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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
 
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-35713
WHEELER REAL ESTATE INVESTMENT TRUST, INC.
(Exact Name of Registrant as Specified in Its Charter) 
Maryland 45-2681082
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
2529 Virginia Beach Blvd.
Virginia Beach, Virginia
 23452
(Address of Principal Executive Offices) (Zip Code)
 (757) 627-9088
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
 Common Stock, $0.01 par value per share WHLR
Nasdaq Capital Market
 Series B Convertible Preferred Stock WHLRP
Nasdaq Capital Market
 Series D Cumulative Convertible Preferred StockWHLRD
Nasdaq Capital Market
 7.00% Subordinated Convertible Notes due 2031WHLRL
Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
1

Table of Contents

Large accelerated filer 
¨
  Accelerated filer
¨
Non-accelerated filer 
ý
  Smaller reporting company
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).         Yes      No  ý
As of November 4, 2022, there were 9,793,494 common shares, $0.01 par value per share, outstanding.
2


Wheeler Real Estate Investment Trust, Inc. and Subsidiaries 
  Page
PART I – FINANCIAL INFORMATION
Item 1.Financial Statements
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
3


Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except par value and share data)
September 30, 2022December 31, 2021
 (unaudited) 
ASSETS:
Investment properties, net$567,573 $386,730 
Cash and cash equivalents24,057 22,898 
Restricted cash30,245 17,521 
Rents and other tenant receivables, net11,517 9,233 
Assets held for sale419 2,047 
Above market lease intangibles, net3,432 2,424 
Operating lease right-of-use assets15,129 12,455 
Deferred costs and other assets, net40,674 11,973 
Total Assets$693,046 $465,281 
LIABILITIES:
Loans payable, net$467,230 $333,283 
Liabilities associated with assets held for sale 3,381 
Below market lease intangibles, net26,340 3,397 
Derivative liabilities7,309 4,776 
Operating lease liabilities16,446 13,040 
Accounts payable, accrued expenses and other liabilities21,286 11,054 
Total Liabilities538,611 368,931 
Series D Cumulative Convertible Preferred Stock (no par value, 6,000,000 shares authorized, 3,152,392 shares issued and outstanding; $111.33 million and $104.97 million aggregate liquidation value, respectively)
99,276 92,548 
EQUITY:
Series A Preferred Stock (no par value, 4,500 shares authorized, 562 shares issued and outstanding)
453 453 
Series B Convertible Preferred Stock (no par value, 5,000,000 authorized, 2,301,337 and 1,872,448 shares issued and outstanding, respectively; $57.53 million and $46.81 million aggregate liquidation preference, respectively)
43,263 41,189 
Common Stock ($0.01 par value, 200,000,000 shares authorized 9,793,494 and 9,720,532 shares issued and outstanding, respectively)
98 97 
Additional paid-in capital234,956 234,229 
Accumulated deficit(288,546)(274,107)
Total Stockholders’ (Deficit) Equity(9,776)1,861 
Noncontrolling interests64,935 1,941 
Total Equity55,159 3,802 
Total Liabilities and Equity$693,046 $465,281 
See accompanying notes to condensed consolidated financial statements.

4


Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
REVENUE:
Rental revenues$18,486 $15,000 $49,142 $44,946 
Other revenues232 508 552 780 
Total Revenue18,718 15,508 49,694 45,726 
OPERATING EXPENSES:
Property operations6,655 5,029 16,637 14,573 
Depreciation and amortization4,981 3,678 12,222 11,033 
Impairment of assets held for sale  760 2,200 
Corporate general & administrative2,498 1,756 5,434 4,945 
Total Operating Expenses14,134 10,463 35,053 32,751 
(Loss) gain on disposal of properties 1,967 (15)2,143 
Operating Income4,584 7,012 14,626 15,118 
Interest income15 9 42 9 
Interest expense(6,949)(5,637)(19,079)(19,813)
Net changes in fair value of derivative liabilities(656)1,884 (2,533)303 
Other income   552 
Other expense (185)(691)(185)
Net (Loss) Income Before Income Taxes(3,006)3,083 (7,635)(4,016)
Income tax expense   (2)
Net (Loss) Income(3,006)3,083 (7,635)(4,018)
Less: Net income attributable to noncontrolling interests1,234 57 1,237 72 
Net (Loss) Income Attributable to Wheeler REIT(4,240)3,026 (8,872)(4,090)
Preferred Stock dividends - undeclared(2,264)(2,198)(6,792)(6,649)
Deemed contribution related to preferred stock redemption   5,040 
Net (Loss) Income Attributable to Wheeler REIT Common Stockholders$(6,504)$828 $(15,664)$(5,699)
(Loss) income per share:
Basic and Diluted$(0.66)$0.09 $(1.61)$(0.59)
Weighted-average number of shares:
Basic and Diluted9,792,815 9,713,125 9,749,651 9,708,588 
See accompanying notes to condensed consolidated financial statements.
5


Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of (Deficit) Equity
(in thousands, except share data)
 (Unaudited)
Series ASeries BTotal
Stockholders’
(Deficit) Equity
Noncontrolling
 Preferred StockPreferred StockCommon StockAdditional
Paid-in Capital
Accumulated Deficit InterestsTotal
 SharesValueSharesValueSharesValueUnitsValue(Deficit) Equity
Balance,
December 31, 2021
562 $453 1,872,448 $41,189 9,720,532 $97 $234,229 $(274,107)$1,861 215,343 $1,941 $3,802 
Accretion of Series B Preferred
  Stock discount
— — — 22 — — — — 22 — — 22 
Conversion of Series B Preferred
  Stock to Common Stock
— — (4,105)(90)2,561 — 90 — — — —  
Dividends and distributions— — — — — — — (2,264)(2,264)— — (2,264)
Net (Loss) Income— — — — — — — (4,580)(4,580)— 4 (4,576)
Balance,
March 31, 2022 (Unaudited)
562 453 1,868,343 41,121 9,723,093 97 234,319 (280,951)(4,961)215,343 1,945 (3,016)
Accretion of Series B Preferred
  Stock discount
— — — 22 — — — — 22 — — 22 
Adjustment for noncontrolling
  interest in operating partnership
— — — — — — 470 — 470 — (470) 
Conversion of Operating Partnership
  units to Common Stock
— — — — 69,620 1 158 — 159 (69,620)(159) 
Paid-in-kind interest, issuance of
  Series B Preferred Stock
— — 432,994 2,099 — — — — 2,099 — — 2,099 
Dividends and distributions— — — — — — — (2,264)(2,264)— — (2,264)
Net Loss— — — — — — — (52)(52)— (1)(53)
Balance,
June 30, 2022 (Unaudited)
562 453 2,301,337 43,242 9,792,713 98 234,947 (283,267)(4,527)145,723 1,315 (3,212)
Accretion of Series B Preferred
  Stock discount
— — — 21 — — — — 21 — — 21 
Adjustment for noncontrolling
  interest in operating partnership
— — — — — — 7 — 7 — (7) 
Conversion of Operating Partnership
  units to Common Stock
— — — — 781  2 — 2 (781)(2) 
Noncontrolling interests assumed
  from the acquisition (1)
— — — — — — — — — — 64,845 64,845 
Dividends and distributions— — — — — — — (2,264)(2,264)— (1,225)(3,489)
Net (Loss) Income— — — — — — — (3,015)(3,015)— 9 (3,006)
Balance,
September 30, 2022 (Unaudited)
562 $453 2,301,337 $43,263 9,793,494 $98 $234,956 $(288,546)$(9,776)144,942 $64,935 55,159 
(1) See Notes 1, 2 and 3 of the Notes to the Condensed Consolidated Financial Statements for further details.

6


Series ASeries BTotal
Stockholders’
(Deficit) Equity
Noncontrolling
 Preferred StockPreferred StockCommon StockAdditional
Paid-in Capital
Accumulated Deficit InterestsTotal
 SharesValueSharesValueSharesValueUnitsValue(Deficit) Equity
Balance,
December 31, 2020
562 $453 1,875,748 $41,174 9,703,874 $97 $234,061 $(260,867)$14,918 224,429 $1,931 $16,849 
Accretion of Series B Preferred
  Stock discount
— — — 22 — — — — 22 — — 22 
Conversion of operating
  partnership units to Common Stock
— — — — 2,864 — 9 — 9 (2,864)(9) 
Adjustment for noncontrolling
  interest in operating partnership
— — — — — — 16 — 16 — (16) 
Dividends and distributions— — — — — — — (2,273)(2,273)— — (2,273)
Deemed contribution related to
  preferred stock redemption
— — — — — — — 4,389 4,389 — — 4,389 
Net (Loss) Income— — — — — — — (4,049)(4,049)— 15 (4,034)
Balance,
March 31, 2021 (Unaudited)
562 453 1,875,748 41,196 9,706,738 97 234,086 (262,800)13,032 221,565 1,921 14,953 
Accretion of Series B Preferred
  Stock discount
— — — 22 — — — — 22 — — 22 
Conversion of operating
  partnership units to Common Stock
— — — — 3,676 — 18 — 18 (3,676)(18) 
Adjustment for noncontrolling
  interest in operating partnership
— — — — — — 15 — 15 — (15) 
Dividends and distributions— — — — — — — (2,189)(2,189)— — (2,189)
Deemed contribution related to
  preferred stock redemption
— — — — — — — 651 651 — — 651 
Net Loss — — — — — — — (3,067)(3,067)— — (3,067)
Balance,
June 30, 2021 (Unaudited)
562 453 1,875,748 41,218 9,710,414 97 234,119 (267,405)8,482 217,889 1,888 10,370 
Accretion of Series B Preferred
  Stock discount
— — — 21 — — — — 21 — — 21 
Conversion of operating
  partnership units to Common Stock
— — — — 801 — 3 — 3 (801)(3) 
Conversion of Series B Preferred
  Stock to Common Stock
— — (3,300)(72)2,572 — 72 — — — —  
Adjustment for noncontrolling
  interest in operating partnership
— — — — — — 5 — 5 — (5) 
Dividends and distributions— — — — — — — (2,198)(2,198)— — (2,198)
Net Income— — — — — — — 3,026 3,026 — 57 3,083 
Balance,
September 30, 2021 (Unaudited)
562 $453 1,872,448 $41,167 9,713,787 $97 $234,199 $(266,577)$9,339 217,088 $1,937 11,276 

