Quarterly Report (10-q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-09043

BROAD STREET REALTY, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	36-3361229
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7250 Woodmont Ave, Suite 350 Bethesda, Maryland	20814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (301) 828-1200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name Of Each Exchange On Which Registered		Ticker Symbol
None		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 12, 2021, the registrant had 22,624,679 shares of common stock outstanding.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Interim Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	March 31, 2021			December 31, 2020
	(unaudited)
Assets
Real estate properties
Land	$	38,458		$	38,458
Building and improvements		124,344			122,988
Intangible lease assets		20,619			20,619
Construction in progress		2,924			2,951
Less accumulated depreciation and amortization		(12,959	)		(10,535	)
Total real estate properties, net		173,386			174,481

Cash and cash equivalents		2,744			4,105
Restricted cash		8,397			5,878
Accounts receivable, net of allowance of $355 and $523, respectively		2,062			2,224
Other assets, net		4,400			4,738
Total Assets	$	190,989		$	191,426

Liabilities and Equity
Liabilities
Mortgage and other indebtedness, net	$	125,037		$	122,060
Accounts payable and accrued liabilities		9,334			10,486
Unamortized intangible lease liabilities, net		2,180			2,381
Payables due to related parties		1,145			660
Deferred tax liabilities		11,245			11,853
Deferred revenue		501			502
Total liabilities		149,442			147,942

Commitments and contingencies

Equity
Preferred Stock, $0.01 par value, 20,000 shares authorized, 500 shares outstanding at March 31, 2021 and December 31, 2020		-			-
Common stock, $0.01 par value. Authorized 50,000,000 shares; 22,624,679 issued and outstanding at March 31, 2021 and December 31, 2020		225			225
Additional paid in capital		54,627			54,622
Accumulated deficit		(11,712	)		(10,035	)
Total Broad Street Realty, Inc. stockholders' equity		43,140			44,812
Noncontrolling interest		(1,593	)		(1,328	)
Total equity		41,547			43,484
Total Liabilities and Equity	$	190,989		$	191,426

See accompanying notes to interim consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Revenues
Rental income	$	3,938		$	4,146
Commissions		635			610
Management and other fees		345			368
Total revenues		4,918			5,124
Operating Expenses
Cost of services		343			449
Depreciation and amortization		2,313			2,482
Property operating		1,250			951
Bad debt expense		55			141
General and administrative		2,586			2,118
Total operating expenses		6,547			6,141
Operating loss		(1,629	)		(1,017	)

Other income (expense)
Interest and other income		-			47
Derivative fair value adjustment		191			(635	)
Interest expense		(1,878	)		(1,580	)
Gain on extinguishment of debt		757			-
Other expense		(7	)		(20	)
Total other income (expense)		(937	)		(2,188	)

Income tax benefit		624			769
Net loss	$	(1,942	)	$	(2,436	)
Plus: Net loss attributable to noncontrolling interest		265			361
Net loss attributable to common stockholders	$	(1,677	)	$	(2,075	)

Net loss attributable to common stockholders per share
Basic and diluted	$	(0.07	)	$	(0.10	)

Weighted average shares outstanding
Basic and diluted		22,471,479			21,587,336

See accompanying notes to interim consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

(in thousands, except share amounts)

(Unaudited)

	Preferred Stock				Common Stock
	Shares		Par Value		Shares		Par Value		Additional Paid-In Capital		Accumulated Deficit			Non- controlling Interest			Total Equity
Balance at December 31, 2019		500	$	-		21,587,336	$	216	$	53,059	$	(1,890	)	$	51		$	51,436
Net loss		-		-		-		-		-		(2,075	)		(361	)		(2,436	)
Balance at March 31, 2020		500	$	-		21,587,336	$	216	$	53,059	$	(3,965	)	$	(310	)	$	49,000

	Preferred Stock				Common Stock
	Shares		Par Value		Shares		Par Value		Additional Paid-In Capital			Accumulated Deficit			Non- controlling Interest			Total Equity
Balance at December 31, 2020		500	$	-		22,624,679	$	225	$	54,622		$	(10,035	)	$	(1,328	)	$	43,484
Stock-based compensation		-		-		-		-		21			-			-			21
Tax effect of change in ownership percentage of OP										(16	)								(16	)
Net loss		-		-		-		-		-			(1,677	)		(265	)		(1,942	)
Balance at March 31, 2021		500	$	-		22,624,679	$	225	$	54,627		$	(11,712	)	$	(1,593	)	$	41,547

See accompanying notes to interim consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities
Net loss	$	(1,942	)	$	(2,436	)
Adjustments to reconcile net loss to net cash used in operating activities
Income tax benefit		(624	)		(769	)
Depreciation and amortization		2,455			2,595
Minimum return on basis preferred interest		(242	)		(244	)
Gain on extinguishment of debt		(757	)		—
Straight-line rent receivable		6			(149	)
Straight-line rent liability		(4	)		(2	)
Stock-based compensation		21			—
Change in fair value of derivatives		(191	)		635
Bad debt expense		55			141
Changes in operating assets and liabilities
Accounts receivable		107			(413	)
Other assets		233			797
Receivables due from related parties		(4	)		24
Accounts payable and accrued liabilities		(1,058	)		(1,404	)
Payables due to related parties		-			(11	)
Deferred revenues		(1	)		(150	)
Net cash used in operating activities		(1,946	)		(1,386	)
Cash flows from investing activities
Acquisitions of real estate		-			(1,898	)
Capitalized pre-acquisition costs, net		-			(5	)
Capital expenditures for real estate		(1,148	)		(373	)
Net cash used in investing activities		(1,148	)		(2,276	)
Cash flows from financing activities
Borrowings under debt agreements		13,469			1,436
Repayments under debt agreements		(9,372	)		(2,887	)
Offering costs		-			(1	)
Debt origination and discount fees		(330	)		(63	)
Proceeds from related parties		487			489
Payments to related parties		(2	)		(205	)
Net cash provided by (used in) financing activities		4,252			(1,231	)
Increase (decrease) in cash, cash equivalents, and restricted cash		1,158			(4,893	)
Cash, cash equivalents and restricted cash at beginning of period		9,983			11,595
Cash, cash equivalents and restricted cash at end of period	$	11,141		$	6,702

See accompanying notes to interim consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

(in thousands)

(Unaudited)

Supplemental Cash Flow Information
Interest paid	$	1,887	$	1,615
Taxes paid, net		-		197
Accrued offering costs		457		457
Accrued capital expenditures for real estate		192
Accrued pre-acquisition costs		133		106
Accrued deferred loan costs		12		-

Supplemental disclosure of non-cash financing activities
Forgiveness of Paycheck Protection Program loan		757		-

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	2,744	$	4,809
Restricted cash		8,397		1,893
Cash, cash equivalents and restricted cash at end of period	$	11,141	$	6,702

See accompanying notes to interim consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

Unaudited

March 31, 2021

Note 1 - Organization and Nature of Business

Broad Street Realty, Inc. (the “Company”) is a fully integrated real estate company that owns, operates, develops and redevelops primarily grocery-anchored shopping centers and street retail-based properties in the Mid-Atlantic and Denver, Colorado markets. As of March 31, 2021, the Company had real estate assets of $186.3 million, gross, in 11 real estate properties and a parcel of land on which another shopping center is located. In addition, the Company provides commercial real estate brokerage services for its own portfolio and third-party office, industrial and retail operators and tenants.

The Company is structured as an “Up-C” corporation with substantially all of its operations conducted through Broad Street Operating Partnership, LP (the “Operating Partnership”) and its direct and indirect subsidiaries. As of March 31, 2021, the Company owned 88.9% of the units of limited partnership interest in its Operating Partnership (“OP units”) and is the sole member of the sole general partner of the Operating Partnership. The Company began operating in its current structure on December 27, 2019 upon the completion of the Initial Mergers (as defined below).

Merger with MedAmerica Properties Inc.

On May 28, 2019, MedAmerica Properties Inc. and certain of its subsidiaries (“MedAmerica”) entered into 19 separate agreements and plans of merger (collectively, the “Merger Agreements”) with each of Broad Street Realty, LLC (“BSR”), Broad Street Ventures, LLC (“BSV”) and each of the 17 separate entities that owned the properties acquired by the Company in the Initial Mergers (as defined below) and to be acquired in the additional Mergers (as defined below) (the “Broad Street Entities”). The Merger Agreements relate to a series of 19 mergers (“Mergers”) whereby BSR, BSV and each Broad Street Entity has or will become subsidiaries of the Company.

On December 27, 2019, the Company completed 11 of the Mergers (the “Initial Mergers”), including the Mergers with BSR and BSV and the Mergers with nine Broad Street Entities. Upon completion of the Initial Mergers, MedAmerica’s name was changed to “Broad Street Realty, Inc.”

On December 31, 2019, the Company completed one additional Merger whereby it acquired Brookhill Azalea Shopping Center. On July 2, 2020, the Company closed one Merger whereby it acquired Lamar Station Plaza East.

As consideration for the Mergers that have closed as of the date of the issuance of these financial statements, the Company has issued an aggregate 19,660,911 shares of common stock and 2,827,904 OP units to prior investors in the Broad Street Entities party to the Mergers. In addition, certain prior investors in the Broad Street Entities received an aggregate of approximately $1.1 million in cash as a portion of the consideration for the Mergers.

As of the date of the issuance of these financial statements, there are six Mergers that have not been completed. The Company expects to issue an aggregate of 10,400,779 shares of common stock and 573,529 OP units as consideration for the additional Mergers as agreed to in the merger agreements. Until the closing of the remaining Mergers, the Company will continue to manage these six properties and receive management fees.

Liquidity and Management’s Plan

The Company’s properties are located in areas that are or have been subject to shelter-in-place orders and restrictions on the types of businesses that may continue to operate due to the COVID-19 pandemic. The Company’s rental revenue and operating results depend significantly on the occupancy levels at its properties and the ability of its tenants to meet their rent and other obligations to the Company, and the government-imposed measures, coupled with customers reducing their purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to the Company and its tenants’ businesses. The Company has observed the impact of COVID-19 manifest in the form of temporary closures or significantly limited operations among its tenants, with the exception of tenants operating in certain “essential” businesses, which has resulted, and may in the future result in, a decline in on-time rental payments and increased requests from tenants for temporary rental relief. The Company believes the ongoing effects of the COVID-19 pandemic on its operations have had, and will continue to have, a material negative impact on its financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic.

Additionally, the Company has been delayed in closing the remaining six Mergers, has been unable to meet and anticipates being unable to meet certain debt covenants included in the Company’s loan agreements, and has certain debt maturities occurring within the next twelve months. Specifically, as described further in Note 5 under the heading “—Covenants”, the Company was in default of the debt service coverage ratio included in the Lamar Station Plaza East mortgage upon assumption of the mortgage with the closing of the property merger in July 2020. In connection with the loan modification agreement, the lender agreed to forbear enforcement of the event of default subject to Company’s satisfaction of certain conditions, which the Company did not meet. The Company entered into a second

modification agreement in November 2020 in which the lender agreed to forbear enforcement of the events of default subject to certain conditions, which the Company has subsequently met.

