Medalist Diversified REIT

Kurta Law is investigating broker recommendations of Medalist Diversified REIT (NASDAQ: MDRR). REITs are investment companies that invest in income-producing real estate properties or real estate financing. This REIT came with considerable risk that was clearly disclosed in the prospectus, the document that companies file with the Securities and Exchange Commission (SEC) when they register their stock offerings.  

Brokers who recommended this investment may have violated the Suitability Rule, which requires brokers to consider their investor’s risk tolerance when making investment recommendations. If you had a moderate or conservative risk tolerance when your broker recommended shares of Medalist Diversified REIT. Call (877) 600-0098 or info@kurtalawfirm.com.  

About the Offering  

The prospectus dated May 8, 2019, states that Medalist Diversified REIT was offering 1,666,667 shares of common stock.  

What is Medalist Diversified REIT?  

According to the prospectus, Medalist Diversified REIT was formed to “acquire, reposition, renovate, lease, and manage income-producing properties, with a primary focus on commercial properties and multi-family residential properties.” The REIT invests primarily in properties in the southeastern United States.  

Risks Associated with Medalist Diversified REIT  

Medalist Diversified REIT has the following risks disclosed in its prospectus. Brokers knew or should known about these risks.  

Limited Investments  

Medalist Diversified REIT’s portfolio consists of only three investments. The company’s success was dependent on their ability to make other investments in line with their investment goals.  

Limited Operating History  

Medalist Diversified REIT had a limited operating history and could offer no guarantee that the company would be successful moving forward.  

Conflicts of Interest  

The prospectus discloses that the REIT has conflicts of interest with its manager and its affiliates – conflicts that could result in investment decisions that are not in the best interests of stockholders.  

Management  

The manager and senior management team have limited experience managing a REIT or a publicly traded company.  

Material Weakness in Internal Control Over Financial Reporting 

In the course of preparing consolidated financial statements for the fiscal years ending December 31, 2018, 2017, and 2016, a material weakness in the company’s internal control over financial reporting was identified. The company offers no guarantee that an additional material weakness or significant deficiencies will not be identified in the future.  

Losses  

Medalist Diversified REIT has experienced losses in the past and may suffer losses in the future.  

Emerging Growth Company 

As an emerging growth company, Medalist Diversified REIT is subject to reduced reporting requirements. 

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Kurta Law Can Help  

Contact Kurta Law today for a free case evaluation – keep in mind that you have a limited time to file a claim. Our attorneys do not collect a fee unless we win your case. If you have any questions, call (877) 600-0098 or email info@kurtalawfirm.com.