Modiv Industrial, Inc. (“Modiv Industrial”, “Modiv”, the
“Company”, “we” or “our”), (NYSE:MDV), the only public REIT
exclusively focused on acquiring industrial manufacturing real
estate, today announced operating results for the third quarter
ended September 30, 2024.
The following is a statement from Aaron Halfacre, CEO of Modiv
Industrial:
“The past few months the American public has been bombarded with
so many hyperactive headlines and speculative soundbites, both
political and economic. The pummeling and abrasion from all the
information noise have led to fatigue and frustration. Many of us
just want to get back to living. Some of you, at least right now,
might be tired of the opinion spewing. As the adage goes, opinions
are like arseholes, we all have them and if you get too close you
may notice an unpleasant aroma. Facts, on the other hand, bring
about certainty and the truth is a wonderful disinfectant that can
readily cleanse any situation. If you are reading this right after
the election and right before the next Fed meeting, then it means
we aren’t yet done with all the aromatic pontification, so we are
going to scrub this quarter’s missive to the most basic of hygienic
facts in hopes that you can have a time dividend to get on with
your pursuit of a better life for yourself and your loved ones.
Third quarter AFFO was 34 cents per share – a penny higher than
this time last year and a penny above consensus. In September we
executed an eight-year lease extension, to February 2034, for our
San Diego, CA, property leased to WSP. In October, we executed a
five-year lease extension, to October 2030, for our San Carlos, CA,
property leased to Labcorp. Since our last earnings release, we
have raised $3.9 million on our ATM Offering at an average price of
$16.54. Fist bump.
Wanting more? No problem. We’re currently working on another
UPREIT transaction for an industrial property located in the
Jacksonville, FL MSA that, should it pass our final due diligence
this month, would result in us issuing approximately $6 million in
OP units at $17.00 per share for a completely unlevered acquisition
priced at an accretive cap rate. This transaction, when combined
with our recent ATM activity, calculates to roughly 600,000
shares/units being issued at an average price of $16.80, which
further computes to a full $1.2 million profit on the same amount
of equity we bought back just last quarter at $14.80. We’re working
hard to make you money.
There’s just one more present under the tree. We recommended to
our Board of Directors that we increase our annual dividend rate,
paid monthly, to $1.17, and they approved!
Ok, we will get back to getting sh-t done in hopes that we can
share more good news by our next earnings release. If you haven’t
already done so, vote your proxy for our annual meeting in
December.
P.S. – I wish to personally thank all of you out there who have
emailed us to say how much you like our transparent and candid
style. We care deeply about the individual investor, so it comes to
us naturally. Please feel free to email us at management@modiv.com.
I plan to share the questions and critiques we receive in an
upcoming communication.
Grit, grind, get it done!” Aaron Halfacre, CEO of Modiv
Industrial.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors
will be held on Wednesday, November 6, 2024, at 11:00 a.m. Eastern
Time / 8:00 a.m. Pacific Time, to discuss the third quarter 2024
operating results and answer questions.
Live conference call: 1-877-407-0789 or 1-201-689-8562 at
11:00 a.m. Eastern Time, Wednesday, November 6, 2024
Webcast: To listen to the webcast, either live or
archived, please use this link
https://viavid.webcasts.com/starthere.jsp?ei=1693498&tp_key=a423007083
or visit the investor relations page of Modiv’s website at
www.modiv.com.
About Modiv Industrial
Modiv Industrial, Inc. is an internally managed REIT that is
focused on single-tenant net-lease industrial manufacturing real
estate. The Company actively acquires critical industrial
manufacturing properties with long-term leases to tenants that fuel
the national economy and strengthen the nation’s supply chains. For
more information, please visit: www.modiv.com.
Forward-looking Statements
Certain statements contained in this press release, other than
historical facts, may be considered forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to,
statements regarding our plans, strategies and prospects, both
business and financial. Such forward-looking statements are subject
to various risks and uncertainties, including but not limited to
those described under the section entitled “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2023 filed with the SEC on March 7, 2024. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this press release and in the Company’s other
filings with the SEC. Any forward-looking statements herein speak
only as of the time when made and are based on information
available to the Company as of such date and are qualified in their
entirety by this cautionary statement. The Company assumes no
obligation to revise or update any such statement now or in the
future, unless required by law.
Notice Involving Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this press release
and the supplemental financial and operating report included in our
Form 8-K dated November 6, 2024 contain and may refer to certain
non-GAAP financial measures. These non-GAAP financial measures are
in addition to, not a substitute for or superior to, measures of
financial performance prepared in accordance with GAAP. These
non-GAAP financial measures should not be considered replacements
for, and should be read together with, the most comparable GAAP
financial measures. Reconciliations to the most directly comparable
GAAP financial measures and statements of why management believes
these measures are useful to investors are provided below.
AFFO is a measure that is not calculated in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). See the Reconciliation of Non-GAAP Measures later
in this press release.
The Company defines “initial cap rate” for property acquisitions
as the initial annual cash rent divided by the purchase price of
the property. The Company defines “weighted average cap rate” for
property acquisitions as the average annual cash rent including
rent escalations over the lease term, divided by the purchase price
of the property.
MODIV INDUSTRIAL, INC.
Condensed Consolidated
Statements of Operations
For the Three and Nine Months
Ended September 30, 2024 and 2023
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Income: Rental income
$
11,589,370
$
12,500,338
$
34,833,458
$
34,648,083
Management fee income
65,993
65,991
197,979
197,978
Total income
11,655,363
12,566,329
35,031,437
34,846,061
Expenses: General and administrative
1,660,520
1,735,104
5,078,814
5,240,935
Stock compensation expense
75,000
8,469,867
1,521,002
9,790,206
Depreciation and amortization
4,166,992
4,175,209
12,437,021
11,403,603
Property expenses
1,025,051
1,195,224
2,703,076
4,429,936
Impairment of real estate property
-
-
-
3,499,438
Total expenses
6,927,563
15,575,404
21,739,913
34,364,118
Gain (loss) on sale of real estate investments, net
172,001
(1,708,801
)
3,359,807
(1,708,801
)
Operating income (loss)
4,899,801
(4,717,876
)
16,651,331
(1,226,858
)
Other income (expense): Interest income
81,622
26,386
403,344
296,921
Dividend income
-
190,000
113,328
190,000
Income from unconsolidated investment in a real estate property
74,509
79,166
222,574
207,506
Interest expense, including unrealized gain or loss on interest
rate swaps and net of derivative settlements
(6,103,668
)
(2,922,918
)
(12,514,167
)
(6,761,779
)
Loss on sale of investment in common stock
-
-
(4,513
)
-
Increase (decrease) in fair value of investment in preferred and
common stock
-
440,000
(20,574
)
440,000
Other expense, net
(5,947,537
)
(2,187,366
)
(11,800,008
)
(5,627,352
)
Net (loss) income
(1,047,736
)
(6,905,242
)
4,851,323
(6,854,210
)
Less: net loss (income) attributable to noncontrolling interests in
Operating Partnership
461,334
1,368,896
(388,349
)
1,535,452
Net (loss) income attributable to Modiv Industrial, Inc.
(586,402
)
(5,536,346
)
4,462,974
(5,318,758
)
Preferred stock dividends
(921,875
)
(921,875
)
(2,765,625
)
(2,765,625
)
Net (loss) income attributable to common stockholders
$
(1,508,277
)
$
(6,458,221
)
$
1,697,349
$
(8,084,383
)
Net (loss) income per share attributable to common
stockholders: Basic
$
(0.18
)
$
(0.86
)
$
0.19
$
(1.06
)
Net (loss) income per share attributable to common stockholders and
noncontrolling interests: Diluted
$
(0.18
)
$
(0.86
)
$
0.19
$
(1.06
)
Weighted-average number of common shares outstanding: Basic
9,430,885
7,548,052
9,151,287
7,537,505
Weighted-average number of common shares and Class C OP Units
outstanding: Diluted
10,959,030
9,147,950
11,245,080
9,041,564
Distributions declared per common share
$
0.2875
$
0.2875
$
0.8625
$
0.8625
MODIV INDUSTRIAL, INC. Condensed Consolidated
Balance Sheets As of September 30, 2024 and December 31,
2023 (Unaudited) September 30, 2024
December 31, 2023 Assets
Real estate investments: Land
$
106,211,873
$
104,858,693
Building and improvements
405,065,910
399,666,781
Equipment
4,429,000
4,429,000
Tenant origination and absorption costs
15,833,293
15,707,458
Total investments in real estate property
531,540,076
524,661,932
Accumulated depreciation and amortization
(63,338,634
)
(50,901,612
)
Total real estate investments, net, excluding unconsolidated
investment in real estate property and real estate investments held
for sale, net
468,201,442
473,760,320
Unconsolidated investment in a real estate property
9,490,189
10,053,931
Total real estate investments, net, excluding real estate
investments held for sale, net
477,691,631
483,814,251
Real estate investments held for sale, net
-
11,557,689
Total real estate investments, net
477,691,631
495,371,940
Cash and cash equivalents
6,824,847
3,129,414
Tenant deferred rent and other receivables
17,388,119
12,794,568
Above-market lease intangibles, net
1,258,460
1,313,959
Prepaid expenses and other assets
3,402,025
4,173,221
Investment in preferred stock
-
11,038,658
Interest rate swap derivative
807,337
2,970,733
Other assets related to real estate investments held for sale
-
103,337
Total assets
$
507,372,419
$
530,895,830
Liabilities and Equity Mortgage
notes payable, net
$
30,863,014
$
31,030,241
Credit facility term loan, net
248,876,279
248,508,515
Accounts payable, accrued and other liabilities
4,985,424
4,469,508
Distributions payable
1,962,762
12,174,979
Below-market lease intangibles, net
8,178,307
8,868,604
Interest rate swap derivative
755,490
473,348
Other liabilities related to real estate investments held for sale
-
248,727
Total liabilities
295,621,276
305,773,922
Commitments and contingencies 7.375% Series A
cumulative redeemable perpetual preferred stock, $0.001 par value,
2,000,000 shares authorized, issued and outstanding as of September
30, 2024 and December 31, 2023 with an aggregate liquidation value
of $50,000,000
2,000
2,000
Class C common stock, $0.001 par value, 300,000,000 shares
authorized; 10,022,085 shares issued and 9,554,766 shares
outstanding as of September 30, 2024 and 8,048,110 shares issued
and 7,704,600 shares outstanding as of December 31, 2023
10,022
8,048
Class S common stock, $0.001 par value, 100,000,000 shares
authorized; no shares issued and outstanding as of September 30,
2024 and December 31, 2023
-
-
Additional paid-in-capital
343,216,935
292,617,486
Treasury stock, at cost, 467,319 and 343,510 shares held as of
September 30, 2024 and December 31, 2023, respectively
(7,111,921
)
(5,290,780
)
Cumulative distributions and net losses
(151,893,580
)
(145,551,586
)
Accumulated other comprehensive income
2,047,473
2,658,170
Total Modiv Industrial, Inc. equity
186,270,929
144,443,338
Noncontrolling interests in the Operating Partnership
25,480,214
80,678,570
Total equity
211,751,143
225,121,908
Total liabilities and equity
$
507,372,419
$
530,895,830
MODIV INDUSTRIAL, INC.
