HOUSTON, Aug. 03, 2021 (GLOBE NEWSWIRE) -- Whitestone REIT (NYSE:WSR) ("Whitestone" or the "Company") today announced its operating and financial results for the second quarter of 2021. Whitestone seeks to create neighborhood center communities in its high quality open-air shopping centers that it acquires, owns, manages, develops, and redevelops primarily in the largest, fastest-growing and most affluent markets in the Sunbelt.

"Beyond the re-activation of our strategic growth plan, our well-located portfolio produced significant increases in our financial results in the second quarter. Specifically, Whitestone's strength and resiliency continues to be demonstrated through increasing revenues and occupancy, reduction of debt and successful scaling of expenses. As the economy continues to recover, we have positioned the Company to reap the benefits and deliver long-term value from our strategically chosen business-friendly, high-growth markets."

- Jim Mastandrea, Chairman and Chief Executive Officer

Financial Summary:

All per share amounts are on a diluted per common share and operating partnership ("OP") unit basis unless stated otherwise.

Net Revenues of $30.6 million and $59.7 million in the three and six months ended June 30, 2021, respectively
Net Income attributable to common shareholders of $0.12 and $0.15 per share in the three and six months ended June 30, 2021, respectively
Funds from Operations ("FFO") Core of $0.26 and $0.50 per share in the three and six months ended June 30, 2021, respectively
General and Administrative Expenses, as a percentage of revenue, of 14.6% in the three months ended June 30, 2021. This compares to 16.9% for the year ended December 31, 2020 ⁽¹⁾
Net Debt to EBITDAre-Adjusted Ratio of 8.2X for the quarter ended June 30, 2021. This compares to 9.4X for the first quarter of 2021 ⁽²⁾
Same-Store Net Operating Income ("NOI") of $20.2 million for the three months ended June 30, 2021, representing an increase of 8.4% from the three months ended June 30, 2020

Second Quarter Operating and Financial Highlights:

All per share amounts are on a diluted per common share and operating partnership ("OP") unit basis unless stated otherwise.

Revenues of $30.6 million vs $29.0 million in prior quarter and $27.6 million in 2Q 2020
Net Income attributable to common shareholders per share of $0.12 vs $0.03 in prior quarter and $0.01 in Q2 2020
FFO Core per share of $0.26 vs $0.23 in the prior quarter and $0.22 in 2Q 2020
Same-store NOI increased 8.4% from 2Q 2020
Comparable GAAP-based leasing spreads of 6.8% for the quarter
Debt to EBITDAre-Adjusted improved to 8.2X from 9.4X in the prior quarter and 9.8X in 2Q 2020
Total Net Debt reduced $47.6 million from a year ago⁽²⁾
Debt to Gross Book Value improved to 52% vs 56% from a year ago
G&A, as a percentage of revenue, improved to 14.6% from 15.7% in 2Q 2020
Annualized Base Rent per leased square foot grew to $19.95 from $19.71 from the prior quarter
Acquired Lakeside Market in Dallas, TX for $53.24 million on July 8, 2021

Financial Results

Reconciliations of Net Income Attributable to Whitestone REIT to FFO, FFO Core and NOI are included herein.

Net income attributable to common shareholders for the quarter ended June 30, 2021 was $5.1 million, or $0.12 per diluted share. Net income attributable to common shareholders for the quarter ended June 30, 2020 was $0.4 million, or $0.01 per diluted share.

FFO for the quarter ended June 30, 2021 was $10.6 million, or $0.24 per diluted share, as compared to $8.4 million, or $0.19 per diluted share for the quarter ended June 30, 2020. FFO Core for the quarter ended June 30, 2021 was $11.9 million or $0.26 per diluted share, compared to $9.6 million, or $0.22 per diluted share for the quarter ended June 30, 2020.

Operating Results

For the periods ending June 30, 2021 and 2020, the Company's operating highlights were as follows:

	Second Quarter 2021	Second Quarter 2020
Occupancy:
Wholly Owned Properties	89.9%	89.2%
Same Store Property Net Operating Income Change ⁽³⁾	8.4%	(7.9)%

Rental Rate Growth - Total (GAAP Basis):	6.8%	11.3%
New Leases	3.1%	3.4%
Renewal Leases	7.9%	13.5%

Leasing Transactions:
Number of New Leases	35	21
New Leases - Lease Term Revenue (millions)	$12.3	$5.2
Number of Renewal Leases	57	43
Renewal Leases - Lease Term Revenue (millions)	$17.5	$9.8

Real Estate Portfolio Update

Community Centered Properties^TM Portfolio Statistics:

