Medalist Diversified REIT Inc

Previous wording

The forward-looking statements contained in this Quarterly Report are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this Quarterly Report speaks only as of the date of this Quarterly Report. Factors or events that could cause our actual results to differ may emerge from time

Current wording

The forward-looking statements contained in this Quarterly Report are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this Quarterly Report speaks only as of the date of this Quarterly Report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

Previous wording

As of March 31, 2024, our company owns four retail center properties consisting of (i) the Shops at Franklin Square, a 134,239 square foot retail property located in Gastonia, North Carolina (the “Franklin Square Property”), (ii) the Ashley Plaza Shopping Center, a 156,012 square foot retail property located in Goldsboro, North Carolina (the “Ashley Plaza Property”), (iii) the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), and (iv) the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”). On March 13, 2024, our company, and its tenant in common partner, sold the Shops at Hanover Square North, a 73,440 square foot retail property located in Mechanicsville, Virginia (the “Hanover Square Shopping Center Property”). Our company owned 84% of the Hanover Square Shopping Center Property as a tenant in common with a noncontrolling owner which owned the remaining 16% interest. Our company and its tenant in common partner retained ownership of the 0.864 acre outparcel (the “Hanover Square Outparcel”). On March 25, 2024, our company purchased its tenant in common partner’s 16% interest in the Hanover Square Outparcel (see Note 3 of the accompanying notes to the condensed consolidated financial statements).

Current wording

As of June 30, 2024, our company owns four retail center properties consisting of (i) the Shops at Franklin Square, a 134,239 square foot retail property located in Gastonia, North Carolina (the “Franklin Square Property”), (ii) the Ashley Plaza Shopping Center, a 156,012 square foot retail property located in Goldsboro, North Carolina (the “Ashley Plaza Property”), (iii) the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), and (iv) the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”). On March 13, 2024, our company, and its tenant in common partner, sold the Shops at Hanover Square North, a 73,440 square foot retail property located in Mechanicsville, Virginia (the “Hanover Square Shopping Center Property”). Our company owned 84% of the Hanover Square Shopping Center Property as a tenant in common with a noncontrolling owner which owned the remaining 16% interest. Our company and its tenant in common partner retained ownership of the 0.86 acre outparcel (the “Hanover Square Outparcel”). On March 25, 2024, our company purchased its tenant in common partner’s 16% interest in the Hanover Square Outparcel (see Note 3 of the accompanying notes to the condensed consolidated financial statements).

Previous wording

Our company also owns three undeveloped parcels which are currently being marketed for use as STNL properties including (i) an outparcel at its Lancer Center Property consisting of approximately 1.8 acres (the “Lancer Outparcel”), (ii) an outparcel at its Salisbury Marketplace Property consisting of approximately 1.2 acres (the “Salisbury Outparcel”) (the exact size of the Lancer Outparcel and Salisbury Outparcel will not be determined until a user is identified), and (iii) the Hanover Square Outparcel consisting of 0.864 acres located adjacent to the Hanover Square Shopping Center.

Current wording

Our company also owns three undeveloped parcels which are currently being marketed for use as STNL properties including (i) an outparcel at its Lancer Center Property consisting of approximately 1.80 acres (the “Lancer Outparcel”), (ii) an outparcel at its Salisbury Marketplace Property consisting of approximately 1.20 acres (the “Salisbury Outparcel”) (the exact size of the Lancer Outparcel and Salisbury Outparcel will not be determined until a user is identified), and (iii) the Hanover Square Outparcel consisting of 0.86 acres located adjacent to the Hanover Square Shopping Center.

Previous wording

On March 13, 2024, our company sold the Hanover Square Shopping Center Property to an unrelated third party for a sale price of $13.0 million, less credits for repairs of $85,000, resulting in a gain on disposal of investment properties of $2,819,502 reported on our Company’s condensed consolidated statement of operations for the three months ended March 31, 2024. Our company did not report any gain or loss on the disposal of investment properties for the three months ended March 31, 2023.

Current wording

On March 13, 2024, our company sold the Hanover Square Shopping Center Property to an unrelated third party for a sale price of $13.0 million, less credits for repairs of $85,000, resulting in a gain on disposal of investment properties of $2,819,502 reported on our Company’s condensed consolidated statement of operations for the six months ended June 30, 2024. Our company did not report any gain or loss on the disposal of investment properties for the three months ended June 30, 2024 or for the three and six months ended June 30, 2023.

Previous wording

On March 28, 2024, our company completed its acquisition of the Citibank Property, a 4,350 square foot single tenant building on 0.45 acres located in Chicago, Illinois, through a wholly-owned subsidiary. The Citibank Property, built in 1954 and subsequently renovated, was 100% leased to Citibank, NA. The purchase price for the Citibank Property was $2,400,000 paid through the issuance of 417,391 Operating Partnership Units at a price of $5.75 per Operating Partnership Unit. Our company’s total investment was $2,444,454. Our company incurred $44,454 of closing costs which were capitalized and added to the tangible assets acquired.

Current wording

On March 28, 2024, our company completed its acquisition of the Citibank Property, a 4,350 square foot single tenant building on 0.45 acres located in Chicago, Illinois, through a wholly-owned subsidiary. The Citibank Property, built in 1954 and subsequently renovated, was 100% leased to Citibank, NA. The purchase price for the Citibank Property was $2,400,000 paid through the issuance of 208,695 Operating Partnership Units at a price of $11.50 per Operating Partnership Unit. Our company’s total investment was $2,444,454. Our company incurred $44,454 of closing costs which were capitalized and added to the tangible assets acquired.

Previous wording

On June 13, 2022, our company, through its wholly-owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”). As of March 31, 2024 and 2023, the Wells Fargo Line of Credit had an outstanding balance of $1,000,000 and $0, respectively. Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above daily SOFR. As of March 31, 2024 and 2023, SOFR was 5.35% and 4.3%, respectively. The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by our company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property. On May 2, 2023, our company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024. Our company is currently in discussions with Wells Fargo to extend the maturity date of the Wells Fargo Line of Credit, but there can be no assurance that we will be successful. We plan to continue to use the Wells Fargo Line of Credit for general working capital needs and to help fund future acquisitions.

Current wording

On June 13, 2022, our company, through its wholly-owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”). As of June 30, 2024 and December 31, 2023, the Wells Fargo Line of Credit had an outstanding balance of $0 and $0, respectively. Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above daily SOFR. As of June 30, 2024 and December 31, 2023, SOFR was 5.34% and 5.35%, respectively. The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by our company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property. On May 2, 2023, our company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024. On June 5, 2024, our company and Wells Fargo Bank entered into the Second Amendment to Revolving Line of Credit Note which further extended the maturity date of the Wells Fargo Line of Credit to October 7, 2024. Our company is currently in discussions with Wells Fargo to further extend the maturity date of the Wells Fargo Line of Credit, but there can be no assurance that we will be successful. We plan to continue to use the Wells Fargo Line of Credit for general working capital needs and to help fund future acquisitions.

Previous wording

On January 18, 2024, the Compensation Committee approved a grant of 15,275 Common Shares to our company’s five independent directors, a grant of 2,546 Common Shares to a consultant of our company and a grant of 38,697 Operating Partnership Units to our company’s President and CEO, under the Equity Incentive Plan. The effective date of the grants was January 18, 2024. The Common Shares granted vested immediately and are unrestricted. The Operating Partnership Units granted vest immediately but are not convertible to Common Shares until January 18, 2025. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares and Operating Partnership Units vested immediately, the fair value of the grants, or $277,500, was recorded to share based compensation expense on our company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our company’s Common Shares on the effective date of the grant.

Current wording

On January 18, 2024, the Compensation Committee approved a grant of 7,637 Common Shares to our company’s five independent directors, a grant of 1,273 Common Shares to a consultant of our company and a grant of 38,697 Operating Partnership Units to our company’s President and CEO, under the Equity Incentive Plan. The effective date of the grants was January 18, 2024. The Common Shares granted vested immediately and are unrestricted. The Operating Partnership Units granted vest immediately but are not convertible to Common Shares until January 18, 2025. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares and Operating Partnership Units vested immediately, the fair value of the grants, or $277,500, was recorded to share based compensation expense on our company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our company’s Common Shares on the effective date of the grant.

Previous wording

On October 28, 2021, our company entered into the Interest Rate Protection Transaction to limit our exposure to increases in interest rates on the variable rate mortgage loan on the Parkway Property. Under this agreement, our interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%. Effective on July 1, 2023, the interest rate index under the Interest Rate Protection Transaction automatically converted to SOFR. For the period from September 1, 2022 through March 31, 2024, the applicable index (LIBOR or SOFR), exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced our company’s net interest expense. Payments to our company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on our company’s condensed consolidated statements of operations for the years ended three months ended March 31, 2024 and 2023, respectively.

Current wording

On October 28, 2021, our company entered into the Interest Rate Protection Transaction to limit our exposure to increases in interest rates on the variable rate mortgage loan on the Parkway Property. Under this agreement, our interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%. Effective on July 1, 2023, the interest rate index under the Interest Rate Protection Transaction automatically converted to SOFR. For the period from September 1, 2022 through June 30, 2024, the applicable index (LIBOR or SOFR), exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced our company’s net interest expense. Payments to our company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on our company’s condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023, respectively.

Previous wording

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements. Below is a discussion of the accounting policies that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain. A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2, “Summary of Significant Accounting

Current wording

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements. Below is a discussion of the accounting policies that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain. A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2, “Summary of Significant Accounting Policies,” of our Condensed Consolidated Financial Statements. We believe that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Previous wording

Upon the adoption of ASC No. 842, our company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Our company assessed the criteria above with respect to our operating leases and determined that they qualify for the non-separation practical expedient. As a result, we have accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023.

Current wording

Upon the adoption of ASC No. 842, our company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Our company assessed the criteria above with respect to our operating leases and determined that they qualify for the non-separation practical expedient. As a result, we have accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on our condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023.

Previous wording

At March 31, 2024, our consolidated cash and restricted cash on hand totaled $5,136,434 compared to consolidated cash on hand of $3,809,605 at December 31, 2023. Cash from operating activities, investing activities and financing activities for the three months ended March 31, 2024 are as follows:

Current wording

At June 30, 2024, our consolidated cash and restricted cash on hand totaled $5,464,542 compared to consolidated cash on hand of $3,809,605 at December 31, 2023. Cash from operating activities, investing activities and financing activities for the six months ended June 30, 2024 are as follows:

Previous wording

During the three months ended March 31, 2024, our cash provided by operating activities was $492,441 compared to cash provided by operating activities of $450,724 for the three months ended March 31, 2023, an increase in cash provided by operating activities of $41,717.

Current wording

During the six months ended June 30, 2024, our cash provided by operating activities was $1,271,084 compared to cash provided by operating activities of $862,923 for the six months ended June 30, 2023, an increase in cash provided by operating activities of $408,161.

Previous wording

Cash flows from operating activities has two components. The first component consists of net operating loss adjusted for non-cash operating activities. During the three months ended March 31, 2024, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $493,480. During the three months ended March 31, 2023, operating activities adjusted for non-cash items resulted in net cash used in operating activities of $817. The increase of $494,297 in cash flows from operating activities for the three months ended March 31, 2024 was a result of improved net operating income from our investment properties and reduced management restructuring expenses of $241,450.

Current wording

Cash flows from operating activities has two components. The first component consists of net operating loss adjusted for non-cash operating activities. During the six months ended June 30, 2024, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $1,021,497. During the six months ended June 30, 2023, operating activities adjusted for non-cash items resulted in net cash used in operating activities of $334,789. The increase of $686,708 in cash flows from operating activities for the six months ended June 30, 2024 was a result of improved net operating income from our investment properties and reduced management restructuring expenses of $393,425.

