Good morning. Welcome to Medalist Diversified REIT Fourth Quarter and Fiscal Year 2019 Earnings Call and Update. On March 4th, the company issued a press release that provided an overview of its results. Today's conference is being recorded and will be available online.

[Operator Instructions]Before the call begins, we would like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Medalists cautious that these forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from those indicated including risks described in the company's filing with the SEC. Any forward-looking statements made on this conference call speak only as of today's date, Monday, March 9th, 2020.

And Medalist does not intend to us see any of these forward-looking statements to reflect events or circumstances that would occur after today's date.With that I would like to turn the call over to Chairman and CEO, Tim Messier. Please go ahead..

Hey. Good morning, everyone. And thanks for getting on the call. As Moore said, we are -- this is an earnings call. However, I will start by listing some of the great fundamentals of our company at this time. In the fourth quarter, we doubled the size of the company with three great assets.

Shopping Center, a very attractive hotel in Clemson, South Carolina and a flex property in Greenville, South Carolina, attached to our already attractive portfolio of three other properties.

So in a fourth quarter we had six properties creating earnings and revenues for us.And with that I'd like to turn it over to [Brent], we need to talk about our earnings and then we'll ask any questions regarding that as we move along. I will say that you have access to me after this call. You may call me on 804-344-4435.

Brent?.

Good morning. As Tim mentioned, like to start off with some major kind of bigger picture items. During the fourth quarter of 2019, our portfolio size doubled from three to six properties which increase our assets by $30 million over December 31st, 2018 assets.

During the fourth quarter, our revenues increased 66.8% over the fourth quarter 2018 to $3.1 million and that was due to the three acquisitions that closed and which we had the benefit of all three properties during the fourth quarter.During the fourth quarter, we also saw a decrease in non-recurring expenses primarily non-cash share based compensation items and a loss on impairment.

Our net loss for the quarter was $734,000 compared to a $1.5 million for the quarter ended December 31st, 2018. As a REIT, we have very heavy non-cash depreciation and amortization items.

So we will be talking primarily going forward about net losses but when adjusted for those non-cash items, we will start to see stronger cash flow going forward.This leads into a FFO which is a supplemental financial measure that we use.

During the fourth quarter ended December 31, 2019, our AFFO increased by $823,000 to $380,000 over the fourth quarter 2018. This is a $0.08 per common share.For the full year, our net loss was $3.8 million compared to $2.9 million of prior year. Again, this is a function of non-recurring expenses and heavy depreciation and amortization costs.

Our -- looking at our AFFO and FFO, as I said our AFFO increased significantly but our funds from operations also increased substantially from $769,000 negative in 2018 fourth quarter to $287,000 positive in the fourth quarter 2019, over $1 million increase.

So going forward, we plan to add one to two properties in the near term, which will create more cash flow and be accretive to the REIT. We do not have a prediction of when they will close but we expect them to close in the first half of the year. Don't know; we don't have a closing date yet.

We -- our plans for the future or to grow significantly buying properties in the southeast for cap rates are 7% to 9% much higher yields in a primary cities in the secondary tertiary markets of the southeast.With that I will open it up for questions regarding our earnings..

[Operator Instructions]Our first question is from [Ben Zakur with Eligius Capital]. Please proceed..

Good morning, guys. Thanks for taking my questions and congratulations on what I view as a pretty strong quarter and definitely a nice turn around and jump in the business and the underlying metrics. I guess just to kind of kick off, you guys now own two hotels.

Could you talk about maybe the seasonality factors and how that might have played into both the fourth quarter results, but then also kind of your outlook and your expectations looking out for 2020?.

Sure. These limited service hotels we would -- that we own now and have owned in the past usually in November and December and sometimes in January, the seasonality where business travel is a lower and group travel is lower. So we always have to allow for that. We have some seasonality in the two hotels in November and December.

We expect revenue to pick up going into the fourth quarter and certainly into the second quarter. In both situations, there are group trips and other activities in the years where our hotels are located and we should see revenues pick up significantly like I said in the first and second quarter..

Got you. And then just real quickly staying on the topic of hotels. I, notwithstanding the seasonality you're talking about.

Have you seen any kind of change or potential change in demand that could be attributable to the coronavirus yet or is it still too early to tell?.

We have not seen any change in demand as a result of that. We've checked with our hotel managers that are booking rooms really on an every other day basis. And we have not seen any problems with that yet..

Understood. On your lease expiration schedule, I believe you had some leases that were set to expire in 2020.

How are just, from a high level how are those conversations shaping out with tenants thus far? Are there any updates there that you could provide?.

We -- they are not current active tenants yet. We usually wait till six months before prior to their expirations. And so that's our strategy. We use outside leasing agents to handle our leasing arrangements, but we usually wait until six months prior to a tenant maturity..

Understood. And then you started touching on the deployment talking about maybe closing some more assets in the first half.

Could you maybe talk about the types of assets that you guys are looking at? I know the market will always be the southeast, but is there anything like do you think you might do a foray into multifamily or do you think you'll be sticking with big companies' kind of retails trip centers? Just want to maybe get a flavor for what you guys are looking at in your pipeline?.

Well, we love multifamily; it's a little expensive right now. Bill took a strategy on purchasing multifamily. The two properties we have on our radar one is a flex property 90,000 square feet located in Chesapeake, Virginia in a great area of Chesapeake where there's a lot of economic activity.

In other properties, a shopping center in Newport, News Virginia on a heavily traveled road or Warwick Boulevard in Newport News. The main acres there are auto zone and true line..

And then just touching back bringing that all back home to kind of the current events, which is on everyone's mind I think of the coronavirus. How are you viewing the rush or patience towards deploying capital? And I'm asking that because obviously debt costs continue to get very favorable.

So the opportunity to lock in some ultra cheap, long-term debt is probably better than it's been in recent history right now. But there's also still some uncertainty.

So are you guys maybe a little bit more cautious and trying to wait and see with how everything plays out or do you think you're really going to be still just trying to lock in the properties that you're looking at right now and take advantage of the low cost debt markets?.

Yes. We face [free asset] question I mean right now the latest numbers we've seen a way sub 4% on most assets. I would say right now we could get 3.5 to 3 and 3.25 on a shopping center, neighborhood shopping center, flex property or hotels, multifamily I think it's around 3.10 all for 10 years fixed, very, very cheap debt.

We have not seen a lot of hand-wringing regarding the coronavirus in the southeast. Activities are still going on. The Atlantic Coast Conference, ACC tournament for basketball is still on for this week. We have a Furniture Mart which is a huge event in the Greensboro area that will benefit our Hampton Inn that is no one has canceled there.

So we haven't seen any real worried about the coronavirus in our area as of yet.So we're very fortunate in that regard in my opinion. And we can keep our fingers crossed if we want..

Great. Well, listen, I appreciate the clarity there. I look forward to reviewing the 10-K filing when that comes out and again just want to say congratulations. I think the sequential jump in earnings has certainly kind of showing the value of the properties you've been assembling..

Our next question is from John Wheeler with Wheeler Real Estate Investments. Please proceed..

Good morning, guys. It's John Wheeler. How y'all doing this morning? Want to touch base; I had a couple questions that I'd like to ask online and offline as well.

Could you repeat your telephone number, Tim?.

Sure. 804-344-4435..

4435, all right, thank you. I appreciate it. I was looking at some of the financials on the SEC website and again I would agree with the previous caller. Congratulations on doubling the size of the portfolio from three to six.

My first question is and again it may be more of an offline question, but it looks like you're paying based upon fourth quarter the $0.08, if you just annualized that times four quarters assuming that was the number you're paying out $0.50 a share annualized and you only earned $0.08 in fourth quarter.

So my question is when you do the math on that you're paying out about 36% more than what you're earning. And I'd like to get your comment on that because it seems a pretty aggressive.

For example, if you're earning $0.08 and you're paying out $0.125, if you could address that first question?.

Sure. The two hotels had seasonality issues in the November and December. If they perform the way they normally do through the year we've been very close to covering or over covering our dividend..

So you think that you could bridge if you use fourth quarter's results as a benchmark metric, you could bridge that 36% on a quarterly basis.

So Q1 over Q4 for last year?.

Q1 over Q4 - Q1 last year has nothing to do with the financials today..

Oh, no. I'm talking about - I'm sorry. I'm talk about Q1 of 2020 when you report based on what your statement was if you earned incentive --.

It should be much closer to covering our dividend in Q1 if we were in Q4 because we expect the hotels to perform better. Q2, we expect them to perform better than Q1. So we are getting very close to either covering or over couple of quarters..

Okay. That's good to hear. Tell me about your diversified REIT and the market traditionally, I know you are NASDAQ, the market traditionally discounts diversified REITs and I heard this morning that not only you in office or warehouse, retail and hotels, but you mentioned apartments. If you did that that would be four different property types.

Are you running financials individually on each product type internally and then have a consolidated statement with currently those three different product types combined?.

That's correct. Look, this strategy is born out of Bill Elliott's experience in the commercial real estate space. Our strategy is to build a portfolio workforce necessity real estate comprised of four property types. And those four property types reflect industrial, limited service hotels, multifamily and neighborhood retail, not large shopping malls..

Okay..

We have managed and owned that property since we started as a private equity company and not REIT..

Okay. Thank you. So tell me about external management. When a company is externally managed as a real estate investment trust, publicly traded real estate investment trusts like the diversified REITs, they're discounted.

When you're externally managed my experience is the stock is discounted and when I look at where the 52-week high the stock was versus where it is today. It looks like you're down 72%. If you look at 52 weeks ago versus today. So if you could address external management..

Yes. I'll address that offline, John. You could call me back on my number. We'll talk about that. Our fundamentals are very strong. If the REIT wants to discount us because we're diversified that's their option. But you may call me back on that question..

Okay. Good. I will. Okay. I'll hold my comments there because I think I have some more hardliner questions that will need direct answers and being a stockholder I'm sure you'll be transparent with me..

Sure. Absolutely.End of Q&A.

With no more further questions in the queue, I would like to turn the conference back over to Mr. Messier for additional closing remarks..

Again, thanks everyone for getting on the call this morning. We are very happy with our earnings. We're very excited about the future. Again, we plan to add properties as we move along. We plan to grow. We have extremely strong team of people working with us. And we're very happy where the company is now. And we thank you for being on this morning..

Ladies and gentlemen, that does conclude our conference for today. Thank you so much for your participation. Have a wonderful day. You may now disconnect..