As of June 30, 2021, Whitestone wholly owned 58 Community Centered Properties^TM with 5.0 million square feet of gross leasable area ("GLA"). Five of the 58 Community Centered Properties^TM are land parcels held for future development. The portfolio is comprised of 30 properties in Texas, 27 in Arizona and one in Illinois. Whitestone's Community Centered Properties^TM are located in the MSA's of Austin (4), Chicago (1), Dallas-Fort Worth (8), Houston (15), Phoenix (27) and San Antonio (3). In addition to being business friendly, these are six of the top markets in the country in terms of size, economic strength and population growth. 2017 estimates show the projected 5-year population growth rates for both Austin and Dallas-Fort Worth to be 9.7%, San Antonio to be 8.6%, Houston to be 8.0%, and Phoenix to be 6.6%⁽⁴⁾. The Company's properties in these markets are generally located on the best retail corners embedded in affluent communities. The Company also owns an 81.4% equity interest in and manages eight properties containing 0.9 million square feet of GLA through its investment in Pillarstone OP.

At the end of the second quarter, the Company's diversified tenant base was comprised of 1,440 tenants, with the largest tenant accounting for only 2.9% of annualized base rental revenues. Lease terms range from less than one year for smaller tenants to more than 15 years for larger tenants. Whitestone's leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance, and typically exclude restrictive lease clauses.

Subsequent Event

On July 8, 2021, we acquired Lakeside Market, a property that meets our Community Centered Property^® strategy, for $53.2 million in cash and net prorations. Lakeside Market, a 163,000 square foot property, was 80.5% leased at the time of purchase and is located in Plano, Texas.

Balance Sheet and Liquidity

At June 30, 2021, Whitestone had $22.3 million in cash and cash equivalents, $55.1 million of availability and $160.5 million of capacity under its credit facility.

The Company has undepreciated real estate assets of $1.1 billion at June 30, 2021.

At June 30, 2021, 51 of the Company's wholly owned 58 properties were unencumbered by mortgage debt, with an undepreciated cost basis of $828.3 million. At June 30, 2021, the Company had total real estate debt, net of cash, of $592.1 million, of which approximately 89% was subject to fixed interest rates. The Company's weighted average interest rate on all fixed rate debt as of the end of the second quarter was 4.1% and the weighted average remaining term was 3.9 years.

Dividend

On June 11, 2021, the Company declared a quarterly cash distribution of $0.1075 per common share and OP unit for the second quarter of 2021, to be paid in three equal installments of $0.035833 in July, August and September of 2021.

Conference Call Information

In conjunction with the issuance of its financial results, the Company invites you to listen to its earnings release conference call to be broadcast live on Wednesday, August 4, 2021 at 10:00 A.M. Central Time. The call will be led by Jim Mastandrea, Chairman and Chief Executive Officer, and Dave Holeman, Chief Financial Officer. Conference call access information is as follows:

To listen to a webcast of the conference call, click on the Investor Relations tab of the Company's website, www.whitestonereit.com, and then click on the webcast link. A replay of the call will be available on Whitestone's website via the webcast link until the Company's next earnings release. Additional information about Whitestone can be found on the Company's website.

Dial-in number for domestic participants:	1-877-705-6003
Dial-in number for international participants:	1-201-493-6725

The conference call will be recorded, and a telephone replay will be available through Wednesday, August 18, 2021. Replay access information is as follows:

Replay number for domestic participants:	1-844-512-2921
Replay number for international participants:	1-412-317-6671
Passcode (for all participants):	13721233

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

Supplemental Financial Information

The second quarter earnings release, supplemental data package and details regarding Whitestone's results of operations, communities and tenants are available in the Investor Relations section of the Company's website at www.whitestonereit.com. For those without Internet access, the earnings release and supplemental data package will be available by mail upon request. To receive a copy, please call the Company's Investor Relations line at (713)435-2219.

About Whitestone REIT

Whitestone is a community-centered shopping center REIT that acquires, owns, manages, develops and redevelops high-quality open-air neighborhood centers primarily in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone seeks to create communities that thrive through creating local connections between consumers in the surrounding communities and a well-crafted mix of national, regional and local tenants that provide daily necessities, needed services, entertainment and experiences. Whitestone is a monthly dividend paying stock and has consistently paid dividends for more than 15 years. Whitestone's strong, balanced and managed capital structure provides stability and flexibility for growth, and positions Whitestone to perform well through economic cycles. For additional information, please visit www.whitestonereit.com.

