CDR-PB 10-K & 10-Q changes, risk factors and insider trading

In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions as further described under the caption above entitled "Cautionary StatementNote on Forward-Looking Statements." Our actual results or other events and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the caption above entitled "Cautionary StatementNote on Forward-Looking Statements." 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.

The following properties were sold during the yearsyear ended December 31, 2024 and 20232025:

Stock Repurchase ProgramPrograms

On August 8, 2024, the Board of Directors authorized the repurchase of up to an aggregate amount of $10.0 million of Preferred Stock over a period of twelve months.months, Duringwhich theexpired yearon endedAugust December8, 31, 2024, there were no repurchases of Series B Preferred Stock and 102,636 shares of Series C Preferred Stock were repurchased under such authorization and retired. See Note 11, Shareholders' Equity, included in Item 8 below for further information.2025.

On December 27, 2024, the Company announced and commenced the December 2024 Tender Offer. Following the expiration of the December 2024 Tender Offer on January 28, 2025, the Company accepted for purchase 645,276 shares of its Series C Preferred Stock at $15.75 per share for approximately $10.2 million.million, Seeexcluding Noterelated 11, Shareholders' Equity,fees and Note 15, Subsequent Events, included in Item 8 below for further information.expenses.

The Company is a subsidiary of WHLR. WHLR performs property management and leasing services for the Company pursuant to the Wheeler Real Estate Company Management Agreement (as defined below). The management fee is 4% of gross operating income, and leasing commissions range from 3% to 6%.6%, and sales commissions range from 0% to 4%, contingent on third-party broker arrangement. During the years ended December 31, 20242025 and 2023,2024, the Company paid WHLR $1.4$0.7 million and $2.1$1.4 million, respectively, for these services. The Operating Partnership and WHLR's operating partnership, Wheeler REIT, L.P., are party to a cost sharing and reimbursement agreement, pursuant to which the parties agreed to share costs and expenses associated with certain employees, certain facilities and property, and certain arrangements with third parties (the "Cost Sharing Agreement"). As of December 31, 20242025 and 2023,2024, the related party amounts due to WHLR were $9.5$11.3 million and $8.1$9.5 million, respectively. See Note 11 of "Notes to Consolidated Financial Statements" included in Item 8 below for information regarding the preferred stock contributions from WHLR.

Rental income with scheduled rent increases is recognized using the straight-line method over the respective non-cancelable terms of the leases. The aggregate excess of rental revenue recognized on a straight-line basis over the contractual base rents is included in receivablesreceivables, net on the consolidated balance sheets. Leases also generally contain provisions under which the tenants reimburse the Company for a portion of property operating expenses and real estate taxes incurred, generally attributable to their respective allocable portions of gross leasable area. Such income is recognized in the periods earned. In addition, a limited number of operating leases contain contingent rent provisions under which tenants are required to pay, as additional rent, a percentage of their sales in excess of a specified amount. The Company defers recognition of contingent rental income until those specified sales targets are met.

Management reviews each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability of real estate investments held for use is based on an estimate of the future cash flows that are expected to result from the real estate investment's use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, capital expenditures, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value. A real estate investment held for sale is carried at the lower of its carrying amount or estimated fair value, less the cost of a potential sale. Depreciation and amortization are suspended during the period the property is held for sale. Management is required to make subjective assessments as to whether there are impairments in the value of its real estate properties. These assessments have a direct impact on net income,income (loss), because an impairment loss is recognized in the period that the assessment is made.

Revenues were lower primarily as a result of (1) a decrease of $1.03$5.69 million in rental revenues and tenant reimbursements, net of credit adjustments on operating lease receivables, attributable to properties that were sold in 2024 and 2025, (2) a decrease in other income of $0.09 million attributable to one-time transactions, partially offset by (3) an increase of $0.27 million in market lease amortization and straight line rents, partially offset by (2) an increase in other income of $0.76 million attributable to one-time transactions and (34) an increase of $0.19$0.63 million in rental revenues and expensetenant recoveries,reimbursements, net of credit adjustments on operating lease receivables.receivables, attributable to Same-Properties (as defined below).

DepreciationProperty and amortizationoperating expenses were lower primarily as a result of (1) a decrease of $1.47$2.88 million in property operating expenses attributable to properties that were sold in 2024 and 2025, partially offset by (2) aan decreaseincrease of $0.77$0.34 million in property operating expenses attributable to sameSame-Properties center(as properties.defined below).

Gain on sales, net in 2025 relate to the sales of Carll's Corner, a South Philadelphia land parcel, Oregon Avenue, and Webster Commons, and in 2024 relatesrelate to the sales of the South Philadelphia retail center, Kings Plaza, the Brickyard Plaza land parcel, and Oakland Commons, and in 2023 relates to the sale of the outparcel building adjacent to Carll's Corner.Commons.

