Whitestone REIT Announces Operating Results for Fourth Quarter and Full Year 2012

  Whitestone REIT Announces Operating Results for Fourth Quarter and Full Year
  2012

                               2012 Highlights

  *33% Year-Over-Year Increase in Annual Revenues.
  *34% Year-Over-Year Increase in Annual Property Net Operating Income.
  *35% Year-Over Year Increase in Annual FFO-Core. FFO-Core Per Share of
    $0.90 up from $0.89 in 2011.
  *Acquired Five Community Centers and One Land Parcel for Aggregate Purchase
    Price of $107.6 Million
  *Gross real estate assets increased 40% from prior year end
  *Net income of $50,000 for 2012, or $2.2 million excluding one-time expense
    of $2.2 million.

Business Wire

HOUSTON -- March 12, 2013

Whitestone REIT (NYSE: WSR - “Whitestone” or the “Company”), a fully
integrated real estate company that owns, operates and re-develops Community
Centered Properties^TM, which are visibly located in established or developing
culturally diverse neighborhoods, announced its financial results for the
fourth quarter and year ended December 31, 2012.

James C. Mastandrea, Whitestone's Chairman and Chief Executive Officer stated,
“For the third consecutive year, the pace of growth for Whitestone accelerated
as we acquired five additional Community Centered Property properties for an
aggregate purchase price of $107.6 million in 2012. Furthermore, we again
delivered on our internal growth initiatives of adding tenants to increase
occupancy rates while executing on select redevelopments to increase the value
our assets. We continue to benefit from our commitment to our small space
business model, which is helping drive improvement in our leasing efforts and
margins. As we look to 2013 with a strengthened balance sheet and additional
financial flexibility, we expect to add additional accretive acquisitions from
our deep and growing pipeline of off-market opportunities in high growth
markets.”

Highlights: Fourth Quarter 2012 Compared to Fourth Quarter 2011

During the year ended December 31, 2012, the Company deployed approximately
$107.6 million towards acquisitions of value-add Community Centered
Properties^TM in its target markets, including $84.9 million in acquisitions
that were completed between September and year-end, which contributed only
partially to 2012 results.

The Company's fourth quarter results, except Funds From Operations
(“FFO”)-Core, include a previously disclosed contingency that resulted in an
expense of $2.2 million, or ($0.12) per fully diluted share and operating
partnership ("OP") unit, related to the disposition of the Chief Executive
Officer's former residence in Cleveland, Ohio, which had been on the market
for more than five years.

  *Total revenues for the fourth quarter of 2012 were $13.5 million, an
    increase of $3.5 million, or 35% from the fourth quarter of 2011.
  *FFO-Core for the fourth quarter 2012 increased 26%, or approximately $0.8
    million, to $3.9 million as compared to $3.1 million in the fourth quarter
    of 2011. FFO-Core per diluted common share and OP unit was $0.22, as
    compared to $0.25 per diluted common share and OP unit for the same period
    in 2011. FFO-Core in the fourth quarter 2012 included non-cash share based
    compensation related to the vesting of 2009 restricted share grants of
    $0.3 million or $0.02 per diluted common share and OP unit. FFO-Core
    excludes acquisition expenses of $698,000 and $339,000 in 2012 and 2011,
    respectively, and executive relocation expense of $2.2 million in 2012.

  *FFO for the fourth quarter 2012 was $1.5 million, or $0.09 per diluted
    common share and OP unit, as compared to $2.8 million or $0.22 per diluted
    common share and OP unit for the fourth quarter 2011. The expense
    recognized related to the relocation agreement with the Company's Chief
    Executive Officer included in FFO for the fourth quarter 2012 was $2.2
    million, or ($0.12) per diluted common share and OP unit.

  *Property net operating income (“NOI”) increased 31% to $8.4 million for
    the fourth quarter 2012 as compared to $6.4 million for the same period in
    2011. The increase of $2.0 million is primarily attributable to new
    acquisitions.