The Company has developed a plan and has taken a number of proactive measures to manage the impacts of the COVID-19 pandemic on its operations and liquidity, including the following:

•

it has maintained ongoing communication with its tenants and assisted them in identifying local, state and federal resources that may be available to support their businesses and employees during the pandemic, including the stimulus packages that have been signed into law to date;

•

it has dedicated significant resources to monitor the performance of its portfolio, including rent collections and negotiating requests for rent relief. The Company has entered into lease modifications that deferred approximately $0.4 million of contractual revenue and waived approximately $0.3 million of contractual revenue due during 2020;

•

it received an unsecured loan in April 2020 of approximately $0.8 million pursuant to the paycheck protection program which was forgiven in the first quarter of 2021, and, in March 2021, it received a second unsecured loan of approximately $0.8 million pursuant to the paycheck protection program (as described in Note 5 “—PPP Loans”);

•

it has negotiated loan payment deferrals during 2020. The lenders for the Company’s mortgage loans secured by the Hollinswood and Vista properties agreed to defer payments of principal and interest for six months, the lender for the Company’s mortgage loan secured by the Brookhill property agreed to defer payments of principal and interest for three months, the lender for the Company’s mortgage loan secured by the Avondale property agreed to require interest-only payments for four months, and the lender under the MVB Loan Agreement (as defined in Note 5) agreed to require interest-only payments for three months. The deferred amount for the Hollinswood mortgage is due in six equal monthly installments beginning November 2020. The deferred amounts for all of the other loans will be due at loan maturity;

•

it has amended the MVB Loan Agreement (as defined in Note 5) to extend the maturity date of the $2.0 million MVB Revolver to December 27, 2022 and to defer the requirement to comply with certain financial covenants until June 30, 2021 and December 31, 2021, as applicable. The amendment also eliminates the revolving nature of the facility, requires monthly principal payments as calculated over a 10-year amortization schedule and requires the repayment of $250,000 on each of the following dates (a) the earlier of March 31, 2021 or the closing of the Company’s pending mergers of the Highlandtown and Spotswood properties, (b) the earlier of September 30, 2021 or the closing of the Company’s pending merger of the Greenwood property, (c) March 31, 2022, and (d) September 30, 2022. The $250,000 owed by March 31, 2021 has been paid;

•

it has negotiated the forbearance of certain mortgage covenant defaults, subject to the satisfaction of certain conditions that the Company met (as described in Note 5 “—Covenants”);

•

it has obtained additional liquidity from the Preferred Investor (as defined in Note 5 “—Basis Preferred Interest”). The Preferred Investor made additional capital contributions, which are treated as debt, available of approximately $2.9 million in the aggregate in order to assist in debt service under the Basis Term Loan (as defined in Note 5“—Basis Term Loan”) and certain other property level debt. There is approximately $1.0 million of remaining availability to the Company from these funds, which is included in restricted cash; and

•

it has deferred certain capital expenditures and paused acquisition and investment activity other than working to close the remaining six Mergers.

As of March 31, 2021, the Company had a mortgage on Lamar Station Plaza East with a principal balance outstanding of approximately $3.5 million that matures during the next 12 months. The Company does not project that it will have sufficient cash available to pay off the mortgage loan upon maturity and is currently in discussions with the lender to exercise a 12-month extension for the mortgage. There can be no assurances that the Company will be successful on the extension or refinance of the mortgage loan on favorable terms or at all. If the Company is unable to extend or refinance this mortgage loan, the lender has the right to place the loan in default and ultimately foreclose on the property, in which case the property could be sold and the sale proceeds would be used to pay off the loan. Under this circumstance, the Company would not have any further financial obligations to the lender as the value of this property is in excess of the outstanding loan balance.

Based on the measures described above, the Company believes that it is probable that it will be able to generate sufficient liquidity to satisfy its obligations for the next twelve months.

Note 2 - Accounting Policies and Related Matters

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim reports. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for a

full year. The unaudited consolidated financial statements and related notes do not include all information and footnotes required by GAAP for annual reports. These interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020, included in the Company’s 2020 Annual Report on Form 10-K filed with the SEC on April 15, 2021.

The interim consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and subsidiaries in which the Company has a controlling interest. All material intercompany transactions and balances have been eliminated in consolidation.

For information about significant accounting policies, refer to the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s 2020 Annual Report on Form 10-K filed with the SEC on April 15, 2021. During the three months ended March 31, 2021, there were no material changes to these policies except as noted below.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The standard also requires additional disclosures related to significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. Operating lease receivables are excluded from the scope of this guidance. The amended guidance is effective for the Company for fiscal years, and interim periods within those years, beginning January 1, 2023. The Company is evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application. The Company adopted this guidance on January 1, 2021. Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply elections as applicable as changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 740-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, that simplifies the accounting for convertible instruments and simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. The guidance also provides clarifications to improve the consistency of earnings per share calculations and requires new disclosures regarding convertible instruments. The Company early adopted this guidance on January 1, 2021. Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Note 3 – Real Estate

Concentrations of Credit Risks

The following table contains information regarding the geographic concentration of the properties in the Company’s portfolio as of March 31, 2021, which includes rental income for the three months ended March 31, 2021 and 2020 (dollars in thousands).

							Rental income for the three months ended March 31,
Location	Number of Properties	Gross Real Estate Assets at March 31, 2021		Percentage of Total Real Estate Assets at March 31, 2021			2021		2020
Maryland⁽¹⁾	4	$	76,971		41.2	%	$	1,896	$	2,154
Virginia	4		68,121		36.6	%		1,227		1,228
Pennsylvania	1		26,761		14.4	%		511		594
Washington D.C.	1		8,393		4.5	%		173		170
Colorado	1		6,099		3.3	%		131		-
	11	$	186,345		100.0	%	$	3,938	$	4,146

⁽¹⁾	Rental income for each of the three months ended March 31, 2021 and 2020 include less than $0.1 million of ground rental revenue under the ground lease for the parcel of land acquired in January 2020.

Note 4 - Other Assets

Items included in other assets, net on the Company’s consolidated balance sheets as of March 31, 2021 and December 31, 2020 are detailed in the table below (dollars in thousands):

	March 31, 2021		December 31, 2020
Prepaid assets and deposits	$	1,385	$	1,662
Right-of-use assets, net		1,179		1,287
Straight-line rent receivable		879		885
Pre-acquisition costs		533		519
Receivables due from related parties		210		206
Corporate property, net		101		107
Other receivables, net of allowance of $82 and $82		100		59
Lease incentives		10		12
Interest rate cap asset		3		1
	$	4,400	$	4,738

Receivables due from related parties as of March 31, 2021 and December 31, 2020 are described further in Note 12 “Related Party Transactions”.

Note 5 – Debt

The table below details the Company’s debt balance at March 31, 2021 and December 31, 2020 (dollars in thousands):

	Maturity Date	Rate Type	Interest Rate ⁽¹⁾	March 31, 2021			December 31, 2020
Basis Term Loan (net of discount of $653 and $745)	January 1, 2023	Floating ⁽²⁾	6.125%	$	66,532		$	66,439
Basis Preferred Interest (net of discount of $131 and $150) ⁽³⁾	January 1, 2023 ⁽⁴⁾	Fixed	14.00% ⁽⁵⁾		11,211			11,434
MVB Term Loan	December 27, 2022	Fixed	6.75%		4,193			4,277
MVB Revolver	December 27, 2022	Floating ⁽⁶⁾	6.75%		1,750			2,000
Hollinswood Loan	December 1, 2024	LIBOR + 2.25% ⁽⁷⁾	4.06%		12,619			11,670
Avondale Shops Loan	June 1, 2025	Fixed	4.00%		3,179			3,205
Vista Shops at Golden Mile Loan (net of discount of $83)	June 24, 2023	Fixed	3.83%		11,617			8,902
Brookhill Azalea Shopping Center Loan	January 31, 2025	LIBOR + 2.75%	2.86%		9,329			9,432
Lamar Station Plaza East Loan (net of discount of $4 and $7)	July 17, 2021	LIBOR + 3.00% ⁽⁸⁾	4.00%		3,497			3,446
Cromwell Land Loan (net of discount of $8 and $10)	January 10, 2023	Fixed	6.75%		1,411			1,415
First Paycheck Protection Program Loan	April 20, 2022 ⁽⁹⁾	Fixed	1.00%		-			757
Second Paycheck Protection Program Loan	March 18, 2026	Fixed	1.00%		769			-
				$	126,107		$	122,977
Unamortized deferred financing costs					(1,070	)		(917	)
Total Mortgage and Other Indebtedness				$	125,037		$	122,060

⁽¹⁾

For floating rate loans tied to LIBOR, based on the one-month LIBOR rate of 0.11%, as of March 31, 2021.

⁽²⁾

The interest rate for the Basis Term Loan is the greater of (i) LIBOR plus 3.850% per annum and (ii) 6.125% per annum. The Company has entered into an interest rate cap that caps the LIBOR rate on this loan at 3.5%.

⁽³⁾

The outstanding balance includes approximately $1.5 million and $1.8 million of indebtedness as of March 31, 2021 and December 31, 2020, respectively, related to the Multiple Minimum Amount owed to the Preferred Investor as described below under the heading “—Basis Preferred Interest”.

⁽⁴⁾

If the Basis Term Loan is paid in full earlier than its maturity date, the Basis Preferred Interest in the Sub-OP (as defined below) will mature at that time.

⁽⁵⁾

In June 2020, the Preferred Investor made additional capital contributions of approximately $2.9 million as described below under the heading “—Basis Preferred Interest”. The Preferred Investor is entitled to a cumulative annual return of 13.0% on the additional contributions.

⁽⁶⁾

The interest rate on the MVB Revolver is the greater of (i) prime rate plus 1.5% and (ii) 6.75%.

⁽⁷⁾

The Company has entered into an interest rate swap which fixes the interest rate of the loan at 4.06%.

⁽⁸⁾

The interest rate on the Lamar Station Plaza East Loan is LIBOR plus 3.00% per annum with a minimum LIBOR rate of 1.00%.

⁽⁹⁾

During the first quarter of 2021, the Company received forgiveness for its first Paycheck Protection Program Loan as described below under the heading “—PPP Loans”.

Basis Term Loan

In December 2019, six of the Company’s subsidiaries, as borrowers (collectively, the “Borrowers”), and Big Real Estate Finance I, LLC, a subsidiary of a real estate fund managed by Basis Management Group, LLC, as lender (the “Basis Lender”), entered into a loan agreement (the “Basis Loan Agreement”) pursuant to which the Basis Lender made a senior secured term loan of up to $66.9 million (the “Basis Term Loan”) to the Borrowers. Pursuant to the Basis Loan Agreement, the Basis Term Loan is secured by mortgages on the following properties: Coral Hills, Crestview, Dekalb, Midtown Colonial, Midtown Lamonticello and West Broad. The Basis Term Loan matures on January 1, 2023, subject to two one-year extension options, subject to certain conditions. The Basis Term Loan bears interest at a rate equal to the greater of (i) LIBOR plus 3.850% per annum and (ii) 6.125% per annum. The Borrowers have entered into an interest rate cap that effectively caps LIBOR at 3.50% per annum. As of March 31, 2021, the interest rate of the Basis Term Loan was 6.125% and the outstanding balance was $66.9 million.

The Basis Loan Agreement includes a debt service coverage calculation based on the trailing twelve months results which includes an adjustment for tenants that are more than one-month delinquent in paying rent. A debt service coverage ratio below 1.10x is a Cash Trap Trigger Event (as defined in the loan agreement), which gives the Basis Lender the right to institute a cash management period until the trigger is cured. A debt service coverage ratio below 1.05x for two consecutive calendar quarters gives the Basis Lender the right to remove the Company as manager of the properties. The Company was in compliance with debt service coverage calculation for the twelve months ended March 31, 2021.

Basis Preferred Interest

In December 2019, the Operating Partnership and Big BSP Investments, LLC, a subsidiary of a real estate fund managed by Basis Management Group, LLC (the “Preferred Investor”), entered into an amended and restated operating agreement (the “Sub-OP Operating Agreement”) of the Broad Street Big First OP LLC (the “Sub-OP”), a subsidiary of the Operating Partnership. Pursuant to the Sub-OP Operating Agreement, among other things, the Preferred Investor committed to make an investment of up to $10.7 million in the Sub-OP, of which $6.9 million had been funded as of March 31, 2021, in exchange for a 1.0% membership interest in the Sub-OP designated as Class A units.

