Texas-based Whitestone REIT (WSR) recently initiated redevelopment and repositioning programs for 4 community centered properties – Woodlake Plaza, Torrey Square, Main Park and Lion Square – in Houston, Texas. The move comes as part of the company’s effort to capitalize on market demand and enjoy increased rental rates.
Woodlake Plaza (106,000 square feet) is a community office building and Main Park (113,000 square feet) is a community center. Lion Square (118,000 square feet) and Torrey Square (106,000 square feet) are retail properties. Notably, both Lion Square and Torrey Square boast over 30 stores. DD's Discount Store of Ross Stores Inc. (ROST) is the principal tenant at Lion Square. On the other hand, Torrey Square is chiefly anchored by Family Dollar Stores Inc. (FDO), Teletron TV/Audio/Appliances and others.
These favorably placed assets have a low cost basis that makes the company’s move more attractive. In addition, the growing Houston market offers adequate scope for these properties to enhance Whitestone’s revenues and operating income.
In addition to revamping, the company is striving to enhance its portfolio quality through opportunistic acquisitions in high-growth markets, mainly on the off-market front. In relation to this, last month, the company acquired Anthem Marketplace, a community center in Phoenix for $23.3 million. In Jun 2013, Whitestone bought Ariz.-based Class-A shopping center – Mercado at Scottsdale Ranch – for $21.3 million. We expect such activities to add value to the company’s earnings, going forward.
Whitestone currently carries a Zacks Rank #4 (Sell). A better performing REIT is Acadia Realty Trust (AKR), which has a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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