1175535--3/31/2008--Whitestone

related topics

{debt, indebtedness, cash}

{loan, real, estate}

{investment, property, distribution}

{tax, income, asset}

{loss, insurance, financial}

{stock, price, share}

{operation, international, foreign}

{acquisition, growth, future}

{cost, regulation, environmental}

{capital, credit, financial}

{financial, litigation, operation}

{condition, economic, financial}

Risks Associated with Real Estate Real estate property investments are illiquid, and therefore we may not be able to dispose of properties when appropriate or on favorable terms. Turmoil in capital markets could adversely impact acquisition activities and pricing of real estate assets. The value of investments in our common shares will be directly affected by general economic and regulatory factors we cannot control or predict. Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost. Competition could limit our ability to lease our properties or increase or maintain rental income. Risks Associated with Our Operations There can be no assurance that we will be able to pay or maintain cash dividends or that dividends will increase over time. If we experience decreased cash flows, we may need to use other sources of cash to fund dividends or we may be unable to pay dividends. Because of the lack of geographic diversification of our portfolio, an economic downturn in the Texas metropolitan areas could adversely impact our operations and ability to pay dividends to our shareholders. Our Properties have significant deferred maintanence which will affect our ability to lease the properties, the types of tenants we are able to attract, and cash flow available for dividends Uninsured losses relating to real property or excessively expensive premiums for insurance coverage may adversely affect our returns. Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results. There is no public trading market for our shares of common stock, making it difficult for shareholders to sell their shares. We have acquired a majority of our properties, on a non arms-length basis, from entities controlled by the previous advisor and CEO, Allen R. Hartman. Approximately 38% of our gross leasable area is subject to leases that expire prior to December 31, 2010. Litigation with Allen R. Hartman and Hartman Management. Defending an adversarial shareholder campaign could be costly to shareholders, take managements attention from day to day business operations and interfere with the execution of our strategic plan. Loss of our key personnel could adversely affect the value of our common shares of beneficial interest and operations. Risks Associated with Our Indebtedness and Financing Our debt agreements impose limits on our operations and our ability to make distributions to our shareholders. We may incur losses on interest rate hedging arrangements. We may incur mortgage indebtedness and other borrowings, which may increase our business risks. If we are unable to retain key personnel, our revolving credit facility could be in default and immediately due. In the event we have a change of control, our revolving credit facility could be in default and immediately due. Risks Associated with Income Tax Laws If we fail to qualify as a REIT, our operations and dividends to shareholders would be adversely impacted. We may need to incur additional borrowings to meet REIT minimum distribution requirements. Changes in the tax law may adversely affect our REIT status

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1175535--3/31/2008--Whitestone_REIT