Modiv Announces Second Quarter 2023 Results

Modiv Industrial, Inc. (“Modiv Industrial” or the “Company”, formerly known as Modiv Inc.) (NYSE:MDV, Financial), an internally managed real estate investment trust (“REIT”) that actively acquires, owns, and manages a portfolio of single-tenant net-lease industrial manufacturing real estate properties, today announced operating results for the second quarter ended June 30, 2023.


“At the beginning of the year, we outlined plans to acquire $100 million of industrial manufacturing assets, which we quickly accomplished. Just three months ago, we shared our strategy to begin the disposition of our legacy, non-core ‘Rich Uncles’ retail and office assets. Today I am pleased to announce that we have successfully delivered on our publicly stated goals,” said Aaron Halfacre, Chief Executive Officer of Modiv Industrial, Inc.


“With the August 10^th sale of 13 non-industrial assets to Generation Income Properties, Inc. for $42 million and the July purchase of two more industrial manufacturing properties, we have already accretively redeployed cash proceeds into additional industrial manufacturing assets, allowing us to achieve our goal of having a super-majority of industrial assets.”


“Now, with the majority of our repositioning behind us, we will begin increasing investor awareness of our compelling investment thesis. Nearer term, we will continue the disposition of non-industrial assets to create capital recycling opportunities. Longer term, we remain focused on achieving scale of over $1 billion in gross assets and becoming the best pure-play net lease industrial manufacturing REIT,” concluded Halfacre.


Financial Highlights for the Second Quarter Ended June 30, 2023:

• 
  
  Revenue was $11.8 million, up 16.7% year-over-year, reflecting the acquisition of 16 industrial manufacturing properties since June 30, 2022.
  
  
• 
  
  FFO was $7.9 million, or $0.75 per diluted share, compared with $4.7 million or $0.46 per diluted share in the year-ago quarter, reflecting higher revenue and lower interest expense attributable to unrealized gains on interest rate swap valuations.
  
  
• 
  
  AFFO was $3.3 million, or $0.31 per diluted share, compared with $3.6 million or $0.35 per diluted share in the year-ago quarter, a decrease reflecting a higher straight-line rent adjustment.
  
  

Business Update

• 
  
  Sold non-core portfolio of 13 legacy retail and office assets to Generation Income Properties, Inc. (NASDAQ: GIPR) on August 10, 2023 for $42 million at an exit cap rate of 7.55%. Transaction consideration includes $30 million in cash and $12 million of GIPR preferred stock, which will pay monthly dividends at an annual rate of 9.5%.
  
  

• 
  
  In July 2023, acquired an additional $29.0 million of industrial manufacturing properties at a blended initial cap rate of 8.2% and a weighted average cap rate of 11.7%.
  
  

• 
  
  Total acquisitions year-to-date are now $129.8 million across 12 industrial manufacturing properties acquired at a blended initial cap rate of 7.8% and a weighted average cap rate of 10.3%.
  
  
• 
  
  Industrial portfolio exposure now includes 40 properties representing 76% of pro forma NOI as of June 30, 2023, with a weighted average lease term of 14.7 years and weighted average annual rental increases of 2.45%.
  
  

Following achievement of a super-majority of industrial manufacturing exposure and its exclusive focus on being a pure-play net lease industrial manufacturing REIT, the Company changed its name from “Modiv Inc.” to “Modiv Industrial, Inc.” effective August 11, 2023. The Company’s ticker symbol will not change and its common stock will start trading as Modiv Industrial, Inc. on August 24, 2023.


Conference Call and Webcast


A conference call and audio webcast with analysts and investors will be held on Monday, August 14, 2023, at 12:00 p.m. Eastern Time / 9:00 a.m. Pacific Time, to discuss the second quarter 2023 operating results and answer questions.


Live conference call: 1-877-407-0789 at 9:00 a.m. Pacific Time, Monday, August 14, 2023


Webcast: To listen to the webcast, either live or archived, please use this link: [url="]https://viavid.webcasts.com/starthere.jsp?ei=1625261&tp_key=836736531a [/url]
or visit the investor relations page of Modiv’s website at www.modiv.com.


About Modiv Industrial


Modiv Industrial, Inc. is an internally managed REIT that acquires, owns, and manages a portfolio of single-tenant net-lease real estate. The Company actively acquires critical industrial manufacturing properties with long-term leases to tenants that fuel the national economy and strengthen the nation’s supply chains. Driven by an investor-first focus, as of August 14, 2023, Modiv Industrial had a $614 million real estate portfolio (based on estimated fair value) comprised of 4.7 million square feet of aggregate leasable area. For more information, please visit: www.modiv.com.


