Whitestone REIT Debt Disclosure

8.  DEBT

 

Mortgages and other notes payable consist of the following (in thousands):

 

Description		December 31, 2025				December 31, 2024
Fixed rate notes
$375.0 million, 3.40% plus 1.25% to 1.85% Note, due January 31, 2031 (1)		$	375,000			$	—
$265.0 million, 3.18% plus 1.45% to 2.10% Note, due January 31, 2028 (2)			—				265,000
$20.0 million, 3.67% plus 1.50% note, due January 31, 2028 (3)			—				20,000
$80.0 million, 3.72% Note, due June 1, 2027			80,000				80,000
$50.0 million, 5.09% Note, due March 22, 2029 (Series A)			28,571				35,714
$50.0 million, 5.17% Note, due March 22, 2029 (Series B)			40,000				50,000
$2.5 million, 7.79% Note, due February 28, 2025			—				429
$50.0 million, 3.71% plus 1.50% to 2.10% Note, due September 16, 2026 (4)			—				50,000
$56.3 million, 6.23% Note, due July 31, 2031			56,340				56,340
$17.7 million, 3.81% Note, due November 6, 2029			17,650				—
Floating rate notes
Unsecured line of credit, SOFR plus 1.30% to 1.90%, due September 19, 2029			51,791				—
Unsecured line of credit, SOFR plus 1.50% to 2.10%, due September 16, 2026			—				75,000
Total notes payable principal			649,352				632,483
Less unamortized debt discount			(997	)			—
Less deferred financing costs, net of accumulated amortization			(4,430	)			(965	)
Total notes payable		$	643,925			$	631,518

 

(1)	Promissory note that includes an interest rate swap that fixes the SOFR portion of the term loan at an interest rate of 3.40% through September 30, 2026, 3.36% from October 1, 2026 through January 31, 2028, and 3.42% from February 1, 2028 though January 31, 2031.

 

(2)

Promissory note included an interest rate swap that fixes the Secured Overnight Financing Rate (“SOFR”) portion of the term loan at an interest rate of 2.16% through October 28, 2022, 2.76% from October 29, 2022 through January 31, 2024, and 3.32% beginning February 1, 2024 through January 31, 2028.

 

(3)	Series One Incremental Term Loan included an interest rate swap that fixed the term loan rate at 5.165% through January 31, 2028.

 

(4)	A portion of the unsecured line of credit included an interest rate swap to fix the SOFR portion of the loan at 3.71%.

 

 

On November 6, 2025, the Company assumed a $17.7 million term loan in connection with the acquisition of the World Cup Plaza property, which matures on November 6, 2029 and bears interest at a stated rate of 3.81%. The assumed loan was initially recorded at its acquisition-date fair value of $16.6 million, with the $1.1 million difference between the contractual principal amount and the fair value recognized as a discount. The discount is amortized to interest expense over the remaining contractual term of the loan using the straight-line method, which approximates the effective interest method. The fair value of the assumed loan was estimated using a discounted cash flow methodology, which considers contractual future cash flows and observable market interest rates for debt instruments with similar terms and credit risk, and is classified within Level 2 of the fair value hierarchy.

 

On  June 21, 2024, Whitestone REIT, operating through its subsidiaries Whitestone Strand LLC, Whitestone Las Colinas Village LLC, and Whitestone Seville, LLC (collectively, the “Borrower”), entered into a loan agreement (the “Loan Agreement”) with Nationwide Life Insurance Company (the “Lender”) for a mortgage loan in the principal amount of $56,340,000 (the “Loan”).

 

The Loan provides for a fixed interest rate of 6.23% per annum. Payments commence on  August 1, 2024, and are due on the first day of each calendar month thereafter through  July 1, 2031, with interest-only payments for the first 36 months. Monthly payments consist of principal and interest based on a 30-year amortization schedule beginning on  August 1, 2027. The Loan  may be prepaid in full but not in part, provided that, as conditions precedent, Borrower: (i) gives Lender not less than fifteen (15) days prior notice of Borrower’s intention to prepay the Loan; (ii) pays to Lender the prepayment premium as set forth in the Loan Agreement, if any, then due and payable to Lender; and (iii) pays to Lender all other amounts then due under the loan documents. No prepayment premium is required for prepayments in full made on or after six months prior to the maturity date.

