Wheeler Real Estate Investment Trust, Inc.
(NASDAQ:WHLR) (“WHLR” or the “Company”) today reported
operating and financial results for the three months ending
March 31, 2019.
|
|
Three Months EndedMarch 31, |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net loss per common
share |
$ |
(0.31 |
) |
|
$ |
(0.57 |
) |
|
|
FFO per common share
and common unit |
0.12 |
|
|
0.16 |
|
|
|
AFFO per common share
and common unit |
0.11 |
|
|
0.21 |
|
|
PREPARED STATEMENT
In lieu of a conference call and webcast, we
have provided a prepared statement, which has been posted to our
website at https://ir.whlr.us/ and has been filed on Form 8-K with
the SEC.
2019 FIRST QUARTER
HIGHLIGHTS
(all comparisons to the same prior year
period unless otherwise noted)
- Sold two properties and an undeveloped parcel of land for a
total of $8.8 million, resulting in a total gain of $1.8 million
and net proceeds of $3.6 million.
- Paid the Revere Term Loan in full with proceeds from the
following sources: $323 thousand with proceeds from the sale of
Jenks Plaza, $30 thousand in conjunction with the sale of a 1.28
acre parcel at Harbor Pointe, $300 thousand in monthly scheduled
principal payments and the remaining $406 thousand and the $20
thousand Exit Fee paid from operating cash flows.
- Paid down $850 thousand on the over-advance portion of KeyBank
Line of Credit.
- Net loss attributable to WHLR's common stock, $0.01 par value
per share ("Common Stock") shareholders of $3.02 million, or
($0.31) per share.
- Total revenue from operations decreased by 1.83% or $298
thousand.
- Property Net Operating Income ("NOI") from operations decreased
by 2.95% to approximately $11.2 million.
- Adjusted Funds from Operations ("AFFO") of $0.11 per share of
the Company's Common Stock and common unit ("Common Unit") in our
operating partnership, Wheeler REIT, L.P.
SUBSEQUENT EVENTS
- In April 2019, the 1,986,600 warrants exchangeable into 248,325
shares of Common Stock expired.
- In April 2019, the Company executed a contract for the sale of
Perimeter Square for $7.43 million. It is expected to close
in the second quarter of 2019. In addition, the Company
extended the $6.50 million in Perimeter Square loans to June 5,
2019.
- In April 2019, the Company absorbed an approximately 30,000
square foot outparcel at JANAF as a result of an unlawful detainer
with a delinquent tenant, Mariner Finance, LLC.
- On April 25, 2019, the Company entered into a First Amendment
to the Amended and Restated Credit Agreement (the "First
Amendment"). In conjunction with the First Amendment, the
Company made a $1.00 million principal payment on the KeyBank Line
of Credit and will begin making monthly principal payments of $250
thousand on May 1, 2019. The First Amendment (among other
provisions) waives the over-advance and replaced the Borrowing Base
Availability with an interest coverage ratio. Additionally,
the KeyBank Line of Credit shall be reduced to $27.00 million by
July 31, 2019, $7.50 million by September 30, 2019 and the interest
rate increases to Libor plus 350 basis points on August 31, 2019 if
the outstanding balance is not below $11.00 million.
- Bank of Arkansas filed suit against WD-I Associates, LLC, our
former CEO Jon S. Wheeler and Wheeler Real Estate, LLC (WHLR
subsidiary) alleging that WD-I and Jon S. Wheeler are in default as
to certain construction loans which Jon Wheeler personally
guaranteed. Wheeler Real Estate, LLC is named as a nominal
defendant, only for purposes of providing an accounting for that
period in which it served as the management company for WD-I
Associates. No damages are sought from Wheeler Real Estate, LLC.
More detail is provided in our Form 10-Q for the period ended March
31, 2019.
BALANCE SHEET
- Cash and cash equivalents totaled $4.2 million at March 31,
2019, compared to $3.5 million at December 31, 2018.
- Total debt was $359.9 million at March 31, 2019 (including debt
associated with assets held for sale), compared to $369.6 million
at December 31, 2018. The decrease of $9.7 million in debt is
primarily a result of the $1.1 million Revere Term Loan pay-off,
$5.8 million in pay-offs as a result of sales, $850 thousand
payment on the KeyBank Line of Credit, and normal principal
payments.
- WHLR's weighted-average interest rate was 4.8% with a term of
4.10 years at March 31, 2019 (including debt associated with assets
held for sale). This compares to an interest rate of 4.8% with a
term of 4.31 years at December 31, 2018.
- Net investment properties as of March 31, 2019 totaled at
$433.2 million (including assets held for sale), compared to $441.4
million as of December 31, 2018.
DIVIDENDS
- At March 31, 2019, the Company had accumulated undeclared
dividends of approximately $6.5 million to holders of shares of our
Series A Preferred Stock, Series B Preferred Stock, and Series D
Preferred Stock of which $3.5 million is attributable to the three
months ended March 31, 2019.
OPERATIONS AND LEASING
- The Company's real estate portfolio is 89.6% leased as of March
31, 2019.
- Executed 28 lease renewals totaling 120,914 square feet at a
weighted-average increase of $0.05 per square foot, representing an
increase of 0.63% over prior rates.
- Signed 8 new leases totaling approximately 31,200 square feet
with a weighted-average rate of $12.77 per square foot.
- The Company’s gross leasable area ("GLA"), which is subject to
leases that expire over the next nine months, including month-to
month leases declined to approximately 5.75% at March 31, 2019,
compared to 8.44% at March 31, 2018. At March 31, 2019,
44.78% of this expiring GLA is subject to renewal options.
SAME STORE RESULTS
- Same-store NOI for the three months ended March 31, 2019
compared to March 31, 2018, declined by (6.17%) and (7.65%) on a
cash basis. The same-store pool for the three months ended March
31, 2019, was comprised of 4.9 million square feet that the Company
owned as of January 1, 2018. Same-store results were driven by a
4.69% decrease in property revenues, primarily a result of rent
modifications to certain 2018 Southeastern Grocer leases, reduced
rent at the three SEG recaptured and backfilled locations,
incremental vacancies as well as the impact from properties that
were sold during the year. Same Store property expenses decreased
0.98%.
DISPOSITIONS
- Sold Jenks Plaza for a contract price of $2.2 million,
resulting in a gain of $387 thousand with net proceeds of $1.8
million.
- Sold a 1.28-acre undeveloped land parcel at Harbor Pointe for a
contract price of $550 thousand resulting in net proceeds of $19
thousand.
- Sold Graystone Crossing for a contract price of $6.0 million,
resulting in a gain of $1.5 million with net proceeds of $1.7
million.
SUPPLEMENTAL INFORMATIONFurther details
regarding Wheeler Real Estate Investment Trust, Inc.’s operations
and financials for the period ended March 31, 2019, including a
supplemental presentation, are available at
https://ir.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 owning and
operating 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.
A copy of Wheeler’s Quarterly Report on Form 10-Q, which
includes the Company’s condensed 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.
DEFINITIONSFFO, AFFO, Pro Forma AFFO, Property
NOI, EBITDA and Adjusted EBITDA are non-GAAP financial measures
within the meaning of the rules of the Securities and Exchange
Commission. Wheeler considers FFO, AFFO, Pro Forma AFFO, Property
NOI, EBITDA and Adjusted 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 and
gains and losses from property dispositions, 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,
nonrecurring expenses, legal settlements, legal and professional
fees, and acquisition costs. Management uses AFFO, which is a non-
GAAP financial measure, to exclude such items. Management believes
that reporting AFFO and Pro Forma AFFO 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,
EBITDA and Adjusted 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 STATEMENTSThis press release
may contain “forward-looking” statements as defined in the Private
Securities Litigation Reform Act of 1995. When the Company uses
words such as “may,” “will,” “intend,” “should,” “believe,”
“expect,” “anticipate,” “project,” “estimate” or similar
expressions that do not relate solely to historical matters, it is
making forward-looking statements. Forward-looking statements are
not guarantees of future performance and involve risks and
uncertainties that may cause the actual results to differ
materially from the Company’s expectations discussed in the
forward-looking statements. The Company’s expected results may not
be achieved, and actual results may differ materially from
expectations. Specifically, the Company’s statements regarding
future generation of financial returns from its portfolio are
forward-looking statements. 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.
For these reasons, among others, investors are cautioned not to
place undue reliance upon any forward-looking statements in this
press release.
Additional factors are discussed in the Company's filings with
the U.S. Securities and Exchange Commission, which are available
for review at www.sec.gov. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof.
