Greetings. Welcome to Whitestone REIT's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, that this conference is being recorded. I'll now turn the conference over to your host, David Mordy, Director of Investor Relations. You may begin.

Good morning, and thank you for joining Whitestone REIT's first quarter 2022 earnings conference call. Joining me on today's call are Dave Holeman, Chief Executive Officer; Christine Mastandrea, Chief Operating Officer; and Scott Hogan, Chief Financial Officer. Please note, that some statements made during this call are not historical and may be deemed forward-looking statements. Actual results may differ materially from those forward-looking statements due to a number of risks, uncertainties and other factors. Please refer to the Company's earnings news release and filings with the SEC including Whitestone's most recent Form 10-Q and 10-K for a detailed discussion of these factors. Acknowledging the fact that this call may be webcast for a period of time, it is also important to note that this call includes time-sensitive information that may be accurate only as of today's date, May 04, 2022. The company undertakes no obligation to update this information. Whitestone's first quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website, www.whitestonereit.com, in the Investor Relations section. I will now turn the call over to Dave Holeman, our Chief Executive Officer.

Thank you, David. Good morning, and thank you for joining Whitestone's first quarter 2021 earnings conference call. We are pleased to announce strong operating and financial results for the first quarter of the year, highlighted by same store NOI growth of 12.9%, significant reductions in our G&A expenses and ongoing balance sheet strengthening. Our necessity-based community centers located in high growth Sunbelt markets continue to drive increasing consumer traffic and tenant demand as evidenced by increases in rent per square foot and occupancy levels. Our focus remains on maximizing shareholder value through organic growth, prudent capital allocation, reducing G&A expenses, improving our debt leverage and delivering on our 2022 targeted FFO per share growth. Today I would like to provide an update on the five key areas of focus that I shared on my initial call as CEO. These key focus areas are critical components of our strategy to unlock and grow shareholder value. First, our commitment to reducing G&A cost. In our fourth quarter call, we communicated our commitment to reduce 2022 G&A cost by $3 million to $3.5 million from the 2021 level. In the first quarter, we have taken several decisive steps toward this goal, largely through resetting of executive compensation levels. Our first quarter G&A expense is approximately $2.6 million lower than the first quarter of 2021. So we are well on our way to meet this commitment. Secondly, our commitment to alignment with corporate governance best practices; in the first quarter, we have made progress in this area through the separation of the roles of the Chairman of the board and CEO, through cancellation of our shareholder rights plan or poison pill through amendment to the company's bylaws, allowing shareholders the right to amend bylaws. This change is subject to shareholder ratification of an amendment to the company's declaration of trust at our upcoming 2022 Annual Meeting of Shareholders, an amendment to the charter of the nominating and governance committee providing board level oversight of our ESG efforts. We appreciate the feedback we have received and will continue to communicate with investor governance teams in the future. Third, our commitment to minimize shared dilution and maximize value. We are laser-focused on increasing FFO from organic initiatives. In the first quarter, our FFO increased to $0.30 per share up from $0.20 per share in Q1 2021. We continue to work to drive occupancy with a goal of 92% to 93% by yearend. To that point in the first quarter, occupancy stayed steady with yearend 2021 at 91%, which is up 230 basis points from the first quarter of the prior year. In combination with the occupancy increase, we will work to drive value by recycling our capital and continuing to merchandise our centers to meet the neighborhood needs. Fourth, our geographic focus remains on the nation's highest growth markets in the Sunbelt, and we believe our mix of entrepreneurial tenants further optimizes our growth potential. I have visited approximately half of our centers over the past month to ensure that our centers are in line with our community-centered strategy and that we are leveraging the high demand we are seeing in our markets. Our strategy is straightforward and we continue to enhance our approach and execute on that strategy to drive up revenue and occupancy. And fifth, we will remain committed to disciplined growth. We will not grow for growth's sake, but our growth will be guided by disciplined capital stewardship. We continue to evaluate our properties to determine if we should modify specific properties and redeploy the proceeds and do acquisitions, development or balance sheet improvement. Our key criteria for monetization are properties that are less aligned with our core strategy, have lower growth potential and/or we anticipate will strengthen our balance sheet metrics upon sale. From a team perspective, we have continued to strengthen our leadership with our recent promotions and to that point; we are thrilled with the advancement and development of individuals that have been key to our success. We continue to build upon last year's record leasing activity and strong base rent growth. The primary takeaways from our strong first quarter results are that we are solidly tracking toward achieving our 2022 guidance. We expect to drive best-in-class FFO per share growth this year, as we hold close to our core strategy. With that, I will now turn the call over to Christine.

Thanks, Dave. Our team continues to outperform in terms of strong tenants and leveraging our tenant relationships to produce results. Accordingly, as Dave mentioned, we increased occupancy to 91% from 88.7%, or 230 basis points from the prior year. Aggregate leasing spreads were a positive 10.1% in the first quarter and a positive 11.3% over the last 12 months. New leasing spreads increased 12.7% in the first quarter and have grown 7.9% over the trailing 12 months. Renewal leasing spreads increased 9.6% in the first quarter and have increased 12% over the trailing 12 months. Our leasing activity is driven by the demand in our markets fueled by population and job growth along with our typical size space of 2000 square feet. More than ever, this is proving to be the right size space meeting the needs of new business growth in retail. By investing in centers positioned to meet the challenging retail environment with smaller spaces, meeting a greater range of different business users, we have further flexibility and lower conversion cost to meet community needs. At approximately $21 per square foot, our ABR increased 7% from a year ago. This is a result of smaller spaces providing a higher ABR per square foot than big box space and our focus on convenience and service. This is a result of being disciplined with our business model, which begins with knowing the neighborhoods we serve. We engage in heavy research to ensure the businesses we partner with meet the needs of our communities. Rather than standardization, we prefer localization to meet the needs of each community. By focusing on the needs of a time-crunched consumer, our tenant mix is compatible with the Amazon effect. Let me now provide a few details of our well-diversified and curated tenant mix. We focus on four primary tenant groups that provide convenience to the surrounding neighborhoods; food, largely restaurants and grocery representing 33% of our lease square footage and 35% of our ABR. Our second-generation restaurants were the fastest to lease up following the reduction from COVID. We've seen the increased pad activity with quick service restaurants and takeout comfort food, most notably, pizza restaurants. We've also seen an uptick in international chef-inspired restaurants designed to meet the nearby community in mind. Self-care, this is a growing category which includes health and fitness and represents 24% of our lease square footage and 27% of our ABR. Healthcare is shifting to preventative and specialized care in more convenient locations and demand for self-care services is up as people prioritize wellness in conjunction with more of a work-life balance. Boutique fitness operators have also been increasing as people have more time and convenience during the work-from-home movement. Finally, we're seeing more pet care and veterinary services as there's been an increase in pet ownership with COVID. Financial services and logistics or shipping representing 7% of our lease square footage and 9% of our ABR and education and entertainment representing 6% of our lease square footage and 6% of our ABR. Our focus-tenant approach combined with the outstanding locations in high growth Sunbelt markets, allowed our properties to perform very well in the first quarter, producing a 12.9% NOI growth. Going forward, we will continue to work and build durable economic advantage by improving the lives of others by striving to meet the community needs of connection, convenience, and commerce, and will continue to work to grow with our tenants. This provides our team members the opportunity for growth and continue to build long term shareholder value. With that, I would like to turn the call over to Scott.

Thank you, Christine. Let me provide a bit more detail on the quarter. Total revenue grew 17.8% to $34.1 million for the quarter versus the first quarter of 2021. The revenue growth included a 300 basis point improvement in same store occupancy compared to 2021 and we also benefited from 7.3% same-store ABR growth from $19.69 to $21.13. Net income for the quarter was $0.14 per share up from $0.03 per share in the prior year. This includes a one-time benefit of $2.2 million from reduced stock compensation expense. The one-time reduction is due to forfeitures of outstanding restricted shares as a result of employee terminations in the quarter. This benefit was anticipated and contained in our 2022 guidance. NAREIT funds from operations per diluted share was $0.30 for the quarter versus $0.20 for the same period in 2021. Exclusive of the $0.04 one-time compensation benefit, this represents 30% growth in FFO per share. G&A expenses were $3 million in the quarter and were reduced by the $2.2 million in one-time stock forfeitures I previously mentioned. Earnings growth continues to contribute to a strengthening balance sheet. Total net debt was $640.8 million, improving our debt to gross book real estate cost ratio to 51%, an improvement from 55% a year ago. After adjusting for one-time compensation benefit, our pro forma annualized debt-to-EBITDA ratio was 8.1% versus 10.3% a year ago. We are pleased with the significant progress we have made on strengthening our balance sheet and we remain steadfast in our commitment in this area. Our board has approved a quarterly dividend of $0.12 per share for the second quarter, representing an annualized dividend amount of $0.48 per share, and an 11.6% increase versus the first quarter. To wrap up, I would like to reaffirm our previously issued 2022 guidance. FFO per fully diluted common share and OP unit guidance is expected to range from $0.98 to $1.02, representing a 14% to 19% increase from 2021. The key assumptions included in our 2022 guidance are occupancy of 92% to 93%, same-store NOI growth from 3% to 5%, bad debt of 1.5% of revenue, a debt-to-EBITDA ratio of 7.8 times to 8.1 times, and a reduction in our annual G&A cost of approximately $2.5 million to $3 million. And for 2022, including non-recurring stock forfeitures and severance costs, we expect our 2022 G&A to be between $3 million and $3.5 million lower than 2021. We look forward to updating investors over the course of the year, as we have progressed towards these targets. And with that, now we will take questions. Operator, please open the lines.

At this time, we'll be conducting a question-and-answer session. Our first question comes from Craig Kucera with B. Riley Securities. Please proceed with your question.

Yeah. Hey, good morning guys. Scott first I'll start a question for you. You were able to recover a lot more of your operating expenses and taxes this quarter through reimbursements. Were there any changes in timing of recoveries this quarter, maybe one-time adjustments or anything along those lines?

We had a little bit of one-time adjustments, maybe $200,000 to $300,000, and other than that, I think we just see strong recoveries. Our occupancy has gone up a bit from last year as well.

Got it. So I think this quarter, it was north of 92%. Typically you guys are able to get back closer to maybe the low to mid 80%. Would we expect that to normalize back to those levels this year, or do you expect to continue to have sort of a more robust recovery?

I expect it to be in the mid-to-high eighties for the balance of the year.

Okay, great. And you have the $100 million term loan maturing here in the fourth quarter that's currently swapped. Can you talk about what your expectations are with dealing with that maturity?

We are currently in discussions with our lending groups and anticipate finalizing and updating our credit facility by the end of the second quarter or the beginning of the third quarter. We will provide more specific updates later in the year.

Got it. Just given the change in sort of swap rates from where we were last year and years prior are you thinking about swapping that based on where rates would be today or would you be more likely to leave that floating until maybe there's a little bit better execution potentially in the future?

We're looking at all options right now. One of the options is to swap it today and we're evaluating all options.

Hey Craig, it's Dave Holeman. I might just add while there's been a lot of volatility if you look back at the 10-year treasury, I think we're close to where we were four years ago when we did the last recast on the facility. So a lot of movement, but the rate level is pretty close to where it was last time we recasted our facility.

Okay, appreciate the color. Just a couple more for me on the G&A, with all the G&A adjustments this quarter related to Jim's departure; are those adjustments pretty much complete for the year? Would we expect to see any more in the second quarter?

So we had one-time adjustments of about $2.2 million that were related to stock forfeitures and we'll have lower stock compensation going forward of maybe around $400,000 a quarter and a little lower level on overall cash compensation as well.

Got it. So, when we think about kind of a going run rate going forward, I know you're guiding this year to the kind of mid $19 million. Would we expect 2023 to sort of ramp back up to that kind of $22 million level because of the one-time adjustments, or would we expect to see sort of lower overall G&A going forward?

So we are expecting lower overall G&A going forward maybe around a $1 million of the savings that we're realizing this year won't repeat next year, somewhere at that level.

I think we said in our guidance, we said kind of $2.5 million to $3 million in G&A reductions, and this year would have some one-timers in it to get us to about $3 million to $3.5 million. So to Scott's comments about a $1 million of what's in this year will not recur next year. So most of the decrease is recurring.

All right. That's great. Appreciate the color, guys. Thanks.

Our next question is from Michael Diana with Maxim Group. Please proceed with your question.

Okay. Thank you. So I know this year 2022, you're focusing on organic growth, which I take to mean focusing on leasing and expense reductions as opposed to acquisitions of centers. I know you have a number of properties that you could develop or redevelop. Is any of that in your plans for 2022, or is that more a 2023 item?

I'll provide a brief introduction and then let Christine share more details. Thank you, Michael. You're right that we have the ability to generate value through development within our portfolio. We have several projects, and I'll allow Christine to comment on them, but there is a significant opportunity in our portfolio to realize that value in the coming years.

Currently, Michael, excuse me, we're working on developing our pad portfolio. So much of this has been your Starbucks, Dunkin' Donuts, any type of QSR that's a drive-through. So that's been our focus, and then moving forward, yes, there is quite a bit of opportunity in our redevelopments in particular, which is a little bit of a lower cost, but also a higher impact. So we're going to be ramping those up. And then in addition, we are looking at some of the larger developments, but most of that will probably take place in 2023, depending on what the costs look like.

Okay. Thanks.

I will now turn the call over to David Holeman for closing remarks.

Thank you for joining us on the call this morning. We are very pleased with our strong start to the year and look forward to updating all of you on our progress as we move through the year. I invite you to reach out to David Mordy if you would like to interact further with the management team and/or visit any of our properties. And with that, I will wish you a good day and conclude our call. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.