Medalist Diversified REIT, Inc. Reports Fourth Quarter and Full Year 2021 Results

RICHMOND, Va.--()--Medalist Diversified REIT, Inc. (NASDAQ:MDRR), a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S., today reported financial results for the year ended December 31, 2021 and provided an update on its corporate activities. In addition, the Company released supplemental financial information about its fourth quarter financial results.

Key Highlights:

Year ended December 31, 2021

  • Total revenues were $11.48 million, representing a 24% increase over revenues for 2020.
    • Same property revenues increased 11% year over year.
  • Net operating income increased 57% to $6.44 million, up from $4.09 million for 2020.
    • Same property NOI increased 31% year over year
  • Net loss attributable to common shareholders was $4.36 million, or $(0.33) per basic and diluted share, compared to a net loss attributable to common shareholders of $8.18 million, or $(1.74) per basic and diluted common share, for 2020, representing an improvement of $1.41 per basic and diluted common share.
  • EBITDA increased 378% to $4.54 million, up from $(1.63) million for the prior year.
  • Adjusted funds from operations (AFFO) was $332,514, up from ($982,764) in the prior year.
  • 77% year-over-year increase in the square footage of retail and flex properties, ending the year with seven properties encompassing 764,940 square feet, compared to 432,915 square feet as of the end of 2020.
  • Average occupancy rate for the Company’s seven retail and flex properties increased to 95.2% as of December 31, 2021, compared to 92.8% for the Company’s four retail and flex properties owned as of December 31, 2020.
  • 100% average occupancy rate for the Company’s 148-room hotel property for 2021, compared to 47.2% for 2020.

Three months ended December 31, 2021 (unaudited)

  • Total revenues were $2.78 million for fourth quarter 2021, representing a 16% increase over revenues for fourth quarter 2020.
  • EBITDA was $1.5 million, a $4.06 million increase over the fourth quarter 2020 EBITDA of ($2,544,507).
  • Net operating income was $1.8 million, a 58% increase over fourth quarter 2020 NOI of $1,133,817.

“Our 2021 results demonstrate the underlying strength of the Company’s portfolio,” stated Thomas E. Messier, Chairman and Chief Executive Officer of the Company. “We are extremely pleased with the dramatic increase of our funds from operations and adjusted funds from operations as those are a key metric in measuring the performance of a REIT. Our strategy to further improve the position of our portfolio in 2021, by selling the Hampton Inn property, which closed in August 2021, and acquiring new cash-flowing properties with funds from our April 2021 common stock offering, is showing a positive impact on our financial results. Our 2022 strategy is to continue to grow by investing in properties that complement our current portfolio.”

Brent Winn, Chief Financial Offer of the Company, stated, “Our fourth quarter performance demonstrates our portfolio’s full recovery from COVID-19, with increased occupancy rates and strong leasing activity contributing to significantly improved financial results. Operating income for the quarter was $216,616, a significant improvement over the operating loss for the fourth quarter of 2020 of $3,634,076. Net operating income was $1,793,408 in the fourth quarter of 2021, an increase of 58% over the fourth quarter of 2020. Funds from operations (FFO) was $613,240 for the fourth quarter of 2021, up from ($148,972) in the fourth quarter of 2020. Adjusted funds from operations (AFFO) for the fourth quarter of 2021 was $419,619, an increase of $554,652 over the fourth quarter of 2020.”

The Company closed on three acquisitions in 2021. In May, the Company closed on the purchase of the Lancer Center Property, a 178,626 square foot retail property located in Lancaster, South Carolina. In August, the Company completed its acquisition of the Greenbrier Business Center Property, an 89,290 square foot mixed-use industrial/office property in Chesapeake, Virginia. On November 1, the Company closed on its acquisition of the Parkway Property, a 64,109 square foot flex-industrial property in Virginia Beach, Virginia. In addition, in August the Company sold its Hampton Inn Property, located in Greensboro, North Carolina.

As of December 31, 2021, the Company’s retail and flex property portfolio consisted of seven properties with 769,940 square feet with an average occupancy rate of 95.2% across the seven properties. As of December 31, 2021, the Company’s hotel portfolio consisted of one property with 148 rooms. The average occupancy of this hotel was 100% for the year ended December 31, 2021, due to the Company’s lease of the entire hotel to Clemson University.

About Medalist Diversified REIT

Medalist Diversified REIT Inc. is a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S. The Company’s strategy is to focus on 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.

For more information on Medalist, including additional supplemental financial information, please visit the Company website at https://www.medalistreit.com.

Forward Looking Statements

This press release 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 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 prospectus dated June 21, 2021 and its accompanying prospectus supplement dated November 17, 2021, and in the Company’s subsequent annual and periodic reports and other documents filed with the SEC, copies of which are available on the SEC’s website, www.sec.gov.

Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

NOI

While we believe net income (loss), as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, we consider NOI, given its wide use by and relevance to investors and analysts, an appropriate supplemental performance measure. NOI provides a measure of rental operations, and does not include depreciation and amortization, interest expense and non-property specific expenses such as corporate-wide interest expense and general and administrative expenses. As used herein, we calculate NOI as follows:

NOI from property operations is calculated as net income (loss), as defined by U.S. GAAP, plus preferred dividends, legal, accounting and other professional fees, corporate general and administrative expenses, depreciation, amortization of intangible assets and liabilities, interest expense, including amortization of financing costs, share based compensation expense, loss on impairment, other income, net amortization of above and below market leases and realized gain on disposal of investment property. The components of NOI consist of recurring rental and reimbursement revenue, less real estate taxes and operating expenses, such as insurance, utilities, and repairs and maintenance.

The following tables reflect net loss attributable to common shareholders with a reconciliation to NOI, as computed in accordance with GAAP for the periods presented:

 

 

 

Year ended

 

 

 

December 31,

Net Operating Income

 

2021

 

2020

Net Loss

 

$

(4,358,282

)

$

(9,581,542

)

Plus: Preferred dividends, including amortization of capitalized issuance costs

 

 

604,383

 

 

 

506,819

 

Plus: Legal, accounting and other professional fees

 

 

1,465,199

 

 

 

1,258,863

 

Plus: Corporate general and administrative expenses

 

 

654,137

 

 

 

300,641

 

Plus: Depreciation expense

 

 

2,415,139

 

 

 

3,067,556

 

Plus: Amortization of intangible assets

 

 

1,093,565

 

 

 

914,318

 

Plus: Interest expense, including amortization of capitalized loan issuance costs

 

 

4,929,872

 

 

 

3,453,807

 

Plus: Share based compensation expense

 

 

149,981

 

 

 

569,995

 

Plus: Loss on impairment

 

 

-

 

 

 

3,717,155

 

Less: Other income

 

 

(361,469

)

 

 

(120,982

)

Less (Plus): Net amortization of above and below market leases

 

 

(24,024

)

 

 

6,142

 

Less: Realized gain on disposal of investment property

 

 

(124,641

)

 

 

-

 

Net Operating Income - NOI

 

$

6,443,860

 

 

$

4,092,772

 

 

 

Three Months Ended
December 31,

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

(Unaudited)

Net Operating Income

 

 

 

 

 

 

 

 

Net Loss

 

$

(534,250

)

$

(4,608,877

)

Plus: Preferred dividends, including amortization of capitalized issuance costs

 

 

152,767

148,388

Plus: Legal, accounting and other professional fees

 

 

365,318

245,151

Plus: Corporate general and administrative expenses

 

 

85,658

 

 

 

59,603

 

Plus: Depreciation expense

 

 

749,936

 

 

 

767,379

 

Plus: Amortization of intangible assets

 

 

397,554

 

 

 

198,468

 

Plus: Interest expense, including amortization of capitalized loan issuance costs

 

 

772,290

 

 

 

946,901

 

Plus: Impairment on assets held for sale

 

 

-

 

 

 

3,494,058

 

Less: Other income

 

 

(174,191

)

 

 

(120,488

)

Less: Net amortization of above and below market leases

 

 

(21,674

)

 

 

3,234

 

Less: Realized gain on disposal of investment properties

 

 

-

 

 

 

-

 

Net Operating Income - NOI

 

$

1,793,408

 

 

$

1,133,817

 

 

EBITDA

EBITDA is net income (loss), as defined by U.S. GAAP, plus preferred dividends, interest expense, including amortization of financing costs, depreciation and amortization, net amortization of acquired above and below market lease revenue and realized gain on disposal of investment property.

The following tables reflect net loss with a reconciliation to EBITDA, as computed in accordance with GAAP for the periods presented:

 

Year ended

 

 

December 31

 

 

2021

 

2020

Net Loss

 

$

(4,358,282

)

$

(9,581,542

)

Plus: Preferred dividends, including amortization of capitalized issuance costs

 

 

604,383

 

 

 

506,819

 

Plus: Interest expense, including amortization of capitalized loan issuance costs

 

 

4,929,872

 

 

 

3,453,807

 

Plus: Depreciation expense

 

 

2,415,139

 

 

 

3,067,556

 

Plus: Amortization of intangible assets

 

 

1,093,565

 

 

 

914,318

 

Less (Plus): Net amortization of above and below market leases

 

 

(24,024

)

 

 

6,142

 

Less: Realized gain on disposal of investment property

 

 

(124,641

)

 

 

-

 

EBITDA

 

$

4,536,012

 

 

$

(1,632,900

)

 

 

Three Months Ended
December 31,

 

 

 

2021

 

2020

 

 

 

(Unaudited)

 

(Unaudited)

 

EBITDA

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(534,250

)

$

(4,608,877

)

Plus: Preferred dividends, including amortization of capitalized issuance costs

 

 

152,767

148,388

Plus: Interest expense, including amortization of capitalized loan issuance costs

 

 

772,290

946,901

Plus: Depreciation expense

 

 

749,936

 

 

 

767,379

 

