Edgar Filing: Wheeler Real Estate Investment Trust, Inc.

12.31.2014 WHLR 10-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35713

WHEELER REAL ESTATE INVESTMENT TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)



Maryland		45-2681082
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2529 Virginia Beach Blvd., Suite 200 Virginia Beach. Virginia		23452
(Address of Principal Executive Offices)		(Zip Code)

(757) 627-9088

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Common stock, $0.01 par value (NASDAQ Capital Market)

Series B convertible preferred stock, no par value (NASDAQ Capital Market)

Warrants to acquire shares of common stock (NASDAQ Capital Market)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company”

in Rule 12b-2 of the Exchange Act.:



Large accelerated file	¨	¨	Accelerated filer

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	þ	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨

As of June 30, 2014 the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $30,750,823.

As of March 24, 2015, there were 7,833,060 shares of common stock, $0.01 par value per share, outstanding.

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Part I

Item 1.	Business	3

Item 1A.	Risk Factors	9

Item 1B.	Unresolved Staff Comments	9

Item 2.	Properties	10

Item 3.	Legal Proceedings	14

Item 4.	Mine Safety Disclosures	15

Part II

Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	16

Item 6.	Selected Financial Data	18

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 8.	Financial Statements and Supplementary Data	32

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32

Item 9A.	Controls and Procedures	33

Item 9B.	Other Information	34

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	34

Item 11.	Executive Compensation	42

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	45

Item 13.	Certain Relationships and Related Transactions, and Director Independence	46

Item 14.	Principal Accountant Fees and Services	48

Item 15.	Exhibits and Financial Statement Schedules	49

EXHIBIT INDEX

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FORWARD- LOOKING STATEMENTS

This Annual Report on Form 10-K ("Form 10-K") of Wheeler Real Estate Investment Trust, Inc. contains forward-looking statements, including discussion and analysis of our financial condition, anticipated capital expenditures required to complete projects, amounts of anticipated cash distributions to our shareholders in the future and other matters. 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.

Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. You are cautioned to not place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this Form 10-K. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results. Factors that could cause actual results to differ materially from any forward-looking statements made in this Form 10-K include:


•	our business and investment strategy;


•	our projected operating results;


•	actions and initiatives of the U.S. government and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies;


•	the state of the U.S. economy generally and in specific geographic areas;


•	economic trends and economic recoveries;


•	our ability to obtain and maintain financing arrangements;


•	financing and advance rates for our target assets;


•	our expected leverage;


•	availability of investment opportunities in real estate-related investments;


•	changes in the values of our assets;


•	our ability to make distributions to our stockholders in the future;


•	our expected investments and investment decisions;


•	changes in interest rates and the market value of our target assets;


•	our ability to renew leases at amounts and terms comparable to existing lease arrangements;


•	our ability to proceed with potential development opportunities for us and third-parties;


•	effects of hedging instruments on our target assets;


•	the degree to which our hedging strategies may or may not protect us from interest rate volatility;


•	impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;


•	our ability to maintain our qualification as a real estate investment trust (“REIT”);


•	our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the "Investment Company Act");


•	availability of qualified personnel and management team;


•	the ability of our 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;


•	our ability 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 preferred stock and to classify or reclassify unissued shares of our preferred stock;


•	our understanding of our competition; and


•	market trends in our industry, interest rates, real estate values or the general economy;


•	the imposition of federal taxes if we fail to qualify as a real estate investment trust (“REIT”) in any taxable year or forego an opportunity to ensure REIT status;


•	uncertainties related to the national economy, the real estate industry in general and in our specific markets;


•	legislative or regulatory changes, including changes to laws governing REITs;


•	adverse economic or real estate developments in Virginia, Florida, Georgia, South Carolina, North Carolina, Oklahoma, Kentucky, Tennessee, West Virginia and New Jersey;


•	increases in interest rates and operating costs;


•	inability to obtain necessary outside financing;


•	litigation risks;


•	lease-up risks;

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•	inability to obtain new tenants upon the expiration of existing leases;


•	inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws; and


•	the need to fund tenant improvements or other capital expenditures out of operating cash flow.

These forward-looking statements should be read in light of these factors.

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Part I

Item 1. Business

Overview

Wheeler Real Estate Investment Trust, Inc. is a fully-integrated, self-managed commercial real estate investment company focused on acquiring and managing income-producing retail properties with a primary focus on grocery-anchored centers. Our strategy is to opportunistically acquire and reinvigorate well-located, potentially dominant retail properties in secondary and tertiary markets that generate attractive risk-adjusted returns, with a particular emphasis on grocery-anchored retail centers. We target competitively protected properties 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 generate regular consumer traffic. We believe our tenants carry goods that are less impacted by fluctuations in the broader U.S. economy and consumers’ disposable income, generating more predictable property level cash flows.

As of December 31, 2014, we own a portfolio consisting of thirty-six properties, including twenty-four retail shopping centers, six freestanding retail properties and one office property, totaling 1,904,146 gross leasable square feet of which approximately 96% are leased and five undeveloped land parcels totaling approximately 64 acres. We believe the current market environment creates a substantial number of favorable investment opportunities in our target markets with attractive yields on investment and significant upside potential in terms of income and gain.

We have 44 full-time and 4 part-time employees. Our management team has experience and capabilities across the real estate sector with experience in the aggregate and expertise particularly in the retail asset class, which we believe provides for flexibility in pursuing attractive acquisition, development and repositioning opportunities. Because varying market conditions create opportunities at different times across the retail property sector, we believe our expertise enables us to target relatively more attractive investment opportunities throughout economic cycles. In addition, our fully integrated platform with in-house development capabilities allows us to pursue development and redevelopment projects with multiple uses. We believe that our ability to pursue these types of opportunities differentiates us from many competitors in our markets.

Our executive officers and the members of the management team have over 150 years of experience in all aspects of the commercial real estate industry, specifically in our target/existing markets. They have overseen the acquisition or development and operation of more than sixty-five shopping centers, representing over 4 million gross leasable square feet of retail property, including all of the properties in our portfolio. Jon S. Wheeler, our Chairman and Chief Executive Officer, has over thirty-three years of experience in the real estate sector with particular experience in strategic financial and market analyses and assessments of new or existing properties to maximize returns. Mr. Wheeler has overseen the acquisition of over sixty properties. Steven M. Belote, our Chief Financial Officer since 2011, has over twenty years' experience as a Chief Financial Officer. Prior to joining us, Mr. Belote was the Chief Financial Officer of Shore Bank for sixteen years. As Chief Financial Officer of Shore Bank, he played an integral role in their initial public offering. Prior to Shore Bank, Mr. Belote spent seven years in public accounting. David Kelly, our Senior Vice President and Director of Acquisitions, has over twenty-five years of experience in the real estate industry. Prior to joining us, he served for thirteen years as the Director of Real Estate for Supevalu, Inc., a Fortune 100 supermarket retailer. While at Supervalu, he focused on site selection and acquisitions from New England to the Carolinas, completing transactions totaling over $500 million. In addition, we recently hired Jeff Parker as our Director of Leasing. Mr. Parker is responsible for leasing operations over our growing portfolio of commercial assets. Prior to joining us, Mr. Parker served as Real Estate Portfolio Manager for the Southeast and Mid-Atlantic regions of the United States for Dollar Tree Stores, Inc. While at Dollar Tree, Mr. Parker was responsible for a portfolio of over 1,100 stores and created many key relationships throughout the industry. Prior to Dollar Tree, Mr. Parker spent ten years handling the leasing and sale of commercial properties for CB Richard Ellis of Virginia, Inc.

Business Objectives and Investment Strategy

Our primary business objective is to provide attractive risk adjusted returns to our shareholders by increasing cash flows at our existing properties and acquiring additional properties with attractive yields below replacement cost. We intend to achieve this objective utilizing the following investment strategy:


•	Focus on necessity-based retail. We intend to invest in 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

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and services that are less impacted by fluctuations in the economy. According to the Food marketing Institute, the average consumer in the US makes a trip to a grocery store 2.2 times per week. We believe targeting centers that provide essential goods and services such as groceries results in a stable, lower-risk portfolio of retail investment properties.

•

Target secondary and tertiary markets with strong demographics and demand. We believe these markets have limited competition from institutional buyers and relatively low levels of new construction. In evaluating potential acquisitions, we focus on areas with strong demographics such as population density, population growth, tenant sales trends and growth in household income, and we seek to identify properties in locations where there is a need for necessity-based retail and limited new supply. We generally will seek to avoid markets where we believe potential yields have decreased as a result of acquisition activity from institutional buyers.


•	Acquire properties that are the number one or number two centers in their respective markets. After we identify an attractive target market, we look to acquire the top center in that market. These centers will have anchor tenants with dominant market share, high sales per square feet, significant capital invested in their respective stores and limited proximity to competing centers.

•

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 such as common area maintenance, or CAM reimbursement and experience utilizing exterior parking for build to suit outparcels or pad sales. 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. Operating expenses that qualify for CAM reimbursement include, but are not limited to, landscaping, parking field maintenance and repairs, building maintenance and repairs, utilities and their associated maintenance and repair within the shopping center. The amount that each tenant pays is determined on a pro-rata basis and our leases generally allow us to add an administrative fee of 15%. Some leases are structured such that there is a price per square foot cap on paying additional fees and charges. Additionally, in some cases the tenant is either fully or partially responsible for all maintenance of the property, thereby limiting our obligations 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 shareholders. We have significant expertise allocating capital to value-added improvements of retail properties to increase rents, extend long-term leases with anchor tenants and increasing occupancy. We will selectively allocate capital to revenue enhancing projects that we believe will improve the market position of a given property.

•

Selectively utilize our development capabilities for third parties. We intend to invest capital in development and re-development opportunities where we believe the return on such capital is accretive to our shareholders. We believe our experience in development will benefit us by providing opportunities to either develop properties for us at higher cap rates that result in positive returns to our operations or to develop for third parties which will result in development fee income for us. While this objective is not always possible, we generally want a development project to be at least 50% pre-leased prior to commencement.

