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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

 

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 7, 2024 (March 28, 2024)

 

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.)

 

P.O. Box 8436

Richmond, VA 23226

(Address of principal executive offices)

 

(804) 338-7708

(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))

 

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

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. ¨

Explanatory Note

 

This Form 8-K/A amends and supplements the Form 8-K filed by Medalist Diversified REIT, Inc. (the “Company”) on March 28, 2024 (the “Original Filing”) reporting the acquisition of the property known as the Citibank Property, a certain tract of real property containing a building in Chicago, Illinois, to include the historical financial statements and unaudited pro forma information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Original Filing.

 

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS.

 

(a) Financial Statements of Property Acquired

 

The following Statement of Revenues and Certain Expenses for the Citibank Property is set forth in Exhibit 99.1, which is incorporated herein by reference.

 

Report of Independent Auditor.

 

Statement of Revenues and Certain Operating Expenses for the year ended December 31, 2023.

 

Notes to Statement of Revenues and Certain Operating Expenses for the year ended December 31, 2023.

 

(b) Unaudited Pro Forma Financial Information

 

The following unaudited pro forma financial statements for the Company are set forth in Exhibit 99.2, which is incorporated herein by reference.

 

Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2023.

 

Notes to Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2023.

 

Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2023.

 

Notes to Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2023.

 

 

(c) Not applicable.

 

(d) Exhibits

Exhibit No.

 

Description

23.1

 

Consent of Cherry Bekaert LLP

99.1

 

Statement of Revenues and Certain Expenses for the Citibank Property for the year ended December 31, 2023

99.2

 

Unaudited Pro Forma Financial Information for the Company

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: May 7, 2024

By:

/s/ C. Brent Winn, Jr.

 

 

C. Brent Winn, Jr.

 

 

Chief Financial Officer

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

Medalist Diversified REIT, Inc. and Subsidiaries

Richmond, Virginia

We hereby consent to the incorporation by reference in the Registration Statement of Medalist Diversified REIT, Inc. on Form S-8 (No. 333-228674 and 333-238483) and Form S-3 (No. 333-257238) of our report dated May 7, 2024, with respect to the statement of revenues and certain operating expenses of the Citibank Property for the year ended December 31, 2023, which appears in Form 8-K/A of Medalist Diversified REIT, Inc., dated May 7, 2022.

/s/ Cherry Bekaert LLP

Richmond, Virginia

May 7, 2024


CITIBANK PROPERTY

 

 

FINANCIAL STATEMENT

 

 

Year Ended December 31, 2023

 

Table of Contents

 

 

 


Report of Independent Auditor

To the Board of Directors
of Medalist Diversified REIT, Inc.

Opinion

We have audited the accompanying statement of revenues and certain operating expenses and the related notes to the statement of revenues and certain operating expenses (the “Statement”) of Citibank Property (the “Property”), as defined in Note 1 of the Statement, for the year ended December 31, 2023.

In our opinion, the Statement referred to above present fairly, in all material respects, the revenues and certain operating expenses of the Property as of December 31, 2023, in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

The accompanying Statement was prepared as described in Note 1, for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Property’s revenues and expenses. Our opinion is not modified with respect to this matter.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Statement section of our report. We are required to be independent of the Property and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Statement

Management is responsible for the preparation and fair presentation of the Statement in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Statement that are free from material misstatement, whether due to fraud or error.

In preparing the Statement, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Property’s ability to continue as a going concern within one year after the date that the Statements is available to be issued.

Auditor’s Responsibilities for the Audit of the Statement

Our objectives are to obtain reasonable assurance about whether the Statement as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the Statement.

In performing an audit in accordance with generally accepted auditing standards, we:

Exercise professional judgment and maintain professional skepticism throughout the audit.


Identify and assess the risks of material misstatement of the Statement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the Statement.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the Statement.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Property’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

/s/ Cherry Bekaert LLP

Richmond, Virginia

May 7, 2024

 


CITIBANK PROPERTY

 

STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES

 

Year Ended December 31, 2023

 

Year ended

December 31, 2023

REVENUE

Single tenant net lease property revenues

$

128,444

Total revenues

128,444

CERTAIN OPERATING EXPENSES

Total certain operating expenses

-

Revenues in excess of certain operating expenses

$

128,444

 

See accompanying notes to statement of revenues and certain operating expenses.

