Company to Hold Conference Call tomorrow,
November 14, 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 third quarter and nine month period ended September
30, 2014.
2014 Third Quarter Highlights (all
comparisons to the same prior year period)
- Total revenue increased 110.9% to $4.2
million for the three months ended September 30, 2014.
- Property Net Operating Income (“NOI)
increased by approximately $1.4 million, for the three month period
ended September 30, 2014.
- Occupancy rate of 95.2% for the 29
leasable properties owned at September 30, 2014.
- Completed follow-on offering and sale
of Series B convertible preferred stock for total net proceeds of
$18.6 million.
- Completed the acquisition of nine
properties during the quarter, which included the acquisition of
three development properties.
- Opened regional office in Charleston,
South Carolina
- Subsequent to the end of the quarter,
acquired an additional two properties (highlighted below).
- Also subsequent to the period ended
September 30, 2014, the Company acquired the external operating
companies, resulting in the internalization of the property
management, leasing and acquisition functions.
- As of September 30, 2014, the Company
owns 29 properties and three development properties in 10 states
with a gross leasable area of 1,755,845 square feet, compared to
fifteen properties in six states with a gross leasable area of
982,429 square feet as of September 30, 2013.
2014 Year-to-Date Highlights (all
comparisons to the same prior year period)
- Total revenue increased 119.5% to $11.5
million for the nine month period ended September 30, 2014.
- NOI increased by 99.3% to approximately
$8.5 million for the nine month period ended September 30,
2014.
- For the nine 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 (“Operating Partnership Unit” or “OP
Unit”), or a 9.2% dividend yield based on the September 30, 2014
closing price of $4.56 per share.
Jon S. Wheeler, Chairman and Chief Executive Officer, commented,
“We are very pleased with what we have been able to accomplish this
quarter and saw substantial increases in revenue and property NOI
for the three and nine month periods. During the quarter, we
acquired an additional nine properties increasing the Company’s
total GLA by 761,273 square feet. We also launched our first
regional office in Charleston, South Carolina This office allows us
to streamline the leasing and management of our properties that are
located in the Southeast. We have been pleased with the success of
the new office thus far and expect that this location will improve
upon and maximize the efficiency of our leasing and management
efforts. In September, the Company returned to the capital markets
and successfully completed its follow-on offering which resulted in
net proceeds of $18.6 million. We immediately began to deploy
capital, using a portion of these proceeds to acquire three
shopping centers.
Mr. Wheeler concluded, “We look forward to continued growth for
the remainder of 2014 and beyond. Subsequent to the end of the
third quarter, the Company completed its transition to a
fully-internalized, self-managed REIT structure. Personally, I am
very proud of this accomplishment. Since day one, we have stated
our intentions to transition into a self-managed REIT and we
believe that by completing this process it demonstrates to the
investment community the integrity of our team and management’s
commitment to the growth of the Company. In the months ahead, we
will continue to seek acquisitions from the steady pipeline of
properties and development projects that are available in the
secondary and tertiary markets. We will also continue to leverage
existing and develop new relationships that will provide additional
opportunities for growth. We remain committed to increasing
shareholder value and appreciate everyone’s ongoing support.”
2014 Third Quarter Financial and
Operational Review
- Total revenue for the third quarter of
2014 was approximately $4.2 million, representing a 110.9% increase
over total revenue of approximately $2.0 million for the prior year
period.
- Wheeler reported FFO available to
common shareholders and common unitholders for the three months
ended September 30, 2014 of approximately ($1.8 million), or
($0.19) per common share and common unit, compared to approximately
($1.6 million), or ($0.25) per common share and common unit in the
prior year comparable period.
- Total Core FFO for the three months
ended September 30, 2014 was approximately ($1.15 million), or
($0.12) per common share and common unit, compared to approximately
$115,711, or $0.02 per common share and common unit for the same
period of the prior year.
- NOI was approximately $3.0 million for
the three months ended September 30, 2014, which represents an
increase 89% over NOI of approximately $1.6 million for the prior
year period.
- Net loss attributable to Wheeler REIT
for common shareholders for the three months ended September 30,
2014 was approximately $4.6 million, or a loss of $0.62 per basic
and diluted share, compared to a net loss of approximately $1.8
million or a loss of $0.38 per basic and diluted share, during the
same 2013 period.
- Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) was approximately
($75,674) during the three months ended September 30, 2014,
representing an increase of approximately $972,900 over the ($1.0
million) of EBITDA generated in the three months ended September
30, 2013.
- On September 2, 2014, the Company
opened a regional office in Charleston, South Carolina to provide
leasing and property management services to the Company’s
properties, as well as future acquisitions, located in the
Southeast region of the United States. Five staff members from
Wheeler’s Virginia Beach headquarters relocated to help launch the
new office.
