Wheeler Real Estate Investment Trust, Inc. [WHLRL] Filings

10-Q 1 whlr-20240630.htm 10-Q whlr-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35713

WHEELER REAL ESTATE INVESTMENT TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)


Maryland						45-2681082
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

2529 Virginia Beach Blvd, Virginia Beach, Virginia						23452
(Address of Principal Executive Offices)						(Zip Code)

(757) 627-9088

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

WHLR

Nasdaq Capital Market

Series B Convertible Preferred Stock

WHLRP

Nasdaq Capital Market

Series D Cumulative Convertible Preferred Stock

WHLRD

Nasdaq Capital Market

7.00% Subordinated Convertible Notes due 2031

WHLRL

Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer,""accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☒

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of August 2, 2024, there were 566,814 common shares, $0.01 par value per share, outstanding.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30 , 2024 (unaudited) and December 31, 2023	6
	Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30 , 2024 and 2023	7
	Condensed Consolidated Statements of (Deficit) Equity (unaudited) for the six months ended June 30 , 2024 and 2023	8
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30 , 2024 and 2023	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	39

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CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Form 10-Q") of Wheeler Real Estate Investment Trust, Inc. (the "Trust," the "REIT," the "Company," "WHLR," "we," "our" or "us") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are subject to risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "should", "estimates", "projects", "anticipates", "believes", "expects", "intends", "future", and words of similar import, or the negative thereof. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. You are cautioned to not place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this Form 10-Q. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

Factors that could cause actual results, performance or achievements to differ materially from any forward-looking statements made in this Form 10-Q include, but are not limited to:

•the use of and demand for retail space;

•general and economic business conditions, including those affecting the ability of individuals to spend in retail shopping centers and/or the rate and other terms on which we are able to lease our properties;

•the loss or bankruptcy of the Company's tenants;

•the state of the U.S. economy generally, or specifically in the Mid-Atlantic, Southeast and Northeast where our properties are geographically concentrated;

•consumer spending and confidence trends;

•availability, terms and deployment of capital;

•substantial dilution of our common stock, par value $0.01 ("Common Stock") and steep decline in its market value resulting from the exercise by the holders of our Series D Cumulative Convertible Preferred Stock (the "Series D Preferred Stock") of their redemption rights and downward adjustment of the conversion price on our outstanding 7.00% Subordinated Convertible Notes due 2031 (the "Convertible Notes"), each of which has already occurred and is anticipated to continue;

•given the volatility in the trading of our Common Stock, whether we have registered a sufficient number of shares of our Common Stock to cover all Series D Preferred Stock redemptions tendered to us by the holders thereof;

•the degree and nature of our competition;

•changes in governmental regulations, accounting rules, tax rates and similar matters;

•adverse economic or real estate developments in our markets of the Mid-Atlantic, Southeast and Northeast;

•the ability and willingness of the Company’s tenants and other third parties to satisfy their obligations under their respective contractual arrangements with the Company;

•the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration;

•the Company’s ability to re-lease its properties on the same or better terms in the event of non-renewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company may incur in connection with the replacement of an existing tenant;

•litigation risks generally;

•the risk that shareholder litigation in connection with the Cedar Acquisition (as defined herein) and as recently filed by the Company's former CEO, Daniel Khoshaba may result in significant costs of defense, indemnification and liability, and divert management's attention away from running the Company;

•financing risks, such as the Company’s inability to obtain new financing or refinancing on favorable terms as the result of market volatility or instability and increases in the Company’s borrowing costs as a result of changes in interest rates and other factors;

•the impact of the Company’s leverage on operating performance;

•our ability to successfully execute strategic or necessary asset acquisitions and divestitures;

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•risks related to the market for retail space generally, including reductions in consumer spending, variability in retailer demand for leased space, adverse impact of e-commerce, ongoing consolidation in the retail sector and changes in economic conditions and consumer confidence;

•risks endemic to real estate and the real estate industry generally;

•the adverse effect any future pandemic, endemic or outbreak of infectious diseases, and mitigation efforts, including government-imposed lockdowns, to control their spread;

•risks to our information systems - or those of our tenants or vendors - from service interruption, misappropriation of data, breaches of security or information technology, or other cyber-related attacks;

•competitive risks;

•risks related to the geographic concentration of the Company’s properties in the Mid-Atlantic, Southeast and Northeast;

•the Company’s ability to regain compliance with the listing standards of the Nasdaq Capital Market ("Nasdaq") and maintain its listing thereon;

•the effects on the trading market of our Common Stock of the one-for-10 reverse stock split effected on August 17, 2023 (the "August 2023 Reverse Stock Split"), the one-for-24 reverse stock split effected on May 16, 2024 (the "May 2024 Reverse Stock Split"), the one-for-five reverse stock split effected on June 27, 2024 (the "June 2024 Reverse Stock Split", and collectively with the May 2024 Reverse Stock Split, the “2024 Reverse Stock Splits”) and any reverse stock splits the Company may effect in the future;

•damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change;

•the risk that an uninsured loss on the Company’s properties or a loss that exceeds the limits of the Company’s insurance policies could subject the Company to lost capital or revenue on those properties;

•the risk that continued increases in the cost of necessary insurance could negatively impact the Company's profitability;

•the Company’s ability and willingness to maintain its qualification as a real estate investment trust ("REIT") in light of economic, market, legal, tax and other considerations;

•the ability of our operating partnership, Wheeler REIT, L.P., and each of our other partnerships and limited liability companies to be classified as partnerships or disregarded entities for federal income tax purposes;

•the impact of e-commerce on our tenants’ business; and

•the inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws.

Forward-looking statements in this Form 10-Q should be read in light of these factors. Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. All of the above factors are difficult to predict, contain uncertainties that may materially affect the Company’s actual results and may be beyond the Company’s control. New factors emerge from time to time, and it is not possible for the Company’s management to predict all such factors or to assess the effects of each factor on the Company’s business. Accordingly, there can be no assurance that the Company’s current expectations will be realized.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except par value and share data)


	June 30, 2024		December 31, 2023
	(unaudited)
ASSETS:
Real estate:
Land and land improvements	$	138,259	$	149,908
Buildings and improvements	507,016		510,812
	645,275		660,720
Less accumulated depreciation	(103,342)		(95,598)
Real estate, net	541,933		565,122

Cash and cash equivalents	19,609		18,404
Restricted cash	22,155		21,403
Receivables, net	14,471		13,126
Investment securities - related party	11,373		10,685
Assets held for sale	24,829		—
Above market lease intangibles, net	1,747		2,114
Operating lease right-of-use assets	9,344		9,450
Deferred costs and other assets, net	24,854		28,028
Total Assets	$	670,315	$	668,332

LIABILITIES:
Loans payable, net	$	481,239	$	477,574
Liabilities associated with assets held for sale	163		—
Below market lease intangibles, net	13,465		17,814
Derivative liabilities	14,128		3,653
Operating lease liabilities	10,230		10,329
Series D Preferred Stock redemptions	—		369
Accounts payable, accrued expenses and other liabilities	21,114		17,065
Total Liabilities	540,339		526,804
Commitments and contingencies (Note 8)
Series D Cumulative Convertible Preferred Stock	100,640		96,705
EQUITY:
Series A Preferred Stock (no par value, 4,500 shares authorized, 562 shares issued and outstanding; $0.6 million in aggregate liquidation value)	453		453
Series B Convertible Preferred Stock (no par value, 5,000,000 authorized, 3,379,142 shares issued and outstanding; $84.5 million aggregate liquidation preference)	45,042		44,998
Common Stock ($0.01 par value, 200,000,000 shares authorized, 566,814 and 448,081 shares issued and outstanding, respectively)	5		4
Additional paid-in capital	261,505		258,106
Accumulated deficit	(343,391)		(324,854)
Total Shareholders’ Deficit	(36,386)		(21,293)
Noncontrolling interests	65,722		66,116
Total Equity	29,336		44,823
Total Liabilities and Equity	$	670,315	$	668,332

See accompanying notes to condensed consolidated financial statements.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
REVENUE:
Rental revenues	$	25,894	$	24,583	$	51,589	$	50,083
Other revenues	423		257		600		823
Total Revenue	26,317		24,840		52,189		50,906
OPERATING EXPENSES:
Property operations	8,664		8,342		17,714		17,297
Depreciation and amortization	6,373		7,301		12,971		14,767

Corporate general & administrative	2,641		2,818		5,387		5,889
Total Operating Expenses	17,678		18,461		36,072		37,953
Gain on disposal of properties	2,883		—		2,883		—
Operating Income	11,522		6,379		19,000		12,953
Interest income	60		126		123		173
Gain on investment securities, net	294		31		188		31
Interest expense	(8,778)		(10,179)		(16,183)		(16,656)
Net changes in fair value of derivative liabilities	(4,968)		3,030		(10,475)		4,882
Gain on preferred stock redemptions	—		—		213		—
Other expense	(487)		(635)		(1,229)		(3,040)
Net Loss Before Income Taxes	(2,357)		(1,248)		(8,363)		(1,657)
Income tax expense	(1)		(46)		(1)		(46)
Net Loss	(2,358)		(1,294)		(8,364)		(1,703)
Less: Net income attributable to noncontrolling interests	2,698		2,676		5,399		5,368
Net Loss Attributable to Wheeler REIT	(5,056)		(3,970)		(13,763)		(7,071)
Preferred stock dividends - undeclared	(2,022)		(2,261)		(4,064)		(4,525)
Deemed distribution related to preferred stock redemption value	(710)		—		(710)		—
Net Loss Attributable to Wheeler REIT Common Shareholders	$	(7,788)	$	(6,231)	$	(18,537)	$	(11,596)

Loss per share:
Basic and Diluted	$	(13.74)	$	(762.93)	$	(33.97)	$	(1,420.26)
Weighted-average number of shares:
Basic and Diluted	566,854		8,167		545,728		8,164

See accompanying notes to condensed consolidated financial statements.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of (Deficit) Equity

(Unaudited, in thousands, except share data)


	Series A			Series B										Total Stockholders’ (Deficit) Equity
	Preferred Stock			Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit				Noncontrolling Interest
	Shares	Value		Shares	Value		Shares	Value								Operating Partnership		Consolidated Subsidiary		Total		Total Equity
Balance, December 31, 2023	562	$	453	3,379,142	$	44,998	448,081	$	4	$	258,106	$	(324,854)	$	(21,293)	$	1,271	$	64,845	$	66,116	$	44,823
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22

Adjustments for noncontrolling interest in operating partnership	—	—		—	—		—	—		6		—		6		(6)		—		(6)		—
Redemption of Series D Preferred Stock to Common Stock	—	—		—	—		118,783	1		2,982		—		2,983		—		—		—		2,983


Dividends and distributions	—	—		—	—		—	—		—		(2,042)		(2,042)		—		(2,688)		(2,688)		(4,730)
Net (Loss) Income	—	—		—	—		—	—		—		(8,707)		(8,707)		13		2,688		2,701		(6,006)
Balance, March 31, 2024	562	453		3,379,142	45,020		566,864	5		261,094		(335,603)		(29,031)		1,278		64,845		66,123		37,092
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Adjusted for noncontrolling interest in operating partnership	—	—		—	—		—	—		411		—		411		(411)		—		(411)		—

Adjustments of Series D Preferred Stock to redemption value	—	—		—	—		—	—		—		(710)		(710)		—		—		—		(710)
Redemption of fractional units as a result of reverse stock split	—	—		—	—		(50)	—		—		—		—		—		—		—		—
Dividends and distributions	—	—		—	—		—	—		—		(2,022)		(2,022)		—		(2,688)		(2,688)		(4,710)
Net (Loss) Income	—	—		—	—		—	—		—		(5,056)		(5,056)		10		2,688		2,698		(2,358)
Balance, June 30, 2024	562	$	453	3,379,142	$	45,042	566,814	$	5	$	261,505	$	(343,391)	$	(36,386)	$	877	$	64,845	$	65,722	$	29,336

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of (Deficit) Equity

(Unaudited, in thousands, except share data)

Continued


	Series A			Series B										Total Stockholders’ (Deficit) Equity
	Preferred Stock			Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit				Noncontrolling Interest
	Shares	Value		Shares	Value		Shares	Value								Operating Partnership		Consolidated Subsidiary		Total		Total Equity
Balance, December 31, 2022	562	$	453	3,379,142	$	44,911	8,160	$	—	$	235,091	$	(295,617)	$	(15,162)	$	1,351	$	64,845	$	66,196	$	51,034
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Conversion of Series D Preferred Stock to Common Stock	—	—		—	—		5	—		140		—		140		—		—		—		140
Adjustment for noncontrolling interest in operating partnership	—	—		—	—		—	—		(13)		—		(13)		13		—		13		—
Dividends and distributions	—	—		—	—		—	—		—		(2,264)		(2,264)		—		(2,688)		(2,688)		(4,952)
Net (Loss) Income	—	—		—	—		—	—		—		(3,101)		(3,101)		4		2,688		2,692		(409)
Balance, March 31 2023	562	453		3,379,142	44,933		8,165	—		235,218		(300,982)		(20,378)		1,368		64,845		66,213		45,835
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Dividends and distributions	—	—		—	—		—	—		—		(2,261)		(2,261)		—		(2,688)		(2,688)		(4,949)
Net (Loss) Income	—	—		—	—		—	—		—		(3,970)		(3,970)		(12)		2,688		2,676		(1,294)
Balance, June 30, 2023	562	$	453	3,379,142	$	44,955	8,165	$	—	$	235,218	$	(307,213)	$	(26,587)	$	1,356	$	64,845	$	66,201	$	39,614

