Whitestone REIT
Annual Report 2010

Plain-text annual report

Creating Communities in Our PropertiesTM A N N U A L R E P O R T 2010 EDUCATION MEDICAL S E R V C E S I I I G N N D L A U S A C 2600 South Gessner Suite 500  Houston, TX 77063  P: 713.827.9595  F: 713.465.8847  www.whitestonereit.com © 2011 Whitestone REIT. All rights reserved. CCorporate Information BOARD OF TRUSTEES James C. Mastandrea, Chairman and Chief Executive Officer, Whitestone REIT; Chairman, Chief Executive Officer and President, Paragon Real Estate Equity and Investment Trust and MDC Realty Corporation; former Chairman and Chief Executive Officer of First Union REIT (NYSE); Director, Cleveland State University Foundation Board; Director, University Circle Board; Director, Calvin Business Alliance Board. Daryl J. Carter, Founder, Chairman and Chief Executive Officer, Avanath Capital Partners and Capri Capital; former Executive Managing Director and Head of Real Estate Group, Centerline Capital Group (NYSE); former President, American Mortgage Acceptance Corporation. Daniel G. DeVos, Chairman and Chief Executive Officer, DP Fox Ventures; Owner, Grand Rapids Rampage (AFL) and Orlando Magic (NBA); Director, Alticor, Inc. (parent company of Amway Corporation); Trustee, Paragon Real Estate Equity and Investment Trust; former Vice President, Pacific and Vice President of Corporate Affairs, Amway Corporation; former Trustee, First Union REIT (NYSE). Donald F. Keating, Former Chief Financial Officer, Shell Mining Company; former Director, Billiton Metal Company, R&F Coal Company and Marrowbone Coal Company. Jack L. Mahaffey, Former President and Chief Executive Officer, Shell Mining Company; Former Director, National Coal Association and the National Coal Counsel. OFFICERS James C. Mastandrea, Chairman and Chief Executive Officer John J. Dee, Chief Operating Officer David K. Holeman, Chief Financial Officer Daniel E. Nixon, Jr., Senior Vice President, Regional Director Valarie L. King, Senior Vice President, Regional Director Gregory J. Belsheim, Senior Vice President, Human Resources Bradford Johnson, Director of Acquisitions Anne I. Gregory, Vice President, Marketing and Investor Relations Mike Taylor, Corporate Counsel Corporate Office: Whitestone REIT 2600 South Gessner, Suite 500 Houston, TX 77063 Toll Free: (866) 789-7348 x2221 Direct: (713) 435.2213 E-Mail: IR@whitestonereit.com Website: www.whitestonereit.com Corporate Counsel: Bass, Berry & Sims, PLC 100 Peabody Place, Suite 900 Memphis, TN 38103 (901) 543-5900 Independent Registered Public Accounting Firm: Pannell, Kerr & Forster of Texas, PC Houston, TX 77057 (713) 860-1400 Annual Meeting: May 10, 2011 10:00 A.M. Marriott Houston Westchase 2900 Briarpark Drive, Houston, Texas 77042 Investor Relations: Shareholders are encouraged to contact the Company with questions or requests for information. Copies of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission are available upon written request and are available online at the SEC website: www.sec.gov. Registrar & Transfer Agent: American Stock Transfer & Trust Company 59 Maiden Lane, Plaza Level New York, New York 10038 Account maintenance inquires should be directed to: AST Shareholder Services Department (800) 937-5449 or (718) 921-8200 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Shareholders Equity (in thousands) ‘08 ‘09 ‘10 M E D C A L I CASUAL DINING Our multi-cultural community focus sets us apart from traditional commercial real estate operators. We value diversity in our team and maintain in-house leasing, property management, marketing, construction and maintenance departments with culturally diverse and multi-lingual associates who understand the particular needs of our tenants and neighborhoods. We market, lease, and manage our Centers to match tenants with the shared needs of the surrounding neighborhood. Those needs may include specialty retail, grocery, restaurants and medical, educational and financial services. diverse neighborhoods MEDICAL Diluted FFO-Core Per Common Share and OP Unit $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 ‘08 ‘09 ‘10 In contrast, one of our largest Centers is Windsor Plaza, a 200,000 square foot Community Center located between two military bases in San Antonio, Texas, where our tenants offer educational services and discounted soft goods. Acquisition Targets In 2010, we purchased two value-add assets in the Phoenix area in off-market transactions well below replacement cost with the proceeds from our IPO. Our acquisitions are primarily in the markets where we currently own properties, in and around the Phoenix, Chicago, Dallas, San Antonio and Houston Metropolitan areas, five of the top 15 markets in the USA in terms of population growth. We are expanding our geographic foot print in these target markets by identifying new acquisitions where we can add value. We seek to purchase properties at prices below replacement cost, and then introduce our Whitestone team of experienced property managers and leasing agents. We believe we have the experience and ability to close quickly on properties as single purchases from distressed owners. Competitive Advantage Acquisitions. We believe we have the following competitive advantages in making acquisitions of Community Centered Properties: 1. We target Community Centers with an aggregate mass of 25,000 to 200,000 square feet with small business tenants who occupy less than 3,000 square feet, while larger publicly traded shopping center REITs target “big box” anchored centers of 200,000+ square feet with larger tenants. 2. We actively seek to use our OP units as acquisition currency, which non-public real estate owners have difficulty doing. 3. Our balance sheet enables us to attract tenants that require tenant improvements to their rental space, which other owners are either unwilling or unable to provide. Operations. We believe we have a competitive operating advantage because our culture, philosophy, and experience in working with small businesses in underserved, culturally diverse populations, including Asian and Hispanic neighborhoods. We attempt to manage and lease our properties to the specific needs of the F Financial Highlights Operations (in thousands) Revenues Funds From Operations Funds From Operations-Core Net Income Attributable to Whitestone REIT $ $ $ Per Share and OP Unit Diluted FFO Per Common Share and OP Unit Diluted FFO-Core Per Common Share and OP Unit Dividends Paid as % of FFO Diluted Earnings Per Share Financial Position (in thousands) Shareholders’ Equity Real Estate Assets, Gross 2010 31,533 8,432 7,920 $ 1,105 $ $ $ 1.44 1.35 88% 0.27 2009 32,685 8,618 6,759 2008 $ 31,201 4,236 $ 6,085 $ 1,342 $ 1,134 1.68 1.32 80% 0.40 $ $ $ 0.85 1.22 205% 0.35 $ $ $ $ $ $ $ 62,708 $ $ 204,954 43,590 $ $ 192,832 $ 45,891 $ 180,397 Our primary business objective is to increase shareholder value by acquiring, owning and operating Community Centered Properties™. * This 2010 Annual Report contains forward looking statements. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers of this 2010 Annual Report should be aware that there are various factors that could cause actual results to differ materially from any forward- looking statements made in this report. Factors that could cause or contribute to such differences include, but are not limited to, changes in general economic and business conditions, industry trends, changes in government rules and regulations (including changes in tax laws) and environmental rules and regulations. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this 2010 Annual Report. For a reconciliation of non-GAAP financial measures, including FFO-Core, please see the reconciliation on page R1 of this 2010 Annual Report. CCorporate Information BOARD OF TRUSTEES James C. Mastandrea, Chairman and Chief Executive Officer, Whitestone REIT; Chairman, Chief Executive Officer and President, Paragon Real Estate Equity and Investment Trust and MDC Realty Corporation; former Chairman and Chief Executive Officer of First Union REIT (NYSE); Director, Cleveland State University Foundation Board; Director, University Circle Board; Director, Calvin Business Alliance Board. Daryl J. Carter, Founder, Chairman and Chief Executive Officer, Avanath Capital Partners and Capri Capital; former Executive Managing Director and Head of Real Estate Group, Centerline Capital Group (NYSE); former President, American Mortgage Acceptance Corporation. Daniel G. DeVos, Chairman and Chief Executive Officer, DP Fox Ventures; Owner, Grand Rapids Rampage (AFL) and Orlando Magic (NBA); Director, Alticor, Inc. (parent company of Amway Corporation); Trustee, Paragon Real Estate Equity and Investment Trust; former Vice President, Pacific and Vice President of Corporate Affairs, Amway Corporation; former Trustee, First Union REIT (NYSE). Donald F. Keating, Former Chief Financial Officer, Shell Mining Company; former Director, Billiton Metal Company, R&F Coal Company and Marrowbone Coal Company. Jack L. Mahaffey, Former President and Chief Executive Officer, Shell Mining Company; Former Director, National Coal Association and the National Coal Counsel. OFFICERS James C. Mastandrea, Chairman and Chief Executive Officer John J. Dee, Chief Operating Officer David K. Holeman, Chief Financial Officer Daniel E. Nixon, Jr., Senior Vice President, Regional Director Valarie L. King, Senior Vice President, Regional Director Gregory J. Belsheim, Senior Vice President, Human Resources Bradford Johnson, Director of Acquisitions Anne I. Gregory, Vice President, Marketing and Investor Relations Mike Taylor, Corporate Counsel Corporate Office: Whitestone REIT 2600 South Gessner, Suite 500 Houston, TX 77063 Toll Free: (866) 789-7348 x2221 Direct: (713) 435.2213 E-Mail: IR@whitestonereit.com Website: www.whitestonereit.com Corporate Counsel: Bass, Berry & Sims, PLC 100 Peabody Place, Suite 900 Memphis, TN 38103 (901) 543-5900 Independent Registered Public Accounting Firm: Pannell, Kerr & Forster of Texas, PC Houston, TX 77057 (713) 860-1400 Annual Meeting: May 10, 2011 10:00 A.M. Marriott Houston Westchase 2900 Briarpark Drive, Houston, Texas 77042 Investor Relations: Shareholders are encouraged to contact the Company with questions or requests for information. Copies of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission are available upon written request and are available online at the SEC website: www.sec.gov. Registrar & Transfer Agent: American Stock Transfer & Trust Company 59 Maiden Lane, Plaza Level New York, New York 10038 Account maintenance inquires should be directed to: AST Shareholder Services Department (800) 937-5449 or (718) 921-8200 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Shareholders Equity (in thousands) ‘08 ‘09 ‘10 M E D C A L I CASUAL DINING Our multi-cultural community focus sets us apart from traditional commercial real estate operators. We value diversity in our team and maintain in-house leasing, property management, marketing, construction and maintenance departments with culturally diverse and multi-lingual associates who understand the particular needs of our tenants and neighborhoods. Creating Communities in Our PropertiesTM A N N U A L R E P O R T 2010 EDUCATION MEDICAL S E R V C E S I I I G N N D L A U S A C 2600 South Gessner Suite 500  Houston, TX 77063  P: 713.827.9595  F: 713.465.8847  www.whitestonereit.com © 2011 Whitestone REIT. All rights reserved. 

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