8-K: Wheeler REIT Announces Fourth Quarter and Year-End 2024 Financial Results

Wheeler Real Estate Investment Trust (WHLR) reports its financial and operating results for the year ended December 31, 2024, highlighting increased occupancy and leasing activity.

Summary

• Wheeler Real Estate Investment Trust, Inc. (WHLR) announced its financial and operating results for the fourth quarter and year-end 2024.
• For the three months ended December 31, 2024, net income attributable to WHLR common stockholders was $173.35 per basic share and $(3.79) per diluted share.
• For the year ended December 31, 2024, net loss attributable to WHLR common stockholders was $(317.02) per share.
• The company's real estate portfolio was 92.3% occupied and 93.1% leased.
• Same-Property NOI increased by 4.8% or $0.7 million for the quarter.
• Total revenue increased by 5.3% or $1.4 million for the quarter.
• FFO was $45.9 million, or $248.50 per share, and AFFO was $18.46 per share for the quarter.
• The company effected a one-for-two reverse stock split on November 18, 2024.
• Cedar repurchased and retired 714,231 shares of Cedar Series C Preferred Stock during the fourth quarter.
• Same-Property NOI increased by 4.9% or $2.9 million for the year.
• Total revenue increased by 2.2% or $2.2 million for the year.
• The company effected multiple reverse stock splits during the year.
• On June 28, 2024, the Company entered into a term loan agreement with Guggenheim Real Estate, LLC, for $25.5 million at a fixed rate of 6.80%.
• The company sold several properties during the year, including Oakland Commons and Kings Plaza.
• Cash and cash equivalents totaled $43.0 million, and debt totaled $499.5 million as of December 31, 2024.
• Total cumulative dividends in arrears for WHLR's Series D Preferred Stock were $32.8 million, or $14.67 per share, as of December 31, 2024.
• The company processed redemptions for 519,822 shares of Series D Preferred Stock during the year.
• Subsequent to December 31, 2024, the Company moved 7 properties to held for sale and as of March 4, 2025, 6 properties were classified as held for sale and 1 property, Webster Commons, was disposed.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While there are positive aspects like increased occupancy and lease renewals, the net loss and complex capital structure create uncertainty.

Positives

• Occupancy rates increased by 120 basis points to 92.3%.
• Lease renewals showed an 11.39% increase over in-place rental rates.
• New leases had a significant rent spread of 37.76%.
• Same-Property NOI increased by 4.8% for the quarter and 4.9% for the year.
• The company recognized a substantial non-operating gain of $41.4 million due to changes in the fair value of derivative liabilities.
• Cedar's repurchase of preferred stock will result in future annual dividend savings of $1.0 million.
• The company's cash position improved, with cash and cash equivalents totaling $43.0 million.
• The company realized a gain of $4.8 million as a result of the fair market value of the Common Stock issued in these transactions being less than the book value of the Preferred Stock retired.

Negatives

• Net loss per diluted share was $(3.79) for the three months ended December 31, 2024.
• Net loss attributable to WHLR common stockholders was $(317.02) per share for the year ended December 31, 2024.
• The company incurred non-operating expenses of $1.5 million, primarily consisting of capital structure costs.
• The company sold South Philadelphia retail center for $21 million, generating a loss of $5.4 million.
• Total cumulative dividends in arrears for WHLR's Series D Preferred Stock were $32.8 million or $14.67 per share as of December 31, 2024.

