Whitestone REIT has recently announced its definitive proxy materials filing with the Securities and Exchange Commission (SEC) regarding its 2024 Annual Meeting of Shareholders scheduled for May 14th, 2024. This move marks a pivotal moment for the company, urging shareholders to stand by Whitestone’s board by voting for its highly qualified trustees on the WHITE proxy card.
The background to this situation is marked by a significant change in leadership in 2022, which saw Whitestone veering onto a path of strategic value creation, yielding among the highest REIT performing shareholder returns. However, this positive stride has been challenged by Erez Asset Management (Erez), engaging in what Whitestone describes as an unnecessary, self-serving, and misguided proxy contest.
Since David Holeman took the helm as CEO in January 2022, Whitestone has executed a successful strategy focused on delivering superior shareholder returns and improving significant operational metrics such as revenue, same-store NOI, occupancy rate, annual net effective average base rent, and leasing metrics. This strategic shift came after a period of turmoil under its former CEO, which necessitated a decisive change to steer the company back to success.
Despite Whitestone’s progress under Holeman’s leadership, Erez Asset Management has launched a campaign aiming for a change in Whitestone’s Board. Erez’s campaign, according to Whitestone, seeks an immediate sale or liquidation of the company without offering any substantial operational, financial, or strategic plans for improvement. Whitestone believes that such an approach risks derailing the company’s current momentum and undermining the value creation achieved so far.
Whitestone’s board has evaluated the propositions by Erez, particularly the candidacy of Bruce Schanzer and Catherine Clark for the board, and found them lacking in contributions towards shareholder value creation. The board’s position is that under its current leadership, Whitestone has become its own change agent, adopting a long-term strategy that has delivered industry-leading total shareholder returns.
The board’s strategic efforts have not only revolved around operational improvements but also significant financial maneuvers aimed at strengthening Whitestone’s balance sheet. This includes reducing leverage and resolving previous litigation, which has further fortified the company’s financial standing.
Addressing Erez’s campaign directly, Whitestone makes a compelling argument against the proposed immediate sale or liquidation of the company. They highlight the adverse market conditions, including high-interest rates and a slow transaction market, suggesting that a sale under these conditions could be detrimental to long-term shareholder value.
Whitestone REIT’s story is one of transformation and resilience, led by a revitalized management team and a board committed to executing a strategy that secures its position as a leader in the REIT industry. The narrative being presented to shareholders emphasizes a clear choice; support for Whitestone’s current trustees is depicted as a vote for sustained strategy, execution, and governance that aims to enhance long-term shareholder value.
In conclusion, Whitestone REIT stands at a crossroads, with its board and management team advocating for continued support from its shareholders. They argue that the strategic path laid out since the leadership change, focused on value creation and operational excellence, is the right course for the company. As the 2024 Annual Meeting of Shareholders approaches, the outcome of this proxy battle will be keenly observed by the real estate investment community.
