Q3 2025 Whitestone REIT Earnings Call

Speaker #3: Greetings and welcome to the Whitestone REIT third Quarter 2025 Earnings Conference Call . At this time , all participants are in a listen only mode .

Operator: Greetings and welcome to the Whitestone REIT third quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. David Mordy. Please go ahead.

Speaker #3: Please note this conference is being recorded . I will now turn the conference over to your host , Mr. David Mordy . Please go ahead .

Speaker #4: Good morning and thank you joining Whitestone REIT . Third quarter 2020 Earnings Conference Call . Joining me on today's call are Dave , Chief Executive Officer .

David Mordy: Good morning and thank you for joining Whitestone REIT's third quarter 2025 earnings conference call. Joining me on today's call are Dave Holeman, Chief Executive Officer, Christine Mastandrea, President and Chief Operating Officer, and Scott Hogan, Chief Financial Officer. Please note that some statements made during this call are not historical and may be 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's most recent Form 10-Q and 10-K for a detailed discussion of these factors. Acknowledging the fact that this call may be webcast for a period of time, it is also important to note that this call includes time-sensitive information that may be accurate only as of today's date, October 30, 2025.

Speaker #4: Christine Mastandrea President and Chief Operating Officer . And Scott Hogan , chief Financial Officer . Please note that some statements made during this call are not historical and may be deemed forward looking statements .

Speaker #4: 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's .

Speaker #4: Most recent form 10-q and 10-K for a detailed discussion of these factors . Acknowledging the fact that this call may be webcast for a period of time is also important .

Speaker #4: To note that this call includes time sensitive information that may be accurate only as of today's date , October 30th , 2025 . The company undertakes no obligation to update this information .

David Mordy: The company undertakes no obligation to update this information. Whitestone's earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website in the Investor Relations section. We published third quarter 2025 slides on our website yesterday afternoon, which highlight topics to be discussed today. I will now turn the call over to Dave Holeman, our Chief Executive Officer.

Speaker #4: Whitestone REIT earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website in the Investor Relations section.

Speaker #4: We published third quarter 2025 slides on our website yesterday afternoon , which highlights topics to be discussed today . I will now turn the call over to Dave Holman , our Chief Executive Officer .

Speaker #4: Thanks , David .

Dave Holeman: Thanks, David. Good morning and thanks again for joining our call. We've got a number of great things to discuss this quarter, so I'll start in with some highlights for the quarter and our overall achievements. We hit 94.2% occupancy this quarter, up 30 basis points from Q2. This is near record occupancy, and given that the fourth quarter is typically our strongest leasing quarter, we're set up for a very strong finish to the year. We delivered 4.8% same store net operating income growth for the quarter, again fueled by increases across the spectrum of shop space leases, various tenant types in both Texas and Arizona. The quality of our portfolio continues to be recognized by third parties as Green Street has now increased our TAP score by five points since Green Street started scoring our portfolio two and a half years ago.

Speaker #5: Good morning , and thanks again for joining our call . We've got a number of great things to discuss this quarter , so I'll start in with some highlights for the quarter .

Speaker #5: And our overall achievements . We hit 94.2% occupancy this quarter up 30 basis points from Q2 . This is near record occupancy . And given that the fourth quarter is typically our strongest leasing quarter , were set up for a very strong finish to the year .

Speaker #5: We delivered 4.8% same store net operating income growth for the quarter , a gain fueled by increases across the spectrum of shop space leases , various tenant types in both Texas and Arizona .

Speaker #5: The quality of our portfolio continues to be recognized by third parties as Green Street has now increased , our Tap score by five points .

Speaker #5: Since Green Street started scoring our portfolio two and a half years ago . In that time , the five point increase leads the peer group and is a testament to the strength of our acquisitions .

Dave Holeman: In that time, the five point increase leads the peer group and is a testament to the strength of our acquisitions, our operations, and our recycling efforts, as well as the demographic trajectory of the area surrounding our properties. We extended and improved the terms of our credit facility, locking down one of the key variables for us to achieve our long term 5% to 7% core FFO per share growth target. Scott will provide greater detail on our debt metrics in his remarks. We're near completion on redevelopment for La Mirada in Scottsdale, we're in full swing on our work at Lion Square in Houston, and we've kicked off redevelopment at Terravita in Scottsdale.

Speaker #5: Our operations and our recycling efforts , as well as the demographic trajectory of the area surrounding our properties . We extended and improved the terms of our credit facility , locking down one of the key variables for us to our long term 5 to 7% core FFO per share growth target .

Speaker #5: Scott will provide greater detail on our debt metrics in his remarks . We're near completion on redevelopment for la mirada in Scottsdale . We're in full swing on our work at Lion Square in Houston , and we've kicked off redevelopment at Scottsdale .

Speaker #5: We forecasted that redevelopment will add up to 1% to Whitestone REIT same store NOI growth , with a 20 to 30 million capital spend over the next couple of years , and we're on track to have this initiative deliver in 2026 .

Dave Holeman: We forecasted that redevelopment will add up to 1% to Whitestone's same store NOI growth with a $20 million to $30 million capital spend over the next couple years, and we're on track to have this initiative deliver in 2026. Our average base rent is now $25.59, an 8.2% increase over the third quarter last year and a 26% increase versus this quarter four years ago, translating to a 5.9% compound annual growth rate. Specific to this quarter, we delivered $0.26 in core FFO per share. As a reminder, we typically have a lift of a couple cents in the fourth quarter versus the third quarter as a result of new lease commencements and percent of sales clauses that trigger as we close out the year. Straight-line leasing spreads were 19.3% for the quarter, our 14th consecutive quarter above 17% on leasing spreads. Those are the recent highlights.

Speaker #5: And our average base rent is now $25.59 and 8.2% increase over the third quarter last year , and a 26% increase versus this quarter four years ago Terravita in , translating to a 5.9 compound annual growth rate achieve specific to this quarter .

Speaker #5: We delivered $0.26 in core FFO per share . As a reminder , we typically have a lift of a couple cents in the fourth quarter versus the third quarter .

Speaker #5: As a result of new lease commencements and percent of sales clauses that trigger as we close out the year . Straight line leasing spreads were 19.3% for the quarter .

Speaker #5: Our 14th consecutive quarter above 17% on leasing spreads . So those are the recent highlights . Let me go on now to talk a little about what we have planned ahead .

Dave Holeman: Let me go on now to talk a little about what we have planned ahead. Our path forward is clear. Deliver on consistent earnings growth. Deliver on the targets we put in front of our investors. If you have any doubts about our ability to deliver these results and don't see the value of our differentiated business model, come talk to us. Dig into our great results and come see our properties. We know many investors have asked themselves, why not Whitestone? How is this small cap delivering growth that's larger than many of our peers? Don't accept a quick, inaccurate answer. We'll help you understand the building blocks underpinning our 5% to 7% core FFO growth target and will help you understand why our cash flows are very durable. Because our success is rooted in operations, we believe investors gained a tremendous amount by seeing our operations.

Speaker #5: Our path forward is clear . Deliver on consistent earnings growth . Deliver on the targets we've put in front of our investors . And if you have any doubts about our ability to deliver these results and don't see the value of our differentiated business model , come talk to us .

Speaker #5: Dig into our great results and come see our properties . We know many investors have asked themselves . Why not Whitestone REIT ? How has this small cap delivering growth , this larger than many of our peers don't accept a quick , inaccurate answer .

