DEF: Wheeler Real Estate Investment Trust Seeks Shareholder Approval for Multiple Reverse Stock Splits to Avert Nasdaq Delisting

Wheeler Real Estate Investment Trust, Inc. is calling its stockholders to an Annual Meeting to vote on the election of directors, auditor ratification, and critically, 17 separate authorizations for potential reverse stock splits to maintain its Nasdaq listing amidst sustained downward pressure on its common stock price.

Summary

• The Annual Meeting of Stockholders for Wheeler Real Estate Investment Trust, Inc. (WHLR) will be held virtually on August 20, 2025, at 9:30 a.m. Eastern Daylight Time.
• Stockholders will vote on three main proposals: the election of eight members to the Board of Directors, the ratification of Cherry Bekaert LLP as the independent registered public accounting firm for fiscal year 2025, and the authorization for the Board to effect up to 17 reverse stock splits.
• The 17 reverse stock split proposals (Proposals 3-19) would grant the Board discretion to implement a reverse stock split at an exchange ratio between one-for-two and one-for-100, at any time within specific monthly windows from August 21, 2025, through December 31, 2026.
• The primary reasons cited for the proposed reverse stock splits are to maintain compliance with Nasdaq Listing Rule 5550(a)(2) (the Bid Price Rule, requiring a minimum $1.00 per share bid price) and to potentially improve the marketability and liquidity of the Common Stock.
• The company received a Nasdaq non-compliance notification on December 7, 2023, due to its common stock closing below $1.00 for 30 consecutive business days.
• Since October 2023, the company has completed seven reverse stock splits (one-for-10 on Aug 17, 2023; one-for-24 on May 16, 2024; one-for-five on June 27, 2024; one-for-three on Sep 19, 2024; one-for-two on Nov 18, 2024; one-for-four on Jan 27, 2025; one-for-five on Mar 26, 2025; and one-for-seven on May 26, 2025) to regain or maintain Nasdaq compliance.
• The company attributes the sustained downward pressure on its common stock price largely to the monthly volume of shares issued to meet redemptions of Series D Preferred Stock.
• As of July 8, 2025, the company has redeemed 1,652,493 shares of Series D Preferred Stock, issuing approximately 301,500 shares of Common Stock (adjusted for prior splits) in settlement.
• As of July 3, 2025, there were 1,094,686 shares of Common Stock outstanding.
• The Board of Directors unanimously recommends a vote FOR all director nominees, FOR the ratification of Cherry Bekaert LLP, and FOR all 17 reverse stock split proposals.

Sentiment

Score: 3

Explanation: The company is facing severe and persistent challenges with its stock price, necessitating repeated and extensive authorizations for reverse stock splits to maintain its Nasdaq listing. The ongoing dilution from preferred stock redemptions suggests a fundamental capital structure issue. While management is actively addressing the listing requirement, the underlying financial health and market perception appear weak, indicating high risk for common shareholders.

Positives

• The Board of Directors is proactively seeking shareholder approval for measures aimed at maintaining the company's Nasdaq listing, which is crucial for liquidity and investor interest.
• The company has a clear corporate governance structure with six specialized committees (Audit, Compensation, Nominating, Executive, Litigation, and Related Person Transactions) to oversee various aspects of the business and risk management.
• All current directors are independent, aligning with strong corporate governance practices.
• The company has adopted an Incentive Compensation Clawback Policy and an Insider Trading Policy, promoting integrity and compliance.
• The separation of the Chief Executive Officer and Chair of the Board roles is maintained, providing an appropriate balance between management and independent oversight.

Negatives

• The company's common stock price has been under sustained downward pressure, leading to repeated non-compliance with Nasdaq's minimum bid price rule.
• Monthly redemptions of Series D Preferred Stock, paid in common stock, are identified as a significant cause of this downward pressure and dilution.
• The company has already undergone seven reverse stock splits since August 2023, indicating a persistent inability to maintain a stable stock price above the Nasdaq minimum without such actions.
• The company is currently not authorized to effect additional reverse stock splits without new stockholder approval, highlighting an ongoing vulnerability to delisting.
• Following the May 26, 2025 reverse stock split, the company is not eligible for any grace periods under Nasdaq rules to regain compliance, increasing the urgency and risk of delisting if the stock price falls again.

Risks

• Significant risk of Nasdaq delisting if the company fails to maintain compliance with the $1.00 minimum bid price rule.
• Delisting could adversely affect the liquidity of the common stock, making it less convenient for investors to trade shares and potentially discouraging institutional investment.
• There is no guarantee that a reverse stock split will increase the market price of the common stock proportionally or result in a permanent or sustained increase.
• A reverse stock split could decrease the liquidity of the common stock due to a reduced number of outstanding shares and potentially fewer market makers.
• Stockholders owning odd lots (less than 100 shares) after a reverse stock split may incur higher transaction costs when selling their shares.
• A reverse stock split may be viewed negatively by the market, potentially leading to a decrease in the company's overall market capitalization.
• The increased proportion of unissued authorized shares resulting from a reverse stock split could have an anti-takeover effect by enabling dilutive issuances.

Future Outlook

The Board of Directors is seeking authorization for a series of potential reverse stock splits through December 2026, indicating an expectation of continued challenges in maintaining the common stock's bid price above Nasdaq's minimum requirement. The company anticipates continuing to pay monthly Series D Preferred Stock redemptions in Common Stock, which is expected to exert ongoing downward pressure on the stock price.

Management Comments

• The Board of Directors unanimously recommends a vote FOR each of the director nominees listed in the enclosed Proxy Statement, as described in Proposal 1.
• The Board of Directors unanimously recommends a vote FOR the ratification of Cherry Bekaert LLP's appointment, as described in Proposal 2.
• The Board of Directors unanimously recommends a vote FOR the approval of the Reverse Stock Split, as described in Proposal 3 (and similarly for Proposals 4 through 19).

Industry Context

As a Real Estate Investment Trust (REIT), the company's performance is tied to the real estate market. The need for frequent reverse stock splits to maintain exchange listing is often indicative of a company facing significant financial or operational challenges, which may or may not be industry-wide. The specific issue of preferred stock redemptions causing common stock dilution points to a capital structure challenge unique to the company's financing arrangements rather than a broad industry trend.

Management Changes

Corporate Governance

Related Party Transactions

• The company performs property management and leasing services for its subsidiary, Cedar Realty Trust, Inc. (Cedar), generating approximately $1.4 million in 2024 and $2.1 million in 2023.
• Wheeler REIT, L.P. and Cedar's operating partnership have a Cost Sharing Agreement, resulting in related party amounts due to the company from Cedar of approximately $9.5 million in 2024 and $8.1 million in 2023.
• The company invested $10.0 million in Stilwell Activist Investments, L.P. (SAI) in 2023, with an additional $0.5 million on June 1, 2024. Joseph Stilwell (director), E.J. Borrack (director), and Megan Parisi (director) are affiliated with Stilwell Value, SAI's general partner or its affiliates.
• SAI's underlying investments include the company's own equity and debt securities.
• SAI limited partners pay a quarterly management fee of 0.25% (1% annualized) to an affiliate of Stilwell Value, and Stilwell Value receives a 20% incentive allocation of positive performance.
• The Board created and later increased Excepted Holder Limits for Stilwell Investors (related to Joseph Stilwell) to 60% for Capital Stock and 90% for Common Stock, allowing them to hold a larger percentage of the company's stock.
• Stilwell Investors converted $1,512,500 of Notes into 536,477 shares of Common Stock on June 11, 2025, subject to an agreement not to exceed 50% of total voting power.

Stakeholder Impact

• Shareholders face potential dilution from ongoing common stock issuances for preferred stock redemptions and the risk of further reverse stock splits, which can negatively impact per-share value and trading liquidity.
• Shareholders are directly impacted by the risk of Nasdaq delisting, which could reduce market access and liquidity for their shares.
• Employees, particularly named executive officers, receive compensation that includes salary and bonus, with a portion allocated to the subsidiary Cedar.
• Creditors, specifically KeyBank National Association, are involved through a $10.0 million bridge loan to Cedar, guaranteed by the company's operating partnership.
• Preferred stockholders (Series D) benefit from monthly redemption rights at $25.00 per share, which the company has historically settled in common stock, transferring value from common shareholders.

Next Steps

• Stockholders will vote on the proposed measures at the Annual Meeting on August 20, 2025.
• If approved, the Board of Directors will have the discretion to effect reverse stock splits at any time within specified monthly windows from August 21, 2025, through December 31, 2026.
• The company anticipates continuing to pay monthly Series D Preferred Stock redemptions, likely in Common Stock.
• Stockholder proposals for the 2026 Annual Meeting must be submitted by March 13, 2026.

Key Dates

Recommendation

Keywords

Wheeler Real Estate Investment Trust, WHLR, Proxy Statement, Annual Meeting, Reverse Stock Split, Nasdaq Listing, Bid Price Rule, Series D Preferred Stock, Stock Redemption, Corporate Governance, Real Estate Investment Trust, REIT, Shareholder Vote, Delisting Risk, Capital Structure