Risks

• The document contains forward-looking statements that are subject to risks and uncertainties.
• The company's performance is subject to general and economic business conditions, including the rate at which they are able to lease their properties.
• The company faces risks related to the loss or bankruptcy of tenants.
• The company's performance is subject to consumer spending and confidence trends.
• The company's performance is subject to the availability, terms and deployment of capital.
• The company's performance is subject to substantial dilution of common stock.
• The company's performance is subject to the degree and nature of competition.
• The company's performance is subject to changes in governmental regulations, accounting rules, tax rates and similar matters.
• The company's performance is subject to the ability and willingness of the company's tenants and other third parties to satisfy their obligations under their respective contractual arrangements with the company.
• The company's performance is subject to the ability and willingness of the company's tenants to renew their leases with the company upon expiration.
• The company's performance is subject to the company's ability to re-lease its properties on the same or better terms in the event of non-renewal or in the event the company exercises its right to replace an existing tenant, and obligations the company may incur in connection with the replacement of an existing tenant.
• The company's performance is subject to litigation risks generally.
• The company's performance is subject to the risk that shareholder litigation filed by the company's former CEO, Daniel Khoshaba, may result in significant costs of defense, indemnification and liability, and divert management's attention away from running the company.
• The company's performance is subject to 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.
• The company's performance is subject to financing risks, such as the company's inability to obtain new financing or refinancing on favorable terms as the result of market volatility or instability and increases in the company's borrowing costs as a result of changes in interest rates and other factors.
• The company's performance is subject to the impact of the company's leverage on operating performance.
• The company's performance is subject to our ability to successfully execute strategic or necessary asset acquisitions and divestitures.
• The company's performance is subject to risks related to the market for retail space generally, including reductions in consumer spending, variability in retailer demand for leased space, adverse impact of e-commerce, ongoing consolidation in the retail sector and changes in economic conditions and consumer confidence.
• The company's performance is subject to risks endemic to real estate and the real estate industry generally.
• The company's performance is subject to the adverse effect of any future pandemic, endemic or outbreak of infectious diseases, and mitigation efforts, including government-imposed lockdowns, to control their spread.
• The company's performance is subject to risks to our information systems or those of our tenants or vendors from service interruption, misappropriation of data, breaches of security or information technology, or other cyber-related attacks.
• The company's performance is subject to competitive risks.
• The company's performance is subject to the company's ability to maintain compliance with the listing standards of the Nasdaq Capital Market ('Nasdaq').
• The company's performance is subject to the effects on the trading market of our Common Stock of the one-for-10 reverse stock split effected on August 17, 2023 (the 'August 2023 Reverse Stock Split'), the one-for-24 reverse stock split effected on May 16, 2024 (the 'May 2024 Reverse Stock Split'), the one-for-five reverse stock split effected on June 27, 2024 (the 'June 2024 Reverse Stock Split'), the one-for-three reverse stock split effected on September 19, 2024 (the 'September 2024 Reverse Stock Split', the one-for-two reverse stock split effected on November 18, 2024 (the 'November 2024 Reverse Stock Split' and collectively with the May 2024 Reverse Stock Split, June 2024 Reverse Stock Split, September 2024 Reverse Stock Split and November 2024 Reverse Stock Split, the 2024 Reverse Stock Splits), the one-for-four reverse stock split effected on January 27, 2025 (the 'January 2025 Reverse Stock Split' and, together with the August 2023 Reverse Stock Split and the 2024 Reverse Stock Splits, the 'Reverse Stock Splits') and any reverse stock splits the Company may effect in the future.
• The company's performance is subject to damage to the company's properties from catastrophic weather and other natural events, and the physical effects of climate change.
• The company's performance is subject to the risk that an uninsured loss on the company's properties or a loss that exceeds the limits of the company's insurance policies could subject the company to lost capital or revenue on those properties.
• The company's performance is subject to the risk that continued increases in the cost of necessary insurance could negatively impact the company's profitability.
• The company's performance is subject to the company's ability and willingness to maintain its qualification as a real estate investment trust ('REIT') in light of economic, market, legal, tax and other considerations.
• The company's performance is subject to the ability of our operating partnership, Wheeler REIT, L.P. (the 'Operating Partnership'), and each of our other partnerships and limited liability companies to be classified as partnerships or disregarded entities for federal income tax purposes.
• The company's performance is subject to the impact of e-commerce on our tenants business.
• The company's performance is subject to the inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws.

Future Outlook

The document contains forward-looking statements, but no specific financial guidance is provided.

Industry Context

The announcement reflects the performance of a REIT focused on grocery-anchored retail centers, a sector that has shown resilience amidst broader retail challenges. The company's focus on secondary and tertiary markets aligns with a strategy to find value in less competitive areas.

Comparison to Industry Standards

• Comparing WHLR's performance to industry peers is challenging due to its unique capital structure and recent reverse stock splits.
• However, the reported increase in Same-Property NOI of 4.8% for the quarter and 4.9% for the year is a positive indicator, suggesting operational improvements.
• For example, Regency Centers (REG), a large, well-established REIT focused on grocery-anchored centers, reported a blended lease rate increase of 9.8% in Q4 2023, while WHLR reported 11.39% increase over in-place rental rates.
• Kimco Realty (KIM), another major player, reported a portfolio occupancy of 96.7% at the end of 2023, while WHLR reported 92.3% occupied.
• WHLR's focus on smaller, secondary markets may result in different performance metrics compared to REITs concentrated in primary markets.

Related Party Transactions

• The Company performs property management and leasing services for Cedar, a subsidiary of the Company.
• During the year ended December 31, 2024, Cedar paid the Company $1.4 million for these services.
• As of December 31, 2024, the fair value of the Company's SAI investment was $12.0 million, which includes $10.5 million of subscriptions.

Stakeholder Impact

• Shareholders: The reverse stock splits and preferred stock redemptions impact shareholder value and equity structure.
• Tenants: Leasing activity and property improvements affect the tenant base and occupancy rates.
• Creditors: Debt management and refinancing activities impact the company's financial stability and creditworthiness.
• Employees: Operational performance and strategic decisions affect employment and compensation.

Next Steps

• The company will continue to execute its leasing and property management strategies.
• The company will continue to manage its capital structure, including preferred stock redemptions and convertible note conversions.
• The company will continue to dispose of properties held for sale.

Key Dates