•

Acquire properties that meet our strict underwriting guidelines and process. Initially, our underwriting process begins with a cursory review of the asset to determine if there is a fit with our acquisition criteria. The offering memorandum; seller’s financials; lease abstracts (anchor and small shop); rent roll; delinquency reports; assumable debt, if any; tenant sales reports; and the general physical structure of the asset are reviewed. By analyzing the trade area we can determine trade area demographics, how the target asset sits within the trade area compared to its competition and how that trade area is currently being serviced by the existing retail base. Provided the cursory review of the target asset is satisfactory we begin the primary underwriting. The acquisition analyst develops an eleven year cash flow analysis using Argus software utilizing lease abstracts, rent roll, financials provided by seller, and historical data from our own portfolio. Lease administration reviews the third-party abstracts of all leases giving particular attention to use restrictions/conflicts, lease termination rights, relocation rights and accuracy against the provided rent roll. Tenant interviews are done with all key tenants per a multi-point checklist. The property is reviewed internally by leasing, asset management and property management departments. Third party reports are generated for environmental, zoning, appraisal and property condition assessment. Legal reviews newly produced survey and title

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binder. Discussions are held with the local municipality, particularly economic development, zoning and planning to determine potential competitive activity, changes in traffic patterns and possible real estate tax exposure. Lastly, an on-site review of the asset by representatives of the Investment Committee of the Board of Directors, Mr. Wheeler, and Mr. Kelly, our Senior Vice President of Acquisitions, is required before the due diligence portion of any contract closes. In all, a checklist of over 100 items is reviewed and signed off prior to moving into the closing phase of the contract.

Policies With Respect to Certain Activities

The following is a discussion of certain of our investment, financing and other policies. These policies have been determined by our board of directors and, in general, may be amended or revised from time to time by our board of directors without a vote of our stockholders.

Investment Policies

Investments in Real Estate or Interests in Real Estate

We will conduct all of our investment activities through our Operating Partnership, Wheeler REIT, L.P., and its subsidiaries. Our investment objectives are to maximize the cash flow of our properties, acquire properties with cash flow growth potential, provide monthly cash distributions and achieve long-term capital appreciation for our stockholders through increases in the value of our company. Consistent with our policy to acquire assets for both income and capital gain, 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 investment objectives. We have not established a specific policy regarding the relative priority of these investment objectives.

We expect to pursue our investment objectives primarily through the ownership by our Operating Partnership of our portfolio of properties and other acquired properties and assets. We currently intend to invest primarily in retail properties. Future investment or development activities will not be limited to any geographic area, property type or to a specified percentage of our assets. While we may diversify in terms of property locations, size and market, 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 activities in a manner that is consistent with the maintenance of our status as a REIT for U.S. federal income tax purposes. In addition, we may purchase or lease income-producing 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 also participate with third parties in property ownership, through joint ventures or other types of co-ownership. We also may acquire real estate or interests in real estate in exchange for the issuance of common stock, units, preferred stock or options to purchase stock. These types of investments may permit us to own interests in larger assets without unduly restricting our diversification and, therefore, provide us with flexibility in structuring our portfolio. We will not, however, enter into a joint venture or other partnership arrangement to make an investment that would not otherwise meet our investment policies.

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 properties. Debt service on such financing or indebtedness will have a priority over any dividends with respect to our common stock. Investments are also subject to our policy not to fall within the definition of an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

Investments in Real Estate Mortgages

We do not intend presently or at any time in the future to invest in real estate mortgages.

Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Although not presently contemplated, subject to the percentage of ownership limitations and the income and asset tests necessary for REIT qualification, we may in the future invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers where such investment would be consistent with our investment objectives. We may

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invest in the debt or equity securities of such entities, including for the purpose of exercising control over such entities. We have no current plans to invest in entities that are not engaged in real estate activities. While we may attempt to diversify our investments with respect to the retail properties owned by such entities, in terms of property locations, size and market, we do not have any limit on the amount or percentage of our assets that may be invested in any one entity, property or geographic area. Our investment objectives are to maximize cash flow of our investments, acquire investments with growth potential and provide cash distributions and long-term capital appreciation to our stockholders through increases in the value of our company. We have not established a specific policy regarding the relative priority of these investment objectives. We will not underwrite the securities of any other issuers and will limit our investment in such securities so that we will not fall within the definition of an “investment company” under the 1940 Act.

Investments in Other Securities

Other than as described above, we do not currently intend to invest in any additional securities such as bonds, preferred stocks or common stock, although we reserve the right to do so if our board of directors determines that such action would be in our best interests.

Dispositions

We do not currently intend to dispose of any of our properties, although we reserve the right to do so if, based upon management’s periodic review of our portfolio, our board of directors determines that such action would be in our best interests. The tax consequences to our directors and executive officers who hold units resulting from a proposed disposition of a property may influence their decision as to the desirability of such proposed disposition.

Financings and Leverage Policy

In the future, we anticipate using a number of different sources to finance our acquisitions and operations, including cash flows from operations, asset sales, seller financing, issuance of debt securities, private financings (such as additional bank credit facilities, which may or may not be secured by our assets), property-level mortgage debt, common or preferred equity issuances or any combination of these sources, to the extent available to us, or other sources that may become available from time to time. Any debt that we incur may be recourse or non-recourse and may be secured or unsecured. We also may take advantage of joint venture or other partnering opportunities as such opportunities arise in order to acquire properties that would otherwise be unavailable to us. We may use the proceeds of our borrowings to acquire assets, to refinance existing debt or for general corporate purposes.

Although we are not required by our governing documents to maintain a ratio of debt to total market capitalization at any particular level, our Board of Directors will review our ratio of debt to total capital on a quarterly basis, with the goal of maintaining a reasonable rate consistent with our expected ratio of debt to total market capitalization going forward. Additionally, we intend, when appropriate, to employ prudent amounts of leverage and to use debt as a means of providing additional funds for the acquisition of assets, to refinance existing debt or for general corporate purposes. We expect to use leverage conservatively, assessing the appropriateness of new equity or debt capital based on market conditions, including prudent assumptions regarding future cash flow, the creditworthiness of tenants and future rental rates. Our charter and bylaws do not limit the amount of debt that we may incur. Our board of directors has not adopted a policy limiting the total amount of debt that we may incur.

Our board of directors will consider a number of factors in evaluating the amount of debt that we may incur. If we adopt a debt policy, our board of directors may from time to time modify such policy in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. Our decision to use leverage in the future to finance our assets will be at our discretion and will not be subject to the approval of our stockholders, and we are not restricted by our governing documents or otherwise in the amount of leverage that we may use.

Lending Policies

We have not made any loans to third parties, although we do not have a policy limiting our ability to make loans to other persons. We may consider offering purchase money financing in connection with the sale of properties where the provision of that financing will increase the value to be received by us for the property sold. We also may make loans to joint

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ventures in which we participate. However, we do not intend to engage in significant lending activities. Any loan we make will be consistent with maintaining our status as a REIT.

Equity Capital Policies

To the extent that our board of directors recommends that we obtain additional capital, we may issue debt or equity securities, including additional units or senior securities of our Operating Partnership, retain earnings (subject to provisions in the Code requiring distributions of income to maintain REIT qualification) or pursue a combination of these methods. As long as our Operating Partnership is in existence, we will generally contribute the proceeds of all equity capital raised by us to our Operating Partnership in exchange for additional interests in our Operating Partnership, which will dilute the ownership interests of the limited partners in our Operating Partnership.

Existing stockholders will have no preemptive rights to common or preferred stock or units issued in any securities offering by us, and any such offering might cause a dilution of a stockholder’s investment in us. Although we have no current plans to do so, we may in the future issue shares of common stock or units in connection with acquisitions of property.

We may, under certain circumstances, purchase shares of our common stock or other securities in the open market or in private transactions with our stockholders, provided that those purchases are approved by our board of directors. Our board of directors has no present intention of causing us to repurchase any shares of our common stock or other securities, and any such action would only be taken in conformity with applicable federal and state laws and the applicable requirements for qualification as a REIT.

Change in Investment and Financing Objectives and Policies

Our investment policies and objectives and the methods of implementing our investment objectives and policies, except to the extent set forth in our charter, may be altered by our board of directors, without the approval of our stockholders. If we change these policies during the offering period, we will disclose these changes in a prospectus supplement prior to the effective time of these changes. If we change these policies after the offering, we will inform our stockholders of the change within ten days after our board of directors alters our investment objectives and policies, by either a press release or notice of an “other event” on a Current Report on Form 8-K or another method deemed reasonable by our board of directors.

Conflict of Interest Policies

Overview. Conflicts of interest 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 applicable 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 other partners under Virginia law and 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 (where our Operating Partnership is formed), 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 duty of loyalty requires a general partner of a Virginia general partnership to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the general partner in the conduct of the partnership business or derived from a use by the general partner of partnership property, including the appropriation of a partnership opportunity, to refrain from dealing with the partnership in the conduct of the partnership’s business as or on behalf of a party having an interest adverse to the partnership and to refrain from competing with the partnership in the conduct of the partnership business, although the Partnership Agreement may identify specific types or categories of activities that do not violate the duty of loyalty. 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. The duty of care

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requires a general partner to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law, and this duty may not be unreasonably reduced by the Partnership Agreement.

The Partnership Agreement provides that we are not liable to our Operating Partnership or any partner for monetary damages for losses sustained, liabilities incurred or benefits not derived by our Operating Partnership or any limited partner, except for liability for our intentional harm or gross negligence. The Partnership Agreement also provides that any obligation or liability in our capacity as the general partner of our Operating Partnership that may arise at any time under the Partnership Agreement or any other instrument, transaction or undertaking contemplated by the Partnership Agreement will be satisfied, if at all, out of our assets or the assets of our Operating Partnership only, and no obligation or liability of the general partner will be personally binding upon any of our directors, stockholders, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise, and none of our directors or officers will be liable or accountable in damages or otherwise to the partnership, any partner or any assignee of a partner for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or any act or omission. Our Operating Partnership must indemnify us, our directors and officers, officers of our Operating Partnership and any other person designated by us against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, that relate to the operations of the 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) for any transaction for which such person actually received an improper personal benefit in violation or breach of any provision of the Partnership Agreement, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe 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.

