Medalist Diversified REIT Inc

Previous wording

The U.S. Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. We have used the words “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” and similar terms and phrases to identify forward-looking statements in this Quarterly Report.

Current wording

The U.S. Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including, but not limited to, statements relating to our business activities, financing sources, liquidity, redemption of our mandatorily redeemable preferred stock and strategy. We have used the words “approximately,” “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” and similar terms and phrases to identify forward-looking statements in this Quarterly Report.

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 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.

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 laws.

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 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.

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 nine months ended September 30, 2024. Our company did not report any gain or loss on the disposal of investment properties for the three months ended September 30, 2024 or for the three and nine months ended September 30, 2023.

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 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.

Current wording

On June 13, 2022, our company, through its wholly-owned subsidiaries, entered into a loan agreement with Wells Fargo Bank, National Association for a $1,500,000 line of credit (the “Original Wells Fargo Line of Credit”). On May 2, 2023, our company and Wells Fargo Bank, National Association entered into the First Amendment to the Revolving Line of Credit Note which extended the maturity date of the Original Wells Fargo Line of Credit to June 9, 2024. On June 5, 2024, our company and Wells Fargo Bank, National Association entered into the Second Amendment to the Revolving Line of Credit Note which further extended the maturity date of the Original Wells Fargo Line of Credit to October 7, 2024. As of September 30, 2024 and December 31, 2023, the Original Wells Fargo Line of Credit had an outstanding balance of $0 and $1,000,000, respectively. Outstanding balances on the Original Wells Fargo Line of Credit bore interest at a floating rate of 2.25% above daily SOFR. As of September 30, 2024 and December 31, 2023, SOFR was 4.85% and 5.35%, respectively. The Original Wells Fargo Line of Credit was secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property, was unconditionally guaranteed by the Company, and any outstanding balances would have been due on the October 7, 2024 maturity date.

Previous 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.

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 19,348 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 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.

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 September 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 nine months ended September 30, 2024 and 2023, respectively.

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 and six months ended June 30, 2024 and 2023.

Current wording

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 nine months ended September 30, 2024 and 2023.

Previous wording

We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Code for the year ended December 31, 2017 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on our taxable income if we annually distribute 100% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to regular federal and state corporate income taxes and may not be able to elect to qualify as a REIT for four subsequent taxable years. Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.

Current wording

We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Internal Revenue Code for the year ended December 31, 2017 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on our taxable income if we annually distribute 100% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to regular federal and state corporate income taxes and may not be able to elect to qualify as a REIT for five subsequent taxable years. Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.

Previous wording

The redemption date of our company’s mandatorily redeemable preferred stock is February 19, 2025 (the “Redemption Date”). Our company will require additional liquidity to fund the redemption. Our company expects to be able to generate this liquidity from a number of sources, including cash on hand, forecasted future cash flows for the periods prior to the Redemption Date, and careful management of our company’s capital expenditures during the periods prior to the Redemption Date.

Current wording

The redemption date of our company’s mandatorily redeemable preferred stock is February 19, 2025 (the “Redemption Date”). On October 23, 2024, our company issued a notice of its intent to redeem 140,000 shares of its mandatorily redeemable preferred stock on November 25, 2024. Our company plans to use the $2,000,000 proceeds from the private placement of Operating Partnership Units and $1,500,000 in cash on hand to fund this redemption. Our company will require additional liquidity to fund the redemption of the remaining 60,000 shares prior to the Redemption Date. Our company expects to be able to generate this liquidity from a number of sources, including cash on hand, forecasted future cash flows for the periods prior to the Redemption Date, additional private placement issuances of Operating Partnership Units, and careful management of our company’s capital expenditures during the periods prior to the Redemption Date.

Previous 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:

Current wording

At September 30, 2024, our consolidated cash and restricted cash on hand totaled $4,968,659 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 nine months ended September 30, 2024 are as follows:

Previous 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.

Current wording

During the nine months ended September 30, 2024, our cash provided by operating activities was $1,410,969 compared to cash provided by operating activities of $415,603 for the nine months ended September 30, 2023, an increase in cash provided by operating activities of $995,366.

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 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.

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 nine months ended September 30, 2024, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $1,519,643. During the nine months ended September 30, 2023, operating activities adjusted for non-cash items resulted in net cash used in operating activities of $432,710. The increase of $1,952,353 in cash flows from operating activities for the nine months ended September 30, 2024 was a result of improved net operating income from our investment properties and reduced management restructuring expenses of $1,846,329.

