WSR - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to Whitestone Real Estate Investment Trust First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.I would now like to turn the conference over to your host, David Mordy, Director of Investor Relations. Please go ahead, sir.

David Mordy

Good morning, and thank you for joining Whitestone REIT's first quarter 2024 earnings conference call.

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

David Holeman

again, conference morning. Thank for earnings XXXX once you, joining Good quarter we David. call. thank first you And Whitestone's

occupancy first prior track Let share saying that renewal a the our increase over by related at achieved further which and goal very than guidance.In in over our our XX% to internal basis. end year's on a Scott from target continued ago FFO EBITDAre leases core a results X.Xx, leases are solid, guidance with annual are basis me increase strengthen out reaffirming the on XXXX delivering, are contest, foot previously at to on begin delivering was straight-line we to same-store at exactly impacted and effective record core same-store go X.X%, of quarter per XX%, full-year and per fees last issued was our balance from occupancy beat signed with X.X% NOI for line revenue is and blended forecast debt professional a we results up net we sheet quarter and cash our XX.X% our finish. We The the new growth a of months our share And to negatively proxy first X.X% growth in and $X.XX. XX produced which team basis our grew a will FFO top quarter, and X.X% rent $XX.XX square less and comments.Our was the XXXX. by per We focused points growth consistent up put ago, year shareholders of into the his in X on detail that. robust strong we base NOI quarter, with

result Our the XX% value our growth beginning over significantly occupancy a became of as base and This the of last aren't XXX the our CEO shows higher at the up our our XXXX. strategy and types since ABR assets these new rent has levels year, average focus, spaces our in. and I of we increased occupancy of team's of the just execution specialize basis for points, and quality the over demand is

our as shortly. to and leasing continues discuss Christine have capital as we increase.I'll continue important successful and we team leasing our these continue growth growth, continue efforts, to Arizona execute Texas expect rapid organic metrics our to more As their and recycling

which projected cap rate rate actual of on cap an X.X% of $XX and late Our dispositions our NOI. based in efforts began at based year we for at of trailing on acquisitions NOI, an average capital X of recycling well for approximately the efforts XX-month have center is the centers completed or are we $XXX million. now in sale acquired and year, completed we X.X%, X have million going Since $XX also. million have million This very X we XXXX, $XX aggregate completed recycling

simultaneously income over and strategy linking of strong intersection a extend while surrounding value has and centers FFO has what to management has will in few percentage not nearly underway, a XXXX.Our a household The in-place surrounding to to of is recent mix gateway XX shareholder think service has active property and is institutional very center our years balancing quarters, Both X-mile benefit residential are tenants our seen next which delve of bit. infill about our as our the little acquisition acts well our Paradise for $XX doubled it's continue acquisitions convenience-based the to leasing me and Garden center is transactions, be X into look to what tenants out North teams growth home is who sheet. was our XX% is work, and Valley. development. on acquisition the our next second million, Commons add track property of level.Let $XXX,XXX. since Oaks and Scottsdale and most the disposition average most potential sales of Our Aldi fit by. it Scottsdale of XX,XXX significant major increased and per an market, only we're The Houston will and shareholders. property Scottsdale our and last pathway with the Commons neighborhood significant in located than The expanding from development I longer market values and center sits thoroughfare passing We've portfolio. out centers.Looking couple steady XX to which vehicles Phoenix trafficked anchored current, from the flow another of our our base needed hearing at record improving slightly great day to commercial balance the increasing critical with our are but residential shareholders is in growing on prospective cash eager a the of and in over get located a Scottsdale,

share we mentioned, same-store primarily forecasting year, I growth. this NOI core are strong per XX% As by driven FFO growth

earnings not free cash just With this year, down. growth, growth, locked our for our have driving debt the our and vast 'XX with majority is XXXX, ratio EBITDA runway XXXX, a but combined we of debt flow to into 'XX.In addition, until clear

quarter hope does We judgment should are by bulk noticeably forecasting assume debt until and collect of percent improve G&A quarter, to exactly summary, the with need in metric of contribute are significantly Pillarstone many quarter the well annual past to not our typically well sale we many lined expenses to by drop for and we'd what I'll we're that do. with come season.In the we see up meet to in June, to fourth conference. fourth We're those This to with that the do to in call that, looking XXXX. as once you clauses us.And fourth the attending sub connecting due forward REITweek we our you And as of proxy leases the Xx anticipated investors. love I EBITDAre of in the the to turn Christine. at over that very you'll

Christine C. Mastandrea

everyone. morning, Good

achieving Occupancy XX leasing we terms in XXXX remains are ago, occupancy of XX.X%, track a mentioned, and high XX.X% confident at and was Dave As on basis in the ] space [ XX.X% internal, points remain for from executing up quarterly our leasing year our within objectives and goals. positive monthly XX% renewal spread anchored spreads XX% overall the quarter. of in remain a I was of our in for leasing smaller year. XX.X%. projections the team leasing confident achieved combined spreads and of new occupancy We

and Pickler, showing we closed, Scottsdale site XX bring are the in Aldi in whether years our will seen in anticipate new lives.One next education that the ever a the our new the the of to that serve we of secure a ability of and and perfect XX future of in Oaks, their X, the health, success.Regarding ensure is for and the types is keys entertainment next environment However, in spaces best-in-class growth recently increasing Garden we've same things an that wellness the of the skill is for succeed drivers strongest food, couple demography and of and Texas a things is all success Arizona tenant, and tenants do centers Commons evaluating there's is environment our right services, to categories and grocery, even mix and services, an look interest we've beauty, this their of as Arizona. and financial the their new restaurants, all time to not these across for to operators, This operators the over Houston it's just acquisitions quality businesses our years. but one the credit tenants as the potential or other

for to, given XXXX. the today strengthened to Our Scott? factors on of We've our tenants XX% dense keep drive infill allows for acquisitions, the Las the I'll increased and Whitestone.With strong cover to the deliver late these and over thoroughfares turn visibility comments Colinas provide in are Their drivers us especially starting center, acquisitions terms the these center, the replaced the neighborhoods traffic which that, development. and development both in the have of an and fast-growing more value fundamentals. for in on for NOI to to knows make Las in Colinas. continue supply tenants, constrained retail for our financials. surrounding areas neighborhoods major excellent we acquisition Scott leasing and by XXXX, XX% similar it that my short team Since to These for how returns example,

J. Scott Hogan

morning. Christine, you, good Thank and

growth. robust as high-quality Our strength solid by of first NOI our quarter results leasing and properties demonstrate spreads same-store the portfolio positive of evidenced

FFO $X.XX for for share was $X.XX the per the core period versus Our same XXXX. in quarter

of track mentioned, per core FFO for guidance remain $X.XX. $X.XX Dave As share we our on to

occupancy, contest our We income from projection are for expense to proxy have on of EBITDAre.We G&A disposition projections professional and quarter for NOI expense first previous reflect our gain also the reflect to growth, debt fees. ending net to and our increased same-store and track interest

professional G&A that to approximately proxy to related second quarter we contest, first will proxy our of include $XXX,XXX $X.X related Our million and fees our expect in contest. included professional our expense quarter fees

that we the for debt earnings X.X% bad quarter, remaining Pillarstone on a our continue variables quarters.On with which of primarily update -- no bit efforts [indiscernible]. you come same as we for significant our of growth and much associated down guidance drive does number exactly first Same-store the may sheet to progress. income our in higher the from XXXX, units for the steps will tenants, was to our small NOI keep -- what improvement. the is anticipate OP longer forward, from quarter, order has in growth in same-store our growth are strong NOI earnings come reduce in drive to NOI balance We same-store to XXXX. to same-store was $X.XX a our whole, process growth and deficit and expected going January, in X.X now of related We allow earnings significant the collection taken was in number not we've our no NOI that updated collection so stretches assume we and growth and occurs variability.We'll some statement need any Pillarstone redeemed to our a have efforts Additionally,

the process year increase percentage We close as will mortgage X-year are forward to debt be results months are to that expected, saying approximately centers, up wrap by due Accordingly, of we of populate for we covering debt.Let weeks all, deliver debt our our that, fixed $XX also and but our than locked the we X.X%. the I we overall me Furthermore, to end our off year. the connecting by as businesses the of in rate dispositions are let's support anticipate line currently look if rate open our will to with with the at able fixed the in have shareholders. and you XX% maturities million questions. comments for later are the our be mentioned ahead.And X We in upcoming of coming greater prepared percentage most debt to excited reduce Dave thrilled

Operator

The Germain Instructions] we Securities. from question Mitch have [Operator first JMP comes of

Mitch Germain

some provide now to some the related the on JV perspective the you that units? nuances of you've redeemed accounting Can

J. Scott Hogan

longer the have effort a redeemed We equity OP -- we because that This collection Yes. to call, accounting accounting we mentioned of around which units, Sure, Mitch. the partner. as changes accounting where we're And in is an our Pillarstone we method from Scott. January, redemption. no on the

we $XX And the So amounts at there confident loan, the Both process. paid $XX only to those of bankruptcy. then collect is are least And collect on million we're through a million. million working $XX.X bankruptcy as that receivable. that we're much the or through we'll that guarantor Pillarstone's

