Group 1 - The article provides a detailed analysis of Modiv Industrial, Inc.'s financial position and evaluates the advantages and risks of its preferred stock [1] - Modiv Industrial, Inc. is traded on the NYSE under the symbol MDV, while its preferred stock is traded as MDV.PR.A [1]

Group 1 - The preferred stock of Modiv Industrial (MDV.PR.A) was recommended for holding due to its above-average dividend yield of 7.5% and a margin of safety [1] - Since the recommendation, the stock has outperformed the market [1] Group 2 - The author has a background in chemical engineering and economics, and has written multiple books on investing and mathematics [1] - The author emphasizes the use of fundamental and technical analysis in investment decisions, primarily utilizing options for both investing and trading [1]

Financial Data and Key Metrics Changes - Rental income for Q1 2025 was $11.7 million, a 2% decrease from $11.9 million in the prior year period, attributed to the disposition of two properties with expiring leases [14] - Adjusted funds from operations (AFFO) increased by 18% to $3.9 million compared to $3.3 million in the year-ago quarter, primarily due to a $195,000 increase in cash rental income and a $200,000 decrease in cash interest expense [14][15] - AFFO per diluted share rose to $0.33, up from $0.29 in the previous year, reflecting an increase in the weighted average number of fully diluted common shares outstanding [15] Business Line Data and Key Metrics Changes - The portfolio consists of 43 properties with an attractive weighted average lease term of 14.2 years, with 39 industrial properties representing 80% of annualized base rent (ABR) [16][17] - Annualized base rent totals $39.4 million as of March 31, 2025, with approximately 30% of tenants having an investment-grade credit rating [17] Market Data and Key Metrics Changes - Total cash and cash equivalents were $6.2 million, with $280 million of debt outstanding, consisting of $31 million in mortgages and $250 million in borrowings on a credit facility [17] - The company has no debt maturities until January 2027, and 100% of its indebtedness held a fixed interest rate with a weighted average of 4.27% [17] Company Strategy and Development Direction - The company is focused on maintaining a stable portfolio and is cautious about acquisitions in a volatile market, preferring to wait for compelling opportunities [20][24] - Management emphasizes risk management and discipline in investment decisions, indicating a narrow focus on specific manufacturing assets [24][25] - The company is exploring capital recycling opportunities rather than increasing leverage, indicating a preference for stability in its financial profile [100] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current market volatility and uncertainty, expressing confidence in the stability of their asset class and tenant performance [7][36] - Conversations with tenants indicate a cautious approach to capital placement due to market conditions, with potential opportunities for consolidation and expansion in the future [92][95] - The company remains committed to its long-term strategy, focusing on maintaining strong margins and effective expense controls [43][100] Other Important Information - The Board of Directors declared a cash dividend of $0.09 per share for April, May, and June 2025, representing an annualized yield of 8% based on the recent closing price [18] - Management has reduced headcount from 12 to 9 employees, which is expected to lower general and administrative expenses in future quarters [16] Q&A Session Summary Question: Can you talk about the cap rates that you're seeing on deals? - Cap rates are currently tighter than in previous quarters, with a sweet spot of 7.5% to 8.25%, but many assets are not compelling enough to justify purchases [47][48] Question: Were you considering doing deals under the ATM when shares were in the $16 range? - The company was in a blackout period and missed opportunities, but is constantly evaluating the market for potential equity issuance [54][56] Question: Any update on the sale of the Costco property? - The sale process is moving forward, with regular updates from the buyer, and the timeline remains on track [76][78] Question: Is there an expectation for more preferred share repurchases? - Future repurchases will depend on market conditions, but the company is open to opportunities if they arise [83][86] Question: What is the view on transaction activity among mid-market tenants? - Tenants are cautious due to macro uncertainty but are looking for opportunities, indicating potential future deal flow [92][95]

Financial Data and Key Metrics Changes - Rental income for Q1 2025 was $11.7 million, a 2% decrease from $11.9 million in the prior year period, attributed to the disposition of two properties with expiring leases [14] - Adjusted funds from operations (AFFO) increased by 18% to $3.9 million compared to $3.3 million in the year-ago quarter, primarily due to a $195,000 increase in cash rental income and a $200,000 decrease in cash interest expense [15] - AFFO per diluted share rose to $0.33, up from $0.29 in the previous year, reflecting an increase in the weighted average number of fully diluted common shares outstanding [15] Business Line Data and Key Metrics Changes - The portfolio consists of 43 properties with an attractive weighted average lease term of 14.2 years, with 39 industrial properties representing 80% of annualized base rent (ABR) [16][17] - Annualized base rent totals $39.4 million as of March 31, 2025, with approximately 30% of tenants or their parent companies having an investment-grade credit rating [17] Market Data and Key Metrics Changes - Total cash and cash equivalents were $6.2 million, with $280 million of debt outstanding, consisting of $31 million in mortgages and $250 million in borrowings on a credit facility [17] - The company has no debt maturities until January 2027, and 100% of its indebtedness as of March 31, 2025, is held at a fixed interest rate of 4.27% [17] Company Strategy and Development Direction - The company is focused on risk management and is being highly disciplined in its acquisition strategy, indicating a preference for compelling opportunities rather than pursuing growth for growth's sake [20][24] - Management is exploring equity deals and is open to capital recycling opportunities, particularly for non-core properties [99] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the portfolio and the performance of tenants, despite market volatility and uncertainty [10][35] - The company is monitoring geopolitical risks and interest rate fluctuations, indicating a cautious but optimistic outlook for the future [37][38] Other Important Information - The Board of Directors declared a cash dividend of $0.09 per share for April, May, and June 2025, representing an annualized dividend rate of $1.17 per share, yielding 8% based on the closing price of $14.58 [18] - The company has reduced its headcount from 12 to 9 employees, which is expected to lower general and administrative expenses in future quarters [16] Q&A Session Summary Question: Can you talk about the cap rates that you're seeing on deals? - Management noted that cap rates are currently tighter than in previous quarters, with a sweet spot between 7.5% to 8.25%, and emphasized the importance of compelling assets rather than marginal ones [47][49] Question: Were you considering doing deals under the ATM when shares were in the $16 range? - Management indicated that they were in a blackout period and missed opportunities but are constantly evaluating the market for potential equity issuance [54][56] Question: Any update on the sale of the Costco property? - Management confirmed ongoing discussions with the buyer, KB Home, and indicated that the process is moving forward as planned [75][77] Question: What is the trend for stock compensation expense? - Management projected a run rate of about $800,000 per quarter for stock compensation, indicating stability in this line item moving forward [69][71] Question: Any expectations for the sale of the solar turbine property? - Management is optimistic about the timeline for the solar property, expecting to market it to an owner-user once the tenant vacates [80]

分组1 - Modiv Industrial, Inc. reported quarterly funds from operations (FFO) of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.31 per share, and up from $0.29 per share a year ago, representing an FFO surprise of 6.45% [1] - The company achieved revenues of $11.73 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.49%, although this is a slight decrease from $11.9 million in the same quarter last year [2] - Over the last four quarters, Modiv Industrial has surpassed consensus FFO estimates three times, while it has only topped consensus revenue estimates once [2] 分组2 - The stock has lost about 2% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The current consensus FFO estimate for the upcoming quarter is $0.37 on revenues of $11.76 million, and for the current fiscal year, it is $1.39 on revenues of $46.06 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Residential is currently in the bottom 39% of over 250 Zacks industries, indicating potential challenges for the sector [8]

[Company Overview](index=4&type=section&id=Company%20Overview) [Company Overview](index=4&type=section&id=Company%20Overview) Modiv Industrial is a REIT specializing in acquiring, owning, and managing single-tenant net-lease industrial manufacturing properties - Modiv Industrial is a REIT focused on acquiring critical single-tenant net-lease industrial manufacturing properties with long-term leases[8](index=8&type=chunk) - The company emphasizes a strong corporate governance structure, led by a management team and board with extensive institutional real estate experience[9](index=9&type=chunk) [Financial Results](index=5&type=section&id=Financial%20Results) [Earnings Release](index=5&type=section&id=Earnings%20Release) Q1 2025 results were in line with plans, featuring an **18% year-over-year AFFO increase** and a 10-year FujiFilm lease renewal Q1 2025 Financial Highlights | Metric | Value | Note | | :--- | :--- | :--- | | Revenue | $11.8 million | - | | Net Income (to common stockholders) | $2,000 | - | | AFFO | $3.9 million | Increased 18% year-over-year | | AFFO per Diluted Share | $0.33 | Beat consensus estimates | | Preferred Stock Repurchased (YTD) | 275,000 shares | At an average price of $23.74 | - Executed a **10-year lease renewal** with FujiFilm in Santa Clara, CA, securing a **6.75% initial rent increase** and **3% annual escalations**[17](index=17&type=chunk)[18](index=18&type=chunk) - The company's CEO believes that despite recent news on tariffs, the impact on its manufacturing tenants has been minimal due to factors like producing non-consumer discretionary products, preparedness from past disruptions (COVID-19), and the immateriality of affected components[24](index=24&type=chunk)[28](index=28&type=chunk) - Management sees a long-term positive trend for U.S. manufacturing, viewing these assets as a critical infrastructure play that will see increased utilization rates as companies seek to reduce supply chain uncertainty[20](index=20&type=chunk)[22](index=22&type=chunk) [Consolidated Statements of Operations - Last Five Quarters](index=9&type=section&id=Consolidated%20Statements%20of%20Operations%20-%20Last%20Five%20Quarters) Q1 2025 saw **$11.8 million total income** and **$2,000 net income** to common stockholders, with increased stock compensation expense Q1 2025 Statement of Operations (in thousands) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Income | $11,793 | $11,967 | | Total Expenses | $7,141 | $8,496 | | Operating Income | $4,736 | $6,659 | | Net Income (Loss) | $829 | $4,637 | | Net Income (Loss) Attributable to Common Stockholders | $2 | $2,802 | - Stock compensation expense increased to **$484,000** in Q1 2025, primarily due to the award of **895,043 Class X OP Units** to employees, a significant increase from the preceding three quarters[35](index=35&type=chunk)[37](index=37&type=chunk) - Depreciation and amortization expense decreased in Q1 2025 because the office property leased to Costco was classified as held for sale as of December 31, 2024[37](index=37&type=chunk) [Consolidated Statements of Comprehensive Income (Loss) - Last Five Quarters](index=11&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29%20-%20Last%20Five%20Quarters) Q1 2025 comprehensive income was **$397,000**, lower than net income due to a **$966,000 unrealized loss** on interest rate derivatives Comprehensive Income Reconciliation - Q1 2025 (in thousands) | Item | Value | | :--- | :--- | | Net Income (Loss) | $829 | | Unrealized Loss on Interest Rate Derivatives | ($966) | | Amortization of Off-Market Interest Rate Derivatives | $784 | | Amortization of Unrealized Holding Gain on Interest Rate Swap | ($250) | | **Comprehensive Income (Loss)** | **$397** | [Earnings (Loss) Per Share - Last Five Quarters](index=12&type=section&id=Earnings%20%28Loss%29%20Per%20Share%20-%20Last%20Five%20Quarters) Modiv reported a **($0.01) basic and diluted loss per share** in Q1 2025, despite positive net income, due to Class X OP Unit distributions Earnings Per Share - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Basic EPS | $(0.01) | $0.33 | | Diluted EPS | $(0.01) | $0.33 | - The **($0.01) loss per share** in Q1 2025 occurred because distributions of **$163,000** paid to Class X OP Units were deducted from the net income attributable to common stockholders when calculating EPS[38](index=38&type=chunk)[40](index=40&type=chunk) [FFO and AFFO - Last Five Quarters](index=13&type=section&id=FFO%20and%20AFFO%20-%20Last%20Five%20Quarters) In Q1 2025, AFFO attributable to common stockholders and OP Unit holders was **$3.9 million**, or **$0.33 per fully diluted share**, an **18% increase** in total AFFO year-over-year FFO and AFFO Per Share/Unit (Fully Diluted) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | FFO Per Share/Unit | $0.33 | $0.43 | -23.3% | | AFFO Per Share/Unit | $0.33 | $0.29 | +13.8% | Q1 2025 AFFO Reconciliation (in thousands) | Item | Value | | :--- | :--- | | Net Income (Loss) Attributable to Common Stockholders and OP Unit Holders | $2 | | FFO Adjustments (Depreciation, Gain on Sale, etc.) | $3,923 | | **FFO Attributable to Common Stockholders and OP Unit Holders** | **$3,925** | | AFFO Adjustments (Stock Comp, Amortization, etc.) | ($13) | | **AFFO Attributable to Common Stockholders and OP Unit Holders** | **$3,912** | [Adjusted EBITDA - Last Five Quarters](index=14&type=section&id=Adjusted%20EBITDA%20-%20Last%20Five%20Quarters) Q1 2025 Adjusted EBITDA was **$9.4 million**, with Net Debt to Adjusted EBITDA at **7.5x** due to decreased cash Adjusted EBITDA and Net Debt Ratio | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Adjusted EBITDA | $9,378,000 | $9,984,000 | | Net Debt | $283,202,000 | $277,970,000 | | Net Debt / Adjusted EBITDA | 7.5x | 7.0x | [Leverage Ratio](index=15&type=section&id=Leverage%20Ratio) As of March 31, 2025, the company's leverage ratio was **47.6%**, well below the **60% maximum** covenant requirement Leverage Ratio Calculation (as of March 31, 2025) | Component | Value (in thousands) | | :--- | :--- | | Total Asset Value | $608,122 | | Total Indebtedness | $289,735 | | **Leverage Ratio** | **47.6%** | [Balance Sheets and Capitalization](index=16&type=section&id=Balance%20Sheets%20and%20Capitalization) [Capitalization](index=16&type=section&id=Capitalization) Modiv's enterprise value was **$521.1 million**, with **53% debt** and **100% fixed-rate debt** for 2025 at **4.27%** Capitalization Structure (as of March 31, 2025) | Category | Value (in thousands) | % of Total | | :--- | :--- | :--- | | Preferred Equity | $44,875 | 9% | | Implied Equity Market Capitalization | $201,611 | 38% | | Total Debt | $280,781 | 53% | | **Total Capitalization** | **$527,267** | **100%** | - **100% of