Footnotes:

⁽¹⁾	Inclusive of pro rata share of revenue of unconsolidated investment in real estate partnership.
⁽²⁾	Total Net Debt is defined as outstanding debt plus pro rata share of outstanding debt of real estate partnership less cash and pro rata share of cash of real estate partnership.
⁽³⁾	Excludes straight-line rent, amortization of above/below market rates and lease termination fees for both periods
⁽⁴⁾	Source: Claritas, as of April 2017.

Forward-Looking Statements

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

The following are additional factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic, and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company's business, employees and tenants, including, among others, (a) changes in tenant demand for the Company's properties, (b) financial challenges confronting major tenants, including as a result of decreased customers' willingness to frequent, and mandated stay in place orders that have prevented customers from frequenting, some of Company's tenants' businesses and the impact of these issues on the Company's ability to collect rent from its tenants; (c) operational changes implemented by the Company, including remote working arrangements, which may put increased strain on IT systems and create increased vulnerability to cybersecurity incidents, (d) significant reduction in the Company's liquidity due to a reduced borrowing base under its revolving credit facility and limited ability to access the capital markets and other sources of financing on attractive terms or at all, and (e) prolonged measures to contain the spread of COVID-19 or the fluctuating government-imposed restrictions implemented to contain the spread of COVID-19; adverse economic or real estate developments or conditions in Texas or Arizona, Houston and Phoenix in particular, including as a result of any resurgences in COVID-19 cases in such areas and the impact on our tenants' ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments; the imposition of federal income taxes if we fail to qualify as a real estate investment trust ("REIT") in any taxable year or forego an opportunity to ensure REIT status; the Company's ability to meet its long-term goals, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; its ability to successfully identify, finance and consummate suitable acquisitions, and the impact of such acquisitions, including financing developments, capitalization rates and internal rates of return; the Company's ability to reduce or otherwise effectively manage its general and administrative expenses; the Company's ability to fund from cash flows or otherwise distributions to its shareholders at current rates or at all; current adverse market and economic conditions including, but not limited to, the significant volatility and disruption in the global financial markets caused by the COVID-19 pandemic; lease terminations or lease defaults; the impact of competition on the Company's efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic, legislative and regulatory changes, including changes to laws governing REITs and the impact of the legislation commonly known as the Tax Cuts and Jobs Act; the success of the Company's real estate strategies and investment objectives; the Company's ability to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended; and other factors detailed in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files with the Securities and Exchange Commission from time to time.

Non-GAAP Financial Measures

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

EBITDAre: The National Association of Real Estate Investment Trusts ("NAREIT") defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense, depreciation and amortization and impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus, or minus losses and gains on the disposition of depreciable property, including losses/gains on change in control and adjustments to reflect the entity's share of EBITDAre of the unconsolidated affiliates and consolidated affiliates with non-controlling interests. The Company calculates EBITDAre in a manner consistent with the NAREIT definition. Management believes that EBITDAre represents a supplemental non-GAAP performance measure that provides investors with a relevant basis for comparing REITs. There can be no assurance the EBITDAre as presented by the Company is comparable to similarly titled measures of other REITs. EBITDAre should not be considered as alternatives to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

EBITDAre-Adjusted: The Company also presents EBITDAre-Adjusted as an additional supplemental measure as we believe it is reflective of the core operating performance of our portfolio of properties. EBITDAre-Adjusted is defined as NAREIT EBITDAre excluding charges and gains related to non-cash and non-operating transactions and other events that could affect the comparability of operating results. Specific examples of items excluded from EBITDAre-Adjusted include, but are not limited to, share-based compensation and management fees, net of related costs. There can be no assurance that EBITDAre-Adjusted as presented by the Company is comparable to similarly titled measures of other REITs. EBITDAre-Adjusted should not be considered an alternative to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre-Adjusted does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

FFO: Funds From Operations: Management believes that FFO is a useful measure of the Company's operating performance. The Company computes FFO as defined by NAREIT, which states that FFO should represent net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company's performance or to cash flow from operations as a measure of liquidity or ability to make distributions and service debt.

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

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

FFO Core: Funds From Operations Core: Management believes that the computation of FFO in accordance with NAREIT's definition includes certain non-cash and non-comparable items that affect the Company's period-over-period performance. These items include, but are not limited to, legal settlements, debt extension costs, non-cash share-based compensation expense and rent support agreement payments received from sellers on acquired assets. In addition, the Company believes that FFO Core is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as many REITs provide some form of adjusted or modified FFO. However, other REITs may use different adjustments, and the Company's FFO Core may not be comparable to the adjusted or modified FFO of other REITs.

