WSR - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to Whitestone REIT’s Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, that this conference is being recorded. turn Relations. over I’ll Director David time, Investor of this the to conference Mordy, At Mr. may you Mordy, begin.

David Mordy

And Whitestone XXXX REIT’s morning. second Good thank quarter earnings you conference for joining call.

number call the our page reference will to Dave second XXXX will over slides quarter this Officer. with this to also website, Chief update like forward-looking Executive today’s Scott may that August uncertainties time, and Chief quarter may company Company’s website be are due historical the Actual have during these most and of Financial for obligation no published that we afternoon risks, financial webcast be of is supplemental may undertakes SEC and statements that statements. filings Dave turn Executive today and of this XX-K to refer on throughout other Operating period Investor X, and note, Hogan, now call information. results and filed discussion Please XXXX. data call important note deemed I’d Whitestone materially in statements Relations me also section. date, Whitestone’s Mastandrea, to call Chief forward-looking call. to earnings on Holeman, with factors. Joining for release from a on factors. www.whitestonereit.com, a as Acknowledging that only the recent includes been may earnings including this it second and today’s and draw Holeman, to and the operating Chief accurate some detailed Please Form Officer; investor SEC the the Officer. fact call attention numbers yesterday Christine XX-Q Officer; not those I our The are be news of fact to differ information news available package release made time-sensitive a are this the our that

Dave Holeman

joining for earnings thank will Good slide you, call. I David. on And Whitestone’s begin conference XXXX second Thank you morning. quarter two. number

and $X.XX continued in quarter Versus strong associated revenue We’re pleased of by leasing operating announce FFO for another spaces of XX%, total per income quarter points second over results, our financial quarter. driven XXXX, from is XXX same-store basis the XX.X%, per $X.XX, to basis from first net grew and our XX share operating centers up activity. and increased share demand up from occupancy is points QX XXXX X%, to the up

a Christine effective quarter, up the base As $XX.XX, of net first rent and continues sheet up as in quarter. our by over have from the strong to leasing lower were X% of end and nearly X% ratio the year shown leasing of from I’ll annual was our our second X.X times ago square foot her strengthen net Total debt with leverage, section. debt-to-EBITDAre per very balance second improvement spreads And quarter XXXX further the to discuss

produce of Our high results. based growth, income, centers high in and Sunbelt located strategy necessity improving markets to continues community designing strong household

taken we’ve to successful I big I’ve the the some steps shared six some over of of quarter points another wanted last the over of Given positive results, calls. conference the last several discuss months. focus

debt expenses, and governance, and our grown our outreach team, enhanced have investor reducing while per leverage. interaction, our improve strengthened our meaningfully leadership We increased XX% overhead share FFO

delivering teamwork, growth, on work, industry. our am value. long-term business our to dedicated in real the to estate reach a We and integrity and meet in hard lead communities, honored Our of to create value our I share executing and team dedicated their success of associates purpose better tenants and value anyone position needs to team our commercial model than shareholder to a common

environment the been over for consistent. is showcase Our that right we the and a Whitestone strategy place had believe in stronger strategy. never clear has decade to has strategy and

current First geographic Sunbelt. in our capable household local and of the the centers embraced something high our have is This local top markets industry one neighborhoods important, is placed in-house including company, our throughout find centers. where well real recently high Board. centers, neighborhood Corner the strategy on team, and and sharpshooters and the of utilized on our This and understood relentlessly of brings focus, type we’re neighborhoods located acquisitions by great Vice been is always property base. The terms our build new is leasing redevelopment some our we on, estate into product growth I on to has morphing recently by in income and to track to they who to strategy XX% mention by I centers to focus behind in increased opportunities by area. meet located centers in leasable joined best contracts, beyond how strong have tenants very our necessity-based in retail to wanted the also been of team, engrained This centers the demands walking strategy strengthening team importance strategy But value this Christine way portfolio value This a is tenants strategic improvements grow, tenants in years our is the AmREIT. through our the and our to our designed our successful service-oriented similar opting surrounding markets, relationships over in of with shorter even MSA embraced XX couple of additions and we the first. and tenant recently a has with are finally, roles our Ng Fifth by Tim eager fastest for our Tim expand to in and to income adding most President today team growing of strategy belief validated the the the excited rightfully embedded around well has our in more communities. him our cycle. traffic located their know has we in as in attract development development is of experience, on choose focus benefiting submarkets detail specifically knows the our leases, connection write of have properties consistency, as the of a I’ll in agents Acquisitions because strategy through our and communities geographic of strategy, surrounding tremendous meeting leasing find additional have crafting of growth record needs. the from for And pursued through of levels.

