Form 4: Wheeler REIT Director Receives Preferred Stock as Interest Payment on Convertible Notes

Wheeler Real Estate Investment Trust Director Kerry G. Campbell received 188 shares of Series D Cumulative Convertible Preferred Stock as an interest payment on 7.00% Senior Subordinated Convertible Notes due 2031.

Summary

• Kerry G. Campbell, a Director of Wheeler Real Estate Investment Trust, Inc. (WHLR), reported changes in beneficial ownership.
• On June 30, 2025, Campbell acquired 188 shares of the Issuer's Series D Cumulative Convertible Preferred Stock.
• This acquisition was a payment of interest on Campbell's 7.00% Subordinated Convertible Notes due 2031.
• The interest payment was made in Series D Preferred Stock, as disclosed in the Issuer's Form 8-K filed on May 22, 2025.
• The value per share for the Series D Preferred Stock issued as interest was $18.58379, calculated based on a formula involving the volume-weighted average prices.
• Each share of Series D Preferred Stock is convertible into 0.000001 shares of common stock at a conversion price of $17,095,680 per common share.
• Campbell directly owns 1,741 shares of Series D Preferred Stock following this transaction.
• Campbell also holds $100,000 principal amount of 7.00% Senior Subordinated Convertible Notes due 2031, which are convertible into approximately 35,469 shares of common stock at a conversion price of approximately $2.82 per common share.
• Interest on these notes may be payable, at the Issuer's election, in cash, Series B Convertible Preferred Stock, or Series D Preferred Stock.

Sentiment

Score: 4

Explanation: While the company fulfilled its obligation, the method of payment (stock instead of cash) and the unusual conversion terms of the preferred stock suggest potential financial strain or significant capital restructuring, which are generally viewed negatively by investors.

Positives

• The company fulfilled its interest payment obligation on the 7.00% Senior Subordinated Convertible Notes due 2031.

Negatives

• The Issuer elected to pay interest on the 7.00% Senior Subordinated Convertible Notes due 2031 in Series D Preferred Stock instead of cash, which may indicate a strategy to conserve cash.
• The extremely high conversion price for Series D Preferred Stock ($17,095,680 per common share) suggests a significant reverse stock split or other capital restructuring has occurred or is anticipated, which can be dilutive or reflect a low common stock price.

Risks

• Potential for dilution of common stock holders if the convertible notes or preferred stock are converted, although the Series D conversion rate is extremely low.
• The election to pay interest in preferred stock rather than cash could signal liquidity management challenges or a desire to preserve cash.

Future Outlook

NA

Industry Context

This transaction reflects a common practice in the real estate investment trust (REIT) sector where companies utilize various capital structures, including convertible debt and preferred equity, to finance operations. The election to pay interest in stock rather than cash is a provision often included in such instruments, allowing companies to manage cash flow and liquidity, particularly in periods where cash conservation is prioritized.

Comparison to Industry Standards

• The practice of paying interest in kind (PIK) through preferred stock is a common feature in certain debt instruments, particularly in sectors like real estate, and is often used by companies to manage cash flow, though it can signal liquidity considerations.
• The extremely high conversion price of the Series D Preferred Stock ($17,095,680 per common share) is highly unusual and suggests a significant capital restructuring, such as a reverse stock split, which is not uncommon for companies with low stock prices, including some REITs.

Related Party Transactions

• Kerry G. Campbell, a Director of Wheeler Real Estate Investment Trust, Inc., received Series D Preferred Stock as an interest payment on 7.00% Senior Subordinated Convertible Notes due 2031 held by him.

Stakeholder Impact

• Shareholders: Potential for dilution if the preferred stock or notes are converted, especially given the complex conversion terms and the payment in stock rather than cash, which could signal cash conservation efforts.
• Creditors (Noteholders): Received interest payment as per terms, albeit in preferred stock, which maintains their claim but defers cash payout.

Key Dates

Recommendation

Keywords

Wheeler Real Estate Investment Trust, WHLR, SEC filing, Form 4, insider transaction, beneficial ownership, Kerry Campbell, Director, Series D Preferred Stock, Convertible Notes, interest payment, corporate governance, REIT