Wheeler Real Estate Investment Trust, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate

Real Estate

3 Months Ended

Mar. 31, 2020

Investment properties consist of the following (in thousands):



	March 31, 2020			December 31, 2019
	(unaudited)
Land and land improvements	$	98,957		$	100,599
Buildings and improvements	360,620			366,082
Investment properties at cost	459,577			466,681
Less accumulated depreciation	(52,762		)	(50,466		)
Investment properties, net	$	406,815		$	416,215

The Company’s depreciation expense on investment properties was $2.94 million and $3.19 million for the three months ended March 31, 2020 and 2019, respectively.

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

Assets Held for Sale

At March 31, 2020 and December 2019 assets held for sale included Columbia Fire Station and St. Matthews, respectively as the Board committed to a plan to sell each property.

The Company recorded an impairment charge on assets held for sale of $600 thousand for the three months ended March 31, 2020 resulting from reducing the carrying value of Columbia Fire Station for the amount that exceeded the property's fair value less estimated selling costs. The valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 inputs. No impairment charges were recorded for the three months ended March, 31, 2019.

As of March 31, 2020 and December 31, 2019, assets held for sale and associated liabilities consisted of the following (in thousands):



	March 31, 2020		December 31, 2019
	(unaudited)
Investment properties, net	$	6,189	$	1,651
Rents and other tenant receivables, net	9		77
Deferred costs and other assets, net	60		9
Total assets held for sale	$	6,258	$	1,737



	March 31, 2020		December 31, 2019
	(unaudited)
Loans payable	$	4,004	$	1,974
Accounts payable, accrued expenses and other liabilities	45		52
Total liabilities associated with assets held for sale	$	4,049	$	2,026

The following properties were sold during the three months ended March 31, 2020 and 2019:



Disposal Date	Property	Contract Price		Gain (loss)			Net Proceeds
		(in thousands, unaudited)
January 21, 2020	St. Matthews	$	1,775	$	(26	)	$	1,665
March 18, 2019	Graystone Crossing	6,000		1,452			1,744
February 7, 2019	Harbor Pointe Land Parcel (1.28 acres)	550		—			19
January 11, 2019	Jenks Plaza	2,200		387			1,840

The Harbor Pointe land parcel sale represents discontinued operations as it was a strategic shift that had a major effect on the Company's financial position or results of operations.

The sale of Jenks Plaza, Graystone Crossing and St. Matthews did not represent a strategic shift that has a major effect on the Company's financial position or results of operations. Accordingly, the operating results of these properties remains classified within continuing operations for all periods presented.