Whitestone our Amy newest be want also great Whitestone. Feng I welcome Board sourcing efforts For disposition focused our the new to to he of member, balance and on will for XXXX, the acquisitions portfolio.

things of Board. depth an side Christine. has providing in to of number through communications to of counsel strategic several part to as we have our are our leading significant independent Amy strengthening infrastructure of internet at having leading our increasing is And the As Amy sell Shopify, the we’re time markets for her our on businesses continued Amy hundreds Board. and a same Board in we currently addition on for Director her provider thrilled trustees many and of time join turn companies experience over spent of knowledge, analyst She the of tremendous brings the essential that, strategic focus financial I’ll and Relations governance, on with. with capital Investor her the firms. work

Christine Mastandrea

Thanks, Dave.

are tenant for leveraging new continue changes, team’s now the higher occupancy, points mentioned strengths year we’ve results. One at is than basis in of grow record XX.X% continued positive last which XX.X% positive our to our we’ve were Since who our a quarter Dave made strong the prior XXX and XX earlier, relationships produce to Whitestone. second and over is leasing spreads XX.X%, Aggregate months. the the

demand the were have and and XX.X% have XX.X% XX our over we trailing Renewal the on that the quarter behind second decade in second New in these service to from to customers, cannot smaller qualitative leasing online few the XX.X% that grown emerging positions spreads square with combined reasons ever over optimized slide are us increase, foot increased for leasing and critical by trailing have three XX quarter well up The leasing last and pursued impressive the months. solely depict are strategy range, spreads expanded XXXX in XX.X% replaced continues an months. our that over spaces strategy. especially to a necessity spreads and presence benefit brick-and-mortar the last years the be trends been more convenience, primarily, the

with sticky in a casual are restaurants Second, coming significant fitness category. a seeing we demand both the generational strong a of a category, Demand strengthened, uptick strong This trend, their for sizes, of drivers. a for Gen and and the traffic Z spending which are convenience seeing continues millennials in restaurant in strengthens, influence may to this post-pandemic higher be larger brands a rebound and variety demand. as income numerous shift a has is of percentage but groups space we are think in part

number reaching the rents and the of a specific collect as our versus MSA. within centers allows we of slide in optimize of our rents. Importantly, occupancy, metropolitan statistical the best our tenants which that by their within for levels to we higher average location four, metros, we us show evidenced premium are On areas, are each each

below base each of that immediate specifics in of financial crisis targeted the in aftermath Phoenix, neighborhoods key Looking XXXX cost. at replacement centers metro, the and acquire the well in the we and our

north centers where majority locations or been retail location both gained Scottsdale from in the off the at able western focus the relocations, and from In zip we has have strength. were to from strategic that District Antonio, gains the a of outsized San traffic fastest the the very the suburbs. before growth Houston, Galleria, prime magnets these we’re driven Our are educated the well talent growing cities known our in are and main reason coastal premier attracting cities in investors suburbs in the due have which we early corporate comes of paid out job employers. Often Dallas, within as among In northern with in In in migration really codes Uptown NOI is cities, tune East because Valley Austin purchased the and we’re country. located of relocations centers. state on district and concentrations affluent secure for to our in

