Whitestone REIT (WSR) Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Occupancy Rate: 94.2%, an increase of 30 basis points from Q2 2025.

Same-Store Net Operating Income (NOI): Grew by 4.8% year-over-year.

Core Funds from Operations (FFO): $0.26 per share for the quarter, with an expectation of a slight increase in Q4.

Average Base Rent (ABR): $25.59, an 8.2% increase year-over-year and a 26% increase over four years, reflecting a 5.9% compound annual growth rate.

Leasing Spreads: Straight-line leasing spreads were 19.3%, marking the 14th consecutive quarter above 17%.

Revenue Growth: Up 6% from the previous year, with improved quality of revenue and reduced bad debt guidance.

2Strategic Updates and Business Highlights

Redevelopment Projects: Near completion of La Mirada in Scottsdale, ongoing work at Lion Square in Houston, and new redevelopment at Terravita in Scottsdale, with expected contributions to same-store NOI growth in 2026.

Credit Facility: Extended and improved terms of the credit facility, enhancing financial flexibility and supporting long-term growth targets of 5% to 7% core FFO per share.

Asset Recycling: Disposed of Sugar Park Plaza in Houston, with a total of approximately $150 million in acquisitions and dispositions over the past three years. Anticipated additional acquisitions and dispositions by year-end.

Market Strength: Continued demand in Texas and Arizona, driven by favorable demographics and business-friendly environments.

3Forward Guidance and Outlook

Core FFO Guidance: Reiterated for 2025 at $1.03 to $1.07 per share.

Same-Store NOI Growth Target: Improved to a range of 3.5% to 4.5%.

Debt Metrics: Anticipated annualized debt-to-EBITDAre ratio to be in the mid to high 6s by Q4 2025.

4Bad News, Challenges, or Points of Concern

Real Estate Tax Accruals: Noted a significant increase in real estate tax accruals, particularly in Texas, which may impact cash flow and tenant costs.

Occupancy Variability: Smaller centers saw a decline in occupancy as the company took back space for higher revenue opportunities, which could present short-term challenges.

Market Risks: Potential risks associated with economic fluctuations and competitive pressures in the retail sector, particularly affecting smaller tenants.

5Notable Q&A Insights

Leasing Trends: Management expressed confidence in maintaining strong leasing spreads, with no signs of weakening demand for retail space.

Pillarstone Joint Venture Update: A settlement is expected to yield approximately $40 million in proceeds, pending court approval.

Acquisition Strategy: The company continues to focus on acquiring properties with higher growth potential while selectively disposing of lower-growth assets.

Cap Rate Expectations: Anticipated cap rates for acquisitions and dispositions are expected to remain consistent with historical trends, emphasizing a focus on long-term value creation. Overall, Whitestone REIT demonstrated solid financial performance in Q3 2025, with strategic initiatives aimed at enhancing portfolio value and maintaining growth amidst market challenges.