Note 17 - Commitments and Contingencies	9 Months Ended
Sep. 30, 2025
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	*17.* COMMITMENTS AND CONTINGENCIES **Guarantor for Pillarstone OP’s Loan** The Company, through its subsidiary, Whitestone OP, guaranteed Pillarstone OP’s loan for its Uptown Tower property located in Dallas, Texas, with an aggregate principal amount of $14.4 million as of September 30, 2023. The loan was also secured by the Uptown Tower property. The debt matured on October 4, 2023, and was in default, as Pillarstone OP failed to refinance the loan. On October 24, 2023, the Lender provided notice of a planned foreclosure sale on December 5, 2023. The Lender also claimed that an additional sum of $4.6 million was due which included default interest of approximately $6.3 million and net credits from escrowed funds and other charges of approximately $1.7 million. On December 1, 2023, Whitestone OP reached an agreement with the Lender that would avoid foreclosure and secure the release of the lien and discharge of the guarantee, and negotiated and satisfied a payoff as of December 4, 2023, in the amount of $13.6 million (the “DPO Amount”). The DPO Amount included a compromise settlement of approximately $1.7 million for the disputed default interest and other fees. The Company's share of it was recorded in the 4th quarter of fiscal year 2023 in the financial statement line equity (deficit) in earnings of real estate partnership. Per the agreement, this payment would satisfy the loan. The Company wired the DPO Amount to Lender on December 4, 2023, with accompanying releases as required by Lender, fully satisfying the agreement. On December 1, 2023, Pillarstone OP filed the Chapter 11 bankruptcy of its special purpose entity borrower that owns Uptown Tower, in the Bankruptcy Court of the Northern District of Texas (the “Bankruptcy Court”). On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP. On February 9, 2024, the Lender filed suit in New York County against the guarantor Whitestone OP and the Company for alleged amounts due under the guarantee. On March 4, 2024, Pillarstone REIT authorized and all of its entities to file bankruptcy. On April 24, 2024, the Lender and Pillarstone OP filed a motion with the Bankruptcy Court seeking approval to settle the dispute and dismiss their mutual lawsuits including the lawsuit by the Lender against Whitestone OP as Guarantor of the loan. On or before June 10, 2024, Pillarstone OP agreed to pay to the Lender the sum of $1.1 million plus all attorneys’ fees and costs (not to exceed $20,000) incurred by the Lender from April 10, 2024 through the date of receipt of such payment. Upon timely receipt of the cash payment from Pillarstone OP, the Lender applied the $13.6 million tendered to it by Whitestone OP, and the guaranty was subsequently released. The Company pursued collection of the DPO Amount from Pillarstone in the Pillarstone Bankruptcies through a subrogation claim against Pillarstone OP. On October 2, 2024, the Bankruptcy Court affirmed the Company’s right of subrogation and allowed the Company’s secured claim for the guaranty payment in the amount of $13.6 million. On October 28, 2024, Pillarstone OP, through a subsidiary, filed a notice of appeal of the Bankruptcy Court’s order affirming Whitestone OP’s right of subrogation. On July 17, 2025, Pillarstone OP sold the Uptown Tower Property for net proceeds of approximately $17.3 million. Following the sale of the Uptown Tower property, Whitestone OP filed in the Bankruptcy court a Motion to Compel the payment of $13.6 million from the Uptown Tower closing proceeds relating to Whitestone OP’s subrogation claim as guarantor, which was a secured claim. Following a hearing on August 18, 2025, the Bankruptcy Court ordered Pillarstone to pay Whitestone OP to the amount of $13.6 million and on September 8, 2025, Pillarstone paid $13.6 million to Whitestone OP for its subrogation claim as guarantor. On September 10, 2025, Pillarstone filed a Notice of Appeal of the Court’s order. On September 15, 2025, the Bankruptcy Court denied Pillarstone’s Motion for Stay Pending Appeal. *Litigation between the Company and Pillarstone REIT* On September 16, 2022, Pillarstone Capital REIT and Pillarstone OP filed suit against the Company and certain of its subsidiaries (Whitestone TRS, Inc. and Whitestone OP) along with certain of its executives (Peter Tropoli, Christine Mastandrea, and David Holeman) in the District Court of Harris County, Texas, alleging claims relating to the limited partnership agreement between Pillarstone Capital REIT and Whitestone OP, as well as the termination of Management Agreements between Pillarstone OP and Whitestone TRS, Inc. On November 25, 2022, the claims against Peter Tropoli, Christine Mastandrea and David Holeman were dismissed. The claimants seek monetary relief in excess of $1 million in damages and equitable relief. However, the Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action. This litigation is subject to the Settlement Agreement discussed below in the section headed “Pillarstone Rights Plan”. *Former COO Litigation* On May 9, 2023, the Company’s former COO, John Dee, filed suit against the Company in the District Court of Harris County, Texas, purporting to assert claims for breach of his change-in-control agreement arising from the Company’s termination of its former CEO James Mastandrea for cause, and is seeking monetary relief in excess of $1 million in damages and equitable relief. The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action. *Former CEO Litigation* On February 23, 2022, the Company’s former CEO, James Mastandrea, filed suit against the Company and certain of its trustees (Nandita Berry, Jeff Jones, Jack Mahaffey, and David Taylor) and executives (David Holeman, Christine Mastandrea, and Peter Tropoli) in the District Court of Harris County, Texas, alleging $25 million in damages and equitable relief claims relating to the termination of his employment, including