wstr20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-34855

WHITESTONE REIT

(Exact Name of Registrant as Specified in Its Charter)

Maryland

76-0594970

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2600 South Gessner, Suite 500		77063
Houston, Texas
(Address of Principal Executive Offices)		(Zip Code)

(713) 827-9595

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, par value $0.001 per share	WSR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Small reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ☒ No

As of April 29, 2025, there were 50,895,585 common shares of beneficial interest, $0.001 par value per share, outstanding.

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PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	1
	Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024	1
	Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2025 and 2024	3
	Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2025 and 2024	6
	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2025 and 2024	8
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	56
Item 4.	Controls and Procedures.	56

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	57
Item 1A.	Risk Factors.	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	58
Item 3.	Defaults Upon Senior Securities.	58
Item 4.	Mine Safety Disclosures.	58
Item 5.	Other Information.	58
Item 6.	Exhibits.	58
	Exhibit Index	59
	Signatures	60

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Whitestone REIT and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	*March 31, 2025*			*December 31, 2024*
		(unaudited)
*ASSETS*
Real estate assets, at cost
Property	$	1,253,641		$	1,248,223
Accumulated depreciation		(254,819	)		(246,534	)
Total real estate assets		998,822			1,001,689
Cash and cash equivalents		5,586			5,224
Restricted cash		10,228			10,146
Escrows and deposits		894			4,006
Accrued rents and accounts receivable, net of allowance for doubtful accounts		33,865			33,820
Receivable from partnership redemption		31,643			31,643
Receivable due from related party		14,958			15,186
Unamortized lease commissions, legal fees and loan costs		14,268			14,693
Prepaid expenses and other assets⁽¹⁾		6,034			7,805
Finance lease right-of-use assets		10,393			10,427
Total assets	$	1,126,691		$	1,134,639

*LIABILITIES AND EQUITY*
Liabilities:
Notes payable	$	641,295		$	631,518
Accounts payable and accrued expenses⁽²⁾		30,376			40,703
Payable due to related party		1,535			1,577
Tenants' security deposits		9,188			9,295
Dividends and distributions payable		6,958			6,931
Finance lease liabilities		772			781
Total liabilities		690,124			690,805
Commitments and contingencies:		—			—
Equity:
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of March 31, 2025 and December 31, 2024		—			—
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 50,894,945 and 50,690,163 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		51			51
Additional paid-in capital		637,497			637,946
Accumulated deficit		(208,754	)		(205,557	)
Accumulated other comprehensive income		2,231			5,713
Total Whitestone REIT shareholders' equity		431,025			438,153
Noncontrolling interest in subsidiary		5,542			5,681
Total equity		436,567			443,834
Total liabilities and equity	$	1,126,691		$	1,134,639

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands)

	*March 31, 2025*		*December 31, 2024*
		(unaudited)
(1) Operating lease right of use assets (net)	$	52	$	59
(2) Operating lease liabilities	$	51	$	58

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

	*Three Months Ended March 31,*
	*2025*			*2024*
Revenues
Rental⁽¹⁾	$	37,395		$	36,741
Management, transaction, and other fees		608			423
Total revenues		38,003			37,164

Operating expenses
Depreciation and amortization		9,324			8,800
Operating and maintenance		7,012			6,349
Real estate taxes		4,252			4,238
General and administrative		5,443			6,180
Total operating expenses		26,031			25,567

Other expenses (income)
Interest expense		8,097			8,519
Gain on sale of properties		—			(6,525	)
Loss on disposal of assets		100			—
Interest, dividend and other investment income		(100	)		(8	)
Total other expenses		8,097			1,986

Income before equity investment in real estate partnership and income tax		3,875			9,611

Deficit in earnings of real estate partnership		—			(28	)
Provision for income tax		(127	)		(119	)
Net income		3,748			9,464

Less: Net income attributable to noncontrolling interests		47			124

Net income attributable to Whitestone REIT	$	3,701		$	9,340

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands, except per share data)

	*Three Months Ended March 31,*
	*2025*			*2024*
Basic Earnings Per Share:
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.07		$	0.19
Diluted Earnings Per Share:
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares	$	0.07		$	0.18

Weighted average number of common shares outstanding:
Basic		50,890			49,940
Diluted		52,010			51,112

Consolidated Statements of Comprehensive Income (Loss)

Net income	$	3,748		$	9,464

Other comprehensive income (loss)

Unrealized gain (loss) on cash flow hedging activities		(3,526	)		5,007

Comprehensive income		222			14,471

Less: Net income attributable to noncontrolling interests		47			124
Less: Comprehensive income (loss) attributable to noncontrolling interests		(44	)		66

Comprehensive income attributable to Whitestone REIT	$	219		$	14,281

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

	*Three Months Ended March 31,*
	*2025*			*2024*
⁽¹⁾ Rental
Rental revenues	$	27,205		$	26,864
Recoveries		10,509			10,477
Bad debt		(319	)		(600	)
Total rental	$	37,395		$	36,741

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(in thousands)

												*Accumulated*
						*Additional*						*Other*			*Total*			*Noncontrolling*
	*Common Shares*					*Paid-In*			*Accumulated*			*Comprehensive*			*Shareholders’*			*Interests*						*Total*
	*Shares*			*Amount*		*Capital*			*Deficit*			*Income (Loss)*			*Equity*			*Units*			*Dollars*			*Equity*

Balance, December 31, 2024		50,690		$	51	$	637,946		$	(205,557	)	$	5,713		$	438,153			650		$	5,681		$	443,834
Exchange of noncontrolling interest OP units for common shares		7			—		55			—			—			55			(7	)		(55	)		—
Issuance of shares under dividend reinvestment plan		2			—		25			—			—			25			—			—			25
Repurchase of common shares ⁽¹⁾		(107	)		—		(1,510	)		—			—			(1,510	)		—			—			(1,510	)
Share-based compensation		303			—		981			—			—			981			—			—			981
Distributions - $0.1350 per common share / OP unit		—			—		—			(6,898	)		—			(6,898	)		—			(87	)		(6,985	)
Unrealized loss on change in value of cash flow hedge		—			—		—			—			(3,482	)		(3,482	)		—			(44	)		(3,526	)
Net income		—			—		—			3,701			—			3,701			—			47			3,748
Balance, March 31, 2025		50,895		$	51	$	637,497		$	(208,754	)	$	2,231		$	431,025			643		$	5,542		$	436,567

See accompanying notes to Consolidated Financial Statements

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(in thousands)

												*Accumulated*
						*Additional*						*Other*		*Total*			*Noncontrolling*
	*Common Shares*					*Paid-In*			*Accumulated*			*Comprehensive*		*Shareholders’*			*Interests*						*Total*
	*Shares*			*Amount*		*Capital*			*Deficit*			*Income (Loss)*		*Equity*			*Units*			*Dollars*			*Equity*

Balance, December 31, 2023		49,611		$	50	$	628,079		$	(216,963	)	$	2,576	$	413,742			694		$	5,875		$	419,617
Exchange of noncontrolling interest OP units for common shares		44			—		355			—			—		355			(44	)		(355	)		—
Issuance of shares under dividend reinvestment plan		2			—		23			—			—		23			—			—			23
Repurchase of common shares ⁽¹⁾		(118	)		—		(1,442	)		—			—		(1,442	)		—			—			(1,442	)
Share-based compensation		420			—		861			—			—		861			—			—			861
Distributions - $0.1200 per common share / OP unit		—			—		—			(6,175	)		—		(6,175	)		—			(92	)		(6,267	)
Unrealized gain on change in value of cash flow hedge		—			—		—			—			4,941		4,941			—			66			5,007
Net income		—			—		—			9,340			—		9,340			—			124			9,464
Balance, March 31, 2024		49,959		$	50	$	627,876		$	(213,798	)	$	7,517	$	421,645			650		$	5,618		$	427,263

⁽¹⁾ The Company acquired common shares held by employees who tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares.

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	*Three Months Ended March 31,*
	*2025*			*2024*
Cash flows from operating activities:
Net income	$	3,748		$	9,464
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,324			8,800
Amortization of deferred loan costs		280			265
Gain on sale of properties		—			(6,525	)
Loss on disposal of assets		100			—
Bad debt		319			600
Share-based compensation		981			861
Deficit in earnings of real estate partnership		—			28
Amortization of right-of-use assets - finance leases		34			22
Changes in operating assets and liabilities:
Escrows and deposits		3,112			6,876
Accrued rents and accounts receivable		(364	)		(1,063	)
Receivable due from related party		228			(9	)
Unamortized lease commissions, legal fees and loan costs		(728	)		(817	)
Prepaid expenses and other assets		(1,766	)		997
Accounts payable and accrued expenses		(12,038	)		(8,160	)
Payable due to related party		(42	)		—
Tenants' security deposits		(107	)		185
Net cash provided by operating activities		3,081			11,524
Cash flows from investing activities:
Acquisitions of real estate		—			(27,204	)
Additions to real estate		(3,914	)		(3,041	)
Proceeds from sales of properties		—			25,661
Net cash used in investing activities		(3,914	)		(4,584	)
Cash flows from financing activities:
Distributions paid to common shareholders		(6,845	)		(5,969	)
Distributions paid to OP unit holders		(87	)		(80	)
Proceeds from credit facility		27,300			23,000
Repayments of notes payable		(17,572	)		(20,869	)
Repurchase of common shares		(1,510	)		(1,442	)
Payment of finance lease liability		(9	)		(5	)
Net cash provided by (used in) financing activities		1,277			(5,365	)
Net increase in cash, cash equivalents and restricted cash		444			1,575
Cash, cash equivalents and restricted cash at beginning of period		15,370			4,640
Cash, cash equivalents and restricted cash at end of period ⁽¹⁾	$	15,814		$	6,215

⁽¹⁾	For a reconciliation of cash, cash equivalents and restricted cash, see supplemental disclosures below.

See accompanying notes to Consolidated Financial Statements.

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Whitestone REIT and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	*Three Months Ended March 31,*
	*2025*			*2024*
Supplemental disclosure of cash flow information:
Cash paid for interest	$	8,041		$	8,160
Non cash investing and financing activities:
Disposal of fully depreciated real estate	$	—		$	29
Financed insurance premiums	$	—		$	2,638
Value of shares issued under dividend reinvestment plan	$	25		$	23
Value of common shares exchanged for OP units	$	55		$	354
Change in fair value of cash flow hedge	$	(3,526	)	$	5,007
Accrued capital expenditures	$	1,710		$	1,962
Receivable from partnership redemption	$	—		$	31,643

	*March 31,*
	*2025*		*2024*
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$	5,586	$	6,215
Restricted cash		10,228		—
Total cash, cash equivalents and restricted cash	$	15,814	$	6,215

See accompanying notes to Consolidated Financial Statements.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

The use of the words “we,” “us,” “our,” “Company” or “Whitestone” refers to Whitestone REIT and our consolidated subsidiaries, except where the context otherwise requires.

1. INTERIM FINANCIAL STATEMENTS

The consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2024 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of and for the period ended March 31, 2025 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to this Quarterly Report on Form 10-Q.

The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of Whitestone and our subsidiaries as of March 31, 2025 and December 31, 2024, and the results of operations for the three month periods ended March 31, 2025 and 2024, the consolidated statements of changes in equity for the three months ended March 31, 2025 and 2024 and cash flows for the three months ended March 31, 2025 and 2024. All of these adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results expected for a full year. The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Business. Whitestone was formed as a real estate investment trust (“REIT”) pursuant to the Texas Real Estate Investment Trust Act on August 20, 1998. In July 2004, we changed our state of organization from Texas to Maryland pursuant to a merger where we merged directly with and into a Maryland REIT formed for the sole purpose of the reorganization and the conversion of each of the outstanding common shares of beneficial interest of the Texas entity into 1.42857 common shares of beneficial interest of the Maryland entity. We serve as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership. We currently conduct substantially all of our operations and activities through the Operating Partnership. As the general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions. As of March 31, 2025 and December 31, 2024, Whitestone wholly owned 55 commercial properties in and around Austin, Dallas-Fort Worth, Houston, Phoenix, Scottsdale and San Antonio.

As of March 31, 2025, these properties consist of:

Consolidated Operating Portfolio

•

50 wholly owned properties that meet our Community Centered Properties® strategy; and

Redevelopment, New Acquisitions Portfolio

•

five parcels of land held for future development.

Acquired properties are categorized in the new acquisitions portfolio until the earlier of 90% occupancy or 18 months of ownership.

As of March 31, 2025, our ownership in Pillarstone Capital REIT Operating Partnership LP (“Pillarstone” or “Pillarstone OP”) no longer represents a majority interest. On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP. As of the date of this filing, Whitestone has not received consideration for its redemption of its equity investment in Pillarstone OP as required by the partnership agreement. On March 4, 2024, Pillarstone Capital REIT (“Pillarstone REIT”) authorized and filed a Chapter 11 bankruptcy (the “Pillarstone Bankruptcies”) of itself, Pillarstone OP, and all of its remaining special purpose entities in the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”). We have filed a claim in the “Pillarstone Bankruptcies” for the value of our redemption claim along with interest and other costs. We intend to pursue collection of amounts due from Pillarstone OP through all means necessary and while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our receivable, formerly our equity investment in Pillarstone OP. Please refer to Note 6 in this Quarterly Report on Form 10-Q for more information regarding the accounting treatment of the redemption of our OP units in Pillarstone OP.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation. We are the sole general partner of the Operating Partnership and possess full legal control and authority over the operations of the Operating Partnership. As of March 31, 2025 and December 31, 2024, we owned a majority of the partnership interests in the Operating Partnership. Consequently, the accompanying consolidated financial statements include the accounts of the Operating Partnership.

Noncontrolling interest in the accompanying consolidated financial statements represents the share of equity and earnings of the Operating Partnership allocable to holders of partnership interests other than us. Net income or loss is allocated to noncontrolling interests based on the weighted-average percentage ownership of the Operating Partnership during the period. Issuance of additional common shares of beneficial interest in Whitestone (the “common shares”) and units of limited partnership interest in the Operating Partnership that are convertible into cash or, at our option, common shares on a one-for-one basis (the “OP units”) changes the percentage of ownership interests of both the noncontrolling interests and Whitestone.

Estimates regarding Pillarstone OP’s financial condition and results of operations. We relied on the reports furnished by our third-party partners for financial information regarding the Company’s investment in Pillarstone OP. As of March 31, 2024, Pillarstone OP’s financial statements were unavailable. We estimated its financial condition for the first 25 days of January 2024 using the best data available at the time.

Equity Method. In compliance with Accounting Standards Update (“ASU”) 2014-09 (“Topic 606”) and Accounting Standards Codification (“ASC”) 610, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets,” the Company previously accounted for its investment in Pillarstone OP using the equity method. However, subsequent to January 25, 2024, the Company ceased utilizing the equity method following the exercise of its notice of redemption for substantially all of its investment in Pillarstone OP. Please refer to Note 6 to the accompanying consolidated financial statements for the full disclosure.

Basis of Accounting. Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred.

Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates that we use include the estimated fair values of properties acquired, the estimated useful lives for depreciable and amortizable assets and costs, the grant date fair value of common share units included in share-based compensation expense, the estimated allowance for doubtful accounts, the estimated fair value of interest rate swaps, the estimates supporting our impairment analysis for the carrying values of our real estate assets, the estimates made regarding Pillarstone REIT Operating Partnership LP’s financial condition and results of operations, and the estimated allowance for credit loss. Actual results could differ from those estimates.

Reclassifications. We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Restricted Cash. During the year ended December 31, 2024 , the Company sold Providence as part of a like-kind exchange under Section 1031 of the Internal Revenue Code. In accordance with exchange requirements, the proceeds were deposited into an escrow account with a Qualified Intermediary (“QI”) and are restricted for the acquisition of a replacement property. On December 12, 2024, a portion of these escrowed funds was used to acquire Village Shops at Dana Park as a qualifying replacement property under the 1031 exchange. As of March 31, 2025, we have a remaining balance in escrow, classified as Restricted Cash on the balance sheet. These funds are legally restricted and cannot be used for general corporate purposes.

