PROMISSORY NOTE

1.

DEFINED TERMS.   As used in this Promissory Note, the following terms shall have the following meanings:

1.1.        Borrower:   Whitestone Centers LLC, a Texas limited liability company,   its successors and assigns.

1.2.        Lender : Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of this Note.

1.3.        Guarantor: Whitestone REIT, a Maryland real estate investment trust.

1.4.        Principal Sum: $2,302,500.00.

1.5.        Monthly Payment: $17,343.50.

1.6.        Date of Disbursement: February 3, 2009.

1.7.        Interest Rate:   6.63% per annum.

1.8.        Default Rate: the Interest Rate plus five percent (5%) per annum, but in no event greater than the maximum lawful rate of interest.

1.9.        Maturity Date:   March 1, 2014.

1.10.       Amortization Period:   Twenty (20) years from the Interest Only Payment Date.

1.11.       Interest Only Payment Date:   March 1, 2009, being the first day of the first month after the Date of Disbursement.

1.12.       First Payment Date :  April 1, 2009, being the first day of the second month after the Date of Disbursement.

1.13.       Lender's Payment Address:

Sun Life  Assurance Company of Canada

c/o Kinghorn Driver Hough & Co.

1300 Post Oak Blvd., Suite 1200

Houston, Texas 77056

1.14.       Permitted Prepayment Period:   the period commencing on Date of Disbursement and ending on the Maturity Date, subject to and in accordance with the provisions of Paragraphs 12 and 13 of this Note.

1.15.       Mortgage:   a Deed of Trust and Security Agreement of even date with this Note from Borrower to, or for the benefit of, Lender, which secures Borrower's obligations hereunder, and which covers property in Harris County, Texas, and all modifications or amendments thereto or extensions thereof.

1.16.       Loan Documents, Insurance Proceeds, Laws, Taking Proceeds, Secured Debt, Property, and Event of Default : shall have the same meanings as in the Mortgage.

2.

DEBT.   For value received, Borrower promises to pay to the order of Lender, the Principal Sum with interest on unpaid principal from the Date of Disbursement at the Interest Rate. Interest shall be calculated on a 360-day year of twelve 30-day months.

3.

PAYMENTS.  Borrower shall pay the Monthly Payment to Lender commencing on the First Payment Date and continuing on each monthly anniversary thereof until the Maturity Date. If a payment date is a non-business day, the Monthly Payment shall be due on the next business day.  On the Interest Only Payment Date, Borrower shall pay the interest then due and accrued from the Date of Disbursement.

4.

LATE CHARGE AND ADDITIONAL INTEREST.  Borrower recognizes that if it does not make the Monthly Payments when due, Lender will incur additional administrative expenses in servicing the loan, will lose the use of the money due and will be frustrated in meeting its other financial and loan commitments.  Lender and Borrower acknowledge that different methods could be used to calculate Lender's actual damages if the Monthly Payment is not made when due. To avoid disputes over which method shall apply, Borrower agrees that a late charge equal to four percent (4%) of each Monthly Payment which is not made when due is a reasonable method for calculating said damages.  Borrower shall pay such late charge to Lender immediately after the due date for each Monthly Payment which is not made when due.  The payment of such late charge shall not affect Lender's other rights and remedies under this Note and the other Loan Documents.

All expenditures by Lender pursuant to the Loan Documents, other than advances of the Principal Sum, which are not reimbursed by Borrower immediately upon demand; all amounts remaining due and unpaid after the Maturity Date; and any amounts due and unpaid after an Event of Default (including late charges) shall bear interest at the Default Rate until such amounts are paid to Lender. Such payments shall be in addition to the late charge described above.

5.

APPLICATION OF PAYMENTS.  Unless Lender elects otherwise, all sums received by Lender in payment hereunder shall be applied first to late charges, costs of collection or enforcement, all expenditures made by Lender pursuant to the Loan Documents, and any other similar amounts due, if any, under this Note and the other Loan Documents, then to amounts due pursuant to Paragraph 13 of this Note, then to interest which is due and payable under this Note and the remainder to principal due and payable under this Note.  If an Event of Default has occurred and is continuing, such payments may be applied to sums due hereunder or under the other Loan Documents in any order and combination that Lender may, in its sole discretion, determine.

6.

WAIVERS.  Borrower waives presentment for payment, demand, notice of nonpayment, notice of intention to accelerate the maturity of this Note, diligence in collection, commencement of suit against any obligor, notice of protest, and protest of this Note and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, before or after maturity of this Note, with or without notice to Borrower, and agrees that Borrower's liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Lender.  Borrower consents to any and all extensions of time, renewals, waivers or modifications that may be granted by Lender with respect to the payment or other provisions of this Note, and to any substitution, exchange or release of the collateral for this Note, or any part thereof, with or without substitution of said collateral, and agrees to the addition or release of any guarantor, all whether primarily or secondarily liable, before or after maturity of this Note, with or without notice to Borrower, and without  affecting Borrower's liability under this Note.

7.

NO USURY.   It is the intent of Lender and Borrower in the execution of this Note and all other Loan Documents to contract in strict compliance with applicable usury law.  In furtherance thereof, Lender and Borrower stipulate and agree that none of the terms and provisions contained in this Note, or in any other Loan Documents, shall ever be construed to create a contract to pay for the use, forbearance or detention of money, interest at a rate in excess of the maximum interest rate permitted to be charged by applicable law; that neither the Borrower nor any guarantors, endorsers or other parties now or hereafter becoming liable for payment of this Note shall ever be obligated or required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under applicable law; and that the provisions of this Paragraph 7 shall control over all other provisions of this Note and any other Loan Documents which may be in apparent conflict herewith.  Lender expressly disavows any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of this Note is accelerated.  If the maturity of this Note shall be accelerated for any reason or if the principal of this Note is paid prior to the end of the term of this Note, and as a result thereof the interest received for the actual period of existence of the loan evidenced by this Note exceeds the applicable maximum lawful rate, Lender shall, at its option, either refund to Borrower the amount of such excess or credit the amount of such excess against the principal balance of this Note then outstanding and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest.  In the event that Lender shall contract for, charge or receive any amount or amounts and/or any other thing of value which are determined to constitute interest which would increase the effective interest rate on this Note to a rate in excess of that permitted to be charged by applicable law, an amount equal to interest in excess of