Whitestone Acquires Assets

Whitestone REIT (WSR - Snapshot Report) recently announced that it has acquired a Class A center, namely, the Shops at Starwood for $15.7 million in cash. In a separate transaction, the company also bought a 2.73 acre parcel of land, adjacent to the Starwood property, for $1.9 million in Frisco, Texas. The transaction was funded through the assumption of a $1.4 million non-recourse loan, secured by the land and cash of $0.5 million.

The Shops at Starwood, spanning 55,385 square feet, is an accretive acquisition for Whitestone. The property is currently 98% leased and has been purchased at below the replacement cost.

This is the first retail Community Center in the Dallas area with the adjacent land of 2.73 acres, which provides opportunities for major expansion  given its favorable location in an affluent area and as it is already zoned to accommodate retail and office space.

Whitestone reported third quarter 2011 funds from operations (FFO) of 17 cents per share compared with 34 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income.

Headquartered in Houston, Texas, 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.

Whitestone currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, General Growth Properties Inc (GGP - Snapshot Report), currently has a Zacks #3 Rank, which translates into a short-term Hold rating.

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