|
(Mark One)
|
[x]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2013
|
OR
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
____________
to
____________
|
Maryland
|
|
76-0594970
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
Item 1.
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
Item 2.
|
|
|
||
Item 3.
|
|
|
||
Item 4.
|
|
|
Item 1.
|
|
|
||
Item 1A.
|
|
|
||
Item 2.
|
|
|
||
Item 3.
|
|
|
||
Item 4.
|
|
|
||
Item 5.
|
|
|
||
Item 6.
|
|
Exhibits
.
|
|
|
|
|
|
||
|
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
|
|
(unaudited)
|
|
|
||||
ASSETS
|
||||||||
Real estate assets, at cost
|
|
|
|
|
||||
Property
|
|
$
|
483,379
|
|
|
$
|
409,669
|
|
Accumulated depreciation
|
|
(62,737
|
)
|
|
(53,920
|
)
|
||
Total real estate assets
|
|
420,642
|
|
|
355,749
|
|
||
Cash and cash equivalents
|
|
9,506
|
|
|
6,544
|
|
||
Marketable securities
|
|
873
|
|
|
1,403
|
|
||
Escrows and acquisition deposits
|
|
6,129
|
|
|
6,672
|
|
||
Accrued rents and accounts receivable, net of allowance for doubtful accounts
|
|
9,169
|
|
|
7,947
|
|
||
Related party receivable
|
|
—
|
|
|
652
|
|
||
Unamortized lease commissions and loan costs
|
|
5,564
|
|
|
4,160
|
|
||
Prepaid expenses and other assets
|
|
2,749
|
|
|
2,244
|
|
||
Total assets
|
|
$
|
454,632
|
|
|
$
|
385,371
|
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
||||||||
Liabilities:
|
|
|
|
|
||||
Notes payable
|
|
$
|
266,260
|
|
|
$
|
190,608
|
|
Accounts payable and accrued expenses
|
|
13,505
|
|
|
13,824
|
|
||
Tenants' security deposits
|
|
3,360
|
|
|
3,024
|
|
||
Dividends and distributions payable
|
|
5,109
|
|
|
5,028
|
|
||
Total liabilities
|
|
288,234
|
|
|
212,484
|
|
||
Commitments and contingencies:
|
|
—
|
|
|
—
|
|
||
Equity:
|
|
|
|
|
||||
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of September 30, 2013 and December 31, 2012
|
|
—
|
|
|
—
|
|
||
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 17,341,947 and 16,943,098 issued and outstanding as of September 30, 2013 and December 31, 2012, respectively
|
|
17
|
|
|
16
|
|
||
Additional paid-in capital
|
|
231,001
|
|
|
224,237
|
|
||
Accumulated deficit
|
|
(69,879
|
)
|
|
(57,830
|
)
|
||
Accumulated other comprehensive loss
|
|
(68
|
)
|
|
(392
|
)
|
||
Total Whitestone REIT shareholders' equity
|
|
161,071
|
|
|
166,031
|
|
||
Noncontrolling interest in subsidiary
|
|
5,327
|
|
|
6,856
|
|
||
Total equity
|
|
166,398
|
|
|
172,887
|
|
||
Total liabilities and equity
|
|
$
|
454,632
|
|
|
$
|
385,371
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Property revenues
|
|
|
|
|
|
|
|
|
||||||||
Rental revenues
|
|
$
|
12,594
|
|
|
$
|
8,992
|
|
|
$
|
35,407
|
|
|
$
|
25,643
|
|
Other revenues
|
|
3,697
|
|
|
2,626
|
|
|
9,548
|
|
|
7,388
|
|
||||
Total property revenues
|
|
16,291
|
|
|
11,618
|
|
|
44,955
|
|
|
33,031
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Property expenses
|
|
|
|
|
|
|
|
|
||||||||
Property operation and maintenance
|
|
4,145
|
|
|
2,969
|
|
|
10,558
|
|
|
8,080
|
|
||||
Real estate taxes
|
|
2,673
|
|
|
1,629
|
|
|
6,483
|
|
|
4,442
|
|
||||
Total property expenses
|
|
6,818
|
|
|
4,598
|
|
|
17,041
|
|
|
12,522
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other expenses (income)
|
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
|
2,722
|
|
|
1,888
|
|
|
7,682
|
|
|
5,392
|
|
||||
Depreciation and amortization
|
|
3,450
|
|
|
2,683
|
|
|
9,783
|
|
|
7,256
|
|
||||
Interest expense
|
|
2,602
|
|
|
2,244
|
|
|
7,664
|
|
|
6,324
|
|
||||
Interest, dividend and other investment income
|
|
(26
|
)
|
|
(121
|
)
|
|
(114
|
)
|
|
(274
|
)
|
||||
Total other expenses
|
|
8,748
|
|
|
6,694
|
|
|
25,015
|
|
|
18,698
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before loss on sale or disposal of assets and income taxes
|
|
725
|
|
|
326
|
|
|
2,899
|
|
|
1,811
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes
|
|
(90
|
)
|
|
(77
|
)
|
|
(227
|
)
|
|
(212
|
)
|
||||
Loss on sale or disposal of assets
|
|
—
|
|
|
(77
|
)
|
|
(48
|
)
|
|
(105
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
635
|
|
|
172
|
|
|
2,624
|
|
|
1,494
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Less: Net income attributable to noncontrolling interests
|
|
21
|
|
|
9
|
|
|
91
|
|
|
99
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Whitestone REIT
|
|
$
|
614
|
|
|
$
|
163
|
|
|
$
|
2,533
|
|
|
$
|
1,395
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
17,036
|
|
|
13,842
|
|
|
16,916
|
|
|
12,409
|
|
||||
Diluted
|
|
17,331
|
|
|
13,961
|
|
|
17,156
|
|
|
12,526
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Distributions declared per common share / OP unit
|
|
$
|
0.2850
|
|
|
$
|
0.2850
|
|
|
$
|
0.8550
|
|
|
$
|
0.8550
|
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
635
|
|
|
$
|
172
|
|
|
$
|
2,624
|
|
|
$
|
1,494
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive gain (loss)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on cash flow hedging activities
|
|
(331
|
)
|
|
(9
|
)
|
|
162
|
|
|
(9
|
)
|
||||
Unrealized gain (loss) on available-for-sale marketable securities
|
|
(39
|
)
|
|
92
|
|
|
176
|
|
|
891
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
|
265
|
|
|
255
|
|
|
2,962
|
|
|
2,376
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Less: Comprehensive income attributable to noncontrolling interests
|
|
8
|
|
|
14
|
|
|
103
|
|
|
158
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income attributable to Whitestone REIT
|
|
$
|
257
|
|
|
$
|
241
|
|
|
$
|
2,859
|
|
|
$
|
2,218
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
Additional
|
|
|
|
Other
|
|
Total
|
|
Noncontrolling
|
|
|
||||||||||||||||||||
|
|
Common Shares
|
|
Paid-In
|
|
Accumulated
|
|
Comprehensive
|
|
Shareholders'
|
|
interests
|
|
Total
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Gain (Loss)
|
|
Equity
|
|
Units
|
|
Dollars
|
|
Equity
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, December 31, 2012
|
|
16,943
|
|
|
$
|
16
|
|
|
$
|
224,237
|
|
|
$
|
(57,830
|
)
|
|
$
|
(392
|
)
|
|
$
|
166,031
|
|
|
685
|
|
|
$
|
6,856
|
|
|
$
|
172,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Exchange of noncontrolling interest OP units for common shares
|
|
113
|
|
|
1
|
|
|
1,132
|
|
|
—
|
|
|
(2
|
)
|
|
1,131
|
|
|
(113
|
)
|
|
(1,131
|
)
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Exchange offer costs
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Issuance of common shares - ATM Program, net of offering costs
|
|
282
|
|
|
—
|
|
|
4,184
|
|
|
—
|
|
|
—
|
|
|
4,184
|
|
|
—
|
|
|
—
|
|
|
4,184
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Issuance of shares under dividend reinvestment plan
|
|
5
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Share-based compensation
|
|
(1
|
)
|
|
—
|
|
|
1,399
|
|
|
—
|
|
|
—
|
|
|
1,399
|
|
|
—
|
|
|
—
|
|
|
1,399
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,582
|
)
|
|
—
|
|
|
(14,582
|
)
|
|
—
|
|
|
(501
|
)
|
|
(15,083
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized gain on change in fair value of available-for-sale marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
170
|
|
|
—
|
|
|
6
|
|
|
176
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized gain on change in value of cash flow hedge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
156
|
|
|
156
|
|
|
—
|
|
|
6
|
|
|
162
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,533
|
|
|
—
|
|
|
2,533
|
|
|
—
|
|
|
91
|
|
|
2,624
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, September 30, 2013
|
|
17,342
|
|
|
$
|
17
|
|
|
$
|
231,001
|
|
|
$
|
(69,879
|
)
|
|
$
|
(68
|
)
|
|
$
|
161,071
|
|
|
572
|
|
|
$
|
5,327
|
|
|
$
|
166,398
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2013
|
|
2012
|
||||
|
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
2,624
|
|
|
$
|
1,494
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
9,783
|
|
|
7,255
|
|
||
Amortization of deferred loan costs
|
|
823
|
|
|
1,064
|
|
||
Amortization of notes payable discount
|
|
387
|
|
|
86
|
|
||
Gain on sale of marketable securities
|
|
(41
|
)
|
|
(110
|
)
|
||
Loss on sale or disposal of assets
|
|
48
|
|
|
105
|
|
||
Bad debt expense
|
|
1,431
|
|
|
720
|
|
||
Share-based compensation
|
|
1,501
|
|
|
384
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Escrows and acquisition deposits
|
|
886
|
|
|
29
|
|
||
Accrued rents and accounts receivable
|
|
(2,653
|
)
|
|
(1,876
|
)
|
||
Related party receivable
|
|
652
|
|
|
—
|
|
||
Unamortized lease commissions
|
|
(993
|
)
|
|
(674
|
)
|
||
Prepaid expenses and other assets
|
|
336
|
|
|
630
|
|
||
Accounts payable and accrued expenses
|
|
(393
|
)
|
|
200
|
|
||
Tenants' security deposits
|
|
336
|
|
|
614
|
|
||
Net cash provided by operating activities
|
|
14,727
|
|
|
9,921
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Acquisitions of real estate
|
|
(58,403
|
)
|
|
(79,400
|
)
|
||
Additions to real estate
|
|
(3,925
|
)
|
|
(9,297
|
)
|
||
Investments in marketable securities
|
|
—
|
|
|
(750
|
)
|
||
Proceeds from sales of marketable securities
|
|
747
|
|
|
5,509
|
|
||
Net cash used in investing activities
|
|
(61,581
|
)
|
|
(83,938
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Distributions paid to common shareholders
|
|
(14,504
|
)
|
|
(10,543
|
)
|
||
Distributions paid to OP unit holders
|
|
(528
|
)
|
|
(783
|
)
|
||
Proceeds from issuance of common shares, net of offering costs
|
|
4,184
|
|
|
58,679
|
|
||
Payments of exchange offer costs
|
|
(23
|
)
|
|
(249
|
)
|
||
Proceeds from notes payable
|
|
47,150
|
|
|
—
|
|
||
Proceeds from revolving credit facility, net
|
|
73,400
|
|
|
33,956
|
|
||
Repayments of notes payable
|
|
(57,936
|
)
|
|
(2,853
|
)
|
||
Payments of loan origination costs
|
|
(1,927
|
)
|
|
(1,546
|
)
|
||
Net cash provided by financing activities
|
|
49,816
|
|
|
76,661
|
|
||
|
|
|
|
|
||||
Net increase in cash and cash equivalents
|
|
2,962
|
|
|
2,644
|
|
||
Cash and cash equivalents at beginning of period
|
|
6,544
|
|
|
5,695
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
9,506
|
|
|
$
|
8,339
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2013
|
|
2012
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
6,950
|
|
|
$
|
5,250
|
|
Cash paid for taxes
|
|
$
|
237
|
|
|
$
|
225
|
|
Non cash investing and financing activities:
|
|
|
|
|
||||
Disposal of fully depreciated real estate
|
|
$
|
194
|
|
|
$
|
523
|
|
Financed insurance premiums
|
|
$
|
883
|
|
|
$
|
856
|
|
Value of shares issued under dividend reinvestment plan
|
|
$
|
72
|
|
|
$
|
68
|
|
Debt assumed with acquisitions of real estate
|
|
$
|
11,100
|
|
|
$
|
9,166
|
|
Interest supplement assumed with acquisition of real estate
|
|
$
|
932
|
|
|
$
|
—
|
|
Acquired interest rate swap
|
|
$
|
—
|
|
|
$
|
1,901
|
|
Debt discount on acquired note payable
|
|
$
|
—
|
|
|
$
|
(1,329
|
)
|
Accrued offering costs
|
|
$
|
15
|
|
|
$
|
85
|
|
Value of common shares exchanged for OP units
|
|
$
|
1,132
|
|
|
$
|
6,224
|
|
Change in fair value of available-for-sale securities
|
|
$
|
176
|
|
|
$
|
891
|
|
Change in fair value of cash flow hedge
|
|
$
|
162
|
|
|
$
|
(9
|
)
|
|
|
September 30, 2013
|
||||||||||||||
|
|
Amortized Cost
|
|
Gains in Accumulated Other Comprehensive Income
|
|
Losses in Accumulated Other Comprehensive Income
|
|
Estimated Fair Value
|
||||||||
Real estate sector common stock
|
|
$
|
1,106
|
|
|
$
|
—
|
|
|
$
|
(233
|
)
|
|
$
|
873
|
|
Total available-for-sale securities
|
|
$
|
1,106
|
|
|
$
|
—
|
|
|
$
|
(233
|
)
|
|
$
|
873
|
|
|
|
December 31, 2012
|
||||||||||||||
|
|
Amortized Cost
|
|
Gains in Accumulated Other Comprehensive Income
|
|
Losses in Accumulated Other Comprehensive Income
|
|
Estimated Fair Value
|
||||||||
Real estate sector common stock
|
|
$
|
1,811
|
|
|
$
|
—
|
|
|
$
|
(408
|
)
|
|
$
|
1,403
|
|
Total available-for-sale securities
|
|
$
|
1,811
|
|
|
$
|
—
|
|
|
$
|
(408
|
)
|
|
$
|
1,403
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
|
|
|
|
|
||||
Tenant receivables
|
|
$
|
5,892
|
|
|
$
|
3,536
|
|
Accrued rents and other recoveries
|
|
6,788
|
|
|
6,696
|
|
||
Allowance for doubtful accounts
|
|
(3,511
|
)
|
|
(2,285
|
)
|
||
Total
|
|
$
|
9,169
|
|
|
$
|
7,947
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
|
|
|
|
|
||||
Leasing commissions
|
|
$
|
6,383
|
|
|
$
|
5,530
|
|
Deferred financing cost
|
|
6,500
|
|
|
4,574
|
|
||
Total cost
|
|
12,883
|
|
|
10,104
|
|
||
Less: leasing commissions accumulated amortization
|
|
(3,452
|
)
|
|
(2,899
|
)
|
||
Less: deferred financing cost accumulated amortization
|
|
(3,867
|
)
|
|
(3,045
|
)
|
||
Total cost, net of accumulated amortization
|
|
$
|
5,564
|
|
|
$
|
4,160
|
|
Description
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Fixed rate notes
|
|
|
|
|
||||
$1.1 million 4.71% Note, due December 31, 2013
|
|
$
|
1,087
|
|
|
$
|
1,087
|
|
$20.2 million 4.2805% Note, due June 6, 2023
(1)
|
|
20,200
|
|
|
13,850
|
|
||
$3.0 million 6.00% Note, due March 31, 2021
(2)
|
|
2,914
|
|
|
2,943
|
|
||
$10.0 million 6.04% Note, due March 1, 2014
|
|
8,998
|
|
|
9,142
|
|
||
$1.5 million 6.50% Note, due March 1, 2014
|
|
1,423
|
|
|
1,444
|
|
||
$11.2 million 6.52% Note, due September 1, 2015
|
|
10,487
|
|
|
10,609
|
|
||
$21.4 million 6.53% Notes, due October 1, 2013
(3)
|
|
—
|
|
|
18,865
|
|
||
$24.5 million 6.56% Note, due October 1, 2013
(3)
|
|
—
|
|
|
23,135
|
|
||
$9.9 million 6.63% Notes, due March 1, 2014
|
|
8,690
|
|
|
8,925
|
|
||
$9.2 million, Prime Rate less 2.00%, due December 29, 2017
(4)
|
|
7,869
|
|
|
7,854
|
|
||
$11.1 million 5.87% Note, due August 6, 2016
|
|
11,972
|
|
|
—
|
|
||
$16.5 million 4.97% Note, due September 26, 2023
|
|
16,450
|
|
|
—
|
|
||
$0.9 million 2.97% Note, due November 28, 2013
|
|
163
|
|
|
15
|
|
||
Floating rate notes
|
|
|
|
|
||||
Unsecured credit facility, LIBOR plus 1.75% to 2.50%, due February 3, 2017
(5)
|
|
142,400
|
|
|
69,000
|
|
||
$26.9 million, LIBOR plus 2.86% Note, due December 1, 2013
|
|
23,107
|
|
|
23,739
|
|
||
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018
|
|
10,500
|
|
|
—
|
|
||
|
|
$
|
266,260
|
|
|
$
|
190,608
|
|
(1)
|
Promissory note had an original balance of
$14.1 million
and an interest rate of
5.695%
, due in 2013, which was refinanced in May 2013. See below for further discussion of the Pinnacle Note.
|
(2)
|
The
6.00%
interest rate is fixed through March 30, 2016. On March 31, 2016, the interest rate will reset to the rate of interest for a
five
-year balloon note with a
thirty
-year amortization as published by the Federal Home Loan Bank.
|
(3)
|
This promissory note was paid in full in August 2013.
|
(4)
|
Promissory note includes an interest rate swap that fixed the interest rate at
5.72%
for the duration of the term.
|
(5)
|
We have entered into an interest rate swap that fixed the
LIBOR
portion of our
$50 million
term loan under our unsecured revolving credit facility at
0.84%
. The swap will begin on January 7, 2014 and will mature on February 3, 2017.
