whlr-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

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

For the quarterly period ended September 30, 2024

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

For the transition period from to

Commission file number 001-35713

WHEELER REAL ESTATE INVESTMENT TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)


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

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

(757) 627-9088

(Registrant’s Telephone Number, Including Area Code)

N/A

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

WHLR

Nasdaq Capital Market

Series B Convertible Preferred Stock

WHLRP

Nasdaq Capital Market

Series D Cumulative Convertible Preferred Stock

WHLRD

Nasdaq Capital Market

7.00% Subordinated Convertible Notes due 2031

WHLRL

Nasdaq Capital Market

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

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

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

Table of Contents

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☒

Emerging growth company

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

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

As of November 6, 2024, there were 1,294,310 common shares, $0.01 par value per share, outstanding.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries


		Page
PART I – FINANCIAL INFORMATION

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

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II – OTHER INFORMATION

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

Table of Contents

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

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

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

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

•the use of and demand for retail space;

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

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

•economic and real estate conditions in the Mid-Atlantic, Southeast and Northeast where our properties are geographically concentrated;

•consumer spending and confidence trends;

•availability, terms and deployment of capital;

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

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

•the degree and nature of our competition;

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

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

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

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

•litigation risks generally;

•the risk that shareholder litigation filed by the Company's former CEO, Daniel Khoshaba, may result in significant costs of defense, indemnification and liability, and divert management's attention away from running the Company;

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

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

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

Table of Contents

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

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

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

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

•competitive risks;

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

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

•the effects on the trading market of our Common Stock of the one-for-10 reverse stock split effected on August 17, 2023 (the "August 2023 Reverse Stock Split"), the one-for-24 reverse stock split effected on May 16, 2024 (the "May 2024 Reverse Stock Split"), the one-for-five reverse stock split effected on June 27, 2024 (the "June 2024 Reverse Stock Split", the one-for-three reverse stock split effected on September 19, 2024 (the "September 2024 Reverse Stock Split" and collectively with the May 2024 Reverse Stock Split and June 2024 Reverse Stock Split, the “2024 Reverse Stock Splits”) and any reverse stock splits the Company may effect in the future;

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

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

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

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

•the ability of our operating partnership, Wheeler REIT, L.P. (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;

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

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

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except par value and share data)


	September 30, 2024		December 31, 2023
	(unaudited)
ASSETS:
Real estate:
Land and land improvements	$	135,796	$	149,908
Buildings and improvements	506,068		510,812
	641,864		660,720
Less accumulated depreciation	(107,514)		(95,598)
Real estate, net	534,350		565,122

Cash and cash equivalents	37,070		18,404
Restricted cash	17,949		21,403
Receivables, net	12,487		13,126
Investment securities - related party	11,964		10,685
Assets held for sale	25,167		—
Above market lease intangibles, net	1,415		2,114
Operating lease right-of-use assets	9,290		9,450
Deferred costs and other assets, net	23,511		28,028
Total Assets	$	673,203	$	668,332

LIABILITIES:
Loans payable, net	$	482,893	$	477,574
Liabilities associated with assets held for sale	163		—
Below market lease intangibles, net	12,275		17,814
Derivative liabilities	53,427		3,653
Operating lease liabilities	10,180		10,329
Series D Preferred Stock redemptions	3,345		369
Accounts payable, accrued expenses and other liabilities	20,721		17,065
Total Liabilities	583,004		526,804
Commitments and contingencies (Note 8)
Series D Cumulative Convertible Preferred Stock	93,591		96,705
EQUITY:
Series A Preferred Stock (no par value, 4,500 shares authorized, 562 shares issued and outstanding; $0.6 million in aggregate liquidation value)	453		453
Series B Convertible Preferred Stock (no par value, 5,000,000 authorized, 3,379,142 shares issued and outstanding; $84.5 million aggregate liquidation preference)	45,063		44,998
Common Stock ($0.01 par value, 200,000,000 shares authorized, 652,768 and 149,360 shares issued and outstanding, respectively)	6		1
Additional paid-in capital	265,597		258,109
Accumulated deficit	(379,066)		(324,854)
Total Shareholders’ Deficit	(67,947)		(21,293)
Noncontrolling interests	64,555		66,116
Total (Deficit) Equity	(3,392)		44,823
Total Liabilities and Equity	$	673,203	$	668,332

