UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~August~~December 31, 2023

Pillarstone Capital REIT

(Exact name of registrant as specified in its charter)

Maryland	001-15409	39-6594066
(State or other jurisdiction of incorporation	(Commission File Number)	(IRS Employer Identification No.)

19407 Park Row, Suite 140 Houston, Texas	77084
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (281) 747-9997

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.04

Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On ~~August~~December 31, 2023, ~~the registrant received notice of the default of the mortgage loan for its Uptown Tower office building (the “Uptown Loan”).~~ Whitestone Uptown Tower, LLC, ~~the~~an ~~registrant’s~~indirect subsidiary ~~that~~of ~~owns Uptown Tower and is~~ the ~~borrower under the loan agreement~~registrant, ~~received~~filed a ~~letter~~voluntary ~~with~~petition ~~the~~for ~~subject~~relief ~~line~~under ofChapter ~~Notice~~11 of ~~Default~~the ~~and~~United ~~Demand~~States ~~for~~Bankruptcy ~~Payment~~Code (the “~~Default~~Bankruptcy ~~Notice~~Code”) ~~from~~in ~~counsel~~the ~~for~~United ~~the~~States ~~lender~~Bankruptcy ~~and~~Court ~~special~~for ~~servicer~~the Northern District of ~~its~~Texas ~~mortgage~~(the ~~loan~~“Bankruptcy Court”).

~~Whitestone~~The ~~REIT~~filing ~~Operating Partnership, L.P. (“Whitestone OP”), a subsidiary~~ of ~~Whitestone REIT, is~~ the ~~guarantor~~petition ofconstituted ~~this~~an ~~mortgage~~event ~~loan. The mortgage payable on this property had a balance~~ of ~~approximately~~default ~~$14.4~~under ~~million~~Whitestone onUptown ~~September~~Tower’s ~~1, 2023. The~~ mortgage loan ~~matures on October 1, 2023. The registrant and the borrower have been working to extend the maturity date and to find new financing~~ for ~~the~~its Uptown Tower ~~property.~~office ~~The~~building ~~registrant cannot provide any assurance that it will be able to obtain an extension of~~ (the “Uptown Loan ~~or new financing for its Uptown Tower property before the scheduled maturity of the mortgage loan, though it has been working diligently to find alternative financing~~”).

As previously disclosed, on August 3, 2023, Whitestone Uptown Tower received a letter with the subject line of Notice of Default and Demand for Payment (the “Default Notice”) from counsel for the lender and Rialto Capital Advisors, LLC, the special servicer for the Uptown Loan. The Default Notice ~~asserts~~asserted non-monetary defaults resulting from Whitestone REIT Operating Partnership, L.P.’s (“Whitestone OP”) failure to comply with the loan agreement in connection with the 2016 contribution agreement between Whitestone OP, the registrant, and Pillarstone Capital REIT Operating Partnership LP (“Pillarstone OP”). Whitestone OP, a subsidiary of Whitestone REIT, is the guarantor of the Uptown Loan.

The Default Notice also ~~alleges~~alleged aanother non-monetary default caused by the Whitestone TRS, Inc.’s termination of its management agreement for Uptown Tower in August 2022. Whitestone TRS, Inc. is a subsidiary of Whitestone REIT.

In ~~the Default Notice~~addition, the ~~lender~~Uptown ~~and~~Loan ~~special~~matured ~~servicer~~on ~~noted~~October ~~that the borrower~~1, ~~prior~~2023. toThe ~~the~~registrant ~~contribution agreement~~ and ~~while~~the itborrower ~~was~~had ~~controlled~~been byworking ~~Whitestone~~to ~~OP,~~extend ~~represented,~~the ~~warranted,~~maturity date and ~~covenanted~~to ~~that~~find ~~“[F]following~~new ~~the~~financing ~~Transfer,~~or ~~Sponsor~~a ~~through~~buyer ~~its~~for ~~ownership~~the ofUptown ~~Guarantor~~Tower [property. .However, .]on ~~shall~~October ~~continue~~19, to2023, ~~Control~~Whitestone ~~Borrower,~~objected ~~and~~to ~~shall~~a ~~continue~~proposed tosale ~~control~~of the ~~day-to-day~~Uptown ~~operation~~Tower ofproperty under the ~~Property.”~~Status ~~The~~Quo ~~lender~~Order ~~and~~issued ~~special~~by ~~servicer~~the ~~contend~~court ~~that~~in ~~this~~the ~~representation~~registrant’s ~~was~~previously ~~false~~disclosed ~~because~~lawsuit ~~Pillarstone~~Whitestone OP isinstituted ~~controlled~~against by the registrant (in the ~~sole~~Delaware ~~general~~Court ~~partner~~ of ~~Pillarstone OP) and not Whitestone REIT~~Chancery.

OnRepresentatives ~~August~~of 31the registrant’s board of trustees attempted to initiate discussions with Whitestone REIT to address these matters in in November 2023 with representatives of Whitestone REIT’s board of trustees. However, in October and November 2023, ~~the~~Rialto ~~special~~Capital ~~servicer~~Advisors ~~provided~~delivered anotices ~~preliminary~~of ~~estimate~~foreclosure sale to Whitestone Uptown Tower providing notice that, among other things, as of the ~~payoff~~maturity date, the borrower failed to repay all amounts ~~for~~due under the ~~loan~~note, ~~for~~and ~~discussion~~making ~~purposes~~a asdemand on (1) the ~~parties~~borrower ~~discuss~~and aall ~~potential~~persons and entities obligated on the promissory note evidencing the mortgage loan ~~extension.~~(except ~~The~~to ~~estimated~~the ~~payoff~~extent ~~amount~~that ~~was~~the ~~listed~~obligation asis ~~approximately~~expressly ~~$18.9~~limited ~~million~~by written contract or applicable law) for payment in full of the entire indebtedness, and on (2) the borrower for payment of rents and proceeds of any rents to which ~~includes~~the ~~approximately~~lender $6is entitled under the mortgage loan documents and Texas Property Code chapter 64, Assignment of Rents to Lienholder.3 ~~million~~The notice also included a notice of ~~default~~foreclosure ~~interest~~sale of Uptown Tower scheduled for December 5, 2023.

On November 17, 2023, the special servicer provided a preliminary estimate of the payoff amounts for the Uptown Loan. The ~~registrant~~estimated ispayoff ~~currently~~amount ~~assessing~~was ~~its~~listed ~~rights~~as approximately $18.8 million, net of escrows and ~~remedies~~reserves, inwhich ~~light~~included an outstanding principal balance of ~~the~~approximately ~~alleged~~$14.4 ~~Default~~million ~~Notice~~and approximately $6.5 million of default interest.

~~Item~~On ~~8.01 Other~~December ~~Events~~1, 2023, Whitestone Uptown Tower issued a press release relating to the filing, a copy of which is attached hereto as Exhibit 99.1.

OnItem ~~July~~9.01 ~~17,~~Financial ~~2023~~Statements and July 18, 2023, trial was held in the lawsuit filed in the Court of Chancery of the State of Delaware by Whitestone OP in which the registrant was named as a defendant, challenging its rights agreement, dated as of December 27, 2021, between the registrant and American Stock Transfer & Trust Company, LLC, as rights agentExhibits.

~~Post-trial~~(d) ~~argument in the lawsuit has been scheduled for November 2, 2023.~~Exhibits

~~Representatives~~Exhibit of the registrant’s board of trustees attempted to initiate discussions to settle these matters in August 2022 with representatives of Whitestone’s board of trustees to avoid a prolonged, expensive legal fightNo. However, Whitestone was not open to settling these matters at that time. This litigation has been and is expected to continue to be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of these proceedings are difficult to predict. The registrant believes that these allegations are without merit and intends to continue to vigorously defend against them. However, the outcome of this lawsuit, including the timing of the final disposition of the lawsuit, is unpredictable and could result in substantial costs to the registrant. As a result, future adverse rulings, settlements, or unfavorable developments could result in charges that could have a material adverse effect on the registrant’s business, results of operations or financial condition.Description

99.1	Press Release of Whitestone Uptown Tower, LLC

104	Cover Page Interact Data File – the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:September 12, 2023	Pillarstone Capital REIT
	By:	/s/ Bradford D. Johnson
		Bradford D. Johnson
		President and Chief Executive Officer

Date:December 1, 2023

Pillarstone Capital REIT

By:/s/ Bradford D. Johnson

Bradford D. Johnson

President and Chief Executive Officer

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