|
Year
|
|
Amount Due
|
||
|
|
|
||
2013
|
|
$
|
24,601
|
|
2014
|
|
19,504
|
|
|
2015
|
|
11,026
|
|
|
2016
|
|
12,126
|
|
|
2017
|
|
151,185
|
|
|
Thereafter
|
|
47,818
|
|
|
Total
|
|
$
|
266,260
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in thousands, except per share data)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
635
|
|
|
$
|
172
|
|
|
$
|
2,624
|
|
|
$
|
1,494
|
|
Less: Net income attributable to noncontrolling interests
|
|
(21
|
)
|
|
(9
|
)
|
|
(91
|
)
|
|
(99
|
)
|
||||
Distributions paid on unvested restricted shares
|
|
(10
|
)
|
|
(5
|
)
|
|
(32
|
)
|
|
(11
|
)
|
||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
|
$
|
604
|
|
|
$
|
158
|
|
|
$
|
2,501
|
|
|
$
|
1,384
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares - basic
|
|
17,036
|
|
|
13,842
|
|
|
16,916
|
|
|
12,409
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Unvested restricted shares
|
|
295
|
|
|
119
|
|
|
240
|
|
|
117
|
|
||||
Weighted average number of common shares - dilutive
|
|
17,331
|
|
|
13,961
|
|
|
17,156
|
|
|
12,526
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
|
Common Shares
(1)
|
|
Noncontrolling OP Unit Holders
|
|
Total
|
||||||||||||||
Quarter Paid
|
|
Distributions Per Common Share
|
|
Total Amount Paid
|
|
Distributions Per OP Unit
|
|
Total Amount Paid
|
|
Total Amount Paid
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Quarter
|
|
$
|
0.2850
|
|
|
$
|
4,865
|
|
|
$
|
0.2850
|
|
|
$
|
165
|
|
|
$
|
5,030
|
|
Second Quarter
|
|
0.2850
|
|
|
4,832
|
|
|
0.2850
|
|
|
169
|
|
|
5,001
|
|
|||||
First Quarter
|
|
0.2850
|
|
|
4,807
|
|
|
0.2850
|
|
|
194
|
|
|
5,001
|
|
|||||
Total
|
|
$
|
0.8550
|
|
|
$
|
14,504
|
|
|
$
|
0.8550
|
|
|
$
|
528
|
|
|
$
|
15,032
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fourth Quarter
|
|
$
|
0.2850
|
|
|
$
|
4,781
|
|
|
$
|
0.2850
|
|
|
$
|
221
|
|
|
$
|
5,002
|
|
Third Quarter
|
|
0.2850
|
|
|
3,859
|
|
|
0.2850
|
|
|
224
|
|
|
4,083
|
|
|||||
Second Quarter
|
|
0.2850
|
|
|
3,362
|
|
|
0.2850
|
|
|
258
|
|
|
3,620
|
|
|||||
First Quarter
|
|
0.2850
|
|
|
3,322
|
|
|
0.2850
|
|
|
301
|
|
|
3,623
|
|
|||||
Total
|
|
$
|
1.1400
|
|
|
$
|
15,324
|
|
|
$
|
1.1400
|
|
|
$
|
1,004
|
|
|
$
|
16,328
|
|
(1)
|
Effective June 27, 2012, each outstanding Class A common share was reclassified into one Class B common share, and the Class B common shares were redesignated as "common shares."
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
(1)
|
|||
Non-vested at January 1, 2013
|
|
534,920
|
|
|
$
|
12.53
|
|
Granted
|
|
298,333
|
|
|
15.59
|
|
|
Vested
|
|
(12,932
|
)
|
|
14.88
|
|
|
Forfeited
|
|
(47,069
|
)
|
|
13.07
|
|
|
Non-vested at September 30, 2013
|
|
773,252
|
|
|
$
|
13.64
|
|
Available for grant at September 30, 2013
|
|
1,679,596
|
|
|
|
(1)
|
The fair value of the common shares granted before trading of the common shares commenced on the NYSE MKT on August 26, 2010 were determined based on observable market transactions occurring near the date of the grants. The fair value of the common shares granted subsequent to August 26, 2010 was determined based on the fair value at the date of grant.
|
|
|
Shares Granted
|
|
Shares Vested
|
||||||||||
|
|
Non-Vested Shares Issued
|
|
Weighted Average Grant-Date Fair Value
|
|
Vested Shares
|
|
Total Vest-Date Fair Value
|
||||||
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
Nine months ended September 30, 2013
|
|
298,333
|
|
|
$
|
15.59
|
|
|
(12,932
|
)
|
|
$
|
192
|
|
Year ended December 31, 2012
|
|
99,700
|
|
|
13.03
|
|
|
(16,208
|
)
|
|
223
|
|
||
Year ended December 31, 2011
|
|
—
|
|
|
—
|
|
|
(5,169
|
)
|
|
80
|
|
||
Year ended December 31, 2010
|
|
31,858
|
|
|
14.09
|
|
|
(55,699
|
)
|
|
695
|
|
•
|
the imposition of federal taxes if we fail to qualify as a REIT in any taxable year or forego an opportunity to ensure REIT status;
|
•
|
uncertainties related to the national economy, the real estate industry in general and in our specific markets;
|
•
|
legislative or regulatory changes, including changes to laws governing REITs;
|
•
|
adverse economic or real estate developments in Texas, Arizona or Illinois;
|
•
|
increases in interest rates and operating costs;
|
•
|
availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures;
|
•
|
decreases in rental rates or increases in vacancy rates;
|
•
|
litigation risks;
|
•
|
lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants;
|
•
|
our inability to renew tenants or obtain new tenants upon the expiration of existing leases;
|
•
|
our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; and
|
•
|
the need to fund tenant improvements or other capital expenditures out of operating cash flow.
|
•
|
30 retail centers containing approximately
2.3 million
square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of
$255.2 million
;
|
•
|
seven office centers containing approximately
0.6 million
square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of
$42.6 million
; and
|
•
|
11 office/flex centers containing approximately
1.2 million
square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of
$38.8 million
.
|
•
|
three retail Community Centered Properties containing approximately
0.5 million
square feet of gross leasable area and having a total carrying value (net of accumulated depreciation) of
$76.7 million
; and
|
•
|
four parcels of land held for future development having a total carrying value of
$7.4 million
.
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2013
|
|
2012
|
||||
Number of properties owned and operated
|
|
55
|
|
|
50
|
|
||
Aggregate gross leasable area (sq. ft.)
|
|
4,597,541
|
|
|
4,195,924
|
|
||
Ending occupancy rate - operating portfolio
(1)
|
|
86
|
%
|
|
87
|
%
|
||
Ending occupancy rate - all properties
|
|
85
|
%
|
|
85
|
%
|
||
|
|
|
|
|
||||
Total property revenues
|
|
$
|
16,291
|
|
|
$
|
11,618
|
|
Total property expenses
|
|
6,818
|
|
|
4,598
|
|
||
Total other expenses
|
|
8,748
|
|
|
6,694
|
|
||
Provision for income taxes
|
|
90
|
|
|
77
|
|
||
Loss on disposal of assets
|
|
—
|
|
|
77
|
|
||
Net income
|
|
635
|
|
|
172
|
|
||
Less: Net income attributable to noncontrolling interests
|
|
21
|
|
|
9
|
|
||
Net income attributable to Whitestone REIT
|
|
$
|
614
|
|
|
$
|
163
|
|
|
|
|
|
|
||||
Funds from operations
(2)
|
|
$
|
4,062
|
|
|
$
|
2,906
|
|
Property net operating income
(3)
|
|
9,473
|
|
|
7,020
|
|
||
Distributions paid on common shares and OP units
|
|
5,030
|
|
|
4,083
|
|
||
Distributions per common share and OP unit
|
|
$
|
0.2850
|
|
|
$
|
0.2850
|
|
Distributions paid as a % of funds from operations
|
|
124
|
%
|
|
141
|
%
|
(1)
|
Excludes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.
|
(2)
|
For a reconciliation of funds from operations to net income, see "Funds From Operations" below.
|
(3)
|
For a reconciliation of property net operating income to net income, see "Property Net Operating Income" below.
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
Overall Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Real estate taxes
|
|
$
|
2,673
|
|
|
$
|
1,629
|
|
|
$
|
1,044
|
|
|
64
|
%
|
Utilities
|
|
1,047
|
|
|
810
|
|
|
237
|
|
|
29
|
%
|
|||
Contract services
|
|
955
|
|
|
657
|
|
|
298
|
|
|
45
|
%
|
|||
Repairs and maintenance
|
|
535
|
|
|
476
|
|
|
59
|
|
|
12
|
%
|
|||
Bad debt
|
|
719
|
|
|
362
|
|
|
357
|
|
|
99
|
%
|
|||
Labor and other
|
|
889
|
|
|
664
|
|
|
225
|
|
|
34
|
%
|
|||
Total property expenses
|
|
$
|
6,818
|
|
|
$
|
4,598
|
|
|
$
|
2,220
|
|
|
48
|
%
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
Same Store Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Real estate taxes
|
|
$
|
1,851
|
|
|
$
|
1,557
|
|
|
$
|
294
|
|
|
19
|
%
|
Utilities
|
|
802
|
|
|
797
|
|
|
5
|
|
|
1
|
%
|
|||
Contract services
|
|
688
|
|
|
642
|
|
|
46
|
|
|
7
|
%
|
|||
Repairs and maintenance
|
|
412
|
|
|
471
|
|
|
(59
|
)
|
|
(13
|
)%
|
|||
Bad debt
|
|
567
|
|
|
360
|
|
|
207
|
|
|
58
|
%
|
|||
Labor and other
|
|
724
|
|
|
659
|
|
|
65
|
|
|
10
|
%
|
|||
Total property expenses
|
|
$
|
5,044
|
|
|
$
|
4,486
|
|
|
$
|
558
|
|
|
12
|
%
|
|
|
Three Months Ended September 30,
|
|
|
|
|
||||||||
New Store Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
||||||
Real estate taxes
|
|
$
|
822
|
|
|
$
|
72
|
|
|
$
|
750
|
|
|
Not meaningful
|
Utilities
|
|
245
|
|
|
13
|
|
|
232
|
|
|
Not meaningful
|
|||
Contract services
|
|
267
|
|
|
15
|
|
|
252
|
|
|
Not meaningful
|
|||
Repairs and maintenance
|
|
123
|
|
|
5
|
|
|
118
|
|
|
Not meaningful
|
|||
Bad debt
|
|
152
|
|
|
2
|
|
|
150
|
|
|
Not meaningful
|
|||
Labor and other
|
|
165
|
|
|
5
|
|
|
160
|
|
|
Not meaningful
|
|||
Total property expenses
|
|
$
|
1,774
|
|
|
$
|
112
|
|
|
$
|
1,662
|
|
|
Not meaningful
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
|
Same Store
|
|
New Store
|
|
Total
|
||||||||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Property revenues
|
|
$
|
11,210
|
|
|
$
|
11,155
|
|
|
$
|
5,081
|
|
|
$
|
463
|
|
|
$
|
16,291
|
|
|
$
|
11,618
|
|
Property expenses
|
|
5,044
|
|
|
4,486
|
|
|
1,774
|
|
|
112
|
|
|
6,818
|
|
|
4,598
|
|
||||||
Property net operating income
|
|
$
|
6,166
|
|
|
$
|
6,669
|
|
|
$
|
3,307
|
|
|
$
|
351
|
|
|
$
|
9,473
|
|
|
$
|
7,020
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
General and administrative
|
|
$
|
2,722
|
|
|
$
|
1,888
|
|
|
$
|
834
|
|
|
44
|
%
|
Depreciation and amortization
|
|
3,450
|
|
|
2,683
|
|
|
767
|
|
|
29
|
%
|
|||
Interest expense
|
|
2,602
|
|
|
2,244
|
|
|
358
|
|
|
16
|
%
|
|||
Interest, dividend and other investment income
|
|
(26
|
)
|
|
(121
|
)
|
|
95
|
|
|
(79
|
)%
|
|||
Total other expenses
|
|
$
|
8,748
|
|
|
$
|
6,694
|
|
|
$
|
2,054
|
|
|
31
|
%
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2013
|
|
2012
|
||||
Number of properties owned and operated
|
|
55
|
|
|
50
|
|
||
Aggregate gross leasable area (sq. ft.)
|
|
4,597,541
|
|
|
4,195,924
|
|
||
Ending occupancy rate - operating portfolio
(1)
|
|
86
|
%
|
|
87
|
%
|
||
Ending occupancy rate - all properties
|
|
85
|
%
|
|
85
|
%
|
||
|
|
|
|
|
||||
Total property revenues
|
|
$
|
44,955
|
|
|
$
|
33,031
|
|
Total property expenses
|
|
17,041
|
|
|
12,522
|
|
||
Total other expenses
|
|
25,015
|
|
|
18,698
|
|
||
Provision for income taxes
|
|
227
|
|
|
212
|
|
||
Loss on disposal of assets
|
|
48
|
|
|
105
|
|
||
Net income
|
|
2,624
|
|
|
1,494
|
|
||
Less: Net income attributable to noncontrolling interests
|
|
91
|
|
|
99
|
|
||
Net income attributable to Whitestone REIT
|
|
$
|
2,533
|
|
|
$
|
1,395
|
|
|
|
|
|
|
||||
Funds from operations
(2)
|
|
$
|
12,388
|
|
|
$
|
8,759
|
|
Property net operating income
(3)
|
|
27,914
|
|
|
20,509
|
|
||
Distributions paid on common shares and OP units
|
|
15,032
|
|
|
11,326
|
|
||
Distributions per common share and OP unit
|
|
$
|
0.8550
|
|
|
$
|
0.8550
|
|
Distributions paid as a % of funds from operations
|
|
121
|
%
|
|
129
|
%
|
(1)
|
Excludes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.
|
(2)
|
For a reconciliation of funds from operations to net income, see "Funds From Operations" below.
|
(3)
|
For a reconciliation of property net operating income to net income, see "Property Net Operating Income" below.
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
Overall Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Real estate taxes
|
|
$
|
6,483
|
|
|
$
|
4,442
|
|
|
$
|
2,041
|
|
|
46
|
%
|
Utilities
|
|
2,670
|
|
|
2,199
|
|
|
471
|
|
|
21
|
%
|
|||
Contract services
|
|
2,670
|
|
|
1,959
|
|
|
711
|
|
|
36
|
%
|
|||
Repairs and maintenance
|
|
1,428
|
|
|
1,335
|
|
|
93
|
|
|
7
|
%
|
|||
Bad debt
|
|
1,434
|
|
|
720
|
|
|
714
|
|
|
99
|
%
|
|||
Labor and other
|
|
2,356
|
|
|
1,867
|
|
|
489
|
|
|
26
|
%
|
|||
Total property expenses
|
|
$
|
17,041
|
|
|
$
|
12,522
|
|
|
$
|
4,519
|
|
|
36
|
%
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
Same Store Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Real estate taxes
|
|
$
|
4,605
|
|
|
$
|
4,339
|
|
|
$
|
266
|
|
|
6
|
%
|
Utilities
|
|
2,145
|
|
|
2,174
|
|
|
(29
|
)
|
|
(1
|
)%
|
|||
Contract services
|
|
1,956
|
|
|
1,930
|
|
|
26
|
|
|
1
|
%
|
|||
Repairs and maintenance
|
|
1,138
|
|
|
1,325
|
|
|
(187
|
)
|
|
(14
|
)%
|
|||
Bad debt
|
|
1,094
|
|
|
694
|
|
|
400
|
|
|
58
|
%
|
|||
Labor and other
|
|
1,863
|
|
|
1,850
|
|
|
13
|
|
|
1
|
%
|
|||
Total property expenses
|
|
$
|
12,801
|
|
|
$
|
12,312
|
|
|
$
|
489
|
|
|
4
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
||||||||
New Store Property Expenses
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
||||||
Real estate taxes
|
|
$
|
1,878
|
|
|
$
|
103
|
|
|
$
|
1,775
|
|
|
Not meaningful
|
Utilities
|
|
525
|
|
|
25
|
|
|
500
|
|
|
Not meaningful
|
|||
Contract services
|
|
714
|
|
|
29
|
|
|
685
|
|
|
Not meaningful
|
|||
Repairs and maintenance
|
|
290
|
|
|
10
|
|
|
280
|
|
|
Not meaningful
|
|||
Bad debt
|
|
340
|
|
|
26
|
|
|
314
|
|
|
Not meaningful
|
|||
Labor and other
|
|
493
|
|
|
17
|
|
|
476
|
|
|
Not meaningful
|
|||
Total property expenses
|
|
$
|
4,240
|
|
|
$
|
210
|
|
|
$
|
4,030
|
|
|
Not meaningful
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
Same Store
|
|
New Store
|
|
Total
|
||||||||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Property revenues
|
|
$
|
32,570
|
|
|
$
|
32,330
|
|
|
$
|
12,385
|
|
|
$
|
701
|
|
|
$
|
44,955
|
|
|
$
|
33,031
|
|
Property expenses
|
|
12,801
|
|
|
12,312
|
|
|
4,240
|
|
|
210
|
|
|
17,041
|
|
|
12,522
|
|
||||||
Property net operating income
|
|
$
|
19,769
|
|
|
$
|
20,018
|
|
|
$
|
8,145
|
|
|
$
|
491
|
|
|
$
|
27,914
|
|
|
$
|
20,509
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
General and administrative
|
|
$
|
7,682
|
|
|
$
|
5,392
|
|
|
$
|
2,290
|
|
|
42
|
%
|
Depreciation and amortization
|
|
9,783
|
|
|
7,256
|
|
|
2,527
|
|
|
35
|
%
|
|||
Interest expense
|
|
7,664
|
|
|
6,324
|
|
|
1,340
|
|
|
21
|
%
|
|||
Interest, dividend and other investment income
|
|
(114
|
)
|
|
(274
|
)
|
|
160
|
|
|
(58
|
)%
|
|||
Total other expenses
|
|
$
|
25,015
|
|
|
$
|
18,698
|
|
|
$
|
6,317
|
|
|
34
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
FFO AND FFO CORE
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income attributable to Whitestone REIT
|
|
$
|
614
|
|
|
$
|
163
|
|
|
$
|
2,533
|
|
|
$
|
1,395
|
|
Depreciation and amortization of real estate assets
|
|
3,427
|
|
|
2,657
|
|
|
9,716
|
|
|
7,160
|
|
||||
Loss on sale or disposal of assets
|
|
—
|
|
|
77
|
|
|
48
|
|
|
105
|
|
||||
Net income attributable to noncontrolling interests
|
|
21
|
|
|
9
|
|
|
91
|
|
|
99
|
|
||||
FFO
|
|
4,062
|
|
|
2,906
|
|
|
12,388
|
|
|
8,759
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Non cash share-based compensation expense
|
|
834
|
|
|
118
|
|
|
1,501
|
|
|
384
|
|
||||
Acquisition costs
|
|
130
|
|
|
338
|
|
|
612
|
|
|
532
|
|
||||
Rent support agreement payments received
|
|
91
|
|
|
—
|
|
|
91
|
|
|
—
|
|
||||
Legal settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(131
|
)
|
||||
FFO Core
|
|
$
|
5,117
|
|
|
$
|
3,362
|
|
|
$
|
14,592
|
|
|
$
|
9,544
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
PROPERTY NET OPERATING INCOME
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income attributable to Whitestone REIT
|
|
$
|
614
|
|
|
$
|
163
|
|
|
$
|
2,533
|
|
|
$
|
1,395
|
|
General and administrative expenses
|
|
2,722
|
|
|
1,888
|
|
|
7,682
|
|
|
5,392
|
|
||||
Depreciation and amortization
|
|
3,450
|
|
|
2,683
|
|
|
9,783
|
|
|
7,256
|
|
||||
Interest expense
|
|
2,602
|
|
|
2,244
|
|
|
7,664
|
|
|
6,324
|
|
||||
Interest, dividend and other investment income
|
|
(26
|
)
|
|
(121
|
)
|
|
(114
|
)
|
|
(274
|
)
|
||||
Provision for income taxes
|
|
90
|
|
|
77
|
|
|
227
|
|
|
212
|
|
||||
Loss on disposal of assets
|
|
—
|
|
|
77
|
|
|
48
|
|
|
105
|
|
||||
Net income attributable to noncontrolling interests
|
|
21
|
|
|
9
|
|
|
91
|
|
|
99
|
|
||||
NOI
|
|
$
|
9,473
|
|
|
$
|
7,020
|
|
|
$
|
27,914
|
|
|
$
|
20,509
|
|
•
|
Cash flow from operations of
$14,727,000
for the
nine
months ended
September 30, 2013
;
|
•
|
Net proceeds of
$73,400,000
from the Facility, net of origination costs;
|
•
|
Net proceeds of
$4,184,000
from issuance of common shares;
|
•
|
Proceeds from notes payable of
$47,150,000
;
|
•
|
Proceeds from sales of marketable securities of
$747,000
;
|
•
|
Payment of distributions to common shareholders and OP unit holders of
$15,032,000
;
|
•
|
Acquisitions of real estate of
$58,403,000
;
|
•
|
Additions to real estate of
$3,925,000
;
|
•
|
Payments of notes payable of
$57,936,000
; and
|
•
|
Payments of loan origination costs of
$1,927,000
.
|
Description
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Fixed rate notes
|
|
|
|
|
||||
$1.1 million 4.71% Note, due December 31, 2013
|
|
$
|
1,087
|
|
|
$
|
1,087
|
|
$20.2 million 4.2805% Note, due June 6, 2023
(1)
|
|
20,200
|
|
|
13,850
|
|
||
$3.0 million 6.00% Note, due March 31, 2021
(2)
|
|
2,914
|
|
|
2,943
|
|
||
$10.0 million 6.04% Note, due March 1, 2014
|
|
8,998
|
|
|
9,142
|
|
||
$1.5 million 6.50% Note, due March 1, 2014
|
|
1,423
|
|
|
1,444
|
|
||
$11.2 million 6.52% Note, due September 1, 2015
|
|
10,487
|
|
|
10,609
|
|
||
$21.4 million 6.53% Notes, due October 1, 2013
(3)
|
|
—
|
|
|
18,865
|
|
||
$24.5 million 6.56% Note, due October 1, 2013
(3)
|
|
—
|
|
|
23,135
|
|
||
$9.9 million 6.63% Notes, due March 1, 2014
|
|
8,690
|
|
|
8,925
|
|
||
$9.2 million, Prime Rate less 2.00%, due December 29, 2017
(4)
|
|
7,869
|
|
|
7,854
|
|
||
$16.5 million 4.97% Note, due September 26, 2023
|
|
16,450
|
|
|
—
|
|
||
$11.1 million 5.87% Note, due August 6, 2016
|
|
11,972
|
|
|
—
|
|
||
$0.9 million 2.97% Note, due November 28, 2013
|
|
163
|
|
|
15
|
|
||
Floating rate notes
|
|
|
|
|
|
|||
Unsecured credit facility, LIBOR plus 1.75% to 2.50%, due February 3, 2017
(5)
|
|
142,400
|
|
|
69,000
|
|
||
$26.9 million, LIBOR plus 2.86% Note, due December 1, 2013
|
|
23,107
|
|
|
23,739
|
|
||
$10.5 million, LIBOR plus 2.00% Note, due September 24, 2018
|
|
10,500
|
|
|
—
|
|
||
|
|
$
|
266,260
|
|
|
$
|
190,608
|
|
(1)
|
Promissory note had an original balance of
$14.1 million
and an interest rate of
5.695%
, due in 2013, which was refinanced in May 2013. See below for further discussion of the Pinnacle Note.
|
(2)
|
The
6.00%
interest rate is fixed through March 30, 2016. On March 31, 2016, the interest rate will reset to the rate of interest for a
five
-year balloon note with a
thirty
-year amortization as published by the Federal Home Loan Bank.
|
(3)
|
This promissory note was paid in full in August 2013.
|
(4)
|
Promissory note includes an interest rate swap that fixed the interest rate at
5.72%
for the duration of the term.
|
(5)
|
We have entered into an interest rate swap that fixed the LIBOR portion of our $50 million term loan under the Facility at 0.84%. The swap will begin on January 7, 2014 and will mature on February 3, 2017.
|
|
|
|
||
Year
|
|
Amount Due
|
||
|
|
|
||
2013
|
|
$
|
24,601
|
|
2014
|
|
19,504
|
|
|
2015
|
|
11,026
|
|
|
2016
|
|
12,126
|
|
|
2017
|
|
151,185
|
|
|
Thereafter
|
|
47,818
|
|
|
Total
|
|
$
|
266,260
|
|
|
|
Common Shares
(1)
|
|
Noncontrolling OP Unit Holders
|
|
Total
|
||||||||||||||
Quarter Paid
|
|
Distributions Per Common Share
|
|
Total Amount Paid
|
|
Distributions Per OP Unit
|
|
Total Amount Paid
|
|
Total Amount Paid
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Quarter
|
|
$
|
0.2850
|
|
|
$
|
4,865
|
|
|
$
|
0.2850
|
|
|
$
|
165
|
|
|
$
|
5,030
|
|
Second Quarter
|
|
0.2850
|
|
|
4,832
|
|
|
0.2850
|
|
|
169
|
|
|
5,001
|
|
|||||
First Quarter
|
|
0.2850
|
|
|
4,807
|
|
|
0.2850
|
|
|
194
|
|
|
5,001
|
|
|||||
Total
|
|
$
|
0.8550
|
|
|
$
|
14,504
|
|
|
$
|
0.8550
|
|
|
$
|
528
|
|
|
$
|
15,032
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fourth Quarter
|
|
$
|
0.2850
|
|
|
$
|
4,781
|
|
|
$
|
0.2850
|
|
|
$
|
221
|
|
|
$
|
5,002
|
|
Third Quarter
|
|
0.2850
|
|
|
3,859
|
|
|
0.2850
|
|
|
224
|
|
|
4,083
|
|
|||||
Second Quarter
|
|
0.2850
|
|
|
3,362
|
|
|
0.2850
|
|
|
258
|
|
|
3,620
|
|
|||||
First Quarter
|
|
0.2850
|
|
|
3,322
|
|
|
0.2850
|
|
|
301
|
|
|
3,623
|
|
|||||
Total
|
|
$
|
1.1400
|
|
|
$
|
15,324
|
|
|
$
|
1.1400
|
|
|
$
|
1,004
|
|
|
$
|
16,328
|
|
(1)
|
Effective June 27, 2012, each outstanding Class A common share was reclassified into one Class B common share, and the Class B common shares were redesignated as "common shares." See Note 10 to the accompanying consolidated financial statements.
