Executive Summary

Q3 2025 revenue was $41.05M, up 6.3% year over year and 8.3% sequential, with diluted EPS of $0.35 driven by a $13.97M gain on sale; Core FFO per diluted share was $0.26, up $0.01 YoY .
Same-store NOI grew 4.8% YoY; occupancy reached 94.2% and straight-line leasing spreads were 19.3% (new: 22.5%; renewals: 18.6%) .
Full-year guidance was revised: net income and net income per share raised materially; same-store NOI range lifted at the low end; Core FFO per share maintained at $1.03–$1.07 .
Post-quarter, MCB Real Estate submitted an unsolicited, non-binding proposal to acquire WSR for $15.20 per share in cash, potentially serving as a stock catalyst as the Board evaluates the offer .

What Went Well and What Went Wrong

What Went Well

Occupancy improved to 94.2% (up 30 bps vs Q2), with strong leasing demand and 14th consecutive quarter of >17% leasing spreads; management highlighted consistent execution toward 5–7% Core FFO per share growth .
Net Effective Annual Base Rent per leased square foot increased 8.2% YoY to $25.59, reflecting pricing power in high-quality Sun Belt markets .
Guidance raised on the lower end of same-store NOI growth (3.5–4.5% vs prior 3.0–4.5%) and bad debt % reduced (0.60–0.90% vs 0.75–1.00%); CFO noted improving revenue quality and lower uncollectibles .
- “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%... Our revenue for the quarter was up 6%, and... improvement in uncollectible accounts...” .

What Went Wrong

FFO per diluted share dipped YoY to $0.24 from $0.25, reflecting debt extinguishment costs (~$0.8M) and higher property taxes; Core FFO per share only rose to $0.26 from $0.25 YoY .
Real estate taxes rose ($5.33M vs $4.84M YoY), and management flagged Texas appraisal timing/litigation headwinds causing 3Q pressure (largely passed through but burdens tenants) .
Small shop occupancy edged down slightly YoY (≤10,000 sq. ft.: 92.0% vs 92.2%), as the company proactively recaptures space to upgrade tenancy and rents, creating near-term occupancy drag .

Financial Results

Consolidated Results vs prior periods and consensus

Metric	Q3 2024	Q2 2025	Q3 2025	S&P Global Consensus (Q3 2025)*
Revenue ($USD)	$38.63M	$37.89M	$41.05M	$39.21M*
Diluted EPS ($)	$0.15	$0.10	$0.35	$0.10*
FFO per diluted share ($)	$0.25	$0.26	$0.24	N/A
Core FFO per diluted share ($)	$0.25	$0.26	$0.26	N/A
EBITDAre ($USD)	$21.62M	$21.87M	$22.46M	N/A

Notes:

Revenue beat: $41.05M vs $39.21M consensus (+$1.84M, +4.7%); bold beat .
GAAP diluted EPS reported $0.35; S&P “Primary EPS” consensus was ~$0.10*, with the difference primarily explained by non-recurring $13.97M gain on sale .
FFO per diluted share down YoY due to extinguishment of debt costs ($0.8M) .

Operating KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Occupancy – Wholly Owned (%)	92.9%	93.9%	94.2%
Occupancy – >10k sq ft (%)	95.4%	95.9%	98.0%
Occupancy – ≤10k sq ft (%)	91.4%	92.8%	92.0%
Same-store NOI growth (%)	4.8%	2.5%	4.8%
Straight-line leasing spread – Total (%)	20.3%	17.9%	19.3%
New leases – spread (%)	22.6%	41.4%	22.5%
Renewal leases – spread (%)	19.9%	15.2%	18.6%
Net Effective ABR ($/sf)	$24.79	$25.28	$25.59

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net income attributable to WSR ($000s)	FY 2025	$17,135–$19,219	$30,913–$33,023	Raised
Net income per diluted share ($)	FY 2025	$0.33–$0.37	$0.59–$0.63	Raised
Core FFO ($000s)	FY 2025	$54,158–$56,268	$54,158–$56,268	Maintained
Core FFO per diluted share & OP Unit ($)	FY 2025	$1.03–$1.07	$1.03–$1.07	Maintained
Same-store NOI growth (%)	FY 2025	3.0%–4.5%	3.5%–4.5%	Raised low end
Bad debt (% of revenue)	FY 2025	0.75%–1.00%	0.60%–0.90%	Lowered
G&A expense ($000s)	FY 2025	$20,800–$22,800	$20,800–$22,800	Maintained
Interest expense ($000s)	FY 2025	$32,000–$33,000	$33,000–$34,000	Raised
Ending occupancy (%)	FY 2025	94.0%–95.0%	94.0%–95.0%	Maintained

Management clarified the GAAP EPS uplift reflects gains on property sales and debt costs; Core FFO and NOI trends capture underlying operations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Leasing demand & spreads	Q1/Q2 leasing spreads 20.3%/17.9%; same-store NOI +4.8%/+2.5%; continued Sun Belt strength	19.3% total; 4.8% same-store NOI; foot traffic +4% YoY	Steady-strong
Occupancy methodology	Not emphasized in prior releases	Report occupancy as “commenced” tenants; 94.2% in-space; Q4 seasonally strong	Clarified, supportive
Credit facility & leverage	Q2: outstanding debt $671.2M; debt/EBITDAre ~7.3x; swaps in place	Amended/extended facility; weighted avg term 4.3 years; fixed rate 4.8%; target debt/EBITDAre mid–high 6x in Q4	Improving balance sheet
Redevelopment/pads	Q1/Q2: active merchandising, center upgrades	La Mirada facade near completion; Lion Square ~75% progress; Terravita kickoff; pads at Lakeside & Scottsdale Commons	Executing, 2026 uplift
Pillarstone proceeds	Receivable $31.6M appearing in filings	Settlement pending court approval; $13.6M received; ~$40M expected mid-Dec if approved	Potential deleveraging
Taxes/expense pass-throughs	Property taxes steady-to-rising across periods	Texas appraisal cycle drove accrual; expected to normalize via protests/litigation; mostly passed through	Temporary pressure

Management Commentary

CEO: “We hit 94.2% occupancy… delivered 4.8% same store NOI growth… extended and improved the terms of our credit facility… on track to deliver… long term 5% to 7% core FFO per share growth target” .
COO: “We signed $29.1 million in total lease value… spreads on new leases at 22.5% and renewals at 18.6%… foot traffic across the portfolio is up 4% versus [Q3 2024]” .
CFO: “We reiterated our 2025 $1.03 to $1.07 core FFO per share guidance… anticipate our fourth quarter annualized debt to EBITDAre ratio will be in the mid to high sixes… approximately $800,000 of debt extinguishment costs… adjusted in core FFO” .

Q&A Highlights

Leverage outlook: debt/EBITDAre expected mid–high 6x in 4Q, aided by seasonal revenue and potential portfolio recycling timing .
Acquisitions/dispositions: “a couple more acquisitions and one to two dispositions to finish out the year” signaling continued capital recycling .
Pillarstone JV: $13.6M received in 3Q; settlement filed; ~$40M distribution expected mid-December pending court approval; potential ~0.5 turn leverage improvement (if excluded from guidance) .
Occupancy reporting: Whitestone emphasizes commenced occupancy; limited “signed-not-open” gap given focus on smaller, nimble tenants .
Property taxes: Texas appraisal cycle created 3Q accrual pressure; management expects normalization through protests/litigation; largely pass-through to tenants .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025E
Primary EPS Consensus Mean ($)	0.0867	0.0833	0.1000	0.1175
Primary EPS Actual ($)	0.0730	0.1000	0.0998	—
Revenue Consensus Mean ($)	39.01M	38.55M	39.21M	41.27M
Revenue Actual ($)	38.00M	37.89M	41.05M	—

Interpretation:

Q3 revenue beat consensus by ~$1.84M; bold beat. EPS comparisons depend on definition: S&P “Primary EPS” actual was ~$0.10*, while GAAP diluted EPS reported by Whitestone was $0.35, reflecting a $13.97M gain on sale; Core FFO per share was $0.26, consistent with operating trends .

*Values retrieved from S&P Global.

Key Takeaways for Investors

Operational momentum: occupancy up to 94.2%, spreads ~19% and same-store NOI +4.8% position WSR for a typically strong Q4 finish; Core FFO per share remains stable at $0.26 despite higher taxes and one-time debt costs .
Balance sheet path: amended/extended credit facility and expected seasonal strength support leverage moving to mid–high 6x in Q4; Pillarstone proceeds (if received) could further reduce leverage .
Guidance quality: raised GAAP net income and EPS ranges, improved same-store NOI and bad debt assumptions; Core FFO per share maintained, indicating confidence in underlying earnings power .
Pricing power: Net Effective ABR rose to $25.59/sf (+8.2% YoY), underpinning rent growth sustainability in target Sun Belt trade areas .
M&A overlay: MCB’s $15.20 proposal may re-rate shares toward peer multiples; Board evaluation introduces a tactical catalyst path alongside fundamental progress .
Risk watch: property tax accruals/timing in Texas and modest small-shop occupancy variability due to proactive space recapture; largely manageable via pass-throughs and leasing strength .
Trading implications: near term, focus on Q4 seasonal lift, potential Pillarstone cash receipt, and Board response to MCB – all supportive of multiple and leverage improvement; medium term thesis centers on continued NOI growth from redevelopment and pad activations .

Whitestone REIT (WSR)·Q3 2025 Earnings Summary