Business Context and Reporting Period
Company: Wheeler Real Estate Investment Trust, Inc. (WHLR)
Filing Type: Form 8-K (Current Report)
Date of Report: March 2, 2022
Event: Entry into a Material Definitive Agreement (Agreement and Plan of Merger).
On March 2, 2022, WHLR entered into a merger agreement to acquire Cedar Realty Trust, Inc. ("Cedar") and its operating partnership in an all-cash transaction. The acquisition targets 19 shopping center assets held by Cedar. The transaction is structured as a two-step merger involving WHLR subsidiaries and Cedar entities.
Key Financial Metrics and Transaction Terms
- Aggregate Merger Consideration: $130.0 million in cash.
- Financing: WHLR secured a debt financing commitment from KeyBank National Association for up to $130.0 million via a bridge loan.
- Security: The debt financing is secured by first mortgage liens on substantially all properties owned by certain subsidiaries of Cedar.
- Termination Fee: Cedar is required to pay WHLR a termination fee of $5.0 million under specific circumstances (e.g., Cedar accepting a superior proposal, failure to close by the drop-dead date without asset sales).
- Dividend: Cedar will declare special pre-closing dividends to shareholders equal to net proceeds from the sale of 33 grocery-anchored shopping centers and certain redevelopment assets, less transaction costs and liabilities.
Note: This filing does not provide WHLR's standalone revenue, profit, cash flow, or margin data for the reporting period.
Material Changes and Conditions
The transaction is subject to several material conditions, including:
- Completion of Cedar's previously announced sale of 33 grocery-anchored shopping centers and certain redevelopment assets ("Cedar Asset Sales").
- Approval by holders of two-thirds of Cedar's outstanding common stock.
- Receipt of a tax opinion confirming Cedar's REIT qualification.
- Absence of a "Company Material Adverse Effect."
- Approval by the boards of directors of both companies (already obtained).
Upon completion, Cedar's common stock will be cancelled and converted into cash. Cedar's Series B and Series C Preferred Stock will remain outstanding in the surviving company and are expected to remain listed on the NYSE.
Outlook, Risks, and Management Commentary
Timeline: The Mergers must be completed by August 30, 2022, subject to a potential 60-day extension under certain circumstances.
Risks and Contingencies:
- Termination Rights: Either party may terminate the agreement if the transaction is not closed by the deadline, if a court enjoins the transaction, or if Cedar's stockholders fail to approve the merger. Cedar may terminate to pursue a "superior proposal."
- Asset Sale Dependency: The transaction is contingent on the successful consummation of Cedar's asset sales. If a purchase agreement for any asset sale is terminated without a qualifying replacement, either party may terminate the Merger Agreement.
- Forward-Looking Statements: The filing includes standard disclaimers regarding risks such as disruption of management attention, financing availability, interest rate changes, and the impact of the COVID-19 pandemic.
Investor Verification Checklist
- Verify the status of Cedar's "Cedar Asset Sales" (sale of 33 grocery-anchored centers), as the merger is conditioned on their completion.
- Monitor Cedar's shareholder vote to ensure the required two-thirds approval is obtained.
- Confirm the final terms and closing of the $130.0 million bridge loan commitment from KeyBank National Association.
- Review the calculation of the special pre-closing dividend to be paid to Cedar shareholders from asset sale proceeds.
- Check for any "superior proposals" that might trigger Cedar's termination rights or the $5.0 million termination fee.