Wheeler Real Estate Investment Trust, Inc. · NASDAQ:WHLR
Wheeler Real Estate Investment Trust — Proxy Contest (November 2019)
28 slides from Wheeler Real Estate Investment Trust's proxy contest presentation, Nov 20, 2019
Slide 1: A Compelling Case For Change
A Compelling Case For Change THE STILWELL GROUP Maximizing Shareholder Value
Slide 2: Overview
Overview A. WHLR’s Board has Failed Shareholders 1. Appalling Capital Allocation 2. Empty Promises (“WHLR 2.0”) • Inability to set and maintain a suitable dividend • Little progress reducing debt/selling assets • High overhead costs relative to peers 3. Broken Corporate Governance 4. Excessive Compe
Slide 3: WHLR's Board has Failed Shareholders
WHLR’s Board has Failed Shareholders Price Returns Since WHLR IPO1 WHLR Common Stock -96% Average REIT2 49% S&P 500 Index 125% We believe WHLR’s directors have mismanaged the Company at the expense of shareholders. WHLR’s directors have overseen substantial erosion of shareholder value in recent yea
Slide 4: WHLR Needs New Directors
WHLR Needs New Directors We have nominated for election 3 directors at the 2019 Annual Meeting. David Kelly WHLR Common Stock Price (96%1 decline from IPO) (Age: 54) Carl joins the McGowan $50 board (Age: 71) joins the board Andrew $40 John Jones McAuliffe (Age: 57) (Age: 65) joins the $30 board fir
Slide 5: Substantial and Prolonged Underperformance
Substantial and Prolonged Underperformance 150% Cumulative Total Returns Since WHLR IPO 100% 50% 0% -50% -100% 2013 2014 2015 2016 2017 2018 2019 Source: S&P Global Market Intelligence WHLR MSCI US REIT S&P 500 WHLR’s Common Stock has drastically underperformed since the 2012 IPO. Even with the bene
Slide 6: Appalling Capital Allocation
WHLR’s Board has Failed Shareholders 1. Appalling Capital Allocation THE STILWELL GROUP Maximizing Shareholder Value 6
Slide 7: Appalling Capital Allocation
Appalling Capital Allocation In January 2018, WHLR issued 1.4M shares of Series D, $25 Convertible Preferred Stock at an $8.50 discount to face value. $25.00 Instant loss to This resulted in an immediate destruction of more than $12M for common $8.50 the common shareholders. shareholders Cash procee
Slide 8: Series D Preferred Stock "Death Spiral" Provision
Series D Preferred Stock “Death Spiral” Provision Beginning in September 2023, Series D holders have the option to redeem their Preferred Stock at $25/share: If all of the Series D holders decide to redeem their 3,600,636 preferred shares, WHLR would have to pay $90,015,900 in cash or issue the Comm
Slide 9: WHLR's Plan (or Lack Thereof)
WHLR’s Plan (or Lack Thereof) Despite the Death Spiral’s potentially dire consequences, the Company does not appear to have a clear strategy in place as to how it plans on handling this Series D redemption, which is only four years away. From WHLR’s First Quarter 2019 Prepared Remarks:1 Q: How many
Slide 10: Empty Promises ("WHLR 2.0")
WHLR’s Board has Failed Shareholders 2. Empty Promises (“WHLR 2.0”) THE STILWELL GROUP Maximizing Shareholder Value 10
Slide 11: Empty Promises
Empty Promises Immediately after Jon Wheeler’s termination on January 29, 2018, WHLR began its supposed “turnaround.” Over a year and a half has passed, yet Management and the Board have not made meaningful progress. WHLR’s Goals – Version 2.0*(January 30, 2018 and On…) What Actually Happened Appoin
Slide 12: Failure to Reinstate the Common Dividend
Failure to Reinstate the Common Dividend Not only has the Board failed to reinstate the common dividend, but they have suspended THREE issues of preferred dividends for four consecutive quarters. Common stockholders have foregone $22 million1 in dividends and preferred stockholders have foregone $13
Slide 13: WHLR's Significant Amount of Debt
WHLR’s Significant Amount of Debt WHLR should sell its vanity project, JANAF, to generate much needed cash. Outstanding Obligations by Year of Maturity ($M) Total: $448M1 $150M $100M $50M $0M 2019 2020 2021 2022 2023 Series D Due after 2023 redemption Outstanding Obligations KeyBank Line of Credit 1
Slide 14: Sell JANAF — WHLR's Vanity Project
Sell JANAF — WHLR’s Vanity Project The sale of JANAF would give WHLR flexibility to begin addressing the Company’s balance sheet issues. Estimated Value of JANAF $85.7M1 Paydown of JANAF Debt ($62.4M)2 Net proceeds $23.2M WHLR can use the net proceeds to repurchase shares of Series D Preferred Stock
Slide 15: Little Progress Selling Non-Core Assets
Little Progress Selling Non-Core Assets From January 30, 2018 through September 30, 2019, WHLR listed thirteen properties for sale and sold only seven.1 The Company has raised only $8.7 million in net proceeds from those sales. Transaction Dates Property Contract Price Net Proceeds 06/19/2018 Laskin
Slide 16: WHLR's High Overhead Costs
WHLR’s High Overhead Costs Since January 30, 2018, WHLR has reduced headcount by only 1 full-time employee. LTM1 Revenues ($M) per Employee $15M $10M $5M Median: $2.8M $0M UBA NSA MNR DEA BRT GTY ADC WSR OLP AHH UMH CTRE FREVS SOHO WHLR # of Employees2 69 1,561 15 32 13 29 36 97 9 156 380 57 41 13 5
Slide 17: Broken Corporate Governance
WHLR’s Board has Failed Shareholders 3. Broken Corporate Governance THE STILWELL GROUP Maximizing Shareholder Value 17
Slide 18: Broken Corporate Governance
Broken Corporate Governance Wheeler’s poor corporate governance severely limits the ability of stockholders to seek effective change at the Company. 1. Stockholders cannot amend the Bylaws (according to ISS, the ability to do so “is a fundamental right, which is enshrined in most states’ corporation
Slide 19: The Sea Turtle Development (another disaster)
The Sea Turtle Development (another disaster) In less than 3 years, WHLR lost its entire investment in a $12M loan to the Sea Turtle Marketplace – where then- CEO Jon Wheeler is an investor. We believe these actions demonstrate the Board’s poor judgment and inability to protect stockholders’ best in
Slide 20: Excessive Compensation
WHLR’s Board has Failed Shareholders 4. Excessive Compensation THE STILWELL GROUP Maximizing Shareholder Value 20
Slide 21: Egregious Director Compensation
Egregious Director Compensation While WHLR’s common share price was plummeting, the Board of Directors deemed itself deserving of outsized raises. Between 2016 and 2018, the Board members approved a jump in compensation. These are the egregious increases:1 Director Increase in Compensation Stewart B
Slide 22: Stilwell's Plan for WHLR: Strategic Plan
Stilwell’s Plan for WHLR 1. Strategic Plan THE STILWELL GROUP Maximizing Shareholder Value 22
Slide 23: Stilwell Strategic Plan
Stilwell Strategic Plan WHLR currently has no focused plan to maximize shareholder value. Here is how we will address the pressing issues that common shareholders face: Shareholder WHLR’s Current Plan Stilwell’s Plan Issue • Refinance the KeyBank line1 • Sell WHLR’s largest shopping center, JANAF ($
Slide 24: Stilwell's Plan for WHLR: Replace Directors
Stilwell’s Plan for WHLR 2. Replace Directors THE STILWELL GROUP Maximizing Shareholder Value 24
Slide 25: Directors: Common Share Ownership
Directors: Common Share Ownership We believe the lack of a substantial ownership interest in shares of Wheeler by the Company’s five longest- tenured directors has affected the Board’s ability to properly evaluate and address the serious challenges facing the Company. The directors we seek to replac
Slide 26: Stilwell's Plan for WHLR: Nominees
Stilwell’s Plan for WHLR 3. Stilwell’s Nominees THE STILWELL GROUP Maximizing Shareholder Value 26
Slide 27: The Stilwell Group's Director Nominees
The Stilwell Group’s Director Nominees Joseph D. Stilwell, Started his first investment fund in 1993 and has been investing in financial companies for over 25 years 58 Has experience serving on the boards of directors of publicly-listed financial companies, two of which were Founder and principa
Slide 28: The Stilwell Group: Maximizing Shareholder Value
The Stilwell Group: Maximizing Shareholder Value The Stilwell Group was founded in 1993 and specializes in value investing in small- cap financials. Our interests are aligned with the common shareholders. As the largest WHLR common shareholder (9.1%1 of common shares outstanding), the Stilwell Group
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