breach of his employment contract, negligence, tortious interference with contract, civil conspiracy, and declaratory judgment. On September 12, 2022, the claim for breach of fiduciary duty was dismissed and a claim for negligence was added (as to the trustee defendants). On December 6, 2023, the District Court of Harris County, Texas granted summary judgement in favor of the Company and dismissed all claims against the Company related to the termination of Mr. Mastandrea. The court also dismissed all claims against certain of the Company’s trustees and executives. The Court subsequently denied Mr. Mastandrea’s Motion for Reconsideration and For New Trial. On December 4, 2024, Mr. Mastandrea filed a Notice of Appeal with the 14th Court of Appeals of the State of Texas and filed an appeal brief on July 28, 2025. The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action. *Pillarstone Rights Agreement* On December 26, 2021, the Board of Trustees of Pillarstone REIT adopted a new shareholder rights agreement (the “Pillarstone Rights Agreement”). Because Pillarstone REIT sought to use the Pillarstone Rights Agreement to prevent Whitestone OP from exercising its contractual Redemption Right in Pillarstone OP, on July 12, 2022, Whitestone OP filed suit against Pillarstone REIT in the Court of Chancery of the State of Delaware challenging the Pillarstone Rights Agreement. On January 25, 2024, the Delaware Court of Chancery held that Pillarstone REIT breached the implied covenant of good faith and fair dealing when it adopted the Pillarstone Rights Agreement that thwarted Whitestone OP from exercising the unfettered contractual redemption right it obtained in connection with its investment in the partnership; and the Court held that the Pillarstone Rights Agreement was unenforceable as to the limited partner and allowed Whitestone OP to exercise its redemption right; allowed Pillarstone REIT to determine the current value of Pillarstone OP’s assets; and, as necessary, would later enter a monetary judgment against Pillarstone REIT for the difference between the amount that the Company would have received in or around December 2021 and the current value. On January 25, 2024, Whitestone OP exercised its notice of redemption for substantially all of its investment in Pillarstone OP. On March 4, 2024, Pillarstone REIT filed the Pillarstone Bankruptcies on behalf of Pillarstone Capital REIT, Pillarstone OP, as well as certain subsidiaries (collectively, the “Pillarstone Debtors”). The Company filed a claim in the Pillarstone Bankruptcies for the value of its redemption claim along with interest and other costs. The automatic stay was lifted in November 2024 and Whitestone OP continued to pursue its redemption claim in Delaware. As of July 23, 2025, the Pillarstone Debtors completed the sale of all of the Pillarstone OP’s properties for net proceeds in the amount of approximately $60 million. A third-party Bankruptcy Plan Agent was appointed and granted the sole and exclusive authority to administer the claims related to the Pillarstone Bankruptcy, including the authority to object to the allowance of claims and to enforce, assert, and settle retained causes of action and to direct and cause the Pillarstone Debtors to make all payments and distributions under the bankruptcy plan. Whitestone OP and the Plan Agent negotiated a resolution of all pending disputes in the Pillarstone Bankruptcies, and on October 18, 2025, filed a settlement agreement with the Bankruptcy Court to resolve and confirm all issues regarding the Pillarstone Bankruptcies including all claims and causes of action asserted by or that could have been asserted by the Pillarstone Debtors against Whitestone OP and by Whitestone OP against the Pillarstone Debtors including Whitestone OP’s Delaware litigation against Pillarstone REIT and the litigation between Pillarstone OP and the Company (the “Settlement Agreement”). The Settlement Agreement requires Court approval under Bankruptcy Rule 9019. If the Court enters a Final Order approving the Settlement Agreement (the “9019 Order”), the Settlement Agreement shall be effective and binding on the Parties and each of their respective successors and assignees as of the date of entry (the “Settlement Effective Date”). The Settlement Agreement establishes three reserve funds using the partnership estate funds in the aggregate amount of $2 million to support the Plan Agent's claim administration process (the “Reserve Funds”). The Settlement Agreement also directs the Pillarstone Debtors to distribute $4 million to the Pillarstone Estate (the "Pillarstone Distribution") in satisfaction of all outstanding claims by Pillarstone against the partnership estate. The Settlement Agreement also directs the Pillarstone Debtors to distribute all funds remaining in the partnership estate following the satisfaction of the claims and Reserve Funds noted above to Whitestone OP as soon as reasonably practicable, and not later than 14-days after the entry of a Final Order by the Bankruptcy Court approving the 9019 Order, but in no event later than December 12, 2025. The amount to be distributed to Whitestone OP is estimated to be approximately $40 million. This is in addition to the $13.6 million payment noted above to the Company relating to Whitestone OP’s secured claim for the Uptown Tower guaranty payment. If the Bankruptcy Court does not approve the Settlement Agreement by entry of a Final Order, then the Settlement Agreement shall not be binding on any party. There can be no assurances that the Bankruptcy Court will approve the Settlement Agreement or that it will not be challenged by any party or appealed. If the Bankruptcy Court does not approve the Settlement Agreement, we will continue to pursue collection of the amounts due from Pillarstone OP through all means necessary and while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our equity investment in Pillarstone OP. We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

