party Transaction [Line Items] | ||
Accrued interest due to related party | (126) | (121) |
Payable due to related party | ||
Related Party Transaction [Line Items] | ||
Other payables due to related party | $ (1,010) | $ (846) |
Incentive Equity Plan - Narrati
Incentive Equity Plan - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 15 | |
2016 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percent of total shares authorized | 12.50% |
Incentive Equity Plan - Schedul
Incentive Equity Plan - Schedule of Share-Based Incentive Plan Activity (Details) | Mar. 31, 2022shares |
2016 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Available for grant (in shares) | 2,086,655 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Apr. 30, 2022 | Mar. 31, 2022 | |
Limited Partner | Whitestone OP | ||
Subsequent Event [Line Items] | ||
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest | 81.40% | |
General Partner | Pillarstone | ||
Subsequent Event [Line Items] | ||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 18.60% | |
Operating and Administrative Expense For 2017 Through 2021 | ||
Subsequent Event [Line Items] | ||
Amounts of transaction | $ 1,819,729 | |
Subsequent Event | Expense Reimbursement For Operating and Administrative Expenses | ||
Subsequent Event [Line Items] | ||
Amounts of transaction | $ 117,186 | |
Subsequent Event | Pillarstone OP | Expense Reimbursement For Operating and Administrative Expenses | ||
Subsequent Event [Line Items] | ||
Amounts of transaction | 176,593 | |
Subsequent Event | Pillarstone OP | Contested Expense Reimbursements | ||
Subsequent Event [Line Items] | ||
Amounts of transaction | 59,407 | |
Subsequent Event | Whitestone and Whitestone OP | ||
Subsequent Event [Line Items] | ||
Reserve for contested amounts | 1,819,729 | |
Subsequent Event | Whitestone and Whitestone OP | Operating and Administrative Expense For 2017 Through 2021 | ||
Subsequent Event [Line Items] | ||
Expenses from transactions with related party | 1,819,729 | |
Subsequent Event | Whitestone and Whitestone OP | Construction And Lease Commission Expenditures | ||
Subsequent Event [Line Items] | ||
Expenses from transactions with related party | $ 1,425,972 |