the company's total debt** is fixed-rate for 2025, achieved through new swap agreements on its **$250 million Term Loan**, fixing the rate at **4.25%**[48](index=48&type=chunk) - The company reduced its Revolver line of credit from **$150 million to $30 million** in December 2024 to save on annual unused fees[48](index=48&type=chunk) [Consolidated Balance Sheets](index=17&type=section&id=Consolidated%20Balance%20Sheets) Total assets were **$506.8 million** as of March 31, 2025, with a decrease in cash and stable liabilities and equity Key Balance Sheet Items (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Real Estate Investments, Net | $474,080 | $473,906 | | Cash and Cash Equivalents | $6,165 | $11,530 | | **Total Assets** | **$506,802** | **$507,829** | | Total Liabilities | $293,426 | $293,779 | | Total Equity | $213,376 | $214,050 | | **Total Liabilities and Equity** | **$506,802** | **$507,829** | - A property with a net value of **$22.4 million** is classified as 'Real estate investments held for sale' as of March 31, 2025, consistent with the prior quarter[49](index=49&type=chunk) [Debt Overview](index=18&type=section&id=Debt%20Overview) Total debt was **$280.8 million** as of March 31, 2025, with **100% fixed-rate** for 2025 at a **4.27% weighted average** Debt Composition (as of March 31, 2025) | Debt Type | Outstanding Balance (in thousands) | Interest Rate | | :--- | :--- | :--- | | Mortgage Notes | $30,781 | 3.85% - 4.85% | | Term Loan | $250,000 | 4.25% (fixed via swap) | | Revolver | $0 | 6.16% (variable) | | **Total Debt** | **$280,781** | **4.27% (weighted avg.)** | - The **$250 million Term Loan's** interest rate is fixed at **4.25%** for the year ending December 31, 2025, through interest rate swap agreements[50](index=50&type=chunk) [Credit Facility and Mortgage Notes Covenants](index=19&type=section&id=Credit%20Facility%20and%20Mortgage%20Notes%20Covenants) Modiv was in full compliance with all financial covenants, maintaining a **47.6% leverage ratio** against a **60% maximum** Unsecured Credit Facility Covenant Compliance (as of March 31, 2025) | Covenant | Requirement | Actual | | :--- | :--- | :--- | | Maximum Leverage Ratio | < 60% | 47.6% | | Minimum Fixed Charge Coverage Ratio | > 1.50x | 1.83x | | Maximum Secured Indebtedness Ratio | < 40% | 7% | [Real Estate Portfolio](index=20&type=section&id=Real%20Estate) [Real Estate Acquisitions](index=20&type=section&id=Real%20Estate%20Acquisitions) From Jan 2024 to Mar 2025, Modiv acquired two Florida industrial properties for **$11.2 million** at an **8.0% initial cap rate** Acquisition Activity (Jan 2024 - Mar 2025) | Tenant and Location | Acquisition Date | Acquisition Price (thousands) | Initial Cap Rate | | :--- | :--- | :--- | :--- | | Torrent, Seminole, FL | July 2024 | $5,125 | 8.0% | | Science First, Yulee, FL | March 2025 | $6,100 | 8.0% | | **Total** | | **$11,225** | **8.0%** | [Real Estate Dispositions](index=21&type=section&id=Real%20Estate%20Dispositions) Between Jan 2024 and Mar 2025, the company disposed of three properties and one land parcel for **$17.6 million** Disposition Activity (Jan 2024 - Mar 2025) | Tenant and Location | Property Type | Disposition Date | Disposition Price (thousands) | | :--- | :--- | :--- | :--- | | Levins, Sacramento, CA | Industrial | January 2024 | $7,075 | | Cummins, Nashville, TN | Office | February 2024 | $7,950 | | Lindsay, Canal Fulton, OH | Industrial (Land) | September 2024 | $240 | | Producto, Endicott, NY | Industrial | January 2025 | $2,362 | | **Total** | | | **$17,627** | [Top 20 Tenants](index=22&type=section&id=Top%2020%20Tenants) The top 20 tenants account for **89% of total ABR**, with Lindsay being the largest at **14% of ABR** - The top 20 tenants contribute **89% of total ABR**[59](index=59&type=chunk) Top 5 Tenants by ABR % | Tenant | ABR as a % of Total Portfolio | | :--- | :--- | | Lindsay | 14% | | KIA of Carson | 11% | | State of CA OES | 7% | | AvAir | 6% | | 3M | 5% | [Property Type](index=23&type=section&id=Property%20Type) The portfolio is **80% industrial core** by ABR, with non-core properties representing **20% of ABR** Portfolio by Property Type | Property Type | % of Total ABR | % of Total Square Feet | | :--- | :--- | :--- | | Industrial core | 80% | 93% | | Non-core | 20% | 7% | - Non-core properties include a legacy Costco property under a purchase and sale agreement with homebuilder KB Home, and a legacy OES property where the tenant has indicated interest in exercising a purchase option[61](index=61&type=chunk) [Tenant Industry Diversification](index=24&type=section&id=Tenant%20Industry%20Diversification) Portfolio diversified across 13 industries, with Infrastructure, Automotive, and Industrial Products as top three by ABR Top 5 Industries by ABR % | Industry | % of Total ABR | | :--- | :--- | | Infrastructure | 24% | | Automotive | 15% | | Industrial Products | 14% | | Aerospace/Defense | 13% | | Government | 7% | [Tenant Geographic Diversification](index=25&type=section&id=Tenant%20Geographic%20Diversification) Properties are spread across 15 states, with California, Ohio, and Arizona accounting for **54% of total ABR** Top 5 States by ABR % | State | % of Total ABR | | :--- | :--- | | California | 30% | | Ohio | 13% | | Arizona | 11% | | Illinois | 9% | | Florida | 7% | [Lease Expirations](index=26&type=section&id=Lease%20Expirations) The portfolio has a well-staggered lease expiration schedule, with only **3% of ABR expiring in 2025** Cumulative ABR Expiration | Year of Expiration | Cumulative % of ABR Expiring | | :--- | :--- | | 2025 | 3% | | 2026 | 6% | | 2027 | 8% | | 2028 | 10% | | 2034 | 41% | | Thereafter | 100% | - A recent **10-year lease extension** with Fujifilm Dimatix, Inc. moved its expiration to 2036, contributing to the long-term stability of the portfolio[64](index=64&type=chunk) [Appendix](index=27&type=section&id=Appendix) [Disclosures Regarding Non-GAAP and Other Metrics](index=27&type=section&id=Disclosures%20Regarding%20Non-GAAP%20and%20Other%20Metrics) This section defines non-GAAP financial measures like FFO, AFFO, and Adjusted EBITDA, used for assessing operating performance - FFO is a Nareit-defined measure that excludes items like depreciation and gains on property sales to facilitate operating performance comparisons between REITs[67](index=67&type=chunk) - AFFO further adjusts FFO by excluding non-routine and certain non-cash items (e.g., stock compensation, amortization of deferred rent) to provide what management believes is a recognized measure of sustainable operating performance[68](index=68&type=chunk) - Adjusted EBITDA is defined as net income adjusted for depreciation, amortization, interest expense, and other non-cash or non-recurring items to provide a widely used industry measure for comparing operating performance[71](index=71&type=chunk)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents Modiv Industrial, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Modiv Industrial, Inc.'s unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, operations, and cash flows Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total real estate investments, net** | $474,080 | $473,906 | | **Cash and cash equivalents** | $6,165 | $11,530 | | **Total assets** | $506,802 | $507,829 | | **Total liabilities** | $293,426 | $293,779 | | **Total equity** | $213,376 | $214,050 | Condensed Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | $11,793 | $11,967 | | **Operating income** | $4,736 | $6,659 | | **Net income** | $829 | $4,637 | | **Net income attributable to common stockholders** | $2 | $2,802 | | **Basic Earnings (loss) per share** | $(0.01) | $0.33 | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $3,050 | $2,987 | | **Net cash (used in) provided by investing activities** | $(864) | $14,682 | | **Net cash used in financing activities** | $(7,551) | $(2,393) | | **Net (decrease) increase in cash** | $(5,365) | $15,276 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and specific financial statement items, covering real estate investments, debt, derivatives, and equity - The company's portfolio as of March 31, 2025, consists of **43 real estate properties**, with approximately **80% of its Annual Base Rent (ABR)** derived from **39 industrial properties**[31](index=31&type=chunk) - In Q1 2025, the company acquired **one industrial property in Florida for $6.1 million** and sold **one industrial property in New York for $2.4 million**[50](index=50&type=chunk)[52](index=52&type=chunk) - In January 2025, the company entered into **two interest rate swap agreements totaling $250.0 million** to fix the SOFR rate at **2.45%** for its Term Loan through December 31, 2025, paying a **$4.2 million premium** to buy down the rate[76](index=76&type=chunk)[83](index=83&type=chunk) - A stock repurchase program for Series A Preferred Stock was authorized on March 4, 2025. Through March 31, 2025, **205,000 shares were repurchased for $4.9 million**[38](index=38&type=chunk)[101](index=101&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operations, and cash flows, covering strategic focus, market uncertainties, liquidity, and non-GAAP measures [Overview and Recent Events](index=30&type=section&id=Overview%20and%20Recent%20Events) The company, an internally managed REIT, focuses on acquiring industrial manufacturing properties and has mitigated interest rate risk with new swap agreements - The company's strategic focus is on acquiring **critical industrial manufacturing properties** to strengthen national supply chains[132](index=132&type=chunk) - As of March 31, 2025, the portfolio had a weighted average remaining lease term (WALT) of **13.8 years** and a **98% occupancy rate**[138](index=138&type=chunk) - To mitigate interest rate risk, the company entered into new swap agreements in January 2025, fixing the rate on its **$250 million Term Loan at 4.25%** for the year ending December 31, 2025[137](index=137&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company plans to fund acquisitions and debt payments through bank borrowings, property sales, and equity offerings, maintaining a $280 million credit facility - Primary sources of capital include the credit facility, mortgage debt, property sales, and equity offerings. The company expects to have **adequate liquidity for the next 12 months**[144](index=144&type=chunk)[146](index=146&type=chunk) - Through April 30, 2025, the company has raised **$10.4 million in net proceeds** from its ATM Offering, with **$38.1 million remaining available** for issuance[147](index=147&type=chunk) - The company's credit facility maturity was extended to **January 2027** for both the Revolver and Term Loan. The Revolver capacity was reduced to **$30.0 million** to lower unused fees[149](index=149&type=chunk)[150](index=150&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Rental income remained stable in Q1 2025, while stock compensation expense decreased significantly and other expenses increased due to higher interest Comparison of Key Expenses (in millions) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Rental Income | $11.7 | $11.9 | -1.7% | | General & Administrative | $2.0 | $2.0 | 0% | | Stock Compensation | $0.5 | $1.4 | -65% | | Depreciation & Amortization | $3.8 | $4.1 | -8% | | Other Expense | $3.9 | $2.0 | +95% | - The decrease in stock compensation expense was primarily due to the **full vesting of Class P and Class R OP Units** at the end of March 2024[182](index=182&type=chunk) - The increase in Other Expense was mainly driven by a **$1.7 million increase in interest expense**, reflecting the absence of a prior-year unrealized gain on a derivative and the amortization of new off-market derivative premiums[186](index=186&type=chunk) [Funds from Operations and Adjusted Funds from Operations](index=35&type=section&id=Funds%20from%20Operations%20and%20Adjusted%20Funds%20from%20Operations) Reconciles net income to non-GAAP measures FFO and AFFO, with Q1 2025 FFO per share at $0.33 and AFFO per share at $0.33 FFO and AFFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net income attributable to common stockholders and OP Unit holders | $2 | $3,715 | | **FFO attributable to common stockholders and OP Unit holders** | **$3,925** | **$4,846** | | FFO Per Share/Unit (Fully diluted) | $0.33 | $0.43 | | **AFFO attributable to common stockholders and OP Unit holders** | **$3,912** | **$3,318** | | AFFO Per Share/Unit (Fully diluted) | $0.33 | $0.29 | [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - Not applicable as the company is a **smaller reporting company**[199](index=199&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2025[201](index=201&type=chunk) - No **material changes to internal control over financial reporting** occurred during the quarter ended March 31, 2025[202](index=202&type=chunk) [PART II - OTHER INFORMATION](index=42&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Presents other information including legal proceedings, risk factors, equity sales, and exhibits [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reports it is not a party to any material legal proceedings - As of March 31, 2025, the Company is not a party to any **legal proceeding that could have a material adverse effect** on its business[109](index=109&type=chunk)[203](index=203&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - No **material changes** have been made to the risk factors disclosed in the Annual Report filed on March 4, 2025[204](index=204&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the issuance of Class C OP Units for a property acquisition and the repurchase of Series A Preferred Stock - On March 7, 2025, the Company issued **344,119 Class C OP Units valued at $5.9 million** in connection with a property acquisition, exempt from registration under Section 4(a)(2) of the Securities Act[205](index=205&type=chunk) Issuer Purchases of Series A Preferred Stock (March 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 1-31, 2025 | 205,000 | $23.661 | [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No directors or officers adopted or terminated a **Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** in Q1 2025[207](index=207&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) Provides an index of exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q - The report includes an **exhibit index** listing all documents filed with the report, such as certifications and XBRL data[208](index=208&type=chunk)[211](index=211&type=chunk)

Group 1 - The recent months have significantly altered global trading norms due to the implementation of tariffs, leading to a new economic reality [1] - The economy is currently navigating through these changes, indicating a period of adjustment for various industries [1]

Financial Performance - Full year 2024 net income attributable to common stockholders was $2.3 million, or $0.25 per diluted share[14] - Fourth quarter 2024 net income attributable to common stockholders was $0.6 million, or $0.07 per diluted share[14] - Full year 2024 AFFO was $14.99 million, or $1.34 per diluted share, exceeding street expectations by $0.08 per share[14] - Fourth quarter AFFO was $4.1 million, or $0.37 per diluted share, beating consensus estimates by 22%[14] - Total income for Q4 2024 was $11.730 million, compared to $12.388 million in Q4 2023, reflecting a decline of approximately 5.3% year-over-year[30] - Operating income for Q4 2024 increased to $5.330 million from $3.838 million in Q4 2023, representing a growth of approximately 38.9%[30] - The company reported a comprehensive income of $1.387 million for Q4 2024, compared to a comprehensive loss of $2.101 million in Q4 2023[34] - For the three months ended December 31, 2024, Modiv Industrial, Inc. reported a net income of $1,642,000, compared to a net loss of $1,048,000 for the previous quarter[36] - The earnings per share attributable to common stockholders for the latest quarter was $0.07, recovering