NEW ROCHELLE, N.Y. - Erez Asset Management, LLC, a shareholder of Whitestone REIT (NYSE:WSR), announced today its intention to nominate two candidates for election to the company's Board of Trustees at the upcoming annual meeting anticipated in May. The investment firm, which specializes in undervalued small market cap REITs, cited Whitestone's history of underperformance and questionable governance as the impetus for its action.
Erez's nominees, Bruce Schanzer, a former shopping center REIT CEO, and Cathy Clark, a former senior investment executive at a shopping center REIT, are expected to provide independent oversight and apply their extensive experience in real estate and REIT operations.
The firm encourages Whitestone shareholders to demand answers from the current management regarding its capital allocation strategies and the rationale behind remaining an independent public company amid significant costs and high debt levels.
Whitestone recently received a buyout proposal from Fortress Investment Group LLC, which was reportedly rejected by the company's management. Erez questions the decision, emphasizing the offer's premium over the market price and the potential for value destruction through equity issuances below net asset value (NAV). Erez estimates that approximately $75-80 million in shareholder equity value has been lost due to these issuances.
The firm also criticizes the composition of the current Board of Trustees, noting a lack of members with direct experience in shopping centers or REIT capital markets, which they believe may be connected to Whitestone's chronic underperformance.
Erez plans to file and mail proxy materials to Whitestone shareholders to support its candidates' election. The firm's founder, Bruce Schanzer, previously led Cedar Realty (NYSE:CDR) Trust, a shopping center REIT, and established Erez in 2022 following Cedar's monetization.
The information presented is based on a press release statement from Erez Asset Management.
InvestingPro Insights
In light of Erez Asset Management's push for changes at Whitestone REIT, a closer look at the company's financial metrics provides a clearer picture of its current standing. According to InvestingPro data, Whitestone REIT has a market capitalization of $598.99 million and is trading at a P/E ratio of 15.83. This valuation may seem attractive, especially considering the company's PEG ratio over the last twelve months as of Q3 2023 stands at a mere 0.15, indicating potential undervaluation relative to near-term earnings growth.
An InvestingPro Tip highlights that Whitestone REIT has maintained dividend payments for 15 consecutive years, showcasing a reliable return to shareholders. This is particularly relevant as Erez Asset Management scrutinizes the company's capital allocation strategies. The dividend yield as of the latest data is 4.1%, which could be an enticing figure for income-focused investors.
However, not all signals are positive. Another InvestingPro Tip points out that Whitestone's short-term obligations exceed its liquid assets, which could raise concerns about the company's liquidity and financial flexibility. This is a factor shareholders may want to consider when assessing the company's financial health and the validity of Erez Asset Management's concerns.
For those seeking a deeper dive into Whitestone REIT's financials and strategic outlook, there are additional tips available on InvestingPro. Readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, which includes comprehensive analysis and real-time data to inform investment decisions.
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