WSR - Earnings call transcript Q4 2019

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Operator

Good day, and welcome to the Whitestone REIT Fourth Quarter and Full Year 2019 Earnings Conference Call. Today's conference is being recorded. With that, let me pass the call to Mr. Kevin Reed, Director of Investor Relations.

Kevin Reed

Thank you, Justin. you Whitestone's thank Earnings Quarter and Call. Conference morning, for Fourth joining XXXX Good

other today's time, with be risks, Jim deemed those Chief to February call and on earnings and a note to historical materially SEC, release made me accurate date, factors. recent Joining are a from are call Actual uncertainties XX, may this Officer; press note some to call number the it factors. most not Dave this a results of during be today's Please that differ of Form this Chief discussion and filings may Acknowledging time-sensitive Please only Mastandrea, is due and for Holeman, statements. the XX-Q refer also may Officer. information forward-looking including our that be XXXX. of and statements that fact Financial for and call Form important that Whitestone's as includes the of statements forward-looking these Executive Chairman XX-K our may webcast detailed company's period

with available The data release in earnings have SEC and and operating section. the no financial to the on are the our filed Relations Whitestone's website, press fourth Investor supplemental been and obligation company information. undertakes quarter package update www.whitestonereit.com

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

James Mastandrea

we Whitestone will progress you thank today. did joining there our us Thank XXXX, we since we're in predictable deliver got My and that remarks to Kevin, address how today going. Great. made results and where consistent for IPO financial you, all the has and

for good was excellence Whitestone. annual earnings yesterday. strategic while perform to on are guidance today We plan We did continue very our range to consistently than our better a focused on we and year remaining XXXX striving to shareholders. execute reached all successfully providing

to especially where Our who that stakeholders, and employees stakeholders are the our other connect begins a operate. force tenants to Whitestone our our communities commitment driving we our with

mix Our community tenant commitment revenues. value operate, values. creating to home business-packed and the our core Whitestone's and and our values driving with which development, in our our the are enhancement to and better including redevelopment transparent of properties, begins Through communities of tenants jobs, we

over efforts our were shopping As U.S. past has traditional a over compared few and of achieved result the of changed the all X of XXXX, which years, and the years significant retail past shareholders in and REIT over rewarded the #X retail, center ranking team, at return, our years. when the of properties Whitestone more the top to when public surrounding even year-end negatively our has impacted the commitment is ranking of long-term ranking shareholder This communities. significantly TSR, the owners

additional notable impact vacancies were and rent. The two reduced most

permits our and consumers, Know explicit to maintaining in on the our game avoid leased believe and while and real occurred decreasing transfer Whitestone's expenses from reducing are and operating of with the of as the net with to that us policy is closures as business covenants second, minimizing from value. First, store property today's focus that increases centers, the estate. triggered. well well our the control tenants stay And curve rent estate when as lower operating their the ahead income, This of vacancies covenants the operating has their control vacated, flow [indiscernible] retail were cash tenant real operating additional tenants we low landlord's attracting zero-sum the income. tenant vacancies financial tenants we policy as is impact landlord traditional and of benefits net

profitable value. tenant balance with closings, solid a statements, operating with We larger higher a store base completed of and minimal XXXX sheet, real a estate portfolio

share funded credit by the term the create; of of of of the debt the and facility year by our I'll in the of million expansion cash years and million. net properties, million received $XX.X noncore million, on in Whitestone resulting completion borrowing of proceeds improving annualized foot include our sales, reflecting per from inaugural of bond; a bond extending $XXX $X.XX the base our Other the we per with X issuance for flow and of $XX issuing XX-year successful reducing share of same-store the proceeds covenants: I'm corporate $XXX operating for value sorry, and sale to rent per Growth the X.X%, point sale property full for in of payment gain growth highlights net operating QX; income X.X% several dividends, from share -- year. of and X.X% $XX.XX, X another

expense reducing bps XX.X% revenue and to and debt-to-EBITDA of X.Xx. general administrative our XX in Improvement reception from to leverage our of X.Xx

create we an of homes our at are contiguous produced through that in XXXX addition the we continue operational which income, of in [indiscernible] In million we development strong million in value redevelopment increase high-growth approximately acquired. development property on to XXXX, From and resulted which markets investment. in $X.X redevelopment our return properties, to performance, invested $XX unlevered due with in to incremental eight operating of XX.X% net and properties own

$XXX a of with plan redevelopment will and $XXX income. we in $XXX will through approximately program development next that acquisitions. development Whitestone's total $XX operating years, as several the Over our million, operations, redevelopment and This additional incremental net and annual will portfolio current million. continue million to profitable invest growth our add million produce an of of been has aggregate investment approximately value value

We that exhibit cash-on-cash improved of spread operations, invested opportunities identified $XXX demographic operating acquisitions, and XX.X% acquisition to Since unlevered quality approximately in high net we XXXX, to our these market. to with return million off-market current XXXX properties. by have Whitestone's through growth X.X% plan making From development. acquisitions X.X% the grown continue we income similar from have XX redevelopment making and our and to

in the as of to sources judicious stewards and fund to multiple intend be these of expect And we capital. opportunities capital through past,

will Chief Officer, that, over With now our financial to greater turn results. I Clinical on present our detail Holeman, Dave it to operating Dave? and

David Holeman

our our remarks, Thanks, on Jim. progress will our goals provide In operating year quarter and efforts, details full my our our I and XXXX disposition balance acquisition results, guidance. on and and financial long-term fourth sheet,

I the few our more the Colinas Dallas Las newest later addition quarter, in provide details enhanced During management the and my overall stringent Village fourth will acquisition asset a quality on our of in we our market. through further assets of remarks. located

rent mix quarter per rent foot X.X% evidenced improve, leased XXXX. fourth operating continues Nick square tenant and annual annual growth $XX.XX, the our basis, same-store per grew of foot as NOI Additionally, income in and our quarter same-store from increase from net annual year the increased our base the square to to a ago. an by strong fourth On base for

below X.X% above/ fourth On same-store same-store amortization X.X% this reporting of the of Beginning increased lease for and full rent, are basis, we reporting our for NOI this to we are to in straight-line quarter. transparency rent, peers. our and Beginning period, with termination quarter, changing market NOI NOI, provide excluding this and the reporting definition year consistent fee. of same-store be the most of greater

including rent management. fee. embedded growth, our same-store increases leases, we rate growth same-store termination and renewal and guidance, reported and expense amortization above/below drivers rent primary new are occupancy lease in The rental to this and of of contractual XXXX straight-line market year increases, and levels from recovery Prior included rent,

our basis, same-store end for the annual the and was year, X.X% our guidance. XXXX quarter the which lower this increased Using for X.X% NOI at of

strong, an lease fourth value the of increase of volume was for quarter quarter for Our signed and total XX% renewal with XXXX. fourth leases very leasing the new versus in

square XX.X% lease spread The of an a a XX.X%, renewal in feet on strong new X.X% the basis feet. new years XXX,XXX and term representing quarter. were on and trends from signed Leasing XXX from was leases GAAP square leasing X.X GAAP blended a at signed on also XXX leases we quarter leases, weighted average leases size approximately basis XX.X% In the growing of renewal during and leases. XXXX, and renewal fourth new X,XXX very average

at which quarter was previous XX.X%, the the flat was total and year-end in relatively Our year-ago occupancy quarter.

basis General year. XX of and administrative to XX.X% of full XX QX expenses, in improvement points prior year, and as the for improved over revenue, a the an percentage XX.X%, basis were points

attributable For over interest prior to increased expense was the acquisition of X the year, debt weighted average and a for our our basis points. lower rate XXXX funding the of quarter, interest $XX,XXX

basis an weighted points. the increase increased year, For million average $X.X rate expense of interest XX our acquisition the as [indiscernible] full our in and a result of interest

Net $XX.X million Whitestone per share $X.XX to million or for income or attributable per year to the in share $XX.X REIT $X.XX compared XXXX. was

by million the quarter quarter per share $X.XX share NAREIT, the per compared of million in Funds or $X.X was from for operations, XXXX. as fourth $X.X or defined to $X.XX

fees compared definition in million core, NAREIT which or $X.XX FFO 'XX per $XX.X $X.XX share For in to the year, share was and to per $XX.X debt quarter in professional or fourth or $X.XX proxy share XXXX in extinguishment XXXX. the NAREIT share was noncash FFO XXXX. the early million per $XX contest and per were $XX.X application, stock million million only, or in adjusts XXXX costs, compared $X.XX

compared share operations $XX.X $XX.X million from or to share For the $X.XX the core full in million funds prior $X.XX per year, per or year. was

the for communicated our share fees As costs, from on fixing for on harvesting investment prior capital compared a by interest declined rate year higher the future value litigation greater driven property core opportunities, interest maturities. anticipated and year per funds percentage the operations providing higher to and created, recycled based debt legal and of the related previously, extending from disposition to

from year dispositions, acquisition. is by and property increased For per store of funds our XXXX operations from offset late the share from the declined a $X.XX quarter. quarter, same prior result NOI core This

the we improving While debt our made per reducing upgrading XXXX, share selective progress this core have through from decreased from structure year, including dispositions, believe operations through of funds the our and portfolio which our tenure for shareholders. all will G&A core our result a increasing our governance and larger rate value costs on leverage, creation fixing percentage in reducing the enhancing long-term debt, we

Now turn sheet. balance let our me to

assets ago, area. and estate existing of $XX end of year, the Our million acquisitions, were assets investments as total additional billion real $X.X year the development undepreciated leasable from of in a reflecting up

As of and a at as cash December year total XXXX, from with ago. debt, total our of a XX% end, million net market quarter improved XX% on $XXX real to million, hand percentage $XXX down from XX, our of debt estate capitalization

quarter, per aftermarket an average $XX.X we raised the During program. share, million of utilizing operating our price $XX.X at

XXX,XXX disposition, a now year. the located Platinum activity Village, development acquisition we play, Corridor, of strong our off-market Irving, leverage regional was give further and a upwardly couple equity area using community square team with Dallas' from with from acquisition, overhead very disposition operating young of an our in under center in manner ATM the Texas And positive platform professional me our comments proceeds foot completed for with mobile, North on the Dallas from December, our This required. debt program. credit in issuance a no Las facility demographics. and Let of our funded acquisition of brief scale In shares Colinas along will additional

that long-term disposition leverage million, pleased progress. of we sold regarding XXXX expenses, three the property improvement in have debt communicated report X.X% our we And am that front, cap and I in a for rate. to G&A On made representing Houston significant XXXX, late for noncore we $XX.X goal

XXXX the Our most XX.X% from G&A recent improved in of to have quarter. revenue XX% expenses in

debt-to-EBITDA leverage QX with the The to XXXX, acquisitions. is goal. with driver financing remain we much debt which but of our QX largest improvement recent acquisitions we most we in a In improve have from able progress, to down in the to as made XXXX. the side, lower X.Xx, X.Xx component, debt On committed were of not leverage did ratio

these pace to expect of on the in metrics We years. build improvement the key few next

our comments let me focusing end my outlook. on XXXX Now by

supplemental not our of operational and current future does market well include conditions, as events earnings acquisitions, as management's package. and impact development or the in Our capital guidance disposition unannounced This data impact earnings release guidance view the of or future of activity. referenced any reflects

of the to above/below $X.XX; in of average to growth, of of per net $X.XX X%, any range we final, to operations rent, for $X.XX are and XXXX core same-store X% of communicate of occupancy our $X.XX be share share $X.XX per per inclusive to to defined and of anticipate range As becomes guidance rent our amortization XX.X% all guidance interest operations as as funds estimate to assumptions by XXXX on from We plan the will in activities termination XX%, from share. of in update needed. and fees market NAREIT, to for be be straight-line funds income the the $X.XX average of X.X%. these to lease Key in and range debt

in have details provided XXXX from actual guidance walk data year-over-year on the our a expected further We supplemental to our package XXXX with changes. results

X/X the we quarterly first give a other into accounting don't the are that quarters. the highlight way we of would and I Although three our guidance quarter, the following fees professional basis, on -- like has given quarter typically first relative to higher the fact that to

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

Operator

Instructions]. [Operator

Our Kucera first question comes from B. FBR. Riley Craig with

Craig Kucera

how acquisition Las off sourced about initial cap to us Can Las start in the I talking transaction rate XXXX? the tell that by is be here what and Colinas I the to -- Colinas you you want wanted about talk first. expected to

David Holeman

touch cap on represented I'll I'll costs. occupied. the The let the asset on X% give our unlevered maybe implied about on time more and The then acquisition. sourcing yield the the XX% little was rate, a of Yes, of acquisition investment NOI Jim at detail

a higher a it So a rate than cap be rate at would cap stabilized that when obviously, from perspective, XX% it occupancy.

James Mastandrea

Dave. this. we our we Yes, number asset X something at have business perfectly myself, times Thanks, it than of and model into buy you including times, portfolio. like several looked probably Yes. this more come and Dallas factors into fits Craig, A the when into

team it's above in which portfolio The is it going occupied. performing cash-on-cash because maybe excellent above our XX%, Dallas also occupancy. But in X%. we X% of First we is an in have in upside that have that fact the all, certainly -- is

that regional this. them more so we like different properties And reward operations the by feeding

it upside, very additional So some into some about well parcels it. fits portfolio. to buy there's we're And think some our excited pretty We opportunity there.

Craig Kucera

Got it.

in it to probably sounds and pursue one, development like then So XXXX try job is longer term, immediate occupancy perhaps probably plan up those of to the some push opportunities?

James Mastandrea

That's correct.

And can to anywhere the good it's a integrate job occupancy. to the and there. the We see, on occupancy, and it focused a going as are but we're We're getting from buy into takes have pressure property, XX you X% always XX of on pretty you new that to operation, months it maybe upside occupied. doing when

that's So right. yes,

David Holeman

increasing as to property rates assets we leases on a We've rental on new I'll Las if come in push those do well we as via ability we'll realm also as have highlight well. as the the operate been rate well. to and were we able renewals of Colinas our business good job the our and model, if the other feel and like

months I XX think our leasing around spreads on renewals trailing for are XX%. the

James Mastandrea

say not It's get that. a listed that we one off-market. principally broker. other the into . auctions, -- straight up principal round, is things just of not In words, We would the don't a portfolio deal, into question note And none by additional don't final it's we get other I it's we usually a final buy bidding call circulated,

sometimes we've And were properties, it's buying most of in very the the broker time, found involved, not. that been how past. there's we out But and we a that's successful

David Holeman

other thing to I our insight One us it enable said really to like my I remarks, infrastructure. I'd Craig, in this does scale but think highlight,

and thoughts. having [indiscernible] [indiscernible] good Dallas very without in we team add to any Our additional is added the

continue aspects to like Colinas. we'll coverage and So G&A improve other acquisitions Las through the in

Craig Kucera

Pillarstone from but potentially not we point? you're your sold just given of take that, assets guidance or Okay. at remaining in could and marketing on currently that in eight it it be include those should any this doesn't recycled, just including commentary guidance, dispositions, you're And your away any

David Holeman

guidance the activities. I think of a to difficult it's from obviously predict of perspective, timing those kind

due we'll current our from of recycle acquisition in guidance But include take guidance our portfolio. difficulty we occur, to to just don't value perspective, those we our for going give asset continue that. update And guidance guidance. opportunity created So that to and obviously, -- activities if the will to as a based look We're we've we the on necessary. timing, in

James Mastandrea

And what when the creating to is that, to I'll the at great company. value that, of a add you're looking -- Craig, asset way net

some So looked going flow off, the see added that that see you'll and as the we it those that into, business. of that take gain more we we've and sell business to add to build added at to the very value. significant, our We're cash what is And model is, that's value. properties create

-- reduced, FFO downside the that sold his it it some because in away Now remarks, Dave took we which of mentioned we away reduced FFO. an reduced that is asset, take FFO how when

sensitive be. would very it balance So

Craig Kucera

it. me. And one Got more for

back counts in should year. we you again, year? assume bump guidance, the to be for Have that's share sort quarter? would appreciated. pretty issuance first here the Just been that, of the the healthy color circling the Any in there's ATM there have for active relatively -- average a throughout Or

David Holeman

full that's by under quarter we the impact Yes, largely I of the -- 'XX, during of think driven $XX.X ATM program. million sold fourth

for we year sold or will only partially think be for of million full XXXX, diluted it's that $XX 'XX, program. under about our fully the In I XXXX. ATM diluted

year driver, largest the kind dilution the of of stock diluted is brand, the from 'XX. the a long-term biggest also but effect the that's So of piece just ATM impact full

James Mastandrea

here which for also X-year activist first And we out a about if our just dealing favorably Whitestone very I comment acquisition it's we're is with through a since action Alright. for fees, excited second and cleaned a can the class which we went investor, on because last, we sabbatical -- shareholders.

strategy, about and growth track we're now that. back to we're judicious pretty continue So on excited

a something that find the some closing that firm comments we track shareholders time, of and that's and everyone been that stable for share is I all I really in think remind welcome. record doing we've starting to this I long that being up predictable. terms So before

Operator

further this will [Operator turn Mr. time, Instructions]. you. no over Mastandrea, are to I now back at conference And questions. there the

James Mastandrea

Thank you.

As And we've call staying we enjoy plan. look discipline for to always, investor to I really we're and sharing our us today. want and We to our true investors that joining thank these. on our our had knowing forward to success with you the

And you simply our forward will we goals want all clear say serving As broad am in did we stakeholders. this of whose to I I year as on shareholders, committed year. -- look hopefully, through I tenants, owners, clear my shoulders, and are hands you you than XXXX, that our all they and, to know us better that objectives and to to to as list serving believe to our our employees putting be be last of serving

I'll and Dave to we'll free you if make and we always, questions like thank that that, Thank any or do would own. happy properties call would say say available. I any see as me much. and And have very you you a you credit, very much, ourselves you of please on give or With feel so be to any to

Operator

thank does conclude a you Have thank your for do We conference. wonderful Well, day. That participation. you. today's

Whitestone REIT (WSR) 27 Feb 202019 Q4 Earnings call transcript