Medalist Diversified (MDRR) risk factors, FY2024 10-K

Risks Related to Our Business and Investments

1. 01Our success is dependent on our ability to make additional Investments consistent with our investment goals
2. 02Restrictions in a tenants in common agreement related to the Parkway Property may adversely impact our investment in that property
3. 03You will not have the opportunity to evaluate our Investments before we make them
4. 04Our future growth will depend upon our ability to acquire and lease properties in a competitive real estate business and to raise additional capital
5. 05We may not be successful in identifying and consummating suitable investment opportunities
6. 06If we cannot obtain additional capital, our ability to make acquisitions and lease properties will be limited. We are subject to risks associated with debt and capital stock issuances, and such issuances may have consequences to holders of shares of our common stock
7. 07Lack of diversification in number of investments increases our dependence on individual investments
8. 08We may never reach sufficient size to achieve diversity in our portfolio
9. 09The market for real estate investments is highly competitive
10. 10We are required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations
11. 11We utilize, and intend to continue to utilize, leverage, which may limit our financial flexibility in the future
12. 12We may incur losses as a result of ineffective risk management processes and strategies
13. 13We are dependent on information systems and third parties, and systems failures, including as a result of cybersecurity threats, could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to make distributions to our stockholders
14. 14Inflation may adversely affect our financial condition and results of operations
15. 15Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses
16. 16We will continue to incur costs as a result of operating as a public company and our management is required to devote substantial time to new compliance initiatives and corporate governance practices
17. 17If we are unable to maintain effective internal control over financial reporting in the future, our ability to produce accurate financial statements could be impaired, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline
18. 18We may discover deficiencies with our internal controls that require improvements, and we will be exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002
19. 19We have experienced losses in the past, and we may experience similar losses in the future
20. 20Rates of distribution to you will not necessarily be indicative of our operating results. If we make distributions from sources other than our cash flows from operations or earnings, we will have fewer funds available for the acquisition of properties and your overall return may be reduced
21. 21Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates, commercial real estate values, hotel revenues and our ability to secure debt financing, service future debt obligations, or pay distributions to stockholders

Risks Related to the Real Estate Industry and Investments in Real Estate

1. 22Our real estate investments are subject to risks particular to real property
2. 23Real estate investments are not as liquid as other types of assets, which may reduce economic returns to our stockholders
3. 24Investments in real estate-related assets can be speculative
4. 25Liability relating to environmental matters may impact the value of the properties that we may acquire or underlying our investments
5. 26Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results
6. 27We may invest in real estate-related Investments, including joint ventures and co-investment arrangements
7. 28We expect to lease a significant portion of our real estate to middle-market businesses, which may be more susceptible to adverse market conditions
8. 29Adverse economic conditions may negatively affect our results of operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our Investments
9. 30We may be adversely affected by unfavorable economic changes in the specific geographic areas where our Investments are concentrated
10. 31We may not be able to re-lease or renew leases at the Investments held by us on terms favorable to us or at all
11. 32Some of our leases are below-market, have long terms, or have unfavorable, below- market renewal options, all of which may limit our ability to increase rental revenues and increase the value of our properties
12. 33The bankruptcy, insolvency or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition
13. 34Lease defaults or terminations or landlord-tenant disputes may adversely reduce our income from our leased property portfolio
14. 35Our leases that are net leases may require us to pay property-related expenses that are not the obligations of our tenants
15. 36Net leases may not result in fair market lease rates over time, which could negatively impact our income and reduce the amount of funds available to make distributions to our stockholders
16. 37Some of our leases are gross leases, which could expose us to increased operating expenses and reduce the amount of funds available to make distributions to our stockholders
17. 38We could be adversely affected by various facts and events related to our Investments over which we have limited or no control
18. 39We may be required to reimburse tenants for overpayments of estimated operating expenses
19. 40An uninsured loss or a loss that exceeds the policies on our Investments could subject us to lost capital or revenue on those properties
20. 41Acquired Investments may not meet projected occupancy
21. 42We could be exposed to environmental liabilities with respect to Investments to which we take title
22. 43Properties may contain toxic and hazardous materials
23. 44Properties may contain mold
24. 45Significant restrictions on transfer and encumbrance of Investments are expected
25. 46If we are unable to retain or obtain key personnel, our ability to implement our investment strategies could be hindered, which could reduce our ability to make distributions and adversely affect the trading price of our common stock
26. 47Our use of social media presents risks
27. 48We may be subject to the risk of liability and casualty loss as the owner of an Investment

Risks Related to Taxes and Our Taxation as a REIT

1. 49Our failure to qualify as a REIT would result in higher taxes and reduced cash available for stockholders
2. 50unless we are entitled to relief under certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”), we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT
3. 51REIT distribution requirements could adversely affect our liquidity
4. 52Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
5. 53Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows
6. 54The stock ownership restrictions of the Code for REITs and the 3.6% stock ownership limits in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities
7. 55Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
8. 56The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties
9. 57We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability to pay distributions to our stockholders
10. 58Distributions to tax-exempt investors may be classified as unrelated business taxable income and tax-exempt investors would be required to pay tax on the unrelated business taxable income and to file income tax returns
11. 59The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders
12. 60We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock
13. 61If our operating partnership failed to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences
14. 62We have used and may continue to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments
15. 63High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders
16. 64High mortgage rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash distributions we can make
17. 65Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to you
18. 66Our ability to obtain financing on reasonable terms would be impacted by negative capital market conditions
19. 67Some of our mortgage loans may have “due on sale” provisions, which may impact the manner in which we acquire, sell and/or finance our properties
20. 68Lenders may be able to recover against our other Investments under our mortgage loans
21. 69If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected
22. 70Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders
23. 71We may enter into derivative or hedging contracts that could expose us to contingent liabilities and certain risks and costs in the future
24. 72Complying with REIT requirements may limit our ability to hedge risk effectively
25. 73Interest rates might increase
26. 74We may use floating rate, interest-only or short-term loans to acquire Investments
27. 75We may use leverage to make Investments
28. 76Leveraging an Investment allows a lender to foreclose on that Investment
29. 77Availability of financing and market conditions will affect the success of our company
30. 78We do not have guaranteed cash flow

Risks Related to Our Organization and Structure

1. 79A limit on the percentage of our securities a person may own may discourage a takeover or business combination, which could prevent our stockholders from realizing a premium price for their stock
2. 80Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders
3. 81We may change our investment and operational policies without stockholder consent

Risks Related to the Ownership of Our Common Stock

1. 82Future sales of shares of our common stock in the public market or the issuance of other equity may adversely affect the market price of our common stock
2. 83The market price of our common stock may be volatile, which could result in substantial losses for investors who purchase our shares; and the volatility in the stock prices of other companies may contribute to volatility in our stock price
3. 84general economic, industry, and market conditions
4. 85The availability and timing of cash distributions is uncertain
5. 86An increase in market interest rates may have an adverse effect on the market price of our common stock and our ability to make distributions to its stockholders
6. 87We may not be able to satisfy listing requirements of the Nasdaq Capital Market to maintain a listing of our common stock
7. 88If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
8. 89A possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to further price volatility in our common stock