Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today
announced that it filed an investor presentation with the
Securities and Exchange Commission (the “SEC”) in connection with
its 2024 Annual Meeting of Shareholders on May 14, 2024. The
presentation is available at
https://ir.whitestonereit.com/news-and-events/presentations/default.aspx.
Highlights of the presentation include:
1)
Whitestone’s track record of superior
performance since David Holeman’s CEO appointment in January
2022
- Since David
Holeman’s appointment, the strategies implemented by our Board and
management team have delivered superior total shareholders returns
of 21% for Whitestone, exceeding all of its peers and the MSCI US
REIT Index.1
- Whitestone has
achieved some of the highest SS NOI growth among our peers2 since
2022 driven by our high-quality portfolio and a management team
that is laser focused on delivering consistent results.
- Our Company is
positioned to continue delivering strong results with the midpoint
of 2024 guidance indicating 11% year over year Core FFO per share
growth.
2) Our
strong, thoughtfully refreshed Board’s demonstrated track record of
driving sustainable shareholder value creation
- Significant
Board refreshment with 3 of 6 Trustees added in the past 2 years,
achieving a balance of deep institutional knowledge, diversity and
fresh perspectives that complement our long-term growth
strategy.
- Independent
Board committed to taking action to protect shareholders; reflected
by recent corporate governance and management enhancements,
including naming David Holeman CEO in January 2022, terminating our
shareholder rights plan and allowing shareholders to propose and
vote on bylaw amendments.
- Board overseeing
a strategy that is driving value and executing on our long term
strategic and operational goals.
3) Erez’s campaign is not
in the best interest of all shareholders
- Erez’s
principal, Bruce Schanzer, is attempting to recycle a playbook from
his time as CEO at Cedar Realty Trust, a company plagued by
governance issues, reputational concerns and long-term operational
and share price underperformance.
- Erez has
demanded a change in Whitestone’s Board with the sole purpose of
embarking on an immediate sale or liquidation of the Company under
adverse market conditions; Erez has offered no substantive
operational or strategic ideas. Their criticisms of our strategy,
operations, and corporate governance do not have merit and are
meant to mislead shareholders.
- The Whitestone
Board is open to all avenues to drive shareholder value including
evaluating transaction opportunities, but we are opposed to selling
under adverse market conditions. We want to maximize value for
shareholders not crystallize value at the worst possible time.
However, Erez demonstrates a singular focus on short-term gains at
the expense of the long-term value opportunity evidenced by
Whitestone’s share price momentum.
- Erez’s nominees
are wholly unqualified to join our Board. Bruce Schanzer has a
tumultuous, conflicted and value destructive track record at Cedar
Realty Trust. Catherine Clark, who Erez touts as bringing strong
shopping center REIT expertise, has never acquired or sold assets
in our core markets; worse, during her tenure at RPT Realty, the
company was among the worst performing shopping center REITs on a
total returns basis, underperforming Whitestone by over 42%.
The Board of Trustees does NOT endorse any of Erez’s nominees
and unanimously recommends that shareholders vote “FOR” ONLY the
election of the six (6) nominees proposed by the Board of Trustees
on the WHITE proxy card, and as the Board of Trustees recommends on
all other proposals.
Whitestone shareholders who have any questions or
require any assistance with voting may contact our proxy
solicitation firm, Mackenzie Partners, toll-free at
(800)-322-2885.
Advisors
BofA Securities is serving as financial advisor
to the Company.
About Whitestone REIT
Whitestone REIT (NYSE: WSR) is a
community-centered real estate investment trust (REIT) that
acquires, owns, operates, and develops open-air, retail centers
located in some of the fastest growing markets in the country:
Phoenix, Austin, Dallas-Fort Worth, Houston and San
Antonio.
Our centers are convenience focused:
merchandised with a mix of service-oriented tenants providing food
(restaurants and grocers), self-care (health and fitness), services
(financial and logistics), education and entertainment to the
surrounding communities. The Company believes its strong
community connections and deep tenant relationships are key to the
success of its current centers and its acquisition strategy.
For additional information, please visit the Company's investor
relations website.
Important Additional Information and Where to Find
It
Whitestone REIT has filed a definitive proxy statement on
Schedule 14A (the “2024 Proxy Statement”) and a WHITE proxy card
with the U.S. Securities and Exchange Commission (the “SEC”) in
connection with the solicitation of proxies for its 2024 Annual
Meeting of Shareholders (the “2024 Annual Meeting”). SHAREHOLDERS
ARE STRONGLY ENCOURAGED TO READ THE 2024 PROXY STATEMENT (INCLUDING
ANY AMENDMENTS OR SUPPLEMENTS THERETO), THE WHITE PROXY CARD, AND
ANY OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may
obtain a free copy of the 2024 Proxy Statement, any amendments or
supplements to the 2024 Proxy Statement and other documents that
the Company files with the SEC from the SEC’s website at
www.sec.gov or the Company’s website at
https://ir.whitestonereit.com/corporate-profile/default.aspx as
soon as reasonably practicable after such materials are
electronically filed with, or furnished to, the SEC.
