Whitestone REIT Reports Continued Strong Occupancy at 87% in its Operating Portfolio for the Fourth


Whitestone REIT Reports Continued Strong Occupancy at 87% in its Operating Portfoliofor the Fourth Quarter 2012

HOUSTON--(BUSINESS WIRE)-- Whitestone REIT (NYSE: WSR - "Whitestone"), a real estate investment trust that acquires, owns and operates Community Centered PropertiesTM, today reported occupancy and leasing highlights for the fourth quarter ended December 31, 2012. The physical occupancy of its Operating Portfolio1 which excludes new acquisitions, and properties which are undergoing significant redevelopment or re-tenanting, was 87% as of December 31, 2012, unchanged from the prior quarter and previous year. The Company's total occupancy was 85% as of the end of the current quarter, a 1% increase over the year-ago quarter ended December 31, 2011.

Whitestone's acquisition and leasing strategies are interdependent to its growth. The acquisition team closed $108 million in new acquisitions in 2012, approximately 500,000 square feet with an average occupancy of 70%. The leasing team signed 78 leases totaling 192,376 square feet ("sf") in new, expansion, and renewal leases during the fourth quarter, adding 41 new tenants to its roster of primarily small entrepreneurial retail service business tenants. Whitestone currently has about 1,065 total tenants, an increase of 17% since December 31, 2011, of which 70% lease space that is less than 3,000 sf, provide retail services as opposed to goods to the surrounding community, and are located in multi-cultural neighborhoods.

"We continue to make progress as our small space business model sets us apart in the retail REIT space and delivers positive results. Small business has an impact on the economy and is enhancing efficiencies by localizing in communities. The number of our tenants is increasing, the size of our tenants leased space is becoming relatively smaller, and the rental rate for smaller spaces is relatively higher, and our base revenue is growing. The average lease size in 2012 was 2,121 square feet compared to 2,555 square feet in 2011. The total lease value of new and renewal leases in 2012 was $35.2 million, versus $32.3 million in 2011, an increase of 9%," said James C. Mastandrea, Whitestone's Chairman and Chief Executive Officer. "Our tenants are entrepreneurs in service-oriented businesses that target the immediate neighborhood surrounding our Community Centers. New acquisitions provide inventory—properties with lower occupancies—to lease and grow our overall occupancies, thus increasing revenue, net operating income and net asset value. Our leasing results and continued strong occupancy for the quarter are consistent with recent national survey data that indicates small business owners are extremely optimistic about the growth of their businesses in 2013, and expect their sales and finances to improve.3"

Leasing Highlights

Whitestone's Community Centered Property business model is focused on leasing smaller spaces (less than 3,000 square feet "sf") to entrepreneurial small business owners who provide retail services to their surrounding neighborhood. The following leases completed during the quarter are provided as examples to illustrate the types of tenants and the tenant mix that Drives Traffic, Driving ValueTMto Whitestone's Community Centers:

Arizona Region:

Pima Norte Garden Office - Carefree: Three leases were signed in this garden office Community Center, ranging from 295 sf to 768 sf.

Dana Park - Mesa: Two leases were signed in this new urban lifestyle community center, ranging from 3,384 sf to 4,893 sf.

The Pinnacle of Scottsdale - Scottsdale: Five leases were signed in this North Scottsdale Community Center, including two expansion leases, ranging from 2,604 sf to 6,045 sf.

Texas/Illinois Region:

Corporate Park Northwest - Houston: Fourteen leases totaling 15,990 sf were signed in this entrepreneurial small business incubator themed Community Center, for service-oriented tenants in small spaces ranging from 623 sf to 2,796 sf.

Corporate Park West - Houston: Nine new leases totaling 33,058 sf were signed in this Katy-area service Center, including an 11,010 sf expansion for a technology services firm.

Main Park - Houston: Two new leases totaling 17,760 sf were signed in this Community Center, located in the Texas Medical Center area ranging from 6,873 sf to 10,887 sf.

About Whitestone REIT

Whitestone REIT (NYS: WSR) is a fully integrated real estate company that owns, operates and re-develops Community Centered PropertiesTM, which are visibly located properties in established or developing culturally diverse neighborhoods. Whitestone focuses on value-creation in its Centers as it markets, leases and manages its Centers to match tenants with the shared needs of surrounding neighborhoods. Operations are structured for providing cost-effective service to local service-oriented smaller space tenants (less than 3,000 sf). Whitestone has a diverse tenant base concentrated on service offerings such as medical, education, and casual dining. The largest of its over 1,050 tenants comprises less than 2% of its rental revenues. Headquartered in Houston, Texas and founded in 1998, the Company is internally managed with a portfolio of commercial Centers in Texas, Arizona and Illinois. Whitestone's portfolio at the time it completed its Initial Public Offering ("IPO") in August 2010 was comprised of 36 Community Centers including one in Arizona, one in Illinois, and 34 in Texas. One property, Greens Road in Houston, has been sold since the IPO (sold in April 2012). Whitestone currently owns 51 Community Centers, including three development sites: 14 in Arizona, one in Illinois, and 36 in Texas. For additional information about the Company, please visit www.whitestonereit.com. The investor section of the Company's website has links to SEC filings, news releases, financial reports and investor newsletters.

1Operating Portfolio - excludes new acquisitions, through the earlier of (1) attainment of 90% occupancy or 18 months of ownership, and (2) properties which are undergoing significant redevelopment or re-tenanting.

2Development Portfolio - includes new acquisitions and properties which are undergoing significant redevelopment or re-tenanting.

Forward-Looking Statements

Statements included herein that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, which by their nature, involve known and unknown risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed or implied by these statements. Reference is made to the Company's regulatory filings with the Securities and Exchange Commission for information or factors that may impact the Company's performance.

3 SOURCE: Bank of America Small Business Owner Report November 2012

Whitestone REIT
Anne Gregory, 713-435-2213
Vice President Marketing & Investor Relations

KEYWORDS: United States North America Texas


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