Medalist Diversified REIT(US:MDRR)2024-05-09 20:20PART I. FINANCIAL INFORMATION Financial Statements Presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2024, showing a significant turnaround to a net income of $1.9 million primarily driven by a $2.8 million gain on the sale of an investment property Condensed Consolidated Balance Sheets As of March 31, 2024, total assets decreased to $76.0 million from $82.7 million at year-end 2023, while total liabilities decreased to $58.3 million, leading to an increase in total equity to $17.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $75,981 | $82,746 | | Total Liabilities | $58,269 | $69,016 | | Total Equity | $17,712 | $13,730 | - The decrease in assets and liabilities is mainly attributed to the sale of the Hanover Square Shopping Center, which was classified as 'Assets held for sale' ($9.7 million) and had an associated mortgage ($9.6 million) at the end of 2023838 Condensed Consolidated Statements of Operations For the first quarter of 2024, the company generated a net income attributable to common shareholders of $1.36 million, a significant improvement from a net loss of $1.22 million in Q1 2023, primarily due to a $2.82 million gain on property disposal Q1 2024 vs Q1 2023 Performance (in thousands) | Metric | Q1 2024 (Unaudited) | Q1 2023 (Unaudited) | | :--- | :--- | :--- | | Total Revenue | $2,572 | $2,461 | | Gain on disposal of investment property | $2,820 | $0 | | Operating Income (Loss) | $2,765 | ($341) | | Net Income (Loss) Attributable to Common Shareholders | $1,357 | ($1,221) | | EPS - basic | $0.61 | ($0.55) | Condensed Consolidated Statements of Cash Flows For Q1 2024, net cash from operating activities was $0.49 million, with investing activities generating $2.74 million from a property sale, while financing activities used $1.90 million, resulting in a total cash increase of $1.33 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 (Unaudited) | Q1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash from operating activities | $492 | $451 | | Net cash from investing activities | $2,738 | ($648) | | Net cash from financing activities | ($1,904) | ($481) | | Net Increase (Decrease) in Cash | $1,327 | ($677) | Notes to Condensed Consolidated Financial Statements The notes detail key financial events including the sale of Hanover Square Shopping Center for $13.0 million, generating a $2.8 million gain, and the acquisition of the Citibank Property for $2.4 million, alongside segment performance and the upcoming mandatory redemption of Series A preferred stock in February 2025 - On March 13, 2024, the company sold the Hanover Square Shopping Center Property for $13.0 million, resulting in a gain on disposal of $2,819,50292 - On March 28, 2024, the company acquired the Citibank Property from an entity controlled by its CEO, Frank Kavanaugh, for $2.4 million, paid via the issuance of 417,391 operating partnership units97148 - The company's 8.0% Series A cumulative redeemable preferred stock is mandatorily redeemable on February 19, 2025, requiring additional liquidity to fund this redemption79102 Net Operating Income (NOI) by Segment - Q1 2024 vs Q1 2023 (in thousands) | Segment | Q1 2024 NOI | Q1 2023 NOI | | :--- | :--- | :--- | | Retail center properties | $1,421 | $1,322 | | Flex center properties | $505 | $366 | | STNL properties | $50 | $49 | | Total NOI | $1,977 | $1,737 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the positive impact of the Hanover Square property sale on Q1 2024 results, covering revenue and expense trends, liquidity, future capital needs, and improved non-GAAP measures like FFO and AFFO Results of Operations In Q1 2024, revenues increased by $110,663 year-over-year to $2.6 million, driven by new leasing, while total operating expenses decreased by $227,148, leading to an operating income of $2.8 million compared to a prior-year operating loss Revenue by Segment - Q1 2024 vs Q1 2023 | Segment | Q1 2024 Revenue | Q1 2023 Revenue | Change | | :--- | :--- | :--- | :--- | | Retail center properties | $1,849,617 | $1,835,373 | $14,244 | | Flex center properties | $664,067 | $569,297 | $94,770 | | Single tenant net lease properties | $57,955 | $56,306 | $1,649 | | Total Revenues | $2,571,639 | $2,460,976 | $110,663 | - Total operating expenses decreased by $227,148 year-over-year, primarily due to the non-recurrence of $241,450 in management restructuring expenses from Q1 2023 and a $143,872 decrease in depreciation and amortization223 - Net income attributable to common shareholders for Q1 2024 was $1,357,398, an increase of $2,578,693 from the net loss of ($1,221,295) in Q1 2023237238 Liquidity and Capital Resources The company's primary liquidity sources are rental receipts and capital markets, with $3.6 million in unrestricted cash as of March 31, 2024, and a key future need being the $5.0 million preferred stock redemption in February 2025 - A primary non-operating liquidity need is the ~$5.0 million required to redeem the mandatorily redeemable preferred stock in February 2025214 - As of March 31, 2024, the company's liquidity resources include $3.6 million in unrestricted cash and a $1.5 million line of credit with a full available balance217 Funds from Operations (FFO) and Adjusted FFO (AFFO) The company presents FFO and AFFO as supplemental non-GAAP performance measures, with FFO at $178,453 and AFFO at $229,611 for Q1 2024, both significantly improved from prior-year losses FFO and AFFO Reconciliation (Non-GAAP) | Metric | Q1 2024 (Unaudited) | Q1 2023 (Unaudited) | | :--- | :--- | :--- | | Net income (loss) | $1,932,901 | ($1,233,806) | | Funds from operations (FFO) | $178,453 | ($40,715) | | Adjustments (Capital expenditures, non-cash rent, etc.) | $51,158 | ($616,823) | | Adjusted funds from operations (AFFO) | $229,611 | ($657,538) | Quantitative and Qualitative Disclosures about Market Risk The company, identifying as a smaller reporting company, has elected to omit the discussion of quantitative and qualitative disclosures about market risk, as permitted by SEC regulations - As a smaller reporting company, the company is not required to provide information for this item and has omitted it245 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and internal control over financial reporting as of March 31, 2024, concluding both were effective with no material changes reported - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective248 - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2024249 PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently involved in any material litigation or legal proceedings outside of the ordinary course of business - The company is not presently subject to any material litigation252 Risk Factors As a smaller reporting company, the company has omitted the discussion of risk factors in this quarterly report, as permitted by regulations - As a smaller reporting company, the company is not required to provide risk factor disclosures in its Form 10-Q254 Unregistered Sales of Equity Securities and Use of Proceeds The company has a share repurchase program in place, which was expanded in October 2023, but no shares were repurchased under this program during the three months ended March 31, 2024 - The company did not make any share repurchases during the three months ended March 31, 2024254 Defaults Upon Senior Securities The company reports that there were no defaults upon its senior securities during the reporting period - None reported255 Other Information During the first quarter of 2024, the company adopted a Rule 10b5-1 trading arrangement, with no directors or officers adopting, terminating, or modifying any such trading plans during the same period - During Q1 2024, the Company adopted a Rule 10b5-1 trading arrangement; no shares were purchased under this plan during the quarter257 Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including articles of incorporation, material contracts, officer certifications required by the Sarbanes-Oxley Act, and XBRL data files - Key exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents260