Whitestone at Nareit REITweek: Strategic Moves in Sunbelt Markets

On Tuesday, 03 June 2025, Whitestone REIT (NYSE:WSR) presented its strategic vision at the Nareit REITweek: 2025 Investor Conference. The leadership emphasized robust growth prospects in the Sunbelt markets, focusing on neighborhood shopping centers in Arizona and Texas. Despite macroeconomic uncertainties, Whitestone remains committed to disciplined capital allocation and value creation for shareholders.

Key Takeaways

• Whitestone targets 5% to 7% FFO per share core growth, supported by a 5.5% CAGR in same-store NOI since 2021.
• The company focuses on service-oriented tenants, with 77% of its portfolio in the 1,500 to 3,000 square foot range.
• Whitestone aims to enhance its portfolio by replacing underperforming tenants and adding pad sites.
• The company plans to liquidate a joint venture with Pillarstone, expecting to generate $40 million to $60 million in cash.
• Whitestone’s leverage profile improved significantly, with debt to EBITDAre reduced to 6.6x by 2024.

Financial Results

• FFO Growth:

- Projected 5% to 7% FFO per share growth.

- Historical FFO per share growth at approximately 5.5% since 2021.

• Same-Store NOI Growth:

- CAGR of 5.5% since 2021, with guidance for 3% to 4.5% growth.

• Dividend Growth:

- Dividends have grown alongside earnings.

• Leverage:

- Debt to EBITDAre decreased from 10.4x in 2020 to 6.6x in 2024.

• Acquisitions and Dispositions:

- Recent acquisitions closed at cap rates around 7.6%, while dispositions were at 6.5%.

Operational Updates

• Occupancy:

- Occupancy dipped to 92.9% in Q1 but is expected to reach 94% to 95% by year-end.

• Leasing and Tenant Mix:

- No significant slowdown in leasing, though build-out times are longer.

- Service-oriented tenants outperform soft goods merchants.

• Pad Site Development:

- Aims for three pad site developments per year, with rents doubling to $90 per square foot over ten years.

Future Outlook

• Redevelopment:

- $20 million to $30 million planned for pad site redevelopment in 2025 and 2026.

• Acquisitions:

- Targeting smaller centers valued between $20 million to $40 million.

• Pillarstone Liquidation:

- Expected to generate $40 million to $60 million in cash.

• Balance Sheet Management:

- Preparing to recast credit facilities and extend loan maturities.

Q&A Highlights

• Leasing and Vacancies:

- Leasing remains stable with upside opportunities in newer centers.

• Credit Underwriting:

- Follows the "4Cs": collateral, capacity, credit, and character.

• Financing Strategy:

- Focus on flexibility, discipline, and momentum.

For a detailed account of Whitestone’s strategic plans and financial outlook, refer to the full transcript below.

Full transcript - Nareit REITweek: 2025 Investor Conference:

Anthony Hao, Analyst, Truist Securities: Thank you everyone for joining us today for the Whitestone REIT panel. My name is Anthony Hao, an analyst at Truist Securities. I’m pleased to introduce Whitestone CEO, Dave Holtman COO, Christine Mastandrea and CFO, Scott Hogan. Whitestone REIT, take our s WSR, is a community center REIT with a focus in Sunbelt markets and has a 630,000,000 equity market cap. We’ll leave time near the end for audience to ask questions, but I’ll kick things off.

Before we get into the market fundamentals and other topics, you know, Dave, for investors out there who are less familiar with Whitestone, maybe you can give a very brief overview of the company and your broad strategy.

Dave Holtman, CEO, Whitestone REIT: Thanks, Anthony. I’ll yeah. Let me make sure I talk to Mike. Thanks, Anthony. I’ll try to be brief, but it’s a pleasure to be with you all today and love to tell you a little bit about Whitestone.

So we own, I would say, some of the best neighborhood shopping centers in the sector. We’re 100% of our portfolio is focused in the fast growth, low regulation states of Arizona and Texas. And then we have a tenant base that’s really well diversified, 1,400 service oriented tenants, and they operate on a bit shorter duration leases. We’ll get into that a bit. And then if you think about what differentiates White Stone is we we’ve leaned into the really high value shop space.

So 77 of our portfolio are the optimal 1,500 to 3,000 square foot size spaces where we see a ton of demand today, gives you a lot of durability of cash flows, they’re flexible. Just a number of businesses types are looking for those spaces. From a strategy perspective, obviously, we’ve targeted really driving long term shareholder value. And how we do that is we anchor our centers to great neighborhoods, and then we fill those centers with tenants that are primarily shop space tenants. We believe we can leverage our position in the States we’re in, the type of products to have really strong earnings growth.

We’ve given some visibility into our earnings of having like 5% to 7% FFO per share core growth in the future. And really, our differentiated strategy, through our focus on strong markets, we’ve been able to have same store NOI growth that’s a CAGR of about 5.5% since 2021. If you look at our FFO per share growth, it’s been around 5.5% since 02/2021. And then, you know, from a dividend perspective, we’ve also grown our dividend in tandem with our earnings, and then we’ve strengthened our balance sheet over that time. So that’s a a quick quick version of Whitestone.

Anthony Hao, Analyst, Truist Securities: With macro uncertainty and consumer confidence sitting at multiyear lows, how have those headwinds affected tenants leasing decision in your Sunbelt Sunbelt markets today? Are you seeing longer decision cycles, greater concessions or shifts in preferred lease term or other clauses? And if so, how does today’s leasing velocity compare to the pace you have experienced over the last twelve to eighteen months?

Christine Mastandrea, COO, Whitestone REIT: We haven’t seen that much slowdown in leasing. What we’ve seen is there’s longer terms that are associated with build out times. I think just the difficulty of getting projects approved and getting things through the local community. Governments have been really challenging since 2022 and become more challenging. But by and large, we haven’t seen a slowdown in leasing.

We haven’t seen much change even in TI. We’ve kept our TIs to a minimum. It’s just a longer time of build outs. And the only thing I’ve seen too is there’s just been a tremendous increase in rents and any type of pads. It wasn’t unusual.

It seems so quaint that you would have a pad building that was maybe you charge $50 in rent. Now it’s getting close to double, which you need to charge in order to build out a pad on your locations.

Anthony Hao, Analyst, Truist Securities: And in terms of like other metrics, right, what are you seeing in terms of like real time foot traffic or tenant sales across your core markets? Are you seeing are you still seeing service focused tenants such as medical, fitness, restaurant and personal care still outperforming soft goods merchants?

Christine Mastandrea, COO, Whitestone REIT: I think there’s a couple of trends that we’re seeing. Services are still running high. We’re close to a 7% increase in our foot traffic. Some of our centers are well over a 10% increase in foot traffic. Again, we lean into the service economy.

With that, we’re starting to see an interesting change with the incumbents being challenged. I think this is across the board. For example, Starbucks losing out to Dutch Brothers. I think you’re seeing it in food as well. And also in grocery where you’re seeing Safran and Kroger getting challenged by some of the strong regionals like Publix, H E B, Myers, in addition to Aldi’s and Trader Joe’s.

So mostly what I’m seeing is that there’s a big shift and change in the dynamic of a new customer being served and how you serve that customer. If you’re not investing in your brand, you’re gonna get behind relatively quickly, and there’s new brands that are ready to overtake you.

Dave Holtman, CEO, Whitestone REIT: Just to just to add a couple of things. Think Christine started out with the the foot traffic. I did we did get an updated report a couple of days ago, I think, that showed 6% to 7% for the year. And then interestingly enough, I think one of the markers was Liberation Day, which is incredible now, all the the things going on. But since that time, we had an 8% increase in traffic.

Have no reason for that, but I do think that clearly we focus on the types of tenants that are growing, are more attractive to the consumer today. Christine said that. But foot traffic is something we’re always watching, always looking for, making sure we bring in businesses and services that drive people to our centers and allow them to have repeat visits and stay for a while.

Anthony Hao, Analyst, Truist Securities: And who’s on your tenant watch list today? Which tenant categories do you believe are positioned to hold up in a weaker consumer backdrop? In which segments are you proactively flagging as high risk? And do you expect a wave of bankruptcy this year?

Dave Holtman, CEO, Whitestone REIT: I’ll I’ll start real quick, and then I’ll hand it to Christine. But I I would say in the in the environment we’re in today, every tenant is on our watch list, meaning for us in the retail sector, it’s a it’s a good time. If you look at the supply demand dynamics, there’s been very little product built in our in our sector type for the last several years. So we’re consistently looking at upgrading our our tenant base. So I don’t wanna I’ll let Christine jump in and say more, but I would say almost every tenant we are we are looking we’re sharpening the sword right now.

We’re continuing to strengthen the tenant base and really look at in this time when you’ve got a supply demand dynamic like we have, making sure we’re continuing to upgrade the quality of our revenue.

Christine Mastandrea, COO, Whitestone REIT: So one of the things that we talk about in our business is that we wanna successfully serve our communities. And in order to do so, we have to have the tenants that serve that community well. So we’ve been actually taking back where we can some of our, I would say, transitioning some of our tenants that maybe have an older business model and re tenanting. So remerchandising is a very active part of what we do, in particular whenever we buy a new asset. Along with that though, I’d have to say that what I’ve seen is operators over the last number of years, especially our regional operators, are very strong.

I’ve seen an improvement on entrepreneurs and their business models. They’re very sophisticated. It’s a lot different than what would be considered the mom and pop operators of about ten years ago. The world has changed a lot as far as the type of tenant that we see. They come in with a level of sophistication that we have not seen before, whether it’s the point of sale systems they use, the cash they have available to invest, the organic growth that they provide and also the teams to scale.

Anthony Hao, Analyst, Truist Securities: So portfolio occupancy dipped 70 bps year over year in the first quarter to 92.9%, largely due to a de leasing at Terra Vida. So guidance assume 94% to 95% by year end. Can you guys help us bridge that gap?

Dave Holtman, CEO, Whitestone REIT: Sure. I’ll once again just maybe start off with year end 2021, and we expect to be higher than that by year end this year. So from a big picture perspective, our occupancy is in a really good place, and it’s continuing to move in an upward fashion. With our portfolio is a little smaller than some of our peers. We’ve got about 5,000,000 square feet.

So you do see some a little bit of volatility quarter to quarter with our strengthening of our tenant base, our releasing, and we saw some of that in Q1 ’twenty five, as Anthony pointed out. So maybe I’ll let Scott or Christine talk about maybe the specifics of what we’re doing from re tenanting. But Q1 was one where we’ve got some exciting things going on that’s continuing to strengthen the tenant base.

Christine Mastandrea, COO, Whitestone REIT: Again, we don’t have that many large boxes, but the few that we’ve had, if we have an underperforming tenant in that box, we like to retenant with a stronger position for the market. This example that you’re talking about with Terra Vida was older box that again had been underperforming. Underperforming as a ground lease for quite some time. And we took that back, put in an ACE hardware in the Pickler. And as you can imagine, when you’re talking about a ground lease or rents getting the building back, we’re triple from what we got from before.

Anthony Hao, Analyst, Truist Securities: And then for the pickler, like when do you expect the timing of a grant commencement?

Christine Mastandrea, COO, Whitestone REIT: I can’t give you the exact date yet because we’re just turning the space over. But one thing I like working with the Pickler, they’re very, very quick to turn their space. It doesn’t take much to retrofit the building and position it for an opening. That’s one of the reasons why we like working with them. Also, they’re extremely profitable.

We like the sticky traffic. They play to a very young male demographic that’s looking for a sense of community right now. And I think when we opened our first one, it was profitable day one.

Anthony Hao, Analyst, Truist Securities: And does your guidance assume that the Pickler is okay.

