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Medalist Diversified REIT Announces Fourth Quarter 2019 and Full Year 2019 Earnings

March 4, 2020 GMT

RICHMOND, Va.--(BUSINESS WIRE)--Mar 4, 2020--

Medalist Diversified REIT, Inc. (Nasdaq: MDRR) (the “Company”) a Virginia-based real estate investment trust that specializes in acquiring, owning and managing value-add commercial real estate in the Mid-Atlantic and Southeast regions, today reported unaudited operating results for its year and quarter ended December 31, 2019. All financial measures referenced herein are unaudited.

Fourth Quarter Ended December 31, 2019 Financial Results

Net loss attributable to Medalist common shareholders for the quarter ended December 31, 2019 was $663,878, or $0.15 per basic and diluted share, compared to $1,418,849, or $0.67 per basic and diluted share, for the prior year’s fourth quarter ended December 31, 2018. For the quarter ended December 31, 2019, the decrease in net loss attributable to Medalist common shareholders was a result of:

  • An increase in revenues of 66.8 percent - During the quarter ended December 31, 2019, total revenues were $3,109,627, an increase of $1,244,787 over total revenues of $1,864,840 for the quarter ended December 31, 2018, due to the Company’s three new acquisitions that closed during the year ended December 31, 2019 (see below).

  • A decrease in non-recurring expenses – During the quarter ended December 31, 2019, the Company did not incur any non-recurring expenses. During the quarter ended December 31, 2018, the Company recorded $790,340 in share based compensation expenses and a loss on impairment of $191,578.

Net loss for the quarter ended December 31, 2019 was $734,920 compared to $1,532,161 for the quarter ended December 31, 2018.

Adjusted funds from operations (“AFFO”) is a supplemental financial measure which the Company considers meaningful in measuring its operating performance. AFFO is not a financial measure recognized by generally accepted accounting principles (“GAAP”). AFFO (non-GAAP) for the quarter ended December 31, 2019 increased by $823,363 to $380,436 from ($442,927) for the quarter ended December 31, 2018. A reconciliation of AFFO to net loss, the most directly comparable GAAP financial measure, is attached to this press release.

Year Ended December 31, 2019 Financial Results

Net loss attributable to Medalist common shareholders for the year ended December 31, 2019 was $3,015,718 or $0.82 per basic and diluted share, compared to $2,743,323, or $1.39 per basic and diluted share, for the year ended December 31, 2018.

Net loss for the year ended December 31, 2019 was $3,804,494 compared to $2,991,153 for the year ended December 31, 2018.

AFFO (non-GAAP) for the year ended December 31, 2019 was ($148,096) compared to ($780,532) for the year ended December 31, 2018.

2019 Acquisitions

As of December 31, 2019, the Company’s total assets were $83,239,242, an increase of $30,132,190 over the Company’s total assets as of December 31, 2018. The increase in assets was a result of the Company’s three acquisitions during the year ended December 31, 2019 that doubled the Company’s portfolio from three properties to six properties.

The Ashley Plaza Property

On August 30, 2019, the Company acquired the Ashley Plaza Property, a 160,356 square foot retail property located in Goldsboro, North Carolina, through a wholly owned subsidiary. The Ashley Plaza Property, built in 1977 and fully renovated in 2018, was 98 percent leased as of December 31, 2019 and is anchored by Hobby Lobby, Harbor Freight and Ashley Home Store. The purchase price for the Ashley Plaza Property was $15,200,000 paid through a combination of cash provided by the Company, the incurrence of new mortgage debt and funds from an unsecured line of credit, short term.

The Clemson Best Western Hotel Property

On September 27, 2019, the Company acquired the Clemson Best Western Hotel Property, a 148-room hotel on 5.92 acres located in Clemson, South Carolina, through a wholly owned subsidiary. The Clemson Best Western Hotel Property was built in 1982 and substantially renovated in 2016 and 2017. The purchase price for the Clemson Best Western Hotel Property was $9,750,000 paid through a combination of cash provided by the Company, the incurrence of new mortgage debt and funds from an unsecured line of credit, short term.

The Brookfield Center Property

On October 3, 2019, the Company acquired the Brookfield Center Property, a 64,880 square foot flex-industrial property located in Greenville, South Carolina, through a wholly owned subsidiary. The Brookfield Center Property, built in 2007, was 93.8 percent leased as of December 31, 2019. Major tenants include Gravitopia Trampoline Park and Summit Church. The purchase price for the Brookfield Center Property was $6,700,000 paid through a combination of cash provided by the Company, the incurrence of new mortgage debt and funds from related party notes payable, short term.

Dividends

On November 27, 2019, our Board of Directors declared a quarterly dividend of $0.125 per common share, payable on March 10, 2020 to shareholders of record as of February 11, 2020.

About Medalist Diversified REIT

Medalist Diversified REIT Inc. is a Virginia-based real estate investment trust that specializes in acquiring, owning and managing value-add commercial real estate in the Mid-Atlantic and Southeast regions. The Company’s strategy is to focus on value-add and opportunistic commercial real estate which is expected to provide an attractive balance of risk and returns. Medalist utilizes a rigorous, consistent and replicable process for sourcing and conducting due diligence of acquisitions. The Company seeks to maximize operating performance of current properties by utilizing a hands-on approach to property management while monitoring the middle market real estate markets in the southeast for acquisition opportunities and disposal of properties as considered appropriate. For more information on Medalist, please visit the Company website at https://www.medalistreit.com.

DEFINITIONS

FFO and AFFO are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. The Company considers FFO and AFFO to be important supplemental measures of its operating performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from property dispositions, the Company believes that it provides a performance measure that, when compared year-over-year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income.

Management believes that the computation of FFO in accordance with NAREIT’s definition includes certain items that are not indicative of the operating performance of the Company’s real estate assets. These items include, but are not limited to, nonrecurring expenses, legal settlements, legal and professional fees, and acquisition costs. Management uses AFFO, which is a non-GAAP financial measure, to exclude such items. Management believes that reporting AFFO in addition to FFO is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis.

Safe Harbor Disclosure

This press release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Forward looking statements are statements that are not historical, including statements regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future, and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “will,” “should” and “could.” Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2019, and in the Company’s other documents filed with the SEC, copies of which are available on the SEC’s website, www.sec.gov.

 

Medalist Diversified REIT, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2019 and 2018

   
 

2019

 

2018

 

Unaudited

 

ASSETS

  

Investment properties, net

 

$

75,791,825

 

 

$

45,323,497

 

Cash

 

 

613,675

 

 

 

1,327,424

 

Restricted cash

 

 

1,458,515

 

 

 

2,793,372

 

Rent and other receivables, net of allowance of $8,615 and $15,194, as of December 31, 2019 and 2018, respectively

 

 

149,382

 

 

 

108,478

 

Unbilled rent

 

 

460,888

 

 

 

259,216

 

Advance deposits

 

 

-

 

 

 

423,747

 

Intangible assets, net

 

 

4,458,071

 

 

 

2,585,834

 

Other assets

 

 

306,886

 

 

 

285,484

 

Total Assets

 

$

83,239,242

 

 

$

53,107,052

 

   

LIABILITIES

  

Accounts payable and accrued liabilities

 

$

1,565,145

 

 

$

826,336

 

Intangible liabilities, net

 

 

1,277,960

 

 

 

439,726

 

Line of credit, short term, net

 

 

1,990,000

 

 

 

-

 

Related party notes payable, short term

 

 

852,000

 

 

 

-

 

Mortgages payable, net

 

 

56,700,902

 

 

 

33,236,397

 

Total Liabilities

 

$

62,386,007

 

 

$

34,502,459

 

   

EQUITY

  

Preferred stock, $.01 par value, 250,000,000 shares authorized, none issued and outstanding

 

$

-

 

 

$

-

 

Common stock, $.01 par value, 750,000,000 shares authorized, 4,500,144 and 2,321,582 shares issued and outstanding at December 31, 2019 and 2018, respectively

 

 

45,001

 

 

 

23,216

 

