Other Information

You should not return your stock certificate or send documents representing common stock with the proxy card. If the Transactions are completed, the paying agent for the Transactions will send you a letter of transmittal and instructions for exchanging your shares of common stock for the merger consideration.

Questions and Assistance

If you have questions about the Transactions or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor at:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders may call toll-free from the U.S. or Canada: (877) 750-9498

From other locations please dial: +1 (412) 232-3651

Banks and Brokers may call collect: (212) 750-5833

If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.

 

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THE TRANSACTIONS

The following is a description of the material aspects of the Transactions. While the Company believes that the following description covers the material terms of the Transactions, the description may not contain all of the information that is important to stockholders. The Company encourages stockholders to carefully read this entire proxy statement, including the Transaction Agreements and the other documents attached to this proxy statement or incorporated herein by reference, for a more complete understanding of the Transactions.

General

If the Transactions are approved by the Company’s stockholders and all other conditions to the closing of the Transactions are either satisfied or waived, the Grocery-Anchored Purchasers will acquire the Grocery-Anchored Portfolio from the Company for a cash purchase price of $840.0 million (less the outstanding principal balance of any assumed mortgage debt), two of the Company’s redevelopment projects will be sold either to third parties or to the Grocery-Anchored Purchasers for an aggregate cash purchase price of $80.5 million (less the outstanding principal balance of any assumed mortgage debt), and Wheeler will then acquire the Company and its subsidiaries through the merger of Merger Sub with and into the Company, with the Company continuing as the surviving entity. Upon completion of the Mergers, the Company’s common stock will cease to be publicly-traded and will no longer be listed on any stock exchange or quotation system, including the NYSE.

Prior to the consummation of the Mergers, the Board will declare the Closing Dividend, payable to record holders of the Company’s company stock and OP Units, in an aggregate amount equal to the net proceeds available for distribution from all prior assets sales, including the Grocery-Anchored Portfolio Sale, less certain amounts as determined in accordance with the merger agreement. In connection with consummation of the Mergers, each share of the Company’s common stock and each OP Unit issued and outstanding immediately prior to the effective time of the Mergers will be converted into the right to receive cash merger consideration in an amount equal to $130.0 million divided by the total number of outstanding shares of Company common stock and OP Units. It is currently anticipated that the total amount of cash returned to holders of Company Common Stock and OP Units by way of the Closing Dividend and receipt of the merger consideration upon consummation of the Mergers will be approximately $29.00 per share/unit. The exact amount of net proceeds available for distribution through the Closing Dividend is subject to customary real estate prorations as of the closing date for the Grocery-Anchored Portfolio Sale, payment by the Company of specified leasing costs, all applicable transaction costs and expenses, and satisfaction of other Company liabilities and indebtedness. Accordingly, while we currently anticipate that the total amount of cash returned to holders of Company common stock by way of the Closing Dividend and merger consideration will be approximately $29.00 per share, it is possible that the total amount received may be more or less than $29.00 per share. The Company will issue a press release specifying the exact amount of the Closing Dividend prior to the effective time of the Mergers.

The Board has unanimously approved the Transactions and the Transaction Agreements, and has declared the Transactions and Transaction Agreements advisable and in the best interests of the Company and its stockholders, and unanimously recommends that holders of the Company’s common stock vote to approve the Transactions.

Background of the Transactions

The following chronology summarizes the key meetings and events that led to the signing of the Transaction Agreements. This chronology does not purport to catalogue every conversation of or among members of our Board, Company management or our representatives and other parties.

As applicable, per share amounts referenced below have been adjusted to reflect the 1-for-6.6 reverse stock split effected by the Company on November 25, 2020.

 

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The Company’s management and Board regularly review our performance and prospects in light of the current business, economic, capital markets and real estate environments, as well as developments in the shopping center REIT sector and the opportunities and challenges facing participants in the shopping center sector. These reviews have included consideration, from time to time, of potential strategic alternatives, including potential acquisitions, dispositions, equity raises, debt issuances, stock buybacks, joint ventures and business combination transactions, as well as remaining an independent standalone company. The Board and management have also considered various challenges that we have faced as a public company, including the challenges currently facing the retail sector, including the impact of the COVID-19 pandemic and government and private business responses to the pandemic.

Over the course of 2018 and 2019, the share prices of many public shopping center REITs traded down significantly. During this period, the market for retail space at bricks-and-mortar shopping centers was adversely affected by ongoing weakness in national and local economies, increases in online shopping, and the bankruptcy of several large retailing companies. Compared to larger public shopping center REITs, however, the share price of the Company’s common stock traded at a material discount to the net asset value of its properties, or NAV, as calculated by the sell-side research analysts covering the Company. For example, during 2018, while the shopping center public REIT sector traded, on average, at a 12% discount to NAV, the Company’s share price traded as low as a 55% discount to NAV. The Company’s management and Board perceived several reasons for the disparity in trading prices and valuations, including the Company’s relatively small size versus its public peers and a property portfolio perceived as weaker due to age and secondary/tertiary market locations. Headwinds in the retail sector carried over into 2019 and the Company’s share price continued to trade at ever-increasing discounts to NAV, trading down to below $16.00 per share in July 2019, which equated to a 58% discount to NAV.

In July 2019, the Board met to discuss the challenges facing the Company as a public company, with representatives of the Company’s outside counsel, Goodwin Procter LLP (“Goodwin Procter”), present. A variety of possible paths and strategies were considered in an effort to maximize shareholder value, including maintaining the Company’s current strategy, selling non-core assets (including the sale of the Company redevelopment assets), pursuing larger asset sales in portfolio or company-level transactions, or seeking to effect a phased liquidation of the Company and all its properties. At that meeting, the Company’s chief executive officer, Mr. Bruce Schanzer indicated to the Board that he was exploring potentially forming an investor group to pursue an acquisition of the Company. Accordingly, the Board determined to promptly form a special committee consisting of all the independent directors to oversee the Company’s exploration of strategic alternatives. The special committee was authorized to consider and evaluate any proposals that might be received by the Company regarding a potential sale transaction, in whole or in part, and to participate in and direct the negotiation of the material terms and conditions of any such transaction. On August 14, 2019, following prior discussions among the Board and the special committee, and meetings by the special committee with several different potential financial advisors, the special committee appointed BofA Securities, Inc. (“BofA Securities”) as the special committee’s financial advisor pursuant to a formal engagement letter for the purpose of advising the committee in connection with its review of strategic alternatives.

During September 2019 and into the fourth quarter of 2019, representatives of BofA Securities, along with representatives of Goodwin Procter, met regularly with the Board and special committee and provided updates on BofA Securities’ views of general market conditions and the Company’s relative positioning in the public REIT marketplace. On November 22, 2019, the special committee convened via teleconference, with representatives of management, BofA Securities and Goodwin Procter in attendance, and representatives of BofA Securities reviewed with the special committee its preliminary valuation analysis with respect to the Company, including certain preliminary financial forecasts prepared by Company management concerning the Company’s future operating performance. The representatives from BofA Securities also reviewed with the special committee preliminary lists of potential counterparties for a transaction with the Company.

On December 12, 2019, an investment group affiliated with Mr. Schanzer submitted a preliminary acquisition proposal to acquire the Company in a merger transaction that valued the Company common stock at

 

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$26.40 per share, of which $23.76 per share would be paid in cash and the balance in shares of the surviving entity in the merger. The proposal indicated that financing for the transaction would be provided in part pursuant to the terms of a $1.03 billion debt financing commitment letter from a commercial lending institution. The proposal requested a 30-day exclusivity and confirmatory due diligence period.

Upon consideration of the proposal, the special committee determined to decline granting any party exclusivity and, instead, instructed representatives of BofA Securities to commence outreach to other potential counterparties to solicit their interest in a potential transaction with the Company. BofA commenced outreach to potential counterparties in early January 2020.

BofA Securities engaged with 33 potential counterparties, including other shopping center REITs, private real estate funds, real estate investors and financial sponsors. Twenty-five parties, including the investor group affiliated with Mr. Schanzer, proceeded to sign non-disclosure agreements with the Company and received data room access. The non-disclosure agreements included customary non-disclosure and “standstill” provisions, but did not restrict counterparties from making confidential proposals to the Board. Over the course of January and February 2020, the Company, BofA Securities and Goodwin Procter facilitated due diligence and engaged in discussions and negotiations regarding a variety of potential transactions with a number of these parties. As of January 31, 2020, BofA Securities had received seven non-binding bids for the Company as a whole and one additional non-binding bid for select assets, ranging in price from $19.80 to approximately $25.00 per share, in each case subject to further due diligence and negotiation of definitive documentation. BofA Securities also received non-binding indications of interest from several parties who requested additional time to potentially finalize a bid or who were interested in only select properties. At the direction of the special committee, on February 14, 2020, BofA Securities set a March 27, 2020 the deadline for receiving “best and final” bids.

In early March 2020, the global onset of the COVID-19 pandemic disrupted financial markets and ordinary course business operations across all sectors of the economy. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and subsequently, the United States declared a national emergency with respect to COVID-19. As a result of “stay-at-home” government mandates that limited travel and movement of the general public to essential activities, non-essential retailers, including many of the Company’s tenants, were forced to close or severely limit operations for sustained periods of time. In response, the Company took a number of protective measures to help navigate the effects of the pandemic, including drawing down $75.0 million under its revolving credit facility and reducing the quarterly common dividend to preserve cash and financial flexibility, dramatically reducing near-term redevelopment and other non-essential capital expenditures, and transitioning all but a limited number of essential employees to remote work arrangements. With respect to the strategic alternatives process, key potential bidders informed BofA Securities that, due to the lack of available debt financing and general market disruption, they would not be in a position to submit “best and final” bids by the scheduled due date of March 27, 2020. In addition, Mr. Schanzer advised the special committee that he would no longer participate, directly or indirectly, in any group with respect to a possible transaction with the Company and would instead focus exclusively on navigating the company through the unique challenges presented by the pandemic. In light of the extraordinary circumstances occasioned by the pandemic, and with a collapse in Cedar’s share price, the Board determined that, while it would remain open to any potential strategic alternatives that enhance stockholder value, in the absence of any currently actionable bids, it was in the best interests of the Company and its stockholders to disband the special committee and end the formal process of exploring potential strategic alternatives and instead focus on preserving the Company and its assets in the face of the pandemic.

On November 6, 2020, Camac Partners, LLC (together with certain affiliates, “Camac”) filed a Schedule 13D with the SEC disclosing that Camac, together with the other members of the filing group, possessed shared voting power of 5.1% of the outstanding Company common stock. The filing stated that Camac intended, among other possible actions, to review its investment in the Company on a periodic basis and that it may from time to time engage in communications and discussions with Company management and the Board. At the direction of the Board, members of Company management engaged in cordial conversations with representatives of Camac with respect to the Company, its properties and business strategy. No material nonpublic information was shared with Camac during the course of these conversations.

 

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On February 1, 2021, Camac made publicly available a slide presentation titled “Unlocking Value in Cedar Realty Trust”, that, among other things, presented purported opportunities to “unlock value” at the Company, asserted Camac’s belief that the Board needed refreshment due to perceived Company underperformance; and outlined a strategic plan formulated by Camac that it said would maximize return on invested capital, preserve cash flow and improve portfolio quality. The presentation was subsequent publicly filed by Camac with the SEC as an exhibit to an amended Schedule 13D, dated February 2, 2021.

On February 22, 2021, the Company received a legal notice from Barington Companies Equity Partners, L.P. (“Barington”) setting forth Barington’s intention to nominate two directors for election at the company’s 2021 annual meeting of stockholders. The two nominees were Christopher J. Pappano, a managing director of Barington, and Keith M. Rosenbloom, the co-founder and managing member of Cruiser Capital Advisors, LLC. Subsequent to the Company’s receipt of the nomination notice, members of the Board and Company management spoke telephonically or by videoconference with representatives of Barington on multiple occasions to discuss Barington’s intentions with respect to the Company. No material nonpublic information was shared with Barington during the course of these conversations.

On February 26, 2021, Ewing Morris & Co. Investment Partners Ltd (together with certain affiliates, “Ewing Morris”) filed a Schedule 13D with the SEC disclosing that Ewing Morris, together with the other members of the filing group, possessed shared voting power of 8.1% of the outstanding Company common stock. Among other things, the filing stated that Ewing Morris was seeking to engage in a dialogue with the Board and Company management about “numerous operational and strategic opportunities to maximize shareholder value”. On February 25, 2021, the day prior to the Schedule 13D filing, Ewing Morris had delivered a legal notice to the Company nominating Darcy Morris, Ewing Morris’ co-president and chief executive officer, for election to the Board at the Company’s 2021 annual meeting of stockholders.

Also on February 26, 2021, the Company received a legal notice from Camac setting forth its intention to replace the Board with Camac’s competing slate of seven nominees for election to the Board at the Company’s 2021 annual meeting of the stockholders. The Camac nominees were Larry Jennings, Jr., Daniel Katz, Eric Ray, Richard Ross, Eric Shahinian, Sharon Stern and Archer G. Stevenson. The Camac nomination notice was subsequently publicly filed by Camac with the SEC as an exhibit to an amended Schedule 13D, dated March 1, 2021.

On March 2, 2021, the Company issued a press release in response to the various shareholder notices and filings described above, noting that the Board’s was receptive to all constructive input from shareholders and was committed to maximizing value for shareholders. The press release also noted that the Board had in fact commenced a strategic review process during the second half of 2019, which was disrupted due to the outbreak of the COVID-19 pandemic (as described above).

From early March 2021 through late April 2021, the Board and members of Company management, with the assistance of BofA Securities and Goodwin Procter, engaged in multiple discussions with each of Barington, Camac and Ewing Morris relating to the terms of potential mutually agreeable cooperation agreements. On April 28, 2021, the Company entered into agreements with each of Camac, Ewing Morris and Barington, pursuant to which all the prior director nominations were withdrawn and the Board agreed to expand the size of the Board from seven members to ten members and appoint Darcy Morris, Richard Ross and Sharon Stern to the Board for terms expiring at the 2021 annual meeting of stockholders. The Board further agreed to nominate each of the new directors for re-election at the 2021 annual meeting of stockholders. In addition, Mr. Morris was appointed to serve on the Nominating and Corporate Governance and Compensation Committees of the Board, Mr. Ross was appointed to serve on the Nominating and Corporate Governance and Audit Committees of the Board and Ms. Stern was appointed to serve on the Compensation and Audit Committees of the Board. The agreements also provided for customary standstill, non-disparagement, voting and expense reimbursement provisions.

 

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In connection with entering into these agreements, Roger Widmann, chairman emeritus of the Board, and Pamela Hootkin, chair of the Compensation Committee of the Board, notified the Board that they would retire from the Board at the Company’s 2021 annual meeting of stockholder, following which the size of the Board would be decreased to eight directors. Mr. Widmann’s and Ms. Hootkin’s retirements were not due to any disputes or disagreements with the Company or the Board.

On June 3, 2021, the newly constituted Board met for its regularly scheduled Q1 2021 board meeting. The management presentation at that meeting focused on the state of the Company’s business and operations, including certain preliminary financial forecasts prepared by Company management concerning the Company’s future operating performance, as well as ongoing strategic challenges as the general economy began emerging from the pandemic. In particular, the management presentation highlighted what appeared to be heightened investor interest in secondary-market grocery anchored shopping centers, as evidenced by the Company having successfully contracted to sell its Camp Hill Mall property at a price well above its most recent internal valuation. The Board and Company management discussed whether this sale was indicative of a growing evolution in the real estate investment market, wherein investors were drawn to the relative stability of grocery-anchored shopping centers, as borne out by their performance during the pandemic. Company management suggested to the Board that, with the Company’s stock then trading for approximately $14 per share, the liquidation value of the Company, if successfully executed, might be as high as $28 or $29 per share. At the conclusion of the meeting, the Board directed Mr. Schanzer and Mr. Gonsalves to confer with BofA Securities and report back to the Board on the possible benefits and risks in the current market environment of an orderly liquidation of the Company versus an outright sale.

On June 9, 2021, Mr. Schanzer and Mr. Gonsalves met via videoconference with representatives BofA Securities to discuss a potential liquidation strategy versus a whole-company sale alternative. The possibility of selling assets in large portfolio sales, rather than individually, was also discussed as a way of minimizing execution risk and shortening the overall timeline of returning cash to shareholders. At a meeting of the Board held telephonically on July 15, 2021, Mr. Schanzer and Mr. Gonsalves reported to the Board the results of their conversations with BofA Securities and other market observations, and Mr. Schanzer presented a proposed dual-track strategic process that would include pursuing a so-called “asset sale/remainco” strategy in tandem with a traditional whole-company sale process. It was noted that a dual track process might benefit the Company and shareholders by engendering greater competition among a greater range of bidders, resulting in better overall pricing. At the conclusion of the meeting, the Board authorized management to interview brokers for the possible sale of discrete asset pools.

On July 28, 2021, the Board met at the offices of Goodwin Procter for its regularly scheduled Q2 2021 board meeting. Attendees included representatives of management, BofA Securities and Goodwin Procter as well as JLL, who had been identified as the likely broker for the sale of the grocery anchored shopping center portfolio. The Board and assembled advisors reviewed certain preliminary financial forecasts prepared by Company management concerning the Company’s future operating performance, and discussed the possibility of restarting the strategic alternatives process. Company management provided a progress update since the July 15, 2021 meeting and walked through a sample execution timeline for a dual-track strategic alternatives process. Representatives of BofA Securities noted that there had been a resurgence in merger and acquisition activity across the broad real estate sector and that, more recently, there had been renewed interest in open-air retail real estate assets. This was evidenced by an uptick in deal activity involving both public shopping center REITs and notable retail real estate transactions in the private sector. The representatives of BofA Securities further noted that they had recently received a limited number of inbound inquiries from parties expressing interest in participating in any future process the Company might launch. Representatives of BofA Securities also presented their views on additional parties that it considered most likely to have an interest in a potential transaction with the Company in any renewed strategic process. At this meeting, Goodwin Procter led a discussion concerning the duties of the Board under applicable law in the context of their consideration of strategic alternatives, including a potential sale of the Company or all or substantially all of its assets.

Based upon the information and advice received from BofA Securities and Goodwin Procter, and its own judgment and deliberations, the Board determined to restart the strategic alternatives process on a “dual track”

 

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basis, which involved offering potential buyers a range of options, including a sale or merger involving the entire Company or, alternatively, the sale of the Company’s core grocery-anchored shopping center portfolio (the “Grocery Anchored Portfolio”) and its mixed-use redevelopment projects. This process would permit the Board to evaluate and compare the relative value of bids for the whole Company against bids for subsets of the Company’s assets and allow the Board to then determine the best course of action. The dual track process would also serve to increase competition among the universe of potential bidders, which the Board believed was likely to lead to higher bids as competitive pressure increased. To help streamline the marketing process with respect to potential asset-sales, the Board determined to engage Jones Lang LaSalle Americas, Inc. (“JLL”) to act as the Company’s real estate advisor with respect to the potential sale of the Grocery-Anchored Portfolio and CBRE Group, Inc. (“CBRE”) to act as the Company’s real estate advisor with respect to the potential sale of the redevelopment projects.

On August 3, 2021, the Board convened via teleconference to kick off the dual-track process, with representatives of management, BofA Securities, JLL, CBRE and Goodwin Procter in attendance. The Board, management and assembled advisors discussed optimal timing for launch of the dual-track process and the Board allocated roles and responsibilities for pre-launch critical path items. The Board, management and advisers also discussed possible strategies with respect to the balance of the Company’s assets (referred to as “Remainco”) in the event the Grocery-Anchored Portfolio and redevelopment assets were sold in discrete asset sale transactions. Remainco was expected to own 19 stabilized shopping center assets, which had generated aggregate cash net operating income of approximately $19.1 million in 2021. The options discussed included maintaining Remainco as an ongoing public company, possibly in an externally managed structure, to adopt a plan of liquidation for Remainco, or to seek counterparties for a potential transaction involving Remainco or its assets. The Board authorized the Company management team and advisers to make outreach to potential counterparties to a Remainco transaction.

At the direction of the Board, a periodic status call was established among members of the Company’s management, BofA Securities, JLL and Goodwin Procter, in addition to periodic full Board updates on the status of the process. These status calls and regular updates remained in place through the first week of March 2022, when the Transactions were announced. Throughout the execution phase of the strategic alternatives review process, the Board conducted numerous formal meetings and Board members were also in regular informal communication with Goodwin Procter and with each other. In addition, the independent members of the Board frequently met in executive session, often with representatives of Goodwin Procter present.

In early September 2021, representatives of BofA Securities, JLL and CBRE commenced outreach to potential counterparties at the direction of the Board to solicit interest in a potential transaction with the Company, in whole or in part. The potential counterparties contacted included both parties that had been contacted in connection with the earlier strategic process, as well as numerous new potential counterparties. On September 9, 2021, the Company issued a press release announcing the Board’s launch of the dual-track strategic alternatives process and the engagement of each of BofA Securities, JLL and CBRE as the Company’s respective financial and real estate advisors. The Company, with assistance from its financial and legal advisors, prepared a substantial online data site to facilitate due diligence by potential bidders. On September 10, 2021, BofA Securities and JLL posted a “round one” process letter to the online data site, inviting potential bidders to submit their preliminary indicative proposals for all or part of the Company by mid-October 2021.

From September 7, 2021 through October 23, 2021, BofA Securities, JLL and CBRE engaged with 55 potential counterparties, including other shopping center REITs, private real estate funds, real estate investors and financial sponsors. Thirty-six parties proceeded to sign non-disclosure agreements with the Company and received expanded data room access. The non-disclosure agreements included customary non-disclosure and standstill provisions, but did not restrict counterparties from making confidential proposals to the Board. During this period, the Company, BofA Securities, JLL and Goodwin Procter facilitated due diligence and engaged in discussions and negotiations regarding a variety of potential transactions with a number of these parties. Throughout this period, the Board continued to hold regular update calls, during which members of the Board

 

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discussed with Company management and the Company’s advisors the status of the strategic process and discussions with potential counterparties.

On October 26, 2021, the Board and management met by videoconference, with representatives from each of BofA Securities, JLL and Goodwin Procter. The representatives from BofA Securities and JLL advised the Board that, as of October 23, 2021, the Company had received two preliminary bids for the Company as a whole, two preliminary bids for the Grocery-Anchored Portfolio, and one non-conforming bid for a select number of Remainco assets. Of the whole Company bids, one was from Party A, a private real estate investment firm, for $21.90 per share in cash, and the other from Party B, a private owner and operator of retail real estate, for $23.00 per share in cash. The non-conforming bid was from Party C, a private commercial real estate investment firm, and proposed to acquire a portfolio of 16 (of 19) Remainco assets for a total cash purchase price of $200.0 million. For the Grocery-Anchored Portfolio, one of the bids was from DRA Advisors and certain of its affiliates, for $810.0 million in cash, and the other bid was from Party D, a group of private investors and financing parties, for $965.0 million, but which bid did not have committed equity financing. Each of the bids was indicative and non-binding, subject to completion of additional due diligence and other conditions and contingencies. Representatives of BofA Securities, JLL and Goodwin Procter provided an overview of the terms of each written proposal, including economic terms, financing considerations, the strategic intentions of the interested bidders, due diligence requirements conveyed by the bidders, anticipated timing to negotiate and execute definitive documentation, and other terms, conditions and process matters. In addition, representatives of BofA Securities reviewed with the Board their preliminary financial analyses of the proposals submitted to the Company, including in comparison to selected valuation reference points. The Board engaged in a detailed and substantive discussion with respect to the proposals received and the financial and legal considerations applicable to each. The Board then instructed Company Management, BofA Securities, JLL and Goodwin Procter to provide updated diligence information in the online data site and to prepare and post a “round two” process letter in furtherance of the strategic process.

During the first two weeks of November 2021, BofA Securities and JLL, with the assistance of Company management, added updated diligence items to the online date site and, on November 19, 2021, BofA Securities and JLL posted a “round two” process letter to the online data site, inviting the remaining bidders to finalize their due diligence, secure financing, and submit their best and final offer, along with ready-to-sign deal documentation. The letter provided bidders with an indicative timetable for finalizing their bids, indicating that “bid draft” transaction agreements prepared by Goodwin Procter on behalf of the Company would be posted to the data room by December 3, 2021; bidder markups of the agreement would be due by January 3, 2022; financing commitment letters would be due by January 14, 2022; and “best and final” proposals from bidders would be due on January 21, 2022. The process letter further noted that Company did not anticipate entering into a definitive agreement that was subject to any due diligence or financing contingencies and that any final proposal containing such contingencies would be materially disadvantaged. Likewise, in subsequent oral conversations during December 2021 and January 2022, the Company, BofA Securities, JLL and Goodwin Procter advised each potential bidder and their respective advisers that the Company anticipated “public company style” definitive agreements, in the sense that there would be no earnest money deposit that would serve as liquidated damages, no post-signing due diligence period, no non-customary conditions, and no survival of representations and warranties.

On December 3, 2021, representatives of Party E, a privately-held real estate company, met with Mr. Schanzer to discuss a potential transaction with respect to Remainco. Goodwin Procter, on behalf of the Company, transmitted a form of non-disclosure agreement to Party E in a form similar to that transmitted to other participants in the process, which agreement was subsequently signed on December 6, 2022. On December 27, 2021, representatives of Company management, Goodwin Procter, Party E and Party E’s counsel participated in a videoconference call to discuss preliminary structural and corporate considerations and respond to diligence requests and other questions from Party E and its counsel.

On December 3, 2021, “bid draft” asset purchase and merger agreements were posted to the online data site. The draft agreements provided that purchaser/counterparty obligations would not be subject to any due diligence

 

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or financing contingencies, or any other conditions or contingencies that were not customary for public-company material transaction agreements. The draft agreements further provided that there would be no survival of the Company’s representations and warranties following closing and that the Company would be entitled to specifically enforce each purchaser counterparty’s obligations to close and/or seek uncapped damages at law. In addition, each of the “bid draft” agreements provided the Company with the right to terminate the agreement in order to pursue a superior proposal with a third party and pay a customary termination fee.

On January 3, 2022, counsel for Party A transmitted a markup of the draft merger agreement to Goodwin Procter. During the week of January 10, 2022, members of Company management, BofA Securities and Goodwin Procter held additional tax diligence and structuring calls with Party A and its representatives.

On January 6, 2022, a representative of Party B advised representatives of BofA Securities via telephone that Party B would be dropping out as a potential bidder in the process and would not be submitting a “best and final” bid later that month. The representative of Party B indicated there were a variety of factors for Party B’s decision, including the fact that the Company’s stock price was now trading at a higher value per share than Party B was willing to offer, the continuing impact of the COVID-19 pandemic and recent increases in market interest rates.

On January 11, 2022, representatives of the Grocery-Anchored Purchasers transmitted an initial markup of the asset purchase agreement to JLL, which was forwarded to Goodwin Procter. Upon review, Goodwin Procter advised the Company that the markup contained several key provisions that were inconsistent with the instructions provided to bidders in the process letter and throughout the process, and that the markup, among other things, included a number of non-customary conditions for public company transactions, limited the Grocery-Anchored Purchasers liability for breach of the agreement to $10 million and provided for survival of the Company’s representations for one year following closing.

On January 19, 2022 representatives of Wheeler met with Mr. Schanzer to discuss a potential transaction with respect to RemainCo. Goodwin Procter, on behalf of the Company, transmitted a form of non-disclosure agreement to Wheeler in a form similar to that transmitted to other participants in the process, which agreement was subsequently signed on January 21, 2022. Subsequent to execution of the non-disclosure agreement, Wheeler was provided access to the data room and Company management provided extensive due diligence information.

On January 21, 2022, the Company received two proposals for potential whole-company transactions. One was from Party A, who proposed a traditional go-private transaction at a gross cash purchase price of $25.75 per share, and the other was from Party C, who proposed that Party C and its affiliates acquire of all of the Company’s assets other than the redevelopment assets in an asset purchase transaction, for an aggregate cash purchase price of $1.05 billion, which valued the Grocery-Anchored Portfolio at $810.0 million and Remainco at $240.0 million. Party A’s proposal contemplated reductions in the gross offer price per share for leasing capital and other identified items, such that the effective net offer price per share was as much as $2-$3 per share below the gross offer price. Party C’s proposal also indicated Party C’s willingness to acquire either only the Grocery-Anchored Portfolio or Remainco at their stated valuations. On January 24, 2021, the Company received a further updated proposal from the Grocery-Anchored Purchasers, providing for the purchase and sale of the Grocery-Anchored Portfolio for an aggregate cash purchase price of $870.0 million. Each of the proposals was non-binding, subject to completion of confirmatory due diligence and certain other conditions and contingencies. Party D did not submit a further proposal for the Grocery-Anchored Portfolio and advised that it was experiencing difficulty securing equity financing to proceed with a transaction.

Also on January 24, 2022, the Company received a non-binding letter of intent with respect to Remainco from Party E. The proposal contemplated a reverse merger transaction pursuant to which the Company would become majority owned by Party E, with legacy Company stockholders retaining approximately 5% of the surviving entity and all shares of the Company Preferred Stock being exchanged for identical shares of preferred stock in the surviving entity. The consideration to be received by legacy Company stockholders in the merger was valued in Party E’s proposal at $8.10 per share. Party E’s proposal contemplated that the Company’s

 

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Preferred Stock would remain outstanding following the completion of the transaction as preferred stock of the surviving entity in the merger transaction. Notably, Party E’s proposal did not include a property that was subsequently included in the Remainco asset pool, which would have likely increased the value of Party E’s offer proportionally.

On January 27, 2022, the Company received a non-binding term sheet from representatives of Wheeler with respect to Remainco, which term sheet contemplated the acquisition of Remainco by Wheeler in an all-cash transaction for consideration payable to Company stockholders in an amount equal to $284 million, less the aggregate accrued liquidation preference of the Company Preferred Stock of $160.1 million and less retained liabilities, including the Company’s transaction expenses, debt financing costs, deferred compensation liabilities and employee severance and change of control payments. This translated into a proposed per share consideration to Company common stockholders of approximately $9.40 per share, assuming no retained liabilities. Wheeler’s proposal also contemplated that the Company’s Preferred Stock would remain outstanding following the completion of the transaction as preferred stock of the surviving entity, and that the Company Preferred Stock would not be exchanged for preferred stock in Wheeler in the merger transaction.

On January 28, 2022, the Board and Company management met by videoconference, with representatives from each of BofA Securities, JLL and Goodwin Procter present. Representatives of BofA Securities, JLL and Goodwin Procter provided an overview of the terms of each written proposal, including economic terms, financing considerations, final due diligence requirements, anticipated timing to finalize definitive documentation, impact on the Company’s Preferred Stock and other terms, conditions and process matters. In addition, representatives of BofA Securities and JLL reviewed with the Board their financial analyses of the proposals submitted to the Company, including a comparison to selected valuation reference points, and representatives of Goodwin Procter reviewed the duties of the directors under applicable law. The Board and the assembled advisors noted that, based on the bids received and their relative implied valuation and terms, the options available to the Board arising from the process included pursuing a traditional whole-company merger transaction with Party A or a “sum of the parts” series of transactions with the Grocery-Anchored Purchasers, buyers of the redevelopment assets and any of Party C, Party E or Wheeler for Remainco and its assets. On one hand, it was noted that based on the bids received, the per share value of Party A’s whole-company proposal of $25.75, after accounting for the $2-$3 per share in deductions specified in their offer letter, was considerably below that of a “sum of the parts” series of transaction assembled from the other bids, which could result in aggregate value to shareholders of approximately $29.00 per share or more. On the other hand, a single transaction with a single credible buyer provided greater certainty of closing than a series of related transactions with multiple counterparties. Likewise, while a single merger transaction could close promptly after Company stockholders voted to approve the transaction, the series of related “sum of the parts” transactions was likely to close on a more elongated schedule to accommodate the various asset transfers and multi-party process. It was further noted that the risk of one or more redevelopment asset sales not closing on time was a risk applicable to both a whole-company and “sum of the parts” transaction. Goodwin Procter advised the Board that in reviewing the relevant draft transaction agreements, Party A’s markup of the merger agreement was in the spirit of a customary public-company transaction as desired by the Company and did not appear to include any non-customary covenants, conditions or termination rights. The asset purchase agreement markup provided by the Grocery-Anchored Purchasers, however, continued to retain several key provisions that were inconsistent with public-company transactions, including non-customary closing conditions, liquidated damages and survival of representations. It was further noted that both Party A and the Grocery-Anchored Purchasers had requested additional time to complete additional diligence, including physical asset-level diligence pursuant to the terms of customary access agreements.

Following a robust discussion among the assembled Board members and advisers, the Board resolved to instruct Company management, BofA Securities and JLL to advise each of Party A, the Grocery-Anchored Purchasers, Party E and Wheeler that the Board had determined to extend the timeline for receiving final definitive bids for a further three-week confirmatory due diligence and negotiation period. In addition, the Board instructed Goodwin Procter to engage with counsel for each of these potential transaction counterparties to

 

35

negotiate the forms of final merger and asset purchase agreements, as applicable. The Board further instructed JLL and Company management to communicate to the Grocery-Anchored Purchasers that the Company would only enter into a “public-company style” asset purchase agreement for the Grocery-Anchored Portfolio, including limited contingent purchase price adjustments, no non-customary closing conditions, no liquidated damages provision and no post-closing survival of representations.

On January 31, 2022, following discussions with JLL and Company management, the Grocery-Anchored Purchasers submitted an updated letter of interest with respect to their proposed acquisition of the Grocery-Anchored Portfolio. The revised proposal removed references to non-customary closing conditions, liquidated damages and survival of representations, and lowered the aggregate purchase price to $830.0 million.

On February 2, 2022, the Company received a request for access to the online data room from the financial advisers of Party D, which had previously ceased to engage with the Company and its advisers in the process. Party D and its advisers were granted access to the online data room pursuant to the terms of the existing non-disclosure in place between the Company and Party D. Representatives of Party D subsequently contacted JLL and indicated that Party D might send a markup of the draft asset purchase agreement. However, representatives of Party D subsequently advised JLL that Party D would not proceed with a markup or make a further bid to acquire the Grocery-Anchored Portfolio due to the inability of Party D to secure committed equity financing.

On February 2 and on February 3, 2022, in order to induce the potential counterparties to remain engaged in the process with the aim of providing the Company with final and fully-financed proposals by the end of the extended diligence period, the Board authorized the Company to enter into expense reimbursement letters with each of Party A, the Grocery-Anchored Purchasers, Party E and Wheeler, providing for the Company’s reimbursement of these parties’ documented out-of-pocket incremental expenses incurred during the extension period, up to stipulated amounts.

On February 9, 2022, the compensation committee of the Board met by videoconference (with independent directors Eisenstat and Ross also in attendance, in addition to representatives from outside counsel to the committee) to review the terms of the Company’s existing agreements and plans under which members of management would be entitled to potential payments and benefits in connection with a potential transaction and the amounts of such payments.

On February 10, 2022, representatives of Goodwin Procter transmitted a further revised draft merger agreement to counsel for Party A. On February 11, 2022, BofA Securities received a letter from Party A providing an update on Party A’s diligence efforts with respect to a proposed transaction and advising that it was adjusting its indicative net offer price down to $23.07 per share due to real estate valuation adjustments primarily to account for committed capital and leasing costs.

On February 10, 2022, representatives of Blank Rome LLP (“Blank Rome”), counsel to the Grocery-Anchored Purchasers, transmitted an updated markup of the draft asset purchase agreement to Goodwin Procter. Over the period from February 10, 2022 through February 25, 2022, the Company facilitated additional due diligence items requests by Blank Rome on behalf of the Grocery-Anchored Purchasers, and representatives of Goodwin Procter and Blank Rome exchanged several iterative versions of the draft asset purchase agreement and engaged in numerous conversations and negotiations of the outstanding items. The principal substantive points of disagreement from the Company’s perspective included the proposed inclusion by Blank Rome of provisions providing for contingent purchase price adjustments and a number of closing conditions that would be non-customary for a public-company style deal (such as delivery of tenant estoppels, signing of specified new leases and completion of specified tenant improvement commitments), in addition to proposed provisions providing for the survival of the Company’s representations and warranties beyond the closing date and the inclusion of a liquidated damages remedy, rather than specific performance, in the event of buyer breach or non-performance.

 

36

On February 11, 2022, representatives of Goodwin Procter transmitted a draft merger agreement for Remainco to Alston & Bird LLP (“Alston & Bird”), counsel for Wheeler. Over the period from February 11, 2022 through February 25, 2022, representatives of Goodwin Procter and Alston & Bird exchanged several iterative versions of the draft merger agreement and engaged in numerous conversations and negotiations of the outstanding items, including a provision requested by Wheeler that in the event of Wheeler’s breach or non-performance, the Company would not be entitled to specific performance but only to $5.0 million in liquidated damages as the Company’s sole remedy.

On February 25, 2022, the Board and Company management met by videoconference, with representatives from each of BofA Securities, JLL and Goodwin Procter present. Representatives of Company management, BofA Securities and JLL reviewed the status of each of the current proposals from the various potential counterparties, and representatives of Goodwin Procter reviewed the current status of the draft transaction agreements with each applicable counterparty. Company management and Goodwin Procter advised that, with respect to Remainco, Party E appeared to have ceased to meaningfully engage in the process. It was noted that the current proposals for the “sum of the parts” transactions consisting of the sale of the Grocery-Anchored Portfolio and redevelopment assets, followed by a Remainco merger on the terms proposed by Wheeler, continued, in the aggregate, to present a substantially higher value per share for the Company’s common stockholders than a whole-company transaction, particularly now that Party A’s whole-company bid had been reduced to $23.07 per share. The Board also took note that pursuant to the terms of the draft merger agreement submitted by Alston & Bird on behalf of Wheeler, the Company Preferred Stock would remain outstanding as preferred shares of the surviving entity and would not be exchanged for preferred shares of Wheeler, which meant that immediately following the proposed merger transaction, the Company Preferred Stock would remain senior to Wheeler and all of Wheeler’s securityholders with respect to the cash generated from the Remainco assets, which in the fiscal year ended December 31, 2021 was in excess of $19 million, as compared to the annual aggregate dividend on the Company Preferred Stock of approximately $10.8 million. The representatives of Goodwin Procter responded to questions from the directors about the rights and obligations of the Company under the terms of the articles supplementary governing the terms of the Company Preferred Stock and further reviewed the duties of the directors under applicable law. Goodwin Procter further advised that many of the key gating issues in the Grocery-Anchored Portfolio draft asset purchase agreement had been resolved favorably for the Company, including the elimination of provisions providing for contingent purchase price adjustments, non-customary closing conditions, survival of representations and liquidated damages as the sole remedy for buyer breach or nonperformance. At the conclusion of the meeting, the Board instructed BofA Securities to advise Party A that the Board was unlikely to agree to pursue a transaction with Party A unless Party A raised its offer price significantly. The Board instructed JLL, Goodwin Procter and Company management to continue engaging with the Grocery-Anchored Purchasers and Wheeler to finalize terms and definitive agreements with respect to the proposed “sum of the parts” transactions in a way that minimized, to the maximum extent possible, any remaining uncertainties or contingencies with respect to the respective purchaser parties’ obligations under the applicable agreements.

Later in the day on February 25, 2022, Cadwalader, Wickersham & Taft LLP, counsel for Wheeler, provided Goodwin Procter with a draft debt commitment letter from KeyBank National Association. On February 27, 2022, representatives of Goodwin Procter, on behalf of the Company, transmitted comments to the draft debt commitment letter, which comments principally addressed the deletion of a number of conditions to funding. On February 27, 2022, representatives of Alston & Bird transmitted to Goodwin Procter a draft restrictive covenants agreement to be entered into between Wheeler and Mr. Schanzer, pursuant to which Mr. Schanzer would agree to customary non-compete and non-solicitation covenants for a four-year period following closing of a Remainco merger transaction.

On February 27, 2022, representatives of Party A advised BofA Securities that Party A was prepared to raise its whole-company offer per share to $26.00, and that it would assume the risk that the sale of one of the redevelopment assets would not occur prior to closing of the proposed merger with Party A. This development was promptly communicated by BofA Securities to the Board and Company management.

 

37

On the evening of February 27, 2022, at the direction of the Board, Company management spoke with representatives of the Grocery-Anchored Purchasers via telephone and advised that a revised whole-company offer had been received by the Company at a valuation that was now only slightly lower than the aggregate value of a “sum of the parts” transaction, a discount that the Board could consider appropriate in exchange for the greater certainty of closing. On the morning of February 28, 2022, representatives of the Grocery-Anchored Purchasers advised Company management that the Grocery-Anchored Purchasers were prepared to raise their proposed purchase price for the Grocery-Anchored Portfolio to $840.0 million and to agree to backstop the Company’s planned sales of two redevelopment projects by agreeing to acquire them for up to $80.5 million to the extent either of these redevelopment assets had not been sold by the time of closing of the Grocery-Anchored Sale. These revisions were subsequently reflected in an updated draft asset purchase agreement transmitted by Goodwin Procter to Blank Rome on February 28, 2022.

On February 27, 2022, the Board retained JLL Securities, an affiliate of JLL, to deliver an opinion on whether the transaction is fair to the stockholders of the Company from a financial point of view, upon request of the Company.

On February 28, 2022, the Board met by videoconference, with representatives from each of Company management, BofA Securities, JLL and Goodwin Procter, to discuss the revised proposals from each of Party A and the Grocery-Anchored Purchasers. Company management, BofA Securities and JLL reviewed the current status of each of the current proposals and further reviewed with the Board their financial analyses of the current proposals, which indicated that a successfully completed “sum of the parts” transaction on the terms proposed would still yield a significant premium to the Company’s stockholders over the value to be received in the proposed whole-company transaction. Representatives of Goodwin Procter reviewed with the Board the current status of the draft transaction agreements with each applicable counterparty, noting that the principal business and legal points on the primary draft transactions documents had been resolved and that, pending direction from the Board, the legal documentation was substantially in place to proceed with either a whole-company transaction with Party A, or a “sum of parts” transaction with the Grocery-Anchored Purchasers and Wheeler, subject in the latter case to receiving and reviewing the final debt commitment papers from Wheeler’s debt financing provider. The Board again weighed the benefits of the higher aggregate value per share receivable by the Company’s stockholders in a “sum of the parts” transaction versus the perceived lesser complexity and greater certainty of closing in the proposed whole-company transaction. Members of the Board expressed their view that while they might consider a slight discount in exchange for greater certainty of closing, they were not prepared to accept a significant discount that would meaningfully reduce the transaction consideration to be received by the Company’s common stockholders. The Board instructed Company management and BofA Securities to engage further with Party A to see whether Party A would be willing to further increase its offer price per share, and instructed Company management, JLL and Goodwin Procter to engage further with the Grocery-Anchored Purchasers and Wheeler to finalize all transaction documentation.

On March 1, 2022, the Board met by videoconference, with representatives from each of BofA Securities, JLL, JLL Securities and Goodwin Procter present, to discuss and review the draft transaction agreements and to consider the terms of the proposed “sum of the parts” transactions. Representatives of Goodwin Procter again reviewed the duties of the directors under applicable law and the terms of the draft transaction agreements. Representatives of JLL and JLL Securities reviewed with the Board JLL Securities’ financial analyses of the aggregate consideration to be received by the Company’s stockholders upon completion of the proposed transactions. JLL Securities then rendered its oral opinion, subsequently confirmed in writing by delivery of a written opinion to the Board dated March 2, 2022, that as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by JLL Securities as set forth in the written opinion, the aggregate consideration to be received by the holders of shares of the Company’s common stock pursuant to the transaction agreements was fair from a financial point of view to such holders. Following extensive discussion, and upon confirmation that Party A had declined to increase its offer price per share for a whole-company transaction, the Board

 

38

unanimously adopted resolutions which, among other things, approved and declared advisable and in the best interests of the Company and the common stockholders of the Company, the Transactions, the Transaction Agreements, and the other transactions contemplated by the Transaction Agreements and resolved to recommend that the stockholders of the Company vote for the approval of the Transactions at a special meeting of common stockholders to be held for this purpose.

Following the Board meeting, the parties proceeded to finalize the Transaction Agreements and all applicable exhibits and schedules, including receipt by the Company of an executed debt commitment letter from KeyBank, National Association and KeyBanc Capital Markets Inc., as lender and lead arranger, respectively, to Wheeler, that did not contain any non-customary conditions to funding. In the afternoon of March 2, 2022, the parties executed and delivered the Transaction Agreements and other transaction documents and the Company issued a press release announcing the Transactions.

Reasons for the Transactions

In reaching its decision to approve the Transactions, the Transaction Agreements and the other transactions contemplated by the Transaction Agreements, and to recommend approval of Transactions to our common stockholders, the Board consulted with the Company’s senior management team, as well as our outside legal and financial advisors, and considered a number of factors, including the following material factors which the Board viewed as supporting its decision to approve the Transactions, the Transaction Agreements and the other transactions contemplated by the Transaction Agreements, and to recommend approval of Transactions to our common stockholders:

 

•

the aggregate consideration of approximately $29.00 per share represents a 16.6% premium to the closing price of the Company’s common stock on March 2, 2022, and a 70.6% premium to the closing price on September 9, 2021, the last day of trading prior to the public announcement by the Company of its dual-track review of strategic alternatives;

 

•

the aggregate consideration of approximately $29.00 per share is the highest aggregate amount of consideration proposed in any oral or written offer received by the Company;

 

•

the belief that the Transactions are more favorable to our common stockholders than other strategic alternatives available to the Company, including remaining an independent public company;

 

•

the fact that the Company conducted an extensive, publicly disclosed process to pursue a potential transaction, which process included inviting 55 strategic and financial parties to participate in the strategic process, 36 of which executed non-disclosure agreements;

 

•

JLL’s oral opinion, subsequently confirmed by delivery of a written opinion to the Board, dated March 2, 2022 that, as of that date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by JLL as set forth in its written opinion, the aggregate consideration to be received by the holders of shares of the Company’s common stock pursuant to the Transaction Agreements was fair from a financial point of view to such holders (see “—Opinion of the Company’s Financial Advisor”);

 

•

the risks and uncertainty of remaining an independent public company, given the Company’s smaller scale relative to other public shopping center REITs, which caused our cost of capital to remain higher than that of our larger peers and our common stock to trade at a persistently greater discount to NAV;

 

•

the terms and conditions of the Transaction Agreements, which were reviewed by our Board with our financial and legal advisors, and the fact that such terms were the product of arm’s-length negotiations between the parties;

 

•

the probability that the Transactions will be completed based on, among other things, the lack of any financing conditions, the irrevocable guarantee of the Grocery-Anchored Purchasers’ performance

 

39

provided by DRA Growth and Income Master Fund X-B, LLC, the debt commitment letter received by Wheeler from KeyBank National Association and KeyBanc Capital Markets Inc., and the lack of liquidated damages provisions that would permit the Grocery-Anchored Purchaser or Wheeler to avoid their obligations to close by paying a capped fee;

 

•

our ability, under each of the Transaction Agreements, to participate in discussions or negotiations of competing acquisition proposals with third parties, under certain circumstances, if our Board determines, after consultation with advisors, that failure to do so would be inconsistent with the Board’s legal duties and that such competing acquisition proposals constitute, or could reasonably be expected to result in, a superior proposal;

 

•

our ability to terminate each Transaction Agreement under certain circumstances in order to enter into a definitive agreement providing for a superior proposal if our Board determines, after consultation with advisors and after taking into account any changes to the terms of the applicable Transaction Agreement proposed by the applicable counterparty, that the superior proposal continues to be a superior proposal, upon payment of a termination fee of in the case of the asset purchase agreement, $7.0 million plus up to $3.5 million in expense reimbursement costs and, in the case of the merger agreement, $5.0 million;

 

•

our Board’s ability, under each of the Transaction Agreements, to withdraw, modify or amend its recommendation that our common stockholders vote to approve the Transactions and the Transaction Agreements under certain circumstances, subject to payment of the applicable termination fee;

 

•

the fact that the termination fee of in the case of the asset purchase agreement, $7.0 million plus up to $3.5 million in expense reimbursement costs and, in the case of the merger agreement, $5.0 million, payable by us in certain circumstances is viewed by our Board, after consultation with our legal and financial advisors, as reasonable and not likely to preclude any other party from making a competing acquisition proposal;

 

•

the fact that the Company Preferred Stock would remain outstanding as preferred shares of the surviving entity in the Mergers and would not be exchanged for preferred shares of Wheeler, which means that immediately following consummation of the Mergers, the Company Preferred Stock will remain senior Wheeler and all of Wheeler’s securityholders with respect to the cash generated from the Remainco assets (which was in excess of $19 million for the fiscal year ended December 31, 2021); and

 

•

the fact that the Transactions are subject to the approval of our common stockholders, and our common stockholders will be free to reject the Transactions by voting against the Transactions for any reason, including if a higher offer were to be made prior to the stockholders meeting (although we may be required to pay a termination fee under certain circumstances if we subsequently were to enter into a definitive agreement relating to, or to consummate, an acquisition proposal).

The Board also considered the following potentially negative factors in its consideration of the Transactions and Transaction Agreements:

 

•

the all-cash nature of the Transactions (after assumption of debt) would preclude our stockholders from having the opportunity to participate in the future performance of our assets, future potential earnings growth, future potential appreciation of the value of our common stock or future dividends that could be realized depending on our future performance;

 

•

the impact of the COVID-19 pandemic on the Company’s earnings and prospects during the period prior to entry into the Transaction Agreements and the effect of that impact on the valuations ascribed to the Company and its assets by participants in the strategic review process;

 

•

the significant costs involved in connection with entering into and completing the Transactions and the substantial time and effort of management required to consummate the Transactions and related disruptions to the operation of our business;

 

40

•

the restrictions on the conduct of our business prior to the completion of the Transactions, which could delay or prevent us from undertaking business opportunities that may arise pending completion of the Transactions;

 

•

the pending Transactions or failure to complete the Transactions may cause harm to relationships with our employees, tenants and other business associates and may divert management and employee attention away from the day-to-day operation of our business;

 

•

the fact that the all-cash aggregate transaction consideration would be taxable to our common stockholders for U.S. federal income tax purposes;

 

•

the fact that, under Maryland law, our common stockholders will not be entitled to appraisal rights, dissenters’ rights or rights of an objecting stockholder in connection with the Transactions;

 

•

the fact that during the strategic review process, the Company had received an indication of interest from Party D that purported to value the Grocery-Anchored Portfolio at $965 million; however, Party D’s indication of interest was non-binding and subject to due diligence, financing and other contingencies, and Party D did not provide a “best and final” proposal during the strategic review process due to Party D’s inability to obtain equity commitments to support its bid and valuation;

 

•

the fact that some of our directors and executive officers have interests in the Transactions that may be different from, or in addition to, our stockholders generally (see “—Interests of the Company’s Directors and Executive Officers in the Transactions”).

The foregoing discussion of the factors considered by our Board is not intended to be exhaustive, but rather includes the material factors considered by our Board. In reaching its decision to approve the Transactions, the Transaction Agreements and the other transactions contemplated by the Transaction Agreements, our Board did not quantify or assign any relative weights to, and did not make specific assessments of, the factors considered, and individual directors may have given different weights to different factors.

The above factors are not presented in any order of priority. The explanation of the factors and reasoning set forth above contain forward-looking statements and should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Recommendation of the Board

The Board has unanimously approved the Transactions and the Transaction Agreements, and has declared the Transactions and Transaction Agreements advisable and in the best interests of Cedar Realty Trust, Inc. and our stockholders. The Board recommends that you vote “FOR” the proposal to approve the Transactions, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Transactions and “FOR” the proposal to approve any adjournments of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the Transactions.

Opinion of Jones Lang LaSalle Securities, LLC

The Board has retained JLL Securities to act as the Board’s financial advisor in connection with the Transactions. JLL Securities is the real estate investment banking arm of Jones Lang LaSalle, Inc., which focuses on providing mergers and acquisitions advisory, equity placement and corporate finance services with core expertise and a depth of knowledge in the institutional real estate marketplace, and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions and valuations for corporate and other purposes. The Board selected JLL Securities to act as the Board’s financial advisor in connection with

 

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the Transactions on the basis of JLL Securities’ experience with similar transactions, its reputation in the investment community and its familiarity with the Company and its business.

On March 1, 2022, at a meeting of the Board held to evaluate the Transactions, JLL Securities delivered to the Board an oral opinion, which was confirmed by delivery of a written opinion dated March 2, 2022, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its opinion, the per share consideration to be received by holders (other than Wheeler, Merger Sub or any wholly owned subsidiary of Cedar immediately prior to the Effective Time) of the Company’s common stock was fair, from a financial point of view, to such holders.

The full text of JLL Securities’ written opinion to the Board, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex C to this proxy statement and is incorporated by reference herein in its entirety. The following summary of JLL Securities’ opinion is qualified in its entirety by reference to the full text of the opinion. JLL Securities delivered its opinion to the Board for the benefit and use of the Board (in its capacity as such) in connection with and for purposes of its evaluation of the per share consideration from a financial point of view. JLL Securities’ opinion does not address any other terms or aspects of the Transactions and no opinion or view was expressed as to the relative merits of the Transactions in comparison to other strategies or transactions that might be available to the Company or in which the Company might engage or as to the underlying business decision of the Company to proceed with or effect the Transactions. JLL Securities’ opinion does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed Transactions or any related matter.

In connection with rendering its opinion, JLL Securities:

 

(i)

reviewed documentation provided by the management of Cedar, including historical audited financial statements and certain internal financial statements and other operating data concerning Cedar prepared by the management of Cedar;

 

(ii)

analyzed certain financial forecasts prepared by the management of Cedar, which forecasts Cedar represented to JLL Securities were consistent with the best judgments of Cedar’s management as to the future financial performance of Cedar and were the best available forecasts at the time with respect to such future financial performance of Cedar, including Cedar’s corporate model;

 

(iii)

reviewed documents filed by Cedar with the Securities and Exchange Commission and other publicly available business and financial information, including research analyst reports;

 

(iv)

reviewed rent rolls and Argus files of Cedar’s properties that were presented to JLL Securities by the management of Cedar;

 

(v)

discussed the past and current operations, capitalization and financial condition and the prospects of Cedar with senior executives of Cedar;

 

(vi)

reviewed the financial terms, to the extent publicly available, of certain publicly traded shopping center and other retail real estate investment trusts that JLL Securities considered to be generally relevant and comparable to Cedar;

 

(vii)

reviewed third-party research on the retail real estate sector from reputable sources;

 

(viii)

reviewed the financial terms, to the extent publicly available, of certain transactions that JLL Securities considered to be relevant;

 

(ix)

reviewed a draft of the asset purchase and sale agreement, a draft of the merger agreement, and other definitive documentation related to the Transactions, that were presented to JLL Securities by the management of Cedar;

 

(x)

compared the operating performance of Cedar with that of certain other publicly traded companies that JLL Securities considered to be generally relevant;

 

42

(xi)

analyzed precedent portfolio and single-asset retail transactions as deemed relevant; and

 

(xii)

performed such other analyses, studies and investigations, and considered such other factors, as JLL Securities deemed appropriate.

JLL Securities assumed and relied upon, without independent verification, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information provided to, reviewed by or discussed with JLL Securities (including information that is available from generally recognized public sources) for the purposes of its opinion. With respect to the financial projections provided to JLL Securities, with Cedar’s consent, JLL Securities assumed that they were reasonably prepared and were consistent with the best available estimates and judgments of senior management of Cedar as to the future financial performance of Cedar and the other matters covered thereby. JLL Securities assumed no responsibility for and expressed no view as to such forecasts or any other forward-looking information or the assumptions on which they were based, and relied upon the assurances of the senior management of Cedar that they were unaware of any facts that would make the information provided to or reviewed by JLL Securities incomplete or misleading. In rendering its opinion, JLL Securities expressed no view as to the reasonableness of such forward-looking information or any estimate, judgment or assumption on which it was based. JLL Securities did not perform any independent valuation or appraisal of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Cedar or its subsidiaries nor had JLL Securities been furnished with any such valuations or appraisals. In particular, JLL Securities did not express any opinion as to the value of any asset or liability of Cedar or any of its subsidiaries, whether at current market prices or in the future. JLL Securities did not assume any obligation to conduct, nor did it conduct, any physical inspection of the properties or facilities of Cedar. In arriving at its opinion, JLL Securities did not take into account any litigation that was pending or may be brought against Cedar or any of its affiliates or representatives. In addition, JLL Securities did not evaluate the solvency of any party to the Transaction Agreements under any state or federal laws or rules, regulations, guidelines or principles relating to bankruptcy, insolvency or similar matters.

For purposes of rendering its opinion, JLL Securities assumed that there had not occurred any material change in the assets, liabilities, financial condition, results of operations, business or prospects of Cedar or any of its subsidiaries since the respective dates on which the most recent financial statements or other information, financial or otherwise, relating to Cedar or any of its subsidiaries, were made available to JLL Securities. JLL Securities also assumed, with Cedar’s consent, that the final executed Transaction Agreements would not differ in any material respect from the draft Transaction Agreements reviewed by JLL Securities, that the representations and warranties of each party set forth in the asset purchase agreement and merger agreement were true and correct, that each party to the Transaction Agreements would perform all of the covenants and agreements required to be performed by it thereunder and that all conditions to the Transactions set forth in the Transaction Agreements would be timely satisfied and not modified or waived and that the Transactions would be consummated in accordance with the terms set forth in the Transaction Agreements without modification, waiver or delay, except, in each case, as would not be material to its analyses. JLL Securities assumed that the Grocery-Anchored Portfolio Sale would be consummated, prior to the consummation of the Mergers. JLL Securities also assumed that, prior to the consummation of the Mergers, the proceeds from the Grocery-Anchored Portfolio Sale would be used to pay the holders of the Cedar common stock and holders of OP Units the Closing Dividend. In addition, JLL Securities assumed, with Cedar’s consent, that any governmental, regulatory or third-party consents, approvals or agreements necessary for the consummation of the Transactions would be obtained without any imposition of a delay, limitation, restriction or condition that would, in any respect be material to its analyses, have an adverse effect on Cedar or the contemplated benefits of the Transactions. In addition, JLL Securities is not a legal, accounting, regulatory or tax expert and with Cedar’s consent it relied, without independent verification, on the assessment of Cedar and its advisors with respect to such matters. JLL Securities did not express any opinion as to the transaction expenses incurred by Cedar in the Transactions. JLL Securities’ opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to JLL Securities as of, March 2, 2022. It should be understood that, although subsequent developments may affect this opinion and the assumptions used in preparing it, JLL Securities does not have any obligation to update, revise or reaffirm its opinion. JLL Securities did not express any view or

 

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opinion as to the price at which any share of common stock or any other security may trade at any time, including subsequent to the date of its opinion. The credit, financial and stock markets as well as the industries in which Cedar operates have experienced, and continue to experience, volatility and JLL Securities expresses no opinion or view as to any potential effects of such volatility on Cedar or the Transactions.

JLL Securities’ opinion addresses only the fairness, from a financial point of view, to the holders of Cedar common stock (other than shares of common stock held by any direct or indirect wholly owned subsidiary of Wheeler, Merger Sub or any wholly owned subsidiary of Cedar immediately prior to the Effective Time) of the per share consideration to be paid to such holders in the Transactions, and JLL Securities did not express any view as to the fairness of the Transactions to, or any consideration of, the holders of any other class of securities of Cedar, including the holders of Series B Preferred Stock and Series C Preferred Stock of Cedar, creditors or other constituencies of Cedar or its subsidiaries or any other term of the proposed Transactions or the other matters contemplated by the Transaction Agreements. JLL Securities was not asked to, nor did it, offer any opinion as to any other term or aspect of the asset purchase agreement and merger agreement, or any other agreement or instrument contemplated by or entered into in connection with the Transactions or the form or structure of the asset purchase agreement and merger agreement, or the likely timeframe in which the Transactions would be consummated. Furthermore, JLL Securities expressed no opinion with respect to the amount or nature of any compensation to any officers, directors or employees of any party to the Transactions, or any class of such persons, relative to the per share consideration to be received by the holders of common stock in the Transactions or with respect to the fairness of any such compensation. JLL Securities did not express any opinion as to any tax or other consequences that may result from the transactions contemplated by the asset purchase agreement and merger agreement nor did its opinion address any legal, tax, regulatory or accounting matters, as to which it understood Cedar received such advice as it deemed necessary from qualified professionals, and which advice JLL Securities relied upon in rendering its opinion. JLL Securities expressed no view or opinion as to the financing of the Transactions or the terms or conditions upon which it was obtained. JLL Securities’ opinion did not address the underlying business decision of Cedar to engage in the Transactions, or the relative merits of the Transactions, as compared to any strategic alternatives that may be available to Cedar.

Summary of Financial Analysis

The following is a summary of the material financial analyses provided by JLL Securities to the Board in connection with the proposed Transactions. The summary set forth below does not purport to be a complete description of the financial analyses performed by, and underlying the opinions of, JLL Securities, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by JLL Securities.

The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by JLL Securities, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by JLL Securities. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by JLL Securities.

For purposes of the analyses described below, the term “per share consideration” refers to the anticipated aggregate $29.00 per share cash consideration payable to the holders of common stock pursuant to the merger agreement and the pro rata payment by Cedar of the Closing Dividend, to occur on or before the close of business on the day immediately prior to the consummation of the Mergers.

Net Asset Value Analysis

JLL Securities performed a net asset value analysis of Cedar by calculating a range of gross real estate asset values of its properties based on its professional judgment and expertise and on property-level net operating

 

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income and cash flows as provided by the management of Cedar, to reflect capital markets activity, capital improvements plans and recent lease signings across the properties owned by Cedar. An implied per share equity value reference range for Cedar was then calculated based on Cedar’s total implied gross real estate value at share at three different levels (a low point of $1.148 billion, a mid-point of $1.194 billion and a high point of $1.243 billion), plus Cedar’s cash and cash equivalents and other net tangible assets totaling approximately $3 million, less Cedar’s outstanding liabilities, including secured mortgage debt, balance on unsecured term loans and revolving credit facility, the liquidation preference of preferred stock outstanding, marked-to-market debt adjustments, unfunded capital costs and transaction related expenses and costs totaling approximately $795 million, divided by the total number of fully diluted shares of common stock and outstanding units of the Operating Partnership, equal to approximately 13.8 million as provided by Cedar management. Balances for cash and cash equivalents, secured mortgage debt, balance on unsecured term loans and revolving credit facility and the liquidation preference of preferred stock outstanding were as of December 31, 2021 and based on a draft form 10-K for the fiscal year ended December 31, 2021, which was provided to JLL Securities by the management of Cedar and later filed on March 10, 2022. Balances for the other net tangible assets, marked-to-market debt adjustments, unfunded capital costs, transaction related expenses and costs and total number of fully diluted shares of common stock and outstanding units of the Operating Partnership reflect management guidance provided by Cedar to JLL Securities, taking into consideration the proposed transaction. This analysis indicated the following approximate implied per share equity value reference range for Cedar at each of the three levels of total implied gross real estate value, as compared to the per share consideration:

 

Total Implied Gross Real Estate Value		Implied Per Share Equity Value Reference Range		Per Share Consideration
Low: $1.148 billion		$25.76		$29.00
Mid: $1.194 billion		$29.07
High: $1.243 billion		$32.57

Discounted Cash Flow Analysis

JLL Securities performed a discounted cash flow analysis of Cedar by calculating the estimated present value as of December 31, 2021, of the standalone unlevered, after-tax free cash flows that Cedar was forecasted to generate during the twelve-month periods ending December 31, 2022 through December 31, 2029, according to projections prepared by the management of Cedar through the 2029 calendar year. For additional information regarding the projections prepared by the management of Cedar, please see the section of this proxy statement titled “Financial Forecasts.” JLL Securities calculated terminal values for Cedar by applying a selected range of perpetuity growth rates of 1.1% to 1.6%, to Cedar’s standalone terminal unlevered, after-tax free cash flows based on its professional judgment and expertise, taking into consideration the market expectations regarding long-term growth of retail real estate in Cedar’s markets. The unlevered, after-tax free cash flows and terminal values were then discounted to present value (as of December 31, 2021) using a selected range of discount rates of 6.8% to 7.3% (reflecting JLL Securities’ analysis of Cedar’s weighted average cost of capital, determined using the “Capital Asset Pricing Model” and based on information provided to JLL Securities by Cedar management and other considerations that JLL Securities deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for a comparable group of companies). An implied per share equity value reference range for Cedar was then calculated based on the estimated present value of Cedar’s future unlevered, after-tax free cash flows as provided by the management of Cedar and terminal value at share ranging between $0.9 billion and $1.1 billion, plus Cedar’s cash and cash equivalents and other net tangible assets totaling approximately $3 million, less Cedar’s outstanding liabilities, including secured mortgage debt, balance on unsecured term loans and revolving credit facility, the liquidation preference of preferred stock outstanding and marked-to-market debt adjustments totaling approximately $691 million, divided by the total number of fully diluted shares of common stock and outstanding units of the Operating Partnership equal to approximately 13.8 million as provided by Cedar management. Balances for cash and cash equivalents, secured mortgage debt, balance on unsecured term loans and revolving credit facility and the liquidation preference of preferred stock outstanding are as of December 31, 2021 and based on a draft form

 

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10-K for the fiscal year ended December 31, 2021, which was provided to JLL Securities by the management of Cedar and later filed on March 10, 2022. Balances for the other net tangible assets, marked-to-market debt adjustments and total number of fully diluted shares of common stock and outstanding units of the Operating Partnership reflect management guidance provided by Cedar to JLL Securities, taking into consideration the proposed transaction. This analysis indicated the following approximate implied per share equity value reference range for Cedar, as compared to the per share consideration:

 

Implied Per Share Equity Value Reference Range		Per Share Consideration
$18.43 - $29.21		$29.00

Comparable Public Companies Analysis

JLL Securities reviewed publicly available financial and stock market information of Cedar and the following six selected companies that JLL Securities viewed as generally comparable to Cedar, based on, but not limited to, the following qualities: (i) focus on shopping center investments, including grocery-anchored shopping centers; (ii) focus on Mid-Atlantic, Northeast or suburban markets; (iii) small- or mid-cap company value; and (iv) well-covered by research analysts, collectively referred to as the selected REITs:

 

•

RPT Realty

 

•

Saul Centers, Inc.

 

•

Slate Grocery REIT

 

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Urban Edge Properties

 

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Urstadt-Biddle Properties Inc.

 

•

Whitestone REIT

JLL Securities reviewed, among other items, enterprise value of selected REITs as a multiple of estimated earnings before interest, taxes, depreciation and amortization, referred to as “EBITDA multiple,” for calendar year 2022, and closing stock prices of the selected REITs on February 25, 2022, as a multiple estimated funds from operations per share, referred to as “FFO multiple,” for calendar year 2022. JLL Securities also analyzed the premium or discount represented by the ratio of the closing stock prices to Green Street Advisors’ or S&P Global Market Intelligence’s (“Research Analysts”) estimated net asset value, referred to as “NAV.” Financial data of the selected REITs were based on publicly available consensus estimates. Financial data of Cedar were based on estimates provided by management and publicly available consensus estimates for NAV. For additional information regarding the estimates provided by the management of Cedar, please see the section of this proxy statement titled “Financial Forecasts.”

The implied overall low to high estimated EBITDA multiples for the selected REITs for calendar year 2022 were 13.0x to 19.2x (with a mean of 15.7x). The implied overall low to high estimated FFO multiples for the selected REITs for calendar year 2022 were 10.5x to 15.0x (with a mean of 12.6x). The implied overall discount to NAV was 29% at the low end and a premium to NAV of 4% at the high end, when compared to the closing stock price as of February 25, 2022 of the selected REITs (with a mean discount to NAV of 16%).

JLL Securities then applied selected ranges of estimated FFO multiples based on its professional judgment and expertise and derived from the selected REITs, estimated EBITDA multiples derived from the selected REITs and the premium or discount represented by the ratio of stock prices to Research Analysts’ estimated

 

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NAV (each for calendar year 2022), excluding transaction costs as provided by the management of Cedar. The following table reflects the results of this analysis:

 

		Range				Implied Per Share Equity Value Reference Range				Per Share Consideration
Enterprise Value to 2022E EBITDA			13.0x - 16.0x			$	16.14 - $31.29			$	29.00
Price to 2022E FFO per Share			10.5x - 13.0x			$	31.35 - $38.86			$	29.00
Share Price Premium / (Discount) to NAV			(30%) - (18%)			$	21.39 - $25.06			$	29.00

No company or business used in this analysis is identical or directly comparable to Cedar. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies or businesses to which Cedar was compared.

Selected Precedent Public REIT Mergers and Acquisitions (“M&A”) Transaction Analysis

JLL Securities also performed an analysis of selected precedent M&A transactions involving publicly traded REITs that shared certain characteristics with the Transaction.

Based on publicly available information obtained from SEC filings and other data sources as of February 25, 2022, JLL Securities identified the following ten publicly announced and completed transactions involving REITs that own and primarily operate retail properties in the U.S. acquired since January 1, 2010:

Selected Precedent Public Retail REIT M&A Transactions

 

Transaction Announcement Date		Acquirer		Target
July 2021		Kite Realty Group Trust		Retail Properties of America, Inc.
April 2021		Kimco Realty Corp.		Weingarten Realty Investors
February 2020		Simon Property Group, Inc.		Taubman Centers, Inc.
March 2018		Brookfield Property Partners L.P.		GGP Inc.
November 2016		Regency Centers Corporation		Equity One, Inc.
February 2016		an affiliate of Brookfield Asset Management Inc.		Rouse Properties, Inc.
December 2015		real estate funds managed by DRA Advisors LLC		Inland Real Estate Corporation
April 2015		Blackstone Property Partners L.P.		Excel Trust, Inc.
October 2014		Edens Investment Trust		AmREIT, Inc.
September 2014		Washington Prime Group Inc.		Glimcher Realty Trust

Additionally, based on publicly available information obtained from SEC filings and other data sources as of February 25, 2022, JLL Securities identified the following selected fourteen publicly announced and completed transactions involving REITs that own U.S. real estate and were acquired in an all-cash transaction for total deal consideration between $500 million and $2.5 billion that closed since January 1, 2010:

 

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Selected Precedent Additional Public REIT M&A Transactions

 

Transaction Announcement Date		Acquirer		Target
October 2020		a Partnership led by Pretium and including funds managed by Ares Management Corporation		Front Yard Residential Corporation
August 2020		an affiliate of NexPoint Advisors, L.P.		Jernigan Capital, Inc.
July 2019		an affiliate of Cortland Partners, LLC		Pure Multi-Family REIT LP
June 2017		Canada Pension Plan Investment Board		Parkway, Inc.
June 2017		Government Properties Income Trust		First Potomac Realty Trust
February 2017		Tricon Capital Group Inc.		Silver Bay Realty Trust Corp.
December 2015		real estate funds managed by DRA Advisors LLC		Inland Real Estate Corporation

 

Transaction Announcement Date		Acquirer		Target
October 2015		affiliates of Harrison Street Real Estate Capital, LLC		Campus Crest Communities, Inc.
April 2015		a real estate fund managed by Brookfield Asset Management		Associated Estates Realty Corporation
April 2015		Blackstone Property Partners L.P.		Excel Trust, Inc.
October 2014		Edens Investment Trust		AmREIT, Inc.
May 2013		American Realty Capital Properties, Inc.		CapLease, Inc.
April 2013		a newly formed fund controlled by Brookfield Office Properties Inc.		MPG Office Trust, Inc.
December 2011		Ventas, Inc.		Cogdell Spencer Inc.

JLL Securities reviewed, among other things, the premiums paid to the target companies’ unaffected stock prices (defined as the closing share price on the day immediately prior to when market rumors or other relevant news began to impact the target’s share price prior to transaction announcement). As unaffected stock price is not always reported consistently by targets, JLL Securities took its best efforts to standardize the metrics for the sake of comparability. The overall observed low and high unaffected stock price premiums paid in all transactions reviewed were 5% and 65% respectively. JLL Securities also reviewed the premiums or discounts paid to the target companies’ NAV (as determined by publicly available information). The overall observed low and high unaffected premium or discount to NAV in all transactions reviewed were discount of 20% and premium of 21%, respectively. JLL Securities then applied selected ranges, incorporating certain adjustments and assumptions, of premium to Cedar’s unaffected share price as of September 9, 2021 and applied ranges of premium to Research Analysts’ estimated NAV per share, which was adjusted for estimated transaction related expenses and costs. This analysis indicated the following implied per share equity value reference range for a share of Cedar Common Stock, as compared to the per share consideration:

 

		Premium Paid Range				Implied Per Share Equity Value Reference Range				Per Share Consideration
Unaffected Stock Price			10% - 35	%		$	18.70 - $22.95			$	29.00
Consensus NAV, less transaction expenses			(10%) - 15	%		$	22.79 - $30.43			$	29.00

 

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No transaction, company or business used in this analysis is identical or directly comparable to Cedar. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies or businesses to which Cedar was compared.

Selected Portfolio-Level Transaction Analysis

JLL Securities also performed an analysis of selected precedent portfolio-level transactions involving shopping centers in precedent transactions that shared certain characteristics with Cedar and the properties acquired in the Transaction.

JLL Securities reviewed the price per square foot and cap rate paid on such selected precedent transactions. The overall observed low and high price per square foot range in all transactions analyzed were $100 and $346, respectively. The overall low and high cap rate range in all transactions analyzed were 4.8% and 9.2%, respectively. An implied per share equity value reference range for Cedar was then calculated based on Cedar’s total implied gross real estate value at share ranging between $1.0 billion and $1.3 billion, plus Cedar’s cash and cash equivalents and other net tangible assets totaling approximately $3 million, less Cedar’s outstanding liabilities, including secured mortgage debt, balance on unsecured term loans and revolving credit facility, the liquidation preference of preferred stock outstanding, marked-to-market debt adjustments, unfunded capital costs and transaction related expenses and costs totaling approximately $795 million, divided by the total number of fully diluted shares of common stock and outstanding units of the Operating Partnership, equal to approximately 13.8 million as provided by Cedar management. Balances for cash and cash equivalents, secured mortgage debt, balance on unsecured term loans and revolving credit facility and the liquidation preference of preferred stock outstanding are as of December 31, 2021 and based on a draft form 10-K for the fiscal year ended December 31, 2021, which was provided to JLL Securities by the management of Cedar and later filed on March 10, 2022. Balances for the other net tangible assets, marked-to-market debt adjustments, unfunded capital costs, transaction related expenses and costs and total number of fully diluted shares of common stock and outstanding units of the Operating Partnership reflect management guidance provided by Cedar to JLL Securities, taking into consideration the proposed transaction. JLL Securities then applied selected ranges of price per square foot and cap rate based on its professional judgment and expertise and derived from the precedent transactions. The following table reflects the results of this analysis:

 

		Premium Paid Range				Implied Per Share Equity Value Reference Range				Per Share Consideration
Price Per Square Foot		$	130 - $160			$	16.69 - $33.88			$	29.00
Cap Rate			7.2% - 6.8	%		$	28.21 - $33.27			$	29.00

No transaction, property, company or business used in this analysis is identical or directly comparable to Cedar. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies or businesses to which Cedar was compared.

Other factors

JLL Securities also noted for the Board certain additional factors that were not considered part of JLL Securities’ financial analysis with respect to its opinion but were referenced for informational purposes, including, among other things:

 

•

Publicly available net asset value per share estimates of shares of Cedar common stock from three Wall Street research analysts, which estimates were determined to range from a minimum of $29.29 to a

 

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maximum of $31.52 before applying management’s estimated transaction related costs and expenses, and a range from a minimum of $24.57 to a maximum of $26.80 after applying management’s estimated transaction related costs and expenses.

 

•

Historical volume-weighted average trading prices of shares of Cedar common stock over the last three years (i.e., since February 25, 2019), which reflected low and high stock closing prices for Cedar during such period of $3.89 to $25.15 per share.

General

As noted above, the discussion set forth above is a summary of the material financial analyses and other factors reviewed by JLL Securities with the Board in connection with the Transactions and is not a comprehensive description of all analyses undertaken or factors considered by JLL Securities. The preparation of a financial opinion or analyses is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. JLL Securities believes that the analyses summarized above must be considered as a whole. JLL Securities further believes that selecting portions of its analyses considered or focusing on information presented in tabular format, without considering all analyses or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying JLL Securities’ analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

In performing its analyses, JLL Securities considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Cedar. The estimates of the future performance of Cedar in or underlying JLL Securities’ analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by JLL Securities’ analyses. These analyses were prepared solely as part of JLL Securities’ analysis of the fairness, from a financial point of view, of the proposed consideration payable to the Cedar common stock holders in the Transactions and were provided to the Board in connection with its evaluation of the Transaction. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or acquired or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be JLL Securities’ view of the actual value of Cedar.

The type and amount of consideration payable in the transaction were determined through negotiations between the Board, the Grocery-Anchored Purchasers and Wheeler, rather than by any financial advisor, and were approved by the Board. The decision to enter into the Transaction Agreements was solely that of the Board. As described above, JLL Securities’ opinion and analyses were only one of many factors considered by the Board in its evaluation of the Transactions and should not be viewed as determinative of the views of the Board, management or any other party with respect to the Transactions or the consideration payable in connection with the Transactions.

Cedar agreed to pay JLL Securities for its services as financial advisor to the Board in connection with the Transactions an aggregate fee of $1.0 million, which was payable upon delivery of its opinion and no portion of which was contingent upon the completion of the Transactions. In addition, Cedar agreed to reimburse JLL Securities for its reasonable expenses incurred in connection with JLL Securities’ engagement and to indemnify JLL Securities and certain related parties against specified liabilities, including liabilities under the federal securities laws.

JLL Securities’ opinion was approved by a committee of JLL Securities’ investment banking and other professionals in accordance with its customary practice. JLL Securities is the real estate investment banking arm

 

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of Jones Lang LaSalle, Inc., which is a professional full-service firm specializing in real estate advisory and investment management businesses. JLL is a Fortune 500 company with operations in 80 countries and more than 98,000 employees as of December 31, 2021.

JLL Securities is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. During the two years preceding the date of its opinion its capital markets affiliates had engaged in financial and real estate advisory relationships with Cedar and its affiliates for which JLL Securities and such affiliates received fees in connection with such services. Such relationships included (i) acting as investment sales advisors on behalf of Cedar in connection with a sale of assets in December 2021 and May 2021, (ii) acting as financing advisors to Cedar in connection with the financing of a property in May 2021, (iii) acting as advisor on behalf of Cedar in connection with securing a joint venture equity partner in May 2021. During the two years preceding the date of its opinion, JLL Securities had not been engaged to provide financial advisory or other services to Wheeler. During the two years preceding the date of its opinion JLL Securities and its affiliates had engaged in financial and real estate advisory relationships with affiliates of the Grocery-Anchored Purchasers, for which JLL Securities and its affiliates received customary fees in connection with such services. Such relationships included (i) acting as investment sales advisors on behalf of affiliates of the Grocery-Anchored Purchasers in connection with eight separate sales of assets between September 2020 and October 2021, and (ii) acting as financing advisors to affiliates of the Grocery-Anchored Purchasers in connection with the financing of a property in December 2021. JLL Securities and its affiliates may in the future provide, financial advice and services to Cedar, Wheeler, the Grocery-Anchored Purchasers, their affiliates, or any other party that may be involved in the Transactions for which JLL Securities and its affiliates would expect to receive compensation. Certain (i) of JLL Securities and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of its affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, JLL, Wheeler, the Grocery-Anchored Purchasers or any of their respective affiliates, or any other party that may be involved in the Transactions.

Certain Financial Forecasts

The Company does not, as a matter of course, publicly disclose forecasts as to future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates, other than providing, from time to time, estimated ranges for the then- current fiscal year of certain expected financial results and operational metrics in our supplemental information packages and other investor materials. However, the Company has included in this proxy statement certain financial forecasts of the Company (the “Company Forecasts”) that, to the extent described herein, were prepared by the Company’s management and provided to the Board in connection with its discussions concerning the proposed Transactions and to JLL Securities for use in connection with its financial analyses and fairness opinion.

The Company Forecasts were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or generally accepted accounting principles in the United States (“GAAP”). A summary of this information is presented below.

While the Company Forecasts were prepared in good faith, no assurances can be made regarding future events and the estimates and assumptions underlying these Company Forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industries in which the Company operates, and

 

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the risk and uncertainties described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 16, all of which are difficult to predict and many of which are outside the control of the Company. The Company’s stockholders are urged to review the Company’s SEC filings for a description of risk factors with respect to the Company’s business. Actual results likely will differ, and may differ materially, from those reflected in the Company Forecasts, whether or not the Transactions are consummated. The inclusion in this proxy statement of the Company Forecasts below should not be regarded as an indication that the Company, the Board, or the Company’s financial advisors considered, or now consider, these forecasts to be a reliable predictor of future results. The Company Forecasts are not fact, and neither they nor any underlying assumptions should be relied upon as being indicative of future results. Readers of this proxy statement are cautioned not to place reliance on this information. The Company Forecasts assume that the Company would continue to operate as a standalone company and do not reflect any impact of the Transactions.

All of the Company Forecasts summarized in this section were prepared by the Company’s management. Neither Ernst & Young LLP, the Company’s independent registered public accounting firm, nor any other independent registered public accounting firm nor any other person has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these Company Forecasts and, accordingly, neither Ernst & Young LLP nor any other independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information. The Ernst & Young LLP reports incorporated by reference in this proxy statement relate to the historical financial information of the Company. Those reports do not extend to the Company Forecasts and should not be read to do so.

By including in this proxy statement the Company Forecasts below, none of the Company or any of its representatives has made or makes any representation to any person regarding the ultimate performance of the Company compared to the information contained in the Company Forecasts. Accordingly, the Company Forecasts should not be construed as financial guidance nor relied upon as such. The inclusion of the Company Forecasts in this proxy statement does not constitute an admission or representation by the Company that the information contained therein is material. The Company Forecasts summarized in this section reflected the opinions, estimates and judgments of the Company’s management at the time they were prepared and have not been updated to reflect any changes since such Company Forecasts were prepared. The Company does not undertake any obligation, except as required by law, to update or otherwise revise the Company Forecasts to reflect circumstances existing since their preparation, changes in general economic or industry conditions or the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error.

The following table sets forth a summary of the Company Forecasts made available to the Board and to JLL Securities. The summary of the Company Forecasts is not included in this proxy statement to induce any Cedar stockholder to vote in favor of the approval of the Transactions or any other proposal to be voted on at the special meeting:

 

($ millions, other than per share data)		2022E				2023E				2024E				2025E				2026E				2027E				2028E				2029E
NOI(1)		$	83.2			$	88.0			$	89.5			$	91.1			$	93.0			$	94.8			$	96.8			$	99.4
EBITDA(2)		$	69.9			$	74.8			$	76.0			$	77.4			$	78.9			$	80.6			$	82.4			$	84.9
Funds From Operations (“FFO”)(3)		$	41.3			$	45.8			$	47.8			$	49.4			$	51.4			$	52.9			$	54.8			$	57.5
FFO per share(3)		$	2.99			$	3.31			$	3.46			$	3.57			$	3.71			$	3.82			$	3.96			$	4.16
Unlevered Free Cash Flow (“UFCF”)(4)		$	21.1			$	52.5			$	57.4			$	58.9			$	60.4			$	61.9			$	63.9			$	65.6

 

(1)

Net Operating Income, or NOI, is a widely-used non-GAAP financial measure for REITs that the Company believes, when considered with financial statements prepared in accordance with GAAP, is useful to investors as it provides an indication of the recurring cash generated by the Company’s properties by excluding certain non-cash revenues and expenses, as well as other infrequent items such as lease termination income which tends to fluctuate more than rents from year to year. Tenant improvements,

 

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leasing commissions and other direct leasing costs are excluded from NOI, consistent with the capital treatment of such costs under GAAP. The most directly comparable GAAP financial measure to NOI is consolidated operating income but NOI should not be considered as an alternative to consolidated operating income prepared in accordance with GAAP or as a measure of liquidity. Further, NOI is a measure for which there is no standard industry definition and, as such, it is not consistently defined or reported on among the Company’s peers, and thus may not provide an adequate basis for comparison among REITs. The Company Forecasts define NOI as total base rent plus recoveries, management fee income and other income, less property expenses including common area maintenance, real estate taxes and other taxes, tenant billable charges, bad debt expense, ground rent, management fees and other expenses.

(2)

EBITDA is a widely recognized supplemental non-GAAP financial measure. The Company computes EBITDA as net income from continuing operations, plus interest expense (including early extinguishment of debt costs), depreciation and amortization, minority interests’ share of consolidated joint venture EBITDA, and discontinued operations. The Company believes EBITDA provides additional information with respect to the Company’s performance and ability to meet its future debt service requirements. EBITDA should be reviewed with GAAP net income from continuing operations, the most directly comparable GAAP financial measure, when trying to understand the Company’s operating performance.

(3)

Funds From Operations (“FFO”) is a widely recognized supplemental non-GAAP measure utilized to evaluate the financial performance of a REIT. The Company presents FFO in accordance with the definition adopted by the National Association of Real Estate Investment Trusts, which generally defines FFO as net income (determined in accordance with GAAP), excluding gains (losses) from sales of real estate properties, impairment write-downs on real estate properties directly attributable to decreases in the value of depreciable real estate, plus real estate related depreciation and amortization, and adjustments for partnerships and joint ventures to reflect FFO on the same basis. The Company considers FFO to be an appropriate measure of its financial performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than other depreciable assets. FFO should be reviewed with net income attributable to common shareholders, the most directly comparable GAAP financial measure, when trying to understand the Company’s operating performance. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income attributable to common shareholders or to cash flow from operating activities. The Company’s computations of FFO may differ from the computations utilized by other REITs and, accordingly, may not by comparable to such REITs.

(4)

UFCF is a non-GAAP financial measure that was calculated by JLL Securities based on information provided to JLL Securities by Cedar management. JLL calculated UFCF, based on information provided to JLL Securities by Cedar management, by adjusting EBITDA to include the effect of tenant improvements, building improvements, other capital expenditures and unlevered unconsolidated joint venture income and exclude the effect of straight-line rental income, all of which were provided to JLL Securities by Cedar management.

The non-GAAP financial measures used in the financial forecasts above were relied upon by JLL Securities for purposes of its fairness opinion and by the Board in connection with its consideration of the Transactions. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not relied upon by JLL Securities for purposes of its fairness opinion or by the Board in connection with its consideration of the Transactions. Accordingly, we have not provided a reconciliation of the financial measures included in the Company Forecasts above.

Interests of Cedar’s Directors and Executive Officers in the Transactions

In addition to their interests in the Transactions as stockholders, our non-employee directors and executive officers have interests in the Transactions that may be different from, or in addition to, the interests of Cedar stockholders generally. In considering the proposals to be voted on at the special meeting, you should be aware

 

53

of these interests. Members of the Board were aware of and considered these interests in reaching the determination to approve the Transaction Agreements and to declare that the Transaction Agreements, the Transactions and the other transactions contemplated by the Transaction Agreements were advisable and in the best interests of Cedar and its stockholders, and in recommending that the holders of the Company common stock vote to approve the Transactions.

Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

•

the aggregate per share consideration to be received by holders of the Company common stock as a result of the Transactions is $29.00 per share, the anticipated per share consideration (referred to as the “aggregate per share consideration”);

 

•

each executive officer’s employment is terminated by the Company without “cause” or by the executive officer for “good reason” (as such terms are defined in each executive officer’s employment or executive agreement with the Company), in each case, immediately following the effective time of the Mergers;

 

•

each non-employee director and executive officer holds the outstanding equity awards that were held by each executive officer as of March 30, 2022, the latest practicable date before the filing of this proxy statement; and

 

•

the amounts set forth below regarding executive officer compensation are based on compensation levels as of March 30, 2022.

Our current executive officers are Bruce J. Schanzer, President and Chief Executive Officer; Jennifer Bitterman, Executive Vice President, Chief Financial Officer and Treasurer; and Robin Zeigler, Senior Executive Vice President and Chief Operating Officer.

Our current non-employee directors are Abraham Eisenstat, Gregg A. Gonsalves, Sabrina L. Kanner, Darcy D. Morris, Steven G. Rogers, Richard H. Ross and Sharon Stern.

Treatment of Equity and Equity-Based Awards

For additional information regarding beneficial ownership of the Company’s common stock by each of our non-employee directors and named executive officers and beneficial ownership of Cedar common stock by all non-employee directors and executive officers as a group, please see the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management.” Each of our non-employee directors and executive officers will be entitled to receive the same aggregate per share consideration in cash in the same manner as other holders of the Company’s common stock.

Our non-employee directors hold restricted stock awards under the Company’s equity incentive plans and our executive officers hold restricted stock awards and restricted stock unit awards that will be afforded the treatment described below. Our executive officers and non-employee directors do not hold any outstanding stock options. All outstanding equity awards that are subject to time-based vesting, including all outstanding restricted stock awards held by our non-employee directors and executive officers, fully accelerate and vest upon a “sale event” or a “change in control,” as applicable (as such terms are defined in the applicable equity plan and each of which includes the Transactions) pursuant to the terms of the applicable equity plan. In addition, out executive officers are party to employment and other executive agreements with the Company that provide for certain acceleration of vesting of performance-based equity awards in the event of a change in control, which will include completion of the Transactions.

 

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In connection with the closing of the Grocery-Anchored Portfolio Sale and immediately prior to the consummation of the Mergers:

 

•

Restricted Stock Awards: Each outstanding restricted stock award will become fully vested and nonforfeitable and the holder thereof will have the right to receive the aggregate per share consideration for each share of the Company’s common stock underlying such award.

 

•

Restricted Stock Units. Each outstanding restricted stock unit award that is subject to performance-based vesting will fully vest in accordance with its terms and convert into the respective number of shares of Company common stock underlying such award and the holder thereof will have the right to receive the aggregate per share consideration with respect to each share of the Company’s common stock underlying such award as well as accrued dividend equivalent rights with respect to such restricted stock unit award.

The table below show the number of shares underlying outstanding unvested restricted stock awards and unvested restricted stock unit awards held by our executive officers and non-employee directors as of April 1, 2022 and the consideration, in cash, they can expect to receive for these awards, assuming continued employment/service through both the (1) closing date of the Transactions, and (2) earliest of any remaining vesting dates or an earlier qualifying termination. As noted above, our executive officers and non-employee directors do not hold any stock options.

Cash Payments to Executive Officers and Non-Employee Directors

in Respect of Company Equity Awards

 

		Restricted Stock Awards								Restricted Stock Unit Awards
		Shares of Restricted Stock (#)				Aggregate Payment for Restricted Stock ($)(1)				Number of Shares Underlying RSU Awards(#)				Aggregate Payment for RSU Awards ($)(2)				Dividend Equivalent Rights on RSU Awards ($)(3)				Total Equity Award Consideration ($)
Executive Officers:
Bruce J. Schanzer			151,514				4,393,906				113,636				3,295,444				500,000				8,189,350
Jennifer Bitterman			19,117				554,393				—				—				—				554,393
Robin Zeigler			82,152				2,382,408				—				—				—				2,382,408
Non-Employee Directors:
Abraham Eisenstat			12,577				364,733				—				—				—				364,733
Gregg A. Gonsalves			12,577				364,733				—				—				—				364,733
Sabrina L. Kanner			12,577				364,733				—				—				—				364,733
Darcy D. Morris			2,493				72,297				—				—				—				72,297
Steven G. Rogers			12,577				364,733				—				—				—				364,733
Richard H. Ross			2,493				72,297				—				—				—				72,297
Sharon Stern			2,493				72,297				—				—				—				72,297

 

(1)	The amounts included in this column are equal to (a) the number of shares of restricted stock, multiplied by (b) the aggregate per share consideration of $29.00.

(2)

The amounts included in this column are equal to (a) the number of restricted stock units, multiplied by (b) the aggregate per share consideration of $29.00. For purposes of calculating the value of outstanding restricted stock units, such restricted stock unit awards have been deemed earned at maximum performance in accordance with their terms as of the consummation of the Transactions.

(3)

On June 15, 2019, Mr. Schanzer was granted 1,500,000 dividend equivalent rights (referred to as “DERs”) in connection with a grant of performance-based restricted stock units. The DERs, along with those restricted stock units, were subject to performance-based vesting over a five-year performance period as set forth in Mr. Schanzer’s executive agreement (as described below), with the ability to earn up to 50% of such grant at the conclusion of an interim three-year measurement period. The DERs are not paid until the

 

55

performance criteria are achieved and will be forfeited to the extent such criteria are not achieved. As a result, Mr. Schanzer received a payment of $500,000 with respect to DERs related to the vesting and settlement of the portion of Mr. Schanzer’s performance-based restricted stock units that vested at the conclusion of the interim three-year measurement period in 2021. The amount in this column shows the consideration, in cash, Mr. Schanzer is anticipated to receive for the DERs assuming continued employment/service through both the (1) closing date of the Transactions and (2) earliest of any remaining vesting dates or an earlier qualifying termination.

Deferred Compensation Plan

Two of our executive officers, Mr. Schanzer and Ms. Zeigler, as well as Mr. Eisenstat, a non-employee director, participate in the 2005 Cedar Shopping Centers, Inc. Deferred Compensation Plan (referred to in this paragraph as the “plan”). Under the plan, participants may defer a portion of their base salaries and cash bonuses on a pre-tax basis and receive a tax-deferred return on such amounts based on the performance of specific investments selected by the participants. Participants may also defer share awards made under the Company’s equity incentive plans, as well as related dividends. In connection with this plan, the Company has established a “rabbi trust” overseen by an independent trustee, wherein the trustee is directed to make investments of the deferred cash amounts, which track as closely as possible to those selected by each participant in order to generally match its liabilities to the participants under the deferred compensation plan with equivalent assets and thereby limit market risk. Generally, cash deferrals will be distributed in a lump sum on the earlier of the first day of the 61st month following the end of the calendar year to which such deferral relates, or as soon as practicable after the participant’s separation from service for any reason other than death or retirement (or six months thereafter, in the case of any participant who is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code, as amended (the “Code”)), unless the participant elects to receive the distribution in installments, or to otherwise further defer the distribution, as provided in the plan. Generally, share deferrals will be distributed in a lump sum on the later of (a) the first business day of the January next following the third anniversary date of the grant, or (b) the first business day of the January next following the date on which the share deferrals are scheduled to vest in their entirety based on the original vesting schedule, unless the participant elects to receive the distribution in installments, or to otherwise further defer the distribution, as provided in the plan. In the event of a “change in control” (as defined in the plan) that constitutes a change in control event under Section 409A of the Code, participants shall become 100% vested in their share deferral accounts, and the Board may terminate the plan and distribute all benefits under the plan to participants. In the event of a termination or constructive termination of the plan in connection with a change in control, such plan provides for an income tax gross up on plan benefits distributed to participants as well as a tax gross-up on any amounts under the plan that are subject to the 20% penalty tax under Section 409A of the Code. Under the terms of the merger agreement, Wheeler has the right to require the Company to terminate the plan in connection with the Transactions. Wheeler has indicated that it intends to exercise this right prior to closing.

The table below shows the anticipated distributions that will be made to each of applicable executive officers and directors in connection with the termination of the plan, including any related tax gross up payments.

Cash Payments to Participants of the Deferred Compensation Plan

 

Name		Amount of Distribution($)
Bruce J. Schanzer			8,436,300
Robin Zeigler			144,996
Abraham Eisenstat			472,796

 

(1)	The amount reported includes the full value of the participant’s account balance that will be distributed in connection with the Transactions, as well as the value of any tax gross-up payment.

 

56

Severance Entitlements

Certain of Cedar’s executive officers are a party to employment or other executive agreements (each referred to as an “executive agreement”) that provides for certain severance payments and benefits in the event of a qualifying termination and/or upon the occurrence of a change in control.

Mr. Schanzer’s executive agreement provides that, upon Mr. Schanzer’s termination of employment by the Company without “cause” or Mr. Schanzer’s resignation for “good reason” (as each term is defined in his executive agreement), or if a “change in control” (as defined in his executive agreement and which includes the Transactions) occurs prior to Mr. Schanzer’s termination of employment, time-based restricted stock awards held by Mr. Schanzer are subject to full acceleration and the performance-based restricted stock unit awards and dividend equivalents, or DERs (referred to collectively as the “Schanzer performance-based awards”) are subject to acceleration as set forth in his executive agreement. In addition, in connection with a change in control, if Mr. Schanzer’s restricted stock unit awards vest and if the Company’s average annual total shareholder return for the period between the June 15, 2018 and the 5th anniversary thereof (or, if the restricted stock unit awards vest earlier pursuant to the terms of the executive agreement, the date on which the awards vest) is greater than 10%, Mr. Schanzer shall be entitled to a cash amount equal to (i) (A) 500,000 multiplied by (B) a fraction, the numerator of which is the Company’s average annual total shareholder return minus 10% and the denominator of which is 10, (provided that, in no event shall such fraction be greater than 1) multiplied, by (x) if such vesting occurs in connection with a change of control, the “sale price” (as defined in the executive agreement) and (y) in all other circumstances, the average closing price of the Company’s common stock for the 20 trading days prior to such vesting date; provided, however, no such cash payment will be made for average annual total shareholder return above 20%.

Finally, if Mr. Schanzer’s employment is terminated by the Company without cause or by Mr. Schanzer for good reason, or his employment is terminated by the Company by reason of death or disability, his executive agreement provides that, subject to his execution of a separation agreement and release, he will be entitled to receive a lump sum cash payment equal to 250% of the sum of his annual base salary at the rate applicable on the date of termination and his target annual bonus for the year of termination. In addition, pursuant to the terms of Mr. Schanzer’s executive agreement, the Company is required to provide Mr. Schanzer with disability, accident and health insurance substantially similar to those insurance benefits that Mr. Schanzer was receiving immediately prior to the date of termination for 12 months following the date of termination or a cash payment in lieu thereof (reduced to the extent comparable benefits are actually received by Mr. Schanzer during such period) and accelerated vesting of any options, restricted common stock, and restricted stock units granted to Mr. Schanzer, including the equity awards granted pursuant to the employment agreement. Any amounts payable in the event of death or disability will be reduced by the amounts payable under any life or disability insurance policy sponsored by the Company and/or the Operating Partnership.

Ms. Bitterman’s executive agreement provides that, upon Ms. Bitterman’s termination of employment by the Company without “cause”, or if Ms. Bitterman resigns for “good reason” (as each term is defined in her executive agreement), in either case, upon or within 90 days prior to or 12 months following a “change in control” (as such term is defined in her executive agreement), Ms. Bitterman will be entitled to receive a lump sum cash payment equal to 200% of the sum of her annual base salary at the rate applicable on the date of termination and her targeted annual bonus for the then-current fiscal year, exclusive of any long-term incentive stock awards. In addition, upon Ms. Bitterman’s termination of employment by Cedar without cause or her resignation for good reason, all outstanding unvested equity awards held by Ms. Bitterman shall immediately accelerate and vest. In addition, the Compensation Committee of the Board has determined, that upon closing of the Transactions, Ms. Bitterman will be entitled to a one-time transaction bonus equal to $500,000 in recognition of Ms. Bitterman’s extraordinary efforts in connection with the Transactions.

Ms. Zeigler’s executive agreement provides that, upon Ms. Zeigler’s termination of employment by the Company other than for “cause” or her resignation for “good reason” (as each term is defined in her executive

 

57

agreement), Ms. Zeigler will be entitled to receive a lump sum cash payment equal to 250% of the sum of her annual base salary at the rate applicable on the date of termination and her targeted annual bonus for the then-current fiscal year, exclusive of any long-term incentive stock awards. In addition, pursuant to the terms of her executive agreement, if Ms. Zeigler’s employment is terminated by the Company other than for cause or by Ms. Zeigler for good reason, the Company is required to provide Ms. Zeigler with (i) disability, accident and health insurance substantially similar to those insurance benefits that Ms. Zeigler was receiving immediately prior to the date of termination for 12 months following the date of termination or a cash payment in lieu thereof (reduced to the extent comparable benefits are actually received by Ms. Zeigler during such period) and (ii) accelerated vesting of any options, restricted common stock, and any other awards granted to Ms. Zeigler under any employee benefit plan that have not vested.

Each of the executive agreements contains what is sometimes referred to as a “best-net” provision. If any amounts or benefits to be paid or provided under the executive agreements or otherwise would cause payments or benefits (or other compensation) to not be fully deductible by Cedar for federal income tax purposes because of Section 280G of the Code (or that would subject the executive officer to the excise tax imposed by Section 4999 of the Code), such payments and benefits (and other compensation) will be reduced to the extent necessary such that no portion of such payments or benefits (or other compensation) will be subject to the excise tax imposed by Section 4999 of the Code, except that such a reduction will be made only if, by reason of such reduction, the executive officer’s net after-tax benefit exceeds the net after-tax benefit such executive officer would realize if such reduction were not made.

Quantification of Payments and Benefits

In accordance with Item 402(t) of Regulation S-K, the table below sets forth for each of our named executive officers the estimated amount of compensation based on or otherwise related to the Transactions and that will or may become payable to the named executive officer (1) solely as a result of the completion of the Transactions (i.e., on a “single-trigger” basis) or (2) conditioned on a qualifying termination of employment following or in connection with the Transactions (i.e., on a “double-trigger” basis). This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules. The holders of our common stock are being asked to approve, on a non-binding, advisory basis, such compensation for the named executive officers. Because the vote to approve such compensation is advisory only, it will not be binding on the Company or any other party to the Transaction Agreements. Accordingly, if the proposal to adopt the Transactions is approved by the holders of our common stock and the Transactions are completed, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the table below and in the narrative above. Philip Mays, our former chief financial officer, is excluded from the disclosure below in accordance with applicable rules because his employment with the Company terminated on September 9, 2021 and he will not be receiving any payments or benefits in connection with Transactions.

The potential payments in the table below are based on the following assumptions:

 

•

the aggregate per share consideration to be received by holders of the Company common stock as a result of the Transactions is $29.00 per share, the anticipated per share consideration;

 

•

the effective time of the Transactions is June 30, 2022, which is the assumed date of the effectiveness of the Mergers solely for purposes of this golden parachute compensation disclosure;

 

•

each named executive officer’s employment is subject to a qualifying termination immediately following the effective time of the Transactions, which entitles the named executive officer to receive the severance benefits described above under “—Severance Entitlements;”

 

•

each named executive officer holds the outstanding equity awards that were held by each named executive officer as of March 28, 2022, the latest practicable date before the filing of this proxy statement;

 

•

the amounts set forth in the table below regarding named executive officer compensation are based on compensation levels as of March 28, 2022; and

 

58

•

the “best-net” provision contained in the executive agreements, described above under “—Severance Entitlements,” will not apply.

The amounts shown are estimates of amounts that would be payable to the named executive officers based on multiple assumptions that may or may not actually occur, including the assumptions described above. Some of the assumptions are based on information not currently available and, as a result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table.

The following table and footnotes describe the benefits each named executive officer is or may be eligible to receive in connection with the completion of the Transactions.

Potential Payments to Named Executive Officers

 

Named Executive Officer		Cash Severance Payments ($)(1)		Equity ($)(2)		Perquisites/ Benefits ($)(3)		Pension/ NQDC ($)(4)		Tax Reimbursements ($)(5)		Total ($)
Bruce J. Schanzer		14,730,088		3,295,444		35,340		4,393,906		8,436,300		30,891,078
Jennifer Bitterman		1,735,000		554,393		357		—		—		2,289,750
Robin M. Zeigler		2,125,500		2,382,408		35,340		—		144,996		4,688,244

 

(1)

The amounts in this column represent the cash severance to which our named executive officers may become entitled, as described above in the section entitled “Interests of Cedar’s Directors and Executive Officers in the Transactions—Severance Entitlements”. The severance payments for each of each of the named executive officers are “double-trigger,” as they will only be payable in the event of a qualifying termination of employment in connection with the Transactions. In addition, with respect to Mr. Schanzer, the amounts reported include (i) a $10,480,088 change in control cash payment to which he is entitled pursuant to his executive agreement, and (ii) a $500,000 cash payment in respect in his DERs to which he is entitled pursuant to his executive agreement, each of which are “single-trigger” payments and will be payable upon the closing of the Transactions.

(2)

As described above under “—Treatment of Equity and Equity-Based Awards,” these amounts, represent the aggregate amount payable pursuant to the Transaction Agreements to each named executive officer in respect of any outstanding unvested restricted stock and unvested restricted stock unit awards held as of the effective time of consummation of the Transactions (with the performance metrics applicable to the performance-based restricted stock units deemed to be achieved at maximum). The amounts payable with respect to such unvested restricted stock and unvested restricted stock unit awards are set forth in the table under “—Treatment of Equity and Equity-Based Awards.” Other than with respect to Mr. Schanzer, whose equity awards are subject to “single-trigger” acceleration, payments with respect to any equity awards are “double trigger” and will become payable upon the named executive officer’s qualifying termination as described in further detail above under “—Severance Entitlements”.

(3)	The amounts reported in this column represent the estimated value of continued health and welfare benefits to which each of named executive officers is entitled pursuant to the executive agreements.

(4)	The amounts reported in this column represents the value of unvested stock to be received upon termination of the deferred compensation plan as described in further detail above under “—Deferred Compensation Plan”.

(5)	The amounts reported in this column represent the tax gross-up to be received upon termination of the deferred compensation plan as described in further detail above under “—Deferred Compensation Plan”.

Director and Officer Indemnification

Pursuant to the terms of the Transaction Agreements, members of the Board and executive officers of the Company will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability

 

59

insurance policies following the Transactions. For a more detailed description of the provisions of the Transaction Agreements relating to director and officer indemnification, please see the section of this proxy statement entitled “The Transaction Agreements—Certain Other Covenants and Agreements—Indemnification of Directors and Officers”.

No Future Arrangements

As of the date of this proxy statement, none of the Company’s executive officers has discussed or entered into any agreement with any of the Grocery-Anchored Purchasers, Wheeler or any of their respective affiliates regarding employment with, or the right to purchase or participate in the equity of, any such party.

Restrictive Covenants Agreement

Wheeler and Mr. Schanzer entered into a Restrictive Covenant Agreement, pursuant to which Mr. Schanzer agreed to customary non-compete and non-solicitation covenants for a four-year period following closing of the Mergers. Mr. Schanzer will not receive any compensation or continuing payments from the Company or from Wheeler in respect of the Restrictive Covenants Agreement.

Material U.S. Federal Income Tax Consequences

The following is a general discussion of the material U.S. federal income tax consequences of the receipt of the Closing Dividend and the merger consideration pursuant to the Company Merger to U.S. holders and non-U.S. holders (each as defined below) of our common stock. This discussion is based on the provisions of the Code, applicable U.S. Treasury Regulations, judicial opinions and administrative rulings and published positions of the Internal Revenue Service (the “IRS”), each as in effect as of the date hereof. These authorities are subject to change or differing interpretations, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences under state, local or non-U.S. laws or U.S. federal laws other than those pertaining to the U.S. federal income tax (such as estate and gift taxes or alternative minimum taxes). We have not obtained any rulings from the IRS concerning the tax treatment of the matters discussed below. Thus, it is possible that the IRS could challenge the statements in this discussion and that a court could agree with the IRS.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:

 

•

an individual citizen or resident of the United States;

 

•

a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof, or the District of Columbia;

 

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a trust (1) the administration of which is subject to the primary supervision of a U.S. court and which has one or more “United States persons” (as defined under the Code) who have the authority to control all substantial decisions of the trust, or (2) that has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or

 

•

an estate the income of which is subject to U.S. federal income tax regardless of its source.

For purposes of this discussion, the term “non-U.S. holder” means a beneficial owner of our common stock, other than an entity or arrangement classified as a partnership for U.S. federal income tax purposes, that is not a U.S. holder.

This discussion applies only to holders of shares of our common stock who hold such shares as “capital assets” within the meaning of the Code (generally, property held for investment). Further, this discussion is for general information purposes only and does not purport to address all aspects of U.S. federal income taxation that

 

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may be relevant to specific holders in light of their particular facts and circumstances, and it does not apply to holders subject to special treatment under U.S. federal income tax laws (including, for example, insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect to apply the mark-to-market method of accounting, holders subject to the alternative minimum tax, persons who are required to recognize income or gain with respect to the Company Merger no later than such income or gain is required to be reported on an applicable financial statement, U.S. holders that have a functional currency other than the U.S. dollar, tax-exempt organizations, retirement plans, individual retirement accounts or other tax-deferred or advantaged accounts (or persons holding common stock through such plans or accounts), banks and other financial institutions, certain former citizens or former long-term residents of the United States, “controlled foreign corporations,” “passive foreign investment companies,” partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes or other flow-through entities (and investors therein), S corporations, real estate investment trusts, regulated investment companies, “qualified foreign pension funds” (within the meaning of Section 897(1)(2) of the Code) or entities all of the interests in which are held by a qualified pension fund, “qualified shareholders” (within the meaning of Section 897(k)(3) of the Code) or investors therein, non-U.S. holders who hold, or have held at any time, directly, indirectly, or constructively, more than 5% of our outstanding common stock, holders who hold our common stock as part of a hedge, straddle, constructive sale, conversion or other integrated or risk reduction transaction, and holders who acquired our common stock through the exercise of employee stock options or otherwise as compensation).

If a partnership (including any entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in such partnership will generally depend on the status of the partners and the activities of the partnership. If you are, for U.S. federal income tax purposes, a partner in a partnership holding common stock, you should consult your tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the Company Merger and the receipt of the Closing Dividend to you in light of your particular circumstances.

All holders should consult their tax advisors regarding the specific tax consequences of the Company Merger and the receipt of the Closing Dividend to them in light of their particular facts and circumstances, including with respect to the applicability and effect of any U.S. federal, state, local, non-U.S. or other tax laws.

Treatment of the Receipt of the Closing Dividend

U.S. Federal Income Tax Treatment of the Receipt of the Closing Dividend

For U.S. federal income tax purposes, we intend to treat the distribution of the Closing Dividend as a dividend distribution to holders of shares of common stock to the extent of the Company’s current and accumulated earnings and profits. Notwithstanding the intended U.S. federal income tax treatment described herein, the U.S. federal income tax treatment of the distribution of the Closing Dividend is not free from doubt, and the IRS or a court may disagree with our intended treatment. The rest of this discussion proceeds on the basis that our intended U.S. federal income tax treatment of the distribution of the Closing Dividend is respected. Holders of shares of our common stock are urged to consult their tax advisors regarding the impact to them of potential alternative treatments in their particular circumstances.

U.S. Holders

The distribution of the Closing Dividend made by the Company out of its current or accumulated earnings and profits, and not designated as a capital gain dividend, will constitute a dividend taxable to U.S. holders as ordinary income. Noncorporate U.S. holders will generally not be entitled to the preferential tax rate applicable to qualified dividend income except with respect to the portion of any distribution (1) that represents income from dividends the Company received from a corporation in which the Company owns shares (but only if such dividends would be eligible for the lower rate on dividends if paid by the corporation to its individual

 

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stockholders), (2) that is equal to the sum of the Company’s REIT taxable income (taking into account the dividends paid deduction available to the Company) and certain net built-in gain with respect to property acquired from a C corporation in certain transactions in which the Company must adopt the basis of the asset in the hands of the C corporation for the Company’s previous taxable year, less any taxes paid by the Company during its previous taxable year, or (3) that represents earnings and profits that were accumulated in a non-REIT taxable year, in each case, provided that certain holding period and other requirements are satisfied at both the Company and individual stockholder levels; however, to the extent not so treated as qualified dividend income and not designated as a capital gain dividend, the distribution will generally constitute a dividend with respect to which noncorporate U.S. holders will be permitted to take a deduction equal to 20% of such dividend for purposes of determining their U.S. federal income tax, subject to certain limitations, which depend on such U.S. holders’ individual circumstances. Noncorporate U.S. holders should consult their tax advisors to determine the tax rates on dividends received from the Company.

The distribution of the Closing Dividend made by the Company will not be eligible for the dividends-received deduction in the case of U.S. holders that are corporations.

The distribution of the Closing Dividend made by the Company, to the extent that the Company properly designates such distribution as a capital gain dividend, will be taxable to U.S. holders as gain from the sale of a capital asset held for more than one year, to the extent that such dividend does not exceed the Company’s actual net capital gain for the taxable year, without regard to the period for which a U.S. holder has held the shares of our common stock. Thus, with certain limitations, a capital gain dividend received by an individual U.S. holder may be eligible for preferential rates of taxation. U.S. holders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income.

To the extent that the Closing Dividend is in excess of the Company’s current and accumulated earnings and profits, such a distribution will be treated first as a tax-free return of capital to each U.S. holder. Thus, such a distribution will reduce the adjusted basis that the U.S. holder has in the shares of our common stock for tax purposes by the amount of the distribution, but not below zero. This reduction will increase gain (or reduce loss) a U.S. holder would recognize in respect of the Company Merger (see “Consequences of the Company Merger to U.S. Holders of our Common Stock”). The distribution made in excess of a U.S. holder’s adjusted basis in the shares of our common stock will be taxable as capital gain, provided that the shares of our common stock have been held as a capital asset.

The distribution of the Closing Dividend made by the Company will not be treated as passive activity income. As a result, U.S. holders generally will not be able to apply any passive losses against that income or gain. A U.S. holder generally may elect to treat capital gain dividends and income designated as qualified dividend income as investment income for purposes of computing the investment interest limitation, but in such case, the holder will be taxed at ordinary income rates on such amount. The Closing Dividend, to the extent it does not constitute a return of capital, generally will be treated as investment income for purposes of computing the investment interest limitation.

Non-U.S. Holders

Ordinary Dividend.

The distribution of the Closing Dividend, other than the portion of the distribution designated by the Company as a capital gain dividend, will generally be treated as ordinary income to the extent that the distribution is made out of the Company’s current or accumulated earnings and profits. So long as our common stock is regularly traded on an established securities market located in the United States, the portion of the distribution designated by the Company as a capital gain dividend, made to a non-U.S. holder who owns no more than 10% of shares of our common stock at all times during the one-year period ending on the date of the distribution, will also generally be treated as ordinary income. A withholding tax equal to 30% of the gross

 

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amount of the distribution will ordinarily apply to the distribution of this kind to non-U.S. holders, unless an applicable tax treaty reduces that tax. However, if income from the investment in the shares of our common stock is treated as effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business and, if required by an applicable income tax treaty as a condition for subjecting the non-U.S. holder to U.S. taxation on a net income basis, is attributable to a permanent establishment or fixed base that the non-U.S. holder maintains in the United States, tax at graduated rates will generally apply to the non-U.S. holder in the same manner as applied to U.S. holders with respect to dividends, and the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) may also apply if the holder is a non-U.S. corporation. The Company expects that it or the applicable withholding agent will withhold U.S. tax at the rate of 30% on the gross amount of the distribution of the Closing Dividend, other than the portion of the distribution that is treated as attributable to gain from sales or exchanges of U.S. real property interests and a capital gain dividend, paid to a non-U.S. holder, unless (1) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate is filed with the Company or the appropriate withholding agent or (2) the non-U.S. holder files an IRS Form W-8-ECI or a successor form with the Company or the appropriate withholding agent claiming that the distribution is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business and in either case other applicable requirements were met.

Capital Gain Dividend.

As described above, the distribution of the Closing Dividend that is attributable to gain from sales or exchanges by the Company of U.S. real property interests that is paid with respect to our common stock that is held by a non-U.S. holder who does not own more than 10% of such stock at any time during the one-year period ending on the date of the distribution will generally be treated as an ordinary dividend.

The portion of the distribution of the Closing Dividend to a non-U.S. holder that is designated by the Company at the time of distribution as a capital gain dividend that is not attributable to or treated as attributable to the disposition by the Company of a U.S. real property interest generally will not be subject to U.S. federal income taxation, subject to the exceptions discussed in “Consequences of the Company Merger to Non-U.S. Holders of our Common Stock.”

Return of Capital.

The distribution of the Closing Dividend made in excess of the Company’s current and accumulated earnings and profits will not be taxable to a non-U.S. holder to the extent that the distribution does not exceed the non-U.S. holder’s adjusted basis in such holder’s shares of our common stock. The distribution of this kind will instead reduce the adjusted basis of such shares. To the extent that the distribution of this kind exceeds the non-U.S. holder’s adjusted basis in such non-U.S. holder’s shares of our common stock, the distribution will give rise to tax liability if the non-U.S. holder otherwise would have to pay tax on any gain from the sale or disposition of such non-U.S. holder’s shares. See discussion below under “Consequences of the Company Merger to Non-U.S. Holders of our Common Stock.” If it cannot be determined at the time the distribution the Closing Dividend is made whether such distribution will be in excess of current and accumulated earnings and profits, withholding will generally apply to the distribution at the rate applicable to ordinary dividends. However, the non-U.S. holder may seek a refund of these amounts from the IRS if it is subsequently determined that the distribution was, in fact, in excess of the Company’s current and accumulated earnings and profits, provided that certain conditions are met.

Consequences of the Company Merger to U.S. Holders of Our Common Stock

The receipt of cash by U.S. holders in exchange for our common stock pursuant to the Company Merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder of our common stock that receives cash in exchange for such common stock in the Company Merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. holder’s adjusted tax basis in such shares.

 

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If a U.S. holder acquired different blocks of common stock at different times and different prices, such U.S. holder must determine its adjusted tax basis, gain or loss and holding period separately with respect to each block of common stock. Any such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if a U.S. holder’s holding period in the common stock surrendered in the Company Merger is greater than one year as of the date of the Company Merger. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations.

A U.S. holder who has held our common stock for six months or less at the time of the Company Merger, taking into account the holding period rules of Sections 246(c)(3) and (4) of the Code, and who recognizes a loss on the exchange of such common stock in the Company Merger will be treated as recognizing a long-term capital loss to the extent of any capital gain dividends received from us, or such holder’s share of any designated retained capital gains, with respect to such shares.

Consequences of the Company Merger to Non-U.S. Holders of Our Common Stock

General

Subject to the discussion of backup withholding below under “-Information Reporting and Backup Withholding,” a non-U.S. holder generally should not be subject to U.S. federal income tax on the gain or loss from the receipt of the merger consideration in exchange for shares of our common stock pursuant to the Company Merger, except as described below.

Gain recognized by a non-U.S. holder upon a sale or exchange of shares of our common stock generally will not be taxed under the Foreign Investment in Real Property Tax Act (“FIRPTA”) if the Company is a “domestically controlled qualified investment entity,” defined generally to include a REIT, less than 50% in value of the stock of which is and was held directly or indirectly by foreign persons at all times during a specified testing period (provided that, if any class of a REIT’s stock is regularly traded on an established securities market in the U.S., a person holding less than 5% of such class during the testing period is generally presumed not to be a foreign person, unless the REIT has actual knowledge otherwise). The Company believes that it is a “domestically controlled qualified investment entity,” and, therefore, assuming that the Company is a “domestically controlled qualified investment entity” at the effective time of the Company Merger, that taxation under FIRPTA will not apply to the receipt of the per share merger consideration in exchange for shares of our common stock pursuant to the Company Merger. However, gain will be taxable to a non-U.S. holder if such gain is treated as effectively connected with the non-U.S. holder’s U.S. trade or business and, if required by an applicable income tax treaty as a condition for subjecting the non-U.S. holder to U.S. taxation on a net income basis, is attributable to a permanent establishment or fixed base that the non-U.S. holder maintains in the U.S. In this case, the same treatment that applies to U.S. holders with respect to the gain will apply to the non-U.S. holder, except that a non-U.S. holder that is a corporation may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such gain. In addition, gain will be taxable to a non-U.S. holder if the non-U.S. holder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year or maintains an office or a fixed place of business in the U.S. to which the gain is attributable. In such cases, a 30% tax (or such lower rate as may be specified by an applicable income tax treaty) will apply to the nonresident alien individual’s capital gains, which may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

If the Company does not qualify as a “domestically controlled qualified investment entity,” the tax consequences to a non-U.S. holder of an exchange of shares of our common stock for cash pursuant to the Company Merger could be adverse. In such case, the tax consequences to a non-U.S. holder will depend upon whether such stock is regularly traded on an established securities market and the amount of such stock that is held by the non-U.S. holder. The Company believes that our common stock is regularly traded on an established

 

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securities market in the U.S. within the meaning of FIRPTA and the applicable U.S. Treasury Regulations. Therefore, a non-U.S. holder will generally be treated as owning a U.S. real property interest within the meaning of FIRPTA only if the non-U.S. holder owns more than 10% of the shares of our common stock at any time during the shorter of the period that the non-U.S. holder owned such shares or the five-year period ending on the date when the non-U.S. holder disposed of the shares. Non-U.S. holders should consult their tax advisors regarding the particular tax consequences of owning a U.S. real property interest within the meaning of FIRPTA.

If gain on the sale, exchange or other taxable disposition of our common stock were subject to taxation under FIRPTA, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to regular U.S. federal income tax with respect to such gain in the same manner as a taxable U.S. holder. In addition, if the sale, exchange or other taxable disposition of our common stock were subject to taxation under FIRPTA, and if shares of our common stock were not “regularly traded” on an established securities market, the purchaser of such common stock generally would be required to withhold and remit to the IRS 15% of the purchase price.

Non-U.S. holders should consult their tax advisors regarding the application of the foregoing rules in light of their particular facts and circumstances and the procedures for claiming treaty benefits or otherwise establishing an exemption from U.S. withholding tax.

Medicare Tax

Certain net investment income earned by U.S. citizens and resident aliens and certain estates and trusts is subject to a 3.8% Medicare tax. Net investment income includes, among other things, dividends on and capital gains from the sale or other disposition of shares of stock. Holders of shares of our common stock should consult their tax advisors regarding the effect, if any, of this tax on their ownership and disposition of such shares.

Information Reporting and Backup Withholding

Information reporting and backup withholding (currently, at a rate of 24%) generally will apply to payments of cash made pursuant to the Company Merger and to the Closing Dividend. Backup withholding will not apply, however, to a holder who (1) in the case of a U.S. holder, furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on a duly executed IRS Form W-9, (2) in the case of a non-U.S. holder, furnishes a duly executed, applicable IRS Form W-8, or (3) is otherwise exempt from backup withholding and complies with other applicable rules and certification requirements.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be claimed as a refund or a credit against such holder’s U.S. federal income tax liability (if any) provided the required information is furnished to the IRS on a timely basis.

FATCA Withholding on Certain Foreign Accounts and Entities

The Foreign Account Tax Compliance Act, or FATCA, provisions of the Code, together with administrative guidance and certain intergovernmental agreements entered into thereunder, impose a 30% withholding tax on “withholdable payments” (as defined below) made to “foreign financial institutions” (as defined below) and certain other non-U.S. entities (whether or not such foreign financial institutions or non-U.S. entities receive the payment as a beneficial owner or intermediary) unless (1) the foreign financial institution undertakes certain diligence and reporting, and withholding obligations or (2) the foreign non-financial entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. “Withholdable payment” generally includes any payment of interest, dividends, and certain other types of generally passive income if such payment is from sources within the United States. “Foreign financial institution” generally means any non-U.S. entity that (i) accepts deposits in the ordinary course of a banking or similar business, (ii) as a substantial portion of its business holds financial assets for the account of others, or

 

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(iii) is engaged or holds itself out as being engaged primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, or any interest in such assets. If the payee is a foreign financial institution that is not exempt under the administrative guidance or an intergovernmental agreement or not subject to special treatment under certain intergovernmental agreements, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it undertakes to identify accounts (and certain debt and equity interests in such foreign financial institutions) held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts and withhold 30% on payments to account holders whose actions prevent them from complying with these reporting and other requirements. Holders in jurisdictions that have entered into intergovernmental agreements may, in lieu of foregoing requirements, be required to report such information to their home jurisdiction.

This discussion of the material U.S. federal income tax consequences is for general information purposes only and is not tax advice. Holders of our common stock should consult their tax advisors as to the specific tax consequences to them of the Transactions, including the effect of any federal, state, local, non-U.S. and other tax laws.

Litigation Related to the Transactions

On April 5, 2022, a purported stockholder of the Company filed a complaint against the Company and the Board in the United States District Court for the Eastern District of New York, entitled Stein v. Cedar Realty Trust, Inc. et. al., Civil Action No. 22-cv-1944. On April 6, 2022, another purported stockholder of the Company filed a complaint against the Company and the Board in the United States District Court for the Eastern District of New York, entitled Wang v. Cedar Realty Trust, Inc. et. al., Civil Action No. 22-cv-1975. On April 18, 2022, another purported stockholder of the Company filed a complaint against the Company and the Board in the United States District Court for the Eastern District of New York, entitled Whitfield v. Cedar Realty Trust, Inc. et. al., Civil Action No. 22-cv-02204. Also on April 18, 2022, a purported stockholder filed a complaint against the Company and the Board in the United States District Court for the Eastern District of Pennsylvania, entitled Waterman v. Cedar Realty Trust, Inc. et. al., Civil Action No. 22-cv-01489. In each action, the complaint alleges violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in connection with the proposed Transactions. The complaints generally allege that the preliminary proxy statement on Schedule 14A filed by the Company with the SEC on April 5, 2022 omits material information regarding financial projections, the financial analysis conducted by JLL Securities in connection with its fairness opinion, conflicts of interest on behalf of JLL Securities and BofA Securities, and the terms of BofA Securities’ engagement. The complaints seek, among other things, an injunction preventing the consummation of the Transactions, or, in the event the Transactions are consummated, to recover damages resulting from defendants’ alleged violations of the Exchange Act.

On April 8, 2022, several purported holders of Company Preferred Stock filed a putative class action complaint against the Company, the Board, and Wheeler in Montgomery County Circuit Court, Maryland (Case No. C-15-CV-22-00152). The complaint alleges on behalf of a putative class of holders of Company Preferred Stock, among other things, claims for breach of contract against the Company and the Board with respect to the articles supplementary governing the terms of the Company Preferred Stock, breach of fiduciary duty against the Board, and tortious interference and aiding and abetting breach of fiduciary duty against Wheeler. The complaint seeks, among other things, a declaration that the holders of Company Preferred Stock are entitled to a Liquidation Preference as set forth in the articles supplementary governing the terms of the Company Preferred Stock, compensatory damages, and an injunction enjoining the merger with Wheeler, and an injunction enjoining the distribution to the Company’s common shareholders of the proceeds of any of the Transactions pending a determination of the merits of plaintiffs’ claims.

We believe that the respective allegations asserted against defendants in the lawsuits are without merit. Similar lawsuits may be filed in the future in connection with the proposed Transactions.

 

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THE TRANSACTION AGREEMENTS

The following summarizes the material provisions of the Transaction Agreements. This summary does not purport to be complete and may not contain all of the information about the Transaction Agreements that is important to you. The summary of the material terms of the Transaction Agreements below and elsewhere in this proxy statement is qualified in its entirety by reference to the asset purchase agreement and the merger agreement, copies of which are attached to this proxy statement as Annex A and Annex B, respectively, and which we incorporate by reference into this proxy statement. We recommend that you read the Transaction Agreements carefully and in their entirety, as the rights and obligations of the parties are governed by the express terms of the Transaction Agreements and not by this summary or any other information contained in this proxy statement.

The asset purchase agreement contains representations and warranties made by, and to, the Company and the Grocery-Anchored Purchasers, and the merger agreement contains representations and warranties made by, and to, the Company, the Operating Partnership, Wheeler, Merger Sub and OP Merger Sub. These representations and warranties, which are set forth in the copies of the Transaction Agreements attached to this proxy statement as Annex A and Annex B, respectively, were made for the purposes of negotiating and entering into the Transaction Agreements between the parties, or may have been used for the purpose of allocating risk between the parties instead of establishing such matters as facts. In addition, these representations and warranties may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the asset purchase agreement and the merger agreement, were made as of specified dates, and may be subject to standards of materiality different from what may be viewed as material to investors. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Transaction Agreements, and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement, and the representations and warranties are qualified by the confidential disclosure schedules attached to the Transaction Agreements, which have not been included in this proxy statement or summarized herein. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company, the Operating Partnership or any of their affiliates.

Grocery-Anchored Portfolio Sale

Pursuant to the terms and conditions of the asset purchase agreement, the Grocery-Anchored Purchasers will acquire from the Company and its affiliates a portfolio of 33 grocery-anchored shopping centers for an aggregate cash purchase price of $840.00 million (less the outstanding principal balance of any assumed mortgage debt).

The table below sets forth the assets to be sold in the Grocery-Anchored Portfolio Sale:

 

Property Name		Location
New London Mall		New London, CT
Bethel Shopping Center		Bethel, CT
Groton Shopping Center		Groton, CT
Jordan Lane		Wethersfield, CT
Christina Crossing		Wilmington, DE
Franklin Village Plaza		Franklin, MA
The Shops at Suffolk Downs		Revere, MA
Norwood Shopping Center		Norwood, MA
Yorktowne Plaza		Cockeysville, MD
Shoppes at Arts District		Hyattsville, MD
Valley Plaza		Hagerstown, MD
Oakland Mills		Columbia, MD
The Shops at Bloomfield Station		Bloomfield, NJ
Carman’s Plaza		Massapequa, NY
Quartermaster Plaza		Philadelphia, PA

 

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Colonial Commons		Harrisburg, PA
Trexlertown Plaza		Trexlertown, PA
The Point		Harrisburg, PA
Fishtown Crossing		Philadelphia, PA
Shops at Crossroads (Crossroads II)		Bartonsville, PA
Lawndale Plaza		Philadelphia, PA
Academy Plaza		Philadelphia, PA
Meadows Marketplace		Hummelstown, PA
Swede Square		E. Norriton Township, PA
Palmyra Shopping		Palmyra, PA
Newport Plaza		Newport, PA
Northside Commons		Campbelltown, PA
Halifax Plaza		Halifax, PA
Girard Plaza		Philadelphia, PA
General Booth Plaza		Virginia Beach, VA
Kempsville Crossing		Virginia Beach, VA
Elmhurst Square		Portsmouth, VA
Oak Ridge Shopping Ctr.		Suffolk, VA

In addition, the asset purchase agreement provides that to the extent two specified redevelopment assets of the Company are not sold by the Company to third parties prior to the closing of the Grocery-Anchored Portfolio Sale, these assets will be acquired by the Grocery-Anchored Purchasers for an additional cash purchase price of up to $80.5 million (less the outstanding principal balance of any assumed mortgage debt).

Merger Transaction with Wheeler

Pursuant to the terms of the merger agreement, following closing of the Grocery-Anchored Portfolio Sale, OP Merger Sub will merge with and into the Operating Partnership, with the Operating Partnership as the surviving entity, and immediately following such merger, Merger Sub will merge with and into the Company, with the Company as the Surviving Company. By virtue of the Mergers, Wheeler and its affiliates will acquire the balance of the Company’s shopping center assets in a transaction that values the remaining portfolio at $291.3 million. The table below sets forth the 19 assets to be acquired by Wheeler:

 

Property Name		Location
Pine Grove Plaza		Browns Mills, NJ
Coliseum Marketplace		Hampton, VA
Golden Triangle		Lancaster, PA
South Philadelphia		Philadelphia, PA
Fieldstone Marketplace		New Bedford, MA
Webster Commons		Webster, MA
Patuxent Crossing (f/k/a San Souci Plaza)		California, MD
Washington Center Shoppes		Sewell, NJ
Trexler Mall		Trexlertown, PA
Timpany Plaza		Gardner, MA
Fairview Commons		New Cumberland, PA
Gold Star Plaza		Shenandoah, PA
Brickyard Plaza		Berlin, CT
Kings Plaza		New Bedford, MA
Southington Center		Southington, CT
Hamburg Square		Hamburg, PA
Oakland Commons		Bristol, CT
Carll’s Corner		Bridgeton, NJ
Oregon Avenue		Philadelphia, PA

 

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Closing Dates; Effective Times

Pursuant to the terms of the asset purchase agreement, the closing of the Grocery-Anchored Portfolio Sale will occur on the date which is fifteen days following the date all conditions to closing contained in asset purchase agreement have been satisfied (or deemed satisfied) or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions), through mutually acceptable closing escrow arrangements; provided, that Grocery-Anchored Purchasers have the right to extend the closing for up to ten days.

Pursuant to the terms of the merger agreement, the closing of the Mergers will take place as soon as practicable and, in any event, within two business days, following the satisfaction or waiver of the conditions to closing set forth in the merger agreement (other than those conditions that by their terms are to be satisfied at the closing, but subject to the satisfaction or waiver of those conditions), which include the closing of the Grocery-Anchored Portfolio Sale. On the closing date, the Operating Partnership and OP Merger Sub will file a certificate of merger with the Secretary of State of the State of Delaware and the Partnership Merger will become effective upon the acceptance for record of the certificate of merger or on such other date and time (not to exceed five business days from the date) as may be mutually agreed and specified in the certificate of merger.

On the closing date, immediately after filing the certificate of merger with respect to the Partnership Merger, the Company and Merger Sub will file articles of merger with the State Department of Assessments and Taxation of Maryland and the merger of the Company and Merger Sub will become effective upon the later of the acceptance for record of the certificate of merger or on such other date and time (not to exceed five business days from the date) as may be mutually agreed and specified in the certificate of merger. Under the merger agreement, the merger effective time will occur promptly after the Partnership Merger effective time.

On April 19, 2022, the parties to the merger agreement executed the first amendment to the merger agreement pursuant to which Section 2.4(a) of the merger agreement was amended and restated to clarify that the articles of incorporation and bylaws of the Company immediately prior to the merger effective time will be the articles of incorporation and bylaws of the Surviving Company immediately after the merger effective time, until thereafter amended as provided therein or by applicable law.

Special Dividend and Merger Consideration

On or before the close of business on the day immediately prior to the consummation of the Mergers, the Board will declare one or more special dividends (the “Closing Dividend”) payable to record holders of the Company’s common stock and holders of OP Units in an aggregate amount equal to the net proceeds available for distribution from all prior sales of assets by the Company and its subsidiaries, including the Grocery-Anchored Portfolio Sale, less certain amounts described below as determined in accordance with the merger agreement. To the extent certain of the Company’s redevelopment assets are not separately sold to third parties, the Grocery-Anchored Portfolio Sale will also include the acquisition by the Grocery-Anchored Purchasers of these redevelopment assets for an additional aggregate purchase price of up to $80.5 million. In addition, in connection with consummation of the Mergers, each share of Company common stock and each OP Unit issued and outstanding immediately prior to the effective time of the Mergers will be converted into the right to receive cash merger consideration in an amount equal to $130.0 million divided by the total number of outstanding shares of Company common stock and OP Units.

It is anticipated that the total amount of cash to be returned to holders of Company common stock by way of the Closing Dividend and the merger consideration will be approximately $29.00 per share/unit. The exact amount of net proceeds available for distribution through the Closing Dividend is subject to customary real estate prorations as of the closing date for the Grocery-Anchored Portfolio Sale, payment by the Company of specified leasing costs, all applicable transaction costs and expenses, and satisfaction of other Company liabilities and indebtedness. Accordingly, while we currently anticipate that the total amount of cash returned to holders of Company common stock by way of the Closing Dividend and merger consideration will be approximately $29.00

 

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per share, it is possible that the total amount received may be more or less than $29.00 per share. The Company will issue a press release specifying the exact amount of the Closing Dividend prior to the effective time of the Mergers.

Treatment of Capital Stock and Compensatory Awards

Company Common Stock. Upon completion of the Mergers, the issued and outstanding shares of the Company’s common stock, par value $0.06 per share, will be cancelled and converted into the right to receive the merger consideration, as described below. Following the Mergers, the Company common stock will no longer be publicly traded and will be deregistered under the Exchange Act.

Company Preferred Stock. Pursuant to the terms of the merger agreement, the Company’s currently outstanding 7.25% Series B Preferred Stock and 6.50% Series C Preferred Stock (collectively, the “Company Preferred Stock”) will remain outstanding as shares of preferred stock in the Surviving Company following the Mergers and will not be exchanged for preferred shares of Wheeler. Both classes of Company Preferred Stock are expected to remain listed on the New York Stock Exchange following closing of the Mergers, and the Surviving Company will continue to be an independent filer of periodic reports with the SEC under the Exchange Act.

As preferred stock of the Surviving Company in the Mergers, the Company Preferred Stock will remain senior Wheeler and all of Wheeler’s securityholders following completion of the Mergers with respect to the cash generated from the Remainco assets. For the year ended December 31, 2021, these assets generated net operating income in excess of $19 million, which the Company anticipates will be exceeded for full-year 2022, based on current leasing activity. In 2021, the aggregate Company Preferred Stock dividend was approximately $10.8 million.

Restricted Stock Awards. In connection with the closing of the Grocery-Anchored Portfolio Sale, each restricted stock award granted under the Company’s equity plans that is outstanding immediately following the consummation of the Grocery-Anchored Portfolio Sale will become fully vested and nonforfeitable and the holder thereof will have the right to receive the Closing Dividend and merger consideration.

Restricted Stock Units. In connection with the closing of the Grocery-Anchored Portfolio Sale, each award of restricted stock units outstanding under the Company’s equity plan that is subject to performance-based vesting will fully vest in accordance with its terms and convert into the respective number of shares of Company common stock underlying such award and the holder thereof will have the right to receive the Closing Dividend and the merger consideration.

Representations, Warranties and Covenants

The Transaction Agreements each contain representations and warranties that the Company and its subsidiaries, on the one hand, and the Grocery-Anchored Purchasers, Wheeler and their respective subsidiaries and affiliates, on the other hand, have made to one another (as applicable), that are subject, in some cases, to specified exceptions and qualifications contained in the Transaction Agreements or in the disclosure schedules delivered in connection with the Transaction Agreements. These representations and warranties relate to, among other things:

 

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the organization, valid existence and power and authority to own, lease and operate its properties and assets and to carry on the businesses of each of the Company and its subsidiaries;

 

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the Company’s and its applicable subsidiaries’ power and authority to execute and deliver the applicable Transaction Agreement, and, subject to the approval of the Company’s stockholders, to consummate the Transactions contemplated by the applicable Transaction Agreement;

 

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•

the absence of conflicts with, or violations of, laws or organizational documents, including with regards to the Company’s ability to consummate the Transactions;

 

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the Company’s and its subsidiaries’ compliance with laws and regulations;

 

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environmental matters affecting the Company, its properties and its subsidiaries;

 

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actions, suits, claims, hearings, arbitrations, litigation or other proceedings involving the Company or its subsidiaries;

 

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tax matters affecting the Company and its subsidiaries;

 

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real property currently or historically owned and leased by the Company and its subsidiaries and the Company’s and its subsidiaries’ leases;

 

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the receipt by our Board of a fairness opinion from JLL Securities;

 

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the absence of any investment banker, broker or finder fees, other than those payable to our financial advisors in connection with the Transactions;

 

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the exemption of the Mergers and the merger agreement from the requirements of any anti-takeover or similar law; and

 

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the Company’s and its subsidiaries’ insurance policies.

The merger agreement also contains additional representations and warranties relating to, among other things:

 

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the good standing and qualification to do business of the Company and its subsidiaries;

 

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the Company’s articles of incorporation and bylaws;

 

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the Company’s subsidiaries, their jurisdiction of organization or incorporation and their compliance with the terms of their organizational documents;

 

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the capital structure and indebtedness, and the absence of restrictions or encumbrances with respect to the equity interests, of each of the Company and its subsidiaries;

 

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the Company’s SEC filings since January 1, 2019 and the financial statements contained in those filings;

 

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the Company’s internal controls over financial reporting and disclosure controls and procedures;

 

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the absence of liabilities required to be recorded on a balance sheet under GAAP since December 31, 2021;

 

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possession of, and compliance with, permits necessary for the Company and its subsidiaries to own, lease and operate their properties and assets and to carry on and operate their businesses as currently conducted;

 

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the Company’s and its subsidiaries’ employee benefit plans and labor matters affecting the Company and its subsidiaries;

 

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material contracts of the Company and its subsidiaries;

 

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intellectual property owned by the Company and its subsidiaries and other intellectual property matters; and the Grocery Anchored Portfolio Sale.

Many of our representations and warranties are qualified by the concept of a “material adverse effect.” Under the terms of the Transaction Agreements, a material adverse effect means any event, change or effect that has a material adverse effect, whether individually or in the aggregate, on the Company and/or its applicable subsidiaries and properties, excluding, with respect to a material adverse effect on the business, financial condition, assets or results of operations of the Company and/or its applicable subsidiaries, the impact of (a) the

 

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general conditions in the industry in which the Company operates, including competition in any of the geographic areas in which the relevant Company properties are located; (b) general political, economic, business, monetary, financial or capital or credit market conditions or trends (including interest rates); (c) changes in global or national political conditions or trends; (d) any act of civil unrest, war or terrorism (including by cyberattack or otherwise), including an outbreak or escalation of hostilities involving the United States or any other country or the declaration by the United States or any other country of a national emergency or war; (e) any conditions resulting from natural disasters or weather developments, manmade disasters or acts of God; (f) the failure of the financial or operating performance of the Company to meet internal or analyst projections, forecasts or budgets for any period; (g) any action taken, or omitted to be taken, by, or at the request of or with the consent of the applicable purchaser party or in compliance with applicable law and the covenants and agreements contained in the applicable Transaction Agreement; (h) changes in any law, including changes in GAAP or other applicable accounting principles or standards or, in each case, any authoritative interpretations thereof; and (i) the taking of any COVID-19 measures; provided, further, that any adverse events, effects or changes resulting from the matters described in clauses (a), (b), (c), (d), (e), (h) and (i) may be taken into account in determining whether there has been a “Material Adverse Effect” if and only to the extent that they have a materially disproportionate effect on the Company or its appliable properties in the aggregate relative to similarly situated properties in the industry and geographic markets in which the Company operates.

The Transaction Agreements also contains representations and warranties made by the Grocery-Anchored Purchasers and Wheeler and its subsidiaries, as applicable, that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. These representations and warranties relate to, among other things:

 

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their organization, valid existence, good standing, qualification to do business and power and authority to own, lease and operate its properties and assets and to carry on their businesses;

 

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their power and authority to execute and deliver the relevant Transaction Agreement and to consummate the applicable Transactions;

 

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the enforceability of the relevant Transaction Agreement against them;

 

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the absence of conflicts with, or violations of, laws or organizational or governing documents and the absence of any consents under, conflicts with or defaults under contracts to which they are a party, in each case as a result of their executing, delivering and performing under or consummating the Transactions contemplated by, the applicable Transaction Agreement;

 

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the absence of any action, suit, claim, hearing, arbitration, litigation or other proceeding against them that would reasonably be expected to have, individually or in the aggregate, a material adverse effect on their ability to timely consummate the relevant Transactions;

 

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the accuracy of the information supplied by them in this proxy statement;

 

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their financing in connection with the applicable Transactions (including, in the case of the merger agreement, the debt commitment letter delivered by Wheeler) and the availability of cash sufficient for the satisfaction of all of their respective payment obligations under the Transaction Agreements; and

 

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in the case of the merger agreement, the solvency of the Surviving Company following the consummation of the Mergers.

The representations and warranties of each of the parties to the Transaction Agreements will expire upon consummation of the applicable Transactions.

Conduct of Business Pending the Transactions

The Transaction Agreements each contain certain interim operating covenants applicable to the Company and its subsidiaries during the time between signing of the Transaction Agreements and closing of the applicable Transactions, subject, in some cases, to specified exceptions and qualifications contained in the Transaction

 

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Agreements. In the case of the asset purchase agreement and the properties to be acquired by the Grocery-Anchored Purchasers, except for matters permitted or contemplated by the asset purchase agreement, required by applicable law, or as agreed among the parties, from the date of asset purchase agreement until the closing of the Grocery-Anchored Portfolio Sale, the Company will, and will cause each of its applicable subsidiaries to:

 

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conduct its business in all material respects in the ordinary course and in a manner consistent with past practice;

 

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use commercially reasonable efforts consistent with past practices to maintain the properties in substantially the same manner as heretofore maintained, ordinary wear and tear excepted;

 

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not permit, allow or suffer any of the interests in the properties to become subjected to any pledge, lien or encumbrance;

 

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not enter into any new contract or reciprocal easement agreement, operating agreement or other similar agreement, or modify, amend or terminate any contract or any reciprocal easement agreement, operating agreement or other similar agreement, (ii) modify, amend or terminate certain leases or (iii) enter into certain new leases;

 

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maintain in full force and effect material insurance policies or comparable replacement policies covering the relevant Company subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice;

 

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not apply for or agree to any change in zoning affecting any of the Company’s applicable real property or any modification of the terms of any license;

 

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not enter into any settlement contract in connection with any condemnation proceedings affecting or relating to any of the Company’s applicable real property;

 

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not amend, supplement, terminate or otherwise modify any applicable ground leases, (ii) fail to comply with the terms of any such ground lease in any material respect, and (iii) fail to deliver to the Grocery-Anchored Purchasers copies of all correspondence delivered or received relating to any such ground leases;

 

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deliver to the Grocery-Anchored Purchasers copies of all material correspondence delivered or received under any lease or contract;

 

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deliver to the Grocery-Anchored Purchasers copies of all new contracts, new leases, and amendments or modifications of existing leases reasonably promptly following execution thereof (and in all cases prior to closing);

 

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not (i) waive the performance or observance by a tenant under certain leases of any of its material obligations or agreements thereunder, (ii) grant consent under certain leases, including to any assignment or sublease of certain leases, or (iii) apply any security deposit (including any letter of credit) held by any Company subsidiary under any certain leases except if the applicable lease has been terminated due to a tenant default; all without prior written consent of the Grocery-Anchored Purchasers;

 

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not market for sale or other transfer, or solicit or engage in discussions regarding selling or transferring, any of the properties, interests, or leasehold to be acquired by the Grocery-Anchored Purchasers, subject to certain exceptions described in more detail in the asset purchase agreement;

 

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maintain all Company subsidiaries in good standing in their respective jurisdictions of formation and the jurisdictions in which their applicable properties are located; and

 

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not cause any Company subsidiaries to make any election to be treated as an association taxable as a corporation for tax purposes.

In the case of the merger agreement and the Remainco properties, the Company must use its commercially reasonable efforts to conduct its operations in the ordinary course of business consistent with past practice in all

 

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material respects and to use its best efforts to maintain its status as a REIT for U.S. federal income tax purposes. In addition, except for matters permitted or contemplated by the merger agreement, required by applicable law, or as agreed among the parties, from the date of merger agreement until the closing of the Mergers, the Company will not, and will cause each of its applicable subsidiaries to not:

 

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amend its organizational documents (whether by merger, consolidation or otherwise);

 

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(i) split, combine or reclassify any capital stock (other than such split, combination or reclassification that would not reasonably have an adverse effect on the Surviving Company), (ii) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of capital stock, or (iii) purchase, redeem or otherwise acquire any Company securities, except for acquisitions of shares of Company common stock by the Company in satisfaction by holders of Company equity awards of the applicable exercise price and/or withholding taxes;

 

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issue, deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), sell, grant, pledge, transfer, subject to any lien or dispose of any Company securities or Operating Partnership securities or any other securities convertible into or exchangeable for Company securities or Operating Partnership securities, other than (i) the issuance of shares of Company common stock in exchange for OP Units pursuant to the terms of the Operating Partnership’s limited partnership agreement, (ii) the issuance of shares of Company common stock upon the settlement of outstanding restricted unit awards in accordance with the terms of such awards, (iii) grants or awards of Company securities made in the ordinary course of business, (iv) grants or awards of Company securities to new hires made in the ordinary course of business, or (v) grants or awards of Company securities required to be made pursuant to the terms of existing employment or other compensation agreements or arrangements in effect as of the date hereof;

 

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adopt a plan or agreement of, or resolutions providing for or authorizing, complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, each with respect to the Company or any of its subsidiaries;

 

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acquire any business, assets or capital stock of any person or division thereof, whether in whole or in part (and whether by purchase of stock, purchase of assets, merger, consolidation, or otherwise), other than one or more acquisitions in the ordinary course of business consistent with past practice that, individually, involve a purchase price of not more than $500,000;

 

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sell, lease, license, pledge, transfer, subject to any lien or otherwise dispose of any material assets or material properties except (i) pursuant to existing contracts or commitments; (ii) pursuant to the Grocery Anchored Portfolio Sale, or (iii) permitted encumbrances incurred in the ordinary course of business;

 

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change any of the accounting methods used by the Company materially affecting its assets, liabilities or business, except for such changes that are required by GAAP or Regulation S-X promulgated under the Exchange Act or as otherwise specifically disclosed in the Company SEC documents;

 

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(i) incur, refinance, guarantee or assume any long-term or short-term indebtedness except (x) for borrowings under the Company’s current credit facilities in the ordinary course of business or (y) in respect of indebtedness owing by any wholly owned subsidiary of the Company to the Company or another wholly owned subsidiary of the Company or (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person;

 

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enter into, terminate, or, other than in the ordinary course of business, amend in any material respect any material contract or any contract which if entered into prior to the date of the merger agreement would be a material contract, except for contracts related to indebtedness and certain contracts specified by Wheeler, which the Company will take all actions to terminate prior to closing;

 

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•

subject to certain exceptions, settle or compromise any pending or threatened legal proceeding against the Company or a subsidiary, whether or not commenced prior to the date of the merger agreement, other than settlements of any pending or threatened legal proceeding (A) in which the Company or any subsidiary is named as a nominal defendant, (B) in the ordinary course of business, (C) providing solely for payment of amounts less than $250,000 in cash individually, or $500,000 in cash in the aggregate (net of any amount covered by insurance) or (D) reflected or reserved against in the December 31, 2021 balance sheet of the Company for an amount not materially in excess of the amount so reflected or reserved (excluding any amount that may be paid under insurance policies or indemnification agreements);

 

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(i) make any capital expenditures other than capital expenditures set forth in the capital expenditure budget attached to the merger agreement, or (ii) fail to make capital expenditures set forth in the capital expenditure budget; provided, however, in each case that the Company may not commit capital of $250,000 or more to any project referred to in such capital expenditure budget without prior written consent;

 

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fail to maintain in full force and effect material insurance policies or comparable replacement policies covering the Company’s subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice;

 

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(i) change any method of tax accounting, (ii) make, change or rescind any election with respect to taxes, (iii) amend any tax return, (iv) settle or compromise any tax liability, claim or assessment, (v) enter into any closing or other agreement with a governmental authority related to taxes, (vi) consent to any extension or waiver of a statute of limitations with respect to any tax return or surrender any right to claim a refund of taxes, except, in each case, (A) in the ordinary course of business or (B) to the extent necessary to preserve the Company’s qualification as a REIT under the federal tax code or the status of any subsidiary as a partnership or disregarded entity for U.S. federal income tax purposes or as a qualified REIT subsidiary, a taxable REIT subsidiary or a REIT under the applicable provision of the federal tax code, as the case may be;

 

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take any action, or fail to take any action, which could reasonably be expected to cause (i) the Company to fail to qualify as a REIT or (ii) any of the Company’s subsidiaries to cease to be treated as a partnership or disregarded entity for U.S. federal income tax purposes or as a qualified REIT subsidiary, a taxable REIT subsidiary or a REIT under the applicable provision of the federal tax code, as the case may be; or

 

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authorize or commit to take any of the actions described above.

Certain Other Covenants and Agreements

Filings and Other Actions. Pursuant to the terms of the Transaction Agreements and in accordance with applicable law and the Company’s governing documents, the Company agreed to duly set a record date for, call, give notice of, and hold a special meeting of its stockholders for the purpose of considering and taking action upon the approval of the Transactions. Unless the Board will have effected an adverse recommendation change (as described below), the Board will make the recommendation that the Company’s stockholders vote to approve the Transactions.

Indemnification of Directors and Officers; Insurance. The merger agreement provides that Wheeler will, and will cause the Surviving Company to, fulfill and honor in all respects the obligations of the Company and its subsidiaries pursuant to (i) each indemnification agreement in effect between the Company and any acquired subsidiary, on the one hand, and any each individual who is or was an officer or director of the Company or any acquired subsidiary at any time prior to the effective time of the Mergers, on the other hand and (ii) any indemnification, exculpation from liability or advancement of expenses provision set forth in the organizational documents of the Company and the acquired subsidiaries, in each case as in effect on the date of the merger agreement, including in respect of any legal proceeding that arises directly or indirectly out of or pertains directly

 

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or indirectly to (A) any action or omission or alleged action or omission in such indemnified party’s capacity as a director, officer, employee or agent of the Company or any acquired subsidiary (regardless of whether such action or omission or alleged action or omission, occurred prior to, at or after the effective time of the Mergers) or (B) any of the Transactions. The organizational documents of the Surviving Company are required to contain the provisions with respect to indemnification, exculpation from liability and advancement of expenses set forth in the Company’s and the acquired subsidiaries’ organizational documents on the date of the merger agreement and, from and after the closing of the Mergers, such provisions shall not be amended, repealed or otherwise modified in any manner that could adversely affect the rights thereunder of any indemnified party.

The merger agreement provides that prior to the closing date of the Mergers, the Company will purchase a fully pre-paid “tail” directors’ and officers’ liability insurance policy for the Company and its subsidiaries and their present and former directors, officers and employees who are currently covered by the directors’ and officers’ liability insurance coverage currently maintained by the Company that will provide such directors, officers and employees with coverage for six years following the closing date of not less than the existing coverage and have other terms not less favorable to the insured persons than the directors’ and officers’ liability insurance coverage currently maintained by the Company and its subsidiaries, subject to certain exceptions. The cost of such pre-paid policy will be deducted from the amount of the Closing Dividend.

Acquisition Proposals; No Solicitation. Under each of the asset purchase agreement and merger agreement, the Company, including its subsidiaries and their respective affiliates is required to cease any solicitations, discussions, negotiations or communications with any person with respect to any alternative “acquisition proposals” (as defined in the applicable agreement) and not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer, request or proposal that constitutes, or could reasonably be expected to lead to, an alternative acquisition proposal, and, subject to certain exceptions, is not permitted to grant any waiver or release under or knowingly fail to enforce any confidentiality, standstill or similar agreement in respect of any alternative acquisition proposals, or enter into discussions or negotiations concerning, or provide non-public information to a third party in connection with, any alternative acquisition proposals. However, the Company may, prior to obtaining the approval of the transactions by the Company’s stockholders, engage in discussions or negotiations and provide non-public information to a third party which has made an unsolicited written bona fide acquisition proposal (as defined in the applicable agreement) if the Board determines in good faith, after consultation with outside legal counsel and financial advisors, that such proposal constitutes, or could reasonably be expected to lead to, a “superior proposal” (as defined in the applicable agreement). Likewise, prior to the approval of the transactions by the Company’s stockholders, the Board may withhold, withdraw, qualify or modify its recommendation that the Company’s stockholders approve the transactions or recommend or otherwise declare advisable any superior proposal, subject to complying with notice and other specified conditions, including giving the Grocery-Anchored Purchasers and/or Wheeler, as the case may be, the opportunity to propose revisions to the terms of the applicable Transaction Agreement during a match right period.

In the case of the asset purchase agreement, the term:

 

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“acquisition proposal” means a proposal or offer (whether or not in writing, except as otherwise provided in the asset purchase agreement) with respect to any (A) merger, consolidation, share exchange, other business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company, (B) sale, lease, contribution or other disposition, directly or indirectly (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity interests in a subsidiary or otherwise) of (i) the Company, (B) any other business or assets of the Company and its subsidiaries representing (x) 20% or more of the consolidated revenues, net income or assets of the Company, taken as a whole or (y) 20% (based on percentage of the allocated purchase price) of the value of the properties to be acquired by the Grocery-Anchored Purchasers, or (C) any combination of the foregoing; and

 

•

“superior proposal” means a written acquisition proposal (provided, that for purposes of this definition, the applicable percentage contained in clause (x) of the definition of acquisition proposal shall be

 

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“50.1%” rather than “20%” and the applicable percentage contained in clause (y) of the definition of acquisition proposal shall be 60% rather than 20%) that the Board determines in good faith, after consultation with outside legal counsel and a financial advisor, is more favorable to the Company’s stockholders than the Grocery-Anchored Portfolio Sale (after taking into account any revisions to the terms of the asset purchase agreement that are committed to in writing by Grocery-Anchored Purchasers as provided under the terms of the asset purchase agreement).

In the case of the merger agreement, the term:

 

•

“acquisition proposal” means any proposal or offer relating to (i) the acquisition (whether by merger, consolidation or otherwise) of 20% or more of any class of the equity interests in the Company (by vote or by value) by any third party, (ii) any merger, consolidation, business combination, reorganization, share exchange, sale of assets, recapitalization, equity investment, joint venture, liquidation, dissolution or other transaction that would result in any third party acquiring assets (including capital stock of or interest in any subsidiary or affiliate of the Company) representing, directly or indirectly, 20% or more of the net revenues, net income or assets of the Company and its subsidiaries, taken as a whole, (iii) the acquisition (whether by merger, consolidation, equity investment, share exchange, joint venture or otherwise) by any third party, directly or indirectly, of any class of equity interest in any entity that holds assets representing, directly or indirectly, 20% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (iv) any tender offer or exchange offer, as such terms are defined under the Exchange Act, that, if consummated, would result in any third party beneficially owning 20% or more of the outstanding shares of Company common stock and any other voting securities of the Company or the Operating Partnership (or instruments convertible to or exchangeable for 20% or more of such outstanding shares or securities), or (v) any combination of the foregoing; and

 

•

“superior proposal” means a bona fide written acquisition proposal (with all of the percentages included in the definition of acquisition proposal increased to 50.1%) that the Board determines in good faith, after consultation with its financial advisor and outside legal counsel, and taking into consideration, among other things, all of the terms, conditions, impact and all legal, financial, regulatory and other aspects of such acquisition proposal and the merger agreement that the Board (or a committee thereof) deems relevant (in each case taking into account any revisions to the merger agreement made in writing by Wheeler prior to the time of determination as provided under the terms of the merger agreement, including all legal, financial (including breakup fee provisions) and regulatory aspects of the acquisition proposal and the person making the proposal, would, if consummated, result in a transaction more favorable to the holders of Company common stock than the Mergers.

No Financing Conditions; Debt Commitment Letter. Neither the obligations of the Grocery-Anchored Purchasers under the asset purchase agreement, nor the obligations of Wheeler and its affiliates under the merger agreement, are subject to any financing condition or contingency whatsoever (other than in connection with lender consent to assumption by the Grocery-Anchored Purchasers of certain existing mortgage debt). The obligations of the Grocery-Anchored Purchasers under the asset purchase agreement are unconditionally guaranteed by the DRA Growth and Income Master Fund X-B.

In addition, as of the date of the merger agreement, Wheeler has delivered to the Company copies of a debt commitment letter pursuant to which the lenders party thereto have committed, subject to the terms and conditions contained in such letter, to provide debt financing in an aggregate amount up to $130.0 million to enable Wheeler to consummate the Mergers and make payments required under and in connection with the merger agreement. The merger agreement requires Wheeler to use its reasonable best efforts to obtain the proceeds of the debt financing on the terms and conditions described in the debt commitment letter, including:

 

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maintaining in effect the debt commitment letter in accordance with their terms (subject to the right to enter into alternate debt financing in certain circumstances);

 

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•

promptly negotiating and entering into definitive agreements with respect to the debt financing on the terms and conditions (including, if required, utilizing the “flex” provisions) contained in the debt commitment letter; and

 

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satisfying (or seeking a waiver of) all conditions to funding in the debt commitment letter and the definitive agreements thereto and to consummate the financing at or prior to the closing of the Mergers.

The merger agreement also requires the Company to use its reasonable best efforts to provide Wheeler, at Wheeler’s sole expense, all cooperation reasonably requested by Wheeler in connection with the arrangement, syndication and consummation of the debt financing (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company or its subsidiaries).

Other Covenants. The Transaction Agreements contain additional agreements between the Company and the other parties thereto, relating to, among other matters:

 

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providing access to the Grocery-Anchored Purchasers and Wheeler, as the case may be, to the relevant Company properties and books and records, pursuant to customary terms and conditions;

 

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in the case of the asset purchase agreement, customary covenants for real estate transactions, including covenants relating to obtaining title insurance, delivery of tenant estoppels and subordination, non-disturbance and attornment agreements, and obtaining mortgage lender consent, as applicable;

 

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payment by the Company and its subsidiaries at or prior to closing of specified leasing costs, currently estimated at approximately $48.0 million, in the aggregate, with respect to certain properties, including unpaid leasing, brokerage or other commissions, tenant improvement costs or allowances, landlord’s work/base building work, inducements or concessions and legal fees;

 

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the filing of this proxy statement with the SEC (and cooperation in response to any comments from the SEC with respect to this proxy statement);

 

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anti-takeover statutes or regulations that become applicable to the Transactions contemplated by the Transaction Agreements;

 

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the coordination of press releases and other public announcements or filings relating to the Transactions;

 

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transaction litigation;

 

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the preparation and filing of all forms, registrations and notices required under, and the seeking of any consents, authorizations or other approvals required under, any law or by any governmental entity in connection with the Transactions and the other transactions contemplated under the Transaction Agreements; and

 

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certain tax matters.

Conditions to Closing

Consummation of the transactions contemplated by each of the asset purchase agreement and merger agreement is subject to certain customary conditions, including (i) the respective representations and warranties of the parties being true and correct (subject to certain materiality exceptions), (ii) compliance in all material respects by each party with their respective covenants, (iii) the absence of any law prohibiting or order preventing the consummation of the Transactions, (iv) the absence of the occurrence of a “Material Adverse Effect” applicable to the Company, (v) in the case of the merger agreement, consummation of the Grocery-Anchored Portfolio Sale, (vi) approval of the transactions by the holders of two-thirds of the outstanding shares of Company common stock, and (vii) in the case of the merger agreement, receipt by Wheeler of a tax opinion from the Company’s counsel to the effect that the Company has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT.

 

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Termination of the Agreements

Each of the Transaction Agreements may be terminated by a party thereto in certain circumstances, including if:

 

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the applicable Transaction is not completed by a specified date (July 30, 2022 in the case of the asset purchase agreement, and August 30, 2022 in the case of the merger agreement), subject to certain limitations (and, in the case of the merger agreement, possible extension for up to an additional 60 days under certain circumstances);

 

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in the case of the merger agreement, a court or governmental authority of competent jurisdiction has issued an order, judgment, injunction, ruling, writ or decree permanently enjoining or otherwise permanently prohibiting the relevant Transactions;

 

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the Company’s stockholders fail to approve the Transactions at the special meeting and any adjournments thereto;

 

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prior to the Company receiving stockholder approval of the Transactions, the Board changes or (in certain circumstances) fails to publicly reaffirm its recommendation with respect to the stockholder approval of the Transactions, the Company does not include a recommendation for approval in its proxy statement, or the Board endorses or approves another acquisition proposal; and

 

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the other party breaches its representations, warranties or covenants set forth in the relevant Transaction Agreement, which results in the failure of a closing condition, subject in certain cases, to the right of the breaching party to cure the breach.

The Company may also terminate each of the asset purchase agreement and/or merger agreement to enter into one or more definitive agreements with third parties that provide for the implementation of a superior proposal (as defined in the applicable Transaction Agreement), and the Grocery-Anchored Purchasers and/or Wheeler, as the case may be, may terminate the asset purchase agreement or merger agreement, as the case may be, if the Board withdraws its recommendation to the Company’s stockholders to vote to approve the Transactions. In addition, the Company may terminate each of the asset purchase agreement and/or merger agreement if all conditions to closing have been satisfied (other than conditions that by their nature are to be satisfied at the closing), the Company has notified the Grocery-Anchored Purchasers and/or Wheeler, as the case may be, that the Company is ready, willing and able to consummate the applicable Transactions and the Grocery-Anchored Purchasers and/or Wheeler, as the case may be, fail to close within three business days (five business days in the case of the asset purchase agreement).

Either party may terminate the merger agreement if, without Wheeler’s prior written consent, the purchase agreement for certain asset sales to be consummated prior to the Mergers (including the Grocery-Anchored Portfolio Sale) is terminated and not replaced with one or more substitute agreements that is no less favorable in any material respect with respect to the rights and obligations of the Surviving Company, or any term or condition or obligation under any such purchase agreement is amended, modified or waived in a manner adverse, or any new such purchase agreement is entered into having terms adverse, in any material respect to the Surviving Company or its subsidiaries.

If either the asset purchase agreement and/or merger agreement is terminated in certain specified circumstances, including by the Company in order to enter into a definitive agreement providing for a superior proposal, if the Board withdraws its recommendation in favor of the transactions or if the Company’s stockholders fail to approve the Transactions and the Company enters into a definitive agreement for the Company as a whole or a subset of its assets with a third party within twelve months of termination, the Company will be required to pay a termination fee of, in the case of the asset purchase agreement, $7.0 million plus up to $3.5 million in expense reimbursement costs and, in the case of the merger agreement, $5.0 million. In the case of the merger agreement, the Company will also be required to pay a termination fee of $5.0 million to Wheeler if the merger agreement is terminated (i) by either party due to the passage of the drop dead date at a time when the Grocery-Anchored Portfolio Sale has not occurred or (ii) by Wheeler because, without Wheeler’s

 

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prior written consent, the purchase agreement for any Grocery-Anchored Portfolio Sale is terminated without a substitute agreement meeting certain standards (or any term or condition or obligation under the purchase agreement for any Grocery Anchored Portfolio Sale is amended, modified or waived in a manner adverse, or any new agreement for any Grocery-Anchored Portfolio Sale is entered into having terms adverse, in any material respect to the Surviving Company or its Grocery Anchored Portfolio Sale subsidiaries).

Governing Law

Each of the Transaction Agreements will be governed by, and construed in accordance with, the laws of the State of Maryland applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles. In the case of the merger agreement, each party has agreed that any interpretation of the debt commitment letter will be governed by, and construed in accordance with, the laws of the State of New York.

Specific Enforcement

Each of the Transaction Agreements provides that the parties agree that irreparable damage would occur in the event that any provision of the relevant agreement is not performed in accordance with its specific terms or is otherwise breached. Subject to certain limitations, the parties acknowledge and agree that the parties are entitled to an injunction or injunctions to prevent breaches of the applicable Transaction Agreement and to enforce specifically the terms and provisions of the applicable Transaction Agreement, in addition to any other remedy at law or in equity.

Amendment

Each of the Transaction Agreements provide that it may be amended with the mutual agreement of the relevant parties at any time, whether before or after the Company stockholder approval has been obtained; provided, however, that after the Company stockholder approval has been obtained, no amendment may be made that pursuant to applicable law requires further approval or adoption by the stockholders of the Company without such further approval or adoption.

 

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