Previous wording

The second component consists of changes in assets and liabilities. Increases in assets and decreases in liabilities result in cash used in operations. Decreases in assets and increases in liabilities result in cash provided by operations. During the three months ended March 31, 2024, net changes in asset and liability accounts resulted in $1,039 in cash used by operations. During the three months ended March 31, 2023, net changes in asset and liability accounts resulted in $451,541 in cash provided by operations. This increase of $452,580 in cash used in operations resulting from changes in assets and liabilities is a result of decreased changes in accounts payable and accrued liabilities of $412,935, decreased changes in other assets of $47,431, and decreased changes in rent and other receivables, net, of $39,244, offset by decreased changes in unbilled rent of $47,030.

Current wording

The second component consists of changes in assets and liabilities. Increases in assets and decreases in liabilities result in cash used in operations. Decreases in assets and increases in liabilities result in cash provided by operations. During the six months ended June 30, 2024, net changes in asset and liability accounts resulted in $249,587 in cash provided by operations. During the six months ended June 30, 2023, net changes in asset and liability accounts resulted in $528,134 in cash provided by operations. This decrease of $278,547 in cash provided by operations resulting from changes in assets and liabilities is a result of decreased changes in accounts payable and accrued liabilities of $408,402 and decreased changes in rent and other receivables, net, of $22,467, offset by increased changes in other assets of $123,961 and increased changes in unbilled rent of $28,361.

Previous wording

The net of (i) the $493,480 increase in cash provided by operations from the first category and (ii) the $1,039 cash used by operations from the second category results in a total increase of cash provided in operations of $492,441 for the three months ended March 31, 2024.

Current wording

The net of (i) the $1,021,497 increase in cash provided by operations from the first category and (ii) the $249,587 cash provided by operations from the second category results in a total increase of cash provided by operations of $1,271,084 for the six months ended June 30, 2024.

Previous wording

During the three months ended March 31, 2024, our cash provided by investing activities was $2,738,142, compared to cash used in investing activities of $647,690 during the three months ended March 31, 2023, an increase in cash provided by investing activities of $3,385,832.

Current wording

During the six months ended June 30, 2024, our cash provided by investing activities was $2,605,078, compared to cash used in investing activities of $740,959 during the six months ended June 30, 2023, an increase in cash provided by investing activities of $3,346,037.

Previous wording

During the three months ended March 31, 2024, cash provided by investing activities consisted of $3,110,149 in cash received from the disposal of investment properties, offset by $145,345 in investment property acquisitions, including $100,891 in cash paid for the acquisition of the noncontrolling owner’s 16% interest in the Hanover Square Outparcel and $44,454 paid in cash for closing costs related to the Citibank Property acquisition, and $226,662 in capitalized expenditures, including $29,124 in building improvements, $2,300 in site improvements, $54,963 in leasing commissions and $140,275 in tenant improvements. During the three months ended March 31, 2023, cash used in investing activities consisted of $647,690 in capitalized expenditures, including $168,464 in building improvements, $11,323 in site improvements, $90,638 in capitalized leasing commissions, and $377,265 in capitalized tenant improvements.

Current wording

During the six months ended June 30, 2024, cash provided by investing activities consisted of $3,110,149 in cash received from the disposal of investment properties, offset by $145,345 in investment property acquisitions, including $100,891 in cash paid for the acquisition of the noncontrolling owner’s 16% interest in the Hanover Square Outparcel and $44,454 paid in cash for closing costs related to the Citibank Property acquisition, and $359,726 in capitalized expenditures, including $68,500 in building improvements, $2,300 in site improvements, $80,329 in leasing commissions and $208,597 in capitalized tenant improvements. During the six months ended June 30, 2023, cash used in investing activities consisted of $740,959 in capitalized expenditures, including $185,921 in building improvements, $11,323 in site improvements, $140,076 in capitalized leasing commissions, and $399,639 in capitalized tenant improvements.

Previous wording

The non-cash investing activity for the three months ended March 31, 2024 that did not affect our cash provided by investing activities, was the issuance of $2,400,000 in Operating Partnership Units for the acquisition of the Citibank Property. There were no non-cash investing activities for the three months ended March 31, 2023.

