8-K: Wheeler REIT Announces First Quarter 2025 Financial and Operating Results

Wheeler Real Estate Investment Trust (WHLR) reported its financial and operating results for the first quarter of 2025, showing a net loss attributable to common stockholders of $(22.41) per share.

Summary

• Wheeler Real Estate Investment Trust (WHLR) announced its first quarter 2025 financial and operating results.
• The company reported a net loss attributable to common stockholders of $(22.41) per share, compared to $(2,459.16) per share for the same period in 2024.
• FFO available to common stockholders and OP unitholders was $2.2 million, or $7.27 per share, compared to $(4.1) million, or $(941.66) per share in the prior year.
• AFFO was $404,000, or $1.32 per share, compared to $46.90 per share in the prior year.
• The company's real estate portfolio was 91.3% occupied and 92.0% leased.
• Same-Property NOI decreased by 2.2% or $0.3 million.
• Total revenue decreased by 5.9% or $1.5 million, primarily due to properties sold in 2024 and 2025.
• The company sold Oregon Avenue, South Lake, and Webster Commons during the quarter.
• The company effected one-for-four and one-for-five reverse stock splits on January 27, 2025 and March 26, 2025, respectively.
• Cedar Realty Trust repurchased and retired 1,301,159 shares of Cedar Series C Preferred Stock in two tender offers for an aggregate of $21.2 million.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the reported net loss and decrease in revenue and NOI, although there are some positive aspects such as lease renewals and new leases. The reverse stock splits and preferred stock redemptions also indicate financial stress.

Positives

• FFO increased significantly to $7.27 per share compared to $(941.66) per share in the prior year.
• AFFO increased to $1.32 per share compared to $46.90 per share in the prior year.
• The company executed 32 lease renewals with a weighted average increase of $1.40 per square foot, representing a 14.2% increase over in-place rental rates.
• The company signed 8 new leases with a weighted average rental rate of $12.56 per square foot, representing a new rent spread of 38.1%.
• Cedar repurchased and retired 1,301,159 shares of Cedar Series C Preferred Stock.

Negatives

• The company reported a net loss attributable to common stockholders of $(22.41) per share.
• Total revenue decreased by 5.9% or $1.5 million.
• Same-Property NOI decreased by 2.2% or $0.3 million.
• Cash and cash equivalents decreased to $19.2 million from $43.0 million at the end of the previous quarter.

Risks

• The company's ability to maintain compliance with the financial and other covenants in its debt agreements and under the terms of its Series D Preferred Stock.
• Financing risks, such as the company's inability to obtain new financing or refinancing on favorable terms.
• Risks related to the market for retail space generally, including reductions in consumer spending and the adverse impact of e-commerce.
• The risk that shareholder litigation filed by the company's former CEO may result in significant costs.
• The company's ability and willingness to maintain its qualification as a real estate investment trust (REIT).

Future Outlook

The document contains forward-looking statements and cautions that actual outcomes and results could differ materially due to various risks and uncertainties. The company undertakes no obligation to release publicly any revisions to any forward-looking statements.

Industry Context

The announcement reflects the challenges and strategies of a REIT operating in the current retail landscape, including managing occupancy rates, lease expirations, and capital structure. The focus on grocery-anchored centers is a common strategy for REITs seeking stable income streams.

Comparison to Industry Standards

• Comparing WHLR's performance to peers like Regency Centers (REG) or Kimco Realty (KIM), which focus on similar grocery-anchored properties, reveals differences in scale and financial stability.
• While REG and KIM boast strong balance sheets and consistent dividend payouts, WHLR faces challenges related to debt and preferred stock redemptions.
• WHLR's occupancy rate of 91.3% is comparable to some industry peers, but its Same-Property NOI decrease indicates potential operational challenges.
• The reverse stock splits and preferred stock exchanges highlight the company's efforts to manage its capital structure, a common theme among REITs facing financial pressures.

Related Party Transactions

• The Company performs property management and leasing services for Cedar, a subsidiary of the Company.
• During the three months ended March 31, 2025, Cedar paid the Company $0.5 million for these services.
• Related party amounts due to WHLR from Cedar for financing and real estate taxes, management fees, leasing commissions, sales commissions and Cost Sharing Agreement allocations were $9.6 million and $9.5 million as of March 31, 2025 and December 31, 2024, respectively, and have been eliminated for consolidation purposes.
• As of March 31, 2025, the net asset value of the Companys SAI investment was $12.5 million, which includes $10.5 million of subscriptions.

Stakeholder Impact

• Shareholders will be impacted by the net loss and the reverse stock splits.
• Tenants may be affected by changes in property management and leasing strategies.
• Employees may be impacted by cost-cutting measures or changes in company strategy.
• Creditors will be concerned about the company's ability to meet its debt obligations.

Next Steps

• The company will continue to manage its portfolio, focusing on leasing and property operations.
• The company will continue to address its capital structure, including managing preferred stock redemptions.
• Cedar will continue to manage its preferred stock through tender offers and dividend payments.

Key Dates

Keywords

REIT, Wheeler Real Estate Investment Trust, WHLR, Financial Results, Operating Results, Real Estate, Retail Properties, Grocery-Anchored Centers, Leasing, FFO, AFFO, Same-Property NOI, Dividends, Preferred Stock, Reverse Stock Split