Pursuant to the Sub-OP Operating Agreement, the Preferred Investor is entitled to a cumulative annual return of 14.0% on its initial capital contribution (the “Class A Return”), and the Preferred Investor will be entitled to a 20% return (the “Enhanced Class A Return”) on any capital contribution made to the Sub-OP in excess of the $10.7 million commitment. The Preferred Investor’s interests must be redeemed on or before the earlier of: (i) January 1, 2023 and (ii) the date on which the Basis Term Loan is paid in full (the “Redemption Date”). The Redemption Date may be extended to December 31, 2023 and December 31, 2024, in each case subject to certain conditions, including the payment of a fee equal to 0.25% of the Preferred Investor’s net invested capital for the first extension option and a fee of 0.50% of the Preferred Investor’s net invested capital for the second extension option. If the redemption price is paid on or before the Redemption Date, then the redemption price will be equal to (a) all unreturned capital contributions made by the Preferred Investor, (b) all accrued but unpaid Class A Return, (c) all accrued but unpaid Enhanced Class A Return and (d) all costs and other expenses incurred by the Preferred Investor in connection with the enforcement of its rights under the Sub-OP Operating Agreement. Additionally, at the Redemption Date, the Preferred Investor is entitled to an amount equal to (a) the product of (i) the aggregate amount of capital contributions made and (ii) 0.4, less (b) the aggregate amount of Class A return payments made to the Preferred Investor (the “Minimum Multiple Amount”). As of March 31, 2021 and December 31, 2020, the Minimum Multiple Amount was approximately $1.5 million and $1.8 million, respectively, which is included as indebtedness on the consolidated balance sheet.

On June 16, 2020, the Preferred Investor made two additional capital contributions available to the Sub-OP in the aggregate amount of approximately $2.9 million, which is classified as debt. The two capital contributions consisted of: (i) a $2.4 million capital contribution to the Sub-OP that the Sub-OP contributed to the Borrowers for purposes of making debt service payments under the Basis Loan Agreement and (ii) a $0.5 million capital contribution to the Sub-OP that the Sub-OP contributed to certain of its other property owning subsidiaries for purposes of making debt service payments on mortgage debt secured by the properties owned by such subsidiaries and making payments of the Class A return due to the Preferred Investor pursuant to the Sub-OP Operating Agreement. The Preferred Investor is entitled to a cumulative annual return of 13.0% on the additional capital contributions. As described below under the heading “—Mortgage Indebtedness,” the Company repaid approximately $0.75 million of these funds with the proceeds from

the Vista mortgage refinance. As of the date of these financial statements, there was approximately $1.0 million remaining available to the Company from these capital contributions, which is included in restricted cash.

MVB Loan

In December 2019, the Company, the Operating Partnership and BSR entered into a loan agreement (the “MVB Loan Agreement”) with MVB Bank, Inc. (“MVB”) with respect to a $6.5 million loan consisting of a $4.5 million term loan (the “MVB Term Loan”) and a $2.0 million revolving credit facility (the “MVB Revolver”). The MVB Term Loan matures on December 27, 2022 and the MVB Revolver had an original maturity date of December 27, 2020, which has been extended to December 27, 2022 under the terms described below. The MVB Term Loan has a fixed interest rate of 6.75% per annum. The MVB Revolver carries an interest rate of the greater of (i) Prime Rate plus 1.5% and (ii) 6.75%.

The Company has no additional availability under the MVB Term Loan and the MVB Revolver as of March 31, 2021.

The MVB Loan Agreement contains certain customary representations and warranties and affirmative and negative covenants. The MVB Loan Agreement also requires the Company to maintain (as such terms are defined in the MVB Loan Agreement) (i) a debt service coverage ratio of at least 1.30 to 1.00, (ii) an EBITDA to consolidated funded debt ratio of at least 8.0%, (iii) an aggregate minimum unencumbered cash, including funds available under other lines of credit, of greater than $5.0 million (the “Minimum Liquidity Requirement”), and (iv) one or more deposit accounts with MVB with an aggregate minimum balance of $3.0 million (the “Deposit Requirement”). The failure to comply with the Deposit Requirement is not a default under the MVB Loan Agreement but will increase the interest rate under the MVB Term Loan and MVB Revolver by 1.0% until the Deposit Requirement has been satisfied.

In December 2020, the Company entered into an amendment to the MVB Loan Agreement, which extended the maturity date of the MVB Revolver to December 27, 2021, and, in March 2021, the Company entered into another amendment to the MVB Loan Agreement which extended the maturity date of the MVB Revolver to December 27, 2022. The amendments also eliminate the revolving nature of the facility, require monthly principal payments as calculated over a 10-year amortization schedule, and require the repayment of $250,000 on each of the following dates (a) the earlier of March 31, 2021 or the closing of the Company’s pending mergers of the Highlandtown and Spotswood properties, (b) the earlier of September 30, 2021 or the closing of the Company’s pending merger of the Greenwood property, (c) March 31, 2022, and (d) September 30, 2022. The $250,000 payment owed by March 31, 2021 has been paid. Additionally, the amendments (i) deferred testing for covenants related to the Deposit Requirement, Minimum Liquidity Requirement and debt service coverage ratio covenant until June 30, 2021, (ii) deferred testing for the covenant related to the Company’s EBITDA to consolidated funded debt ratio until December 31, 2021, (iii) modified the debt service coverage ratio to 1.00 to 1 and (iv) modified the Minimum Liquidity Requirement to $3.0 million. These amendments were treated as modifications under applicable accounting standards.

Mortgage Indebtedness

In addition to the indebtedness described above, as of March 31, 2021 and December 31, 2020, the Company had approximately $41.6 million and $38.1 million, respectively, of outstanding mortgage indebtedness secured by individual properties. The Hollinswood mortgage, Vista mortgage, Brookhill mortgage, and Lamar Station Plaza East mortgage require the Company to maintain a debt service coverage ratio (as such terms are defined in the respective loan agreements) of at least 1.40 to 1.00, 1.50 to 1.00, 1.35 to 1.00, and 1.25 to 1.00, respectively.

In March 2021, the Company completed the refinance of the Vista Shops mortgage loan. The new loan has a principal balance of $11.7 million, matures in June 2023, and carries an interest rate of 3.83% per annum. The Company deposited approximately $1.9 million of the proceeds from the refinance with the Basis Lender, which was applied as follows during the second quarter of 2021: (i) repaid approximately $0.75 million of the outstanding principal balance on the capital contributions, which are treated as debt, provided to the Company in June 2020 under the Basis Preferred Interest as described above under the heading “—Basis Preferred Interest”, (ii) paid approximately $46,000 in accrued interest on these funds and (iii) contributed approximately $1.1 million into an escrow account with the Basis Lender which will be used to pay down the outstanding principal balance of the capital contributions upon satisfaction of certain conditions.

PPP Loans

On April 20, 2020, a wholly owned subsidiary of the Company entered into a promissory note (the “PPP Note”) with MVB with respect to an unsecured loan of approximately $0.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (the “PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Loan bears interest at a rate of 1.0% per year. During the first quarter of 2021, the Company received forgiveness for its entire balance of the PPP Loan from the SBA, which is recognized as a gain on debt extinguishment in the Company’s statement of operations.

On March 18, 2021, a wholly owned subsidiary of the Company entered into a promissory note (the “Second PPP Note”) with MVB with respect to an unsecured loan of approximately $0.8 million (the “Second PPP Loan”) pursuant to the PPP. The Second PPP Loan bears interest at a rate of 1.0% per year. The Second PPP Note contains certain events of default relating to, among other things, failure to make any payment when due and material adverse changes in the borrower’s financial condition. The occurrence of an event

of default, following any applicable cure period, would permit MVB to declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the PPP Note to be immediately due and payable.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of a loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs and certain mortgage interest, rent and utility expenses. The terms of any forgiveness may also be subject to further requirements under any regulations and guidelines the SBA may adopt. The Company can provide no assurances that it will obtain forgiveness of the Second PPP Loan in whole or in part. If the Company does not obtain forgiveness it is required to make equal monthly payments of principal and interest to repay the loan in full upon maturity on March 18, 2026.

Deferred Financing Costs and Debt Discounts

The total amount of deferred financing costs associated with the Company’s debt as of March 31, 2021 and December 31, 2020 was $1.6 million, gross ($1.1 million, net) and $1.4 million, gross ($0.9 million, net), respectively. Debt discounts associated with the Company’s debt as of March 31, 2021 and December 31, 2020 were $1.5 million, gross ($0.9 million, net) and $1.4 million, gross ($0.9 million, net), respectively. Deferred financing costs and debt discounts are netted against the debt balance outstanding on the Company’s consolidated balance sheets and will be amortized to interest expense through the maturity date of the related debt.

The Company recognized amortization expense of deferred financing costs and debt discounts, included in interest expense in the consolidated statement of operations, of approximately $0.2 million for each of the three months ended March 31, 2021 and 2020, respectively.

Debt Maturities

The following table details the Company’s scheduled principal repayments and maturities during each of the next five years and thereafter as of March 31, 2021 (dollars in thousands):

Year	Amount Due
Remainder of 2021	$	4,687
2022		6,546
2023		92,442
2024		12,607
2025		10,658
2026		46
Thereafter		-
		126,986
Unamortized debt discounts and issuance costs, net		(1,949	)
Total	$	125,037

Interest Rate Cap and Interest Rate Swap Agreements

To mitigate exposure to interest rate risk, the Company entered into an interest rate cap agreement, effective December 27, 2019, on the full $66.9 million Basis Term Loan to cap the variable LIBOR interest rate at 3.5%. The Basis Term Loan bears interest at a rate equal to the greater of (i) LIBOR plus 3.850% per annum and (ii) 6.125% per annum. As of March 31, 2021, the interest rate of the Basis Term Loan was 6.125%. The Company also entered into two interest rate swap agreements on the Hollinswood Loan to fix the interest rate at 4.06%. The swap agreements are effective as of December 27, 2019 on the outstanding balance of $10.2 million and on July 1, 2021 for the additional availability of $3.0 million under the Hollinswood Loan.

The Company recognizes all derivative instruments as assets or liabilities at their fair value in the consolidated balance sheets. The changes in the fair value of the Company’s derivatives, which do not qualify for hedge accounting, are recognized in earnings. For the three months ended March 31, 2021 and 2020, the Company recognized approximately $0.2 million in income and $0.6 million in expense, respectively, related to fair value adjustments on derivatives.

The fair value of the Company’s derivative financial instruments as of March 31, 2021 and December 31, 2020 was an interest rate cap asset of less than $0.1 million for each period and an interest rate swap liability of approximately $0.5 million and $0.7 million, respectively. The interest rate cap asset is included in Other assets, net and the interest rate swap liability is included in Accounts payable and accrued expenses on the consolidated balance sheet, respectively.

Covenants

The Company’s loan agreements contain customary financial and operating covenants including debt service coverage ratios and aggregate minimum unencumbered cash covenants. As described above under the heading “—MVB Loan”, the lender under the MVB Loan Agreement deferred covenant tests until June 30, 2021 and December 31, 2021. As of March 31, 2021, the Company was in

compliance with all of the covenants under its debt agreements except for the debt service coverage ratio covenant under the Lamar Station Plaza East mortgage as described below.

In July 2020 the Company completed the Merger to acquire Lamar Station Plaza East, which included the assumption of $2.5 million in debt. Additionally, in connection with the Merger, the Company entered into a loan modification agreement, which increased the maximum principal amount available under the assumed loan agreement to $4.1 million. The loan was in default of the debt service coverage ratio (as defined in the loan agreement) upon the Company’s assumption of the loan agreement. In connection with the loan modification agreement, the lender agreed to forbear enforcement of the event of default subject to Company’s satisfaction of certain conditions, which the Company did not meet. The Company entered into a second loan modification agreement effective November 2020 pursuant to which the lender agreed to forbear enforcement of the events of default subject to the Company’s satisfaction of certain conditions including (i) issuance of a certificate of occupancy for a specified tenant on or before January 31, 2021 and (ii) the specified tenant taking full possession and occupancy of the space on or before January 31, 2021. The Company met both conditions required by the second loan modification. The lender’s forbearance applied to the default of the debt service coverage ratio calculation through December 31, 2020. The next debt service coverage ratio testing date is June 30, 2021 and the loan matures in July 2021.

Note 6 - Commitments and Contingencies

Commitments

As detailed in Note 1 under the heading “—Merger with MedAmerica Properties Inc.”, there are six Mergers that have not been completed. The Company will issue an aggregate of 10,400,779 shares of common stock and 573,529 OP units as consideration for the additional Mergers. Until the closing of the remaining Mergers, the Company will continue to manage these six properties and earn management fees.

Contingencies

Impact of COVID-19

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including the impact on its tenants and rental revenue. The Company has observed the impact of COVID-19 manifest in the form of limited operations among its tenants, which has resulted, and may in the future result in, a decline in on-time rental payments and requests from tenants for temporary rental relief. In some cases, the Company may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to the Company as those currently in place. In addition, lease renewals and new leasing activity are expected to be adversely impacted as businesses delay executing leases amidst the immediate and uncertain future economic impacts of the COVID-19 pandemic. The extent of the COVID-19 pandemic’s effect on the Company’s future operational and financial performance, financial condition and liquidity will depend on future developments, including the duration and intensity of the pandemic, the effectiveness of COVID-19 vaccines and treatments, the duration of government measures to mitigate the pandemic and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and difficult to predict. Given this uncertainty, the Company cannot accurately predict the effect on future periods, but the Company expects the pandemic and the related government measures to have an adverse impact on its financial condition, liquidity, results of operations and cash flows and the impact could be material.

Beginning in April 2020 and through the date of these financial statements, the Company has entered into lease modifications that deferred approximately $0.4 million of contractual revenue and waived approximately $0.3 million of contractual revenue. To date, the weighted average payback period of deferred rent is approximately seven months which commences at various times beginning in July 2020 through June 2021. Rent deferrals to date may not be indicative of rent deferrals in any future period.

Litigation

From time to time, the Company or its properties may be subject to claims and suits in the ordinary course of business. The Company’s lessees and borrowers have indemnified, and are obligated to continue to indemnify, the Company against all liabilities arising from the operations of the properties and are further obligated to indemnify it against environmental or title problems affecting the real estate underlying such facilities. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

Note 7 - Equity

Noncontrolling Interest

As of March 31, 2021, the Company owned an 88.9% interest in the Operating Partnership and investors in the Broad Street Entities receiving OP units as consideration for the Initial Mergers collectively owned an 11.1% interest in the Operating Partnership. Commencing on the 12-month anniversary of the date on which the OP units were issued, each limited partner of the Operating Partnership (other than the Company) has the right, subject to certain terms and conditions, to require the Operating Partnership to redeem all or a portion of the OP units held by such limited partner in exchange for cash based on the market price of the Company’s common stock or, at the Company’s option and sole discretion, for shares of the Company’s common stock on a one-for-one basis.

2020 Equity Incentive Plan

The Company’s 2020 Equity Incentive Plan (the “Plan”) provides for the grant of stock options, share awards (including restricted stock and restricted stock units), share appreciation rights, dividend equivalent rights, performance awards, annual cash incentive awards and other equity-based awards, including LTIP units, which are convertible on a one-for-one basis into OP units. As of March 31, 2021, the Plan had 3,620,000 shares authorized for issuance with 3,466,800 shares available for future issuance, subject to certain adjustments set forth in the Plan. Each share subject to an award granted under the Plan will reduce the available shares under the Plan on a one-for-one basis. The Plan is administered by the compensation committee of the Company’s board of directors.

Restricted Stock

Awards of restricted stock are awards of the Company’s common stock that are subject to restrictions on transferability and other restrictions as established by the Company’s compensation committee on the date of grant that are generally subject to forfeiture if employment (or service as a director) terminates prior to vesting. Upon vesting, all restrictions would lapse. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends on the shares. The value of the awards is determined based on the market value of the Company’s common stock on the date of grant. The Company expenses the cost of restricted stock ratably over the vesting period.

The following table summarizes the stock-based award activity under the Plan for the year three months ended March 31, 2021. There was no activity during the three months ended March 31, 2020.

	Restricted Stock Awards		Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2020		153,200	$	0.55
Granted		-		-
Outstanding as of March 31, 2021		153,200	$	0.55

Compensation expense related to these share-based payments for the three months ended March 31, 2021 was approximately $21,000 and was included in general and administrative expenses on the consolidated statement of operations. The remaining unrecognized costs from stock-based awards as of March 31, 2021 was less than $0.1 million and will be recognized over a weighted-average period of 0.8 years.

Option Awards

In connection with the completion of the Initial Mergers, the Company assumed option awards previously issued to directors and officers of MedAmerica. Details of these options for the three months ended March 31, 2021 and 2020 are presented in the tables below.

	Number of Shares Underlying Options		Weighted Average Exercise Price Per Share		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Life		Intrinsic Value
Balance at December 31, 2020		70,000	$	7.71	$	-		1.76	$	-
Options granted		-		-		-		-		-
Options exercised		-		-		-		-		-
Options expired		-		-		-		-		-
Balance at March 31, 2021		70,000	$	7.71	$	-		1.51	$	-

	Number of Shares Underlying Options		Weighted Average Exercise Price Per Share		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Life		Intrinsic Value
Balance at December 31, 2019		70,000	$	7.71	$	-		2.76	$	-
Options granted		-		-		-		-		-
Options exercised		-		-		-		-		-
Options expired		-		-		-		-		-
Balance at March 31, 2020		70,000	$	7.71	$	-		2.51	$	-

The fair values of stock options are estimated using the Black-Scholes method, which takes into account variables such as estimated volatility, expected holding period, dividend yield, and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the date of grant. The expected life is based on the contractual life of the options at the date of grant. All 70,000 outstanding options were fully vested at grant date. The exercise price of the outstanding options exceeded the closing price of the Company’s common stock at March 31, 2021. The intrinsic value is not material.

Note 8 – Revenues

Disaggregated Revenue

The following tables represents a disaggregation of revenues from contracts with customers for the three months ended March 31, 2021 and 2020 by type of service (dollars in thousands):

	Topic 606	Three Months Ended March 31,
	Revenue Recognition	2021		2020
Topic 606 Revenues
Leasing commissions	Point in time	$	589	$	591
Property and asset management fees	Over time		197		191
Development fees	Over time		89		93
Engineering services	Over time		59		76
Sales commissions	Point in time		46		19
Topic 606 Revenue			980		970
Out of Scope of Topic 606 revenue
Rental income		$	3,938	$	4,146
Sublease income			-		8
Total Out of Scope of Topic 606 revenue			3,938		4,154
Total Revenue		$	4,918	$	5,124

Leasing Operations

Minimum cash rental payments due to the Company in future periods under executed non-cancelable operating leases in place for the Company’s properties as of March 31, 2021 are as follows (dollars in thousands):

Remainder of 2021	$	9,649
2022		12,559
2023		11,853
2024		9,825
2025		8,160
2026		5,836
Thereafter		17,311
Total	$	75,193

Note 9 - Earnings per Share

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined based on the weighted average number of shares outstanding during the period combined with the incremental average shares that would have been outstanding assuming the conversion of all potentially dilutive common shares into common shares as of the earliest date possible. Potentially dilutive securities include stock options, convertible preferred stock, restricted stock, and OP units, which, subject to certain terms and conditions, may be tendered for redemption by the holder thereof for cash based on the market price of the Company’s common stock or, at the Company’s option and sole discretion, for shares of the Company’s common stock on a one-for-one basis. Stock options, convertible preferred stock, restricted stock, and OP units

have been omitted from the Company’s denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the denominator would have no dilutive impact due to the net loss position.

The following table sets forth the computation of earnings per common share for the three months ended March 31, 2021 and 2020 (amounts in thousands, except per share amounts):

	Three Months Ended March 31,
Numerator:	2021			2020
Net loss	$	(1,942	)	$	(2,436	)
Plus: Net loss attributable to noncontrolling interest		265			361
Net loss attributable to common stockholders	$	(1,677	)	$	(2,075	)
Denominator
Basic weighted-average common shares		22,471			21,587
Dilutive potential common shares		-			-
Diluted weighted-average common shares		22,471			21,587

Net loss per common share- basic and diluted	$	(0.07	)	$	(0.10	)

Note 10 - Fair Value of Financial Instruments

Financial Assets and Liabilities Measured at Fair Value

The Company’s financial assets and liabilities measured at fair value on a recurring basis currently include derivative financial instruments. These derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate caps and interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. The fair value of the Company’s interest rate cap, which is included in Other assets, net on the consolidated balance sheets was less than $0.1 million at both March 31, 2021 and December 31, 2020. The fair value of the Company’s interest rate swap liabilities, which are included in Accounts payable and accrued liabilities on the consolidated balance sheets, was approximately $0.6 million and $0.7 million at March 31, 2021 and December 31, 2020, respectively. See Note 5 “—Interest Rate Cap and Interest Rate Swap Agreements” for further discussion regarding the Company’s interest rate cap and interest rate swap agreements.

Financial Assets and Liabilities Not Carried at Fair Value

The carrying amounts of cash and cash equivalents, restricted cash, receivables and payables are reasonable estimates of their fair value as of March 31, 2021 and December 31, 2020, respectively, due to their short-term nature of these instruments (Level 1).

At March 31, 2021 and December 31, 2020, the Company’s indebtedness was comprised of borrowings that bear interest at LIBOR plus a margin and borrowings at fixed rates. The fair value of the Company’s $93.8 million and $101.9 million in borrowings under variable rates at March 31, 2021 and December 31, 2020, respectively, approximate their carrying values as the debt is at variable rates currently available and resets on a monthly basis.

The fair value of the Company’s fixed rate debt as of March 31, 2021 and December 31, 2020 is estimated by using Level 2 inputs such as discounting the estimated future cash flows using current market rates for similar loans that would be made to borrowers with similar credit ratings and for the same remaining maturities. As of March 31, 2021, the fair value of the Company’s $32.4 million fixed rate debt was estimated to be approximately $32.8 million. As of December 31, 2020, the fair value of the Company’s $21.1 million fixed rate debt was estimated to be approximately $21.6 million.

Fair value estimates are made at a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement at such fair value amounts may not be possible.

Note 11 – Taxes

The provision for income taxes for the three months ended March 31, 2021 and 2020 reflects an income tax benefit of approximately $0.6 million and $0.8 million, respectively, at an effective tax rate of 24.3% and 24.0%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate is primarily due to the loss attributable to the partnership not subject to tax and state income taxes.

Note 12 – Related Party Transactions

Receivables and Payables

As of March 31, 2021, the Company had approximately $0.2 million in receivables due from related parties, included in Other assets, net on the consolidated balance sheet, which relates to receivables due from properties managed by the Company which were provided to the properties for working capital. Additionally, the Company had $1.1 million in payables due to properties managed by the Company related to amounts borrowed by the Company for working capital, which are reflected in Payables due to related parties on the consolidated balance sheet.

As of December 31, 2020, the Company had $0.2 million in receivables due from related parties, included in Other assets, net on the consolidated balance sheet, which relates to receivables due from properties managed by the Company which were provided to the properties for working capital. Additionally, the Company had $0.7 million in payables due to properties managed by the Company related to amounts borrowed by the Company for working capital, which are reflected in Payables due to related parties on the consolidated balance sheet.

Approximately $0.5 million and $0.4 million of the Company’s total revenue for the three months ended March 31, 2021 and 2020, respectively, was generated from related parties. Additionally, approximately $0.6 million and $0.5 million of the Company’s accounts receivable, net balance at March 31, 2021 and December 31, 2020, respectively, was owed from related parties.

During 2019, the Company agreed to pay $1.5 million of consideration to Mr. Yockey in exchange for repurchasing a portion of his ownership interest in BSR prior to the Mergers. Approximately $1.0 million of this consideration was paid to Mr. Yockey in January 2020 and the remaining $0.5 million is included in accounts payable and accrued expenses on the consolidated balance sheet as of March 31, 2021.

The Mergers

As consideration in the Mergers that have closed as of the date of these financial statements, as a result of their interests in the Broad Street Entities party to such Mergers, (i) Mr. Jacoby received 2,004,146 shares of the Company’s common stock and 856,805 OP units, (ii) Mr. Yockey received 2,004,146 shares of the Company’s common stock and 420,523 OP units, (iii) Alexander Topchy, the Company’s Chief Financial Officer, received an aggregate of 96,281 shares of the Company’s common stock and 48,320 OP units and (iv) Daniel J.W. Neal, a member of the Company’s Board of Directors, received, directly or indirectly, 521,996 shares of the Company’s common stock. As consideration in the remaining six Mergers as a result of their interests in the remaining Broad Street Entities, (i) Mr. Jacoby will receive an aggregate of approximately 547,513 shares of the Company’s common stock and 136,213 OP units, (ii) Mr. Yockey will receive an aggregate of approximately 547,513 shares of the Company’s common stock and 136,213 OP units, (iii) Mr. Topchy will receive 43,001 shares of the Company’s common stock and 14,338 OP units and (iv) Mr. Neal will receive, directly or indirectly, an aggregate of approximately 361,127 shares of the Company’s common stock.

Management Fees

The Company provides management services for the six properties to be acquired as of March 31, 2021 in the remaining Mergers. For each property, the Company receives a management fee ranging from 3.0% to 4.0% of such property’s gross income. As described above, Messrs. Jacoby, Yockey, Topchy and Neal have interests in some or all of the Broad Street Entities that own the six properties.

Messrs. Jacoby and Yockey, along with Mr. Topchy, Jeffrey H. Foster, a member of the Company’s Board of Directors, and Aras Holden, the Company’s vice president of asset management and acquisitions, own an interest in BBL Current Investors LLC (“BBL”). BBL is redeveloping a property adjacent to the Company’s Midtown Colonial property into a mixed-use facility with retail on the ground floor and multi-family above. When the redevelopment is complete, the Company will manage the retail portion of the property and will receive management fees from BBL. However, the Company will have no ownership interest in the property.

Ground Lease

The Company owns the fee-simple interest in the land that the Cromwell Field Shopping Center, a property managed by the Company, is located on under a leasehold interest. The Company leases the land to the owner of the Cromwell Field Shopping Center pursuant to a ground lease and recognized less than $0.1 million of revenue under the ground lease for each of the three months ended March 31, 2021 and 2020.

Tax Protection Agreements

On December 27, 2019, pursuant to the Merger Agreements, the Company and the Operating Partnership entered into tax protection agreements (the “Tax Protection Agreements”) with each of the prior investors in BSV Colonial Investor LLC, BSV Lamonticello Investors LLC and BSV Patrick Street Member LLC, including Mr. Jacoby, Mr. Yockey and Mr. Topchy, in connection with their receipt of OP units in certain of the Initial Mergers. Pursuant to the Tax Protection Agreements, until the seventh anniversary of the completion of the Initial Mergers, the Company and the Operating Partnership may be required to indemnify the other parties thereto for their tax liabilities related to built-in gain that exists with respect to the properties known as Midtown Colonial, Midtown Lamonticello and Vista Shops at Golden Mile (the “Protected Properties”). Furthermore, until the seventh anniversary of the completion of the Initial Mergers, the Company and the Operating Partnership will be required to use commercially reasonable efforts to avoid any

event, including a sale of the Protected Properties, that triggers built-in gain to the other parties to the Tax Protection Agreements, subject to certain exceptions, including like-kind exchanges under Section 1031 of the Internal Revenue Code.

Guarantees

The Company’s subsidiaries’ obligations under the Basis Term Loan Agreement, the Sub-OP Operating Agreement, and the Brookhill mortgage loan are guaranteed by Mr. Jacoby and Mr. Yockey. We have agreed to indemnify Mr. Yockey for any losses he incurs as a result of his guarantee of the Basis Term Loan, the Sub-OP Operating Agreement, and the Brookhill mortgage loan. Mr. Jacoby is also a guarantor under the MVB Loan Agreement and the Cromwell land loan.

Consulting Agreement

The Company has engaged Timbergate Ventures, LLC, an entity wholly owned by Mr. Yockey, as a consultant for a two-year term beginning December 27, 2019. Pursuant to this arrangement, the Company pays Timbergate Ventures, LLC a consulting fee of $0.2 million per year. During each of the three months ended March 31, 2021 and 2020, approximately $50,000 was recorded in general and administrative expenses related to this consulting agreement.

Legal Fees

Samuel M. Spiritos, a member of the Company’s Board of Directors, is the managing partner of Shulman Rogers LLP, which represents the Company in certain real estate matters, including with matters related to the Mergers. During each of the three months ended March 31, 2021 and 2020, the Company paid less than $0.1 million in legal fees to Shulman Rogers LLP.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the consolidated financial statements and notes thereto appearing elsewhere is this report. References to “we,” “our,” “us,” and “Company” refer to Broad Street Realty, Inc., together with its consolidated subsidiaries.

Forward-Looking Statements

We make statements in this report that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements include, without limitation, statements about our estimates, expectations, predictions and forecasts of our future business plans and financial and operating performance and/or results, as well as statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. When we use the words “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense, we intend to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance, and our actual financial and operating results could differ materially from those set forth in the forward-looking statements. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Factors that may impact forward-looking statements include, among others, the following:

•

uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company’s business, employees and tenants;

•

our limited access to capital and our ability to repay, refinance, restructure and/or extend our indebtedness as it becomes due;

•

risks associated with our ability to consummate the pending merger transactions (described further herein), the timing and closing of such transactions and unexpected costs or unexpected liabilities that may arise from the transactions, whether or not consummated;

•

risks related to disruption of management’s attention from its ongoing business operations due to the pending merger transactions;

•

our ability to recognize the benefits of the completed and pending mergers;

•

our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions or investments;

•

adverse economic or real estate developments, either nationally or in the markets in which the Company’s properties are located;

•

changes in financial markets and interest rates, or to our business or financial condition;

•

the nature and extent of our competition;

•

other factors affecting the retail industry or the real estate industry generally;

•

availability of financing and capital;

•

the performance of our portfolio; and

•

the impact of any financial, accounting, legal or regulatory issues or litigation, including any legal proceedings, regulatory matters or enforcement matters that have been or in the future may be instituted relating to the merger transactions or that may affect us.

See Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of these and other risks, as well as the risks, uncertainties and other factors discussed in this report and identified in other documents we file with the Securities and Exchange Commission from time to time. You should carefully consider these risks before making any investment decisions in the Company. New risks and uncertainties may also emerge from time to time that could materially and adversely affect us.

Overview

We are a fully integrated real estate company that owns, operates, develops and redevelops primarily grocery-anchored shopping centers and street retail-based properties in the Mid-Atlantic and Denver, Colorado markets. As of March 31, 2021, we owned 11 properties with an additional six properties under contract to be acquired. The properties in our portfolio and the properties we have under contract are dispersed in sub-markets that we believe generally have high population densities, high traffic counts, good visibility and accessibility, which provide our tenants with attractive locations to serve the necessity-based needs of the surrounding communities. Although we have paused acquisition and investment activity due to the impact of the COVID-19 pandemic, other than working to close the remaining six Mergers, over the long-term, we intend to focus on acquiring additional strategically positioned properties in established and developing neighborhoods primarily leased to necessity-based tenants that meet the needs of the surrounding communities in our existing markets, as well as acquiring properties in new markets that meet our investment criteria, including the Southeastern United States. In addition, we provide commercial real estate brokerage services for our own portfolio and third-party office, industrial and retail operators and tenants.

We are structured as an “Up-C” corporation with substantially all of our operations conducted through our Operating Partnership and its direct and indirect subsidiaries. As of March 31, 2021, we owned 88.9% of the units of limited partnership interest (“OP units”) in our Operating Partnership, and we are the sole member of the sole general partner of our Operating Partnership.

Mergers with MedAmerica Properties Inc.

On December 27, 2019 (the “Merger Date”), subsidiaries of MedAmerica Properties Inc. (“MedAmerica”) completed 11 mergers (the “Initial Mergers”), including the mergers with Broad Street Realty, LLC (“BSR”) and Broad Street Ventures, LLC (“BSV”) and mergers with nine Broad Street Entities. Prior the Initial Mergers, Broad Street Realty, LLC (“BSR”) was a real estate management and brokerage company, which was 50% owned by Michael Z. Jacoby, the Company’s chairman and chief executive officer, and 50% owned by Thomas M. Yockey, one of the Company’s directors. BSR provided property management services for the substantial majority of the properties in the Company’s current portfolio and the additional properties to be acquired by the Company upon the completion of the additional Mergers. BSR also provided real estate brokerage services for the properties acquired or to be acquired by the Company as well as for third party clients. BSR owned no real property, so all of its revenues were derived from its property management and brokerage businesses. The properties acquired by the Company in the Initial Mergers and to be acquired in the additional Mergers were or are owned by entities (the “Broad Street Entities”) for which Broad Street Ventures, LLC (“BSV”) served or serves, directly or indirectly and either alone or with other co-managers or co-managing members as the manager or managing member.

Upon completion of the Initial Mergers and in accordance with the applicable merger agreements, Mr. Jacoby was appointed as the chairman and chief executive officer of the Company, Alexander Topchy was appointed as the chief financial officer of the Company, and each of the employees of BSR became employees of the Company. In addition, upon completion of the Initial Mergers, MedAmerica’s name was changed to “Broad Street Realty, Inc.”

On December 31, 2019, the Company completed one additional merger whereby it acquired the Brookhill Azalea Shopping Center. On July 2, 2020, the Company closed one merger whereby it acquired Lamar Station Plaza East.

As consideration for the mergers with the Broad Street Entities that have closed as of the date of this report, the Company has issued an aggregate of 19,660,911 shares of common stock and 2,827,904 OP units to prior investors in the Broad Street Entities party to the mergers. In addition, certain prior investors in the Broad Street Entities received an aggregate of approximately $1.1 million in cash as a portion of the consideration for the mergers.

As of the date of this report, there are six mergers that have not been completed. The Company expects to issue an aggregate of 10,400,779 shares of common stock and 573,529 OP units as consideration for the additional mergers. Until the closing of the remaining mergers, the Company will continue to manage these six properties and receive management fees.

Impact of COVID-19

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic and, on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The pandemic led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to mitigate its spread, including restrictions on freedom of movement and business operations, such as travel bans, border closings, business closures, quarantines and shelter-in-place or similar orders. The extent of the COVID-19 pandemic’s effect on our future operational and financial performance, financial condition and liquidity will depend on future developments, including the duration and intensity of the pandemic, the effectiveness of COVID-19 vaccines and treatments, the duration of government measures to mitigate the pandemic and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and difficult to predict. Given this uncertainty, we cannot accurately predict the effect on future periods.

All of our properties, as well as our headquarters and other offices, are located in areas that are or have been subject to shelter-in-place orders and restrictions on the types of businesses that may continue to operate. Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our tenants to meet their rent and other obligations to us, and the government-imposed measures, coupled with customers reducing their purchasing activity in light of health concerns or personal

financial distress, have resulted in significant disruptions to our and our tenants’ businesses. We have observed the impact of COVID-19 manifest in the form of limited operations among our tenants, which has resulted, and may in the future result in, a decline in on-time rental payments and increased requests from tenants for temporary rental relief.

As of May 12, 2021:

•

we have collected, deferred and forgiven, respectively, the percentage of contractual revenue (base rent and expense reimbursements) due from April 2020 through March 2021 as outlined in the table below:

Period	Percentage of Contractual Rent Collected	Percentage of Contractual Rent Deferred	Percentage of Contractual Rent Forgiven
Q2 2020	85.3%	6.6%	6.6%
Q3 2020	93.8%	3.1%	0.3%
Q4 2020	95.7%	0.1%	0.0%
Q1 2021	95.0%	0.0%	0.1%

•

we have entered into lease modifications that deferred approximately $0.4 million and waived approximately $0.3 million of contractual rent, respectively. To date, the weighted average payback period of deferred rent is approximately seven months which commences at various times beginning in July 2020 through June 2021;

•

approximately 66% of our tenants (based on GLA) were designated as “essential” businesses under applicable state guidelines;

•

all of our tenants were open and operational at least on a limited basis (e.g., restaurants providing only carryout service). None of our tenants were completely closed as a result of COVID-19; and

•

our commission revenue, which comprised approximately $0.6 million of our total revenues for each of the three months ended March 31, 2021 and 2020, has been impacted by COVID-19 mostly as a result of delays in leasing transactions. We believe this revenue will return as uncertainty recedes and our clients adjust and solidify their decision process. We have experienced an increase in establishing new relationships with potential clients as well as an increase in the number of consultations with our existing clients.

Collections and rent deferrals to date may not be indicative of collections or rent deferrals in any future period. We expect that our rent collections will continue to be below our tenants’ contractual rent obligations for so long as governmental orders require non-essential businesses to operate on a limited basis, which will adversely impact our results of operations. Even after governmental restrictions are lifted, our tenants may continue to be impacted by economic conditions resulting from COVID-19 or public perception of the risk of COVID-19, which could adversely affect foot traffic to our tenants’ businesses and our tenants’ ability to adequately staff their businesses. If the impacts of the pandemic continue, we expect that certain tenants will experience greater financial distress, which could result in additional tenants being unable to pay contractual rent (including deferred rent) on a timely basis, or at all, additional requests for rental relief, early lease terminations, tenant bankruptcies, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. In addition, lease renewals and new leasing activity are expected to be adversely impacted as businesses delay executing leases amidst the immediate and uncertain future economic impacts of the COVID-19 pandemic. These factors also may adversely affect the value of our properties. The extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

In addition, as of the date of this Quarterly Report, substantially all of our employees were working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. Furthermore, our ability to close the remaining six Mergers has been adversely impacted by the market and other disruptions related to the COVID-19 pandemic, including delays in obtaining consent from the requisite lenders.

We have taken a number of proactive measures to maintain the strength of our business and manage the impacts of the COVID-19 pandemic on our operations and liquidity, including the following:

•

we have dedicated significant resources to monitoring detailed portfolio performance on a real-time basis, including rent collections and requests for rent relief, as well as negotiating rent deferments and other relief with certain of our tenants on case-by-case basis;

•

we have maintained ongoing communication with our tenants and assisted them in identifying local, state and federal resources that may be available to support their businesses and employees during the pandemic, including the stimulus and relief packages that have been signed into law to date;

•

we received an unsecured loan in April 2020 of approximately $0.8 million pursuant to the Paycheck Protection Program (“PPP”) which was forgiven in the first quarter of 2021, and, in March 2021, we received a second unsecured loan of

approximately $0.8 million pursuant to the PPP (see “—Liquidity and Capital Resources—Consolidated Indebtedness and Preferred Equity—PPP Loans”);

•

we negotiated loan payment deferrals and loan covenant deferrals. The lenders for our mortgage loans secured by the Brookhill, Hollinswood and Vista properties agreed to defer payments of principal and interest for three months, and the lender for our mortgage loan secured by the Avondale property agreed to require interest-only payments for four months; the lender for our MVB Loan Agreement (as defined below) agreed to require interest-only payments for three months and deferred covenant tests until March 31, 2021. Subsequent to the initial payment deferral, our lender for the mortgage loans secured by Hollinswood and Vista has agreed to defer payments of principal and interest for another three months. The deferred amount for the Hollinswood mortgage is due in six equal monthly installments beginning November 2020. The deferred amounts for all of the other loans will be due at loan maturity;

•

we obtained additional capital from one of our lenders. Under our operating agreement (the “Sub-OP Operating Agreement”) for Broad Street BIG First OP LLC (the “Sub-OP”), BIG BSP Investments, LLC (the “Preferred Investor”), a subsidiary of a real estate fund managed by Basis, made additional capital contributions, which are treated as debt, available to the Sub-OP of approximately $2.9 million in the aggregate in order to assist in debt service under the Basis Term Loan and certain other property level indebtedness. As of May 12, 2021, there was approximately $1.0 million remaining availability to the Company from these capital contributions, which is included in restricted cash. For more information about the Sub-OP Operating Agreement and these capital contributions, see “—Liquidity and Capital Resources— Consolidated Indebtedness and Preferred Equity—Sub-OP Operating Agreement.”; and

•

we have paused acquisition and investment activity other than working to close the remaining six Mergers.

We will continue to actively monitor the implications of the COVID-19 pandemic on our and our tenants’ businesses and may take further actions to alter our business practices if we determine that such changes are in the best interests of our employees, tenants and stockholders, or as required by federal, state or local authorities.

Portfolio Summary

As of March 31, 2021, our portfolio was comprised of 11 retail properties and a parcel of land on which another shopping center is located, consisting of 1,055,143 total square feet of gross leasable area (“GLA”). The following table provides additional information about the properties in our portfolio (dollars in thousands).

Property Name	City/State	GLA		Percent Leased⁽¹⁾			Gross Real Estate Assets
Avondale Shops	Washington, D.C.		28,044		82.0	%	$	8,393
Brookhill Azalea Shopping Center	Richmond, VA		163,363		79.5	%		17,262
Coral Hills Shopping Center	Capitol Heights, MD		85,928		100.0	%		16,682
Cromwell Field Shopping Center (Land)	Glen Burnie, MD		—		—			2,256
Crestview Square	Landover Hills, MD		74,694		98.7	%		18,592
Dekalb Plaza	East Norriton, PA		178,815		81.5	%		26,761
Hollinswood Shopping Center	Baltimore, MD		112,698		91.9	%		24,529
Lamar Station Plaza East	Lakewood, CO		41,976		60.9	%		6,099
Midtown Colonial	Williamsburg, VA		98,043		71.9	%		14,813
Midtown Lamonticello	Williamsburg, VA		63,173		90.6	%		16,222
Vista Shops at Golden Mile	Frederick, MD		98,858		96.8	%		14,912
West Broad Commons	Richmond, VA		109,551		81.3	%		19,824
Total			1,055,143				$	186,345

⁽¹⁾	Percent leased is calculated as (a) GLA under commenced leases as of March 31, 2021, divided by (b) total GLA, expressed as a percentage.

Geographic Concentration

The following table contains information regarding the geographic concentration of the properties in our portfolio as of March 31, 2021, which includes rental income for the three months ended March 31, 2021 and 2020 (dollars in thousands).

							Rental income for the three months ended March 31,
Location	Number of Properties	Gross Real Estate Assets at March 31, 2021		Percentage of Total Real Estate Assets at March 31, 2021			2021		2020
Maryland⁽¹⁾	4	$	76,971		41.2	%	$	1,896	$	2,154
Virginia	4		68,121		36.6	%		1,227		1,228
Pennsylvania	1		26,761		14.4	%		511		594
Washington D.C.	1		8,393		4.5	%		173		170
Colorado	1		6,099		3.3	%		131		-
	11	$	186,345		100.0	%	$	3,938	$	4,146

⁽¹⁾	Rental income for each of the three months ended March 31, 2021 and 2020 includes less than $0.1 million of ground rental revenue under the ground lease for the parcel of land acquired in January 2020.

Critical Accounting Policies

Refer to our audited consolidated financial statements and notes thereto for the year ended December 31, 2020 for a discussion of our accounting policies, including the critical accounting policies of revenue recognition, real estate investments, asset impairment, income taxes, and our accounting policy on consolidation, which are included in our 2020 Annual Report on Form 10-K, which was filed with the SEC on April 15, 2021. During the three months ended March 31, 2021, there were no material changes to these policies. See Note 2 “—Recent Accounting Pronouncements” for recently-adopted accounting pronouncements.

Factors that May Impact Future Results of Operations

Rental Income

Growth in rental income will depend on our ability to acquire additional properties that meet our investment criteria and on filling vacancies and increasing rents on the properties in our portfolio. The amount of rental income generated by the properties in our portfolio depends on our ability to renew expiring leases or re-lease space upon the scheduled or unscheduled termination of leases, lease currently available space and maintain or increase rental rates at our properties. In addition to the factors regarding the COVID-19 pandemic described above, our rental income in future periods could be adversely affected by local, regional or national economic conditions, an oversupply of or a reduction in demand for retail space, changes in market rental rates, our ability to provide adequate services and maintenance at our properties, and fluctuations in interest rates. In addition, economic downturns affecting our markets or downturns in our tenants’ businesses that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments to us, including as a result of the COVID-19 pandemic, could adversely affect our ability to maintain or increase rent and occupancy.

Scheduled Lease Expirations

Our ability to re-lease expiring space at rental rates equal to or greater than that of current rental rates will impact our results of operations. Our properties are marketed to smaller tenants that generally desire shorter-term leases. As of March 31, 2021, approximately 41.3% of our portfolio (based on GLA) was leased to tenants occupying less than 10,000 square feet. In addition, as of March 31, 2021, approximately 14.7% of our GLA was vacant and approximately 1.8% of our leases (based on GLA) were month-to-month or scheduled to expire on or before December 31, 2021. Although we maintain ongoing dialogue with our tenants, we generally raise the issue of renewal at least 12 months prior to lease renewal often providing concessions for early renewal. If our current tenants do not renew their leases or terminate their leases early, we may be unable to re-lease the space to new tenants on favorable terms or at all, including as a result of the COVID-19 pandemic and related government measures described above. Our vacancy trends will be impacted by new properties that we acquire, which may include properties with higher vacancy where we identified opportunities to increase occupancy.

Acquisitions

Due to the impact of the COVID-19 pandemic, we have paused acquisition and investment activity other than working to close the remaining six Mergers. Over the long-term, however, we intend to grow our portfolio through the acquisition of additional strategically positioned properties in established and developing neighborhoods primarily leased to necessity-based tenants that meet the needs of the surrounding communities in our existing markets, as well as acquiring properties in new markets that meet our investment criteria, including the Southeastern United States. We have established relationships with a wide variety of market participants, including tenants, leasing agents, investment sales brokers, property owners and lenders, in our target markets and beyond and, over the long-term, we believe that we will have opportunities to acquire properties that meet our investment criteria at attractive prices. Once we recommence acquisition activity as the impact of COVID-19 decreases, until we have greater access to capital, we likely will structure future acquisitions through joint ventures or other syndicated structures in which outside investors will contribute a majority of the capital and we will manage the assets.

General and Administrative Expenses

General and administrative expenses include employee compensation costs, professional fees, consulting and other general administrative expenses. We expect an increase in general and administrative expenses in the future related to stock issuances to employees. We expect that our general and administrative expenses will rise in some measure as our portfolio grows but that such expenses as a percentage of our revenue will decrease over time due to efficiencies and economies of scale.

Capital Expenditures

We incur capital expenditures at our properties that vary in amount and frequency based on each property’s specific needs. We expect our capital expenditures will be for recurring maintenance to ensure our properties are in good working condition, including parking and roof repairs, façade maintenance and general upkeep. We also will incur capital expenditures related to repositioning and refurbishing properties where we have identified opportunities to improve our properties to increase occupancy, and we may incur capital expenditures related to redevelopment or development consistent with our business and growth strategies although we expect redevelopment and development activities to be limited in the near-term due to the impact of the COVID-19 pandemic.

