ﾒﾀﾞﾘｽﾄﾀﾞｲﾊﾞｰｼﾌｧｲﾄﾞREITの適時開示・決算・その他

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): March 10, 2023

Medalist Diversified REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland	001-38719	47-5201540
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1051 E. Cary Street Suite 601

James Center Three

Richmond, VA, 23219

(Address of principal executive offices)

(804) 344-4435

(Registrant’s telephone number, including area code)

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

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


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

Item 2.02Results of Operations and Financial Condition

On March 10, 2023, Medalist Diversified REIT, Inc., a Maryland corporation (the “Company”), issued a press release announcing its financial results for the fiscal year ended December 31, 2022 (the “Press Release”) and a financial supplement including reconciliations to certain non-GAAP financial measures (the “Financial Supplement”). Copies of the Press Release and the Financial Supplement are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and shall not be incorporated by reference into any registration statement or other document filed under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 8.01Other Events

On March 10, 2023, the Company issued a press release announcing that its Board of Directors (the “Board”) has established a Special Committee of the Board comprised solely of independent directors to explore potential strategic alternatives focusing on maximizing stockholder value. A copy of the press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

Item 9.01Financial Statements and Exhibits

(d) Exhibits


Exhibit Number		Description of Exhibit

99.1		Press Release, dated March 10, 2023
99.2		Financial Supplement to Press Release, dated March 10, 2023
99.3		Press Release, dated March 10, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	MEDALIST DIVERSIFIED REIT, INC.

Dated: March 10, 2023	By:	/s/ Thomas E. Messier
		Thomas E. Messier
		Chief Executive Officer, Chairman of the Board, Treasurer and Secretary

EX-99.1 2 mdrr-20230310xex99d1.htm EX-99.1

Exhibit 99.1

MEDALIST DIVERSIFIED REIT, INC. REPORTS 2022 RESULTS

RICHMOND, VA, March 10, 2023. Medalist Diversified REIT, Inc. (NASDAQ:MDRR) (the “Company”), a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S., today reported financial results for the year ended December 31, 2022 and provided an update on its corporate activities. In addition, the Company released supplemental financial information about its first quarter financial results.

Key Highlights:

●

Operating loss was $1,413,626 for the year ended December 31, 2022, compared to operating income of $814,504 for the year ended December 31, 2021.

●

Net Operating Income (NOI) grew 6.8% to $6,884,918 for the year ended December 31, 2022, compared to NOI of $6,443,860 for the year ended December 31, 2021.

●

Funds from operations (FFO) increased by $1,971,472 to $997,253 for the year ended December 31, 2022, compared to FFO of ($974,219) for the year ended December 31, 2021.

●

Same Property NOI growth of 7.9% for the year ended December 31, 2022, compared to the year ended December 31, 2021.

●

Portfolio occupancy rate of 96.0% as of December 31, 2022, compared 94.7% as of December 31, 2021.

o

Weighted average lease term (“WALT”) of 3.9 years on retail and flex / industrial portfolios.

●

Weighted average debt maturity of 6.1 years and weighted average interest rate of 4.2% as of December 31, 2022.

●

On January 27, 2023, the Company paid its fourth quarter 2022 dividend of $0.01 per common share, its seventh consecutive quarter paying a dividend.

About Medalist Diversified REIT

Medalist Diversified REIT Inc. is a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S. The Company’s strategy is to focus on commercial real estate which is expected to provide an attractive balance of risk and returns. Medalist utilizes a rigorous, consistent and replicable process for sourcing and conducting due diligence of acquisitions. For more information on Medalist, including additional supplemental financial information, please visit the Company website at https://www.medalistreit.com.

Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

NOI

While we believe net income (loss), as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, we consider NOI, given its wide use by and relevance to investors and analysts, an appropriate supplemental performance measure. NOI provides a measure of rental operations, and does not include depreciation and amortization, interest expense and non-property specific expenses such as corporate-wide interest expense and general and administrative expenses. As used herein, we calculate NOI as follows:

NOI from property operations is calculated as net loss, as defined by U.S. GAAP, plus preferred dividends, legal, accounting and other professional fees, corporate general and administrative expenses, depreciation, amortization of intangible assets and liabilities, net amortization of above and below market leases, interest expense, including amortization of financing costs, share based compensation expense, loss on impairment, impairment of assets held for sale, loss (gain) on disposition of investment properties, loss on extinguishment of debt, other income and other expenses.

The components of NOI consist of recurring rental and reimbursement revenue, less real estate taxes and operating expenses, such as insurance, utilities, and repairs and maintenance.

The following tables reflect net loss attributable to common shareholders with a reconciliation to NOI, as computed in accordance with GAAP for the periods presented:


	Year Ended
	December 31,
	2022		2021
Net Operating Income
Net Loss	$	(4,732,214)	$	(4,358,282)
Plus: Preferred dividends, including amortization of capitalized issuance costs		622,881		604,383
Plus: Legal, accounting and other professional fees		1,627,881		1,465,199
Plus: Corporate general and administrative expenses		457,653		654,137
Plus: Depreciation expense		3,381,249		2,415,139
Plus: Amortization of intangible assets		1,325,574		1,093,565
Less: Net amortization of above and below market leases		(226,721)		(24,024)
Plus: Interest expense, including amortization of capitalized loan issuance costs		2,932,207		4,929,872
Plus: Share based compensation expense		483,100		149,981
Plus: Loss on impairment		36,670		-
Plus: Impairment of assets held for sale		175,671		-
Plus: Loss on extinguishment of debt		389,207		-
Less: Other income		(236,500)		(361,469)
Plus: Other expense		227,164		-
Less: Realized loss (gain) on disposal of investment properties		421,096		(124,641)
Net Operating Income - NOI	$	6,884,918	$	6,443,860

Same Property NOI

Same property NOI is calculated as the NOI of all properties owned during the entire periods presented with the exclusion of any properties acquired or sold during the periods presented. The following table reconciles same property retail and flex NOI, NOI of newly acquired retail and flex properties, same hotel property NOI, and NOI of disposed hotel properties with total NOI.


	Year Ended
	December 31,
	2022		2021
All Properties
Same property NOI	$	4,386,329	$	4,063,845
NOI of acquired properties (1)		2,326,741		847,635
NOI of disposed properties (2)		171,848		1,532,380
Total NOI (3)	$	6,884,918	$	6,443,860

EBITDA

EBITDA is net income, as defined by U.S. GAAP, plus preferred dividends, interest expense, including amortization of financing costs, depreciation and amortization, net amortization of acquired above and below market lease revenue, loss on impairment, impairment of assets held for sale, loss (gain) on disposition of investment properties, and loss on extinguishment of debt.

The following tables reflect net loss with a reconciliation to EBITDA, as computed in accordance with GAAP for the periods presented:


	Year Ended
	December 31,
	2022		2021
EBITDA
Net Loss	$	(4,732,214)	$	(4,358,282)
Plus: Preferred dividends, including amortization of capitalized issuance costs		622,881		604,383
Plus: Interest expense, including amortization of capitalized loan issuance costs		2,932,207		4,929,872
Plus: Depreciation expense		3,381,249		2,415,139
Plus: Amortization of intangible assets		1,325,574		1,093,565
Less: Net amortization of above and below market leases		(226,721)		(24,024)
Less: Realized loss (gain) on disposal of investment properties		421,096		(124,641)
Plus: Loss on impairment		36,670		-
Plus: Impairment of assets held for sale		175,671		-
Plus: Loss on extinguishment of debt		389,207		-
EBITDA	$	4,325,620	$	4,536,012

FFO and AFFO

Funds from operations (“FFO”), a non-GAAP measure, is an alternative measure of operating performance, specifically as it relates to results of operations and liquidity. FFO is computed in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and losses on extinguishment of debt, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases). In addition to FFO, Adjusted FFO (“AFFO”), excludes non-cash items such as amortization of loans and above and below market leases, unbilled rent arising from applying straight line rent revenue recognition and share-based compensation expenses. Additionally, the impact of capital expenditures, including tenant improvement and leasing commissions, net of reimbursements of such expenditures by property escrow funds, is included in the calculation of AFFO.

