What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-02 · 699 added, 713 removed, 893 unchanged (61% of the section changed)

17 unchanged sentences

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

On August 22, 2022, the Company completed the Cedar Acquisition and accordingly the Company’s management has integrated Cedar’s operations into its internal control over financial reporting, as necessary, to accommodate modifications to its business processes related to the Cedar Acquisition.

None of these integration activities had a material impact on our system of internal control over financial reporting for the year ended December 31, 2022

This Form 10-K 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 in accordance with SEC rules.

Other Information.

During the three months ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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The Company has adopted a Code of Business Conduct and Ethics applicable to the directors, officers and employees.

A copy of that code is available on the Company’s corporate website at www.whlr.us, which does not form a part of this Annual Report on Form 10-K.

A copy of that code is available on the Company’s corporate website, which does not form a part of this Annual Report on Form 10-K.

We intend to post any amendments to such code, or any waivers of its requirements, on our website.

The Code of Business Conduct and Ethics is available at ir.whlr.us under "Governance - Governance Documents".

Executive Compensation.

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.

Evaluation of Investment Properties for Impairment

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of Real Estate for Impairment

Description of Matter

At December 31, 2022, the Company’s investment properties totaled $561.0 million.

As more fully described in Note 2 to the consolidated financial statements, the Company evaluates its investment properties for impairment whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable.

Management evaluates various qualitative factors in determining whether or not events or changes in circumstances indicate that the carrying amount of an investment property may not be recoverable.

Auditing the Company’s impairment assessment involved subjectivity due to the estimation required to assess significant assumptions utilized in estimating the recoverability of the investment properties based on undiscounted operating income and residual values, such as assumptions related to renewal and renegotiations of current leases, estimates of new leases on vacant spaces, and estimates of operating costs.

At December 31, 2023, the Company’s net real estate totaled $565.1 million.

As more fully described in Note 2 to the consolidated financial statements, the Company evaluates its real estate investments for impairment whenever events or changes in circumstances indicate that the carrying value of a real estate investment may not be recoverable.

Management evaluates various qualitative factors in determining whether or not events or changes in circumstances indicate that the carrying amount of a real estate investment may not be recoverable.

Auditing the Company’s impairment assessment involved subjectivity due to the estimation required to assess significant assumptions utilized in the recoverability of the real estate based on undiscounted operating income and residual values, such as assumptions related to renewal and renegotiations of current leases, estimates of new leases on vacant spaces, and estimates of operating costs.

How We Addressed the Matter in Our Audit

To test the Company’s evaluation of investment properties for impairment, we performed audit procedures that included, among others, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used in the analysis.

To test the Company’s evaluation of net real estate for impairment, we performed audit procedures that included, among others, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used in the analysis.

We compared the recoverability calculated to the remaining net book value of the assets to ensure recoverability for the properties’ remaining useful lives.

We compared the significant assumptions used by management to relevant market information and other applicable sources.

As part of our evaluation, we performed sensitivity analyses of significant assumptions to evaluate the changes in the undiscounted cash flows of the related investment property that would result from changes in the assumptions.

As part of our evaluation, we performed sensitivity analyses of significant assumptions to evaluate the changes in the undiscounted cash flows of the related property that would result from changes in the assumptions.

Derivative Liabilities

Description of Matter

At December 31, 2022, the Company had convertible notes with an outstanding principal balance of $33.0 million and 1.6 million common stock warrants.

At December 31, 2023, the Company had convertible notes with an outstanding principal balance of $31.5 million and 106,171 common stock warrants.

Calculations and accounting for the notes payable and embedded conversion features as well as the warrants require management’s judgments related to initial and subsequent recognition, use of a valuation model, and determination of the appropriate inputs used in the selected valuation model.

As more fully described in Note 6 to the consolidated financial statements, the Company utilizes a multinomial lattice model valuation technique in measuring the fair value of the notes’ conversion features and a Monte Carlo simulation technique in measuring the fair value of the warrants

As more fully described in Note 7 to the consolidated financial statements, the Company utilizes a multinomial lattice model valuation technique in measuring the fair value of the notes’ conversion features and the Black-Scholes valuation method in measuring the fair value of the warrants.

Auditing management’s valuations of the derivative liabilities was challenging due to the complexity of valuation model and the inputs that are highly sensitive to changes such as the common stock market price, volatility, risk free rates, and yields.

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To test the accounting for the derivative liabilities resulting from the issuance of warrants and convertible notes, our audit procedures included, among others, inspection of the contracts, and testing completeness and accuracy of the data used as well as management’s application of the relevant accounting guidance.

We also involved our valuation specialists to evaluate the Company’s determination of the fair value of the convertible notes inclusive of the embedded features and warrants, including testing the appropriateness of the methodology and underlying inputs used and assessing the reasonableness of those inputs.

Valuation of Purchase Price Allocation for Acquisition

Description of Matter

As more fully described in Note 3 to the consolidated financial statements, on August 22, 2022 the Company acquired Cedar Realty Trust, a 2.9 million square foot shopping center portfolio consisting of 19 properties for an aggregate of $135.5 million of cash merger consideration and acquisition costs.

The acquisition was accounted for as an asset acquisition which required the Company to assess the acquisition-date fair value of all tangible assets, identifiable intangible assets, and assumed liabilities.

The Company determines fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.

Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and specific market and economic conditions that may affect the properties.

Auditing management’s estimated fair value of all acquired tangible assets, identifiable intangible assets, and assumed liabilities required the assistance of our valuation professionals with specialized skills and knowledge as the fair value estimates required subjective auditor judgment to evaluate the audit evidence obtained.

How We Addressed the Matter in Our Audit

To test the accounting for the purchase price allocation, our audit procedures included, among others, inspection of the purchase and sale agreements, and testing the completeness and accuracy of the data used in the fair value determination.

We evaluated management’s application of the relevant accounting guidance and involved our valuation specialists to evaluate the Company’s determination of fair value of the purchase price allocations, including testing the appropriateness of the methodology and underlying inputs used and assessing the reasonableness of those inputs.

We also involved our valuation specialists to evaluate the Company’s determination of the fair value of the derivative liabilities, including testing the appropriateness of the methodology used and assessing the reasonableness of the underlying inputs.

/s/ Cherry Bekaert LLP

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(in thousands, except par value and share data)

Investment properties, net $ 560,980 $ 386,730

Land and land improvements $ 149,908 $ 144,537

Buildings and improvements 510,812 494,668

660,720 639,205

Less accumulated depreciation ( 95,598 ) ( 78,225 )

Real estate, net 565,122 560,980

Cash and cash equivalents 18,404 28,491

Restricted cash 21,403 27,374

Rents and other tenant receivables, net 13,544 9,233

Assets held for sale — 2,047

Receivables, net 13,126 13,544

Investment securities - related party 10,685 —

Above market lease intangibles, net 2,114 3,134

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Loans payable, net $ 477,574 $ 466,029

Liabilities associated with assets held for sale — 3,381

Below market lease intangibles, net 23,968 3,397

Below market lease intangible, net 17,814 23,968

Derivative liabilities 3,653 7,111

Operating lease liabilities 10,329 16,478

Series D Preferred Stock redemptions 369 —

Accounts payable, accrued expenses and other liabilities 17,065 18,398

Total Liabilities 526,804 531,984

Series D Cumulative Convertible Preferred Stock (no par value, 6,000,000 shares authorized, 3,152,392 shares issued and outstanding, respectively;

$ 113.44 million and $ 104.97 million aggregate liquidation value, respectively)

101,518 92,548

Commitments and contingencies (Note 8)

Series D Cumulative Convertible Preferred Stock 96,705 101,518

Series A Preferred Stock (no par value, 4,500 shares authorized, 562 shares issued and outstanding;

Series B Convertible Preferred Stock no par value, 5,000,000 authorized, 3,379,142

and 1,872,448 shares issued and outstanding, respectively;

$ 84.48 million and $ 46.81

million aggregate liquidation preference, respectively)

$ 0.6 million in aggregate liquidation value)

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)

44,998 44,911

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Accumulated deficit ( 324,854 ) ( 295,617 )

Total Stockholders’ (Deficit) Equity ( 15,162 ) 1,861

Total Stockholders’ Deficit

( 21,293 ) ( 15,162 )

Noncontrolling interests 66,116 66,196

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Total Liabilities and Equity $ 668,332 $ 684,536

See accompanying notes to consolidated financial statements.

See accompanying notes to audited consolidated financial statements.

Wheeler Real Estate Investment Trust, Inc.

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Interest income 484 65

Gain on investment securities, net 685 —

Interest expense ( 32,314 ) ( 30,107 )

Net changes in fair value of derivative liabilities 3,458 ( 2,335 )

Other income — 552

Gain on preferred stock redemptions 9,893 —

Other expense ( 5,482 ) ( 691 )

Net Loss Before Income Taxes ( 8,470 ) ( 9,349 )

Net Income (Loss) Before Income Taxes 6,131 ( 8,470 )

Income tax expense ( 48 ) —

Net Loss ( 8,470 ) ( 9,351 )

Net Income (Loss) 6,083 ( 8,470 )

Net income attributable to noncontrolling interests 10,770 3,984

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Preferred Stock dividends - undeclared ( 9,262 ) ( 9,056 )

Deemed contribution related to preferred stock redemption — 5,040

Deemed distribution related to preferred stock redemptions ( 15,288 ) —

Net Loss Attributable to Wheeler REIT Common Stockholders $ ( 29,237 ) $ ( 21,510 )

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Basic and Diluted 6,400,490 976,070

See accompanying notes to consolidated financial statements.

See accompanying notes to audited consolidated financial statements.

Wheeler Real Estate Investment Trust, Inc.

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(in thousands, except share data)

Series A Series B Noncontrolling

Series A Series B

Preferred Stock Preferred Stock Common Stock Additional

Paid-in Capital Accumulated Deficit Total

Stockholders’ Equity Interests Total

Shares Value Shares Value Shares Value Units Value Equity

Stockholders’ (Deficit) Equity Noncontrolling Interest

Shares Value Shares Value Shares Value Operating Partnership Consolidated Subsidiary Total Total Equity

December 31, 2021 562 $ 453 1,872,448 $ 41,189 972,053 $ 10 $ 234,316 $ ( 274,107 ) $ 1,861 $ 1,941 $ — $ 1,941 $ 3,802

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Stock discount — — — 87 — — — — 87 — — — 87

Conversion of Series B Preferred

Stock to Common Stock — — ( 4,847 ) ( 104 ) 303 — 104 — — — — — —

Conversion of Operating

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Stock — — — — 7,040 — 161 — 161 ( 161 ) — ( 161 ) —

Issuance of Common Stock

under Share Incentive Plan — — — — 5,000 — 14 — 14 — — 14

Adjustment for noncontrolling

interest in operating partnership — — — — — — 500 — 500 ( 500 ) — ( 500 ) —

Conversion of Series B Preferred

Stock to Common Stock — — ( 3,300 ) ( 72 ) 2,572 — 72 — — — — —

Deemed contribution related to preferred stock redemption — — — — — — — 5,040 5,040 — — 5,040

Paid-in-kind interest, Issuance of

Series B Preferred Stock — — 1,511,541 3,739 — — — — 3,739 — — — 3,739

Noncontrolling interests assumed from the acquisition (1)

— — — — — — — — — — 64,845 64,845 64,845

Dividends and distributions — — — — — — — ( 9,056 ) ( 9,056 ) — ( 3,913 ) ( 3,913 ) ( 12,969 )

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Stock discount — — — 87 — — — — 87 — — — 87

Conversion of Series B Preferred

Conversion of Series D Preferred

Stock to Common Stock — — — — 625 — 140 — 140 — — — 140

Adjustment for noncontrolling

interest in operating partnership — — — — — — 500 — 500 — ( 500 ) —

Conversion of Operating

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Stock — — — — 1,141 — 57 — 57 ( 57 ) — ( 57 ) —

Paid-in-kind interest, Issuance of

Series B Preferred Stock — — 1,511,541 3,739 — — — — 3,739 — — 3,739

Noncontrolling interests assumed

from the acquisition (1) — — — — — — — — — — 64,845 64,845

Adjustment for noncontrolling

interest in operating partnership — — — — — — 41 — 41 ( 41 ) — ( 41 ) —

Redemption of Series D

Preferred Stock to Common

Stock — — — — 52,788,687 528 22,253 — 22,781 — — — 22,781

Adjustment of Series D Preferred

Stock to redemption value — — — — — — — ( 15,288 ) ( 15,288 ) — — — ( 15,288 )

Redemption of fractional units

as a result of reverse stock split — — — — ( 62 ) — — — — — — — —

Dividends and distributions — — — — — — — ( 9,262 ) ( 9,262 ) — ( 10,752 ) ( 10,752 ) ( 20,014 )

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562 $ 453 3,379,142 $ 44,998 53,769,787 $ 538 $ 257,572 $ ( 324,854 ) $ ( 21,293 ) $ 1,271 $ 64,845 $ 66,116 $ 44,823

(1) See Notes 1, 2 and 3 of the Notes to the Condensed Consolidated Financial Statements for further details.

