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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: October 6, 2023

 

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.)

 

P.O. Box 8436

Richmond, VA, 23226

(Address of principal executive offices)

 

(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)

 

¨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))

 

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
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value   Nasdaq Capital Market   MDRRP

 

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. ¨

 

 

 

 

 

  

Item 7.01

Regulation FD Disclosure

 

On October 6, 2023, Medalist Diversified REIT, Inc., a Maryland corporation (the “Company”) released a letter from Francis P. Kavanaugh, the Company’s interim CEO and President, providing an update on the Company’s activities. A copy of the letter is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference and is also available on the “Investors” section of the Company’s website at www.medalistreit.com. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any registration statement or other document filed under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit Number  Description of Exhibit
    
99.1  Letter to Shareholders, dated October 6, 2023
104  Cover Page Interactive Data File (embedded within the Inline XBRL Document)

  

 

 

 

SIGNATURE

 

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

 

  MEDALIST DIVERSIFIED REIT, INC.
     
Dated: October 6, 2023 By: /s/ C. Brent Winn, Jr.
    C. Brent Winn, Jr.
    Chief Financial Officer

 

 

Exhibit 99.1

 

October 6, 2023

 

 

 

Dear Medalist Diversified REIT, Inc. Shareholders,

 

We’ve got some updates to share covering everything from governance to our financial game plan.

 

Governance: Leveling Up 

 

Welcome David Lunin, the newest member of our Board. David is EVP and CFO Designate of Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT), a $1.5B specialty chemicals and renewables firm. Prior to Calumet, David was a Managing Director in Investment Banking at Goldman Sachs where he spent 13 years. David’s corporate finance, M&A and capital markets experience will contribute a valuable perspective.

 

But wait, there’s more! We’ve also launched a Board of Advisors who’ll meet quarterly to bring fresh perspectives to the table. Our charter members are Lee Finley, a major MDRR shareholder, and Laith Hermiz, a talented executive with extensive REIT and real estate experience. We look forward to adding additional members to our Board of Advisors who can provide strategic insight into our business.

 

Asset Quality and Leasing: Solid Progress

 

Our portfolio is solid, spanning nearly a million square feet across retail and industrial spaces. We have reached full occupancy at Parkway Center and locking in a 10-year renewal at Salisbury Marketplace. These wins show we’re on the right track for long-term stability.

 

Leasing Update: The Numbers Don’t Lie

 

Our portfolio is 97.2% leased, beating the national averages mentioned in recent Wall Street Journal articles. In the last 60 days alone, we’ve inked 2 new leases and renewed 7, totaling over 37,000 square feet. If talks with a couple of national credit tenants go well, we could see our occupancy rate jump to 98.2%.

 

Financial Strategy: Playing It Smart

 

Seven of our eight loans have low-cost, fixed or capped rates, setting us up nicely for growth with accretive debt that leads to better returns. We’re laser-focused on boosting Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to keep delivering value to you, our shareholders.

 

Property Strategy: Making Smart Moves

 

We’re looking at how to optimize our assets. That includes carving out stand-alone assets to reposition them as Single Tenant Net Lease (STNL) properties. This move aligns perfectly with our emerging focus on STNL assets, which are easier to manage.  

 

Medalist Diversified REIT, Inc.

www.medalistreit.com

P. O. Box 8436

Richmond, Virginia 23226

 

  

Why We’re Entering the STNL Market:

 

Market Dislocation: The rising interest rate environment is causing a shift in the market. Current owners are holding onto their assets longer, which eventually forces them to sell with a shorter lease duration. This diminishes the asset’s value. We see this as an opportunity rather than a challenge.

 

Strategic Leverage: MDRR plans to capitalize on this dislocation by identifying such undervalued assets. Leveraging our existing relationships and expertise, we aim to extend these leases during a non-committed due diligence period. This strategy allows us to add value to the asset before acquisition.

 

Simple Asset Management: STNL properties historically require less asset management, aligning perfectly with MDRR’s goal to keep overhead manageable and modest. This allows us to focus on growth rather than getting bogged down in day-to-day operations.

 

Demographic Targeting: We are specifically looking to acquire STNLs in regions experiencing significant demographic growth. This aligns with our long-term strategy to add value to our portfolio and, by extension, to our investors.

 

Financial Metrics: Your Growth Compass

 

When it comes to REITs, AFFO per share is the metric to watch. We’re committed to growing this number to ensure dividends keep flowing in the long run. Speaking of dividends, we’ve hit pause for six months, but rest assured, they’re coming back.

 

Organic Growth: Adapting and Thriving

 

We’re keeping an eye on market trends like inflation and supply-demand dynamics to make smart rental revisions. It’s all about staying agile and adaptive.

 

CEO Compensation and Future Outlook: Alignment

 

To show I’m all in, I’m waiving my salary during this dividend pause. We’re committed to bringing back a dividend strategy that makes sense for everyone involved.

 

Wrapping Up

 

A huge thank you for your ongoing support. At our recent annual meeting, a whopping 72% of you cast your votes, and we couldn’t be more grateful. Your input is gold to us, so keep it coming.

 

Feel free to reach out directly if you’ve got questions or need more info.

 

Cheers,

 

Frank Kavanaugh

Interim CEO, Medalist Diversified REIT, Inc.

 

Medalist Diversified REIT, Inc.

www.medalistreit.com

P. O. Box 8436

Richmond, Virginia 23226

 

 

 

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