No reported decision of a Virginia appellate court has interpreted provisions similar to the provisions of the Partnership Agreement of our Operating Partnership that modify or reduce the fiduciary duties and obligations of a general partner or reduce or eliminate our liability for money damages to the Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the Partnership Agreement that purport to modify or reduce our fiduciary duties that would be in effect were it not for the Partnership Agreement.

Sale or Refinancing of Properties. Upon the sale of certain of the properties to be owned by us, certain unitholders could incur adverse tax consequences which are different from the tax consequences to us and to holders of our common stock. Consequently, unitholders may have differing objectives regarding the appropriate pricing and timing of any such sale or repayment of indebtedness.

While we will have the exclusive authority under the Partnership Agreement to determine whether, when, and on what terms to sell a property or when to refinance or repay indebtedness, any such decision would require the approval of our board of directors.

Policies Applicable to All Directors and Officers. Our charter and bylaws do not restrict any of our directors, officers, stockholders or affiliates from having a pecuniary interest in an investment or transaction that we have an interest in or from conducting, for their own account, business activities of the type we conduct. We intend, however, to adopt policies that are designed to eliminate or minimize potential conflicts of interest, including a policy for the review, approval or ratification of any related party transactions. This policy will provide that the audit committee of our board of directors will review the relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party before approving such transaction. We have adopted a code of business conduct and ethics, which provides that all of our directors, officers and employees are prohibited from taking for themselves opportunities that are discovered through the use of corporate property, information or position without our consent. However, we cannot assure you that these policies or provisions of law will always be successful in eliminating the influence of such conflicts, and if they are not successful, decisions could be made that might fail to reflect fully the interests of all stockholders.

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Interested Director and Officer Transactions

Pursuant to the Maryland General Corporation Law (“MGCL”), a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of our directors is a director or has a material financial interest is not void or voidable solely on the grounds of such common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof, provided that:


•	the fact of the common directorship or interest is disclosed or known to our board of directors or a committee of our board, and our board or such committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;


•	the fact of the common directorship or interest is disclosed or known to our stockholders entitled to vote thereon, and the transaction or contract is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director or corporation, firm or other entity; or


•	the transaction or contract is fair and reasonable to us at the time it is authorized, ratified or approved.

Furthermore, under Virginia law, we, as general partner, have a fiduciary duty of loyalty to our Operating Partnership and its partners and, consequently, such transactions also are subject to the duties that we, as general partner, owe to the Operating Partnership and its limited partners (as such duty has been modified by the Partnership Agreement). We have adopted a policy that requires that all contracts and transactions between us, our Operating Partnership or any of our subsidiaries, on the one hand, and any of our directors or executive officers or any entity in which such director or executive officer is a director or has a material financial interest, on the other hand, must be approved by the affirmative vote of a majority of our disinterested directors even if less than a quorum. Where appropriate, in the judgment of the disinterested directors, our board of directors may obtain a fairness opinion or engage independent counsel to represent the interests of non-affiliated security holders, although our board of directors will have no obligation to do so.

Policies With Respect To Other Activities

We have authority to offer common stock, preferred stock or options to purchase stock in exchange for property and to repurchase or otherwise acquire our common stock or other securities in the open market or otherwise, and we may engage in such activities in the future. We expect, but are not obligated, to issue common stock to holders of common units upon exercise of their redemption rights. Our board of directors has the authority, without further stockholder approval, to amend our charter to increase or decrease the number of authorized shares of common stock or preferred stock and authorize us to issue additional shares of common stock or preferred stock, in one or more series, including senior securities, in any manner, and on the terms and for the consideration, it deems appropriate. We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers other than our Operating Partnership and do not intend to do so. 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 Treasury regulations, our board of directors determines that it is no longer in our best interest to qualify as a REIT. In addition, we intend to make investments in such a way that we will not be treated as an investment company under the 1940 Act.

Reporting Policies

We make available to our stockholders our annual reports, including our audited consolidated financial statements. We are subject to the information reporting requirements of the Exchange Act. Pursuant to those requirements, we will be required to file annual and periodic reports, proxy statements and other information, including audited consolidated financial statements, with the SEC.

Item 1A. Risk Factors.

Not applicable.

Item 1B. Unresolved Staff Comments.

Not applicable.

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Item 2. Properties.

Our Portfolio

At December 31, 2014, we own thirty-six properties, consisting of thirty income producing properties located in Virginia, North Carolina, South Carolina, Florida, Georgia, Kentucky, Oklahoma, Tennessee and New Jersey, containing a total of 1,904,146 rentable square feet of retail space, which we refer to as our portfolio. The following table presents an overview of our portfolio, based on information as of December 31, 2014.

Portfolio



Property	Location	Number of Tenants		Gross Leasable Area		Percentage Leased		Annualized Base Rent (1)			Annualized Base Rent per Leased Square Foot
Amscot Building (2)	Tampa, FL	1		2,500		100.00	%	$	100,738		$	40.30
Berkley	Norfolk, VA	(3	)	(3	)	(3	)	(3		)	(3		)
Bixby Commons	Bixby, OK	1		75,000		100.00	%	768,500			10.25
Bryan Station	Lexington, KY	9		54,397		100.00	%	551,570			10.14
Clover Plaza	Clover, SC	10		45,575		100.00	%	349,843			7.68
Courtland Commons	Courtland, VA	(3	)	(3	)	(3	)	(3		)	(3		)
Crockett Square	Morristown, TN	4		107,122		100.00	%	871,897			8.14
Cypress Shopping Center	Boiling Springs, SC	13		80,435		91.73	%	755,162			10.23
Edenton Commons	Edenton, NC	(3	)	(3	)	(3	)	(3		)	(3		)
Forrest Gallery	Tullahoma, TN	26		214,451		93.18	%	1,181,234			5.91
Freeway Junction	Stockbridge, GA	17		156,834		97.75	%	1,008,303			6.58
Graystone Crossing	Tega Cay, SC	11		21,997		100.00	%	504,443			22.93
Harbor Point	Grove, OK	(3	)	(3	)	(3	)	(3		)	(3		)
Harps at Harbor Point	Grove, OK	1		31,500		100.00	%	364,432			11.57
Harrodsburg Marketplace	Harrodsburg, KY	8		60,048		97.00	%	438,106			7.52
Jenks Plaza	Jenks, OK	5		7,800		100.00	%	143,416			18.39
Jenks Reasors	Jenks, OK	1		81,000		100.00	%	912,000			11.26
LaGrange Marketplace	LaGrange, GA	13		76,594		93.34	%	385,317			5.39
Lumber River Village	Lumberton, NC	12		66,781		100.00	%	499,890			7.49
Monarch Bank	Virginia Beach, VA	1		3,620		100.00	%	250,538			69.21
Perimeter Square	Tulsa, OK	8		58,277		95.70	%	677,789			12.15
Port Crossing	Harrisonburg, VA	8		65,365		92.40	%	777,742			12.88
Riversedge North	Virginia Beach, VA	(4	)	(4	)	(4	)	(4		)	(4		)
Shoppes at TJ Maxx	Richmond, VA	16		93,552		96.20	%	1,047,809			11.64
South Square	Lancaster, SC	5		44,350		89.85	%	318,822			8.00
Starbucks/Verizon (2)	Virginia Beach, VA	2		5,600		100.00	%	185,695			33.16
St. George Plaza	St. George, SC	6		59,279		85.75	%	354,383			6.97
Surrey Plaza	Hawkinsville, GA	5		42,680		100.00	%	291,495			6.83
Tampa Festival	Tampa, FL	22		137,987		100.00	%	1,224,156			8.87
The Shoppes at Eagle Harbor	Carrollton, VA	7		23,303		100.00	%	478,546			20.54
Tulls Creek	Moyock, NC	(3	)	(3	)	(3	)	(3		)	(3		)
Twin City Commons	Batesburg-Leesville, SC	5		47,680		100.00	%	449,194			9.42
Walnut Hill Plaza	Petersburg, VA	11		87,239		85.22	%	593,323			7.98
Waterway Plaza	Little River, SC	8		49,750		92.76	%	396,233			8.59
Westland Square	West Columbia, SC	7		62,735		85.69	%	435,311			8.10
Winslow Plaza	Sicklerville, NJ	15		40,695		94.10	%	542,130			14.16
Total Portfolio		258		1,904,146		95.61	%	$	16,858,017		$	9.26


(1)	Annualized base rent per leased square foot excludes the impact of tenant concessions.


(2)	We own the Amscot building and Starbucks/Verizon building, but we do not own the land underneath the buildings and instead lease the land pursuant to ground leases with parties that are affiliates of Jon Wheeler. As discussed in the financial statements in Item 15, these ground leases require us to make annual rental payments and contain escalation clauses and renewal options.


(3)	This information is not available because the property is undeveloped.


(4)	This property is our corporate headquarters that we 100% occupy.