Like-Kind Exchange Activity. As of March 31, 2025, the Company was actively engaged in a like-kind exchange under Section 1031 of the Internal Revenue Code, involving the sale of the Providence property. The identification period commenced on December 20, 2024, and the exchange period concludes on May 5, 2025. Failure to complete the exchange by this date may result in the recognition of capital gains and associated tax liabilities for our investors. The Company is diligently working to ensure the timely completion of this transaction but cannot guarantee that all conditions will be met within the required timeframe.

Derivative Instruments and Hedging Activities. We utilize derivative financial instruments, principally interest rate swaps, to manage our exposure to fluctuations in interest rates. We have established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. We recognize our interest rate swaps as cash flow hedges with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Any ineffective portion of a cash flow hedges’ change in fair value is recorded immediately into earnings. Our cash flow hedges are determined using Level 2 inputs under ASC 820, “Fair Value Measurements and Disclosures.” Level 2 inputs represent quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable. As of March 31, 2025, we consider our cash flow hedges to be highly effective.

Development Properties. Land, buildings and improvements are recorded at cost. Expenditures related to the development of real estate are carried at cost which includes capitalized carrying charges and development costs. Carrying charges (interest, real estate taxes, loan fees, and direct and indirect development costs related to buildings under construction) are capitalized as part of construction in progress. The capitalization of such costs ceases when the property, or any completed portion, becomes available for occupancy. For the three months ended March 31, 2025, approximately $ 136,000 and $ 47,000 in interest expense and real estate taxes, respectively, were capitalized. For the three months ended March 31, 2024, approximately $ 134,000 and $ 61,000 in interest expense and real estate taxes, respectively, were capitalized.

Share-Based Compensation. From time to time, we award nonvested restricted common share awards or restricted common share unit awards, which may be converted into common shares, to executive officers and employees under our 2018 Long-Term Equity Incentive Ownership Plan (the “2018 Plan”). Awarded shares and units vest when certain performance conditions are met. We recognize compensation expense when achievement of the performance conditions is probable based on management’s most recent estimates using the fair value of the shares as of the grant date. We recognized $1,132,000 and $936,000 in share-based compensation net of forfeitures for the three months ended March 31, 2025 and 2024, respectively.

Noncontrolling Interests. Noncontrolling interests are the portion of equity in a subsidiary not attributable to a parent. Accordingly, we have reported noncontrolling interests in equity on the consolidated balance sheets but separate from Whitestone’s equity. On the consolidated statements of operations and comprehensive income (loss), subsidiaries are reported at the consolidated amount, including both the amount attributable to Whitestone and noncontrolling interests. The consolidated statements of changes in equity is included for quarterly financial statements, including beginning balances, activity for the period and ending balances for shareholders’ equity, noncontrolling interests and total equity.

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March 31, 2025

(Unaudited)

Accrued Rents and Accounts Receivable. Included in accrued rents and accounts receivable are base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. We review the collectability of charges under our tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. We recognize an adjustment to rental revenue if we deem it probable that the receivable will not be collected. Our review of collectability under our operating leases includes any accrued rental revenues related to the straight-line method of reporting rental revenue. As of March 31, 2025 and December 31, 2024, we had an allowance for uncollectible accounts of $13.2 million and $14.7 million, respectively. During the three months ended March 31, 2025 and 2024, we recorded an adjustment to rental revenue for bad debt, exclusive of straight-line rent reserve adjustments, resulting in a $0.3 million and $0.6 million decrease in revenue, respectively. The three months ended March 31, 2025 included 11 cash basis tenants, resulting in a decrease to rental revenue for straight-line rent adjustments of $0.2 million and a decrease to rental revenue for bad debt adjustments of $0.1 million. The three months ended March 31, 2024 included 19 cash basis tenants, resulting in a decrease to rental revenue for straight-line rent adjustment of $0.02 million and a decrease to rental revenue for bad debt adjustments of $0.2 million.

Revenue Recognition. All leases on our properties are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are capitalized or charged, as applicable, to accrued rents and accounts receivable. Percentage rents are recognized as rental income when the thresholds upon which they are based have been met. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We combine lease and nonlease components in lease contracts, which includes combining base rent, recoveries, and percentage rents into a single line item, Rental, within the consolidated statements of operations and comprehensive income (loss). Additionally, we have tenants who pay real estate taxes directly to the taxing authority. We exclude these costs paid directly by the tenant to third parties on our behalf from revenue recognized and the associated property operating expense.

Other property income primarily includes amounts recorded in connection with lease termination fees. We recognize lease termination fees in the year that the lease is terminated and collection of the fee is probable. Amounts recorded within other property income are accounted for at the point in time when control of the goods or services transfers to the customer and our performance obligation is satisfied.

See our Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on significant accounting policies.

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March 31, 2025

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3. LEASES

As a Lessor. All leases on our properties are classified as noncancelable operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are capitalized or charged, as applicable, to accrued rents and accounts receivable. Percentage rents are recognized as rental income when the thresholds upon which they are based have been met. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We combine lease and nonlease components in lease contracts, which includes combining base rent, recoveries, and percentage rents into a single line item, Rental, within the consolidated statements of operations and comprehensive income (loss).

A summary of minimum future rents to be received (exclusive of renewals, tenant reimbursements, contingent rents, and collectability adjustments under Topic 842) under noncancelable operating leases in existence as of March 31, 2025 is as follows (in thousands):

Years Ended December 31,	*Minimum Future Rents (1)*
2025 (remaining)	$	78,168
2026		93,399
2027		80,314
2028		65,346
2029		50,562
Thereafter		142,298
Total	$	510,087

As a Lessee. We have automobile and office machine leases, which qualify as operating leases, with remaining lease terms of approximately two years. As of March 31, 2025, we had one ground lease and one office machine lease that were classified as finance leases. The ground lease provides for variable rental payments based on CPI adjustment.

The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by our weighted average incremental borrowing rates to calculate the lease liabilities for our operating and finance leases in which we are the lessee (in thousands):

Years Ended December 31,	*Operating Leases*		*Finance Leases*
2025 (remaining)	$	22	$	62
2026		24		83
2027		7		85
2028		1		86
2029		—		81
Thereafter		—		2,642
Total undiscounted rental payments		54		3,039
Less imputed interest		3		2,267
Total lease liabilities	$	51	$	772

Total lease cost for operating leases were $19,000 for each of the three-month periods ended March 31, 2025 and 2024, and for the finance leases were $34,000 and $22,000, respectively

The weighted average remaining lease term for our operating leases and our finance leases was 1.6 and 94 years, respectively, at March 31, 2025. We do not include renewal options in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The weighted average incremental borrowing rate was 4.6% for our operating leases and 6.1% for our finance leases at March 31, 2025.

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March 31, 2025

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4. ACCRUED RENTS AND ACCOUNTS RECEIVABLE, NET

Accrued rents and accounts receivable, net consists of amounts accrued, billed and due from tenants, allowance for doubtful accounts and other receivables as follows (in thousands):

	*March 31, 2025*			*December 31, 2024*
Tenant receivables	$	15,814		$	17,285
Accrued rents and other recoveries		29,887			29,964
Allowance for doubtful accounts		(13,167	)		(14,720	)
Other receivables		1,331			1,291
Total	$	33,865		$	33,820

5. UNAMORTIZED LEASE COMMISSIONS, LEGAL FEES AND LOAN COSTS

Costs which have been deferred consist of the following (in thousands):

	*March 31, 2025*			*December 31, 2024*
Leasing commissions	$	21,911		$	21,562
Deferred legal cost		257			257
Deferred financing cost		4,236			4,236
Total cost		26,404			26,055
Less: leasing commissions accumulated amortization		(9,598	)		(9,057	)
Less: deferred legal cost accumulated amortization		(234	)		(232	)
Less: deferred financing cost accumulated amortization		(2,304	)		(2,073	)
Total cost, net of accumulated amortization	$	14,268		$	14,693

6. INVESTMENT IN REAL ESTATE PARTNERSHIP

On December 8, 2016, we, through our Operating Partnership, entered into a Contribution Agreement (the “Contribution Agreement”) with Pillarstone OP and Pillarstone Capital REIT (“Pillarstone REIT”) pursuant to which we contributed all of the equity interests in four of our wholly-owned subsidiaries that, at the time, owned 14 non-core properties that did not fit our Community Centered Property® strategy (the “Pillarstone Properties”), to Pillarstone OP for aggregate consideration of approximately $84 million, consisting of (1) approximately $18.1 million of Class A units representing limited partnership interests in Pillarstone OP (“Pillarstone OP Units”) and (2) the assumption of approximately $65.9 million of liabilities (collectively, the “Contribution”). As of March 31, 2025, our ownership in Pillarstone OP no longer represents a majority interest. On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP. As of the date of this filing, we have not received consideration for our redemption of our equity investment in Pillarstone OP as required by the partnership agreement. We have filed a claim in the Pillarstone Bankruptcies for the value of our redemption claim along with interest and other costs. We intend to pursue collection of amounts due from Pillarstone OP through all means necessary and while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our equity investment in Pillarstone OP.

The table below presents our share of net loss from our investment in the real estate partnership which is included in deficit in earnings of real estate partnership, net on our consolidated statements of operations and comprehensive income (loss) (in thousands):

	*Three Months Ended March 31,*
	*2025*		*2024*

Pillarstone OP	$	—	$	(28	)

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March 31, 2025

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	*Three Months Ended March 31, 2025*			*For the Period from January 1, 2024 to January 25, 2024(1) (2)*

Revenues	$	—	$	591
Operating expenses		—		(559	)
Other expenses		—		(56	)
Net loss	$	—	$	(24	)

⁽¹⁾

We rely on reporting provided to us by Pillarstone OP's general partner for financial information regarding our investment in Pillarstone OP. Because Pillarstone OP financial statements for the three months ended March 31, 2024 have not been made available to us, we have estimated net loss and its components based on the information available to us at the time of this report.

⁽²⁾	The estimated net loss and its components are calculated through January 25, 2024, the redemption date.

Estimates regarding Pillarstone OP's guarantee. We, through our subsidiary, Whitestone REIT Operating Partnership, L.P., guaranteed Pillarstone OP’s loan for its Uptown Tower property located in Dallas, Texas, with an aggregate principal amount of $14.4 million as of September 30, 2023. The loan was also secured by the Uptown Tower property. The debt matured on October 4, 2023, and was in default, as Pillarstone OP failed to refinance the loan. On October 24, 2023, the Lender provided notice of a planned foreclosure sale on December 5, 2023. The Lender also claimed that an additional sum of $4.6 million was due which included default interest of approximately $6.3 million and net credits from escrowed funds and other charges of approximately $1.7 million.

On December 1, 2023, Whitestone OP reached an agreement with the Lender that would avoid foreclosure and secure the release of the lien and discharge of the guarantee, and the Company negotiated and satisfied a payoff as of December 4, 2023, in the amount of $13,632,764 (the “DPO Amount”). We paid the DPO amount and asserted a subrogation claim against Pillarstone OP. As of March 31, 2025 and December 31, 2024, the DPO amount was recorded as an asset in our financial statement line receivable due from related party.

The DPO Amount included a compromise settlement of approximately $1,688,000 for the disputed default interest and other fees.

On December 1, 2023, Pillarstone OP authorized and filed the Chapter 11 bankruptcy of its special purpose entity borrower that owns Uptown Tower (Whitestone Uptown Tower LLC) in the United States Bankruptcy Court for the Northern District of Texas.

On January 25, 2024, we exercised our notice of redemption for substantially all of our investment in Pillarstone OP.

On February 9, 2024, the Lender filed suit in New York County, New York against the guarantor Whitestone OP and the Company for alleged amounts due under the guarantee. The compromise settlement is our best estimate of the amount due.

On March 4, 2024, Pillarstone REIT authorized and filed the Pillarstone Bankruptcies. As of the date of this filing, we have not received consideration for our redemption of our equity investment in Pillarstone OP as required by the partnership agreement. We have filed a claim in the Pillarstone Bankruptcies for the value of our redemption claim along with interest and other costs.

On April 24, 2024, the Lender and Pillarstone OP filed a motion with the Bankruptcy Court seeking approval to settle the dispute and dismiss their mutual lawsuits including the lawsuit by the Lender against the Company as Guarantor of the loan. On or before June 10, 2024, Pillarstone OP agreed to pay to the Lender the sum of $1,123,950.24 plus all attorneys’ fees and costs (not to exceed $20,000.00) incurred by the Lender from April 10, 2024 through the date of receipt of such payment. Upon timely receipt of the cash payment from Pillarstone OP, the Lender applied the $13,632,764 tendered to it by Whitestone REIT Operating Partnership, L.P., and the guaranty was subsequently released. On October 2, 2024, the Bankruptcy Court affirmed the Company’s right of subrogation and allowed the Company’s secured claim for the DPO amount. On October 28, 2024, Pillarstone OP, through a subsidiary, filed a notice of appeal of the Bankruptcy Court’s order affirming Whitestone OP’s right of subrogation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

We do not believe a probable loss will be incurred, nor do we anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, we have not recorded a charge as a result of the Pillarstone Bankruptcies.

Accounting treatment of the redemption of our OP units in Pillarstone OP. On January 25, 2024, we executed an irrevocable redemption of substantially all our investment in Pillarstone OP, converting our equity investment into a receivable. Pillarstone OP conveyed their intention to forego issuing equity, opting instead to liquidate the properties to satisfy creditors, with Whitestone being significantly the largest creditor. Based on insights from our legal team and advisors, we anticipate that the most probable outcome will involve the liquidation of all Pillarstone properties.

The carrying value of our investment in Pillarstone OP was approximately $31.6 million as of January 25, 2024. We assert a claim of $70 million, inclusive of the $13 million default interest payment and accrued interest. It is anticipated that the claim and proceeds from liquidation will surpass the carrying value of our receivable for the redemption of our former equity investment in Pillarstone OP.

Subsequently, we reclassified our investment in Pillarstone OP to a receivable on our balance sheet after estimating 25 days of our share of the equity investment income. We will assess the credit losses of the receivable on a quarterly basis.

Any gains will be recognized once the proceeds received exceed our receivable.

This is within the scope of ASC 326, “Financial Instruments - Credit Losses.” The value of the unencumbered assets of Pillarstone OP is significantly in excess of Whitestone’s basis in the account receivable, but the precise value cannot be determined at this time. When applying the estimated loss rate method with a zero loss rate, the Current Expected Credit Losses (“CECL”) are zero according to ASC 326. We will continue to monitor our legal team's assessment of the bankruptcy case and the value of the assets of Pillarstone OP to evaluate the credit risk of the receivable.

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March 31, 2025

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7. DEBT

Certain subsidiaries of Whitestone are the borrowers under various financing arrangements. These subsidiaries are separate legal entities, and their respective assets and credit are not available to satisfy the debt of Whitestone or any of its other subsidiaries.

Debt consisted of the following as of the dates indicated (in thousands):

Description	*March 31, 2025*			*December 31, 2024*
Fixed rate notes
$265.0 million, 3.18% plus 1.45% to 2.10% Note, due January 31, 2028 ⁽¹⁾	$	265,000		$	265,000
$20.0 million, 3.67% plus 1.50% Note, due January 31, 2028 ⁽³⁾		20,000			20,000
$80.0 million, 3.72% Note, due June 1, 2027		80,000			80,000
$50.0 million, 5.09% Note, due March 22, 2029 (Series A)		28,571			35,714
$50.0 million, 5.17% Note, due March 22, 2029 (Series B)		40,000			50,000
$2.5 million, 7.79% Note, due February 28, 2025		—			429
$50.0 million, 3.71% plus 1.50% to 2.10% Note, due September 16, 2026 ⁽²⁾		50,000			50,000
$56.3 million, 6.23% Note, due July 31, 2031		56,340			56,340
Floating rate notes
Unsecured line of credit, SOFR plus 1.50% to 2.10%, due September 16, 2026		102,300			75,000
Total notes payable principal		642,211			632,483
Less deferred financing costs, net of accumulated amortization		(916	)		(965	)
Total notes payable	$	641,295		$	631,518

⁽¹⁾

Promissory note includes an interest rate swap that fixes the Secured Overnight Financing Rate (“SOFR”) portion of the term loan at an interest rate of 2.16% through October 28, 2022, 2.76% from October 29, 2022 through January 31, 2024, and 3.32% beginning February 1, 2024 through January 31, 2028.