David Holeman

that thing, we past recording one will take I it was positive, Pillarstone no be from just Mitch, the real some Hey, going longer add of obviously, had to those deficits our volatility quarters we've of results which that had was in out we as will in 'XX.

on Sorry, didn't mean there? I you to Scott, step

J. Scott Hogan

it That's okay. Did I any... there are answer or Mitch

Mitch Germain

Yes.

as One, management there's more no fee questions. X well [indiscernible]? So

J. Scott Hogan

of we management canceled we fee Pillarstone had contract. the 'XX August from since management Well, haven't a when

what we've been ended us we us, on OP any funding where Pillarstone. been exercise that haven't any with Pillarstone equity our method really JV So, there units. from is It's January to redeemed a an had accounting when XX, to just distributions or

Mitch Germain

And deposit by the guys, on money is that you the out was door the debt, or...

J. Scott Hogan

That the money out door. was was -- it

then to right $X.X releases and June to $XX of lender pay against building there'll Pillarstone. right be pay and a XX Pillarstone and in now. on then did Uptown this, Whitestone loan our the more the Pillarstone has filed subrogation would or have I liens million and settle whereby have with XX-Q hopefully subrogation releases but the allows mention that sell June We a there's Pillarstone April, as a guarantor around by We asset a motion disclosure lender the XX, Tower, for now. by property in and will that the that right Whitestone think contract a the of then the million against can't

our should million cover So claim. $XX the amount

Mitch Germain

a with now contractual that do potential a settlement happening despite what's have the They entities both from between to right court.

J. Scott Hogan

the the work through is of thing. have they have. court, loan against but that out getting to just they talking was properties lender only to Well, through equation that work bankruptcy And have any about of the -- the -- the the that good a loan I is they the

Mitch Germain

in you proxy for all that to big cost, guided the to addition fees that Legal is Okay. G&A?

J. Scott Hogan

last legal fees. part sorry, the I the didn't It of understand I'm question. was

legal fees So there's and...

Mitch Germain

G&A the guidance, over includes G&A right? out guidance out that proxy but that You've got correct? backing quarter went obviously still quarter, costs, legal, you're

J. Scott Hogan

when forth. fees. We can on so haven't be happen depending and changed on timing the the on guidance that There legal hearings

And the more to I quarter, change was to think just So are guidance the fees in full-year [ a the ] think little that going first mentioned. fees change. don't we legal had the we proxy the only we

Mitch Germain

get one, queued I just X forward? you've another so. up. color what or asset can we some $XX sold got the property, should then anticipate And that's the or I done How about like think And or and then on sales? X sounds million what's You been another going should

David Holeman

that take one. It's Dave, I'll

we refining at ago the or looking I to so valued continue either some think upside had the felt into very new we years were like announced And assets that attractively intent portfolio, future those couple less properties. just the assets that in and recycling

earlier looking more efforts, we $XXX with been We're redeploying the X.X%, continue, I at obviously, I a I more turn. probably rate to done We've I dispositions opportunity.So a decent the cash properties think with in going to -- forward once of our cap close X areas to would approximately about And in is than commented rate done of able recycling $XXX probably on, we a acquire different upside million and acquisitions. million a no we've X about X.X%. run importantly, portfolio. flow X much that's my great in you day really we're that mean, do years, and that. think, going as think this We've next

We evidenced. are with they're contributing But acquisitions positive on right efforts. seeing pleased the as we're significantly. cap now, some rates, the think We movement on

have strengthen higher higher we properties the at new incomes, look bought, you Whitestone. just ABRs, continuing If to the better at demographics, portfolio

Mitch Germain

the The more X up. million Just when closed follow $XX in quarter?

David Holeman

the It million was first $XX the quarter... Scott, you date? remember do the in -- the So closed in

J. Scott Hogan

the Are sale? asset about you talking

David Holeman

Yes.

J. Scott Hogan

the It was towards so... March, end of

Mitch Germain

Okay.

J. Scott Hogan

end the towards of March. Yes,

Mitch Germain

right? million you've in then $XX And process, got

David Holeman

potentially early I And now, we're on that's efforts. -- -- there's definitely, confident in right feel to will very second continuing we definitely but to the just And expected second be, but quarter. and what timing execute wise not if right. third quarter, quarter, the forward moving be That's that risks, with know recycling

Operator

Alliance Partners. next Global The Mehta of Gaurav have question comes from we

Gaurav Mehta

up on follow I wanted asset to sales. the

the $XX of million you the have does in include that slide, $XX $XX to or million? you top that million Just have clarify, $XX million on number would

David Holeman

the dispositions. million $XX It does actual The not. is

comment in transactions roughly making we next I the in dispositions. The will $XXX balance were that. think X have million acquisitions, million $XX about we really is

get So $XX-ish about to to an we're going million go. additional

upgrade by refine the with continuing portfolio portfolio, and Just external need the -- the without to capital. recycling for

Gaurav Mehta

your leverage. question on Second

you X.Xx upon to from hoping I think guidance the remarks, touched your to of on this but color more in your some prepared to debt to going get Xx. X.Xx EBITDAre

J. Scott Hogan

some proxy of cost pertaining we've and quarter year, around Pillarstone legal, elevated this got to G&A costs. also efforts first our contest the with In

the the to NOI to to year by time expect also grow continue throughout to the we debt and quarter. improve get fourth We

we'll the through of to the in the lower numerator time both I and costs. growth G&A also year end we the through by improvement So denominator line see and think the top get

Gaurav Mehta

follow-up Okay. the you rate the talked the market? that that The in Maybe expiring think seeing earlier debt on sheet. that rate. the the is you X balance debt on call, that's about Is said more -- you're XXXX, I X.X% that the the on on $XX rate or million

J. Scott Hogan

on rate lock part the loan. the I about have the that That's of And didn't the market, we understand question second sorry.

Gaurav Mehta

do that where on -- guess, plan the debt to another that would mortgage replace debt? line? Would be I or looking how put And do to you you you

J. Scott Hogan

the replacement is -- debt. That that the I mean, is

So -- down those use and pay $XX we to would a million it's proceeds revolver. the we'd loan, then

David Holeman

right, -- this year. is We debt basically, about have replacing $XX maturities this just we think about Scott? those, have And million I of

J. Scott Hogan

That's right, yes.

Operator

[Operator from B. Securities. have Massocca Instructions] The Riley John of we question comes next

John Massocca

that kind of I rates Maybe rates, cap transactions? the back disposition the to other cap capital of those the the what's but caught of leg acquisition -- going and recycling, the

J. Scott Hogan

rate been based other dispositions on Those been acquisitions, X.X% We've or NOI. XX-month XX. October John. at actual The of cap the a side projected. have have disposition rate since X.X% in on year trailing Sure, at first cap NOI, a $XX done million the

John Massocca

compare that how date longer does to term And to year maybe number?

J. Scott Hogan

I for volume recycling? think that you're asking level asking? what our what's Is you're

John Massocca

No, to to rate compare I starting does -- the XXXX? rate. since no, cap going cap was I you're how mean, year-to-date the just [ number ]

J. Scott Hogan

think it. right I it's Yes, on

to on a just buying there's we're looking most right period, about the with saying we're selling spread what performance looking the us. positive the we're at So, recent period, and mean, what -- it's not I a versus X% XX-month trying at now, play for

John Massocca

And they're market, what just more Scottsdale holistically, like transactions kind asset v together? something asset same makes then Mercado moving because Scottsdale in of you and that like, just I the -- those X the in what's the -- purchased in the Ranch Okay. mean, other maybe selling at logic into you

David Holeman

Sure.

Let a me bit little help on this.

was all, a only challenged XXX-degree area it as was far locationally So because an trade that first of area. Mercado as in hit a bit

Fountain the Hills. somewhat it closer further So limited trade area Shea and to along Road, was was

So area limited. intersections that that's that's I you to I probably Paradise it's the that's area I of Scottsdale significant, which city.So my degrees, swap Valley, the look is of the it's the all because which about versus by and and Shea, a is in far around consider goes And I at area. the from trade to what go And infill pretty some a is the as way in one your probably, of been the XXX, think surrounds east the what XXX to my best, gateway like is the PV, where of gateway almost limited type look also then the city of best Scottsdale northern for recycling. as -- which it. over And asset one always about trade Indian so if reservation you trade where's location what

times. that expectations that assets have on So the purchased, out, our the rental growth recycling trade just been of I either limited exceeded we've comment we assets that done, think tapped are and areas, and rates limited opportunity, and to it's the some the lease-up we've on

John Massocca

on X any themes specific some the industry, just of tenant more tenant, And that? tenants, particular out for that multiple that debt bad then color kind there, increased, was to on looking any call

J. Scott Hogan

really just an gives we're also really us handful tenants the base, to working of issue and the tenant It's upgrade better across It's or It and around pervasive a that community tenants. just X serve. to not probably better it's X a serve retenant opportunity properties.

