Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40814 ____________________________________________________ ...

Financial Data and Key Metrics Changes - Fourth quarter adjusted funds from operations (AFFO) increased to $4.5 million, up 41% from $3.82 million in the prior year quarter after excluding the 2022 lease termination fee [15][36] - Revenue for the fourth quarter was $12.3 million compared to $13.8 million in the prior year, but increased by 23% when excluding the 2022 lease termination fee [35] - Full year revenue was $46.9 million, a 17% increase from $40 million in the prior year, excluding the lease termination fee [36] - AFFO for the full year was $14.7 million, up 14% from $12.9 million in the prior year [36] - AFFO per fully diluted share increased to $1.33 from $1.26 in the prior year, reflecting a 6% increase despite an increase in shares outstanding [36] Business Line Data and Key Metrics Changes - The increase in AFFO was driven by a $6.9 million revenue increase, offset by a $3 million increase in straight-line rents and a $5.1 million increase in cash interest expense [16] - General and administrative (G&A) expenses decreased by $1.2 million, reflecting lower headcount and the absence of the 2022 relocation reserve [16][49] - Property expenses decreased by $1.4 million due to the disposition of properties with modified gross leases and double net leases [16][49] Market Data and Key Metrics Changes - As of December 31, 2023, total cash and cash equivalents were $3.1 million, with $280 million of debt outstanding [5] - The company’s debt consists of $31 million in mortgages and $250 million in borrowings on a $400 million credit facility, with a fixed interest rate of 4.52% [5] Company Strategy and Development Direction - The company plans to announce potential strategic partnerships before the end of April, indicating a focus on collaboration for future growth [44] - Management is optimistic about the potential sale of a property to Costco, with a timeline for closure potentially before 2025 [54] - The company is actively monitoring the market for individual property deals, although the current pipeline is lighter due to market conditions [61] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the current market environment but remains optimistic about future opportunities as the spring season approaches [42][61] - The company is focused on maintaining liquidity and balancing equity issuance with market conditions [62] - Management emphasized the importance of clear communication with stakeholders to enhance understanding of the company's operations and strategies [66] Other Important Information - The Board of Directors declared a cash dividend of approximately $0.95 per common share for the first quarter of 2024, representing a yield of 7.5% based on the closing price [37] - The company’s portfolio consists of 42 properties with an attractive weighted average lease term of 14 years, with 33% of tenants having investment-grade credit ratings [50] Q&A Session Summary Question: What is the timing for the Costco sale closing? - Management indicated that the timing is contingent on the completion of necessary approvals, with a potential closing date before 2025 [54] Question: Can you provide more details on the pipeline? - Management noted that the pipeline is currently lighter due to market conditions, but they are seeing individual property deals and are prepared to deploy cash if strategic partnerships do not materialize [61] Question: What was the reason for selling shares during the quarter? - The share sales were part of an At-The-Market (ATM) program to test liquidity and manage price surges, with a focus on balancing equity issuance [62]

Exhibit 99.2 NYSE: MDV QUARTERLY SUPPLEMENTAL DATA December 31, 2023 Financial Information and Portfolio Information Modiv Industrial, Inc. Supplemental Information - Fourth Quarter 2023 Table of Contents | About the Data | 3 | | --- | --- | | Company Overview | 4 | | Financial Results | | | Earnings Release | 5 | | Consolidated Statements of Operations - Last Five Quarters | 10 | | Property Portfolio - Statements of Operations - Fourth Quarter of 2023 | 12 | | Consolidated Statements of Comprehensive (Loss ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for Modiv Industrial, Inc [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Modiv Industrial, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity as of September 30, 2023, and December 31, 2022 | Metric | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | **Assets** | | | | Total real estate investments, net | $499,734,347 | $425,963,908 | | Cash and cash equivalents | $5,641,610 | $8,608,649 | | Total assets | $539,063,193 | $454,429,919 | | **Liabilities and Equity** | | | | Total liabilities | $300,659,357 | $213,395,959 | | Total equity | $238,403,836 | $241,033,960 | | Total liabilities and equity | $539,063,193 | $454,429,919 | - Total assets increased by approximately **$84.6 million** from December 31, 2022, to September 30, 2023, primarily driven by an increase in real estate investments[11](index=11&type=chunk) - Total liabilities increased significantly by approximately **$87.3 million**, mainly due to an increase in the credit facility term loan[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including rental income, operating expenses, and net income (loss) for the three and nine months ended September 30, 2023 and 2022 | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Rental income | $12,500,338 | $10,303,402 | $34,648,083 | $30,017,493 | | Total operating expenses | $15,575,404 | $7,401,841 | $34,364,118 | $40,212,928 | | Operating (loss) income | $(4,783,867) | $6,833,589 | $(1,424,836) | $1,331,750 | | Net (loss) income attributable to common stockholders | $(6,458,221) | $3,000,352 | $(8,084,383) | $(6,817,403) | | Basic EPS | $(0.86) | $0.40 | $(1.07) | $(0.91) | | Diluted EPS | $(0.86) | $0.35 | $(1.07) | $(0.91) | - Rental income increased by **21%** for the three months ended September 30, 2023, and by **15%** for the nine months ended September 30, 2023, compared to the prior year periods[13](index=13&type=chunk) - The company reported a net loss attributable to common stockholders of **$(6,458,221)** for the three months ended September 30, 2023, a significant decline from a net income of **$3,000,352** in the same period last year, primarily due to increased stock compensation expense and a loss on sale of real estate investments[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) This section details the company's comprehensive income (loss), including net income (loss) and other comprehensive income components for the three and nine months ended September 30, 2023 and 2022 | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net (loss) income | $(6,905,242) | $4,450,767 | $(6,854,210) | $(5,232,053) | | Comprehensive (loss) income | $(6,652,150) | $8,706,673 | $(6,097,714) | $(976,147) | | Comprehensive (loss) income attributable to Modiv Industrial, Inc. | $(5,238,990) | $7,540,704 | $(4,436,516) | $(433,301) | - Comprehensive loss attributable to Modiv Industrial, Inc. was **$(5,238,990)** for the three months ended September 30, 2023, a significant decrease from comprehensive income of **$7,540,704** in the prior year, mainly due to the net loss and changes in cash flow hedge adjustments[15](index=15&type=chunk) [Condensed Consolidated Statements of Equity (Three Months)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20%E2%80%93%20Three%20Months%20Ended%20September%2030%2C%202023%20and%202022) This section presents changes in Modiv Industrial, Inc.'s equity for the three months ended September 30, 2023 and 2022, reflecting net loss, distributions, and stock compensation | Metric | Sep 30, 2023 (Total Modiv Industrial, Inc. Equity) | Jun 30, 2023 (Total Modiv Industrial, Inc. Equity) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Balance, beginning of period | $154,720,206 | $156,186,587 (June 30, 2022) | | Issuance of common stock - distribution reinvestments | $552,086 | $663,219 (June 30, 2022) | | Stock compensation expense | $70,000 | $165,000 (June 30, 2022) | | OP Units compensation expense | $8,399,867 | $466,740 (June 30, 2022) | | Net loss | $(5,536,346) | $3,922,227 (June 30, 2022) | | Balance, end of period | $154,903,900 | $161,115,023 (Sep 30, 2022) | - Modiv Industrial, Inc. equity decreased from **$159,750,904** at December 31, 2022, to **$154,903,900** at September 30, 2023, primarily due to net losses and distributions, partially offset by additional paid-in capital from stock compensation and distribution reinvestments[11](index=11&type=chunk)[18](index=18&type=chunk) [Condensed Consolidated Statements of