Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended December 31, 2019

¨ 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., Suite 200 Virginia Beach. Virginia		23452
(Address of Principal Executive Offices)		(Zip Code)

(757) 627-9088

(Registrant’s Telephone Number, Including Area Code)

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

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.:



Large accelerated file	¨	¨	Accelerated filer

Non-accelerated filer	þ	þ	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). ¨

As of June 30, 2019, the aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant was $12,218,760.

As of February 24, 2020, there were 9,694,284 shares of Common Stock, $0.01 par value per share, outstanding.

Documents Incorporated by Reference

Portions of the Wheeler Real Estate Investment Trust, Inc.'s Proxy Statement in connection with its 2020 Annual Meeting of Stockholders are incorporated by reference in Part III.

Table of Contents



Part I

Item 1.	Business	2

Item 1A.	Risk Factors	4

Item 1B.	Unresolved Staff Comments	4

Item 2.	Properties	5

Item 3.	Legal Proceedings	8

Item 4.	Mine Safety Disclosures	9

Part II

Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	9

Item 6.	Selected Financial Data	10

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 8.	Financial Statements and Supplementary Data	23

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	23

Item 9A.	Controls and Procedures	23

Item 9B.	Other Information	24

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	25

Item 11.	Executive Compensation	25

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	25

Item 13.	Certain Relationships and Related Transactions, and Director Independence	25

Item 14.	Principal Accountant Fees and Services	25

Item 15.	Exhibits and Financial Statement Schedules	26

Item 16.	Form 10-K Summary	68

EXHIBIT INDEX

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K ("Form 10-K") of Wheeler Real Estate Investment Trust, Inc. (the "Company" or "our Company") contains forward-looking statements, including discussion and analysis of our financial condition, anticipated capital expenditures required to complete projects, amounts of anticipated cash distributions to our shareholders in the future and other matters. These forward-looking statements are not historical facts but are the intent, belief or current expectations of our management based on its knowledge and understanding of our business and industry. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “potential,” “predicts,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or the negative of such terms and variations of these words and similar expressions. 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-K. 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 to differ materially from any forward-looking statements made in this Form 10-K include:


•	our business and investment strategy;


•	our projected operating results;


•	actions and initiatives of the U.S. government and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies;


•	the state of the U.S. economy generally and in specific geographic areas;


•	economic trends and economic recoveries;


•	our ability to obtain and maintain financing arrangements;


•	financing and advance rates for our target assets;


•	our expected leverage;


•	availability of investment opportunities in real estate-related investments;


•	changes in the values of our assets;


•	our ability to make distributions to our stockholders in the future;


•	our expected investments and investment decisions;


•	our ability to renew leases at amounts and terms comparable to existing lease arrangements;


•	our ability to proceed with potential development opportunities for us and third-parties;


•	our ability to maintain our qualification as a real estate investment trust (“REIT”);


•	our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the "Investment Company Act");


•	impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters, including changes to laws governing REITs;


•	availability of qualified personnel and management team;


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


•	our ability to amend our charter to increase or decrease the aggregate number of authorized shares of stock and to change the terms of our preferred stock, without par value ("Preferred Stock");


•	our competition;


•	market trends in our industry, interest rates, real estate values or the general economy;


•	uncertainties related to the national economy, the real estate industry in general and in our specific markets;


•	adverse economic or real estate developments in Virginia, Florida, Georgia, Alabama, South Carolina, North Carolina, Oklahoma, Kentucky, Tennessee, West Virginia, New Jersey and Pennsylvania;


•	increases in interest rates and operating costs;


•	litigation risks;


•	lease-up risks;


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


•	the need to fund tenant improvements or other capital expenditures out of operating cash flow.

Forward-looking statements should be read in light of these factors.

Part I

Item 1. Business.

Overview

Wheeler Real Estate Investment Trust, Inc. (the “Trust” or “REIT” or “Company”) 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. Substantially, all of our assets are held by, and all of our operations are conducted through, our Operating Partnership. The Company is a fully-integrated, self-managed commercial real estate investment company that owns, leases and operates income-producing retail properties with a primary focus on grocery-anchored centers.

Our corporate office is located at 2529 Virginia Beach Boulevard, Virginia Beach, Virginia 23452. Our telephone number is (757) 627-9088. Our registrar and stock transfer agent is Computershare Trust Company, N.A. and may be contacted at 250 Royall Street, Canton, MA 02021 or their website, www.computershare.com.

Portfolio

Our portfolio contains retail properties in secondary and tertiary markets, with a particular emphasis on grocery-anchored retail centers. Our properties are in communities that have stable demographics and have historically exhibited favorable trends, such as strong population and income growth. We generally lease our properties to national and regional retailers that offer consumer goods and generate regular consumer traffic. We believe our tenants carry goods that are less impacted by fluctuations in the broader U.S. economy and consumers’ disposable income, generating more predictable property level cash flows.

The Company’s portfolio of properties is dependent upon regional and local economic conditions. As of December 31, 2019, we own a portfolio consisting of sixty-eight properties, including sixty-one retail shopping centers, totaling 5,618,877 total leasable square feet which is 89.8% leased (our "operating portfolio"), one office property and six undeveloped land parcels totaling approximately 63 acres. The properties are geographically located in the Northeast, Mid-Atlantic and Southeast, which markets represented approximately 4%, 36% and 60%, respectively, of the total annualized base rent of the properties in its portfolio as of December 31, 2019.

No tenant represents greater than 6% of the Company’s annualized base rent or 7% of gross leasable square footage. The top 10 tenants account for 25.34% or $12.30 million of annualized base rent and 29.81% or 1.68 million of gross leasable square footage at December 31, 2019.

Management Team and People

We have 47 full-time employees. Our management team has experience and capabilities across the real estate sector with experience in all aspects of the commercial real estate industry, specifically in our target/existing markets.

David Kelly, age 55, has served as Chief Executive Officer (the "CEO") since January 2018 and first joined the Company in 2013. Mr. Kelly served as the Chief Investment Officer (the "CIO") for the Company before serving at the CEO. He has over twenty-eight years of experience in the real estate industry. Prior to joining us, he served for thirteen years as the Director of Real Estate for Supervalu, Inc., a Fortune 100 supermarket retailer. While at Supervalu, he focused on site selection and acquisitions from New England to the Carolinas, completing transactions totaling over $500 million.

Andrew Franklin, age 39, is our Chief Operating Officer and has over nineteen years of commercial real estate experience and joined the Company in 2014. Mr. Franklin is responsible for overseeing the property management, lease administration and leasing divisions of our portfolio of commercial assets. Prior to joining us, Mr. Franklin was a partner with Broad Reach Retail Partners, LLC where he ran the day to day operations, managing the leasing team as well as overseeing the

asset, property and construction management of the portfolio with assets totaling $50 million. Mr. Franklin is a graduate of the University of Maryland, with a Bachelor of Science degree in Finance.

Matthew Reddy, age 37, served as Chief Financial Officer, (the "CFO") until his resignation in February 2020 at which time he was replaced with Crystal Plum. Mr. Reddy, a certified public accountant, joined the Company in 2015 as Chief Accounting Officer and was appointed CFO in 2018. Prior to joining the Company, Mr. Reddy was the Assistant Vice President of Online Products at Liberty Tax Service. While employed at Liberty, Mr. Reddy was also employed as Director of Finance from 2011 to 2014, and Manager of Financial Reporting from 2008 to 2011. Prior to joining Liberty, Mr. Reddy worked at KPMG LLP as a Senior Auditor.

Crystal Plum, age 38, was appointed as CFO in February 2020. Prior to her appointment as CFO, Ms. Plum most recently served as the Vice President of Financial Reporting and Corporate Accounting for the Company from March 2018 to the present and as Director of Financial Reporting for the Company from September 2016 to March 2018. Prior to that time, she served as Manager at Dixon Hughes Goodman LLP from September 2014 to August 2016 and as Supervisor at Dixon Hughes Goodman LLP from 2008 to September 2014. Ms. Plum has experience reviewing and performing audits, reviews, compilations and tax engagements for a diverse group of clients, as well as banking experience. Ms. Plum is a certified public accountant and has a Bachelor of Science degree in Accounting and Finance from Old Dominion University.

Business Objectives and Investment Strategy

Our primary business objective is to provide attractive risk-adjusted returns to our shareholders. We intend to achieve this objective utilizing the following investment strategies:

•

Focus on necessity-based retail. Own and operate retail properties that serve the essential day-to-day shopping needs of the surrounding communities. These necessity-based centers attract high levels of daily traffic resulting in cross-selling of goods and services from our tenants. The majority of our tenants provide non-cyclical consumer goods and services that are less impacted by fluctuations in the economy. We believe these centers that provide essential goods and services such as groceries results in a stable, lower-risk portfolio of retail investment properties.

