Q1 2024 Whitestone REIT Earnings Call
Greetings and welcome to Whitestone Real estate investment Trust first quarter 2024 earnings Conference call.
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A question and answer session will follow the formal presentation.
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I would now like to turn the conference over to your host David Martin Director of Investor Relations. Please go ahead Sir.
David Martin: Good morning, and thank you for joining Whitestone REIT first quarter 2024 earnings Conference call. Joining me on today's call are Dave Holeman, Chief Executive Officer, Christine Mastandrea, Chief operating Officer, and Scott Hogan Chief Financial Officer.
David Martin: Please note that some statements made during this call are not historical maybe deemed forward looking statements actual results may differ materially from those forward looking statements due to a number of risks uncertainties and other factors. Please refer to the company's earnings news release and filings with the SEC, including Whitestone is most recent Form 10-Q and 10-K for a detailed.
David Martin: Discussion of these factors acknowledging the fact that this call may be webcast for a period of time. It's also important to note that this call includes time sensitive information that maybe accurate only as of today's date May 2024. The company undertakes no obligation to update this information Whitestone <unk> first quarter earnings news release and supplement.
David Martin: The operating and financial data package have been filed with the SEC and are available on our website in the Investor Relations section.
David Martin: We published first quarter 2024 slides on our website yesterday afternoon.
David Martin: Which highlight topics to be discussed today I will now turn the call over to Dave Holeman, Our Chief Executive Officer.
David K. Holeman: Thank you David.
David K. Holeman: Good morning, and once again, we thank you for joining Whitestone <unk> first quarter 2024 earnings conference call.
David K. Holeman: Let me begin by saying that we are very focused on delivering solid consistent results for shareholders and our first quarter results are exactly that.
David K. Holeman: We put out our 2020 for full year guidance less than two months ago with strong core <unk> per share growth of 11%.
David K. Holeman: A robust same store NOI growth target and our goal to beat last year's record occupancy finish.
David K. Holeman: The team is delivering and we are on track with our internal forecast and reaffirming our previously issued guidance.
David K. Holeman: In the first quarter, we signed new and renewal leases at a blended 17% increase over the prior leases on a straight line basis, and nine 3% increase on a cash basis.
David K. Holeman: We grew our top line revenue over three 7% produced three 1% growth in same store NOI and achieved a core F. F O per share up 24 cents.
David K. Holeman: And we continued to strengthen our balance sheet with debt to EBITDA Ari at seven eight times, which was negatively impacted by professional fees in the quarter related to our proxy contest, which Scott will go into further detail in his comments.
David K. Holeman: Our occupancy was 93, 6% at the end of the quarter up 90 basis points from a year ago, and our net effective annual base rent per square foot was $23.83 up seven 2% from 2023.
David K. Holeman: Our occupancy levels and average base rents aren't just up significantly over the last year or.
David K. Holeman: Our occupancy has increased 230 basis points and our a b R is over 13% higher since I became the CEO at the beginning of 2022.
David K. Holeman: This growth shows the value of our strategy and as a result of our new team's execution focus the quality of our assets and the demand for these types of spaces, we specialize in.
David K. Holeman: As Texas, and Arizona continue their rapid growth as our leasing team continues to execute and as we continue our successful capital recycling efforts. We expect these important metrics to continue to increase.
David K. Holeman: I'll have kristine discuss our leasing and organic growth more shortly.
Kristine: Our capital recycling efforts are going very well also.
Kristine: This year, we have completed the sale of one center for 28 million and acquired two centers for approximately $50 million.
Kristine: Since we began our recycling efforts in late 2022, we now have completed 84 million in dispositions at an average cap rate of six 2% based on the trailing 12 month NOI and we have completed 104 million of acquisitions at an aggregate cap rate of seven.
Kristine: One, 1%, which is based on actual or projected year one NOI.
Kristine: Our next two transactions, which are underway will be property sales of about 25 million balancing out our disposition and acquisition level.
Kristine: Let me delve into the acquisitions, a little bit Garden Oaks is an aldi anchored center located in the pathway of significant residential and commercial development and which sits on a major thoroughfare in our Houston market with 30000 vehicles per day passing by the.
Kristine: The center has a strong mix of 19th service and convenient space tenants and has significant potential for infill development. The surrounding neighborhood has seen residential present residential property values increased nearly 50% since 2019.
Kristine: Our most recent acquisition with Scottsdale Commons in our Phoenix market and it's another great add to our portfolio.
Kristine: Got still Commons is located on the second most trafficked intersection in Scottsdale is home to 20 tenants and has a surrounding three mile average household income of over $135000.
Kristine: The center acts as a gateway linking north Scottsdale and Paradise Valley.
Kristine: With centers fit very well with our strategy and will benefit from our in place leasing and property management teams, who are eager to get to work growing cash flow and increasing the value of the centers.
Kristine: Looking out slightly longer than the next couple of quarters I think it is critical to look at what we're hearing from not only our current or prospective shareholders. We've doubled the percentage of our active institutional shareholders over the last few years and what is needed to continue expanding our shareholder base.
Kristine: <unk> is to extend our track record of steady <unk> growth, while simultaneously improving our balance sheet.
Kristine: As I mentioned, we are forecasting 11% core F. F O per share growth. This year, driven primarily by strong same store NOI growth with the vast majority of our debt locked until 2027, we have a clear runway for growth not just this year, but into two.
Kristine: 25, 26 and 27.
Kristine: In addition, our earnings growth combined with free cash flow is driving our debt to EBITDA ratio down we are forecasting sub seven times debt to EBITDA or a by the fourth quarter and that does not assume we collect the bulk of the pillar stone judgment until 2025.
Kristine: This metric should improve noticeably in the fourth quarter due to annual percentage of sale clauses in many of our leases they typically contribute significantly to the fourth quarter as well as the anticipated drop in our G&A expenses once we're past the proxy season.
Kristine: In summary, we are very well lined up to do exactly what we need to do well.
Kristine: We're looking forward to connecting with many investors and for those of you attending REIT week in June we'd love to to meet with you at that conference I hope, you'll come by and see us and with that I'll turn the call over to Christine.
Christine C. J. Mastandrea: Good morning, everyone as Dave mentioned, we remain confident in terms of achieving our 2024 objectives and our track are on track with our turn on monthly and quarterly goals.
Christine C. J. Mastandrea: Occupancy remains high at 93, 6% up 90 basis points from a year ago anchor occupancy was 96, 9% and smaller space occupancy was 91, 6%.
Christine C. J. Mastandrea: We achieved renewal leasing spreads of 15% and new leasing spreads of 25, 9% for combined overall positive leasing spread of 17% in the quarter.
Christine C. J. Mastandrea: I remain confident in the leasing team executing in our projections for the year. However, this is the strongest environment, we've ever seen in Texas, and Arizona for all sized spaces in all the categories. We serve across our mix of tenants of food grocery restaurants health wellness and beauty financial services other services education and <unk>.
Christine C. J. Mastandrea: Attainment and anticipate the next couple of years will bring the same if theres, an increasing growth and a new democracy, they're showing a new interest and new types of things to do in their lives one of the things that we look for and are tenants. It's the best in class operators, whether it's an aldi or the pickler one of our keys to success is not just a <unk>.
Christine C. J. Mastandrea: <unk> the credit quality of the potential tenant, but their skill as operators and their ability to succeed over the next 510, and even 20 years.
Christine C. J. Mastandrea: This environment is a perfect time to secure these businesses and ensure that our centers to the right drivers for future success rigor.
Christine C. J. Mastandrea: Regarding the acquisitions, we've recently closed garden knows Houston, and Scottsdale comments in Arizona, our leasing team knows how to deliver returns on these acquisitions, especially given the strong starting fundamentals there are excellent visibility on major thoroughfares and fast growing surrounding neighborhoods and dense areas better supply.
