Suzy Taylor - Director of Investor Relations Jim Mastandrea - Chairman of the Board of Trustees, Chief Executive Officer Dave Holeman - Chief Financial Officer.

Mitch Germain - JMP Securities Carol Kemple - Hilliard Lyons Craig Kucera - Wunderlich Securities Dan Donlan - Ladenburg Thalmann.

Good day, and welcome to the Whitestone REIT Fourth Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Suzy Taylor, Director of Investor Relations. Please go ahead, ma'am..

Thank you, Shannon. Good morning and thanks all of you for joining Whitestone REIT's Fourth Quarter and full year 2014 Earnings Conference Call. Joining me on today's call will be Jim Mastandrea, our Chairman and Chief Executive Officer; and Dave Holeman, our Chief Financial Officer.

Please note that some statements made during this call are not historical and may be deemed forward-looking statements. Actual results may differ materially from those forward-looking statements due to a number of risks and uncertainties. Please refer to the Company's filings with the SEC, for a detailed discussion of these risks.

Acknowledging the fact that this call may be webcast for a period of time, it is important to note that today's call includes time-sensitive information that may be accurate only as of today's date, February 27, 2015. Whitestone's fourth quarter earnings press release and supplemental operating and financial data package have been filed with SEC.

Our 2014 10-K will be filed shortly, all will available on our website, whitestonereit.com, in the Investor Relations section. Also included in the supplemental data package are the reconciliations from GAAP financial measures. With that, let me pass the call to Jim Mastandrea..

Thank you, Suzy, and thank you all for joining us on our call today.

We are very pleased to report another strong quarter and year, driven by excellence in executing our strategy of acquiring value-properties in high growth markets, strategically cycling of capital through the sale of non-core legacy properties building upon our forward-looking operating model and maintaining a balanced and flexible capital structure.

In 2014, our team delivered another year of profitable growth with a 35% increase in FFO-Core and a 9% increase in FFO-Core per share. In 2014, we exceeded the guidance provided for FFO-Core and met or exceeded almost every one of the underlying drivers, including same-store growth and acquisition volume.

These results highlighted the acceptance of our business model as it continues to drive value producing a 22% total return in 2014, and a three-year total return to shareholders of over 60%.

Specifically in 2014, we acquired attractive properties in our core markets, transformed legacy properties into profitable community centers, sold non-core properties, strengthened our balance sheet and drove revenues and operating income and FFO per share growth. I will touch on each of those in more detail.

I want to first comment on our operating model and acquisition strategy which was central to our success in 2014. Whitestone was a first mover in implementing a business model which recognizes two significant macro-level changes that have created a paradigm shift in consumer behavior.

First, greater percentage of households with two wage earners, and second online commerce continuing to transform the way consumers shop.

Consumers, while facing greater demands on their time, are benefiting from increasing transparency in pricing and product information on the Internet and web-based services that yield far more choices than ever before. Today consumers make trips to the local retail centers seeking convenience, services and unique experiences.

Following shifting consumer behavior and preference patterns, Whitestone has crafted its business model and modified its real estate to meet these consumers' underserved needs.

Our Whitestone community approach caters to these new purchasing habits by blending a complementary mix of grocery, restaurants health, wellness and beauty, education and services. With our customer-centric discipline, we strive for a tenant mix of small, regional and national tenants that meets the unique needs and preferences of the neighborhood.

Our customers typically occupy smaller spaces which produce premium, rental rates and seldom contained restrictive lease clauses such as co-tenancy, approval rights and exclusive uses and often contain rent bumps and percentage clauses.

As a leader in this space, our approach and attention to a complementary tenant mix differentiates our business and allows us for high value creation in our communities and GMI metric benefit to Whitestone from any form of a tailwind that will or can or may be caused by inflation.

Our value-added approach to redevelopment, repositioning and rebranding makes our properties stand out and enhances visibility, circulation and community.

We focus not just on what we own, but what we do with what we own, starting with our purchase of property, continuing with enhancing the customer experience through improvements and blending a tenant mix to create a center that offers consumers' convenience and drives traffic to the property.

Our acquisition and redevelopment repositioning approaches are supported by a solid pipeline of acquisition opportunities. Proven management team, balanced capital structure and flexibility within our model that is designed to mitigate downside risk and position the company for continued growth.

Now, let me share with you some additional highlights for the past year. We continue to build on our past success in 2014 focused on acquisitions that were high-quality, well located community centers in Arizona and Texas markets. During our fourth quarter, we completed $94 million acquisitions.