Christine Mastandrea, COO, Whitestone REIT: Got you.

Dave Holtman, CEO, Whitestone REIT: It does. And I think I think what you’re getting at is is you should see you should see steady occupancy progression. I think I’d started off by saying where we were 24, we expect to be I think we’ve given guidance in the 94% to 95% occupancy level. So with the retenanting, we were at 92.9% in Q1. So what you should see from us for the next few quarters is a nice uptick in occupancy as we bring in some of the activities we’ve been talking about.

So super positive on that. And probably the result of that is if you look at our same store growth from that, those leasing efforts, very solid. We’ve reiterated our 3% to 4.5% same store guidance. I think we started out the year on with a very strong first quarter. And so feeling very good about the occupancy.

You’re going to continue to see us look for ways to strengthen this tenant base. And that means testing the tenants, making sure we have best in class tenants, where we stay very close to our tenants. From a company perspective, we’ve got more probably a more targeted geographic approach than many of our peers. So we’re very real estate intensive. We spend time with the tenants.

We understand the business. And we’re going to continue right now in this environment strengthening that base as much as we can.

Anthony Hao, Analyst, Truist Securities: And then are there any notable vacant space that must be backfilled to reach this target? And where are those negotiations today?

Christine Mastandrea, COO, Whitestone REIT: I think there’s a couple of centers that we’re we’re doing in the market right now. So what we like to do is a newer center because that’s where we get the most upside opportunities. So there’s a couple that we have that we’re doing in redevelopment at this point and we’ll be turning some space. But I would say that really our box size is not that big on average. So if you consider our boxes, they’re about 10,000 square feet.

Most of our large boxes we’ve filled at this point. So more to come on that.

Dave Holtman, CEO, Whitestone REIT: So yes. So I mean Whitestone is an operating business very much. We have, as I said, we have 1,400 tenants. We have an average lease term of about four years. So we roll 25% to 25% of our leases every year.

We love that. That’s one of the things that differentiates Whitestone right now is if you look at the mark to mark, I think I heard I walked in on the panel before us and heard the PICO guys talking about the replacement cost dynamic and the pricing power we have today in this environment with the cost to build new product being much higher. Whitestone also has leases that are rolling right now. So for us, we’re able to capture that mark to market spread much quicker than many of our peers.

Anthony Hao, Analyst, Truist Securities: So roughly like 60% of your ABR comes from small shop space, and most of these tenants are local or regional operators. Could you guys walk us through the credit underwriting process for these tenants? And do you guys require quarterly sales reporting? Or and which KPIs carry the most weight when you screen and monitor these operators?

Christine Mastandrea, COO, Whitestone REIT: So we begin just like a bank does. We look at the four Cs, collateral, capacity, credit, character. We also look for the commitment to the business. I think the most important thing when you’re working with local and regional operators that you’re looking for not an investor that invests in a business, we’re that investor, so to speak, because we’ve invested in the real estate. What I’m looking for is the commitment of the operator.

So I’m looking for operators that have the ability to scale, have the teams in place to scale, have the metrics with their business, know and tune their businesses really well to show that they can go from three to five operations in a location. We have specialized in that and I think that’s made us in a really good position to know our local markets well and to serve them quickly with a change whenever we buy a new center. Along with that, we also like working with franchises as well. Why? Because those are tested and proven operations.

So that’s worked really well for us. I just wanna mention with this, we do talk about being again local and regional. But when COVID came, we were a top in the class as far as our collections. And we had very we had very few losses. So it should speak well to our business model and the resiliency and also the robustness of how we operate.

Anthony Hao, Analyst, Truist Securities: In terms of the balance sheet, I’ll start with a very open ended question for maybe for Scott. What can you tell us about your financing strategy, target leverage, access to capital, cost of capital and etcetera?

Scott Hogan, CFO, Whitestone REIT: Thanks, Anthony. Our financing strategy centers around flexibility, discipline and momentum. First on flexibility, we’ve made significant progress in strengthening our balance sheet. Since the leadership transition in 2022, we’ve meaningfully improved our leverage profile, bringing annualized fourth quarter debt to EBITDAre from 10.4 times in 2020 down to 6.6 times in 2024. That’s been supported by strong operating performance, proactive capital management and disciplined allocation.

We maintain ample liquidity with current revolver availability of approximately $98,000,000 at the end of Q1 and no maturities for the balance of 2025. We’re actively preparing to recast our credit facility in term loans. And based on strong engagement, including interest from new banks, we expect to both extend maturities and increase overall capacity with the potential to tighten spreads as well. In 2023, we achieved an investment grade credit rating, which reflects financial progress and improved risk profile of the business. That’s opened up new avenues of capital and continues to enhance our cost of borrowing.

We approach capital allocation with clear hurdle rate discipline, and the dollars we deploy are tested against the risk adjusted cost of capital, not as a static number, but as a dynamic number that reflects market conditions and our evolving capital structure. We have multiple capital sources available today: a stable and supportive bank group, an ATM program to issue equity opportunistically growing interest from private capital providers, which gives us optionality and the possibility of joint venture partnerships that can enhance returns and mitigate risk. As a smaller public REIT, we recognize that our cost capital is a little higher than some of our peers, which is why we’ve refined our acquisition strategy to focus on targeted high impact opportunities where we can move the needle and generate FFO accretive results. On the transaction side, we remain selective. Our recent transactions have closed at cap rates around 7.6%, while recent dispositions have executed at 6.5, reinforcing the value we’ve created in the discipline in our underwriting.

We also continue our efforts to monetize Pillarstone assets, which will further enhance our financial flexibility. Ultimately, the strategy is not just about managing the balance sheet, it’s about positioning the company to capitalize on opportunities. We’re focused on investments where projected returns outpace our blended cost of capital, whether that’s in acquisitions, ground up developments or strategic developments, and we remain committed to creating durable accretive value for our shareholders.

Anthony Hao, Analyst, Truist Securities: Maybe we can take a pause here and then open up the Q and A for the audience.

Christine Mastandrea, COO, Whitestone REIT: I’d say it’s not the

Dave Holtman, CEO, Whitestone REIT: Let me repeat the question real quick.

Christine Mastandrea, COO, Whitestone REIT: So you had said about the pad development costs. Actually, the rents have doubled. So it wasn’t long, maybe about ten years ago, we were doing deals around $45 a square foot. Now we’re going up to $90 just to cover to make sure to cover the cost of development. I can’t say where The challenge always with the pad is you’re carving it out of already an existing center that you have.

So it’s a question of your site costs and how much you need to improve the site. What I am finding is that the merchant builders aren’t able to compete like they used to be because they can’t acquire the land and make the deals work. So competitively, that’s forcing rates up as well.

Dave Holtman, CEO, Whitestone REIT: One of the benefits for us as well is in the markets we’re in, we’ve acquired centers that have a little more land. We’re in markets that are more open. And so we have those pad abilities on land that we own are already in the portfolio. So while when we underwrite it, obviously, we allocate the cost of that land to the underwriting. We do have embedded already in our assets today.

So it’s opportunity that helps us move the needle by building small pads every year and doing that in a way that really adds to our earnings. So I’ll repeat the question, Scott, and you get it. So I think the question was, on the balance sheet, you mentioned some assets you were selling potentially, and you said something about Pillarstone. So I thought Scott.

Scott Hogan, CFO, Whitestone REIT: Yeah. Sure. So Pillarstone is a group of assets that we have in a joint venture that are returning no dollars today that are wrapped up in a bankruptcy process. And so we’re just in the process of liquidating that. And we think by the time we liquidate it, we should get anywhere from 40,000,000 to $60,000,000 of cash.

But the timing of it is very hard to predict because it’s in a bankruptcy process. But those dollars would be totally accretive. And then some of our legal fees that we have in G and A today would go away.

