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Financial Services

Medalist Diversified Inc.

11/13/2026 | Press release | Distributed by Public on 11/13/2026 07:07

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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, 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

The U.S. Private Securities Litigation Reform Act of 1995 (the "1995 Act") provides a "safe harbor" for forward-looking statements. This Quarterly Report contains "forward-looking statements" that we intend to be covered by the safe harbor provisions of the 1995 Act. 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, including references to strategy, plans or intentions, 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;

●

local, regional, national and international economic and geopolitical conditions;

●

our ability to pivot our investment strategy and reposition our portfolio;

●

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 incurrence of impairment charges;

●

the degree and nature of our competition;

●

our dependence upon our key personnel;

●

defaults on or non-renewal of leases by tenants;

●

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 for our DST Program;

●

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;

●

whether revoking our real estate investment trust, or REIT, election, effective January 1, 2026, and our revised strategy can be implemented in a manner that provides the expected benefits;

●

our ability to sell beneficial interests in our offerings under our DST Program;

●

our ability to generate fee income and increase assets under management through our DST Program;

●

our ability to have met and maintained our qualification as a REIT for U.S. federal income tax purposes for the years we elected REIT status;

●

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;

●

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;

●

potential disruption to or compromise of our information technology networks or data, or those of third parties upon which we rely; 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.

Overview

Company

Medalist Diversified, Inc. is a Maryland corporation formed on September 28, 2015. Beginning with the taxable year ended December 31, 2017, we elected to be taxed as a REIT for federal income tax purposes. Effective on January 1, 2026, we terminated our election to be taxed as a REIT. Medalist Diversified, Inc. serves as the general partner of Medalist Diversified Holdings, LP which was formed as a Delaware limited partnership on September 29, 2015.

Our current primary focus is to complete the strategic repositioning initiated during 2025. As of September 30, 2026, we have

completed the sale of all but one of our legacy investment properties to generate capital for our DST Program and other potential acquisitions, and have transitioned our primary focus to build the DST Program to generate fee income and increase assets under management. As of September 30, 2026, we have completed the sale of beneficial interests in our first DST, the XXV DST, have sold 43% of the beneficial interests in our second DST, the Overland Park DST, and launched efforts to sell beneficial interests in our third DST, the Pilot Point DST. We will continue to evaluate direct and indirect real estate investments (i) for our general portfolio and (ii) that support the DST Program, including completing the disposition of properties from our legacy portfolio.

Our efforts to scale the DST Program will be focused on (1) identifying real estate investments suitable for DST vehicles that offer competitive, risk-adjusted returns, with a focus on net lease assets with nationally recognized tenants or those with investment grade credit ratings, in larger metropolitan areas experiencing high levels of growth in the southeast, mountain states, and California, in industries including, but not limited to, retail, medical, and single tenant industrial and warehouse uses; (2) syndicating these investments into DSTs; and (3) offering beneficial interests in the DSTs for sale to accredited investors in private placements under Regulation D.

We may also pursue, in an opportunistic manner, other real estate and non-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, and ownership of crypto assets, other equity investments, including marketable securities, short-duration U.S. treasuries, and other investment-grade marketable securities. While these types of investments are not intended to be a primary focus, we may make such investments at the discretion of the Board.

As of September 30, 2026, our portfolio consisted of the following properties:


Name		Occupancy		Location		SQ FT	Date Acquired
Lancer Center Property		78.3%		Lancaster, South Carolina		181,590	May 14, 2021
Overland Park Property		100.0%		Overland Park, Kansas		17,592	July 29, 2026
Pilot Point Property		100.0%		Pilot Point, Texas		15,104	September 17, 2026
Total Portfolio		81.6%				214,286

As of September 30, 2026, we also owned two undeveloped parcels which are currently being marketed for sale or lease, including (i) an outparcel at our Lancer Center Property consisting of approximately 1.80 acres (the "Lancer Outparcel"), (the exact size of the Lancer Outparcel will not be determined until a user is identified), and (ii) the Hanover Square Outparcel consisting of 0.86 acres located in Mechanicsville, Virginia.

As of September 30, 2026, the Overland Park and Pilot Point Properties were classified as assets held for sale on our condensed consolidated balance sheet.

Reporting Segments

Prior to January 1, 2026, we aggregated individual properties into retail, flex and STNL operating segments. Effective on January 1, 2026, following our strategic repositioning and increased focus on DST sponsorship activities, our CODM began evaluating our real estate portfolio on a combined basis as a single, "Investment Properties" segment. Additionally, as of January 1, 2026, we established a second operating segment for our DST sponsorship activities. These two segments align with how our CODM evaluates performance and allocates resources.

Recent Highlights

Sales of Investment Properties

On February 13, 2026, we sold the Greenbrier Business Center Property to an unrelated third party for a sale price of $11,000,000 and used $7,000,000 from the proceeds to repay a portion of the Wells Fargo Mortgage Facility. The sale of the Greenbrier Business Center Property resulted in a gain on disposal of investment properties of $4,213,586 reported on our condensed consolidated statement of operations for the nine months ended September 30, 2026.

On February 27, 2026, we sold the Parkway Property to an unrelated third party for a sale price of $7,825,000 and used $4,735,614 from the proceeds to repay the Parkway Mortgage. The sale of the Parkway Property resulted in a gain on disposal of investment properties of $1,040,870 reported on our condensed consolidated statement of operations for the nine months ended September 30, 2026.