The following tables reflect net loss with a reconciliation to FFO and AFFO for the periods presented:


	Year Ended
	December 31,
	2022		2021
Funds from operations
Net loss	$	(4,732,214)	$	(4,358,282)
Depreciation of tangible real property assets		2,561,843		1,912,353
Depreciation of tenant improvements		718,704		437,372
Amortization of leasing commissions		100,702		65,414
Amortization of intangible assets		1,325,574		1,093,565
Loss (gain) on sale of investment properties		421,096		(124,641)
Loss on impairment		36,670		-
Impairment of assets held for sale		175,671		-
Loss on extinguishment of debt		389,207		-
Funds from operations	$	997,253	$	(974,219)


	Year Ended
	December 31,
	2022		2021
Adjusted funds from operations
Funds from operations	$	997,253	$	(974,219)
Amortization of above market leases		188,903		250,504
Amortization of below market leases		(415,624)		(274,528)
Straight line rent		(149,831)		(198,594)
Capital expenditures		(1,019,304)		(536,685)
(Increase) decrease in fair value of interest rate cap		(220,881)		27,281
Amortization of loan issuance costs		107,595		103,180
Amortization of preferred stock discount and offering costs		222,881		204,383
Amortization of convertible debenture discount, offering costs and beneficial conversion feature		—		1,718,487
Share-based compensation		483,100		149,981
Bad debt expense		46,932		39,024
Debt forgiveness		—		(176,300)
Adjusted Funds from operations (AFFO)	$	241,024	$	332,514

Brent Winn
Medalist Diversified REIT, Inc.
brent.winn@medalistprop.com

EX-99.2 3 mdrr-20230310xex99d2.htm EX-99.2

Exhibit 99.2

Financial Supplement

Table of Contents

Definitions

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for the years ended December 31, 2022 and 2021

NOI Reconciliations for the years ended December 31, 2022 and 2021

Same Property NOI Reconciliation for the years ended December 31, 2022 and 2021

EBITDA Reconciliations for the years ended December 31, 2022 and 2021

Same Property Revenues

Same Property Statistics – Retail and Flex Properties

Weighted Average Lease Term

Weighted Average Mortgage Payable Maturity

Definitions

Weighted Average Mortgage Payable Interest Rate Investors and analysts following the real estate industry utilize certain financial measures as supplemental performance measures, including net operating income ("NOI"), Same Property NOI, and earnings before interest, taxes, depreciation and amortization for real estate ("EBITDA").

While we believe net income available to common stockholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, we consider NOI, Same Property NOI, and EBITDA, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. NOI provides a measure of rental operations, and does not include depreciation and amortization, interest expense and non-property specific expenses such as corporate-wide interest expense and general and administrative expenses. As used herein, we calculate the following non-U.S. GAAP measures as follows:

• NOI from property operations is calculated as net loss, as defined by U.S. GAAP, plus preferred dividends, legal, accounting and other professional fees, corporate general and administrative expenses, depreciation, amortization of intangible assets and liabilities, net amortization of above and below market leases, interest expense, including amortization of financing costs, share based compensation expense, loss on impairment, impairment of assets held for sale, loss (gain) on disposition of investment properties, loss on extinguishment of debt, other income and other expenses. The components of NOI consist of recurring rental and reimbursement revenue, less real estate taxes and operating expenses, such as insurance, utilities, and repairs and maintenance. NOI presented in this financial supplement includes an adjustment to the Company’s net loss for amortization of above and below market leases and, as a result, varies from NOI presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

• Same Property NOI is calculated as the NOI of all properties owned during the entire periods presented with the exclusion of any properties acquired or sold during the periods presented.

• EBITDA is net income, as defined by U.S. GAAP, plus preferred dividends, interest expense, including amortization of financing costs, depreciation and amortization, net amortization of acquired above and below market lease revenue, loss on impairment, impairment of assets held for sale, loss (gain) on disposition of investment properties, and loss on extinguishment of debt.

NOI, Same Property NOI, Same Property Revenues, and EBITDA, do not represent cash generated from operating activities in accordance with U.S. GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt, capital expenditures and payment of dividends and distributions. NOI, Same Property NOI, and EBITDA should not be considered as substitutes for net income applicable to common stockholders (calculated in accordance with U.S. GAAP) as a measure of results of operations or cash flows (calculated in accordance with U.S. GAAP) as a measure of liquidity. NOI, Same Property NOI, and Adjusted EBITDA, as currently calculated by us, may not be comparable to similarly titled, but variously calculated, measures of other REITs.

FFO and AFFO Funds from operations (“FFO”), a non-GAAP measure, is an alternative measure of operating performance, specifically as it relates to results of operations and liquidity. FFO is computed in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and losses on extinguishment of debt, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases). In addition to FFO, Adjusted FFO (“AFFO”), excludes non-cash items such as amortization of loans and above and below market leases, unbilled rent arising from applying straight line rent revenue recognition and share-based compensation expenses. Additionally, the impact of capital expenditures, including tenant improvement and leasing commissions, net of reimbursements of such expenditures by property escrow funds, is included in the calculation of AFFO.

Medalist Diversified REIT, Inc. and Subsidiaries

Consolidated Balance Sheets


	December 31,
	2022		2021
ASSETS
Investment properties, net	$	76,514,952	$	69,407,915
Cash		3,922,136		4,370,405
Restricted cash		1,740,717		3,013,572
Rent and other receivables, net of allowance of $47,109 and $13,010, as of December 31, 2022 and December 31, 2021, respectively		402,434		466,141
Assets held for sale		—		9,846,208
Unbilled rent		1,022,153		872,322
Intangible assets, net		3,748,706		4,200,392
Other assets		564,306		370,133
Total Assets	$	87,915,404	$	92,547,088

LIABILITIES
Accounts payable and accrued liabilities	$	1,198,072	$	1,307,257
Intangible liabilities, net		2,234,113		1,880,612
Mortgages payable, net		61,340,259		54,517,822
Mortgages payable, net, associated with assets held for sale		—		7,615,368
Mandatorily redeemable preferred stock, net		4,450,521		4,227,640
Total Liabilities	$	69,222,965	$	69,548,699

EQUITY
Common stock, 17,758,421 and 16,052,617 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	$	177,584		160,526
Additional paid-in capital		51,363,812		49,645,426
Offering costs		(3,350,946)		(3,350,946)
Accumulated deficit		(30,939,020)		(24,981,346)
Total Stockholders' Equity		17,251,430		21,473,660
Noncontrolling interests - Hanover Square Property		127,426		146,603
Noncontrolling interests - Parkway Property		470,685		500,209
Noncontrolling interests - Operating Partnership		842,898		877,917
Total Equity	$	18,692,439	$	22,998,389
Total Liabilities and Equity	$	87,915,404	$	92,547,088

See notes to consolidated financial statements

Medalist Diversified REIT, Inc. and Subsidiaries

Consolidated Statements of Operations


	Year Ending December 31,
	2022		2021

REVENUE
Retail center property revenues	$	7,053,757	$	5,634,396
Flex center property revenues		2,529,919		1,202,822
Hotel property room revenues		1,494,836		4,590,372
Hotel property other revenues		12,813		44,959
Total Revenue	$	11,091,325	$	11,472,549

OPERATING EXPENSES
Retail center property operating expenses	$	1,912,110	$	1,518,973
Flex center property operating expenses		684,843		343,717
Hotel property operating expenses		1,335,801		3,102,951
Bad debt expense		46,932		39,024
Share based compensation expenses		483,100		149,981
Legal, accounting and other professional fees		1,627,881		1,465,199
Corporate general and administrative expenses		457,653		654,137
Loss on impairment		36,670		—
Impairment of assets held for sale		175,671		—
Other expense		227,164		—
Depreciation and amortization		4,706,823		3,508,704
Total Operating Expenses		11,694,648		10,782,686
(Loss) gain on disposal of investment properties		(421,096)		124,641
Loss on extinguishment of debt		(389,207)		—
Operating (loss) income		(1,413,626)		814,504
Interest expense		3,555,088		5,534,255
Net Loss from Operations		(4,968,714)		(4,719,751)
Other income		236,500		361,469
Net Loss		(4,732,214)		(4,358,282)
Less: Net income attributable to Hampton Inn Property noncontrolling interests		—		14,651
Less: Net income (loss) attributable to Hanover Square Property noncontrolling interests		38,023		(8,781)
Less: Net income (loss) attributable to Parkway Property noncontrolling interests		19,076		(3,791)
Less: Net (loss) income attributable to Operating Partnership noncontrolling interests		(20,072)		3,903
Net Loss Attributable to Medalist Common Shareholders	$	(4,769,241)	$	(4,364,264)

Loss per share from operations - basic and diluted	$	(0.28)	$	(0.33)

Weighted-average number of shares - basic and diluted		17,122,617		13,092,937

Dividends paid per common share	$	0.07	$	0.04

See notes to consolidated financial statements

Medalist Diversified REIT, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


	Year ended December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss	$	(4,732,214)	$	(4,358,282)

Adjustments to reconcile consolidated net loss to net cash flows from operating activities
Depreciation		3,381,249		2,415,139
Amortization		1,325,574		1,093,565
Loan cost amortization		107,595		103,180
Mandatorily redeemable preferred stock issuance cost and discount amortization		222,881		204,383
Convertible debenture issuance cost, discount and beneficial conversion feature amortization		—		1,718,487
Above (below) market lease amortization, net		(226,721)		(24,024)
Bad debt expense		46,932		39,024
Note payable forgiveness		—		(176,300)
Share-based compensation		483,100		149,981
Impairment of assets held for sale		175,671		—
Loss on impairment		36,670		—
Loss on extinguishment of debt		389,207		—
Loss (gain) on sale of investment property		421,096		(124,641)

Changes in assets and liabilities
Rent and other receivables, net		16,775		(46,413)
Unbilled rent		(149,831)		(198,594)
Other assets		(194,173)		(50,243)
Accounts payable and accrued liabilities		(109,185)		87,351
Net cash flows from operating activities		1,194,626		832,613

CASH FLOWS FROM INVESTING ACTIVITIES

Investment property acquisitions		(10,279,714)		(20,750,571)
Capital expenditures		(1,019,304)		(536,685)
Cash received from disposal of investment properties		1,979,837		2,144,529
Net cash flows from investing activities		(9,319,181)		(19,142,727)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends and distributions paid		(1,309,180)		(1,151,304)
Investment of noncontrolling interests		—		504,000
Cash paid for lender fees associated with Clemson Best Western sale		(84,900)		—
Repayment of line of credit, short term		—		(325,000)
Proceeds from mortgages payable, net		18,477,304		24,377,886
Repayment of mortgages payable		(11,932,137)		(14,914,830)
Proceeds from sale of convertible debentures, net of capitalized offering costs		—		1,305,000
Proceeds from sales of common stock, net of capitalized offering costs		1,538,887		10,801,411
Repurchases of common stock, including costs and fees		(286,543)		—
Net cash flows from financing activities		6,403,431		20,597,163

(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(1,721,124)		2,287,049
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		7,383,977		5,096,928
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	5,662,853	$	7,383,977

CASH AND CASH EQUIVALENTS, end of period, shown in consolidated balance sheets		3,922,136		4,370,405
RESTRICTED CASH including assets restricted for capital and operating reserves and tenant deposits, end of period, shown in consolidated balance sheets		1,740,717		3,013,572
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period shown in the consolidated statements of cash flows	$	5,662,853	$	7,383,977

Supplemental Disclosures and Non-Cash Activities:

Other cash transactions:
Interest paid	$	3,237,728	$	4,065,121

Non-cash transactions:
Release of restricted cash related to sale of Clemson Best Western Property	$	1,455,777	$	—
Conversion of convertible debentures and accrued interest to common stock		—		5,058,788
Transfer of investment properties, net to assets held for sale, net		—		9,683,555
Transfer of mortgages payable, net to mortgages payable associated with assets held for sale, net		—		7,592,931
Assumption of mortgage debt, net		—		4,481,600
Forgiveness of note payable		—		176,300

See notes to consolidated financial statements

Medalist Diversified REIT

Funds from Operations and Adjusted Funds from Operations

For the years ended December 31, 2022 and 2021


	Year Ended
	December 31,
	2022		2021
Funds from operations
Net loss	$	(4,732,214)	$	(4,358,282)
Depreciation of tangible real property assets		2,561,843		1,912,353
Depreciation of tenant improvements		718,704		437,372
Amortization of leasing commissions		100,702		65,414
Amortization of intangible assets		1,325,574		1,093,565
Loss (gain) on sale of investment properties		421,096		(124,641)
Loss on impairment		36,670		-
Impairment of assets held for sale		175,671		-
Loss on extinguishment of debt		389,207		-
Funds from operations	$	997,253	$	(974,219)


	Year Ended
	December 31,
	2022		2021
Adjusted funds from operations
Funds from operations	$	997,253	$	(974,219)
Amortization of above market leases		188,903		250,504
Amortization of below market leases		(415,624)		(274,528)
Straight line rent		(149,831)		(198,594)
Capital expenditures		(1,019,304)		(536,685)
(Increase) decrease in fair value of interest rate cap		(220,881)		27,281
Amortization of loan issuance costs		107,595		103,180
Amortization of preferred stock discount and offering costs		222,881		204,383
Amortization of convertible debenture discount, offering costs and beneficial conversion feature		—		1,718,487
Share-based compensation		483,100		149,981
Bad debt expense		46,932		39,024
Debt forgiveness		—		(176,300)
Adjusted Funds from operations (AFFO)	$	241,024	$	332,514

NOI Reconciliation


	Year Ended
	December 31,
	2022		2021
Net Operating Income
Net Loss	$	(4,732,214)	$	(4,358,282)
Plus: Preferred dividends, including amortization of capitalized issuance costs		622,881		604,383
Plus: Legal, accounting and other professional fees		1,627,881		1,465,199
Plus: Corporate general and administrative expenses		457,653		654,137
Plus: Depreciation expense		3,381,249		2,415,139
Plus: Amortization of intangible assets		1,325,574		1,093,565
Less: Net amortization of above and below market leases		(226,721)		(24,024)
Plus: Interest expense, including amortization of capitalized loan issuance costs		2,932,207		4,929,872
Plus: Share based compensation expense		483,100		149,981
Plus: Loss on impairment		36,670		-
Plus: Impairment of assets held for sale		175,671		-
Plus: Loss on extinguishment of debt		389,207		-
Less: Other income		(236,500)		(361,469)
Plus: Other expense		227,164		-
Less: Realized loss (gain) on disposal of investment properties		421,096		(124,641)
Net Operating Income - NOI	$	6,884,918	$	6,443,860


	Year Ended
	December 31,
	2022		2021
Components of Net Operating Income
Revenues:
Retail and flex property rental revenues (1)	$	7,663,746	$	5,629,495
Retail and flex property tenant reimbursement revenues		1,693,209		1,183,699
Hotel property revenues		1,507,649		4,635,331
Total revenues		10,864,604		11,448,525

Operating expenses:
Retail and flex property operating expenses		2,596,953		1,862,690
Hotel property operating expenses		1,335,801		3,102,951
Bad debt expense		46,932		39,024
Total operating expenses		3,979,686		5,004,665

Net Operating Income - NOI	$	6,884,918	$	6,443,860

(1)

Excludes amortization of above and below market leases.

Same Property NOI Reconciliation


	Year Ended
	December 31,
	2022		2021
All Properties
Same property NOI	$	4,386,329	$	4,063,845
NOI of acquired properties (1)		2,326,741		847,635
NOI of disposed properties (2)		171,848		1,532,380
Total NOI (3)	$	6,884,918	$	6,443,860

(1)

Lancer Center, Greenbrier Business Center, Parkway and Salisbury Marketplace

(2)

Greensboro Hampton Inn and Clemson Hotel

(3)

Excludes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021
Retail Properties
Same retail property NOI	$	3,797,954	$	3,548,150
NOI of acquired retail properties (1)		1,168,041		525,992
Total retail property NOI (2)	$	4,965,995	$	4,074,142

(1)

Lancer Center and Salisbury Marketplace

(2)

Excludes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021
Flex Properties
Same flex property NOI	$	588,375	$	515,695
NOI of acquired flex properties (1)		1,158,700		321,643
Total flex property NOI (2)	$	1,747,075	$	837,338

(1)

Greenbrier Business Center and Parkway

(2)

Excludes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021
Hotel Properties
NOI of disposed hotel properties (1)	$	171,848	$	1,532,380
Total hotel property NOI	$	171,848	$	1,532,380

(1)

Greensboro Hampton Inn and Clemson Hotel


	Year Ended
	December 31,
	2022		2021
Same Property Retail & Flex NOI Reconciliation
Same property retail and flex NOI	$	4,386,329	$	4,063,845
NOI of newly acquired retail and flex properties (1)		2,326,741		847,635
Total NOI (3)	$	6,713,070	$	4,911,480

(1)

Lancer Center, Greenbrier Business Center, Parkway and Salisbury Marketplace

(2)

Greensboro Hampton Inn and Clemson Hotel

(3)

Excludes net amortization of above and below market leases.

EBITDA Reconciliation


	Year Ended
	December 31,
	2022		2021
EBITDA
Net Loss	$	(4,732,214)	$	(4,358,282)
Plus: Preferred dividends, including amortization of capitalized issuance costs		622,881		604,383
Plus: Interest expense, including amortization of capitalized loan issuance costs		2,932,207		4,929,872
Plus: Depreciation expense		3,381,249		2,415,139
Plus: Amortization of intangible assets		1,325,574		1,093,565
Less: Net amortization of above and below market leases		(226,721)		(24,024)
Less: Realized loss (gain) on disposal of investment properties		421,096		(124,641)
Plus: Loss on impairment		36,670		-
Plus: Impairment of assets held for sale		175,671		-
Plus: Loss on extinguishment of debt		389,207		-
EBITDA	$	4,325,620	$	4,536,012

Same Property Revenues


	Year Ended
	December 31,
	2022		2021		Change ($)		Change (%)
All Properties
Same property revenues	$	6,059,078	$	5,620,808	$	438,270		7.8%
Revenues of acquired properties (1)		3,524,598		1,216,410		2,308,188
Revenues of disposed properties (2)		1,507,649		4,635,331		(3,127,682)
Total revenues (3)	$	11,091,325	$	11,472,549	$	(381,224)		(3.3)%

(1)

Lancer Center, Greenbrier Business Center, Parkway and Salisbury Marketplace

(2)

Greensboro Hampton Inn and Clemson Hotel

(3)

Includes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021		Change ($)		Change (%)
Retail Properties
Same retail property revenues	$	5,223,236	$	4,865,232	$	358,004		7.4%
Revenues of acquired retail properties (1)		1,830,521		769,164		1,061,357
Total retail property revenues (2)	$	7,053,757	$	5,634,396	$	1,419,361		25.2%

(1)

Lancer Center and Salisbury Marketplace

(2)

Includes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021		Change ($)		Change (%)
Flex Properties
Same flex property revenues	$	835,842	$	755,576	$	80,266		10.6%
Revenues of acquired flex properties (1)		1,694,077		447,246		1,246,831
Total flex property revenues (2)	$	2,529,919	$	1,202,822	$	1,327,097		110.3%

(1)

Greenbrier Business Center and Parkway

(2)

Includes net amortization of above and below market leases.


	Year Ended
	December 31,
	2022		2021		Change ($)		Change (%)
Hotel Properties
Revenues of disposed hotel properties (1)	$	1,507,649	$	4,635,331	$	(3,127,682)	$	(67.5)%
Total hotel property revenues	$	1,507,649	$	4,635,331	$	(3,127,682)		(67.5)%

(1)

Greensboro Hampton Inn and Clemson Hotel

Same Property Statistics – Retail and Flex Properties

Total Retail and Flex Properties


	Number of Properties				Total Square Feet				Percent Leased
	As of December 31,				As of December 31,				As of December 31,
	2022		2021		2022		2021		2022		2021
Retail		5		4		633,013		553,281		97.4%		94.8%
Flex		3		3		218,269		218,279		91.8%		94.6%
Total		8		7		851,282		771,560		96.0%		94.7%

Retail and Flex - Same Properties


	Number of Properties				Total Square Feet				Percent Leased
	As of December 31,				As of December 31,				As of December 31,
	2022		2021		2022		2021		2022		2021
Retail		4		4		553,281		553,281		98.3%		94.8%
Flex		3		3		218,279		218,279		91.8%		94.6%
Total		7		7		771,560		771,560		96.5%		94.7%

Weighted Average Lease Term


Retail Properties
Ashley Plaza			6.25
Franklin Square			4.47
Hanover Square			3.49
Lancer Center			4.00
Salisbury Marketplace			2.52
Retail Property Average			4.44

Flex Properties
Brookfield			3.01
Greenbrier Business Center			1.72
Parkway			2.61
Flex Property Average			2.37

Retail and Flex Property Average			3.91

Weighted Average Debt Data


Weighted Average Mortgage Maturity (Years)			6.08

Weighted Average Mortgage Payable Interest Rate			4.2%

EX-99.3 4 mdrr-20230310xex99d3.htm EX-99.3

Exhibit 99.3

Medalist Diversified REIT, Inc. Announces Establishment of a Special Committee of the Board and Exploration of Strategic Alternatives

RICHMOND, VA, March 10, 2023. Medalist Diversified REIT, Inc. (NASDAQ: MDRR) (the “Company” or “Medalist”), a Virginia-based real estate investment trust that specializes in acquiring, owning and managing value-add commercial real estate in the Mid-Atlantic and Southeast regions of the United States, today announced that its Board of Directors (the “Board”) has established a Special Committee of the Board (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value.

The Special Committee is comprised solely of independent directors and is charged with exploring potential strategic alternatives, including, without limitation, a business combination involving the Company, a sale of all or part of the Company’s assets, joint venture arrangements and/or restructurings, and determining whether a strategic transaction is in the best interests of the Company. The Special Committee has retained Jones Lang LaSalle Securities, LLC to act as its financial advisor and Troutman Pepper Hamilton Sanders LLP as its legal counsel.

There can be no assurance that the strategic alternatives exploration process will result in any transaction being pursued or consummated. There is no formal timetable for the Special Committee’s completion of its exploration of potential strategic alternatives, and the Company does not intend to disclose any developments with respect to the Special Committee’s activities unless and until the Company determines that further disclosure is appropriate or required by law or regulation.

Forward Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward looking statements are not historical and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate, “may,” “will,” “should” and “could” and include statements about the Special Committee’s exploration of potential strategic alternatives and the impact, if any, of such explorations and results from such explorations on the Company and stockholder value. Forward-looking statements are based upon the Company’s present expectations, but are not guarantees or assurances as to future developments or results. Factors that may cause actual developments or results to differ from those reflected in forward-looking statements include, without limitation, those included in the Company’s most recent Annual Report on Form 10-K and in the Company’s other filings with the SEC. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes and new developments except as required by law or regulation.

Brent Winn
Medalist Diversified REIT, Inc.
brent.winn@medalistprop.com