For the full year of 2014, we closed over $132 million of acquisitions. These acquisitions represent the third consecutive year of adding more than $100 million of external growth. As we move forward in 2015, we will further benefit from our 2014 acquisitions, which closed primarily in December.

These communities will begin to fully contribute starting in Q1 2015. At year end, we owned 63 Community Centered Properties, with 5.5 square feet of gross leasable area including six development land parcels.

Our occupancy grew substantially, sequentially, to 86.8% at year-end, up from 85.8% at the end of the third quarter and our same-store NOI growth was a very strong 5.2% for the full year. Let me take a moment to speak to our holdings in Texas given the current energy markets and lower oil prices.

The attributes that brought us Texas and specifically Houston are still intact. Texas remains a business-friendly state with its low cost of living, great schools and a highly educated and diverse employment base as well as low taxes. The state has been leading the nation in job expansion and population growth for 15 years.

While energy has played a considerable role in that growth, Houston has flourished outside of the oil industry and grown to be the fourth largest city in the country bolstered by world-class medical center, Port of Houston and a strong technology sector.

Over the past four years, we have deliberately diversified a geographic mix to Phoenix, Arizona and other Texas markets, thus in 2014 34% of Whitestone's total revenues were generated in Houston, down from 42% in 2013, while in the same period, our Phoenix portfolio revenues grew to 46% of the company total revenues, up from 40%.

We have little or no impact to our business in terms of occupancy and believe that our community center property business model, which our tenants provide everything needed services insulates us to a large degree from negative effects of lower energy prices.

Conversely, lower gas prices have resulted in slightly increased disposable income and greater consumer spending. Now, let me turn to our capital allocation priorities.

During 2014, our capital markets activities utilized debt refinancing which was directed towards acquisitions that provided the greatest returns to our shareholders with an expanding credit facility and the redeployment of capital from the sale of non-strategic office property assets.

Our acquisition pipeline remains substantial, our solid capital structure allows us to continue to make accretive acquisitions and development opportunities in our target market. In 2015, we also expect to continue to recycle capital from the sale of additional non-core assets.

With that, I would like to turn it over to Dave Holeman, our Chief Financial Officer, to discuss our financial results.

Dave?.

FFO-Core grew 22% over the prior year to $7.5 million in the fourth quarter and the full year 2014 FFO-Core increased to $28.2 million, up from $20.8 million in 2013 or 35%. More importantly, FFO-Core grew 14% to $0.32 per share in the fourth quarter of 2014, up from $0.28 per share in the fourth quarter of last year.

FFO-Core per share for the full-year grew 9% to $1.20 per share. Our fourth quarter was marked by a 20% year-over-year improvement in property net operating income and the assigning of 75 new leases totaling over 183,000 square feet of space with an average positive leasing spread on new and renewal leases of 10.6% in the fourth quarter.

For the year, our leasing team signed 372 new and renewal leases totaling $862,000 feet with a total lease value of over $53 million. Our tenant base consists of 1,347 tenants and our forward thinking operating model continues to be effective producing increases in occupancy and industry-leading positive leasing spreads.

We have a diverse tenant base, minimizing our individual tenant credit risk with our largest tenant representing 2.2% of our annualized rental revenues.

For the fourth-quarter, our total property NOI grew 20% to $12.7 million from a year ago, and as Jim mentioned, does not include the full impact of our $94 million of acquisitions in the fourth quarter. For the full year 2014, property NOI grew 25% to $47.2 million from the full year 2013.

The annual increase in NOI was attributable to strong same-store growth of 5.2% and our 2014 acquisition. Our weighted average interest rate for the quarter was 3.6% and for the full year was 3.3% versus 3.7% in 2013.

Our general and administrative expense for the quarter, includes $700,000 in acquisition expenses and $1.6 million in expense relating to the amortization of non-cash share-based incentive compensation. We continue to see the benefit as we gain scale from our larger base of assets on our property expenses and our overhead costs.

As of the end of the quarter, we had 81 employees and our G&A costs excluding acquisition expenses and non-cash expense was 11.3% of revenue. We continue to believe that performance-based stock compensation resulting in significant ownership by management is the best way to align our team with all of our shareholders.

Now, let me turn to our balance sheet. In 2014, we continue to strengthen our balance sheet through the addition of strong capital institution and the addition of high quality assets.

