Company to Hold Conference Call Tomorrow,
August 15, 2014, at 10 a.m. ET
Wheeler Real Estate Investment Trust, Inc. (NASDAQ:WHLR)
(“Wheeler” or the “Company”) today reported operating and financial
results for its second quarter and six month period ended June 30,
2014.
2014 Second Quarter Highlights (all
comparisons to the same prior year period)
- Total revenue increased 123.1% to $3.6
million for the second quarter 2014.
- Funds from Operations (“FFO”) available
to common shareholders and common unitholders increased by
approximately $127,100, or $0.08 per common share and common unit,
for the three month period ended June 30, 2014.
- Occupancy rate of 94.7% for the 23
properties owned at June 30, 2014.
- Secured a $25 million guidance line of
credit facility with KeyBank National Association.
- Completed Series B convertible
preferred stock offering for total net proceeds of $18.7
million.
- Closed on four property acquisitions
subsequent to the end of the quarter (highlighted below).
- As of June 30, 2014, the Company owns
or had under contract 27 properties in 10 states with a gross
leasable area of 1,577,014 square feet, compared to twelve
properties in six states with a gross leasable area of 545,350
square feet as of the prior year.
2014 Year-to-Date Highlights (all
comparisons to the same prior year period)
- Total revenue increased 124.8% to $7.3
million for the six month period ended June 30, 2014.
- FFO available to common shareholders
and common unitholders for the first half of 2014 increased
approximately $457,300, or $0.10 per common share and common unit,
for the six month period ended June 30, 2014.
- Wheeler Development, LLC, a real estate
development company, was acquired by the Company.
- For the six month period, the Company
declared monthly cash dividends of approximately $0.035 per share.
On an annualized basis, this amounted to a dividend of $0.42 per
common share and common unit, or an 8.8% dividend yield based on
the June 30, 2014 closing price of $4.76 per share.
Outlook / Primary Goals
- Expects to continue pursing property
acquisitions in secondary and tertiary markets at an average
accretive cash flow benefit of approximately $100,000 per
asset.
- Continue to maintain occupancy levels
in excess of 90%.
- Wheeler expects to become a
self-managed REIT by December 31, 2014.
- Reduce debt to total asset ratio
quarter over quarter with the expectation of reaching the mid-50
percentile over the long-term.
Jon S. Wheeler, Chairman and Chief Executive Officer, commented,
“We achieved significant year-over-year increases in revenue, FFO,
Core FFO and property NOI for the second quarter and six month
period. Wheeler continues to remain a fast growing, acquisitive
company. Over the last twelve months we have increased our total
properties from twelve to twenty-three, GLA from 545,350 square
feet to 1,294,572 square feet, and total assets from $62.3 million
to $140.2 million. We are achieving these results due to an
abundance of significant, quality shopping centers becoming
available in the secondary and tertiary markets we target. Many of
the acquisitions that Wheeler’s team has made have been locations
our sales team has evaluated for years, and we feel this is the key
element that allows us to take advantage of potential sales
opportunities and also derive the most value from each property we
acquire.”
Mr. Wheeler continued, “We are also beginning to benefit from
growing to scale, as evidenced by general and administrative
expenses decreasing as a percentage of revenues during the first
half of 2014 as compared to the prior year. Finally, we understand
that we have had to leverage the Company’s balance sheet in order
to have the capital to continue to grow. However, our debt to total
asset ratio decreased by 11.9% since March 2014. Overall, we are
very pleased with the progression over the first half of 2014 and
feel that the Company is now at a scale where our growth will
translate into profitable operations in the coming months.”
Outlook for 2014
Mr. Wheeler concluded, “In the months ahead, we will continue to
focus on improving operational efficiencies while sustaining a
healthy rate of growth, as evident by the four properties the
Company closed on and will begin to record revenue on in the third
quarter. We will also strive to reduce leverage quarter over
quarter with the long-term goal at around 55% debt to equity. In
addition, based upon the broad pipeline of properties and
development projects available in the secondary and tertiary
markets in which we target this is an exciting time in our
development and here at Wheeler, we remain committed to the
Company’s longevity and growth.”
2014 Second Quarter Financial and
Operational Review
- Total revenue for the second quarter of
2014 was approximately $3.6 million, representing a 125% increase
over total revenue of approximately $1.6 million for the prior year
period.
- Wheeler reported FFO available to
common shareholders and common unitholders for the three months
ended June 30, 2014 of approximately ($593,100), or ($0.06) per
common share and common unit, compared to approximately ($720,200),
or ($0.14) per common share and common unit in the prior year
comparable period.
- Total Core FFO for the three months
ended June 30, 2014 was approximately $60,300, or $0.01 per common
share and common unit, compared to approximately $463,300, or $0.09
per common share and common unit for the same period of the prior
year.
- Property net operating income (“NOI”)
was approximately $2.7 million for the three months ended June 30,
2014, representing a 108% increase over NOI of approximately $1.3
million for the prior year period.
- Net loss attributable to Wheeler REIT
for common shareholders for the three months ended June 30, 2014
was approximately $2.2 million, or a loss of $0.31 per basic and
diluted share, compared to a net loss of approximately $1.3 million
or $0.39 per basic and diluted share, during the same 2013
period.
- Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) was approximately $1.4
million during the three months ended June 30, 2014, representing
an increase of approximately $1.6 million over the negative
$251,600 of EBITDA generated in the three months ended June 30,
2013.
2014 Year-to-Date Financial and
Operational Review
- Total revenue for the first half of
2014 was approximately $7.3 million, representing a 128% increase
over total revenue of approximately $3.2 million for the prior year
period.
- Wheeler reported FFO available to
common shareholders and common unitholders for the six months ended
June 30, 2014 of approximately ($94,000), or ($0.01) per common
share and common unit, compared to approximately ($551,400), or
($0.11) per common share and common unit in the prior year
comparable period.
- Total Core FFO available to common
shareholders and common unitholders for the six months ended June
30, 2014 was approximately $679,800, or $0.07 per common share and
common unit, as compared to approximately $461,500 or $0.09 per
common share and common unit, for the same period of the prior
year.
- Property NOI was approximately $5.5
million for the six month period ended June 30, 2014, representing
a 104% increase over NOI of approximately $2.7 million for the
prior year comparable period.
- Net loss attributable to Wheeler REIT
for common shareholders for the six months ended June 30, 2014 was
approximately $3.4 million, or a loss of $0.47 per basic and
diluted share, compared to a net loss of approximately $1.7 million
or $0.52 per basic and diluted share, during the comparable 2013
period.
- EBITDA was approximately $3.3 million
during the six months ended June 30, 2014, representing an increase
of approximately $2.8 million over the $466,900 of EBITDA generated
in the six months ended June 30, 2013.
- In January 2014, the Company acquired
for nominal consideration Wheeler Development, an entity
wholly-owned by Wheeler’s Chairman and Chief Executive Officer. The
taxable subsidiary will provide development and re-development
services to current tenants and third parties.
Leasing Review
- The Company signed six lease renewals
totaling 44,662 square feet at an average weighted decrease of
$0.64 per square foot for the three months ended June 30, 2014.
There were two renewals totaling 9,339 square feet at an average
weighted decrease of $0.31 per square foot for the same period of
the prior year.
- Renewals for the first six months of
2014 were comprised of twelve deals totaling 61,937 square feet
with an average weighted decrease of $0.22 per square foot. The
decrease was primarily the result of a negotiated rent reduction of
$4.34 per square foot on one of the renewals. This compares to four
renewals totaling approximately 13,739 square feet with an average
weighted increase of $0.31 per square foot for the six months ended
June 30, 2013.
- For the three months ended June 30,
2014, Wheeler signed three new leases totaling approximately 6,928
square feet at an average weighted rate of $11.96 per square
foot.