 

The Loan is a non-recourse loan secured by three of the Company’s properties including their related equipment, fixtures, personal property, and other assets, and a limited carve-out guarantee by the Company’s operating partnership.

 

The loan documents contain customary terms and conditions, including without limitation affirmative and negative covenants such as information reporting and insurance requirements. The loan documents also contain customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants, and bankruptcy or other insolvency events. Upon the occurrence of an event of default, the Lender is entitled to accelerate all obligations of the Borrower. The Lender will also be entitled to receive the entire unpaid principal balance at a default rate.

 

The Loan proceeds were used to pay down the Borrower’s existing floating rate indebtedness.

 

On March 22, 2019, we, through our Operating Partnership, entered into a Note Purchase and Guarantee Agreement (the “Note Agreement”) together with certain subsidiary guarantors as initial guarantor parties thereto (the “Subsidiary Guarantors”) and The Prudential Insurance Company of America and the various other purchasers named therein (collectively, the “Purchasers”) providing for the issuance and sale of $100 million of senior unsecured notes of the Operating Partnership, of which (i) $50 million are designated as 5.09% Series A Senior Notes due March 22, 2029 (the “Series A Notes”) and (ii) $50 million are designated as 5.17% Series B Senior Notes due March 22, 2029 (the “Series B Notes” and, together with the Series A Notes, the “Notes”) pursuant to a private placement that closed on March 22, 2019 (the “Private Placement”). Obligations under the Notes are unconditionally guaranteed by the Company and by the Subsidiary Guarantors.

 

On December 16, 2022, Whitestone REIT (the “Company”) and its operating partnership, Whitestone REIT Operating Partnership, L.P. (the “Operating Partnership”), amended its Note Purchase and Guarantee Agreement originally executed on  March 22, 2019 (the “Existing Note Agreement”), pursuant to the terms and conditions of an Amendment No. 1 to Note Purchase and Guaranty Agreement, dated as of December 16, 2022 (the Existing Note Purchase Agreement, as so amended, the “Amended Note Agreement”), by and among the Company and the Operating Partnership, together with certain subsidiary guarantors as initial guarantor parties thereto and The Prudential Insurance Company of America and the various other purchasers named therein.

 

Neither the term of the Existing Note Agreement, the interest rate, nor the principal amounts, were amended. The purpose of the amendment is to conform certain covenants and defined terms contained in the Amended Note Agreement with the Company’s recently amended unsecured credit facility with the lenders party thereto, Bank of Montreal, as administrative agent, Truist Bank, as syndication agent, and BMO Capital Markets Corp., Truist Bank, Capital One, National Association, and U.S. Bank National Association, as co-lead arrangers and joint book runners.

 

The principal of the Series A Notes began to amortize on March 22, 2023 with annual principal payments of approximately $7.1 million. The principal of the Series B Notes began to amortize on March 22, 2025 with annual principal payments of $10.0 million. The Notes will pay interest quarterly on the 22nd day of March, June, September and December in each year until maturity.

 

The Operating Partnership may prepay at any time all, or from time to time part of, the Notes, in an amount not less than $1,000,000 in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus a make-whole amount. The make-whole amount is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the Notes being prepaid over the aggregate principal amount of such Notes (as described in the Note Agreement). In addition, in connection with a Change of Control (as defined in the Note Purchase Agreement), the Operating Partnership is required to offer to prepay the Notes at 100% of the principal amount plus accrued and unpaid interest thereon.

 

 

 

The Note Agreement contains representations, warranties, covenants, terms and conditions customary for transactions of this type and substantially similar to the Operating Partnership’s existing senior revolving credit facility, including limitations on liens, incurrence of investments, acquisitions, loans and advances and restrictions on dividends and certain other restricted payments. In addition, the Note Agreement contains certain financial covenants substantially similar to the Operating Partnership’s existing senior revolving credit facility, including the following:

 

•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

 

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

 

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

 

•

maximum secured recourse debt to total asset value ratio of 0.15 to 1.00;

 

•

maintenance of a minimum tangible net worth (adjusted for accumulated depreciation and amortization) of 75% of the Company's total net worth as of December 31, 2021 plus 75% of the net proceeds from additional equity offerings (as defined therein); and

 

•

minimum adjusted property NOI to implied unencumbered debt service ratio of 1.50 to 1.00.

 

In addition, the Note Agreement contains a financial covenant requiring that maximum unsecured indebtedness not exceed the ratio of unsecured indebtedness to unencumbered asset pool of 0.60 to 1.00. That covenant is substantially similar to the borrowing base concept contained in the Operating Partnership’s existing senior revolving credit facility.

 

The Note Agreement also contains default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants, cross-defaults with other indebtedness and guarantor defaults. The occurrence of an event of default under the Note Agreement could result in the Purchasers accelerating the payment of all obligations under the Notes. The financial and restrictive covenants and default provisions in the Note Agreement are substantially similar to those contained in the Operating Partnership’s existing credit facility.

 

Net proceeds from the Private Placement were used to refinance existing indebtedness. The Notes have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Notes were sold in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

 

On  September 19, 2025, we, through our Operating Partnership, entered into an unsecured credit facility (the “2025 Facility”) pursuant to that certain Fourth Amended and Restated Credit Agreement (the “A&R Credit Agreement”), by and among the Operating Partnership, the Guarantors from time to time parties thereto, the several financial institutions from time to time party thereto and Bank of Montreal, as administrative agent (the “Administrative Agent”). The A&R Credit Agreement amends and restates that certain Third Amended and Restated Credit Agreement, dated  September 16, 2022 with the Administrative Agent, and the other agents and lenders named therein (as amended, restated, supplemented or otherwise modified prior to  September 19, 2025, the “Prior Credit Agreement”) and replaces the Company’s previous unsecured revolving credit facility, dated  September 16, 2022.

 

The 2025 Facility is comprised of the following two tranches:

 

•

$375.0 million unsecured revolving credit facility with a maturity date of September 19, 2029, with two six-month options to extend the maturity date to September 19, 2030 (the “Revolver”); and

 

•

$375.0 million unsecured term loan with a maturity date of January 31, 2031 (the “Term Loan”).

 

Borrowings under the 2025 Facility accrue interest (at the Operating Partnership's option) at a Base Rate or Term SOFR plus an applicable margin based upon our then existing total leverage. Based on our current leverage ratio, the Revolver has initial interest rate of Term SOFR plus 1.30%. In addition, the Company entered into interest rate swaps to fix the Term SOFR rates on the Term Loan.

 

As of December 31, 2025, the interest rate on the Revolver was 5.22%. The Term Loan with the swaps has the following interest rates:

 

•

3.40% (Term SOFR) plus 1.30% (current applicable margin) through September 30, 2026;

 

•

3.36% (Term SOFR) plus 1.30% (current applicable margin) from October 1, 2026 through January 31, 2028; and

 

•

3.42% (Term SOFR) plus 1.30% (current applicable margin) from February 1, 2028 through January 31, 2031.

 

As of  December 31, 2025, the Term Loan with the swap had a spread of 1.25%.

 

Base Rate means, for any day, the highest of: (a) the Administrative Agent’s prime commercial rate, (b) the sum of (i) the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York for such day, plus (ii) 0.50%, or (c) the sum of (i) Term SOFR for a one-month tenor in effect on such day plus (ii) 1.10%. Term SOFR means, for any such day, the SOFR-based term rate for the day two (2) business days prior.

 

The A&R Credit Agreement contains substantially similar terms to the Prior Credit Agreement. Other material terms, including financial covenants, were not changed by the A&R Credit Agreement, except as follows:

 

•

a 10 basis point credit spread adjustment previously applied to SOFR-based loans was eliminated;

 

•

the maturity date for both the Revolver and the Term Loan were extended to the maturity dates described above;

 

•

the interest rates were adjusted as described above; and

 

•

the unused fee applicable to the Revolver was reduced by 5 basis points in instances where the average daily unused commitments are less than 50% of the total revolving commitments.

