Whitestone REIT

Greetings and welcome to the Whitestone REIT first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, David Morty, Director of Investor Relations. You may begin, sir.

Good morning, and thank you for joining Whitestone REIT's first quarter 2023 earnings conference call. Joining me on today's call are Dave Holman, Chief Executive Officer, Christine Massandrea, Chief Operating Officer, and Scott Hogan, Chief Financial Officer. Please note that some statements made during this call are not historical and may be deemed forward-looking statements. Actual results may differ materially from those forward-looking statements due to a number of risks, uncertainties, and other factors. Please refer to the company's earnings news release and filings with the SEC, including Whitestone's most recent Form 10-Q and 10-K, for a detailed discussion of these factors. Acknowledging the fact that this call may be webcast for a period of time, it is also important to note that this call includes time-sensitive information that may be accurate only as of today's date, May 3, 2023. The company undertakes no obligation to update this information. Whitestone's third quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website in the investor relations section. We published first quarter 2023 slides on our website yesterday afternoon, which highlighted topics to be discussed today. I will now turn the call over to Dave Holman, our chief executive officer. Thank you, David.

Good morning, and thank you for joining Whitestone's first quarter 2023 earnings conference call. We are pleased to deliver another quarter of strong results on multiple fronts and are solidly on track to achieve our FFO guidance for the year and the underlying key drivers we previously have communicated. In terms of leasing activity, 2022 was a record year for us, And 2023 has shown no slowdown in demand for spaces in our centers, as evidenced by our sector-leading leasing spreads in Q1. It seems commercial real estate is often one category in many of the headlines today. So I wanted to make a straightforward point that investors know, but that sometimes seems to get lost. Simply put, not all commercial real estate is the same. Whitestone is in the most desirable markets, has the right types of tenants, the most flexible and in-demand size of leaseable spaces, and continues to benefit from limited supply and strong population and job growth in our markets, and also continues to benefit from hybrid work as consumers spend less time in offices and urban centers and more time at home and in their neighborhoods. The lane we've been in for the last decade is exactly what is in greatest demand today. We specialize in smaller spaces and populating our centers with service-oriented businesses. As people continue to migrate to Texas and Arizona, we see the fundamental drivers of our business are not just remaining strong, but accelerating in the current environment. In the first quarter, we signed new and renewal leases at a blended 20.8% increase over the prior leases on a straight line basis and 13.3% increase on a cash basis. During the first quarter, we grew our top line revenue over 5%, produced strong 2.8% same store growth, NOI growth, and achieved FFO per share of 24 cents. And we strengthened our balance sheet, reducing our exposure to variable rate debt and improving our liquidity. Our occupancy at quarter end was 92.7%, up 170 basis points from a year ago. And our net effective annual base rent per square foot was $22.22, up 4.7% from 2022. Christine and Scott will provide greater detail of our operating and financial activities and results in their comments. We are pleased with our start to 2023, and our focus for the remainder of the year will be growing shareholder value through operational and financial performance, FFO per share growth, and delivery of consistent results. The new management team has delivered five quarters of strong results and understands the value of building on those results. We will continue to focus on the balance sheet and cost of capital with improvements to debt leverage in 2023 and future years and remain disciplined stewards of capital. We recognize the value of a strong balance sheet and we recognize the importance of reaching the leverage milestones we have set. We will continue to focus on accretive recycling of capital. As we highlighted on the fourth quarter call, in 2022, we made a number of strategic dispositions that funded our Lake Woodlands acquisition and allowed us to improve our debt leverage. We are targeting similarly accretive activity, probably of about the same magnitude within the next few quarters And finally, we will continue to focus on monetizing our underperforming joint venture investment in Pillarstone. Our team is aligned, our focus is clear, and we are confident in our ability to add value from a unique business model and a great portfolio of high quality, open air, convenience and necessity based centers that are positioned to serve their respective communities on a daily basis and drive consistent cash flow growth. With that, I will now turn the call over to our Chief Operating Officer, Christine.