  

 


 

  

Notes to Statement of Revenues and Certain Operating Expenses

 

Note 1.  Basis of Presentation

 

The accompanying statement of revenues and certain operating expenses (the “Statement”) includes the operations of the Citibank Property, a single tenant net leased property located at 3535 N. Central Avenue, Chicago, IL, 60634 (the “Property”).

 

The Statement has been prepared for the purpose of complying with Rule 8-06 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the Statement is not representative of the actual operations for the period presented, as revenues and certain operating expenses, which may not be directly attributable to the revenues and expenses expected to be incurred in the future operations of the Property, have been excluded. Such excluded items include certain legal, accounting, and interest expenses, non-cash expenses such as depreciation, amortization, and amortization of above-market and below-market leases, and interest income. Management is not aware of any material factors during the year ended December 31, 2023 that would cause the reported financial information not to be indicative of future operating results.

 

Note 2.  Nature of Business and Summary of Significant Accounting Policies

 

Basis of accounting:

 

The Statement has been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”) as determined by the Financial Accounting Standards Board Accounting Standards Codification (“ASC”).

 

Revenue recognition:

The Property’s single source of revenue is from an absolute net lease (the “Lease”) with Citibank, N.A., a national banking association (the “Tenant”).  

The Property recognizes rental revenue from the Tenant on a straight-line basis over the lease term when collectability is reasonably assured and the Tenant has taken possession or controls the physical use of the leased asset. Tenant recoveries related to reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses would be recognized as revenue in the period the applicable expenses are incurred. However, under the absolute net structure of the Lease, the Tenant is responsible for the direct payment of such expenses.  Accordingly, no such tenant recovery revenues are recorded on the Statement in connection with the lease on the Property.  

Recognition of revenues from leases is covered under Accounting Standard Update 2016-02, Leases (Topic 842) (“ASC No. 842”).  Medalist Diversified REIT, Inc. (the “Company”) adopted ASC No. 842 on January 1, 2023.  Upon the adoption of ASC No. 842, the Company elected the practical expedient that permits lessors to elect to not separate non-lease components from associated lease components if certain criteria are met.  Management assessed these criteria with respect to the operating leases related to the Property and determined they qualify for this non-separation practical expedient.  However, since there are no non-lease components under the Lease, base rent revenues are the only component of rent revenues recorded under single tenant net lease property revenues on the Statement for the year ended December 31, 2023.  

Operating expenses:

Under the terms of the Lease, the Tenant is responsible for the direct payment of all utilities, real estate taxes and repairs and maintenance costs.  In addition, the Tenant is responsible for maintaining insurance on the Property.  Accordingly, no expenses are included in the Statement.  

Income taxes:

 

As a limited liability company, the Property’s taxable income or loss is allocated to the members of RMP N. Central Ave, LLC. Therefore, no provision or liability for income taxes has been included in the financial statements.

 


Use of estimates:

 

Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenues during the reporting period to present the Statement in conformity with GAAP. Actual results could differ from those estimates.

Note 3.  Minimum Future Lease Rentals

The Lease is the only lease agreement in place with a tenant to lease space in the Property. As of December 31, 2023, the minimum future cash rents receivable under the Lease in each of the next five years and thereafter are as follows:

 

(Unaudited)

2024

$

66,257

2025

135,165

2026

137,868

2027

140,626

2028

143,438

Thereafter

371,649

Total future rents

$

995,003

Note 4.  Tenant Concentrations

 

As of December 31, 2023, the Tenant represented 100 percent of the Property’s rental revenues.

 

Note 5.  Commitments and Contingencies

 

The Property may be subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. Management believes that if any such actions arise, the ultimate settlement of these actions will not have a material adverse effect on the Property’s results of operations.  As of December 31, 2023, there were no such commitments or contingencies.  

