Reconciliation of non-GAAP financial measures,
including FFO, Core FFO, Property NOI and EBITDA are included in
the accompanying financial tables.
Wheeler Real Estate Investment Trust, Inc. (NASDAQ:WHLR)
(“Wheeler” or the “Company”) today reported operating and financial
results for its first quarter ended March 31, 2015.
2015 First Quarter Highlights (all
comparisons to the same prior year period unless otherwise
noted)
- Total revenue increased 57.0% to $5.8
million.
- Property Net Operating Income (“NOI”)
increased by 38.6% or $1.1 million.
- Average rental rate increase on
renewals signed during the quarter was 9.65%.
- Occupancy rate improved to 95.8% at
March 31, 2015, compared with 94.2% at March 31, 2014.
- During the quarter, the Company
completed the acquisition of an additional 122,259 square feet of
gross leasable area and 2.47 acres of undeveloped land.
- Announced the completion of a Series C
Mandatorily Convertible Preferred Stock (“Series C Preferred
Stock”) private placement transaction for $93 million which
generated gross proceeds of $90 million and the cancelation of $3
million in existing convertible debt. Concurrently, the Company
reduced the monthly dividend payable to common shareholders from
$0.035 per share to approximately $0.0175 per share commencing with
the April 2015 dividend.
- As of March 31, 2015, Wheeler’s
property portfolio included 31 properties with a gross leasable
area of 2,029,073 square feet and seven undeveloped properties
totaling approximately 66 acres of land. As of March 31, 2014, the
Company owned 22 properties with a gross leasable area of 1,284,022
square feet and owned no undeveloped properties.
Jon S. Wheeler, Chairman and Chief Executive Officer, commented,
“We continue to take advantage of an unparalleled time to acquire
‘necessity-based’ retail focused properties at favorable rates that
we believe will ultimately generate strong returns for our
shareholders. Our gross leasable area increased by 58.0% at a high
utilization rate, and our leasing division and property management
teams remain proactive in their approach to maximizing each
property’s value. We believe that our continued efforts to work
with the tenants in our centers to seek ways to help improve their
business will help increase the revenue potential at each of our
locations.”
Mr. Wheeler concluded, “During the quarter, we also completed a
transformational private placement transaction that we expect to
help fuel our continued growth. At the time of the transaction,
Wheeler had seven properties either under contract or subject to
signed letters of intent to acquire. Upon closing of the potential
acquisitions, we believe we will substantially increase net
operating income while also accelerating our ability to achieve
proper scale. We implemented a revised dividend that will afford
the Company the means to maintain what we believe to be a
conservative payout level as we realign our balance sheet and
become better positioned for long-term growth. The proceeds from
this transaction will allow us to continue to take advantage of a
strong pipeline of stable, ‘necessity based’ properties located in
secondary and tertiary markets at highly desirable cap rates. In
the coming months, we expect to be aggressive in our acquisition
strategy, while still adhering to our core competencies of
high-touch, effective management in the retail sector.”
2015 First Quarter Financial and
Operational Review
- For the first quarter of 2015, total
revenue increased by approximately 57.0% to $5.8 million, compared
with total revenue of $3.7 million for the same prior year
period.
- Net loss attributable to Wheeler REIT
common shareholders for the three months ended March 31, 2015 was
$6.3 million, or $0.80 per basic and diluted share, compared to a
net loss of $1.2 million or $0.17 per basic and diluted share,
during the same 2014 period. The increase in net loss for the
first quarter 2015 was due to an increase in general and
administrative expenses as a result of the internalization of
Wheeler Interests, LLC, Wheeler Real Estate, LLC and WHLR
Management, LLC (the "Operating Companies"); depreciation and
amortization; and preferred stock dividend payments from the
offerings completed in April 2014, September 2014 and March
2015.
- Wheeler reported Funds From Operations
(“FFO”) available to common shareholders and holders of OP Units
for the three months ended March 31, 2015 of ($986,705), or ($0.20)
per share of common stock and OP Unit, compared to $539,714, or
$0.05 per share of common stock and OP unit for the prior year
period.
- Total Core FFO for the three months
ended March 31, 2015 was ($1.03 million), or ($0.09) per share of
common stock and OP Unit, compared to $619,538, or $0.07 per common
share and OP Unit for the same period of the prior year.
- NOI increased by 38.6% to $3.8 million
for the three months ended March 31, 2015, as compared to NOI of
$2.7 million for the prior year period.
- Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) was $2.1 million for the
three months ended March 31, 2015, as compared to $2.0 million of
EBITDA for the three months ended March 31, 2014.
