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Whitestone REIT (WSR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid operational growth: Core FFO/share rose 5.4% YoY to $0.26, occupancy increased 100bps sequentially to 93.9%, and net effective ABR climbed 5.3% YoY to $25.28 .
  • Mixed vs consensus: EPS of $0.10 beat, while revenue of $37.9M missed; management reaffirmed FY guidance (Core FFO/share $1.03–$1.07, same-store NOI 3.0–4.5%, year-end occupancy 94–95%) * * .
  • Guidance updated only for interest expense (raised to $33–34M from $32–33M); other metrics maintained, signaling confidence in leasing momentum and redevelopment pipeline .
  • Strategic catalysts: two acquisitions (San Clemente, Austin; South Hulen, Fort Worth), redevelopment at Lion Square nearing completion (Q3), and strong Sun Belt demand underpin longer-term 5–7% Core FFO growth target .

What Went Well and What Went Wrong

What Went Well

  • Core FFO/share up 5.4% YoY to $0.26; straight-line leasing spreads remained strong at 17.9% (new leases 41.4%, renewals 15.2%); occupancy rose 100bps sequentially to 93.9% .
  • Portfolio remerchandising traction: $33.2M total lease value signed; ABR up 5.3% YoY to $25.28; two high-profile tenants (EoS Windsor Park, Cactus Club Cafe at BLVD Place) expected to add 150bps to same-store NOI in 2026 .
  • Balance sheet improving: LTM pro forma Debt/EBITDAre down to 7.2x (from 7.8x YoY); dividend ~50% of FFO remains well-supported; liquidity of $5.3M cash and $69M available revolver .

Management quote: “We are on track for our previously communicated 2025 full year guidance and are reaffirming our core FFO per share, same store NOI growth, and year-end occupancy guidance ranges this morning.”

What Went Wrong

  • Revenue below consensus ($37.9M vs $38.5M*); the company raised FY interest expense guidance by $1M to reflect acquisitions ahead of dispositions * .
  • Same-store NOI growth moderated to 2.5% in Q2 (down from 4.8% in Q1), as free rent on larger tenants phases out and leasing benefits back-half weighted .
  • EPS and revenue also missed in Q1 2025 and Q2 2024, showing ongoing cadence variability from remerchandising and timing (termination fees, percentage rents seasonality) * * .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)37.647 38.003 37.892
Net Income attributable to common ($USD Millions)2.592 3.701 5.054
Diluted EPS ($USD)0.05 0.07 0.10
FFO/share – diluted ($USD)0.22 0.25 0.26
Core FFO/share – diluted ($USD)0.24 0.25 0.26
EBITDAre ($USD Millions)20.172 21.396 21.866
Same-store NOI ($USD Millions)24.432 24.661 25.049
Same-store NOI Growth % (YoY)6.6% 4.8% 2.5%
Occupancy – Wholly Owned (%)93.5% 92.9% 93.9%
Leasing Spreads – Total (GAAP) (%)17.5% 20.3% 17.9%
Net Effective ABR ($/sf)—24.79 25.28

Estimates vs Actuals (S&P Global consensus; asterisk denotes S&P Global values)

MetricQ2 2024 EstimateQ2 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Revenue ($USD)37,725,800*37,647,000 39,005,750*38,003,000 38,549,400*37,892,000
Primary EPS ($USD)0.07*0.05 0.08667*0.07 0.08333*0.10

Values retrieved from S&P Global.

KPIs and Balance Sheet (quarter-end)

  • Bad debt: just under 1% of revenues in Q2 2025 .
  • LTM pro forma Debt/EBITDAre: 7.2x (goal ~7x by YE) .
  • Liquidity: Cash $5.3M; Revolver availability $69M .
  • Total debt: $671.2M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Interest Expense ($USD ‘000)FY 2025$32,000 – $33,000 $33,000 – $34,000 Raised
Core FFO/share (diluted)FY 2025$1.03 – $1.07 $1.03 – $1.07 Maintained
Net Income/share (diluted)FY 2025$0.33 – $0.37 $0.33 – $0.37 Maintained
Same-store NOI Growth %FY 20253.0% – 4.5% 3.0% – 4.5% Maintained
Bad Debt % of RevenueFY 20250.75% – 1.00% 0.75% – 1.00% Maintained
G&A ($USD ‘000)FY 2025$20,800 – $22,800 $20,800 – $22,800 Maintained
Ending Occupancy (%)FY 202594.0% – 95.0% 94.0% – 95.0% Maintained
Dividend/quarter ($USD)Q3 2025$0.135 $0.135 Maintained
Dividend/quarter ($USD)Q4 2025—$0.135 Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Leasing spreads & occupancySpreads 21.9% in Q4; strategic take-backs lowered Q1 occupancy to 92.9% with plan to backfill Total spreads 17.9%; new >40%; occupancy up to 93.9% Seasonal normalization; momentum improving
Redevelopment pipelineDetailed plan (Williams Trace, Lion Square) with double-digit returns targeted Lion Square completion expected by end of Q3; up to 1% redevelopment contribution embedded LT Execution advancing
Capital recycling & acquisitions~$50M pipeline (Q1); disciplined, accretive sourcing ~$40M acquisitions and ~$40M dispositions expected in 2H; more product coming to market Active and balanced
Balance sheet & credit facilityTarget leverage low-6x; strong cash flow supports deleveraging LTM Debt/EBITDAre 7.2x; recasting credit facility; bank demand strong Improving; refinancing underway
Technology/data usageESRI/Placer.ai underpin tenant selection and community connection Continued emphasis on data-driven leasing/remerchandising Consistent focus
Macro/reshoringTariffs/reshoring tailwinds (TSMC Phoenix, Houston growth) Phoenix/Dallas/Houston growth drivers reiterated; large tenant commencements back-half Supportive LT backdrop

Management Commentary

  • “We delivered core FFO per share of $0.26 for the quarter… Straight line leasing spreads of 17.9%, our 13th consecutive quarter with leasing spreads in excess of 17%.”
  • “We had two strategic acquisitions in the quarter, San Clemente in Austin and South Hulen in Fort Worth… Both fit very well within our overall strategy.”
  • “We reiterated our 2025 $1.03–$1.07 core FFO per share guidance… year-end occupancy 94%–95%… bad debt just under 1% of revenues.”
  • “We signed $33.2 million of total lease value… combined leasing spread of 17.9%… EoS and Cactus Club Cafe will contribute over 150 bps to same-store NOI in 2026.”

Q&A Highlights

  • Same-store NOI trajectory: Confidence in back-half improvement as free rent periods end and signed larger tenants commence; Q2 same-store moderated due to timing .
  • Recycling plans: ~$40M acquisitions and ~$40M dispositions likely already in process; aim to upgrade portfolio quality while balancing capital .
  • Interest expense: Guidance lifted by ~$1M due to acquisitions preceding dispositions; expected offset by non-same-store NOI .
  • Leverage outlook: LTM around ~7x by YE; Q4 annualized mid-6x .
  • Cap rates/pricing: Recent acquisitions at 6.4–6.7% going-in yields; expectation to add a couple hundred bps through remerchandising/redevelopment .
  • The Picklr: Commencement in back half; minimal same-store impact in 2025 given concessions; stronger contribution thereafter .

Estimates Context

  • Q2 2025 EPS beat: $0.10 vs $0.08333 consensus*; revenue miss: $37.892M vs $38.549M consensus*. Q1 2025 and Q2 2024 both missed on revenue and EPS, reflecting variability from remerchandising timing and free rent cycles * *.
  • Given reaffirmed FY guidance and strong signed-but-not-yet-rent-paying tenants, Street models should bias higher on 2H same-store NOI and 2026 NOI uplift from EoS/Cactus Club commencements .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Leasing momentum and remerchandising are intact; expect stronger same-store NOI in H2 as free rent burns off; watch occupancy progression toward 94–95% target .
  • Earnings mix is improving via higher ABR and tenant quality; redevelopment (Lion Square, Williams Trace follow-through) adds embedded LT NOI upside .
  • Portfolio quality upgrade continues through disciplined recycling; recent acquisitions at mid-6% cap rates offer yield expansion through Whitestone’s operating model .
  • Balance sheet trend positive with LTM Debt/EBITDAre at 7.2x and facility recast underway; dividend (~50% FFO payout) appears durable with room to grow alongside earnings .
  • Near-term modeling: Raise 2H 2025 same-store NOI assumptions and 2026 contributions from EoS/Cactus Club; incorporate $1M higher interest expense run-rate in FY 2025 .
  • Watch catalysts: Large tenant commencements, Lion Square completion (Q3), additional acquisitions/dispositions (~$40M each), credit facility recast update next call .

Additional relevant press releases: South Hulen acquisition (Fort Worth) on June 17, 2025 ; Q3 dividend declaration on June 10, 2025 ; Q2 earnings webcast announcement on July 2, 2025 .