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Outstanding Indebtedness

As of December 31, 2014, our outstanding indebtedness was approximately $141.5 million. The following table sets forth information with respect to such indebtedness:



	Amount of Debt Outstanding as of December 31, 2014		Weighted Average Interest Rate		Maturity Date	Amortization Period (Mths)	Annual Debt Service		Balance at Maturity
Shoppes at Eagle Harbor	$	3,773,319	4.34	%	3/11/2018	240	$	301,200	$	3,341,138
Lumber River Plaza	2,894,862		5.65	%	5/1/2015	120	220,968		2,874,034
Monarch Bank Building	1,430,961		4.15	%	12/30/2017	240	113,676		1,275,140
Perimeter Square	4,294,216		6.38	%	6/11/2016	120	337,068		4,133,592
Riversedge North	1,007,856		6.00	%	1/16/2019	360	105,624		807,901
Walnut Hill Plaza	3,626,945		5.50	%	7/10/2017	240	291,276		3,389,003
Harps at Harbor Point	3,251,552		3.99	%	12/14/2015	300	217,464		3,186,314
Twin City Commons	3,279,076		4.86	%	1/6/2023	360	213,924		2,747,631
Shoppes at TJ Maxx	6,248,349		3.88	%	5/1/2020	300	406,560		5,294,355
Bixby Commons	6,700,000		2.77	%	6/11/2018	204	185,590		6,244,252
VantageSouth Line of Credit	2,074,432		4.25	%	9/16/2015	N/A	88,163		2,074,432
Forrest Gallery	9,045,880		5.40	%	9/6/2023	360	611,676		7,794,407
Jenks Reasors	8,550,000		4.25	%	9/23/2016	N/A	363,375		8,550,000
Tampa Festival	8,746,860		5.56	%	9/6/2023	360	609,568		7,483,025
Starbucks/Verizon	652,044		5.00	%	7/2/2019	240	52,596		553,571
Winslow Plaza	5,000,000		5.22	%	12/1/2015	N/A	261,000		5,000,000
Cypress Shopping Center	6,625,000		4.70	%	7/6/2024	240	311,375		5,688,422
Harrodsburg Marketplace	3,735,739		4.55	%	9/1/2024	240	229,344		3,044,312
Port Crossing	6,568,918		4.84	%	8/1/2024	240	417,456		5,410,500
LaGrange Marketplace	2,463,909		5.00	%	3/26/2020	120	162,968		2,231,507
Freeway Junction	8,150,000		4.60	%	9/6/2024	240	16,932		6,914,589
DF I-Courtland	115,728		6.50	%	1/15/2019	60	17,109		73,317
Edenton Commons	1,650,000		3.75	%	9/30/2016	N/A	1,061,875		—
DF I-Moyock	522,430		5.00	%	7/30/2019	60	127,980		—
Graystone Crossing	4,000,000		4.55	%	10/26/2024	240	182,000		3,396,917
Bryan Station	4,625,000		4.52	%	11/1/2024	240	209,050		3,959,965
Crockett Square	6,337,500		4.47	%	12/5/2024	240	283,286		4,439,473
Harbor Point	1,544,567		5.85	%	12/6/2016	240	132,288		1,455,827
Senior convertible notes	6,000,000		9.00	%	12/15/2018	N/A	540,000		6,000,000
Senior non-convertible notes	4,000,000		9.00	%	12/15/2015	N/A	360,000		4,000,000
Senior non-convertible notes	2,160,000		9.00	%	1/31/2016	N/A	194,400		2,160,000
South Carolina Food Lions Note	12,375,000		5.25	%	1/6/2024	360	649,440		10,728,916
	$	141,450,143

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Major Tenants

The following table sets forth information regarding the ten largest tenants in our operating portfolio based on annualized base rent as of December 31, 2014.



Tenants	Total Gross Leaseable Area	Percent of Total Gross Leasable Area		Annualized Base Rent ($ in 000s)		Percent of Total Annualized Base Rent		Base Rent Per Leased Square Foot
Food Lion	191,280	10.05	%	$	1,459	8.65	%	$	7.63
Bi-Lo/Winn Dixie	168,358	8.84	%	1,269		7.53	%	7.54
Kroger	84,938	4.46	%	534		3.17	%	6.29
Reasor's Foods	81,000	4.25	%	912		5.41	%	11.26
Associated Wholesale Grocers	75,000	3.94	%	769		4.56	%	10.25
Hobby Lobby	58,935	3.10	%	383		2.27	%	6.50
Family Dollar	48,827	2.56	%	293		1.74	%	6.00
Food Depot	46,700	2.45	%	140		0.83	%	3.00
Citi Trends	36,034	1.89	%	246		1.46	%	6.83
Goodwill	36,015	1.89	%	270		1.60	%	7.50
	827,087	43.43	%	$	6,275	37.22	%	$	7.59

Lease Expirations

The following table sets forth information with respect to the lease expirations of our properties as of December 31, 2014.



Lease Expiration Year	Number of Expiring Leases	Total Expiring Gross Leaseable Area	Percent of Total Gross Leaseable Area		Expiring Base Rent (in 000s)		Percent of Total Base Rent		Expiring Base Rent Per Leased Square Foot
Available	—	83,570	4.39	%	$	—	—		$	—
2015	41	193,144	10.14	%	1,888		11.20	%	9.78
2016	53	273,269	14.35	%	2,525		14.98	%	9.24
2017	45	191,323	10.05	%	1,940		11.51	%	10.14
2018	42	462,449	24.29	%	3,419		20.28	%	7.39
2019	34	183,256	9.62	%	1,829		10.85	%	9.98
2020	15	97,253	5.11	%	1,018		6.04	%	10.47
2021	3	103,570	5.44	%	712		4.22	%	6.87
2022	5	25,479	1.34	%	392		2.33	%	15.39
2023	5	44,024	2.31	%	445		2.64	%	10.11
2024 and thereafter	15	246,809	12.96	%	2,690		15.95	%	10.90
		1,904,146	100.00	%	$	16,858	100.00	%	$	9.26

Property Management and Leasing Strategy

We administer our property management and substantially all of our leasing activities and operating and administrative functions (including leasing, legal, acquisitions, development, data processing, finance and accounting). On-site functions such as maintenance, landscaping, sweeping, plumbing and electrical are subcontracted out at each location and, to the extent permitted by their respective leases, the cost of these functions is passed on to the tenants.

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We believe that focused property management, leasing and customer retention are essential to maximizing the sales per square foot, operating cash flow and value of our properties. Our primary goal in property management is to maintain an attractive shopping environment on a cost effective basis for our tenants.

The majority of our property management and leasing functions are supervised and administered by us. We maintain regular contact with our tenants and frequently visit each asset to ensure the proper implementation and execution of our market strategies. As part of our ongoing property management, we conduct regular physical property reviews to improve our properties, react to changing market conditions and ensure proper maintenance.

Our leasing representatives have become experienced in the markets in which we operate by becoming familiar with current tenants as well as potential local, regional and national tenants that would complement our current tenant base. We study demographics, customer sales and merchandising mix to optimize the sales performance of our centers and thereby increase rents. We believe this hands-on approach maximizes the value of our shopping centers.

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Depreciation

The following table sets forth depreciation information for our properties as of December 31, 2014.



	Federal Tax Basis		Depreciation Rate		Method of Depreciation	Useful Life Claimed
Shoppes at TJ Maxx	$	6,934,989	3.63	%	Straight-Line	5-39 Years
Walnut Hill Plaza	3,740,255		3.08	%	Straight-Line	5-39 Years
Lumber River Village	4,486,787		3.30	%	Straight-Line	5-39 Years
Perimeter Square	5,191,021		3.43	%	Straight-Line	5-39 Years
The Shoppes at Eagle Harbor	4,477,700		2.76	%	Straight-Line	5-39 Years
Riversedge North	2,282,687		2.43	%	Straight-Line	5-39 Years
Monarch Bank	1,986,363		2.90	%	Straight-Line	5-39 Years
Amscot Building	492,828		2.77	%	Straight-Line	5-39 Years
Harps at Harbor Point	2,891,853		3.19	%	Straight-Line	5-39 Years
Twin City Crossing	3,045,189		3.29	%	Straight-Line	5-39 Years
Surrey Plaza	1,856,515		4.16	%	Straight-Line	5-39 Years
Bixby Commons	6,791,995		3.45	%	Straight-Line	5-39 Years
Tampa Festival	6,849,313		3.86	%	Straight-Line	5-39 Years
Forrest Gallery	7,719,994		4.02	%	Straight-Line	5-39 Years
Jenks Reasors	8,339,838		3.06	%	Straight-Line	5-39 Years
Starbucks/Verizon	1,137,971		3.39	%	Straight-Line	5-39 Years
Jenks Plaza	917,898		9.42	%	Straight-Line	5-39 Years
Winslow Plaza	3,684,286		5.27	%	Straight-Line	5-39 Years
Clover Plaza	1,222,554		2.93	%	Straight-Line	5-39 Years
St. George Plaza	1,271,236		3.21	%	Straight-Line	5-39 Years
South Square	1,911,330		2.65	%	Straight-Line	5-39 Years
Westland Square	1,719,692		3.14	%	Straight-Line	5-39 Years
Waterway Plaza	1,247,952		3.18	%	Straight-Line	5-39 Years
Cypress Shopping Center	4,578,838		2.97	%	Straight-Line	5-39 Years
Harrodsburg Marketplace	2,484,653		3.08	%	Straight-Line	5-39 Years
Port Crossing Shopping Center	7,021,741		4.37	%	Straight-Line	5-39 Years
LaGrange Marketplace	2,659,203		4.51	%	Straight-Line	5-39 Years
Freeway Junction	6,757,222		3.62	%	Straight-Line	5-39 Years
Graystone Crossing	2,856,365		2.90	%	Straight-Line	5-39 Years
Bryan Station	2,756,142		3.32	%	Straight-Line	5-39 Years
Crockett Square	6,833,967		3.66	%	Straight-Line	5-39 Years
Wheeler Real Estate, LLC	53,541		8.03	%	Straight-Line	5-39 Years
Wheeler Interests, LLC	8,734		22.60	%	Straight-Line	5-39 Years
Wheeler Real Estate Investment Trust, Inc.	374,216		13.21	%	Straight-Line	5-39 Years
	$	116,584,868

Item 3. Legal Proceedings

We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

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On July 10, 2008, one of our subsidiaries, Perimeter Associates, LLC (“Perimeter”), sued a tenant for breach of contract, guaranty of the contract and fraud related to an executed lease. In response, on August 22, 2008, the defendant filed a counterclaim against Perimeter for breach of contract, unjust enrichment and fraud. On April 8, 2013, the court found in favor of the defendant and assessed damages against Perimeter in the amount of $13,300. On or about May 8, 2013, Perimeter appealed the judgment of the lower court to the Oklahoma Supreme Court. Subsequent to the initial judgment, the defendant’s attorney applied to the court to be reimbursed for approximately $368,000 in legal fees incurred by the defendant during litigation. On July 9, 2013, the lower court awarded the defendant approximately $267,000 of the defendant’s legal fees. Perimeter expects to amend its appeal with the Oklahoma Supreme Court to include the issue of the award of legal fees. We have posted bonds for both judgments and have accrued for the judgments in our financial statements. We will continue to vigorously litigate the issues raised upon appeal.