 

Plus: Amortization of intangible assets

 

 

397,554

 

 

 

198,468

 

 

Less: Net amortization of above and below market leases

 

 

(21,674

)

 

 

3,234

 

 

EBITDA

 

$

1,516,623

 

 

$

(2,544,507

)

 

FFO and AFFO

Funds from operations (“FFO”), a non-GAAP measure, is an alternative measure of operating performance, specifically as it relates to results of operations and liquidity. FFO is computed in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases) and after adjustments for unconsolidated partnerships and joint ventures. In addition to FFO, Adjusted FFO (“AFFO”), excludes non-cash items such as amortization of loans and above and below market leases, unbilled rent arising from applying straight line rent revenue recognition and share-based compensation expenses. Additionally, the impact of capital expenditures, including tenant improvement and leasing commissions, net of reimbursements of such expenditures by property escrow funds, is included in the calculation of AFFO.

The following tables reflect net loss with a reconciliation to FFO and AFFO for the periods presented:

 

 

Year ended

 

 

December 31,

 

2021

 

 

2020

Funds from operations

 

 

 

 

 

 

 

 

Net Loss

 

$

(4,358,282

)

$

(9,581,542

)

Depreciation of tangible real property assets

 

 

1,912,353

 

 

 

2,705,017

 

Depreciation of tenant improvements

 

 

437,372

 

 

 

312,961

 

Amortization of tenant inducements

 

 

-

 

 

 

7,100

 

Amortization of leasing commissions

 

 

65,414

 

 

 

49,578

 

Amortization of intangible assets

 

 

1,093,565

 

 

 

914,318

 

Loss on impairment

 

 

-

 

 

 

223,097

 

Impairment of assets held for sale

 

 

-

 

 

 

3,494,058

 

Gain on sale of investment properties

 

 

(124,641

)

 

 

-

 

Funds from operations

 

$

(974,219

)

 

$

(1,875,413

)

 

 

 

 

 

 

 

 

 

Adjusted funds from operations

 

 

 

 

 

 

 

 

Funds from operations

 

$

(974,219

)

 

$

(1,875,413

)

Amortization of above market leases

 

 

250,504

 

 

 

221,390

 

Amortization of below market leases

 

 

(274,528

)

 

 

(215,248

)

Straight line rent

 

 

(198,594

)

 

 

(244,003

)

Capital expenditures

 

 

(536,685

)

 

 

(226,640

)

Decrease in fair value of interest rate cap

 

 

27,281

 

 

 

12,124

 

Amortization of loan issuance costs

 

 

103,180

 

 

 

279,951

 

Amortization of preferred stock discount and offering costs

 

 

204,383

 

 

 

162,375

 

Amortization of convertible debenture discount, offering costs and beneficial conversion feature

 

 

1,718,487

 

 

 

-

 

Share-based compensation

 

 

149,981

 

 

 

569,995

 

Write off unbilled rent

 

 

-

 

 

 

31,162

 

Bad debt expense

 

 

39,024

 

 

 

431,143

 

Debt forgiveness

 

 

(176,300

)

 

 

(129,600

)

Adjusted funds from operations (AFFO)

 

$

332,514

 

 

$

(982,764

)

 

 

Three Months Ended
December 31,

 

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

Funds from operations

 

 

 

 

 

 

 

 

Net loss

 

$

(534,250

)

$

(4,608,877

)

Depreciation of tangible real property assets

 

 

587,125

677,864

Depreciation of tenant improvements

 

 

144,737

74,334

Amortization of leasing commissions

 

 

18,074

 

 

 

15,181

 

Amortization of intangible assets

 

 

397,554

 

 

 

198,468

 

Impairment of assets held for sale

 

 

-

 

 

 

3,494,058

 

Funds from operations

 

$

613,240

 

 

$

(148,972

)

 

 

 

 

 

 

 

 

 

Adjusted funds from operations

 

 

 

 

 

 

 

 

Funds from operations

 

$

613,240

 

 

$

(148,972

)

Amortization of above market leases

 

 

69,701

 

 

 

53,613

 

Amortization of below market leases

 

 

(91,375

)

 

 

(50,379

)

Straight line rent

 

 

(33,617

)

 

 

(43,809

)

Capital expenditures

 

 

(253,667

)

 

 

(24,078

)

Decrease in fair value of interest rate cap

 

 

27,091

 

 

 

10,301

 

Amortization of loan issuance costs

 

 

22,469

 

 

 

52,829

 

Amortization of preferred stock discount and offering costs

 

 

52,767

 

 

 

48,388

 

Bad debt expense

 

 

13,010

 

 

 

96,674

 

Debt forgiveness

 

 

-

 

 

 

(129,600

)

Adjusted funds from operations (AFFO)

 

$

419,619

 

 

$

(135,033)

 

 

Contacts

Dave Gentry
RedChip Companies
407-491-4498
MDRR@redchip.com

Contacts

Dave Gentry
RedChip Companies
407-491-4498
MDRR@redchip.com