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUE:
Rental revenues	$	24,336	$	24,655	$	75,925	$	74,738
Other revenues	456		549		1,056		1,372
Total Revenue	24,792		25,204		76,981		76,110
OPERATING EXPENSES:
Property operations	8,444		8,771		26,158		26,068
Depreciation and amortization	6,241		6,875		19,212		21,642
Impairment charges	1,195		—		1,195		—
Corporate general & administrative	2,101		2,475		7,488		8,364
Total Operating Expenses	17,981		18,121		54,053		56,074
Gain on disposal of properties, net	7,083		2,204		9,966		2,204
Operating Income	13,894		9,287		32,894		22,240
Interest income	133		163		256		336
Gain on investment securities, net	591		49		779		80
Interest expense	(7,851)		(7,469)		(24,034)		(24,125)
Net changes in fair value of derivative liabilities	(39,299)		(11,163)		(49,774)		(6,281)
Loss on conversion of Convertible Notes	(368)		—		(368)		—
Gain on preferred stock redemptions	2,526		—		2,739		—
Other expense	(257)		(2,233)		(1,486)		(5,273)
Net Loss Before Income Taxes	(30,631)		(11,366)		(38,994)		(13,023)
Income tax expense	—		(2)		(1)		(48)
Net Loss	(30,631)		(11,368)		(38,995)		(13,071)
Less: Net income attributable to noncontrolling interests	2,689		2,693		8,088		8,061
Net Loss Attributable to Wheeler REIT	(33,320)		(14,061)		(47,083)		(21,132)
Preferred stock dividends - undeclared	(2,071)		(2,415)		(6,135)		(6,940)
Deemed distribution related to preferred stock redemption value	—		(13,542)		(710)		(13,542)
Deemed distribution related to repurchase of noncontrolling interests	(284)		—		(284)		—
Net Loss Attributable to Wheeler REIT Common Shareholders	$	(35,675)	$	(30,018)	$	(54,212)	$	(41,614)

Loss per share:
Basic and Diluted	$	(91.99)	$	(11,019.82)	$	(215.94)	$	(15,288.02)
Weighted-average number of shares:
Basic and Diluted	387,817		2,724		251,046		2,722

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of (Deficit) Equity

(Unaudited, in thousands, except share data)


	Series A			Series B										Total Stockholders’ (Deficit) Equity								Total (Deficit) Equity
	Preferred Stock			Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit				Noncontrolling Interest
	Shares	Value		Shares	Value		Shares	Value								Operating Partnership		Consolidated Subsidiary		Total
Balance, December 31, 2023	562	$	453	3,379,142	$	44,998	149,360	$	1	$	258,109	$	(324,854)	$	(21,293)	$	1,271	$	64,845	$	66,116	$	44,823
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22

Adjustments for noncontrolling interest in operating partnership	—	—		—	—		—	—		6		—		6		(6)		—		(6)		—
Redemption of Series D Preferred Stock to Common Stock	—	—		—	—		39,594	—		2,983		—		2,983		—		—		—		2,983


Dividends and distributions	—	—		—	—		—	—		—		(2,042)		(2,042)		—		(2,688)		(2,688)		(4,730)
Net (Loss) Income	—	—		—	—		—	—		—		(8,707)		(8,707)		13		2,688		2,701		(6,006)
Balance, March 31, 2024	562	453		3,379,142	45,020		188,954	1		261,098		(335,603)		(29,031)		1,278		64,845		66,123		37,092
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Adjustments for noncontrolling interest in operating partnership	—	—		—	—		—	—		411		—		411		(411)		—		(411)		—

