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Whitestone REIT (WSR) Inks 51,000SF Lease With EoS Fitness

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Whitestone REIT (WSR - Free Report) recently executed a long-term lease with EoS Fitness — a dynamic, high-energy fitness brand — for 51,000 square feet at Williams Trace Plaza center in Sugar Land, a fast-growing suburb of Houston. EoS Fitness will replace an underutilized grocer at the center.

Whitestone focuses on acquiring, owning, operating and developing open-air retail centers in the fast-growing markets of Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. These markets are usually located in high-traffic areas surrounded by high-household-income communities.

Therefore, the lease with EoS is a strategic fit and is expected to significantly increase the investment returns for Whitestone’s center in the forthcoming years.

EoS Fitness, one of the top retail categories for foot traffic growth, will enable Whitestone to attract traffic at the center, creating greater tenant demand for spaces. Moreover, it is expected to support the development of a future pad site at the center.

With EoS becoming the anchor at Williams Trace Plaza, Whitestone will be able to leverage its community center focus with the former’s growing reputation for family friendliness and great service.

Per Christine Mastandrea, chief operating officer of Whitestone REIT, “The addition of a high-quality, state-of-the-art health and fitness tenant like EoS Fitness positions the center to thrive. Investing in a high-traffic center in the vibrant Sugar Land community is anticipated to contribute to Whitestone’s future earnings growth in 2023 and beyond.”

Given the ongoing economic recovery, leasing activity in the retail real estate market has gained pace. Amid this, Whitestone signed 35 new leases and 51 renewal leases in third-quarter 2022.

The company has a well-diversified tenant base. It comprised 1,555 tenants as of the September-quarter end, and its largest tenant accounted for only 2.5% of the annualized base rental revenues in the third quarter. This assures a steady revenue generation for the company, aiding its revenue growth.

The net effective annual base rental revenue per leased square foot was $21.73 in the third quarter, up 6.5% from the prior-year quarter.

In addition, the company’s occupancy at its wholly-owned properties reached an all-time high of 92.5%. The small space occupancy increased 320 basis points (bps) year over year to 90.1% while the large space occupancy climbed 160 bps to 96.5%.

Shares of WSR, currently carrying a Zacks Rank #3 (Hold), have gained 13.9% in the quarter-to-date period compared with the real estate market’s growth of 7%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , Lamar Advertising (LAMR - Free Report) and Chatham Lodging Trust REIT (CLDT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is currently pegged at $1.92.

The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share presently stands at $7.34.

The Zacks Consensus Estimate for Chatham Lodging Trust’s ongoing year’s FFO per share is pegged at $1.17, presently.

Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.

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