⁽²⁾	A portion of the unsecured line of credit includes an interest rate swap to fix the SOFR portion of the loan at 3.71%.

⁽³⁾	Series One Incremental Term Loan includes an interest rate swap that fixed the term loan rate at 5.165% through January 31, 2028.

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March 31, 2025

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On June 21, 2024, Whitestone REIT, operating through its subsidiaries Whitestone Strand LLC, Whitestone Las Colinas Village LLC, and Whitestone Seville, LLC (collectively, the “Borrower”), entered into a loan agreement (the “Loan Agreement”) with Nationwide Life Insurance Company (the “Lender”) for a mortgage loan in the principal amount of $56,340,000 (the “Loan”).

The Loan provides for a fixed interest rate of 6.23% per annum. Payments commence on August 1, 2024, and are due on the first day of each calendar month thereafter through July 1, 2031, with interest-only payments for the first 36 months. Monthly payments consist of principal and interest based on a 30-year amortization schedule beginning on August 1, 2027. The Loan may be prepaid in full but not in part, provided that, as conditions precedent, Borrower: (i) gives Lender not less than fifteen (15) days prior notice of Borrower’s intention to prepay the Loan; (ii) pays to Lender the prepayment premium as set forth in the Loan Agreement, if any, then due and payable to Lender; and (iii) pays to Lender all other amounts then due under the loan documents. No prepayment premium is required for prepayments in full made on or after six months prior to the maturity date.

The Loan is a non-recourse loan secured by three of our properties including our related equipment, fixtures, personal property, and other assets, and a limited carve-out guarantee by the our Operating Partnership.

The loan documents contain customary terms and conditions, including without limitation affirmative and negative covenants such as information reporting and insurance requirements. The loan documents also contain customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants, and bankruptcy or other insolvency events. Upon the occurrence of an event of default, the Lender is entitled to accelerate all obligations of the Borrower. The Lender will also be entitled to receive the entire unpaid principal balance at a default rate.

The Loan proceeds will be used to pay down the Borrower’s existing floating rate indebtedness.

On March 22, 2019, we, through our Operating Partnership, entered into a Note Purchase and Guarantee Agreement (as amended from time to time, the “Note Agreement”) together with certain subsidiary guarantors as initial guarantor parties thereto (the “Subsidiary Guarantors”) and The Prudential Insurance Company of America and the various other purchasers named therein (collectively, the “Purchasers”) providing for the issuance and sale of $100 million of senior unsecured notes of the Operating Partnership, of which (i) $50 million are designated as 5.09% Series A Senior Notes due March 22, 2029 (the “Series A Notes”) and (ii) $50 million are designated as 5.17% Series B Senior Notes due March 22, 2029 (the “Series B Notes” and, together with the Series A Notes, the “Notes”) pursuant to a private placement that closed on March 22, 2019 (the “Private Placement”). Obligations under the Notes are unconditionally guaranteed by us and by the Subsidiary Guarantors.

On December 16, 2022, we through our Operating Partnership, amended the Note Agreement, pursuant to the terms and conditions of that certain Amendment No. 1 to Note Purchase and Guaranty Agreement, by and among us and the Operating Partnership, together with certain subsidiary guarantors as initial guarantor parties thereto and The Prudential Insurance Company of America and the various other purchasers named therein, for the purpose of conforming certain covenants and defined terms contained in the Note Agreement with the 2022 Facility (defined below).

The principal of the Series A Notes began to amortize on March 22, 2023 with annual principal payments of approximately $7.1 million. The principal of the Series B Notes began to amortize on March 22, 2025 with annual principal payments of $10.0 million. The Notes pay interest quarterly on the 22nd day of March, June, September and December in each year until maturity.

The Operating Partnership may prepay at any time all, or from time to time part of, the Notes, in an amount not less than $1,000,000 in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus a make-whole amount. The make-whole amount is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the Notes being prepaid over the aggregate principal amount of such Notes (as described in the Note Agreement). In addition, in connection with a Change of Control (as defined in the Note Agreement), the Operating Partnership is required to offer to prepay the Notes at 100% of the principal amount plus accrued and unpaid interest thereon.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

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The Note Agreement contains representations, warranties, covenants, terms and conditions customary for transactions of this type and substantially similar to the Operating Partnership’s existing senior revolving credit facility, including limitations on liens, incurrence of investments, acquisitions, loans and advances and restrictions on dividends and certain other restricted payments. In addition, the Note Agreement contains certain financial covenants substantially similar to the Operating Partnership’s existing senior revolving credit facility, including the following:

•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

•

maximum secured recourse debt to total asset value ratio of 0.15 to 1.00;

•

maintenance of a minimum tangible net worth (adjusted for accumulated depreciation and amortization) of 75% of our total net worth as of December 31, 2021 plus 75% of the net proceeds from additional equity offerings (as defined therein); and

•

minimum adjusted property NOI to implied unencumbered debt service ratio of 1.50 to 1.00.

In addition, the Note Agreement contains a financial covenant requiring that maximum unsecured indebtedness not exceed the ratio of unsecured indebtedness to unencumbered asset pool of 0.60 to 1.00. That covenant is substantially similar to the borrowing base concept contained in the Operating Partnership’s existing senior revolving credit facility.

The Note Agreement also contains default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants, cross-defaults with other indebtedness and guarantor defaults. The occurrence of an event of default under the Note Agreement could result in the Purchasers accelerating the payment of all obligations under the Notes. The financial and restrictive covenants and default provisions in the Note Agreement are substantially similar to those contained in the Operating Partnership’s existing credit facility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

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Net proceeds from the Private Placement were used to refinance existing indebtedness. The Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Notes were sold in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

On September 16, 2022, we, through our Operating Partnership, entered into an unsecured credit facility (the “2022 Facility”) pursuant to that certain Third Amended and Restated Credit Agreement, by and among the Operating Partnership, the Company and certain subsidiaries of the Company, as guarantors signatory thereto, the lenders party thereto, Bank of Montreal, as administrative agent (the “Administrative Agent”), Truist Bank, as syndication agent, and BMO Capital Markets Corp., Truist Bank, Capital One, National Association, and U.S. Bank National Association, as co-lead arrangers and joint book runners (as amended from time to time, the “Credit Agreement”). The 2022 Facility replaced the Company’s previous unsecured revolving credit facility, dated January 31, 2019 (the “2019 Facility”).

On October 7, 2024, we, through our Operating Partnership, entered into the First Amendment to Third Amended and Restated Credit Agreement and Incremental Term Loan Joinder (the “Amendment”) among the Operating Partnership, the Company and certain subsidiaries of the Company, as guarantors signatory thereto, the Administrative Agent, and L/C Issuer and Associated Bank, National Association, which amends the Credit Agreement.

The Amendment, among other things, establishes the Series One Incremental Term Loan (defined below) consistent with the existing Term Loan (defined below). The Series One Incremental Term Loan accrues interest (at the Operating Partnership’s option) at a Base Rate (defined below) or Adjusted Term SOFR (as defined in the Credit Agreement) plus an applicable margin based upon the Operating Partnership’s then existing total leverage and is subject to adjustment as set forth in the Credit Agreement. In addition, the Operating Partnership entered into an interest rate swap to fix the interest rate on the Series One Incremental Term Loan at 3.665% plus bank credit spreads (that are currently 1.5%, through January 31, 2028), or an all-in rate of 5.165%.

The 2022 Facility is comprised of the following three tranches of indebtedness:

•

$250.0 million unsecured revolving credit facility with a maturity date of September 16, 2026 (the “2022 Revolver”);

•

$265.0 million unsecured term loan with a maturity date of January 31, 2028 (the “Term Loan”); and

•

$20.0 million unsecured term loan with a maturity date of January 31, 2028 (the “Series One Incremental Term Loan”), effective October 7, 2024.

Borrowings under the 2022 Facility accrue interest (at the Operating Partnership’s option) at a Base Rate or an Adjusted Term SOFR plus an applicable margin based upon our then existing total leverage. “Base Rate” means, for any day, the higher of: (a) the Administrative Agent’s prime commercial rate, (b) the sum of (i) the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York for such day, plus (ii) 0.50%, or (c) the sum of (i) Adjusted Term SOFR for a one-month tenor in effect on such day plus (ii) 1.10%.

As of March 31, 2025, the interest rate on the 2022 Revolver was 5.87%. Based on our current leverage ratio, the revolver has an interest rate of Adjusted Term SOFR plus 1.45% and a 10 basis point credit spread adjustment. In addition, we entered into interest rate swaps to fix the interest rates on the Term Loan. The Term Loan with the swaps has the following interest rates:

•

2.16% plus spreads ranging from 1.45% to 2.10%, through October 28, 2022;

•

2.80% plus spreads ranging from 1.45% to 2.10%, from October 29, 2022 through January 31, 2024; and

•

3.42% plus spreads ranging from 1.45% to 2.10%, from February 1, 2024 through January 31, 2028.

As of March 31, 2025, the Term Loan with the swaps had a spread of 1.40% and a 10 basis point credit spread adjustment.

The Credit Agreement also has a pricing provision where the applicable margin can be adjusted by an aggregate 0.02% per annum based on our performance on certain sustainability performance targets.

The 2022 Facility includes an accordion feature that allows the Operating Partnership to increase the borrowing capacity by an aggregate amount equal to $200.0 million, upon the satisfaction of certain conditions. As of March 31, 2025, subject to any potential future paydowns or increases in the borrowing base, we have $97.7 million remaining availability under the 2022 Revolver. As of March 31, 2025, $437.3 million was drawn on the 2022 Facility and our unused borrowing capacity was $97.7 million, assuming that we use the proceeds of the 2022 Facility to acquire properties, or to repay debt on properties, that are eligible to be included in the unsecured borrowing base.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

The Company, each direct and indirect material subsidiary of the Operating Partnership and any other subsidiary of the Operating Partnership that is a guarantor under any unsecured ratable debt will serve as a guarantor for funds borrowed by the Operating Partnership under the 2022 Facility. The Credit Agreement contains customary terms and conditions, including, without limitation, customary representations and warranties and affirmative and negative covenants including, without limitation, information reporting requirements, limitations on investments, acquisitions, loans and advances, mergers, consolidations and sales, incurrence of liens, dividends and restricted payments. In addition, the Credit Agreement contains certain financial covenants including the following:

•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

•

maximum secured recourse debt to total asset value ratio of 0.15 to 1.00;

•

maintenance of a minimum tangible net worth (adjusted for accumulated depreciation and amortization) of $449 million plus 75% of the net proceeds from additional equity offerings (as defined therein);

•

minimum adjusted property net operating income to implied unencumbered debt service of 1.50 to 1.00; and

•

maximum unsecured indebtedness to unencumbered asset pool value ratio of 0.60 to 1.00.

As of March 31, 2025, our $136.34 million in secured debt was collateralized by four properties with a carrying value of $221.2 million. Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties. As of March 31, 2025, we were in compliance with all loan covenants.

Scheduled maturities of our outstanding debt as of March 31, 2025 were as follows (in thousands):

Year	*Amount Due*
2025 (remaining)	$	—
2026		169,443
2027		97,414
2028		302,823
2029		17,867
Thereafter		54,664
Total	$	642,211

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

8. DERIVATIVES AND HEDGING ACTIVITIES

The fair value of our interest rate swaps is as follows (in thousands):

	*March 31, 2025*
Balance Sheet Location	*Estimated Fair Value*
Prepaid expenses and other assets	$	2,280
Accounts payable and accrued expenses	$	(15	)

	*December 31, 2024*
Balance Sheet Location	*Estimated Fair Value*
Prepaid expenses and other assets	$	5,792

On October 7, 2024, Whitestone REIT, operating through its subsidiary Whitestone REIT Operating Partnership, entered into an interest rate swap to fix the interest rate on the Series One Incremental Term Loan at 3.665% plus bank credit spreads (that are currently 1.5%, through January 31, 2028), or an all-in rate of 5.165%. See Note 7 (Debt) for additional information regarding the 2022 Facility. We designated the interest rate swap as a cash flow hedge with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. We do not expect any amount of the existing gains or losses to be reclassified into earnings within the next 12 months.

On March 31, 2023, we, through our Operating Partnership, entered into an interest rate swap of $50 million (“Revolver Swap”) with Bank of Montreal that fixed the unhedged SOFR portion of the variable rate debt at 3.71%. Pursuant to the terms of the agreement governing the interest rate swap, Bank of Montreal assigned $10.0 million of the swap to U.S. Bank, $10.0 million of the swap to Capital One, $12.5 million of the swap to SunTrust Bank, and $2.5 million of the swap to Associated Bank. The swap began on March 31, 2023 and will mature on September 16, 2026. We designated the interest rate swap as a cash flow hedge with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. We do not expect any amount of the existing gains or losses to be reclassified into earnings within the next 12 months.

On September 16, 2022, we, through our Operating Partnership, entered an interest rate swap with Bank of Montreal that fixed the unhedged SOFR portion of Term Loan under the 2022 Facility at 3.32%. The notional amount of the swap begins at $100 million on October 29, 2022, and increases to $265 million on February 1, 2024, maturing on January 31, 2028. Pursuant to the terms of the agreement governing the interest rate swap, Bank of Montreal assigned beginning and ending notionals of $20.7 million and $54.8 million of the swap, respectively, to U.S. Bank, National Association, beginning and ending notionals of $25.4 million and $67.2 million of the swap, respectively, to Truist Bank, beginning and ending notionals of $20.7 million and $54.8 million of the swap, respectively, to Capital One, National Association, and beginning and ending notionals of $5.9 million and $15.7 million of the swap, respectively, to Associated Bank. See Note 7 (Debt) for additional information regarding the 2022 Facility. We designated the interest rate swap as a cash flow hedge with the effective portion of the changes in fair value recorded in comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company does not expect any amount of the existing gains or losses to be reclassified into earnings within the next 12 months.

On January 31, 2019, we, through our Operating Partnership, entered into an interest rate swap of $165 million with Bank of Montreal that fixed the LIBOR portion of our $165 million term loan under the 2019 Facility at 2.43%. Pursuant to the terms of the agreement governing the interest rate swap, Bank of Montreal assigned $32.6 million of the swap to U.S. Bank, National Association, $29.4 million of the swap to Regions Bank, $40.0 million of the swap to SunTrust Bank, and $15.0 million of the swap to Associated Bank. Effective September 7, 2022, Regions Bank novated $29.4 million of the swap to Bank of Montreal. See Note 7 (Debt) for additional information regarding the 2019 Facility. The swap began on February 8, 2021 and matured on January 31, 2024. Effective September 16, 2022, our contracts indexed to LIBOR were converted to SOFR. We designated the interest rate swap as a cash flow hedge with the effective portion of the changes in fair value to be recorded in comprehensive income (loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

A summary of our interest rate swap activity is as follows (in thousands):

	*Amount Recognized as Comprehensive Income (Loss)*			*Location of Income (Loss) Recognized in Earnings*	*Amount of Income (Loss) Recognized in Earnings (1)*
Three Months Ended March 31, 2025	$	(3,526	)	Interest expense	$	781
Three Months Ended March 31, 2024	$	5,007		Interest expense	$	1,699

⁽¹⁾	There was no ineffective portion of our interest rate swaps to recognize in earnings for the three months ended March 31, 2025 and 2024.

9. EARNINGS PER SHARE

Basic earnings per share for our common shareholders is calculated by dividing net income excluding the net income attributable to unvested restricted common shares and the net income attributable to noncontrolling interests, by our weighted average common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income attributable to common shareholders, excluding the net income attributable to unvested restricted common shares and the net income attributable to noncontrolling interests, by the weighted average number of common shares including any dilutive unvested restricted common shares.

Certain of our performance-based restricted common shares are considered participating securities that require the use of the two-class method for the computation of basic and diluted earnings per share. During the three months ended March 31, 2025 and 2024, 644,910 and 663,622 OP units, respectively, were excluded from the calculation of diluted earnings per share because their effect would be anti-dilutive.

	*Three Months Ended March 31,*
(in thousands, except per share data)	*2025*			*2024*
Numerator:
Net income	$	3,748		$	9,464
Less: Net income attributable to noncontrolling interests		(47	)		(124	)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	3,701		$	9,340

Denominator:
Weighted average number of common shares - basic		50,890			49,940
Effect of dilutive securities:
Unvested restricted shares		1,120			1,172
Weighted average number of common shares - dilutive		52,010			51,112

Earnings Per Share:
Basic:
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.07		$	0.19
Diluted:
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	0.07		$	0.18

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

10. INCOME TAXES

With the exception of our taxable REIT subsidiaries, federal income taxes are generally not provided because we intend to and believe we continue to qualify as a REIT under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and because we have distributed and intend to continue to distribute all of our taxable income to our shareholders. As a REIT, we must distribute at least 90% of our REIT taxable income to our shareholders and meet certain income sources and investment restriction requirements. In addition, REITs are subject to a number of organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.

We are subject to the Texas Margin Tax, which is computed by applying the applicable tax rate (0.75% for us) to the profit margin, which generally will be determined for us as total revenue less a 30% standard deduction. Although the Texas Margin Tax is not an income tax, FASB ASC 740, “Income Taxes” applies to the Texas Margin Tax. For the three months ended March 31, 2025 and 2024, we recognized approximately $ 126,000 and $ 120,000, respectively, in margin tax provision.

11. EQUITY

Common Shares

Under our declaration of trust, as amended, we have authority to issue up to 400,000,000 common shares of beneficial interest, $0.001 par value per share, and up to 50,000,000 preferred shares of beneficial interest, $0.001 par value per share.

Equity Offerings

On May 20, 2022, our universal shelf registration statement on Form S-3 (File No. 333-264881) was declared effective by the SEC (the “Registration Statement”), which registers the issuance and sale by us of up to $500 million in securities from time to time, including common shares, preferred shares, debt securities, depositary shares and subscription rights.

On September 9, 2022, we entered into eleven equity distribution agreements with certain sales agents names therein for an at-the-market equity distribution program (the “2022 equity distribution agreements”) providing for the issuance and sale of up to an aggregate of $100 million of the Company’s common shares pursuant to our Registration Statement. Actual sales will depend on a variety of factors determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and will be made in transactions that will be deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act. We have no obligation to sell any of our common shares and can at any time suspend offers under the 2022 equity distribution agreements or terminate the 2022 equity distribution agreements.

For the three months ended March 31, 2025 and 2024, we did not sell shares under the 2022 equity distribution agreements.

Operating Partnership Units

Substantially all of our business is conducted through our Operating Partnership. We are the sole general partner of the Operating Partnership. As of March 31, 2025, we owned a 98.7% interest in the Operating Partnership.

Limited partners in the Operating Partnership holding OP units have the right to redeem their OP units for cash or, at our option, common shares at a ratio of one OP unit for one common share. Distributions to OP unit holders are paid at the same rate per unit as distributions per share to holders of Whitestone common shares. As of March 31, 2025 and December 31, 2024, there were 51,416,592 and 51,218,415 OP units outstanding, respectively. We owned 50,773,884 and 50,569,102 OP units as of March 31, 2025 and December 31, 2024, respectively. The balance of the OP units is owned by third parties, including certain members of our Board of Trustees. Our weighted average share ownership in the Operating Partnership was approximately 98.7% and 98.7% for the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025 and 2024, 6,605 and 43,747 OP units, respectively, were redeemed for an equal number of common shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Distributions

The following table summarizes the cash distributions paid or payable to holders of common shares and to holders of noncontrolling OP units during each quarter of 2024 and the three months ended March 31, 2025 (in thousands, except per share/per OP unit data):

	*Common Shares*				*Noncontrolling OP Unit Holders*				*Total*
Quarter Paid	*Distributions Per Common Share*		*Amount Paid*		*Distributions Per OP Unit*		*Amount Paid*		*Amount Paid*
2025
First Quarter	$	0.1350	$	6,845	$	0.1350	$	87	$	6,932
Total	$	0.1350	$	6,845	$	0.1350	$	87	$	6,932

2024
Fourth Quarter	$	0.1238	$	6,247	$	0.1238	$	81	$	6,328
Third Quarter		0.1238		6,194		0.1238		80		6,274
Second Quarter		0.1238		6,162		0.1238		80		6,242
First Quarter		0.1200		5,969		0.1200		80		6,049
Total	$	0.4914	$	24,572	$	0.4914	$	321	$	24,893

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

12. INCENTIVE SHARE PLAN

Our 2008 Long-Term Equity Incentive Plan (as amended, the “2008 Plan”) expired in July 2018. At the Company’s annual meeting of shareholders on May 11, 2017, our shareholders voted to approve the 2018 Long-Term Equity Incentive Ownership Plan (the “2018 Plan”). The 2018 Plan provides for the issuance of up to 3,433,831 common shares and OP units pursuant to awards under the 2018 Plan. The 2018 Plan became effective on July 30, 2018, which is the day after the 2008 Plan expired.

The Compensation Committee administered the 2008 Plan and administers the 2018 Plan except, in each case, with respect to awards to non-employee trustees, for which the 2008 Plan was and the 2018 Plan is administered by the Board of Trustees. The Compensation Committee is authorized to grant share options, including both incentive share options and non-qualified share options, as well as share appreciation rights, either with or without a related option. The Compensation Committee is also authorized to grant restricted common shares, restricted common share units, performance awards and other share-based awards.

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March 31, 2025

(Unaudited)

On June 30, 2021, the Compensation Committee approved the grant of an aggregate of 433,200 TSR Units and 433,200 time-based restricted common share units under the 2018 Plan to certain of our employees. Vesting of the TSR Units is contingent upon achieving Total Shareholder Return relative to the peer group defined in the TSR Unit award agreements over a three-year performance period. At the end of the performance period, the number of common shares awarded for each vested TSR Unit will vary from 0% to 200% depending on the Company’s TSR Peer Group Ranking. Continued employment is required through the vesting date. The grant date fair value for each TSR Unit of $4.17 was determined using the Monte Carlo simulation method and is being recognized as share-based compensation expense ratably from the June 30, 2021 grant date to the end of the performance period, December 31, 2023. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The time-based restricted common share units have a grant date fair value of $7.51 and vest annually in three equal installments. The 433,200 TSR Units granted on June 30, 2021 include 111,465 TSR Units that will be converted into the right to receive cash in the amount of the fair market value of the common shares to the extent that common shares are not available for issuance under the 2018 Plan. On January 1, 2024, the remaining unvested 210,400 TSR units that were granted on June 30, 2021 vested at 200% achievement into 420,800 common shares.

On September 30, 2021, the Compensation Committee approved the grant of an aggregate of 5,500 time-based restricted common share units under the 2018 Plan to certain of our employees. The time-based common share units had a grant date fair value of $9.06 each and vest annually in three equal installments.

On March 28, 2022, the Compensation Committee approved the grant of an aggregate of 162,556 TSR Units and 162,556 time-based restricted common share units under the 2018 Plan to certain of our employees. Vesting of the TSR Units is contingent upon achieving Total Shareholder Return relative to the peer group defined in the TSR Unit award agreements over a three-year performance period. At the end of the performance period, the number of common shares awarded for each vested TSR Unit will vary from 0% to 200% depending on the Company’s TSR Peer Group Ranking. Continued employment is required through the vesting date. The grant date fair value for each TSR Unit of $13.74 was determined using the Monte Carlo simulation method and is being recognized as share-based compensation expense ratably from the June 30, 2022 grant date to the end of the performance period, December 31, 2024. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The time-based restricted common share units have a grant date fair value of $9.94 and vest annually in three equal installments. On January 2, 2025, the remaining unvested 151,440 TSR units that were granted on June 30, 2022 vested at 200% achievement into 302,880 common shares. The vesting condition was satisfied on December 31, 2024, and the shares were issued on January 2, 2025.

On March 7, 2023, the Compensation Committee approved the grant of an aggregate of 228,025 TSR Units and 228,025 time-based restricted common share units under the 2018 Plan to certain of our employees. Vesting of the TSR Units is contingent upon achieving Total Shareholder Return relative to the peer group defined in the TSR Unit award agreements over a three-year performance period. At the end of the performance period, the number of common shares awarded for each vested TSR Unit will vary from 0% to 200% depending on the Company’s TSR Peer Group Ranking. Continued employment is required through the vesting date. The grant date fair value for each TSR Unit of $9.55 was determined using the Monte Carlo simulation method and is being recognized as share-based compensation expense ratably from the June 30, 2023 grant date to the end of the performance period, December 31, 2025. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The time-based restricted common share units have a grant date fair value of $8.72 and vest annually in three equal installments.

On March 4, 2024, the Compensation Committee approved the grant of an aggregate of 203,518 TSR Units and 169,065 time-based restricted common share units under the 2018 Plan to certain of our employees. Vesting of the TSR Units is contingent upon achieving Total Shareholder Return relative to the peer group defined in the TSR Unit award agreements over a three-year performance period. At the end of the performance period, the number of common shares awarded for each vested TSR Unit will vary from 0% to 200% depending on the Company’s TSR Peer Group Ranking. Continued employment is required through the vesting date. The grant date fair value for each TSR Unit of $15.12 was determined using the Monte Carlo simulation method and is being recognized as share-based compensation expense ratably from the June 30, 2024 grant date to the end of the performance period, December 31, 2026. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The time-based restricted common share units have a grant date fair value of $12.29 and vest annually in three equal installments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

A summary of the share-based incentive plan activity as of and for the three months ended March 31, 2025 is as follows:

				*Weighted Average*
				*Grant Date*
	*Shares*			*Fair Value*
Non-vested at January 1, 2025		943,551		$	11.80
Granted		—			—
Vested		(151,440	)		13.74
Forfeited		—			—
Non-vested at March 31, 2025		792,111			11.43
Available for grant at March 31, 2025		839,384

A summary of our non-vested and vested shares activity for the three months ended March 31, 2025 and years ended December 31, 2024 and 2023 is presented below:

	*Shares Granted*				*Shares Vested*
	*Non-Vested Shares Issued*		*Weighted Average Grant-Date Fair Value*		*Vested Shares*			*Total Vest-Date Fair Value*
								(in thousands)
Three Months Ended March 31, 2025		—	$	—		(151,440	)	$	2,081
Year Ended December 31, 2024		415,329	$	13.87		(446,917	)	$	3,151
Year Ended December 31, 2023		480,184	$	9.30		(231,600	)	$	1,841

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Total compensation recognized in earnings for share-based payments was $ 1,132,000 and $ 936,000 for the three months ended March 31, 2025 and 2024, respectively.

Based on our current financial projections, we expect approximately 100% of the unvested awards to vest over the next 27 months. As of March 31, 2025, there was approximately $2.8 million in unrecognized compensation cost related to outstanding non-vested TSR Units, which are expected to vest over a period of 21 months, and approximately $2.5 million in unrecognized compensation cost related to outstanding non-vested time-based shares, which are expected to be recognized over a period of approximately 27 months beginning on April 1, 2025.

We expect to record approximately $3.7 million in non-cash share-based compensation expense in 2025 and $2.6 million subsequent to 2025. The unrecognized share-based compensation cost is expected to vest over a weighted average period of 20 months. The dilutive impact of the performance-based shares will be included in the denominator of the earnings per share calculation beginning in the period that the performance conditions are expected to be met. The dilutive impact of the TSR Units is based on the Company’s TSR Peer Group Ranking as of the reporting date and weighted according to the number of days outstanding in the period. As of March 31, 2025, the TSR Peer Group Ranking called for attainment of 200% and 150% for the shares issued in 2023 and 2024, respectively.

13. GRANTS TO TRUSTEES

On December 24, 2024, seven independent trustees were granted a total of 42,746 common shares, which vest immediately and are prorated based on date appointed. The 42,746 common shares granted to our trustees had a grant date fair value of $14.15 per share. The fair value of the shares granted during the year ended December 31, 2024 was determined using quoted prices available on the date of grant.

14. SEGMENT INFORMATION

We generate revenue from our portfolio of community and neighborhood shopping centers. The Chief Executive Officer, as our Chief Operating Decision Maker (CODM), evaluates performance and resource allocation at the portfolio level. We do not segment our operations geographically for performance measurement purposes. As a result, we operate as a single reportable segment (the “Reporting Segment”) under GAAP. The Reporting Segment follows the same accounting policies outlined in the summary of significant accounting policies (see Note 2 for details).

Net income attributable to Whitestone REIT, as shown in the Consolidated Statements of Operations, is a key metric used by the CODM to assess performance and allocate resources. Additionally, total assets, as presented in the Consolidated Balance Sheets, are used to measure the Reporting Segment’s assets.

The table below provides revenues and significant segment expenses (in thousands):

	*Three Months Ended March 31,*
	*2025*			*2024*

Revenues
Total revenues	$	38,003		$	37,164
Less:
Depreciation and amortization		9,324			8,800
Operating and maintenance		7,012			6,349
Real estate taxes		4,252			4,238
General and administrative		5,443			6,180
Interest expense		8,097			8,519
Gain on sale of properties		—			(6,525	)
Loss on disposal of assets		100			—
Interest, dividend and other investment income		(100	)		(8	)
Add:
Deficit in earnings of real estate partnership		—			(28	)
Provision for income tax		(127	)		(119	)
Net income		3,748			9,464

Less: Net income attributable to noncontrolling interests		47			124

Net income attributable to Whitestone REIT	$	3,701		$	9,340

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

15. REAL ESTATE

Property Acquisitions.

On December 12, 2024, we acquired Village Shops at Dana Park, a property that meets our Community Centered Property® strategy, for $5.6 million in cash and net prorations. Village Shops at Dana Park, a 10,128 square foot property, was 100% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona. The funding for this acquisition was partially obtained through a 1031 exchange transaction, utilizing the proceeds from the sale of our Providence property in accordance with Section 1031 of the Internal Revenue Code.

On April 5, 2024, we acquired Scottsdale Commons, a property that meets our Community Centered Property® strategy, for $22.2 million in cash and net prorations. Scottsdale Commons, a 69,482 square foot property, was 96.6% leased at the time of purchase and is located in Scottsdale, Arizona. The funding for this acquisition was provided by our credit facility.

On April 1, 2024, we acquired Anderson Arbor Pad, a development parcel that meets our Community Centered Property® strategy, for $0.9 million in cash and net prorations. Anderson Arbor Pad is located in Austin, Texas. The funding for this acquisition was provided by our credit facility.

On February 20, 2024, we acquired Garden Oaks Shopping Center, a property that meets our Community Centered Property® strategy, for $27.2 million in cash and net prorations. Garden Oaks Shopping Center, a 106,858 square foot property, was 95.8% leased at the time of purchase and is located in Houston, Texas. The funding for this acquisition was provided by our credit facility.

Property dispositions.

On November 6, 2024, we completed the sale of Providence, located in Houston, Texas, for $16.3 million. We recorded a gain on sale of $11.9 million.

On August 9, 2024, we completed the sale of Fountain Hills Plaza along with the adjacent parcel of development land, located in Phoenix, Arizona, for $21.3 million. We recorded a gain on sale of $3.6 million.

On March 27, 2024, we completed the sale of Mercado at Scottsdale Ranch, located in Phoenix, Arizona, for $26.5 million. We recorded a gain on sale of $6.6 million.

We have not included properties sold in 2024 in discontinued operations as they did not meet the definition of discontinued operations.