INVESTOR CONTACT:Mary
JensenInvestor Relations(757) 627-9088mjensen@whlr.us
Wheeler Real Estate Investment Trust,
Inc. and SubsidiariesCondensed Consolidated
Statements of Operations(in thousands, except
share and per share data)
|
Three Months EndedMarch
31, |
|
2019 |
|
2018 |
REVENUE: |
|
|
|
Rental revenues |
$ |
15,770 |
|
|
$ |
15,821 |
|
Asset
management fees |
13 |
|
|
125 |
|
Commissions |
42 |
|
|
14 |
|
Other
revenues |
170 |
|
|
333 |
|
Total Revenue |
15,995 |
|
|
16,293 |
|
OPERATING
EXPENSES: |
|
|
|
Property
operations |
4,726 |
|
|
4,599 |
|
Non-REIT
management and leasing services |
23 |
|
|
36 |
|
Depreciation
and amortization |
5,816 |
|
|
7,476 |
|
Corporate
general & administrative |
1,814 |
|
|
2,508 |
|
Total Operating Expenses |
12,379 |
|
|
14,619 |
|
Gain on
disposal of properties |
1,839 |
|
|
1,055 |
|
Operating
Income |
5,455 |
|
|
2,729 |
|
Interest
income |
1 |
|
|
1 |
|
Interest
expense |
(4,793 |
) |
|
(4,577 |
) |
Net Income (Loss)
Before Income Taxes |
663 |
|
|
(1,847 |
) |
Income tax
expense |
(8 |
) |
|
(25 |
) |
Net Income
(Loss) |
655 |
|
|
(1,872 |
) |
Less: Net
income (loss) attributable to noncontrolling interests |
13 |
|
|
(47 |
) |
Net Income (Loss)
Attributable to Wheeler REIT |
642 |
|
|
(1,825 |
) |
Preferred
Stock dividends - declared |
— |
|
|
(3,207 |
) |
Preferred
Stock dividends - undeclared |
(3,657 |
) |
|
— |
|
Net Loss
Attributable to Wheeler REIT Common Shareholders |
$ |
(3,015 |
) |
|
$ |
(5,032 |
) |
|
|
|
|
Loss per
share: |
|
|
|
Basic and
Diluted |
$ |
(0.31 |
) |
|
$ |
(0.57 |
) |
|
|
|
|
Weighted-average number of shares: |
|
|
|
Basic and
Diluted |
9,606,249 |
|
|
8,900,416 |
|
Wheeler Real Estate Investment Trust,
Inc. and SubsidiariesCondensed Consolidated
Balance Sheets(in thousands, except par value and
share data)
|
March 31,2019 |
|
December 31,2018 |
|
(unaudited) |
|
|
ASSETS: |
|
|
|
Investment properties,
net |
$ |
422,838 |
|
|
$ |
433,142 |
|
Cash and
cash equivalents |
4,159 |
|
|
3,544 |
|
Restricted
cash |
14,446 |
|
|
14,455 |
|
Rents and
other tenant receivables, net |
5,594 |
|
|
5,539 |
|
Notes
receivable, net |
5,000 |
|
|
5,000 |
|
Assets held
for sale |
10,431 |
|
|
8,982 |
|
Above market
lease intangibles, net |
6,793 |
|
|
7,346 |
|
Operating
lease right-of-use assets |
11,833 |
|
|
— |
|
Deferred
costs and other assets, net |
28,003 |
|
|
30,073 |
|
Total Assets |
$ |
509,097 |
|
|
$ |
508,081 |
|
LIABILITIES: |
|
|
|
Loans
payable, net |
$ |
348,651 |
|
|
$ |
360,117 |
|
Liabilities
associated with assets held for sale |
6,684 |
|
|
4,632 |
|
Below market
lease intangibles, net |
9,265 |
|
|
10,045 |
|
Operating
lease liability |
11,962 |
|
|
— |
|
Accounts
payable, accrued expenses and other liabilities |
10,504 |
|
|
12,077 |
|
Total Liabilities |
387,066 |
|
|
386,871 |
|
Series D Cumulative
Convertible Preferred Stock (no par value, 4,000,000 shares
authorized, 3,600,636 shares issued and outstanding; $94.40 million
and $91.98 million aggregate liquidation preference,
respectively) |
79,522 |
|
|
76,955 |
|
|
|
|
|
EQUITY: |
|
|
|
Series A
Preferred Stock (no par value, 4,500 shares authorized, 562 shares
issued and outstanding) |
453 |
|
|
453 |
|
Series B
Convertible Preferred Stock (no par value, 5,000,000 authorized,
1,875,748 shares issued and outstanding; $46.90 million aggregate
liquidation preference) |
41,022 |
|
|
41,000 |
|
|
|
|
|
|
|
Common Stock
($0.01 par value, 18,750,000 shares authorized, 9,693,271 and
9,511,464 shares issued and outstanding, respectively) |
97 |
|
|
95 |
|
Additional
paid-in capital |
233,861 |
|
|
233,697 |
|
Accumulated
deficit |
(235,131 |
) |
|
(233,184 |
) |
Total
Shareholders’ Equity |
40,302 |
|
|
42,061 |
|
Noncontrolling interests |
2,207 |
|
|
2,194 |
|
Total Equity |
42,509 |
|
|
44,255 |
|
Total Liabilities and Equity |
$ |
509,097 |
|
|
$ |
508,081 |
|
Wheeler Real Estate Investment Trust,
Inc. and Subsidiaries Reconciliation
of Funds From Operations (FFO)(unaudited, in
thousands)
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
Same Store |
|
New Store |
|
Total |
|
Period Over PeriodChanges |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
633 |
|
|
$ |
(1,932 |
) |
|
$ |
22 |
|
|
$ |
60 |
|
|
$ |
655 |
|
|
$ |
(1,872 |
) |
|
$ |
2,527 |
|
|
134.99 |
% |
Depreciation and
amortization of real estate assets |
4,743 |
|
|
6,495 |
|
|
1,073 |
|
|
981 |
|
|
5,816 |
|
|
7,476 |
|
|
(1,660 |
) |
|
(22.20 |
)% |
Gain on disposal of
properties |
(1,839 |
) |
|
(1,055 |
) |
|
— |
|
|
— |
|
|
(1,839 |
) |
|
(1,055 |
) |
|
(784 |
) |
|
(74.31 |
)% |
FFO |
$ |
3,537 |
|
|
$ |
3,508 |
|
|
$ |
1,095 |
|
|
$ |
1,041 |
|
|
$ |
4,632 |
|
|
$ |
4,549 |
|
|
$ |
83 |
|
|
1.82 |
% |
Wheeler Real Estate Investment Trust,
Inc. and Subsidiaries Reconciliation
of Funds From Operations (FFO)(unaudited, in
thousands)
|
Three Months EndedMarch
31, |
|
2019 |
|
2018 |
Net Income (Loss) |
$ |
655 |
|
|
$ |
(1,872 |
) |
Depreciation and
amortization of real estate assets |
5,816 |
|
|
7,476 |
|
Gain on disposal of
properties |
(1,839 |
) |
|
(1,055 |
) |
FFO |
4,632 |
|
|
4,549 |
|
Preferred stock
dividends-declared |
— |
|
|
(3,207 |
) |
Preferred stock
dividends-undeclared |
(3,657 |
) |
|
— |
|
Preferred stock
accretion adjustments |
170 |
|
|
170 |
|
FFO available to common
shareholders and common unitholders |
1,145 |
|
|
1,512 |
|
Acquisition and
development costs |
4 |
|
|
7 |
|
Capital related
costs |
74 |
|
|
53 |
|
Other non-recurring and
non-cash expenses (1) |
24 |
|
|
103 |
|
Share-based
compensation |
90 |
|
|
419 |
|
Straight-line rental
revenue, net straight-line expense |
(155 |
) |
|
(195 |
) |
Loan cost
amortization |
392 |
|
|
379 |
|
(Below) above market
lease amortization |
(226 |
) |
|
(22 |
) |
Recurring capital
expenditures and tenant improvement reserves |
(284 |
) |
|
(290 |
) |
AFFO |
$ |
1,064 |
|
|
$ |
1,966 |
|
|
|
|
|
Weighted Average Common
Shares |
9,606,249 |
|
|
8,900,416 |
|
Weighted Average Common
Units |
235,032 |
|
|
629,009 |
|
Total Common Shares and
Units |
9,841,281 |
|
|
9,529,425 |
|
FFO per Common Share
and Common Units |
$ |
0.12 |
|
|
$ |
0.16 |
|
AFFO per Common Share
and Common Units |
$ |
0.11 |
|
|
$ |
0.21 |
|
(1) Other non-recurring expenses are described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included in our Quarterly Report on Form 10-Q for
the period ended March 31, 2019.
Wheeler Real Estate Investment Trust,
Inc. and SubsidiariesReconciliation of Property
Net Operating Income(unaudited, in
thousands)
|
Three Months Ended March 31, |
|
Same Store |
|
New Store |
|
Total |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
(in thousands) |
Net Income
(Loss) |
$ |
633 |
|
|
$ |
(1,932 |
) |
|
$ |
22 |
|
|
$ |
60 |
|
|
$ |
655 |
|
|
$ |
(1,872 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
8 |
|
|
25 |
|
|
— |
|
|
— |
|
|
8 |
|
|
25 |
|
Interest
expense |
4,068 |
|
|
3,974 |
|
|
725 |
|
|
603 |
|
|
4,793 |
|
|
4,577 |
|
Interest
income |
(1 |
) |
|
(1 |
) |
|
— |
|
|
— |
|
|
(1 |
) |
|
(1 |
) |
Gain on
disposal of properties |
(1,839 |
) |
|
(1,055 |
) |
|
— |
|
|
— |
|
|
(1,839 |
) |
|
(1,055 |
) |
Corporate
general & administrative |
1,711 |
|
|
2,499 |
|
|
103 |
|
|
9 |
|
|
1,814 |
|
|
2,508 |
|
Depreciation
and amortization |
4,743 |
|
|
6,495 |
|
|
1,073 |
|
|
981 |
|
|
5,816 |
|
|
7,476 |
|
Non-REIT
management and leasing services |
23 |
|
|
36 |
|
|
— |
|
|
— |
|
|
23 |
|
|
36 |
|
Asset
management and commission revenues |
(55 |
) |
|
(139 |
) |
|
— |
|
|
— |
|
|
(55 |
) |
|
(139 |
) |
Property Net
Operating Income |
$ |
9,291 |
|
|
$ |
9,902 |
|
|
$ |
1,923 |
|
|
$ |
1,653 |
|
|
$ |
11,214 |
|
|
$ |
11,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
revenues |
$ |
13,222 |
|
|
$ |
13,872 |
|
|
$ |
2,718 |
|
|
$ |
2,282 |
|
|
$ |
15,940 |
|
|
$ |
16,154 |
|
Property
expenses |
3,931 |
|
|
3,970 |
|
|
795 |
|
|
629 |
|
|
4,726 |
|
|
4,599 |
|
Property Net
Operating Income |
$ |
9,291 |
|
|
$ |
9,902 |
|
|
$ |
1,923 |
|
|
$ |
1,653 |
|
|
$ |
11,214 |
|
|
$ |
11,555 |
|
Wheeler Real Estate Investment Trust,
Inc. and SubsidiariesReconciliation of Earnings
Before Interest, Taxes, Depreciation and Amortization -
EBITDA(unaudited, in thousands)
|
Three Months EndedMarch 31, |
|
2019 |
|
2018 |
Net Income (Loss) |
$ |
655 |
|
|
$ |
(1,872 |
) |
Add back: |
Depreciation and
amortization (1) |
5,590 |
|
|
7,454 |
|
|
Interest Expense
(2) |
4,793 |
|
|
4,577 |
|
|
Income tax expense |
8 |
|
|
25 |
|
EBITDA |
11,046 |
|
|
10,184 |
|
Adjustments
for items affecting comparability: |
|
|
|
|
Acquisition and
development costs |
4 |
|
|
7 |
|
|
Capital related
costs |
74 |
|
|
53 |
|
|
Other non-recurring and
non-cash expenses (3) |
24 |
|
|
103 |
|
|
Gain on disposal of
properties |
(1,839 |
) |
|
(1,055 |
) |
Adjusted
EBITDA |
$ |
9,309 |
|
|
$ |
9,292 |
|
(1) Includes above (below) market lease amortization.(2)
Includes loan cost amortization.(3) Other non-recurring expenses
are described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in our Quarterly
Report on Form 10-Q for the period ended March 31, 2019.
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