Adjustments of Series D Preferred Stock to redemption value	—	—		—	—		—	—		—		(710)		(710)		—		—		—		(710)
Redemption of fractional units as a result of reverse stock split	—	—		—	—		(16)	—		—		—		—		—		—		—		—
Dividends and distributions	—	—		—	—		—	—		—		(2,022)		(2,022)		—		(2,688)		(2,688)		(4,710)
Net (Loss) Income	—	—		—	—		—	—		—		(5,056)		(5,056)		10		2,688		2,698		(2,358)
Balance, June 30, 2024	562	453		3,379,142	45,042		188,938	1		261,509		(343,391)		(36,386)		877		64,845		65,722		29,336
Accretion of Series B Preferred Stock discount	—	—		—	21		—	—		—		—		21		—		—		—		21


Conversion of debt to Common Stock	—	—		—	—		28,105	—		434		—		434		—		—		—		434
Redemption of Series D Preferred Stock to Common Stock	—	—		—	—		435,767	5		3,223		—		3,228		—		—		—		3,228
Adjustments for noncontrolling interest in operating partnership	—	—		—	—		—	—		431		—		431		(431)		—		(431)		—
Redemption of fractional units as a result of reverse stock split	—	—		—	—		(42)	—		—		—		—		—		—		—		—
Noncontrolling interest repurchases	—	—		—	—		—	—		—		(284)		(284)		—		(751)		(751)		(1,035)
Dividends and distributions	—	—		—	—		—	—		—		(2,071)		(2,071)		—		(2,674)		(2,674)		(4,745)
Net (Loss) Income	—	—		—	—		—	—		—		(33,320)		(33,320)		15		2,674		2,689		(30,631)
Balance, September 30, 2024	562	$	453	3,379,142	$	45,063	652,768	$	6	$	265,597	$	(379,066)	$	(67,947)	$	461	$	64,094	$	64,555	$	(3,392)

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of (Deficit) Equity

(Unaudited, in thousands, except share data)

Continued


	Series A			Series B										Total Stockholders’ (Deficit) Equity
	Preferred Stock			Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit				Noncontrolling Interest
	Shares	Value		Shares	Value		Shares	Value								Operating Partnership		Consolidated Subsidiary		Total		Total Equity
Balance, December 31, 2022	562	$	453	3,379,142	$	44,911	2,720	$	—	$	235,091	$	(295,617)	$	(15,162)	$	1,351	$	64,845	$	66,196	$	51,034
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Conversion of Series D Preferred Stock to Common Stock	—	—		—	—		1	—		140		—		140		—		—		—		140
Adjustment for noncontrolling interest in operating partnership	—	—		—	—		—	—		(13)		—		(13)		13		—		13		—
Dividends and distributions	—	—		—	—		—	—		—		(2,264)		(2,264)		—		(2,688)		(2,688)		(4,952)
Net (Loss) Income	—	—		—	—		—	—		—		(3,101)		(3,101)		4		2,688		2,692		(409)
Balance, March 31 2023	562	453		3,379,142	44,933		2,721	—		235,218		(300,982)		(20,378)		1,368		64,845		66,213		45,835
Accretion of Series B Preferred Stock discount	—	—		—	22		—	—		—		—		22		—		—		—		22
Dividends and distributions	—	—		—	—		—	—		—		(2,261)		(2,261)		—		(2,688)		(2,688)		(4,949)
Net (Loss) Income	—	—		—	—		—	—		—		(3,970)		(3,970)		(12)		2,688		2,676		(1,294)
Balance, June 30, 2023	562	453		3,379,142	44,955		2,721	—		235,218		(307,213)		(26,587)		1,356		64,845		66,201		39,614
Accretion of Series B Preferred Stock discount	—	—		—	21		—	—		—		—		21		—		—		—		21
Conversion of Operating Partnership units to Common Stock	—	—		—	—		2	—		57		—		57		(57)		—		(57)		—
Adjustments for noncontrolling interest in operating partnership	—	—		—	—		—	—		30		—		30		(30)		—		(30)		—
Adjustments of preferred stock to redemption value	—	—		—	—		—	—		—		(13,542)		(13,542)		—		—		—		(13,542)

