Medalist Diversified REIT, Inc. [MDRR] Filings

10-Q 1 mdrr-20240930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

	For the quarterly period ended September 30, 2024

	OR

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

For the transition period from to

Commission file no: 001-38719

MEDALIST DIVERSIFIED REIT, INC.

(Exact name of registrant as specified in its charter)

Maryland

47-5201540

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

P. O. Box 8436

Richmond, VA 23226

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (804) 338-7708

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


Title of Each Class	Trading Symbol(s)	Name of each Exchange on Which Registered
Common Stock, $0.01 par value per share	MDRR	The Nasdaq Capital Market
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	MDRRP	The Nasdaq Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	◻

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ ☒ No

The number of shares of Common Stock, $0.01 par value per share, of the registrant outstanding at November 12, 2024 was 1,115,260.

Table of Contents

Medalist Diversified REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2024

Table of Contents

w
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	4

	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56

Item 4.	Controls and Procedures	56

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	58

Signatures		60

Table of Contents

PART I.FINANCIAL INFORMATION

Item 1. Financial Statements

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


		September 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Investment properties, net	$	65,155,785	$	64,577,376
Cash		3,121,333		2,234,603
Restricted cash		1,847,326		1,575,002
Rent and other receivables, net of allowance of $31,145 and $13,413, as of September 30, 2024 and December 31, 2023, respectively		215,532		292,618
Assets held for sale		—		9,707,154
Unbilled rent		1,077,746		1,109,782
Intangible assets, net		2,448,365		2,716,546
Other assets		741,398		532,935
Total Assets	$	74,607,485	$	82,746,016

LIABILITIES
Accounts payable and accrued liabilities	$	1,291,987	$	1,095,049
Intangible liabilities, net		1,736,263		1,865,310
Line of credit, short term, net		—		1,000,000
Mortgages payable, net		50,219,369		50,772,773
Mortgages payable, net, associated with assets held for sale		—		9,588,888
Mandatorily redeemable preferred stock, net		4,890,196		4,693,575
Total Liabilities	$	58,137,815	$	69,015,595

EQUITY
Common stock, 1,115,260 and 1,109,405 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	$	11,153	$	11,094
Additional paid-in capital		51,577,572		51,525,303
Offering costs		(3,350,946)		(3,350,946)
Accumulated deficit		(35,678,971)		(35,864,693)
Total Stockholders' Equity		12,558,808		12,320,758
Noncontrolling interests - Hanover Square Property		—		119,140
Noncontrolling interests - Parkway Property		419,725		453,203
Noncontrolling interests - Operating Partnership		3,491,137		837,320
Total Equity	$	16,469,670	$	13,730,421
Total Liabilities and Equity	$	74,607,485	$	82,746,016

See notes to condensed consolidated financial statements

Table of Contents

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
REVENUE
Retail center property revenues	$	1,565,896	$	1,874,188	$	4,955,305	$	5,557,045
Flex center property revenues		676,754		658,246		2,008,056		1,839,675
Single tenant net lease property revenues		94,275		56,306		246,359		168,897
Total Revenue	$	2,336,925	$	2,588,740	$	7,209,720	$	7,565,617

OPERATING EXPENSES
Retail center property operating expenses	$	374,016	$	459,132	$	1,193,838	$	1,489,602
Flex center property operating expenses		162,800		180,164		491,586		535,065
Single tenant net lease property operating expenses		8,188		7,696		23,697		23,174
Bad debt expense		15,423		5,669		37,643		49,868
Share based compensation expenses		—		—		277,500		—
Legal, accounting and other professional fees		261,670		237,562		941,244		1,228,262
Corporate general and administrative expenses		238,189		162,649		748,928		364,868
Management restructuring expenses		—		1,452,904		—		1,846,329
Loss on impairment		—		—		—		50,859
Depreciation and amortization		973,367		1,149,664		2,979,142		3,459,262
Total Operating Expenses		2,033,653		3,655,440		6,693,578		9,047,289
Gain on disposal of investment property		—		—		2,819,502		—
Loss on extinguishment of debt		—		—		(51,837)		—
Operating Income (Loss)		303,272		(1,066,700)		3,283,807		(1,481,672)
Interest expense		730,922		900,182		2,331,030		2,612,642
Net (Loss) Income from Operations		(427,650)		(1,966,882)		952,777		(4,094,314)
Other income		14,824		20,522		40,486		52,249
Other expense		105,123		—		76,985		—
Net (Loss) Income		(517,949)		(1,946,360)		916,278		(4,042,065)
Less: Net (loss) income attributable to Hanover Square Property noncontrolling interests		(399)		(225)		453,928		(1,482)
Less: Net (loss) income attributable to Parkway Property noncontrolling interests		(16,397)		2,199		(9,178)		10,081
Less: Net income (loss) attributable to Operating Partnership noncontrolling interests		25,843		493		162,828		(2,878)
Net (Loss) Income Attributable to Medalist Common Stockholders	$	(526,996)	$	(1,948,827)	$	308,700	$	(4,047,786)

Earnings per common share - basic	$	—	$	—	$	0.28	$	—
Weighted-average number of shares - basic		—		—		1,117,099		—

Earnings per common share - diluted	$	—	$	—	$	0.28	$	—
Weighted-average number of shares - diluted		—		—		1,123,249		—

Loss per common share - basic and diluted	$	(0.47)	$	(1.76)	$	—	$	(3.65)
Weighted-average number of shares - basic and diluted		1,116,391		1,109,405		—		1,109,631

Dividends paid per common share	$	0.05	$	—	$	0.11	$	0.32

See notes to condensed consolidated financial statements

Table of Contents

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the nine months ended September 30, 2024 and 2023

(Unaudited)


	For the nine months ended September 30, 2024
	Common Stock											Noncontrolling Interests
											Total		Hanover
				Additional			Offering	Accumulated			Stockholders'		Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2024	1,109,405	$	11,094	$	51,525,303	$	(3,350,946)	$	(35,864,693)	$	12,320,758	$	119,140	$	453,203	$	837,320	$	13,730,421

Common stock repurchases	(2,830)	$	(28)	$	(32,439)	$	—	$	—	$	(32,467)	$	—	$	—	$	—	$	(32,467)
Share based compensation	8,910		89		87,411		—		—		87,500		—		—		190,000		277,500
Redemption of operating partnership units	—		—		—		—		—		—		—		—		(77,226)		(77,226)
Retire fractional shares resulting from reverse stock split	(225)		(2)		(2,703)		—		—		(2,705)		—		—		—		(2,705)
Net income (loss)	—		—		—		—		308,700		308,700		453,928		(9,178)		162,828		916,278
Dividends and distributions	—		—		—		—		(122,978)		(122,978)		(516,596)		(24,300)		(21,785)		(685,659)
Non-controlling interests	—		—		—		—		—		—		(56,472)		—		2,400,000		2,343,528

Balance, September 30, 2024	1,115,260	$	11,153	$	51,577,572	$	(3,350,946)	$	(35,678,971)	$	12,558,808	$	—	$	419,725	$	3,491,137	$	16,469,670


	For the nine months ended September 30, 2023
	Common Stock											Noncontrolling Interests
											Total		Hanover
				Additional			Offering	Accumulated			Stockholders'		Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2023	1,109,902	$	11,099	$	51,530,298	$	(3,350,946)	$	(30,939,020)	$	17,251,431	$	127,426	$	470,685	$	842,898	$	18,692,440

Retire fractional shares resulting from reverse stock split	(497)	$	(5)	$	(2,495)	$	—	$	—	$	(2,500)	$	—	$	—	$	—	$	(2,500)
Net (loss) income	—		—		—		—		(4,047,786)		(4,047,786)		(1,482)		10,081		(2,878)		(4,042,065)
Dividends and distributions	—		—		—		—		(354,394)		(354,394)		(16,000)		—		(4,271)		(374,665)

Balance, September 30, 2023	1,109,405	$	11,094	$	51,527,803	$	(3,350,946)	$	(35,341,200)	$	12,846,751	$	109,944	$	480,766	$	835,749	$	14,273,210

Table of Contents

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended September 30, 2024 and 2023

(Unaudited)


	For the three months ended September 30, 2024
	Common Stock											Noncontrolling Interests
											Total		Hanover
				Additional			Offering		Accumulated		Stockholders'		Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, July 1, 2024	1,118,315	$	11,183	$	51,612,714	$	(3,350,946)	$	(35,096,071)	$	13,176,880	$	8,339	$	436,122	$	3,477,004	$	17,098,345

Common stock repurchases	(2,830)	$	(28)	$	(32,439)	$	—	$	—	$	(32,467)	$	—	$	—	$	—	$	(32,467)
Retire fractional shares resulting from reverse stock split	(225)		(2)		(2,703)		—		—		(2,705)		—		—		—		(2,705)
Net (loss) income	—		—		—		—		(526,996)		(526,996)		(399)		(16,397)		25,843		(517,949)
Dividends and distributions	—		—		—		—		(55,904)		(55,904)		(7,940)		—		(11,710)		(75,554)

Balance, September 30, 2024	1,115,260	$	11,153	$	51,577,572	$	(3,350,946)	$	(35,678,971)	$	12,558,808	$	—	$	419,725	$	3,491,137	$	16,469,670

Medalist Diversified REIT, Inc. [MDRR] Filings
Medalist Diversified REIT, Inc. [MDRRP] Filings
10-Q	[2024-11-12]
10-Q	[2024-08-09]
10-Q	[2024-05-09]
10-K	[2024-03-06]
10-Q	[2023-11-13]
10-Q	[2023-08-09]
10-Q	[2023-05-11]
10-K	[2023-03-10]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-09]
10-K	[2022-03-16]
10-Q	[2021-11-12]
10-Q	[2021-08-10]
10-Q	[2021-05-14]
10-K	[2021-03-11]
10-Q	[2020-11-13]
10-Q	[2020-08-13]
10-Q	[2020-05-14]
10-K	[2020-03-24]
10-Q	[2019-11-05]
10-Q	[2019-08-13]
10-Q	[2019-05-15]
10-K	[2019-03-11]

Medalist Diversified REIT, Inc. [MDRR] Filings

Medalist Diversified REIT, Inc. [MDRRP] Filings