Additional paid-in capital

 

 

31,702,347

 

 

 

22,077,827

 

Offering costs

 

 

(2,992,357

)

 

 

(1,835,291

)

Accumulated deficit

 

 

(10,555,841

)

 

 

(5,229,760

)

Total Stockholders' Equity

 

 

18,199,150

 

 

 

15,035,992

 

Noncontrolling interests - Hampton Inn Property

 

 

1,282,782

 

 

 

2,009,031

 

Noncontrolling interests - Hanover Square Property

 

 

540,791

 

 

 

608,943

 

Noncontrolling interests - Operating Partnership

 

 

830,512

 

 

 

950,627

 

Total Equity

 

$

20,853,235

 

 

$

18,604,593

 

Total Liabilities and Equity

 

$

83,239,242

 

 

$

53,107,052

 

 

Medalist Diversified REIT, Inc. and Subsidiaries

Consolidated Statements of Operations

  
  
 

For the quarter ended

For the year ended

 

December 31,

December 31,

 

2019

2018

2019

2018

 

Unaudited

Unaudited

Unaudited

REVENUE

 

Retail center property revenues

 

$

1,118,019

 

$

733,724

 

$

3,495,396

 

$

2,372,666

 

Retail center property tenant reimbursements

 

 

240,995

 

 

175,459

 

 

691,349

 

 

541,116

 

Flex center property revenues

 

 

138,607

 

 

-

 

 

138,607

 

 

-

 

Flex center property tenant reimbursements

 

 

45,162

 

 

-

 

 

45,162

 

 

-

 

Hotel property room revenues

 

 

1,446,633

 

 

949,421

 

 

3,723,173

 

 

3,636,485

 

Hotel property other revenues

 

 

120,211

 

 

6,236

 

 

175,081

 

 

39,684

 

Total Revenue

 

$

3,109,627

 

$

1,864,840

 

$

8,268,768

 

$

6,589,951

 

  

OPERATING EXPENSES

 

Retail center property operating expenses

 

 

329,467

 

 

306,077

 

$

1,134,718

 

$

976,468

 

Flex center property operating expenses

 

 

55,266

 

 

-

 

 

55,266

 

 

-

 

Hotel property operating expenses

 

 

1,239,010

 

 

670,279

 

 

3,156,664

 

 

2,608,825

 

Share based compensation expenses

 

 

-

 

 

790,340

 

 

61,600

 

 

790,340

 

Legal, accounting and other professional fees

 

 

261,457

 

 

142,563

 

 

1,089,246

 

 

924,651

 

Corporate general and administrative expenses

 

 

54,740

 

 

83,349

 

 

261,934

 

 

119,679

 

Loss on impairment

 

 

-

 

 

191,578

 

 

-

 

 

191,578

 

Loss on disposition of furniture, fixtures and equipment

 

 

-

 

 

-

 

 

983,855

 

 

-

 

Depreciation and amortization

 

 

1,018,311

 

 

563,621

 

 

2,773,805

 

 

2,043,323

 

Total Operating Expenses

 

 

2,958,251

 

 

2,747,807

 

 

9,517,088

 

 

7,654,864

 

Operating Loss

 

 

151,376

 

 

(882,967

)

 

(1,248,320

)

 

(1,064,913

)

Interest expense

 

 

882,677

 

 

519,510

 

 

2,472,628

 

 

1,917,183

 

Net Loss from Operations

 

 

(731,301

)

 

(1,402,477

)

 

(3,720,948

)

 

(2,982,096

)

Other (loss) income

 

 

(3,619

)

 

(76,533

)

 

(83,546

)

 

44,094

 

Net Loss before Income Taxes

 

 

(734,920

)

 

(1,479,010

)

 

(3,804,494

)

 

(2,938,002

)

Income tax expense

 

 

-

 

 

53,151

 

 

-

 

 

53,151

 

Net Loss

 

 

(734,920

)

 

(1,532,161

)

 

(3,804,494

)

 

(2,991,153

)

Less: Net loss attributable to Hampton Inn Property noncontrolling interests

 

 

(62,880

)

 

(83,134

)

 

(726,249

)

 

(166,314

)

Less: Net loss attributable to Hanover Square Property noncontrolling interests

 

 

468

 

 

(5,778

)

 

(8,037

)

 

(15,177

)

Less: Net loss attributable to Operating Partnership noncontrolling interests

 

 

(8,630

)

 

(24,400

)

 

(54,490

)

 

(66,339

)

Net Loss Attributable to Medalist Common Shareholders

 

$

(663,878

)

$

(1,418,849

)

$

(3,015,718

)

$

(2,743,323

)

  

Loss per share from operations - basic and diluted

 

$

(0.15

)

$

(0.67

)

$

(0.82

)

$

(1.39

)

  

Weighted-average number of shares - basic and diluted

 

 

4,500,144

 

 

2,108,550

 

 

3,683,171

 

 

1,967,980

 

  

Dividends paid per common share

 

$

0.175

$

0.175

$

0.525

$

0.525

 

A reconciliation of AFFO (non-GAAP) to net income is as follows:

  
 

For the Three Months Ended

For the Year Ended

 

December 31,

December 31,

 

2019
Unaudited

 

2018
Unaudited

2019
Unaudited

 

2018
Unaudited

    

Net income (loss)

 

$

(734,920

)

 

$

(1,532,161

)

$

(3,804,494

)

 

$

(2,991,153

)

Depreciation of tangible real property assets

 

 

670,445

 

 

 

333,201

 

 

1,715,274

 

 

 

1,243,385

 

Depreciation of tenant improvements

 

 

83,223

 

 

 

57,246

 

 

270,203

 

 

 

193,170

 

Amortization of leasing commissions

 

 

10,497

 

 

 

15,140

 

 

40,067

 

 

 

25,075

 

Amortization of tenant inducements

 

 

4,260

 

 

 

-

 

 

17,040

 

 

 

11,360

 

Amortization of intangible assets

 

 

254,146

 

 

 

165,134

 

 

748,261

 

 

 

581,693

 

Loss on disposition of FF&E

 

 

-

 

 

 

-

 

 

983,855

 

 

 

-

 

Loss on impairment

 

 

-

 

 

 

191,578

 

 

-

 

 

 

191,578

 

Funds from operations

 

$

287,651

 

 

$

(769,862

)

$

(29,794

)

 

$

(744,892

)

    
    

Funds from operations

 

$

287,651

 

 

$

(769,862

)

$

(29,794

)

 

$

(744,892

)

Amortization of above market leases

 

 

60,552

 

 

 

49,810

 

 

226,251

 

 

 

214,415

 

Amortization of below market leases

 

 

(58,338

)

 

 

(23,511

)

 

(140,481

)

 

 

(78,045

)

Straight line rent

 

 

(15,845

)

 

 

(79,370

)

 

(195,374

)

 

 

(207,432

)

Capital expenditures, net of reimbursements from property reserve accounts

 

 

12,617

 

 

 

(530,311

)

 

(428,787

)

 

 

(878,157

)

Decrease (Increase) in fair value of interest rate cap

 

 

6,454

 

 

 

77,266

 

 

136,558

 

 

 

(43,361

)

Amortization of loan issuance costs

 

 

87,345

 

 

 

42,711

 

 

221,931

 

 

 

166,600

 

Share-based compensation

 

 

-

 

 

 

790,340

 

 

61,600

 

 

 

790,340

 

Adjusted funds from operations (AFFO)

 

$

380,436

 

 

$

(442,927

)

$

(148,096

)

 

$

(780,532

)

   

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200304005408/en/

CONTACT: Dave Gentry, CEO

RedChip Companies

Office: 1.800.RED.CHIP (733.2447)

Cell: 407.491.4498

dave@redchip.com

KEYWORD: VIRGINIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: COMMERCIAL BUILDING & REAL ESTATE CONSTRUCTION & PROPERTY REIT

SOURCE: Medalist Diversified REIT, Inc.

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PUB: 03/04/2020 08:00 AM/DISC: 03/04/2020 08:01 AM

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