Greetings, welcome to the Whitestone REIT First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, David Mordy, Director of Investor Relations. You may begin, sir.
Good morning, and thank you for joining Whitestone REIT's First Quarter 2023 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 Form 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 3, 2023.
The company undertakes no obligation to update this information. Whitestone's third quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website in the Investor Relations section. We published first quarter 2023 slides on our website yesterday afternoon, which highlighted topics to be discussed today. I will now turn the call over to Dave Holeman, our Chief Executive Officer.
Thank you, David. Good morning, thank you for joining Whitestone's 1st quarter 2023 earnings conference call. We are pleased to deliver another quarter of strong results on multiple fronts and are solidly on track to achieve our FFO guidance for the year and the underlying key drivers we previously have communicated. In terms of leasing activity, 2022 was a record year for us, and 2023 has shown no slowdown in demand for spaces in our centers, as evidenced by our sector-leading leasing spreads in Q1. It seems commercial real estate is often one category in many of the headlines today. I wanted to make a straightforward point that investors know but that sometimes seems to get lost. Simply put, not all commercial real estate is the same.
Whitestone is in the most desirable markets, has the right types of tenants, the most flexible and in-demand size of leasable spaces, and continues to benefit from limited supply and strong population and job growth in our markets. Also continues to benefit from hybrid work as consumers spend less time in offices and urban centers and more time at home and in their neighborhoods. The lane we've been in for the last decade is exactly what is in greatest demand today. We specialize in smaller spaces and populating our centers with service-oriented businesses. As people continue to migrate to Texas and Arizona, we see the fundamental drivers of our business are not just remaining strong, but accelerating in the current environment.
In the first quarter, we signed new and renewal leases at a blended 20.8% increase over the prior leases on a straight line basis, and 13.3% increase on a cash basis. During the first quarter, we grew our top-line revenue over 5%, produced strong 2.8% same-store growth, NOI growth, and achieved FFO per share of $0.24. We strengthened our balance sheet, reducing our exposure to variable rate debt and improving our liquidity. Our occupancy at quarter end was 92.7%, up 170 basis points from a year ago, and our net effective annual base rent per square foot was $22.22, up 4.7% from 2022. Christine and Scott will provide greater detail of our operating and financial activities and results in their comments.
We are pleased with our start to 2023. Our focus for the remainder of the year will be growing shareholder value through operational and financial performance, FFO per share growth, and delivery of consistent results. The new management team has delivered five quarters of strong results and understands the value of building on those results. We will continue to focus on the balance sheet and cost of capital with improvements to debt leverage in 2023 and future years and remain disciplined stewards of capital. We recognize the value of a strong balance sheet. We recognize the importance of reaching the leverage milestones we have set. We will continue to focus on accretive recycling of capital.
As we highlighted on the fourth quarter call, in 2022, we made a number of strategic dispositions that funded our Lake Woodlands acquisition and allowed us to improve our debt leverage.
We are targeting similarly accretive activity, probably of about the same magnitude within the next few quarters. Finally, we will continue to focus on monetizing our underperforming joint venture investment in Pillarstone. Our team is aligned, our focus is clear, and we are confident in our ability to add value from a unique business model and a great portfolio of high quality, open air, convenience, and necessity-based centers that are positioned to serve their respective communities on a daily basis and drive consistent cash flow growth. With that, I will now turn the call over to our Chief Operating Officer, Christine.
Good morning, everyone. As Dave mentioned, we remain confident in terms of achieving our 2023 objectives and are on track with our internal monthly and quarterly goals. Our leasing efforts remain very strong in the quarter. The actual leases signed were a little lower than previous quarters. We expect the very active first quarter to show positive results in future quarters in terms of leases signed, leasing spreads, and overall occupancy. Occupancy remains high at just under 93%, up 170 basis points from a year ago and down slightly from the last quarter as a result of re-merchandising efforts, which are going well. We achieved renewal spreads of 23% and new leasing spreads of 9.5% for a combined overall positive leasing spread of 20.8% in the quarter.
It is gratifying to see the number of trends that we act upon, acted upon a decade ago really accelerated in the recent quarters, and we're working hard to capitalize on those trends. Probably the most important activity we do in order to ensure we're skating to where the puck is going is the mix of businesses we select for our centers. Getting this mix right drives traffic for every tenant in the center and paves the road for additional leasing successes, both with new and renewing tenants. It underpins our philosophy that shorter leases allow us a better share in the success of our tenants, providing our investors with a better protection of, against inflation.
In turn, the shorter leases allow us to be much more nimble in terms of optimizing our tenant mix to best service the surrounding neighborhood, where active managers are by centers. Their shorter refresh rate allows us to ensure that our centers are thriving for their communities. Proactive management requires that we know how our tenant businesses are performing. We do. We're continually verifying that local customer demand is being met. We're designed Whitestone to take better action if the business is not meeting those needs. We have a very low number of big box tenants outside of grocery stores and a risk-dispersed tenant mix with minimal tenant concentration. Our largest tenant makes up only 2.2% of our base rent. In the news recently, we have one Bed Bath & Beyond. Our mix focuses instead on restaurants, medical, self-care, education, and entertainment offerings.
The Bed Bath & Beyond we have is located in our center of McKinney, Texas, just north of the Dallas Platinum Corridor. The center is anchored by a Trader Joe's. We look forward to having the space back as it is already in very high demand. Instead of big box tenants and power centers, we have entrepreneurial tenants, often fast-growing regional franchises. We've anchored either by grocery restaurants or a combination of high-traffic tenants. We've averaged over 25 tenants per center. We have a very high retention rate, providing a high dispersion of risk for our investors. One of the advantages that arises from the closeness that we have with our tenants is that we have a very good pulse on the current business environment in Texas and Arizona. Consumer demand remains very strong within our markets.
Additionally, many service-oriented businesses within our center are low capital businesses because they don't have capital tied up in inventory. We're keeping an eye out to see if credit conditions become a concern, but we're seeing no evidence currently in either Texas or Arizona. Scott?
Thank you, Christine, and good morning. Our solid first quarter results demonstrate the strength of our high-quality portfolio of properties, as evidenced by robust leasing spreads and positive same-store NOI growth. Our NAREIT Funds From Operations per diluted share was $0.24 for the quarter versus $0.30 for the same period in 2022. Notably, last year's figures include a benefit of $0.04 from forfeiture of restricted equity compensation stock. Our first quarter results were driven by strong NOI growth, largely due to higher base rent of $900,000, offset by higher inter-interest rate costs. In addition, pro rata FFO from our joint venture was lower by approximately $500,000. Same-store NOI was a positive 2.8% increase, fueled by strong leasing spreads and increased year-over-year occupancy.
Furthering our ability to narrow in on our guidance target and minimize interest rate risk, we entered into an interest rate swap on $50 million of variable rate debt on the last day of the quarter, reducing our variable rate debt to $63 million or approximately 10% of our total debt. The SOFR curve would indicate rates will flatten or fall soon, we are well positioned to sustain a higher interest rate market duration. Shown on slide nine, while we estimate higher interest rates to be a drag on 2023 earnings, we expect same-store NOI growth and scaling of G&A infrastructure to positively contribute to our 2023 results. We continue to strengthen our balance sheet with improved debt leverage from $8 million in lower net debt and increased EBITDARE with lower variable rate interest exposure.
Our EBITDAre ratio improved to 7.8 turns as compared to 8.1 turns a year ago, excluding stock forfeiture benefit in 2022, and our variable rate debt as a percentage of total debt improved to 10% from 17% at year-end. We have a well-laddered debt stack with limited maturities coming due over the next three years, and we expect to continue to focus on strengthening our financial position to position us for opportunities as they occur. Let me conclude my prepared remarks by reaffirming our full year 2023 guidance. As Christine and Dave both said, our results are in line with our internal monthly and quarterly expectations and have us well on track for achieving our 2023 full year targets. With that, we'll open the line for questions.
Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Anthony Hau with Truist Securities. Please go ahead.
Good morning, guys. Can you guys please provide a little bit more color on the interest on the Bed Bath & Beyond space and the mark-to-market opportunity there? Was getting the space back part of the initial guidance?
Yeah, thanks for the call or thanks for the question, Anthony. A couple of things regarding that space. It's a nice size. It's well-sized for the market. It's right across from a Trader Joe's, so it's a heavily trafficked center. The Trader Joe's does very, very well there. I would say that we're getting an interest from kind of a broad range really. It goes from fitness to, you know, possibly splitting the space. That's something we're taking a look at, which whenever we do a splitting of the space, we're looking for a premium. In addition, furniture. Let me tell you, it's ever since there has been trouble with Bed Bath & Beyond, we are receiving inquiries. That's been happening since the beginning of the year.
