Exhibit 99.1
Modiv Industrial Announces Second Quarter 2024 Results
Reno, Nevada, August 6, 2024 – 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 second quarter ended June 30, 2024.
Highlights:
|
• |
Second quarter rental income of $11.3 million. Due to the elimination of some non-NNN tenant reimbursements related to the August 2023 portfolio disposition of 13 properties,
rental income decreased $493,000. Concurrently during the quarter, we benefitted from an $834,000 decrease in property expenses and $179,000 decrease in G&A.
|
|
• |
Second quarter AFFO of $3.9 million increased by $575,000, or 17.3% year over year.
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|
• |
On July 15, 2024, we completed the acquisition of an industrial manufacturing property for $5.2 million with a company that produces optical systems for the defense and aerospace
industries. The property is located in the Tampa Florida MSA and the tenant entered into a 20-year lease, with 2.85% annual rent escalations, at an initial cap rate of 8.0% and a weighted average cap rate of 10.6%.
|
|
• |
On August 1, 2024, we repurchased 656,191 Class C units in our operating partnership and 123,809 shares of MDV common stock from First City Investment Group, LLC based on the
10-day average closing price as of July 29, 2024 of $14.80 per share for a total of $11,544,000. These units and shares were originally issued at $25.00 in January 2022, representing an accretive full-cycle transaction of nearly $8 million.
The reduction of shares outstanding from this repurchase results in an increased AFFO per diluted share for the recent quarter of $0.37 on a pro forma basis assuming the repurchase occurred at the beginning of the quarter. This repurchase
also terminates a tax protection agreement thereby allowing the KIA auto dealership property to be recycled to buy additional industrial manufacturing assets.
|
|
• |
Fully covered dividend yield of 7.79% based on our closing price of $14.76 on August 5, 2024.
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“We’re back…it’s been a little more than three months since our last earnings release…what a summer. For those who
are reading this for the first time, I encourage you to pull up the prior quarter press releases as each of these missives ties to the other. This summer has been very similar to spring with still more price volatility, economic uncertainty and
geo-political risk. Modiv stock, along with other REITs, has seen whipsaw price action as the market seems to swoon with admiration or hide with fright on any given day. As of this writing, the market appears to be hot to trot for some big (and
quick) rate cuts – not too dissimilar to the market’s mood back in December. We hope it happens this time (but ideally not on the heels of an economic meltdown), but we are fully prepared for a meaningful rate cut not to happen for a while should
that be the case.
If volatility and uncertainty are the malady, then patience and discipline are the medicine. With abundant patience
and ironclad discipline, the price volatility and economic/political uncertainty we’ve all experienced is simply data that should be used to inform, not emote. That’s been our approach even though it hasn’t always been fun. As they say, patience
begets patience – what you gain from patience is the ability to continue to be patient. Same holds true for discipline. Not sexy, but it works and, most importantly, it is working for us.
To be fair, we are not a stone-cold company bereft of sentiment. In fact, we have a great sense of calm knowing
that our company is stronger than it has ever been – we are ideally poised for the winds of fortune should they choose to blow our way. We also hold a sense of balanced optimism that the market tumult experienced by asset-intensive companies will
come full circle eventually. However, trying to guess when that happens could make one sick so we will stick to taking our medicine. Grit, grind, get it done!
Business Outlook:
Acquisition Activity – You may have
noticed above that the Tampa-MSA acquisition had a closing purchase price of $5.2 million but last quarter’s release we noted that the LOI we had signed was for $6.4 million. When we first entered into the LOI, it was for the main building (which
we ultimately ended up acquiring) and a second, smaller building. After we completed our site tour (I physically tour every purchase along with Bill Broms, our CIO), we identified that the second building wasn’t in the same line of business and
after conducting some additional due diligence decided we weren’t a buyer of that asset. Consistent with our disciplined approach, we offered the seller a choice: we can walk away from both or we can drop the second building.
Yes, it is a small purchase, but it is accretive, and we always want to make sure each dollar of capital deployed is working hard as it can to create value.
We continue to look at individual acquisitions but currently have not found a single asset acquisition that compels us.
Share Repurchase – Way, way back in
the fall of 2021, before we had listed on the NYSE, back when interest rates had a 3-handle, and before we had conflicts in the Ukraine and Gaza (so basically ancient history)… we entered into negotiations with the then owner of the KIA auto
dealership property which is attractively located along the 405 freeway in Los Angeles County. The owner was looking to shelter taxes on the potential sale of the property and we offered a 721 exchange/UPREIT transaction. The sale leaseback
transaction that we entered into resulted in an accretive equity issuance in January 2022 of $32.8 million at a share price of $25.00.
Flash forward to 2Q24, after all the market carnage we have witnessed over the past two years, when the owner of the shares we had issued at $25 reached out
to us seeking liquidity to pursue another attractive investment opportunity. On a per share basis, the math was a no-brainer, so we entered into a transaction that allowed us to accretively repurchase a large block of the shares (59% of the original
total) at a price of $14.80 – a nearly $8 million “green trade” and over 100 bps net effective improvement in the cap rate on that asset. Another example of us making sure each dollar of capital deployed is “earning its keep”.
Discussions with Potential Strategic Partners – For several
quarters now we have been keeping you apprised of our ongoing discussions with potential strategic partners with the view that affording you the most transparency that we can helps to better inform you, the investor. In our last earnings release I
metaphorically described two battleships, one located alongside the English shore and the other located along the shore of Miami. As of this writing, we have entered into a non-binding LOI with the Miami shore battleship. This LOI, which is subject
to satisfactorily addressing several contingencies that may or may not be met (meaning this might not happen), contemplates Modiv entering into a non-controlling joint venture arrangement whereby we would acquire a less-than-majority (but
meaningful) stake in their portfolio of industrial manufacturing assets. The real estate private equity firm that steers the battleship is a savvy and respected enterprise that we believe makes for an ideal joint venture partner. We do not
anticipate the JV growing in size after we enter into it and, under the right market conditions, would be pleased to have the opportunity to acquire all or some of the assets in the future. We would be acquiring said JV stake with a mix of cash and
stock, with the stock being issued at a premium price comfortably above our 30, 60, 90, 120 and 180-day VWAP ranges. The negotiated cap rate is attractive and this transaction will be accretive, even before taking into consideration the host of
other strategic benefits it brings.
Next steps for us, and the other battleship, are to clear the contingencies and then enter into a formal purchase agreement. We are contemplating this
transaction as a “sign and close” so the next time you will most likely hear from on us on this topic will be either an 8-K disclosing the consummation of the deal or a future 10-Q where we tell you why it didn’t close. That being said, we know their
portfolio well, I have toured each one of the assets personally, and there is a natural complement to us both in terms of industry and location.
It is also worth noting that we are still in discussions with the English shore battleship (in fact, I spoke to them last week), which means we could
potentially enter into another transaction at some point down the road.
Gratitude – I want to take a
special moment to express how thankful I am for the contributions made by Adam Markman and Curtis McWilliams as members of our board of directors. They first joined our board five years ago and have been instrumental in our evolution. They have
informed us of their intent not to stand for reelection and I felt it important to recognize their positive impact over these many years. Change is inevitable in life and, on behalf of Modiv, I wish them the very best in their future endeavors.
Personally, I wish to stand tall, shoulders back, and offer them a sharp salute for their service. Thank you gentleman, it’s been an honor.
Ok, that wraps it up. Zulu Foxtrot Golf. Back to the grindstone!” – Aaron Halfacre, CEO of Modiv Industrial.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors will be held on Tuesday, August 6, 2024, at 10:30 a.m. Eastern Time / 7:30 a.m. Pacific
Time, to discuss the second quarter 2024 operating results and answer questions.
Live conference call: 1-877-407-0789
or 1-201-689-8562 at 10:30 a.m. Eastern Time, Tuesday, August 6, 2023
Webcast: To listen
to the webcast, either live or archived, please use this link https://viavid.webcasts.com/starthere.jsp?ei=1683079&tp_key=e72f68c908 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 August
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.
Inquiries:
management@modiv.com
MODIV INDUSTRIAL, INC.
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
11,343,521
|
|
|
$
|
11,836,563
|
|
|
$
|
23,244,088
|
|
|
$
|
22,147,745
|
|
Management fee income
|
|
|
65,993
|
|
|
|
65,993
|
|
|
|
131,986
|
|
|
|
131,987
|
|
Total income
|
|
|
11,409,514
|
|
|
|
11,902,556
|
|
|
|
23,376,074
|
|
|
|
22,279,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,418,893
|
|
|
|
1,597,776
|
|
|
|
3,418,294
|
|
|
|
3,505,831
|
|
Stock compensation expense
|
|
|
67,500
|
|
|
|
660,170
|
|
|
|
1,446,002
|
|
|
|
1,320,339
|
|
Depreciation and amortization
|
|
|
4,136,528
|
|
|
|
3,956,334
|
|
|
|
8,270,029
|
|
|
|
7,228,394
|
|
Property expenses
|
|
|
694,043
|
|
|
|
1,527,868
|
|
|
|
1,678,025
|
|
|
|
3,234,712
|
|
Impairment of real estate investment property
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,499,438
|
|
Total expenses
|
|
|
6,316,964
|
|
|
|
7,742,148
|
|
|
|
14,812,350
|
|
|
|
18,788,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of real estate investments, net
|
|
|
-
|
|
|
|
-
|
|
|
|
3,187,806
|
|
|
|
-
|
|
Operating income
|
|
|
5,092,550
|
|
|
|
4,160,408
|
|
|
|
11,751,530
|
|
|
|
3,491,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
197,883
|
|
|
|
216,841
|
|
|
|
321,722
|
|
|
|
270,535
|
|
Dividend income
|
|
|
4,955
|
|
|
|
-
|
|
|
|
113,328
|
|
|
|
-
|
|
Income from unconsolidated investment in a real estate property
|
|
|
74,211
|
|
|
|
72,773
|
|
|
|
148,065
|
|
|
|
128,340
|
|
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements
|
|
|
(4,103,350
|
)
|
|
|
179,931
|
|
|
|
(6,410,499
|
)
|
|
|
(3,838,861
|
)
|
Loss on sale of investment in common stock
|
|
|
(4,513
|
)
|
|
|
-
|
|
|
|
(4,513
|
)
|
|
|
-
|
|
Decrease in fair value of investment in common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,574
|
)
|
|
|
-
|
|
Other (expense) income, net
|
|
|
(3,830,814
|
)
|
|
|
469,545
|
|
|
|
(5,852,471
|
)
|
|
|
(3,439,986
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,261,736
|
|
|
|
4,629,953
|
|
|
|
5,899,059
|
|
|
|
51,032
|
|
Less: net loss (income) attributable to noncontrolling interest in Operating Partnership
|
|
|
63,181
|
|
|
|
(649,643
|
)
|
|
|
(849,683
|
)
|
|
|
166,556
|
|
Net income (loss) attributable to Modiv Industrial, Inc.
|
|
|
1,324,917
|
|
|
|
3,980,310
|
|
|
|
5,049,376
|
|
|
|
217,588
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(1,843,750
|
)
|
|
|
(1,843,750
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
403,042
|
|
|
$
|
3,058,435
|
|
|
$
|
3,205,626
|
|
|
$
|
(1,626,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
0.41
|
|
|
$
|
0.36
|
|
|
$
|
(0.22
|
)
|
Net income (loss) per share attributable to common stockholders and noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.35
|
|
|
$
|
0.36
|
|
|
$
|
(0.22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
9,441,485
|
|
|
|
7,532,106
|
|
|
|
9,002,819
|
|
|
|
7,532,080
|
|
Diluted
|
|
|
11,419,115
|
|
|
|
10,638,311
|
|
|
|
11,389,106
|
|
|
|
7,532,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share
|
|
$
|
0.2875
|
|
|
$
|
0.2875
|
|
|
$
|
0.5750
|
|
|
$
|
0.5750
|
|
MODIV INDUSTRIAL, INC.
Condensed Consolidated Balance Sheets
As of June 30, 2024 and December 31, 2023
(Unaudited)
|
|
|
June 30, 2024
|
|
|
December 31, 2023
|
|
Assets
|
|
|
|
|
|
|
Real estate investments:
|
|
|
|
|
|
|
Land
|
|
$
|
104,858,693
|
|
|
$
|
104,858,693
|
|
Building and improvements
|
|
|
399,880,932
|
|
|
|
399,666,781
|
|
Equipment
|
|
|
4,429,000
|
|
|
|
4,429,000
|
|
Tenant origination and absorption costs
|
|
|
15,707,458
|
|
|
|
15,707,458
|
|
Total investments in real estate property
|
|
|
524,876,083
|
|
|
|
524,661,932
|
|
Accumulated depreciation and amortization
|
|
|
(59,171,642
|
)
|
|
|
(50,901,612
|
)
|
Total real estate investments, net, excluding unconsolidated investment in real estate property and real estate investments held for sale, net
|
|
|
465,704,441
|
|
|
|
473,760,320
|
|
Unconsolidated investment in a real estate property
|
|
|
9,656,786
|
|
|
|
10,053,931
|
|
Total real estate investments, net, excluding real estate investments held for sale, net
|
|
|
475,361,227
|
|
|
|
483,814,251
|
|
Real estate investments held for sale, net
|
|
|
-
|
|
|
|
11,557,689
|
|
Total real estate investments, net
|
|
|
475,361,227
|
|
|
|
495,371,940
|
|
Cash and cash equivalents
|
|
|
18,869,651
|
|
|
|
3,129,414
|
|
Tenant deferred rent and other receivables
|
|
|
16,064,411
|
|
|
|
12,794,568
|
|
Above-market lease intangibles, net
|
|
|
1,276,959
|
|
|
|
1,313,959
|
|
Prepaid expenses and other assets
|
|
|
5,228,889
|
|
|
|
4,173,221
|
|
Investment in preferred stock
|
|
|
-
|
|
|
|
11,038,658
|
|
Interest rate swap derivatives
|
|
|
2,730,521
|
|
|
|
2,970,733
|
|
Other assets related to real estate investments held for sale
|
|
|
-
|
|
|
|
103,337
|
|
Total assets
|
|
$
|
519,531,658
|
|
|
$
|
530,895,830
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Mortgage notes payable, net
|
|
$
|
30,927,344
|
|
|
$
|
31,030,241
|
|
Credit facility term loan, net
|
|
|
248,753,691
|
|
|
|
248,508,515
|
|
Accounts payable, accrued and other liabilities
|
|
|
3,728,094
|
|
|
|
4,469,508
|
|
Distributions payable
|
|
|
2,018,679
|
|
|
|
12,174,979
|
|
Below-market lease intangibles, net
|
|
|
8,408,406
|
|
|
|
8,868,604
|
|
Interest rate swap derivative
|
|
|
-
|
|
|
|
473,348
|
|
Other liabilities related to real estate investments held for sale
|
|
|
-
|
|
|
|
248,727
|
|
Total Liabilities
|
|
|
293,836,214
|
|
|
|
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 June 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; 9,825,586 shares issued and 9,482,076 shares outstanding as of June 30,
2024 and 8,048,110 shares issued and 7,704,600 shares outstanding as of December 31, 2023
|
|
|
9,825
|
|
|
|
8,048
|
|
Class S common stock, $0.001 par value, 100,000,000 shares authorized; no shares issued and outstanding as of June 30, 2024
and December 31, 2023
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in-capital
|
|
|
337,780,646
|
|
|
|
292,617,486
|
|
Treasury stock, at cost, 343,510 shares held as of June 30, 2024 and December 31, 2023
|
|
|
(5,290,780
|
)
|
|
|
(5,290,780
|
)
|
Cumulative distributions and net losses
|
|
|
(147,660,654
|
)
|
|
|
(145,551,586
|
)
|
Accumulated other comprehensive income
|
|
|
2,140,570
|
|
|
|
2,658,170
|
|
Total Modiv Industrial, Inc. equity
|
|
|
186,981,607
|
|
|
|
144,443,338
|
|
Noncontrolling interests in the Operating Partnership
|
|
|
38,713,837
|
|
|
|
80,678,570
|
|
Total equity
|
|
|
225,695,444
|
|
|
|
225,121,908
|
|
Total liabilities and equity
|
|
$
|
519,531,658
|
|
|
$
|
530,895,830
|
|
MODIV INDUSTRIAL, INC.
Reconciliation of Non-GAAP Measures - FFO and AFFO
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
Net income (in accordance with GAAP)
|
|
$
|
1,261,736
|
|
|
$
|
4,629,953
|
|
|
$
|
5,899,059
|
|
|
$
|
51,032
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(1,843,750
|
)
|
|
|
(1,843,750
|
)
|
Net income (loss) attributable to common stockholders and Class C OP Unit holders
|
|
|
339,861
|
|
|
|
3,708,078
|
|
|
|
4,055,309
|
|
|
|
(1,792,718
|
)
|
FFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate properties
|
|
|
4,136,528
|
|
|
|
3,956,334
|
|
|
|
8,270,029
|
|
|
|
7,228,394
|
|
Amortization of deferred lease incentives
|
|
|
1,198
|
|
|
|
88,570
|
|
|
|
(2,588
|
)
|
|
|
177,140
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
188,934
|
|
|
|
186,069
|
|
|
|
377,853
|
|
|
|
380,242
|
|
Impairment of real estate investment property
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,499,438
|
|
Gain on sale of real estate investments, net
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,187,806
|
)
|
|
|
-
|
|
FFO attributable to common stockholders and Class C OP Unit holders
|
|
|
4,666,521
|
|
|
|
7,939,051
|
|
|
|
9,512,797
|
|
|
|
9,492,496
|
|
AFFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
67,500
|
|
|
|
660,170
|
|
|
|
1,446,002
|
|
|
|
1,320,339
|
|
Deferred financing costs
|
|
|
221,495
|
|
|
|
195,213
|
|
|
|
442,992
|
|
|
|
390,426
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
-
|
|
|
|
3,848
|
|
|
|
-
|
|
|
|
346,390
|
|
Amortization of deferred rents
|
|
|
(1,422,070
|
)
|
|
|
(1,580,358
|
)
|
|
|
(3,093,868
|
)
|
|
|
(2,755,717
|
)
|
Unrealized loss (gain) on interest rate swap valuation
|
|
|
550,042
|
|
|
|
(3,708,598
|
)
|
|
|
(739,322
|
)
|
|
|
(1,986,416
|
)
|
Amortization of (below) above market lease intangibles, net
|
|
|
(211,599
|
)
|
|
|
(195,901
|
)
|
|
|
(423,198
|
)
|
|
|
(392,184
|
)
|
Loss on sale of investment in common stock
|
|
|
4,513
|
|
|
|
-
|
|
|
|
4,513
|
|
|
|
-
|
|
Decrease in fair value of investment in common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
20,574
|
|
|
|
-
|
|
Other adjustments for unconsolidated investment in a real estate property
|
|
|
23,826
|
|
|
|
11,819
|
|
|
|
47,651
|
|
|
|
23,638
|
|
AFFO attributable to common stockholders and Class C OP Unit holders
|
|
$
|
3,900,228
|
|
|
$
|
3,325,244
|
|
|
$
|
7,218,141
|
|
|
$
|
6,438,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
9,441,485
|
|
|
|
7,532,106
|
|
|
|
9,002,819
|
|
|
|
7,532,080
|
|
Fully diluted (1)
|
|
|
11,419,115
|
|
|
|
10,638,311
|
|
|
|
11,389,106
|
|
|
|
10,494,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
$
|
1.05
|
|
|
$
|
1.06
|
|
|
$
|
1.26
|
|
Fully diluted
|
|
$
|
0.41
|
|
|
$
|
0.75
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
AFFO Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.41
|
|
|
$
|
0.44
|
|
|
$
|
0.80
|
|
|
$
|
0.85
|
|
Fully diluted
|
|
$
|
0.34
|
|
|
$
|
0.31
|
|
|
$
|
0.63
|
|
|
$
|
0.61
|
|
(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.
|
FFO is defined by the National Association of Real Estate Investment Trusts (“Nareit”) as net income or loss computed in accordance with GAAP, excluding
extraordinary items, as defined by GAAP, and 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 partnerships, joint ventures, preferred distributions 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 revenues in excess of cash received (“deferred rents”), stock-based compensation, amortization of in-place lease valuation intangibles, deferred financing fees, 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 by 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 (loss) from operations, net income (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 (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 regulatory 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 Six Months Ended June 30, 2024 and 2023
(Unaudited)
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
Net income (in accordance with GAAP)
|
|
$
|
1,261,736
|
|
|
$
|
4,629,953
|
|
|
$
|
5,899,059
|
|
|
$
|
51,032
|
|
Depreciation and amortization of real estate properties
|
|
|
4,136,528
|
|
|
|
3,956,334
|
|
|
|
8,270,029
|
|
|
|
7,228,394
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
188,934
|
|
|
|
186,069
|
|
|
|
377,853
|
|
|
|
380,242
|
|
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements
|
|
|
4,103,350
|
|
|
|
(179,931
|
)
|
|
|
6,410,499
|
|
|
|
3,838,861
|
|
Interest expense on unconsolidated investment in real estate property
|
|
|
93,650
|
|
|
|
95,932
|
|
|
|
187,884
|
|
|
|
191,419
|
|
Impairment of real estate investment property
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,499,438
|
|
Stock compensation expense
|
|
|
67,500
|
|
|
|
660,170
|
|
|
|
1,446,002
|
|
|
|
1,320,339
|
|
Gain on sale of real estate investments, net
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,187,806
|
)
|
|
|
-
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
-
|
|
|
|
3,848
|
|
|
|
-
|
|
|
|
346,390
|
|
Loss on sale of investment in common stock
|
|
|
4,513
|
|
|
|
-
|
|
|
|
4,513
|
|
|
|
-
|
|
Decrease in fair value of investment in common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
20,574
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
9,856,211
|
|
|
$
|
9,352,375
|
|
|
$
|
19,428,607
|
|
|
$
|
16,856,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted EBITDA
|
|
$
|
39,424,844
|
|
|
$
|
37,409,500
|
|
|
$
|
38,857,214
|
|
|
$
|
33,712,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated debt
|
|
$
|
281,082,633
|
|
|
$
|
294,361,357
|
|
|
$
|
281,082,633
|
|
|
$
|
294,361,357
|
|
Debt of unconsolidated investment in real estate property (a)
|
|
|
9,138,019
|
|
|
|
9,372,615
|
|
|
|
9,138,019
|
|
|
|
9,372,615
|
|
Consolidated cash and cash equivalents
|
|
|
(18,869,651
|
)
|
|
|
(9,912,110
|
)
|
|
|
(18,869,651
|
)
|
|
|
(9,912,110
|
)
|
Cash of unconsolidated investment in real estate property (a)
|
|
|
(298,147
|
)
|
|
|
(494,250
|
)
|
|
|
(298,147
|
)
|
|
|
(494,250
|
)
|
|
|
$
|
271,052,854
|
|
|
$
|
293,327,612
|
|
|
$
|
271,052,854
|
|
|
$
|
293,327,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt / Adjusted EBITDA
|
|
|
6.9
|
x
|
|
|
7.8
|
x
|
|
|
7.0
|
x
|
|
|
8.7
|
x
|
(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.
###
Exhibit 99.2
NYSE: MDV
QUARTERLY SUPPLEMENTAL DATA
June 30, 2024
Financial Information
and
Portfolio Information
Modiv Industrial, Inc.
Supplemental Information - Second Quarter 2024
Table of Contents
|
|
|
|
About the Data
|
3 |
|
|
|
Company Overview
|
4 |
|
|
|
Financial Results
|
|
|
Earnings Release
|
5 |
|
Consolidated Statements of Operations - Last Five Quarters
|
11 |
|
Consolidated Statements of Comprehensive Income (Loss) - Last Five Quarters
|
13 |
|
Earnings (Loss) Per Share - Last Five Quarters
|
14 |
|
FFO and AFFO - Last Five Quarters
|
15 |
|
Adjusted EBITDA - Last Five Quarters
|
17 |
|
Leverage Ratio
|
18
|
|
|
|
Balance Sheets and Capitalization
|
|
|
Capitalization
|
19 |
|
Consolidated Balance Sheets
|
20 |
|
Debt Overview
|
21 |
|
Credit Facility and Mortgage Notes Covenants
|
22 |
|
|
|
Real Estate
|
|
|
Real Estate Acquisitions
|
23 |
|
Real Estate Dispositions
|
24 |
|
Top 20 Tenants
|
25 |
|
Property Type
|
26 |
|
Tenant Industry Diversification
|
27 |
|
Tenant Geographic Diversification
|
28 |
|
Lease Expirations
|
29 |
|
|
|
Appendix
|
|
|
Disclosures Regarding Non-GAAP and Other Metrics
|
30 |
About the Data
This data and other information described herein are as of and for the three months ended June 30,
2024 unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with Modiv Industrial, Inc.'s.
Annual Report on Form 10-K for the year ended December 31, 2023 filed on March 7, 2024 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, including the financial statements and management's discussion and analysis of financial condition and results of operations filed on May 2, 2024 and August 6,
2024, respectively.
Forward-Looking Statements
Information set forth herein contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and
strategies, market opportunities, and market trends. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words.
All of the forward-looking statements herein are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future
business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions,
our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors
that could cause actual outcomes or results to differ materially from such forward-looking statements. These factors include, but are not limited to, changes in the rate of inflation and interest rates, general economic conditions, local real
estate conditions, tenant financial health, property acquisitions and dispositions and the timing of any acquisitions and dispositions, supply-chain disruptions and negative impacts associated with the violence and unrest in the Middle East, and
the ongoing Russian war against Ukraine and sanctions which have been implemented by the United States and other countries against Russia and Iran. These and other risks, assumptions, and uncertainties are described in our filings with the SEC,
which are available on the SEC’s website at www.sec.gov. You are cautioned not to place undue reliance on any forward-looking statements included herein. All forward-looking statements are made as of the date of this document and the risk that actual results, performance, and
achievements will differ materially from the expectations expressed or referenced herein will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new
information, future developments, or otherwise, except as required by law.
Company Overview
Modiv Industrial, Inc. (NYSE:MDV) (“Modiv Industrial”, the “Company”, “we”, “us” and “our”) is a real estate investment trust (“REIT”) that acquires,
owns and manages a portfolio of single-tenant net-lease 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.
Modiv Industrial strives towards a “best-in-class” corporate governance structure through a board of directors and management team with decades of
institutional real estate industry experience.
Management Team:
|
Independent Directors:
|
|
|
Aaron S. Halfacre
|
Adam S. Markman
|
Chief Executive Officer and Director
|
Chairman of the Board
|
|
|
Raymond J. Pacini
|
Curtis B. McWilliams
|
Chief Financial Officer and Secretary
|
|
|
|
John C. Raney
|
Thomas H. Nolan, Jr.
|
Chief Operating Officer and General Counsel
|
|
|
|
Sandra G. Sciutto
|
Kimberly Smith
|
Chief Accounting Officer
|
|
|
|
William R. Broms
|
Connie Tirondola
|
Chief Investment Officer
|
|
Investor Inquiries:
management@modiv.com
Transfer Agent:
Computershare Trust Company, N.A.
150 Royall Street
Canton, MA 02021
800-736-3001
Modiv Industrial Announces Second Quarter 2024 Results
Reno, Nevada, August 6, 2024 – 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 second quarter ended June 30, 2024.
Highlights:
|
• |
Second quarter rental income of $11.3 million. Due to the elimination of some non-NNN tenant reimbursements related to the August 2023 portfolio disposition of 13 properties, rental income
decreased $493,000. Concurrently during the quarter, we benefitted from an $834,000 decrease in property expenses and $179,000 decrease in G&A.
|
|
• |
Second quarter AFFO of $3.9 million increased by $575,000, or 17.3% year over year.
|
|
• |
On July 15, 2024, we completed the acquisition of an industrial manufacturing property for $5.2 million with a company that produces optical systems for the defense and
aerospace industries. The property is located in the Tampa Florida MSA and the tenant entered into a 20-year lease, with 2.85% annual rent escalations, at an initial cap rate of 8.0% and a weighted average cap rate of 10.6%.
|
|
• |
On August 1, 2024, we repurchased 656,191 Class C units in our operating partnership and 123,809 shares of MDV common stock from First City Investment Group, LLC based on the 10-day average
closing price as of July 29, 2024 of $14.80 per share for a total of $11,544,000. These units and shares were originally issued at $25.00 in January 2022, representing an accretive full-cycle transaction of nearly $8 million. The
reduction of shares outstanding from this repurchase results in an increased AFFO per diluted share for the recent quarter of $0.37 on a pro forma basis assuming the repurchase occurred at the beginning of the quarter. This repurchase
also terminates a tax protection agreement thereby allowing the KIA auto dealership property to be recycled to buy additional industrial manufacturing assets.
|
|
• |
Fully covered dividend yield of 7.79% based on our closing price of $14.76 on August 5, 2024.
|
“We’re back…it’s been a little more than three months since our last earnings release…what a summer. For those who are
reading this for the first time, I encourage you to pull up the prior quarter press releases as each of these missives ties to the other. This summer has been very similar to spring with still more price volatility, economic uncertainty and
geo-political risk. Modiv stock, along with other REITs, has seen whipsaw price action as the market seems to swoon with admiration or hide with fright on any given day. As of this writing, the market appears to be hot to trot for some big (and
quick) rate cuts – not too dissimilar to the market’s mood back in December. We hope it happens this time (but ideally not on the heels of an economic meltdown), but we are fully prepared for a meaningful rate cut not to happen for a while
should that be the case.
If volatility and uncertainty are the malady, then patience and discipline are the medicine. With abundant patience and
ironclad discipline, the price volatility and economic/political uncertainty we’ve all experienced is simply data that should be used to inform, not emote. That’s been our approach even though it hasn’t always been fun. As they say, patience
begets patience – what you gain from patience is the ability to continue to be patient. Same holds true for discipline. Not sexy, but it works and, most importantly, it is working for us.
To be fair, we are not a stone-cold company bereft of sentiment. In fact, we have a great sense of calm knowing that our company is stronger than it has ever been –
we are ideally poised for the winds of fortune should they choose to blow our way. We also hold a sense of balanced optimisim that the market tumult experienced by asset-intensive companies will come full circle eventually. However, trying to
guess when that happens could make one sick so we will stick to taking our medicine. Grit, grind, get it done!
Business Outlook:
Acquisition Activity – You may have noticed
above that the Tampa-MSA acquisition had a closing purchase price of $5.2 million but last quarter’s release we noted that the LOI we had signed was for $6.4 million. When we first entered into the LOI, it was for the main building (which we
ultimately ended up acquiring) and a second, smaller building. After we completed our site tour (I physically tour every purchase along with Bill Broms, our CIO), we identified that the second building wasn’t in the same line of business and
after conducting some additional due diligence decided we weren’t a buyer of that asset. Consistent with our disciplined approach, we offered the seller a choice: we can walk away from both or we can drop the second building.
Yes, it is a small purchase, but it is accretive, and we always want to make sure each dollar of capital deployed is working hard as it can to create value. We
continue to look at individual acquisitions but currently have not found a single asset acquisition that compels us.
Share Repurchase – Way, way back in the fall
of 2021, before we had listed on the NYSE, back when interest rates had a 3-handle, and before we had conflicts in the Ukraine and Gaza (so basically ancient history)… we entered into negotiations with the then owner of the KIA auto
dealership property which is attractively located along the 405 freeway in Los Angeles County. The owner was looking to shelter taxes on the potential sale of the property and we offered a 721 exchange/UPREIT transaction. The sale leaseback
transaction that we entered into resulted in an accretive equity issuance in January 2022 of $32.8 million at a share price of $25.00.
Flash forward to 2Q24, after all the market carnage we have witnessed over the past two years, when the owner of the shares we had issued at $25 reached out to us
seeking liquidity to pursue another attractive investment opportunity. On a per share basis, the math was a no-brainer, so we entered into a transaction that allowed us to accretively repurchase a large block of the shares (59% of the original
total) at a price of $14.80 – a nearly $8 million “green trade” and over 100 bps net effective improvement in the cap rate on that asset. Another example of us making sure each dollar of capital deployed is “earning its keep”.
Discussions with Potential Strategic Partners – For several
quarters now we have been keeping you apprised of our ongoing discussions with potential strategic partners with the view that affording you the most transparency that we can helps to better inform you, the investor. In our last earnings
release I metaphorically described two battleships, one located alongside the English shore and the other located along the shore of Miami. As of this writing, we have entered into a non-binding LOI with the Miami shore battleship. This LOI,
which is subject to satisfactorily addressing several contingencies that may or may not be met (meaning this might not happen), contemplates Modiv entering into a non-controlling joint venture arrangement whereby we would acquire a
less-than-majority (but meaningful) stake in their portfolio of industrial manufacturing assets. The real estate private equity firm that steers the battleship is a savvy and respected enterprise that we believe makes for an ideal joint venture
partner. We do not anticipate the JV growing in size after we enter into it and, under the right market conditions, would be pleased to have the opportunity to acquire all or some of the assets in the future. We would be acquiring said JV stake
with a mix of cash and stock, with the stock being issued at a premium price comfortably above our 30, 60, 90, 120 and 180-day VWAP ranges. The negotiated cap rate is attractive and this transaction will be accretive, even before taking into
consideration the host of other strategic benefits it brings.
Next steps for us, and the other battleship, are to clear the contingencies and then enter into a formal purchase agreement. We are contemplating this transaction as
a “sign and close” so the next time you will most likely hear from on us on this topic will be either an 8-K disclosing the consummation of the deal or a future 10-Q where we tell you why it didn’t close. That being said, we know their
portfolio well, I have toured each one of the assets personally, and there is a natural complement to us both in terms of industry and location.
It is also worth noting that we are still in discussions with the English shore battleship (in fact, I spoke to them last week), which means we could potentially
enter into another transaction at some point down the road.
Gratitude – I want to take a special moment
to express how thankful I am for the contributions made by Adam Markman and Curtis McWilliams as members of our board of directors. They first joined our board five years ago and have been instrumental in our evolution. They have informed us
of their intent not to stand for reelection and I felt it important to recognize their positive impact over these many years. Change is inevitable in life and, on behalf of Modiv, I wish them the very best in their future endeavors.
Personally, I wish to stand tall, shoulders back, and offer them a sharp salute for their service. Thank you gentleman, it’s been an honor.
Ok, that wraps it up. Zulu Foxtrot Golf. Back to the grindstone!” – Aaron Halfacre, CEO of Modiv Industrial.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors will be held on Tuesday, August 6, 2024, at 10:30 a.m. Eastern Time / 7:30 a.m. Pacific Time, to
discuss the second quarter 2024 operating results and answer questions.
Live conference call: 1-877-407-0789 or
1-201-689-8562 at 10:30 a.m. Eastern Time, Tuesday, August 6, 2023
Webcast: To listen to the webcast, either live
or archived, please use this link
https://viavid.webcasts.com/starthere.jsp?ei=1683079&tp_key=e72f68c908 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 August 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.
Inquiries:
management@modiv.com
Modiv Industrial, Inc.
Consolidated Statements of Operations - Last Five Quarters
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income (a)
|
|
$
|
11,343,521
|
|
|
$
|
11,900,567
|
|
|
$
|
12,288,516
|
|
|
$
|
12,500,338
|
|
|
$
|
11,836,563
|
|
Management fee income
|
|
|
65,993
|
|
|
|
65,993
|
|
|
|
65,993
|
|
|
|
65,993
|
|
|
|
65,993
|
|
Total income
|
|
|
11,409,514
|
|
|
|
11,966,560
|
|
|
|
12,354,509
|
|
|
|
12,566,331
|
|
|
|
11,902,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,418,893
|
|
|
|
1,999,401
|
|
|
|
1,402,055
|
|
|
|
1,735,104
|
|
|
|
1,597,776
|
|
Stock compensation expense (b)
|
|
|
67,500
|
|
|
|
1,378,502
|
|
|
|
1,381,001
|
|
|
|
8,469,867
|
|
|
|
660,170
|
|
Depreciation and amortization
|
|
|
4,136,528
|
|
|
|
4,133,501
|
|
|
|
4,147,570
|
|
|
|
4,175,209
|
|
|
|
3,956,334
|
|
Property expenses (c)
|
|
|
694,043
|
|
|
|
983,982
|
|
|
|
731,081
|
|
|
|
1,195,224
|
|
|
|
1,527,868
|
|
Impairment of real estate investment property (d)
|
|
|
—
|
|
|
|
—
|
|
|
|
888,186
|
|
|
|
—
|
|
|
|
—
|
|
Total expenses
|
|
|
6,316,964
|
|
|
|
8,495,386
|
|
|
|
8,549,893
|
|
|
|
15,575,404
|
|
|
|
7,742,148
|
|
Gain (loss) on sale of real estate investments (e)
|
|
|
—
|
|
|
|
3,187,806
|
|
|
|
—
|
|
|
|
(1,708,801
|
)
|
|
|
—
|
|
Operating income (loss)
|
|
|
5,092,550
|
|
|
|
6,658,980
|
|
|
|
3,804,616
|
|
|
|
(4,717,874
|
)
|
|
|
4,160,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
197,883
|
|
|
|
123,839
|
|
|
|
28,967
|
|
|
|
26,386
|
|
|
|
216,841
|
|
Dividend income
|
|
|
4,955
|
|
|
|
108,373
|
|
|
|
285,000
|
|
|
|
190,000
|
|
|
|
—
|
|
Income from unconsolidated investment in a real estate property
|
|
|
74,211
|
|
|
|
73,854
|
|
|
|
72,043
|
|
|
|
79,164
|
|
|
|
72,773
|
|
Interest (expense) income, including unrealized gain or loss on interest rate swaps and net of derivative settlements
(f)
|
|
|
(4,103,350
|
)
|
|
|
(2,307,149
|
)
|
|
|
(7,045,059
|
)
|
|
|
(2,922,918
|
)
|
|
|
179,931
|
|
Loss on sale of investment in common stock (g)
|
|
|
(4,513
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(Decrease) increase in fair value of investment in common/preferred stock (g)
|
|
|
—
|
|
|
|
(20,574
|
)
|
|
|
978,658
|
|
|
|
440,000
|
|
|
|
—
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
33,724
|
|
|
|
—
|
|
|
|
—
|
|
Other (expense) income, net
|
|
|
(3,830,814
|
)
|
|
|
(2,021,657
|
)
|
|
|
(5,646,667
|
)
|
|
|
(2,187,368
|
)
|
|
|
469,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
1,261,736
|
|
|
|
4,637,323
|
|
|
|
(1,842,051
|
)
|
|
|
(6,905,242
|
)
|
|
|
4,629,953
|
|
Less: net loss (income) attributable to noncontrolling interests in Operating Partnership
|
|
|
63,181
|
|
|
|
(912,864
|
)
|
|
|
546,967
|
|
|
|
1,368,896
|
|
|
|
(649,643
|
)
|
Net income (loss) attributable to Modiv Industrial, Inc.