Dividends and distributions	—	—		—	—		—	—		—		(2,415)		(2,415)		—		(2,688)		(2,688)		(5,103)
Net (Loss) Income	—	—		—	—		—	—		—		(14,061)		(14,061)		5		2,688		2,693		(11,368)
Balance, September 30, 2023	562	$	453	3,379,142	$	44,976	2,723	$	—	$	235,305	$	(337,231)	$	(56,497)	$	1,274	$	64,845	$	66,119	$	9,622

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	For the Nine Months Ended September 30,
	2024		2023
OPERATING ACTIVITIES:
Net Loss	$	(38,995)	$	(13,071)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
Depreciation and amortization	19,212		21,642
Deferred financing cost amortization	2,157		2,357
Changes in fair value of derivative liabilities	49,774		6,281
Loss on conversion of Convertible Notes	368		—
Above (below) market lease amortization, net	(2,607)		(3,865)
Paid-in-kind interest	2,031		2,006
Loss on repurchase of debt securities	700		1,647
Gain on preferred stock redemptions	(2,739)		—
Unrealized gain on investment securities, net	(779)		(80)
Straight-line expense (income)	(51)		7
Gain on disposal of properties, net	(9,966)		(2,204)
Credit adjustments on operating lease receivables	540		481
Impairment charges	1,195		—
Net changes in assets and liabilities:
Receivables, net	(445)		1,373
Deferred costs and other assets, net	(2,722)		(3,166)
Accounts payable, accrued expenses and other liabilities	2,915		1,624
Net cash provided by operating activities	20,588		15,032
INVESTING ACTIVITIES:
Investment property acquisitions	—		(4,259)
Expenditures for real estate improvements	(18,658)		(11,618)
Purchases of investment securities	(500)		(6,500)
Cash received from disposal of properties	20,720		2,759
Net cash provided by (used in) investing activities	1,562		(19,618)
FINANCING ACTIVITIES:
Payments for deferred financing costs	(1,597)		(4,440)
Dividends and distributions paid on noncontrolling interest	(8,064)		(8,064)
Repurchase of noncontrolling interest	(1,035)		—
Loan proceeds	33,223		123,230
Loan principal payments	(27,815)		(108,274)

Repurchase of debt securities	(1,282)		(3,116)
Loan prepayment penalty	(368)		(1,758)
Net cash used in financing activities	(6,938)		(2,422)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	15,212		(7,008)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	39,807		55,865
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	55,019	$	48,857

Supplemental Disclosure:
The following table provides a reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	37,070	$	25,419
Restricted cash	17,949		23,438
Cash, cash equivalents, and restricted cash	$	55,019	$	48,857

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Business and Organization

Wheeler Real Estate Investment Trust, Inc. is a Maryland corporation formed on June 23, 2011. The Trust serves as the general partner of Wheeler REIT, L.P. (the "Operating Partnership"), which was formed as a Virginia limited partnership on April 5, 2012. At September 30, 2024, the Company owned 99.69% of the Operating Partnership. As of September 30, 2024, the Trust owned and operated seventy-three retail shopping centers and two undeveloped properties in South Carolina, Georgia, Virginia, Pennsylvania, North Carolina, New Jersey, Massachusetts, Florida, Connecticut, Kentucky, Tennessee, Alabama, Maryland and West Virginia. These centers and undeveloped properties include the properties acquired through the Cedar Acquisition (defined below). Accordingly, the use of the word "Company", "we," "our" or "us" refers to the Trust and consolidated subsidiaries, except where the context otherwise requires.