unmet invest also rebranding In to out adding blue phases. street overall offerings the illustrate an it’s their basis year, bars acquisition, services across between variability need new increasing foot example location spend prime well. the the shortly base And money straight out acquisition the the designed educational as accelerating anchor different and is Most in the centers the XXXX, we On inner had shows in areas the hardworking at as offerings new acquisition is renewal the as Looking we as portfolio occupancy some the increases dessert are need tenants sandwiched for attracted parents grown had and takes occupancy that the young our a same-store thereafter, per the with line slide. tents, property. closing with more casual rapidly out addition Lakeside as green time just line around and Kohl’s a that moving over to which to the of general through well bottom in of we’re fact square with with opening an same XX%, trend while identity. of of rent dining over rents as right, affordable are recently, time. with that In families chart down over a go. sized is in properties, and five, rent coming dynamics have for rates of the average this as with young the a fitness which of use that we was an attracted just the The HEB shadow seek slide they rent new XX%. Added demand XXXX and kids, for lifecycle pandemic. The strongly children the together. we market, us in a market making Lakeside families ring conjunction Lakeside to Lakeside we developed limited

the for time takes of refining and of the process join to in the short And path strong properties of a to order this will planning Achieving three in sites We take XX% of property I’ll and this Lakeside phase. refining to cycle. tie go center for Often I’d dedicated sales our cycle, that morning commuters surrounding reports our over occupancy our trained Here the to businesses the is over detail. their level, years with the driving two part heavily team property as roughly years within of endure XX%. more Once any well monitored take to by economic developing the several all to in and years phase we and reach commitment thriving the well. are with through Scott an a further advantage anticipate likely customers. within tenants strengthens that to referencing but the neighborhood thank strongly make has a like will improvement that results things that, in team to and over communities, results turn still with

Scott Hogan

you, Christine. Thank

As six, you for for can the NAREIT $X.XX see versus the share operations $X.XX period same per on in slide from funds quarter was diluted XXXX.

XXXX that drivers regarding notice FFO. we have shared our will You

compensation in and modest very continue As well, driving in have is the opportunities Dave up late most future year. core which quarters. impactful business in QX impactful management and Reduction our is be Christine to Development shared driver and be may a will doing in occupancy rents. was base the

an guidance loss continues was on a increasing on $XXX Earnings year net XX% refinance sheet. estate XXXX greater which within to million, majority our improving assumption XXXX. the our improvement few our ratio and We clarity we from expense. contains months, versus Our interest future will provide book expense XXXX maturities strengthening growth to balance with our debt-to-gross interest us will the XX% ago. debt to next of anticipate contribute Total and real

this pleased We we we in on made strengthening in progress commitment significant balance steadfast with our sheets area. and are our the remain have

non-recurring XX% fully of for to guidance our includes FFO for $X.XX guidance. versus to previous the $X.XX, amount wrap forfeitures share XXXX. This unit $X.XX I would share annualized $X.XX dividend $X.XX increase quarter. the a then common and and quarter, and XX% dividend representing approved share range previously from per To XXXX from reaffirm second severance stock per of diluted a an quarterly Board representing is XX.X% Our issued the of from increase like to OP up, costs to expected first level.

changed. will related assumptions please have not key now With lines. Our that, to the open Operator, guidance the take questions. we

Operator

proceed line Instructions] question from Securities. you. Thank our is first you. questions. Mitch Please with with And JMP Thank Germain of [Operator your the

Mitch Germain

the with different Thank you. financials, lease discussions regards security having in curious, terms Is I’m changed your to I you’re requiring the you’re there or anything more tenants? with anything negotiation? for deposit guess, requirement of

Christine Mastandrea

But is as lease business to -- something and opportunity revisit that for see what I think an I Well, so sticking this keeping shorter and of benefited their it because inflation we’re still they’re impact them thanks looking for terms, and lease starting at, your also to they’re because terms. the question. think company they’re asking terms that’s longer a well, gives with us their as lease

they not they it’s have. at they who -- some as understand business, operations quality engaged clients this how focus items, changed other a we into under have their We those That look well their current what of involves ago. are, we understand deeper an are. on COVID. their in the how security additional cash, operate, their commitment their it’s years they to the product It’s just to financials, I that look and Regarding really business their vendors, strengthened, to did they teams of our but stickiness quality financials, have how -- well what line their our revenue a mean, focus that’s the of looking primarily kind two resources of how and a what’s about the not metrics of And of how I owner think, involved during just the now.

efforts the So some it’s on those of off. paid team and and their refocused we’ve the that things are

