Wheeler Real Estate Investment Trust(WHLR) - 2023 Q3 - Quarterly Report

Company Operations - As of September 30, 2023, the company owned and operated 75 retail shopping centers and 4 undeveloped properties across multiple states, including South Carolina, Georgia, and Virginia[122]. - The company's geographic concentration is approximately 45% in the Mid-Atlantic, 40% in the Southeast, and 15% in the Northeast, which may increase susceptibility to adverse market developments[123]. - The company acquired a 2.5-acre land parcel for $0.2 million and a 3.25-acre land parcel for $4.1 million in South Carolina in 2023[127]. - The company acquired Cedar Realty Trust in August 2022, which is now a subsidiary, impacting future operational results[121]. Lease and Revenue Performance - For the three months ended September 30, 2023, the company renewed 262,160 square feet of leases, with a weighted average increase of 7.2% over prior rates[138]. - New leases signed for 135,537 square feet at a weighted average rate of $10.71 per square foot during the three months ended September 30, 2023[138]. - Total revenues increased to $25.2 million for the three months ended September 30, 2023, up 34.7% from $18.7 million in 2022[143]. - Rental revenues rose by $6.2 million, primarily due to a $5.8 million increase in non-same store property revenues from the Cedar Acquisition[143]. - For the nine months ended September 30, 2023, total revenues reached $76.1 million, a 53.2% increase from $49.7 million in 2022[152]. - The increase in rental revenues for the nine months was $25.6 million, largely driven by a $21.7 million increase in non-same store property revenues due to the Cedar Acquisition[152]. Expenses and Financial Performance - Total operating expenses were $18.1 million, reflecting a 28.2% increase from $14.1 million in the prior year[144]. - Depreciation and amortization expenses increased by 38.0% due to the Cedar Acquisition[146]. - Interest expense rose to $7.5 million, a 7.5% increase from $6.9 million in the previous year[147]. - The net loss before income taxes was $11.4 million, a significant increase from a loss of $3.0 million in the prior year, representing a 278.1% decrease[148]. - Total operating expenses for the nine months were $56.1 million, a 60.0% increase from $35.1 million in the previous year[153]. - Corporate general and administrative expenses increased to $8.4 million, up 53.9% from $5.4 million in the prior year[155]. - Interest expense increased by 26.4% to $24.1 million for the nine months ended September 30, 2023, compared to $19.1 million in 2022[156]. - Net change in fair value of derivative liabilities resulted in a loss of $6.3 million for the nine months ended September 30, 2023, compared to a loss of $2.5 million in 2022[157]. - Other expenses totaled $5.3 million for the nine months ended September 30, 2023, significantly higher than $0.7 million in 2022, driven by costs related to the Exchange Offer and Convertible Notes repurchases[158]. Cash Flow and Liquidity - Cash flows from operating activities decreased by $12.9 million to $15.0 million for the nine months ended September 30, 2023, compared to $27.9 million in 2022[168]. - Consolidated cash, cash equivalents, and restricted cash totaled $48.9 million as of September 30, 2023, down from $54.3 million in 2022[167]. - The company had $25.4 million in cash and cash equivalents at September 30, 2023, and $23.4 million held in lender reserves for tenant improvements and other expenses[181]. - Cash flows used in investing activities decreased by $120.5 million, primarily due to costs related to the Cedar Acquisition in 2022 and proceeds from the Carll's Corner Out Parcel sale[170]. - Cash flows used in financing activities were $2.4 million for the nine months ended September 30, 2023, compared to $126.0 million in cash flows provided by financing activities for the same period in 2022[171]. Debt and Preferred Stock - The company entered into a Term Loan Agreement for $61.1 million at a fixed rate of 6.194% for refinancing 12 properties, with monthly principal and interest payments of $0.4 million starting July 2025[128]. - Total debt as of September 30, 2023, was $495.9 million, with a weighted average interest rate of 5.42% and an average term of 8.41 years[174]. - The company had received requests to redeem 172,241 shares of Series D Preferred Stock, amounting to $6.4 million, reclassified from mezzanine equity to a liability[125]. - As of September 30, 2023, the outstanding Series D Preferred Stock had a total liquidation value of approximately $123.8 million[188]. - The first monthly Holder Redemption Date occurred on October 5, 2023, with 172,911 shares redeemed for approximately $6.5 million, settled in Common Stock[189]. - The second monthly Holder Redemption Date occurred on November 6, 2023, with 319,762 shares redeemed for approximately $12.1 million, also settled in Common Stock[190]. Market and Economic Conditions - Inflation and interest rate increases could impact the company's business, although lease provisions are in place to mitigate some effects[193][194]. - The company received a letter from Nasdaq on June 26, 2023, regarding non-compliance with the minimum bid price requirement, but regained compliance by September 1, 2023[175][176]. Operational Metrics - Same store property net operating income (NOI) decreased by 7.0% to $9.5 million for the three months ended September 30, 2023, primarily due to a 14.1% increase in property expenses[161]. - Funds from operations (FFO) decreased by $8.7 million to $(6.7) million for the three months ended September 30, 2023, while increasing by $1.0 million to $6.4 million for the nine months ended September 30, 2023[164]. - Adjusted funds from operations (AFFO) was $(1.8) million for the three months ended September 30, 2023, compared to $0.1 million in 2022, and $(1.7) million for the nine months ended September 30, 2023, compared to $6.0 million in 2022[166]. - Property revenues for the nine months ended September 30, 2023, were $46.3 million, compared to $45.6 million in 2022, reflecting a slight increase[161]. - Total interest expense components included a 100% increase in property debt interest related to Cedar, amounting to $5.6 million in 2023 compared to $0.7 million in 2022[156].