WSR - Earnings call transcript Q4 2017

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Operator

Good day, and welcome to Whitestone REIT Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kevin Reed, Director of Investor Relations. Please go ahead.

Kevin Reed

Thank you, Mendy. you earnings Whitestone conference thank and fourth and XXXX full-year call. morning, for REIT's joining quarter Good

release Joining period of me it Holeman, on made may our important factors. today's Officer. Chairman no press be today's note during call those will includes website, Chief X, note with Please other Whitestone's and statements. and not as Officer; a obligation the also be Acknowledging number call been Company's information. this uncertainties and factors. Executive results including deemed refer recent to call and earnings time, filed historical available that some forward-looking with fact Dave to Whitestone's that the may to the supplemental March of date, The section. Relations Investor data these our only sensitive XXXX. Form in have financial a be our are call accurate filings on due press Financial differ the SEC, the XX-K and may and forward-looking Chief statements Company statements a Jim and information may materially and are release undertakes package update today's detailed the that time earnings whitestonereit.com, Mastandrea, this is of SEC for Actual Please from to that most quarter risks, description be fourth operating webcast for

release pass package reconciliations Included measures in GAAP to With financial of Company. and understand earnings financial position which Mastandrea. to me non-GAAP During the press the performance let we this we believe certain presentation, Jim better of and allow are investors reference that, measures, to may data call non-GAAP the measures. the supplemental the financial

James Mastandrea

occurring year our strong starting overview and will governance my highlight thank and with we At our joining and e-commerce went the initial asset performance, will create the public, corporate, continued for first XXXX. inherited from long-term within Company Dave It model, call. differentiated distribution provide the quarter our an generate of model, operational non-traded flow with XXXX grow our fourth team's the and discuss investors highlights one enhancements New and Kevin, we shareholders. strategy, for and us our remarks, business to performance, and York capital and financial of you, a listed on when I goals and with I profitable Exchange resistant the were take in created provide retail for all shareholders. Whitestone's an Whitestone disruption on compensation the structure. In Stock conference have system access made you time differentiated market on total cash was REIT return to the transparency full our to above Today, capitalizing e-commerce our Thank Great. that base our greater and an to resistant a stable the business goals

measure, and have three adopting end for the adding significant you leverage including through On expense. general of experience Xx more shareholders shopping structure In long-term for financial X guidelines total and proactive Xx ownership officers changes; practices for our public we the an annual strengthening of gender, new stay-on-pay, years. XXXX, ranked the our share X exceptional long-term independent trustees, corporate using closely out knowledge, adopting primary performance that goals as a total and our few for and backgrounds industry peers during debt and made have of to of include trustees aligning industry three goals shareholders XX interactions, XX ongoing provide relative with and XXXX. REITs me from our these several to and year, adopting return listing shareholder salaries a refreshing with highlights a by for Let administrative Number performance one frequency Whitestone Board diverse and basis compensation Number center governance return

XX% in million portfolio and completed $XXX XX.X% at to we XX% FFO We million redeveloped of made improvements growth of successfully XXXX. acquisitions XXX% to shareholders at million, our to properties. $XX XX We million. our achieving produced property dividend portfolio increased million NOI Turning occupancy by by basis We grew grew to of over over our operations Houston, revenues sugar core of $XX over we year-end. to achieving of in We XX% XXXX; $XXX We capital $XX in points, $XX million. year-end. and redistributed to operating occupancy occupancy by

full and support we slower add quarter purchased we investments will into enter property where rental and XX control result in than negatively We quarter that in properties Whitestone, we beyond. the allow a expect and with the previous quality in customer was fourth highest to XXXX, growth can NOI period, the same year which NOI increase leases with same-store seek fourth Our and made that we NOI value businesses and tenant's success in impacted properties hours XXXX At growth times. in best long-term that the stronger produce tenants inflationary neighborhood our to day. creating our us traffic rate in expenses structures by

drive reduce aided improved returns a our take differential evolve we to changing we the to to strategy, view cost. long-term shareholder economic and long-term and leverage and constantly energized environment. adapt G&A maintain overtime. result metrics expect our financial best-in-class to We approach as relative continue by and and the are Long-term, value to valuation We in expect that