Dave Holeman

Mitch. Christine’s a obviously, said very just to I’ll things seen, add continue just highlight, to just she and And couple It’s Dave. Hey, on comments revenue. that’d to focus successful. quality be have we

on and If a activity, leasing XX.X% as basis quarter leasing you well leasing point with X% very GAAP on just at being as starting trending look this spreads well, a basis. our they’re our spreads, a

to activity centers, on the activities revenue. in pleased really in really leasing the pleased really focus continuing levels we’re So with our lock and a seeing with quality

Mitch Germain

Great. Question significantly results guidance. same-store, on the have been above obviously,

you slowdown the -- guidance? view conservative in a are backyard taking you implying with just If your your are regards a potentially to or

Scott Hogan

Scott. the It’s Thanks for question.

first occupancy of the improved of the see ended our with I the we were to we we think got year year, half end since. we the higher to leasing, because of the in -- yield COVID up results, record collections, the we year the to recovery by same-store expected to a part and back quarters, time time the and by the got to few first still mode the and from started

think with -- it results. I to XXXX than XXXX just do it’s do to has does with So more it

Mitch Germain

Got assets if part Is the back you. are and what And there then about discussions? what’s on status be of are, -- thinking what’s sales market there in of asset the I -- year? status the the should any there the

Dave Holeman

Yeah.

previously, year. that do market. we have this We assets communicated hitting as recycling we handful to do expect of some the So a are

So of dispositions than $XX less been in million I think targeted kind somewhere and we’ve acquisitions.

actively and recycling that about market a are that sourcing of come We to in deals dispositions the for that handful potential amount those. we’re on up

think the to quarters. more forward report in to and I having next we’re on potentially So look couple track

Mitch Germain

Thank you.

Operator

Thank you. The next question…

Dave Holeman

Mitch. Thanks,

Operator

Gaurav of Next your question with Please proceed with comes from EF Mehta the line Hutton. question.

Gaurav Mehta

morning. Good you. Thank

are on provide can the your market? guys what seeing on in on comment maybe some up transactions, sourcing color potential you Following acquisition you

Dave Holeman

Yeah. Dave. is This Gaurav. morning, Good

search our to markets look that of and part our relationships. is asset, some -- sellers assets of type different we’re widely little Whitestone still for on through in So fairly between buyers a cap a a seeing tend softening But rate it’s are we’re we early, seeing expectations. marketed. our decent for little has the gap and obviously, what We are looked But depth always we’re of pricing.

So into in have it’s capital, for of a type where think Whitestone at into that greater -- probably little that’s get further we we’re is of as to now, tending in little the maybe area a process. a I could an visibility look we’ll a attractive. asset, right But asset get that smaller price

So right comment. whole to not now a lot we’re seeing opportunities, probably but more

we line. along get further So the

Gaurav Mehta

sell, you’re the talk expectations on you about that the happen be? to -- that can to And trying for your assets Okay. you

Dave Holeman

question? can Gaurav, sorry, at I the repeat you that lost I’m end. you

Gaurav Mehta

in those the hold assets guys to you talk for be as well? assets the about sell expecting can Maybe planning you you would what joint that venture, you

Dave Holeman

Yeah.

-- talking Whitestone are properties liquidating non-core -- venture, assets, investment. think we you that in that’s the about I equity working own joint our liquidated the toward is

We we have now, on those our books predict of that that’s that. about actively are and working of $XX but so are assets monetizing recycling toward well. as properties are little investment some working hard towards we million in to non-retail Timing a

Gaurav Mehta

XXXX the And months. debt lastly Okay. rate? enter XXXX of to to maturities? the debt talked you in should then Can you try the XXXX fix balance explanation as as sheet, the line the far explorations -- rate potential on credit guys provide and you then in that interest as the the some color on next doing to you floating you maybe with about refinance debt, expect we rate And what refinancing the debt few fixed guys

Scott Hogan

Well I’m -- hi. Scott.

add we you recast and Dave, debt around go the variable, current We probably million now anything do the of if fixed know that there. those through but are right that on on are XX% now. But to $XXX fix leave And I process. expect we’re as to the have assessing interest don’t to our expectations. working our rates the We’re

Dave Holeman

little -- it been Yeah. But volatility ton just bit. I there’s down if you might has of come rates. obviously a around add, a just

they did our four they’re If at rates, were credit you we the of recast when look where our very years last facility. ago, similar Treasury

