Having seen the price of shares fall by a significant 6.91% as of April 8th, 2021, Medalist Diversified REIT Inc. (MDRR) shares now sit at USD$1.75. This dip followed the announcement that they would be pricing 8 million common shares at USD$1.50 per share in their public offering. This will net the company close to USD$12 million, with a closing date around April 13th, 2021.
What are they doing?
MDRR plans to invest these funds in the acquisition of additional properties in the Mid-Atlantic and Southeast regions of the United States, as well as for general working capital. As of October 2020, MDDR owned and managed Franklin Square Shopping Center, Hanover Square shopping Center, Ashley Plaza, Clemson Best Western Hotel, Greensboro Hampton Inn, and Brookfield Center. As part of the public offering announcement, underwriters were also given the option to buy up a further 1.2 million shares over a 45-day period in the case of over-allotments.
Has this worked in the past?
Historically, MDRR has struggled with making efficient use of the capital they raise. In their 2018 exempt offering, 1,995,580 shares were sold at USD$10, yet only USD$17,952,310 were netted. Between underwriter costs and other related expenses, 10% of their investments had been eaten up. For their future to look brighter, MDDR will have to make efficient and impactful use of the funds they have raised. This will result in investor confidence and some stability, as opposed to being at the whims of traders executing pump and dumps to make some short-term money.
MDDR in the Context of Covid-19
Based in Virginia, Medalist Diversified REIT Inc. (MDRR) is an investment trust that deals primarily in real estate, focusing on the acquisition and management of commercial properties. The pandemic particularly affected MDRR’s performance and overall fundamental value. Because of heavily restricted traveling and less spending power their rent collections suffered, as did hotel occupancy levels. The slim silver lining during the pandemic consists of contracts with universities who have a need to provide safe student housing. While it is a welcome influx of revenue, it cannot be counted on as a sustainable source of income.