Whitestone REIT (WSR -1.77%), which owns and operates community-focused open-air retail centers in the Sun Belt, released its earnings on July 30, 2025. The company reported Core Funds from Operations (FFO) per share of $0.26 (non-GAAP), far exceeding the analyst consensus of $0.08 (non-GAAP). Revenue (GAAP) reached $37.9 million, slightly below the $38.33 million GAAP estimate but up modestly from the prior-year quarter. Overall, the period delivered strong profit growth and stable operational results, offset by a minor revenue shortfall and signs of slowing growth in some operating metrics.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Core FFO per share and OP Unit (Non-GAAP) | $0.26 | $0.08 | $0.24 | 8.3% |
| Revenue (GAAP) | $37.9 million | $38.33 million | $37.6 million | 0.8% |
| Net Income per diluted share (GAAP) | $0.10 | $0.05 | 100% | |
| Same Store Net Operating Income (Non-GAAP) | $25.0 million | $24.4 million | 2.5% | |
| EBITDAre (Non-GAAP) | $21.9 million | $20.2 million | 8.4% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Whitestone REIT's Business and Strategy
Whitestone REIT focuses on owning and managing open-air shopping centers tailored to neighborhood needs in fast-growing Sun Belt markets. With a presence in Texas and Arizona, its portfolio covers 56 wholly owned properties and serves a broad range of food, service, health, logistics, education, and entertainment tenants.
The company’s recent strategy centers on targeted property acquisitions, careful tenant selection, and proactive redevelopment of its shopping centers. Priorities include growing rental income, maintaining high occupancy, and managing capital efficiently. Key factors in its success are its ability to match tenants to community demand, maintain diversification by geography, and hold a balanced capital structure.
Quarter Review: Notable Developments and Drivers
Core FFO per share rose 8.3% from $0.24 in the second quarter of 2024 to $0.26 in 2025. Net income per diluted share increased from $0.05 in the second quarter of 2024 to $0.10 in 2025. The significant Core FFO (non-GAAP) outperformance versus estimates indicates results exceeded analyst expectations despite a revenue shortfall. The $37.9 million revenue figure (GAAP), slightly under expectations, was up from $37.6 million in the second quarter of 2024.
Occupancy across the wholly owned portfolio improved to 93.9%, with a noticeable increase in smaller lease spaces. Rental rate growth (GAAP basis) remained strong at 17.9%, indicating higher renewal and new lease pricing. Renewal leasing spreads, which track changes in rent for tenants that stay, reached 15.2%, while new lease spreads (GAAP basis) jumped to 41.4%. This demonstrates the company’s pricing power and tenant demand. Average base rent per leased square foot climbed 5.3% year-over-year, reaching $25.28.
Leasing activity showed a mix of headwinds and bright spots. There were 24 new leases signed, down from 30 in the prior year, with a total lease value of $8.9 million. However, renewal leases increased to 54, and the lease value for these renewals reached $24.3 million, up from $20.7 million in the prior year.
Same store net operating income (NOI), which captures the core performance of properties held over time, increased by 2.5%. This is slower than the prior-year quarter’s 6.6% and also below the prior quarter’s 4.8%. Management cited ongoing redevelopment and intentional re-tenanting as reasons for this moderation, noting that these steps, while lowering short-term NOI, should boost long-term rental income and property quality. The company confirmed ongoing redevelopment at key centers such as Lion Square, with expected benefits in coming years.
The quarterly dividend was maintained at $0.135 per share, paid in three monthly installments. This rate continued a stable trend. There were no announced changes to payout or policy.
The Business Model: Portfolio Mix and Value Creation
Nearly all of Whitestone’s income stems from its open-air retail centers, a single product type designed to offer community-centered services. The company believes this provides flexibility and higher rent potential versus dependence on large anchor tenants. Types of tenants span everyday services, food outlets, fitness and health, and specialized education or logistics.
The company’s tenant screening and property upgrades focus on matching services with evolving neighborhood needs. For example, it responded to shifts in local demographics by bringing new fitness operators and specialty retailers into redeveloped centers like Terravita and Lion Square. This approach aims to build stable, higher-paying rent rolls and reduce exposure to economic swings in the broader retail market. Risk from any one tenant is low, as the largest accounts for just 2.2% of total annual rental income.
Looking Ahead: Outlook and Key Areas for Investors
Whitestone reaffirmed its financial outlook for fiscal 2025. Management maintained guidance of $1.03–$1.07 for Core FFO per share for the full year and 3.0%–4.5% growth in same store NOI for the full year. The company continues to project ending occupancy between 94.0% and 95.0% for the full year. However, expected full-year interest expense was raised to $33–$34 million, up from a prior estimate of $32–$33 million, reflecting the impact of higher debt and rising rates.
Investors may want to monitor the pace of lease-up and rent growth, future redevelopment impacts, and especially interest expenses, as debt levels and financing costs now run higher. Although Whitestone’s strategy of redeveloping underperforming properties and targeting high-growth Sun Belt markets supports its earnings model, the company’s modest top-line growth and slower NOI gains suggest a need for ongoing discipline in tenant mix and capital management. The company’s management did not announce any further dividend changes for the coming periods.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