Equity (Nine Months)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20%E2%80%93%20Nine%20Months%20Ended%20September%2030%2C%202023%20and%202022) This section presents changes in Modiv Industrial, Inc.'s equity for the nine months ended September 30, 2023 and 2022, reflecting net loss, stock repurchases, and compensation | Metric | Sep 30, 2023 (Total Modiv Industrial, Inc. Equity) | Dec 31, 2022 (Total Modiv Industrial, Inc. Equity) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Balance, beginning of period | $159,750,904 | $171,826,892 (Dec 31, 2021) | | Issuance of common stock - distribution reinvestments | $1,708,285 | $2,866,846 (2022) | | OP Units compensation expense | $9,555,206 | $1,493,352 (2022) | | Repurchase of common stock | $(1,129,162) | $(3,957,752) (2022) | | Net loss | $(5,318,758) | $(4,051,778) (2022) | | Balance, end of period | $154,903,900 | $161,115,023 (Sep 30, 2022) | - For the nine months ended September 30, 2023, Modiv Industrial, Inc.'s equity decreased by approximately **$4.8 million**, influenced by net losses and common stock repurchases, despite contributions from OP Units compensation and distribution reinvestments[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022 | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $11,210,166 | $9,326,763 | | Net cash used in investing activities | $(90,995,924) | $(64,969,591) | | Net cash provided by financing activities | $76,818,719 | $2,962,196 | | Net decrease in cash and cash equivalents | $(2,967,039) | $(52,680,632) | | Cash and cash equivalents, end of period | $5,641,610 | $5,726,888 | - Net cash provided by operating activities increased by **$1,883,403** for the nine months ended September 30, 2023, compared to the same period in 2022[24](index=24&type=chunk) - Net cash used in investing activities significantly increased by **$26,026,333**, primarily due to higher real estate acquisitions and lower net proceeds from sales[24](index=24&type=chunk) - Net cash provided by financing activities saw a substantial increase of **$73,856,523**, mainly driven by increased borrowings from the credit facility term loan[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering business operations, accounting policies, and specific financial line items [NOTE 1. BUSINESS AND ORGANIZATION](index=12&type=section&id=NOTE%201.%20BUSINESS%20AND%20ORGANIZATION) Modiv Industrial, Inc. is a Maryland REIT primarily investing in industrial properties through its Operating Partnership, with its Class C common stock and Series A Preferred Stock listed on the NYSE - Company changed its name from Modiv Inc. to Modiv Industrial, Inc. effective August 11, 2023[30](index=30&type=chunk) - As of September 30, 2023, the portfolio consists of **44 real estate properties** (**4.6 million sq ft**): **39 industrial** (**76% of ABR**), **1 retail** (**10% of ABR**), and **4 office** (**14% of ABR**)[32](index=32&type=chunk) - The Company is the sole general partner of Modiv Operating Partnership, LP, owning approximately **68% interest** as of September 30, 2023[31](index=31&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the company's significant accounting policies, including basis of presentation, consolidation, estimates, real estate acquisitions, revenue recognition, impairment, fair value disclosures, and derivative instruments - All real estate acquisitions for the nine months ended September 30, 2023, and the year ended December 31, 2022, were accounted for as asset acquisitions[43](index=43&type=chunk) - The Company records derivative instruments at fair value for risk management purposes to hedge exposure to interest rate variability on variable rate debt[67](index=67&type=chunk) - Immaterial error corrections were made in Q1 2023 for property tax accounting and in Q4 2022 for straight-line rent receivable write-offs, which did not affect net income (loss) or EPS[71](index=71&type=chunk)[72](index=72&type=chunk) [NOTE 3. REAL ESTATE INVESTMENTS, NET](index=19&type=section&id=NOTE%203.%20REAL%20ESTATE%20INVESTMENTS%2C%20NET) This note details the company's real estate portfolio, including acquisitions, dispositions, and impairment charges, highlighting its shift towards industrial properties - As of September 30, 2023, the Company's portfolio included **44 operating properties**: **39 industrial**, **1 retail**, and **4 office properties**[76](index=76&type=chunk) Real Estate Activity | Activity | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :----------------------------- | | Acquisitions (12 industrial properties) | $127,953,499 | | Dispositions (14 properties) | $47,466,960 | | (Loss) Gain on sale of real estate investments | $(1,708,801) | | Impairment charge (Cummins property) | $3,499,438 | - The KIA, Carson, CA property represented **12.5% of total assets** as of September 30, 2023, and **10.3% of rental income** for the three months ended September 30, 2023[89](index=89&type=chunk)[90](index=90&type=chunk) - Future minimum contractual rent payments from non-cancellable operating leases total **$715,669,876** as of September 30, 2023[96](index=96&type=chunk) [NOTE 4. UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY](index=25&type=section&id=NOTE%204.%20UNCONSOLIDATED%20INVESTMENT%20IN%20REAL%20ESTATE%20PROPERTY) This note describes the company's equity method investment in an unconsolidated industrial property and its related income and cash distributions - The Company holds an approximate **72.7% TIC interest** in a Santa Clara, California industrial property, accounted for using the equity method[106](index=106&type=chunk) Unconsolidated Investment Income and Distributions | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Income from unconsolidated investment | $79,164 | $207,506 | | Cash distributions received | $54,706 | $179,121 | [NOTE 5. INVESTMENT IN PREFERRED STOCK](index=26&type=section&id=NOTE%205.%20INVESTMENT%20IN%20PREFERRED%20STOCK) This note details the company's investment in GIPR Series A Redeemable Preferred Stock, received from a property disposition, and its fair value and expected redemption terms - The Company received **$12,000,000** in GIPR Series A Redeemable Preferred Stock as part of a property sale on August 10, 2023[110](index=110&type=chunk) GIPR Preferred Stock Fair Value | Metric | September 30, 2023 | | :----------------------------------- | :------------------- | | Liquidation value of GIPR preferred stock | $12,000,000 | | Fair value of GIPR preferred stock as of August 10, 2023 | $9,620,000 | | Increase in fair value for the period | $440,000 | | Fair value of GIPR preferred stock as of September 30, 2023 | $10,060,000 | - The Company expects GIPR to redeem the preferred stock for GIPR common stock as early as January 2024, leading to an immediate in-kind distribution to Modiv Industrial, Inc. stockholders[112](index=112&type=chunk) [NOTE 6. OTHER BALANCE SHEET DETAILS](index=27&type=section&id=NOTE%206.%20OTHER%20BALANCE%20SHEET%20DETAILS) This note provides details on tenant receivables, prepaid expenses, and accounts payable, accrued and other liabilities, including a significant construction-in-progress liability Balance Sheet Details | Metric | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Tenant receivables | $11,211,058 | $7,263,202 | | Prepaid expenses and other assets | $4,881,383 | $6,100,937 | | Accounts payable, accrued and other liabilities | $8,893,630 | $7,649,806 | - Accrued expenses as of September 30, 2023, include a **$2,350,000** liability for construction in progress at the Kalera property, related to mechanic's liens[116](index=116&type=chunk) [NOTE 7. DEBT](index=28&type=section&id=NOTE%207.%20DEBT) This note details the company's debt structure, including mortgage notes and credit facility borrowings, highlighting the increase in total debt and the fixed interest rate achieved through swaps Debt Summary | Debt Type | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------------- | :------------------- | | Mortgage notes payable, net | $34,118,748 | $44,435,556 | | Credit facility revolver | $0 | $3,000,000 | | Credit facility term loan, net | $248,385,927 | $148,018,164 | | Total debt | $282,504,675 | $195,453,720 | - The Credit Facility was increased to **$400,000,000** in October 2022, comprising a **$150,000,000 Revolver** and a **$250,000,000 Term Loan**[124](index=124&type=chunk) - As of September 30, 2023, **100%** of the Company's consolidated indebtedness was at fixed rates with a weighted average rate of **4.52%** due to swap agreements[221](index=221&type=chunk) Interest Expense, Net | Interest Expense Component | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Mortgage notes payable interest expense | $411,610 | $1,354,642 | | Credit facility interest expense | $4,509,026 | $10,895,933 | | Derivative cash settlements | $(1,586,641) | $(4,062,442) | | Total Interest expense, net | $2,922,918 | $6,761,779 | [NOTE 8. INTEREST RATE SWAP DERIVATIVES](index=32&type=section&id=NOTE%208.