  *Net loss attributable to Whitestone REIT was $1.3 million, or ($0.08) per
    diluted common share for the fourth quarter 2012, compared to $556,000 or
    $0.05 per diluted common share for the same period in 2011. Excluding the
    $2.2 million one-time executive relocation charge discussed above, net
    income attributable to Whitestone REIT would have been $800,000 or $0.05
    per diluted common share for the fourth quarter of 2012.

  *The Company declared a quarterly cash distribution of $0.285 per common
    share and OP unit for the first quarter of 2013, to be paid in three equal
    installments of $0.095 in January, February and March 2013. The
    distribution rate has remained the same since the distribution paid on
    July 8, 2010. In March 2013, the Company also declared its second quarter
    cash distribution of $0.285 per common share and OP unit, to be paid in
    three equal installments of $0.095 in April, May and June 2013.

Highlights: 2012 Compared to 2011

The Company's annual results, except Funds From Operations (“FFO”)-Core,
include a previously disclosed contingency that resulted in an expense of $2.2
million, or ($0.15) per fully diluted share and operating partnership ("OP")
unit, respectively, related to the disposition of the Chief Executive
Officer's former residence in Cleveland, Ohio, which had been on the market
for more than five years.

  *Total revenues for 2012 were $46.6 million, an increase of $11.7 million,
    or 34% from 2011.
  *FFO-Core increased 35%, or approximately $3.4 million, to $13.0 million
    for 2012 as compared to $9.6 million in 2011. FFO-Core per diluted common
    share and OP unit was $0.90 for 2012, as compared to $0.89 per diluted
    common share and OP unit for 2011. FFO-Core excludes acquisition expenses
    of $698,000 and $666,000 in 2012 and 2011, respectively, legal recoveries
    and expenses of $131,000 and $254,000 in 2012 and 2011, respectively, and
    executive relocation expense of $2.2 million in 2012.

  *Whitestone's FFO was $10.3 million, or $0.71 per diluted common share and
    OP unit for 2012, as compared to $8.7 million, or $0.81 per diluted common
    share and OP unit, for 2011. FFO includes the $2.2 million executive
    relocation expense.

  *Property NOI increased 34% to $28.9 million in 2012, as compared to $21.6
    million for 2011. The increase of $7.3 million is primarily attributable
    to new acquisitions.

  *Net income attributable to Whitestone was $50,000, or $0.00 per diluted
    common share for 2012, as compared to $1.1 million, or $0.12 per diluted
    common share, for 2011.Excluding the $2.2 million charge for the
    disposition of our Chief Executive Officer's former residence, net income
    attributable to Whitestone REIT would have been $2.2 million or $0.15 per
    diluted common share for 2012.

2012 Leasing Highlights

The Company's Operating Portfolio Occupancy Rate was 87% as of December 31,
2012 and December 31, 2011. The Company defines Operating Portfolio Occupancy
Rate as physical occupancy in all properties, excluding new acquisitions
through the earlier of attainment of 90% occupancy or 18 months of ownership
and properties that are undergoing significant redevelopment or re-tenanting.
Total physical property occupancy, which includes properties under
redevelopment, undergoing significant retenanting and recent acquisitions,
increased to 85% as of December 31, 2012 from 84% as of December 31, 2011.

The Company signed new and renewal leases representing 685,000 square feet
during 2012 primarily with tenants that required less than 3,000 square feet
in multi-cultural neighborhoods, which drives premium rents. Leasing activity
increased from the prior year as represented by:

  *An increase of 9% in total lease value of new and renewal leases signed:
    $35.2 million in 2012 versus $32.3 million in 2011; and
  *An increase of 4% in the number of new and renewal leases signed: 323 in
    2012 versus 312 in 2011.

Community Centered Properties^TM Portfolio Statistics

As of December 31, 2012, Whitestone owned 51 Community Centered Properties^TM
with approximately 4.3 million square feet of gross leasable area, including
three development land parcels, located in five of the top markets in the
United States in terms of population growth: Houston, Dallas, San Antonio,
Phoenix and Chicago.

The Company's strategic efforts target entrepreneurial tenants that provide
services to the surrounding neighborhood at each Community Centered
Property^TM. These tenants tend to occupy smaller spaces (less than 3,000
square feet) and, as of December 31, 2012, provided a 55% premium rental rate
compared to Whitestone's larger space tenants. As of December 31, 2012 the
Company serviced 1,066 tenants throughout its portfolio. No single tenant
accounted for more than 1.2% of the Company's annualized base rental revenues
as of December 31, 2012.

Balance Sheet

Undepreciated real estate assets increased 40% to $409.7 million as of
December 31, 2012 as compared to the prior year end.

Real estate debt as a percentage of total market capitalization was 43% as of
December 31, 2012 as compared to 45% as of December 31, 2011.

Whitestone had 24 properties unencumbered by mortgage debt as of December 31,
2012, with an undepreciated cost basis of $206.8 million. The total
undepreciated value of the Company's real estate assets and real estate
indebtedness was $409.6 million and $292.4 million, respectively as of
December 31, 2012 and 2011. As of December 31, 2012, $97.9 million, or
approximately 51%, of the Company's debt was subject to fixed interest rates.
The Company's weighted average interest rate on all debt as of the end of the
fourth quarter was 4.7%.

Subsequent Events

On February 4, 2013, Whitestone, through its operating partnership, closed on
an amended and restated credit facility that amended its existing $125 million
unsecured revolving credit facility. The amended and restated credit facility
increases the borrowing capacity by $50 million to $175 million, adds an
accordion feature that will allow borrowing capacity under the facility to
further increase to a total of $225 million, reduces the interest rate by
approximately 1% (LIBOR plus a margin of 1.75% - 2.50% based on overall
corporate leverage), and extends the term by two years to February 3, 2017.

On March 8, 2013 we entered into an interest rate swap, with a January 7, 2014
start date, that fixes the LIBOR portion of our $50 million term loan under
the credit facility at 0.84%.

Supplemental Financial Information

Further details regarding Whitestone REIT's results of operations, communities
and tenants can be accessed at the Company's website at
www.whitestonereit.com.

Webcast and Conference Call

The Company will host a conference call for investors and other interested
parties on Tuesday, March 12, 2013 at 5:00 p.m. (Eastern Time). Interested
parties can listen to the call live on the internet through the Investor
Relations section of the Company's website, www.whitestonereit.com, using the
News/Events - Press Releases tab. The call is also accessible via telephone by
dialing 1-877-741-4239 for domestic participants or 1-719-325-4744 for
international participants. Listeners should go to the website at least 15
minutes prior to the call to download and install any necessary audio
software. Those dialing in should call in at least five to ten minutes prior
to the start.

The conference call will be recorded and a telephone replay will be available
through March 26, 2013, by dialing 1-877-870-5176 for domestic participants or
1-858-384-5517 for international participants and entering the pass code
4423137. Additionally, a replay of the call will be available on the Company’s
website until its next earnings release.

The earnings release and supplemental data package will be located in the
Investor Relations section of the website on the News/Events - Press Releases
tab. For those without internet access, the fourth quarter earnings release
and supplemental data package will be available by mail upon request. To
receive a copy, please call the Company’s Investor Relations line at (713)
435-2219.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a fully integrated real estate investment trust
("REIT") that owns, operates and redevelops Community Centered Properties^TM,
which are visibly located properties in established or developing culturally
diverse neighborhoods. Whitestone focuses on value-creation in its community
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 square feet). Whitestone has a diversified tenant
base concentrated on service offerings including medical, education, casual
dining, and convenience services. The largest of its approximately 1,100
tenants comprised less than 1.2% of its annualized base rental revenues as of
December 31, 2012. Founded in 1998, the Company is internally managed with a
portfolio of commercial properties in Texas, Arizona, and Illinois. For
additional information about the Company, please visit www.whitestonereit.com.
The Investor Relations section of the Company's website contains filings with
the Securities and Exchange Commission, news releases, financial reports and
investor newsletters.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). We intend for all such
forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act and
Section 21E of the Exchange Act, as applicable. Such information is subject to
certain risks and uncertainties, as well as known and unknown risks, which
could cause actual results to differ materially from those projected or
anticipated. Therefore, such statements are not intended to be a guarantee of
our performance in future periods. Such forward-looking statements can
generally be identified by our use of forward-looking terminology, such as
"may," "will," "expect," "intend," "anticipate," "believe," "continue" or
similar words or phrases that are predictions of future events or trends and
which do not relate solely to historical matters. Examples of such statements
in this press release include, but are not limited to, the strength of the
Company's leasing portfolio and lease renewal activities.

The following are some of the factors that could cause the Company's actual
results and its expectations to differ materially from those described in the
Company's forward-looking statements: the Company's ability to successfully
identify and consummate suitable acquisitions; current adverse market and
economic conditions; lease terminations or lease defaults; the impact of
competition on the Company's efforts to renew existing leases; changes in the
economies and other conditions of the specific markets in which the Company
operates; economic and regulatory changes; the success of the Company's real
estate strategies and investment objectives; the Company's ability to continue
to qualify as a REIT under the Internal Revenue Code; and other factors
detailed in our most recent Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and other documents we file with the Securities and Exchange
Commission.

Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. We cannot
guarantee the accuracy of any such forward-looking statements contained in
this press release, and we do not intend to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.

Non-GAAP Financial Measures

This release contains the supplemental financial measures that are not
calculated pursuant to U.S. generally accepted accounting principles ("GAAP")
including FFO, FFO-Core, and NOI. Following are explanations and
reconciliations of these metrics to their most comparable GAAP metric.

FFO: Management believes that FFO is a useful measure of the Company's
operating performance. The Company computes FFO as defined by the National
Association of Real Estate Investment Trusts, or NAREIT, which states that FFO
should represent net income (loss) available to common shareholders (computed
in accordance with GAAP) excluding gains or losses from sales of operating
assets, impairment charges and extraordinary items, plus depreciation and
amortization of operating properties, including the Company's share of
unconsolidated real estate joint ventures and partnerships. FFO does not
represent cash flows from operating activities determined in accordance with
GAAP and should not be considered an alternative to net income as an
indication of the Company's performance or to cash flow from operations as a
measure of liquidity or ability to make distributions.

Management considers FFO a useful additional measure of performance for an
equity REIT because it facilitates an understanding of the operating
performance of its properties without giving effect to real estate
depreciation and amortization, which assumes that the value of real estate
assets diminishes predictably over time. Since real estate values have
historically risen or fallen with market conditions, management believes that
FFO provides a more meaningful and accurate indication of the Company's
performance and useful information for the investment community to compare
Whitestone to other REITs since FFO is generally recognized as the industry
standard for reporting the operations of REITs.

Other REITs may use different methodologies for calculating FFO, and
accordingly, the Company's FFO may not be comparable to other REITs. The
Company presents FFO per diluted share calculations that are based on the
outstanding dilutive common shares plus the outstanding OP units for the
periods presented.

FFO-Core: Management believes that the computation of FFO in accordance with
NAREIT's definition includes certain items that are not indicative of the
results provided by the Company's operating portfolio and affect the
comparability of the Company's period-over-period performance. These items
include, but are not limited to, extraordinary non-recurring expenses, such as
those incurred in connection with the relocation agreement entered into with
the Company's Chief Executive Officer, legal settlements, legal and
professional fees, gains and losses on insurance claim settlements and
acquisition costs. Therefore, in addition to FFO, management uses FFO-Core,
which the Company defines to exclude such items. Management believes that
these adjustments are appropriate in determining FFO-Core as they are not
indicative of the operating performance of the Company's assets. In addition,
the Company believes that FFO-Core is a useful supplemental measure for the
investing community to use in comparing the Company to other REITs as many
REITs provide some form of adjusted or modified FFO.