Current wording

The non-cash investing activity for the six months ended June 30, 2024 that did not affect our cash provided by investing activities, was the issuance of $2,400,000 in Operating Partnership Units for the acquisition of the Citibank Property. The non-cash investing activity for the six months ended June 30, 2023 was the accrual of capital expenditures of $90,000.

Previous wording

During the three months ended March 31, 2024, our cash used by financing activities was $1,903,754 compared to cash used by financing activities of $480,522 during the three months ended March 31, 2023, an increase in cash used by financing activities of $1,423,232. During the three months ended March 31, 2024, our cash used by financing activities consisted of $1,000,000 to repay the line of credit, short term, $331,215 in principal payments for our company’s mortgages, $510,950 in dividends and distributions and $61,589 for the Operating Partnership Unit redemption. During the three months ended March 31, 2023, cash used in financing activities consisted of $301,577 for mortgage debt principal payments and $178,945 for dividends and distributions.

Current wording

During the six months ended June 30, 2024, our cash used by financing activities was $2,221,225 compared to cash used by financing activities of $977,118 during the six months ended June 30, 2023, an increase in cash used by financing activities of $1,244,107. During the six months ended June 30, 2024, our cash used by financing activities consisted of $1,000,000 to repay the line of credit, short term, $533,894 in principal payments for our company’s mortgages, $610,105 in dividends and distributions and $77,226 for the Operating Partnership Unit redemption. During the six months ended June 30, 2023, cash used in financing activities consisted of $597,454 for mortgage debt principal payments, $374,665 for dividends and distributions and $4,999 for the retirement of fractional shares resulting from the 2024 Reverse Stock Split.

Previous wording

The primary, non-operating liquidity needs of our company are $5,000,000 to redeem our mandatorily redeemable preferred stock in February, 2025, $54,154 to pay the dividends and distributions to our common stockholders and Operating Partnership Unit holders, $100,000 to pay the dividends to holders of our mandatorily redeemable preferred stock that were declared on April 8, 2024 and payable on April 25, 2024 to holders of record on April 22, 2024, and $612,808 in principal payments due on our mortgages payable during the remaining nine months ending December 31, 2024. In addition to liquidity required to fund these dividends and principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. Our company plans to pay these obligations through a combination of cash on hand, potential dispositions and operating cash.

Current wording

The primary, non-operating liquidity needs of our company are $5,000,000 to redeem our mandatorily redeemable preferred stock in February, 2025, $67,625 to pay the dividends and distributions to our common stockholders and Operating Partnership Unit holders, $100,000 to pay the dividends to holders of our mandatorily redeemable preferred stock that were declared on July 5, 2024 and payable on July 26, 2024 to holders of record on July 23, 2024, and $412,410 in principal payments due on our mortgages payable during the remaining six months ending December 31, 2024. In addition to liquidity required to fund these dividends and principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. Our company plans to pay these obligations through a combination of cash on hand, potential dispositions and operating cash.

Previous wording

Total revenue was $2,571,639 for the three months ended March 31, 2024, consisting of $1,849,617 in revenues from retail center properties, $664,067 from flex center properties and $57,955 from STNL properties. Total revenues for the three months ended March 31, 2024 increased by $110,663 over the three months ended March 31, 2023, resulting from new leasing activity in our retail center and flex center properties, and the acquisition of the Citibank Property.

Current wording

Total revenue was $2,301,156 for the three months ended June 30, 2024, consisting of $1,539,792 in revenues from retail center properties, $667,235 from flex center properties and $94,129 from STNL properties. Total revenues for the three months ended June 30, 2024 decreased by $214,745 over the three months ended June 30, 2023, resulting from reduced revenues from the sale of the Hanover Square Property, but offset by increased revenues from flex center properties and STNL properties.

Previous wording

Revenues from retail center properties were $1,849,617 for the three months ended March 31, 2024, an increase of $14,244 over retail center property revenues for the three months ended March 31, 2023. Increased revenues of $33,262 from the Franklin Square Property and $22,385 from the Lancer Center Property due to new leasing activity, were offset by reduced revenues of $3,950 from the Ashley Plaza Property, and $13,341 from the Salisbury Marketplace Property, due to reduced occupancy, and reduced revenues of $24,112 due to the sale of the Hanover Square Property on March 13, 2024.

Current wording

Revenues from retail center properties were $1,539,792 for the three months ended June 30, 2024, a decrease of $307,692 from retail center property revenues for the three months ended June 30, 2023. Increased revenues of $19,999 from the Franklin Square Property and $21,986 from the Lancer Center Property due to new leasing activity and increasing rents, were offset by reduced revenues of $7,904 from the Ashley Plaza Property, and $13,437 from the Salisbury Marketplace Property, due to reduced occupancy, and reduced revenues of $328,336 due to the sale of the Hanover Square Property on March 13, 2024.

Previous wording

Revenues from STNL properties were $57,955 for the three months ended March 31, 2024, an increase of $1,649 from revenues from STNL properties for the three months ended March 31, 2023, due to a lease escalation for the T-Mobile Property and the acquisition of the Citibank Property.

Current wording

Revenues from STNL properties were $94,129 for the three months ended June 30, 2024, an increase of $37,844 from revenues from STNL properties for the three months ended June 30, 2023, due to a lease escalation for the T-Mobile Property and the acquisition of the Citibank Property.

Previous wording

Operating expenses from the flex center properties were $158,729 for the three months ended March 31, 2024, a decrease of $45,005 over flex center property operating expenses for the three months ended March 31, 2023 due to decreased operating expenses from the Greenbrier Business Center Property of $23,324, from the Parkway Property of $13,254, and from the Brookfield Center Property of $8,427.

Current wording

Operating expenses from flex center properties were $178,613 for the three months ended June 30, 2024, a decrease of $258 over flex center property operating expenses for the three months ended June 30, 2023 due to decreased operating expenses from the Greenbrier Business Center Property of $1,035, and from the Brookfield Center Property of $1,200, offset by increased operating expenses from the Parkway Property of $1,977.

Previous wording

Operating expenses for STNL properties were $7,708 for the three months ended March 31, 2024, a decrease of $20 from operating expenses from hotel properties for the three months ended March 31, 2023, due to decreased operating expenses from the T-Mobile Property offset by increased operating expenses of $94 for the East Coast Wings Property.

Current wording

Operating expenses from STNL properties were $7,801 for the three months ended June 30, 2024, an increase of $51 from operating expenses from STNL properties for the three months ended June 30, 2023, due to decreased operating expenses of $39 from the T-Mobile Property offset by increased operating expenses of $90 for the East Coast Wings Property.

Previous wording

Interest expense was $876,748 and $864,052 for the three months ended March 31, 2024 and 2023, respectively, as follows:

Current wording

Interest expense was $723,360 and $848,408 for the three months ended June 30, 2024 and 2023, respectively, as follows:

Previous wording

Total interest expense for the three months ended March 31, 2024 increased by $12,696 over the three months ended March 31, 2023. This increase was a result of increased interest of $1,401 from the Franklin Square Mortgage, $36,973 from the Parkway Mortgage, $15,144 from the Wells Fargo Line of Credit, $5,322 of amortization and preferred dividends on the Company’s mandatorily redeemable preferred stock, and $2,292 of other interest, offset by decreased interest expense from the Ashley Plaza mortgage of $976,

Current wording

Total interest expense for the three months ended June 30, 2024 decreased by $125,048 over the three months ended June 30, 2023. This decrease was a result of decreased interest of $172,749 from the sale of the Hanover Square Shopping Center Property, decreased interest expense from each of the Ashley Plaza mortgage of $2,127, the Brookfield mortgage of $911, and the Wells Fargo Mortgage Facility of $4,815, offset by increased interest from the Parkway Mortgage of $48,227, increased amortization and preferred dividends on the Company’s mandatorily redeemable preferred stock of $5,439, and increased other interest of $1,888. Interest expense above includes non-cash amortization of discounts and capitalized issuance costs related to the mandatorily redeemable preferred stock. See Note 5 of the accompanying notes to the condensed consolidated financial statements.

