HOUSTON – Whitestone REIT (NYSE:WSR), a community-focused real estate investment trust, has expanded its portfolio with the acquisition of Scottsdale Commons, a retail center in Scottsdale, Arizona, for $22.2 million.
The center, located at a bustling intersection that connects North Scottsdale with Paradise Valley, encompasses 69,000 square feet and boasts a high occupancy rate of 96.6% across its 20 tenants.
The tenant roster at Scottsdale Commons includes a variety of service-oriented businesses such as Rosati's Chicago Pizza, Rusty Nail Meats, U.S. Egg, Companion Pet Partners, and BevMo. These businesses cater to an affluent local community where the average household income within a 3-mile radius is approximately $138,000.
According to Whitestone's Chief Operating Officer, Christine Mastandrea, the acquisition presents an opportunity for the company to apply its expertise in leasing and operations to enhance the center's performance. Whitestone has a significant presence in the Scottsdale market, and Mastandrea expressed confidence in the team's ability to further increase the property's value.
The purchase of Scottsdale Commons was financed through Whitestone's capital recycling program, which aims to enhance the quality of its real estate holdings by selling certain assets and acquiring properties with higher long-term value. Since its inception in 2022, the program has surpassed $100 million in acquisitions.
These acquisitions have an average annual base rent of roughly $27 per square foot and a combined capitalization rate of 7.1% based on projected first-year net operating income (NOI). In contrast, the disposed properties had an average annual base rent of $18 per square foot and were sold at a capitalization rate of 6.2%.
Whitestone REIT specializes in acquiring, owning, operating, and developing open-air retail centers in some of the fastest-growing markets in the United States, including Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio. The company believes that its strong community ties and tenant relationships are crucial to the success of its existing properties and acquisition strategy.
This report is based on a press release statement from Whitestone REIT and includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those projected due to various factors, including market conditions and changes in the economic or regulatory environment.
InvestingPro Insights
Whitestone REIT's recent acquisition of Scottsdale Commons reflects its strategic initiative to optimize its portfolio for long-term value. The company's focus on community-centric retail centers is underpinned by solid financial metrics that offer a glimpse into its operational performance and market standing. As of the last twelve months ending Q4 2023, Whitestone REIT boasts a market capitalization of $595.68 million and a revenue of $143.92 million, highlighting the scale of its operations. Moreover, the company has maintained a strong gross profit margin of 68.06%, indicating efficient management and a robust business model.
From an investment perspective, Whitestone REIT has consistently rewarded its shareholders, maintaining dividend payments for 15 consecutive years. The dividend yield as of early 2024 stands at an attractive 4.21%, coupled with a dividend growth of 3.12% in the last twelve months of 2023. This consistent performance is a testament to the company's financial resilience and commitment to shareholder returns. Additionally, analysts project profitability for the company this year, aligning with its track record of profitability over the last twelve months.
Investors looking for further insights and analysis on Whitestone REIT can explore a wealth of additional InvestingPro Tips tailored to the company's financials and market performance. For those interested, there are many more tips available on InvestingPro, which can be accessed at https://www.investing.com/pro/WSR. To enrich your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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