Modiv(MDV) - 2025 Q2 - Quarterly Results

Company Overview Modiv Industrial is a REIT focused on single-tenant net-lease industrial manufacturing properties Company Overview Modiv Industrial is a REIT focused on single-tenant net-lease industrial manufacturing properties with long-term leases - Modiv Industrial's core business is owning and managing single-tenant net-lease real estate, with a strategic focus on critical industrial manufacturing properties[9] Leadership Team | Role | Name | | :--- | :--- | | Management Team | | | Chief Executive Officer and Director | Aaron S. Halfacre | | Chief Financial Officer and Secretary | Raymond J. Pacini | | Chief Operating Officer and General Counsel | John C. Raney | | Independent Directors | | | Chairman of the Board | Thomas H. Nolan, Jr. | | Director | Christopher R. Gingras | | Director | Kimberly Smith | | Director | Connie Tirondola | Financial Results This section details Modiv Industrial's financial performance, including earnings, FFO, AFFO, and leverage ratios Earnings Release Q2 2025: $11.8 million revenue, $(2.8) million net loss, and 22% YoY AFFO per diluted share growth to $0.38 Q2 2025 Financial Highlights | Metric | Value | Note | | :--- | :--- | :--- | | Revenue | $11.8 million | - | | Net Loss Attributable to Common Stockholders | $(2.8) million | - | | AFFO | $4.8 million | - | | AFFO per Diluted Share | $0.38 | 22% year-over-year increase | - A 5-year lease was renewed with Northrop Grumman for the property in Melbourne, Florida, featuring 2% annual rent escalations[18] - Management observes early signs of a thaw in the lending market, making refinancing and acquisition financing more available[19] - The company is considering an asset recycling program involving approximately $150 million of properties, which could potentially produce over 100 basis points of AFFO growth within 12+ months[23] Consolidated Statements of Operations - Last Five Quarters Q2 2025 total income was $11.8 million, but a $4.0 million impairment led to a $(2.6) million net loss, contrasting Q2 2024 Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Income | $11,833 | $11,410 | +3.7% | | Total Expenses | $10,668 | $6,317 | +68.9% | | Net (Loss) Income | $(2,633) | $1,262 | N/A | | Net (Loss) Income Attributable to Common Stockholders | $(2,818) | $403 | N/A | - A $4.0 million impairment charge was recorded in Q2 2025 related to a property in Saint Paul, Minnesota, due to current market conditions[32] - Interest expense in Q2 2025 was $(4.0) million, slightly lower than the $(4.1) million in Q2 2024, influenced by changes in interest rate swap valuations and settlements[30] Consolidated Statements of Comprehensive Income (Loss) - Last Five Quarters Q2 2025 comprehensive loss was $(2.7) million, driven by net loss and cash flow hedge adjustments Comprehensive Income (Loss) (in thousands) | Period | Net (Loss) Income | Other Comprehensive (Loss) Income | Comprehensive (Loss) Income | | :--- | :--- | :--- | :--- | | Q2 2025 | $(2,633) | $(59) | $(2,692) | | Q2 2024 | $1,262 | $(253) | $1,009 | Earnings (Loss) Per Share - Last Five Quarters Q2 2025 basic and diluted loss per share was $(0.32), a significant drop from $0.03 in Q2 2024 Earnings (Loss) Per Share Comparison | Period | Basic EPS | Diluted EPS | | :--- | :--- | :--- | | Q2 2025 | $(0.32) | $(0.32) | | Q1 2025 | $(0.01) | $(0.01) | | Q4 2024 | $0.07 | $0.07 | | Q3 2024 | $(0.18) | $(0.18) | | Q2 2024 | $0.03 | $0.03 | FFO and AFFO - Last Five Quarters Q2 2025 FFO was $0.36 per share, AFFO $0.38 per share, with AFFO up 11.8% YoY despite GAAP net loss FFO and AFFO Per Share/Unit (Fully Diluted) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | FFO Per Share/Unit | $0.36 | $0.41 | -12.2% | | AFFO Per Share/Unit | $0.38 | $0.34 | +11.8% | - AFFO adjustments in Q2 2025 included adding back $0.8 million in stock compensation and adjusting for amortization of deferred rents, interest rate derivatives, and lease intangibles[38] Adjusted EBITDA - Last Five Quarters Q2 2025 Adjusted EBITDA rose to $10.3 million, maintaining a Net Debt to Adjusted EBITDA ratio of 6.9x Adjusted EBITDA and Leverage | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Adjusted EBITDA | $10,302 thousand | $9,856 thousand | | Net Debt | $283,114 thousand | $271,053 thousand | | Net Debt / Adjusted EBITDA | 6.9x | 6.9x | Leverage Ratio Modiv's leverage ratio was 48.0% as of June 30, 2025, well below the 60% covenant limit Leverage Ratio Calculation (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Asset Value | $602,992 | $609,741 | | Total Indebtedness | $289,535 | $289,935 | | Leverage Ratio | 48.0% | 47.6% | Balance Sheets and Capitalization This section outlines Modiv's capital structure, balance sheet, debt composition, and covenant compliance Capitalization As of June 30, 2025, total capitalization was $501.7 million, comprising 56% fixed-rate debt, 35% common equity Capital Structure as of June 30, 2025 (in thousands) | Category | Value | % of Total Capitalization | | :--- | :--- | :--- | | Preferred Equity | $43,125 | 9% | | Common Equity | $177,903 | 35% | | Total Debt | $280,642 | 56% | | Total Capitalization | $501,670 | 100% | - The company fixed the rate on its $250 million term loan at 4.25% for the year 2025 through swap agreements, resulting in 