See accompanying notes to condensed consolidated financial statements.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	For the Six Months Ended June 30,
	2024		2023
OPERATING ACTIVITIES:
Net Loss	$	(8,364)	$	(1,703)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
Depreciation and amortization	12,971		14,767
Deferred financing cost amortization	1,354		1,721
Changes in fair value of derivative liabilities	10,475		(4,882)
Above (below) market lease amortization, net	(1,773)		(2,633)
Paid-in-kind interest	2,031		2,006
Loss on repurchase of debt securities	700		594
Gain on preferred stock redemptions	(213)		—
Unrealized gain on investment securities, net	(188)		(31)
Straight-line expense (income)	(34)		15
Gain on disposal of properties	(2,883)		—
Credit adjustments on operating lease receivables	(63)		182

Net changes in assets and liabilities:
Receivables, net	(1,718)		2,315
Deferred costs and other assets, net	(1,674)		(1,358)
Accounts payable, accrued expenses and other liabilities	2,491		514
Net cash provided by operating activities	13,112		11,507
INVESTING ACTIVITIES:
Investment property acquisitions	—		(191)
Expenditures for real estate improvements	(11,897)		(6,845)
Purchases of investment securities	(500)		(3,000)
Cash received from disposal of properties	5,662		—
Net cash used in investing activities	(6,735)		(10,036)
FINANCING ACTIVITIES:
Payments for deferred financing costs	(1,597)		(4,116)
Dividends and distributions paid on noncontrolling interest	(5,376)		(5,376)
Loan proceeds	30,135		114,170
Loan principal payments	(25,932)		(107,922)

Repurchase of debt securities	(1,282)		(1,189)
Loan prepayment penalty	(368)		(1,758)
Net cash used in financing activities	(4,420)		(6,191)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	1,957		(4,720)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	39,807		55,865
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	41,764	$	51,145

Supplemental Disclosure:
The following table provides a reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	19,609	$	28,735
Restricted cash	22,155		22,410
Cash, cash equivalents, and restricted cash	$	41,764	$	51,145

See accompanying notes to condensed consolidated financial statements.

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Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Business and Organization

Wheeler Real Estate Investment Trust, Inc. is a Maryland corporation formed on June 23, 2011. The Trust serves as the general partner of Wheeler REIT, L.P. (the "Operating Partnership"), which was formed as a Virginia limited partnership on April 5, 2012. At June 30, 2024, the Company owned 99.41% of the Operating Partnership. As of June 30, 2024, the Trust owned and operated seventy-four retail shopping centers and three undeveloped properties in South Carolina, Georgia, Virginia, Pennsylvania, North Carolina, Massachusetts, New Jersey, Florida, Connecticut, Kentucky, Tennessee, Alabama, Maryland and West Virginia. These centers and undeveloped properties include the properties acquired through the Cedar Acquisition (defined below). Accordingly, the use of the word "Company", "we," "our" or "us" refers to the Trust and consolidated subsidiaries, except where the context otherwise requires.

The Trust through the Operating Partnership owns Wheeler Interests ("WI") and Wheeler Real Estate, LLC ("WRE") (WRE and, together with WI, the "Operating Companies"). The Operating Companies are taxable REIT subsidiaries ("TRS") to accommodate serving the non-REIT properties since applicable REIT regulations consider the income derived from these services to be "bad" income subject to taxation. The regulations allow for costs incurred by the Company commensurate with the services performed for the non-REIT properties to be allocated to a TRS.

Acquisition of Cedar Realty Trust

On August 22, 2022, the Company completed a merger transaction (the "Cedar Acquisition") with Cedar Realty Trust, Inc. ("Cedar"). As a result of the merger, the Company acquired all of the outstanding shares of Cedar’s common stock, which ceased to be publicly traded on the New York Stock Exchange ("NYSE"). Through this acquisition, the Company acquired an additional 19 retail shopping centers in the Northeast. Cedar’s outstanding 7.25% Series B Preferred Stock and 6.50% Series C Preferred Stock remain outstanding and continue to trade on the NYSE. As a result of the Cedar Acquisition, Cedar became a subsidiary of the REIT.

2. Summary of Significant Accounting Policies

Principles of Consolidation/Basis of Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring accruals) have been included. All material balances and transactions between the consolidated entities of the Company have been eliminated. All per share amounts, common units and shares outstanding, warrants, and conversion features of the Convertible Notes for all periods presented reflect our August 2023 Reverse Stock Split, May 2024 Reverse Stock Split and June 2024 Reverse Stock Split, which took effect on August 17, 2023, May 16, 2024 and June 27, 2024, respectively. The financial statements are prepared on the accrual basis in accordance with GAAP, which requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. Actual results could differ from these estimates. The unaudited condensed consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K").

The unaudited condensed consolidated financial statements included in this Form 10-Q include Cedar starting from the date of the Cedar Acquisition. We have determined that this acquisition is not a variable interest entity, as defined under the consolidation topic of the Financial Accounting Standards Board (the "FASB"), Accounting Standards Codification ("ASC"), and we evaluated such entity under the voting model and concluded we should consolidate the entity. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive participating rights.

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Supplemental Condensed Consolidated Statements of Cash Flows Information


	For the Six Months Ended June 30,
	2024		2023
Non-Cash Transactions:


Conversion of Series D Preferred Stock to Common Stock	$	—	$	140
Accretion of Preferred Stock discounts	$	44	$	292

Redemption of Series D Preferred Stock to Common Stock	$	2,982	$	—
Buildings and improvements included in accounts payable, accrued expenses and other liabilities	$	4,638	$	101
Other Cash Transactions:

Cash paid for amounts included in the measurement of operating lease liabilities	$	407	$	556
Cash paid for interest	$	12,912	$	12,700

Other Expense

Other expense represents expenses which are non-operating in nature. Other expenses were $0.5 million and $1.2 million for the three and six months ended June 30, 2024, respectively, which primarily consisted of capital structure costs, including repurchase of Convertible Notes and legal and other expenses incurred for the 2024 Reverse Stock Splits and the registration of our Common Stock to issue in settlement of Series D redemptions. Other expenses were $0.6 million and $3.0 million for the three and six months ended June 30, 2023, respectively, which primarily consisted of capital structure costs including repurchase of Convertible Notes and an exchange offer for the Company's outstanding shares of Series D Preferred (the "Exchange Offer").

Recently Issued and Adopted Accounting Pronouncements

Accounting standards that have been recently issued or proposed by the FASB or other standard-setting bodies are not currently applicable to the Company or are not expected to have a significant impact on the Company’s financial position, results of operations and cash flows.

Reclassifications

The Company has reclassified certain prior period amounts in the accompanying condensed consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net loss.

3. Real Estate

A significant portion of the Company’s land, buildings and improvements serve as collateral for its secured term loans and revolving credit facility. Accordingly, restrictions exist as to the encumbered property’s transferability, use and other common rights typically associated with property ownership.

The Company’s depreciation expense on investment properties for the three months ended June 30, 2024 and 2023 totaled $4.6 million and $4.5 million, respectively. The Company’s depreciation expense on investment properties for the six months ended June 30, 2024 and 2023 totaled $9.3 million and $9.0 million, respectively.

Assets Held for Sale and Dispositions

At June 30, 2024, assets held for sale include South Philadelphia, as the Company has committed to a plan to sell components of the property. There were no assets held for sale as of December 31, 2023.

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Assets held for sale and associated liabilities consisted of the following (in thousands, unaudited):


	June 30, 2024		December 31, 2023
Real estate, net	$	23,784	$	—
Receivables, net - unbilled straight-line rent	431		—
Deferred costs and other assets, net	327		—
Deferred financing costs, net	287
Total assets held for sale	$	24,829	$	—


	June 30, 2024		December 31, 2023



Below market lease intangibles, net	$	163	$	—
Total liabilities associated with assets held for sale	$	163	$	—

The following properties were sold during the three and six months ended June 30, 2024 (in thousands, unaudited):

Disposal Date

Property

Contract Price

Gain (Loss)

Net Proceeds

June 18, 2024

Harbor Point Land Parcel

n/a

(480)

n/a

June 26, 2024

Oakland Commons

6,000

3,363

5,662

There were no property sales during the three and six months ended June 30, 2023.

Harbor Point Land Parcel Disposition

On June 18, 2024, the Company entered into a settlement agreement (the "Harbor Point Settlement Agreement") with the City of Grove, Oklahoma and the Grove Economic Development Authority of Grove, Oklahoma (collectively, the "City of Grove"), which, among other things, provided for the transfer of the Harbor Point Land Parcel and a one-time payment of $160 thousand to the City of Grove in exchange for a release of the Company from all increment taxes and other obligations under the Economic Development Agreement the Company had entered into with the City of Grove and the dismissal of the litigation commenced by the City of Grove against the Company related thereto. See Note 8 for additional details.

4. Investment Securities - Related Party

In 2023, the Company subscribed for an investment in the amount of $10.0 million for limited partnership interests in Stilwell Activist Investments, L.P., a Delaware limited partnership ("SAI"). On June 1, 2024, the Company subscribed for an additional investment in the amount of $0.5 million for limited partnership interests in SAI. The investment objective of SAI is to seek long-term capital appreciation through investing primarily in publicly-traded undervalued financial institutions or businesses with a strong financial component, or the securities of any of them, and pursuing an activist shareholder agenda with respect to those institutions.

Stilwell Value LLC ("Value") is the general partner of SAI. Joseph Stilwell, a member of the Company's Board of Directors, is the managing member of Value and a limited partner in funds advised by Value. Additionally, E.J. Borrack, a member of the Board of Directors, serves as the General Counsel to Value and its affiliated entities, including SAI and related funds, and is a limited partner in one of the funds advised by Value. Megan Parisi, a member of the Company’s Board of Directors, serves as the Director of Communications to Value and its affiliated entities, including SAI and related funds, is a non-managing member of Value and is a limited partner in one of the funds advised by Value.

The Company’s subscriptions were approved by the disinterested directors of the Company, and, after the formation of the Related Person Transactions Committee, by that Committee.

A portion of SAI's underlying investments are in the Company's own equity and debt securities.

SAI records investment transactions based on trade date. Realized gains and losses from investment transactions are determined on a specific identification basis. Dividend income, net of withholding taxes, and dividend expense are recognized

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on the ex-dividend date, and interest income and expense are recognized on an accrual basis. Discounts and premiums to the face amount of debt securities are accreted and amortized using the effective interest rate method over the lives of the respective debt securities.

The Company may not withdraw its capital from SAI for a period of one year measured from the date of the Company's initial investment, June 1, 2023, subject to certain exceptions.

In consideration for management, administrative and operational services, limited partners of SAI pay a management fee to an affiliate of Value each calendar quarter, in advance, equal to 0.25% (an annualized rate of 1%) of each limited partner’s capital account balance on the first day of such calendar quarter. In addition, as of the last day of each specified performance period, an incentive allocation of 20% of the amount by which the "positive performance change," if any, that has been credited to the capital account of a limited partner during such period exceeds any positive balance in such limited partner’s "carryforward account," is debited from the limited partner’s capital account and is simultaneously credited to the capital account of Value.

The Company’s SAI investment is accounted for under the equity method and measured at net asset value as a practical expedient and has not been classified within the fair value hierarchy. All gains and losses, realized and unrealized, and fees are recorded through "gains (losses) on investment securities, net" in the condensed consolidated statements of operations. As of June 30, 2024, the fair value of the Company’s SAI investment was $11.4 million. For the three and six months ended June 30, 2024, the gain on investment securities, net was $294 thousand and $188 thousand, respectively. For the three and six months ended June 30, 2023, gain on investment securities, net was $31 thousand and $31 thousand, respectively.

5. Deferred Costs and Other Assets, Net

Deferred costs and other assets, net of accumulated amortization are as follows (in thousands, unaudited):


	June 30, 2024		December 31, 2023
Leases in place, net	$	13,134	$	16,663
Lease origination costs, net	6,897		7,461
Ground lease sandwich interest, net	982		1,119
Tenant relationships, net	205		280
Legal and marketing costs, net	225		278
Prepaid expenses	3,336		2,224
Other	75		3
Total	$	24,854	$	28,028

As of June 30, 2024 and December 31, 2023, the Company’s intangible accumulated amortization totaled $69.3 million and $69.9 million, respectively. During the three months ended June 30, 2024 and 2023, the Company’s intangible amortization expense totaled $1.7 million and $2.8 million, respectively. During the six months ended June 30, 2024 and 2023, the Company’s intangible amortization expense totaled $3.7 million and $5.7 million, respectively.

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(Unaudited)

6. Loans Payable

The Company’s loans payable consist of the following (in thousands, except monthly payment, unaudited):


Property/Description	Monthly Payment		Interest Rate	Maturity	June 30, 2024		December 31, 2023
Cypress Shopping Center	$	34,360	4.70%	July 2024	$	—	$	5,769
Cedar Revolving Credit Agreement	Interest only		8.18% (3)	February 2025	—		—
Conyers Crossing	Interest only		4.67%	October 2025	—		5,960
Winslow Plaza	$	24,295	4.82%	December 2025	4,291		4,331
Tuckernuck	$	32,202	5.00%	March 2026	4,696		4,771
Chesapeake Square	$	23,857	4.70%	August 2026	—		4,014
Sangaree/Tri-County	$	32,329	4.78%	December 2026	—		5,990
Timpany Plaza	Interest only		7.27%	September 2028	10,060		9,060
Village of Martinsville	$	89,664	4.28%	July 2029	14,537		14,755
Laburnum Square	Interest only		4.28%	September 2029	7,665		7,665
Rivergate (1)	$	100,222	4.25%	September 2031	17,326		17,557
Convertible Notes	Interest only		7.00%	December 2031	30,948		31,530
Term loan, 22 properties	Interest only		4.25%	July 2032	75,000		75,000
JANAF (2)	Interest only		5.31%	July 2032	60,000		60,000
Cedar term loan, 10 properties	Interest only		5.25%	November 2032	110,000		110,000
Patuxent Crossing/Coliseum Marketplace	Interest only		6.35%	January 2033	25,000		25,000
Term loan, 12 properties	Interest only		6.19%	June 2033	61,100		61,100
Term loan, 8 properties	Interest only		6.24%	June 2033	53,070		53,070
Term loan, 5 properties	Interest only		6.80%	July 2034	25,500		—
Total Principal Balance					499,193		495,572
Unamortized deferred financing cost					(17,954)		(17,998)


Total Loans Payable, net					$	481,239	$	477,574

(1) In October 2026, the interest rate under this loan resets based on the 5-year U.S. Treasury Rate, plus 2.70%, with a floor of 4.25%.

(2) Collateralized by JANAF properties.

(3) Daily SOFR, plus applicable margins of 0.10%, plus 2.75%.

Cedar Revolving Credit Agreement

On February 29, 2024, the Company entered into a revolving credit agreement with KeyBank National Association to draw up to $9.5 million (the "Cedar Revolving Credit Agreement"). The interest rate under the Cedar Revolving Credit Agreement is the daily SOFR, plus applicable margins of 0.10% plus 2.75%. Interest payments are due monthly, and any outstanding principal is due at maturity on February 28, 2025. The Cedar Revolving Credit Agreement may be extended, at the Company's option, for up to two additional three-month periods, subject to customary conditions. The Cedar Revolving Credit Agreement is collateralized by 6 properties, consisting of Carll's Corner, Fieldstone Marketplace, Oakland Commons, Kings Plaza, Oregon Avenue and South Philadelphia, and proceeds will be used for capital expenditures and tenant improvements for such properties. Upon the disposition of Oakland Commons, the property was released from collateral and the outstanding borrowings were repaid.

Timpany Plaza Loan Agreement

On March 28, 2024, the Company received $1.0 million of $2.5 million in deferred loan proceeds under the Timpany Plaza Loan Agreement following the Company's satisfaction of certain lease-related contingencies. The Company anticipates receiving the $1.5 million balance of the deferred loan proceeds upon the satisfaction of certain other lease-related contingencies.

Term Loan, Five Properties

On June 28, 2024, the Company entered into a term loan agreement (the "Term Loan Agreement, 5 Properties") with Guggenheim Real Estate, LLC, for $25.5 million at a fixed rate of 6.80% with interest-only payments due monthly. Commencing on August 10, 2029, until the maturity date of July 10, 2034, monthly principal and interest payments will be made based on a 30-year amortization schedule calculated based on the principal amount outstanding at that time. The Term Loan Agreement, 5 Properties' proceeds were used to refinance four loans, including paying $0.4 million in defeasance. The Term Loan Agreement, 5 Poperties is collateralized by Cypress Shopping Center, Conyers Crossing, Chesapeake Square, Sangaree Plaza and Tri-County Plaza.

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(Unaudited)

Scheduled Principal Payments

The Company’s scheduled principal repayments on indebtedness as of June 30, 2024 are as follows (in thousands, unaudited):


For the remaining six months ending December 31, 2024	$	672
December 31, 2025	6,069
December 31, 2026	6,575
December 31, 2027	2,958
December 31, 2028	14,194
December 31, 2029	24,434
Thereafter	444,291
Total principal repayments and debt maturities	$	499,193

Convertible Notes

On January 17, 2024, the Company paid down $0.6 million of the Convertible Notes through an open market purchase of 23,280 units at a total purchase price of $1.3 million. As a result of that transaction, the Company recognized a $0.7 million loss, which represents the fair value of the purchase price over the amount of principal reduction. The loss is included in "other expense" in the condensed consolidated statements of operations.

As of June 30, 2024, the Conversion Price for the Convertible Notes was approximately $14.30 per share of the Company’s Common Stock (approximately 1.75 shares of Common Stock for each $25.00 of principal amount of the Convertible Notes being converted).

Interest expense on the Convertible Notes consisted of the following (in thousands, except for shares ):


For the Six Months Ended June 30,	Series B Preferred number of shares (1)	Series D Preferred Stock number of shares (1)	Convertible Note interest at 7% coupon		Fair value adjustment		Interest expense
2024	—	109,676	$	1,083	$	948	$	2,031
2023	—	160,455	$	1,155	$	851	$	2,006
(1) Shares issued as interest payment on Convertible Notes.

Fair Value Measurements

The fair value of the Company’s fixed rate secured term loans was estimated using available market information and discounted cash flow analyses based on borrowing rates the Company believes it could obtain with similar terms and maturities. As of June 30, 2024 and December 31, 2023, the fair value of the Company’s fixed rate secured term loans, which were determined to be Level 3 within the valuation hierarchy, was $456.6 million and $420.8 million, respectively, and the carrying value of such loans, was $455.0 million and $451.2 million, respectively.

The fair value of the Convertible Notes was estimated using available market information. As of June 30, 2024, and December 31, 2023, the fair value of the Convertible Notes, which were determined to be Level 1 within the valuation hierarchy, was $78.6 million and $75.7 million, respectively, and the carrying value, was $26.2 million and $26.4 million, respectively.

7. Derivative Liabilities

Fair Value of Warrants

Table of Contents Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

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(Unaudited)

The Company utilized the Black-Scholes valuation method to calculate the fair value of the warrants noted below. Significant observable and unobservable inputs include stock price, conversion price, risk-free rate, term, likelihood of an event of contractual conversion and expected volatility. The Black-Scholes valuation method simulation is a Level 3 valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. The warrants noted below contain terms and features that give rise to derivative liability classification.

As of the close of business on March 12, 2024 (the third anniversary of the issuance of that certain Common Stock Purchase Warrant, dated March 12, 2021, to the holders thereof (the "Warrant")), the exercise price of the Warrant was reset to an amount equal to the product of the Common Stock volume weighted average price as provided under the Warrant, multiplied by a factor of 1.25 for Tranche A, 1.50 for Tranche B and 2.50 for Tranche C: approximately $27.81, $33.37, and $55.62, respectively.

Warrants to purchase shares of Common Stock outstanding at June 30, 2024 and December 31, 2023 are as follows:

Warrant Name

Warrants

Exercise Price

Expiration Date

Wilmington Warrant Tranche A

425

$27.81

3/12/2026

Wilmington Warrant Tranche B

354

$33.37

3/12/2026

Wilmington Warrant Tranche C

106

$55.62

3/12/2026

In measuring the warrant liability, the Company used the following inputs:


	June 30, 2024	December 31, 2023
Common Stock price	$15.53	$36.60
Weighted average contractual term to maturity (years)	1.7 years	2.2 years
Range of expected market volatility %	165.81%	137.71%
Range of risk free interest rate	4.90%	4.23%

Fair Value of Conversion Features Related to Convertible Notes

The Company identified certain embedded derivatives related to the conversion features of the Convertible Notes. In accordance with ASC 815-40, Derivatives and Hedging Activities, the embedded conversion options contained within the Convertible Notes were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through each reporting date. The Company utilized a binomial lattice model to calculate the fair value of the embedded derivatives. Significant observable and unobservable inputs include conversion price, stock price, dividend rate, expected volatility, risk-free rate, optional conversion price and term. The binomial lattice model is a Level 3 valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.

In measuring the embedded derivative liability, the Company used the following inputs:


	June 30, 2024	December 31, 2023
Conversion price	$8.10 (1)	$19.20 (1)
Common Stock price	$15.53	$36.60
Contractual term to maturity (years)	7.5 years	8.0 years
Expected market volatility %	110.00%	100.00%
Risk-free interest rate	4.30%	3.90%
Traded WHLRL price, % of par	254.00%	240.00%
(1) Represents the volume weighted average of the Company's closing Common Stock price for the 10 trading days preceding the valuation, less a discount of 45%.

Table of Contents Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

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(Unaudited)

The following table sets forth a summary of the changes in fair value of the Company's derivative liabilities, which include both the warrant and embedded derivative liabilities (in thousands, unaudited):


	Six Months Ended June 30, 2024		Year Ended December 31, 2023
Balance at the beginning of period	$	3,653	$	7,111
Changes in fair value - Warrants	9		(495)
Changes in fair value - Convertible Notes	10,466		(2,963)
Balance at end of period	$	14,128	$	3,653

8. Commitments and Contingencies

Lease Commitments

The Company is the lessee under several ground leases and for its corporate headquarters; all are accounted for as operating leases. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 5 to 50 years. As of June 30, 2024 and 2023, the weighted average remaining lease term of our leases was 36 and 34 years, respectively. Rent expense under the operating lease agreements was $0.2 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively. Rent expense under the operating lease agreements was $0.4 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively.

Litigation

The Company is involved in various legal proceedings arising in the ordinary course of its business, including, but not limited to commercial disputes. The Company believes that such litigation, claims and administrative proceedings will not have a material adverse impact on its financial position or its results of operations. The Company records a liability when it considers the loss probable and the amount can be reasonably estimated. In addition, the below legal proceedings are in process:

On April 8, 2022, several purported holders of Cedar’s outstanding preferred stock filed a putative class action complaint against Cedar, Cedar's of Directors prior to the Merger, and WHLR in Montgomery County Circuit Court, Maryland entitled Sydney, et al. v. Cedar Realty Trust, Inc., et al., (Case No. C-15-CV-22-001527).

On May 6, 2022, the Plaintiffs in Sydney filed a motion for a preliminary injunction. Also on May, 6, 2022, a purported holder of Cedar’s outstanding preferred stock filed a separate putative class action complaint against Cedar and Cedar's Board of Directors prior to the Cedar Acquisition in the United States District Court for the District of Maryland, entitled Kim v. Cedar Realty Trust, Inc., et al., Civil Action No. 22-cv-01103. On May 11, 2022, Cedar, former Board of Directors of Cedar and the Company removed the Sydney action to the United States District Court for the District of Maryland, Case No. 8:22-cv-01142-GLR. On May 16, 2022, the court ordered that a hearing on the Sydney Plaintiffs’ motion for preliminary injunction be held on June 22, 2022. On June 2, 2022, the Plaintiffs in Kim also filed a motion for a preliminary injunction. The court consolidated the motions for preliminary injunction.

On June 23, 2022, following a hearing, the court issued an order denying both motions for preliminary injunction, holding that the Plaintiffs in both cases were unlikely to succeed on the merits and that Plaintiffs had not established that they would suffer irreparable harm if the injunction was denied.

By order dated July 11, 2022, the court consolidated the Sydney and Kim cases and set an August 24, 2022 deadline for the Plaintiffs in both cases to file a consolidated amended complaint. Plaintiffs filed their amended complaint on August 24, 2022. The amended complaint alleges on behalf of a putative class of holders of Cedar's preferred stock, among other things, claims for breach of contract against Cedar and Cedar's former Board of Directors with respect to the articles supplementary governing the terms of Cedar's preferred stock, breach of fiduciary duty against Cedar's former Board of Directors, and tortious interference and aiding and abetting breach of fiduciary duty against the Company. On October 7, 2022, Defendants moved to dismiss the amended complaint. Plaintiffs opposed the motion to dismiss and filed a motion to certify a question of law to Maryland’s Supreme Court. On August 1, 2023, the court

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issued a decision and order granting Defendants’ motions to dismiss. The Plaintiffs appealed the dismissal to the United States Court of Appeals for the Fourth Circuit, Case No. 23-1905. The appeal has been fully briefed and oral argument was held before the Fourth Circuit on May 9, 2024. The Fourth Circuit took the appeal under advisement. At this juncture, the outcome of the litigation remains uncertain.

Daniel Khoshaba v. Joseph D. Stilwell, et al., Civil Action No. 2:24CV237 in the United States District Court for the Easter District of Virginia. On April 10, 2024, Daniel Khoshaba, a holder of the Company's Common Stock and former CEO of the Company, filed a derivative action on behalf of the Company and putative class action on behalf of common stockholders who had not purchased the Convertible Notes in a rights offering alleging that the current and certain former directors of the Company breached their duty to the Company and its common stockholders, and that certain of those directors and an officer of the Company were unjustly enriched. The complaint primarily asserts the Defendants failed to take sufficient action to mitigate the potential dilution that could be caused by the redemption rights of holders of Series D Preferred Stock and that the Defendants should not have authorized dividends on the Convertible Notes sold in the rights offering to be paid in Series D Preferred Stock. The Company is named as a nominal defendant in the case and no claims are asserted against it. The Company is providing indemnification (including legal fees and costs) to the directors and officer Defendants. On June 10, 2024, the individual Defendants and the other parties filed motions to dismiss the complaint. At this juncture, the outcome of the litigation remains uncertain

City of Grove, Oklahoma et al v. Harbor Point Associates, LLC et al. Case No. CJ-2024-961 in the District Court of Tulsa County, State of Oklahoma. On March 14, 2024, the City of Grove, Oklahoma, and the Grove Economic Development Authority filed a petition against Harbor Point Associates, LLC ("Harbor Point"), WHLR, and the Operating Partnership alleging against all Defendants claims for breach of contract, breach of implied covenant of good faith and fair dealing, and unjust enrichment. On April 10, 2024, (i) Harbor Point filed an Answer to Plaintiffs’ Claims and set forth a Counterclaim for an accounting from Plaintiffs, (ii) WHLR and the Operating Partnership filed a Motion to Dismiss all of Plaintiffs’ claims, and (iii) Harbor Point filed a Partial Motion to Dismiss Plaintiffs’ claims for breach of implied covenant of good faith and fair dealing and unjust enrichment. On April 29, 2024, Plaintiffs filed a response to Defendants’ motions to dismiss. On May 1, 2024, Plaintiffs filed an answer to Harbor Point’s counterclaim. On July 9, 2024, Plaintiffs dismissed the action with prejudice in accordance with the Harbor Point Settlement Agreement entered into by and among the parties on June 18, 2024 (see Note 3 for additional details).

9. Rental Revenue and Tenant Receivables

Tenant Receivables

As of June 30, 2024 and December 31, 2023, the Company’s allowance for uncollectible tenant receivables totaled $0.7 million and $0.9 million, respectively. At June 30, 2024 and December 31, 2023, there were $8.3 million and $7.9 million, respectively, in unbilled straight-line rent, which is included in "receivables, net."

Lease Contract Revenue

The below table disaggregates the Company’s revenue by type of service (in thousands, unaudited):

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Base rent	$	18,609	$	18,117	$	37,047	$	36,126
Tenant reimbursements - variable lease revenue	5,920		4,861		11,742		10,437
Above (below) market lease amortization, net	860		1,237		1,773		2,633
Straight-line rents	356		373		726		719
Percentage rent - variable lease revenue	136		152		238		350
Lease termination fees	222		—		231		115
Other	201		257		369		708
Total	26,304		24,997		52,126		51,088
Credit adjustments on operating lease receivables	13		(157)		63		(182)
Total	$	26,317	$	24,840	$	52,189	$	50,906

10. Equity and Mezzanine Equity

2024 Reverse Stock Splits

On March 5, 2024, in accordance with the Maryland General Corporation Law, our Board of Directors declared the 2024 Reverse Stock Splits advisable, and directed that they be submitted to the Company’s stockholders for consideration. The Company’s stockholders approved the 2024 Reverse Stock Splits, including such other reverse stock splits as may be determined by the Board of Directors through March 31, 2025, at the annual meeting held on May 6, 2024.

May 2024 Reverse Stock Split

The May 2024 Reverse Stock Split took effect as of 5:00 p.m., Eastern Standard Time, on May 16, 2024, pursuant to an amendment to the Company’s charter (the “Charter”), and every 24 issued and outstanding shares of Common Stock were converted into one issued and outstanding share of Common Stock. As a result of the May 2024 Reverse Stock Split, the number of outstanding shares of Common Stock was reduced from 68,023,718 to 2,834,237. The par value of each share of Common Stock remained unchanged. No fractional shares were issued in connection with the May 2024 Reverse Stock Split. Stockholders who would have otherwise been issued a fractional share of the Company’s Common Stock as a result of the May 2024 Reverse Stock Split instead received a cash payment in lieu of such fractional share in an amount equal to the applicable fraction multiplied by the closing price of the Company’s Common Stock on Nasdaq on May 16, 2024 (as adjusted for the May 2024 Reverse Stock Split), without any interest.

June 2024 Reverse Stock Split

The June 2024 Reverse Stock Split took effect as of 5:00 p.m., Eastern Standard Time, on June 27, 2024, pursuant to an amendment to the Charter, and every 5 issued and outstanding shares of Common Stock were converted into one issued and

outstanding share of Common Stock. As a result of the June 2024 Reverse Stock Split, the number of outstanding shares of Common Stock was reduced from 2,834,237 to 566,814. The par value of each share of Common Stock remained unchanged. No fractional shares were issued in connection with the June 2024 Reverse Stock Split. Stockholders who would have otherwise been issued a fractional share of the Company’s Common Stock as a result of the June 2024 Reverse Stock Split instead received a cash payment in lieu of such fractional share in an amount equal to the applicable fraction multiplied by the closing price of the Company’s Common Stock on Nasdaq on June 27, 2024 (as adjusted for the June 2024 Reverse Stock Split), without any interest.

All share and share-related information presented in this Form 10-Q, including our condensed consolidated financial statements, has been retroactively adjusted to reflect the decreased number of shares resulting from the 2024 Reverse Stock Splits.

Series D Preferred Stock - Redeemable Preferred Stock

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

At June 30, 2024 and December 31, 2023, the Company had 6,000,000 authorized shares of Series D Preferred Stock, without par value with a $25.00 liquidation preference per share, or $100.6 million and $97.1 million in aggregate liquidation value, respectively.

After September 21, 2023, each holder of the Series D Preferred Stock may, at such holder's option, request that the Company redeem any or all of such holder's shares on a monthly basis (each redemption date, a "Holder Redemption Date") at a redemption price of $25.00 per share, plus an amount equal to all accrued and unpaid dividends, if any, to and including the Holder Redemption Date, payable in cash or in shares of Common Stock, or any combination thereof, at the Company's option. Redemptions commenced on September 22, 2023, and the first Holder Redemption Date was October 5, 2023.

During the six months ended June 30, 2024, the Company processed redemptions for an aggregate of 84,561 shares of Series D Preferred Stock from the holders thereof. Accordingly, the Company issued 118,783 shares of Common Stock in settlement of an aggregate Redemption Price of approximately $3.2 million.

The value of the Common Stock issued to holders redeeming their Series D Preferred Stock is the volume weighted average price (the "VWAP") per share of our Common Stock for the ten consecutive trading days immediately preceding, but not including, the Holder Redemption Date as reported on Nasdaq. During the three and six months ended June 30, 2024, the Company has realized a gain of $0 million and $0.2 million in the aggregate, respectively, due to the closing price of the Common Stock on the last VWAP date differing from the VWAP used to calculate the shares issued in each redemption round.

The changes in the carrying value of the Series D Preferred Stock for the six months ended June 30, 2024 and 2023 are as follows (in thousands, except per share data, unaudited):


	Series D Preferred Stock
	Shares	Value
Balance December 31, 2023	2,590,458	$	96,705



Series D Preferred Stock redemptions	(84,561)	(2,826)
Undeclared dividends	—	2,020
Balance March 31, 2024	2,505,897	95,899

Paid-in-kind interest, issuance of Preferred Stock	109,676	2,031
Accretion to liquidation preference	—	710

Undeclared dividends	—	2,000
Balance June 30, 2024	2,615,573	$	100,640


	Series D Preferred Stock
	Shares	Value
Balance December 31, 2022	3,152,392	$	101,518
Accretion of Preferred Stock discount	—	125
Conversion of Series D Preferred Stock to Common Stock	(4,244)	(140)
Undeclared dividends	—	2,118
Balance March 31, 2023	3,148,148	103,621
Paid-in-kind interest, issuance of Preferred Stock	160,455	2,006
Accretion of Preferred Stock discount	—	124
Undeclared dividends	—	2,115
Balance June 30, 2023	3,308,603	$	107,866

Earnings per share

Basic earnings per share ("EPS") is calculated by dividing net income (loss) attributable to the Company’s common shareholders by the weighted average number of common shares outstanding for the period including participating securities.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into shares of common stock.

The following table summarizes the potential dilution of conversion of Operating Partnership common units ("Common Units"), Series B Preferred, Series D Preferred Stock, warrants and Convertible Notes into the Company's Common Stock. These have been excluded from the Company’s diluted earnings per share calculation because their inclusion would be antidilutive.


	June 30, 2024
	Outstanding shares	Potential Dilutive Shares
Common units	75	75
Series B Preferred Stock	3,379,142	1,760
Series D Preferred Stock	2,615,573	3,871,953
Warrants to purchase Common Stock	—	885
Convertible Notes	—	2,164,730

Dividends

The following table summarizes the Series D Preferred Stock dividends (in thousands, except for per share amounts, unaudited):


	Series D Preferred Stock
Arrears Date	Undeclared Dividends		Per Share
For the six months ended June 30, 2024	$	4,020	$	1.54

For the six months ended June 30, 2023	$	4,233	$	1.28

The total cumulative dividends in arrears for Series D Preferred Stock is $35.3 million as of June 30, 2024 ($13.48 per share). There were no dividends declared to holders of Common Stock, Series A Preferred, Series B Preferred or Series D Preferred Stock during the six months ended June 30, 2024 and 2023.

11. Related Party Transactions

Related Party Transactions with Cedar

The Company performs property management and leasing services for Cedar, a subsidiary of the Company, pursuant to the management agreement entered into by and between the companies (the "Wheeler Real Estate Company Management Agreement"). During the three and six months ended June 30, 2024, Cedar paid the Company $0.6 million and $0.9 million for these services, respectively. During the three and six months ended June 30, 2023, Cedar paid the Company $0.0 million and $0.4 million for these services, respectively. The Operating Partnership and Cedar’s operating partnership, Cedar Realty Trust Partnership, L.P., are party to a cost sharing and reimbursement agreement, pursuant to which the parties agreed to share costs and expenses associated with certain employees, certain facilities and property, and certain arrangements with third parties (the "Cost Sharing Agreement"). Related party amounts due to the Company from Cedar are comprised of (in thousands):


	June 30, 2024 (2)		December 31, 2023 (2)
Financings and real estate taxes	$	7,166	$	7,166
Management fees	232		225
Leasing commissions	348		161
Cost Sharing Agreement allocations (1)	669		548
Transaction fees	60		—
Other	—		(6)
Total	$	8,475	$	8,094

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(1) Includes allocations for executive compensation and directors' liability insurance.

(2) These related party amounts have been eliminated for consolidation purposes.

Investment securities - related party

The Company has investments held with SAI, a related party. For the three and six months ended June 30, 2024 the Company recognized $73 thousand and $100 thousand in fees, respectively. For the three and six months ended June 30, 2023 the Company recognized $10 thousand and $10 thousand in fees, respectively. See Note 4 for additional details.

Excepted Holder Limits

On December 4, 2023, the Company's Board of Directors, under the terms of its charter (the "Charter"), created a Capital Stock Excepted Holder Limit of 55% and a Common Stock Excepted Holder Limit of 86% for each of SAI, Stilwell Activist Fund, L.P., Stilwell Value Partners VII, L.P., and Stilwell Associates, L.P. (collectively, the "Investors"). Joseph Stilwell, a member of our Board of Directors, is the managing member and owner of Stilwell Value LLC, which is the general partner of each of the Investors.

On December 5, 2023, the Company entered into an Excepted Holder Agreement with the Investors with respect to such limits. The Capital Stock Excepted Holder Limit provides that the Investors are exempted from the Charter’s aggregate stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of all classes of the Company's capital stock (as calculated under the definitions of "Aggregate Stock Ownership Limit" and "Beneficial Ownership" in the Charter) and are instead subject to the percentage limit established by the Board of Directors. The Common Stock Excepted Holder Limit provides that the Investors are exempted from the Charter’s common stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of the Company's Common Stock (as calculated under the definitions of "Common Stock Ownership Limit" and "Beneficial Ownership" in the Charter) and is instead subject to the percentage limit established by the Board of Directors. The Capital Stock Excepted Holder Limit and Common Stock Excepted Holder Limit will automatically terminate upon reduction of the Investors’ capital stock and Common Stock ownership below 9.8%, respectively.

In consideration of the grant of these Excepted Holder Limits, the Investors concurrently entered into a one-year letter agreement with the Company whereby each Investor agreed that it will not exercise its right to convert Convertible Notes into shares of Common Stock to the extent that such conversion would result in such Investor, whether on its own or as part of a “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), becoming the direct or indirect “beneficial owner”, as defined in Rule 13d-3 under the Exchange Act, of common equity of the Company representing 50% or more of the total voting power of all outstanding shares of common equity of the Company that is entitled to vote generally in the election of directors.

Following the transfer of Common Stock to the Investors in consideration of the February 2024 Series D Preferred Stock redemptions made by the Investors, the Investors would have beneficially owned or constructively owned an amount of capital stock in excess of the Prior Excepted Holder Limits. On February 5, 2024, the Board of Directors agreed to increase the prior Excepted Holder Limits to permit this additional ownership and, accordingly, the Company entered into an amendment to the Excepted Holder Agreement with the Investors under which the Company increased the Capital Stock Excepted Holder Limit granted to Investors under the Excepted Holder Agreement to 60% and the Common Stock Excepted Holder Limit to 90%.

12. Subsequent Events

Adjustment to Conversion Price of Convertible Notes

For the August 2024 Series D Preferred Stock redemptions, the lowest price at which any Series D Preferred Stock was redeemed by a holder into Common Stock was approximately $7.33.

Accordingly, pursuant to Section 14.02 (Optional Conversion) of the indenture governing the Convertible Notes, the Conversion Price for the Convertible Notes was further adjusted to approximately $4.03 per share of Common Stock

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Wheeler Real Estate Investment Trust, Inc. [WHLRL] Filings
Wheeler Real Estate Investment Trust, Inc. [WHLR] Filings
Wheeler Real Estate Investment Trust, Inc. [WHLRD] Filings
Wheeler Real Estate Investment Trust, Inc. [WHLRP] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-06]
10-K	[2024-03-05]
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-09]
10-K	[2023-03-02]
10-Q	[2022-11-08]
10-Q	[2022-08-09]
10-Q	[2022-05-11]
10-K	[2022-02-28]
10-Q	[2021-11-09]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-03-18]
10-Q	[2020-11-10]
10-Q	[2020-08-04]
10-Q	[2020-05-12]
10-K	[2020-02-26]
10-Q	[2019-11-07]
10-Q	[2019-08-05]
10-Q	[2019-05-02]
10-K	[2019-02-28]
10-Q	[2018-11-07]
10-Q	[2018-08-08]
10-Q	[2018-05-09]
10-K	[2018-03-07]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-02]
10-K	[2017-02-28]
10-Q	[2016-11-09]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-03-10]
10-Q	[2015-11-10]
10-Q	[2015-08-12]
10-Q	[2015-05-15]
10-K	[2015-03-25]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-15]
10-K	[2014-03-21]
10-Q	[2013-11-14]
10-Q	[2013-08-12]
10-Q	[2013-05-15]
10-K	[2013-04-01]
10-Q	[2012-12-07]

Wheeler Real Estate Investment Trust, Inc. [WHLRL] Filings

Wheeler Real Estate Investment Trust, Inc. [WHLR] Filings

Wheeler Real Estate Investment Trust, Inc. [WHLRD] Filings

Wheeler Real Estate Investment Trust, Inc. [WHLRP] Filings