Breaking Down Medalist Diversified REIT, Inc. (MDRR) Financial Health: Key Insights for Investors

You're looking at Medalist Diversified REIT, Inc. (MDRR) and seeing a mixed signal: the revenue is up, but the bottom line is still under pressure, so you need to know if the dividend is sustainable. The direct takeaway is that while the company is improving its balance sheet-mortgages dropped to 56% of total assets from 67% at year-end-the path to profitability is still bumpy, making the 2.00% dividend yield a high-wire act. For the nine months ended September 30, 2025, the company reported revenue of $7.57 million, an increase from the prior year, but still swung to a net loss of $1.92 million, a stark reversal from the prior year's net income. Honestly, that kind of loss makes you question the quarterly payout of $0.0675 per share, even though CEO Frank Kavanaugh just bought 20,000 shares at $13.50 each, a strong sign of insider confidence. We need to break down the fundamentals and see if their strategy-like selling the Salisbury Marketplace to unlock capital-can translate that revenue growth into the stable Funds From Operations (FFO) that actually covers the dividend.

Revenue Analysis

You need to know where Medalist Diversified REIT, Inc. (MDRR) is actually making its money, and the 2025 numbers show a mixed picture: rental revenue is growing, but the overall top-line story is complicated by asset sales.

For the nine months ended September 30, 2025, the company reported total revenue of $7.57 million, up from $7.21 million in the same period a year prior. That's a decent 5.00% year-over-year (YoY) increase, which is a solid sign of incremental rent growth in their core portfolio. Still, you have to look closer at the quarterly trend.

Core Revenue Streams and Portfolio Mix

Medalist Diversified REIT, Inc.'s revenue primarily comes from rental income on its diversified portfolio of commercial real estate (CRE) properties located in secondary and tertiary markets across the Southeast U.S.. Their strategy focuses on a few key property types, which helps spread risk.

• Retail Centers: Four properties as of June 30, 2025, providing consistent lease income.
• Flex-Industrial: Three properties, capitalizing on the resilient demand for last-mile logistics and light manufacturing space.
• Single-Tenant Net Lease (STNL): Five properties, which typically offer longer lease terms and minimal landlord operating expenses.
• Other CRE: The company's mandate also includes multi-family residential and hotel properties, though the core portfolio leans heavily on commercial assets.

Honestly, the core income is rental revenue, but the portfolio composition is shifting, so you need to keep an eye on what they own next quarter. If you want to dive deeper into the overarching strategy, you can check out the Mission Statement, Vision, & Core Values of Medalist Diversified REIT, Inc. (MDRR).

Near-Term Revenue Growth and Volatility

The quarterly revenue figures for 2025 show positive momentum from their existing properties, but also highlight the volatility inherent in a REIT that actively manages its property base.

Here's the quick math on the quarterly revenue: Q3 2025 revenue came in strong at $2.79 million, a significant jump from $2.34 million in Q3 2024, representing a 19.23% YoY growth. Q2 2025 revenue was $2.47 million, a 7.13% increase over Q2 2024.

What this estimate hides is the one-time revenue component. The company's year-to-date net loss was largely driven by the absence of a substantial $2.8 million gain on property sale that they recorded in the first half of 2024. Rental income is growing, but overall earnings (which includes gains/losses) are still pressured without those big sales.

Significant Changes and Future Outlook

The biggest change impacting future revenue streams is the ongoing asset disposition strategy. Medalist Diversified REIT, Inc. is actively shedding non-core or stabilized assets to unlock capital (cash is tight, defintely) and pay down debt.

For example, in October 2025, they announced agreements to sell the Greenbrier Business Center for $11 million and properties in Bowling Green, KY, and Huntsville, AL, for $5.35 million. They are also marketing the Salisbury Marketplace for sale. These sales will temporarily reduce the rental revenue base, but the resulting cash inflow is crucial for improving the balance sheet and potentially funding new, higher-yield acquisitions down the road. The immediate action for an investor is to monitor how the proceeds from these $16.35 million in sales are deployed.

Profitability Metrics

You're looking at Medalist Diversified REIT, Inc. (MDRR) and asking the right question: is this company actually profitable? The short answer for the Trailing Twelve Months (TTM) leading into the end of 2025 is no, not on a net basis, but the operational efficiency shows a mixed bag that demands a closer look.

For the TTM period, which gives us the best full-year proxy for the 2025 fiscal year, Medalist Diversified REIT, Inc. reported a total revenue of approximately $10.27 million. Here's the quick math on how that revenue translates into profit, or in this case, a significant loss.

The core issue is the massive drop-off between Operating Income and Net Loss. That $1.16 million in Operating Income gets wiped out, and then some, by non-operating expenses-primarily high interest costs and other corporate overhead. A -44.50% Net Profit Margin is a flashing red light for any investor.

Operational Efficiency and Cost Management

The Gross Profit Margin is the first place I look to gauge operational efficiency, and at 30.16% for the TTM, Medalist Diversified REIT, Inc. is running quite lean. For a Real Estate Investment Trust (REIT), especially one focused on value-add commercial properties like flex industrial and retail, a healthy gross margin (or Net Operating Income (NOI) margin, which is a close proxy) should typically be in the 60% to 70% range. MDRR's relatively low Gross Margin suggests their property-level operating expenses-things like property taxes, insurance, and maintenance-are consuming a much larger slice of rental revenue than is typical for the sector.

The real pain point, however, is the journey from the 11.29% Operating Margin down to the Net Loss Margin. This shows two things:

• High General & Administrative (G&A) Costs: The difference between Gross Profit and Operating Income is too wide, indicating high corporate overhead relative to revenue.
• Crushing Interest Expense: The nearly $5.73 million swing from positive Operating Income to a huge Net Loss is largely due to debt service. For the broader REIT industry, interest expense as a share of Net Operating Income (NOI) has been trending lower, around 18.9% as of late 2022, but MDRR's debt structure is clearly a major headwind in the current rate environment.

Profitability Trends and Industry Comparison

The trend in 2025 is one of struggle, but with signs of marginal improvement in the near-term. For the nine months ended September 30, 2025, the company reported a Net Loss of $1.92 million on revenue of $7.57 million. This is a significant swing from a Net Income of $0.3087 million in the same period a year prior, primarily due to the absence of a large property-sale gain that boosted 2024 results. What this estimate hides is the sequential quarterly improvement in margins, which is a key management action to watch.

The Net Margin loss improved from -24.64% in Q1 2025 to -21.19% in Q3 2025. You're seeing less of a loss, which is defintely a step in the right direction, but the company is still deep in the red. Compared to the industry, which generally aims for stable, positive net income to support its dividend payout, Medalist Diversified REIT, Inc.'s TTM Net Profit Margin of -44.50% is a dramatic outlier. It signals that the current business model, or at least the current capital structure, is not sustainable without significant asset sales or a major reduction in debt costs.

For more on the capital structure risks, you should check out the full post: Breaking Down Medalist Diversified REIT, Inc. (MDRR) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You need to know how Medalist Diversified REIT, Inc. (MDRR) funds its properties, because a high reliance on debt-leverage-can amplify both returns and risk. The direct takeaway is that Medalist Diversified REIT, Inc. operates with a significantly higher debt-to-equity ratio than its peers, meaning it uses more borrowing to finance its assets.

As of the most recent quarter, Medalist Diversified REIT, Inc.'s total debt stood at approximately $37.73 million. The vast majority of this is long-term debt, indicated by a Long-Term Debt to Equity ratio of 150.01%. This high leverage is a core part of their capital structure, a common but risky strategy in real estate investment trusts (REITs).

Here's the quick math on their leverage: the Debt-to-Equity (D/E) ratio is roughly 1.51. This means for every dollar of shareholder equity, the company has taken on about $1.51 in debt. To be fair, REITs are capital-intensive, but this ratio is notably elevated compared to the Diversified REIT industry average of approximately 0.9145.

• MDRR Debt-to-Equity: 1.51
• Diversified REIT Industry Average: 0.9145
• Action: Factor in the higher-than-average financial risk premium when valuing the stock.

Medalist Diversified REIT, Inc. has been actively managing its capital structure in 2025. In January 2025, the company completed the full redemption of its 8.0% Series A Cumulative Redeemable Preferred Stock, paying out $25.00 per share plus accrued dividends. This was a smart move to eliminate a high-cost source of capital. Still, they are still taking on new debt for acquisitions and property management.

For instance, in November 2025, a subsidiary secured a new loan of $7,710,000 from Pinnacle Bank to facilitate a property transfer into a Delaware Statutory Trust (DST). This shows a continuous reliance on debt financing for growth and operational flexibility. The balance is tricky: while they reduced mortgage payable by 13% to $43.5 million in Q2 2025, they also issued Operating Partnership (OP) units-a form of equity funding-valued at $5.8 million for single-tenant net lease (STNL) acquisitions. This mix of new loans and equity-based acquisitions is how they try to balance the scales, but the debt side is defintely heavier.