•

Focus on secondary and tertiary markets with strong demographics and demand. Our properties are in markets that have relatively low levels of new construction. The markets have strong demographics such as population density, population growth, tenant sales trends and growth in household income. We seek to identify new tenants and renew leases with existing tenants in these locations that support the need for necessity-based retail and limited new supply.

•

Increase operating income through leasing strategies and expense management. We employ intensive lease management strategies to optimize occupancy. Management has strong expertise in acquiring and managing under-performing properties and increasing operating income through more effective leasing strategies and expense management. Our leases generally require the tenant to reimburse us for a substantial portion of the expenses incurred in operating, maintaining, repairing, and managing the shopping center and the common areas, along with the associated insurance costs and real estate taxes. In many cases the tenant is either fully or partially responsible for all maintenance of the property, thereby limiting our financial exposure towards maintaining the center and increasing our net income. We refer to this arrangement as a “triple net lease.”

•

Selectively utilize our capital to improve retail properties. We intend to make capital investments where the return on such capital is accretive to our shareholders. We allocate capital to value-added improvements of retail properties to increase rents, extend long-term leases with anchor tenants and increase occupancy. We selectively allocate capital to revenue enhancing projects that we believe will improve the market position of a given property.

•

Recycling and sensible management of capital structure. We intend to sell non-income producing land parcels utilizing sales proceeds to deleverage the balance sheet. In addition, we intend to monetize assets to redeploy the capital to further deleverage and strengthen the balance sheet. In 2019, we sold 4 properties for a total of $3.60 million net proceeds which were used to reduce outstanding indebtedness. Additional properties have been slated for disposition based upon management’s periodic review of our portfolio, and the determination by our Board of Directors.

Governmental Regulations Affecting Our Properties

We and our properties are subject to a variety of federal, state and local environmental, health, safety and similar laws.

The application of these laws to a specific property that we own depends on a variety of property-specific circumstances, including the current and former uses of the property, the building materials used at the property and the physical layout of the property. Neither existing environmental, health, safety and similar laws nor the costs of our compliance with these laws has had a material adverse effect on our financial condition or results of operations, and management does not believe they will in the future. In addition, we have not incurred, and do not expect to incur, any material costs or liabilities due to environmental contamination at properties we currently own or have owned in the past. However, we cannot predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future. We have no current plans for substantial capital expenditures with respect to compliance with environmental, health, safety and similar laws and we carry environmental insurance which covers a number of environmental risks for most of our properties.

Competition

Numerous commercial developers and real estate companies compete with us with respect to the leasing of properties. Some of these competitors may possess greater capital resources than we do, although we do not believe that any single competitor or group of competitors in any of the primary markets where our properties are located are dominant in that market. This competition may interfere with our ability to attract and retain tenants, leading to increased vacancy rates and/or reduced rents and adversely affect our ability to minimize operating expenses.

Retailers at our properties also face increasing competition from online retailers, outlet stores, discount shopping clubs, superstores, and other forms of sales and marketing of goods and services, such as direct mail. This competition could contribute to lease defaults and insolvency of tenants.

Company Website Access and SEC Filings

We are subject to the information reporting requirements of the Exchange Act. Pursuant to those requirements, we are required to file annual and periodic reports, proxy statements and other information, including audited consolidated financial statements, with the SEC which can be found at http://www.sec.gov.

Additionally, we make available free of charge through our website http://www.whlr.us our most recent Annual Report on Form 10-K, including our audited consolidated financial statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission (the “SEC”). In addition, we have posted the Charters of our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, as well as our Code of Business Conduct and Ethics for Employees, Officers, Agents and Representatives, Code of Business Conduct and Ethics for Members of the Board of Directors, Corporate Governance Principles, including guidelines on director independence, and Insider Trading Policy, all under separate headings. The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website is intended to be inactive textual references only.

Annual Meeting of Stockholders

Our 2020 Annual Meeting of Stockholders will be held in Virginia Beach on May 28, 2020.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our Portfolio

At December 31, 2019, we owned sixty-eight properties, including sixty-one income producing properties located in Virginia, North Carolina, South Carolina, Florida, Georgia, Kentucky, Tennessee, Alabama, New Jersey, Pennsylvania and West Virginia, containing a total of 5,618,877 gross leasable square feet of retail space, which we refer to as our operating portfolio. The following table presents an overview of our properties, based on information as of December 31, 2019.

Portfolio



Property	Location	Number of Tenants (1)	Total Leasable Square Feet	Percentage Leased (1)		Percentage Occupied		Total SF Occupied	Annualized Base Rent (in 000's) (2)		Annualized Base Rent per Occupied Sq. Foot
Alex City Marketplace	Alexander City, AL	17	147,791	96.8	%	96.8	%	142,991	$	1,140	$	7.98
Amscot Building (3)	Tampa, FL	1	2,500	100.0	%	100.0	%	2,500	116		46.34
Beaver Ruin Village	Lilburn, GA	28	74,038	93.7	%	89.2	%	66,036	1,137		17.22
Beaver Ruin Village II	Lilburn, GA	4	34,925	100.0	%	100.0	%	34,925	452		12.95
Berkley (4)	Norfolk, VA	—	—	—	%	—	%	—	—		—
Berkley Shopping Center	Norfolk, VA	10	47,945	42.0	%	42.0	%	20,140	253		12.54
Brook Run Shopping Center	Richmond, VA	19	147,738	92.1	%	92.1	%	136,102	1,404		10.32
Brook Run Properties (4)	Richmond, VA	—	—	—	%	—	%	—	—		—
Bryan Station	Lexington, KY	10	54,397	100.0	%	100.0	%	54,397	601		11.05
Butler Square	Mauldin, SC	14	82,400	87.6	%	87.6	%	72,196	769		10.66
Cardinal Plaza	Henderson, NC	9	50,000	100.0	%	100.0	%	50,000	479		9.58
Chesapeake Square	Onley, VA	12	108,982	96.5	%	96.5	%	105,182	793		7.54
Clover Plaza	Clover, SC	10	45,575	100.0	%	100.0	%	45,575	366		8.03
Columbia Fire Station	Columbia, SC	3	21,273	77.3	%	77.3	%	16,450	450		27.35
Courtland Commons (4)	Courtland, VA	—	—	—	%	—	%	—	—		—
Conyers Crossing	Conyers, GA	12	170,475	97.1	%	97.1	%	165,475	875		5.29
Crockett Square	Morristown, TN	4	107,122	100.0	%	100.0	%	107,122	920		8.59
Cypress Shopping Center	Boiling Springs, SC	17	80,435	41.2	%	41.2	%	33,175	448		13.51
Darien Shopping Center	Darien, GA	1	26,001	100.0	%	100.0	%	26,001	156		6.00
Devine Street	Columbia, SC	2	38,464	100.0	%	100.0	%	38,464	319		8.28
Edenton Commons (4)	Edenton, NC	—	—	—	%	—	%	—	—		—
Folly Road	Charleston, SC	5	47,794	100.0	%	100.0	%	47,794	728		15.23
Forrest Gallery	Tullahoma, TN	27	214,451	95.5	%	95.5	%	204,804	1,415		6.91
Fort Howard Shopping Center	Rincon, GA	19	113,652	95.1	%	95.1	%	108,120	923		8.53
Freeway Junction	Stockbridge, GA	18	156,834	99.1	%	99.1	%	155,343	1,262		8.12
Franklin Village	Kittanning, PA	27	151,821	97.4	%	97.4	%	147,821	1,255		8.49
Franklinton Square	Franklinton, NC	14	65,366	95.3	%	95.3	%	62,300	587		9.42
Georgetown	Georgetown, SC	2	29,572	100.0	%	100.0	%	29,572	267		9.04
Grove Park	Orangeburg, SC	13	93,265	98.4	%	98.4	%	91,741	718		7.83
Harbor Point (4)	Grove, OK	—	—	—	%	—	%	—	—		—
Harrodsburg Marketplace	Harrodsburg, KY	8	60,048	91.0	%	91.0	%	54,648	414		7.58
JANAF (6)	Norfolk, VA	126	825,006	83.8	%	83.3	%	687,579	8,176		11.89
Laburnum Square	Richmond, VA	20	109,405	97.5	%	97.5	%	106,705	971		9.10
Ladson Crossing	Ladson, SC	15	52,607	100.0	%	100.0	%	52,607	497		9.45
LaGrange Marketplace	LaGrange, GA	11	76,594	88.3	%	88.3	%	67,594	377		5.57
Lake Greenwood Crossing	Greenwood, SC	6	47,546	87.5	%	87.5	%	41,618	331		7.95
Lake Murray	Lexington, SC	5	39,218	100.0	%	100.0	%	39,218	258		6.57
Litchfield Market Village	Pawleys Island, SC	18	86,740	87.9	%	87.9	%	76,263	931		12.20
Lumber River Village	Lumberton, NC	11	66,781	98.2	%	98.2	%	65,581	451		6.88
Moncks Corner	Moncks Corner, SC	1	26,800	100.0	%	100.0	%	26,800	323		12.07



Property	Location	Number of Tenants (1)	Total Leasable Square Feet	Percentage Leased (1)		Percentage Occupied		Total SF Occupied	Annualized Base Rent (in 000's) (2)		Annualized Base Rent per Occupied Sq. Foot
Nashville Commons	Nashville, NC	11	56,100	97.3	%	97.3	%	54,600	$	589	$	10.80
New Market Crossing	Mt. Airy, NC	13	117,076	96.0	%	96.0	%	112,368	998		8.88
Parkway Plaza	Brunswick, GA	4	52,365	81.7	%	81.7	%	42,785	349		8.16
Pierpont Centre	Morgantown, WV	17	111,162	97.2	%	97.2	%	108,001	1,208		11.19
Port Crossing	Harrisonburg, VA	8	65,365	96.1	%	96.1	%	62,800	821		13.07
Ridgeland	Ridgeland, SC	1	20,029	100.0	%	100.0	%	20,029	140		7.00
Riverbridge Shopping Center	Carrollton, GA	11	91,188	98.5	%	98.5	%	89,788	694		7.73
Riversedge North (5)	Virginia Beach, VA	—	—	—	%	—	%	—	—		—
Rivergate Shopping Center	Macon, GA	31	201,680	97.0	%	97.0	%	195,719	2,836		14.49
Sangaree Plaza	Summerville, SC	9	66,948	100.0	%	100.0	%	66,948	655		9.79
Shoppes at Myrtle Park	Bluffton, SC	12	56,601	99.3	%	76.3	%	43,204	547		12.66
Shoppes at TJ Maxx	Richmond, VA	14	93,624	94.5	%	94.5	%	88,483	1,084		12.26
South Lake	Lexington, SC	5	44,318	14.2	%	14.2	%	6,300	91		14.49
South Park	Mullins, SC	3	60,734	83.2	%	83.2	%	50,509	351		6.95
South Square	Lancaster, SC	5	44,350	74.2	%	74.2	%	32,900	275		8.37
St. George Plaza	St. George, SC	5	59,279	78.8	%	78.8	%	46,718	316		6.76
St. Matthews	St. Matthews, SC	5	29,015	87.2	%	87.2	%	25,314	187		7.38
Sunshine Plaza	Lehigh Acres, FL	22	111,189	98.2	%	98.2	%	109,186	1,014		9.29
Surrey Plaza	Hawkinsville, GA	2	42,680	78.5	%	78.5	%	33,500	211		6.30
Tampa Festival	Tampa, FL	16	137,987	63.8	%	63.8	%	87,966	664		7.54
Tri-County Plaza	Royston, GA	5	67,577	87.4	%	87.4	%	59,077	382		6.47
Tulls Creek (4)	Moyock, NC	—	—	—	%	—	%	—	—		—
Twin City Commons	Batesburg Leesville, SC	5	47,680	100.0	%	100.0	%	47,680	435		9.12
Village of Martinsville	Martinsville, VA	18	297,950	96.1	%	96.1	%	286,431	2,285		7.98
Walnut Hill Plaza	Petersburg, VA	6	87,239	38.1	%	38.1	%	33,225	270		8.14
Waterway Plaza	Little River, SC	10	49,750	100.0	%	100.0	%	49,750	488		9.81
Westland Square	West Columbia, SC	8	62,735	74.4	%	74.4	%	46,690	427		9.14
Winslow Plaza	Sicklerville, NJ	18	40,695	100.0	%	100.0	%	40,695	633		15.47
Total Portfolio		783	5,618,877	89.8	%	89.4	%	5,023,505	$	48,512	$	9.66


(1)	Reflects leases executed through January 6, 2020 that commence subsequent to the end of the current period.


(2)	Annualized based rent per occupied square foot, assumes base rent as of the end of the current reporting period, excludes the impact of tenant concessions and rent abatements.


(3)	We own the Amscot building, but we do not own the land underneath the buildings and instead lease the land pursuant to ground leases. As discussed in the financial statements, these ground leases require us to make annual rental payments and contain escalation clauses and renewal options.


(4)	This information is not available because the property is undeveloped.


(5)	This property is our corporate headquarters that we 100% occupy.


(6)	Square footage is net of management office the Company occupies on premise and buildings on ground lease which the Company only leases the land.

Major Tenants

The following table sets forth information regarding the ten largest tenants in our operating portfolio based on annualized base rent as of December 31, 2019.



Tenants		Number of Stores	Annualized Base Rent ($ in 000s)		% of Total Annualized Base Rent		Total Occupied Square Feet	Percent Total Leasable Square Foot		Base Rent Per Occupied Square Foot
1.	BI-LO ⁽¹⁾	10	$	2,717	5.60	%	380,675	6.77	%	$	7.14
2.	Food Lion	10	2,692		5.55	%	325,576	5.79	%	8.27
3.	Piggly Wiggly	7	1,474		3.04	%	191,363	3.41	%	7.70
4.	Kroger ⁽²⁾	4	1,340		2.76	%	186,064	3.31	%	7.20
5.	Winn Dixie ⁽¹⁾	3	863		1.78	%	133,575	2.38	%	6.46
6.	Planet Fitness	5	783		1.61	%	86,927	1.55	%	9.01
7.	Hobby Lobby	2	675		1.39	%	114,298	2.03	%	5.91
8.	BJ's Wholesale Club	1	594		1.22	%	147,400	2.62	%	4.03
9.	TJ Maxx	2	584		1.20	%	69,783	1.24	%	8.37
10.	Harris Teeter ⁽²⁾	1	577		1.19	%	39,946	0.71	%	14.44
		45	$	12,299	25.34	%	1,675,607	29.81	%	$	7.34

(1) These tenants are both owned by Southeastern Grocers.

(2) These tenants are both owned by The Kroger Company.

Lease Expirations

The following table sets forth information with respect to the lease expirations of our properties as of December 31, 2019.



Lease Expiration Period	Number of Expiring Leases	Total Expiring Square Footage	% of Total Expiring Square Footage		% of Total Occupied Square Footage Expiring		Expiring Annualized Base Rent (in 000s)		% of Total Annualized Base Rent		Expiring Base Rent Per Occupied Square Foot
Available	—	595,372	10.60	%	—	%	$	—	—	%	$	—
Month-to-Month	29	54,451	0.97	%	1.08	%	679		1.40	%	12.47
2020	137	681,654	12.13	%	13.57	%	6,849		14.12	%	10.05
2021	141	662,189	11.79	%	13.18	%	6,641		13.69	%	10.03
2022	150	572,342	10.19	%	11.39	%	6,532		13.46	%	11.41
2023	101	752,495	13.39	%	14.98	%	6,466		13.33	%	8.59
2024	89	606,367	10.79	%	12.07	%	5,687		11.72	%	9.38
2025	46	560,245	9.97	%	11.15	%	4,965		10.23	%	8.86
2026	27	350,991	6.25	%	6.99	%	3,293		6.79	%	9.38
2027	14	98,532	1.75	%	1.96	%	1,174		2.42	%	11.91
2028	16	329,155	5.86	%	6.55	%	2,475		5.10	%	7.52
2029 and thereafter	33	355,084	6.31	%	7.08	%	3,751		7.74	%	10.56
Total	783	5,618,877	100.00	%	100.00	%	$	48,512	100.00	%	$	9.66

Property Management and Leasing Strategy

We self-administer our property management and substantially all of our leasing activities and operating and administrative functions (including leasing, legal, acquisitions, development, data processing, finance and accounting). On-site functions such as maintenance, landscaping, sweeping, plumbing and electrical are subcontracted out at each location and, to the extent permitted by their respective leases, the cost of these functions is passed on to the tenants.

We believe that focused property management, leasing and customer retention are essential to maximizing the sales per square foot, operating cash flow and value of our properties. Our primary goal in property management is to maintain an attractive shopping environment on a cost effective basis for our tenants.

The majority of our property management and leasing functions are supervised and administered by us. We maintain regular contact with our tenants and frequently visit each asset to ensure the proper implementation and execution of our market strategies. As part of our ongoing property management, we conduct regular physical property reviews to improve our properties, react to changing market conditions and ensure proper maintenance.

Our leasing representatives are experienced in the markets in which we operate by becoming familiar with current tenants as well as potential local, regional and national tenants that would complement our current tenant base. We study demographics, customer sales and merchandising mix to optimize the sales performance of our centers and thereby increase rents. We believe this hands-on approach maximizes the value of our shopping centers.

Item 3. Legal Proceedings.

JCP Investment Partnership LP, et al v. Wheeler Real Estate Investment Trust, Inc., Circuit Court for Baltimore County, Maryland. This is an action brought by a large minority shareholder of the Company alleging that in 2018, the Company breached an asset coverage ratio covenant, so as to require the Company to buy back a portion of its Series D Preferred. The Company is defending this suit on the grounds it validly amended the Articles Supplementary through the Certificate of Correction filed with the Maryland Department of Taxation on or about May 3, 2018, curing any alleged breach of the covenant. Plaintiffs are not seeking any specific damage amount; rather, their prayer for relief asks the Court to order that the Company must redeem the Series D Preferred in accordance with the terms of the original Articles Supplementary, not commit any further alleged violations of the Articles Supplementary, and award them their costs, expenses and attorneys' fees. In the event a redemption is required, the redemption provisions of the Articles Supplementary permit the Company to redeem those Series D Preferred that it chooses to redeem (not necessarily JCP's Preferred Shares). Accordingly, it is difficult to assess the Company's anticipated exposure in this case at this time. After discovery was completed, JCP filed a motion for summary judgment, which the Court denied on January 29, 2020. In February 2020, the parties reached a settlement which provides JCP will dismiss the lawsuit without prejudice.

Jon Wheeler v. Wheeler Real Estate Investment Trust, Inc., Circuit Court for the City of Virginia Beach, Virginia. Former CEO, Jon Wheeler, alleges that he was improperly terminated and is owed severance and bonus payments pursuant to his Employment Agreement. Altogether, his alleged damages total approximately $1.00 million. The Company is defending the action on the grounds that Jon Wheeler was properly terminated for cause, including for his failure to properly apprise the Board of Directors of critical information, and placing his own personal interests above the Company's, including contracting counsel about filing suit on his behalf against the Company and the Board of Directors while he was still CEO and President of the Board. The Company has filed a Counterclaim against Jon Wheeler for approximately $150 thousand for reimbursement of personal expenses the Company paid, but that Jon Wheeler should have borne. Trial of this action was held on December 17-20, 2019. Post-trial briefs were submitted on January 31, 2020. The Court is expected to make its rulings by mid-March, 2020. At this juncture, the outcome of the matter cannot be predicted.

BOKF, NA v. WD-1 Associates, LLC, et al, Court of Common Pleas for Beaufort County, South Carolina. This is a lawsuit filed by BOKF ("Bank of Arkansas") the lead lender for Sea Turtle project in Hilton Head, South Carolina against WD-1 Associates, LLC and Jon Wheeler for default on BOKF's two construction loans. BOKF seeks appointment of a Receiver to take over the financial management of the project that WD-1 was allegedly mishandling. The lawsuit pending in Beaufort County is presently stayed as to WD-1, pursuant to the Chapter 11 Bankruptcy proceeding it filed in Charleston, South Carolina. In the lawsuit pending in Beaufort County, BOKF has moved for a

default judgment against Jon Wheeler, who personally guaranteed the two BOKF loans. The Company's subsidiary, Wheeler Real Estate, LLC is named in the lawsuit pending in Beaufort County solely in its position as the former property manager for WD-1 Associates, to obtain financial information. No damages are sought from Wheeler Real Estate, LLC in the Beaufort County action. The Company's subsidiaries are creditors in the Chapter 11 Bankruptcy. WD-1 is seeking a sale of the project real estate through the bankruptcy proceedings. BOKF’s credit bid purchase of Sea Turtle was approved by the Bankruptcy Court for $18.75 million in February, 2020. At this juncture, the proceeds, if any, awarded to the Company are expected to be immaterial.

Jon Wheeler v. Wheeler Real Estate Investment Trust, Inc. and David Kelly, Individually, Circuit Court for the City of Virginia Beach, Virginia. In September, 2018, former Chief Executive Officer and President Jon S. Wheeler filed claims for defamation and tortious interference with contract expectancy, prospective business relationships and economic advantage in the Circuit Court for the City of Virginia Beach, Virginia, asserting current Chief Executive Officer and President, David Kelly, defamed him in communications with an industry association. In February, 2019, Jon Wheeler’s counsel amended the suit to add the Company as a Defendant, but dropped all but the defamation claims. Mr. Kelly and the Company are defending the lawsuit. Trial is set for June 10, 2020. At this juncture, the outcome of the matter cannot be predicted.

In addition to the above, we are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operation or liquidity.

Item 4. Mine Safety Disclosures.

Not applicable.

Part II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

Market Information.

Our Common Stock is traded on the NASDAQ Capital Market under the symbol “WHLR”.

Approximate Number of Holders of Our Common Stock

As of February 24, 2020 there were 171 holders of record of our common stock. This number excludes our Common Stock owned by shareholders holding under nominee security position listings.

Dividend Policy

In March 2018, the Board of Directors suspended the payment of dividends on our Common Stock. The Board of Directors also suspended the quarterly dividends on shares of our Series A Preferred, Series B Preferred and Series D Preferred, beginning with the three months ended December 31, 2018. Dividends were suspended to retain cash flow to pay operating expenses and reduce debt. Additionally, as the Company has failed to pay cash dividends on the outstanding Series D Preferred, the annual dividend rate on the Series D Preferred has increased to 10.75%; commencing on the first day after the first missed quarterly payment, January 1, 2019 and will continue until such time as the Company has paid all accumulated and unpaid dividends on the Series D Preferred in full. See Note 9, Equity and Mezzanine Equity, to our audited consolidated financial statements included in this Form 10-K. As a result of the dividend suspension on the Series A Preferred, Series B Preferred and Series D Preferred, no dividends may be declared or paid on the Common Stock until all accumulated accrued and unpaid dividends on the Preferred Stocks have been declared and paid in full. At this time, we can provide no certainty as to when or if dividends will be reinstated. However, we intend to make all required dividend distributions, if any, that will enable us to maintain our REIT status and to eliminate or minimize our obligation to pay income and excise taxes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Future Liquidity Needs.”

Dividend Payments

We have made dividend payments to holders of our Common Stock and holders of common units in our Operating Partnership as follows in 2019 and 2018:



Dividend Period	Record Date	Payment Date	Payment Amount per Share or Unit
October 1, 2017 - December 31, 2017	12/28/2017	1/15/2018	$	0.3400

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the notes thereto included in this Form 10-K. For more detailed information regarding the basis of presentation for the following information, you should read the notes to the audited consolidated financial statements included in this Form 10-K.

Company Overview

We are a Maryland corporation focused on owning, leasing and operating income producing strip centers, neighborhood centers, grocery-anchored centers, community centers and free-standing retail properties. Our strategy has been to opportunistically acquire quality retail properties in secondary and tertiary markets that generate attractive risk-adjusted returns. We have targeted competitively protected properties located within developed areas, commonly referred to as in-fill, that possess minimal competition risk and are surrounded by communities that have strong demographics and dynamic, diversified economies that will continue to generate jobs and future demand for commercial real estate. Our primary target markets include the Northeast, Mid-Atlantic and Southeast.

Our portfolio is comprised of sixty-one retail shopping centers, our office building and six undeveloped land parcels. Thirteen of these properties are located in Virginia, three are located in Florida, seven are located in North Carolina, twenty-four are located in South Carolina, twelve are located in Georgia, two are located in Kentucky, two are located in Tennessee, one is located in New Jersey, one is located in Alabama, one is located in West Virginia, one is located in Oklahoma and one is located in Pennsylvania. The Company’s portfolio had total net rentable space of approximately 5,619,000 square feet and a leased level of approximately 89.8% at December 31, 2019.

Recent Trends and Activities

There have been several significant events in 2019 that have impacted our company. These events are summarized below.

Dispositions



Disposal Date	Property	Contract Price		Gain (loss)			Net Proceeds
				(in thousands)
July 12, 2019	Perimeter Square, Tulsa, OK	$	7,200	$	(95	)	$	—
March 18, 2019	Graystone Crossing, Tega Cay, SC	6,000		1,433			1,744
February 7, 2019	Harbor Pointe Land Parcel (1.28 acres), Grove, OK	550		—			19
January 11, 2019	Jenks Plaza, Jenks, OK	2,200		387			1,840
		$	15,950	$	1,725		$	3,603

Assets Held for Sale

In 2019, the Company’s management and Board of Directors committed to a plan to sell Perimeter Square, Tulsa, OK and St. Matthews, St. Matthews, SC. The Company recorded a $1.60 million impairment charge for the year ended December 31, 2019. These impairment charges resulted from reducing the carrying value of Perimeter Square and St. Matthews during the year ended December 31, 2019, for the amounts that exceeded the properties' fair value less estimated selling costs.

The valuation assumptions for Perimeter and St. Matthews are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 inputs. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices.

KeyBank Credit Agreement

On April 25, 2019, the Company entered into the First Amendment to the Amended and Restated Credit Agreement (the "First Amendment to the Amended and Restated Credit Agreement"). In conjunction with the First Amendment to the Amended and Restated Credit Agreement, the Company made a $1.00 million principal payment on the KeyBank Line of Credit and began making monthly principal payments of $250 thousand on May 1, 2019.

Effective December 21, 2019, the Company and KeyBank entered into a Second Amendment to the Amended and Restated Credit Agreement (the "Second Amendment to the Amended and Restated Credit Agreement"). Pursuant to the Second Amendment to the Amended and Restated Credit Agreement, the Company began making monthly principal payments of $350 thousand on November 1, 2019. The Second Amendment to the Amended and Restated Credit Agreement, among other provisions, requires a pledge of additional collateral of $15.00 million in residual equity interests. Additionally, the KeyBank Line of Credit shall be reduced to $10.00 million by January 31, 2020, $2.00 million by April 30, 2020 and fully matures on June 30, 2020. Additionally, the Company has made principal payments of $4.10 million during the year ended December 31, 2019.

The following collateralized portions of the Amended and Restated Credit Agreement had principal paydowns associated with each property’s refinancing as noted below:


•	$15.46 million paydown from Village of Martinsville refinancing proceeds on June 28, 2019;


•	$7.55 million paydown from Laburnum Square refinancing proceeds on August 1, 2019; and


•	$7.16 million paydown from Litchfield Market Village refinancing proceeds on November 1, 2019.

As of December 31, 2019, the Amended and Restated Credit Agreement is collateralized by 7 properties, accruing interest at 5.29% with a balance of $17.88 million.

Revere Term Loan

The Revere Term Loan has been paid in full using proceeds from the following:


•	$323 thousand with proceeds from the sale of Jenks Plaza on January 11, 2019;


•	$30 thousand with proceeds from the sale of Harbor Pointe on February 7, 2019;


•	$300 thousand in monthly scheduled principal payments; and,


•	$406 thousand, the remaining principal balance and the $20 thousand Exit Fee on March 29, 2019 from operating cash flows.

Sea Turtle Development

In 2016, the Company loaned $11.00 million for the partial funding of Sea Turtle and loaned $1.00 million for the sale of land to be used in the development. Both promissory notes are subordinated to the construction loans made by BOKF, totaling $20.00 million.

On or about April 9, 2019, BOKF filed a Verified Complaint in state court in Beaufort County, South Carolina for Sea Turtle’s default on payment of the BOKF construction loans, and for the appointment of a receiver, injunctive relief and accounting records. On May 7, 2019, Sea Turtle filed a Chapter 11 Voluntary Petition for Bankruptcy in the United States Bankruptcy Court for the District of South Carolina in Charleston. The bankruptcy petition automatically stayed BOKF’s suit.

The pleadings in the state court action and the bankruptcy action state that Sea Turtle has been in default on its payments to BOKF since September, 2018. The pleadings further state that the project is $8.00 million over budget as of August 8, 2018. Sea Turtle has retained a broker to try and sell the property. There is a possibility that a judicially approved sale of the property will not bring a price that exceeds what is owed to BOKF on its construction loans. If a sale is not approved through the bankruptcy court in 2020, it is expected that the bankruptcy petition will be dismissed and BOKF will resume its suit in South Carolina state court, possibly leading to a foreclosure on the property. The pending legal proceedings have provided additional uncertainty with regards to the estimated fair market value of the development. As such, the Company recognized $5.00 million in impairment charges on the notes receivable for the year ended December 31, 2019 as the estimated fair value of Sea Turtle is not expected to provide for the cash required to repay the notes receivable in the event of a judicially approved sale. The total impairment charge on notes receivable is $12.00 million and the carrying value is zero as of December 31, 2019.

The fair market value of Sea Turtle is based on the three-level valuation hierarchy for fair value measurement and represents Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Subsequent to December 31, 2019, the Bankruptcy Court approved BOKF’s credit bid purchase of Sea Turtle in February, 2020, for $18.75 million.

Preferred Dividends

At December 31, 2019, the Company had accumulated undeclared dividends of $16.99 million to holders of shares of our Series A Preferred Stock, Series B Preferred Stock, and Series D Preferred Stock of which $13.95 million is attributable to the year ended December 31, 2019.

New Leases, Leasing Renewals and Expirations

The following table presents selected lease activity statistics for our properties.



	Years Ended December 31,
	2019			2018 ⁽²⁾
Renewals⁽¹⁾:
Leases renewed with rate increase (sq feet)	685,124			474,267
Leases renewed with rate decrease (sq feet)	52,282			43,935
Leases renewed with no rate change (sq feet)	298,611			175,768
Total leases renewed (sq feet)	1,036,017			693,970

Leases renewed with rate increase (count)	116			93
Leases renewed with rate decrease (count)	12			8
Leases renewed with no rate change (count)	21			18
Total leases renewed (count)	149			119

Option exercised (count)	38			31

Weighted average on rate increases (per sq foot)	$	0.68		$	0.93
Weighted average on rate decreases (per sq foot)	$	(2.25	)	$	(2.22	)
Weighted average rate (per sq foot)	$	0.34		$	0.50
Weighted average change over prior rates	4.17		%	5.72		%

New Leases^{(1) (3)}:
New leases (sq feet)	117,605			290,986
New leases (count)	43			55
Weighted average rate (per sq foot)	$	12.82		$	9.06

Gross Leasable Area ("GLA") expiring during the next 12 months, including month-to-month leases	13.10		%	7.08		%


(1)	Lease data presented for the years ended December 31, 2019 and 2018 is based on average rate per square foot over the renewed or new lease term.


(2)	2018 lease data adjusted to reflect average rate per square foot over the renewed or new lease term for consistency with 2019 presentations.


(3)	The Company does not include ground leases entered into for the purposes of new lease sq feet and weighted average rate (per sq foot) on new leases.

Critical Accounting Policies

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting policies summarized in this section are discussed in further detail in the notes to the consolidated financial statements appearing elsewhere in this Form 10-K. We believe that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Revenue Recognition

Principal components of our total revenues include base and percentage rents and tenant reimbursements. The Company combines lease and nonlease components in lease contracts, which includes combining base rent and tenant reimbursement revenue. We accrue minimum (base) rent on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset or deferred rent liability being recorded on the balance sheet. Certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent) which we recognize when the tenants achieve the specified targets as defined in their lease agreements. We periodically review the valuation of the asset/liability resulting from the straight-line accounting treatment of our leases in light of any changes in lease terms, financial condition or other factors concerning our tenants.

Rents and Other Tenant Receivables

We record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease; our standard lease form considers a rent charge past due after five days. A past due receivable triggers certain events such as notices, fees and other allowable and required actions per the lease. Upon adoption of ASC Topic 842 "Leases," reserves for uncollectible accounts were recorded and reclassified to "rental revenues". Prior to adoption, reserves for uncollectible accounts were recorded as an operating expense, provision for credit losses. The standard also provides guidance on calculating reserves; however, those did not impact the Company.

Impairment of Long-Lived Assets

We periodically review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable, with an evaluation performed at least annually. These circumstances include, but are not limited to, declines in the property’s cash flows, occupancy and fair market value. We measure any impairment of investment property when the estimated undiscounted future operating income before depreciation and amortization, plus its residual value, is less than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value. We estimate fair value using unobservable data such as operating income, estimated capitalization rates or multiples, leasing prospects and local market information. These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company did not recognize any impairment charges to its investment properties for the year ended December 31, 2019 and $3.94 million for the year ended December 31, 2018.

The Company may decide to sell properties. Properties classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. When the carrying value exceeds the fair value, less estimated costs to sell an impairment charge is recognized. The Company estimates fair value, less estimated closing costs based on similar real estate sales transactions. These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 and 3 inputs. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices.

Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company recognized $1.60 million of impairment charges to its assets held for sale for the years ended December 31, 2019 and none for the year ended December 31, 2018.

Notes Receivable

Notes receivable represent financing to Sea Turtle Development as discussed in Note 4 of the audited consolidated financial statements for development of the project. The notes are secured by a second deed of trust on the underlying real estate known as Sea Turtle Development. The Company evaluates the collectability of both the interest on and principal of the notes receivable based primarily upon the projected fair market value of the project at stabilization and lease up. The notes receivable are determined to be impaired when, based upon current information, it is no longer probable that the Company will

be able to collect all contractual amounts due from the borrower. The amount of impairment loss recognized is measured as the difference between the carrying amount of the loan and its estimated realizable value, as of December 31, 2019 the carrying value of the Sea Turtle Development notes were zero. The impairment charges to the Sea Turtle Development notes for the years ended December 31, 2019 and 2018 were $5.00 million and $1.74 million, respectively.

Adoption of ASC Topic 842, “Leases”

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842)”, to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. The Company adopted ASU 2016-02 as of January 1, 2019 using the modified retrospective approach within ASU 2018-11, which allows for the application date to be the beginning of the reporting period in which the entity first applies the new standard. The Company did not have a cumulative-effect adjustment as of the adoption date.

The Company elected the package of transition practical expedients where the company is either the lessee or lessor, which among other things, allowed the Company to carry forward the historical lease classifications and use hindsight in determining the lease terms.

The standard had a material impact on the Company's consolidated balance sheets, but did not have a material impact on the consolidated statements of operations. The most significant impact was the recognition of ROU assets and lease liabilities of approximately $11.90 million and $11.99 million, respectively, for operating leases as of January 1, 2019, calculated based on an incremental borrowing rate of 4.84%. The difference between the ROU assets and lease liabilities at adoption represents the accrued straight-line rent liability previously recognized under ASC 840. The standard had no impact on the Company's cash flows.

Liquidity and Capital Resources

At December 31, 2019, our consolidated cash, cash equivalents and restricted cash totaled $21.59 million compared to consolidated cash, cash equivalents and restricted cash of $18.00 million at December 31, 2018. Cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2019 and 2018 are as follows (in thousands):



	Years Ended December 31,						Year Over Year Change
	2019			2018			$			%
Operating activities	$	15,253		$	22,002		$	(6,749	)	(30.67	)%
Investing activities	$	868		$	(22,450	)	$	23,318		103.87	%
Financing activities	$	(12,529	)	$	6,161		$	(18,690	)	(303.36	)%

Operating Activities

During the year ended December 31, 2019, our cash flows from operating activities were $15.25 million, compared to cash flows from operating activities of $22.00 million during the year ended December 31, 2018, representing a decrease of $6.75 million. This decrease is primarily a result of a reduction of accounts payable, accrued expenses and other liabilities of $4.29 million, a decrease in property net operating income ("NOI") of $2.49 million and timing of receivables and deferred costs.

Investing Activities

During the year ended December 31, 2019, our cash flows from investing activities were $868 thousand, compared to cash flows used in investing activities of $22.45 million during the year ended December 31, 2018, representing an increase of $23.32 million due to the following:


•	$23.15 million in cash outflows used for the acquisition of JANAF in 2018;


•	$2.86 million decrease in cash outflows used for capital expenditures primarily a result of the redevelopment of Columbia Fire House as well as Perimeter Square and Shoppes at Myrtle Park tenant improvements in 2018; and offset by


•	$2.67 million decrease in cash received as a result of the 2019 sales of Jenks Plaza, Graystone Crossing, Perimeter Square and Harbor Pointe land parcel, compared to the 2018 sales of the Chipotle ground lease at Conyers Crossing, Shoppes at Eagle Harbor, the Laskin Road land parcel and the Monarch Bank Building.

Financing Activities

During the year ended December 31, 2019, our cash flows used in financing activities were $12.53 million, compared to $6.16 million of cash flows provided by financing activities during the year ended December 31, 2018, representing a decrease of $18.69 million due to the following:


•	$21.16 million decrease in proceeds from sale of preferred stock due to the 2018 Series D Preferred offering;


•	$14.44 million increase in loan principal payments primarily a result of the payoff of the Revere Term Loan and Senior Convertible Notes, in addition to the Village of Martinsville, Laburnum Square and Litchfield Market Village refinances and pay-down of the KeyBank Line of Credit; and offset by


•	$1.13 million increase in loan proceeds due to the 2019 Village of Martinsville, Laburnum Square and Litchfield Market Village refinances offset by the 2018 JANAF Bravo Loan, Columbia Fire House Construction Loan advances, refinance of LaGrange and refinancing of six properties off the KeyBank Line of Credit; and


•	$14.59 million decrease in cash outflows for dividends and distributions primarily as a result of the suspended Preferred Stock dividends.

We intend to continue managing our debt prudently so as to maintain a conservative capital structure and minimize leverage within our company. As of December 31, 2019 and 2018, our debt balances, excluding unamortized debt issuance costs, consisted of the following (in thousands):



	December 31,
	2019		2018
Fixed-rate notes	$	305,017	$	286,684
Adjustable-rate mortgages	24,163		26,503
Fixed-rate notes, assets held for sale	—		4,323
Floating-rate line of credit ⁽¹⁾	17,879		52,102
Total debt	$	347,059	$	369,612

(1) Includes portion attributable to liabilities held for sale, see Note 3 included in this Form 10-K.

The weighted average interest rate and term of our fixed-rate debt including liabilities held for sale are 4.67% and 4.77 years, respectively, at December 31, 2019. We have $62.07 million of debt maturing, including scheduled principal repayments, during the year ending December 31, 2020. While we anticipate being able to refinance all the loans at reasonable market terms upon maturity, our inability to do so may materially impact our financial position and results of operations. See the Note 7 included in the audited consolidated financial statements for additional mortgage indebtedness details.

Future Liquidity Needs

The primary liquidity needs of the Company, in addition to the funding of our ongoing operations, at December 31, 2019 are $62.07 million in debt maturities and principal payments due in the year ended December 31, 2020 and covenant requirements as detailed in our Amended and Restated Credit Agreement as described in Note 7. Included in the $62.07 million is $17.88 million on the KeyBank Line of Credit. The KeyBank Line of Credit is collateralized by 7 properties within our portfolio. Subsequent to December 31, 2019, the Company reduced the line to $10.00 million in accordance with the Second Amendment to the KeyBank Line of Credit through the sale of St. Matthews and refinancing of Shoppes of Myrtle Park. Additionally, the $21.55 million Rivergate loan was extended to March 20, 2020. The Company plans to meet the remaining deadlines described in the Second Amendment through monthly principal payments, refinances and dispositions. Management intends to refinance or extend the remaining maturing debt as it comes due.

In addition to liquidity required to fund debt payments we may incur some level of capital expenditures during the year for our existing properties that cannot be passed on to our tenants. The majority of these expenditures occur subsequent to acquiring a new property that requires significant improvements to maximize occupancy and lease rates, with an existing property that needs a facelift to improve its marketability or when tenant improvements are required to make a space fit a particular tenant’s needs.

To meet these future liquidity needs, the Company had $5.45 million in cash and cash equivalents, $16.14 million held in lender reserves for the purpose of tenant improvements, lease commissions, real estate taxes and insurance at December 31, 2019 and intends to use cash generated from operations during the year ending December 31, 2020. In addition, the Board suspended Series A Preferred, Series B Preferred and Series D Preferred dividend payments beginning with the fourth quarter 2018 dividend. The Board plans to revisit the dividend payment policy with respect to the Series A Preferred, Series B Preferred and Series D Preferred on an ongoing basis. The Board believes that the dividend suspension will provide the Company with additional funds to meet its ongoing liquidity needs, approximately $3.49 million a quarter.

Additionally, the Company plans to undertake measures to grow its operations and increase liquidity through backfilling vacant anchor spaces, replacing tenants who are in default of their lease terms, increasing future lease revenue through tenant improvements partially funded by restricted cash, disposition of assets and refinancing properties.

Our success in refinancing the debt, and executing on our strategy will dictate our liquidity needs going forward. If we are unable to execute in these areas, our ability to grow and reinstate dividends may be limited without additional capital.

Off-Balance Sheet Arrangements

On September 1, 2011, the Grove Economic Development Authority issued the Grove Economic Development Authority Tax Increment Revenue Note, Taxable Series 2011 in the amount of $2.42 million, bearing a variable interest rate of 2.29%, not to exceed 14% and payable in 50 semi-annual installments. The proceeds of the bonds were to provide funding for the construction of public infrastructure and other site improvements and to be repaid by incremental additional property taxes generated by development. Harbor Pointe Associates, LLC, then owned by an affiliate of former CEO, Jon Wheeler, entered into the Harbor Pointe Agreement. In 2014, Harbor Pointe Associates, LLC was acquired by the Company.

The total debt service shortfall over the life of the bond is uncertain as it is based on ad valorem taxes, assessed property values, property tax rates, LIBOR and future potential development ranging until 2036. The Company’s future total principal obligation under the Harbor Pointe Agreement will be no more than $2.23 million, the principal amount of the bonds, as of December 31, 2019. In addition, the Company may have an interest obligation on the note based on the principal balance and LIBOR rates in effect at future payment dates. During the years ended December 31, 2019 and 2018, the Company funded approximately $79 thousand and $73 thousand, respectively, in debt service shortfalls. No amounts have been accrued for this as of December 31, 2019 as a reasonable estimate of future debt service shortfalls cannot be determined based on variables noted above.

As of December 31, 2019, we have no off-balance sheet arrangements, other than that noted above, that are likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

Inflation, Deflation and Economic Condition Considerations

Inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers; however, inflation may become a greater concern in the near future. Most of our leases contain provisions designed to partially mitigate the impact of inflation, which require tenants to pay their pro-rata share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation, although some tenants have capped the amount of these operating expenses they are responsible for under the lease. A small number of our leases also include percentage rent clauses enabling us to receive additional rent based on tenant sales above a predetermined level, which sales generally increase as prices rise and are typically related to increases in the Consumer Price Index or similar inflation indices. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods of economic weakness, minimum rents and percentage rents will decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines will result in lower recovery rates of our operating expenses.

Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements beginning on page 34 of this Annual Report on Form 10-K.

Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018

Results of Operations

The following table presents a comparison of the consolidated statements of operations for the years ended December 31, 2019 and 2018, respectively (in thousands, except Property Data).



	For the Years Ended December 31,						Year over Year Changes
	2019			2018			$/#			%

PROPERTY DATA:
Number of properties owned and leased at period end ⁽¹⁾	61			64			(3		)	(4.69	)%
Aggregate gross leasable area at period end⁽¹⁾	5,618,877			5,716,471			(97,594		)	(1.71	)%
Ending leased rate at period end⁽¹⁾	89.8		%	89.4		%	0.4		%	0.45	%
FINANCIAL DATA:
Rental revenues	$	62,442		$	63,036		$	(594	)	(0.94	)%
Asset management fees	60			266			(206		)	(77.44	)%
Commissions	65			140			(75		)	(53.57	)%
Other revenues	595			1,833			(1,238		)	(67.54	)%
Total Revenue	63,162			65,275			(2,113		)	(3.24	)%
EXPENSES:
Property operations	19,127			18,473			654			3.54	%
Non-REIT management and leasing services	25			75			(50		)	(66.67	)%
Depreciation and amortization	21,319			27,094			(5,775		)	(21.31	)%
Impairment of goodwill	—			5,486			(5,486		)	(100.00	)%
Impairment of notes receivable	5,000			1,739			3,261			187.52	%
Impairment of real estate	—			3,938			(3,938		)	(100.00	)%
Impairment of assets held for sale	1,598			—			1,598			100.00	%
Corporate general & administrative	6,633			8,228			(1,595		)	(19.39	)%
Other operating expense	—			250			(250		)	(100.00	)%
Total Operating Expenses	53,702			65,283			(11,581		)	(17.74	)%
Gain on disposal of properties	1,394			2,463			(1,069		)	(43.40	)%
Operating Income	10,854			2,455			8,399			342.12	%
Interest income	2			4			(2		)	(50.00	)%
Interest expense	(18,985		)	(20,228		)	1,243			6.14	%
Net Loss from Continuing Operations Before Income Taxes	(8,129		)	(17,769		)	9,640			54.25	%
Income tax expense	(15		)	(40		)	25			62.50	%
Net Loss from Continuing Operations	(8,144		)	(17,809		)	9,665			54.27	%
Net Income from Discontinued Operations	—			903			(903		)	(100.00	)%
Net Loss	(8,144		)	(16,906		)	8,762			51.83	%
Less: Net loss attributable to noncontrolling interests	(105		)	(406		)	301			74.14	%
Net Loss Attributable to Wheeler REIT	$	(8,039	)	$	(16,500	)	$	8,461		51.28	%

(1) Excludes the undeveloped land parcels and Riversedge North, our corporate headquarters. Includes assets held for sale.

Total Revenue

Total revenue was $63.16 million for the year ended December 31, 2019 compared to $65.28 million for the year ended December 31, 2018, a $2.11 million decrease. The decrease in other revenues is primarily a result of early lease termination fees associated with Berkley Center Shopping Center Farm Fresh and Southeastern Grocers ("SEG") recaptures during 2018. The rent adjustments for certain SEG leases, sold properties and additional vacant anchor spaces attributed to the

decrease in rental revenues which was partially offset by a full period of JANAF operations and increased tenant reimbursement recoveries.

Total Operating Expenses

Total operating expenses for the year ended December 31, 2019 were $53.70 million, representing a decrease of $11.58 million over the year ended December 31, 2018.

For the year ended December 31, 2019, the Company recorded impairment charges of $5.00 million on Sea Turtle notes receivable and $1.60 million impairment charges on assets held for sale, which were offset by the 2018 impairment charge of $5.49 million on goodwill, $1.74 million on the Sea Turtle Development notes receivable and $3.94 million on land held for use. After consideration of all impairment charges, total operating expenses decreased for the year ended December 31, 2019 by $7.02 million.

The decrease of $5.78 million noted in depreciation and amortization is a result of the write-off of lease intangibles from early terminations of leases in 2018 and properties either sold or classified as held for sale.

Corporate general and administrative expenses for the year ended December 31, 2019 decreased $1.60 million, as a result of the following:


•	$682 thousand decrease in compensation and benefits primarily driven by the decrease in employee share based compensation and severance;


•	$432 thousand decrease in capital and debt financing costs as a result of costs incurred on refinancing of properties which the Company opted to stop pursuing in 2018. These costs did not reoccur in 2019;


•	$310 thousand decrease in professional fees associated with hiring of KeyBanc Advisors in 2018 and SOX internal audit compliance; and


•	$274 thousand decrease in acquisition and development costs as a result of costs associated with the development of an outparcel at Folly Road which the Company chose to no longer pursue in 2018.

Other operating expenses decreased $250 thousand for the year ended December 31, 2019 as a result of the 2018 lease termination expense to allow the space to be available for a high credit grocery store tenant.

Gain on Disposal of Properties

The gain on disposal of properties decrease of $1.07 million for the year ended December, 2019 is a result of the demolition of an approximate 10,000 square foot building at the JANAF property in 2019 to make space available for a new approximate 20,000 square foot building constructed by a new grocer tenant and the 2019 sales of Jenks Plaza, Graystone Crossing and Perimeter Square, net of the 2018 sales of the Chipotle ground lease at Conyers Crossing, Shoppes at Eagle Harbor and Monarch Bank Building.

Interest Expense

Interest expense decreased $1.24 million or 6.14% for the year ended December 31, 2019, compared to $20.23 million for the year ended December 31, 2018. The decrease is primarily attributable to lower loan cost amortization due to 2018 loan modifications and reduction of loans payable by $22.55 million from December 31, 2018, partially offset by a full twelve months of interest expense on JANAF.

Same Store and Non-same Store Operating Income

NOI is a widely-used non-GAAP financial measure for REITs. The Company believes that NOI is a useful measure of the Company's property operating performance. The Company defines NOI as property revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Because NOI excludes general and administrative expenses, depreciation and amortization, interest expense, interest income, provision for income taxes, gain or loss on sale or capital expenditures and leasing costs, impairment of assets held for sale and held for use, impairment of goodwill and impairment of notes receivable, it provides a performance measure, that when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to

operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to that of other REITs.

The following table is a reconciliation of same store and non-same store NOI from the most directly comparable GAAP financial measure of net income (loss). Same stores consist of those properties owned during all periods presented in their entirety, while non-same stores consist of those properties acquired or disposed of during the periods presented. The non-same store category represents the JANAF acquisition that occurred in January 2018, the absorption of the JANAF Executive Building in April 2019 and the below properties sold:


•	Discontinued operations


•	Laskin Road land parcel (sold June 19, 2018); and


•	Harbor Pointe land parcel (sold February 7, 2019);


•	Continuing operations


•	Chipotle Ground Lease at Conyers Crossing (sold January 12, 2018)


•	Shoppes at Eagle Harbor (sold September 27, 2018);


•	Monarch Bank Building (sold October 22, 2018);


•	Jenks Plaza (sold January 11, 2019);


•	Graystone Crossing (sold March 18, 2019); and


•	Perimeter Square (sold July 12, 2019).



	Years Ended December 31,
	Same Store						Non-same Store						Total
	2019			2018			2019			2018			2019			2018
							(in thousands)
Net (Loss) Income	$	(9,122	)	$	(20,071	)	$	978		$	3,165		$	(8,144	)	$	(16,906	)
Adjustments:
Income from Discontinued Operations	—			—			—			(903		)	—			(903		)
Income tax expense	15			40			—			—			15			40
Interest expense	15,788			16,581			3,197			3,647			18,985			20,228
Interest income	(2		)	(4		)	—			—			(2		)	(4		)
Gain on disposal of properties	—			—			(1,394		)	(2,463		)	(1,394		)	(2,463		)
Other operating expenses	—			—			—			250			—			250
Corporate general & administrative	6,439			8,040			194			188			6,633			8,228
Impairment of assets held for sale	451			—			1,147			—			1,598			—
Impairment of real estate	—			3,938			—			—			—			3,938
Impairment of notes receivable	5,000			1,739			—			—			5,000			1,739
Impairment of goodwill	—			5,486			—			—			—			5,486
Depreciation and amortization	17,298			21,944			4,021			5,150			21,319			27,094
Non-REIT management and leasing services	25			75			—			—			25			75
Asset management and commission revenues	(125		)	(406		)	—			—			(125		)	(406		)
Property Net Operating Income	$	35,767		$	37,362		$	8,143		$	9,034		$	43,910		$	46,396

Property revenues	$	51,355		$	52,426		$	11,682		$	12,443		$	63,037		$	64,869
Property expenses	15,588			15,064			3,539			3,409			19,127			18,473
Property Net Operating Income	$	35,767		$	37,362		$	8,143		$	9,034		$	43,910		$	46,396

Property Revenues

Total same store property revenues for the year ended December 31, 2019 decreased to $51.36 million compared to $52.43 million for the year ended December 31, 2018. The decrease is primarily a result of the 2018 early termination fees associated with Farm Fresh at Berkley Center Shopping Center, rent modifications to certain 2018 SEG leases, reduced rent at the SEG recaptured properties and backfilled locations and incremental vacancies.

Property Expenses

Total same store property expenses for the year ended December 31, 2019 increased to $15.59 million, compared to $15.06 million for the year ended December 31, 2018, representing an increase of $524 thousand due to increased repairs and maintenance expenses related to buildings and parking lots.

There were no significant unusual or non-recurring items included in non-same store property expenses for the year ended December 31, 2019.

Property Net Operating Income

Total property net operating income was $43.91 million for the year ended December 31, 2019, compared to $46.40 million for the year ended December 31, 2018 representing a decrease of $2.49 million over 2018. Same stores accounted for a decrease of $1.60 million, while non-same stores had a decrease of $891 thousand, resulting from the loss of NOI associated with sold properties.

Funds from Operations (FFO)

We use FFO, a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs), plus impairment of goodwill, impairment of real estate related long-lived assets and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

Below is a comparison of same store and non-same store FFO, which is a non-GAAP measurement, for the years ended December 31, 2019 and 2018:



	Years Ended December 31,
	Same Store						Non-same Store						Total						Year Over Year Changes
	2019			2018			2019			2018			2019			2018			$			%
Net (loss) income	$	(9,122	)	$	(20,071	)	$	978		$	3,165		$	(8,144	)	$	(16,906	)	$	8,762		51.83	%
Depreciation and amortization of real estate assets	17,298			21,944			4,021			5,150			21,319			27,094			(5,775		)	(21.31	)%
Impairment of goodwill	—			5,486			—			—			—			5,486			(5,486		)	(100.00	)%
Impairment of real estate	—			3,938			—			—			—			3,938			(3,938		)	(100.00	)%
Impairment of assets held for sale	451			—			1,147			—			1,598			—			1,598			100.00	%
Gain on disposal of properties	—			—			(1,394		)	(2,463		)	(1,394		)	(2,463		)	1,069			43.40	%
Gain on disposal of properties-discontinued operations	—			—			—			(903		)	—			(903		)	903			100.00	%
FFO	$	8,627		$	11,297		$	4,752		$	4,949		$	13,379		$	16,246		$	(2,867	)	(17.65	)%

During the year ended December 31, 2019, same store FFO decreased $2.67 million primarily due to the following:


•	$3.26 million increase in impairment charges on notes receivable related to Sea Turtle Development, which is not indicative of our core portfolio of properties and future operations;


•	$1.60 million decrease in property net operating income; offset by


•	$1.60 million decrease in corporate general and administrative expenses; and


•	$793 thousand decrease in interest expense.

We believe the computation of FFO in accordance with NAREIT's definition includes certain items that are not indicative of the results provided by our operating portfolio and affect the comparability of our period-over-period performance. These items include, but are not limited to, legal settlements, non-cash share-based compensation expense, non-cash amortization on loans and acquisition costs. Therefore, in addition to FFO, management uses Adjusted FFO ("AFFO"), which we define to exclude such items. Management believes that these adjustments are appropriate in determining AFFO as they are not indicative of the operating performance of our assets. In addition, we believe that AFFO is a useful supplemental measure for the investing community to use in comparing us to other REITs as many REITs provide some form of adjusted or modified FFO. However, there can be no assurance that AFFO presented by us is comparable to the adjusted or modified FFO of other REITs.

Total AFFO for the years ended December 31, 2019 and 2018 is shown in the table below (in thousands):



	Years Ended December 31,
	2019			2018
FFO	$	13,379		$	16,246
Preferred Stock dividends - declared	—			(9,790		)
Preferred Stock dividends - undeclared	(14,629		)	(3,037		)
Preferred Stock accretion adjustments	680			678
FFO available to common shareholders and common unitholders	(570		)	4,097
Impairment of notes receivable	5,000			1,739
Acquisition and development costs	26			300
Capital related costs	144			576
Other non-recurring and non-cash expenses	42			103
Share-based compensation	2			940
Straight-line rental revenue, net straight-line expense	6			(1,197		)
Loan cost amortization	1,707			2,363
(Below) above market lease amortization	(1,261		)	(695		)
Recurring capital expenditures and tenant improvement reserves	(1,126		)	(1,143		)
AFFO	$	3,970		$	7,083

Impairment on notes receivable during the years ended December 31, 2019 and 2018 is due to the impairment of the notes receivable related to Sea Turtle Development and is not indicative of our core portfolio of properties and future operations.

Acquisition and development costs at December 31, 2018 are related to the write-off of costs associated with the construction contract for the development of an outparcel at Folly Road and Light Bridge joint venture, both of which the Company is no longer pursuing.

Other nonrecurring and non-cash expenses are severance costs, vacation accrual and one time fees we believe will not be incurred on a go forward basis.

The preferred stock accretion adjustments represent the amortization of offering costs associated with raising the Series B Preferred Stock and Series D Preferred Stock.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

The information required by this Item 8 is incorporated by reference to our Financial Statements beginning on page 29 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our principal executive and financial officer, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the

time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to our company’s management, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officer have concluded that such disclosure controls and procedures were effective as of December 31, 2019 (the end of the period covered by this Annual Report).

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our CEO and CFO and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:


•	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;


•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and


•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our internal control over financial reporting is evaluated on a regular basis by personnel in our organization. The overall goals of these various evaluation activities are to monitor our internal control over financial reporting and to make modifications as necessary, as disclosure and internal controls are intended to be dynamic systems that change (including improvements and corrections) as conditions warrant.

Management conducted an assessment of the effectiveness of our company’s internal control over financial reporting as of December 31, 2019, utilizing the framework established in “INTERNAL CONTROL-INTEGRATED FRAMEWORK” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on this assessment, management has determined that our internal controls over financial reporting as of December 31, 2019 were effective.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal controls over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management's report in this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting for the three months ended December 31, 2019 that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

Item 9B. Other Information

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information concerning our directors, executive officers and corporate governance is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to the 2020 Annual Meeting of Stockholders. Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3).

Code of Ethics

We have a code of ethics applicable to our Board of Directors, principal executive officers, principal financial officer, principal accounting officer and persons performing similar functions. The text of this code of ethics may be found on our website at www.whlr.us. We will post a notice of any waiver from, or amendment to, any provision of our code of ethics on our website.

Item 11. Executive Compensation.

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to the 2020 Annual Meeting of Stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of December 31, 2019 regarding our compensation plans and the Common Stock we may issue under the plan.



Equity Compensation Plan Information Table
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders ₍₁₎	—	—	173,811
Equity compensation plans not approved by stockholders	—	—	—
Total	—	—	173,811

(1) Includes our 2015 and 2016 Long-Term Incentive Plans, which authorized a maximum of 125,000 and 625,000 shares, respectively, of our Common Stock for issue. Awards are granted by the Compensation Committee.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits and Financial Statement Schedules.

1. Financial Statements. The following financial statements filed as a part of this Annual Report on Form 10-K is as follows:



				Page
Report of Independent Registered Public Accounting Firm				28
Consolidated Balance Sheets				29
Consolidated Statements of Operations				30
Consolidated Statements of Equity				31
Consolidated Statements of Cash Flows				32
Notes to Consolidated Financial Statements				33

2. Financial Statement Schedules.


a.	Schedule II- Valuation and Qualifying Accounts


b.	Schedule III- Real Estate and Accumulated Depreciation

All other financial statements schedules have been omitted because the required information of such schedules is not present, is not present in amounts sufficient to require a schedule or is included in the consolidated financial statements.

3. Exhibits. The list of exhibits filed as a part of this Annual Report on Form 10-K in response to Item 601 of Regulation S-K is submitted on the Exhibit Index attached hereto and incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities 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/ Crystal Plum
		Crystal Plum
		Chief Financial Officer

Date: February 26, 2020

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Each person whose signature appears below hereby constitutes and appoints each of Dave Kelly and Crystal Plum as his or her attorney-in-fact and agent, with full power of substitution and resubstitution for him or her in any and all capacities, to sign any or all amendments to this Report and to file same, with exhibits thereto and other documents in connection therewith, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his or her substitutes may do or cause to be done by virtue hereof.



Signature	Title	Date
/S/ DAVID KELLY	Chief Executive Officer	February 26, 2020
David Kelly
/S/ CRYSTAL PLUM	Chief Financial Officer	February 26, 2020