- The Observatory generated $24 million NOI in Q2 2025, down 4.3% year-over-year due to adverse weather and lower demand from international past program business.
- Weather disruptions, especially on weekends in May and June, significantly impacted visitation.
- Management revised the Observatory NOI guidance to $90-$94 million for 2025, reflecting these headwinds.
- Long-term fundamentals remain strong, with a focus on guest experience, marketing, and operational efficiency.
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- Management emphasized that the decline in L.A. RevPAR was primarily due to media coverage and misperceptions about safety following ICE activity and military response, not actual safety issues.
- Cancellations in Santa Monica were concentrated in a small downtown area, with no impact on the broader market.
- Despite market-specific headwinds, management remains confident in L.A.'s long-term outlook due to upcoming major events (NBA All-Star, World Cup, Super Bowl, Olympics) and new legislation supporting production activity.
- Shop occupancy reached a record high of 92.5%, up 270 basis points YoY, with a target to exceed 93% in H2 2025.
- Management highlighted increased pricing power through better lease terms, including exclusives, radius restrictions, and faster store openings, leveraging high occupancy levels.
- Average base rent per leased square foot grew 5.3% year-over-year to $25.28.
- Bad debt for the quarter was just under 1% of revenues, consistent with prior year and within forecasted range.
- Debt-to-EBITDAre improved to 7.2x from 7.8x a year ago, with an expected year-end target of about 7x.
- G&A and interest expenses were reduced by about 6% compared to the prior year.
- Leasing spreads remained strong with straight-line leasing spreads of 17.9%, marking the 13th consecutive quarter above 17%.
- Occupancy increased 100 basis points sequentially from Q1 to 93.9%.
- Same-store NOI growth was 2.5% for the quarter and 3.9% for the 6 months, on track to meet the full-year target range of 3% to 4.5%.
- Whitestone REIT delivered core FFO per share of $0.26 for Q2 2025 and $0.51 for the first 6 months, representing a 5.4% and 5.6% year-over-year increase respectively.
- Balance sheet is strong with no secured debt maturing before 2028 and weighted average debt maturity of almost 8 years.
- Core community-based rental income increased 5.5% for the quarter and year-to-date.
- Core operating expenses were flat in the quarter, with expense growth 190 basis points lower than guidance.
- Core portfolio generated 6.4% NOI growth in the quarter, 70 basis points higher than guidance.
- Core RV and marina annual base rental income increased 3.7% in the quarter and 3.9% year-to-date.
- Membership business contributed $16 million net in the quarter and $31.4 million year-to-date.
- NOI increased 5% year-to-date compared to last year.
- Normalized per share FFO growth year-to-date is 5.7%.
- Seasonal rent decreased 5.6% and transient decreased 8.6% year-to-date.
- Second quarter normalized FFO was $0.69 per share, in line with midpoint guidance.
- Year-to-date expense growth was 70 basis points including insurance renewal impact.
- Two marinas experienced storm damage, leading to offline slips and some turnover in the marina portfolio.
- Storm damage impacted two properties, causing some occupancy loss and requiring site improvements.
- Management expects these sites to come back online in upcoming quarters, with occupancy expected to recover next year.
- Bad debt remains below 2%, indicating a healthy customer base.
- Flat same-store revenue growth in Q2 due to gradual rate growth progress.
- Interest income and expense were higher due to a higher-than-forecasted SOFR curve.
- Net rental income was positive 20 basis points in the quarter, partially offset by lower administrative fees and late fees.
- Positive year-over-year rate growth to new customers achieved for the first time since March 2022.
- Same-store expenses increased by 8.6%, driven by higher property taxes in legacy Life Storage properties.
- Same-store occupancy reached 94.6%, up 60 basis points year-over-year and 120 basis points sequentially from Q1.
- Tenant insurance income and management fee income were stronger than expected, augmenting flat same-store revenue.
- Management highlighted positive inflection in new customer rate growth for the first time since March 2022.
- Occupancy remained high at 94.6%, with a 50 basis point increase year-over-year in July.
- Progress in revenue growth is gradual, with expectations of acceleration in the second half, especially in Q4.
- Demand indicators such as rental volume and customer behavior remain positive, despite softer-than-expected revenue growth.
Dafinchi