Form 8-K/A Wheeler Real Estate Inve For: Oct 02
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
�
FORM 8-K/A
�
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): October�2, 2014
�
WHEELER REAL ESTATE INVESTMENT TRUST, INC.
(Exact name of registrant as specified in its charter)
��
�
Maryland | � | 001-35713 | � | 45-2681082 |
(State or Other Jurisdiction of Incorporation) | � | (Commission File Number) | � | (IRS Employer Identification No.) |
2529 Virginia Beach Blvd., Suite 200
Virginia Beach, VA 23452
Registrants telephone number, including area code: (757)�627-9088
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
�
� | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
� | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
� | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
� | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
�
ITEM�8.01 OTHER EVENTS.
On October�7, 2014, Wheeler Real Estate Investment Trust, Inc. filed a Form 8-K (the Original 8-K ) to report the completion of the acquisition of Bryan Station located in Lexington, Kentucky on October�2, 2014. This amendment is being filed for the sole purpose of filing the financial statements and pro forma financial information required by Item 9.01 on Form 8-K, and should be read in conjunction with the Original 8-K.
ITEM�9.01 FINANCIAL STATEMENTS AND EXHIBITS.
�
(a) | Financial statement of businesses acquired. * |
Report of Independent Auditor.
Statements of Revenues and Certain Operating Expenses for the Six Months Ended June�30, 2014 (unaudited) and the Year Ended December�31, 2013.
Notes to Statements of Revenues and Certain Operating Expenses for the Six Months Ended June�30, 2014 (unaudited) and the Year Ended December�31, 2013.
�
(b) | Pro forma financial information. ** |
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June�30, 2014.
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended
June�30, 2014.
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December�31, 2013.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
�
(c) | Shell company transactions. |
Not Applicable.
�
(d) | Exhibits. *** |
23.1 | Consent of Cherry Bekaert LLP. | |
* | Filed as Exhibit 99.1 and incorporated herein by reference. |
** | Filed as Exhibit 99.2 and incorporated herein by reference. |
*** | Filed as Exhibit 23.1 and incorporated herein by reference. |
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
�
WHEELER REAL ESTATE INVESTMENT TRUST, INC. | ||
By: | � | /s/ Jon S. Wheeler |
� | Jon S. Wheeler | |
� | Chairman and Chief Executive Officer | |
Dated: November�12, 2014
EXHIBIT INDEX
�
Number | �� | Description of Exhibit |
23.1 | Consent of Cherry Bekaert LLP. | |
99.1 | Financial Statements of Bryan Station. | |
99.2 | �� | Pro Forma Financial Information of Bryan Station. |
Exhibit 23.1
Consent of Independent Auditor
We hereby consent to the incorporation by reference in the Registration Statements of Wheeler Real Estate Investment Trust, Inc., on Form�S-11 (Nos. 333-194831, 333-195492, 333-198245, and 333-198696) and Form�S-3 (Nos.�333-189887, 333-193563 and�333-194252) of our report dated November�12, 2014, with respect to the Statement of Revenues and Certain Operating Expenses of Bryan Station for the year ended December�31, 2013, which report appears in the accompanying Current Report on Form 8-K/A of Wheeler Real Estate Investment Trust, Inc.
/s/ Cherry Bekaert LLP
Virginia Beach, Virginia
November�12, 2014
Exhibit 99.1
Report of Independent Auditor
To the Board of Directors and Shareholders of
Wheeler Real Estate Investment Trust, Inc.
Report on the Statement
We have audited the accompanying statement of revenues and certain operating expenses (the Statement ) of Bryan Station (the Property ) for the year ended December�31, 2013.
Managements Responsibility for the Statement
Management is responsible for the preparation and fair presentation of this Statement, in accordance with accounting principles generally accepted in the United States of America, that is free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on this Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Statement. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the Statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Statement.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenue and certain operating expenses of the Property for the year ended December�31, 2013 in conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As further discussed in Note 1, on October�2, 2014, Wheeler Real Estate Investment Trust, Inc., through its subsidiary of Wheeler REIT, L.P., completed the acquisition of the Property.
