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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): May 11, 2023
Medalist Diversified REIT, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Maryland |
|
001-38719 |
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47-5201540 |
(State or other jurisdiction of incorporation |
|
(Commission File Number) |
|
(I.R.S. Employer |
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 |
|
Trading |
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 May 11, 2023, Medalist Diversified REIT, Inc., a Maryland corporation (the “Company”), issued a press release announcing its financial results for the three months ended March 31, 2023 (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 9.01Financial Statements and Exhibits
(d) Exhibits
Exhibit Number |
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Description of Exhibit |
|
|
|
99.1 |
|
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99.2 |
|
|
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.
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MEDALIST DIVERSIFIED REIT, INC. |
|
|
|
|
Dated: May 11, 2023 |
By: |
/s/ Thomas E. Messier |
|
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Thomas E. Messier |
|
|
Chief Executive Officer, Chairman of the Board, Treasurer and Secretary |
Exhibit 99.1
MEDALIST DIVERSIFIED REIT, INC. REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS
RICHMOND, VA, May 11, 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 three months ended March 31, 2023. In addition, the Company released supplemental financial information about its first quarter 2023 financial results.
Key Highlights:
| ● | Total revenues decreased by 15% to $2,460,976, down from $2,903,964 for the same quarter in 2022. |
| o | Excluding Q1 2022 revenues from the Company’s Clemson Best Western Hotel, which it sold on September 29, 2022, revenues increased by 15%, which includes the impact of the Company’s acquisition of the Salisbury Marketplace Property on June 13, 2022. |
| ● | Operating loss was $340,716, an increased loss of $106,318 over the same quarter in 2022. |
| o | Excluding Q1 2022 revenues and expenses from the Company’s Clemson Best Western Hotel, the 2023 operating loss represented a $286,311 improvement over the same quarter in 2022. |
| ● | Net operating income (“NOI”) decreased by 12% to $1,663,484, down from $1,880,781 for the prior year quarter. |
| o | Same property NOI increased by 1.4% to $1,508,255, up from $1,488,152 from the same quarter in 2022. |
| o | Same retail property NOI increased by 8.6% to $1,156,090, up from $1,064,536 from the same quarter in 2022, driven by a 29.4% increase in the Franklin Square Property’s NOI, which increased by $90,618, from $407,839 to $398,457. |
| ● | Funds from operations (FFO) was ($40,715), down from $387,155 in the prior year quarter. |
| o | Reduced net income resulting from the sale of the Clemson Best Western Hotel and $206,627 in legal expenses related to the pursuit of strategic alternatives, as previously announced, contributed to the decline in FFO. |
| ● | Adjusted funds from operations (AFFO) was ($657,538), down from $217,023 in the prior year quarter. |
| o | Increased capital expenditures of $467,902 related to tenant improvements and leasing commissions from the Company’s robust leasing activity contributed to this decline. |
| ● | Average occupancy rate for the Company’s eight retail and flex properties increased to 96.7% as of March 31, 2023, compared to 94.0% as of March 31, 2022. |
“Due to reduced NOI resulting from the sale of our Clemson Best Western Hotel Property, and the expenses related to the Special Committee’s efforts to maximize stockholder value through the pursuit of strategic alternatives, first quarter results were disappointing and we do not believe they reflect the underlying strength of our portfolio,” stated Thomas E. Messier, Chairman and Chief Executive Officer of the Company. “Robust leasing activity late in 2022 and year-to-date in 2023 have overcome some significant lease expirations and increased our portfolio-wide occupancy to 96.7 percent. We are seeing continued interest in our properties from both new tenants, and from existing tenants electing to renew their leases.”
Recent Leasing Activity
Recent leasing activity has generated 8 new leases and 11 renewed leases for a total of 63,856 square feet, or 7.5% of the Company’s 851,282 square foot portfolio, bringing the overall occupancy of the Company’s portfolio to 96.7%, with a weighted average lease term of 4.1 years (4.7 years for retail properties and 2.5 years for flex properties).