David Holeman

also something we -- rather been in as past the Yes, about think really this them do talked portfolio this team, improved weaker in really a strong are has if in as out that there we've I we'd overall, a we've that that our market. have and tenants remerchandise tenants, this

we've have very taken is debt team as active towards part at something there. that. taken bad to the seriously to look frankly, stand that lingering that we is So how not number quite that knows of is be and And operate, something we a out a

-- So we of and type we've reducing bring the in quality I about, really consider been revenue what in. would very the as look forward we some active towards challenges of talked of we past.And managing for that going tenancy

But So I future. really and future. leasing I to I'm in with good job and in look of through a efforts out be look -- careful portfolio we to to has weakness team where our see the tenant the improvement think not in we this all time also figure need we the for the continue that done

tenant towards tenant COVID, like, haven't seen, a all seen weakness the is so... of And really of strong far in certain really, a I so type types. market And we've amount since significant

John Massocca

in And recycling, then pipeline, all result of capital on we to initiatives picture, maybe the bigger ongoing pause the you it need see then we'll strategic need and that are or proxy adjust -- think until at is beyond contest? is completed, or be? that as kind that's any the of Do take transactions you a of the kind about that impacted as completed by that

J. Scott Hogan

absolutely I John, think say, would not. I

is, on all cylinders. frankly, firing business Our

strong. demand locations. is tenant Our We've great got

We to keep record. synced that's down and team keep a a executing. got laying delivering intend You've and track

Operator

comes have Instructions] question we next go [Operator Michael ahead. The LLC. Diana, from Please Maxim Group,

Michael Diana

why of more a What us lot the retenanting. just old? or the give new X in X acquisitions, you of was that mentioned there? were lot better Can detail were than retenanted doing some you there a you the tenants Christine, you recent

Christine C. Mastandrea

center, lot when I -- that we what approach, we wouldn't we of just buy we an that of It's It's retenanting. different couple we take. a consider. a have look so at approaches

successfully not really to goal have match a is there. that has -- is rolling serving as the be. phenomenal sales again, successfully community. is property. have that look in First doing retenant we maybe some so, this, well-located been -- and been or time. those just tenants those it all, in that.So as which be, all, that and really are types we example the an there serving same been the a I significantly is a operators The remerchandise X do look haven't they to businesses It's one, and property. when strong of of types serving that been good aren't business bought managed, community rents take forward raise at the should opportunities the the we the one maybe -- for Woodlands, of serve as in for numbers the well really a think able community. portfolios of of tenants that opportunities properties And to those not the of we sales that there management could And their We've to in our active think, is because first not it as of We actively

get with have point area, we of today. been look have direction, at strong raise at, again, we shouldn't that is rents retenant? meeting community the strong I levels an rents.And quality that there? a one look needs? every would why the raise market is and same have years who's much example and we as an a Las retenanting -- are with that revenue But type to take especially we and that of that several able a the that opportunity that, was look again, area because move operators is able that used traffic Are stronger higher. such we which to acquisition the So in Is same in There center. -- the say well. at The the to we've And then that we've there in gotten understanding of Again, that of we was significant been always much they ago. the the view, an other we of better Colinas,

our So approach acquisition. in been that's always

doing very in it think the future. it's I continue we'll been successful and

Operator

of we turn and the sir. session. closing for the end go to to reached Please would Ladies like question-and-answer back And our I ahead, gentlemen, call remarks. Holeman have over Dave

David Holeman

Whitestone. little just you, saying level. thank Well, everyone at been that's to of up in proud wrap place us new by joining the extremely X made I'm today. a progress for leadership ago, I'd put team like at A over years we the

also year Since momentum I'll Our to going is through have years. progress itself, with this and only time, we shareholders. made guess and the that extremely and and I we I'm coming board just to we as proud leave you to I'm accelerate today commitments into significantly today, reshaped delivered confident that extremely that we've the continue move on those the commitments,

coming support.As reach out. so so can we places. comments, markets, anything for love of said a next your my Thank We have great you into run If I we or some over you. hesitate months, and of conferences there's other few number great to do, in assets, NAREIT don't a up have team, you much great to thank at the

Operator

Thank you Thank then you, today's sir. us. joining concludes Ladies and for gentlemen, conference. that

disconnect now may your lines. You

Whitestone REIT (WSR) 2 May 242024 Q1 Earnings call transcript