Modiv(MDV) - 2025 Q1 - Quarterly Results

Company Overview Company Overview 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] - The company emphasizes a strong corporate governance structure, led by a management team and board with extensive institutional real estate experience[9] Financial Results Earnings Release 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][18] - 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][28] - 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][22] Consolidated Statements of Operations - Last Five Quarters 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][37] - 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] Consolidated Statements of Comprehensive Income (Loss) - Last Five Quarters 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 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][40] FFO and AFFO - Last Five Quarters 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 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 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 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] - The company reduced its Revolver line of credit from $150 million to $30 million in December 2024 to save on annual unused fees[48] Consolidated Balance Sheets 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] Debt Overview 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] Credit Facility and Mortgage Notes Covenants 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 Real Estate Acquisitions 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 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 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] 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 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] Tenant Industry Diversification 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 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 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] Appendix Disclosures Regarding Non-GAAP and Other Metrics 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] - 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] - 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]