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

Acquisition of Cedar Realty Trust

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

2. Summary of Significant Accounting Policies

Principles of Consolidation/Basis of Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring accruals) have been included. All material balances and transactions between the consolidated entities of the Company have been eliminated. All per share amounts, common units and shares outstanding, warrants, and conversion features of the Convertible Notes for all periods presented reflect our August 2023 Reverse Stock Split, May 2024 Reverse Stock Split, June 2024 Reverse Stock Split and September 2024 Reverse Stock Split, which took effect on August 17, 2023, May 16, 2024, June 27, 2024 and September 19, 2024, respectively. The unaudited condensed consolidated financial statements are prepared on the accrual basis in accordance with GAAP, which requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. Actual results could differ from these estimates. The unaudited condensed consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K").

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Supplemental Condensed Consolidated Statements of Cash Flows Information


	For the Nine Months Ended September 30,
	2024		2023
Non-Cash Transactions:
Conversion of common units to Common Stock	$	—	$	57

Conversion of Series D Preferred Stock to Common Stock	—		140
Accretion of Preferred Stock discounts	65		438

Redemption of Series D Preferred Stock to Common Stock	6,206		—
Buildings and improvements included in accounts payable, accrued expenses and other liabilities	2,389		1,979
Other Cash Transactions:

Cash paid for amounts included in the measurement of operating lease liabilities	$	719	$	798
Cash paid for interest	19,308		18,951

Other Expense

Other expense represents expenses which are non-operating in nature. Other expenses were $0.3 million and $1.5 million for the three and nine months ended September 30, 2024, respectively, which primarily consisted of capital structure costs, including repurchase of Convertible Notes and legal and other expenses incurred in connection with the 2024 Reverse Stock Splits, the registration of our Common Stock to issue in settlement of Series D Preferred Stock redemptions and redemptions of the Series D Preferred Stock by holders thereof. Other expenses were $2.2 million and $5.3 million for the three and nine months ended September 30, 2023, respectively, which primarily consisted of capital structure costs including repurchase of Convertible Notes and legal and other expenses incurred in connection with an exchange offer for the Company's outstanding shares of Series D Preferred Stock (the "Exchange Offer"), redemptions by holders of the Series D Preferred Stock and the August 2023 Reverse Stock Split.

Recently Issued and Adopted Accounting Pronouncements

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

Reclassifications

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

3. Real Estate

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

The Company’s depreciation expense on investment properties for the three months ended September 30, 2024 and 2023 totaled $4.7 million and $4.5 million, respectively. The Company’s depreciation expense on investment properties for the nine months ended September 30, 2024 and 2023 totaled $14.0 million and $13.6 million, respectively.

During the three and nine months ended September 30, 2024, the Company recorded impairment charges of $1.2 million on Oregon Avenue, located in Philadelphia, Pennsylvania. These impairment charges are included in operating income in the accompanying condensed consolidated statements of operations.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Assets Held for Sale and Dispositions

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

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


	September 30, 2024		December 31, 2023
Real estate, net	$	24,408	$	—
Receivables, net - unbilled straight-line rent	431		—
Deferred costs and other assets, net	328		—

Total assets held for sale	$	25,167	$	—


	September 30, 2024		December 31, 2023



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

The following properties were sold during the nine months ended September 30, 2024 and 2023 (in thousands, unaudited):


Disposal Date	Property	Contract Price		Gain (Loss)		Net Proceeds
September 12, 2024	Kings Plaza	$	14,200	$	6,509	$	13,746
September 11, 2024	Edenton Commons Land Parcel	1,400		574		1,312
June 26, 2024	Oakland Commons	6,000		3,363		5,662
June 18, 2024	Harbor Point Land Parcel	n/a		(480)		n/a
July 11, 2023	Carll's Corner Outparcel	3,000		2,204		2,759

Harbor Point Land Parcel Disposition

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

4. Investment Securities - Related Party

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

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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

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

SAI records investment transactions based on trade date. Realized gains and losses from investment transactions are determined on a specific identification basis. Dividend income, net of withholding taxes, and dividend expense are recognized on the ex-dividend date, and interest income and expense are recognized on an accrual basis. Discounts and premiums to the face amount of debt securities are accreted and amortized using the effective interest rate method over the lives of the respective debt securities.