Dave Holtman, CEO, Whitestone REIT: So just to add a couple of things on that. Many of you know the kind of the turnaround of Whitestone that’s happened over the last couple of years, but those assets came out of a a relationship with the former CEO and a related party investment that we’re we’re almost out of. And what it means is we’ll have, 50,000,000 to $70,000,000 of cash that we don’t that’s been tied up for a number of years and will provide a return. So it’s we’re nearing the end with those proceeds coming to Whitestone. We haven’t put any of that in our guidance because the difficulty of predicting timing is difficult, but we’re but it’s an opportunity for us.

And when Scott uses things like bankruptcy, we wanna make sure people know that’s that’s not us. That’s cleanup of the the old regime that we came in in ’22 and really have have done a number of things. Clearly, we have changed a lot of the governance. We brought on a new refresh board. Excited that we have a couple new board members that just joined Whitestone.

Many of you may know them, but just to add to that.

Anthony Hao, Analyst, Truist Securities: So you guys recently cited $20,000,000 to $30,000,000 of pad site redevelopment projects for 2025 and 2026 that could lift same store NOI up to 100 bps. So how many additional pad or expansion sites remain untapped across the portfolio? And what could the potential investment represent?

Dave Holtman, CEO, Whitestone REIT: I love the fact that Anthony is very detailed and is building his model. So I will, I’ll give a more general answer, and then Scott or Christine can give the details that they would like. I mean, obviously, one of the things we did in the first quarter is we tried to give investors a view of Whitestone earnings potential for a number of years, right? So a lot of what we’ve done over the last couple of years has been cleaning up a great portfolio, getting it in a good position to now be able to show investors what this portfolio can do. So we put forward some a view of kind of 5% to 7% earnings FFO growth for the next few years.

Part of that was, I think, about 1% coming from redevelopment or pad sites. And so I’ll let my teammates share if they’d like about that. But we think, as I mentioned earlier, we consistently look across our portfolio. We’ve got opportunities to add some GLA, add real estate that’s on land we already own. And we do all of that driven by demand coming from tenants, which is very strong.

Christine Mastandrea, COO, Whitestone REIT: So we try to do about three pad sites a year. And a lot of that has to do with two. We look for assets that we can acquire and also develop pad sites on those locations. We try to be conservative in saying that we can do about three a year because they do take a heavy lift. You do have to get them approved.

You have to go through a whole process. And some of them that we build, some of them are ground leases. So it depends on the location. Along with that though, we have a couple of larger projects that have additional GLA. Some cases anywhere between 20% to 25% plus where we can add additional GLA on those locations.

At this point, we’re going through again some of the approval process and the design and the working towards starting those up and getting those into execution.

Anthony Hao, Analyst, Truist Securities: What cap rates are for what are the cap rates for neighborhood centers trading in your core markets today? Do you expect to be a net buyer, seller or balance in 2025? And what unlevered IRR or rent growth are you underwriting today for acquisitions?

Dave Holtman, CEO, Whitestone REIT: I’ll take a crack at those. I think from a cap rate perspective, we are seeing some, you know, some settling of cap rates. One of the things that Whitestone always does is we’re trying to to compete in a little bit different space than than some of the others. So we typically look for a little smaller center, probably in the 20,000,000 to $40,000,000 range as opposed to some of the some of our peers who may look for the the larger centers. So we try to to compete in a space where we can compete well.

You know, we’re seeing and I think when you talk about cap rates, what we talk about is going in, what is the cap rate, what’s the cash flow versus the purchase price. To me, that’s very different than what we expect it to be a couple of years later. So we’re always looking for centers where we can apply what we do and drive probably a couple of hundred upside in the seeing of in market. Of the

where we can apply our model and drive that 150 basis 200 basis points over a couple of years. I think that when you look at IRRs, what are you doing with the exit cap, a lot of things factor into that, right? So I think we generally take a conservative approach to that and are looking at terminal cap rates that are 50 basis points higher than what we’re going in with. So we’re looking for we’re being conservative. And we with those types of underwriting, we’re seeing kind of unlevered I’m sorry, we’re seeing levered IRRs probably in the low teens on the assets we’re typically looking at today.

Obviously, we’re looking for assets where we can come in and apply our model and the surrounding area is growing. So first, that was cap rate. Second one, I think, was net buyer, net seller. If you look back at what we’ve done in the last couple of years, about 125,000,000 in sales and buys. We do think this is a portfolio that we can scale and grow.

That said, we’re going be disciplined. We work for shareholders. Our job is to grow shareholder value. Our job is to grow earnings per share. We think there’s benefit in scale for Whitestone, but we’re going to do that in a disciplined way.

But we do think there’s going to be opportunities for us to apply this model and grow from an overall scale perspective. And then I think the last one was, I think I hit it was IRR. Don’t know if I hit all those. Yeah. Yeah.

Anthony Hao, Analyst, Truist Securities: Should investors be most excited about for Whitestone? Why should investors buy your stock today? And what what is, like, the the bold case scenario?

Dave Holtman, CEO, Whitestone REIT: Yeah. So I think there’s a lot to be excited about. I think if if you’re an investor looking to to to benefit from from migration and from a time when there’s a a dynamic a a supply demand dynamic that’s in a really good space in a sector, that leads you to to to Whitestone. That leads you to our sector. If you look at geography, I think Whitestone has best in class geography.

There’s been a you know, we’ve been in this space for a number of years. We started out with a a model that was focused on smaller spaces. There’s a number of others that have got into that space now and done a really good job of explaining the opportunity. We’ve been doing this. We know how to do this.

If you look at the growth profile that we present to investors, I think it’s probably top of group. And then I think if you look at a valuation perspective, as a smaller REIT, our valuation is attractive as well. So I think what we offer to investors is a consistent earnings growth, a very stable portfolio, extremely targeted, high quality assets in some of the best markets with the growth perspective growth you’d like to see.

Anthony Hao, Analyst, Truist Securities: And then on the flip side, what do you see as potential risk? Or said definitely, what keeps you up at night?

Dave Holtman, CEO, Whitestone REIT: I took the bull and you took the risk. I like

Christine Mastandrea, COO, Whitestone REIT: I’m used to it. I think the big thing that we have to be mindful of is that retail is very bespoke to the neighborhood. So it’s not I think over the years, what we’ve seen is just an overconcentration in the mall and the power space, and you’ve seen the risk that’s come along with that. It’s just too much of the same approach. And a lot of those retailers are in trouble now because there’s a concentration in risk because the risk was with hard goods and soft goods.

That’s why we went to services. We saw the growth in the opportunity in services. We also saw the dispersion of risk in small being a lot less riskier, not having the same concentrated tail risk that the others had. That’s why we built the model the way we did. That being said, what keeps me up at night, well, it’s always the economy.

I do think that what we’ve been seeing even with the volatility of today, we really have not seen that much change with our traffic to our centers. As we’ve mentioned, it’s increased. What we do see is the need and the importance of really understanding the right client for our community. It takes a lot more understanding and research to be able to find out, especially if you have changing communities. Our communities are high growth right now.

We focus in areas of HHI as well over 100 ks. And we look for corners that are VPDs 50 and up. So that being said, I wanna make sure that I’m meeting the needs of that community. I don’t have a lot of competition coming into our markets because, well, it’s hard to build right now. But that being said, what might change economically is always something that we have to deal with.

So we also focus to make sure that we’re looking at things that have a relative price ticket that’s affordable to a broad range of people. Instead of staying at the high end, we try to stay in the mid range so we have that repeat customer coming in. And I think one of the most important things that we do is a focus on community itself. There’s a need for people to be with each other. We look for those opportunities and reasons for the right clients that provide that for our communities.

Anthony Hao, Analyst, Truist Securities: Thank you everyone for everyone’s time. Thank you.

Dave Holtman, CEO, Whitestone REIT: Yep. Thanks everybody.

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