Modiv(MDV) - 2021 Q1 - Quarterly Report

Company Overview - The company has a portfolio of approximately 2.3 million square feet of leasable space, including 38 commercial properties across 14 states[206]. - The company has a real estate investment portfolio consisting of 38 properties across 14 states, with a net book value of $347,596,635 as of March 31, 2021[229]. - The occupancy rate of the portfolio is 98%, with properties leased to 31 different commercial tenants across 13 industries[231]. Financial Performance - Funds from Operations (FFO) for the three months ended March 31, 2021, was $2,101,357 compared to a loss of $748,519 for the same period in 2020[272]. - Adjusted Funds from Operations (AFFO) for the three months ended March 31, 2021, was $2,195,958, down from $3,816,571 in the same period in 2020[272]. - The company reported net cash provided by operating activities of $102,091 for the three months ended March 31, 2021, down from $1,947,505 in the same period of 2020[260]. - Rental income, including tenant reimbursements, decreased by $2,013,546, or 18%, to $9,040,863 for the three months ended March 31, 2021, compared to $11,054,409 in 2020[275]. - General and administrative expenses increased by $727,879, or 28%, to $3,282,884 for the three months ended March 31, 2021, primarily due to stock compensation expenses[276]. - Interest expense decreased by $2,123,520, or 54%, to $1,781,136 for the three months ended March 31, 2021, compared to $3,904,656 in 2020[278]. - Depreciation and amortization expense decreased by $610,821, or 13%, to $4,024,703 for the three months ended March 31, 2021, compared to $4,635,524 in 2020[277]. - Property expenses decreased by $193,772, or 10%, to $1,754,947 for the three months ended March 31, 2021, compared to $1,948,719 in 2020[279]. Investment Strategy - The company plans to expand its investment strategy to include a diversified portfolio of income-generating commercial real estate, including multifamily, retail, office, hotel, and industrial assets[232]. - The company has expanded its investment strategy beyond single-tenant properties to include a diversified portfolio of real estate investments[202]. - The company intends to focus on technology-driven platforms in the real estate industry through MACS, targeting fintech and proptech companies[210]. - The company has acquired the intellectual property of BuildingBITs and REITless, enhancing its online real estate crowdfunding capabilities[206]. Capital Raising and Shareholder Actions - The company plans to raise $100,000,000 in its IPO for Modiv Acquisition Corp. (MACS), with a potential increase to $115,000,000 if the over-allotment option is exercised[209]. - The company has the authority to issue 450,000,000 shares of stock, including 50,000,000 shares of preferred stock and 300,000,000 shares of Class C common stock[203]. - The company has terminated its public offering of up to $800,000,000 and commenced a private offering of Class C common stock under Regulation D[222]. - The share repurchase program for Class C common stock was amended to increase the minimum holding period from three months to six months[223]. - The company repurchased shares valued at approximately $3,807,881 in January 2021, $3,586,623 in February 2021, and $897,742 in March 2021[256]. Debt and Financing - The outstanding mortgage note payable balance is $178,492,358, excluding the balance related to the property held for sale[231]. - As of March 31, 2021, the outstanding principal balance of mortgage notes payable was $185,082,520, with an additional $6,000,000 under the revolving credit facility[252]. - The new credit facility provides a total line of credit of $22,000,000, which includes a $17,000,000 revolving line for real estate acquisitions and $5,000,000 for working capital[250]. - The leverage ratio as of March 31, 2021, was 48%, remaining below the maximum limit of 55% of the aggregate value of tangible assets[247]. Market Conditions and Risks - The company faces significant uncertainties due to the COVID-19 pandemic, impacting both investing and leasing environments, leading to reluctance in long-term commitments[305]. - Future declines in rental rates and potential concessions may decrease cash flows from investment properties, with one retail lease expiring in July 2021 representing approximately 0.4% of projected 2021 net operating income[306]. - Nine leases expiring in 2022 or 2023 comprise 805,822 leasable square feet, representing about 24.5% of projected 2021 net operating income, with tenants potentially reevaluating their lease renewals[306]. - The debt market remains sensitive to macroeconomic factors, and the company may experience more stringent lending criteria affecting property acquisitions and refinancing[308]. Taxation and Compliance - The company elected to be taxed as a REIT, which requires distributing at least 90% of annual taxable income to avoid federal income tax[309]. - Failure to qualify as a REIT could result in significant tax liabilities and adversely affect net income and cash available for distribution[310]. - The company has no off-balance sheet arrangements that could materially affect its financial condition as of March 31, 2021[317]. - There have been no significant changes to the company's accounting policies during the three months ended March 31, 2021[311].