WHLR Q2 2021 Earnings Call Summary

1. Key Financial Results and Metrics

Operating Funds from Operations (FFO): $8.5 million, or $0.61 per share.
Property Net Operating Income (NOI): $20.8 million.
Same-property NOI: Increased by 8.2% year-over-year, and 10.2% including redevelopment properties.
Leased Occupancy: 88.7%, up 0.9% from the previous quarter; same-property leased occupancy at 90.9%.
Rent Collection: 97% of billed rent collected during the quarter.
Capital Transactions: Closed on the sale of Camp Hill Mall for approximately $90 million at a 6.5% cap rate; refinanced $114 million mortgage loan.

2. Strategic Updates and Business Highlights

Leasing Activity: Executed 40 leases totaling 209,100 square feet, with a notable increase in leasing volume compared to previous quarters. However, the average spread on new leases was negative 18.7%, primarily due to deals negotiated during the pandemic.
Redevelopment Projects: Progressing on mixed-use projects, including a joint venture with Goldman Sachs for the Northeast Heights project in Washington, DC.
Market Dynamics: Strong demand for grocery-anchored shopping centers due to their resilience during the pandemic, with a robust leasing pipeline anticipated to drive future occupancy and NOI growth.

3. Forward Guidance and Outlook

Occupancy Projections: Management expects occupancy to trend towards the low to mid-90% range as leasing activity increases and redevelopment impacts stabilize.
Leasing Momentum: Anticipated improvement in lease spreads as the company moves past pandemic-era negotiations.
Strategic Focus: Continued assessment of the disconnect between public share price and private market valuations, with potential for further asset sales if conditions remain favorable.

4. Bad News, Challenges, or Points of Concern

Negative Lease Spreads: The company reported a negative spread of 18.7% on new leases executed, indicating challenges in achieving favorable lease terms.
Redevelopment Impact: Occupancy is still affected by ongoing redevelopment projects, which may continue to create temporary vacancies.
Market Risks: Potential resurgence of COVID-19 variants could impact retail operations and leasing activity, creating uncertainty in future performance.

5. Notable Q&A Insights

Leasing Trends: Management expressed optimism about increasing leasing activity and the potential for improved lease spreads in the near future.
Asset Sales Strategy: The CEO indicated that the company is considering additional asset sales to capitalize on the current favorable market conditions for grocery-anchored retail.
Board Dynamics: New board members are actively engaging in discussions about strategic direction, particularly regarding the disconnect between public and private valuations.
Flexibility in Financing: The recent mortgage refinancing provides flexibility for asset substitution, allowing the company to manage its portfolio dynamically.

Overall, WHLR reported a strong recovery from pandemic impacts with positive trends in leasing and occupancy, although challenges remain in achieving favorable lease terms and managing redevelopment impacts. The company is strategically positioned to exploit market conditions while remaining vigilant about potential risks.

WHLR — Wheeler Real Estate Investment Trust, Inc.