2014 Year-to-Date Financial and
Operational Review
- Total revenue for the first nine months
of 2014 increased 119.5% to approximately $11.5 million, as
compared to total revenue of approximately $5.2 million for the
prior year period.
- Wheeler reported FFO available to
common shareholders and common unitholders for the nine months
ended September 30, 2014 of approximately ($3.0 million), or
($0.15) per common share and common unit, compared to approximately
($2.3 million), or ($0.38) per common share and common unit in the
prior year comparable period.
- Total Core FFO available to common
shareholders and common unitholders for the nine months ended
September 30, 2014 was approximately ($470,412), or ($0.05) per
common share and common unit, as compared to approximately $572,254
or $0.10 per common share and common unit, for the same period of
the prior year.
- Property NOI was approximately $8.5
million for the nine month period ended September 30, 2014,
representing an increase of 99.3% over NOI of approximately $4.3
million for the prior year comparable period.
- Net loss attributable to Wheeler REIT
for common shareholders for the nine months ended September 30,
2014 was approximately $8.0 million, or a loss of $1.10 per basic
and diluted share, compared to a net loss of approximately $3.5
million or $0.93 per basic and diluted share, during the comparable
2013 period.
- EBITDA was approximately $3.2 million
during the nine months ended September 30, 2014, representing an
improvement of approximately $3.8 million over the ($581,700) of
EBITDA generated in the nine months ended September 30, 2013.
Acquisition Activity
During the third quarter, Wheeler acquired six shopping centers
and three development properties in South Carolina, Kentucky,
Virginia, Georgia, and North Carolina. The combined acquisition
value of these properties is approximately $46.4 million, which was
paid for using a combination of cash, debt and, in the case of Port
Crossing and LaGrange, the issuance of OP Units. Included below are
the details pertaining to these acquisitions.
Name / Description
Location Square Footage/ Acreage
Major Tenants Occupancy Level
Cypress Shopping Center Boiling Springs, South
Carolina 80,435 square feet Bi-Lo and
Dollar General
94% Harrodsburg Marketplace/
Shopping Center
Harrodsburg, Kentucky 60,048 square
feet Kroger and Arby's 97% Port
Crossing
Shopping Center
Harrisonburg, Virginia 65,365 square
feet Food Lion
grocery store
92% LaGrange Marketplace / Shopping Center
LaGrange, Georgia 76,594 square feet
Food Depot grocery store 93% Courtland/
Development Property
Courtland, Virginia 1.03 acre
- - Moyock /
Development Property
Moyock,
North Carolina
1.28 acre - - Edenton
Commons /
Development Property
Edenton,
North Carolina
53.82 acre - - Freeway
Junction /
Shopping Center
Stockbridge, Georgia 156,834 square
feet Goodwill and
Farmer's Furniture.
98% Graystone Crossing /
Shopping Center
Tega Cay, South Carolina 21,997 square
feet T-Mobile, Tropical Smoothie Café and Edible
Arrangements 100%
Leasing Review
- The Company signed seven lease renewals
totaling 30,339 square feet at an average weighted increase of
$1.36 per square foot for the three months ended September 30,
2014. There were two renewals totaling 3,300 square feet at an
average weighted decrease of $8.45 per square foot for the same
period of the prior year.
- Renewals for the first nine months of
2014 were comprised of twenty-three deals totaling 106,470 square
feet with an average weighted increase of $0.15 per square foot.
This compares to eleven renewal leases totaling approximately
49,468 square feet with a weighted average increase of $0.03 for
the nine month period ended September 30, 2013.
- For the three months ended September
30, 2014, Wheeler signed four new leases totaling approximately
16,925 square feet at an average weighted rate of $12.21 per square
foot.
- During the first nine months of 2014,
new leases comprised of fourteen deals totaling 33,996 square feet
with an average weighted rate of $12.60 per square foot.
- Approximately 5.56% of Wheeler’s gross
leasable area is subject to leases that expire during the twelve
months ending September 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 September 2014, the Company
completed a follow-on offering of Series B Preferred Stock
(Preferred Stock) and warrants to purchase the Company’s common
stock. The Preferred Stock and warrants were sold in 144,000 units
with each unit consisting of five shares of Preferred Stock and six
warrants. The Company’s underwriters exercised the over-allotment
option which resulted in the issuance of an additional 20,200
units. Net proceeds from the financing totaled approximately $18.6
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 September 30, 2014 were $137.5 million, as compared to $101.8
million in net investment properties as of December 31, 2013.
- The Company’s total fixed-rate debt was
$129.8 million at September 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 5.18% and 5.91 years,
respectively, at September 30, 2014, compared to 5.31% and 5.61
years, respectively, at December 31, 2013.
2014 Third Quarter and Year-to-Date
Dividend Distribution
- For the three months ended September
30, 2014, the Company distributed approximately $996,657 to holders
of common shares and common units, as compared to $809,120 for the
same period of the prior year.
- For the nine months ended September 30,
2014, the Company distributed approximately $2.9 million to holders
of common shares and common units, as compared to $1.9 million
distributed for the same period of the prior year.
- The Company has distributed $1.1
million in quarterly dividends to holders of preferred shares for
the three months ended September 30, 2014, as compared to $79,049
distributed for the same period of the prior year. The increase in
quarterly dividend payments was due to the Series B preferred
shares issued in the offerings completed in April and September of
2014.
- For the nine months ended September 30,
2014, the Company distributed approximately $1.6 million in
quarterly dividends to holders of preferred shares, as compared to
$101,549 distributed for the nine month period of the prior year.
The rise in preferred stock dividend was due to an increase in the
number of Series B preferred shares, as mentioned above.
Subsequent Events
Wheeler completed the acquisition of two grocery-anchored
shopping centers in Kentucky and Tennessee for a combined
acquisition value of $15.9 million. These properties include:
- Bryan Station, a 54,397 square foot
shopping center located in Lexington, Kentucky purchased for
approximately $6.1 million and paid for using a combination of cash
and debt. The property is 100% leased with major tenants Planet
Fitness and Shoe Carnival.
- Crockett Square, a 101,722 square foot
shopping center located in Morristown, Tennessee with a purchase
price of approximately $9.8 million and also paid for with a
combination of cash and debt. The property is 100% leased, with
major tenants including Hobby Lobby, Dollar Tree and Pier 1
Imports.
On October 24, 2014, the Company completed its transition to an
internally-managed REIT through the acquisition of operating
companies, Wheeler Interests, LLC, which wholly owns Wheeler Real
Estate, LLC, and WHLR Management, LLC. These entities were wholly
owned and acquired from the Company’s Chief Executive Office, Jon
Wheeler, and paid for through the issuance of $6.75 million in OP
Units. With the close of this transaction, the Company’s assets and
properties are internally managed under the REIT.
Conference Call Details
Date/Time: Friday, November 14, 2014, at 10 a.m. ET
Live Participant Dial In (Toll Free): 877-407-3101
Live 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/q3-2014
Supplemental Information
Further details regarding Wheeler Real Estate Investment Trust,
Inc.’s operations and financials for the period ended September 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 within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934, including (i) discussion
and analysis of the Company’s financial condition; (ii) the
Company’s ability to complete future acquisitions; (iii) the
Company’s ability to obtain sufficient and economical financing to
complete potential acquisitions; (iv) the amount of the Company’s
anticipated cash distributions to the Company’s shareholders in the
future; (v) the anticipated streamlining of the management and
leasing of our properties located in the Southeast due to the
opening of the Charleston, South Carolina office; and (vi) 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, Alabama, 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 Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 REVENUE:
Rental revenues $ 3,448,406 $ 1,806,118 $ 9,396,506 $ 4,624,612
Other revenues 719,424 170,334
2,069,170 598,736
Total Revenue
4,167,830 1,976,452 11,465,676
5,223,348
OPERATING EXPENSES:
Property operations 1,155,666 383,276 2,987,885 968,846
Depreciation and amortization 2,205,244 872,213 5,726,790 2,204,899
Provision for credit losses 46,774 32,017 18,742 69,920 Corporate
general & administrative 3,041,064
2,609,726 5,258,931 4,766,293
Total Operating Expenses 6,448,748
3,897,232 13,992,348 8,009,958
Operating Loss
(2,280,918)
(1,920,780)
(2,526,672)
(2,786,610)
Interest expense
(1,720,835)
(592,231)
(4,626,410)
(1,587,946)
Net Loss
(4,001,753)
(2,513,011)
(7,153,082)
(4,374,556)
Less: Net loss attributable to noncontrolling interests
(487,284)
(793,360)
(655,987)
(950,264)
Net Loss Attributable to Wheeler REIT
(3,514,469)
(1,719,651)
(6,497,095)
(3,424,292)
Preferred stock dividends
(1,088,062)
(79,049)
(1,552,320)
(101,549)
Net Loss Attributable to Wheeler REIT
Common Shareholders
$
(4,602,531)
$
(1,798,700)
$
(8,049,415)
$
(3,525,841)
Loss per share: Basic and Diluted
$
($0.62 )
$
($0.38 )
$
($1.10 )
$
($0.93 ) Weighted-average number of shares: Basic and
Diluted 7,430,413 4,715,382
7,316,147 3,777,974
Wheeler
Real Estate Investment Trust
Balance Sheet
September 30,2014 December
31,2013 ASSETS: Investment properties, net $
137,541,065 $ 101,772,335 Cash and cash equivalents 19,863,214
1,155,083 Rents and other tenant receivables, net 1,801,542
1,594,864 Deferred costs and other assets, net 29,057,575
20,847,984
Total Assets $ 188,263,396 $
125,370,266
LIABILITIES: Loans payable $ 129,792,557
$ 94,562,503 Below market lease intangible, net 323,538 2,674,566
Accounts payable, accrued expenses and other liabilities
5,316,268 2,526,388
Total Liabilities
135,432,363 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, 1,649,800 and no shares issued
and outstanding, respectively)
37,427,213 —
Common stock ($0.01 par value, 75,000,000
shares authorized, 7,439,531 and 7,121,000 shares issued and
outstanding, respectively)
74,396 71,210 Additional paid-in capital 28,058,066 28,169,693
Accumulated deficit (21,657,039 ) (11,298,253 )
Total Shareholders’ Equity 45,360,686 18,400,700
Noncontrolling interests 7,470,347 7,206,109
Total Equity 52,831,033 25,606,809
Total Liabilities and Equity $ 188,263,396 $ 125,370,266
Wheeler Real Estate Investment
Trust
Funds From Operations (FFO)
Three Months Ended September 30,
Same Stores New Stores Total
Period Over Period Changes 2014
2013 2014 2013 2014
2013 $ % Net income (loss) $ (1,220,419
) $ (1,373,038 ) $ (2,781,334 ) $ (1,139,973 ) $ (4,001,753 ) $
(2,513,011 ) $ (1,488,742 ) (59.2 %) Depreciation of real estate
assets 517,064 647,161 1,688,180
225,052 2,205,244 872,213
1,333,031 152.8 % Total FFO $ (703,355
) $ (725,877 ) $ (1,093,154 ) $ (914,921 ) $ (1,796,509 ) $
(1,640,798 ) $ (155,711 ) (9.5 %)
Nine Months Ended
September 30, Same Stores New Stores Total
Period Over Period Changes 2014 2013
2014 2013 2014 2013 $ %
Net income (loss) $ (3,261,125 ) $ (2,931,136 ) $ (3,891,957 ) $
(1,443,420 ) $ (7,153,082 ) $ (4,374,556 ) $ (2,778,526 ) (63.5 %)
Depreciation of real estate assets 1,536,453
1,954,097 4,190,337 250,802
5,726,790 2,204,899 3,521,891
159.7 % Total FFO $ (1,724,672 ) $ (977,039 ) $
298,380 $ (1,192,618 ) $ (1,426,292 ) $ (2,169,657 ) $
743,365 34.3 %
Wheeler Real Estate Investment
Trust
Core Funds From Operations (Core
FFO)
Three Months Ended September 30,
Nine Months Ended September 30, 2014
2013 2014 2013 Total FFO $ (1,796,509 )
$ (1,640,798 ) $ (1,426,292 ) $ (2,169,657 ) Preferred stock
dividends (1,088,062 ) (79,049 ) (1,552,320 )
(101,549 )
Total FFO available to common shareholders
and common unitholders
(2,884,571 ) (1,719,847 ) (2,978,612 )
(2,271,206 ) Acquisition fees and related legal and accounting
costs 1,505,000 1,328,000 1,905,000 2,041,000 Share-based
compensation 45,000 - 190,000 - Harp's and Perimeter accruals -
856,000 - 1,123,000 Other noncash adjustments 184,356
(348,442 ) 413,200 (320,540 )
Total Core FFO $ (1,150,215 ) $ 115,711 $ (470,412 ) $
572,254 Weighted Average Common Shares
7,430,413 4,715,382 7,316,147 3,777,974 Weighted Average Common
Units 2,029,768 1,858,068 1,967,428 1,858,068 Total Common Shares
and Units 9,460,181 6,573,450 9,283,575 5,636,042 FFO per
Common Share and Common Unit $ (0.19 ) $ (0.25 ) $ (0.15 ) $ (0.38
) Core FFO per Common Share and Common Unit $ (0.12 ) $ 0.02 $
(0.05 ) $ 0.10
Wheeler Real Estate Investment Trust,
Inc.Robin Hanisch, 757-627-9088Corporate
Secretaryrobin@whlr.usorLaura Nguyen, 757-627-9088Director of
Marketinglnguyen@whlr.usorINVESTOR RELATIONS:The Equity Group Inc.Terry Downs,
212-836-9615Associatetdowns@equityny.comorAdam Prior,
212-836-9606Senior Vice-Presidentaprior@equityny.com
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