Our underlying capital structure remains quite simple with a conservative level of secured and unsecured debt, a low weighted average interest cost and laddered maturities. We have one class of common stock and no joint ventures or partnership. This composition gives us significant financial flexibility and the ability to be quick and nimble.

During the fourth quarter, we amended our existing credit facility, expanding the facility from a $175 million to $500 million, extending the maturity and improving the pricing grid by approximately 35 basis points to 55 basis points. Also, we added five high quality banks to our existing bank group of four.

The facility also has an accordion feature that will allow it to further increase to $700 million and the facility consist of $100 million in term loan $400 million in revolving loan. As of year-end, $220 million is drawn the facility and $280 million remains available.

During 2014, we refinanced $47 million of property level debt at a weighted fixed interest rate average of 4.3% and a weighted average term of 10 years.

As a result of the expansion of our credit facility and proceeds received from property disposition, we did not raise equity in 2014, other than approximately $6 million in proceeds from our ATM program. We did not issue any shares under our ATM program in the fourth quarter.

In 2015, to fund our growth, we continued to evaluate all sources of capital, including usage on our corporate credit facility further recycling of capital from property sales, public debt issuance and accretive issuance of equity.

As of year-end, we had a total market capitalization of approximately $741 million with $394 million of debt and approximately $55 million of in place net operating income. Our ratio of debt to EBITDA is 8.9 times at year end and we have 43 unencumbered properties with an undepreciated cost basis of $426 million.

Finally, let me provide a few comments regarding our financial guidance. As Jim stated, we are pleased to report that in 2014, we have exceeded the guidance we provided for FFO-Core and have met or exceeded almost all of the other underlying drivers, including same-store growth and acquisition volume.

In 2015, we are providing guidance for both FFO-Core and FFO in accordance with NAREIT's definition. Guidance for FFO-Core is $1.25 to $1.30 per diluted share and guidance reflects the asset level we have as of year-end and does not include the impact of 2015 acquisitions.

Each of the last three years, we have completed over $100 million in acquisition. In 2015, we expect to do in excess of $100 million in acquisitions that will be accretive on an FFO-Core per share basis.

Due to the difficulty in predicting timing on acquisitions, we are not including the impact from 2015 acquisitions in our initial 2015 FFO-Core per share guidance. We will update our guidance on a quarterly basis, reflecting the impact of our acquisition volume and other factors as necessary.

All of the details of our guidance are included in our supplemental.

Jim?.

In 2014, our team demonstrated its commitment to produce another consecutive year of exceptional returns. In 2015, we expect no less and are focused on the following goals. Number one, to increase overall occupancy, number two increasing the quality and size of our property holdings.

Number three, continuing our repositioning and redeveloping efforts on legacy properties that fit our business model. Four, developing outparcels and land adjacent to our properties, five, selling or spinning off additional non-core assets.

six, increasing FFO-Core, supporting a dividend payout ratio that is below 85%, seven, delivering exceptional returns to our shareholders. I would like to thank you all for joining us today and for your continued interest in Whitestone. Operator, we will now be happy to take questions..

Thank you. [Operator Instructions] We will take our first question from Mitch Germain with JMP Securities..

Good morning, guys. Jim, I guess, you both mentioned asset sales as a potential funding source.

Curious what potentially is planned for disposition?.

Thanks, Mitch. We have continued to obviously look at all of our properties. We do that on a very analytical basis. As you know, when we started there were some legacy assets in the portfolio that over time we said we will sell and recycle that capital. As we look to this year, we continue to look at assets.

It is a not a large amount, but we have probably got five or six assets in a portfolio that we will look to dispose off over the next couple of years that will provide capital to invest in communities and properties to meet our model..

There is not much I would add to that, Mitch, except one of the metrics we look at is that when the revenues and the NOI increased at a decreasing rate, when we start seeing that trend mathematically, that is when we start looking at a property to take it offline and sell it..

So, there is no attempt to reduce office or flex specifically, it is just going to be….

No. There is an attempt to do that. We just haven't fully developed plans for what we are going to do yet in 2015, but there is a definite plan to do that..

You would get leverage a little high and I think you guys were upfront in terms of talking about the different funding sources, but what sort of leverage are you guys comfortable operating at longer-term?.

Let me just mention, when you say leveraged high we have to look at it and say leverage relative to what. If you look at our average cost per square foot of our total asset base, we are at $134.

I mean, the replacement cost of this portfolio is about $250 to $300, so when you look at leverage, you would have to look at relative to what, so we look at it relative to that basis. We also have been successful in working with a terrific group of bankers to put together $0.5 unsecured line of credit.

These guys are very smart, they understand asset basis very, very well and for us to have a company that is $741 million in assets, and a $500 million unsecured line of credit, really speaks to the underlying value of our assets.

We do not quite look at leverage the same as you might look at it on a fully valued company where assets are in the company at a much higher price, so we are comfortable where we are, we have set a maxim on it.

Dave, you can address that if you like?.

Sure. I will just add a couple of comments to what Jim had mentioned and maybe more specifically address your question. I think we said previously that we do believe in a value-add growth model, where we are buying real estate at very attractive prices.

It is probably appropriate to have a little greater leverage, because we are producing value in those properties that will be seen over the coming quarters and years, but not necessarily seen in NOI or in purchase price. Given that and you have also seen from a leverage perspective, we have corporate target of not greater than 60%.

As of the end of the quarter, I think we were about 51% of market cap and 8.9 times EBITDA. We are probably, like you said, we are up in the higher range, but we are comfortable with that range and we do expect to utilize lots of sources of capital as we go forward. 2014, we did utilize primarily debt.

As we go forward in '15, we will probably utilize greater other sources and continue to look at that recycling accretive issuance of equity where it makes sense. Then obviously we have room on our facility..

Great. Last for me. Just curious about some of the momentum we are seeing on the leasing front..

We did some restructuring in terms of our team at the end of the year last year. Of course, whatever you are looking at the activity you are getting, you can usually walk it back to maybe a small group of individuals.

Once we restructured it, we started seeing a lot of traction and the deal level picked up significantly in the fourth quarter, so far this first quarter, so we are confident internally that you are going to see a lot more momentum.

Also, the properties that we spent money to reposition are starting to come online for example Lion Square and some of the other properties we have maybe four or five properties that are coming online now.

It takes a little bit longer to reposition and redevelop our properties than it does building from scratch and you will see some of that coming on. I think you are going to see some very, very good results in the leasing and occupancies quarter-by-quarter this year..

Thank you..

You are welcome..

We will take our next question from Carol Kemple with Hilliard Lyons..

Good morning..

Hi, Carol..

Hi, Carol..

Can you quantify the acquisition pipeline?.

We can. We will both talk to it is large. Our acquisition team is constantly looking at a large amount of assets as we talked about before we follow some of those year, two years, three years, until the situation is right.

Our acquisition pipeline I think in the past we have talked about it, $0.5 million, continues to be our large and probably above that amount.

We have more short-term acquisitions that are either LOI or under discussion, but we continue to see a very large opportunity on the acquisition side in the target markets we are in and possibly some other markets..

Okay.

Then you all mentioned earlier that you would like to have a dividend payout ratio at 85%, if that is your goal, is the Board committed to continue to pay the dividend until it gets there at the current level or should we think that there could possibly be a cut in near future?.

I can say as a Board member, we have no intention on cutting the dividend.

We think our cash flow is really solid and we have said that day one even when the dividend payout ratio exceeded the FFO, what is interesting in the read, because we cannot retain capital, we have to continually pay it out, so you got to use the combination of debt and equity and we are pretty good at balancing the debt and equity side of it, also the value-add process, so we know where the cash flow is coming from and we are confident in our dividend.

One of the things that differentiates our models, say from the traditional real estate retail remodel is that we have a small percentage of discount retail stores and some of the big boxes and most of the leases that we have in those which are traditional [ph] retail, they have limitations in terms of the percentage increase that they can increase the rent, usually to about a percent per year.

They also have restrictive covenants in terms of occupancies, in terms of co-tenancies, so the large tenants have a lot of approval rights and the nature of our model is we have as few as possible of those types of tennis, so that we really run the real estate.

Now, offsetting that as we stick to a three to five-year lease, and we will have restaurants that generate high revenues. For example, we might get a $36 to $38 square foot rent.

When it hit a break point of $2.5 million or $2.4 million, we get a 6% percentage clause that kicks in, so we have a lot of percentage clause, almost all of our restaurants have percentage clauses.

We have rent increases that are in excess of what you are going to see on the national-based large discount retailers and we have all the value-add in the lease up, so I think you are going to see some really strong cash flow developing Whitestone over the next couple years as it has been in the last, and you have followed us for last few years, so I think you are going to that.

We are very confident in the dividend. We make that statement because we want our owners to be sure that we are consciously providing to pay the dividend out of cash flow..