 

Note 6.  Subsequent Events

 

As of May 7, 2024, the following event has occurred subsequent to the December 31, 2023 effective date of the accompanying Statement:  

On March 28, 2024, the Property was acquired by MDR Central Avenue, LLC, a wholly-owned subsidiary of Medalist Diversified REIT, Inc. (the “Purchaser”) from RMP 3535 N. Central Ave., LLC (the “Seller”).  The sole manager and member of the Seller is CWS BET Seattle, LP, a Delaware limited partnership, a company controlled and owned by Frank Kavanaugh, the Purchaser’s Chief Executive Officer and a member of the Purchaser’s Board of Directors.  


Exhibit 99.2

MEDALIST DIVERSIFIED REIT, INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2023

and

Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2023

Summary of Unaudited Pro Forma Consolidated Financial Statements

On March 13, 2024, Medalist Diversified REIT, Inc. (the “Company”) announced that Medalist Diversified Holdings, LP (the “Operating Partnership”), through a wholly-owned subsidiary, completed the sale of  Hanover Square North located at 7230 Bell Creek Road, Mechanicsville, Virginia 23111 (the “Hanover Square Shopping Center Property”).   The Company’s tenant-in-common partner, PMI Hanover Square, LLC, (the “Noncontrolling Owner”) also entered into the same agreement to sell its 16% tenant-in-common interest.  The Company and the Noncontrolling Owner  retained ownership of the 0.864 acre parcel of land (the “Hanover Square Outparcel”) adjacent to the Hanover Square Shopping Center Property.  

On March 25, 2024, the Company completed the acquisition of the Noncontrolling Owner’s 16% tenant-in-common interest in the Hanover Square Outparcel.

On March 28, 2024, the Company completed the acquisition of that certain tract of real property containing a building at 3535 North Central Avenue, Chicago, IL 60634 (the “Citibank Property”) from RMP 3535 N. Central Ave., LLC, a Delaware limited liability company (“RMP”).

The following unaudited pro forma consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated balance sheet of Medalist Diversified REIT, Inc. and Subsidiaries as of December 31, 2023, and the related audited consolidated statement of operations for the year ended December 31, 2023.

The following unaudited pro forma consolidated balance sheet as of December 31, 2023 has been prepared to give effect to the (i) acquisition of the Citibank Property, (ii) the disposition of the Hanover Square Shopping Center Property, and (iii) the acquisition of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel as if the three transactions had occurred on December 31, 2023.

The following unaudited pro forma consolidated statement of operations for the year ended December 31, 2023 has been prepared to give effect to the (i) acquisition of the Citibank Property, (ii) the disposition of the Hanover Square Shopping Center Property, and (iii) the acquisition of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel as if the three transactions had occurred on January 1, 2023.

These unaudited pro forma consolidated financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisition of the Citibank Property, the disposition of the Hanover Square Shopping Center Property or the acquisition of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel been consummated as of the date indicated.


Medalist Diversified REIT, Inc.

Unaudited Pro Forma Consolidated Balance Sheet

As of December 31, 2023

Pro Forma

Pro Forma

Pro Forma

Adjustments

Adjustments

Adjustments

Hanover Square

Hanover Square

Historical

Citibank Property

Shopping Center

Outparcel

Pro Forma

December 31, 2023 (a)

Acquisition (b)

Disposition (c)

NCI Acquisition (d)

December 31, 2023

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

ASSETS

Investment properties, net

$

64,577,376

$

2,298,373

(i)

$

$

44,419

(i)

$

66,920,168

Cash

2,234,603

(44,454)

(ii)

2,738,571

(i)

(100,891)

(ii)

4,827,829

Restricted cash

1,575,002

(163,913)

(ii)

1,411,089

Rent and other receivables, net of allowance

292,618

292,618

Assets held for sale

9,707,154

(9,707,154)

(iii)

Unbilled rent

1,109,782

(94,523)

(iv)

1,015,259

Intangible assets, net

2,716,546

245,837

(iii)

2,962,383

Other assets

532,935

532,935

Total Assets

$

82,746,016

$

2,499,756

$

(7,227,019)

