Form 4: Wheeler REIT CEO Acquires Series D Preferred Stock as Interest Payment

CEO Michael Andrew Franklin receives Series D Preferred Stock as interest payment on convertible notes.

Summary

• Michael Andrew Franklin, CEO of Wheeler Real Estate Investment Trust, Inc. (WHLR), received Series D Cumulative Convertible Preferred Stock as an interest payment on 7.00% Senior Subordinated Convertible Notes due 2031.
• The transaction occurred on July 1, 2024.
• The interest payment was made in the form of 94 shares of Series D Preferred Stock.
• Each share of Series D Preferred Stock is convertible into 0.001228 shares of WHLR's common stock, implying a conversion price of $20,352 per share.
• The number of shares issued was determined based on a per share value of $17.95505 for the Series D Preferred Stock.
• Franklin also holds convertible notes that can be converted into common stock at $14.29 per share.
• Franklin holds 438 shares of common stock.
• Franklin holds 1,223 shares of Series B Convertible Preferred Stock, each convertible into 0.000521 shares of common stock at a conversion price of $48,000.

Sentiment

Score: 4

Explanation: The document indicates potential financial strain due to the interest payment being made in preferred stock rather than cash. The high conversion prices of the preferred stock are also concerning.

Positives

• The company is fulfilling its interest obligations on the convertible notes.
• The CEO's continued holding of convertible notes and preferred stock demonstrates alignment with the company's future.

Negatives

• The interest payment being made in preferred stock rather than cash may indicate cash flow constraints.
• The high conversion prices of the preferred stock ($20,352 and $48,000) suggest a low common stock price.

Risks

• The company's decision to pay interest in preferred stock could dilute existing shareholders if the preferred stock is converted to common stock.
• The low conversion prices of the preferred stock may indicate financial difficulties.

Industry Context

REITs often use convertible notes and preferred stock as financing tools. Paying interest in preferred stock is not uncommon, especially for companies facing liquidity challenges.

Comparison to Industry Standards

• Other REITs, such as Simon Property Group (SPG) and Prologis (PLD), typically have stronger balance sheets and are less likely to pay interest in preferred stock.
• Compared to industry leaders, Wheeler REIT's reliance on convertible securities and preferred stock may indicate a higher risk profile.
• The conversion prices of Wheeler REIT's preferred stock are significantly higher than the current trading price of its common stock, which is unusual compared to industry norms where conversion prices are typically set at a premium to the current market price.

Stakeholder Impact

• Shareholders may experience dilution if the preferred stock is converted into common stock.
• The company's financial stability could be a concern for creditors and suppliers.

Key Dates

Keywords

Series D Preferred Stock, Convertible Notes, Michael Andrew Franklin, Wheeler REIT, Interest Payment, Beneficial Ownership, Form 4