Filed pursuant to Rule 424(b)(3)
Registration No. 333-274329
PROSPECTUS
Wheeler Real Estate Investment Trust, Inc.
101,100,000 Shares of Common Stock
This Prospectus relates to
the issuance from time to time by Wheeler Real Estate Investment Trust, Inc. (the “Company,” “our”, “we”
or “us”) of up to 101,100,000 shares of our common stock, par value $0.01 (“Common Stock”).
After September
21, 2023 (the “Series D Redemption Eligibility Date”), the holders (the “Series D Preferred Holders”) of
outstanding shares of our Series D Cumulative Convertible Preferred Stock (the “Series D Preferred Stock”) will have
the right, at their option, to require us to redeem their Series D Preferred Stock (the “Redemption”) at a redemption
price of $25.00 per share, plus the amount of all accrued but unpaid dividends to and including
the redemption date (the “Redemption Price”). The Redemption Price is payable by us, at our option, in cash or in
equal value of shares of Common Stock, or in any combination of cash and shares of Common Stock. The
Company intends to settle redemptions of Series D Preferred Stock in shares of Common Stock.
Further,
the Series D Preferred Stock is convertible, in whole or in part, at any time, at the option of the Series D Preferred Holders, into shares
of Common Stock at a conversion price of $169.60 per share of Common Stock (a “Conversion”).
For the purpose of estimating the number of shares of Common Stock covered by this Prospectus, we included: (a) 100,000,000 shares, representing
approximately 325% of the number of shares of Common Stock issuable upon the Redemption, determined as if all outstanding shares of the
Series D Preferred Stock were redeemed in full on the first redemption date (which will occur on October 5, 2023) at a Redemption Price
of $25.00 per share plus an amount equal to all accrued but unpaid dividends to and including such redemption date (and assuming, for
the purpose of calculating such estimated number of shares, the price per share of Common Stock equal to $4.05 representing the volume
weighted average of the closing sales price (“VWAP”) for the ten consecutive trading days immediately preceding, but not including,
September 1, 2023 (for this purpose, the assumed Holder Redemption Date (as we define such term below)); plus (b) 1,100,000 shares, representing
approximately 150% of the number of shares of Common Stock issuable upon conversion of the Series D Preferred Stock determined as if all
outstanding shares of the Series D Preferred Stock were converted in full at a conversion price of $169.60 per share of Common Stock.
Because the shares of our
Common Stock covered by this Prospectus are to be issued upon the Redemption and Conversion of the Series D Preferred Stock, we will not receive any proceeds from the issuance of
shares of Common Stock upon the Redemption and Conversion of the Series D Preferred Stock.
Our
Common Stock is listed on the Nasdaq Capital Market under the symbol “WHLR”. As of the close of business on September 27,
2023, 980,857 shares of Common Stock were issued and outstanding. On September 27, 2023, the last reported sales price of Common Stock
was $3.54 per share.
Investing in our Common Stock involves a high degree of risk. You should review carefully the risks and uncertainties
described under the heading “Risk Factors” beginning on page 4 of this Prospectus, and under similar headings in any
amendments or supplements to this Prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this Prospectus. Any representation to the contrary is a criminal offense.
The date of this Prospectus is September 29, 2023.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This Prospectus forms
part of a Registration Statement that we filed with the Securities and Exchange Commission (“SEC”) and that includes exhibits
that provide more detail of the matters discussed in this Prospectus. You should read this Prospectus and the related exhibits filed with
the SEC, together with the additional information described under the headings “Where You Can Find More Information”
on page 70 and “Incorporation by Reference” on page 71 before making your investment decision.
You should rely only
on the information provided in this Prospectus or in a prospectus supplement or any free writing prospectuses or amendments thereto. We
have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. You should assume that the information in this Prospectus is accurate only as of the date hereof. Our business,
financial condition, results of operations and prospects may have changed since that date.
We are not offering to
sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. We have not done anything
that would permit this offering or possession or distribution of this Prospectus in any jurisdiction where action for that purpose is
required, other than in the United States. Persons outside the United States who come into possession of this Prospectus must inform themselves
about, and observe any restrictions relating to, the offering of the securities as to distribution of the Prospectus outside of the United
States.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Prospectus contains
forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are not historical facts but
are the intent, belief or current expectations of our management based on its knowledge and understanding of our business and industry.
Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,”
“potential,” “predicts,” “anticipates,” “expects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” or the negative of such terms and variations of these words and
similar expressions. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors,
some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed
or forecasted in the forward-looking statements.
Factors that could cause
actual results to differ materially from any forward-looking statements made in this Prospectus include:
| ● | the adverse effect any future pandemic, endemic or outbreak
of infectious disease, and mitigation efforts to control their spread; |
| ● | the use of and demand for retail space; |
| ● | general and economic
business conditions, including those affecting the ability of individuals to spend in retail shopping centers and/or the rate and other
terms on which we are able to lease our properties; |
| ● | the state of the U.S. economy generally, or specifically in
the Southeast, Mid-Atlantic and Northeast where our properties are geographically concentrated; |
| ● | consumer spending and confidence trends; |
| ● | availability, terms
and deployment of capital; |
| ● | anticipated substantial dilution of our common stock, and
steep declines in its stock price, after the Series D Redemption Eligibility
Date that may result from the Redemption; |
| ● | the degree and nature
of our competition; |
| ● | changes in governmental
regulations, accounting rules, tax rates and similar matters; |
| ● | adverse economic or real estate developments in our markets
of South Carolina, Georgia, Virginia, Pennsylvania, North Carolina, Massachusetts, New Jersey, Florida, Connecticut, Kentucky, Tennessee,
Alabama, Maryland, West Virginia, and Oklahoma; |
| ● | the ability and willingness of the Company’s tenants
and other third parties to satisfy their obligations under their respective contractual arrangements with the Company; |
| ● | the ability and willingness of the Company’s tenants
to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the similar or better
terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations the Company
may incur in connection with the replacement of an existing tenant; |
| ● | increases in the Company’s financing and other costs
as a result of changes in interest rates and other factors; |
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the Company’s ability to maintain its listing on the Nasdaq Capital Market; |
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the effects of the one-for-ten reverse stock split of our Common Stock, which we refer to as the “Reverse Stock Split”, on the trading market of our Common Stock; |
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| ● | inability to successfully integrate the acquisition of Cedar
Realty Trust, Inc. (“Cedar); |
| ● | changes in our ability to obtain and maintain financing; |
| ● | damage to the Company’s properties from catastrophic
weather and other natural events, and the physical effects of climate change; |
| ● | information technology security breaches; |
| ● | the Company’s
ability and willingness to maintain its qualification as a REIT; |
| ● | the ability of our operating partnership, Wheeler REIT, L.P.
(the “Operating Partnership”), and each of our other partnerships and limited liability companies to be classified as partnerships
or disregarded entities for federal income tax purposes; |
| ● | the impact of e-commerce
on our tenants’ business; and |
| ● | inability to generate sufficient cash flows due to market
conditions, competition, uninsured losses, changes in tax or other applicable laws. |
The
risks and uncertainties included here are not exhaustive. Other sections of this Prospectus, including “Risk Factors”
on page 4, include additional factors that could affect our business and financial performance. Moreover, we operate in a rapidly changing
and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk
factors.
Further,
it is not possible to assess the effect of all risk factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties,
investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we disclaim any
obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this Prospectus.
PROSPECTUS SUMMARY
This summary contains
basic information about us and does not contain all of the information that you should consider before investing. You should read
this entire Prospectus carefully, including the section entitled “Risk Factors” beginning on page 4 and our financial
statements and the notes thereto incorporated by reference in this Prospectus, before making an investment decision.
We effected a one-for-ten
Reverse Stock Split, effective as of 5:00 p.m., Eastern Standard Time, on August 17, 2023. The Reverse
Stock Split applied to all of the outstanding shares of Common Stock and therefore did not affect any particular stockholder’s relative
ownership percentage of shares of Common Stock, except for de minimis changes resulting from the payment of cash in lieu of
fractional shares.
Unless the context otherwise
requires or indicates, references to the “Company”, “we”, “our” or “us” refers to Wheeler
Real Estate Investment Trust, Inc., a Maryland corporation, together with its consolidated subsidiaries, including the Operating Partnership,
a Virginia limited partnership of which we are the sole general partner.
Overview
Wheeler Real Estate Investment
Trust, Inc., a Maryland corporation, is a fully integrated, self-managed commercial real estate
investment company that owns, leases and operates income-producing retail properties with a primary focus on grocery-anchored centers.
We have targeted competitively protected properties located within developed areas, commonly referred to as in-fill, that possess minimal
competition risk and are surrounded by communities that have strong demographics and dynamic, diversified economies that will continue
to generate jobs and future demand for commercial real estate.
As of June 30, 2023,
we own a portfolio consisting of seventy-five retail shopping centers and four undeveloped properties,
totaling 8,172,535 leasable square feet which is 92.6% leased (our “operating portfolio”), and four undeveloped land parcels
totaling approximately 61 acres. The properties are geographically located in the Mid-Atlantic, Southeast and Northeast, which markets
represented approximately 45%, 40% and 15%, respectively, of the total annualized base rent of the properties in its portfolio as of June
30, 2023.
Our corporate office
is located at 2529 Virginia Beach Boulevard, Virginia Beach, Virginia 23452. Our telephone number is (757) 627-9088. Our registrar, stock
transfer agent, redemption agent and conversion agent (the “Agent”) is Computershare, Inc. The Agent may be contacted at 480
Washington Blvd, Jersey City, NJ 07310 or through its website, www.computershare.com.
Reverse Stock Split
On August 17, 2023, the Company
effected the Reverse Stock Split. At the market open on August 18, 2023, the Common Stock began trading on the Nasdaq Capital Market on
a split-adjusted basis under a new CUSIP number. As a result of the Reverse Stock Split, the number of outstanding shares of Common Stock
was reduced to approximately 980,857 shares based on the shares of Common Stock outstanding as of August 17, 2023. The Reverse Stock Split
did not affect the relative voting or other rights that accompany the shares of Common Stock, except to the extent that it results from
a stockholder receiving cash in lieu of fractional shares. There was no change to the number of authorized shares of the Common Stock
as a result of the Reverse Stock Split. Pursuant to the Maryland General Corporation Law
(“MGCL”), stockholder approval was not required to effect the Reverse Stock Split, and
it was approved solely by the Company’s Board of Directors (the “Board of Directors”).
Except as otherwise provided
or where the context otherwise requires, all share and per share information
and conversion prices appearing in this Prospectus have been adjusted to give effect to the Reverse Stock Split. However, our Annual Report
on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 2, 2023, any subsequent quarterly report on Form 10-Q, and
all other documents incorporated by reference into this Prospectus that were filed prior to August 18, 2023, do not give effect to the
Reverse Stock Split.
The Reverse Stock Split was effected to help
the Company regain compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price
Rule”) for continued listing.
Redemption
of Series D Preferred Stock
Under the Company’s
Articles Supplementary relating to the Series D Preferred Stock (the “Series D Articles Supplementary”), after the Series
D Redemption Eligibility Date, the Series D Preferred Holders will have the right, at their
option, to require the Company to redeem any or all of their shares of Series D Preferred Stock.
The Company intends
to settle redemptions of Series D Preferred Stock in the shares of Common Stock covered by this Prospectus.
Stockholders seeking redemption
of their Series D Preferred Stock will be required to complete the Holder Redemption Notice and the Stock Ownership Statement and send
the two forms to the Company and the Agent. The Redemption Price for any Redemption Notice and
Stock Ownership Statement received on or before the 25th day of any month (and
after the 25th day of the previous month) will be paid on the 5th day of the following month or, if such
date is not a business day, on the next succeeding business day (which date is referred to in this Prospectus as the “Holder Redemption
Date”). Delivery of Common Stock will be made as soon as possible after the Holder
Redemption Date in accordance with customary settlement cycles.
The
number of shares of Common Stock to be issued per share of Series D Preferred Stock will be equal to the quotient obtained by dividing
(i) the sum of the $25.00 liquidation preference per share of Series D Preferred Stock plus an amount equal to all accrued and unpaid
dividends thereon to and including the Holder Redemption Date (unless the Holder Redemption Date is after a dividend record date of December
30th, March 30th, June 30th or September 30th (each, a “Dividend Record Date”)
and prior to the corresponding dividend payment date of January 15th, April 15th,
July 15th or October 15th (each,
a “Dividend Payment Date”), in which case no additional amount for such accrued and unpaid dividend payment shall be included
in this sum) by (ii) the VWAP per share of Common Stock for the ten consecutive trading days immediately preceding, but not including,
the Holder Redemption Date as reported on the Nasdaq Capital Market.
Conversion
of Series D Preferred Stock
Under the Series D Articles
Supplementary, the Series D Preferred Stock is convertible, in whole or in part, at any time, at
the option of the Series D Preferred Holders, into authorized but previously unissued Common Stock at the currently effective conversion
price of $169.60 per share of Common Stock, subject to adjustment. Conversion of shares of the Series D Preferred Stock may be effected
by delivering to the Agent such shares, together with written notice of conversion and other required documentation. Each conversion will
be deemed to have been effected on the date immediately following the next Dividend Record Date after which written notice of conversion
and other required documentation will have been surrendered and notice will have been received by the Company. Fractional shares
of Common Stock will not be issued upon conversion but, in lieu thereof, the Company will pay a cash adjustment based on the closing price
of the Common Stock on the trading day immediately preceding the conversion date.
The Issuance
Issuer: |
Wheeler Real Estate Investment Trust, Inc. |
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Common Stock covered by this Prospectus |
We are registering the issuance from time
to time by us of up to 101,100,000 shares of Common Stock issuable upon the Redemption and Conversion of the Series D Preferred
Stock.
For the purpose of estimating the number of shares of Common Stock covered by this Prospectus, we included: (a) 100,000,000 shares, representing
approximately 325% of the number of shares of Common Stock issuable upon the Redemption, determined as if all outstanding shares of the
Series D Preferred Stock were redeemed in full on the first Holder Redemption Date (which will occur on October 5, 2023) at a Redemption
Price of $25.00 per share plus an amount equal to all accrued but unpaid dividends to and including such Holder Redemption Date (and assuming,
for the purpose of calculating such estimated number of shares, the price per share of Common Stock equal to $4.05 representing the VWAP
for the ten consecutive trading days immediately preceding, but not including, September 1, 2023 (for this purpose, the assumed Holder
Redemption Date); plus (b) 1,100,000 shares, representing approximately 150% of the number of shares of Common Stock issuable upon Conversion
of the Series D Preferred Stock determined as if all outstanding shares of the Series D Preferred Stock were converted in full at a conversion
price of $169.60 per share of Common Stock. |
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Common Stock to be outstanding after this issuance |
100,980,857 shares of Common Stock (assuming full Redemption of the Series
D Preferred Stock as stated above), or 2,080,857 shares of Common Stock (assuming full Conversion of the Series D Preferred Stock as stated
above), as applicable.
The number of shares of Common Stock shown
above to be outstanding after this issuance is based on the 980,857 shares outstanding
as of September 27, 2023, after the Reverse Stock Split was effective on August
17, 2023. |
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Use of proceeds |
Because the shares of our Common Stock covered by this Prospectus are to be issued upon the Redemption and Conversion of the Series D Preferred Stock, we will not receive any proceeds from the issuance of shares of Common Stock upon the Redemption or Conversion of the Series D Preferred Stock. |
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Risk factors |
This investment involves a high degree of risk. See “Risk Factors” for a discussion of factors which you should consider carefully before making an investment decision. |
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Listing |
Our Common Stock trades on the Nasdaq Capital Market under the symbol “WHLR”. |
RISK
FACTORS
Risk Factor Summary
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We effected a Reverse Stock Split which may adversely impact the market price of our Common Stock. |
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The Reverse Stock Split may not have the desired effect on our
Common Stock price, and we can provide no assurance that we will be able to comply with the continued
listing requirements of the Nasdaq Capital Market over time and that our Common Stock will continue
to be listed on the Nasdaq Capital Market. |
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Our portfolio of properties is dependent
upon regional and local economic conditions and is geographically concentrated in the Southeast, Mid-Atlantic and Northeast, which may
cause us to be more susceptible to adverse developments in those markets than if we owned a more geographically diverse portfolio. |
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The issuance of a substantial amount of our
Common Stock as a result of the Redemption and Conversion of the Series D Preferred Stock will result in substantial dilution of Common
Stock and could cause a steep decline in its stock price. |
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The majority of our properties are retail shopping centers and depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants. |
| ● | We may be unable to renew leases, lease vacant space or re-let
space as leases expire, thereby increasing or prolonging vacancies, which could adversely affect our financial condition, results of
operations, cash flow and per share trading price of our securities. |
| ● | Our growth depends on external sources of capital that are
outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability, among
other things, to meet our capital and operating needs. |
| ● | Our performance and value are subject to risks associated
with real estate assets and the real estate industry, including local oversupply, reduction in demand or adverse changes in financial
conditions of buyers, sellers and tenants of properties, which could decrease revenues or increase costs, which would adversely affect
our financial condition, results of operations, cash flow, and the per share trading price of our securities. |
| ● | We may incur significant costs complying with various federal,
state and local laws, regulations and covenants that are applicable to our properties. |
| ● | Our Board of Directors may change our investment and financing
policies without stockholder approval and we may become more highly leveraged, which may increase our risk of default under our debt
obligations. |
| ● | We are a holding company with
no direct operations and, as such, we rely on funds received from our Operating Partnership to pay liabilities, and the interests of
our stockholders will be structurally subordinated to all liabilities and obligations of our Operating Partnership and its subsidiaries. |
Risks Related to Our Common Stock
Our
Common Stock is listed on the Nasdaq Capital Market. We can provide no assurance that
we will be able to comply with the continued listing requirements of the Nasdaq Capital Market over time and that our Common Stock will
continue to be listed on the Nasdaq Capital Market.
On June 26, 2023, we received
a letter from the listing qualifications staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying
the Company that it is not in compliance with the Bid Price Rule. The Bid
Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A)
provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business
days.
On
August 17, 2023, we effected a one-for-ten Reverse Stock Split of our Common Stock. Following the
Reverse Stock Split, the closing bid price of the Common Stock closed above $1.00 for ten consecutive business
days from and including August 18, 2023 through August 31, 2023.
On
September 1, 2023, we received written confirmation from Nasdaq notifying us that the Company had regained compliance with the Bid Price
Rule.
There can be no assurance
that we will be able to maintain compliance with the continued listing requirements of the Nasdaq
Capital Market. If we fail to maintain compliance with any such continued listing requirements, there can also be no assurance
that our Common Stock will not be delisted from the Nasdaq Capital Market in the future. If we fail to maintain compliance, Nasdaq may
take steps to delist our Common Stock. If such delisting should occur, it would likely have a negative effect on the value of an investment
in our Common Stock and would impair an investor’s ability to sell or purchase our Common Stock when desired. In the event of a
delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our Common
Stock to become listed again, stabilize the market price or improve the liquidity of our Common Stock, prevent our Common Stock from dropping
below the Nasdaq minimum bid price requirement, or prevent future non-compliance with the continued listing requirements of
the Nasdaq Capital Market.
The reverse stock split may decrease the liquidity
of the shares of our Common Stock and could lead to a decrease in our overall market capitalization.
The liquidity of the shares
of our Common Stock may be affected adversely by the Reverse Stock Split given the reduced number of shares of our Common Stock that are
outstanding following the Reverse Stock Split. The Reverse Stock Split had the effect of increasing the per share trading price of our
Common Stock but there is no assurance that the trading price of our Common Stock after the Reverse Stock Split will remain constant in
proportion to the reduction in the number of shares of Common Stock outstanding before the Reverse Stock Split. The history of reverse
stock splits for other companies is varied, particularly because some investors may view a reverse stock split negatively. We cannot predict
the impact of the Reverse Stock Split on the trading price of our Common Stock. Our total market capitalization after the Reverse Stock
Split may be lower than our total market capitalization before the Reverse Stock Split.
The effective increase
in the number of shares of our Common Stock available for issuance as a result of the Reverse Stock Split could result in further dilution
to our existing stockholders.
The Reverse Stock Split alone
had no effect on our authorized capital stock, and the total number of authorized shares remains the same as before the Reverse Stock
Split. The Reverse Stock Split increased the number of shares of our Common Stock available for issuance by decreasing the number of shares
of our Common Stock issued and outstanding. The additional available shares are available for issuance from time to time at the discretion
of our Board of Directors when opportunities arise, without further stockholder action or the related delays and expenses, except as may
be required for a particular transaction by law, the rules of any exchange on which our securities may then be listed, or other agreements
or restrictions. Any issuance of additional shares of our Common Stock would increase the number of outstanding shares of our Common Stock
and (unless such issuance was pro-rata among existing stockholders) the percentage ownership of existing stockholders would be diluted
accordingly. In addition, any such issuance of additional shares of our Common Stock could have the effect of diluting the earnings per
share and book value per share of outstanding shares of our Common Stock.
The issuance of a substantial
amount of our Common Stock as a result of the Redemption and Conversion will result in substantial dilution of Common Stock and could
cause a steep decline in its stock price.
We cannot predict if, when,
and how many Series D Preferred Holders will effect the Redemption or Conversion. Issuance of Common Stock as a result of Redemption and
Conversion could result in substantial dilution to our existing stockholders and could cause our Common Stock price to steeply decline.
Adjustment to the conversion
price of our 7.00% Subordinated Convertible Notes due 2031, if it occurs as a result of the Redemption, will cause further dilution of
Common Stock.
Our 7.00% Subordinated Convertible
Notes due 2031 (the “Notes”) are convertible, in whole or in part, at any time, at the option of their holders, into shares
of Common Stock at a conversion price of $62.50 per share of Common Stock (the “Note Conversion Price”) (0.4 common shares
for each $25.00 of principal amount of the Notes being converted); provided that if after the Series D Redemption Eligibility
Date, the Series D Preferred Holders have required us to redeem (payable in cash or stock) in the aggregate at least 100,000 shares of
the Series D Preferred Stock, then the Note Conversion Price will be adjusted to the lower of (i) 55% of the Conversion Price or (ii)
a 45% discount to the lowest price at which any Series D Preferred Stock was converted by a Series D Preferred Holder into Common Stock.
Issuance of additional Common Stock as a result of such adjustment to the Note Conversion Price could result in further dilution to our
existing stockholders.
Our Common Stock ranks
junior to the Series A Preferred Stock (“Series A Preferred Stock”), Series B Convertible Preferred Stock (“Series B Preferred
Stock”) and Series D Preferred Stock with respect to amounts payable in the event of our liquidation, dissolution or winding up.
Our newly issued Common Stock
will rank junior to our Series A Preferred Stock, Series B Preferred Stock, and Series D Preferred Stock with respect to the amounts payable
in the event of our liquidation, dissolution or winding up. This means that, until the holders of our Series A Preferred Stock, holders
of our Series B Preferred Stock, and the Series D Preferred Stock Holders have been paid their liquidation preference in full, no payment
will be made to any holder of Common Stock upon the liquidation, dissolution or winding up of the Company. As a result, the value of your
investment in our Common Stock may suffer if sufficient funds are not available to first satisfy our obligations to the holders of Series
A Preferred Stock, Series B Preferred Stock, and Series D Preferred Stock Holders in the event of our liquidation, dissolution or winding
up.
Risks Related to Our Liquidity
Our ability to service
all of our indebtedness depends on many factors beyond our control, and if we cannot generate enough cash to service our indebtedness,
we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled
payments on or to refinance our obligations with respect to our debt depends on our financial condition and operating performance, which
is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
We may not be able to maintain a level of cash flows from operating activities and future borrowings sufficient to permit us to pay the
principal, premium, if any, and interest on our indebtedness. If we are unable to service our debt, we will have to take actions such
as reducing or delaying capital investments, selling assets, restructuring or refinancing our debt or seeking additional equity capital,
which may be restricted by the terms of our credit agreements. We also may not be able to, if required, effect these actions on commercially
reasonable terms, or at all. Because of these and other factors beyond our control, we may be unable to pay the principal, premium, if
any, interest or other amounts in our indebtedness.
Our level of debt and
the limitations imposed on us by our debt agreements could have significant adverse consequences.
As of June 30, 2023, the
Company had approximately $488 million of indebtedness outstanding, which may expose us to the risk of default under our debt obligations.
As of June 30, 2023, approximately $376 million of $488 million of our outstanding indebtedness is guaranteed by our Operating Partnership,
and we may incur additional debt to finance future acquisition and development activities. Payments of principal and interest on borrowings
may leave us with insufficient cash resources to operate our properties or to pay the dividends currently contemplated or necessary to
maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse
consequences, including the following:
| ● | our cash flow may be insufficient to meet our required principal
and interest payments; |
| ● | we may be unable to borrow additional funds as needed or on
favorable terms, which could, among other things, adversely affect our ability to meet operational needs; |
| ● | we may be unable to refinance our indebtedness at maturity
or the refinancing terms may be less favorable than the terms of our original indebtedness; |
| ● | we may be forced to dispose of one or more of our properties,
possibly on unfavorable terms or in violation of certain covenants to which we may be subject; |
| ● | we may violate financial covenants in our loan documents,
which would entitle the lenders to accelerate our debt obligations; and |
| ● | our default under any loan with cross-default provisions could
result in a default on other indebtedness. |
If any one of these events
were to occur, our financial condition, results of operations, cash flow and per share trading price of our securities could be adversely
affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to
meet the REIT distribution requirements imposed by the U.S. Internal Revenue Code of 1986, as amended (the “Code”).
Risks Related to Our General Business Operations
Our portfolio of properties
is dependent upon regional and local economic conditions and is geographically concentrated in the Northeast, Mid-Atlantic and Southeast,
which may cause us to be more susceptible to adverse developments in those markets than if we owned a more geographically diverse portfolio.
Our properties are located
in South Carolina, Georgia, Virginia, Pennsylvania, North Carolina, Massachusetts, New Jersey, Florida, Connecticut, Kentucky, Tennessee,
Alabama, Maryland, West Virginia, and Oklahoma, which exposes us to greater economic risks than if we owned a more geographically diverse
portfolio. If there is a downturn in the economy in our markets, our operations and our revenue and cash available for distribution, including
cash available to pay distributions to our stockholders, could be materially adversely affected. We cannot assure you that our markets
will grow or that underlying real estate fundamentals will be favorable to owners and operators of retail properties. Our operations may
also be affected if competing properties are built in our markets. Moreover, submarkets within any of our markets may be dependent upon
a limited number of industries. Any adverse economic or real estate developments in the Mid-Atlantic, Northeast or Southeast markets,
or any decrease in demand for retail space resulting from the regulatory environment, business climate or energy or fiscal problems, could
adversely impact our financial condition, results of operations, cash flow and ability to satisfy our debt service obligations.
The majority of our properties
are retail shopping centers and depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss
of, or a store closure by, one or more of these tenants.
Large, regionally or nationally
recognized tenants typically anchor our properties. At any time, our tenants may experience a downturn in their business that may significantly
weaken their financial condition. As a result, our tenants, including our anchor and other major tenants, may fail to comply with their
contractual obligations to us, seek concessions in order to continue operations or declare bankruptcy, any of which could result in the
termination of such tenants’ leases and the loss of rental income attributable to the terminated leases. In addition, certain of
our tenants may cease operations while continuing to pay rent, which could decrease customer traffic, thereby decreasing sales for our
other tenants at the applicable retail property. In addition to these potential effects of a business downturn, mergers or consolidations
among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations,
which could include stores at our retail properties.
Loss of, or a store closure
by, an anchor or major tenant could significantly reduce our occupancy level or the rent we receive from our retail properties, and we
may not have the right to re-lease vacated space or we may be unable to re-lease vacated space at attractive rents or at all. Moreover,
in the event of default by a major tenant or anchor store, we may experience delays and costs in enforcing our rights as landlord to recover
amounts due to us under the terms of our agreements with those parties. The occurrence of any of the situations described above, particularly
if it involves an anchor tenant with leases in multiple locations, could seriously harm our performance and could adversely affect the
value of the applicable retail property.
