UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 2023
Modiv Industrial, Inc.
(Exact name of registrant as specified in its charter)
|
Maryland
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001-40814
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47-4156046
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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200 S. Virginia Street,
Suite 800
Reno, Nevada
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89501
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (888) 686-6348
Modiv Inc.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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Class C Common Stock, $0.001 par value per share
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MDV
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7.375% Series A Cumulative Redeemable Perpetual Preferred
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MDV.PA
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. |
Results of Operations and Financial Condition
|
On August 14, 2023, Modiv Industrial, Inc. (formerly known as Modiv Inc.), a Maryland corporation (the “Company”), issued an earnings press release
relating to the Company’s financial results for the first quarter ended June 30, 2023 and its industrial manufacturing pure-play focus following the sale of 13 non-industrial assets on August 10, 2023. A copy of the press release is attached hereto
as Exhibit 99.1 and is incorporated herein by reference. The press release is available on the Company’s website.
The information in Item 2.02 of this Current Report, including Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other
document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless it is specifically incorporated by reference therein. References to the Company’s website in this Current Report on Form 8-K and in the
attached Exhibit 99.1 to this Current Report on Form 8-K do not incorporate by reference the information on such website into this Current Report on Form 8-K and the Company disclaims any such incorporation by reference.
| Item 7.01. |
Regulation FD Disclosure
|
On August 14, 2023, the Company issued an earnings press release relating to the Company’s financial results for the first quarter ended June 30, 2023
and its industrial manufacturing pure-play focus following the sale of 13 non-industrial assets on August 10, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The furnishing of this earnings press release is not intended to constitute a representation that such furnishing is required by Regulation FD or other
securities laws, or that the earnings press release includes material investor information that is not otherwise publicly available. In addition, the Company does not assume any obligation to update such information in the future.
The information in Item 7.01 of this Current Report, including Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for purposes of
Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or
the Exchange Act, unless it is specifically incorporated by reference therein.
| Item 9.01. |
Financial Statements and Exhibits
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Exhibit No.
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Description
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Modiv Industrial, Inc. Earnings Press Release dated August 14, 2023
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104
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Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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MODIV INDUSTRIAL, INC.
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(Registrant)
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By:
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/s/ RAYMOND J. PACINI
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Name: Raymond J. Pacini
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Title: Chief Financial Officer
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Date: August 14, 2023
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Exhibit 99.1
Modiv Announces Second Quarter 2023 Results
Completes Successful Transition to Focused Industrial Manufacturing REIT
Closes Sale of 13 Non-Industrial Assets for $42 million
Changes Corporate Name to Modiv Industrial, Inc.
Reno, Nevada, August 14, 2023 – Modiv Industrial, Inc. (“Modiv Industrial” or the “Company”, formerly known as Modiv Inc.) (NYSE:MDV), 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 yet again we have successfully delivered on our publicly stated goals,” said Aaron Halfacre, Chief
Executive Officer of Modiv Industrial, Inc.”
“With the August 10th 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.
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● |
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.
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■ |
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.
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Business Update
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■ |
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%.
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■ |
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%.
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■ |
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%.
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■ |
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 weighed
average annual rental increases of 2.45%.
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■ |
From this point forward, the Company will now be known as “Modiv Industrial” following its achievement of a super-majority of industrial manufacturing exposure and its exclusive
focus on being a pure-play net lease industrial manufacturing REIT.
|
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:
https://viavid.webcasts.com/starthere.jsp?ei=1625261&tp_key=836736531a
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.
Investor Inquiries:
Margaret Boyce, Financial Profiles, Inc.
mboyce@finprofiles.com
310-622-8247
MODIV INDUSTRIAL, INC.
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2023 and 2022
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2023
|
|
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2022
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2023
|
|
|
2022
|
|
|
Rental income
|
|
$
|
11,836,563
|
|
|
$
|
10,144,478
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|
|
$
|
22,147,745
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$
|
19,714,091
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| |
|
|
|
|
|
|
|
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|
|
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|
|
|
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Operating expenses:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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General and administrative
|
|
|
1,597,776
|
|
|
|
1,615,182
|
|
|
|
3,505,831
|
|
|
|
3,721,365
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|
|
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
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|
|
Property expenses
|
|
|
1,527,868
|
|
|
|
1,434,215
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|
|
|
3,234,712
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|
|
|
3,594,080
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|
|
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
|
|
|
|
8,608,649
|
|
|
Tenant receivables
|
|
|
9,468,576
|
|
|
|
7,263,202
|
|
|
Above-market lease intangibles, net
|
|
|
1,351,949
|
|
|
|
1,850,756
|
|
|
Prepaid expenses and other assets
|
|
|
5,430,520
|
|
|
|
6,100,937
|
|
|
Interest rate swap derivative
|
|
|
5,613,847
|
|
|
|
4,629,702
|
|
|
Other assets related to real estate investments held for sale
|
|
|
2,337,517
|
|
|
|
12,765
|
|
|
Total assets
|
|
$
|
549,409,970
|
|
|
$
|
454,429,919
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
Mortgage notes payable, net
|
|
$
|
44,243,807
|
|
|
$
|
44,435,556
|
|
|
Credit facility revolver
|
|
|
-
|
|
|
|
3,000,000
|
|
|
Credit facility term loan, net
|
|
|
248,263,340
|
|
|
|
148,018,164
|
|
|
Accounts payable, accrued and other liabilities
|
|
|
7,015,513
|
|
|
|
7,649,806
|
|
|
Below-market lease intangibles, net
|
|
|
9,328,801
|
|
|
|
9,675,686
|
|
|
Interest rate swap derivatives
|
|
|
-
|
|
|
|
498,866
|
|
|
Liabilities related to real estate investments held for sale
|
|
|
465,252
|
|
|
|
117,881
|
|
|
Total Liabilities
|
|
|
309,316,713
|
|
|
|
213,395,959
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.375% Series A cumulative redeemable perpetual preferred stock, $0.001 par value, 2,000,000 shares authorized, issued and
outstanding as of June 30, 2023 and December 31, 2022, respectively
|
|
|
2,000
|
|
|
|
2,000
|
|
|
Class C common stock, $0.001 par value, 300,000,000 shares authorized; 7,874,502 shares issued and 7,530,992 shares
outstanding as of June 30, 2023 and 7,762,506 shares issued and 7,512,353 shares outstanding as of December 31, 2022
|
|
|
7,875
|
|
|
|
7,762
|
|
|
Additional paid-in-capital
|
|
|
280,815,445
|
|
|
|
278,339,020
|
|
|
Treasury stock, at cost, 343,510 and 250,153 shares held as of June 30, 2023 and December 31, 2022, respectively
|
|
|
(5,290,780
|
)
|
|
|
(4,161,618
|
)
|
|
Cumulative distributions and net losses
|
|
|
(123,895,028
|
)
|
|
|
(117,938,876
|
)
|
|
Accumulated other comprehensive income
|
|
|
3,080,694
|
|
|
|
3,502,616
|
|
|
Total Modiv Industrial, Inc. equity
|
|
|
154,720,206
|
|
|
|
159,750,904
|
|
|
Noncontrolling interest in the Operating Partnership
|
|
|
85,373,051
|
|
|
|
81,283,056
|
|
|
Total equity
|
|
|
240,093,257
|
|
|
|
241,033,960
|
|
|
Total liabilities and equity
|
|
$
|
549,409,970
|
|
|
$
|
454,429,919
|
|
MODIV INDUSTRIAL, INC.
Reconciliation of Non-GAAP Measures - FFO and AFFO
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
|
|
|
Net income (loss) (in accordance with GAAP)
|
|
$
|
4,629,953
|
|
|
$
|
2,390,344
|
|
|
$
|
51,032
|
|
|
$
|
(9,682,820
|
)
|
|
Preferred stock dividends
|
|
|
(921,875
|
)
|
|
|
(921,875
|
)
|
|
|
(1,843,750
|
)
|
|
|
(1,843,750
|
)
|
|
Net income (loss) attributable to common stockholders and Class C OP Unit holders
|
|
|
3,708,078
|
|
|
|
1,468,469
|
|
|
|
(1,792,718
|
)
|
|
|
(11,526,570
|
)
|
|
FFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate properties
|
|
|
3,956,334
|
|
|
|
3,682,681
|
|
|
|
7,228,394
|
|
|
|
6,983,173
|
|
|
Amortization of lease incentives
|
|
|
88,570
|
|
|
|
75,655
|
|
|
|
177,140
|
|
|
|
147,049
|
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
186,069
|
|
|
|
190,468
|
|
|
|
380,242
|
|
|
|
380,936
|
|
|
Impairment of real estate investment property
|
|
|
-
|
|
|
|
-
|
|
|
|
3,499,438
|
|
|
|
-
|
|
|
Gain on sale of real estate investments, net
|
|
|
-
|
|
|
|
(720,071
|
)
|
|
|
-
|
|
|
|
(7,595,157
|
)
|
|
FFO attributable to common stockholders and Class C OP
Unit holders
|
|
|
7,939,051
|
|
|
|
4,697,202
|
|
|
|
9,492,496
|
|
|
|
(11,610,569
|
)
|
|
AFFO adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,320,857
|
|
|
Stock compensation
|
|
|
660,170
|
|
|
|
679,747
|
|
|
|
1,320,339
|
|
|
|
1,191,612
|
|
|
Deferred financing costs
|
|
|
195,213
|
|
|
|
101,781
|
|
|
|
390,426
|
|
|
|
1,368,506
|
|
|
Non-recurring loan prepayment penalties
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
615,336
|
|
|
Swap termination costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
733,000
|
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
3,848
|
|
|
|
4,639
|
|
|
|
346,390
|
|
|
|
591,308
|
|
|
Deferred rents
|
|
|
(1,580,358
|
)
|
|
|
(981,083
|
)
|
|
|
(2,755,717
|
)
|
|
|
(1,617,279
|
)
|
|
Unrealized gain on interest rate swap valuation
|
|
|
(3,708,598
|
)
|
|
|
(589,997
|
)
|
|
|
(1,986,415
|
)
|
|
|
(1,378,013
|
)
|
|
Amortization of (below) above market lease intangibles, net
|
|
|
(195,901
|
)
|
|
|
(317,354
|
)
|
|
|
(392,184
|
)
|
|
|
(647,972
|
)
|
|
Other adjustments for unconsolidated investment in a real estate
property
|
|
|
11,819
|
|
|
|
(188
|
)
|
|
|
23,638
|
|
|
|
(376
|
)
|
|
AFFO attributable to common stockholders and Class C OP Unit holders
|
|
$
|
3,325,244
|
|
|
$
|
3,594,747
|
|
|
$
|
6,438,973
|
|
|
$
|
6,566,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
7,532,106
|
|
|
|
7,478,973
|
|
|
|
7,532,080
|
|
|
|
7,505,673
|
|
|
Fully Diluted (1)
|
|
|
10,638,311
|
|
|
|
10,221,490
|
|
|
|
10,494,527
|
|
|
|
10,241,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.05
|
|
|
$
|
0.63
|
|
|
$
|
1.26
|
|
|
$
|
(1.55
|
)
|
|
Fully Diluted
|
|
$
|
0.75
|
|
|
$
|
0.46
|
|
|
$
|
0.90
|
|
|
$
|
(1.55
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.44
|
|
|
$
|
0.48
|
|
|
$
|
0.85
|
|
|
$
|
0.87
|
|
|
Fully Diluted
|
|
$
|
0.31
|
|
|
$
|
0.35
|
|
|
$
|
0.61
|
|
|
$
|
0.64
|
|
|
(1)
|
Includes the Class C, Class M, Class P and Class R OP Units to compute the weighted average number of shares.
|
FFO is defined by the National Association of Real Estate Investment Trusts (“Nareit”) as net income or loss computed in accordance with GAAP, excluding extraordinary
items, as defined by GAAP, and gains and losses from sales of depreciable operating property, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets),
and after adjustment for unconsolidated partnerships, joint ventures, preferred distributions and real estate impairments. Because FFO calculations adjust for such items as depreciation and amortization of real estate assets and gains and losses
from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods
and between other REITs. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on
which to make decisions involving operating, financing, and investing activities. It should be noted, however, that other REITs may not define FFO in accordance with the current Nareit definition or may interpret the current Nareit definition
differently than we do, making comparisons less meaningful.
Additionally, we use AFFO as a non-GAAP financial measure to evaluate our operating performance. AFFO excludes non-routine and certain non-cash items such as revenues in excess of cash
received, amortization of stock-based compensation, deferred rents, amortization of in-place lease valuation intangibles, deferred financing fees, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments,
and write-offs of due diligence expenses for abandoned pursuits. We also believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our
operating performance with the sustainability of the operating performance of other real estate companies. Management believes that AFFO is a beneficial indicator of our ongoing portfolio performance and ability to sustain our current distribution
level. More specifically, AFFO isolates the financial results of our operations. AFFO, however, is not considered an appropriate measure of historical earnings as it excludes certain significant costs that are otherwise included in reported
earnings. Further, since the measure is based on historical financial information, AFFO for the period presented may not be indicative of future results or our future ability to pay our dividends.
By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities. For
all of these reasons, we believe the non-GAAP measures of FFO and AFFO, in addition to income (loss) from operations, net income (loss) and cash flows from operating activities, as defined by GAAP, are helpful supplemental performance measures and
useful to investors in evaluating the performance of our real estate portfolio. However, a material limitation associated with FFO and AFFO is that they are not indicative of our cash available to fund distributions since other uses of cash, such
as capital expenditures at our properties and principal payments of debt, are not deducted when calculating FFO and AFFO. AFFO is useful in assisting management and investors in assessing our ongoing ability to generate cash flow from operations
and continue as a going concern in future operating periods. Therefore, FFO and AFFO should not be viewed as a more prominent measure of performance than income (loss) from operations, net income (loss) or cash flows from operating activities and
each should be reviewed in connection with GAAP measurements.
Neither the SEC, Nareit, nor any other applicable regulatory body has opined on the acceptability of the adjustments contemplated to adjust FFO in order to calculate
AFFO and its use as a non-GAAP performance measure. In the future, the SEC or Nareit may decide to standardize the allowable exclusions across the REIT industry, and we may have to adjust the calculation and characterization of this non-GAAP
measure.
MODIV INDUSTRIAL, INC.
Reconciliation of Non-GAAP Measures - Adjusted EBITDA
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
|
|
|
Net income (loss) (in accordance with GAAP)
|
|
$
|
4,629,953
|
|
|
$
|
2,390,344
|
|
|
$
|
51,032
|
|
|
$
|
(9,682,820
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
3,956,334
|
|
|
|
3,682,681
|
|
|
|
7,228,394
|
|
|
|
6,983,173
|
|
|
Depreciation and amortization for unconsolidated investment in a real estate property
|
|
|
186,069
|
|
|
|
190,468
|
|
|
|
380,242
|
|
|
|
380,936
|
|
|
Interest expense, net of derivative settlements and unrealized gain on interest rate swaps
|
|
|
(179,931
|
)
|
|
|
1,197,154
|
|
|
|
3,838,861
|
|
|
|
2,765,329
|
|
|
Loss on early extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,725,318
|
|
|
Interest expense on unconsolidated investment in real estate property
|
|
|
95,932
|
|
|
|
98,135
|
|
|
|
191,419
|
|
|
|
195,780
|
|
|
Impairment of real estate investment property
|
|
|
-
|
|
|
|
-
|
|
|
|
3,499,438
|
|
|
|
-
|
|
|
Impairment of goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,320,857
|
|
|
Stock compensation
|
|
|
660,170
|
|
|
|
679,747
|
|
|
|
1,320,339
|
|
|
|
1,191,612
|
|
|
Due diligence expenses, including abandoned pursuit costs
|
|
|
3,848
|
|
|
|
4,639
|
|
|
|
346,390
|
|
|
|
591,308
|
|
|
Gain on sale of real estate investments, net
|
|
|
-
|
|
|
|
(720,071
|
)
|
|
|
-
|
|
|
|
(7,595,157
|
)
|
|
Adjusted EBITDA
|
|
$
|
9,352,375
|
|
|
$
|
7,523,097
|
|
|
$
|
16,856,115
|
|
|
$
|
13,876,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted EBITDA
|
|
$
|
37,409,500
|
|
|
$
|
30,092,388
|
|
|
$
|
33,712,230
|
|
|
$
|
27,752,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated debt
|
|
$
|
294,361,357
|
|
|
$
|
201,425,173
|
|
|
$
|
294,361,357
|
|
|
$
|
201,425,173
|
|
|
Debt of unconsolidated investment in real estate property (a)
|
|
|
9,372,615
|
|
|
|
9,599,182
|
|
|
|
9,372,615
|
|
|
|
9,599,182
|
|
|
Consolidated cash and cash equivalents
|
|
|
(9,912,110
|
)
|
|
|
(11,705,449
|
)
|
|
|
(9,912,110
|
)
|
|
|
(11,705,449
|
)
|
|
Cash of unconsolidated investment in real estate property (a)
|
|
|
(494,250
|
)
|
|
|
(585,357
|
)
|
|
|
(494,250
|
)
|
|
|
(585,357
|
)
|
| |
|
$
|
293,327,612
|
|
|
$
|
198,733,549
|
|
|
$
|
293,327,612
|
|
|
$
|
198,733,549
|
|
|
Net debt / Adjusted EBITDA
|
|
|
7.8x
|
|
|
|
6.6x
|
|
|
|
8.7x
|
|
|
|
7.2x
|
|
|
(a)
|
Reflects the Company’s 72.71% pro rata share of the tenant-in-common’s mortgage note payable and cash.
|
We define Net Debt as gross debt less cash and cash equivalents and restricted cash. We define Adjusted EBITDA as GAAP net income or loss adjusted to exclude real
estate related depreciation and amortization, gains or losses from the sales of depreciable property, extraordinary items, provisions for impairment on real estate investments and goodwill, interest expense, non-cash items such as non-cash
compensation expenses and write-offs of transaction costs and other one-time transactions. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to
compare the operating performance of REITs. EBITDA is not a measure of financial performance under GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA as an alternative to
net income or cash flows from operating activities determined in accordance with GAAP.
###