then shorter future. and comment extensive Let that the entrepreneurial our looking strategy services at psychographics. find and success determine the that and restrictive tenant our centers, We entrepreneurial this We and that the provide replicated to we built are can strategically research the create the strive infrastructure of and to We our typically the our the downside workspaces X% living durations, allowing are the and on increase centers our tenant consumer processes limit necessary do porches, occupy the positioned respective successful. consumer properties. by Whitestone in those the to that and entertainment differentiated based a demographics big the also acquire further center surrounding leases at properties, front shorter community. of rental this optimize minimize capital people out which the us is to owners. culture communities be At tenants the behavior, box local to end in environment. missing, the on and relating leases an strategy X-year big rates tenants escalators. mix focus X-year properties of to of ensure with X% rooms, needs, and relative of meet focuses the communities well of rent the cost unique understand our boxes; inflationary is avoiding build drive on leases communities. include needs our do seek retail and me to We We We Whitestone service to the of typically community to structure and of the

cost the as are triple of our rising of risk passing leases our to Additionally, structured tenant. net most

in to us our innovative and our share dividends, appreciation. will investment the shareholders price ultimately, We in an form enable approach expect provide return attractive of in properties our that to

balance to As growth maximize risk-adjusted disciplined returns. stewards strive of we to your capital,

success. is to workforce our key talented Our

future our our estate performance culture Whitestone train to continue coupled with development executive real to scale and program, based leaders managers our through at profitably a business. We

markets. and of understand tenant, approximately now the Street on meet team X,XXX us vibrant, growing recognize focus We diverse estate local, of Wall numbering Our regional associates real is continues which on Street. attracting neighborhoods rapidly is than enables our it on that outstanding target Main to and in national cheaper needs

and the business Whitestone fundamentals model track to of learns market recognize more record this of as understand and added our We the expect performance. our change at value

because are produce forward-looking confident our $XXX in our have billion the able -- will since million demonstrate over grow our to IPO results ability XXXX. our did strategy to from been $X we portfolio We we future to outstanding

We navigated credit some facility in best XXXX structure, million that, company the with through including the of $XXX unsecured the the a solid Before we a capital recession. industry. built banks

introduced shareholders. With we our our dividends geographically e-commerce Phoenix, have Austin, adding I'm Worth, go trained to smart Successfully, of through that and and Fort are very leaders. Scottsdale We of beyond the highly diversified Antonio, executed business Chandler and Whitestone resistant Texas, the growth and capable to attractive paying high call Albert, model, Houston, experienced Dave? our turn Dallas, the while Dave going Mesa, and San markets to all, financials. to attractive over

David Holeman

It portfolio. our our X.X% Thanks, portfolio as and annualized Jim. our rent in to administrative in occupancy, an points by our improvement was highlighted increase of year, basis XX.X%. an portfolio in general in occupancy wholly-owned in total strong increase points XXXX was XXX our increasing by wholly-owned of XX of highlighted percentage operating a total X.X% basis with highlighted also and by We of revenue. total our expenses base a

new details $X.X million $XX.X driven full discuss or results. revenue let XX%, of me Now increased $XX the year of for and and year fourth same-stores. Revenue of million acquisition the some quarter by million the from from

by of same-stores. properties. X.X% million growth in new partnership the for in revenue $X.X prior XX.X% portfolio million $X.X driven increase wholly-owned the non-retail fourth same-store was from year in was consolidated revenues the Revenue Our or increased $XXX,XXX period. our our quarter from acquisitions The and X.X% over and for quarter revenue

new increased the to in The Our increase Fourth negatively these wholly approximately frequent, recognized non-retail same-store marketing was operating was and re-tenanting in and incurred year or income new acquisition. properties in same-stores. and was our X.X% transactions, happen. Same-store expenses driven property. impacted income period. non-recoverable X.X% non-retail Austin our portfolio, in and growth in X.X% primarily the do the revenue reductions our $X for of though partnership or partnership property by We're growth quarter million our quarter million not and quarter two non-retail market. Property was NOI for XX.X%, wholly the market $XXX,XXX and Property flat from our of to that expenditures prior-year growth revenue NOI owned of while NOI in over a million operating a We've same-store and properties. fourth partnership restaurants consolidated result $XX.X for our decline. net Dallas properties net from $XX.X X.X% consolidated decreased relating owned in $XXX,XXX Arizona flat our NOI XX% portfolio NOI owned consolidated million types wholly was experienced $X.X our by of acquisitions increased our

with adjusting For comparability wholly items. NOI quarter been the have in General X.X% owned fourth year these expenses flat were the for and for administrative same-store XXXX. purposes, our would growth

property value of QX owner, QX was related incurred in XXXX. while legal total XX.X% FFO the share protect properties, percent As it one from was XX.X% to cost by in to expenses, adjacent per well expenses the G&A, to with Included a dispute our improved approximately impacting where revenue, and a excluding of an acquisition to believe, protect our of centers. of spent money we one $X.XX, 'XX,

our XXX a at to On XX.X%. X% As end percentage XXX goals, administrative funds from core the XXXX increased core expenses as to in Funds or operations down we for At operations XX% from the XXXX. by $X.XX expect to from to of decrease communicated employees, year-end, per-share $X.XX general year had $X.XX. a from basis, to decreased $X.X million revenue. we continue and of

to the acquisitions. decreased details the interest core were the in per-share decrease in year-over-year some relates in $X.XX XXXX dilutive from non-retail contributed the upside dilutive earlier were a asset timing to to to XXXX, property. $X.XX timing incremental variable discussed the partnership the for XXXX quarter. $X.XX year-over-year. quarter, which dispositions in were from share of dilution $X.XX were We consolidated price. Core $X.XX have share in from and issuance equity of $X.XX. variable Positive XXXX dilutive developer XXXX on acquisition from Let purchase The the increase parcels included per basis. rate Both million share, fees the of $X.XX in XXXX in acquisitions $X.XX contributed a basis, XXXX our of by XXXX NOI to same-store per or were quarter of growth acquisitions The to from and Funds we on rate me XXXX for professional dilutive And $X.XX $X.XX $X.XX our disposition increase of half $X.X give the relating $X.XX was per property $X.XX $X.XX approximately dilution the had the XXXX. decrease on the from dilutive dilutive FFO legal rate quarter rate XX.X% operations to increased fees year-over-year. land

sheet. an balance $XXX our gross ago. of on book XX% minutes few year billion, million from assets on had a We increase spend total me let Now a or of estate a basis real $X.X

net of X%. unlevered cash approximately have annual operating return investment an on or of approximately assets on in-place $XX Our income million cash

Our with debt capital unit of structure property stock, structure one our underlying secured corporate remains and quite and simple a partnership unsecured maturity. operating combination of comprises well and Further, and level debt mix and a class of transparent laddered debt.

a weighted a availability of X.X availability Our support was X/X quarter, end fixed and approximately of credit future years. at flexibility our average of the weighted capital of million to million and the our facility structure end of term We us $XX remaining financial At the under debt quarter provides the of feature. with the average interest rate X.X% the of a had expansion $XXX growth.

to expect Xx. XXXX communicated goals, Xx ratio As over to debt-to-EBITDA to improve our in we

net We acquisitions asset of and generated from operating expect this increased and rates, from future disposition. income additional rising to occupancy structuring do rental

We continue wholly unencumbered unsecured undepreciated and structure to out debt cost million. of a properties an XX $XXX owned maintain largely properties XX basis with of our

During price $XX.XX of the shares per our share. offering issued under quarter, aftermarket XXX,XXX weighted program fourth a at average we

and Now for some assumption. our XXXX on the color underlying guidance

guidance our owned cost our acquisitions or of not professional reflects the the by XXXX the operational As dispositions, potential of assets. non-wholly future trustees capital the nomination consolidation and with non-retail of of proposed a recent include does reminder, shareholder portfolio a associated impact or

following $X.XX assumption. to the operations X.X% share share; per to growth accretive growth X% guidance. XXXX our Our wholly X.X% guidance Same-store to X.X% the to $X.XX core portfolio. range for total in same-store XXXX this of from reflects is funds owned in portfolio, per our to $X.XX guidance of $X.XX in is This

We increase same-store of into which an also built growth. our point is basis occupancy, the include XXX in total

to stock in resulting dilutive NAREIT per to and $X.XX with from reflect share. to Our lowering to $X.XX change per changes, cash of accretive $X.XX compensation. $X.XX compensation structure overall performance-based share a is to compensation compensation guidance an shift This by core FFO FFO

XX Our $X.XX point a this basis variable the debt; increase guidance rate also per includes dilutive an in share. of on our assumption is rate

are our point, and be on final with our your proven our execution strategy team highly a of about questions. and and will And now happy the As focused that, future. motivated take I is Jim confident to

Operator

with And go to first JMP we'll Germain Instructions] Securities. [Operator Mitch

James Mastandrea

there? are you Mitch,

Mitchell Germain

the are talk there? what So let's just if charges costs, just you costs, can onetime maybe What quickly about a are of some more this provide re-tenanting quarter. marketing little details

