On Friday, Truist Securities adjusted its outlook on Whitestone REIT (NYSE:WSR), increasing the price target to $16.00 from the previous $15.00, while reaffirming a Buy rating for the stock. Currently trading at $14.88, the REIT has shown strong momentum with a 25.39% year-to-date return and is trading near its 52-week high of $15.01.
According to InvestingPro analysis, the stock appears to be trading above its Fair Value. The adjustment follows the company's third-quarter financial results for 2024.
The analyst from Truist Securities has decided to maintain the 2024 Core Funds From Operations (FFO) per share at $0.99 and has increased the 2025 Core FFO projection to $1.07 per share. With a solid dividend yield of 3.33% and a 15-year track record of maintaining dividend payments, Whitestone REIT demonstrates strong income potential for investors.
This forecast is based on several key assumptions for the year 2025, including a steady year-over-year occupancy rate, a 15% increase in Generally Accepted Accounting Principles (GAAP) lease spreads, a bad debt reserve equal to 0.90% of Annualized Base Rent (ABR), and $40 million in dispositions related to Pillarstone assets. Get access to more detailed financial metrics and 7 additional key insights with InvestingPro.
The revised $16 price target is derived from a combination of valuation methods. One-third of the valuation is based on a discounted cash flow estimate of $17.68, another third assumes a 10% discount to the projected Net Asset Value (NAV) one year from now, and the final third is based on a multiple of 14 times the estimated 2025 FFO per share.
Whitestone REIT is currently trading at a 9% discount to Truist's NAV estimate. This represents a narrower discount compared to the average 20% discount to consensus NAV that the stock has experienced over the past three years. The price-to-FFO multiple for 2025 is also set at 14 times according to the analyst's evaluation.
In other recent news, MCB Real Estate withdrew its acquisition offer for Whitestone REIT due to resistance from the latter's board. The retracted proposal, which valued Whitestone at $15 per share, was dismissed despite its potential to maximize shareholder value. MCB, however, remains a significant shareholder of Whitestone and is considering other options to ensure the board fulfills its responsibilities.
Simultaneously, Whitestone REIT showcased robust financial performance in Q3, as reported by CEO Dave Holeman and CFO Scott Hogan. The company reported a core Funds From Operations (FFO) of $0.25 per share and increased its annual same-store Net Operating Income (NOI) growth guidance to a range of 3.75% to 4.75%. Furthermore, Whitestone added $20 million in unsecured debt and extended a term loan to Q1 2028 to strengthen its financial position.
In addition to its financial growth, Whitestone made strategic progress by adding a high-end liquor store and an Asian grocer to its portfolio, driving occupancy rates to 94.1%. The company also plans to onboard two new trustees by the end of the year. Despite concerns about the timing of leasing activity impacting Q4 same-store NOI growth, Whitestone's management expressed confidence in maintaining momentum into Q4 and aims to maintain a debt-to-EBITDA ratio between 6.6 to 7 times by year-end.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.