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:
|
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Three Months Ended |
||||
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March 31, |
||||
|
|
2023 |
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2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Net Operating Income |
|
|
|
|
|
|
Net Loss |
|
$ |
(1,233,806) |
|
$ |
(980,383) |
Plus: Preferred dividends, including amortization of capitalized issuance costs |
|
|
158,804 |
|
|
153,923 |
Plus: Legal, accounting and other professional fees |
|
|
767,078 |
|
|
459,869 |
Plus: Corporate general and administrative expenses |
|
|
117,049 |
|
|
80,706 |
Plus: Depreciation expense |
|
|
911,481 |
|
|
771,560 |
Plus: Amortization of intangible assets |
|
|
244,867 |
|
|
383,637 |
Less: Net amortization of above and below market leases |
|
|
(73,018) |
|
|
(26,034) |
Plus: Interest expense, including amortization of capitalized loan issuance costs |
|
|
705,248 |
|
|
687,501 |
Plus: Share based compensation expense |
|
|
— |
|
|
233,100 |
Plus: Loss on impairment |
|
|
36,743 |
|
|
36,670 |
Plus: Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
Less: Other (loss) income |
|
|
29,038 |
|
|
(95,439) |
Net Operating Income - NOI |
|
$ |
1,663,484 |
|
$ |
1,880,781 |
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.
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Three Months Ended |
||||
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March 31, |
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2023 |
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2022 |
||
|
|
(Unaudited) |
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(Unaudited) |
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All Properties |
|
|
|
|
|
|
Same property NOI |
|
$ |
1,508,255 |
|
$ |
1,488,152 |
NOI of acquired properties (1) |
|
|
155,229 |
|
|
— |
NOI of disposed properties (2) |
|
|
— |
|
|
392,629 |
Total NOI (3) |
|
$ |
1,663,484 |
|
$ |
1,880,781 |
| (1) | Salisbury Marketplace |
| (2) | Clemson Best Western Hotel |
| (3) | Excludes net amortization of above and below market leases. |
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:
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Three Months Ended |
||||
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March 31, |
||||
|
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2023 |
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2022 |
||
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(Unaudited) |
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(Unaudited) |
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Funds from operations |
|
|
|
|
|
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Net loss |
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$ |
(1,233,806) |
|
$ |
(980,383) |
Depreciation of tangible real property assets |
|
|
674,398 |
|
|
602,845 |
Depreciation of tenant improvements |
|
|
205,153 |
|
|
148,924 |
Amortization of leasing commissions |
|
|
31,930 |
|
|
19,791 |
Amortization of intangible assets |
|
|
244,867 |
|
|
383,637 |
Loss on impairment |
|
|
36,743 |
|
|
36,670 |
Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
Funds from operations |
|
$ |
(40,715) |
|
$ |
387,155 |
|
|
Three Months Ended |
||||
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March 31, |
||||
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2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Adjusted funds from operations |
|
|
|
|
|
|
Funds from operations |
|
$ |
(40,715) |
|
$ |
387,155 |
Amortization of above market leases |
|
|
27,343 |
|
|
69,583 |
Amortization of below market leases |
|
|
(100,361) |
|
|
(95,617) |
Straight line rent |
|
|
(48,899) |
|
|
(14,921) |
Capital expenditures |
|
|
(647,690) |
|
|
(366,059) |
(Increase) decrease in fair value of interest rate cap |
|
|
39,868 |
|
|
(91,042) |
Amortization of loan issuance costs |
|
|
26,990 |
|
|
28,118 |
Amortization of preferred stock discount and offering costs |
|
|
58,804 |
|
|
53,923 |
Share-based compensation |
|
|
— |
|
|
233,100 |
Bad debt expense |
|
|
27,122 |
|
|
12,783 |
Adjusted Funds from operations (AFFO) |
|
$ |
(657,538) |
|
$ |
217,023 |
Brent Winn Medalist Diversified REIT, Inc. brent.winn@medalistprop.com Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022
Exhibit 99.2
Financial Supplement
Table of Contents
Definitions
Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for the three months ended March 31, 2023 and 2022
NOI Reconciliations for the three months ended March 31, 2023 and 2022
Same Property NOI Reconciliation for the three months ended March 31, 2023 and 2022
EBITDA Reconciliations for the three months ended March 31, 2023 and 2022
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, earnings before interest, taxes, depreciation and amortization for real estate ("EBITDA"), Funds from operations (“FFO”) and Adjusted FFO (“AFFO”).