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16. RELATED PARTY TRANSACTIONS

Former Executives, Trustee, and Their Ownership Interests in Pillarstone REIT. Prior to his employment termination on January 18, 2022, Mr. James C. Mastandrea, the former Chairman and Chief Executive Officer of Whitestone REIT, also served as the Chairman and Chief Executive Officer of Pillarstone REIT and beneficially owns approximately 66.7% of the outstanding equity in Pillarstone REIT (when calculated in accordance with Rule 13d-3(d)(1) under the Exchange Act of 1934, as amended (the “Exchange Act”)). He resigned as a member of the Board of Whitestone REIT on April 18, 2022. Prior to his employment termination on February 9, 2022, Mr. John J. Dee, the Company’s former Chief Operating Officer and Corporate Secretary, also served as the Senior Vice President and Chief Financial Officer of Pillarstone REIT and beneficially owns approximately 20.0% of the outstanding equity in Pillarstone REIT (when calculated in accordance with Rule 13d-3(d)(1) under the Exchange Act). In addition, Mr. Paul T. Lambert, a Trustee of the Company, until expiration of his term on May 12, 2023, also served as a Trustee of Pillarstone REIT.

The Company previously accounted for its investment in Pillarstone OP using the equity method. However, subsequent to January 25, 2024, the Company ceased utilizing the equity method following the exercise of its notice of redemption for the majority of its investment in Pillarstone OP. We reclassified our investment in Pillarstone OP to a receivable on our balance sheet after estimating 25 days of our share of the equity investment income. Please refer to Note 6 (Investment in Real Estate Partnership) for more information on our accounting treatment of our former investment in Pillarstone OP.

17. COMMITMENTS AND CONTINGENCIES

Guarantor for Pillarstone OP’s Loan

The Company, through its subsidiary Whitestone REIT Operating Partnership, L.P., guaranteed Pillarstone OP’s loan for its Uptown Tower property located in Dallas, Texas, with an aggregate principal amount of $14.4 million as of September 30, 2023. The loan was also secured by the Uptown Tower property. The debt matured on October 4, 2023, and was in default, as Pillarstone OP failed to refinance the loan. On October 24, 2023, the Lender provided notice of a planned foreclosure sale on December 5, 2023. The Lender also claimed that an additional sum of $4.6 million was due which included default interest of approximately $6.3 million and net credits from escrowed funds and other charges of approximately $1.7 million.

On December 1, 2023, Whitestone OP reached an agreement with the Lender that would avoid foreclosure and secure the release of the lien and discharge of the guarantee, and negotiated and satisfied a payoff as of December 4, 2023, in the amount of $13,632,764 (the “DPO Amount”). The DPO Amount included a compromise settlement of approximately $1,688,000 for the disputed default interest and other fees. The Company's share of it was recorded in the 4th quarter of fiscal year 2023 in the financial statement line equity (deficit) in earnings of real estate partnership. Per the agreement, this payment would satisfy the loan. The Company wired the DPO Amount to Lender on December 4, 2023, with accompanying releases as required by Lender, fully satisfying the agreement.

On December 1, 2023, Pillarstone OP filed the Chapter 11 bankruptcy of its special purpose entity borrower that owns Uptown Tower, in the Bankruptcy Court. On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP. On February 9, 2024, the Lender filed suit in New York County against the guarantor Whitestone OP and the Company for alleged amounts due under the guarantee. On March 4, 2024, Pillarstone REIT authorized and all of its entities to file bankruptcy.

On April 24, 2024, the Lender and Pillarstone OP filed a motion with the Bankruptcy Court seeking approval to settle the dispute and dismiss their mutual lawsuits including the lawsuit by the Lender against the Company as Guarantor of the loan. On or before June 10, 2024, Pillarstone OP agreed to pay to the Lender the sum of $1,123,950.24 plus all attorneys’ fees and costs (not to exceed $20,000.00) incurred by the Lender from April 10, 2024 through the date of receipt of such payment. Upon timely receipt of the cash payment from Pillarstone OP, the Lender applied the $13,632,764 tendered to it by Whitestone OP, and the guaranty was subsequently released. The Company is pursuing collection of the DPO Amount from Pillarstone in the Pillarstone Bankruptcies through a subrogation claim against Pillarstone OP. On October 2, 2024, the Bankruptcy Court affirmed the Company’s right of subrogation and allowed the Company’s secured claim for the guaranty payment in the amount of $13,632,764. On October 28, 2024, Pillarstone OP, through a subsidiary, filed a notice of appeal of the Bankruptcy Court’s order affirming Whitestone OP’s right of subrogation.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Litigation between the Company and Pillarstone REIT

On September 16, 2022, Pillarstone Capital REIT and Pillarstone Capital REIT Operating Partnership, L.P. filed suit against the Company and certain of its subsidiaries (Whitestone TRS, Inc. and Whitestone REIT Operating Partnership, L.P.) along with certain of its executives (Peter Tropoli, Christine Mastandrea, and David Holeman) in the District Court of Harris County, Texas, alleging claims relating to the limited partnership agreement between Pillarstone Capital REIT and Whitestone REIT Operating Partnership, as well as the termination of Management Agreements between Pillarstone Capital REIT Operating Partnership, L.P. and Whitestone TRS, Inc. On November 25, 2022, the claims against Peter Tropoli, Christine Mastandrea and David Holeman were dismissed. The claimants seek monetary relief in excess of $1,000,000 in damages and equitable relief. However, the Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action.

Former COO Litigation

On May 9, 2023, the Company’s former COO, John Dee, filed suit against the Company in the District Court of Harris County, Texas, purporting to assert claims for breach of his change-in-control agreement arising from the Company’s termination of its former CEO James Mastandrea for cause, and is seeking monetary relief in excess of $1,000,000 in damages and equitable relief. On December 23, 2024, Mr. Dee filed a Notice of Appeal with the 14th Court of Appeals of the State of Texas, stating his intention to appeal the District Court’s order denying his intervention in the James Mastandrea v. Whitestone REIT case. The 14th Court of Appeals of Texas granted Mr. Dee’s motion to Dismiss his appeal, with prejudice. The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action.

Former CEO Litigation

On February 23, 2022, the Company’s former CEO, James Mastandrea, filed suit against the Company and certain of its trustees (Nandita Berry, Jeff Jones, Jack Mahaffey, and David Taylor) and executives (David Holeman, Christine Mastandrea, and Peter Tropoli) in the District Court of Harris County, Texas, alleging $25 million in damages and equitable relief claims relating to the termination of his employment, including breach of his employment contract, negligence, tortious interference with contract, civil conspiracy, and declaratory judgment. On September 12, 2022, the claim for breach of fiduciary duty was dismissed and a claim for negligence was added (as to the trustee defendants).

On December 6, 2023, the District Court of Harris County, Texas granted summary judgement in favor of the Company and dismissed all claims against the Company related to the termination of Mr. Mastandrea. The court also dismissed all claims against certain of the Company’s trustees and executives. The Court subsequently denied Mr. Mastandrea’s Motion for Reconsideration and For New Trial. On December 4, 2024, Mr. Mastandrea filed a Notice of Appeal with the 14th Court of Appeals of the State of Texas.

The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action.

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WHITESTONE REIT AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Pillarstone Rights Plan

On December 26, 2021, the Board of Trustees of Pillarstone REIT adopted a new shareholder rights agreement (the “Pillarstone Rights Agreement”). Because Pillarstone REIT sought to use the Pillarstone Rights Agreement to prevent Whitestone OP from exercising its contractual Redemption Right, on July 12, 2022, Whitestone OP filed suit against Pillarstone REIT in the Court of Chancery of the State of Delaware challenging the Pillarstone Rights Agreement.

On September 8, 2022, Whitestone OP’s Motion to Preserve the Status Quo was granted by the Court, limiting Pillarstone OP from engaging in any acts outside the ordinary course of business and otherwise imposing restrictions on Pillarstone OP to ensure that Whitestone’s right of redemption is not impaired while the underlying dispute is being considered by the Court.

On January 25, 2024, the Delaware Court of Chancery: held that Pillarstone breached the implied covenant of good faith and fair dealing when it adopted the Pillarstone Rights Agreement that thwarted Whitestone OP from exercising the unfettered contractual redemption right it obtained in connection with its investment in the partnership; and the Court held that the Rights Plan was unenforceable as to the limited partner and allowed Whitestone OP to exercise its redemption right; allowed Pillarstone to determine the current value of the Partnership’s assets; and, as necessary, would later enter a monetary judgment against Pillarstone for the difference between the amount Whitestone would have received in or around December 2021 and the current value.

On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP.

On March 4, 2024, Pillarstone REIT filed the Pillarstone Bankruptcies. The automatic stay was lifted in November 2024 and the Company is pursuing its redemption claim in Delaware.

As of the date of this filing, Whitestone has not received consideration for its redemption of its equity investment in Pillarstone OP as required by the partnership agreement. The Company has filed a claim in the Pillarstone Bankruptcies for the value of its redemption claim along with interest and other costs. We intend to pursue collection of amounts due from Pillarstone OP through all means necessary and while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our equity investment in Pillarstone OP.

We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

18. SUBSEQUENT EVENTS

None.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q (this “Report”), and the consolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2024. For more detailed information regarding the basis of presentation for the following information, you should read the notes to the unaudited consolidated financial statements included in this Report.

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of the federal securities laws, including discussion and analysis of our financial condition, pending acquisitions and the impact of such acquisitions on our financial condition and results of operations, anticipated capital expenditures required to complete projects, amounts of anticipated cash distributions to our shareholders in the future and other matters. These forward-looking statements are not historical facts but are the intent, belief or current expectations of our management based on its knowledge and understanding of our business and industry. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “potential,” “predicts,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or the negative of such terms and variations of these words and similar expressions, although not all forward-looking statements include these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. You are cautioned not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this Report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

Factors that could cause actual results to differ materially from any forward-looking statements made in this Report include:

•

the imposition of federal income taxes if we fail to qualify as a real estate investment trust (“REIT”) in any taxable year or forego an opportunity to ensure REIT status;

•

uncertainties related to national, international, regional and local economic conditions, including impacts and uncertainty from trade disputes and tariffs on goods imported to the United States and goods exported to other countries;

•

real estate risk, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

•

legislative or regulatory changes, including changes to laws governing REITs;

•

adverse economic or real estate developments or conditions in Texas or Arizona, Houston, Dallas, San Antonio, Scottsdale and Phoenix in particular, including the potential impact of public health emergencies on our tenants’ ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments;

•

our current geographic concentration in the Austin, Houston, Dallas, San Antonio, Scottsdale and Phoenix metropolitan area markets makes us susceptible to potential local economic downturns;

•

increases in interest rates, including as a result of inflation, which may increase our operating costs or general and administrative expenses;

•

natural disasters, such as floods and hurricanes, which may increase as a result of climate change may adversely affect our returns and adversely impact our existing and prospective tenants;

•

increasing focus by stakeholders on environmental, social and governance matters;

•

financial institution disruptions;

•

availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures;

•

decreases in rental rates or increases in vacancy rates;

•

harm to our reputation, ability to do business and results of operations as a result of improper conduct by our employees, agents or business partners;

•

litigation risks;

•

lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants;

•

our inability to renew tenant leases or obtain new tenant leases upon the expiration of existing leases;

•

risks related to generative artificial intelligence tools and language models, along with the potential interpretations and conclusions they might make regarding our business and prospects, particularly concerning the spread of misinformation;

•

our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws;

•

geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine, the conflict in the Gaza Strip and unrest in the Middle East;

•

the need to fund tenant improvements or other capital expenditures out of our operating cash flow;

•

the risk that we are unable to raise capital for working capital, acquisitions or other uses on attractive terms or at all; and

•

the ultimate amount we will collect in connection with the redemption of our equity investment in Pillarstone Capital REIT Operating Partnership LP (“Pillarstone” or “Pillarstone OP.”)

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The forward-looking statements should be read in light of these factors and the factors identified in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024, as previously filed with the Securities and Exchange Commission (“SEC”).

Overview

We are a fully-integrated real estate company that owns and operates commercial properties in culturally diverse markets in major metropolitan areas. Founded in 1998, we are internally managed with a portfolio of commercial properties in Texas and Arizona.

In October 2006, we adopted a strategic plan to acquire, redevelop, own and operate Community Centered Properties®. We define Community Centered Properties® as visibly located properties in established or developing culturally diverse neighborhoods in our target markets. We market, lease and manage our centers to match tenants with the shared needs of the surrounding neighborhood. Those needs may include specialty retail, grocery, restaurants and medical, educational and financial services. Our goal is for each property to become a Whitestone-branded retail community that serves a neighboring five-mile radius around our property. We employ and develop a diverse group of associates who understand the needs of our multi-cultural communities and tenants.

We serve as the general partner of Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), which was formed on December 31, 1998 as a Delaware limited partnership. We currently conduct substantially all of our operations and activities through the Operating Partnership. As the general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain customary exceptions.

As of March 31, 2025, we wholly owned 55 commercial properties consisting of:

Consolidated Operating Portfolio

•

50 wholly owned properties that meet our Community Centered Properties® strategy containing approximately 4.9 million square feet of gross leasable area (“GLA”) and having a total carrying amount (net of accumulated depreciation) of $975.9 million; and

Redevelopment, New Acquisitions Portfolio

•

five parcels of land held for future development that meet our Community Centered Properties® strategy having a total carrying value of $22.9 million.

Acquired properties are categorized in the new acquisitions portfolio until the earlier of 90% occupancy or 18 months of ownership.

As of March 31, 2025, we had an aggregate of 1,456 tenants. We have a diversified tenant base with our largest tenant comprising only 2.2% of our annualized rental revenues for the three months ended March 31, 2025. Lease terms for our properties range from less than one year for smaller tenants to over 15 years for larger tenants. Our leases include minimum monthly lease payments and generally provide for tenant reimbursements for payment of taxes, insurance and maintenance. We completed 84 new and renewal leases during the three months ended March 31, 2025, totaling 199,610 square feet and approximately $31.3 million in total lease value. This compares to 70 new and renewal leases totaling 192,349 square feet and approximately $18.5 million in total lease value during the same period in 2024.

We employed 69 full-time employees as of March 31, 2025. As an internally managed REIT, we bear our own expenses of operations, including the salaries, benefits and other compensation of our employees, office expenses, legal, accounting, and investor relations expenses and other overhead costs.

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Real Estate Partnership

As of March 31, 2025, our ownership in Pillarstone OP no longer represents a majority interest. On January 25, 2024, we exercised our notice of redemption for substantially all of our investment in Pillarstone OP. As of the date of this filing, we have not received consideration for our redemption of our equity investment in Pillarstone OP as required by the partnership agreement. On March 4, 2024, Pillarstone Capital REIT (“Pillarstone REIT”) authorized and filed a Chapter 11 bankruptcy of itself, Pillarstone OP, and all of its remaining special purpose entities in the United States Bankruptcy Court for the Northern District of Texas (the “Pillarstone Bankruptcies”). We have filed a claim in the Pillarstone Bankruptcies for the value of our redemption claim along with interest and other costs. We intend to pursue collection of amounts due from Pillarstone OP through all means necessary, and, while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our equity investment in Pillarstone OP.

Inflation

We anticipate that the majority of our leases will continue to be triple-net leases or otherwise provide that tenants pay for increases in operating expenses and will contain provisions that we believe will mitigate the effect of inflation. In addition, many of our leases are for terms of less than five years, which allows us to adjust rental rates to reflect inflation and other changing market conditions when the leases expire. Consequently, increases due to inflation, as well as ad valorem tax rate increases, generally do not currently have a significant adverse effect upon our operating results.

Rising Interest Rates

As of March 31, 2025, $102.3 million, or approximately 16% of our outstanding debt, was subject to floating interest rates of Secured Overnight Financing Rate (“SOFR”) plus 1.50% to 2.10% and a 10 basis point credit spread adjustment and not currently subject to a hedge. The impact of a 1% increase or decrease in interest rates on our non-hedged variable rate debt would result in a decrease or increase of annual net income of approximately $1.0 million, respectively.

How We Derive Our Revenue

Substantially all of our revenue is derived from rents received from leases at our properties. We had total revenues of approximately $38.0 million and $37.2 million for the three months ended March 31, 2025 and 2024, respectively.