|
|
|
1,324,917
|
|
|
|
3,724,459
|
|
|
|
(1,295,084
|
)
|
|
|
(5,536,346
|
)
|
|
|
3,980,310
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
403,042
|
|
|
$
|
2,802,584
|
|
|
$
|
(2,216,959
|
)
|
|
$
|
(6,458,221
|
)
|
|
$
|
3,058,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
0.33
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.41
|
|
Net income (loss) per share attributable to common stockholders and noncontrollling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.33
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
9,441,485
|
|
|
|
8,568,353
|
|
|
|
7,621,871
|
|
|
|
7,548,052
|
|
|
|
7,532,106
|
|
Diluted (h)
|
|
|
11,419,115
|
|
|
|
11,359,258
|
|
|
|
7,621,871
|
|
|
|
7,548,052
|
|
|
|
10,638,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share (i)
|
|
$
|
0.2875
|
|
|
$
|
0.2875
|
|
|
$
|
1.3975
|
|
|
$
|
0.2875
|
|
|
$
|
0.2875
|
|
(a) |
Rental income includes tenant reimbursements for property expenses.
|
(b) |
Since there are no stock incentive awards currently outstanding, stock compensation expense for the second quarter of 2024 only reflects the portion of independent directors’ fees
that are paid in common stock. Stock compensation expense in the third quarter of 2023 included a one-time non-cash catch-up adjustment of $7,822,197 related to our determination that it was probable that we would achieve our performance
target for FFO of $1.05 per diluted share for the year ending December 31, 2023, exclusive of the dilutive effect of the performance units and related stock compensation expense. Our FFO per fully diluted share excluding the dilutive impact
of the performance units and the related stock compensation expense was $1.77 for the year ended December 31, 2023. As a result of achieving our performance target of FFO of $1.05 per diluted share (excluding the performance units), our
Class R OP Units automatically converted based on a conversion ratio of 2.5 Class C OP Units for each Class R OP Unit for a total of 790,857 Class C OP Units, some of which were then exchanged for the Company's Class C Common Stock, as of
March 31, 2024. Stock compensation expense of $733,332 for the performance units was recorded for the fourth quarter of 2023 and the first quarter of 2024 to recognize the final vesting periods.
|
(c) |
The decrease in property expenses for the second quarter of 2024 compared with the comparable period of 2023 primarily reflects decreases in repairs and maintenance and property
taxes related to properties sold during August 2023 which included modified gross leases and double-net leases. Property expenses are largely offset by tenant reimbursements included in rental income.
|
(d) |
The impairment charge for the fourth quarter of 2023 relates to an office property located in Nashville, Tennessee leased to Cummins, Inc. through February 29, 2024, which was sold
on February 28, 2024. The impairment charge was based on the sale agreement executed on December 15, 2023, reflecting the excess of the property's carrying value over the property's contracted sale price, less estimated selling costs for
the sale.
|
(e) |
Gain on sale of real estate investments of $3,187,806 for the first quarter of 2024 relates to the sales of two non-core properties. Loss on sale of real estate investments for the
third quarter of 2023 includes a loss of $(1,887,040) on the sale of 13 non-core properties to Generation Income Properties, Inc. ("GIPR") (11 retail and two office), partially offset by a gain on the sale of the Rocklin, California
property. Sale proceeds from the GIPR sale included cash of $30,000,000 and newly issued GIPR preferred stock with a liquidation value of $12,000,000. The loss includes the $2,380,000 difference between the $12,000,000 liquidation value and
the $9,620,000 fair value of our investment in GIPR’s newly-created Series A Redeemable Preferred Stock received on August 10, 2023.
|
(f) |
Interest expense (income), including unrealized gain or loss on interest rate swaps and net of derivative settlements in the second and first quarters of 2024 include $550,042 and $(1,289,364), respectively, of net unrealized loss (gain) on interest rate swaps
and $1,634,702 and $1,670,732, respectively, of derivative cash settlements received. The fourth quarter of 2023 includes $3,400,138 unrealized loss on interest
rate swaps, net of $1,617,279 of derivative cash settlements received. The third quarter of 2023 is net of $(795,425) unrealized gain on interest rate swaps and
$1,586,641 of derivative cash settlements received and the second quarter of 2023 is net of $(3,708,598) unrealized gain on interest rate swaps and $1,401,716 of
derivative cash settlements received.
|
(g) |
Decrease (increase) in fair value of investment in common/preferred stock reflects adjustments to fair value. We received 2,794,597 shares of GIPR common stock on January 31, 2024
in redemption for the $12,000,000 liquidation value of GIPR Series A Redeemable Preferred Stock and immediately distributed 2,623,153 shares of the GIPR common stock to our stockholders. We sold the remaining 171,444 shares of GIPR common
stock in the open market by May 9, 2024 at an average price of $3.80 per share for aggregate net proceeds of $652,118.
|
(h) |
Diluted shares outstanding for periods when we reported a net loss do not include the OP Units since they would be anti-dilutive. Diluted shares during the second quarter of 2024
include Class C OP Units and the first quarter of 2024 and the second quarter of 2023 include Class C, Class M, Class P and Class R OP Units.
|
(i) |
Distributions for the three months ended December 31, 2023 include the distribution of GIPR common stock of $1.11 per share declared on December 29, 2023 which reflects 0.28 shares
of GIPR common stock per one share of our common stock multiplied by $3.95 which was the closing price of GIPR common stock on December 29, 2023.
|
Modiv Industrial, Inc.
Consolidated Statements of Comprehensive Income (Loss) - Last Five Quarters
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Net income (loss)
|
|
$
|
1,261,736
|
|
|
$
|
4,637,323
|
|
|
$
|
(1,842,051
|
)
|
|
$
|
(6,905,242
|
)
|
|
$
|
4,629,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: cash flow hedge adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Amortization of unrealized holding gain on interest rate swap (a)
|
|
|
(253,093
|
)
|
|
|
(253,093
|
)
|
|
|
(258,655
|
)
|
|
|
(253,092
|
)
|
|
|
(253,093
|
)
|
Comprehensive income (loss)
|
|
|
1,008,643
|
|
|
|
4,384,230
|
|
|
|
(2,100,706
|
)
|
|
|
(7,158,334
|
)
|
|
|
4,376,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (income) attributable to noncontrolling interest in Operating Partnership
|
|
|
63,181
|
|
|
|
(912,864
|
)
|
|
|
546,967
|
|
|
|
1,368,896
|
|
|
|
(649,643
|
)
|
Other comprehensive loss attributable to noncontrolling interest in Operating Partnership: cash flow
hedge adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Amortization of unrealized holding gain on interest rate swap (a)
|
|
|
43,568
|
|
|
|
62,185
|
|
|
|
44,959
|
|
|
|
44,264
|
|
|
|
44,341
|
|
Comprehensive loss (income) attributable to noncontrolling interest in Operating Partnership
|
|
|
106,749
|
|
|
|
(850,679
|
)
|
|
|
591,926
|
|
|
|
1,413,160
|
|
|
|
(605,302
|
)
|
Comprehensive income (loss) attributable to Modiv Industrial, Inc.
|
|
$
|
1,115,392
|
|
|
$
|
3,533,551
|
|
|
$
|
(1,508,780
|
)
|
|
$
|
(5,745,174
|
)
|
|
$
|
3,771,558
|
|
(a) |
Due to the $150 million Term Loan swap's failure to qualify as a cash flow hedge for each of the quarterly periods presented, the unrealized gain on interest rate swap derivative
on the consolidated balance sheet is being amortized on a straight-line basis, as a reduction to interest expense, through the maturity date of the Term Loan. The $100 million Term Loan interest rate swap derivative instrument failed to
qualify as a cash flow hedge during each of the quarterly periods presented because the swap was deemed ineffective due to the one-time cancellation option on December 31, 2024 as compared with the maturity of the Term Loan.
|
Modiv Industrial, Inc.
Earnings (Loss) Per Share - Last Five Quarters
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Numerator - Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,261,736
|
|
|
$
|
4,637,323
|
|
|
$
|
(1,842,051
|
)
|
|
$
|
(6,905,242
|
)
|
|
$
|
4,629,953
|
|
Less: net loss (income) attributable to noncontrolling interest in Operating Partnership
|
|
|
63,181
|
|
|
|
(912,864
|
)
|
|
|
546,967
|
|
|
|
1,368,896
|
|
|
|
(649,643
|
)
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
403,042
|
|
|
$
|
2,802,584
|
|
|
$
|
(2,216,959
|
)
|
|
$
|
(6,458,221
|
)
|
|
$
|
3,058,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator - Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,261,736
|
|
|
$
|
4,637,323
|
|
|
$
|
(1,842,051
|
)
|
|
$
|
(6,905,242
|
)
|
|
$
|
4,629,953
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
Net income (loss) attributable to common stockholders and noncontrolling interests
|
|
$
|
339,861
|
|
|
$
|
3,715,448
|
|
|
$
|
(2,763,926
|
)
|
|
$
|
(7,827,117
|
)
|
|
$
|
3,708,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic (a)
|
|
|
9,441,485
|
|
|
|
8,568,353
|
|
|
|
7,621,871
|
|
|
|
7,548,052
|
|
|
|
7,532,106
|
|
Operating Partnership Units - Class C (a)(b)(c)(d)
|
|
|
1,977,630
|
|
|
|
2,790,905
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,106,205
|
|
Weighted average shares outstanding - diluted
|
|
|
11,419,115
|
|
|
|
11,359,258
|
|
|
|
7,621,871
|
|
|
|
7,548,052
|
|
|
|
10,638,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
0.33
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.41
|
|
Earnings (loss) per share attributable to common stockholders and noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.33
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.35
|
|
(a) |
An aggregate of 1,980,823 of Classes M, P and R Units automatically converted to Class C OP Units during the
first quarter of 2024. An aggregate of 1,566,110 and 51,381 units of the 3,350,720 outstanding Class C OP Units were exchanged for Class C common stock during the first and second quarters of 2024, respectively.
|
(b) |
We issued 1,312,382 Class C OP Units at an agreed upon value of $25.00 per unit in connection with our
January 18, 2022 acquisition of a KIA auto dealership property in an “UPREIT” transaction. These units were not included in the computation of Diluted EPS for the quarters ended December 31, 2023 and September 30, 2023 because their effect
would be anti-dilutive. Half of these Class C OP Units or 656,191 units were exchanged for Class C common stock during the first quarter of 2024.
|
(c) |
The weighted average Class C OP Units of 1,599,898 for the quarters ended March 31, 2024 and June 30, 2023 included the weighted effect of 287,516 units issued in April 2023 in
conjunction with our acquisition in an “UPREIT” transaction of the property in Reading, Pennsylvania leased to Summit Steel & Manufacturing, LLC.
|
(d) |
During both the three months ended December 31, 2023 and September 30, 2023, the weighted average dilutive effect of 1,980,822 and 1,506,307 shares, respectively, related to Classes M, P and R Operating Partnership units were excluded from the computation of Diluted EPS because their effect would be anti-dilutive. There were no other
outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended.
|
Modiv Industrial, Inc.
FFO and AFFO - Last Five Quarters
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Net income (loss) (in accordance with GAAP)
|
|
$
|
1,261,736
|
|
|
$
|
4,637,323
|
|
|
$
|
(1,842,051
|
)
|
|
$
|
(6,905,242
|
)
|
|
$
|
4,629,953
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
Net income (loss) attributable to common stockholders and Class C OP Unit holders
|
|
|
339,861
|
|
|
|
3,715,448
|
|
|
|
(2,763,926
|
)
|
|
|
(7,827,117
|
)
|
|
|
3,708,078
|
|
FFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate properties
|
|
|
4,136,528
|
|
|
|
4,133,501
|
|
|
|
4,147,570
|
|
|
|
4,175,209
|
|
|
|
3,956,334
|
|
Amortization of lease incentives
|
|
|
1,198
|
|
|
|
(3,786
|
)
|
|
|
(63,956
|
)
|
|
|
40,397
|
|
|
|
88,570
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
188,934
|
|
|
|
188,919
|
|
|
|
188,889
|
|
|
|
187,479
|
|
|
|
186,069
|
|
Impairment of real estate investment property
|
|
|
—
|
|
|
|
—
|
|
|
|
888,186
|
|
|
|
—
|
|
|
|
—
|
|
Loss (gain) on sale of real estate investments, net
|
|
|
—
|
|
|
|
(3,187,806
|
)
|
|
|
—
|
|
|
|
1,708,801
|
|
|
|
—
|
|
FFO attributable to common stockholders and Class C OP Unit holders
|
|
|
4,666,521
|
|
|
|
4,846,276
|
|
|
|
2,396,763
|
|
|
|
(1,715,231
|
)
|
|
|
7,939,051
|
|
AFFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation (a)
|
|
|
67,500
|
|
|
|
1,378,502
|
|
|
|
1,381,001
|
|
|
|
8,469,867
|
|
|
|
660,170
|
|
Deferred financing costs
|
|
|
221,495
|
|
|
|
221,497
|
|
|
|
210,604
|
|
|
|
165,709
|
|
|
|
195,213
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,208
|
|
|
|
3,848
|
|
Amortization of deferred rents
|
|
|
(1,422,070
|
)
|
|
|
(1,671,798
|
)
|
|
|
(1,704,137
|
)
|
|
|
(1,772,403
|
)
|
|
|
(1,580,358
|
)
|
Unrealized losses (gains) on interest rate swap valuation
|
|
|
550,042
|
|
|
|
(1,289,364
|
)
|
|
|
3,400,138
|
|
|
|
(795,425
|
)
|
|
|
(3,708,598
|
)
|
Amortization of (below) above market lease intangibles, net
|
|
|
(211,599
|
)
|
|
|
(211,599
|
)
|
|
|
(211,600
|
)
|
|
|
(204,011
|
)
|
|
|
(195,901
|
)
|
Loss on sale of investment in common stock
|
|
|
4,513
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Decrease (increase) in fair value of investment in common/preferred stock
|
|
|
—
|
|
|
|
20,574
|
|
|
|
(978,658
|
)
|
|
|
(440,000
|
)
|
|
|
—
|
|
Other adjustments for unconsolidated investment in a real estate property
|
|
|
23,826
|
|
|
|
23,825
|
|
|
|
17,821
|
|
|
|
11,819
|
|
|
|
11,819
|
|
AFFO attributable to common stockholders and Class C OP Unit holders (b)
|
|
$
|
3,900,228
|
|
|
$
|
3,317,913
|
|
|
$
|
4,511,932
|
|
|
$
|
3,721,533
|
|
|
$
|
3,325,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
9,441,485
|
|
|
|
8,568,353
|
|
|
|
7,621,871
|
|
|
|
7,548,052
|
|
|
|
7,532,106
|
|
Fully diluted (b) (c)
|
|
|
11,419,115
|
|
|
|
11,359,258
|
|
|
|
11,202,591
|
|
|
|
11,128,772
|
|
|
|
10,638,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
$
|
0.57
|
|
|
$
|
0.31
|
|
|
$
|
(0.23
|
)
|
|
$
|
1.05
|
|
Fully diluted
|
|
$
|
0.41
|
|
|
$
|
0.43
|
|
|
$
|
0.21
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
|
$
|
0.59
|
|
|
$
|
0.49
|
|
|
$
|
0.44
|
|
Fully diluted
|
|
$
|
0.34
|
|
|
$
|
0.29
|
|
|
$
|
0.40
|
|
|
$
|
0.33
|
|
|
$
|
0.31
|
|
(a) |
Since there are no stock incentive awards currently outstanding, stock compensation expense for the second quarter of 2024 only reflects the portion of independent directors' fees
that are paid in common stock. Stock compensation expense in the third quarter of 2023 included a one-time non-cash catch-up adjustment of $7,822,197 related to our determination that it was probable that we would achieve our performance
target for FFO of $1.05 per diluted share for the year ending December 31, 2023, exclusive of the dilutive effect of the performance units and related stock compensation expense. Our FFO per fully diluted share excluding the dilutive impact
of the performance units and the related stock compensation expense was $1.77 for the year ended December 31, 2023. As a result of achieving our performance target of FFO of $1.05 per diluted share (excluding the performance units), our
Class R OP Units automatically converted based on a conversion ratio of 2.5 Class C OP Units for each Class R OP Unit for a total of 790,857 Class C OP Units, some of which were then exchanged for the Company's Class C Common Stock, as of
March 31, 2024. Stock compensation expense of $733,332 for the performance units was recorded for the fourth quarter of 2023 and the first quarter of 2024 to recognize the final vesting periods.
|
(b) |
The weighted average Class C OP Units includes the 287,516 units issued in April 2023 in conjunction with our acquisition in an “UPREIT” transaction of the property in Reading,
Pennsylvania leased to Summit Steel & Manufacturing, LLC.
|
(c) |
Includes the Class C OP Units to compute the weighted average number of shares during the second quarter of 2024 and Class C, Class M, Class P and Class R OP Units to compute the
weighted average number of shares during for the first quarter of 2024 and the second, third and fourth quarters of 2023 presented above, including the performance portion of the Class R OP Units for the quarters ended September 30, 2023,
December 31, 2023 and March 31, 2024.
|
Modiv Industrial, Inc.
Adjusted EBITDA - Last Five Quarters
(Unaudited)
|
|
Three Months Ended
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Net income (loss) (in accordance with GAAP)
|
|
$
|
1,261,736
|
|
|
$
|
4,637,323
|
|
|
$
|
(1,842,051
|
)
|
|
$
|
(6,905,242
|
)
|
|
$
|
4,629,953
|
|
Depreciation and amortization of real estate properties
|
|
|
4,136,528
|
|
|
|
4,133,501
|
|
|
|
4,147,570
|
|
|
|
4,175,209
|
|
|
|
3,956,334
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
188,934
|
|
|
|
188,919
|
|
|
|
188,889
|
|
|
|
187,479
|
|
|
|
186,069
|
|
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements (a)
|
|
|
4,103,350
|
|
|
|
2,307,149
|
|
|
|
7,045,059
|
|
|
|
2,922,918
|
|
|
|
(179,931
|
)
|
Interest expense on unconsolidated investment in real estate property
|
|
|
93,650
|
|
|
|
94,234
|
|
|
|
95,801
|
|
|
|
96,375
|
|
|
|
95,932
|
|
Impairment of real estate investment property (b)
|
|
|
—
|
|
|
|
—
|
|
|
|
888,186
|
|
|
|
—
|
|
|
|
—
|
|
Stock compensation
|
|
|
67,500
|
|
|
|
1,378,502
|
|
|
|
1,381,001
|
|
|
|
8,469,867
|
|
|
|
660,170
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,208
|
|
|
|
3,848
|
|
Gain (loss) on sale of real estate investments, net
|
|
|
—
|
|
|
|
(3,187,806
|
)
|
|
|
—
|
|
|
|
1,708,801
|
|
|
|
—
|
|
Loss on sale of investment in common stock
|
|
|
4,513
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Decrease (increase) in fair value of investment in common/preferred stock
|
|
|
—
|
|
|
|
20,574
|
|
|
|
(978,658
|
)
|
|
|
(440,000
|
)
|
|
|
—
|
|
Adjusted EBITDA
|
|
$
|
9,856,211
|
|
|
$
|
9,572,396
|
|
|
$
|
10,925,797
|
|
|
$
|
10,216,615
|
|
|
$
|
9,352,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized adjusted EBITDA
|
|
$
|
39,424,844
|
|
|
$
|
38,289,580
|
|
|
$
|
43,703,188
|
|
|
$
|
40,866,460
|
|
|
$
|
37,409,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
$
|
281,082,633
|
|
|
$
|
281,153,337
|
|
|
$
|
281,200,000
|
|
|
$
|
284,284,849
|
|
|
$
|
294,361,357
|
|
Debt of unconsolidated investment in real estate property (c)
|
|
|
9,138,019
|
|
|
|
9,197,045
|
|
|
|
9,256,466
|
|
|
|
9,315,322
|
|
|
|
9,372,615
|
|
Cash and restricted cash
|
|
|
(18,869,651
|
)
|
|
|
(18,404,990
|
)
|
|
|
(3,129,414
|
)
|
|
|
(5,641,610
|
)
|
|
|
(9,912,110
|
)
|
Cash of unconsolidated investment in real estate property (c)
|
|
|
(298,147
|
)
|
|
|
(350,269
|
)
|
|
|
(350,937
|
)
|
|
|
(387,278
|
)
|
|
|
(494,250
|
)
|
|
|
$
|
271,052,854
|
|
|
$
|
271,595,123
|
|
|
$
|
286,976,115
|
|
|
$
|
287,571,283
|
|
|
$
|
293,327,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt / Adjusted EBITDA
|
|
|
6.9
|
x
|
|
|
7.1
|
x
|
|
|
6.6
|
x
|
|
|
7.0
|
x
|
|
|
7.8
|
x
|
(a) |
Includes unrealized losses (gains) on swap valuations of $550,042 and $(1,289,364) in the second and first quarters of 2024, respectively, and $3,400,138, $(795,425) and $(3,708,598) in the fourth, third and second quarters of 2023, respectively.
|
(b) |
The impairment charge for the fourth quarter of 2023 related to an office property located in Nashville, Tennessee leased to Cummins, Inc. through February 29, 2024 that was sold
on February 28, 2024. The impairment charge was based on the sale agreement executed on December 15, 2023 reflecting the excess of the property's carrying value over the property's contracted sale price less estimated selling costs for the
sale.
|
(c) |
Includes our approximate 72.71% pro rata share of the tenant-in-common's mortgage note payable and cash of our unconsolidated investment in real estate property.
|
Modiv Industrial, Inc.
Leverage Ratio
(Unaudited)
We calculate our leverage ratio in conformance with the definition used in our KeyBank credit facility as set forth below.
|
|
As of
|
|
|
|
June 30,
2024
|
|
|
December 31,
2023
|
|
Total Asset Value
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
18,869,651
|
|
|
$
|
3,129,414
|
|
Borrowing base value (a)
|
|
|
490,506,028
|
|
|
|
471,126,446
|
|
Other real estate value
|
|
|
76,220,000
|
|
|
|
102,340,000
|
|
Pro-rata share of unconsolidated investment in a real estate property
|
|
|
28,349,665
|
|
|
|
28,402,455
|
|
Total asset value
|
|
$
|
613,945,344
|
|
|
$
|
604,998,315
|
|
|
|
|
|
|
|
|
|
|
Indebtedness
|
|
|
|
|
|
|
|
|
Credit facility term loan
|
|
$
|
250,000,000
|
|
|
$
|
250,000,000
|
|
Mortgage debt
|
|
|
31,082,633
|
|
|
|
31,200,000
|
|
Pro-rata share of unconsolidated investment in a real estate property
|
|
|
9,138,019
|
|
|
|
9,256,466
|
|
Total indebtedness
|
|
$
|
290,220,652
|
|
|
$
|
290,456,466
|
|
|
|
|
|
|
|
|
|
|
Leverage Ratio
|
|
|
47
|
%
|
|
|
48
|
%
|
(a) |
The increase in borrowing base properties reflects the addition of the property leased to OES following repayment of the mortgage in December 2023, partially offset by the two
properties sold in January and February of 2024.
|
Modiv Industrial, Inc.
