MODIV INDUSTRIAL, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Transactions: Emphasized patience in transactions, reducing revolver from $150M to $30M to save $300k annually; identified other financing sources for acquisitions.
• Tariffs: Talked to tenants; most said they would pass on higher input costs due to tariffs, with some tenants seeing increased inquiries.
• Swaps: Adjusted swaps to lower interest expense to 4.27%.
• Equity Issuance: Issued 287,000 shares via ATM in Q4, accretive and under the radar.
• Asset Sales/Dispositions: Costco sale expected to close 8/15; solar and WSP split ongoing; OES purchase option process in progress; Calera property taken to market.

Segment Performance

• Fourth Quarter: Revenue was $11.7 million. Adjusted funds from operations (AFFO) was $4.1 million, with AFFO per diluted share at $0.37, which was $0.08 above analyst estimates.
• Full Year: Rental income was $46.5 million. AFFO was $14.99 million, and AFFO per fully diluted share was $1.34. Annualized base rent from 43 properties was $39.6 million, with 39 industrial properties (78% of ABR) and non-core properties (22% of ABR). Weighted average lease term was 13.8 years, and ~32% of tenants had investment-grade ratings.

Guidance

• Costco Sale: Scheduled closing 8/15.
• OES Purchase Option: Process started with appraiser selection; timing uncertain until summer.
• Acquisitions: Looking for 10-25 million dollar assets; waiting for compelling opportunities.
• Asset Held for Sale: Only Costco included at year-end; Calera to be included in Q1.

Risks

• Market Volatility: Uncertainty in acquisition market timing and pricing.
• Government Processes: Delays or uncertainties in municipal approvals for asset splits.
• Preferred Stock Call: Need to consider refinancing or retiring preferred stock callable in 2026.

Question and Answer

Q: Update on Costco sale timing?

A: Scheduled closing 8/15.

Q: OES purchase option exercise?

A: Process started with appraiser; timing uncertain until summer.

Q: Acquisition market indicators?

A: Looking for 10-25 million dollar assets; waiting for compelling opportunities.

Q: Asset held for sale?

A: Only Costco at year-end; Calera to be included in Q1.