Reconciliation of Non-GAAP
Measures - FFO and AFFO
For the Three and Nine Months
Ended September 30, 2024 and 2023
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net (loss) income (in accordance with GAAP)
$
(1,047,736
)
$
(6,905,242
)
$
4,851,323
$
(6,854,210
)
Preferred stock dividends
(921,875
)
(921,875
)
(2,765,625
)
(2,765,625
)
Net (loss) income attributable to common stockholders and Class
C OP Unit holders
(1,969,611
)
(7,827,117
)
2,085,698
(9,619,835
)
FFO adjustments: Depreciation and amortization of real
estate properties
4,166,992
4,175,209
12,437,021
11,403,603
Amortization of lease incentives
1,197
40,397
(1,391
)
217,537
Depreciation and amortization for unconsolidated investment in a
real estate property
188,934
187,479
566,787
567,721
Impairment of real estate investment property
-
-
-
3,499,438
Gain (loss) on sale of real estate investments, net
(172,001
)
1,708,801
(3,359,807
)
1,708,801
FFO attributable to common stockholders and Class C OP Unit
holders
2,215,511
(1,715,231
)
11,728,308
7,777,265
AFFO adjustments: Stock compensation
75,000
8,469,867
1,521,002
9,790,206
Amortization of deferred financing costs
221,496
165,708
664,488
556,134
Abandoned pursuit costs
239,191
1,208
239,191
347,598
Amortization of deferred rents
(1,284,995
)
(1,772,403
)
(4,378,863
)
(4,528,120
)
Unrealized loss (gain) on interest rate swap valuation
2,422,801
(795,424
)
1,683,479
(2,781,840
)
Amortization of (below) above market lease intangibles, net
(211,600
)
(204,010
)
(634,798
)
(596,194
)
Loss on sale of investment in common stock
-
-
4,513
-
(Increase) decrease in fair value of investment in preferred and
common stock
-
(440,000
)
20,574
(440,000
)
Other adjustments for unconsolidated investment in a real estate
property
23,825
11,819
71,476
35,457
AFFO attributable to common stockholders and Class C OP Unit
holders
$
3,701,229
$
3,721,534
$
10,919,370
$
10,160,506
Weighted Average outstanding Shares/Units: Fully
diluted (1)
10,959,030
11,128,772
11,245,080
11,022,386
FFO Per Share/Unit: Fully diluted
$
0.20
$
(0.23
)
$
1.04
$
0.71
AFFO Per Share/Unit: Fully diluted
$
0.34
$
0.33
$
0.97
$
0.92
(1)
Includes the Class M OP Units which
automatically converted to Class C OP Units on January 30, 2024,
and Class P and Class R OP Units which automatically converted to
Class C OP Units as of March 31, 2024, to compute the fully diluted
weighted average number of shares.
In order to provide a more complete understanding of the
operating performance of a REIT, the National Association of Real
Estate Investment Trusts (“Nareit”) promulgated a measure known as
FFO. FFO is defined as net income or loss computed in accordance
with GAAP, excluding gains and losses from sales of depreciable
operating property, plus real estate-related depreciation and
amortization (excluding amortization of deferred financing costs
and depreciation of non-real estate assets), and after adjustment
for unconsolidated investments, preferred dividends and real estate
impairments. Because FFO calculations adjust for such items as
depreciation and amortization of real estate assets and gains and
losses from sales of operating real estate assets (which can vary
among owners of identical assets in similar conditions based on
historical cost accounting and useful-life estimates), they
facilitate comparisons of operating performance between periods and
between other REITs. As a result, we believe that the use of FFO,
together with the required GAAP presentations, provides a more
complete understanding of our performance relative to our
competitors and a more informed and appropriate basis on which to
make decisions involving operating, financing, and investing
activities. It should be noted, however, that other REITs may not
define FFO in accordance with the current Nareit definition or may
interpret the current Nareit definition differently than we do,
making comparisons less meaningful.
Additionally, we use AFFO as a non-GAAP financial measure to
evaluate our operating performance. AFFO excludes non-routine and
certain non-cash items such as stock-based compensation,
amortization of deferred rent, amortization of below/above market
lease intangibles, amortization of deferred financing costs, gain
or loss from the extinguishment of debt, unrealized gains (losses)
on derivative instruments, and write-offs of due diligence expenses
for abandoned pursuits. We also believe that AFFO is a recognized
measure of sustainable operating performance of the REIT industry.
Further, we believe AFFO is useful in comparing the sustainability
of our operating performance with the sustainability of the
operating performance of other real estate companies. Management
believes that AFFO is a beneficial indicator of our ongoing
portfolio performance and ability to sustain our current
distribution level. More specifically, AFFO isolates the financial
results of our operations. AFFO, however, is not considered an
appropriate measure of historical earnings as it excludes certain
significant costs that are otherwise included in reported earnings.
Further, since the measure is based on historical financial
information, AFFO for the period presented may not be indicative of
future results or our future ability to pay our dividends. By
providing FFO and AFFO, we present information that assists
investors in aligning their analysis with management’s analysis of
long-term operating activities.