Some of the leases at
our retail properties contain “co-tenancy” or “go-dark” provisions, which, if triggered, may allow tenants to
pay reduced rent, cease operations or terminate their leases, any of which could adversely affect our performance or the value of the
applicable retail property.
Some of the leases at our
retail properties contain “co-tenancy” provisions that condition a tenant’s obligation to remain open, the amount of
rent payable by the tenant or the tenant’s obligation to continue occupancy on certain conditions, including: (i) the presence of
a certain anchor tenant or tenants; (ii) the continued operation of an anchor tenant’s store; and (iii) minimum occupancy levels
at the applicable retail property. If a co-tenancy provision is triggered by a failure of any of these or other applicable conditions,
a tenant could have the right to cease operations, to terminate its lease early or to a reduction of its rent. In periods of prolonged
economic decline, there is a higher than normal risk that co-tenancy provisions will be triggered as there is a higher risk of tenants
closing stores or terminating leases during these periods. In addition to these co-tenancy provisions, certain of the leases at our retail
properties contain “go-dark” provisions that allow the tenant to cease operations while continuing to pay rent. This could
result in decreased customer traffic at the applicable retail property, thereby decreasing sales for our other tenants at that property,
which may result in our other tenants being unable to pay their minimum rents or expense recovery charges. These provisions also may result
in lower rental revenue generated under the applicable leases. To the extent co-tenancy or go-dark provisions in our retail leases result
in lower revenue or tenant sales or tenants’ rights to terminate their leases early or to a reduction of their rent, our performance
or the value of the applicable retail property could be adversely affected.
We may be unable to renew
leases, lease vacant space or re-let space as leases expire, thereby increasing or prolonging vacancies, which could adversely affect
our financial condition, results of operations, cash flow and per share trading price of our Common Stock.
As of June 30, 2023, leases
representing approximately 0.7% of the square footage and approximately 0.8% of the annualized base rent of the properties in our total
portfolio are month-to-month leases or will expire through December 31, 2023, and an additional 9.1% of the square footage of the properties
in our total portfolio was available. We cannot assure you that leases will be renewed or that our properties will be re-let at net effective
rental rates equal to or above the current average net effective rental rates or that substantial rent abatements, tenant improvements,
early termination rights or below-market renewal options will not be offered to attract new tenants or retain existing tenants. If the
rental rates for our properties decrease, our existing tenants do not renew their leases or we do not re-let a significant portion of
our available space and space for which leases will expire, our financial condition, results of operations, cash flow and per share trading
price of our securities could be adversely affected.
We may be unable to identify
and complete acquisitions of properties that meet our criteria, which may impede our growth.
Our business strategy involves
the acquisition of income producing assets such as strip centers, neighborhood centers, grocery-anchored centers, community centers, free-standing
retail properties and development properties. These activities require us to identify suitable acquisition candidates or investment opportunities
that meet our criteria and are compatible with our growth strategies. We continue to evaluate the market of available properties and may
attempt to acquire properties when strategic opportunities exist. However, we may be unable to acquire properties identified as potential
acquisition opportunities. Our ability to acquire properties on favorable terms, or at all, may be exposed to the following significant
risks:
| ● | we may incur significant costs and divert management attention
in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; |
| ● | even if we enter into agreements for the acquisition of properties,
these agreements are subject to conditions to closing, which we may be unable to satisfy; and |
| ● | we may be unable to finance the acquisition on favorable terms
or at all. |
If we are unable to finance
property acquisitions or acquire properties on favorable terms, or at all, our financial condition, results of operations, cash flow and
per share trading price of our securities could be adversely affected. In addition, failure to identify or complete acquisitions of suitable
properties could slow our growth.
We face significant competition
for acquisitions of real properties, which may reduce the number of acquisition opportunities available to us and increase the costs of
these acquisitions.
The current market for acquisitions
continues to be extremely competitive. This competition may increase the demand for the types of properties in which we typically invest
and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such acquisition
properties. We also face significant competition for attractive acquisition opportunities from an indeterminate number of investors, including
publicly traded and privately held REITs, private equity investors and institutional investment funds, some of which have greater financial
resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently
manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices. This competition
will increase if investments in real estate become more attractive relative to other forms of investment. Competition for investments
may reduce the number of suitable investment opportunities available to us and may have the effect of increasing prices paid for such
acquisition properties and/or reducing the rents we can charge and, as a result, adversely affecting our operating results.
Acquisitions may not yield
the returns we expect, and we may otherwise be unable to operate these properties to meet our financial expectations, which could adversely
affect our financial condition, results of operations, cash flow and per share trading price of our securities.
| ● | Acquisitions and our ability to successfully operate the properties
we acquire in such acquisitions may be exposed to the following significant risks: |
| ● | even if we are able to acquire a desired property, competition
from other potential acquirers may significantly increase the purchase price; |
| ● | we may acquire properties that are not accretive to our results
upon acquisition, and we may not successfully manage and lease those properties to meet our expectations; |
| ● | our cash flow may be insufficient to meet our required principal
and interest payments or make expected distributions; |
| ● | we may spend more than budgeted amounts to make necessary
improvements or renovations to acquired properties; |
| ● | we may be unable to quickly and efficiently integrate new
acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result our results of operations
and financial condition could be adversely affected; |
| ● | market conditions may result in higher than expected vacancy
rates and lower than expected rental rates; and |
| ● | we may acquire properties subject to liabilities and without
any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for cleanup of undisclosed environmental
contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in
the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the
former owners of the properties. |
If we cannot operate acquired
properties to meet our financial expectations, our financial condition, results of operations, cash flow and per share trading price of
our securities could be adversely affected.
We may not be able to
control our operating costs or our expenses may remain constant or increase, even if our revenues do not increase, causing our results
of operations to be adversely affected.
Factors that may adversely
affect our ability to control operating costs include the need to pay for insurance and other operating costs, including real estate taxes,
which could increase over time, the need periodically to repair, renovate and re-lease space, the cost of compliance with governmental
regulation, including zoning, environmental and tax laws, the potential for liability under applicable laws, interest rate levels, principal
loan amounts and the availability of financing. If our operating costs increase as a result of any of the foregoing factors, our results
of operations may be adversely affected.
The expense of owning and
operating a property is not necessarily reduced when circumstances such as market factors and competition cause a reduction in income
from the property. As a result, if revenues decline, we may not be able to reduce our expenses accordingly. Costs associated with real
estate investments, such as real estate taxes, insurance, loan payments and maintenance, generally will not be reduced even if a property
is not fully occupied or other circumstances cause our revenues to decrease. If we are unable to decrease operating costs when demand
for our properties decreases and our revenues decline, our financial condition and results of operations may be adversely affected.
High mortgage interest
rates and/or unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number
of properties we can acquire, our net income and the amount of cash distributions we can make.
If mortgage debt is unavailable
at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we may be unable
to refinance the properties when the loans become due, or to refinance on favorable terms or at all. If interest rates are higher when
we refinance our properties, our income could be reduced. If any of these events occur, our cash flow could be reduced. This, in turn,
could reduce cash available for debt payments and distributions to our stockholders and may hinder our ability to raise more capital by
issuing more stock or by borrowing more money.
Mortgage debt obligations
expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject
to mortgage debt.
Incurring mortgage and other
secured debt obligations increase our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure
actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default. Any foreclosure on
a mortgaged property or group of properties could adversely affect the overall value of our portfolio of properties. For U.S. federal
income tax purposes, a foreclosure on any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale
of the property for a purchase price equal to the outstanding balance of the loan. If the outstanding balance of the loan exceeds our
tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder
our ability to meet the REIT distribution requirements imposed by the Code.
Failure to hedge effectively
against interest rate changes may adversely affect our financial condition, results of operations, cash flow and per share trading price
of our securities.
Subject to maintaining our
qualification as a REIT, we may enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating
rate debt. We currently do not have any hedges in place. Our hedging transactions may include entering into interest rate cap agreements
or interest rate swap agreements. These agreements involve risks, such as the risk that such arrangements would not be effective in reducing
our exposure to interest rate changes or that a court could rule that such an agreement is not legally enforceable. In addition, interest
rate hedging can be expensive, particularly during periods of rising and volatile interest rates. Hedging could reduce the overall returns
on our investments. Failure to hedge effectively against interest rate changes could materially adversely affect our financial condition,
results of operations, cash flow and per share trading price of our securities. In addition, while such agreements would be intended to
lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would
not perform, we could incur significant costs associated with the settlement of the agreements or that the underlying transactions could
fail to qualify as highly-effective cash flow hedges under generally accepted accounting principles in the United States of America.
Adverse economic and geopolitical
conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations,
cash flow and per share trading price of our securities.
Our business may be affected
by market and economic challenges experienced by the U.S. economy or real estate industry as a whole, including the recent dislocations
in the credit markets and general global economic downturn. These conditions, or similar conditions existing in the future, may adversely
affect our financial condition, results of operations, cash flow and per share trading price of our securities as a result of the following
potential consequences, among others:
| ● | decreased demand for retail space, which would cause market
rental rates and property values to be negatively impacted; |
| ● | reduced values of our properties may limit our ability to
dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured
loans; and |
| ● | our ability to obtain financing on terms and conditions that
we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and
refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense. |
In addition, any economic
downturn may adversely affect the businesses of many of our tenants. As a result, we may see increases in bankruptcies of our tenants
and increased defaults by tenants, and we may experience higher vacancy rates and delays in re-leasing vacant space, which could negatively
impact our business and results of operations.
We are subject to risks
that affect the general retail environment, such as weakness in the economy, the level of consumer spending, the adverse financial condition
of large retailing companies and competition from discount and internet retailers, any of which could adversely affect market rents for
retail space and the willingness or ability of retailers to lease space in our shopping centers.
With the exception of our
corporate offices, all of our improved properties are in the retail real estate market. This means that we are subject to factors that
affect the retail sector generally, as well as the market for retail space. The retail environment and the market for retail space have
been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the level of consumer spending
and consumer confidence, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector,
the excess amount of retail space in a number of markets and increasing competition from discount retailers, outlet malls, internet retailers
and other online businesses. Increases in consumer spending via the internet may continue to significantly affect our retail tenants’
ability to generate sales in their stores. In addition, some of our retail tenants face competition from the expanding market for digital
content and hardware. New and enhanced technologies, including new digital technologies and new web services technologies, may increase
competition for certain of our retail tenants.
Any of the foregoing factors
could adversely affect the financial condition of our tenants and the willingness of retailers to lease space in our shopping centers.
In turn, these conditions could negatively affect market rents for retail space and could materially and adversely affect our financial
condition, results of operations, cash flow, the trading price of our common shares and our ability to satisfy our debt service obligations
and to pay distributions to our stockholders.
We face significant competition
in the leasing market, which may decrease or prevent increases of the occupancy and rental rates of our properties.
We compete with numerous
developers, owners and operators of real estate, many of which own properties similar to ours in the same submarkets in which our properties
are located. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge
our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge
or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to
retain tenants when our tenants’ leases expire. As a result, our financial condition, results of operations, cash flow and per share
trading price of our Common Stock could be adversely affected.
We may be required to
make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants,
causing our financial condition, results of operations, cash flow and per share trading price of our securities to be adversely affected.
To the extent adverse economic
conditions continue in the real estate market and demand for retail space falls, we expect that, upon expiration of leases at our properties,
we may be required to make rent or other concessions to tenants, accommodate requests for renovations, build-to-suit remodeling and other
improvements or provide additional services to our tenants. As a result, we may have to make significant capital or other expenditures
in order to retain tenants whose leases expire and to attract new tenants in sufficient numbers. Additionally, we may need to raise capital
to make such expenditures. If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures.
This could result in non-renewals by tenants upon expiration of their leases, which could cause an adverse effect to our financial condition,
results of operations, cash flow and per share trading price of our securities.
The actual rents we receive
for the properties in our portfolio may be less than our asking rents, which could negatively impact our ability to generate cash flow
growth.
As a result of various factors,
including competitive pricing pressure in our submarkets, adverse conditions in the Northeast, Mid-Atlantic and Southeast real estate
markets, a general economic downturn and the desirability of our properties compared to other properties in our submarkets, we may be
unable to realize the asking rents across the properties in our portfolio. In addition, the degree of discrepancy between our asking rents
and the actual rents we are able to obtain may vary both from property to property and among different leased spaces within a single property.
If we are unable to obtain rental rates that are on average comparable to our asking rents across our portfolio, then our ability to generate
cash flow growth will be negatively impacted. In addition, depending on asking rental rates at any given time as compared to expiring
leases in our portfolio, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases.
We have and may continue
to acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution
and limit our ability to sell such assets.
We have acquired, and in
the future we may continue to acquire, properties or portfolios of properties through tax deferred contribution transactions in exchange
for partnership interests in our Operating Partnership, which may result in stockholder dilution. This acquisition structure may have
the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties,
and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on
our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax
bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
Our real estate development
activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which
could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our securities.
We may engage in development
and redevelopment activities with respect to certain of our properties. To the extent that we do so, we will be subject to the following
risks associated with such development and redevelopment activities:
| ● | unsuccessful development or redevelopment opportunities could
result in direct expenses to us; |
| ● | construction or redevelopment costs of a project may exceed
original estimates, possibly making the project less profitable than originally estimated, or unprofitable; |
| ● | time required to complete the construction or redevelopment
of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow
and liquidity; |
| ● | contractor and subcontractor disputes, strikes, labor disputes
or supply disruptions; |
| ● | failure to achieve expected occupancy and/or rent levels within
the projected time frame, if at all; |
| ● | delays with respect to obtaining or the inability to obtain
necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws; |
| ● | occupancy rates and rents of a completed project may not be
sufficient to make the project profitable; |
| ● | our ability to dispose of properties developed or redeveloped
with the intent to sell could be impacted by the ability of prospective buyers to obtain financing given the current state of the credit
markets; and |
| ● | the availability and pricing of financing to fund our development
activities on favorable terms or at all. |
These risks could result
in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment
activities once undertaken, any of which could have an adverse effect on our financial condition, results of operations, cash flow, service
our substantial indebtedness, the issuance of Common Stock, and the trading price of our securities.
Our success depends upon
our retaining and recruiting key personnel.
Our future success depends
heavily upon the continued service of our key executives. We rely on their industry expertise and experience in our business operations,
and in particular, on their financial and accounting skills, management skills, and working relationship with our employees and many of
our tenants. If they became unable or unwilling to continue in their present positions, or they left our Company, we may not be able to
replace them, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely
affected.
Potential losses may not
be covered by insurance or may exceed policy limits and we could incur significant costs and lose our equity in the damaged properties.
We carry comprehensive liability
insurance policies, covering all of our properties. Our insurance coverage contains policy specifications and insured limits customarily
carried for similar properties and business activities. If a loss or damages are suffered at one or more of our properties, our insurer
may attempt to limit or void our coverage by arguing that the loss resulted from facts or circumstances not covered by our policy. Furthermore,
if we experience a loss that is uninsured or that exceeds our policy limits, we could incur significant costs and lose the capital invested
in the damaged or otherwise adversely affected properties as well as the anticipated future cash flows from those properties.
Our growth depends on
external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all,
which could limit our ability, among other things, to meet our capital and operating needs or make the cash distributions to our stockholders
necessary to maintain our qualification as a REIT.
In order to maintain our
qualification as a REIT, we are required under the Code, among other things, to distribute annually at least 90% of our REIT taxable income,
determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to U.S.
federal income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any
net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary
acquisition financing, from operating cash flow. Consequently, we have and continue to intend to rely on third-party sources to fund our
capital needs. We may not be able to obtain such financing on favorable terms or at all and any additional debt that we incur will increase
our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:
| ● | general market conditions; |
| ● | the market’s perception of our growth potential; |
| ● | our current debt levels; |
| ● | our current and expected future earnings; |
| ● | our cash flow and cash distributions; and |
| ● | the market price per share of our securities. |
Recently, the capital markets
have been subject to significant disruptions. If we cannot obtain capital from third-party sources, we may not be able to acquire or develop
properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service
obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
We may not comply with
the “Asset Coverage Ratio” contained in the terms of our Series D Preferred Stock.
The terms of our Series D
Preferred Stock require us to maintain a certain level of asset coverage. More specifically, we are required to maintain an asset coverage
percentage of at least 200% on the last business day of each calendar quarter. This percentage is calculated by dividing (i) our total
assets plus accumulated depreciation, plus accumulated amortization minus our total liabilities and indebtedness as reported in our financial
statements (exclusive of the book value of any outstanding shares of term preferred stock or preferred stock providing for a fixed mandatory
redemption date or maturity date (“Redeemable and Term Preferred Stock”) by (ii) the aggregate liquidation preference, plus
an amount equal to all accrued and unpaid dividends, of the outstanding shares of our Series D Preferred Stock and any outstanding
shares of Redeemable and Term Preferred Stock. If we fail to satisfy the Asset Coverage Ratio (as defined in Note 8 to the consolidated
financial statements of our 2022 Annual Report on Form 10-K), we must cure the failure during the period that expires at the close of
business on the date that is 30 calendar days following the filing date of our Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as applicable, for that quarter. If we fail to cure the failure prior to the Asset Coverage Cure Date (as defined in Note 8 to the
consolidated financial statements of our 2022 Annual Report on Form 10-K), the terms of our Series D Preferred Stock require us to
redeem, within 90 calendar days of the Asset Coverage Cure Date, shares of Redeemable and Term Preferred Stock, which may include Series D
Preferred Stock, at least equal to the lesser of (i) the minimum number of shares of Redeemable and Term Preferred Stock that will result
in us having an Asset Coverage Ratio of at least 200% and (ii) the maximum number of shares of Redeemable and Term Preferred Stock that
can be redeemed solely out of funds legally available for such redemption.
There can be no guarantee
that we will continue to comply with our Asset Coverage Ratio in the near future. To the extent we fail to satisfy the Asset Coverage
Ratio and are required to redeem shares of our Series D Preferred Stock, our business and operations may be materially and adversely
impacted.
If a major tenant declares
bankruptcy or experiences a downturn in its business, we may be unable to collect balances due under relevant leases.
We may experience concentration
in one or more tenants across several of the properties in our portfolio. At any time, our tenants may experience a downturn in their
business that may significantly weaken their financial condition. As a result, our tenants, including our anchor and other major tenants,
may fail to comply with their contractual obligations to us, seek concessions in order to continue operations or declare bankruptcy, any
of which could result in the termination of such tenants’ leases and the loss of rental income attributable to the terminated leases.
In addition, certain of our tenants may cease operations while continuing to pay rent, which could decrease customer traffic, thereby
decreasing sales for our other tenants at the applicable retail property. In addition to these potential effects of a business downturn,
mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically
overlapping store locations, which could include stores at our retail properties.
Loss of, or a store closure
by, an anchor or major tenant could significantly reduce our occupancy level or the rent we receive from our retail properties. In addition,
we may not be able to re-lease vacated space at attractive rents or at all. Moreover, in the event of default by a major tenant or anchor
store, we may experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements
with those parties. The occurrence of any of the situations described above, particularly if it involves an anchor tenant with leases
in multiple locations, could seriously harm our performance and could adversely affect the value of the applicable retail property.
Any of our tenants, or any
guarantor of one of our tenant’s lease obligations, could become subject to a bankruptcy proceeding pursuant to Title 11 of the
United States Code (the “Bankruptcy Code”). If a tenant becomes a debtor under the Bankruptcy Code, federal law prohibits
us from evicting such tenant based solely upon the commencement of such bankruptcy. Further, such a bankruptcy filing could prevent us
from attempting to collect pre-bankruptcy debts from the bankrupt tenant or its properties or taking other debt enforcement actions, unless
we receive an enabling order from the bankruptcy court. Generally, post-bankruptcy debts are required by statute to be paid currently,
which would include payments on our leases that come due after the date of the bankruptcy filing. Such a bankruptcy filing also could
cause a decrease, delay or cessation of current rental payments, reducing our operating cash flows and the amount of cash available for
distributions to stockholders. Prior to emerging from bankruptcy, the tenant will need to decide whether to assume or reject its leases.
Generally, and unless otherwise agreed to by the tenant and the lessor, if a tenant assumes a lease, all pre-bankruptcy balances and unpaid
post-bankruptcy amounts owed under the lease must be paid in full. If a given lease or guaranty is not assumed, our operating cash flows
and the amount of cash available for distribution to stockholders may be adversely affected. If a lease is rejected by a tenant in bankruptcy,
we are entitled to general unsecured claims for damages. If a lease is rejected, we may not receive any further rent payments from the
tenant, and the amount of our general unsecured claim for future rent would be capped at the rent reserved under the lease, without acceleration,
for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent and damages already
due but unpaid. We would only receive recovery on our general unsecured claim in the event that funds or other consideration were available
for distribution to general unsecured creditors, and then only in the same percentage as that realized on other general unsecured claims.
We may also be unable to re-lease a terminated or rejected property or to re-lease it on comparable or more favorable terms.
Our business and the market
price of our securities could be negatively affected as a result of the actions of activist stockholders.
Our business, operating results
or financial condition could be harmed by proxy contests because, among other things:
| ● | Responding to proxy contests is costly and time-consuming,
is a significant distraction for our board of directors, management and employees, and diverts the attention of our board of directors
and senior management from the pursuit of our business strategy, which could adversely affect our results of operations and financial
condition; |
| ● | Perceived uncertainties as to our future direction, our ability
to execute on our strategy, or changes to the composition of our Board of Directors or senior management team, including our CEO, may
lead to the perception of a change in the direction of our business, instability or lack of continuity which may be exploited by our
competitors, and may result in the loss of potential business opportunities and make it more difficult to attract and retain qualified
personnel and business partners; |
| ● | The expenses for legal and advisory fees and administrative
and associated costs incurred in connection with responding to proxy contests and any related litigation may be substantial; and |
| ● | We may choose to initiate, or may become subject to, litigation
as a result of the proxy contests or matters arising from the proxy contests, which would serve as a further distraction to our Board
of Directors, management and employees and would require us to incur significant additional costs. |
In addition, the market price of our securities
could be subject to significant fluctuations or otherwise be adversely affected by the uncertainties described above or the outcome of
the proxy contests.
The federal government’s
“green lease” policies may adversely affect us.
In recent years, the federal
government has instituted “green lease” policies that allow a government tenant to require leadership in energy and environmental
design for commercial interiors, or LEED®-CI, certification in selecting new premises or renewing leases at existing premises.
In addition, the Energy Independence and Security Act of 2007 allows the General Services Administration to prefer buildings for lease
that have received an “Energy Star” label. Obtaining such certifications and labels may be costly and time consuming, but
our failure to do so may result in our competitive disadvantage in acquiring new or retaining existing government tenants.
Technological developments
may impact customer traffic at certain tenants’ stores and ultimately sales at such stores.
We may be adversely affected
by developments of new technology that may cause the business of certain of our tenants to become substantially diminished or functionally
obsolete, with the result that such tenants may be unable to pay rent, become insolvent, file for bankruptcy protection, close their stores
or terminate their leases. Examples of the potentially adverse effects of new technology on retail businesses include, among other things,
the advent of online movie rentals on video stores, the effect of e-books and small screen readers on book stores, and increased sales
of many products online.
Substantial recent annual
increases in online sales have also caused many retailers to sell products online on their websites with pick-ups at a store or warehouse
or through deliveries. With special reference to our principal tenants, online grocery orders are available in some areas and may become
a major factor affecting grocers in our portfolio.
Natural disasters and
severe weather conditions could have an adverse impact on our cash flow and operating results.
Some of our properties could
be subject to potential natural or other disasters. In addition, we may acquire properties that are located in areas that are subject
to natural disasters, such as earthquakes and droughts. Properties could also be affected by increases in the frequency or severity of
tornadoes, hurricanes or other storms, whether such increases are caused by global climate changes or other factors. The occurrence of
natural disasters or severe weather conditions can increase investment costs to repair or replace damaged properties, increase operating
costs, increase future property insurance costs, and/or negatively impact the tenant demand for lease space. If insurance is unavailable
to us, or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from such events,
our earnings, liquidity and/or capital resources could be adversely affected.
We face risks relating
to cybersecurity attacks, loss of confidential information and other business disruptions.
Our business is at risk from
and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data, and other electronic
security breaches. Such cyber-attacks can range from individual attempts to gain unauthorized access to our information technology systems
to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no
guarantee such efforts will be successful in preventing a cyber-attack. A cybersecurity attack could compromise the confidential information
of our employees, tenants and vendors. A successful attack could disrupt and otherwise adversely affect our business operations.
Risks Related to the Real Estate Industry
There are inherent risks
associated with real estate investments and with the real estate industry, each of which could have an adverse impact on our financial
performance and the value of our properties.
Real estate investments are
subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control. Our financial performance
and the value of our properties can be affected by many of these factors, including the following:
| ● | adverse changes in financial conditions of buyers, sellers
and tenants of our properties, including bankruptcies, financial difficulties or lease defaults by our tenants; |
| ● | the national, regional and local economy, which may be negatively
impacted by concerns about increasing interest rates, inflation, deflation and government deficits, high unemployment rates, decreased
consumer confidence, industry slowdowns, reduced corporate profits, liquidity concerns in our markets and other adverse business concerns; |
| ● | local real estate conditions, such as an oversupply of, or
a reduction in, demand for retail space and the availability and creditworthiness of current and prospective tenants; |
| ● | vacancies or ability to rent retail space on favorable terms,
including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal
options; |
| ● | changes in operating costs and expenses, including, without
limitation, increasing labor and material costs, insurance costs, energy prices, environmental restrictions, real estate taxes and costs
of compliance with laws, regulations and government policies, which we may be restricted from passing on to our tenants; |
| ● | fluctuations in interest rates, which could adversely affect
our ability, or the ability of buyers and tenants of our properties, to obtain financing on favorable terms or at all; |
| ● | competition from other real estate investors with significant
capital, including other real estate operating companies, publicly traded REITs and institutional investment funds; |
| ● | inability to refinance our indebtedness, which could result
in a default on our obligations; |
| ● | the convenience and quality of competing retail properties; |
| ● | inability to collect rent from tenants; |
| ● | our ability to secure adequate insurance; |
| ● | our ability to secure adequate management services and to
maintain our properties; |
| ● | changes in, and changes in enforcement of, laws, regulations
and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, government fiscal policies
and the Americans with Disabilities Act of 1990 (the “ADA”); and |
| ● | civil unrest, acts of war, terrorist attacks and natural disasters,
including earthquakes, wind damage and floods, which may result in uninsured and underinsured losses. |
In addition, because the
yields available from equity investments in real estate depend in large part on the amount of rental income earned, as well as property
operating expenses and other costs incurred, a period of economic slowdown or recession, or declining demand for real estate, or the public
perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults among
our existing leases, and, consequently, our properties, including any held by joint ventures, may fail to generate revenues sufficient
to meet operating, debt service and other expenses. As a result, we may have to borrow amounts to cover fixed costs, and our financial
condition, results of operations, cash flow, per share market price of our securities and ability to satisfy our principal and interest
obligations and to make distributions to our stockholders may be adversely affected.
Our performance and value
are subject to risks associated with real estate assets and the real estate industry, including local oversupply, reduction in demand
or adverse changes in financial conditions of buyers, sellers and tenants of properties, which could decrease revenues or increase costs,
which would adversely affect our financial condition, results of operations and cash flow.
Our growth depends on our
ability to complete future acquisitions as well as our ability to generate revenues in excess of expenses, scheduled principal payments
on debt and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that
are beyond our control may decrease cash available for distribution and the value of our properties. These events include many of the
risks set forth above under “Risks Related to Our General Business Operations,” as well as the following:
| ● | local oversupply or reduction in demand for retail space; |
| ● | adverse changes in financial conditions of buyers, sellers
and tenants of properties; |
| ● | vacancies or our inability to rent space on favorable terms,
including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal
options, and the need to periodically repair, renovate and re-let space; |
| ● | increased operating costs, including insurance premiums, utilities,
real estate taxes and state and local taxes; |
| ● | civil unrest, acts of war, terrorist attacks and natural disasters,
including earthquakes and floods, which may result in uninsured or underinsured losses; |
| ● | decreases in the underlying value of our real estate; |
| ● | changing submarket demographics; and |
| ● | changing traffic patterns. |
In addition, periods of economic
downturn or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may
occur, could result in a general decline in rents or an increased incidence of defaults under existing leases, which would adversely affect
our financial condition, results of operations and cash flow.
