Mail Stop 3233
July 16, 2018
Via E-mail
Thomas E. Messier
Co-President and Director
Medalist Diversified REIT, Inc.
11 S. 12th Street
Suite 401
Richmond, VA 23219
Re: Medalist Diversified REIT, Inc.
Draft Registration Statement on Form S-11
Submitted June 18, 2018
CIK No. 0001654595
Dear Mr. Messier:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
General
1. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your
behalf, present to potential investors in reliance on Section 5(d) of
the Securities Act,
whether or not they retain copies of the communications.
Thomas E. Messier
Co-President and Director
Medalist Diversified REIT, Inc.
July 16, 2018
Page 2
2. Please ensure that you provide all of the applicable disclosure found in
Industry Guide 5
and CF Disclosure Guidance Topic No. 6. For example only, in accordance
with Item 1
of Industry Guide 5, please provide cover page risk factors. In
accordance with Item 4 of
Industry Guide 5, provide an estimate of the dollar amount of the
management fee to be
paid to your manager in the first fiscal year, assuming the maximum
number of securities
being registered are sold in this offering and maximum leverage. With
respect to your
prior performance disclosure and tables, please ensure that you provide
all of the
disclosure required by Item 8 of Industry Guide 5 and revise the tables
to be consistent
with the guidance provided by CF Disclosure Guidance Topic No. 6.
Cover Page
3. We note your disclosure that you intend to be taxed as a REIT for
federal income tax
purposes beginning with the taxable year ended December 31, 2017. Please
update this
disclosure to clarify if you met the requirements and whether you
qualify as a REIT.
Industry and Market Data, page 2
4. We note your disclosure that you "do not make any representation as to
the accuracy and
completeness of this information." This statement appears to disclaim
the issuer's
responsibility for information in the registration statement. As this is
not consistent with
the liability provisions of the Securities Act, please revise the
disclosure to remove this
disclaimer.
Risk Factors, page 14
5. We note that you have experienced net losses. Please add a risk factor
to address these
losses and the potential impact on your company's business and financial
condition.
"The bankruptcy, insolvency or dimishied creditworthiness of our tenants under
their leases . . . .
," page 25
6. We note your disclose on page 56 that revenues at your Franklin Square
property were
negatively impacted by a bankruptcy filing in 2017 by one of your
tenants. Please revise
this risk factor to specifically address the bankruptcy filing by this
tenant.
Thomas E. Messier
Co-President and Director
Medalist Diversified REIT, Inc.
July 16, 2018
Page 3
Distribution Policy, page 49
7. We note that you made dividend payments of $.70 per share through
January 2018.
Please revise to provide the disclosure required by Item 201(c)(1) of
Regulation S-K.
Additionally, it appears that your cash flow from operations were not
sufficient to fund
your distributions. Therefore, please disclose the sources of your
distribution payments,
including borrowings and proceeds, and revise your risk factor
disclosure on page 27 to
indicate that you have utilized these other sources and the extent to
which you have used
sources other than cash flow from operations.
Results of Operations, page 56
8. We note your disclosure that you expect a new lease will be signed for a
space at the
Franklin Square Property in May 2018. Please update this disclosure.
Funds From Operations, page 57
9. Please tell us how your adjustment that adds back distributions to
noncontrolling interests
is consistent with the NAREIT definition of FFO.
Dilution, page 62
10. Please include a tabular presentation of the public contribution under
the offering and the
effective cash contribution of officers, directors, promoters and
affiliated persons. Refer
to Item 506 of Regulation S-K for further guidance.
Our Business and Properties
Our Portfolio, page 68
11. Based on your footnote disclosure, it does not appear that the average
effective rent per
square foot accounts for concessions, abatements and reimbursements.
Please advise or
revise as appropriate.
12. With respect to your Hampton Inn property, please disclose your average
daily room rate
and revenue per available room.
Management, page 77
13. Please briefly describe the specific experience, qualifications,
attributes or skills that led
to the conclusion that Mr. Messier and Mr. Elliot should serve as
directors. Refer to Item
401(e) of Regulation S-K.
Thomas E. Messier
Co-President and Director
Medalist Diversified REIT, Inc.
July 16, 2018
Page 4
Policies with Respect to Certain Activities
Conflict of Interest Policies, page 89
14. We note your discussion of the investment allocation agreement with your
manager.
Please also disclose the number of affiliated entities currently raising
funds and the
amounts these other entities have available for investment.
Medalist Diversified REIT, Inc. Unaudited Pro Forma Consolidated Statement of
Operations For
The Three Months Ended March 18, 2018, page FS-6
15. Please revise to present revenues and expenses by type rather than by
property. This
comment also applies to your presentation on page FS-10. Reference is
made to Rule 5-
03 of Regulation S-X.
Medalist Fund 1-A, LLC (Franklin Square) Financial Statements, page FS-60
16. We note you acquired Franklin Square during 2017. Please provide us with
your analysis
supporting your conclusion that the acquired business is not a
predecessor.
You may contact William Demarest at (202)551-3432 or Shannon Sobotka at
(202)551-
if you have questions regarding comments on the financial statements and
related matters.
Please contact Stacie Gorman at (202)551-3585 or me at (202)551-3391 with any
other
questions.
Sincerely,
/s/ Erin E. Martin
Erin E. Martin
Legal Branch Chief
Office of Real
Estate and
Commodities
cc: T. Rhys James, Esq.