[8-K] Medalist Diversified REIT, Inc. Reports Material Event

Rhea-AI Filing Summary

Medalist Diversified REIT, Inc. entered an exchange allowing its CEO to swap 240,004 shares of common stock on a one-for-one basis for 240,004 limited partnership OP Units in the companys operating partnership to help preserve REIT qualification limits on concentrated ownership. The CEO indicated an intent to purchase additional common shares after the exchange.

The companys wholly owned subsidiary agreed to sell Salisbury Marketplace Shopping Center for $10,000,000 with a $150,000 earnest money deposit and an expected close within 60 days, subject to customary closing conditions that remain to be satisfied. The issued OP Units were sold without registration relying on Section 4(a)(2) of the Securities Act.

Positive

• 240,004 shares were exchanged one-for-one into 240,004 OP Units, a move intended to preserve REIT qualification limits
• OP Units are redeemable after a one-year holding period for cash or, at the partnerships option, one-for-one in common stock
• Purchase and Sale Agreement for Salisbury Marketplace sets $10,000,000 total consideration with a $150,000 earnest money deposit
• Exchange and related-party transaction received review and approval from the Audit Committee and a majority of the Board

Negative

• The Salisbury Marketplace sale contains several conditions to closing that remain unsatisfied and the company states there is no assurance the transaction will complete
• The issued OP Units were sold unregistered relying on Section 4(a)(2) of the Securities Act
• Forward-looking statements warn of risks including adverse changes in asset pricing, disruptions from management internalizations, and increased cost or reduced availability of capital

Insights

Corporate Governance Expert

TL;DR: Leadership exchanged stock for OP units to maintain REIT compliance and ownership limits.

The one-for-one exchange of 240,004 common shares for OP Units by the CEO is a direct governance action to address REIT qualification thresholds that restrict concentrated ownership. By converting shares to OP Units, the company preserves the capitalization structure required for REIT status while keeping management aligned with operating-partnership interests. The Audit Committee and Board review and approval were documented, which follows the company's related-person transaction policies.

M&A / Real Estate Analyst

TL;DR: Agreement to sell Salisbury Marketplace for $10.0M is material but remains conditional.

The Purchase and Sale Agreement sets the sales price at $10,000,000 with a $150,000 deposit and customary representations, covenants and indemnities. Closing is anticipated within 60 days, however several conditions to closing remain outstanding and the company expressly disclaims assurance the transaction will close on the described terms. Investors should note the transactions proceeds and timing are contingent on satisfaction of those conditions.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 8, 2025

Medalist Diversified REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland		001-38719		47-5201540
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

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P.O. Box 8436

Richmond, VA, 23226

(Address of principal executive offices)

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(804) 338-7708

(Registrant’s telephone number, including area code)

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of each Exchange on Which Registered		Trading Symbol(s)
Common Stock, $0.01 par value		Nasdaq Capital Market		MDRR

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging Growth Company ☐

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. ¨

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	ITEM 1.01	ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

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Entry into Exchange Agreement

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On August 8, 2025, Medalist Diversified REIT, Inc. (the “Company”) and Medalist Diversified Holdings, LP, a Maryland limited partnership and the operating partnership (the “Operating Partnership”) entered into an exchange agreement (the “Exchange Agreement”) with Francis P. Kavanaugh, the Company’s Chief Executive Officer, President, Treasurer and Secretary, pursuant to which Mr. Kavanaugh will exchange an aggregate of 240,004 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), on a one-for-one basis for an aggregate of 240,004 units of limited partnership interest (the “OP Units”) in the Operating Partnership  (the “Exchange”). Following the Exchange, Mr. Kavanaugh intends to purchase additional shares of Common Stock.

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The Exchange will help to ensure the Company’s continued compliance with real estate investment trust qualifications, including the requirement that no more than 50% in value of the Company’s outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals.

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Pursuant to the Agreement of Limited Partnership of the Operating Partnership, as amended, the OP Units are redeemable for cash or, at the Operating Partnership’s option, shares of the Company’s common stock on a one-for-one basis after a holding period of one-year from the date of the Exchange Agreement, pursuant to the terms of the Limited Partnership Agreement.

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Pursuant to the Company’s Code of Business Conduct and Ethics, Audit Committee Charter and Related Person Transaction Policy, the Exchange was reviewed and approved by a majority of the Audit Committee of the Company’s Board of Directors (the “Board”) in addition to the approval by a majority of the Board. 

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The foregoing description is only a summary of the material provisions of the Exchange Agreement and is qualified in its entirety by reference to the full text of the Exchange Agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.

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Entry into Purchase and Sale Agreement

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On August 8, 2025, (the “Effective Date”), MDR Salisbury, LLC, a Delaware limited liability company (the “Seller”), a wholly-owned subsidiary of the Company, entered into a Purchase and Sale Agreement (the “Agreement”), a copy of which is filed as Exhibit 10.2 hereto, with Salisbury SC LLC, a Delaware limited liability company (the “Purchaser”), whereby the Purchaser agreed to acquire (the “Acquisition”) the property located at 2092 Statesville Blvd., Salisbury, NC, commonly known as Salisbury Marketplace Shopping Center (the “Property”). The total consideration for the Property is $10,000,000 (the “Consideration”), subject to the prorations and adjustments described in the Agreement. The Consideration is to be paid by the Purchaser to the Seller at Closing (as that term is defined in the Agreement). The Purchaser is required to make an earnest money deposit of $150,000 (“Deposit”) within three business days of the Effective Date.

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The Agreement contains provisions, representations, warranties, covenants, conditions and indemnities that are customary and standard for the real estate industry and the sale of commercial real property. The Acquisition is expected to close within 60 days. Several conditions to closing on the Acquisition remain to be satisfied, and there can be no assurance that the Purchaser will complete the transaction on the general terms described above or at all.

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The foregoing description is only a summary of the material provisions of the Agreement and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.2 hereto and incorporated by reference herein.

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ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES

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In connection with the Exchange, the Company issued 240,004 OP Units in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

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Cautionary Statements Regarding Forward-Looking Statements

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This Current Report on Form 8-K contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward looking statements are not historical and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate, “may,” “will,” “should” and “could” and include statements about the Exchange, future common stock purchases and the closing of the Acquisition. Forward-looking statements are based upon the Company’s present expectations but are not guarantees or assurances as to future developments or results. Factors that may cause actual developments or results to differ from those reflected in forward-looking statements include, without limitation, adverse changes in the pricing of the Company’s assets, disruptions associated with management internalizations, increased costs of, and reduced availability of, capital and those included in the Company’s most recent Annual Report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes and new developments except as required by law or regulation.

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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

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(d) Exhibits

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Exhibit No.	​	Description
10.1	​	Exchange Agreement, dated as of August 8, 2025, by and among Medalist Diversified REIT, Inc., Medalist Diversified Holdings, LP and Francis P. Kavanaugh Purchase and Sale Agreement, dated as of August 8, 2025, by and between Salisbury SC LLC and MDR Salisbury, LLC
10.2	​	Purchase and Sale Agreement, dated as of August 8, 2025, by and between Salisbury SC LLC and MDR Salisbury, LLC
104	​	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL Document

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MEDALIST DIVERSIFIED REIT, INC.
Dated: August 11, 2025	By:	/s/ C. Brent Winn, Jr.
		C. Brent Winn, Jr.
		Chief Financial Officer

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FAQ

How many shares did Medalist Diversified (MDRR) exchange and what did they receive?

The company exchanged 240,004 shares of common stock on a one-for-one basis for 240,004 OP Units in the operating partnership.

Why was the exchange executed by the CEO?

The exchange was made to help ensure continued REIT qualification, including the rule that no more than 50% in value of outstanding capital stock be owned by five or fewer individuals.

What are the redemption terms for the OP Units issued in the exchange?

Under the Limited Partnership Agreement, the OP Units are redeemable after a one-year holding period for either cash or, at the partnership's option, one-for-one shares of common stock.

What are the key terms of the Salisbury Marketplace sale?

The Purchase and Sale Agreement sets consideration at $10,000,000 with an earnest money deposit of $150,000 and an expected close within 60 days, subject to customary conditions to closing.

Was the issuance of OP Units registered with the SEC?

No. The Company issued the OP Units in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.