Medalist Diversified (NASDAQ: MDRR) posts Q1 2026 profit after major property sales
Rhea-AI Filing Summary
Medalist Diversified, Inc. reported a sharp turnaround for the quarter ended March 31, 2026, driven mainly by property sales. Net income was $14.1M versus a prior-year loss, with a $12.9M gain on disposal of investment properties and a $2.1M income tax benefit.
Recurring investment property revenues slipped to $2.16M from $2.32M, and operating cash flow was negative $0.5M. The company reduced mortgages payable, net, to $19.2M from $32.8M and increased cash and cash equivalents to $8.6M. Shares outstanding rose to 1,428,500, and dividends were $0.07 per share.
Effective January 1, 2026, Medalist revoked its REIT status and is now taxed as a regular corporation. Its strategy is shifting toward scaling a Delaware statutory trust program, selectively selling legacy properties to fund DST offerings, and adding digital and other non-real-estate investments.
Positive
- Strong quarterly profit and de-leveraging: Net income reached $14.1M, helped by a $12.9M gain on property sales, while mortgages payable, net, decreased from $32.8M to $19.2M, and cash and cash equivalents increased to $8.6M.
Negative
- Earnings quality and tax profile change: Core investment property revenues declined to $2.16M, operating cash flow was a $0.5M outflow, and revoking REIT status effective January 1, 2026 exposes future profits to regular corporate taxation.
Insights
Results are boosted by one-time gains and a major strategic shift.
Medalist Diversified posted net income of $14.1M, largely from a $12.9M gain on property sales, while core property revenue declined modestly. Mortgages payable, net, fell from $32.8M to $19.2M, indicating significant de-leveraging funded by asset dispositions.
The company revoked its REIT election effective January 1, 2026 and will now pay corporate income tax, partly offset by recognizing a $2.1M deferred tax benefit this quarter. Future tax expense will depend on profitability without large disposal gains.
Strategy is pivoting toward a DST sponsorship program and the Tesla Pensacola DST, plus limited exposure to crypto assets and marketable securities. Future filings for periods after Q1 2026 will clarify how recurring fee income and remaining rental operations perform without sizable transaction gains.
Key Figures
Key Terms
real estate investment trust ("REIT") financial
Delaware statutory trust ("DST") program financial
variable interest entities ("VIEs") financial
assets held for sale financial
crypto assets (Bitcoin) financial
mandatorily redeemable preferred stock financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No:
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of Common Stock, $0.01 par value per share, of the registrant outstanding at May 13,2026 was
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Medalist Diversified, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2026
Table of Contents
PART I. FINANCIAL INFORMATION | 3 | |
Item 1. | Financial Statements | 3 |
Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025 | 3 | |
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 4 | |
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 5 | |
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 6 | |
Notes to Condensed Consolidated Financial Statements (unaudited) | 7 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 37 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 50 |
Item 4. | Controls and Procedures | 50 |
PART II. OTHER INFORMATION | 51 | |
Item 1. | Legal Proceedings | 51 |
Item 1A. | Risk Factors | 51 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
Item 3. | Defaults Upon Senior Securities | 51 |
Item 4. | Mine Safety Disclosures | 51 |
Item 5. | Other Information | 52 |
Item 6. | Exhibits | 52 |
Signatures | 52 | |
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PART I.FINANCIAL INFORMATION
Item 1. Financial Statements
Medalist Diversified, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| March 31, 2026 | December 31, 2025 |
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(Unaudited) | | ||||||
ASSETS |
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Investment properties, net | $ | | $ | | |||
Cash and cash equivalents |
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Restricted cash | | | |||||
Investment in marketable securities | | — | |||||
Rent and other receivables, net of allowance of $ |
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Assets held for sale | | | |||||
Unbilled rent |
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Intangible lease assets, net |
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Other intangible assets | | | |||||
Deferred tax assets, net | | — | |||||
Other assets |
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Total Assets | $ | | $ | | |||
LIABILITIES |
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Accounts payable and accrued liabilities | $ | | $ | | |||
Liabilities associated with assets held for sale | | | |||||
Intangible lease liabilities, net |
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Mortgages payable, net | | | |||||
Total Liabilities | $ | | $ | | |||
EQUITY |
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Common stock, $ | $ | | $ | | |||
Additional paid-in capital |
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Offering costs |
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Accumulated deficit |
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Total Stockholders' Equity |
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Noncontrolling interests - Parkway Property | | | |||||
Noncontrolling interests - DST Entities | | — | |||||
Noncontrolling interests - Operating Partnership |
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Total Equity | | | |||||
Total Liabilities and Equity | $ | | $ | | |||
See notes to unaudited condensed consolidated financial statements
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Medalist Diversified, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | |||||||
March 31, | |||||||
| 2026 | | 2025 |
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REVENUE |
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Investment property revenues | $ | | $ | | |||
Total Revenue | $ | | $ | | |||
OPERATING EXPENSES |
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Investment property operating expenses | $ | | $ | | |||
DST sponsorship program expenses | | — | |||||
Bad debt expense | — | | |||||
Share based compensation expense |
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Legal, accounting and other professional fees |
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Corporate general and administrative expenses |
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Loss on impairment |
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Depreciation and amortization |
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Total Operating Expenses |
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Gain on disposal of investment properties | | — | |||||
Loss on extinguishment of debt | ( | — | |||||
Loss on redemption of mandatorily redeemable preferred stock | — | ( | |||||
Operating Income (Loss) |
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Interest expense |
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Net Income (Loss) from Operations |
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Other income |
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Other expense |
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Net Income (Loss) before Income Taxes | |
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Income tax benefit | | — | |||||
Net Income (Loss) | | ( | |||||
Less: Net income (loss) attributable to Parkway Property noncontrolling interests | | ( | |||||
Less: Net income attributable to DST noncontrolling interests |
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Less: Net income (loss) attributable to Operating Partnership noncontrolling interests |
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Net Income (Loss) Attributable to Medalist Common Stockholders | $ | | $ | ( | |||
Loss per common share - basic and diluted | $ | — | $ | ( | |||
Weighted-average number of shares - basic and diluted | — | | |||||
Earnings per common share - basic | $ | | $ | — | |||
Weighted-average number of shares - basic | | — | |||||
Earnings per common share - diluted | $ | | $ | — | |||
Weighted-average number of shares - diluted | | — | |||||
Dividends paid per common share | $ | | $ | | |||
See notes to unaudited condensed consolidated financial statements
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Medalist Diversified, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
For the three months ended March 31, 2026 and 2025
(Unaudited)
For the three months ended March 31, 2026 | |||||||||||||||||||||||||||||
| Common Stock | Noncontrolling Interests | |||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||
Additional | Offering | Accumulated | Stockholders' | Parkway | Operating |
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Shares | | Par Value | | Paid in Capital | |
| Costs | | Deficit | | Equity | | Property | | DST Entities | | Partnership | | Total Equity | ||||||||||
Balance, January 1, 2026 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | — | $ | | $ | | ||||||||||
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Share based compensation | | | | — | — | | — | — | — | | |||||||||||||||||||
Redemption of operating partnership units |
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Offering costs |
| — | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||
Net (loss) income |
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Dividends and distributions |
| — | — | — | — | ( | ( | ( | ( | ( | ( | ||||||||||||||||||
Tax effect of change in noncontrolling interest |
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Noncontrolling interests |
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Balance, March 31, 2026 |
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For the three months ended March 31, 2025 | ||||||||||||||||||||||||||
| Common Stock | Noncontrolling Interests | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||
Additional | Offering | Accumulated | Stockholders' | Parkway | Operating | |||||||||||||||||||||
Shares | | Par Value | | Paid in Capital | |
| Costs | | Deficit | | Equity | | Property | | Partnership | | Total Equity | |||||||||
Balance, January 1, 2025 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
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Share based compensation | | | | — | — | | — | | | |||||||||||||||||
Common stock repurchases | ( | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||
Offering costs |
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Net loss |
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Dividends and distributions | — | — | — | — | ( | ( | ( | ( | ( | |||||||||||||||||
Noncontrolling interests |
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Balance, March 31, 2025 |
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See notes to unaudited condensed consolidated financial statements
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Medalist Diversified, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months ended March 31, | ||||||
| 2026 | | 2025 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net Income (Loss) | $ | | $ | ( | ||
Adjustments to reconcile consolidated net income (loss) to net cash flows from operating activities |
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Depreciation |
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Amortization |
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Deferred income taxes |
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Loan cost amortization |
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Mandatorily redeemable preferred stock issuance cost and discount amortization | — | | ||||
Amortization of lease incentives | — |
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Above (below) market lease amortization, net |
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Bad debt expense | — |
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Share-based compensation | |
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Loss on impairment | — |
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Loss on extinguishment of debt | |
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Loss on redemption of mandatorily redeemable preferred stock |
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Unrealized gain on marketable securities | ( | — | ||||
Unrealized loss on crypto assets | | — | ||||
Gain on disposal of investment property |
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Changes in assets and liabilities |
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Rent and other receivables |
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Unbilled rent |
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Other assets |
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Accounts payable and accrued liabilities |
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Net cash flows from operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Investment property acquisitions |
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Capital expenditures | ( |
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Cash received from disposal of investment property, net | |
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Purchase of marketable securities | ( |
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Purchase of crypto assets | ( | — | ||||
Net cash flows from investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Dividends and distributions paid |
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Repayment of mortgages payable | ( | ( | ||||
Redemption of mandatorily redeemable preferred stock |
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Offering costs paid related to DST offering | — | ( | ||||
Repurchases of common stock, including costs and fees | — | ( | ||||
Proceeds from the sale of beneficial interests in DST entities, net of offering costs | | — | ||||
Net cash flows from financing activities |
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INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | ( | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | | $ | | ||
CASH AND CASH EQUIVALENTS, end of period, shown in condensed consolidated balance sheets | | | ||||
RESTRICTED CASH, end of period, shown in condensed consolidated balance sheets | | | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period shown in the condensed consolidated statements of cash flows | $ | | $ | | ||
Supplemental Disclosures and Non-Cash Activities: |
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Other cash transactions: |
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Interest paid | $ | | $ | | ||
Non-cash transactions: | ||||||
Issuance of operating partnership units for Buffalo Wild Wings and United Rentals Acquisitions | $ | — | $ | | ||
Transfer of investment properties, net, to assets held for sale | | | ||||
Transfer of intangible lease assets, net, to assets held for sale | | — | ||||
Transfer of mortgages payable, net, to mortgages payable, net, associated with assets held for sale | | — | ||||
Transfer of intangible lease liabilities, net, to liabilities, net, associated with assets held for sale | | — | ||||
Conversion of operating partnership units to common shares | | — | ||||
Capital expenditures accrued as of March 31, 2026 and 2025, respectively | | — | ||||
See notes to unaudited condensed consolidated financial statements
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Medalist Diversified, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Basis of Presentation and Consolidation
Medalist Diversified, Inc. (“Medalist”) is a Maryland corporation formed on September 28, 2015. Beginning with the taxable year ended December 31, 2017, Medalist elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes. Effective on January 1, 2026, Medalist terminated its election to be taxed as a REIT. Medalist serves as the general partner of Medalist Diversified Holdings, LP (the “Operating Partnership”) which was formed as a Delaware limited partnership on September 29, 2015. As of March 31, 2026, Medalist, through the Operating Partnership, owned and operated
The use of the words “we,” “us,” or the “Company” refers to Medalist and its consolidated subsidiaries, except where the context otherwise requires. The Company includes Medalist, the Operating Partnership and, wholly owned limited liability companies which own or operate the properties and Medalist’s other business activities.
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As of March 31, 2026, the Company owned (i) the Ashley Plaza Shopping Center, a
As of March 31, 2026, the Company also owned
The Company prepared the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). References to the condensed consolidated financial statements and references to individual financial statements included herein, reference the condensed consolidated financial statements or the respective individual financial statement. All material balances and transactions between the consolidated entities of the Company have been eliminated. The unaudited condensed consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The Company’s current primary focus is to implement the strategic repositioning initiated during 2025. Effective January 1, 2026, the Company revoked its REIT status and is transitioning its primary focus to build the DST Program to generate fee income and increase assets under management. The Company will continue to evaluate direct and indirect real estate investments (i) for the Company’s general portfolio and (ii) that support the DST Program, including opportunities within the Company’s existing portfolio, including selective disposition of properties from the Company’s portfolio to generate capital for the DST Program and other potential acquisitions.
The Company’s efforts to scale the DST Program will be focused on identifying real estate investments suitable for DST vehicles that offer competitive, risk-adjusted returns, with a focus on net lease assets with nationally recognized tenants or those with investment grade credit ratings, in larger metropolitan areas experiencing high levels of growth in the southeast, mountain states and California. Industry focuses will include, but not be limited to, retail, medical, and single tenant industrial and warehouse uses.
The Company may also pursue, in an opportunistic manner, other real estate and non-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, indirect investments in real property, such as those that may be obtained in a joint venture, and ownership of crypto assets, other equity investments, including marketable securities, short-duration U.S. treasuries, and other investment-grade marketable securities. While these types of investments are not intended to be a primary focus, the Company may make such investments at the discretion of the Company’s Board of Directors (the “Board”).
2.Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and any single member limited liability companies or other entities which are consolidated in accordance with U.S. GAAP. The Company consolidates variable interest entities (“VIEs”) where it is the primary beneficiary. All intercompany balances are eliminated in consolidation.
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Variable Interest Entities
The Company evaluates its interests in other entities in accordance with guidance in Accounting Standards Codification (“ASC”) Topic 810, Consolidation which provides that the Company consolidate variable interest entities (“VIE”) when it is deemed to be the primary beneficiary. If it is not deemed to be the primary beneficiary, the entity is not consolidated and is instead accounted for in accordance with other appropriate accounting methods. The analysis is performed upon the initial investment and then re-performed upon substantive events including changes in equity interests or operations.
The Company first identifies if its interests obligate it to absorb expected losses or entitle it to expected residual returns (i.e., are the interests variable). Variable interests can include equity or contractual interests in an entity. If the Company is deemed to hold a variable interest, the Company then determines if an entity is a VIE. An entity is deemed to be a VIE if it has any of the following characteristics: (i) it lacks sufficient equity investment at risk to finance its activities, (ii) its equity holders lack the characteristics of a controlling financial interest, or (iii) it is structured where the Company’s non-substantive voting rights are not proportional to the economic interests.
In this evaluation, the Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. A qualitative analysis is generally based on a review of the design of the entity, including its control structure and decision-making abilities, and also its financial structure. In a quantitative analysis, the Company would incorporate various estimates, including estimated future cash flows, assumed hold periods and capitalization or discount rates.
If an entity is determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity. The Company evaluates all of its investments in real estate-related assets to determine if they are VIEs utilizing judgments and estimates that are inherently subjective. If different judgments or estimates were used for these evaluations, it could result in differing conclusions as to whether an entity is a VIE and whether to consolidate such entity.
As of March 31, 2026, the Company has determined itself to be the primary beneficiary of the XXV DST VIE because the Company owns
The XXV DST was formed by MDR XXV Sponsor, TRS, a wholly owned subsidiary of the Company, to hold title to the Tesla Property and expects to offer beneficial interests in the DST to accredited investors in a private placement under Regulation D, the proceeds of which will be used to redeem the Company’s beneficial interests for cash. Upon completion of such offering, the Company expects to no longer retain an ownership interest in the DST but will continue to control the Tesla Property’s operations as the Trust Manager of the XXV DST. The Company expects to continue consolidating the DST in its consolidated financial statements under applicable accounting guidance until it has sold greater than
Investment Properties
Accounting Standards Codification (“ASC”) 805 mandates that “an acquiring entity shall allocate the cost of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at date of acquisition.” ASC 805 results in an allocation of acquisition costs to both tangible and intangible assets associated with income producing real estate. Tangible assets include land, buildings, site improvements, tenant improvements and furniture, fixtures and equipment, while intangible lease assets include the value of in-place leases, lease origination costs (leasing commissions and tenant improvements), legal and marketing costs and leasehold assets and liabilities (above or below market leases), among others.
The Company uses independent, third-party consultants to assist management with its ASC 805 evaluations. The Company determines fair value based on accepted valuation methodologies including the cost, market, and income capitalization approaches. The purchase price is allocated to the tangible and intangible lease assets identified in the evaluation.
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The Company records depreciation on buildings and improvements utilizing the straight-line method over the estimated useful life of the asset, generally
Acquisition and closing costs are capitalized as part of each tangible asset on a pro rata basis. Improvements and major repairs and maintenance are capitalized when the repair and maintenance substantially extend the useful life, increase capacity or improve the efficiency of the asset. All other repair and maintenance costs are expensed as incurred.
Assets Held for Sale
The Company may decide to sell properties that are held as investment properties. The accounting treatment for the disposal of long-lived assets is covered by ASC 360. Under this guidance, the Company records the assets associated with these properties, and any associated liabilities, as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year. Delays in the time required to complete a sale do not preclude a long-lived asset from continuing to be classified as held for sale beyond the initial one-year period if the delay is caused by events or circumstances beyond an entity’s control and there is sufficient evidence that the entity remains committed to a qualifying plan to sell the long-lived asset.
Properties classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. When the carrying value exceeds the fair value, less estimated costs to sell, an impairment charge is recognized. The Company determines fair value based on the three-level valuation hierarchy for fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s investment properties are measured at fair value using Level 2 inputs. Under ASC 360, depreciation of assets held for sale is discontinued.
In June 2025, the Company committed to a plan to sell the asset group associated with the Salisbury Marketplace Property and reclassified the assets and related mortgage payable, net, as assets held for sale and liabilities associated with assets held for sale, respectively. The Company completed the sale of the Salisbury Marketplace Property on October 23, 2025 (see Note 3, below).
As of July 18, 2025, the date the Company acquired the Tesla Pensacola Property, the Company had committed to a plan to contribute the Tesla Pensacola Property to its first DST and to sell beneficial interests in the DST. The Company’s plan was for an asset group that includes the land, site improvements, building, building improvements, tenant improvements, capitalized leasing commissions, and intangible lease assets and liabilities associated with the Tesla Pensacola Property. As of September 30, 2025, the Company determined that the carrying value of the Tesla Pensacola Property exceeded its fair value, less estimated costs to sell, by $
In August 2025, the Company committed to a plan to sell the asset group associated with the Greenbrier Business Center Property and reclassified the assets and related mortgage payable, net as assets held for sale and liabilities associated with assets held for sale, respectively. The Company completed the sale of the Greenbrier Business Center Property on February 13, 2026. (see Note 3, below).
In December 2025, the Company committed to a plan to sell the asset group associated with the Parkway Property and reclassified the assets and related mortgage payable, net as assets held for sale and liabilities associated with assets held for sale, respectively. The Company completed the sale of the Parkway Property on February 27, 2026. (see Note 3, below).
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In February 2026, the Company committed to a plan to sell the asset group associated with the Franklin Square Property and reclassified the assets and related mortgage payable, net as assets held for sale and liabilities associated with assets held for sale, respectively. The Company completed the sale of the Franklin Square Property on March 30, 2026. (see Note 3, below).
Intangible Lease Assets and Liabilities, net
The Company determines, through the ASC 805 evaluation, the above and below market lease intangibles upon acquiring a property. Intangible lease assets (or liabilities) such as above or below-market leases and in-place lease value are recorded at fair value and are amortized as an adjustment to rental revenue or amortization expense, as appropriate, over the remaining terms of the underlying leases. The Company amortizes amounts allocated to tenant improvements, in-place lease assets and other lease-related intangibles over the remaining life of the underlying leases. The analysis is conducted on a lease-by-lease basis.
During the three months ended March 31, 2026, the Company wrote off intangible lease assets and liabilities associated with assets held for sale resulting from the sale of the Greenbrier Business Center, Parkway and Franklin Square Properties.
Details of the deferred costs, net of amortization, arising from the Company’s purchases of its investment properties are as follows:
March 31, 2026 | | December 31, 2025 | |||||
| (unaudited) |
| |||||
Intangible lease assets, net | |||||||
Leasing commissions | $ | | $ | | |||
Legal and marketing costs |
| |
| | |||
Above market leases |
| |
| | |||
Leases in place |
| |
| | |||
$ | | $ | | ||||
Intangible lease liabilities, net |
|
| |||||
Below market leases | $ | ( | $ | ( | |||
As of March 31, 2026 and December 31, 2025, the Company’s intangible assets and liabilities associated with assets held for sale were as follows:
| March 31, 2026 | | December 31, 2025 | ||||
(unaudited) | |||||||
Intangible lease assets, net, associated with assets held for sale | |||||||
Leasing commissions | $ | | $ | | |||
Legal and marketing costs |
| |
| | |||
Above market leases |
| |
| | |||
Leases in place |
| — |
| | |||
$ | | $ | | ||||
Intangible lease liabilities, net, associated with liabilities held for sale |
|
| |||||
Below market leases | $ | ( | $ | ( | |||
Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining terms of the respective leases. Adjustments to rental revenue related to the above and below market leases during three months ended March 31, 2026 and 2025, respectively, were as follows:
For the three months ended |
| ||||||
March 31, | |||||||
2026 | 2025 | ||||||
| (unaudited) | | (unaudited) |
| |||
Amortization of above market leases | $ | ( | $ | ( | |||
Amortization of below market leases |
| |
| | |||
$ | | $ | | ||||
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Amortization of lease origination costs, leases in place and legal and marketing costs represent a component of depreciation and amortization expense. Amortization related to these intangible assets during the three months ended March 31, 2026 and 2025, respectively, were as follows:
For the three months ended |
| ||||||
March 31, | |||||||
| (unaudited) | | (unaudited) |
| |||
Leasing commissions | $ | ( | $ | ( | |||
Legal and marketing costs |
| ( |
| ( | |||
Leases in place |
| ( |
| ( | |||
Total | $ | ( | $ | ( | |||
As of March 31, 2026 and December 31, 2025, the Company’s accumulated amortization of lease origination costs, leases in place and legal and marketing costs totaled $
Future amortization of above and below market leases, lease origination costs, leases in place, legal and marketing costs and tenant relationships is as follows:
| For the | ||||||||||||||||||||
remaining nine | |||||||||||||||||||||
months ending | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
2026 | | 2027 | | 2028 | | 2029 | | 2030 | | 2031-2041 | | Total | |||||||||
Intangible Lease Assets |
| |
| |
| |
| |
| |
| |
| | |||||||
Leasing commissions | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Legal and marketing costs | | | | | | |
| | |||||||||||||
Above market leases |
| | | | | — | — |
| | ||||||||||||
Leases in place |
| | | | | | |
| | ||||||||||||
$ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Intangible Lease Liabilities |
|
|
|
|
|
|
| ||||||||||||||
Below market leases | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||
Impairment of Investment Properties and Intangible Lease Assets
The Company reviews its investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable, but at least annually. These circumstances include, but are not limited to, declines in the property’s cash flows, occupancy and fair market value. The Company measures any impairment of investment property when the estimated undiscounted cash flows plus its residual value, is less than the carrying value of the property. To the extent impairment has occurred, the Company charges against income the excess of the carrying value of the property over its estimated fair value. The Company estimates fair value using unobservable data such as projected future operating income, estimated capitalization rates, or multiples, leasing prospects and local market information. The Company may decide to sell properties that are held for use and the sale prices of these properties may differ from their carrying values. The Company did not record any impairment adjustments to its investment properties resulting from events or changes in circumstances during the three months ended March 31, 2026 and 2025, that would result in the projected value of the Company’s investment properties being below their carrying value.
However, tenant defaults and early lease terminations can also result in the recognition of impairment. As a result of certain tenant-specific events during the three months ended March 31, 2026 and 2025, the Company recorded a loss on impairment of $
Conditional Asset Retirement Obligation
A conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement depends on a future event that may or may not be within the Company’s control. Currently, the Company
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does not have any conditional asset retirement obligations. However, any such obligations identified in the future would result in the Company recording a liability if the fair value of the obligation can be reasonably estimated. Environmental studies conducted at the time the Company acquired its properties did not reveal any material environmental liabilities, and the Company is unaware of any subsequent environmental matters that would have created a material liability.
The Company believes that its properties are currently in material compliance with applicable environmental, as well as non-environmental, statutory and regulatory requirements. The Company did not record any conditional asset retirement obligation liabilities during the three months ended March 31, 2026 and 2025, respectively.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Cash equivalents consist primarily of cash held in money market funds. Financial instruments that potentially subject the Company to concentrations of credit risk include its cash and equivalents and its trade accounts receivable.
The Company places its cash and restricted cash held by the Company on deposit with financial institutions in the United States which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Restricted cash represents amounts held by the Company for tenant security deposits, escrow deposits held by lenders for real estate taxes and insurance premiums, and capital reserves held by lenders for investment property capital improvements.
Tenant security deposits are restricted cash balances held by the Company to offset potential damages, unpaid rent or other unmet conditions of its tenant leases. As of March 31, 2026 and December 31, 2025, the Company reported $
Escrow deposits are restricted cash balances held by lenders for real estate taxes and insurance premiums. As of March 31, 2026 and December 31, 2025, the Company reported $
Capital reserves are restricted cash balances held by lenders for capital improvements, leasing commissions and tenant improvements. As of March 31, 2026 and December 31, 2025, the Company reported $
March 31, 2026 | December 31, | ||||||
Property and Purpose of Reserve | | (unaudited) | | 2025 | |||
Ashley Plaza Property – maintenance and leasing cost reserve | | | |||||
Brookfield Center Property – maintenance and leasing cost reserve | | | |||||
Franklin Square Property – leasing costs |
| — |
| | |||
Total | $ | | $ | | |||
Fair Value Measurements
The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:
| ● | Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. |
| ● | Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities. |
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| ● | Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
See Note 8 for additional information.
Investment in Marketable Securities
The Company accounts for its investment in equity securities with a readily determinable fair value in accordance with the guidance in ASC 321, Investments – Equity Securities. The Company presents unrealized gains and losses related to the equity securities, within other income (expense) in its condensed consolidated statements of operations. See Note 8 for additional information.
Crypto Assets (Bitcoin)
The Company accounts for its crypto asset holdings in accordance with Accounting Standards Update (ASU) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). Under ASU 2023-08, crypto assets are measured at fair value, with realized and unrealized changes in fair value recognized in net income each reporting period. Fair value is determined using Level 1 inputs. See Note 8 for additional information. Crypto assets are classified as other intangible assets on the Company’s condensed consolidated balance sheet. The Company does not amortize crypto assets and does not assess crypto assets for impairment under this standard, as gains and losses are recorded through the income statement. Gains and losses are recorded under other income or other expense, as appropriate, on the Company’s condensed consolidated statements of operations.
A reconciliation of the Company’s crypto asset activity for the three months ended March 31, 2026 is as follows:
For the three months ended |
| ||||||
March 31, | |||||||
2026 | 2025 | ||||||
| (unaudited) | | (unaudited) |
| |||
Beginning balance | $ | | $ | — | |||
Purchases (1) | | — | |||||
Sales | — | — | |||||
Realized gain (loss) | — | — | |||||
Unrealized loss | ( | — | |||||
Ending Balance | $ | | $ | — | |||
| (1) | For the three months ended March 31, 2026, purchases of |
Share Retirement
ASC 505 provides guidance on accounting for share retirement and establishes two alternative methods for accounting for the purchase price paid in excess of par value. The Company has elected the method by which the excess between par value and the purchase price, including costs and fees, is recorded to additional paid in capital on the Company’s condensed consolidated balance sheets.
Revenue Recognition
Investment Property Revenues
The Company recognizes minimum rents from its investment properties on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset being recorded on the condensed consolidated balance sheets. As of March 31, 2026 and December 31, 2025, the Company reported $
The Company’s leases generally require the tenant to reimburse the Company for a substantial portion of its expenses incurred in operating, maintaining, repairing, insuring and managing the shopping center and common areas (collectively defined as Common Area Maintenance or “CAM” expenses). The Company includes these reimbursements, along with other revenue derived from late fees and seasonal events, on the condensed consolidated statements of operations under the captions "Investment property revenues”. This significantly reduces the Company’s exposure to increases in costs and operating expenses resulting from inflation or other outside
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factors. The Company accrues reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. The Company calculates the tenant’s share of operating costs by multiplying the total amount of the operating costs allowable under each Tenant’s lease by a fraction, the numerator of which is the total number of square feet being leased by the tenant, and the denominator of which is the average total square footage of all leasable buildings at the property. The Company also receives payments for these reimbursements from substantially all its tenants on a monthly basis throughout the year.
The Company recognizes differences between previously estimated recoveries and the estimated final billed amounts in the year in which the amounts become final. Since these differences are determined annually under the leases and accrued as of December 31 in the year earned,
The Company recognizes lease termination fees in the period that the lease is terminated and collection of the fees is reasonably assured. Upon early lease termination, any unrecovered intangibles and other assets are written off as a loss on impairment (See Impairment, above.). The Company did
Rent and Other Receivables
Rent and other receivables include tenant receivables related to base rents and tenant reimbursements. Rent and other receivables do not include receivables attributable to recording rents on a straight-line basis, which are included in unbilled rent, discussed above. The Company determines an allowance for the uncollectible portion of accrued rents and accounts receivable based upon customer credit worthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends. The Company considers 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 allowable and required actions per the lease. As of March 31, 2026 and December 31, 2025, the Company’s allowance for uncollectible rent totaled $
Income Taxes
Beginning with the Company’s taxable year ended December 31, 2017, and ending on December 31, 2025, Medalist elected to be taxed as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code and applicable Treasury regulations relating to REIT qualification. In order to maintain REIT status, the regulations require a REIT to distribute at least
Effective on January 1, 2026, Medalist terminated its election to be taxed as a REIT and will be subject to tax at regular corporate rates. The Company may not re-elect to be taxed as a REIT for five years.
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized.
Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense.
The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for 2020 and all subsequent periods.
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Use of Estimates
The Company has made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and revenues and expenses during the reported period. The Company’s actual results could differ from these estimates.
Reclassifications
Certain reclassifications have been made in the condensed consolidated financial statements to conform to the 2026 presentation. Specifically, the Company has combined operating revenue and operating expenses previously reported as
Noncontrolling Interests
The ownership interests not held by Medalist are considered noncontrolling interests. There are three elements of noncontrolling interests in the capital structure of the Company. These noncontrolling interests have been reported in equity on the condensed consolidated balance sheets but separate from the Company’s equity. On the condensed consolidated statements of operations, the subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests. The Company’s condensed consolidated statements of changes in stockholders’ equity includes beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.
The first noncontrolling interest is in the Parkway Property, which was sold on February 27, 2026, in which the Company owned an
The second noncontrolling interest is in the XXV DST subsidiary. During the three months ended March 31, 2026 the Company sold
The third noncontrolling ownership interest consists of the common units of the Operating Partnership (the “OP Units”) that are not held by Medalist. On January 15, 2025, the Company issued
As of March 31, 2026 and December 31, 2025, there were
The OP Units not held by Medalist represent
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During the three months ended March 31, 2026, a weighted average of
Recent Accounting Pronouncements
Upcoming Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The objective of ASU 2024-03 is to help investors better understand a company’s performance and prospects for future cash flows, as well as compare its performance over time with that of other companies. To meet that objective, the update requires companies to provide a tabular disclosure in the notes to the financial statements that disaggregates all relevant expense captions in continuing operations on the face of the income statement into specific expenses, gains, and losses that are outlined in the guidance. The specific items include employee compensation, depreciation, intangible lease asset amortization, impairment losses, gains or losses on long-lived assets held for disposal or disposed of, gains and losses on derivative instruments and related hedged items, and various other expenses, gains and losses. The tabular presentation must also include a total for “other items” that are not required to be otherwise itemized for each relevant expense caption. A qualitative description of the “other items” category must also be provided. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these disclosure requirements to determine their impact on its condensed consolidated financial statements.
Derivatives and Hedging
In November 2025, the FASB issued ASU 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The new guidance is intended to more closely align hedge accounting with the economics of an entity’s risk management activities and better reflect those strategies in financial reporting. ASU 2025-09 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods and is to be adopted on a prospective basis. The Company is currently assessing the impact on its condensed consolidated financial statements.
Interim Reporting
In December 2025, the FASB issued ASC 2025-11, Interim Reporting (Topic 270) which aims to improve the navigability of ASC 270 and clarify when it applies. This includes adding a list of required interim disclosures and the addition of a requirement for reporting entities to disclose events occurring after the end of the last annual reporting period that have a material impact on the entity. The ASU is not intended to change the fundamental nature of interim reporting or expand or reduce current disclosure requirements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and can be adopted either prospectively or retrospectively to any or all periods presented. The Company is currently evaluating these disclosure requirements to determine their impact on its condensed consolidated financial statements.
Evaluation of the Company’s Ability to Continue as a Going Concern
Under the accounting guidance related to the presentation of financial statements, the Company is required to evaluate, on a quarterly basis, whether or not the entity’s current financial condition, including its sources of liquidity at the date that the condensed consolidated financial statements are issued, will enable the entity to meet its obligations as they come due arising within one year of the date of the issuance of the Company’s condensed consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the entity will be able to continue as a going concern. The Company’s condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
In applying applicable accounting guidance, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company’s obligations due over the next twelve months as well as the Company’s recurring business operating expenses. The Company concludes that it is probable that the Company will be able to meet its obligations arising within one year of the date of issuance of these condensed consolidated financial statements within the parameters set forth in the accounting guidance.
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3. Investment Properties
Investment properties consist of the following:
March 31, 2026 | December 31, | ||||||
| (unaudited) | | 2025 | ||||
Land | $ | | $ | | |||
Site improvements |
| |
| | |||
Buildings and improvements (1) |
| |
| | |||
Investment properties at cost (2) |
| |
| | |||
Less accumulated depreciation |
| |
| | |||
Investment properties, net | $ | | $ | |
| (1) | Includes tenant improvements (both those acquired as part of the acquisition of the properties and those constructed after the properties’ acquisition), capitalized leasing commissions and other capital costs incurred post-acquisition. |
| (2) | Excludes intangible lease assets and liabilities (see Note 2, above, for a discussion of the Company’s accounting treatment of intangible lease assets), escrow deposits and property reserves. |
The Company’s depreciation expense on investment properties was $
Capitalized Tenant Improvements
The Company carries two categories of capitalized tenant improvements on its condensed consolidated balance sheets, which are recorded under investment properties, net, on the Company’s condensed consolidated balance sheets. The first category is the allocation of acquisition costs to tenant improvements that is recorded on the Company’s condensed consolidated balance sheets as of the date of the Company’s acquisition of the investment property. The second category is tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property. Both categories are recorded as a component of investment properties on the Company’s condensed consolidated balance sheets.
Depreciation expense on the allocation of acquisition costs to tenant improvements and tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property are depreciated on a straight-line basis as a component of depreciation expense on the Company’s condensed consolidated statement of operations. Capitalized lease incentives are amortized as a reduction of rental income on a straight-line basis over the term of the respective lease.
Details of these deferred costs, net of depreciation are as follows:
March 31, 2026 | December 31, | |||||
| (unaudited) | | 2025 | |||
Capitalized tenant improvements – acquisition cost allocation, net | $ | | $ | | ||
Capitalized tenant improvements incurred subsequent to acquisition, net |
| |
| | ||
Depreciation of capitalized tenant improvements arising from the acquisition cost allocation was $
During the three months ended March 31, 2026 and 2025, the Company recorded $
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subsequent to acquisition of $
Capitalized Leasing Commissions
The Company carries two categories of capitalized leasing commissions on its condensed consolidated balance sheets. The first category is the allocation of acquisition costs to leasing commissions that is recorded as an intangible asset (see Note 2, above, for a discussion of the Company’s accounting treatment for intangible assets) on the Company’s condensed consolidated balance sheet as of the date of the Company’s acquisition of the investment property. The second category is leasing commissions incurred and paid by the Company subsequent to the acquisition of the investment property. These costs are carried on the Company’s condensed consolidated balance sheets under investment properties.
The Company generally records depreciation of capitalized leasing commissions incurred and paid by the Company subsequent to the acquisition of an investment property on a straight-line basis over the terms of the related leases. Details of these deferred costs, net of depreciation are as follows:
March 31, 2026 | December 31, | ||||||
(unaudited) | 2025 | ||||||
Capitalized leasing commissions, net | | $ | | | $ | | |
During the three months ended March 31, 2026 and 2025 the Company recorded $
2025 Property Acquisitions
Buffalo Wild Wings Property
On January 24, 2025, the Company completed its acquisition of the Buffalo Wild Wings Property, a
United Rentals Property
On February 21, 2025, the Company completed its acquisition of the United Rentals Property, a
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Tesla Pensacola Property
On July 18, 2025, the Company completed its acquisition of a Tesla sales, service and delivery facility consisting of a
Buffalo | United | Tesla | ||||||||||||||
Wild Wings | Rentals | Pensacola | ||||||||||||||
Property | | Property | Property | Total | ||||||||||||
Fair value of assets acquired: | ||||||||||||||||
Investment property (a) | $ | | $ | | $ | | $ | | ||||||||
Lease intangibles (b) | | | | | ||||||||||||
Below market lease (b) | ( | — | ( | ( | ||||||||||||
Fair value of net assets acquired (c) | $ | | $ | | $ | | $ | | ||||||||
Purchase consideration: | ||||||||||||||||
Consideration paid with cash (d) | $ | | $ | | $ | | $ | | ||||||||
Consideration paid with proceeds from line of credit, short term, net | — | — | | (e) | | |||||||||||
Consideration paid with OP Units |
| | (f) |
| | (g) |
| — |
| | ||||||
Total consideration (h) | $ | | $ | | $ | | $ | |
| (a) | Represents the fair value of the investment property acquired which includes land, buildings, site improvements and tenant improvements. The fair value was determined using the market approach, the cost approach, the income approach or a combination thereof. Closing costs were allocated and added to the fair value of the tangible assets acquired. |
| (b) | Represents the fair value of lease intangibles. Lease intangibles include leasing commissions, leases in place, below market leases and legal and marketing costs associated with replacing existing leases. |
| (c) | Represents the total fair value of assets and liabilities acquired at closing. |
| (d) | Represents cash paid for closing costs paid at closing or directly by the Company outside of closing. |
| (e) | Represents the Farmers Line of Credit used to fund the purchase of the Tesla Pensacola Property, net of capitalized loan issuance costs. See Note 5, below. |
| (f) | Represents issuance of |
| (g) | Represents issuance of |
| (h) | Represents the consideration paid for the fair value of the assets and liabilities acquired. |
Assets Held for Sale
The Company records properties, including the related intangible lease assets, as assets held for sale and any related intangible lease liabilities and any associated mortgages payable, net, as liabilities associated with assets held for sale, on the Company's condensed consolidated balance sheets, when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year.
During February 2025, the Company committed to a plan to sell the Hanover Square Outparcel and as a result, reclassified the assets associated with the Hanover Square Outparcel as assets held for sale. The Company believes that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Hanover Square Outparcel in the three months ended March 31, 2026 or the year ended December 31, 2025.
During June 2025, the Company committed to a plan to sell the Salisbury Marketplace Property and as a result, reclassified the assets associated with the Salisbury Marketplace Property as assets held for sale. The Company believed that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Salisbury Marketplace Property in the year ended December 31, 2025. On October 23, 2025, the Company completed the sale of the Salisbury Marketplace Property (see below).
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As discussed above, on July 18, 2025, the Company acquired the Tesla Pensacola Property and immediately committed to a plan to contribute the Tesla Pensacola Property to the Company’s first DST and subsequently commence efforts to sell
During August 2025, the Company committed to a plan to sell the Greenbrier Business Center Property and as a result, reclassified the assets associated with the Greenbrier Business Center Property as assets held for sale. The Company believes that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale. related to the Greenbrier Business Center Property in the three months ended March 31, 2026 or the year ended December 31, 2025. The Company sold the Greenbrier Center Business Center Property on February 13, 2026.
During October 2025, the Company committed to a plan to sell the Buffalo Wild Wings and United Rentals Properties and, as a result, reclassified the assets associated with the Buffalo Wild Wings and United Rentals Properties as assets held for sale. The Company believed that the Company’s carrying cost exceeded the fair value, less estimated costs to sell, so the Company recorded $
During December 2025, the Company committed to a plan to sell the Parkway Property and as a result, reclassified these assets associated with the Parkway Property as assets held for sale and liabilities associated with assets held for sale, respectively. The Company believes that the fair value, less estimated costs to sell, exceeded the Company’s carrying cost, so the Company did not record any impairment of assets held for sale related to the Parkway Property during the three months ended March 31, 2026 or during the year ended December 31, 2025. The Company sold the Parkway Property on February 27, 2026.
As of March 31, 2026 and December 31, 2025, assets held for sale and liabilities associated with assets held for sale consisted of the following:
March 31, 2026 | December 31, | ||||||
Assets Held for Sale | | (unaudited) | | 2025 | |||
Investment properties, net, held for sale, associated with the Greenbrier Business Center Property | — | | |||||
Investment properties, net, held for sale, associated with the Tesla Pensacola Property | | | |||||
Investment properties, net, held for sale, associated with the Hanover Square Outparcel | | | |||||
Investment properties, net, held for sale, associated with the Parkway Property | — | | |||||
Intangible lease assets, net, held for sale, associated with the Greenbrier Business Center Property | — | | |||||
Intangible lease assets, net, held for sale, associated with the Tesla Pensacola Property | | | |||||
Total assets held for sale | $ | | $ | | |||
March 31, 2026 | December 31, | ||||||
Liabilities Held for Sale | | (unaudited) | | 2025 | |||
Mortgages payable, net, associated with the Greenbrier Business Center Property | — | | |||||
Mortgages payable, net, associated with the Tesla Pensacola Property | | | |||||
Mortgages payable, net, associated with the Parkway Property | — | | |||||
Intangible lease liabilities, net, held for sale associated with the Tesla Pensacola Property | | | |||||
Total liabilities held for sale | $ | | $ | | |||
Sales of Investment Properties
On October 23, 2025, the Company sold the Salisbury Marketplace Property to an unrelated third party for a sale price of $
On December 30, 2025, the Company sold the Buffalo Wild Wings and United Rentals Properties to an unrelated third party for a sale price of $
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$
On February 13, 2026, the Company sold the Greenbrier Business Center Property to an unrelated third party for a sale price of $
On February 27, 2026, the Company sold the Parkway Property to an unrelated third party for a sale price of $
On March 30, 2026, the Company sold the Franklin Square Property to an unrelated third party for a sale price of $
The Company reports properties that either were previously disposed of or are currently held for sale in continuing operations in the Company’s condensed consolidated statements of operations if the disposition, or anticipated disposition, of the assets does not represent a shift in the Company’s investment strategy. The Company’s sale of the investment properties discussed above does not constitute a change in the Company’s investment strategy, which continues to include all investment property segments, depending on current market conditions, but which has been expanded to include sales of some of the Company’s legacy portfolio to create capital for the Company’s DST sponsorship program and other investment and acquisition opportunities.
Operating results of the Greenbrier Business Center, Parkway, Franklin Square, Buffalo Wild Wings, United Rentals, and Salisbury Marketplace Properties, which are included in continuing operations, are as follows:
For the three months ended | ||||||
March 31, | ||||||
2026 | 2025 | |||||
(unaudited) | (unaudited) | |||||
Revenue | ||||||
Investment property revenues | $ | | $ | | ||
Total Revenue | | | ||||
Operating Expenses | ||||||
Investment property operating expenses | | | ||||
Bad debt expense | — | | ||||
Loss on impairment | — | | ||||
Depreciation and amortization | | | ||||
Total Operating Expenses | | | ||||
Gain on disposal of investment properties | | — | ||||
Loss on extinguishment of debt | ( | — | ||||
Operating Income | | | ||||
Interest expense | ( | ( | ||||
Other income | ( | | ||||
Other expense | — | ( | ||||
Net Income | | | ||||
Less: Net income (loss) attributable to Parkway Property noncontrolling interests | | ( | ||||
Less: Net income attributable to Operating Partnership noncontrolling interests | | | ||||
Net Income Attributable to Medalist Common Stockholders | $ | | $ | | ||
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4. Mandatorily Redeemable Preferred Stock
On January 10, 2025, the Company completed the final redemption of the remaining
The Company classified the Mandatorily Redeemable Preferred Stock as a liability in accordance with ASC Topic No. 480, “Distinguishing Liabilities from Equity,” which states that mandatorily redeemable financial instruments should be classified as liabilities and therefore the related dividend payments are treated as a component of interest expense in the accompanying condensed consolidated statements of operations (see Note 5, below, for a discussion of interest expense associated with the mandatorily redeemable preferred stock).
For all periods during which the Mandatorily Redeemable Preferred Stock was outstanding, the Company paid a cash dividend on the stock equal to
5. Loans Payable
Mortgages Payable
The Company’s mortgages payable, net consists of the following:
March 31, | |||||||||||||||
Monthly | Interest | 2026 | December 31, | ||||||||||||
Property | | Payment | | Rate | | Maturity | | (unaudited) | | 2025 | |||||
Franklin Square (a) |
| $ | |
| | % | $ | — | $ | | |||||
Ashley Plaza (b) | |
| | % |
| |
| | |||||||
Brookfield Center (c) | | | % | | | ||||||||||
Wells Fargo Mortgage Facility (Lancer Center) (d) | | | % | | | ||||||||||
Unamortized issuance costs, net | ( | ( | |||||||||||||
Total mortgages payable, net |
| |
| | $ | | $ | | |||||||
| (a) | The mortgage loan for the Franklin Square Property in the original principal amount of $ |
| (b) | The mortgage loan for the Ashley Plaza Property bears interest at a fixed rate of |
| (c) | The mortgage loan for the Brookfield Property bears interest at a fixed rate of |
| (d) | On June 13, 2022, the Company entered into a mortgage loan facility with Wells Fargo Bank (the “Wells Fargo Mortgage Facility”) in the principal amount of $ |
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| Salisbury Marketplace Property and to refinance the mortgages payable on the Lancer Center Property and the Greenbrier Business Center Property (the “Secured Properties”). The Wells Fargo Mortgage Facility bears interest at a fixed rate of |
On October 23, 2025 and February 13, 2026, the Company sold the Salisbury Marketplace and Greenbrier Business Center Properties, respectively and used $
The Company’s mortgages payables, net, associated with assets held for sale, consists of the following:
March 31, | |||||||||||||||
Monthly | Interest | 2026 | December 31, | ||||||||||||
Property | Payment | | Rate | Maturity | | (unaudited) | | 2025 | |||||||
Parkway Property (a) | $ | |
| Variable | November 2031 |
| — |
| | ||||||
Wells Fargo Mortgage Facility (Greenbrier Business Center) (see note (d), above) | | | % | June 2027 | — | | |||||||||
Tesla DST Mortgage (b) | Interest only | Variable | November 2030 | | | ||||||||||
Total mortgages payable, net, associated with assets held for sale |
| | $ | | $ | | |||||||||
| (a) | The interest rate for the mortgage loan for the Parkway Property was based on , with a margin of |
| (b) |
Farmers Line of Credit
On July 18, 2025, in connection with the completion of the acquisition of the Tesla Pensacola Property discussed in Note 3, above, the Company, through its wholly-owned subsidiaries, entered into a loan agreement with Farmers and Merchants Bank of Long Beach, for the Farmers Line of Credit in the maximum amount of $
On November 7, 2025, in connection with the Company’s contribution of the Tesla Pensacola Property to the XXV DST, the Company repaid $
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December 30, 2025, the Company used $
The Farmers Line of Credit was unconditionally guaranteed by the Company and the Operating Partnership, had a one-year term, maturing on August 10, 2026. As of March 31, 2026 and December 31, 2025, respectively, the balance of the Farmers Line of Credit was $
Tesla DST Mortgage
On November 7, 2025, in connection with the contribution of the Tesla Pensacola Property to the XXV DST discussed in Note 3, the XXV DST entered into the Tesla DST Mortgage with Pinnacle Bank for a principal amount of $
In connection with the Tesla DST Mortgage, the Operating Partnership agreed to provide a limited guaranty (the “Guaranty”) with respect to certain potential costs, expenses, losses, damages and other sums for which the XXV DST is directly liable under the Tesla DST Mortgage, including losses or damages that may result from certain intentional actions committed by the XXV DST in violation of the Tesla DST Mortgage. The Operating Partnership also provide a guaranty of the principal balance and any interest or other sums outstanding under the Tesla DST Mortgage in the event of certain bankruptcy or insolvency proceedings involving the XXV DST.
Interest Rate Protection Transactions
Parkway Mortgage Loan
On October 28, 2021, the Company entered into an interest rate protection transaction to limit its exposure to increases in interest rates on the variable rate mortgage loan on the Parkway Property (the “Interest Rate Protection Transaction”). Under this agreement, the Company’s interest rate exposure is
For the period from September 1, 2022 through June 30, 2023, LIBOR, and for the period from July 1, 2023 through the February 13, 2026 repayment of the Parkway mortgage, SOFR exceeded the
Tesla DST Mortgage
Concurrent with the Pinnacle Loan closing the XXV DST entered into an interest rate swap agreement with Pinnacle Bank (the “Interest Rate Swap”) to fix the interest rate at
In accordance with the guidance on derivatives, the Company records all derivatives on the balance sheet at fair value under other assets with changes in fair value being included in other income on its condensed consolidate statements of operations. The fair value of the Interest Rate Swap is determined using Level 2 inputs. See Note 8 for additional information.
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Wells Fargo Line of Credit
In 2024, the Company, through its wholly-owned subsidiaries, entered into an amended and restated Revolving Line of Credit Note with Wells Fargo Bank, National Association for up to $
Loss on Extinguishment of Debt
Upon the sale of the Greenbrier Business Center Property, the Parkway Property and the Franklin Square Property, the Company repaid the mortgages payable that were secured by each of these properties. The Company accounted for the repayment of the mortgage payable under debt extinguishment accounting in accordance with ASC 470.
On February 13, 2026, the Company sold the Greenbrier Business Center Property and repaid a portion of the Wells Fargo Mortgage facility that was partially secured by the Greenbrier Business Center Property. During, the three months ended March 31, 2026, the Company recorded a loss on extinguishment of debt of $
On February 27, 2026, the Company and its tenant in common partner sold the Parkway Property and repaid the mortgage loan secured by the Parkway Property. During, the three months ended March 31, 2026, the Company recorded a loss on extinguishment of debt of $
On March 30, 2026, the Company sold the Franklin Square Property and repaid the mortgage loan secured by the Franklin Square Property. During, the three months ended March 31, 2026, the Company recorded a loss on extinguishment of debt of $
Interest Expense
Interest expense, including amortization of capitalized issuance costs consists of the following:
For the three months ended March 31, 2026 | |||||||||||||||
(unaudited) | |||||||||||||||
| | Amortization | | Interest rate | | | |||||||||
Mortgage | of discounts and | protection | Other | ||||||||||||
Interest | capitalized | transaction | interest | ||||||||||||
| Expense |
| issuance costs |
| payments |
| expense |
| Total | ||||||
Franklin Square | $ | | | $ | | | $ | — | | $ | — | | $ | | |
Ashley Plaza |
| |
| |
| — |
| — |
| | |||||
Brookfield Center |
| |
| |
| — |
| — |
| | |||||
Parkway Center | | — | ( | — | | ||||||||||
Wells Fargo Mortgage Facility | | | — | | | ||||||||||
Tesla Pensacola (Pinnacle Bank) | | — | ( | — | | ||||||||||
Total interest expense | $ | | $ | | $ | ( | $ | | $ | | |||||
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For the three months ended March 31, 2025 | |||||||||||||||
(unaudited) | |||||||||||||||
| | Amortization | | Interest rate | | | |||||||||
Mortgage | of discounts and | protection | Other | ||||||||||||
Interest | capitalized | transaction | interest | ||||||||||||
| Expense |
| issuance costs |
| payments |
| expense |
| Total | ||||||
Franklin Square | $ | |
| $ | |
| $ | — | | $ | — |
| $ | | |
Ashley Plaza |
| |
| |
| — |
| — |
| | |||||
Brookfield Center |
| |
| |
| — |
| — |
| | |||||
Parkway Center | |
| |
| ( |
| — |
| | ||||||
Wells Fargo Mortgage Facility | |
| |
| — |
| — |
| | ||||||
Wells Fargo Line of Credit | — | — | — | | | ||||||||||
Amortization and preferred stock dividends on mandatorily redeemable preferred stock | — |
| |
| — |
| |
| | ||||||
Other interest |
| — |
| — |
| — |
| |
| | |||||
Total interest expense | $ | | $ | | $ | ( | $ | | $ | | |||||
Interest accrued and accumulated amortization of capitalized issuance costs consist of the following:
As of March 31, 2026 | ||||||||||||
(unaudited) | As of December 31, 2025 | |||||||||||
| | Accumulated | | | Accumulated | |||||||
amortization of | amortization | |||||||||||
Accrued | capitalized | Accrued | of capitalized | |||||||||
interest | issuance costs | interest | issuance costs | |||||||||
Franklin Square | $ | — | $ | — | $ | | $ | | ||||
Ashley Plaza |
| — |
| |
| — |
| | ||||
Brookfield Center |
| — |
| |
| — |
| | ||||
Parkway Center | — | — | | — | ||||||||
Wells Fargo Mortgage Facility | — | | — | | ||||||||
Tesla Pensacola (Pinnacle Bank) | | — | ( | (1) | — | |||||||
Total | $ | | $ | | $ | | $ | | ||||
(1) | Reflects the payment due for the month of December 2025 under the Interest Rate Swap for the Tesla DST Mortgage which was received on January 2, 2026. |
Debt Maturity
The Company’s scheduled principal repayments on indebtedness as of March 31, 2026 are as follows:
Mortgages Payable | Mortgages Payable Associated with Assets Held for Sale | Total | |||||||
For the remaining nine months ending December 31, 2026 | | $ | | | $ | — | | $ | |
2027 |
| | — | | |||||
2028 |
| | — | | |||||
2029 |
| | — | | |||||
2030 |
| — | | | |||||
Total principal payments and debt maturities | | | | ||||||
Less unamortized issuance costs |
| ( | ( | ( | |||||
Net principal payments and debt maturities | $ | | $ | | $ | | |||
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6. Rentals under Operating Leases
Future minimum rents (based on recognizing future rents on the straight-line basis) to be received under noncancelable tenant operating leases for each of the next five years and thereafter, excluding common area maintenance and other expense pass-throughs, as of March 31, 2026 are as follows:
For the remaining nine months ending December 31, 2026 | | $ | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
2030 |
| | |
Thereafter |
| | |
Total minimum rents | $ | |
7. Equity
The Company has authority to issue
Exchange of Common Shares for OP Units
On August 8, 2025 and November 14, 2025, the Company and the Operating Partnership entered into an exchange agreement (the “Exchange Agreement”) with Francis P. Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board, pursuant to which Mr. Kavanaugh exchanged an aggregate of
Common Stock Repurchase Plan
In December 2021, the Board approved a program to purchase up to
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Purchase (Trade) Date | | Shares Purchased | | Price Per Share | | Fees |
| Total Cost (1) | |||
August 6, 2024 | | $ | | $ | | $ | | ||||
Total - year ended December 31, 2024 | | $ | | (2) | $ | |
| $ | | ||
February 3, 2025 | | $ | | $ | |
| $ | | |||
February 10, 2025 | | | |
| | ||||||
March 19, 2025 | | | |
| | ||||||
April 23, 2025 | | | |
| | ||||||
Total - year ended December 31, 2025 | | $ | | (2) | $ | |
| $ | | ||
| (1) | Total cost including transaction fees. |
| (2) | Annual average price per share, including fees. |
Common Shares and Operating Partnership Units Outstanding
As of March 31, 2026 and December 31, 2025, respectively, there were
2018 Equity Incentive Plan
The Company’s 2018 Equity Incentive Plan (the “Equity Incentive Plan”) was adopted by the Board on July 27, 2018 and approved by the Company’s stockholders on August 23, 2018. The Equity Incentive Plan permits the grant of stock options, stock appreciation rights, stock awards, performance units, incentive awards and other equity-based awards (including LTIP units of the Company’s Operating Partnership) to its employees or an affiliate (as defined in the Equity Incentive Plan) of the Company and for up to the greater of (i)
On January 15, 2025, the Company's Compensation Committee approved a grant of
On January 28, 2026, the Company's Compensation Committee approved a grant of
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value of the grants, or $
On each January 1 during the term of the Equity Incentive Plan, the maximum number of Common Shares that may be issued under the Equity Incentive Plan will increase by eight percent (
Earnings per Share
Basic earnings per share for the Company’s Common Shares is calculated by dividing income (loss) from continuing operations, excluding the net income (loss) attributable to noncontrolling interests, by the Company’s weighted-average number of Common Shares outstanding during the period. Diluted earnings per share is computed by dividing the net income attributable to common stockholders, excluding the net loss attributable to noncontrolling interests, by the weighted average number of Common Shares, including any dilutive shares. As of March 31, 2026 and 2025, respectively, there were
The Company's income (loss) per common share is determined as follows:
Three months ended March 31, | ||||||
| 2026 | | 2025 | |||
| (unaudited) | | (unaudited) | |||
Basic and diluted shares outstanding | | |||||
Weighted average Common Shares – basic |
| |
| | ||
Effect of conversion of Operating Partnership Units |
| |
| | ||
Weighted average Common Shares – diluted |
| |
| | ||
Calculation of loss per share – basic and diluted |
|
| ||||
Net loss attributable to common stockholders | $ | — | $ | ( | ||
Weighted average Common Shares – basic and diluted |
| — |
| | ||
Loss per share – basic and diluted | $ | — | $ | ( | ||
Calculation of earnings per share – basic | ||||||
Net income attributable to common stockholders | $ | | $ | — | ||
Weighted average Common Shares – basic | | — | ||||
Earnings per share – basic | $ | | $ | — | ||
Calculation of earnings per share – diluted | ||||||
Net income attributable to common stockholders | $ | | $ | — | ||
Weighted average Common Shares – diluted | | — | ||||
Earnings per share – diluted | $ | | $ | — | ||
Dividends and Distributions
During the three months ended March 31, 2026, dividends in the amount of $
Total dividends paid to holders of Common Shares and distributions to noncontrolling interests paid during the three months ended March 31, 2026 and 2025, respectively, are as follows:
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| Three months ended March 31, | |||||
| 2026 | | 2025 | |||
(unaudited) | | (unaudited) | ||||
Common stockholders (dividends) | $ | | $ | | ||
Parkway Property noncontrolling interest (distributions) |
| |
| | ||
DST Entities noncontrolling interest (distributions) | | — | ||||
Operating Partnership Unit holders (distributions) |
| |
| | ||
Total dividends and distributions | $ | | $ | | ||
8.Fair Value Measurements
The condensed consolidated balance sheets include certain financial instruments (primarily cash, cash equivalents, restricted cash, rent and other receivables and unbilled rent and accounts payable and accrued liabilities) that are carried at cost which approximates fair values due to their short term nature. The Company’s debt facilities bear interest that fluctuates with the changes in SOFR and because the variable interest rate approximates market borrowing rates available to the Company, the carrying value of debt facilities approximates fair value.
Financial Asset and Liabilities Measured at Fair Value on a Recurring Basis
Investments in marketable securities are carried at fair value using Level 1 inputs based on quoted prices on applicable markets. Unrecognized gains of $
The Company’s interest rate protection instruments are carried at fair value using observable inputs such as yield curves, volatilities and other current market data, all of which are considered Level 2 inputs.
The following tables summarize assets that are measured on a recurring basis:
March 31, 2026 | ||||||||||||||
(unaudited) | ||||||||||||||
Description | | Classification | | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Money market funds | Cash and cash equivalents | $ | | $ | — | $ | — | $ | | |||||
Equity securities | Investment in marketable securities | $ | | $ | — | $ | — | $ | | |||||
Crypto Assets (Bitcoin) | Other intangible assets | $ | | $ | — | $ | — | $ | | |||||
Interest Rate Swap | $ | — | $ | | $ | — | $ | | ||||||
December 31, 2025 | ||||||||||||||
Description | | Classification | | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Money market funds | Cash and cash equivalents | $ | — | $ | — | $ | — | $ | — | |||||
Equity securities | Investment in marketable securities | $ | — | $ | — | $ | — | $ | — | |||||
Crypto Assets (Bitcoin) | Other intangible assets | $ | | $ | — | $ | — | $ | | |||||
Interest Rate Protection Transaction | $ | — | $ | | $ | — | $ | | ||||||
Interest Rate Swap | $ | — | $ | | $ | — | $ | | ||||||
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
There are
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Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
There are
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Long-lived assets, including investment properties, intangible lease assets and other intangible assets, are measured at fair value on a non-recurring basis. See Note 2.
Assets held for sale are measured at the lower of carrying amount or fair value less cost to sell on a non-recurring basis using sale agreements and written offers which are considered Level 2 inputs.
9. Commitments and Contingencies
Insurance
The Company carries comprehensive liability, fire, extended coverage, business interruption and rental loss insurance covering all of the properties in its portfolio, in addition to other coverages that may be appropriate for certain of its properties. Additionally, the Company carries a directors and officers liability insurance policy that covers such claims made against the Company and its directors and officers. The Company believes the policy specifications and insured limits are appropriate and adequate for its properties given the relative risk of loss, the cost of the coverage and industry practice; however, its insurance coverage may not be sufficient to fully cover its losses.
Concentration of Credit Risk
The Company is subject to risks incidental to the ownership and operation of commercial real estate. These risks include, among others, the risks normally associated with changes in the general economic climate, trends in the retail industry, creditworthiness of tenants, competition for tenants and customers, changes in tax laws, interest rates, the availability of financing and potential liability under environmental and other laws. The Company’s portfolio of properties is dependent upon regional and local economic conditions and is geographically concentrated in the Mid-Atlantic, specifically in North Carolina and South Carolina, which represented approximately
Interest Rate Risk
As of March 31, 2026, the interest rate environment remains elevated, significantly impacting the Company’s operations. The Federal Reserve has maintained a higher federal funds rate as part of its ongoing strategy to combat inflation. This situation has several implications for the Company, which is sensitive to a higher interest rate environment due to the Company’s reliance on debt financing. Higher interest rates increase the cost of borrowing for the Company, raising the expense associated with financing property acquisitions and developments. This could limit the ability to pursue new investments or expansions, potentially slowing growth. Additionally, refinancing existing debt in a high-rate environment could lead to increased costs. Elevated interest rates typically lead to higher capitalization rates, which can reduce property valuations. A decline in asset values may impact the net asset value (NAV) calculations, affecting investors’ perceptions and overall market confidence in the Company. The ongoing interest rate volatility may affect investor sentiment towards the Company, potentially leading to capital outflows as investors seek alternative investment opportunities with better risk-adjusted returns.
The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. To limit this exposure, the Company attempts to obtain mortgage financing on a long-term, fixed-rate basis. However, from time to time, the Company may obtain variable-rate mortgage loans and, as a result, may enter into interest rate cap agreements that limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. These interest rate caps are derivative instruments designated as cash flow hedges on the forecasted interest payments on the debt obligation. Our objective in using interest rate caps is to limit our exposure to interest rate movements.
As of March 31, 2026 and December 31, 2025, all of the Company’s long-term debt either bore interest at fixed rates or was capped to a fixed rate. The Company’s debt obligations are more fully described in Note 5, Loans Payable, above.
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Potential Impact of Tariffs and Trade Restrictions on Tenants and Our Business
Changes in international trade policies, including the imposition of tariffs, duties, import taxes, or other trade restrictions by the United States or foreign governments, could adversely impact the operations of our retail tenants. Our tenants could source a substantial portion of their merchandise, raw materials, or manufacturing services from foreign countries. The imposition of new or increased tariffs on these goods, or retaliatory measures from trading partners, could increase costs for these tenants, potentially reducing their profitability and operational flexibility. Increased costs may not be fully passed on to consumers, which could lead to lower sales volumes, compressed margins, and in some cases, store closures or bankruptcy filings. If a significant number of our tenants experience financial distress or reduce their physical retail presence, this could negatively affect our occupancy rates, rental income, and cash flows.
Regulatory and Environmental
As the owner of the buildings on its properties, the Company could face liability for the presence of hazardous materials (e.g., asbestos or lead) or other adverse conditions (e.g., poor indoor air quality) in its buildings. Environmental laws govern the presence, maintenance, and removal of hazardous materials in buildings, and if the Company does not comply with such laws, it could face fines for such noncompliance. Also, the Company could be liable to third parties (e.g., occupants of the buildings) for damages related to exposure to hazardous materials or adverse conditions in its buildings, and the Company could incur material expenses with respect to abatement or remediation of hazardous materials or other adverse conditions in its buildings. In addition, some of the Company’s tenants routinely handle and use hazardous or regulated substances and wastes as part of their operations at the Company’s properties, which are subject to regulation. Such environmental and health and safety laws and regulations could subject the Company or its tenants to liability resulting from these activities. Environmental liabilities could affect a tenant’s ability to make rental payments to the Company, and changes in laws could increase the potential liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise materially and adversely affect the Company’s operations. The Company is not aware of any material contingent liabilities, regulatory matters or environmental matters that may exist.
Litigation
The Company and its subsidiaries are, from time to time, parties to litigation arising from the ordinary course of their business. The Company is not presently subject to any material litigation nor, to its knowledge, is any other litigation threatened against the Company, including routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which would be covered by liability insurance and any of which collectively would not be expected to have a material adverse effect on the Company’s liquidity, results of operations or business or financial condition.
10. Related Party Transactions
Redemption of OP Units
On February 12, 2026, Francis P. Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board, submitted a Notice of Exercise of Common Unit Redemption Right (the “Notice”) for
Exchange of Common Shares for OP Units
On August 8, 2025 and November 14, 2025, the Company and the Operating Partnership entered into the Exchange Agreement with Francis P. Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board, pursuant to which Mr. Kavanaugh exchanged an aggregate of
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Buffalo Wild Wings Property Acquisition
On January 24, 2025, the Company acquired the Buffalo Wild Wings Property (see Note 3, above) from Fort Ashford Funds, LLC. The sole manager and member of Fort Ashford Funds, LLC is CWS BET Seattle, LP, a Delaware limited partnership, a company controlled and owned by Frank Kavanaugh, the Company’s President and Chief Executive Officer and Chairman of the Board. Pursuant to the Company’s Related Person Transaction Policy, the Company’s Audit Committee determined that the terms of the acquisition were those that would normally be agreed upon in an arms-length transaction.
United Rentals Property Acquisition
On February 21, 2025, the Company acquired the United Rentals Property (see Note 3, above) from Dionysus Investments, LLC, a California limited liability company. Dionysus Investments, LLC is controlled and owned by Frank Kavanaugh, the Company’s President and Chief Executive Officer and Chairman of the Board. Pursuant to the Company’s Related Person Transaction Policy, the Company’s Audit Committee determined that the terms of the acquisition were those that would normally be agreed upon in an arms-length transaction.
Staffing Agreement
The Company has entered into a staffing agreement dated November 13, 2023 (the “Staffing Agreement”) with Gunston Consulting, LLC (the “Consultant”) to employ staff on behalf of the Company. The Consultant’s sole member is C. Brent Winn, Jr., the Company’s Chief Financial Officer. Under the Staffing Agreement, the Company reimburses the Consultant for any approved employee’s salary, payroll taxes and benefits, including health insurance and retirement benefits, and related expenses. All expenses are reimbursed at cost and without a markup.
11. Segment Information
Prior to January 1, 2026, the Company aggregated individual properties into retail, flex and STNL operating segments. Effective on January 1, 2026, following the Company’s strategic repositioning and increased focus on DST sponsorship activities, the CODM began evaluating the Company’s real estate portfolio on a combined basis as a single, “Investment Properties” segment. Prior-period segment information has been recast to conform to the current presentation. Additionally, as of January 1, 2026, the Company established a second operating segment for its DST sponsorship activities. These
The Company's CODM consists of the President and Chief Executive Officer, and the Chief Financial Officer, who are responsible for assessing performance and allocating resources. The CODM primarily evaluates the Company's overall performance and operating segment performance based on net operating income adjusted for interest expense and considers additional metrics such as adjusted funds from operations (“AFFO”). The CODM receives financial information monthly.
Pursuant to ASU 2023-07, the Company has identified and disclosed (i) operating expenses (investment property operating expenses and DST Program operating expenses) and (ii) interest expense as significant expense categories by segment. These expense categories are regularly provided to the CODM and included in the reported measure of segment profit or loss. The CODM does not evaluate investment property operating expenses at a more detailed level because many property operating expenses are non-controllable and are not considered to be a useful measure of operating performance.
Certain expenses are not allocated to individual segments, including share-based compensation, corporate legal, accounting and other professional fees, and corporate general and administrative expenses. These expenses are reviewed at the corporate level and are not included in segment-level profitability measures. In addition, depreciation and amortization are not allocated among segments and are not used by the CODM to assess performance or allocate resources. Asset information by segment is not reported as the CODM does not use this measure to assess segment performance or to make resource allocation decisions.
Net operating income (“NOI”) is a non-GAAP financial measure and is not considered a measure of operating results or cash flows from operations under GAAP. For the Company’s investment properties, NOI reflects occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. NOI, as the Company calculates it, may not be directly comparable to similarly titled, but differently calculated, measures for other real estate companies. NOI is calculated by deducting operating expenses from operating revenues. For the Company’s DST Program, NOI reflects the underlying profitability of the business.
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NOI adjusted for interest expense is the primary performance measure reviewed by management to assess the operating performance of investment properties and is calculated by deducting operating expenses and interest expense from operating revenues. Operating revenues include rental income, tenant reimbursements, and other property income; and operating expenses include all investment property operating costs. Interest expense includes mortgage interest expense, only, and excludes non-mortgage interest expense and non-cash interest expense such as amortization of loan issuance costs. The NOI adjusted for interest expense performance metric consists of only revenues and expenses directly related to real estate rental operations.
NOI for the Company’s DST sponsorship program is calculated by deducting DST Program operating expenses from DST Program operating revenues. Operating revenues include acquisition fees (which are generally recorded when the DST entity is de-consolidated from the Company upon the sale of a majority of the DST entity beneficial interests), asset management fees, and disposition fees; and DST Program operating expenses include salaries and benefits, marketing, travel, office, and other expenses related to the DST Program.
The following table presents property operating revenues, operating expenses and interest expense by operating segment:
For the three months ended March 31, (unaudited) | ||||||||||||||||||
| Investment Properties | | DST Program | | Total | |||||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 | |||||||
Revenues | | $ | | $ | | $ | — | $ | — | $ | | $ | | |||||
Operating expenses |
| |
| | | — |
| |
| | ||||||||
Property related interest expense (1) | |
| | — | — |
| |
| | |||||||||
Adjusted net operating income | $ | | $ | | $ | ( | $ | — | $ | | $ | | ||||||
Reconciliation to net loss from operations (2) | ||||||||||||||||||
Less: Bad debt expense | — | | — | — | — | | ||||||||||||
Less: Share-based compensation expenses | | | ||||||||||||||||
Less: Legal, accounting and other professional fees | | | ||||||||||||||||
Less: Corporate general and administrative expenses | | | ||||||||||||||||
Less: Loss on impairment | — | | ||||||||||||||||
Less: Depreciation and amortization | | | ||||||||||||||||
Less: Non-mortgage interest expense (3) | | | ||||||||||||||||
Less: Amortization of loan issuance costs (3) | | | ||||||||||||||||
Plus: Gain on disposal of investment properties | ( | — | ||||||||||||||||
Less: Loss on redemption of mandatorily redeemable preferred stock | — | | ||||||||||||||||
Less: Loss on extinguishment of debt | | — | ||||||||||||||||
Net income (loss) from operations | $ | | $ | ( | ||||||||||||||
| (1) | Includes mortgage interest expense and amortization of issuance costs related to mortgages payable. For a reconciliation to interest expense as reported on the Company’s condensed consolidated statement of operations, see Note 5, above. |
| (2) | Certain expenses that are not allocated to individual segments which are either reviewed at the corporate level or which are not included in segment-level profitability measures used by the CODM are added to or subtracted from net operating income measure used by the CODM to reconcile this measure to net (loss) income from operations on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2026 and 2025. |
| (3) | Non-mortgage interest expense includes dividends paid and amortization of issuance costs and discounts on the Company’s Mandatorily Redeemable Preferred Stock which are recorded as interest expense (see Note 4, above), and other interest expense, all of which are not allocated to individual segments. For a reconciliation to interest expense as reported on the Company’s condensed consolidated statement of operations, see Note 5, above. |
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The following table presents assets by operating segment:
Investment Properties | | DST Program | | Total | ||||||||||||||
March 31, | March 31, | March 31, | ||||||||||||||||
2026 | December 31, | 2026 | December 31, | 2026 | December 31, | |||||||||||||
| (unaudited) | | 2025 | (unaudited) | | 2025 | (unaudited) | | 2025 | |||||||||
Segment assets | $ | | $ | | $ | — | $ | — | $ | | $ | | ||||||
Reconciliation to total assets on condensed consolidated balance sheet | ||||||||||||||||||
Plus: Other assets | $ | | | |||||||||||||||
Plus: Assets held by operating partnership | | | ||||||||||||||||
Plus: Assets held by parent company | | | ||||||||||||||||
Total assets recorded | $ | | $ | | ||||||||||||||
12. Income Taxes
Income before income taxes was $
During the year ended December 31, 2025, the Company elected to be taxed as a REIT for federal income tax purposes and it did not generate any taxable income from its taxable REIT subsidiaries, accordingly
The Company has determined that it has
13. Subsequent Events
As of May 13, 2026, the following events have occurred subsequent to the March 31, 2026 effective date of the consolidated financial statements:
Redemption of OP Units
On April 16, 2026, Francis P. Kavanaugh, the Company’s President and Chief Executive Officer and the Chairman of the Board, submitted a Notice of Exercise of Common Unit Redemption Right (the “Notice”) for
Common Stock Dividend
On April 21, 2026, a dividend in the amount of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is based on, and should be read in conjunction with, the condensed consolidated financial statements and the related notes thereto of Medalist Diversified, Inc. contained in this Quarterly Report.
This following discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions associated with those statements. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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” that we intend to be covered by the safe harbor provisions of the 1995 Act. 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, including references to strategy, plans or intentions, to identify forward-looking statements in this Quarterly Report.
The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:
| ● | the competitive environment in which we operate; |
| ● | local, regional, national and international economic and geopolitical conditions; |
| ● | our ability to pivot our investment strategy and reposition our portfolio; |
| ● | capital expenditures; |
| ● | the availability, terms and deployment of capital; |
| ● | financing risks; |
| ● | inflation; |
| ● | the general level of interest rates; |
| ● | changes in our business or strategy; |
| ● | fluctuations in interest rates and increased operating costs; |
| ● | our incurrence of impairment charges; |
| ● | the degree and nature of our competition; |
| ● | our dependence upon our key personnel; |
| ● | defaults on or non-renewal of leases by tenants; |
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| ● | decreased rental rates or increased vacancy rates; |
| ● | our ability to make distributions on shares of our common stock; |
| ● | difficulties in identifying properties to acquire and completing acquisitions; |
| ● | our ability to operate as a public company; |
| ● | potential natural disasters such as hurricanes; |
| ● | the impact of epidemics, pandemics, or other outbreaks of illness, disease or virus; |
| ● | whether revoking our real estate investment trust, or REIT, election, effective January 1, 2026, and our revised strategy can be implemented in a manner that provides the expected benefits; |
| ● | our ability to have met and maintained our qualification as a REIT for U.S. federal income tax purposes for the years we elected REIT status; |
| ● | our ability to maintain an active trading market for our common stock on The Nasdaq Capital Market (“Nasdaq”) and maintain continued listing on Nasdaq and the likelihood that a delisting of our common stock from Nasdaq could result in significantly lower trading volumes and reduced liquidity for investors seeking to buy or sell our common stock; |
| ● | potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or tax laws, and potential increases in real property tax rates; |
| ● | potential disruption to or compromise of our information technology networks or data, or those of third parties upon which we rely; and |
| ● | related industry developments, including trends affecting our business, financial condition and results of operations. |
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.
Overview
Company
Medalist Diversified, Inc. is a Maryland corporation formed on September 28, 2015. Beginning with the taxable year ended December 31, 2017, we elected to be taxed as a REIT for federal income tax purposes. Effective on January 1, 2026, we terminated our election to be taxed as a REIT. Medalist Diversified, Inc. serves as the general partner of Medalist Diversified Holdings, LP which was formed as a Delaware limited partnership on September 29, 2015.
Our current primary focus is to implement the strategic repositioning initiated during 2025. Effective January 1, 2026, we revoked our REIT status and are transitioning our primary focus to build the DST Program to generate fee income and increase assets under management. We will continue to evaluate direct and indirect real estate investments (i) for our general portfolio and (ii) that support the DST Program, including opportunities within our existing portfolio, including selective disposition of properties from our portfolio to generate capital for the DST Program and other potential acquisitions.
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Our efforts to scale the DST Program will be focused on identifying real estate investments suitable for DST vehicles that offer competitive, risk-adjusted returns, with a focus on net lease assets with nationally recognized tenants or those with investment grade credit ratings, in larger metropolitan areas experiencing high levels of growth in the southeast, mountain states, and California. Industry focuses will include, but not be limited to, retail, medical, and single tenant industrial and warehouse uses.
We may also pursue, in an opportunistic manner, other real estate and non-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, indirect investments in real property, such as those that may be obtained in a joint venture, and ownership of crypto assets, other equity investments, including marketable securities, short-duration U.S. treasuries, and other investment-grade marketable securities. While these types of investments are not intended to be a primary focus, we may make such investments at the discretion of the Board.
As of March 31, 2026, our portfolio consisted of the following properties:
Name | | Occupancy | | Location | | SQ FT | Date Acquired | |
Ashley Plaza Property |
| 99.0% |
| Goldsboro, North Carolina |
| 156,012 |
| August 30, 2019 |
Lancer Center Property |
| 79.1% |
| Lancaster, South Carolina |
| 181,590 |
| May 14, 2021 |
Brookfield Center Property | 100.0% | Greenville, South Carolina | 64,882 | October 3, 2019 | ||||
Citibank Property | 100.0% | Chicago, Illinois | 4,350 | March 28, 2024 | ||||
East Coast Wings Property | 100.0% | Goldsboro, North Carolina | 5,000 | August 30, 2019 | ||||
T-Mobile Property | 100.0% | Goldsboro, North Carolina | 3,000 | August 30, 2019 | ||||
Tesla Pensacola (1) | 100.0% | Pensacola, Florida | 45,461 | July 18, 2025 | ||||
Total Portfolio | 91.4% | 460,295 |
| (1) | As of March 31, 2026, we held 73.6% of the beneficial ownership interests in XXV DST, which owns the Tesla Pensacola Property, and non-affiliated owners held the remaining 26.4% of the beneficial ownership interests in XXV DST. |
As of March 31, 2026, we also owned two undeveloped parcels which are currently being marketed for sale or lease, including (i) an outparcel at our Lancer Center Property consisting of approximately 1.80 acres (the “Lancer Outparcel”), (the exact size of the Lancer Outparcel will not be determined until a user is identified), and (ii) the Hanover Square Outparcel consisting of 0.86 acres located in Mechanicsville, Virginia.
As of March 31, 2026, the Tesla Pensacola Property was classified as assets held for sale on our condensed consolidated balance sheet. As of March 31, 2026, we held 73.6% of the beneficial ownership interests in XXV DST, which owns the Tesla Pensacola Property, and non-affiliated owners held the remaining 26.4% of the beneficial ownership interests in XXV DST.
Reporting Segments
Prior to January 1, 2026, we aggregated individual properties into retail, flex and STNL operating segments. Effective on January 1, 2026, following our strategic repositioning and increased focus on DST sponsorship activities, our CODM began evaluating the Company’s real estate portfolio on a combined basis as a single, “Investment Properties” segment. Additionally, as of January 1, 2026, we established a second operating segment for our DST sponsorship activities. These two segments align with how our CODM evaluates performance and allocates resources.
Recent Highlights
Sales of Investment Properties
On February 13, 2026, we sold the Greenbrier Business Center Property to an unrelated third party for a sale price of $11,000,000 and used $7,000,000 from the proceeds to repay a portion of the Wells Fargo Mortgage Facility. The sale of the Greenbrier Business Center Property resulted in a gain on disposal of investment properties of $4,228,612 reported on our condensed consolidated statement of operations for the three months ended March 31, 2026.
On February 27, 2026, we sold the Parkway Property to an unrelated third party for a sale price of $7,825,000 and used $4,735,614 from the proceeds to repay the Parkway Mortgage. The sale of the Parkway Property resulted in a gain on disposal of investment properties of $1,040,870 reported on our condensed consolidated statement of operations for the three months ended March 31, 2026.
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On March 30, 2026, we sold the Franklin Square Property to an unrelated third party for a sale price of $24,100,000 and used $12,954,175 from the proceeds to repay the Franklin Square Mortgage. The sale of the Franklin Square Property resulted in a gain on disposal of investment properties of $7,580,745 reported on our condensed consolidated statement of operations for the three months ended March 31, 2026.
Financing Activities
Mortgages Payable
We have historically financed acquisitions of our investment properties through mortgages. The following table is presented as of March 31, 2026.
March 31, | |||||||||||||||
Monthly | Interest | 2026 | December 31, | ||||||||||||
Property | | Payment | | Rate | | Maturity | | (unaudited) | | 2025 | |||||
Franklin Square (a) |
| $ | 61,800 |
| 3.81 | % | December 2031 | $ | — | $ | 13,015,840 | ||||
Ashley Plaza (b) | 52,795 |
| 3.75 | % | September 2029 |
| 10,157,546 |
| 10,220,312 | ||||||
Brookfield Center (c) | 22,876 |
| 3.90 | % | November 2029 |
| 4,351,077 |
| 4,377,112 | ||||||
Wells Fargo Mortgage Facility (Lancer Center) (d) | 30,000 | 4.50 | % | June 2027 | 4,798,477 | 5,502,446 | |||||||||
Total mortgages payable | $ | 19,307,100 | $ | 33,115,710 | |||||||||||
Amounts presented do not reflect unamortized loan issuance costs.
| (a) | The mortgage loan for the Franklin Square Property in the original principal amount of $13,250,000 had a ten-year term and a maturity date of December 6, 2031. The mortgage loan bore interest at a fixed rate of 3.808% and was interest only until January 6, 2025, at which time the monthly payment became $61,800, which includes interest and principal based on a thirty-year amortization schedule. The mortgage loan included covenants for us to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for us to maintain liquid assets of no less than $1,000,000. We repaid the mortgage loan in March 2026, and as of December 31, 2025 we believe that were compliant with these covenants. |
| (b) | The mortgage loan for the Ashley Plaza Property bears interest at a fixed rate of 3.75% and was interest only for the first twelve months. Beginning on October 1, 2020, the monthly payment became $52,795 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule. The mortgage loan include covenants for the Company to maintain a net worth of $11,400,000, excluding the liabilities associated with the mortgage loan for the Ashley Plaza Property, and for the Company to maintain liquid assets of no less than $1,140,000. As of March 31, 2026 and December 31, 2025, we believe that we are compliant with these covenants. |
| (c) | The mortgage loan for the Brookfield Property bears interest at a fixed rate of 3.90% and was interest only for the first twelve months. Beginning on November 1, 2020, the monthly payment became $22,876 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule. The mortgage loan includes covenants for the Company to maintain a net worth of $4,850,000, excluding the liabilities associated with the mortgage loan for the Brookfield Property, and for the Company to maintain liquid assets of no less than $485,000. As of March 31, 2026 and December 31, 2025, we believe that we are compliant with these covenants. |
| (d) | On June 13, 2022, we entered into a mortgage loan facility with Wells Fargo Bank (the “Wells Fargo Mortgage Facility”) in the principal amount of $18,609,500. The proceeds of this mortgage were used to finance the acquisition of the Salisbury Marketplace Property and to refinance the mortgages payable on the Lancer Center Property and the Greenbrier Business Center Property (the “Secured Properties”). The Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term. The monthly payment was $103,438. Our Operating Partnership has provided an unconditional guaranty of the payment of and performance under the terms of the Wells Fargo Mortgage Facility. The Wells Fargo Mortgage Facility credit agreement includes covenants to maintain a debt service coverage ratio of not less than 1.50 to 1.00 on an annual basis and a combined minimum debt yield of 9.5% on the Secured Properties. As of March 31, 2026 and December 31, 2025, we believe that we are compliant with these covenants. |
On October 23, 2025 and February 13, 2026, respectively, we sold the Salisbury Marketplace and Greenbrier Business Center Properties, respectively and used $5,145,479 and $7,000,000, respectfully, of the net proceeds of the sales to reduce the
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principal balance of the Wells Fargo Mortgage Facility in exchange for Wells Fargo releasing its security interest in the respective properties. As of December 31, 2025 the portion of the Wells Fargo Mortgage Facility allocated to the Greenbrier Business Center Property was included in mortgages payable, net, associated with assets held for sale on our condensed consolidated balance sheet. As of March 31, 2026, the monthly payment is $30,000 and the remaining outstanding balance of the Wells Fargo Mortgage Facility is secured by the Lancer Center Property.
We financed acquisitions of our assets held for sale through mortgages, which as of March 31, 2026, are recorded as mortgages payable, net, associated with assets held for sale, on our consolidated balance sheets, as follows:
March 31, | ||||||||||||||
Monthly | Interest | 2026 | December 31, | |||||||||||
Property | Payment | | Rate | Maturity | | (unaudited) | | 2025 | ||||||
Parkway Property (a) | $ | 37,310 |
| Variable | November 2031 | — | 4,683,797 | |||||||
Wells Fargo Mortgage Facility (Greenbrier Business Center) (see note (d), above) | 46,561 | 4.50 | % | June 2027 | — | 6,356,947 | ||||||||
Tesla DST Mortgage (b) | Interest only | Variable | November 2030 | 7,505,754 | 7,505,754 | |||||||||
Total mortgages payable, net, associated with assets held for sale |
| | $ | 7,505,754 | $ | 18,546,498 | ||||||||
| (a) | The interest rate for the mortgage loan for the Parkway Property was based on Term SOFR, with a margin of 236.44 basis points. Under the terms of the mortgage, the interest rate payable each month shall not change by greater than 1% during any six-month period and 2% during any 12-month period. As of December 31, 2025 the rate in effect for the Parkway Property mortgage was 6.24%. The monthly payment, which varies based on the interest rate in effect each month, included interest at the variable rate, and principal based on a thirty-year amortization schedule. The mortgage loan for the Parkway Property included a covenant to maintain a debt service coverage ratio of not less than 1.30 to 1.00 on an annual basis. We repaid the mortgage loan in February, 2026 and as of December 31, 2025, we believe that we were compliant with these covenants. |
| (b) | On November 7, 2025, our subsidiary, MDRR XXV DST 1, entered into a mortgage loan with Pinnacle Bank (the “Tesla DST Mortgage”). The Tesla DST Mortgage has a five year term, is interest only and bears interest at a variable rate based on Term SOFR plus 2.5%. As of March 31, 2026 and December 31, 2025, Term SOFR was 3.66% and 3.69%, respectively. The Tesla DST Mortgage is non-recourse to us, except for fraud, intentional misrepresentation, gross negligence, physical waste and other similar acts or omissions. Under the terms of the Tesla DST Mortgage, the failure of the borrower to maintain a minimum debt service coverage ration (“DSCR”) of 1.25 constitutes a “trigger event” under which borrower would be required to establish a cash management account to which all rents and profits would be deposited and remain under the control of the lender until the trigger event is terminated. The Tesla Pensacola Property’s DSCR will be tested on a trailing 12 month basis starting on the first anniversary of the issuance of the Tesla DST Mortgage. However, as of March 31, 2026 and December 31, 2025, we believe that we are compliant with the DSCR requirement. |
Summary of Critical Accounting Policies
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.
Revenue Recognition
Principal components of our total revenues for our investment property revenues include base rents and tenant reimbursements. We accrue minimum (base) rent on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset or deferred rent liability being recorded on the balance sheet. Certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent) which we recognize when the tenants achieve the specified targets as defined in their lease agreements. We periodically review the valuation of the asset/liability resulting from the straight-line accounting treatment of our leases in light of any changes in lease terms, financial condition or other factors concerning our tenants.
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Rents and Other Tenant Receivables
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.
Acquisition of Investments in Real Estate
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, we estimate 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.
Impairment of Long-Lived Assets
We periodically review investment properties for impairment on a property-by-property basis to identify any events or changes in circumstances that indicate that the carrying value of investment properties may not be recoverable. These circumstances include, but are not limited to, declines in the property’s cash flows, occupancy and fair market value. If any such events or changes in circumstances are identified, we perform a formal impairment analysis. We measure any impairment of investment property when the estimated undiscounted operating income before depreciation and amortization, is less than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value. We estimate fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects and local market information. We also review our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of our intangible assets may not be recoverable, but at least annually.
Income Taxes
Beginning with our taxable year ended December 31, 2017, and ending on December 31, 2025, we elected to be taxed as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code and applicable Treasury regulations relating to REIT qualification. In order to maintain REIT status, the regulations require a REIT to distribute at least 90% of its taxable income to stockholders and meet certain other asset and income tests, as well as other requirements. We believe that we operated in a manner that met these requirements during those taxable years.
Effective on January 1, 2026, we terminated our election to be taxed as a REIT and will be subject to tax at regular corporate rates. We may not re-elect to be taxed as a REIT for five years.
We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized.
Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense.
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Evaluation of Our Ability to Continue as a Going Concern
Under the accounting guidance related to the presentation of financial statements, we are required to evaluate, on a quarterly basis, whether or not our current financial condition, including our sources of liquidity at the date that the condensed consolidated financial statements are issued, will enable us to meet our obligations as they come due arising within one year of the date of the issuance of our condensed consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that we will be able to continue as a going concern. Our condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In applying applicable accounting guidance, management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our obligations due over the next twelve months, as well as our recurring business operating expenses.
We have concluded that it is probable that we will be able to meet our obligations arising within one year of the date of issuance of these condensed consolidated financial statements within the parameters set forth in the accounting guidance. For additional information regarding our liquidity, see Note 5 – Loans Payable and Note 9 – Commitments and Contingencies in the notes to our condensed consolidated financial statements.
Liquidity and Capital Resources
Our business model is intended to drive growth through acquisitions and increasing assets under management. Our primary liquidity needs are funding for (1) operations, including operating expenses, corporate and administrative costs, payment of principal of, and interest on, outstanding indebtedness, and escrow and reserve payments associated with long-term debt financing for our properties; (2) investing needs, including property acquisitions and recurring capital expenditures; and (3) financing needs, including cash dividends and debt repayments.
Internal liquidity to fund operating needs is expected to be provided primarily by the rental receipts from our investment properties.
Cash Flows
At March 31, 2026, our consolidated cash and restricted cash on hand totaled $9,435,265 compared to consolidated cash on hand of $4,134,070 at December 31, 2025. Cash from operating activities, investing activities and financing activities for the three months ended March 31, 2026 are as follows:
Operating Activities
During the three months ended March 31, 2026, our cash used in operating activities was $508,353 compared to cash provided by operating activities of $459,972 for the three months ended March 31, 2025, a decrease in cash provided by operating activities of $968,325.
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, 2026, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $318,580. 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. The decrease of $708,129 in cash flows from operating activities for the three months ended March 31, 2026 was primarily from reduced lease termination fees, increased income tax expense, and an increase in DST sponsorship program expenses.
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, 2026, net changes in asset and liability accounts resulted in $189,773 in cash used in operations. During the three months ended March 31, 2025, net changes in asset and liability accounts resulted in $70,423 in cash provided by operations. This increase of $260,196 in cash used in operations resulting from changes in assets and liabilities is a result of decreased changes in rent and other receivables, net, of $15,789, decreased changes in other assets of $301,593, and increased changes in accounts payable and accrued liabilities of $30,413, all of which are uses of cash, offset by decreased changes in unbilled rent of $26,773, which provided cash.
The total of (i) the $708,129 decrease in cash flows from operations from the first category and (ii) the $260,196 decrease in cash provided by operations from the second category results in a total decrease of cash provided by operations of $968,325 for the three
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months ended March 31, 2026.
Management believes that separately evaluating these two components of our 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 operating performance, along with adjusted net operating income, presented below.
Investing Activities
During the three months ended March 31, 2026, our cash provided by investing activities was $4,653,138, compared to cash used in investing activities of $227,464 during the three months ended March 31, 2025, an increase in cash provided by investing activities of $4,880,602.
During the three months ended March 31, 2026, cash provided by investing activities consisted of $17,159,761 in cash received from the disposal of the Greenbrier Business Center, Parkway and Franklin Square properties, offset by $12,185,803 in cash used for our investments in marketable securities, $201,077 for the purchase of crypto assets, and $119,743 in capitalized expenditures. During the three months ended March 31, 2025, cash used in investing activities consisted of $137,589 in capitalized expenditures and $89,875 in investment property acquisitions for closing costs related to the Buffalo Wild Wings Property and United Rentals Property acquisitions.
The non-cash investing activity for the three months ended March 31, 2026, that did not affect our cash provided by investing activities was the transfer of $15,419,522 from investment properties, net, to assets held for sale, the transfer of $9,970 of intangible lease assets, net, to assets held for sale, the transfer of $7,682 of intangible lease liabilities, net, to liabilities held for sale, and $59,288 in accrued capital expenditures.
The non-cash investing activity for the three months ended March 31, 2025, that did not affect our cash used in investing activities, was the issuance of $5,765,000 of OP Units and the transfer of $397,367 from investment properties, net, to assets held for sale.
Financing Activities
During the three months ended March 31, 2026, our cash provided by financing activities was $1,156,410 compared to cash used in financing activities of $1,898,196 during the three months ended March 31, 2025, an increase in cash provided by financing activities of $3,054,606. During the three months ended March 31, 2026 our cash provided by financing activities consisted of $2,106,312 of proceeds from the sale of beneficial interests in DST entities, net of $228,725 in principal payments for our mortgages, and $721,177 in dividends and distributions. During the three months ended March 31, 2025, our cash used in financing activities consisted of $1,500,000 for the partial redemption of our mandatorily redeemable preferred stock, $274,737 in principal payments for our mortgages, and $123,459 in dividends and distributions.
The non-cash financing activity for the three months ended March 31, 2026, that did not affect our cash provided by financing activities was $3,720,000 for the conversion of OP Units to common shares and the transfer of $13,474,729 of mortgages payable, net, to mortgages payable, net, associated with assets held for sale.
Future Liquidity Needs
Liquidity for general operating needs and our investment properties is generally provided by the rental receipts from our investment properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, we continually review and evaluate our outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.
Our primary, non-operating liquidity needs are $149,919 to pay the dividends to common stockholders and distributions to OP Unit holders that were declared on April 1, 2026 and paid on April 21, 2026 to holders of record on April 15, 2026, and $370,469 in principal payments due on its mortgages payable during the remaining nine months ending December 31, 2026. 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. We plan to pay these obligations through a combination of cash on hand, sale of our marketable securities, potential dispositions of our investment properties, and cash generated by operations.
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To meet these future liquidity needs, we have the following resources:
| ● | $8,604,528 in unrestricted cash as of March 31, 2026; |
| ● | $12,416,668 in marketable securities which are readily liquid; |
| ● | $830,737 held in lender reserves for the purposes of tenant improvements, leasing commissions, real estate taxes and insurance premiums; |
| ● | Cash generated from operations during the remaining nine months ending December 31, 2026, if any. |
We expect these resources will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months and beyond. There can be no assurance that we will continue to generate cash flows at or above current levels.
Factors That May Influence Our Results of Operations
Economic Conditions
Rental revenues from our remaining investment properties are directly affected by a number of factors, including occupancy rates, lease structures, and tenant credit quality, as well as broader economic and policy developments that affect consumer sentiment. Our revenues can be significantly impacted by trends in consumer spending, interest rates, and market confidence, all of which shape demand for our tenants’ goods and services and, in turn, for occupancy in our investment properties. The ability to lease space to creditworthy tenants and maintain high occupancy levels directly impacts rental income. Changes in tenant demand, property competitiveness, or local economic conditions can influence occupancy rates. Upon the expiration or early termination of leases, we may face difficulties in re-leasing spaces on terms as favorable as previous agreements. Lease terminations and defaults or terminations by significant tenants can reduce revenues, especially if suitable replacements are not found promptly. Concentration risk from large tenants or tenants in financially stressed sectors may further impact revenue reliability.
Dividend and interest income on our marketable securities and cash balances are not guaranteed and can fluctuate significantly. Such income is influenced by a range of factors, including the composition of our investment portfolio, issuer credit quality, payout policies, and prevailing macroeconomic and policy developments that shape market conditions and investor sentiment. In particular, our dividend and interest income can be substantially affected by changes in interest rates, credit markets, and liquidity, all of which influence demand for our securities and, in turn, the level of income we realize from such investments.
As we execute our strategic transition, revenues may increasingly depend on capital allocation decisions, including income generated from short-term investments, fee-based activities, and potential acquisitions or strategic transactions. These activities are subject to market conditions, interest rate volatility, counterparty risk, regulatory considerations, and execution risk. There can be no assurance that these strategies will generate anticipated levels of income or returns.
Macroeconomic conditions, including inflation, elevated interest rates, economic slowdowns, recessionary pressures, and financial market volatility, may adversely affect our business, our tenants, the value of our real estate assets, the performance of our short-term and other investments, and our ability to identify and execute strategic investment opportunities. Rising interest rates may increase borrowing costs, reduce asset valuations, and alter the relative attractiveness of alternative investment options. Broader economic conditions, including employment levels, capital markets liquidity, and consumer confidence, may negatively impact tenant performance, demand for commercial real estate, and the operating performance or valuation of current and prospective investments.
Potential Impact of Tariffs and Trade Restrictions on Tenants and Our Business
Changes in international trade policies, including the imposition of tariffs, duties, import taxes, or other trade restrictions by the United States government or foreign governments, could adversely impact the operations of our retail tenants. Our tenants could source a substantial portion of their merchandise, raw materials, or manufacturing services from foreign countries. The imposition of new or increased tariffs on these goods, or retaliatory measures from trading partners, could increase costs for these tenants, potentially reducing their profitability and operational flexibility. Increased costs may not be fully passed on to consumers, which could lead to lower sales volumes, compressed margins, and in some cases, store closures or bankruptcy filings. If a significant number of our tenants experience financial distress or reduce their physical retail presence, this could negatively affect our occupancy rates, rental income, and
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cash flows.
Results of Operations
Three months ended March 31, 2026
Revenues
Revenues for the three months ended March 31, 2026 and 2025 are as follows:
For the three months ended | |||||||||
March 31, | |||||||||
2026 | | 2025 | Increase / | ||||||
| (unaudited) | | (unaudited) | | (Decrease) | ||||
Currently Owned Properties | |||||||||
Ashley Plaza | $ | 382,357 | $ | 366,881 | $ | 15,476 | |||
Lancer Center | 262,494 | 291,607 | (29,113) | ||||||
Brookfield Center | 238,468 | 191,992 | 46,476 | ||||||
East Coast Wings | 26,629 | 26,630 | (1) | ||||||
T-Mobile | 30,267 | 29,945 | 322 | ||||||
Citibank | 37,700 | 37,697 | 3 | ||||||
Tesla Pensacola | 264,974 | — | 264,974 | ||||||
Total Revenues - Currently Owned Properties | $ | 1,242,889 | $ | 944,752 | $ | 298,137 | |||
Recently Sold Properties | |||||||||
Franklin Square |
| 635,357 |
| 637,182 |
| (1,825) | |||
Salisbury Marketplace |
| — |
| 196,777 |
| (196,777) | |||
Greenbrier Business Center | 140,091 | 267,161 | (127,070) | ||||||
Parkway Center | 140,928 | 221,410 | (80,482) | ||||||
Buffalo Wild Wings | — | 32,709 | (32,709) | ||||||
United Rentals | — | 21,649 | (21,649) | ||||||
Total Revenues - Recently Sold Properties | $ | 916,376 | $ | 1,376,888 | $ | (460,512) | |||
Total Revenues | $ | 2,159,265 | $ | 2,321,640 | $ | (162,375) | |||
Total revenue was $2,159,265 for the three months ended March 31, 2026, a decrease of $162,375 from the three months ended March 31, 2025. We experienced decreased investment property revenues due to the sale of the Salisbury Marketplace, Buffalo Wild Wings, United Rentals, Parkway, Greenbrier and Franklin Square properties, and increased vacancy in the Lancer Center Property, which were offset by increased revenues from the acquisition of the Tesla Pensacola Property and new leasing activity in the Ashley Plaza and Brookfield properties.
Adjusted Net Operating Income
Effective on January 1, 2026, we established two operating segments. The first operating segment consists of our investment properties (prior to January 1, 2026, we established operating segments that aggregated individual properties into retail, flex and STNL segments). As of January 1, 2026, we established a second operating segment for our DST sponsorship activities. These segments align with how the CODM evaluates performance and allocates resources.
During the three months ended March 31, 2026 and 2025, our reportable segments consisted of our investment properties and our DST Sponsorship activities. We base our evaluation of our results of operations on the net operating income adjusted for interest expense of each reportable segment. In our discussion below, we have provided an evaluation on a property by property basis.
Net operating income (“NOI”) is a non-GAAP financial measure and is not considered a measure of operating results or cash flows from operations under GAAP. NOI is calculated by deducting operating expenses from operating revenues. NOI reflects occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. NOI, as we calculate it, may not be directly comparable to similarly titled, but differently calculated, measures for other REITs.
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NOI adjusted for interest expense (“Adjusted Net Operating Income”), also a non-GAAP financial measure, is calculated by deducting operating expenses and interest expense from investment property rental revenues. Operating revenues include rental income, tenant reimbursements, other property income and non-cash revenues such as straight line rent and amortization of above and below market leases. Operating expenses include all investment property operating costs. Interest expense includes mortgage interest expense, only, and excludes non-mortgage interest expense and non-cash interest expense such as amortization of loan issuance costs.
Because Adjusted Net Operating Income only consists of revenues, operating expenses, and interest expense directly related to our real estate rental operations, management believes that the use of Adjusted Net Operating Income to evaluate the financial performance of its operating segments and individual investment properties is a useful tool that can assist in the comparison of the operating performance of our real estate assets between periods, or as compared to other companies and other investment opportunities we may consider from time to time. Management uses Adjusted Net Operating Income as a supplemental measure to evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance.
Adjusted Net Operating Income is a non-GAAP financial measure and is not considered a measure of operating results or cash flows from operations under GAAP. Please see below for the reconciliation of revenue and Adjusted Net Operating Income for each property.
Investment Property Revenues and Adjusted Net Operating Income
The following table presents property revenues, operating expenses and interest expense for our investment properties for the three months ended March 31, 2026 and 2025:
For the three months ended March 31, 2026 | For the three months ended March 31, 2025 | ||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||
Revenues | Operating Expenses | Interest Expense | Adjusted NOI | Revenues | Operating Expenses | Interest Expense | Adjusted NOI | Adjusted NOI Change | |||||||||||||||||||
Currently Owned Properties |
| | | |
| |
| | | ||||||||||||||||||
Ashley Plaza | $ | 382,357 | $ | 132,609 | $ | 95,620 | $ | 154,128 | $ | 366,881 | $ | 102,202 | $ | 97,877 | $ | 166,802 | $ | (12,674) | |||||||||
Lancer Center | 262,494 | 131,084 | 51,915 | 79,495 | 291,607 | 114,270 | 69,952 | 107,385 | (27,890) | ||||||||||||||||||
Brookfield | 238,468 | 62,180 | 42,592 | 133,696 | 191,992 | 66,706 | 43,563 | 81,723 | 51,973 | ||||||||||||||||||
East Coast Wings | 26,629 | 5,566 | — | 21,063 | 26,630 | 17,529 | — | 9,101 | 11,962 | ||||||||||||||||||
T-Mobile | 30,267 | 6,175 | — | 24,092 | 29,945 | 4,398 | — | 25,547 | (1,455) | ||||||||||||||||||
Citibank |
| 37,700 | — | — | 37,700 | 37,697 | — | — | 37,697 | 3 | |||||||||||||||||
Tesla DST | 264,974 | — | 96,375 | 168,599 | — | — | — | — | 168,599 | ||||||||||||||||||
$ | 1,242,889 | $ | 337,614 | $ | 286,502 | $ | 618,773 | $ | 944,752 | $ | 305,105 | $ | 211,392 | $ | 428,255 | 190,518 | |||||||||||
Recently Sold Properties | |||||||||||||||||||||||||||
Franklin Square | 635,357 | 191,762 | 81,055 | 362,540 | 637,182 | 140,722 | 125,777 | 370,683 | (8,143) | ||||||||||||||||||
Salisbury Marketplace | — | — | — | — | 196,777 | 72,530 | 69,166 | 55,081 | (55,081) | ||||||||||||||||||
Greenbrier | 140,091 | 37,823 | 39,412 | 62,856 | 267,161 | 68,432 | 57,376 | 141,353 | (78,497) | ||||||||||||||||||
Parkway |
| 140,928 | 53,860 | 37,845 | 49,223 | 221,410 | 72,565 | 67,889 | 80,956 | (31,733) | |||||||||||||||||
Buffalo Wild Wings | — | — | — | — | 32,709 | — | — | 32,709 | (32,709) | ||||||||||||||||||
United Rentals | — | 20,205 | — | (20,205) | 21,649 | — | — | 21,649 | (41,854) | ||||||||||||||||||
$ | 916,376 | $ | 303,650 | $ | 158,312 | $ | 454,414 | $ | 1,376,888 | $ | 354,249 | $ | 320,208 | $ | 702,431 | (248,017) | |||||||||||
Total | $ | 2,159,265 | $ | 641,264 | $ | 444,814 | $ | 1,073,187 | $ | 2,321,640 | $ | 659,354 | $ | 531,600 | $ | 1,130,686 | (57,499) | ||||||||||
Investment property revenues were $2,159,265 for the three months ended March 31, 2026, a $162,375 decrease from the three months ended March 31, 2025. Adjusted Net Operating Income from investment properties was $1,073,187 for the three months ended March 31, 2026, a decrease of $57,499 from the three months ended March 31, 2025, due to the sale of the six properties, increased vacancy at the Lancer Center Property, slightly higher operating expenses at the Ashley Plaza Property and T-Mobile Property, offset by increased Adjusted NOI from the Brookfield Property due to new leases and from the East Coast Wings Property due to lower operating expenses.
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DST Sponsorship Revenues and Adjusted Net Operating Income
The following table presents revenues, operating expenses and interest expense for our DST Program for the three months ended March 31, 2026 and 2025:
For the three months ended | |||||||||
March 31, | |||||||||
2026 | | 2025 | Increase / | ||||||
| (unaudited) | | (unaudited) | | (Decrease) | ||||
DST Program revenues | $ | — | $ | — | — | ||||
DST Program operating expenses | 222,896 | — | 222,896 | ||||||
DST Program net operating income | $ | (222,896) | $ | — | $ | (222,896) | |||
We initiated our DST Program during the three months ended March 31, 2026. Accordingly, there was no activity during the three months ended March 31, 2025. During the three months ended March 31, 2026, we incurred $222,896 in expenses associated with our DST Program, including salaries and benefits, conferences and travel, marketing, administrative and other expenses. Our DST Program did not generate revenues during the three months ended March 31, 2026. DST Program revenues generally consist of acquisition fees, asset management fees, and disposition fees. Acquisition fees are generally earned upon the completion of the sale of all beneficial interests in a DST. Asset management fees are generally earned monthly, but we have waived our asset management fees that during the first year of the XXV DST. Disposition fees are earned upon the sale of a DST property and are generally subordinated to DST investors’ return of capital.
Operating Expenses
The following table presents our operating expenses for the three months ended March 31, 2026 and 2025:
For the three months ended | |||||||||
March 31, | |||||||||
2026 | | 2025 | Increase / | ||||||
| (unaudited) | | (unaudited) | | (Decrease) | ||||
Property Operating Expense Reconciliation |
| |
| |
| | |||
Investment property operating expenses | $ | 641,264 | $ | 659,354 | $ | (18,090) | |||
DST Program operating expenses | 222,896 | — | $ | 222,896 | |||||
Total Property Operating Expenses from Consolidated Statements of Operations | $ | 864,160 | $ | 659,354 | $ | 204,806 | |||
Other Operating Expenses |
| |
| |
| | |||
Bad debt expense | $ | — | $ | 1,321 | $ | (1,321) | |||
Share based compensation expenses | 224,220 | 397,182 | (172,962) | ||||||
Legal, accounting and other professional fees | 416,139 | 426,569 | (10,430) | ||||||
Corporate general and administrative expenses | 347,829 | 353,341 | (5,512) | ||||||
Loss on impairment | — | 61,803 | (61,803) | ||||||
Depreciation and amortization | 488,770 | 965,211 | (476,441) | ||||||
Total Operating Expenses | $ | 2,341,118 | $ | 2,864,781 | $ | (523,663) | |||
Total operating expenses were $2,341,118 for the three months ended March 31, 2026, a decrease of $523,663 over the three months ended March 31, 2025, primarily due to decreased depreciation and amortization expense due to the sales of the Salisbury Marketplace, Greenbrier Business Center, Parkway properties, and the transfer of the Franklin Square Property to assets held for sale, at which point, we ceased recording depreciation and amortization, and a decrease in share based compensation expense, net of an increase due to DST sponsorship program expenses.
Operating Income
Operating income for the three months ended March 31, 2026 was $12,296,034, an increase of $12,848,550 from the operating loss of $552,516 for the three months ended March 31, 2025. This increase was primarily a result of the gain on the disposal of our investment properties, net of the loss on the extinguishment of debt related to three properties sold during the three months ended
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March 31, 2026.
Interest Expense
Interest expense was $456,095 and $573,016 for the three months ended March 31, 2026 and 2025, respectively, as follows:
For the three months ended | |||||||||
March 31, | |||||||||
2026 | | 2025 | Increase / | ||||||
| (unaudited) | | (unaudited) | | (Decrease) | ||||
Franklin Square | $ | 83,419 | $ | 132,870 | $ | (49,451) | |||
Ashley Plaza |
| 99,977 |
| 102,235 |
| (2,258) | |||
Brookfield Center |
| 45,430 |
| 46,401 |
| (971) | |||
Parkway Center | 37,845 | 70,645 | (32,800) | ||||||
Wells Fargo Mortgage Facility | 93,049 | 208,629 | (115,580) | ||||||
Wells Fargo Line of Credit | — | 2,500 | (2,500) | ||||||
Tesla Pensacola (Pinnacle Bank) | 96,375 | — | 96,375 | ||||||
Amortization and preferred stock dividends on mandatorily redeemable preferred stock |
| — |
| 7,470 |
| (7,470) | |||
Other interest |
| — |
| 2,266 |
| (2,266) | |||
Total interest expense | $ | 456,095 | $ | 573,016 | $ | (116,921) | |||
Total interest expense for the three months ended March 31, 2026 decreased by $116,921 over the three months ended March 31, 2025. This decrease was primarily a result of the repayment of a portion of the Wells Fargo Mortgage Facility resulting from the sale of the Salisbury Marketplace and Greenbrier Business Center Properties and the repayment of the Parkway Center mortgage resulting from the sale of the Parkway Property.
Other Income
During the three months ended March 31, 2026, other income was $275,815, which consisted of unrealized gains on our investment in marketable securities of $230,865, $26,704 related to the fair value change of the interest rate cap, $11,546 in dividend income, and $6,700 in interest income. This is an increase of $148,941 from other income of $126,874 for the three months ended March 31, 2025, which consisted of $118,529 in lease termination fees and interest income of $8,345.
Other Expense
During the three months ended March 31, 2026 and 2025 other expense was $71,627 and $28,226, respectively. Other expense for the three months ended March 31, 2026 consists of unrealized loss on crypto assets. Other expense for the three months ended March 31, 2025 related to the fair value change of the interest rate cap.
Net Income (Loss) before Income Taxes
Net income was $12,044,127 for the three months ended March 31, 2026, before adjustments for net income attributable to noncontrolling interests. Net income for the three months ended March 31, 2026 increased by $13,071,011 over the three months ended March 31, 2025.
Provision for Income Taxes
Effective on January 1, 2026, we revoked our election to be taxed as a REIT and as a result, we recorded a net deferred tax asset and income tax benefit of $3,902,878. In addition, for the three months ended March 31, 2026, we recorded a provision for income taxes of $1,824,236, which consists of current and deferred components. Our effective tax rate of 16.4% of pre-tax income reported in the period differs from the federal statutory rate of 21% primarily due to establishing the net deferred tax asset upon the termination of our election to be taxed as a REIT.
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Net Income (Loss)
Net income was $14,122,769 for the three months ended March 31, 2026, before adjustments for net income attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders was $8,966,809.
Net income for the three months ended March 31, 2026 increased by $15,149,653 over the three months ended March 31, 2025, before adjustments for net 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, 2026 increased by $9,973,635 over the three months ended March 31, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have omitted a discussion of quantitative and qualitative disclosures about market risk because, as a smaller reporting company, we are not required to provide such information.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the rules and regulations of the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures as of March 31, 2026, the end of the period covered by this Quarterly Report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded, as of March 31, 2026, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow for timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Our management, including our Chief Executive Officer, evaluated, as of March 31, 2026, the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on that evaluation, our Chief Executive Officer concluded that our internal control over financial reporting, as of March 31, 2026, was effective.
This Quarterly Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Quarterly Report.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We and our subsidiaries are, from time to time, parties to litigation arising from the ordinary course of their business. We are not presently subject to any material litigation nor, to our knowledge, is any other litigation threatened against us, other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on our liquidity, results of operations or business or financial condition.
ITEM 1A.RISK FACTORS
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Issuer Repurchases of Equity Securities
In March 2024, our Board approved the adoption of a share repurchase program (the “Repurchase Program”) through a Rule 10b5-1 plan, under which we were authorized to repurchase up to 35,265 shares of our Common Stock at or below a price of $12.00 per share. The Repurchase Program expired on May 15, 2025. Accordingly, there was no share repurchase activity during the quarterly period ended March 31, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934)
EXHIBIT INDEX
Exhibit |
| Description |
10.1 | Purchase and Sale Agreement, dated as of March 5, 2026 by and among MDR Ashley Plaza, LLC and HPX Goldsboro Ashley Center LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 6, 2026). | |
31.1 | Certification by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 † | |
31.2 | Certification by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. † | |
32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. † | |
32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. † | |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL † | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document † | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document † | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document † | |
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document † | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document † | |
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) † |
†Filed herewith.
Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Unaudited Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MEDALIST DIVERSIFIED, INC. | ||
Date: May 13, 2026 | By: | /s/ Francis P. Kavanaugh |
Francis P. Kavanaugh | ||
President and Chief Executive Officer | ||
Date: May 13, 2026 | By: | /s/ C. Brent Winn, Jr. |
C. Brent Winn, Jr. | ||
Chief Financial Officer | ||
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