Whitestone REIT Files 10-Q for Q1 2024

TL;DR

<b>Whitestone REIT filed its Q1 2024 10-Q, reporting $49.96M in assets and $13.63M in net income.</b>

AI Summary

Whitestone REIT (WSR) filed a Quarterly Report (10-Q) with the SEC on May 2, 2024. Whitestone REIT filed its 10-Q for the period ending March 31, 2024. The company reported $49,958,896 in total assets for the period. Net income attributable to common stockholders was $13,632,764. Earnings per share (EPS) were $0.12. The company has $400,000,000 in authorized shares.

Why It Matters

For investors and stakeholders tracking Whitestone REIT, this filing contains several important signals. The filing details the company's financial performance and position as of Q1 2024, providing investors with up-to-date information on its operations. Key financial metrics such as assets, net income, and EPS are disclosed, allowing for analysis of the REIT's performance and valuation.

Risk Assessment

Risk Level: medium — Whitestone REIT shows moderate risk based on this filing. The company is involved in ongoing litigation regarding a shareholder rights agreement and a redemption right dispute, which could impact its financial stability and operational flexibility.

Analyst Insight

Investors should monitor the ongoing litigation and its potential financial implications for Whitestone REIT.

Financial Highlights

total Assets

49,958,896

net Income

13,632,764

eps

0.12

Key Numbers

• 49,958,896 — Total Assets (As of March 31, 2024)
• 13,632,764 — Net Income (For the period ending March 31, 2024)
• 0.12 — EPS (For the period ending March 31, 2024)
• 400,000,000 — Authorized Shares (As of March 31, 2024)

Key Players & Entities

• Whitestone REIT (company) — Filer
• Pillarstone REIT (company) — Litigation party
• Pillarstone OP (company) — Litigation party
• Court of Chancery of the State of Delaware (regulator) — Court overseeing litigation
• January 25, 2024 (date) — Date of court ruling and redemption notice
• July 12, 2022 (date) — Date Whitestone OP filed suit
• September 8, 2022 (date) — Date Whitestone OP's Motion to Preserve the Status Quo was granted

FAQ

Risk Factors

• Litigation Regarding Shareholder Rights Agreement [high — legal]: Whitestone OP is involved in litigation with Pillarstone REIT concerning a shareholder rights agreement and the exercise of a redemption right, which has led to court-imposed restrictions and a ruling allowing the redemption.

Key Dates

• 2024-03-31: Quarter End — Reporting period for the 10-Q filing.
• 2024-05-02: Filing Date — Date the 10-Q was filed with the SEC.
• 2024-01-25: Court Ruling & Redemption Notice — Delaware Court of Chancery ruled in favor of Whitestone OP, allowing redemption; company exercised notice.

Key Financial Figures

• $0.001 — hares of Beneficial Interest, par value $0.001 per share WSR New York Stock Exchan
• $13,632,764.25 — , the lender shall retain and apply the $13,632,764.25 tendered to it by Whitestone REIT Opera

Filing Documents

• wstr20240331_10q.htm (10-Q) — 1664KB
• ex_648702.htm (EX-31.1) — 15KB
• ex_648703.htm (EX-31.2) — 16KB
• ex_648704.htm (EX-32.1) — 6KB
• ex_648705.htm (EX-32.2) — 5KB
• 0001437749-24-014401.txt (&nbsp;) — 8206KB
• wstr-20240331.xsd (EX-101.SCH) — 77KB
• wstr-20240331_cal.xml (EX-101.CAL) — 67KB
• wstr-20240331_def.xml (EX-101.DEF) — 587KB
• wstr-20240331_lab.xml (EX-101.LAB) — 484KB
• wstr-20240331_pre.xml (EX-101.PRE) — 624KB
• wstr20240331_10q_htm.xml (XML) — 1056KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements . 1 Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023 1 Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2024 and 2023 3 Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2024 and 2023 6 Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2024 and 2023 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations . 32 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk . 53 Item 4.

Controls and Procedures

Controls and Procedures . 53

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1. Legal Proceedings . 54 Item 1A. Risk Factors . 54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds . 55 Item 3. Defaults Upon Senior Securities . 55 Item 4. Mine Safety Disclosures . 55 Item 5. Other Information . 55 Item 6. Exhibits . 55 Exhibit Index 56

Signatures

Signatures 57 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Whitestone REIT and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) March 31, 2024 December 31, 2023 (unaudited) ASSETS Real estate assets, at cost Property $ 1,230,936 $ 1,221,466 Accumulated depreciation ( 232,867 ) ( 229,767 ) Total real estate assets 998,069 991,699 Investment in real estate partnership — 31,671 Cash and cash equivalents 6,215 4,572 Restricted cash — 68 Escrows and deposits 17,272 24,148 Accrued rents and accounts receivable, net of allowance for doubtful accounts 31,055 30,592 Receivable from partnership redemption 31,643 — Receivable due from related party 1,522 1,513 Unamortized lease commissions, legal fees and loan costs 14,200 13,783 Prepaid expenses and other assets (1) 11,302 4,765 Finance lease right-of-use assets 10,406 10,428 Total assets $ 1,121,684 $ 1,113,239 LIABILITIES AND EQUITY Liabilities: Notes payable $ 644,981 $ 640,172 Accounts payable and accrued expenses (2) 32,133 36,513 Payable due to related party 1,577 1,577 Tenants' security deposits 8,799 8,614 Dividends and distributions payable 6,215 6,025 Finance lease liabilities 716 721 Total liabilities 694,421 693,622 Commitments and contingencies: — — Equity: Preferred shares, $ 0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of March 31, 2024 and December 31, 2023 — — Common shares, $ 0.001 par value per share; 400,000,000 shares authorized; 49,958,896 and 49,610,831 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 50 50 Additional paid-in capital 627,876 628,079 Accumulated deficit ( 213,798 ) ( 216,963 ) Accumulated other comprehensive income 7,517 2,576 Total Whitestone REIT shareholders' equity 421,645 413,742 Noncontrolling interest in subsidiary 5,618 5,875 Total equity 427,263 419,617 Total liabilities and equity $

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) The use of the words "we," "us," "our," "Company" or "Whitestone" refers to Whitestone REIT and our consolidated subsidiaries, except where the context otherwise requires. 1. INTERIM FINANCIAL STATEMENTS The consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2023 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of and for the period ended March 31, 2024 have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to Form 10 -Q. The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of Whitestone and our subsidiaries as of March 31, 2024 and December 31, 2023 , and the results of operations for the three month periods ended March 31, 2024 and 2023 , the consolidated statements of changes in equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023 . All of these adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results expected for a full year. The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10 -K for the year ended December 31, 2023 . Business . Whitestone was formed as a real estate investment trust ("REIT") pursuant to the Texas Real Estate Investment Trust Act on August 20, 1998. In July 2004, we changed our state of organization from Texas to Mar

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Consolidation. We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership. As of March 31, 2024 and December 31, 2023 , we owned a majority of the partnership interests in the Operating Partnership. Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership. Noncontrolling interest in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us. Net income or loss is allocated to noncontrolling interests based on the weighted-average percentage ownership of the Operating Partnership during the period. Issuance of additional common shares of beneficial interest in Whitestone (the "common shares") and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, common shares on a one -for- one basis (the "OP units") changes the percentage of ownership interests of both the noncontrolling interests and Whitestone. Estimates regarding Pillarstone OP's financial condition and results of operations and guarantee. We rely on the reports furnished by our third -party partners for financial information regarding the Company's investment in Pillarstone OP. As of March 31, 2024 and December 31, 2023, Pillarstone OP's financial statements have not been made accessible to us. Consequently, we have estimated the financial status and operational outcomes of Pillarstone OP based on the information accessible to us at the time of this report. The Company has a limited guarantee on Pillarstone OP's loan for its Uptown Tower property located in Dallas, Texas. The guarantee is a so-called "bad boy" carve-out guarantee, which is g

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) Restricted Cash. We classify all cash pledged as collateral to secure certain obligations and all cash whose use is limited as restricted cash. During 2015, pursuant to the terms of our $ 15.1 million 4.99 % Note, due January 6, 2024 ( see Note 7 (Debt)), which was collateralized by our Anthem Marketplace property, we were required by the lenders thereunder to establish a cash management account controlled by the lenders to collect all amounts generated by our Anthem Marketplace property in order to collateralize such promissory note. The note was paid off in January 2024. As of March 31, 2024, we had no restricted cash. Derivative Instruments and Hedging Activities. We utilize derivative financial instruments, principally interest rate swaps, to manage our exposure to fluctuations in interest rates. We have established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. We recognize our interest rate swaps as cash flow hedges with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Any ineffective portion of a cash flow hedges' change in fair value is recorded immediately into earnings. Our cash flow hedges are

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