Medalist Diversified REIT(MDRR) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Medalist Diversified REIT, Inc. for the first quarter of 2025 and 2024, along with accompanying notes Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $78,230 thousand from $75,098 thousand at year-end 2024, primarily due to a rise in investment properties, while total liabilities decreased and total equity increased significantly Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2025 (Unaudited) ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Assets | | | | Investment properties, net | $68,705 | $64,424 | | Cash | $2,744 | $4,776 | | Assets held for sale | $397 | $0 | | Total Assets | $78,230 | $75,098 | | Liabilities | | | | Mortgages payable, net | $49,756 | $50,001 | | Mandatorily redeemable preferred stock, net | $0 | $1,488 | | Total Liabilities | $52,384 | $54,095 | | Equity | | | | Total Stockholders' Equity | $13,991 | $15,033 | | Noncontrolling interests - Operating Partnership | $11,453 | $5,555 | | Total Equity | $25,845 | $21,002 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, the company reported a net loss of ($1,027 thousand), a significant shift from a net income of $1,933 thousand in Q1 2024, primarily due to the absence of a large gain on property disposal Q1 2025 vs. Q1 2024 Statement of Operations | Metric | Q1 2025 (Unaudited) ($ thousands) | Q1 2024 (Unaudited) ($ thousands) | | :--- | :--- | :--- | | Total Revenue | $2,322 | $2,572 | | Total Operating Expenses | $2,865 | $2,575 | | Gain on disposal of investment property | $0 | $2,820 | | Operating (Loss) Income | ($553) | $2,765 | | Net (Loss) Income | ($1,027) | $1,933 | | Net (Loss) Income Attributable to Common Stockholders | ($1,007) | $1,357 | | Loss per common share - basic and diluted | ($0.74) | - | | Earnings per common share - diluted | - | $1.21 | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash from operating activities was $460 thousand, while investing activities used $227 thousand and financing activities used $2,067 thousand, resulting in a net cash decrease of $1,835 thousand Q1 2025 vs. Q1 2024 Cash Flow Summary | Cash Flow Activity | Q1 2025 (Unaudited) ($ thousands) | Q1 2024 (Unaudited) ($ thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | $460 | $492 | | Net cash flows from investing activities | ($227) | $2,738 | | Net cash flows from financing activities | ($2,067) | ($1,904) | | Net (Decrease) Increase in Cash | ($1,835) | $1,327 | - Key non-cash investing activities in Q1 2025 included the issuance of $5,765 thousand in Operating Partnership (OP) units for the acquisition of the Buffalo Wild Wings and United Rentals properties[16] Notes to Condensed Consolidated Financial Statements The notes detail the company's structure, accounting policies, and significant Q1 2025 transactions, including STNL property acquisitions, preferred stock redemption, and an impairment loss - As of March 31, 2025, the company owned 12 developed properties: 4 retail centers, 3 flex centers, and 5 single tenant net lease (STNL) properties[18] - In Q1 2025, the company acquired the Buffalo Wild Wings Property for $2,620 thousand and the United Rentals Property for $3,145 thousand, both paid for by issuing OP Units to related parties[93][94] - On January 10, 2025, the company completed the final redemption of its remaining 60,000 shares of mandatorily redeemable preferred stock for $1,500 thousand, resulting in a loss on redemption of $9,375[111] - The company recorded a loss on impairment of $61,803 in Q1 2025 due to early lease terminations by three tenants, which involved writing off tenant improvements, capitalized leasing commissions, and unbilled rent[43][44][46] - Subsequent to the quarter end, on April 28, 2025, the company terminated its $4,000 thousand Expanded Wells Fargo Line of Credit[123][182] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial condition and results of operations for Q1 2025, highlighting strategic focus, property acquisitions, preferred stock redemption, and the shift to a net loss, while also providing non-GAAP measures - The company's current primary focus is on managing its legacy retail and flex-industrial portfolio, expanding its STNL portfolio, and implementing a Delaware Statutory Trust (DST) investment offering program[190] - In Q1 2025, the company acquired the United Rentals Property and the Buffalo Wild Wings Property, both from entities controlled by the company's CEO, Frank Kavanaugh, with transactions approved by the Audit Committee as arms-length[197][198][199] - On April 9, 2025, the company filed a new S-3 "shelf" registration statement, allowing it to issue up to $100,000 thousand of Common Shares over the next three years[203] Q1 2025 vs Q1 2024 Revenue Breakdown | Revenue Source | Q1 2025 (Unaudited) ($ thousands) | Q1 2024 (Unaudited) ($ thousands) | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Retail center property | $1,492 | $1,850 | ($358) | | Flex center property | $681 | $664 | $17 | | STNL property | $149 | $58 | $91 | | Total Revenues | $2,322 | $2,572 | ($250) | FFO and AFFO Reconciliation | Metric | Q1 2025 (Unaudited) ($ thousands) | Q1 2024 (Unaudited) ($ thousands) | | :--- | :--- | :--- | | Net (loss) income | ($1,027) | $1,933 | | Funds from operations (FFO) | $10 | $178 | | Adjusted funds from operations (AFFO) | $217 | $230 | Quantitative and Qualitative Disclosures about Market Risk This section has been omitted as the company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company - As a smaller reporting company, Medalist Diversified REIT, Inc. is not required to provide quantitative and qualitative disclosures about market risk[276] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of March 31, 2025 - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[278] - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2025, based on the COSO framework (2013)[279] PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material litigation, nor is it aware of any threatened material litigation - The company reports no material legal proceedings and is not aware of any threatened litigation that would have a material adverse effect on its financial condition[282] Risk Factors No material changes to risk factors were reported, except for a new risk concerning the potential impact of tariffs and trade restrictions on the company's tenants and business - A new material risk factor has been added regarding the potential negative impact of tariffs and trade restrictions on tenants' operations, which could affect occupancy rates, rental income, and cash flows[285] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities in Q1 2025, but repurchased 8,490 common shares for $106,624, with 103,175 shares remaining available under the program Issuer Purchases of Equity Securities (Q1 2025) | Period | Shares Purchased | Average Price Paid ($) | Total Shares Purchased as Part of Program ($) | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $0.00 | 0 | | Feb 2025 | 5,660 | $12.30 | 5,660 | | Mar 2025 | 2,830 | $13.00 | 2,830 | | Total | 8,490 | $12.56 | 8,490 | - As of March 31, 2025, 103,175 shares remained available for repurchase under the Board-approved plans[291] Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None[293] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[294] Other Information No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during Q1 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[295] Exhibits This section lists the exhibits filed with the quarterly report, including amendments to agreements and certifications by the CEO and CFO