Medalist Diversified REIT Inc

Previous wording

Our company was formed to acquire, reposition, renovate, lease and manage income-producing properties. Our primary focus is on commercial properties, including retail properties and flex-industrial properties in secondary and tertiary markets in the southeastern part of the United States, with an expected concentration in Virginia, North Carolina, South Carolina, Georgia, Florida and Alabama, and STNL assets with an expected national focus. We may also pursue, in an opportunistic manner, other real estate-related investments, including, among other things, equity or other ownership interests in entities that are the direct or indirect owners of real property, and indirect investments in real property, such as those that may be obtained in a joint venture. While these types of investments are not intended to be a primary focus, we may make such investments in our discretion.

Current wording

Our company was formed to acquire, reposition, renovate, lease and manage income-producing properties. Our current primary focus is on (i) managing our legacy portfolio consisting of retail and flex-industrial properties in secondary and tertiary markets in Virginia, North Carolina, and South Carolina, (ii) managing and expanding our STNL property portfolio in geographic markets across the United States and (iii) implementing a program by which our company will act as a sponsor of Delaware Statutory Trust (DST) investment offerings. We may also pursue, in an opportunistic manner, other real estate-related investments, including, among other things, equity or other ownership interests in entities that are the direct or indirect owners of real property, and indirect investments in

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 1.80 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.

Current wording

In addition, as of March 31, 2025, our company also owned three undeveloped parcels which are currently being marketed for use as STNL properties including (i) an outparcel at our Lancer Center Property consisting of approximately 1.80 acres (the “Lancer Outparcel”), (ii) an outparcel at our 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 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.

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 October 2, 2024, our company, through its wholly-owned subsidiaries, entered into an amended and restated Revolving Line of Credit Note with Wells Fargo Bank, National Association that increased the line of credit from $1,500,000 to $4,000,000 (the “Expanded Wells Fargo Line of Credit”). Outstanding balances on the Expanded Wells Fargo Line of Credit will bear interest at a floating rate of 3.10% above Daily Simply SOFR. The Expanded Wells Fargo Line of Credit is secured by the Lancer Center Property, the Greenbrier Business Center Property, the Salisbury Marketplace Property and the Citibank Property, is unconditionally guaranteed by our company, and any outstanding balances will be due on the September 30, 2026 maturity date.

Previous wording

Our company financed its acquisitions of its investment properties through mortgages, as follows:

Current wording

Our company has historically financed its acquisitions of its investment properties through mortgages. The following table is presented as of March 31, 2025.

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 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.

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 March 31, 2025, 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 months ended March 31, 2025 and 2024, 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 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.

Current wording

The preparation of 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

For our retail center properties, flex center properties and STNL properties, we record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease. A past due receivable triggers certain events such as notices, fees and other actions per the lease.

Current wording

We record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease. A past due receivable triggers certain events such as notices, fees and other actions per the lease.

Previous wording

The adoption of ASU 2017-01, as discussed in Note 2, “Summary of Significant Accounting Policies” of the condensed consolidated financial statements included in this report, has impacted our accounting framework for the acquisition of investment properties. Upon acquisition of investment properties, our company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities, including in-place leases, above- and below-market leases, tenant relationships and assumed debt based on evaluation of information and estimates available at that date. Fair values for these assets are not directly observable and estimates are based on comparable market data and other information which is subjective in nature, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.

Current wording

The adoption of Accounting Standards Update (“ASU”) 2017-01,Business Combinations (Topic 805), as discussed in Note 2, “Summary of Significant Accounting Policies” of the condensed consolidated financial statements included in this report, has impacted our accounting framework for the acquisition of investment properties. Upon acquisition of investment properties, our company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities, including in-place leases, above- and below-market leases, tenant relationships and assumed debt based on evaluation of information and estimates available at that date. Fair values for these assets are not directly observable and estimates are based on comparable market data and other information which is subjective in nature, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.

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 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.

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 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 taxable years including the year during which we ceased to qualify as a REIT. 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

Internal liquidity to fund operating needs are expected to be provided primarily by the rental receipts from our retail and flex center properties.

Current wording

Internal liquidity to fund operating needs are expected to be provided primarily by the rental receipts from our investment properties. As of March 31, 2025, we had $4,238,209 in cash and cash equivalents and $4 million in borrowing capacity under the Expanded Wells Fargo Line of Credit. However, on April 28, 2025, our company terminated the Expanded Wells Fargo Line of Credit in anticipation of a new credit relationship with a separate lender, which our company expects to announce during the second quarter of 2025. There can be no assurance that we will successfully complete this new credit arrangement, and failure to do so could adversely affect our liquidity.

Previous 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:

Current wording

At March 31, 2025, our consolidated cash and restricted cash on hand totaled $4,238,209 compared to consolidated cash on hand of $6,072,736 at December 31, 2024. Cash from operating activities, investing activities and financing activities for the three months ended March 31, 2025 are as follows:

Previous 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.

Current wording

During the three months ended March 31, 2025, our cash provided by operating activities was $459,972 compared to cash provided by operating activities of $492,441 for the three months ended March 31, 2024, a decrease in cash provided by operating activities of $32,469.

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 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.

Current wording

Cash flows from operating activities has two components. The first component consists of net operating (loss) income adjusted for non-cash operating activities. During the three months ended March 31, 2025, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $389,549. During the three months ended March 31, 2024, operating activities adjusted for non-cash items resulted in net cash provided in operating activities of $493,480. The decrease of $103,931 in cash flows from operating activities for the three months ended March 31, 2025 was primarily the result of reduced net operating income from our investment properties resulting from the sale of the Hanover Square Property on March 13, 2024 and increased corporate general and administrative expenses.

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 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.

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 three months ended March 31, 2025, net changes in asset and liability accounts resulted in $70,423 in cash provided in operations. During the three months ended March 31, 2024, net changes in asset and liability accounts resulted in $1,039 in cash used in operations. This increase of $71,462 in cash provided in operations resulting from changes in assets and liabilities is a result of increased changes in rent and other receivables, net, of $34,651, increased changes in other assets of $10,320 and increased changes in accounts payable and accrued liabilities of $87,386, offset by decreased changes in unbilled rent of $60,895.

Previous 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.

Current wording

The net of (i) the $103,931 decrease in cash provided by operations from the first category and (ii) the $71,462 increase in cash provided by operations from the second category results in a total decrease of cash provided in operations of $32,469 for the three months ended March 31, 2025.

Previous wording

Management believes that separately evaluating these two components of our company’s cash provided by operating activities provides management with additional insight into this GAAP measure. Management believes that separating changes in assets and liabilities, the second component, from net operating loss adjusted for non-cash operating activities, the first component, is a meaningful measure of our company’s operating performance, along with adjusted funds from operations, presented below.

Current wording

Management believes that separately evaluating these two components of our company’s cash provided by operating activities provides management with additional insight into this GAAP measure. Management believes that separating changes in assets and liabilities, the second component, from net operating (loss) income adjusted for non-cash operating activities, the first component, is a meaningful measure of our company’s operating performance, along with adjusted net operating income and adjusted funds from operations, presented below.

Previous 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.

Current wording

During the three months ended March 31, 2025, our cash used by investing activities was $227,464, compared to cash provided in investing activities of $2,738,142 during the three months ended March 31, 2024, a decrease in cash provided by investing activities of $2,965,606.

Previous 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.

Current wording

During the three months ended March 31, 2025, cash used by investing activities consisted of $137,589 in capitalized expenditures, including $29,235 in building improvements, $63,354 in leasing commissions and $45,000 in tenant improvements and $89,875 in investment property acquisitions for closing costs related to the Buffalo Wild Wings Property and United Rentals Property acquisitions. 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 the Hanover Square Shopping Center Property, offset by cash used in investing activities consisting of $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.

Previous 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.

Current wording

The non-cash investing activity for the three months ended March 31, 2025, that did not affect our cash provided by investing activities was the issuance of $5,765,000 of OP Units, $2,620,000 of OP Units for the acquisitions of the Buffalo Wild Wings Property and $3,145,000 of OP Units for the United Rentals Property. 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 of OP Units for the acquisition of the Citibank Property.

Previous 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.

Current wording

During the three months ended March 31, 2025, our cash used by financing activities was $2,067,035 compared to cash used by financing activities of $1,903,754 during the three months ended March 31, 2024, an increase in cash used by financing activities of $163,281. During the three months ended March 31, 2025, our cash used by financing activities consisted of $1,500,000 for the final redemption of our company’s mandatorily redeemable preferred stock, $274,737 in principal payments for our company’s mortgages, $123,459 in dividends and distributions, $106,624 to repurchase Common Shares, and $62,215 in offering costs paid related to the common stock offering. 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.

Previous wording

Liquidity for general operating needs and our company’s investment properties is generally provided by the rental receipts from our retail properties and flex center properties, and revenues from our hotel properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, our company continually reviews and evaluates its outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.