|
(a)
|
During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.
|
(b)
|
Not applicable.
|
(c)
|
Not applicable.
|
|
|
|
|
WHITESTONE REIT
|
Date:
|
November 6, 2013
|
|
|
/s/ James C. Mastandrea
|
|
|
|
|
James C. Mastandrea
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
November 6, 2013
|
|
|
/s/ David K. Holeman
|
|
|
|
|
David K. Holeman
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial and Principal Accounting Officer)
|
EXHIBIT INDEX
|
Exhibit No.
|
Description
|
3.1.1
|
Articles of Amendment and Restatement of Declaration of Trust (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on July 31, 2008)
|
3.1.2
|
Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3(i).1 to the Registrant's Current Report on Form 8-K, filed on December 6, 2006)
|
3.1.3
|
Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)
|
3.1.4
|
Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)
|
3.1.5
|
Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)
|
3.1.6
|
Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.1 to the Registrant's Current Report on Form 8-K, filed on June 27, 2012)
|
3.1.7
|
Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.2 to Registrant's Current Report on Form 8-K, filed on June 27, 2012)
|
3.2
|
Amended and Restated Bylaws (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 9, 2008)
|
10.1*
|
Separation Agreement between Whitestone REIT and Richard Rollnick, dated June 28, 2013.
|
12.1*
|
Statement of Calculation of Consolidated Ratio of Earnings to Fixed Charges.
|
31.1*
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1**
|
Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2**
|
Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS***
|
XBRL Instance Document
|
|
|
101.SCH***
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL***
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB***
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE***
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF***
|
XBRL Taxonomy Extension Definition Linkbase Document
|
1.
|
Whitestone agrees to accept Employee's voluntary resignation from employment with Whitestone, effective Friday, June 28,2013.
|
2.
|
Upon his resignation, Employee shall turn over to Whitestone all Whitestone property in his possession or control, including, without limitation, keys, access cards, identification cards, telephones, telephone cards, badges, computers, equipment, customer information and business data of any kind.
|
3.
|
Whitestone agrees to respond to reference inquiries by confirming Employee's title, salary hire date and date of resignation.
|
1.
|
Salary Continuation:
Employee's salary will be continued through July 31,2013 (1 month) paid on regular payroll dates, at the rate of $5,769.24 per payroll period.
|
2.
|
Restricted Stock:
Employee shall receive 4,535 shares (.20 x 22,668) of restricted stock granted pursuant to Whitestone's Equity Incentive Plan with respect to which performance targets are achieved during 2013, provided that such shares will only be issued after verification of the satisfaction of performance targets after completion of the audit of Whitestone's 2013 financial statements during the first quarter of 2014.
|
3.
|
Time Vested Shares:
Employee was granted 2,345 time vested restricted shares and has previously vested in 782 of these shares. The balance of 1,563 unvested time vested restricted shares will be forfeited.
|
4.
|
Health Benefits:
Whitestone will continue to reimburse Employee's biweekly Medicare Premium in the amount of $151.85 through July 31, 2013.
|
1.
|
As a material consideration for this Agreement contained herein, Employee agrees, commencing on the effective date hereof through and including the second (2nd) anniversary date of the date on which this Agreement expires or is otherwise earlier terminated, Employee will not (i) directly or indirectly compete with Whitestone in selling, marketing or promoting products and/or services similar to that offered by Whitestone (the "Restricted Business''), (ii) directly or indirectly solicit any person, tenant, employee, consultant, agent, or independent contractor of Whitestone from Whitestone, or ( iii) contact, solicit, interfere with, or endeavor to entice away from Whitestone, any person or any tenant or perspective tenant.
|
/s/ Richard Rollnick
|
|
/s/ James C. Mastandrea
|
||
Employee
|
|
|
James C. Mastandrea, CEO
|
|
|
|
|
Whitestone REIT
|
|
|
|
|
|
|
Date signed:
|
7/3/2013
|
|
Date signed:
|
7/5/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Greg Belsheim
|
|
|
|
|
Witness
|
|
|
|
|
|
|
|
|
|
Date signed:
|
7/5/2013
|
|
Nine Months
|
|
|
|
|
|
||||||||||
|
Ended September 30,
|
|
Year Ended December 31,
|
|||||||||||||
|
2013
|
|
2012
|
2011
|
2010
|
2009
|
||||||||||
Earnings
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
2,624
|
|
|
$
|
53
|
|
$
|
1,333
|
|
$
|
1,575
|
|
$
|
2,075
|
|
Plus: Taxes
|
227
|
|
|
286
|
|
225
|
|
264
|
|
222
|
|
|||||
Plus: Fixed charges
|
7,664
|
|
|
8,732
|
|
6,344
|
|
6,040
|
|
6,190
|
|
|||||
Total earnings
|
$
|
10,515
|
|
|
$
|
9,071
|
|
$
|
7,902
|
|
$
|
7,879
|
|
$
|
8,487
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
|
|
|
|
|
|
|
||||||||||
Interest expense
|
7,664
|
|
|
8,732
|
|
6,344
|
|
6,040
|
|
6,190
|
|
|||||
Total fixed charges
|
$
|
7,664
|
|
|
$
|
8,732
|
|
$
|
6,344
|
|
$
|
6,040
|
|
$
|
6,190
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
1.37
|
|
|
1.04
|
|
1.25
|
|
1.30
|
|
1.37
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q, for the period ended
September 30, 2013
, of Whitestone REIT;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this quarterly report on Form 10-Q, for the period ended
September 30, 2013
, of Whitestone REIT;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James C. Mastandrea
|
James C. Mastandrea
|
Chairman and Chief Executive Officer
|
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ David K. Holeman
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David K. Holeman
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Chief Financial Officer
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