%20INTEREST%20RATE%20SWAP%20DERIVATIVES) This note describes the company's interest rate swap agreements used to fix SOFR on its Term Loan, noting the accounting treatment for fair value changes and hedge effectiveness - The Company has two interest rate swap agreements to fix SOFR on its Term Loan: one for **$150,000,000** (fixed at **2.258%**) and another for **$100,000,000** (fixed at **3.440%**)[141](index=141&type=chunk)[142](index=142&type=chunk) - The **$150,000,000** swap failed to qualify as a cash flow hedge in 2023 due to a counterparty cancellation option, resulting in fair value changes being recorded in interest expense[144](index=144&type=chunk)[145](index=145&type=chunk) Derivative Instrument Fair Value | Derivative Instrument | September 30, 2023 Fair Value | | :----------------------------------- | :------------------------------ | | Interest Rate Swaps (Asset) | $6,156,179 | | Interest Rate Swaps (Liability) | $0 | [NOTE 9. PREFERRED STOCK AND COMMON STOCK](index=33&type=section&id=NOTE%209.%20PREFERRED%20STOCK%20AND%20COMMON%20STOCK) This note details the company's outstanding Series A Preferred Stock and Class C common stock, including dividend rates, redemption terms, and common stock distributions - **2,000,000 shares** of **7.375% Series A Preferred Stock** are issued and outstanding, with cumulative dividends of **$1.84375 per share** annually[151](index=151&type=chunk)[158](index=158&type=chunk) - The Series A Preferred Stock is redeemable at the Company's option after September 17, 2026, or upon certain Delisting or Change of Control events[153](index=153&type=chunk) Distributions Declared Per Common Share | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Distributions declared per common share | $0.2875 | $0.8625 | [NOTE 10. RELATED PARTY TRANSACTIONS](index=36&type=section&id=NOTE%2010.%20RELATED%20PARTY%20TRANSACTIONS) This note outlines related party transactions, including board member compensation, a property lease with a related party, and management fees earned from an unconsolidated investment Board Compensation | Board Compensation | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Payments for services rendered | $57,500 | $192,500 | | Value of shares issued for services rendered | $70,000 | $235,000 | | Total | $127,500 | $427,500 | | Number of shares issued | 4,194 | 17,455 | - The Company acquired an industrial property leased to Kalera Inc. in January 2022, a transaction approved by disinterested board members due to a related party's executive role at Kalera[165](index=165&type=chunk) - The Company's taxable REIT subsidiary earned **$65,993** in management fees from the TIC Interest property for both the three and nine months ended September 30, 2023[167](index=167&type=chunk) [NOTE 11. COMMITMENTS AND CONTINGENCIES](index=37&type=section&id=NOTE%2011.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details the company's commitments for tenant improvements and significant contingencies, including mechanic's liens related to a bankrupt tenant's property - The Company has obligations to pay **$2,595,468** for on-site and tenant improvements as of September 30, 2023[171](index=171&type=chunk) - Kalera Inc. filed for Chapter 11 bankruptcy on April 4, 2023, and is expected to reject its lease with the Company, making the Company responsible for **$3,110,443** in mechanic's liens[172](index=172&type=chunk)[175](index=175&type=chunk) - An estimated **$2,350,000** has been accrued in the balance sheet to settle the pending mechanic's liens at less than face value[175](index=175&type=chunk) [NOTE 12. OPERATING PARTNERSHIP UNITS](index=38&type=section&id=NOTE%2012.%20OPERATING%20PARTNERSHIP%20UNITS) This note describes the company's various classes of Operating Partnership Units, their conversion terms, and the accounting for performance-based equity incentive compensation - Class M OP Units are convertible to Class C OP Units at a **1.6667:1 ratio** and will automatically convert on March 31, 2024[179](index=179&type=chunk)[182](index=182&type=chunk) - Class P OP Units are 'profits interests' convertible to Class C OP Units at a **1.6667:1 ratio** after a lockup period, also converting automatically on March 31, 2024[183](index=183&type=chunk)[188](index=188&type=chunk) - A one-time non-cash catch-up adjustment of **$7,822,197** was recorded for performance-based Class R OP Units, as achieving the 2023 FFO performance target (**$1.05 per diluted share**) is deemed probable, leading to a **2.5-for-1 conversion ratio** to Class C OP Units on March 31, 2024[191](index=191&type=chunk) Stock Compensation Expense | Stock Compensation Expense | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Class P OP Units | $88,783 | $266,350 | | Class R OP Units - Time Vesting Units | $488,887 | $1,466,659 | | Class R OP Units - Performance Units | $7,822,197 | $7,822,197 | | Class C common stock to board | $70,000 | $235,000 | | Total | $8,469,867 | $9,790,206 | [NOTE 13. EARNINGS (LOSS) PER SHARE](index=41&type=section&id=NOTE%2013.%20EARNINGS%20%28LOSS%29%20PER%20SHARE) This note presents the company's basic and diluted earnings per share, reflecting net losses and the treatment of anti-dilutive Operating Partnership Units Earnings Per Share | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :----------------------------- | | Net (loss) income attributable to common stockholders | $(6,458,221) | $(8,084,383) | | Basic EPS | $(0.86) | $(1.07) | | Diluted EPS | $(0.86) | $(1.07) | | Weighted-average common shares outstanding (Basic) | 7,548,052 | 7,537,505 | | Weighted-average common shares outstanding (Diluted) | 7,548,052 | 7,537,505 | - The weighted average dilutive effect of **3,580,720 shares** for the three months and **3,484,881 shares** for the nine months ended September 30, 2023, related to OP Units, were excluded from diluted EPS computation because their effect would be anti-dilutive[199](index=199&type=chunk) [NOTE 14. SUBSEQUENT EVENTS](index=42&type=section&id=NOTE%2014.%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after September 30, 2023, including dividend payments, authorized distributions, and developments regarding the Kalera Inc. lease and mechanic's liens - Series A Preferred Stock dividends of **$921,875** for Q3 2023 were paid on October 16, 2023, and Q4 2023 dividends were declared payable on January 16, 2024[202](index=202&type=chunk)[203](index=203&type=chunk) - Monthly distributions to common stockholders and Class C OP Unit holders were authorized through March 2024 at an annualized rate of **$1.15 per share**[205](index=205&type=chunk)[206](index=206&type=chunk) - Kalera Inc. filed a motion on October 31, 2023, to reject its lease, confirming the Company's responsibility for **$3,110,443** in mechanic's liens, with **$2,350,000** already accrued[207](index=207&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, results of operations, and cash flows, emphasizing strategic shifts, market uncertainties, liquidity, and REIT compliance [Overview](index=44&type=section&id=Overview) Modiv Industrial, Inc. is a REIT focused on acquiring industrial manufacturing properties, strategically shifting its portfolio composition and maintaining REIT qualification through income distribution - Modiv Industrial, Inc. is a REIT focused on acquiring critical industrial manufacturing properties[216](index=216&type=chunk) - Industrial properties increased from **41% to 75%** of the portfolio, and office properties decreased from **50% to 14%** (by ABR) since December 31, 2021[216](index=216&type=chunk) - The Company intends to remain qualified as a REIT, requiring annual distribution of at least **90%** of taxable income[217](index=217&type=chunk) [Recent Events and Uncertainties](index=45&type=section&id=Recent%20Events%20and%20Uncertainties) This section discusses significant market uncertainties, including inflation, interest rates, and geopolitical conflicts, and their potential impact on the company's fixed-rate debt and office property portfolio - Significant market uncertainties include inflation, rising interest rates, supply chain disruptions, and geopolitical conflicts[220](index=220&type=chunk) - As of September 30, 2023, **100%** of the Company's **$284,284,849** outstanding debt is at fixed rates with a weighted average rate of **4.52%**[221](index=221&type=chunk) - The COVID-19 pandemic's impact on office properties may lead to lower occupancy, rental rates, and declining values[222](index=222&type=chunk)[223](index=223&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's liquidity and capital resources, including funding sources for acquisitions and operations, and the structure and utilization of its Credit Facility - Cash requirements for property acquisitions, debt payments, and capital expenditures are funded by bank borrowings (Credit Facility), mortgage indebtedness, real estate property sales, and internally generated funds[227](index=227&type=chunk) - The Credit Facility was increased to **$400,000,000** in October 2022, comprising a **$150,000,000 Revolver** and a **$250,000,000 Term Loan**[229](index=229&type=chunk) - As of September 30, 2023, the Revolver had **zero outstanding balance**, and the Term Loan had an outstanding principal balance of **$250,000,000**[233](index=233&type=chunk) [Cash Flow Summary](index=48&type=section&id=Cash%20Flow%20Summary) This section summarizes the company's cash flow performance for the nine months ended September 30, 2023, highlighting changes in operating, investing, and financing activities Cash Flow Summary | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $11,210,166 | $9,326,763 | | Net cash used in investing activities | $(90,995,924) | $(64,969,591) | | Net cash provided by financing activities | $76,818,719 | $2,962,196 | - Net cash provided by operating activities increased by **$1,883,403**, while net cash used in investing activities increased by **$26,026,333**[241](index=241&type=chunk)[243](index=243&type=chunk) - Net cash provided by financing activities increased by **$73,856,523**, primarily due to decreased principal payments on notes payable and increased Credit Facility term loan borrowings[244](index=244&type=chunk) [Funds from Operations and Adjusted Funds from Operations](index=49&type=section&id=Funds%20from%20Operations%20and%20Adjusted%20Funds%20from%20Operations) This section presents the company's non-GAAP performance measures, Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO), used to evaluate operating performance and compare with other REITs - FFO and AFFO are non-GAAP measures used to evaluate operating performance and compare with other REITs[246](index=246&type=chunk)[247](index=247&type=chunk) FFO and AFFO Attributable to Common Stockholders and Class C OP Unit Holders | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------------ | :------------------------------ | :----------------------------- | | FFO attributable to common stockholders and Class C OP Unit holders | $(1,715,231) | $7,777,265 | | AFFO attributable to common stockholders and Class C OP Unit holders | $3,721,533 | $10,160,508 | | Basic FFO Per Share | $(0.23) | $1.03 | | Fully Diluted FFO Per Share | $(0.23) | $0.71 | | Basic AFFO Per Share | $0.49 | $1.35 | | Fully Diluted AFFO Per Share | $0.33 | $0.92 | [Property Portfolio Information](index=51&type=section&id=Property%20Portfolio%20Information) This section provides a segmented breakdown of the company's financial performance and asset allocation by property type, reflecting its strategic focus on industrial manufacturing properties - The Company categorizes its assets into Industrial Core, Tactical Non-Core, and Other Non-Core to reflect its strategic focus on industrial manufacturing properties[253](index=253&type=chunk) FFO by Property Type (Nine Months Ended Sep 30, 2023) | Property Type (Nine Months Ended Sep 30, 2023) | FFO Attributable to Common Stockholders and Class C OP Unit Holders | | :----------------------------------- | :------------------------------------------------------------------ | | Industrial Core | $12,254,527 | | Tactical Non-Core | $4,420,352 | | Other Non-Core | $925,706 | | Non-Property & Other | $(9,823,320) | | Consolidated Total | $7,777,265 | Total Real Estate Investments, Net by Property Type (As of Sep 30, 2023) | Property Type (As of Sep 30, 2023) | Total Real Estate Investments, Net | | :----------------------------------- | :--------------------------------- | | Industrial Core | $366,220,599 | | Tactical Non-Core | $118,255,821 | | Other Non-Core | $15,257,927 | | Consolidated Total | $499,734,347 | [Results of Operations (Comparison of Three Months Ended September 30, 2023 to 2022)](index=57&type=section&id=Results%20of%20Operations%20%28Comparison%20of%20Three%20Months%29) This section compares the company's operating results for the three months ended September 30, 2023 and 2022, highlighting changes in rental income, expenses, and real estate gains/losses - Rental income increased by **$2,196,936 (21%)** to **$12,500,338** for the three months ended September 30, 2023[260](index=260&type=chunk) - Stock compensation expense increased by **$7,920,627** to **$8,469,867**, primarily due to a one-time non-cash catch-up adjustment of **$7,822,197** for performance-based Class R OP Units[262](index=262&type=chunk) - The Company recorded a loss on sale of real estate investments of **$(1,708,801)** for the three months ended September 30, 2023, compared to a gain of **$3,932,028** in the prior year[266](index=266&type=chunk) [Results of Operations (Comparison of Nine Months Ended September 30, 2023 to 2022)](index=59&type=section&id=Results%20of%20Operations%20%28Comparison%20of%20Nine%20Months%29) This section compares the company's operating results for the nine months ended September 30, 2023 and 2022, detailing changes in rental income, expenses, impairment charges, and real estate gains/losses - Rental income increased by **$4,630,590 (15%)** to **$34,648,083** for the nine months ended September 30, 2023[272](index=272&type=chunk) - Stock compensation expense increased by **$8,049,354** to **$9,790,206**, primarily due to a one-time non-cash catch-up adjustment of **$7,822,197**[274](index=274&type=chunk) - An impairment of real estate investment property of **$3,499,438** was recorded for the nine months ended September 30, 2023[277](index=277&type=chunk) - The Company reported a loss on sale of real estate investments of **$(1,708,801)** for the nine months ended September 30, 2023, compared to a gain of **$11,527,185** in the prior year[279](index=279&type=chunk) [Capital Expenditures](index=61&type=section&id=Capital%20Expenditures) This section outlines the company's capital expenditure obligations for tenant improvements and property repairs, along with their expected funding sources - As of September 30, 2023, the Company had obligations to pay **$2,595,468** for on-site and tenant improvements[287](index=287&type=chunk) - Approximately **$343,500** in roof, HVAC, and paving repairs are expected in the next 12 months, with **$6,500** recoverable from tenants and **$337,000** non-recoverable[288](index=288&type=chunk) [Distributions](index=62&type=section&id=Distributions) This section details the company's Series A Preferred Stock dividends and common stock distributions, including historical payments and future authorizations - Series A Preferred Stock dividends of **$921,875** were declared for each of the first three quarters of 2023[289](index=289&type=chunk) Total Distributions Declared and Paid | Metric | 2023 Total (First Three Quarters) | | :----------------------------------- | :-------------------------------- | | Total Distributions Declared | $7,798,407 | | Distributions Declared Per Share | $0.862500 | | Distributions Paid Cash | $6,056,334 | | Distributions Reinvested | $1,716,399 | - Monthly common stock distributions were **$0.095833 per share**, representing an annualized rate of **$1.15 per share**, authorized through March 2024[293](index=293&type=chunk) [Election as a REIT](index=64&type=section&id=Election%20as%20a%20REIT) This section explains the company's election and intent to maintain its REIT status, outlining the tax implications and distribution requirements for qualification - The Company elected to be taxed as a REIT for U.S. federal income tax purposes beginning December 31, 2016[295](index=295&type=chunk) - To maintain REIT status, the Company must annually distribute at least **90%** of its taxable income (excluding net capital gains)[295](index=295&type=chunk) - Failure to qualify as a REIT would result in corporate tax rates and disqualification for four taxable years[296](index=296&type=chunk) [Critical Accounting Policies and Estimates](index=64&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the critical accounting policies and estimates used in preparing the financial statements, noting the reliance on management judgment and the absence of significant policy changes - Preparation of financial statements requires significant management judgments, assumptions, and estimates[297](index=297&type=chunk) - No significant changes to accounting policies occurred during the nine