James Mastandrea

totally Sure. And quarter. as cost. toughness some do I quarter said, Mitch, to comparing in our business, But these in are unusual not provide they

So $XXX,XXX we to we items. we Austin had that in Dallas Two for to and replacing unusual we in quarter had are where new market, our our with restaurants wanted items compare Approximately, adjusting some positive that restaurants. believe, 'XX. Those quarter in line in revenue off straight with rent more some replaced positive reductions being writing and contribute writing-off portfolio, tenants receivable from balances. accounts from will we to the are restaurants for be two

was related in would quarter. that our be driving spent the nature, value income dollars tenants. those we were net centers to we So our advance we spent the one enhance properties expenses The additional discussed good properties, did non-recoverable our to marketing couple a the where thought to $XXX,XXX to reduced in communities. and we $XXX,XXX those. We by really in And in to so that's their operating traffic

Mitchell Germain

referenced you also were fees, legal-related some that then And --

James Mastandrea

you. Yes, thank

were that. $XXX,XXX $X.XX in doing impact We had that had develop did that But to and our able attempting to those legal also cost two of share. was the owner to included quarter related large we administrative per adjacent -- So property. property expense, were that were stop was and an to fees, our by related a XXX,XXX about we general we

Mitchell Germain

nonrecurring think So about if XXX,XXX-or-so what would as I going be are this, these forward, were all about of right? cost, characterized

James Mastandrea

say, meaningful would a point I it's I think, quarter-to-quarter, out. Mitch, of from comparability to those

a things I would kinds don't of happen period think over those time. I of wrong saying in be

think, nonrecurring. quarter. quarter characterize they would the them were versus totally of the But I not So impacting comparability I as definitely

Mitchell Germain

you. Got

So $X.XX? $X.XX I it's there, right about just have quantified down,

James Mastandrea

That's right.

Mitchell Germain

Okay.

if it? this to back last is quarter at XX, three out, XX, take if at the strip that So these you're quarter I way at items about XX, you think

James Mastandrea

about the to 'XX. That's correct. from QX way it QX comparability think purpose 'XX is to a That from

Mitchell Germain

Okay. that curious, acquisition And some just dilutive, guys I $X.XX the about the had I was think that you in said referenced. there were that you quarter know upside

this So about point? maybe just doing talk are how underwriting your centers at relative to those

James Mastandrea

in let in a centers on then give Boulevard of acquired and of Flight two on really cash may kind very well. two they on centers location total I'll then a market for Those leased. bright $XXX of the properties was price of XXX% add comments comments million. in end in the Plaza mid-X as XXXX Eldorado in well. those as and the And some in Sure. properties year, XXXX, purchase the the in high-quality acquired a as couple We Houston the in was performing we located going is, cash Dallas well. Jim Boulevard district. The acquired were range are

that of changing we one We've the addition owned those think, is short but be Plaza out, for are only on we time, We be expected. continue they very center will a and XX% as restaurant positive And doing to are great Eldorado period to those. leased.

And percentage rents. Mitch. We on have of are kicking in total of them three five restaurants, now a

$X which million in have one year, percent. is restaurant We foot $XX square paying almost does a that a

and percentage kick million lease, around now. They're we're is whole may you which we Foods hit They when the million, line on million in like. Airport go breakfast doing $XX We Foods which recall having $XX the things in working put will we retail is discussions with completed office. Dave in construction build the right them has of value. would the in to sales. to property there $XX we're And also to your front the rest right and at of to to the outside mass that additional Whole and begin a as have the the to on that square add stories the said, foods That Couple feet, right the then have rents to area, -- shading operator. for Whole all a area way about we and we're with And includes that widening Intercontinental sit and that two XXX,XXX ability is transit be that rooftop the door, when buffet no place it. have theater you on All and a other properties they will are when

looking have are several that be We there. office large to tenant

We and for LOIs everything infrastructure parking place of property. And that have on the the several all in is else.

very with we're Starbucks promising. we the property, drive-through. -- an there to In that's do Dallas, have working independent So

a are that Starbucks. with on We that, line State the from other opportunity we'll cost. an of to We ground with to to have a in comment program. at of be them adjacent are we do progress favorable which soon. tenants. continue they very Department, process in will Dave, now And think completed it, And an owners acquiring have adjacent first right that the have we our piece the of you want