If you want to understand who is financing this structure, you should check out Exploring Medalist Diversified REIT, Inc. (MDRR) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to look past the surface-level numbers for Medalist Diversified REIT, Inc. (MDRR). While the company's current ratio suggests a healthy short-term position, the quick ratio tells a much tighter story, signaling a reliance on less liquid current assets. The key takeaway is that MDRR is burning cash heavily on new acquisitions, which is straining its immediate liquidity, a defintely critical point for a REIT.

Assessing MDRR's Liquidity Position

The liquidity ratios for Medalist Diversified REIT, Inc. as of the third quarter ending September 30, 2025, show a mixed picture. The Current Ratio sits at approximately 2.29, which is generally considered a strong indicator that current assets comfortably cover current liabilities. However, the Quick Ratio-the acid-test ratio-is far lower, around 0.25 on a quarterly/TTM basis.

This massive gap between the two ratios means a significant portion of MDRR's current assets are not easily convertible to cash. For a REIT, this often includes items like prepaid expenses or other non-cash assets that can't pay a bill tomorrow. This low quick ratio, at just 0.25, is a clear warning sign about immediate, unexpected cash needs.

• Current Ratio (Q3 2025): 2.29-Looks good on paper.
• Quick Ratio (TTM/Quarterly): 0.25-Signals tight, immediate cash availability.
• Working Capital: Positive, but heavily reliant on less liquid assets.

Cash Flow and Working Capital Trends

The working capital trend is best understood by looking at the cash flow statement. For the trailing twelve months (TTM) ended September 30, 2025, Medalist Diversified REIT, Inc. generated $2.66 million in Operating Cash Flow. This is the cash generated from the core business of property operations. To be fair, that's a positive number, but it's not enough to cover the aggressive investment activity.

The Investing Cash Flow for the same TTM period was a negative -$16.20 million. Here's the quick math: the bulk of this was spent on the Acquisition of Real Estate Assets, totaling $16.08 million. This high level of capital expenditure is the primary driver of the cash drain. For example, cash reserves declined from $4.8 million to $2.0 million in the first half of 2025 alone.

On the Financing Cash Flow side, the company has been active in managing its capital structure. They reduced mortgage debt and redeemed $1.5 million of mandatorily redeemable preferred stock in Q2 2025. Still, the total debt remains high at $37.73 million (MRQ). The dividend payout, which was $0.07 per share in October 2025, also consumes scarce liquidity, especially given the net loss of $1.92 million for the nine months ended September 30, 2025.

Near-Term Liquidity Concerns

The core issue is a classic growth-versus-stability trade-off. Medalist Diversified REIT, Inc. is using a substantial amount of cash-more than six times its TTM operating cash flow-to acquire new properties. This aggressive investment, while potentially beneficial long-term, has left cash levels tight. The low quick ratio of 0.25 means any unexpected capital call, like a major property repair or a sudden rise in interest rates affecting floating-rate debt, could force the company to raise capital at an unfavorable time. The softened operating cash flow further limits near-term financial flexibility.

For a deeper dive into the valuation model implications of these cash flows, read our full analysis at Breaking Down Medalist Diversified REIT, Inc. (MDRR) Financial Health: Key Insights for Investors.

Next Step: Portfolio Managers: Stress-test MDRR's balance sheet against a 15% rise in short-term interest expense by the end of the year.

Valuation Analysis

You're looking at Medalist Diversified REIT, Inc. (MDRR) and asking the core question: Is it overvalued, undervalued, or priced just right? Honestly, the valuation metrics paint a picture that suggests caution, especially when you consider the current earnings profile.

The core takeaway is that while the stock has shown positive momentum, traditional valuation ratios are either distorted or point to a premium, and the single analyst rating is a strong warning. We need to dig into the numbers to see why.

• Stock is up $\mathbf{+9.76\%}$ over the last year.
• The Price-to-Book ratio sits at $\mathbf{1.45}$.
• Analyst consensus is a clear Sell rating.

Key Valuation Ratios: What the Numbers Say

When assessing a company's value, we typically start with the Price-to-Earnings (P/E) ratio, but for Medalist Diversified REIT, Inc., that's not meaningful. The trailing twelve months (TTM) Earnings Per Share (EPS) is negative, at approximately $\mathbf{-\$1.74}$, which makes the P/E ratio 'Not Meaningful' (NM). This immediately signals that the company is not generating a profit on a TTM basis, which is a major red flag for a Real Estate Investment Trust (REIT).

Instead, we look at other metrics. The Price-to-Book (P/B) ratio is currently around $\mathbf{1.45}$. This means investors are willing to pay $\mathbf{\$1.45}$ for every dollar of the company's book value (assets minus liabilities). For a REIT, this ratio is a decent gauge, and a value above 1.0 suggests the market believes the company's assets are worth more than their accounting value, or that future growth is expected. Still, you have to ask yourself if that $\mathbf{45\%}$ premium is justified given the lack of TTM profitability.

Another crucial metric, the Enterprise Value-to-EBITDA (EV/EBITDA), is sitting at about $\mathbf{16.37}$. This ratio measures the total value of the company, including debt (Enterprise Value), against its operating cash flow proxy (Earnings Before Interest, Taxes, Depreciation, and Amortization). This multiple is on the higher side compared to many diversified REIT peers, suggesting the stock may be trading at a premium relative to its operating cash flow, especially in the current interest rate environment.

Stock Performance and Dividend Profile

Looking at the stock price trend over the last 12 months, Medalist Diversified REIT, Inc. has delivered a gain of approximately $\mathbf{+9.76\%}$. This positive momentum is good, but it's important to note the volatility. The stock's 52-week trading range has been between a low of $\mathbf{\$9.55}$ and a high of $\mathbf{\$15.00}$. The recent price of around $\mathbf{\$13.49}$ (as of November 2025) is near the higher end of that range. That's a big swing. You're buying closer to the top of the range.

The dividend story is also a key part of the REIT investment thesis. Medalist Diversified REIT, Inc. currently offers an annual dividend of $\mathbf{\$0.27}$, which translates to a forward dividend yield of $\mathbf{2.00\%}$. To be fair, this is a relatively modest yield for a REIT, especially one with negative earnings. The dividend payout ratio is not readily calculable due to the negative EPS, which introduces uncertainty about the long-term sustainability of the dividend without a clear path to profitability.

Analyst Consensus and Actionable Insight

Here's the quick math on risk: Wall Street analysts, based on the one recent rating, have a consensus of Sell for Medalist Diversified REIT, Inc. The predicted downside in some models is even as dramatic as $\mathbf{-100.00\%}$ over the next 12 months, which essentially implies a total loss of value or a severe restructuring. What this estimate hides is the potential for a significant shift in the company's operating performance or capital structure, but the message is defintely clear: the risk is high.

My advice? Given the negative TTM EPS, the elevated EV/EBITDA multiple, and the consensus Sell rating, you need to treat this as a highly speculative investment. Before making any move, you should read the full analysis on this company's operational health at Breaking Down Medalist Diversified REIT, Inc. (MDRR) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Medalist Diversified REIT, Inc. (MDRR) and seeing the recent debt reduction, but the core issue is simple: the company is burning cash and its profitability remains a significant near-term risk. For the nine months ended September 30, 2025, the company reported a net loss of $1.92 million, swinging hard from a net income of $0.31 million in the prior year period. That's a serious earnings deterioration you must factor in.

The primary internal and external risks right now center on liquidity, debt service, and the execution of their asset disposition strategy. Here's the quick math on the financial strain: as of Q2 2025, cash declined to only $2.0 million from $4.8 million previously, because operating cash flow fell to $0.70 million while the REIT still funded capital expenditures, dividends, and share buybacks. They need a capital event, fast.

Operational and Financial Risks

The most recent filings highlight clear operational and financial pressure points. The lack of a major property-sale gain, which buoyed 2024 results by $2.8 million, is the main driver of the year-to-date loss in 2025. Also, while MDRR has reduced mortgages payable by 13% to $43.5 million as of Q2 2025, the interest coverage ratio of just 0.30 indicates that operating income is not nearly enough to cover interest payments.

• Liquidity Crunch: Cash levels are tight, limiting flexibility.
• Dividend Sustainability: The quarterly dividend of $0.0675/share is questionable given the current loss trajectory.
• Shareholder Dilution: Issuing $5.8 million in Operating Partnership (OP) units for acquisitions dilutes common shareholders.