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, EBITDA, and FFO and AFFO, 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 Quarterly Report on Form 10-Q for the three months ended March 31, 2023.
• 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, non-GAAP measures, are 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, 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
Condensed Consolidated Balance Sheets
|
|
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March 31, 2023 |
|
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December 31, 2022 |
|
|
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(Unaudited) |
|
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|
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ASSETS |
|
|
|
|
|
|
|
Investment properties, net |
|
$ |
76,242,506 |
|
$ |
76,514,952 |
|
Cash |
|
|
3,048,100 |
|
|
3,922,136 |
|
Restricted cash |
|
|
1,937,265 |
|
|
1,740,717 |
|
Rent and other receivables, net of allowance of $62,960 and $47,109, as of March 31, 2023 and December 31, 2022, respectively |
|
|
290,836 |
|
|
402,434 |
|
Unbilled rent |
|
|
1,069,860 |
|
|
1,022,153 |
|
Intangible assets, net |
|
|
3,449,600 |
|
|
3,748,706 |
|
Other assets |
|
|
497,510 |
|
|
564,306 |
|
Total Assets |
|
$ |
86,535,677 |
|
$ |
87,915,404 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
1,547,240 |
|
$ |
1,198,072 |
|
Intangible liabilities, net |
|
|
2,133,752 |
|
|
2,234,113 |
|
Mortgages payable, net |
|
|
61,065,672 |
|
|
61,340,259 |
|
Mandatorily redeemable preferred stock, net |
|
|
4,509,325 |
|
|
4,450,521 |
|
Total Liabilities |
|
$ |
69,255,989 |
|
$ |
69,222,965 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Common stock, 17,758,421 and 17,758,421 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively |
|
$ |
177,584 |
|
$ |
177,584 |
|
Additional paid-in capital |
|
|
51,363,812 |
|
|
51,363,812 |
|
Offering costs |
|
|
(3,350,946) |
|
|
(3,350,946) |
|
Accumulated deficit |
|
|
(32,337,125) |
|
|
(30,939,020) |
|
Total Stockholders' Equity |
|
|
15,853,325 |
|
|
17,251,430 |
|
Noncontrolling interests - Hanover Square Property |
|
|
126,185 |
|
|
127,426 |
|
Noncontrolling interests - Parkway Property |
|
|
462,318 |
|
|
470,685 |
|
Noncontrolling interests - Operating Partnership |
|
|
837,860 |
|
|
842,898 |
|
Total Equity |
|
$ |
17,279,688 |
|
$ |
18,692,439 |
|
Total Liabilities and Equity |
|
$ |
86,535,677 |
|
$ |
87,915,404 |
|
See notes to condensed consolidated financial statements
Medalist Diversified REIT, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
Three Months Ended |
|
||||
|
|
March 31, |
|
||||
|
|
2023 |
|
2022 |
|
||
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
Retail center property revenues |
|
$ |
1,891,679 |
|
$ |
1,525,085 |
|
Flex center property revenues |
|
|
569,297 |
|
|
613,390 |
|
Hotel property room revenues |
|
|
— |
|
|
762,200 |
|
Hotel property other revenues |
|
|
— |
|
|
3,289 |
|
Total Revenue |
|
$ |
2,460,976 |
|
$ |
2,903,964 |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
Retail center property operating expenses |
|
$ |
520,615 |
|
$ |
450,125 |
|
Flex center property operating expenses |
|
|
176,737 |
|
|
161,381 |
|
Hotel property operating expenses |
|
|
— |
|
|
372,860 |
|
Bad debt expense |
|
|
27,122 |
|
|
12,783 |
|
Share based compensation expenses |
|
|
— |
|
|
233,100 |
|
Legal, accounting and other professional fees |
|
|
767,078 |
|
|
459,869 |
|
Corporate general and administrative expenses |
|
|
117,049 |
|
|
80,706 |
|
Loss on impairment |
|
|
36,743 |
|
|
36,670 |
|
Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
|
Depreciation and amortization |
|
|
1,156,348 |
|
|
1,155,197 |
|
Total Operating Expenses |
|
|
2,801,692 |
|
|
3,138,362 |
|
Operating loss |
|
|
(340,716) |
|
|
(234,398) |
|
Interest expense |
|
|
864,052 |
|
|
841,424 |
|
Net Loss from Operations |
|
|
(1,204,768) |
|
|
(1,075,822) |
|
Other (loss) income |
|
|
(29,038) |
|
|
95,439 |
|
Net Loss |
|
|
(1,233,806) |
|
|
(980,383) |
|
Less: Net loss attributable to Hanover Square Property noncontrolling interests |
|
|
(1,241) |
|
|
(319) |
|
Less: Net (loss) income attributable to Parkway Property noncontrolling interests |
|
|
(8,367) |
|
|
10,193 |
|
Less: Net loss attributable to Operating Partnership noncontrolling interests |
|
|
(2,903) |
|
|
(973) |
|
Net Loss Attributable to Medalist Common Shareholders |
|
$ |
(1,221,295) |
|
$ |
(989,284) |
|
|
|
|
|
|
|
|
|
Loss per share from operations - basic and diluted |
|
$ |
(0.07) |
|
$ |
(0.06) |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares - basic and diluted |
|
|
17,758,421 |
|
|
16,037,073 |
|
|
|
|
|
|
|
|
|
Dividends paid per common share |
|
$ |
0.01 |
|
$ |
0.02 |
|
See notes to condensed consolidated financial statements
Medalist Diversified REIT, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Three months ended March 31, |
||||
|
|
2023 |
|
2022 |
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(1,233,806) |
|
$ |
(980,383) |
|
|
|
|
|
|
|
Adjustments to reconcile consolidated net loss to net cash flows from operating activities |
|
|
|
|
|
|
Depreciation |
|
|
911,481 |
|
|
771,560 |
Amortization |
|
|
244,867 |
|
|
383,637 |
Loan cost amortization |
|
|
26,990 |
|
|
28,118 |
Mandatorily redeemable preferred stock issuance cost and discount amortization |
|
|
58,804 |
|
|
53,923 |
Above (below) market lease amortization, net |
|
|
(73,018) |
|
|
(26,034) |
Bad debt expense |
|
|
27,122 |
|
|
12,783 |
Share-based compensation |
|
|
— |
|
|
233,100 |
Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
Loss on impairment |
|
|
36,743 |
|
|
36,670 |
|
|
|
|
|
|
|
Changes in assets and liabilities |
|
|
|
|
|
|
Rent and other receivables, net |
|
|
84,476 |
|
|
109,000 |
Unbilled rent |
|
|
(48,899) |
|
|
(14,846) |
Other assets |
|
|
66,796 |
|
|
(128,599) |
Accounts payable and accrued liabilities |
|
|
349,168 |
|
|
38,263 |
Net cash flows from operating activities |
|
|
450,724 |
|
|
692,863 |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(647,690) |
|
|
(366,059) |
Net cash flows from investing activities |
|
|
(647,690) |
|
|
(366,059) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and distributions paid |
|
|
(178,945) |
|
|
(341,521) |
Repayment of mortgages payable |
|
|
(301,577) |
|
|
(192,257) |
Proceeds from sales of common stock, net of capitalized offering costs |
|
|
— |
|
|
1,188,574 |
Repurchases of common stock, including costs and fees |
|
|
— |
|
|
(286,543) |
Net cash flows from financing activities |
|
|
(480,522) |
|
|
368,253 |
|
|
|
|
|
|
|
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
(677,488) |
|
|
695,057 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
|
5,662,853 |
|
|
7,383,977 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
|
$ |
4,985,365 |
|
$ |
8,079,034 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period, shown in condensed consolidated balance sheets |
|
|
3,048,100 |
|
|
4,629,945 |
RESTRICTED CASH including assets restricted for capital and operating reserves and tenant deposits, end of period, shown in condensed consolidated balance sheets |
|
|
1,937,265 |
|
|
3,449,089 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period shown in the condensed consolidated statements of cash flows |
|
$ |
4,985,365 |
|
$ |
8,079,034 |
|
|
|
|
|
|
|
Supplemental Disclosures and Non-Cash Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other cash transactions: |
|
|
|
|
|
|
Interest paid |
|
$ |
796,268 |
|
$ |
682,456 |
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements
Medalist Diversified REIT
Funds from Operations and Adjusted Funds from Operations
For the three months ended March 31, 2023 and 2022
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Funds from operations |
|
|
|
|
|
|
Net loss |
|
$ |
(1,233,806) |
|
$ |
(980,383) |
Depreciation of tangible real property assets |
|
|
674,398 |
|
|
602,845 |
Depreciation of tenant improvements |
|
|
205,153 |
|
|
148,924 |
Amortization of leasing commissions |
|
|
31,930 |
|
|
19,791 |
Amortization of intangible assets |
|
|
244,867 |
|
|
383,637 |
Loss on impairment |
|
|
36,743 |
|
|
36,670 |
Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
Funds from operations |
|
$ |
(40,715) |
|
$ |
387,155 |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Adjusted funds from operations |
|
|
|
|
|
|
Funds from operations |
|
$ |
(40,715) |
|
$ |
387,155 |
Amortization of above market leases |
|
|
27,343 |
|
|
69,583 |
Amortization of below market leases |
|
|
(100,361) |
|
|
(95,617) |
Straight line rent |
|
|
(48,899) |
|
|
(14,921) |
Capital expenditures |
|
|
(647,690) |
|
|
(366,059) |
(Increase) decrease in fair value of interest rate cap |
|
|
39,868 |
|
|
(91,042) |
Amortization of loan issuance costs |
|
|
26,990 |
|
|
28,118 |
Amortization of preferred stock discount and offering costs |
|
|
58,804 |
|
|
53,923 |
Share-based compensation |
|
|
— |
|
|
233,100 |
Bad debt expense |
|
|
27,122 |
|
|
12,783 |
Adjusted Funds from operations (AFFO) |
|
$ |
(657,538) |
|
$ |
217,023 |
NOI Reconciliation
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Net Operating Income |
|
|
|
|
|
|
Net Loss |
|
$ |
(1,233,806) |
|
$ |
(980,383) |
Plus: Preferred dividends, including amortization of capitalized issuance costs |
|
|
158,804 |
|
|
153,923 |
Plus: Legal, accounting and other professional fees |
|
|
767,078 |
|
|
459,869 |
Plus: Corporate general and administrative expenses |
|
|
117,049 |
|
|
80,706 |
Plus: Depreciation expense |
|
|
911,481 |
|
|
771,560 |
Plus: Amortization of intangible assets |
|
|
244,867 |
|
|
383,637 |
Less: Net amortization of above and below market leases |
|
|
(73,018) |
|
|
(26,034) |
Plus: Interest expense, including amortization of capitalized loan issuance costs |
|
|
705,248 |
|
|
687,501 |
Plus: Share based compensation expense |
|
|
— |
|
|
233,100 |
Plus: Loss on impairment |
|
|
36,743 |
|
|
36,670 |
Plus: Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
Less: Other income (loss) |
|
|
29,038 |
|
|
(95,439) |
Net Operating Income - NOI |
|
$ |
1,663,484 |
|
$ |
1,880,781 |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Components of Net Operating Income |
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
Retail and flex property rental revenues (1) |
|
$ |
2,012,716 |
|
$ |
1,775,616 |
Retail and flex property tenant reimbursement revenues |
|
|
375,242 |
|
|
336,825 |
Hotel property revenues |
|
|
— |
|
|
765,489 |
Total revenues |
|
|
2,387,958 |
|
|
2,877,930 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Retail and flex property operating expenses |
|
|
697,352 |
|
|
611,506 |
Hotel property operating expenses |
|
|
— |
|
|
372,860 |
Bad debt expense |
|
|
27,122 |
|
|
12,783 |
Total operating expenses |
|
|
724,474 |
|
|
997,149 |
|
|
|
|
|
|
|
Net Operating Income - NOI |
|
$ |
1,663,484 |
|
$ |
1,880,781 |
| (1) | Excludes amortization of above and below market leases. |
Same Property NOI Reconciliation
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
All Properties |
|
|
|
|
|
|
Same property NOI |
|
$ |
1,508,255 |
|
$ |
1,488,152 |
NOI of acquired properties (1) |
|
|
155,229 |
|
|
— |
NOI of disposed properties (2) |
|
|
— |
|
|
392,629 |
Total NOI (3) |
|
$ |
1,663,484 |
|
$ |
1,880,781 |
| (1) | Salisbury Marketplace |
| (2) | Clemson Hotel |
| (3) | Excludes net amortization of above and below market leases. |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Retail Properties |
|
|
|
|
|
|
Same retail property NOI |
|
$ |
1,156,090 |
|
$ |
1,064,536 |
NOI of acquired retail properties (1) |
|
|
155,229 |
|
|
— |
Total retail property NOI (2) |
|
$ |
1,311,319 |
|
$ |
1,064,536 |
| (1) | Salisbury Marketplace |
| (2) | Excludes net amortization of above and below market leases. |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Flex Properties |
|
|
|
|
|
|
Same flex property NOI |
|
$ |
352,165 |
|
$ |
423,616 |
Total flex property NOI (1) |
|
$ |
352,165 |
|
$ |
423,616 |
| (1) | Excludes net amortization of above and below market leases. |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Hotel Properties |
|
|
|
|
|
|
NOI of disposed hotel properties (1) |
|
$ |
— |
|
$ |
392,629 |
Total hotel property NOI |
|
$ |
— |
|
$ |
392,629 |
| (1) | Clemson Hotel |
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
Same Property Retail & Flex NOI Reconciliation |
|
|
|
|
|
|
Same property retail and flex NOI |
|
$ |
1,508,255 |
|
$ |
1,488,152 |
NOI of newly acquired retail and flex properties (1) |
|
|
155,229 |
|
|
— |
Total NOI (2) |
|
$ |
1,663,484 |
|
$ |
1,488,152 |
| (1) | Salisbury Marketplace |
| (2) | Excludes net amortization of above and below market leases. |
EBITDA Reconciliation
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
|
(Unaudited) |
||
EBITDA |
|
|
|
|
|
|
Net Loss |
|
$ |
(1,233,806) |
|
$ |
(980,383) |
Plus: Preferred dividends, including amortization of capitalized issuance costs |
|
|
158,804 |
|
|
153,923 |
Plus: Interest expense, including amortization of capitalized loan issuance costs |
|
|
705,248 |
|
|
687,501 |
Plus: Depreciation expense |
|
|
911,481 |
|
|
771,560 |
Plus: Amortization of intangible assets |
|
|
244,867 |
|
|
383,637 |
Less: Net amortization of above and below market leases |
|
|
(73,018) |
|
|
(26,034) |
Plus: Loss on impairment |
|
|
36,743 |
|
|
36,670 |
Plus: Impairment of assets held for sale |
|
|
— |
|
|
175,671 |
EBITDA |
|
$ |
750,319 |
|
$ |
1,202,545 |
Same Property Revenues
|
|
Three Months Ended |
|
|
||||||||
|
|
March 31, |
|
|
||||||||
|
|
2023 |
|
2022 |
|
|
|
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
Change ($) |
|
Change (%) |
||||
All Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Same property revenues |
|
$ |
2,221,242 |
|
$ |
2,138,475 |
|
$ |
82,767 |
|
|
3.9% |
Revenues of acquired properties (1) |
|
|
239,734 |
|
|
— |
|
|
239,734 |
|
|
|
Revenues of disposed properties (2) |
|
|
— |
|
|
765,489 |
|
|
(765,489) |
|
|
|
Total revenues (3) |
|
$ |
2,460,976 |
|
$ |
2,903,964 |
|
$ |
(442,988) |
|
|
(15.3)% |
| (1) | Salisbury Marketplace |
| (2) | Clemson Hotel |
| (3) | Includes net amortization of above and below market leases. |
|
|
Three Months Ended |
|
|
||||||||
|
|
March 31, |
|
|
||||||||
|
|
2023 |
|
2022 |
|
|
|
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
Change ($) |
|
Change (%) |
||||
Retail Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Same retail property revenues |
|
$ |
1,651,945 |
|
$ |
1,525,085 |
|
$ |
126,860 |
|
|
8.3% |
Revenues of acquired retail properties (1) |
|
|
239,734 |
|
|
— |
|
|
239,734 |
|
|
|
Total retail property revenues (2) |
|
$ |
1,891,679 |
|
$ |
1,525,085 |
|
$ |
366,594 |
|
|
24.0% |
| (1) | Salisbury Marketplace |
| (2) | Includes net amortization of above and below market leases. |
|
|
Three Months Ended |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
||||||||
|
|
2023 |
|
2022 |
|
|
|
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
Change ($) |
|
Change (%) |
||||
Flex Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Same flex property revenues |
|
$ |
569,297 |
|
$ |
613,390 |
|
$ |
(44,093) |
|
|
(7.2)% |
Total flex property revenues (1) |
|
$ |
569,297 |
|
$ |
613,390 |
|
$ |
(44,093) |
|
|
(7.2)% |
| (1) | Includes net amortization of above and below market leases. |
|
|
Three Months Ended |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
||||||||
|
|
2023 |
|
2022 |
|
|
|
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
Change ($) |
|
Change (%) |
||||
Hotel Property |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues of disposed hotel properties (1) |
|
$ |
— |
|
$ |
765,489 |
|
$ |
(765,489) |
|
$ |
(100.0)% |
Total hotel property revenues |
|
$ |
— |
|
$ |
765,489 |
|
$ |
(765,489) |
|
|
(100.0)% |
| (1) | Clemson Hotel |
Same Property Statistics – Retail and Flex Properties
Total Retail and Flex Properties
|
|
Number of Properties |
|
Total Square Feet |
|
Percent Leased |
||||||||||||
|
|
As of March 31, |
|
As of March 31, |
|
As of March 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Retail |
|
|
5 |
|
|
4 |
|
|
633,013 |
|
|
553,281 |
|
|
97.5% |
|
|
94.8% |
Flex |
|
|
3 |
|
|
3 |
|
|
218,269 |
|
|
218,269 |
|
|
94.4% |
|
|
94.6% |
Total |
|
|
8 |
|
|
7 |
|
|
851,282 |
|
|
771,550 |
|
|
96.7% |
|
|
94.0% |
Retail and Flex - Same Properties
|
|
Number of Properties |
|
Total Square Feet |
|
Percent Leased |
||||||||||||
|
|
As of March 31, |
|
As of March 31, |
|
As of March 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Retail |
|
|
4 |
|
|
4 |
|
|
553,281 |
|
|
553,281 |
|
|
98.8% |
|
|
94.8% |
Flex |
|
|
3 |
|
|
3 |
|
|
218,269 |
|
|
218,269 |
|
|
94.4% |
|
|
94.6% |
Total |
|
|
7 |
|
|
7 |
|
|
771,550 |
|
|
771,550 |
|
|
97.5% |
|
|
94.0% |
Weighted Average Lease Term
Retail Properties |
|
|
|
Ashley Plaza |
|
|
6.01 |
Franklin Square |
|
|
4.42 |
Hanover Square |
|
|
3.49 |
Lancer Center |
|
|
3.87 |
Salisbury Marketplace |
|
|
5.34 |
Retail Property Average |
|
|
4.68 |
|
|
|
|
Flex Properties |
|
|
|
Brookfield |
|
|
2.76 |
Greenbrier Business Center |
|
|
2.23 |
Parkway |
|
|
2.52 |
Flex Property Average |
|
|
2.47 |
|
|
|
|
Retail and Flex Property Average |
|
|
4.12 |
Weighted Average Debt Data
Weighted Average Mortgage Maturity (Years) |
|
|
5.84 |
|
|
|
|
Weighted Average Mortgage Payable Interest Rate |
|
|
4.1% |