- During the first six months of 2014,
new leases comprised of five deals totaling 9,414 square feet with
an average weighted rate of $13.15 per square foot. No new leases
were signed during the first six months of the prior year.
- Approximately 5.58% of Wheeler’s gross
leasable area is subject to leases that expire during the twelve
months ending June 30, 2015. Based on recent market trends, the
Company believes that these leases will be renewed at amounts and
terms comparable to existing lease agreements.
Financing Activity
- In January 2014, the Company completed
the second closing of an approximate $2.2 million private placement
transaction of non-convertible senior notes and warrants to
purchase shares of Wheeler common stock. The notes bear interest at
9% per annum. The warrants issued are to purchase an aggregate
227,372 shares of Wheeler common stock at an exercise price of
$4.75 per share. The first closing of this financing was completed
in December 2013.
- During the second quarter, Wheeler
secured a $25 million guidance line of credit facility with KeyBank
National Association. The credit facility is available to the
Company until December 31, 2015 and will be used towards
acquisitions. On April 29, 2014, the Company completed an offering
and sale of Series B Preferred Stock (Preferred Stock) and warrants
to purchase the Company’s common stock. The Preferred Stock and
warrants were sold in $125 units with each unit consisting of five
shares of Preferred Stock and six warrants. The Preferred Stock
bears interest at a rate of 9% per annum and has a conversion price
of $5.00 per share of common stock, which if fully converted would
result in the issuance of approximately 4,140,000 shares of common
stock. There were 993,600 warrants issued with each warrant
permitting the investors to purchase one share of the Company’s
common stock at an exercise price of $5.50 per share. Net proceeds
from the financing totaled approximately $18.7 million after the
deduction of underwriting, legal, accounting and other professional
fees. The Company intends to use the proceeds towards future
acquisitions and for general working capital.
Balance Sheet Summary
- Wheeler’s net investment properties as
of June 30, 2014 were $100.6 million, as compared to $101.8 million
in net investment properties as of December 31, 2013.
- The Company’s total fixed-rate debt was
$95.2 million at June 30, 2014, compared to $94.6 million at
December 31, 2013. Wheeler’s weighted average interest rate and
term of the Company’s fixed-rate debt was 5.39% and 5.03 years,
respectively, at June 30, 2014, compared to 5.31% and 5.61 years,
respectively, at December 31, 2013.
2014 Second Quarter and Year-to-Date
Dividend Distribution
- For the three months ended June 30,
2014, the Company distributed approximately $966,500 to holders of
common shares and common units, as compared to $361,200 for the
same period of the prior year.
- For the six months ended June 30, 2014,
the Company distributed approximately $1.9 million to holders of
common shares and common units, as compared to $902,900 distributed
for the same period of the prior year.
- The Company has distributed $423,600
and $464,300 in quarterly dividends to holders of preferred shares
for the three and six months ended June 30, 2014,
respectively.
Subsequent Events
In July 2014, Wheeler completed the acquisition of four
grocery-anchored shopping centers in South Carolina, Kentucky,
Virginia and Georgia for a combined acquisition value of $26.3
million. These properties include:
- Cypress Shopping Center, an 80,435
square foot grocery-anchored shopping center located in Boiling
Springs, South Carolina purchased for approximately $8.3 million.
The property is 94.4% occupied with the majority of the square
footage leased to Bi-Lo and Dollar General.
- Harrodsburg Marketplace, a 60,048
square foot shopping center located in Harrodsburg, Kentucky with a
purchase price of approximately $5.0 million. The property is 97%
leased, anchored by a Kroger grocery store with Arby’s as the other
primary tenant.
- Port Crossing Shopping Center, a 65,365
square foot grocery-anchored shopping center located in
Harrisonburg, Virginia with an acquisition value of $9.3 million.
Port Crossing is 89% leased and is anchored by a Food Lion grocery
store. The property was acquired from a related party and was paid
for using a combination of cash, Operating Partnership units and
assumption of outstanding debt.
- LaGrange Marketplace, a 76,594 square
foot grocery-anchored shopping center located in LaGrange, Georgia
with an acquisition value of $3.7 million. The property is 92%
leased and is anchored by a Food Depot grocery store. LaGrange
Marketplace was also acquired from a related party and paid for
through a combination of cash, Operating Partnership units and
assumption of outstanding debt.
Conference Call Details
Date/Time: Friday, August 15, 2014, at 10 a.m. ET
Live Participant Dial In (Toll Free): 877-407-3101Live
Participant Dial In (International): 201-689-8428
Webcast
The call will also be simultaneously webcast over the Internet
via the “Investor Relations” section of Wheeler’s website at
www.whlr.us or by clicking on the conference call link:
http://whlr.equisolvewebcast.com/q2-2014
Supplemental Information
Further details regarding Wheeler Real Estate Investment Trust,
Inc.’s operations and financials for the period ended June 30, 2014
are available through the Company’s website by visiting
www.whlr.us.
About Wheeler Real Estate Investment
Trust, Inc.
Headquartered in Virginia Beach, VA, the Company specializes in
owning, acquiring, financing, developing, renovating, leasing and
managing income producing assets, such as community centers,
neighborhood centers, strip centers and free-standing retail
properties. Wheeler’s portfolio contains strategically selected
properties, primarily leased by nationally and regionally
recognized retailers of consumer goods and located in the
Northeast, Mid-Atlantic, Southeast and Southwest regions of the
United States. For additional information about the Company, please
visit: www.whlr.us.
Financial Information
A copy of Wheeler’s Quarterly Report on Form 10-Q which includes
the Company’s consolidated financial statements and Management’s
Discussion & Analysis, will be available upon filing via the
U.S. Securities and Exchange Commission website (www.sec.gov) or
through Wheeler’s website at www.whlr.us.
FFO is a non-GAAP financial measure within the meaning of the
rules of the Securities and Exchange Commission. Wheeler considers
FFO to be an important supplemental measure of its operating
performance and believes it is frequently used by securities
analysts, investors and other interested parties in the evaluation
of REITs, many of which present FFO when reporting their results.
FFO is intended to exclude GAAP historical cost depreciation and
amortization of real estate and related assets, which assumes that
the value of real estate assets diminishes ratably over time.
Historically, however, real estate values have risen or fallen with
market conditions. Because FFO excludes depreciation and
amortization unique to real estate, gains and losses from property
dispositions and extraordinary items, it provides a performance
measure that, when compared year-over-year, reflects the impact to
operations from trends in occupancy rates, rental rates, operating
costs, development activities and interest costs, providing
perspective not immediately apparent from net income.
Management believes that the computation of FFO in accordance
with NAREIT’s definition includes certain items that are not
indicative of the operating performance of the Company’s real
estate assets. These items include, but are not limited to,
non-recurring expenses, legal settlements, legal and professional
fees, and acquisition costs. Management uses Core FFO, which is a
non-GAAP financial measure, to exclude such items. Management
believes that reporting Core FFO in addition to FFO is a useful
supplemental measure for the investment community to use when
evaluating the operating performance of the Company on a
comparative basis. A reconciliation of non-GAAP financial measures
is included in the accompanying financial tables.
Forward-Looking
Statement
This press release contains forward-looking statements,
including (i) all matters referenced in the “Outlook/Primary Goals”
section of this press release; (ii) discussion and analysis of the
Company’s financial condition; (iii) anticipated cost savings from
economies of scale; (iv) the Company’s ability to complete future
acquisitions; (vv) the Company’s ability to obtain sufficient and
economical financing to complete potential acquisitions; (vi) the
amount of the Company’s anticipated cash distributions to the
Company’s shareholders in the future; (vii) the anticipated ability
of the Company to successfully utilize Wheeler Development to
complete development and re-development projects; and (viii) the
anticipated renewals of the Company’s existing leases. These
forward-looking statements are not historical facts but are the
intent, belief or current expectations of management based on its
knowledge and understanding of our business and industry.
Forward-looking statements are typically identified by the use of
terms such as “may,” “will,” “should,” “potential,” “predicts,”
“anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” or the negative of such terms and variations of these
words and similar expressions. These statements are not guarantees
of future performance and are subject to risks, uncertainties and
other factors, some of which are beyond our control, are difficult
to predict and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking
statements.
Forward-looking statements that were true at the time made may
ultimately prove to be incorrect or false. You are cautioned to not
place undue reliance on forward-looking statements, which reflect
management’s view only as of the date of this press release. The
Company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results. Factors that could cause actual results to differ
materially from any forward-looking statements made in this press
release include:
- the imposition of federal taxes if the
Company fails to qualify as a REIT in any taxable year or opts to
forego an opportunity to ensure REIT status;
- uncertainties related to the national
economy, the real estate industry in general and in our specific
markets;
- legislative or regulatory changes,
including changes to laws governing REITs;
- adverse economic or real estate
developments in Virginia, Florida, Georgia, South Carolina, North
Carolina, New Jersey, Tennessee, Kentucky or Oklahoma;
- increases in interest rates and
operating costs;
- inability to obtain necessary outside
financing;
- litigation risks;
- lease-up risks;
- inability to obtain new tenants upon
the expiration of existing leases;
- inability to generate sufficient cash
flows due to market conditions, competition, uninsured losses,
changes in tax or other applicable laws; and
- the need to fund tenant improvements or
other capital expenditures out of operating cash flow.
Wheeler Real Estate Investment Trust, Inc.
Consolidated Statements of
Operations
Three Months EndedJune
30,
Six Months EndedJune 30,
2014 2013 2014 2013
REVENUE: Rental revenues $ 2,999,290 $ 1,425,462 $ 5,948,100
$ 2,818,494 Other revenues 634,404 203,518
1,349,746 428,402
Total Revenue
3,633,694 1,628,980 7,297,846 3,246,896
OPERATING EXPENSES: Property operations 909,037 284,868
1,832,219 585,570 Depreciation and amortization 1,735,944 684,554
3,521,546 1,332,686 Provision for credit losses (28,032) 22,903
(28,032) 37,903 Corporate general & administrative
1,385,549 1,572,775 2,217,867 2,156,567
Total Operating Expenses 4,002,498 2,565,100
7,543,600 4,112,726
Operating Loss
(368,804) (936,120) (245,754) (865,830) Interest expense
(1,536,637) (446,087) (2,905,575)
(995,715)
Net Loss (1,905,441) (1,382,207)
(3,151,329) (1,861,545) Less: Net loss attributable to
noncontrolling interests (81,451) (111,248)
(168,703) (156,904)
Net Loss Attributable to
Wheeler REIT (1,823,990) (1,270,959) (2,982,626) (1,704,641)
Preferred stock dividends (423,555) (22,500)
(464,258) (22,500)
Net Loss Attributable to
Wheeler REIT Common Shareholders $ (2,247,545) $
(1,293,459) $ (3,446,884) $ (1,727,141) Loss per share:
Basic and Diluted $ (0.31) $ (0.39) $ (0.47) $ (0.52)
Weighted-average number of shares: Basic and Diluted
7,329,788 3,301,502 7,258,068 3,301,502
Wheeler Real Estate Investment Trust
Balance Sheet
June 30,2014 December
31,2013 ASSETS: Investment properties, net