months ended September 30, 2023[297](index=297&type=chunk) [Commitments and Contingencies](index=64&type=section&id=Commitments%20and%20Contingencies) This section refers to Note 11 for details on the company's various commitments and contingencies - The Company may be subject to certain commitments and contingencies with regard to certain transactions[298](index=298&type=chunk) [Related-Party Transactions and Agreements](index=64&type=section&id=Related-Party%20Transactions%20and%20Agreements) This section refers to Note 10 for details on the company's related-party transactions and agreements - Details of related-party transactions and agreements are included in Note 10 of the financial statements[299](index=299&type=chunk) [Subsequent Events](index=64&type=section&id=Subsequent%20Events) This section refers to Note 14 for details on significant events occurring subsequent to the reporting period - Events that occurred subsequent to September 30, 2023, through the filing date of this report are detailed in Note 14[300](index=300&type=chunk) [Recent Accounting Pronouncements](index=65&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for information on recently issued and not yet adopted accounting pronouncements - Information regarding recent accounting pronouncements is provided in Note 2 of the financial statements[302](index=302&type=chunk) [Off-Balance Sheet Arrangements](index=65&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that could significantly impact the company's financial condition or results - The Company has no material off-balance sheet arrangements as of September 30, 2023[303](index=303&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company due to its status as a smaller reporting company - This item is not applicable as the Company is a smaller reporting company[304](index=304&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to a material weakness in accounting for non-recurring transactions, though financial statements are fairly stated, and a remediation plan is in progress [Evaluation of Disclosure Controls and Procedures](index=65&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of September 30, 2023, due to a material weakness, despite the fair presentation of financial statements - Disclosure controls and procedures were deemed ineffective as of September 30, 2023[306](index=306&type=chunk) - Despite the material weakness, consolidated financial statements are fairly stated in all material respects in accordance with GAAP[307](index=307&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=65&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) A material weakness was identified in the company's internal control over financial reporting regarding the evaluation of accounting standards for non-recurring transactions, stemming from immaterial error corrections - A material weakness was identified as of December 31, 2022, in the ability to properly identify and evaluate applicable accounting standards for non-recurring transactions and recent pronouncements[308](index=308&type=chunk) - The immaterial error corrections that led to this conclusion did not affect net loss or net loss per share for the years ended December 31, 2022 and 2021, nor non-GAAP measures like AFFO and EBITDA[309](index=309&type=chunk) [Remediation Plan](index=66&type=section&id=Remediation%20Plan) Management is implementing a remediation plan to address the material weakness by enhancing internal controls, utilizing consultants, and reorganizing accounting policy documentation - Management enhanced internal controls by refining policies and procedures and utilizing additional qualified consultants[311](index=311&type=chunk) - A review and reorganization of accounting policy documentation is underway to ensure comprehensiveness and GAAP conformance[311](index=311&type=chunk) [Changes in Internal Control over Financial Reporting](index=66&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the three months ended September 30, 2023, beyond the ongoing remediation efforts for the identified material weakness - No other material changes in internal control over financial reporting occurred during the three months ended September 30, 2023, beyond the remediation plan[312](index=312&type=chunk) [PART II - OTHER INFORMATION](index=66&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, other significant transactions, and exhibits for Modiv Industrial, Inc [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) This item incorporates by reference legal proceedings information from Note 11, primarily concerning the Kalera bankruptcy and related foreclosure action - Information on legal proceedings is incorporated by reference from Note 11 of the financial statements[313](index=313&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This item confirms no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to risk factors have occurred since the Annual Report on Form 10-K for 2022[314](index=314&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item details unregistered sales of Class C common stock to board members and reports no repurchases under the active 2023 Share Repurchase Program during the period [Unregistered Sales of Equity Securities](index=66&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) The company issued Class C common stock to non-employee board members for services, relying on a Section 4(a)(2) exemption during the three months ended September 30, 2023 - **4,194 shares** of Class C common stock were issued to non-employee board members during Q3 2023, exempt from registration under Section 4(a)(2) of the Securities Act[315](index=315&type=chunk) [Our Stock Repurchases](index=66&type=section&id=Our%20Stock%20Repurchases) The Board authorized a $15 million share repurchase program for 2023, with no Class C common stock repurchases made during the three months ended September 30, 2023 - The Board authorized a **$15,000,000** share repurchase program for Class C common stock and Series A Preferred Stock for 2023[316](index=316&type=chunk) - No shares of Class C common stock were repurchased during the three months ended September 30, 2023[317](index=317&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) This item details the sale of 13 properties to GIPR for cash and preferred stock, including the terms of the GIPR Preferred Stock and pro forma financial statements illustrating the transaction's impact [GIPR Sale Agreement Details](index=67&type=section&id=GIPR%20Sale%20Agreement%20Details) This section outlines the sale of 13 properties to GIPR for cash and preferred stock, including the company's commitment to distribute GIPR common stock to its stockholders upon redemption - The Company sold **13 net-leased properties** (**11 retail, 2 office**) to GIPR for **$42,000,000** on August 10, 2023[318](index=318&type=chunk)[319](index=319&type=chunk) - Consideration included **$30,000,000** in cash and **$12,000,000** in GIPR Series A Redeemable Preferred Stock[319](index=319&type=chunk) - The Company agreed to distribute GIPR common stock (upon redemption of the preferred stock) to its stockholders and/or OP Unit holders[320](index=320&type=chunk) [GIPR Preferred Stock Terms](index=67&type=section&id=GIPR%20Preferred%20Stock%20Terms) This section details the GIPR Preferred Stock terms, including dividend rates, redemption options for cash or common stock, and associated conditions and share limits - GIPR Preferred Stock pays cumulative cash dividends of **9.5% per annum**, increasing to **12.0% per annum** from August 10, 2024[322](index=322&type=chunk) - GIPR may redeem the preferred stock for cash or, until March 15, 2024, for GIPR Common Stock, subject to conditions[323](index=323&type=chunk) - Redemption for GIPR Common Stock is subject to a minimum of **2,200,000 shares** and a maximum of **3,000,000 shares**[323](index=323&type=chunk) [Unaudited Pro Forma Condensed Consolidated Balance Sheet](index=69&type=section&id=Unaudited%20Pro%20Forma%20Condensed%20Consolidated%20Balance%20Sheet) This section presents the unaudited pro forma condensed consolidated balance sheet, illustrating the estimated financial impact of the GIPR Portfolio disposition on assets and equity | Metric | Modiv Industrial, Inc. (As of Jun 30, 2023) | Pro Forma Modiv Industrial, Inc. (As of Jun 30, 2023) | | :----------------------------------- | :------------------------------------------ | :-------------------------------------------------- | | Total real estate investments, net | $515,295,451 | $476,754,048 | | Cash and cash equivalents | $9,912,110 | $39,194,618 | | Investment in preferred stock | $0 | $9,620,000 | | Total assets | $549,409,970 | $547,466,343 | | Total liabilities | $309,316,713 | $308,957,575 | | Total equity | $240,093,257 | $238,508,768 | - The pro forma balance sheet reflects the removal of the 13 properties sold to GIPR and the inclusion of cash and GIPR Preferred Stock proceeds[329](index=329&type=chunk) [Unaudited Pro Forma Condensed Consolidated Statement of Operations (For the Six Months Ended June 30, 2023)](index=70&type=section&id=Unaudited%20Pro%20Forma%20Condensed%20Consolidated%20Statement%20of%20Operations%20%28For%20the%20Six%20Months%20Ended%20June%2030%2C%202023%29) This section presents the unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2023, illustrating the estimated impact of the GIPR Portfolio disposition on rental income and net income | Metric | Modiv Industrial, Inc. (Six Months Ended Jun 30, 2023) | Pro Forma Modiv Industrial, Inc. (Six Months Ended Jun 30, 2023) | | :----------------------------------- | :----------------------------------------------------- | :---------------------------------------------------------- | | Total rental income | $22,147,745 | $20,266,546 | | Total expenses | $18,788,714 | $17,274,440 | | Operating income | $3,359,031 | $2,992,106 | | Net (loss) income attributable to common stockholders | $(1,626,162) | $(1,473,264) | | Basic and diluted EPS | $(0.22) | $(0.20) | - The pro forma statement reflects the removal of rental operations of the 13 properties sold to GIPR, including an allocation of interest expense[335](index=335&type=chunk) [Unaudited Pro Forma Condensed Consolidated Statement of Operations (For the Year Ended December 31, 2022)](index=71&type=section&id=Unaudited%20Pro%20Forma%20Condensed%20Consolidated%20Statement%20of%20Operations%20%28For%20the%20Year%20Ended%20December%2031%2C%202022%29) This section presents the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022, illustrating the estimated impact of the GIPR Portfolio disposition on rental income and net loss | Metric | Modiv Industrial, Inc. (Year Ended Dec 31, 2022) | Pro Forma Modiv Industrial, Inc. (Year Ended Dec 31, 2022) | | :----------------------------------- | :----------------------------------------------- | :---------------------------------------------------- | | Total rental income | $46,174,267 | $42,302,305 | | Total expenses | $53,443,863 | $50,818,370 | | Operating income | $4,926,775 | $3,680,306 | | Net loss attributable to common stockholders | $(6,976,035) | $(7,323,399) | | Basic and diluted EPS | $(0.93) | $(0.98) | - The pro forma statement reflects the removal of rental operations of the 13 properties sold to GIPR, including an allocation of interest expense[335](index=335&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This item lists all exhibits included or incorporated by reference in the Quarterly Report on Form 10-Q, such as corporate documents, agreements, and certifications - The exhibit index lists various documents, including Articles of Amendment, Bylaws, the GIPR Sale Agreement, and certifications[337](index=337&type=chunk)[339](index=339&type=chunk) [SIGNATURES](index=73&type=section&id=SIGNATURES) This section contains the required signatures for the Quarterly Report on Form 10-Q, certifying its submission by the Chief Executive Officer and Chief Financial Officer - The Quarterly Report on Form 10-Q is signed by Aaron S. Halfacre, Chief Executive Officer, and Raymond J. Pacini, Chief Financial Officer, on November 13, 2023[343](index=343&type=chunk)[344](index=344&type=chunk)

Modiv Inc. (NYSE:MDV) Q2 2023 Earnings Call Transcript August 14, 2023 12:00 PM ET Company Participants Margaret Boyce - IR Aaron Halfacre - CEO Ray Pacini - CFO Conference Call Participants Bryan Maher - B. Riley FBR Rob Stevenson - Janney Barry Oxford - Colliers Operator Good day and welcome to Modiv Industrial Second Quarter 2023 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. On today's call, management will provide prepared remarks and then ...

PART I - FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Modiv Industrial, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, Modiv Industrial, Inc. reported total assets of $549.4 million, an increase from $454.4 million at December 31, 2022. This growth was primarily driven by an increase in net real estate investments. Total liabilities rose to $309.3 million from $213.4 million, mainly due to increased borrowings on the credit facility term loan. Total equity slightly decreased to $240.1 million from $241.0 million Condensed Consolidated Balance Sheet Summary | Balance Sheet Item | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Total real estate investments, net** | $515,295,451 | $425,963,908 | | **Total assets** | **$549,409,970** | **$454,429,919** | | Credit facility term loan, net | $248,263,340 | $148,018,164 | | **Total liabilities** | **$309,316,713** | **$213,395,959** | | **Total equity** | **$240,093,257** | **$241,033,960** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2023, the company reported net income attributable to common stockholders of $3.1 million ($0.41 basic EPS), a significant improvement from $1.2 million ($0.17 basic EPS) in the same period of 2022. For the six-month period, the company recorded a net loss of $1.6 million (-$0.22 basic EPS), compared to a net loss of $9.8 million (-$1.31 basic EPS) in the prior year. The improvement was driven by higher rental income and the absence of the large goodwill impairment charge recorded in 2022 Key Operational Metrics (Attributable to Common Stockholders) | Metric | Q2 2023 ($) | Q2 2022 ($) | H1 2023 ($) | H1 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Rental Income | $11,836,563 | $10,144,478 | $22,147,745 | $19,714,091 | | Net Income (Loss) | $3,058,435 | $1,249,255 | ($1,626,162) | ($9,817,755) | | Basic EPS | $0.41 | $0.17 | ($0.22) | ($1.31) | | Diluted EPS | $0.35 | $0.14 | ($0.22) | ($1.31) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash provided by operating activities was $7.3 million, up from $5.1 million in the prior-year period. Net cash used in investing activities increased to $95.9 million, primarily for real estate acquisitions. Net cash provided by financing activities was $89.9 million, driven by $100 million in borrowings from the credit facility term loan, which funded the acquisitions Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,289,108 | $5,076,472 | | Net cash used in investing activities | ($95,877,378) | ($58,420,894) | | Net cash provided by financing activities | $89,891,731 | $6,642,351 | | Net increase (decrease) in cash | $1,303,461 | ($46,702,071) | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details the company's accounting policies, strategic portfolio shift, debt structure, equity, and significant subsequent events - As of June 30, 2023, the company's portfolio consisted of **56 properties**, with industrial properties representing **68% of annual base rent**, reflecting a strategic shift. **14 properties (11 retail, 3 office)** were classified as held for sale[36](index=36&type=chunk) - During H1 2023, the company acquired **10 industrial properties** for a total price of **$98.9 million**[86](index=86&type=chunk) - The company expanded its **credit facility to $400 million** **($150M Revolver, $250M Term Loan)** and entered into interest rate swaps to fix the rate on its term loan debt[129](index=129&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) - Subsequent to quarter-end, on August 10, 2023, the company **sold 13 retail and office properties** **for $42 million** **($30M cash, $12M preferred stock)** and **acquired two industrial properties** **for $28.9 million** in July 2023[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic pivot to industrial properties, financial performance, liquidity, and capital resources, including FFO and AFFO [Overview and Recent Developments](index=44&type=section&id=Overview%20and%20Recent%20Developments) The company is an internally-managed REIT focusing on acquiring critical industrial manufacturing properties. A significant strategic shift has occurred, with industrial properties growing to represent 76% of the portfolio's pro forma Annual Base Rent (ABR) as of June 30, 2023, up from 41% at the end of 2021. This was achieved through targeted acquisitions and the disposition of non-core retail and office assets, including a major sale of 13 properties on August 10, 2023 - The company is executing a strategic plan to focus on industrial manufacturing properties, reducing its retail and office exposure[212](index=212&type=chunk) - Post-quarter end, the portfolio consists of **45 properties**, with **40 being industrial**, representing **76% of pro forma ABR**. The portfolio has a **weighted average remaining lease term (WALT) of 14.3 years**[218](index=218&type=chunk) - On August 10, 2023, the company **sold 13 retail and office properties** to Generation Income Properties, Inc. (GIPR) **for $42 million**[217](index=217&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are its $400 million credit facility, property sales, and internally generated funds. The credit facility consists of a $150 million revolver and a $250 million term loan. The company has used interest rate swaps to fix the rates on its term loan debt. During H1 2023, the company drew down the remaining $100 million on its term loan to fund acquisitions. A share repurchase program is active, with $1.1 million in shares repurchased in H1 2023 - The company increased its **credit facility to $400 million**, **comprised of a $150 million revolver and a $250 million term loan**[228](index=228&type=chunk) - **Interest rates on the $250 million term loan are fixed through swap agreements**, with the **original $150M at 4.058%** and the **additional $100M at 5.240%** (based on a 47% leverage ratio)[230](index=230&type=chunk)[231](index=231&type=chunk) - Under the 2023 Share Repurchase Program, the company **repurchased 93,357 shares** of Class C common stock **for $1.1 million** at an **average price of $12.10 per share** during the six months ended June 30, 2023[239](index=239&type=chunk) [Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)](index=50&type=section&id=Funds%20from%20Operations%20%28FFO%29%20and%20Adjusted%20Funds%20from%20Operations%20%28AFFO%29) For Q2 2023, FFO per fully diluted share was $0.75 and AFFO was $0.31. For H1 2023, FFO per fully diluted share was $0.90 and AFFO was $0.61. The results are broken down by property type, showing that the 'Industrial Core' segment is the primary driver of FFO and AFFO, contributing $0.37 and $0.28 per fully diluted share, respectively, in Q2 2023 FFO and AFFO Per Fully Diluted Share | Metric | Q2 2023 ($) | Q2 2022 ($) | H1 2023 ($) | H1 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | FFO | $0.75 | $0.46 | $0.90 | ($1.55) | | AFFO | $0.31 | $0.35 | $0.61 | $0.64 | Q2 2023 AFFO Breakdown by Segment (per fully diluted share) | Segment | AFFO per Share ($) | | :--- | :--- | | Industrial Core | $0.28 | | Tactical Non-Core | $0.08 | | Other Non-Core | $0.03 | | Non-Property & Other | ($0.08) | | **Consolidated Total** | **$0.31** | [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Comparing Q2 2023 to Q2 2022, rental income increased 17% to $11.8 million due to acquisitions. For H1 2023 vs H1 2022, rental income grew 12% to $22.1 million. A significant factor in the improved H1 2023 net results was the absence of the $17.3 million goodwill impairment charge recorded in H1 2022. Interest expense decreased in Q2 2023 due to large unrealized gains on interest rate swaps, but increased for the six-month period due to higher debt balances and rates - Q2 2023 **rental income rose 17% YoY to $11.8 million**, driven by **acquisitions of 16 industrial properties** since June 30, 2022[264](index=264&type=chunk) - H1 2023 results were **positively impacted by the absence of a $17.3 million goodwill impairment charge** that was recorded in H1 2022[282](index=282&type=chunk) - In H1 2023, the company **recorded a $3.5 million impairment charge** on its Nashville, TN property (leased to Cummins) due to a plan to sell it[281](index=281&type=chunk) - Interest expense in Q2 2023 was **significantly reduced by $3.5 million in unrealized gains on interest rate swaps**, as the **swaps were deemed ineffective for hedge accounting and marked to market through the P&L**[271](index=271&type=chunk)[272](index=272&type=chunk) [Properties and Investment Activities](index=64&type=section&id=Properties%20and%20Investment%20Activities) As of June 30, 2023, the portfolio comprised 56 properties totaling 4.3 million square feet. During the first six months of 2023, the company acquired 10 industrial properties for $98.4 million at a blended initial cap rate of 7.8%. No properties were sold in H1 2023, contrasting with five sales in H1 2022. The company has been active in leasing, executing a new 11.5-year lease for its Rocklin, CA property and extending leases for its Solar Turbines and Levins properties with significant rent increases H1 2023 Acquisitions Summary | Metric | Value ($) | | :--- | :--- | | Properties Acquired | 10 (all industrial) | | Total Square Feet | 1,151,967 | | Total Acquisition Price | $98,408,574 | | Blended Initial Cap Rate | 7.8% | - Executed a **new 11.5-year lease** with EMC Shop for the Rocklin, CA property previously leased to Gap, Inc[303](index=303&type=chunk) - Extended the lease with Solar Turbines for **two years with a 14.0% rent increase**, and the Levins property lease with a **69.0% rent increase**[301](index=301&type=chunk)[302](index=302&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has omitted this section, as it is not required for a smaller reporting company - **Disclosure is not applicable as the company qualifies as a smaller reporting company**[315](index=315&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, despite a previously identified material weakness. This weakness, related to the accounting for non-recurring transactions and new pronouncements, stemmed from two immaterial error corrections from prior periods. A remediation plan is underway, involving enhanced use of consultants and a review of accounting policy documentation. Management asserts that despite the weakness, the financial statements are fairly stated - A **material weakness in internal control over financial reporting was identified as of December 31, 2022**. It relates to the company's ability to **properly identify and evaluate accounting standards for non-recurring transactions and new pronouncements**[319](index=319&type=chunk) - A **remediation plan has been initiated**, which includes **refining policies to utilize qualified consultants and reorganizing accounting policy documentation**[321](index=321&type=chunk) - Despite the material weakness, management concluded that the consolidated financial statements in this 10-Q are **fairly stated in all material respects**[318](index=318&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information on legal matters disclosed in Note 10 of the financial statements. The key legal issues mentioned are related to the Kalera bankruptcy and a foreclosure action by a general contractor on the property leased to Kalera - The company refers to Note 10 for details on legal proceedings, which **primarily concern the Kalera bankruptcy and related mechanic's liens**[323](index=323&type=chunk)[175](index=175&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been **no material changes to the risk factors from the company's 2022 Annual Report on Form 10-K**[324](index=324&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, the company issued 5,500 shares of Class C common stock to non-employee board members for their services. Additionally, under its 2023 share repurchase program, the company repurchased 88,892 shares of its Class C common stock for a total of $1.1 million at an average price of $12.14 per share during the quarter - **Issued 5,500 shares of Class C common stock** to non-employee directors in Q2 2023, **exempt from registration under Section 4(a)(2) of the Securities Act**[325](index=325&type=chunk) Share Repurchases for Q2 2023 | Period | Shares Repurchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2023 | 32,805 | $10.68 | | May 2023 | 53,268 | $12.92 | | June 2023 | 2,819 | $14.48 | | **Total Q2 2023** | **88,892** | **$12.14** | [Other Information](index=69&type=section&id=Item%205.%20Other%20Information) This section reports two key events. On August 8, 2023, board member Asma Ishaq resigned, and the board size was reduced from seven to six members. Effective August 11, 2023, the company changed its name from 'Modiv Inc.' to 'Modiv Industrial, Inc.' to better reflect its strategic focus - **Board member Asma Ishaq resigned effective August 8, 2023**. The **board size was subsequently reduced to six members**[329](index=329&type=chunk) - The **company changed its name to 'Modiv Industrial, Inc.' effective August 11, 2023**[330](index=330&type=chunk) [Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q. Key exhibits include articles of amendment for the name change and officer certifications - The report includes an **exhibit index listing all filed documents, including certifications and articles of amendment for the name change**[333](index=333&type=chunk)[334](index=334&type=chunk)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) Commission file number: 001-40814 MODIV INC. (Exact name of registrant as specified in its charter) Maryland 47-41 ...

Financial Data and Key Metrics Changes - The net loss attributable to common stockholders improved by $6.4 million, resulting in a loss of $4.7 million or $0.62 per share, compared to a loss of $11.1 million or $1.47 per share in the prior year [5][21] - Adjusted funds from operations (AFFO) for the first quarter was $3.1 million or $0.03 per diluted share, compared to $3 million or $0.29 per diluted share in the previous year [21] - Revenue increased by 7.7% to $10.3 million from $9.6 million in the prior year [21] Business Line Data and Key Metrics Changes - The portfolio now consists of 56 properties located in 18 states, with 37 industrial core properties representing 67% of the portfolio [24] - The weighted average lease term for the portfolio is 13.3 years, with approximately 38% of tenants having an investment-grade credit rating [27] - The company acquired $100.6 million across 10 industrial manufacturing properties at a blended initial cap rate of 7.7% [9][24] Market Data and Key Metrics Changes - The weighted average interest rate on the $294.4 million of total debt outstanding as of May 12, 2023, was 4.4% [28] - The company has seen a shift in the buyer pool, with fewer institutional buyers and a more selective market for acquisitions [63][72] Company Strategy and Development Direction - The company is focusing on acquiring industrial manufacturing assets and has successfully increased its industrial exposure to a supermajority allocation from 39% as of September 30, 2021 [25] - Management is actively working on selling 16 legacy retail and office assets to recycle capital [10][33] - The goal is to become the first pure play industrial manufacturing REIT and to lead in this sector [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, emphasizing the importance of the management team's grit and ability to adapt to market conditions [14][30] - The company is cautious about the credit market and is focused on maintaining a disciplined approach to acquisitions and dispositions [39][56] - Management acknowledged the challenges in the office market but believes there are unique opportunities within their office portfolio [64][84] Other Important Information - The company declared a cash dividend of approximately $0.95 for the months of April, May, and June 2023, representing an annualized dividend rate of $1.15 per share [29] - The company has drawn the remaining $80 million available on its term loan to fund equity property acquisitions [28] Q&A Session Summary Question: What is the size and timing of dispositions besides the Gap property? - Management indicated that while they aim to sell properties in a timely manner, the current credit market conditions may affect the timing of sales [36][52] Question: How should we think about acquisitions moving forward? - Management stated that they are likely to match acquisitions with disposition proceeds and are being disciplined in their approach to leverage [54][56] Question: Can you provide insights on cap rate trends during the acquisition window? - Management noted that cap rates for industrial manufacturing properties ranged from mid-sevens to just under eight, reflecting a selective acquisition strategy [88] Question: What is the impact of the Kalera bankruptcy on the company's lease? - Management confirmed that the rent is current and they are awaiting the outcome of the bankruptcy process, with optimism about the tenant's future [91][92] Question: How does the company view the office market? - Management expressed a cautious outlook on the office market, noting that while there are challenges, their unique office assets may still hold value [64][84]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________________________________ FORM 10-K ________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-4 ...

Financial Data and Key Metrics Changes - The full year adjusted funds from operations (AFFO) grew by 45% to $16.6 million or $1.63 per fully diluted share [5] - Total revenue increased by 22% to $46.2 million compared to $37.9 million in 2021 [5][27] - Fourth quarter AFFO was $6.9 million or $0.68 per diluted share, more than double the AFFO of $2.4 million or $0.27 per share reported in the fourth quarter of 2021 [24] - General and administrative (G&A) expenses for the full year decreased by $1.9 million to $7.8 million from $9.7 million in 2021 [9][26] Business Line Data and Key Metrics Changes - The company acquired over $162 million of real estate properties and sold over $70 million of non-core legacy assets [5] - The weighted average lease term nearly doubled to 11.9 years [5] - Property expenses for the fourth quarter were $2.1 million, an increase from $1.6 million in the prior year [28] Market Data and Key Metrics Changes - The company decreased its office exposure by nearly 30% [5][30] - The portfolio consisted of 46 properties located in 17 states, with approximately 3.2 million square feet of aggregate leasable space, which was 100% leased [30] Company Strategy and Development Direction - The company aims to become a pure-play industrial manufacturing REIT, focusing on increasing exposure to manufacturing assets [15][16] - The company plans to enhance the delineation and reporting of non-core and legacy assets from its core portfolio [8] - The company anticipates a robust acquisition volume of at least $100 million of industrial manufacturing properties in 2023 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing their plan and delivering better results in 2023 [20] - The company is navigating a high market and interest rate volatility environment but remains committed to its investment discipline [7] - Management noted that the growing importance of U.S. industrial manufacturing facilities presents tremendous long-term opportunities [16] Other Important Information - The company reported a leverage ratio of 38% as of December 31, 2022, with total cash and cash equivalents of $8.6 million [18][32] - The weighted average interest rate on total debt outstanding was 4.03% as of December 31, 2022 [32] - The Board of Directors declared a cash dividend per common share of approximately $0.96 for the first quarter of 2023, representing an annualized dividend rate of $1.15 per share [32] Q&A Session Summary Question: Can you provide any color on the investment proposals from institutional investors? - Management stated that they have received multiple interests but did not provide specific details on the proposals [37] Question: What should we expect in terms of timing on dispositions over the course of the year? - Management indicated that the bulk of dispositions will occur in the second half of the year, mindful of AFFO [42] Question: Are you still seeing a buyer-seller disconnect on the industrial side in terms of cap rates? - Management confirmed that there was a significant disconnect in the fourth quarter, but noted that the current inventory seems to need to close, indicating a shift in market dynamics [63]