Medalist Diversified Fully Subscribes Debut DST, Raising $8.6 Million

Medalist Diversified Inc. (Nasdaq: MDRR) has fully subscribed MDRR XXV DST 1, raising nearly $8.6 million in equity from accredited 1031 exchange investors in the first offering from its Delaware statutory trust sponsor platform. Total capitalization is approximately $16.3 million, according to a company statement.

The trust holds a net-leased, 45,190-square-foot facility at 312 East Nine Mile Road in Pensacola, Fla., leased entirely to Tesla Inc., which carries a BBB rating with a stable outlook from S&P Global Ratings. The building serves as Tesla’s sales, service, and delivery hub for Northwest Florida and Southern Alabama, a market of more than 500,000 residents anchored by Naval Air Station Pensacola, the company said.

The lease runs 12 years to May 31, 2037, with 3% annual rent escalations and three five-year renewal options at the same escalation rate, the company said. Base annual rent is $894,487. The trust placed a $7.7 million non-recourse first mortgage with Pinnacle Bank at a 47.32% loan-to-value ratio, swapped to a 5% fixed rate, with debt service coverage of 2.32x. Current cash flow to investors is 6%, based on first-year annualized rent, debt service, and projected expenses, the company said. The minimum investment was $100,000.

DST investments managing director Peter Elwell said the closing reflects the platform’s underwriting approach. “We are focused on sourcing investments characterized by institutional quality tenants, long-term leases and conservative use of leverage,” he said. “A BBB-rated tenant on a 12-year lease at 47% LTV with 2.32x coverage is the profile we intend to repeat.”

Sponsor operations executive vice president Ronald Nielsen said the offering’s structure reflects how Medalist is positioning itself with advisers evaluating the sponsor alongside the real estate.

“Advisers placing 1031 capital are underwriting the sponsor as much as the real estate,” he said. “Being part of a public reporting company means our financials, our governance, and our track record are on the record from day one. That mattered to the firms that took this to their due diligence committees.”

The closing follows the platform’s launch in May, when AltsWire reported that Medalist was seeking approximately $8.5 million for the offering. At the time, Nielsen said the firm’s public-company structure was intended to offer advisers a level of governance and transparency uncommon among DST sponsors, most of which are privately held.

Medalist said it expects to bring its second DST offering to market later this month, with information to be made available to registered representatives and investment advisers through the company’s distribution partners.

Medalist sponsors its DST offerings through MDI Sponsor, LLC, a company subsidiary formerly known as MDRR Sponsor TRS, LLC. The company reported approximately $96 million in assets under management across 10 properties in eight states, with 94% portfolio occupancy.

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