On May 22, 2013, WHLR-HPA-1, LLC, (“Harp’s”), a subsidiary of our Operating Partnership that owns our Harps and Harbor Point property, (“Harp’s Food Store”), filed suit against Crossland Heavy Contractors (“Crossland”) for equitable relief to divide a mechanic and materialmen’s lien (“Lien”) of approximately $856,000 filed on three properties which includes the Harp’s Food Store property and two adjacent properties owned by our affiliates. Crossland subsequently filed a counterclaim adding us, among others, as a defendant to the case. The Lien relates to cost overruns incurred by Crossland during the construction and development process that occurred prior to us acquiring the Harp’s Food Store property. On October 22, 2013, the parties reached a settlement whereby it was agreed that the Lien would be paid in full by November 22, 2013. Since the Lien related to construction and development costs incurred prior to us acquiring the property, the affiliated parties that developed the property intended to fully satisfy the Lien, resulting in no liability to us. However, since there was no evidence as of September 30, 2013 that the affiliated parties had finalized their funding sources to satisfy the Lien, management concluded that the appropriate treatment was to accrue the $856,000 in the September 30, 2013 financial statements. On January 31, 2014, Crossland removed the lien as our affiliates fulfilled their obligation to pay the Lien. Accordingly, the accrual was reversed as of December 31, 2013 since the Lien was satisfied without liability to us and the consolidated financial statements had not been issued when the Lien was released.

Item 4. Mine Safety Disclosures

Not applicable.

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Part II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market Information.

Our common stock is traded on the NASDAQ Capital Market under the symbol “WHLR”. On March 24, 2015, the closing price of our common stock reported on the NASDAQ Capital Market was $2.39 per share. The high and low common stock sales prices per share during the periods indicated were as follows:



Price per share of common stock:
Quarter Ended	Mar. 31		June 30		Sept. 30		Dec. 31		Year
Fiscal Year 2014
High	$	4.86	$	5.08	$	5.16	$	4.67	$	5.16
Low	$	4.14	$	4.35	$	4.45	$	3.94	$	3.94

Quarter Ended
Fiscal Year 2013
High	$	5.66	$	5.92	$	5.27	$	4.41	$	5.92
Low	$	5.47	$	5.17	$	4.00	$	3.74	$	3.74

Our Series B preferred stock is traded on the NASDAQ Capital Market under the symbol “WHLRP”. On March 24, 2015, the closing price of our common stock reported on the NASDAQ Capital Market was $23.75 per share. Our Series B preferred stock began trading on April 30, 2014. The high and low preferred stock sales prices per share during the periods indicated were as follows:

Price per share of Series B preferred stock:

Quarter Ended

Mar. 31

June 30

Sept. 30

Dec. 31

Year

Fiscal Year 2014

High

N/A

27.43

25.55

23.85

27.43

Low

N/A

24.20

23.20

21.28

Quarter Ended

Fiscal Year 2013

High

N/A

Low

N/A

Approximate Number of Holders of Our Common Shares

As of March 24, 2015 there were 99 holders of record of our common shares and 1 holder of our Series B preferred shares. This number excludes our common and Series B preferred stock owned by shareholders holding under nominee security position listings.

Dividend Policy

We pay cash dividends to holders of our common stock on a monthly basis. We intend to make dividend distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay income and excise taxes. We may in the future also choose to pay dividends in shares of our common stock. While we intend to maintain the annual $0.42 per share dividend for the foreseeable future, our current cash flow does not support this amount. Accordingly, we may be forced to reduce the annual dividend if the cash flow deficit continues for an extended period of time. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Future Liquidity Needs.”

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Dividend Payments

We have made dividend payments to holders of our common stock and holders of common units in our Operating Partnership as follows in 2014 and 2013:



Dividend Period	Record Date	Payment Date	Payment Amount per Share or Unit
January 1, 2014 - January 31, 2014	1/31/2014	2/28/2014	$	0.035
February 1, 2014 - February 28, 2014	3/1/2014	3/31/2014	$	0.035
March 1, 2014 - March 31, 2014	3/31/2014	4/30/2014	$	0.035
April 1, 2014 - April 30, 2014	4/30/2014	5/31/2014	$	0.035
May 1, 2014 - May 31, 2014	5/31/2014	6/30/2014	$	0.035
June 1, 2014 - June 30, 2014	6/30/2014	7/31/2014	$	0.035
July 1, 2014 - July 31, 2014	7/31/2014	8/31/2014	$	0.035
August 1, 2014 - August 31, 2014	8/31/2014	9/30/2014	$	0.035
September 1, 2014 - September 30, 2014	9/30/2014	10/31/2014	$	0.035
October 1, 2014 - October 31, 2014	10/31/2014	11/30/2014	$	0.035
November 1, 2014 - November 30, 2014	11/30/2014	12/31/2014	$	0.035
December 1, 2014 - December 31, 2014	12/31/2014	1/31/2015	$	0.035



Dividend Period	Record Date	Payment Date	Payment Amount per Share or Unit
November 19, 2012 - December 31, 2012	1/1/2013	1/31/2013	$	0.490
January 1, 2013 - January 31, 2013	2/1/2013	2/28/2013	$	0.035
February 1, 2013 - February 28, 2013	3/1/2013	3/31/2013	$	0.035
March 1, 2013 - March 31, 2013	3/31/2013	4/30/2013	$	0.035
April 1, 2013 - April 30, 2013	4/30/2013	5/31/2013	$	0.035
May 1, 2013 - May 31, 2013	5/31/2013	6/30/2013	$	0.035
June 1, 2013 - June 30, 2013	6/30/2013	7/31/2013	$	0.035
July 1, 2013 - July 31, 2013	7/31/2013	8/31/2013	$	0.035
August 1, 2013 - August 31, 2013	8/31/2013	9/30/2013	$	0.035
September 1, 2013 - September 30, 2013	9/30/2013	10/31/2013	$	0.035
October 1, 2013 - October 31, 2013	10/31/2013	11/30/2013	$	0.035
November 1, 2013 - November 30, 2013	11/30/2013	12/31/2013	$	0.035
December 1, 2013 - December 31, 2013	12/31/2013	1/31/2014	$	0.035

We have made dividend payments to holders of our Series B preferred stock as follows in 2014:



Dividend Period	Record Date	Payment Date	Payment Amount per Share or Unit
April 26, 2014 - June 30, 2014	6/30/2014	7/15/2014	$	38.75
July 1, 2014 - September 30, 2014	9/30/2014	10/15/2014	$	56.25
October 1, 2014 - December 31, 2014	12/31/2014	1/15/2015	$	56.25

Security Authorized For Issuance Under Equity Compensation Plan

Please see Item 11 for a discussion regarding our equity compensation plan.

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Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the notes thereto included in this Form 10-K, and the consolidated financial statements and the notes thereto. For more detailed information regarding the basis of presentation for the following information, you should read the notes to the audited consolidated financial statements included in this Form 10-K.

Company Overview

We are a Maryland corporation formed with the principle objective of acquiring, financing, developing, leasing, owning and managing income producing, strip centers, neighborhood centers, grocery-anchored centers, community centers and free-standing retail properties. Our strategy is to opportunistically acquire quality, well-located, predominantly retail properties in secondary and tertiary markets that generate attractive risk-adjusted returns. We generally target 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. Our primary target markets include the Northeast, Mid-Atlantic, Southeast and Southwest.

Our portfolio is comprised of twenty-four retail shopping centers, six free-standing retail properties, our office building and five undeveloped land parcels. Nine of these properties are located in Virginia, two are located in Florida, three are located in North Carolina, eight are located in South Carolina, three are located in Georgia, two are located in Kentucky, two are located in Tennessee, one is located in New Jersey, and six are located in Oklahoma. Our portfolio has a total GLA of 1,904,146 square feet and an occupancy level of approximately 96%.

Recent Trends and Activities

There have been several significant events in 2014 that have positively impacted our company. These events are summarized below.

Property Acquisitions

On July 1, 2014, we completed our acquisition of Cypress Shopping Center, an 80,435 square foot grocery-anchored shopping center located in Boiling Springs, South Carolina (“Cypress”) for a contract price of $8.30 million, paid through a combination of cash and debt. Cypress is currently 92% leased and its major tenants include Bi-Lo and Dollar General.

On July 1, 2014, we completed our acquisition of Harrodsburg Marketplace, a 60,048 square foot grocery-anchored shopping center located in Harrodsburg, Kentucky ("Harrodsburg") for a contract price of $5.00 million, paid through a combination of cash and debt. Harrodsburg is currently 97% leased and its major tenants include Kroger and Arby's.

On July 3, 2014, we completed our acquisition of Port Crossing Shopping Center, a 65,365 square foot grocery-anchored shopping center located in Harrisonburg, Virginia ("Port Crossing") for a contract price of $9.31 million. Port Crossing is 92% leased and is anchored by a Food Lion grocery store. We acquired the property from a related party through a combination of cash, the issuance of 157,429 common units in the Operating Partnership and the assumption of outstanding debt.

On July 25, 2014, we completed the acquisition of LaGrange Marketplace, a 76,594 square foot grocery-anchored shopping center located in LaGrange, Georgia ("LaGrange") for a contract price of $3.70 million. LaGrange is 93% leased and is anchored by a Food Depot grocery store. We acquired the property from a related party through a combination of cash, the issuance of 105,843 common units in the Operating Partnership and the assumption of outstanding debt.

On August 15, 2014, we completed the acquisition of DF I-Courtland, LLC ("DF I-Courtland"), consisting of a 1.01 acre parcel of undeveloped real estate located in Courtland, Virginia, for a contract price of $893,900. We believe that this parcel can accommodate a 8,400 square foot facility. There are currently no development plans for DF I-Courtland, but we believe that it could support a retail facility that would be complementary to our existing portfolio.

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On August 15, 2014, we completed the acquisition of DF I-Moyock, LLC ("DF I-Moyock"), consisting of a 1.28 acre parcel of undeveloped real estate located in Moyock, North Carolina, for a contract price of $908,100. We believe that this parcel can accommodate a 9,000 square foot facility. There are currently no development plans for DF I-Moyock, but we believe that it could support a retail facility that would be complementary to our existing portfolio.

On August 15, 2014, we completed the acquisition of Edenton Commons ("Edenton Commons"), consisting of a 53.82 acre parcel of undeveloped real estate located in Edenton, North Carolina, for a contract price of $2.40 million. We believe that this parcel can accommodate a 225,000 square foot facility. There are currently no development plans for Edenton Commons, but we believe that it could support a retail facility that would be complementary to our existing portfolio.

On September 4, 2014, we completed the acquisition of Freeway Junction, a 156,834 square foot shopping center located in Stockbridge, Georgia ("Freeway Junction") for a contract price of $10.45 million, paid through a combination of cash and debt. Freeway Junction is 98% leased and is anchored by Northern Tool, Ollie's Bargain Outlet, Goodwill and Farmer's Furniture.

On September 26, 2014, we completed the acquisition of Graystone Crossing, a 21,997 square foot shopping center located in Tega Cay, South Carolina ("Graystone Crossing") for a contract price of $5.4 million, paid through a combination of cash and debt. Graystone Crossing is 100% leased and is anchored by T-Mobile, Tropical Smoothie Cafe, and Edible Arrangements.

On October 2, 2014, we completed the acquisition of Bryan Station, an 54,397 square foot retail center located in Lexington, Kentucky (“Bryan Station”) for a contract price of $6.10 million, paid through a combination of cash and debt. Bryan Station is currently 100% leased and its major tenants include Planet Fitness and Shoe Carnival.

On October 24, 2014, the Operating Partnership entered into a Membership Interest Contribution Agreement ("Contribution Agreement") with Mr. Wheeler for the contribution of Mr. Wheeler's membership interests in Wheeler Interests, LLC, Wheeler Real Estate, LLC and WHLR Management, LLC (collectively known as the "Operating Companies"). These entities were wholly owned by Mr. Wheeler at the time of the Contribution Agreement. The purpose of the Contribution Agreement was to internalize the management of the Trust. Pursuant to the terms of the Contribution Agreement, Mr. Wheeler received 1,516,853 common units of the Operating Partnership worth $6.75 million at the time of issuance.

On November 5, 2014, we completed the acquisition of Crockett Square, a 107,122 square foot retail center located in Morristown, Tennessee ("Crockett Square") for a contract price of $9.75 million, paid through a combination of cash and debt. Crockett Square is currently 100% leased and its major tenants include Hobby Lobby, Dollar Tree, Pier 1 Imports and Ross Dress for Less.

On November 21, 2014, we completed the acquisition of Harbor Point Associates, LLC ("Harbor Point"), consisting of a 7.2 acre parcel of undeveloped real estate located in Grove, Oklahoma, for a contract price of $2.4 million. We believe that this parcel can accommodate a 45,700 square foot facility. There are currently no development plans for Harbor Point, but we believe that it could support a retail facility that would be complementary to our existing portfolio.

On December 1, 2014, we completed the acquisition of DF I-Berkley, LLC ("DF I-Berkley"), a parcel of approximately 1.0 acre of undeveloped real estate located in Norfolk, Virginia, for a contract price of $250,000. We believe that this parcel can accommodate a 6,500 square foot facility. There are currently no development plans for DF I-Berkley, but we believe that it could support a retail facility that would be complementary to our existing portfolio.

Financing Activities

The Riversedge North loan matured on April 16, 2013, and was subsequently extended to January 16, 2014. On January 16, 2014, we renewed the loan until January 16, 2019. The loan requires monthly principal and interest payments based on a 15 year amortization with a fixed interest rate of 6.00%.

On March 11, 2013, we entered into a promissory note for $4.0 million to refinance the Shoppes at Eagle Harbor loan that matured in February 2013. The new loan matures on March 11, 2018 and requires monthly principal and interest payments based on a 20 year amortization and a 4.34% interest rate.

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On April 19, 2013, we entered in a promissory note for $6.5 million to refinance the Shoppes at TJ Maxx loan that matured on that date. The new loan matures on May 1, 2020 and requires monthly principal and interest payments based on a 25 year amortization and a 3.88% fixed interest rate.

On June 3, 2013, we entered into a promissory note with Monarch Bank for a $2.0 million line of credit. The line of credit matured on May 12, 2014, provided for an interest rate of 4.5% per annum and was guaranteed by a Deed of Trust and Assignment of Rents on real property.

On July 2, 2014, we entered into a promissory note for $660,000 to refinance the Starbucks/Verizon loan. The new loan matures on July 2, 2019 and requires monthly principal and interest payments based on a 20 year amortization and a 5.00% fixed interest rate.

The Walnut Hill loan matured on April 11, 2014, and was subsequently extended until July 31, 2014. On July 31, 2014, we entered into a promissory note for $3.65 million to refinance the note that matured. The new loan matures on July 30, 2017 and requires monthly principal and interest payments based on a 20 year amortization and a 5.50% fixed interest rate.

On September 16, 2014, we entered into a promissory note for a $3.0 million line of credit. The line of credit matures on September 16, 2015, provides for an interest rate of 4.25% per annum and is guaranteed by a Deed of Trust and Assignment of Rents on real property. Concurrently with this transaction, we paid off our $2.0 million Monarch Bank line of credit.

Certain debt agreements into which we have entered have covenants with which we must comply. As of December 31, 2014, we believe we are in compliance with the applicable covenants.

On December 16, 2013, we completed a $10.0 million private placement transaction with eight accredited investors (the “Buyers”). Pursuant to the securities purchase agreement, dated as of December 16, 2013 (the “December 2013 Securities Purchase Agreement”), we sold convertible and nonconvertible 9% senior notes and warrants to purchase shares of our common stock totaling $10.0 million dollars. We completed the financings in two concurrent tranches. The first tranche consisted of $6.0 million in convertible senior notes due December 15, 2018. During the first two years, the convertible notes will only be available for conversion upon the completion of a secondary offering of common stock in excess of $20 million at a conversion rate of the lesser of 95% of the secondary offering’s per share price or $5.50. After two years, holders of the convertible notes can convert at their discretion at a conversion rate of the lesser of 90% of the market price of our common stock or $5.50. The maximum number of shares of stock issuable upon conversion of the convertible notes is 1,417,079 shares.

The second tranche consisted of $4.0 million in nonconvertible senior notes due December 15, 2015. In addition to the non-convertible notes, we issued 421,053 warrants with an exercise price of $4.75. The warrants were subject to obtaining shareholder approval for the transaction and the issuance of the common stock underlying the warrants which occurred in June 2014.

In connection with the private placement transaction, we and the Buyers entered into a Registration Rights Agreement, dated as of December 16, 2013 (the “December 2013 Registration Rights Agreement”). Pursuant to the December 2013 Registration Rights Agreement, we agreed to file and maintain a registration statement with the Securities and Exchange Commission for the resale of the shares of common stock underlying the convertible notes and the warrants. Interest on the convertible and nonconvertible senior notes of 9% per annum will be payable monthly.

Pursuant to a First Amendment to the December 2013 Securities Purchase Agreement, dated as of January 31, 2014 (the “First Amendment”), we and the Initial Investors amended the December 2013 Securities Purchase Agreement solely to increase the maximum size of the offering to an aggregate of $12.16 million. In accordance with the terms of the December 2013 Securities Purchase Agreement, as amended by the First Amendment, as of January 31, 2014, we completed a second closing (the “Second Closing”) consisting of the private placement of $2.160 million of non-convertible notes and warrants to purchase shares of our common stock with fourteen accredited investors (the “Secondary Investors”). The non-convertible senior notes have an interest rate of 9.0% (which will be paid monthly) and mature on January 31, 2016. The warrants issued permit the Secondary Investors to purchase an aggregate 227,372 shares of our common stock, have an exercise price of $4.75 per share, expire on January 31, 2019 and were subject to obtaining shareholder approval for this transaction and the issuance of the common stock underlying the warrants which occurred in June 2014.

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New Leases, Leasing Renewals and Expirations

New leases during the year ended December 31, 2014 were comprised of sixteen deals totaling 37,596 square feet with a weighted average rate of $12.43 per square foot. The commission rate per square foot equated to $5.44.

Renewals during the year ended December 31, 2014 were comprised of thirty-three deals totaling 139,053 square feet with a weighted average increase of $0.23 per square foot, representing an increase of 6.6% over prior rates. The rates on negotiated renewals resulted in a weighted average increase of $1.03 per square foot on twenty-nine renewals and a $5.19 per square foot decrease on four renewals. Fifteen of these renewals represented options being exercised. We also had a lease assignment for a 4,100 square foot space with all lease terms remaining the same.

Approximately 10.14% of our gross leasable area is subject to leases that expire during the twelve months ending December 31, 2015 that have not already been renewed. Based on recent market trends, we believe that these leases will be renewed at amounts and terms comparable to existing lease agreements.

Funds from Operations

We use Funds From Operations (“FFO”) as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999 and April 2002). As defined by NAREIT, FFO represents net income (computed in accordance with accounting principles generally accepted in the United States, or “GAAP”), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

Critical Accounting Policies

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting policies summarized in this section are discussed in further detail in the notes to the financial statements appearing elsewhere in this Form 10-K. We believe that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Revenue Recognition

Principal components of our total revenues include base and percentage rents and tenant reimbursements. We accrue minimum (base) rent on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset or deferred rent liability being recorded on the balance sheet. Certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent) which we recognize when the tenants achieve the specified targets as defined in their lease agreements. We periodically review the valuation of the asset/liability resulting from the straight-line accounting treatment of our leases in light of any changes in lease terms, financial condition or other factors concerning our tenants.

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Receivables

We record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease; our standard lease form considers a rent charge past due after five days. A past due receivable triggers certain events such as notices, fees and other allowable and required actions per the lease.

Acquired Properties and Lease Intangibles

We allocate the purchase price of the acquired properties to land, building and improvements, identifiable intangible assets and to the acquired liabilities based on their respective fair values. Identifiable intangibles include amounts allocated to acquired out-of-market leases and the value of in-place leases. We determine fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the property. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Such amounts are based on estimates and forecasts which, by their nature, are highly subjective and may result in future changes in the event forecasts are not realized.

Impairment of Long-Lived Assets

We periodically review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable, with an evaluation performed at least annually. These circumstances include, but are not limited to, declines in the property’s cash flows, occupancy and fair market value. We measure any impairment of investment property when the estimated undiscounted operating income before depreciation and amortization, plus its residual value, is less than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value. We estimate fair value using unobservable data such as operating income, estimated capitalization rates or multiples, leasing prospects and local market information. We may decide to sell properties that are held for use and the sale prices of these properties may differ from their carrying values. We did not record any impairment charges during the years ended December 31, 2014 and 2013.

Liquidity and Capital Resources

At December 31, 2014, our consolidated cash and cash equivalents totaled $9.97 million compared to consolidated cash and cash equivalents of $1.16 million at December 31, 2013. Cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2014 and 2013 are as follows:



	Years Ended December 31,				Period Over Period Change
	2014		2013		$			%
Operating activities	(4,441,020	)	(2,451,570	)	$	(1,989,450	)	81.15	%
Investing activities	(18,161,992	)	(22,582,154	)	$	4,420,162		(19.57	)%
Financing activities	31,417,677		24,135,615		$	7,282,062		30.17	%

Operating Activities

During the year ended December 31, 2014, our cash flows used in operating activities were $4,441,020, compared to cash flows used in operating activities of $2,451,570 during the year ended December 31, 2013. Operating cash flows were primarily impacted by the $7,370,589 increase in our consolidated net loss due to the factors discussed in the "Results of Operations" section below, specifically the $4,198,545 increase in total corporate general and administrative expenses associated with operating the REIT and acquiring and operating eight additional properties in 2014. Due to these factors, our FFO decreased $2,617,056 for the year ended December 31, 2014, compared to the same period in 2013. FFO is a non-GAAP measurement. (See Funds from Operations reconciliation to net income).

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Investing Activities

During the year ended December 31, 2014, our cash flows used in investing activities were $18,161,992, compared to cash flows used in investing activities of $22,582,154 during the year ended December 31, 2013. The decrease primarily related to approximately $17,640,587 paid for the acquisitions completed in 2014, compared to $21,875,065 paid for the acquisitions completed in 2013.

Financing Activities

During the year ended December 31, 2014, our cash flows from financing activities were $31,417,677, compared to $24,135,615 of cash flows from financing activities during the year ended December 31, 2013. During the year ended December 31, 2014, we received $37,242,941 of proceeds from the sale of Series B preferred stock, compared to $3,943,936 of proceeds from the sale of preferred stock, and $11,862,198 from the completion of our secondary common stock offering in 2013. During the year ended December 31, 2014, we also received $2,160,000 in proceeds from the issuance of senior non-convertible notes, compared to $10.0 million in proceeds from similar issuances in 2013. These proceeds were partially offset by dividends and distributions, which increased to $5,432,518 in the year ended December 31, 2014 from $2,886,574 during the year ended December 31, 2013, primarily resulting from the additional common shares outstanding due to the August 2013 offering and the additional dividends paid on the preferred stock which totaled $1,790,750.

Mortgage indebtedness activity during the year ended December 31, 2014 included the refinancing of $6.9 million in loans that matured during the period, the $2.16 million in senior notes and $46.7 million in loans in conjunction with the 2014 acquisitions. Excluding the net impact of the refinancing transactions, principal payments on mortgage indebtedness was approximately $2,718,000 during the year ended December 31, 2014, compared to approximately $814,000 during the year ended December 31, 2013.

We intend to continue managing our debt prudently so as to maintain a conservative capital structure and minimize leverage within our company. As of December 31, 2014 and 2013, our debt balances consisted of the following:



	December 31,
	2014		2013
Fixed-rate notes	$	141,450,143	$	94,562,503

The increase in total mortgage indebtedness at December 31, 2014 is primarily due to $46.7 million in debt from acquisitions made during 2014, and from the $2.16 million in senior non-convertible notes issued in January 2014. The weighted average interest rate and term of our fixed-rate debt are 5.14% and 6.04 years, respectively, at December 31, 2014. We have $19.51 million of debt maturing during the year ending December 31, 2015. While we anticipate being able to refinance all the loans at reasonable market terms upon maturity, our inability to do so may materially impact our financial position and results of operations. See the financial statements included elsewhere in this Form 10-K for additional mortgage indebtedness details.

Future Liquidity Needs

The $19.51 million in debt maturities, ongoing debt service and the $0.42 per share targeted dividend we intend to pay for the next 12 months represent the most significant factors outside of normal operating activities impacting cash flow over the next year. Our success in refinancing the debt and executing on the acquisition strategy discussed below will dictate our liquidity needs going forward. If we are unable to execute in these areas, our ability to grow and pay future dividends may be limited without additional capital. Additionally, distributions paid in excess of earnings and profits may represent a return of capital for U.S. federal income tax purposes.

We believe significant opportunities exist in the current commercial real estate environment that will enable us to sufficiently leverage our capital and execute our growth plan. Several factors are contributing to an increased supply in available properties for acquisition, including a significant level of maturities of commercial mortgage backed securities (“CMBS”) debt, strategic shifts by larger REITs to reduce debt levels and exit certain markets, and the negative impact on the real estate industry as a result of the economic downtown experienced in recent years. We believe the public REIT model provides a unique growth vehicle whereby we can either acquire properties through traditional third party acquisitions using a combination of cash generated in the capital markets and debt financing; contributions of properties by third parties in exchange for common units issued by the Operating Partnership; and contributions of existing properties owned and managed by

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Mr. Wheeler and his affiliates in exchange for common units issued by the Operating Partnership. Additionally, access to public market capital enhances our ability to formulate acquisition structures and terms that better meet our growth strategies.

We envision acquiring properties during the next twelve months, consisting primarily of a blend of traditional acquisitions using equity capital and external financing and property contributions in exchange for common units and debt assumption. Based on our knowledge of the property acquisition markets, there appears to be an ample inventory of properties available to enable us to meet our acquisition goals over the next twelve months, especially as it relates to those in the secondary and tertiary markets where we have historically excelled. Current cap rates in these markets have typically ranged from 8% to 10% and beyond. We believe that acquisitions at these price ranges, assuming a reasonable blend of traditional acquisition strategies and property contributions in exchange for common units and external debt financing, will produce excess cash flow to fund distributions to our stockholders and common unit holders. We intend to aggressively pursue acquisitions that fit these parameters and that will generate sufficient cash flow to support our operating model. Since 1999, Mr. Wheeler and his affiliates have acquired in excess of 60 properties. We believe our experience and success in acquiring and managing these properties will enable us to execute on our strategies.

In addition to liquidity required to fund debt payments, distributions and acquisitions, we may incur some level of capital expenditures during the year for the existing thirty retail properties that cannot be passed on to our tenants. The majority of these expenditures occur subsequent to acquiring a new property that requires significant improvements to maximize occupancy and lease rates, with an existing property that needs a facelift to improve its marketability or when tenant improvements are required to make a space fit a particular tenant’s needs.

On April 1, 2014, we announced that we had entered into a $25 million secured guidance line credit facility with KeyBank National Association. We will be able to utilize this credit facility until December 31, 2015. We expect to use the facility for the acquisition of select grocery-anchored properties located in secondary and tertiary markets throughout the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States.

On March 19, 2015, we completed our Series C Mandatorily Convertible Cumulative Perpetual Preferred Stock offering, raising approximately $90,000,000 to fund contemplated acquisitions and for general working capital purposes. Compass Point Research & Trading, LLC acted as the lead placement agent and received a commission in the amount of $5,565,000. Please see Note 9 to the consolidated financial statements for details.

Off-Balance Sheet Arrangements

As of December 31, 2014, we were not involved in any significant off-balance sheet arrangements that are likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

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Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013

Results of Operations

The following table presents a comparison of the consolidated statements of operations for the years ended December 31, 2014 and 2013, respectively.



	For the Years Ended December 31,						Period over Period Changes
	2014			2013			$/#			%
PROPERTY DATA:
Number of properties owned and leased (1)	30			22			8			36.4	%
Aggregate gross leasable area (1)	1,904,146			1,284,022			620,124			48.3	%
Ending occupancy rate (1)	95.6		%	94.0		%	—			1.7	%
FINANCIAL DATA:
Rental revenues	$	13,598,681		$	7,158,549		$	6,440,132		89.96	%
Asset management fees	296,290			—			296,290			—	%
Commissions	158,876			—			158,876			—	%
Tenant reimbursements and other income	3,105,405			1,548,943			$	1,556,462		100.49	%
Total Revenue	17,159,252			$	8,707,492		8,451,760			97.06	%
EXPENSES:
Property operations	4,314,599			1,713,957			2,600,642			151.73	%
Depreciation and amortization	8,220,490			3,466,957			4,753,533			137.11	%
Provision for credit losses	60,841			106,828			(45,987		)	(43.05	)%
Corporate general & administrative	9,495,711			5,297,166			4,198,545			79.26	%
Total Operating Expenses	22,091,641			10,584,908			11,506,733			108.71	%
Operating Loss	(4,932,389		)	(1,877,416		)	(3,054,973		)	162.72	%
Interest expense	(6,813,426		)	(2,497,810		)	(4,315,616		)	172.78	%
Net Loss	(11,745,815		)	(4,375,226		)	(7,370,589		)	168.46	%
Net loss attributable to noncontrolling interests	(1,195,560		)	(714,972		)	(480,588		)	67.22	%
Net Loss Attributable to Wheeler REIT	$	(10,550,255	)	$	(3,660,254	)	$	(6,890,001	)	188.24	%

(1) Excludes Riversedge North that ceased paying rent upon acquired the Operating Companies.

Same Store and New Store Operating Income

The following table provides same store and new store financial information. Same stores consist of those properties we owned during all periods presented in their entirety, while new stores consist of those properties acquired during the periods presented. Same store data includes the 2014 and 2013 twelve month results of the following entities:


•	The Shoppes at Eagle Harbor


•	Monarch Bank Building


•	Amscot Building


•	Riversedge North


•	Walnut Hill Plaza


•	Wheeler Real Estate Investment Trust, Inc.


•	Wheeler Real Estate Investment Trust, L.P.


•	Lumber River Village


•	Perimeter Square


•	Shoppes at TJ Maxx


•	Harps at Harbor Point


•	Twin City Crossing


•	Surrey Plaza

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New store financial information reflects the activity for the following entities:


•	Bixby Commons (acquired June 11, 2013)


•	Tampa Festival (acquired August 26, 2013)


•	Forrest Gallery (acquired August 29, 2013)


•	Jenks Reasors (acquired September 25, 2013)


•	Starbucks/Verizon (acquired October 21, 2013)


•	Jenks Plaza (acquired December 17, 2013)


•	Winslow Plaza (acquired December 19, 2013)


•	Clover Plaza (acquired December 23, 2013)


•	St. George Plaza (acquired December 23, 2013)


•	South Square (acquired December 23, 2013)


•	Waterway Plaza (acquired December 23, 2013)


•	Westland Square (acquired December 23, 2013)


•	Cypress Shopping Center (acquired July 1, 2014)


•	Harrodsburg Marketplace (acquired July 2, 2014)


•	Port Crossing Shopping Center (acquired July 3, 2014)


•	LaGrange Marketplace (acquired July 25, 2014)


•	DF I-Courtland (acquired August 15, 2014)


•	DF I-Moyock (acquired August 15, 2014)


•	Edenton Commons (acquired August 15, 2014)


•	Freeway Junction (acquired September 4, 2014)


•	Graystone Crossing (acquired September 26, 2014)


•	Bryan Station (acquired October 2, 2014)


•	Crockett Square (acquired November 5, 2014)


•	Harbor Point (acquired November 21, 2014)


•	DF I-Berkley (acquired December 1, 2014)

Same Store and New Store Operating Income

The following table provides same store and new store financial information.



	Year Ended December 31,
	Same Store						New Store						Total
	2014			2013			2014			2013			2014			2013
Property revenues	$	6,398,546		$	6,543,707		$	10,305,540		$	2,163,785		$	16,704,086		$	8,707,492
Property expenses	1,355,391			1,275,541			2,959,208			438,416			4,314,599			1,713,957
Property Net Operating Income	5,043,155			5,268,166			7,346,332			1,725,369			12,389,487			6,993,535
Asset Management and Commission Revenues	—			—			455,166			—			455,166			—
Depreciation and amortization	1,973,012			2,683,581			6,247,478			783,376			8,220,490			3,466,957
Provision for credit losses	(25,332		)	106,828			86,173			—			60,841			106,828
Corporate general & administrative	5,054,203			3,127,458			4,441,508			2,169,708			9,495,711			5,297,166
Total Other Operating Expenses	7,001,883			5,917,867			10,775,159			2,953,084			17,777,042			8,870,951
Interest expense	3,222,442			1,876,890			3,590,984			620,920			6,813,426			2,497,810
Net Loss	$	(5,181,170	)	$	(2,526,591	)	$	(6,564,645	)	$	(1,848,635	)	$	(11,745,815	)	$	(4,375,226	)

Property Revenues

Total same store property revenues for the year ended December 31, 2014 were $6,398,546, compared to $6,543,707 for the year ended December 31, 2013, representing a decrease of $145,161, or 2.22%. The decrease in same store revenues primarily resulted from Riversedge not paying rent and tenant reimbursements during November and December 2014 due to the internalization of the Operating Companies, and a reduction in amortization of below market leases. Seven of the centers

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representing same stores are 100% leased and two are in excess of 95% leased, resulting in nominal fluctuations in revenues at these centers.

The year ended December 31, 2014 represents a partial year of operations for the twelve acquisitions made in 2014. The 2014 and 2013 acquisitions contributed $10.31 million in revenues for the year ended December 31, 2014. Going forward we believe these properties will generate a significant amount of revenue for our company and we will benefit from future contractual rent increases.

Property Expenses

Total same store operating expenses for the year ended December 31, 2014 were $1,355,391, compared to $1,275,541 for the year ended December 31, 2013, respectively. The increase was primarily due to increases in repairs and maintenance and utility expenses which typically fluctuate from period to period depending on timing and weather. Four of the same store centers are free-standing buildings, one center was built in 2009 and another center was significantly renovated during 2008. Accordingly, those centers require minimal maintenance. Additionally, two of the free-standing buildings have triple-net leases in which the tenant is responsible for the majority of all operating costs to the properties.

Other Operating Expenses

Same store other operating expenses for the year ended December 31, 2014 were $7,001,883, representing an increase of $1,084,016 over the year ended December 31, 2013. The increase is primarily associated with professional fees and other expenses as a result of being a publicly traded company, property acquisitions and legal matters, and two months of operating expenses resulting from internalizing the Operating Companies during October 2014. The expenses related to being a publicly traded company primarily consisted of costs associated with legal, audit, tax, Board of Directors fees, directors’ and officers’ insurance, investor relations, REIT management fees and consulting fees.

Total acquisition expenses for same and new stores were $3,787,907, which included $2,691,000 in acquisition fees, and approximately $879,000 for legal, accounting and other professional costs associated with these acquisitions. This compares to $2,856,000 of acquisition related costs incurred during 2013.

Same store depreciation and amortization expense for the year ended December 31, 2014 decreased $710,569, or 26.48%, resulting from more assets becoming fully depreciated and amortized.

Interest Expense

Same store interest expense increased $1,345,552 or 71.69% for the year ended December 31, 2014, compared to $1,876,890 for the year ended December 31, 2013. The increase primarily resulted from interest of approximately $1,078,000 on the $12.16 million of senior convertible and non-convertible notes issued in December 2013 and January 2014. Total interest expense for the year ended December 31, 2014 increased $4,315,616 or 172.78% compared to the year ended December 31, 2013, primarily due to the $46.7 million increase in debt resulting from the acquisitions made in 2014.

Funds from Operations

Below is a comparison of same store FFO, which is a non-GAAP measurement, for the years ended December 31, 2014 and 2013:



	Years Ended December 31,
	Same Stores						New Stores						Total						Period Over Period Changes
	2014			2013			2014			2013			2014			2013			$			%
Net (loss)	$	(5,181,170	)	$	(2,526,591	)	$	(6,564,645	)	$	(1,848,635	)	$	(11,745,815	)	$	(4,375,226	)	$	(7,370,589	)	168.46	%
Depreciation of real estate assets	1,973,012			2,683,581			6,247,478			783,376			8,220,490			3,466,957			4,753,533			137.11	%
Total FFO	$	(3,208,158	)	$	156,990		$	(317,167	)	$	(1,065,259	)	$	(3,525,325	)	$	(908,269	)	$	(2,617,056	)	288.14	%

During the year ended December 31, 2014, same store FFO decreased $3,365,148 as compared to the year ended December 31, 2013, primarily due to an increase of $1,926,745 in same store corporate general and administrative expenses for the year ended December 31, 2014. The increase in corporate general and administrative expenses is discussed in the “Other

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Operating Expenses” section above. Excluding the impact of acquisition related costs and certain non-cash items, total FFO for the years ended December 31, 2014 and 2013 would have been approximately $(1,125,658) and $1,600,171, respectively, as shown in the table below.

We believe that the computation of FFO in accordance with NAREIT’s definition includes certain items that are not indicative of the results provided by our operating portfolio and affect the comparability of our period-over-period performance. These items include, but are not limited to, legal settlements, non-cash share-based compensation expense, non-cash amortization on loans and acquisition costs. Therefore, in addition to FFO, management uses Core FFO, which we define to exclude such items. Management believes that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of our assets. In addition, we believe that Core FFO is a useful supplemental measure for the investing community to use in comparing us to other REITs as many REITs provide some form of adjusted or modified FFO. However, there can be no assurance that Core FFO presented by us is comparable to the adjusted or modified FFO of other REITs.



	Years Ended December 31,
	2014			2013
Total FFO	$	(3,525,325	)	$	(908,269	)
Preferred stock dividends	(2,718,257		)	(141,418		)
Total FFO available to common shareholders and common unitholders	(6,243,582		)	(1,049,687		)
Acquisition costs	3,787,900			2,856,000
Share-based compensation	456,988			—
Perimeter legal accrual	—			267,000
Other amortization and noncash adjustments	873,036			(473,142		)
Total Core FFO	$	(1,125,658	)	$	1,600,171

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Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012

Results of Operations

The following table presents a comparison of the consolidated statements of operations for the years ended December 31, 2013 and 2012, respectively.



	For the Years Ended December 31,						Period over Period Changes
	2013			2012			$/#			%
PROPERTY DATA:
Number of properties owned and operated	23			11			12			109.09	%
Aggregate gross leasable area	1,294,572			470,350			824,222			175.24	%
Ending occupancy rate	94.0		%	94.3		%	(0.3		)%	(0.32	)%
FINANCIAL DATA:
Rental revenues	$	7,158,549		$	1,963,681		$	5,194,868		264.55	%
Other revenues	1,548,943			470,298			1,078,645