A limited partner in SAI may request a withdrawal after the expiration of the first anniversary of the date its investment was accepted into SAI. After the expiration of this lock-up period, withdrawal requests can be made quarterly and are generally paid out on a quarterly basis in accordance with the terms of the SAI limited partnership agreement.

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

The Company’s SAI investment is accounted for under the equity method and measured at net asset value as a practical expedient and has not been classified within the fair value hierarchy. All gains and losses, realized and unrealized, and fees are recorded through "gains (losses) on investment securities, net" in the condensed consolidated statements of operations. As of September 30, 2024, the fair value of the Company’s SAI investment was $12.0 million. For the three and nine months ended September 30, 2024, the gain on investment securities, net was $0.6 million and $0.8 million, respectively. For the three and nine months ended September 30, 2023, gain on investment securities, net was $0.0 million and $0.1 million, respectively.

5. Deferred Costs and Other Assets, Net

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


	September 30, 2024		December 31, 2023
Leases in place, net	$	11,326	$	16,663
Lease origination costs, net	6,621		7,461
Ground lease sandwich interest, net	914		1,119
Tenant relationships, net	178		280
Legal and marketing costs, net	194		278
Prepaid expenses	4,278		2,224
Other	—		3
Total	$	23,511	$	28,028

As of September 30, 2024 and December 31, 2023, the Company’s intangible accumulated amortization totaled $70.1 million and $69.9 million, respectively. During the three months ended September 30, 2024 and 2023, the Company’s intangible amortization expense totaled $1.5 million and $2.4 million, respectively. During the nine months ended September 30, 2024 and 2023, the Company’s intangible amortization expense totaled $5.2 million and $8.1 million, respectively.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

6. Loans Payable

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


Property/Description	Monthly Payment		Interest Rate	Maturity	September 30, 2024		December 31, 2023
Cypress Shopping Center	$	34,360	4.70%	July 2024	$	—	$	5,769

Conyers Crossing	Interest only		4.67%	October 2025	—		5,960
Winslow Plaza	$	24,295	4.82%	December 2025	4,271		4,331
Tuckernuck	$	32,202	5.00%	March 2026	4,658		4,771
Chesapeake Square	$	23,857	4.70%	August 2026	—		4,014
Sangaree/Tri-County	$	32,329	4.78%	December 2026	—		5,990
Timpany Plaza	Interest only		7.27%	September 2028	11,560		9,060
Village of Martinsville	$	89,664	4.28%	July 2029	14,426		14,755
Laburnum Square	$	37,842	4.28%	September 2029	7,655		7,665
Rivergate (1)	$	100,222	4.25%	September 2031	17,209		17,557
Convertible Notes	Interest only		7.00%	December 2031	30,882		31,530
Term loan, 22 properties	Interest only		4.25%	July 2032	75,000		75,000
JANAF (2)	Interest only		5.31%	July 2032	60,000		60,000
Cedar term loan, 10 properties	Interest only		5.25%	November 2032	110,000		110,000
Patuxent Crossing/Coliseum Marketplace	Interest only		6.35%	January 2033	25,000		25,000
Term loan, 12 properties	Interest only		6.19%	June 2033	61,100		61,100
Term loan, 8 properties	Interest only		6.24%	June 2033	53,070		53,070
Term loan, 5 properties	Interest only		6.80%	July 2034	25,500		—
Total Principal Balance					500,331		495,572
Unamortized deferred financing cost					(17,438)		(17,998)


Total Loans Payable, net					$	482,893	$	477,574

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

(2) Collateralized by JANAF properties.

Cedar Revolving Credit Agreement

On February 29, 2024, the Company entered into a revolving credit agreement with KeyBank National Association to draw up to $9.5 million (the "Cedar Revolving Credit Agreement"). The interest rate under the Cedar Revolving Credit Agreement was the daily SOFR, plus applicable margins of 0.10% plus 2.75%. Interest payments were due monthly, and any outstanding principal was due at maturity on February 28, 2025. The Cedar Revolving Credit Agreement could have been extended, at the Company's option, for up to two additional three-month periods, subject to customary conditions. The Cedar Revolving Credit Agreement was collateralized by 6 properties, consisting of Carll's Corner, Fieldstone Marketplace, Oakland Commons, Kings Plaza, Oregon Avenue and South Philadelphia, and proceeds were used for capital expenditures and tenant improvements for such properties. Upon the dispositions of Oakland Commons and Kings Plaza, the properties were released from collateral, the outstanding borrowings were repaid and the Cedar Revolving Credit Agreement was closed on September 12, 2024.

Timpany Plaza Loan Agreement

On March 28, 2024, the Company received $1.0 million of $2.5 million in deferred loan proceeds under the Timpany Plaza Loan Agreement following the Company's satisfaction of certain lease-related contingencies. On September 30, 2024, the Company received the remaining balance of $1.5 million following the Company's satisfaction of other lease-related contingencies.

Term Loan, Five Properties

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Scheduled Principal Payments

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


For the remaining three months ending December 31, 2024	$	355
December 31, 2025	5,953
December 31, 2026	6,450
December 31, 2027	2,824
December 31, 2028	16,091
December 31, 2029	24,434
Thereafter	444,224
Total principal repayments and debt maturities	$	500,331

Convertible Notes

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

During the nine months ended September 30, 2024, the Company issued an aggregate of 28,105 shares of its Common Stock, having an aggregate fair value of $0.4 million, to settle conversion requests of the holders of the Convertible Notes comprising an aggregate principal amount of $0.1 million, which resulted in an aggregate net loss on conversion of Convertible Notes of $0.4 million.

As of September 30, 2024, the conversion price for the Convertible Notes was approximately $2.37 per share of the Company’s Common Stock (approximately 10.53 shares of Common Stock for each $25.00 of principal amount of the Convertible Notes being converted).

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


For the Nine Months Ended September 30,	Series B Preferred Stock number of shares (1)	Series D Preferred Stock number of shares (1)	Convertible Note interest at 7% coupon		Fair value adjustment		Interest expense
2024	—	109,676	$	1,624	$	948	$	2,572
2023	—	160,455	$	1,718	$	851	$	2,569
(1) Shares issued as interest payment on Convertible Notes.

Fair Value Measurements

The fair value of the Company’s fixed rate secured term loans was estimated using available market information and discounted cash flow analyses based on borrowing rates the Company believes it could obtain with similar terms and maturities. As of September 30, 2024 and December 31, 2023, the fair value of the Company’s fixed rate secured term loans, which were determined to be Level 3 within the valuation hierarchy, was $470.1 million and $420.8 million, respectively, and the carrying value of such loans, was $456.6 million and $451.2 million, respectively.

The fair value of the Convertible Notes was estimated using available market information. As of September 30, 2024, and December 31, 2023, the fair value of the Convertible Notes, which were determined to be Level 1 within the valuation hierarchy, was $183.4 million and $75.7 million, respectively, and the carrying value, was $26.3 million and $26.4 million, respectively.

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

7. Derivative Liabilities

Fair Value of Warrants

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

As of the close of business on March 12, 2024 (the third anniversary of the issuance of that certain Common Stock Purchase Warrant, dated March 12, 2021, to the holders thereof (the "Warrant")), the exercise price of the Warrant was reset to an amount equal to the product of the Common Stock volume weighted average price as provided under the Warrant, multiplied by a factor of 1.25 for Tranche A, 1.50 for Tranche B and 2.50 for Tranche C: approximately $83.43, $100.12, and $166.87, respectively.

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


Warrant Name	Warrants	Exercise Price		Expiration Date
Wilmington Warrant Tranche A	142	$	83.43	3/12/2026
Wilmington Warrant Tranche B	118	100.12		3/12/2026
Wilmington Warrant Tranche C	35	166.87		3/12/2026

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


	September 30, 2024	December 31, 2023
Common Stock price	$8.09	$0.31 (1)
Weighted average contractual term to maturity (years)	1.5 years	2.2 years
Range of expected market volatility %	247.25%	137.71%
Range of risk free interest rate	3.82%	4.23%
(1) Common stock price as of December 31, 2023 and was not restated for any subsequent stock splits.

Fair Value of Conversion Features Related to Convertible Notes

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

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)


	September 30, 2024	December 31, 2023
Conversion price	$2.38 (1)	$0.16 (1) (2)
Common Stock price	$8.09	$0.31 (2)
Contractual term to maturity (years)	7.3 years	8.0 years
Expected market volatility %	155.00%	100.00%
Risk-free interest rate	3.70%	3.90%
Traded WHLRL price, % of par	594.00%	240.00%
(1) Represents the volume weighted average of the Company's closing Common Stock price for the 10 trading days preceding the valuation, less a discount of 45%.
(2) Value as of December 31, 2023 and was not restated for any subsequent stock splits.

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


	Nine Months Ended September 30, 2024		Year Ended December 31, 2023
Balance at the beginning of period	$	3,653	$	7,111
Changes in fair value - Warrants	9		(495)
Changes in fair value - Convertible Notes	49,765		(2,963)
Balance at end of period	$	53,427	$	3,653

8. Commitments and Contingencies

Lease Commitments

The Company is the lessee under several ground leases and for its corporate headquarters; all are accounted for as operating leases. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 5 to 50 years. As of September 30, 2024 and 2023, the weighted average remaining lease term of our leases was 36 and 36 years, respectively. Rent expense under the operating lease agreements was $0.2 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively. Rent expense under the operating lease agreements was $0.7 million and $0.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Litigation

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

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

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Sydney Plaintiffs’ motion for preliminary injunction be held on June 22, 2022. On June 2, 2022, the Plaintiffs in Kim also filed a motion for a preliminary injunction. The court consolidated the motions for preliminary injunction.

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

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

The Plaintiffs appealed the dismissal to the United States Court of Appeals for the Fourth Circuit, Case No. 23-1905. On September 4, 2024, the Fourth Circuit affirmed the District Court order dismissing the complaint.

Daniel Khoshaba v. Joseph D. Stilwell, et al., Civil Action No. 2:24CV237 in the United States District Court for the Easter District of Virginia. On April 10, 2024, Daniel Khoshaba, a holder of the Company's Common Stock and former CEO of the Company, filed a derivative action on behalf of the Company and putative class action on behalf of common stockholders who had not purchased the Convertible Notes in a rights offering alleging that the current and certain former directors of the Company breached their duty to the Company and its common stockholders, and that certain of those directors and an officer of the Company were unjustly enriched. The complaint primarily asserts the Defendants failed to take sufficient action to mitigate the potential dilution that could be caused by the redemption rights of holders of Series D Preferred Stock and that the Defendants should not have authorized dividends on the Convertible Notes sold in the rights offering to be paid in Series D Preferred Stock. The Company is named as a nominal defendant in the case and no claims are asserted against it. The Company is providing indemnification (including legal fees and costs) to the directors and officer Defendants. On June 10, 2024, the individual Defendants and the other parties filed motions to dismiss the complaint. On September 13, 2024, the District Court issued an opinion (i) granting the directors’ motion to dismiss the derivative claims, finding no demand was made and that demand would not have been futile; (ii) granting the motion to dismiss the unjust enrichment claim against the directors based on a failure to plead facts supporting the elements of such a claim, and (ii) denying the motions to dismiss on all other grounds. At this juncture, discovery is ongoing and the outcome of the litigation remains uncertain.

9. Rental Revenue and Tenant Receivables

Tenant Receivables

As of September 30, 2024 and December 31, 2023, the Company’s allowance for uncollectible tenant receivables totaled $1.1 million and $0.9 million, respectively. At September 30, 2024 and December 31, 2023, there were $8.4 million and $7.9 million, respectively, in unbilled straight-line rent, which is included in "receivables, net."

Lease Contract Revenue

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

Table of Contents

Wheeler Real Estate Investment Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024	2023
Base rent	$	18,317	$	18,190	$