Illiquidity of real estate
investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial
condition.
The real estate investments
made, and to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more properties
in our portfolio in response to changing economic, financial and investment conditions is limited. Return of capital and realization of
gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property. We may be unable to
realize our investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time or may
otherwise be unable to complete any exit strategy. In particular, our ability to dispose of one or more properties within a specific time
period is subject to weakness in or even the lack of an established market for a property, changes in the financial condition or prospects
of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies
of jurisdictions in which the property is located.
In addition, the Code imposes
restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular,
the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the
ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore,
we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which may adversely
affect our financial condition, results of operations, cash flow, and per share trading price of our securities.
Our property taxes could
increase due to property tax rate changes or reassessment, which would adversely impact our cash flows.
We are required to pay state
and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties
are assessed or reassessed by taxing authorities. The amount of property taxes we pay in the future may increase substantially from what
we have paid in the past. If the property taxes we pay increase, our cash flow would be adversely impacted, and our ability to pay any
expected dividends to our stockholders could be adversely affected.
Our properties may contain
asbestos or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem, which
could adversely affect the value of the affected property.
We are required by federal
regulations with respect to our properties to identify and warn, via signs and labels, of potential hazards posed by workplace exposure
to installed asbestos-containing materials (“ACMs”), and potential ACMs. We may be subject to an increased risk of personal
injury lawsuits by workers and others exposed to ACMs and potential ACMs at our properties as a result of these regulations. The regulations
may affect the value of any of our properties containing ACMs and potential ACMs. Federal, state and local laws and regulations also govern
the removal, encapsulation, disturbance, handling and disposal of ACMs and potential ACMs when such materials are in poor condition or
in the event of construction, remodeling, renovation or demolition of a property. When excessive moisture accumulates in buildings or
on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period
of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing because exposure
to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions.
The presence of ACMs or significant
mold at any of our properties could require us to undertake a costly remediation program to contain or remove the ACMs or mold from the
affected property. In addition, the presence of ACMs or significant mold could expose us to claims of liability to our tenants, their
or our employees, and others if property damage or health concerns arise.
Acquired properties may
be located in new markets where we may face risks associated with investing in an unfamiliar market.
We may acquire properties
in markets that are new to us. When we acquire properties located in new markets, we may face risks associated with a lack of market knowledge
or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting
procedures. We work to mitigate such risks through extensive diligence and research and associations with experienced service providers.
However, there can be no guarantee that all such risks will be eliminated.
We may acquire properties
with lock-out provisions, or agree to such provisions in connection with obtaining financing, which may prohibit us from selling or refinancing
a property during the lock-out period.
We may acquire properties
in exchange for common units of our Operating Partnership and agree to restrictions on sales or refinancing, called “lock-out”
provisions, which are intended to preserve favorable tax treatment for the owners of such properties who sell them to us. In addition,
we may agree to lock-out provisions in connection with obtaining financing for the acquisition of properties. Lock-out provisions could
materially restrict us from selling, otherwise disposing of or refinancing properties. These restrictions could affect our ability to
turn our investments into cash and thus affect cash available for distributions to our stockholders. Lock-out provisions could impair
our ability to take actions during the lock-out period that would otherwise be in the best interests of our stockholders. In particular,
lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change
in control.
Construction and development
projects are subject to risks that materially increase the costs of completion.
In the event that we decide
to develop and construct new properties or redevelop existing properties, we will be subject to risks and uncertainties associated with
construction and development. These risks include, but are not limited to, risks related to obtaining all necessary zoning, land-use,
building occupancy and other governmental permits and authorizations, risks related to the environmental concerns of government entities
or community groups, risks related to changes in economic and market conditions between development commencement and stabilization, risks
related to construction labor disruptions, adverse weather, acts of God or shortages of materials which could cause construction delays
and risks related to increases in the cost of labor and materials which could cause construction costs to be greater than projected and
adversely impact the amount of our development fees or our results of operations or financial condition.
As an owner of real estate,
we could incur significant costs and liabilities related to environmental matters.
Under various federal, state
and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable
for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in,
under or migrating from such property, including costs to investigate, clean up such contamination and liability for harm to natural resources.
Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such
contamination, and the liability may be joint and several. These liabilities could be substantial and the cost of any required remediation,
removal, fines or other costs could exceed the value of the property and/or our aggregate assets. In addition, the presence of contamination
or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or personal
or property damage or materially adversely affect our ability to sell, lease or develop our properties or to borrow using the properties
as collateral. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs
it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions
on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures.
Additionally, we possess
Phase I Environmental Site Assessments for all of the properties in our portfolio. However, the assessments are limited in scope (e.g.,
they do not generally include soil sampling, subsurface investigations, hazardous materials surveys or lead-based paint inspections or
asbestos inspections) and may have failed to identify all environmental conditions or concerns. Furthermore, the Phase I Environmental
Site Assessment reports for all of the properties in our portfolio are limited to the information available to the licensed site professional
at the time of the investigation, and, as such, may not disclose all potential or existing environmental contamination liabilities at
the properties in our portfolio arising after the date of such investigation. As a result, we could potentially incur material liability
for these issues, which could adversely impact our financial condition, results of operations and cash flow. Some of the Phase I Environmental
Site Assessments in our possession indicate the possibility of lead-based paint and asbestos containing materials located on and within
buildings on some of our properties and polychlorinated biphenyl-containing electrical transformers located or adjacent to some of our
properties. However, management believes that the potential liabilities resulting from removing these items would be immaterial.
As the owner of the buildings
on our properties, we could face liability for the presence of hazardous materials (e.g., asbestos or lead) or other adverse conditions
(e.g., poor indoor air quality) in our buildings. Environmental laws govern the presence, maintenance, and removal of hazardous
materials in buildings, and if we do not comply with such laws, we could face fines for such non-compliance. Also, we could be liable
to third parties (e.g., occupants of the buildings) for damages related to exposure to hazardous materials or adverse conditions
in our buildings, and we could incur material expenses with respect to abatement or remediation of hazardous materials or other adverse
conditions in our buildings. In addition, some of our tenants routinely handle and use hazardous or regulated substances and wastes as
part of their operations at our properties, which are subject to regulation. Such environmental and health and safety laws and regulations
could subject us or our tenants to liability resulting from these activities. Environmental liabilities could affect a tenant’s
ability to make rental payments to us, and changes in laws could increase the potential liability for non-compliance. This may result
in significant unanticipated expenditures or may otherwise materially and adversely affect our operations, or those of our tenants, which
could in turn have an adverse effect on us.
We cannot assure you that
costs or liabilities incurred as a result of environmental issues or other remedial measures will not have an adverse effect on our financial
condition, results of operations and cash flow. If we do incur material environmental liabilities in the future, we may face significant
remediation costs, and we may find it difficult to sell any affected properties.
We may incur significant
costs complying with various federal, state and local laws, regulations and covenants that are applicable to our properties.
The properties in our portfolio
are subject to various covenants and federal, state and local laws and regulatory requirements, including permitting and licensing requirements.
Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers
may restrict our use of our properties and may require us to obtain approval from local officials or restrict our use of our properties
and may require us to obtain approval from local officials of community standards organizations at any time with respect to our properties,
including prior to acquiring a property or when undertaking renovations of any of our existing properties. Among other things, these restrictions
may relate to fire and safety, seismic or hazardous material abatement requirements. There can be no assurance that existing laws and
regulatory policies will not adversely affect us or the timing or cost of any future acquisitions or renovations, or that additional regulation
will not be adopted that increase such delays or result in additional costs. Our growth strategy may be affected by our ability to obtain
permits, licenses and zoning relief. Our failure to obtain such permits, licenses and zoning relief or to comply with applicable laws
could have an adverse effect on our financial condition, results of operations and cash flow.
In addition, federal and
state laws and regulations, including laws such as the ADA and the Fair Housing Amendment Act of 1988 (the “FHAA”), impose
further restrictions on our properties and operations. Under the ADA and the FHAA, all public accommodations must meet federal requirements
related to access and use by disabled persons. Some of our properties may currently be in non-compliance with the ADA or the FHAA. If
one or more of the properties in our portfolio is not in compliance with the ADA, the FHAA or any other regulatory requirements, we may
be required to incur additional costs to bring the property into compliance and we might incur governmental fines or the award of damages
to private litigants. In addition, we do not know whether existing requirements will change or whether future requirements will require
us to make significant unanticipated expenditures that will adversely impact our financial condition, results of operations and cash flow.
The risks associated with
undeveloped land parcels and related activities could have a material adverse effect on our results of operations.
We have 4 undeveloped parcels
of land. The risks inherent in owning land increase as demand or rental rates for office, retail or multifamily properties decreases.
Real estate markets are uncertain, and as a result, the value of undeveloped land can fluctuate depending on prospective uses or intended
developments. In addition, carrying costs, can be significant and can result in losses or reduced profitability. If there are subsequent
changes in the fair value of our undeveloped land parcels that cause us to determine that the fair value of our undeveloped land parcels
is less than their carrying basis reflected in our financial statements plus estimated costs to sell, we may be required to take future
impairment charges which would reduce our net income and could materially and adversely affect our results of operations.
Risks Related to Our Organization Structure
Conflicts of interest
may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating
Partnership, which may impede business decisions that could benefit our stockholders.
Conflicts of interest may
exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating
Partnership or any partner thereof, on the other. Our directors and officers have duties to our company under Maryland law in connection
with their management of our company. At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties
and obligations to our Operating Partnership and its limited partners under Virginia law and the partnership agreement of our Operating
Partnership (the “Partnership Agreement”) in connection with the management of our Operating Partnership. Our fiduciary duties
and obligations as the general partner of our Operating Partnership may come into conflict with the duties of our directors and officers
to our company.
Under Virginia law, a general
partner of a Virginia limited partnership has fiduciary duties of loyalty and care to the partnership and its partners and must discharge
its duties and exercise its rights as general partner under the Partnership Agreement or Virginia law consistently with the obligation
of good faith and fair dealing. The Partnership Agreement provides that, in the event of a conflict between the interests of our Operating
Partnership or any partner, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in
our capacity as the general partner of our Operating Partnership, are under no obligation not to give priority to the separate interests
of our company or our stockholders, and that any action or failure to act on our part or on the part of our directors that gives priority
to the separate interests of our company or our stockholders that does not result in a violation of the contract rights of the limited
partners of the Operating Partnership under its Partnership Agreement does not violate the duty of loyalty that we, in our capacity as
the general partner of our Operating Partnership, owe to the Operating Partnership and its partners.
Additionally, the Partnership
Agreement provides that we will not be liable to the Operating Partnership or any partner for monetary damages for losses sustained, liabilities
incurred or benefits not derived by the Operating Partnership or any limited partner, except for liability for our intentional harm or
gross negligence. Our Operating Partnership must indemnify us, our directors and officers, officers of our Operating Partnership and our
designees from and against any and all claims that relate to the operations of our Operating Partnership, unless (1) an act or omission
of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and
deliberate dishonesty, (2) the person actually received an improper personal benefit in violation or breach of the Partnership Agreement
or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful.
Our Operating Partnership must also pay or reimburse the reasonable expenses of any such person upon its receipt of a written affirmation
of the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking
to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification.
Our Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking
indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under
the Partnership Agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
Our Board of Directors
may change our investment and financing policies without stockholder approval and we may become more highly leveraged, which may increase
our risk of default under our debt obligations.
Our investment and financing
policies are exclusively determined by our Board of Directors. Accordingly, our stockholders do not control these policies. Further, while
our Board of Directors reviews our ability to service our indebtedness, the Company’s charter (the “Charter”) and bylaws
do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Directors may alter or eliminate
our current policy on borrowing at any time without stockholder approval. If this policy changed, we could become more highly leveraged,
which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations. In addition,
a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets
in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. Changes
to our policies with regard to the foregoing could adversely affect our financial condition, results of operations, cash flow and per
share trading price of our Common Stock.
Our rights and the rights
of our stockholders to take action against our directors and officers are limited.
As permitted by Maryland
law, our Charter eliminates the personal liability of our directors and officers to us and our stockholders for money damages, except
for liability resulting from:
| ● | actual receipt of an improper benefit or profit in money,
property or services (and then only for the value of the benefit or profit received); or |
| ● | a judgment or final adjudication adverse to a director or
offer based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated. |
Accordingly, in the event
that actions taken in good faith by any of our directors or officers impede the performance of our company, your ability to recover damages
from such director or officer will be limited.
Further,
we have entered into separate indemnification agreements with each of our directors and officers. As a result, you and we may have more
limited rights against our directors or officers than might otherwise exist under common law, which could reduce your and our recovery
from these persons if they act in a manner that causes us to incur losses.
Loss of exclusion from
regulation pursuant to the Investment Company Act of 1940 would adversely affect us.
We conduct our operations
so that our company and each of its subsidiaries are exempt from registration as an investment company under the Investment Company Act
of 1940, or the Investment Company Act. Under Section 3(a)(1)(A) of the Investment Company Act, a company is an “investment
company” if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting or trading in securities. Under Section 3(a)(1)(C) of the Investment Company Act, a company is deemed to be an “investment
company” if it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities
and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive
of government securities and cash items) on an unconsolidated basis, or the 40% test.
We conduct our operations
so that our company and most, if not all, of our subsidiaries will comply with the 40% test. We continuously monitor our holdings on an
ongoing basis to determine the compliance of our company and each subsidiary with this test. In addition, we believe that neither we nor
any of our subsidiaries will be considered investment companies under Section 3(a)(1)(A) of the Investment Company Act because we not
engage primarily, or propose to engage primarily, or hold ourselves out as being engaged primarily in the business of investing, reinvesting
or trading in securities. Rather, we and our subsidiaries are primarily engaged in non-investment company businesses related to real estate.
Our business will be materially and adversely affected if we fail to qualify for this exclusion from regulation pursuant to the Investment
Company Act.
Our Charter and bylaws
contain provisions that may delay or prevent a change of control transaction.
Our Charter contains 9.8%
ownership limits. For the purpose of preserving our REIT qualification, our Charter prohibits direct or constructive ownership by any
person of more than (i) 9.8% of the total number or value (whichever is more restrictive) of the outstanding shares of our Common
Stock, or (ii) 9.8% of the value of the outstanding shares of any classes or series of stock, of the Company, unless our Board of
Directors grants a waiver.
Our Charter’s constructive
ownership rules are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities to
be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of any class or series
of our stock by an individual or entity could nevertheless cause that individual or entity to own constructively in excess of 9.8% of
a class or series of outstanding stock, and thus be subject to our Charter’s ownership limit. Any attempt to own or transfer shares
of our stock in excess of the ownership limit without the consent of our Board of Directors will be void, and could result in the shares
being automatically transferred to a charitable trust.
Our bylaws require a stockholder
who desires to nominate a person for election to our Board of Directors and/or to make proposals to be considered at an annual meetings
of stockholders to comply with strict notice requirements. These bylaw provisions could make it more difficult for a stockholder’s
director nominee to be elected or for such stockholder’s proposal to be voted on at an annual meeting.
Our Charter permits our
Board of Directors to issue shares of stock without stockholder approval and to create and issue a class or series of common stock or
preferred stock without stockholder approval.
Our Charter empowers our
Board of Directors, without stockholder approval, to issue authorized shares of stock and to amend our Charter from time to time to increase
or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Company has authority
to issue. In addition, our Charter authorizes our Board of Directors to classify and reclassify authorized but unissued shares of stock
of any class or series of stock by setting, fixing, eliminating, or altering in any one or more respects the preferences, rights, voting
powers, restrictions and qualifications of, dividends on, and redemption, conversion, exchange, and other rights of, such stock. Our Board
of Directors could use these powers to issue shares of stock having terms favorable to management or to a person or persons affiliated
with or otherwise friendly to management. The issuance of any such classes or series of stock could have the effect of delaying or preventing
a change of control transaction that might otherwise be in the best interests of our stockholders.
Certain provisions of
Maryland law could inhibit changes in control.
Certain provisions of the
MGCL may have the effect of inhibiting a third party from making a proposal to acquire us or impeding a change of control that could provide
our stockholders with the opportunity to realize a premium over the then-prevailing market price of our Common Stock, including:
| ● | “business combination” provisions that, subject
to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any
person who beneficially owns 10% or more of the voting power of our outstanding voting stock), or an affiliate thereof, for five years
after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights
and supermajority voting requirements on these combinations; and |
| ● | “control share” provisions that provide that holders
of “control shares” of our company (defined as voting shares which, when aggregated with all other shares owned or controlled
by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired
in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding
“control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least
two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. |
The statute permits various
exemptions from its provisions, including business combinations that are exempted by a board of directors prior to the time that the “interested
stockholder” becomes an interested stockholder.
Risks Related to Our Acquisition of
Cedar Realty Trust, Inc.
We may be unable to integrate
Cedar successfully or realize expected synergies or other benefits.
Our recently completed acquisition
of Cedar has placed significant demands on our management and our operational and financial
resources. Acquisitions involve numerous risks, including:
| ● | difficulties in assimilating and integrating the operations,
technologies and properties acquired; |
| ● | the diversion of management’s attention from other business
concerns; |
| ● | current operating and financial systems and controls may be
inadequate to deal with the growth; |
| ● | the risk of not realizing all of the anticipated operational
efficiencies or other anticipated strategic and financial benefits of the merger within the expected timeframe or at all; |
| ● | potential unknown liabilities and unforeseen increased expenses
associated with the acquisition, and |
| ● | performance shortfalls as a result of the diversion of management’s
attention caused by completing the acquisition and integrating the companies’ operations. |
For all these reasons, it
is possible that the Cedar integration process could result in the distraction of our management, the disruption of the ongoing business,
or inconsistencies in the combined operations, any of which could adversely affect the ability of the Company to achieve the anticipated
benefits of the acquisition, or could otherwise adversely affect the business and financial results of the Company.
Risks Related to Our Status as a REIT
Failure to qualify as
a REIT could have significant adverse consequences to us.
We have elected to
be taxed, and we conduct operations so as to qualify, as a REIT for U.S. federal income tax purposes. We have not requested, and do not
plan to request, a ruling from the IRS that we qualify as a REIT, and the statements in this Prospectus are not binding on the IRS or
any court. Therefore, we cannot assure you that we qualify as a REIT, or that we will remain qualified as such in the future. If we fail
to qualify as a REIT in any tax year, we will face adverse tax consequences because:
| ● | we would not be allowed a deduction for distributions to stockholders
in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; |
| ● | we also could be subject to the federal alternative minimum
tax for taxable years beginning before January 1, 2018 and, possibly, increased state and local taxes; and |
| ● | unless we are entitled to relief under applicable statutory
provisions, we could not elect to be taxed as a REIT for the four taxable years following the year during which we were disqualified. |
Any such corporate tax liability
could be substantial and would reduce our cash available for, among other things, our operations and payments on our debt obligations.
In addition, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, which could further
impact our ability to make payments on our debts.
Qualification as a REIT involves
the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations.
The complexity of these provisions and of the applicable Treasury regulations that have been promulgated under the Code, or the Treasury
Regulations, is greater in the case of a REIT that, like us, holds its assets through a partnership. The determination of various factual
matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. To qualify as a REIT, we must satisfy
a number of requirements, including requirements regarding the ownership of our stock, requirements regarding the composition of our assets
and a requirement that at least 95% of our gross income in any year must be derived from qualifying sources, such as “rents from
real property.” Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, excluding
net capital gains. In addition, legislation, new regulations, administrative interpretations or court decisions may materially adversely
affect our investors and creditors, our ability to qualify as a REIT for U.S. federal income tax purposes or the desirability of an investment
in a REIT relative to other investments.
Even if we continue to qualify
as a REIT for U.S. federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on
our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, our taxable
REIT subsidiaries will be subject to tax as regular corporations in the jurisdictions they operate.
If our Operating Partnership
fails to continue to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and suffer other
adverse consequences.
We believe that our Operating
Partnership will continue to be treated as a partnership for U.S. federal income tax purposes. As a partnership, our Operating Partnership
will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may
be required to pay tax with respect to, its share of our Operating Partnership’s income. We cannot assure you, however, that the
IRS will not challenge the status of our Operating Partnership or any other subsidiary partnership in which we own an interest as a partnership
for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating
Partnership or any such other subsidiary partnership as an entity taxable as a corporation for U.S. federal income tax purposes, we would
fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to continue
to qualify as a REIT. Also, the failure of our Operating Partnership or any subsidiary partnerships to continue to qualify as a partnership
could cause it to become subject to federal and state corporate income tax, which would significantly reduce the amount of cash available
for debt service and for distribution to its partners, including us.
Maintaining our status
as a REIT may require us to engage in transactions at unfavorable times under unfavorable terms.
To maintain our REIT status,
we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the
desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could
adversely affect our financial condition, results of operations, cash flow, and per share trading price of our securities.
To continue to qualify as
a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, excluding net capital gains,
and we will be subject to regular U.S. federal corporate income taxes to the extent that we distribute less than 100% of our REIT taxable
income each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid
by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed
income from prior years. To maintain our REIT status and avoid paying income and excise taxes, we may need to borrow funds to meet the
REIT distribution requirements even if the then-prevailing market conditions are not favorable for these borrowings. These borrowing needs
could result from, among other things, differences in timing between the actual receipt of cash and inclusion of income for U.S. federal
income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments.
These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number
of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our stock and
debt obligations, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable
terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune
times, and could adversely affect our financial condition, results of operations, cash flow, ability to make payments on our debt obligations.
The tax imposed on REITs
engaging in “prohibited transactions” may limit our ability to engage in transactions that would be treated as sales for U.S.
federal income tax purposes.
A REIT’s net income
from prohibited transactions is subject to a 100% excise tax. In general, prohibited transactions are sales or other dispositions of property,
other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to
hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or
disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given
that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe
harbors. Complying with the available safe harbors may prevent us from selling property to raise additional funds, including funds that
we may need to make payments on our debt obligations.
Complying with REIT requirements
may affect our profitability and may force us to liquidate or forgo otherwise attractive investments.
To qualify as a REIT, we
must continually satisfy tests concerning, among other things, the nature and diversification of our assets, the sources of our income,
the ownership of our stock, and the amounts we distribute to our stockholders. We may be required to liquidate or forgo otherwise attractive
investments to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We also may be required to
make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly,
satisfying the REIT requirements could have an adverse effect on our business results, profitability and ability to execute our business
plan. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, to redeem the
Series D Preferred Stock, or to repay obligations to our lenders, we may be unable to comply with one or more of the requirements applicable
to REITs or may be subject to a 100% tax on any resulting net gain if such sales constitute prohibited transactions.
Legislative or other actions
affecting REITs could have a negative effect on us, including our ability to qualify as a REIT or the U.S. federal income tax consequences
of such qualification.
At any time, the U.S. federal
income tax laws governing REITs or the administrative interpretations of those laws may be amended, possibly with retroactive effect.
We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any
existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective. We
and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative
interpretations.
SELECTED FINANCIAL DATA
Reverse Stock Split
On August 17, 2023, we effected
the Reverse Stock Split. In connection with the Reverse Stock Split, the total number of authorized shares and the par value per share
of the Common Stock remained unchanged at 200,000,000 and $0.01 per share, respectively. Our audited consolidated financial statements
included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 2, 2023 and our unaudited
condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q filed with the SEC on May 9, 2023 and August
8, 2023 that are incorporated by reference into this Prospectus are presented without giving effect to the Reverse Stock Split. Except
as otherwise provided or where the context otherwise requires, share numbers in this Prospectus reflect the Reverse Stock Split of our
Common Stock.
The following selected financial
data has been derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2022 and our unaudited condensed consolidated interim financial statements for the quarterly periods ended March 31, 2023
and June 30, 2023 included in our Quarterly Reports on Form 10-Q, as adjusted to reflect the Reverse Stock Split for all periods presented.
Our historical results are not indicative of the results that may be expected in the future and results of interim periods are not indicative
of the results for the entire year.