NOI: Management believes that NOI is a useful measure of the Company's
property operating performance. The Company defines NOI as operating revenues
(rental and other revenues) less property and related expenses (property
operation and maintenance and real estate taxes). Because NOI excludes general
and administrative expenses, depreciation and amortization, involuntary
conversion, interest expense, interest income, provision for income taxes and
gain or loss on sale or disposition of assets, 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. The Company uses NOI to evaluate its operating performance since
NOI allows the Company to evaluate the impact that factors, such as occupancy
levels, lease structure, lease rates and tenant base, have on the Company's
results, margins and returns. In addition, management believes that NOI
provides useful information to the investment community about the Company's
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 the
Company's overall financial performance since it does not reflect general and
administrative expenses, depreciation and amortization, involuntary
conversion, interest expense, interest income, provision for income taxes,
gain or loss on sale or disposition of assets, and the level of capital
expenditures and leasing costs necessary to maintain the operating performance
of the Company's properties. Other REITs may use different methodologies for
calculating NOI, and accordingly, the Company's NOI may not be comparable to
other REITs.

Whitestone REIT and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)
                                                   
                                                    December 31,
                                                     2012         2011
ASSETS
Real estate assets, at cost
Property                                             $ 409,669     $ 292,360
Accumulated depreciation                             (53,920   )   (45,472   )
Total real estate assets                             355,749       246,888
Cash and cash equivalents                            6,544         5,695
Marketable securities                                1,403         5,131
Escrows and acquisition deposits                     6,672         4,996
Accrued rents and accounts receivable, net of        7,947         6,053
allowance for doubtful accounts
Related party receivable                             652           —
Unamortized lease commissions and loan costs         4,160         3,755
Prepaid expenses and other assets                    2,244        975       
Total assets                                         $ 385,371    $ 273,493 
LIABILITIES AND EQUITY
Liabilities:
Notes payable                                        $ 190,608     $ 127,890
Accounts payable and accrued expenses                13,824        9,017
Tenants' security deposits                           3,024         2,232
Dividends and distributions payable                  5,028        3,647     
Total liabilities                                    212,484      142,786   
Commitments and contingencies:                       —             —
Equity:
Preferred shares, $0.001 par value per share;
50,000,000 shares authorized; none issued and        —             —
outstanding as of December 31, 2012 and December
31, 2011
Common shares, $0.001 par value per share;
400,000,000 shares authorized; 16,943,098 and        16            10
11,437,855 issued and outstanding as of December
31, 2012 and December 31, 2011, respectively
Additional paid-in capital                           224,237       158,127
Accumulated other comprehensive loss                 (392      )   (1,119    )
Accumulated deficit                                  (57,830   )   (41,060   )
Total Whitestone REIT shareholders' equity           166,031       115,958
Noncontrolling interest in subsidiary                6,856        14,749    
Total equity                                         172,887      130,707   
Total liabilities and equity                         $ 385,371    $ 273,493 

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

                                         Year Ended December 31,
                                          2012        2011        2010
Property revenues
Rental revenues                           $ 36,131     $ 27,814     $ 25,901
Other revenues                            10,423      7,101       5,632    
Total property revenues                   46,554      34,915      31,533   
                                                                    
Property expenses
Property operation and maintenance        11,255       8,659        8,358
Real estate taxes                         6,384       4,668       3,925    
Total property expenses                   17,639      13,327      12,283   
                                                                    
Other expenses (income)
General and administrative                7,616        6,648        4,992
Depreciation and amortization             10,229       7,749        6,805
Executive relocation expense              2,177        —            —
Involuntary conversion                    —            —            (558     )
Interest expense                          8,732        6,344        6,040
Interest, dividend and other investment   (290     )   (460     )   (28      )
income
Total other expense                       28,464      20,281      17,251   
                                                                    
Income before loss on sale or disposal    451          1,307        1,999
of assets and income taxes
                                                                    
Provision for income taxes                (286     )   (225     )   (264     )
Loss on sale or disposal of assets        (112     )   (146     )   (160     )
Income before gain on sale of property    53           936          1,575
                                                                    
Gain on sale of property                  —           397         —        
                                                                    
Net income                                53           1,333        1,575
                                                                    
Less: Net income attributable to          3           210         470      
noncontrolling interests
                                                                    
Net income attributable to Whitestone     $ 50        $ 1,123     $ 1,105  
REIT

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

                                           Year Ended December 31,
                                            2012        2011        2010
Basic and Diluted Earnings Per Share:
Net income attributable to common
shareholders excluding amounts              $ 0.00      $ 0.12      $ 0.27
attributable to unvested restricted
shares
                                                                      
