5. Loans Payable

Mortgages Payable

The Company’s mortgages payables, net consists of the following:


		Monthly			Interest			December 31,
Property		Payment			Rate		Maturity	2025			2024
Franklin Square (a)		$	61,800		3.808	%	December 2031	$	13,015,840		$	13,250,000
Ashley Plaza (b)			52,795		3.75	%	September 2029		10,220,312			10,460,350
Brookfield Center (c)			22,876		3.90	%	November 2029		4,377,112			4,476,429
Parkway Center (d)			37,310		Variable		November 2031		—			4,814,563
Wells Fargo Mortgage Facility (Lancer Center) (e)			56,877		4.50	%	June 2027		5,502,446			17,509,420
Unamortized issuance costs, net									(286,847)			(509,700)
Total mortgages payable, net								$	32,828,863		$	50,001,062

(a)

The mortgage loan for the Franklin Square Property in the principal amount of $13,250,000 has a ten-year term and a maturity date of December 6, 2031. The mortgage loan bears interest at a fixed rate of 3.808% and was interest only until January 6, 2025, at which time the monthly payment became $61,800, which includes interest and principal based on a thirty-year amortization schedule. The mortgage loan includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of December 31, 2025 and 2024, the Company believes that it is compliant with these covenants. The Company has guaranteed the payment and performance of the obligations of the mortgage loan.

(b)

The mortgage loan for the Ashley Plaza Property bears interest at a fixed rate of 3.75% and was interest only for the first twelve months. Beginning on October 1, 2020, the monthly payment became $52,795 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule. The mortgage loan includes covenants for the Company to maintain a net worth of $11,400,000, excluding the liabilities associated with the mortgage loan for the Ashley Plaza Property, and for the Company to maintain liquid assets of no less than $1,140,000. As of December 31, 2025 and 2024, the Company believes that it is compliant with these covenants.

(c)

The mortgage loan for the Brookfield Property bears interest at a fixed rate of 3.90% and was interest only for the first twelve months. Beginning on November 1, 2020, the monthly payment became $22,876 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule. The mortgage loan includes covenants for the Company to maintain a net worth of $4,850,000, excluding the liabilities associated with the mortgage loan for the Brookfield Property, and for the Company to maintain liquid assets of no less than $485,000. As of December 31, 2025 and 2024, the Company believes that it is compliant with these covenants.

(d)

The interest rate for the mortgage loan for the Parkway Property is based on Term SOFR, with a margin of 236.44 basis points. Under the terms of the mortgage, the interest rate payable each month shall not change by greater than 1% during any six-month period and 2% during any 12-month period. As of December 31, 2025 and 2024 the rate in effect for the Parkway Property mortgage was 6.24% and 6.92%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a thirty-year amortization schedule. The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.30 to 1.00 on an annual basis. As of December 31, 2025 and 2024, the Company believes that it is compliant with this covenant. During the year ended December 31, 2025, the Company reclassified the mortgage loan for the Parkway Property to liabilities associated with assets held for sale.

(e)

On June 13, 2022, the Company entered into a mortgage loan facility with Wells Fargo Bank (the “Wells Fargo Mortgage Facility”) in the principal amount of $18,609,500. The proceeds of this mortgage were used to finance the acquisition of the Salisbury Marketplace Property and to refinance the mortgages payable on the Lancer Center Property and the Greenbrier Business Center Property (the “Secured Properties”). The Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term. The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule, is $103,438. The Company has provided an unconditional guaranty of the payment of and performance under the terms of the Wells Fargo Mortgage Facility. The Wells Fargo Mortgage Facility credit agreement includes covenants to maintain a debt service coverage ratio of not less than 1.50 to 1.00 on an annual basis, a combined minimum debt yield of 9.5% on the Secured Properties, and the maintenance of liquid assets of not less than $1,500,000. As of December 31, 2025 and 2024, the Company believes that it is compliant with these covenants.

On October 23, 2025, the Company sold the Salisbury Marketplace Property and used $5,145,479 of the net proceeds of the sale to reduce the principal balance of the Wells Fargo Mortgage Facility in exchange for Wells Fargo releasing its security interest in the Salisbury Marketplace Property. As of December 31, 2025, the remaining outstanding balance, the monthly payment (which remains unchanged) and the remaining unamortized loan issuance costs related to the Wells Fargo Mortgage Facility are allocated, for reporting purposes, among the Lancer Center Property and Greenbrier Business Center Property based on each property's proportionate share of the total combined appraised value at the time the Wells Fargo Mortgage Facility was originated. The portion allocated to the Lancer Center Property is reported in Mortgages payable, net, on the Company’s consolidated balance sheets, while the portions allocated to the Greenbrier Business Center Property, representing the estimated paydown amount upon its anticipated sale, is included in liabilities associated with assets held for sale on the Company’s consolidated balance sheets.

The Company’s mortgages payables, net, associated with assets held for sale, consists of the following:


	Monthly		Interest			December 31,
Property	Payment		Rate		Maturity	2025		2024
Parkway Property (see note (d), above)	$	37,310	Variable		November 2031	$	4,683,797	$	—
Wells Fargo Mortgage Facility (Greenbrier Business Center) (see note (e), above)		46,561	4.50	%	June 2027		6,356,947		—
Tesla DST Mortgage (a)		Interest only	Variable		November 2030		7,505,754		—
Total mortgages payable, net, associated with assets held for sale						$	18,546,498	$	—

(a)

On November 7, 2025, the Company’s subsidiary, MDRR XXV DST 1, entered into a mortgage loan with Pinnacle Bank (the “Tesla DST Mortgage”). The Tesla DST Mortgage has a five year term, is interest only and bears interest at a variable rate based on Term SOFR plus 2.5%. As of December 31, 2025, Term SOFR was 3.69% and 4.33%, respectively. The Tesla DST Mortgage is non-recourse to the Company, except for fraud, intentional misrepresentation, gross negligence, physical waste and other similar acts or omissions. Under the terms of the Tesla DST Mortgage, the failure of the borrower to maintain a

minimum debt service coverage ration (“DSCR”) of 1.25 constitutes a “trigger event” under which borrower would be required to establish a cash management account to which all rents and profits would be deposited and remain under the control of the lender until the trigger event is terminated. As of December 31, 2025, the Company believes it is compliant with the DSCR requirement.

Farmers Line of Credit

On July 18, 2025, in connection with the completion of the acquisition of the Tesla Pensacola Property discussed in Note 3, above, the Company, through its wholly-owned subsidiaries, entered into a loan agreement with Farmers and Merchants Bank of Long Beach, for the Farmers Line of Credit in the maximum amount of $14,700,000. The Farmers Line of Credit is cross collateralized by the Tesla Pensacola Property, the Citibank Property, the Buffalo Wild Wings Property, and the United Rentals. Amounts outstanding under the Farmers Line of Credit bear interest at a floating rate pegged to the prime rate announced by Farmers.

On November 7, 2025, in connection with the Company’s contribution of the Tesla Pensacola Property to the XXV DST, the Company repaid $7,350,000 of the Farmers Line of Credit and Farmers released its lien on the Tesla Pensacola Property. During November and December 2025, the Company made additional principal payments of $2,000,000 and $948,997, respectively. On December 30, 2025, the Company used $4,401,003 from the proceeds of the sale of the Buffalo Wild Wings and United Rentals Properties to complete the repayment of the Farmers Line of Credit.

The Farmers Line of Credit was unconditionally guaranteed by the Company and the Operating Partnership, had a one-year term, maturing on August 10, 2026. As of December 31, 2025 and 2024, respectively, the balance of the Farmers Line of Credit was $0.

Tesla DST Mortgage

On November 7, 2025, in connection with the contribution of the Tesla Pensacola Property to the XXV DST discussed in Note 3, the XXV DST entered into the Telsa DST Mortgage with Pinnacle Bank for a principal amount of $7,710,000. The Pinnacle Loan is collateralized by the Tesla Pensacola Property. Amounts outstanding under the Pinnacle Loan bear interest at a floating rate of one month SOFR plus 2.5%. As of December 31, 2025 and 2024, SOFR was 3.69% and 4.33%, respectively. The Pinnacle Loan provides for monthly interest only payments and has a five-year term and matures on November 7, 2030. The XXV DST received $6,932,061 in net proceeds which was used to fund a portion of the total consideration associated with the Company’s contribution of the Tesla Pensacola Property to the XXV DST. The Company used these proceeds, and cash on hand, to make a $7,350,000 principal repayment on the Farmers Line of Credit.

In connection with the Tesla DST Mortgage, the Operating Partnership agreed to provide a limited guaranty (the “Guaranty”) with respect to certain potential costs, expenses, losses, damages and other sums for which the XXV DST is directly liable under the Tesla DST Mortgage, including losses or damages that may result from certain intentional actions committed by the XXV DST in violation of the Tesla DST Mortgage. The Operating Partnership also provide a guaranty of the principal balance and any interest or other sums outstanding under the Tesla DST Mortgage in the event of certain bankruptcy or insolvency proceedings involving the XXV DST.

Interest Rate Protection Transactions

Parkway Mortgage Loan

On October 28, 2021, the Company entered into an interest rate protection transaction to limit its exposure to increases in interest rates on the variable rate mortgage loan on the Parkway Property (the “Interest Rate Protection Transaction”). Under this agreement, the Company’s interest rate exposure is capped at 5.25% if USD 1-Month ICE LIBOR exceeds 3%. Effective on July 1, 2023, the interest rate index under the Interest Rate Protection Transaction automatically converted to SOFR. As of December 31, 2025 and 2024, SOFR was 3.69% and 4.33%, respectively. In accordance with the guidance on derivatives and hedging, the Company records all derivatives on the balance sheet at fair value under other assets. The Company determines fair value based on the three-level valuation hierarchy for fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of the Interest Rate Protection Transaction is valued by an

independent, third-party consultant which uses observable inputs such as yield curves, volatilities and other current market data, all of which are considered Level 2 inputs. As of December 31, 2025 and 2024, the fair value of the Interest Rate Protection Transaction was $27,224 and $117,390, respectively, and is recorded under other assets on the Company’s consolidated balance sheets. The Company reports changes in the fair value of the derivative in other income on its consolidated statements of operations.

For the period from September 1, 2022 through June 30, 2023, LIBOR, and for the period from July 1, 2023 through December 31, 2025, SOFR, exceeded the 3% cap, and payments from the Interest Rate Protection Transaction reduced the Company’s net interest expense. Payments to the Company from the Interest Rate Protection Transaction are recorded as an offset to interest expense on the Company’s consolidated statements of operations for the years ended December 31, 2025 and 2024.

Tesla DST Mortgage

Concurrent with the Pinnacle Loan closing the XXV DST entered into an interest rate swap agreement with Pinnacle Bank (the “Interest Rate Swap”) to fix the interest rate at 5%. The Interest Rate Swap has a $7,710,000 notional amount and provides for the XXV DST to make monthly payments to Pinnacle Bank based on a fixed 5% rate and for Pinnacle Bank to make monthly payments to the XXV DST based on a variable amount of one month SOFR plus 2.5%. The XXV DST paid a premium of $417,136 to secure the 5% fixed rate. The Interest Rate Swap matures concurrently with the maturity of the Tesla DST Mortgage, or November 7, 2030. The Company has not designated the Interest Rate Swap as a hedge and consequently hedge accounting will not apply.

In accordance with the guidance on derivatives, the Company records all derivatives on the balance sheet at fair value under other assets. The Company determines fair value based on the three-level valuation hierarchy for fair value measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of the Interest Rate Swap is valued by an independent, third-party consultant which uses observable inputs such as yield curves, volatilities and other current market data, all of which are considered Level 2 inputs. As of December 31, 2025 and 2024, the fair value of the Interest Rate Swap was $326,551 and $0, respectively, and is recorded under other assets on the Company’s consolidated balance sheets. The Company reports changes in the fair value of the derivative in other income on its consolidated statements of operations.

Wells Fargo Line of Credit

On June 13, 2022, the Company, through its wholly-owned subsidiaries, entered into a loan agreement with Wells Fargo Bank, National Association for a $1,500,000 line of credit (the “Original Wells Fargo Line of Credit”). On May 2, 2023, the Company and Wells Fargo Bank, National Association entered into the First Amendment to the Revolving Line of Credit Note which extended the maturity date of the Original Wells Fargo Line of Credit to June 9, 2024. On June 5, 2024, the Company and Wells Fargo Bank, National Association entered into the Second Amended to the Revolving Line of Credit Note which further extended the maturity date of the Original Wells Fargo Line of Credit to October 7, 2024. Outstanding balances on the Original Wells Fargo Line of Credit bore interest at a floating rate of 2.25% above daily SOFR. The Original Wells Fargo Line of Credit was secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property, was unconditionally guaranteed by the Company, and any outstanding balances would have been due on the October 7, 2024 maturity date.

On October 2, 2024, the Company, through its wholly-owned subsidiaries, entered into an amended and restated Revolving Line of Credit Note with Wells Fargo Bank, National Association that increased the line of credit from $1,500,000 to $4,000,000 (the “Expanded Wells Fargo Line of Credit”). Outstanding balances on the Expanded Wells Fargo Line of Credit will bear interest at a floating rate of 3.10% above Daily Simply SOFR, which, with respect to any day (a “SOFR Rate Day”) means a rate per annum equal to SOFR for the day that is two U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, subject to certain exceptions. A U.S. Government Securities Business Day is any day except for Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

On April 28, 2025 the Company terminated the Expanded Wells Fargo Line of Credit and Wells Fargo Bank released its security interest in the Citibank Property.

Loss on Extinguishment of Debt

On April 28, 2025, the Company terminated the Expanded Wells Fargo Line of Credit. The Company accounted for the termination under debt extinguishment accounting in accordance with ASC 470. During the year ended December 31, 2025, the Company recorded a loss on extinguishment of debt of $51,081 consisting of unamortized loan issuance costs.

During the year ended December 31, 2025, the Company repaid the Farmers Line of Credit. The Company accounted for the repayment under debt extinguishment accounting in accordance with ASC 470. During the year ended December 31, 2025, the Company recorded a loss on extinguishment of debt of $379,563 consisting of unamortized loan issuance costs.

On March 13, 2024, the Company sold the Hanover Square Shopping Center Property and repaid the mortgage loan for the Hanover Square Property. The Company accounted for the repayment of the mortgage payable under debt extinguishment accounting in accordance with ASC 470. During the year ended December 31, 2024, the Company recorded a loss on extinguishment of debt of $51,837 consisting of unamortized loan issuance costs.

Interest Expense

Interest expense, including amortization of capitalized issuance costs consists of the following:


	For the year ended December 31, 2025
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense			Total
Franklin Square	$	506,669	$	28,372	$	—	$	—		$	535,041
Ashley Plaza		393,504		17,430		—		—			410,934
Brookfield Center		175,194		11,351		—		—			186,545
Parkway Center		315,724		11,026		(70,111)		—			256,639
Wells Fargo Mortgage Facility		747,305		28,671		—		—			775,976
Wells Fargo Line of Credit		—		—		—		2,500			2,500
Tesla Pensacola (Farmers Line of Credit)		382,771		—		—		—			382,771
Tesla Pensacola DST (Pinnacle Bank)		75,679		—		(16,783)		—			58,896
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		2,404		—		5,066			7,470
Other interest		—		—		—		3,624			3,624
Total interest expense	$	2,596,846	$	99,254	$	(86,894)	$	11,190		$	2,620,396


	For the year ended December 31, 2024
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square	$	512,969	$	28,372	$	—	$	—	$	541,341
Hanover Square		129,248		—		—		—		129,248
Ashley Plaza		403,550		17,430		—		—		420,980
Brookfield Center		179,530		11,350		—		—		190,880
Parkway Center		351,240		11,027		(116,329)		—		245,938
Wells Fargo Mortgage Facility		811,396		32,300		—		—		843,696
Wells Fargo Line of Credit		—		—		—		17,700		17,700
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		246,966		—		378,490		625,456
Other interest		—		—		—		4,560		4,560
Total interest expense	$	2,387,933	$	347,445	$	(116,329)	$	400,750	$	3,019,799

Interest accrued and accumulated amortization of capitalized issuance costs consist of the following:

	As of December 31, 2025					As of December 31, 2024
				Accumulated					Accumulated
				amortization of					amortization
	Accrued			capitalized		Accrued			of capitalized
	interest			issuance costs		interest			issuance costs
Franklin Square	$	42,682		$	115,852	$	43,448		$	87,480
Ashley Plaza		—			110,399		—			92,969
Brookfield Center		—			70,945		—			59,594
Parkway Center		24,678			—		27,753			34,917
Wells Fargo Mortgage Facility		—			34,580		—			72,631
Tesla Pensacola (Pinnacle Bank)		(9,114)	(1)		—		—			—
Amortization and accrued preferred stock dividends on mandatorily redeemable preferred stock		—			—		21,334	(2)		1,127,339
Total	$	58,246		$	331,776	$	92,535		$	1,474,930

(1)

Reflects the payment due for the month of December 2025 under the Interest Rate Swap for the Tesla DST Mortgage which was received on January 2, 2026.

(2)

Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s consolidated balance sheets as of December 31, 2024.

Debt Maturity

The Company’s scheduled principal repayments on indebtedness as of December 31, 2025 are as follows:


	Mortgages Payable		Mortgages Payable Associated with Assets Held for Sale			Total
2026	$	930,550	$	477,500	$	1,408,050
2027		5,787,154		6,077,092		11,864,246
2028		640,740		101,601		742,341
2029		13,772,365		109,039		13,881,404
2030		283,879		7,826,139		8,110,018
Thereafter		11,701,022		4,234,888		15,935,910
Total principal payments and debt maturities		33,115,710		18,826,259		51,941,969
Less unamortized issuance costs		(286,847)		(279,761)		(566,608)
Net principal payments and debt maturities	$	32,828,863	$	18,546,498	$	51,375,361

Historical Timeline

Fiscal Year	Filed
2025	Mar 2, 2026	Showing above
2024	Feb 27, 2025

2023	Mar 6, 2024

2022	Mar 10, 2023

About Debt Disclosures

Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.

Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.

Medalist Diversified, Inc. Debt Disclosure

Historical Timeline

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