Previous wording

During the three months ended March 31, 2024, other income was $44,889, an increase of $34,059 from other income of $10,830 for the three months ended March 31, 2023. Other income for the three months ended March 31, 2024 consisted of $35,338 in income related to the fair value change of the interest rate cap, and interest income of $9,551. Other income for the three months ended March 31, 2023 consisted of interest income of $10,830.

Current wording

During the three months ended June 30, 2024, other income was $16,111, an increase of $44,654 from other income of $60,765 for the three months ended June 30, 2023. Other income for the three months ended June 30, 2024 consisted of $16,111 in interest income. Other income for the three months ended June 30, 2023 consisted of $52,205 in income related to the fair value change of the interest rate caps, and interest income of $8,560.

Previous wording

During the three months ended March 31, 2024, other expense was $0, a decrease of $39,868 from other expense of $39,868 for three months ended March 31,2023. Other expense for the three months ended March 31,2023 consisted of $39,868 in expense related to the fair value change of the interest rate cap.

Current wording

During the three months ended June 30, 2024, other expense was $7,200, an increase of $7,200 from other expense of $0 for the three months ended June 30,2023. Other expense for the three months ended June 30,2024 consisted of $7,200 in expense related to the fair value change of the interest rate cap.

Previous wording

Net income was $1,932,901 for the three months ended March 31, 2024, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common shareholders was $1,357,398. Net loss was $1,233,806 for the three months ended March 31, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common shareholders was $1,221,295, for the three months ended March 31, 2023.

Current wording

Net loss was $498,674 for the three months ended June 30, 2024, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to our common stockholders was $521,702. Net loss was $861,899 for the three months ended June 30, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common stockholders was $877,664, for the three months ended June 30, 2023.

Previous wording

Revenues from the flex center properties were $664,067 for the three months ended March 31, 2024, an increase of $94,770 over revenues from flex center properties for the three months ended March 31, 2023 due increased revenues from the Parkway Property of $17,423 and the Greenbrier Business Center Property of $70,080, both due to new leasing activity, and the Brookfield Center Property of $7,267.

Current wording

Revenues from flex center properties were $1,331,302 for the six months ended June 30, 2024, an increase of $149,873 over revenues from flex center properties for the six months ended June 30, 2023 due to increased revenues from the Parkway Property of $20,973 and the Greenbrier Business Center Property of $118,103, both due to new leasing activity, and the Brookfield Center Property of $10,797 due to general rent increases.

Previous wording

Total operating expenses were $2,574,544 for the three months ended March 31, 2024, consisting of $428,259 in expenses from retail center properties, $158,729 in expenses from the flex center properties, $7,708 in expenses from the STNL properties, $277,500 in share based compensation expenses, $393,078 in legal, accounting and other professional fees, $296,794 in corporate general and administrative expenses, and $1,012,476 in depreciation and amortization.

Current wording

Total operating expenses were $4,659,925 for the six months ended June 30, 2024, consisting of $833,486 in expenses from retail center properties, $337,342 in expenses from flex center properties, $15,509 in expenses from the STNL properties, $277,500 in share based compensation expenses, $679,574 in legal, accounting and other professional fees, $510,739 in corporate general and administrative expenses, and $2,005,775 in depreciation and amortization.

Previous wording

Operating expenses for retail center properties were $428,259 for the three months ended March 31, 2024, a decrease of $84,753 from retail center property operating expenses for the three months ended March 31, 2023. Decreased operating expenses in all of the Company’s properties, including $22,300 from the Salisbury Property, $811 from the Hanover Square Property, $21,851 from the Franklin Square Property, $21,327 from the Ashley Plaza Property, and $18,464 from the Lancer Center Property, primarily from the elimination of the asset management fees paid by the properties to our company’s former Manager.

