ANNUAL REPORT
C O M M U N I T I E S
T H AT
T H R I V E
1
Whitestone has shown its tremendous organic growth
potential over the last several years and has bolstered
earnings with a disciplined, opportunistic property
acquisition strategy. Simultaneously growing earnings
and meaningfully reducing leverage is an impressive
accomplishment for any company and Whitestone
continues to display strong momentum.”
DONALD A. MILLER, CFA
Trustee
2024 FINANCIAL HIGHLIGHTS
5.1%
Same Store NOI (1)
Growth
5.3% Avg Since 2021
11%
Core FFO Share (3)
Growth
5.5% CAGR Since 2021
5.0%
Revenue Growth
Up 23% Since 2021
6.6x
Debt/EBITDAre (2)
2.6x Improvement
Versus 2021
9.1%
Dividend Growth
6.5% CAGR
Q1 2021 - Q1 2025
94.1%
Occupancy
Up 280 Basis Points
Since 2021
(1) Same Store NOI Growth is a non-GAAP measure. Please refer to page 10 for a
full reconciliation.
(2) 4th quarter 2024 annualized Debt/EBITDAre and a comparison with 4th
quarter 2021 annualized Debt/EBITDAre. Debt/EBITDAre is a non-GAAP
measure. Please refer to page 9 for a full reconciliation.
(3) Core FFO/Share is a non-GAAP measure. Please refer to page 8 for a full
reconciliation.
GROWTH DIFFERENTIATORS
Disciplined, operationally focused
management team
100% of portfolio growth within low
regulation states: TX & AZ
1,400+ high-growth service-
oriented tenants, operating on
shorter duration leases
92% centers configured with high-
demand 1,500 to 3,000 sq ft spaces
Experts in utilizing technology to
match neighborhood demands with
high-growth businesses
Advantages of our Leading Position
in High-Value Shop Space:
• Very strong leasing spreads and SS NOI growth
• Smaller tenants do not restrict real estate
• Shorter WALT (4.1 years) provides inflation
protection
• More eff icient capital: lower capital
requirements translates into higher SS NOI
growth
• Better risk dispersion
• Approximately 100% Triple Net Leases allow for
recovery of over 90% of CAM, tax and insurance
expenses
We delivered very strong results in 2024. Our north star is consistently growing
Core FFO on a per share basis. This allows us to steadily increase our dividend while
maintaining an approximate 50% payout ratio. Since 2021, we have grown Core
FFO per share at a compound annual rate of 5.5%. That growth, plus the current
yield on the stock is ultimately the return we’re providing to shareholders.
As we continue to execute, we are simultaneously proving the value of our
diff erentiated strategy and broadening our investor base. The value of our assets
is steadily climbing as we show what a portfolio of high-return shop space can
deliver when properly anchored to the community.
So, what do we mean when we say, properly anchored to the community? We
identified early on that we had access to the technology and data that allow us to
constantly pay attention to the demand drivers that translate into success for the
businesses populating our centers. Specifically, we utilize strong local knowledge
in conjunction with data from ESRI and Placer.ai to identify which high-growth
businesses will best succeed in our centers.
Our business model is designed to thrive as change occurs. We are geared to
proactively identify change and deliver results as retailers adapt and evolve to
changes in demand surrounding their physical locations. At a high level, our
formula for success is as follows:
ACQUIRE THE RIGHT CENTERS: Acquire centers that fit our criteria.
ANCHOR CENTERS TO THE COMMUNITY: Whitestone team members are
data centric in determining demand for a center’s surrounding community and
matching businesses to meet that demand.
ALWAYS REMERCHANDISE: Team members constantly reassess the strength of all
tenants, increasing a center’s traff ic and enhancing the Quality of Revenue coming
from our tenants.
DRIVE RESULTS VIA CAPITAL EFFICIENCY: Redevelopment is done to match
changes in the surrounding community and the associated demand – and is done
while maintaining cash flow.This formula has been key to our delivering on a host
of financial and operational metrics, including our 11th consecutive quarter with
leasing spreads in excess of 17%.
The team at Whitestone views our strategy, our ability to drive earnings growth
and the external view of the value of our assets as inexorably linked. We believe
we have all the right ingredients to drive the value of our assets higher, while
appropriately aligning external views to reflect both our intrinsic value and
forward-looking expectations.
DEAR SHAREHOLDERS
2
WHITESTONE REIT 2024 ANNUAL REPORT
Supporting our work is the feedback we have received from the investment
community. 2024 was an invaluable year of shareholder engagement, and we have
acted on many of the constructive perspectives provided by shareholders. In our
recent discussions, we have heard support from many of you and appreciate your
confidence in the results we’re delivering and momentum we are gaining.
Our financial and operational results underscore the meaningful advancement we
are making against our strategic objectives. Since the beginning of 2022, when
new management took over, Whitestone has been the best performing shopping
center REIT, with a total return of more than 60%, significantly outpacing the peer
average of 8%.
The results of our approach are evident in our financial and
operational metrics:
IMPROVING OPERATIONS: We drove occupancy to 94.1% for the fourth quarter of
2024. We achieved a combined overall positive leasing spread of 20.3% and Same
Store NOI growth of 5.1% for the year. Not only is this top quartile Same Store NOI
growth, we utilized less capital to achieve this result, in part because the majority
of our centers are already correctly configured with high-demand shop space.
EARNINGS GROWTH: We delivered 11% Core FFO per share growth in 2024 and
in our 4th quarter earnings presentation, we laid out the building blocks that we
believe will allow us to continue to deliver 5 – 7% Core FFO growth in the years
ahead.
INCREASING RETURNS: Growing earnings allows Whitestone to significantly
increase dividends while maintaining our payout ratio, which is among the
healthiest in the shopping center sector. Whitestone recently declared dividends
for the first quarter of 2025, growing the dividend by 9% and reflecting the
Board’s confidence in Whitestone’s earnings growth trajectory. We are laser
focused on growing Core FFO per share and accompanying that growth with an
increasing dividend.
EVER STRONGER TENANT QUALITY: Whitestone’s performance during the
pandemic was amongst the best within the peer set, as measured by collections
or by the change in Core FFO per share from 2019 to 2020. Since that time, the
leasing team has relentlessly refreshed the tenant mix, driving the Bad Debt /
Revenue percentage down 40 basis points from the 2019 level.
In evaluating businesses, we believe that strong underwriting and leasing team
skills are vital to driving strong Same Store NOI growth, enhancing the credit
quality of our portfolio and supporting our ability to deliver results in any
environment.
STRENGTHENING FINANCIAL PROFILE: We have improved our leverage
(measured as Net Debt / Pro Forma EBITDAre) from 9.2x (4th quarter 2021) to 6.6x
today (4th quarter 2024). We have also been proactive in renewing our corporate
3
4
WHITESTONE REIT 2024 ANNUAL REPORT
TOTAL SHAREHOLDER RETURN
January 1, 2022 to March 24, 2025
Breakdown of Large Space ABR
Tenants Over 10,000 Sq FT
23% of Total ABR
Breakdown of Small Space ABR
Tenants Under 10,000 Sq FT
77% of Total ABR
77% OF WHITESTONE’S TOTAL ABR DRIVEN BY HIGH-VALUE SHOP SPACE
65.8%
WSR
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
BRX
PECO
KRG
IVT
UE
AKR
REG
KIM
FRT
SITC
20.8%
20.5%
19.7%
19.0%
14.1%
12.3%
9.8%
.1%
-17.5%
-18.0%
Restaurants & Food Service
34%
Beauty 12%
Medical 10%
Financial Services
6%
Fitness
5%
Apparel
5%
Education/
Entertainment
5%
Home Décor
4%
Non Retail
4%
General Retail
4%
Pets 3%
Grocery 2%
Other
9%
Grocery
28%
General Retail
11%
Education/
Entertainment
9%
Fitness
7%
Non Retail
7%
Financial
Services
6%
Home
Improvement
5%
Pharmacies/
Nutritional
5%
Off Price
5%
Restaurants &
Food Service
3%
Medical
3%
Pets
3%
Other
8%
credit facility and minimizing near-term debt maturities. These actions have led to
a strengthened balance sheet and the ability to fund future growth investments in
line with our strategic initiatives.
We are pleased with this progress, but what excites us most is the runway ahead
that we see for additional growth and value creation.
Our portfolio optimization strategy is just hitting stride.
Strong community connections and deep tenant relationships are key to the
success of Whitestone’s current centers and acquisition strategy. We have excellent
visibility into fast-growing surrounding neighborhoods and dense areas that are
supply-constrained, in terms of retail development, to ensure that our acquisitions
are successful.
2024 brought the strongest environment we’ve seen in Texas and Arizona in all
the categories we serve, across all our size spaces and mix of tenants of grocery,
restaurants, health, wellness and beauty, financial services, other services,
education and entertainment.
In 2024 we acquired Garden Oaks Shopping Center located in the Houston MSA
and Scottsdale Commons located in the Phoenix MSA. Whitestone’s acquisition
program has been funded with timely, well-priced dispositions, is immediately
accretive and directly enhances our growth. Disposition cap rates have been more
than 100 basis points below our day one acquisition cap rates. This means that
we are continuously improving our portfolio with higher quality revenues and
more valuable assets. The assets we acquire generally have another 100 – 200
basis points of yield on cost improvement within the first 2 years as we apply our
strategic operating model.
As we look ahead, we have all the right ingredients to find new acquisitions, scale
the platform and reduce the percentage of our fixed costs while driving earnings
growth.
Above all, we welcome and deeply value the perspectives
of our shareholders.
Shareholder engagement remains a top priority for the Board and management,
and we will continue regularly considering your views as we make decisions about
the future. Building and strengthening our shareholder relations will remain a
perpetual priority for Whitestone.
Indeed, our recent Board refreshment with the additions of Krissy Gathright and
Don Miller is the result of an eff ective and comprehensive refreshment process
that took into account the views of our shareholders. Krissy brings deep real estate
experience at both Board and executive levels, as well as significant B2C and capital
markets experience. Don brings decades of real estate executive experience,
including in acquisitions, asset management, property management and leasing.
5
6
WHITESTONE REIT 2024 ANNUAL REPORT
I am energized by what I’ve seen so far in the
Whitestone boardroom. This is a company with
phenomenal assets, a strong plan in place, engaged
trustees and significant growth potential.”
KRISTIAN M. GATHRIGHT
Trustee
GREEN STREET TRADE AREA POWER SCORES
FRT
AKR
WSR
REG
SITC
ROIC
UE
IVT
CURB
KIM
KRG
BRX
PECO
0%
10%
Sun Belt Percentage (% of NOI)
Neighborhood/Community Strip Power/Lifestyle Other
20%
30%
40%
50%
60%
70%
80%
90%
100%
(1)
Center Type Percentage (% of NOI)
(1) Whitestone’s TAP score has improved by 4 points since Q2 2023. The increase has been driven by a combination of improving trade areas and
Whitestone’s acquisition/disposition activity. Source: Green Street Strip Center Sector Update “Scrubbing The White Stones for Pricing Insights” on
10/14/2024. Green Street’s Trade Area Power (“TAP”) scores quantify demand and rank a property’s trade area on a 1 to 100 scale that’s comparable
across the U.S. Whitestone moved up from a previous score of 79. We believe that TX and AZ growth combined with higher disposable incomes
surrounding Whitestone centers will continue to push Whitestone’s TAP scores higher versus the peer set.
85.4
82.2
81.7
80.2
75.7
74.4
74.3
73.7
73.2
70.8
65.9
59.3
56.0
FRT
AKR
WSR
REG
SITC
ROIC
UE
IVT
CURB
KIM
KRG
BRX
PECO
18%
11%
100%
48%
40%
48%
0%
95%
72%
51%
58%
46%
43%
In all, we have an engaged independent Board that comprises highly qualified
trustees with significant leadership, governance, investment, financial and operating
experience across real estate, REITs and public companies. Whitestone’s refreshed
Board is committed to acting in the best interests of all shareholders and to
enhancing the value of your investment.
We have strength and momentum heading into 2025.
With our leadership team and Board focused exclusively on realizing Whitestone’s
potential, we expect our underlying growth engine to become more visible to
investors and the inherent value of our real estate platform to become clearer.
We are excited to further advance our strategic objectives and drive even greater
bottom line growth, fueled by strong organic performance and disciplined external
growth.
The Whitestone that enters 2025 possesses a high-quality portfolio concentrated
in fast growing sunbelt markets with a diversified and granular tenant base, a
disciplined and focused team of operators with a proven record of curating centers
to match demand and a refreshed Board composed of independent and experienced
trustees focused on maximizing value for our shareholders.
The momentum we are carrying into 2025 is a direct result of our continuous
improvement mentality, and it gives me great confidence in the long-term value
proposition of the new Whitestone REIT and our ability to continue improving our
portfolio, driving earnings and growing free cash flow.
We want to thank our investors for believing in us over the last three years and we
are eager to earn the trust of those who will come on board in the years to come.
7
DAVE HOLEMAN
Whitestone CEO and Trustee
81,7('67$7(6
6(&85,7,(6$1'(;&+$1*(&200,66,21
:DVKLQJWRQ'&
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
)250.
0DUN2QH
☒
$118$/5(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72)
)RUWKHILVFDO\HDUHQGHG'HFHPEHU
25
☐
75$16,7,215(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72)
)RUWKHWUDQVLWLRQSHULRGIURPBBBBBBBBBBBBWRBBBBBBBBBBBB
&RPPLVVLRQ)LOH1XPEHU
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
:+,7(6721(5(,7
([DFW1DPHRI5HJLVWUDQWDV6SHFLILHGLQ,WV&KDUWHU
0DU\ODQG
6WDWHRU2WKHU-XULVGLFWLRQRI,QFRUSRUDWLRQRU
,56(PSOR\HU
2UJDQL]DWLRQ
,GHQWLILFDWLRQ1R
6RXWK*HVVQHU6XLWH+RXVWRQ7H[DV
$GGUHVVRI3ULQFLSDO([HFXWLYH2IILFHV
=LS&RGH
5HJLVWUDQW¶VWHOHSKRQHQXPEHULQFOXGLQJDUHDFRGH
6HFXULWLHVUHJLVWHUHGSXUVXDQWWR6HFWLRQ E RIWKH$FW
7LWOHRIHDFKFODVV
7UDGLQJ6\PERO V
1DPHRIHDFKH[FKDQJHRQZKLFKUHJLVWHUHG
&RPPRQ6KDUHVRI%HQHILFLDO,QWHUHVWSDUYDOXHSHU
VKDUH
:65
1HZ