I the that think looked in obviously, little and at five-year today, rates swap a of somewhere we’ve variability. they’re XX% bit

on guys in the folks refinancing, the right as so activity of in third year the have quarter. doing process. the to So now extra with expense bit obviously, know, second as we’ll half fair the world built close. guidance We’ve banking closed amount that, we we’re interest and be for of of in we a our little visibility expect you There’s greater into a

XXXX I about sense think maturities. as the look a our rate then right XXXX continuing continuing refinancing now Scott And out fixed laddering variable at believe moving makes but portion we’re, -- with we’re variable at debt, rates, those having we XX%. on said, our look about and track do to

Gaurav Mehta

Okay. Thank you.

Dave Holeman

Thank you.

Operator

proceed The next with with question from questions. B. Please the of Craig line Kucera comes Riley Securities. your

Craig Kucera

morning, Good guys. Hey.

joint impairments expectations there at I reported in some some reported occupancy sequentially on venture of You’ve the like maybe going any looks It give the you But And time, for a what dropped first can those kind adjustments there, it. properties. portfolio think, for the one-time since loss your were are of you of year? rest your color or?

Scott Hogan

number There weren’t the in There’s purchasers we those so a But out in have flexibility are think leases several to them cycle going properties NOI to in of getting trying impairments with -- that No. No. just they’re properties. number portfolio. that sell. believe a of ready I any and down to we cases, I of those do they’re there see of

Dave Holeman

do assets. I And I might to is, like to exit all clearly those Craig, that, we think, would add that

perspective, retail by general in charged exit, assets that were think the might think have some the Whitestone this interest well expenses shareholders into very I and toward incurred recycling So that we the clearly that additional as quarter of think from partner we been I working we’re our do best at. there But that it’s well.

Craig Kucera

there but year, for been would assets? last is well, one-time it. on a And pretty value just pickup a or you’ve were a was a Got the rising function of the this taxes of adjustments able say lid keep there in that quarter, to so there I any over the

Dave Holeman

process assets a the of In three in chunk and that’s tax a with sort where our of the valuations Texas market, step good are. there’s

protest we to So a there’s an then get initial valuation, and chance we litigate. then

all the estimate three a we we two we’re to year. that way our lower little the just get that through in process process. way, So bump this expect And through we step we until work work way and the those valuations those see conservative of we’re oftentimes, taxes would we bit a as

Craig Kucera

Got the I it. No. appreciate color.

one for any there the existing your recycling sort development are involved with Dave, are maybe thoughts your of me, that looking guys properties maybe more getting or capital versus making capital, acquisitions of placing Just or there? at you for in potential redevelopment what current

Dave Holeman

I’ll wants I sometimes say in. but years, you portfolio, picked up can earnings the little over she for so a not, Sure. acquired the acquisitions I some we’re comments up we do capital have continuing to have are field internally small, do in thoughts. opportunities come plan will me, picked also that we’ve larger the working all on contribute within give way as have yeah, coming markets, just up years. expect to those development some -- with we’re recycling. neutral assets obviously, at But, the dispositions but the to get do just and maybe and that let pad and really to are getting Christine opportunities on look opportunities, Christine. will through look starting to so it start have land extra the they XXXX side and into some parking We couple a we’re our more up those excuse a ramping to we’ve is, and to may recycling, several Christine sometimes obviously, development, focused within add back over portfolio parcels, anything, and

start to provide have we announce -- think that, we our that. think will we that details are work on now and later. to to more But we’ll that through is to working value plan more extract that So I right toward

Craig Kucera

Okay. Thanks.

Dave Holeman

Thanks, Craig.

Operator

back time, further this to the At you. I closing Thank remarks. for will floor Instructions] [Operator management turn

Dave Holeman

everyone to for Mordy interest have in questions reach team. appreciate for your thank a we anyone you interest today’s on your joining to and you on day. once, Should I or our call. again, David encourage thank great you We And have much out very Well, any Whitestone.

Operator

today’s This conference. concludes

you participation. lines for your this disconnect Thank You your may time.

Whitestone REIT (WSR) 3 Aug 222022 Q2 Earnings call transcript