Current wording

Operating expenses for retail center properties were $833,486 for the six months ended June 30, 2024, a decrease of $213,479 from retail center property operating expenses for the six months ended June 30, 2023. Operating expenses decreased for all of our company’s properties, including $58,045 from the Salisbury Property, $60,544 from the Hanover Square Property, $38,019 from the Franklin Square Property, $19,827 from the Ashley Plaza Property, and $37,044 from the Lancer Center Property, primarily from the elimination of the asset management fees paid by the properties to our company’s former Manager.

Previous wording

(1)Includes bad debt expense of $0 and $125 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(3)Includes bad debt expense of $0 and $16,370 for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Operating income for the three months ended March 31, 2024 was $2,764,760, an increase of $3,105,476 from the operating loss of $340,716 for the three months ended March 31, 2023. This increase was a result of increased investment property operating income of $240,441, decreased legal, accounting and other professional fees of $132,550, decreased management restructuring expenses of $241,450, decreased loss on impairment of $36,743, and decreased depreciation and amortization expenses of $143,872, offset by increased share based compensation expenses of $277,500, and increased corporate general and administrative expenses of $179,745**.**

Current wording

Operating income for the six months ended June 30, 2024 was $2,980,536, an increase of $3,395,508 from the operating loss of $414,972 for the six months ended June 30, 2023. This increase was a result of increased investment property operating income of $154,629, decreased legal, accounting and other professional fees of $311,126, decreased management restructuring expenses of $393,425, decreased loss on impairment of $50,859, and decreased depreciation and amortization expenses of $303,823, offset by increased share based compensation expenses of $277,500, and increased corporate general and administrative expenses of $308,519**.**

Previous wording

Net income for the three months ended March 31, 2024 increased by $3,166,707 over the net loss from the three months ended March 31, 2023, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to Medalist common shareholders for the three months ended March 31, 2024 increased by $2,578,693 over the net loss from the three months ended March 31, 2023.

Current wording

Net income for the six months ended June 30, 2024 increased by $3,529,932 over the net loss from the six months ended June 30, 2023, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to Medalist common stockholders for the six months ended June 30, 2024 increased by $2,934,655 over the net loss from the six months ended June 30, 2023.

Previous wording

NAREIT’s December 2018 White Paper states, “FFO of a REIT includes the FFO of all consolidated properties, including consolidated, partially owned affiliates”. Additionally, since the adjustments to GAAP net income, such as depreciation and amortization, used in the reconciliation of net income (loss) to determine FFO are not allocated between shareholders and noncontrolling interests (i.e. 100% of depreciation and amortization are “added back” without reduction to reflect the noncontrolling owners’ interest in such items), our company believes that the appropriate starting point for the calculation is the net income (loss) before allocation to noncontrolling interests. This allows our company to use FFO as a tool to measure the overall performance of its investment properties, as a whole, not just the portion of the investment properties controlled by our company’s shareholders.

Current wording

NAREIT’s December 2018 White Paper states, “FFO of a REIT includes the FFO of all consolidated properties, including consolidated, partially owned affiliates”. Additionally, since the adjustments to GAAP net income, such as depreciation and amortization, used in the reconciliation of net income (loss) to determine FFO are not allocated between stockholders and noncontrolling interests (i.e. 100% of depreciation and amortization are “added back” without reduction to reflect the noncontrolling owners’ interest in such items), our company believes that the appropriate starting point for the calculation is the net income (loss) before allocation to noncontrolling interests. This allows our company to use FFO as a tool to measure the overall performance of its investment properties, as a whole, not just the portion of the investment properties controlled by our company’s stockholders.

Previous wording

Below is our company’s FFO, which is a non-GAAP measurement, for the three months ended March 31, 2024 and 2023:

Current wording

Below is our company’s FFO, which is a non-GAAP measurement, for the six months ended June 30, 2024 and 2023:

Previous wording

Total AFFO for the three months ended March 31, 2024 and 2023 was as follows:

Current wording

Total AFFO for the six months ended June 30, 2024 and 2023 was as follows: