Medalist Diversified REIT, Inc. [MDRRP] Filings

10-Q 1 mdrr-20230930x10q.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, 2023

	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.

Maryland

47-5201540

(State or other jurisdiction

of incorporation)

(IRS Employer

Identification No.)

Post Office Box 8436

Richmond, VA 23226

(Address of principal executive offices) (Zip Code)

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

1051 E. Cary Street Suite 601

James Center Three

Richmond, VA, 23219

(Former name, former address and former fiscal year, if changed since last report)

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 13, 2023 was 2,218,810.

Table of Contents

Medalist Diversified REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2023

Table of Contents


PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	4

	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59

Item 4.	Controls and Procedures	59

PART II. OTHER INFORMATION		60

Item 1.	Legal Proceedings	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults Upon Senior Securities	60

Item 4.	Mine Safety Disclosures	60

Item 5.	Other Information	60

Item 6.	Exhibits	62

Signatures		64

Table of Contents

PART I.FINANCIAL INFORMATION

Item 1. Financial Statements

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


		September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Investment properties, net	$	74,875,809	$	76,514,952
Cash		3,015,859		3,922,136
Restricted cash		1,734,297		1,740,717
Rent and other receivables, net of allowance of $0 and $47,109, as of September 30, 2023 and December 31, 2022, respectively		94,782		402,434
Unbilled rent		1,097,570		1,022,153
Intangible assets, net		2,956,080		3,748,706
Other assets		647,268		564,306
Total Assets	$	84,421,665	$	87,915,404

LIABILITIES
Accounts payable and accrued liabilities	$	1,956,415	$	1,198,072
Intangible liabilities, net		1,946,772		2,234,113
Line of credit, short term, net		1,000,000		—
Mortgages payable, net		60,616,944		61,340,259
Mandatorily redeemable preferred stock, net		4,630,824		4,450,521
Total Liabilities	$	70,150,955	$	69,222,965

EQUITY
Common stock, 2,218,810 and 2,219,803 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	$	22,188	$	22,198
Additional paid-in capital		51,514,209		51,519,198
Offering costs		(3,350,946)		(3,350,946)
Accumulated deficit		(35,341,200)		(30,939,020)
Total Stockholders' Equity		12,844,251		17,251,430
Noncontrolling interests - Hanover Square Property		109,944		127,426
Noncontrolling interests - Parkway Property		480,766		470,685
Noncontrolling interests - Operating Partnership		835,749		842,898
Total Equity	$	14,270,710	$	18,692,439
Total Liabilities and Equity	$	84,421,665	$	87,915,404

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,
	2023		2022		2023		2022

REVENUE
Retail center property revenues	$	1,930,494	$	1,850,797	$	5,725,942	$	4,999,089
Flex center property revenues		658,246		610,967		1,839,675		1,834,200
Hotel property room revenues		—		376,560		—		1,494,836
Hotel property other revenues		—		2,749		—		12,813
Total Revenue	$	2,588,740	$	2,841,073	$	7,565,617	$	8,340,938

OPERATING EXPENSES
Retail center property operating expenses	$	466,828	$	491,889	$	1,512,776	$	1,384,061
Flex center property operating expenses		180,164		189,720		535,065		511,771
Hotel property operating expenses		—		589,311		—		1,302,114
Bad debt expense		5,669		—		49,868		12,946
Share based compensation expenses		—		—		—		233,100
Legal, accounting and other professional fees		237,562		284,463		1,228,262		1,112,878
Corporate general and administrative expenses		162,649		99,323		364,868		335,538
Management restructuring expenses		1,452,904		—		1,846,329		—
Loss on impairment		—		—		50,859		36,670
Impairment of assets held for sale		—		—		—		175,671
Other expense		—		227,164		—		227,164
Depreciation and amortization		1,149,664		1,231,513		3,459,262		3,509,165
Total Operating Expenses		3,655,440		3,113,383		9,047,289		8,841,078
Loss on disposal of investment property		—		(389,471)		—		(389,471)
Loss on extinguishment of debt		—		(219,532)		—		(389,207)
Operating loss		(1,066,700)		(881,313)		(1,481,672)		(1,278,818)
Interest expense		900,182		989,255		2,612,642		2,704,835
Net Loss from Operations		(1,966,882)		(1,870,568)		(4,094,314)		(3,983,653)
Other income		20,522		126,434		52,249		251,197
Net Loss		(1,946,360)		(1,744,134)		(4,042,065)		(3,732,456)
Less: Net (loss) income attributable to Hanover Square Property noncontrolling interests		(225)		8,468		(1,482)		15,421
Less: Net income attributable to Parkway Property noncontrolling interests		2,199		16,782		10,081		31,027
Less: Net income (loss) attributable to Operating Partnership noncontrolling interests		493		(14,926)		(2,878)		(20,275)
Net Loss Attributable to Medalist Common Shareholders	$	(1,948,827)	$	(1,754,458)	$	(4,047,786)	$	(3,758,629)

Loss per share from operations - basic and diluted	$	(0.88)	$	(0.80)	$	(1.82)	$	(1.77)

Weighted-average number of shares - basic and diluted		2,218,810		2,179,993		2,219,262		2,121,540

Dividends paid per common share	$	—	$	0.16	$	0.16	$	0.48

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, 2023
	Common Stock											Noncontrolling Interests
				Additional			Offering	Accumulated			Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2023	2,219,803	$	22,198	$	51,519,198	$	(3,350,946)	$	(30,939,020)	$	17,251,430	$	127,426	$	470,685	$	842,898	$	18,692,439

Retire fractional shares resulting from reverse stock split	(993)	$	(10)	$	(4,989)	$	—	$	—	$	(4,999)	$	—	$	—	$	—	$	(4,999)
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	2,218,810	$	22,188	$	51,514,209	$	(3,350,946)	$	(35,341,200)	$	12,844,251	$	109,944	$	480,766	$	835,749	$	14,270,710


	For the nine months ended September 30, 2022
	Common Stock											Noncontrolling Interests
				Additional			Offering	Accumulated			Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2022	2,006,577	$	20,065	$	49,785,887	$	(3,350,946)	$	(24,981,346)	$	21,473,660	$	146,603	$	500,209	$	877,917	$	22,998,389

Common stock issuances	180,676	$	1,807	$	1,537,080	$	—	$	—	$	1,538,887	$	—	$	—	$	—	$	1,538,887
Common stock repurchases	(33,509)		(335)		(286,208)		—		—		(286,543)		—		—		—		(286,543)
Share based compensation	26,250		263		232,837		—		—		233,100		—		—		—		233,100
Net (loss) income	—		—		—		—		(3,758,629)		(3,758,629)		15,421		31,027		(20,275)		(3,732,456)
Dividends and distributions	—		—		—		—		(1,014,048)		(1,014,048)		(41,200)		(48,600)		(12,812)		(1,116,660)

Balance, September 30, 2022	2,179,994	$	21,800	$	51,269,596	$	(3,350,946)	$	(29,754,023)	$	18,186,427	$	120,824	$	482,636	$	844,830	$	19,634,717

Table of Contents


	For the three months ended September 30, 2023
	Common Stock											Noncontrolling Interests
				Additional			Offering		Accumulated		Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, July 1, 2023	2,218,810	$	22,188	$	51,514,209	$	(3,350,946)	$	(33,392,373)	$	14,793,078	$	110,169	$	478,567	$	835,256	$	16,217,070

Net (loss) income	—	$	—	$	—	$	—	$	(1,948,827)	$	(1,948,827)	$	(225)	$	2,199	$	493	$	(1,946,360)

Balance, September 30, 2023	2,218,810	$	22,188	$	51,514,209	$	(3,350,946)	$	(35,341,200)	$	12,844,251	$	109,944	$	480,766	$	835,749	$	14,270,710


	For the three months ended September 30, 2022
	Common Stock											Noncontrolling Interests
				Additional			Offering		Accumulated		Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, July 1, 2022	2,179,994	$	21,800	$	51,269,596	$	(3,350,946)	$	(27,650,766)	$	20,289,684	$	137,156	$	474,854	$	864,027	$	21,765,721

Net (loss) income	—	$	—	$	—	$	—	$	(1,754,458)	$	(1,754,458)	$	8,468	$	16,782

Medalist Diversified REIT, Inc. [MDRRP] Filings
Medalist Diversified REIT, Inc. [MDRR] Filings
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. [MDRRP] Filings

Medalist Diversified REIT, Inc. [MDRR] Filings