from a loss of $0.18 in the prior quarter[36] - Funds from Operations (FFO) attributable to common stockholders and Class C OP Unit holders was $5,072,000 for the quarter ended December 31, 2024, up from $2,216,000 in the previous quarter[38] - Adjusted Funds from Operations (AFFO) attributable to common stockholders and Class C OP Unit holders was $4,067,000 for the latest quarter, compared to $3,702,000 in the prior quarter[38] - Modiv's AFFO per share on a fully diluted basis was $0.37 for the quarter ended December 31, 2024, compared to $0.34 in the previous quarter[38] - Annualized adjusted EBITDA for the year was $39,936,000, compared to $38,596,000 in the prior year[40] - Net income for the quarter was $1,642,000, a significant recovery from a net loss of $1,048,000 in the previous quarter[40] Asset Management and Acquisitions - The company plans to grow AFFO through acquiring positive income-producing assets and improving expense efficiency[20] - A small $2 million asset was sold, and a $6 million asset acquisition is expected to close by March 14, 2025[18] - The company has implemented a disciplined acquisition strategy, focusing on evaluating opportunities without overextending itself[17] - The total property acquisition activity from January 1, 2023, to December 31, 2024, includes 1,730,704 square feet with an initial lease price of $134.274 million[54] - The company disposed of properties totaling 405,025 square feet, generating $62.732 million in disposition price[57] - The company completed a non-core acquisition of a KIA auto dealership in Los Angeles County for $32.8 million, structured as an OP Unit transaction at a cost basis of $25.00 per share[63] - The company has a 12-year lease with OES for a legacy asset in Rancho Cordova, California, which includes a purchase option that OES may exercise until December 31, 2026[63] - A legacy property leased to Costco in Issaquah, Washington is under a purchase agreement with KB Home for $25.3 million, with a potential increase of $0.3 million for each additional townhome added before closing[63] Debt and Equity - Consolidated debt as of December 31, 2024, was $280,918,000, with a net debt to adjusted EBITDA ratio of 7.0x[40] - The leverage ratio as of December 31, 2024, was 48.0%, up from 47.6% in the previous quarter[44] - The company reported a total equity of $214,050,000, down from $225,122,000 in the previous year[47] - The weighted average interest rate for total debt outstanding was 4.27% as of December 31, 2024[46] - Total debt as of December 31, 2024, is $279.776 million, with a weighted average interest rate of 4.27%[48] - The company has a maximum leverage ratio of 47.6%, which is below the required limit of 60%[51] - The company reduced its Revolver line of credit from $150 million to $30 million, saving $0.3 million in annual unused fees[49] - New swap agreements were entered into for $250 million, fixing SOFR at 2.45% for the year ending December 31, 2025, resulting in a fixed rate of 4.25%[49] - The company has a minimum consolidated tangible net worth of $281.553 million, exceeding the required $221.737 million[51] Rental Income and Portfolio - Total rental income for Q4 2024 was $11.664 million, a decrease from $12.289 million in Q4 2023, attributed to the sale of 14 properties in August 2023 and two properties in Q1 2024[30] - The top 20 tenants contribute $35.439 million in annual base rent (ABR), representing 88% of the total portfolio[59] - Industrial core properties account for 78% of the total ABR, with 39 properties and 4,196,496 square feet[61] - California accounts for 30% of the total ABR, with 11,925 thousand dollars, while Ohio contributes 12% with 4,866 thousand dollars[65] - Lease expirations indicate that 5% of ABR, amounting to $1.812 million, is set to expire in 2025, with cumulative expirations reaching 100% by 2034[66] - The company holds 43 properties with an Annual Base Rent (ABR) of $39.638 million, representing 100% of the total portfolio[64] Impairment and Depreciation - The impairment charge for Q4 2023 was related to an office property in Nashville, Tennessee, which was sold in February 2024[32] - The impairment charge for the fourth quarter of 2023 was related to an office property in Nashville, Tennessee, which was sold on February 28, 2024[42] - The company experienced a depreciation and amortization of real estate properties totaling $4,163,000 for the quarter ended December 31, 2024[38] Definitions and Metrics - The company defines Funds from Operations (FFO) as net income excluding gains/losses from sales of depreciable property, plus real estate-related depreciation, providing a clearer view of operating performance[69] - Adjusted Funds from Operations (AFFO) excludes non-routine and certain non-cash items, offering insight into sustainable operating performance[70] - The leverage ratio is defined as total debt as a percentage of the aggregate fair value of real estate properties, including cash and cash equivalents[76] - The initial cap rate for property acquisitions is defined as the initial annual cash rent divided by the purchase price of the property[78]

