Wheeler Real Estate Investment Trust(WHLR) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Wheeler REIT and its subsidiaries for the period ended March 31, 2020 - The report includes unaudited condensed consolidated financial statements for the three months ended March 31, 2020 and 2019, and the balance sheet as of December 31, 2019[7][23] - Statements are prepared in accordance with GAAP for interim financial statements and reflect all necessary normal recurring adjustments[23] Condensed Consolidated Balance Sheets Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of March 31, 2020, and December 31, 2019 Key Balance Sheet Items (in thousands) | Item | March 31, 2020 | December 31, 2019 | Change (%) | | :--------------------------------- | :------------- | :---------------- | :--------- | | Investment properties, net | $406,815 | $416,215 | -2.26% | | Cash and cash equivalents | $6,695 | $5,451 | 22.82% | | Restricted cash | $16,543 | $16,140 | 2.50% | | Total Assets | $479,149 | $484,365 | -1.08% | | Loans payable, net | $336,277 | $340,913 | -1.36% | | Total Liabilities | $367,794 | $371,133 | -0.90% | | Total Shareholders' Equity | $19,492 | $23,927 | -18.53% | | Total Equity | $21,563 | $26,007 | -17.10% | Condensed Consolidated Statements of Operations Details the company's financial performance, including revenue, expenses, and net loss, for the three months ended March 31, 2020 and 2019 Key Income Statement Items (in thousands) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change (%) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total Revenue | $15,574 | $15,995 | -2.63% | | Total Operating Expenses | $11,994 | $12,379 | -3.11% | | Operating Income | $3,554 | $5,455 | -34.85% | | Interest expense | $(4,400) | $(4,793) | 8.20% | | Other expense | $(1,024) | $0 | -100.00% | | Net (Loss) Income | $(1,877) | $655 | -386.56% | | Net Loss Attributable to Wheeler REIT Common Shareholders | $(5,525) | $(3,015) | -83.27% | | Loss per share: Basic and Diluted | $(0.57) | $(0.31) | -83.87% | - Net Loss Attributable to Wheeler REIT Common Shareholders increased significantly from $(3,015) thousand in Q1 2019 to $(5,525) thousand in Q1 2020[12] Condensed Consolidated Statements of Equity Outlines changes in the company's equity, including total equity and accumulated deficit, for the three months ended March 31, 2020 - Total Equity decreased from $26,007 thousand at December 31, 2019, to $21,563 thousand at March 31, 2020, primarily due to dividends and distributions and net loss[14] - Accumulated deficit increased from $(251,580) thousand at December 31, 2019, to $(256,037) thousand at March 31, 2020[14] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2020 and 2019 Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change ($) | Change (%) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Operating Activities | $3,223 | $2,697 | $526 | 19.50% | | Investing Activities | $1,339 | $3,318 | $(1,979) | -59.64% | | Financing Activities | $(2,915) | $(5,409) | $2,494 | 46.11% | | Increase in Cash, Cash Equivalents and Restricted Cash | $1,647 | $606 | $1,041 | 171.78% | | Cash, cash equivalents and restricted cash, end of period | $23,238 | $18,605 | $4,633 | 24.90% | - Net cash provided by operating activities increased by 19.50% to $3,223 thousand in Q1 2020[17] - Net cash provided by investing activities decreased significantly by 59.64% to $1,339 thousand in Q1 2020[17] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, real estate, debt, and equity - Wheeler REIT owned and operated sixty centers, one office building, and six undeveloped properties across multiple states as of March 31, 2020[19] - The company became an internally-managed REIT in October 2014, handling acquisitions, dispositions, leasing, property management, and other business operations internally[20] - The company is closely monitoring the impact of COVID-19, which has led to rent relief requests from tenants and forbearance on 8 loans, deferring approximately $928 thousand in principal and interest payments[145][146][148] 1. Organization and Basis of Presentation and Consolidation Describes the company's corporate structure, its status as a Maryland corporation and general partner of Wheeler REIT, L.P., and its property portfolio - Wheeler Real Estate Investment Trust, Inc. is a Maryland corporation, serving as the general partner of Wheeler REIT, L.P., a Virginia limited partnership[19] - As of March 31, 2020, the Company owned and operated 60 centers, one office building, and six undeveloped properties across 12 states[19] - The Company became an internally-managed REIT in October 2014 through the acquisition of Wheeler