8-K: Wheeler REIT 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 to recent redemptions of Series D Preferred Stock.

Summary

• Wheeler Real Estate Investment Trust (WHLR) has adjusted the conversion price of its 7.00% Subordinated Convertible Notes due 2031.
• The adjustment was triggered by the redemptions of Series D Cumulative Convertible Preferred Stock.
• Prior to March 5, 2025, the conversion price was approximately $3.88 per share.
• Following the March redemptions, where the lowest conversion price for Series D Preferred Stock was $1.66, the note conversion price is now approximately $0.91 per share.
• This represents a 45% discount to the $1.66 conversion price of the Series D Preferred Stock.
• In March 2025, the company redeemed 39,373 shares of Series D Preferred Stock at $40.42 per share, issuing 959,604 shares of common stock to settle the redemptions.
• Cumulatively, the company has redeemed 1,577,843 shares of Series D Preferred Stock and issued approximately 1,840,600 shares of common stock.
• As of March 6, 2025, there were 2,947,647 shares of Common Stock and 1,975,264 shares of Series D Preferred Stock outstanding.
• The deadline for the next round of Series D Preferred Stock redemptions is March 25, 2025, with the redemption date set for April 7, 2025.

Sentiment

Score: 4

Explanation: The announcement is factual and describes a technical adjustment to the conversion price of convertible notes. The dilution of common stock is a negative.

Negatives

• The adjustment of the conversion price of the notes indicates potential dilution for existing common shareholders.

Risks

• Further redemptions of Series D Preferred Stock could lead to additional adjustments to the conversion price of the notes, potentially diluting common shareholders.
• The company's reliance on issuing common stock to settle preferred stock redemptions could put downward pressure on the stock price.

Future Outlook

The company will continue to process monthly redemptions of Series D Preferred Stock, with the next redemption date on April 7, 2025.

Industry Context

REITs often use preferred stock and convertible notes as part of their capital structure. Adjustments to conversion prices are common when triggered by specific events outlined in the security agreements.

Comparison to Industry Standards

• Similar REITs, such as Washington Prime Group (before its restructuring) and CBL Properties, have also used preferred stock and convertible notes.
• The conversion price adjustments are standard practice based on the terms of the agreements, but the impact on shareholders depends on the specific terms and the company's financial performance.
• Comparing Wheeler REIT's capital structure and redemption activity to peers requires a detailed analysis of their respective financial statements and security agreements.

Stakeholder Impact

• Common shareholders may experience dilution due to the issuance of new shares to settle preferred stock redemptions.
• Holders of the convertible notes will see a more favorable conversion price.

Next Steps

• The company will process redemption requests for Series D Preferred Stock with a deadline of March 25, 2025, and a redemption date of April 7, 2025.

Key Dates