AS REPORTED
| |
| | |
| | |
AS ADJUSTED FOR
1-FOR-10 REVERSE
STOCK SPLIT | |
| |
Years Ended
December 31, | | |
Years Ended
December 31, | |
(in thousands, except per share amounts) | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (21,510 | ) | |
| (13,240 | ) | |
| (21,510 | ) | |
| (13,240 | ) |
Net income (loss) per share, basic | |
| (2.20 | ) | |
| (1.36 | ) | |
| (22.04 | ) | |
| (13.63 | ) |
Net income (loss) per share, diluted | |
| (2.20 | ) | |
| (1.36 | ) | |
| (22.04 | ) | |
| (13.63 | ) |
Weighted average number of shares outstanding, basic | |
| 9,760,704 | | |
| 9,711,944 | | |
| 976,070 | | |
| 971,194 | |
Weighted average number of shares outstanding, diluted | |
| 9,760,704 | | |
| 9,711,944 | | |
| 976,070 | | |
| 971,194 | |
Common shares outstanding at the period end | |
| 9,793,957 | | |
| 9,720,532 | | |
| 979,396 | | |
| 972,053 | |
| |
For the Three Months ended | | |
For the Three Months ended | |
| |
March 31, | | |
March 31, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (6,844 | ) | |
| (1,933 | ) | |
| (6,844 | ) | |
| (1,933 | ) |
Net income (loss) per share, basic | |
| (0.70 | ) | |
| (0.20 | ) | |
| (7.04 | ) | |
| (1.99 | ) |
Net income (loss) per share, diluted | |
| (0.70 | ) | |
| (0.20 | ) | |
| (7.04 | ) | |
| (1.99 | ) |
Weighted average number of shares outstanding, basic | |
| 9,720,589 | | |
| 9,704,638 | | |
| 972,059 | | |
| 970,464 | |
Weighted average number of shares outstanding, diluted | |
| 9,720,589 | | |
| 9,704,638 | | |
| 972,059 | | |
| 970,464 | |
Common shares outstanding at the period end | |
| 9,723,093 | | |
| 9,706,738 | | |
| 972,309 | | |
| 970,674 | |
AS REPORTED
| |
| | |
| | |
AS ADJUSTED FOR
1-FOR-10 REVERSE
STOCK SPLIT | |
| |
For the Three Months ended | | |
For the Three Months ended | |
| |
June 30, | | |
June 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (2,316 | ) | |
| (4,605 | ) | |
| (2,316 | ) | |
| (4,605 | ) |
Net income (loss) per share, basic | |
| (0.24 | ) | |
| (0.47 | ) | |
| (2.38 | ) | |
| (4.74 | ) |
Net income (loss) per share, diluted | |
| (0.24 | ) | |
| (0.47 | ) | |
| (2.38 | ) | |
| (4.74 | ) |
Weighted average number of shares outstanding, basic | |
| 9,734,755 | | |
| 9,707,711 | | |
| 973,476 | | |
| 970,771 | |
Weighted average number of shares outstanding, diluted | |
| 9,734,755 | | |
| 9,707,711 | | |
| 973,476 | | |
| 970,771 | |
Common shares outstanding at the period end | |
| 9,792,713 | | |
| 9,710,414 | | |
| 979,271 | | |
| 971,041 | |
| |
For the Six Months ended | | |
For the Six Months ended | |
| |
June 30, | | |
June 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (9,160 | ) | |
| (6,538 | ) | |
| (9,160 | ) | |
| (6,538 | ) |
Net income (loss) per share, basic | |
| (0.94 | ) | |
| (0.67 | ) | |
| (9.42 | ) | |
| (6.74 | ) |
Net income (loss) per share, diluted | |
| (0.94 | ) | |
| (0.67 | ) | |
| (9.42 | ) | |
| (6.74 | ) |
Weighted average number of shares outstanding, basic | |
| 9,727,711 | | |
| 9,706,183 | | |
| 972,771 | | |
| 970,618 | |
Weighted average number of shares outstanding, diluted | |
| 9,727,711 | | |
| 9,706,183 | | |
| 972,771 | | |
| 970,618 | |
Common shares outstanding at the period end | |
| 9,792,713 | | |
| 9,710,414 | | |
| 979,271 | | |
| 971,041 | |
| |
For the Three Months ended | | |
For the Three Months ended | |
| |
September 30, | | |
September 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (6,504 | ) | |
| 828 | | |
| (6,504 | ) | |
| 828 | |
Net income (loss) per share, basic | |
| (0.66 | ) | |
| 0.09 | | |
| (6.64 | ) | |
| 0.85 | |
Net income (loss) per share, diluted | |
| (0.66 | ) | |
| 0.09 | | |
| (6.64 | ) | |
| 0.85 | |
Weighted average number of shares outstanding, basic | |
| 9,792,815 | | |
| 9,713,125 | | |
| 979,282 | | |
| 971,313 | |
Weighted average number of shares outstanding, diluted | |
| 9,792,815 | | |
| 9,713,125 | | |
| 979,282 | | |
| 971,313 | |
Common shares outstanding at the period end | |
| 9,793,494 | | |
| 9,713,787 | | |
| 979,349 | | |
| 971,379 | |
AS REPORTED
| |
| | |
| | |
AS ADJUSTED FOR
1-FOR-10 REVERSE
STOCK SPLIT | |
| |
For the Nine Months ended | | |
For the Nine Months ended | |
| |
September 30, | | |
September 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (15,664 | ) | |
| (5,699 | ) | |
| (15,664 | ) | |
| (5,699 | ) |
Net income (loss) per share, basic | |
| (1.61 | ) | |
| (0.59 | ) | |
| (16.07 | ) | |
| (5.87 | ) |
Net income (loss) per share, diluted | |
| (1.61 | ) | |
| (0.59 | ) | |
| (16.07 | ) | |
| (5.87 | ) |
Weighted average number of shares outstanding, basic | |
| 9,749,651 | | |
| 9,708,588 | | |
| 974,965 | | |
| 970,859 | |
Weighted average number of shares outstanding, diluted | |
| 9,749,651 | | |
| 9,708,588 | | |
| 974,965 | | |
| 970,859 | |
Common shares outstanding at the period end | |
| 9,793,494 | | |
| 9,713,787 | | |
| 979,349 | | |
| 971,379 | |
| |
For the Three Months ended | | |
For the Three Months ended | |
| |
March 31, | | |
March 31, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2023 | | |
2023 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (5,365 | ) | |
| (5,365 | ) |
Net income (loss) per share, basic | |
| (0.55 | ) | |
| (5.48 | ) |
Net income (loss) per share, diluted | |
| (0.55 | ) | |
| (5.48 | ) |
Weighted average number of shares outstanding, basic | |
| 9,794,026 | | |
| 979,403 | |
Weighted average number of shares outstanding, diluted | |
| 9,794,026 | | |
| 979,403 | |
Common shares outstanding at the period end | |
| 9,800,211 | | |
| 980,021 | |
| |
For the Three Months ended | | |
For the Three Months ended | |
| |
June 30, | | |
June 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2023 | | |
2023 | |
Net income (loss) attributable to Wheeler REIT common stockholders | |
| (6,231 | ) | |
| (6,231 | ) |
Net income (loss) per share, basic | |
| (0.64 | ) | |
| (6.36 | ) |
Net income (loss) per share, diluted | |
| (0.64 | ) | |
| (6.36 | ) |
Weighted average number of shares outstanding, basic | |
| 9,800,211 | | |
| 980,021 | |
Weighted average number of shares outstanding, diluted | |
| 9,800,211 | | |
| 980,021 | |
Common shares outstanding at the period end | |
| 9,800,211 | | |
| 980,021 | |
AS REPORTED
| |
| | |
AS ADJUSTED FOR 1-FOR-10 REVERSE STOCK SPLIT | |
| |
For the Six Months ended | | |
For the Six Months ended | |
| |
June 30, | | |
June 30, | |
| |
(unaudited) | | |
(unaudited) | |
| |
2023 | | |
2023 | |
Net income (loss) attributable to wheeler REIT common stockholders | |
| (11,596 | ) | |
| (11,596 | ) |
Net income (loss) per share, basic | |
| (1.18 | ) | |
| (11.84 | ) |
Net income (loss) per share, diluted | |
| (1.18 | ) | |
| (11.84 | ) |
Weighted average number of shares outstanding, basic | |
| 9,797,136 | | |
| 979,714 | |
Weighted average number of shares outstanding, diluted | |
| 9,797,136 | | |
| 979,714 | |
Common shares outstanding at the period end | |
| 9,800,211 | | |
| 980,021 | |
USE OF PROCEEDS
Because the shares of our
Common Stock covered by this Prospectus are to be issued upon the Redemption or Conversion of the Series D Preferred Stock, the Company
will not receive any proceeds from the issuance of shares of Common Stock upon the Redemption or Conversion of the Series D Preferred
Stock.
POLICIES AND OBJECTIVES
WITH RESPECT TO CERTAIN ACTIVITIES
The following is a discussion
of our policies with respect to certain activities, including financing matters and conflicts of interest. These policies may be amended
or revised from time to time at the discretion of the Board of Directors, without a vote of our stockholders. Any change to any of these
policies by the Board of Directors, however, would be made only after a review and analysis of that change, in light of then-existing
business and other circumstances, and then only if, in the exercise of its business judgment, the Board of Directors believes that it
is advisable to do so in the Company’s best interests.
Disposition Policy
We will evaluate our asset
portfolio on a regular basis to determine if it continues to satisfy our investment criteria. Subject to certain restrictions applicable
to REITs, we may sell investments opportunistically and use the proceeds of any such sale for debt reduction or additional acquisitions
or stock repurchases. We will utilize several criteria to determine the long-term potential of our investments. Investments will be identified
for sale based upon management’s forecast of the strength of the related cash flows as well as their value to our overall portfolio.
Our decision to sell an investment often will be predicated upon the projected cash flow, strength of the franchise, property condition
and related costs to renovate the property, strength of market demand, probability of increased valuation and geographic profile of the
property and alternative investment returns. We may also acquire and sell other retail-related assets opportunistically based upon management’s
forecast and review of the performance of our overall portfolio and management’s assessment of changing conditions in the investment
and capital markets. If we sell a property, held for sale to customers in the ordinary course of business, our gain from the sale will
be subject to a 100% penalty tax.
Financing Policies
We utilize debt to increase
equity returns, acquire properties and payoff existing near-term maturities. When evaluating our future level of indebtedness and making
decisions regarding the incurrence of indebtedness, the Board of Directors considers a number of factors, including:
| ● | our leverage levels across the portfolio; |
| ● | the purchase price of our investments to be acquired with
debt financing; |
| ● | impact on financial covenants; |
| ● | the estimated market value of our investments upon refinancing;
and |
| ● | the ability of particular investments, and our Company as
a whole, to generate cash flow to cover expected debt service. |
We may incur debt in the
form of purchase money obligations to the sellers of properties, publicly or privately placed debt instruments, or financing from banks,
institutional investors, or other lenders. Any such indebtedness may be secured or unsecured by mortgages or other interests in our properties.
This indebtedness may be recourse, non-recourse, or cross-collateralized. If recourse, such recourse may include our general assets or
be limited to the particular investment to which the indebtedness relates. In addition, we may invest in properties or loans subject to
existing loans secured by mortgages or similar liens on the properties, or we may refinance properties acquired on a leveraged basis.
We may use the proceeds from any borrowings for
working capital, consistent with industry practice, to:
| ● | finance the origination or purchase of debt investments; or |
| ● | finance acquisitions, expand, redevelop or improve existing
properties, or develop new properties or other uses. |
In addition, if we do not
have sufficient cash available, we may need to borrow to meet taxable income distribution requirements under the Code. No assurances can
be given that we will obtain additional financings or, if we do, what the amount and terms will be. Our failure to obtain future financing
under favorable terms could adversely impact our ability to execute our business strategy. In addition, we may selectively pursue debt
financing on our individual properties and debt investments.
Equity Capital Policies
Our Board of Directors has
the authority, without further stockholder approval, to issue additional authorized Common Stock and Preferred Stock or otherwise raise
capital, including through the issuance of senior securities, in any manner and on the terms and for the consideration it deems appropriate.
Existing stockholders will have no preemptive right to additional shares issued in any offering, and any offering might cause a dilution
of investment. We may in the future issue Common Stock in connection with acquisitions. We also may issue units of partnership interest
in our operating partnership in connection with acquisitions of property.
We may, under certain circumstances,
purchase Common Stock in the open market or in private transactions with our stockholders, if those purchases are approved by the Board.
On June 8, 2023, we paid
down $0.6 million of the Notes through an open market purchase of 23,784 units totaling $1.2 million.
We have not engaged in trading,
underwriting or agency distribution or sale of securities of other issuers and do not intend to do so.
Conflict of Interest Policy
Our governing documents do
not restrict any of our directors, officers, stockholders or affiliates from having a pecuniary interest in an investment or transaction
in which we have an interest or from conducting, for their own account, business activities of the type we conduct. Our Code
of Business Conduct and Ethics (the “Code of Conduct”) contains a Conflicts of Interest policy that provides that our officers,
directors and employees are expected to avoid any situation in which their personal interests conflict, or have the appearance of conflicting,
with those of the Company. Further, the Conflicts of Interest policy prohibits our officers, directors and employees from obtaining loans
from the Company and from working for a competitor as a consultant or board member.
Our Conflicts of Interest
policy also provides that a conflict of interest may occur when an officer, director or employee has an ownership or financial interest
in another business organization that is doing business with the Company or when such person has an interest in a transaction in which
the Company is a participant. These transactions are characterized as “Related Person Transactions”. Our Code of Conduct Compliance
Officer must be made aware of each such transaction so that such officer can make a judgment as to its appropriateness. The Related Person
Transactions Committee of the Board of Directors has the authority to determine if a Related Person Transaction constitutes an impermissible
conflict of interest.
In addition, our directors
also are subject to provisions of Maryland law that address transactions between Maryland corporations and our directors or other entities
in which our directors have a material financial interest. Such transactions may be voidable under Maryland law, unless certain safe harbors
are met.
Reporting Policies
Generally speaking, we will
make available to our stockholders certified annual financial statements and annual reports. We are subject to the information reporting
requirements of the Exchange Act. Pursuant to these requirements, we will file periodic reports, proxy statements and other information,
including audited financial statements, with the SEC.
Investment Policies
Investment in Real Estate or Interests in
Real Estate
Our investment objectives
are to increase cash flow from operations, achieve sustainable long-term growth and maximize stockholder value. We have not established
a specific policy regarding the relative priority of these investment objectives. For a discussion of our properties and our acquisition
and other strategic objectives, see “Our Company” and Part II, Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” of the Company’s 2022 Annual Report on Form 10-K.
We intend to continue to acquire
retail properties in secondary and tertiary markets, with a particular emphasis on grocery-anchored retail centers. Future investment
activities will be focused on our target markets, but will not be limited to any specific geographic area or to a specified percentage
of our assets. While we may diversify in terms of property locations, size and market or submarket, we do not have any limit on the amount
or percentage of our assets that may be invested in any one property or any one geographic area. We intend to engage in such future investment
or development activities in a manner that is consistent with our qualification as a REIT for U.S. federal income tax purposes. We do
not have a specific policy to acquire assets primarily for capital gain or primarily for income. In addition, we may purchase or lease
income-producing commercial and other types of properties for long-term investment, expand and improve the properties we presently own
or other acquired properties, or sell such properties, in whole or in part, when circumstances warrant.
We may participate with third
parties in property ownership, through limited liability partnerships or other types of co-ownership if we determine that doing so would
be the most effective means of owning or acquiring properties. We do not expect, however, to enter into limited liability partnership
or other partnership arrangement to make an investment that would not otherwise meet our investment policies. We also may acquire real
estate or interests in real estate in exchange for the issuance of Common Stock, preferred stock or options to purchase stock.
Equity investments in acquired
properties may be subject to existing mortgage financing and other indebtedness or to new indebtedness which may be incurred in connection
with acquiring or refinancing these investments.
Securities of or Interests in Persons Primarily
Engaged in Real Estate Activities and Other Issuers
Our investment objectives
are to maximize the cash flow of our investments and acquire investments with growth potential. Subject to the asset tests and gross income
tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities,
or securities of other issuers, including in entities that are not engaged in real estate activities.
For a discussion of our investments
in entities that are not engaged in real estate activities, see “Investment Securities – Related Party” in the Company’s
Quarterly Report on Form 10-Q filed with the SEC on August 8, 2023. On September 1, 2023, the Company subscribed for an additional investment
in the amount of $3.5 million for limited partnership interests in Stilwell Activist Investments,
L.P., a limited partnership formed in the State of Delaware. This additional investment was approved by the Company’s Related Person
Transactions Committee.
We do not currently have any
policy limiting the types of entities in which we may invest or the proportion of assets to be so invested, whether through acquisition
of an entity’s common stock, limited liability or partnership interests, interests in another REIT or entry into a joint venture.
Policies with Respect to
Other Activities
At all times, we intend to
make investments in such a manner as to qualify as a REIT, unless because of circumstances or changes in the Code or the applicable Treasury
Regulations our Board of Directors determines that it is no longer in our best interest to qualify as a REIT. We
have not made any loans to third parties, although we may make loans to third parties in the future. We intend to make our real
estate and other investments in such a way that we will not be treated as an investment company under the Investment Company Act.
OUR COMPANY
Overview
Wheeler Real Estate Investment
Trust, Inc. (the “Trust”, the “REIT”, the “Company”, “we”, “our” or “us”)
is a Maryland corporation formed on June 23, 2011. The Trust serves as the general partner of the Operating Partnership which was formed
as a Virginia limited partnership on April 5, 2012. Substantially, all of our assets are held by, and all of our operations are conducted
through, our Operating Partnership. At June 30, 2023, the Company owned 99.05% of the Operating Partnership. The Company is a fully-integrated,
self-managed commercial real estate investment company that owns, leases and operates income-producing retail properties with a primary
focus on grocery-anchored centers.
On August 22, 2022, the Company
completed a merger transaction with Cedar Realty Trust, Inc. (“Cedar” or “CDR”). As a result of the merger, the
Company acquired all of the outstanding shares of Cedar’s common stock, which ceased to be publicly traded on the New York Stock
Exchange (“NYSE”). Cedar’s outstanding 7.25% Series B Preferred Stock and 6.50% Series C Preferred Stock remain outstanding
and continue to trade on the NYSE. Each outstanding share of common stock of Cedar and outstanding common unit of Cedar
Realty Trust Partnership, L.P., the operating partnership of Cedar, held by persons other than Cedar immediately prior to the merger
were cancelled and converted into the right to receive a cash payment of $9.48 per share or unit. As a result, Cedar became a subsidiary
of the REIT.
On August 17, 2023, the Company
effected the Reverse Stock Split. At the market open on August 18, 2023, the Common Stock began trading on the Nasdaq Capital Market on
a split-adjusted basis under a new CUSIP number. As a result of the Reverse Stock Split, the number of outstanding shares of Common Stock
was reduced to approximately 980,857 shares based on the shares of Common Stock outstanding as of August 17, 2023. The Reverse Stock Split
did not affect the relative voting or other rights that accompany the shares of Common Stock, except to the extent that it results from
a stockholder receiving cash in lieu of fractional shares. There was no change to the number of authorized shares of the Common Stock
as a result of the Reverse Stock Split. Pursuant to the MGCL,
stockholder approval was not required to effect the Reverse Stock Split, and it was approved solely by the Board of Directors.
For additional information
on recent business developments, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations”, of the Company’s 2022 Annual Report on Form 10-K.
Our corporate office is located
at 2529 Virginia Beach Boulevard, Virginia Beach, Virginia 23452. Our telephone number is (757) 627-9088. Our registrar and stock transfer
agent is Computershare Trust Company, N.A. and may be contacted at 150 Royall Street, Suite 101, Canton, MA 02021 or their website, www.computershare.com.
Portfolio
Our portfolio contains retail
properties in secondary and tertiary markets, with a particular emphasis on grocery-anchored retail centers. Our properties are in communities
that have stable demographics and have historically exhibited favorable trends, such as strong population and income growth. We generally
lease our properties to national and regional retailers that offer consumer goods and services and generate regular consumer traffic.
We believe our tenants carry goods and offer services that are less impacted by fluctuations in the broader U.S. economy and consumers’
disposable income, generating more predictable property level cash flows.
The Company’s portfolio of properties is
dependent upon regional and local economic conditions. As of June 30, 2023, we own a portfolio consisting of seventy-nine properties,
including seventy-five retail shopping centers, totaling 8,172,535 leasable square feet which is 92.6% leased (our “operating portfolio”),
and four undeveloped land parcels totaling approximately 61 acres. The properties are geographically located in the Mid-Atlantic, Southeast
and Northeast, which markets represented approximately 45%, 40% and 15%, respectively, of the total annualized base rent of the properties
in its portfolio as of June 30, 2023.
No tenant represents greater
than approximately 10% of the Company’s annualized base rent or 10% of gross leasable square footage. The top 10 tenants account
for 23.6% or $17.64 million of annualized base rent and 26.3% or 2.15 million of gross leasable square footage at June 30, 2023.
For a detailed description
of our properties, see Part I, Item 2, “Properties”, of the Company’s 2022 Annual Report on Form 10-K.
Human Capital Management
Information About our Executive Officers
Andrew Franklin, age 42, was
appointed as Chief Executive Officer (“CEO”) and President in October 2021. He previously served as Interim Chief Executive
Officer since July 2021, Chief Operating Officer since February 2018, and Senior Vice President of Operations since January 2017. Mr.
Franklin has over twenty-three years of commercial real estate experience. Mr. Franklin is responsible for overseeing the property management,
lease administration, and leasing divisions of our growing portfolio of commercial assets. Prior to joining the Company, Mr. Franklin
was a partner with Broad Reach Retail Partners where he ran the day-to-day operations of the company, managing the leasing team as well
as overseeing the asset, property and construction management of the portfolio with assets totaling $50 million. Mr. Franklin is
a graduate of the University of Maryland, with a Bachelor of Science degree in Finance.
Crystal Plum, age 41, was
appointed as Chief Financial Officer (“CFO”) in February 2020. She most recently served as the Vice President of Financial Reporting
and Corporate Accounting for the Company from March 2018 to February 2020 and as Director of Financial Reporting for the Company from
September 2016 to March 2018. Prior to that time, she served as Manager at Dixon Hughes Goodman LLP from September 2014 to August 2016
and as Supervisor at Dixon Hughes Goodman LLP from 2008 to September 2014. Ms. Plum has experience reviewing and performing audits, reviews,
compilations and tax engagements for a diverse group of clients, as well as banking experience. Ms. Plum is a Certified Public Accountant
and has a Bachelor of Science degree in Business Administration - Accounting and Finance from Old Dominion University.
Our Team and Talent
As of June 30, 2023, we have
48 full-time employees. We seek to hire experienced leaders and team members and offer competitive wage and benefit programs. Employees
are offered flexibility to meet personal and family needs, which was further expanded when the COVID-19 pandemic began. In addition to
medical insurance support, the Company offers wellness programs including free short and long term disability insurance, free basic life
insurance policy with accidental death and dismemberment coverage, employee assistance programs that include emotional health support,
gym memberships, volunteer time off and tuition assistance. Tuition assistance includes assistance to learn a new language as the Company
identifies opportunities to better serve a diverse tenant base.
Business Objectives and Investment Strategy
Our primary business objective
is to provide attractive risk-adjusted returns to our stockholders. We intend to achieve this objective utilizing the following investment
strategies:
| ● | Focus on necessity-based retail. Own and operate
retail properties that serve the essential day-to-day shopping needs of the surrounding communities. These necessity-based centers attract
high levels of daily traffic resulting in cross- selling of goods and services from our tenants. The majority of our tenants provide
non-cyclical consumer goods and services that are less impacted by fluctuations in the economy. We believe these centers that provide
essential goods and services such as groceries and electric vehicle charging stations result in a stable, lower-risk portfolio of retail
investment properties. |
| ● | Focus on secondary and tertiary markets with strong
demographics and demand. Our properties are in markets that have strong demographics such as population density, population growth,
stable tenant sales trends and growth in household income. We seek to identify new tenants and renew leases with existing tenants in
these locations that support the need for necessity-based retail and limited new supply. |
| ● | Increase operating income through leasing strategies
and expense management. We employ intensive lease management strategies to optimize occupancy. Management has strong expertise
in acquiring and managing under- performing properties and increasing operating income through more effective leasing strategies and
expense management. Our leases generally require the tenant to reimburse us for a substantial portion of the expenses incurred in operating,
maintaining, repairing, and managing the shopping center and the common areas, along with the associated insurance costs and real estate
taxes. In many cases the tenant is either fully or partially responsible for all maintenance of the property, thereby limiting our financial
exposure towards maintaining the center and increasing our net income. We refer to this arrangement as a “triple net lease.” |
| ● | Selectively utilize our capital to improve retail properties.
We intend to make capital investments where the return on such capital is accretive to our stockholders. We allocate capital
to value-added improvements of retail properties to increase rents, extend long-term leases with anchor tenants and increase occupancy.
We selectively allocate capital to revenue enhancing projects that we believe will improve the market position of a given property. |
| ● | Recycling and sensible management of capital structure.
We intend to sell non-income producing land parcels utilizing sales proceeds to deleverage the balance sheet. In addition, we
intend to monetize assets to redeploy the capital to further deleverage and strengthen the balance sheet. In 2021, we sold two land parcels,
two properties and an out parcel for a total of $11.51 million net proceeds which were used to reduce outstanding indebtedness. In 2022,
thus far we have sold one property for a total of $1.79 net proceeds which were used to reduce outstanding indebtedness. Additional properties
may be slated for disposition based upon management’s periodic review of our portfolio, and the determination by our Board of Directors. |
| ● | Strategy for Integrating
Cedar Assets. Through integrations of both software and personnel, the increased scale will allow the company to maximize efficiencies
both at the property and corporate level. Focusing on our core model of necessity, service and convenience-based retailers, the Cedar
assets complement our existing portfolio, further diversifying our tenant credit profiles and micro-market risks. |
Company Website Access and SEC Filings
We are subject to the information
reporting requirements of the Exchange Act. Pursuant to those requirements, we are required to file annual and periodic reports, proxy
statements and other information, including audited consolidated financial statements, with the SEC which can be found at http://www.sec.gov.
Additionally, we make available free of charge through our website http://www.whlr.us our most recent Annual Report on Form 10-K, including
our audited consolidated financial statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports
as soon as reasonably practicable after we electronically file or furnish such materials to the SEC. In addition, we have posted the Charters
of our Asset Liability Committee, Audit Committee, Compensation Committee, Executive Committee, Governance and Nominating Committee, Litigation
Committee, Related Person Transactions Committee, and Series D Redemption Facilitation Committee, as well as our Insider Trading Policy,
Code of Conduct, and Corporate Governance Principles, all under separate headings. The content of our website is not incorporated by reference
into this Prospectus or in any other report or document we file with the SEC, and any references to our website is intended to be inactive
textual references only.
Governmental Regulations Affecting Our Properties
We and our properties are
subject to a variety of federal, state and local environmental, health, safety, tax and similar laws. The application of these laws to
a specific property that we own depends on a variety of property-specific circumstances, including the current and former uses of the
property, the building materials used at the property and the physical layout of the property. Neither existing environmental, health,
safety and similar laws nor the costs of our compliance with these laws has had a material adverse effect on our financial condition or
results of operations, and management does not believe they will in the future. In addition, we have not incurred, and do not expect to
incur, any material costs or liabilities due to environmental contamination at properties we currently own or have owned in the past.
However, we cannot predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future.
We have no current plans for substantial capital expenditures with respect to compliance with environmental, health, safety and similar
laws and we carry environmental insurance that covers a number of environmental risks for most of our properties.
Competition
Numerous commercial developers
and real estate companies compete with us with respect to the leasing of properties. Some of these competitors may possess greater capital
resources than we do, although we do not believe that any single competitor or group of competitors in any of the primary markets where
our properties are located are dominant in that market. This competition may interfere with our ability to attract and retain tenants,
leading to increased vacancy rates and/or reduced rents and adversely affect our ability to minimize operating expenses.
Retailers at our properties
also face increasing competition from online retailers, outlet stores, discount shopping clubs, superstores, and other forms of sales
and marketing of goods and services, such as direct mail. This competition could contribute to lease defaults and insolvency of tenants.
Climate
Some of our properties could be subject to potential
natural or other disasters. In addition, we may acquire properties that are located in areas that are subject to natural disasters, such
as earthquakes and droughts. Properties could also be affected by increases in the frequency or severity of tornadoes, hurricanes or other
storms, whether such increases are caused by global climate changes or other factors. The occurrence of natural disasters or severe weather
conditions can increase investment costs to repair or replace damaged properties, increase operating costs, increase future property insurance
costs, and/or negatively impact the tenant demand for lease space. If insurance is unavailable to us, or is unavailable on acceptable
terms, or if our insurance is not adequate to cover business interruption or losses from such events, our earnings, liquidity and/or capital
resources could be adversely affected. While several of our properties are located in areas that have experienced hurricanes, tornados,
severe rain storms, or snow during the past two years, there has been no substantial damage or change in operations related to weather
events.
Information Technology and Cyber Security
The Company depends on the
proper functioning, availability and security of its information systems, including financial, data processing, communications and operating
systems. Several information systems are software applications provided by third parties. Our business is at risk from and may be impacted
by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data, and other electronic security breaches.
Such cyber attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated
security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts
will be successful in preventing a cyber attack. A cybersecurity attack could compromise the confidential information of our employees,
tenants and vendors. A successful attack could disrupt and otherwise adversely affect our business operations.
The Company has incorporated
cybersecurity coverage in its insurance policies; however, there is no assurance that the insurance the Company maintains will cover all
cybersecurity breaches or that policy limits will be sufficient to cover all related losses. The Company is not aware of any information
security breaches over the last two years.
Insurance
The Company carries comprehensive
liability, fire, extended coverage, business interruption and rental loss insurance covering all of the properties in its portfolio under
an insurance policy, in addition to other coverages, such as trademark and pollution coverage that may be appropriate for certain of its
properties. Additionally, the Company carries a directors’, officers’, entity and employment practices liability insurance
policy that covers such claims made against the Company and its directors and officers. The Company believes the policy specifications
and insured limits are appropriate and adequate for its properties given the relative risk of loss, the cost of the coverage and industry
practice; however, its insurance coverage may not be sufficient to fully cover losses.
Dividend Policy
In March 2018, the Board of
Directors suspended the payment of dividends on our Common Stock. The Board of Directors also suspended the quarterly dividends on shares
of our Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock, beginning with the three months ended December
31, 2018. Dividends were suspended to retain cash flow to pay operating expenses and reduce debt. On November 3, 2021, common stockholders
of the Company voted to amend the Charter to remove the cumulative dividend rights of the Series A Preferred Stock and Series B Preferred
Stock. Additionally, as the Company has failed to pay cash dividends on the outstanding Series D Preferred Stock, the annual dividend
rate on the Series D Preferred Stock has increased to 10.75%; commencing on the first day after the first missed quarterly payment, January
1, 2019 and will continue until such time as the Company has paid all accumulated and unpaid dividends on the Series D Preferred Stock
in full. As a result of the dividend suspension on the Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock,
no dividends may be declared or paid on the Common Stock until all accumulated accrued and unpaid dividends on the Preferred Stocks have
been declared and paid in full.