See accompanying notes to condensed consolidated financial statements.

7


Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 For the Nine Months
Ended September 30,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss$(7,635)$(4,018)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
Depreciation8,966 8,193 
Amortization3,256 2,840 
Loan cost amortization2,154 5,200 
Changes in fair value of derivative liabilities2,533 (303)
Above (below) market lease amortization, net559 28 
Paid-in-kind interest2,099  
Straight-line expense24 26 
Loss (gain) on disposal of properties15 (2,143)
Credit losses on operating lease receivables267 168 
Impairment of assets held for sale760 2,200 
Net changes in assets and liabilities:
Rents and other tenant receivables, net770 1,829 
Unbilled rent(548)(1,061)
Deferred costs and other assets, net3,074 (904)
Accounts payable, accrued expenses and other liabilities11,660 2,458 
Net cash provided by operating activities27,954 14,513 
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment property acquisitions, net of cash acquired(135,510) 
Capital expenditures(6,382)(3,791)
Cash received from disposal of properties1,786 7,610 
Net cash (used in) provided by investing activities(140,106)3,819 
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for deferred financing costs(8,748)(6,026)
Loan proceeds265,000 94,650 
Loan principal payments(127,603)(68,801)
Preferred stock redemption (8,336)
Loan prepayment penalty(2,614)(687)
Net cash provided by financing activities126,035 10,800 
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH13,883 29,132 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period40,419 42,768 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$54,302 $71,900 
Supplemental Disclosures:
Non-Cash Transactions:
Paycheck Protection Program forgiveness$ $552 
Initial fair value of warrants$ $2,018 
Initial fair value of derivative liability at issuance of convertible notes$ $5,393 
Conversion of common units to common stock$160 $30 
Conversion of Series B Preferred Stock to common stock$90 $72 
Accretion of Preferred Stock discounts$438 $454 
Deemed contribution related to Preferred Stock discount$ $5,040 
Other Cash Transactions:
Cash paid for interest$14,137 $14,305 
The following table provides a reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$24,057 $36,234 
Restricted cash30,245 35,666 
Cash, cash equivalents, and restricted cash$54,302 $71,900 
See accompanying notes to condensed consolidated financial statements.
8

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)

1. Organization and Basis of Presentation and Consolidation

Wheeler Real Estate Investment Trust, Inc. (the “Trust,” the “REIT,” the “Company,” "we," "our" or "us") is a Maryland corporation formed on June 23, 2011. The Trust serves as the general partner of Wheeler REIT, L.P. (the “Operating Partnership”), which was formed as a Virginia limited partnership on April 5, 2012. At September 30, 2022, the Trust owned 99.05% of the Operating Partnership. As of September 30, 2022, the Trust, through the Operating Partnership, owned and operated seventy-six centers and four undeveloped properties in Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Oklahoma, Tennessee, Kentucky, New Jersey, Pennsylvania, Massachusetts, Maryland, Connecticut and West Virginia. Accordingly, the use of the word “Company” refers to the Trust and its consolidated subsidiaries, except where the context otherwise requires.

The Trust through the Operating Partnership owns Wheeler Interests (“WI”) and Wheeler Real Estate, LLC (“WRE”) (collectively the “Operating Companies”). The Operating Companies are Taxable REIT Subsidiaries (“TRS”) to accommodate serving the Non-REIT Properties since applicable REIT regulations consider the income derived from these services to be “bad” income subject to taxation. The regulations allow for costs incurred by the Company commensurate with the services performed for the Non-REIT Properties to be allocated to a TRS.