Okay. Thank you very much..

We move to our next question. from Craig Kucera with Wunderlich Securities..

Hi. Good morning, guys..

Good morning..

Good morning, Craig..

Getting back to acquisitions, you were back-loaded this year.

Did you see any break in pricing [ph] year or were these just simply deals that you have been working on for a while that happened to close this fourth quarter?.

Yes. Let me start with just a couple of things our pattern has always been to do rightful deals, one-off deals, sequentially. We took a little direction change on that and looked at some very, very large portfolios. In doing so, they are very time-consuming.

At the end of the day, one portfolio that we are in finalist on, we decided that we want to take a pass on so it. What we did is, we then fell back deals we had in our pipeline and put those together.

This year we are taking approach that is more balanced like we have one deal that we have we are in a finalist it is a fairly large deal, but we are also queuing up the things that we do best that is these one-off transactions. I think that' is why you saw load up towards the end of the year..

Just to touch on the fourth quarter acquisitions, I think we did see some very nice assets that we bought in the fourth quarter. We were weighted towards the end of the year a little bit. Those were assets we have been working. A couple of them were in our Houston market, very nice addition to this market.

Then a couple in Phoenix market, but they were asset, our model as Jim has said is really to follow asset to get to know the principles to look for deals that have not marketed heavily, so those were assets that just happened to be weighted toward the end of the year, but they fared very well with what we have done throughout the last several years..

I will just add to that, if you look at we did about $90 million in December and we have a positive spread, our cost of under the line of credit provides us with a fairly high spread on the $90 million and none of that is reflected in our 2014 FFO, so you will start seeing the results of those acquisition starting to kick in first quarter?.

Right, Right..

We are hearing from some of your competitors perhaps more on the office side that Houston has sort of frozen up.

It was nice to see you were able to get some stuff done, but when you think about where you want to be, do you think you will push a little bit more to Houston if that is the case? We do see some upward pressure on cap rates? Do you think you will go a little bit further into Phoenix or maybe even elsewhere in some of other markets that you….

Yes. I think that the market here, new construction has really slowed down tremendously in Houston and it was getting overheated. We think, we will probably see some fallback in prices. I think that is the time for us to buy. We are really good at buying off-cycle, and what we would like to see is our balanced approach.

When we have this portfolio up around $3 billion, we would probably see ourselves in about six or eight markets, balanced somewhat equally in terms of total assets, so we are looking at some deals in Houston right now. We are looking at some deals in other parts of Texas and we are looking at a possible deal on a new market as well..

Got it. Thanks for color..

Thank you..

[Operator Instructions] We will move to our next question from Dan Donlan with Ladenburg Thalmann..

Yes. Thank you. Good morning..

Good morning, Dan..

Jim, just of that last comment, you said when the portfolio was at $3 billion, just kind of curious how long you think it is going to take you to get there? That is almost five times the size of the current company..

I will let Dave start on that..

I think we have had a lot of growth over the last few years we have given guidance, the growth. I think, we think there is a tremendous opportunity. It is tough to put a timeline on it a $3 million goal. We think there is a great opportunity, we think this business model works very well as you scale it.

We spend a lot of time building infrastructure and structure that the scale to that $3 billion level, but I do not think we want to put a timeframe on that number..

Okay.

Jim, you mentioned that you might continue to sell some assets and you also use the word spin-off I mean, could you maybe quantify what you meant by the spin-off?.

Well, I use that synonymously with selling as well. Spinning off we think about, if we did that, a better way to describe that is spinning off might be collectively more than one asset at the time maybe three or four assets and we have some interested buyers in some of our properties.

What we wanted to do, Dan, was make sure we had our cash flow sufficiently flowing and increasing before we took some of these non-core assets out of service, because when you think about a service you are also taking away some of the cash flow in the company, so we want to make sure that we are ready to replace that and we have also been using it to pay down debt..

Understood.

Then if I could dive a little bit into your guidance, if I look at the FFO per share guidance that you provided, that is about a 9% increase over last year, but the FFO per share core is only a 6.3% increase over last year, is the delta between the two - are you just assuming there is going to be less non-cash stock comp in the year?.

In our guidance for 2015, we have provided obviously FFO within a redefinition of FFO FFO-Core [indiscernible] always a big item between FFO and FFO-Core are acquisition expenses and non-cash share-based comp, so the difference between FFO and FFO-Core in the 2015 guidance really reflects mainly the non cash stock comp.

