10-K: Wheeler REIT Navigates Dilution, Debt Amid Portfolio Shifts

Wheeler Real Estate Investment Trust reports a net income increase in 2025, driven by property sales gains, but faces ongoing common stock dilution from preferred share redemptions and convertible notes.

Summary

• Wheeler Real Estate Investment Trust (WHLR) reported a net income of $14.837 million for the fiscal year ended December 31, 2025, a significant increase from $0.711 million in 2024.
• Total revenues decreased by 4.9% to $99.445 million in 2025 from $104.574 million in 2024, primarily due to property dispositions.
• The company sold 10 retail shopping centers and one land parcel in 2025, generating $59.2 million in net proceeds, compared to three retail shopping centers and three land parcels sold in 2024 for $38.5 million.
• Same-Property Net Operating Income (NOI) increased by 1.6% to $60.195 million in 2025 from $59.235 million in 2024.
• WHLR continues to experience substantial dilution of its common stock due to the exercise of redemption rights by Series D Preferred Stock holders and downward adjustments of the conversion price on its 7.00% Subordinated Convertible Notes due 2031.
• Multiple reverse stock splits were effected in 2024 and 2025, and one in January 2026, to manage share price and Nasdaq listing compliance.
• The company repurchased and retired $41.9 million of noncontrolling interests (Cedar Series C and B Preferred Stock) in 2025, which is expected to reduce future annual dividend payments by $5.6 million.
• Total debt principal balance decreased to $482.841 million at December 31, 2025, from $499.531 million at December 31, 2024.
• Crystal Plum, Chief Financial Officer, notified the company of her decision to resign, with her last day being March 13, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a low sentiment score due to the severe and ongoing common stock dilution, repeated reverse stock splits, and significant preferred dividend arrears, which collectively indicate deep-seated capital structure issues despite some operational positives like Same-Property NOI growth and debt reduction. The CFO's resignation adds to the uncertainty.

Positives

• Net income significantly increased to $14.837 million in 2025 from $0.711 million in 2024.
• Same-Property Net Operating Income (NOI) increased by 1.6% to $60.195 million in 2025, driven by a 2.3% increase in property revenue.
• Gain on disposal of properties, net, increased substantially to $14.354 million in 2025 from $5.550 million in 2024, reflecting successful asset recycling.
• Total debt principal balance decreased by $16.69 million from $499.531 million in 2024 to $482.841 million in 2025.
• Repurchased and retired $41.9 million of noncontrolling interests (Cedar Series C and B Preferred Stock) in 2025, reducing future annual dividend payments by $5.6 million.
• The company's portfolio is 94.3% leased as of December 31, 2025, indicating strong occupancy.
• Weighted average change over prior rates for renewed leases was 11.7% in 2025, and for new leases was 26.4%, indicating favorable leasing economics.

Negatives

• Revenues decreased by 4.9% to $99.445 million in 2025, primarily due to property dispositions.
• Substantial dilution of common stock and steep decline in its market value resulted from Series D Preferred Stock redemptions and downward adjustment of Convertible Notes conversion price.
• The company effected multiple reverse stock splits in 2024 (one-for-24, one-for-five, one-for-three, one-for-two) and 2025 (one-for-four, one-for-five, one-for-seven, one-for-five, one-for-two), and one in January 2026 (one-for-three), indicating significant share price challenges and potential delisting concerns.
• Net cash used in financing activities increased significantly to $65.356 million in 2025 from $20.559 million in 2024.
• Corporate general & administrative expenses increased by 8.5% to $11.709 million in 2025.
• Impairment charges increased to $2.880 million in 2025 from $1.195 million in 2024.
• Loss on conversion of Convertible Notes increased to $0.902 million in 2025 from $0.412 million in 2024.
• Gain on preferred stock redemptions decreased to $1.523 million in 2025 from $4.716 million in 2024.
• Total cumulative dividends in arrears for Series D Preferred Stock reached $25.6 million ($16.95 per share) as of December 31, 2025, with the annual dividend rate increasing to 16.00%.
• The company does not intend to pay dividends on common stock or other preferred stock until all accumulated accrued and unpaid dividends on Series D Preferred Stock have been paid in full.
• Chief Financial Officer Crystal Plum is resigning effective March 13, 2026.
• The Conversion Price for Convertible Notes was adjusted downwards to approximately $2.60 per share of Common Stock (from $5.69 per share at December 31, 2025) subsequent to year-end, indicating further dilution risk.

Risks

• The use of and demand for retail space, including reductions in consumer spending, variability in retailer demand for leased space, adverse impact of e-commerce, ongoing consolidation in the retail sector, and changes in economic conditions and consumer confidence.
• General and economic business conditions, including the rate and other terms on which the company is able to lease its properties.
• The loss or bankruptcy of the company's tenants.
• The geographic concentration of properties in the Mid-Atlantic, Southeast, and Northeast.
• Availability, terms, and deployment of capital.
• Substantial dilution of common stock and steep decline in its market value resulting from the exercise by the holders of Series D Cumulative Convertible Preferred Stock of their redemption rights and downward adjustment of the Conversion Price on outstanding 7.00% Subordinated Convertible Notes due 2031, each of which has already occurred and is anticipated to continue.
• Uncertainty regarding whether the company has registered and can continue to register sufficient shares of common stock to settle redemptions of all Series D Preferred Stock tendered by holders.
• The degree and nature of competition.
• The company's ability to hire, develop, and/or retain talent.
• Changes in applicable laws and governmental regulations, including federal tax law and other regulatory provisions as a result of the One Big Beautiful Bill Act (OBBBA).
• Changes to accounting rules, tax rates, and similar matters, including tariff-related measures.
• The ability and willingness of the company's tenants and other third parties to satisfy their obligations under their respective contractual arrangements with the company.
• The ability and willingness of the company's tenants to renew their leases with the company upon expiration.
• The company's ability to re-lease its properties on the same or better terms in the event of non-renewal or in the event the company exercises its right to replace an existing tenant, and obligations the company may incur in connection with the replacement of an existing tenant.
• Litigation risks generally, including the risk that shareholder litigation in connection with the Cedar Acquisition may result in significant indemnification costs.
• Tax audits and other regulatory inquiries.
• The company's ability to maintain compliance with the financial and other covenants in its debt agreements and under the terms of its Series D Preferred Stock.
• Financing risks, such as the company's inability to obtain new financing or refinancing on favorable terms as the result of market volatility or instability and increases in borrowing costs as a result of changes in interest rates and other factors.
• The impact of the company's leverage on operating performance.
• The company's ability to successfully execute strategic or necessary asset acquisitions and divestitures.
• The company's ability to repurchase noncontrolling interests and the price and timing of such repurchases.
• Risks endemic to real estate and the real estate industry generally.
• The adverse effect of any future pandemic, endemic, or outbreak of infectious diseases, and mitigation efforts, including government-imposed lockdowns, to control their spread.
• Competitive risks from online retailers, outlet stores, discount shopping clubs, superstores, and other forms of sales and marketing of goods and services.
• Risks to information systems or those of tenants or vendors from service interruption, misappropriation of data, breaches of security or information technology, or other cyber-related attacks.
• The company's ability to maintain compliance with the listing standards of the Nasdaq Capital Market.
• The effects on the trading market of common stock from the numerous reverse stock splits effected in 2024, 2025, and January 2026, and any reverse stock splits the company may effect in the future.
• Damage to properties from catastrophic weather and other natural events, and the physical effects of climate change.
• The risk that an uninsured loss on properties or a loss that exceeds the limits of insurance policies could subject the company to lost capital or revenue on those properties.
• The risk that continued increases in the cost of necessary insurance could negatively impact the company's profitability.
• The company's ability and willingness to maintain its qualification as a real estate investment trust (REIT) in light of economic, market, legal, tax, and other considerations.
• The ability of the operating partnership, Wheeler REIT, L.P., and each of other partnerships and limited liability companies to be classified as partnerships or disregarded entities for federal income tax purposes.
• The impact of government shutdowns.
• The inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws.
• 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.
• 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.

Future Outlook

The company intends to continue exchanging common stock for Series B and Series D Preferred Stock to reduce outstanding securities, enhance financial stability, and optimize capital allocation. It also plans to continue repurchasing Cedar Series B and C Preferred Stock, which are trading at a discount, to offset lost net operating income from property sales and maximize shareholder value. Future dividend declarations will depend on cash flow, financial condition, capital requirements, and REIT distribution requirements. The company aims to grow operations and increase liquidity by delivering currently leased but unoccupied space, backfilling vacant anchor spaces, replacing defaulting tenants, increasing future lease revenue through tenant improvements, disposing of non-core assets, and refinancing properties. The OBBBA tax law update, effective after December 31, 2025, will increase the REIT asset test percentage limit for taxable REIT subsidiaries from 20% to 25%.