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 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.

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 nine months ended September 30, 2024, net changes in asset and liability accounts resulted in $108,674 in cash used for operations. During the nine months ended September 30, 2023, net changes in asset and liability accounts resulted in $848,313 in cash provided by operations. This decrease of $956,987 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 $635,510, decreased changes in rent and other receivables, net, of $218,341, and decreased changes in other assets of $125,501, partially offset by increased changes in unbilled rent of $22,365.

Previous 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.

Current wording

The net of (i) the $1,519,643 cash provided by operations from the first category and (ii) the $108,674 cash used for operations from the second category resulted in a total increase of cash provided by operations of $1,410,969 for the nine months ended September 30, 2024.

Previous 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.

Current wording

During the nine months ended September 30, 2024, our cash provided by investing activities was $2,300,540, compared to cash used in investing activities of $1,144,354 during the nine months ended September 30, 2023, an increase in cash provided by investing activities of $3,444,894.

Previous 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.

Current wording

During the nine months ended September 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 $664,264 in capitalized expenditures, including $113,847 in building improvements, $2,300 in site improvements, $174,159 in leasing commissions and $373,958 in capitalized tenant improvements. During the nine months ended September 30, 2023, cash used in investing activities consisted of $1,144,354 in capitalized expenditures, including $194,570 in building improvements, $11,323 in site improvements, $317,155 in capitalized leasing commissions, and $621,306 in capitalized tenant improvements.

Previous 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.

Current wording

The non-cash investing activity for the nine months ended September 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 and the accrual of capital expenditures of $74,105. There was no non-cash investing activity for the nine months ended September 30, 2023.

Previous 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.

Current wording

During the nine months ended September 30, 2024, our cash used by financing activities was $2,552,455 compared to cash used by financing activities of $183,946 during the nine months ended September 30, 2023, an increase in cash used by financing activities of $2,368,509. During the nine months ended September 30, 2024, our cash used by financing activities consisted of $1,000,000 to repay the line of credit, short term, $754,398 in principal payments for our company’s mortgages, $685,659 in dividends and distributions and $77,226 for the Operating Partnership Unit redemption, $32,467 in repurchases of common stock, and $2,705 for the retirement of fractional shares resulting from the 2024 Reverse Stock Split. During the nine months ended September 30, 2023, cash used in financing activities consisted of $804,282 for mortgage debt principal payments, $374,665 for dividends and distributions and $4,999 for the retirement of fractional shares resulting from the Reverse Stock Split, partially offset by proceeds from the line of credit, short term, of $1,000,000.

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, $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.

Current wording

The primary, non-operating liquidity needs of our company are $3,500,000 to redeem 140,000 shares of our mandatorily redeemable preferred stock on November 25, 2024, pursuant to the redemption notice issued on October 23, 2024, $1,500,000 to redeem the remaining 60,000 shares of our mandatorily redeemable preferred stock by February, 2025, $90,737 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 October 3, 2024 and payable on October 21, 2024 to holders of record on October 16, 2024, and $208,232 in principal payments due on our mortgages payable during the remaining three 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 $2,301,156 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.

Current wording

Total revenue was $2,336,925 for the three months ended September 30, 2024, consisting of $1,565,896 in revenues from retail center properties, $676,754 from flex center properties and $94,275 from STNL properties. Total revenues for the three months ended September 30, 2024 decreased by $251,815 over the three months ended September 30, 2023, resulting from reduced revenues from the sale of the Hanover Square Property partially offset by increased revenues from flex center properties and STNL properties.

Previous 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.

Current wording

Revenues from retail center properties were $1,565,896 for the three months ended September 30, 2024, a decrease of $308,292 from retail center property revenues for the three months ended September 30, 2023. Increased revenues of $27,582 from the Franklin Square Property and $22,014 from the Lancer Center Property due to new leasing activity and increasing rents, were offset by reduced revenues of $1,717 from the Ashley Plaza Property, and $28,823 from the Salisbury Marketplace Property, due to reduced occupancy, and reduced revenues of $327,348 due to the sale of the Hanover Square Property on March 13, 2024.

Previous wording

Revenues from flex center properties were $667,235 for the three months ended June 30, 2024, an increase of $55,103 over revenues from flex center properties for the three months ended June 30, 2023. Revenues from the Parkway Property increased by $3,550 and the Greenbrier Business Center Property by $48,023, both due to new leasing activity, and revenues increased from the Brookfield Center Property by $3,530 due to general rent increases.

Current wording

over revenues from flex center properties for the three months ended September 30, 2023. Revenues from the Parkway Property and the Greenbrier Business Center Property increased by $4,120 and $11,924, respectively, both due to new leasing activity, and revenues increased from the Brookfield Center Property by $2,464 due to general rent increases.

Previous 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.

Current wording

Revenues from STNL properties were $94,275 for the three months ended September 30, 2024, an increase of $37,969 from revenues from STNL properties for the three months ended September 30, 2023, due to an annual rent escalation for the T-Mobile Property and the acquisition of the Citibank Property.

Previous wording

Total operating expenses were $2,085,381 for the three months ended June 30, 2024, consisting of $405,227 in expenses from retail center properties, $178,613 in expenses from flex center properties, $7,801 in expenses from the STNL properties, $286,496 in legal, accounting and other professional fees, $213,945 in corporate general and administrative expenses, and $993,299 in depreciation and amortization.

Current wording

Total operating expenses were $2,033,653 for the three months ended September 30, 2024, consisting of $389,439 in expenses from retail center properties, $162,800 in expenses from flex center properties, $8,188 in expenses from the STNL properties, $261,670 in legal, accounting and other professional fees, $238,189 in corporate general and administrative expenses, and $973,367 in depreciation and amortization.

Previous wording

(1)Includes bad debt expense of $13,664 and $0 for the three months ended June 30, 2024 and 2023, respectively.

Current wording

(1)Includes bad debt expense of $2,472 and $0 for the three months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

Operating expenses from flex center properties were $162,800 for the three months ended September 30, 2024, a decrease of $20,950 over flex center property operating expenses for the three months ended September 30, 2023. Decreased operating expenses consisted of $3,129 from the Greenbrier Business Center Property due to decreased building repair expenses, $2,740 from the Brookfield Center Property due to a minor decrease in miscellaneous operating expenses, and $15,081 from the Parkway Property due to decreased building repair expenses.

Previous 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.

Current wording

Operating expenses from STNL properties were $8,188 for the three months ended September 30, 2024, an increase of $492 from operating expenses from STNL properties for the three months ended September 30, 2023, due to increased operating expenses of $398 from the T-Mobile Property and $94 for the East Coast Wings Property.

Previous wording

Operating income for the three months ended June 30, 2024 was $215,776, an increase of $290,032 from the operating loss of $74,256 for the three months ended June 30, 2023. This increase was a result of increased investment property operating income of $85,812, decreased legal, accounting and other professional fees of $178,576, decreased management restructuring expenses of $151,975, decreased loss on impairment of $14,116, and decreased depreciation and amortization expenses of $159,951, offset by increased corporate general and administrative expenses of $128,774**.**

Current wording

Operating income for the three months ended September 30, 2024 was $303,272, an increase of $1,369,972 from the operating loss of $1,066,700 for the three months ended September 30, 2023. This was a result of decreased management restructuring expenses of $1,452,904 and decreased depreciation and amortization expenses of $176,297, partially offset by decreased investment property operating income of $159,581, increased legal, accounting and other professional fees of $24,108, and increased corporate general and administrative expenses of $75,540**.**

Previous wording

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

Current wording

Interest expense was $730,922 and $900,182 for the three months ended September 30, 2024 and 2023, respectively, as follows:

Previous 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.

Current wording

Total interest expense for the three months ended September 30, 2024 decreased by $169,260 over the three months ended September 30, 2023. This decrease was a result of decreased interest of $169,755 from the sale of the Hanover Square Shopping Center Property, decreased interest expense from each of the Ashley Plaza mortgage of $2,169, the Brookfield mortgage of $930, and the Wells Fargo Mortgage Facility of $19,950, partially offset by increased interest from the Parkway Mortgage of $17,106, increased amortization and preferred dividends on the Company’s mandatorily redeemable preferred stock of $5,557, and increased other interest of $521. 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 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.

Current wording

During the three months ended September 30, 2024, other income was $14,824, a decrease of $5,698 from other income of $20,522 for the three months ended September 30, 2023. Other income for the three months ended September 30, 2024 consisted of $14,824 in interest income. Other income for the three months ended September 30, 2023 consisted of $12,337 in income related to the fair value change of the interest rate caps, and interest income of $8,185.

Previous 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.

Current wording

During the three months ended September 30, 2024, other expense was $105,123, an increase of $105,123 from other expense of $0 for the three months ended September 30, 2023. Other expense for the three months ended September 30, 2024 consisted of $105,123 in expense related to the fair value change of the interest rate cap.

