-$49.40
$6.40
bear -$49.40
base -$13.00
bull $6.40
margin of safety $0.01
market price* $0.38
Business condition attached to the margin of safety
The roughly $163 million of preferred stock and subsidiary preferred interests ranking ahead of the common shares would need to be substantially retired or reduced, and the common share count would need to stop multiplying through preferred and note conversions.
Wheeler Real Estate Investment Trust owns and operates 65 properties at December 31, 2025: 62 grocery-anchored and neighborhood retail shopping centers and three undeveloped parcels, concentrated in South Carolina, Georgia, Virginia and Pennsylvania. Revenue was $99.4 million in 2025 versus $104.6 million in 2024, with the decline coming from property sales. The company sold properties for $59.2 million of cash in 2025 and $38.5 million in 2024. What the business earns. We estimate owner earnings, meaning operating cash flow after stripping out working-capital swings, minus stock compensation (none here) and the real estate improvement spending needed to keep the centers running. For 2025 that is about $8.8 million (operating cash flow of $21.1 million, plus $4.7 million of working-capital outflows, less $17.1 million of improvements). For 2024 it was about $6.9 million. Because revenue fell, we treated all improvement spending as maintenance rather than growth. Owner earnings grew about 27 percent in 2025, but part of that reflects lower improvement spending after asset sales; we start from the 2025 level and do not assume further growth beyond what is described below. This figure includes about $3.9 million of interest that was added to loan balances rather than paid in cash, so it is somewhat generous. The problem is who gets paid first. Before any owner earnings reach common shareholders, the company owes dividends on its Series D preferred stock (carried at $63.2 million, with a dividend rate that stepped up to the 16 percent maximum in September 2025) and Series B preferred stock ($67.9 million liquidation preference), plus a small Series A issue and $31.3 million of preferred-type interests held in a consolidated subsidiary. Together these claims are roughly $163 million. Preferred dividends have not been paid in cash and accrued at about $6.6 million in 2025, and the company's charter bars any common dividend until the Series D arrears are paid. The company also carries about $483 million of loans, at a weighted average fixed rate of 5.5 percent for 6.6 years; the interest on those loans is already deducted in owner earnings, so we do not subtract the debt a second time, but it makes the outcome for common holders much more fragile. The common shares are being diluted at an extraordinary pace. Holders of Series D preferred have been redeeming into common stock, and the conversion price on the 7.00% convertible notes has been adjusting downward. The company has carried out eleven reverse stock splits since May 2024. Common shares went from 311 at the end of 2024 to 631,866 at the end of 2025 and 1,290,069 by March 2, 2026, all on today's split basis. Per-share history is therefore not comparable across years, and per-share values here use the 1,290,069 share count, which will probably be out of date quickly. Base case: the value to all owners of the business is owner earnings of about $8.8 million held flat, worth roughly $146 million at a 6 percent discount rate. Flat is the most we can defend: the company has been steadily selling centers, and we can name no secured growth. Against roughly $163 million of claims ahead of the common shares, the common shares come out at about negative $13 per share. Put plainly, on this view the company appears to owe its senior holders more than the business is worth, by about $17 million. Bear case: sales of centers continue at the pace of recent years and owner earnings shrink about 5 percent a year (the same rate revenue fell in 2025) for ten years, then stay level at about $5.3 million. That is worth about $99 million against $163 million of claims, or negative $49 per share. The company appears to owe more than it is worth, by roughly $64 million. Bull case: owner earnings grow 2 percent a year for ten years, backed by the demonstrated rent increases on leases signed. In 2025, renewals were done at rates 11.7 percent above prior rents and new leases at 26.4 percent above (9.5 percent and 21.4 percent in 2024). That, then level earnings, is worth about $171 million, leaving about $8 million for common holders, or about $6 per share on today's count. We do not credit larger growth because dispositions have more than offset rent increases in recent years. What would make this wrong: a large reduction in the preferred claims, for example retirement at a discount, would raise the common value, but conversions that create many more common shares would dilute any per-share value further. Because the share count is changing so quickly, these per-share numbers should be treated as approximate. We could not reconcile the difference between reported weighted average shares (106,902 for 2025) and the 1,290,069 shares outstanding in March 2026 beyond the conversions described in the filing.