Whitestone REIT (
recently announced the completion of the acquisition of a community
center - Fountain Square - for $15.4 million. The acquisition
depicts Whitestone's ongoing expansion spree mainly on the
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The strategic move by Whitestone is expected to strengthen its
presence in the Phoenix area. The retail market in and around
Phoenix is currently going through a positive trend in terms of net
absorption and vacancy rates. The market witnessed 1.3 million
square feet of positive absorption by the end of first half of 2012
compared with 648,697 square feet in the first half of 2011.
By the end of second quarter of 2012, the overall retail market
vacancy stood at 11.3%. The key submarkets of Phoenix like
Scottsdale, Mesa and Gilbert are the major contributors.
With the acquisition, Whitestone now owns a large share of the
tenant space in the affluent submarket of Phoenix, spanning around
870,000 square feet. It has eleven Community Centers in the greater
Phoenix area - such as Terravita marketplace, Pima Norte, The
Citadel, The Pinnacle of Scottsdale and The Shops at Pinnacle Peak.
Fountain Square, which spans 118,209 square feet, is located on the
northwest corner of Bell Road and Seventh Street in the northern
Phoenix market. The property is currently 76% leased and has been
purchased at below replacement cost.
Whitestone expects the 24% unoccupied property space to reduce
going forward, with the completion of a new 20,000 square foot
Planet Fitness location that is currently under construction. The
property currently houses more than 25 well known diversified
tenants focused on service offerings including medical, education,
and casual dining. Some of the major tenants of Fountain Square are
McDonald's Corp. (
Weight Watchers International, Inc. (
Safeway Inc. (
The company is focused on its strategy of escalating its footprint
by tactically acquiring commercial properties in high-growth
markets. Whitestone mainly targets the U.S. properties situated in
thickly populated and culturally diverse submarkets in Phoenix,
Chicago, Dallas, San Antonio and Houston. Recently, the company
acquired a 125,898 square foot community center - Paradise Plaza -
in Phoenix for $16.3 million.
Founded in 1998, Whitestone is a fully integrated real estate
company that owns, operates and re-develops community centered
properties, which are visibly located properties in established or
developing culturally diverse neighborhoods. As of June 30, 2012,
Whitestone owned 46 community center properties spanning
approximately 3.6 million square feet, including two development
The company will likely release its third quarter 2012 earnings on
November 6, 2012. The Zacks Consensus Estimate for third quarter
2012 FFO (fund from operations) is pegged at 25 cents per share. We
presently have a long-term Neutral recommendation on the stock. It
also carries a Zacks #3 Rank (a short-term Hold rating).
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.