Speaker #5: We'll help you understand the building blocks underpinning our 5 to 7% core FFO growth target , and will help you understand why our cash flows are very durable .

Speaker #5: Because our success is rooted in operations . We believe investors gain a tremendous amount by seeing our operations . We'll be at REIT world in Dallas this December .

Dave Holeman: We'll be at REIT World in Dallas this December. We'll be showing investors properties on Monday, December 8, and we'll have one on ones on Tuesday. We hope you'll be able to join us at this conference. As part of our ongoing asset recycling efforts, we disposed of one property this quarter, Sugar Park Plaza in Houston. Over the last three years, we have increased the NOI in this property by 22% by transforming the center into a grocery anchored center and remerchandising the shop space, and the time was right to sell and deploy the proceeds where we can create greater value over the coming years. This disposition brings our total acquisitions and dispositions over the past three years to approximately $150 million. I anticipate we'll have a couple more acquisitions very shortly and should have one to two dispositions to finish out the year.

Speaker #5: We'll be showing investors properties on Monday , December 8th , and we'll have one on ones on Tuesday . We hope you'll be able to join us at this conference as part of our ongoing asset recycling efforts .

Speaker #5: We disposed of one property this quarter Sugar Park Plaza in Houston . Over the last three years , we have increased the NOI in this property by 22% .

Speaker #5: By transforming the center into a grocery anchored center and remerchandising the shop space and the time was right to sell and deploy the proceeds where we can create greater value over the coming years .

Speaker #5: This disposition brings our total acquisitions and dispositions over the past three years to approximately $150 million . I anticipate we'll have a couple more acquisitions very shortly , and should have 1 to 2 dispositions to finish out the year .

Speaker #5: Our markets are continuing to show significant strength as Texas and Arizona's business friendly environments and strong demographic trends continue to support demand . Our acquisition team continues to identify neighborhoods with upwardly mobile consumers where our leasing team can have the greatest impact .

Dave Holeman: Our markets are continuing to show significant strength as Texas and Arizona's business friendly environments and strong demographic trends continue to support demand. Our acquisition team continues to identify neighborhoods with upwardly mobile consumers where our leasing team can have the greatest impact applying our business model. In closing, we remain steadfast in our belief that a company with a well aligned forward thinking team, a well located portfolio with a concentration of high value shop space properly anchored to the community can outperform the herd. I look forward to connecting with investors in the months ahead and I look forward to being able to lay out our 2026 plan on the fourth quarter call. Christine, good morning everyone.

Speaker #5: Applying our business model . And in closing , we remain steadfast in our belief that a company with a well-aligned forward thinking team , a well-located portfolio with a concentration of high value shop space properly anchored to the community , can outperform the herd .

Speaker #5: I look forward to connecting with investors in the months ahead . And I look forward to being able to lay out our 2026 plan on the fourth quarter call .

Speaker #5: Christine .

Speaker #6: Good morning, everyone. On the leasing front, we had a strong quarter, and we're accelerating as we close in on year-end.

Christine Mastandrea: On the leasing front, we had a strong quarter and we're accelerating as we close in on year end. We signed $29.1 million in total lease value with spreads on new leases at 22.5% and renewals at 18.6% for a combined 19.3% out of straight-line leasing spreads. Same store NOI growth was 4.8% for the quarter, allowing us to raise the lower end of the same store NOI growth target by 50 basis points. Foot traffic across the portfolio is up 4% versus the third quarter of 2024. That's a good indicator we've got in terms of the health of the consumer specific to our footprint and our locations. What we're seeing in terms of successful tenants right now are those that are successfully expanding on their offerings, for restaurant delivery services have gone from a nice add to a critical component of the business.

Speaker #6: We signed 29.1 million in total lease value with spreads on new leases at 22.5% and renewals at 18.6% for a combined 19.3 . On a straight line , leasing spreads same store NOI growth was 4.8% for the quarter , allowing us to raise the lower end of the same store .

Speaker #6: NOI growth target by 50 basis points . Foot traffic across the portfolio was up 4% versus the third quarter of 2020 . For that's a good indicator .

Speaker #6: We've got, in terms of the health of the consumer specific to our footprint and our locations, what we're seeing in terms of successful tenants right now are those that are successfully expanding on their offerings for restaurant delivery services. This has gone from a nice add to a critical component of the business.

Speaker #6: In addition , we continue to see an expansion of beauty , health , wellness , fitness and see the spend on overall health and mental wellness continues to increase .

Christine Mastandrea: In addition, we continue to see an expansion of beauty, health, wellness, fitness and see the spend on overall health and mental wellness continues to increase. Understanding these avenues for the tenant's success is critical for Whitestone REIT to stay on top as we curate our centers to the neighborhood needs. On the redevelopment front, we've completed the facade renovation at La Mirada, which puts us on track to finish this by year end. At Lion Square, the transformation of striking is about 75% complete. With the redevelopment at Lion Square, the grocery brought in last year, Sunwing, will expand, creating value by making this grocery-anchored center the heart of Houston's Asiatown. Now we're kicking off the facade work at Terravita, which we talked about on the second earnings call, bringing in the Pickler and Ace Hardware.

Speaker #6: Understanding these avenues for the tenant success is critical for Whitestone to stay on top . As we curate our centers to the neighborhood needs .

Speaker #6: On the redevelopment front , we've completed the facade renovation at la mirada , which puts us on track to finish this by year end and at Line Square , the transformation is striking is about 75% complete .

Speaker #6: With the redevelopment at Line Square , the grocery brought in last year , Sunwing will expand , creating value by making this grocery anchored center the heart of Houston's Asia town .

Speaker #6: Now we're kicking off the facade work at Terravita , which we've talked about on the second earnings call , bringing in the Pickler and Ace hardware .

Speaker #6: This will further accelerate the transformation of the center , which is experiencing dynamic growth as a result of TSMC's nearby semiconductor fabrication facility .

Christine Mastandrea: This will further accelerate the transformation of the center, which is experiencing dynamic growth as a result of TSMC's nearby semiconductor fabrication facility. We also generally move a couple of pads into action each year. This year, we created a pad at Lakeside in Dallas and brought in Central National Bank on that pad. We also signed a tenant for a pad at Scottsdale Commons. As a reminder, we purchased Scottsdale Commons in 2024, so the creation of the new pad represents a significant value creation pretty rapidly post acquisition. We anticipate bringing a couple of additional pads online in 2026 as well. We continue to see pickleball succeed as the demand with a younger demographic accelerates.

Speaker #6: We also generally move a couple of pads into action each year . This year , we created a pad at Lakeside in Dallas and brought in Central National Bank .

Speaker #6: On that pad, we also signed a tenant for a pad at Scottsdale Commons. As a reminder, we purchased Scottsdale Commons in 2024.

Speaker #6: So the creation of the new pad represents a significant value creation . Pretty rapidly . Post . We anticipate bringing a couple pads , additional pads online in 2026 as well .

Speaker #6: We continue to see pickleball succeed as a demand with a younger demographic accelerates . We're looking at bringing pickleball on the roof of Boulevard , which is adding value to where we had no income stream for that square .

Christine Mastandrea: We're looking at bringing pickleball on the roof of Boulevard, which is adding value to where we had no income stream for that square footage previously, and welcome this as an opportunity to add value also for the office community in the area. On the last several calls we've talked about the intentional design of our business model to benefit from changes both in terms of change allowing us to enhance our growth trajectory and change enabling us to ensure more durable cash flows, a key component of what we do. Proactively tracking and understanding consumer behavior and capitalizing on that knowledge, we will see change as the result of three primary forces. First, change is a result of generational shifts as the younger generations step up into new roles both as consumers and business owners.

Speaker #6: Footage previously . And welcome this as an opportunity to add value . Also for the office community and the area . On the last several calls , we've talked about the intentional design of our business model to benefit from change , both in terms of change , allowing us to enhance our growth trajectory and change , enabling us to ensure more durable cash flows .

Speaker #6: A key component of what we do proactively tracking and understanding consumer behavior and capitalizing on that knowledge . We will see change as the result of three primary forces .

Speaker #6: First , change as a result of generational shifts as the younger generations step up into new roles , both as consumers and business owners .

Speaker #6: Two migratory change as consumers move to more business friendly areas and take advantage of opportunities there , such as our markets and what we've seen over the last number of years .

Christine Mastandrea: Second, migratory change as consumers move to more business-friendly areas and take advantage of opportunities there such as our markets and what we've seen over the last number of years. Third, technological change as both consumers and businesses become more sophisticated in utilizing technology and as spending patterns shift accordingly. Both generational change and migratory change show up in the ESRI data heavily used by our acquisitions team and our leasing team. Migratory change is a bit slower moving but also a critical component for the acquisitions team to get it right. The Houston metro area has added nearly 2 million people over the last 15 years, while the Phoenix metro area has added 1 million residents during that time as well. Ensuring we benefit from that phenomenal growth is very important in terms of Whitestone REIT's success.

Speaker #6: And number three , technological change as both consumers and businesses become more sophisticated in utilizing technology and is spending patterns shift accordingly , both generational change and migratory change show up in the ESRI data heavily used by our acquisitions team and our leasing team .

Speaker #6: Migratory change is a bit slower moving, but also a critical component for the acquisitions team to get it right. The Houston metro area has added nearly 2 million people over the last 15 years, while the Phoenix metro area has added 1 million residents during that time as well.

Speaker #6: Ensuring we benefit from that phenomenal growth is very important in terms of Whitestone success . All three types of change also impact the consumer data that we and traffic data that we follow in place for AI .

Christine Mastandrea: All three types of change also impact the consumer data and traffic data that we follow in Placer AI. This is critical for leasing but is key in our underwriting process. Our assessment of the business ability to meet the future consumer demands weighs heavily into our decisions to move forward on any lease we sign. For all of our leasing agents, our weekly leasing meetings provide an opportunity to discuss what changes we're seeing as they interact with their neighborhoods and the tools they're using to evaluate those changes around our centers. The biggest takeaway for investors here is that our ability to translate change into a higher same store NOI growth starts with our assets and our business model, but also relies heavily on technology, but ultimately needs to be embedded in our culture and our processes to which Whitestone REIT delivers our results.

Speaker #6: This is critical for leasing , but is key in our underwriting process . Our assessment of the businesses ability to meet the future consumer demands weighs heavily into our decisions to move forward on any lease , we sign for all of our leasing agents , our weekly leasing meetings provide an opportunity to discuss what changes we're seeing as they interact with their neighborhoods and the tools they're using to evaluate those changes around our centers .

Speaker #6: The biggest takeaway for investors here is that our ability to translate change into higher same-store NOI growth starts with our assets and our business model, but also relies heavily on technology.

Speaker #6: But ultimately needs to be embedded in our culture and our processes . To which Whitestone REIT delivers our results . We delivered strong finishes in both 2023 and 2024 , and the team here is pushing hard to take advantage of the year end dynamics and close leases .

Christine Mastandrea: We delivered strong finishes in both 2023 and 2024, and the team here is pushing hard to take advantage of the year end dynamics and close leases. With that, I turn it over to Scott to cover the financials.

Speaker #6: And with that , I turn it over to Scott to cover the financials .

Speaker #5: Thank you Christine .

Scott Hogan: Thank you, Christine. This morning we reiterated our 2025 $1.03 to $1.07 core FFO per share guidance, improved our same store NOI growth range to 3.5% to 4.5%, and reiterated our long term growth rates on our leverage metrics. We're making steady progress, and I anticipate our fourth quarter annualized debt to EBITDAre ratio will be in the mid to high sixes. The most significant development this quarter on the financial side was our amended and extended credit facility. We accomplished everything we wanted to accomplish here in large part because of the actions we've taken over the last three years. We were able to expand our bank group and improve Whitestone's valuation cap rate to 6.75% because there was wide recognition that we are consistently delivering, and we have steadily increased the value of our properties through our focused strategy and strong execution.

Speaker #6: This morning .

Speaker #5: We reiterated our 2025 . $1.03 to $1.07 core . FFO per share guidance improved our same store NOI growth range to three and a half to 4.5% , and reiterated our long term growth .

Speaker #6: Rates .

Speaker #5: On our leverage metrics . We're making steady progress , and . I anticipate our fourth quarter annualized debt to EBITDA rate ratio .

Speaker #6: Will be in .

Speaker #5: The mid to high sixes.

Speaker #6: The most significant development .

Speaker #5: This quarter on the financial side was our amended and extended credit facility . We accomplished .

Speaker #7: Everything we wanted to accomplish here , in large part because of the actions we've taken over the last three years . We were able to expand our bank group and improve Whitestone REIT valuation cap rate to 6.75% because there was wide recognition that we are consistently delivering and we have steadily increased the value of our properties through our focus , strategy and strong execution , we increased the size of the facility to put Whitestone on par with our size based peers .

Scott Hogan: We increased the size of the facility to put Whitestone on par with our size based peers in terms of available revolver credit capacity, and we expect to continue our debt leverage improvement initiative over the coming quarters and years. We fixed an increased percentage of our overall debt, bringing the weighted average term on all of our debt to 4.3 years and the weighted average rate on our fixed debt to 4.8%. Most importantly, locking down our debt clears the runway for us to focus on executing our plan and delivering core FFO per share growth for shareholders. I will note that included in the quarter is approximately $800,000 of debt extinguishment costs related to our refinancing. We have adjusted for this amount in our core FFO.

Speaker #7: In terms of available revolver credit capacity , and we expect to continue our debt leverage improvement initiative over the coming quarters and years .

Speaker #7: We fixed and increased percentage of our overall debt , bringing the weighted average term on all of our debt to 4.3 years . And the weighted average rate on our fixed debt to 4.8% .

Speaker #7: Most importantly, locking down our debt clears the runway for us to focus on executing our plan and delivering core FFO per share growth for shareholders.

Speaker #7: I will note that included in the quarter is approximately $800,000 of debt extinguishment costs related to our refinancing . We have adjusted for this amount in our core FFO , our revenue for the quarter was up 6% , and most importantly , the quality of revenue continues to strengthen , as evidenced by our improvement in Uncollectible accounts and downward revision to our full year bad debt guidance .

Scott Hogan: Our revenue for the quarter was up 6%, and most importantly, the quality of revenue continues to strengthen as evidenced by our improvement in uncollectible accounts and downward revision to our full year bad debt guidance. Our total headcount is down 6% from a year ago, and we continue to focus on lowering G&A costs as we scale. As a reminder, our dividend is well covered with a healthy payout ratio, and we expect to grow the dividend in sync with earnings growth. With that, I'll conclude my comments and open the line for questions.

Speaker #7: Our total headcount is down 6% from a year ago , and we continue to focus on lowering G&A costs as we scale . As a reminder , our dividend is well covered with a healthy payout ratio , and we expect to grow the dividend in sync with earnings growth .

Speaker #7: And with that , I'll conclude my comments and open the line for questions .

Speaker #3: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Mitch Germain with JMP Securities.

Speaker #3: A confirmation tone will indicate your line is in the question queue . You may press star two . If you would like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star keys .

Speaker #3: And our first question will come from Mitch Garman with JMP securities .

Speaker #8: Hi . Good morning . This is Jodi on from Edge . Just a few questions here . The first one being so the rent expirations in 2026 , the average rent is higher than average .

[Operator]: Hi, good morning, this is Jodi on with Mitch, just a few questions here. The first one being, the rent expirations in 2026, the average rent is higher than average there. Should we expect similar leasing spreads as in recent quarter? I think it's about 17% for the next year or so.

Speaker #8: They're should be expect similar leasing stats as in recent quarter . I think it was about 17% for the next year or so .

Speaker #5: Thanks . Thanks Jodi . Excuse me . This is Dave . I'll I'll start out and Christine may want to add some some granularity , but there's always mix when you look at the you know , one of the things about our our tenants are we have a highly diversified tenant base with 1500 tenants .

Dave Holeman: Thanks, Jody. Excuse me, this is Dave. I'll start out and Christine may want to add some granularity. There's always mix when you look at the, you know, one of the things about our tenants is we have a highly diversified tenant base with 1,500 tenants. In any particular year you do have some mix, but there's nothing unique about next year's rental rates. We continue to see really strong leasing demand and there's no sign of any weakening in our leasing spread. Great quarter this quarter. I think our, I can't remember the number, but we've had many quarters over 17%, I think about three years. I'll let Christine add anything she wants to add.

Speaker #5: So in any particular year you do have some mix . But there's nothing unique about next year's rental rates . We we continue to see really strong leasing demand .

Speaker #5: And there's no , no sign of any any weakening in our leasing spreads . So great quarter this quarter . I think our I can't remember the number , but we've had many quarters over 17% .

Speaker #5: I think it's been about three years, and so I'll let Christine add anything if she wants to add.

Speaker #6: We don't see anything distinguishing next year any different than this past year . We see we expect that we're going to continue to see the , the the , the same rate of leasing spreads , if not more , continue because there's just such a demand for retail space .

Christine Mastandrea: We don't see anything distinguishing next year any different than this past year. We expect that we're going to continue to see the same rate of leasing spreads, if not more, continue because there's just such a demand for retail space.

Speaker #8: Okay . That's very helpful . Secondly , could you give any more information on the change in occupancy ? I think the larger centers increase in occupancy in the smaller ones documents , even down to any more details that .

[Operator]: Okay, that's very helpful. Secondly, could you give any more information on the change in occupancy? I think the larger centers increased in occupancy and the smaller ones decreased. Can you give any more details, sir?

Speaker #6: It's the same thing that we've been doing in the past couple of years where we're taking some space back . And the purpose for that on the smaller spaces is we see the opportunity for higher revenue and stronger quality tenants that we want to bring in .

Christine Mastandrea: It's the same thing that we've been doing in the past couple of years where we're taking some space back. The purpose for that on the smaller spaces is we see the opportunity for higher revenue and stronger quality tenants that we want to bring in. We have been doing that for the last couple of years, and we continue to do so going forward. There's been a number of small spaces that we've taken back, and we expect to put to work with a higher income stream based off of our leasing efforts. We did fill a couple of larger spaces this year.

Speaker #6: We have been doing that for the last couple of years , and we continue to do so . Going forward . So there's been a number of small spaces that we've taken back , and we expect to put to put to work with , you know , a higher income stream based off of our leasing efforts .

Speaker #6: And then we did fill a couple of large , larger spaces this year . And much of that timing has to do with just city approvals and the timing that we can bring that revenue online .

Christine Mastandrea: Much of that timing has to.

Christine Mastandrea: Do with just city approvals and the timing that we can bring that revenue online.

Speaker #5: Hey , Jodi , I might also just remind everyone that we report fully commenced occupancy . So I know many of our peers report leased and and commenced Whitestone REIT 94.2 is tenants that are in the in the space .

Dave Holeman: Hey, Jody, I might also just remind everyone that we report fully commenced occupancy. I know many of our peers report leased and commenced. Whitestone's 94.2% is tenants that are in the space and continuing to see good trends in occupancy. I think we were up 30 basis points just over the second quarter. As we said in our remarks, fourth quarter tends to be a very good time period for us. We're excited about finishing out the year strong.

Speaker #5: And so, continuing to see good trends in occupancy. I think we were up 30 basis points just over the second quarter. And I think, as we said in our remarks, fourth quarter tends to be a very good time period for us.

Speaker #5: And so we're excited about finishing out the year strong .

Speaker #8: Okay . And then last one for me here is if you all have any update on the pillar stone JV .

[Operator]: Okay. The last one for me here is if you all have any update on the Pillarstone JV.

Speaker #5: I'm glad to give an update . Jodi . I will encourage everyone to . We'll file our 10-q shortly and it has a very detailed description of the the activities that have gone on .

Dave Holeman: Yeah, I'm glad to give an update, Jody. I will encourage everyone to. We'll file our 10Q shortly, and it has a very detailed description of the activities that have gone on. What I will say is we're nearing the end. We talked about we're in the collection phase of just collecting our funds from the partnership. The court recently, there was recently a settlement agreement filed with the court, and we expect that to be approved. With that, there would be a distribution of proceeds. I encourage you very shortly, I encourage you to read the 10Q because it gives all of the details. The short answer is we have reached a settlement with the court. The court has to approve that settlement, and if it is done, then the proceeds are expected to be distributed by in December.

Speaker #5: What I will say is we're we're nearing the end . We've talked about we're in the collection phase of just collecting our , our funds from the partnership .

Speaker #5: The court recently , there was recently a settlement agreement filed with the court , and we expect that to be to be approved .

Speaker #5: And with that , there would be a distribution of proceeds . But I encourage you to very shortly , I encourage you to read the 10-q because it gives all of the all of the details , but the short answer is we have we have reached a settlement with the court .

Speaker #5: The court has to approve that settlement . And if it is done , then the proceeds are expected to be distributed by in December .

Speaker #8: Okay . Thank you so much . I'm looking forward to that and good luck with the next quarter .

[Operator]: Okay, thank you so much. I'm looking forward to that. Good luck for the next quarter.

Speaker #5: Thanks , Jodi .

Dave Holeman: Thanks, Jody.

Speaker #3: Our next question comes from Gaurav Mehta with Alliance Global Partners .

Operator: Our next question comes from Gaurav Mehta with Alliance Global Partners.

Speaker #9: Thank you . Good morning . I wanted to ask you on your leverage comments mid to high 60s in for Q it seems like it was 7.2 as of three Q so just want to get some more color on assumptions driving leverage lower in this quarter .

[Analyst]: Thank you. Good morning. I wanted to ask you on your leverage comments. Mid to high sixes in Q4. It seems like it was 7.2 as of Q3. I just want to get some more color on assumptions driving leverage lower in this quarter.

Speaker #7: I'm sorry . Sorry . Scott here . I didn't catch the whole question . Are you asking about the the leverage ratios ?

Scott Hogan: I'm sorry, Gaurav, it's Scott here. I didn't catch the whole question. Are you asking about the leverage ratios?

Speaker #9: Yeah , I think you mentioned mid to high sixes expected in four Q from 7.2 as of three q . So I just want to get some more color on the assumptions driving leverage lower .

[Analyst]: Yeah, I think you mentioned mid to high 6% expected in Q4 from 7.2% as of Q3. I just want to get some more color on the assumptions driving leverage lower.

Speaker #7: Oh sure . So I think there's there's two pieces to the puzzle . We continue to improve the balance sheet . And we're focused on that .

Dave Holeman: Oh sure.

Scott Hogan: I think there's two pieces to the puzzle. We continue to improve the balance sheet and we're focused on that, and then operations continue to improve. The fourth quarter is, as Dave mentioned before, usually our strongest quarter. Normally we have % sales break points that are hitting the fourth quarter, and on an annualized basis, we do expect the fourth quarter to be in the mid to high 6% range on debt to EBITDAre. We think we'll continue to improve our balance sheet as we move forward this year. There's been a little bit of timing in our recycling efforts. The acquisitions have gotten ahead of the dispositions, but we think we'll balance those out as we move forward.

Speaker #7: And then operations continue to improve . The fourth quarter is as Dave mentioned before , usually one of our is our strongest quarter .

Speaker #7: Normally we have percent sales break points that are hit in the fourth quarter and so on . On an annualized basis , we do expect the fourth quarter to be in the mid to high six range .

Speaker #7: On debt to EBITDA , and then we we think we'll continue to improve our balance sheet as we move forward . This year's there's been a little bit of timing in our recycling efforts .

Speaker #7: The acquisitions have gotten ahead of the dispositions , but we think we'll balance those out as we move forward .

Speaker #9: Okay . A follow up on the on acquisitions and dispositions . In the prepared remarks , you said you're expecting some acquisitions shortly .

[Analyst]: Okay, a follow up on acquisitions and dispositions. I think in the prepared remarks you said you're expecting some acquisitions shortly and then you also mentioned few more dispositions. Just in terms of timing, is that expected this quarter?

Speaker #9: And then you also mentioned a few more dispositions . So just in terms of timing , is that expected this quarter ?

Speaker #5: Yes , we expect I think I said in my remarks that we we've got what we expect is a couple more acquisitions and 1 to 2 dispositions to to finish out the year .

Dave Holeman: Yes, we expect, I think I said in my remarks, that we've got what we expect is a couple more acquisitions and one to two dispositions to finish out the year. That would be expected to occur in the fourth quarter. I think what you'll see is consistent with what we've done in the past, looking at properties that fit Whitestone REIT's model, continuing to upgrade the portfolio. I think we've got a chart in our investor deck that lays out what we've done, where we've bought properties that have what we believe is much more upside in better areas and sold properties that we see less growth in the future. Just continuing what we're doing with a couple of those for the balance of the year. As we've said, we're fairly well balancing the assets, acquisitions and dispositions at this point.

Speaker #5: So that would be expected to occur in the fourth quarter . I think what you'll see is consistent with what we've done in the past , looking at properties that that fit Whitestone REIT model continuing to upgrade the portfolio .

Speaker #5: I think we've got a chart in our investor deck that lays out what we've done , where we've bought properties that have what we believe is much more upside in better areas and sold properties that that we see less growth in the future .

Speaker #5: So just continuing what we're doing with a couple of those for the balance of the year . And as we've said , you know , we're fairly well balancing the assets , acquisitions and dispositions at this point .

Speaker #9: Okay . Thank you . That's all I had .

[Analyst]: Okay, thank you. That's all I had.

Speaker #5: Thank you .

Dave Holeman: Thank you.

Speaker #3: And as a reminder , that is star one . If you would like to ask a question , we'll go next to Craig Kuczera with Lucid Capital Markets .

Operator: As a reminder, that is Star One. If you would like to ask a question, we'll go next to Craig Kucera with Lucid Capital Markets.

Speaker #10: Hey good morning guys . Scott , you had a fairly large pickup in real estate tax accruals this quarter . Can you talk about your expectations for the year in regard to real estate tax ?

[Analyst]: Hey, good morning guys. Scott, you had a fairly large pickup in real estate tax accruals this quarter. Can you talk about your expectations for the year in regard to real estate tax?

Speaker #7: Oh , sure . Yeah . So it's mainly Texas , Texas has a has a choppy real estate valuation process that we go through .

Dave Holeman: Sure, yeah.

Scott Hogan: It is mainly Texas. Texas has a choppy real estate valuation process that we go through. We really go through a three or four step process to ultimately settle on what we're going to pay. What we typically see is around July, what's called the ARB process happens and we usually settle in on a little higher valuation. We continue to protest those and we continue to litigate those. Ultimately, I think we feel confident that those will come down. We do pass through most of those costs to our tenants, but we work very hard to keep those low because it's a burden on the tenants. Some of those can take two to three years to get through the full litigation process. I think it's just a normal increase that you'd see in the third quarter, particularly in Texas.

Speaker #7: So we we really go through a 3 or 4 step process to ultimately settle on what we're going to pay . And what we typically see is around July .

Speaker #7: What's called the ARB process happens . And and we usually settle in on a little higher valuation . And then we we continue to protest those and we continue to litigate those .

Speaker #7: And ultimately , I think we feel confident that those will come down . We we do pass through most of those costs to our tenants , but we we work very hard to keep those low because it's a burden on the tenants .

Speaker #7: And some of those take can take 2 to 3 years to get through the full litigation process . So I think it's just a normal increase that you'd see in the third quarter , particularly in Texas .

Speaker #10: Okay . That's helpful . Excuse me . Just circling back to your commentary , Dave , on the acquisitions and dispositions . I think earlier this year , you were talking about maybe $40 million for the year .

[Analyst]: Okay, that's helpful. Excuse me. Just circling back to your commentary, Dave, on the acquisitions and dispositions. I think earlier this year you were talking about maybe $40 million for the year. Has that number changed at all, or is that still sort of the expectation of having $40 million of acquisitions and maybe $40 million on the disposition side?

Speaker #10: Is that number changed at all , or is that still sort of the expectation of having 40 million of acquisitions and maybe 40 million on the disposition side ?

Speaker #5: Hey , Greg . Yeah , I don't I think we like I said in page ten of our deck , we've laid out , we've done two of two acquisitions this year .

Dave Holeman: Hey, Craig. Yeah, I don't. I think we, like I said in page 10 of our deck, we've laid out we've done two of two acquisitions this year. As I said, I have a couple more. I would say probably we're going to be a little higher than those numbers on the acquisition and disposition side, not significantly different. If you look back so far, we've done basically $150 million over the last two and a half, three years. I think that run rate is consistent with where we are today, but we are seeing some nice opportunities. I'm very pleased with the acquisition of San Clemente in Austin earlier this year, which is across from our Davenport property and provides us some really nice synergies between those two properties. We acquired Hewland in Fort Worth Market earlier this year, I think.

Speaker #5: And as I said , I have a couple more . I would say probably we're going to be a little higher than those numbers on the acquisition .

Speaker #5: And disposition side . So not not significantly different . If you look back so far , we've done basically 150 million over the last two and a half , three years .

Speaker #5: I think that run rate is is consistent with where we are today . But we are seeing some some nice opportunities . I'm very pleased with the the acquisition of San Clemente in Austin earlier this year , which is across from our Davenport property and provides us some , some really nice synergies between those two properties .

Speaker #5: We acquired Hulen in Fort Worth Market earlier this year . I think great acquisition for us and excited about a couple more that we should announce shortly .

Dave Holeman: Great acquisition for us and excited about a couple more that we should announce shortly, no huge change here. Just continuing to make sure we're working the portfolio. We're taking the steps we need to do to achieve our 5% to 7% long term FFO growth. Probably just a little bit more than the $40 million, but kind of a consistent pattern with what we've done over the last three years.

Speaker #5: But no , no , no huge change here . Just continuing to make sure we're we're working the portfolio . We're taking the steps we need to do to to to achieve our 5 to 7% long term FFO growth .

Speaker #5: And so probably just a little bit more than the 40 million . But kind of a consistent pattern with what we've done over the last three years .

Speaker #10: Got it. And kind of changing gears here in the fourth quarter, I think you've got about 4% of your ABR expiring.

[Analyst]: Got it. Changing gears here in the fourth quarter, I think you've got about 4% of your ABR expiring. Is that really just because you have a concentration of month to month leases or anything else going on there?

Speaker #10: Is that is that really just because you have a concentration of month to month leases or anything other going on there ?

Speaker #7: Well , I think if you if , if you're looking at the number of leases , most , most just on the lease count , most of that is is in our what we call the Kubitschek product , which is very small percentage of the portfolio .

Scott Hogan: If you're looking at the number of leases, just on the lease count, most of that is in our, what we call the Cubic SEC product, which is a very small percentage of the portfolio, but it's a shared office space concept. It's a high number of leases that just tend to be either month to month or very short terms, and that's normal. If we looked at just what we consider being our wheelhouse of leases, the number is closer to 50 to 75 that are expiring in the fourth quarter, something like that, probably closer to 50. I think it's mainly just Cubic SEC leases expiring.

Speaker #7: But it's a shared office space concept . And so it's a high number of leases that just tend to be either month to month or very short terms .

Speaker #7: And that's normal . I think if we looked at just what we'd consider to be in our wheelhouse of leases , the numbers closer to 50 to 75 that are expiring in the fourth quarter , something like that , probably closer to 50 .

Speaker #7: So I think it's mainly just cubics leases expiring .

Speaker #5: And it's actually very consistent with what we've we've always had . I mean , it is if you look back to the last fourth quarter , I think we're a little smaller .

Dave Holeman: It's actually very consistent with what we've always had. I mean, if you look back to the last fourth quarter, I think we're a little smaller. Super pleased with the opportunity to continue to have roll. One of the things that I think is a benefit for Whitestone REIT is in this environment, we're rolling a greater % of our leases than some of our peers. Obviously, with the positive marks we're having, we're pleased with that. Consistent with what we've had is about 20% of our leases rolling. If you look at the 4% of revenue, that translates very closely.

Speaker #5: So super , super pleased with the opportunity to continue to have role . One of the things that I think is a benefit for for Whitestone is in this environment , we're rolling a greater percent of our leases than some of our peers .

Speaker #5: So obviously with the positive marks we're having , we're we're pleased with that . But consistent with what we've had is , is , you know , about 20% of our leases rolling .

Speaker #5: If you look at the 4% of revenue , that translates very closely .

Speaker #7: I think on a square footage and ABR basis , we're is actually lower than we than we were in this position last year .

Scott Hogan: I think on a square footage and ABR basis, it's actually lower than we were in this position last year, Craig.

Speaker #7: Craig . So okay .

Speaker #10: That's helpful . One more just on slide ten on the investor presentation . Appreciate the color . First of all , that's helpful .

[Analyst]: Okay, that's helpful. One more just on slide 10 on the investor presentation. Appreciate the color, first of all. That's helpful. Just looking at it optically, it looks like you're acquiring properties with higher rents at higher cap rates and selling assets with lower rents and lower cap rates. Obviously, you're getting that positive cap rate arbitrage, which you've reported over the past few years. Is that just you executing your strategy, or is that a focus more on, you know, more small shop space where you can charge higher rents? I just would be interested in your color on how you're doing that.

Speaker #10: But just looking at it optically , it looks like you're acquiring properties with higher rents and higher cap rates and selling assets that with lower rents and lower cap rates .

Speaker #10: So obviously you're getting that positive cap rate arbitrage , which you've reported over the past few years , is that just you executing your strategy or is that a focus more on , you know , more small shop space where you can charge higher rents ?

Speaker #10: I just would be interested in your color on how you're doing that .

Speaker #5: I think it's , you know , it's largely our strategy and it's I think if you look at at the fundamental aspect of what we do , it's , you know , it's capital allocation .

Dave Holeman: I think it's largely our strategy. I think if you look at the fundamental aspect of what we do, it's capital allocation. Just continuing to look at our portfolio, we do believe that right now it's the right time to continue to upgrade a number of things: upgrading the tenant base, upgrading the properties through higher income levels to potentially higher ABRs. It is a focused strategy to ultimately buy properties that we think have greater growth going forward. We're doing that probably in a little better areas and upgrading the portfolio. You've seen us move the ABR, you've seen us move our consolidated TAP score.

Speaker #5: So just continuing to look at our portfolio , we do believe that right now it's the right time to continue to upgrade a number of things .

Speaker #5: Upgrading the tenant base , upgrading the the properties through higher income levels to potentially higher ABS . So it is a focus strategy to to ultimately buy properties that we think have greater growth going forward .

Speaker #5: And we're doing that probably in a little better areas than upgrading the portfolio . You've seen us move the ABR , you've seen us move kind of our consolidated Tap score .

Speaker #5: And then most importantly , if you look at the chart on ten , not only are we buying these properties at good rates , but Christine and her team are doing a job of stepping in day one , looking at the merchandising mix , looking at ways we can drive NOI .

Dave Holeman: Most importantly, if you look at the chart on TAP, not only are we buying these properties at good rates, but Christine and her team are doing a fabulous job of stepping in day one, looking at the merchandising mix, looking at ways we can drive NOI. We're buying it at more attractive cap rates, and then we're making very quick return increases as we move forward.

Speaker #5: So we're buying it at more attractive cap rates , and then we're making , you know , very quick return increases as we as we move forward .

Speaker #10: Okay, great. Appreciate the color. Thank you.

[Analyst]: Okay, great. Appreciate the color. Thank you.

Speaker #5: Thanks , Greg .

Dave Holeman: Thanks, Greg.

Speaker #3: We'll go next to Bill Chen with Rhizome Partners .

Operator: We'll go next to Bill Chen with Rhizome Partners.

Speaker #11: Hi . I was wondering if you have a update on peristome in terms of timing and then if the dollar figures are still in that same range of , I believe , 50 to 70 , that you have previously guided .

[Analyst]: Hi. I was wondering if you have an update on Pillarstone in terms of timing, and then if the dollar figures are still in that same range of, I believe, $50 to $70 million that you have previously guided.

Speaker #5: Hey , Bill . David Holeman , thanks for your question . I think I said earlier , and I'll remind folks , we're going to file our 10-q very shortly .

Dave Holeman: Hey, Bill. Dave Holeman, thanks for your question. I think I said earlier, and I'll remind folks, we're going to file our 10-Q very shortly. There is a very detailed explanation in the 10-Q that goes through all the activities that have happened on Pillarstone, but just briefly, during the quarter, we received $13.6 million. That was payment of part of our proceeds due from Pillarstone. There has been a settlement reached with the court, with the plan agent, that would result in about another $40 million coming to Whitestone REIT. That settlement needs to be approved by the court. There will be a hearing to do so in November. If all of that's approved, it's expected the distribution of approximately $40 million would be made in mid-December. Obviously, we expect that to happen, but there are a number of steps to get there. That's the update.

Speaker #5: And there is a very detailed explanation in the 10-q that goes through all the activities that have happened on pillar Stone , but just just briefly during the quarter , we received 13.6 million .

Speaker #5: That was payment of part of our proceeds due from pillar Stone . We have there has been a settlement reached with the with the court , with the plan agent that would result in about another 40 million coming to to Whitestone .

Speaker #5: That settlement needs to be approved by the court . There will be a hearing to do so in in November , and then if all of that's approved , it's expected the distribution of approximately 40 million would be made in in mid-December .

Speaker #5: You know , there are obviously there are we expect that to happen . But there are a number of steps to get there .

Speaker #5: So that's the update . We're we're very close to receiving what we believe is kind of the end of this of the joint venture .

Dave Holeman: We're very close to receiving what we believe is kind of the end of the joint venture. $13.6 million received in the quarter, and right now we estimate another $40 million to come in December.

Speaker #5: 13.6 million received in the quarter . And right now we estimate another 40 to come in in December .

Speaker #11: Gotcha . And thank you for that great color . I appreciate that . And does your leverage ratios factor into those payments that that you previously just that you mentioned on the call earlier today .

[Analyst]: Gotcha. Thank you for that great color. I appreciate that. Does your leverage ratios factor into those payments that you previously mentioned on the call earlier today?

Speaker #7: Now . Right . Right now the the the guidance for the fourth quarter does not include the impact of any gains or losses or the pillar stone proceeds .

Scott Hogan: Right now, the guidance for the fourth quarter does not include the impact of any gains or losses or the Pillarstone proceeds. $40 million. The $40 million Dave mentioned would probably be right around a half turn.

Speaker #7: So 40 million if the 40 million Dave mentioned would probably be , right around a half turn .

Speaker #11: Okay . I appreciate that . And one last question . If I may , on the past site developments , is the is the strategy going forward to hold them or to kind of sell them for for the gain and redeploy the capital ?

[Analyst]: Okay, I appreciate that. One last question, if I may, on the pad site developments. Is the strategy going forward to hold them or to kind of sell them for the gain and redeploy the capital?

Speaker #5: Great question . I think that's an individual by individual pad site , you know , kind of that we go . Through obviously we you know , we do think there's value in in having an aggregation of the properties that all go together .

Dave Holeman: Great question. I think that's an individual by individual pad site kind of that we go through. Obviously, we do think there's value in having an aggregation of the properties that all go together. As you can see from what we've done in the last couple years, we selectively sold a couple pad sites that we thought the value was very attractive. As we do these pad sites, one of the things we look at is structuring them in a way that with a lease that is attractive to a buyer and then keeping that opportunity open to us. It's really an individual, you know, kind of decision we go through. We look at the pad site, we look at where it is in the center, we look at potentially the pricing in the market. We're looking at a number of ways to do things that add value to shareholders.

Speaker #5: But as you can see from what we've done over the last couple of years , we selectively sold a couple pad sites that we thought the value was very attractive .

Speaker #5: So as we do these pad sites , one of the things we look at is , is structuring them in a way with a lease that is attractive to a buyer and then so keeping that opportunity open to us .

Speaker #5: But but it's really a it's an individual , you know , kind of decision . We go through . We look at the pad site , we look at where it is in the center .

Speaker #5: We look at potentially the pricing in the market . So , you know , we're looking at a number of ways to to do things that add value to shareholders .

Speaker #11: Thank you for that . Appreciate it . I have no further questions .

[Analyst]: Thank you for that. I appreciate it. I have no further questions.

Speaker #5: Thanks , Bill .

Dave Holeman: Thanks, Bill.

Speaker #3: Moving on to John Massocca with B Riley Securities .

Operator: Moving on to John Massocca with B. Riley.

Speaker #12: Good morning . Maybe earlier in the call . And I know it's not really how you tend to think about the portfolio , but as we think about for Q rent and maybe even beyond that , I mean , do you have a signed not open pipeline or pipeline of things that are on a free rent period that could be kicking in here in , in the next 3 to 6 months ?

[Analyst]: Good morning. Apologies if I missed this earlier in the call, and I know it's not really how you tend to think about the portfolio, but as we think about Q4 rent and maybe even beyond that, do you have a signed not open pipeline or a pipeline of things that are on, call it a free rent period, that could be kicking in here in the next three to six months, and if so, what's the broad parameters of how big that number is?

Speaker #12: And if so , kind of what's the broad parameters of how big that number is ?

Speaker #5: Yeah . So as I hey John . Dave . So as I mentioned earlier , you know , we report occupancy as commenced occupancy .

Dave Holeman: Yeah, as I mentioned earlier, we report occupancy as commenced occupancy so that the tenants have taken possession of the space. Some of our peers report, I think, a leased occupancy and then a signed not open. One of the fundamental aspects of our business model is smaller tenants, shorter leases, much more quick and nimble. We just don't have a substantial amount of leases that aren't commenced because we move quickly, we get those tenants in very quickly. I also think when people report signed not open, they're not reporting potential tenants that move out. There's that signed not open gap that always sits there. Whitestone's at a solid 94%, over 94%, fourth quarter moving forward. We sign leases and we get them commenced very quickly. I think I answered your question, maybe, John.

Speaker #5: So the tenants have taken possession of the space . Some of our peers report , I think a leased occupancy and then a sign not open .

Speaker #5: One of the fundamental aspects of our business model is , is smaller tenants , shorter leases , much more quick and nimble . So we just don't have a substantial amount of leases that aren't aren't commenced because we move quickly .

Speaker #5: We get those tenants in very quickly . So also think , you know , when people report sign , not open , they're not reporting , you potential tenants that move out .

Speaker #5: So there's that sign not open gap . Always sits there . But Whitestone REIT a solid 94 over 94 fourth quarter moving forward .

Speaker #5: And you know , we we we sign leases and we get them commenced very quickly . I think I I answered your question .

Speaker #5: Maybe maybe John . .

Speaker #7: Yeah . Just the three and a half to 4.5% . guidance that we've given for the year includes any any kind of free rent or anything of that nature .

Scott Hogan: Just the 3.5% to 4.5% same store guidance that we've given for the year includes any kind of free rent or anything of that nature. It as well.

Speaker #7: Same store

Speaker #7: In it as well . Okay .

Speaker #12: So I guess maybe just as we think about for Q , which historically a big leasing quarter , I mean , is that stuff that's in negotiation today or is that things that have been negotiated in three Q , two Q that are essentially just , you formalities to close in the quarter ?

[Analyst]: I guess maybe just, you know, as we think about Q4, which is historically a big leasing quarter, is that stuff that's in negotiation today, or is that things that have been negotiated in Q3, Q2 that are essentially just, you know, formalities to close in the quarter?

Speaker #6: It's both . John . I mean , leasing , you know , there's complicated leases can take , you know , six months to negotiate to , to put in place and some , some are different .

Christine Mastandrea: It's both, John. Leasing, you know, is complicated. Leases can take, you know, six months to negotiate to put in place, and some are different. I mean, it's across the board. Traditionally, we've always tried to take back some space at the beginning of the year, which always kind of dips our occupancy a bit. In that, we're moving towards either leasing activity well into the second and third that delivers on the fourth, and sometimes the fourth, for whatever reason, people wanting to start their businesses up at the beginning of the year, just seems to always have been a very productive quarter for us in the beginning. I think, again, you kind of see the trend has been the same the last couple of years. We just expect it to keep being that way.

Speaker #6: I mean , it's across the board . So but traditionally we've always tried to take back some space at the beginning of the year and which always kind of dips our occupancy a bit .

Speaker #6: And in that we're moving towards either leasing activity well into the second and third that delivers on the fourth . And then sometimes the fourth for whatever reason , people wanted to start there .

Speaker #6: Businesses up at the beginning of the year just seems to always been a very productive quarter for us . In in the beginning , you know , and I think , again , you kind of see the trend has been the same the last couple of years .

Speaker #6: We just expect it to keep being that way .

Speaker #5: Yeah . And I think obviously , obviously we're not just saying that because it's been that way . We've got great visibility into the leases .

Dave Holeman: I think obviously we're not just saying that because it's been that way. We've got great visibility into the leases. Christine and her team, every week we look at the activity, we look at leases in place, so we feel good about where we are on the leasing side. At this point in the year, there's substantial activity, we believe to finish out in Q4.

Speaker #5: We . Yeah . Christine and her team every week we look at the activity . We look at leases in place . So we feel feel good about where we are .

Speaker #5: On the leasing side . And you know , at this point in the year , there's there's substantial activity . We believe to to finish out in Q4 .

Speaker #6: Yeah, I haven't seen a downtick in leasing activity this year. Surprisingly, I thought there would be a little bit of pullback.

Christine Mastandrea: Yeah, I haven't seen a downtick in leasing activity this year, surprisingly. I thought there'd be a little bit of pullback, and there really has not been.

Speaker #6: And it really has not been .

Speaker #12: Okay . And then on the kind of redevelopment or center and enhancement CapEx you're putting in is all of the kind of tailwind to same store NOI or NOI , you're expecting to see from that kind of hit in 2026 ?

[Analyst]: Okay. On the kind of redevelopment or center enhancement CapEx you're putting in, is all of the kind of tailwind to same store NOI or NOI you're expecting to see from that going to hit in 2026, or are there projects in place that are really more of a 2027 impact? I guess how big could that be compared to what you're, you know, going to complete this year or early next and therefore have it be impacting the 2026 numbers?

Speaker #12: Or is there projects in place that are really more of a 2027 impact ? And I guess how big could that be compared to what your , you know , going to complete this year or early next ?

Speaker #12: And therefore have it be impacting the 26 numbers ?

Speaker #6: It's boy , we've been stacking this evenly across the board over the number of years . Just because the timing of lease roles , when we're able to put production into place .

Christine Mastandrea: We've been stacking this evenly across the board over the number of years just because the timing of lease rolls when we're able to put production into place. I think we may see some of our larger projects come online in 2027. 2026 is going to be similar to this past year as far as what we're able to achieve as far as putting pads into production, et cetera.

Speaker #6: But I think , you know , we may see some of our larger projects come online on 27 . But 26 is going to be similar to this past year as far as what we're able to achieve as far as putting pads into production , etc.

Speaker #6: . And the same thing , we have a couple of projects that we expect to see an uplift from . I think as we talked about Line Square Terravita , a number of these that they take about six months to nine months to put in production , and then you see the results in 2020 , you know , the following year .

Christine Mastandrea: We have the same thing.

Christine Mastandrea: Couple of projects that we expect to see an uplift from. I think as we talked about, Lion Square, Terravita, a number of these that they take about six months to nine months to put in production, and then you see the results in 2020, you know, the following year.

Speaker #6: So we continue that's that is part of the value add of our business that we find to be , you know , as far as whenever we purchase an asset , we look at doing that .

Dave Holeman: We continue.

Christine Mastandrea: That is part of the value add of our business that we find to be, as far as whenever we purchase an asset, we look at doing that. Garden Oaks will probably be the next one to start up. It's just how we do business, and that's how we're able to keep increasing and improving the value of the portfolio, the quality of the revenue, and deliver to the bottom line.

Speaker #6: Garden Oaks will probably be the next one to start up . And it's just how we do business . And that's how we we're able to keep , you know , increasing and improving the value of the portfolio , the quality of the revenue and , and deliver to the bottom line .

Speaker #12: And then maybe kind of on a very short term basis , as I think about the acquisitions and dispositions that are in the pipeline for the remainder of the year , should we expect kind of cap rates to roughly be aligned with what you've done historically on kind of both ends of those , those transactions .

[Analyst]: On a very short term basis, as I think about the acquisitions and dispositions that are in the pipeline for the remainder of the year, should we expect cap rates to be roughly aligned with what you've done historically on both ends of those transactions?

Speaker #5: That general answer is yes . Nothing . No , no . Substantial changes . I mean , we're we're we're working a program , you know , the specific cap rates may be slightly different , but generally we're seeing cap rates consistent with what we show on slide ten .

Dave Holeman: The general answer is yes. Nothing. No substantial changes. We're working a program. The specific cap rates may be slightly different, but generally we're seeing cap rates consistent with what we show on slide 10. As far as the acquisition side, most importantly to us is obviously the day one cap rate is important, but we're equally focused on the day, the day 300 cap rate. What can we do? How can we move the rents? There should be no substantial change in doing similar to what we've been doing. I think I said in my remarks, what we plan to do is execute and deliver, share with investors where we think we can add value and then do that. You should see that on the acquisition disposition side throughout the rest of the year.

Speaker #5: You know, as far as the acquisition side, you know, most importantly to us is obviously the day one cap rate is important.

Speaker #5: But we're equally focused on the , you know , the the day , the day 300 cap rate . What can we do ?

Speaker #5: How can we move the rents . So it should be no , no substantial change in doing similar to what we've been doing .

Speaker #5: I think I said in my remarks what we plan to do is execute and deliver , you know , share with investors where we think we can add value and then do that .

Speaker #5: So you should see that on the acquisition disposition side throughout the rest of the year .

Speaker #12: Okay . That's it for me . Thank you very much .

[Analyst]: Okay, that's it for me. Thank you very much.

Speaker #5: Thanks , John .

Dave Holeman: Thanks, John.

Speaker #3: This now concludes our question and answer session . I would like to turn the floor back to Dave Holeman for closing comments .

Operator: This now concludes our question and answer session. I would like to turn the floor back to Dave Holeman for closing comments.

Speaker #5: Thank you . Thanks to everyone for joining our call . We're we're very pleased with the progress we're making . I think we've laid down another solid quarter and are excited about finishing out the year with a very strong year .

Dave Holeman: Thank you. Thanks to everyone for joining our call. We're very pleased with the progress we're making. I think we've laid down another solid quarter and are excited about finishing out the year with a very strong year. We'd love to interact with anyone that was going to be at REIT World in Dallas in December. We're going to be having a property tour and then obviously meeting one on one with investors. If you'd like to do that, reach out to us. Thanks again for joining and have a great day.

Speaker #5: We'd love to interact with anyone that was going to be at REIT World in Dallas in December . We're going to be having a property tour and then obviously meeting one on one with investors .

Speaker #5: So if you'd like to do that , reach out to us . And thanks again for joining and have a great day .

Speaker #3: Ladies and gentlemen , thank you for your participation . This does conclude today's teleconference . You may disconnect your lines and have a wonderful day .

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Dave Holeman: Sam.

[Operator]: Sa.

Dave Holeman: Sa.