DESCRIPTION OF SECURITIES
The following descriptions
are summaries of the material terms of our Charter and bylaws relating to our capital securities. The documents that constitute our Charter
and our bylaws are included as exhibits to the registration statement on Form S-11 of which this Prospectus forms a part. Because these
descriptions are only summaries, they do not contain all the information that may be important to you. For a complete description of the
matters set forth in this section, you should refer to our Charter and bylaws and to the applicable provisions of Maryland law.
General
Our Charter provides that
we may issue a maximum of 200,000,000 shares of common stock, $0.01 par value per share, and 15,000,000 shares of preferred stock, without
par value per share. There was no change to the number of authorized shares of the Common Stock as a result of the Reverse Stock Split.
Our Charter authorizes the Board of Directors, with the approval of a majority of the entire Board of Directors and without any action
by our stockholders, to amend our Charter to increase or decrease the aggregate number of authorized shares of stock or the number of
authorized shares of any class or series of our stock and to classify and reclassify any authorized but unissued shares of any class
or series stock. As of September 27, 2023, and after the Reverse Stock Split was effective on August 17, 2023, 980,857 shares of our
common stock, 562 shares of our Series A Preferred Stock, 3,379,142 shares of our Series B Preferred Stock and 3,379,946 shares of our
Series D Preferred Stock were issued and outstanding. Our Operating Partnership purchased 71,343 shares of the Series D Preferred Stock
on September 22, 2020 from an unaffiliated investor in a privately negotiated transaction. We consider these shares to be retired
and they are reflected as such in our consolidated financial statements.
Under Maryland law, stockholders
generally are not personally liable for our debts or obligations solely as a result of their status as stockholders.
As of September 27, 2023,
and after the Reverse Stock Split was effective on August 17, 2023, there were outstanding 13,566 units of our Operating Partnership,
with each unit exchangeable for one share of our Common Stock, or, at our option, the cash value of one share of our common stock.
Common Stock
We are registering the
issuance of up to 101,100,000 shares of Common Stock (assuming full Redemption and Conversion of the Series D Preferred
Stock). The following description of the Common Stock sets forth the general terms and provisions of the Common Stock. The
statements below describing the Common Stock are in all respects subject to and qualified in their entirety by reference to the
applicable provisions of our Charter and bylaws. Subject to the preferential rights of any other class or series of stock and to the
provisions of our Charter regarding the restrictions on ownership and transfer of our stock, holders of shares of our Common Stock
are entitled to receive dividends and other distributions on such shares if, as and when authorized by the Board of Directors out of
assets legally available therefor and declared by us and to share ratably in the assets of our company legally available for
distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment or establishment of
reserves for all known debts and liabilities of our company.
Unless full cumulative dividends
equal to the full amount of all accumulated, accrued and unpaid dividends on the Series D Preferred Stock have been, or are concurrently
therewith, declared and paid or declared and set apart for payment for all past dividend periods, no dividends shall be declared and paid
or declared and set apart for payment and no other distribution of cash or other property may be declared and made, directly or indirectly,
by us with respect to any shares of Common Stock.
Subject to the provisions
of our Charter regarding the restrictions on ownership and transfer of our stock and except as may otherwise be specified in the terms
of any class or series of our Common Stock, each outstanding share of our Common Stock entitles the holder to one vote with respect to
each matter on which the holders of Common Stock are entitled to vote, including the election of directors. There is no cumulative voting
in the election of our directors. Directors are elected by a plurality of all of the votes cast in the election of directors.
Holders of shares of our Common
Stock have no preference, conversion, exchange, sinking fund or redemption rights and have no preemptive rights to subscribe for any securities
of our company. Our Charter provides that our stockholders generally have no appraisal rights unless our Board of Directors determines
prospectively that appraisal rights will apply to one or more transactions in which the Common Stock holders would otherwise be entitled
to exercise appraisal rights. Subject to the provisions of our Charter regarding the restrictions on ownership and transfer of our stock,
the Common Stock holders will have equal dividend, liquidation and other rights. Under the MGCL, a Maryland corporation generally cannot
dissolve, amend its charter, merge, consolidate, sell all or substantially all of its assets or engage in a statutory share exchange unless
declared advisable by its Board of Directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds
of all of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled
to be cast on the matter) is set forth in the corporation’s charter. Our Charter provides for approval of any of these matters by
the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on such matters, except that the affirmative
vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast generally in the election of directors is required
to remove a director and the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on
such matter is required to amend the provisions of our Charter relating to the removal of directors or specifying that our stockholders
may act without a meeting only by unanimous consent, or to amend the vote required to amend such provisions.
Maryland law also permits
a Maryland corporation to transfer all or substantially all of its assets without the approval of the stockholders of the corporation
to an entity if all of the equity interests of the entity are owned, directly or indirectly, by the corporation. Because our operating
assets may be held by our Operating Partnership or its subsidiaries, these subsidiaries may be able to merge or transfer all or substantially
all of their assets without the approval of our stockholders.
Our Charter authorizes our
Board of Directors to classify and/or reclassify any unissued shares of our Common Stock into other classes or series of stock, to establish
the designation and number of shares of each class or series and to set, subject to the provisions of our Charter relating to the restrictions
on ownership and transfer of our stock, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends
or other distributions, qualifications or terms or conditions of redemption of each such class or series.
On September 27, 2023,
the closing price of our Common Stock reported on the Nasdaq Capital Market was $3.54 per share.
Power to Increase or Decrease
Authorized Shares of Common Stock and Issue Additional Shares of Common and Preferred Stock
We believe that the power
of our Board of Directors to amend our Charter to increase or decrease the aggregate number of authorized shares of stock, to authorize
us to issue additional authorized but unissued shares of our Common Stock or preferred stock and to classify or reclassify unissued shares
of our Common Stock or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock will provide
us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise.
The additional classes or series, as well as the additional authorized shares of Common Stock, will be available for issuance without
further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation
system on which our securities may be listed or traded. Although our Board of Directors does not currently intend to do so, it could authorize
us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent
a transaction or a change of control of our company that might involve a premium price for the Common Stock holders or that the Common
Stock holders otherwise believe to be in their best interests.
Series A Preferred Stock
Holders of Series A Preferred
Stock have the right to receive, only when and as authorized by the Board of Directors and declared by the Company, out of funds legally
available for the payment of dividends, cash dividends, at a rate of 9% per annum of the $1,000 liquidation preference per share. The
Series A Preferred Stock has no redemption rights. The Company has the right to redeem the shares of Series A Preferred Stock, on
a pro rata basis, at any time at a redemption price of $1,030 per share, plus all declared and unpaid dividends. Upon
any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of the Series A Preferred Stock
shall be entitled to be paid out of our assets a liquidation preference of $1,000 per share plus an amount equal to any declared
and unpaid dividends. The Series A Preferred Stock has no maturity date and will remain outstanding indefinitely unless subject
to a mandatory or voluntary conversion as described above. Holders of the Series A Preferred Stock have no voting rights except as provided
by law.
Series B Preferred Stock
Holders of Series B Preferred
Stock have the right to receive, only when and as authorized by the Board of Directors and declared by the Company, out of funds legally
available for the payment of dividends, cash dividends, at a rate of 9% per annum of the $25 liquidation preference per share. The Series
B Preferred Stock has no redemption rights. However, the Series B Preferred Stock is subject to a mandatory conversion once the 20-trading
day volume-weighted average closing price of our Common Stock exceeds $580 per share; once this weighted average closing price is met,
each share of our Series B Preferred Stock will automatically convert into shares of our Common Stock at a conversion price equal to $400.00
per share. In addition, holders of our Series B Preferred Stock also have the option, at any time, to convert shares of our Series B Preferred
Stock into shares of our Common Stock at a conversion price of $400.00 per share of Common Stock. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares of the Series B Preferred Stock shall be entitled to be paid out of our
assets a liquidation preference of $25.00 per share plus an amount equal to any declared and unpaid dividends. The Series B Preferred
Stock has no maturity date and will remain outstanding indefinitely unless subject to a mandatory or voluntary conversion as described
above. Holders of Series B Preferred Stock have no voting rights except as provided by law.
Series D Preferred Stock
Until September 21, 2023,
the Series D Preferred Holders are entitled to receive cumulative cash dividends at a rate of 8.75% per annum of the $25.00 liquidation
preference per share, which is equivalent to the fixed annual amount of $2.1875 per share (the “Initial Rate”). Commencing
on September 21, 2023, the Series D Preferred Holders will be entitled to cumulative cash dividends at an annual dividend rate of the
Initial Rate increased by 2% of the liquidation preference per share, which shall increase by an additional 2% of the liquidation preference
per share on each subsequent anniversary thereafter, subject to a maximum annual dividend rate of 14%. Dividends are payable quarterly
in arrears on or before each Dividend Payment Date of each year.
The Company may at its option
redeem the Series D Preferred Stock for cash at a Redemption Price of $25.00 per share, plus an amount equal to all accrued and unpaid
dividends, if any, to and including the Redemption Date.
After the Series D Redemption
Eligibility Date, the Series D Preferred Holders will have the right, at their option, to
require the Company to redeem any or all of their shares of Series D Preferred Stock. Redemptions can be made at the Redemption Price
payable in cash or in equal value of shares of Common Stock, or in any combination thereof, at the Company’s option.
The
number of shares of Common Stock to be issued per share of Series D Preferred Stock will be equal to the quotient obtained by dividing
(i) the sum of the $25.00 liquidation preference per share of Series D Preferred Stock plus an amount equal to all accrued and unpaid
dividends thereon to and including the Holder Redemption Date (unless the Holder Redemption Date is after the Dividend Record Date and
prior to the corresponding Dividend Payment Date, in which case no additional amount for such accrued and unpaid dividend payment shall
be included in this sum) by (ii) the VWAP per share of Common Stock for the ten consecutive trading days immediately preceding, but not
including, the Holder Redemption Date as reported on the Nasdaq Capital Market.
The Series D Preferred Stock
Holders may convert shares of their Series D Preferred Stock at any time into shares of the Common Stock at a conversion price of $169.60
per share of Common Stock.
The Series D Preferred Stock
requires the Company to maintain asset coverage of at least 200%. If we fail to maintain asset coverage of at least 200% calculated by
determining the percentage value of (i) our total assets plus accumulated depreciation and accumulated amortization minus our total liabilities
and indebtedness as reported in our financial statements prepared in accordance with GAAP (exclusive of the book value of any Redeemable
and Term Preferred Stock (defined below)) over (ii) the aggregate liquidation preference, plus an amount equal to all accrued and unpaid
dividends, of outstanding shares of our Series D Preferred Stock and any outstanding shares of term preferred stock or preferred stock
providing for a fixed mandatory redemption date or maturity date (collectively referred to as “Redeemable and Term Preferred Stock”)
on the last business day of any calendar quarter (“Asset Coverage Ratio”), and such failure is not cured by the close of business
on the date that is 30 calendar days following the filing date of our Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
applicable, for that quarter, or the “Asset Coverage Cure Date”, then we will be required to redeem, within 90 calendar days
of the Asset Coverage Cure Date, shares of Redeemable and Term Preferred Stock, which may include Series D Preferred Stock, at least equal
to the lesser of (i) the minimum number of shares of Redeemable and Term Preferred Stock that will result in us having an Asset Coverage
Ratio of at least 200% and (ii) the maximum number of shares of Redeemable and Term Preferred Stock that can be redeemed solely out of
funds legally available for such redemption. In connection with any redemption for failure to maintain the Asset Coverage Ratio, we may,
in our sole option, redeem any shares of Redeemable and Term Preferred Stock we select, including on a non-pro rata basis. We may elect
not to redeem any Series D Preferred Stock to cure such failure as long as we cure our failure to meet the Asset Coverage Ratio by or
on the Asset Coverage Cure Date. If shares of Series D Preferred Stock are to be redeemed for failure to maintain the Asset Coverage Ratio,
such shares will be redeemed solely in cash at a redemption price equal to $25.00 per share plus an amount equal to all accrued but unpaid
dividends, if any, on such shares (whether or not declared) to and including the redemption date.
Dividends on the Series D
Preferred Stock cumulate from the end of the most recent dividend period for which dividends have been paid. Dividends on the Series D
Preferred Stock cumulate whether or not (i) we have earnings, (ii) there are funds legally available for the payment of such
dividends and (iii) such dividends are authorized by the Board of Directors or declared by us. Dividends on the Series D Preferred
Stock do not bear interest. Beginning with the fourth quarter 2018 dividend, the Company suspended the Series D Preferred Stock dividend.
As such, since January 2019, the Company’s Series D Preferred Stock has been accruing unpaid dividends at a rate of 10.75% per annum
of the $25.00 liquidation preference per share of Series D Preferred Stock, or at $2.6875 per share per annum.
In general, Series D Preferred
Holders have no voting rights. However, if dividends on the Series D Preferred Stock are in arrears for six or more consecutive quarterly
periods, the number of directors on the Board of Directors will automatically be increased by two, and holders of shares of the Series
D Preferred Stock and the holders of shares of Parity Preferred Stock (as defined in Series D Articles Supplementary) upon which like
voting rights have been conferred and are exercisable (voting together as a single class) will be entitled to vote, at a special meeting
called upon the written request of the holders of at least 20% of such stock or at our next annual meeting and at each subsequent annual
meeting of stockholders, for the election of two additional directors to serve on the Board of Directors (the “Series D Preferred
Directors”), until all unpaid dividends on such Series D Preferred Stock and Parity Preferred Stock, if any, have been paid or declared
and a sum sufficient for the payment thereof set apart for payment. The Series D Preferred Directors will be elected by a plurality of
the votes cast in the election. The Board of Directors is not permitted to fill the vacancies on the Board of Directors as a result of
the failure of the holders of 20% of the Series D Preferred Stock and Parity Preferred Stock to deliver such written request for the election
of the Series D Preferred Directors. In addition, the Series D Preferred Holders have the right to vote on the issuance of capital stock
ranking senior to the Series D Preferred Stock, and on certain amendments or alterations to, or the repeal of, the Charter, including
certain changes to the terms of the Series D Preferred Stock. Any such action requires the affirmative vote or consent of the holders
of two-thirds of the shares of Series D Preferred Stock issued and outstanding.
RESTRICTIONS ON OWNERSHIP
AND TRANSFER
For us to qualify as a REIT
under the Code, our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other
than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also,
not more than 50% of the value of the outstanding shares of stock (after taking into account options to acquire shares of stock) may be
owned, directly, indirectly or through application of attribution rules by five or fewer individuals (as defined in the Code to include
certain entities such as private foundations) at any time during the last half of a taxable year (other than the first year for which
an election to be a REIT has been made).
Our Charter contains restrictions
on the ownership and transfer of our stock that are intended to assist us in complying with these requirements and continuing to qualify
as a REIT. The relevant sections of our Charter provide that, subject to the exceptions described below, no person or entity may actually
or beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in
value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of our Common Stock, or 9.8% in
value of the aggregate of the outstanding shares of all classes and series of our stock, in each case excluding any shares of our Common
Stock that are not treated as outstanding for U.S. federal income tax purposes (the “Ownership Limits”). A person or entity
that would have acquired beneficial or constructive ownership of our stock but for the application of the Ownership Limits or any of the
other restrictions on ownership and transfer of our stock discussed below is referred to as a “prohibited owner.”
The constructive ownership
rules under the Code are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities
to be owned constructively by one individual or entity. As a result, the acquisition of less than 9.8% of our Common Stock (or the acquisition
of an interest in an entity that owns, beneficially or constructively, our Common Stock) by an individual or entity could, nevertheless,
cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% of our outstanding Common Stock
and thereby violate the applicable ownership limit.
Our Board of Directors, in
its sole and absolute discretion, prospectively or retroactively, may exempt a person from either or both of the Ownership Limits if doing
so would not result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether
the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT and our Board of Directors
determines that:
| ● | such waiver will not cause or allow five or fewer individuals
to actually or beneficially own more than 49% in value of the aggregate of the outstanding shares of all classes and series of our stock;
and |
| ● | subject to certain exceptions, the person does not and will
not own, beneficially or constructively, an interest in a tenant of ours (or a tenant of any entity owned in whole or in part by us)
that would cause us to constructively own more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant. |
As a condition of the exception,
our Board of Directors may require (i) an opinion of counsel or an IRS ruling, in either case in form and substance satisfactory to our
Board of Directors, in its sole and absolute discretion, to determine or ensure our status as a REIT and (ii) such representations and
undertakings from the person requesting the exception as are reasonably necessary to make the determinations described above. Our Board
of Directors may impose such conditions or restrictions as it deems appropriate in connection with such an exception.
In connection with a waiver
of an Ownership Limit or at any other time, our Board of Directors may, in its sole and absolute discretion, increase or decrease one
or both of the Ownership Limits for one or more persons, except that a decreased ownership limit will not be effective for any person
whose actual, beneficial or constructive ownership of our stock exceeds the decreased ownership limit at the time of the decrease until
the person’s actual, beneficial or constructive ownership of our stock equals or falls below the decreased ownership limit, although
any further acquisition of our stock will violate the decreased Ownership Limit. Our Board of Directors may not increase or decrease any
Ownership Limit if, among other limitations, the new ownership limit would allow five or fewer persons to actually or beneficially own
more than 49% in value of our outstanding stock or could otherwise cause us to fail to qualify as a REIT.
Our Charter further prohibits:
| ● | any person from beneficially or constructively owning shares
of our stock that could result in us being “closely held” under Section 856(h) of the Code (without regard to whether
the ownership interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT (including,
but not limited to, actual, beneficial or constructive ownership of shares of our stock that could result in us constructively owning
an interest in a tenant that is described in Section 856(d)(2)(B) of the Code, if the income we derive from such tenant taking into
account our other income that would not qualify under the gross income requirements of Section 856(c) of the Code, would cause us
to fail to satisfy any the gross income requirements imposed on REITs); and |
| ● | any person from transferring shares of our stock if such transfer
would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of
attribution). |
Any person who acquires or
attempts or intends to acquire actual, beneficial or constructive ownership of shares of our stock that will or may violate the Ownership
Limits or any of the other restrictions on ownership and transfer of our stock described above must give written notice immediately to
us or, in the case of a proposed or attempted transaction, provide us at least 15 days’ prior written notice, and provide us with
such other information as we may request in order to determine the effect of such transfer on our status as a REIT.
The Ownership Limits and
other restrictions on ownership and transfer of our stock described above will not apply if our Board of Directors determines that it
is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance is no longer required
for us to qualify as a REIT.
Pursuant to our Charter, if
any purported transfer of our stock or any other event would otherwise result in any person violating the Ownership Limits or such other
limit established by our Board of Directors, or could result in us being “closely held” within the meaning of Section 856(h)
of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to
qualify as a REIT, then that number of shares causing the violation (rounded up to the nearest whole share) will be automatically transferred
to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us. The prohibited owner will have
no rights in shares of our stock held by the trustee. The automatic transfer will be effective as of the close of business on the business
day prior to the date of the violative transfer or other event that results in the transfer to the trust. Any dividend or other distribution
paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above,
must be repaid to the trustee upon demand. If the transfer to the trust as described above is not automatically effective, for any reason,
to prevent violation of the applicable restriction on ownership and transfer of our stock, then that transfer of the number of shares
that otherwise would cause any person to violate the above restrictions will be void. If any transfer of our stock would result in shares
of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution), then any such
purported transfer will be void and of no force or effect and the intended transferee will acquire no rights in the shares.
Shares of our stock transferred
to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price per
share in the transaction that resulted in the transfer of the shares to the trust (or, in the event of a gift, devise or other such transaction,
the last reported sale price on the Nasdaq Capital Market on the day of the transfer or other event that resulted in the transfer of such
shares to the trust) and (2) the last reported sale price on the Nasdaq Capital Market on the date we accept, or our designee accepts,
such offer. We must reduce the amount payable to the prohibited owner by the amount of dividends and distributions paid to the prohibited
owner and owed by the prohibited owner to the trustee and pay the amount of such reduction to the trustee for the benefit of the charitable
beneficiary. We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust. Upon a sale
to us, the interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the
sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such stock will be paid to the
charitable beneficiary.
If we do not buy the shares,
the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or persons
designated by the trustee who could own the shares, without violating the Ownership Limits or other restrictions on ownership and transfer
of our stock. Upon such sale, the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price
paid by the prohibited owner for the shares (or, if the prohibited owner did not give value in connection with the transfer or other event
that resulted in the transfer to the trust (e.g., a gift, devise or other such transaction), the last reported sale price on the Nasdaq
Capital Market on the day of the transfer or other event that resulted in the transfer of such shares to the trust) and (2) the sales
proceeds (net of commissions and other expenses of sale) received by the trustee for the shares. The trustee will reduce the amount payable
to the prohibited owner by the amount of dividends and other distributions paid to the prohibited owner and owed by the prohibited owner
to the trustee. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable
beneficiary, together with any dividends or other distributions thereon. In addition, if prior to discovery by us that shares of our stock
have been transferred to the trustee, such shares of stock are sold by a prohibited owner, then such shares shall be deemed to have been
sold on behalf of the trust and, to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds
the amount that such prohibited owner was entitled to receive, such excess amount shall be paid to the trustee upon demand.
The trustee will be designated
by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive,
in trust for the charitable beneficiary, all dividends and other distributions paid by us with respect to such shares, and may exercise
all voting rights with respect to such shares for the exclusive benefit of the charitable beneficiary.
Subject to Maryland law, effective
as of the date that the shares have been transferred to the trust, the trustee may, at the trustee’s sole discretion:
| ● | rescind as void any vote cast by a prohibited owner prior
to our discovery that the shares have been transferred to the trust; and |
| ● | recast the vote in accordance with the desires of the trustee
acting for the benefit of the beneficiary of the trust. |
However, if we have already
taken irreversible corporate action, then the trustee may not rescind and recast the vote.
If our Board of Directors
or a committee thereof determines in good faith that a proposed transfer or other event has taken place that violates the restrictions
on ownership and transfer of our stock set forth in our Charter, our Board of Directors or such committee may take such action as it deems
advisable in its sole discretion to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to
redeem shares of stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.
Every owner of 5% or more
(or such lower percentage as required by the Code or the U.S. Treasury Regulations promulgated thereunder) of the outstanding shares of
our stock, within 30 days after the end of each taxable year, must give written notice to us stating the name and address of such owner,
the number of shares of each class and series of our stock that the owner beneficially owns and a description of the manner in which the
shares are held. Each such owner also must provide us with any additional information that we request in order to determine the effect,
if any, of the person’s actual or beneficial ownership on our status as a REIT and to ensure compliance with the Ownership Limits.
In addition, any person that is an actual owner, beneficial owner or constructive owner of shares of our stock and any person (including
the stockholder of record) who is holding shares of our stock for an actual owner, beneficial owner or constructive owner must, on request,
disclose to us such information as we may request in good faith in order to determine our status as a REIT and comply with requirements
of any taxing authority or governmental authority or to determine such compliance.
Any certificates representing
shares of our stock will bear a legend referring to the restrictions on ownership and transfer of our stock described above.
These restrictions on ownership
and transfer could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for
our Common Stock that our stockholders believe to be in their best interest.
BUSINESS COMBINATIONS
Under the MGCL, certain “business
combinations” (including a merger, consolidation, share exchange or, in certain circumstances specified under the statute, an asset
transfer or issuance or reclassification of equity securities) between a Maryland corporation and any interested stockholder, or an affiliate
of such an interested stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes
an interested stockholder. Maryland law defines an interested stockholder as:
| ● | any person who beneficially owns, directly or indirectly,
10% or more of the voting power of the corporation’s outstanding voting stock; or |
| ● | an affiliate or associate of the corporation who, at any time
within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the
then outstanding voting stock of the corporation. A person is not an interested stockholder under the statute if the Board of Directors
approved in advance the transaction by which the person otherwise would have become an interested stockholder. In approving a transaction,
however, a Board of Directors may provide that its approval is subject to compliance, at or after the time of the approval, with any
terms and conditions determined by it. |
After such five-year period,
any such business combination must be recommended by the Board of Directors of the corporation and approved by the affirmative vote of
at least:
| ● | 80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and |
| ● | two-thirds of the votes entitled to be cast by holders
of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business
combination is to be effected or held by an affiliate or associate of the interested stockholder. |
These supermajority approval
requirements do not apply if, among other conditions, the corporation’s common stockholders receive a minimum price (as defined
in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder
for its shares.
These provisions of the MGCL
do not apply, however, to business combinations that are approved or exempted by a corporation’s Board of Directors prior to the
time that the interested stockholder becomes an interested stockholder. Our Board of Directors has, by board resolution, elected to opt
out of the business combination provisions of the MGCL. However, we cannot assure you that our Board of Directors will not opt to be subject
to such business combination provisions in the future. Notwithstanding the foregoing, an alteration or repeal of this resolution will
not have any effect on any business combinations that have been consummated or upon any agreements existing at the time of such modification
or repeal.
CONTROL
SHARE Acquisitions
The MGCL provides that holders
of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights
with respect to any control shares except to the extent approved by the affirmative vote of at least two-thirds of the votes
entitled to be cast in the election of directors, generally, excluding shares of stock in a corporation in respect of which any of the
following persons is entitled to exercise or direct the exercise of the voting power of such shares in the election of directors: (1) the
person who made or proposes to make a control share acquisition, (2) an officer of the corporation or (3) an employee of the
corporation who is also a director of the corporation. “Control shares” are voting shares of stock that, if aggregated with
all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the
exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing
directors within one of the following ranges of voting power:
| ● | one-tenth or more but less than one-third; |
| ● | one-third or more but less than a majority; or |
| ● | a majority or more of all voting power. |
Control shares do not include
shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control
share acquisition” means the acquisition, directly or indirectly, of ownership of, or the power to direct the exercise of voting
power with respect to, issued and outstanding control shares, subject to certain exceptions.
A person who has made or proposes
to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring
person statement” as described in the MGCL), may compel the corporation to call a special meeting of stockholders to be held within
50 days of demand to consider the voting rights of the control shares. If no request for a special meeting is made, the corporation may
itself present the question at any stockholders meeting.
If voting rights of control
shares are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required
by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except
those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights
for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which
the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting
and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights.
The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid
by the acquirer in the control share acquisition.
The control share acquisition
statute does not apply to: (1) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the
transaction or (2) acquisitions approved or exempted by the charter or bylaws of the corporation.
Our bylaws contain a provision
exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. We cannot provide
you any assurance, however, that our Board of Directors will not amend or eliminate this provision at any time in the future.
SUBTITLE 8 OF TITLE 3 OF
THE MGCL
Subtitle 8 of Title 3 of the
MGCL (“Subtitle 8”) permits a Maryland corporation with a class of equity securities registered under the Exchange Act and
at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its Board of Directors
and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following:
| ● | A two-thirds vote requirement for removing a director; |
| ● | a requirement that the number of directors be fixed only by
vote of the directors; |
| ● | a requirement that a vacancy on the board be filled only by
the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; or |
| ● | a prohibition against stockholders calling a special meeting
of stockholders unless they are entitled to cast at least a majority of all votes entitled to be cast at that meeting. |
Our Charter provides that,
at such time as we become eligible to make a Subtitle 8 election and except as may be provided by our Board of Directors in setting the
terms of any class or series of stock, we elect to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on
our Board of Directors. Through provisions in our Charter and bylaws unrelated to Subtitle 8, we currently (1) require a two-thirds vote
for the removal of any director from the board, which removal will be allowed only for cause, (2) vest in the board the exclusive
power to fix the number of directorships, subject to limitations set forth in our Charter and bylaws and (3) require, unless called
by the chairman of our Board of Directors, our president, our chief executive officer or our Board of Directors, the request of stockholders
entitled to cast not less than a majority of all votes entitled to be cast on a matter at such meeting to call a special meeting to consider
and vote on any matter that may properly be considered at a meeting of stockholders. We have not elected to create a classified board.
In the future, our Board of Directors may elect, without stockholder approval, to create a classified board or elect to be subject to
one or more of the other provisions of Subtitle 8.
PLAN OF DISTRIBUTION
We are registering the issuance
by us from time to time of up to 101,100,000 shares of Common Stock issuable upon the Redemption and Conversion of the Series D
Preferred Stock. No broker, dealer or underwriter has been engaged in connection with soliciting the Redemption or Conversion, and no
commission or other compensation will be paid to any such person in connection with the Redemption and Conversion. Redemption and Conversion
will be effected in accordance with the Series D Articles Supplementary, as follows:
| ● | Stockholders seeking redemption of their Series D Preferred Stock
will be required to complete the Holder Redemption Notice and the Stock Ownership Statement and send the two forms to the Company and
the Agent. The Redemption Price for any Redemption Notice and Stock Ownership Statement received
on or before the 25th day of any month (and after the 25th day of the previous month) will be paid on
the following month’s Holder Redemption Date. Delivery of Common Stock will be made
as soon as possible after the Holder Redemption Date in accordance with customary settlement cycles. |
The Holder Redemption Notice
and the Stock Ownership Statement should be sent to the following addresses:
Regular Mail Delivery: |
OR |
Overnight Mail
Delivery: |
AND |
With a copy to: |
Computershare
Attn: Corp Action
Voluntary
PO Box 43011
Providence, RI 02940-3011 |
|
Computershare
Attn: Corp Action
Voluntary
150 Royall Street
Suite V
Canton, MA 02021
|
|
Wheeler Real Estate Investment
Trust, Inc.
Attention: Investor Relations
2529 Virginia Beach Blvd.
Virginia Beach, Virginia 23452
investorrelations@whlr.us |
A medallion guarantee stamp
will be required on the Holder Redemption Notice that is mailed to the Agent. A medallion guarantee stamp will not be required on the
copy of the Holder Redemption Notice that is mailed or e-mailed to the Company.
| ● | Conversion
of the Series D Preferred Stock may be effected at the option of a Series
D Preferred Holder by delivering shares of the Series D Preferred Stock, together with written
notice of conversion and other required documentation, to the Agent. Each conversion will be deemed to have been effected on the
date immediately following the next Dividend Record Date after which written notice of conversion and other required documentation will
have been surrendered and notice will have been received by the Company. |
We will pay all customary
fees and expenses of the Agent related to the Redemption and Conversion. We estimate that our total expenses in connection with the Redemption
and Conversion will be approximately $460,000.
The foregoing summary
of the Redemption and Conversion terms of the Series D Articles Supplementary does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the Series D Articles Supplementary, a copy of which is attached as Exhibit 3.2 to the Registration
Statement of which this Prospectus is a part and is incorporated by reference herein.
MATERIAL U.S. FEDERAL INCOME
TAX CONSIDERATIONS
The following is a summary of the material U.S.
federal income tax consequences related to (i) the Redemption or Conversion of Series D Preferred
Stock for Common Stock and (ii) the ownership and disposition of Common Stock acquired pursuant to a Redemption or Conversion of Series
D Preferred Stock. This discussion applies only to holders that hold Series D Preferred Stock or Common Stock, as applicable, as capital
assets for U.S. federal income tax purposes. For purposes of this section under the heading “Material U.S. Federal Income
Tax Considerations,” references to the “Company,” “we,” “our” and “us” mean only
Wheeler Real Estate Investment Trust, Inc. and not its subsidiaries or other lower-tier entities, except as otherwise required by the
context. However, our subsidiary, Cedar, like the Company, has also elected to be taxed as a REIT. To the extent that the discussion below
relates to the tax requirements for, and consequences of, qualifying as a REIT, it also applies to Cedar’s election to be taxed
as a REIT.
This discussion does not describe all of the tax
consequences that may be relevant to you in light of your particular circumstances, including the alternative minimum tax, the Medicare
tax on certain investment income, the tax consequences to accrual-method taxpayers who are required under Section 451(b) of Code
to recognize income for U.S. federal income tax purposes no later than when such income is taken into account in applicable financial
statements and the different consequences that may apply if you are subject to special rules that apply to certain types of investors,
such as:
| ● | banks,
financial institutions or financial services entities; |
| ● | subchapter
S corporations; |
| ● | governments
or agencies or instrumentalities thereof; |
| ● | regulated
investment companies and other REITs; |
| ● | U.S.
expatriates or former long-term residents of the United States; |
| ● | taxpayers
subject to mark-to-market tax accounting rules; |
| ● | tax-exempt
organizations, except to the extent discussed below under “—Federal Income Tax Considerations of the Ownership and Disposition
of our Common Stock—U.S. Federal Income Tax Considerations to Tax Exempt Holders of the Ownership and Disposition of Common Stock”; |
| ● | passive
foreign investment companies or controlled foreign corporations; |
| ● | persons
who are not citizens or residents of the United States (except to the limited extent discussed below); |
| ● | persons
holding our securities as part of a “straddle,” hedge, integrated transaction or similar transaction; |
| ● | investors
that have a principal place of business or “tax home” outside the United States; |
| ● | investors
whose functional currency is not the United States dollar; and |
| ● | persons
who receive our securities through the exercise of employee stock options or otherwise as compensation. |
This discussion also does not generally consider
the tax treatment of entities or arrangements treated as partnerships or other pass-through entities for U.S. federal income tax purposes
or persons who hold our Series D Preferred Stock or Common Stock through such entities or arrangements. If a partnership (or other entity
or arrangement treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Series D Preferred Stock
or Common Stock, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner
and the activities of the partner and the partnership. If you are a partner of a partnership holding our Series D Preferred Stock or Common
Stock, we urge you to consult your tax advisor.
When we use the term “U.S. Holder,”
we mean a beneficial owner of shares of our Series D Preferred Stock or Common Stock, as applicable who, for U.S. federal income tax purposes,
is:
| ● | an
individual who is a citizen or resident of the United States; |
| ● | a
corporation, including an entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the
laws of the United States or of any state thereof or the District of Columbia; |
| ● | an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| ● | a
trust (other than a trust treated as owned by its grantor under the provisions of subchapter J of the Code) if (1) a U.S. court is able
to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control
all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. |
When we use the term “Non-U.S. Holder,”
we mean a beneficial owner of shares of our Series D Preferred Stock or Common Stock, as applicable who, for U.S. federal income tax purposes,
is neither a U.S. Holder nor a partnership or other pass-through entity for U.S. federal income tax purposes.
This discussion is based on the Code, administrative
pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations as of the date of this Prospectus, changes to
any of which subsequent to the date of this Prospectus may affect the tax consequences described herein. This discussion does not address
any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).
We have not sought, and do not expect to seek,
a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein,
and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative
rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
We urge you to consult your own tax advisor regarding
the specific tax consequences to you of redeeming or converting Series D Preferred Stock for Common Stock, and owning and disposing of
the Common Stock acquired pursuant to a Redemption or Conversion of Series D Preferred Stock,
and of both our election and Cedar’s election to be taxed as a REIT. Specifically, we urge you to consult your own tax advisor regarding
the federal, state, local, foreign, and other tax consequences of such ownership and election and regarding potential changes in applicable
tax laws.
Taxation of Our Company
General
The Company and Cedar have each elected to be
taxed as a REIT under Sections 856 through 860 of the Code commencing with their taxable years ended December 31, 2012 and December
31, 2017, respectively. We believe that both the Company and Cedar have been organized and have been operated in a manner that has allowed
each of them to qualify for taxation as a REIT under the Code commencing with taxable years ended December 31, 2012 and December
31, 2017, respectively, and each of the Company and Cedar intend to conduct operations as to qualify as a REIT in the future.
Provided that the Company continues to qualify
for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is
currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results
from investment in a “C corporation.” A “C corporation” is a corporation that generally is required to pay tax
at the corporate level. Double taxation means taxation once at the corporate level when income is earned and once again at the stockholder
level when the income is distributed. We will, however, be required to pay U.S. federal income tax as follows:
| ● | First,
we will be required to pay tax at regular corporate rates on taxable income, including net
capital gain, that we do not distribute to our stockholders during, or within a specified
time period after, the calendar year in which the income is earned. |
| ● | Second,
if we have (1) net income from the sale or other disposition of “foreclosure property” held primarily for sale to customers
in the ordinary course of business or (2) other nonqualifying income from foreclosure property, we will be required to pay tax at
the highest corporate rate on this income. To the extent that income from foreclosure property is otherwise qualifying income for purposes
of the 75% gross income test described under “Taxation of Our Company —Income Tests” on page 53, this tax is
not applicable. |
| ● | Third, if we fail to satisfy the 75% gross
income test or the 95% gross income test, each as described under “Taxation of Our Company —Income Tests”
on page 53 and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on (1) the
gross income attributable to the greater of the amount by which we fail the 75% and 95% gross income tests, multiplied by (2) a
fraction intended to reflect our profitability. |
| ● | Fourth,
we will be required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales
or other taxable dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course
of business. |
| ● | Fifth,
if we fail to satisfy any of the asset tests (other than a de minimis failure of the 5% asset test, the 10% value test, or the 10% vote
test), as described under “Taxation of Our Company—Asset Tests” on page 55, due to reasonable cause and not
due to willful neglect, and we nonetheless maintain our REIT qualification because of specified cure provisions, we will be required
to pay a tax equal to the greater of $50,000 and the highest corporate tax rate multiplied by the net income generated by the nonqualifying
assets that caused us to fail such test. |
| ● | Sixth,
if we fail to satisfy any provision of the Code that would result in our failure to qualify as a REIT (other than a violation of the
gross income tests or certain violations of the asset tests, as described below) and the violation is due to reasonable cause and not
due to willful neglect, we may retain our REIT qualification but we will be required to pay a penalty of $50,000 for each such failure. |
| ● | Seventh,
we will be required to pay a 4% excise tax to the extent we fail to distribute during each calendar year at least the sum of (1) 85%
of our ordinary income for the year, (2) 95% of our capital gain net income for the year, and (3) any undistributed taxable income from
prior periods. |
| ● | Eighth,
if we acquire any asset from a corporation that is or has been a C corporation in a transaction in which our basis in the asset is determined
by reference to the C corporation’s basis in the asset, and we subsequently recognize gain on the disposition of the asset during
the five-year period beginning on the date on which we acquired the asset, then we will be required to pay tax at the highest regular
corporate tax rate on this gain to the extent of the excess of (1) the fair market value of the asset over (2) our adjusted
basis in the asset, in each case determined as of the date on which we acquired the asset. The results described in this paragraph with
respect to the recognition of gain assume that the C corporation will refrain from making an election to receive different treatment
under applicable Treasury Regulations on its tax return for the year in which we acquire the asset from the C corporation. |
| ● | Ninth,
any subsidiaries that are C corporations, including our Taxable REIT Subsidiaries (“TRSs”), such as Wheeler Real Estate LLC
(“Wheeler Real Estate”) and Wheeler Interests LLC (“Wheeler Interests”), generally will be required to pay U.S.
federal corporate income tax on their earnings. |
| ● | Tenth,
we will incur a 100% excise tax on certain transactions with a TRS that are not conducted on an arm’s-length basis and we will
incur such 100% excise tax if it is determined we have been undercharged for certain services provided by a TRS. |
| ● | Eleventh,
we may elect to retain and pay income tax on our net capital gain. In that case, a stockholder would include its proportionate share
of our undistributed net capital gain (to the extent we make a timely designation of such gain to the stockholder) in its income, would
be deemed to have paid the tax that we paid on such gain, and would be allowed a credit for its proportionate share of the tax
deemed to have been paid, and an adjustment would be made to increase the basis of the stockholder in our Common Stock. |
Requirements for Qualification as
a REIT. The Code defines a REIT as a corporation, trust or association:
| 1. | that is managed by one or more trustees or directors; |
| 2. | that issues transferable shares or transferable certificates
to evidence its beneficial ownership; |
| 3. | that would be taxable as a domestic corporation, but for Sections
856 through 860 of the Code; |
| 4. | that is not a financial institution or an insurance company
within the meaning of certain provisions of the Code; |
| 5. | that is beneficially owned by 100 or more persons; |
| 6. | not more than 50% in value of the outstanding stock of which
is owned, directly or indirectly, by five or fewer individuals, including certain specified entities, at any time during the last half
of each taxable year; |
| 7. | that meets other tests, described below, regarding the nature
of its income and assets and the amount of its distributions; and |
| 8. | that makes an election to be taxable as a REIT for the current
taxable year, or has made this election for a previous year, which election has not been revoked or terminated and satisfied all relevant
filing and other administrative requirements established by the IRS that must be met to maintain qualification as a REIT. |
The Code provides
that conditions (1) to (4), inclusive, must be met during the entire taxable year and that condition (5) must be met during
at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Conditions
(5) and (6) do not apply until after the first taxable year for which an election is made to be taxed as a REIT. For purposes of
condition (6), the term “individual” includes a supplemental unemployment compensation benefit plan, a private foundation
or a portion of a trust permanently set aside or used exclusively for charitable purposes, but generally does not include a qualified
pension plan or profit sharing trust.
To monitor compliance
with the stock ownership requirements, we generally are required to maintain records regarding the actual ownership of our stock. To do
so, we must demand written statements each year from the record holders of significant percentages of our stock pursuant to which the
record holders must disclose the actual owners of the stock (i.e., the persons required to include our dividends in their gross
income). We must maintain a list of those persons failing or refusing to comply with this demand as a part of our records. We could be
subject to monetary penalties if we fail to comply with these record-keeping requirements. If you fail or refuse to comply with the demands,
you will be required by Treasury Regulations to submit a statement with your tax return disclosing your actual ownership of our stock
and other information.
The Company believes
that it has been organized, has operated and has issued sufficient shares of Common Stock and preferred stock with sufficient diversity
of ownership to allow the Company to satisfy conditions (1) through (8), inclusive, during the relevant time periods. In addition,
our charter provides for restrictions regarding ownership and transfer of our shares that are intended to assist us in continuing to satisfy
the share ownership requirements described in (5) and (6) above. A description of the share ownership and transfer restrictions relating
to our stock is contained in the discussion in this Prospectus under the heading “Restrictions on Ownership and Transfer”.
These restrictions, however, may not ensure that we will, in all cases, be able to satisfy the share ownership requirements described
in (5) and (6) above. If we fail to satisfy these share ownership requirements, except as provided in the next sentence, our status
as a REIT will terminate. If, however, we comply with the rules contained in applicable Treasury Regulations that require us to ascertain
the actual ownership of our shares and we do not know, or would not have known through the exercise of reasonable diligence, that we failed
to meet the requirement described in condition (6) above, we will be treated as having met this requirement. See “Taxation
of Our Company—Failure to Qualify” on page 58.
In addition, we may
not maintain our status as a REIT unless our taxable year is the calendar year. We have used and intend to continue to use a calendar
taxable year.
The Inflation Reduction
Act, which was signed into law by President Biden on August 16, 2022, imposes a nondeductible one percent excise tax (the “Excise
Tax”) on certain stock repurchases by domestic public-traded companies taking place after December 31, 2022. Notably, the
Excise Tax does not apply to stock repurchases made by REITs. So long as we maintain our qualification as a REIT, the Excise Tax
should not apply to any repurchases of our common stock or preferred stock that occur on or after January 1, 2023.
Ownership of Interests
in Partnerships, Limited Liability Companies and Qualified REIT Subsidiaries. In the case of a REIT that is a partner in a partnership
or a member in a limited liability company treated as a partnership for U.S. federal income tax purposes, Treasury Regulations provide
that the REIT will be deemed to own its proportionate share of the assets of the partnership or limited liability company, as the case
may be, based on its interest in partnership capital, subject to special rules relating to the 10% value test described below. Also, the
REIT will be deemed to be entitled to its proportionate share of the income of that entity. The assets and gross income of the partnership
or limited liability company retain the same character in the hands of the REIT for purposes of Section 856 of the Code, including
satisfying the gross income tests and the asset tests.
Thus, our pro rata
share of the assets and items of income of our Operating Partnership, including our Operating Partnership’s share of these items
of any partnership or limited liability company treated as a partnership or disregarded entity for U.S. federal income tax purposes in
which it owns an interest, is treated as our assets and items of income for purposes of applying the requirements described in this discussion,
including the gross income and asset tests described below. A brief summary of the rules governing the U.S. federal income taxation of
partnerships and limited liability companies is set forth below in “—Tax Aspects of Our Operating Partnership, the Subsidiary
Partnerships and the Limited Liability Companies”.
We control our Operating
Partnership and its subsidiary partnerships and subsidiary limited liability companies and intend to continue to operate them in a manner
consistent with the requirements for our qualification as a REIT. If we become a limited partner or non-managing member in any
partnership or limited liability company and such entity takes or expects to take actions that could jeopardize our status as a REIT or
require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited
liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of
such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely
basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.
We may from time
to time own and operate certain properties through subsidiaries that we intend to be treated as “qualified REIT subsidiaries”
under the Code. A corporation will qualify as our qualified REIT subsidiary if we own 100% of the corporation’s outstanding stock
and do not elect with the subsidiary to treat it as a TRS, as described below. A qualified REIT subsidiary is not treated as a separate
corporation, and all assets, liabilities and items of income, gain, loss, deduction and credit of a qualified REIT subsidiary are treated
as assets, liabilities and items of income, gain, loss, deduction and credit of the parent REIT for all purposes under the Code, including
all REIT qualification tests. Thus, in applying the federal tax requirements described in this discussion, any qualified REIT subsidiaries
we own are ignored, and all assets, liabilities and items of income, gain, loss, deduction and credit of such corporations are treated
as our assets, liabilities and items of income, gain, loss, deduction and credit. A qualified REIT subsidiary is not subject to U.S. federal
income tax, and our ownership of the stock of a qualified REIT subsidiary will not violate the restrictions on ownership of securities,
as described under “Taxation of Our Company—Asset Tests” on page 55.
Ownership of Interests
in TRSs. We have three TRSs: Wheeler Real Estate, Wheeler Interests and Wheeler Development. Additionally, Cedar has two TRSs: Gold
Star Realty, Inc., and CIF Loyal Plaza Associates Corp. Wheeler Real Estate is a real estate leasing, management and administration firm.
Wheeler Interests is an acquisition and asset management firm. Wheeler Development is a development company that specializes in ground-up development,
redevelopment of mature centers, phase two developments for existing centers and build-to-suit projects for selecting tenants.
We may acquire securities in additional TRSs in the future. A TRS is a corporation other than a REIT or qualified REIT subsidiary in which
a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS. If a TRS owns more
than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be
treated as a TRS. Other than some activities relating to lodging and health care facilities as more fully described under “Taxation
of Our Company—Income Tests” beginning on page 53, a TRS may generally engage in any business, including the provision
of customary or noncustomary services to tenants of its parent REIT. A TRS is subject to U.S. federal, state and local income tax as a
regular C corporation. In addition, a TRS’s deductions may be disallowed for business interest expense (even if paid to third parties)
in excess of the sum of the TRS’s business interest income and 30% of the adjusted taxable income of the business, which is its
taxable income computed without regard to business interest income or expense, net operating losses or the pass-through income deduction
(and for taxable years before 2022, excludes depreciation and amortization). A REIT’s ownership of securities of a TRS is not subject
to the 5% asset test, the 10% value test, or the 10% vote test as described below. See “Taxation of Our Company—Asset Tests”
on page 55. Overall, no more than 20% (25% for taxable years ending on or before December 31, 2017) of the value of a REIT’s
assets may consist of stock or securities of one or more TRSs. Further, a 100% excise tax may apply to transactions between a TRS and
its parent REIT or the REIT’s tenants whose terms are not on an arm’s-length basis.
Ownership of Subsidiary
REITs. We recently acquired by merger with our wholly owned subsidiary 100% of the common stock of Cedar, a subsidiary REIT. Cedar
is treated as a separate entity for U.S. federal income tax purposes. We are not treated as owning the assets of Cedar or recognizing
the income of Cedar. Rather, Cedar is generally subject to U.S. federal income tax in the same manner as us and will be subject to the
same gross income tests, asset tests and other REIT qualification requirements and considerations as are applicable to us.
The stock of Cedar,
our subsidiary REIT, is a qualifying asset to us for the purpose of the 75% asset test so long as Cedar continues to qualify as a REIT
for U.S. federal income tax purposes. See “Taxation of Our Company—Asset Tests.” Dividends received by us from
Cedar are qualifying income to us for purposes of both the 75% and 95% gross income tests. See “Taxation of Our Company—Income
Tests.”
Income Tests
We must satisfy two
gross income requirements annually to maintain our qualification as a REIT. First, in each taxable year we must derive directly or indirectly
at least 75% of our gross income (excluding cancellation of indebtedness income and gross income from prohibited transactions, certain
hedging transactions, and certain foreign currency gains) from investments relating to real property or mortgages on real property, including
“rents from real property” and, in certain circumstances, interest, or certain types of temporary investments. Second, in
each taxable year we must derive at least 95% of our gross income (excluding cancellation of indebtedness income and gross income from
prohibited transactions, certain hedging transactions, and certain foreign currency gains) from the real property investments described
above or dividends, interest and gain from the sale or disposition of stock or securities, or any combination of the foregoing. For these
purposes, the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination
of all or some of the amount depends in any way on the net income or profits of any person. However, an amount received or accrued generally
will not be excluded from the term “interest” solely by reason of being based on a fixed percentage or percentages of gross
receipts or sales.
Although a debt instrument
issued by a “publicly offered REIT” (i.e., a REIT that is required to file annual and periodic reports with the SEC
under the 1934 Act) is treated as a “real estate asset” for the asset tests described below, the interest income and gain
from the sale of such a debt instrument is not treated as qualifying income for the 75% gross income test unless the debt instrument is
secured by real property or an interest in real property.
Rents we receive
from a tenant will qualify as “rents from real property” for the purpose of satisfying the gross income requirements for a
REIT described above only if all of the following conditions are met:
| ● | The
amount of rent is not based in any way on the net income or profits of any person. However, an amount we receive or accrue generally
will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages
of gross receipts or sales. Although some of our leases provide for payment of rent based in part on a fixed percentage of gross receipts,
none of our leases provide for rent that is based on the net income or profits of any person; |
| ● | Neither
we nor an actual or constructive owner of 10% or more of our stock actually or constructively owns 10% or more of the interests in the
assets or net profits of a non-corporate tenant, or, if the tenant is a corporation, 10% or more of the voting power or value
of all classes of stock of the tenant. Rents we receive from such a tenant that is a TRS of ours, however, will not be excluded from
the definition of “rents from real property” as a result of this condition if (1) at least 90% of the space at the property
to which the rents relate is leased to third parties, and the rents paid by the taxable REIT subsidiary are substantially comparable
to rents paid by our other tenants for comparable space, or (2) the property to which the rents relate is a qualified lodging facility
or qualified health care property and such property is operated on behalf of the TRS by a person who is an eligible independent contractor
and certain other requirements are met, as described below. Whether rents paid by a TRS are substantially comparable to rents paid by
other tenants is determined at the time the lease with the TRS is entered into, extended, and modified, if such modification increases
the rents due under such lease. |
Notwithstanding
the foregoing, however, if a lease with a “controlled taxable REIT subsidiary” is modified and such modification results
in an increase in the rents payable by such TRS, any such increase will not qualify as “rents from real property.” For purposes
of this rule, a “controlled taxable REIT subsidiary” is a TRS in which the parent REIT owns stock possessing more than 50%
of the voting power or more than 50% of the total value of the outstanding stock of such TRS;
| ● | Rent
attributable to personal property, leased in connection with a lease of real property, is not greater than 15% of the total rent received
under the lease. If this condition is not met, then the portion of the rent attributable to personal property will not qualify as “rents
from real property,” nor will such personal property qualify as a “real estate asset” for purposes of the REIT asset
tests described below. To the extent that rent attributable to personal property, leased in connection with a lease of real property,
exceeds 15% of the total rent received under the lease, we may transfer a portion of such personal property to a taxable REIT subsidiary; |
| ● | For
any obligation held by us that is secured by a mortgage on both real and personal property, the fair market value of personal property
securing such obligation is not greater than 15% of the total fair market value of all property securing such obligation. If this condition
is not met, then the portion of the rent attributable to personal property may not qualify as “rents from real property”
and such obligation will not qualify as a “real estate asset” for purposes of the REIT asset tests described below. To the
extent we hold an obligation for which the security consists of personal property the fair market value of which exceeds 15% of the total
fair market value of all property securing such obligation, we may transfer such obligation to a taxable REIT subsidiary; and |
| ● | We
generally must not operate or manage our real property or furnish or render noncustomary services to our tenants, other than through
an independent contractor who is adequately compensated and from whom we do not derive revenue. We may own up to 100% of the stock of
a TRS that may provide customary and noncustomary services directly to our tenants without tainting our rental income from the leased
property. Any amounts we receive from a TRS with respect to the TRS’s provision of noncustomary services will, however, be nonqualifying
income under the 75% gross income test and, except to the extent received through the payment of dividends, the 95% gross income test.
We need not provide services through an independent contractor or a TRS, but may instead provide the services directly to our tenants
if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and
are not otherwise considered “rendered to the occupant” of the property. In addition, we may provide a minimal amount of
services not described in prior sentence to the tenants of a property, other than through an independent contractor or a TRS, as long
as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our
income from the related property. If the total amount of impermissible tenant service income from a property does not exceed 1% of our
total income from the property, the services will not cause the rent paid by tenants of that property to fail to qualify as rents from
real property, but the impermissible tenant service income will not qualify as rents from real property. |
We generally do not intend, and as a general partner
of our Operating Partnership and as controlling shareholder of Cedar, do not intend to permit our Operating Partnership or Cedar, as the
case may be, to take actions we believe will cause us to fail to satisfy the rental conditions described above.
From time to time, we may enter into hedging transactions
with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps,
and floors, options to purchase these items, and futures and forward contracts. Income from a hedging transaction, including gain from
the sale or disposition of such a transaction, that is clearly identified as a hedging transaction as specified in the Code will not constitute
gross income and thus will be exempt from the 75% and 95% gross income tests. The term “hedging transaction,” as used above,
generally means any transaction we enter into in the normal course of our business primarily (1) to manage risk of interest rate
changes or fluctuations with respect to borrowings made or to be made by us to acquire or carry real estate assets, (2) to manage
risk of currency fluctuations with respect to an item of qualifying income under the 75% or 95% gross income test, or (3) to “offset”
a transaction described in (1) or (2) if a portion of the hedged indebtedness is extinguished or the related property is disposed
of. To the extent that we do not properly identify such transactions as hedges or we hedge with other types of financial instruments,
the income from those transactions is not likely to be treated as qualifying income for purposes of the gross income tests. We intend
to structure any hedging transactions in a manner that does not jeopardize our status as a REIT.
Any dividends received from a REIT, including
dividends derived by the Company from Cedar if Cedar qualifies as a REIT, will be qualifying income in the Company’s hands for purposes
of both the 95% and 75% income tests.
To the extent our TRSs pay dividends, we generally
will derive our allocable share of such dividend income through our interest in our Operating Partnership. Such dividend income will qualify
under the 95%, but not the 75%, gross income test.
We will monitor the amount of the dividend and
other income from our TRSs and will take actions intended to keep this income, and any other nonqualifying income, within the limitations
of the gross income tests. Although we expect these actions will be sufficient to prevent a violation of the gross income tests, we cannot
guarantee that such actions will in all cases prevent such a violation.
If we fail to satisfy one or both of the 75% or
95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for the year if we are entitled to relief under certain
provisions of the Code. We generally may make use of the relief provisions if:
| ● | following
our identification of the failure to meet the 75% or 95% gross income tests for any taxable year, we file a schedule with the IRS setting
forth each item of our gross income for purposes of the 75% or 95% gross income tests for such taxable year in accordance with Treasury
Regulations; and |
| ● | our
failure to meet these tests was due to reasonable cause and not due to willful neglect. |
If Cedar were to fail to satisfy one or both of
the 75% or 95% gross income tests for any taxable year, Cedar would be similarly entitled to these relief provisions.