On March 30, 2026, we sold the Franklin Square Property to an unrelated third party for a sale price of $24,100,000 and used $12,954,175 from the proceeds to repay the Franklin Square Mortgage. The sale of the Franklin Square Property resulted in a gain on disposal of investment properties of $7,580,745 reported on our condensed consolidated statement of operations for the nine months ended September 30, 2026.

On June 24, 2026, we sold the Citibank Property to an unrelated third party for a sale price of $2,150,000. The sale of the Citibank property resulted in a loss on disposal of investment properties of $50,181.

As of June 22, 2026, we had sold 84.7% of the class 1 beneficial interest in XXV DST and deconsolidated the entity. XXV DST owned the Tesla Pensacola Property.

On July 31, 2026, we sold the Ashley Plaza Property to an unrelated third party for a sale price of $16,600,000 and used $10,075,052 from the proceeds to repay the Ashley Plaza Mortgage. The sale of the Ashley Plaza Property resulted in a gain on disposal of investment properties of $4,145,802 reported on our condensed consolidated statement of operations for the nine months ended September 30, 2026.

On September 1, 2026, we sold the Brookfield Property to an unrelated third party for a sale price of $10,100,000 and used $4,308,531 from the proceeds to repay the Brookfield Mortgage. The sale of the Brookfield Property resulted in a gain on disposal of investment properties of $4,263,384 reported on our condensed consolidated statement of operations for the nine months ended September 30, 2026.

Financing Activities

Mortgages Payable

We historically financed acquisitions of investment properties through mortgages. The following table is presented as of September 30, 2026:


											September 30,
		Monthly			Interest					2026				December 31,
Property		Payment			Rate			Maturity		(unaudited)			2025
Franklin Square		$	61,800			3.81	%	December 2031		$	-		$	13,015,840
Ashley Plaza			52,795			3.75	%	September 2029			-			10,220,312
Brookfield Center			22,876			3.90	%	November 2029			-			4,377,112
Wells Fargo Mortgage Facility (Lancer Center)			30,000			4.50	%	June 2027			4,727,532			5,502,446
Total mortgages payable										$	4,727,532		$	33,115,710

We financed acquisitions of our assets held for sale through mortgages, which as of September 30, 2026, are recorded as mortgages payable, net, associated with assets held for sale, on our consolidated balance sheets, as follows:


							September 30,
	Monthly		Interest				2026		December 31,
Property	Payment		Rate		Maturity	(unaudited)		2025
Parkway Property	$	37,310	Variable		November 2031	$	-	$	4,683,797
Wells Fargo Mortgage Facility (Greenbrier Business Center)		46,561	4.50	%	June 2027		-		6,356,947
Tesla DST Mortgage		Interest only	Variable		November 2030		-		7,505,754
Total mortgages payable, net, associated with assets held for sale						$	-	$	18,546,498

Pledged Asset Line

We entered into a Pledged Asset Line Agreement (the "PAL Agreement") with Charles Schwab & Co., Inc. ("Schwab"). The PAL Agreement provides for a revolving, non-purpose margin credit facility, secured by a first-priority lien on our brokerage account maintained at Schwab (the "Collateral Account"), of an amount based on the collateral value in the Collateral Account. We hold marketable securities in the Collateral Account. Based on the collateral value in the Collateral Account as of September 30, 2026, we are permitted to borrow up to approximately $20.9 million under the PAL Agreement.

Borrowings under the PAL Agreement bear interest at a variable rate based on the SOFR plus 75 basis points. As of September 30, 2026 SOFR was 3.91%. The PAL Agreement contains customary events of default, including, without limitation, failure to make any payment upon demand or otherwise when due or deposit additional collateral when required under the PAL Agreement; initiation of a bankruptcy petition or other insolvency proceeding; any event of default under any security agreement executed in connection with the Collateral Account; or the insufficiency of the value of the financial assets in the Collateral Account.

As of September 30, 2026 and December 31, 2025, the outstanding balance on the PAL Agreement was $0.

Summary of Critical Accounting Policies

The preparation of 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

Our investment property revenues 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.

DST Sponsorship revenues consist of acquisition fees, asset management fees, disposition fees, cost reimbursement fees and other fees from the Company's DST Program. Acquisition fees and cost reimbursement fees are generally recognized upon the completion of the sale of the beneficial interests in a DST. Asset management fees are recognized monthly as the related services are provided. Disposition fees are generally recognized upon the sale of the underlying DST property, when our company's performance obligations have been satisfied, and are generally subordinated to the DST investors' return of capital.

Rents and Other Tenant Receivables

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.

Acquisition of Investments in Real Estate

The adoption of Accounting Standards Update ("ASU") 2017-01, Business Combinations (Topic 805), 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, we estimate 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. We also review our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of our intangible assets may not be recoverable, but at least annually.

Income Taxes

Beginning with our taxable year ended December 31, 2017, and ending on December 31, 2025, we elected to be taxed as a REIT 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 REIT status, the regulations require a REIT to distribute at least 90% of its taxable income to stockholders and meet certain other asset and income tests, as well as other requirements. We believe that we operated in a manner that met these requirements during those taxable years.

Effective on January 1, 2026, we terminated our election to be taxed as a REIT and will be subject to tax at regular corporate rates. We may not re-elect to be taxed as a REIT for five years.

We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized.

Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense.

Evaluation of Our Ability to Continue as a Going Concern

Under the accounting guidance related to the presentation of financial statements, we are required to evaluate, on a quarterly basis, whether or not our current financial condition, including our sources of liquidity at the date that the condensed consolidated financial statements are issued, will enable us to meet our obligations as they come due arising within one year of the date of the issuance of our 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 we will be able to continue as a going concern. Our 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 current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our obligations due over the next twelve months, as well as our 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 liquidity, see Note 6 - Loans Payable and Note 10 - Commitments and Contingencies in the notes to our condensed consolidated financial statements.

Liquidity and Capital Resources

Our business model is intended to drive growth through acquisitions and increasing assets under management. 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 for our portfolio and for our DST Program, and recurring capital expenditures; and (3) financing needs, including cash dividends and debt repayments.

Internal liquidity to fund operating needs is expected to be provided primarily by the rental receipts from our investment properties.

Cash Flows

At September 30, 2026, our consolidated cash and restricted cash on hand totaled $7,790,185 compared to consolidated cash on hand of $4,134,070 at December 31, 2025. Cash from operating activities, investing activities and financing activities for the nine months ended September 30, 2026 are as follows:

Operating Activities

During the nine months ended September 30, 2026, our cash used in operating activities was $1,268,593 compared to cash provided by operating activities of $2,271,897 for the nine months ended September 30, 2025, a decrease in cash provided by operating activities of $3,540,490. The decrease in cash provided by operating activities is primarily from reduced net operating income resulting from the sale of certain of our investment properties, and an increase in net changes in assets and liabilities.

Investing Activities

During the nine months ended September 30, 2026, our cash provided by investing activities was $987,954, compared to cash used in investing activities of $15,964,554 during the nine months ended September 30, 2025, an increase in cash provided by investing activities of $16,952,508.

During the nine months ended September 30, 2026, cash provided by investing activities consisted of cash received of $30,470,977 from the sale of investment properties, $5,021,894 from sales of DST interests and net crypto asset sales of $233,117, offset by net cash used of $19,022,323 for our investments in marketable securities, $11,331,709 for investment property acquisitions, $2,680,038 equity investments and $1,703,964 in capitalized expenditures. During the nine months ended September 30, 2025, cash used in investing activities consisted of $1,131,036 in capitalized expenditures, $14,714,513 in investment property acquisitions, and $119,005 for the purchase of crypto assets.

The non-cash investing activity for the nine months ended September 30, 2026, that did not affect our cash provided by investing activities was the transfer of $33,968,653 from investment properties, net, to assets held for sale, the transfer of $949,782 of intangible lease assets, net, to assets held for sale, and the transfer of $412,394 of intangible lease liabilities, net, to liabilities held for sale.

The non-cash investing activity for the nine months ended September 30, 2025, that did not affect our cash provided by investing activities was the issuance of $5,765,000, consisting of $2,620,000 of OP Units for the acquisitions of the Buffalo Wild Wings Property and $3,145,000 of OP Units for the United Rentals Property, $2,544,042 related to the Exchange of Common Shares for OP Units, the transfer of $15,168,178 from investment properties, net, to assets held for sale, the transfer of $503,675 of intangible assets, net, to assets held for sale, and the transfer of $476,656 of intangible liabilities, net, to liabilities held for sale.

Financing Activities

During the nine months ended September 30, 2026, our cash provided by financing activities was $3,936,754 compared to cash provided by financing activities of $11,422,507 during the nine months ended September 30, 2025, a decrease in cash provided by financing activities of $7,485,753. During the nine months ended September 30, 2026 our cash provided by financing activities consisted of $5,452,579 in proceeds from the sale of beneficial interests in DST entities, offset by $424,709 in principal payments for our mortgages, and $1,091,116 in dividends and distributions. During the nine months ended September 30, 2025, our cash provided by financing activities consisted of $14,321,378 in net proceeds from the Farmers Line of Credit, offset by $1,500,000 for the final redemption of our mandatorily redeemable preferred stock, $816,596 in principal payments for our mortgages, and $441,487 in dividends and distributions, and $140,788 to repurchase Common Shares.

The non-cash financing activity for the nine months ended September 30, 2026, that did not affect our cash provided by financing activities was $5,992,000 for the conversion of OP Units to common shares and the transfer of $27,815,493 of mortgages payable, net, to mortgages payable, net, associated with assets held for sale.

The non-cash financing activity for the nine months ended September 30, 2025 that did not affect the our cash used in financing activities was transfer of $11,636,684 of mortgages payable, net, to mortgages payable, net, associated with assets held for sale.

Future Liquidity Needs

Liquidity for general operating needs and our investment properties is generally provided by the rental receipts from our investment properties, if any, and fee income generated by our DST Program. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital and through short term borrowings under the PAL Agreement.

Our primary, non-operating liquidity needs are approximately $4,691,170 to repay the Wells Fargo Mortgage Facility that matures in June 2027, $151,168 to pay the dividends to common stockholders and distributions to OP Unit holders that were declared on October 6, 2026, and paid on October 23, 2026, to holders of record on October 16, 2026, and $36,362 in principal payments due on the Wells Fargo Mortgage Facility during the remaining three months ending December 31, 2026. In addition to liquidity required to fund these dividends and principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. We plan to pay these obligations through a combination of cash on hand, sale of our marketable securities, potential dispositions of our remaining investment properties, and cash generated by operations, if any.

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

●

$7,760,807 in unrestricted cash as of September 30, 2026;

●

$19,857,960 in marketable securities which are readily liquid either by selling such securities, or by collateralizing them through the PAL Agreement.

●

Cash generated from operations during the remaining three months ending December 31, 2026, if any.

We expect these resources will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months and beyond. There can be no assurance that we will continue to generate cash flows at or above current levels.

Factors That May Influence Our Results of Operations

Economic Conditions

Our efforts to sell beneficial interests in our DST entities are directly affected by a number of factors, including (i) investor demand and market conditions for DST/1031-like real estate investment products, (ii) the availability for and pricing of competing investment opportunities, and (iii) interest rates and broader capital market and liquidity conditions. Because each property is dependent on a single tenant, our rental income may be particularly sensitive to changes in that tenant's demand, liquidity and operating results, and an adverse event affecting a tenant, such as financial distress, delayed payments, defaults, rent concessions, bankruptcy proceedings, or lease termination, could reduce revenues and cash flows, and could result in a transfer distribution, effectively terminating the DST, and negatively impacting our efforts to sell beneficial interests in current or future DST offerings.

Rental revenues from our remaining investment property is directly affected by a number of factors, including occupancy rates, lease structures, and tenant credit quality, as well as broader economic and policy developments that affect consumer sentiment. Our revenues can be significantly impacted by trends in consumer spending, interest rates, and market confidence, all of which shape demand for our tenants' goods and services and, in turn, for occupancy in our investment properties. The ability to lease space to creditworthy tenants and maintain high occupancy levels directly impacts rental income. Changes in tenant demand, property competitiveness, or local economic conditions can influence occupancy rates. Upon the expiration or early termination of leases, we may face difficulties in re-leasing spaces on terms as favorable as previous agreements. Lease terminations and defaults or terminations by significant tenants can reduce revenues, especially if suitable replacements are not found promptly. Concentration risk from large tenants or tenants in financially stressed sectors may further impact revenue reliability.

Dividend and interest income on our marketable securities and cash balances are not guaranteed and can fluctuate significantly. Such income is influenced by a range of factors, including the composition of our investment portfolio, issuer credit quality, payout policies, and prevailing macroeconomic and policy developments that shape market conditions and investor sentiment. In particular, our dividend and interest income can be substantially affected by changes in interest rates, credit markets, and liquidity, all of which influence demand for our securities and, in turn, the level of income we realize from such investments.

As we execute our strategic transition, revenues may increasingly depend on capital allocation decisions, including income generated from short-term investments, fee-based activities, and potential acquisitions or strategic transactions. These activities are

subject to market conditions, interest rate volatility, counterparty risk, regulatory considerations, and execution risk. There can be no assurance that these strategies will generate anticipated levels of income or returns.

Macroeconomic conditions, including inflation, elevated interest rates, economic slowdowns, recessionary pressures, and financial market volatility, may adversely affect our business, our tenants, the value of our real estate assets, the performance of our short-term and other investments, and our ability to identify and execute strategic investment opportunities. Rising interest rates may increase borrowing costs, reduce asset valuations, and alter the relative attractiveness of alternative investment options. Broader economic conditions, including employment levels, capital markets liquidity, and consumer confidence, may negatively impact tenant performance, demand for commercial real estate, and the operating performance or valuation of current and prospective investments.

Potential Impact of Tariffs and Trade Restrictions on Tenants and Our Business

Changes in international trade policies, including the imposition of tariffs, duties, import taxes, or other trade restrictions by the United States government or foreign governments, could adversely impact the operations of our retail tenants. Our tenants could source a substantial portion of their merchandise, raw materials, or manufacturing services from foreign countries. The imposition of new or increased tariffs on these goods, or retaliatory measures from trading partners, could increase costs for these tenants, potentially reducing their profitability and operational flexibility. Increased costs may not be fully passed on to consumers, which could lead to lower sales volumes, compressed margins, and in some cases, store closures or bankruptcy filings. If a significant number of our tenants experience financial distress or reduce their physical retail presence, this could negatively affect our occupancy rates, rental income, and cash flows.

Results of Operations

Three months ended September 30, 2026

Revenues

Revenues for the three months ended September 30, 2026 and 2025 are as follows:


	For the three months ended
	September 30,
	2026		2025		Increase /
	(unaudited)		(unaudited)		(Decrease)
Currently Owned Properties
Lancer Center	$	321,080	$	286,483	$	34,597
Overland Park		68,218		-		68,218
Pilot Point		14,025		-		14,025
Total Revenues - Currently Owned Properties	$	403,323	$	286,483	$	116,840

Recently Sold Properties
Franklin Square		3,000		659,778		(656,778)
Salisbury Marketplace		-		234,639		(234,639)
Greenbrier Business Center		-		277,555		(277,555)
Parkway Center		-		209,453		(209,453)
Buffalo Wild Wings		-		43,586		(43,586)
United Rentals		-		51,099		(51,099)
Citibank		-		37,699		(37,699)
Tesla Pensacola		-		318,968		(318,968)
Ashley Plaza		123,964		443,104		(319,140)
Brookfield		158,376		223,877		(65,501)
Total Revenues - Recently Sold Properties	$	285,340	$	2,499,758	$	(2,214,418)

Total Investment Property Revenues	$	688,663	$	2,786,241	$	(2,097,578)
DST Sponsorship Revenues		1,500		-		1,500
Total Revenues	$	690,163	$	2,786,241	$	(2,096,078)

Total revenue was $690,163 for the three months ended September 30, 2026, a decrease of $2,096,078 from the three months ended September 30, 2025. We experienced decreased investment property revenues due to the sale of investment properties and the deconsolidation of the Tesla Pensacola Property, which were offset by increased revenues from new leasing activity in the Lancer Center, revenues from two new property acquisitions, Overland Park and Pilot Point, and DST Sponsorship Revenues from our new DST Program.

Adjusted Net Operating Income

Effective on January 1, 2026, we established two operating segments. The first operating segment consists of our investment properties (prior to January 1, 2026, we established operating segments that aggregated individual properties into retail, flex and STNL segments). As of January 1, 2026, we established a second operating segment for our DST sponsorship activities. These segments align with how the CODM evaluates performance and allocates resources.

During the three months ended September 30, 2026 and 2025, our reportable segments consisted of our investment properties and our DST Sponsorship activities. We base our evaluation of our results of operations on the net operating income adjusted for interest expense of each reportable segment. In our discussion below, we have provided an evaluation on a property by property basis.

Net operating income or loss ("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 calculated by deducting operating expenses from operating revenues. For our investment properties, NOI reflects occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. For the Company's DST Program, NOI reflects the underlying profitability of the business. NOI, as we calculate it, may not be directly comparable to similarly titled, but differently calculated, measures for other real estate companies.

NOI adjusted for interest expense ("Adjusted Net Operating Income" or Adjusted NOI"), also a non-GAAP financial measure, is calculated by deducting operating expenses and interest expense from operating revenues. Operating revenues from our investment properties include rental income, tenant reimbursements, other property income and non-cash revenues such as straight line rent and amortization of above and below market leases. Operating expenses for our investment properties include all investment property operating costs. Interest expense includes mortgage interest expense, only, and excludes non-mortgage interest expense and non-cash interest expense such as amortization of loan issuance costs. Operating revenues from our DST Program include acquisition fees, asset management fees and cost reimbursement revenues. Operating expenses from our DST Program include salaries and benefits, conferences and travel, marketing, administrative and other expenses.

Because Adjusted Net Operating Income only consists of revenues, operating expenses, and interest expense directly related to our real estate rental DST sponsorship operations, management believes that the use of Adjusted Net Operating Income to evaluate the financial performance of its operating segments and individual investment properties is a useful tool that can assist in the comparison of the operating performance of our real estate assets and DST Program between periods, or as compared to other companies and other investment opportunities we may consider from time to time. Management uses Adjusted Net Operating Income as a supplemental measure to evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Adjusted Net Operating Income is a non-GAAP financial measure and is not considered a measure of operating results or cash flows from operations under GAAP. Please see below for the reconciliation of revenue and Adjusted Net Operating Income for each property.

Investment Property Revenues and Adjusted Net Operating Income (Loss)

The following table presents property revenues, operating expenses and interest expense for our investment properties for the three months ended September 30, 2026 and 2025:


	For the three months ended September 30, 2026								For the three months ended September 30, 2025
	(unaudited)								(unaudited)
	Revenues		Operating Expenses		Interest Expense		Adjusted NOI		Revenues		Operating Expenses		Interest Expense		Adjusted NOI		Adjusted NOI Change
Currently Owned Properties
Lancer Center	$	321,080	$	166,760	$	56,243	$	98,077	$	286,483	$	118,751	$	72,383	$	95,349	$	2,728
Overland Park		68,218		-		-		68,218		-		-		-		-		68,218
Pilot Point		14,025		-		-		14,025		-		-		-		-		14,025
	$	403,323	$	166,760	$	56,243	$	180,320	$	286,483	$	118,751	$	72,383	$	95,349	$	84,971

Recently Sold or Deconsolidated Properties
Franklin Square		3,000		-		-		3,000		659,778		160,143		134,524		365,111		(362,111)
Salisbury Marketplace		-		-		-		-		234,639		62,379		70,644		101,616		(101,616)
Greenbrier		-		2,869		-		(2,869)		277,555		63,845		58,601		155,109		(157,978)
Parkway		-		1,323		-		(1,323)		209,453		39,939		63,960		105,554		(106,877)
Buffalo Wild Wings		-		-		-		-		43,586		-		-		43,586		(43,586)
United Rentals		-		-		-		-		51,099		-		-		51,099		(51,099)
Citibank		-		-		-		-		37,699		-		-		37,699		(37,699)
Tesla Pensacola		-		-		-		-		318,968		112,626		219,071		(12,729)		12,729
Ashley Plaza		123,964		81,557		32,599		9,808		443,104		132,983		103,264		206,857		(197,049)
Brookfield		158,376		52,546		30,916		74,914		223,877		65,712		46,877		111,288		(36,374)
	$	285,340	$	138,295	$	63,515	$	83,530	$	2,499,758	$	637,627	$	696,941	$	1,165,190	$	(1,081,660)

Investment Properties	$	688,663	$	305,055	$	119,758	$	263,850	$	2,786,241	$	756,378	$	769,324	$	1,260,539	$	(996,689)

DST Sponsorship Program		1,500		451,572		-		(450,072)		-		-		-		-		(450,072)

Total	$	690,163	$	756,627	$	119,758	$	(186,222)	$	2,786,241	$	756,378	$	769,324	$	1,260,539		(1,446,761)

Total revenues were $690,163 for the three months ended September 30, 2026, a $2,096,078 decrease from the three months ended September 30, 2025. Adjusted net operating loss was $182,710 for the three months ended September 30, 2026, a decrease of $1,463,615 from the three months ended September 30, 2025, due to the sale of investment properties, deconsolidation of the Tesla Pensacola Property, offset by increased adjusted net operating income from the newly acquired Overland Park and Pilot Point Properties.

DST Sponsorship Revenues and Adjusted Net Operating Income

The following table presents revenues, operating expenses and interest expense for our DST Program the three months ended September 30, 2026 and 2025:


	For the three months ended
	September 30,
	2026		2025		Increase /
	(unaudited)		(unaudited)		(Decrease)
DST Program revenues	$	1,500	$	-	$	1,500
DST Program operating expenses		451,572		-		451,572
DST Program adjusted NOI	$	(450,072)	$	-	$	(450,072)

We initiated our DST Program during the first quarter of 2026. Accordingly, there was no activity during 2025. During the three months ended September 30, 2026, we recorded $1,500 in DST Program revenues consisting of asset management fees. During the three months ended September 30, 2026, we incurred $451,572 in expenses associated with our DST Program, including salaries and benefits, conferences and travel, marketing, administrative and other expenses. Acquisition fees are generally earned upon the completion of the sale of all beneficial interests in a DST. Asset management fees are generally earned monthly. Disposition fees are

earned upon the sale of a DST property and are generally subordinated to DST investors' return of capital. Adjusted net operating loss for the three months ended September 30, 2026 was $450,072.

Operating Expenses

The following table presents our operating expenses for the three months ended September 30, 2026 and 2025:


	For the three months ended
	September 30,
	2026		2025		Increase /
	(unaudited)		(unaudited)		(Decrease)
Operating Expense Reconciliation
Investment property operating expenses	$	305,055	$	756,378	$	(451,323)
DST Program operating expenses		451,572		-	$	451,572
Total Operating Expenses from Consolidated Statements of Operations	$	756,627	$	756,378	$	249

Other Operating Expenses
Bad debt expense	$	-	$	365	$	(365)
Legal, accounting and other professional fees		325,849		430,319		(104,470)
Corporate general and administrative expenses		260,859		268,985		(8,126)
Impairment of assets held for sale		-		120,000		(120,000)
Depreciation and amortization		205,501		768,678		(563,177)
Total Operating Expenses	$	1,548,836	$	2,344,725	$	(795,889)

Total operating expenses were $1,548,836 for the three months ended September 30, 2026, a decrease of $795,889 over the three months ended September 30, 2025, primarily due to decreased property operating expenses and depreciation and amortization expense due to the sales of the investment properties, a decrease in legal, accounting and other professional fees, corporate general and administrative expenses and a decrease in impairment of assets held for sale, offset by increased DST Program operating expenses.

Interest Expense

Interest expense was $124,360 and $768,816 for the three months ended September 30, 2026 and 2025, respectively, as follows:


	For the three months ended
	September 30,
	2026		2025		Increase /
	(unaudited)		(unaudited)		(Decrease)
Franklin Square	$	-	$	134,524	$	(134,524)
Ashley Plaza		32,599		103,264		(70,665)
Brookfield Center		30,916		46,877		(15,961)
Parkway Center		-		63,960		(63,960)
Wells Fargo Mortgage Facility		56,243		201,628		(145,385)
Tesla Pensacola		-		219,071		(219,071)
Other interest		4,602		(508)		5,110
Total interest expense	$	124,360	$	768,816	$	(644,456)

Total interest expense for the three months ended September 30, 2026 decreased by $644,456 over the three months ended September 30, 2025. This decrease was primarily a result of the repayment of a portion of the Wells Fargo Mortgage Facility resulting from the sale of the Salisbury Marketplace and Greenbrier Business Center Properties and the repayment of the Parkway Center, Franklin Square, Ashley Plaza and Brookfield mortgages resulting from the sales of the respective properties in addition to the deconsolidation of the Tesla Pensacola property.

Other Income

During the three months ended September 30, 2026, other income was $1,065,848, which consisted of $516,816 of unrealized gains and $18,329 in realized gains on our investment in marketable securities, $430,553 in dividend income, $38,975 in unrealized

gains and $32,255 in realized gains on our crypto assets, and $28,920 in interest income. This is an increase of $885,565 from other income of $180,283 for the three months ended September 30, 2025, which consisted of $172,921 in insurance proceeds for property damage at our Franklin Square Property, $3,734 in gains on crypto assets and $3,628 in interest income.

Other Expense

During the three months ended September 30, 2026 and 2025 other expense was $91,844 and $19,721, respectively. Other expense for the three months ended September 30, 2026, consists of costs associated with the deconsolidation of the XXV DST. Other expense for the three months ended September 30, 2025, related to the fair value change of the interest rate cap.

Equity in Earnings of Unconsolidated Entities

During the three months ended September 30, 2026, equity in earnings of unconsolidated entities was generated from our equity investments in XXV DST and Mira JV.

Provision for Income Taxes

Effective on January 1, 2026, we revoked our election to be taxed as a REIT and as a result, we recorded a net deferred tax asset and income tax benefit of $3,987,344. In addition, for the three months ended September 30, 2026, we recorded a provision for income taxes of $1,212,052, which consists of current components. Our effective tax rate of 14.7% of pre-tax income reported in the period differs from the federal statutory rate of 21% primarily due to the disposals of certain investment properties.

Net Income

Net income $7,039,843 for the three months ended September 30, 2026, before adjustments for net income attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders was $4,644,961.

Net income for the three months ended September 30, 2026 increased by $7,206,581 over the three months ended September 30, 2025, before adjustments for net income attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders for the three months ended September 30, 2026 increased by $5,040,909 over the three months ended September 30, 2025.

Nine Months Ended September 30, 2026

Revenues

Revenues for the nine months ended September 30, 2026 and 2025 are as follows:


	For the nine months ended
	September 30,				Increase /
	2026		2025		(Decrease)
Currently Owned Properties
Lancer Center	$	928,591	$	867,624	$	60,967
Overland Park		68,218		-		68,218
Pilot Point		14,025		-		14,025
Total Revenues - Currently Owned Properties	$	1,010,834	$	867,624	$	143,210

Recently Sold Properties
Franklin Square		678,467		1,979,043		(1,300,576)
Salisbury Marketplace		-		695,646		(695,646)
Greenbrier Business Center		145,466		819,209		(673,743)
Parkway Center		150,687		641,857		(491,170)
Buffalo Wild Wings		-		119,880		(119,880)
United Rentals		-		123,846		(123,846)
Citibank		70,494		113,096		(42,602)
Tesla Pensacola		529,948		318,968		210,980
Ashley Plaza		969,434		1,301,083		(331,649)
Brookfield Center		635,228		592,802		42,426
Total Revenues - Recently Sold Properties	$	3,179,724	$	6,705,430	$	(3,525,706)

Total Investment Property Revenues	$	4,190,558	$	7,573,054	$	(3,382,496)

DST Sponsorship Revenues		467,292		-		467,292

Total Revenues	$	4,657,850	$	7,573,054	$	(2,915,204)

Total revenue was $4,657,850 for the nine months ended September 30, 2026, a decrease of $2,915,204 from the nine months ended September 30, 2025. We experienced decreased investment property revenues due to the sale of investment properties and the deconsolidation of the Tesla Pensacola Property, offset by increased revenues from the acquisition of the Tesla Pensacola Property, revenues from the newly acquired Overland Park and Pilot Point Properties, increased DST Sponsorship revenues and increased revenues from leasing activity at the Lancer Center Property and the Brookfield Property, which was sold on September 1, 2026.

Adjusted Net Operating Income

Adjusted Net Operating Income is a non-GAAP financial measure and is not considered a measure of operating results or cash flows from operations under GAAP. See the discussion above, under the discussion of operating results for the three months ended September 30, 2026. Please see below for the reconciliation of revenue and Adjusted Net Operating Income for each property.

Investment Property Revenues and Adjusted Net Operating Income

The following table presents property revenues, operating expenses and interest expense for our investment properties for the nine months ended September 30, 2026 and 2025:


	For the nine months ended September 30, 2026								For the nine months ended September 30, 2025
	(unaudited)								(unaudited)
	Revenues		Operating Expenses		Interest Expense		Adjusted NOI		Revenues		Operating Expenses		Interest Expense		Adjusted NOI		Adjusted NOI Change
Currently Owned Properties
Lancer Center	$	928,591	$	421,474	$	165,633	$	341,484	$	867,624	$	333,448	$	354,301	$	179,875	$	161,609
Overland Park		68,218		-		-		68,218		-		-		-		-		68,218
Pilot Point		14,025		-		-		14,025		-		-		-		-		14,025
	$	1,010,834	$	421,474	$	165,633	$	423,727	$	867,624	$	333,448	$	354,301	$	179,875		243,852

Recently Sold or Deconsolidated Properties
Franklin Square		678,467		228,110		83,419		366,938		1,979,043		467,693		401,090		1,110,260		(743,322)
Salisbury Marketplace		-		-		-		-		695,646		190,751		147,400		357,495		(357,495)
Greenbrier		145,466		48,096		40,148		57,222		819,209		183,130		118,076		518,003		(460,781)
Parkway		150,687		55,126		37,845		57,716		641,857		170,588		198,975		272,294		(214,578)
Buffalo Wild Wings		-		-		-		-		119,880		-		-		119,880		(119,880)
United Rentals		-		55,405		-		(55,405)		123,846		-		-		123,846		(179,251)
Citibank		70,494		-		-		70,494		113,096		-		-		113,096		(42,602)
Tesla Pensacola		529,948		-		193,821		336,127		318,968		112,626		219,071		(12,729)		348,856
Ashley Plaza		969,434		347,866		231,569		389,999		1,301,083		350,518		308,248		642,317		(252,318)
Brookfield		635,228		192,048		121,048		322,132		592,802		191,425		139,917		261,460		60,672
	$	3,179,724	$	926,651	$	707,850	$	1,545,223	$	6,705,430	$	1,666,731	$	1,532,777	$	3,505,922		(1,960,699)

Investment Properties	$	4,190,558	$	1,348,125	$	873,483	$	1,968,950	$	7,573,054	$	2,000,179	$	1,887,078	$	3,685,797	$	(1,716,847)

DST Sponsorship Program		467,292		916,002		-		(448,710)		-		-		-		-		(448,710)

Total	$	4,657,850	$	2,264,127	$	873,483	$	1,520,240	$	7,573,054	$	2,000,179	$	1,887,078	$	3,685,797		(2,165,557)

Total revenues were $4,657,850 for the nine months ended September 30, 2026, a $2,915,204 decrease from the nine months ended September 30, 2025. Adjusted Net Operating Income was $1,541,887 for the nine months ended September 30, 2026, a decrease of $2,222,635 from the nine months ended September 30, 2025, due to reduced Adjusted Net Operating Income from the sales of investment properties, and the new DST Sponsorship Program, offset by increased revenues from the Tesla Pensacola Property (prior to its deconsolidation), and increased Adjusted Net Operating Income from new leasing activity in the Lancer Center and the newly acquired Overland Park and Pilot Point Properties.

DST Sponsorship Revenues and Adjusted Net Operating Loss

The following table presents revenues, operating expenses and interest expense for our DST Program the nine months ended September 30, 2026 and 2025:


	For the nine months ended
	September 30,
	2026		2025		Increase /
	(unaudited)		(unaudited)		(Decrease)
DST Program revenues	$	467,292	$	-	$	467,292
DST Program operating expenses		916,002		-		916,002
DST Program adjusted NOI	$	(448,710)	$	-	$	(448,710)

We initiated our DST Program during the first quarter of 2026. Accordingly, there was no activity during 2025. During the nine months ended September 30, 2026, we recorded $467,292 in DST Program revenues related to acquisition fees, asset management fees and cost reimbursement fees from XXV DST. During the nine months ended September 30, 2026, we incurred $916,002 in

expenses associated with our DST Program, including salaries and benefits, conferences and travel, marketing, administrative and other expenses. Acquisition fees are generally earned upon the completion of the sale of all beneficial interests in a DST. Asset management fees are generally earned monthly. Disposition fees are earned upon the sale of a DST property and are generally subordinated to DST investors' return of capital. Adjusted net operating loss for the nine months ended September 30, 2026 was $448,710.

Operating Expenses

The following table presents our operating expenses for the nine months ended September 30, 2026 and 2025:


	For the nine months ended
	September 30,				Increase /
	2026		2025		(Decrease)
	(unaudited)		(unaudited)
Operating Expense Reconciliation
Investment property operating expenses	$	1,348,125	$	2,000,179	$	(652,054)
DST Program operating expenses		916,002		-		916,002
Total Operating Expenses from Consolidated Statements of Operations	$	2,264,127	$	2,000,179	$	263,948

Other Operating Expenses
Bad debt expense		12,991		1,686		11,305
Share based compensation expenses		224,220		397,182		(172,962)
Legal, accounting and other professional fees		1,194,864		1,172,673		22,191
Corporate general and administrative expenses		840,709		1,041,918		(201,209)
Loss on impairment		-		67,503		(67,503)
Impairment of assets held for sale		465,327		120,000		345,327
Depreciation and amortization		1,024,948		2,667,181		(1,642,233)
Total Operating Expenses	$	6,027,186	$	7,468,322	$	(1,441,136)

Total operating expenses were $6,027,186 for the nine months ended September 30, 2026, a decrease of $1,441,136 over the nine months ended September 30, 2025, primarily due to decreased investment property operating expenses and depreciation and amortization expense due to the sales of the investment properties, the deconsolidation of the Tesla Pensacola Property, and a decrease in share based compensation expense and corporate general and administrative expenses, offset by an increase in bad debt expense, legal, accounting and other professional fees, DST sponsorship program expenses and impairment of assets held for sale.

Interest Expense

Interest expense was $878,187 and $1,900,672 for the nine months ended September 30, 2026 and 2025, respectively, as follows:


	For the nine months ended
	September 30,				Increase /
	2026		2025		(Decrease)
	(unaudited)		(unaudited)
Franklin Square	$	83,419	$	401,090	$	(317,671)
Ashley Plaza		231,569		308,248		(76,679)
Brookfield Center		121,048		139,917		(18,869)
Parkway Center		37,845		198,975		(161,130)
Wells Fargo Mortgage Facility		205,781		619,777		(413,996)
Wells Fargo Line of Credit		-		2,500		(2,500)
Tesla Pensacola		193,821		219,071		(25,250)
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		-		7,470		(7,470)
Other interest		4,704		3,624		1,080
Total interest expense	$	878,187	$	1,900,672	$	(1,022,485)

Total interest expense for the nine months ended September 30, 2026 decreased by $1,022,485 over the nine months ended September 30, 2025. This decrease was primarily a result of the repayment of a portion of the Wells Fargo Mortgage Facility resulting from the sale of the Salisbury Marketplace and Greenbrier Business Center Properties and the repayment of the Parkway Center, Franklin Square and Ashley Plaza mortgages resulting from the sale of the respective property.

Other Income

During the nine months ended September 30, 2026, other income was $1,851,092, which consisted of $817,308 in unrealized gains and $18,329 in realized gains on our investment in marketable securities, $32,255 of realized gains on crypto assets, $95,704 related to the fair value change of the interest rate cap, $753,755 in dividend income, $62,978 in insurance proceeds related to property damage at the Brookfield Property, and $70,763 in interest income. This is an increase of $1,536,774 from other income of $314,318 for the nine months ended September 30, 2025, which consisted of $118,529 in lease termination fees, $172,921 in insurance proceeds for property damage at our Franklin Square Property, $3,733 in gains on crypto assets and $19,135 in interest income.

Other Expense

During the nine months ended September 30, 2026 and 2025 other expense was $184,884 and $68,937, respectively. Other expense for the nine months ended September 30, 2026, consists of $93,040 of unrealized losses on crypto assets and $91,844 in costs associated with the deconsolidation of the XXV DST. Other expense for the nine months ended September 30, 2025 related to the fair value change of the interest rate cap.

Equity in Earnings of Unconsolidated Entities

During the nine months ended September 30, 2026, equity in earnings of unconsolidated entities was generated from our equity investments in XXV DST and Mira JV.

Provision for Income Taxes

Effective on January 1, 2026, we revoked our election to be taxed as a REIT and as a result, we recorded a net deferred tax asset and income tax benefit of $3,987,344. In addition, for the nine months ended September 30, 2026, we recorded a benefit for income taxes of $864,202, which consists of current and deferred components. Our effective tax rate of (4.3)% of pre-tax income reported in the period differs from the federal statutory rate of 21% primarily due to establishing the net deferred tax assets upon our termination of our election to be taxed as a REIT partially offset by tax expense related to deconsolidation of our DST subsidiary along with disposal of certain investment properties.

Medalist Diversified Inc. published this content on November 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 13, 2026 at 13:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]