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 firstname.lastname@example.org
Whitestone REIT Announces Operating Results for Fourth Quarter and Full Year 2012
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