 

At closing, the Company used (i) approximately $83.2 million of proceeds from the Term Loan to repay amounts outstanding under its previous unsecured revolving credit facility, (ii) $285 million of proceeds from the Term Loan to refinance in full the Company’s Term Loan and (iii) approximately $6.8 million from the Term Loan towards fees and expenses related to the A&R Credit Agreement.

 

 

As of December 31, 2025, subject to any potential future paydowns or increases in the borrowing base, we have $220.4 million remaining availability under the Revolver. As of December 31, 2025, $426.8 million was drawn on the 2025 Facility and our unused borrowing capacity was $323.2 million, assuming that we use the proceeds of the 2025 Facility to acquire properties, or to repay debt on properties, that are eligible to be included in the unsecured borrowing base. 

 

The Company, each direct and indirect material subsidiary of the Operating Partnership and any other subsidiary of the Operating Partnership that is a guarantor under any unsecured ratable debt will serve as a guarantor for funds borrowed by the Operating Partnership under the 2025 Facility. The A&R Credit Agreement contains customary terms and conditions, including, without limitation, customary representations and warranties and affirmative and negative covenants including, without limitation, information reporting requirements, limitations on investments, acquisitions, loans and advances, mergers, consolidations and sales, incurrence of liens, dividends and restricted payments. In addition, the A&R Credit Agreement contains certain financial covenants including the following:

 

•

maximum total indebtedness to total asset value ratio of 0.60 to 1.00;

 

•

maximum secured debt to total asset value ratio of 0.40 to 1.00;

 

•

minimum EBITDA (earnings before interest, taxes, depreciation, amortization or extraordinary items) to fixed charges ratio of 1.50 to 1.00;

 

•

maximum other recourse debt to total asset value ratio of 0.15 to 1.00;

 

•

maintenance of a minimum tangible net worth (adjusted for accumulated depreciation and amortization) of $527 million plus 75% of the net proceeds from additional equity offerings (as defined therein);

 

•

minimum adjusted property net operating income to implied unencumbered debt service of 1.50 to 1.00; and

 

•

maximum unsecured indebtedness to unencumbered asset pool value ratio of 0.60 to 1.00.

 

As of December 31, 2025, our $154.0 million in secured debt was collateralized by five properties with a carrying value of $254.4 million.  Our loans contain restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt and are secured by deeds of trust on certain of our properties and by assignment of the rents and leases associated with those properties. As of December 31, 2025, we were in compliance with all loan covenants.

 

Scheduled maturities of our outstanding debt as of December 31, 2025 were as follows (in thousands):

 

Year		Amount Due
2026		$	17,143
2027			97,414
2028			17,823
2029			35,517
2030			52,561
Thereafter			428,894
Total		$	649,352

 

As of December 31, 2025, we had the following contractual obligations (in thousands): 

 

						Payment due by period (in thousands)
																		More than
						Less than 1				1 - 3 years				3 - 5 years				5 years
Consolidated Contractual Obligations		Total				year (2026)				(2027 - 2028)				(2029-2030)				(after 2030)
Long-Term Debt - Principal		$	649,352			$	17,143			$	115,237			$	88,078			$	428,894
Long-Term Debt - Fixed Interest			120,774				27,431				47,717				42,499				3,127
Long-Term Debt - Variable Interest (1)			12,841				2,703				5,407				4,731				—
Unsecured credit facility - Unused commitment fee (2)			3,070				646				1,293				1,131				—
Operating Lease Obligations			579				250				329				—				—
Finance Lease Obligations			2,974				83				171				150				2,570
Total		$	789,590			$	48,256			$	170,154			$	136,589			$	434,591

 

(1)

As of December 31, 2025, we had one loan totaling $51.8 million which bore interest at a floating rate. The variable interest rate payments are based on SOFR plus 1.30% spread adjustment which reflects our new interest rates under our 2025 Facility. The information in the table above reflects our projected interest rate obligations for the floating rate payments based on one-month SOFR as of December 31, 2025, of 5.22%.

 

(2)

The unused commitment fees on our unsecured credit facility, payable quarterly, are based on the average daily unused amount of our unsecured credit facility. The fees are 0.20% for facility usage greater than 50% or 0.25% for facility usage less than 50%. The information in the table above reflects our projected obligations for our unsecured credit facility based on our December 31, 2025 balance of $426.8 million.