Forward-looking Statements


Certain statements contained in this press release, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements regarding our plans, strategies and prospects, both business and financial. Such forward-looking statements are subject to various risks and uncertainties, including but not limited to those described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 13, 2023. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the Company’s other filings with the SEC. Any forward-looking statements herein speak only as of the time when made and are based on information available to the Company as of such date and are qualified in their entirety by this cautionary statement. The Company assumes no obligation to revise or update any such statement now or in the future, unless required by law.


Notice Involving Non-GAAP Financial Measures


In addition to U.S. GAAP financial measures, this press release and the supplemental financial and operating report included in our Form 8-K dated August 14, 2023 contain and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are provided below.


AFFO is a measure that is not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See the Reconciliation of Non-GAAP Measures later in this press release.


The Company defines “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property. The Company defines “weighted average cap rate” for property acquisitions as the average annual cash rent including rent escalations over the lease term, divided by the purchase price of the property.

Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2023 and 2022
(Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Rental income		$	11,836,563		$	10,144,478		$	22,147,745		$	19,714,091
Operating expenses:
General and administrative			1,597,776			1,615,182			3,505,831			3,721,365
Stock compensation expense			660,170			679,747			1,320,339			1,191,612
Depreciation and amortization			3,956,334			3,682,681			7,228,394			6,983,173
Property expenses			1,527,868			1,434,215			3,234,712			3,594,080
Impairment of real estate investment property			-			-			3,499,438			-
Impairment of goodwill			-			-			-			17,320,857
Total operating expenses			7,742,148			7,411,825			18,788,714			32,811,087
Gain on sale of real estate investments			-			720,071			-			7,595,157
Operating income (loss)			4,094,415			3,452,724			3,359,031			(5,501,839)
Other income (expense):
Interest income			216,841			1,763			270,535			15,198
Interest expense, net of derivative settlements and unrealized gain on interest rate swaps			179,931			(1,197,154)			(3,838,861)			(2,765,329)
Income from unconsolidated investment in a real estate property			72,773			66,868			128,340			162,332
Loss on early extinguishment of debt			-			-			-			(1,725,318)
Other			65,993			66,143			131,987			132,136
Other income (expense), net			535,538			(1,062,380)			(3,307,999)			(4,180,981)
Net income (loss)			4,629,953			2,390,344			51,032			(9,682,820)
Less: net (income) loss attributable to noncontrolling interest in Operating Partnership			(649,643)			(219,214)			166,556			1,708,815
Net income (loss) attributable to Modiv Industrial, Inc.			3,980,310			2,171,130			217,588			(7,974,005)
Preferred stock dividends			(921,875)			(921,875)			(1,843,750)			(1,843,750)
Net income (loss) attributable to common stockholders		$	3,058,435		$	1,249,255		$	(1,626,162)		$	(9,817,755)
Net income (loss) per share attributable to common stockholders:
Basic		$	0.41		$	0.17		$	(0.22)		$	(1.31)
Diluted		$	0.35		$	0.14		$	(0.22)		$	(1.31)
Weighted-average number of common shares outstanding:
Basic			7,532,106			7,478,973			7,532,080			7,505,673
Diluted			10,638,311			10,221,490			7,532,080			7,505,673
Distributions declared per common stock		$	0.2875		$	0.2875		$	0.5750		$	0.6750

MODIV INDUSTRIAL, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
		As of
		June 30,			December 31,
		2023			2022
Assets
Real estate investments:
Land		$	105,646,718		$	103,657,237
Building and improvements			376,619,602			329,867,099
Equipment			4,429,000			4,429,000
Tenant origination and absorption costs			16,393,977			19,499,749
Total investments in real estate property			503,089,297			457,453,085
Accumulated depreciation and amortization			(44,974,782)			(46,752,322)
Total investments in real estate property, net, excluding unconsolidated investment in real estate property and real estate investments held for sale, net			458,114,515			410,700,763
Unconsolidated investment in a real estate property			10,011,347			10,007,420
Total real estate investments, net, excluding real estate investments held for sale, net			468,125,862			420,708,183
Real estate investments held for sale, net			47,169,589			5,255,725
Total real estate investments, net			515,295,451			425,963,908
Cash and cash equivalents			9,912,110