Medalist Diversified REIT(MDRR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company presents its unaudited condensed consolidated financial statements for the period ended June 30, 2025, showing a net loss primarily due to the absence of a prior year property disposal gain Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $77.7 million from $75.1 million, driven by assets held for sale and new intangible assets, while liabilities decreased and equity rose due to noncontrolling interests Condensed Consolidated Balance Sheet Highlights (as of June 30, 2025 vs. Dec 31, 2024) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $77,657,148 | $75,097,702 | | Investment properties, net | $59,850,435 | $64,424,038 | | Cash | $1,950,829 | $4,776,021 | | Assets held for sale | $9,432,904 | $— | | Total Liabilities | $52,336,339 | $54,095,456 | | Mortgages payable, net | $43,509,578 | $50,001,062 | | Liabilities associated with assets held for sale | $6,545,968 | $— | | Mandatorily redeemable preferred stock, net | $— | $1,488,221 | | Total Equity | $25,320,809 | $21,002,246 | | Total Stockholders' Equity | $13,409,060 | $15,032,607 | | Noncontrolling interests - Operating Partnership | $11,520,923 | $5,554,770 | Condensed Consolidated Statements of Operations For the six months ended June 30, 2025, the company reported a net loss of $1.42 million, a significant shift from a net income of $1.43 million in 2024, primarily due to the absence of a property disposal gain Statement of Operations Summary (Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Total Revenue | $4,786,813 | $4,872,795 | | Total Operating Expenses | $5,123,597 | $4,659,925 | | Gain on disposal of investment property | $— | $2,819,502 | | Operating Income (Loss) | ($373,225) | $2,980,535 | | Net (Loss) Income | ($1,420,262) | $1,434,227 | | Net (Loss) Income Attributable to Common Stockholders | ($1,525,485) | $835,696 | | Loss per common share - basic and diluted | ($1.13) | $0.75 (EPS) | Statement of Operations Summary (Three Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Total Revenue | $2,465,173 | $2,301,156 | | Operating Income (Loss) | $241,506 | $215,775 | | Net (Loss) Income | ($331,163) | ($498,674) | | Net (Loss) Income Attributable to Common Stockholders | ($456,444) | ($521,702) | | Loss per common share - basic and diluted | ($0.34) | ($0.47) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities decreased, investing activities shifted to a net use of cash, and financing activities continued to use cash, resulting in an overall decrease in cash Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash flows from operating activities | $704,098 | $1,271,084 | | Net cash flows from investing activities | ($708,098) | $2,605,078 | | Net cash flows from financing activities | ($2,430,954) | ($2,221,225) | | (Decrease) Increase in Cash | ($2,434,954) | $1,654,937 | | Cash, beginning of period | $6,072,736 | $3,809,605 | | Cash, end of period | $3,637,782 | $5,464,542 | - A significant non-cash investing activity in the first six months of 2025 was the issuance of $5,765,000 in Operating Partnership (OP) units for the acquisition of the Buffalo Wild Wings and United Rentals properties[21] Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures on the company's accounting policies and financial activities, including property portfolio composition, significant acquisitions, preferred stock redemption, debt structure, and subsequent events Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategy, which includes managing its legacy portfolio, expanding its Single Tenant Net Lease portfolio, and implementing a Delaware Statutory Trust program, alongside an analysis of its financial performance and liquidity - The company's current primary focus includes managing its legacy retail and flex-industrial properties, expanding its STNL portfolio, and implementing a Delaware Statutory Trust (DST) investment offering program[211] - Subsequent to the quarter end, on July 18, 2025, the company acquired a Tesla service, sales, and delivery facility in Pensacola, FL for $14.5 million, intended as the first property for its new DST Program[216][217] FFO and AFFO Reconciliation (Six Months Ended June 30) | Metric | 2025 (unaudited) | 2024 (unaudited) | | :--- | :--- | :--- | | Net (loss) income | ($1,420,262) | $1,434,227 | | Adjustments (Depreciation, Gain on Sale, etc.) | $2,003,683 | ($2,160,408) | | Funds from operations (FFO) | $583,421 | $673,819 | | Further Adjustments (Straight line rent, Capex, etc.) | ($302,959) | ($86,284) | | Adjusted funds from operations (AFFO) | $280,462 | $587,535 | Quantitative and Qualitative Disclosures about Market Risk This section is omitted as the company qualifies as a smaller reporting company and is not required to provide such disclosures - As a smaller reporting company, Medalist Diversified REIT, Inc. is not required to provide quantitative and qualitative disclosures about market risk[313] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with no material changes reported during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[318] - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2025, based on the COSO 2013 framework[319] PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material litigation, nor is it aware of any threatened litigation that would materially impact its financial condition or results of operations - The company is not presently subject to any material litigation[322] Risk Factors The company highlights new material risks associated with its investment in bitcoin, citing market volatility and regulatory uncertainty, and risks related to its new Delaware Statutory Trust Program - A new risk factor has been added regarding the company's investment in bitcoin, citing high market volatility and regulatory uncertainty[324] - The company has identified new risks associated with its DST Program, including potential litigation, bearing the performance risk of DST properties via master leases, and reduced asset liquidity[326][327][328] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period but repurchased 2,830 common shares at an average price of $12.05 per share during the three months ended June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30, 2025 | 2,830 | $12.05 | | May 1 - May 31, 2025 | — | — | | June 1 - June 30, 2025 | — | — | | Total | 2,830 | $12.05 | Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[334] Other Information During the three months ended June 30, 2025, none of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter[336] Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, purchase and sale agreements, loan agreements, officer certifications, and XBRL data files