See accompanying notes to consolidated financial statements.

(1) See Notes 1, 2 and 3 of the Notes to the audited consolidated financial statements for further details.

See accompanying notes to audited consolidated financial statements.

Wheeler Real Estate Investment Trust, Inc.

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For the Years Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss $ ( 8,470 ) $ ( 9,351 )

Adjustments to reconcile consolidated net loss to net cash provided by operating activities:

Depreciation 13,489 11,072

Amortization 6,051 3,725

Loan cost amortization 6,098 12,710

OPERATING ACTIVITIES:

Net income (loss) $ 6,083 $ ( 8,470 )

Adjustments to reconcile consolidated net income (loss) to net cash from operating activities

Depreciation and amortization 28,502 19,540

Deferred financing cost amortization 2,860 6,098

Changes in fair value of derivative liabilities ( 3,458 ) 2,335

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Paid-in-kind interest 3,908 3,739

Loss on repurchase of debt securities 1,647 —

Gain on preferred stock redemptions ( 9,893 ) —

Unrealized gain on investment securities, net ( 685 ) —

Straight-line expense ( 10 ) 32

Share-based compensation — 14

Gain on disposal of properties ( 2,204 ) ( 2,604 )

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Net changes in assets and liabilities

Rent and other tenant receivables, net ( 1,221 ) 1,001

Unbilled rent ( 740 ) ( 1,220 )

Receivables, net ( 103 ) ( 1,961 )

Deferred costs and other assets, net ( 2,745 ) 4,381

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Net cash provided by operating activities 20,934 30,758

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment property acquisitions, net of cash acquired ( 135,510 ) —

Capital expenditures ( 8,511 ) ( 6,412 )

INVESTING ACTIVITIES:

Investment property acquisitions ( 4,259 ) ( 135,510 )

Expenditures for real estate improvements ( 20,021 ) ( 8,511 )

Purchase of investment securities ( 10,000 ) —

Cash received from disposal of properties

Net cash (used in) provided by investing activities ( 133,512 ) 5,101

CASH FLOWS FROM FINANCING ACTIVITIES:

Net cash used in investing activities ( 31,521 ) ( 133,512 )

FINANCING ACTIVITIES:

Payments for deferred financing costs ( 4,440 ) ( 12,683 )

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Loan principal payments ( 108,635 ) ( 263,815 )

Preferred stock redemption — ( 8,336 )

Loan prepayment penalty ( 2,614 ) ( 687 )

Net cash provided by (used in) financing activities 118,200 ( 24,491 )

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 15,446 ( 2,349 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year 40,419 42,768

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of year $ 55,865 $ 40,419

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 $ — $ 5,932

Conversion of common units to common stock $ 160 $ 33

Conversion of Series B Preferred Stock to common stock $ 104 $ 72

Accretion of Preferred Stock discounts $ 584 $ 600

Deemed contribution related to Preferred Stock discount $ — $ 5,040

Other Cash Transactions:

Cash paid for taxes $ — $ 2

Cash paid for interest $ 19,957 $ 18,973

Repurchase of debt securities ( 3,116 ) —

Loan payment penalty ( 1,758 ) ( 2,614 )

Net cash (used in) provided by financing activities ( 5,471 ) 118,200

(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 16,058 ) 15,446

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 55,865 40,419

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 39,807 $ 55,865

Supplemental Disclosure:

The following table provides a reconciliation of cash, cash equivalents and restricted cash:

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Cash, cash equivalents, and restricted cash $ 39,807 $ 55,865

See accompanying notes to consolidated financial statements.

See accompanying notes to audited consolidated financial statements.

Wheeler Real Estate Investment Trust, Inc.

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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.

The Trust serves as the general partner of the Operating Partnership, which was formed as a Virginia limited partnership on April 5, 2012.

At December 31, 2023, the Company owned 99.13 % of the Operating Partnership.

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Twenty-one of these properties are located in South Carolina, twelve in Georgia, ten in Virginia, eight in Pennsylvania, six in North Carolina, four in Massachusetts, four in New Jersey, three in Florida, three in Connecticut, two in Kentucky, two in Tennessee, one in Alabama, one in Maryland, one in West Virginia, and one in Oklahoma.

The Company’s portfolio had total gross rentable space of approximately 8,173,000 square feet and a leased level of approximately 92.9 % at December 31, 2022.

Accordingly, the use of the word "Company", "we," "our" or "us" refers to the Trust and its consolidated subsidiaries, except where the context otherwise requires.

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economy and consumers’ disposable income, which it believes generates more predictable property-level cash flows.

The Trust through the Operating Partnership owns Wheeler Interests, LLC (“WI”) and Wheeler Real Estate, LLC (“WRE”) (collectively the “Operating Companies”).

The Trust through the Operating Partnership owns Wheeler Interests, LLC ("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.

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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 March 2, 2022, the Company entered into an Agreement and Plan of Merger (as amended, the "Merger Agreement") with 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.

On August 22, 2022, the Company completed the merger transaction with Cedar.

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During the year ended December 31, 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-K for further details.

These costs were capitalized as part of the acquisition and are primarily comprised of professional fees and legal fees, see Note 3 for further details.

The consolidated financial statements included in this Form 10-K include Cedar starting from the date of 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, 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

Table of Contents Wheeler Real Estate Investment Trust, Inc.

We have determined that this acquisition is not a variable interest entity, as defined under the consolidation topic of 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.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated and Combined Financial Statements

Organization and Basis of Presentation and Consolidation (continued)

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.

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies

Investment Properties

Real Estate Investments

The Company records investment properties and related intangibles at fair value upon acquisition.

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The Company also estimates the value of other acquired intangible assets, if any, and amortizes them over the remaining life of the underlying related intangibles.

The Company reviews 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.

The Company reviews investment properties for impairment on a property-by-property basis or whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable.

These circumstances include, but are not limited to, declines in the property’s cash flows, occupancy and fair market value.

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Assets Held For Sale and Discontinued Operations

The Company may decide to sell properties that are held for use.

The Company records these properties as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year.

Properties classified as held for sale are reported at the lower of

Wheeler Real Estate Investment Trust, Inc.

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Summary of Significant Accounting Policies (continued)

The Company may decide to sell properties that are held for use.

Properties classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell.

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 expense is recognized.

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A past due receivable triggers certain events such as notices, fees and other allowable and required actions per the lease.

As of December 31, 2022 and 2021, the Company’s allowance for uncollectible tenant receivables totaled $ 3.15 million and $ 633 thousand, respectively.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (continued)

Above and Below Market Lease Intangibles, net

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Amortization of above and below market lease intangibles is recorded as a component of rental revenues.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (continued)

Deferred Costs and Other Assets, net

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Amortization of deferred costs and other assets represents a component of depreciation and amortization expense.

Paycheck Protection Program

The Company received proceeds of $ 552 thousand (the "PPP funds") pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

The PPP funds were received in the form of a promissory note, dated April 24, 2020 (the “Promissory Note”), between the Company and KeyBank as the lender.

Under the terms of the CARES Act, the Promissory Note was forgiven during the year ended December 31, 2021 and the corresponding forgiveness of the liability was recorded as "other income" on the consolidated statements of operations.

Derivative Financial Instruments

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Debt issuance costs are presented as a direct deduction from the carrying value of the associated debt liability in the consolidated balance sheets.

Series D Preferred Stock

The Series D Preferred Stock was initially classified as mezzanine equity because the redemption provisions were conditional upon the occurrence of an event that was not certain.

The Series D Preferred Stock was valued at net proceeds plus accrued and unpaid dividends.

In 2023, this event became certain and in accordance with ASC 480, the Series D Preferred Stock was revalued at the redemption price which includes undeclared dividends, representing liquidation value.

The adjustment to liquidation value was recognized in accumulated deficit as an adjustment to redemption value.

Additionally, in accordance with ASC 480, as holders exercise their redemption rights the Series D Preferred Stock becomes mandatorily redeemable and the liquidation value of their exercise is classified as a liability.

Operating Partnership Purchase of Stock

The Operating Partnership purchased 71,343 shares of the Series D Preferred Stock on September 22, 2020 from an unaffiliated investor at $ 15.50 per share.

The Company considers the purchase of the REIT's equity securities to be retired in the consolidated financial statements.

Revenue Recognition

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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 December 31, 2022 and 2021, there were $ 6.52 million and $ 5.77 million, respectively, in unbilled rent which is included in "rents and other tenant receivables, net."

Additionally, certain lease agreements

Wheeler Real Estate Investment Trust, Inc.

2 unchanged sentences

Summary of Significant Accounting Policies (continued)

Additionally, certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent).

contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent).

Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements as variable lease income.

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The Company calculates the tenant’s share of operating costs by multiplying the total amount of the operating costs by the tenant's pro-rata percentage of square footage to total square footage of the property.

The Company also receives monthly payments for these reimbursements from substantially all its tenants throughout the year.

The Company also receives payments for these reimbursements from substantially all its tenants throughout the year.

The Company recognizes tenant reimbursements as variable lease income.

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Upon early lease termination, the Company records losses related to unrecovered intangibles and other assets.

The below table disaggregates the Company’s revenue by type of service for the years ended December 31, 2022 and 2021 (in thousands):

Years Ended December 31,

Minimum rent $ 57,533 $ 45,896

Tenant reimbursements - variable lease revenue 16,665 13,120

Straight-line rents 800 1,060

Percentage rent - variable lease revenue 558 531

Lease termination fees 134 139

Other 1,316 803

Total 77,006 61,549

Credit losses on operating lease receivables ( 361 ) ( 239 )

Total $ 76,645 $ 61,310

Segment Information

The Company’s primary business is the ownership and operation of grocery-anchored shopping centers.

The Company reviews operating and financial information for each property on an individual basis and, accordingly, each property represents an individual operating segment.

The Company evaluates financial performance using property operating income, which consists of rental income and other property income, less operating expenses and real estate taxes.

The Company has no operations outside of the United States of America.

Therefore, the Company has aggregated its properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in similar markets, and have similar tenant mixes.

The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code and applicable Treasury regulations relating to REIT qualification.

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If the Company loses its REIT status it could not elect to be taxed as a REIT for five years unless the Company’s failure to qualify was due to reasonable cause and certain other conditions were satisfied.

Management has evaluated the effect of the guidance provided by GAAP on Accounting for Uncertainty of Income Taxes and has determined that the Company had no uncertain income tax positions .

Management has evaluated the effect of the guidance provided by generally accepted accounting principles on Accounting for Uncertainty of Income Taxes and has determined that the Company had no uncertain income tax positions .

Financial Instruments

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (continued)

The carrying amount of financial instruments included in assets and liabilities approximates fair market value due to their immediate or short-term maturity.

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The Company’s actual results could differ from these estimates.

Corporate General and Administrative Expense

Corporate general & administrative expenses consist of the following (in thousands):

Years Ended December 31,

Professional fees $ 3,810 $ 3,116

Compensation and benefits 2,276 1,465

Corporate administration 1,901 1,771

Advertising costs for leasing activities 319 119

Other 314 669

Total $ 8,620 $ 7,140

Other Expense

Other expense represents costs which are non-operating in nature.

Other expenses were $ 691 thousand and $ 185 thousand for the year ended December 31, 2022 and 2021 respectively, and consist of legal settlement costs.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (continued)

Other expense represents expenses which are non-operating in nature.

Other expenses were $ 5.5 million for the year ended December 31, 2023, which consists of capital structure transaction costs.

Other expenses were $ 0.7 million for the year ended December 31, 2022, which consisted of legal settlement costs.

Lease Commitments

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On the consolidated statements of operations, the subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (continued)

statements of equity include beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.

Consolidated statements of equity include beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.

The noncontrolling interest of the Operating Partnership common unit holders is calculated by multiplying the noncontrolling interest ownership percentage at the balance sheet date by the Operating Partnership’s net assets (total assets less total liabilities).

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Level 1 inputs represent observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

The total cumulative dividends for the Cedar Series B Preferred and Cedar Series C Preferred were $ 3.91 million as of December 31, 2022 and are included as a reduction to net loss attributable to Wheeler REIT Common Stockholders on the consolidated statements of operations during the year ended December 31, 2022.

Recently Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entities Own Equity (Subtopic 815-40).” This ASU simplifies accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separating embedded conversion features from convertible instruments.

In addition, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.

The guidance is effective for fiscal years beginning after December 15, 2021.

We adopted this guidance effective January 1, 2021 under the modified retrospective adoption approach.

There was no effect to the opening balance of retained earnings at the date of adoption.

The comparative information has not been restated and continues to be presented according to accounting standards in effect for those periods.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments." This update enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better calculate credit loss estimates.

The guidance will apply to most financial assets measured at amortized cost and certain other instruments, such as accounts receivable and loans.

The guidance will require that the Company estimate the lifetime expected credit loss with respect to these receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected.

This guidance is effective for fiscal years, and for interim reporting periods within those fiscal years, beginning after December 15, 2022, however the Company is early adopting as of January 1, 2022.

In November 2018, the FASB issued ASU 2018-19 to clarify that operating lease receivables, including straight-line rent receivables, recorded by lessors are explicitly excluded from the scope of Topic 326.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

Other accounting standards that have been 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.

The total cumulative dividends for the Cedar Series B Preferred and Cedar Series C Preferred were $ 10.8 million and $ 3.9 million as of December 31, 2023 and 2022, respectively, and are included as an increase to net loss attributable to Wheeler REIT Common Stockholders on the consolidated statements of operations.

Reclassifications

The Company has reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation.

These reclassifications had no effect on net loss.

All per share

Wheeler Real Estate Investment Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Investment properties consist of the following (in thousands):

Land and land improvements $ 144,537 $ 96,752

Buildings and improvements 494,668 357,606

Investment properties at cost 639,205 454,358

Less accumulated depreciation ( 78,225 ) ( 67,628 )

Investment properties, net $ 560,980 $ 386,730

The Company’s depreciation expense on investment properties was $ 13.49 million and $ 11.07 million for the years ended December 31, 2022 and 2021, respectively.

Summary of Significant Accounting Policies (continued)

amounts, common units and shares outstanding, warrants, and conversion features of the Convertible Notes for all periods presented reflect our one-for-ten Reverse Stock Split, which was effective August 17, 2023.

Supplemental Consolidated Statements of Cash Flows Information

For the Years

Ended December 31,

(in thousands)

Non-Cash Transactions:

Conversion of common units to Common Stock $ 57 $ 160

Conversion of Series B Preferred Stock to Common Stock $ — $ 104

Conversion of Series D Preferred Stock to Common Stock $ 140 $ —

Accretion of Preferred Stock discounts $ 460 $ 584

Accretion of Preferred stock to liquidation preference

Redemption of Series D Preferred Stock to Common Stock

$ ( 33,044 ) $ —

Buildings and improvements included in accounts payable, accrued expenses and other liabilities $ 1,047 $ 238

Other Cash Transactions:

Cash paid for taxes $ 48 $ —

Cash paid for amounts included in the measurement of operating lease liabilities $ 1,001 $ 956

Cash paid for interest $ 25,216 $ 19,957

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued guidance which requires disclosure of incremental segment information on both an annual and interim basis.

The guidance will require that the Company continue to disclose existing segment information required by FASB Accounting Standards Codification Topic 280, as well as significant segment expenses and other segment items that are regularly provided to the chief operating decision maker ("CODM").

The Company will also be required to disclose the title and position of the CODM and how the CODM uses reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The guidance will be effective for the Company's fiscal year beginning on January 1, 2024 and interim periods within the Company's fiscal year beginning on January 1, 2025.

The Company is currently in the process of evaluating the guidance, but does not believe it will have a material effect on the Company's consolidated financial statements.

Other 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.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 and Dispositions

At December 31, 2022, there were no assets held for sale.

At December 31, 2021, assets held for sale included Walnut Hill Plaza, which was sold in 2022.

The Company’s depreciation expense on investment properties was $ 18.1 million and $ 13.5 million for the years

ended December 31, 2023 and 2022, respectively.

George Plaza Land Acquisition

On February 21, 2023, the Company purchased a 2.5 acre land parcel adjacent to St.

George Plaza, located in St.

George, South Carolina, for $ 0.2 million.

Devine Street Land Acquisition

On August 18, 2023, the Company purchased a 3.25 acre land parcel within Devine Street, located in Columbia, South Carolina, for $ 4.1 million.

The Devine Street Land Acquisition terminated the Company's ground lease associated with this property.

Assets Held for Sale, Impairment and Dispositions

Impairment expenses on assets held for sale are a result of reducing the carrying value 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.

Impairment expenses for the years ended December 31, 2022 and 2021 are as follows (in thousands):

Years Ended December 31,

Harbor Pointe Land Parcel $ 760 $ —

Walnut Hill Plaza — 100

Columbia Fire Station — 2,200

Total $ 760 $ 2,300

As of December 31, 2022 and 2021, assets held for sale and associated liabilities consist of the following (in thousands):

Investment properties, net $ — $ 1,824

Rents and other tenant receivables, net — 18

Deferred costs and other assets, net — 205

Total assets held for sale $ — $ 2,047

Loans payable $ — $ 3,145

Accounts payable, accrued expenses and other liabilities — 236

Total liabilities associated with assets held for sale $ — $ 3,381

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Real Estate (continued)

No impairment expense was recorded for the year ended December 31, 2023.

Impairment expense was $ 0.8 million for the year ended December 31, 2022 resulting from reducing the carrying value of an approximately 5 acre land parcel held by Harbor Point Associates, LLC, a wholly-owned subsidiary of the Company (the "Harbor Point Land Parcel").

The Harbor Point Land Parcel did not meet the requirements to be classified as held for sale at December 31, 2023 or 2022.

The following properties were sold during the years ended December 31, 2023 and 2022 (in thousands):

Disposal Property Contract Price Gain (Loss) Net Proceeds

July 11, 2023 Carll's Corner Outparcel $ 3,000 $ 2,204 $ 2,759

December 9, 2022 Butler Square 9,250 2,619 8,723

January 11, 2022 Walnut Hill Plaza 1,986 ( 15 ) 1,786

November 17, 2021 Columbia Fire Station 4,250 ( 88 ) 3,903

August 31, 2021 Rivergate Shopping Center Out Parcel 3,700 1,915 3,451

July 9, 2021 Tulls Creek Land Parcel ( 1.28 acres)

March 25, 2021 Berkley Shopping Center and Berkley Land Parcel ( 0.75 acres)

4,150 176 3,937

Cedar Acquisition

On August 22, 2022, the Company acquired Cedar, a 2.9 million square foot shopping center portfolio consisting of 19 properties located primarily in the Northeast from Virginia to Massachusetts (the "Cedar Portfolio").

The Cedar Portfolio was acquired through the purchase of the issued and outstanding shares of Cedar’s common stock, par value $ 0.06 per share (“Cedar Common Stock”), and the issued and outstanding common units of Cedar OP held by persons other than Cedar for an aggregate of $ 135.51 million of cash merger consideration and acquisition costs.

The following summarizes the consideration paid and the purchase allocation of assets acquired and liabilities assumed in conjunction with the acquisition described above in accordance with ASU 2017-01, along with a description of the methods used to determine the purchase price allocation (in thousands, unaudited).

The Cedar Portfolio was acquired through the purchase of the issued and outstanding shares of Cedar’s common stock, par value $ 0.06 per share (the “Cedar Common Stock”), and the issued and outstanding common units of Cedar OP held by persons other than Cedar for an aggregate of $ 135.5 million of cash merger consideration and acquisition costs.

The following summarizes the consideration paid and the purchase allocation of assets acquired and liabilities assumed in conjunction with the acquisition described above in accordance with Accounting Standards Update ("ASU") 2017-01, along with a description of the methods used to determine the purchase price allocation (in thousands, unaudited).

In determining the purchase price allocation, the Company considered many factors including, but not limited to, cash flows, market capitalization rates, location, occupancy rates, appraisals, other acquisitions and management’s knowledge of the current acquisition market for similar properties.

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The income approach was used to determine the allocation of above/below market leases using market rental rates for similar properties.

Represents the purchase price allocation of the lease liability and corresponding right of use asset associated with a ground lease.

Represents the purchase price allocation of the lease liability and corresponding right of use asset associated with a ground lease expiring in 2071.

The Company used an incremental borrowing rate of 5.25 % for the purpose of calculating the lease liability.

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Notes to Consolidated Financial Statements (Continued)

Real Estate (continued)

Unaudited pro forma financial information in the aggregate is presented below for the acquisition of the Cedar properties.

The unaudited pro forma information presented below includes the effects of the Cedar Acquisition as if it had been consummated as of January 1, 2021.

The pro forma results include adjustments for depreciation and amortization associated with acquired tangible and intangible assets, straight-line rent adjustments and interest expense related to debt incurred.

The unaudited pro forma financial information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if this acquisition had taken place on January 1, 2021 or 2022.

(Amounts presented in thousands, except per share figures).

Rental revenues $ 100,315 $ 98,802

Net loss from continuing operations $ ( 6,950 ) $ ( 9,252 )

Net loss attributable to Wheeler REIT $ ( 7,022 ) $ ( 20,096 )

Net loss attributable to Wheeler REIT common shareholders $ ( 26,830 ) $ ( 23,893 )

Basic loss per share $ ( 2.75 ) $ ( 2.46 )

Diluted loss per share $ ( 2.75 ) $ ( 2.46 )

Deferred Costs and Other Assets

Investments Securities - Related Party

On June 1, 2023, the Company subscribed for an investment in the amount of $ 3.0 million for limited partnership interests in Stilwell Activist Investments, L.P., a Delaware limited partnership (“SAI”).

On September 1, 2023, and November 30, 2023, the Company subscribed for additional investments each in the amount of $ 3.5 million for limited partnership interests in SAI.

The investment objective of SAI is to seek long-term capital appreciation through investing primarily in publicly-traded undervalued financial institutions or businesses with a strong financial component, or the securities of any of them, and pursuing an activist shareholder agenda with respect to those institutions.

Stilwell Value LLC ("Value") is the general partner of SAI.

Joseph Stilwell, a member of the Company's Board of Directors, is the managing member of Value and a limited partner in funds advised by Value.

Additionally, E.J.

Borrack, a member of the Board of Directors, serves as the General Counsel to Value and its affiliated entities, including SAI and related funds, and is a limited partner in one of the funds advised by Value.

Megan Parisi, a member of the Company’s Board of Directors, serves as the Director of Communications to Value and its affiliated entities, including SAI and related funds, is a non-managing member of Value and is a limited partner in one of the funds advised by Value.

The Company’s initial subscription in SAI was approved by the disinterested directors of the Company, and, after the formation of the Related Person Transactions Committee, the further subscriptions in SAI were approved 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.

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

In consideration for management, administrative and operational services, limited partners of SAI pay a management fee to an affiliate of Value each calendar quarter, in advance, equal to 0.25 % (an annualized rate of 1 %) of each limited partner’s capital account balance on the first day of such calendar quarter.

In addition, as of the last day of each specified performance period, an incentive allocation of 20 % of the amount by which the “positive performance change,” if any, that has been credited to the capital account of a limited partner during such period exceeds any positive balance in such limited partner’s “carryforward account,” is debited from the limited partner’s capital account and is simultaneously credited to the capital account of Value.

The Company’s SAI investment is accounted for under the equity method and measured at net asset value as a practical expedient and has not been classified within the fair value hierarchy.

All gains and losses, realized and unrealized, and fees are recorded through "gain on investment securities, net" on the consolidated statements of operations.

As of December 31, 2023, the fair value of the Company’s SAI investment was $ 10.7 million, which includes $ 10.0 million from subscriptions and $ 0.2 million in fees.

Unrealized gains on investment securities , net of fees wer e $ 0.7 million for the year ended December 31, 2023.

Deferred Costs and Other Assets, net

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

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Deferred Costs and Other Assets, net (continued)

Leases in place, net $ 16,663 $ 24,956

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Notes to Consolidated Financial Statements (Continued)

Loans Payable

Loans Payable, net

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

Property/Description Monthly Payment Interest

Rate Maturity December 31,

2022 December 31,

Rate Maturity December 31, 2023 December 31,

Cypress Shopping Center $ 34,360 4.70 % July 2024 $ 5,769 $ 5,903

Port Crossing $ 34,788 4.84 % August 2024 5,641 5,778

Freeway Junction $ 41,798 4.60 % September 2024 7,273 7,431

Harrodsburg Marketplace $ 19,112 4.55 % September 2024 3,186 3,267

Bryan Station $ 23,489 4.52 % November 2024 4,136 4,226

Crockett Square Interest only 4.47 % December 2024 6,338 6,338

Pierpont Centre $ 39,435 4.15 % February 2025 7,716 7,861

Shoppes at Myrtle Park $ 33,180 4.45 % February 2025 5,615 5,757

Alex City Marketplace Interest only 3.95 % April 2025 5,750 5,750

Brook Run Shopping Center Interest only 4.08 % June 2025 10,950 10,950

Beaver Ruin Village I and II Interest only 4.73 % July 2025 9,400 9,400

Sunshine Shopping Plaza Interest only 4.57 % August 2025 5,900 5,900

Barnett Portfolio (2) Interest only 4.30 % September 2025 8,770 8,770

Fort Howard Shopping Center Interest only 4.57 % October 2025 7,100 7,100

Conyers Crossing Interest only 4.67 % October 2025 5,960 5,960

Grove Park Shopping Center Interest only 4.52 % October 2025 3,800 3,800

Parkway Plaza Interest only 4.57 % October 2025 3,500 3,500

Winslow Plaza $ 24,295 4.82 % December 2025 4,331 4,409

2 unchanged sentences

Sangaree/Tri-County $ 32,329 4.78 % December 2026 5,990 6,086

Riverbridge Interest only 4.48 % December 2026 4,000 4,000

Franklin Village $ 45,336 4.93 % January 2027 8,144 8,277

Timpany Plaza Interest only 7.27 % September 2028 9,060 —

Village of Martinsville $ 89,664 4.28 % July 2029 14,755 15,181

2 unchanged sentences

Convertible Notes Interest only 7.00 % December 2031 31,530 33,000

Guggenheim Loan Agreement (4) Interest only 4.25 % July 2032 75,000 —

JANAF Loan Agreement (5) Interest only 5.31 % July 2032 60,000 —

Guggenheim-Cedar Loan Agreement (6)

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 Loan Agreement Interest only 6.35 % January 2033 25,000 —

Walnut Hill Plaza $ 26,850 5.50 % March 2023 — 3,145

Litchfield Market Village $ 46,057 5.50 % November 2022 — 7,312

Twin City Commons $ 17,827 4.86 % January 2023 — 2,843

New Market $ 48,747 5.65 % June 2023 — 6,291

Benefit Street Note $ 53,185 5.71 % June 2023 — 6,914

Deutsche Bank Note $ 33,340 5.71 % July 2023 — 5,488

First National Bank $ 24,656 LIBOR + 350 basis points

August 2023 — 789

Lumber River $ 10,723 LIBOR + 350 basis points

September 2023 — 1,296

Tampa Festival $ 50,797 5.56 % September 2023 — 7,753

Forrest Gallery $ 50,973 5.40 % September 2023 — 8,060

South Carolina Food Lions Note $ 68,320 5.25 % January 2024 — 11,259

Folly Road $ 41,482 4.65 % March 2025 — 7,063

JANAF $ 333,159 4.49 % July 2023 — 47,065

JANAF Bravo $ 35,076 5.00 % May 2024 — 5,936

JANAF BJ's $ 29,964 4.95 % January 2026 — 4,725

Butler Square Interest only 3.90 % May 2025 — 5,640

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 —

Term loan, 8 properties

Interest only 6.24 % June 2033 53,070 —

Term loans - fixed interest rate various 4.47 % (3)

various — 107,219

Total Principal Balance 495,572 482,447

Unamortized debt issuance cost (1) ( 16,418 ) ( 9,834 )

Total Loans Payable, including assets held for sale 466,029 336,428

Less loans payable on assets held for sale, net loan amortization costs — 3,145

Unamortized deferred financing cost ( 17,998 ) ( 16,418 )

Total Loans Payable, net $ 477,574 $ 466,029

(1) Includes loans payable on assets held for sale, see Note 3.

The loan agreements include customary prepayment penalties or defeasance costs, which can be incurred by the company when prepaying or defeasing loans.

(2) Collateralized by Cardinal Plaza, Franklinton Square, and Nashville Commons.

(3) October 2026 the interest rate changes to variable interest rate equal to the 5 years U.S.

(1) In October 2026, the interest rate under this loan changes to a variable interest rate equal to the 5 year U.S.

Treasury Rate plus 2.70 %, with a floor of 4.25 %.

(4) Collateralized by 22 properties.

(2) Collateralized by JANAF properties.

(6) Collateralized by 10 Cedar properties.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable (continued)

Rights Offering and Convertible Notes

On July 22, 2021, the Company commenced a rights offering (the “Rights Offering”) for the purchase of up to $ 30.00 million in aggregate principal amount of the Company’s 7.00 % senior subordinated convertible notes due 2031 (the “Convertible Notes”).

On August 13, 2021, the Rights Offering expired.

Pursuant to the Rights Offering, the Company distributed to holders of its Common Stock, as of 5:00 p.m.

New York City time on June 1, 2021 (the “Record Date”), non-transferable subscription rights to purchase Convertible Notes.

Each holder of the Company’s Common Stock as of the Record Date received one right for each eight shares of the Company’s Common Stock owned, and each right entitled a holder to purchase $ 25.00 principal amount of Convertible Notes.

The Rights Offering was made pursuant to an effective registration statement filed with the U.S.

Securities and Exchange Commission.

The aggregate principal amount of Convertible Notes issued in the Rights Offering was $ 30.00 million.

The Rights Offering was backstopped by Magnetar Structured Credit Fund, LP, Magnetar Longhorn Fund LP, Magnetar Lake Credit Fund LLC, Purpose Alternative Credit Fund – F LLC, Purpose Alternative Credit Fund – T LLC, and AY2 Capital LLC (each individually, a “Backstop Party” and, collectively, the “Backstop Parties”) in the amount of $ 2.19 million in aggregate principal.

On October 12, 2021, the Backstop Parties and their assignee elected to exercise their “accordion right” in full and purchased from the Company an additional $ 3.00 million in aggregate principal amount of the Company’s Convertible Notes.

The Convertible Notes contain debt issuance costs aggregating $ 7.10 million which is being amortized over the life of the Convertible Notes.

On August 13, 2021, the Company, as Issuer, and Wilmington Savings Fund Society, FSB., as Trustee, entered into an Indenture governing the terms of the Convertible Notes (the "Indenture").

The Convertible Notes bear interest at a rate of 7.00 % per annum.

Interest on the Convertible Notes is payable semi-annually in arrears on June 30 and December 31 of each year, commencing on December 31, 2021.

The Convertible Notes are subordinate and junior in right of payment to the Company's obligations to the holders of senior indebtedness, and that in the case of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a whole, whether voluntary or involuntary, all obligations to holders of senior indebtedness shall be entitled to be paid in full before any payment shall be made on account of the principal or interest on the Convertible Notes.

Interest on the Convertible Notes is payable, at the Company's election:

(b) in shares of Series B Preferred;

or (d) in any combination of (a), (b), and/or (c).

For purposes of determining the value of Series B Preferred and Series D Preferred paid as interest on the Convertible Notes, each share of Series B Preferred and Series D Preferred shall be deemed to have a value equal to the product of (x) the average of the VWAPs (as defined in the Indenture) for the Series B Preferred or the Series D Preferred, as the case may be, for the 15 consecutive trading days ending on the third business day immediately preceding the relevant interest payment date, and (y) 0.55 .

Interest payments on the Convertible Notes were made as follows (in thousands, except for shares )

For the years ended December 31, Series B Preferred

number of shares Series D Preferred

number of shares Convertible Note Interest at 7 %

Fair value adjustment Paid-in-kind Interest Expense

2021 — 113,709 $ 885 $ 725 $ 1,610

2022 1,511,541 — $ 2,310 $ 1,429 $ 3,739

The Convertible Notes are convertible, in whole or in part, at any time, at the option of the holders of the Convertible Notes, into shares of the Company’s Common Stock at a conversion price of $ 6.25 per share of the Company’s Common Stock (the “Conversion Price”);

provided, however, that if at any time after September 21, 2023, holders of the Series D Preferred have required the Company to redeem (payable in cash or stock) in the aggregate at least 100,000 shares of Series D Preferred, then the Conversion Price will be adjusted to the lower of (i) 55 % of the Conversion Price or (ii) a 45 % discount to the lowest price at which any Series D Preferred was converted into the Common Stock.

Upon a change of control, each Convertible Note will mandatorily convert into shares of the Company’s Common Stock equal to:

(i) the principal amount of each Convertible Note divided by (ii) the product of (x) the average of the per share volume-weighted average prices for the Common Stock for the 15 consecutive trading days ending on the third business day immediately preceding the date of such change of control, and (y) 0.55 .

After January 1, 2024, the Company may redeem the Convertible Notes at any time (in whole or in part) at the

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable (continued)

Company's option at a redemption price equal to 100 % of the principal amount thereof plus accrued and unpaid interest as of the redemption date (the "Redemption Price").

The Redemption Price may be paid:

(b) in shares of Common Stock;

or (c) in any combination of (a) and (b).

Powerscourt Financing Agreement

On December 22, 2020, the Company entered into a financing agreement (the "Powerscourt Financing Agreement") with Powerscourt Investments XXII, LP, as administrative agent and collateral agent.

In conjunction with the Powerscourt Financing Agreement, the Company issued to Powerscourt XXII, LP a warrant (the "Powerscourt Warrant") to purchase 496,415 shares of Common Stock for $ 3.12 per share (the "Powerscourt Warrant Agreement").

The Powerscourt Warrant is exercisable at the option of its holder in whole or in part into shares of Common Stock from time to time on or after December 22, 2020 (the "Effective Date") and before the date that is the 36-month anniversary of the Effective Date.

Additionally, the Company entered into a registration rights agreement with the holders from time to time of the Powerscourt Warrant, dated as of December 22, 2020 (the “Powerscourt Registration Rights Agreement”), accordingly, the Company registered the resale of the common stock underlying the Powerscourt Warrant on a Form S-11 Registration Statement which became effective on May 25, 2021.

On March 12, 2021, the Company paid in full the $ 25.00 million Powerscourt Financing Agreement.

The Powerscourt Warrant Agreement and the Powerscourt Registration Rights Agreement remain as of December 31, 2022, see Note 6.

Wilmington Financing Agreement

On March 12, 2021, the Company entered into a financing agreement (the "Wilmington Financing Agreement") as borrower, certain subsidiaries of the Company from time to time party thereto, as guarantors (together with the Company, the "Loan Parties"), the lenders from time to time party thereto, and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent.

The Wilmington Financing Agreement provided for a term loan in the aggregate principal amount of $ 35.00 million.

The proceeds of the Wilmington Financing Agreement were intended for the following:

(i) to payoff the Company's indebtedness on the Powerscourt Financing Agreement, (ii) to fund the redemption of certain shares of the Company's 8.75 % Series D Preferred and (iii) to pay fees and expenses in connection with the transactions contemplated by the Wilmington Financing Agreement.

The Wilmington Financing Agreement is at a rate of 8.00 % and matures in March 2026 with quarterly interest only payments beginning on April 15, 2021.

Any payment or repayment of principal will be made with a premium equal to 5 % of the amount repaid or prepaid, a total of $ 1.75 million.

The obligations of the Company under the Wilmington Financing Agreement were secured by liens on certain assets of the Company and certain of the Company's subsidiaries, including mortgages on the properties within the Company's portfolio.

The Wilmington Financing Agreement also contains covenants that restrict, among other things the ability of the Company and its subsidiaries to create liens, incur indebtedness, make certain investments, merge or consolidate, dispose of assets, pay certain dividends and make certain other restricted payments or certain equity issuances, change the nature of their businesses, enter into certain transactions with affiliates and change their governing documents.

Pursuant to the Wilmington Financing Agreement, the Company issued to the holders from time to time party thereto a warrant (the "Wilmington Warrant") to purchase in the aggregate 1,061,719 shares of Common Stock in three tranches (the "Wilmington Warrant Agreement").

The Wilmington Warrant is exercisable at the option of its holder in whole or in part into shares of Common Stock from time to time on or after March 12, 2021 (the "Effective Date") and before the maturity date of the Wilmington Financing Agreement.

In connection with the Wilmington Financing Agreement, the Company entered into a registration rights agreement with the holders from time to time of the Wilmington Warrants, dated as of March 12, 2021 (the "Wilmington Registration Rights Agreement"), accordingly, the Company registered the resale of the common stock underlying the Wilmington Warrant on a Form S-11 Registration Statement which became effective on May 25, 2021.

On December 21, 2021, the principal balance on the Wilmington Financing Agreement was paid in full.

The Wilmington Warrant Agreement and the Wilmington Registration Rights Agreement remain as of December 31, 2022.

First National Bank Amendment

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable (continued)

On September 22, 2021, the Company entered into the Fourth Amendment to extend the $ 875 thousand First National Bank Loan to August 15, 2023 with monthly principal and interest payments of $ 25 thousand.

The First National Bank Loan will bear interest at LIBOR plus 350 basis points with a minimum interest rate set at 4.25 %.

In conjunction with Guggenheim Loan Agreement on June 17, 2022, the principal balance on the First National Bank Loan was paid in full.

Lumber River Extensions

On September 22, 2021, the Company entered into the Fifth Amendment to extend the $ 1.31 million Lumber River Loan to September 10, 2023 with monthly principal and interest payments of $ 11 thousand.

The Lumber River Loan will bear interest at LIBOR plus 350 basis points with a minimum interest rate set at 4.25 %.

In conjunction with Guggenheim Loan Agreement on June 17, 2022, the principal balance on the Lumber River Loan was paid in full.

Tuckernuck Extension and Refinance

On February 2, 2021, the Company refinanced the Tuckernuck Loan for $ 5.15 million at a rate of 5.00 %.

The loan matures on March 1, 2026 with monthly principal and interest payments of $ 32 thousand.

Rivergate Extensions and Refinance

On May 28, 2021, the Company entered into an agreement with Synovus Bank to extend the maturity date from April 21, 2021 to October 20, 2021 with monthly principal payments of $ 60 thousand plus accrued and unpaid interest.

The Rivergate Loan will bear interest at the Synovus Bank's prime rate less 0.25 % with a floor of 3.00 %.

On August 31, 2021 a $ 3.54 million principal payment was made in conjunction with the outparcel sale.

On September 30, 2021, the Company refinanced the Rivergate Loan for $ 18.50 million at a rate of 4.25 %.

The loan matures on September 30, 2031 with monthly principal and interest payments of $ 100 thousand through September 2026 at which time monthly principal and interest payments begin based on a 20-year amortization and an interest rate change to 5 year U.S.

Treasury Rate plus 2.70 % with a floor of 4.25 %.

Columbia Fire Station Extension and Payoff

On January 21, 2021, the Company entered into a Forbearance Agreement (the "Forbearance Agreement") with Pinnacle Bank at an interest rate of 14 % and made a $ 500 thousand principal payment.

The Forbearance Agreement, among other provisions, extends the maturity date of the Columbia Fire Station Loan to July 21, 2021 and waives all defaults and late fees existing prior to the Forbearance Agreement.

On July 21, 2021, the principal balance on the Columbia Fire Station Loan was paid in full.

Berkley/Sangaree/Tri-County Paydown

On March 25, 2021, the Company made a $ 3.22 million principal payment on the Berkley/Sangaree/Tri-County loan with the sale of the Berkley Shopping Center, as detailed in Note 3, and paid $ 687 thousand in defeasance.

JANAF Bravo Refinance

On May 5, 2021, the Company refinanced the JANAF Bravo Loan for $ 6.00 million at a rate of 5.00 %.

The loan matures on May 5, 2024 with monthly principal and interest payments of $ 35 thousand.

In conjunction with JANAF Loan Agreement on July 6, 2022, the principal balance on the JANAF Bravo Loan was paid in full.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable (continued)

(3) Contractual interest rate weighted average.

Walnut Hill Plaza Payoff

1 unchanged sentence

On February 17, 2022 the Company paid the remaining loan balance of $ 1.3 million in full.

Guggenheim Loan Agreement

On June 17, 2022, the Company entered into a term loan agreement (the “Guggenheim Loan Agreement”) with Guggenheim Real Estate, LLC, for $ 75.00 million at a fixed rate of 4.25 % with interest-only payments due monthly.

Term Loan Agreement, 22 properties

On June 17, 2022, the Company entered into a term loan agreement (the “Term Loan Agreement, 22 properties”) with Guggenheim Real Estate, LLC, for $ 75.0 million at a fixed rate of 4.25 % with interest-only payments due monthly.

Commencing on August 10, 2027, until the maturity date of July 10, 2032, monthly principal and interest payments will be made based on a 30-year amortization schedule calculated based on the principal amount as of that time .

The Guggenheim Loan Agreement proceeds were used to refinance eleven loans including paying $ 1.46 million in defeasance.

The Term Loan Agreement, 22 properties proceeds were used to refinance eleven other loans, including paying $ 1.5 million in defeasance.

JANAF Loan Agreement

1 unchanged sentence

for $ 60.0 million at a fixed interest rate of 5.31 % with interest-only payments due monthly through maturity, July 6, 2032.

The JANAF Loan Agreement proceeds were used to refinance three loans including paying $ 1.16 million in defeasance.

The JANAF Loan Agreement proceeds were used to refinance three other loans, including paying $ 1.2 million in defeasance.

KeyBank-Cedar Loan Agreement

On August 22, 2022, Cedar entered into a loan agreement (the “KeyBank-Cedar Loan Agreement”) with KeyBank

National Association for $ 130.00 million with interest-only payments due monthly through maturity, August 22, 2023.

The interest rate on this term loan consisted of the Secured Overnight Financing Rate plus 0.10 % plus an applicable margin of 2.5 % through February 2023, at which time increases to 4.0 % and was collateralized by 19 properties.

The obligations under the KeyBank-Cedar Loan Agreement were satisfied in full with the proceeds of the loans under the Guggenheim-Cedar Loan Agreement entered into on October 28, 2022 and the Patuxent Crossing/Coliseum Marketplace Loan Agreement entered into on December 21, 2022.

Guggenheim-Cedar Loan Agreement

On October 28, 2022, Cedar entered into a loan agreement (the “Guggenheim-Cedar Loan Agreement”) with Guggenheim Real Estate, LLC, for $ 110.00 million at a fixed rate of 5.25 % with interest-only payments due monthly through November 2027.

On August 22, 2022, Cedar entered into a loan agreement with KeyBank National Association for $ 130.0 million (the “KeyBank-Cedar Loan Agreement”) and was collateralized by 19 properties.

The obligations under the KeyBank-Cedar Loan Agreement were satisfied in full with the proceeds of the loans under the Cedar Term Loan Agreement, 10 properties (defined below) and the Patuxent Crossing/Coliseum Marketplace Loan Agreement (defined below).

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable, net (continued)

Cedar Term Loan Agreement, 10 properties

On October 28, 2022, Cedar entered into a loan agreement (the “Cedar Term Loan Agreement, 10 properties”) with Guggenheim Real Estate, LLC, for $ 110.0 million at a fixed rate of 5.25 % with interest-only payments due monthly.

Wheeler REIT, L.P.

provided a guarantee in connection with such loan.

provided a limited recourse indemnity in connection with the loan.

Commencing on December 10, 2027, until the maturity date of November 10, 2032, monthly principal and interest payments will be made based on a 30-year amortization schedule calculated based on the principal amount as of that time.

The Guggenheim-Cedar Loan Agreement proceeds were used to refinance a portion of Cedar’s property portfolio that were previously collateralized by the KeyBank-Cedar Loan Agreement.

The Cedar Term Loan Agreement, 10 properties proceeds were used to refinance a portion of Cedar’s property portfolio that were previously collateralized by the KeyBank-Cedar Loan Agreement.

Butler Square Payoff

3 unchanged sentences

for $ 25.0 million at a fixed rate of 6.35 % with interest-only payments due monthly through maturity, January 6, 2033.

The Patuxent Crossing/Coliseum Marketplace Loan Agreement proceeds were used to satisfy the remaining obligations of the KeyBank-Cedar Loan Agreement and, accordingly, the remaining collateral was released.

The Patuxent Crossing/Coliseum Marketplace Loan Agreement proceeds were used to satisfy the remaining obligations of the KeyBank-Cedar Loan Agreement and released the remaining collateral under that agreement.

Term Loan Agreement, 12 properties

On May 5, 2023, the Company entered into the Term Loan Agreement, 12 properties for $ 61.1 million at a fixed rate of 6.194 % and interest-only payments due monthly through June 2025.

Commencing in July 2025, until the maturity date of June 1, 2033, monthly principal and interest payments will be $ 0.4 million.

Loan proceeds were used to refinance the loans on 12 properties, including $ 1.1 million in defeasance.

Term Loan Agreement, 8 properties

On May 18, 2023, the Company entered into the Term Loan Agreement, 8 properties for $ 53.1 million at a fixed rate of 6.24 % and interest-only payments due monthly through June 2028.

Commencing in July 2028, until the maturity date of June 10, 2033, monthly principal and interest payments will be $ 0.3 million.

Loan proceeds were used to refinance the loans on 8 properties, including $ 0.7 million in defeasance.

Timpany Plaza Loan Agreement

On September 12, 2023, the Company entered into the Timpany Plaza Loan Agreement for $ 11.6 million at a fixed rate of 7.27 % with interest-only payments due monthly for the first twelve months .

Commencing on September 12, 2024, until the maturity date of September 12, 2028, monthly principal and interest payments will be made based on a 30-year amortization schedule calculated based on the principal amount as of that time.

On the closing date, the Company received $ 9.1 million of the $ 11.6 million, and the remaining $ 2.5 million will be received upon the satisfaction of certain lease-related contingencies within one year of the agreement date.

The Timpany Plaza Loan Agreement is collateralized by the Timpany Plaza shopping center.

Debt Maturities

The Company’s scheduled principal repayments on indebtedness as of December 31, 2023, are as follows (in thousands):

Wheeler Real Estate Investment Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Loans Payable (continued)

Debt Maturities

The Company’s scheduled principal repayments on indebtedness as of December 31, 2022, are as follows (in thousands):

Loans Payable, net (continued)

For the years ended December 31,

1 unchanged sentence

Total principal repayments and debt maturities $ 495,572

Convertible Notes

The Company’s Convertible Notes bear interest at a rate of 7.00 % per annum.

Interest on the Convertible Notes is payable semi-annually in arrears on June 30 and December 31 of each year, at the Company's election:

(b) in shares of Series B Preferred;

or (d) in any combination of (a), (b), and/or (c).

For purposes of determining the value of Series B Preferred and Series D Preferred Stock paid as interest on the Convertible Notes, each share of Series B Preferred and Series D Preferred Stock shall be deemed to have a value equal to the product of (x) the average of the VWAPs (as defined in the Indenture) for the Series B Preferred or the Series D Preferred Stock, as the case may be, for the 15 consecutive trading days ending on the third business day immediately preceding the relevant interest payment date, and (y) 0.55 .

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

For the years ended December 31, Series B Preferred

number of shares (1)

Series D Preferred Stock

number of shares (1)

Convertible Note interest at 7 % coupon

Fair value adjustment Interest expense

2023 — 306,380 $ 2,259 $ 1,649 $ 3,908

2022 1,511,541 — $ 2,310 $ 1,429 $ 3,739

(1) Shares issued as interest payment on Convertible Notes.

On June 8, 2023, the Company paid down $ 0.6 million of the Convertible Notes through an open market purchase

of 23,784 units totaling $ 1.2 million.

On September 11, 2023, the Company paid down $ 0.9 million of the Convertible Notes through an open market purchase of 35,000 units totaling $ 1.9 million.

As a result of these transactions the Company recognized a $ 1.6 million loss for the year ended December 31, 2023 which represents the fair value of the purchase over principal pay down.

The loss is included in "other expense" on the consolidated statements of operations.

The Convertible Notes are convertible, in whole or in part, at any time, at the option of the holders of the Convertible Notes, into shares of the Company’s Common Stock at a conversion price of $ 62.50 per share of the Company’s Common Stock (the “Conversion Price”);

provided, however, that if at any time after September 21, 2023, holders of the Series D Preferred Stock have required the Company to redeem (payable in cash or stock) in the aggregate at least 100,000 shares of Series D Preferred Stock, then the Conversion Price will be adjusted to the lower of (i) 55 % of the Conversion Price or (ii) a 45 % discount to the lowest price at which any Series D Preferred Stock was converted into the Common Stock.

Upon a change of control, each Convertible Note will mandatorily convert into shares of the Company’s Common Stock equal to:

After January 1, 2024, the Company may redeem the Convertible Notes at any time (in whole or in part) at the Company's option at a redemption price equal to 100 % of the principal amount thereof plus accrued and unpaid interest as of the redemption date (the "Note Redemption Price").

The Note Redemption Price may be paid:

(b) in shares of Common Stock;

or (c) in any combination of (a) and (b).

As of December 5, 2023, the Conversion Price for the Convertible Notes was approximately $ 0.21 per share of the Company’s Common Stock (approximately 116.46 shares of Common Stock for each $ 25.00 of principal amount of the Convertible Notes being converted).

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans Payable, net (continued)

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 a similar term and maturities.

As of December 31, 2023 and December 31, 2022, the fair value of the Company’s fixed rate secured term loans, which were determined to be Level 3 within the valuation hierarchy, was $ 420.8 million and $ 429.1 million, respectively, and the carrying value of such loans, was $ 451.2 million and $ 440.2 million, respectively.

The fair value of the Convertible Notes was estimated using available market information.

As of December 31, 2023 and December 31, 2022, the fair value of the Convertible Notes, which were determined to be Level 1 within the valuation hierarchy, was $ 75.7 million and $ 40.9 million, respectively, and the carrying value, was $ 26.4 million and $ 25.8 million, respectively.

Derivative Liabilities

Fair Value of Warrants

The Company utilized the Monte Carlo simulation model to calculate the fair value of the Powerscourt Warrant and Wilmington Warrant (collectively, the "Warrant Agreements").

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 Monte Carlo simulation is a Level 3 valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.

The Warrant Agreements contain terms and features that give rise to derivative liability classification.

In determining the initial fair value of the Wilmington Warrant, the Company used the following inputs in its Monte Carlo model;

exercise price of each of the three tranches described in the table below, Common Stock price $ 3.75 , contractual term to maturity 5.0 years, expected Common Stock volatility 54.72 % and risk-free interest rate 0.91 %.

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.

Warrants to purchase shares of common stock outstanding at December 31, 2023 and 2022 are as follows:

Warrant Name Warrants Exercise Price Expiration Date

Powerscort Warrant 496,415 $ 3.120 12/22/2023

Powerscourt Warrant 49,641 $ 31.20 12/22/2023

Wilmington Warrant Tranche A 51,020 $ 34.30 3/12/2026

1 unchanged sentence

Wilmington Warrant Tranche C 12,727 $ 68.75 3/12/2026

In measuring the warrant liability, the Company used the following inputs in its Monte Carlo Model:

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

For the Years Ended December 31,

8 unchanged sentences

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 multinomial 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-

The Company utilized a binomial lattice model to calculate the fair value of the embedded derivatives.

Wheeler Real Estate Investment Trust, Inc.

2 unchanged sentences

Derivative Liabilities (continued)

free rate and term.

The multinomial lattice model is a Level 3 valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.

In determining the initial fair value of the embedded derivatives, the Company used the following inputs in its multinomial lattice model;

initial conversion price within the Convertible Notes was $ 6.25 , Common Stock price of $ 2.94 , dividend rate of 0 %, expected Common Stock volatility 50.00 %, risk-free interest rate 1.53 % and contractual term to maturity was 10.3 years.

In measuring the embedded derivative liability, the Company used the following inputs in its multinomial lattice model:

Significant observable and unobservable inputs include conversion price, stock price, dividend rate, expected volatility, risk-free rate, optional conversion price and term.

The b inomial 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:

December 31, 2023 December 31, 2022

5 unchanged sentences

Traded WHLRL price % of par 240.00 % 120.50 %

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

(1) Represents the volume weighted average of the Company's closing Common Stock price for the 10 trading days

preceding the valuation date of December 31, 2023, less a discount of 45 %.

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):

Year Ended December 31, 2023 Year Ended December 31, 2022

Balance at the beginning of period $ 7,111 $ 4,776

Issuance of Wilmington Warrant — 2,018

Issuance of embedded derivative — 5,932

Changes in fair value 2,335 ( 3,768 )

Changes in fair value - Warrants ( 495 ) ( 753 )

Changes in fair value - Convertible Notes ( 2,963 ) 3,088

Balance at ending of period $ 3,653 $ 7,111

2 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Rentals under Operating Leases

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 December 31, 2023 and 2022, the weighted average remaining lease term of our leases was 36 and 34 years, respectively.

Rent expense under the operating lease agreements were $ 1.1 million and $ 1.2 million for the years ended December 31, 2023 and 2022, respectively.

The following table represents a reconciliation of the Company’s undiscounted future minimum lease payments for its ground lease and corporate headquarters lease agreements applicable to lease liabilities as of December 31, 2023 (in thousands):

For the years ended December 31,

Thereafter 19,591

Total undiscounted future minimum lease payments 23,704

Future minimum lease payments, discount ( 13,375 )

Operating lease liabilities $ 10,329

The Company carries comprehensive liability, property, fire, flood, wind, extended coverage, business interruption and rental loss insurance covering all of the properties in its portfolio under an insurance policy, in addition to other coverages, such as trademark and pollution coverage, that may be appropriate for certain of its properties.

Additionally, the Company carries a directors’, officers’, entity and employment practices liability insurance policy that covers such claims made against the Company and its directors and officers.

The Company believes the policy specifications and insured limits are appropriate and adequate for its properties given the relative risk of loss, the cost of the coverage and industry practice;

however, its insurance coverage may not be sufficient to fully cover losses.

Concentration of Credit Risk

The Company is subject to risks incidental to the ownership and operation of commercial real estate.

These risks include, among others, the risks normally associated with changes in the general economic climate, trends in the retail industry, creditworthiness of tenants, competition for tenants and customers, changes in tax laws, interest rates, the availability of financing and potential liability under environmental and other laws.

The Company’s portfolio of properties is dependent upon regional and local economic conditions and is geographically located in the Mid-Atlantic, Southeast, and Northeast, which markets represented approximately 45 %, 40 % and 15 %, respectively, of the total annualized base rent of the properties in its portfolio as of December 31, 2023.

The Company’s geographic concentration may cause it to be more susceptible to adverse developments in those markets than if it owned a more geographically diverse portfolio.

Additionally, the Company’s retail shopping center properties depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.

Regulatory and Environmental

As the owner of the buildings on our properties, the Company could face liability for the presence of hazardous materials (e.g., asbestos or lead) or other adverse conditions (e.g., poor indoor air quality) in its buildings.

Environmental laws

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Commitments and Contingencies (continued)

govern the presence, maintenance, and removal of hazardous materials in buildings, and if the Company does not comply with such laws, it could face fines for such noncompliance.

Also, the Company could be liable to third parties (e.g., occupants of the buildings) for damages related to exposure to hazardous materials or adverse conditions in its buildings, and the Company could incur material expenses with respect to abatement or remediation of hazardous materials or other adverse conditions in its buildings.

In addition, some of the Company’s tenants routinely handle and use hazardous or regulated substances and wastes as part of their operations at our properties, which are subject to regulation.

Such environmental and health and safety laws and regulations could subject the Company or its tenants to liability resulting from these activities.

Environmental liabilities could affect a tenant’s ability to make rental payments to the Company, and changes in laws could increase the potential liability for noncompliance.

This may result in significant unanticipated expenditures or may otherwise materially and adversely affect the Company’s operations.

The Company is not aware of any material contingent liabilities, regulatory matters or environmental matters that may exist.

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.

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.

On May 11, 2022, Cedar, former Board of Directors of Cedar and the Company removed the Sydney action to the United States District Court for the District of Maryland, Case No.

8:22-cv-01142-GLR.

On May 16, 2022, the court ordered that a hearing on the Sydney Plaintiffs’ motion for preliminary injunction be held on June 22, 2022.

On June 2, 2022, the Plaintiffs in Kim also filed a motion for a preliminary injunction.

The court consolidated the motions for preliminary injunction.

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

By order dated July 11, 2022, the court consolidated the Sydney and Kim cases and set an August 24, 2022 deadline for the Plaintiffs in both cases to file a consolidated amended complaint.

Plaintiffs filed their amended complaint on August 24, 2022.

The amended complaint alleges on behalf of a putative class of holders of Cedar's preferred stock, among other things, claims for breach of contract against Cedar and Cedar's former Board of Directors with respect to the articles supplementary governing the terms of Cedar's preferred stock, breach of fiduciary duty against Cedar's former Board of Directors, and tortious interference and aiding and abetting breach of fiduciary duty against the Company.

On October 7, 2022, Defendants moved to dismiss the amended complaint.

Plaintiffs opposed the motion to dismiss and filed a motion to certify a question of law to Maryland’s Supreme Court.

On August 1, 2023, the court issued a decision and order granting Defendants’ motions to dismiss, without leave to amend, and denying Plaintiffs’ motion to certify a question of law to the Maryland Supreme Court.

The Plaintiffs appealed the dismissal to the United States Court of Appeals for the Fourth Circuit, Case No.

23-1905, docketed on August 30, 2023.

The Court has set a briefing schedule.

The appeal has been fully briefed.

At this juncture, the outcome of the litigation remains uncertain.

On July 11, 2022, a purported holder of Cedar's outstanding preferred stock filed a complaint against Cedar and Cedar's Board of Directors prior to the Merger in the United States District Court for the Eastern District of New York, entitled High Income Securities Fund v.

Cedar Realty Trust, Inc., et al., No.

2:22-cv-4031.

The complaint alleged that the Defendants violated Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions, and that Cedar's former Board of Directors are control persons under Section 20(a) of the Exchange Act.

On September 25, 2023, the Court granted Defendants’ motion to dismiss the complaint with prejudice, and the time within which the Plaintiff could have appealed such decision has passed.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Commitments and Contingencies (continued)

On October 14, 2022, a purported holder of the Company's outstanding preferred stock filed a putative class action against Cedar, Cedar's Board of Directors prior to the Merger, and WHLR in Nassau County Supreme Court, New York entitled Krasner v.

Cedar Realty Trust, Inc., et al.

The 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 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 WHLR.

The complaint seeks, among other relief, an award of monetary damages, attorneys' fees, and expert fees.

The Defendants filed motions in the Nassau County action to dismiss or stay the case based both on the pendency of the lawsuit in Maryland in which the same claims were asserted by other preferred stockholders and on the merits.

The court held a hearing on the motions on October 27, 2023, and on December 4, 2023 granted the motions to dismiss based on the pendency of the lawsuit in Maryland without addressing the merits.

Harbor Point Tax Increment Financing

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 Point, then owned by an affiliate of former CEO, Jon Wheeler, entered into an Economic Development Agreement with the Grove Economic Development Authority for this infrastructure development and in the event the ad valorem taxes were insufficient to cover annual debt service, Harbor Point would reimburse the Grove Economic Development Authority (the “Harbor Point Agreement”).

In 2014, Harbor Point 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 Point Agreement will be no more than $ 2.0 million, the principal amount of the bonds, as of December 31, 2023.

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.

The Company funded approximately $ 41 thousand and $ 42 thousand, during the years ended December 31, 2023 and 2022, respectively, in debt service shortfalls.

As of December 31, 2023, $ 78 thousand was accrued for the December 2023 debt service payment shortfall.

Future debt service shortfalls cannot be determined based on the variables noted above, as such have not been accrued.

Rental Revenue and Tenant Receivables

Tenant Receivables

As of December 31, 2023 and 2022, the Company’s allowance for uncollectible tenant receivables totaled $ 0.9 million and $ 3.1 million, respectively.

At December 31, 2023 and 2022, there were $ 7.9 million and $ 6.5 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):

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Rental Revenue and Tenant Receivables ( continued)

Years ended December 31,

Base rent $ 72,621 $ 55,454

Tenant reimbursements - variable lease revenue 21,240 16,665

Above (below) market lease amortization, net 4,849 2,079

Straight-line rents 1,370 800

Percentage rent - variable lease revenue 774 558

Lease termination fees 325 134

Other 1,668 1,316

Total 102,847 77,006

Credit losses on operating lease receivables ( 522 ) ( 361 )

Total $ 102,325 $ 76,645

Future minimum rents to be received under noncancelable tenant operating leases, excluding rents on assets held for sale, for each of the next five years and thereafter, excluding tenant reimbursements and percentage rent based on tenant sales volume, as of December 31, 2023 are as follows (in thousands):

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Equity and Mezzanine Equity

The Company has authority to issue 215,000,000 shares of stock, consisting of 200,000,000 shares of $ 0.01 par value Common Stock (“Common Stock”) and 15,000,000 shares of preferred stock of which 5,000,000 shares have been classified as no par value Series B Preferred Stock (“Series B Preferred”), 6,000,000 shares as Series D Cumulative Convertible Preferred Stock ("Series D Preferred") and 4,500 shares of Series A Preferred Stock ("Series A Preferred").

The Company has authority to issue 215,000,000 shares of stock, consisting of 200,000,000 shares of $ 0.01 par value Common Stock and 15,000,000 shares of preferred stock of which 5,000,000 shares have been classified as no par value Series B Preferred, 6,000,000 shares as Series D Preferred Stock and 4,500 shares of Series A Preferred.

Substantially all of our business is conducted through the Company’s Operating Partnership.

The Trust is the sole general partner of the Operating Partnership and owned a 99.13 % and 99.05 % interest in the Operating Partnership as of December 31, 2023 and 2022, respectively.

Limited partners in the Operating Partnership have the right to redeem their common units for cash or, at our option, common shares at a ratio of one common unit for one common share.

Limited partners in the Operating Partnership have the right to redeem their common units for cash or Common Stock, at our option.

Distributions to common unit holders are paid at the same rate per unit as dividends per share to the Trust’s common stockholders.

As of December 31, 2022 and 2021, there were 15,227,758 of common units outstanding with the Trust owning 15,082,816 and 15,012,415 , respectively, of these common units.

Common Stock One-for-Ten Reverse Stock Split

On August 7, 2023, we announced that our Board of Directors had approved the Reverse Stock Split.

The Reverse Stock Split took effect as of 5:00 p.m., Eastern Standard Time, on August 17, 2023 (the “Effective Time”).

At the Effective Time, every ten issued and outstanding shares of Common Stock were converted into one share of Common Stock, and as a result, the number of outstanding shares of Common Stock was reduced from approximately 9,809,195 to approximately 980,919 .

The par value of each share of Common Stock remained unchanged.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would have otherwise been issued a fractional share of the Company’s Common Stock as a result of the Reverse Stock Split instead received a cash payment in lieu of such fractional share in an amount equal to the applicable fraction multiplied by the closing price of the Company’s Common Stock on the Nasdaq on August 17, 2023 (as adjusted for the Reverse Stock Split), without any interest.

All share and share-related information

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Equity and Mezzanine Equity (continued)

presented in this Annual Report on Form 10-K, including our consolidated financial statements, has been retroactively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Split.

Series A Preferred Stock

At December 31, 2022 and 2021, the Company had 562 shares without par value Series A Preferred issued and outstanding and a $ 1,000 liquidation preference per share, or $ 562 thousand in aggregate.

The Company has the right to redeem the 562 shares of Series A Preferred, on a pro rata basis, at any time at a price equal to 103 % of the purchase price for the Series A Preferred.

Series B Preferred Stock

At December 31, 2022 and 2021, the Company had 3,379,142 and 1,872,448 shares, issued and outstanding, respectively, without par value Series B Preferred with a $ 25.00 liquidation preference per share, or $ 84.48 million and $ 46.81 million, respectively.

Holders of Series B Preferred shares have the right to receive, only when and as authorized by the Board of Directors and declared by the Company, out of funds legally available for the payment of dividends, cash dividends, at a rate of 9 % per annum of the $ 25 liquidation preference per share.

5 unchanged sentences

The Series B Preferred has no maturity date and will remain outstanding indefinitely unless subject to a mandatory or voluntary conversion as described above.

Series D Preferred Stock - Redeemable Preferred Stock

At December 31, 2023 and 2022, the Company had 2,590,458 and 3,152,392 issued shares, respectively and 6,000,000 authorized shares of Series D Preferred Stock, without par value with a $ 25.00 liquidation preference per share, or $ 97.1 million and $ 113.4 million in aggregate liquidation value, respectively.

Until September 21, 2023, the holders of the Series D Preferred Stock were entitled to receive cumulative cash dividends at a rate of 8.75 % per annum of the $ 25.00 liquidation preference per share (the “Initial Rate”).

Commencing September 21, 2023, the holders were entitled to cumulative cash dividends at an annual dividend rate of the Initial Rate increased by 2 % of the liquidation preference per annum on each subsequent anniversary thereafter, subject to a maximum annual dividend rate of 14 %.

Dividends are payable quarterly in arrears on or before January 15 th , April 15 th , July 15 th and October 15 th of each year.

Dividends on the Series D Preferred Stock cumulate from the end of the most recent dividend period for which dividends have been paid.

Dividends on the Series D Preferred Stock cumulate whether or not (i) we have earnings, (ii) there are funds legally available for the payment of such dividends and (iii) such dividends are authorized by our Board of Directors or declared by us.

Dividends on the Series D Preferred Stock do not bear interest.

If the Company fails to pay any dividend within three (3) business days after the payment date for such dividend, the then-current dividend rate increases following the payment date by an additional 2.0 % of the $ 25.00 stated liquidation preference per share until we pay the dividend, subject to our ability to cure the failure.

On December 20, 2018, the Company suspended the Series D Preferred dividend.

As such, the Series D Preferred Stock shares began accumulating dividends at 10.75 % beginning January 1, 2019 and will continue to accumulate dividends at this rate until all accumulated dividends have been paid.

Commencing September 21, 2023, the Series D Preferred Stock holders were entitled to cumulative cash dividends at an annual dividend rate of 12.75 %, subject to a maximum annual dividend rate of 16 %, including the 2 % default rate.

Holders of shares of the Series D Preferred Stock have no voting rights.

Pursuant to the Company's Articles Supplementary, if dividends on the Series D Preferred are in arrears for six or more consecutive quarterly periods (a "Preferred Dividend Default"), holders of shares of the Series D Preferred Stock and the holders of Series A Preferred and Series B Preferred upon which like voting rights have been conferred and are exercisable (such the Series A Preferred and Series B Preferred together, being the "Parity Preferred Stock"), shall be entitled to vote for the election of two additional directors to serve on the Board of Directors (the "Series D Preferred Directors").

A Preferred Dividend Default occurred on April 15, 2020.

The election of the Series D Preferred Directors will take place upon the written request of the holders of record of at least 20 % of the Series D Preferred Stock and Parity Preferred Stock.

The Board of Directors is not permitted to fill the vacancies on the Board of Directors as a result of the failure of the holders of 20 % of the Series D Preferred Stock and Parity Preferred Stock to

Wheeler Real Estate Investment Trust, Inc.

2 unchanged sentences

Equity and Mezzanine Equity (continued)

Series D Preferred Stock - Redeemable Preferred Stock and Tender Offers

At December 31, 2022 and 2021, the Company had 3,152,392 issued and outstanding, of Series D Preferred, without par value with a $ 25.00 liquidation preference per share, and a liquidation value of $ 113.44 million and $ 104.97 million in aggregate, respectively.

Until September 21, 2023, the holders of the Series D Preferred are entitled to receive cumulative cash dividends at a rate of 8.75 % per annum of the $ 25.00 liquidation preference per share (equivalent to the fixed annual amount of $ 2.1875 per share) (the “Initial Rate”).

Commencing September 21, 2023, the holders will be entitled to cumulative cash dividends at an annual dividend rate of the Initial Rate increased by 2 % of the liquidation preference per annum on each subsequent anniversary thereafter, subject to a maximum annual dividend rate of 14 %.

Dividends are payable quarterly in arrears on or before January 15 th , April 15 th , July 15 th and October 15 th of each year.

On or after September 21, 2021, the Company may, at its option, redeem the Series D Preferred, for cash at a redemption price of $ 25.00 per share, plus an amount equal to all accrued and unpaid dividends, if any, to and including the redemption date.

The holder of the Series D Preferred may convert shares at any time into shares of the Company’s Common Stock at an initial conversion rate of $ 16.96 per share of Common Stock.

After September 21, 2023, the holders of the Series D Preferred may, at their option, elect to cause the Company to redeem any or all of their shares at a redemption price of $ 25.00 per share, plus an amount equal to all accrued and unpaid dividends, if any, to and including the redemption date, payable in cash or in shares of Common Stock, or any combination thereof, at the Company's option.

The Series D Preferred requires the Company maintain asset coverage of at least 200 %.

If we fail to maintain asset coverage of at least 200 % calculated by determining the percentage value of (i) our total assets plus accumulated depreciation and accumulated amortization minus our total liabilities and indebtedness as reported in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) (exclusive of the book value of any Redeemable and Term Preferred Stock (defined below)) over (ii) the aggregate liquidation preference, plus an amount equal to all accrued and unpaid dividends, of outstanding shares of our Series D Preferred and any outstanding shares of term preferred stock or preferred stock providing for a fixed mandatory redemption date or maturity date (collectively referred to as “Redeemable and Term Preferred Stock”) on the last business day of any calendar quarter (“Asset Coverage Ratio”), and such failure is not cured by the close of business on the date that is 30 calendar days following the filing date of our Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable, for that quarter, or the “Asset Coverage Cure Date,” then we will be required to redeem, within 90 calendar days of the Asset Coverage Cure Date, shares of Redeemable and Term Preferred Stock, which may include Series D Preferred, at least equal to the lesser of (i) the minimum number of shares of Redeemable and Term Preferred Stock that will result in us having a coverage ratio of at least 200 % and (ii) the maximum number of shares of Redeemable and Term Preferred Stock that can be redeemed solely out of funds legally available for such redemption.

deliver such written request for the election of the Series D Preferred Directors.

The Series D Preferred Directors may serve on our Board of Directors, until all unpaid dividends on such Series D Preferred Stock and Parity Preferred Stock, if any, have been paid or declared and a sum sufficient for the payment thereof is set apart for payment.

The Series D Preferred Stock requires the Company maintain asset coverage of at least 200 %.

If we fail to maintain asset coverage of at least 200 % calculated by determining the percentage value of (i) our total assets plus accumulated depreciation and accumulated amortization minus our total liabilities and indebtedness as reported in our financial statements prepared in accordance with GAAP (exclusive of the book value of any Redeemable and Term Preferred Stock (defined below)) over (ii) the aggregate liquidation preference, plus an amount equal to all accrued and unpaid dividends, of outstanding shares of our Series D Preferred Stock and any outstanding shares of term preferred stock or preferred stock providing for a fixed mandatory redemption date or maturity date (collectively referred to as “Redeemable and Term Preferred Stock”) on the last business day of any calendar quarter (“Asset Coverage Ratio”), and such failure is not cured by the close of business on the date that is 30 calendar days following the filing date of our Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable, for that quarter, or the “Asset Coverage Cure Date,” then we will be required to redeem, within 90 calendar days of the Asset Coverage Cure Date, shares of Redeemable and Term Preferred Stock, which may include Series D Preferred Stock, at least equal to the lesser of (i) the minimum number of shares of Redeemable and Term Preferred Stock that will result in us having a coverage ratio of at least 200 % and (ii) the maximum number of shares of Redeemable and Term Preferred Stock that can be redeemed solely out of funds legally available for such redemption.

In connection with any redemption for failure to maintain the Asset Coverage Ratio, we may, in our sole option, redeem any shares of Redeemable and Term Preferred Stock we select, including on a non-pro rata basis.

We may elect not to redeem any Series D Preferred to cure such failure as long as we cure our failure to meet the Asset Coverage Ratio by or on the Asset Coverage Cure Date.

If shares of Series D Preferred are to be redeemed for failure to maintain the Asset Coverage Ratio, such shares will be redeemed solely in cash at a redemption price equal to $ 25.00 per share plus an amount equal to all accrued but unpaid dividends, if any, on such shares (whether or not declared) to and including the redemption date.

Dividends on the Series D Preferred cumulate from the end of the most recent dividend period for which dividends have been paid.

Dividends on the Series D Preferred cumulate whether or not (i) we have earnings, (ii) there are funds legally available for the payment of such dividends and (iii) such dividends are authorized by our Board of Directors or declared by us.

Dividends on the Series D Preferred do not bear interest.

If the Company, fails to pay any dividend within three (3) business days after the payment date for such dividend, the then-current dividend rate increases following the payment date by an additional 2.0 % of the $ 25.00 stated liquidation preference per share, or $ 0.50 per annum, until we pay the dividend, subject to our ability to cure the failure.

On December 20, 2018, the Company suspended the Series D Preferred dividend.

As such, the Series D Preferred shares began accumulating dividends at 10.75 % beginning January 1, 2019 and will continue to accumulate dividends at this rate until all accumulated dividends have been paid.

Holders of shares of the Series D Preferred have no voting rights.

Pursuant to the Company's Articles Supplementary, if dividends on the Series D Preferred are in arrears for six or more consecutive quarterly periods (a "Preferred Dividend Default") holders of shares of the Series D Preferred and the holders of Series A Preferred and Series B Preferred upon which, like voting rights have been conferred and are exercisable (such the Series A Preferred and Series B Preferred together, being the "Parity Preferred Stock"), shall be entitled to vote for the election of two additional directors to serve on the Board of Directors (the "Series D Preferred Directors").

A Preferred Dividend Default occurred on April 15, 2020.

The election of the Series D Preferred Directors will take place upon the written request of the holders of record of at least 20 % of the Series D

We may elect not to redeem any Series D Preferred Stock to cure such failure as long as we cure our failure to meet the Asset Coverage Ratio by or on the Asset Coverage Cure Date.

If shares of Series D Preferred Stock are to be redeemed for failure to maintain the Asset Coverage Ratio, such shares will be redeemed solely in cash at a redemption price equal to $ 25.00 per share plus an amount equal to all accrued but unpaid dividends, if any, on such shares (whether or not declared) to and including the redemption date.

On or after September 21, 2021, the Company may, at its option, redeem the Series D Preferred Stock, for cash at a redemption price of $ 25.00 per share, plus an amount equal to all accrued and unpaid dividends, if any, to and including the redemption date.

The holder of the Series D Preferred Stock may convert shares at any time into shares of the Company’s Common Stock at an initial conversion rate of $ 169.60 per share of Common Stock.

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

Redemptions commenced on September 22, 2023, and the first Holder Redemption Date was October 5, 2023.

During the year ended December 31, 2023, the Company processed 175 redemption requests, collectively redeeming 864,070 shares of Series D Preferred Stock.

Accordingly, the Company issued 52,788,687 shares of Common Stock in settlement of an aggregate Redemption Price of approximately $ 32.7 million.

The value of the Common Stock issued to holders redeeming their Series D Preferred Stock is the volume weighted average price per share of our Common Stock for the ten consecutive trading days immediately preceding, but not including, the Holder Redemption Date as reported on Nasdaq (the "VWAP").

As of December 31, 2023, the Company has realized a gain of $ 9.9 million in the aggregate due to the closing price of the Common Stock on the last VWAP date differing from the VWAP used to calculate the shares issued in each redemption round.

At December 31, 2023, the Company had received requests to redeem 9,843 shares of Series D Preferred Stock with

respect to the January 2024 Holder Redemption Date.

As such, the redemption of these Series D Preferred Stock is considered certain at December 31, 2023 and the liquidation value associated with these shares of $ 0.4 million is presented as a liability.

The changes in the carrying value of the Series D Preferred Stock for the years ended December 31, 2023 and 2022 is as follows (in thousands, except per share data):

Wheeler Real Estate Investment Trust, Inc.

2 unchanged sentences

Equity and Mezzanine Equity (continued)

Preferred and Parity Preferred Stock.

The Board of Directors is not permitted to fill the vacancies on the Board of Directors as a result of the failure of the holders of 20 % of the Series D Preferred and Parity Preferred Stock to deliver such written request for the election of the Series D Preferred Directors.

The Series D Preferred Directors may serve on our Board of Directors, until all unpaid dividends on such Series D Preferred and Parity Preferred Stock, if any, have been paid or declared and a sum sufficient for the payment thereof is set apart for payment.

The Company through “modified Dutch auction” tender offers on the Series D Preferred accepted for purchase 387,097 shares at a purchase price of $ 15.50 per share, for an aggregate cost of $ 6.00 million on March 12, 2021, and 103,513 shares of Series D Preferred at a purchase price of $ 18.00 per share, for an aggregate cost of $ 1.86 million on May 15, 2021, both excluding fees and expenses.

The changes in the carrying value of the Series D Preferred for the years ended December 31, 2022 and 2021 is as follows (in thousands):

Series D Preferred

Series D Preferred Stock

Balance December 31, 2021 3,152,392 $ 92,548

1 unchanged sentence

Undeclared dividends — 8,472

Paid-in-kind interest, issuance of Preferred Stock 1,610

Redemption of Preferred Stock ( 13,375 )

Balance December 31, 2022 3,152,392 101,518

Accretion of Preferred Stock discount — 373

Conversion of Series D Preferred Stock to Common Stock ( 4,244 ) ( 140 )

Paid-in-kind interest, issuance of Preferred Stock (2)

306,380 3,908

Accretion to liquidation preference (1)

Series D Preferred Stock redemptions (3)

( 864,070 ) ( 33,044 )

Undeclared dividends — 8,802

Balance December 31, 2023 2,590,458 $ 96,705

(1) The Series D Preferred Stock was adjusted to $ 25.00 liquidation preference plus accrued and unpaid dividends, representing a $ 13.5 million adjustment to its carrying value at September 21, 2023, the commencement of the holder redemptions.

(2) See Note 6 for additional details.

(3) The value is net of the January 2024 Holder Redemption Date redemption liquidation value of $ 0.4 million, which is represented as a liability;

however, the corresponding 9,843 shares has not been adjusted for as they remained outstanding at December 31, 2023.

Earnings per share

Basic earnings per share for the Company’s common stockholder is calculated by dividing income (loss) from continuing operations, excluding amounts attributable to preferred stockholders and the net income (loss) attributable to noncontrolling interests, by the Company’s weighted-average shares of Common Stock outstanding during the period.

Diluted earnings per share is computed by dividing the net income (loss) attributable to common stockholders, excluding amounts attributable to preferred stockholders and the net income (loss) attributable to noncontrolling interests, by the weighted-average number of common shares including any dilutive shares.

The following table summarizes the potential dilution of conversion of common units, Series B Preferred, Series D Preferred, warrants and Convertible Notes into the Company's Common Stock.

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

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

The following table summarizes the potential dilution of conversion of Operating Partnership common units ("Common Units"), Series B Preferred, Series D Preferred Stock, warrants and Convertible Notes into the Company's Common Stock.

These have been excluded from the Company’s diluted earnings per share calculation because their inclusion would be antidilutive.

December 31, 2023 December 31, 2022

Outstanding shares Potential Dilutive Shares Outstanding shares Potential Dilutive Shares

Outstanding Shares

Potential Dilutive Shares Outstanding Shares

Potential Dilutive Shares

Common units 13,323 13,323 14,494 14,494

3 unchanged sentences

Convertible Notes — 146,876,617 — 3,856,259

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

Series D Preferred Stock

Arrears Date Undeclared Dividends

For the year ended December 31, 2023 $ 8,802 $ 3.40

For the year ended December 31, 2022 $ 8,472 $ 2.69

Wheeler Real Estate Investment Trust, Inc.

2 unchanged sentences

Equity and Mezzanine Equity (continued)

On November 3, 2021, common stockholders of the Company voted to amend the Company’s Charter to remove the cumulative dividend rights of the Series A Preferred and Series B Preferred.

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

Series D Preferred

Record Date/Arrears Date Arrears Per Share

For the year ended December 31, 2022 $ 8,472 $ 2.69

For the year ended December 31, 2021 $ 8,167 $ 2.59

The total cumulative dividends in arrears for Series D Preferred (per share $ 10.99 ) as of December 31, 2022 is $ 34.63 million.

There were no dividends declared to holders of Common Stock, Series A Preferred, Series B Preferred or Series D Preferred during years ended December 31, 2022 or 2021.

The total cumulative dividends in arrears for Series D Preferred Stock is $ 32.3 million as of December 31, 2023 (per share $ 12.48 ).

There were no dividends declared to holders of Common Stock, Series A Preferred, Series B Preferred or Series D Preferred Stock during years ended December 31, 2023 or 2022.

2015 Long-Term Incentive Plan

6 unchanged sentences

The 2016 Incentive Plan allows for issuance of up to 62,500 shares of the Company's Common Stock to employees, directors, officers and consultants for services rendered to the Company.

For the Years Ended December 31, Shares Issued Market Value

(in thousands)

As of December 31, 2023, there are 12,770 shares available for issuance under the Company’s 2016 Incentive Plan and there were no shares issued in 2023 or 2022.

Related Party Transactions

Related Party Transactions with Cedar

The Company performs property management and leasing services for Cedar, a subsidiary of the Company, pursuant to the Wheeler Real Estate Company Management Agreement.

During the years ended December 31, 2023 and 2022, Cedar paid the Company $ 2.1 million and $ 1.0 million, respectively, for these services.

The Operating Partnership and Cedar’s operating partnership, Cedar Realty Trust Partnership, L.P., are party to a cost sharing and reimbursement agreement, pursuant to which the parties agreed to share costs and expenses associated with certain employees, certain facilities and property, and certain arrangements with third parties (the “Cost Sharing Agreement”).

Related party amounts due to the Company from Cedar as of December 31, 2023 and 2022 are comprised of (in thousands):

December 31, 2023

(b) December 31, 2022 (b)

Financings and real estate taxes

$ 7,166 $ 7,166

As of December 31, 2022, there are 127,707 shares available for issuance under the Company’s 2016 Incentive Plan.

Cancellation of Stock Appreciation Rights Agreement

Effective July 5, 2021, Daniel Khoshaba resigned as the President and Chief Executive Officer of the Company and as a member of the Board of Directors and as a member of the Executive Committee of our Board of Directors.

Khoshaba’s cessation of employment with the Company, all of his rights under that certain Stock Appreciation Rights Agreement, dated August 4, 2020, by and between Mr.

Khoshaba and the Company (the “SAR Agreement”), were forfeited for no consideration.

Lease Commitments

The Company has ground leases and leases its corporate headquarters;

both 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 December 31, 2022 and 2021, the weighted average remaining lease term of our leases is 34 and 31 years, respectively.

Rent expense under the operating lease agreements were $ 1.15 million and $ 1.06 million for the years ended December 31, 2022 and 2021, respectively.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Lease Commitments (continued)

The Cedar Portfolio has a ground lease which is accounted for as an operating lease expiring in 2071 and is included in the purchase price allocation discussed in Note 3 of this Form 10-K.

Supplemental information related to leases is as follows (in thousands):

For the Years Ended December 31,

Cash paid for amounts included in the measurement of operating lease liabilities $ 956 $ 902

Undiscounted cash flows of our scheduled obligations for future minimum lease payments due under the operating leases, including applicable automatic extension options and options reasonably certain of being exercised, as of December 31, 2022 and a reconciliation of those cash flows to the operating lease liabilities at December 31, 2022 are as follows (in thousands):

For the years ended December 31,

Thereafter 30,829

Total minimum lease payments (1)

Discount ( 19,998 )

Operating lease liabilities $ 16,478

(1) Operating lease payments include $ 7.54 million related to options to extend lease terms that are reasonably certain of being exercised.

Commitments and Contingencies

The Company carries comprehensive liability, fire, extended coverage, business interruption and rental loss insurance covering all of the properties in its portfolio under an insurance policy, in addition to other coverages, such as trademark and pollution coverage that may be appropriate for certain of its properties.

The Company believes the policy specifications and insured limits are appropriate and adequate for its properties given the relative risk of loss, the cost of the coverage and industry practice;

however, its insurance coverage may not be sufficient to fully cover losses.

Concentration of Credit Risk

The Company is subject to risks incidental to the ownership and operation of commercial real estate.

The Company’s portfolio of properties is dependent upon regional and local economic conditions and is geographically located in the Mid-Atlantic, Southeast, and Northeast, which markets represented approximately 44 %, 41 % and 15 %, respectively, of the total annualized base rent of the properties in its portfolio as of December 31, 2022.

The Company’s geographic concentration may cause it to be more susceptible to adverse developments in those markets than if it owned a more geographically diverse portfolio.

Wheeler Real Estate Investment Trust, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Commitments and Contingencies (continued)

Regulatory and Environmental

Environmental laws govern the presence, maintenance, and removal of hazardous materials in buildings, and if the Company does not comply with such laws, it could face fines for such noncompliance.