Dear Mr. Bramble,

The Whitestone Board of Trustees has reviewed your October 9, 2024, indication of interest. The Board's review considered the $15 per share indication of interest against numerous data points, including, but not limited to, sell side Net Asset Value, Net Asset Value utilizing peer capitalization rate indications, sell side estimates and price targets and a Discounted Cash Flow valuation utilizing the company's internal 5-year forecast. While your indication of interest is premised on public market valuation, the Board views NAV and DCF as critical to determining the intrinsic value of Whitestone REIT. Your valuation falls short on both marks. The Whitestone Board of Trustees has unanimously determined to reject your indication of interest and does not believe it reflects an appropriate valuation to enter into discussions toward a negotiated transaction.

The Whitestone Board also considered the following in rejecting your indication of interest:

• The Whitestone REIT Board of Trustees believes the indication of interest is opportunistically timed to take advantage of Whitestone's performance while the company is still gaining momentum under the new management team. Given the all cash indication of interest, Whitestone believes that a transaction at this valuation would deprive all other Whitestone shareholders of the opportunity to maximize the value of their investment while transferring additional value directly to MCB.
  
• Whitestone REIT is well-positioned for growth. As our financial results disclosed today demonstrate, Whitestone is making great progress against its strategic objectives and gaining momentum while driving shareholder value. Key highlights include:
  
  • Reiteration of 2024's Core FFO per share estimate of $0.98 to $1.04, targeting 11% growth in 2024 versus 2023 (at the midpoint)
    
  • An increased Same Store NOI growth target of 3.75% – 4.75%, after delivering year-to-date Same Store NOI growth of 4.9%
  • Q3 2024 Debt / EBITDAre ratio of 7.2x, a 0.6x improvement versus one year ago
  • Accretive asset recycling with disposition cap rates over 100 basis points below acquisition cap rates while simultaneously positioning Whitestone for future growth
• Whitestone's strong performance has driven total shareholder returns of over 60% since the current management team took over on January 18, 2022.
  

Source: S&P Capital IQ (Oct 25, 2024 Closing Price)

The Whitestone Board of Trustees continues to consider MCB an important shareholder and remains committed to acting in the best interests of all shareholders to maximize shareholder value.

Sincerely,

Whitestone Board of Trustees:

David T. Taylor
Nandita V. Berry
Julia B. Buthman
Amy S. Feng
David K. Holeman
Jeffrey A. Jones