Impairment charges in 2025 relate to Fieldstone Marketplace and in 2024 relate to Oregon Avenue.

Same-property net operating income ("Same-Property NOI") is a widely-used non-GAAP financial measure for REITsREITs. The Company believes that theSame-Property Company believes, when considered with financial statements prepared in accordance with GAAP,NOI is a useful tomeasure investors.of the Company's property operating performance. The Company defines Same-Property NOI as property revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes) for properties that are owned and operated for the entirety of both periods being compared.. Because Same-Property NOI excludes above (below) market lease amortization, straight-line rents, general and administrative expenses, depreciation and amortization, gain or loss on sale or capital expenditures and leasing costs and impairment charges, it provides a performance measure, that when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from operating income. The Company uses Same-Property NOI to evaluate its operating performance since Same-Property NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company's results, margins and returns. Properties are included in Same-Property NOI if they are owned and operated for the entirety of both periods being compared ("Same-Property" or "Same-Properties"). Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from Same-Property NOI.

The following table reconcilesis a reconciliation of Same-Property NOI to the Company's consolidatedfrom operating income (loss) (the most directly comparable GAAP financial measure):

Same-Property NOI for the comparable years increased 0.9%1.7% primarily as a result of an increase in expense recoveries,recoveries and base rents, partially offset by an increase in property operating expenses.

The Company funds operating expenses and other liquidity requirements, including debt service and loan maturities, tenant improvements, and leasing commissions, primarily from its operations, asset sales and the $30.6$15.9 million in cash, cash equivalents and restricted cash as of December 31, 2024.2025. The Company does not have any scheduled debt maturities for the year ending December 31, 2025.2026, except for the monthly principal payments relating to Timpany Plaza. The Company is working to increase revenue by improving occupancy, which includes backfilling vacant anchor spaces and replacing defaulted tenants. Tenant improvements and leasing commissions for these efforts will be partially funded by restricted cash, strategic disposition of assets and financing of properties.

In 2024 and through the 2025 expiration of the December 2024 Tender Offer,2025, the Company has repurchasedretired a total of 1,436,5822,770,778 shares of Series C Preferred Stock forand a purchase pricetotal of 592,372 shares of Series B Preferred Stock, which carried an aggregate liquidation value of $84.1 million, for approximately $21.2$53.4 millionmillion, under the Repurchase Program and through the two Tenders Offers, excludingincluding fees and expenses. These repurchasesretirements were funded by asset sales. In addition,sales, the CompanyApril has2025 beenBridge Loan, and the August 2025 Credit Facility. The shares retired in 2024 and 2025 will reduce future annual dividend payments by $5.6 million. The Company intends to continue repurchasing its Preferred Stock as both series are currently trading at a discount to their liquidation value, presenting a strategic opportunity to buy back shares at favorable prices. By reducing the number of shareholders eligible for dividend payments, the Company believes it can offset the net operating income lost from the recent sales of certain properties as it seeks to enhance its financial stability, strengthen its balance sheet, optimize its capital allocation, and maximize shareholder value. On February 21, 2025, the Company announced and commenced the February 2025 Tender Offers (as defined below). See Note 15 of "Notes to Consolidated Financial Statements" included in Item 8 below for further information.

Net cash provided by operating activities, before net changes in operating assets and liabilities, was $7.2 million for 2025. Net cash provided by operating activities, before net changes in operating assets and liabilities, was $10.2 million for 2024. Net cash provided by operating activities, before net changes in operating assets and liabilities, was $8.7 million for 2023. The increasedecrease was primarily a result of otherproperty incomedispositions attributablein to one-time transactions2024 and lower corporate general and administrative costs.2025.

Net cash flows provided by (used in) investing activities were primarily the result of net proceeds received from the sale of real estate, partially offset by the Company's expenditures for property improvements. During 2024,2025, the Company received $16.7$33.5 million of net proceeds from the sale of 4 properties and a land parcel, which was partially offset by $3.5 million of expenditures for property improvements. During 2024, the SouthCompany Philadelphiareceived retail center, $13.7$37.2 million of net proceeds from the sale of Kings3 Plaza, $5.7 million of net proceeds from the sale of Oakland Commons,properties and $1.1 million of net proceeds from the sale of the Brickyard Plazaa land parcel, which was partially offset by $11.6 million of expenditures for property improvements. During 2023, the Company incurred $6.5 million of expenditures for property improvements, which was partially offset by $2.8 million of net proceeds related to the sale of the outparcel building adjacent to Carll's Corner. These increases in expenditures are a result of increased leasing activity.

During 2025, the Company paid $41.9 million for the repurchase of preferred stock, paid down variable-rate borrowings of $19.3 million primarily under the August 2025 Credit Facility and the April 2025 Bridge Loan, paid down fixed-rate borrowings of $9.2 million primarily under the October 2022 Term Loan Agreement, paid $6.6 million of preferred stock dividends, paid $0.5 million in a loan prepayment premium, and paid $0.5 million of debt financing costs, which was partially offset by $15.3 million in proceeds received from the August 2025 Credit Facility and $10.0 million in proceeds received from the April 2025 Bridge Loan. During 2024, the Company paid $11.5 million for the repurchase of preferred stock, paid $10.4 million of preferred stock dividends, paid down borrowings of $5.2 million under the February 29, 2024 revolving credit agreement with KeyBank National Association ("Revolving Credit Agreement,Agreement"), paid $0.5 million of term loan principal, and paid $0.4 million of debt financing costs, which was partially offset by $5.2 million in proceeds received from the Revolving Credit Agreement and $2.5 million in proceeds received related to the Timpany Plaza Loan Agreement (as defined below). During 2023, the Company paid $10.8 million of preferred stock dividends and $0.4 million of debt financing costs, which was partially offset by $9.1 million received related to the Timpany Plaza Loan Agreement.

A reconciliation of net income (loss) attributable to common shareholders to FFO and AFFO is as follows:

Inflation, Deflation and Economic ConditionMacroeconomic Considerations

Evolving macroeconomic conditions, including global macroeconomic challenges such as changes in trade policies, sanctions, treaties, tariffs, regulatory requirements, uncertainty in the markets, economic instability and fluctuations in inflation and interest rates, may affect our business. Substantially all of the Company's leases contain provisions designed to partially mitigate the negative impact of inflation in the near term. Such lease provisions include clauses that require tenants to reimburse the Company for inflation-sensitive costs such as real estate taxes, insurance and many of the operating expenses it incurs. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, significant inflation rate increases over a prolonged period of time may have a material adverse impact on the Company's business. Conversely, deflation could lead to downward pressure on rents and other sources of income.

Fluctuations in interest rates and governmental tariff-related measures could significantly impact our operating portfolio and overall financial performance. Interest rate increases could result in higher incremental borrowing costs for the Company and our tenants. The duration of the Company's indebtedness and our relatively low exposure to floating rate debt have mitigated the direct impact of inflation and interest rate increases. In a low or stable interest rate environment, we may benefit from lower borrowing costs, enabling strategic investments, acquisitions, or capital returns to shareholders. Additionally, we monitor market conditions to adjust our capital allocation accordingly, maintain a disciplined financial approach and seek to optimize returns while managing exposure to interest rate volatility. The degree and pace of these changes have had and may continue to have impacts on our business. Changes in tariffs could lead to construction cost variances for the Company, additional tenant costs, which may affect rental rates, and shifts in tenant mix that may impact the Company's operating income.

The Company is a fully-integrated real estate investment trust that focuses on owning and operating income producing retail properties with a primary focus on grocery-anchored shopping centers, predominantly located in the Northeast, and is a subsidiary of WHLR. At MarchJune 31,30, 2026, the Company owned a portfolio of 12 properties.

During the firstthree quarterand ofsix months ended June 30, 2026, WHLR entered into subscription agreements with certain investors to issue WHLR’s Series D Cumulative Convertible Preferred Stock in exchange for the Company's Series C Preferred Stock held by such investors. Immediately following the closingsclosing of suchthe transactions, WHLR contributed a total of 294,00014,950 shares of Series B Preferred Stock and 127,050 shares of Series C Preferred Stock to the Company.Company for the three months ended June 30, 2026, and a total of 14,950 shares of Series B Preferred Stock and 421,050 shares of Series C Preferred Stock to the Company for the six months ended June 30, 2026.

The Company is a subsidiary of WHLR. WHLR performs property management and leasing services for the Company pursuant to the Wheeler Real Estate Company Management Agreement. The management fee is 4% of gross operating income; leasing commissions range from 3% to 6%, and sales commissions range from 0% to 4%, contingent on third-party broker arrangement. During the three and six months ended MarchJune 31,30, 2026, the Company paid WHLR $0.5 million and $0.7 million for these services, respectively. During the three and six months ended June 30, 2025, the Company paid WHLR $0.2 million forand these services. During the three months ended March 31, 2025, the Company paid WHLR $0.5$0.7 million for these services.services, respectively. The Operating Partnership and WHLR's operating partnership, Wheeler REIT, L.P., are party to the Cost Sharing Agreement. As of MarchJune 31,30, 2026 and December 31, 2025, the related party amounts due to WHLR were $11.5 million and $11.3 million, respectively.

Depreciation and amortization expenses were lower primarily as a result of (1) a decrease of $0.21$0.39 million in depreciation and amortization attributable to sold properties,properties partially offset byand (2) ana increasedecrease of $0.02$0.01 million in depreciation and amortization attributable to Same-Properties (as defined below).

Interest expense, net was higher as a result of (1) a decrease of $0.11 million in interest income, (2) an increase of $0.08$0.06 million in amortization expense of deferred financing costs, partially offset by (23) ana increasedecrease of $0.03$0.05 million in interest expense relating to the changes in the overall weighted average principal debt balance and the overall weighted average interest rate, and (3) a decrease of $0.10 million in interest income.rate.

Same-Property NOI for the three and six months ended MarchJune 31,30, 2026 increaseddecreased 5.8%6.1% and 0.5%, respectively, compared to the same periodperiods in the prior year. The increasedecreases for the three months and six months ended MarchJune 31,30, 2026 waswere primarily due to ana increasedecrease in base rents and expense recoveries, partially offset by an increase in operatingbase expenses.rents.

The Company funds operating expenses and other liquidity requirements, including debt service and loan maturities, tenant improvements, and leasing commissions, primarily from its operations, asset sales and the $16.3$17.5 million in cash, cash equivalents and restricted cash as of MarchJune 31,30, 2026. The Company does not have any scheduled debt maturities for the twelve months ending MarchJune 31,30, 2027, except for the principal payments relating to Timpany Plaza. The Company is working to increase revenue by improving occupancy, which includes backfilling vacant anchor spaces and replacing defaulted tenants. Tenant improvements and leasing commissions for these efforts will be partially funded by restricted cash, strategic disposition of assets and financing of properties.

For the three months ended MarchJune 31,30, 2026, the Company retired a total of 294,00014,950 shares of Series B Preferred Stock and 127,050 shares of Series C Preferred Stock. For the six months ended June 30, 2026, the Company retired a total of 14,950 shares of Series B Preferred Stock and 421,050 shares of Series C Preferred Stock. Since 2024, the Company retired a total of 3,064,778607,322 shares of Series CB Preferred Stock and a total of 592,3723,191,828 shares of Series BC Preferred Stock, which carried an aggregate liquidation value of $91.4$95.0 million, for approximately $53.4 million, including fees and expenses. Part of these retirements were funded by asset sales, the April 2025 Bridge Loan and the August 2025 Credit Facility, and part related to contributions from WHLR. The shares retired since 2024 will reduce future annual dividend payments by $6.1$6.3 million. The Company intends to continue repurchasing its Preferred Stock as both series are currently trading at a discount to their liquidation value, presenting a strategic opportunity to buy back shares at favorable prices. By reducing the number of shares eligible for dividend payments, the Company believes it may partially offset the net operating income lost from the recent sales of certain properties as it seeks to enhance its financial stability, strengthen its balance sheet, optimize its capital allocation, and maximize shareholder value.

In order to continue qualifying as a REIT, the Company is required to distribute at least 90% of its "REIT taxable income," as defined in the Internal Revenue Code of 1986, as amended (the "Code"). The Company paid preferred stock dividends through the firstsecond quarter of 2026 and has continued to declare preferred stock dividends through the secondthird quarter of 2026. Future dividend declarations will continue to be at the discretion of the Board of Directors and will depend on the cash flow and financial condition of the Company, capital requirements, annual distribution requirements under the REIT provisions of the Code, and such other factors as the Board of Directors may deem relevant. The Company intends to continue to operate its business in a manner that will allow it to qualify as a REIT for U.S. federal income tax purposes.

Net cash provided by operating activities, before net changes in operating assets and liabilities, was $1.6$3.7 million for the threesix months ended MarchJune 31,30, 2026. Net cash provided by operating activities, before net changes in operating assets and liabilities, was $1.7$3.5 million for the threesix months ended MarchJune 31,30, 2025.

Net cash flows provided by (used in) investing activities were primarily the result of net proceeds received from the sales of real estate and the Company's expenditures for property improvements. During the threesix months ended MarchJune 31,30, 2026, the Company incurred $0.6$0.7 million of expenditures for property improvements. During the threesix months ended MarchJune 31,30, 2025, the Company received $13.9 million of net proceeds from the sale of Webster Commons and $2.8 million of net proceeds from the sale of Oregon Avenue, partially offset by $0.5$1.8 million of expenditures incurred for property improvements.

During the threesix months ended MarchJune 31,30, 2026, the Company paid $1.3$2.4 million of preferred stock dividends.dividends and made $0.1 million of principal payments for the Timpany Plaza Loan. During the threesix months ended MarchJune 31,30, 2025, the Company repurchased $21.2$31.8 million of preferred stock, paid down borrowings of $9.2 million primarily for the October 2022 Term Loan, paid $2.1$3.7 million of preferred stock dividends anddividends, paid $0.5 million in a loan prepayment premium.premium and paid $0.2 million of deferred financing costs, which was partially offset by $10.0 million of proceeds received from the April 2025 Bridge Loan.

A reconciliation of net (loss) income attributable to common shareholders to FFO and AFFO is as follows: