MODIV INDUSTRIAL, INC. Q4 FY2025 earnings call

Aaron thanked the team, especially the accounting team. Ray provided an overview of fourth quarter operating results, balance sheet, and liquidity. Aaron then opened up for questions. Discussion on asset recycling, including office properties like the one in San Diego needing parcel split, OES office property, Kia dealership as non-core asset, short waltz with tenants, and industrial credits recycling. Also talked about opportunistic assets and the pipeline for buying and selling properties

Rental income for the fourth quarter was $11 million, compared with $11.7 million in the prior year period. The decrease in rental income reflects expiration of leases. Fourth quarter adjusted funds from operations (AFFO) was $4 million compared to $4.1 million in the year-ago quarter. AFFO per share decreased from 37 cents per share in the prior year period to 32 cents per share for the fourth quarter of 2025. Interest expense for the quarter was $1.1 million higher than the comparable period of 2024, primarily due to amortization of off-market interest rate swaps. As of December 31, 2025, total cash and cash equivalents were $14.4 million, and there was $30 million available to draw on a revolver. Consolidated debt outstanding was $262.1 million, with $250 million of outstanding borrowings on a $280 million credit facility. Based on interest rate swap agreements, 100% of indebtedness held a fixed interest rate with a weighted average interest rate of 4.15%

Recycling will start to pick up in earnest. Expect more activity in asset recycling including non-core office properties, short waltz with tenants, industrial credits, and opportunistic assets. Still on track to get the portfolio to 100% pure play manufacturing industrial over next 24 months, with bottleneck being right assets to acquire. Interest in the company as there's good value, public REIT discount to private real estate, and being one of the smaller cap industrial REITs. Melbourne, Florida office sale terms to be disclosed after closing, scheduled to close in second quarter

Actual financial condition and results of operations may vary materially from forward-looking statements. Factors causing differences are in SEC filings. Volatility in interest rates and global economic pictures can affect acquisitions and dispositions. Tight pipeline and difficulty in finding replacement properties quickly

Q: Ask about reasons for not pursuing an offer.

A: At that moment, didn't see a secure path forward so stepped back from discussions.

Q: About 2026 asset recycling and acquisition environment.

A: Recycling to pick up, but hard due to rate gyrations. Talked about office properties, Kia dealership, short waltz with tenants, industrial credits, and opportunistic assets.

Q: On track to get portfolio to pure play manufacturing industrial in 24 months.

A: 24 months is realistic, bottleneck is right assets to acquire.

Q: What brought company into limelight as acquisition target.

A: REIT M&A, discount of public REITs to private real estate, people having money to make allocations, and being one of the smaller cap industrial REITs.

Q: Thoughts on running strategic alternatives process earlier.

A: Premature process may not be ideal, better to clean up portfolio first.

Q: Terms of Melbourne, Florida office sale.

A: Earnest money gone hard, closing in second quarter, replacement property not identified yet.

Q: Cost of carry for Clara property in fourth quarter.

A: Roughly 20-30 grand a month