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Item 7. Management’s Discussion and Analysis

2025-03-04 compared with 2024-03-05 · 187 added, 159 removed, 235 unchanged (60% of the section changed)

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You should read the following discussion of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the notes thereto included in this Form 10-K.

All per share amounts, common units and shares outstanding, stock-based compensation, warrants, and conversion features of our Convertible Notes for all periods presented reflect the one-for-ten Reverse Stock Split, which took effect on August 17, 2023.

All share and share-related information presented in this Form 10-K, including our consolidated financial statements, has been retroactively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Splits, unless otherwise noted.

For more detailed information regarding the basis of presentation for the following information, you should read the notes to the audited consolidated financial statements included in this Form 10-K.

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Our primary target markets include the Mid-Atlantic, Southeast and Northeast.

Our portfolio is comprised of seventy-five retail shopping centers and four undeveloped land parcels.

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.

Our portfolio is comprised of seventy-five properties, including seventy-two retail shopping centers and three undeveloped land parcels.

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

The Company’s portfolio had total gross rentable space of approximately 7,661,000 square feet and a leased level of approximately 93.1% at December 31, 2024.

In August 2022, the Company acquired Cedar, and as a result of such transaction acquired 19 shopping centers (the majority of which are grocery-anchored), which increased the Company’s presence in the Northeast.

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.

In August 2022, the Company acquired Cedar, and as a result of such transaction acquired its then 19 shopping centers (the majority of which are grocery-anchored), which increased the Company’s presence in the Northeast.

The consolidated financial statements included in this Form 10-K include Cedar.

We have determined that this acquisition is not a variable interest entity, as defined under the consolidation topic of the Financial Accounting Standards Board (the "FASB"), Accounting Standards Codification ("ASC") and we evaluated such entity under the voting model and concluded we should consolidate the entity.

Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive participating rights.

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These events are summarized below.

Series D Preferred Stock - Exchange Offer and Consent Solicitation

On November 22, 2022, the Company commenced an exchange offer (the "Exchange Offer"), which, as subsequently amended, provided for the exchange of up to 2,112,103 outstanding shares of Series D Preferred Stock, representing 67% of the outstanding shares of Series D Preferred Stock, for (i) 6.00% Subordinated Convertible Notes due 2028, and (ii) Common Stock, in each case to have been newly issued by the Company.

As of the expiration of the Exchange Offer on January 20, 2023, 864,391 shares of Series D Preferred Stock (representing 26.8% of the total outstanding Series D Preferred Stock) had been validly tendered (and not validly withdrawn) in the Exchange Offer.

Accordingly, the condition that the holders of at least

66 2/3% of the outstanding shares of Series D Preferred Stock validly tender their Series D Preferred Stock into the Exchange Offer had not been satisfied and the Exchange Offer expired on January 20, 2023.

Series D Preferred Stock - Redemptions

After September 21, 2023, each holder of the Series D Preferred Stock has the right, at such holder’s option, to request that the Company redeem any or all of such holder’s shares on a monthly basis (each redemption date, a “Holder Redemption Date”), 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, during the year ended December 31, 2023, the Company issued 52,788,687 shares of Common Stock in settlement of an aggregate redemption price of approximately $32.7 million.

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.

At December 31, 2023 and 2022, there were no assets held for sale.

The following properties were sold during the year ended December 31, 2024 (in thousands):

Disposal Date Property Contract Price Gain Net Proceeds

July 11, 2023 Carll's Corner Outparcel - Bridgeton, New Jersey $ 3,000 $ 2,204 $ 2,759

Land Acquisitions

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.

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").

The Devine Street Land Acquisition terminated the Company's ground lease associated with this property, a savings of $0.3 million in annual ground rent.

Term Loan Agreement, 12 properties

On May 5, 2023, the Company entered into a loan agreement (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 loans on 12 properties, including $1.1 million in defeasance.

Term Loan Agreement, 8 properties

On May 18, 2023, the Company entered into a loan agreement (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 loans on 8 properties, including $0.7 million in defeasance.

Timpany Plaza Loan Agreement

On September 12, 2023, the Company entered into a loan agreement (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.

Disposal Date Property Contract Price Gain (Loss) Net Proceeds

December 26, 2024 South Philadelphia retail center - Philadelphia, Pennsylvania $ 21,000 $ (5,389) $ 16,736

November 27, 2024 Brickyard Plaza land parcel - Berlin, Connecticut 1,150 973 1,050

September 12, 2024 Kings Plaza - New Bedford, Massachusetts

14,200 6,509 13,746

September 11, 2024 Edenton Commons land parcel - Edenton, North Carolina 1,400 574 1,312

June 26, 2024 Oakland Commons - Bristol, Connecticut

6,000 3,363 5,662

June 18, 2024 Harbor Point land parcel - Grove, Oklahoma n/a (480) n/a

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

During the year ended December 31, 2024, the Company recorded impairment charges of $1.2 million on Oregon Avenue, located in Philadelphia, Pennsylvania.

Term Loan, Five Properties

On June 28, 2024, the Company entered into a term loan agreement (the "Term Loan Agreement, 5 Properties") with Guggenheim Real Estate, LLC, for $25.5 million at a fixed rate of 6.80% with interest-only payments due monthly.

Commencing on August 10, 2029, until the maturity date of July 10, 2034, monthly principal and interest payments will be made based on a 30-year amortization schedule calculated based on the principal amount outstanding at that time.

The Term Loan Agreement, 5 Properties' proceeds were used to refinance four loans, including paying $0.4 million in defeasance.

The Term Loan Agreement, 5 Properties is collateralized by Cypress Shopping Center, Conyers Crossing, Chesapeake Square, Sangaree Plaza and Tri-County Plaza.

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.

On January 17, 2024, the Company paid down $0.6 million of the Convertible Notes through an open market purchase of 23,280 units at a total purchase price of $1.3 million.

As a result of that transaction, the Company recognized a $0.7 million

loss for the year ended December 31, 2024, 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.

In 2024, the Company issued an aggregate of 4,368 shares of its Common Stock upon the conversion of Convertible Notes by certain holders thereof, which resulted in an aggregate net loss on conversion of Convertible Notes of $0.4 million.

As of December 31, 2024, the Conversion Price for the Convertible Notes was approximately $16.88 per share of the Company’s Common Stock (approximately 1.48 shares of Common Stock for each $25.00 of principal amount of the Convertible Notes being converted).

For the February 2025 Series D Preferred Stock redemptions subsequent to year-end, the lowest price at which any Series D Preferred Stock was converted by a holder thereof into Common Stock was approximately $7.05.

Accordingly, under Section 14.02 (Optional Conversion) of the indenture governing the Convertible Notes (the "Indenture"), the Conversion Price was further adjusted, as of February 5, 2025, to approximately $3.88 per share of the Company’s Common Stock (approximately 6.44 shares of Common Stock for each $25.00 of principal amount of the Convertible Notes being converted).

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

For the years ended December 31, Series B Preferred

Years ended December 31,

Series B Preferred Stock

number of shares (1)

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(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.

As of December 5, 2023, the Conversion Price (as defined below) 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).

As of February 5, 2024, the Conversion Price for the Convertible Notes was approximately $0.12 per share of the Company’s Common Stock (approximately 209.84 shares of Common Stock for each $25.00 of principal amount of the Convertible Notes being converted).

Interest on the Convertible Notes is payable semi-annually in arrears on June 30 and

December 31 of each year.

Exchange of Series B Preferred Stock and Series D Preferred Stock for Common Stock

On October 8, 2024, the Company agreed to issue 11,000 shares of its Common Stock to an unaffiliated holder of the Company’s securities in exchange for 22,000 shares of the Company’s Series D Preferred Stock and 22,000 shares of the Company's Series B Preferred Stock from the investor.

The settlement of the 2024 Preferred Stock Exchange occurred on the same day.

The Company did not receive any cash proceeds as a result of the 2024 Preferred Stock Exchange, and the shares of the preferred stock exchanged have been retired and cancelled.

The Company intends to continue to opportunistically exchange shares of its Common Stock for its Series B Preferred Stock and/or its Series D Preferred Stock with the holders thereof as an additional strategy to reduce the outstanding number of each security, enhance the Company's financial stability and optimize its capital allocation.

See Note 12 to the accompanying audited consolidated financial statements for additional details.

Series D Preferred Stock - Redemptions

During the year ended December 31, 2024, the Company processed redemptions for an aggregate of 519,822 shares of Series D Preferred Stock from the holders thereof.

Accordingly, the Company issued 294,083 shares of its Common Stock in settlement of an aggregate redemption price of approximately $20.4 million.

At December 31, 2024, the Company had received requests to redeem 102,487 shares of Series D Preferred Stock with respect to the January 2025 Holder Redemption Date.

As such, the redemption of these Series D Preferred Stock is considered certain at December 31, 2024 and the liquidation value associated with these shares of $4.1 million is presented as a liability.

Noncontrolling Interests - Consolidated Subsidiary

During the year ended December 31, 2024, Cedar repurchased and retired 791,306 shares of Cedar Series C Preferred Stock in a series of repurchase transactions, including through a "modified Dutch auction" tender offer that commenced in September 2024 (the "September 2024 Cedar Tender Offer").

The shares of Cedar Series C Preferred Stock were repurchased for an aggregate of $11.5 million at a weighted average price of $13.93 per share, representing a premium to the book value of $9.75 per share.

The repurchase of the noncontrolling interests caused the recognition of $3.8 million deemed distributions during the year ended December 31, 2024.

On December 27, 2024, the Company announced and commenced a second "modified Dutch auction" tender offer to purchase up to an aggregate amount paid of $12.5 million of shares of Cedar Series C Preferred Stock at a price of not less than $13.75 nor greater than $15.75 per share of Cedar Series C Preferred Stock, to the sellers in cash, less any applicable withholding taxes and without interest.

Following the expiration of the December 2024 Cedar Tender Offer on January 28, 2025, the Company accepted for purchase 645,276 shares of its Cedar Series C Preferred Stock at $15.75 per share for approximately $10.2 million.

See Note 12 to the accompanying audited consolidated financial statements for additional details.

Related Party Transactions

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During the years ended December 31, 2024 and 2023, Cedar paid the Company $1.4 million and $2.1 million, respectively, for these services.

Related party amounts due to the Company from Cedar were $8.1 million and $7.3 million as of December 31, 2023 and 2022, respectively, and have been eliminated for consolidation purposes.

Related party amounts due to the Company from Cedar for financing and real estate taxes, management fees, leasing

commissions and Cost Sharing Agreement (as defined below) allocations were $9.5 million and $8.1 million as of December 31, 2024 and 2023, respectively, and have been eliminated for consolidation purposes.

Investment in Stilwell Activist Investments, L.P

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 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.

The Company’s investments with the Stilwell Activist Investments, L.P., a Delaware limited partnership (“SAI”) are accounted for under the equity method and measured at net asset value as a practical expedient and has not been classified within the fair value hierarchy.

All gains and losses, realized and unrealized, and fees are recorded through "gains (losses) on investment securities, net" 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.

As of December 31, 2024, the fair value of the Company’s SAI investment was $12.0 million, w hich includes $10.0 million fr om 2023 subscriptions and $0.5 million from the 2024 subscription.

These subscriptions were approved by the disinterested directors of the Company, and, after the

formation of the Related Person Transactions Committee (the “RPT Committee”), by the RPT Committee.

F or the years ended December 31, 2024 and 2023, the Company recognized $323 thousand and $204 thousand in fees, respectively.

See Note 4 to the accompanying audited consolidated financial statements for additional details.

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.

Excepted Holder Limits

On December 4, 2023, the Board of Directors, under the terms of the Charter, created a Capital Stock Excepted Holder Limit of 55% and a Common Stock Excepted Holder Limit of 86% for each of SAI, Stilwell Activist Fund, L.P., Stilwell Value Partners VII, L.P., and Stilwell Associates, L.P.

(collectively, the “Investors”).

Joseph Stilwell, a member of our Board of Directors, is the managing member and owner of Stilwell Value LLC, which is the general partner of each of the Investors.

On December 5, 2023, the Company entered into an Excepted Holder Agreement with the Investors with respect to such limits.

The Capital Stock Excepted Holder Limit provides that the Investors are exempted from the Charter’s aggregate stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of all classes of the Company's capital stock (as calculated under the definitions of “Aggregate Stock Ownership Limit” and “Beneficial Ownership” in the Charter) and are instead subject to the percentage limit established by the Board of Directors.

The Common Stock Excepted Holder Limit provides that the Investors are exempted from the Charter’s common stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of the Company's Common Stock (as calculated under the definitions of “Common Stock Ownership Limit” and “Beneficial Ownership” in the Charter) and is instead subject to the percentage limit established by the Board of Directors.

The Capital Stock Excepted Holder Limit and Common Stock Excepted Holder Limit will automatically terminate upon reduction of the Investors’ capital stock and Common Stock ownership below 9.8%, respectively.

In consideration of the grant of these Excepted Holder Limits, the Investors concurrently entered into a one-year letter agreement with the Company whereby each Investor agreed that it will not exercise its right to convert the Convertible Notes into shares of Common Stock to the extent that such conversion would result in such Investor, whether on its own or as part of a “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), becoming the direct or indirect “beneficial owner”, as defined in Rule 13d-3 under the Exchange Act, of common equity of the Company representing 50% or more of the total voting power of all outstanding shares of common equity of the Company that is entitled to vote generally in the election of directors.

Following the transfer of Common Stock to the Investors in consideration of the February 2024 Series D Preferred Stock redemptions made by the Investors, the Investors would have beneficially owned or constructively owned an amount of capital stock in excess of the Prior Excepted Holder Limits.

On February 5, 2024, the Board of Directors agreed to increase the prior Excepted Holder Limits to permit this additional ownership and, accordingly, the Company entered into an amendment to the Excepted Holder Agreement with the Investors under which the Company increased the Capital Stock Excepted Holder Limit granted to Investors under the Excepted Holder Agreement to 60% and the Common Stock Excepted Holder Limit to 90%.

(collectively, the “Stilwell Investors”).

Joseph Stilwell, a member of our Board of Directors, is the managing member and owner of Stilwell Value LLC, which is the general partner of each of the Stilwell Investors.

On December 5, 2023, the Company entered into an Excepted Holder Agreement with the Stilwell Investors with respect to such limits.

The Capital Stock Excepted Holder Limit provides that the Stilwell Investors are exempted from the Charter’s aggregate stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of all classes of the Company's capital stock (as calculated under the definitions of “Aggregate Stock Ownership Limit” and “Beneficial Ownership” in the Charter) and are instead subject to the percentage limit established by the Board of Directors.

The Common Stock Excepted Holder Limit provides that the Stilwell Investors are exempted from the Charter’s common stock ownership limit of not more than 9.8% in value of the aggregate of the outstanding shares of the Company's Common Stock (as calculated under the definitions of “Common Stock Ownership Limit” and “Beneficial Ownership” in the Charter) and is instead subject to the percentage limit established by the Board of Directors.

The Capital Stock Excepted Holder Limit and

Common Stock Excepted Holder Limit will automatically terminate upon reduction of the Stilwell Investors’ capital stock and Common Stock ownership below 9.8%, respectively.

In consideration of the grant of these Excepted Holder Limits, the Stilwell Investors concurrently entered into a one-year letter agreement (the "Stilwell Letter Agreement") with the Company whereby each Stilwell Investor agreed that it will not exercise its right to convert the Convertible Notes into shares of Common Stock to the extent that such conversion would result in such Stilwell Investor, whether on its own or as part of a “group” within the meaning of Section 13(d) of the Exchange Act of 1934, becoming the direct or indirect “beneficial owner”, as defined in Rule 13d-3 under the Exchange Act, of common equity of the Company representing 50% or more of the total voting power of all outstanding shares of common equity of the Company that is entitled to vote generally in the election of directors.

Following the transfer of Common Stock to the Stilwell Investors in consideration of the February 2024 Series D Preferred Stock redemptions made by the Stilwell Investors, the Stilwell Investors would have beneficially owned or constructively owned an amount of capital stock in excess of the Prior Excepted Holder Limits.

On February 5, 2024, the Board of Directors agreed to increase the prior Excepted Holder Limits to permit this additional ownership and, accordingly, the Company entered into an amendment to the Excepted Holder Agreement with the Stilwell Investors under which the Company increased the Capital Stock Excepted Holder Limit granted to Stilwell Investors under the Excepted Holder Agreement to 60% and the Common Stock Excepted Holder Limit to 90%.

Following approval by the Executive Committee of the Company's Board, the Company entered into an an amendment to the Stilwell Letter Agreement with the Stilwell Investors that extended the term thereof an additional year, through December 5, 2025.