I think it's just important for us to evaluate all those opportunities, pick the best one for the mix, and because that center has so much traffic and has, you know, a little bit of challenges with the parking lot being so full from the Trader Joe's, that we blend that appropriately with the right user.
Hey, Anthony, it's Dave. I think the second part of your question was, is it included in our guidance? I'm gonna let Scott respond to that.
Yeah, the answer to that is no, we didn't anticipate Bed Bath & Beyond bankruptcy, but we view that as upside. There might be a short re-tenanting period, but no, that's not in the guidance.
And one-
very small % of our NOI.
It's small, but we also look forward to, when you get the opportunity of a well-placed box like this, number one, it was heavily restricted, and at the same time, we had a number of caps on it as well. I think when we turn this, we're gonna see some upside.
Do you mind quantifying that mark-to-market upside?
You know, I think it'd be premature probably to do that. All of us are kind of looking at each other, we feel very strongly that there is upside. As Scott said, it's granular. If you remember, we have a really nicely risk-diversified tenant base with no huge tenant concentration. Biggest tenant's 2.5%. Bed Bath & Beyond is one tenant, is not a large part of our revenue, we do feel confident that it's gonna be a positive upside and a positive to the center when we re-tenant that space.
Gotcha. How will the Whataburger space at Windsor Park? 'Cause I think right now it's categorized as a 24,000 office space. Just curious, what's the plan there for that space and what's the interest for that space as well?
It's similar in nature. Let me just walk back and explain how we look at when we get these spaces back. It was very similar to last year when we replaced the Randalls with an EOS. First of all, we look at the demand in the market, number one, what do we need to do to blend that center with the right merchandising mix? That's the first thing we look at as far as... We look at the comp set to not directly compete necessarily with what the comp set is, but what's missing in that market.
The third thing is that we look at the space itself and say, "What do we need to do here that we utilize that space in the appropriate way, whether it means demising it, so we get the best premium for it, or does it mean keeping, you know, the current infrastructure in the space, so we're not, we're not having to make an extreme change to, you know, to the value of that space?" In this case, this is a little bit of a different type of space than we normally have in our portfolio. We're being very selective as to who, you know, who we should put in there. In this case, we're a little more selective than because of the infrastructure already built into the space.
We have interest in it, but I think it's making, again, the right choice, and I'd rather evaluate making the right decision because these tend to be a little bit longer leases than what's normal in our portfolio.
I'll just add that that vacancy is factored into the guidance.
Hey, Anthony Hau, it's Dave Holeman. I'll add one more thing. This one was obviously we've known this. This is a training space for Whataburger University. Knew that they had plans to move out. Once again, this was known and is part of our re-tenanting efforts. We think that, you know, once we re-tenant it will be a positive for the space. This was known, included in the guidance, and we feel very good about the re-leasing.
When does that Office Depot lease expires at the center?
I think I heard a little bit. When does Office Depot do what?
The lease expires at the center.
The Office Depot lease at our Windsor Center in San Antonio.
I think that's a couple years out.
Yeah.
Yeah. I mean, that center is very stable. really hasn't had, you know, I think the turn that occurred in that center was years ago. That's really about 7- 10 years ago. That center's been very stable ever since. It's well established. It's sort of a gateway entrance into San Antonio, you know, with two major highways and coming in, so it's a desirable location. It's a little bit of an unusual center for us. It's part of the legacy portfolio. as a, you know, again, it's not our type of center, generally speaking, but it has the Office Depot, it has a PetSmart, it has Rosses and a Burkes. Those tenants really haven't. They've been there for quite some time, so, relatively stable.
Again, a little unusual center for our type of mix.
Gotcha. Thanks for taking my question, guys.
Thanks, Anthony.
Thank you.
Our next question comes from Mitch Germain with JMP Securities. Please go ahead.
Yeah, good morning. Just back to the decline in occupancy. I think you characterized it as remerchandising efforts, but, you know, we're at about 100 basis points. Anything more specific you can provide there?
Yes. I think really our focus on quality of revenue has been to look through the current portfolio. I'm gonna walk this back a little bit, but we started this during COVID in looking at what type of tenants were successful, really diving into understanding their performance during COVID, and then going forward. You know, rather than nurse a tenant along if they're not really serving this, the community successfully, we've taken an active role in making changes quicker and faster because I find that if you leave a tenant on the rolls that's not performing well rather than taking an active stance against them, the leasing agents don't market it as they should. We changed our philosophy. It's worked really well for us.
I think I'll be showing some data really the next time around about retention and why this is healthy for our portfolio. I think a number of those active stance that we've taken over the last year has probably pushed some tenants out quicker than we normally would because I'd rather have the space actively marketed in a very, very hot market right now. In addition to that, it's not unusual that we do have this on the first quarter. The last two years, we had such hot demand in the first quarters, it was a little unusual. Normally, we always have a little bit of a fall off in the first quarter. It's not, you know, it's not out of theme for us.
That being said, we're right on track with where we expect to be for the year.
Yeah, Mitch, it's Scott here. I'll just mention that when we do our forecasting, we look at all 1,500 tenants and forecast those out for the entire year. We're just a little bit above the forecast actually for first quarter in terms of occupancy, so there's nothing unexpected with where we are right now.
To that point, Scott, is there a little bit of a bias maybe toward the lower to the midpoint because of some of the uncertainty that, or the unknowns like Bed Bath? Are you still confident that the plan can evolve as the year progresses?
I think we're confident that we're gonna end up where we expected, around the midpoint of the guidance.
Okay. Last one for me. Just curious about tenant demand. I think Christine said, or maybe it was Dave said, obviously it's kinda, you know, the sweet spot is that smaller part of the market. I'm just curious about how the pipeline looks this year versus pipeline looks today versus like, you know, maybe this time last quarter.
Let me just clarify, Mitch. Are you talking about the leasing pipeline?
Yes, please.
Okay, great. Thank you. I'll let Christine comment on that. Yeah.
What we're seeing is that the stronger operators are very, very active in the market, and that's what we prefer. This last quarter we've had, same thing with our restaurant spaces, which if you have a second-generation restaurant space, I'd rather have that available to market if we have a weak tenant, which again, we've been very active in replacing. I haven't seen the demand pull back for restaurants at all. In fact, it's still increasing. Again, what we're finding is those that are seeking those types of locations are quality, well-developed operators that have scale. We haven't seen a change with the exception of, I would say that there's little less, new entrepreneurs coming to the market with, you know, less experience.
If anything, it's been consistency with those that know the strength of our markets, have strong businesses, and are continuing to grow.
Great. Last one. Scott, was there any one-timers this quarter? I think I saw a lease term fee. Is there anything that we should be aware of?
No, not really. I mean, we list out the lease term fees in our same-store reconciliation. You can look to see that. If anything, with locking the interest rates, we might have a little bit of upside on interest rate versus where we forecasted. No, I can't really think of any one-timers that we need to call out.
Great. Thank you.
Thanks, Mitch.
Our next question comes from John Massocca with B. Riley Securities. Please go ahead.
Yeah, good morning, guys. You've had a significant amount of variability in your Pillarstone results. I think it was about $0.01 per share year-over-year. I guess, can you give us some color on how we should think about, you know, what Pillarstone will contribute or maybe take away from Whitestone this year? I know you mentioned there weren't any one-timers, but speaking specifically to the Pillarstone results, were there any adjustments there? Thank you.
Hey, hey, John. Good morning, and thanks for your comment. This is Dave. I'll start out and then I may hand it over to Scott to talk more financially about it. One of the things we've communicated is a goal for us is to exit our JV relationship with Pillarstone. We've said we'd like to monetize that. The asset is underperforming and not returning what we expect for our shareholders. We, as a company, are working toward that, in a lot of ways, toward exiting that partnership. That's largely through the court system at this time. We are committed to exiting that partnership. That said, right now I think we are doing our best to estimate the financial performance.
Pillarstone is a public company and is delinquent in their SEC filings for a few quarters. We're using the information that's available. We're having some communication and doing our best to estimate it, but that investment is significantly underperforming, and we are committed toward working toward an exit of that. Scott, you wanna add anything?