Previous 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.

Current wording

Net loss was $517,949 for the three months ended September 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 $526,996. Net loss was $1,946,360 for the three months ended September 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 $1,948,827, for the three months ended September 30, 2023.

Previous wording

Net loss for the three months ended June 30, 2024 decreased by $363,225 over the three months ended June 30, 2023, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common stockholders for the three months ended June 30, 2024 decreased by $355,962 over the net loss from the three months ended June 30, 2023.

Current wording

Net loss for the three months ended September 30, 2024 decreased by $1,428,411 over the three months ended September 30, 2023, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common stockholders for the three months ended September 30, 2024 decreased by $1,421,831 over the net loss from the three months ended September 30, 2023.

Previous wording

Total revenue was $4,872,795 for the six months ended June 30, 2024, consisting of $3,389,409 in revenues from retail center properties, $1,331,302 from flex center properties and $152,084 from STNL properties. Total revenues for the six months ended June 30, 2024 decreased by $104,082 over the six months ended June 30, 2023, resulting primarily from the sale of the Hanover Square Property.

Current wording

Total revenue was $7,209,720 for the nine months ended September 30, 2024, consisting of $4,955,305 in revenues from retail center properties, $2,008,056 from flex center properties and $246,359 from STNL properties. Total revenues for the nine months ended September 30, 2024 decreased by $355,897 over the nine months ended September 30, 2023, resulting primarily from the sale of the Hanover Square Property.

Previous wording

Revenues from retail center properties were $3,389,409 for the six months ended June 30, 2024, a decrease of $293,448 from retail center property revenues for the six months ended June 30, 2023. Increased revenues of $53,261 from the Franklin Square Property and $44,371 from the Lancer Center Property due to new leasing activity, were offset by reduced revenues of $11,854 from the Ashley Plaza Property, and $26,778 from the Salisbury Marketplace Property, due to reduced occupancy, and reduced revenues of $352,448 due to the sale of the Hanover Square Property on March 13, 2024.

Current wording

Revenues from retail center properties were $4,955,305 for the nine months ended September 30, 2024, a decrease of $601,740 from retail center property revenues for the nine months ended September 30, 2023. Increased revenues of $80,843 from the Franklin Square Property and $66,385 from the Lancer Center Property due to new leasing activity, were offset by reduced revenues of $13,571 from the Ashley Plaza Property, and $55,601 from the Salisbury Marketplace Property, due to reduced occupancy, and reduced revenues of $679,796 due to the sale of the Hanover Square Property on March 13, 2024.

Previous 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.

Current wording

Revenues from flex center properties were $2,008,056 for the nine months ended September 30, 2024, an increase of $168,381 over revenues from flex center properties for the nine months ended September 30, 2023 due to increased revenues from the Parkway Property of $25,093 and the Greenbrier Business Center Property of $130,027, both due to new leasing activity, and the Brookfield Center Property of $13,261 due to general rent increases.

Previous wording

Revenues from STNL properties were $152,084 for the six months ended June 30, 2024, an increase of $39,493 from revenues from STNL properties for the six months ended June 30, 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 $246,359 for the nine months ended September 30, 2024, an increase of $77,462 from revenues from STNL properties for the nine months ended September 30, 2023, due to increased revenues from a lease escalation for the T-Mobile Property and the acquisition of the Citibank Property, partially offset by a slight decline in revenues from the East Coast Wings Property due to lower common area maintenance reimbursement revenues.

Previous 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.

Current wording

Total operating expenses were $6,693,578 for the nine months ended September 30, 2024, consisting of $1,222,925 in expenses from retail center properties, $500,142 in expenses from flex center properties, $23,697 in expenses from the STNL properties, $277,500 in share based compensation expenses, $941,244 in legal, accounting and other professional fees, $748,928 in corporate general and administrative expenses, and $2,979,142 in depreciation and amortization.

Previous 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.

Current wording

Operating expenses for retail center properties were $1,222,925 for the nine months ended September 30, 2024, a decrease of $285,255 from retail center property operating expenses for the nine months ended September 30, 2023. Operating expenses decreased for all of our company’s properties, including $57,625 from the Salisbury Property, $140,181 from the Hanover Square Property, $48,657 from the Franklin Square Property, $9,275 from the Ashley Plaza Property, and $29,517 from the Lancer Center Property, primarily from the elimination of the asset management fees paid by the properties to our company’s former Manager, and from the sale of the Hanover Square Property on March 13, 2024.