To be fair, the company is trying to clean up its balance sheet, but the underlying profitability is still a major question mark. You can read more about their long-term goals here: Mission Statement, Vision, & Core Values of Medalist Diversified REIT, Inc. (MDRR).

Mitigation Strategies and Execution Risk

Management is actively pursuing strategies to unlock capital and improve the balance sheet, but these actions carry execution risk. The primary mitigation plan involves asset sales and creative financing. For instance, they are marketing the Salisbury Marketplace for sale to generate needed capital. Still, the timing and price of any sale are defintely not guaranteed.

A recent, complex move involved transferring the Tesla-occupied property into a Delaware Statutory Trust (DST) in November 2025. This transaction immediately generated $6.93 million in cash for the company and involved the DST taking on a new $7.71 million loan. This shifts the property's risk profile and capital structure, but it's a necessary step to inject cash.

Here is a summary of the near-term risk factors and the corresponding mitigation efforts:

The biggest risk is that the asset sales or DST private placement offerings don't materialize quickly enough to cover the ongoing cash burn, which could force more dilutive equity raises or strain debt covenants.

Growth Opportunities

You're looking for a clear path forward for Medalist Diversified REIT, Inc. (MDRR), and the near-term picture is all about portfolio rebalancing and debt management. The direct takeaway is that management is actively shedding non-core assets to pay down debt and focus capital on higher-growth Single-Tenant Net Lease (STNL) and Flex/Industrial properties in the Southeast U.S. That's a smart, defensive move in a high interest rate environment.

The company's growth strategy centers on a tactical shift in its property mix, moving away from assets that require heavy capital expenditure. This is a classic value-add strategy: sell the older, lower-margin properties to fund the acquisition of newer, more stable income streams. For example, in October 2025, they announced agreements to sell the Greenbrier Business Center in Chesapeake, VA, for $11 million, plus two other properties for $5.35 million. That's $16.35 million in fresh capital, which is defintely a significant amount for a company with a market cap around $30.12 million.

• Sell non-core assets to unlock capital.
• Reduce high-cost debt and preferred equity.
• Focus acquisitions on stable STNL and Flex/Industrial.

Future Revenue Trajectory and Earnings Estimates

While the company is still reporting losses, the sales and acquisitions are setting the stage for more predictable revenue. For the nine months ended September 30, 2025, Medalist Diversified REIT, Inc. reported revenue of $7.57 million, with Q3 2025 revenue hitting $2.79 million. Here's the quick math: if Q4 revenue holds steady at the Q3 level, the full-year 2025 revenue will be approximately $10.36 million. That's a solid step up from the last twelve months' revenue of $9.65 million.

The earnings picture is still challenged. The net loss attributable to common shareholders for the first half of 2025 was $(1.53) million, or -$1.13 per share. The good news is the loss is shrinking; the Q3 2025 net loss was $(0.395948) million, or $(0.33)/share, an improvement from the prior year. The market is pricing in caution, with the 2025 average stock price forecast sitting around $5.3744. You need to see a clear path to profitability, not just shrinking losses, before the stock truly moves.

Strategic Moves and Competitive Edge

The most important strategic initiative is the aggressive reduction of leverage. By Q2 2025, mortgages payable had dropped 13% to $43.5 million, and the company successfully redeemed its $1.5 million in mandatorily redeemable preferred stock. This deleveraging improves the balance sheet and reduces interest expense, which is crucial in a rising rate environment. Also, the February 2025 acquisition of a property in Huntsville, Alabama, for $3.145 million shows their commitment to the Flex/Industrial sector.

Their competitive advantage is their regional focus and disciplined process. Medalist Diversified REIT, Inc. specializes in value-add commercial real estate across the Southeast U.S., including Virginia and North Carolina. This regional expertise allows them to source and conduct due diligence more effectively than larger, nationally diversified REITs. They are focused on a specific niche-commercial properties expected to provide an attractive balance of risk and returns-which is a good, clear mandate. You can learn more about who is investing in this strategy by reading Exploring Medalist Diversified REIT, Inc. (MDRR) Investor Profile: Who's Buying and Why?

The next concrete step for you is to monitor the closing of the announced asset sales and see how management deploys that $16.35 million in proceeds. If a large portion goes to further debt reduction, it signals a focus on stability; if it's all new acquisitions, it signals a more aggressive growth push. Watch the Q4 2025 earnings report, estimated for November 18, 2025, for that clarity.