Certain Information Regarding Participants in
Solicitation
Whitestone REIT, its trustees and certain of its executive
officers may be deemed to be participants in the solicitation of
proxies from Company shareholders in connection with the matters to
be considered at the 2024 Annual Meeting Information regarding the
direct and indirect interests, by security holdings or otherwise,
of the persons who may, under the rules of the SEC, be considered
participants in the solicitation of shareholders in connection with
the 2024 Annual Meeting is included in the 2024 Proxy Statement of
the, which was filed with the SEC on April 4, 2024. To the extent
securities holdings by the Company’s trustees and executive
officers as reported in the 2024 Proxy Statement have changed, such
changes have been or will be reflected on Statements of Change in
Ownership on Forms 3, 4 or 5 filed with the SEC, which can also be
found through the Company’s website
(https://ir.whitestonereit.com/corporate-profile/default.aspx) in
the section “Investor Relations” or through the SEC’s website.
These documents are available free of charge as described
above.
Forward-Looking Statements
This Report contains forward-looking statements within the
meaning of the federal securities laws, including discussion and
analysis of our financial condition and results of operations,
statements related to our expectations regarding the performance of
our business, and other matters. These forward-looking statements
are not historical facts but are the intent, belief or current
expectations of our management based on its knowledge and
understanding of our business and industry. Forward-looking
statements are typically identified by the use of terms such as
“may,” “will,” “should,” “potential,” “predicts,” “anticipates,”
“expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or
the negative of such terms and variations of these words and
similar expressions, although not all forward-looking statements
include these words. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other
factors, some of which are beyond our control, are difficult to
predict and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking
statements.
Factors that could cause actual results to differ materially
from any forward-looking statements made in this Report include:
the imposition of federal income taxes if we fail to qualify as a
real estate investment trust (“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 or conditions in Texas or Arizona, Houston and Phoenix
in particular, including the potential impact of public health
emergencies, such as COVID-19, on our tenants’ ability to pay their
rent, which could result in bad debt allowances or straight-line
rent reserve adjustments; increases in interest rates, including as
a result of inflation operating costs or general and
administrative expenses; our current geographic concentration in
the Houston and Phoenix metropolitan area makes us susceptible to
local economic downturns and natural disasters, such as floods and
hurricanes, which may increase as a result of climate change,
increasing focus by stakeholders on environmental, social, and
governance matters, financial institution
disruption; 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;
harm to our reputation, ability to do business and results of
operations as a result of improper conduct by our employees, agents
or business partners; litigation risks; lease-up risks, including
leasing risks arising from exclusivity and consent provisions in
leases with significant tenants; our inability to renew tenant
leases or obtain new tenant leases upon the expiration of existing
leases; risks related to generative artificial intelligence tools
and language models, along with the potential interpretations and
conclusions they might make regarding our business and prospects,
particularly concerning the spread of misinformation; our inability
to generate sufficient cash flows due to market conditions,
competition, uninsured losses, changes in tax or other applicable
laws; geopolitical conflicts, such as the ongoing conflict between
Russia and Ukraine, the conflict in the Gaza Strip and unrest in
the Middle East; the need to fund tenant improvements or other
capital expenditures out of operating cash flow; the extent to
which our estimates regarding Pillarstone REIT Operating
Partnership LP's financial condition and results of operations
differ from actual results; and the risk that we are unable to
raise capital for working capital, acquisitions or other uses on
attractive terms or at all and other factors detailed in the
Company's most recent Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and other documents the Company files with the
Securities and Exchange Commission from time to time.
Non-GAAP Financial Measures
This release contains supplemental financial measures that are
not calculated pursuant to U.S. generally accepted accounting
principles (“GAAP”) including EBITDAre, FFO, NOI and net debt.
Following are explanations and reconciliations of these metrics to
their most comparable GAAP metric.
FFO: Funds From Operations: The National Association of Real
Estate Investment Trusts (“NAREIT”) defines FFO as net income
(loss) (calculated in accordance with GAAP), excluding depreciation
and amortization related to real estate, gains or losses from the
sale of certain real estate assets, gains and losses from change in
control, and impairment write-downs of certain real estate assets
and investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity. We calculate FFO in a manner consistent with
the NAREIT definition and also include adjustments for our
unconsolidated real estate partnership.
Core Funds from Operations (“Core FFO”) is a non-GAAP measure.
From time to time, we report or provide guidance with respect
to “Core FFO” which removes the impact of certain
non-recurring and non-operating transactions or other items we do
not consider to be representative of our core operating results
including, without limitation, default interest on debt of real
estate partnership, extinguishment of debt cost, gains or losses
associated with litigation involving the Company that is not in the
normal course of business, and proxy contest professional
fees.
Management uses FFO and Core FFO as a supplemental measure to
conduct and evaluate our business because there are certain
limitations associated with using GAAP net income (loss) alone as
the primary measure of our operating performance. Historical cost
accounting for real estate assets in accordance with GAAP
implicitly assumes that the value of real estate assets diminishes
predictably over time. Because real estate values instead have
historically risen or fallen with market conditions, management
believes that the presentation of operating results for real estate
companies that use historical cost accounting is insufficient by
itself. In addition, securities analysts, investors and other
interested parties use FFO and Core FFO as the primary metric
for comparing the relative performance of equity REITs.
FFO and Core FFO should not be considered as an alternative to
net income or other measurements under GAAP, as an indicator of our
operating performance or to cash flows from operating, investing or
financing activities as a measure of liquidity. FFO and Core
FFO do not reflect working capital changes, cash expenditures for
capital improvements or principal payments on indebtedness.
Although our calculation of FFO is consistent with that of
NAREIT, there can be no assurance that FFO and Core FFO
presented by us is comparable to similarly titled measures of other
REITs.
NOI: Net Operating Income: Management believes that NOI is
a useful measure of our property operating performance. We define
NOI as operating revenues (rental and other revenues) less property
and related expenses (property operation and maintenance and real
estate taxes). Other REITs may use different methodologies for
calculating NOI and, accordingly, our NOI may not be comparable to
other REITs. Because NOI excludes general and administrative
expenses, depreciation and amortization, equity or deficit in
earnings of real estate partnership, interest expense, interest,
dividend and other investment income, provision for income taxes,
gain on sale of property from discontinued
operations, management fee (net of related expenses)
and gain or loss on sale or disposition of assets, and
includes NOI of real estate partnership (pro rata) and net
income attributable to noncontrolling interest, it provides a
performance measure that, when compared year-over-year, reflects
the revenues and expenses directly associated with owning and
operating commercial real estate properties and the impact to
operations from trends in occupancy rates, rental rates and
operating costs, providing perspective not immediately apparent
from net income. We use NOI to evaluate our operating performance
since NOI allows us to evaluate the impact that factors such as
occupancy levels, lease structure, lease rates and tenant base have
on our results, margins and returns. In addition, management
believes that NOI provides useful information to the investment
community about our property and operating performance when
compared to other REITs since NOI is generally recognized as a
standard measure of property performance in the real estate
industry. However, NOI should not be viewed as a measure of our
overall financial performance since it does not reflect the level
of capital expenditure and leasing costs necessary to maintain the
operating performance of our properties, including general and
administrative expenses, depreciation and amortization, equity or
deficit in earnings of real estate partnership, interest expense,
interest, dividend and other investment income, provision for
income taxes, gain on sale of property from discontinued
operations, management fee (net of related expenses) and gain or
loss on sale or disposition of assets.
Same Store NOI: Management believes that Same Store NOI is a
useful measure of the Company’s property operating performance
because it includes only the properties that have been owned for
the entire period being compared, and it is frequently used by
the investment community. Same Store NOI assists in eliminating
differences in NOI due to the acquisition or disposition of
properties during the period being presented, providing a more
consistent measure of the Company’s performance. The Company
defines Same Store NOI as operating revenues (rental and other
revenues, excluding straight-line rent adjustments, amortization of
above/below market rents, and lease termination fees) less property
and related expenses (property operation and maintenance and real
estate taxes), Non-Same Store NOI, and NOI of our investment in
Pillarstone OP (pro rata). We define “Non-Same Stores” as
properties that have been acquired since the beginning of the
period being compared and properties that have been sold, but not
classified as discontinued operations. Other REITs may use
different methodologies for calculating Same Store NOI, and
accordingly, the Company's Same Store NOI may not be comparable to
that of other REITs.
Investor and Media Contact:
David MordyDirector, Investor
RelationsWhitestone REIT(713) 435-2219ir@whitestonereit.com
________________________1 From 1/18/2022 to
4/12/2024. Peers include AKR, BFS, BRX, FRT, IVT, KIM, KRG, PECO,
REG, ROIC, SITC and UE.2 Peers include AKR, BFS, BRX, FRT, IVT,
KIM, KRG, PECO, REG, ROIC, SITC and UE.
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