Interests, LLC, Wheeler Real Estate, LLC, and WHLR Management, LLC[20] 2. Summary of Significant Accounting Policies Outlines key accounting principles applied, including property valuation, revenue recognition, and the impact of recent accounting pronouncements - Investment properties are recorded at fair value upon acquisition and depreciated using the straight-line method over 5 to 40 years[24][28] - The Company accrues minimum rents on a straight-line basis and combines lease and nonlease components for revenue recognition[42][43] Corporate General & Administrative Expenses (in thousands) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Professional fees | $1,026 | $599 | | Compensation and benefits | $407 | $676 | | Corporate administration | $331 | $305 | | Advertising costs for leasing activities | $31 | $49 | | Taxes and licenses | $18 | $62 | | Other | $59 | $123 | | Total | $1,872 | $1,814 | - Other expenses for Q1 2020 included $585 thousand in legal settlement costs and $439 thousand for reimbursement of 2019 proxy costs[58] - The Company adopted ASU 2018-13 (Fair Value Measurement) as of January 1, 2020, with no material impact, and is evaluating ASU 2016-13 (Credit Losses) and the Lease Modification Q&A related to COVID-19[66][67][68] 3. Real Estate Details changes in investment properties, including net values, impairment charges, and assets held for sale, as of March 31, 2020 - Investment properties, net, decreased from $416.22 million at December 31, 2019, to $406.82 million at March 31, 2020[72] - An impairment charge of $600 thousand was recorded for assets held for sale (Columbia Fire Station) for the three months ended March 31, 2020[75] Assets Held for Sale and Associated Liabilities (in thousands) | Item | March 31, 2020 | December 31, 2019 | | :--------------------------------- | :------------- | :---------------- | | Total assets held for sale | $6,258 | $1,737 | | Total liabilities associated with assets held for sale | $4,049 | $2,026 | - The sale of St. Matthews on January 21, 2020, for $1,775 thousand resulted in a loss of $26 thousand[79] 4. Deferred Costs Presents information on deferred costs and their amortization, including a schedule of future amortization for various cost categories - Total deferred costs and other assets, net, decreased from $21.03 million at December 31, 2019, to $20.28 million at March 31, 2020[81] - Intangible amortization expense totaled $1.86 million for Q1 2020, down from $2.63 million for Q1 2019[81] Future Amortization of Deferred Costs (in thousands, unaudited) | Period | Leases In Place, net | Ground Lease Sandwich Interest, net | Tenant Relationships, net | Lease Origination Costs, net | Legal & Marketing Costs, net | Total | | :----------------------------------- | :------------------- | :-------------------------------- | :------------------------ | :------------------------- | :------------------------- | :------ | | For the remaining nine months ending December 31, 2020 | $3,182 | $205 | $580 | $126 | $8 | $4,101 | | December 31, 2021 | $2,766 | $274 | $448 | $158 | $8 | $3,654 | | December 31, 2022 | $2,119 | $274 | $354 | $116 | $6 | $2,869 | | December 31, 2023 | $1,638 | $274 | $227 | $98 | $5 | $2,242 | | December 31, 2024 | $1,124 | $274 | $128 | $83 | $3 | $1,612 | | December 31, 2025 | $799 | $274 | $62 | $63 | — | $1,198 | | Thereafter | $1,943 | $571 | $92 | $327 | $1 | $2,934 | | Total | $13,571 | $2,146 | $1,891 | $971 | $31 | $18,610 | 5. Loans Payable Details the company's debt obligations, including changes in total loans payable, specific loan agreements, and the debt maturity schedule - Total loans payable, net, decreased from $340.91 million at December 31, 2019, to $336.28 million at March 31, 2020[84] - The KeyBank Credit Agreement had outstanding borrowings of $9.30 million at March 31, 2020, with the Company negotiating an extension to December 31, 2020, after not meeting the April 30, 2020, paydown requirement[89][93] - The Company refinanced Shoppes at Myrtle Park for $6.00 million and Folly Road for $7.35 million in Q1 2020[90][92] Debt Maturity Schedule (in thousands, unaudited) | Period | Total principal repayments and debt maturities | | :------------------------------------ | :--------------------------------------------- | | For the remaining nine months ended December 31, 2020 | $46,171 | | December 31, 2021 | $11,394 | | December 31, 2022 | $15,848 | | December 31, 2023 | $85,537 | | December 31, 2024 | $44,240 | | December 31, 2025 | $91,426 | | Thereafter | $49,854 | | Total | $344,470 | - The Company plans to meet $53.78 million in debt maturities for the next 12 months through a combination of refinancings, dispositions, and operating cash[95][201] 6. Rentals under Operating Leases Provides a schedule of future minimum rents receivable under the company's operating leases Future Minimum Rents (in thousands, unaudited) | Period | Total minimum rents | | :------------------------------------ | :------------------ | | For the remaining nine months ended December 31, 2020 | $34,113 | | December 31, 2021 | $40,412 | | December 31, 2022 | $33,910 | | December 31, 2023 | $27,437 | | December 31, 2024 | $20,676 | | December 31, 2025 | $14,842 | | Thereafter | $36,634 | | Total minimum rents | $208,024 | 7. Equity and Mezzanine Equity Details the company's equity structure, including preferred stock characteristics, dividend arrears, and potential dilutive shares - Series D Preferred Stock has 3,600,636 shares outstanding with a $25.00 liquidation preference per share, accruing 8.75% cumulative cash dividends, which increased to 10.75% due to undeclared dividends since December 20, 2018[102][103] - A Preferred Dividend Default occurred on April 15, 2020, granting preferred shareholders the right to elect two additional directors[104] - Total cumulative dividends in arrears for Series A, B, and D Preferred Stock amounted to $20.47 million as of March 31, 2020[111] Series D Preferred Stock Carrying Value (in thousands, unaudited) | Item | March 31, 2020 | March 31, 2019 | | :-------------------------- | :------------- | :------------- | | Balance December 31 | $87,225 | $76,955 | | Accretion of Preferred Stock discount | $148 | $148 | | Undeclared dividends | $2,419 | $2,419 | | Balance March 31 | $89,792 | $79,522 | Potential Dilutive Shares (as of March 31, 2020) | Item | Outstanding shares | Potential Dilutive Shares | | :-------------------------- | :----------------- | :---------------------- | | Common units | 234,019 | 234,019 | | Series B Preferred Stock | 1,875,748 | 1,172,343 | | Series D Preferred Stock | 3,600,636 | 5,307,541 | 8. Leases Commitments Outlines the company's lease commitments, including weighted average remaining lease term, ground lease payments, and future minimum lease payments - The weighted average remaining lease term for the Company's leases was 35 years as of March 31, 2020[117] Ground Lease Payments (in thousands, unaudited) | Property | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Amscot | $6 | $6 | | Beaver Ruin Village | $14 | $14 | | Beaver Ruin Village II | $6 | $6 | | Moncks Corner | $30 | $30 | | Devine Street | $99 | $99 | | JANAF | $71 | $67 | | Total ground leases | $226 | $247 | Undiscounted Cash Flows for Future Minimum Lease Payments (in thousands, unaudited) | Period | Total minimum lease payments | | :------------------------------------ | :--------------------------- | | For the remaining nine months ended December 31, 2020 | $437 | | December 31, 2021 | $637 | | December 31, 2022 | $640 | | December 31, 2023 | $642 | | December 31, 2024 | $644 | | December 31, 2025 | $648 | | Thereafter | $22,460 | | Total minimum lease payments | $26,108 | 9. Commitments and Contingencies Discusses various commitments and potential liabilities, including geographic concentration risks, legal settlements, and bankruptcy proceedings - The Company's portfolio is geographically concentrated in the Southeast (61%), Mid-Atlantic (35%), and Northeast (4%) based on annualized base rent, making it susceptible to regional economic conditions[123] - The lawsuit by JCP Investment Partnership LP was settled in February 2020, alleging a breach of an asset coverage ratio covenant[127] - A court found in favor of former CEO Jon Wheeler for improper employment termination without cause, awarding him $475 thousand for severance and benefits, which the Company accrued as $485 thousand in 'other expenses'[128] - In the BOKF, NA v. WD-I Associates, LLC bankruptcy case, the Company expects to receive approximately $196 thousand as an unsecured creditor from the $18.75 million sale of Sea Turtle Marketplace[131][132] - The Company's future principal obligation under the Harbor Pointe Tax Increment Financing Agreement is no more than $2.23 million as of March 31, 2020[136] 10. Related Party Transactions Details transactions and agreements with related parties, including reimbursement for proxy solicitation expenses - The Company agreed to reimburse the Stilwell Group $439 thousand for proxy solicitation expenses incurred for the 2019 annual meeting, which was accrued as 'other expenses'[140] Related Party Activity (in thousands, unaudited) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Amounts paid to affiliates | $9 | $0 | | Amounts received from affiliates | $0 | $6 | 11. Subsequent Events Reports significant