Rental Income

We expect our rental income to increase year-over-year due to the addition of properties and rent increases on renewal leases. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. During the three months ended March 31, 2025 and 2024, we recorded an adjustment to rental revenue for bad debt, exclusive of straight-line rent reserve adjustments, resulting in a $0.3 million and $0.6 million decrease in revenue, respectively. The three months ended March 31, 2025 included 11 cash basis tenants, resulting in a decrease to rental revenue for straight-line rent adjustments of $0.2 million and a decrease to rental revenue for bad debt adjustments of $0.1 million. The three months ended March 31, 2024 included 19 cash basis tenants, resulting in a decrease to rental revenue for straight-line rent adjustment of $0.02 million and a decrease to rental revenue for bad debt adjustments of $0.2 million.

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Scheduled Lease Expirations

We tend to lease space to smaller businesses that desire shorter term leases. As of March 31, 2025, approximately 24% of our GLA was subject to leases that expire prior to December 31, 2026. Over the last three calendar years, we have renewed expiring leases with respect to approximately 69% of our GLA. We routinely seek to renew leases with our existing tenants prior to their expiration and typically begin discussions with a tenant as early as 24 months prior to the expiration date of the existing lease. Inasmuch as our early renewal program and other leasing and marketing efforts target these expiring leases, we work to re-lease most of that space prior to expiration of the leases. In the markets in which we operate, we obtain and analyze market rental rates through review of third-party publications, which provide market and submarket rental rate data and through inquiry of property owners and property management companies as to rental rates being quoted at properties that are located in close proximity to our properties and we believe display similar physical attributes as our nearby properties. We use this data to negotiate leases with new tenants and renew leases with our existing tenants at rates we believe to be competitive in the markets for our individual properties. Due to the short term nature of our leases, and based upon our analysis of market rental rates, we believe that, in the aggregate, our current leases are at market rates. Market conditions, including new supply of properties and competition, and macroeconomic conditions in our markets and nationally affecting tenant income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs and other matters, could adversely impact our renewal rate and/or the rental rates we are able to negotiate. We continue to monitor our tenants’ operating performances as well as overall economic trends to evaluate any future negative impact on our renewal rates and rental rates, which could adversely affect our cash flow and ability to make distributions to our shareholders.

Acquisitions

We seek to grow our GLA through the acquisition of additional properties, and we are carefully evaluating development and redevelopment activities on a case-by-case basis. We have extensive relationships with community banks, attorneys, title companies, and others in the real estate industry, which we believe enables us to take advantage of these market opportunities and maintain an active acquisition pipeline.

Property Acquisitions, Dispositions and Development

We seek to acquire commercial properties in high-growth markets. Our acquisition targets are properties that fit our Community Centered Properties® strategy. We may acquire properties in other high-growth cities in the future. As part of our ongoing commitment to our Community Centered Properties® strategy and in pursuit of expanding our commercial property portfolio in high-growth markets, we have carefully evaluated and identified certain non-core properties for divestment, allowing us to reallocate resources towards acquiring properties that align more closely with our long-term growth objectives.

On December 12, 2024, we acquired Village Shops at Dana Park, a property that meets our Community Centered Property® strategy, for $5.6 million in cash and net prorations. Village Shops at Dana Park, a 10,128 square foot property, was 100% leased at the time of purchase and is located in the Mesa submarket of Phoenix, Arizona. The funding for this acquisition was partially obtained through a 1031 exchange transaction, utilizing the proceeds from the sale of our Providence property in accordance with Section 1031 of the Internal Revenue Code.

On April 5, 2024, we acquired Scottsdale Commons, a property that meets our Community Centered Property® strategy, for $22.2 million in cash and net prorations. Scottsdale Commons, a 69,482 square foot property, was 96.6% leased at the time of purchase and is located in Scottsdale, Arizona. The funding for this acquisition was provided by our credit facility.

On April 1, 2024, we acquired Anderson Arbor Pad, a development parcel that meets our Community Centered Property® strategy, for $0.9 million in cash and net prorations. Anderson Arbor Pad is located in Austin, Texas. The funding for this acquisition was provided by our credit facility.

On February 20, 2024, we acquired Garden Oaks Shopping Center, a property that meets our Community Centered Property® strategy, for $27.2 million in cash and net prorations. Garden Oaks Shopping Center, a 106,858 square foot property, was 95.8% leased at the time of purchase and is located in Houston, Texas. The funding for this acquisition was provided by our credit facility.

On November 6, 2024, we completed the sale of Providence, located in Houston, Texas, for $16.3 million. We recorded a gain on sale of $11.9 million.

On August 9, 2024, we completed the sale of Fountain Hills Plaza along with the adjacent parcel of development land, located in Phoenix, Arizona, for $21.3 million. We recorded a gain on sale of $3.6 million.

On March 27, 2024, we completed the sale of Mercado at Scottsdale Ranch, located in Phoenix, Arizona, for $26.5 million. We recorded a gain on sale of $6.6 million.

We have not included properties sold in 2024 in discontinued operations as they did not meet the definition of discontinued operations.

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Leasing Activity

As of March 31, 2025, we owned 55 properties with 4,863,562 square feet of GLA and, as of March 31, 2025 and March 31, 2024, our occupancy rate for all properties was approximately 93% and 94%, respectively. The following is a summary of our leasing activity for the three months ended March 31, 2025:

	Number of Leases Signed		GLA Signed		Weighted Average Lease Term (2)		TI and Incentives per Sq. Ft. (3)		Contractual Rent Per Sq. Ft. (4)		Prior Contractual Rent Per Sq. Ft. (5)		Straight-lined Basis Increase (Decrease) Over Prior Rent
Comparable ⁽¹⁾
Renewal Leases		58		136,618		4.4	$	3.44	$	32.29	$	28.48		19.9	%
New Leases		13		21,889		6.5		39.46		37.75		34.46		22.6	%
Total		71		158,507		4.7	$	8.42	$	33.04	$	29.30		20.3	%

	Number of Leases Signed		GLA Signed		Weighted Average Lease Term (2)		TI and Incentives per Sq. Ft. (3)		Contractual Rent Per Sq. Ft. (4)
Total
Renewal Leases		62		158,191		4.2	$	5.10	$	31.05
New Leases		22		41,419		6.1		27.98		31.57
Total		84		199,610		4.6	$	9.85	$	31.16

⁽¹⁾	Comparable leases represent leases signed on spaces for which there was a former tenant within the last twelve months and the new or renewal square footage was within 25% of the expired square footage.

⁽²⁾	Weighted average lease term is determined on the basis of square footage.

⁽³⁾	Estimated amount per signed leases. Actual cost of construction may vary. Does not include first generation costs for tenant improvements (“TI”) and leasing commission costs needed for new acquisitions or redevelopment of a property to bring to operating standards for its intended use.

⁽⁴⁾	Contractual minimum rent under the new lease for the first month, excluding concessions.

⁽⁵⁾	Contractual minimum rent under the prior lease for the final month.

Critical Accounting Policies and Estimates

In preparing the consolidated financial statements, we have made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results may differ from these estimates. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2024, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no significant changes to policies during the three months ended March 31, 2025. For disclosure regarding recent accounting pronouncements and the anticipated impact they will have on our operations, please refer to Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table provides a general comparison of our results of operations and other metrics for the three months ended March 31, 2025 and 2024 (dollars in thousands, except per share and per OP unit amounts):

	Three Months Ended March 31,
	2025			2024
Number of properties owned and operated		55			55
Aggregate GLA (sq. ft.)⁽¹⁾		4,863,562			4,985,568
Ending occupancy rate - operating portfolio ⁽¹⁾		93	%		94	%
Ending occupancy rate		93	%		94	%

Total revenues	$	38,003		$	37,164
Total operating expenses		26,031			25,567
Total other expense (income)		8,097			1,986
Income before equity investment in real estate partnership and income tax		3,875			9,611
Deficit in earnings of real estate partnership		—			(28	)
Provision for income tax		(127	)		(119	)
Net income		3,748			9,464
Less: Net income attributable to noncontrolling interests		47			124
Net income attributable to Whitestone REIT	$	3,701		$	9,340

Funds from operations⁽²⁾	$	13,148		$	11,818
Property net operating income⁽³⁾		26,739			26,760
Distributions paid on common shares and OP units		6,932			6,049
Distributions per common share and OP unit	$	0.1350		$	0.1200
Distributions paid as a percentage of funds from operations		53	%		51	%

⁽¹⁾	Excludes (i) new acquisitions, through the earlier of attainment of 90% occupancy or 18 months of ownership, and (ii) properties that are undergoing significant redevelopment or re-tenanting.

⁽²⁾	For an explanation and reconciliation of funds from operations, a Non-GAAP metric, to net income, see “—Reconciliation of Non-GAAP Financial Measures—Funds From Operations (“FFO”)” below.

⁽³⁾	For an explanation and reconciliation of property net operating income, a Non-GAAP metric, to net income, see “—Reconciliation of Non-GAAP Financial Measures—Property Net Operating Income (“NOI”)” below.

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We define “Same Store” as properties that have been owned for the entire period being compared. For purposes of comparing the three months ended March 31, 2025 to the three months ended March 31, 2024, Same Store includes properties owned during the entire period from January 1, 2024 to March 31, 2025. We define “Non-Same Store” as properties acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations.

Revenues. The primary components of revenue are detailed in the table below (in thousands, except percentages):

	Three Months Ended March 31,
Revenue	2025			2024			Change			% Change
Same Store
Rental revenues ⁽¹⁾	$	26,117		$	25,445		$	672			3	%
Recoveries ⁽²⁾		10,235			9,974			261			3	%
Bad debt		(323	)		(572	)		249			(44	)%
Total rental		36,029			34,847			1,182			3	%
Other revenues		599			422			177			42	%
Same Store Total		36,628			35,269			1,359			4	%

Non-Same Store
Rental revenues ⁽³⁾		1,088			1,419			(331	)		(23	)%
Recoveries ⁽³⁾		274			503			(229	)		(46	)%
Bad debt ⁽³⁾		4			(28	)		32			(114	)%
Total rental		1,366			1,894			(528	)		(28	)%
Other revenues ⁽³⁾		9			1			8			800	%
Non-Same Store Total		1,375			1,895			(520	)		(27	)%

Total revenue	$	38,003		$	37,164		$	839			2	%

⁽¹⁾

The Same Store rental revenues increase of $672,000 resulted from a decrease of $111,000 from lower average leased square feet from 4,389,324 to 4,370,220, and an increase of $783,000 from higher average rent per leased square foot from $23.19 to $23.90. Same Store rental revenues include straight-line rent write offs for tenants converted to cash basis accounting of a decrease of $195,000 and an decrease of $22,000 for the three months ended March 31, 2025 and 2024, respectively.

⁽²⁾	The Same Store recoveries revenue increase of $261,000 is primarily attributable to increases in operating expenses.

⁽³⁾

Non-Same Store rental revenue includes Village Shops at Dana Park (acquired on December 12, 2024), Providence (sold on November 6, 2024), Fountain Hills (sold on August 9, 2024), Scottsdale Commons (acquired on April 5, 2024), Mercado at Scottsdale Rancy (sold on March 27, 2024), and Garden Oaks (acquired on February 20, 2024).

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Operating expenses. The primary components of operating expenses for the three months ended March 31, 2025 and 2024 are detailed in the table below (in thousands, except percentages):

	Three Months Ended March 31,
Operating Expenses	2025		2024		Change			% Change
Same Store
Operating and maintenance ⁽¹⁾	$	6,845	$	6,071	$	774			13	%
Real estate taxes		4,085		4,080		5			0	%
Same Store total		10,930		10,151		779			8	%

Non-Same Store
Operating and maintenance ⁽²⁾		167		278		(111	)		(40	)%
Real estate taxes ⁽²⁾		167		158		9			6	%
Non-Same Store total		334		436		(102	)		(23	)%
Depreciation and amortization		9,324		8,800		524			6	%
General and administrative ⁽³⁾		5,443		6,180		(737	)		(12	)%
Total operating expenses	$	26,031	$	25,567	$	464			2	%

⁽¹⁾	The operating and maintenance expense increase is attributable to increased repairs of $323,000, increased contract services of $150,000, increased insurance of $114,000, increased utilities costs of $96,000, increased association fees of $78,000, and increased other expenses of $13,000.

⁽²⁾

Non-Same Store rental expenses includes Village Shops at Dana Park (acquired on December 12, 2024), Providence (sold on November 6, 2024), Fountain Hills (sold on August 9, 2024), Scottsdale Commons (acquired on April 5, 2024), Mercado at Scottsdale Ranch (sold on March 27, 2024), and Garden Oaks (acquired on February 20, 2024).

⁽³⁾

The general and administrative expense decrease is attributable to decreased legal fees of $565,000, decreased proxy fees of $400,000, and decreased payroll costs of $157,000, offset by increased professional fees of $153,000, increased share based compensation of $120,000, and increased other expenses of $112,000.

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Other expenses (income). The primary components of other expenses (income) for the three months ended March 31, 2025 and 2024 are detailed in the table below (in thousands, except percentages):

	Three Months Ended March 31,
Other Expenses (Income)	2025			2024			Change			% Change

Interest expense ⁽¹⁾	$	8,097		$	8,519		$	(422	)		(5	)%
Gain on sale of properties ⁽²⁾		—			(6,525	)		6,525			N/A
Loss on disposal of assets		100			—			100			N/A
Interest, dividend and other investment income		(100	)		(8	)		(92	)		1150	%
Total other expenses	$	8,097		$	1,986		$	6,111			308	%

⁽¹⁾

The $422,000 decrease in interest expense is primarily attributable to a decrease in our effective interest rate to 4.91% for the three months ended March 31, 2025 as compared to 5.14% for the three months ended March 31, 2024, resulting in a $358,000 decrease in interest expense and decrease of our average outstanding notes payable balance by $6,170,000, resulting in a $64,000 decrease in interest expense.

⁽²⁾	On March 27, 2024, we completed the sale of Mercado at Scottsdale Ranch, located in Phoenix, Arizona, for $26.5 million.

Deficit in earnings of real estate partnership. As of March 31, 2025, our ownership in Pillarstone OP no longer represents a majority interest. On January 25, 2024, we exercised our notice of redemption for substantially all of our investment in Pillarstone OP. For the three months ended March 31, 2024 our estimated deficit in earnings from the real estate partnership was $28,000. Please refer to Note 6 (Investment in Real Estate Partnership) to the accompanying consolidated financial statements for more information regarding our investment in Pillarstone OP.

Same Store net operating income. The components of Same Store net operating income is detailed in the table below (in thousands):

	Three Months Ended March 31,						Increase			% Increase
	2025			2024			(Decrease)			(Decrease)
Same Store (47 properties, excluding development land)
Property revenues
Rental	$	36,029		$	34,847		$	1,182			3	%
Management, transaction and other fees		599			422			177			42	%
Total property revenues		36,628			35,269			1,359			4	%

Property expenses
Property operation and maintenance		6,845			6,071			774			13	%
Real estate taxes		4,085			4,080			5			0	%
Total property expenses		10,930			10,151			779			8	%

Total property revenues less total property expenses		25,698			25,118			580			2	%

Same Store straight-line rent adjustments		(490	)		(1,114	)		624			(56	)%
Same Store amortization of above/below market rents		(121	)		(214	)		93			(43	)%
Same Store lease termination fees		(426	)		(268	)		(158	)		59	%

Same Store NOI⁽¹⁾	$	24,661		$	23,522		$	1,139			5	%

⁽¹⁾	For an explanation and reconciliation of property net operating income, a non-GAAP metric, to net income, see “Reconciliation of Non-GAAP Financial Measures—Property Net Income (“NOI”)” below.

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	Three Months Ended March 31,
PROPERTY NET OPERATING INCOME (“NOI”)	2025			2024
Net income attributable to Whitestone REIT	$	3,701		$	9,340
General and administrative expenses		5,443			6,180
Depreciation and amortization		9,324			8,800
Deficit in earnings of real estate partnership⁽¹⁾		—			28
Interest expense		8,097			8,519
Interest, dividend and other investment income		(100	)		(8	)
Provision for income taxes		127			119
Gain on sale of properties		—			(6,525	)
Loss on disposal of assets		100			—
NOI of real estate partnership (pro rata)⁽¹⁾		—			183
Net income attributable to noncontrolling interests		47			124
NOI	$	26,739		$	26,760
Non-Same Store NOI ⁽²⁾		(1,041	)		(1,459	)
NOI of real estate partnership (pro rata)⁽¹⁾		—			(183	)
NOI less Non-Same Store NOI and NOI of real estate partnership (pro rata)		25,698			25,118
Same Store straight-line rent adjustments		(490	)		(1,114	)
Same Store amortization of above/below market rents		(121	)		(214	)
Same Store lease termination fees		(426	)		(268	)
Same Store NOI ⁽³⁾	$	24,661		$	23,522

⁽¹⁾

We rely on reporting provided to us by Pillarstone OP’s general partner for financial information regarding the Company’s investment in Pillarstone OP. Because Pillarstone OP financial statements for the three months ended March 31, 2024 have not been made available to us, we have estimated deficit in earnings and pro rata share of NOI of real estate partnership based on the information available to us at the time of this report. On January 25, 2024, we exercised our redemption notice for substantially all of our investment in Pillarstone OP. As a result, our ownership no longer represents a majority interest. Please refer to Note 6 to the accompanying consolidated financial statements for the full disclosure.

⁽²⁾

We define “Non-Same Store” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. For purposes of comparing the three months ended March 31, 2025 to the three months ended March 31, 2024, Non-Same Store includes properties acquired between January 1, 2024 and March 31, 2025 and properties sold between January 1, 2024 and March 31, 2025, but not included in discontinued operations.

⁽³⁾

We define “Same Store” as properties that have been owned during the entire period being compared. For purposes of comparing the three months ended March 31, 2025 to the three months ended March 31, 2024, Same Store includes properties owned before January 1, 2024 and not sold before March 31, 2025. Straight-line rent adjustments, above/below market rents, and lease termination fees are excluded.

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Reconciliation of Non-GAAP Financial Measures

Funds From Operations (“FFO”) and Core FFO

The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income available to Whitestone REIT (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We calculate FFO in a manner consistent with the NAREIT definition and also include adjustments for our unconsolidated real estate partnership.

Core Funds from Operations (“Core FFO”) is a non-GAAP measure. We define Core FFO as FFO excluding proxy contest costs.

Management uses FFO and Core FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Because real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself. In addition, securities analysts, investors and other interested parties use FFO as the primary metric for comparing the relative performance of equity REITs.

FFO and Core FFO should not be considered as alternatives to net income or other measurements under GAAP, as an indicator of our operating performance or to cash flows from operating, investing or financing activities as a measure of liquidity. FFO and Core FFO do not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness. Although our calculation of FFO is consistent with that of NAREIT, there can be no assurance that FFO and Core FFO presented by us is comparable to similarly titled measures of other REITs.

Below are the calculations of FFO and Core FFO, along with the reconciliations to net income, which we believe is the most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended March 31,
FFO (NAREIT) AND CORE FFO	2025		2024
Net income attributable to Whitestone REIT	$	3,701	$	9,340
Adjustments to reconcile to FFO:⁽¹⁾
Depreciation and amortization of real estate assets		9,300		8,768
Depreciation and amortization of real estate assets of real estate partnership (pro rata) ⁽²⁾		—		111
Loss on disposal of assets		100		—
Gain on sale of properties		—		(6,525	)
Net income attributable to noncontrolling interests		47		124
FFO (NAREIT)	$	13,148	$	11,818
Adjustments to reconcile to Core FFO:
Proxy contest costs		—		438
Core FFO	$	13,148	$	12,256

⁽¹⁾	Includes pro-rata share attributable to real estate partnership through January 25, 2024, the redemption date.

⁽²⁾

We rely on reporting provided to us by Pillarstone OP’s general partner for financial information regarding the Company’s investment in Pillarstone OP. Because Pillarstone OP financial statements for the three months ended March 31, 2024 have not been made available to us, we have estimated depreciation and amortization of real estate assets based on the information available to us at the time of this report. On January 25, 2024, we exercised our redemption notice for substantially all of our investment in Pillarstone OP. As a result, our ownership no longer represents a majority interest. Please refer to Note 6 to the accompanying consolidated financial statements for the full disclosure.

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Property Net Operating Income (“NOI”)

Management believes that NOI is a useful measure of our property operating performance. We define NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Other REITs may use different methodologies for calculating NOI and, accordingly, our NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, depreciation and amortization, deficit in earnings of real estate partnership, interest expense, interest, dividend and other investment income, provision for income taxes, (gain) loss on sale of properties, management fee, net of related expenses, loss on disposal of assets, and includes NOI of real estate partnership (pro rata) and net income attributable to noncontrolling interest, it provides a performance measure that, when compared year-over-year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. We use NOI to evaluate our operating performance since NOI allows us to evaluate the impact that factors such as occupancy levels, lease structure, lease rates and tenant base have on our results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about our property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of our overall financial performance since it does not reflect the level of capital expenditure and leasing costs necessary to maintain the operating performance of our properties, including general and administrative expenses, depreciation and amortization, equity or deficit in earnings of real estate partnership, interest expense, interest, dividend and other investment income, provision for income taxes, (gain) loss on sale of properties, management fee, net of related expenses, and loss on disposal of assets.

Below is the calculation of NOI and the reconciliations to net income, which we believe is the most directly comparable U.S. GAAP financial measure (in thousands):

	Three Months Ended
	March 31,
PROPERTY NET OPERATING INCOME	2025			2024
Net income attributable to Whitestone REIT	$	3,701		$	9,340
General and administrative expenses		5,443			6,180
Depreciation and amortization		9,324			8,800
Deficit in earnings of real estate partnership		—			28
Interest expense		8,097			8,519
Interest, dividend and other investment income		(100	)		(8	)
Provision for income taxes		127			119
Gain on sale of properties		—			(6,525	)
Loss on disposal of assets		100			—
NOI of real estate partnership (pro rata) ⁽¹⁾		—			183
Net income attributable to noncontrolling interests		47			124
NOI	$	26,739		$	26,760

⁽¹⁾

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of distributions to holders of our common shares and OP units, including those required to maintain our REIT status and satisfy our current quarterly distribution target of $0.135 per common share and OP unit, recurring expenditures, such as repairs and maintenance of our properties, non-recurring expenditures, such as capital improvements and tenant improvements, debt service requirements, and, potentially, acquisitions of additional properties.

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During the three months ended March 31, 2025, our cash provided by operating activities was $3,081,000 and our total distributions were $6,932,000. Therefore, we had distributions in excess of cash flow from operations of approximately $3,851,000. We anticipate that cash flows from operating activities and our borrowing capacity under our 2022 Facility will provide adequate capital for our working capital requirements, anticipated capital expenditures, acquisitions and scheduled debt payments in the short term. We also believe that cash flows from operating activities and our borrowing capacity will allow us to make all distributions required for us to continue to qualify to be taxed as a REIT for federal income tax purposes.

Our long-term capital requirements consist primarily of maturities under our longer-term debt agreements, development and redevelopment costs, and potential acquisitions. We expect to meet our long-term liquidity requirements with net cash from operations, long-term indebtedness, sales of common shares, issuance of OP units, sales of underperforming properties and non-core properties and other financing opportunities, including debt financing. We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. On December 4, 2024, we announced an increase to our quarterly distribution to $0.135 per common share and OP unit, equal to a monthly distribution of $0.045, beginning with the January 2025 distribution. The Board will regularly reassess the dividend in light of economic conditions. As of March 31, 2025, subject to any potential future paydowns in the borrowing base, we have $97.7 million remaining availability under the 2022 Revolver.

Our ability to access the capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us. In light of the dynamics in the capital markets impacted by macro economic factors and economic uncertainty, our access to capital may be diminished. Despite these potential challenges, we believe we have sufficient access to capital for the foreseeable future, but we can provide no assurance that such capital will be available to us in the future on attractive terms or at all.

On May 20, 2022, our universal shelf registration statement on Form S-3 (File No. 333-264881) was declared effective by the SEC (the “Registration Statement”), which registers the issuance and sale by us of up to $500 million in securities from time to time, including common shares, preferred shares, debt securities, depositary shares and subscription rights.

On September 9, 2022, we entered into eleven equity distribution agreements with certain sales agents’ names therein for an at-the-market equity distribution program (the “2022 equity distribution agreements”) providing for the issuance and sale of up to an aggregate of $100 million of the Company’s common shares pursuant to our Registration Statement. Actual sales will depend on a variety of factors determined by us from time to time, including (among others) market conditions, the trading price of our common shares, capital needs and our determinations of the appropriate sources of funding for us, and will be made in transactions that will be deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). We have no obligation to sell any of our common shares and can at any time suspend offers under the 2022 equity distribution agreements or terminate the 2022 equity distribution agreements. For the three months ended March 31, 2025 and 2024, we did not sell shares under the equity distribution agreement.

To the extent we sell shares in the future under the 2022 equity distribution agreements, we anticipate using net proceeds for general corporate purposes, which may include acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment and/or re-tenanting of properties in our portfolio, working capital and other general purposes.

We expect that our rental income will increase as we continue to acquire additional properties, subsequently increasing our cash flows generated from operating activities. We intend to finance the continued acquisition of such additional properties through equity issuances and through debt financing.

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Our capital structure includes non-recourse mortgage debt that we have assumed or originated on certain properties. We may hedge the future cash flows of certain variable rate debt transactions principally through interest rate swaps with major financial institutions. See Note 8 (Derivatives and Hedging Activities) to the accompanying consolidated financial statements for a description of our current cash flow hedges.

During the year ended December 31, 2024 , the Company sold Providence as part of a like-kind exchange under Section 1031 of the Internal Revenue Code. In accordance with exchange requirements, the proceeds were deposited into an escrow account with a Qualified Intermediary (“QI”) and are restricted for the acquisition of a replacement property. On December 12, 2024, a portion of these escrowed funds was used to acquire Village Shops at Dana Park as a qualifying replacement property under the 1031 exchange. As of March 31, 2025, we have a remaining balance in escrow, classified as Restricted Cash on the balance sheet. These funds are legally restricted and cannot be used for general corporate purposes.

As of March 31, 2025, the Company was actively engaged in a like-kind exchange under Section 1031 of the Internal Revenue Code, involving the sale of the Providence property. The identification period commenced on December 20, 2024, and the exchange period concludes on May 5, 2025. Failure to complete the exchange by this date may result in the recognition of capital gains and associated tax liabilities for our investors. The Company is diligently working to ensure the timely completion of this transaction but cannot guarantee that all conditions will be met within the required timeframe.

Cash, Cash Equivalents and Restricted Cash

We had cash, cash equivalents and restricted cash of approximately $15,814,000 as of March 31, 2025, as compared to $15,370,000 on December 31, 2024. Sources and uses of cash during the three months ended March 31, 2025 and 2024 were as follows:

Sources of Cash

•

Proceeds from credit facility of $27,300,000 for the three months ended March 31, 2025, compared to $23,000,000 for the three months ended March 31, 2024; and

•

Cash flow from operations of $3,081,000 for the three months ended March 31, 2025, compared to $11,524,000 for the three months ended March 31, 2024;

Uses of Cash

•

Payments of notes payable of $17,572,000 for the three months ended March 31, 2025, compared to $20,869,000 for the three months ended March 31, 2024;

•

Payment of distributions to common shareholders and OP unit holders of $6,932,000 for the three months ended March 31, 2025, compared to $6,049,000 for the three months ended March 31, 2024;

•

Additions to real estate of $3,914,000 for the three months ended March 31, 2025, compared to $3,041,000 for the three months ended March 31, 2024;

•

Repurchase of common shares from employees to satisfy tax withholding obligations upon vesting of equity awards of $1,510,000 for the three months ended March 31, 2025, compared to $1,442,000 for the three months ended March 31, 2024; and

•

Payment of finance lease liability of $9,000 for the three months ended March 31, 2025, compared to $5,000 for the three months ended March 31, 2024.

We place all cash in short-term, highly liquid investments that we believe provide appropriate safety of principal.

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Debt

Debt consisted of the following as of the dates indicated (in thousands):

Description	March 31, 2025			December 31, 2024
Fixed rate notes
$265.0 million, 3.18% plus 1.45% to 2.10% Note, due January 31, 2028 ⁽¹⁾	$	265,000		$	265,000
$20.0 million, 3.67% plus 1.50% Note, due January 31, 2028 (3)		20,000			20,000
$80.0 million, 3.72% Note, due June 1, 2027		80,000			80,000
$50.0 million, 5.09% Note, due March 22, 2029 (Series A)		28,571			35,714
$50.0 million, 5.17% Note, due March 22, 2029 (Series B)		40,000			50,000
$2.5 million, 7.79% Note, due February 28, 2025		—			429
$50.0 million, 3.71% plus 1.50% to 2.10% Note, due September 16, 2026 ⁽²⁾		50,000			50,000
$56.3 million, 6.23% Note, due July 31, 2031		56,340			56,340
Floating rate notes
Unsecured line of credit, SOFR plus 1.50% to 2.10%, due September 16, 2026		102,300			75,000
Total notes payable principal		642,211			632,483
Less deferred financing costs, net of accumulated amortization		(916	)		(965	)
Total notes payable	$	641,295		$	631,518

⁽¹⁾	Promissory note includes an interest rate swap that fixes the SOFR portion of the term loan at an interest rate of 2.16% through October 28, 2022, 2.76% from October 29, 2022 through January 31, 2024, and 3.32% beginning February 1, 2024 through January 31, 2028.

⁽²⁾	A portion of the unsecured line of credit includes an interest rate swap to fix the SOFR portion of the loan at 3.71%.

(3)	Series One Incremental Term Loan includes an interest rate swap that fixed the term loan rate at 5.165% through January 31, 2028.

Scheduled maturities of our outstanding debt as of March 31, 2025 were as follows (in thousands):

Year	Amount Due
2025 (remaining)	$	—
2026		169,443
2027		97,414
2028		302,823
2029		17,867
Thereafter		54,664
Total	$	642,211

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On June 21, 2024, Whitestone REIT, operating through its subsidiaries Whitestone Strand LLC, Whitestone Las Colinas Village LLC, and Whitestone Seville, LLC (collectively, the “Borrower”), entered into a loan agreement (the “Loan Agreement”) with Nationwide Life Insurance Company (the “Lender”) for a mortgage loan in the principal amount of $56,340,000 (the “Loan”).

The Loan provides for a fixed interest rate of 6.23% per annum. Payments commence on August 1, 2024, and are due on the first day of each calendar month thereafter through July 1, 2031, with interest-only payments for the first 36 months. Monthly payments consist of principal and interest based on a 30-year amortization schedule beginning on August 1, 2027. The Loan may be prepaid in full but not in part, provided that, as conditions precedent, Borrower: (i) gives Lender not less than fifteen (15) days prior notice of Borrower’s intention to prepay the Loan; (ii) pays to Lender the prepayment premium as set forth in the Loan Agreement, if any, then due and payable to Lender; and (iii) pays to Lender all other amounts then due under the loan documents. No prepayment premium is required for prepayments in full made on or after six months prior to the maturity date.

The Loan is a non-recourse loan secured by three of our properties including their related equipment, fixtures, personal property, and other assets, and a limited carve-out guarantee by the Operating Partnership.

The Loan proceeds will be used to pay down the Borrower’s existing floating rate indebtedness.

On September 16, 2022 we, through our Operating Partnership, entered into an unsecured credit facility (the “2022 Facility”) pursuant to that certain Third Amended and Restated Credit Agreement, by and among the Operating Partnership, the Company and certain subsidiaries of the Company, as guarantors signatory thereto, the lenders party thereto, Bank of Montreal, as administrative agent (the “Administrative Agent”), Truist Bank, as syndication agent, and BMO Capital Markets Corp., Truist Bank, Capital One, National Association, and U.S. Bank National Association, as co-lead arrangers and joint book runners (as amended from time to time, the “Credit Agreement”). The 2022 Facility replaced the Company’s previous unsecured revolving credit facility, dated January 31, 2019.

On October 7, 2024, we, through our Operating Partnership, entered into the First Amendment to Third Amended and Restated Credit Agreement and Incremental Term Loan Joinder (the “Amendment”) among the Operating Partnership, us and certain of our subsidiaries, as guarantors signatory thereto, the Administrative Agent, and L/C Issuer and Associated Bank, National Association, which amends the Credit Agreement.

The 2022 Facility is comprised of the following three tranches:

•

$250.0 million unsecured revolving credit facility with a maturity date of September 16, 2026 (the “2022 Revolver”);

•

$265.0 million unsecured term loan with a maturity date of January 31, 2028 (the “Term Loan”); and

•

$20.0 million unsecured term loan with a maturity date of January 31, 2028 (the “Series One Incremental Term Loan”), effective October 7, 2024.

Borrowings under the 2022 Facility accrue interest (at the Operating Partnership’s option) at a Base Rate or Adjusted Term SOFR plus an applicable margin based upon our then existing total leverage as set forth in the Credit Agreement. “Base Rate” means, for any day, the higher of: (a) the Administrative Agent’s prime commercial rate, (b) the sum of (i) the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York for such day, plus (ii) 0.50%, or (c) the sum of (i) Adjusted Term SOFR for a one-month tenor in effect on such day plus (ii) 1.10%.

As of March 31, 2025, the interest rate on the 2022 Revolver was 5.87%. Based on our current leverage ratio, the revolver has an interest rate of Adjusted Term SOFR plus 1.45% and a 10 basis point credit spread adjustment. In addition, we entered into interest rate swaps to fix the interest rates on the Term Loan. The Term Loan with the swaps has the following interest rates:

•

2.16% plus spreads ranging from 1.45% to 2.10%, through October 28, 2022;

•

2.80% plus spreads ranging from 1.45% to 2.10%, from October 29, 2022 through January 31, 2024; and

•

3.42% plus spreads ranging from 1.45% to 2.10%, from February 1, 2024 through January 31, 2028.

As of March 31, 2025, the Term Loan with the swaps had a spread of 1.40% and a 10 basis point credit spread adjustment.

The 2022 Facility also has a pricing provision where the applicable margin can be adjusted by an aggregate 0.02% per annum based on our performance on certain sustainability performance targets.

The 2022 Facility includes an accordion feature that allows the Operating Partnership to increase the borrowing capacity by an aggregate principal amount not to exceed $200.0 million, upon the satisfaction of certain conditions. As of March 31, 2025, subject to any potential future paydowns or increases in the borrowing base, we have $97.7 million remaining availability under the 2022 Revolver. As of March 31, 2025, $437.3 million was drawn on the 2022 Facility and our unused borrowing capacity was $97.7 million, assuming that we use the proceeds of the 2022 Facility to acquire properties, or to repay debt on properties, that are eligible to be included in the unsecured borrowing base.

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We, each direct and indirect material subsidiary of the Operating Partnership and any other subsidiary of the Operating Partnership that is a guarantor under any unsecured ratable debt will serve as a guarantor for funds borrowed by the Operating Partnership under the 2022 Facility. The 2022 Facility contains customary terms and conditions, including, without limitation, customary representations and warranties and affirmative and negative covenants including, without limitation, information reporting requirements, limitations on investments, acquisitions, loans and advances, mergers, consolidations and sales, incurrence of liens, dividends and restricted payments. In addition, the 2022 Facility contains certain financial covenants including the following:

•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

•

maximum secured recourse debt to total asset value ratio of 0.15 to 1.00;

•

minimum adjusted property net operating income to implied unencumbered debt service of 1.50 to 1.00; and

•

maximum unsecured indebtedness to unencumbered asset pool value of 0.60 to 1.00.

On March 22, 2019, we, through our Operating Partnership, entered into a Note Purchase and Guarantee Agreement (as amended from time to time, the “Note Agreement”) together with certain subsidiary guarantors as initial guarantor parties thereto (the “Subsidiary Guarantors”) and The Prudential Insurance Company of America and the various other purchasers named therein (collectively, the “Purchasers”) providing for the issuance and sale of $100 million of senior unsecured notes of the Operating Partnership, of which (i) $50 million are designated as 5.09% Series A Senior Notes due March 22, 2029 (the “Series A Notes”) and (ii) $50 million are designated as 5.17% Series B Senior Notes due March 22, 2029 (the “Series B Notes” and, together with the Series A Notes, the “Notes”) pursuant to a private placement that closed on March 22, 2019 (the “Private Placement”). Obligations under the Notes are unconditionally guaranteed by the Company and by the Subsidiary Guarantors.

On December 16, 2022, we, through our Operating Partnership, amended the Note Agreement, pursuant to the terms and conditions of that certain Amendment No. 1 to Note Purchase and Guaranty Agreement, by and among the Company and the Operating Partnership, together with certain subsidiary guarantors as initial guarantor parties thereto and The Prudential Insurance Company of America and the various other purchasers named therein, for the purposes of conforming certain covenants and defined terms contained in the Note Agreement with the 2022 Facility.

The principal of the Series A Notes began to amortize on March 22, 2023, with annual principal payments of approximately $7.1 million. The principal of the Series B Notes began to amortize on March 22, 2025 with annual principal payments of $10.0 million. The Notes will pay interest quarterly on the 22nd day of March, June, September and December in each year until maturity.

The Operating Partnership may prepay at any time all, or from time to time part of, the Notes, in an amount not less than $1,000,000 in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus a make-whole amount. The make-whole amount is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the Notes being prepaid over the aggregate principal amount of such Notes (as described in the Note Agreement). In addition, in connection with a Change of Control (as defined in the Note Agreement), the Operating Partnership is required to offer to prepay the Notes at 100% of the principal amount plus accrued and unpaid interest thereon.

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•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

•

maximum secured recourse debt to total asset value ratio of 0.15 to 1.00;

•

maintenance of a minimum tangible net worth (adjusted for accumulated depreciation and amortization) of 75% of the Company's total net worth as of December 31, 2021 plus 75% of the net proceeds from additional equity offerings (as defined therein); and

•

minimum adjusted property NOI to implied unencumbered debt service ratio of 1.50 to 1.00.

In addition, the Note Agreement contains a financial covenant requiring that maximum unsecured indebtedness not exceed the ratio of unsecured indebtedness to unencumbered asset pool of 0.60 to 1.00. That covenant is substantially similar to the borrowing base concept contained in the Operating Partnership’s existing senior revolving credit facility.

Net proceeds from the Private Placement were used to refinance existing indebtedness. The Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Notes were sold in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

As of March 31, 2025, our $136.34 million in secured debt was collateralized by four properties with a carrying value of $221.2 million. Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties. As of March 31, 2025, we were in compliance with all loan covenants.

Refer to Note 7 (Debt) to the accompanying consolidated financial statements for additional information regarding debt.

Capital Expenditures

We continually evaluate our properties’ performance and value. We may determine it is in our shareholders’ best interest to invest capital in properties that we believe have potential for increasing value. We also may have unexpected capital expenditures or improvements for our existing assets. Additionally, we intend to continue investing in similar properties outside of the markets on which we focus in cities with exceptional demographics to diversify market risk, and we may incur significant capital expenditures or make improvements in connection with any properties we may acquire.

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The following is a summary of our capital expenditures for the three month periods ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Capital expenditures:
Tenant improvements and allowances	$	2,259	$	3,267
Developments / redevelopments		1,737		1,471
Leasing commissions and costs		651		754
Maintenance capital expenditures		1,628		265
Total capital expenditures⁽¹⁾	$	6,275	$	5,757

⁽¹⁾	Total capital expenditures include the non cash accrued capital expenditures line item as reported in the consolidated statements of cash flows.

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Distributions

U.S. federal income tax law generally requires that a REIT distribute annually to its shareholders at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates on any taxable income that it does not distribute. We currently, and intend to continue to, accrue distributions quarterly and make distributions in three monthly installments following the end of each quarter. For a discussion of our cash flow as compared to dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

The timing and frequency of our distributions are authorized and declared by our Board of Trustees in exercise of its business judgment based upon a number of factors, including:

•

our funds from operations;

•

our debt service requirements;

•

our capital expenditure requirements for our properties;

•

our taxable income, combined with the annual distribution requirements necessary to maintain REIT qualification;

•

requirements of Maryland law;

•

our overall financial condition; and

•

other factors deemed relevant by our Board of Trustees.

Any distributions we make will be at the discretion of our Board of Trustees and we cannot provide assurance that our distributions will be made or sustained in the future.

On December 4, 2024, we announced an increase to our quarterly distribution to $0.135 per common share and OP unit, equal to a monthly distribution of $0.045, beginning with the January 2025 distribution. The Board will continue to regularly reassess the dividend level.

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During the three months ended March 31, 2025, we paid distributions to our common shareholders and OP unit holders of $6.9 million, compared to $6.0 million in the three months ended March 31, 2024. Common shareholders and OP unit holders receive monthly distributions. Payments of distributions are declared quarterly and paid monthly. The following table summarizes the cash distributions paid or payable to holders of our common shares and noncontrolling OP units during each quarter of 2024 and the three months ended March 31, 2025 (in thousands, except per share data):

	Common Shares				Noncontrolling OP Unit Holders				Total
Quarter Paid	Distributions Per Common Share		Amount Paid		Distributions Per OP Unit		Amount Paid		Amount Paid
2025
First Quarter	$	0.1350	$	6,845	$	0.1350	$	87	$	6,932
Total	$	0.1350	$	6,845	$	0.1350	$	87	$	6,932

2024
Fourth Quarter	$	0.1238	$	6,247	$	0.1238	$	81	$	6,328
Third Quarter		0.1238		6,194		0.1238		80		6,274
Second Quarter		0.1238		6,162		0.1238		80		6,242
First Quarter		0.1200		5,969		0.1200		80		6,049
Total	$	0.4914	$	24,572	$	0.4914	$	321	$	24,893

Taxes

We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 1999. As a REIT, we generally are not subject to federal income tax on income that we distribute to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates. We believe that we are organized and operate in a manner to qualify and be taxed as a REIT, and we intend to operate so as to remain qualified as a REIT for federal income tax purposes.

Environmental Matters

Our properties are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which our operations are conducted. From our inception, we have incurred no significant environmental costs, accrued liabilities or expenditures to mitigate or eliminate future environmental contamination.

Off-Balance Sheet Arrangements

Guarantees. We may guarantee the debt of a real estate partnership primarily because it allows the real estate partnership to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the real estate partnership on its investment, and a higher return on our investment in the real estate partnership. We may receive a fee from the real estate partnership for providing the guarantee. Additionally, when we issue a guarantee, the terms of the real estate partnership’s partnership agreement typically provide that we may receive indemnification from the real estate partnership or have the ability to increase our ownership interest. See Note 6 (Investment in Real Estate Partnership) to the accompanying consolidated financial statements for information related to our former guarantee of the real estate partnership’s debt, which is no longer in effect.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our future income, cash flows and fair value relevant to our financial instruments depend upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Based upon the nature of our operations, we are not subject to foreign exchange rate or commodity price risk. The principal market risk to which we are exposed is the risk related to interest rate fluctuations. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to interest rate risk. Our interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve this objective, we manage our exposure to fluctuations in market interest rates for our borrowings through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable.

All of our financial instruments were entered into for other than trading purposes.

Fixed Interest Rate

As of March 31, 2025, $539.9 million, or approximately 84% of our total outstanding debt, was subject to fixed interest rates, which limit the risk of fluctuating interest rates. Although a change in the market interest rates affects the fair market value of our fixed interest rate debt, it does not impact net income to shareholders or cash flows. Our total outstanding fixed interest rate debt had an average effective interest rate as of March 31, 2025 of approximately 4.87% per annum with scheduled maturities ranging from 2026 to 2031. See Note 7 (Debt) to the accompanying consolidated financial statements for further detail. Holding other variables constant, a 1% increase or decrease in interest rates would cause a $12.1 million decline or increase, respectively, in the fair value for our fixed rate debt.

Variable Interest Rate Debt

As of March 31, 2025, $102.3 million, or approximately 16% of our outstanding debt, was subject to floating interest rates of SOFR plus 1.50% to 2.10% and not currently subject to a hedge. The impact of a 1% increase or decrease in interest rates on our non-hedged variable rate debt would result in a decrease or increase of annual net income of approximately $1.0 million, respectively.

Credit Risk

Credit risk may be increased as a result of macroeconomic factors such as inflation, rising interest rates, and financial institution disruptions. Actions taken by the U.S. and international governments to decrease the impact of inflation, including rising interest rates, may result in a continued decline in global economic activity generally, and may adversely affect the financial condition of our tenants in particular. Although the full extent of the adverse impacts on our tenants cannot be predicted, in future periods we may experience reductions in on-time payments or closures of tenants’ businesses, which could have a material adverse effect on our results of operations, cash flows and financial condition.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

As disclosed in Note 17 to the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we are engaged in certain legal proceedings, and the disclosure set forth in Note 17 is incorporated herein by reference.

Item 1A. Risk Factors.

There has been no material change in our risk factors from those previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

During the period covered by this Quarterly Report on Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act.

(b)

Not applicable.

(c)

During the three months ended March 31, 2025, certain of our employees tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares issued under the 2018 Plan. The following table summarizes all of these repurchases during the three months ended March 31, 2025.

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2025 - January 31, 2025		106,592	$	14.17		N/A		N/A
February 1, 2025 - February 28, 2025		—		—		N/A		N/A
March 1, 2025 - March 31, 2025		—		—		N/A		N/A
Total		106,592	$	14.17

⁽¹⁾

The number of shares purchased represents common shares held by employees who tendered owned common shares to satisfy the tax withholding on the lapse of certain restrictions on restricted common shares issued under the 2018 Plan. With respect to these shares, the price paid per share is based on the fair market value at the time of tender.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended March 31, 2025, no trustee or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

The exhibits listed on the accompanying Exhibit Index are filed, furnished and incorporated by reference (as stated therein) as part of this Report.

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EXHIBIT INDEX

Exhibit No.

Description

3.1.1

Articles of Amendment and Restatement of Whitestone REIT (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on July 31, 2008)

3.1.2

Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3(i).1 to the Registrant's Current Report on Form 8-K, filed on December 6, 2006)

3.1.3

Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.4

Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.5

Articles Supplementary (previously filed as and incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K, filed on August 24, 2010)

3.1.6

Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.1 to the Registrant's Current Report on Form 8-K, filed on June 27, 2012)

3.1.7

Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.2 to the Registrant's Current Report on Form 8-K, filed on June 27, 2012)

3.1.8

Articles of Amendment (previously filed as and incorporated by reference to Exhibit 3.1.8 to the Registrant’s Annual Report on Form 10-K, filed on March 2, 2020)

3.1.9

Articles Supplementary for Series A Preferred Shares (previously filed and incorporated by reference to Exhibit 3.1. to the Registrant’s Current Report on Form 8-K filed on May 15, 2020)

3.2.1

Amended and Restated Bylaws of Whitestone REIT (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 24,2020)

3.2.2

Amendment No. 1 to Amended and Restated Bylaws of Whitestone REIT (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed January 19, 2022

3.2.3

Amendment No. 2 to Amended and Restated Bylaws of Whitestone REIT (previously filed as and incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed March 30, 2022)

31.1*

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial information of the Registrant for the quarter ended March 31, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three month periods ended March 31, 2025 and 2024 (unaudited), (iii) the Consolidated Statements of Changes in Equity for the three month periods ended March 31, 2025 and 2024 (unaudited), (iv) the Consolidated Statement of Cash Flows for the three months ended March 31, 2025 and 2024 (unaudited) and (v) the Notes to the Consolidated Financial Statements (unaudited).

104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document and in Exhibit 101.

________________________

*	Filed herewith.

**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		WHITESTONE REIT
Date:	May 5, 2025	/s/ David K. Holeman
		David K. Holeman
		Chief Executive Officer
		(Principal Executive Officer)

Date:	May 5, 2025	/s/ John S. Hogan
		John S. Hogan
		Chief Financial Officer
		(Principal Financial and Principal Accounting Officer)