Slide 1: Free Writing Prospectus - Whitestone REIT
Filed Issuer Relating Registration Creating & NYSE-AMEX: August The read by toll-free Strictly Value visiting issuer the Pursuant Free 2010 Private prospectus 1-866-789-7348. for to Communities has EDGAR Writing Preliminary Our No. filed to & WSR Shareholders 333-162859 Rule Confidential Prospectus
Slide 2: Forward-Looking Statements
Forward This beliefs, of necessarily These all Important Form We or -Strictly WHITES Creating 1implied forward-looking of -do presentation which S-11. forward-looking not intentions, Private Looking Communities TONE factors undertake by mean are the & difficult REIT that forward-looking contains Sta
Slide 3: Summary of Transaction
Transaction Issuer Whitestone Common 3.4 $14 Offering $50 Over-allotment Annual 15% $1.14 Use Acquisitions NYSE-AMEX: Ticker Wunderlich Bookrunners J.J.B. Co-managers National Expected Week -Strictly WHITES Creating 2 -million –ofHilliard, million $16 per of /Proceeds Issue Dividend Private August R
Slide 4: Investment Highlights
Investment Focus Target Operational Experienced Whitestone Internal Consistent Competitive In Significant Existing Capital Pipeline -Strictly WHITES Creating 3midst - onRapidly fast structure Private property of properties Communities key TONE Track growing $300+ Potential economic Highlights Commun
Slide 5: Operations
Operations Strictly Private Structured & Confidential to Effectively Serve High Growth Target Markets
Slide 6: Community Centered Properties in High Growth Cities
Stable San Chicago Phoenix Houston Dallas City Growth SFT 16th 8th 7th 2nd 231st Properties 192.5 41.4 33.4 2,367.1 1(379.9 Source: Community Retail 18 1,181,000 82% 7Office 631,841 76% Office/Flex 11 1,201,672 85% Annualized Avg. (1) -Strictly WHITES Creating 1) 15properties properties -As MSA Anto
Slide 7: We Serve Fast Growing Consumers in our Properties
We % San Dallas Houston Chicago 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% African Caucasian Phoenix East Source: Hispanic -Strictly WHITES Creating 6Change -Serve Antonio / South Private American US Communities TONE Fast inCensus Asian Population Growing &REIT Confidential Bureau inConsumers by ourEth
Slide 8: Structured to Effectively Serve High Growth Target Markets
Operations Develop Visibly Acquire Limited Apply Management “Right-Size” Accelerates 42% Reduces Internal Smaller, -Strictly WHITES Creating 7 - premium modestly located Private Leasing competition Stressed local Whitestone concentration Communities TONE Structured new Lease has tenants per properti
Slide 9: Highly Experienced Management Team
Experienced Experience Highly History Significant James Name John David Valarie Daniel Samuel Chairman Title CFO COO Sr. Vice Industry 4, 3, 30+ 20+ Joined Nov. Oct. Jul. Jan. -Strictly WHITES Creating 820+ Vice -2007 2007 2006 President J. 2006 K. C. Public Whitestone E. experienced Dee L. Private
Slide 10: Our Board of Trustees
James President, Daryl Founder, Executive Daniel Chairman Trustee Donald Jack Former 4Corporate 2Our Trustees Board Independent -Strictly WHITES Creating 9Trustees out - board L. of J.Trustees of C. G. Mahaffey CEO CFO President board F. Private of 5Carter subject Communities Trustees Chairman Masta
Slide 11: Focus on Local Community-Oriented Tenants
Focus Authentic DINING EDUCATION SERVICES MEDICAL -Strictly WHITES Creating 10 - onPrivate Communities Local TONE Chinese & Community-Oriented REIT Confidential Dance in our & Ballet Properties™ Tenants
Slide 12: Significant Tenant Diversification
Significant Tenant US Sports Brockette Compass Air River X-Ray Petsmart Kroger Other Marshall’s Year 86.3% 1.7% 2.7% Industry Various 2019 2013 2011 2015 2010 EATING INDUSTRY VARIETY LEGAL SPORTING GROCERY CLOTHING CHURCHES GENERAL MEDICAL BEAUTY ENGINEERING X-RAY BUSINESS FREIGHT INSURANCE PET FURN
Slide 13: Case Study: Repositioned Property - Providence Plaza
Case Repositioned Property Providence 90,000 Over 99 Challenge 24,000 Further The Transformation Leasing Results SFT Base Occupancy NOI July Dec. $44,144 $48,680 63% 56,908 % $57,299 $61,125 91% 82,039 Strictly 29.9% 25.6% -44.2% WHITES Creating 12Increase Cent space -2009 Occupied /2009 Study: Rent
Slide 14: Case Study: Distressed Property - Indian Webster
Case Distressed Located Growing 44,000 Road Challenge Property Traffic Whitestone’s Transformation Reduced Enhanced Repainted Worked Upscale Results Indian Webster SFT Base Occupancy NOI Jan. Dec. $15,357 $18,329 74% 19,310 % $21,835 $23,728 100% 26,060 Strictly 42.2% 29.5% -35.0% WHITES Creating 13
Slide 15: Case Study: Redeveloped Property - Westchase Plaza
Case Redeveloped Property Located Exclusive 70,000 Blighted Challenge Large Pad Created Transformation Added Designed Stand-alone Resurfaced New Total Results Base Rent, Pro $11 $308,000 42,924 $15 $713,000 49,573 % 35 131.5% 15.5% Strictly After -Before WHITES Creating 14Increase toForma site to -s
Slide 16: Our Strategy Has Produced Strong Operating and Financial Results
Our Strategy Strictly Private Has& Produced Confidential Strong Operating and Financial Results
Slide 17: Attractive Real Estate Operating Results
Attractive 02Total 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Revenue $8.00 $10.00 $12.00 NOI $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 Real 2009 2008 2007 2006 2005 0.0% 2.00% 4.00% 6.00% 8.00% 10.00% LTM (1) Source: -Strictly WHITES Creating 005 16Real -/Estate 6/09 6/10 SFT Aver
Slide 18: Attractive Performance vs. Public Traded REITs
Attractive (20.9%) (10.5%) (5.4%) (2.0%) (0.2%) 1.6% 2.3% 2.7% 3.6% 4.6% 4.9% 6.6% (25.0%) (73.3%) (34.1%) (29.8%) (21.4%) (9.1%) (8.8%) (5.9%) 6.0% 8.4% 14.2% 18.9% (80.0%) (60.0%) (40.0%) 20.0% 40.0% 5.8% (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% LTM 10.8% 0% 2% 4% 6% 8% 10% 12% FPO (1) (2) 3
Slide 19: Consistent Occupancy in Difficult Environment
Consistent 2009 82% 13% 8% 16% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Total: 12/31/2008 Expiring Unplanned New Renewals 12/31/2009 -Strictly WHITESTONE Creating 18—Leases Contribution (24%) 22% Private Communities Leases Occupancy Vacancies Occupancy &REIT Confidential to Occupancy in in Difficu
Slide 20: Occupancy Has Been Stable YTD
2010 4% 3% 2% 5% 82% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Total: 12/31/2009 Expiring Unplanned New Renewals 12/31/2010 -Strictly WHITESTONE Creating 19—Leases YTD Occupancy (7%) 7%Private Communities Leases Contribution Vacancies Occupancy &REIT Has Confidential Been intoour Occupancy Stable Prope
Slide 21: Lease Expirations
Lease Note: Therafer 2017 2016 2015 2014 2013 2012 2011 2010 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Source: -Strictly WHITESTONE Creating 20—As Expirations Private Company Communities of June&REIT 30 Confidential filings 2010 in with our Properties™ SEC
Slide 22: Financial Summary
Financial Normalized Average Property ($ $30,000 $35,000 $2,000 $4,000 $6,000 $8,000 $12,000 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 2005 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Pro LTM Source: -Strictly WHITESTONE Creating 21— informa thousands) 2006 6/10 Private Company Rent Communities Reve
Slide 23: Revenue Bridge
2009 ($ 2008 $15,000 $17,000 $19,000 $21,000 $23,000 $25,000 $27,000 $29,000 $31,000 $33,000 $970 $31,201 Total: $126 -Strictly WHITESTONE Creating 22— in thousands) Revenue $32,685 $3,102 $(1,618) Private $1,492 Communities Bridge Occupancy Total: &$2,132 REIT Confidential $3,102 in our Decrease Pr
Slide 24: NOI Bridge
2009 ($ 2008 5000 8000 11000 14000 17000 20000 $596 $93 Total: $2,131 $1,492 $18,366 -Strictly WHITESTONE Creating 23— in thousands) YTD NOI $19,694 $2,820 $(1,492) Private Communities Bridge Occupancy NOITotal: & Bridge REIT Confidential $2,820 Decrease in our Properties™ Rate / SFT Acquired Proper
Slide 25: Limited Leverage and Few Near-Term Maturities
Limited Pro Debt 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Equity 2010- 02($ 20000 40000 60000 80000 $1,398 $66,418 (1) -Strictly WHITESTONE Creating 010 24— inBased Forma thousands) $100, 2011 2014 $129,000 $2,410 Private Leverage Communities on 2012 Market 837 Debt outstanding $2,543 & 43.9% REI
Slide 26: Financial Metrics vs. Public Traded REITs
Financial 2009 39.7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CDR $Cost $20 $40 $60 $80 $100 $120 $140 $160 RPT LTM 6.7x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x UBA (1) (2) -Strictly WHITESTONE Creating 52 25—Data Defined $62 6.0x GOOD Basis Dividend ADC Interest RPT 43.8% Private $64 for Co
Slide 27: Significant Potential to Accelerate Growth Through Acquisitions
Significant Strictly Private Potential & Confidential to Accelerate Growth Through Acquisitions
Slide 28: Significant Potential to Accelerate Growth
Significant Management Limited Market Purchase Active -Strictly WHITES Creating 27 - search conditions Private leverage Communities properties TONE Potential and process &REIT with infrastructure Confidential provide attotargeting few historically in Accelerate our near-term acquisition Properties™
Slide 29: Illustrative Stressed Acquisition Opportunities
Illustrative “Stressed” New Foreclosure No $114 $34 $80 87,700 $20-$27 580% Retail 718% Owner: Location: Stress Leasable Metrics Acquisition Cost Total Vacancy $104 $14 $90 48,623 Rent Time Stabilized $12+ 34% 1IRR Strictly 15% -12% WHITES Creating 28 Yrs Yractive -old to Class per investment (NNN)
Slide 30: Investment Highlights
Investment Focus Target Operational Experienced Whitestone Internal Consistent Competitive In Significant Existing Capital Pipeline -Strictly WHITES Creating 29midst - on Rapidly fast structure Private property of properties Communities key TONE Track growing $300+ Potential economic Highlights Comm
Slide 31: Regulation G Reconciliation - FFO
Regulation FUNDS FFO (1) Year 2009 PROPERTY General Property Depreciation Involuntary Interest Other Provision Loss Less: Net 2NOI accounting performance common properties 3historically should calculated Strictly -expenses. WHITES Creating 30 Funds Net Including income -$Ended on (gain) 2008 net Ope