Financial Performance - Funds from Operations (FFO) for the year ended December 31, 2024, was $16.802 million, compared to $10.175 million in 2023, reflecting an increase in operating performance [244]. - Adjusted Funds From Operations (AFFO) for 2024 was $14.988 million, slightly up from $14.673 million in 2023, indicating stable operating performance [244]. - Total rental income for the year ended December 31, 2024 was $46.5 million, a decrease of $0.4 million or 1% compared to $46.9 million in 2023, primarily due to the sale of properties [263]. - The company reported net cash provided by operating activities of $18.241 million in 2024, an increase from $16.579 million in 2023 [256]. - Interest income increased to $0.5 million in 2024 from $0.3 million in 2023, primarily due to higher interest rates on cash and proceeds from property sales [270]. - Dividend income decreased to $0.1 million in 2024 from $0.5 million in 2023, reflecting reduced dividends from GIPR preferred stock [271]. - Interest expense rose to $16.2 million in 2024 from $13.8 million in 2023, driven by increased interest rates and larger outstanding balances [273]. - The gain on sale of real estate investments was $3.4 million for the year ended December 31, 2024, compared to a loss of $1.7 million for 2023 [269]. Investment Strategy - The company’s primary investment objectives include providing attractive growth in Adjusted Funds from Operations (AFFO) and sustainable cash distributions [209]. - The company’s focus for future acquisitions is on critical industrial manufacturing properties with long-term leases to tenants [206]. - The company plans to acquire an industrial property for $6.1 million, with an initial cap rate of 8.00%, expected to close by March 14, 2025 [234]. - The percentage of Annual ABR from industrial core properties increased from 76% in 2023 to 78% in 2024, reflecting a strategic shift towards industrial manufacturing properties [247]. - In 2024, the company acquired one industrial manufacturing property and sold two non-core properties, resulting in 78% of the portfolio being industrial properties and 22% non-core properties as of December 31, 2024 [249]. Liquidity and Capital Structure - The company reported a leverage ratio of 47.6% as of December 31, 2024, with an aggregate of $250.0 million in new swap agreements fixing the Secured Overnight Financing Rate (SOFR) at 2.45% for the year ending December 31, 2025 [212][226]. - The company has $30.0 million of borrowing capacity available under its Credit Facility, which may be utilized for attractive investment opportunities [218]. - The company expects to maintain adequate liquidity to meet cash requirements for the next 12 months and beyond, funded by internally generated funds [219]. - The company’s Credit Facility includes a $280.0 million line of credit, with a $30.0 million revolving line of credit and a $250.0 million term loan [222]. - The company had $30.0 million in unused capacity on its Revolver as of the date of the Annual Report, which can be utilized for real estate investments and repositioning properties [230]. - The company is expected to incur $3.0 million in tenant improvements in 2025, funded from cash on hand and operating cash flow [238]. Property Management and Operations - The company successfully negotiated lease extensions for six properties during the years ended December 31, 2024, and 2023, despite potential future declines in rental rates and economic conditions [214]. - The company has two leases expiring on July 31, 2025, for properties leased to Costco and Solar Turbines, which may impact future cash flows [213]. - The weighted average lease term (WALT) for the company's properties was approximately 13.8 years as of December 31, 2024 [247]. - General and administrative expenses decreased by $0.3 million or 5% year-over-year, totaling $6.3 million in 2024 compared to $6.6 million in 2023 [264]. - Stock compensation expense significantly decreased by $9.6 million or 86% year-over-year, amounting to $1.6 million in 2024 compared to $11.2 million in 2023 [265]. - Depreciation and amortization expense increased by $1.0 million or 7% year-over-year, totaling $16.6 million in 2024 compared to $15.6 million in 2023 [266]. - Property expenses decreased by $1.5 million or 30% year-over-year, totaling $3.6 million in 2024 compared to $5.2 million in 2023 [267]. Portfolio Management - The company disposed of 14 non-core properties in 2023 for aggregate contract sales prices of $47.5 million, resulting in net proceeds of $44.4 million and a net loss on sales of $1.7 million [236]. - The company sold 14 properties in August 2023 and two properties in the first quarter of 2024, reflecting its ongoing portfolio transformation strategy [261]. - The total investments in real estate property as of December 31, 2024 were $393.488 million for industrial core properties and $108.200 million for non-core properties [252]. Market Conditions and Risks - The company anticipates potential impacts from inflation and interest rates, which may affect future operating results and liquidity [210][211]. - The company monitors real estate properties for impairment indicators, which may involve significant management judgment and assumptions [277]. - The company allocates purchase prices of acquired properties based on estimated fair values, impacting revenue and expense recognition timing [276]. - The company is classified as a smaller reporting company, thus not applicable for certain market risk disclosures [280].