Note 17 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2025

Commitments and Contingencies Disclosure [Text Block]

17. COMMITMENTS AND CONTINGENCIES

Guarantor for Pillarstone OP’s Loan

The Company, through its subsidiary, Whitestone OP, guaranteed Pillarstone OP’s loan for its Uptown Tower property located in Dallas, Texas, with an aggregate principal amount of $14.4 million as of September 30, 2023. The loan was also secured by the Uptown Tower property. The debt matured on October 4, 2023, and was in default, as Pillarstone OP failed to refinance the loan. On October 24, 2023, the Lender provided notice of a planned foreclosure sale on December 5, 2023. The Lender also claimed that an additional sum of $4.6 million was due which included default interest of approximately $6.3 million and net credits from escrowed funds and other charges of approximately $1.7 million.

On December 1, 2023, Whitestone OP reached an agreement with the Lender that would avoid foreclosure and secure the release of the lien and discharge of the guarantee, and negotiated and satisfied a payoff as of December 4, 2023, in the amount of $13.6 million (the “DPO Amount”). The DPO Amount included a compromise settlement of approximately $1.7 million for the disputed default interest and other fees. The Company's share of it was recorded in the 4th quarter of fiscal year 2023 in the financial statement line equity (deficit) in earnings of real estate partnership. Per the agreement, this payment would satisfy the loan. The Company wired the DPO Amount to Lender on December 4, 2023, with accompanying releases as required by Lender, fully satisfying the agreement.

On December 1, 2023, Pillarstone OP filed the Chapter 11 bankruptcy of its special purpose entity borrower that owns Uptown Tower, in the Bankruptcy Court of the Northern District of Texas (the “Bankruptcy Court”). On January 25, 2024, the Company exercised its notice of redemption for substantially all of its investment in Pillarstone OP. On February 9, 2024, the Lender filed suit in New York County against the guarantor Whitestone OP and the Company for alleged amounts due under the guarantee. On March 4, 2024, Pillarstone REIT authorized and all of its entities to file bankruptcy.

On April 24, 2024, the Lender and Pillarstone OP filed a motion with the Bankruptcy Court seeking approval to settle the dispute and dismiss their mutual lawsuits including the lawsuit by the Lender against Whitestone OP as Guarantor of the loan. On or before June 10, 2024, Pillarstone OP agreed to pay to the Lender the sum of $1.1 million plus all attorneys’ fees and costs (not to exceed $20,000) incurred by the Lender from April 10, 2024 through the date of receipt of such payment. Upon timely receipt of the cash payment from Pillarstone OP, the Lender applied the $13.6 million tendered to it by Whitestone OP, and the guaranty was subsequently released. The Company pursued collection of the DPO Amount from Pillarstone in the Pillarstone Bankruptcies through a subrogation claim against Pillarstone OP. On October 2, 2024, the Bankruptcy Court affirmed the Company’s right of subrogation and allowed the Company’s secured claim for the guaranty payment in the amount of $13.6 million. On October 28, 2024, Pillarstone OP, through a subsidiary, filed a notice of appeal of the Bankruptcy Court’s order affirming Whitestone OP’s right of subrogation. On July 17, 2025, Pillarstone OP sold the Uptown Tower Property for net proceeds of approximately $17.3 million.

Following the sale of the Uptown Tower property, Whitestone OP filed in the Bankruptcy court a Motion to Compel the payment of $13.6 million from the Uptown Tower closing proceeds relating to Whitestone OP’s subrogation claim as guarantor, which was a secured claim. Following a hearing on August 18, 2025, the Bankruptcy Court ordered Pillarstone to pay Whitestone OP to the amount of $13.6 million and on September 8, 2025, Pillarstone paid $13.6 million to Whitestone OP for its subrogation claim as guarantor. On September 10, 2025, Pillarstone filed a Notice of Appeal of the Court’s order. On September 15, 2025, the Bankruptcy Court denied Pillarstone’s Motion for Stay Pending Appeal.

Litigation between the Company and Pillarstone REIT

On September 16, 2022, Pillarstone Capital REIT and Pillarstone OP filed suit against the Company and certain of its subsidiaries (Whitestone TRS, Inc. and Whitestone OP) along with certain of its executives (Peter Tropoli, Christine Mastandrea, and David Holeman) in the District Court of Harris County, Texas, alleging claims relating to the limited partnership agreement between Pillarstone Capital REIT and Whitestone OP, as well as the termination of Management Agreements between Pillarstone OP and Whitestone TRS, Inc. On November 25, 2022, the claims against Peter Tropoli, Christine Mastandrea and David Holeman were dismissed. The claimants seek monetary relief in excess of $1 million in damages and equitable relief. However, the Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action. This litigation is subject to the Settlement Agreement discussed below in the section headed “Pillarstone Rights Plan”.

Former COO Litigation

On May 9, 2023, the Company’s former COO, John Dee, filed suit against the Company in the District Court of Harris County, Texas, purporting to assert claims for breach of his change-in-control agreement arising from the Company’s termination of its former CEO James Mastandrea for cause, and is seeking monetary relief in excess of $1 million in damages and equitable relief. The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action.

Former CEO Litigation

On February 23, 2022, the Company’s former CEO, James Mastandrea, filed suit against the Company and certain of its trustees (Nandita Berry, Jeff Jones, Jack Mahaffey, and David Taylor) and executives (David Holeman, Christine Mastandrea, and Peter Tropoli) in the District Court of Harris County, Texas, alleging $25 million in damages and equitable relief claims relating to the termination of his employment, including breach of his employment contract, negligence, tortious interference with contract, civil conspiracy, and declaratory judgment. On September 12, 2022, the claim for breach of fiduciary duty was dismissed and a claim for negligence was added (as to the trustee defendants).

On December 6, 2023, the District Court of Harris County, Texas granted summary judgement in favor of the Company and dismissed all claims against the Company related to the termination of Mr. Mastandrea. The court also dismissed all claims against certain of the Company’s trustees and executives. The Court subsequently denied Mr. Mastandrea’s Motion for Reconsideration and For New Trial. On December 4, 2024, Mr. Mastandrea filed a Notice of Appeal with the 14th Court of Appeals of the State of Texas and filed an appeal brief on July 28, 2025.

The Company denies the claims, has substantial legal and factual defenses against the claims, and intends to vigorously defend against the claims. The Company does not believe a probable loss will be incurred, nor does it anticipate a material adverse effect on its financial position, results of operations, cash flows or liquidity. Therefore, the Company has not recorded a charge as a result of this action.

Pillarstone Rights Agreement

On December 26, 2021, the Board of Trustees of Pillarstone REIT adopted a new shareholder rights agreement (the “Pillarstone Rights Agreement”). Because Pillarstone REIT sought to use the Pillarstone Rights Agreement to prevent Whitestone OP from exercising its contractual Redemption Right in Pillarstone OP, on July 12, 2022, Whitestone OP filed suit against Pillarstone REIT in the Court of Chancery of the State of Delaware challenging the Pillarstone Rights Agreement.

On January 25, 2024, the Delaware Court of Chancery held that Pillarstone REIT breached the implied covenant of good faith and fair dealing when it adopted the Pillarstone Rights Agreement that thwarted Whitestone OP from exercising the unfettered contractual redemption right it obtained in connection with its investment in the partnership; and the Court held that the Pillarstone Rights Agreement was unenforceable as to the limited partner and allowed Whitestone OP to exercise its redemption right; allowed Pillarstone REIT to determine the current value of Pillarstone OP’s assets; and, as necessary, would later enter a monetary judgment against Pillarstone REIT for the difference between the amount that the Company would have received in or around December 2021 and the current value.

On January 25, 2024, Whitestone OP exercised its notice of redemption for substantially all of its investment in Pillarstone OP.

On March 4, 2024, Pillarstone REIT filed the Pillarstone Bankruptcies on behalf of Pillarstone Capital REIT, Pillarstone OP, as well as certain subsidiaries (collectively, the “Pillarstone Debtors”). The Company filed a claim in the Pillarstone Bankruptcies for the value of its redemption claim along with interest and other costs. The automatic stay was lifted in November 2024 and Whitestone OP continued to pursue its redemption claim in Delaware.

As of July 23, 2025, the Pillarstone Debtors completed the sale of all of the Pillarstone OP’s properties for net proceeds in the amount of approximately $60 million.

A third-party Bankruptcy Plan Agent was appointed and granted the sole and exclusive authority to administer the claims related to the Pillarstone Bankruptcy, including the authority to object to the allowance of claims and to enforce, assert, and settle retained causes of action and to direct and cause the Pillarstone Debtors to make all payments and distributions under the bankruptcy plan. Whitestone OP and the Plan Agent negotiated a resolution of all pending disputes in the Pillarstone Bankruptcies, and on October 18, 2025, filed a settlement agreement with the Bankruptcy Court to resolve and confirm all issues regarding the Pillarstone Bankruptcies including all claims and causes of action asserted by or that could have been asserted by the Pillarstone Debtors against Whitestone OP and by Whitestone OP against the Pillarstone Debtors including Whitestone OP’s Delaware litigation against Pillarstone REIT and the litigation between Pillarstone OP and the Company (the “Settlement Agreement”). The Settlement Agreement requires Court approval under Bankruptcy Rule 9019. If the Court enters a Final Order approving the Settlement Agreement (the “9019 Order”), the Settlement Agreement shall be effective and binding on the Parties and each of their respective successors and assignees as of the date of entry (the “Settlement Effective Date”).

The Settlement Agreement establishes three reserve funds using the partnership estate funds in the aggregate amount of $2 million to support the Plan Agent's claim administration process (the “Reserve Funds”). The Settlement Agreement also directs the Pillarstone Debtors to distribute $4 million to the Pillarstone Estate (the "Pillarstone Distribution") in satisfaction of all outstanding claims by Pillarstone against the partnership estate.

The Settlement Agreement also directs the Pillarstone Debtors to distribute all funds remaining in the partnership estate following the satisfaction of the claims and Reserve Funds noted above to Whitestone OP as soon as reasonably practicable, and not later than 14-days after the entry of a Final Order by the Bankruptcy Court approving the 9019 Order, but in no event later than December 12, 2025. The amount to be distributed to Whitestone OP is estimated to be approximately $40 million. This is in addition to the $13.6 million payment noted above to the Company relating to Whitestone OP’s secured claim for the Uptown Tower guaranty payment.

If the Bankruptcy Court does not approve the Settlement Agreement by entry of a Final Order, then the Settlement Agreement shall not be binding on any party. There can be no assurances that the Bankruptcy Court will approve the Settlement Agreement or that it will not be challenged by any party or appealed. If the Bankruptcy Court does not approve the Settlement Agreement, we will continue to pursue collection of the amounts due from Pillarstone OP through all means necessary and while we do not know the ultimate amount to be collected, we believe the amount will be in excess of the current carrying value of our equity investment in Pillarstone OP.

We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

Whitestone REIT 10-Q