WSR - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Whitestone REIT Third Quarter 2019 Earnings Conference Call.

As a reminder, today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Kevin Reed. Please go ahead sir.

Kevin Reed

Shaite. you, Thank thank XXXX and joining REIT's Whitestone Good conference you call. quarter earnings third morning for

Joining today's filings factors. our earnings Chief during be Executive forward-looking Please me deemed number Chairman that Whitestone's this Officer; Form our of on and these and note other a results historical and press call call including are forward-looking. are statements Dave and company's statements risks, factors. the Actual Holeman, to Please the some due Chief those to most not Officer. from XX-Q Mastandrea, Financial made Jim materially may detailed and differ refer SEC, for with release discussion uncertainties recent a may of

webcast third to is filed includes only earnings company with time, obligation been for a Acknowledging Investor on XX, undertakes and fact be operating release that the have date the and our quarter press SEC period October also this no in are The update call to financial XXXX. package be Relations it note time-sensitive the www.whitestonereit.com supplemental available information. and that information of data website, today's accurate may the that this section. as may important Whitestone's of call

performance GAAP supplemental release we non-GAAP of financial the we presentation, press allow and are may the company. to reference this earnings believe During financial package, Included the and refer may of measures. which understand the non-GAAP position measures financial we -- in measures, certain investors data better reconciliations to

call to With Jim that, Mastandrea. the let me pass

Jim Mastandrea

Whitestone's shares Investors produced SNL of the estate This as quarter our for Whitestone all of our estate of a total joining Index, XXXX, XXXX against to our directly Yes. on they have period. own nine-year history. its real returned Thank you, for has you August and growth hedge real thank compares REIT Center conference if time Since call. all in these Kevin, own which directly attributes inflation. third return Shopping XXX%. IPO and a income, the provided same XXX% over shareholders throughout us

data with some illustrate five me years. Let the from last

$XXX We million in distributing have provided income over dividends.

provided exceed increases have income. hedge million. by net growth with of compounded a approximately five-year against net we grown a built annual have Whitestone's And X.X% into net triple Over averaging have rate property X% inflation high-quality XX% over -- for provided this operating to solid continued to million and annual annual index. inflation income leases property that $XX We operating an rent period has properties base of $XX

has annual during $XX the Our period dividend same million. grown by approximately

With record that like for and why highlight track Whitestone. background, provide history a to I our reasons four bright future would

the First increasing of nine for fourfold income property of and growth, we Since revenue, have our operating run. drivers over foremost, sustained estate to long net we times years $XXX $XX invested had million. over IPO, to approximately a X.X XXXX our and real key million

calling to over has $X.X been price. and higher our In market many the equity real stock This estate times is our what million grown has billion $XXX a are based capitalization time value grown estimated $X.X on today's than billion, to frame, X times the growth same accomplished today X valuation has retail which almost apocalypse. during market implied

quarter XXX our third progress second We accomplishments to quarter XX.X%. are and continued occupancy XXXX, the basis points our from the During noticeable. of improved

two per We newly to increased a XX and ABR months assets. The grew of X.X% square the respectively. rental year-over-year developed GAAP leases X.X% XXX% rates to $XX.XX. basis. lease-up X% we foot over signed And We renewal completed trailing on our

who Foods that with are and nationally once revenue Starbucks, their recognized national as tenants local communities local primarily provide invest in like Whole tenants. entrepreneurial retailers, and services we tenants exalted growth Safeways, Second, profiles not credit to with

those Now face challenges. many of significant tenants

retail Whitestone's the estate portfolio REIT. traditional real concurrent is through

examples, tend Research a of have are service already fighting all total XX,XXX to of XXXX could companies. September that recorded end national, report tenants, XXXX. will and exceeded on the XXXX closures to according line by retailers store today not U.S. stay consumer announced of hardline come retailers from closures product soft These Coresight primarily the to by in and closures focus reach XXXX for good we apparel soft As relevant. Store

the and local service-based a By to meet to locations the right take Whitestone's mix and is as focus needs. right improving the in the high-growth drive resistance center to quality continue contrast, craft markets revenues, to right serve -- of Whitestone's to entrepreneurs. e-commerce on strive we make the tenants consumers' community primarily We consumer approach we meet

shareholder $XXX per square foot, been approximately record cost markets. replacement by Whitestone's track bolstered a returns within industry-leading of construction or our total acquisitions have at cost total off-market of our $X exceptional acquisition below billion, well

and timed, having analyzed with properties well-located well most substantial components. of our acquisitions value-add a been carefully Our we're have

example, the the operating we have annual is in who XXXX decreases that over seen This higher most XXXX time made today. XX retail an As contrast acquisitions period. properties income same XX% is net to and of between owners of

residual to cost, accomplished land in mix with market of little right the acquired rates. vacant at needs grasping of existing consumer the spaces acquisitions of and by through tenants lease-up surrounding our meet no the sites or tenant renewals increase Whitestone's at value the property community of development and we and of initial the is strategically pad many on

XXXX, annual in returns with pad Chandler completion that XX.X% which Arizona, a and multi-tenant Recent XXX% $XXXXXX lease-up include of the on net example return pad annual site produce an on pad completion will cost of total developments of income site investments. Arizona of Anthem a site unlevered at in one operating multi-tenant is generating similar

same approach we pad our incremental period achieve Whitestone's property as our the value exemplify embedded minimized the examples developments of over and pays time analysis successful from investment. also returns portfolio portfolio has These off on double-digit risk. and added extract strategic

of mortar, future is focused is through Land, opportunities Trace, redevelopment at bricks an including in located are robust Williams our additional and in patient the tenant base value strategy the operations acquisition have Sugar within located site portfolio, out Place In area Whitestone's pad that Galleria pipeline our and include; BLVD we unlocking which we a and Plaza accretive opportunities just on Kentwood remain in and current opportunities expansion invest development active our as existing the few. to there, are disciplined. Third,

powder capital from of sales. down million the And profitably value-add opportunities. example, subsequent all third to and quarter, dry finally, providing debt, $XX.X An recycling paid some non-core related assets sold we this asset of for additional

real profitability disciplined in stay the for to course maximize the approach estate which is and long investing run to plan, value to our on the company. of decisions our shareholder make strategic Fourth, is

our stated and acquisitions long-term we developing include, redeveloping improving and reducing and leverage, revenue parcels have before, and As making goals accretive expense land. dispositions, general and our administrative ratio, out to

Whitestone really at for enjoy is discipline they're is together And exciting from that over has decade. they The an result the really what's exceptional a that team been what doing.

nine talented, that that performance and diverse currently a we employee them We a with dedicated long-term As have to and goals. is and based strong years. the our workplace to dedicated people culture is further to remain talented fundamental future we've leaders. become excelled achieving developing By development team, a differing hire our vision, past creating belief backgrounds to prospectus and that a over

we've and like that to fact provide a would income remain In plan in closing, leader we with but so, committed a dividend In inflation. XXX say strive in a months, to want and industry. growth I to to monthly to shareholders been for against business we consecutive our our become doing hedge continue paying

that, turn over With call to I'll the Dave.

Dave Holeman

I'm happy financial operating our on details Jim. quarter to more and few Thanks, year-to-date results. provide a and third

third overall our quality the assets. enhanced the quarter, further of we During

evidenced quarter. Additionally, increases base tenant improve our rent and to per the in occupancy by foot mix annual continues second to in compared square our

square X% second composite X% annual a our $XX.XX sequentially base foot the leased Our rent occupancy from X% total to from year sequentially XXXX. increased from QX, and increased per and ago quarter average

Let our activity. in me discuss detail now greater leasing

square at X.X an signed renewal million During average average had quarter, total X,XXX of new representing leases an value. and $XX.X years. in lease XXX,XXX an size of feet, the we feet These term third leases, XX

of a of square XX.X% to -- and in amount in footage XXXX result leased properties strategy, a the markets, foot compared have increase As achieved we leasing team, XXXX. our

comprised Our increase from for GAAP new leases. composite allowed leasing spread us and overall on QX. for X.X% of positive, of a X% trailing X.X% X.X% XX-month to our are an occupancy basis leasing increase robust a activity to XX.X%, expand renewals This

$X.XX in REIT net compared per $X.X $X.X to income or sales, per for XXXX. income share per gain $X.XX $X.XX share in million quarter to approximately amount. $X.X share the Whitestone in attributable the the from asset or contributing third share million was to per Net million XXXX XXXX was Included quarter

the or $X.XX million gain per Net or per in nine million share. months income approximately $X.X per in from was XXXX. number share, for attributable approximately Included nine-month to XXXX sales, share $X.X asset million was Whitestone $X.XX incremental $XX representing compared the REIT to $X.XX

was to share from $X.XX $XX.X $X.XX compared quarter for per million operations NAREIT, share the funds or million $X.X or in per XXXX.

per or from For to $XX.X XXXX. $XX.X the $X.XX share funds nine million compared or NAREIT, share operations million $X.XX months, per was in

in or $XX.X just or professional which and from the million compared $X.XX share quarter or share funds fees $X.XX from contest stock is non-cash for core, XXXX. to NAREIT expense million proxy $XX Funds compensation per operations operations was per

property nine primary in or for the assets to months $XX.X million funds our properties share million equity per Core in the funds or million estate compared per dispositions partnerships. real million in Operations nine from $XX.X $X.XX per from to share. $XX.X months wholly-owned For $X.XX were investment reasons the for $XX.X was $X.XXX Core and owned of in decline quarter Operations compared share the our The of and

operating for in litigation Property a XXXX and higher higher million and the to interest extending $XX greater related period million fixing for income, million will interest $XX.X operating months. on maturities. I quarter driven the rate nine same compared and nine detail percentage net of same-store debt to which legal as net $XX.X our later discuss the my by greater XXXX to in fees cost Our was compared million the months as the income for XXXX for in $XX.X remarks

attributable both to property periods was for decrease primarily dispositions. The

period nine income same-store XXXX. of a XXXX occupancy change compared net in between to the quarter largely X.X% a down net quarter the positive Our September The growth same in was basis same-store for XXX the operating for of the a in reduction as operating September of point X.XX% is XXXX. for months our income result and and

occupancy proactive While our re-tenanting of much with are decrease in operators. year-over-year stronger the performance disappointed comes we from

short-term somewhat levels We ultimately results more occupancy increases long-term revenue actions quality attractive and will that higher higher while believe greater negative NOIs. in these rent and producing to result vendors

$XXX,XXX higher from to the and the of compensation were higher expenses the quarter primarily expense in fees an administrative the than prior expected continue fees and In non-cash adjacent stock legal with general incurred. and legal the timing XXXX. balance relate are property of owner year higher The through litigation to quarter

be We in expect expense with stock the QX consistent noncash compensation QX. to

and improvement million expenses year months primarily the administrative from basis revenue professional for to of decreased XX.X% year full the XXXX. For general and a improved points in from have nine advisory the $X.X as XX.X% was in XXXX. for XXXX. XX to expenses expenses the nine and months percentage The relative General administrative lower

X% $XXX,XXX year, from average a a an was increase For expense ago. as our result over our interest interest in up primarily quarter, year the to rate prior of X.X% the

end subject average rate the X.X and rates our quarter a remaining weighted of a weighted with As average years. X.X% XX% of of fixed of is the debt to term of

balance turn me our sheet. let Now, to

$X.XX the development $XX estate up is areas. leasable real additional quarter. year reflecting total assets a in This Our ago million billion of assets and as investments the end were existing from of of

fourth XX% capitalization. debt, As total the $XX.X will properties market in quarter. pay which real reduce debt to debt completed we in further partnership. Subsequent leverage to million Proceeds or our estate were $XXX quarter down quarter-end, of million used owned estate non-core of our sale equity the was investment of our end, total of real

XXX,XXX utilizing common average shares offering at-the-market our During we judiciously the at quarter, $XX.XX price of issued an program.

turn Lastly, me let our outlook for to XXXX.

sales our We annual income Core and reaffirming guidance. asset quarter previously our are per issued the reflect net and guidance we share FFO to gain FFO are increasing on post

be I with to take And questions. Jim now and will that your happy

Operator

first Thank Germain JMP go Instructions] our Securities. from you from now take ahead. Mitch We'll Please [Operator question

is line Your open.

Mitch Germain

the it And of of much how a much pad earnings? Good morning. in the of How curious, that I'm be was developments how stabilized. income recognized gets that should expect in recognized staggering there the from we to were like quarter?

Dave Holeman

Mitch. Thanks, Sure.

lease-up and square development the completed both two we of pads. XXXX were stated, about we As Those pads feet.

a beyond dollars incremental the in hundred of was probably thousand think quarter. current of annually contribution I reflected what kind the be couple should

Mitch Germain

about curious you're got for? consider Great. you've at? should the Any mix, think I'm acquisition in about that I'd looking said I that color grateful considering properties how we of Jim the types curious some activity you market that pipeline. I'm really be you're

Jim Mastandrea

Sure, contract to make accretive we're and markets return Mitch. -- really We're We company. that a to Great on our the good overall properties another. LOI in. overall stage the that we're at looking already they're in one rates us for -- investment. stage in And really cap them give for

managers markets each in of What's are added related they about these so have because solid in we already regional great cost our overhead expansions our we existing of that no potential regions. have deals is really

Mitch Germain

guess, guys is I about particularly curious And if strategy the more of part I've before sell well? non-core. me. as for for question Last to desire mentioned going forward that you my I'm Right.

Dave Holeman

Yes.

an we a clearly can strategy the get those of to where is recycle. of I value-add there are the and own great look we company to feel think in value maximize our look sell to like as to to continue we properties assets investment

we'll if capital the to more and at look acquisitions. evaluate use portfolio of determine to accretive continue our for the can put and and recycle So assets use we

Mitch Germain

Thank you.

Dave Holeman

Thank you, Mitch.

Operator

We'll you. Riley now question our from FBR. go Please ahead. next Kucera from Thank B. take Craig

Craig Kucera

or Were anything the good any led that reduction you to initiatives the executed guys. talk same-store Can that about you Hey, pool? decline? operating specific in expenses cost morning, the in there

Dave Holeman

Thanks, me Yes, flip let Sure. and reference. there Craig.

things part of continuing the is a do of we what manage the one obviously So we is big do to expenses.

to our operating always expenses So And property tied we able and expenses well taxes. as then scale we've our as been well. grown, have focused the we've leverage our on as for valuations. lowest We tax as

rate perspective we've some is things contracts. consolidating a from could the those of of a done by to we one get into So lower where maintenance enter look contracts maybe

revenues, a at there's in company only So properties. manage lease-up consolidated but is in focus continue not levels expense to the our to drive the

us an nothing continued just go So but that really should you forward. to as we focus continue do overall specific see

Craig Kucera

those as the office assets far industrial subsequent or sold as And great. Okay, both? were or maybe that dispositions to quarter-end, were

Dave Holeman

market. Three There like properties were kind the in of so plex. three properties plex located Houston, in Houston industrial

Craig Kucera

it. Got

Jim Mastandrea

with And off related properties debt to I those - all paid the was the sale.

now remaining -- free So clear. there there are and fleet assets

Craig Kucera

through any you considered had have assets you redevelopment Great. process? some the potentially on Or what those buyer And have expecting that do? I Was know to kind opportunity. that planning color they're of on do going to

Dave Holeman

very disposition. to Yes, with what really We getting of I going of the buyer to on the right them. any assets, We sales the rate think with know we at fully assets kind our do obviously time. X.X% went with market don't were pleased is a those cap price

those So fully we're to not buyer what of with do intends aware the assets.

Craig Kucera

in may earlier, but more on with strategic of kind those versus be touched for you is additional those to this assets pricing types markets sales of other pursue decisions maybe And Pillarstone? that you Texas Okay. likely strong enough

Dave Holeman

our investment We which -- Pillarstone in an so real partnership. estate Whitestone has is

focus We continue beyond have expect away our over our that Whitestone non-core partnership. to sales the community and from and that continues accomplished portfolio and our focus investment move to properties through time retail retail on those reducing centers. We to asset in our

Craig Kucera

lease you quarter certainly Okay, particularly the more had markets and that for or side. Were a in there leasing pretty concentrated leasing great. it renewal on which pickup Yes, in One growth me. broad-based? pretty was was any the strong

Jim Mastandrea

that, regions. two that most properties day. We doing every large how addressing. holes them have Overall, in approach We and or a of were address terms or really one leasing say we're We've is by region. region in our covered it one shift two I'd slight made the it we of we that

level. the at to shifted And doing the of general beginning corporate a on year, it we

because we single on to really leasing every morning relating that call televised and is call leasing. working deals and a a a they're the on have start one the it's momentum approach to on So now unified week get to a really person and

Craig Kucera

Okay. Thanks.

Operator

queue are like now in Please Instructions] to the no Jim back Mastandrea. time. the go [Operator this call at There questions pass I'd ahead. to

Jim Mastandrea

to are and Well we conclusion you, my going you It's say been Thank all following interest to us really I'm brief a make we that operator. Whitestone. company company build. of an have exciting an just appreciate and fun and in

set on execute we're to that and great really happening that Well know in accomplish to that you course things future want early of lot are we goals in a will we staying to the XXXX. the extraordinarily forward successfully. our I we And just And looking are long-term out calls optimistic we're company.

us you our for So XXXX call. much very thank third conference on joining quarter

Operator

your this Ladies for you Thank and call. concludes gentlemen today's participation.

now may disconnect. You

Whitestone REIT (WSR) 31 Oct 192019 Q3 Earnings call transcript