$

(56,472)

$

77,962,281

LIABILITIES

Accounts payable and accrued liabilities

$

1,095,049

$

$

$

$

1,095,049

Intangible liabilities, net

1,865,310

99,756

(iii)

1,965,066

Line of credit, short term, net

1,000,000

1,000,000

Mortgages payable, net

50,772,773

50,772,773

Mortgages payable, net, associated with assets held for sale

9,588,888

(9,588,888)

(v)

Mandatorily redeemable preferred stock, net

4,693,575

4,693,575

Total Liabilities

$

69,015,595

$

99,756

$

(9,588,888)

$

$

59,526,463

EQUITY

Common stock

$

22,188

$

$

$

$

22,188

Additional paid-in capital

51,514,209

51,514,209

Offering costs

(3,350,946)

(3,350,946)

Accumulated deficit

(35,864,693)

2,324,839

(vi)

99,698

(iii)

(33,440,156)

Total Shareholders' Equity

12,320,758

2,324,839

99,698

14,745,295

Noncontrolling interests - Hanover Square Property

119,140

37,030

(vii)

(156,170)

(iii)

Noncontrolling interests - Parkway Property

453,203

453,203

Noncontrolling interests - Operating Partnership

837,320

2,400,000

(iv)

3,237,320

Total Equity

$

13,730,421

$

2,400,000

$

2,361,869

$

(56,472)

$

18,435,818

Total Liabilities and Equity

$

82,746,016

$

2,499,756

$

(7,227,019)

$

(56,472)

$

77,962,281

See notes to unaudited pro forma consolidated balance sheet


MEDALIST DIVERSIFIED REIT, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2023

Notes to unaudited pro forma consolidated balance sheet as of December 31, 2023

(a)Historical financial information was derived from the audited consolidated balance sheet of the Company as of December 31, 2023.

(b)Represents the impact of the acquisition of the Citibank Property as if it had occurred on December 31, 2023. The Citibank Property was acquired by MDR Central Avenue, LLC, a wholly-owned subsidiary of the Operating Partnership on March 28, 2024. The net purchase price of the property was $2,400,000 plus capitalized due diligence and closing costs of $44,454.  The purchase price was paid through the issuance of 417,391 units of the Operating Partnership (“Operating Partnership Units”) and the closing costs were paid from cash on hand.  

(i)Amounts recorded to investment properties include tangible assets acquired at closing, including land, site improvements, building and tenant improvements and are recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 805.  

(ii)The acquisition cost was funded with 417,391 Operating Partnership Units issued by the Operating Partnership.  Cash from the Company on the unaudited pro forma consolidated balance sheet as of December 31, 2023 represents closing costs paid in cash of $44,454.

(iii)Represents the fair value of lease intangibles, including leasing commissions, leases in place, below-market leases and legal and marketing costs associated with replacing existing leases, recorded at fair value in accordance with ASC 805.  

(iv)Represents 417,391 Operating Partnership Units issued by the Operating Partnership at a price of approximately $5.75 per Operating Partnership Unit.  

(c)Represents the approximate impact of the sale of the Hanover Square Shopping Center Property as if it had occurred on December 31, 2023. The Hanover Square Shopping Center Property was sold on March 13, 2024 to an unrelated third-party purchaser for $13,000,000 less $85,000 in credits for repairs.  

(i)Amounts recorded to cash include net cash proceeds from the sale attributable to the Company’s 84% ownership interest (prior to adjustments for distribution of 16% of the net proceeds to the Noncontrolling Owner) and the release of restricted cash held by the lender resulting from the repayment of the mortgage payable.  Amounts recorded to cash include adjustments for pro-rated revenues and expenses and the impact of other assets and liabilities retired as a result of the sale.  

(ii)Amounts recorded to restricted cash are the release of restricted cash held by the lender and transferred to cash on the pro forma consolidated balance sheet (unaudited).

(iii)Amounts recorded to assets held for sale include tangible assets sold at closing, including land, site improvements, buildings and tenant improvements.  As of the date of the sale, the Company and its noncontrolling partner retained the Hanover Square Outparcel which continued to be carried under investment properties, net, on the Company’s consolidated balance sheet.  (See note (d), below).  

(iv)Represents the amount of unbilled rent recorded on the Company’s consolidated balance sheet as of the date of closing.  The write-off of this amount reduced the Company’s gain on sale resulting from the transaction.  

(v)At closing, the gross proceeds of the sale were used to repay the mortgage for the Hanover Square Shopping Center Property.  The amounts recorded to mortgages payable, net, associated with assets held for sale include the outstanding principal balance of the mortgage and the write-off of unamortized issuance costs.  

(vi)Represents the approximate gain on sale from the sale of the Hanover Square Shopping Center Property, net of a loss on the extinguishment of debt recorded as a result of the repayment of the mortgage payable, attributable to the Company’s shareholders.  

(vii)Represents the approximate net impact of the allocation of income to the Noncontrolling Owner and the distribution of the Noncontrolling Owner’s share of net cash proceeds.  

Notes to unaudited pro forma consolidated balance sheet as of December 31, 2023, continued

(d)Represents the impact of the Company’s acquisition of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel as if it had occurred on December 31, 2023.  On March 25, 2024, the Company acquired the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel. The purchase price for the 16% interest was $98,411 plus closing costs of $2,480.  The purchase price and closing costs were paid from cash on hand.  

(i)Represents the Company’s acquisition cost of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel in excess of the original acquisition cost of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel.  

(ii)The acquisition cost and closing costs were funded with cash on hand of $100,891.

(iii)Represents the approximate impact of retiring the noncontrolling interest’s ownership in the Hanover Square Outparcel.  Following the sale of the Hanover Square Shopping Center Property and the acquisition of the Noncontrolling Owner’s 16% interest in the Hanover Square Outparcel, and the resolution of all post-closing adjustments, the Noncontrolling Owner’s interest will be fully redeemed.

Medalist Diversified REIT, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2023

Pro Forma

Pro Forma

Adjustments

Historical

Adjustments

Hanover Square

Pro Forma

Year Ended

Citibank Property

Shopping Center

Year Ended

December 31, 2023 (a)

Acquisition (b)

Disposition (c)

December 31, 2023

(unaudited)

(unaudited)

(unaudited)

REVENUE

Retail center property revenues

$

7,768,174

$

$

(1,354,804)

(i)

$

6,413,370

Flex center property revenues

2,504,652

2,504,652

Single tenant net lease property revenues

114,680

(i)

114,680

Total Revenue

$

10,272,826

$

114,680

$

(1,354,804)

$

9,032,702

OPERATING EXPENSES

Retail center property operating expenses

$

1,913,699

$

$

(315,076)

(ii)

$

1,598,623

Flex center property operating expenses

686,818

686,818

Single tenant net lease property expenses

(ii)

Bad debt expense

63,282

63,282

Legal, accounting and other professional fees

1,390,941

1,390,941

Corporate general and administrative expenses

484,345

484,345

Management restructuring expenses

2,066,521

2,066,521

Loss on impairment

90,221

90,221

Depreciation and amortization

4,574,163

80,712

(iii)

(280,141)

(iii)

4,374,734

Total Operating Expenses

11,269,990

80,712

(595,217)

10,755,485

Operating (Loss) Income

(997,164)

33,968

(759,587)

(1,722,783)

Interest expense

3,540,900

(707,604)

(iv)

2,833,296

Net (Loss) Income from Operations

(4,538,064)

33,968

(51,983)

(4,556,079)

Other income

49,274

49,274

Other expense

(84,564)

(84,564)

Net (Loss) Income

(4,573,354)

33,968

(51,983)

(4,506,805)

Less: Net income attributable to Hanover Square Property noncontrolling interests

7,714

(7,714)

(v)

Less: Net loss attributable to Parkway Property noncontrolling interests

(8,482)

(8,482)

Less: Net (loss) income attributable to Operating Partnership noncontrolling interests

(1,307)

5,663

(iv)

(619)

(vi)

3,737

Net (Loss) Income Attributable to Medalist Common Shareholders

$

(4,571,279)

$

28,306

$

(43,650)

$

(4,502,060)

Loss per share from operations - basic and diluted

$

(2.06)

$

(2.03)

Weighted-average number of shares - basic and diluted

2,219,149

2,219,149

Dividends paid per common share

$

0.16

$

0.16

See notes to unaudited pro forma consolidated statement of operations


MEDALIST DIVERSIFIED REIT, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

Notes to unaudited pro forma consolidated statement of operations for the year ended December 31, 2023

(a)Historical financial information was derived from the audited consolidated financial statements of the Company for the year ended December 31, 2023.

(b)Adjustments to give effect to the acquisition of the Citibank Property as if the acquisition had occurred on January 1, 2023.

(i)Represents rental revenues for the Citibank Property that would have been recognized for the year ended December 31, 2023 based on the terms of the lease with the tenant that is currently in place.  Rental revenues are presented on a straight-line basis and include an adjustment of $(13,764) in estimated net amortization of below market leases.

(ii)Under the net-lease structure of the lease with Citibank, all operating expenses, including maintenance, real estate taxes and insurance, are the responsibility of the tenant.  Accordingly, no operating expenses are projected to be incurred.  

(iii)Represents depreciation and amortization expense for the Citibank Property for the year ended December 31, 2023 as if the Company had acquired the Citibank Property on January 1, 2023.  Depreciation expense is calculated using the straight-line method over the estimated remaining useful life of 35 years for the building and 10 years for land improvements. Tenant improvements are amortized utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.  Intangible assets such as in-place lease value and other lease-related intangibles are recorded at fair value and are amortized over the remaining terms of the underlying leases.

(iv)Represents the Operating Partnership’s 16.67% weighted average noncontrolling ownership interest’s share of the Citibank Property net income that would have been recorded for the year ended December 31, 2023.  The Operating Partnership’s 16.67% weighted average reflects the issuance of 417,391 Operating Partnership Units as if they had been issued on January 1, 2023.  

(c)Adjustments to give effect to the sale of the Hanover Square Shopping Center Property on March 13, 2024 as if the disposition had occurred on January 1, 2023.   Actual operating results for the Hanover Square Shopping Center for the year ended December 31, 2023 have been removed from the pro forma statement of operations to reflect the pro forma results of the Company’s remaining portfolio for the full year ending December 31, 2023.  

(i)Represents rental revenues and tenant reimbursements for the Hanover Square Shopping Center that were recognized during the year ended December 31, 2023.  

(ii)Represents operating expenses for the Hanover Square Shopping Center that were incurred during the year ended December 31, 2023, net of real estate taxes for the Hanover Square Outparcel that was retained by the Company.  

(iii)Represents depreciation and amortization expense for the Hanover Square Shopping Center that were recorded during the year ended December 31, 2023.  

(iv)Represents the interest expense, including amortization of offering costs, that were recorded for the Hanover Square Shopping Center Property during the year ended December 31, 2023.  

(v)Represents the Noncontrolling Owner’s 16% share of the net loss from the Hanover Square Shopping Center.  

(vi)Represents the noncontrolling ownership’s 1.19% share of the net loss from the Hanover Square Shopping Center.

v3.24.1.u1
Document and Entity Information
Mar. 28, 2024
Document Information [Line Items]  
Document Type 8-K/A
Amendment Flag false
Document Period End Date Mar. 28, 2024
Entity File Number 001-38719
Entity Registrant Name Medalist Diversified REIT, Inc.
Entity Central Index Key 0001654595
Entity Incorporation, State or Country Code MD
Entity Tax Identification Number 47-5201540
Entity Address State Or Province VA
Entity Address, Address Line One P.O. Box 8436
Entity Address, City or Town Richmond
Entity Address, Postal Zip Code 23226
City Area Code 804
Local Phone Number 338-7708
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Common Stock [Member]  
Document Information [Line Items]  
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol MDRR
Security Exchange Name NASDAQ
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value  
Document Information [Line Items]  
Title of 12(b) Security 8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value
Trading Symbol MDRRP
Security Exchange Name NASDAQ

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