It is not possible, however, to predict whether
in all circumstances we would be entitled to the benefit of these relief provisions, or if Cedar would be entitled to the benefit of these
relief provisions if it failed to satisfy one of the gross income tests. For example, if we fail to satisfy the gross income tests because
nonqualifying income that we intentionally accrue or receive exceeds the limits on nonqualifying income, the IRS could conclude that our
failure to satisfy the tests was not due to reasonable cause. If these relief provisions do not apply to a particular set of circumstances,
we will not qualify as a REIT. As discussed in Taxation of Our Company—General” on page 49, even if these relief provisions
apply, and we retain our status as a REIT, a tax would be imposed with respect to our nonqualifying income. A similar tax would be imposed
on Cedar’s nonqualifying income if the relief provisions apply to Cedar. We may not always be able to comply with the gross income
tests for REIT qualification despite periodic monitoring of our income and Cedar’s income.
Prohibited Transaction Income. Any gain
that we realize on the sale of property held as inventory or otherwise held primarily for sale to customers in the ordinary course of
business, including our share of any such gain realized by our Operating Partnership, either directly or through its subsidiary partnerships
and limited liability companies, will be treated as income from a prohibited transaction that is subject to a 100% penalty tax, unless
certain safe harbor exceptions apply. This prohibited transaction income will be disregarded for purposes of the gross income tests. Under
existing law, whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is
a question of fact that depends on all the facts and circumstances surrounding the particular transaction. Our Operating Partnership intends
to hold its properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning
its properties and to make occasional sales of the properties as are consistent with our Operating Partnership’s investment objectives.
We do not intend to enter into any sales that are prohibited transactions. However, the IRS may successfully contend that some or all
of the sales made by our Operating Partnership or its subsidiary partnerships or limited liability companies are prohibited transactions.
We would be required to pay the 100% penalty tax on our allocable share of the gains resulting from any such sales. The 100% penalty tax
also would apply to Cedar if it were deemed to have income from a prohibited transaction.
Asset Tests.
At the close of each calendar quarter of our taxable
year, we must also satisfy several tests relating to the nature and diversification of our assets. Our investment in Cedar is a qualifying
asset because Cedar qualifies as a REIT. Cedar therefore must separately satisfy these same tests to continue to qualify as a REIT.
First, at least 75% of the value of our total
assets must be represented by real estate assets, cash, cash items and government securities. For purposes of this test, the term “real
estate assets” generally means real property (including interests in real property, interests in mortgages on real property, and
personal property to the extent such personal property is leased in connection with real property and rents attributable to such personal
property are treated as “rents from real property” as discussed above), debt instruments issued by “publicly offered
REITs,” and shares (or transferable certificates of beneficial interest) in other REITs, as well as any stock or debt instrument
attributable to the investment of the proceeds of a stock offering or a public offering of debt with a term of at least five years, but
only for the one-year period beginning on the date the REIT receives such proceeds.
Second, not more than 25% of the value of our
total assets may be represented by securities, other than those securities includable in the 75% asset test.
Third, not more than 25% of the value of our total
assets may include certain debt issued by publicly traded REITs.
Fourth, of the investments included in the 25%
asset class, and except for investments in other REITs, any qualified REIT subsidiaries and TRSs, the value of any one issuer’s
securities may not exceed 5% of the value of our total assets (the “5% asset test”), we may not own more than 10%, by value,
of any one issuer’s outstanding securities (the “10% value test”) and we may not own more than 10% of the voting power
of any one issuer (the “10% vote test”). Although the Company owns 100% of the common stock of Cedar, the Company’s
ownership of Cedar is not subject to the 5% asset test, 10% value test, and 10% vote test so long as Cedar continues to qualify as a REIT
for U.S. federal income tax purposes. Certain types of securities we may own are disregarded as securities solely for purposes of the
10% value test, including, but not limited to, “straight debt,” securities issued by a partnership that itself would satisfy
the 75% income test if it were a REIT, any loan to an individual or an estate, any obligation to pay rents from real property and securities
issued by certain governments and government instrumentalities. In addition, solely for purposes of the 10% value test, the determination
of our interest in the assets of a partnership or limited liability company taxable as a partnership in which we own an interest will
be based on our proportionate interest in any securities issued by the partnership or limited liability company, excluding for this purpose
certain securities described in the Code.
Fifth, not more than 20% (25% for taxable years
ending on or before December 31, 2017) of the value of our total assets may be represented by the securities of one or more TRSs. Our
Operating Partnership currently owns three TRSs, and we may acquire securities in other TRSs in the future. So long as each of these companies
qualifies as a TRS, we will not be subject to the 5% asset test, the 10% value test, or the 10% vote test with respect to our ownership
of their securities. We intend that the aggregate value of our TRSs will not exceed 20% of the aggregate value of our gross assets.
The Company believes that its assets have allowed
the Company to comply with the foregoing asset tests and intends to monitor compliance on an ongoing basis. Similarly, the Company believes
that Cedar’s assets have allowed Cedar to comply with the asset tests such that it continues to qualify as a REIT and an asset that
is permissible for us to hold under the asset tests. However, independent appraisals have not been obtained to support the Company’s
conclusions as to the value of its assets or Cedar’s assets. Moreover, values of some assets may not be susceptible to a precise
determination, and values are subject to change in the future. Accordingly, there can be no assurance that the IRS will not disagree with
the Company’s determinations of value. If the IRS were to disagree with our determination of the value of certain of our assets,
we could fail one or more of the foregoing asset tests, which could cause us to fail to qualify as a REIT unless we satisfied one of the
cure provisions described below. Furthermore, if Cedar were to fail to qualify as a REIT for U.S. federal income tax purposes, the Company’s
ownership of Cedar may fail one or more of the 5% asset test, 10% value test and 10% vote test causing the Company to cease to qualify
as a REIT unless we satisfied one of the cure provisions described below or, if Cedar’s failure to qualify as a REIT were due to
its failure to satisfy one or more of such tests, if Cedar satisfied one of the cure provisions described below.
If we fail to satisfy an asset test because we
acquire nonqualifying securities or other property during a quarter, we may cure this failure by disposing of sufficient nonqualifying
assets within 30 days after the close of that quarter. The Company believes that it has maintained and intends to maintain adequate records
of the value of our assets to ensure compliance with the asset tests. If the Company fails to cure any noncompliance with the asset tests
within the 30-day cure period, the Company would cease to qualify as a REIT unless the Company is eligible for certain relief
provisions discussed below. Furthermore, if Cedar were to fail to qualify as a REIT for U.S. federal income tax purposes, the Company’s
ownership of Cedar may fail one or more of the 5% asset test, 10% value test, and 10% vote test causing the Company to cease to qualify
as a REIT unless we satisfied one of the cure provisions described below.
Certain relief provisions may be available to
us if we discover a failure to satisfy the asset tests described above after the 30-day cure period. The same relief provisions
are available to Cedar if we discover that Cedar failed to satisfy the asset tests described above after the 30-day cure period. Under
these provisions, we will be deemed to have met the 5% asset test, the 10% value test, and the 10% vote test if the value of our nonqualifying
assets (1) does not exceed the lesser of (a) 1% of the total value of our assets at the end of the applicable quarter or (b) $10,000,000,
and (2) we dispose of the nonqualifying assets or otherwise satisfy such tests within (a) six months after the last day of the
quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury Regulations
to be issued. For violations of any of the asset tests due to reasonable cause and not due to willful neglect and that are, in the case
of the 5% asset test, the 10% value test, and the 10% vote test, in excess of the de minimis exception described above, we may avoid disqualification
as a REIT after the 30-day cure period by taking steps including (1) the disposition of sufficient nonqualifying assets,
or the taking of other actions, which allow us to meet the asset tests within (a) six months after the last day of the quarter in
which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury Regulations to be issued,
(2) paying a tax equal to the greater of (a) $50,000 or (b) the highest corporate tax rate multiplied by the net income generated
by the nonqualifying assets, and (3) disclosing certain information to the IRS.
Although the Company believes it has satisfied
the asset tests described above and plans to take steps to ensure that it satisfies such tests at the close of each calendar quarter,
there can be no assurance that the Company will always be successful, or will not require a reduction in the Operating Partnership’s
overall interest in an issuer (including in the Company’s TRSs) or in the Company’s interest in Cedar. If the Company fails
to cure any noncompliance with the asset tests in a timely manner, or if Cedar fails to cure any noncompliance with the asset tests, and
the relief provisions described above are not available, the Company would cease to qualify as a REIT.
Annual Distribution Requirements
To maintain our qualification as a REIT, we are
required to distribute dividends, other than capital gain dividends, to our stockholders in an amount at least equal to the sum of:
| ● | 90%
of our “REIT taxable income”; and |
| ● | 90%
of our after-tax net income, if any, from foreclosure property; minus |
| ● | the
excess of the sum of certain items of non-cash income over 5% of our “REIT taxable income.” |
For these purposes, our “REIT taxable income”
is computed without regard to the dividends paid deduction and our net capital gain. In addition, for purposes of this test, non-cash income
means income attributable to leveled stepped rents, original issue discount, cancellation of indebtedness, or a like-kind exchange that
is later determined to be taxable.
In addition, if we dispose of any asset we acquired
from a corporation which is or has been a C corporation in a transaction in which our basis in the asset is determined by reference to
the basis of the asset in the hands of that C corporation, within the five-year period following our acquisition of such asset, we would
be required to distribute at least 90% of the after-tax gain, if any, we recognized on the disposition of the asset, to the
extent that gain does not exceed the excess of (a) the fair market value of the asset over (b) our adjusted basis in the asset,
in each case, on the date we acquired the asset.
We generally must pay, or be treated as paying,
the distributions described above in the taxable year to which they relate. At our election, a distribution will be treated as paid in
a taxable year if it is declared before we timely file our tax return for such year and paid on or before the first regular dividend payment
after such declaration, provided such payment is made during the 12-month period following the close of such year. These distributions
are treated as received by our stockholders in the year in which paid. This is so even though these distributions relate to the prior
year for purposes of the 90% distribution requirement.
A special rule provides that for a distribution
to be taken into account for purposes of the distribution requirement, the amount distributed must not have been preferential—i.e.,
every stockholder of the class of stock to which a distribution is made must have been treated the same as every other stockholder of
that class, and no class of stock may have been treated other than according to its dividend rights as a class. This preferential dividend
rule, however, does not apply to “publicly offered REITs.” Accordingly, so long as we qualify as a “publicly offered
REIT,” this preferential dividend rule will not apply to us.
To the extent that we do not distribute all of
our net capital gain, or distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be
required to pay tax on the undistributed amount at regular corporate tax rates. We believe that we will make timely distributions sufficient
to satisfy these annual distribution requirements and to minimize our corporate tax obligations. In this regard, the limited partnership
agreement of our Operating Partnership, or the Partnership Agreement, authorizes us, as general partner of our Operating Partnership,
to take such steps as may be necessary to cause our Operating Partnership to distribute to its partners an amount sufficient to permit
us to meet these distribution requirements and to minimize our corporate tax obligation.
The annual distribution requirements discussed
above also apply to Cedar. We believe that Cedar has made and will continue to make timely distributions sufficient to similarly satisfy
these annual distribution requirements.
Under some circumstances, we may be able to rectify
an inadvertent failure to meet the 90% distribution requirement for a year by paying “deficiency dividends” to our stockholders
in a later year, which may be included in our deduction for dividends paid for the earlier year. Thus, we may be able to avoid being taxed
on amounts distributed as deficiency dividends, subject to the 4% excise tax described below. However, we will be required to pay interest
to the IRS based upon the amount of any deduction claimed for deficiency dividends. Cedar may similarly rectify an inadvertent failure
to meet the distribution requirement for any year.
Furthermore, we will be required to pay a 4% excise
tax to the extent we fail to distribute during each calendar year at least the sum of 85% of our ordinary income for such year, 95% of
our capital gain net income for the year and any undistributed taxable income from prior periods. Any ordinary income and net capital
gain on which this excise tax is imposed for any year is treated as an amount distributed during that year for purposes of calculating
such tax. For purposes of the 90% distribution requirement and excise tax described above, dividends declared during the last three months
of the taxable year, payable to stockholders of record on a specified date during such period and paid during January of the following
year, will be treated as paid by us and received by our stockholders on December 31 of the year in which they are declared. The same
excise tax applies to any failure by Cedar to make its similarly required distributions.
Like-Kind Exchanges
We may dispose of properties in transactions intended
to qualify as like-kind exchanges under the Code. Such like-kind exchanges are intended to result in the deferral of gain for U.S. federal
income tax purposes. The failure of any such transaction to qualify as a like-kind exchange could require us to pay U.S. federal income
tax, possibly including the 100% prohibited transaction tax, depending on the facts and circumstances surrounding the particular transaction.
Moreover, the Biden Administration has proposed to end the deferral of gain recognized in like-kind exchanges in excess of $500,000 in
any taxable year. The proposal, if enacted, could limit or restrict our ability to engage in like-kind exchanges.
Failure to Qualify
If we discover a violation of a provision of the
Code that would result in our failure to qualify as a REIT, certain specified cure provisions may be available to us. Except with respect
to violations of the gross income tests and asset tests (for which the cure provisions are described above), and provided the violation
is due to reasonable cause and not due to willful neglect, these cure provisions generally impose a $50,000 penalty for each violation
in lieu of a loss of REIT status. If we fail to satisfy the requirements for taxation as a REIT in any taxable year, and the relief provisions
do not apply, we will be required to pay tax, including any applicable alternative minimum tax, on our taxable income at regular corporate
rates. Distributions to stockholders in any year in which we fail to qualify as a REIT will not be deductible by us, and we will not be
required to distribute any amounts to our stockholders. As a result, we anticipate that our failure to qualify as a REIT would reduce
the cash available for distribution by us to our stockholders. In addition, if we fail to qualify as a REIT, all distributions to stockholders
will be taxable as regular corporate dividends to the extent of our current and accumulated earnings and profits. In such event, corporate
distributees may be eligible for the dividends-received deduction. In addition, non-corporate stockholders, including individuals,
may be eligible for the preferential tax rates on qualified dividend income. Unless entitled to relief under specific statutory provisions,
we will also be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lost our qualification.
It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
Tax Aspects of Our Operating Partnership,
the Subsidiary Partnerships and the Limited Liability Companies
General. All of our investments, other
than our interests in Cedar, will be held indirectly through our Operating Partnership. In addition, our Operating Partnership may hold
certain of its investments indirectly through subsidiary partnerships and limited liability companies which we expect will be treated
as partnerships or disregarded entities for U.S. federal income tax purposes. In general, entities that are classified as partnerships
or disregarded entities for U.S. federal income tax purposes are “pass-through” entities that are not required to pay U.S.
federal income tax. Rather, partners or members of such entities are allocated their shares of the items of income, gain, loss, deduction
and credit of the partnership or limited liability company, and are potentially required to pay tax on this income, without regard to
whether they receive a distribution from the partnership or limited liability company. For taxable years beginning after December 31,
2017, however, the tax liability for adjustments to a partnership’s tax returns made as a result of an audit by the IRS will be
imposed on the partnership itself in certain circumstances absent an election to the contrary, if permitted under the circumstances.
We will include in our income our share of these
partnership and limited liability company items for purposes of the various gross income tests, the computation of our REIT taxable income,
and the REIT distribution requirements. Moreover, for purposes of the asset tests (other than the 10% value test), we will include our
pro rata share of assets held by our Operating Partnership, including its share of its subsidiary partnerships and limited liability companies,
based on our capital interests in each such entity. See “Taxation of Our Company—Asset Tests” on page 55.
Entity Classification. Our interests in
our Operating Partnership and any subsidiary partnerships and limited liability companies involve special tax considerations, including
the possibility that the IRS might challenge the status of these entities as partnerships (or disregarded entities). For example, an entity
that would otherwise be classified as a partnership for U.S. federal income tax purposes may nonetheless be taxable as a corporation if
it is a “publicly traded partnership” and certain other requirements are met. A partnership or limited liability company would
be treated as a publicly traded partnership if its interests are traded on an established securities market or are readily tradable on
a secondary market or a substantial equivalent thereof, within the meaning of applicable Treasury Regulations. Interests in a partnership
are not treated as readily tradable on a secondary market, or the substantial equivalent thereof, if all interests in the partnership
were issued in one or more transactions that were not required to be registered under the Securities Act of 1933, as amended (“Securities
Act”), and the partnership does not have more than 100 partners at any time during the taxable year of the partnership, taking into
account certain ownership attribution and anti-avoidance rules (the “100 Partner Safe Harbor”). Our Operating Partnership
may not qualify for the 100 Partner Safe Harbor. In the event that the 100 Partner Safe Harbor or certain other safe harbor provisions
of applicable Treasury Regulations are not available, our Operating Partnership could be classified as a publicly traded partnership.
If our Operating Partnership does not qualify
for the 100 Partner Safe Harbor, interests in our Operating Partnership may nonetheless be viewed as not readily tradable on a secondary
market or the substantial equivalent thereof if the sum of the percentage interests in capital or profits of our Operating Partnership
transferred during any taxable year of our Operating Partnership does not exceed 2% of the total interests in our Operating Partnership’s
capital or profits, subject to certain exceptions. For purpose of this 2% trading restriction, our interests in our Operating Partnership
are excluded from the determination of the percentage interests in capital or profits of our Operating Partnership. In addition, this
2% trading restriction does not apply to transfers by a limited partner in one or more transactions during any 30-day period
representing in the aggregate more than 2% of the total interests in our Operating Partnership’s capital or profits. We, as general
partner of our Operating Partnership, have the authority to take any steps we determine necessary or appropriate to prevent any trading
of interests in our Operating Partnership that would cause our Operating Partnership to become a publicly traded partnership, including
any steps necessary to ensure compliance with this 2% trading restriction.
We believe our Operating Partnership and each
of our other partnerships and limited liability companies will be classified as partnerships or disregarded entities for U.S. federal
income tax purposes, and we do not anticipate that our Operating Partnership or any subsidiary partnership or limited liability company
will be treated as a publicly traded partnership that is taxable as a corporation.
If our Operating
Partnership or any of our other partnerships or limited liability companies were to be treated as a publicly traded partnership, it
would be taxable as a corporation unless it qualified for the statutory “90% qualifying income exception.” Under that
exception, a publicly traded partnership is not subject to corporate-level tax if 90% or more of its gross income consists of
dividends, interest, “rents from real property” (as that term is defined for purposes of the rules applicable to REITs,
with certain modifications), gain from the sale or other disposition of real property, and certain other types of qualifying income.
However, if any such entity did not qualify for this exception or was otherwise taxable as a corporation, it would be required to
pay an entity-level tax on its income. In this situation, the character of our assets and items of gross income would change and
could prevent us from satisfying the REIT asset tests and possibly the REIT income tests. See “Taxation of Our
Company—Asset Tests” beginning on page 55 and “Taxation of Our Company—Income Tests”
beginning on page 53. This, in turn, could prevent us from qualifying as a REIT. See “Taxation of Our
Company—Failure to Qualify” beginning on page 58 for a discussion of the effect of our failure to meet these
tests. In addition, a change in the tax status of our Operating Partnership or a subsidiary partnership or limited liability company
might be treated as a taxable event. If so, we might incur a tax liability without any related cash payment.
Allocations of Income, Gain, Loss and Deduction.
The Partnership Agreement generally provides that allocations of net income to holders of common units generally will be made proportionately
to all such holders in respect of such units. Certain limited partners will have the opportunity to guarantee debt of our Operating Partnership,
either directly or indirectly through an agreement to make capital contributions to our Operating Partnership under limited circumstances.
As a result of these guaranties or contribution agreements, and notwithstanding the foregoing discussion of allocations of income and
loss of our Operating Partnership to holders of units, such limited partners could under limited circumstances be allocated a disproportionate
amount of net loss upon a liquidation of our Operating Partnership, which net loss would have otherwise been allocable to us. If an allocation
of partnership income or loss does not comply with the requirements of Section 704(b) of the Code and the Treasury Regulations thereunder,
the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership. This reallocation
will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with
respect to such item. Our Operating Partnership’s allocations of taxable income and loss are intended to comply with the requirements
of Section 704(b) of the Code and the Treasury Regulations thereunder.
Tax Allocations With Respect to the Properties.
Under Section 704(c) of the Code, income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed
to a partnership in exchange for an interest in the partnership must be allocated in a manner so that the contributing partner is charged
with the unrealized gain or benefits from the unrealized loss associated with the property at the time of the contribution. The amount
of the unrealized gain or unrealized loss generally is equal to the difference between the fair market value or book value and the adjusted
tax basis of the contributed property at the time of contribution, as adjusted from time to time. These allocations are solely for U.S.
federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners.
Our Operating Partnership may, from time to time,
acquire interests in property in exchange for interests in our Operating Partnership. In that case, the tax basis of these property interests
generally carries over to the Operating Partnership, notwithstanding their different book (i.e., fair market) value (this difference
is referred to as a book-tax difference). The Partnership Agreement requires that income and loss allocations with respect to
these properties be made in a manner consistent with Section 704(c) of the Code. Treasury Regulations issued under Section 704(c)
of the Code provide partnerships with a choice of several methods of accounting for book-tax differences. Depending on the method
we choose in connection with any particular contribution, the carryover basis of each of the contributed interests in the properties in
the hands of our Operating Partnership (1) could cause us to be allocated lower amounts of depreciation deductions for U.S. federal
income tax purposes than would be allocated to us if any of the contributed properties were to have a tax basis equal to its respective
fair market value at the time of the contribution and (2) could cause us to be allocated taxable gain in the event of a sale of such
contributed interests or properties in excess of the economic or book income allocated to us as a result of such sale, with a corresponding
benefit to the other partners in our Operating Partnership. An allocation described in clause (2) above might cause us or the other
partners to recognize taxable income in excess of cash proceeds in the event of a sale or other disposition of property, which might adversely
affect our ability to comply with the REIT distribution requirements. See “General—Requirements for Qualification as a
REIT” beginning on page 50 and “Annual Distribution Requirements” beginning on page 57.
Partnership Audit Rules. In certain situations,
a partnership itself must pay any “imputed underpayments,” consisting of delinquent taxes, interest and penalties deemed to
arise out of an audit of the partnership, unless certain alternative methods are available and the partnership elects to utilize them.
U.S. Federal Income Tax Considerations of Redemption
or Conversion of Series D Preferred Stock for Common Stock
The holders of our Series D Preferred Stock may
convert their shares of Series D Preferred Stock at any time into shares of Common Stock at a conversion price of $169.60
per share of Common Stock. Beginning on and after September 21, 2023, the holders of the Series D Preferred Stock may, instead, cause
the Company to redeem any or all of their shares of Series D Preferred Stock at a redemption price of $25.00 per share plus an amount
equal to all accrued and unpaid dividends, if any, through and including the redemption date. The redemption price is payable, at our
election, in cash, in Common Stock, or partly in Common Stock and partly in cash.
A Conversion of Series D Preferred Stock into
Common Stock or a Redemption of Series D Preferred Stock solely in exchange for Common Stock (in each case whether or not an isolated
transaction) is treated as a recapitalization, and therefore as a corporate reorganization, under Section 368(a)(1)(E) of the Code. Stockholders
generally will not recognize gain or loss upon the Redemption or Conversion of Series D Preferred
Stock entirely in exchange for our Common Stock. However, the lesser of (1) the amount by which the fair market value of the Common Stock
received in the Redemption or Conversion (determined immediately following the Redemption
or Conversion) exceeds the issue price of the Series D Preferred Stock, or (2) the amount of accumulated and unpaid dividends,
will be treated as a deemed distribution of property made by the Company. See “U.S. Federal Income Tax Considerations to U.S.
Holders of the Ownership and Disposition of our Common Stock —Distributions Generally” beginning on page 62 and “U.S.
Federal Income Tax Considerations to Non-U.S. Holders of the Ownership and Disposition of our Common Stock—Distributions Generally”
beginning on page 64.
If a stockholder’s
Series D Preferred Stock is redeemed and we elect to pay the redemption price partly in Common Stock and partly in cash, that stockholder
will realize gain or loss on the difference between (i) the sum of the cash and the fair market value of our Common Stock received and
(ii) the stockholder’s adjusted tax basis in the Series D Preferred Stock redeemed. Stockholders will not recognize any loss realized
on the Redemption. If a stockholder realizes gain on a Redemption, the stockholder will be required to recognize that gain in an amount
equal to the lesser of (a) the gain realized and (b) the amount of cash received, excluding cash attributable to a fractional share. Cash
received in lieu of fractional shares will be treated as described in the next paragraph. Additionally, as discussed in the previous paragraph,
the lesser of (1) the amount by which the fair market value of the Common Stock received in the Redemption (determined immediately following
the Redemption or Conversion) exceeds the issue price of the Series D Preferred Stock redeemed,
or (2) the amount of accumulated and unpaid dividends, will be treated as a deemed distribution of property made by the Company.
A stockholder’s aggregate
tax basis in our Common Stock received in a conversion or redemption of Series D Preferred Stock generally will equal the stockholder’s
adjusted tax basis in the converted or redeemed Series D Preferred Stock, increased by the amount of any income or gain recognized on
the Redemption, and reduced, but not below zero, by the portion of adjusted tax basis allocated to any fractional share exchanged for
cash. Cash received upon Redemption or Conversion in lieu of a fractional share generally
will be treated as a payment made in a taxable exchange for such fractional share, and gain or loss will be recognized on the receipt
of cash in an amount equal to the difference between the amount of cash received and the adjusted tax basis allocable to the fractional
share deemed exchanged. Any gain or loss recognized will generally be long-term capital gain or loss to a U.S. Holder if the U.S. Holder
has held the Series D Preferred Stock for more than one year at the time of Redemption or Conversion.
If any portion of a Redemption or Conversion of Series D Preferred Stock is treated as a
deemed distribution of property from the Company, then the rules applicable to distributions of property from the Company apply to in
determining the stockholder’s basis and holding period in the Common Stock received. See “U.S. Federal Income Tax Considerations
to U.S. Holders of the Ownership and Disposition of our Common Stock —Distributions Generally” beginning on page 62 and
“U.S. Federal Income Tax Considerations to Non-U.S. Holders of the Ownership and Disposition of our Common Stock—Distributions
Generally” beginning on page 64. When a stockholder converts or redeems blocs of Series D Preferred Stock acquired at different
times or where any portion of a Redemption or Conversion is treated as a deemed distribution
of property from the Company, the stockholder’s basis and holding period in Common Stock received in the Redemption
or Conversion will depend on the stockholder’s particular situation, and the stockholder should consult its own tax advisors
regarding the basis and holding period of the Common Stock.
The application of the U.S.
federal income tax laws to a Redemption or Conversion of Series D Preferred Stock is highly
complex and, in certain cases, unsettled. Stockholders are urged to consult with their own tax advisors regarding the U.S. federal income
tax consequences of any Redemption or Conversion of Series D Preferred Stock for Common Stock,
or any subsequent transaction by which such holder exchanges the Common Stock received on a Redemption
or Conversion of Series D Preferred Stock for cash or other property.
Federal Income Tax Considerations of the Ownership
and Disposition of our Common Stock
U.S. Federal Income Tax Considerations to
U.S. Holders of the Ownership and Disposition of our Common Stock
Distributions Generally.
Distributions of cash or other property (excluding,
in most cases, distributions of our own stock) out of our current or accumulated earnings and profits will be treated as dividends and,
other than with respect to capital gain dividends and certain amounts which have previously been subject to corporate level tax discussed
below, will be taxable to our taxable U.S. Holders as ordinary income when actually or constructively received. See “—Tax
Rates” below. For purposes of determining whether a distribution is made out of our current or accumulated earnings and profits,
our earnings and profits will be allocated first to our preferred stock dividends and then to our Common Stock dividends. As long as we
qualify as a REIT, these distributions will not be eligible for the dividends-received deduction in the case of U.S. Holders that are
corporations or, except to the extent provided in “—Tax Rates” below, the preferential rates on qualified dividend income
applicable to non-corporate U.S. Holders, including individuals. If a stockholder receives a distribution of property other than cash
from the Company, the stockholder’s initial federal income tax basis in that property generally will equal the property’s
fair market value on the date of the distribution and the stockholder’s holding period will begin on the day after the distribution.
To the extent that we make distributions of cash
or other property on our Common Stock in excess of our current and accumulated earnings and profits, these distributions will be treated
first as a tax-free return of capital to a U.S. Holder. This treatment will reduce the U.S. Holder’s adjusted tax basis in such
shares of stock by the amount of the distribution, but not below zero. Distributions in excess of our current and accumulated earnings
and profits and in excess of a U.S. Holder’s adjusted tax basis in its shares will be taxable as capital gain. Such gain will be
taxable as long-term capital gain if the shares have been held for more than one year. Dividends we declare in October, November, or December
of any year and which are payable to stockholders of record as of a specified date in any of these months, and that are actually paid
in January of the following year, will be treated as both paid by us and received by the stockholder on December 31 of the first year.
U.S. Holders may not include in their own income tax returns any of our net operating losses or capital losses. Certain stock dividends,
including dividends partially paid in our stock and partially paid in cash and any distributions of our common stock treated as a distribution
of property as discussed above in “U.S. Federal Income Tax Considerations of Redemption or Conversion of Series D Preferred Stock
for Common Stock,” will be treated the same as if paid in cash or other property.
Capital Gain Dividends.
Dividends that we properly designate as capital
gain dividends will be taxable to our U.S. Holders as a gain from the sale or disposition of a capital asset held for more than one year,
to the extent that such gain does not exceed our actual net capital gain for the taxable year. U.S. Holders that are corporations may,
however, be required to treat up to 20% of certain capital gain dividends as ordinary income.
Retention of Net Capital Gains.
We may elect to retain, rather than distribute
as a capital gain dividend, all or a portion of our net capital gains. If we make this election, we would pay tax on our retained net
capital gains. In addition, to the extent we so elect, our earnings and profits (determined for U.S. federal income tax purposes) would
be adjusted accordingly, and a U.S. Holder generally would:
| ● | include
its pro rata share of our undistributed net capital gains in computing its long-term capital gains in its return for its taxable year
in which the last day of our taxable year falls, subject to certain limitations as to the amount that is includable; |
| ● | be
deemed to have paid its share of the capital gains tax imposed on us on the designated amounts included in the U.S. Holder’s income
as long-term capital gain; |
| ● | receive
a credit or refund for the amount of tax deemed paid by it; |
| ● | increase
the adjusted basis of its stock by the difference between the amount of includable gains and the tax deemed to have been paid by it;
and |
| ● | in
the case of a U.S. Holder that is a corporation, appropriately adjust its earnings and profits for the retained capital gains
in accordance with Treasury Regulations to be promulgated by the IRS. |
Passive Activity Losses and Investment Interest
Limitations.
Distributions we make and gain arising from the
sale or exchange by a U.S. Holder of our shares will not be treated as passive activity income. As a result, U.S. Holders generally will
not be able to apply any “passive losses” against this income or gain. A U.S. Holder may elect to treat capital gain dividends,
capital gains from the disposition of our stock and income designated as qualified dividend income, described in “—Tax Rates”
below, as investment income for purposes of computing the investment interest limitation, but in such case, the stockholder will be taxed
at ordinary income rates on such amount. Other distributions made by us, to the extent they do not constitute a return of capital, generally
will be treated as investment income for purposes of computing the investment interest limitation.
Dispositions of our Common Stock.
If a U.S. Holder sells or disposes of shares of
our Common Stock, it will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the
amount of cash and the fair market value of any property received on the sale or other disposition and the holder’s adjusted basis
in the shares. This gain or loss, except as provided below, will be a long-term capital gain or loss if the holder has held such Common
Stock for more than one year. However, if a U.S. Holder recognizes a loss upon the sale or other disposition of Common Stock that it has
held for six months or less, after applying certain holding period rules, the loss recognized will be treated as a long-term capital loss
to the extent the U.S. Holder received distributions from us which were required to be treated as long-term capital gains.
Tax Rates.
The maximum tax rate for non-corporate taxpayers
for (1) capital gains, including certain “capital gain dividends,” is 20% (although depending on the characteristics of the
assets which produced these gains and on designations which we may make, certain capital gain dividends may be taxed at a 25% rate) and
(2) “qualified dividend income” is 20%. However, dividends payable by REITs are not eligible for the 20% tax rate on qualified
dividend income, except to the extent that certain holding requirements have been met and the REIT’s dividends are attributable
to dividends received from taxable corporations (such as its TRSs) or to income that was subject to tax at the corporate/REIT level (for
example, if it distributed taxable income that it retained and paid tax on in the prior taxable year) or to dividends properly designated
by the REIT as “capital gain dividends.” For taxable years beginning prior to 2026, individual stockholders are generally
allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us (but not for purposes of the 3.8% Medicare tax described
below), subject to certain complex limitations.
Medicare Tax on Unearned Income.
Certain U.S. Holders that are individuals, estates
or trusts will be required to pay an additional 3.8% Medicare tax on, among other things, dividends on and capital gains from the sale
or other disposition of our Common Stock. U.S. Holders should consult their tax advisors regarding the effect, if any, of this Medicare
tax on their ownership and disposition of our Common Stock.
U.S. Federal Income Tax Considerations to
Tax-Exempt Holders of the Ownership and Disposition of our Common Stock
U.S. tax-exempt entities, including qualified
employee pension and profit-sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation.
They are subject, however, to taxation on their unrelated business taxable income (“UBTI”). While many investments in real
estate generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute
UBTI. Based on that ruling, and provided that (1) an exempt employee pension trust has not held our common stock as “debt financed
property” within the meaning of the Code (that is, where the acquisition or holding of the property is financed through a borrowing
by the exempt employee pension trust) and (2) we do not, directly or through a partnership, hold REMIC residual interests or interests
in a taxable mortgage pool that give rise to “excess inclusion income,” dividend income from us and gain arising upon a sale
of our Common Stock generally should not be UBTI, to an exempt employee pension trust, except as described below.
For tax-exempt stockholders that are social clubs,
voluntary employee benefit associations, supplemental unemployment benefit trusts, or qualified group legal services plans exempt from
U.S. federal income taxation under Sections 501(c)(7), (c)(9), (c)(17) or (c)(20) of the Code, respectively, income from an investment
in our Common Stock will constitute UBTI unless the organization is able to properly claim a deduction for amounts set aside or placed
in reserve for specific purposes so as to offset the income generated by its investment in our shares. These prospective investors should
consult their tax advisors concerning these “set aside” and reserve requirements.
Notwithstanding the above, however, a portion
of the dividends paid by a “pension-held REIT” may be treated as UBTI as to certain trusts that hold more than 10%, by value,
of our stock. A REIT will not be a “pension-held REIT” if it is able to satisfy the “not closely held” requirement
without relying on the “look-through” exception with respect to certain trusts or if such REIT is not “predominantly
held” by “qualified trusts.” As a result of restrictions on ownership and transfer of our stock contained in our charter,
we do not expect to be classified as a “pension-held REIT,” and as a result, the tax treatment described above should be inapplicable
to our stockholders. However, because our stock will be publicly traded, we cannot guarantee that this will always be the case.
U.S. Federal Income Tax Considerations to
Non-U.S. Holders of the Ownership and Disposition of our Common Stock
The following discussion addresses the rules governing
U.S. federal income taxation of the purchase, ownership and disposition of our Common Stock by Non-U.S. Holders. These rules are complex,
and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects
of U.S. federal income taxation and does not address state, local or non-U.S. tax consequences that may be relevant to a Non-U.S. Holder
in light of its particular circumstances. We urge Non-U.S. Holders to consult their tax advisors to determine the impact of federal, state,
local and non-U.S. income tax laws on the purchase, ownership and disposition of shares of our Common Stock, including any reporting requirements.
Distributions Generally.
Distributions of cash or other property (including
certain stock dividends) that are neither attributable to gains from sales or exchanges by us of “United States real property interests”
(as defined below) nor designated by us as capital gain dividends (except as described below) will be treated as dividends of ordinary
income to the extent that they are made out of our current or accumulated earnings and profits. Such distributions ordinarily will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty,
unless the distributions are treated as effectively connected with the conduct by the Non-U.S. Holder of a U.S. trade or business. Under
certain treaties, however, lower withholding rates generally applicable to dividends do not apply to dividends from a REIT. Certain certification
and disclosure requirements must be satisfied for a Non-U.S. Holder to be exempt from withholding under the effectively connected income
exemption or to claim a lower withholding tax rate under an applicable tax treaty. Dividends that are treated as effectively connected
with a U.S. trade or business will generally not be subject to withholding but will be subject to U.S. federal income tax on a net basis
at graduated rates, in the same manner as dividends paid to U.S. Holders are subject to U.S. federal income tax. Any such dividends received
by a Non-U.S. Holder that is a corporation may also be subject to an additional branch profits tax at a 30% rate (applicable after deducting
U.S. federal income taxes paid on such effectively connected income) or such lower rate as may be specified by an applicable income tax
treaty.
Except as otherwise provided below, we expect
to withhold U.S. federal income tax at the rate of 30% on any distributions made to a Non-U.S. Holder unless:
| 1. | a lower treaty rate applies and the Non-U.S. Holder files
with us an IRS Form W-8BEN or W-8BEN-E evidencing eligibility for that reduced treaty rate; or |
| 2. | the Non-U.S. Holder files an IRS Form W-8ECI with us claiming
that the distribution is income effectively connected with the Non-U.S. Holder’s trade or business. |
Distributions in
excess of our current and accumulated earnings and profits will not be taxable to a Non-U.S. Holder to the extent that such distributions
do not exceed the adjusted basis of the stockholder’s Common Stock, but rather will reduce the adjusted basis of such stock, but
not below zero. To the extent that such distributions exceed the Non-U.S. Holder’s adjusted basis in such Common Stock, they will
give rise to gain from the sale or exchange of such Common Stock, the tax treatment of which is described below. For withholding purposes,
we expect to treat all distributions as made out of our current or accumulated earnings and profits. However, amounts withheld may be
refundable if it is subsequently determined that the distribution was, in fact, in excess of our current and accumulated earnings and
profits, provided that certain conditions are met.
Capital Gain Dividends
and Distributions Attributable to a Sale or Exchange of U.S. Real Property Interests.
Distributions to
a Non-U.S. Holder that we properly designate as capital gain dividends, other than those arising from the disposition of a USRPI, generally
should not be subject to U.S. federal income taxation, unless:
| 1. | the investment in our stock is treated as effectively connected
with the Non-U.S. Holder’s U.S. trade or business, in which case the Non-U.S. Holder will be subject to the same treatment as U.S.
Holders with respect to such gain, except that a Non-U.S. Holder that is a non-U.S. corporation may also be subject to a branch profits
tax of up to 30%, as discussed above; or |
| 2. | the Non-U.S. Holder is a nonresident alien individual who
is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the
nonresident alien individual will be subject to a 30% tax on the individual’s capital gains. |
Pursuant to FIRPTA,
distributions to a Non-U.S. Holder that are attributable to gain from sales or exchanges by us of USRPIs, whether or not designated as
capital gain dividends, will cause the Non-U.S. Holder to be treated as recognizing such gain as income effectively connected with a U.S.
trade or business. Non-U.S. Holders would generally be taxed at the same rates applicable to U.S. Holders, subject to any applicable alternative
minimum tax. We also will be required to withhold and to remit to the IRS 21% of any distribution to Non-U.S. Holders that is designated
as a capital gain dividend. The amount withheld is creditable against the Non-U.S. Holder’s U.S. federal income tax liability. However,
any distribution with respect to any class of stock that is “regularly traded” on an established securities market located
in the United States is not subject to FIRPTA, and therefore, not subject to the 21% withholding tax described above, if the Non-U.S.
Holder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of the distribution.
We believe our Common Stock is “regularly traded” on an established securities market in the United States. In addition, any
distribution to a Non-U.S. Holder that is a “qualified shareholder” or “qualified foreign pension fund” that holds
REIT stock directly or indirectly (through one or more partnerships), as discussed below, is not subject to FIRPTA. Instead, such distributions
will generally be treated as ordinary dividend distributions and subject to withholding in the manner described above with respect to
ordinary dividends.
A “qualified shareholder”
is a foreign person that (1) either is eligible for the benefits of a comprehensive income tax treaty which includes an exchange of information
program and whose principal class of interests is listed and regularly traded on one or more recognized stock exchanges (as defined in
such comprehensive income tax treaty), or is a foreign partnership that is created or organized under foreign law as a limited partnership
in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class
of limited partnership units representing greater than 50% of the value of all the partnership units that is regularly traded on the
NYSE or Nasdaq markets, (2) is a “qualified collective investment vehicle” (defined below), and (3) maintains records on
the identity of each person who, at any time during the foreign person’s taxable year, is the direct owner of 5% or more of the
class of interests or units (as applicable) described in (1), above. A “qualified collective investment vehicle” is a foreign
person that (1) would be eligible for a reduced rate of withholding under the comprehensive income tax treaty described above, even if
such entity holds more than 10% of the stock of such REIT, (2) is publicly traded, is treated as a partnership under the Code, is a withholding
foreign partnership, and would be treated as a USRPHC, if it were a domestic corporation, or (3) is designated as such by the Secretary
of the Treasury and is either (a) fiscally transparent within the meaning of Section 894 of the Code, or (b) required to include dividends
in its gross income, but is entitled to a deduction for distributions to its investors.
While a “qualified
shareholder” will not be subject to FIRPTA withholding on REIT distributions, certain investors of a “qualified shareholder”
(i.e., non-U.S. persons who hold interests in the “qualified shareholder” (other than interests solely as a creditor),
and hold more than 10% of the stock of such REIT (whether or not by reason of the investor’s ownership in the “qualified shareholder”))
may be subject to FIRPTA withholding.
A “qualified
foreign pension fund” includes any trust, corporation, or other organization or arrangement: (1) which is created or organized under
the law of a country other than the United States, (2) which is established to provide retirement or pension benefits to participants
or beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration
for services rendered, (3) which does not have a single participant or beneficiary with a right to more than 5% of its assets or income,
(4) which is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities
in the country in which it is established or operates, and (5) with respect to which, under the laws of the country in which it is established
or operates, contributions to such trust, corporation, organization or arrangement that would otherwise be subject to tax under such laws
are deductible or excluded from gross income of such entity or taxed at a reduced rate, or taxation of any investment income of such trust,
corporation, organization, or arrangement is deferred or such income is taxed at a reduced rate.
Retention of Net
Capital Gains.
Although the law
is not clear on the matter, it appears that amounts designated by us as retained net capital gains in respect of the stock held by stockholders
generally should be treated with respect to Non-U.S. Holders in the same manner as actual distributions of capital gain dividends. Under
that approach, the Non-U.S. Holders would be able to offset as a credit against their U.S. federal income tax liability resulting from
their proportionate share of the tax paid by us on such retained net capital gains and to receive from the IRS a refund to the extent
their proportionate share of such tax paid by us exceeds their actual U.S. federal income tax liability. If we were to designate any portion
of our net capital gain as retained net capital gain, a Non-U.S. Holder should consult its tax advisor regarding the taxation of such
retained net capital gain.
Sale of Common
Stock.
Gain recognized by
a Non-U.S. Holder upon the sale, exchange or other taxable disposition of our Common Stock generally will not be subject to U.S. federal
income taxation unless such stock constitutes a USRPI. In general, stock of a domestic corporation that constitutes a USRPHC will constitute
a USRPI. We expect that we will continue to be a USRPHC. Our Common Stock will not, however, constitute a USRPI so long as we are a “domestically
controlled qualified investment entity.” A “domestically controlled qualified investment entity” includes a REIT in
which at all times during a specified testing period less than 50% in value of its stock is held directly or indirectly by Non-U.S. Holders.
We believe, but cannot guarantee, that we are a “domestically controlled qualified investment entity.” Because our Common
Stock is publicly traded, no assurance can be given that we will continue to be a “domestically controlled qualified investment
entity.”
Notwithstanding the
foregoing, gain from the sale, exchange or other taxable disposition of our Common Stock not otherwise subject to FIRPTA will be taxable
to a Non-U.S. Holder if either (a) the investment in our Common Stock is treated as effectively connected with the Non-U.S. Holder’s
U.S. trade or business or (b) the Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or
more during the taxable year and certain other conditions are met. In addition, even if we are a domestically controlled qualified investment
entity, upon disposition of our Common Stock (subject to the 10% exception applicable to “regularly traded” stock and exceptions
for “qualified shareholders” and “qualified foreign pension funds” described herein), a Non-U.S. Holder may be
treated as having gain from the sale or other taxable disposition of a USRPI if (1) the Non-U.S. Holder disposes of the Common Stock within
a 30-day period preceding the ex-dividend date of a distribution, any portion of which, but for the disposition, would have been treated
as gain from the sale or exchange of a USRPI and (2) acquires, or enters into a contract or option to acquire, or is deemed to acquire,
other shares of that stock during the 61-day period beginning with the first day of the 30-day period described in clause (1).
Even if we do not
qualify as a “domestically controlled qualified investment entity” at the time a Non-U.S. Holder sells our Common Stock, gain
arising from the sale or other taxable disposition by a Non-U.S. Holder of our Common Stock would not be subject to U.S. federal income
taxation under FIRPTA as a sale of a USRPI if:
| ● | our Common Stock is “regularly traded,” as defined
by applicable Treasury Regulations, on an established securities market, such as Nasdaq; and |
| ● | such Non-U.S. Holder owned, actually and constructively, 10%
or less of our Common Stock throughout the five-year period ending on the date of the sale or exchange. |
In addition, a sale of our stock by a “qualified
shareholder” or a “qualified foreign pension fund” who holds such stock directly or indirectly (through one or more
partnerships) will not be subject to U.S. federal income tax under FIRPTA. As with distributions, however, certain investors of a “qualified
shareholder” (i.e., non-U.S. persons who hold interests in the “qualified shareholder” (other than interests
solely as a creditor), and hold more than 10% of the stock of such REIT (whether or not by reason of the investor’s ownership in
the “qualified shareholder”)) may be subject to FIRPTA withholding on a sale of our stock.
If gain on the sale, exchange or other taxable
disposition of our Common Stock were subject to taxation under FIRPTA, the Non-U.S. Holder would be subject to regular U.S. federal income
tax with respect to such gain in the same manner as a taxable U.S. Holder (subject to any applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals). In addition, if the sale, exchange or other taxable disposition
of our Common Stock were subject to taxation under FIRPTA, and if shares of our Common Stock were not “regularly traded” on
an established securities market, the purchaser of our Common Stock would generally be required to withhold and remit to the IRS 15% of
the purchase price. If amounts so withheld on a sale, exchange, or other taxable disposition of our Common Stock exceeds the Non-U.S.
Holder’s substantive tax liability resulting from such disposition, such excess may be refunded or credited against the Non-U.S.
Holder’s United States federal income tax liability, provided that the required information is provided to the IRS on a timely basis.
However, amounts withheld on any sale, exchange, or other taxable disposition of stock may not satisfy a Non-U.S. Holder’s entire
tax liability under FIRPTA, and such non-U.S. holder remains liable for the timely payment of any remaining tax liability. As noted above,
we believe our Common Stock is “regularly traded” on an established securities market.
Information Reporting and Backup Withholding
Dividends on our Common Stock, amounts treated
as dividends with respect to a Redemption or Conversion of Series D Preferred Stock for Common
Stock, and amounts treated as proceeds from the sale, exchange or redemption of Common Stock may be subject to information reporting to
the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to payments made to a U.S. Holder who furnishes
a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from backup withholding and
establishes such exempt status. Payments made to a Non-U.S. Holder generally will not be subject to backup withholding if the Non-U.S.
Holder provides certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise
establishing an exemption.
Backup withholding is not an additional tax. Amounts
withheld under the backup withholding rules may be credited against a holder’s U.S. federal income tax liability, and a holder generally
may obtain a refund of any excess amounts withheld by timely filing the appropriate claim for refund with the IRS and furnishing any required
information.
All holders should consult their tax advisors
regarding the application of information reporting and backup withholding to them.
FATCA Withholding Taxes
Sections 1471 through 1474 of the Code and the
Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as the “Foreign Account Tax Compliance
Act” or “FATCA”) generally impose withholding of 30% in certain circumstances on payments of dividends (including amounts
treated as dividends with respect to the exchange of Series D Preferred Stock for Common Stock pursuant to a Redemption
or Conversion) and, subject to the proposed Treasury Regulations discussed below, proceeds from sales or other disposition of our
securities paid to “foreign financial institutions” (which is broadly defined for this purpose and includes investment vehicles)
and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (relating to ownership by
U.S. persons of interests in or accounts with those entities) have been satisfied or an exemption applies (typically certified as to by
the delivery of a properly completed IRS Form W-8BEN-E). If FATCA withholding is imposed, a beneficial owner that is not a foreign financial
institution will be entitled to a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant
administrative burden). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United
States governing FATCA may be subject to different rules. Similarly, interest, dividends and, subject to the proposed Treasury Regulations
discussed below, proceeds from sales or other disposition in respect of our securities held by an investor that is a non-financial non-U.S.
entity that does not qualify under certain exceptions generally will be subject to withholding at a rate of 30%, unless such entity either
(i) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners”
or (ii) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be
provided to the U.S. Department of the Treasury. The U.S. Department of the Treasury has proposed regulations that eliminate the federal
withholding tax of 30% applicable to the gross proceeds of a sale or other disposition of our securities. Withholding agents may rely
on the proposed Treasury Regulations until final regulations are issued. Prospective investors should consult their tax advisors regarding
the possible effects of FATCA on their investment in our securities.
Legislative or Other Actions Affecting REITs
The present U.S. federal income tax treatment
of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules
are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department, which may
result in statutory changes as well as revisions to regulations and interpretations. Additionally, several of the tax considerations described
herein are currently under review and are subject to change. Prospective investors are urged to consult with their own tax advisors regarding
the effect of potential changes to the federal tax laws on an investment in our Common Stock.
Other Tax Consequences
State, local and non-U.S. income tax
laws may differ substantially from the corresponding U.S. federal income tax laws, and this discussion does not purport to describe any
aspect of the tax laws of any state, local or non-U.S. jurisdiction. You should consult your tax advisor regarding the effect
of state, local and non-U.S. tax laws with respect to our tax treatment as a REIT, the tax consequences of a Redemption
or Conversion of Series D Preferred Stock for Common Stock, and the tax consequences of an investment in Common Stock.
THE TAX DISCUSSION SET FORTH ABOVE IS FOR GENERAL
INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO DESCRIBE FULLY THE TAX CONSEQUENCES OF AN INVESTMENT IN THE COMPANY. INVESTORS
ARE STRONGLY URGED TO CONSULT, AND MUST RELY ON, THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF A REDEMPTION OR CONVERSION
OF SERIES D PREFERRED STOCK FOR COMMON STOCK, INCLUDING WITHOUT LIMITATION THE EFFECT OF U.S. FEDERAL TAXES (INCLUDING TAXES OTHER
THAN INCOME TAXES) AND STATE, LOCAL AND FOREIGN TAX CONSIDERATIONS, AS WELL AS THE POTENTIAL CONSEQUENCES OF ANY CHANGES THERETO
MADE BY FUTURE LEGISLATIVE, ADMINISTRATIVE OR JUDICIAL DEVELOPMENTS (WHICH MAY HAVE RETROACTIVE EFFECT).
LEGAL MATTERS
The validity of the Common
Stock will be passed upon for us by Gordon Feinblatt LLC. Certain tax matters will be passed upon for us by Williams Mullen P.C.
EXPERTS
The historical consolidated
financial statements of our Company as of December 31, 2022 and 2021 and for each of the two years in the period ended December 31,
2022 incorporated by reference in this Prospectus and in the Registration Statement have been so incorporated in reliance on the report
of Cherry Bekaert LLP, an independent registered public accounting firm, incorporated herein by reference, given on the authority of such
firm as experts on auditing and accounting.
WHERE YOU CAN FIND MORE
INFORMATION
We file annual, quarterly
and current reports, proxy statements and other information with the SEC under the Exchange Act.
We will provide to each
person, including any beneficial owner, to whom our Prospectus is delivered, upon request, a copy of any or all of the information that
we have incorporated by reference into our prospectus but not delivered with our Prospectus. To receive a free copy of any of the documents
incorporated by reference in our Prospectus, other than exhibits, unless they are specifically incorporated by reference in those documents,
call or write us at:
Wheeler Real Estate Investment Trust, Inc.
2529 Virginia Beach Blvd.
Virginia Beach, Virginia 23452
(757) 627-9088
Our
website at www.whlr.us contains additional information about us. Our website and the information contained therein or connected
thereto do not constitute a part of this Prospectus, the accompanying prospectus or any supplement thereto.
We have filed with the SEC a Registration Statement on Form S-11 with
respect to the shares of our Common Stock covered by this Prospectus, of which this Prospectus is a part under the Securities Act. This
Prospectus does not contain all of the information set forth in the Registration Statement, portions of which have been omitted as permitted
by the rules and regulations of the SEC. Statements contained in this Prospectus as to the content of any contract or other document incorporated
by reference in the Registration Statement are necessarily summaries of such contract or other document, with each such statement being
qualified in all respects by such contract or other document as incorporated by reference in the Registration Statement. For further information
regarding our Company and the Common Stock covered by this Prospectus, reference is made by this Prospectus to the Registration Statement
and the schedules and exhibits incorporated therein by reference.
The
Registration Statement and the schedules and exhibits forming a part of the registration statement filed by us with the SEC can be inspected
and copies obtained from the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can be obtained from
the Public Reference Section of the Securities and Exchange Commission, Room 1580, 100 F Street, N.E., Washington, D.C. 20549, at prescribed
rates. You may obtain information on the operation of the public reference room by calling the SEC at 1-800- SEC-0330. In addition,
the SEC maintains a website that contains reports, proxies and information statements and other information regarding our company and
other registrants that have been filed electronically with the SEC. The address of such site is http://www.sec.gov.
INCORPORATION BY REFERENCE
We have elected to “incorporate
by reference” certain information into this Prospectus. By incorporating by reference, we are disclosing important information to
you by referring you to documents we have filed separately with the SEC. The information incorporated by reference is deemed to be part
of this Prospectus, except for information incorporated by reference that is superseded by information contained in this Prospectus. You
can access documents that are incorporated by reference into this Prospectus at the website we maintain at http://www.whlr.us. There is
additional information about us and our affiliates at our website, but unless specifically incorporated by reference herein as described
in the paragraphs below, the contents of that website are not incorporated by reference in or otherwise a part of this Prospectus.
The following documents previously
filed with the SEC are incorporated by reference into this Prospectus, except for any document or portion thereof deemed to be “furnished”
and not filed in accordance with SEC rules:
| ● | Current Reports
on Form 8-K filed with the SEC on May
19, 2023, May
22, 2023, June
5, 2023, June
14, 2023, June
28, 2023, July
18, 2023, August
8, 2023, August
17, 2023, September
1, 2023, September
5, 2023, September
7, 2023 and September
18, 2023; |
| ● | The description of Series D Preferred Stock contained in Form 8-A, filed
with the SEC on September 19, 2016. |
We will provide to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request, a copy of any or all of the information
that we have incorporated by reference into this Prospectus but not delivered with this Prospectus, free of charge. To receive a copy
of any of the documents incorporated by reference in this Prospectus, other than exhibits, unless they are specifically incorporated
by reference in those documents, call or write us at:
Wheeler Real Estate Investment Trust, Inc.
2529 Virginia Beach Blvd.
Virginia Beach, Virginia 23452
(757) 627-9088
The
information relating to us contained in this Prospectus does not purport to be comprehensive and should be read together with the information
contained in the documents incorporated by reference. In addition, such reports and documents may be found on our website at www.whlr.us.
Wheeler Real Estate Investment Trust, Inc.
101,100,000 Shares
Common Stock
PROSPECTUS
September 29, 2023
Wheeler Real Estate Inve... (NASDAQ:WHLRP)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Wheeler Real Estate Inve... (NASDAQ:WHLRP)
Gráfica de Acción Histórica
De May 2023 a May 2024