Capitalization as of June 30, 2024
(Unaudited)
PREFERRED EQUITY
|
|
|
|
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock
|
|
$
|
50,000,000
|
|
% of Total Capitalization
|
|
|
10
|
%
|
|
|
|
|
|
COMMON EQUITY
|
|
|
|
|
Shares of Class C Common Stock
|
|
|
9,482,076
|
|
Class C OP Units
|
|
|
1,963,229
|
|
Total Class C Common Stock and Class C OP Units
|
|
|
11,445,305
|
|
Price Per Share / Unit at June 30, 2024
|
|
$
|
14.14
|
|
IMPLIED EQUITY MARKET CAPITALIZATION
|
|
$
|
161,836,613
|
|
% of Total Capitalization
|
|
|
33
|
%
|
|
|
|
|
|
DEBT
|
|
|
|
|
Mortgage Debt
|
|
|
|
|
Costco Property
|
|
$
|
18,732,633
|
|
Taylor Fresh Foods Property
|
|
|
12,350,000
|
|
Total Mortgage Debt
|
|
$
|
31,082,633
|
|
KeyBank Credit Facility
|
|
|
|
|
Revolver
|
|
$
|
—
|
|
Term Loan (a) & (b)
|
|
|
250,000,000
|
|
Total Credit Facility
|
|
$
|
250,000,000
|
|
TOTAL DEBT
|
|
$
|
281,082,633
|
|
% of Total Capitalization
|
|
|
57
|
%
|
% of Total Debt - Floating Rate Debt
|
|
|
—
|
%
|
% of Total Debt - Fixed Rate Debt (a) (b) & (c)
|
|
|
100
|
%
|
% of Total Debt
|
|
|
100
|
%
|
ENTERPRISE VALUE
|
|
|
|
|
Total Capitalization
|
|
$
|
492,919,246
|
|
Less: Cash and Cash Equivalents
|
|
|
(18,869,651
|
)
|
Enterprise Value
|
|
$
|
474,049,595
|
|
(a) |
On May 10, 2022, we purchased a five-year swap at 2.258% on our $150,000,000 term loan that results in a fixed interest rate of 4.058% based on our leverage ratio of 47% as of June 30, 2024. Under our Credit Agreement, the interest rate will continue to vary
based on our leverage ratio. The counter-party has a one-time right of cancellation on December 31, 2024.
|
(b) |
On October 26, 2022, we purchased another five-year swap at 3.44% on our $100,000,000 term loan commitment that results in a fixed interest rate of 5.24% based on our leverage
ratio of 47% as of June 30, 2024. Under our Credit Agreement, the interest rate will
continue to vary based on our leverage ratio. The counter-party has a one-time right of cancellation on December 31, 2024.
|
(c) |
The weighted average interest rate for the $281,082,633 Total Debt outstanding was 4.52% as of June 30, 2024.
|
Modiv Industrial, Inc.
Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
June 30,
2024
|
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
|
|
Real estate investments:
|
|
|
|
|
|
|
Land
|
|
$
|
104,858,693
|
|
|
$
|
104,858,693
|
|
Buildings and improvements
|
|
|
399,880,932
|
|
|
|
399,666,781
|
|
Equipment
|
|
|
4,429,000
|
|
|
|
4,429,000
|
|
Tenant origination and absorption costs
|
|
|
15,707,458
|
|
|
|
15,707,458
|
|
Total investments in real estate property
|
|
|
524,876,083
|
|
|
|
524,661,932
|
|
Accumulated depreciation and amortization
|
|
|
(59,171,642
|
)
|
|
|
(50,901,612
|
)
|
Total real estate investments, net, excluding unconsolidated investment in real estate property and real estate
investments held for sale, net
|
|
|
465,704,441
|
|
|
|
473,760,320
|
|
Unconsolidated investment in a real estate property
|
|
|
9,656,786
|
|
|
|
10,053,931
|
|
Total real estate investments, net, excluding real estate investments held for sale, net
|
|
|
475,361,227
|
|
|
|
483,814,251
|
|
Real estate investments held for sale, net
|
|
|
—
|
|
|
|
11,557,689
|
|
Total real estate investments, net
|
|
|
475,361,227
|
|
|
|
495,371,940
|
|
Cash and cash equivalents
|
|
|
18,869,651
|
|
|
|
3,129,414
|
|
Tenant deferred rent and other receivables
|
|
|
16,064,411
|
|
|
|
12,794,568
|
|
Above-market lease intangibles, net
|
|
|
1,276,959
|
|
|
|
1,313,959
|
|
Prepaid expenses and other assets
|
|
|
5,228,889
|
|
|
|
4,173,221
|
|
Investment in preferred stock
|
|
|
—
|
|
|
|
11,038,658
|
|
Interest rate swap derivatives
|
|
|
2,730,521
|
|
|
|
2,970,733
|
|
Other assets related to real estate investments held for sale
|
|
|
—
|
|
|
|
103,337
|
|
Total assets
|
|
$
|
519,531,658
|
|
|
$
|
530,895,830
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Mortgage notes payable, net
|
|
$
|
30,927,344
|
|
|
$
|
31,030,241
|
|
Credit facility term loan, net
|
|
|
248,753,691
|
|
|
|
248,508,515
|
|
Accounts payable, accrued and other liabilities
|
|
|
3,728,094
|
|
|
|
4,469,508
|
|
Distributions payable
|
|
|
2,018,679
|
|
|
|
12,174,979
|
|
Below-market lease intangibles, net
|
|
|
8,408,406
|
|
|
|
8,868,604
|
|
Interest rate swap derivative
|
|
|
—
|
|
|
|
473,348
|
|
Other liabilities related to real estate investments held for sale
|
|
|
—
|
|
|
|
248,727
|
|
Total liabilities
|
|
|
293,836,214
|
|
|
|
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 June 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, 9,825,586 shares issued and 9,482,076 shares outstanding as of June 30, 2024 and 8,048,110
shares issued and 7,704,600 shares outstanding as of December 31, 2023
|
|
|
9,825
|
|
|
|
8,048
|
|
Class S common stock, $0.001 par value, 100,000,000 shares authorized no shares issued and outstanding as of June 30, 2024 and December 31, 2023
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in-capital
|
|
|
337,780,646
|
|
|
|
292,617,486
|
|
Treasury stock, at cost, 343,510 shares held
as of June 30, 2024 and December 31, 2023
|
|
|
(5,290,780
|
)
|
|
|
(5,290,780
|
)
|
Cumulative distributions and net losses
|
|
|
(147,660,654
|
)
|
|
|
(145,551,586
|
)
|
Accumulated other comprehensive income
|
|
|
2,140,570
|
|
|
|
2,658,170
|
|
Total Modiv Industrial, Inc. equity
|
|
|
186,981,607
|
|
|
|
144,443,338
|
|
Noncontrolling interests in the Operating Partnership
|
|
|
38,713,837
|
|
|
|
80,678,570
|
|
Total equity
|
|
|
225,695,444
|
|
|
|
225,121,908
|
|
Total liabilities and equity
|
|
$
|
519,531,658
|
|
|
$
|
530,895,830
|
|
Modiv Industrial, Inc.
Debt Overview
(Unaudited)
|
|
Outstanding Balance
|
|
|
|
|
|
Collateral
|
|
June 30,
2024
|
|
|
December 31,
2023
|
|
|
Interest Rate
|
|
Loan
Maturity
|
Mortgage Notes:
|
|
|
|
|
|
|
|
|
|
|
Costco property
|
|
$
|
18,732,633
|
|
|
$
|
18,850,000
|
|
|
|
4.85
|
%(b)
|
1/1/2030
|
Taylor Fresh Foods property
|
|
|
12,350,000
|
|
|
|
12,350,000
|
|
|
|
3.85
|
%(b)
|
11/1/2029
|
|
|
|
31,082,633
|
|
|
|
31,200,000
|
|
|
|
|
|
|
Less unamortized deferred financing costs
|
|
|
(155,289
|
)
|
|
|
(169,759
|
)
|
|
|
|
|
|
Mortgage notes payable, net
|
|
|
30,927,344
|
|
|
|
31,030,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KeyBank Credit Facility (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolver
|
|
|
—
|
|
|
|
—
|
|
|
|
7.23
|
%(c)
|
1/18/2026
|
Term loan
|
|
|
250,000,000
|
|
|
|
250,000,000
|
|
|
|
4.53
|
%(d)
|
1/18/2027
|
Total Credit Facility
|
|
|
250,000,000
|
|
|
|
250,000,000
|
|
|
|
|
|
|
Less unamortized deferred financing costs
|
|
|
(1,246,309
|
)
|
|
|
(1,491,485
|
)
|
|
|
|
|
|
|
|
|
248,753,691
|
|
|
|
248,508,515
|
|
|
|
|
|
|
Total debt, net
|
|
$
|
279,681,035
|
|
|
$
|
279,538,756
|
|
|
|
4.52
|
%(e)
|
|
(a) |
Our $400,000,000 Credit Facility is comprised of a $150,000,000 Revolver and a $250,000,000 Term Loan. The Credit Facility includes an accordion option that allows us to request
additional Revolver and Term Loan lender commitments up to a total of $750,000,000. As of the filing date of this Supplemental Data, the $250,000,000 Term Loan is fully drawn and the Revolver has zero outstanding balance.
|
(b) |
Contractual fixed rate.
|
(c) |
The interest rate on the Revolver is based on our leverage ratio at the end of the prior quarter. With our leverage ratio at 47% as of June 30, 2024, the spread over the Secured Overnight Financing Rate (‘‘SOFR’’), including a 10 basis point credit adjustment, is
185 basis points and the interest rate on the Revolver was 7.2250% as of June 30, 2024, although we had no outstanding borrowings under the Revolver. We also pay an
annual unused fee of up to 25 basis points on the Revolver, based on the daily amount of the unused commitment.
|
(d) |
To mitigate the risk of rising interest rates, on May 10, 2022, we purchased a five-year swap at fixing SOFR at 2.258% on the $150,000,000 term loan that results in a fixed
interest rate of 4.058% based on our leverage ratio of 47% as of June 30, 2024. On October
26, 2022, we purchased another five-year swap fixing SOFR at 3.44% on our $100,000,000 term loan commitment which results in a fixed interest rate of 5.24% based on our leverage ratio of 47% as of June 30, 2024. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio. The weighted
average interest rate on the Term Loan was 4.53% as of June 30, 2024. We are evaluating various alternatives available to enter into new swap agreements given the
likely exercise of the cancellation options.
|
(e) |
The weighted average interest rate for the $281,082,633 Total Debt outstanding was 4.52% as of June 30, 2024.
|
Modiv Industrial, Inc.
Covenants
Credit Facility and Mortgage Notes Covenants
The following is a summary of key financial covenants for our credit facility and mortgage notes, as defined and calculated per the terms of the facility's credit
agreement and the mortgage notes' governing documents, respectively, which are included in our filings with the U.S. Securities and Exchange Commission. These calculations, which are not based on U.S. GAAP measurements are presented to demonstrate
that as of June 30, 2024, we are in compliance with the covenants.
Unsecured Credit Facility Covenants
|
|
Required
|
|
|
June 30,
2024
|
|
Maximum leverage ratio
|
|
<60%
|
|
|
|
47%
|
|
Minimum fixed charge coverage ratio
|
|
>1.50x
|
|
|
|
1.74x
|
|
Maximum secured indebtedness ratio
|
|
|
40%
|
|
|
|
7%
|
|
Minimum consolidated tangible net worth
|
|
$
|
215,058,172
|
|
|
$
|
287,508,870
|
|
Weighted average lease term (years)
|
|
|
7
|
|
|
|
16
|
|
Mortgage Notes Key Covenants
|
|
Debt service
coverage ratio
|
|
|
June 30,
2024
|
|
Costco property
|
|
N.A.
|
|
|
N.A.
|
|
Taylor Fresh Foods property
|
|
|
1.5
|
|
|
|
3.4
|
|
Modiv Industrial, Inc.
Real Estate Acquisitions – Proforma (a)
(Unaudited)
The following table summarizes our property acquisition activity from January 1, 2023 through July 31, 2024:
Tenant and Location
|
|
Property
Type
|
|
Acquisition
Date
|
|
Area
(Square
Feet)
|
|
|
Lease
Term
(Years)
|
|
|
Annual
Rent
Increase
|
|
|
Acquisition
Price
|
|
|
Initial Cap
Rate
|
|
|
Weighted
Average
Cap Rate
|
|
Plastic Products, Princeton, MN
|
|
Industrial
|
|
January 2023
|
|
|
148,012
|
|
|
|
5.8
|
|
|
|
3.0
|
%
|
|
|
6,368,776
|
|
|
|
7.5
|
%
|
|
|
9.2
|
%
|
Stealth Manufacturing, Savage MN
|
|
Industrial
|
|
March 2023
|
|
|
55,175
|
|
|
|
20.0
|
|
|
|
2.5
|
%
|
|
|
5,500,000
|
|
|
|
7.7
|
%
|
|
|
9.8
|
%
|
Lindsay Precast, Gap, PA (a)
|
|
Industrial
|
|
April 2023
|
|
|
137,086
|
|
|
|
24.0
|
|
|
|
2.2
|
%
|
|
|
18,343,624
|
|
|
|
7.5
|
%
|
|
|
10.1
|
%
|
Summit Steel, Reading, PA
|
|
Industrial
|
|
April 2023
|
|
|
116,560
|
|
|
|
20.0
|
|
|
|
2.9
|
%
|
|
|
11,200,000
|
|
|
|
7.3
|
%
|
|
|
9.7
|
%
|
PBC Linear, Roscoe, IL
|
|
Industrial
|
|
April 2023
|
|
|
219,287
|
|
|
|
20.0
|
|
|
|
2.5
|
%
|
|
|
20,000,000
|
|
|
|
7.8
|
%
|
|
|
9.4
|
%
|
Cameron Tool, Lansing, MI
|
|
Industrial
|
|
May 2023
|
|
|
93,085
|
|
|
|
20.0
|
|
|
|
2.5
|
%
|
|
|
5,721,174
|
|
|
|
8.5
|
%
|
|
|
10.9
|
%
|
S.J. Electro Systems, Minnesota (2) and Texas
|
|
Industrial
|
|
May 2023
|
|
|
159,680
|
|
|
|
17.0
|
|
|
|
2.8
|
%
|
|
|
15,975,000
|
|
|
|
7.5
|
%
|
|
|
9.4
|
%
|
Titan, Alleyton, TX
|
|
Industrial
|
|
May 2023
|
|
|
223,082
|
|
|
|
20.0
|
|
|
|
2.9
|
%
|
|
|
17,100,000
|
|
|
|
8.2
|
%
|
|
|
10.8
|
%
|
Vistech, Piqua, OH
|
|
Industrial
|
|
July 2023
|
|
|
335,525
|
|
|
|
25.0
|
|
|
|
3.0
|
%
|
|
|
13,500,000
|
|
|
|
9.0
|
%
|
|
|
13.1
|
%
|
SixAxis, Andrews, SC
|
|
Industrial
|
|
July 2023
|
|
|
213,513
|
|
|
|
25.0
|
|
|
|
2.8
|
%
|
|
|
15,440,000
|
|
|
|
7.5
|
%
|
|
|
10.5
|
%
|
Torrent, Seminole, FL
|
|
Industrial
|
|
July 2024
|
|
|
29,699
|
|
|
|
20.0
|
|
|
|
2.9
|
%
|
|
|
5,125,000
|
|
|
|
8.0
|
%
|
|
|
10.6
|
%
|
|
|
|
|
|
|
|
1,730,704
|
|
|
|
|
|
|
|
|
|
|
$
|
134,273,574
|
|
|
|
|
|
|
|
|
|
(a) |
Includes a 29,699 square foot manufacturing property used in the production of optical systems for the defense and aerospace industries. The property is located in Seminole,
Florida (Tampa metro) and was acquired on July 15, 2024.
|
(b) |
Includes $1,800,000 funding provided for improvements to the previously acquired Lindsay property in Franklinton, North Carolina.
|
Modiv Industrial, Inc.
Real Estate Dispositions
(Unaudited)
The following table summarizes our property disposition activity from January 1, 2023 through June 30,
2024.
Tenant and Location
|
|
Property Type
|
|
Disposition
Date
|
|
Area (Square
Feet)
|
|
|
Disposition
Price
|
|
|
Cap Rate
|
|
Dollar General, Litchfield, ME
|
|
Retail
|
|
August 2023
|
|
|
9,026
|
|
|
|
1,247,974
|
|
|
|
7.5
|
%
|
Dollar General, Wilton, ME
|
|
Retail
|
|
August 2023
|
|
|
9,100
|
|
|
|
1,452,188
|
|
|
|
7.7
|
%
|
Dollar General, Thompsontown, PA
|
|
Retail
|
|
August 2023
|
|
|
9,100
|
|
|
|
1,111,831
|
|
|
|
7.7
|
%
|
Dollar General, Mt. Gilead, OH
|
|
Retail
|
|
August 2023
|
|
|
9,026
|
|
|
|
1,066,451
|
|
|
|
8.1
|
%
|
Dollar General, Lakeside, OH
|
|
Retail
|
|
August 2023
|
|
|
9,026
|
|
|
|
1,134,522
|
|
|
|
7.1
|
%
|
Dollar General, Castalia, OH
|
|
Retail
|
|
August 2023
|
|
|
9,026
|
|
|
|
1,111,831
|
|
|
|
7.1
|
%
|
Dollar General, Bakersfield, CA
|
|
Retail
|
|
August 2023
|
|
|
18,827
|
|
|
|
4,855,754
|
|
|
|
6.6
|
%
|
Dollar General, Big Spring, TX
|
|
Retail
|
|
August 2023
|
|
|
9,026
|
|
|
|
1,270,665
|
|
|
|
6.8
|
%
|
Dollar Tree, Morrow, GA
|
|
Retail
|
|
August 2023
|
|
|
10,906
|
|
|
|
1,293,355
|
|
|
|
8.0
|
%
|
PreK Education, San Antonio, TX
|
|
Retail
|
|
August 2023
|
|
|
50,000
|
|
|
|
12,888,169
|
|
|
|
7.2
|
%
|
Walgreens, Santa Maria, CA
|
|
Retail
|
|
August 2023
|
|
|
14,490
|
|
|
|
6,081,036
|
|
|
|
6.1
|
%
|
exp US Services, Maitland, FL
|
|
Office
|
|
August 2023
|
|
|
33,118
|
|
|
|
5,899,514
|
|
|
|
10.6
|
%
|
GSA (MSHA), Vacaville, CA
|
|
Office
|
|
August 2023
|
|
|
11,014
|
|
|
|
2,586,710
|
|
|
|
7.8
|
%
|
EMC Shop (formerly Gap), Rocklin, CA
|
|
Office
|
|
August 2023
|
|
|
40,110
|
|
|
|
5,466,960
|
|
|
|
8.1
|
%
|
Levins, Sacramento, CA
|
|
Industrial
|
|
January 2024
|
|
|
76,000
|
|
|
|
7,075,000
|
|
|
|
7.5
|
%
|
Cummins, Nashville, TN
|
|
Office
|
|
February 2024
|
|
|
87,230
|
|
|
|
7,950,000
|
|
|
N.A.
|
|
|
|
|
|
|
|
|
405,025
|
|
|
$
|
62,491,960
|
|
|
|
|
|
Modiv Industrial, Inc.
Top 20 Tenants
(Unaudited)
Tenant
|
|
|
ABR
|
|
|
Proforma ABR
as a Percentage
of Total Portfolio
|
|
|
Area
(Square Feet)
|
|
|
Proforma
Square Feet as a
Percentage of
Total Portfolio
|
|
Lindsay
|
|
|
$
|
5,305,583
|
|
|
|
13
|
%
|
|
|
755,281
|
|
|
|
17
|
%
|
KIA of Carson
|
|
|
|
4,002,202
|
|
|
|
10
|
%
|
|
|
72,623
|
|
|
|
2
|
%
|
State of CA OES
|
|
|
|
2,579,682
|
|
|
|
6
|
%
|
|
|
106,592
|
|
|
|
2
|
%
|
Costco Wholesale
|
|
|
|
2,472,296
|
|
|
|
6
|
%
|
|
|
97,191
|
|
|
|
2
|
%
|
AvAir
|
|
|
|
2,388,590
|
|
|
|
6
|
%
|
|
|
162,714
|
|
|
|
4
|
%
|
3M
|
|
|
|
1,891,311
|
|
|
|
5
|
%
|
|
|
410,400
|
|
|
|
9
|
%
|
Valtir
|
|
|
|
1,876,387
|
|
|
|
5
|
%
|
|
|
293,612
|
|
|
|
7
|
%
|
FUJIFILM Dimatix (a)
|
|
|
|
1,702,957
|
|
|
|
4
|
%
|
|
|
91,740
|
|
|
|
2
|
%
|
Taylor Fresh Foods
|
|
|
|
1,675,896
|
|
|
|
4
|
%
|
|
|
216,727
|
|
|
|
5
|
%
|
Pacific Bearing
|
|
|
|
1,560,000
|
|
|
|
4
|
%
|
|
|
219,287
|
|
|
|
5
|
%
|
Titan
|
|
|
|
1,443,320
|
|
|
|
4
|
%
|
|
|
223,082
|
|
|
|
5
|
%
|
Northrup Grumman
|
|
|
|
1,312,660
|
|
|
|
3
|
%
|
|
|
107,419
|
|
|
|
2
|
%
|
Vistech
|
|
|
|
1,248,413
|
|
|
|
3
|
%
|
|
|
335,525
|
|
|
|
7
|
%
|
SJE
|
|
|
|
1,233,840
|
|
|
|
3
|
%
|
|
|
159,680
|
|
|
|
3
|
%
|
SixAxis
|
|
|
|
1,178,990
|
|
|
|
3
|
%
|
|
|
213,513
|
|
|
|
5
|
%
|
Husqvarna
|
|
|
|
932,946
|
|
|
|
2
|
%
|
|
|
64,637
|
|
|
|
1
|
%
|
L3Harris
|
|
|
|
891,283
|
|
|
|
2
|
%
|
|
|
46,214
|
|
|
|
1
|
%
|
Summit Steel
|
|
|
|
844,896
|
|
|
|
2
|
%
|
|
|
116,560
|
|
|
|
3
|
%
|
Arrow-TruLine
|
|
|
|
800,923
|
|
|
|
2
|
%
|
|
|
206,155
|
|
|
|
4
|
%
|
WSP USA
|
|
|
|
762,288
|
|
|
|
2
|
%
|
|
|
37,449
|
|
|
|
1
|
%
|
Total Top 20 Tenants
|
|
|
$
|
36,104,463
|
|
|
|
89
|
%
|
|
|
3,936,401
|
|
|
|
87
|
%
|
(a) |
Reflects our approximate 72.71% tenant-in-common interest (“TIC Interest”).
|
Modiv Industrial, Inc.
Property Type – Proforma (a)
(Unaudited)
Property Type
|
|
Number of
Properties
|
|
|
ABR
|
|
|
ABR as a
Percentage of
Total Portfolio
|
|
|
Area
(Square Feet)
|
|
|
Square Feet as
a Percentage of
Total Portfolio
|
|
Industrial core, including TIC Interest
|
|
|
39
|
|
|
$
|
30,614,485
|
|
|
|
76
|
%
|
|
|
4,196,496
|
|
|
|
93
|
%
|
Non-core (b)
|
|
|
4
|
|
|
|
9,880,177
|
|
|
|
24
|
%
|
|
|
302,442
|
|
|
|
7
|
%
|
Total Properties
|
|
|
43
|
|
|
$
|
40,494,662
|
|
|
|
100
|
%
|
|
|
4,498,938
|
|
|
|
100
|
%
|
(a) |
Includes a 29,699 square foot manufacturing property used in the production of optical systems for the defense and aerospace industries. The property is located in Seminole,
Florida (Tampa metro) and was acquired on July 15, 2024.
|
(b) |
Non-core properties include the following:
|
|
(i) |
our non-core acquisition of a leading KIA auto dealership located in a prime location in Los Angeles County acquired in January 2022 which was structured as an UPREIT transaction
resulting in a favorable equity issuance of $32,809,550 of Class C OP Units at a cost basis of $25 per share;
|
|
(ii) |
our 12 year lease with the State of California’s Office of Emergency Services ("OES") for one of our legacy assets located in Rancho Cordova, California that includes an attractive
purchase option which OES may exercise anytime between May 1, 2024 and December 31, 2026. We have received preliminary indications from OES of interest in exercising the option. (We define legacy assets as those that were acquired by
different management teams utilizing different investment objectives and underwriting criteria);
|
|
(iii) |
our legacy property leased to Costco located in Issaquah, Washington which offers compelling redevelopment opportunities following Costco’s lease expiration given its higher
density infill location and the fact that the land is zoned for additional uses to include multi-family. We entered into a purchase and sale agreement with KB Home, a national homebuilder, for the sale of this property, for a sale price of
$28,650,000. On April 1, 2024, we entered into an amendment to the purchase and sale agreement for a revised sale price of $25,300,000 reflecting an agreement to reduce the sales price due to the City of Issaquah’s setback requirements
resulting in a reduced number of townhomes planned for the property, with an agreement to increase the purchase price by $325,000 for each additional townhome the buyer can add to the development prior to closing. KB Home completed its due
diligence on April 26, 2024 and deposited $1,407,500 into escrow on May 1, 2024, bringing the total non-refundable deposit to $1,432,500;
|
Completing the sale remains subject to the buyer obtaining development approvals and the sale will not close until the earlier of (a) 15 days following
the later of buyer obtaining all necessary development approvals and tenant vacating the property, but not prior to February 1, 2025, and (b) August 15, 2025 unless extended. The amendment to the purchase and sale agreement provides that the buyer
can extend the outside closing date up to three times for 60 days for each extension. The nonrefundable extension fee for the first extension is $300,000 with 50% applicable to the purchase price. The nonrefundable extension fees for the second and
third extensions are $200,000 and $300,000, respectively, and none of these extension fees will be applicable to the purchase price. The buyer is not affiliated with the Company or its affiliates. Since the pending disposition is not expected to be
completed within 12 months of the balance sheet date, it is not classified as a real estate investment held for sale as of June 30,2024; and
|
(iv) |
our legacy property leased to Solar Turbines which we expect to sell soon after we complete a parcel split to maximize value.
|
Modiv Industrial, Inc.
Tenant Industry Diversification – Proforma (a)
(Unaudited)
Industry
|
|
Number of Properties
|
|
|
ABR
|
|
|
ABR as a
Percentage of
Total Portfolio
|
|
|
Area
(Square Feet)
|
|
|
Square Feet as
a Percentage
of Total
Portfolio
|
|
Infrastructure
|
|
|
18
|
|
|
$
|
10,357,088
|
|
|
|
26
|
%
|
|
|
1,459,535
|
|
|
|
32
|
%
|
Automotive
|
|
|
3
|
|
|
|
5,950,110
|
|
|
|
15
|
%
|
|
|
501,233
|
|
|
|
11
|
%
|
Aerospace/Defense
|
|
|
4
|
|
|
|
4,987,104
|
|
|
|
12
|
%
|
|
|
346,046
|
|
|
|
8
|
%
|
Industrial Products
|
|
|
3
|
|
|
|
4,384,256
|
|
|
|
11
|
%
|
|
|
694,324
|
|
|
|
15
|
%
|
Government
|
|
|
1
|
|
|
|
2,579,682
|
|
|
|
6
|
%
|
|
|
106,592
|
|
|
|
2
|
%
|
Metals
|
|
|
5
|
|
|
|
2,479,947
|
|
|
|
6
|
%
|
|
|
450,263
|
|
|
|
10
|
%
|
Retailer
|
|
|
1
|
|
|
|
2,472,296
|
|
|
|
6
|
%
|
|
|
97,191
|
|
|
|
2
|
%
|
Technology
|
|
|
2
|
|
|
|
2,314,016
|
|
|
|
6
|
%
|
|
|
130,240
|
|
|
|
3
|
%
|
Energy
|
|
|
2
|
|
|
|
2,069,317
|
|
|
|
5
|
%
|
|
|
249,118
|
|
|
|
6
|
%
|
Agriculture/Food Production
|
|
|
2
|
|
|
|
1,675,896
|
|
|
|
4
|
%
|
|
|
295,584
|
|
|
|
7
|
%
|
Medical
|
|
|
1
|
|
|
|
665,398
|
|
|
|
2
|
%
|
|
|
20,800
|
|
|
|
1
|
%
|
Plastics
|
|
|
1
|
|
|
|
559,552
|
|
|
|
1
|
%
|
|
|
148,012
|
|
|
|
3
|
%
|
Total
|
|
|
43
|
|
|
$
|
40,494,662
|
|
|
|
100
|
%
|
|
|
4,498,938
|
|
|
|
100
|
%
|
(a) |
Includes a 29,699 square foot manufacturing property used in the production of optical systems for the defense and aerospace industries. The property is located in Seminole,
Florida (Tampa metro) and was acquired on July 15, 2024.
|
Modiv Industrial, Inc.
Tenant Geographic Diversification – Proforma (a)
(Unaudited)
State
|
|
Number of
Properties
|
|
|
ABR
|
|
|
ABR as a
Percentage of
Total Portfolio
|
|
|
Area (Square
Feet)
|
|
|
Square Feet as
a Percentage
of Total
Portfolio
|
|
California
|
|
|
8
|
|
|
$
|
12,040,866
|
|
|
|
30
|
%
|
|
|
439,954
|
|
|
|
10
|
%
|
Ohio
|
|
|
6
|
|
|
|
4,807,235
|
|
|
|
12
|
%
|
|
|
1,016,742
|
|
|
|
22
|
%
|
Arizona
|
|
|
2
|
|
|
|
4,064,487
|
|
|
|
10
|
%
|
|
|
379,441
|
|
|
|
8
|
%
|
Illinois
|
|
|
2
|
|
|
|
3,451,311
|
|
|
|
9
|
%
|
|
|
629,687
|
|
|
|
14
|
%
|
Washington
|
|
|
1
|
|
|
|
2,472,296
|
|
|
|
6
|
%
|
|
|
97,191
|
|
|
|
2
|
%
|
Florida
|
|
|
3
|
|
|
|
2,302,193
|
|
|
|
5
|
%
|
|
|
233,910
|
|
|
|
5
|
%
|
Pennsylvania
|
|
|
2
|
|
|
|
2,108,927
|
|
|
|
5
|
%
|
|
|
253,646
|
|
|
|
6
|
%
|
South Carolina
|
|
|
3
|
|
|
|
2,088,949
|
|
|
|
5
|
%
|
|
|
343,422
|
|
|
|
8
|
%
|
Texas
|
|
|
2
|
|
|
|
1,674,893
|
|
|
|
4
|
%
|
|
|
255,969
|
|
|
|
6
|
%
|
Minnesota
|
|
|
5
|
|
|
|
1,648,102
|
|
|
|
4
|
%
|
|
|
377,450
|
|
|
|
8
|
%
|
North Carolina
|
|
|
2
|
|
|
|
1,556,335
|
|
|
|
4
|
%
|
|
|
134,576
|
|
|
|
3
|
%
|
Colorado
|
|
|
3
|
|
|
|
861,359
|
|
|
|
2
|
%
|
|
|
98,994
|
|
|
|
2
|
%
|
Utah
|
|
|
1
|
|
|
|
518,049
|
|
|
|
2
|
%
|
|
|
72,498
|
|
|
|
2
|
%
|
Michigan
|
|
|
1
|
|
|
|
499,496
|
|
|
|
1
|
%
|
|
|
93,085
|
|
|
|
2
|
%
|
New York
|
|
|
2
|
|
|
|
400,164
|
|
|
|
1
|
%
|
|
|
72,373
|
|
|
|
2
|
%
|
Total
|
|
|
43
|
|
|
$
|
40,494,662
|
|
|
|
100
|
%
|
|
|
4,498,938
|
|
|
|
100
|
%
|
(a) |
Includes a 29,699 square foot manufacturing property used in the production of optical systems for the defense and aerospace industries. The property is located in Seminole,
Florida (Tampa metro) and was acquired on July 15, 2024.
|
Modiv Industrial, Inc.
Lease Expirations – Proforma (a)
(Unaudited)
10 Years and Thereafter Lease Expirations
As of June 30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Number of
Leases
Expiring
|
|
|
Leased Square
Footage
Expiring
|
|
|
Percentage of
Leased Square
Footage
Expiring
|
|
|
Cumulative
Percentage
of Leased
Square
Footage
Expiring
|
|
|
Annualized
Base Rent
Expiring
|
|
|
Percentage
of
Annualized Base Rent
Expiring
|
|
|
Cumulative
Percentage of
Annualized
Base Rent
Expiring
|
|
July to December 2024 (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
—
|
%
|
|
$
|
—
|
|
|
|
—
|
%
|
|
|
—
|
%
|
2025
|
|
|
3
|
|
|
|
144,027
|
|
|
|
3.2
|
%
|
|
|
3.2
|
%
|
|
|
3,763,690
|
|
|
|
9.3
|
%
|
|
|
9.3
|
%
|
2026
|
|
|
3
|
|
|
|
236,608
|
|
|
|
5.3
|
%
|
|
|
8.5
|
%
|
|
|
3,777,905
|
|
|
|
9.3
|
%
|
|
|
18.6
|
%
|
2027
|
|
|
1
|
|
|
|
64,637
|
|
|
|
1.4
|
%
|
|
|
9.9
|
%
|
|
|
932,946
|
|
|
|
2.3
|
%
|
|
|
20.9
|
%
|
2028
|
|
|
1
|
|
|
|
148,012
|
|
|
|
3.3
|
%
|
|
|
13.2
|
%
|
|
|
559,552
|
|
|
|
1.4
|
%
|
|
|
22.3
|
%
|
2029
|
|
|
2
|
|
|
|
84,714
|
|
|
|
1.9
|
%
|
|
|
15.1
|
%
|
|
|
1,502,343
|
|
|
|
3.7
|
%
|
|
|
26.0
|
%
|
2030
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
15.1
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
26.0
|
%
|
2031
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
15.1
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
26.0
|
%
|
2032
|
|
|
1
|
|
|
|
162,714
|
|
|
|
3.6
|
%
|
|
|
18.7
|
%
|
|
|
2,388,590
|
|
|
|
5.9
|
%
|
|
|
31.9
|
%
|
2033
|
|
|
1
|
|
|
|
216,727
|
|
|
|
4.8
|
%
|
|
|
23.5
|
%
|
|
|
1,675,896
|
|
|
|
4.1
|
%
|
|
|
36.0
|
%
|
Thereafter
|
|
|
31
|
|
|
|
3,441,499
|
|
|
|
76.5
|
%
|
|
|
100.0
|
%
|
|
|
25,893,740
|
|
|
|
64.0
|
%
|
|
|
100.0
|
%
|
Total
|
|
|
43
|
|
|
|
4,498,938
|
|
|
|
100.0
|
%
|
|
|
|
|
|
$
|
40,494,662
|
|
|
|
100.0
|
%
|
|
|
|
|
(a) |
Includes a 29,699 square foot manufacturing property used in the production of optical systems for the defense and aerospace industries. The property is located in Seminole,
Florida (Tampa metro) and was acquired on July 15, 2024.
|
Modiv Industrial, Inc.
Disclosures Regarding Non-GAAP and Other Metrics
Notice Involving Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this supplemental report contains 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.
Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)
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 extraordinary items, as defined by GAAP, and 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 partnerships, joint ventures and preferred distributions. 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 revenues in excess of cash received, deferred rent, amortization of stock-based compensation, amortization of in-place lease valuation intangibles, deferred financing fees, gain or loss from the extinguishment of debt, unrealized gains
(losses) on derivative instruments, and write-offs of due diligence costs for abandoned pursuits. We also believe that AFFO is a recognized measure of sustainable operating performance by 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 (loss) from operations, net income (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. 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. 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. Therefore, FFO and AFFO should not be viewed as a more prominent measure of
performance than income (loss) from operations, net income or 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 regulatory 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.
Adjusted EBITDA
We define Adjusted EBITDA as GAAP net income or loss adjusted to exclude depreciation and amortization, gains or losses from the sales of depreciable
property, extraordinary items, provisions for impairment on investment in real estate and goodwill and intangibles, interest expense and non-cash items such as non-cash compensation expenses and write-offs of due diligence costs for abandoned
pursuits 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.
Net Debt
We define Net Debt as gross debt less cash and cash equivalents and restricted cash.
Leverage Ratio
We define our “leverage ratio” as total debt as a percentage of the aggregate fair value of our real estate properties, including our proportionate
interest in real estate owned by unconsolidated entities, plus our cash and cash equivalents.
Annualized Base Rent (“ABR”)
ABR represents contractual annual base rent for the next 12 months.
Initial Cap Rate
We define “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property.
Weighted Average Cap Rate
We define “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.
31