Christine C. J. Mastandrea: Constrained in terms of more retail development.
Christine C. J. Mastandrea: These factors provide for an infill development and make these acquisitions similar to for example, our Las Colinas acquisition late 2019.
Christine C. J. Mastandrea: Since 2019, we have replaced 50% of the tenants unless connect clean us we've increase the NOI by 35% and strengthen the traffic drivers for the center, which allows us to continue to drive value for the center, both for our tenants that neighborhoods and for Whitestone.
Christine C. J. Mastandrea: With that I'll keep my comments short today and turn it over to Scott to cover the financials Scott.
Scott Hogan: Thank you Christine and good morning.
Scott Hogan: Our solid first quarter results demonstrate the strength of our high quality portfolio of properties as evidenced by a robust leasing spreads and positive same store NOI growth.
Scott Hogan: Our core F. F O per share was 24 cents for the quarter versus 24 cents for the same period in 2023.
Scott Hogan: As Dave mentioned, we remain on track for our core F. F O per share guidance of 98 cents to a dollar of enforce ads.
Scott Hogan: We are also on track for our previous projections of same store NOI growth.
Scott Hogan: Indian occupancy interest expense and debt to EBITDA Ari.
Scott Hogan: We have increased our projection for net income and G&A expense to reflect the gain from our first quarter disposition.
Scott Hogan: And to reflect proxy contest professional fees.
Scott Hogan: Our first quarter G&A expense included approximately 400000 of professional fees related to our proxy contest.
Scott Hogan: And we expect that our second quarter will include $1 2 million in professional fees related to our proxy contest.
Scott Hogan: Additionally, bad debt was a bit higher in the first quarter, primarily from a small number of tenants. We are now in the process for infinity.
Scott Hogan: We anticipate that number will come down for the remaining quarters.
Scott Hogan: On the whole we've taken significant steps to reduce earnings variables and allow for our same our strong same store NOI growth to continue to drive earnings growth and balance sheet improvement.
Scott Hogan: Same store NOI was 3.1 are the same.
Scott Hogan: Store NOI growth was three 1% for the quarter.
Scott Hogan: Which is exactly what we need in order to drive the seven cents earnings growth are expected to come from same store NOI growth in 2024.
Scott Hogan: We redeemed our pillars stone O P units in January.
Scott Hogan: So going forward our income statement no longer has a deficit related to pillar stone and any associated variability.
Scott Hogan: Well keep you updated on our collection efforts and our guidance does not assume much of that occurs in 2024, and we may have some significant stretches window update as our collection efforts progress.
Scott Hogan: We are also in the process of covering off maturities, we have coming due later in the year.
Scott Hogan: And our currently rate locked for approximately $55 million of seven year mortgage debt at six 2%.
Scott Hogan: Accordingly, I anticipate our fixed debt rate percentage will be greater than 85% by the end of the year.
Scott Hogan: Furthermore, if the two upcoming dispositions Dave mentioned it closed as expected.
Scott Hogan: Our fixed that percentage will increase as we reduce our overall debt.
Speaker Change: Let me wrap up our prepared comments by saying we are excited to be able to support the businesses that populate our centers, but most of all we are thrilled to deliver results to our shareholders.
Speaker Change: We look forward to connecting with you in the weeks and months ahead and with that let's open the line for questions.
Speaker Change: Okay.
Speaker Change: Thank you Sir at this time, we will be conducting a question answer session. If you'd like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press, Stan and two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys again, if you would like to ask a question. Please proceed.
Speaker Change: No.
Speaker Change: The first question we have comes from Mitch Germain of JMP Securities. Please go ahead.
Mitchell Bradley Germain: Hi, good morning.
Speaker Change: Hum.
Mitchell Bradley Germain: Can you provide some perspective on some of the nuances related equal the JV accounting now that you've regained.
Speaker Change: The units.
Speaker Change: Yeah sure Mitch This is Scott we as we mentioned on the call in January we redeemed.