NOI: Net Operating Income: Management believes that NOI is a useful measure of the Company's property operating performance. The Company defines NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, pro rata share of NOI of unconsolidated entities and capital expenditures and leasing costs, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company's property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to that of other REITs.

Same Store NOI: Management believes that Same Store NOI is a useful measure of the Company's property operating performance because it includes only the properties that have been owned for the entire period being compared, and that it is frequently used by the investment community. Same Store NOI assists in eliminating differences in NOI due to the acquisition or disposition of properties during the period being presented, providing a more consistent measure of the Company's performance. The Company defines Same Store NOI as operating revenues (rental and other revenues, excluding straight-line rent adjustments, amortization of above/below market rents, and lease termination fees) less property and related expenses (property operation and maintenance and real estate taxes), Non-Same Store NOI, and NOI of our investment in Pillarstone OP (pro rata). We define "Non-Same Stores" as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company's Same Store NOI may not be comparable to that of other REITs.

Investor and Media Relations:

Rebecca Elliott,

VP of Corporate Communications

Whitestone REIT

(713) 435-2228

Relliott@whitestonereit.com

Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

	June 30, 2021			December 31, 2020

ASSETS
Real estate assets, at cost
Property	$	1,109,794		$	1,106,426
Accumulated depreciation	(176,879		)	(163,712		)
Total real estate assets	932,915			942,714
Investment in real estate partnership	34,257			33,979
Cash and cash equivalents	22,274			25,777
Restricted cash	211			179
Escrows and acquisition deposits	10,402			9,274
Accrued rents and accounts receivable, net of allowance for doubtful accounts ⁽¹⁾	21,346			23,009
Receivable due from related party	647			335
Unamortized lease commissions, legal fees and loan costs	8,321			7,686
Prepaid expenses and other assets⁽²⁾	3,737			2,049
Total assets	$	1,034,110		$	1,045,002

LIABILITIES AND EQUITY
Liabilities:
Notes payable	$	614,441		$	644,185
Accounts payable and accrued expenses⁽³⁾	40,608			50,918
Payable due to related party	514			125
Tenants' security deposits	7,280			6,916
Dividends and distributions payable	4,995			4,532
Total liabilities	667,838			706,676
Commitments and contingencies:	—			—
Equity:
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of June 30, 2021 and December 31, 2020	—			—
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 45,692,791 and 42,391,316 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	45			42
Additional paid-in capital	589,764			562,250
Accumulated deficit	(218,842		)	(215,809		)
Accumulated other comprehensive loss	(10,966		)	(14,400		)
Total Whitestone REIT shareholders' equity	360,001			332,083
Noncontrolling interest in subsidiary	6,271			6,243
Total equity	366,272			338,326
Total liabilities and equity	$	1,034,110		$	1,045,002

Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands)

	June 30, 2021			December 31, 2020
⁽¹⁾Accrued rents and accounts receivable, net of allowance for doubtful accounts
Tenant receivables	$	21,026		$	22,956
Accrued rents and other recoveries	16,435			16,348
Allowance for doubtful accounts	(16,186		)	(16,426		)
Other receivables	71			131
Total accrued rents and accounts receivable, net of allowance for doubtful accounts	$	21,346		$	23,009

⁽²⁾ Operating lease right of use assets (net)	$	432		$	592
⁽³⁾ Operating lease liabilities	$	439		$	603

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

	Three Months Ended									% Change From
	June 30, 2021			March 31, 2021			June 30, 2020			March 31, 2021			June 30, 2020
Revenues
Rental⁽¹⁾	$	30,152		$	28,695		$	27,052		5		%	11		%
Management, transaction, and other fees	466			350			545			33		%	(14	)	%
Total revenues	30,618			29,045			27,597			5		%	11		%

Operating expenses
Depreciation and amortization	7,105			7,013			6,970			1		%	2		%
Operating and maintenance	5,444			4,839			4,395			13		%	24		%
Real estate taxes	4,160			4,038			4,385			3		%	(5	)	%
General and administrative	4,730			5,634			4,644			(16	)	%	2		%
Total operating expenses	21,439			21,524			20,394			—		%	5		%

Other expenses (income)
Interest expense	6,143			6,132			6,468			—		%	(5	)	%
(Gain) loss on sale or disposal of assets, net	(224		)	(1		)	657			N.M.		⁽²⁾	N.M.
Interest, dividend and other investment income	(23		)	(49		)	(73		)	(53	)	%	(68	)	%
Total other expense	5,896			6,082			7,052			(3	)	%	(16	)	%

Income before equity investment in real estate partnership and income tax	3,283			1,439			151			128		%	2074		%

Equity in earnings of real estate partnership	189			89			364			112		%	(48	)	%
Provision for income tax	(87		)	(87		)	(96		)	—		%	(9	)	%
Income from continuing operations	3,385			1,441			419			135		%	708		%

Gain on sale of property from discontinued operations	1,833			—			—			N.M.		⁽²⁾	N.M.
Income from discontinued operations	1,833			—			—			N.M.			N.M.

Net income	5,218			1,441			419			262		%	1145		%

Less: Net income attributable to noncontrolling interests	92			26			9			254		%	922		%

Net income attributable to Whitestone REIT	$	5,126		$	1,415		$	410		262		%	1150		%

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)

	Three Months Ended							% Change From
	June 30, 2021		March 31, 2021		June 30, 2020			March 31, 2021		June 30, 2020
Basic Earnings Per Share:
Net income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.08	$	0.03	$	0.01		167	%	700	%
Income from discontinued operations attributable to Whitestone REIT	0.04		0.00		0.00			N.M.		N.M.
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.12	$	0.03	$	0.01		300	%	1100	%
Diluted Earnings Per Share:
Net income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.08	$	0.03	$	0.01		167	%	700	%
Income from discontinued operations attributable to Whitestone REIT	0.04		0.00		0.00			N.M.		N.M.
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.12	$	0.03	$	0.01		300	%	1100	%

Weighted average number of common shares outstanding:
Basic	43,378		42,495		42,212			2	%	3	%
Diluted	44,125		43,331		42,763			2	%	3	%

Consolidated Statements of Comprehensive Income (Loss)

Net income	$	5,218	$	1,441	$	419		262	%	1145	%

Other comprehensive income (loss)

Unrealized gain (loss) on cash flow hedging activities	1,289		2,221		(684		)	N.M.		N.M.

Comprehensive income (loss)	6,507		3,662		(265		)	N.M.		N.M.

Less: Net income attributable to noncontrolling interests	92		26		9			254	%	922	%
Less: Comprehensive income (loss) attributable to noncontrolling interests	21		41		(15		)	N.M.		N.M.

Comprehensive income (loss) attributable to Whitestone REIT	$	6,394	$	3,595	$	(259	)	N.M.		N.M.

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

	Three Months Ended									% Change From
	June 30, 2021			March 31, 2021			June 30, 2020			March 31, 2021		June 30, 2020
⁽¹⁾ Rental
Rental revenues	$	22,238		$	21,626		$	21,706		3	%	2	%
Recoveries	8,057			7,598			7,674			6	%	5	%
Bad debt	(143		)	(529		)	(2,328		)	73	%	94	%
Total rental	$	30,152		$	28,695		$	27,052		5	%	11	%

⁽²⁾	Not Meaningful

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

	Six Months Ended June 30,						% Change From June 30,
	2021			2020			2020
Revenues
Rental⁽¹⁾	$	58,847		$	57,248		3		%
Management, transaction, and other fees	816			933			(13	)	%
Total revenues	59,663			58,181			3		%

Operating expenses
Depreciation and amortization	14,118			13,941			1		%
Operating and maintenance	10,283			9,992			3		%
Real estate taxes	8,198			8,921			(8	)	%
General and administrative	10,364			9,744			6		%
Total operating expenses	42,963			42,598			1		%

Other expenses (income)
Interest expense	12,275			13,161			(7	)	%
(Gain) loss on sale or disposal of assets, net	(225		)	864			(126	)	%
Interest, dividend and other investment income	(72		)	(135		)	(47	)	%
Total other expense	11,978			13,890			(14	)	%

Income before equity investment in real estate partnership and income tax	4,722			1,693			179		%

Equity in earnings of real estate partnership	278			556			(50	)	%
Provision for income tax	(174		)	(183		)	(5	)	%
Income from continuing operations	4,826			2,066			134		%

Gain on sale of property from discontinued operations	1,833			—			N.M.
Income from discontinued operations	1,833			—			N.M.

Net income	6,659			2,066			222		%

Less: Net income attributable to noncontrolling interests	118			44			168		%

Net income attributable to Whitestone REIT	$	6,541		$	2,022		223		%

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)

	Six Months Ended June 30,					% Change From June 30,
	2021		2020			2020
Basic Earnings Per Share:
Net income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.11	$	0.05		120	%
Income from discontinued operations attributable to Whitestone REIT	0.04		0.00			N.M.
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.15	$	0.05		200	%
Diluted Earnings Per Share:
Net income from continuing operations attributable to Whitestone REIT excluding amounts attributable to unvested restricted shares	$	0.11	$	0.05		120	%
Income from discontinued operations attributable to Whitestone REIT	0.04		0.00			N.M.
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.15	$	0.05		200	%

Weighted average number of common shares outstanding:
Basic	42,939		42,130			2	%
Diluted	43,730		42,734			2	%

Consolidated Statements of Comprehensive Income (Loss)

Net income	$	6,659	$	2,066		222	%

Other comprehensive income (loss)

Unrealized gain (loss) on cash flow hedging activities	3,510		(11,636		)	N.M.