The accompanying Statement was prepared as described in Note 2, for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Propertys revenue and expenses.
/s/ Cherry Bekaert LLP
Virginia Beach, Virginia
November�12, 2014
Bryan Station
Statements of Revenues and Certain Operating Expenses
For the Six Months Ended June 30, 2014 (unaudited) and the Year Ended December 31, 2013
Six Months Ended June 30, 2014 | Year Ended December 31, 2013 | ||||||||
(unaudited) | |||||||||
REVENUES: | |||||||||
Rental income | $ | 279,115 | $ | 548,681 | |||||
Tenant reimbursements and other income | 56,642 | 122,174 | |||||||
Total Revenues | 335,757 | 670,855 | |||||||
CERTAIN OPERATING EXPENSES: | |||||||||
Property operating | 70,444 | 115,994 | |||||||
Real estate taxes | 17,433 | 34,865 | |||||||
Repairs and maintenance | 4,241 | ||||||||
Other | 4,895 | 13,004 | |||||||
Total Certain Operating Expenses | 92,772 | 168,104 | |||||||
Excess of Revenues Over Certain Operating Expenses | $ | 242,985 | $ | 502,751 | |||||
See accompanying notes to statements of revenues and certain operating expenses.
Bryan Station
Notes to Statements of Revenues and Certain Operating Expenses
For the Six Months Ended June 30, 2014 (unaudited) and the Year Ended December 31, 2013
1. Business and Purchase and Sales Agreement
On September�25, 2014, Wheeler Real Estate Investment Trust, Inc., through its subsidiary of Wheeler Real Estate Investment Trust, L.P. (the Operating Partnership ), assumed from Wheeler Interests, LLC ( Wheeler Interests ) the Purchase and Sales Agreement (the Agreement ) to acquire Bryan Station (the Property ), a 54,397 square foot shopping center located in Lexington, Kentucky for a purchase price of approximately $6.1 million. On October�2, 2014, the Operating Partnership completed the acquisition. The Property is 100% occupied and is anchored by Planet Fitness and Shoe Carnival, which occupy approximately 58% of the total rentable square feet of the center through various leases which expire through August 2032. The Property is shadow anchored by a 73,000 square foot Kroger supermarket.
2. Basis of Presentation
The Statements of Revenues and Certain Operating Expenses (the Statements ) have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X, promulgated by the Securities and Exchange Commission, and are not intended to be a complete presentation of the Propertys revenues and expenses. Certain operating expenses include only those expenses expected to be comparable to the proposed future operations of the Property. Expenses such as depreciation and amortization are excluded from the accompanying Statements. The Statements have been prepared on the accrual basis of accounting which requires management to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting periods. Actual results may differ from those estimates.
3. Revenues
The Property leases retail space under various lease agreements with its tenants. All leases are accounted for as noncancelable operating leases. The leases include provisions under which the Property is reimbursed for common area maintenance, real estate taxes and insurance costs. Pursuant to the lease agreements, income related to these reimbursed costs is recognized in the period the applicable costs are incurred. Certain leases contain renewal options at various periods at various rental rates.
The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of total annualized rental income for all tenants on a straight line basis as of June�30, 2014 (unaudited) and December�31, 2013:
Tenant | June�30, 2014 | December�31, 2013 | ||||
Planet Fitness | 26.6 | % | 27.0 | % | ||
Shoe Carnival | 21.4 | % | 20.3 | % | ||
Cato | 14.1 | % | 14.3 | % | ||
KORT | 11.9 | % | 12.1 | % | ||
The termination, delinquency or nonrenewal of one of the above tenants may have a material adverse effect on revenues. No other tenant represents more than 10% of annualized rental income as of June�30, 2014 (unaudited) and December�31, 2013.
Bryan Station
Notes to Statements of Revenues and Certain Operating Expenses
For the Six Months Ended June 30, 2014 (unaudited) and the Year Ended December 31, 2013
(continued)
3. Revenues (continued)
�����������The weighted average remaining lease terms for tenants at the property was 8.51 years as of June�30, 2014 (unaudited). Future minimum rentals to be received under noncancelable tenant operating leases for each of the next five years and thereafter, excluding CAM and percentage rent based on tenant sales volume, as of June�30, 2014 (unaudited) and December�31, 2013 were as follows:
Years Ending December 31, | ||||||||
Twelve Months Ending June 30, | ||||||||
(unaudited) | ||||||||
2014 | $ | 550,708 | ||||||
2015 | 546,778 | 539,591 | ||||||
2016 | 537,195 | 525,695 | ||||||
2017 | 417,379 | 300,277 | ||||||
2018 | 238,584 | 188,442 | ||||||
2019 | 179,707 | 163,196 | ||||||
Thereafter | 2,234,468 | 2,161,125 | ||||||
$ | 4,154,111 | $ | 4,429,034 | |||||
The above schedule takes into consideration all renewals and new leases executed subsequent to June�30, 2014 through the date of this report.
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial statements have been prepared to provide pro forma information with regard to the acquisition of Bryan Station ( the Property ), which Wheeler Real Estate Investment Trust, Inc. and Subsidiaries ( Wheeler REIT or the Company ), through Wheeler Real Estate Investment Trust, L.P. ( Operating Partnership ), its majority-owned subsidiary, obtained the right to acquire through the assumption of a Purchase and Sales Agreement from a related party on September�25, 2014. The Operating Partnership completed the acquisition on October�2, 2014.
The unaudited pro forma condensed consolidated balance sheet as of June�30, 2014 gives effect to the acquisition of the Property as if it occurred on June�30, 2014. The Wheeler REIT column as of June�30, 2014 represents the actual balance sheet presented in the Companys Quarterly Report on Form 10-Q ( Form 10-Q ) filed on August 14, 2014 with the Securities and Exchange Commission ( SEC ) for the period. The pro forma adjustments column includes the preliminary estimated impact of purchase accounting and other adjustments for the periods presented.
The unaudited pro forma condensed consolidated statements of operations for the Company and the Property for the six months ended June�30, 2014 and the year ended December�31, 2013 give effect to the Company's acquisition of the Property, as if it had occurred on the first day of the earliest period presented. The Wheeler REIT column for the six months ended June�30, 2014 represents the results of operations presented in the Companys Form 10-Q. The Wheeler REIT column for the year ended December�31, 2013 represents the results of operations presented in the Companys Annual Report on Form 10-K ( Form 10-K ) filed with the SEC on March 21, 2014. The Property column includes the full periods operating activity for the Property, as the Property was acquired subsequent to June�30, 2014 and therefore was not included in the Companys historical financial statements. The pro forma adjustments columns include the impact of purchase accounting and other adjustments for the periods presented.
The unaudited pro forma condensed consolidated financial statements have been prepared by the Company's management based upon the historical financial statements of the Company and of the acquired Property. Since the acquisition transaction closed during the fourth quarter of 2014, the Property will be included in the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, to be filed with the SEC. These pro forma statements may not be indicative of the results that actually would have occurred had the anticipated acquisition been in effect on the dates indicated or which may be obtained in the future.
