Modiv(US:MDV)2025-08-06 21:57markdown PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements) Modiv Industrial reported a $1.8 million net loss for H1 2025, a decline from $5.9 million net income in H1 2024, with total assets at $498.9 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $498.9 million as of June 30, 2025, from $507.8 million, primarily due to reduced cash and a decline in total equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate investments, net | $466,398 | $473,906 | | Cash and cash equivalents | $5,814 | $11,530 | | **Total assets** | **$498,852** | **$507,829** | | Total liabilities | $292,637 | $293,779 | | Total equity | $206,215 | $214,050 | | **Total liabilities and equity** | **$498,852** | **$507,829** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) H1 2025 saw a $1.8 million net loss, a shift from $5.9 million net income in H1 2024, mainly due to a $4.0 million impairment charge Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $11,833 | $11,410 | $23,626 | $23,376 | | Impairment of real estate | $4,000 | $— | $4,000 | $— | | Gain on sale of real estate | $— | $— | $84 | $3,188 | | Net (loss) income | $(2,633) | $1,262 | $(1,804) | $5,899 | | Net (loss) income attributable to common stockholders | $(2,818) | $403 | $(2,816) | $3,205 | | Basic (Loss) earnings per share | $(0.32) | $0.03 | $(0.33) | $0.36 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $5.7 million in H1 2025, driven by $13.0 million used in financing activities and lower investing cash flows Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,988 | $7,697 | | Net cash provided by investing activities | $288 | $14,221 | | Net cash used in financing activities | $(12,992) | $(6,177) | | **Net (decrease) increase in cash** | **$(5,716)** | **$15,741** | - Key noncash activities in H1 2025 included the issuance of **$5.85 million** in Class C OP Units for a real estate acquisition[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the 43-property portfolio, a $6.1 million acquisition, a $4.0 million impairment, and $6.5 million in preferred stock repurchases - As of June 30, 2025, the company's portfolio consisted of **43** real estate properties, with industrial properties making up approximately **81%** of the portfolio's annual base rent (ABR)[31](index=31&type=chunk) - On March 7, 2025, the company acquired an industrial property in Florida for **$6.1 million**, paid with **$0.3 million** in cash and **$5.9 million** in Class C OP Units[47](index=47&type=chunk) - A **$4.0 million impairment charge** was recorded in Q2 2025 for a property in Saint Paul, Minnesota, due to current market conditions[60](index=60&type=chunk) - In January 2025, the company entered into two swap agreements to fix the SOFR rate at **2.45%** on its **$250 million term loan** for the year ending December 31, 2025, paying a **$4.2 million premium** to buy down the rate[78](index=78&type=chunk) - A preferred stock repurchase program was authorized on March 4, 2025. Through June 30, 2025, the company repurchased **275,000 shares** of Series A Preferred Stock for **$6.5 million**[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to industrial properties, H1 2025 revenue increase, net income decline due to impairment, and liquidity, with FFO at $0.70 and AFFO at $0.71 [Overview and Recent Events](index=33&type=section&id=Overview%20and%20Recent%20Events) The REIT focuses on 43 industrial properties with a 14.4-year WALT, mitigating interest rate risk with new swaps on its $250 million term loan - The company's portfolio consists of **43 properties**, with **39** being industrial, representing **81%** of the portfolio's Annual Base Rent (ABR). The weighted average remaining lease term (WALT) is **14.4 years**[132](index=132&type=chunk) - In January 2025, the company executed two new swap agreements to fix the interest rate on its **$250 million term loan** at **4.25%** for the year ending December 31, 2025, by paying a **$4.2 million premium**[131](index=131&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by a $280 million credit facility, property sales, and an ATM offering that raised $2.1 million in H1 2025 - The company has a **$280 million credit facility**, comprising a **$30 million revolver** and a **$250 million term loan**. As of June 30, 2025, the term loan was fully drawn, and the revolver was undrawn[141](index=141&type=chunk)[146](index=146&type=chunk) - In H1 2025, the company sold **133,376 shares** of Class C Common Stock through its ATM offering, raising net proceeds of **$2.1 million**. **$38.1 million** remains available under the program[140](index=140&type=chunk) [Acquisitions and Dispositions](index=37&type=section&id=Acquisitions%20and%20Dispositions) H1 2025 saw the acquisition of a $6.1 million industrial property in Florida and the sale of a $2.4 million property in New York - Acquired an industrial property in Florida for **$6.1 million** on March 7, 2025, consisting of **$0.3 million cash** and **$5.9 million** in Class C OP Units[152](index=152&type=chunk) - Sold an industrial property in New York for **$2.4 million** on February 26, 2025[154](index=154&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) H1 2025 rental revenue increased by 1% to $23.5 million, but a $4.0 million impairment charge led to an operating loss Comparison of Results (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Rental Revenue | $23.5 | $23.2 | +1% | Property acquisitions | | General & Administrative | $3.2 | $3.4 | -7% | Reduced headcount | | Impairment Charge | $4.0 | $0.0 | +$4.0M | Impairment on MN property | | Gain on Sale of Real Estate | $0.1 | $3.2 | -$3.1M | Fewer property sales | | Other Expense | $7.7 | $5.9 | +$1.8M | Increased interest expense | [Funds from Operations and Adjusted Funds from Operations](index=38&type=section&id=Funds%20from%20Operations%20and%20Adjusted%20Funds%20from%20Operations) H1 2025 FFO was $0.70 per share/unit and AFFO was $0.71 per share/unit, with FFO decreasing due to lower property sales gains FFO and AFFO per Share/Unit (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | FFO per Share/Unit | $0.70 | $0.84 | | AFFO per Share/Unit | $0.71 | $0.63 | FFO and AFFO Reconciliation (in thousands, Six Months Ended June 30, 2025) | Metric | Amount | | :--- | :--- | | Net (loss) income attributable to common stockholders and OP Unit holders | $(3,427) | | FFO adjustments (Depreciation, Impairment, etc.) | $11,940 | | **FFO attributable to common stockholders and OP Unit holders** | **$8,513** | | AFFO adjustments (Stock comp, Amortization, etc.) | $177 | | **AFFO attributable to common stockholders and OP Unit holders** | **$8,690** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This disclosure is not required as the company qualifies as a smaller reporting company - The company, as a smaller reporting company, is not required to provide this **disclosure**[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[202](index=202&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[203](index=203&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not a party to any **material legal proceedings**[204](index=204&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors have been reported since the Annual Report filing - No **material changes** to the risk factors from the Annual Report filed on March 4, 2025, have been reported[205](index=205&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 70,000 shares of Series A Preferred Stock in Q2 2025 at an average price of $23.986 per share Issuer Purchases of Series A Preferred Stock (Q2 2025) | Period | Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1-30, 2025 | 70,000 | $23.986 | | May 1-31, 2025 | — | — | | June 1-30, 2025 | — | — | | **Total** | **70,000** | **$23.986** | [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated, and federal income tax considerations were updated via Exhibit 99.1 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[207](index=207&type=chunk) - The company also provided an update to its discussion of federal income tax considerations via Exhibit **99.1**, which addresses recently enacted tax law changes[208](index=208&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications, tax consideration updates, and XBRL data files - The report includes a list of exhibits filed, such as Sarbanes-Oxley certifications (**Exhibits 31.1, 31.2, 32.1**) and updates to tax considerations (**Exhibit 99.1**)[209](index=209&type=chunk)[212](index=212&type=chunk)