For all of these reasons, we believe the non-GAAP measures of
FFO and AFFO, in addition to income or loss from operations, net
income or loss and cash flows from operating activities, as defined
by GAAP, are helpful supplemental performance measures and useful
to investors in evaluating the performance of our real estate
portfolio. AFFO is useful in assisting management and investors in
assessing our ongoing ability to generate cash flow from operations
and continue as a going concern in future operating periods.
However, a material limitation associated with FFO and AFFO is that
they are not indicative of our cash available to fund distributions
since other uses of cash, such as capital expenditures at our
properties and principal payments of debt, are not deducted when
calculating FFO and AFFO. Therefore, FFO and AFFO should not be
viewed as a more prominent measure of performance than income or
loss from operations, net income (loss) or cash flows from
operating activities and each should be reviewed in connection with
GAAP measurements.
Neither the SEC, Nareit, nor any other applicable body has
opined on the acceptability of the adjustments contemplated to
adjust FFO in order to calculate AFFO and its use as a non-GAAP
performance measure. In the future, the SEC or Nareit may decide to
standardize the allowable exclusions across the REIT industry, and
we may have to adjust the calculation and characterization of this
non-GAAP measure.
MODIV INDUSTRIAL, INC.
Reconciliation of Non-GAAP
Measures - Adjusted EBITDA
For the Three and Nine Months
Ended September 30, 2024 and 2023
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net (loss) income (in accordance with GAAP)
$
(1,047,736
)
$
(6,905,242
)
$
4,851,323
$
(6,854,210
)
Depreciation and amortization of real estate properties
4,166,992
4,175,209
12,437,021
11,403,603
Depreciation and amortization for unconsolidated investment in a
real estate property
188,934
187,479
566,787
567,721
Interest expense, including unrealized gain or loss on interest
rate swaps and net of derivative settlements
6,103,668
2,922,918
12,514,167
6,761,779
Interest expense for unconsolidated investment in real estate
property
94,045
96,375
281,929
287,794
Impairment of real estate investment property
-
-
-
3,499,438
Stock compensation expense
75,000
8,469,867
1,521,002
9,790,206
(Gain) loss on sale of real estate investments, net
(172,001
)
1,708,801
(3,359,807
)
1,708,801
Abandoned pursuit costs
239,191
1,208
239,191
347,598
Loss on sale of investment in common stock
-
-
4,513
-
(Increase) decrease in fair value of investment in preferred and
common stock
-
(440,000
)
20,574
(440,000
)
Adjusted EBITDA
$
9,648,093
$
10,216,615
$
29,076,700
$
27,072,730
Annualized Adjusted EBITDA
$
38,592,372
$
40,866,460
$
38,768,933
$
36,096,973
Net debt: Consolidated debt
$
281,011,068
$
284,284,849
$
281,011,068
$
284,284,849
Debt of unconsolidated investment in real estate property (a)
9,078,403
9,315,322
9,078,403
9,315,322
Consolidated cash and cash equivalents
(6,824,847
)
(5,641,610
)
(6,824,847
)
(5,641,610
)
Cash of unconsolidated investment in real estate property (a)
(310,219
)
(387,278
)
(310,219
)
(387,278
)
$
282,954,405
$
287,571,283
$
282,954,405
$
287,571,283
Net debt / Adjusted EBITDA 7.3x 7.0x 7.3x 8.0x
(a)
Reflects the Company's 72.71% pro rata
share of the tenant-in-common's mortgage note payable and cash.
We define Net Debt as gross debt less cash and cash equivalents.
We define Adjusted EBITDA as GAAP net income or loss adjusted to
exclude real estate related depreciation and amortization, gains or
losses from the sales of depreciable property, extraordinary items,
provisions for impairment on real estate investments and goodwill,
interest expense, non-cash items such as stock compensation and
write-offs of transaction costs and other one-time transactions. We
believe these non-GAAP financial measures are useful to investors
because they are widely accepted industry measures used by analysts
and investors to compare the operating performance of REITs. EBITDA
is not a measure of financial performance under GAAP, and our
EBITDA may not be comparable to similarly titled measures of other
companies. You should not consider our EBITDA as an alternative to
net income or cash flows from operating activities determined in
accordance with GAAP.
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Inquiries: management@modiv.com
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