Preferred Dividends

Commencing September 21, 2023, the Series D Preferred Stock holders were entitled to cumulative cash dividends at an annual dividend rate of 12.75% increased by 2% of the liquidation preference per annum on each subsequent anniversary thereafter, subject to a maximum annual dividend rate of 16%, including the 2% default rate.

At September 21, 2024, the annual dividend rate increased by 2% of the liquidation preference per annum to 14.75%, including the default rate.

The total cumulative dividends in arrears for Series D Preferred Stock is $32.8 million as of December 31, 2024 ($14.67 per share).

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Weighted average rate (per sq foot) $ 14.45 $ 12.43

Weighted average change of new leases over prior rates 21.35 % 14.68 %

(1) Lease data presented is based on average rate per square foot over the renewed or new lease term.

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

Critical Accounting Estimates

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

Big Lots Chapter 11 Bankruptcy

On September 9, 2024, Big Lots, Inc.

and its affiliates (collectively, "Big Lots"), filed for protection under chapter 11 of the U.S.

Bankruptcy Code (the "Bankruptcy Code") in the U.S.

Bankruptcy Court for the District of Delaware.

Big Lots leased five locations from us (collectively, the "Big Lots Leases").

We don't anticipate that the Big Lots chapter 11 cases will have a material adverse effect on our business, our financial condition, or our results of operations.

Critical Accounting Estimates and Policies

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

The preparation of these consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

The preparation of these consolidated financial statements

requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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To the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value.

We estimate fair value using unobservable data such as operating income, estimated capitalization rates or multiples, leasing prospects and local market information.

These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 3 inputs.

We estimate fair value using unobservable data such as operating income, estimated capitalization rates or multiples,

leasing prospects and local market information.

These valuation assumptions are based on the three-level valuation hierarchy for fair value measurement and represent Level 2 and 3 inputs.

Level 2 inputs are quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets in markets that are not active;

and inputs other than quoted prices.

Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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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 Accounting Standards Codification ("ASC") 480, the Series D Preferred Stock was revalued at the redemption price which includes undeclared dividends, representing liquidation value.

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.

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At December 31, 2024, our consolidated cash, cash equivalents and restricted cash totaled $60.7 million compared to consolidated cash, cash equivalents and restricted cash of $39.8 million at December 31, 2023.

Cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Cash flows from operating activities, investing activities and financing activities were as follows (in thousands):

Years Ended December 31, Year Over Year Change

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Operating Activities

Our cash flows from operating activities were $20.9 million and $30.8 million during the years ended December 31, 2023 and 2022, respectively, representing a decrease of 31.9% or $9.8 million primarily due to (1) a $12.5 million decrease in net changes in operating assets and liabilities due to timing of receipts and payments, (2) an $11.1 increase in corporate administrative expenses, interest expense and other expenses, offset by (3) a $13.5 million increase in net operating income ("NOI") not attributable to same properties a result of the Cedar Acquisition.

Net cash provided by operating activities, before net changes in operating assets and liabilities, was $29.4 million and $22.4 million for 2024 and 2023, respectively, primarily due to (1) a $4.0 million decrease in capital structure costs, (2) a $2.9 million increase in Same-Property NOI and (3) a $0.8 million decrease in corporate administrative expenses, partially offset by (4) a $0.5 million increase in cash paid for interest.

Investing Activities

Our cash flows used in investing activities were $31.5 million during the year ended December 31, 2023, compared to cash flows used in investing activities of $133.5 million during the year ended December 31, 2022, representing a decrease of 76.4% primarily due to (1) $135.5 million costs due to the Cedar Acquisition, described in Note 3 included in the accompanying audited consolidated financial statements, partially offset by (2) $11.5 million increase in capital expenditures, (3) $10.0 million subscription in SAI, (4) $4.2 million in 2023 acquisitions and (5) $7.8 million decrease in cash received from disposal of properties.

Our cash flows from investing activities increased $47.0 million, primarily due to (1) the proceeds from the sale of three properties and two land parcels compared to one outparcel sale in 2023, (2) the investment subscription with SAI of $0.5 million as compared to $10.0 million in 2023 and (3) the 2023 acquisitions of two land parcels, partially offset by (4) the increase in capital expenditures of $2.5 million.

Financing Activities

Our cash flows used in financing activities were $5.5 million during the year ended December 31, 2023, compared to cash flows from financing activities of $118.2 million for the comparable period in 2022.

Financing activities during the year ended December 31, 2023 primarily consists of:

Our cash flows used in financing activities were $20.6 million during the year ended December 31, 2024, compared to cash flows used in financing activities of $5.5 million for the comparable period in 2023.

Financing activities during the year ended December 31, 2024 primarily consist of:

Cash inflows:

• $16.4 million 2023 loan refinancing activities, net, including the Timpany Plaza Loan Agreement;

• $3.9 million 2024 loan refinancing activities, net;

• $5.2 million draw on Cedar Revolving Credit Agreement;

• $2.5 million draw on Timpany Plaza Loan Agreement.

Cash outflows:

• $11.5 million repurchase of noncontrolling interests;

• $10.4 million for distributions paid on noncontrolling interests;

• $1.6 million payments for deferred financing costs;

• $1.8 million defeasance payments;

• $3.1 million repurchase of debt securities;

• $5.2 million payment on Cedar Revolving Credit Agreement;

• $1.4 million scheduled loan principal payments on debt;

Financing activities during the year ended December 31, 2022 primarily consisted of:

• $1.3 million repurchase of debt securities;

• $0.4 million payment on Cedar term loan, 10 properties related to the sale of Brickyard Plaza land parcel;

• $0.4 million defeasance payments.

Financing activities during the year ended December 31, 2023 primarily consist of:

Cash inflows:

• $19.3 million 2022 loan refinancing activities, net;

• $130.0 million loan related to the Cedar Acquisition;

• $16.4 million 2023 loan refinancing activities, net, including the Timpany Plaza Loan Agreement.

Cash outflows:

• $12.7 million payments for deferred financing costs;

• $4.4 million scheduled loan principal payments on debt;

• $5.6 million loan principal payment related to the sale of Butler Square;

• $3.1 million loan principal payment related to the sale of Walnut Hill Plaza;

• $10.8 million for distributions paid on noncontrolling interests;

• $4.4 million payments for deferred financing costs;

• $1.8 million defeasance payments;

• $3.1 million repurchase of debt securities;

• $1.8 million scheduled loan principal payments on debt.

The Company continues to endeavor to manage its debt prudently with the objective of achieving a conservative capital structure and minimizing leverage within the Company.

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Total debt $ 499,531 $ 495,572

The weighted average interest rate and term of our fixed-rate debt are 5.42% and 8.2 years, respectively, at December 31, 2023.

The weighted average interest rate and term of our fixed-rate debt was 4.99% and 7.4 years, respectively, at December 31, 2022.

The weighted average interest rate and term of our fixed-rate debt were 5.53% and 7.5 years, respectively, at December 31, 2024.

The weighted average interest rate and term of our fixed-rate debt were 5.42% and 8.2 years, respectively, at December 31, 2023.

We have $6.0 million of debt maturing during the year ending December 31, 2025.

While we anticipate being able to refinance all the loans at reasonable market terms upon maturity, our inability to do so may materially impact our financial position and results of operations.

While we anticipate being able to refinance all the loans at reasonable market terms upon maturity, our inability to do so may materially impact our

financial position and results of operations.

See Note 6 to the accompanying audited consolidated financial statements for additional mortgage indebtedness details.

Nasdaq Notices

On June 26, 2023, the listing qualifications staff (the "Staff") of Nasdaq notified the Company that based on the Common Stock’s bid price closing below $1.00 per share for 30 consecutive business days, the Company no longer complied with Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule") and that it had 180 calendar days to regain compliance.

On December 7, 2023, the listing qualifications staff (the "Staff") of Nasdaq notified the Company that based on the Common Stock’s bid price closing below $1.00 per share for 30 consecutive business days, the Company no longer complied with Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule") and that Company had a 180-day compliance period.

This rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

In response, the Board of Directors determined that it was advisable to amend the Company’s charter to effect a one-for-ten reverse stock split of the Company’s Common Stock, which reverse stock split was subsequently effected on August 17, 2023.

Primarily as a result of this reverse stock split, the closing bid price of the Company’s Common Stock was at least $1.00 per share for a minimum of ten consecutive business days, and the Company regained compliance with Nasdaq’s Bid Price Rule on September 1, 2023.

However, the Company’s Common Stock bid price has again come under significant downward pressure primarily as a result of the Company’s Series D Preferred Stock holders having the right, at each such holder’s option, after September 21, 2023, to require the Company to redeem on a monthly basis any or all of such holder’s shares of Series D Preferred Stock at a redemption price of $25.00 per share, plus an amount equal to all accrued but unpaid dividends, if any, to and including the Holder Redemption Date.

This holder redemption price may be paid in cash or in equal value of shares of Common Stock, or in any combination thereof, at the Company’s option.

The Company has chosen to pay the monthly redemption price in equal value of shares of Common Stock.

On December 7, 2023, the Staff again notified the Company that based on the Common Stock’s bid price closing below $1.00 per share for 30 consecutive business days, the Company no longer complied with Nasdaq’s Bid Price Rule and that it had a 180-day compliance period until June 4, 2024 to regain compliance.

On June 3, 2024, the Company received a letter from the Staff notifying the Company that it had regained compliance with the Bid Price Rule.

On June 28, 2024, the Staff notified the Company that it was not in compliance with Nasdaq Listing Rule 5550(a)(4), which requires the Company to have a minimum of 500,000 "Publicly Held Shares" (defined in Nasdaq Listing Rule 5005(a)(35) as "shares not held directly or indirectly by an officer, director or any person who is the beneficial owner of more than 10 percent of the total shares outstanding") (the "Publicly Held Shares Rule").

Per the Staff's notice, the Company had until July 12, 2024 to submit to Nasdaq a specific plan to achieve and sustain compliance.

On July 12, 2024, the Company timely submitted its plan of compliance to the Staff.

On July 30, 2024, the Staff provided the Company with written notice of an extension through December 25, 2024 to regain compliance with the Publicly Held Shares Rule.

Following the Company's issuance of its Common Stock in settlement of Series D Preferred Stock redemptions and in conversion of its Convertible Notes, the Company regained compliance with the Publicly Held Shares Rule and received a letter from the Staff on November 13, 2024 indicating the matter was closed.

Material Cash Requirements, Contractual Obligations and Commitments

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(ii) other essential expenditures;

and (iii) opportunistic expenditures.

(iii) other investments;

and (iv) the repurchase of noncontrolling interests, including through the December 2024 Cedar Tender Offer.

The primary liquidity needs of the Company, in addition to the funding of our ongoing operations, at December 31, 2024 are $6.0 million in principal and regularly scheduled payments due in the year ended December 31, 2025 as described in Note 6 to the accompanying audited consolidated financial statements.

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• intends to use cash generated from operations during the year ended December 31, 2025.

In 2024 and through the 2025 expiration of the December 2024 Cedar Tender Offer, the Company has repurchased a total of 1,436,582 shares of Cedar Series C Preferred Stock for a purchase price of approximately $21.2 million, excluding fees and expenses.

These repurchases were funded by asset sales.

In addition, the Company has been and intends to continue repurchasing its Cedar Series B Preferred Stock and Cedar Series C Preferred Stock as both series are currently trading at a discount to their liquidation value, presenting a strategic opportunity to buy back shares at favorable prices.

By reducing the number of shareholders eligible for dividend payments, the Company believes it can offset the net operating income lost from the recent sales of certain properties as its seeks to enhance its financial stability and optimize its capital allocation.

February 21, 2025, the Company announced and commenced the February 2025 Cedar Tender Offers (as defined below).

See Note 12 to the accompanying audited consolidated financial statements for further information.

Additionally, the Company plans to undertake measures to grow its operations and increase liquidity through delivering space currently leased but not yet occupied, backfilling vacant anchor spaces, replacing tenants who are in default of their lease terms, increasing future lease revenue through tenant improvements partially funded by restricted cash, disposition of non-core assets in the ordinary course of business and refinancing properties.

In order to continue qualifying as a REIT, the Company is required to distribute at least 90% of its "REIT taxable income," as defined in the Code.

Future dividend declarations will continue to be at the discretion of the Board of Directors, and will depend on the cash flow and financial condition of the Company, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as the Board of Directors may deem relevant.

The Company intends to continue to operate its business in a manner that will allow it to qualify as a REIT for U.S.

federal income tax purposes.

Our success in executing on our strategy will dictate our liquidity needs going forward.

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The Convertible Notes could have the effect of causing, if interest is paid in the future in shares of Series D Preferred Stock, substantial dilution of the Series D Preferred Stock and reduction in the value of any Series D Preferred Stock.

In addition, depending on the prices at which the ongoing monthly redemptions of Series D Preferred Stock occur, the conversion price for the Convertible Notes could be repeatedly adjusted downwards which would in turn cause significant pressure on the value of the Company’s Common Stock.

In addition, depending on the prices at which the ongoing monthly redemptions of Series D Preferred Stock occur, the conversion price for the Convertible Notes could be repeatedly adjusted downwards, which has caused, and could continue to cause, significant downward pressure on the value of the Company’s Common Stock.

Series D Preferred Stock

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After September 21, 2023, each holder of Series D Preferred Stock has the right, at such holder’s option, to request that the Company redeem any or all of such holder’s shares of Series D Preferred Stock on a monthly basis.

As the Series D Preferred Holders’ continue to exercise their redemption rights on a monthly basis, the Company will continue to pay the aggregate redemption price in shares of our Common Stock.

As the holders of the Series D Preferred Stock continue to exercise their redemption rights on a monthly basis, the Company will continue to pay the aggregate redemption price in shares of our Common Stock.

The Company does not believe it is in its interests to liquidate assets or incur indebtedness to fund cash redemptions of the Series D Preferred Stock and, accordingly, it has no intention of doing so.

Therefore, the Company intends to continue to settle redemptions of Series D Preferred Stock in Common Stock.

Therefore, the Company intends to continue to settle redemptions of the Series D Preferred Stock in Common Stock until the earlier of (a) the redemption of all outstanding shares of Series D Preferred Stock or (b) an agreed settlement with the holders of two-thirds of the then issued and outstanding Series D Preferred Stock.

We believe that the issuance of Common Stock to settle redemptions in Common Stock will continue to result in a substantial dilution of the outstanding Common Stock.

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The following table presents a comparison of the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively (in thousands).

For the Years Ended December 31, Changes

Years Ended December 31,

2024 2023 Dollars Percent

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Depreciation and amortization (25,316) (28,502) 3,186 (11.2) %

Impairment of assets held for sale — (760) 760 n/a

Impairment charges (1,195) — (1,195) n/a

Corporate general & administrative (10,982) (11,750) 768 (6.5) %

Gain on disposal of properties 2,204 2,604 (400) (15.4) %

Gain on disposal of properties, net 5,550 2,204 3,346 151.8 %

Interest income 460 484 (24) (5.0) %

Gain on investment securities, net 685 — 685 n/a

Gain on investment securities, net 840 685 155 22.6 %

Interest expense (32,602) (32,314) (288) 0.9 %

Net changes in fair value of derivative liabilities (8,332) 3,458 (11,790) (340.9) %

Gain on preferred stock redemptions 9,893 — 9,893 n/a

Loss on conversion of Convertible Notes (412) — (412) n/a

Gain on Preferred Stock retirements 4,772 9,893 (5,121) (51.8) %

Other expense (1,489) (5,482) 3,993 (72.8) %

Income tax expense (48) — (48) n/a

Net Income (Loss) 6,083 (8,470) 14,553

Net income attributable to noncontrolling interests 10,770 3,984 6,786 170.3 %

Net Loss Attributable to Wheeler REIT $ (4,687) $ (12,454) $ 7,767

Revenues were higher primarily as a result of (1) an increase in rental revenues of $25.1 million, which is primarily due to a $21.1 million increase in property revenues from the Cedar Acquisition, partially offset by 2022 property sales, (2) an increase of $2.8 million in market lease amortization and (3) an increase of $1.1 million in same-property revenues.

See Same-Property Net Operating Income for further details about the changes within operating revenue.

Property Operating expenses were higher primarily as a result of (1) an increase of $7.6 million in property operating expenses from the Cedar Acquisition, partially offset by 2022 property sales and (2) an increase of $1.5 million in same-property expenses.

Impairment was lower primarily as a result of the Harbor Point Land Parcel (defined below) held for sale in 2022.

Depreciation and amortization were higher primarily as a result of the Cedar Acquisition.

Corporate general and administrative expenses were higher primarily as a result of (1) an increase of $1.2 million in professional fees primarily a result of the Cedar Acquisition, (2) an increase of $1.1 million in compensation and benefits primarily driven by hiring more employees due to the Cedar Acquisition and payroll related costs, and (3) an increase of $0.7 million in corporate administration costs primarily a result of the Cedar Acquisition.

Interest expense was higher primarily as a result of a full year of the Cedar Acquisition.

Income tax expense (1) (48) 47 (97.9) %

Net Income 767 6,083 (5,316)

Revenues were higher primarily as a result of (1) an increase in tenant reimbursements of $2.7 million, (2) an increase in base rent of $0.7 million and (3) an increase in other income of $0.2 million, partially offset by (4) a decrease in market lease amortization of $1.4 million.

Property operating expenses were higher primarily as a result of (1) an increase in insurance of $0.3 million and (2) an increase in management fees of $0.1 million, partially offset by (3) a decrease of $0.2 million in ground rent expense, a result of the 2023 acquisition of a land parcel located on the Company's property.

Depreciation and amortization were lower primarily as a result of the purchase price allocation of lease intangibles due to the timing of the Cedar Acquisition and properties sold in 2024.

Corporate general and administrative expenses were lower primarily as a result of (1) a decrease in salaries of $0.5 million, (2) a decrease in legal fees of $0.4 million and (3) a decrease in taxes of $0.1 million, partially offset by (4) an increase in corporate administration of $0.2 million.

Interest expense increased 0.9%.

Below is a comparison of the components which make up interest expense (in thousands):

December 31, Changes

2023 2022 Dollars % Change

2024 2023 Dollars Percent

Property debt interest - excluding Cedar debt $ 17,118 $ 16,153 $ 965 6.0 %

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(1) Includes the fair value adjustment for the paid-in-kind interest.

Net changes in the fair value of derivative liabilities increased, which represents a non-cash adjustment from a change in the fair value that includes adjustments in valuation assumptions.

The above increase in property debt interest inclusive of Cedar debt was $1.6 million, a result of (1) an increase of $1.1 million due to an increase in the overall average interest rate and (2) an increase of $0.5 million in the average principal debt balance.

Net changes in the fair value of derivative liabilities was a $8.3 million loss for the year ended December 31, 2024, which represents a non-cash adjustment from a change in the fair value, primarily related to the conversion rate on the Convertible Notes which can only be adjusted downward based on the redemption price(s) of the Series D Preferred Stock relative to market trade prices of the Convertible Notes and Common Stock.

See Note 7 to the accompanying audited consolidated financial statements for additional details.

Gain on preferred stock redemptions is a result of the redemptions of Series D Preferred Stock.

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").

During the year ended 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.

Gain on Preferred Stock retirements is a result of the fair market value of the Common Stock issued on redemptions and exchanges of the Company's Preferred Stock, in comparison to the Preferred Stock's book value.

During the years ended December 31, 2024 and 2023, the Company realized a gain of $4.8 million and $9.9 million in the aggregate, respectively, as a result of the fair market value of the Common Stock issued in these transactions being less than the book value of the Preferred Stock retired.

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.

Other expenses were $1.5 million for the year ended December 31, 2024, which primarily consisted of capital structure costs, including repurchase of Convertible Notes and legal and other expenses incurred in connection with the 2024 Reverse Stock Splits, the registration of our Common Stock to issue in settlement of Series D Preferred Stock redemptions and redemptions of the Series D Preferred Stock by holders thereof.

Other expenses were $5.5 million for the year ended December 31, 2023, which primarily consisted of capital structure costs including repurchase of Convertible Notes and legal and other expenses incurred in connection with an exchange offer for the Company's outstanding shares of Series D Preferred Stock (the "2023 Exchange Offer"), redemptions by holders of the Series D Preferred Stock and the August 2023 Reverse Stock Split.

Same-Property Net Operating Income

NOI is a widely-used non-GAAP financial measure for REITs.

The Company believes that NOI is a useful measure of the Company's property operating performance.

The Company defines NOI as property revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes).

Because NOI excludes general and administrative expenses, depreciation and amortization, interest expense, interest income, provision for income taxes, gain or loss on sale or capital expenditures and leasing costs and impairment charges, it provides a performance measure, that when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income.

The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns.

NOI should not be viewed as a measure of the Company's overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, straight-line rents, market lease amortization, gain or

loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties.

Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to that of other REITs.

Same-property net operating income ("Same-Property NOI") is a widely-used non-GAAP financial measure for REITs.

The Company believes that Same-Property NOI is a useful measure of the Company's property operating performance.

The Company defines Same-Property NOI as property revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes).

Because Same-Property NOI excludes general and administrative expenses, depreciation and amortization, gain or loss on sale or capital expenditures and leasing costs and impairment charges, it provides a performance measure, that when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from operating income.

The Company uses Same-Property NOI to evaluate its operating performance since Same-Property NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns.

Properties are included in Same-Property NOI if they are owned and operated for the entirety of both periods being compared.

Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from Same-Property NOI.

The most directly comparable GAAP financial measure is consolidated operating income.

Same-Property NOI should not be considered as an alternative to consolidated operating income prepared in accordance with GAAP or as a measure of liquidity.

Further, Same-Property NOI is a measure for which there is no standard industry definition and, as such, it is not

consistently defined or reported on among the Company's peers, and thus may not provide an adequate basis for comparison among REITs.

The following table is a reconciliation of same-property NOI from operating income (the most directly comparable GAAP financial measure).

Same-property NOI consists only of those properties owned during the entirety of all periods presented.

Year Ended December 31,

Years Ended December 31,

(in thousands )

Operating Income $ 37,531 $ 29,407

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

Add (deduct):

Gain on disposal of properties, net (5,550) (2,204)

Corporate general & administrative 10,982 11,750

Impairment of assets held for sale — 760

Impairment charges 1,195 —

Depreciation and amortization 25,316 28,502

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Same-Property Net Operating Income $ 61,706 $ 58,814

Total same-property NOI was $41.0 million and $41.4 million for the years ended December 31, 2023 and 2022, respectively, representing a decrease of 0.9%.

Same-property NOI was impacted by (1) $1.3 million increase in rental revenue driven by strong leasing activity, (2) $0.3 million increase in other revenues due to termination fees and enterprise zone credits;

(3) $0.2 million savings in rent expense due to the purchase of the Devine Street Land Acquisition, which terminated the Company's ground lease associated with this property, offset by a (4) $1.4 million increase in property operating expenses necessary as part of financing requirements, (5) $0.3 million demolition of an outparcel building that was placed out of service and (6) an increase in credit losses from tenants of $0.5 million.

NOI related to properties not defined as same-properties for the year ended December 31, 2023 and 2022 is attributable to the Cedar Acquisition and the 2022 property sales.

The Cedar Acquisition had property revenues of $33.2 million and $11.0 million, respectively, and property expenses of $13.1 million and $5.0 million, respectively, for the years ended December 31, 2023 and 2022.

Total same-property NOI was $61.7 million and $58.8 million for the years ended December 31, 2024 and 2023, respectively, representing an increase of 4.9% due to a 3.4% increase in property revenue, partially offset by a 0.7% increase in property operating expenses.

Funds from Operations

We use funds from operations ("FFO"), a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity.

We compute FFO in accordance with standards established by the Board of Governors of Nareit in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018).

We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts ("Nareit") in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018).

As defined by Nareit, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate-related depreciation and amortization (excluding amortization of loan origination costs), plus impairment of real estate related long-lived assets and after adjustments for unconsolidated partnerships and joint ventures.

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We believe the computation of FFO in accordance with Nareit's definition includes certain items that are not indicative of the results provided by our Operating Portfolio and affect the comparability of our period-over-period performance.

These items include, but are not limited to, legal settlements, non-cash share-based compensation expense, non-cash amortization on loans and acquisition costs.

These items include, but are not limited to, legal settlements, non-cash amortization on loans and acquisition costs.

Therefore, in addition to FFO, management uses Adjusted FFO ("AFFO"), which we define to exclude such items.

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However, there can be no assurance that AFFO presented by us is comparable to the adjusted or modified FFO of other REITs.

A reconciliation of net income (loss) to FFO available for common shareholders and AFFO (in thousands):

A reconciliation of net income to FFO available for common shareholders and AFFO (in thousands):

Years Ended December 31,

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

$ 767 $ 6,083

Depreciation and amortization of real estate assets 25,316 28,502

Impairment of assets held for sale — 760

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

Impairment charges 1,195 —

Gain on disposal of properties, net (5,550) (2,204)

FFO 21,728 32,381

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Net changes in fair value of derivative liabilities 8,332 (3,458)

Gain on preferred stock redemptions (9,893) —

Loss on conversion of Convertible Notes 412 —

Gain on Preferred Stock retirements (4,772) (9,893)

Straight-line rental revenue, net straight-line expense (1,402) (1,380)

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Above (below) market lease amortization, net (3,434) (4,849)

(4,849) (2,079)

Recurring capital expenditures tenant improvement reserves (1,532) (1,628)

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Other non-recurring and non-cash expenses are costs of the Company that we believe will not be incurred on a go-forward basis.

Other non-recurring expenses of $2.1 million for the year ended December 31, 2023, were primarily a result of $1.8 million in loan defeasance payments and $0.3 million costs to demolish decommissioned space not included in the Company's gross leasable area.

For the year ended December 31, 2022, other non-recurring expenses totaled $3.1 million, primarily including $2.6 million in loan defeasance payments a result of the 2022 loan refinancing activities and $0.7 million legal settlement costs and severance, partially offset with $0.4 million nonrecurring revenue related to Cedar's recognition of easement revenue.

Other non-recurring expenses were $0.4 million for the year ended December 31, 2024, a result of loan defeasance payments.

Other non-recurring expenses were $2.1 million for the year ended December 31, 2023, a result of $1.8 million in loan defeasance payments and $0.3 million costs to demolish decommissioned space not included in the Company's gross leasable area.

Inflation, Deflation and Economic Condition Considerations

is experiencing elevated levels of inflation, which could continue or worsen.

Substantially all of the Company’s tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term.

Substantially all of the Company’s leases contain provisions designed to partially mitigate the negative impact of inflation in the near term.

Such lease provisions include clauses that require tenants to reimburse the Company for inflation-sensitive costs such as real estate taxes, insurance and many of the operating expenses it incurs.

In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates.

However, s ignificant inflation rate increases over

a prolonged period of time may have a material adverse impact on the Company’s business.

However, s ignificant inflation rate increases over a prolonged period of time may have a material adverse impact on the Company’s business.

Conversely, deflation could lead to downward pressure on rents and other sources of income.

Fluctuations in interest rates could significantly impact our Operating Portfolio and overall financial performance.

Interest rate increases could result in higher incremental borrowing costs for the Company and our tenants.

The duration of the Company's indebtedness and our relatively low exposure to floating rate debt have mitigated the direct impact of inflation and interest rate increases.

The degree and pace of these changes have had and may continue to have impacts on our business.

In a low or stable interest rate environment, we may benefit from lower borrowing costs, enabling strategic investments, acquisitions, or capital returns to shareholders.

Additionally, we monitor market conditions to adjust our capital allocation accordingly, maintain a disciplined financial approach and seek to optimize returns while managing exposure to interest rate volatility.

The degree and pace of inflation and interest rate changes have had and may continue to have impacts on our business.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis