10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2023
	OR
☐	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: 001-38719

MEDALIST DIVERSIFIED REIT, INC.

Maryland	47-5201540
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

1051 E. Cary Street Suite 601

James Center Three

Richmond, VA, 23219

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (804) 344-4435

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

Title of Each Class	Trading Symbol(s)	Name of each Exchange on Which Registered
Common Stock, $0.01 par value per share	MDRR	The Nasdaq Capital Market
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	MDRRP	The Nasdaq Capital Market

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.   Yes  ⌧    ◻  No

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). ⌧  Yes    No  ◻

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.

Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	☒	Smaller reporting company	☒
		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  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ ☒ No

The number of shares of Common Stock, $0.01 par value per share, of the registrant outstanding at May 10, 2023 was 2,219,779.

Medalist Diversified REIT, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2023

Table of Contents

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52
PART II. OTHER INFORMATION		52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	53
Signatures		55

2

PART I.FINANCIAL INFORMATION

Item 1.   Financial Statements

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

		March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Investment properties, net	$	76,242,506	$	76,514,952
Cash		3,048,100		3,922,136
Restricted cash		1,937,265		1,740,717
Rent and other receivables, net of allowance of $62,960 and $47,109, as of March 31, 2023 and December 31, 2022, respectively		290,836		402,434
Unbilled rent		1,069,860		1,022,153
Intangible assets, net		3,449,600		3,748,706
Other assets		497,510		564,306
Total Assets	$	86,535,677	$	87,915,404
LIABILITIES
Accounts payable and accrued liabilities	$	1,547,240	$	1,198,072
Intangible liabilities, net		2,133,752		2,234,113
Mortgages payable, net		61,065,672		61,340,259
Mandatorily redeemable preferred stock, net		4,509,325		4,450,521
Total Liabilities	$	69,255,989	$	69,222,965
EQUITY
Common stock, 17,758,421 and 17,758,421 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	$	177,584	$	177,584
Additional paid-in capital		51,363,812		51,363,812
Offering costs		(3,350,946)		(3,350,946)
Accumulated deficit		(32,337,125)		(30,939,020)
Total Stockholders' Equity		15,853,325		17,251,430
Noncontrolling interests - Hanover Square Property		126,185		127,426
Noncontrolling interests - Parkway Property		462,318		470,685
Noncontrolling interests - Operating Partnership		837,860		842,898
Total Equity	$	17,279,688	$	18,692,439
Total Liabilities and Equity	$	86,535,677	$	87,915,404

See notes to condensed consolidated financial statements

3

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	March 31,
	2023		2022
REVENUE
Retail center property revenues	$	1,891,679	$	1,525,085
Flex center property revenues		569,297		613,390
Hotel property room revenues		—		762,200
Hotel property other revenues		—		3,289
Total Revenue	$	2,460,976	$	2,903,964
OPERATING EXPENSES
Retail center property operating expenses	$	520,615	$	450,125
Flex center property operating expenses		176,737		161,381
Hotel property operating expenses		—		372,860
Bad debt expense		27,122		12,783
Share based compensation expenses		—		233,100
Legal, accounting and other professional fees		767,078		459,869
Corporate general and administrative expenses		117,049		80,706
Loss on impairment		36,743		36,670
Impairment of assets held for sale		—		175,671
Depreciation and amortization		1,156,348		1,155,197
Total Operating Expenses		2,801,692		3,138,362
Operating loss		(340,716)		(234,398)
Interest expense		864,052		841,424
Net Loss from Operations		(1,204,768)		(1,075,822)
Other (loss) income		(29,038)		95,439
Net Loss		(1,233,806)		(980,383)
Less: Net loss attributable to Hanover Square Property noncontrolling interests		(1,241)		(319)
Less: Net (loss) income attributable to Parkway Property noncontrolling interests		(8,367)		10,193
Less: Net loss attributable to Operating Partnership noncontrolling interests		(2,903)		(973)
Net Loss Attributable to Medalist Common Shareholders	$	(1,221,295)	$	(989,284)
Loss per share from operations - basic and diluted	$	(0.07)	$	(0.06)
Weighted-average number of shares - basic and diluted		17,758,421		16,037,073
Dividends paid per common share	$	0.01	$	0.02

See notes to condensed consolidated financial statements

4

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended March 31, 2023 and 2022

(Unaudited)

	For the three months ended March 31, 2023
	Common Stock											Noncontrolling Interests
				Additional			Offering	Accumulated			Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2023	17,758,421	$	177,584	$	51,363,812	$	(3,350,946)	$	(30,939,020)	$	17,251,430	$	127,426	$	470,685	$	842,898	$	18,692,439
Net loss	—	$	—	$	—	$	—	$	(1,221,295)	$	(1,221,295)	$	(1,241)	$	(8,367)	$	(2,903)	$	(1,233,806)
Dividends and distributions	—		—		—		—		(176,810)		(176,810)		—		—		(2,135)		(178,945)
Balance, March 31, 2023	17,758,421	$	177,584	$	51,363,812	$	(3,350,946)	$	(32,337,125)	$	15,853,325	$	126,185	$	462,318	$	837,860	$	17,279,688

	For the three months ended March 31, 2022
	Common Stock											Noncontrolling Interests
				Additional			Offering	Accumulated			Shareholders’		Hanover Square		Parkway		Operating
	Shares	Par Value		Paid in Capital			Costs	Deficit			Equity		Property		Property		Partnership		Total Equity
Balance, January 1, 2022	16,052,617	$	160,526	$	49,645,426	$	(3,350,946)	$	(24,981,346)	$	21,473,660	$	146,603	$	500,209	$	877,917	$	22,998,389
Common stock issuances	1,119,668	$	11,197	$	1,177,377	$	—	$	—	$	1,188,574	$	—	$	—	$	—	$	1,188,574
Common stock repurchases	(268,070)		(2,681)		(283,862)		—		—		(286,543)		—		—		—		(286,543)
Share based compensation	210,000		2,100		231,000		—		—		233,100		—		—		—		233,100
Net (loss) income	—		—		—		—		(989,284)		(989,284)		(319)		10,193		(973)		(980,383)
Dividends and distributions	—		—		—		—		(316,450)		(316,450)		(10,000)		(10,800)		(4,271)		(341,521)
Balance, March 31, 2022	17,114,215	$	171,142	$	50,769,941	$	(3,350,946)	$	(26,287,080)	$	21,303,057	$	136,284	$	499,602	$	872,673	$	22,811,616

See notes to condensed consolidated financial statements

5

Medalist Diversified REIT, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,233,806)	$	(980,383)
Adjustments to reconcile consolidated net loss to net cash flows from operating activities
Depreciation		911,481		771,560
Amortization		244,867		383,637
Loan cost amortization		26,990		28,118
Mandatorily redeemable preferred stock issuance cost and discount amortization		58,804		53,923
Above (below) market lease amortization, net		(73,018)		(26,034)
Bad debt expense		27,122		12,783
Share-based compensation		—		233,100
Impairment of assets held for sale		—		175,671
Loss on impairment		36,743		36,670
Changes in assets and liabilities
Rent and other receivables, net		84,476		109,000
Unbilled rent		(48,899)		(14,846)
Other assets		66,796		(128,599)
Accounts payable and accrued liabilities		349,168		38,263
Net cash flows from operating activities		450,724		692,863
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(647,690)		(366,059)
Net cash flows from investing activities		(647,690)		(366,059)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends and distributions paid		(178,945)		(341,521)
Repayment of mortgages payable		(301,577)		(192,257)
Proceeds from sales of common stock, net of capitalized offering costs		—		1,188,574
Repurchases of common stock, including costs and fees		—		(286,543)
Net cash flows from financing activities		(480,522)		368,253
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(677,488)		695,057
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		5,662,853		7,383,977
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	4,985,365	$	8,079,034
CASH AND CASH EQUIVALENTS, end of period, shown in condensed consolidated balance sheets		3,048,100		4,629,945
RESTRICTED CASH including assets restricted for capital and operating reserves and tenant deposits, end of period, shown in condensed consolidated balance sheets		1,937,265		3,449,089
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period shown in the condensed consolidated statements of cash flows	$	4,985,365	$	8,079,034
Supplemental Disclosures and Non-Cash Activities:
Other cash transactions:
Interest paid	$	796,268	$	682,456

See notes to condensed consolidated financial statements

6

Medalist Diversified REIT, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.      Organization and Basis of Presentation and Consolidation

Medalist Diversified Real Estate Investment Trust, Inc. (the “REIT”) is a Maryland corporation formed on September 28, 2015. Beginning with the taxable year ended December 31, 2017, the REIT has elected to be taxed as a real estate investment trust for federal income tax purposes. The REIT 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, 2023, the REIT, through the Operating Partnership, owned and operated eight properties, including the Shops at Franklin Square, a 134,239 square foot retail property located in Gastonia, North Carolina (the “Franklin Square Property”), the Shops at Hanover Square North, a 73,440 square foot retail property located in Mechanicsville, Virginia (the “Hanover Square Property”), the Ashley Plaza Shopping Center, a 164,012 square foot retail property located in Goldsboro, North Carolina (the “Ashley Plaza Property”), Brookfield Center, a 64,880 square foot mixed-use industrial/office property located in Greenville, South Carolina (the “Brookfield Center Property”), the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), the Greenbrier Business Center, an 89,280 square foot mixed-use industrial/office property located in Chesapeake, Virginia (the “Greenbrier Business Center Property "), the Parkway Property, a 64,109 square foot mixed-use industrial office property located in Virginia Beach, Virginia (the "Parkway Property") and the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”). The Company owns 84% of the Hanover Square Property as a tenant in common with a noncontrolling owner which owns the remaining 16% interest and 82% of the Parkway Property as a tenant in common with a noncontrolling owner which owns the remaining 18% interest.

7

The use of the word “Company” refers to the REIT and its consolidated subsidiaries, except where the context otherwise requires. The Company includes the REIT, the Operating Partnership, wholly owned limited liability companies which own or operate the properties and, for the periods presented prior to September 30, 2022, the taxable REIT subsidiary which formerly operated the Clemson Best Western University Inn, a hotel with 148 rooms on 5.92 acres in Clemson, South Carolina (“the Clemson Best Western Property”), which the Company sold on September 29, 2022.  As a REIT, certain tax laws limit the amount of “non-qualifying” income that Company can earn, including income derived directly from the operation of hotels.  As a result, the Company leased its consolidated hotel property to a taxable REIT subsidiary (“TRS”) for federal income tax purposes. The Company’s TRS was subject to income tax and was not limited as to the amount of nonqualifying income it could generate, but the Company’s TRS was limited in terms of its value as a percentage of the total value of the Company’s assets. The Company’s TRS entered into an agreement with a third party to manage the operations of the hotel.  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 Company was formed to acquire, reposition, renovate, lease and manage income-producing properties, with a primary focus on (i) commercial properties, including flex-industrial, limited-service hotels, and retail properties, and (ii) multi-family residential properties in secondary and tertiary markets in the southeastern part of the United States, with an expected concentration in Virginia, North Carolina, South Carolina, Georgia, Florida and Alabama. The Company may also pursue, in an opportunistic manner, other 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. While these types of investments are not intended to be a primary focus, the Company may make such investments in the discretion of Medalist Fund Manager, Inc. (the “Manager”).

The Company is externally managed by the Manager. The Manager makes all investment decisions for the Company. The Manager and its affiliated companies specialize in acquiring, developing, owning and managing value-added commercial real estate in the Mid-Atlantic and Southeast regions. The Manager oversees the Company’s overall business and affairs and has broad discretion to make operating decisions on behalf of the Company and to make investment decisions. The Company’s stockholders are not involved in its day-to-day affairs.

2.      Summary of Significant Accounting Policies

Investment Properties

The Company has adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. As a result, all of the Company’s acquisitions to date qualified as asset acquisitions and the Company expects future acquisitions of operating properties to qualify as asset acquisitions.  Accordingly, third-party transaction costs associated with these acquisitions have been and will be capitalized, while internal acquisition costs will continue to be expensed.

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 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 assets identified in the evaluation.

8

The Company records depreciation on buildings and improvements utilizing the straight-line method over the estimated useful life of the asset, generally 4 to 42 years. The Company reviews depreciable lives of investment properties periodically and makes adjustments to reflect a shorter economic life, when necessary. Capitalized leasing commissions and tenant improvements incurred and paid by the Company subsequent to the acquisition of the investment property are amortized utilizing the straight-line method over the term of the related lease. Amounts allocated to buildings are depreciated over the estimated remaining life of the acquired building or related improvements.

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, increases capacity or improves the efficiency of the asset. All other repair and maintenance costs are expensed as incurred.

The Company reviews 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 to 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.

Other than the tenant-specific losses on impairment and the impairment of assets held for sale described below, 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, 2023 and 2022, that would result in the projected value being below the carrying value of the Company’s properties.  

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 mortgages payable, 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.

During February 2021, the Company committed to a plan for the sale of an asset group associated with the Clemson Best Western Hotel Property that included the land, site improvements, building, building improvements and furniture, fixtures and equipment.  As of March 31, 2021, the Company recorded this asset group, and the associated mortgage payable, as held for sale.  As of March 31, 2021, the date the Company originally recorded this asset group as held for sale, the Company determined that the fair value of the Clemson Best Western Property exceeded the carrying value of its asset group, and the Company did not record impairment of assets held for sale associated with this asset group.

During subsequent periods since the asset group associated with the Clemson Best Western Property was initially classified as held for sale, the Company continued to follow its disposal plan.  Under ASC 360, during subsequent reporting periods after the asset group is classified as held for sale, it is necessary to evaluate the amounts previously used for the estimated fair value of the asset group.  Up to and including the reporting periods ending December 31, 2021, the Company reviewed and reassessed the estimated fair value of the asset group and believed that the fair value, less estimated costs to sell, exceeds the Company’s carrying cost in the property.  

9

Accordingly, the Company did not record impairment of assets held for sale related to the Clemson Best Western Property for the year ended December 31, 2021.

As of March 31, 2022, the Company determined that the carrying value of the asset group associated with the Clemson Best Western Hotel Property exceeded its fair value, less estimated costs to sell, and recorded impairment of assets held for sale of $175,671 on its condensed consolidated statement of operations for the three months ended March 31, 2022.  No such impairment of assets held for sale was recorded during the three months ended March 31, 2023.

On September 29, 2022, the Company closed on the sale of the Clemson Best Western Hotel Property to an unaffiliated purchaser.  See Note 3 for additional details.

Intangible Assets and Liabilities, net

The Company determines, through the ASC 805 evaluation, the above and below market lease intangibles upon acquiring a property. Intangible 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.

The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of its intangible assets may not be recoverable, but at least annually. During the three months ended March 31, 2023, a tenant defaulted on its lease and abandoned its premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with this lease of $35,551 that were recorded as part of the purchase of this property should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2023.  During the three months ended March 31, 2022, two tenants defaulted on their leases and abandoned their premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with these leases of $36,670 that were recorded as part of the purchase of these properties should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022.  

Details of the deferred costs, net of amortization, arising from the Company’s purchases of its retail center properties and flex center properties are as follows:

		March 31, 2023
	(unaudited)		December 31, 2022
Intangible Assets, net
Leasing commissions	$	1,074,551	$	1,135,421
Legal and marketing costs		150,957		169,437
Above market leases		175,839		209,860
Net leasehold asset		2,048,253		2,233,988
	$	3,449,600	$	3,748,706
Intangible Liabilities, net
Below market leases	$	(2,133,752)	$	(2,234,113)

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 the three months ended March 31, 2023 and 2022, respectively, were as follows:

10

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Amortization of above market leases	$	(27,343)	$	(69,583)
Amortization of below market leases		100,361		95,617
	$	73,018	$	26,034

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, 2023 and 2022, respectively, were as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Leasing commissions	$	(56,618)	$	(63,032)
Legal and marketing costs		(16,205)		(14,559)
Net leasehold asset		(172,044)		(306,046)
	$	(244,867)	$	(383,637)

As of March 31, 2023 and December 31, 2022, the Company’s accumulated amortization of lease origination costs, leases in place and legal and marketing costs totaled $2,148,257 and $2,198,049, respectively. During the three months ended March 31, 2023 and 2022, the Company wrote off $273,252 and $486,785, respectively, in accumulated amortization related to fully amortized intangible assets and $21,407 and $5,108, respectively, in accumulated amortization related to the write off of intangible assets related to the tenant defaults, discussed above.

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,
	2023		2024		2025		2026		2027		2028-2042		Total
Intangible Assets
Leasing commissions	$	160,102	$	171,601	$	145,550	$	107,312	$	88,394	$	401,592	$	1,074,551
Legal and marketing costs		43,963		38,900		24,004		13,160		7,917		23,013		150,957
Above market leases		66,689		42,858		21,526		15,629		14,543		14,594		175,839
Net leasehold asset		443,833		394,874		295,851		199,466		153,142		561,087		2,048,253
	$	714,587	$	648,233	$	486,931	$	335,567	$	263,996	$	1,000,286	$	3,449,600
Intangible Liabilities
Below market leases, net	$	(268,441)	$	(285,892)	$	(213,348)	$	(178,776)	$	(161,866)	$	(1,025,429)	$	(2,133,752)

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 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, 2023 and 2022, respectively.

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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 bank operating accounts and money markets. 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 cash equivalents and any restricted cash held by the Company on deposit with financial institutions in the United States which are insured by the Federal Deposit Insurance Company ("FDIC") up to $250,000. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions credit worthiness in conjunction with balances on deposit to minimize risk. As of March 31, 2023, the Company held one cash account at a financial institution with a balance that exceeded the FDIC limit by $1,404,374. As of December 31, 2022, the Company held two cash accounts at a single financial institution with combined balances that exceeded the FDIC limit by $2,613,789.

Restricted cash represents (i) amounts held by the Company for tenant security deposits, (ii) escrow deposits held by lenders for real estate tax, insurance, and operating reserves, (iii) an escrow for the first year of dividends on the Company’s mandatorily redeemable preferred stock, and (iv) 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, 2023 and December 31, 2022, the Company reported $283,646 and $267,854, respectively, in security deposits held as restricted cash.

Escrow deposits are restricted cash balances held by lenders for real estate taxes, insurance and other operating reserves. As of March 31, 2023 and December 31, 2022, the Company reported $736,865 and $579,785, respectively, in escrow deposits.

Capital reserves are restricted cash balances held by lenders for capital improvements, leasing commissions furniture, fixtures and equipment, and tenant improvements. As of March 31, 2023 and December 31, 2022, the Company reported $916,754 and $893,078, respectively, in capital property reserves.

	March 31, 2023		December 31,
Property and Purpose of Reserve	(unaudited)		2022
Franklin Square Property - leasing costs	$	858,509	$	845,765
Brookfield Center Property - maintenance and leasing cost reserve		58,245		47,313
Total	$	916,754	$	893,078

Share Retirement

ASC 505-30-30-8 provides guidance on accounting for share retirement and establishes two alternative methods for accounting for the repurchase price paid in excess of par value.  The Company has elected the method by which the excess between par value and the repurchase price, including costs and fees, is recorded to additional paid in capital on the Company’s condensed consolidated balance sheets.  During the three months ended March 31, 2022, the Company repurchased 268,070 shares of its common stock at a total cost of $278,277 at an average price of $1.038 per common share.  The Company incurred fees of $8,266 associated with these transactions.  Of the total repurchase price, $2,681 was recorded to common stock and the difference, $283,862, was recorded to additional paid in capital on the Company’s condensed consolidated balance sheet.  No such amounts were recorded during the three months ended March 31, 2023.

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Revenue Recognition

Retail and Flex Center Property Revenues

The Company recognizes minimum rents from its retail center properties and flex center 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, 2023 and December 31, 2022, the Company reported $1,069,860 and $1,022,153, respectively, in unbilled rent. During the three months ended March 31, 2023, the Company recorded a loss on impairment of $1,192 related to previously recognized straight-line rent related to a defaulting tenant’s lease.  No such loss on impairment related to straight-line rent was recorded during the three months ended March 31, 2022.  

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 "Retail center property revenues” and “Flex center property revenues.” (See Recent Accounting Pronouncements, below.) This significantly reduces the Company’s exposure to increases in costs and operating expenses resulting from inflation or other outside 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 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 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, no such revenues were recognized during the three months ended March 31, 2023 and 2022.

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, the Company provides for losses related to unrecovered intangibles and other assets. During the three months ended March 31, 2023 and 2022, respectively, no such termination costs were recognized.

Hotel Property Revenues

Hotel revenues from the Clemson Best Western Property were recognized as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel’s services.  Revenues from the Company’s occupancy agreement with Clemson University were recognized as earned, which is as rooms are occupied or otherwise reserved for use by the University.  The Clemson University occupancy agreement ended on May 15, 2022 and the Company sold the Clemson Best Western Property on September 29, 2022.  

The Clemson Best Western Property was required to collect certain taxes and fees from customers on behalf of government agencies and remit them back to the applicable governmental agencies on a periodic basis.  The Clemson Best Western Property had a legal obligation to act as a collection agent.  The Clemson Best Western Property did not retain these taxes and fees; therefore, they were not included in revenues.  The Clemson Best Western Property recorded a liability when the amounts were collected and relieved the liability when payments were made to the applicable taxing authority or other appropriate governmental agency.

Hotel Property Operating Expenses

All personnel of the Clemson Best Western Property were directly or indirectly employees of Marshall Hotels and Resorts, Inc. (“Marshall”), the Company’s hotel management firm. In addition to fees and services discussed above, the Clemson Best Western Property reimbursed Marshall for all employee related service costs, including payroll salaries and wages, payroll taxes and other employee benefits paid by Marshall on its behalf.  The total amounts incurred for payroll salaries and wages, payroll taxes and other employee benefits for the three months ended March 31, 2023 and 2022 were $0 and $131,939, respectively.

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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, 2023 and December 31, 2022, the Company’s allowance for uncollectible rent totaled $62,960 and $47,109, respectively, which are comprised of amounts specifically identified based on management’s review of individual tenants’ outstanding receivables.  Management determined that no additional general reserve is considered necessary as of March 31, 2023 and December 31, 2022, respectively.

Income Taxes

Beginning with the Company’s taxable year ended December 31, 2017, the REIT has elected to be taxed as a real estate investment trust 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 this REIT status, the regulations require the Company to distribute at least 90% of its taxable income to shareholders and meet certain other asset and income tests, as well as other requirements. If the Company fails to qualify as a REIT, it will be subject to tax at regular corporate rates for the years in which it fails to qualify. If the Company loses its REIT status it could not elect to be taxed as a REIT for five years unless the Company’s failure to qualify was due to reasonable cause and certain other conditions were satisfied.

During the three months ended March 31, 2022, the Company's Clemson Best Western TRS entity generated taxable income.  The Company believed that the net operating loss carry forward from prior years would offset the taxable income for the three months ended March 31, 2022, so no income tax expense was recorded.  During the three months ended March 31, 2023, the Company no longer owned the Clemson Best Western Hotel Property.

Management has evaluated the effect of the guidance provided by GAAP on Accounting for Uncertainty of Income Taxes and has determined that the Company had no uncertain income tax positions.

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.

Noncontrolling Interests

The ownership interests not held by the REIT 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 shareholders’ equity, noncontrolling interests and total equity.

The first noncontrolling interest is in the Hanover Square Property in which the Company owns an 84% tenancy in common interest through its subsidiary and an outside party owns a 16% tenancy in common interest. The Hanover Square Property’s net loss is allocated to the noncontrolling ownership interest based on its 16% ownership. During the three months ended March 31, 2023, 16% of the Hanover Square Property’s net loss of $7,755, or $1,241, was allocated to the noncontrolling ownership interest. During the three months ended March 31, 2022, 16% of the Hanover Square Property’s net loss of $1,992, or $319, was allocated to the noncontrolling ownership interest.

The second noncontrolling interest is in the Parkway Property in which the Company owns an 82% tenancy in common interest through its subsidiary and an outside party owns an 18% tenancy in common interest. The Parkway Property's net (loss) income is

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allocated to the noncontrolling ownership interest based on its 18% ownership. During the three months ended March 31, 2023, 18% of the Parkway Property's net loss of $46,482, or $8,367, was allocated to the noncontrolling ownership interest.  During the three months ended March 31, 2022, 18% of the Parkway Property’s net income of $56,624, or $10,193, was allocated to the noncontrolling ownership interest.

The third noncontrolling ownership interest are the units in the Operating Partnership that are not held by the REIT. In 2017, 125,000 Operating Partnership units were issued to members of the selling limited liability company which owned the Hampton Inn Property who elected to participate in a 721 exchange, which allows the exchange of interests in real property for shares in a real estate investment trust. These members of the selling limited liability company invested $1,175,000 in the Operating Partnership in exchange for 125,000 Operating Partnership units. Additionally, as discussed above, effective on January 1, 2020, 93,850 Operating Partnership units were issued in exchange for approximately 3.45% of the noncontrolling owner’s tenant in common interest in the Hampton Inn Property. On August 31, 2020, a unitholder converted 5,319 Operating Partnership units into shares of Common Stock. As of March 31, 2023 and December 31, 2022, there were 213,531 Operating Partnership units outstanding.

The Operating Partnership units not held by the REIT represent 1.19% of the outstanding Operating Partnership units as of March 31, 2023 and December 31, 2022.  The noncontrolling interest percentage is calculated at any point in time by dividing the number of units not owned by the Company by the total number of units outstanding. The noncontrolling interest ownership percentage will change as additional common or preferred shares are issued by the REIT, or additional Operating Partnerships units are issued or as units are exchanged for the Company’s $0.01 par value per share Common Stock. During periods when the Operating Partnership’s noncontrolling interest changes, the noncontrolling ownership interest is calculated based on the weighted average Operating Partnership noncontrolling ownership interest during that period. The Operating Partnership’s net loss is allocated to the noncontrolling unit holders based on their ownership interest.

During the three months ended March 31, 2023, a weighted average of 1.19% of the Operating Partnership’s net loss of $243,989, or $2,903, was allocated to the noncontrolling unit holders.  During the three months ended March 31, 2022, a weighted average of 1.28% of the Operating Partnership’s net loss of $75,882, or $973, was allocated to the noncontrolling unit holders.

Recent Accounting Pronouncements

Since its initial public offering, the Company has elected to be classified as an emerging growth company in its periodic reporting to the U.S. Securities and Exchange Commission (the “SEC”), and accordingly has followed the private company implementation dates for new accounting pronouncements.  Effective for the three months ending March 31, 2023, the Company will no longer be classified as an emerging growth company, but will retain its classification as a smaller reporting company and therefore follow implementation dates applicable to smaller reporting companies with respect to new accounting pronouncements.   In addition, the Company has elected to follow scaled disclosure requirements applicable to smaller reporting companies.  

Recently Adopted Accounting Pronouncements

Accounting for Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842).  The amendments in this update govern a number of areas including, but not limited to, accounting for leases, replacing the existing guidance in ASC No. 840, Leases.  Under this standard, among other changes in practice, a lessee’s rights and obligations under most leases, including existing and new arrangements, must be recognized as assets and liabilities, respectively, on the balance sheets.  Other significant provisions of this standard include (i) defining the “lease term” to include the non-cancelable period together with periods for which there is a significant economic incentive for the lessee to extend or not terminate the lease; (ii) defining the initial lease liability to be recorded on the balance sheets to contemplate only those variable lease payments that depend on an index or that are in substance “fixed,” (iii) a dual approach for determining whether lease expense is recognized on a straight-line or accelerated basis, depending on whether the lessee is expected to consume more than an insignificant portion of the leased asset’s economic benefits and (iv) a requirement to bifurcate certain lease and non-lease components.  The lease standard was effective for public companies for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years) and for private companies, fiscal years beginning after December 15, 2019, with early adoption permitted. The FASB subsequently deferred the effective date of ASU 2016-02 for private companies by one year, to fiscal years beginning after December 15, 2020, to provide those companies with additional time to address various implementation challenges and complexities. In June 2020, the FASB further deferred the effective date due to the effects on private companies from business and capital market disruptions caused by the novel coronavirus (“COVID-19”) pandemic.  Following those deferrals, ASU 2016-02 became effective for private companies for fiscal years beginning after December 15, 2021, and for

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interim periods within fiscal years beginning after December 15, 2022. The Company adopted the standard effective on January 1, 2022 using the modified retrospective approach within ASU 2018-11, which allows for the application date to be the beginning of the reporting period in which the entity first applies the new standard. The Company historically has not been and is not currently a “lessee” under any lease agreements, and thus did not have any arrangements requiring the recognition of lease assets or liabilities on its balance sheet.

As a “lessor”, the Company has active lease agreements with over 100 tenants across its portfolio of investment properties. On a prospective and retrospective basis, the accounting for those leases under ASU 2016-02 (ASC No. 842) is substantially unchanged from the previous guidance in ASC No. 840. However, upon the adoption of ASC No. 842, the Company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Prior to the adoption of ASC No. 842, the Company separated lease-related revenue from its retail center and flex center properties into two components. Fixed rental payments under its leases (recognized on a straight-line basis over the term of the underlying lease) were recorded as retail center property revenues and flex center property revenues. Variable payments under the leases made by tenants for real estate taxes, insurance and common area maintenance (“CAM”) expenses were recorded as retail center and flex center tenant reimbursements. With the adoption of ASC No. 842, the Company determined that its retail center and flex center operating leases qualify for the non-separation practical expedient based on the guidance. As a result, the Company has accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on its condensed consolidated statements of operations.

Debt With Conversion Options

In August 2020, the FASB issued ASU 2020-06, Debt - Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The objective of ASU 2020-06 is to reduce the current complexity involved in accounting for convertible financial instruments by reducing the number of accounting models applicable to those instruments in the existing guidance. Following the adoption of ASU 2020-06, companies are expected to encounter fewer instances in which a convertible financial instrument must be separated into a debt or equity component and a derivative component for accounting purposes due to the embedded conversion feature. As a result of these revisions, debt instruments issued with a beneficial conversion feature will no longer require separation and thus will be accounted for as a single debt instrument under the updated guidance. In addition to those changes, ASU 2020-06 adds several incremental financial statement disclosures with respect to a company’s convertible financial instruments and makes certain refinements with respect to calculating the effect of those instruments on a company’s diluted earnings per share. ASU 2020-06 is effective for public companies for fiscal years beginning after December 15, 2021 (including interim periods within those fiscal years), and for private companies, fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted, but no earlier than fiscal years beginning after December 15, 2020. The updated guidance in ASU 2020-06 was adopted effective January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better calculate credit loss estimates. The guidance applies to most financial assets measured at amortized cost and certain other instruments, such as accounts receivable and loans; however, it does not apply to receivables arising from operating leases accounted for in accordance with ASC Topic 842. ASU 2016-13 requires that the Company estimate the lifetime expected credit loss with respect to applicable receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. The Company is also required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company’s estimate of expected credit losses and the reasons for those changes.  The Company’s credit losses primarily arise from tenant defaults on amounts due under operating leases.  As noted, these losses are not subject to the guidance in ASU 2016-13, and historically have not been significant.  The Company adopted the update on the required effective date of January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

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Upcoming Accounting Pronouncements

Effects of Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The London Interbank Offered Rate (LIBOR), which is widely used as a reference interest rate in debt agreements and other contracts, was effectively discontinued for new contracts as of December 31, 2021, and its publication for existing contracts is scheduled to be discontinued by June 30, 2023. Financial market regulators in certain jurisdictions throughout the world undertook reference rate reform initiatives to guide the transition and modification of debt agreements and other contracts that are based on LIBOR to the successor reference rate that will replace it. ASU 2020-04 was issued to provide companies that are impacted by these changes with the opportunity to elect certain expedients and exceptions that are intended to ease the potential burden of accounting for or recognizing the effects of reference rate reform on financial reporting.  Under ASU 2020-04, companies may generally elect to make use of the expedients and exceptions provided therein for any reference rate contract modifications that occur in reporting periods that encompass the timeline from March 12, 2020 to December 31, 2022. The FASB subsequently issued ASU 2022-06, Reference Rate Reform (Topic 848):  Deferral of the Sunset of Topic 848, to extend that timeline from December 31, 2022 to December 31, 2024.  The Company’s Parkway Property is financed by a mortgage loan with a corresponding interest rate protection agreement which both use USD LIBOR as the reference interest rate (see Note 5, below).  The mortgage loan matures on November 1, 2031, and the interest rate protection agreement expires on December 1, 2026.  The Company is continuing to review the guidance in ASU 2020-04 and anticipates that it will use the expedients and exceptions provided therein with respect to the replacement of USD LIBOR as the reference rate in the Parkway Property mortgage loan and corresponding interest rate protection agreement.  However, the Company does not expect that any changes under ASU 2020-04 will have a material 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, 2023		December 31,
		(unaudited)		2022
Land	$	16,526,436	$	16,526,436
Site improvements		4,731,249		4,719,926
Buildings and improvements (1)		65,209,769		64,669,498
Investment properties at cost (2)		86,467,454		85,915,860
Less accumulated depreciation		10,224,948		9,400,908
Investment properties, net	$	76,242,506	$	76,514,952

(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 assets and liabilities (see Note 2, above, for a discussion of the Company's accounting treatment of intangible assets), escrow deposits and property reserves.

The Company’s depreciation expense on investment properties was $911,481 and $771,560 for the three months ended March 31, 2023 and 2022, respectively.

Capitalized tenant improvements

The Company carries two categories of capitalized tenant improvements on its condensed consolidated balance sheets, both of 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 sheet as of the date of the Company’s acquisition of the investment property. The second category are tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property. Both are recorded as a component of investment properties on the Company’s condensed consolidated balance sheets. Depreciation expense on both categories of tenant improvements is recorded as a component of depreciation expense on the Company’s condensed consolidated statement of operations.

The Company generally records depreciation of capitalized tenant improvements 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,
	2023		December 31,
	(unaudited)		2022
Capitalized tenant improvements – acquisition cost allocation, net	$	2,996,990	$	3,178,534
Capitalized tenant improvements incurred subsequent to acquisition, net		683,836		338,836

Depreciation of capitalized tenant improvements arising from the acquisition cost allocation was $172,888 and $127,276 for the three months ended March 31, 2023 and 2022, respectively.  Additionally, the Company wrote off capitalized tenant improvements of $8,656 associated with the tenant that abandoned its premises during the three months ended March 31, 2023.  No such write offs were recorded during the three months ended March 31, 2022.

During the three months ended March 31, 2023 and 2022, the Company recorded $377,265 and $56,281, respectively, in capitalized tenant improvements.  Depreciation of capitalized tenant improvements incurred subsequent to acquisition was $32,265 and $21,648 for the three months ended March 31, 2023 and 2022, respectively.  

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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 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, 2023		December 31,
	(unaudited)		2022
Capitalized leasing commissions, net	$	614,663	$	555,956

During the three months ended March 31, 2023 and 2022, the Company recorded $90,637 and $78,921, respectively, in capitalized leasing commissions. Depreciation on capitalized leasing commissions was $31,930 and $19,791 for the three months ended March 31, 2023 and 2022, respectively.

Sale of investment properties

The Company reports properties that have been either previously disposed or that 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 Clemson Best Western Hotel Property does not constitute a change in the Company's investment strategy, which continues to include limited-service hotels as a targeted asset class.

Operating results of the Clemson Best Western Hotel Property, which was sold on September 29, 2022 and which are included in continuing operations, are as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Hotel property room revenues	$	—	$	762,200
Hotel property other revenues		—		3,289
Total Revenue		—		765,489
Hotel property operating expenses		—		372,860
Impairment of assets held for sale		—		175,671
Total Operating Expenses		—		548,531
Operating Income		—		216,958
Interest expense		—		138,917
Net Income from Operations		—		78,041
Other income		—		263
Net Income		—		78,304
Net income attributable to Operating Partnership noncontrolling interests		—		1,002
Net Income Attributable to Medalist Common Shareholders	$	—	$	77,302

2022 Property Acquisitions

On June 13, 2022, the Company completed its acquisition of the Salisbury Marketplace Property, a 79,732 square foot retail property located in Salisbury, North Carolina, through a wholly owned subsidiary.  The Salisbury Marketplace Property, built in 1986, was 91.2% leased as of March 31, 2023, and is anchored by Food Lion, Citi Trends and Family Dollar.  The purchase price for the Salisbury Marketplace Property was $10,025,000 paid through a combination of cash provided by the Company and the incurrence of

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new mortgage debt.  The Company’s total investment was $10,279,714.  The Company incurred $254,714 of acquisition and closing costs which were capitalized and added to the tangible assets acquired.  

		Salisbury
		Marketplace
		Property
Fair value of assets acquired:
Investment property (a)	$	9,963,258
Lease intangibles and other assets (b)		1,045,189
Above market leases (b)		40,392
Below market leases (b)		(769,125)
Fair value of net assets acquired (c)	$	10,279,714
Purchase consideration:
Consideration paid with cash (d)	$	3,746,561
Consideration paid with new mortgage debt, net (e)		6,533,153
Total consideration (f)	$	10,279,714

a. Represents the fair value of the investment property acquired which includes land, buildings, site improvements, tenant improvements and furniture, fixtures and equipment. The fair value was determined using the market approach, the cost approach, the income approach or a combination thereof. Closing and acquisition costs were allocated and added to the fair value of the tangible assets acquired.

b. Represents the fair value of lease intangibles and other assets. Lease intangibles include leasing commissions, leases in place, above market leases, 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 at closing and cash paid for acquisition (including intangible assets), and closing costs paid at closing or directly by the Company outside of closing.

e. Represents allocation of the Wells Fargo Mortgage Facility proceeds used to fund the purchase of the Salisbury Marketplace Property, net of $18,847 in capitalized loan issuance costs. See Note 5, below.

f. Represents the consideration paid for the fair value of the assets and liabilities acquired.

4.       Mandatorily Redeemable Preferred Stock

On February 19, 2020, the Company issued and sold 200,000 shares of 8.0% Series A cumulative redeemable preferred stock at $23.00 per share, resulting in gross proceeds of $4,600,000.  Net proceeds from the issuance were $3,860,882, which includes the impact of the underwriter’s discounts, selling commissions and legal, accounting and other professional fees, and is presented on the Company’s condensed consolidated balance sheets as mandatorily redeemable preferred stock.

The mandatorily redeemable preferred stock has an aggregate liquidation preference of $5 million, plus any accrued and unpaid dividends thereon. The mandatorily redeemable preferred stock is senior to the Company’s common stock and any class or series of capital stock expressly designated as ranking junior to the mandatorily redeemable preferred stock as to distribution rights and rights upon liquidation, dissolution or winding up (“Junior Stock”).  The mandatorily redeemable preferred stock is on a parity with any class or series of the Company’s capital stock expressly designated as ranking on a parity with the mandatorily redeemable preferred stock as to distribution rights and rights upon liquidation, dissolution or winding up (“Parity Stock”).

If outstanding on February 19, 2025, the mandatorily redeemable preferred stock must be redeemed by the Company on that date, the fifth anniversary of the date of issuance.  Beginning on February 19, 2022, the second anniversary of the issuance, the Company may redeem the outstanding mandatorily redeemable preferred stock for an amount equal to its aggregate liquidation preference, plus any accrued but unpaid dividends.  The holders of the mandatorily redeemable preferred stock may also require the Company to redeem

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the stock upon a change of control of the Company for an amount equal to its aggregate liquidation preference plus any accrued and unpaid dividends thereon.

Holders of the mandatorily redeemable preferred stock generally have no voting rights. However, if the Company does not pay dividends on the mandatorily redeemable preferred stock for six consecutive quarterly periods, the holders of that stock, voting together as a single class with the holders of any outstanding Parity Stock having similar voting rights, will be entitled to vote for the election of two additional directors to serve on the Company’s Board of Directors (the “Board”) until the Company pays all dividends owed on the mandatorily redeemable preferred stock. The affirmative vote of the holders of at least two-thirds of the outstanding shares of mandatorily redeemable preferred stock, voting together as a single class with the holders of any other class or series of the Company’s preferred stock upon which like voting rights have been conferred and are exercisable, is required for the Company to authorize, create or increase the number of shares of any class or series of capital stock expressly designated as ranking senior to the mandatorily redeemable preferred stock as to distribution rights and rights upon the Company’s liquidation, dissolution or winding up.  In addition, the affirmative vote of at least two-thirds of the outstanding shares of mandatorily redeemable preferred stock (voting as a separate class) is required to amend the Company’s charter (including the articles supplementary designating the mandatorily redeemable preferred stock) in a manner that materially and adversely affects the rights of the holders of mandatorily redeemable preferred stock. Among other things, the Company may, without any vote of the holders of mandatorily redeemable preferred stock, issue additional shares of mandatorily redeemable preferred stock and may authorize and issue additional shares of any class or series of any Junior Stock or Parity Stock.

The Company has 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 the mandatorily redeemable preferred stock has been outstanding, the Company has paid a cash dividend on the stock equal to 8% per annum, paid quarterly, as follows:

		Amount
Payment Date	Record Date	per share		For the period
April 27, 2020	April 24, 2020	$	0.37	February 19, 2020 - April 27, 2020
July 24, 2020	July 22, 2020		0.50	April 28, 2020 - July 24, 2020
October 26, 2020	October 23, 2020		0.50	July 25, 2020 - October 26, 2020
February 1, 2021	January 29, 2021		0.50	October 27, 2020 - February 1, 2021
April 30, 2021	April 26, 2021		0.50	February 2, 2021 – April 30, 2021
July 26, 2021	July 12, 2021		0.50	May 1, 2021 - July 26, 2021
October 27, 2021	October 25, 2021		0.50	July 27, 2021 – October 26, 2021
January 20, 2022	January 13, 2022		0.50	October 27, 2021 – January 19, 2022
April 21, 2022	April 18, 2022		0.50	January 20, 2022 - April 20, 2022
July 21, 2022	July 18, 2022		0.50	April 21, 2022 - July 20, 2022
October 20, 2022	October 17, 2022		0.50	July 21, 2022 - October 19, 2022
January 27, 2023	January 24, 2023		0.50	October 20, 2022 - January 19, 2023
April 28, 2023	April 25, 2023		0.50	January 20, 2023 - April 20, 2023

As of March 31, 2023 and December 31, 2022, the Company recorded $70,004 and $70,004, respectively, in accrued but unpaid dividends on the mandatorily redeemable preferred stock. This amount is reported in accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets.

The mandatorily redeemable preferred stock was issued at $23.00 per share, a $2.00 per share discount. The total discount of $400,000 is being amortized over the five-year life of the shares using the effective interest method. Additionally, the Company incurred $739,118 in legal, accounting, other professional fees and underwriting discounts related to this offering. These costs were recorded as deferred financing costs on the accompanying condensed consolidated balance sheets as a direct deduction from the carrying amount of the mandatorily redeemable preferred stock liability and are being amortized using the effective interest method over the term of the agreement.

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Amortization of the discount and deferred financing costs related to the mandatorily redeemable preferred stock totaling $58,804 and $53,923 were included in interest expense for the three months ended March 31, 2023 and 2022, respectively, in the accompanying condensed consolidated statements of operations. Accumulated amortization of the discount and deferred financing costs was $648,443 and $589,639 as of March 31, 2023 and December 31, 2022, respectively.

5.      Loans Payable

Mortgages Payable

The Company’s mortgages payables, net consists of the following:

							March 31,
	Monthly		Interest				2023		December 31,
Property	Payment		Rate		Maturity	(unaudited)		2022
Franklin Square (a)		Interest only	3.808	%	December 2031	$	13,250,000	$	13,250,000
Hanover Square (b)	$	78,098	6.94	%	December 2027		9,813,679		9,877,867
Ashley Plaza (c)	$	52,795	3.75	%	September 2029		10,856,618		10,930,370
Brookfield Center (d)	$	22,876	3.90	%	November 2029		4,639,969		4,663,206
Parkway Center (e)	$	28,161	Variable		October 2026		4,956,301		4,992,427
Wells Fargo Facility (f)	$	103,438	4.50	%	June 2027		18,247,707		18,351,981
Unamortized issuance costs, net							(698,602)		(725,592)
Total mortgages payable, net						$	61,065,672	$	61,340,259

(a) The original mortgage loan for the Franklin Square Property in the amount of $14,275,000 matured on October 6, 2021. Effective on October 6, 2021, the Company entered into a forbearance agreement with the current lender extending the maturity date for thirty days with a right to extend the maturity date for an additional thirty days. On November 8, 2021, the Company closed on a new loan in the principal amount of $13,250,000 with a ten-year term and a maturity date of December 6, 2031.  In addition to the funds from the new loan, the Company used $2,242,273 in cash on hand for loan issuance costs (totaling $283,721), to fund escrows and to repay the remaining balance of the original mortgage loan. The Company has guaranteed the payment and performance of the obligations of the new mortgage loan. The new mortgage loan bears interest at a fixed rate of 3.808% and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a thirty-year amortization schedule. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470. The new mortgage includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(b) The mortgage loan for the Hanover Square Property bore interest at a fixed rate of 4.25% until January 1, 2023, when the interest rate adjusted to a fixed rate of 6.94%, which was determined by adding 3.00% to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25%. As a result of the interest rate change, as of February 1, 2023, the fixed monthly payment of $56,882 increased to $78,098 which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.  The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75%.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(c) 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.

(d) 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.

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(e) The mortgage loan for the Parkway Property bears interest at a variable rate based on LIBOR with a minimum rate of 2.25%. The interest rate payable is the ICE LIBOR rate plus 225 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 March 31, 2023 and December 31, 2022 the rate in effect for the Parkway Property mortgage was 4.4806% and 4.3117%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a thirty-year amortization schedule.  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 capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%.  For the period from September 1, 2022 through March 31, 2023, LIBOR exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced the Company’s net interest expense.  Payments to the Company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2023.  No such payments were received during the three months ended March 31, 2022 because the LIBOR rate in effect did not exceed the LIBOR cap. The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.60 to 1.00 on an annual basis.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with this covenant.  

(f) 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 $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 Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule, is $103,438.  The Company 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, a minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and the maintenance of liquid assets of not less than $1,500,000.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.  

The Company refinanced the mortgage loan for the Lancer Center Property using proceeds from the Wells Fargo Facility.  The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $113,282.  The original mortgage loan for the Lancer Center Property bore interest at a fixed rate of 4.00%.  The monthly payment was $34,667 which included interest at the fixed rate and principal, based on a twenty-five-year amortization schedule.

The Company refinanced the mortgage loan for the Greenbrier Business Center Property using proceeds from the Wells Fargo Facility. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $56,393.  The Company assumed the original mortgage loan for the Greenbrier Business Center Property from the seller. The original mortgage loan bore interest at a fixed rate of 4.00% and would have been interest only until August 1, 2022, at which time the monthly payment would have become $23,873, which would have included interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.

Interest rate protection transaction

On October 28, 2021, the Company entered into the Interest Rate Protection Transaction. Under this agreement, the Company’s interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%. USD 1-Month ICE LIBOR was 4.86% and 4.39% as of March 31, 2023 and December 31, 2022, respectively. In accordance with the guidance on derivatives and hedging, the Company records all derivatives on the condensed balance sheet at fair value under other assets. 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 fair value of the Interest Rate Protection Transaction is valued by an independent, third-party consultant which uses observable inputs such as yield curves, volatilities and other current market data, all of which are considered Level 2 inputs.  As of March 31, 2023 and December 31, 2022, the fair value of the

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Interest Rate Protection Transaction was $218,411 and $258,279, respectively and is recorded under other assets on the Company’s condensed balance sheets. The Company reports changes in the fair value of the derivative in other (loss) income on its condensed consolidated statements of operations.

Wells Fargo Line of Credit

On June 13, 2022, the Company, through its wholly owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”).  During the three months ended March 31, 2023, the Company did not make any draws or repayments on the Wells Fargo Line of Credit.  As of March 31, 2023 and December 31, 2022, respectively, the Wells Fargo Line of Credit had an outstanding balance of $0.  Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above the daily secured overnight financing rate (“SOFR”).  As of March 31, 2023 and December 31, 2022, SOFR was 4.87% and 4.30%, respectively.  The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by the Company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property.  On May 2, 2023, the Company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024.  

Interest expense

Interest expense, including amortization of capitalized issuance costs consists of the following:

	For the three months ended March 31, 2023 (unaudited)
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	—	$	133,233
Hanover Square mortgage		170,640		3,223		—		—		173,863
Ashley Plaza mortgage		102,133		4,357		—		—		106,490
Brookfield Center mortgage		45,391		2,838		—		—		48,229
Parkway Center mortgage		47,257		2,757		(19,342)		—		30,672
Wells Fargo Mortgage Facility		206,039		6,722		—		—		212,761
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		58,804		—		100,000		158,804
Total interest expense	$	697,600	$	85,794	$	(19,342)	$	100,000	$	864,052

	For the three months ended March 31, 2022 (unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	133,233
Hanover Square mortgage		104,854		3,223		—		108,077
Ashley Plaza mortgage		104,147		4,358		—		108,505
Clemson Best Western mortgage		138,531		—		386		138,917
Brookfield Center mortgage		46,254		2,838		—		49,092
Lancer Center mortgage		63,746		7,156		—		70,902
Greenbrier Business Center mortgage		44,950		693		—		45,643
Parkway Center mortgage		30,375		2,757		—		33,132
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		53,923		100,000		153,923
Total interest expense	$	658,997	$	82,041	$	100,386	$	841,424

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Interest accrued and accumulated amortization of capitalized issuance costs consist of the following:

	As of March 31, 2023 (unaudited)				As of December 31, 2022
			Accumulated				Accumulated
			amortization of				amortization
	Accrued		capitalized		Accrued		of capitalized
	interest		issuance costs		interest		issuance costs
Franklin Square mortgage	$	43,448	$	37,829	$	43,448	$	30,736
Hanover Square mortgage		60,539		63,103		38,792		59,880
Ashley Plaza mortgage		—		62,466		35,296		58,109
Brookfield Center mortgage		—		39,731		—		36,893
Parkway Center mortgage		22,041		15,621		26,502		12,864
Wells Fargo Mortgage Facility		—		20,166		—		13,444
Amortization and accrued preferred stock dividends on mandatorily redeemable preferred stock (1)		70,004		648,443		70,004		589,639
Total	$	196,032	$	887,359	$	214,042	$	801,565

(1) Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Debt Maturity

The Company’s scheduled principal repayments on indebtedness as of March 31, 2023 are as follows:

For the remaining nine months ending December 31, 2023	$	780,584
2024		1,092,879
2025		1,391,025
2026		1,460,923
2027		25,990,390
Thereafter		31,048,473
Total principal payments and debt maturities		61,764,274
Less unamortized issuance costs		(698,602)
Net principal payments and debt maturities	$	61,065,672

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, 2023 are as follows:

For the remaining nine months ending December 31, 2023	$	5,967,624
2024		6,702,872
2025		5,814,765
2026		4,048,868
2027		3,053,369
Thereafter		7,608,664
Total minimum rents	$	33,196,162

7.      Equity

The Company has authority to issue 1,000,000,000 shares consisting of 750,000,000 shares of common stock, $0.01 par value per share ("Common Shares"), and 250,000,000 shares of preferred stock, $0.01 par value per share ("Preferred Shares"). Substantially all of the Company’s business is conducted through its Operating Partnership. The REIT is the sole general partner of the Operating Partnership and owned a 98.81% interest in the Operating Partnership as of March 31, 2023 and December 31, 2022. Limited partners in the Operating Partnership who have held their units for one year or longer have the right to redeem their common units for cash or,

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at the REIT’s option, Common Shares at a ratio of one common unit for one common share. Under the Agreement of Limited Partnership, distributions to unit holders are made at the discretion of the REIT. The REIT intends to make distributions in a manner that will result in limited partners of the Operating Partnership receiving distributions at the same rate per unit as dividends per share are paid to the REIT’s holders of Common Shares.

Shelf Registration

On June 21, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC. The registration statement is intended to provide the Company additional flexibility to finance future business opportunities through timely and cost-effective access to capital markets. Under the shelf registration statement, the Company may, from time to time, issue common stock up to an aggregate amount of $150 million. The shelf registration statement was declared effective by the SEC on July 27, 2021. The Company has incurred $84,926 in legal costs, filing fees and other costs associated with this registration which are recorded as offering costs as part of stockholders' equity on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Standby Equity Purchase Agreement

On November 17, 2021, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with a financing entity. Under this agreement, the Company will be able to sell up to $6,665,299 of its shares of common stock at the Company’s request any time during the 36 months following the execution of the SEPA. The shares would be purchased at 96.5% of the market price (as defined in the agreement) and would be subject to certain limitations, including that the financing entity could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock.  As of March 31, 2023, the Company has generated net proceeds of $1,538,887 from the issuance of 1,445,400 shares at an average price of $1.065 per common share under the SEPA.  

Issuance Date	Shares Issued	Price Per Share		Total Proceeds
March 3, 2022	90,600	$	1.088	$	98,574
March 14, 2022	276,190		1.050		290,000
March 17, 2022	278,810		1.076		300,000
March 21, 2022	474,068		1.055		500,000
April 1, 2022	325,732		1.075		350,313
Total	1,445,400	$	1.065	$	1,538,887

Common Stock Repurchase Plan

In December 2021, the Board approved a program to purchase up to 500,000 shares of the Company’s common stock in the open market, up to a maximum price of $4.80 per share. The repurchase program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. As of March 31, 2023, the Company had repurchased 268,070 shares of its common stock at a total cost of $278,277 at an average price of $1.038 per common share.  The Company incurred fees of $8,266 associated with these transactions.  All repurchased shares were retired in accordance with Maryland law.  

Purchase (Trade) Date	Shares Purchased	Price Per Share		Total Cost (1)
January 4, 2022	400	$	1.060	$	424
January 5, 2022	48,205		1.060		51,093
January 6, 2022	100,000		1.046		104,556
January 7, 2022	30,000		1.050		31,500
January 10, 2022	50,000		1.020		51,000
January 14, 2022	100		1.010		101
January 21, 2022	39,365		1.006		39,603
Total	268,070	$	1.038	$	278,277

(1) Total cost before transaction fees.

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Common shares and operating partnership units outstanding

As of March 31, 2023 and December 31, 2022, there were 17,971,952 common units of the Operating Partnership outstanding with the REIT owning 17,758,421 of these common units. The remaining 213,531 common units are held by noncontrolling, limited partners.  As of March 31, 2023 and December 31, 2022, there were 17,758,421 Common Shares of the REIT outstanding. As of March 31, 2023 and December 31, 2022, there were 213,531 common units of the Operating Partnership held by noncontrolling, limited partners that were eligible for conversion to the Company’s Common Shares.

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 shareholders 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) 240,000 Common Shares and (ii) eight percent (8)% of the number of fully diluted shares of the Company’s Common Shares (taking into account interests in the Operating Partnership that may become convertible into Common Shares).

On March 2, 2022, the Compensation Committee of the Board (the “Compensation Committee”) approved a grant of 60,000 Common Shares to two employees of the Manager who also serve as directors of the Company, a grant of 90,000 Common Shares to the Company’s three independent directors, and a grant of 60,000 Common Shares to the chief financial officer of the Company, under the Equity Incentive Plan. The effective date of the grants was March 2, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $233,100, was recorded to share based compensation expense on the Company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of the Company’s Common Shares on the effective date of the grant.

On November 22, 2022, the Compensation Committee approved a grant of 76,434 Common Shares to two employees of the Manager who also serve as directors of the Company, a grant of 114,651 Common Shares to the Company’s three independent directors, a grant of 76,433 Common Shares to the chief financial officer of the Company, and a grant of 50,956 Common Shares to two consultants of the Company, under the Equity Incentive Plan. The effective date of the grants was November 22, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $250,000, was recorded to share based compensation expense on the Company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of the Company’s Common Shares on the effective date of the grant.

On each January 1 during the term of the Equity Incentive Plan, the maximum number of shares of common stock that may be issued under the Equity Incentive Plan will increase by eight percent (8%) of any additional shares of common stock or interests in the Operating Partnership issued (i) after the completion date the Company’s initial registered public offering of common stock, in the case of the January 1, 2019 adjustment, or (ii) in the preceding calendar year, in the case of any adjustment subsequent to January 1, 2020. As of January 1, 2023, the shares available for issuance under the Equity Incentive Plan was adjusted to 491,304 shares.

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 shareholders, excluding the net loss attributable to noncontrolling interests, by the weighted average number of Common Shares, including any dilutive shares. As of March 31, 2023 and 2022, 213,531 of the Operating Partnership’s 213,531 common units held by noncontrolling, limited partners were eligible to be converted, on a one-to-one basis, into Common Shares. The Operating Partnership’s common units and the equivalent common shares attributable to the convertible debentures have been excluded from the Company’s diluted earnings per share calculation because their inclusion would be antidilutive.

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The Company's loss per common share is determined as follows:

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Basic and diluted shares outstanding
Weighted average Common Shares – basic		17,758,421		16,037,073
Effect of conversion of operating partnership units		213,531		213,531
Weighted average Common Shares – diluted		17,971,952		16,250,604
Calculation of earnings per share – basic and diluted
Net loss attributable to common shareholders	$	(1,221,295)	$	(989,284)
Weighted average Common Shares – basic and diluted		17,758,421		16,037,073
Loss per share – basic and diluted	$	(0.07)	$	(0.06)

Dividends and Distributions

During the three months ended March 31, 2023, dividends in the amount of $0.01 per share were paid on January 27, 2023, to stockholders of record on January 24, 2023.  During the three months ended March 31, 2022, dividends in the amount of $0.02 per share were paid on January 20, 2022, to stockholders of record on January 13, 2022.  Total dividends and distributions to noncontrolling interests paid during the three months ended March 31, 2023 and 2022, respectively, are as follows:

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Common shareholders (dividends)	$	176,810	$	316,450
Hanover Square Property noncontrolling interest (distributions)		—		10,000
Parkway Property noncontrolling interest (distributions)		—		10,800
Operating Partnership unit holders (distributions)		2,135		4,271
Total dividends and distributions	$	178,945	$	341,521

Nasdaq Compliance

On July 11, 2022, the Company received a deficiency letter (the “Deficiency Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC notifying the Company that, for the last thirty (30) consecutive business days, the closing bid price for the Company’s common stock had been below the minimum $1.00 per share required for continued listing on the Nasdaq Capital Market (“Nasdaq”) pursuant to Nasdaq Listing Rule 5550 (a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was given one hundred and eighty (180) calendar days, or until January 9, 2023, to regain compliance with the Minimum Bid Price Requirement.

On January 10, 2023, the Company received a letter (the “Second Notification”) from the Nasdaq Stock Market LLC notifying the Company that, while the Company had not regained compliance with the Minimum Bid Price Requirement, the Staff determined that the Company is eligible for an additional 180 calendar day period, or until July 10, 2023 (the “Second Compliance Period”), to regain compliance. The Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on Nasdaq, with the exception of the Minimum Bid Price Requirement, and (ii) the Company’s written notice to the Nasdaq Stock Market LLC of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

If at any time during the Second Compliance Period, the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance. If compliance with the Minimum Bid Price Requirement cannot be demonstrated by July 10, 2023, the Staff will provide written notification that the Company’s common stock will be delisted. At that time, the Company may appeal the Staff’s determination to a Hearings Panel.  

Neither the Deficiency Letter or the Second Notification had any effect on the listing of the Company’s common stock, and its common stock continues to trade on Nasdaq under the symbol “MDRR”.  

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Reverse Stock Split

See Note 11, Subsequent Events, for a discussion of the reverse stock split that was completed on May 3, 2023.

8.      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 South Carolina, North Carolina and Virginia, which represented 100% of the total annualized base revenues of the properties in its portfolio as of March 31, 2023. The Company’s geographic concentration may cause it to be more susceptible to adverse developments in those markets than if it owned a more geographically diverse portfolio. Additionally, the Company’s retail shopping center properties depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.

Interest Rate Risk

The value of the Company’s real estate is subject to fluctuations based on changes in interest rates, which may affect the Company’s ability to refinance property-level mortgage debt when balloon payments are scheduled. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. An increase in interest rates would likely cause the value of the Company’s assets to decrease. Increases in interest rates may also have an impact on the credit profile of certain tenants.

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, 2023 and December 31, 2022, 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.

Other Risks and Uncertainties

Since March 2020, the Company’s investment properties have been significantly impacted by (i) measures taken by local, state and federal authorities to mitigate the impact of COVID-19, such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders and (ii) significant changes in consumer behavior and business and leisure travel patterns.  While most, if not all, of the initial measures have been relaxed by the respective governmental authorities, with the uncertainty resulting from the continued mutation of COVID-19 into new variants, and the possibility that changes in consumer behavior and business and

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leisure travel patterns will continue, the negative impact on consumer behavior, including demand for the goods and services of our retail tenants within our portfolio could continue to be significant in future periods.

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 is not currently involved in any litigation or legal proceedings.

9.      Related Party Transactions

Medalist Fund Manager, Inc.

The Company is externally managed by the Manager, which makes all investment decisions for the Company. The Manager oversees the Company’s overall business and affairs and has broad discretion to make operating decisions on behalf of the Company and to make investment decisions.

The Company pays the Manager a monthly asset management fee equal to 0.125% of stockholders’ equity, payable in arrears in cash. For purposes of calculating the asset management fee, the Company’s stockholders’ equity means: (a) the sum of (1) the net proceeds from (or equity value assigned to) all issuances of the Company’s equity and equity equivalent securities (including common stock, common stock equivalents, preferred stock and OP Units issued by the Company’s operating partnership) since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) the Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that the Company has paid to repurchase its common stock issued in this or any subsequent offering. Stockholders’ equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in the Company’s condensed consolidated financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Company’s Manager and its independent director(s) and approval by a majority of its independent directors. For the three months ended March 31, 2023 and 2022, the Company incurred $224,380 and $210,148, in asset management fees, respectively.  Asset management fees are recorded on the Company’s condensed consolidated statements of operations as (i) retail center property operating expenses ($84,282 and $70,257 for the three months ended March 31, 2023 and 2022, respectively), (ii) hotel property operating expenses ($0 and $6,825 for the three months ended March 31, 2023 and 2022, respectively), (iii) flex center property operating expenses ($27,675 and $26,075 for the three months ended March 31, 2023 and 2022, respectively) and (iv) legal, accounting and other professional fees ($112,423 and $106,991 for the three months ended March 31, 2023 and 2022, respectively).

The Manager also receives an acquisition fee of 2.0% of the purchase price plus transaction costs, for each property acquired or investment made on the Company’s behalf at the closing of the acquisition of such property or investment, in consideration for the Manager’s assistance in effectuating such acquisition. Acquisition fees are allocated and added to the fair value of the tangible assets acquired and recorded as part of investment properties, net, on the Company’s condensed consolidated balance sheets.  

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On March 19, 2021, pursuant to a Letter Agreement, dated March 19, 2021, by and among the Company, the Operating Partnership and the Manager (the “2021 Manager Letter Agreement”), which amended that certain Management Agreement, dated as of March 15, 2016, among the Company, the Operating Partnership and the Manager (the “Management Agreement”), the Manager agreed to defer payment of one-half of any acquisition fee payable to the Manager from that date until the earlier of: (i) the date that the public trading price of our common stock, as reported on the Nasdaq Capital Market, reaches a closing trading price of at least $5.00 per share (as the same may be proportionately adjusted to reflect a stock split or reverse stock split); (ii) the effective date of the termination of the Management Agreement as the result of an election by the Company to terminate the Management Agreement (other than on account of any of the events specified in clauses (i) through (vi) of Section 11(a) of the Management Agreement); and (iii) a Change in Control (the “Deferral Agreement”).

On March 10, 2023, the Company announced that the Board established a Special Committee of the Board (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value.  In light of the exploration of potential strategic alternatives by the Special Committee, the Company entered into a Letter Agreement, dated as of March 10, 2023, by and among the Company, the Operating Partnership and the Manager (the “2023 Manager Letter Agreement”).  

Pursuant to the terms of the 2023 Manager Letter Agreement, the Company further amended the Management Agreement, which provides for the deferral of the acquisition fee payable to the Manager in certain circumstances, to clarify that the Deferred Acquisition Fee Amount (as defined in the 2021 Manager Letter Agreement) will be deferred until the earlier of (i) the date that the public trading price of the Company’s common stock, as reported on the Nasdaq Capital Market, reaches a closing trading price of at least $5.00 per share (as the same may be proportionately adjusted to reflect a stock split or reverse stock split); (ii) the effective date of the termination of the Management Agreement as the result of an election by the Company to terminate the Management Agreement (other than on account of any of the events specified in clauses (i) through (vi) of Section 11(a) of the Management Agreement); and (iii) a Change in Control.

For the year ended December 31, 2022, the Company incurred $201,524 in acquisition fees associated with the Salisbury Marketplace Property acquisition, which were allocated and added to the fair value of the Salisbury Marketplace Property tangible assets.  One half of the acquisition fee, or $100,762 was paid in cash and one half of the acquisition fee was accrued in connection with the Deferral Agreement.  For the year ended December 31, 2021, the Company incurred $503,910 in acquisition fees associated with the Lancer Center Property, Greenbrier Business Center Property and Parkway Property, which were allocated and added to the fair value of the Lancer Center Property, Greenbrier Business Center Property and Parkway Property tangible assets. One half of the acquisition fees, or $251,955 was paid in cash and one half of the acquisition fees was accrued in connection with the Deferral Agreement. The accrued portion of the acquisition fee is recorded under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.  As of March 31, 2023 and December 31, 2022, the Company had accrued a total of $352,717 in acquisition fees in connection with the Deferral Agreement.

The Manager will be entitled to an incentive fee, payable quarterly, equal to an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) Adjusted Funds from Operations (AFFO) (as further defined below) for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in this offering and in future offerings and transactions, multiplied by the weighted average number of all shares of common stock outstanding on a fully-diluted basis (including any restricted stock units, any restricted shares of common stock and OP Units) in the previous 12-month period, exclusive of equity securities issued prior to this offering, and (B) 7%, and (2) the sum of any incentive fee paid to the Manager with respect to the first three calendar quarters of such previous 12-month period. For purposes of calculating the incentive fee during the first years after completion of this offering, adjusted funds from operations (“AFFO”) will be determined by annualizing the applicable period following completion of this offering. AFFO is calculated by removing the effect of items that do not reflect ongoing property operations. The Company further adjusts funds from operations (“FFO”) for certain items that are not added to net income in the National Association of Real Estate Investment Trusts’ (NAREIT) definition of FFO, such as acquisition expenses, equity based compensation expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of the Company’s properties, and subtract recurring capital expenditures (and, when calculating the incentive fee only, we further adjust FFO to include any realized gains or losses on real estate investments). No incentive fees were earned or paid during the three months ended March 31, 2023 or 2022.

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Colin Elliott

Effective as of March 1, 2020, the Company entered into a consulting agreement (the “Consulting Agreement”), with Gunston Consulting, LLC (the “Consultant”), pursuant to which the Consultant agreed to provide certain financial and accounting consulting services to the Company, and the Company agreed to pay the Consultant an annual fee and annual stock grants awarded by the Compensation Committee and agreed to reimburse the Consultant for certain expenses to be authorized by the Company.  Pursuant to the terms of the Consulting Agreement, the Company authorized the Consultant to retain the services of Mr. C. Elliott as vice president of the Company and authorized the Consultant to incur certain costs related to Mr. C. Elliott’s employment as vice president and agreed to reimburse the Consultant for such costs, including Mr. C. Elliott’s $150,000 annual salary, payroll taxes and certain benefits, and an annual bonus to be determined in consultation with the Company.  

In addition, on March 10, 2023, the Company entered into a change in control agreement with the Consultant and Mr. C. Elliott (the “Change in Control Agreement”), in order to authorize the Consultant to pay Mr. C. Elliott, our Vice President, and to reimburse the Consultant for, the payment of the Elliott Retention Amount (as defined below), in the event that (i) a Change in Control (as defined therein) occurs at a time when Mr. C. Elliott remains employed by the Consultant and no Cause Event (as defined therein) has then occurred and the Consultant thereafter terminates, at the request of the Company (or any successor), the employment of Mr. C. Elliott (other than on account of a Cause Event) within twelve (12) months after the date of the Change in Control; (ii) a Change in Control occurs at a time when Mr. C. Elliott remains employed by the Consultant and no Cause Event has then occurred and within twelve (12) months after the date of the Change in Control Mr. C. Elliott elects to terminate his engagement with the Consultant to provide services to the Company (or any successor) because either (a) the Company (or any successor) requires Mr. C. Elliott to relocate his primary work location by more than fifty (50) miles from the location as of the effective date of the Change in Control Agreement; (b) the Company (or any successor) directs the Consultant to reduce the annual compensation ($150,000) of Mr. C. Elliott; (c) the Company (or any successor) directs the Consultant to materially diminish Mr. C. Elliott’s position, authority, duties or responsibilities with respect to services to the Company (or any successor); or (d) the Company (or any successor) commits a material breach of the Consulting Agreement and fails to cure such material breach within thirty (30) days after receiving written notice of such material breach; or (iii) the Consultant terminates, at the Company’s (or any successor’s) request, Mr. C. Elliott’s employment (other than on account of a Cause Event) ninety (90) or fewer days prior to the Change in Control.  In each such case, a “Triggering Event” shall be deemed to have occurred, and pursuant to the Change in Control Agreement, the Company authorizes the Consultant to pay, and agrees to reimburse the Consultant for, and the Consultant agrees to pay to Mr. C. Elliott, within thirty-seven (37) days after such Triggering Event, an amount equal to the sum of (i) Mr. C. Elliott’s current annual compensation (i.e., $150,000) payable by the Consultant to Mr. C. Elliott and reimbursable by the Company, plus (ii) the amount of Mr. C. Elliott’s last annual bonus (i.e., $50,000) payable by the Consultant to Mr. C. Elliott and reimbursable by the Company, plus (iii) a cash payment equivalent to the value of the last stock grant from the Company to Mr. C. Elliott (i.e., $30,000) (collectively, the “Elliott Retention Amount”).

Mr. C. Elliott is the son of Mr. William R. Elliott, Vice Chairman of the Board and President and Chief Operating Officer of the Company. During the three months ended March 31, 2023 and 2022, the Company paid the Consultant $44,872 and $0, respectively, for services provided by Mr. C. Elliott under the Consulting Agreement.  

Other related parties

The Company pays Shockoe Properties, LLC, a subsidiary of Dodson Properties, an entity in which one of the owners of the Manager holds a 6.32% interest, an annual property management fee of up to 3% of the monthly gross revenues of the Franklin Square, Hanover Square, Ashley Plaza, Brookfield, Lancer Center, Greenbrier Business Center, Parkway and Salisbury properties. These fees are paid in arrears on a monthly basis. During the three months ended March 31, 2023 and 2022, the Company paid Shockoe Properties, LLC property management fees of $70,519 and $62,072, respectively.

10.      Segment Information

The Company establishes operating segments at the property level and aggregates individual properties into reportable segments based on product types in which the Company has investments. For the three months ended March 31, 2023, the Company had the following reportable segments:  retail center properties and flex center properties.  For the three months ended March 31, 2022, the Company had the following reportable segments: retail center properties, flex center properties and hotel properties. During the periods presented, there have been no material intersegment transactions.

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Although the Company’s flex center property has tenants that are similar to tenants in its retail center properties, the Company considers its flex center properties as a separate reportable segment. Flex properties are considered by the real estate industry as a distinct subset of the industrial market segment. Flex properties contain a mix of industrial/warehouse and office spaces. Warehouse space that is not air conditioned can be used flexibly by building office or showroom space that is air conditioned, depending on tenants’ needs.

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 the primary performance measure reviewed by management to assess operating performance of properties and is calculated by deducting operating expenses from operating revenues. Operating revenues include rental income, tenant reimbursements, hotel income, and other property income; and operating expenses include retail center property and hotel operating costs. The NOI performance metric consists of only revenues and expenses directly related to real estate rental operations. NOI reflects property acquisitions and dispositions, 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 REITs.

Asset information and capital expenditures by segment are not reported because the Company does not use these measures to assess performance. Depreciation and amortization expense, along with other expense and income items, are not allocated among segments.

The following table presents property operating revenues, expenses and NOI by product type:

	For the three months ended March 31,
	Hotel properties				Retail center properties					Flex center property			Total
	2023		2022		2023		2022		2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues	$	—	$	765,489	$	1,891,679	$	1,525,085	$	569,297	$	613,390	$	2,460,976	$	2,903,964
Operating expenses		—		372,860		520,615		450,125		176,737		161,381		697,352		984,366
Bad debt expense		—		—		125		7,791		26,997		4,992		27,122		12,783
Net operating income	$	—	$	392,629	$	1,370,939	$	1,067,169	$	365,563	$	447,017	$	1,736,502	$	1,906,815

11.      Subsequent Events

As of May 11, 2023, the following events have occurred subsequent to the March 31, 2023 effective date of the condensed consolidated financial statements:

Common Stock Dividend

On April 28, 2023, a dividend in the amount of $0.01 per share was paid to common stockholders and operating partnership unit holders of record on April 25, 2023.

Mandatorily Redeemable Preferred Stock Dividend

On April 28, 2023, a dividend in the amount of $0.50 per share was paid to mandatorily redeemable preferred stockholders of record on April 25, 2023 for the period from January 20, 2023 through April 20, 2023.

Completion of 1-for-8 Reverse Stock Split

On May 3, 2023, the Company completed the previously announced reverse stock split of its Common Shares, and a corresponding adjustment to the outstanding common units of the Operating Partnership, at a ratio of 1-for-8 (the “Reverse Stock Split”). The Reverse Stock Split took effect at 5:00 p.m. Eastern Time on May 3, 2023 (the “Effective Time”) and automatically converted every eight Common Shares outstanding at that time into one Common Share.

The Reverse Stock Split affected all common stockholders uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares, as described below. As a result of the Reverse Stock Split, the number of Common Shares outstanding was reduced from 17,758,421 to 2,219,779 shares as of the Effective Time.

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No fractional shares were issued in connection with the Reverse Stock Split. Instead, each stockholder that otherwise would have received fractional shares received, in lieu of such fractional shares, cash in an amount equal to the applicable fraction multiplied by the closing price of the Common Shares on Nasdaq on May 3, 2023 (as adjusted for the Reverse Stock Split).

At the Effective Time, the aggregate number of shares of Common Stock available for awards under the Company’s 2018 Equity Incentive Plan and the terms of outstanding awards were ratably adjusted to reflect the Reverse Stock Split.

Trading of the Common Shares on Nasdaq commenced on a split-adjusted basis on May 4, 2023 under the existing trading symbol “MDRR.” The new CUSIP number for the Common Shares following the Reverse Stock Split is 58403P303.

The Reverse Stock Split is intended to help the Company regain compliance with the Minimum Bid Price Requirement. If at any time before July 10, 2023, the closing bid price of the Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance.  If compliance with the Minimum Bid Price Requirement cannot be demonstrated by July 10, 2023, the Staff will provide written notification that the Common Stock will be delisted. At that time, the Company may appeal the Staff’s determination to a Hearings Panel. Accordingly, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or maintain its listing on Nasdaq.

Charter Amendments

In connection with the Reverse Stock Split, on April 19, 2023, the Company filed two Articles of Amendment to its charter with the State Department of Assessments and Taxation of Maryland that provided for:

(i)a 1-for-8 Reverse Stock Split of the Common Stock, effective at 5:00 p.m. Eastern Time on May 3, 2023 (the “First Amendment”); and

(ii)the par value of the Common Stock to be decreased from $0.08 per share (as a result of the 1-for-8 Reverse Stock Split) back to $0.01 per share, effective at 5:01 p.m. Eastern Time on May 3, 2023 (the “Second Amendment”).

The foregoing descriptions of the First Amendment and the Second Amendment do not purport to be complete and are qualified in their entirety by reference to each amendment, copies of which are filed as Exhibit 3.3 and Exhibit 3.4, respectively, to this Quarterly Report on Form 10-Q (this “Quarterly Report”) and are incorporated herein by reference.

Wells Fargo Line of Credit

On May 2, 2023, the Company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024 (see Note 5, above).  

Update on Special Committee and Exploration of Strategic Alternatives

On March 10, 2023, the Board announced that it established a Special Committee (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value. The Special Committee is comprised solely of independent directors and is charged with exploring potential strategic alternatives including, without limitation, a business combination involving our company, a sale of all or part of our company’s assets, joint venture arrangements and/or restructurings, and determining whether a strategic transaction is in the best interest of our company.

On April 18, 2023, the Company provided an update on the Special Committee’s efforts.  Specifically, the Company announced that the Special Committee is in active discussions with potential parties in pursuit of those alternatives and the Company will provide further disclosures as appropriate or required by law or regulation. While the review is underway, the Company remains fully focused on its operations and on the continued execution of its strategies to create stockholder value. There is no assurance that the review will result in any transaction, including a sale of the Company, its assets, or entry into a business combination, among other alternatives being reviewed.

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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 REIT, 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

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. 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 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;

● failure of our recently announced exploration of strategic alternatives to maximize stockholder value or to result in a transaction that yields value to our stockholders, and the potential that our exploration of strategic alternatives could adversely impact us;

● local, regional, national and international economic conditions;

● 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 limited operating history;

● the degree and nature of our competition;

● our dependence upon our Manager and 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 (such as COVID-19 and its variants);

● our ability to maintain our qualification as a REIT for U.S. federal income tax purposes;

● 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;

● the reverse stock split may decrease the liquidity of the shares of our common stock and could lead to a decrease in our overall market capitalization;

● 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; 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.

Company Overview

Medalist Diversified REIT Inc. is a Maryland corporation formed on September 28, 2015. Beginning with our taxable year ended December 31, 2017, we believe that we have operated in a manner qualifying us as a real estate investment trust (“REIT”), and we have elected to be taxed as a REIT for federal income tax purposes. Our company serves as the general partner of Medalist Diversified Holdings, LP which was formed as a Delaware limited partnership on September 29, 2015.

Our company was formed to acquire, reposition, renovate, lease and manage income-producing properties, with a primary focus on (i) commercial properties, including flex-industrial and retail properties, (ii) multi-family residential properties and (iii) limited-service hotel properties in secondary and tertiary markets in the southeastern part of the United States, with an expected concentration in Virginia, North Carolina, South Carolina, Georgia, Florida and Alabama. We may also pursue, in an opportunistic manner, other 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, and indirect investments in real property, such as those that may be obtained in a joint venture. While these types of investments are not intended to be a primary focus, we may make such investments in our Manager’s discretion.

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Our company is externally managed by the Manager. The Manager makes all investment decisions for our company. The Manager and its affiliated companies specialize in acquiring, developing, owning and managing value-added commercial real estate in the Mid-Atlantic and Southeast regions. The Manager oversees our company’s overall business and affairs and has broad discretion to make operating decisions on behalf of our company and to make investment decisions. Our company’s stockholders are not involved in its day-to-day affairs.

As of March 31, 2023, our company owned and operated eight investment properties, the Shops at Franklin Square (the “Franklin Square Property”), a 134,239 square foot retail property located in Gastonia, North Carolina, the Hanover North Shopping Center (the “Hanover Square Property”), a 73,440 square foot retail property located in Mechanicsville, Virginia, the Ashley Plaza Shopping Center (the “Ashley Plaza Property”), a 164,012 square foot retail property located in Goldsboro, North Carolina, Brookfield Center (the “Brookfield Center Property”), a 64,880 square foot mixed-use industrial/office property located in Greenville, South Carolina, the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), the Greenbrier Business Center (the “Greenbrier Business Center Property”), an 89,280 square foot mixed-use industrial/office property located in Chesapeake, Virginia, Parkway 3 & 4 (the “Parkway Property”), a 64,109 square foot mixed-use industrial office property located in Virginia Beach, Virginia, and the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”).  As of March 31, 2023, we owned 84% of the Hanover Square Property as a tenant in common with a noncontrolling owner which owned the remaining 16% interest and 82% of the Parkway Property as a tenant in common with a noncontrolling owner which owns the remaining 18% interest.

Reporting Segments

We establish operating segments at the property level and aggregate individual properties into reportable segments based on product types in which we have investments. For the three months ended March 31, 2023, our reportable segments were retail center properties and flex center properties.  Although we sold our interest in the Clemson Best Western Hotel Property on September 29, 2022, we include hotel properties as a third reportable segment for the three months ended March 31, 2022.  

Recent Trends and Activities

1:8 Reverse Stock Split

On May 3, 2023, our company completed a reverse stock split of its Common Shares, and a corresponding adjustment to the outstanding common units of the Operating Partnership, at a ratio of 1-for-8 (the “Reverse Stock Split”). The Reverse Stock Split took effect at 5:00 p.m. Eastern Time on May 3, 2023 (the “Effective Time”) and automatically converted every eight Common Shares outstanding at that time into one Common Share.  The Reverse Stock Split is intended to help our company regain compliance with Nasdaq’s Minimum Bid Price Requirement.  If at any time before July 10, 2023, the closing bid price of the Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide our company with written confirmation of compliance.  If compliance with the Minimum Bid Price Requirement cannot be demonstrated by July 10, 2023, the Staff will provide written notification that the Common Stock will be delisted. At that time, our company may appeal the Staff’s determination to a Hearings Panel. Accordingly, there can be no assurance that our company will be able to regain compliance with the Minimum Bid Price Requirement or maintain its listing on Nasdaq.

Establishment of a Special Committee of the Board and Exploration of Strategic Alternatives

On March 10, 2023, the Board announced that it established a Special Committee (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value. The Special Committee is comprised solely of independent directors and is charged with exploring potential strategic alternatives including, without limitation, a business combination involving our company, a sale of all or part of our company’s assets, joint venture arrangements and/or restructurings, and determining whether a strategic transaction is in the best interest of our company.

On April 18, 2023, the Company provided an update on the Special Committee’s efforts.  Specifically, the Company announced that the Special Committee is in active discussions with potential parties in pursuit of those alternatives and the Company will provide further disclosures as appropriate or required by law or regulation. While the review is underway, the Company remains fully focused on its operations and on the continued execution of its strategies to create stockholder value. There is no assurance that the review will result in any transaction, including a sale of the Company, its assets, or entry into a business combination, among other alternatives being reviewed.

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Sale of the Clemson Best Western Property

On September 29, 2022, our company sold its interest in the Clemson Best Western Property, a 148 room hotel on 5.92 acres in Clemson, South Carolina, to an unrelated purchaser for $10,015,000.  During the three months ended March 31, 2021, our company reclassified the Clemson Best Western Property as assets held for sale.  As part of our continuing evaluation of the amounts previously used for the estimated fair value of the Clemson Best Western asset group that had been reclassified as assets held for sale, during the three months ended March 31, 2022, our company recorded an impairment charge of $175,671 associated with this reclassification.  As a result of the closing of the sale of the Clemson Best Western Property on September 29, 2022, our company recognized a loss on sale of investment properties of $421,096 for the year ended December 31, 2022.

Salisbury Marketplace Property Acquisition

On June 13, 2022, we completed our acquisition of the Salisbury Marketplace Property, a 79,732 square foot retail property located in Salisbury, North Carolina, through a wholly owned subsidiary.  The Salisbury Marketplace Property, built in 1986, was 91.2% leased as of March 31, 2023, and is anchored by Food Lion, Citi Trends and Family Dollar.  The purchase price for the Salisbury Marketplace Property was $10,025,000 paid through a combination of cash provided by our company and the incurrence of new mortgage debt.  Our company’s total investment was $10,279,714 and we incurred $254,714 of acquisition and closing costs which were capitalized and added to the tangible assets acquired.

Wells Fargo Mortgage Facility

On June 13, 2022, our company, through its wholly owned subsidiaries, 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 the Wells Fargo Mortgage Facility 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 Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a 25-year amortization schedule, is $103,438.  Our company 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 minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and to maintain liquid assets of not less than $1,500,000 on deposit with Wells Fargo Bank.  As of March 31, 2023, our company believes that it is compliant with these covenants.

Wells Fargo Line of Credit

On June 13, 2022, our company, through its wholly owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”).  As of March 31, 2023, the Wells Fargo Line of Credit had an outstanding balance of $0.  Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above the daily secured overnight financing rate (“SOFR”).  The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by our company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property.   On May 2, 2023, our company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024.  We plan to use the Wells Fargo Line of Credit to help fund future acquisitions.

Shelf Registration

On June 21, 2021, our company filed a shelf registration statement on Form S-3 with the SEC. The shelf registration statement is intended to provide additional flexibility to finance future business opportunities through timely and cost-effective access to capital markets. Under the shelf registration statement, our company may, from time to time, issue common stock up to an aggregate amount of $150 million. The shelf registration statement was declared effective by the SEC on July 27, 2021.

Standby Equity Purchase Agreement

On November 17, 2021, our company entered into a Standby Equity Purchase Agreement (the “SEPA”) with a financing entity. Under the SEPA, our company may sell up to $6,665,299 of our shares of common stock at our request any time during the 36 months

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following the execution of the SEPA. Any shares purchased pursuant to the SEPA would be purchased at 96.5% of the market price (as defined in the SEPA), subject to certain limitations, including that the financing entity could not purchase any shares that would result in it owning more than 4.99% of our company’s outstanding common stock.  As of March 31, 2023, our company has generated net proceeds of $1,538,887 from the issuance of 1,445,400 shares of our common stock at an average price of $1.065 per share under the SEPA.

Issuance Date	Shares Issued	Price Per Share		Total Proceeds
March 3, 2022	90,600	$	1.088	$	98,574
March 14, 2022	276,190		1.050		290,000
March 17, 2022	278,810		1.076		300,000
March 21, 2022	474,068		1.055		500,000
April 1, 2022	325,732		1.075		350,313
Total	1,445,400	$	1.065	$	1,538,887

Common Stock Repurchase Plan

In December 2021, the Board approved a program to purchase up to 500,000 shares of our common stock in the open market, up to a maximum price of $4.80 per share (the “Common Stock Repurchase Plan”). The Common Stock Repurchase Plan does not obligate our company to acquire any particular amount of shares, and the Common Stock Repurchase Plan may be suspended or discontinued at any time at our discretion. As of March 31, 2023, we have repurchased a total of 268,070 shares of our common stock on the open market under the Common Stock Repurchase Plan at an average price of $1.038 per share.

Purchase Date	Shares Purchased	Price Per Share		Total Cost
January 4, 2022	400	$	1.060	$	424
January 5, 2022	48,205		1.060		51,093
January 6, 2022	100,000		1.046		104,556
January 7, 2022	30,000		1.050		31,500
January 10, 2022	50,000		1.020		51,000
January 14, 2022	100		1.010		101
January 21, 2022	39,365		1.006		39,603
Total	268,070	$	1.038	$	278,277

Common stock grants under the 2018 Equity Incentive Plan

On March 2, 2022, the Compensation Committee approved a grant of 60,000 Common Shares to two employees of our Manager who also serve as directors of our company, a grant of 90,000 Common Shares to our company’s three independent directors, and a grant of 60,000 Common Shares to the chief financial officer of our company under the Equity Incentive Plan. The effective date of the grants was March 2, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $233,100, was recorded to share based compensation expense on our condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our Common Shares on the effective date of the grant.

On November 22, 2022, the Compensation Committee approved a grant of 76,434 Common Shares to two employees of our Manager who also serve as directors of our company, a grant of 114,651 Common Shares to our company’s three independent directors, a grant of 76,433 Common Shares to the chief financial officer of our company, and a grant of 50,956 Common Shares to the vice president and senior accountant of our company under the Equity Incentive Plan. The effective date of the grants was November 22, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $250,000, was recorded to share based compensation expense on our condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our Common Shares on the effective date of the grant.

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Financing Activities

Mortgages payable

Our company financed its acquisitions of its investment properties through mortgages, as follows:

							Balance
							March 31,
	Monthly		Interest				2023			December 31,
Property	Payment		Rate			Maturity	(unaudited)		2022
Franklin Square (a)		Interest only		3.808	%	December 2031	$	13,250,000	$	13,250,000
Hanover Square (b)	$	78,098		6.94	%	December 2027		9,813,679		9,877,867
Ashley Plaza (c)	$	52,795		3.75	%	September 2029		10,856,618		10,930,370
Brookfield Center (d)	$	22,876		3.90	%	November 2029		4,639,969		4,663,206
Parkway Center (e)	$	28,161		Variable		October 2026		4,956,301		4,992,427
Wells Fargo Facility (f)	$	103,438		4.50	%	June 2027		18,247,707		18,351,981
Total mortgages payable							$	61,764,274	$	62,065,851

Amounts presented do not reflect unamortized loan issuance costs.

(a) The original mortgage loan for the Franklin Square Property matured on October 6, 2021. Effective on October 6, 2021, our company entered into a forbearance agreement with the current lender extending the maturity date for thirty days with a right to extend the maturity date for an additional thirty days. On November 8, 2021, we closed on a new loan in the principal amount of $13,250,000 which bears interest at a fixed rate of 3.808%, has a ten-year term, and matures on December 6, 2031.  In addition to the funds from the new loan, our company used $2,242,273 in cash on hand for closing costs and to repay the remaining balance of the original mortgage loan. Our company has guaranteed the payment and performance of the obligations of the new loan.  The new mortgage loan bears interest at a fixed rate of 3.808% and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a thirty-year amortization schedule.  Our company accounted for this refinancing transaction in accordance with debt extinguishment accounting in accordance with ASC 470.  The new mortgage includes covenants for our company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and to maintain liquid assets of no less than $1,000,000.  As of March 31, 2023 and December 31, 2022, respectively, our company believes that we are compliant with these covenants.

(b) The mortgage loan for the Hanover Square Property bore interest at a fixed rate of 4.25% until January 1, 2023, when the interest rate adjusted to a fixed rate of 6.94%, which was determined by adding 3.00% to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25%. As a result of the interest rate change, as of February 1, 2023, the fixed monthly payment of $56,882 increased to $78,098 which includes interest at the fixed rate, and principal, based on a twenty-five -year amortization schedule.  The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75%.  As of March 31, 2023 and December 31, 2022, respectively, our company believes that we are compliant with these covenants.

(c) 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.

(d) The mortgage loan for the Brookfield Property bears interest at a fixed rate of 3.90% and is 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.

(e) The mortgage loan for the Parkway Property bears interest at a variable rate based on LIBOR with a minimum rate of 2.25%.  The interest rate payable is the ICE LIBOR rate plus 225 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 March 31, 2023 and December 31, 2022, the rate in effect for the Parkway Property mortgage was 4.4806% and 4.3117%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable

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rate, and principal based on a thirty-year amortization schedule.  On October 28, 2021, our company entered into the Interest Rate Protection Transaction to limit our exposure to increases in interest rates on the variable rate mortgage loan on the Parkway Property. Under this agreement, our interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%.  For the period from September 1, 2022 through March 31, 2023, LIBOR exceeded the 3%, and payments from the Interest Rate Protection Transaction reduced our company’s net interest expense.  Payments to our company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on our company’s condensed consolidated statements of operations for the three months ended March 31, 2023.  No such payments were received during the three months ended March 31, 2022 because the LIBOR rate in effect did not exceed the LIBOR cap.  The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.60 to 1.00 on an annual basis.  As of March 31, 2023 and December 31, 2022, respectively, our company believes that it is compliant with this covenant.

(f) On June 13, 2022, our company 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 (see notes (g) and (h), below).  The Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five -year amortization schedule, is $103,438.  Our company 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 minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and to maintain liquid assets of not less than $1,500,000.  As of March 31, 2023 and December 31, 2022, our company believes that we are compliant with these covenants.

Our company refinanced the mortgage loan for the Lancer Center Property using proceeds from the Wells Fargo Mortgage Facility discussed above.  Our company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $113,282.  The original mortgage loan for the Lancer Center Property bore interest at a fixed rate of 4.00%.  The monthly payment was $34,667 which includes interest at the fixed rate and principal, based on a twenty-five-year amortization schedule.

Our company refinanced the mortgage loan for the Greenbrier Business Center Property, using proceeds from the Wells Fargo Mortgage Facility discussed above. Our company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $56,393.  Our company assumed the original mortgage loan for the Greenbrier Business Center Property from the seller. The original mortgage loan bore interest at a fixed rate of 4.00% and would have been interest only until August 1, 2022, at which time the monthly payment would have become $23,873, which would have included interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.

COVID-19 Impact

Since March 2020, our company’s investment properties have been significantly impacted by (i) measures taken by local, state and federal authorities to mitigate the impact of COVID-19, such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders and (ii) significant changes in consumer behavior and business and leisure travel patterns. While most of the measures have been relaxed by the respective governmental authorities, with the uncertainty resulting from the continued mutation of COVID-19 into new variants and the possibility of the re-imposition of mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders by some governmental authorities, and the possibility that changes in consumer behavior will continue and consumer demand for the goods and services of our retail tenants within our portfolio could continue to be significant in future periods.  These factors, as well as additional factors that our company may not currently be aware of, could materially negatively impact our company’s ability to collect rent and could lead to termination of leases by tenants, tenant bankruptcies, decreases in demand for retail space at our company’s properties, difficulties in accessing capital, impairment of our company’s long-lived assets and other impacts that could materially and adversely affect our company’s business, results of operations, financial condition, and ability to pay distributions to stockholders.

Off-Balance Sheet Arrangements

As of March 31, 2023 and December 31, 2022, we have no off-balance sheet arrangements.

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Summary of Critical Accounting Policies

The preparation of condensed 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 retail center properties and flex center properties 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.

For the periods during which our company owned its hotel properties, revenues were recognized as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel’s services. Revenues from our company’s occupancy agreement with Clemson University were recognized as earned, which is as rooms were occupied by the University.

Rents and Other Tenant Receivables

For our retail center and flex center properties, 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.

Accounting for Leases

Our company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) on January 1, 2022 using the modified retrospective approach within ASU 2018-11, which allows for the application date to be the beginning of the reporting period in which the entity first applies the new standard. Our company historically has not been and is not currently a “lessee” under any lease agreements, and thus did not have any arrangements requiring the recognition of lease assets or liabilities on its balance sheet.  As a “lessor”, our company has active lease agreements with over 100 tenants across our portfolio of investment properties.

Upon the adoption of ASC No. 842, our company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Our company assessed the criteria above with respect to our operating leases and determined that they qualify for the non-separation practical expedient. As a result, we have accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on our condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022.  

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Acquisition of Investments in Real Estate

The adoption of ASU 2017-01, 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, our company estimates 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. Our company also reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of its intangible assets may not be recoverable, but at least annually.

REIT Status

We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Code for the year ended December 31, 2017 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on our taxable income if we annually distribute 100% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to regular federal and state corporate income taxes and may not be able to elect to qualify as a REIT for four subsequent taxable years. Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.

Evaluation of our company’s Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, our 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 our 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. Our 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 our company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our company’s obligations due over the next twelve months, as well as our company’s 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 company’s liquidity, see Note 5 – Loans Payable and Note 8 – Commitments and Contingencies in the notes to our company’s condensed consolidated financial statements.

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Liquidity and Capital Resources

Our business model is intended to drive growth through acquisitions. Access to the capital markets is an important factor for our continued growth and success.  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 are expected to be provided primarily by the rental receipts from our retail and flex center properties.  

Cash Flows

At March 31, 2023, our consolidated cash and restricted cash on hand totaled $4,985,365 compared to consolidated cash on hand of $8,079,034 at March 31, 2022. Cash from operating activities, investing activities and financing activities for the three months ended March 31, 2023 are as follows:

Operating Activities

During the three months ended March 31, 2023 our cash provided by operating activities was $450,724 compared to cash provided by operating activities of $692,863 for the three months ended March 31, 2022, a decrease in cash provided by operating activities of $242,139.

Cash flows from operating activities has two components. The first component consists of net operating loss adjusted for non-cash operating activities. During the three months ended March 31, 2023, operating activities adjusted for non-cash items resulted in net cash used by operating activities of $817.  During the three months ended March 31, 2022, operating activities adjusted for non-cash items resulted in net cash provided in operating activities of $689,045.  The decrease of $689,862 in cash flows from operating activities for the three months ended March 31, 2023 was primarily a result of increased legal, accounting and other professional fees resulting from the exploration of strategic alternatives announced by our Board of Directors on March 10, 2023, of $307,209, and a decrease in operating income of $392,629 resulting from the sale of the Clemson Best Western Hotel on September 29, 2022.  For the three months ended March 31, 2022, the Clemson Best Western Hotel generated $392,629 in operating income.  Since our company sold the Clemson Best Western Hotel on September 29, 2022, no operating income was generated during the three months ended March 31, 2023.  

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, 2023, net changes in asset and liability accounts resulted in $451,541 in cash provided by operations. During the three months ended March 31, 2022, net changes in asset and liability accounts resulted in $3,818 in cash provided by operations. This increase of $447,723 in cash provided by operations resulting from changes in assets and liabilities is a result of increased changes in accounts payable and accrued liabilities of $310,905, and increased changes in other assets of $195,395, offset by decreased changes in unbilled rent of $34,053, and other receivables, net, of $24,524.

The net of (i) the $689,862 decrease in cash provided by operations from the first category and (ii) the $447,723 increase in cash provided by operations from the second category results in a total decrease in cash provided in operations of $242,139 for the three months ended March 31, 2023.

Investing Activities

During the three months ended March 31, 2023, our cash used in investing activities was $647,690, compared to cash used in investing activities of $366,059 during the three months ended March 31, 2022, an increase in cash used in investing activities of $281,631. During the three months ended March 31, 2023, cash used in investing activities consisted of $647,690 in capitalized expenditures, including $168,464 in building improvements, $11,323 in site improvements, $90,638 in capitalized leasing commissions, and $377,265 in capitalized tenant improvements.  During the three months ended March 31, 2022, cash used in investing activities consisted of $366,059 in capitalized expenditures, including $230,857 in building improvements, $78,921 in capitalized leasing commissions, and $56,281 in capitalized tenant improvements.

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Financing Activities

During the three months ended March 31, 2023, our cash used in financing activities was $480,522 compared to cash provided by financing activities of $368,253 during the three months ended March 31, 2022, an increase in cash used in financing activities of $848,775.  During the three months ended March 31, 2023, cash used in financing activities consisted of $301,577 for mortgage debt principal payments and $178,945 for dividends and distributions.  During the three months ended March 31, 2022, financing activities generated $1,188,574 in net proceeds, after issuance costs, from common stock issuances under our SEPA, offset by cash used in financing activities, including dividends and distributions of $341,521, mortgage debt principal payments of $192,257 and repurchases of our company’s common stock of $286,543, including costs and fees.

Future Liquidity Needs

Liquidity for general operating needs and our company’s investment properties is generally provided by the rental receipts from our retail properties and flex center property, and revenues from our hotel properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, our company continually reviews and evaluates its outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.

The primary, non-operating liquidity need of our company is $179,719 to pay the dividends and distributions to common shareholders and operating partnership unit holders, and $100,000 to pay the dividends to holders of our mandatorily redeemable preferred stock that were declared on April 12, 2023 and payable April 28, 2023 to holders of record on April 25, 2023, and $780,584 in principal payments due on its mortgages payable during the remaining nine months ending December 31, 2023.  In addition to liquidity required to fund these principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. Our company plans to pay these obligations through a combination of cash on hand, potential dispositions and operating cash.

As discussed above, the continuing COVID-19 pandemic outbreak has adversely impacted states and cities where our company’s tenants operate their businesses and where our company’s properties are located. The COVID-19 pandemic could have a material adverse effect on our company’s financial condition, results of operations and cash flows as the reduced economic activity severely impacts certain of our company’s tenants’ businesses, financial condition and liquidity and may cause certain tenants to be unable to meet their obligations to our company in full. Closures of stores operated by our company’s tenants could reduce our company’s cash flows.

To meet these future liquidity needs, we have the following resources:

· $3,048,100 in unrestricted cash as of March 31, 2023;

· $1,937,265 held in lender reserves for the purposes of tenant improvements, leasing commissions, real estate taxes and insurance premiums;

· Our $1,500,000 line of credit with Wells Fargo Bank, which, as of March 31, 2023, had a $0 balance;

● Cash generated from operations during the nine months ending December 31, 2023, if any; and

· Potential proceeds from issuances of common stock under our shelf registration or under the Standby Equity Purchase Agreement (see note 7 of the notes to the condensed consolidated financial statements), although there is no guarantee that any such issuances will be successful in raising additional funds.

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Results of Operations

Three months ended March 31, 2023

Revenues

Total revenue was $2,460,976 for the three months ended March 31, 2023, consisting of $1,891,679 in revenues from retail center properties, and $569,297 from flex center properties. Total revenues for the three months ended March 31, 2023 decreased by $442,988 over the three months ended March 31, 2022, resulting from decreased hotel property revenues from the sale of our company’s Clemson Best Western Hotel Property on September 29, 2022, decreased flex center revenues from tenant turnovers in our Parkway Center and Greenbrier Business Center properties, offset by increased retail center revenues from new leasing activity at our Franklin Square property, and our company’s acquisition of the Salisbury Marketplace Property.

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Revenues
Retail center properties	$	1,891,679	$	1,525,085	$	366,594
Hotel property		—		765,489		(765,489)
Flex center properties		569,297		613,390		(44,093)
Total Revenues	$	2,460,976	$	2,903,964	$	(442,988)

Revenues from retail center properties were $1,891,679 for the three months ended March 31, 2023, an increase of $366,594 over retail center property revenues for the three months ended March 31, 2022. Increased revenues of $239,734 from the acquisition of the Salisbury Marketplace Property, $127,669 from new leasing activity at our Franklin Square Property, and $8,078 from the Hanover Square Property, were offset by slightly decreased revenues of $5,016 from the Lancer Center Property and $3,871 from the Ashley Plaza Property.  

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Retail Center Properties
Franklin Square Property	$	583,874	$	456,205	$	127,669
Hanover Square Property		331,437		323,359		8,078
Ashley Plaza Property		431,849		435,720		(3,871)
Lancer Center Property		304,785		309,801		(5,016)
Salisbury Property		239,734		—		239,734
	$	1,891,679	$	1,525,085	$	366,594

Revenues from hotel properties were $0 for the three months ended March 31, 2023, a decrease of $765,489 from revenues from hotel properties for the three months ended March 31, 2022, due to the sale of Clemson Best Western Property on September 29, 2022.  

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Hotel Property
Clemson Best Western Property	$	—	$	765,489	$	(765,489)
	$	—	$	765,489	$	(765,489)

Revenues from the flex center properties were $569,297 for the three months ended March 31, 2023, a decrease of $44,093 over revenues from flex center properties for three months ended March 31, 2022 due to decreased revenues from the Greenbrier Business Center Property of $19,255 and the Parkway Property of $33,972, resulting from tenant turnovers in both properties, offset by increased revenues from the Brookfield Center Property of $9,134.

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	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Flex Center Properties
Brookfield Center Property	$	207,111	$	197,977	$	9,134
Greenbrier Business Center Property		180,246		199,501		(19,255)
Parkway Center Property		181,940		215,912		(33,972)
	$	569,297	$	613,390	$	(44,093)

Operating Expenses

Total operating expenses were $2,801,692 for the three months ended March 31, 2023, consisting of $520,740 in expenses from retail center properties, $203,734 in expenses from the flex center properties, $767,078 in legal, accounting and other professional fees, $117,049 in corporate general and administrative expenses, a loss on impairment of $36,743, and $1,156,348 in depreciation and amortization.

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Operating Expenses
Retail center properties (1)	$	520,740	$	457,916	$	62,824
Hotel property		—		372,860		(372,860)
Flex center properties (2)		203,734		166,373		37,361
Total Investment Property Operating Expenses		724,474		997,149		(272,675)
Share based compensation expenses		—		233,100		(233,100)
Legal, accounting and other professional fees (3)		767,078		459,869		307,209
Corporate general and administrative expenses		117,049		80,706		36,343
Loss on impairment		36,743		36,670		73
Impairment of assets held for sale		—		175,671		(175,671)
Depreciation and amortization		1,156,348		1,155,197		1,151
Total Operating Expenses	$	2,801,692	$	3,138,362	$	(336,670)

(1) Includes $125 and $7,791 of bad debt expense for the three months ended March 31, 2023 and 2022, respectively.

(2) Includes $26,997 and $4,992 of bad debt expense for the three months ended March 31, 2023 and 2022, respectively.

(3) Includes $144,734 and $99,531 in expenses paid to the Consultant pursuant to the Consulting Agreement for the three months ended March 31, 2023 and 2022, respectively.

Operating expenses for retail center properties were $520,740 for the three months ended March 31, 2023, an increase of $62,824 over retail center property operating expenses for the three months ended March 31, 2022.  Increased operating expenses from the acquisition of the Salisbury Marketplace Property of $60,893, and from three of our existing properties, the Franklin Square Property, which increased by $3,440, the Ashley Plaza Property, which increased by $3,696, and the Hanover Square Property, which increased by $8,669, were offset by decreased operating expenses from the Lancer Center Property of $13,874.

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	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Retail Center Properties
Franklin Square Property	$	178,492	$	175,052	$	3,440
Hanover Square Property		89,153		80,484		8,669
Ashley Plaza Property		87,938		84,242		3,696
Lancer Center Property (1)		104,264		118,138		(13,874)
Salisbury Property		60,893		—		60,893
	$	520,740	$	457,916	$	62,824

(1) Includes bad debt expense of $125 and $7,791 for the March 31, 2023 and 2022, respectively.

Operating expenses for hotel properties were $0 for the three months ended March 31, 2023, a decrease of $372,860 from operating expenses from hotel properties for the three months ended March 31, 2022 resulting from the sale of the Clemson Best Western Property on September 29, 2022.  

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Hotel Property
Clemson Best Western Property	$	—	$	372,860	$	(372,860)
	$	—	$	372,860	$	(372,860)

Operating expenses from the flex center properties were $203,734 for the three months ended March 31, 2023, an increase of $37,361 over flex center property operating expenses for the three months ended March 31, 2022 due to increased operating expenses from the Greenbrier Business Center of $41,416 and the Brookfield Center Property of $1,038, offset by decreased operating expenses from the Parkway Property of $5,093.

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Flex Center Properties
Brookfield Center Property	$	60,851	$	59,813	$	1,038
Greenbrier Business Center Property (1)		85,192		43,776		41,416
Parkway Center Property (2)		57,691		62,784		(5,093)
	$	203,734	$	166,373	$	37,361

(1) Includes $24,463 and $0 of bad debt expense for the March 31, 2023 and 2022, respectively.

(2) Includes $2,534 and $4,992 of bad debt expense for the March 31, 2023 and 2022, respectively.

Operating (Loss) Income

Operating loss for the three months ended March 31, 2023 was $340,716, an increase of $106,318 over the operating loss of $234,398 for the three months ended March 31, 2022.  This decrease was a result of (i) decreased investment property operating income of $170,313 primarily resulting from the sale of the Clemson Best Western Hotel on September 29, 2022, (ii) a slight increase in depreciation and amortization expenses of $1,151, (ii) slightly increased loss on impairment of $73, (iii) increased legal, accounting and other professional fees of $307,209, and (iv) increased corporate general and administrative expenses of $36,343.

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Interest Expense

Interest expense was $864,052 and $841,424 for the March 31, 2023 and 2022, respectively, as follows:

	For the three months ended
	March 31,
	2023		2022		Increase /
	(unaudited)		(unaudited)		(Decrease)
Franklin Square	$	133,233	$	133,233	$	—
Hanover Square		173,863		108,077		65,786
Ashley Plaza		106,490		108,505		(2,015)
Clemson Best Western		—		138,917		(138,917)
Brookfield Center		48,229		49,092		(863)
Lancer Center		—		70,902		(70,902)
Greenbrier Business Center		—		45,643		(45,643)
Parkway Center		30,672		33,132		(2,460)
Wells Fargo Mortgage Facility		212,761		—		212,761
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		158,804		153,923		4,881
Total interest expense	$	864,052	$	841,424	$	22,628

Total interest expense for the three months ended March 31, 2023 increased by $22,628 over the three months ended March 31, 2022. This decrease was a result of (i) increased interest expense from the Wells Fargo Mortgage Facility, which refinanced the Lancer Center and Greenbrier Business Center mortgages payable, and financed the acquisition of the Salisbury Marketplace Property (net increase in interest expense of $96,216 for the four properties, combined), and (ii) increased amortization of preferred stock issuance costs of $4,881, offset by (i) decreased interest expense of $138,917 from the sale of the Clemson Best Western Property, (ii) slight decreases in interest expense for the Ashley Plaza mortgage of $2,015, and the Brookfield Center mortgage of $863.  

Other (Loss) Income

During the three months ended March 31, 2023, other loss was $29,038, a decrease of $124,477 from other income of $95,439 for the three months ended March 31, 2022.  Other loss for the three months ended March 31, 2023 consisted of $39,868 in loss related to the fair value change of the interest rate caps, offset by interest income of $10,830.  Other income of $95,439 for the three months ended March 31, 2022 consisted of $91,042 related to the fair value change of the interest rate cap, $3,913 of miscellaneous income and $484 of interest income.

Net Loss

Net loss was $1,233,806 for the three months ended March 31, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to our common shareholders was $1,221,295. Net loss was $980,383 for the three months ended March 31, 2022, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common shareholders was $989,284, for the three months ended March 31, 2022.

Net loss for the three months ended March 31, 2023 increased by $253,423 over the three months ended March 31, 2022, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common shareholders for the three months ended March 31, 2023 increased by $232,011 over the three months ended March 31, 2022.

Funds from Operations

We use funds from operations (“FFO”), a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO 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.

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Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

NAREIT’s December 2018 White Paper states, “FFO of a REIT includes the FFO of all consolidated properties, including consolidated, partially owned affiliates”. Additionally, since the adjustments to GAAP net income, such as depreciation and amortization, used in the reconciliation of net income (loss) to determine FFO are not allocated between shareholders and noncontrolling interests (i.e. 100% of depreciation and amortization are “added back” without reduction to reflect the noncontrolling owners’ interest in such items), our company believes that the appropriate starting point for the calculation is the net income (loss) before allocation to noncontrolling interests.  This allows our company to use FFO as a tool to measure the overall performance of its investment properties, as a whole, not just the portion of the investment properties controlled by our company’s shareholders.

Below is our company’s FFO, which is a non-GAAP measurement, for the three months ended March 31, 2023 and 2022:

	For the three months ended
	March 31,
	2023		2022
Net loss	$	(1,233,806)		(980,383)
Depreciation of tangible real property assets (1)		674,398		602,845
Depreciation of tenant improvements (2)		205,153		148,924
Amortization of leasing commissions (3)		31,930		19,791
Amortization of intangible assets (4)		244,867		383,637
Loss on impairment (5)		36,743		36,670
Impairment of assets held for sale (5)		—		175,671
Funds from operations	$	(40,715)	$	387,155

(1) Depreciation expense for buildings, site improvements and furniture and fixtures.

(2) Depreciation of tenant improvements, including those (i) acquired as part of the purchase of the retail center and flex center properties and (ii) those constructed by our company for the retail center properties and flex center property subsequent to their acquisition.

(3) Amortization of leasing commissions paid for the retail center properties and flex center property subsequent to the acquisition of the properties.

(4) Amortization of (i) intangible assets acquired as part of the purchase of the retail center properties and flex center property, including leasing commissions, leases in place and legal and marketing costs.

(5) NAREIT’s December 2018 White Paper provides guidance for the treatment of impairment write-downs. Specifically, “To the extent there is an impairment write-down of depreciable real estate … related to a REIT’s main business, the write-down is excluded from FFO (i.e., adjusted from net income in calculating FFO).” Additionally, NAREIT’s December 2018 White Paper provides guidance on gains or losses on the sale of assets, stating “the REIT has the option to include or exclude such gains and losses in the calculation of FFO.”

NAREIT’s December 2018 White Paper encourages companies reporting FFO to “make supplemental disclosure of all material non-cash revenues and expenses affecting their results for each period.” We believe that the computation of FFO in accordance with NAREIT’s definition includes certain items that are not indicative of the results provided by our operating portfolio and affect the comparability of our period-over-period performance. These items include 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 our calculation of AFFO. Therefore, in addition to FFO, management uses

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Adjusted FFO (“AFFO”), which we define to exclude such items. Management believes that these adjustments are appropriate in determining AFFO as their exclusion is not indicative of the operating performance of our assets. In addition, we believe that AFFO is a useful supplemental measure for the investing community to use in comparing us to other REITs as many REITs provide some form of adjusted or modified FFO. However, there can be no assurance that AFFO presented by us is comparable to the adjusted or modified FFO of other REITs.

Total AFFO for the three months ended March 31, 2023 and 2022 was as follows:

	For the three months ended
	March 31,
	2023		2022
Funds from operations	$	(40,715)	$	387,155
Amortization of above market leases (1)		27,343		69,583
Amortization of below market leases (2)		(100,361)		(95,617)
Straight line rent (3)		(48,899)		(14,921)
Capital expenditures (4)		(647,690)		(366,059)
(Increase) decrease in fair value of interest rate cap (5)		39,868		(91,042)
Amortization of loan issuance costs (6)		26,990		28,118
Amortization of preferred stock discount and offering costs (7)		58,804		53,923
Share-based compensation (8)		—		233,100
Bad debt expense (9)		27,122		12,783
Adjusted funds from operations (AFFO)	$	(657,538)	$	217,023

(1) Adjustment to FFO resulting from non-cash amortization of intangible assets.

(2) Adjustment to FFO resulting from non-cash amortization of intangible liabilities.

(3) Adjustment to FFO resulting from non-cash revenues recognized as a result of applying straight line revenue recognition for the retail center properties and flex center properties.

(4) Adjustment to FFO for capital expenditures, including capitalized leasing commissions, tenant improvements, building and site improvements and purchases of furniture, fixtures and equipment that have not been reimbursed by property escrow accounts. See Investing Activities, above, for detail of capital expenditures.

(5) Adjustment to FFO resulting from non-cash expenses recognized as a result of decreases in the fair value of the interest rate caps for the Parkway Property and Clemson Best Western Property.

(6) Adjustment to FFO for amortization of non-cash expenses recognized as a result of amortizing loan issuance costs over the terms of the respective mortgages.

(7) Adjustment to FFO for amortization of non-cash expenses recognized as a result of amortizing the preferred stock discount over its five-year term.

(8) Adjustment to FFO for amortization of non-cash expenses recognized as a result of amortizing the preferred stock offering costs over its five-year term.

(9) NAREIT’s December 2018 White Paper provides guidance on non-cash revenues and expenses, stating, “To provide an opportunity for consistent analysis of operating results among REITs, NAREIT encourages those reporting FFO to make supplemental disclosure of all material non-cash revenues and expenses affecting their results for each period. Our company has elected to include non-cash revenues (debt forgiveness) and non-cash expenses (bad debt expense) in its calculation of AFFO.

51

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, 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 principal executive officer and principal financial officer, regarding the effectiveness of our disclosure controls and procedures as of March 31, 2023, the end of the period covered by this Quarterly Report. Based on the foregoing, our principal executive officer and principal financial officer have concluded, as of March 31, 2023, 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 principal executive officer and principal financial officer, evaluated, as of March 31, 2023, 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 principal executive officer and principal financial officer concluded that our internal control over financial reporting, as of March 31, 2023, were effective.

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company 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.

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.

52

ITEM 1A.RISK FACTORS

We have omitted a discussion of risk factors because, as a smaller reporting company, we are not required to provide such information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Repurchases of Equity Securities

On December 21, 2021, the Board authorized a share repurchase program whereby we may repurchase up to 500,000 shares

of our common stock for a maximum price of $4.80 per share. As of December 31, 2022, the Company had repurchased 268,070 shares of our common stock at a total cost of $278,277 and an average price of $1.038 per share. During the three months ended March 31, 2023, the Company did not make any share repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

EXHIBIT INDEX

Exhibit Number	Description
3.1	Articles of Incorporation of Medalist Diversified REIT, Inc.*
3.2	Articles Supplementary to the Articles of Incorporation of Medalist Diversified REIT, Inc. designating the Company’s Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A filed on February 13, 2020).
3.3	First Articles of Amendment to Articles of Incorporation of Medalist Diversified REIT, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 3, 2023).
3.4	Second Articles of Amendment to Articles of Incorporation of Medalist Diversified REIT, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 3, 2023).
3.5	Bylaws of Medalist Diversified REIT, Inc. *
4.1	Form of Certificate of Common Stock. *
4.2	Form of Certificate of Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed on February 13, 2020)
4.3	Description of Medalist Diversified REIT, Inc.’s Securities (incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K filed on March 10, 2023).
10.1	Letter Agreement, dated March 10, 2023, by and among Medalist Diversified REIT, Inc., Medalist Diversified Holdings, L.P. and Medalist Fund Manager, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed on March 10, 2023).
10.2	First Amendment to Consulting Agreement, dated as of March 10, 2023, by and between Medalist Diversified REIT, Inc. and Gunston Consulting, LLC (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on March 10, 2023).

53

10.3	Change in Control Agreement, dated as of March 10, 2023, by and among Medalist Diversified REIT, Inc., Gunston Consulting, LLC and Colin Elliott (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed on March 10, 2023).
10.4	First Amendment, dated as of May 2, 2023, to Revolving Line of Credit Note by and between MDR Greenbrier, LLC, MDR Lancer, LLC, MDR Salisbury, LLC, Wells Fargo Bank, National Association, and Medalist Diversified REIT, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 8, 2023).
31.1	Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2	Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1	Certification of the 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 the 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.
101.SCH	Inline XBRL Schema Document.
101.CAL	Inline XBRL Calculation Linkbase Document.
101.DEF	Inline XBRL Definition Linkbase Document.
101.LAB	Inline XBRL Labels Linkbase Document.
101.PRE	Inline XBRL Presentation Linkbase Document.
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101).

†Filed herewith.

* Previously filed with the Amendment to the Registrant’s Registration Statement on Form S-11 filed by the Registrant with the Securities and Exchange Commission on October 5, 2018.

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 Condensed Consolidated Financial Statements.

54

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 REIT, INC.

ay
Date: May 11, 2023
	By:	/s/ Thomas E. Messier
		Thomas E. Messier
		Chief Executive Officer and Chairman of the Board
		(principal executive officer)
	By:	/s/ C. Brent Winn
		C. Brent Winn
		Chief Financial Officer
		(principal accounting officer and principal financial officer)

55

EX-31.1

Exhibit 31.1

Certification

I, Thomas E. Messier, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Medalist Diversified REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2023	/s/ Thomas E. Messier
Date	Thomas E. Messier
	Chief Executive Officer and Chairman of the Board
	(principal executive officer)

EX-31.2

Exhibit 31.2

Certification

I, C. Brent Winn, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Medalist Diversified REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2023	/s/ C. Brent Winn, Jr.
Date	C. Brent Winn, Jr.
	Chief Financial Officer
	(principal accounting officer and principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Medalist Diversified REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Messier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 11, 2023	/s/ Thomas E. Messier
Date	Thomas E. Messier
	Chief Executive Officer and Chairman of the Board
	(principal executive officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Medalist Diversified REIT, Inc. and will be retained by Medalist Diversified REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Medalist Diversified REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. Brent Winn, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 11, 2023	/s/ C. Brent Winn, Jr.
Date	C. Brent Winn, Jr.
	Chief Financial Officer
	(principal accounting officer and principal financial officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Medalist Diversified REIT, Inc. and will be retained by Medalist Diversified REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2023	May 10, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-38719
Entity Registrant Name	MEDALIST DIVERSIFIED REIT, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	47-5201540
Entity Address, Address Line One	1051 E. Cary Street Suite 601
Entity Address, Address Line Two	James Center Three
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23219
City Area Code	804
Local Phone Number	344-4435
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,219,779
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001654595
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Common Stock, $0.01 par value per share
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.01 par value per share
Security Exchange Name	NASDAQ
Trading Symbol	MDRR
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
Document Information [Line Items]
Title of 12(b) Security	8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
Security Exchange Name	NASDAQ
Trading Symbol	MDRRP

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2023	Dec. 31, 2022
ASSETS
Investment properties, net	$ 76,242,506	$ 76,514,952
Cash	3,048,100	3,922,136
Restricted cash	1,937,265	1,740,717
Rent and other receivables, net of allowance of $62,960 and $47,109, as of March 31, 2023 and December 31, 2022, respectively	290,836	402,434
Unbilled rent	1,069,860	1,022,153
Intangible assets, net	3,449,600	3,748,706
Other assets	497,510	564,306
Total Assets	86,535,677	87,915,404
LIABILITIES
Accounts payable and accrued liabilities	1,547,240	1,198,072
Intangible liabilities, net	2,133,752	2,234,113
Mortgages payable, net	61,065,672	61,340,259
Mandatorily redeemable preferred stock, net	4,509,325	4,450,521
Total Liabilities	69,255,989	69,222,965
EQUITY
Common stock, 17,758,421 and 17,758,421 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	177,584	177,584
Additional paid-in capital	51,363,812	51,363,812
Offering costs	(3,350,946)	(3,350,946)
Accumulated deficit	(32,337,125)	(30,939,020)
Total Stockholders' Equity	15,853,325	17,251,430
Noncontrolling interests - Operating Partnership	837,860	842,898
Total Equity	17,279,688	18,692,439
Total Liabilities and Equity	86,535,677	87,915,404
Hanover Square Property
EQUITY
Noncontrolling interests	126,185	127,426
Parkway Property
EQUITY
Noncontrolling interests	$ 462,318	$ 470,685

XML

Condensed Consolidated Balance Sheets (Parenthetical)	Mar. 31, 2023 USD ($) shares
Condensed Consolidated Balance Sheets
Allowance for uncollectible receivables | $	$ 62,960
Common stock, shares, issued | shares	17,758,421

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
REVENUE
Total Revenue	$ 2,460,976	$ 2,903,964
OPERATING EXPENSES
Retail center property operating expenses	520,615	450,125
Flex center property operating expenses	176,737	161,381
Hotel property operating expenses		372,860
Bad debt expense	27,122	12,783
Share based compensation expenses		233,100
Legal, accounting and other professional fees	767,078	459,869
Corporate general and administrative expenses	117,049	80,706
Loss on impairment	36,743	36,670
Impairment of assets held for sale	0	175,671
Depreciation and amortization	1,156,348	1,155,197
Total Operating Expenses	2,801,692	3,138,362
Operating loss	(340,716)	(234,398)
Interest expense	864,052	841,424
Net Loss from Operations	(1,204,768)	(1,075,822)
Other (loss) income	(29,038)	95,439
Net Loss	(1,233,806)	(980,383)
Less: Net loss attributable to Operating Partnership noncontrolling interests	(2,903)	(973)
Net Loss Attributable to Medalist Common Shareholders	$ (1,221,295)	$ (989,284)
Loss per share from operations - basic	$ (0.07)	$ (0.06)
Loss per share from operations - diluted	$ (0.07)	$ (0.06)
Weighted-average number of shares - basic	17,758,421	16,037,073
Weighted-average number of shares - diluted	17,758,421	16,037,073
Dividends paid per common share	$ 0.01	$ 0.02
Hanover Square Property
OPERATING EXPENSES
Interest expense	$ 173,863	$ 108,077
Less: Net (loss) income attributable to noncontrolling interests	(1,241)	(319)
Parkway Property
OPERATING EXPENSES
Less: Net (loss) income attributable to noncontrolling interests	(8,367)	10,193
Retail center property revenues
REVENUE
Total Revenue	1,891,679	1,525,085
Flex center property revenues
REVENUE
Total Revenue	$ 569,297	613,390
Hotel property room revenues
REVENUE
Total Revenue		762,200
Hotel property other revenues
REVENUE
Total Revenue		$ 3,289

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid in Capital	Offering Costs.	Accumulated Deficit	Total Shareholders' Equity	Noncontrolling Interests Hanover Square Property	Noncontrolling Interests Parkway Property	Noncontrolling Interest Operating Partnership	Total
Balance at Dec. 31, 2021	$ 160,526	$ 49,645,426	$ (3,350,946)	$ (24,981,346)	$ 21,473,660	$ 146,603	$ 500,209	$ 877,917	$ 22,998,389
Balance (shares) at Dec. 31, 2021	16,052,617
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issuances	$ 11,197	1,177,377			1,188,574				1,188,574
Common stock issuances (shares)	1,119,668
Common stock repurchases	$ (2,681)	(283,862)			(286,543)				(286,543)
Common stock repurchases (in shares)	(268,070)
Share based compensation	$ 2,100	231,000			233,100				233,100
Share based compensation (shares)	210,000
Net (loss) income				(989,284)	(989,284)	(319)	10,193	(973)	(980,383)
Dividends and distributions				(316,450)	(316,450)	(10,000)	(10,800)	(4,271)	(341,521)
Balance at Mar. 31, 2022	$ 171,142	50,769,941	(3,350,946)	(26,287,080)	21,303,057	136,284	499,602	872,673	22,811,616
Balance (shares) at Mar. 31, 2022	17,114,215
Balance at Dec. 31, 2022	$ 177,584	51,363,812	(3,350,946)	(30,939,020)	17,251,430	127,426	470,685	842,898	$ 18,692,439
Balance (shares) at Dec. 31, 2022	17,758,421
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issuances (shares)									1,445,400
Common stock repurchases	$ 0
Net (loss) income				(1,221,295)	(1,221,295)	(1,241)	(8,367)	(2,903)	$ (1,233,806)
Dividends and distributions				(176,810)	(176,810)			(2,135)	(178,945)
Balance at Mar. 31, 2023	$ 177,584	$ 51,363,812	$ (3,350,946)	$ (32,337,125)	$ 15,853,325	$ 126,185	$ 462,318	$ 837,860	$ 17,279,688
Balance (shares) at Mar. 31, 2023	17,758,421

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (1,233,806)	$ (980,383)
Adjustments to reconcile consolidated net loss to net cash flows from operating activities
Depreciation	911,481	771,560
Amortization	244,867	383,637
Loan cost amortization	26,990	28,118
Mandatorily redeemable preferred stock issuance cost and discount amortization	58,804	53,923
Above (below) market lease amortization, net	(73,018)	(26,034)
Bad debt expense	27,122	12,783
Share-based compensation		233,100
Impairment of assets held for sale	0	175,671
Loss on impairment	36,743	36,670
Changes in assets and liabilities
Rent and other receivables, net	84,476	109,000
Unbilled rent	(48,899)	(14,846)
Other assets	66,796	(128,599)
Accounts payable and accrued liabilities	349,168	38,263
Net cash flows from operating activities	450,724	692,863
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(647,690)	(366,059)
Net cash flows from investing activities	(647,690)	(366,059)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends and distributions paid	(178,945)	(341,521)
Repayment of mortgages payable	(301,577)	(192,257)
Proceeds from sales of common stock, net of capitalized offering costs		1,188,574
Repurchases of common stock, including costs and fees		(286,543)
Net cash flows from financing activities	(480,522)	368,253
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(677,488)	695,057
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	5,662,853	7,383,977
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$ 4,985,365	$ 8,079,034

XML

Condensed Consolidated Statements of Cash Flows - Supplemental cash flow information - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Additional Cash Flow Elements and Supplemental Disclosures and Non-Cash Activities
CASH AND CASH EQUIVALENTS, end of period, shown in condensed consolidated balance sheets	$ 3,048,100	$ 4,629,945
RESTRICTED CASH including assets restricted for capital and operating reserves and tenant deposits, end of period, shown in condensed consolidated balance sheets	1,937,265	3,449,089
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period shown in the condensed consolidated statements of cash flows	4,985,365	8,079,034
Other cash transactions:
Interest paid	$ 796,268	$ 682,456

XML

Organization and Basis of Presentation and Consolidation

3 Months Ended

Mar. 31, 2023

Organization and Basis of Presentation and Consolidation

Organization and Basis of Presentation and Consolidation

1.      Organization and Basis of Presentation and Consolidation

Medalist Diversified Real Estate Investment Trust, Inc. (the “REIT”) is a Maryland corporation formed on September 28, 2015. Beginning with the taxable year ended December 31, 2017, the REIT has elected to be taxed as a real estate investment trust for federal income tax purposes. The REIT 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, 2023, the REIT, through the Operating Partnership, owned and operated eight properties, including the Shops at Franklin Square, a 134,239 square foot retail property located in Gastonia, North Carolina (the “Franklin Square Property”), the Shops at Hanover Square North, a 73,440 square foot retail property located in Mechanicsville, Virginia (the “Hanover Square Property”), the Ashley Plaza Shopping Center, a 164,012 square foot retail property located in Goldsboro, North Carolina (the “Ashley Plaza Property”), Brookfield Center, a 64,880 square foot mixed-use industrial/office property located in Greenville, South Carolina (the “Brookfield Center Property”), the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), the Greenbrier Business Center, an 89,280 square foot mixed-use industrial/office property located in Chesapeake, Virginia (the “Greenbrier Business Center Property "), the Parkway Property, a 64,109 square foot mixed-use industrial office property located in Virginia Beach, Virginia (the "Parkway Property") and the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”). The Company owns 84% of the Hanover Square Property as a tenant in common with a noncontrolling owner which owns the remaining 16% interest and 82% of the Parkway Property as a tenant in common with a noncontrolling owner which owns the remaining 18% interest.

The use of the word “Company” refers to the REIT and its consolidated subsidiaries, except where the context otherwise requires. The Company includes the REIT, the Operating Partnership, wholly owned limited liability companies which own or operate the properties and, for the periods presented prior to September 30, 2022, the taxable REIT subsidiary which formerly operated the Clemson Best Western University Inn, a hotel with 148 rooms on 5.92 acres in Clemson, South Carolina (“the Clemson Best Western Property”), which the Company sold on September 29, 2022.  As a REIT, certain tax laws limit the amount of “non-qualifying” income that Company can earn, including income derived directly from the operation of hotels.  As a result, the Company leased its consolidated hotel property to a taxable REIT subsidiary (“TRS”) for federal income tax purposes. The Company’s TRS was subject to income tax and was not limited as to the amount of nonqualifying income it could generate, but the Company’s TRS was limited in terms of its value as a percentage of the total value of the Company’s assets. The Company’s TRS entered into an agreement with a third party to manage the operations of the hotel.  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 Company was formed to acquire, reposition, renovate, lease and manage income-producing properties, with a primary focus on (i) commercial properties, including flex-industrial, limited-service hotels, and retail properties, and (ii) multi-family residential properties in secondary and tertiary markets in the southeastern part of the United States, with an expected concentration in Virginia, North Carolina, South Carolina, Georgia, Florida and Alabama. The Company may also pursue, in an opportunistic manner, other 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. While these types of investments are not intended to be a primary focus, the Company may make such investments in the discretion of Medalist Fund Manager, Inc. (the “Manager”).

The Company is externally managed by the Manager. The Manager makes all investment decisions for the Company. The Manager and its affiliated companies specialize in acquiring, developing, owning and managing value-added commercial real estate in the Mid-Atlantic and Southeast regions. The Manager oversees the Company’s overall business and affairs and has broad discretion to make operating decisions on behalf of the Company and to make investment decisions. The Company’s stockholders are not involved in its day-to-day affairs.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.      Summary of Significant Accounting Policies

Investment Properties

The Company has adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. As a result, all of the Company’s acquisitions to date qualified as asset acquisitions and the Company expects future acquisitions of operating properties to qualify as asset acquisitions.  Accordingly, third-party transaction costs associated with these acquisitions have been and will be capitalized, while internal acquisition costs will continue to be expensed.

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 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 assets identified in the evaluation.

The Company records depreciation on buildings and improvements utilizing the straight-line method over the estimated useful life of the asset, generally 4 to 42 years. The Company reviews depreciable lives of investment properties periodically and makes adjustments to reflect a shorter economic life, when necessary. Capitalized leasing commissions and tenant improvements incurred and paid by the Company subsequent to the acquisition of the investment property are amortized utilizing the straight-line method over the term of the related lease. Amounts allocated to buildings are depreciated over the estimated remaining life of the acquired building or related improvements.

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, increases capacity or improves the efficiency of the asset. All other repair and maintenance costs are expensed as incurred.

The Company reviews 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 to 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.

Other than the tenant-specific losses on impairment and the impairment of assets held for sale described below, 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, 2023 and 2022, that would result in the projected value being below the carrying value of the Company’s properties.  

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 mortgages payable, 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.

During February 2021, the Company committed to a plan for the sale of an asset group associated with the Clemson Best Western Hotel Property that included the land, site improvements, building, building improvements and furniture, fixtures and equipment.  As of March 31, 2021, the Company recorded this asset group, and the associated mortgage payable, as held for sale.  As of March 31, 2021, the date the Company originally recorded this asset group as held for sale, the Company determined that the fair value of the Clemson Best Western Property exceeded the carrying value of its asset group, and the Company did not record impairment of assets held for sale associated with this asset group.

During subsequent periods since the asset group associated with the Clemson Best Western Property was initially classified as held for sale, the Company continued to follow its disposal plan.  Under ASC 360, during subsequent reporting periods after the asset group is classified as held for sale, it is necessary to evaluate the amounts previously used for the estimated fair value of the asset group.  Up to and including the reporting periods ending December 31, 2021, the Company reviewed and reassessed the estimated fair value of the asset group and believed that the fair value, less estimated costs to sell, exceeds the Company’s carrying cost in the property.  

Accordingly, the Company did not record impairment of assets held for sale related to the Clemson Best Western Property for the year ended December 31, 2021.

As of March 31, 2022, the Company determined that the carrying value of the asset group associated with the Clemson Best Western Hotel Property exceeded its fair value, less estimated costs to sell, and recorded impairment of assets held for sale of $175,671 on its condensed consolidated statement of operations for the three months ended March 31, 2022.  No such impairment of assets held for sale was recorded during the three months ended March 31, 2023.

On September 29, 2022, the Company closed on the sale of the Clemson Best Western Hotel Property to an unaffiliated purchaser.  See Note 3 for additional details.

Intangible Assets and Liabilities, net

The Company determines, through the ASC 805 evaluation, the above and below market lease intangibles upon acquiring a property. Intangible 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.

The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of its intangible assets may not be recoverable, but at least annually. During the three months ended March 31, 2023, a tenant defaulted on its lease and abandoned its premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with this lease of $35,551 that were recorded as part of the purchase of this property should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2023.  During the three months ended March 31, 2022, two tenants defaulted on their leases and abandoned their premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with these leases of $36,670 that were recorded as part of the purchase of these properties should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022.  

Details of the deferred costs, net of amortization, arising from the Company’s purchases of its retail center properties and flex center properties are as follows:

		March 31, 2023
	(unaudited)		December 31, 2022
Intangible Assets, net
Leasing commissions	$	1,074,551	$	1,135,421
Legal and marketing costs		150,957		169,437
Above market leases		175,839		209,860
Net leasehold asset		2,048,253		2,233,988
	$	3,449,600	$	3,748,706
Intangible Liabilities, net
Below market leases	$	(2,133,752)	$	(2,234,113)

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 the three months ended March 31, 2023 and 2022, respectively, were as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Amortization of above market leases	$	(27,343)	$	(69,583)
Amortization of below market leases		100,361		95,617
	$	73,018	$	26,034

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, 2023 and 2022, respectively, were as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Leasing commissions	$	(56,618)	$	(63,032)
Legal and marketing costs		(16,205)		(14,559)
Net leasehold asset		(172,044)		(306,046)
	$	(244,867)	$	(383,637)

As of March 31, 2023 and December 31, 2022, the Company’s accumulated amortization of lease origination costs, leases in place and legal and marketing costs totaled $2,148,257 and $2,198,049, respectively. During the three months ended March 31, 2023 and 2022, the Company wrote off $273,252 and $486,785, respectively, in accumulated amortization related to fully amortized intangible assets and $21,407 and $5,108, respectively, in accumulated amortization related to the write off of intangible assets related to the tenant defaults, discussed above.

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,
	2023		2024		2025		2026		2027		2028-2042		Total
Intangible Assets
Leasing commissions	$	160,102	$	171,601	$	145,550	$	107,312	$	88,394	$	401,592	$	1,074,551
Legal and marketing costs		43,963		38,900		24,004		13,160		7,917		23,013		150,957
Above market leases		66,689		42,858		21,526		15,629		14,543		14,594		175,839
Net leasehold asset		443,833		394,874		295,851		199,466		153,142		561,087		2,048,253
	$	714,587	$	648,233	$	486,931	$	335,567	$	263,996	$	1,000,286	$	3,449,600
Intangible Liabilities
Below market leases, net	$	(268,441)	$	(285,892)	$	(213,348)	$	(178,776)	$	(161,866)	$	(1,025,429)	$	(2,133,752)

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 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, 2023 and 2022, 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 bank operating accounts and money markets. 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 cash equivalents and any restricted cash held by the Company on deposit with financial institutions in the United States which are insured by the Federal Deposit Insurance Company ("FDIC") up to $250,000. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions credit worthiness in conjunction with balances on deposit to minimize risk. As of March 31, 2023, the Company held one cash account at a financial institution with a balance that exceeded the FDIC limit by $1,404,374. As of December 31, 2022, the Company held two cash accounts at a single financial institution with combined balances that exceeded the FDIC limit by $2,613,789.

Restricted cash represents (i) amounts held by the Company for tenant security deposits, (ii) escrow deposits held by lenders for real estate tax, insurance, and operating reserves, (iii) an escrow for the first year of dividends on the Company’s mandatorily redeemable preferred stock, and (iv) 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, 2023 and December 31, 2022, the Company reported $283,646 and $267,854, respectively, in security deposits held as restricted cash.

Escrow deposits are restricted cash balances held by lenders for real estate taxes, insurance and other operating reserves. As of March 31, 2023 and December 31, 2022, the Company reported $736,865 and $579,785, respectively, in escrow deposits.

Capital reserves are restricted cash balances held by lenders for capital improvements, leasing commissions furniture, fixtures and equipment, and tenant improvements. As of March 31, 2023 and December 31, 2022, the Company reported $916,754 and $893,078, respectively, in capital property reserves.

	March 31, 2023		December 31,
Property and Purpose of Reserve	(unaudited)		2022
Franklin Square Property - leasing costs	$	858,509	$	845,765
Brookfield Center Property - maintenance and leasing cost reserve		58,245		47,313
Total	$	916,754	$	893,078

Share Retirement

ASC 505-30-30-8 provides guidance on accounting for share retirement and establishes two alternative methods for accounting for the repurchase price paid in excess of par value.  The Company has elected the method by which the excess between par value and the repurchase price, including costs and fees, is recorded to additional paid in capital on the Company’s condensed consolidated balance sheets.  During the three months ended March 31, 2022, the Company repurchased 268,070 shares of its common stock at a total cost of $278,277 at an average price of $1.038 per common share.  The Company incurred fees of $8,266 associated with these transactions.  Of the total repurchase price, $2,681 was recorded to common stock and the difference, $283,862, was recorded to additional paid in capital on the Company’s condensed consolidated balance sheet.  No such amounts were recorded during the three months ended March 31, 2023.

Revenue Recognition

Retail and Flex Center Property Revenues

The Company recognizes minimum rents from its retail center properties and flex center 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, 2023 and December 31, 2022, the Company reported $1,069,860 and $1,022,153, respectively, in unbilled rent. During the three months ended March 31, 2023, the Company recorded a loss on impairment of $1,192 related to previously recognized straight-line rent related to a defaulting tenant’s lease.  No such loss on impairment related to straight-line rent was recorded during the three months ended March 31, 2022.  

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 "Retail center property revenues” and “Flex center property revenues.” (See Recent Accounting Pronouncements, below.) This significantly reduces the Company’s exposure to increases in costs and operating expenses resulting from inflation or other outside 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 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 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, no such revenues were recognized during the three months ended March 31, 2023 and 2022.

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, the Company provides for losses related to unrecovered intangibles and other assets. During the three months ended March 31, 2023 and 2022, respectively, no such termination costs were recognized.

Hotel Property Revenues

Hotel revenues from the Clemson Best Western Property were recognized as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel’s services.  Revenues from the Company’s occupancy agreement with Clemson University were recognized as earned, which is as rooms are occupied or otherwise reserved for use by the University.  The Clemson University occupancy agreement ended on May 15, 2022 and the Company sold the Clemson Best Western Property on September 29, 2022.  

The Clemson Best Western Property was required to collect certain taxes and fees from customers on behalf of government agencies and remit them back to the applicable governmental agencies on a periodic basis.  The Clemson Best Western Property had a legal obligation to act as a collection agent.  The Clemson Best Western Property did not retain these taxes and fees; therefore, they were not included in revenues.  The Clemson Best Western Property recorded a liability when the amounts were collected and relieved the liability when payments were made to the applicable taxing authority or other appropriate governmental agency.

Hotel Property Operating Expenses

All personnel of the Clemson Best Western Property were directly or indirectly employees of Marshall Hotels and Resorts, Inc. (“Marshall”), the Company’s hotel management firm. In addition to fees and services discussed above, the Clemson Best Western Property reimbursed Marshall for all employee related service costs, including payroll salaries and wages, payroll taxes and other employee benefits paid by Marshall on its behalf.  The total amounts incurred for payroll salaries and wages, payroll taxes and other employee benefits for the three months ended March 31, 2023 and 2022 were $0 and $131,939, respectively.

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, 2023 and December 31, 2022, the Company’s allowance for uncollectible rent totaled $62,960 and $47,109, respectively, which are comprised of amounts specifically identified based on management’s review of individual tenants’ outstanding receivables.  Management determined that no additional general reserve is considered necessary as of March 31, 2023 and December 31, 2022, respectively.

Income Taxes

Beginning with the Company’s taxable year ended December 31, 2017, the REIT has elected to be taxed as a real estate investment trust 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 this REIT status, the regulations require the Company to distribute at least 90% of its taxable income to shareholders and meet certain other asset and income tests, as well as other requirements. If the Company fails to qualify as a REIT, it will be subject to tax at regular corporate rates for the years in which it fails to qualify. If the Company loses its REIT status it could not elect to be taxed as a REIT for five years unless the Company’s failure to qualify was due to reasonable cause and certain other conditions were satisfied.

During the three months ended March 31, 2022, the Company's Clemson Best Western TRS entity generated taxable income.  The Company believed that the net operating loss carry forward from prior years would offset the taxable income for the three months ended March 31, 2022, so no income tax expense was recorded.  During the three months ended March 31, 2023, the Company no longer owned the Clemson Best Western Hotel Property.

Management has evaluated the effect of the guidance provided by GAAP on Accounting for Uncertainty of Income Taxes and has determined that the Company had no uncertain income tax positions.

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.

Noncontrolling Interests

The ownership interests not held by the REIT 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 shareholders’ equity, noncontrolling interests and total equity.

The first noncontrolling interest is in the Hanover Square Property in which the Company owns an 84% tenancy in common interest through its subsidiary and an outside party owns a 16% tenancy in common interest. The Hanover Square Property’s net loss is allocated to the noncontrolling ownership interest based on its 16% ownership. During the three months ended March 31, 2023, 16% of the Hanover Square Property’s net loss of $7,755, or $1,241, was allocated to the noncontrolling ownership interest. During the three months ended March 31, 2022, 16% of the Hanover Square Property’s net loss of $1,992, or $319, was allocated to the noncontrolling ownership interest.

The second noncontrolling interest is in the Parkway Property in which the Company owns an 82% tenancy in common interest through its subsidiary and an outside party owns an 18% tenancy in common interest. The Parkway Property's net (loss) income is

allocated to the noncontrolling ownership interest based on its 18% ownership. During the three months ended March 31, 2023, 18% of the Parkway Property's net loss of $46,482, or $8,367, was allocated to the noncontrolling ownership interest.  During the three months ended March 31, 2022, 18% of the Parkway Property’s net income of $56,624, or $10,193, was allocated to the noncontrolling ownership interest.

The third noncontrolling ownership interest are the units in the Operating Partnership that are not held by the REIT. In 2017, 125,000 Operating Partnership units were issued to members of the selling limited liability company which owned the Hampton Inn Property who elected to participate in a 721 exchange, which allows the exchange of interests in real property for shares in a real estate investment trust. These members of the selling limited liability company invested $1,175,000 in the Operating Partnership in exchange for 125,000 Operating Partnership units. Additionally, as discussed above, effective on January 1, 2020, 93,850 Operating Partnership units were issued in exchange for approximately 3.45% of the noncontrolling owner’s tenant in common interest in the Hampton Inn Property. On August 31, 2020, a unitholder converted 5,319 Operating Partnership units into shares of Common Stock. As of March 31, 2023 and December 31, 2022, there were 213,531 Operating Partnership units outstanding.

The Operating Partnership units not held by the REIT represent 1.19% of the outstanding Operating Partnership units as of March 31, 2023 and December 31, 2022.  The noncontrolling interest percentage is calculated at any point in time by dividing the number of units not owned by the Company by the total number of units outstanding. The noncontrolling interest ownership percentage will change as additional common or preferred shares are issued by the REIT, or additional Operating Partnerships units are issued or as units are exchanged for the Company’s $0.01 par value per share Common Stock. During periods when the Operating Partnership’s noncontrolling interest changes, the noncontrolling ownership interest is calculated based on the weighted average Operating Partnership noncontrolling ownership interest during that period. The Operating Partnership’s net loss is allocated to the noncontrolling unit holders based on their ownership interest.

During the three months ended March 31, 2023, a weighted average of 1.19% of the Operating Partnership’s net loss of $243,989, or $2,903, was allocated to the noncontrolling unit holders.  During the three months ended March 31, 2022, a weighted average of 1.28% of the Operating Partnership’s net loss of $75,882, or $973, was allocated to the noncontrolling unit holders.

Recent Accounting Pronouncements

Since its initial public offering, the Company has elected to be classified as an emerging growth company in its periodic reporting to the U.S. Securities and Exchange Commission (the “SEC”), and accordingly has followed the private company implementation dates for new accounting pronouncements.  Effective for the three months ending March 31, 2023, the Company will no longer be classified as an emerging growth company, but will retain its classification as a smaller reporting company and therefore follow implementation dates applicable to smaller reporting companies with respect to new accounting pronouncements.   In addition, the Company has elected to follow scaled disclosure requirements applicable to smaller reporting companies.  

Recently Adopted Accounting Pronouncements

Accounting for Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842).  The amendments in this update govern a number of areas including, but not limited to, accounting for leases, replacing the existing guidance in ASC No. 840, Leases.  Under this standard, among other changes in practice, a lessee’s rights and obligations under most leases, including existing and new arrangements, must be recognized as assets and liabilities, respectively, on the balance sheets.  Other significant provisions of this standard include (i) defining the “lease term” to include the non-cancelable period together with periods for which there is a significant economic incentive for the lessee to extend or not terminate the lease; (ii) defining the initial lease liability to be recorded on the balance sheets to contemplate only those variable lease payments that depend on an index or that are in substance “fixed,” (iii) a dual approach for determining whether lease expense is recognized on a straight-line or accelerated basis, depending on whether the lessee is expected to consume more than an insignificant portion of the leased asset’s economic benefits and (iv) a requirement to bifurcate certain lease and non-lease components.  The lease standard was effective for public companies for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years) and for private companies, fiscal years beginning after December 15, 2019, with early adoption permitted. The FASB subsequently deferred the effective date of ASU 2016-02 for private companies by one year, to fiscal years beginning after December 15, 2020, to provide those companies with additional time to address various implementation challenges and complexities. In June 2020, the FASB further deferred the effective date due to the effects on private companies from business and capital market disruptions caused by the novel coronavirus (“COVID-19”) pandemic.  Following those deferrals, ASU 2016-02 became effective for private companies for fiscal years beginning after December 15, 2021, and for

interim periods within fiscal years beginning after December 15, 2022. The Company adopted the standard effective on January 1, 2022 using the modified retrospective approach within ASU 2018-11, which allows for the application date to be the beginning of the reporting period in which the entity first applies the new standard. The Company historically has not been and is not currently a “lessee” under any lease agreements, and thus did not have any arrangements requiring the recognition of lease assets or liabilities on its balance sheet.

As a “lessor”, the Company has active lease agreements with over 100 tenants across its portfolio of investment properties. On a prospective and retrospective basis, the accounting for those leases under ASU 2016-02 (ASC No. 842) is substantially unchanged from the previous guidance in ASC No. 840. However, upon the adoption of ASC No. 842, the Company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Prior to the adoption of ASC No. 842, the Company separated lease-related revenue from its retail center and flex center properties into two components. Fixed rental payments under its leases (recognized on a straight-line basis over the term of the underlying lease) were recorded as retail center property revenues and flex center property revenues. Variable payments under the leases made by tenants for real estate taxes, insurance and common area maintenance (“CAM”) expenses were recorded as retail center and flex center tenant reimbursements. With the adoption of ASC No. 842, the Company determined that its retail center and flex center operating leases qualify for the non-separation practical expedient based on the guidance. As a result, the Company has accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on its condensed consolidated statements of operations.

Debt With Conversion Options

In August 2020, the FASB issued ASU 2020-06, Debt - Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The objective of ASU 2020-06 is to reduce the current complexity involved in accounting for convertible financial instruments by reducing the number of accounting models applicable to those instruments in the existing guidance. Following the adoption of ASU 2020-06, companies are expected to encounter fewer instances in which a convertible financial instrument must be separated into a debt or equity component and a derivative component for accounting purposes due to the embedded conversion feature. As a result of these revisions, debt instruments issued with a beneficial conversion feature will no longer require separation and thus will be accounted for as a single debt instrument under the updated guidance. In addition to those changes, ASU 2020-06 adds several incremental financial statement disclosures with respect to a company’s convertible financial instruments and makes certain refinements with respect to calculating the effect of those instruments on a company’s diluted earnings per share. ASU 2020-06 is effective for public companies for fiscal years beginning after December 15, 2021 (including interim periods within those fiscal years), and for private companies, fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted, but no earlier than fiscal years beginning after December 15, 2020. The updated guidance in ASU 2020-06 was adopted effective January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better calculate credit loss estimates. The guidance applies to most financial assets measured at amortized cost and certain other instruments, such as accounts receivable and loans; however, it does not apply to receivables arising from operating leases accounted for in accordance with ASC Topic 842. ASU 2016-13 requires that the Company estimate the lifetime expected credit loss with respect to applicable receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. The Company is also required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company’s estimate of expected credit losses and the reasons for those changes.  The Company’s credit losses primarily arise from tenant defaults on amounts due under operating leases.  As noted, these losses are not subject to the guidance in ASU 2016-13, and historically have not been significant.  The Company adopted the update on the required effective date of January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

Upcoming Accounting Pronouncements

Effects of Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The London Interbank Offered Rate (LIBOR), which is widely used as a reference interest rate in debt agreements and other contracts, was effectively discontinued for new contracts as of December 31, 2021, and its publication for existing contracts is scheduled to be discontinued by June 30, 2023. Financial market regulators in certain jurisdictions throughout the world undertook reference rate reform initiatives to guide the transition and modification of debt agreements and other contracts that are based on LIBOR to the successor reference rate that will replace it. ASU 2020-04 was issued to provide companies that are impacted by these changes with the opportunity to elect certain expedients and exceptions that are intended to ease the potential burden of accounting for or recognizing the effects of reference rate reform on financial reporting.  Under ASU 2020-04, companies may generally elect to make use of the expedients and exceptions provided therein for any reference rate contract modifications that occur in reporting periods that encompass the timeline from March 12, 2020 to December 31, 2022. The FASB subsequently issued ASU 2022-06, Reference Rate Reform (Topic 848):  Deferral of the Sunset of Topic 848, to extend that timeline from December 31, 2022 to December 31, 2024.  The Company’s Parkway Property is financed by a mortgage loan with a corresponding interest rate protection agreement which both use USD LIBOR as the reference interest rate (see Note 5, below).  The mortgage loan matures on November 1, 2031, and the interest rate protection agreement expires on December 1, 2026.  The Company is continuing to review the guidance in ASU 2020-04 and anticipates that it will use the expedients and exceptions provided therein with respect to the replacement of USD LIBOR as the reference rate in the Parkway Property mortgage loan and corresponding interest rate protection agreement.  However, the Company does not expect that any changes under ASU 2020-04 will have a material 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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Investment Properties

3 Months Ended

Mar. 31, 2023

Investment Properties

Investment Properties

3.      Investment Properties

Investment properties consist of the following:

		March 31, 2023		December 31,
		(unaudited)		2022
Land	$	16,526,436	$	16,526,436
Site improvements		4,731,249		4,719,926
Buildings and improvements (1)		65,209,769		64,669,498
Investment properties at cost (2)		86,467,454		85,915,860
Less accumulated depreciation		10,224,948		9,400,908
Investment properties, net	$	76,242,506	$	76,514,952

(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 assets and liabilities (see Note 2, above, for a discussion of the Company's accounting treatment of intangible assets), escrow deposits and property reserves.

The Company’s depreciation expense on investment properties was $911,481 and $771,560 for the three months ended March 31, 2023 and 2022, respectively.

Capitalized tenant improvements

The Company carries two categories of capitalized tenant improvements on its condensed consolidated balance sheets, both of 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 sheet as of the date of the Company’s acquisition of the investment property. The second category are tenant improvement costs incurred and paid by the Company subsequent to the acquisition of the investment property. Both are recorded as a component of investment properties on the Company’s condensed consolidated balance sheets. Depreciation expense on both categories of tenant improvements is recorded as a component of depreciation expense on the Company’s condensed consolidated statement of operations.

The Company generally records depreciation of capitalized tenant improvements 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,
	2023		December 31,
	(unaudited)		2022
Capitalized tenant improvements – acquisition cost allocation, net	$	2,996,990	$	3,178,534
Capitalized tenant improvements incurred subsequent to acquisition, net		683,836		338,836

Depreciation of capitalized tenant improvements arising from the acquisition cost allocation was $172,888 and $127,276 for the three months ended March 31, 2023 and 2022, respectively.  Additionally, the Company wrote off capitalized tenant improvements of $8,656 associated with the tenant that abandoned its premises during the three months ended March 31, 2023.  No such write offs were recorded during the three months ended March 31, 2022.

During the three months ended March 31, 2023 and 2022, the Company recorded $377,265 and $56,281, respectively, in capitalized tenant improvements.  Depreciation of capitalized tenant improvements incurred subsequent to acquisition was $32,265 and $21,648 for the three months ended March 31, 2023 and 2022, respectively.  

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 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, 2023		December 31,
	(unaudited)		2022
Capitalized leasing commissions, net	$	614,663	$	555,956

During the three months ended March 31, 2023 and 2022, the Company recorded $90,637 and $78,921, respectively, in capitalized leasing commissions. Depreciation on capitalized leasing commissions was $31,930 and $19,791 for the three months ended March 31, 2023 and 2022, respectively.

Sale of investment properties

The Company reports properties that have been either previously disposed or that 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 Clemson Best Western Hotel Property does not constitute a change in the Company's investment strategy, which continues to include limited-service hotels as a targeted asset class.

Operating results of the Clemson Best Western Hotel Property, which was sold on September 29, 2022 and which are included in continuing operations, are as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Hotel property room revenues	$	—	$	762,200
Hotel property other revenues		—		3,289
Total Revenue		—		765,489
Hotel property operating expenses		—		372,860
Impairment of assets held for sale		—		175,671
Total Operating Expenses		—		548,531
Operating Income		—		216,958
Interest expense		—		138,917
Net Income from Operations		—		78,041
Other income		—		263
Net Income		—		78,304
Net income attributable to Operating Partnership noncontrolling interests		—		1,002
Net Income Attributable to Medalist Common Shareholders	$	—	$	77,302

2022 Property Acquisitions

On June 13, 2022, the Company completed its acquisition of the Salisbury Marketplace Property, a 79,732 square foot retail property located in Salisbury, North Carolina, through a wholly owned subsidiary.  The Salisbury Marketplace Property, built in 1986, was 91.2% leased as of March 31, 2023, and is anchored by Food Lion, Citi Trends and Family Dollar.  The purchase price for the Salisbury Marketplace Property was $10,025,000 paid through a combination of cash provided by the Company and the incurrence of

new mortgage debt.  The Company’s total investment was $10,279,714.  The Company incurred $254,714 of acquisition and closing costs which were capitalized and added to the tangible assets acquired.  

		Salisbury
		Marketplace
		Property
Fair value of assets acquired:
Investment property (a)	$	9,963,258
Lease intangibles and other assets (b)		1,045,189
Above market leases (b)		40,392
Below market leases (b)		(769,125)
Fair value of net assets acquired (c)	$	10,279,714
Purchase consideration:
Consideration paid with cash (d)	$	3,746,561
Consideration paid with new mortgage debt, net (e)		6,533,153
Total consideration (f)	$	10,279,714

a. Represents the fair value of the investment property acquired which includes land, buildings, site improvements, tenant improvements and furniture, fixtures and equipment. The fair value was determined using the market approach, the cost approach, the income approach or a combination thereof. Closing and acquisition costs were allocated and added to the fair value of the tangible assets acquired.

b. Represents the fair value of lease intangibles and other assets. Lease intangibles include leasing commissions, leases in place, above market leases, 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 at closing and cash paid for acquisition (including intangible assets), and closing costs paid at closing or directly by the Company outside of closing.

e. Represents allocation of the Wells Fargo Mortgage Facility proceeds used to fund the purchase of the Salisbury Marketplace Property, net of $18,847 in capitalized loan issuance costs. See Note 5, below.

f. Represents the consideration paid for the fair value of the assets and liabilities acquired.

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Mandatorily Redeemable Preferred Stock

3 Months Ended

Mar. 31, 2023

Mandatorily Redeemable Preferred Stock

Mandatorily Redeemable Preferred Stock

4.       Mandatorily Redeemable Preferred Stock

On February 19, 2020, the Company issued and sold 200,000 shares of 8.0% Series A cumulative redeemable preferred stock at $23.00 per share, resulting in gross proceeds of $4,600,000.  Net proceeds from the issuance were $3,860,882, which includes the impact of the underwriter’s discounts, selling commissions and legal, accounting and other professional fees, and is presented on the Company’s condensed consolidated balance sheets as mandatorily redeemable preferred stock.

The mandatorily redeemable preferred stock has an aggregate liquidation preference of $5 million, plus any accrued and unpaid dividends thereon. The mandatorily redeemable preferred stock is senior to the Company’s common stock and any class or series of capital stock expressly designated as ranking junior to the mandatorily redeemable preferred stock as to distribution rights and rights upon liquidation, dissolution or winding up (“Junior Stock”).  The mandatorily redeemable preferred stock is on a parity with any class or series of the Company’s capital stock expressly designated as ranking on a parity with the mandatorily redeemable preferred stock as to distribution rights and rights upon liquidation, dissolution or winding up (“Parity Stock”).

If outstanding on February 19, 2025, the mandatorily redeemable preferred stock must be redeemed by the Company on that date, the fifth anniversary of the date of issuance.  Beginning on February 19, 2022, the second anniversary of the issuance, the Company may redeem the outstanding mandatorily redeemable preferred stock for an amount equal to its aggregate liquidation preference, plus any accrued but unpaid dividends.  The holders of the mandatorily redeemable preferred stock may also require the Company to redeem

the stock upon a change of control of the Company for an amount equal to its aggregate liquidation preference plus any accrued and unpaid dividends thereon.

Holders of the mandatorily redeemable preferred stock generally have no voting rights. However, if the Company does not pay dividends on the mandatorily redeemable preferred stock for six consecutive quarterly periods, the holders of that stock, voting together as a single class with the holders of any outstanding Parity Stock having similar voting rights, will be entitled to vote for the election of two additional directors to serve on the Company’s Board of Directors (the “Board”) until the Company pays all dividends owed on the mandatorily redeemable preferred stock. The affirmative vote of the holders of at least two-thirds of the outstanding shares of mandatorily redeemable preferred stock, voting together as a single class with the holders of any other class or series of the Company’s preferred stock upon which like voting rights have been conferred and are exercisable, is required for the Company to authorize, create or increase the number of shares of any class or series of capital stock expressly designated as ranking senior to the mandatorily redeemable preferred stock as to distribution rights and rights upon the Company’s liquidation, dissolution or winding up.  In addition, the affirmative vote of at least two-thirds of the outstanding shares of mandatorily redeemable preferred stock (voting as a separate class) is required to amend the Company’s charter (including the articles supplementary designating the mandatorily redeemable preferred stock) in a manner that materially and adversely affects the rights of the holders of mandatorily redeemable preferred stock. Among other things, the Company may, without any vote of the holders of mandatorily redeemable preferred stock, issue additional shares of mandatorily redeemable preferred stock and may authorize and issue additional shares of any class or series of any Junior Stock or Parity Stock.

The Company has 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 the mandatorily redeemable preferred stock has been outstanding, the Company has paid a cash dividend on the stock equal to 8% per annum, paid quarterly, as follows:

		Amount
Payment Date	Record Date	per share		For the period
April 27, 2020	April 24, 2020	$	0.37	February 19, 2020 - April 27, 2020
July 24, 2020	July 22, 2020		0.50	April 28, 2020 - July 24, 2020
October 26, 2020	October 23, 2020		0.50	July 25, 2020 - October 26, 2020
February 1, 2021	January 29, 2021		0.50	October 27, 2020 - February 1, 2021
April 30, 2021	April 26, 2021		0.50	February 2, 2021 – April 30, 2021
July 26, 2021	July 12, 2021		0.50	May 1, 2021 - July 26, 2021
October 27, 2021	October 25, 2021		0.50	July 27, 2021 – October 26, 2021
January 20, 2022	January 13, 2022		0.50	October 27, 2021 – January 19, 2022
April 21, 2022	April 18, 2022		0.50	January 20, 2022 - April 20, 2022
July 21, 2022	July 18, 2022		0.50	April 21, 2022 - July 20, 2022
October 20, 2022	October 17, 2022		0.50	July 21, 2022 - October 19, 2022
January 27, 2023	January 24, 2023		0.50	October 20, 2022 - January 19, 2023
April 28, 2023	April 25, 2023		0.50	January 20, 2023 - April 20, 2023

As of March 31, 2023 and December 31, 2022, the Company recorded $70,004 and $70,004, respectively, in accrued but unpaid dividends on the mandatorily redeemable preferred stock. This amount is reported in accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets.

The mandatorily redeemable preferred stock was issued at $23.00 per share, a $2.00 per share discount. The total discount of $400,000 is being amortized over the five-year life of the shares using the effective interest method. Additionally, the Company incurred $739,118 in legal, accounting, other professional fees and underwriting discounts related to this offering. These costs were recorded as deferred financing costs on the accompanying condensed consolidated balance sheets as a direct deduction from the carrying amount of the mandatorily redeemable preferred stock liability and are being amortized using the effective interest method over the term of the agreement.

Amortization of the discount and deferred financing costs related to the mandatorily redeemable preferred stock totaling $58,804 and $53,923 were included in interest expense for the three months ended March 31, 2023 and 2022, respectively, in the accompanying condensed consolidated statements of operations. Accumulated amortization of the discount and deferred financing costs was $648,443 and $589,639 as of March 31, 2023 and December 31, 2022, respectively.

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Loans Payable

3 Months Ended

Mar. 31, 2023

Loans Payable

Loans Payable

5.      Loans Payable

Mortgages Payable

The Company’s mortgages payables, net consists of the following:

							March 31,
	Monthly		Interest				2023		December 31,
Property	Payment		Rate		Maturity	(unaudited)		2022
Franklin Square (a)		Interest only	3.808	%	December 2031	$	13,250,000	$	13,250,000
Hanover Square (b)	$	78,098	6.94	%	December 2027		9,813,679		9,877,867
Ashley Plaza (c)	$	52,795	3.75	%	September 2029		10,856,618		10,930,370
Brookfield Center (d)	$	22,876	3.90	%	November 2029		4,639,969		4,663,206
Parkway Center (e)	$	28,161	Variable		October 2026		4,956,301		4,992,427
Wells Fargo Facility (f)	$	103,438	4.50	%	June 2027		18,247,707		18,351,981
Unamortized issuance costs, net							(698,602)		(725,592)
Total mortgages payable, net						$	61,065,672	$	61,340,259

(a) The original mortgage loan for the Franklin Square Property in the amount of $14,275,000 matured on October 6, 2021. Effective on October 6, 2021, the Company entered into a forbearance agreement with the current lender extending the maturity date for thirty days with a right to extend the maturity date for an additional thirty days. On November 8, 2021, the Company closed on a new loan in the principal amount of $13,250,000 with a ten-year term and a maturity date of December 6, 2031.  In addition to the funds from the new loan, the Company used $2,242,273 in cash on hand for loan issuance costs (totaling $283,721), to fund escrows and to repay the remaining balance of the original mortgage loan. The Company has guaranteed the payment and performance of the obligations of the new mortgage loan. The new mortgage loan bears interest at a fixed rate of 3.808% and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a thirty-year amortization schedule. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470. The new mortgage includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(b) The mortgage loan for the Hanover Square Property bore interest at a fixed rate of 4.25% until January 1, 2023, when the interest rate adjusted to a fixed rate of 6.94%, which was determined by adding 3.00% to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25%. As a result of the interest rate change, as of February 1, 2023, the fixed monthly payment of $56,882 increased to $78,098 which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.  The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75%.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(c) 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.

(d) 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.

(e) The mortgage loan for the Parkway Property bears interest at a variable rate based on LIBOR with a minimum rate of 2.25%. The interest rate payable is the ICE LIBOR rate plus 225 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 March 31, 2023 and December 31, 2022 the rate in effect for the Parkway Property mortgage was 4.4806% and 4.3117%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a thirty-year amortization schedule.  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 capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%.  For the period from September 1, 2022 through March 31, 2023, LIBOR exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced the Company’s net interest expense.  Payments to the Company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2023.  No such payments were received during the three months ended March 31, 2022 because the LIBOR rate in effect did not exceed the LIBOR cap. The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.60 to 1.00 on an annual basis.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with this covenant.  

(f) 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 $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 Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule, is $103,438.  The Company 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, a minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and the maintenance of liquid assets of not less than $1,500,000.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.  

The Company refinanced the mortgage loan for the Lancer Center Property using proceeds from the Wells Fargo Facility.  The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $113,282.  The original mortgage loan for the Lancer Center Property bore interest at a fixed rate of 4.00%.  The monthly payment was $34,667 which included interest at the fixed rate and principal, based on a twenty-five-year amortization schedule.

The Company refinanced the mortgage loan for the Greenbrier Business Center Property using proceeds from the Wells Fargo Facility. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the year ended December 31, 2022, recorded a loss on extinguishment of debt of $56,393.  The Company assumed the original mortgage loan for the Greenbrier Business Center Property from the seller. The original mortgage loan bore interest at a fixed rate of 4.00% and would have been interest only until August 1, 2022, at which time the monthly payment would have become $23,873, which would have included interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.

Interest rate protection transaction

On October 28, 2021, the Company entered into the Interest Rate Protection Transaction. Under this agreement, the Company’s interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%. USD 1-Month ICE LIBOR was 4.86% and 4.39% as of March 31, 2023 and December 31, 2022, respectively. In accordance with the guidance on derivatives and hedging, the Company records all derivatives on the condensed balance sheet at fair value under other assets. 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 fair value of the Interest Rate Protection Transaction is valued by an independent, third-party consultant which uses observable inputs such as yield curves, volatilities and other current market data, all of which are considered Level 2 inputs.  As of March 31, 2023 and December 31, 2022, the fair value of the

Interest Rate Protection Transaction was $218,411 and $258,279, respectively and is recorded under other assets on the Company’s condensed balance sheets. The Company reports changes in the fair value of the derivative in other (loss) income on its condensed consolidated statements of operations.

Wells Fargo Line of Credit

On June 13, 2022, the Company, through its wholly owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”).  During the three months ended March 31, 2023, the Company did not make any draws or repayments on the Wells Fargo Line of Credit.  As of March 31, 2023 and December 31, 2022, respectively, the Wells Fargo Line of Credit had an outstanding balance of $0.  Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above the daily secured overnight financing rate (“SOFR”).  As of March 31, 2023 and December 31, 2022, SOFR was 4.87% and 4.30%, respectively.  The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by the Company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property.  On May 2, 2023, the Company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024.  

Interest expense

Interest expense, including amortization of capitalized issuance costs consists of the following:

	For the three months ended March 31, 2023 (unaudited)
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	—	$	133,233
Hanover Square mortgage		170,640		3,223		—		—		173,863
Ashley Plaza mortgage		102,133		4,357		—		—		106,490
Brookfield Center mortgage		45,391		2,838		—		—		48,229
Parkway Center mortgage		47,257		2,757		(19,342)		—		30,672
Wells Fargo Mortgage Facility		206,039		6,722		—		—		212,761
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		58,804		—		100,000		158,804
Total interest expense	$	697,600	$	85,794	$	(19,342)	$	100,000	$	864,052

	For the three months ended March 31, 2022 (unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	133,233
Hanover Square mortgage		104,854		3,223		—		108,077
Ashley Plaza mortgage		104,147		4,358		—		108,505
Clemson Best Western mortgage		138,531		—		386		138,917
Brookfield Center mortgage		46,254		2,838		—		49,092
Lancer Center mortgage		63,746		7,156		—		70,902
Greenbrier Business Center mortgage		44,950		693		—		45,643
Parkway Center mortgage		30,375		2,757		—		33,132
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		53,923		100,000		153,923
Total interest expense	$	658,997	$	82,041	$	100,386	$	841,424

Interest accrued and accumulated amortization of capitalized issuance costs consist of the following:

	As of March 31, 2023 (unaudited)				As of December 31, 2022
			Accumulated				Accumulated
			amortization of				amortization
	Accrued		capitalized		Accrued		of capitalized
	interest		issuance costs		interest		issuance costs
Franklin Square mortgage	$	43,448	$	37,829	$	43,448	$	30,736
Hanover Square mortgage		60,539		63,103		38,792		59,880
Ashley Plaza mortgage		—		62,466		35,296		58,109
Brookfield Center mortgage		—		39,731		—		36,893
Parkway Center mortgage		22,041		15,621		26,502		12,864
Wells Fargo Mortgage Facility		—		20,166		—		13,444
Amortization and accrued preferred stock dividends on mandatorily redeemable preferred stock (1)		70,004		648,443		70,004		589,639
Total	$	196,032	$	887,359	$	214,042	$	801,565

(1) Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Debt Maturity

The Company’s scheduled principal repayments on indebtedness as of March 31, 2023 are as follows:

For the remaining nine months ending December 31, 2023	$	780,584
2024		1,092,879
2025		1,391,025
2026		1,460,923
2027		25,990,390
Thereafter		31,048,473
Total principal payments and debt maturities		61,764,274
Less unamortized issuance costs		(698,602)
Net principal payments and debt maturities	$	61,065,672

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Rentals under Operating Leases

3 Months Ended

Mar. 31, 2023

Rentals under Operating Leases

Rentals under Operating Leases

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, 2023 are as follows:

For the remaining nine months ending December 31, 2023	$	5,967,624
2024		6,702,872
2025		5,814,765
2026		4,048,868
2027		3,053,369
Thereafter		7,608,664
Total minimum rents	$	33,196,162

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Equity

3 Months Ended

Mar. 31, 2023

Equity

Equity

7.      Equity

The Company has authority to issue 1,000,000,000 shares consisting of 750,000,000 shares of common stock, $0.01 par value per share ("Common Shares"), and 250,000,000 shares of preferred stock, $0.01 par value per share ("Preferred Shares"). Substantially all of the Company’s business is conducted through its Operating Partnership. The REIT is the sole general partner of the Operating Partnership and owned a 98.81% interest in the Operating Partnership as of March 31, 2023 and December 31, 2022. Limited partners in the Operating Partnership who have held their units for one year or longer have the right to redeem their common units for cash or,

at the REIT’s option, Common Shares at a ratio of one common unit for one common share. Under the Agreement of Limited Partnership, distributions to unit holders are made at the discretion of the REIT. The REIT intends to make distributions in a manner that will result in limited partners of the Operating Partnership receiving distributions at the same rate per unit as dividends per share are paid to the REIT’s holders of Common Shares.

Shelf Registration

On June 21, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC. The registration statement is intended to provide the Company additional flexibility to finance future business opportunities through timely and cost-effective access to capital markets. Under the shelf registration statement, the Company may, from time to time, issue common stock up to an aggregate amount of $150 million. The shelf registration statement was declared effective by the SEC on July 27, 2021. The Company has incurred $84,926 in legal costs, filing fees and other costs associated with this registration which are recorded as offering costs as part of stockholders' equity on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Standby Equity Purchase Agreement

On November 17, 2021, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with a financing entity. Under this agreement, the Company will be able to sell up to $6,665,299 of its shares of common stock at the Company’s request any time during the 36 months following the execution of the SEPA. The shares would be purchased at 96.5% of the market price (as defined in the agreement) and would be subject to certain limitations, including that the financing entity could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock.  As of March 31, 2023, the Company has generated net proceeds of $1,538,887 from the issuance of 1,445,400 shares at an average price of $1.065 per common share under the SEPA.  

Issuance Date	Shares Issued	Price Per Share		Total Proceeds
March 3, 2022	90,600	$	1.088	$	98,574
March 14, 2022	276,190		1.050		290,000
March 17, 2022	278,810		1.076		300,000
March 21, 2022	474,068		1.055		500,000
April 1, 2022	325,732		1.075		350,313
Total	1,445,400	$	1.065	$	1,538,887

Common Stock Repurchase Plan

In December 2021, the Board approved a program to purchase up to 500,000 shares of the Company’s common stock in the open market, up to a maximum price of $4.80 per share. The repurchase program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. As of March 31, 2023, the Company had repurchased 268,070 shares of its common stock at a total cost of $278,277 at an average price of $1.038 per common share.  The Company incurred fees of $8,266 associated with these transactions.  All repurchased shares were retired in accordance with Maryland law.  

Purchase (Trade) Date	Shares Purchased	Price Per Share		Total Cost (1)
January 4, 2022	400	$	1.060	$	424
January 5, 2022	48,205		1.060		51,093
January 6, 2022	100,000		1.046		104,556
January 7, 2022	30,000		1.050		31,500
January 10, 2022	50,000		1.020		51,000
January 14, 2022	100		1.010		101
January 21, 2022	39,365		1.006		39,603
Total	268,070	$	1.038	$	278,277

(1) Total cost before transaction fees.

Common shares and operating partnership units outstanding

As of March 31, 2023 and December 31, 2022, there were 17,971,952 common units of the Operating Partnership outstanding with the REIT owning 17,758,421 of these common units. The remaining 213,531 common units are held by noncontrolling, limited partners.  As of March 31, 2023 and December 31, 2022, there were 17,758,421 Common Shares of the REIT outstanding. As of March 31, 2023 and December 31, 2022, there were 213,531 common units of the Operating Partnership held by noncontrolling, limited partners that were eligible for conversion to the Company’s Common Shares.

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 shareholders 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) 240,000 Common Shares and (ii) eight percent (8)% of the number of fully diluted shares of the Company’s Common Shares (taking into account interests in the Operating Partnership that may become convertible into Common Shares).

On March 2, 2022, the Compensation Committee of the Board (the “Compensation Committee”) approved a grant of 60,000 Common Shares to two employees of the Manager who also serve as directors of the Company, a grant of 90,000 Common Shares to the Company’s three independent directors, and a grant of 60,000 Common Shares to the chief financial officer of the Company, under the Equity Incentive Plan. The effective date of the grants was March 2, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $233,100, was recorded to share based compensation expense on the Company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of the Company’s Common Shares on the effective date of the grant.

On November 22, 2022, the Compensation Committee approved a grant of 76,434 Common Shares to two employees of the Manager who also serve as directors of the Company, a grant of 114,651 Common Shares to the Company’s three independent directors, a grant of 76,433 Common Shares to the chief financial officer of the Company, and a grant of 50,956 Common Shares to two consultants of the Company, under the Equity Incentive Plan. The effective date of the grants was November 22, 2022. The Common Shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares vested immediately, the fair value of the grants, or $250,000, was recorded to share based compensation expense on the Company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of the Company’s Common Shares on the effective date of the grant.

On each January 1 during the term of the Equity Incentive Plan, the maximum number of shares of common stock that may be issued under the Equity Incentive Plan will increase by eight percent (8%) of any additional shares of common stock or interests in the Operating Partnership issued (i) after the completion date the Company’s initial registered public offering of common stock, in the case of the January 1, 2019 adjustment, or (ii) in the preceding calendar year, in the case of any adjustment subsequent to January 1, 2020. As of January 1, 2023, the shares available for issuance under the Equity Incentive Plan was adjusted to 491,304 shares.

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 shareholders, excluding the net loss attributable to noncontrolling interests, by the weighted average number of Common Shares, including any dilutive shares. As of March 31, 2023 and 2022, 213,531 of the Operating Partnership’s 213,531 common units held by noncontrolling, limited partners were eligible to be converted, on a one-to-one basis, into Common Shares. The Operating Partnership’s common units and the equivalent common shares attributable to the convertible debentures have been excluded from the Company’s diluted earnings per share calculation because their inclusion would be antidilutive.

The Company's loss per common share is determined as follows:

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Basic and diluted shares outstanding
Weighted average Common Shares – basic		17,758,421		16,037,073
Effect of conversion of operating partnership units		213,531		213,531
Weighted average Common Shares – diluted		17,971,952		16,250,604
Calculation of earnings per share – basic and diluted
Net loss attributable to common shareholders	$	(1,221,295)	$	(989,284)
Weighted average Common Shares – basic and diluted		17,758,421		16,037,073
Loss per share – basic and diluted	$	(0.07)	$	(0.06)

Dividends and Distributions

During the three months ended March 31, 2023, dividends in the amount of $0.01 per share were paid on January 27, 2023, to stockholders of record on January 24, 2023.  During the three months ended March 31, 2022, dividends in the amount of $0.02 per share were paid on January 20, 2022, to stockholders of record on January 13, 2022.  Total dividends and distributions to noncontrolling interests paid during the three months ended March 31, 2023 and 2022, respectively, are as follows:

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Common shareholders (dividends)	$	176,810	$	316,450
Hanover Square Property noncontrolling interest (distributions)		—		10,000
Parkway Property noncontrolling interest (distributions)		—		10,800
Operating Partnership unit holders (distributions)		2,135		4,271
Total dividends and distributions	$	178,945	$	341,521

Nasdaq Compliance

On July 11, 2022, the Company received a deficiency letter (the “Deficiency Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC notifying the Company that, for the last thirty (30) consecutive business days, the closing bid price for the Company’s common stock had been below the minimum $1.00 per share required for continued listing on the Nasdaq Capital Market (“Nasdaq”) pursuant to Nasdaq Listing Rule 5550 (a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was given one hundred and eighty (180) calendar days, or until January 9, 2023, to regain compliance with the Minimum Bid Price Requirement.

On January 10, 2023, the Company received a letter (the “Second Notification”) from the Nasdaq Stock Market LLC notifying the Company that, while the Company had not regained compliance with the Minimum Bid Price Requirement, the Staff determined that the Company is eligible for an additional 180 calendar day period, or until July 10, 2023 (the “Second Compliance Period”), to regain compliance. The Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on Nasdaq, with the exception of the Minimum Bid Price Requirement, and (ii) the Company’s written notice to the Nasdaq Stock Market LLC of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

If at any time during the Second Compliance Period, the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance. If compliance with the Minimum Bid Price Requirement cannot be demonstrated by July 10, 2023, the Staff will provide written notification that the Company’s common stock will be delisted. At that time, the Company may appeal the Staff’s determination to a Hearings Panel.  

Neither the Deficiency Letter or the Second Notification had any effect on the listing of the Company’s common stock, and its common stock continues to trade on Nasdaq under the symbol “MDRR”.  

Reverse Stock Split

See Note 11, Subsequent Events, for a discussion of the reverse stock split that was completed on May 3, 2023.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

8.      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 South Carolina, North Carolina and Virginia, which represented 100% of the total annualized base revenues of the properties in its portfolio as of March 31, 2023. The Company’s geographic concentration may cause it to be more susceptible to adverse developments in those markets than if it owned a more geographically diverse portfolio. Additionally, the Company’s retail shopping center properties depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.

Interest Rate Risk

The value of the Company’s real estate is subject to fluctuations based on changes in interest rates, which may affect the Company’s ability to refinance property-level mortgage debt when balloon payments are scheduled. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. An increase in interest rates would likely cause the value of the Company’s assets to decrease. Increases in interest rates may also have an impact on the credit profile of certain tenants.

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, 2023 and December 31, 2022, 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.

Other Risks and Uncertainties

Since March 2020, the Company’s investment properties have been significantly impacted by (i) measures taken by local, state and federal authorities to mitigate the impact of COVID-19, such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders and (ii) significant changes in consumer behavior and business and leisure travel patterns.  While most, if not all, of the initial measures have been relaxed by the respective governmental authorities, with the uncertainty resulting from the continued mutation of COVID-19 into new variants, and the possibility that changes in consumer behavior and business and

leisure travel patterns will continue, the negative impact on consumer behavior, including demand for the goods and services of our retail tenants within our portfolio could continue to be significant in future periods.

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 is not currently involved in any litigation or legal proceedings.

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions

Related Party Transactions

9.      Related Party Transactions

Medalist Fund Manager, Inc.

The Company is externally managed by the Manager, which makes all investment decisions for the Company. The Manager oversees the Company’s overall business and affairs and has broad discretion to make operating decisions on behalf of the Company and to make investment decisions.

The Company pays the Manager a monthly asset management fee equal to 0.125% of stockholders’ equity, payable in arrears in cash. For purposes of calculating the asset management fee, the Company’s stockholders’ equity means: (a) the sum of (1) the net proceeds from (or equity value assigned to) all issuances of the Company’s equity and equity equivalent securities (including common stock, common stock equivalents, preferred stock and OP Units issued by the Company’s operating partnership) since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) the Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that the Company has paid to repurchase its common stock issued in this or any subsequent offering. Stockholders’ equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in the Company’s condensed consolidated financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Company’s Manager and its independent director(s) and approval by a majority of its independent directors. For the three months ended March 31, 2023 and 2022, the Company incurred $224,380 and $210,148, in asset management fees, respectively.  Asset management fees are recorded on the Company’s condensed consolidated statements of operations as (i) retail center property operating expenses ($84,282 and $70,257 for the three months ended March 31, 2023 and 2022, respectively), (ii) hotel property operating expenses ($0 and $6,825 for the three months ended March 31, 2023 and 2022, respectively), (iii) flex center property operating expenses ($27,675 and $26,075 for the three months ended March 31, 2023 and 2022, respectively) and (iv) legal, accounting and other professional fees ($112,423 and $106,991 for the three months ended March 31, 2023 and 2022, respectively).

The Manager also receives an acquisition fee of 2.0% of the purchase price plus transaction costs, for each property acquired or investment made on the Company’s behalf at the closing of the acquisition of such property or investment, in consideration for the Manager’s assistance in effectuating such acquisition. Acquisition fees are allocated and added to the fair value of the tangible assets acquired and recorded as part of investment properties, net, on the Company’s condensed consolidated balance sheets.  

On March 19, 2021, pursuant to a Letter Agreement, dated March 19, 2021, by and among the Company, the Operating Partnership and the Manager (the “2021 Manager Letter Agreement”), which amended that certain Management Agreement, dated as of March 15, 2016, among the Company, the Operating Partnership and the Manager (the “Management Agreement”), the Manager agreed to defer payment of one-half of any acquisition fee payable to the Manager from that date until the earlier of: (i) the date that the public trading price of our common stock, as reported on the Nasdaq Capital Market, reaches a closing trading price of at least $5.00 per share (as the same may be proportionately adjusted to reflect a stock split or reverse stock split); (ii) the effective date of the termination of the Management Agreement as the result of an election by the Company to terminate the Management Agreement (other than on account of any of the events specified in clauses (i) through (vi) of Section 11(a) of the Management Agreement); and (iii) a Change in Control (the “Deferral Agreement”).

On March 10, 2023, the Company announced that the Board established a Special Committee of the Board (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value.  In light of the exploration of potential strategic alternatives by the Special Committee, the Company entered into a Letter Agreement, dated as of March 10, 2023, by and among the Company, the Operating Partnership and the Manager (the “2023 Manager Letter Agreement”).  

Pursuant to the terms of the 2023 Manager Letter Agreement, the Company further amended the Management Agreement, which provides for the deferral of the acquisition fee payable to the Manager in certain circumstances, to clarify that the Deferred Acquisition Fee Amount (as defined in the 2021 Manager Letter Agreement) will be deferred until the earlier of (i) the date that the public trading price of the Company’s common stock, as reported on the Nasdaq Capital Market, reaches a closing trading price of at least $5.00 per share (as the same may be proportionately adjusted to reflect a stock split or reverse stock split); (ii) the effective date of the termination of the Management Agreement as the result of an election by the Company to terminate the Management Agreement (other than on account of any of the events specified in clauses (i) through (vi) of Section 11(a) of the Management Agreement); and (iii) a Change in Control.

For the year ended December 31, 2022, the Company incurred $201,524 in acquisition fees associated with the Salisbury Marketplace Property acquisition, which were allocated and added to the fair value of the Salisbury Marketplace Property tangible assets.  One half of the acquisition fee, or $100,762 was paid in cash and one half of the acquisition fee was accrued in connection with the Deferral Agreement.  For the year ended December 31, 2021, the Company incurred $503,910 in acquisition fees associated with the Lancer Center Property, Greenbrier Business Center Property and Parkway Property, which were allocated and added to the fair value of the Lancer Center Property, Greenbrier Business Center Property and Parkway Property tangible assets. One half of the acquisition fees, or $251,955 was paid in cash and one half of the acquisition fees was accrued in connection with the Deferral Agreement. The accrued portion of the acquisition fee is recorded under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.  As of March 31, 2023 and December 31, 2022, the Company had accrued a total of $352,717 in acquisition fees in connection with the Deferral Agreement.

The Manager will be entitled to an incentive fee, payable quarterly, equal to an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) Adjusted Funds from Operations (AFFO) (as further defined below) for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in this offering and in future offerings and transactions, multiplied by the weighted average number of all shares of common stock outstanding on a fully-diluted basis (including any restricted stock units, any restricted shares of common stock and OP Units) in the previous 12-month period, exclusive of equity securities issued prior to this offering, and (B) 7%, and (2) the sum of any incentive fee paid to the Manager with respect to the first three calendar quarters of such previous 12-month period. For purposes of calculating the incentive fee during the first years after completion of this offering, adjusted funds from operations (“AFFO”) will be determined by annualizing the applicable period following completion of this offering. AFFO is calculated by removing the effect of items that do not reflect ongoing property operations. The Company further adjusts funds from operations (“FFO”) for certain items that are not added to net income in the National Association of Real Estate Investment Trusts’ (NAREIT) definition of FFO, such as acquisition expenses, equity based compensation expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of the Company’s properties, and subtract recurring capital expenditures (and, when calculating the incentive fee only, we further adjust FFO to include any realized gains or losses on real estate investments). No incentive fees were earned or paid during the three months ended March 31, 2023 or 2022.

Colin Elliott

Effective as of March 1, 2020, the Company entered into a consulting agreement (the “Consulting Agreement”), with Gunston Consulting, LLC (the “Consultant”), pursuant to which the Consultant agreed to provide certain financial and accounting consulting services to the Company, and the Company agreed to pay the Consultant an annual fee and annual stock grants awarded by the Compensation Committee and agreed to reimburse the Consultant for certain expenses to be authorized by the Company.  Pursuant to the terms of the Consulting Agreement, the Company authorized the Consultant to retain the services of Mr. C. Elliott as vice president of the Company and authorized the Consultant to incur certain costs related to Mr. C. Elliott’s employment as vice president and agreed to reimburse the Consultant for such costs, including Mr. C. Elliott’s $150,000 annual salary, payroll taxes and certain benefits, and an annual bonus to be determined in consultation with the Company.  

In addition, on March 10, 2023, the Company entered into a change in control agreement with the Consultant and Mr. C. Elliott (the “Change in Control Agreement”), in order to authorize the Consultant to pay Mr. C. Elliott, our Vice President, and to reimburse the Consultant for, the payment of the Elliott Retention Amount (as defined below), in the event that (i) a Change in Control (as defined therein) occurs at a time when Mr. C. Elliott remains employed by the Consultant and no Cause Event (as defined therein) has then occurred and the Consultant thereafter terminates, at the request of the Company (or any successor), the employment of Mr. C. Elliott (other than on account of a Cause Event) within twelve (12) months after the date of the Change in Control; (ii) a Change in Control occurs at a time when Mr. C. Elliott remains employed by the Consultant and no Cause Event has then occurred and within twelve (12) months after the date of the Change in Control Mr. C. Elliott elects to terminate his engagement with the Consultant to provide services to the Company (or any successor) because either (a) the Company (or any successor) requires Mr. C. Elliott to relocate his primary work location by more than fifty (50) miles from the location as of the effective date of the Change in Control Agreement; (b) the Company (or any successor) directs the Consultant to reduce the annual compensation ($150,000) of Mr. C. Elliott; (c) the Company (or any successor) directs the Consultant to materially diminish Mr. C. Elliott’s position, authority, duties or responsibilities with respect to services to the Company (or any successor); or (d) the Company (or any successor) commits a material breach of the Consulting Agreement and fails to cure such material breach within thirty (30) days after receiving written notice of such material breach; or (iii) the Consultant terminates, at the Company’s (or any successor’s) request, Mr. C. Elliott’s employment (other than on account of a Cause Event) ninety (90) or fewer days prior to the Change in Control.  In each such case, a “Triggering Event” shall be deemed to have occurred, and pursuant to the Change in Control Agreement, the Company authorizes the Consultant to pay, and agrees to reimburse the Consultant for, and the Consultant agrees to pay to Mr. C. Elliott, within thirty-seven (37) days after such Triggering Event, an amount equal to the sum of (i) Mr. C. Elliott’s current annual compensation (i.e., $150,000) payable by the Consultant to Mr. C. Elliott and reimbursable by the Company, plus (ii) the amount of Mr. C. Elliott’s last annual bonus (i.e., $50,000) payable by the Consultant to Mr. C. Elliott and reimbursable by the Company, plus (iii) a cash payment equivalent to the value of the last stock grant from the Company to Mr. C. Elliott (i.e., $30,000) (collectively, the “Elliott Retention Amount”).

Mr. C. Elliott is the son of Mr. William R. Elliott, Vice Chairman of the Board and President and Chief Operating Officer of the Company. During the three months ended March 31, 2023 and 2022, the Company paid the Consultant $44,872 and $0, respectively, for services provided by Mr. C. Elliott under the Consulting Agreement.  

Other related parties

The Company pays Shockoe Properties, LLC, a subsidiary of Dodson Properties, an entity in which one of the owners of the Manager holds a 6.32% interest, an annual property management fee of up to 3% of the monthly gross revenues of the Franklin Square, Hanover Square, Ashley Plaza, Brookfield, Lancer Center, Greenbrier Business Center, Parkway and Salisbury properties. These fees are paid in arrears on a monthly basis. During the three months ended March 31, 2023 and 2022, the Company paid Shockoe Properties, LLC property management fees of $70,519 and $62,072, respectively.

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Segment Information

3 Months Ended

Mar. 31, 2023

Segment Information

Segment Information

10.      Segment Information

The Company establishes operating segments at the property level and aggregates individual properties into reportable segments based on product types in which the Company has investments. For the three months ended March 31, 2023, the Company had the following reportable segments:  retail center properties and flex center properties.  For the three months ended March 31, 2022, the Company had the following reportable segments: retail center properties, flex center properties and hotel properties. During the periods presented, there have been no material intersegment transactions.

Although the Company’s flex center property has tenants that are similar to tenants in its retail center properties, the Company considers its flex center properties as a separate reportable segment. Flex properties are considered by the real estate industry as a distinct subset of the industrial market segment. Flex properties contain a mix of industrial/warehouse and office spaces. Warehouse space that is not air conditioned can be used flexibly by building office or showroom space that is air conditioned, depending on tenants’ needs.

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 the primary performance measure reviewed by management to assess operating performance of properties and is calculated by deducting operating expenses from operating revenues. Operating revenues include rental income, tenant reimbursements, hotel income, and other property income; and operating expenses include retail center property and hotel operating costs. The NOI performance metric consists of only revenues and expenses directly related to real estate rental operations. NOI reflects property acquisitions and dispositions, 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 REITs.

Asset information and capital expenditures by segment are not reported because the Company does not use these measures to assess performance. Depreciation and amortization expense, along with other expense and income items, are not allocated among segments.

The following table presents property operating revenues, expenses and NOI by product type:

	For the three months ended March 31,
	Hotel properties				Retail center properties					Flex center property			Total
	2023		2022		2023		2022		2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues	$	—	$	765,489	$	1,891,679	$	1,525,085	$	569,297	$	613,390	$	2,460,976	$	2,903,964
Operating expenses		—		372,860		520,615		450,125		176,737		161,381		697,352		984,366
Bad debt expense		—		—		125		7,791		26,997		4,992		27,122		12,783
Net operating income	$	—	$	392,629	$	1,370,939	$	1,067,169	$	365,563	$	447,017	$	1,736,502	$	1,906,815

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Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events

Subsequent Events

11.      Subsequent Events

As of May 11, 2023, the following events have occurred subsequent to the March 31, 2023 effective date of the condensed consolidated financial statements:

Common Stock Dividend

On April 28, 2023, a dividend in the amount of $0.01 per share was paid to common stockholders and operating partnership unit holders of record on April 25, 2023.

Mandatorily Redeemable Preferred Stock Dividend

On April 28, 2023, a dividend in the amount of $0.50 per share was paid to mandatorily redeemable preferred stockholders of record on April 25, 2023 for the period from January 20, 2023 through April 20, 2023.

Completion of 1-for-8 Reverse Stock Split

On May 3, 2023, the Company completed the previously announced reverse stock split of its Common Shares, and a corresponding adjustment to the outstanding common units of the Operating Partnership, at a ratio of 1-for-8 (the “Reverse Stock Split”). The Reverse Stock Split took effect at 5:00 p.m. Eastern Time on May 3, 2023 (the “Effective Time”) and automatically converted every eight Common Shares outstanding at that time into one Common Share.

The Reverse Stock Split affected all common stockholders uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares, as described below. As a result of the Reverse Stock Split, the number of Common Shares outstanding was reduced from 17,758,421 to 2,219,779 shares as of the Effective Time.

No fractional shares were issued in connection with the Reverse Stock Split. Instead, each stockholder that otherwise would have received fractional shares received, in lieu of such fractional shares, cash in an amount equal to the applicable fraction multiplied by the closing price of the Common Shares on Nasdaq on May 3, 2023 (as adjusted for the Reverse Stock Split).

At the Effective Time, the aggregate number of shares of Common Stock available for awards under the Company’s 2018 Equity Incentive Plan and the terms of outstanding awards were ratably adjusted to reflect the Reverse Stock Split.

Trading of the Common Shares on Nasdaq commenced on a split-adjusted basis on May 4, 2023 under the existing trading symbol “MDRR.” The new CUSIP number for the Common Shares following the Reverse Stock Split is 58403P303.

The Reverse Stock Split is intended to help the Company regain compliance with the Minimum Bid Price Requirement. If at any time before July 10, 2023, the closing bid price of the Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance.  If compliance with the Minimum Bid Price Requirement cannot be demonstrated by July 10, 2023, the Staff will provide written notification that the Common Stock will be delisted. At that time, the Company may appeal the Staff’s determination to a Hearings Panel. Accordingly, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or maintain its listing on Nasdaq.

Charter Amendments

In connection with the Reverse Stock Split, on April 19, 2023, the Company filed two Articles of Amendment to its charter with the State Department of Assessments and Taxation of Maryland that provided for:

(i)a 1-for-8 Reverse Stock Split of the Common Stock, effective at 5:00 p.m. Eastern Time on May 3, 2023 (the “First Amendment”); and

(ii)the par value of the Common Stock to be decreased from $0.08 per share (as a result of the 1-for-8 Reverse Stock Split) back to $0.01 per share, effective at 5:01 p.m. Eastern Time on May 3, 2023 (the “Second Amendment”).

The foregoing descriptions of the First Amendment and the Second Amendment do not purport to be complete and are qualified in their entirety by reference to each amendment, copies of which are filed as Exhibit 3.3 and Exhibit 3.4, respectively, to this Quarterly Report on Form 10-Q (this “Quarterly Report”) and are incorporated herein by reference.

Wells Fargo Line of Credit

On May 2, 2023, the Company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024 (see Note 5, above).  

Update on Special Committee and Exploration of Strategic Alternatives

On March 10, 2023, the Board announced that it established a Special Committee (the “Special Committee”) to explore potential strategic alternatives focusing on maximizing stockholder value. The Special Committee is comprised solely of independent directors and is charged with exploring potential strategic alternatives including, without limitation, a business combination involving our company, a sale of all or part of our company’s assets, joint venture arrangements and/or restructurings, and determining whether a strategic transaction is in the best interest of our company.

On April 18, 2023, the Company provided an update on the Special Committee’s efforts.  Specifically, the Company announced that the Special Committee is in active discussions with potential parties in pursuit of those alternatives and the Company will provide further disclosures as appropriate or required by law or regulation. While the review is underway, the Company remains fully focused on its operations and on the continued execution of its strategies to create stockholder value. There is no assurance that the review will result in any transaction, including a sale of the Company, its assets, or entry into a business combination, among other alternatives being reviewed.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Summary of Significant Accounting Policies

Assets Held for Sale

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 mortgages payable, 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.

During February 2021, the Company committed to a plan for the sale of an asset group associated with the Clemson Best Western Hotel Property that included the land, site improvements, building, building improvements and furniture, fixtures and equipment.  As of March 31, 2021, the Company recorded this asset group, and the associated mortgage payable, as held for sale.  As of March 31, 2021, the date the Company originally recorded this asset group as held for sale, the Company determined that the fair value of the Clemson Best Western Property exceeded the carrying value of its asset group, and the Company did not record impairment of assets held for sale associated with this asset group.

During subsequent periods since the asset group associated with the Clemson Best Western Property was initially classified as held for sale, the Company continued to follow its disposal plan.  Under ASC 360, during subsequent reporting periods after the asset group is classified as held for sale, it is necessary to evaluate the amounts previously used for the estimated fair value of the asset group.  Up to and including the reporting periods ending December 31, 2021, the Company reviewed and reassessed the estimated fair value of the asset group and believed that the fair value, less estimated costs to sell, exceeds the Company’s carrying cost in the property.  

Accordingly, the Company did not record impairment of assets held for sale related to the Clemson Best Western Property for the year ended December 31, 2021.

As of March 31, 2022, the Company determined that the carrying value of the asset group associated with the Clemson Best Western Hotel Property exceeded its fair value, less estimated costs to sell, and recorded impairment of assets held for sale of $175,671 on its condensed consolidated statement of operations for the three months ended March 31, 2022.  No such impairment of assets held for sale was recorded during the three months ended March 31, 2023.

On September 29, 2022, the Company closed on the sale of the Clemson Best Western Hotel Property to an unaffiliated purchaser.  See Note 3 for additional details.

Intangible Assets and Liabilities, net

Intangible Assets and Liabilities, net

The Company determines, through the ASC 805 evaluation, the above and below market lease intangibles upon acquiring a property. Intangible 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.

The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of its intangible assets may not be recoverable, but at least annually. During the three months ended March 31, 2023, a tenant defaulted on its lease and abandoned its premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with this lease of $35,551 that were recorded as part of the purchase of this property should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2023.  During the three months ended March 31, 2022, two tenants defaulted on their leases and abandoned their premises. The Company determined that the carrying value of the intangible assets and liabilities, net, associated with these leases of $36,670 that were recorded as part of the purchase of these properties should be written off. This amount is included in the loss on impairment reported on the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022.  

Details of the deferred costs, net of amortization, arising from the Company’s purchases of its retail center properties and flex center properties are as follows:

		March 31, 2023
	(unaudited)		December 31, 2022
Intangible Assets, net
Leasing commissions	$	1,074,551	$	1,135,421
Legal and marketing costs		150,957		169,437
Above market leases		175,839		209,860
Net leasehold asset		2,048,253		2,233,988
	$	3,449,600	$	3,748,706
Intangible Liabilities, net
Below market leases	$	(2,133,752)	$	(2,234,113)

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 the three months ended March 31, 2023 and 2022, respectively, were as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Amortization of above market leases	$	(27,343)	$	(69,583)
Amortization of below market leases		100,361		95,617
	$	73,018	$	26,034

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, 2023 and 2022, respectively, were as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Leasing commissions	$	(56,618)	$	(63,032)
Legal and marketing costs		(16,205)		(14,559)
Net leasehold asset		(172,044)		(306,046)
	$	(244,867)	$	(383,637)

As of March 31, 2023 and December 31, 2022, the Company’s accumulated amortization of lease origination costs, leases in place and legal and marketing costs totaled $2,148,257 and $2,198,049, respectively. During the three months ended March 31, 2023 and 2022, the Company wrote off $273,252 and $486,785, respectively, in accumulated amortization related to fully amortized intangible assets and $21,407 and $5,108, respectively, in accumulated amortization related to the write off of intangible assets related to the tenant defaults, discussed above.

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,
	2023		2024		2025		2026		2027		2028-2042		Total
Intangible Assets
Leasing commissions	$	160,102	$	171,601	$	145,550	$	107,312	$	88,394	$	401,592	$	1,074,551
Legal and marketing costs		43,963		38,900		24,004		13,160		7,917		23,013		150,957
Above market leases		66,689		42,858		21,526		15,629		14,543		14,594		175,839
Net leasehold asset		443,833		394,874		295,851		199,466		153,142		561,087		2,048,253
	$	714,587	$	648,233	$	486,931	$	335,567	$	263,996	$	1,000,286	$	3,449,600
Intangible Liabilities
Below market leases, net	$	(268,441)	$	(285,892)	$	(213,348)	$	(178,776)	$	(161,866)	$	(1,025,429)	$	(2,133,752)

Conditional Asset Retirement Obligation

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 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, 2023 and 2022, respectively.

Cash and Cash Equivalents and Restricted Cash

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 bank operating accounts and money markets. 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 cash equivalents and any restricted cash held by the Company on deposit with financial institutions in the United States which are insured by the Federal Deposit Insurance Company ("FDIC") up to $250,000. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. Management monitors the financial institutions credit worthiness in conjunction with balances on deposit to minimize risk. As of March 31, 2023, the Company held one cash account at a financial institution with a balance that exceeded the FDIC limit by $1,404,374. As of December 31, 2022, the Company held two cash accounts at a single financial institution with combined balances that exceeded the FDIC limit by $2,613,789.

Restricted cash represents (i) amounts held by the Company for tenant security deposits, (ii) escrow deposits held by lenders for real estate tax, insurance, and operating reserves, (iii) an escrow for the first year of dividends on the Company’s mandatorily redeemable preferred stock, and (iv) 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, 2023 and December 31, 2022, the Company reported $283,646 and $267,854, respectively, in security deposits held as restricted cash.

Escrow deposits are restricted cash balances held by lenders for real estate taxes, insurance and other operating reserves. As of March 31, 2023 and December 31, 2022, the Company reported $736,865 and $579,785, respectively, in escrow deposits.

Capital reserves are restricted cash balances held by lenders for capital improvements, leasing commissions furniture, fixtures and equipment, and tenant improvements. As of March 31, 2023 and December 31, 2022, the Company reported $916,754 and $893,078, respectively, in capital property reserves.

	March 31, 2023		December 31,
Property and Purpose of Reserve	(unaudited)		2022
Franklin Square Property - leasing costs	$	858,509	$	845,765
Brookfield Center Property - maintenance and leasing cost reserve		58,245		47,313
Total	$	916,754	$	893,078

Share Retirement

Share Retirement

ASC 505-30-30-8 provides guidance on accounting for share retirement and establishes two alternative methods for accounting for the repurchase price paid in excess of par value.  The Company has elected the method by which the excess between par value and the repurchase price, including costs and fees, is recorded to additional paid in capital on the Company’s condensed consolidated balance sheets.  During the three months ended March 31, 2022, the Company repurchased 268,070 shares of its common stock at a total cost of $278,277 at an average price of $1.038 per common share.  The Company incurred fees of $8,266 associated with these transactions.  Of the total repurchase price, $2,681 was recorded to common stock and the difference, $283,862, was recorded to additional paid in capital on the Company’s condensed consolidated balance sheet.  No such amounts were recorded during the three months ended March 31, 2023.

Revenue Recognition

Revenue Recognition

Retail and Flex Center Property Revenues

The Company recognizes minimum rents from its retail center properties and flex center 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, 2023 and December 31, 2022, the Company reported $1,069,860 and $1,022,153, respectively, in unbilled rent. During the three months ended March 31, 2023, the Company recorded a loss on impairment of $1,192 related to previously recognized straight-line rent related to a defaulting tenant’s lease.  No such loss on impairment related to straight-line rent was recorded during the three months ended March 31, 2022.  

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 "Retail center property revenues” and “Flex center property revenues.” (See Recent Accounting Pronouncements, below.) This significantly reduces the Company’s exposure to increases in costs and operating expenses resulting from inflation or other outside 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 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 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, no such revenues were recognized during the three months ended March 31, 2023 and 2022.

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, the Company provides for losses related to unrecovered intangibles and other assets. During the three months ended March 31, 2023 and 2022, respectively, no such termination costs were recognized.

Hotel Property Revenues

Hotel revenues from the Clemson Best Western Property were recognized as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel’s services.  Revenues from the Company’s occupancy agreement with Clemson University were recognized as earned, which is as rooms are occupied or otherwise reserved for use by the University.  The Clemson University occupancy agreement ended on May 15, 2022 and the Company sold the Clemson Best Western Property on September 29, 2022.  

The Clemson Best Western Property was required to collect certain taxes and fees from customers on behalf of government agencies and remit them back to the applicable governmental agencies on a periodic basis.  The Clemson Best Western Property had a legal obligation to act as a collection agent.  The Clemson Best Western Property did not retain these taxes and fees; therefore, they were not included in revenues.  The Clemson Best Western Property recorded a liability when the amounts were collected and relieved the liability when payments were made to the applicable taxing authority or other appropriate governmental agency.

Hotel Property Operating Expenses

Hotel Property Operating Expenses

All personnel of the Clemson Best Western Property were directly or indirectly employees of Marshall Hotels and Resorts, Inc. (“Marshall”), the Company’s hotel management firm. In addition to fees and services discussed above, the Clemson Best Western Property reimbursed Marshall for all employee related service costs, including payroll salaries and wages, payroll taxes and other employee benefits paid by Marshall on its behalf.  The total amounts incurred for payroll salaries and wages, payroll taxes and other employee benefits for the three months ended March 31, 2023 and 2022 were $0 and $131,939, respectively.

Rent and other receivables

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, 2023 and December 31, 2022, the Company’s allowance for uncollectible rent totaled $62,960 and $47,109, respectively, which are comprised of amounts specifically identified based on management’s review of individual tenants’ outstanding receivables.  Management determined that no additional general reserve is considered necessary as of March 31, 2023 and December 31, 2022, respectively.

Income Taxes

Income Taxes

Beginning with the Company’s taxable year ended December 31, 2017, the REIT has elected to be taxed as a real estate investment trust 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 this REIT status, the regulations require the Company to distribute at least 90% of its taxable income to shareholders and meet certain other asset and income tests, as well as other requirements. If the Company fails to qualify as a REIT, it will be subject to tax at regular corporate rates for the years in which it fails to qualify. If the Company loses its REIT status it could not elect to be taxed as a REIT for five years unless the Company’s failure to qualify was due to reasonable cause and certain other conditions were satisfied.

During the three months ended March 31, 2022, the Company's Clemson Best Western TRS entity generated taxable income.  The Company believed that the net operating loss carry forward from prior years would offset the taxable income for the three months ended March 31, 2022, so no income tax expense was recorded.  During the three months ended March 31, 2023, the Company no longer owned the Clemson Best Western Hotel Property.

Management has evaluated the effect of the guidance provided by GAAP on Accounting for Uncertainty of Income Taxes and has determined that the Company had no uncertain income tax positions.

Use of Estimates

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.

Noncontrolling Interests

Noncontrolling Interests

The ownership interests not held by the REIT 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 shareholders’ equity, noncontrolling interests and total equity.

The first noncontrolling interest is in the Hanover Square Property in which the Company owns an 84% tenancy in common interest through its subsidiary and an outside party owns a 16% tenancy in common interest. The Hanover Square Property’s net loss is allocated to the noncontrolling ownership interest based on its 16% ownership. During the three months ended March 31, 2023, 16% of the Hanover Square Property’s net loss of $7,755, or $1,241, was allocated to the noncontrolling ownership interest. During the three months ended March 31, 2022, 16% of the Hanover Square Property’s net loss of $1,992, or $319, was allocated to the noncontrolling ownership interest.

The second noncontrolling interest is in the Parkway Property in which the Company owns an 82% tenancy in common interest through its subsidiary and an outside party owns an 18% tenancy in common interest. The Parkway Property's net (loss) income is

allocated to the noncontrolling ownership interest based on its 18% ownership. During the three months ended March 31, 2023, 18% of the Parkway Property's net loss of $46,482, or $8,367, was allocated to the noncontrolling ownership interest.  During the three months ended March 31, 2022, 18% of the Parkway Property’s net income of $56,624, or $10,193, was allocated to the noncontrolling ownership interest.

The third noncontrolling ownership interest are the units in the Operating Partnership that are not held by the REIT. In 2017, 125,000 Operating Partnership units were issued to members of the selling limited liability company which owned the Hampton Inn Property who elected to participate in a 721 exchange, which allows the exchange of interests in real property for shares in a real estate investment trust. These members of the selling limited liability company invested $1,175,000 in the Operating Partnership in exchange for 125,000 Operating Partnership units. Additionally, as discussed above, effective on January 1, 2020, 93,850 Operating Partnership units were issued in exchange for approximately 3.45% of the noncontrolling owner’s tenant in common interest in the Hampton Inn Property. On August 31, 2020, a unitholder converted 5,319 Operating Partnership units into shares of Common Stock. As of March 31, 2023 and December 31, 2022, there were 213,531 Operating Partnership units outstanding.

The Operating Partnership units not held by the REIT represent 1.19% of the outstanding Operating Partnership units as of March 31, 2023 and December 31, 2022.  The noncontrolling interest percentage is calculated at any point in time by dividing the number of units not owned by the Company by the total number of units outstanding. The noncontrolling interest ownership percentage will change as additional common or preferred shares are issued by the REIT, or additional Operating Partnerships units are issued or as units are exchanged for the Company’s $0.01 par value per share Common Stock. During periods when the Operating Partnership’s noncontrolling interest changes, the noncontrolling ownership interest is calculated based on the weighted average Operating Partnership noncontrolling ownership interest during that period. The Operating Partnership’s net loss is allocated to the noncontrolling unit holders based on their ownership interest.

During the three months ended March 31, 2023, a weighted average of 1.19% of the Operating Partnership’s net loss of $243,989, or $2,903, was allocated to the noncontrolling unit holders.  During the three months ended March 31, 2022, a weighted average of 1.28% of the Operating Partnership’s net loss of $75,882, or $973, was allocated to the noncontrolling unit holders.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Since its initial public offering, the Company has elected to be classified as an emerging growth company in its periodic reporting to the U.S. Securities and Exchange Commission (the “SEC”), and accordingly has followed the private company implementation dates for new accounting pronouncements.  Effective for the three months ending March 31, 2023, the Company will no longer be classified as an emerging growth company, but will retain its classification as a smaller reporting company and therefore follow implementation dates applicable to smaller reporting companies with respect to new accounting pronouncements.   In addition, the Company has elected to follow scaled disclosure requirements applicable to smaller reporting companies.  

Recently Adopted Accounting Pronouncements

Accounting for Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842).  The amendments in this update govern a number of areas including, but not limited to, accounting for leases, replacing the existing guidance in ASC No. 840, Leases.  Under this standard, among other changes in practice, a lessee’s rights and obligations under most leases, including existing and new arrangements, must be recognized as assets and liabilities, respectively, on the balance sheets.  Other significant provisions of this standard include (i) defining the “lease term” to include the non-cancelable period together with periods for which there is a significant economic incentive for the lessee to extend or not terminate the lease; (ii) defining the initial lease liability to be recorded on the balance sheets to contemplate only those variable lease payments that depend on an index or that are in substance “fixed,” (iii) a dual approach for determining whether lease expense is recognized on a straight-line or accelerated basis, depending on whether the lessee is expected to consume more than an insignificant portion of the leased asset’s economic benefits and (iv) a requirement to bifurcate certain lease and non-lease components.  The lease standard was effective for public companies for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years) and for private companies, fiscal years beginning after December 15, 2019, with early adoption permitted. The FASB subsequently deferred the effective date of ASU 2016-02 for private companies by one year, to fiscal years beginning after December 15, 2020, to provide those companies with additional time to address various implementation challenges and complexities. In June 2020, the FASB further deferred the effective date due to the effects on private companies from business and capital market disruptions caused by the novel coronavirus (“COVID-19”) pandemic.  Following those deferrals, ASU 2016-02 became effective for private companies for fiscal years beginning after December 15, 2021, and for

interim periods within fiscal years beginning after December 15, 2022. The Company adopted the standard effective on January 1, 2022 using the modified retrospective approach within ASU 2018-11, which allows for the application date to be the beginning of the reporting period in which the entity first applies the new standard. The Company historically has not been and is not currently a “lessee” under any lease agreements, and thus did not have any arrangements requiring the recognition of lease assets or liabilities on its balance sheet.

As a “lessor”, the Company has active lease agreements with over 100 tenants across its portfolio of investment properties. On a prospective and retrospective basis, the accounting for those leases under ASU 2016-02 (ASC No. 842) is substantially unchanged from the previous guidance in ASC No. 840. However, upon the adoption of ASC No. 842, the Company has elected the practical expedient permitting lessors to elect by class of underlying asset to not separate non-lease components (for example, maintenance services, including common area maintenance) from associated lease components (the “non-separation practical expedient”) if both of the following criteria are met: (1) the timing and pattern of transfer of the lease and non-lease component(s) are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If both criteria are met, the combined component is accounted for in accordance with ASC No. 842 if the lease component is the predominant component of the combined component; otherwise, the combined component is accounted for in accordance with the revenue recognition standard. Prior to the adoption of ASC No. 842, the Company separated lease-related revenue from its retail center and flex center properties into two components. Fixed rental payments under its leases (recognized on a straight-line basis over the term of the underlying lease) were recorded as retail center property revenues and flex center property revenues. Variable payments under the leases made by tenants for real estate taxes, insurance and common area maintenance (“CAM”) expenses were recorded as retail center and flex center tenant reimbursements. With the adoption of ASC No. 842, the Company determined that its retail center and flex center operating leases qualify for the non-separation practical expedient based on the guidance. As a result, the Company has accounted for and presented the revenues from these leases, including tenant reimbursements, as a single line item on its condensed consolidated statements of operations.

Debt With Conversion Options

In August 2020, the FASB issued ASU 2020-06, Debt - Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The objective of ASU 2020-06 is to reduce the current complexity involved in accounting for convertible financial instruments by reducing the number of accounting models applicable to those instruments in the existing guidance. Following the adoption of ASU 2020-06, companies are expected to encounter fewer instances in which a convertible financial instrument must be separated into a debt or equity component and a derivative component for accounting purposes due to the embedded conversion feature. As a result of these revisions, debt instruments issued with a beneficial conversion feature will no longer require separation and thus will be accounted for as a single debt instrument under the updated guidance. In addition to those changes, ASU 2020-06 adds several incremental financial statement disclosures with respect to a company’s convertible financial instruments and makes certain refinements with respect to calculating the effect of those instruments on a company’s diluted earnings per share. ASU 2020-06 is effective for public companies for fiscal years beginning after December 15, 2021 (including interim periods within those fiscal years), and for private companies, fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted, but no earlier than fiscal years beginning after December 15, 2020. The updated guidance in ASU 2020-06 was adopted effective January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better calculate credit loss estimates. The guidance applies to most financial assets measured at amortized cost and certain other instruments, such as accounts receivable and loans; however, it does not apply to receivables arising from operating leases accounted for in accordance with ASC Topic 842. ASU 2016-13 requires that the Company estimate the lifetime expected credit loss with respect to applicable receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. The Company is also required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company’s estimate of expected credit losses and the reasons for those changes.  The Company’s credit losses primarily arise from tenant defaults on amounts due under operating leases.  As noted, these losses are not subject to the guidance in ASU 2016-13, and historically have not been significant.  The Company adopted the update on the required effective date of January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

Upcoming Accounting Pronouncements

Effects of Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The London Interbank Offered Rate (LIBOR), which is widely used as a reference interest rate in debt agreements and other contracts, was effectively discontinued for new contracts as of December 31, 2021, and its publication for existing contracts is scheduled to be discontinued by June 30, 2023. Financial market regulators in certain jurisdictions throughout the world undertook reference rate reform initiatives to guide the transition and modification of debt agreements and other contracts that are based on LIBOR to the successor reference rate that will replace it. ASU 2020-04 was issued to provide companies that are impacted by these changes with the opportunity to elect certain expedients and exceptions that are intended to ease the potential burden of accounting for or recognizing the effects of reference rate reform on financial reporting.  Under ASU 2020-04, companies may generally elect to make use of the expedients and exceptions provided therein for any reference rate contract modifications that occur in reporting periods that encompass the timeline from March 12, 2020 to December 31, 2022. The FASB subsequently issued ASU 2022-06, Reference Rate Reform (Topic 848):  Deferral of the Sunset of Topic 848, to extend that timeline from December 31, 2022 to December 31, 2024.  The Company’s Parkway Property is financed by a mortgage loan with a corresponding interest rate protection agreement which both use USD LIBOR as the reference interest rate (see Note 5, below).  The mortgage loan matures on November 1, 2031, and the interest rate protection agreement expires on December 1, 2026.  The Company is continuing to review the guidance in ASU 2020-04 and anticipates that it will use the expedients and exceptions provided therein with respect to the replacement of USD LIBOR as the reference rate in the Parkway Property mortgage loan and corresponding interest rate protection agreement.  However, the Company does not expect that any changes under ASU 2020-04 will have a material 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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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Summary of Significant Accounting Policies

Schedule of net intangible assets and liabilities

		March 31, 2023
	(unaudited)		December 31, 2022
Intangible Assets, net
Leasing commissions	$	1,074,551	$	1,135,421
Legal and marketing costs		150,957		169,437
Above market leases		175,839		209,860
Net leasehold asset		2,048,253		2,233,988
	$	3,449,600	$	3,748,706
Intangible Liabilities, net
Below market leases	$	(2,133,752)	$	(2,234,113)

Schedule of adjustments to rental revenue related to the above and below market leases

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Amortization of above market leases	$	(27,343)	$	(69,583)
Amortization of below market leases		100,361		95,617
	$	73,018	$	26,034

Schedule of amortization related to intangible assets

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Leasing commissions	$	(56,618)	$	(63,032)
Legal and marketing costs		(16,205)		(14,559)
Net leasehold asset		(172,044)		(306,046)
	$	(244,867)	$	(383,637)

Schedule of future amortization of above and below market leases

		For the
		remaining nine
		months ending
		December 31,
	2023		2024		2025		2026		2027		2028-2042		Total
Intangible Assets
Leasing commissions	$	160,102	$	171,601	$	145,550	$	107,312	$	88,394	$	401,592	$	1,074,551
Legal and marketing costs		43,963		38,900		24,004		13,160		7,917		23,013		150,957
Above market leases		66,689		42,858		21,526		15,629		14,543		14,594		175,839
Net leasehold asset		443,833		394,874		295,851		199,466		153,142		561,087		2,048,253
	$	714,587	$	648,233	$	486,931	$	335,567	$	263,996	$	1,000,286	$	3,449,600
Intangible Liabilities
Below market leases, net	$	(268,441)	$	(285,892)	$	(213,348)	$	(178,776)	$	(161,866)	$	(1,025,429)	$	(2,133,752)

Schedule of property and purpose of reserve

	March 31, 2023		December 31,
Property and Purpose of Reserve	(unaudited)		2022
Franklin Square Property - leasing costs	$	858,509	$	845,765
Brookfield Center Property - maintenance and leasing cost reserve		58,245		47,313
Total	$	916,754	$	893,078

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Investment Properties (Tables)

3 Months Ended

Mar. 31, 2023

Schedule of investment properties

		March 31, 2023		December 31,
		(unaudited)		2022
Land	$	16,526,436	$	16,526,436
Site improvements		4,731,249		4,719,926
Buildings and improvements (1)		65,209,769		64,669,498
Investment properties at cost (2)		86,467,454		85,915,860
Less accumulated depreciation		10,224,948		9,400,908
Investment properties, net	$	76,242,506	$	76,514,952

(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 assets and liabilities (see Note 2, above, for a discussion of the Company's accounting treatment of intangible assets), escrow deposits and property reserves.

Schedule of deferred costs, net of depreciation and amortization

	March 31,
	2023		December 31,
	(unaudited)		2022
Capitalized tenant improvements – acquisition cost allocation, net	$	2,996,990	$	3,178,534
Capitalized tenant improvements incurred subsequent to acquisition, net		683,836		338,836

	March 31, 2023		December 31,
	(unaudited)		2022
Capitalized leasing commissions, net	$	614,663	$	555,956

Schedule of operating results of hotel properties included in continuing operations

Operating results of the Clemson Best Western Hotel Property, which was sold on September 29, 2022 and which are included in continuing operations, are as follows:

	For the three months ended
	March 31,
		2023		2022
	(unaudited)		(unaudited)
Hotel property room revenues	$	—	$	762,200
Hotel property other revenues		—		3,289
Total Revenue		—		765,489
Hotel property operating expenses		—		372,860
Impairment of assets held for sale		—		175,671
Total Operating Expenses		—		548,531
Operating Income		—		216,958
Interest expense		—		138,917
Net Income from Operations		—		78,041
Other income		—		263
Net Income		—		78,304
Net income attributable to Operating Partnership noncontrolling interests		—		1,002
Net Income Attributable to Medalist Common Shareholders	$	—	$	77,302

Salisbury Marketplace Property

Schedule of fair values of assets acquired and liabilities assumed

		Salisbury
		Marketplace
		Property
Fair value of assets acquired:
Investment property (a)	$	9,963,258
Lease intangibles and other assets (b)		1,045,189
Above market leases (b)		40,392
Below market leases (b)		(769,125)
Fair value of net assets acquired (c)	$	10,279,714
Purchase consideration:
Consideration paid with cash (d)	$	3,746,561
Consideration paid with new mortgage debt, net (e)		6,533,153
Total consideration (f)	$	10,279,714

a. Represents the fair value of the investment property acquired which includes land, buildings, site improvements, tenant improvements and furniture, fixtures and equipment. The fair value was determined using the market approach, the cost approach, the income approach or a combination thereof. Closing and acquisition costs were allocated and added to the fair value of the tangible assets acquired.

b. Represents the fair value of lease intangibles and other assets. Lease intangibles include leasing commissions, leases in place, above market leases, 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 at closing and cash paid for acquisition (including intangible assets), and closing costs paid at closing or directly by the Company outside of closing.

e. Represents allocation of the Wells Fargo Mortgage Facility proceeds used to fund the purchase of the Salisbury Marketplace Property, net of $18,847 in capitalized loan issuance costs. See Note 5, below.

f. Represents the consideration paid for the fair value of the assets and liabilities acquired.

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Mandatorily Redeemable Preferred Stock (Tables)

3 Months Ended

Mar. 31, 2023

Mandatorily Redeemable Preferred Stock

Schedule of mandatorily redeemable preferred stock

For all periods the mandatorily redeemable preferred stock has been outstanding, the Company has paid a cash dividend on the stock equal to 8% per annum, paid quarterly, as follows:

		Amount
Payment Date	Record Date	per share		For the period
April 27, 2020	April 24, 2020	$	0.37	February 19, 2020 - April 27, 2020
July 24, 2020	July 22, 2020		0.50	April 28, 2020 - July 24, 2020
October 26, 2020	October 23, 2020		0.50	July 25, 2020 - October 26, 2020
February 1, 2021	January 29, 2021		0.50	October 27, 2020 - February 1, 2021
April 30, 2021	April 26, 2021		0.50	February 2, 2021 – April 30, 2021
July 26, 2021	July 12, 2021		0.50	May 1, 2021 - July 26, 2021
October 27, 2021	October 25, 2021		0.50	July 27, 2021 – October 26, 2021
January 20, 2022	January 13, 2022		0.50	October 27, 2021 – January 19, 2022
April 21, 2022	April 18, 2022		0.50	January 20, 2022 - April 20, 2022
July 21, 2022	July 18, 2022		0.50	April 21, 2022 - July 20, 2022
October 20, 2022	October 17, 2022		0.50	July 21, 2022 - October 19, 2022
January 27, 2023	January 24, 2023		0.50	October 20, 2022 - January 19, 2023
April 28, 2023	April 25, 2023		0.50	January 20, 2023 - April 20, 2023

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Loans Payable (Tables)

3 Months Ended

Mar. 31, 2023

Loans Payable

Schedule of mortgages payables, net

The Company’s mortgages payables, net consists of the following:

							March 31,
	Monthly		Interest				2023		December 31,
Property	Payment		Rate		Maturity	(unaudited)		2022
Franklin Square (a)		Interest only	3.808	%	December 2031	$	13,250,000	$	13,250,000
Hanover Square (b)	$	78,098	6.94	%	December 2027		9,813,679		9,877,867
Ashley Plaza (c)	$	52,795	3.75	%	September 2029		10,856,618		10,930,370
Brookfield Center (d)	$	22,876	3.90	%	November 2029		4,639,969		4,663,206
Parkway Center (e)	$	28,161	Variable		October 2026		4,956,301		4,992,427
Wells Fargo Facility (f)	$	103,438	4.50	%	June 2027		18,247,707		18,351,981
Unamortized issuance costs, net							(698,602)		(725,592)
Total mortgages payable, net						$	61,065,672	$	61,340,259

(a) The original mortgage loan for the Franklin Square Property in the amount of $14,275,000 matured on October 6, 2021. Effective on October 6, 2021, the Company entered into a forbearance agreement with the current lender extending the maturity date for thirty days with a right to extend the maturity date for an additional thirty days. On November 8, 2021, the Company closed on a new loan in the principal amount of $13,250,000 with a ten-year term and a maturity date of December 6, 2031.  In addition to the funds from the new loan, the Company used $2,242,273 in cash on hand for loan issuance costs (totaling $283,721), to fund escrows and to repay the remaining balance of the original mortgage loan. The Company has guaranteed the payment and performance of the obligations of the new mortgage loan. The new mortgage loan bears interest at a fixed rate of 3.808% and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a thirty-year amortization schedule. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470. The new mortgage includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(b) The mortgage loan for the Hanover Square Property bore interest at a fixed rate of 4.25% until January 1, 2023, when the interest rate adjusted to a fixed rate of 6.94%, which was determined by adding 3.00% to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25%. As a result of the interest rate change, as of February 1, 2023, the fixed monthly payment of $56,882 increased to $78,098 which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.  The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75%.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(c) 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.

(d) 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.

(e) The mortgage loan for the Parkway Property bears interest at a variable rate based on LIBOR with a minimum rate of 2.25%. The interest rate payable is the ICE LIBOR rate plus 225 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 March 31, 2023 and December 31, 2022 the rate in effect for the Parkway Property mortgage was 4.4806% and 4.3117%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a thirty-year amortization schedule.  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 capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%.  For the period from September 1, 2022 through March 31, 2023, LIBOR exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced the Company’s net interest expense.  Payments to the Company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2023.  No such payments were received during the three months ended March 31, 2022 because the LIBOR rate in effect did not exceed the LIBOR cap. The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.60 to 1.00 on an annual basis.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with this covenant.  

(f) 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 $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 Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule, is $103,438.  The Company 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, a minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and the maintenance of liquid assets of not less than $1,500,000.  As of March 31, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.  

Schedule of interest expense, including amortization of capitalized issuance costs and payments received from the Company's interest rate protection transactions for the Hampton Inn Property and Clemson Best Western Property

	For the three months ended March 31, 2023 (unaudited)
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	—	$	133,233
Hanover Square mortgage		170,640		3,223		—		—		173,863
Ashley Plaza mortgage		102,133		4,357		—		—		106,490
Brookfield Center mortgage		45,391		2,838		—		—		48,229
Parkway Center mortgage		47,257		2,757		(19,342)		—		30,672
Wells Fargo Mortgage Facility		206,039		6,722		—		—		212,761
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		58,804		—		100,000		158,804
Total interest expense	$	697,600	$	85,794	$	(19,342)	$	100,000	$	864,052

	For the three months ended March 31, 2022 (unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	126,140	$	7,093	$	—	$	133,233
Hanover Square mortgage		104,854		3,223		—		108,077
Ashley Plaza mortgage		104,147		4,358		—		108,505
Clemson Best Western mortgage		138,531		—		386		138,917
Brookfield Center mortgage		46,254		2,838		—		49,092
Lancer Center mortgage		63,746		7,156		—		70,902
Greenbrier Business Center mortgage		44,950		693		—		45,643
Parkway Center mortgage		30,375		2,757		—		33,132
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		53,923		100,000		153,923
Total interest expense	$	658,997	$	82,041	$	100,386	$	841,424

Schedule of interest accrued and accumulated amortization of capitalized issuance costs

	As of March 31, 2023 (unaudited)				As of December 31, 2022
			Accumulated				Accumulated
			amortization of				amortization
	Accrued		capitalized		Accrued		of capitalized
	interest		issuance costs		interest		issuance costs
Franklin Square mortgage	$	43,448	$	37,829	$	43,448	$	30,736
Hanover Square mortgage		60,539		63,103		38,792		59,880
Ashley Plaza mortgage		—		62,466		35,296		58,109
Brookfield Center mortgage		—		39,731		—		36,893
Parkway Center mortgage		22,041		15,621		26,502		12,864
Wells Fargo Mortgage Facility		—		20,166		—		13,444
Amortization and accrued preferred stock dividends on mandatorily redeemable preferred stock (1)		70,004		648,443		70,004		589,639
Total	$	196,032	$	887,359	$	214,042	$	801,565

(1) Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Schedule of principal repayments on indebtedness

For the remaining nine months ending December 31, 2023	$	780,584
2024		1,092,879
2025		1,391,025
2026		1,460,923
2027		25,990,390
Thereafter		31,048,473
Total principal payments and debt maturities		61,764,274
Less unamortized issuance costs		(698,602)
Net principal payments and debt maturities	$	61,065,672

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Rentals under Operating Leases (Tables)

3 Months Ended

Mar. 31, 2023

Rentals under Operating Leases

Schedule of future minimum rentals to be received under noncancelable tenant operating leases

For the remaining nine months ending December 31, 2023	$	5,967,624
2024		6,702,872
2025		5,814,765
2026		4,048,868
2027		3,053,369
Thereafter		7,608,664
Total minimum rents	$	33,196,162

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Equity (Tables)

3 Months Ended

Mar. 31, 2023

Equity

Schedule of Stock Issuances under Standby Equity Purchase Agreement

Issuance Date	Shares Issued	Price Per Share		Total Proceeds
March 3, 2022	90,600	$	1.088	$	98,574
March 14, 2022	276,190		1.050		290,000
March 17, 2022	278,810		1.076		300,000
March 21, 2022	474,068		1.055		500,000
April 1, 2022	325,732		1.075		350,313
Total	1,445,400	$	1.065	$	1,538,887

Schedule of common stock purchases under Common Stock Repurchase Plan

Purchase (Trade) Date	Shares Purchased	Price Per Share		Total Cost (1)
January 4, 2022	400	$	1.060	$	424
January 5, 2022	48,205		1.060		51,093
January 6, 2022	100,000		1.046		104,556
January 7, 2022	30,000		1.050		31,500
January 10, 2022	50,000		1.020		51,000
January 14, 2022	100		1.010		101
January 21, 2022	39,365		1.006		39,603
Total	268,070	$	1.038	$	278,277

(1) Total cost before transaction fees.

Schedule of earnings per common share

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Basic and diluted shares outstanding
Weighted average Common Shares – basic		17,758,421		16,037,073
Effect of conversion of operating partnership units		213,531		213,531
Weighted average Common Shares – diluted		17,971,952		16,250,604
Calculation of earnings per share – basic and diluted
Net loss attributable to common shareholders	$	(1,221,295)	$	(989,284)
Weighted average Common Shares – basic and diluted		17,758,421		16,037,073
Loss per share – basic and diluted	$	(0.07)	$	(0.06)

Schedule of dividends and distributions to common shareholders and noncontrolling interests

	Three months ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Common shareholders (dividends)	$	176,810	$	316,450
Hanover Square Property noncontrolling interest (distributions)		—		10,000
Parkway Property noncontrolling interest (distributions)		—		10,800
Operating Partnership unit holders (distributions)		2,135		4,271
Total dividends and distributions	$	178,945	$	341,521

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Information

Schedule of property operating revenues, expenses and NOI by product type

	For the three months ended March 31,
	Hotel properties				Retail center properties					Flex center property			Total
	2023		2022		2023		2022		2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues	$	—	$	765,489	$	1,891,679	$	1,525,085	$	569,297	$	613,390	$	2,460,976	$	2,903,964
Operating expenses		—		372,860		520,615		450,125		176,737		161,381		697,352		984,366
Bad debt expense		—		—		125		7,791		26,997		4,992		27,122		12,783
Net operating income	$	—	$	392,629	$	1,370,939	$	1,067,169	$	365,563	$	447,017	$	1,736,502	$	1,906,815

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Organization and Basis of Presentation and Consolidations (Details)	Sep. 29, 2022 a room	Mar. 31, 2023 ft²	Jun. 13, 2022 ft²	Mar. 31, 2022
Clemson Best Western University Inn
Organization And Basis Of Presentation And Consolidation [Line Items]
Number of hotel rooms | room	148
Area of land | a	5.92
Hanover Square Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Percentage by parent		84.00%
Ownership percentage by noncontrolling owners		16.00%		16.00%
Parkway Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Percentage by parent		82.00%
Ownership percentage by noncontrolling owners		18.00%		18.00%
Greenbrier Business Center Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		89,280
Lancer Center Shopping Center
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		181,590
Franklin Square Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		134,239
Hanover Square Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		73,440
Hanover Square Property | Hanover Square Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Percentage by parent		84.00%
Ownership percentage by noncontrolling owners		16.00%
Ashley Plaza Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		164,012
Brookfield Center Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		64,880
Parkway Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		64,109
Parkway Property | Parkway Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Percentage by parent		82.00%
Ownership percentage by noncontrolling owners		18.00%
Salisbury Marketplace Property
Organization And Basis Of Presentation And Consolidation [Line Items]
Area of building		79,732	79,732

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Summary of Significant Accounting Policies - Investment Properties, Assets Held for Sale and Intangible Assets and Liabilities, net (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($) tenant	Dec. 31, 2022 USD ($)
Real Estate [Line Items]
Number tenants defaulted | tenant		2
Loss on impairment - intangible assets	$ 35,551	$ 36,670
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration]	Gain (Loss) on Sale of Assets and Asset Impairment Charges	Gain (Loss) on Sale of Assets and Asset Impairment Charges
Impairment of assets held for sale	$ 0	$ 175,671
Accumulated amortization of lease origination costs, leases in place and legal and marketing costs	2,148,257		$ 2,198,049
Write off of fully amortized intangible assets	273,252	486,785
Write Off amortization of tenant defaults	$ 21,407	$ 5,108
Buildings and improvements | Maximum
Real Estate [Line Items]
Estimated useful life of asset	42 years
Buildings and improvements | Minimum
Real Estate [Line Items]
Estimated useful life of asset	4 years

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Summary of Significant Accounting Policies - Intangible Assets and Liabilities, net (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Intangible Assets, net
Net intangible assets	$ 3,449,600	$ 3,748,706
Intangible Liabilities, net
Below market leases	(2,133,752)	(2,234,113)
Leasing commissions
Intangible Assets, net
Net intangible assets	1,074,551	1,135,421
Legal and marketing costs
Intangible Assets, net
Net intangible assets	150,957	169,437
Above market leases
Intangible Assets, net
Net intangible assets	175,839	209,860
Net leasehold asset
Intangible Assets, net
Net intangible assets	$ 2,048,253	$ 2,233,988

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Summary of Significant Accounting Policies - Rental Revenue Related to Above and Below Market Leases (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ (244,867)	$ (383,637)
Amortization of below market leases	100,361	95,617
Amortization of above and below market leases	73,018	26,034
Above market leases
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ (27,343)	$ (69,583)

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Summary of Significant Accounting Policies - Related to Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ (244,867)	$ (383,637)
Leasing commissions
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	(56,618)	(63,032)
Legal and marketing costs
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	(16,205)	(14,559)
Net leasehold asset
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ (172,044)	$ (306,046)

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Summary of Significant Accounting Policies - Future Amortization of Above and Below Market Leases (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Intangible Assets, net
For the remaining nine months ending December 31, 2023	$ 714,587
2024	648,233
2025	486,931
2026	335,567
2027	263,996
2028-2042	1,000,286
Intangible assets, net	3,449,600	$ 3,748,706
Intangible Liabilities, net
For the remaining nine months ending December 31, 2023	(268,441)
2024	(285,892)
2025	(213,348)
2026	(178,776)
2027	(161,866)
2028 - 2042	(1,025,429)
Below market leases	(2,133,752)	(2,234,113)
Leasing commissions
Intangible Assets, net
For the remaining nine months ending December 31, 2023	160,102
2024	171,601
2025	145,550
2026	107,312
2027	88,394
2028-2042	401,592
Intangible assets, net	1,074,551	1,135,421
Legal and marketing costs
Intangible Assets, net
For the remaining nine months ending December 31, 2023	43,963
2024	38,900
2025	24,004
2026	13,160
2027	7,917
2028-2042	23,013
Intangible assets, net	150,957	169,437
Above market leases
Intangible Assets, net
For the remaining nine months ending December 31, 2023	66,689
2024	42,858
2025	21,526
2026	15,629
2027	14,543
2028-2042	14,594
Intangible assets, net	175,839	209,860
Net leasehold asset
Intangible Assets, net
For the remaining nine months ending December 31, 2023	443,833
2024	394,874
2025	295,851
2026	199,466
2027	153,142
2028-2042	561,087
Intangible assets, net	$ 2,048,253	$ 2,233,988

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Summary of Significant Accounting Policies - Cash and Cash Equivalents and Restricted Cash (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Restricted Cash and Cash Equivalents Items [Line Items]
Exceeded the FDIC limit	$ 1,404,374	$ 2,613,789
Security deposits	283,646	267,854
Escrow deposits	736,865	579,785
Capital property reserves	916,754	$ 893,078
FDIC Limit | UNITED STATES
Restricted Cash and Cash Equivalents Items [Line Items]
FDIC Limit, per account	$ 250,000

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Summary of Significant Accounting Policies - Property and Purpose of Reserves (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation [Line Items]
Capital property reserves	$ 916,754	$ 893,078
Franklin Square Property | Leasing costs [Member]
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation [Line Items]
Capital property reserves	858,509	845,765
Brookfield Center Property. | Maintenance and leasing cost reserve
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation [Line Items]
Capital property reserves	$ 58,245	$ 47,313

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Summary of Significant Accounting Policies - Share Retirement (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Common stock repurchases		$ 286,543
Common Stock
Common stock repurchases (in shares)		268,070
Cost of re-purchased common stock		$ 278,277
Average price of repurchased shares		$ 1.038
Expenses from stock repurchase plan		$ 8,266
Common stock repurchases	$ 0	2,681
Additional Paid in Capital
Common stock repurchases		$ 283,862

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Summary of Significant Accounting Policies - Revenue Recognition (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($) tenant	Dec. 31, 2022 USD ($)
Summary of Significant Accounting Policies
Unbilled rent	$ 1,069,860		$ 1,022,153
Loss on impairment	1,192	$ 0
Revenues	2,460,976	$ 2,903,964
Number tenants defaulted | tenant		2
Loss on impairment - intangible assets	$ 35,551	$ 36,670
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration]	Gain (Loss) on Sale of Assets and Asset Impairment Charges	Gain (Loss) on Sale of Assets and Asset Impairment Charges

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Summary of Significant Accounting Policies - Additional Information (Details)			3 Months Ended		12 Months Ended
	Aug. 31, 2020 shares	Jan. 01, 2020 shares	Mar. 31, 2023 USD ($) $ / shares shares	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) shares	Dec. 31, 2017 USD ($) Partnership
Accounting Policies [Line Items]
Allowance for uncollectible tenant receivables			$ 62,960		$ 47,109
Percentage of taxable income required to be distributed to shareholders			90.00%
Tenant in common interest exchanged for operating partnership units (as a percent)		3.45%
Tenant in common interest exchanged, operating partnership units issued (in shares) | shares		93,850
Net (loss) income			$ (1,233,806)	$ (980,383)
Noncontrolling Operating Partnership Units | Partnership						125,000
Number of Operating Partnership units into shares of Common Stock | shares	5,319
Common stock, par value per share (in dollars per share) | $ / shares			$ 0.01
Less: Net loss attributable to Operating Partnership noncontrolling interests			$ (2,903)	(973)
Hanover Square Property
Accounting Policies [Line Items]
Net loss (income) attributable to noncontrolling interests			(1,241)	(319)
Hanover Square Property | Noncontrolling Interests
Accounting Policies [Line Items]
Net (loss) income			(1,241)	(319)
Clemson Best Western Property
Accounting Policies [Line Items]
Amounts incurred for payroll salaries and wages, payroll taxes and other employee benefits			0	131,939
Income tax expense				0
Parkway Property
Accounting Policies [Line Items]
Net loss (income) attributable to noncontrolling interests			(8,367)	10,193
Parkway Property | Noncontrolling Interests
Accounting Policies [Line Items]
Net (loss) income			(8,367)	10,193
Hanover Square Property
Accounting Policies [Line Items]
Net (loss) income			7,755	(1,992)
Parkway Property
Accounting Policies [Line Items]
Net (loss) income			46,482	(56,624)
Operating Partnership
Accounting Policies [Line Items]
Net (loss) income			(243,989)	75,882
Operating Partnership | Noncontrolling Interests
Accounting Policies [Line Items]
Net (loss) income			$ (2,903)	$ 973
Percentage of outstanding operating partnership units			1.19%		1.19%
Weighted average of net income (loss) allocated to noncontrolling unit holders			0.0119	0.0128
Operating Partnership | Members of the selling LLC
Accounting Policies [Line Items]
Investment of non-controlling owner						$ 1,175,000
Hampton Inn Property
Accounting Policies [Line Items]
Operating Partnership units outstanding | shares			213,531		213,531
Hanover Square Property
Accounting Policies [Line Items]
Percentage by parent			84.00%
Ownership percentage by noncontrolling owners			16.00%	16.00%
Hanover Square Property | Hanover Square Property
Accounting Policies [Line Items]
Percentage by parent			84.00%
Ownership percentage by noncontrolling owners			16.00%
Parkway Property
Accounting Policies [Line Items]
Percentage by parent			82.00%
Ownership percentage by noncontrolling owners			18.00%	18.00%
Parkway Property | Noncontrolling Interests
Accounting Policies [Line Items]
Net (loss) income			$ 8,367	$ (10,193)
Parkway Property | Parkway Property
Accounting Policies [Line Items]
Percentage by parent			82.00%
Ownership percentage by noncontrolling owners			18.00%

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Investment Properties - Investment Properties (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Real Estate [Line Items]
Investment properties at cost	$ 86,467,454	$ 85,915,860
Less accumulated depreciation	10,224,948	9,400,908
Investment properties, net	76,242,506	76,514,952
Land
Real Estate [Line Items]
Investment properties at cost	16,526,436	16,526,436
Site improvements
Real Estate [Line Items]
Investment properties at cost	4,731,249	4,719,926
Buildings and improvements
Real Estate [Line Items]
Investment properties at cost	$ 65,209,769	$ 64,669,498

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Investment Properties - Deferred costs, net of depreciation (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Capitalized leasing commissions, net	$ 614,663	$ 555,956
Capitalized tenant improvements - acquisition cost allocation, net
Capitalized tenant improvements, net	2,996,990	3,178,534
Capitalized tenant improvements incurred subsequent to acquisition, net
Capitalized tenant improvements, net	$ 683,836	$ 338,836

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Investment Properties - Property (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Real Estate [Line Items]
Depreciation expense	$ 911,481	$ 771,560
Capitalized tenant improvements	377,265	56,281
Capitalized leasing commissions	90,637	78,921
Depreciation on capitalized leasing commissions	31,930	19,791
Impairment of assets held for sale	0	175,671
Investment property
Real Estate [Line Items]
Depreciation expense	911,481	771,560
Capitalized tenant improvements incurred subsequent to acquisition, net
Real Estate [Line Items]
Depreciation on capitalized tenant improvements	32,265	21,648
Capitalized tenant improvements - acquisition cost allocation, net
Real Estate [Line Items]
Depreciation on capitalized tenant improvements	$ 172,888	$ 127,276

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Investment Properties - Additional Information (Details)		3 Months Ended		12 Months Ended
	Jun. 13, 2022 USD ($) ft²	Mar. 31, 2023 USD ($) ft²	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Real Estate [Line Items]
Depreciation expense		$ 911,481	$ 771,560
Capitalized Tenant Improvements		377,265	56,281
Capitalized tenant improvements written off		8,656		$ 0
Capitalized Leasing Commissions		90,637	78,921
Depreciation on capitalized leasing commissions		31,930	$ 19,791
Capitalized loan issuance costs		$ 698,602		$ 725,592
Parkway Property
Real Estate [Line Items]
Ownership percentage by noncontrolling owners		18.00%	18.00%
Noncontrolling ownership percentage		18.00%	18.00%
Ownership percentage		82.00%
Greenbrier Business Center Property
Real Estate [Line Items]
Area of building | ft²		89,280
Salisbury Marketplace Property
Real Estate [Line Items]
Area of building | ft²	79,732	79,732
Purchase price of property	$ 10,025,000
Acquisition and closing costs	254,714
Total investment	10,279,714
Percentage of property leased		91.20%
Parkway Property
Real Estate [Line Items]
Area of building | ft²		64,109
Parkway Property | Parkway Property
Real Estate [Line Items]
Ownership percentage by noncontrolling owners		18.00%
Noncontrolling ownership percentage		18.00%
Ownership percentage		82.00%
Salisbury Marketplace Property | Lancer Center Property
Real Estate [Line Items]
Capitalized loan issuance costs	$ 18,847
Investment property
Real Estate [Line Items]
Depreciation expense		$ 911,481	$ 771,560

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Investment Properties - Assets held for sale and liabilities associated with assets held for sale (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Long Lived Assets Held-for-sale [Line Items]
Impairment of assets held for sale	$ 0	$ 175,671
Clemson Best Western Hotel Property
Long Lived Assets Held-for-sale [Line Items]
Impairment of assets held for sale		$ 175,671

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Investment Properties - Sale of investment property (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
REVENUE
Total Revenue	$ 2,460,976	$ 2,903,964
OPERATING EXPENSES
Hotel property operating expenses		372,860
Depreciation and amortization	1,156,348	1,155,197
Impairment of assets held for sale	0	175,671
Total Operating Expenses	2,801,692	3,138,362
Operating Income	(340,716)	(234,398)
Interest Expense	864,052	841,424
Net Income from Operations	(1,204,768)	(1,075,822)
Net (loss) income	(1,233,806)	(980,383)
Net income attributable to Operating Partnership noncontrolling interests	(2,903)	(973)
Net Income Attributable to Medalist Common Shareholders	$ (1,221,295)	(989,284)
Clemson Best Western Hotel Property and Hampton Inn Property
REVENUE
Total Revenue		765,489
OPERATING EXPENSES
Hotel property operating expenses		372,860
Total Operating Expenses		548,531
Operating Income		216,958
Interest Expense		138,917
Net Income from Operations		78,041
Net (loss) income		78,304
Net income attributable to Operating Partnership noncontrolling interests		1,002
Net Income Attributable to Medalist Common Shareholders		77,302
Clemson Best Western Hotel Property
OPERATING EXPENSES
Impairment of assets held for sale		175,671
Other income (expense)		263
Hotel property room revenues
REVENUE
Total Revenue		762,200
Hotel property room revenues | Clemson Best Western Hotel Property
REVENUE
Total Revenue		762,200
Hotel property other revenues
REVENUE
Total Revenue		3,289
Hotel property other revenues | Clemson Best Western Hotel Property
REVENUE
Total Revenue		$ 3,289

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Investment Properties - 2022 Acquisition (Details) - USD ($)	Jun. 13, 2022	Mar. 31, 2023	Dec. 31, 2022
Real Estate [Line Items]
Investment property		$ 76,242,506	$ 76,514,952
Salisbury Marketplace Property
Real Estate [Line Items]
Investment property	$ 9,963,258
Lease intangibles and other assets	1,045,189
Above market leases	40,392
Below market leases	(769,125)
Fair value of net assets acquired	10,279,714
Purchase consideration:
Consideration paid with cash	3,746,561
Consideration paid with new mortgage debt, net	6,533,153
Total consideration	$ 10,279,714

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Investment Properties - 2021 Acquisition (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Investment Properties
Investment property	$ 76,242,506	$ 76,514,952

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Mandatorily Redeemable Preferred Stock (Details)															3 Months Ended
	Apr. 28, 2023 $ / shares	Jan. 27, 2023 $ / shares	Oct. 20, 2022 $ / shares	Jul. 21, 2022 $ / shares	Apr. 21, 2022 $ / shares	Jan. 20, 2022 $ / shares	Oct. 27, 2021 $ / shares	Jul. 26, 2021 $ / shares	Apr. 30, 2021 $ / shares	Feb. 01, 2021 $ / shares	Oct. 26, 2020 $ / shares	Jul. 24, 2020 $ / shares	Apr. 27, 2020 $ / shares	Feb. 19, 2020 USD ($) director period $ / shares shares	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Apr. 01, 2022 $ / shares	Mar. 21, 2022 $ / shares	Mar. 17, 2022 $ / shares	Mar. 14, 2022 $ / shares	Mar. 03, 2022 $ / shares
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Price Per Share | $ / shares																		$ 1.075	$ 1.055	$ 1.076	$ 1.050	$ 1.088
Dividends paid (in dollars per share) | $ / shares		$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.37
Mandatorily redeemable preferred stock.
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Preferred stock issuances (shares) | shares														200,000
Price Per Share | $ / shares														$ 23.00
Gross proceeds														$ 4,600,000
Net proceeds of the redeemable preferred stock														3,860,882
Aggregate liquidation preference														$ 5,000,000
Preferred Stock, dividend rate (as a percent)														8.00%	8.00%
Defaulted dividend payment quarterly periods, number | period														6
Number of additional directors, who can be elected | director														2
Accrued but unpaid dividends															$ 70,004		$ 70,004
Discount on stock issued (in dollars per share) | $ / shares														$ 2.00
Discount on stock issued														$ 400,000
Discount on stock issued, amortization period														5 years
Legal Fees														$ 739,118
Amortization of the discount and deferred financing costs															58,804	$ 53,923
Accumulated amortization of the discount and deferred financing costs															$ 648,443		$ 589,639
Subsequent event
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Dividends paid (in dollars per share) | $ / shares	$ 0.50
Subsequent event | Mandatorily redeemable preferred stock.
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Dividends paid (in dollars per share) | $ / shares	$ 0.50

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Loans Payable - Mortgages Payables, Net (Details) - USD ($)					3 Months Ended	12 Months Ended
	Feb. 01, 2023	Jan. 31, 2023	Aug. 01, 2022	Jun. 13, 2022	Mar. 31, 2023	Dec. 31, 2022	Jan. 01, 2023	Jul. 31, 2022
Loans Payable
Less unamortized issuance costs					$ (698,602)	$ (725,592)
Mortgages Payable
Loans Payable
Less unamortized issuance costs					(698,602)
Net principal payments and debt maturities					61,065,672	61,340,259
Franklin Square Property
Loans Payable
Mortgages payable					$ 13,250,000	$ 13,250,000
Franklin Square Property | Mortgages Payable
Loans Payable
Monthly Payment					Interest only
Interest Rate					3.808%
Maturity					2031-12	2031-12
Hanover Square Property
Loans Payable
Mortgages payable					$ 9,813,679	$ 9,877,867
Hanover Square Property | Mortgages Payable
Loans Payable
Monthly Payment	$ 78,098	$ 56,882			$ 78,098
Interest Rate					6.94%	4.25%	6.94%
Maturity					2027-12	2027-12
Ashley Plaza Property
Loans Payable
Mortgages payable					$ 10,856,618	$ 10,930,370
Ashley Plaza Property | Mortgages Payable
Loans Payable
Monthly Payment					$ 52,795
Interest Rate					3.75%
Maturity					2029-09	2029-09
Brookfield Center Property.
Loans Payable
Mortgages payable					$ 4,639,969	$ 4,663,206
Brookfield Center Property. | Mortgages Payable
Loans Payable
Monthly Payment					$ 22,876
Interest Rate					3.90%
Maturity					2029-11	2029-11
Parkway Property
Loans Payable
Maturity					2026-10	2026-10
Mortgages payable					$ 4,956,301	$ 4,992,427
Parkway Property | Mortgages Payable
Loans Payable
Monthly Payment					28,161
Wells Fargo Facility
Loans Payable
Mortgages payable					$ 18,247,707	$ 18,351,981
Wells Fargo Facility | Mortgages Payable
Loans Payable
Monthly Payment					103,438
Monthly Payment				$ 103,438
Interest Rate				4.50%	4.50%
Maturity					2027-06	2027-06
Lancer Center Property | Mortgages Payable
Loans Payable
Monthly Payment				$ 34,667
Interest Rate				4.00%
Greenbrier Business Center Property | Mortgages Payable
Loans Payable
Monthly Payment			$ 23,873
Interest Rate								4.00%

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Loans Payable - Assets held for sale (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Loans Payable
Less unamortized issuance costs	$ (698,602)	$ (725,592)

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Loans Payable - Wells Fargo Line of Credit (Details) - Wells Fargo Line of Credit - USD ($)	Jun. 13, 2022	Mar. 31, 2023	Dec. 31, 2022
Loans Payable
Line of credit, maximum borrowing capacity	$ 1,500,000
Line of credit, outstanding balance		$ 0
Basis spread on variable rate	2.25%
Term of loan	1 year
SOFR
Loans Payable
Interest Rate		4.87%	4.30%

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Loans Payable - Interest expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Debt Instrument [Line Items]
Mortgage Interest Expense	$ 697,600	$ 658,997
Amortization of discounts and capitalized issuance costs	85,794	82,041
Interest rate protection transaction payments	(19,342)	(100,386)
Other interest expense	100,000	841,424
Total interest expense	864,052	841,424
Amortization and preferred stock dividends on mandatorily redeemable preferred stock
Debt Instrument [Line Items]
Amortization of discounts and capitalized issuance costs	58,804	53,923
Other interest expense	100,000	100,000
Total interest expense	158,804	153,923
Franklin Square Property
Debt Instrument [Line Items]
Mortgage Interest Expense	126,140	126,140
Amortization of discounts and capitalized issuance costs	7,093	7,093
Total interest expense	133,233	133,233
Hanover Square Property
Debt Instrument [Line Items]
Mortgage Interest Expense	170,640	104,854
Amortization of discounts and capitalized issuance costs	3,223	3,223
Total interest expense	173,863	108,077
Ashley Plaza Property
Debt Instrument [Line Items]
Mortgage Interest Expense	102,133	104,147
Amortization of discounts and capitalized issuance costs	4,357	4,358
Total interest expense	106,490	108,505
Clemson Best Western Property
Debt Instrument [Line Items]
Mortgage Interest Expense		138,531
Other interest expense		386
Total interest expense		138,917
Brookfield Center Property.
Debt Instrument [Line Items]
Mortgage Interest Expense	45,391	46,254
Amortization of discounts and capitalized issuance costs	2,838	2,838
Total interest expense	48,229	49,092
Lancer Centers Property
Debt Instrument [Line Items]
Mortgage Interest Expense		63,746
Amortization of discounts and capitalized issuance costs		7,156
Total interest expense		70,902
Greenbrier Business Center Property
Debt Instrument [Line Items]
Mortgage Interest Expense		44,950
Amortization of discounts and capitalized issuance costs		693
Total interest expense		45,643
Parkway Center
Debt Instrument [Line Items]
Mortgage Interest Expense	47,257	30,375
Amortization of discounts and capitalized issuance costs	2,757	2,757
Interest rate protection transaction payments	(19,342)
Total interest expense	30,672	$ 33,132
Wells Fargo Facility
Debt Instrument [Line Items]
Mortgage Interest Expense	206,039
Amortization of discounts and capitalized issuance costs	6,722
Total interest expense	$ 212,761

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Loans Payable - Interest accrued and accumulated amortization of capitalized issuance costs (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Accrued interest	$ 196,032	$ 214,042
Accumulated amortization of capitalized issuance costs	887,359	801,565
Amortization and preferred stock dividends on mandatorily redeemable preferred stock
Debt Instrument [Line Items]
Accrued interest	70,004	70,004
Accumulated amortization of capitalized issuance costs	648,443	589,639
Franklin Square Property
Debt Instrument [Line Items]
Accrued interest	43,448	43,448
Accumulated amortization of capitalized issuance costs	37,829	30,736
Hanover Square Property
Debt Instrument [Line Items]
Accrued interest	60,539	38,792
Accumulated amortization of capitalized issuance costs	63,103	59,880
Ashley Plaza Property
Debt Instrument [Line Items]
Accrued interest		35,296
Accumulated amortization of capitalized issuance costs	62,466	58,109
Brookfield Center Property.
Debt Instrument [Line Items]
Accumulated amortization of capitalized issuance costs	39,731	36,893
Parkway Center
Debt Instrument [Line Items]
Accrued interest	22,041	26,502
Accumulated amortization of capitalized issuance costs	15,621	12,864
Wells Fargo Facility
Debt Instrument [Line Items]
Accumulated amortization of capitalized issuance costs	$ 20,166	$ 13,444

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Loans Payable - Principal Repayments on Indebtedness (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Less unamortized issuance costs	$ (698,602)	$ (725,592)
Mortgages Payable
Debt Instrument [Line Items]
For the remaining nine months ending December 31, 2023	780,584
2024	1,092,879
2025	1,391,025
2026	1,460,923
2027	25,990,390
Thereafter	31,048,473
Total principal payments and debt maturities	61,764,274
Less unamortized issuance costs	(698,602)
Net principal payments and debt maturities	$ 61,065,672	$ 61,340,259

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Loans Payable - Additional Information (Details) - USD ($)											3 Months Ended	12 Months Ended
	Mar. 31, 2023	Feb. 01, 2023	Jan. 31, 2023	Jan. 01, 2023	Dec. 31, 2022	Aug. 01, 2022	Jun. 13, 2022	Nov. 08, 2021	Oct. 28, 2021	Oct. 06, 2021	Mar. 31, 2023	Dec. 31, 2022	Jul. 31, 2022
Debt Instrument [Line Items]
Unamortized issuance costs, net	$ 698,602				$ 725,592						$ 698,602	$ 725,592
LIBOR | Minimum
Debt Instrument [Line Items]
Interest rate exposure cap	3.00%										3.00%
Mortgages Payable
Debt Instrument [Line Items]
Mortgages payables	$ 61,065,672				$ 61,340,259						$ 61,065,672	$ 61,340,259
Unamortized issuance costs, net	$ 698,602										$ 698,602
Wells Fargo Line of Credit
Debt Instrument [Line Items]
Basis spread on variable rate							2.25%
Term of loan							1 year
Wells Fargo Line of Credit | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Interest Rate	4.87%				4.30%						4.87%	4.30%
Parkway Property | Interest Rate Protection Transaction
Debt Instrument [Line Items]
Interest rate exposure cap									5.25%
Description of interest rate									capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%
Fair value of derivative					$ 258,279							$ 258,279
Parkway Property | Interest Rate Protection Transaction | ICE LIBOR
Debt Instrument [Line Items]
Description of interest rate	4.86%				4.39%
Basis spread on variable rate									3.00%
Franklin Square Property
Debt Instrument [Line Items]
Refinance with new mortgage payable	$ 13,250,000				$ 13,250,000						$ 13,250,000	13,250,000
Franklin Square Property | Mortgages Payable
Debt Instrument [Line Items]
Maturity extension period										30 days
Additional maturity period										30 days
Cash proceeds used to fund escrows and to repay the remaining balance of the original mortgage loan.								$ 2,242,273
Interest Rate	3.808%										3.808%
Term of loan								10 years
Net worth to be maintained by the entity (excluding mortgaged property's assets and liabilities)	$ 13,250,000										$ 13,250,000
Principal Amount								$ 13,250,000		$ 14,275,000
Amortization schedule of the mortgage loan								30 years
Loan issuance costs								$ 283,721
Minimum liquid assets to be maintained	1,000,000										1,000,000
Franklin Square Property | Mortgages Payable | Monthly payments till January 6, 2025
Debt Instrument [Line Items]
Interest Rate								3.808%
Fixed monthly payment including principal and interest								$ 61,800
Hanover Square Property
Debt Instrument [Line Items]
Refinance with new mortgage payable	$ 9,813,679				$ 9,877,867						$ 9,813,679	$ 9,877,867
Hanover Square Property | Mortgages Payable
Debt Instrument [Line Items]
Interest Rate	6.94%			6.94%	4.25%						6.94%	4.25%
Term of loan				5 years
Debt service coverage ratio											excess of 1.35
Loan-to-value of real estate ratio											75.00%
Fixed monthly payment including principal and interest		$ 78,098	$ 56,882								$ 78,098
Amortization schedule of the mortgage loan		25 years
Hanover Square Property | Mortgages Payable | US Treasury Securities Interest Rate
Debt Instrument [Line Items]
Basis spread on variable rate				3.00%
Hanover Square Property | Mortgages Payable | US Treasury Securities Interest Rate | Minimum
Debt Instrument [Line Items]
Interest Rate				4.25%
Ashley Plaza Property
Debt Instrument [Line Items]
Refinance with new mortgage payable	$ 10,856,618				$ 10,930,370						$ 10,856,618	$ 10,930,370
Ashley Plaza Property | Mortgages Payable
Debt Instrument [Line Items]
Interest Rate	3.75%										3.75%
Fixed monthly payment including principal and interest											$ 52,795
Amortization schedule of the mortgage loan											30 years
Lancer Center Property | Mortgages Payable
Debt Instrument [Line Items]
Interest Rate							4.00%
Fixed monthly payment including principal and interest							$ 34,667
Amortization schedule of the mortgage loan							25 years
Loss on extinguishment of debt												113,282
Brookfield Center Property.
Debt Instrument [Line Items]
Refinance with new mortgage payable	$ 4,639,969				4,663,206						$ 4,639,969	4,663,206
Brookfield Center Property. | Mortgages Payable
Debt Instrument [Line Items]
Interest Rate	3.90%										3.90%
Fixed monthly payment including principal and interest											$ 22,876
Amortization schedule of the mortgage loan											30 years
Greenbrier Business Center Property | Mortgages Payable
Debt Instrument [Line Items]
Interest Rate													4.00%
Fixed monthly payment including principal and interest						$ 23,873
Amortization schedule of the mortgage loan						25 years
Loss on extinguishment of debt												56,393
Parkway Property
Debt Instrument [Line Items]
Refinance with new mortgage payable	$ 4,956,301				4,992,427						$ 4,956,301	$ 4,992,427
Parkway Property | Interest Rate Protection Transaction
Debt Instrument [Line Items]
Interest rate exposure cap	5.25%										5.25%
Description of interest rate											capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%.
Fair value of derivative	$ 218,411										$ 218,411
Parkway Property | Mortgages Payable
Debt Instrument [Line Items]
Maximum allowed change in interest payable each month during any 6 month period											1.00%
Maximum allowed change in interest payable each month during any 12 month period											2.00%
Effective interest rate											4.4806%	4.3117%
Debt service coverage ratio											not less than 1.60 to 1.00 on an annual basis
Fixed monthly payment including principal and interest											$ 28,161
Amortization schedule of the mortgage loan											30 years
Parkway Property | Mortgages Payable | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate											2.25%
Parkway Property | Mortgages Payable | LIBOR | Minimum
Debt Instrument [Line Items]
Interest Rate	2.25%										2.25%
Wells Fargo Facility
Debt Instrument [Line Items]
Debt service coverage ratio							not less than 1.50 to 1.00
Refinance with new mortgage payable	$ 18,247,707				$ 18,351,981						$ 18,247,707	$ 18,351,981
Wells Fargo Facility | Mortgages Payable
Debt Instrument [Line Items]
Maturity period							5 years
Interest Rate	4.50%						4.50%				4.50%
Fixed monthly payment including principal and interest							$ 103,438
Principal Amount							$ 18,609,500
Minimum debt yield							9.50%
Amortization schedule of the mortgage loan							25 years
Minimum liquid assets to be maintained							$ 1,500,000

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Rentals under Operating Leases (Details)	Mar. 31, 2023 USD ($)
Future minimum rents to be received under operating leases
For the remaining nine months ending December 31, 2023	$ 5,967,624
2024	6,702,872
2025	5,814,765
2026	4,048,868
2027	3,053,369
Thereafter	7,608,664
Total minimum rents	$ 33,196,162

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Equity - Standby Equity Purchase Agreement (Details) - USD ($)						1 Months Ended	3 Months Ended
	Apr. 01, 2022	Mar. 21, 2022	Mar. 17, 2022	Mar. 14, 2022	Mar. 03, 2022	Apr. 01, 2022	Mar. 31, 2023
Equity
Total Proceeds	$ 350,313	$ 500,000	$ 300,000	$ 290,000	$ 98,574	$ 1,538,887	$ 1,538,887
Price Per Share	$ 1.075	$ 1.055	$ 1.076	$ 1.050	$ 1.088	$ 1.075
Common stock issuances (shares)	325,732	474,068	278,810	276,190	90,600	1,445,400	1,445,400

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Equity - Common Stock Repurchase Plan (Details) - USD ($)								1 Months Ended	3 Months Ended
	Jan. 21, 2022	Jan. 14, 2022	Jan. 10, 2022	Jan. 07, 2022	Jan. 06, 2022	Jan. 05, 2022	Jan. 04, 2022	Jan. 21, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2021
Equity [Line Items]
Number of common shares approved to repurchase											500,000
Total Cost										$ 286,543
Common Stock Repurchase Plan
Equity [Line Items]
Shares Purchased	39,365	100	50,000	30,000	100,000	48,205	400	268,070	268,070
Total Cost	$ 39,603	$ 101	$ 51,000	$ 31,500	$ 104,556	$ 51,093	$ 424	$ 278,277	$ 278,277
Price Per Share	$ 1.006	$ 1.010	$ 1.020	$ 1.050	$ 1.046	$ 1.060	$ 1.060	$ 1.006
Expenses from stock repurchase plan									$ 8,266
Average price of repurchased shares	$ 1.038							$ 1.038	$ 1.038

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Equity - Earnings Per Common Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Basic and diluted shares outstanding
Weighted average Common Shares - basic	17,758,421	16,037,073
Effect of conversion of operating partnership units	213,531	213,531
Weighted average common shares - diluted	17,971,952	16,250,604
Calculation of earnings per share - basic and diluted
Net loss attributable to common shareholders	$ (1,221,295)	$ (989,284)
Weighted-average number of shares - basic	17,758,421	16,037,073
Weighted-average number of shares - diluted	17,758,421	16,037,073
Loss per share from operations - basic	$ (0.07)	$ (0.06)
Loss per share from operations - diluted	$ (0.07)	$ (0.06)

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Equity - Dividends and Distributions to Noncontrolling Interests Paid (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Equity [Line Items]
Common shareholders (dividends)	$ 176,810	$ 316,450
Total dividends and distributions	178,945	341,521
Hanover Square Property
Equity [Line Items]
Noncontrolling interest (distributions)		10,000
Parkway Property
Equity [Line Items]
Noncontrolling interest (distributions)		10,800
Operating Partnership unit holders (distributions)
Equity [Line Items]
Noncontrolling interest (distributions)	$ 2,135	$ 4,271

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Equity - 2018 Equity Incentive Plan (Details) - 2018 Equity Incentive Plan	Nov. 22, 2022 USD ($) employee item director shares	Mar. 02, 2022 USD ($) director employee shares	Aug. 23, 2018 shares	Mar. 31, 2023	Jan. 01, 2023 shares
Equity [Line Items]
Number of shares available for issuance under the plan					491,304
Percentage of fully diluted shares of common shares			8.00%
Fair value of grants | $	$ 250,000	$ 233,100
Consultants
Equity [Line Items]
Number of shares granted	50,956
Number of consultants | item	2
Minimum
Equity [Line Items]
Number of shares authorized			240,000
Independent directors
Equity [Line Items]
Number of shares granted	114,651	90,000
Number of directors who received grants | director	3	3
Employee
Equity [Line Items]
Number of shares granted	76,434	60,000
Number of employees of the Manager who also serve as directors who received grants | employee	2	2
Chief financial officer
Equity [Line Items]
Number of shares granted	76,433	60,000
Percent incremental common shares reserved				8.00%

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Equity - Additional Information (Details)									1 Months Ended		3 Months Ended		12 Months Ended	15 Months Ended
	Jan. 27, 2023 $ / shares	Apr. 01, 2022 USD ($) $ / shares shares	Mar. 21, 2022 USD ($) $ / shares shares	Mar. 17, 2022 USD ($) $ / shares shares	Mar. 14, 2022 USD ($) $ / shares shares	Mar. 03, 2022 USD ($) $ / shares shares	Jan. 20, 2022 $ / shares	Nov. 17, 2021 USD ($)	Apr. 01, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) $ / shares shares	Mar. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) shares	Mar. 31, 2023 USD ($) $ / shares shares	Jun. 30, 2021 USD ($)
Equity [Line Items]
Shares authorized											1,000,000,000			1,000,000,000
Common stock, shares authorized											750,000,000			750,000,000
Common stock, par value per share (in dollars per share) | $ / shares											$ 0.01			$ 0.01
Preferred stock, shares authorized											250,000,000			250,000,000
Preferred stock, par value per share (in dollars per share) | $ / shares											$ 0.01			$ 0.01
Number of common shares issued and sold		325,732	474,068	278,810	276,190	90,600			1,445,400		1,445,400
Sales price per share | $ / shares		$ 1.075	$ 1.055	$ 1.076	$ 1.050	$ 1.088			$ 1.075
Average share price | $ / shares		$ 1.065							$ 1.065		$ 1.065			$ 1.065
Net proceeds from issuance of common shares | $		$ 350,313	$ 500,000	$ 300,000	$ 290,000	$ 98,574			$ 1,538,887		$ 1,538,887
Authorized aggregate amount of common stock under shelf registration | $											150,000,000			$ 150,000,000
Legal costs and filing fees associated with filling of shelf registration statement | $										$ 84,926	84,926		$ 84,926	$ 84,926	$ 84,926
Maximum period to issue common shares								36 months
Number of shares authorized to repurchase										500,000
Maximum price per share under stock repurchase plan | $ / shares										$ 4.80
Common stock, shares, outstanding													17,758,421
Dividend paid | $											$ 178,945	$ 341,521
Dividends paid per common share | $ / shares	$ 0.01						$ 0.02				$ 0.01	$ 0.02
Standby Equity Purchase Agreement (SEPA)
Equity [Line Items]
Maximum value of shares issuable under the agreement | $								$ 6,665,299
Price per share as a percentage of market price								96.50%
Restrictions on owning of common shares (in percentage)								4.99%
Noncontrolling Interest Operating Partnership
Equity [Line Items]
Common units outstanding											17,971,952		17,971,952	17,971,952
Dividend paid | $											$ 2,135	$ 4,271
General Partner | Noncontrolling Interest Operating Partnership
Equity [Line Items]
Common units outstanding											17,758,421		17,758,421	17,758,421
General Partner | Medalist Diversified Real Estate Investment Trust, Inc. ("REIT") | Noncontrolling Interest Operating Partnership
Equity [Line Items]
Common stock, shares, outstanding											17,758,421		17,758,421	17,758,421
Operating Partnership unit holders (distributions) | Noncontrolling Interest Operating Partnership
Equity [Line Items]
Common units eligible for conversion											213,531	213,531	213,531	213,531
Operating Partnership unit holders (distributions) | Noncontrolling Limited Partner | Noncontrolling Interest Operating Partnership
Equity [Line Items]
Common units outstanding											213,531	213,531	213,531	213,531
Common unit to common share conversion ratio											1	1		1
Operating Partnership | General Partner
Equity [Line Items]
Operating Partnership ownership interest											98.81%		98.81%
Operating Partnership | Noncontrolling Limited Partner
Equity [Line Items]
Common unit to common share conversion ratio											1			1

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Equity - Reverse Stock Split (Details)	May 03, 2023 D $ / shares shares	May 02, 2023 shares	Dec. 31, 2022 shares
Equity [Line Items]
Common stock, shares, outstanding			17,758,421
Subsequent event
Equity [Line Items]
Conversion ratio	0.125
Common stock, shares, outstanding		17,758,421
Fractional shares issued	0
Minimum Bid Price Requirement | $ / shares	$ 1.00
Minimum number or consecutive business days that the closing bid price of the common stock must be at or above the Minimum Bid Price Requiirement. | D	10

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Commitments and Contingencies (Details)	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies
Percentage of total annualized base revenues of properties in the Mid-Atlantic	100.00%

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Related Party Transactions - Medalist Fund Manager Inc (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021	Mar. 19, 2021
Amounts payable to Manager
Retail center property operating expenses	$ 520,615	$ 450,125
Hotel property operating expenses		372,860
Flex center property operating expenses	176,737	161,381
Legal, accounting and other professional fees	767,078	459,869
Asset management fees
Amounts payable to Manager
Retail center property operating expenses	84,282	70,257
Hotel property operating expenses	0	6,825
Flex center property operating expenses	27,675	26,075
Legal, accounting and other professional fees	$ 112,423	106,991
Asset management fees | Medalist Fund Manager, Inc.
Amounts payable to Manager
Asset management fee percentage	0.125%
Asset management fees incurred	$ 224,380	210,148
Acquisition fees | Medalist Fund Manager, Inc.
Amounts payable to Manager
Percentage Of Acquisition Fee	2.00%
Threshold stock price up to which one half of acquisition fees will defer					$ 5.00
Acquisition fee accrued	$ 352,717		$ 352,717
Acquisition fees | Medalist Fund Manager, Inc. | Salisbury Marketplace Property
Amounts payable to Manager
Acquisition and closing costs			201,524
Cash payment of acquisition fee			100,762
Acquisition fee accrued			$ 100,762
Acquisition fees | Medalist Fund Manager, Inc. | Lancer Center Property, Greenbrier Business Center Property and Parkway Property [Member]
Amounts payable to Manager
Acquisition and closing costs				$ 503,910
Cash payment of acquisition fee				251,955
Acquisition fee accrued				$ 251,955
Incentive fees | Medalist Fund Manager, Inc.
Amounts payable to Manager
Incentive fee expenses	$ 0	$ 0

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Related Party Transactions - Other Related Parties (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
One of the Medalist Fund Manager, Inc. owners | Shockoe Properties, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners	6.32%
Property management fees | Shockoe Properties, LLC
Related Party Transaction [Line Items]
Property management fees	$ 70,519	$ 62,072
Percentage of rent	3.00%
Threshold limit of percentage of asset management fee	up to 3% of the monthly gross revenues
Consulting Agreement | Gunston Consulting, LLC
Related Party Transaction [Line Items]
Annual salary	$ 150,000
Consulting fees paid	$ 44,872	$ 0

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Segment Information - Property Operating Revenues, Expenses and NOI by Product Type (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Revenues	$ 2,460,976	$ 2,903,964
Operating expenses	2,801,692	3,138,362
Bad debt expense	27,122	12,783
Net operating income	(340,716)	(234,398)
Operating segments
Segment Reporting Information [Line Items]
Revenues	2,460,976	2,903,964
Operating expenses	697,352	984,366
Bad debt expense	27,122	12,783
Net operating income	1,736,502	1,906,815
Operating segments | Hotel properties.
Segment Reporting Information [Line Items]
Revenues		765,489
Operating expenses		372,860
Net operating income		392,629
Operating segments | Retail center properties
Segment Reporting Information [Line Items]
Revenues	1,891,679	1,525,085
Operating expenses	520,615	450,125
Bad debt expense	125	7,791
Net operating income	1,370,939	1,067,169
Operating segments | Flex center property
Segment Reporting Information [Line Items]
Revenues	569,297	613,390
Operating expenses	176,737	161,381
Bad debt expense	26,997	4,992
Net operating income	$ 365,563	$ 447,017

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Subsequent Events - Additional Information (Details)															3 Months Ended
	May 03, 2023 $ / shares	Apr. 28, 2023 $ / shares	Jan. 27, 2023 $ / shares	Oct. 20, 2022 $ / shares	Jul. 21, 2022 $ / shares	Apr. 21, 2022 $ / shares	Jan. 20, 2022 $ / shares	Oct. 27, 2021 $ / shares	Jul. 26, 2021 $ / shares	Apr. 30, 2021 $ / shares	Feb. 01, 2021 $ / shares	Oct. 26, 2020 $ / shares	Jul. 24, 2020 $ / shares	Apr. 27, 2020 $ / shares	Mar. 31, 2023 $ / shares	Mar. 31, 2022 $ / shares	May 02, 2023 $ / shares
Subsequent Event [Line Items]
Common stock dividend paid			$ 0.01				$ 0.02								$ 0.01	$ 0.02
Dividends paid (in dollars per share)			$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.50	$ 0.37
Common stock, par value per share (in dollars per share)															$ 0.01
Subsequent event
Subsequent Event [Line Items]
Dividends paid (in dollars per share)		$ 0.50
Conversion ratio	0.125
Common stock, par value per share (in dollars per share)	$ 0.01																$ 0.08
Subsequent event | Common Stock
Subsequent Event [Line Items]
Common stock dividend paid		0.01
Subsequent event | Mandatorily redeemable preferred stock.
Subsequent Event [Line Items]
Dividends paid (in dollars per share)		$ 0.50