8-K: Wheeler Real Estate Investment Trust Adjusts Conversion Price of Convertible Notes Following Series D Preferred Stock Redemptions

Wheeler Real Estate Investment Trust adjusts the conversion price of its 7.00% Subordinated Convertible Notes due 2031 following the May 2025 redemptions of Series D Cumulative Convertible Preferred Stock.

Summary

• Wheeler Real Estate Investment Trust (WHLR) announced an adjustment to the conversion price of its 7.00% Subordinated Convertible Notes due 2031 due to recent redemptions of its Series D Cumulative Convertible Preferred Stock.
• Prior to May 5, 2025, the conversion price was approximately $1.97 per share.
• Following the May redemptions, where the lowest conversion price for Series D Preferred Stock was $1.22, the conversion price for the Notes has been adjusted to approximately $0.67 per share.
• This represents a 45% discount to the $1.22 conversion price observed in the Series D Preferred Stock redemptions.
• In May 2025, the company processed 15 redemption requests, redeeming 23,070 shares of Series D Preferred Stock at $41.03 per share, settling the redemptions with 774,572 shares of common stock.
• Cumulatively, the company has redeemed 1,639,903 shares of Series D Preferred Stock and issued approximately 1,586,400 shares of common stock to settle these redemptions.
• As of May 5, 2025, the company had 3,845,587 shares of Common Stock and 1,790,504 shares of Series D Preferred Stock outstanding.
• The deadline for the next monthly round of Series D Preferred Stock redemptions is May 25, 2025, with the redemption date set for June 5, 2025.
• The company anticipates potentially not having enough registered common stock to settle redemption requests on the June Redemption Date and plans to file a new registration statement.

Sentiment

Score: 4

Explanation: The announcement includes negative elements such as the significant adjustment to the conversion price and the potential need to issue unregistered shares, offset slightly by the routine nature of the redemption process. The uncertainty around the registration statement adds to the negative sentiment.

Negatives

• The company anticipates potentially not having enough registered common stock to settle redemption requests on the June Redemption Date.
• The company may need to issue unregistered Common Stock or delay delivery of registered Common Stock pending SEC clearance of the new registration statement.

Risks

• There is no assurance that the new registration statement for additional shares of Common Stock will be declared effective in advance of the June Redemption Date.
• If the new registration statement is not effective by the June Redemption Date, the Company would likely issue unregistered Common Stock to settle redemption requests OR delay delivery of registered Common Stock pending SEC clearance of the new registration statement.

Future Outlook

The company plans to file a new registration statement to register additional shares of Common Stock to cover future monthly redemption requests, but there is no assurance that it will be declared effective in advance of the June Redemption Date.

Industry Context

The adjustment of the conversion price and the potential need for a new registration statement reflect the ongoing challenges faced by REITs in managing their capital structure and preferred stock obligations. This is especially relevant in a rising interest rate environment where refinancing and raising capital can be more difficult.

Comparison to Industry Standards

• Similar REITs with convertible securities, such as Washington Prime Group (before its bankruptcy) and CBL Properties, have faced challenges managing their debt and preferred equity obligations.
• The conversion price adjustment is a common mechanism to protect noteholders from dilution, but it also signals potential strain on the company's common equity.
• The need to file a new registration statement to cover redemptions is not uncommon, but the uncertainty around its effectiveness adds risk.

Stakeholder Impact

• Shareholders may experience dilution if the company issues a significant number of new shares.
• Holders of the convertible notes will benefit from the lower conversion price.
• Holders of Series D Preferred Stock will continue to have the option to redeem their shares.

Next Steps

• The company plans to file a new registration statement to register additional shares of Common Stock.
• The SEC will need to declare the registration statement effective before the June Redemption Date.

Key Dates

Keywords

redemption, Series D Preferred Stock, convertible notes, conversion price, common stock, Wheeler Real Estate Investment Trust, WHLR