Weighted average number of common shares
outstanding:
Basic                                       13,496       9,028        4,012
Diluted                                     13,613       9,042        4,041
                                                                      
Distributions declared per common share /   $ 1.1400     $ 1.1400     $ 0.8550
OP unit
                                                                      
Consolidated Statements of Comprehensive
Income
                                                                      
Net income                                  $ 53         $ 1,333      $ 1,575
                                                                      
Other comprehensive gain (loss)
                                                                      
Unrealized loss on cash flow hedging        1            —            —
activities
Unrealized gain (loss) on                   920         (1,329   )   —
available-for-sale marketable securities
                                                                      
Comprehensive income                        974          4            1,575
                                                                      
Less: Comprehensive income attributable     57          1           470
to noncontrolling interests
                                                                      
Comprehensive income attributable to        $ 917       $ 3         $ 1,105
Whitestone REIT

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

                           Three Months Ended          Twelve Months Ended
                                                    
                           December 31,                December 31,
                           2012         2011          2012        2011
                           (unaudited)   (unaudited)
Property revenues
Rental revenues            $  10,488     $  7,352      $ 36,131     $ 27,814
Other revenues             3,035        2,616        10,423      7,101    
Total property revenues    13,523       9,968        46,554      34,915   
                                                                    
Property expenses
Property operation and     3,175         2,331         11,255       8,659
maintenance
Real estate taxes          1,942        1,278        6,384       4,668    
Total property expenses    5,117        3,609        17,639      13,327   
                                                                    
Other expenses (income)
General and                2,224         1,911         7,616        6,648
administrative
Depreciation and           2,973         2,048         10,229       7,749
amortization
Executive relocation       2,177         —             2,177        —
expense
Involuntary conversion     —             —             —            —
Interest expense           2,408         1,642         8,732        6,344
Interest, dividend and     (16       )   (81       )   (290     )   (460     )
other investment income
Total other expense        9,766        5,520        28,464      20,281   
                                                                    
Income (loss) before
gain (loss) on sale or     (1,360    )   839           451          1,307
disposal of assets and
income taxes
                                                                    
Provision for income       (74       )   (60       )   (286     )   (225     )
taxes
Loss on sale or disposal   (7        )   (129      )   (112     )   (146     )
of assets
Income (loss) before       (1,441    )   650           53           936
gain on sale of property
                                                                    
Gain on sale of property   —            —            —           397      
                                                                    
Net income (loss)          (1,441    )   650           53           1,333
                                                                    
Less: Net income (loss)
attributable to            (61       )   94           3           210      
noncontrolling interests
                                                                    
Net income (loss)
attributable to            $  (1,380 )   $  556       $ 50        $ 1,123  
Whitestone REIT

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data

                      Three Months Ended December    Twelve Months Ended
                       31,                             December 31,
                       2012            2011           2012        2011
                       (unaudited)      (unaudited)
Basic and Diluted
Earnings Per Share:
Net income (loss)
attributable to
common shareholders
excluding amounts      $  (0.08   )     $   0.05      $ 0.00      $ 0.12   
attributable to
unvested restricted
shares
                                                                    
Weighted average
number of common
shares outstanding:
Basic                  16,733           11,232         13,496       9,028
Diluted                16,733           11,244         13,613       9,042
                                                                    
Distributions
declared per common    $  0.2850        $   0.2850     $ 1.1400     $ 1.1400
share / OP unit
                                                                    
Consolidated
Statements of
Comprehensive Income
(loss)
                                                                    
Net income (loss)      $  (1,441  )     $   650        $ 53         $ 1,333
                                                                    
Other comprehensive
gain (loss)
                                                                    
Unrealized gain on
cash flow hedging      10               —              1            —
activities
Unrealized gain
(loss) on
available-for-sale     29              552           920         (1,329   )
marketable
securities
                                                                    
Comprehensive income   (1,402     )     1,202          974          4
(loss)
                                                                    
Less: Comprehensive
income (loss)
attributable to        (59        )     131           57          1        
noncontrolling
interests
                                                                    
Comprehensive income
(loss) attributable    $  (1,343  )     $   1,071     $ 917       $ 3      
to Whitestone REIT

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                
                                           Year Ended December 31,
                                           2012         2011        2010
Cash flows from operating activities:
Net income                                 $  53        $ 1,333     $ 1,575
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization              10,229       7,749       6,805
Amortization of deferred loan costs        1,426        616         420
Amortization of notes payable discount     317          —           —
Gain on sale of marketable securities      (110     )   (192    )   —
Loss (gain) on sale or disposal of         112          (251    )   160
assets and properties
Bad debt expense                           1,004        615         536
Share-based compensation                   725          310         297
Changes in operating assets and
liabilities:
Escrows and acquisition deposits           (1,104   )   (519    )   3,840
Accrued rent and accounts receivable       (2,930   )   (1,939  )   (748     )
Related party receivable                   (652     )   —           —
Unamortized lease commissions              (994     )   (995    )   (783     )
Prepaid expenses and other assets          (525     )   296         446
Accounts payable and accrued expenses      2,875        993         (2,319   )
Tenants' security deposits                 792         436        166      
Net cash provided by operating             11,218      8,452      10,395   
activities
Cash flows from investing activities:
Acquisitions of real estate                (98,350  )   (65,910 )   (8,625   )
Additions to real estate                   (10,815  )   (7,568  )   (4,143   )
Proceeds from sale of property             —            1,567       —
Investments in marketable securities       (750     )   (13,520 )   —
Proceeds from sales of marketable          5,508       7,252      —        
securities
Net cash used in investing activities      (104,407 )   (78,179 )   (12,768  )
Cash flows from financing activities:
Distributions paid to common               (15,324  )   (10,045 )   (5,158   )
shareholders
Distributions paid to OP unit holders      (1,004   )   (1,974  )   (2,249   )
Proceeds from issuance of common shares,   58,679       59,683      22,970
net of offering costs
Payments of exchange offer costs           (479     )   —           —
Proceeds from revolving credit facility,   58,000       11,000      —
net
Proceeds from notes payable                —            2,905       1,430
Repayments of notes payable                (4,146   )   (3,128  )   (2,957   )
Payments of loan origination costs         (1,688   )   (610    )   (98      )
Repurchase of common stock                 —           —          (249     )
Net cash provided by financing             94,038      57,831     13,689   
activities
Net increase (decrease) in cash and cash   849          (11,896 )   11,316
equivalents
Cash and cash equivalents at beginning     5,695       17,591     6,275    
of period
Cash and cash equivalents at end of        $  6,544    $ 5,695    $ 17,591 
period

Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental Disclosures

(in thousands)

                                            Year Ended December 31,
                                             2012        2011        2010
Supplemental disclosure of cash flow
information:
Cash paid for interest                       $ 7,137      $ 5,719      $ 5,621
Cash paid for taxes                          $ 326        $ 215        $ 262
Non cash investing and financing
activities:
Disposal of fully depreciated real estate    $ —          $ 238        $ 598
Financed insurance premiums                  $ 856        $ 649        $ 616
Value of shares issued under dividend        $ 90         $ 6          $ —
reinvestment plan
Acquired interest rate swap                  $ 1,901      $ —          $ —
Debt discount on acquired note payable       $ (1,329 )   $ —          $ —
Value of common shares exchanged for OP      $ 7,272      $ 4,972      $ —
units
Change in fair value of available-for-sale   $ 920        $ (1,329 )   $ —
securities
Change in fair value of cash flow hedge      $ 1          $ —          $ —
Debt assumed with acquisitions of real       $ 9,166      $ 15,425     $ —
estate
Change in par value of common shares         $ —          $ —          $ 7
Reclassification of dividend reinvestment    $ —          $ —          $ 606
shares with rescission rights

Whitestone REIT and Subsidiaries

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share and per unit data)

                   Three Months Ended       Year Ended
                                        
                   December 31,             December 31,
                   2012        2011        2012        2011       2010
FFO AND
FFO-CORE
Net income
(loss)
attributable       $ (1,380 )   $ 556       $ 50         $ 1,123     $ 1,105
to Whitestone
REIT
Depreciation
and
amortization       2,948        2,015       10,108       7,625       6,697
of real estate
assets
(Gain) Loss on
disposal of        7            129         112          (251    )   160
assets
Net income
(loss)
attributable       (61      )   94         3           210        470     
to
noncontrolling
interests
FFO                1,514        2,794       10,273       8,707       8,432
                                                                     
Acquisition        166          339         $ 698        $ 666       $ 46
costs
Relocation         2,177        —           2,177        —           —
arrangement
Gain on
insurance          —            —           —            —           (558    )
claim
settlement
Legal              —           —          (131     )   254        —       
settlement
FFO-Core           $ 3,857     $ 3,133    $ 13,017    $ 9,627    $ 7,920 
                                                                     
FFO PER SHARE
AND OP UNIT:
Numerator:
FFO                $ 1,514      $ 2,794     $ 10,273     $ 8,707     $ 8,432
Distributions
paid on
unvested           (11      )   (4      )   (22      )   (17     )   (27     )
restricted
common shares
FFO excluding
amounts
attributable       $ 1,503     $ 2,790    $ 10,251    $ 8,690    $ 8,405 
to unvested
restricted
common shares
FFO-Core
excluding
amounts
attributable       $ 3,846     $ 3,129    $ 12,995    $ 9,610    $ 7,893 
to unvested
restricted
common shares
                                                                     
Denominator:
Weighted
average number
of total           16,733       11,232      13,496       9,028       4,012
common shares
- basic
Weighted
average number
of total           735         1,381      848         1,705      1,815   
noncontrolling
OP units -
basic
Weighted
average number
of total
commons shares     17,468       12,613      14,344       10,733      5,827
and
noncontrolling
OP units -
basic
                                                                     
Effect of
dilutive
securities:
Unvested
restricted         121         12         117         14         29      
shares
Weighted
average number
of total
common shares      17,589      12,625     14,461      10,747     5,856   
and
noncontrolling
OP units -
dilutive
                                                                     
FFO per common
share and OP       $ 0.09       $ 0.22      $ 0.71       $ 0.81      $ 1.44
unit - basic
FFO per common
share and OP       $ 0.09       $ 0.22      $ 0.71       $ 0.81      $ 1.44
unit - diluted
                                                                     
FFO-Core per
common share       $ 0.22       $ 0.25      $ 0.91       $ 0.90      $ 1.35
and OP unit -
basic
FFO-Core per
common share       $ 0.22       $ 0.25      $ 0.90       $ 0.89      $ 1.35
and OP unit -
diluted

Whitestone REIT and Subsidiaries

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per share and per unit data)

                 Three Months Ended       Year Ended
                                       
                 December 31,             December 31,
                 2012        2011        2012        2011        2011
PROPERTY NET
OPERATING
INCOME
                                                                    
Net income
(loss)
attributable     $ (1,380 )   $ 556       $ 50         $ 1,123      $ 1,105
to Whitestone
REIT
General and
administrative   2,224        1,911       7,616        6,648        4,992
expenses
Depreciation
and              2,973        2,048       10,229       7,749        6,805
amortization
Involuntary      —            —           —            —            (558     )
conversion
Executive
relocation       2,177        —           2,177        —            —
expense
Interest         2,408        1,642       8,732        6,344        6,040
expense
Interest,
dividend and
other            (16      )   (81     )   (290     )   (460     )   (28      )
investment
income
Provision for    74           60          286          225          264
income taxes
Loss on
disposal of      7            129         112          146          160
assets
Gain on sale     —            —           —            (397     )   —
of property
Net income
(loss)
attributable     (61      )   94         3           210         470      
to
noncontrolling
interests
NOI              $ 8,406     $ 6,359    $ 28,915    $ 21,588    $ 19,250 

Contact:

Whitestone REIT:
David K. Holeman, Chief Financial Officer
713-435 2227
ir@whitestonereit.com
 
Press spacebar to pause and continue. Press esc to stop.