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Wheeler Real Estate Investment Trust(WHLR) - 2024 Q4 - Annual Report
WHLRWheeler Real Estate Investment Trust(WHLR)2025-03-04 13:11

Portfolio Overview - As of December 31, 2024, the company owns a portfolio of 75 properties, including 72 retail shopping centers, totaling 7,660,979 leasable square feet, which is 93.1% leased[22] - The company’s properties are geographically located in the Mid-Atlantic (44%), Southeast (43%), and Northeast (13%) regions, representing the total annualized base rent[22] - The Company has a total real estate portfolio of 7,660,979 square feet, with an overall occupancy rate of 93.1%[48] - The Company’s properties include 981 tenants across various locations, with a total leasable area of 7,660,979 square feet[48] - The company has a total of 210 properties under the CDR segment, with an occupancy rate of 88.9%[48] - The highest occupancy rate among individual properties is 100% for several locations, including Alex City Marketplace and Amscot Building[47] - The company has a total of 771 properties under the WHLR segment, with an occupancy rate of 94.9%[48] - The company's portfolio consists of 75 properties, including 72 retail shopping centers and 3 undeveloped land parcels, with a total gross rentable space of approximately 7,661,000 square feet and a leased level of approximately 93.1% as of December 31, 2024[73] Financial Performance - Revenues for the year ended December 31, 2024, were 104.6million,anincreaseof2.2104.6 million, an increase of 2.2% compared to 102.3 million in 2023, primarily due to a 2.7millionincreaseintenantreimbursements[144]−Same−PropertyNetOperatingIncome(NOI)increasedby4.92.7 million increase in tenant reimbursements[144] - Same-Property Net Operating Income (NOI) increased by 4.9% to 61.7 million for the year ended December 31, 2024, compared to 58.8millionin2023,drivenbya3.458.8 million in 2023, driven by a 3.4% increase in property revenue[157] - Net income for the year ended December 31, 2024, was 767,000, a decrease of 87.4% from 6.1millionin2023[144]−ThetotalinterestexpensefortheyearendedDecember31,2024,was6.1 million in 2023[144] - The total interest expense for the year ended December 31, 2024, was 32.6 million, a slight increase of 0.9% from 32.3millionin2023[149]−TheCompanyreportedalossof32.3 million in 2023[149] - The Company reported a loss of 8.3 million in net changes in the fair value of derivative liabilities for the year ended December 31, 2024, compared to a gain of 3.5millionin2023[151]−Thegainondisposalofpropertiesincreasedsignificantlyby151.83.5 million in 2023[151] - The gain on disposal of properties increased significantly by 151.8% to 5.6 million in 2024, compared to 2.2millionin2023[145]−Corporategeneralandadministrativeexpensesdecreasedby6.52.2 million in 2023[145] - Corporate general and administrative expenses decreased by 6.5% to 11.0 million in 2024, down from 11.8millionin2023[144]−TheCompanyrealizedagainof11.8 million in 2023[144] - The Company realized a gain of 4.8 million from Preferred Stock retirements in 2024, a decrease of 51.8% compared to 9.9millionin2023[152]−Depreciationandamortizationexpensesdecreasedby11.29.9 million in 2023[152] - Depreciation and amortization expenses decreased by 11.2% to 25.3 million in 2024, down from 28.5millionin2023[144]−FundsfromOperations(FFO)availabletocommonstockholdersdecreasedto28.5 million in 2023[144] - Funds from Operations (FFO) available to common stockholders decreased to 3,253,000 in 2024 from 12,827,000in2023,representingadeclineof74.712,827,000 in 2023, representing a decline of 74.7%[160] - Adjusted Funds from Operations (AFFO) improved to 7,191,000 in 2024 compared to a negative 247,000in2023[160]TenantandLeaseManagement−Thetop10tenantsaccountfor24.1247,000 in 2023[160] Tenant and Lease Management - The top 10 tenants account for 24.1% or 17.6 million of annualized base rent and 26.3% or 2.0 million of gross leasable square footage as of December 31, 2024[23] - Major tenants include Food Lion (annualized base rent of 4,280,000,5.864,280,000, 5.86% of total), Kroger Co (2,097,000, 2.87%), and Dollar Tree (2,070,000,2.832,070,000, 2.83%), collectively accounting for 24.13% of total annualized base rent[52] - The company employs intensive lease management strategies to optimize occupancy and increase operating income through effective leasing strategies and expense management[27] - The company self-administers property management and leasing activities, focusing on maximizing revenue per square foot and maintaining tenant relationships[56][57] - The company maintains regular contact with tenants and conducts physical property reviews to adapt to market conditions and enhance property value[58][59] - The company has lease provisions to mitigate inflation impacts, allowing for reimbursement of inflation-sensitive costs[161] Capital Structure and Investments - The company has a strategy to optimize its capital structure by maintaining prudent leverage and reducing the total outstanding preferred stock through opportunistic exchanges and repurchases[28] - The company intends to make capital investments to enhance retail properties, increase rents, extend long-term leases, and improve occupancy[27] - The Company entered into a term loan agreement for 25.5 million at a fixed rate of 6.80%, with monthly interest-only payments until 2029, followed by a 30-year amortization schedule[79] - The company plans to repurchase its Cedar Series B and C Preferred Stock, having already repurchased 1,436,582 shares for approximately 21.2million,fundedbyassetsales[134]−Thecompanyintendstogrowoperationsandincreaseliquiditybybackfillingvacantspacesandrefinancingproperties[136]EnvironmentalandInsuranceMatters−Thecompanyhasnotincurredanymaterialcostsorliabilitiesduetoenvironmentalcontaminationatpropertiescurrentlyownedorpreviouslyowned[29]−Thecompanycarriescomprehensiveinsurancecoveringallpropertiesinitsportfolio,includingliability,property,andbusinessinterruptioninsurance[33]−TheCompanyhasincorporatedcybersecuritycoverageinitsinsurancepolicies,althoughthereisnoassurancethatallbreacheswillbecovered[44]GovernanceandCompliance−TheBoardofDirectorsincludesmemberswithextensivefinancialandlegalexpertise,enhancingcorporategovernance[176][185]−ManagementassessedinternalcontrolsoverfinancialreportingaseffectiveasofDecember31,2024,ensuringreliablefinancialdisclosures[170]−TheAuditCommitteemetfourtimesin2024,ensuringoversightoffinancialreporting[201]−TheCompensationCommitteemetoncein2024tooverseeexecutivecompensation[202]−TheNominatingCommitteemettwicein2024toreviewcorporategovernancepractices[203]−TheExecutiveCommittee,formedinFebruary2020,metthreetimesin2024forpromptdecision−making[204]−TheLitigationCommitteemetoncein2024tooverseemateriallitigationmatters[205]−TheRelatedPersonTransactionsCommitteemettwicein2024toapproverelatedtransactions[206]CashFlowandDebtManagement−AsofDecember31,2024,thecompany′sconsolidatedcash,cashequivalents,andrestrictedcashtotaled21.2 million, funded by asset sales[134] - The company intends to grow operations and increase liquidity by backfilling vacant spaces and refinancing properties[136] Environmental and Insurance Matters - The company has not incurred any material costs or liabilities due to environmental contamination at properties currently owned or previously owned[29] - The company carries comprehensive insurance covering all properties in its portfolio, including liability, property, and business interruption insurance[33] - The Company has incorporated cybersecurity coverage in its insurance policies, although there is no assurance that all breaches will be covered[44] Governance and Compliance - The Board of Directors includes members with extensive financial and legal expertise, enhancing corporate governance[176][185] - Management assessed internal controls over financial reporting as effective as of December 31, 2024, ensuring reliable financial disclosures[170] - The Audit Committee met four times in 2024, ensuring oversight of financial reporting[201] - The Compensation Committee met once in 2024 to oversee executive compensation[202] - The Nominating Committee met twice in 2024 to review corporate governance practices[203] - The Executive Committee, formed in February 2020, met three times in 2024 for prompt decision-making[204] - The Litigation Committee met once in 2024 to oversee material litigation matters[205] - The Related Person Transactions Committee met twice in 2024 to approve related transactions[206] Cash Flow and Debt Management - As of December 31, 2024, the company's consolidated cash, cash equivalents, and restricted cash totaled 60.7 million, an increase from 39.8millionattheendof2023[118]−Netcashprovidedbyoperatingactivitiesincreasedto39.8 million at the end of 2023[118] - Net cash provided by operating activities increased to 29.4 million in 2024 from 22.4millionin2023,primarilyduetoa22.4 million in 2023, primarily due to a 4.0 million decrease in capital structure costs and a 2.9millionincreaseinSame−PropertyNOI[119]−Cashflowsfrominvestingactivitiesincreasedby2.9 million increase in Same-Property NOI[119] - Cash flows from investing activities increased by 47.0 million, mainly due to proceeds from the sale of three properties and two land parcels compared to one outparcel sale in 2023[121] - The company reported total debt of 499.5millionasofDecember31,2024,withaweightedaverageinterestrateof5.53499.5 million as of December 31, 2024, with a weighted average interest rate of 5.53% and a term of 7.5 years[125] - The company has 6.0 million in principal payments due in 2025 and 1.2millioninoutstandingconstructioncommitmentsasofDecember31,2024[132]−Thecompanyanticipatesbeingabletorefinanceallloansatreasonablemarkettermsuponmaturity,butfailuretodosomaymateriallyimpactitsfinancialposition[125]DividendandStockMatters−ThecompanyhassuspendeddividendsonitscommonstockandpreferredstocksinceMarch2018,withtheannualdividendrateonSeriesDPreferredStockincreasingto14.751.2 million in outstanding construction commitments as of December 31, 2024[132] - The company anticipates being able to refinance all loans at reasonable market terms upon maturity, but failure to do so may materially impact its financial position[125] Dividend and Stock Matters - The company has suspended dividends on its common stock and preferred stock since March 2018, with the annual dividend rate on Series D Preferred Stock increasing to 14.75% as of September 21, 2024, due to missed payments[69][70] - The total cumulative dividends in arrears for Series D Preferred Stock reached 32.8 million as of December 31, 2024, equating to $14.67 per share[102] - Future dividend declarations will depend on the company's cash flow, financial condition, and capital requirements, as it must distribute at least 90% of its REIT taxable income[137] - The Company intends to continue settling redemptions of Series D Preferred Stock in Common Stock, which is expected to result in substantial dilution of the outstanding Common Stock[141] Cybersecurity and IT Management - The Company outsources its information technology function to a third-party provider, ensuring 24/7 security operations[43] - The Company updates its cybersecurity policies annually to mitigate risks, but acknowledges potential vulnerabilities[44] - Interest rate fluctuations could significantly affect the company's financial performance, with potential higher borrowing costs impacting tenants[162] - The company maintains a disciplined financial approach to optimize returns while managing interest rate exposure[162]