Results of Operations

Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020 (dollars in thousands)

	For the Three Months Ended						Change
	March 31, 2021			March 31, 2020			$			%
Revenues
Rental income	$	3,938		$	4,146		$	(208	)		(5	%)
Commissions		635			610			25			4	%
Management and other fees		345			368			(23	)		(6	%)
Total revenues		4,918			5,124			(206	)		(4	%)
Expenses
Cost of services		343			449			(106	)		(24	%)
Depreciation and amortization		2,313			2,482			(169	)		(7	%)
Property operating		1,250			951			299			31	%
Bad debt expense		55			141			(86	)		(61	%)
General and administrative		2,586			2,118			468			22	%
Total operating expenses		6,547			6,141			406			7	%
Operating loss		(1,629	)		(1,017	)		(612	)		60	%

Other income (expense)
Interest and other income		-			47			(47	)		(100	%)
Derivative fair value adjustment		191			(635	)		826			(130	%)
Interest expense		(1,878	)		(1,580	)		(298	)		19	%
Gain on extinguishment of debt		757			-			757		-
Other expense		(7	)		(20	)		13			(65	%)
Total other income (expense)		(937	)		(2,188	)		1,251			(57	%)

Income tax benefit		624			769			(145	)		(19	%)
Net loss	$	(1,942	)	$	(2,436	)	$	494			(20	%)
Plus: Net loss attributable to noncontrolling interest		265			361			(96	)		(27	%)
Net loss attributable to common stockholders	$	(1,677	)	$	(2,075	)	$	398			(19	%)

Revenues for the three months ended March 31, 2021 decreased approximately $0.2 million, or 4%, from the prior period as a result of a decrease in rental income related to revenue from certain tenants being converted to cash basis accounting due to the Company’s determination regarding the probability of future lease payments from these tenants being collectable. The decrease was partially offset by an increase in rental income of approximately $0.1 million related to the property acquired in July 2020.

Total operating expenses for the three months ended March 31, 2021 increased approximately $0.4 million, or 7%, over the prior period primarily from: (i) an increase in general and administrative expenses of approximately $0.5 million mainly attributable to an increase in professional service fees, including legal, audit and tax fees of approximately $0.4 million and higher payroll and related expenses of approximately $0.1 million; and (ii) an increase in property operating expense of approximately $0.3 million, of which approximately $0.2 million is related to an increase snow removal expense and approximately $0.1 million is related to the acquisition of one property in July 2020. The increase was partially offset by (i) a decrease in depreciation and amortization expense of approximately $0.2 million mainly related to a decrease in amortization of in-place lease intangibles that were fully amortized during

2020 and (ii) a decrease in costs of services of approximately $0.1 million mainly related to a decrease in third party commission expense.

Derivative fair value adjustment, related to the interest rate cap and interest rate swaps the Company entered into in December 2019, was approximately $0.2 million of income for the three months ended March 31, 2021 as compared to approximately $0.6 million of expense for the prior year period. Interest expense for the three months ended March 31, 2021 increased approximately $0.3 million over the prior year period. This increase is mainly attributable to additional borrowings of approximately $13.9 million subsequent to March 31, 2020. The gain on extinguishment of debt of approximately $0.8 million for the three months ended March 31, 2021 is related to the forgiveness of the PPP Loan described below under the heading “Liquidity and Capital Resources—Consolidated Indebtedness and Preferred Equity —PPP Loans.”.

Net loss attributable to noncontrolling interest decreased approximately $0.1 million over the prior year period. The net loss attributable to noncontrolling interest reflects the proportionate share of the OP units held by outside investors in the operating results of the Operating Partnership from the completion of the Mergers on December 27, 2019, described above under the heading “—Mergers with MedAmerica Properties Inc.”.

Liquidity and Capital Resources

Overview

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations and other general business needs.

Our short-term liquidity requirements consist primarily of debt service requirements, operating expenses, recurring capital expenditures (such as repairs and maintenance of our properties), and non-recurring capital expenditures (such as capital improvements and tenant improvements). We expect to meet our short-term liquidity requirements through cash on hand and cash reserves. As of March 31, 2021 and May 12, 2021, we had unrestricted cash and cash equivalents of approximately $2.7 million and $2.2 million, respectively, available for current liquidity needs and restricted cash of approximately $8.4 million and $7.5 million, respectively, which is available for debt service shortfall requirements, certain capital expenditures, real estate taxes and insurance. As described above, we have taken a number of proactive measures to maintain the strength of our business and manage the impacts of the COVID-19 pandemic on our operations and liquidity, including the following:

•

we received an unsecured loan in April 2020 of approximately $0.8 million pursuant to the PPP which was forgiven in the first quarter of 2021, and, in March 2021, we received a second unsecured loan of approximately $0.8 million pursuant to the PPP (see “—Consolidated Indebtedness and Preferred Equity—PPP Loans”);

•

we negotiated loan payment deferrals and loan covenant deferrals. The lenders for our mortgage loans secured by the Brookhill, Hollinswood and Vista properties agreed to defer payments of principal and interest for three months, and the lender for our mortgage loan secured by the Avondale property agreed to require interest-only payments for four months; the lender under the MVB Loan Agreement agreed to require interest-only payments for three months and deferred covenant tests until June 30, 2021 and December 31, 2021, as applicable. Subsequent to the initial payment deferral, our lender for the mortgage loans secured by Hollinswood and Vista has agreed to defer payments of principal and interest for another three months. The deferred amounts for the Hollinswood mortgage will be due in six equal monthly installments beginning in November 2020. The deferred amount for all other loans will be due at loan maturity;

•

we obtained additional capital from the Preferred Investor. Under the Sub-OP Operating Agreement, the Preferred Investor made additional capital contributions, which are treated as debt, available to the Sub-OP of approximately $2.9 million in the aggregate in order to assist in debt service under the Basis Term Loan and certain other property level indebtedness. As of May 12, 2021, there was approximately $1.0 million of remaining availability to the Company from these capital contributions which is included in restricted cash. For more information about the Sub-OP Operating Agreement and these capital contributions, see “—Consolidated Indebtedness and Preferred Equity—Sub-OP Operating Agreement”; and

•

we have paused acquisition and investment activity other than working to close the remaining six Mergers.

As described above, as of May 12, 2021, we have collected 95.0% of contractual rent due for the three months ended March 31, 2021. We expect that our rent collections will continue to be below our tenants’ contractual rent obligations for so long as certain businesses limit operations and public perception of the risk of COVID-19 persists, which will adversely impact our cash flows and liquidity. If the impacts of the pandemic continue, we expect that certain tenants will experience greater financial distress, which could result in additional tenants being unable to pay contractual rent (including deferred rent) on a timely basis, or at all, additional requests for rental relief, early lease terminations, tenant bankruptcies, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so

on terms that are as favorable to us as those currently in place. The extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

We have a mortgage loan secured by Lamar Station Plaza East totaling approximately $3.5 million that matures in July 2021. We do not project that we will have sufficient cash available to pay off the mortgage balance upon maturity and are currently in discussions with lenders to refinance the mortgage. There can be no assurances that we will be successful on the refinance of the mortgage on favorable terms or at all. If we are unable to refinance this mortgage, the lender has the right to place the loan in default and ultimately foreclose on the property, in which case the property could be sold and the sale proceeds would be used to pay off the loan. Under this circumstance, we would not have any further financial obligations to the lender as the value of this property is in excess of the outstanding mortgage balance.

Our long-term liquidity requirements are expected to consist primarily of funds necessary for the repayment of debt at or prior to maturity, capital improvements, development and/or redevelopment of properties and property acquisitions. We expect to meet our long-term liquidity requirements through net cash from operations, additional secured and unsecured debt and, subject to market conditions, the issuance of additional shares of common stock, preferred stock or OP units.

We have encountered difficulties obtaining the necessary capital to service and refinance our existing indebtedness. Our access to capital depends upon a number of factors over which we have little or no control, including general market conditions, the market’s perception of our current and potential future earnings and cash distributions, our current debt levels and the market price of the shares of our common stock. Although our common stock is quoted on the OTC, there is a very limited trading market for our common stock, and if a more active trading market is not developed and sustained, we will be limited in our ability to issue equity to fund our capital needs. The severe economic, market and other disruptions, worldwide, including in the bank lending, capital and other financial markets, caused by the COVID-19 pandemic and the impact on the retail industry have exacerbated the issues we have encountered obtaining financing. As described further below, during 2020, we relied on Basis to provide additional necessary capital. However, we can provide no assurances that Basis will continue to work with us in order to be able to meet our liquidity needs to service our indebtedness, and we may not be able to establish relationships with new lenders or financing sources as a result of Basis’s significant rights. If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or pay dividends to our stockholders. Until we have greater access to capital, we will likely structure future acquisitions through joint ventures or other syndicated structures in which outside investors will contribute a majority of the capital and we will manage the assets.

As described below, under our existing debt agreements, we are subject to continuing covenants. As of March 31, 2021 we have been in compliance with all covenants under our debt agreements except for the debt service coverage ratio covenant under the Lamar Station Plaza East mortgage as described below under the heading ““—Consolidated Indebtedness and Preferred Equity—Covenant Defaults.” In the event of a default, the lenders could accelerate the timing of payments under the applicable debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition and results of operations.

Consolidated Indebtedness and Preferred Equity

Indebtedness Summary

The following table sets forth certain information regarding our outstanding indebtedness as of March 31, 2021 (dollars in thousands):

Maturity Date

Rate Type

Interest Rate ⁽¹⁾

Balance Outstanding at March 31, 2021

Basis Term Loan (net of discount of $653)

January 1, 2023

Floating ⁽²⁾

6.125%

66,532

Basis Preferred Interest (net of discount of $131)⁽³⁾

January 1, 2023 ⁽⁴⁾

Fixed

14.00% ⁽⁵⁾

11,211

MVB Term Loan

December 27, 2022

Fixed

6.75%

4,193

MVB Revolver

December 27, 2022

Floating ⁽⁶⁾

6.75%

1,750

Hollinswood Loan

December 1, 2024

LIBOR + 2.25% ⁽⁷⁾

4.06%

12,619

Avondale Shops Loan

June 1, 2025

Fixed

4.00%

3,179

Vista Shops at Golden Mile Loan (net of discount of $83)

June 24, 2023

Fixed

3.83%

11,617

Brookhill Azalea Shopping Center Loan

January 31, 2025

LIBOR + 2.75%

2.86%

9,329

Lamar Station Plaza East Loan (net of discount of $4)

July 17, 2021

LIBOR + 3.00% ⁽⁸⁾

4.00%

3,497

Cromwell Land Loan (net of discount of $8)

January 10, 2023

Fixed

6.75%

1,411

Paycheck Protection Program Loan

March 18, 2026

Fixed

1.00%

769

Total

126,107

⁽¹⁾

For floating rate loans tied to LIBOR, based on the one-month LIBOR rate of 0.11%, as of March 31, 2021.

⁽²⁾

⁽³⁾

The outstanding balance includes approximately $1.5 million of indebtedness related to the Multiple Minimum Amount owed to the Preferred Investor as described below under the heading “—Basis Preferred Interest”.

⁽⁴⁾

If the Basis Term Loan is paid in full earlier than its maturity date, the Basis Preferred Interest in the Sub-OP will mature at that time.

⁽⁵⁾

⁽⁶⁾

The interest rate on the MVB Revolver is the greater of (i) prime rate plus 1.5% and (ii) 6.75%.

⁽⁷⁾

The Company has entered into an interest rate swap which fixes the interest rate of the loan at 4.06%.

⁽⁸⁾

The interest rate on the Lamar Station Plaza East Loan is LIBOR plus 3.00% per annum with a minimum LIBOR rate of 1.00%.

Basis Term Loan

In December 2019, six of our subsidiaries, as borrowers (collectively, the “Borrowers”), and Big Real Estate Finance I, LLC, a subsidiary of a real estate fund managed by Basis Management Group, LLC, as lender (the “Basis Lender”), entered into a loan agreement (the “Basis Loan Agreement”) pursuant to which the Basis Lender made a senior secured term loan of up to $66.9 million (the “Basis Term Loan”) to the Borrowers. Pursuant to the Basis Loan Agreement, the Basis Term Loan is secured by mortgages on the following properties: Coral Hills, Crestview, Dekalb, Midtown Colonial, Midtown Lamonticello and West Broad. The Basis Term Loan matures on January 1, 2023, subject to two one-year extension options, subject to certain conditions. The Basis Term Loan bears interest at a rate equal to the greater of (i) LIBOR plus 3.850% per annum and (ii) 6.125% per annum. The Borrowers have entered into an interest rate cap that effectively caps LIBOR at 3.50% per annum. As of March 31, 2021, the interest rate of the Basis Term Loan was 6.125% and the outstanding balance was $66.9 million.

