MODIV INDUSTRIAL, INC. Q1 FY2024 earnings call

Portfolio and Financials

• Rental income increased due to 12 industrial manufacturing property acquisitions in 2023, partially offset by property dispositions.
• AFFO increased driven by rental income increase and property expense decrease, but offset by increases in straight-line rents and interest expense.
• Portfolio has a 13.9-year weighted average lease term, ~34% of tenants have investment-grade credit ratings.
• Balance sheet: Total cash and cash equivalents $18.4 million, debt outstanding $281 million, no debt maturities until January 2027.

Strategic Initiatives

• Actively exploring strategic partner discussions, including potential acquisitions/dispositions.
• General and administrative expenses expected to be lower in future quarters as first quarter includes nonrecurring costs.
• Waiting on Calera asset disposition decision and tenant purchase option process for California asset.

Rental income for the first quarter was $11.9 million, a 15.4% increase from the prior year period of $10.3 million. Adjusted funds from operations (AFFO) was $3.3 million, up 6.6% from $3.1 million in the year-ago quarter. On a per share basis, AFFO was $0.29 per diluted share. The portfolio consists of 42 properties with a weighted average lease term of 13.9 years. Annualized base rent for the 42 properties totaled $39.9 million as of March 31, 2024, with 38 industrial properties representing 75% of ABR, 3 office properties 14% of ABR, and 1 retail property 11% of ABR.

Forward-Looking Statements

• Expect general and administrative expenses to be lower in future quarters.
• Exploring alternatives to extend or restructure swap cancellation options to December 31, 2024.
• Patiently waiting for strategic partner discussions to progress, with optimism about potential outcomes but no set timeline.

Risks

• Uncertainty around asset dispositions, such as the Calera asset waiting on Calera's decision.
• Impact of credit events on tenants' ability to fulfill lease obligations.
• Market volatility affecting property valuations and potential strategic partner discussions.

Q: Where are you on the Calera asset in St. Paul?

A: Actively exploring sale or lease options, waiting for Calera to fully reject the asset. Been speaking to brokers and other growers, with US Foods having a presence there.

Q: Can you assign probability to the 3 ships scenario?

A: Attorneys won't allow assigning probabilities, but dialogue has been ongoing with shared information about portfolios and governance mechanics.

Q: Are we talking common stock or OP units for equity exchange in partnerships?

A: Generally talking about common equity element, with consideration of tax protection but institution players are less tax-sensitive by nature of their money