In the first quarter of 2024, Wheeler Real Estate Investment Trust, Inc. experienced a significant increase in revenue and net income, driven by strong market conditions and successful acquisitions. The company’s balance sheet remains healthy, with a solid cash position and low debt levels. However, the company faces potential risks from market fluctuations and regulatory changes. Despite these challenges, Wheeler Real Estate Investment Trust remains optimistic about its future growth prospects.
The company’s revenues were $25.9 million in the first quarter of 2024, a slight 0.7% decrease from $26.1 million in the first quarter of 2023. However, the company’s same-property net operating income (NOI) increased by 2.7% to $15.5 million due to a 2.1% increase in property revenue and a 1.1% increase in property expenses. The company had a net loss of $6 million in Q1 2024 compared to a net loss of $0.4 million in Q1 2023.
The company’s revenue decrease was primarily driven by lower market lease amortization and non-property revenue, partially offset by increased base rent and tenant reimbursements. Property expenses increased slightly, but same-property NOI still improved by 2.7%. The larger net loss in Q1 2024 was primarily due to higher interest expense, losses on investment securities, and non-cash losses from changes in the fair value of derivative liabilities.
The company had $38.5 million of cash, cash equivalents, and restricted cash at March 31, 2024, compared to $52.1 million at March 31, 2023. The company has debt maturities of $8.7 million over the next 12 months, which it expects to refinance. The company believes it has sufficient liquidity from cash on hand, cash generated from operations, and additional measures it can undertake like refinancing properties.
Revenue (000s) | Q1 2024 | Q1 2023 | Change |
---|---|---|---|
Base Rent | $16,978 | $16,651 | +2.0% |
Reimbursements | $6,124 | $5,916 | +3.6% |
Market Lease Amortization | $1,401 | $1,899 | -26.2% |
Other Revenue | $1,369 | $1,600 | -14.4% |
Total Revenue | $25,872 | $26,066 | -0.7% |
Expense (000s) | Q1 2024 | Q1 2023 | Change |
---|---|---|---|
Utilities | $2,302 | $2,220 | +3.7% |
Repairs & Maintenance | $1,986 | $2,002 | -0.8% |
Real Estate Taxes | $2,105 | $2,044 | +3.0% |
Total | $9,050 | $8,955 | +1.1% |
Expense (000s) | Q1 2024 | Q1 2023 | Change |
---|---|---|---|
Property Debt Interest | $6,234 | $5,420 | +15.1% |
Convertible Note Interest | $543 | $578 | -6.1% |
Amortization of Deferred Financing Costs | $628 | $479 | +31.1% |
Total Interest Expense | $7,405 | $6,477 | +14.3% |
The company expects its core portfolio to continue producing steady growth in same-property NOI. However, high inflation and rising interest rates present headwinds that could negatively impact earnings. The company aims to use cash from operations and refinancing to address near-term debt maturities. Longer term, the company hopes to reduce its leverage to provide more flexibility. However, the substantial preferred stock obligations remain an overhang on the company’s financial position that will need to be addressed at some point.
Overall, the core property operations appear relatively stable, but the heavy preferred stock obligations and challenging economic environment mean uncertainty still remains high for the company. Careful capital management will be needed in coming quarters.