The Basis Loan Agreement includes a debt service coverage calculation based on the trailing twelve months results which includes an adjustment for tenants that are more than one-month delinquent in paying rent. A debt service coverage ratio below 1.10x is a Cash Trap Trigger Event (as defined in the loan agreement), which gives the Basis Lender the right to institute a cash management period until the trigger is cured. A debt service coverage ratio below 1.05x for two consecutive calendar quarters gives the Basis Lender the right to remove the Company as manager of the properties. The debt service coverage calculation for the twelve months ended March 31, 2021 was approximately 1.14x.

Basis Preferred Interest

On June 16, 2020, the Preferred Investor made two additional capital contributions, which are classified as debt, available to the Sub-OP in the aggregate amount of approximately $2.9 million. The two capital contributions consisted of: (i) a $2.4 million capital contribution to the Sub-OP that the Sub-OP contributed to the Borrowers under the Basis Loan Agreement for purposes of making debt service payments under the Basis Loan Agreement and (ii) a $0.5 million capital contribution to the Sub-OP that the Sub-OP contributed to certain of its other property owning subsidiaries for purposes of making debt service payments on mortgage debt secured by the properties owned by such subsidiaries and making payments of the Class A return due to the Preferred Investor pursuant to the Sub-OP Operating Agreement. As described below under the heading “—Mortgage Indebtedness”, we repaid approximately $0.75 million of these funds with the proceeds from the Vista mortgage refinance. As of May 12, 2021, there was approximately $1.0 million of remaining availability to the Sub-OP under these additional capital contributions, which is included in restricted cash. The Preferred Investor is entitled to a cumulative annual return of 13.0% on the additional capital contributions.

MVB Loan

The Company has no additional availability under the MVB Term Loan and the MVB Revolver as of March 31, 2021.

The MVB Loan Agreement is secured by certain personal property of the Company, the Operating Partnership and BSR. In addition, Mr. Jacoby has pledged the shares of Common Stock and OP units received as consideration in the Initial Mergers as collateral under the MVB Loan Agreement. The obligations of the Company and the Operating Partnership under the MVB Loan Agreement are guaranteed by a subsidiary of the Company and Michael Z. Jacoby, in his individual capacity.

In December 2020, we entered into an amendment to the MVB Loan Agreement, which extended the maturity date of the MVB Revolver to December 27, 2021 and in March 2021, we entered into another amendment to the MVB Loan Agreement which further extended the maturity date of the MVB Revolver to December 27, 2022. The amendments also eliminate the revolving nature of the facility, require monthly principal payments as calculated over a 10-year amortization schedule, and require the repayment of $250,000 on each of the following dates (a) the earlier of March 31, 2021 or the closing date of our pending mergers of the Highlandtown and Spotswood properties, (b) the earlier of September 30, 2021 or the closing date of the pending merger of the Greenwood property, (c) March 31, 2022, and (d) September 30, 2022. The $250,000 payment owed by March 31, 2021 has been paid. Additionally, the amendments (i) deferred testing for covenants related to the Deposit Requirement, Minimum Liquidity Requirement and the debt service coverage ratio until June 30, 2021, (ii) deferred testing for the covenant related to the Company’s EBITDA to consolidated funded debt ratio until December 31, 2021, (iii) modified the debt service coverage ratio to 1.00 to 1 and (iv) modified the Minimum Liquidity Requirement to $3.0 million.

Mortgage Indebtedness

In addition to the indebtedness described above, as of March 31, 2021 and December 31, 2020, the Company had approximately $41.6 million and $38.1 million, respectively, of outstanding mortgage indebtedness secured by individual properties. The Hollinswood mortgage, Vista mortgage, Brookhill mortgage, and Lamar Station Plaza East mortgage require the Company to maintain a debt service coverage ratio (as such terms are defined in the respective Loan Agreements) of at least 1.40 to 1.00, 1.50 to 1.00, 1.35 to 1.00 and 1.25 to 1.00, respectively.

In March 2021, we completed the refinance of the Vista Shops mortgage loan. The new loan has a principal balance of $11.7 million, matures in June 2023, and carries an interest rate of 3.83%. We deposited approximately $1.9 million of the proceeds from the refinance with the Basis Lender, which was applied as follows during the second quarter of 2021: (i) repaid approximately $0.75 million of the outstanding principal balance on the capital contributions, which are treated as debt, provided to us in June 2020 under the Basis Preferred Interest as described above under the heading “—Basis Preferred Interest”, (ii) paid approximately $46,000 in accrued interest on these funds and (iii) contributed approximately $1.1 million into an escrow account with the Basis Lender which will be used to pay down the outstanding principal balance of the capital contributions upon satisfaction of certain conditions.

In connection with the closings of the six remaining Mergers, we expect to incur or assume approximately $82.5 million of additional mortgage indebtedness.

PPP Loans

On April 20, 2020, a wholly owned subsidiary of the Company entered into a promissory note (the “PPP Note”) with MVB with respect to an unsecured loan of approximately $0.8 million (the “PPP Loan”) pursuant to the PPP, which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Loan bears interest at a rate of 1.0% per year. During the first quarter of 2021, the Company received forgiveness for its entire balance of the PPP Loan from the SBA, which was recognized as a gain on debt extinguishment in the Company’s statement of operations.

Covenant Defaults

As described above under the heading “—Mergers with MedAmerica Properties Inc.”, in July 2020 we completed the merger to acquire Lamar Station Plaza East, which included the assumption of $2.5 million in debt. Additionally, in connection with the merger, we entered into a loan modification agreement, which increased the maximum principal amount available under the assumed loan agreement to $4.1 million. The loan was in default of the debt service coverage ratio (as defined in the loan agreement) upon assumption of the loan agreement. In connection with the loan modification agreement, the lender agreed to forbear enforcement of the event of default subject to Company’s satisfaction of certain conditions, which we did not meet. We entered into a second loan modification agreement effective November 2020 pursuant to which the lender agreed to forbear enforcement of the events of default subject to our satisfaction of certain conditions including (i) issuance of a certificate of occupancy for a specified tenant on or before January 31, 2021 and (ii) the specified tenant has taken full possession and occupancy of the space on or before January 31, 2021. We met both conditions required by the second loan modification. The lender’s forbearance applied to the default of the debt service coverage ratio calculation through December 31, 2020. The next debt service coverage ratio testing date is June 30, 2021 and the loan matures in July 2021.

Interest Rate Derivatives

We may use interest rate derivatives from time to time to manage our exposure to interest rate risks. On December 27, 2019, we entered into an interest rate cap agreement on the full $66.9 million Basis Term Loan to cap the variable LIBOR interest rate at 3.5%. We also entered into two interest rate swap agreements on the Hollinswood Loan to fix the interest rate at 4.06%. The swap agreements are effective as of December 27, 2019 on the outstanding balance of $10.2 million and on July 1, 2021 for the additional availability of $3.0 million under the Hollinswood Loan.

Sources and Uses of Cash

The sources and uses of cash reflected in our consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are summarized below (dollars in thousands). As described above, our cash flows in future periods may be significantly impacted by the effects of the COVID-19 pandemic.

	For the Three Months Ended March 31,
	2021			2020			Change
Cash and cash equivalents and restricted cash at beginning of period	$	9,983		$	11,595		$	(1,612	)
Net cash used in operating activities		(1,946	)		(1,386	)		(560	)
Net cash used in investing activities		(1,148	)		(2,276	)		1,128
Net cash provided by (used in) financing activities		4,252			(1,231	)		5,483
Cash and cash equivalents and restricted cash at end of period	$	11,141		$	6,702		$	4,439

Operating Activities- Cash used in operating activities increased by approximately $0.6 million during the three months ended March 31, 2021 compared to the corresponding period in 2020. Operating cash flows were primarily impacted by a decrease in net cash provided by operating activities, before net changes in operating assets and liabilities, of approximately $1.0 million. This was partially offset by a net decrease in changes in operating assets and liabilities of approximately $0.4 million, which was mainly attributable to the change in accounts payable and accrued liabilities.

Investing Activities- Cash used in investing activities during the three months ended March 31, 2021 decreased by $1.1 million compared to the corresponding period in 2020. This decrease is mainly attributable to the acquisition of a parcel of land totaling approximately $1.9 million during the three months ended March 31, 2020, partially offset by an increase in capital expenditures for real estate during the three months ended March 31, 2021 of $0.8 million.

Financing Activities- Cash provided by financing activities for the three months ended March 31, 2021 was approximately $4.3 million as compared to cash used in financing activities of approximately $1.2 million during the corresponding period in 2020. The change resulted primarily from an increase in net borrowings under debt agreements of approximately $5.5 million, which includes (i) a net increase in the Vista Shops mortgage loan of approximately $2.8 million from the refinance of the loan as described above under the heading “—Mortgage Indebtedness”, (ii) the receipt of the Second PPP Loan of approximately $0.8 million as described above under the heading “—PPP Loans”, and (iii) a $1.9 million, net reduction of debt repayments compared to the corresponding period, mainly attributable to the payoff of the mezzanine loans related to the Initial Mergers which were repaid in the first quarter of 2020 due to the timing of the Initial Mergers in December 2019.

Off-Balance Sheet Arrangements

As of March 31, 2021, we had no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined in Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As initially disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2019, management concluded that there were material weaknesses in our internal control over financial reporting. We are in the process of remediating the material weaknesses as of the end of the period covered by this Quarterly Report on Form 10-Q.

Management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the reporting period covered in this Quarterly Report on Form 10-Q, as a result of the materials weaknesses referred to above. Notwithstanding the identified material weaknesses, our management has concluded that the unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in conformity with GAAP.

Changes in Internal Control Over Financial Reporting

Ongoing Remediation Plan

Management, under the oversight of the Audit Committee of the Board of Directors, has continued to implement measures designed to improve our internal control over financial reporting to remediate the identified material weaknesses. The Company began remediating the material weaknesses during the first quarter of 2020 and continues to do so through the date of this report. The Company’s remediation efforts have included initial assessments of existing internal control over financial reporting and its internal and external accounting resources. While the Company has completed the initial assessments, it will continue monitoring and assessing on a continuing basis.

As part of the Company’s initial assessment of its existing internal control over financial reporting, the Company identified missing or inadequately designed controls and is in the process of remediating. The Company anticipates that its control improvement efforts will be completed during 2021. Once all appropriately designed controls are in place, they will need to be operating for a sufficient period of time prior to concluding they are operating effectively.

The Company engaged outside consultants to assist with various accounting and financial reporting matters in the first quarter of 2020 and began assessing the need for hiring of additional accounting and financial reporting resources. As of the date of the filing of this report, the Company has hired several internal resources, including a vice president of finance and reporting. The Company will continue assessing its needs for both internal and external resources going forward.

While we believe that these efforts have improved, and will continue to improve our internal control over financial reporting, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, or that we may take in the future, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses. Accordingly, there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in various claims and legal actions in the ordinary course of business. We are not currently involved in any material legal proceedings outside the ordinary course of our business.

Item 1A. Risk Factors

There have been no material changes to the risk factors that were disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Description
3.1		Restated Certificate of Incorporation of MedAmerica Properties Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed April 15, 2010)

3.2		Certificate of Amendment of Certificate of Incorporation of B.H.I.T. Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on January 6, 2010)

3.3		Certificate of Correction. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 14, 2011)

3.4		Certificate of Amendment of Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to the company’s Current Report on Form 8-K, filed on June 19, 2017)

3.5		Certificate of Amendment of Certificate of Incorporation of MedAmerica Properties Inc., filed with the Delaware Secretary of State on December 27, 2019. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on December 27, 2019)

3.6		Amended and Restated Bylaws of Broad Street Realty, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on December 27, 2019)

10.1		Allonge and Modification Agreement, dated as of March 30, 2021. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on April 5, 2020)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Broad Street Realty, Inc.

Date: May 17, 2021	By:	/s/ Michael Z. Jacoby
		Michael Z. Jacoby
		Chief Executive Officer
		(principal executive officer)

Date: May 17, 2021	By:	/s/ Alexander Topchy
		Alexander Topchy
		Chief Financial Officer and Secretary
		(principal financial and accounting officer)