I would just add that when we think about Pillarstone from a cash flow perspective, it's a 100% upside for us at this point. There's not distributions coming from Pillarstone, and we do have some legal fees that are embedded in our G&A costs for the last year or so.
Exiting, I think we'll see improvement in G&A when we're able to exit and when we ought to monetize some of that in-investment that we have on the balance sheet right now. From a GAAP basis, while we see some amount of loss right there, the, there's no cash flow going out other than legal fees to try to monetize it. I think in the future, it should be thought of as upside from a cash flow perspective.
Got it. We're able to transact successfully in the fourth quarter, and I know you kind of are thinking about capital recycling again. Dave, I guess would be curious sort of what your thoughts are on this year and in this current environment and what you're seeing?
Yeah. Dave, once again, John. The transaction market continues to be shallow. I think you've probably heard that theme from others. We are seeing a little bit of movement in cap rates, but not a lot. We are, you know, we're targeted very much in the markets we're in, we are, you know, deeply looking for opportunities. You know, I think there's obviously a need for the interest rates to stabilize or get some predictability. As we did last year, we recycled about $40 million in dispositions. We used those proceeds to buy a great acquisition in The Woodlands, Texas, as well as contribute to our deleveraging. I think we would expect to do the same this year.
We're actively looking for opportunities. We're continuing to recycle. If you think about our portfolio, just like a portfolio of stock, it's important that we look at each asset and, you know, look to when is the right time to sell and when's the right time to own. Not a big amount, but probably similar to what you saw us do last year from a recycling perspective, with the goals being to sell assets and buy new assets that are more accretive kind of day one and in the future, as well as contributing to strengthening of the balance sheet.
Okay, great. Just one more for me. Christine, circling back to your remerchandising efforts, I'd be curious if there's any sort of themes that you see that are either consistent with where they were last year or maybe changing in this environment. I feel like last year, Whitestone was pretty positive on, you know, a number of the restaurants and the strength of the QSRs and fitness. I guess kind of what are you looking thematically, if there is a theme, as far as moving tenants in versus, you know, getting rid of some other categories?
Yeah, restaurant's still very hot this year. Again, this is why we're proactively making changes because if you have a restaurant that's not performing well in this market, we believe being active with that tenant and making a shift to somebody else that would better serve that community is the right thing to do. It has not slowed down in that space at all. It's the same thing as QSRs. In addition to the QSRs, I think it's still that affordability factor that we look for. Restaurants that really serve in the ticket price that works for families, works for, you know, a consistent stickiness to a client that comes back often is we're staying within that range, and that's really worked well for us.
In addition, we're seeing this is something that's, again, I'm just watching this more than anything, but we are seeing kind of an interesting change with the workforce coming back and owners of businesses that wanna attract talent going into horizontal, I call horizontal office space. It's kind of unusual, but it's something that when we have a space available at some of our mixed-use centers, which have a little bit of this component, it fills up. Those space sizes tend to be, again, the same range, small, about 1,000 to maybe 1,500 sq ft. When they're ready, you know, we just clean them up, paint them up, maybe have to recarpet them sometimes, but they lease up. They've been leasing up very quickly in our markets. Little unusual.
It's not something that we focus on too deeply, but it started with some of our CUBExec space, which is always been, you know, well occupied in our centers, and it drives that daytime traffic. Really the last two quarters, we saw it the last quarter of last year and this 1st quarter, we had some interesting trends there. Again, we look at that as being closer to the suburbs, being out, you know, where amenitization is really important and convenience is really important as well. In addition, I'd say a little bit of a pullback in fitness. I think that's just because last year there was such a demand for it, and I think it's just normalized.
Not, you know, just across all of our groups, we've seen pretty good, strong demand, especially again in the size spaces that we have, which again are about, you know, that 1,500-2,500 sq ft. Easy to lease, flexible to shift towards the demand of the market.
Great. Thanks.
Our next question comes from Gaurav Mehta with EF Hutton. Please go ahead.
Yeah, thanks. Good morning. I wanted to ask you on your asset recycling comments again. You know, if you were to acquire any properties this year, should we expect that would be match funded by dispositions?
hey Gaurav, this is Dave. Thanks for your question. I think your question was, on the disposition acquisition side, should we expect those to be in balance? Is that your question?
Yes.
Okay. Yeah, I think that's absolutely correct. You know, we are given right now, given the position and we're very disciplined on our capital allocation. Right now, given the, you know, the current market conditions, we've identified that from an acquisition disposition standpoint, we believe that recycling is what's best for us to do. Obviously, we continue to look for opportunities in the marketplace and be aware of those. Right now, we've from an acquisitions perspective, we've targeted funding that through recycling.
Okay. Second question I wanted to ask you on your debt maturity for 2023, the 4.28% note that you're expiring in June. Should we expect that you will replace that with credit line?
I think right now that's the most likely scenario. We'll look at all refinancing options, but more than likely, we'll roll it into the revolver. It's part of the reason we locked down $50 million of debt. We're down to 10% floating rate debt right now, and that gives us the ability to be flexible and use the facility to handle these maturities that are coming due in the next three years, which are on the smaller side.
Okay. Where are the rates today for fixed rate notes?
I'm sorry, I didn't understand the question.
What are the rates, for the fixed rate notes, versus credit line, if you were to issue a new note?
While Scott's looking, I think the question was, what are the rates, fixed rates versus the credit line? credit line is the revolver is priced at a variable rate that is SOFR plus I think we're at about 160 today. I think that's in the SOFRs around 4-ish, I believe, so in the 5-6 range. Fixed rates, Scott's looking at that and should be able to give it from you from our sub data.
Yeah. It looks like the fixed rate note that's expiring in 2023 is around 4.25%. 24, closer to 4.5% or 5%. A bit of an increase on the rate, that is factored into our guidance and the way we've forecasted that is to roll it into the facility using the SOFR curves.
Okay. Thank you.
Thanks, Gaurav.
Our next question comes from Michael Diana with Maxim Group. Please go ahead.
Hey, Dave. I think you may have partly answered this on your when you talked about recycling, your recycling plan, but is there any update on out parcel developments or any redevelopments?
Hey, Michael. Dave, thanks for your question. I'm gonna give you just a quick thought, and then I'll ask Christine to maybe give more on it. As we've communicated in the past, one of the things that Whitestone has as far as embedded value is the opportunity to develop some pad sites and a few land parcels that we acquired when we bought centers, really looking for future value add. Continue to have those, and I'll turn it over to Christine to give a little bit of an update on those activities.
The demand is there. I think it's frustratingly slow with cities, with approvals. It started during COVID, and you would think that some of the pipeline has moved through a little quicker, but we're just finding that it's been very challenging from the what you would consider the pre-development aspects of a project. The pre-development aspects of a project are working with the approval rights with the city, working with your architects and engineers. It has not been for lack of demand. It's really been for what I would say is the timing. It's taking twice as long as it normally takes to work through the early, the pre, you know, what would, again, be the pre-construction of a project. Once you...
We are finding though that costs are coming down a little bit for those, so that's been good. It is, it's been very sluggish working these things through the approval process.
Think about it in terms of, I think one of our assets we recycled in 2022 was the pad site that we had built for Dunkin' Donuts. You know, we've got a few of those in our portfolio that we can do similar, but I think we built that pad site at probably about, you know, double the return, closer to a 10% kinda return on cost, and we were able to sell it at probably half of that from a cap rate perspective. Small amount. We've got the number of pad sites. I think one of the things that Christine has commented on before is from a use perspective, we continue to see smaller pad sites. There's some really interesting folks out there that are doing even smaller sites.
The ability to put those on our properties continues to increase because they take up less space and potentially less of our parking.
Great. Thanks for the update.
Thanks, Michael.
There are no further questions at this time. I would now like to turn the floor back over to Dave Holeman, Chief Executive Officer, for closing comments. Please, sir, go ahead.
Thank you. Thanks to all for joining today's call, and we really appreciate your interest in Whitestone. I would like to share that we're very pleased to have Julia Buthman as a nominee for the Whitestone Board of Trustees at our upcoming annual meeting of shareholders on May 12th. Julia will be our third new addition to our board since the beginning of last year, and she brings strong skills to our board after a 35-year career, really investing in senior debt, subordinated debt, and structured equity with Prudential largely. Julia's upcoming addition to our board is gonna continue to strengthen our governance, continue to strengthen our alignment with shareholders, and really making our board a better reflection of society and our customers with 50% female representation on our board. We're super excited and really wanted to welcome Julia.
With that, I will now conclude the call and wish everyone a great day. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.