Modiv(US:MDV)2023-05-15 21:27Financial 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]