As you know Dan that the accounting rules around the expensing of that do not necessarily tie to win the actual awards are made or when it is earned, but they reflect the period of time that we have spend that stock over, so in 2015 it is probably a little higher amount of stock comp being expensed than in 2014, which would cost that the difference in FFO and FFO-Core being a little bigger in 2015.

Okay. Yes, I [ph] it. Thank you for the clarity.

Then just looking at digging further into the assumptions, since you are not including any acquisitions or dispositions, should we just be running your leverage of around nine times net debt to EBITDA, just run that forward? Is that the assumption that we should be making?.

Yeah. Obviously, you are going to build your models and you are going to have your underlier we provided guidance as far as same-store property NOI growth, we have given some guidance on the year-end occupancy. We will do acquisitions.

I think the earlier comment was waiting of that is why we felt it was prudent just to give that guidance as we go forward. I think from a leverage standpoint for modeling perspective, we are at 8.9 times EBITDA today. I think that is probably at the high end where we will operate on a going forward basis, so maybe that is helpful in your modeling..

Yes. Absolutely. I appreciate it and appreciate the additional disclosure on the net debt to EBITDA on Page 21, as well. Then as far as the same store, you guys the revenues were only up 2% in 2014 versus 2013, but you had a nice 3% decline in expenses.

Just kind of curious, what really drove the reduction in expenses, and do you think you can continue to see your expenses decline like you have and maybe what you are thinking on real estate taxes as those were basically flat year-over-year..

Yes. I think, we believe that with the scale, some benefit on the expense side. We see the ability to get larger contracts at better rates for the larger amount of services provided, so we do expect to continue to be able to drive expenses down.

I think on the revenue sides, you saw our leasing spreads, pretty good leasing spreads for the year which are contributing to that same-store growth. Then we also saw a really decreased bad debt in our '14 versus '13.

As we have continued to improve the portfolio, really upgrade our mix of tenants, we have also seen the bad debt as a percent of revenue go down, so I think those are all good indicators. On the property tax side, as you probably know Texas is a state that has a lot of tax on the property as opposed to from an income approach.

From a properties tax standpoint, we actively worked those property tax as we are able to keep that fairly flat in '14. Actually in Texas probably we will see some pull back on property taxes over the coming years if the oil price stay where they are, so we think we will be able to work the expense side.

Then on the revenue side, we are continuing to push leasing spreads. Then I think we have also got room on the occupancy to make improvement there as well..

Okay. Then just one kind of granular question, the acquisition costs that you guys provide on Page 19. You had $1.3 million this year.

What exactly is that? Is that just simple brokerage fees or is there some type of like legal costs and other things that are in that line item?.

It is the transaction costs, so it would include title fees for title insurance when you close, attorney fees, really just the direct transaction fees of the borrowing properties..

I think along those lines, you can look at some of the legal fees all of us initially experiencing and on real estate transaction some more between $500 and $700 an hour.

Security work here somewhere between $800 and $1,000, so legal cost are really are significantly higher today than they were 10 years ago or year ago even, so I think everybody is experiencing some of that as well..

Okay. I was just curious some folks put a little bit more in that than maybe they should and yours is completely reasonable just more or less asking the question..

We do a lot of work in-house on our acquisition and we actually have the quality of staff and associates of mine with be experience and knowledge that we can close deals very, very fast. I think the fastest we did was the $50.5 million deal in 22 days of contract to closing, so we do a lot of and as much as we can in-house..

Okay. Then just lastly, your full-time employees have gone from 68 to 81.

Should we see a similar increase in 2015 or does that start to taper back? I mean, do you have the scale that you want right now given your acquisition thoughts on this year?.

I think if you look at the numbers five looks like a bigger increase than probably on a dollar basis. Obviously, we have a senior management team that is positioned to support a lot higher assets level than we have today.

As we grow, we continue to hire probably more frontline folk's property managers leasing agents, so I think you will see from a number of perspective from a dollar perspective a lot of infrastructure has been placed to really scale that cost..

Okay. Thank you..

Thank you..

There are no further questions in the queue at this time..

I think we are good.

Operator, thank you very much and I would like to thank each and every one of you for joining us on this call and at anytime please feel free to call either Dave Holeman or myself with any question you might have and we invite you at any time to come into our office either in Houston or Dallas or Phoenix to meet with us personally we would happily to take you out to see some of the properties that you own.

Thank you very much operator..

That does conclude today’s conference. Thank you for your participation..