- In March 2015, the Company sold 93,000
shares of Series C Preferred Stock to accredited investors in a
private placement transaction that resulted in gross proceeds of
$90 million and the cancelation of $3 million in existing
convertible debt. Wheeler intends to use the proceeds for future
acquisitions and general working capital. The Series C Preferred
Stock will receive a dividend that mirrors the dividend payable on
the Company’s common stock until conversion which is subject to
shareholder approval. Common shareholders will vote on conversion
at the Company’s next annual shareholder meeting which is set to
occur June 4, 2015.
Acquisition Activity
- On January 9, 2015, the Company
acquired 0.47 acres of undeveloped land in Virginia Beach,
Virginia. The land will be used for a future development project
and was acquired for approximately $1.6 million, of which $150,000
was paid for in cash with the remaining balance to be paid in
UPREIT shares on the earlier of the one year anniversary of the
acquisition or completion of any development projects on the
property.
- On January 14, 2015, the Company closed
on the acquisition of Pierpont Centre, a 122,259 square foot
shopping center located in Morgantown, West Virginia. The property
is 100% leased and was acquired using a combination of cash and
bank debt. Major tenants include GNC, Hallmark, Michael’s, Ruby
Tuesday and Outback Steakhouse.
- On March 13, 2015, the Company
announced it had entered a contract to acquire, Beaver Ruin
Village, a 74,038 square foot shopping center located in Lilburn,
Georgia. The Company will purchase the property for $12.4 million,
or approximately $166.81 per square foot, using a combination of
cash and bank debt. The Company expects to complete the acquisition
in the three months ending June 30, 2015.
- On March 26, 2015, the Company entered
into a contract to acquire Washington Square, a 261,566 square foot
shopping center located in Washington, North Carolina. The Company
will purchase the property for $20.0 million, or approximately
$76.46 per square foot, using a combination of cash and debt.
- On March 26, 2015, the Company entered
a contract to acquire Beaver Ruin II Village, a 34,925 square foot
shopping center located in Lilburn, Georgia. The Company will
purchase the property for approximately $4.4 million, or $125.27
per square foot, using a combination of cash and bank debt.
- On March 27, 2015, the Company acquired
Brook Run Properties, a 2.0 acre parcel of undeveloped land in
Richmond, Virginia. The Company purchased the property for
$300,000, which Wheeler intends to lease to an affiliated shopping
center.
Leasing Review
- The Company executed ten renewals
totaling 88,825 square feet at a weighted average increase of $0.92
per square foot for the three months ended March 31, 2015,
representing an increase of 9.65% over prior rates.
- Approximately 10.51% of Wheeler’s gross
leasable area is subject to leases that expire during the twelve
months ending March 31, 2016. Based on recent market trends, the
Company believes that tenants will renew these leases at amounts
and terms comparable to existing lease agreements.
Balance Sheet Summary
- The Company’s cash and cash equivalents
increased to $81.0 million at March 31, 2015, compared to $10.0
million at December 31, 2014, primarily as a result of the
completion of the Series C Preferred Stock private placement
transaction.
- Wheeler’s net investment properties as
of March 31, 2015 were valued at $163.3 million, as compared to
$152.3 million as of December 31, 2014.
- The Company’s total fixed-rate debt was
$147.6 million at March 31, 2015, compared to $141.5 million at
December 31, 2014. Wheeler’s weighted-average interest rate and
term of the Company’s fixed-rate debt was 5.00% and 6.11 years,
respectively, at March 31, 2015, compared to 5.14% and 6.04 years,
respectively, at December 31, 2014.
Dividend Distribution
- For the three months ended March 31,
2015 the Company declared $992,883 in dividend payments for common
shareholders and unitholders.
- For the three months ended March 31,
2015, the Company declared approximately $1.3 million in dividends
to the Series A, Series B and Series C preferred shareholders.
Subsequent Events
- On April 1, 2015, the Company completed
the acquisition of Alex City Marketplace, a 164,717 square foot
grocery-anchored shopping center located in Alexander City, Alabama
for $10.25 million, or approximately $62 per square foot.
Consideration for the acquisition consisted of a combination of
cash and bank debt. The property is currently 98.3% leased, and its
major tenants include Dollar Tree, Goody’s, Verizon Wireless,
Advance America, Subway and Cato Fashion.
- On April 15, 2015, Wheeler closed on
the acquisition of Butler Square, an 82,400 square foot shopping
center located in Mauldin, South Carolina. The Company purchased
the property for $9.4 million, or approximately $114 per square
foot, using a combination of cash and bank debt.
Supplemental Information
Further details regarding Wheeler Real Estate Investment Trust,
Inc.’s operations and financials for the period ended March 31,
2015, including a supplemental presentation, are available through
the Company’s website by visiting www.whlr.us.
About Wheeler Real Estate Investment
Trust, Inc.
Headquartered in Virginia Beach, VA, Wheeler Real Estate
Investment Trust, Inc. is a fully-integrated, self-managed
commercial real estate investment company focused on acquiring and
managing income-producing retail properties with a primary focus on
grocery-anchored centers. Wheeler’s portfolio contains
well-located, potentially dominant retail properties in secondary
and tertiary markets that generate attractive, risk-adjusted
returns, with a particular emphasis on grocery-anchored retail
centers. 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 of financial condition and
results of operations, 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, Core FFO, Property NOI and EBITDA are non-GAAP financial
measures within the meaning of the rules of the Securities and
Exchange Commission. Wheeler considers FFO, Core FFO, Property NOI
and EBITDA to be important supplemental measures 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, the Company believes that 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 the
closest GAAP measurement, 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. Management also believes that Property NOI and
EBITDA represent important supplemental measures for securities
analysts, investors and other interested parties, as they are often
used in calculating net asset value, leverage and other financial
metrics used by these parties in the evaluation of REITs.
Forward-Looking
Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended,
including (i) the future generation of financial returns from the
acquisition of ‘necessity based’ retail focused properties; (ii)
potential increase in revenue potential at the Company’s properties
due to its efforts assisting tenants to improve their business;
(iii) the Company’s ability to complete the acquisitions of Beaver
Ruin Village, Beaver Ruin Village II, Brook Run Properties,
Washington Square and other future acquisitions of properties; (iv)
the ability to lease the Brook Run properties to an affiliated
shopping center; (v) the anticipated leases of Brook Run
Properties; (vi) the anticipated renewals of the Company’s existing
leases at amounts and terms comparable to existing leases; (vii)
the Company’s ability to use proceeds from the private placement
transaction to obtain properties at desirable cap rates; (viii) the
anticipated implementation of the Company’s acquisition strategy;
(ix) payment of future dividends on the Company’s preferred stock
and common stock; (x) the use of proceeds from the private
placement transaction for future acquisitions; and (xi) the
anticipated development of the 0.47 acres of undeveloped land in
Virginia Beach, Virginia. 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, West
Virginia 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. and
Subsidiaries Condensed Consolidated Statements of
Operations Three Months Ended March
31, 2015 2014
(unaudited)
REVENUE: Rental revenues $ 4,380,605 $ 2,948,810 Asset
management fees 212,298 - Commissions 108,893 - Tenant
reimbursement and other income 1,050,345
715,342
Total Revenue 5,752,141
3,664,152
OPERATING EXPENSES: Property
operations 1,632,179 923,182 Non-REIT management and leasing
services 369,775 - Depreciation and amortization 3,236,484
1,785,602 Provision for credit losses 47,198 - Corporate general
& administrative 2,311,230 832,318
Total Operating Expenses 7,596,866
3,541,102
Operating Loss (1,844,725 )
123,050 Interest expense (2,378,464 )
(1,368,938 )
Net Loss (4,223,189 ) (1,245,888 )
Less: Net loss attributable to noncontrolling interests
(462,376 ) (87,252 )
Net Loss Attributable
to Wheeler REIT (3,760,813 ) (1,158,636 ) Preferred
stock dividends (2,502,223 ) (40,703 )
Net
Loss Attributable to Wheeler REIT Common Shareholders $
(6,263,036 ) $ (1,199,339 ) Loss per share: Basic and
Diluted $ (0.80 ) $ (0.17 ) Weighted-average number of
shares: Basic and Diluted 7,806,467 7,185,550
Wheeler Real Estate Investment Trust, Inc.
and Subsidiaries Condensed Consolidated Balance Sheet
March 31,2015
December 31,2014
(unaudited)
ASSETS: Investment properties, net $ 163,265,867
$ 152,250,986 Cash and cash equivalents 80,958,326 9,969,748 Rents
and other tenant receivables, net 2,114,898 1,985,466 Goodwill
7,004,072 7,004,072 Deferred costs and other assets, net
34,661,026 29,272,096
Total
Assets $ 288,004,189 $ 200,482,368
LIABILITIES: Loans payable $ 147,634,250 $ 141,450,143
Accounts payable, accrued expenses and other liabilities
7,211,725 5,908,798
Total Liabilities
154,845,975 147,358,941
Commitments and contingencies
- - Series C mandatorily convertible cumulative preferred
stock (no par value, 100,000 shares authorized, 93,000 and no
shares issued and outstanding, respectively) 87,510,354 -
EQUITY: Series A preferred stock (no par value, 4,500 shares
authorized, 1,809 shares issued and outstanding, respectively)
1,458,050 1,458,050 Series B preferred stock (no par value,
3,000,000 shares authorized, 1,595,900 and 1,648,900 shares issued
and outstanding, respectively) 36,608,768 37,620,254 Common stock
($0.01 par value, 75,000,000 shares authorized, 7,841,196 and
7,512,979 shares issued and outstanding, respectively 78,411 75,129
Additional paid-in capital 32,197,918 31,077,060 Accumulated
deficit (34,607,083 ) (27,660,234 ) Total
Shareholders' Equity 35,736,064 42,570,259 Noncontrolling
interests 9,911,796 10,553,168
Total Equity 45,647,860 53,123,427
Total Liabilities and Equity $ 288,004,189
$ 200,482,368
Wheeler Real Estate
Investment Trust, Inc. and Subsidiaries
Reconciliation of Funds From Operations
(FFO)
(unaudited)
Three Months Ended March 31, Same
Stores New Stores Total
Period Over Period Changes 2015
2014 2015 2014 2015
2014 $ % Net income (loss) $ (2,670,515
) $ (1,245,888 ) $ (1,552,674 ) $ - $ (4,223,189 ) $ (1,245,888 ) $
(2,977,301 ) (238.97
%)
Depreciation of real estate assets 1,648,782
1,785,602 1,587,702 - 3,236,484
1,785,602 1,450,882 81.25 % Total FFO $ (1,021,733 )
$ 539,714 $ 35,028 $ - $ (986,705 ) $ 539,714 $ (1,526,419 )
(282.82
%)
Wheeler Real Estate Investment Trust, Inc. and
Subsidiaries
Reconciliation of Core Funds From
Operations (Core FFO)
(unaudited)
Three Months Ended March 31, 2015
2014 Total FFO $ (986,705
)
$ 539,714 Preferred stock dividends (2,502,223
)
(40,703 ) Preferred stock accretion adjustments 1,211,202 —
Total FFO available to common shareholders and common
unitholders (2,277,726
)
499,011 Acquisition costs 653,242 57,000 Share-based
compensation 45,000 — Loan cost amortization 486,198 86,831 Above
(below) market lease amortization 195,729 (23,304 ) Tenant
improvement reserves (59,500 ) — Recurring capital expenditures
(71,400 ) — Total Core FFO $ (1,028,457
)
$ 619,538 Weighted Average Common Shares 7,806,467
7,185,550 Weighted Average Common Units 3,540,576 2,008,338
Total Common Shares and Units 11,347,043 9,193,888
FFO per Common Share and Common Units $ (0.20
)
$ 0.05 Core FFO per Common Share and Common Units $ (0.09
)
$ 0.07
Wheeler Real Estate Investment
Trust, Inc. and Subsidiaries
Reconciliation of Property Net
Operating Income
Three Months Ended March 31,
2015 2014
(unaudited)
Property revenues $ 5,430,950 $ 3,664,152 Property expenses
1,632,179 923,182
Property Net
Operating Income 3,798,771 2,740,970
Asset Management and Commission Revenues
321,191 - Non-REIT management
and leasing services 369,775 - Depreciation and amortization
3,236,484 1,785,602 Provision for credit losses 47,198 - Corporate
general & administrative 2,311,230 832,318
Total Other Operating Expenses
5,964,687 2,617,920 Interest expense
2,378,464 1,368,938
Net
Loss $ (4,223,189 ) $ (1,245,888 )
Wheeler
Real Estate Investment Trust, Inc. and Subsidiaries
Reconciliation of Earnings Before
Interest, Taxes, Depreciation and Amortization - EBITDA
(unaudited)
Three Months Ended March 31,
2015
2014
(unaudited)
Net Loss $ (4,223,189 )
$
(1,245,888 ) Add back: Depreciation and amortization (1)
3,918,411
1,849,129
Interest Expense
2,378,464
1,368,938
EBITDA
$
2,073,686
$
1,972,179
(1) Includes loan cost amortization and
above (below) market lease amortization.
Wheeler Real Estate Investment Trust,
Inc.Robin HanischCorporate Secretary(757) 627-9088 /
robin@whlr.usorLaura NguyenDirector of Marketing(757)
627-9088lnguyen@whlr.usorINVESTOR RELATIONS:The Equity Group Inc.Terry
DownsAssociate(212) 836-9615 / tdowns@equityny.comorAdam
PriorSenior Vice-President(212)836-9606aprior@equityny.com
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