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Whitestone REIT (WSR) to Raise $87M in Public Offering; Buys Retail Centers in Texas

Whitestone REIT (NYSE:WSR) is dropping 8.98% or $1.28 to $12.97 on midday Thursday, April 20, after announcing that it expects to raise $87.23 million, after underwriting discounts and expenses, through its offering of 7 million common shares at $13 per share.

Whitestone granted the underwriters a 30-day option to purchase up to an additional 1,050,000 common shares.  The offering is subject to customary closing conditions and is expected to close on April 25, 2017.

Whitestone REIT (NYSE:WSR) will contribute the net proceeds of the offering to its operating partnership in exchange for units of limited partnership interest in the operating partnership.  The operating partnership intends to use the net proceeds from the offering initially to repay a portion of outstanding indebtedness under Whitestone’s unsecured revolving credit facility, which amounts will then become available for future borrowings, including to fund a portion of the purchase price of two pending acquisitions of properties, or for general corporate purposes.

SunTrust Robinson Humphrey, Inc. is acting as book-running manager of the offering.  BMO Capital Markets and JMP Securities are also acting as book-running managers for the offering. Wunderlich Securities, J.J.B. Hilliard, W.L. Lyons, LLC, Janney Montgomery Scott, Ladenburg Thalmann and Maxim Group LLC are acting as co-managers for the offering.

Whitestone REIT Adds Into Acquisitions Pipeline

The company on April 19 agreed to buy Eldorado Plaza and BLVD Place in separate deals for an aggregate amount of $204.6 million. The retail centers are dubbed class A and are located in Dallas and Houston areas in texas.

In a press release, the company said:

Based on, among other things, the contractual rent under in-place leases and actual operating expenses at the properties as of April 17, 2017, and assuming the development and lease-up of the developable land parcels described below, the Company estimates the projected unlevered internal rate of return (“IRR”) over an eight-year hold period, and assuming a 6% exit capitalization rate for each of the two properties, to be in the mid-teens.  Pursuant to the purchase agreements, the Company expects the closing of the pending acquisitions to occur in May 2017, subject to customary closing conditions.

What Does The Smart Money Sentiment Say?

Out of the 742 funds we track at Insider Monkey, we saw 8 funds maintain their confidence on Whitestone REIT (NYSE:WSR) with holdings of $9 million in total by the end of Q4, compared to 7 funds in Q3 with holdings of $11 million.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

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