Whitestone REIT (WSR)
Unlike most retail REITs that focus on big-box clients, this company stresses the multi-cultural and entrepreneurial nature of its tenants, and takes great pride in its diverse base of specialty retail, grocery, restaurants, medical, educational, financial services, and entertainment tenants, who are all typically renting spaces of less than 3,000 square feet.
This means a mix of national, regional, and local tenants that provide daily necessities, needed services, and entertainment to communities located primarily in thriving Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio areas.
As of third quarter 2020, all of the 1,386 tenants were located in 58 "Community Centered Properties" comprising 5 million square feet of leasable units. Thats a lot of different tenants.
Their tenants paid 95% of their rent in the fourth quarter which is higher than average for the sector, this is up from 90% Q3 2020, and 81% Q2 2020 (all during the Rona pandemic - when rental returns from other comparative REITS had seen an impact in their tenants ability to pay).
They have paused acquisition and development plans during the pandemic in order to maintain cash flow, but have a very strong business plan post covid for rapid expansion using cash in bank and land already owned.
With a monthly dividend of currently $0.035833 per share. Thats $0.43 yearly. Which equates to a nearly 5% yearly dividend yield, and a stock price that hasn’t quite managed to get back to pre Rona levels. The Divi was cut was announced back in March 20, from $0.095 monthly; this was a move to shore up cash and keep liquidity throughout the pandemic.
70% of all the NEO’s (named executive officers) compensation is incentive based, so there is a huge push from the top down for performance and growth within the business; and I do feel this compensation structure has driven WSRs senior team to really brace the 2020 financial storm, and come out the other side in very good form.
As we ease through these next few months, we will potentially see a sizeable growth of the dividend; or an even larger portion of cash assets being used for acquisition and development — which makes it a very interesting time.
Currently trading around $9, but I would very much expect to see this REIT trading around $13 in the next 12 months if the market is kind.
In my view it has the best of both worlds - growth and income opportunities.