events occurring after the balance sheet date, such as loan extensions, PPP loan receipt, COVID-19 impacts, and CEO termination - The Columbia Fire Station loan was extended to September 3, 2020, and a non-binding term sheet was entered to extend the Tuckernuck loan to August 1, 2020[141][142] - The Company received a $552 thousand Paycheck Protection Program (PPP) loan on April 27, 2020, under the CARES Act, which may be forgivable[143][144] - The COVID-19 pandemic has led to tenant rent relief requests and forbearance on 8 loans, deferring approximately $928 thousand in principal and interest payments[145][146][148] - The Company terminated the employment of its CEO, David Kelly, on April 13, 2020, with potential legal proceedings in early stages[134] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results for Q1 2020, focusing on COVID-19 impacts, dispositions, and liquidity - The discussion includes forward-looking statements subject to risks, particularly the ongoing impact of COVID-19 on the economy and retail market[151][152][153] - The COVID-19 pandemic has severely impacted the U.S. retail market, leading to business closures and 'shelter-in-place' orders, with the company's portfolio being 89.2% leased and 86% of tenants open and operating[159][160][161] - The company received payment for approximately 72% of April contractual base rent, has $6.70 million in cash and $16.54 million in restricted cash, and secured forbearance on 8 loans deferring $928 thousand in payments[165] - The company continued the suspension of preferred dividend distributions to preserve liquidity due to COVID-19 uncertainty[165] Company Overview Provides a brief overview of the company's property portfolio and operational scope as of March 31, 2020 - As of March 31, 2020, the Company owned and operated 60 retail shopping centers, one office building, and six undeveloped properties across multiple states[156] Recent Trends and Activities Highlights the impact of the COVID-19 pandemic on the retail market, the company's portfolio performance, and liquidity measures - The COVID-19 pandemic has caused significant economic disruption, severely impacting the U.S. retail market due to mandatory business closures and restrictions[159] - As of March 31, 2020, the Company's portfolio was 89.2% leased, with 86% of tenants open and operating, and 27% of annualized base rent from grocers[160][161] - The Company received payment for approximately 72% of April contractual base rent, secured forbearance on 8 loans deferring $928 thousand, and maintains $6.70 million in cash and $16.54 million in restricted cash[165] - The Company recorded a $600 thousand impairment charge for Columbia Fire Station, which is held for sale[165] Leasing Activity Statistics (Three Months Ended March 31, in sq feet and count) | Item | 2020 | 2019 | Change (%) | | :------------------------------------ | :----- | :----- | :--------- | | Leases renewed with rate increase (sq feet) | 137,599 | 90,858 | 51.44% | | Leases renewed with rate decrease (sq feet) | 26,980 | 27,656 | -2.44% | | Leases renewed with no rate change (sq feet) | 20,578 | 2,400 | 757.42% | | Total leases renewed (sq feet) | 185,157 | 120,914 | 53.13% | | Total leases renewed (count) | 41 | 28 | 46.43% | | New leases (sq feet) | 27,622 | 31,200 | -11.47% | | New leases (count) | 14 | 8 | 75.00% | | Weighted average change over prior rates | 8.60% | 0.63% | 1265.08% | Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019 Compares the company's financial performance for the first quarter of 2020 against the same period in 2019, analyzing key operational metrics Property Data Comparison | Item | March 31, 2020 | March 31, 2019 | Change | % Change | | :------------------------------------ | :------------- | :------------- | :----- | :------- | | Number of properties owned and leased | 60 | 62 | (2) | (3.23)% | | Aggregate gross leasable area | 5,564,882 | 5,675,581 | (110,699) | (1.95)% | | Ending leased rate | 89.2% | 89.1% | 0.1% | 0.11% | Results of Operations Analyzes changes in total revenue, operating expenses, and net loss, highlighting factors such as property sales, impairment charges, and legal costs - Total revenue decreased by 2.63% to $15.57 million in Q1 2020, primarily due to a $355 thousand decrease from sold properties[175] - Total operating expenses decreased by 3.11% to $11.99 million, mainly due to a $1.02 million decrease in depreciation and amortization, partially offset by a $600 thousand impairment charge on assets held for sale[176] - Corporate general and administrative expenses increased by 3.20% to $1.87 million, driven by higher litigation and corporate counsel costs, partially offset by lower compensation and benefits[177][183] - A $1.87 million decrease in gain on disposal of properties was recorded, from a gain of $1.84 million in Q1 2019 to a loss of $26 thousand in Q1 2020, due to the sale of St. Matthews[178] - Interest expense decreased by 8.20% to $4.40 million, attributed to a $15.46 million reduction in loans payable and lower loan cost amortization[179] - Other expenses totaled $1.02 million in Q1 2020, including $585 thousand in legal settlement costs and $439 thousand for proxy solicitation expense reimbursement[180] - Accumulated undeclared preferred dividends totaled $20.47 million as of March 31, 2020, with $3.49 million attributable to Q1 2020[181] Same Store and Non-same Store Operating Income Examines the performance of same-store and non-same-store properties, detailing changes in net operating income and related expenses - Total property net operating income (NOI) decreased by 3.43% to $10.83 million in Q1 2020[189] - Same store property revenues remained relatively flat at $15.54 million in Q1 2020[186] - Same store property expenses increased by 1.73% to $4.71 million, primarily due to increased repairs, maintenance, and utilities[187] NOI Reconciliation (in thousands, unaudited) | Item | Same Store 2020 | Same Store 2019 | Non-same Store 2020 | Non-same Store 2019 | Total 2020 | Total 2019 | | :------------------------------------ | :-------------- | :-------------- | :------------------ | :------------------ | :--------- | :--------- | | Net (Loss) Income | $(1,844) | $(1,213) | $(33) | $1,868 | $(1,877) | $655 | | Property Net Operating Income | $10,835 | $10,948 | $(6) | $266 | $10,829 | $11,214 | Funds from Operations (FFO) Presents the calculation and analysis of Funds from Operations, highlighting a significant decrease in Q1 2020 compared to Q1 2019 - FFO decreased by 23.40% to $3.55 million in Q1 2020 from $4.63 million in Q1 2019[192] - Same store FFO decreased by $987 thousand, primarily due to increased other expenses, decreased property NOI, and increased corporate G&A, partially offset by decreased interest expense[192][193] FFO Calculation (in thousands, unaudited) | Item | 2020 | 2019 | Change ($) | Change (%) | | :------------------------------------ | :----- | :----- | :--------- | :--------- | | Net (Loss) Income | $(1,877) | $655 | $(2,532) | (386.56)% | | Depreciation and amortization of real estate assets | $4,799 | $5,816 | $(1,017) | (17.49)% | | Impairment of assets held for sale | $600 | $0 | $600 | 100.00% | | Loss (gain) on disposal of properties | $26 | $(1,839) | $1,865 | 101.41% | | FFO | $3,548 | $4,632 | $(1,084) | (23.40)% | Adjusted FFO (AFFO) Details the calculation of Adjusted Funds from Operations, showing a decrease in Q1 2020 and identifying non-recurring expenses - AFFO decreased by 20.77% to $843 thousand in Q1 2020 from $1,064 thousand in Q1 2019[194] - Other nonrecurring and non-cash expenses in Q1 2020 included $585 thousand in legal settlement costs and $439 thousand for proxy solicitation expenses[194] AFFO Calculation (in thousands, unaudited) | Item | 2020 | 2019 | | :------------------------------------ | :----- | :----- | | FFO | $3,548 | $4,632 | | Preferred Stock dividends - undeclared | $(3,657) | $(3,657) | | Preferred stock accretion adjustments | $170 | $170 | | FFO available to common shareholders and common unitholders | $61 | $1,145 | | Acquisition and development costs | $1 | $4 | | Capital related costs | $4 | $74 | | Other non-recurring and non-cash expenses | $1,024 | $24 | | Share-based compensation | — | $90 | | Straight-line rental revenue, net straight-line expense | $(5) | $(155) | | Loan cost amortization | $310 | $392 | | Above (below) market lease amortization | $(273) | $(226) | | Recurring capital expenditures and tenant improvement reserves | $(279) | $(284) | | AFFO | $843 | $1,064 | Liquidity and Capital Resources Assesses the company's cash position, debt structure, and strategies for managing liquidity and meeting future debt maturities - Consolidated cash, cash equivalents, and restricted cash totaled $23.24 million at March 31, 2020, an increase from $21.59 million at December 31, 2019[196] Cash Flow Activities (in thousands, unaudited) | Activity | 2020 | 2019 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Operating activities | $3,223 | $2,697 | $526 | 19.50% | | Investing activities | $1,339 | $3,318 | $(1,979) | (59.64)% | | Financing activities | $(2,915) | $(5,409) | $2,494 | 46.11% | Debt Balances (in thousands, unaudited) | Item | March 31, 2020 | December 31, 2019 | | :------------------------------------ | :------------- | :---------------- | | Fixed-rate notes | $307,207 | $305,017 | | Adjustable-rate mortgages | $23,948 | $24,163 | | Fixed rate mortgages, assets held for sale | $4,015 | $0 | | Floating-rate line of credit | $9,300 | $17,879 | | Total debt | $344,470 | $347,059 | - The Company has $53.78 million in debt maturities and principal payments due in the twelve months ended March 31, 2021, including $9.30 million on the KeyBank Credit Agreement[201] - Liquidity needs will be met through cash from operations, refinancing, dispositions, and short-term loan extensions, with the Board suspending preferred dividend payments to provide approximately $3.49 million of additional funds per quarter[201][205][206][207] Off-Balance Sheet Arrangements Discloses the company's off-balance sheet obligations, specifically the principal obligation under the Harbor Pointe Tax Increment Revenue Note - The Company's future principal obligation under the Harbor Pointe Tax Increment Revenue Note is no more than $2.23 million as of March 31, 2020[209][210] Recent Accounting Pronouncements Refers to Note 2 for details on recently adopted and evaluated accounting standards and their impact - Details on recent accounting pronouncements and their anticipated impact are provided in Note 2 of the condensed consolidated financial statements[212] Critical Accounting Policies Confirms that there have been no significant changes to the company's critical accounting policies during the reporting period - There have been no significant changes to critical accounting policies during the three months ended March 31, 2020[213] Available Information Provides information on where to access the company's public filings and corporate governance documents - The Company's website (www.whlr.us) provides free access to its SEC filings and corporate governance documents[214] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that the company has no quantitative and qualitative disclosures about market risk to report - The company has no quantitative and qualitative disclosures about market risk to report[215] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2020[216] - No changes in internal control over financial reporting occurred during the period[217] PART II – OTHER INFORMATION Item 1. Legal Proceedings Details ongoing and settled legal proceedings, including a shareholder lawsuit, CEO termination judgment, bankruptcy case, and defamation claims - The lawsuit by JCP Investment Partnership LP, alleging a breach of an asset coverage ratio covenant, was settled and dismissed without prejudice in February 2020[219] - A court found in favor of former CEO Jon Wheeler for improper employment termination without cause, awarding him $475 thousand for severance and benefits, which the Company accrued as $485 thousand in 'other expenses'[220] - In the BOKF, NA v. WD-I Associates, LLC bankruptcy case, the Company expects to receive approximately $196 thousand as an unsecured creditor from the $18.75 million sale of Sea Turtle Marketplace[221][222] - Former CEO Jon Wheeler filed claims for defamation against the Company and former CEO David Kelly, with a trial set for June 10, 2020[223] - The Company terminated CEO David Kelly on April 13, 2020, with potential legal proceedings in early stages[134] Item 1A. Risk Factors States that as a smaller reporting company, specific risk factor disclosures are not required under this item - The company is a smaller reporting company and is not required to provide risk factor information under this item[225] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Indicates no applicable disclosures regarding unregistered sales of equity securities and use of proceeds - No information to report under this item[226][229] Item 3. Defaults Upon Senior Securities States that there are no defaults upon senior securities to report - No defaults upon senior securities[226] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[227] Item 5. Other Information Indicates that there is no other information to report - No other information to report[228] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including securities descriptions, employment agreements, credit amendments, and certifications - The exhibit list includes Description of Securities, Employment Agreement with Crystal Plum, Second Amendment to KeyBank Credit Agreement, Equity Interests Pledge and Security Agreement, Certifications of CEO and CFO (Sections 302 and 906), and XBRL Instance Document and Taxonomy Extensions[230] Signatures SIGNATURE The report is duly signed by Crystal Plum, Chief Financial Officer, on behalf of Wheeler REIT on May 12, 2020 - The report was signed by Crystal Plum, Chief Financial Officer, on May 12, 2020[234]