Scott Hogan: R O P units, which are changes the accounting from that of equity method accounting, because we're no longer a partner and pillar stone to and accounting, where we have a collection effort around the redemption. So.
Speaker Change: There is a to a 30 million.
Speaker Change: Million dollar or a $31 million receivable and then as the guarantor on pillar ourselves only alone we paid $13 6 million. Both of those are amounts that were working to collect through the bankruptcy.
Speaker Change: And were confident that well collect at least that much through the bankruptcy process.
Mitchell Bradley Germain: Hey, Mitch.
Mitchell Bradley Germain: Got it.
Mitchell Bradley Germain: It's going to just add one thing which was a.
Mitchell Bradley Germain: A real positive obviously it will take some of the volatility that we've had in past quarters out of our results as we no longer will be recording those deficits from pillar stone that we had in in 'twenty three sorry, Scott didn't mean to Stefan you there.
Stefan: That's okay I did that answer emerge or are there any other yes.
Speaker Change: So two questions. One there is no more management fee as well got it.
Speaker Change: Well, we we haven't had a management fee from pillar stone since August of 'twenty, two when we canceled the management contract. So Oh, that's right about that yeah really.
Speaker Change: Really what we've had with pillar astound us is a JV, where there there haven't been any distributions to us or any funding from us to pillar stone as it's just been an equity method accounting exercise that ended on January 25th when we redeemed our one P. M S N.
Speaker Change: How's it.
Speaker Change: Is it deposit funded debt was that money out the door by you guys or.
Speaker Change: That was it it was money out the door or we have a right of subrogation now I didn't mentioned that there'll be a disclosure in our 10-Q around this but in in April.
Speaker Change: And then allows pillar stone to hopefully sell the property and then Whitestone would have a right of subrogation against pillar style.
Speaker Change: We think there's a contract for $26 million on that building right now so the amount should cover.
Speaker Change: Our $13 million claim.
Speaker Change: Gotcha.
Speaker Change: Sure I can do that.
Speaker Change: Despite what's happening between both entities now with with a potential settlement.
Speaker Change: They are all there.
Speaker Change: Have to work through them they have to work through the bankruptcy court, but are you getting the lender out of the equation is a good thing in that the the law that I was just talking about is the only loan against any other properties that they passed yeah.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Legal fees that you guided to.
Speaker Change: In addition to the Roxy costs is that all day.
Speaker Change: Or.
Speaker Change: Jean Ann.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: I'm, sorry, I didn't understand the last part of the question I believe it was legal fees. So there's there's legal fees employee G&A guidance right. Yeah, you got G&A guidance that went out quarter.
Speaker Change: Quarter over quarter, obviously, you're backing out the proxy costs, but that still includes legal correct.
Speaker Change: Yeah.
Speaker Change: Although we have we haven't we haven't changed the guidance on the legal fees.
Speaker Change: It sounds like twenties 28 million or so and then.
Speaker Change: You've got another one that's cute or another one or two queued up but how should I just think about.
Speaker Change: What's been done and what we should anticipate going forward.
Speaker Change: Sure.
Speaker Change: It's Dave I'll I'll take that one and.
David K. Holeman: So I think we announced a couple of years ago that the intent to continue just refining the portfolio.
David K. Holeman: Looking at assets that we felt like were either very attractively valued our assets that had less upside in the future and recycling those into some new properties and I think in my in my earlier I commented on it we're about 100 million once we close the next two acquisitions, we've done the dispositions.
David K. Holeman: <unk> at a cap rate of approximately six point too and we've been able to acquire properties with a day one cash flow of seven one and obviously more importantly, much more upside and in really great areas with opportunity. So I think as you think about our recycling efforts.
David K. Holeman: I mean this is no different than our portfolio, we're going to continue probably looking to turn you know you know we've done $100 million in two years, that's probably a decent run rate that we would do going forward.
David K. Holeman: And redeploying that we are seeing some some positive movement on the cap rates on acquisitions as evidenced but right now. We're we're pleased with the efforts we think they're contributing significantly if you look at the new properties, we have bought better.
David K. Holeman: Demographics higher incomes higher a be ours, just continuing to strengthen the portfolio whitestone.
Speaker Change: Okay understood and just one more follow up the $28 million closed when in the quarter.
Speaker Change: So the 28 million closed in the Scott do you remember the date it was in the first quarter were talking about the asset sale target.
Scott Hogan: It was towards the end of March yeah. So okay.
Scott Hogan: Yeah.
Scott Hogan: Towards the end of March.
Scott Hogan: And then you've got 20 $25 million in process right.
Scott Hogan: That's right and that will be you know timing wise right now that's expected to be.
Scott Hogan: And potentially in the second quarter, but definitely definitely if not second quarter early third quarter and I know that there's.
Scott Hogan: There's risk, but we feel very confident what we're moving forward and just continuing to execute on the recycling efforts.
Speaker Change: Thank you.
Speaker Change: Thanks Mitch.
Speaker Change: Thank you. The next question we have comes from Gaurav Mehta of Alliance Global Partners. Please go ahead.
Gaurav Mehta: Good morning.
Gaurav Mehta: Hi, I wanted to follow up on the asset.
Gaurav Mehta: Just to clarify the $80 million number that you have in the slide does that include 25 million are you would have $25 million on top of $80 million.
Gaurav Mehta: It does not the 84 million is is the actual dispositions I think the comment we were making is.
Gaurav Mehta: We have about 100 million in acquisitions, roughly 80 million in dispositions. The next two transactions will really balance that so we're gonna have got about an additional 20 ish million to go and just continuing to add.
Gaurav Mehta: To refine the portfolio upgrade the portfolio with you know by recycling and without the need for external capital.
Speaker Change: Okay, Okay, great Uh huh.
Speaker Change: Second question on your leverage.
Speaker Change: I think you touched upon doesn't your prepared remarks, but hoping to get some more color on your debt to EBITDA going from seven point it to the guidance of six months that's been seven.
Speaker Change: Sure.
Speaker Change: In the first in the first quarter of this year, we've got some elevated G&A cost around legal.
Speaker Change: Turning to our efforts with pillar stone and also a proxy contest cost.
Speaker Change: We also expect NOI to grow throughout the year.
Speaker Change: And debt to continue to improve by the time, we get to the fourth quarter. So I think we will see improvement both in the numerator and denominator by the time, we get to the end of the year through topline growth and also through lower G&A cost.
Speaker Change: Uh huh.
Speaker Change: Maybe one more follow up on the balance sheet. The 2024, I think the $55 million.
Speaker Change: I talked about on the earlier on the call.
Speaker Change: Just at six 2% our read is that the red that's expiring on that.
Speaker Change: You are seeing in the market.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: That's the right. That's the rate lock, we have on that loan that I didn't understand the second part of the question about the market sorry.
Speaker Change: And I guess, you know Bob a verbal joke.
Speaker Change: How do you plan to replace that but would you be looking to blend at the modules that are put down on the line.
Bob: That is the I mean that is the replacement debt. So we would we would.
Bob: Yeah.
Bob: It's a $55 million loan and then we would use those proceeds to pay down the revolver.
Bob: We have about we have about $50 million of debt maturities. This year and basically I think this is just replacing those right Scott.
Scott Hogan: That's right yeah.
Speaker Change: Okay understood.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you ladies and gentlemen, just a reminder, if you'd like to ask a question. Please press star and then one now.
Speaker Change: The next question we have comes from John Masako of B Riley Securities. Please go ahead.
John James Massocca: Good morning.
John James Massocca: Good morning.
John James Massocca: Clearly going back to the capital recycling I taught the.
John James Massocca: Acquisition cap rates, but what's the disposition cap rates in the kind of the other leg of that those transactions.
John James Massocca: Sure John add yeah, we've done.
John: 84 million in dispositions since October 20 to those who have been at a disposition cap rate of six point to based on the trailing 12 month NOI.
John: The acquisitions the other side have been at a 7.1 cap rate on first year NOI actual or projected.
John James Massocca: And maybe how does the year to date compared to that longer term number.
John: Okay.
Speaker Change: I think you're asking what's our what's our volume level for recycling is that what you're asking.
John: No no just cap rate and understanding what how does the year to date cap rates compare to the.
John: Or standing since 2022.
Speaker Change: It's broadly.
John: Yeah, I think it's I think it's right on it so I mean, we're not trying to play with the period, it's just saying in looking at that looking at the most recent performance on a 12 month period, what we're buying versus what we're selling right now there's about a 1% spread positive for us.
Speaker Change: Okay, and then maybe just kind of more Holistically I mean, you know just because they were in the same market.
Speaker Change: What makes something like selling mercado at Scottsdale ranch and moving into the other asset you've heard yes, you purchased in Scottsdale whats the logic in that those two transactions together.
Speaker Change: Sure, let me help a little bit on us. So first of all Mercado is it an area that was a.
Speaker Change: A bit challenged as far as location only because it only had 180 degree Cherry trade area. So the trade area was somewhat limited.
Speaker Change: Along Shay road and it was further closer to Fountain Hills, So when I look at it as I always think about Where's my location as far as in fill in my trade area and what I like about so if you look for almost a swap from that type of asset where your trade area is limited by 180 degrees, which is pretty significant and that's because.
Speaker Change: The Indian reservation surrounds it and then you go all the way to Scottsdale, and Shay, which is probably it's the northern gateway over to PV Paradise Valley and also the east Gateway to.
Speaker Change: The 101, which goes around the city.
Speaker Change: So it's probably one of the best what I consider one of the best intersections in the city of Scottsdale.
Speaker Change: Versus a trade area, that's limited and that's been some of the recycling. So just to comment on some of the recycling that we have done it's either bad assets that are tapped out limited trade areas limited growth and opportunity and the assets that we've purchased I think we've exceeded our expectations on the rental.
Speaker Change: Rates in the lease up times.
Speaker Change: Okay that makes sense and then.
Speaker Change: On the bad debt and an increase any kind of specific themes to call out there was that one tenant multiple tenants any particular tenant industry. Just just looking for some more color on that.
Speaker Change: It's it it's just a handful of tenants that we're working to re tenant and really upgrade and better serve the it gives us an opportunity also to better serve the community around the properties, it's not a it's not a pervasive.
Speaker Change: Issue across the tenant base, it's really just probably three or four times.
Speaker Change: Yes, it really this it's been something that.
Speaker Change: I think overall, we've really improved this in our portfolio and also as a team.
Speaker Change: As we've talked about this in the past that if we do have tenants out there that are weaker tenants, we'd rather re merchandize them in a strong market. So we've taken a very active stand towards that.
Speaker Change: And quite frankly the team knows.
Speaker Change: That's we look at bad debt is something that is part of how we operate is something that has to be taken seriously.
Speaker Change: Reducing what I would consider.
Speaker Change: Some challenges of the past and as we talked about you know, we really look for quality of revenue going forward and in the type of tenancy that we bring on so I think the team has done a really good job with us and we continue to see improvement of that in the future, but I'm not I look for tenant weakness all the time and we also look through our portfolio to figure out where where are we.
Speaker Change: Need to be careful and leasing efforts in the future and so far we've seen in.
Speaker Change: The market is really really strong.
Speaker Change: Towards all tenant types that I haven't seen like a significant amount of weakness in a certain type of tenant since COVID-19. So.
Speaker Change: Okay.
Speaker Change: And then maybe bigger picture you know as you're kind of thinking about capital recycling beyond the transactions that you've completed or that are in kind of in the pipeline is that impacted at all by the ongoing proxy contest I mean, do you kind of need to take a pause on any strategic initiatives until that is completed or is it.
Speaker Change: Yeah.
Speaker Change: We'll see the result of that and then hi.
Speaker Change: Just as need be.
Speaker Change: I think I would say John absolutely not.
Speaker Change: Our business is frankly firing on all cylinders.
Speaker Change: Our tenant demand is strong we've got great locations you have got a team that's synced in executing we intend to keep keep delivering and keep laying down a track record.
Speaker Change: Okay. That's it for me thank you very much.
Speaker Change: Thank you.
Speaker Change: Thank you ladies and gentlemen, just a reminder, if you would like to ask a question. Please press star and then one no the.
Speaker Change: The next question we have comes from Michael Diana Maxim Group of Maxim Group LLC. Please go ahead.
Michael Keelan Diana: Okay. Thank you.
Michael Keelan Diana: Christine you mentioned that in one of the two recent acquisitions you re tenanted.
Michael Keelan Diana: What what there's a lot of returns can you just give us some more detail why why would the new tenants better than the old what what are.
Michael Keelan Diana: Are you doing there.
Christine C. J. Mastandrea: I wouldn't consider it a lot of re tendering assist that what we look at when we buy a center are we so we have an approach a couple of different approaches that we take first of all is it serving successfully serving the community.
Michael Keelan Diana: And we look for opportunities that maybe there are.
Michael Keelan Diana: Some tenants that have been just rolling forward in portfolios of properties that haven't been actively managed and.
Michael Keelan Diana: Those types of tests at maybe not you know not serving the community as well as they could be their sales numbers aren't there and the management of the business is not as active as it should be we take those opportunities to re merchandise because we think that first of all again our goal is to successfully serve the community and in doing so.
Michael Keelan Diana: We look for those types of businesses that do that has the strong sales to to match that so you know an example of this I think is a really good one is that when we bought the.
Michael Keelan Diana: The one in woodlands switch has been a really a phenomenal property. It's a really well located property, we've been able to re tenant two of the operators sitting there and significantly raise the rents at the same time, so we've gotten stronger operators and have been able to raise the rents.
Michael Keelan Diana: Again, we look at that because the area is such a strong area why shouldn't we move in that direction, especially with the strong market that we have today.
Michael Keelan Diana: And the same and we always have that look at every other acquisition that we take a look at it's the same type of point of view, we we get an understanding of who's in there or are they meeting the community needs is there an opportunity to re tenant and then again you know I did say that Las Colinas, which you know as an example that we used to have won that.
Michael Keelan Diana: With several years ago and.
Michael Keelan Diana: You know there was a significant re tenants in that center, but with that with the traffic levels are much higher but again the quality of revenue is much better and we've been able to raise the rents as well so.
Michael Keelan Diana: That's always been our approach in acquisition I think it's been very successful and will continue doing it in the future.
Speaker Change: Okay, great. Thank you very much.
Michael Keelan Diana: Yeah.
Michael Keelan Diana: Yeah.
Speaker Change: Thank you Sam.
Speaker Change: Ladies and gentlemen, we have reached the end of our question and answer session and I would like to turn the call back over to Dave Holeman for closing remarks. Please go ahead Sir.
David K. Holeman: Well, thank everyone for joining us today and I'd, just like to wrap up by saying I'm extremely proud of the progress that's been made at Whitestone.
David K. Holeman: Little over two years ago, we put up.
David K. Holeman: New team in place at the leadership level, our board significantly reshaped itself and we made commitments to shareholders since that time I'm extremely proud that we delivered on those commitments and I guess I'll just leave you with that today I'm also extremely confident that the momentum and the progress we have today is going.
David K. Holeman: To only continue to accelerate as we move through this year and into the coming years, well, we have a great great assets great markets have a great team and we thank you so much for for your support as I said in my comments.
David K. Holeman: Number of conferences coming up over the next few months to love to run into some of you at NAREIT or other places if theres anything we can do don't hesitate to reach out. Thank you.
Speaker Change: Thank you, so ladies and gentlemen, duct and computes today's conference. Thank you for joining US you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].