Whitestone Acquires Asset

Houston, Texas-based, Whitestone REIT (WSR - Snapshot Report), a real estate investment trust (REIT), recently announced that it has acquired a Class A Community Center named 'The Shops at Pinnacle Peak' for $6.4 million in cash.

The Shops at Pinnacle Peak, spanning 41,530 square foot, is an accretive acquisition for Whitestone situated in North Scottsdale. The Shops at Pinnacle Peak comprises a variety of service providers, including various privately owned restaurants, an educational provider, medical/health care service providers and bunch of other convenience service providers. The property witnesses traffic count of over 29,000 cars per day and is currently 76% leased and has been purchased at below the replacement cost.

Management has immediate plans of renovating the acquired property, by adding value through complementary neighborhood enhancements and making it appropriate to serve the local community. They view immense growth prospects in the North Scottsdale market considering its population growth especially of middle-aged people and strong economic recovery.

Whitestone now owns a large share of the tenant space in the affluent submarket of North Scottsdale, spanning over 183,000 square feet. At present, it has six Community Centers in the North Scottsdale trade area, including Terravita (northwest), Pima Norte (northeast in the Cave Creek area), The Citadel (southeast), Pinnacle of Scottsdale (southwest), Desert Canyon (in the McDowell Mountain area) and recently acquired The Shops at Pinnacle Peak.

Founded in 1998, Whitestone is a fully integrated real estate company that engages in investment and operation of retail, office, and warehouse in established or developing culturally diverse neighborhoods. It has a diversified tenant base focused on service offerings including medical, education, and casual dining.

Whitestone reported first quarter 2012 funds from operations (FFO) of 24 cents per share compared with 29 cents in the year-earlier quarter and missed the Zacks Consensus estimate by a penny. The Zacks Consensus Estimate for 2012 and 2013 are pegged at $1.08 and $1.23 respectively, representing a year on year growth of 21.35% and 13.66%.

Whitestone currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Weingarten Realty Investors (WRI - Snapshot Report)), currently has a Zacks #4 Rank (short-term Sell) and a long-term Neutral recommendation.