Current wording

Liquidity for general operating needs and our company’s investment properties is generally provided by the rental receipts from our retail properties, flex center properties and STNL properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, our company continually reviews and evaluates its outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.

Previous 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.

Current wording

The primary, non-operating liquidity needs of our company are $150,874 to pay the dividends to common stockholders and distributions to OP Unit holders that were declared on April 3, 2025 and payable April 22, 2025 to holders of record on April 17, 2025, and $813,032 in principal payments due on its mortgages payable during the remaining nine months ending December 31, 2025. 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

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

Current wording

Interest expense was $573,016 and $876,748 for the three months ended March 31, 2025 and 2024, respectively, as follows:

Previous 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.

Current wording

Total interest expense for the three months ended March 31, 2025 decreased by $303,732 over the three months ended March 31, 2024. This decrease was primarily a result of decreased interest of $129,248 from the sale of the Hanover Square Shopping Center Property and the redemption of the mandatorily redeemable preferred stock. Non cash 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 unaudited condensed consolidated financial statements.

Previous 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.

Current wording

During the three months ended March 31, 2025, other income was $126,874, which consisted of $118,529 in lease termination fees and interest income of $8,345. This is an increase of $81,985 from other income of $44,889 for the three months ended March 31, 2024, which consisted of $35,338 in income related to the fair value change of the interest rate cap and interest income of $9,551.

Previous 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.

Current wording

During the three months ended March 31, 2025, other expense was $28,226 related to the fair value change of the interest rate cap. Since the fair value change of the interest cap was recognized as income, there was no such other expense for the three months ended March 31, 2024.

Previous 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.

Current wording

Net loss was $1,026,884 for the three months ended March 31, 2025, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to our common stockholders was $1,006,826.

Previous 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.

Current wording

Net income for the three months ended March 31, 2025 decreased by $2,959,785 over the three months ended March 31, 2024, before adjustments for net (loss) income attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders for the three months ended March 31, 2025 decreased by $2,346,224 over the three months ended March 31, 2024.

Previous wording

We use funds from operations (“FFO”), a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases) and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

Current wording

We use funds from operations (“FFO”), a non-GAAP measure, as an alternative measure of our company’s operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its December 2018 White Paper (the “NAREIT White Paper”). As defined in the NAREIT White Paper, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases) and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

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 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.

Current wording

The NAREIT 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 common 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 (loss) income before allocation to noncontrolling

Previous wording

NAREIT’s December 2018 White Paper encourages companies reporting FFO to “make supplemental disclosure of all material non-cash revenues and expenses affecting their results for each period.” We believe that the computation of FFO in accordance with NAREIT’s definition includes certain items that are not indicative of the results provided by our operating portfolio and affect the comparability of our period-over-period performance. These items include non-cash items such as amortization of loans and above and below market leases, unbilled rent arising from applying straight line rent revenue recognition and share-based compensation expenses. Additionally, the impact of capital expenditures, including tenant improvement and leasing commissions, net of reimbursements of such expenditures by property escrow funds, is included in our calculation of AFFO. Therefore, in addition to FFO, management uses Adjusted FFO (“AFFO”), which we define to exclude such items. Management believes that these adjustments are appropriate in determining AFFO as their exclusion is not indicative of the operating performance of our assets. In addition, we believe that AFFO is a useful supplemental measure for the investing community to use in comparing us to other REITs as many REITs provide some form of adjusted or modified FFO. However, there can be no assurance that AFFO presented by us is comparable to the adjusted or modified FFO of other REITs.

Current wording

The NAREIT White Paper encourages companies reporting FFO to “make supplemental disclosure of all material non-cash revenues and expenses affecting their results for each period.” We believe that the computation of FFO in accordance with the NAREIT White Paper’s definition includes certain items that are not indicative of the results provided by our operating portfolio and affect the comparability of our period-over-period performance. These items include non-cash items such as amortization of loans and above and below market leases, unbilled rent arising from applying straight line rent revenue recognition and share-based compensation expenses. Additionally, the impact of capital expenditures, including tenant improvement and leasing commissions, net of reimbursements of such expenditures by property escrow funds, is included in our calculation of AFFO. Therefore, in addition to FFO, management uses Adjusted FFO (“AFFO”), which we define to exclude such items. Management believes that these adjustments are appropriate in determining AFFO as their exclusion is not indicative of the operating performance of our assets. In addition, we believe that AFFO is

Previous wording

Total AFFO for the nine months ended September 30, 2024 and 2023 was as follows:

Current wording

Total AFFO for the three months ended March 31, 2025 and 2024 was as follows: