モディブインダストリアルの適時開示・決算・その他

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): May 2, 2024

Modiv Industrial, Inc.

(Exact name of registrant as specified in its charter)

Maryland		001-40814		47-4156046
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

200 S. Virginia Street, Suite 800
Reno, Nevada		89501
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (888) 686-6348

None

(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:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class C Common Stock, $0.001 par value per share	MDV	New York Stock Exchange

7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share	MDV.PA	New York Stock Exchange

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 May 2, 2024, Modiv Industrial, Inc., a Maryland corporation (the “Company”), issued an earnings press release relating to the Company’s financial results for the first quarter ended March 31, 2024. A copy of the press release is available on the Company’s website, is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Company also released supplemental data on the Company’s website relating to the Company’s portfolio information as of March 31, 2024 and its financial results for the first quarter ended March 31, 2024. A copy of the supplemental data is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The information in Item 2.02 of this Current Report, including Exhibits 99.1and 99.2 are 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 Exhibits 99.1and 99.2 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

Earnings Release and Supplemental Data

On May 2, 2024, the Company issued an earnings press release relating to the Company’s financial results for the first quarter ended March 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Company also released supplemental data on the Company’s website relating to the Company’s portfolio information as of March 31, 2024 and its financial results for the first quarter ended March 31, 2024. A copy of the supplemental data is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The furnishing of this earnings press release and supplemental data are not intended to constitute a representation that such furnishing is required by Regulation FD or other securities laws, or that the earnings release and supplemental data include 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 the section “Estimated Net Asset Value Per Share” below and Exhibits 99.1and 99.2 are 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.

Estimated Net Asset Value Per Share

Estimated Net Asset Value (“NAV”) Per Share and Valuation Procedures

In order to provide additional insight into the value of our real estate portfolio, we engaged Cushman & Wakefield (“Cushman”) and CBRE, Inc. (“CBRE”), two independent valuation firms, to appraise our properties and provide estimated fair values for our fixed-rate mortgages as of January 31, 2024. We then used their estimated fair values of our assets and debt, along with our balance sheet as of January 31, 2024 to calculate our estimated net asset value (“NAV”) per share (unaudited).

As a public company, we are required to issue financial statements generally based on historical cost in accordance with GAAP as applicable to our financial statements. To calculate NAV, we have adopted a model, as explained below, which adjusts the value of certain of our assets from their historical cost to fair value. As a result, our NAV differs from the amount reported as stockholders’ equity on the face of our financial statements prepared in accordance with GAAP. When the fair value of our assets is calculated for the purposes of determining our NAV per share, the calculation is done generally in accordance with the fair value methodologies detailed within the FASB Accounting Standards Codification under Topic 820, Fair Value Measurements and Disclosures. Because these fair value calculations involve significant professional judgment in the application of both observable and unobservable inputs, the calculated fair value of our assets may differ from their actual realizable value or future fair value. In addition, our valuation procedures and our NAV are not subject to GAAP and are not subject to independent audit. Our NAV may differ from equity reflected on our consolidated financial statements, even if we are required to adopt a fair value basis of accounting for our GAAP financial statements in the future. Furthermore, no rule or regulation requires that we calculate NAV in a certain way. While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no rule or regulation that requires we calculate NAV in a certain way and there is no established practice among public REITs, whether listed or not. As a result, other public REITs may use different methodologies or assumptions to determine NAV. In addition, NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV will differ from GAAP. You should not consider NAV to be equivalent to stockholders’ equity or any other GAAP measure.

Independent Valuation Firms

We engaged Cushman and CBRE to serve as our independent valuation firms with respect to the valuation of the assets and fixed-rate debt associated with our wholly-owned real estate portfolio and an approximate 72.7% tenant-in-common interest in a Santa Clara, California industrial property (the “TIC Interest”), all of which are held, directly or indirectly, by Modiv Operating Partnership, LP (the “Operating Partnership”). Cushman and CBRE are multidisciplinary providers of independent, commercial real estate consulting and advisory services in multiple offices around the world. Cushman and CBRE are engaged in the business of valuing commercial real estate properties and are not affiliated with us. The compensation we paid to the independent valuation firms is not based on the estimated values of our real estate properties. The independent valuation firms discharge their responsibilities in accordance with our real property valuation procedures described below.

Cushman and CBRE and their affiliates may from time to time in the future perform other commercial real estate and financial advisory services for us, or in transactions related to the properties that are the subjects of valuations being performed for us, or otherwise, so long as such other services do not adversely affect the independence of the applicable appraiser as certified in the applicable valuation report.

Real Property Valuation

The real property valuation, which is the largest component of our NAV calculation, has been provided to us by Cushman and CBRE. Both Cushman and CBRE provided restricted appraisal reports for our 43 properties owned as of January 31, 2024, including the property held in our TIC Interest. The value of our properties was estimated on an unencumbered basis. The effect of property-level debt on our NAV is discussed further below.

Cushman and CBRE rely in part on property-level information provided by management, including (i) physical property attributes such as size, year built, and construction quality and type; (ii) historical and projected operating revenues and expenses of the property; (iii) lease agreements on the property; and (iv) information regarding recent or planned capital expenditures.

Cushman and CBRE utilize standard and accepted appraisal methodology in arriving at their opinions of fair value, and apply only the most appropriate valuation techniques amongst the income capitalization, sales comparison, and cost approaches to value. The reliability of each approach depends on the availability and comparability of market data as well as the motivation and thinking of purchasers. In estimating the fair value of the properties, Cushman and CBRE utilize the income capitalization approach as the primary method. A second limited scope sales comparison approach is employed to test the reasonableness of the income capitalization approach.

Because the estimated property valuations involve significant professional judgment in the application of both observable and unobservable attributes, the calculated value of our real property may not reflect the liquidation value or net realizable value of our properties because the valuations performed by Cushman and CBRE involve subjective judgments and do not reflect transaction costs associated with property dispositions. However, as discussed below, in some circumstances such as when an asset is anticipated to be acquired or disposed, we may apply a probability-weighted analysis to factor in a portion of potential transaction costs in our NAV calculation.

Cushman’s and CBRE’s valuation reports are not addressed to the public and may not be relied upon by any other person to establish an estimated value of our common stock and do not and will not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing their valuation reports, Cushman and CBRE did not solicit third-party indications of interest for our common stock in connection with possible purchases thereof, or the acquisition of all or any part of our Company. The valuation reports of Cushman and CBRE are subject to certain assumptions and limiting conditions, which are set forth therein, and must be read in their entirety for a full understanding of each appraiser’s analysis and basis for its conclusions. Note that each valuation report is only an estimate of value, as of the specific date stated in such report, and that changes since the date of the report can significantly affect the conclusions therein.

In conducting their investigation and analyses, Cushman and CBRE take into account customary and accepted financial and commercial procedures and considerations as they deem relevant, which may include, without limitation, the review of documents, materials and information relevant to valuing the property that are provided by us. Although Cushman and CBRE may review information supplied or otherwise made available by us for reasonableness, they assume and rely upon the accuracy and completeness of all such information and all information supplied or otherwise made available to them by any other party and do not undertake any duty or responsibility to verify independently any such information. With respect to operating or financial forecasts and other information and data to be provided to or otherwise to be reviewed or discussed with Cushman and CBRE, they assume such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of our management and rely upon us to advise them promptly if any material information previously provided becomes inaccurate or was required to be updated during the period of their review.

In performing their analyses, Cushman and CBRE are expected to make numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond their control and our control, as well as with respect to certain factual matters. Such assumptions, some of which may be unstated, may or may not prove to have been or be, or may no longer be, accurate. For example, unless specifically informed to the contrary, Cushman and CBRE assume that we have clear and marketable title to each real estate property valued, that no title defects exist, that improvements were made in accordance with law, that no hazardous materials are present or were present previously, that no deed restrictions exist, and that no changes to zoning ordinances or regulations governing use, density or shape are pending or being considered. Furthermore, Cushman’s and CBRE’s analysis, opinions and conclusions are necessarily based upon market, economic, financial and other circumstances and conditions existing at or prior to the valuation, and any material change in such circumstances and conditions may affect their analysis and conclusions. Cushman’s and CBRE’s valuation reports may contain other assumptions, qualifications and limitations set forth in their respective reports that qualify the analysis, opinions and conclusions set forth therein.

The overarching principle is to produce valuations that represent fair and reasonable estimates of the unencumbered values of our real estate or the prices that would be received for our real properties in arm’s length transactions between market participants before considering underlying debt. The valuation of our real properties estimated by Cushman and CBRE may not always reflect the value at which we would agree to buy or sell assets and the value at which we would buy or sell such assets could materially differ from their estimates of fair value. Further, we do not undertake to disclose the value at which we would be willing to buy or sell our real properties to any prospective or existing investor.

The valuations are performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practices, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation. Each valuation must be reviewed, approved and signed by an individual with the Member of Appraisal Institute (“MAI”) professional designation. Real estate valuations are reported on a free-and-clear basis (for example, without factoring in any applicable mortgage(s)), irrespective of any property-level financing that may be in place. Such property-level financings ultimately are factored in and do reduce our NAV in a manner described below.

The analyses performed by Cushman and CBRE do not address the market value of our common stock. Furthermore, the prices at which our real estate properties may actually be sold could differ from their estimated valuations of such properties.

Valuation of Real Estate-Related Liabilities

Our real estate-related liabilities consist of financing for our real estate assets. Depending on the relationship of a loan’s interest rate and other terms to current market interest rates and other terms, Cushman and CBRE may conclude that the estimated value of a loan is more or less than our current loan balance.

Cushman’s and CBRE’s scope of work was conducted in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. Several members of the Cushman and CBRE engagement teams who certified the methodologies and assumptions applied by us hold a MAI designation.

Other than (i) its engagement as described herein, (ii) its previous engagements with our Company in connection with the determination of the estimated NAV per share (unaudited) of our common stock as of December 31, 2017, December 31, 2018, December 31, 2019, April 30, 2020, December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, January 31, 2022 and December 31, 2022, and (iii) its previous engagements with Rich uncles Real Estate Investment Trust I (“REIT I”) in connection with the determination of the estimated NAV per share (unaudited) of REIT I common stock as of December 31, 2017 and December 31, 2018, Cushman does not have any direct interests in any transaction with us and has not performed any services for us other than Asset Allocation services pursuant to Accounting Standards Update (“ASU”) No. 2017-01, Clarifying the Definition of a Business (ASU No. 2017-01) and FASB Accounting Standards Codification Topic 805, Business Combinations (ASC Topic 805) and the real estate financial advisor services it provided on behalf of REIT I in connection with the REIT I Merger with our Company on December 31, 2019.

Valuation Methodology

In preparing their valuation materials and in reaching their conclusions as to the reasonableness of the methodologies and assumptions used by our Company to value our assets, Cushman and CBRE, among other things:

•	investigated sales in the properties’ relevant markets, analyzed rental data and considered the available input of buyers, sellers, brokers, property developers and public officials;

•	reviewed and relied upon our Company-provided data regarding the size, year built, construction quality and construction type of the properties in order to understand the characteristics of the existing improvements and underlying land;

•	researched the market by means of publications, public and private databases and other resources to measure current market conditions, supply and demand factors, and growth patterns and their effect on the properties; and

•	performed such other analyses and studies, and considered such other factors, as they considered appropriate.

Cushman and CBRE utilized two approaches in estimating the value of our real estate assets that are commonly used in the commercial real estate industry. The following is a summary of the valuation approaches used by Cushman and CBRE.

Determination of Estimated Fair Value of Our Real Estate Assets

Cushman’s and CBRE’s estimated fair values of our real estate properties as of January 31, 2024 were as follows.

	Cushman		CBRE
• Estimated fair value of our 42 wholly-owned real estate properties	$	569,465,000	$	563,280,000
• Estimated fair value of the property held in our TIC Interest	$	38,580,000	$	38,400,000

Income Capitalization Approach – The income capitalization approach first estimates the income-producing capacity of a property by using contract rents on existing leases, or expected rents for leases that are scheduled to expire within the next 12 months if not extended by the tenant, and by estimating market rent from rental activity at competing properties for any vacant space. Deductions are then made for vacancy and collection loss and operating expenses. The net operating income (“NOI”) developed in Cushman’s and CBRE’s analysis is the balance of potential income remaining after vacancy and collection loss and operating expenses. This NOI was then capitalized at an appropriate rate to derive an estimate of value (the “Direct Capitalization Method”) or discounted by an appropriate yield rate over a typical projection period in a discounted cash flow analysis. Thus, two key steps were involved: (1) estimating the NOI applicable to the subject property and (2) choosing appropriate capitalization rates and discount rates.

The following summarizes the range of capitalization rates used to arrive at the estimated fair values of our properties valued using the Direct Capitalization Method:

	Cushman		CBRE
Capitalization Rate – Estimated fair value as of January 31, 2024	5.25% to 15.70%		5.75% to 9.50%

Sales Comparison Approach – The sales comparison approach estimates value based on what other purchasers and sellers in the market have agreed to as the price for comparable improved properties. This approach is based upon the principle of substitution, which states that the limits of prices, rents, and rates tend to be set by the prevailing prices, rents, and rates of equally desirable substitutes.

Determination of Estimated Fair Value of Our Mortgages

Cushman’s and CBRE’s estimated fair values of our fixed-rate real estate-related liabilities as of January 31, 2024 were as follows.

	Cushman		CBRE
• Estimated fair value of our two consolidated real estate mortgages	$	28,117,749	$	28,650,200
• Estimated fair value of the mortgage on property in our TIC Interest	$	11,857,833	$	11,788,128

Calculation of Our Estimated NAV Per Share (Unaudited) as of January 31, 2024

We used Cushman’s and CBRE’s estimated fair values of our real estate assets and mortgages on our properties, along with our balance sheet to calculate estimated NAV per share.

We added the non-real estate related tangible assets, including cash and cash equivalents, and subtracted non-real estate related liabilities, including interest rate swap derivatives and other liabilities. Our liabilities are included as part of our NAV calculation generally based on GAAP, except for property-level mortgages and interest rate swaps, which are included based on their fair values. Our other liabilities include, without limitation, accounts payable, accrued operating expenses, accrued interest, dividends and distributions payable, and other liabilities.

The resulting amount, which is our estimated NAV of the portfolio, is divided by the number of fully-diluted shares of common stock outstanding to determine the estimated NAV per share.

The table below sets forth Modiv’s calculation of our estimated NAV per share (unaudited) as of January 31, 2024:

	Management Calculation				Management Calculation
	Using Cushman Appraisals				Using CBRE Appraisals
	Estimated Value		Estimated NAV Per Share		Pro Forma Value		Pro Forma NAV Per Share
Real estate properties	$	569,465,000	$	50.06	$	563,280,000	$	49.52
Investment in unconsolidated entity:
Santa Clara, CA property tenant-in-common interest (b)		19,735,103		1.74		19,654,908		1.73
Cash, cash equivalents and restricted cash		10,306,887		0.91		10,306,887		0.91
Interest rate swap derivative		2,848,024		0.25		2,848,024		0.25
Other assets		3,555,655		0.31		3,555,655		0.31
Total assets		605,910,669		53.27		599,645,474		52.72

Mortgage notes payable		28,117,749		2.47		28,650,200		2.52
Credit facility (at face value)		250,000,000		21.98		250,000,000		21.98
Accrued interest payable		196,451		0.02		196,451		0.02
Accrued dividends and distributions payable		1,005,397		0.09		1,005,397		0.09
Interest rate swap derivative		271,283		0.02		271,283		0.02
Other liabilities		4,081,707		0.36		4,081,707		0.36
Total liabilities		283,672,587		24.94		284,205,038		24.99
Series A Preferred Stock		50,000,000		4.40		50,000,000		4.40
Total estimated net asset value (b) and (c)	$	272,238,082	$	23.93	$	265,440,436	$	23.33

Fully-diluted shares outstanding (d)		11,375,344				11,375,344

(a)

Reflects our approximate 72.7% interest in the Santa Clara property which includes real estate valued at $38,580,000 and $38,400,000 by Cushman and CBRE, respectively, and a mortgage with estimated fair value of $11,857,833 and $11,788,128 by Cushman and CBRE, respectively, along with non-real estate related tangible assets and other liabilities.

(b)	The implied cap rate of Cushman’s real estate appraised values is 6.93% and the implied cap rate of CBRE’s real estate appraised values is 6.81%

(c)	Book value per share was $15.77 as of January 31, 2024

(d)	Fully-diluted shares outstanding as of January 31, 2024 includes all outstanding units of limited partnership interest as described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Exclusions from Estimated NAV

The estimated share value does not reflect any “portfolio premium,” nor does it reflect an enterprise value of our Company, which may include a premium or discount to NAV for:

•	the size of our Company’s portfolio, as some buyers may pay more for a portfolio compared to prices for individual investments;

•	the overall geographic and tenant diversity of the portfolio as a whole;

•	the characteristics of our Company’s working capital, leverage, credit facilities and other financial structures where some buyers may ascribe different values based on synergies, cost savings or other attributes; or

•	certain third-party transaction or other expenses that would be necessary to realize the value.

Limitations of the Estimated Share Value

As with any valuation methodology, the NAV Methodology used in reaching an estimate of the value of our shares is based upon a number of estimates, assumptions, judgments and opinions that may, or may not, prove to be correct, and are calculated as of a particular point in time. The use of different valuation methods, estimates, assumptions, judgments or opinions may have resulted in significantly different estimates of the value of our shares. In addition, our estimate of share value is not based on the book values of our real estate, as determined by GAAP, as our book value for most real estate is based on the amortized cost of the property, subject to certain adjustments.

Furthermore, in reaching an estimate of the value of our shares, we did not include a discount for debt that may include a prepayment obligation or a provision precluding assumption of the debt by a third party. In addition, selling costs were not considered by Cushman or CBRE in estimating the valuation of the properties.

Additional Information Regarding Engagement of Cushman and CBRE

Cushman’s and CBRE’s valuation materials provided to our Company do not constitute a recommendation to purchase or sell any shares of our common stock or other securities. The estimated value of our common stock may vary depending on numerous factors that generally impact the price of securities, the financial condition of our Company and the state of the real estate industry more generally, such as changes in economic or market conditions, changes in interest rates, changes in the supply of and demand for commercial real estate properties and changes in tenants’ financial condition.

In connection with their reviews, while Cushman and CBRE reviewed the information supplied or otherwise made available to them by our Company for reasonableness, Cushman and CBRE assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to them by any other party, and did not undertake any duty or responsibility to verify independently any of such information. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Cushman and CBRE, they assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of our Company, and relied upon our Company to advise them promptly if any information previously provided became inaccurate or was required to be updated during the period of their review.

In preparing their valuation materials, Cushman and CBRE did not, and were not requested to, solicit third party indications of interest for our Company in connection with possible purchases of our securities or the acquisition of all or any part of our Company.

In performing their analyses, Cushman and CBRE made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond their control and the control of our Company. The analyses performed by Cushman and CBRE are not necessarily indicative of actual values, trading values or actual future results of our Company’s common stock that might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. The analyses do not reflect the prices at which properties may actually be sold, and such estimates are inherently subject to uncertainty.

Cushman’s and CBRE’s materials were necessarily based upon market, economic, financial and other circumstances and conditions existing as of January 31, 2024, and any material change in such circumstances and conditions may have affected their analysis, but they do not have, and have disclaimed, any obligation to update, revise or reaffirm their materials as of any date subsequent to January 31, 2024. The intended use and users of each valuation report are specifically identified in each valuation report. No other use or user of any valuation report is permitted by any other party for any other purpose. Dissemination of any valuation report by any party to any non-client, non-intended users does not extend reliance to any other such party and Cushman and CBRE will not be responsible for unauthorized use of any valuation report, its conclusions, or contents, whether used in part or in whole.

For services rendered in connection with and upon the delivery of their valuation materials, we paid Cushman and CBRE a customary fee. The compensation Cushman and CBRE received was based on the scope of work and was not contingent on an action or event resulting from analyses, opinions, or conclusions in their valuation materials or from their use. In addition, Cushman’s and CBRE’s compensation for completing the valuation was not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of our Company, the amount of the estimated value, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the valuation materials. We also agreed to reimburse Cushman and CBRE for their expenses incurred in connection with their services and will indemnify Cushman and CBRE against certain liabilities arising out of their engagements.

Safe Harbor Statement

There is no guarantee that the Company’s Board will authorize, or that the Company will declare, additional dividends in the future, and the amount of future dividends, if any, and the authorization and payment thereof, will be determined by the Board based on the Company’s financial condition and such other factors as the Board deems relevant. Certain statements contained in this Current Report on Form 8-K, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business and the estimated net asset value per share of the Company’s common stock. Cushman and CBRE relied on forward-looking information, some of which was provided by or on behalf of the Company, in preparing its valuation materials. Therefore, neither such statements nor Cushman’s nor CBRE’s valuation materials are intended to, nor shall they, serve as a guarantee of the Company’s performance in future periods. These forward-looking statements can be identified by the use of words such as “believes,” “potential,” “may,” “will,” “should,” “intends,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (“SEC”). 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 Current Report on Form 8-K and in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Actual events may cause the valuation and returns on the Company’s investments to be less than that used for purposes of the Company’s estimated per share NAV.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Modiv Industrial, Inc. Press Release dated May 2, 2024
99.2	Modiv Industrial, Inc. Supplemental Data For The Quarter Ended March 31, 2024
104	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document

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.

	MODIV INDUSTRIAL, INC. (Registrant)

	By:	/s/ RAYMOND J. PACINI
		Name:	Raymond J. Pacini
		Title:	Chief Financial Officer
Date: May 2, 2024

EX-99.1 2 ef20028174_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Modiv Industrial Announces First Quarter 2024 Results

Management Provides NAV per share and Forward-Looking Thoughts

Reno, Nevada, May 2, 2024 – Modiv Industrial, Inc. (“Modiv Industrial”, “Modiv”, the “Company”, “we” or “our”), (NYSE:MDV), the only public REIT exclusively focused on acquiring industrial manufacturing real estate, today announced operating results for the first quarter ended March 31, 2024.

Highlights:

•

First quarter rental income of $11.9 million increased $1.6 million, or 15.4% year-over-year.

•

First quarter AFFO of $3.3 million increased $0.2 million, or 6.6% year-over year.

•

Received $1.4 million non-refundable deposit, following the completion of due diligence, on the previously announced disposition of our Issaquah, Washington office property to KB Home (NYSE: KBH).

•

Entered into a letter of intent (LOI) to acquire an industrial manufacturing property for $6,400,000 with a company that produces optical systems for the defense and aerospace industries. The property is located in the Tampa Florida MSA and the tenant is expected to enter into a 20-year lease, with 2.85% annual rent escalations, at an initial cap rate of 8.13% and a weighted average cap rate of 10.75%.

•

Cash balance of $18.4 million as of March 31, 2024 and $150 million available on our revolving credit facility.

•

Obtained independent appraisals of real estate portfolio as of January 31, 2024.

•

Compelling upside opportunity in current share price when compared to our implied average NAV per share of $23.63 and our current GAAP book value per share of $15.64.

•

Fully covered dividend yield of 7.72% based on our closing price of $14.90 on May 1, 2024.

“Of all the quarterly earnings releases, first quarter is always the most quirky in terms of timing given that it comes so soon after the release of fourth quarter results. In our case, we were speaking about 2023 results less than 60 days ago. During that short time, the broader market has consistently delivered the price volatility, economic uncertainty and geo-political risk that have plagued us for what feels like dog years now. Here at Modiv, we too have been consistent with what we do – patient, nose-to-the-grindstone execution. Though we have no seismic shifts to announce today, we have been steadfast in our focused pursuit of a tectonic transformation. Let’s get to it…

Business Outlook:

Acquisition Activity – Like a sniper laying prone for a seemingly endless period of time, scanning for the right target and adjusting for the wind, before they find their shot, we too have been ever so patient in our acquisitions process over the past six plus months as we waited to pull the trigger on the right transaction. Though its just an LOI, and subject to the normal contingencies of due diligence, we are pleased that the Tampa MSA acquisition we have found meets our very specific goal of acquiring a manufacturing facility in an industry that is both critical and durable. Furthermore, this transaction highlights our ability to make single asset purchases on an unlevered and accretive basis. Should it pass due diligence, this acquisition is anticipated to close late May/early June and then we can share more details.

True, it’s a small transaction that won’t profoundly move the needle, but it definitely showcases our discipline, our patience and our self-restraint to not hammer out rote acquisition volume for the sake of big numbers. If you see yourself as a hammer, then everything else you see is a nail, and we believe that hammers aren’t heroes in this current market.

Disposition Activity – Though we previously announced the sale contract with KB Home to buy our Issaquah, Washington office asset (currently leased to Costco), it is nice to have their exhaustive due diligence behind us and the $1.4 million deposit now fully non-refundable. That’s good news as KB Home is very thorough and wouldn’t give up that money if they weren’t serious. Unexpectedly, as KB Home went through city zoning and approvals, it came to everyone’s attention that there was a recently legislated environmental setback requirement of 150 feet along one side of the property line. This setback requirement resulted in less buildable area and, as a result, less townhome units they could sell. After some back and forth, we ultimately agreed upon a new selling price of $25.3 million to enable both parties to move forward. From our perspective, selling for a slight reduction in price that leads to more housing options in that tight residential market was a better outcome than us trying to lease or sell a soon-to-be empty office building. Additionally, should they find a way to fit a higher number of townhomes on the site through their design efforts, then we have a mechanism in place that increases the ultimate sales price by $325,000 for each additional unit. Lastly, getting to collect the full rent from our existing tenant for the next year is a big plus. We think this dispo is a win-win.

Recent External Valuations – In the past six years we have had our portfolio of assets independently appraised (and publicly disclosed) a total of 10 times. Why? Simply put, we believe that data informs decision-making and transparency empowers awareness. This year we elected to increase the data and transparency by having two nationally recognized valuation agents independently appraise the same portfolio of assets. Historically, we have engaged just Cushman & Wakefield to conduct an appraisal. This year we engaged both Cushman & Wakefield and CBRE. We took the data from their estimates of value for our properties (and our fixed rate mortgages) and then we calculated our net asset value (NAV) per share as delineated in the table further below and also in our accompanying 8-K filing. The result of our calculations imputes an average NAV of $23.63 per share – a greater than 50% premium to where we have recently been trading. Appraisals are just one of the many forms of valuations, and like the other forms (e.g. discounted cash flow models, analysts’ consensus targets, cap rate analysis and P/AFFO metrics) all suggest that MDV is currently trading below fair value. What you do with this information is completely up to you, but for us it drives our motivation to work tirelessly to close the value gap and to work with those investors who wish to do the same.

Discussions with Potential Strategic Partners – As we mentioned in our fourth quarter 2023 earnings release, we have had some very productive conversations with a few investors that believe in our asset class and see the opportunity. Over the past 60 days we have narrowed down our conversations to two possible strategic partners that both have existing industrial manufacturing portfolios and both are contemplating the contribution of their assets in exchange for our equity. These two possible partners are both well known, have great reputations and are quite savvy. As you can imagine, given the current market backdrop, the conversations are more nuanced than they might otherwise be. Negotiating, in this instance, is not unlike doing integral calculus with an array of principal variables with finite value ranges that are uniquely and collectively impacted by each other as well as from other derivative variables that are constantly changing. This calculus is notably more difficult given our desire to see if we can manifest all three of us coming together – the benefits of such a combination could lead to considerably more economic scale, greater diversification, meaningful index inclusion buying, increased trading float and a higher percentage of institutional ownership.

Imagine three battleships, each very capable in their own right. One battleship is anchored along the shore of Miami, one battleship is anchored along the shore of England and the third battleship is in the middle of the Atlantic Ocean. Imagine that Modiv is that third battleship and from our vantage point we can clearly see an easy path to either the shore in Miami or the English shore – we could go toward either. Now the battleship alongside the Miami shore has a harder time seeing a path toward the battleship alongside the English shore, and vice versa. What we are presently attempting to do is to get all three battleships to sail to a new location and to form an armada of strength that no individual battleship could obtain on their own. Stormy market weather, economic currents and geo-political waves mean that each ship must be very thoughtful (and patient) when it comes to seafaring.

Obviously, we aren’t so barmy as to take an all or nothing approach at the expense of viable alternatives. Negotiating in volatile markets can be a fatiguing and frustrating exercise, sometimes the ideas make sense but the timing is off. At this stage of the process, we see the range of outcomes that could possibly arise (in no particular order or probability) as: 1) a three-way deal; 2) a two-way deal with either party; 3) no deals at all; or 4) no deals for now. There are no assurances that anything will manifest, but we can tell you we are working hard to see if something can. We will keep you posted.

Ok, I think that about does it. Until we meet again… hug your families, enjoy life and stay modivated!” – Aaron Halfacre, CEO of Modiv Industrial.

Conference Call and Webcast

A conference call and audio webcast with analysts and investors will be held on Thursday, May 2, 2024, at 10:30 a.m. Eastern Time / 7:30 a.m. Pacific Time, to discuss the first quarter 2024 operating results and answer questions.

Live conference call: 1-877-407-0789 or 1-201-689-8562 at 10:30 a.m. Eastern Time, Thursday, May 2, 2023

Webcast: To listen to the webcast, either live or archived, please use this LINK 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 is focused on single-tenant net-lease industrial manufacturing 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. 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, 2023 filed with the SEC on March 7, 2024. 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 May 2, 2024 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.

Inquiries:

management@modiv.com

MODIV INDUSTRIAL, INC.

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Income:
Rental income	$	11,900,567		$	10,311,182
Management fee income		65,993			65,993
Total income		11,966,560			10,377,175

Expenses:
General and administrative		1,999,401			1,908,055
Stock compensation expense		1,378,502			660,169
Depreciation and amortization		4,133,501			3,272,061
Property expenses		983,982			1,706,843
Impairment of real estate investment property		-			3,499,438
Total expenses		8,495,386			11,046,566

Gain on sale of real estate investments, net		3,187,806			-
Operating income (loss)		6,658,980			(669,391	)

Other income (expense):
Interest income		123,839			53,695
Dividend income		108,373			-
Income from unconsolidated investment in a real estate property		73,854			55,567
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements		(2,307,149	)		(4,018,792	)
Decrease in fair value of investment in common stock		(20,574	)		-
Other expense, net		(2,021,657	)		(3,909,530	)

Net income (loss)		4,637,323			(4,578,921	)
Less: net (income) loss attributable to noncontrolling interest in Operating Partnership		(912,864	)		816,199
Net income (loss) attributable to Modiv Industrial, Inc.		3,724,459			(3,762,722	)
Preferred stock dividends		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders	$	2,802,584		$	(4,684,597	)

Net income (loss) per share attributable to common stockholders:
Basic	$	0.33		$	(0.62	)
Net income (loss) per share attributable to common stockholders and noncontrolling interests:
Diluted	$	0.33		$	(0.62	)

Weighted-average number of common shares outstanding:
Basic		8,568,353			7,532,452
Diluted		11,359,258			7,532,452

Distributions declared per common share	$	0.2875		$	0.2875

MODIV INDUSTRIAL, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

	As of
	March 31, 2024			December 31, 2023
Assets
Real estate investments:
Land	$	104,858,693		$	104,858,693
Building and improvements		399,767,923			399,666,781
Equipment		4,429,000			4,429,000
Tenant origination and absorption costs		15,707,458			15,707,458
Total investments in real estate property		524,763,074			524,661,932
Accumulated depreciation and amortization		(55,035,113	)		(50,901,612	)
Total real estate investments, net, excluding unconsolidated investment in real estate property and real estate investments held for sale, net		469,727,961			473,760,320
Unconsolidated investment in a real estate property		9,823,118			10,053,931
Total real estate investments, net, excluding real estate investments held for sale, net		479,551,079			483,814,251
Real estate investments held for sale, net		-			11,557,689
Total real estate investments, net		479,551,079			495,371,940
Cash and cash equivalents		18,404,990			3,129,414
Tenant deferred rent and other receivables		14,557,947			12,794,568
Above-market lease intangibles, net		1,295,459			1,313,959
Prepaid expenses and other assets		5,121,043			4,173,221
Investment in preferred stock		-			11,038,658
Interest rate swap derivatives		3,533,656			2,970,733
Other assets related to real estate investments held for sale		-			103,337
Total assets	$	522,464,174		$	530,895,830
Liabilities and Equity
Mortgage notes payable, net	$	30,990,813		$	31,030,241
Credit facility term loan, net		248,631,103			248,508,515
Accounts payable, accrued and other liabilities		3,851,814			4,469,508
Distributions payable		2,014,711			12,174,979
Below-market lease intangibles, net		8,638,505			8,868,604
Interest rate swap derivative		-			473,348
Other liabilities related to real estate investments held for sale		-			248,727
Total liabilities		294,126,946			305,773,922

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 March 31, 2024 and December 31, 2023 with an aggregate liquidation value of $50,000,000		2,000			2,000
Class C common stock, $0.001 par value, 300,000,000 shares authorized; 9,732,805 shares issued and 9,389,295 shares outstanding as of March 31, 2024 and 8,048,110 shares issued and 7,704,600 shares outstanding as of December 31, 2023		9,733			8,048
Class S common stock, $0.001 par value, 100,000,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and December 31, 2023		-			-
Additional paid-in-capital		336,284,720			292,617,486
Treasury stock, at cost, 343,510 shares held as of March 31, 2024 and December 31, 2023		(5,290,780	)		(5,290,780	)
Cumulative distributions and net losses		(145,342,118	)		(145,551,586	)
Accumulated other comprehensive income		2,335,701			2,658,170
Total Modiv Industrial, Inc. equity		187,999,256			144,443,338
Noncontrolling interests in the Operating Partnership		40,337,972			80,678,570
Total equity		228,337,228			225,121,908
Total liabilities and equity	$	522,464,174		$	530,895,830

MODIV INDUSTRIAL, INC.

Reconciliation of Non-GAAP Measures - FFO and AFFO

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Net income (loss) (in accordance with GAAP)	$	4,637,323		$	(4,578,921	)
Preferred stock dividends		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders and Class C OP Unit holders		3,715,448			(5,500,796	)
FFO adjustments:
Depreciation and amortization of real estate properties		4,133,501			3,272,061
Amortization of deferred lease incentives		(3,786	)		88,570
Depreciation and amortization for unconsolidated investment in a real estate property		188,919			194,173
Impairment of real estate investment property		-			3,499,438
Gain on sale of real estate investments, net		(3,187,806	)		-
FFO attributable to common stockholders and Class C OP Unit holders		4,846,276			1,553,446
AFFO adjustments:
Stock compensation		1,378,502			660,169
Deferred financing costs		221,496			195,212
Due diligence expenses, including abandoned pursuit costs		-			342,542
Amortization of deferred rents		(1,671,798	)		(1,175,359	)
Unrealized (gain) loss on interest rate swap valuation		(1,289,362	)		1,722,185
Amortization of (below) above market lease intangibles, net		(211,599	)		(196,282	)
Decrease in fair value of investment in common stock		20,574			-
Other adjustments for unconsolidated investment in a real estate property		23,825			11,819
AFFO attributable to common stockholders and Class C OP Unit holders	$	3,317,914		$	3,113,732

Weighted average shares outstanding:
Basic		8,568,353			7,532,452
Fully diluted (1)		11,359,258			10,351,141

FFO Per Share:
Basic	$	0.57		$	0.21
Fully diluted	$	0.43		$	0.15
AFFO Per Share:
Basic	$	0.39		$	0.41
Fully diluted	$	0.29		$	0.30

(1)	Includes the Class M OP Units which automatically converted to Class C OP Units on January 30, 2024, and Class P and Class R OP Units which automatically converted to Class C OP Units as of March 31, 2024, to compute the fully diluted 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 (“deferred rents”), stock-based compensation, 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. 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. 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. 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.

MODIV INDUSTRIAL, INC.

Reconciliation of Non-GAAP Measures - Adjusted EBITDA

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Net income (loss) (in accordance with GAAP)	$	4,637,323		$	(4,578,921	)

Depreciation and amortization of real estate properties		4,133,501			3,272,061
Depreciation and amortization for unconsolidated investment in a real estate property		188,919			194,173
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements		2,307,149			4,018,792
Interest expense on unconsolidated investment in real estate property		94,234			95,485
Impairment of real estate investment property		-			3,499,438
Stock compensation expense		1,378,502			660,169
Gain on sale of real estate investments, net		(3,187,806	)		-
Due diligence expenses, including abandoned pursuit costs		-			342,542
Decrease in fair value of investment in common stock		20,574			-
Adjusted EBITDA	$	9,572,395		$	7,503,739

Annualized Adjusted EBITDA	$	38,289,580		$	30,014,956

Net debt:
Consolidated debt	$	281,153,337		$	214,436,983
Debt of unconsolidated investment in real estate property (a)		9,197,045			9,429,343
Consolidated cash and cash equivalents		(18,404,990	)		(13,280,104	)
Cash of unconsolidated investment in real estate property (a)		(350,269	)		(420,947	)
	$	271,595,123		$	210,165,275

Net debt / Adjusted EBITDA		7.1	x		7.0	x

(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. 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 stock compensation 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.

MODIV INDUSTRIAL, INC.

Non-GAAP Measures - Net Asset Value Per Share

Estimated as of January 31, 2024

(Unaudited)

The table below sets forth the calculation of our estimated NAV per share (unaudited) as of January 31, 2024:

	Management Calculation				Management Calculation
	Using Cushman Appraisals				Using CBRE Appraisals
	Estimated		Per Share		Pro Forma		Per Share
	Value		NAV		Value		NAV
Assets
Real estate properties	$	569,465,000	$	50.06	$	563,280,000	$	49.52
Investment in unconsolidated entity: tenant-in-common interest (a)		19,735,103		1.74		19,654,908		1.73
Cash and cash equivalents		10,306,887		0.91		10,306,887		0.91
Interest rate swap derivative		2,848,024		0.25		2,848,024		0.25
Other assets		3,555,655		0.31		3,555,655		0.31
Total Assets	$	605,910,669	$	53.27	$	599,645,474	$	52.72

Liabilities
Mortgage notes payable	$	28,117,749	$	2.47	$	28,650,200	$	2.52
Credit facility (at face value)		250,000,000		21.98		250,000,000		21.98
Accrued interest payable		196,451		0.02		196,451		0.02
Accrued dividends and distributions payable		1,005,397		0.09		1,005,397		0.09
Interest rate swap derivative		271,283		0.02		271,283		0.02
Other liabilities		4,081,707		0.36		4,081,707		0.36
Total Liabilities		283,672,587		24.94		284,205,038		24.99

Series A preferred stock		50,000,000		4.40		50,000,000		4.40

Total estimated net asset value (b) and (c )	$	272,238,082	$	23.93	$	265,440,436	$	23.33

Fully-diluted shares outstanding (d)		11,375,344				11,375,344

(a)

(b)	The implied cap rate of Cushman’s real estate appraised values is 6.93% and the implied cap rate of CBRE’s real estate appraised values is 6.81%.

(c)	Book value per share was $15.77 as of January 31, 2024.

(d)	Fully-diluted shares outstanding as of January 31, 2024 includes all outstanding units of limited partnership interest as described in our Annual Report on Form 10-K for the year ended December 31, 2023.

###

EX-99.2 3 ef20028174_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

NYSE: MDV

QUARTERLY SUPPLEMENTAL DATA

March 31, 2024

Financial Information

and

Portfolio Information

Modiv Industrial, Inc.

Supplemental Information - First Quarter 2024

Table of Contents

About the Data		3

Company Overview		4

Financial Results
	Earnings Release	5
	Consolidated Statements of Operations - Last Five Quarters	9
	Property Portfolio - Statements of Operations - First Quarter of 2024	11
	Consolidated Statements of Comprehensive (Loss) Income - Last Five Quarters	13
	Earnings (Loss) Per Share - Last Five Quarters	14
	FFO and AFFO - Last Five Quarters	15
	Property Portfolio - FFO and AFFO - First Quarter of 2024	17
	Adjusted EBITDA - Last Five Quarters	18
	Leverage Ratio	19
Balance Sheets and Capitalization
	Capitalization	20
	Consolidated Balance Sheets	21
	Property Portfolio - Balance Sheets - As of March 31, 2024	22
	Debt Overview	23
	Credit Facility and Mortgage Notes Covenants	24

Real Estate
	Real Estate Acquisitions	25
	Real Estate Dispositions	26
	Top 20 Tenants	27
	Property Type	28
	Tenant Industry Diversification	29
	Tenant Geographic Diversification	29
	Lease Expirations	30

Appendix
	Disclosures Regarding Non-GAAP and Other Metrics	31

Table of Contents

About the Data

This data and other information described herein are as of and for the three months ended March 31, 2024 unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with Modiv Industrial, Inc.'s (f/k/a Modiv Inc.) Annual Report on Form 10-K for the year ended December 31, 2023 filed on March 7, 2024 and Quarterly Report on From 10-Q for the quarter ended March 31, 2024, including the financial statements and management's discussion and analysis of financial condition and results of operations filed on May 2, 2024.

Forward-Looking Statements

Information set forth herein contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. All of the forward-looking statements herein are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements. These factors include, but are not limited to, changes in the rate of inflation and interest rates, general economic conditions, local real estate conditions, tenant financial health, property acquisitions and dispositions and the timing of any acquisitions and dispositions, supply-chain disruptions and negative impacts associated with the violence and unrest in the Middle East, and the ongoing Russian war against Ukraine and sanctions which have been implemented by the United States and other countries against Russia and Iran. These and other risks, assumptions, and uncertainties are described in our filings with the SEC, which are available on the SEC’s website at www.sec.gov. You are cautioned not to place undue reliance on any forward-looking statements included herein. All forward-looking statements are made as of the date of this document and the risk that actual results, performance, and achievements will differ materially from the expectations expressed or referenced herein will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

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Company Overview

Modiv Industrial, Inc. (NYSE:MDV) (“Modiv Industrial”, the “Company”, “we”, “us” and “our”) is a real estate investment trust (“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. For more information, please visit: www.modiv.com.

Modiv Industrial strives towards a “best-in-class” corporate governance structure through a board of directors and management team with decades of institutional real estate industry experience.

Management Team:	Independent Directors:

Aaron S. Halfacre	Adam S. Markman
Chief Executive Officer and Director	Chairman of the Board

Raymond J. Pacini	Curtis B. McWilliams
Chief Financial Officer and Secretary

John C. Raney	Kimberly Smith
Chief Operating Officer and General Counsel

Sandra G. Sciutto	Thomas H. Nolan, Jr.
Chief Accounting Officer

William R. Broms	Connie Tirondola
Chief Investment Officer

Investor Inquiries:

management@modiv.com

Transfer Agent:

Computershare Trust Company, N.A.

150 Royall Street

Canton, MA 02021

800-736-3001

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Modiv Industrial Announces First Quarter 2024 Results

Management Provides NAV per share and Forward-Looking Thoughts

Highlights:

•

First quarter rental income of $11.9 million increased $1.6 million, or 15.4% year-over-year.

•

First quarter AFFO of $3.3 million increased $0.2 million, or 6.6% year-over year.

•

Received $1.4 million non-refundable deposit, following the completion of due diligence, on the previously announced disposition of our Issaquah, Washington office property to KB Home (NYSE: KBH).

•

Cash balance of $18.4 million as of March 31, 2024 and $150 million available on our revolving credit facility.

•

Obtained independent appraisals of real estate portfolio as of January 31, 2024.

•

Compelling upside opportunity in current share price when compared to our implied average NAV per share of $23.63 and our current GAAP book value per share of $15.64.

•

Fully covered dividend yield of 7.72% based on our closing price of $14.90 on May 1, 2024.

“Of all the quarterly earnings releases, first quarter is always the most quirky given in terms of timing that it comes so soon after the release of fourth quarter results. In our case, we were speaking about 2023 results less than 60 days ago. During that short time, the broader market has consistently delivered the price volatility, economic uncertainty and geo-political risk that have plagued us for what feels like dog years now. Here at Modiv, we too have been consistent with what we do – patient, nose-to-the-grindstone execution. Though we have no seismic shifts to announce today, we have been steadfast in our focused pursuit of a tectonic transformation. Let’s get to it…

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Business Outlook:

Recent External Valuations – In the past six years we have had our portfolio of assets independently appraised (and publicly disclosed) a total of 10 times. Why? Simply put, we believe that data informs decision-making and transparency empowers awareness. This year we elected to increase the data and transparency by having two nationally recognized valuation agents independently appraise the same portfolio of assets. Historically, we have engaged just Cushman & Wakefield to conduct an appraisal. This year we engaged both Cushman & Wakefield and CBRE. We took the data from their estimates of values for our properties (and our fixed rate mortgages) and then we calculated our net asset value (NAV) per share as delineated in the table further below and also in our accompanying 8-K filing. The result of our calculations imputes an average NAV of $23.63 per share – a greater than 50% premium to where we have recently been trading. Appraisals are just one of the many forms of valuations, and like the other forms (e.g. discounted cash flow models, analysts’ consensus targets, cap rate analysis and P/AFFO metrics) all suggest that MDV is currently trading below fair value. What you do with this information is completely up to you, but for us it drives our motivation to work tirelessly to close the value gap and to work with those investors who wish to do the same.

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Ok, I think that about does it. Until we meet again… hug your families, enjoy life and stay modivated!” – Aaron Halfacre, CEO of Modiv Industrial.

Conference Call and Webcast

Live conference call: 1-877-407-0789 or 1-201-689-8562 at 10:30 a.m. Eastern Time, Thursday, May 2, 2023

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Webcast: To listen to the webcast, either live or archived, please use this LINK or visit the investor relations page of Modiv’s website at www.modiv.com.

About Modiv Industrial

Forward-looking Statements

Notice Involving Non-GAAP Financial Measures

Inquiries:

management@modiv.com

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Modiv Industrial, Inc.

Consolidated Statements of Operations - Last Five Quarters

(Unaudited)

	Three Months Ended
	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Income:
Rental income (a)	$	11,900,567		$	12,288,516		$	12,500,338		$	11,836,563		$	10,311,182
Management fee income		65,993			65,993			65,993			65,993			65,993
Total income		11,966,560			12,354,509			12,566,331			11,902,556			10,377,175

Expenses:
General and administrative		1,999,401			1,402,055			1,735,104			1,597,776			1,908,055
Stock compensation expense (b)		1,378,502			1,381,001			8,469,867			660,170			660,169
Depreciation and amortization		4,133,501			4,147,570			4,175,209			3,956,334			3,272,061
Property expenses (c)		983,982			731,081			1,195,224			1,527,868			1,706,843
Impairment of real estate investment property (d)		—			888,186			—			—			3,499,438
Total expenses		8,495,386			8,549,893			15,575,404			7,742,148			11,046,566

Gain (loss) on sale of real estate investments (e)		3,187,806			—			(1,708,801	)		—			—
Operating income (loss)		6,658,980			3,804,616			(4,717,874	)		4,160,408			(669,391	)

Other income (expense):
Interest income		123,839			28,967			26,386			216,841			53,695
Dividend income		108,373			285,000			190,000			—			—
Income from unconsolidated investment in a real estate property		73,854			72,043			79,164			72,773			55,567
Interest (expense) income, including unrealized gain or loss on interest rate swaps and net of derivative settlements (f)		(2,307,149	)		(7,045,059	)		(2,922,918	)		179,931			(4,018,792	)
(Decrease) increase in fair value of investment in common/preferred stock (g)		(20,574	)		978,658			440,000			—			—
Other		—			33,724			—			—			—
Other (expense) income, net		(2,021,657	)		(5,646,667	)		(2,187,368	)		469,545			(3,909,530	)

Net income (loss)		4,637,323			(1,842,051	)		(6,905,242	)		4,629,953			(4,578,921	)
Less: net (income) loss attributable to noncontrolling interests in Operating Partnership		(912,864	)		546,967			1,368,896			(649,643	)		816,199
Net income (loss) attributable to Modiv Industrial, Inc.		3,724,459			(1,295,084	)		(5,536,346	)		3,980,310			(3,762,722	)
Preferred stock dividends		(921,875	)		(921,875	)		(921,875	)		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders	$	2,802,584		$	(2,216,959	)	$	(6,458,221	)	$	3,058,435		$	(4,684,597	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.33		$	(0.29	)	$	(0.86	)	$	0.41		$	(0.62	)
Net income (loss) per share attributable to common stockholders and noncontrolling interests:
Diluted	$	0.33		$	(0.29	)	$	(0.86	)	$	0.35		$	(0.62	)

Weighted-average number of common shares outstanding:
Basic		8,568,353			7,621,871			7,548,052			7,532,106			7,532,452
Diluted (h)		11,359,258			7,621,871			7,548,052			10,638,311			7,532,452

Distributions declared per common share (i)	$	0.2875		$	1.3975		$	0.2875		$	0.2875		$	0.2875

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(a)	Rental income includes tenant reimbursements for property expenses.

(b)

Stock compensation expense in the third quarter of 2023 included a one-time non-cash catch-up adjustment of $7,822,197 related to our determination that at that time it was probable that we would achieve our performance target for FFO of $1.05 per diluted share for the year ended December 31, 2023, exclusive of the dilutive effect of the performance units and related stock compensation expense. Our FFO per fully diluted share excluding the dilutive impact of the performance units and the related stock compensation expense was $1.77 for the year ended December 31, 2023. The $0.72 of FFO per diluted share in excess of the performance target of $1.05 per diluted share exceeded the target by 69%. As a result of achieving our performance target of FFO of $1.05 per diluted share (excluding the performance units), our Class R OP Units automatically converted based on a conversion ratio of 2.5 Class C OP Units for each Class R OP Unit for a total of 790,857 Class C OP Units, some of which were then exchanged for the Company's Class C Common Stock, as of March 31, 2024. Stock compensation expense of $733,332 for the performance units was recorded for the fourth quarter of 2023 and the first quarter of 2024 to recognize the final vesting periods.

(c)	Property expenses are largely offset by tenant reimbursements included in rental income.

(d)

The impairment charges for the first and fourth quarters of 2023 relate to an office property located in Nashville, Tennessee leased to Cummins, Inc. through February 29, 2024, which was sold on February 28, 2024. We determined that an impairment charge in the first quarter of 2023 was triggered by expectations of a shortened holding period and estimated the property's fair value based upon market comparables at the time. The additional charge in the fourth quarter of 2024 was based on the sale agreement executed on December 15, 2023, reflecting the excess of the property's carrying value over the property's contracted sale price less estimated selling costs for the sale.

(e)

Gain on sale of real estate investments of $3,187,806 for the first quarter of 2024 relates to the sales of two non-core properties. Loss on sale of real estate investments for the third quarter of 2023 includes a loss of $(1,887,040) on the sale of 13 non-core properties to Generation Income Properties, Inc. ("GIPR") (11 retail and two office), partially offset by a gain on the sale of the Rocklin, California property. Sale proceeds from the GIPR sale included cash of $30,000,000 and newly issued GIPR preferred stock with a liquidation value of $12,000,000. The loss includes the $2,380,000 difference between the $12,000,000 liquidation value and the $9,620,000 fair value of our investment in GIPR’s newly-created Series A Redeemable Preferred Stock received on August 10, 2023.

(f)

Interest expense (income), including unrealized gain or loss on interest rate swaps and net of derivative settlements in the first quarter of 2024 includes $1,036,270 of net unrealized gain on interest rate swaps and $1,670,732 of derivative cash settlements received. The fourth quarter of 2023 includes $3,400,139 unrealized loss on interest rate swaps, net of $1,617,279 of derivative cash settlements received. The third quarter of 2023 is net of $795,425 unrealized gain on interest rate swaps and $1,586,641 of derivative cash settlements received, the second quarter of 2023 is net of $3,708,597 unrealized gain on interest rate swaps and $1,401,716 of derivative cash settlements received and the first quarter of 2023 includes $1,722,184 unrealized loss on interest rate swaps and is net of $1,074,085 of derivative cash settlements received.

(g)	Decrease (increase) in fair value of investment in common/preferred stock reflects adjustments to fair value.

(i)	Diluted shares outstanding for periods when we reported a net loss do not include the OP Units since they would be anti-dilutive. Diluted shares during the first quarter of 2024 and the second quarter of 2023 include Class C, Class M, Class P and Class R OP Units.

(j)

Distributions for the three months ended December 31, 2023 include the distribution of GIPR common stock of $1.11 per share declared on December 29, 2023 which reflects 0.28 shares of GIPR common stock per one share of our stock multiplied by $3.95 which was the closing price of GIPR common stock on December 29, 2023.

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Modiv Industrial, Inc.

Property Portfolio - Statements of Operations - First Quarter of 2024

(Unaudited)

	Three Months Ended March 31, 2024
	Industrial Core			Tactical Non-Core (1)			Other Non-Core (2)			Non-Property & Other (3)			Consolidated
Income:
Rental income	$	8,663,832		$	2,757,676		$	479,059		$	—		$	11,900,567
Management fee income		—			—			—			65,993			65,993
Total income		8,663,832			2,757,676			479,059			65,993			11,966,560

Expenses:
General and administrative		—			—			—			1,999,401			1,999,401
Stock compensation expense		—			—			—			1,378,502			1,378,502
Depreciation and amortization		3,279,932			808,902			44,667			—			4,133,501
Property expenses		535,562			331,346			117,074			—			983,982
Impairment of real estate investment property		—			—			—			—			—
Total expenses		3,815,494			1,140,248			161,741			3,377,903			8,495,386

Gain on sale of real estate investments, net		3,178,860			—			8,946			—			3,187,806
Operating income (loss)		8,027,198			1,617,428			326,264			(3,311,910	)		6,658,980

Other income (expense):
Interest income		—			—			—			123,839			123,839
Dividend income		—			—			—			108,373			108,373
Income from unconsolidated investment in a real estate property		73,854			—			—			—			73,854
Interest expense, including unrealized gain on interest rate swaps and net of derivative settlements (4)		(4,014,099	)		(1,121,538	)		(131,606	)		2,960,094			(2,307,149	)
Decrease in fair value of investment in common stock		—			—			—			(20,574	)		(20,574	)
Other expense, net		(3,940,245	)		(1,121,538	)		(131,606	)		3,171,732			(2,021,657	)

Net income (loss)		4,086,953			495,890			194,658			(140,178	)		4,637,323
Less: net income attributable to noncontrolling interest in Operating Partnership		—			—			—			(912,864	)		(912,864	)
Net income (loss) attributable to Modiv Industrial, Inc.		4,086,953			495,890			194,658			(1,053,042	)		3,724,459
Preferred stock dividends		—			—			—			(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders	$	4,086,953		$	495,890		$	194,658		$	(1,974,917	)	$	2,802,584

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(1)

We categorize Tactical Non-Core Assets as those assets that offer compelling value-add or opportunistic investment characteristics when measured over a near-term or interim holding period. We currently hold three such assets: (i) our tactical non-core acquisition of a leading KIA auto dealership located in a prime location in Los Angeles County acquired in January 2022, which was structured as an UPREIT transaction resulting in a favorable equity issuance of $32,809,550 Class C OP Units at a cost basis of $25 per share; (ii) our 12 year lease to the State of California's Office of Emergency Services (OES) executed in January 2023 for one of our existing assets located in Rancho Cordova, California that includes an attractive purchase option by the tenant; we expect to hear in the near-term if OES plans to exercise their option since the option period begins on May 1, 2024; and (iii) our property leased to Costco located in Issaquah, Washington until July 31, 2025, which offers compelling redevelopment opportunities following Costco's lease expiration given its higher density infill location and the fact that the land is zoned to allow for multi-family development. On April 1, 2024, we entered into an amendment to the January 11, 2024 purchase and sale agreement with KB Home, a national homebuilder for the sale of this property, for a revised sale price of $25,300,000 reflecting an agreement to reduce the sales price due to City of Issaquah’s setback requirements resulting in a reduced number of townhomes planned for the property. KB Home completed its due diligence on April 26, 2024 and deposited $1,407,500 into escrow on May1, 2024, bringing the total non-refundable deposit to $1,432,500. Completing the sale remains subject to the buyer obtaining development approvals and the sale would not close until 15 days following the earlier of (a) buyer obtaining all necessary development approvals, or (b) tenant vacating the property, but not prior to February 1, 2025, and not later than August 15, 2025 unless extended. The amendment to the purchase and sale agreement provides that the buyer can extend the outside closing date up to three times for 60 days for each extension. The nonrefundable extension fee for the first extension is $300,000 with 50% applicable to the purchase price. The nonrefundable extension fees for the second and third extensions are $200,000 and $300,000, respectively, and none of these extension fees will be applicable to the purchase price. The buyer is not affiliated with the Company or its affiliates.

(2)

Other non-core assets include one remaining legacy office property leased to Solar Turbines in San Diego and the Cummins office property in Nashville, Tennessee that was sold in February 2024. We define legacy assets as those assets inherited through prior mergers and acquisitions that were acquired by different management teams utilizing different investment objectives and underwriting criteria.

(3)

We do not allocate non-property expenses across our property-specific segments; therefore, we report these expenses separately under the Non-Property & Other caption in the table above. Such expenses and income include stock compensation expense, general and administrative, unrealized gains and losses on valuation of interest rate swaps, and other comprehensive items.

(4)	Non-Property & Other's interest expense, including unrealized loss on interest rate swaps and net of derivative settlements in the first quarter of 2024 includes $1,036,270 of unrealized gain on interest rate swaps and $1,670,732 of derivative cash settlements received.

(5)	Other income reflects management fees earned for managing the TIC Interest.

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Modiv Industrial, Inc.

Consolidated Statements of Comprehensive (Loss) Income - Last Five Quarters

(Unaudited)

	Three Months Ended
	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Net income (loss)	$	4,637,323		$	(1,842,051	)	$	(6,905,242	)	$	4,629,953		$	(4,578,921	)

Other comprehensive (loss): cash flow hedge adjustment
Add: Amortization of unrealized holding gain on interest rate swap (a)		(253,092	)		(258,655	)		(253,092	)		(253,093	)		(250,311	)
Comprehensive income (loss)		4,384,231			(2,100,706	)		(7,158,334	)		4,376,860			(4,829,232	)

Net (income) loss attributable to noncontrolling interest in Operating Partnership		(912,864	)		546,967			1,368,896			(649,643	)		816,199
Other comprehensive loss attributable to noncontrolling interest in Operating Partnership: cash flow hedge adjustment
Add: Amortization of unrealized holding gain on interest rate swap (a)		62,184			44,959			44,264			44,341			37,141
Comprehensive (income) loss attributable to noncontrolling interest in Operating Partnership		(850,680	)		591,926			1,413,160			(605,302	)		853,340
Comprehensive income (loss) attributable to Modiv Industrial, Inc.	$	3,533,551		$	(1,508,780	)	$	(5,745,174	)	$	3,771,558		$	(3,975,892	)

(a)

Due to the $150 million Term Loan swap's failure to qualify as a cash flow hedge for each of the quarterly periods ended March 31, 2024, the unrealized gain on interest rate swap derivative on the consolidated balance sheet is being amortized on a straight-line basis, as a reduction to interest expense, through the maturity date of the Term Loan. The interest rate swap derivative instrument failed to qualify as a cash flow hedge during each of the quarterly periods presented because the swap was deemed ineffective due to the one-time cancellation option on December 31, 2024 as compared with the maturity of the Term Loan. The Company has begun, and intends to further explore various alternatives available to extend or restructure both of its swap cancellation options.

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Modiv Industrial, Inc.

Earnings (Loss) Per Share - Last Five Quarters

(Unaudited)

	Three Months Ended
	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Numerator - Basic:
Net income (loss)	$	4,637,323		$	(1,842,051	)	$	(6,905,242	)	$	4,629,953		$	(4,578,921	)
Less: net (income) loss attributable to noncontrolling interest in Operating Partnership		(912,864	)		546,967			1,368,896			(649,643	)		816,199
Preferred stock dividends		(921,875	)		(921,875	)		(921,875	)		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders	$	2,802,584		$	(2,216,959	)	$	(6,458,221	)	$	3,058,435		$	(4,684,597	)

Numerator - Diluted:
Net income (loss)	$	4,637,323		$	(1,842,051	)	$	(6,905,242	)	$	4,629,953		$	(4,578,921	)
Preferred stock dividends		(921,875	)		(921,875	)		(921,875	)		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders and noncontrolling interests	$	3,715,448		$	(2,763,926	)	$	(7,827,117	)	$	3,708,078		$	(5,500,796	)

Denominator:
Weighted average shares outstanding - basic (a)		8,568,353			7,621,871			7,548,052			7,532,106			7,532,452
Operating Partnership Units - Class C (a)(b)(c)		2,790,905			—			—			1,599,898			—
Operating Partnership Units - Classes M, P and R (d)		—			—			—			1,506,307			—
Weighted average shares outstanding - diluted		11,359,258			7,621,871			7,548,052			10,638,311			7,532,452

Earnings (loss) per share attributable to common stockholders:
Basic	$	0.33		$	(0.29	)	$	(0.86	)	$	0.41		$	(0.62	)
Earnings (loss) per share attributable to common stockholders and noncontrolling interests:
Diluted	$	0.33		$	(0.29	)	$	(0.86	)	$	0.35		$	(0.62	)

(a)	An aggregate of 1,980,822 of Classes M, P and R Units automatically converted to Class C OP Units during the first quarter of 2024. An aggregate of 1,566,109 units of the 3,350,720 outstanding Class C OP Units were exchanged for Class C common stock during the first quarter of 2024.

(b)

We issued 1,312,382 Class C OP Units at an agreed upon value of $25.00 per unit in connection with our January 18, 2022 acquisition of a KIA auto dealership property in an “UPREIT” transaction. These units were not included in the computation of Diluted EPS for the quarters ended December 31, 2023, September 30, 2023 and March 31, 2023 and because their effect would be anti-dilutive. Half of these Class C OP Units or 656,191 units were exchanged for Class C common stock during the first quarter of 2024.

(c)

The weighted average Class C OP Units of 1,599,898 for the quarters ended March 31, 2024 and June 30, 2023 included the weighted effect of 287,516 units issued in April 2023 in conjunction with our acquisition in an “UPREIT” transaction of the property in Reading, Pennsylvania leased to Summit Steel & Manufacturing, LLC.

(d)

During the three months ended December 31, 2023, September 30, 2023 and March 31, 2023, the weighted average dilutive effect of 1,980,822, 1,506,307 and 1,506,307 shares, respectively, related to Classes M, P and R Operating Partnership units were excluded from the computation of Diluted EPS because their effect would be anti-dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended.

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Modiv Industrial, Inc.

FFO and AFFO - Last Five Quarters

(Unaudited)

	Three Months Ended
	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Net income (loss) (in accordance with GAAP)	$	4,637,323		$	(1,842,051	)	$	(6,905,242	)	$	4,629,953		$	(4,578,921	)
Preferred stock dividends		(921,875	)		(921,875	)		(921,875	)		(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders and Class C OP Unit holders		3,715,448			(2,763,926	)		(7,827,117	)		3,708,078			(5,500,796	)
FFO adjustments:
Depreciation and amortization of real estate properties		4,133,501			4,147,570			4,175,209			3,956,334			3,272,061
Amortization of lease incentives		(3,786	)		(63,956	)		40,397			88,570			88,570
Depreciation and amortization for unconsolidated investment in a real estate property		188,919			188,889			187,479			186,069			194,173
Impairment of real estate investment property		—			888,186			—			—			3,499,438
Loss (gain) on sale of real estate investments, net		(3,187,806	)		—			1,708,801			—			—
FFO attributable to common stockholders and Class C OP Unit holders		4,846,276			2,396,763			(1,715,231	)		7,939,051			1,553,446
AFFO adjustments:
Stock compensation (b)		1,378,502			1,381,001			8,469,867			660,170			660,169
Deferred financing costs		221,496			210,604			165,709			195,213			195,212
Due diligence expenses, including abandoned pursuit costs (c)		—			—			1,208			3,848			342,542
Amortization of deferred rents		(1,671,798	)		(1,704,137	)		(1,772,403	)		(1,580,358	)		(1,175,359	)
Unrealized loss (gain) on interest rate swap valuation		(1,289,362	)		3,400,138			(795,425	)		(3,708,598	)		1,722,185
Amortization of (below) above market lease intangibles, net		(211,599	)		(211,600	)		(204,011	)		(195,901	)		(196,282	)
Decrease (increase) in fair value of investment in common/preferred stock		20,574			(978,658	)		(440,000	)		—			—
Other adjustments for unconsolidated investment in a real estate property		23,825			17,821			11,819			11,819			11,819
AFFO attributable to common stockholders and Class C OP Unit holders (d)	$	3,317,914		$	4,511,932		$	3,721,533		$	3,325,244		$	3,113,732

Weighted Average Shares Outstanding:
Basic		8,568,353			7,621,871			7,548,052			7,532,106			7,532,452
Fully diluted (d) (e)		11,359,258			11,202,591			11,128,772			10,638,311			10,351,141

FFO Per Share:
Basic	$	0.57		$	0.31		$	(0.23	)	$	1.05		$	0.21
Fully diluted	$	0.43		$	0.21		$	(0.23	)	$	0.75		$	0.15

AFFO Per Share:
Basic	$	0.39		$	0.59		$	0.49		$	0.44		$	0.41
Fully diluted	$	0.29		$	0.40		$	0.33		$	0.31		$	0.30

Table of Contents

(a)

Stock compensation expense in the third quarter of 2023 included a one-time non-cash catch-up adjustment of $7,822,197 related to our determination that at that time it was probable that we would achieve our performance target for FFO of $1.05 per diluted share for the year ended December 31, 2023, exclusive of the dilutive effect of the performance units and related stock compensation expense. Our FFO per fully diluted share excluding the dilutive impact of the performance units and the related stock compensation expense was $1.77 for the year ended December 31, 2023. The $0.72 of FFO per diluted share in excess of the performance target of $1.05 per diluted share exceeded the target by 69%. As a result of achieving our performance target of FFO of $1.05 per diluted share (excluding the performance units), our Class R OP Units automatically converted based on a conversion ratio of 2.5 Class C OP Units for each Class R OP Unit for a total of 790,857 Class C OP Units, some of which were then exchanged for the Company's Class C Common Stock as of March 31, 2024. Stock compensation expense of $733,332 for the performance units was recorded for the fourth quarter of 2023 and the first quarter of 2024 to recognize the final vesting periods.

(b)

Stock compensation expense includes (i) amortization of the value of Class P OP Units granted to our Chief Executive Officer and Chief Financial Officer on December 31, 2019; (ii) amortization of the value of the time-based Class R OP Units granted to all of our employees, including the Chief Executive Officer and Chief Financial Officer, on January 25, 2021; and (iii) stock granted to our independent directors each quarter as partial consideration for their service as directors.

(c)	Abandoned pursuit costs for the first quarter of 2023 primarily reflect the write-off of due diligence costs incurred during 2022 and 2023 for a potential acquisition of a portfolio of industrial manufacturing properties that we abandoned due to changes in market conditions.

(d)

The weighted average Class C OP Units for the first quarter of 2024 and the second, third and fourth quarters of 2023 included the weighted effect of 287,516 units issued in April 2023 in conjunction with our acquisition in an “UPREIT” transaction of the property in Reading, Pennsylvania leased to Summit Steel & Manufacturing, LLC.

(e)

Includes the Class C, Class M, Class P and Class R OP Units to compute the weighted average number of shares during the first quarter of 2024 and for each of the four quarters ended December 31, 2023 presented above, including the performance portion of the Class R OP Units for the quarters ended September 30, 2023, December 31, 2023 and March 31, 2024.

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Modiv Industrial, Inc.

Property Portfolio - FFO and AFFO - First Quarter of 2024

(Unaudited)

	Three Months Ended March 31, 2024
	Industrial Core			Tactical Non-Core (1)			Other Non-Core (1)			Non-Property & Other (1)			Consolidated
Net income (loss) (in accordance with GAAP)	$	4,086,953		$	495,890		$	194,658		$	(140,178	)	$	4,637,323
Preferred stock dividends		—			—			—			(921,875	)		(921,875	)
Net income (loss) attributable to common stockholders and Class C OP Unit holders		4,086,953			495,890			194,658			(1,062,053	)		3,715,448
FFO adjustments:
Depreciation and amortization of real estate properties		3,279,932			808,902			44,667			—			4,133,501
Amortization of lease incentives		(3,786	)		—			—			—			(3,786	)
Depreciation and amortization for unconsolidated investment in a real estate property		188,919			—			—			—			188,919
Gain on sale of real estate investments, net		(3,178,860	)		—			(8,946	)		—			(3,187,806	)
FFO attributable to common stockholders and Class C OP Unit holders		4,373,158			1,304,792			230,379			(1,062,053	)		4,846,276
AFFO adjustments:
Stock compensation		—			—			—			1,378,502			1,378,502
Deferred financing costs		174,661			41,096			5,739			—			221,496
Amortization of deferred rents		(1,105,220	)		(580,439	)		13,861			—			(1,671,798	)
Unrealized gain on interest rate swap valuation		—			—			—			(1,289,362	)		(1,289,362	)
Amortization of (below) above market lease intangibles, net		(211,599	)		—			—			—			(211,599	)
Decrease in fair value of investment in common stock		—			—			—			20,574			20,574
Other adjustments for unconsolidated investment in a real estate property		23,825			—			—			—			23,825
AFFO attributable to common stockholders and Class C OP Unit holders	$	3,254,825		$	765,449		$	249,979		$	(952,339	)	$	3,317,914

Weighted average shares outstanding:
Basic		8,568,353			8,568,353			8,568,353			8,568,353			8,568,353
Fully diluted (2)(3)		11,359,258			11,359,258			11,359,258			11,359,258			11,359,258

FFO Per Share:
Basic	$	0.51		$	0.15		$	0.03		$	(0.12	)	$	0.57
Fully diluted (2)(3)	$	0.39		$	0.11		$	0.02		$	(0.09	)	$	0.43

AFFO Per Share:
Basic	$	0.38		$	0.09		$	0.03		$	(0.11	)	$	0.39
Fully diluted (2)(3)	$	0.28		$	0.07		$	0.02		$	(0.08	)	$	0.29

(1)	See Footnotes (1), (2), (3) and (4) of Property Portfolio Statement - Statement of Operations - First Quarter of 2024.

(2)	Weighted average fully diluted shares outstanding includes the following:

(i)

8,568,353 shares of Class C Common Stock; and

(ii)

2,790,905 Operating Partnership Units.

(3)	For the intraperiod allocation, we treat all component per share amounts as fully-diluted to correspond with the consolidated FFO and AFFO results reflected above.

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Modiv Industrial, Inc.

Adjusted EBITDA - Last Five Quarters

(Unaudited)

	Three Months Ended
	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Net income (loss) (in accordance with GAAP)	$	4,637,323		$	(1,842,051	)	$	(6,905,242	)	$	4,629,953		$	(4,578,921	)
Depreciation and amortization of real estate properties		4,133,501			4,147,570			4,175,209			3,956,334			3,272,061
Depreciation and amortization for unconsolidated investment in a real estate property		188,919			188,889			187,479			186,069			194,173
Interest expense (income), including unrealized gain or loss on interest rate swaps and net of derivative settlements (a)		2,307,149			7,045,059			2,922,918			(179,931	)		4,018,792
Interest expense on unconsolidated investment in real estate property		94,234			95,801			96,375			95,932			95,485
Impairment of real estate investment property (b)		—			888,186			—			—			3,499,438
Stock compensation		1,378,502			1,381,001			8,469,867			660,170			660,169
Due diligence expenses, including abandoned pursuit costs		—			—			1,208			3,848			342,542
Gain (loss) on sale of real estate investments, net		(3,187,806	)		—			1,708,801			—			—
Decrease (increase) in fair value of investment in common/preferred stock		20,574			(978,658	)		(440,000	)		—			—
Adjusted EBITDA	$	9,572,396		$	10,925,797		$	10,216,615		$	9,352,375		$	7,503,739

Annualized adjusted EBITDA	$	38,289,580		$	43,703,188		$	40,866,460		$	37,409,500		$	30,014,956

Net debt:
Debt	$	281,153,337		$	281,200,000		$	284,284,849		$	294,361,357		$	214,436,983
Debt of unconsolidated investment in real estate property (c)		9,197,045			9,256,466			9,315,322			9,372,615			9,429,343
Cash and restricted cash		(18,404,990	)		(3,129,414	)		(5,641,610	)		(9,912,109	)		(13,280,104	)
Cash of unconsolidated investment in real estate property (c)		(350,269	)		(350,937	)		(387,278	)		(494,250	)		(420,947	)
	$	271,595,123		$	286,976,115		$	287,571,283		$	293,327,613		$	210,165,275

Net debt / Adjusted EBITDA		7.1	x		6.6	x		7.0	x		7.8	x		7.0	x

(a)	Includes unrealized gains (losses) on swap valuations of $1,036,270, $(3,658,794), $542,332, $3,708,597 and $(1,722,184) in the first quarter of 2024 and each of the quarters ended December 31, 2023, respectively.

(b)

The impairment charges for the first and fourth quarters of 2023 relate to an office property located in Nashville, Tennessee leased to Cummins, Inc. through February 29, 2024 that was sold on February 28, 2024. We determined that an impairment charge in the first quarter of 2023 was triggered by expectations of a shortened holding period and estimated the property's fair value based upon market comparables at the time. The additional charge in the fourth quarter of 2023 was based on the sale agreement executed on December 15, 2023 reflecting the excess of the property's carrying value over the property's contracted sale price less estimated selling costs for the sale.

(c)	Includes our approximate 72.71% pro rata share of the tenant-in-common's mortgage note payable and cash of our unconsolidated investment in real estate property.

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Modiv Industrial, Inc.

Leverage Ratio

(Unaudited)

We calculate our leverage ratio in conformance with the definition used in our KeyBank credit facility as set forth below.

	As of
	March 31, 2024			December 31, 2023
Total Asset Value
Cash and cash equivalents	$	18,404,990		$	3,129,414
Borrowing base value (a)		482,245,137			471,126,446
Other real estate value		76,220,000			102,340,000
Pro-rata share of unconsolidated investment in a real estate property		28,401,787			28,402,455
Total asset value	$	605,271,914		$	604,998,315

Indebtedness
Credit facility term loan	$	250,000,000		$	250,000,000
Mortgage debt		31,153,337			31,200,000
Pro-rata share of unconsolidated investment in a real estate property		9,197,045			9,256,466
Total indebtedness	$	290,350,382		$	290,456,466

Leverage Ratio		48	%		48	%

(a)	The increase in borrowing base properties reflects the addition of the property leased to OES following repayment of the mortgage in December 2023, partially offset by the two properties sold in January and February of 2024.

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Modiv Industrial, Inc.

Capitalization as of March 31, 2024

(Unaudited)

PREFERRED EQUITY
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock	$	50,000,000
% of Total Capitalization		9	%

COMMON EQUITY
Shares of Class C Common Stock		9,389,295
OP Units (Class M, Class P, Class R and Class C)		2,014,610
Total Class C Common Stock and OP Units		11,403,905
Price Per Share / Unit at March 31, 2024	$	16.79
IMPLIED EQUITY MARKET CAPITALIZATION	$	191,471,565
% of Total Capitalization		37	%

DEBT
Mortgage Debt
Costco Property	$	18,803,337
Taylor Fresh Foods Property		12,350,000
Total Mortgage Debt	$	31,153,337
KeyBank Credit Facility
Revolver	$	—
Term Loan (a) & (b)		250,000,000
Total Credit Facility	$	250,000,000
TOTAL DEBT	$	281,153,337
% of Total Capitalization		54	%
% of Total Debt - Floating Rate Debt		—	%
% of Total Debt - Fixed Rate Debt (a) (b) & (c)		100	%
% of Total Debt		100	%
ENTERPRISE VALUE
Total Capitalization	$	522,624,902
Less: Cash and Cash Equivalents		(18,404,990	)
Enterprise Value	$	504,219,912

(a)

On May 10, 2022, we purchased a five-year swap at 2.258% on our $150,000,000 term loan that results in a fixed interest rate of 4.058% based on our leverage ratio of 48% as of March 31, 2024. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio. The counter-party has a one-time right of cancellation on December 31, 2024. We are exploring various alternatives to extend or restructure the cancellation options on both of our existing swaps.

(b)

On October 26, 2022, we purchased another five-year swap at 3.44% on our $100,000,000 term loan commitment that results in a fixed interest rate of 5.24% based on our leverage ratio of 48% as of March 31, 2024. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio. The counter-party has a one-time right of cancellation on December 31, 2024.

(c)	The weighted average interest rate for the $281,153,337 Total Debt outstanding was 4.52% as of March 31, 2024.

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Modiv Industrial, Inc.

Consolidated Balance Sheets

(Unaudited)

	As of
	March 31, 2024			December 31, 2023
Assets
Real estate investments:
Land	$	104,858,693		$	104,858,693
Buildings and improvements		399,767,923			399,666,781
Equipment		4,429,000			4,429,000
Tenant origination and absorption costs		15,707,458			15,707,458
Total investments in real estate property		524,763,074			524,661,932
Accumulated depreciation and amortization		(55,035,113	)		(50,901,612	)
Total real estate investments, net, excluding unconsolidated investment in real estate property and real estate investments held for sale, net		469,727,961			473,760,320
Unconsolidated investment in a real estate property		9,823,118			10,053,931
Total real estate investments, net, excluding real estate investments held for sale, net		479,551,079			483,814,251
Real estate investments held for sale, net		—			11,557,689
Total real estate investments, net		479,551,079			495,371,940
Cash and cash equivalents		18,404,990			3,129,414
Tenant deferred rent and other receivables		14,557,947			12,794,568
Above-market lease intangibles, net		1,295,459			1,313,959
Prepaid expenses and other assets		5,121,043			4,173,221
Investment in preferred stock		—			11,038,658
Interest rate swap derivatives		3,533,656			2,970,733
Other assets related to real estate investments held for sale		—			103,337
Total assets	$	522,464,174		$	530,895,830
Liabilities and Equity
Mortgage notes payable, net	$	30,990,813		$	31,030,241
Credit facility term loan, net		248,631,103			248,508,515
Accounts payable, accrued and other liabilities		3,851,814			4,469,508
Distributions payable		2,014,711			12,174,979
Below-market lease intangibles, net		8,638,505			8,868,604
Interest rate swap derivative		—			473,348
Other liabilities related to real estate investments held for sale		—			248,727
Total liabilities		294,126,946			305,773,922

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 March 31, 2024 and December 31, 2023 with an aggregate liquidation value of $50,000,000		2,000			2,000
Class C common stock, $0.001 par value, 300,000,000 shares authorized, 9,732,805 shares issued and 9,389,295 shares outstanding as of March 31, 2024 and 8,048,110 shares issued and 7,704,600 shares outstanding as of December 31, 2023		9,733			8,048
Class S common stock, $0.001 par value, 100,000,000 shares authorized no shares issued and outstanding as of March 31, 2024 and December 31, 2023		—			—
Additional paid-in-capital		336,284,720			292,617,486
Treasury stock, at cost, 343,510 shares held as of March 31, 2024 and December 31, 2023		(5,290,780	)		(5,290,780	)
Cumulative distributions and net losses		(145,342,118	)		(145,551,586	)
Accumulated other comprehensive income		2,335,701			2,658,170
Total Modiv Industrial, Inc. equity		187,999,256			144,443,338
Noncontrolling interests in the Operating Partnership		40,337,972			80,678,570
Total equity		228,337,228			225,121,908
Total liabilities and equity	$	522,464,174		$	530,895,830

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Modiv Industrial, Inc.

Property Portfolio - Balance Sheets - March 31, 2024

(Unaudited)

	As of March 31, 2024
	Industrial Core			Tactical Non-Core (1)			Other Non-Core (1)			Non-Property & Other (2)			Consolidated
Assets
Real estate investments:
Land	$	58,986,797		$	43,387,936		$	2,483,960		$	—		$	104,858,693
Buildings and improvements		311,928,409			83,137,949			4,701,565			—			399,767,923
Equipment		4,429,000			—			—			—			4,429,000
Tenant origination and absorption costs		10,882,884			4,500,352			324,222			—			15,707,458
Total investments in real estate property		386,227,090			131,026,237			7,509,747			—			524,763,074
Accumulated depreciation and amortization		(39,697,586	)		(14,367,018	)		(970,509	)		—			(55,035,113	)
Total real estate investments, net, excluding unconsolidated investment in real estate property		346,529,504			116,659,219			6,539,238			—			469,727,961
Unconsolidated investment in a real estate property		9,823,118			—			—			—			9,823,118
Total real estate investments, net		356,352,622			116,659,219			6,539,238			—			479,551,079
Cash and cash equivalents		—			—			—			18,404,990			18,404,990
Tenant deferred rent and other receivables		9,916,712			4,602,599			38,636			—			14,557,947
Above-market lease intangibles, net		1,295,459			—			—			—			1,295,459
Prepaid expenses and other assets		2,339,721			132,056			86,604			2,562,662			5,121,043
Interest rate swap derivatives		—			—			—			3,533,656			3,533,656
Total assets	$	369,904,514		$	121,393,874		$	6,664,478		$	24,501,308		$	522,464,174

Liabilities and Equity
Mortgage notes payable, net	$	12,238,788		$	18,752,025		$	—		$	—		$	30,990,813
Credit facility term loan, net		196,877,434			45,093,329			6,660,340			—			248,631,103
Accounts payable, accrued and other liabilities		1,572,116			890,155			107,340			1,282,203			3,851,814
Distributions payable		—			—			—			2,014,711			2,014,711
Below-market lease intangibles, net		8,638,505			—			—			—			8,638,505
Total liabilities		219,326,843			64,735,509			6,767,680			3,296,914			294,126,946

Commitments and contingencies

Total Modiv Industrial, Inc. equity, net of due to affiliates		150,577,671			56,658,365			(103,202	)		(19,133,578	)		187,999,256
Noncontrolling interests in the Operating Partnership		—			—			—			40,337,972			40,337,972
Total equity		150,577,671			56,658,365			(103,202	)		21,204,394			228,337,228
Total liabilities and equity	$	369,904,514		$	121,393,874		$	6,664,478		$	24,501,308		$	522,464,174

(1)	See Footnotes (1) and (2) of Property Portfolio Statement - Statement of Operations - First Quarter of 2024.

(2)	Non-Property & Other's prepaid expenses and other assets include deferred financing fees on our Revolver and prepaid directors and officers insurance.

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Modiv Industrial, Inc.

Debt Overview

(Unaudited)

	Outstanding Balance
	As of
Collateral	March 31, 2024			December 31, 2023			Interest Rate			Loan Maturity
Mortgage Notes:
Costco property	$	18,803,337		$	18,850,000			4.85	%(b)	1/1/2030
Taylor Fresh Foods property		12,350,000			12,350,000			3.85	%(b)	11/1/2029
		31,153,337			31,200,000
Less unamortized deferred financing costs		(162,524	)		(169,759	)
Mortgage notes payable, net		30,990,813			31,030,241

KeyBank Credit Facility (a):
Revolver		—			—			7.16	%(c)	1/18/2026
Term loan		250,000,000			250,000,000			4.53	%(d)	1/18/2027
Total Credit Facility		250,000,000			250,000,000
Less unamortized deferred financing costs		(1,368,897	)		(1,491,485	)
		248,631,103			248,508,515
Total debt, net	$	279,621,916		$	279,538,756			4.52	%(e)

(a)

Our $400,000,000 Credit Facility is comprised of a $150,000,000 Revolver and a $250,000,000 Term Loan. The Credit Facility includes an accordion option that allows us to request additional Revolver and Term Loan lender commitments up to a total of $750,000,000. As of the filing date of this Supplemental Data, the $250,000,000 Term Loan is fully drawn and the Revolver has zero outstanding balance.

(b)	Contractual fixed rate.

(c)

The interest rate on the Revolver is based on our leverage ratio at the end of the prior quarter. With our leverage ratio at 48% as of March 31, 2024, the spread over the Secured Overnight Financing Rate (‘‘SOFR’’), including a 10 basis point credit adjustment, is 185 basis points and the interest rate on the Revolver was 7.1625% as of March 31, 2024, although we had no outstanding borrowings under the Revolver. We also pay an annual unused fee of up to 25 basis points on the Revolver, based on the daily amount of the unused commitment.

(d)

To mitigate the risk of rising interest rates, on May 10, 2022, we purchased a five-year swap at fixing SOFR at 2.258% on the $150,000,000 term loan that results in a fixed interest rate of 4.058% based on our leverage ratio of 48% as of December 31, 2023. On October 26, 2022, we purchased another five-year swap fixing SOFR at 3.44% on our $100,000,000 term loan commitment which results in a fixed interest rate of 5.24% based on our leverage ratio of 48% as of December 31, 202. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio. The weighted average interest rate on the Term Loan was 4.43% as of March 31, 2024. We are exploring various alternatives to extend or restructure the cancellation options on both of our existing swaps.

(e)	The weighted average interest rate for the $281,153,337 Total Debt outstanding was 4.52% as of March 31, 2024.

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Modiv Industrial, Inc.

Covenants

Credit Facility and Mortgage Notes Covenants

The following is a summary of key financial covenants for our credit facility and mortgage notes, as defined and calculated per the terms of the facility's credit agreement and the mortgage notes' governing documents, respectively, which are included in our filings with the U.S. Securities and Exchange Commission. These calculations, which are not based on U.S. GAAP measurements are presented to demonstrate that as of March 31, 2024, we are in compliance with the covenants.

Unsecured Credit Facility Covenants	Required			March 31, 2024
Maximum leverage ratio	<60%				48	%
Minimum fixed charge coverage ratio	>1.50x				1.94	x
Maximum secured indebtedness ratio		40	%		5	%
Minimum consolidated tangible net worth	$	214,641,729		$	283,372,341
Weighted average lease term (years)		7			16

Mortgage Notes Key Covenants	Debt service coverage ratio		March 31, 2024
Costco property	N.A.		N.A.
Taylor Fresh Foods property		1.5		3.4

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Modiv Industrial, Inc.

Real Estate Acquisitions

(Unaudited)

The following table summarizes our property acquisition activity from January 1, 2023 through March 31, 2024:

Tenant and Location	Property Type	Acquisition Date	Area (Square Feet)		Lease Term (Years)		Annual Rent Increase			Acquisition Price		Initial Cap Rate			Weighted Average Cap Rate
Plastic Products, Princeton, MN	Industrial	January 2023		148,012		5.8		3.0	%		6,368,776		7.5	%		9.2	%
Stealth Manufacturing, Savage MN	Industrial	March 2023		55,175		20.0		2.5	%		5,500,000		7.7	%		9.8	%
Lindsay Precast, Gap, PA (a)	Industrial	April 2023		137,086		24.0		2.2	%		18,343,624		7.5	%		10.1	%
Summit Steel, Reading, PA	Industrial	April 2023		116,560		20.0		2.9	%		11,200,000		7.3	%		9.7	%
PBC Linear, Roscoe, IL	Industrial	April 2023		219,287		20.0		2.5	%		20,000,000		7.8	%		9.4	%
Cameron Tool, Lansing, MI	Industrial	May 2023		93,085		20.0		2.5	%		5,721,174		8.5	%		10.9	%
S.J. Electro Systems, Minnesota (2) and Texas	Industrial	May 2023		159,680		17.0		2.8	%		15,975,000		7.5	%		9.4	%
Titan, Alleyton, TX	Industrial	May 2023		223,082		20.0		2.9	%		17,100,000		8.2	%		10.8	%
Vistech, Piqua, OH	Industrial	July 2023		335,525		25.0		3.0	%		13,500,000		9.0	%		13.1	%
SixAxis, Andrews, SC	Industrial	July 2023		213,513		25.0		2.8	%		15,440,000		7.5	%		10.5	%
				1,701,005						$	129,148,574

(a)	Includes $1,800,000 funding provided for improvements to the previously acquired Lindsay property in Franklinton, North Carolina.

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Modiv Industrial, Inc.

Real Estate Dispositions

(Unaudited)

The following table summarizes our property disposition activity from January 1, 2023 through March 31, 2024.

Tenant and Location	Property Type	Disposition Date	Area (Square Feet)		Disposition Price		Cap Rate
Dollar General, Litchfield, ME	Retail	August 2023		9,026		1,247,974		7.5	%
Dollar General, Wilton, ME	Retail	August 2023		9,100		1,452,188		7.7	%
Dollar General, Thompsontown, PA	Retail	August 2023		9,100		1,111,831		7.7	%
Dollar General, Mt. Gilead, OH	Retail	August 2023		9,026		1,066,451		8.1	%
Dollar General, Lakeside, OH	Retail	August 2023		9,026		1,134,522		7.1	%
Dollar General, Castalia, OH	Retail	August 2023		9,026		1,111,831		7.1	%
Dollar General, Bakersfield, CA	Retail	August 2023		18,827		4,855,754		6.6	%
Dollar General, Big Spring, TX	Retail	August 2023		9,026		1,270,665		6.8	%
Dollar Tree, Morrow, GA	Retail	August 2023		10,906		1,293,355		8.0	%
PreK Education, San Antonio, TX	Retail	August 2023		50,000		12,888,169		7.2	%
Walgreens, Santa Maria, CA	Retail	August 2023		14,490		6,081,036		6.1	%
exp US Services, Maitland, FL	Office	August 2023		33,118		5,899,514		10.6	%
GSA (MSHA), Vacaville, CA	Office	August 2023		11,014		2,586,710		7.8	%
EMC Shop (formerly Gap), Rocklin, CA	Flex	August 2023		40,110		5,466,960		8.1	%
Levins, Sacramento, CA	Industrial	January 2024		76,000		7,075,000		7.5	%
Cummins, Nashville, TN	Office	February 2024		87,230		7,950,000	N.A.
				405,025	$	62,491,960

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Modiv Industrial, Inc.

Top 20 Tenants

(Unaudited)

Tenant	ABR		ABR as a Percentage of Total Portfolio			Area (Square Feet)		Square Feet as a Percentage of Total Portfolio
Lindsay	$	5,277,576		13	%		755,281		17	%
KIA of Carson		3,982,356		10	%		72,623		2	%
Costco Wholesale		2,454,073		6	%		97,191		2	%
State of CA OES		2,458,473		6	%		106,592		2	%
AvAir		2,376,766		6	%		162,714		4	%
3M		1,885,467		5	%		410,400		9	%
Valtir		1,866,034		5	%		293,612		7	%
FUJIFILM Dimatix (a)		1,690,950		4	%		91,740		2	%
Taylor Fresh Foods		1,669,682		4	%		216,727		5	%
Pacific Bearing		1,560,000		4	%		219,287		5	%
Titan		1,433,250		4	%		223,082		5	%
Northrup Grumman		1,306,215		3	%		107,419		2	%
Vistech		1,239,300		3	%		335,525		7	%
SJE		1,225,528		3	%		159,680		4	%
SixAxis		1,171,083		3	%		213,513		5	%
Husqvarna		927,186		3	%		64,637		1	%
L3Harris		884,702		2	%		46,214		1	%
Summit Steel		838,960		2	%		116,560		3	%
Arrow-TruLine		796,958		2	%		206,155		4	%
WSP USA		756,627		2	%		37,449		1	%
Total Top 20 Tenants	$	35,801,186		90	%		3,936,401		88	%

(a)	Reflects our approximate 72.71% tenant-in-common interest (“TIC Interest”).

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Modiv Industrial, Inc.

Property Type

(Unaudited)

Property Type	Number of Properties		ABR		ABR as a Percentage of Total Portfolio			Area (Square Feet)		Square Feet as a Percentage of Total Portfolio
Industrial Core, including TIC Interest		38	$	30,056,361		75	%		4,166,797		93	%
Tactical Non-Core (1)		3		9,183,235		23	%		276,406		6	%
Non-Core		1		621,427		2	%		26,036		1	%
Total Properties		42	$	39,861,023		100	%		4,469,239		100	%

(1)

We categorize Tactical Non-Core Assets as those assets that offer compelling value-add or opportunistic investment characteristics when measured over a near-term or interim holding period. We currently hold three such assets: (i) our tactical non-core acquisition of a leading KIA auto dealership located in a prime location in Los Angeles County acquired in January 2022; this acquisition was structured as an UPREIT transaction resulting in a favorable equity issuance of $32,809,550 of Class C OP Units at a cost basis of $25.00 per share; (ii) our 12 year lease with the State of California’s Office of Emergency Services (OES) for an existing asset located in Rancho Cordova, California that includes an attractive purchase option by the tenant; we expect to hear in the near-term if OES plans to exercise their option since the option period begins on May 1, 2024; and (iii) our property leased to Costco located in Issaquah, Washington which offers compelling redevelopment opportunities following Costco’s lease expiration given its higher density infill location and the fact that the land is zoned for additional uses to include multi-family. In January 2024, we entered into a purchase and sale agreement with KB Home, a national homebuilder for the sale of this property, for a sale price of $28,650,000. On April 1, 2024, we entered into an amendment to the January 11, 2024 purchase and sale agreement for a revised sale price of $25,300,000 reflecting an agreement to reduce the sales price due to City of Issaquah’s setback requirements resulting in a reduced number of townhomes planned for the property. KB Home completed its due diligence on April 26, 2024 and deposited $1,407,500 into escrow on May 1, 2024, bringing the total non-refundable deposit to $1,432,500. Completing the sale remains subject to the buyer obtaining development approvals and the sale will not close until 15 days following the earlier of (a) buyer obtaining all necessary development approvals, or (b) tenant vacating the property, but not prior to February 1, 2025, and not later than August 15, 2025 unless extended. The amendment to the purchase and sale agreement provides that the buyer can extend the outside closing date up to three times for 60 days for each extension. The nonrefundable extension fee for the first extension is $300,000 with 50% applicable to the purchase price. The nonrefundable extension fees for the second and third extensions are $200,000 and $300,000, respectively, and none of these extension fees will be applicable to the purchase price. The buyer is not affiliated with the Company or its affiliates.

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Modiv Industrial, Inc.

Tenant Industry Diversification

(Unaudited)

Industry	Number of Properties		ABR		ABR as a Percentage of Total Portfolio			Area (Square Feet)		Square Feet as a Percentage of Total Portfolio
Infrastructure		18	$	10,296,848		26	%		1,459,535		33	%
Automotive		3		6,006,421		15	%		501,233		11	%
Aerospace/Defense		3		4,567,683		12	%		316,347		7	%
Industrial Products		3		4,372,654		11	%		694,324		16	%
Metals		5		2,465,386		6	%		450,263		10	%
Government		1		2,458,473		6	%		106,592		2	%
Retailer		1		2,454,073		6	%		97,191		2	%
Technology		2		2,297,582		6	%		130,240		3	%
Energy		2		2,054,677		5	%		249,118		6	%
Agriculture/Food Production		2		1,669,682		4	%		295,584		7	%
Medical		1		662,107		2	%		20,800		—	%
Plastics		1		555,437		1	%		148,012		3	%
Total		42	$	39,861,023		100	%		4,469,239		100	%

Modiv Industrial, Inc.

Tenant Geographic Diversification

(Unaudited)

State	Number of Properties		ABR		ABR as a Percentage of Total Portfolio			Area (Square Feet)		Square Feet as a Percentage of Total Portfolio
California		8	$	11,951,609		30	%		439,954		10	%
Ohio		6		4,778,401		12	%		1,016,742		23	%
Arizona		2		4,046,447		10	%		379,441		8	%
Illinois		2		3,445,467		9	%		629,687		14	%
Washington		1		2,454,072		6	%		97,191		2	%
Pennsylvania		2		2,096,157		5	%		253,646		6	%
South Carolina		3		2,076,069		5	%		343,422		8	%
Florida		2		1,898,177		5	%		204,211		4	%
Texas		2		1,663,547		4	%		255,969		6	%
Minnesota		5		1,636,883		4	%		377,450		8	%
North Carolina		2		1,547,432		4	%		134,576		3	%
Colorado		3		856,937		2	%		98,994		2	%
Utah		1		515,194		2	%		72,498		2	%
Michigan		1		496,431		1	%		93,085		2	%
New York		2		398,200		1	%		72,373		2	%
Total		42	$	39,861,023		100	%		4,469,239		100	%

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Modiv Industrial, Inc.

Lease Expirations

(Unaudited)

10 Years and Thereafter Lease Expirations

As of March 31, 2024

Year	Number of Leases Expiring		Leased Square Footage Expiring		Percentage of Leased Square Footage Expiring			Cumulative Percentage of Leased Square Footage Expiring			Annualized Base Rent Expiring		Percentage of Annualized Base Rent Expiring			Cumulative Percentage of Annualized Base Rent Expiring
April to December 2024 (1)		—		—		—	%		—	%	$	—		—	%		—	%
2025		3		144,027		3.2	%		3.2	%		3,737,608		9.4	%		9.4	%
2026		3		236,608		5.3	%		8.5	%		3,753,792		9.4	%		18.8	%
2027		1		64,637		1.5	%		10.0	%		927,186		2.3	%		21.1	%
2028		1		148,012		3.3	%		13.3	%		555,437		1.4	%		22.5	%
2029		2		84,714		1.9	%		15.2	%		1,491,334		3.7	%		26.2	%
2030		—		—		—	%		15.2	%		—		—	%		26.2	%
2031		—		—		—	%		15.2	%		—		—	%		26.2	%
2032		1		162,714		3.7	%		18.9	%		2,376,766		6.0	%		32.2	%
2033		1		216,727		4.8	%		23.7	%		1,669,682		4.2	%		36.4	%
Thereafter		30		3,411,800		76.3	%		100.0	%		25,349,218		63.6	%		100.0	%
Total		42		4,469,239		100.0	%				$	39,861,023		100.0	%

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Modiv Industrial, Inc.

Disclosures Regarding Non-GAAP and Other Metrics

Notice Involving Non-GAAP Financial Measures

In addition to U.S. GAAP financial measures, this supplemental report contains 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.

Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)

In order to provide a more complete understanding of the operating performance of a REIT, the National Association of Real Estate Investment Trusts (“Nareit”) promulgated a measure known as FFO. FFO is defined 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 and preferred distributions. 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, deferred rent, amortization of stock-based compensation, 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 costs 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 or loss or cash flows from operating activities and each should be reviewed in connection with GAAP measurements.

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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. Furthermore, as described in the notes to our unaudited condensed consolidated financial statements, the conversion ratios for units of Class M limited partnership interest in the Operating Partnership, units of Class P limited partnership interest in the Operating Partnership and units of Class R limited partnership interest (“Class R OP Units”) in the Operating Partnership can increase if the specified performance hurdles are achieved. The increased conversion ratio for the Class R OP Units is reflected in the fully-diluted weighted average shares outstanding above.

Adjusted EBITDA

We define Adjusted EBITDA as GAAP net income or loss adjusted to exclude depreciation and amortization, gains or losses from the sales of depreciable property, extraordinary items, provisions for impairment on investment in real estate and goodwill and intangibles, interest expense and non-cash items such as non-cash compensation expenses and write-offs of due diligence costs for abandoned pursuits 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.

Net Debt

We define Net Debt as gross debt less cash and cash equivalents and restricted cash.

Leverage Ratio

We define our “leverage ratio” as total debt as a percentage of the aggregate fair value of our real estate properties, including our proportionate interest in real estate owned by unconsolidated entities, plus our cash and cash equivalents.

Annualized Base Rent (“ABR”)

ABR represents contractual annual base rent for the next 12 months.

Initial Cap Rate

We define “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property.

Weighted Average Cap Rate

We define “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.