$ 100,553,283 $ 101,772,335 Cash and cash equivalents 16,243,867
1,155,083 Rents and other tenant receivables, net 1,663,027
1,594,864 Deferred costs and other assets, net 21,692,120
20,847,984
Total Assets $ 140,152,297 $
125,370,266
LIABILITIES: Loans payable $ 95,236,145 $
94,562,503 Below market lease intangible, net 2,610,379 2,674,566
Accounts payable, accrued expenses and other liabilities
3,361,048 2,526,388
Total Liabilities
101,207,572 99,763,457 Commitments and contingencies — —
EQUITY:
Series A preferred stock (no par value,
4,500 shares authorized, 1,809 and no shares issued and
outstanding,respectively)
1,458,050 1,458,050
Series B preferred stock (no par value,
1,000,000 shares authorized, 828,000 and no shares issued and
outstanding,respectively)
18,738,515 — Common stock ($0.01 par value, 75,000,000 shares
authorized, 7,421,852 and 7,121,000 shares issued and outstanding,
respectively) 74,218 71,210 Additional paid-in capital 28,092,906
28,169,693 Accumulated deficit (16,274,152 )
(11,298,253 ) Total Shareholders’ Equity 32,089,537
18,400,700 Noncontrolling interests 6,855,188
7,206,109
Total Equity 38,944,725
25,606,809
Total Liabilities and Equity $ 140,152,297
$ 125,370,266
Wheeler Real Estate Investment
Trust
Funds From Operations (FFO)
Three Months Ended June 30, Same Stores New
Stores Total Period Over Period Changes
2014 2013 2014 2013 2014
2013 $ % Net income (loss) $
(1,377,631 ) $ (1,078,760 ) $ (527,810 ) $ (303,447 ) $ (1,905,441
) $ (1,382,207 ) $ (523,234 ) (37.85 %) Depreciation of real estate
assets 506,031 658,804 1,229,913
25,750 1,735,944 684,554
1,051,390 153.59 % Total FFO $ (871,600
) $ (419,956 ) $ 702,103 $ (277,697 ) $ (169,497 ) $
(697,653 ) $ 528,156 75.70 %
Six Months Ended June
30, Same Stores New Stores Total Period
Over Period Changes 2014 2013 2014
2013 2014 2013 $ %
Net income (loss) $ (2,040,704 ) $ (1,558,098 ) $ (1,110,625 ) $
(303,447 ) $ (3,151,329 ) $ (1,861,545 ) $ (1,289,784 ) (69.29 %)
Depreciation of real estate assets 1,019,389
1,306,936 2,502,157 25,750
3,521,546 1,332,686 2,188,860
164.24 % Total FFO $ (1,021,315 ) $ (251,162 ) $
1,391,532 $ (277,697 ) $ 370,217 $ (528,859 ) $
899,076 170.00 %
Wheeler Real Estate Investment
Trust
Core Funds From Operations (Core
FFO)
Three Months Ended June 30, Six Months
Ended June 30, 2014
2013
2014 2013 Total FFO $ (169,497 )
$ (697,653 ) $ 370,217 $ (528,859 ) Preferred stock dividends
(423,555 ) (22,500 ) (464,258 ) (22,500 ) Total FFO available to
common shareholders and common
unitholders (593,052 ) (720,153 ) (94,041 )
(551,359 ) Legal and accounting costs for acquisitions
343,000 985,000 400,000 985,000 Share-based compensation 145,000 -
145,000 - Other noncash adjustments 165,317
198,437 228,844 27,902
Total Core FFO $ 60,265 $ 463,284 $ 679,803 $
461,543 Weighted Average Common Shares
7,329,788 3,301,502 7,258,068 3,301,502 Weighted Average Common
Units 1,863,942 1,858,068
1,935,741 1,858,068 Total Common Shares and
Units 9,193,730 5,159,570
9,193,809 5,159,570 FFO per Common
Share and Common Unit $ (0.06 ) $ (0.14 ) $ (0.01 ) $ (0.11 )
Core FFO per Common Share and
CommonUnit
$ 0.01 $ 0.09 $ 0.07 $ 0.09
Wheeler Real Estate Investment Trust,
Inc.Robin HanischCorporate
Secretary757-627-9088robin@whlr.usorINVESTOR RELATIONS:The Equity Group Inc.Terry
DownsAssociate212-836-9615tdowns@equityny.comorAdam PriorSenior
Vice President212-836-9606aprior@equityny.com
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