The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (the “Form 10-Q”) are unaudited and the results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for future periods or the year. The accompanying condensed consolidated financial statements include the accounts of the Company. The Company’s subsidiaries are accounted in accordance with the Consolidation Guidance of the Financial Accounting Standards Board (“FASB”). However, amounts presented in the condensed consolidated balance sheet as of December 31, 2021 are derived from the Company’s audited consolidated financial statements as of that date, but do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The Company prepared the accompanying condensed consolidated financial statements in accordance with GAAP for interim financial statements. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. All material balances and transactions between the consolidated entities of the Company have been eliminated. These condensed consolidated financial statements should be read in conjunction with the Company's 2021 Annual Report filed on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

Acquisition of Cedar Realty Trust

On March 2, 2022, the Company entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Cedar Realty Trust, Inc. (“Cedar”), Cedar Realty Trust Partnership, L.P., (“Cedar OP”), WHLR Merger Sub Inc., a wholly owned subsidiary of the Company, and WHLR OP Merger Sub LLC, a wholly owned subsidiary of Merger Sub I (“Merger Sub II”), pursuant to which the Company agreed to acquire Cedar, including 19 of its shopping center assets, in an all-cash merger transaction consisting, in accordance with the terms of the Merger Agreement, of a payment to Cedar common shareholders of merger consideration of $9.48 per common share (the “Cedar Acquisition”).

On August 22, 2022, the Company completed the merger transaction with Cedar. As a result of the merger, the Company acquired all of the outstanding shares of the Cedar's common stock, which ceased to be publicly traded on the New York Stock Exchange ("NYSE"). Cedar’s outstanding 7.25% Series B Preferred Stock and 6.50% Series C Preferred Stock remain outstanding and continue to trade on the NYSE. Each outstanding share of common stock of Cedar and outstanding common unit of the Cedar OP held by persons other than Cedar immediately prior to the merger were cancelled and converted into the right to receive a cash payment of $9.48 per share or unit. As a result Cedar became a subsidiary of the REIT.

During the nine months ended September 30, 2022 the Company incurred acquisition related costs of $5.51 million for the merger. These costs were capitalized as part of the acquisition and are primarily comprised of professional fees and legal fees, see Note 3 included in this Form 10-Q for further details.

The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (the “Form 10-Q”) include Cedar starting from the date of acquisition. We have determined that this acquisition is not a variable interest entity, as
9

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)

1. Organization and Basis of Presentation and Consolidation (continued)


defined under the consolidation topic of the Financial Accounting Standards Board (the "FASB"), Accounting Standards Codification, or ASC, and we evaluated such entity under the voting model and concluded we should consolidate the entity. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive participating rights.

2. Summary of Significant Accounting Policies

Tenant Receivables

Tenant receivables include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. The Company determines an allowance for the uncollectible portion of accrued rents and accounts receivable based upon customer credit-worthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends. The Company considers a receivable past due once it becomes delinquent per the terms of the lease. The Company’s 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. As of September 30, 2022 and December 31, 2021, the Company’s allowance for uncollectible tenant receivables totaled $3.81 million and $633 thousand, respectively.

Revenue Recognition

Lease Contract Revenue

The Company has two classes of underlying assets relating to rental revenue activity, retail and office space. The Company retains substantially all of the risks and benefits of ownership of these underlying assets and accounts for these leases as operating leases. The Company combines lease and nonlease components in lease contracts, which includes combining base rent and tenant reimbursement revenue.

The Company accrues minimum rents 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. At September 30, 2022 and December 31, 2021, there were $6.32 million and $5.77 million, respectively, in unbilled rent which is included in "rents and other tenant receivables, net."

The below table disaggregates the Company’s revenue by type of service (in thousands, unaudited):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Minimum rent$14,285 $11,487 $38,085 $34,149 
Tenant reimbursements - variable lease revenue3,875 3,178 10,455 9,604 
Percentage rent - variable lease revenue89 177 322 463 
Straight-line rents314 290 547 898 
Other232 508 552 780 
     Total18,795 15,640 49,961 45,894 
Credit losses on operating lease receivables(77)(132)(267)(168)
     Total$18,718 $15,508 $49,694 $45,726 

Use of Estimates

The Company has made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported periods. The Company’s actual results could differ from these estimates.

Corporate General and Administrative Expense
    
10

Table of Contents
Wheeler Real Estate Investment Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
2. Summary of Significant Accounting Policies (continued)
Corporate general & administrative expenses consist of the following (in thousands, unaudited):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Professional fees$946 $717 $1,918 $2,133 
Compensation and benefits863 325 1,554 900 
Corporate administration598 542 1,512 1,314 
Advertising costs for leasing activities22 36 232