Whitestone REIT Reports Leasing Highlights for First Quarter 2013
- 130,897 square feet in new, expansion and renewal leases in Q1 2013
- 160 new tenants added since Q1 2012
HOUSTON--(BUSINESS WIRE)-- Whitestone REIT (WSR), a real estate investment trust that acquires, owns and operates Community Centered PropertiesTM, today reported occupancy and leasing highlights for the first quarter ended March 31, 2013. The physical occupancy of its Operating Portfolio1 which excludes new acquisitions, and properties which are undergoing significant redevelopment or re-tenanting, was 86% as of March 31, 2012, down 1% from the prior quarter and previous year. The Companys total occupancy was 84% as of the end of the current quarter, a 1% decrease over the year-ago quarter ended March 31, 2011. The decrease in the occupancy rate as of the end of the quarter was primarily a result of the companies re-tenanting efforts to continue to strengthen the overall tenant base and revenues.
Whitestones acquisition and leasing strategies are interdependent to its growth. The acquisition team closed on Headquarters Village on April 1, an 89,134 square foot ("sf") Community Center located within the Preston Road retail corridor in Plano, Texas, for $25.7 million in an all-cash transaction. The acquisition closed one day after the end of the first quarter, and will be reflected in the Companys second quarter results. Additionally, our acquisition pipeline remains strong, with a total value exceeding $500 million, and includes one property currently under contract which is expected to close in the second quarter.
The leasing team signed 71 leases totaling 130,897 sf in new, expansion, and renewal leases during the first quarter. The Company has added 160 new tenants to its roster since March 31, 2012, and now has over 1,100 primarily small entrepreneurial retail service business tenants, an increase of 17% over the year ago quarter. The Company focuses on smaller space tenants: over 70% of Whitestones tenants lease space that is less than 3,000 square feet, which provide retail services as opposed to goods to the surrounding community, and are located in multi-cultural neighborhoods.
"During the first quarter, we made a concerted effort to continue to strengthen our tenant and revenue base by replacing tenants paying below market rental rates with stronger tenants paying higher rental rates. The timing of these replacements was the primary cause for our occupancy decrease of 1% from the previous year. For example, in our Torrey Square Center, a local dollar store tenant leasing approximately 26,000 square feet at below market rent was moved out during the quarter and will be replaced with a national clothing retailer with a rental rate of nearly double that of the existing tenant. We expect the occupancy and rent to commence on this new tenant early in the third quarter. This improvement in the quality of our tenants is a direct result of the application or our Community Centered PropertyTM business model and the improvements we have made at the Center. Simultaneously, we have sought to balance our re-tenanting program with lease-up in our new value-add acquisitions, and occupancy has continued to increase in these Centers. For example, our Gilbert Tuscany Center in Gilbert Arizona was 16% occupied when we bought it in late 2010, increased to 28% occupied at the end of first quarter last year, and is now 49% occupied. The Citadel, one of our Scottsdale Centers, was 59% occupied at the end of the first quarter last year and is now 85% occupied. Our new acquisitions provide inventory properties with lower occupancies to lease and grow our overall occupancies, thus increasing revenue, net operating income and net asset value," said James C. Mastandrea, Chairman and Chief Executive Officer. "The timing and allocation of resources necessary to in capture the intrinsic value in our portfolio of new acquisitions and longer-held properties, is being strategically applied to increase revenues and increase property values in the dynamic markets in which we operate."
Whitestones Community Centered Property business model is focused on leasing smaller spaces (less than 3,000 square feet "sf") to entrepreneurial small business owners who provide retail services to their surrounding neighborhood. The following leases completed during the quarter are provided as examples to illustrate the types of tenants and the tenant mix that Drives Traffic, Driving ValueTM to Whitestones Community Centers:
Southwest Region: Arizona
Fountain Square: Avalon Beauty School will soon join this Community Center, having signed a 13,000 sf lease during the quarter.
Pima Norte: Five leases were signed in this small business services center, ranging from 230 sf to 621 sf, including a new 576 sf lease for a mortgage company.
Central Region: Texas/Illinois
Corporate Park Northwest Houston: Fifteen leases totaling 21,849 sf were signed in this entrepreneurial small business incubator themed Community Center for service-oriented tenants in small spaces ranging from 672 sf to 9,150 sf.
Providence Houston: Three leases totaling 5,926 sf ranging from 1,052 sf to 1,954 sf were signed in this Sugar Land area Center, including a new lease for a 1,950 sf Salvadorian restaurant.
Centre South Houston: A new Zumba dance and exercise studio will soon join this neighborhood Center in Southeast Houston, having signed a 1,917 sf lease.
About Whitestone REIT
Whitestone REIT is a fully integrated real estate company that owns, operates and re-develops Community Centered PropertiesTM, which are visibly located properties in established or developing culturally diverse neighborhoods. Whitestone focuses on value-creation in its Centers as it markets, leases and manages its Centers to match tenants with the shared needs of surrounding neighborhoods. Operations are structured for providing cost-effective service to local service-oriented smaller space tenants (less than 3,000 sf). Whitestone has a diverse tenant base concentrated on service offerings such as medical, education, and casual dining. The largest of its over 1,100 tenants comprises less than 2% of its rental revenues. Headquartered in Houston, Texas and founded in 1998, the Company is internally managed with a portfolio of commercial Centers in Texas, Arizona and Illinois. Whitestones portfolio at the time it completed its Initial Public Offering ("IPO") in August 2010 was comprised of 36 Community Centers including one in Arizona, one in Illinois, and 34 in Texas. One property, Greens Road in Houston, has been sold since the IPO (sold in April 2012). Whitestone currently owns 52 Community Centers, including three development sites: 15 in Arizona, one in Illinois, and 36 in Texas. For additional information about the Company, please visit www.whitestonereit.com. The investor section of the Companys website has links to SEC filings, news releases, financial reports and investor newsletters.
1 Operating Portfolio - excludes new acquisitions,
through the earlier of (1) attainment of 90% occupancy or 18 months of
ownership, and (2) properties which are undergoing significant
redevelopment or re-tenanting.
2 Development Portfolio includes new acquisitions and properties which are undergoing significant redevelopment or re-tenanting.
Statements included herein that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, which by their nature, involve known and unknown risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed or implied by these statements. Reference is made to the Company's regulatory filings with the Securities and Exchange Commission for information or factors that may impact the Company's performance.
Dave Holeman, 713-435-2227
Chief Financial Officer
Source: Whitestone REITCopyright Business Wire 2013