Form 4: Wheeler REIT Director Receives Preferred Stock for Note Interest

Wheeler Real Estate Investment Trust Director Kerry Campbell received an interest payment on convertible notes in Series D Preferred Stock.

Summary

• Director Kerry G. Campbell, a director of Wheeler Real Estate Investment Trust, Inc. (WHLR), reported a change in beneficial ownership.
• The change relates to an interest payment on 7.00% Subordinated Convertible Notes due 2031 (the "Notes") held by the reporting person.
• On December 31, 2025, the issuer paid interest on the Notes in the form of Series D Cumulative Convertible Preferred Stock, as previously disclosed in a Form 8-K filed on November 20, 2025.
• The number of Series D Preferred Stock shares issued for interest was determined based on a per share value of $20.789285.
• Each share of Series D Preferred Stock is convertible into common stock at an extremely high conversion price of $170,956,800 per common share.
• The 7.00% Subordinated Convertible Notes are convertible into common stock at a conversion price of $1.895028 per share.
• Following the transaction, the reporting person directly beneficially owns 168 shares of Series D Preferred Stock.
• The reporting person also beneficially owns 7.00% Subordinated Convertible Notes with a principal amount of $100,000, which are convertible into 52,769 shares of common stock.

Sentiment

Score: 5

Explanation: The filing reports an expected transaction (interest payment in preferred stock) that was previously disclosed. While paying interest in preferred stock can be interpreted as a sign of cash conservation, it was a pre-announced event. The director's continued beneficial ownership is a neutral to slightly positive signal. Overall, the filing does not introduce significant new positive or negative information to materially alter the company's outlook based solely on this report.

Positives

• The director's continued beneficial ownership of the company's securities, including preferred stock and convertible notes, aligns their interests with those of other shareholders.
• The company's election to pay interest in preferred stock rather than cash helps conserve cash, which can be beneficial for liquidity management.

Negatives

• The payment of interest in preferred stock, while pre-announced, could signal potential cash flow constraints for the issuer.
• The Series D Preferred Stock has an exceptionally high conversion price of $170,956,800 per common share, making conversion into common stock highly improbable under normal market conditions and limiting potential upside from conversion for preferred shareholders.

Risks

• The issuer's decision to pay interest in preferred stock rather than cash may indicate liquidity management challenges or a strategic preference to conserve cash, which could impact future financial flexibility.
• The complex conversion terms of the Series D Preferred Stock and the Subordinated Convertible Notes introduce complexity for investors assessing the true value and potential dilution from these instruments.

Future Outlook

The filing does not provide a general future outlook. However, the company's election to pay interest on its convertible notes in Series D Preferred Stock indicates a strategy to manage cash flow, which may continue in the near term depending on the company's financial position and strategic priorities.

Industry Context

REITs frequently utilize a variety of financing instruments, including preferred stock and convertible notes, to fund their operations and acquisitions. The practice of paying interest in kind (PIK), such as through preferred stock, is a common mechanism for companies, particularly in capital-intensive sectors like real estate, to conserve cash. This can be a strategic choice to reinvest cash or a necessity due to liquidity constraints, and its interpretation depends on the broader financial health and market conditions of the REIT sector.

Comparison to Industry Standards

• Paying interest on convertible notes in preferred stock is a mechanism used by various companies, including other REITs, to manage cash flow. For example, some smaller or growth-oriented REITs might use PIK interest to retain cash for property acquisitions or development, similar to how some high-yield corporate bonds or distressed debt instruments might feature PIK options.
• The extremely high conversion price of the Series D Preferred Stock ($170,956,800 per common share) is unusual and effectively renders the preferred stock non-convertible into common equity under any realistic scenario. This differs from typical convertible preferred stock, which usually has a conversion price closer to the common stock's trading price to offer equity upside. This structure suggests the Series D Preferred Stock primarily functions as a yield instrument rather than an equity-linked security.
• The conversion terms of the 7.00% Subordinated Convertible Notes ($1.895028 per common share) are more typical for convertible debt, offering potential equity participation if the common stock price appreciates significantly above the conversion price.

Related Party Transactions

• The transaction involves an interest payment to Kerry G. Campbell, a director of Wheeler Real Estate Investment Trust, Inc., on 7.00% Subordinated Convertible Notes due 2031 held by him. This constitutes a related party transaction as it involves a company director.

Stakeholder Impact

• Shareholders: The payment of interest in preferred stock, while conserving cash, could lead to future dilution if the preferred stock were to convert to common stock (though highly unlikely given the conversion price) or if the company issues more preferred stock for similar purposes. It also signals a strategic choice regarding cash management.
• Noteholders (including the reporting person): Receive Series D Preferred Stock instead of cash for interest, which may have different liquidity, market value, and risk characteristics compared to cash payments. The value of this preferred stock is subject to market fluctuations and the company's performance.

Key Dates

Recommendation

This Form 4 reports an expected transaction that was previously disclosed in an 8-K filing. It details a director's beneficial ownership changes resulting from an interest payment on convertible notes in the form of preferred stock. While the payment in preferred stock suggests cash conservation, this was an anticipated event and does not introduce new, material information that would fundamentally alter the investment thesis for Wheeler Real Estate Investment Trust. The filing alone does not provide sufficient new data to warrant a change from a 'hold' position.

Keywords

Wheeler Real Estate Investment Trust, WHLR, Form 4, Insider Ownership, Director, Convertible Notes, Preferred Stock, Interest Payment, SEC Filing, Real Estate Investment Trust, REIT