Management Comments

• "Our primary business objective is to maximize the value of our portfolio."
• "We intend to achieve this objective utilizing the following investment strategies: Focus on necessity-based retail, Focus on secondary and tertiary markets with strong demographics and demand, Increase operating income through leasing strategies and expense management, Selectively utilize our capital to improve retail properties, Recycling and sensible management of our property portfolio, Strategy for optimizing capital structure, Strategy for integrating acquisitions."
• "The Company seeks to mitigate risk and optimize its capital structure through continuous focus on maintaining prudent leverage and lengthy average debt maturities, as well as access to a diverse selection of capital sources."
• "By reducing the number of shares outstanding that are eligible for dividend payments, we can offset the net operating income lost from the recent sales of certain properties."
• "The Company intends to continue to exchange shares of its Common Stock for its Series B Preferred Stock and/or its Series D Preferred Stock with the holders thereof as opportunities arise as an additional strategy to reduce the outstanding number of each security, enhance the Company's financial stability and optimize its capital allocation."
• "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 the Series D Preferred Stock in Common 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."
• "Management has determined that our internal controls over financial reporting as of December 31, 2025 were effective."

Industry Context

StockSavvy.ai notes that Wheeler REIT's focus on grocery-anchored retail centers in secondary and tertiary markets aligns with a broader industry trend towards necessity-based retail, which has shown resilience against e-commerce pressures and economic fluctuations. The strategy of asset recycling and debt reduction is common among REITs seeking to optimize portfolios and strengthen balance sheets in a dynamic interest rate environment. However, the aggressive use of reverse stock splits and the significant dilution of common stock due to preferred share redemptions and convertible notes highlight severe capital structure challenges that are not typical for healthy, well-managed REITs, suggesting a distressed situation rather than strategic growth. The increase in Same-Property NOI is a positive operational indicator, but it is overshadowed by the complex and dilutive capital management activities.

Comparison to Industry Standards

• The company's portfolio occupancy rate of 94.3% is generally competitive within the retail REIT sector. For example, larger, more stable grocery-anchored REITs like Regency Centers (REG) or Federal Realty Investment Trust (FRT) typically report occupancy rates in the high 90s, indicating WHLR is performing reasonably well on this operational metric, albeit with a smaller, more geographically concentrated portfolio.
• The reported weighted average change over prior rates for renewed leases (11.7%) and new leases (26.4%) in 2025 suggests strong pricing power in its specific markets. This compares favorably to average rent growth reported by many retail REITs, which might range from 3-8% for renewals and 10-20% for new leases, depending on market and asset quality.
• The significant common stock dilution and repeated reverse stock splits are highly unusual and indicative of severe financial distress and capital structure issues, far below industry standards for healthy, publicly traded REITs. Companies like Realty Income (O) or Kimco Realty (KIM) manage their capital structures to minimize dilution and maintain stable dividend policies, contrasting sharply with WHLR's situation.
• The substantial cumulative dividends in arrears for Series D Preferred Stock ($25.6 million) and the increasing dividend rate (16.00%) are a major red flag, indicating a failure to meet preferred shareholder obligations, which is not seen in financially sound REITs.
• The resignation of the CFO is a concern, as management stability is a key indicator of corporate health, especially for companies undergoing significant financial restructuring.

Management Changes

Corporate Governance

Legal Proceedings

• Daniel Khoshaba v. Joseph D. Stilwell, et al.: A derivative and putative class action lawsuit filed on April 10, 2024, alleging breach of duty by current and former directors and the CEO regarding common stock dilution from Series D Preferred Stock redemptions and Convertible Notes dividends. A settlement agreement was reached on October 21, 2025, preliminarily approved by the court on December 4, 2025, with a final approval hearing scheduled for March 31, 2026. The company is a nominal defendant and not responsible for any settlement payment, but indemnifies the individual defendants.
• Anthony Aquino, et al. v. Bruce Schanzer, et al. (Aquino Action): A putative class action suit filed by preferred stockholders of Cedar against Former Cedar Directors, alleging breach of duties through the Cedar Acquisition. The company has a contractual obligation to indemnify the Former Cedar Directors, including for reasonable costs and legal fees. The outcome is uncertain, and the company cannot predict potential damages.

Related Party Transactions

• Management and Leasing Services for Cedar: The company performs property management and leasing services for Cedar, a subsidiary. Cedar paid the company $0.7 million in 2025 and $1.4 million in 2024 for these services.
• Cost Sharing Agreement: The Operating Partnership and Cedar's operating partnership share costs and expenses for certain employees, facilities, and third-party arrangements. Related party amounts due to the company from Cedar were $11.3 million as of December 31, 2025, and $9.5 million as of December 31, 2024, for financings, real estate taxes, management fees, leasing commissions, sales commissions, and Cost Sharing Agreement allocations (including executive compensation and D&O insurance).
• Investment in Stilwell Activist Investments, L.P. (SAI): The company has an investment in SAI, a Delaware limited partnership. Joseph Stilwell (Board member) is the managing member of SAI's general partner, Stilwell Value LLC. E.J. Borrack (Board member) is General Counsel to Stilwell Value and its affiliates. Megan Parisi (Board member) is Director of Communications to Stilwell Value and its affiliates. The company subscribed for $10.0 million in 2025 and $0.5 million in 2024 for limited partnership interests in SAI, bringing total subscriptions to $20.5 million. As of December 31, 2025, the net asset value of the investment was $24.4 million. Approximately 38.0% of SAI's underlying investments were in the company's own equity and debt securities at December 31, 2025 and 2024. The company recorded $2.4 million in unrealized holding gains through other comprehensive income in 2025 (net of $0.6 million investment fees).
• Subscription Agreements, Issuances of Series D Preferred Stock and Noncontrolling Interest Contributions: The company issued 27,000 shares of its Series D Preferred Stock in consideration for 54,000 shares of Cedar Series C Preferred Stock held by certain investors in 2025. These acquired Cedar Series C Preferred Stock shares were then contributed to Cedar Realty Trust, Inc. and retired.

Stakeholder Impact

• Shareholders (Common Stock): Significant negative impact due to substantial and ongoing dilution from preferred stock redemptions and convertible notes, as well as numerous reverse stock splits. No common stock dividends are expected until Series D Preferred Stock arrears are paid.
• Shareholders (Preferred Stock Series D): Entitled to monthly redemption rights, but payments are made in common stock, leading to exposure to common stock dilution. Accumulated and unpaid dividends are substantial and increasing.
• Shareholders (Preferred Stock Cedar Series B/C): The company is actively repurchasing these shares at a discount to liquidation value, which could be positive for remaining holders if the repurchases drive up value, but also indicates a desire to reduce this class of equity.
• Employees: The company offers competitive wages, benefits, wellness programs, and tuition assistance. The resignation of the CFO could create uncertainty.
• Tenants: The company focuses on necessity-based retail and aims to increase operating income through leasing strategies and expense management, which could lead to stable tenancy. However, risks like tenant bankruptcy and competition from online retailers remain.
• Creditors: The company is actively managing its debt, reducing principal, and refinancing loans. However, the high leverage and complex capital structure, along with ongoing litigation, could pose risks.

Next Steps

• Continue exchanging Common Stock for Series B and Series D Preferred Stock to reduce outstanding securities.
• Continue repurchasing Cedar Series B and C Preferred Stock.
• Grow operations and increase liquidity by delivering currently leased but unoccupied space.
• Backfill vacant anchor spaces.
• Replace tenants who are in default of their lease terms.
• Increase future lease revenue through tenant improvements partially funded by restricted cash.
• Dispose of non-core assets in the ordinary course of business.
• Refinance properties.
• Initiate a search for a new Chief Financial Officer following Crystal Plum's resignation.
• Attend a court hearing on March 31, 2026, to consider final approval of the Khoshaba lawsuit settlement.

Key Dates

Recommendation

The filing reveals a company in a highly precarious financial position. The relentless series of reverse stock splits, coupled with the substantial and ongoing dilution of common stock from preferred share redemptions and convertible note conversions, indicates a severe erosion of shareholder value. The massive accumulation of Series D Preferred Stock dividend arrears, now at 16.00% and totaling $25.6 million, highlights a fundamental inability to meet preferred obligations, which takes precedence over common shareholders. While operational metrics like Same-Property NOI show some stability, the capital structure issues are overwhelming and suggest a high risk of further value destruction for common shareholders. The CFO's resignation adds to the instability. A seasoned investor would recognize these as significant red flags pointing to a distressed equity.

Keywords

REIT, Real Estate Investment Trust, Grocery-anchored retail, Retail properties, Commercial real estate, SEC filing, 10-K, Financial performance, Property portfolio, Debt management, Preferred stock, Convertible notes, Stock dilution, Reverse stock split, Corporate governance, Asset disposition, Leasing, Mid-Atlantic real estate, Southeast real estate, Northeast real estate