In management's opinion, all adjustments necessary to reflect the effects of the Property acquisition have been made. These unaudited pro forma condensed consolidated financial statements are for informational purposes only and should be read in conjunction with the historical financial statements of the Company, including the related notes thereto, which were filed with the SEC on March 21, 2014 as part of its Form 10-K for the year ended December�31, 2013 and on August 14, 2014 as part of its Form 10-Q for the six months ended June�30, 2014.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
As of June�30, 2014
(unaudited)
Wheeler | �Pro Forma | �Pro Forma | ||||||||||||
REIT | Adjustments | Consolidated | ||||||||||||
(A) | (B) | |||||||||||||
ASSETS: | ||||||||||||||
Net investment properties | $ | 100,553,283 | $ | 4,414,596 | $ | 104,967,879 | ||||||||
Cash and cash equivalents | 16,243,867 | (1,475,000 | ) | 14,768,867 | ||||||||||
Tenant and other receivables | 1,663,027 | 1,663,027 | ||||||||||||
Deferred costs, reserves, intangibles and other assets | 21,692,120 | 1,693,696 | 23,385,816 | |||||||||||
Total Assets | $ | 140,152,297 | $ | 4,633,292 | $ | 144,785,589 | ||||||||
LIABILITIES: | ||||||||||||||
Mortgages and other indebtedness | $ | 95,236,145 | $ | 4,625,000 | $ | 99,861,145 | ||||||||
Below market lease intangibles | 2,610,379 | 8,292 | 2,618,671 | |||||||||||
Accounts payable, accrued expenses and other liabilities | 3,361,048 | 3,361,048 | ||||||||||||
Total Liabilities | 101,207,572 | 4,633,292 | 105,840,864 | |||||||||||
Commitments and contingencies | ||||||||||||||
EQUITY: | ||||||||||||||
Series A preferred stock | 1,458,050 | 1,458,050 | ||||||||||||
Series B convertible preferred stock | 18,738,515 | 18,738,515 | ||||||||||||
Common stock | 74,218 | 74,218 | ||||||||||||
Additional paid-in capital | 28,092,906 | 28,092,906 | ||||||||||||
Accumulated deficit | (16,274,152 | ) | (16,274,152 | ) | ||||||||||
Noncontrolling interest | 6,855,188 | 6,855,188 | ||||||||||||
Total Equity | 38,944,725 | 38,944,725 | ||||||||||||
Total Liabilities and Equity | $ | 140,152,297 | $ | 4,633,292 | $ | 144,785,589 | ||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June�30, 2014
(unaudited)
Wheeler REIT | Property | Pro Forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
(A) | (B) | (C) | |||||||||||||||||
REVENUES: | |||||||||||||||||||
Rental income | $ | 5,948,100 | $ | 279,115 | $ | (47,954 | ) | (1) | $ | 6,179,261 | |||||||||
Tenant reimbursements and other income | 1,349,746 | 56,642 | 1,406,388 | ||||||||||||||||
Total Revenues | 7,297,846 | 335,757 | (47,954 | ) | 7,585,649 | ||||||||||||||
OPERATING EXPENSES AND CERTAIN | |||||||||||||||||||
OPERATING EXPENSES OF THE ACQUIRED: | |||||||||||||||||||
Property operating | 1,832,219 | 87,877 | 1,920,096 | ||||||||||||||||
Depreciation and amortization | 3,521,546 | 149,278 | (2 | ) | 3,670,824 | ||||||||||||||
Provision for credit losses | (28,032 | ) | (28,032 | ) | |||||||||||||||
Corporate general & administrative | 2,217,867 | 4,895 | 2,222,762 | ||||||||||||||||
Total Operating Expenses and Certain Operating | |||||||||||||||||||
�����Expenses of the Acquired | 7,543,600 | 92,772 | 149,278 | 7,785,650 | |||||||||||||||
Operating Income (Loss) and Excess of Acquired | |||||||||||||||||||
�����Revenues Over Certain Operating Expenses | (245,754 | ) | 242,985 | (197,232 | ) | (200,001 | ) | ||||||||||||
Interest expense | (2,905,575 | ) | (104,525 | ) | (3 | ) | (3,010,100 | ) | |||||||||||
Net Income (Loss) and Excess of Acquired | |||||||||||||||||||
�����Revenues Over Certain Operating Expenses | $ | (3,151,329 | ) | $ | 242,985 | $ | (301,757 | ) | $ | (3,210,101 | ) | ||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December�31, 2013
(unaudited)
Wheeler REIT | Property | Pro Forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
(D) | (E) | (C) | |||||||||||||||||
REVENUES: | |||||||||||||||||||
Rental income | $ | 7,158,549 | $ | 548,681 | $ | (96,735 | ) | (1) | $ | 7,610,495 | |||||||||
Tenant reimbursements and other income | 1,548,943 | 122,174 | 1,671,117 | ||||||||||||||||
Total Revenues | 8,707,492 | 670,855 | (96,735 | ) | 9,281,612 | ||||||||||||||
OPERATING EXPENSES AND CERTAIN OPERATING | |||||||||||||||||||
EXPENSES OF THE ACQUIRED: | |||||||||||||||||||
Property operating | 1,713,957 | 155,100 | 1,869,057 | ||||||||||||||||
Depreciation and amortization | 3,466,957 | 314,409 | (2 | ) | 3,781,366 | ||||||||||||||
Provision for credit losses | 106,828 | 106,828 | |||||||||||||||||
Corporate general & administrative and other | 5,297,166 | 13,004 | 5,310,170 | ||||||||||||||||
Total Operating Expenses and Certain Operating | |||||||||||||||||||
�����Expenses of the Acquired | 10,584,908 | 168,104 | 314,409 | 11,067,421 | |||||||||||||||
Operating Income (Loss) and Excess of Acquired | |||||||||||||||||||
�����Revenues Over Certain Operating Expenses | (1,877,416 | ) | 502,751 | (411,144 | ) | (1,785,809 | ) | ||||||||||||
Interest expense | (2,497,810 | ) | (209,050 | ) | (3 | ) | (2,706,860 | ) | |||||||||||
Net Income (Loss) and Excess of Acquired | |||||||||||||||||||
�����Revenues Over Certain Operating Expenses | $ | (4,375,226 | ) | $ | 502,751 | $ | (620,194 | ) | $ | (4,492,669 | ) | ||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
Pro Forma Balance Sheet
A. | Reflects the unaudited condensed consolidated balance sheet of the Company as of June�30, 2014 included in the Companys Form 10-Q for the six months ended June�30, 2014. |
B. | Represents the estimated pro forma effect of the Companys $6.1 million acquisition of the Property, assuming it occurred on June�30, 2014. The Company has initially allocated the purchase price of the acquired Property to land, building and improvements, identifiable intangible assets and to the acquired liabilities based on their preliminary estimated fair values. Identifiable intangibles include amounts allocated to above/below market leases, the value of in-place leases and customer relationships value, if any. The Company estimated fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the Property. Factors considered by management in its analysis of estimating the as-if-vacant property value include an estimate of carrying costs during the expected lease-up periods considering market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and estimates of lost rentals at market rates during the expected lease-up periods, tenant demand and other economic conditions. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Intangibles related to above/below market leases and in-place lease value are recorded as acquired lease intangibles and are amortized as an adjustment to rental revenue or amortization expense, as appropriate, over the remaining terms of the underlying leases. |
Pro Forma Statement of Operations
A. | Reflects the consolidated statement of operations of the Company for the six months ended June�30, 2014. |
B. | Amounts reflect the historical operations of the Property for the six months ended June�30, 2014, unless otherwise noted. |
C. | Represents the estimated unaudited pro forma adjustments related to the acquisition for the period presented. |
(1) | Represents estimated amortization of above/below market leases which are being amortized on a straight-line basis over the remaining terms of the related leases. |
(2) | Represents the estimated depreciation and amortization of the buildings and related improvements, leasing commissions, in place leases and capitalized legal/marketing costs resulting from the preliminary estimated purchase price allocation in accordance with accounting principles generally accepted in the United States of America. The buildings and site improvements are being depreciated on a straight-line basis over their estimated useful lives up to 40 years. The tenant improvements, leasing commissions, in place leases and capitalized legal/marketing costs are being amortized on a straight-line basis over the remaining terms of the related leases. |
(3) | Represents interest expense on debt used to finance the acquisition, which accrues interest at a rate of 4.52% per annum and matures in October 2024. |
D. | Reflects the consolidated statement of operations of the Company for the year ended December�31, 2013. |
E. | Amounts reflect the historical operations of the Property for the year ended December�31, 2013, unless otherwise noted. |