100% of its total debt being fixed-rate[45][47] Consolidated Balance Sheets Total assets slightly decreased to $498.9 million by June 30, 2025, with total equity declining to $206.2 million Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Real Estate Investments, Net | $466,398 | $473,906 | | Total Assets | $498,852 | $507,829 | | Total Liabilities | $292,637 | $293,779 | | Total Equity | $206,215 | $214,050 | Debt Overview Total debt was $280.6 million with a 4.27% weighted average interest rate, 100% fixed via swaps Debt Composition as of June 30, 2025 (in thousands) | Debt Instrument | Outstanding Balance | Interest Rate | Maturity | | :--- | :--- | :--- | :--- | | Mortgage Notes | $30,642 | 3.85% - 4.85% | 2029 - 2030 | | Term Loan | $250,000 | 4.25% (fixed via swap) | 01/18/2027 | | Revolver | $0 | 6.16% (variable) | 01/18/2027 | - Through interest rate swaps effective Dec 31, 2024, the company fixed the rate on its $250 million term loan at 4.25% for the year ending Dec 31, 2025[50] Credit Facility and Mortgage Notes Covenants Modiv fully complied with all covenants, maintaining 48.0% leverage and 1.89x fixed charge coverage Unsecured Credit Facility Covenant Compliance | Covenant | Requirement | Actual (June 30, 2025) | Status | | :--- | :--- | :--- | :--- | | Maximum Leverage Ratio | < 60% | 48.0% | Compliant | | Minimum Fixed Charge Coverage Ratio | > 1.50x | 1.89x | Compliant | | Maximum Secured Indebtedness Ratio | < 40% | 7% | Compliant | | Minimum Consolidated Tangible Net Worth | > $223,986k | $280,370k | Compliant | Real Estate Portfolio This section details Modiv's real estate activities, including acquisitions, dispositions, and portfolio diversification Real Estate Acquisitions Modiv acquired two industrial properties for $11.2 million, adding 78,288 sq. ft. at an 8.0% initial cap rate Acquisition Summary (Apr 2024 - Jun 2025) | Metric | Value | | :--- | :--- | | Number of Properties | 2 | | Total Leasable Area | 78,288 sq. ft. | | Total Acquisition Price | $11,225 thousand | | Weighted Average Initial Cap Rate | 8.0% | Real Estate Dispositions Modiv disposed of two properties for $2.6 million, including an industrial property at a 7.4% cap rate Disposition Summary (Apr 2024 - Jun 2025) | Property | Disposition Price | Cap Rate | | :--- | :--- | :--- | | Producto, Endicott, NY | $2,362 thousand | 7.4% | | Land parcel, Canal Fulton, OH | $240 thousand | N/A | | Total | $2,602 thousand | | Top 20 Tenants The top 20 tenants contribute 90% of total ABR, with Lindsay (14%) and KIA of Carson (11%) as largest - The top 20 tenants contribute 90% of total ABR and occupy 86% of the total portfolio square footage, indicating a high level of tenant concentration[58] Top 5 Tenants by ABR Percentage | Tenant | ABR as a % of Total Portfolio | | :--- | :--- | | Lindsay | 14% | | KIA of Carson | 11% | | State of CA OES | 7% | | AvAir | 6% | | FUJIFILM Dimatix (72.71% TIC) | 6% | Property Type The portfolio comprises 39 industrial core properties (81% of ABR) and four non-core properties for potential sale Portfolio Breakdown by Property Type | Property Type | Number of Properties | % of Total ABR | % of Total Square Feet | | :--- | :--- | :--- | :--- | | Industrial core | 39 | 81% | 93% | | Non-core | 4 | 19% | 7% | | Total | 43 | 100% | 100% | - The company has a purchase and sale agreement with homebuilder KB Home for its non-core Costco property in Issaquah, WA, with $1.7 million in non-refundable deposits made as of June 30, 2025[60] Tenant Industry Diversification Portfolio diversified across 13 industries; top sectors: Infrastructure (24%), Automotive (16%), Industrial Products (15%) Top 5 Industries by ABR Percentage | Industry | ABR as a % of Total Portfolio | | :--- | :--- | | Infrastructure | 24% | | Automotive | 16% | | Industrial Products | 15% | | Aerospace/Defense | 13% | | Government | 7% | Tenant Geographic Diversification Portfolio spans 15 states, with California (30% of ABR), Ohio (13%), Arizona (12%) as key concentrations Top 5 States by ABR Percentage | State | ABR as a % of Total Portfolio | | :--- | :--- | | California | 30% | | Ohio | 13% | | Arizona | 12% | | Illinois | 9% | | Florida | 7% | Lease Expirations Long weighted-average lease term, with only 1% of ABR expiring in 2025 and 60% expiring after 2034 - The portfolio has a long weighted-average lease term, with 60% of ABR expiring after 2034[63] - Near-term lease expirations are minimal, with only 1% of ABR expiring in 2025 and 0% in 2026[63] Appendix This section provides definitions and explanations for non-GAAP financial measures and other key metrics Disclosures Regarding Non-GAAP and Other Metrics This section defines non-GAAP measures like FFO, AFFO, and Adjusted EBITDA, explaining their calculation and utility - FFO is defined per Nareit guidelines, excluding gains on sale of property and adding back real estate depreciation to net income[66] - AFFO further adjusts FFO to exclude non-routine and certain non-cash items like stock-based compensation, amortization of deferred rent, and unrealized gains/losses on derivatives to better represent sustainable operating performance[67] - Adjusted EBITDA is defined as GAAP net income adjusted for depreciation, amortization, interest expense, gains/losses on sales, impairments, and non-cash compensation[70]