David Holeman

so stand-alone on drive-through. El into a closed parcel that Actually, That's that land we're We had Dorado; looking just move that's parcel Starbucks to great. right. we at that

said, upside, as the upside Jim term then longer So those and from development opportunities. have of operations, both from

James Mastandrea

but that off oldest Kroger legacy We a had which sell of sale a we've continue non-core this square-foot the few had. now box. XX,XXX lingering We completed It on just add sold vacant gone. bucks I'd assets one it's assets. Belmont, of to made we And Mitch, is week that, it, the

the centers. we purifying So portfolio to community the really

Mitchell Germain

takes change talked -- Got perspective, just background you of maybe G&A more about in, the maybe I maybe and you bit you. and can your behind a that? provide know when, talk just quantified And a effect bit plan. now, guess, I But maybe about little a just a little guess, change to that the I

James Mastandrea

Sure.

David Holeman

Mitch, thanks. Sure

XX% a with communicated by percent to our goal around to of revenue as have expenses reduce a commitment We those long-term XXXX. X% G&A to

of of is XX%. enhancements structure we by compensation things compensation our Some our in we've in one stock the stocks made program of size programs, we about did overall the reduced the the

That's So a a included $X.XX stock roughly in the the to guidance tables from accretive from XXXX XXXX. walk reduction are FFO to and in comp.

was the approved we that shareholders, then plan number ever out reload our provision. by available shares and of also reduced in also, we the We green of took our

it's a of to and more some We have expect G&A cost business changes. we And in of committed remain lower continuing it as $X.XX efficiently we our of the assets. decrease increased year well continue overall, to the per from to the been $X.XX those But to for scale over share cash-based to comp. ways approximately next compensation do to G&A look base as operate larger a

Mitchell Germain

is increase way the the think to that the the is that return And on back of accrual the look on based of company, it? about

David Holeman

Say I'm Mitch, your not that I again, understand sure question?

Mitchell Germain

ultimately increase the how non-cash higher you based the return embedded that is are parameters in about but that on share in -- said comp that? the -- the the sorry, you think plan, mean, cash said do right. Is salaries comp, I some I

David Holeman

let Yes, question. that. clarify the for Thanks me

company to our as committee So, continue consultants as worked public we to -- look independent continue with a grow. obviously and evolve we compensation has

is things done at looked we've of measures. the One the performance

Jim On measure we the puts based think shareholder comp and I And -- the reduced relative cash we've us we then which stock very the shareholders. we've it in compensation. total a we mentioned shift side, return overall increased think is long-term important stock adopted with and alignment performance

decrease approximately will the X% metrics but in to X% it overall, be measures. shifting those So on based financial

of Our the NEOs based. structure compensation about XX% compensation is compensation at consultant total XX% performance overall looked the of for the and the to

James Mastandrea

provision through would we add that also XXXX for shares that let XX We was of XX.X%. reload that ran factor that. what the of a years, had to goals. XX.X% And put had earn Mitch, performance call management to a together outstanding which me plan allocated be That the for

that have that when approved would was no stock, X.X% and XXXX, At issued and our and So shares we versus for now our out into is the vote whenever by committee changed what shareholders. more feature. we it the compensation year, the go reload is of total last there we XX.X% pool took plan XX.X%

vote the that's increase Board has to when go So any to to to net. allocated, shares back then shareholders the

$X a billion, number there years, that the at in $XXX and So the established low million was significant should and that the so, call reduction base there was of company relatively kept recall, And a for do number they program XX.X% to was of in some comp shares incentives if of it's doing like shares. the at in tweaking taking level from that. the to I a were -- so and salaries what like you salaries reducing the of say founder's earlier, to over some

Operator

go We'll Thalmann. Ladenburg Instructions] [Operator John with next Massocca to

John Massocca

trading are, I where think earlier you your is I fund estate versus Street. just is sell you thought buyback Street today step; delever possibly mean, real think your Jim, on stock the assets said your where that or process there? the your really given why value Wall quicker on cheaper Main and a of not on of than kind asset

James Mastandrea

that? Dave, to you start want off

David Holeman

management team comments, opportunities off, into and Street for to and today interest a Yes, best there a will Street, our Board perspective, couple then Wall acting value to obviously, drive John, guess, it. our the to start and I Jim recognized give out enhance value. there a of shareholders. to and from obviously ways versus our Main possibilities shareholders are continue on all remain committed in discount of we at high-level and to of that I'll We look looking there's look the

James Mastandrea

And do regularly you near be we relatively the John, in all out lets future. on some and will look at making decisions And at. mention look things we

John Massocca

Okay. What Belmont? XQ rate was the on cap of sale

David Holeman

up. -- it It square John, property vacancy. for XX% about our so about foot I'm located in $X.X had million. Houston. catch XX,XXX So you didn't had sorry, center -- sold We it XX% Belmont was I was

think, meaningful, perspective, was in rate purchase operating cap a XXX,XXX a it from not probably net roughly $X.X I price. income So million annual on it's

John Massocca

similar less going guess, forward, more of a more kind more opportunistic kind are and of portfolio I really that of or fully activity? it in that is dispositions Okay, the that disposition to assets you, occupied management is kind

James Mastandrea

the John, off properties point, IPO. acquiring with a very we're small in started just late we getting to XXXX, where XXXX, starting

and where or to some of So point, began as properties we we just see bought on the to putting them have market the for the them on process, we're them sale. redevelopment come the those beginning market

For example, start decreasing is that IRRs know market look when properties every them you mathematically, a we putting to on consider our time sale. give example. when, at rate, it's the at when we we increasing one year, project the for I'll

a We boxes Phoenix in with store. have We particularly property property a grocery has couple of bought for Walmart million. that a that about $X.X

On broker the $XX cash flow, we have it for with somewhere around the -- listed million. with just had analyzed and

we things, $X.X publicly We REIT. that as significant now starting that But we to asset, of a increasing you'll relatively see, will million can roll a profit. that, great assets, out for smaller seems of that on revenues business. We're rate We sell. our like that a amount that's roll see on that the and just we in like small properties traded any off profit we make can to theme more off. it, like believe get make a Now these don't time we of an that

John Massocca

underperform continue then in for Any And wholly the to least going assets guidance at growth, be seems owned on what's like update Pillarstone. NOI solid the It going the for plan forward. properties the Understood. they're drag there pretty been your to that are there?

David Holeman

Yes, John.

that. be move $XX play retail and a to company So we continue back to to remain continuing as roughly pure Whitestone know, of Pillarstone you committed is million. in of investment XXXX, are The to we committed end to

deconsolidating being our to So committed impacting that, we and doing working we lowering investment to to committed our With and were that Pillarstone. it diluted in in that it's, while earnings, in 'XX. us doing is a are toward

John Massocca

bring and a would financials? assets is those But longer more another to of a to of strategy to capital -- it it on be no grow kind more selling where it's that partner a consolidated or Whitestone point trying nothing of and you're

James Mastandrea

it's on assured Sure, capitalizing those ready specifics, the are probably discussions -- with about not but not probably going Pillarstone, that we're all Whitestone to ownership. the can of talk that's

sales, We looking different we to at Whitestone's side, some debt ownership looking at and reduce asset options are the various Pillarstone. are

David Holeman

with we with Pillarstone. significant very And looking some work both significant are capital investors where we opportunities and in in who some Whitestone have private have in areas, to us

Operator

with We'll [ph] SunTrust. go Kibin Kim next to

Unidentified Analyst

and flow So FAB. my on focus cash is

XXXX So projection can you per give some share? guidance parameters for your on FAB

James Mastandrea

things year one of that, we've is guidance. done, Kevin, our try up. same-store and I lease around parameters With to the G&A growth, transparency into given expense, some a provide we've look XXXX additional think this

FAD provide have given We But data various AFFO and not calculating impacts We methods those that. FFO changes or you FFO have provided in core guidance our I think, not historically you FFO. calculated the But an of supplemental the measure. that impacting see the number. largely package on or FAD an that

Unidentified Analyst

because way at a very $X.XX, I, second Okay. of simplistic is question it. point this Well, your dividend looking of if

stock your I If FAD, calculate even share company core comp per the think you between look add FFO And back normal I to that. spread versus how

Still it at maybe dividend something pennies. $X.XX of XXXX, XXXX. a the or minus couple You to XX, closer in of than in bit lower, little are In $X.XX. plus probably lower payout

it guys, not cash at why the keep X.Xx is I flow? company levered at if level you issue Isn't the EBITDA. Your today mean, for by finding should an that is it dividend you you're

David Holeman

from rate constantly we team of drivers as the board, key well cash feel we confident Be increases leverage leasing as the from -- we think have our expect flow ability over increase the measures. do look those. and business we the always increase cash of look evaluate dividend absolutely to cash -- debt and upside ratio on the and have assured, at a to flow coming improving as G&A ability flow. management We on And the our that focused rental are years. and I and we in at payout -- we

James Mastandrea

time I analysis, when that And business I if Kevin, even think take you're very cover. I really runs dividend, we to pay that presumptuous not when reason that's we're I what and implying. close look being talk to to you you do and and no kind at think you building borrow management a able visit. to that some have of mean, we're think, precisely that you mean, are And should

If I track the you our six to going an and rate. in increasing keep our look record years, last at flow cash at increasing you're think, find

Unidentified Analyst

leverage right, a not be maybe little XXXX XXXX, are into XXXX longer-term. way I it or really like to those deliver end of target Capital comments easiest for But, pressure, the should the you in at sheet mean, the it's balance some if some to especially, Actual variability. seems rightsize are, covered. different story higher XXXX the and

why follow-up the guess, what looking are to I level? as keep So, is at a the that reasons are to at I to mean, you dividend Board, this the talk the

James Mastandrea

do. Because they spend more you time numbers looking than our at

David Holeman

a company, I great committed we dividend we're great committed guess from metrics which to a would -- business committed and improving say market. tried as we leverage, got got the we've ratio, assets, like just feel overtime to includes are we've flow, a payout I the mean got the I communicate we're say all -- cash that -- solid G&A financial I team, to of model we've I would we've that ratio, mean, things

and like do to place to make does and in cash management shareholders. So we feel team the And we that. at doing try have to seriously flow and and committed we execute team consist Board -- very look remain our for decisions the our those and dividend best things

Unidentified Analyst

Okay. in about coming XX% the around that, details due composition, that in what is assets much your if of -- have some basis? this terms retaining you how office of those those I And your lease at Could ABR year. explorations, level you is there? look XXXX question; of is what's or provide last confidence And

David Holeman

leases Historically, about amount that rolled we have year. our each of

our The almost rate think XXXX, XXXX our the about we below have renewals which average one is square of level on which rate in company. we feet I is coming blended in XXXX. leases about in the a executed million due $XX for is

and the no rate, without So, foot those a renew it's a square or blended and -- year, hard appropriate very very where tenant significant we've $XX at to XXX tenant leases rates. mature X.X increase concentration leases, is fairly the next rental small million or tenants have improve appropriate there obviously diverse though worked we base to

Unidentified Analyst

much explorations guess, to been, in I but see that of XX% know it's how supplemental I have hard be far whether this or a of that addressed so LOI? hard contracts

James Mastandrea

they ability to look to number. stay the we how their tenants, future look close if before businesses and businesses well, for renewals ability have XX-months -- understanding rental our -- that, a increase to are with out not the typically tenant. continue we space are doing, rates their lease their We we the improve even for of at very succeeding, are the to understand how don't and look I process begin

So looking secured. XX-months number leases of percent I on are out don't we're a for typically what have and you those

historically, very are number confident signed we've leases. We that on that, of

at I'm this was that shorter our square years. feet five have the about to one it what did with leases don't assuming I year, pretty look but you three If historically year are we done before we've typically close, million

Operator

Kemple We'll to Carol go Hilliard Lyons. next with

Carol Kemple

one of interest was there that of get the was earlier or listed those? think expected in those were I'm quarter Did of closed assets quarter. you what week. call assuming the on prices that lot had expecting kind one with all third that happened or one other the a you this not you the just million $XX later about at is fourth close mentioned of I the to you

David Holeman

was assets The one of Yes, million. for Belmont we did those little communicate under that. $X

of we recycle we dispose -- be hate timeline are but I We continue and under confident will other give to that negotiations able we properties a and the those capital. to to are that three have

the we changed So closed of. but a QX, are dispose little they from still we're nothing contract, to that bit, under the has except looking currently properties four timing of one

Carol Kemple

Okay.

three So under are the contract? other

David Holeman

I contract still couple a under expecting have moving are offers don't of complete negotiation, they have of talk on a assets. to we those -- are the they but dispositions actually are close. towards want where They we're to exactly or some but

Carol Kemple

any the how supplement, going and I And of noticed discussions far? your Okay. on you due in so looks started that it line is like Have XXXX. coming that credits then in

David Holeman

these a extension typical, period. That's line credits X-year of have a have. X-year We with life

We have begun discussions our with lenders.

one do with facility, of credit that. is, the we've years improved we've things over of able at looking the line know, the been to as significantly to quality that you the sure and our credit we've on that As terms of made match the portfolio the

market to of at year as doing are out that, that as used we the this the are great expect rates that far. of process discussions do begun far cap there discussions, looking and going been the so So have the value have properties, rates the we'd our to interest in

Operator

Riley next go we'll to FBR. Craig And B. with Kucera

Craig Kucera

rise in you've about built expectations of seen Could sort talk what you year-to-date debt the guidance? are into bad your

David Holeman

from our was year last the revenue, bad of year. X.X% expense debt for approximately So X.X% our up about

of similar We this into level are we have where built the guidance kind a to year.

are we tenants rate in bit that year. that is two -- talked see work related X.X%, X.X% tenants, about did of reduce our but with to debt the the the continuing and bad little fourth Part in the with but was So last we one re-tenanting is we of of increase a AR an work the quarter to expense. upside to the

in year. If debt little expense that we a X% see around you we've been X% or XX bad look but back, about did under this our historically bip increase

Craig Kucera

balance interest be philosophically on of think, given thought versus sort a is about in of now environment, your may -- this debt And even What debts? line year. Okay. rate given more a XX% beyond terming may out using line are be of I we your your sustained that right your more rising

David Holeman

Yes.

rising rate is operate first very well environment. to positioned So of a I think, all, really Whitestone interest well in

the then well to short the have. we move that interest the to With be debt rates the raise ability to rates. economy and about increase that talk performing leases our rental have to quickly I'll obviously the should we leases, Just in

many On portion larger probably the have variable of maintained side, others. a rate than little we the debt

is this that ratio laterring -- of paying goals in at but making we're sell to rates. down our we the think lowering sync to debt, commitment fixed Xx those some I to us will But sensitive potentially lower debt-to-EBITDA to at we of our long-term the to also point. at adding maintaining this more Xx to lowering some [ph] is of continue important leverage with as we're flexibility assets and look

James Mastandrea

when direction currently they work is things towards when the And we we'll it and a think one in. I other start are things that we credit getting look towards I think to at rating, change march seeing

Operator

follow-up a SunTrust. have Kim [ph] from We question with Kibin

Unidentified Analyst

activity fully modifications Our reflected early lease lease the supplemental? your modifications in or scheduling

James Mastandrea

we have question? lease your down, is the whereby modifications, the and lease early that adjusted or modifications, Lease up signed rate

Unidentified Analyst

Yes.

David Holeman

as months we When during the the there included what there if in those that's are we period, the to is report spreads, leases leasing a the in supplemental executed -- executed not the six renewal data out period.

Operator

to now closing [Operator additional Instructions] there at Mastandrea questions. turn remarks. conference back will the I any Jim time, no this And for are or further

James Mastandrea

we're and markets, and also today. remain in to flow team values to thank value. value continue and all been to get I the to the all Whitestone business you liquidity, them marketplace, have it. the business, got have and is the management is for shareholder, cash creates I'd we them understand stock we're employee your to about we've the want where particularly individual real really has shareholders estate the of that been even to close all fears I downside the starts up and you also to going from we've like you also It's I The from What Yes, the change times and it shoulder is to quarter you is well, and today portfolio great leadership for would increased and the just I of our of times, assure wake all. solid, company investment, call. our us XXXX with and thank want they're the it's bad heading, here from Board trying and so of I largest and they to year want every committed, to end with it your your I that it committed be your and that solid. single even when to like dividend particularly you you it's XX%, is assure and for course. relationships you shareholder is you here a good single understand know to in this both to creates equity without the analyst through company e-commerce in and or is I have thank right fears appreciate know visit the want and properties our and all we track protect sources private just fears off business joining of need I'd telling appreciating see of we know capital what you like our a credit confidence you the continued we we price them it's two that's the know cover done to model, to do record you. don't the of and thank up high price to conference for with chart We've in to what about your you that and in work fourth that coming Whitestone, woke Whitestone tell morning that position see then if the more this your do. is a and business you want banks properties on-track I our that shoulder seem evident today, us you you where that a risk; operator, joining quality this as to have understand we shareholders. on year talking resistant unfortunate. by are with them over exceptional, we to us. we're trying does, morning. publishing but creates purchased that to you about and most important better, company than And stock or with this

operator information informed today going just as With investment. I that, honest and and to to are to will shareholders say keep that entitled continue straightforward you to you I'm about we Finally, like your close.

Operator

Thank does today's participation. call. you for your This conclude

now disconnect. You may

Whitestone REIT (WSR) 2 Mar 182017 Q4 Earnings call transcript