Form 4: WHLR Director Hannon Reports Indirect Stock Holdings

Wheeler Real Estate Investment Trust Director Gregory Paul Hannon reported indirect beneficial ownership changes, including the receipt of Series D Preferred Stock as interest payment on convertible notes.

Summary

• Gregory Paul Hannon, a Director of Wheeler Real Estate Investment Trust, Inc. (WHLR), filed a Form 4 reporting changes in his indirect beneficial ownership.
• On December 31, 2025, Hannon indirectly received 526 shares of the Issuer's Series D Cumulative Convertible Preferred Stock.
• These shares were issued as payment of interest on the Issuer's 7.00% Subordinated Convertible Notes due 2031, in accordance with the terms of the Indenture.
• The number of Series D Preferred Stock shares paid as interest was determined based on a per share value of $20.789285.
• Each Series D Preferred Stock share is convertible into 0.00000015 shares of common stock, implying a conversion price of $170,956,800 per common share.
• Hannon indirectly holds 7.00% Subordinated Convertible Notes due 2031 with an outstanding principal amount of $312,500.
• These Notes are convertible into 164,905 shares of common stock at a conversion price of $1.895028 per share.
• Interest on the Notes may be paid, at the Issuer's election, in cash, Series B Convertible Preferred Stock, or Series D Preferred Stock.
• All reported securities are owned indirectly by Oakmont Capital Inc., where Gregory Paul Hannon serves as Vice President and Director.

Sentiment

Score: 5

Explanation: The filing is a routine insider transaction report (Form 4) detailing the receipt of preferred stock as an interest payment. It is neutral in sentiment as it primarily reflects a compliance disclosure of a pre-determined event, with no immediate positive or negative operational news. The payment in stock rather than cash could be interpreted with slight caution regarding cash flow, but it's within the terms of the notes.

Positives

• The Director's indirect holdings of Series D Preferred Stock and Convertible Notes indicate continued alignment of interests with the company's long-term performance.
• The company is fulfilling its interest payment obligations, albeit through stock, which maintains its financial commitments.

Negatives

• The payment of interest in Series D Preferred Stock rather than cash for the 7.00% Subordinated Convertible Notes due 2031 could suggest cash flow management considerations for the Issuer.
• The extremely high conversion price of Series D Preferred Stock ($170,956,800 per common share) makes its direct conversion into common stock highly impractical, potentially limiting its value as a common stock equivalent.

Risks

• Dilution Risk: While not immediately apparent from the Series D Preferred Stock's conversion ratio, the existence of convertible notes and preferred stock always carries a potential for future dilution of common shareholders if converted at more favorable terms or if the company issues more convertible securities.
• Cash Flow Risk: The election to pay interest in Series D Preferred Stock rather than cash for the 7.00% Subordinated Convertible Notes due 2031 could indicate potential cash flow constraints or a strategic decision to preserve cash, which might be a risk factor for the company's liquidity.
• Complex Capital Structure Risk: The presence of multiple classes of convertible preferred stock and convertible notes adds complexity to the company's capital structure, which can be challenging for investors to evaluate.

Future Outlook

The filing indicates that interest on the 7.00% Subordinated Convertible Notes due 2031 may continue to be paid, at the Issuer's election, in cash, Series B Convertible Preferred Stock, or Series D Preferred Stock, suggesting flexibility in future capital management.

Management Comments

• Gregory Paul Hannon disclaims beneficial ownership of all securities reported as owned indirectly except to the extent of his pecuniary interest therein.

Industry Context

This Form 4 filing is a routine disclosure of insider transactions, common in the real estate investment trust (REIT) sector and across publicly traded companies. The use of preferred stock for interest payments can be a strategy employed by REITs to manage cash flow, particularly in periods of market volatility or when preserving cash for property acquisitions or operational expenses is prioritized. This practice is not uncommon but warrants attention as it can impact the capital structure and potential future dilution.

Comparison to Industry Standards

• The practice of paying interest on convertible notes with preferred stock is a mechanism sometimes used by REITs, similar to how some companies in the broader market might issue payment-in-kind (PIK) notes. For example, other REITs facing cash flow considerations might also opt for non-cash interest payments to preserve liquidity, though specific terms vary widely.
• The complex conversion terms of the Series D Preferred Stock, with an extremely high conversion price to common stock, are unusual and suggest these shares are primarily designed as a preferred equity instrument rather than a direct common stock equivalent, differing from more straightforward convertible preferred stock seen in companies like Simon Property Group (SPG) or Realty Income (O) which often have more direct conversion paths.

Related Party Transactions

• The transaction involves Gregory Paul Hannon, a Director of the Issuer, indirectly receiving securities from the Issuer through Oakmont Capital Inc., where he is also a Vice President and Director. This constitutes a related party transaction.

Stakeholder Impact

• Shareholders: The payment of interest in Series D Preferred Stock rather than cash could preserve cash for other corporate purposes, potentially benefiting common shareholders by reducing immediate cash outflow. However, the existence of convertible securities always carries potential future dilution risk, though the Series D Preferred Stock's conversion terms make direct common stock conversion highly unlikely.
• Noteholders (including Reporting Person): Receipt of Series D Preferred Stock as interest fulfills the company's obligation, providing a return on their investment, albeit in a non-cash form.

Next Steps

• The Issuer will continue to make interest payments on the 7.00% Subordinated Convertible Notes due 2031, with the option to pay in cash, Series B Convertible Preferred Stock, or Series D Preferred Stock.

Key Dates

Keywords

Wheeler Real Estate Investment Trust, WHLR, Form 4, Insider Trading, Beneficial Ownership, Convertible Preferred Stock, Convertible Notes, Director Holdings, SEC Filing, Real Estate Investment Trust