Comprehensive income (loss)	10,169		(9,570		)	N.M.

Less: Net income attributable to noncontrolling interests	118		44			168	%
Less: Comprehensive income (loss) attributable to noncontrolling interests	62		(246		)	N.M.

Comprehensive income (loss) attributable to Whitestone REIT	$	9,989	$	(9,368	)	N.M.

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

	Six Months Ended June 30,						% Change From June 30,
	2021			2020			2020
⁽¹⁾ Rental
Rental revenues	$	43,864		$	43,783		—		%
Recoveries	15,655			16,637			(6	)	%
Bad debt	(672		)	(3,172		)	79		%
Total rental	$	58,847		$	57,248		3		%

Whitestone REIT and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net income from continuing operations	$	4,826		$	2,066
Net income from discontinued operations	1,833			—
Net income	6,659			2,066
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,118			13,941
Amortization of deferred loan costs	548			562
(Gain) loss on sale or disposal of assets and loan forgiveness, net	(225		)	864
Bad debt	672			3,172
Share-based compensation	2,575			2,388
Equity in earnings of real estate partnership	(278		)	(556		)
Changes in operating assets and liabilities:
Escrows and acquisition deposits	(1,128		)	1,448
Accrued rents and accounts receivable	991			(4,994		)
Receivable due from related party	(312		)	(592		)
Unamortized lease commissions, legal fees and loan costs	(1,852		)	(461		)
Prepaid expenses and other assets	201			1,263
Accounts payable and accrued expenses	(6,800		)	(5,843		)
Payable due to related party	389			398
Tenants' security deposits	364			264
Net cash provided by operating activities	14,089			13,920
Cash flows from investing activities:
Additions to real estate	(3,499		)	(3,053		)
Net cash used in investing activities	(3,499		)	(3,053		)
Net cash provided by investing activities of discontinued operations	1,833			—
Cash flows from financing activities:
Distributions paid to common shareholders	(9,082		)	(16,341		)
Distributions paid to OP unit holders	(165		)	(349		)
Proceeds from issuance of common shares, net of offering costs	25,371			2,241
Payments of exchange offer costs	(31		)	(43		)
Proceeds from notes payable	—			1,734
Net proceeds from (payments of) credit facility	(30,000		)	30,000
Repayments of notes payable	(1,559		)	(1,603		)
Repurchase of common shares	(428		)	(2,070		)
Net cash provided by (used in) financing activities	(15,894		)	13,569
Net increase (decrease) in cash, cash equivalents and restricted cash	(3,471		)	24,436
Cash, cash equivalents and restricted cash at beginning of period	25,956			15,643
Cash, cash equivalents and restricted cash at end of period⁽¹⁾	$	22,485		$	40,079

⁽¹⁾	For a reconciliation of cash, cash equivalents and restricted cash, see supplemental disclosures below.

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures
(in thousands)

	Six Months Ended June 30,
	2021		2020
Supplemental disclosure of cash flow information:
Cash paid for interest	$	11,829	$	12,626
Cash paid for taxes	$	364	$	—
Non cash investing and financing activities:
Disposal of fully depreciated real estate	$	3	$	24
Financed insurance premiums	$	1,712	$	1,431
Value of shares issued under dividend reinvestment plan	$	30	$	58
Value of common shares exchanged for OP units	$	—	$	1,127
Change in fair value of cash flow hedge	$	3,510	$	(11,636	)

	June 30,
	2021		2020
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$	22,274	$	39,924
Restricted cash	211		155
Total cash, cash equivalents and restricted cash	$	22,485	$	40,079

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)

	Three Months Ended								Change From
	June 30, 2021			March 31, 2021			June 30, 2020		March 31, 2021			June 30, 2020
FFO (NAREIT) AND FFO CORE
Net income attributable to Whitestone REIT	$	5,126		$	1,415		$	410	262		%	1150		%
Adjustments to reconcile to FFO:
Depreciation and amortization of real estate assets	7,068			6,980			6,909		1		%	2		%
Depreciation and amortization of real estate assets of real estate partnership (pro rata)	409			405			427		1		%	(4	)	%
(Gain) loss on sale or disposal of assets, net	(224		)	(1		)	657		(22300	)	%	(134	)	%
Loss (gain) on sale of property from discontinued operations	(1,833		)	—			—		N.M.			N.M.
(Gain) loss on sale or disposal of properties or assets of real estate partnership (pro rata)	(20		)	—			1		N.M.			N.M.
Net income attributable to noncontrolling interests	92			26			9		254		%	922		%
FFO (NAREIT)	10,618			8,825			8,413		20		%	26		%
Adjustments to reconcile to FFO Core:
Share-based compensation expense	1,244			1,468			1,196		(15	)	%	4		%
FFO Core	$	11,862		$	10,293		$	9,609	15		%	23		%

FFO PER SHARE AND OP UNIT CALCULATION
Numerator:
FFO	$	10,618		$	8,825		$	8,413	20		%	26		%
Distributions paid on unvested restricted common shares	—			—			—		N.M.			N.M.
FFO excluding amounts attributable to unvested restricted common shares	$	10,618		$	8,825		$	8,413	20		%	26		%
FFO Core excluding amounts attributable to unvested restricted common shares	$	11,862		$	10,293		$	9,609	15		%	23		%
Denominator:
Weighted average number of total common shares - basic	43,378			42,495			42,212		2		%	3		%
Weighted average number of total noncontrolling OP units - basic	773			773			828		—		%	(7	)	%
Weighted average number of total common shares and noncontrolling OP units - basic	44,151			43,268			43,040		2		%	3		%

Effect of dilutive securities:
Unvested restricted shares	747			836			551		(11	)	%	36		%
Weighted average number of total common shares and noncontrolling OP units - diluted	44,898			44,104			43,591		2		%	3		%

FFO per common share and OP unit - basic	$	0.24		$	0.20		$	0.20	20		%	20		%
FFO per common share and OP unit - diluted	$	0.24		$	0.20		$	0.19	20		%	26		%

FFO Core per common share and OP unit - basic	$	0.27		$	0.24		$	0.22	13		%	23		%
FFO Core per common share and OP unit - diluted	$	0.26		$	0.23		$	0.22	13		%	18		%

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share and per unit data)


	Six Months Ended June 30,					% Change From June 30,
	2021			2020		2020
FFO (NAREIT) AND FFO CORE
Net income attributable to Whitestone REIT	$	6,541		$	2,022	223		%
Adjustments to reconcile to FFO:
Depreciation and amortization of real estate assets	14,048			13,818		2		%
Depreciation and amortization of real estate assets of real estate partnership (pro rata)	814			876		(7	)	%
(Gain) loss on sale or disposal of assets, net	(225		)	864		(126	)	%
Gain on sale of property from discontinued operations	(1,833		)	—		N.M.
(Gain) loss on sale or disposal of properties or assets of real estate partnership (pro rata)	(20		)	54		(137	)	%
Net income attributable to noncontrolling interests	118			44		168		%
FFO (NAREIT)	19,443			17,678		10		%
Adjustments to reconcile to FFO Core:
Share-based compensation expense	2,712			2,522		8		%
FFO Core	$	22,155		$	20,200	10		%

FFO PER SHARE AND OP UNIT CALCULATION
Numerator:
FFO	$	19,443		$	17,678	10		%
Distributions paid on unvested restricted common shares	—			—		N.M.
FFO excluding amounts attributable to unvested restricted common shares	$	19,443		$	17,678	10		%
FFO Core excluding amounts attributable to unvested restricted common shares	$	22,155		$	20,200	10		%
Denominator:
Weighted average number of total common shares - basic	42,939			42,130		2		%
Weighted average number of total noncontrolling OP units - basic	773			866		(11	)	%
Weighted average number of total common shares and noncontrolling OP units - basic	43,712			42,996		2		%

Effect of dilutive securities:
Unvested restricted shares	791			604		31		%
Weighted average number of total common shares and noncontrolling OP units - diluted	44,503			43,600		2		%

FFO per common share and OP unit - basic	$	0.44		$	0.41	7		%
FFO per common share and OP unit - diluted	$	0.44		$	0.41	7		%

FFO Core per common share and OP unit - basic	$	0.51		$	0.47	9		%
FFO Core per common share and OP unit - diluted	$	0.50		$	0.46	9		%

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(continued)
(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
PROPERTY NET OPERATING INCOME
Net income attributable to Whitestone REIT	$	5,126		$	410		$	6,541		$	2,022
General and administrative expenses	4,730			4,644			10,364			9,744
Depreciation and amortization	7,105			6,970			14,118			13,941
Equity in earnings of real estate partnership	(189		)	(364		)	(278		)	(556		)
Interest expense	6,143			6,468			12,275			13,161
Interest, dividend and other investment income	(23		)	(73		)	(72		)	(135		)
Provision for income taxes	87			96			174			183
Gain on sale of property from discontinued operations	(1,833		)	—			(1,833		)	—
Management fee, net of related expenses	83			56			163			165
(Gain) loss on sale or disposal of assets, net	(224		)	657			(225		)	864
NOI of real estate partnership (pro rata)	952			1,164			1,843			2,260
Net income attributable to noncontrolling interests	92			9			118			44
NOI	22,049			20,037			43,188			41,693
Non-Same Store NOI ⁽¹⁾	—			—			—			—
NOI of real estate partnership (pro rata)	(952		)	(1,164		)	(1,843		)	(2,260		)
NOI less Non-Same Store NOI and NOI of real estate partnership (pro rata)	21,097			18,873			41,345			39,433
Same Store straight-line rent adjustments	(484		)	285			(694		)	619
Same Store amortization of above/below market rents	(240		)	(226		)	(441		)	(434		)
Same Store lease termination fees	(150		)	(271		)	(227		)	(301		)
Same Store NOI⁽²⁾	$	20,223		$	18,661		$	39,983		$	39,317

⁽¹⁾

We define "Non-Same Store" as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. For purposes of comparing the three months ended June 30, 2021 to the three months ended June 30, 2020, Non-Same Store includes properties acquired between April 1, 2020 and June 30, 2021 and properties sold between April 1, 2020 and June 30, 2021, but not included in discontinued operations. For purposes of comparing the six months ended June 30, 2021 to the six months ended June 30, 2020, Non-Same Store includes properties acquired between January 1, 2020 and June 30, 2021 and properties sold between January 1, 2020 and June 30, 2021, but not included in discontinued operations.

⁽²⁾

We define "Same Store" as properties that have been owned during the entire period being compared. For purposes of comparing the three months ended June 30, 2021 to the three months ended June 30, 2020, Same Store includes properties owned before April 1, 2020 and not sold before June 30, 2021. For purposes of comparing the six months ended June 30, 2021 to the six months ended June 30, 2020, Same Store includes properties owned before January 1, 2020 and not sold before June 30, 2021.

Whitestone REIT and Subsidiaries
RECONCILIATION OF NON-GAAP MEASURES
(continued)
(in thousands)

	Three Months Ended									% Change From
	June 30, 2021			March 31, 2021			June 30, 2020			March 31, 2021			June 30, 2020
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)

Net income attributable to Whitestone REIT	$	5,126		$	1,415		$	410		262		%	1150		%
Depreciation and amortization	7,105			7,013			6,970			1		%	2		%
Interest expense	6,143			6,132			6,468			—		%	(5	)	%
Provision for income taxes	87			87			96			—		%	(9	)	%
Net income attributable to noncontrolling interests	92			26			9			254		%	922		%
Equity in earnings of real estate partnership	(189		)	(89		)	(364		)	112		%	(48	)	%
EBITDAre adjustments for real estate partnership	766			685			999			12		%	(23	)	%
Gain on sale of property from discontinued operations	(1,833		)	—			—			N.M.			N.M.
(Gain) loss on sale or disposal of assets, net	(224		)	(1		)	657			(22300	)	%	(134	)	%
EBITDAre	17,073			15,268			15,245			12		%	12		%
Management fee, net of related expenses	83			80			56			4		%	48		%
Share-based compensation expense	1,244			1,468			1,196			(15	)	%	4		%
EBITDAre-Adjusted	$	18,400		$	16,816		$	16,497		9		%	12		%

	Six Months Ended June 30,						% Change From June 30,
	2021			2020			2020
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)

Net income attributable to Whitestone REIT	$	6,541		$	2,022		223		%
Depreciation and amortization	14,118			13,941			1		%
Interest expense	12,275			13,161			(7	)	%
Provision for income taxes	174			183			(5	)	%
Net income attributable to noncontrolling interests	118			44			168		%
Equity in earnings of real estate partnership	(278		)	(556		)	(50	)	%
EBITDAre adjustments for real estate partnership	1,451			1,886			(23	)	%
Gain on sale of property from discontinued operations	(1,833		)	—
(Gain) loss on sale or disposal of assets, net	(225		)	864			(126	)	%
EBITDAre	32,341			31,545			3		%
Management fee, net of related expenses	163			165			(1	)	%
Share-based compensation expense	2,712			2,522			8		%
EBITDAre-Adjusted	$	35,216		$	34,232		3		%

Whitestone REIT Reports Second Quarter 2021 Results