Whitestone REIT Shares Sold

When the Enhanced High Yield Porfolio was set up our intention was to have 1 REIT or MLP in the portfolio with potential to add a capital gain component to the fixed income mix.  With this in mind we purchased 300 shares of Whitestone REIT (NYSE:WSR) to “enhance” the return of the portfolio.  All other issues in the portfolio were either baby bonds or preferred stocks.

At the time of purchase WSR shares had fallen from the $15/share area to around $12/share which is where we made our purchase.

Almost immediately we questioned the wisdom of the purchase–reviewing an investor presentation after the purchase and comments from our reader “Bea” made us wonder if this purchase was a mistake. Within the investor presentation the company made it clear they want to reduce leverage–this is code (to us) that they may want to issue more shares and use the proceeds to reduce debt instead of investing in additional properties.  In the case of Whitestone the last time they sold shares it sent shares $3/share lower

On March 1st earnings were announced and while they were respectable investors did not like them at all–shares fell from the $12.40 to as low as $10 a few weeks later.

Obviously the issue that had been added to the portfolio to “enhance” returns was “destroying” returns.  The choice was to sell out and book the loss or simply hold since the dividend was around 10%.

Of course we held and were rewarded today when we sold the shares for $12.50.  This means we collected dividends 38/cents per share and have a capital gain of 46 cents so in total a return of just shy of 7% in about 140 days.

So the sale brings the portfolio back up to a 30% cash position which is too high from which to earn a reasonable return.  We will add 1 additional long term holding to the portfolio later this week (unknown what it will be at this point in time).  Additionally we will be watching for a new issue to replace WSR–a REIT or MLP which has potential to add not only a high dividend, but which also will produce a capital gain within a few months.

9 thoughts on “Whitestone REIT Shares Sold”

  1. I have three REITs you may wish to consider for the portfolio.
    HASI, JCAP and PEI.

    Each have very nice yields and the market sentiment for the stocks is not as good as it should be. Each have nice balance sheets and are improving their assets.

    I suspect PEI will be acquired at a premium within the next 18 months.

    I long all three names.

    1. Hi Greg–yes will consider. Am looking for the quick (a few months) 5% pop just for a little portfolio “juice”.

  2. hi Tim.. I bought a modest 200 shares of WSR 4/2017 at $12.45. To-date, my ROI is 10.24% (w/dividends). I was trying to hold out for the next x-d which is end of August. Me think I should get out while I’m ahead. Yield is nice but been itching to sell once it passed my buy-in price.

    1. Hi Rich–who knows for sure–but I am afraid as the price rises they are going to take the opportunity to drop 10 million more shares on the market which would knock a few bucks out of the shares price.

      1. oh I’m famous! I agree the concern w a nice interim gain in WSR is a potential share sale.. they will probably feel emboldened after the failure of KBS to win it’s proxy battle…mgmt. does not have to abide by the non binding vote to ignore exec comp issue and vote to declassify the board.. they may take notice that folks are unhappy but i doubt it.. if it sold off again would probably be worth a look for a trade like this!

        good move hanging on for the gain as reits were so oversold, even the more spec ones.. they have all come back a lot and are worth re-evaluating for sure! I got out of one today and another smallcap div riskier play both w nice gains and glad to pocket the bucks and collect my 2c/100 or so now for the next opportunities..

        best to all…appreciate the civil tone that we have on this forum. Bea

        1. Hi Bea–hope the civil tone continues–there has a bit of “tension” but nothing too bad—wish I had more time right now to participate.

  3. Hi Tim – FYI I too sold WSR late last week at $12.33 for a small profit. I’ve been watching the chart and it looks like it wants to roll over, and it has not kept pace with many other REITs, and I kept thinking about your comment on them wanting to reduce leverage. I also sold KIM but am hanging on to KIM-M, sold CUZ, HR, BXMT, but bought BXMT back today. Look forward to hearing which REITs you will buy soon. I’ll look at Greg’s suggestions and maybe Bea has some ideas too (hint).

  4. REIT consideration:

    WPC has the high dividend yield you’re looking for and has been oscillating within a nice trading range for years.

    https://www.morningstar.com/stocks/xnys/wpc/quote.html

    I’m long the holding and have accumulated phenomenal total returns from it.

    Another consideration would be STAG, a high yielding, monthly paying REIT.

    https://www.morningstar.com/stocks/xnys/stag/quote.html

    Yield is north of 5% and has been printing phenomenal earnings growth. It also has a preferred out there, STAG-C. One of its preferreds just got called, STAG-B.

    I am long both of the preferreds and used to be long the common in STAG.

    When it comes to MLP’s, for years, I’ve owned and followed what appear to be 2 excellent names: MMP and EPD. Currently, I’m only long EPD.

    https://www.morningstar.com/stocks/xnys/mmp/quote.html

    https://www.morningstar.com/stocks/xnys/epd/quote.html

    Yields are well north of 5 and 6%.

    1. I agree that WPC is a quality REIT and I’ve owned it in the past, but the yield is not high enough to fit in a portfolio yielding north of 8%.
      REITs that I currently own and have high yields, that I’ve made quite a bit of money on are NRZ, ABR, and LADR. For MLPs, I currently like KNOP, which issues a 1099, rather than a K-1.

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