MDV - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, good day, and welcome to the Modiv Industrial, Inc.

First Quarter '24 Conference Call. [Operator Instructions]. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. [Operator Instructions]. is over would Operating to General event turn like Officer this Counsel. conference the John note, being now recorded. I to and Please Raney, Chief ahead, go Please sir.

John Raney

for thank We Call. prepared our at it's call, Pacini, earnings open for operator, available Aaron and XXXX market issued provide you, before modiv.com. I'm morning, you, First Chief Ray Quarter Officer. Hataker, and will joining Thank us this with Modiv release on we Industrial's Earnings your website everyone, up and remarks, and Halfacre call Chief here management On open today's today Officer; Executive Financial for will then the questions. our

begin, include today's would I remind to comments we forward-looking you the will under that laws. Before statements like securities federal

as such statements. will working potential as or words by strategic be, other believe, statements acquisitions discussions anticipate historical identified forward-looking are Statements about are statements phrases. facts, expect, comparable dispositions, partner are or that not such expected intend, our Forward-looking also

and XX-K may our results the Our statements. these Aaron factors that call reports SEC cause could financial filings, by in vary that turn contained I Discussion differ to With Form of including of materially forward-looking like are contemplated those Aaron? condition on forward-looking to from such actual and our from XX-Q. the Halfacre. materially results statements said, our operations would to over

Aaron Halfacre

I doing well. everyone. you're Hello, hope John. Thanks,

done tradition release it right fourth the around all the earnings in results. I've couple in there most for the quarter, of First the part. from I've out corner last In the quarters, put quarter

and then first, way, it the Ray, me I'll end. to of at instead So have go our [indiscernible] catch up Ray? let's

Raymond Pacini

XXXX. XX.X% quarter $XX.X first of overview quarter year the income months the during noncore property X first results. period. increase noncore the X dispositions partially prior XX compared million XX dispositions additional with reflects an industrial acquisitions This the million XXXX for property $XX.X operating by with of begin was August Rental in manufacturing of XXXX, offset during our in and I'll first impact

disposition per share number during ago issued transaction. of performance fully or million $X.XX decrease with diluted and which million in the diluted the primarily partially during a the property AFFO with XXXX leases properties year the interest reflects quarter expenses diluted an is $XXX,XXX net AFFO rental in XXXX funds and by in expense. straight-line average expenses diluted First a income was operations in primarily which X.X% AFFO when double compared increase per ago decreased April shares in property quarter. The increase through share of of increases Property by to weighted increase and for connection up increase acquisition from basis, the reflecting gross X and $X.XX $X.X year quarter. quarter, offset in shares were the year to in in shares The ago in common shares this was rents adjusted million modified compared reflects fully per On with leases share an and to compared the quarter shares outstanding $X.X UPREIT earned management XXXX. August attributable

only of impact our year swap on credit million, the outstanding during $XXX given that and outstanding million interest approximately by expense quarter, greater during reflecting Excluding $X.X borrowings valuations, ago cash XXXX we facility. of an increased the average had

common due the and to stock costs G&A our While our entirely transfer increased in to the nonrecurring the fees [ year legal January. GIPRs increase to was distribution ] compared to of for by quarter, ago stockholders $XX,XXX agent related

the each Max professionals, We for includes who Social first the taxes year and [ social ] for audit expect be first higher to the quarter tax with costs employees administrative during and since Security lower general expenses security quarters reached future quarter. along of higher on in tax

our to portfolio. turning Now

total as of ]. With of ABR we XX had the sheet January was with a an respect base and recognized XX% of $XXX tenants cash XX.X industrial noncore $XX.X balance agency February from one and of BBB- average representing credit our retail million, to cash of March property $XX.X weighted term XX% rating [ and dispositions or XXXX, investment-grade liquidity, X of of properties for our credit XX-property equivalents Annualized XX, or XX, approximately has as properties properties APR representing Following March office years X assets, our better. rent XX% our have attractive and million representing ABR, outstanding. lease XX% of and their debt XX portfolio million of rating companies an parent XXXX, totaled and of

into Our debt swap million term with mortgages X a $XXX loan entered do during interest credit a based a XX, of on not consists X.XX% interest we XXX% any end. $XXX until as interest leverage of XXXX, on fixed of debt facility, rate ratio our that $XX on average weighted on XX% maturities agreements indebtedness January and quarter rate XXXX, and properties held our have outstanding we XXXX. Based million million of of at rate our March of

alternatives We cancellation extend XX, our are to restructure options December under existing XXXX, exploring to swaps. various

[ the an declared As months $X.XX of June rate cash This stock turn to now stock. and annualized over of based May X.XX% closing Board call the common our May $XX.XX representing XXXX. dividend represents our of $X.XX XXXX, a of Directors as of previously on dividend ] I'll Aaron. for for announced, yield back of common of price X, April, of a approximately share share the common per

Aaron Halfacre

quarter. say, Thanks, Ray. I'd pretty straightforward

have disposing actively of lot much. look volatility. very who Those of seem assets a make to of be we if similar distressed acquiring think out, I be sense Doesn't a too theme, lot to REITs them. coming at

a like of duck the lot of of lot of a For lot patients the These let a us, kicking a time of legs. but being take lot of primarily aforementioned calm, patience. water the partner it time, that effort, ] seriously surface strategic bulk quarter mainly of was a but sort thinking, of spent on [ conversations. the on The of may a sort

been we've no We everyone ever We'd a anything. long but gun do have I the probably call feel the back trough. constructive feel don't It's to head. best have We in think capital It's we would our to love this on we a open been markets up, the the position. on like to company. love same.

Our entire been and nuts and having berries public stake. existence has eating a never

make So of pricing X cuts market -- XXX We've riots. of lot we've had it I was Middle fine. It's end and got was in, We is the December, the we're at now East. -- we've missiles crazy into volatility. got a the And -- quite We've faith to think keeping worth X the It think weeks people for was campus had ago. time over it decisions. coming that December shown something. stability the a I doing

but mortgages. appraisals, as come appraisers high-profile to the information a legitimate for I personal That's very with, I massively I'm have big, think well our we out very The NAV. NAV came we're estate some may And of chose -- appraise people with and we're have go -- up gap. a and space. We big undervalued. why look, comfortable that fixed out as that still been with X assets real ] of rate to stand our an part that position use I portfolio [ and we think they're that legitimate about closing to

I our of year. you -- we S-XX last years a a an think came them you NAV obviously, we our ago, history if NAV, did of in the define that at X long look with but lot out

have right? Unlike, right trend, I year. they the think down gone in there out say, our the valuations show space, directionally, or last SREIT for BREIT nontrade

perspective lack your think that a just So appraisals. rates, But I see had we it clearly not the of smell passes legacy or rates [ float], remotely shows in that because higher fact share wider price, the even test the and not to vast have should consider that that even trading you so do do my cap pay of investors it. our majority attention

is our a look what is percentage trades, a of like normal X/XX ours shares at outstanding is. -- what you REIT If of

what understand to right we them we to -- to the get fit very institutional but way, volume, in. there's have with really for the address theme, like have of doing, our way we that. We've that people space by we're who many had So thin now conversations no and like

just at that. have. have looking patient. We're We did to saving it so [ grease We we're our operating Qs Mining to ] we what be have And don't we requires in not patience. ready just to high. with now. happen. like to we're right Q&A. done. every prior that our but Ps the done, out something Focus optimism just open to This patient, try try ATM this said, being and penny know skids, just something can some strong that get Operator? again, we and fifth don't optimistic get for for the time, that can is say We it will when we environment, is But and quarter

Operator

Instructions]. [Operator

Our first of Montgomery the Janney Scott. question with from Robert is Stevenson line

Robert Stevenson

[ are the Paul? Aaron, like you where Calera point? that or sale ] at a release St. a Is asset on looking in this

Aaron Halfacre

great a It's question.

a Foods. there. fully hogtie they to them. they And they been spoken that developing And -- microgreens the an do, interesting to of we've still has express the been We've yet kind waiting until speaking got for We haven't margin. That original exploring providing enough is fully progress Calera. little but rejected us strategies. that We're A actively were to -- both we've property other with reject yet. in well on is them. in interest. presence growers that presume it, said, I they in to time proactive why -- contact we [ Foods will market. brokers on US We such in those. who it significant we've reason [indiscernible] be been think we're US haven't know we house have of and don't from ] the that They as fact going context, it

vertical it's of spurred a that's and it. -- some in I to is building itself said, very And a so The great that box. space of what be unique mean, a interest. That terms seems lot over-improved growers. they has

put $XX improvements equipment they that I There's we in originally that million think upwards there. that's purchased of property. had capital also them this into from of

to we're also an us of [ equipment. sell So to cell concept would to we're contemplating vertical require -- that as off then looking ] sell the in part the And grower, a lease empty box. lease addition as

a exploring a then reject. momentum. all So able to after get actively probably of them for those we'll holding be We're more that, a waiting things. pattern. we're We're bit to little And bit

Robert Stevenson

they Are currently paying you?

Aaron Halfacre

No.

Robert Stevenson

So gotten and haven't they paid? out haven't they

Aaron Halfacre

in just They're stock-up They're they're not in in so it. bankruptcy proceedings. the not it, not it. in It's

Robert Stevenson

We're point? -- state and of the just going Okordova]. the uptake purchase on window play X then there believe at I opened the this What's California Okay. option the Ranch And not tenant the asset for [ to it? likely

Aaron Halfacre

Yes. the it. last We reached their about They to they week. said them to discuss -- out schedule have meeting

for So probably going won't their process more this hear it, we start call they're back a time, bit little quarter, to second if quarter, probably. option

is their The to isn't think going needle purchase do move when they there's on ours, things things they may view we our budget, but budget their calculus those couple now. do big of about this. price originally had did That's -- case not when may be -- element California from in not of a terms Our or of a political terms a the they surplus. in calculus, the candidly. But of which in it, terms

have they likely them indicated May. Our to said for probably on talk view budget. have minus between can called was And plus estate in and we forward. of can there's just through that he process who people it's a range, they lease or to if again, us, it's different up then start come and to that -- has the the they terms valuation things get the this to it to they basically, that. to to goes I the and of approved forth real go agree put process last in to and them of have if like We on do embedded. with which departments then the is see state any resources discussion. How acquisitions and until budget approval price. it's don't issues next mechanism, it we approved, move and make department, department that If that, -- late want docket very XX% not to the year. Goes a get a -- which yes, it's that would to the finite back then have with we they price once various were it's in we their year, then price acquisitions And outside they the mechanism. From then there, when has one

take whenever XX told XX least did would to they it. months us So they initiate clearly process at the

just going it, if do take they initiate it's year say to -- it, we'll or have it does us Our of to AA+ rated to be sure it's then it, going we're they to they're to credit they're it tell couple they at of and they're have least If going probably a view term. a Because market. rate is a got patient. window initiate not AAA because credit

And for so it. earnings. better bit. property down because -- holding I I get of guess we second no update sense were rid But have so a if Costco -- assume in Particularly quarter last we'll to on we'll they the the the

Robert Stevenson

to to Tampa seeing there this and rates matter for last then access for point? a I significant classes? asset How it's guys? other more in lot is of one at opportunity it capital you similar alone And decently like mean is are Okay. of acquisition you at if acquisition, we're Or had the capital priced the just me. a the opportunities

Aaron Halfacre

is portfolio, was an a brand-new It I was there a But ago. is not is less million. -- opportunity, great multi-site but leaseback. probably be that lull. just a it up than there think we're saw a talking was anything it sale I great a being a going year -- about, $XXX There was straight shown like to [ Acap], there

definitely money you work. put So to

you what logic seeing. manufacturing leaseback, for the when think you're think sale really ones I -- is industrial which about the us

mean, -- move a way seeing genesis necessarily one any that but of like right? because things when money an up, them. that more sheet we months that one, to want private minute, existing the first and catalyst If egg, age decides strategic because this, a equity the that's some guys it right?" not that on [ wait free gold assuming a that I the leased on sell Occasionally, typically right not properties generations. transactions why sale doesn't be PE people. to in a XX Even a that's they do. And now. much not lengthy to "Hey, you gets it's would to strategic. But you the like we've have owner a ] market for much. out goose They're last for say, the it believe lengthy take was put want And and it's I You're hardly it's day things this of this shop leasebacks decide the they're to haven't is off-balance or concept, And market my who if the the had middle paper sale lays it small they'll HVAC it, operator where that, leasebacks for had not not, and -- take is pretty it in which companies process the foreign

of upwards for XX the make months decision. them to least takes XX probably journey that at probably So months,

last acquiring decisions were when the 'XX and year, we in or different. And those environment were made 'XX, was assets so

doing was When -- did, think have they an doing case so the actual momentum had deals of -- And we an suggestive was it kind one out of merger. it's they're they Photonics a the I committed. the they have now, you real coming the of capital. In for are need going, international

capital found lending than could so And trying better scale. to as so they get source they bank this a of get

because us to something and it a If to do then red like where just are cash and environment. dividend trying it's that, they're out it wanting or do someone's so they worked, in And those flags do that's this why somewhere out to this right? want to

the lull that now, So a we volume. but north expect of But X.X%. [indiscernible] said, in

I the think I probably could company of could if I replicate capital. I size the the had

Operator

the from B. with is question Bryan next of Riley Maher Our line Securities.

Bryan Maher

of your and first plays and X know thinking ying question probability look we of morning you But But deep kind up? yang to it answered your I was ends scenario, could how you you where is the of this talk kind that the kind when as the just ships pipeline think any in be. of at assign My discussed can about this mean, acquisition out? head how you it I the it. release

Aaron Halfacre

you let Well, me won't give attorneys probabilities. any

won't. I So

I X are are I look, or have any scenarios forced I think the that -- X don't out participants neither laid do have these other any do deadlines.

weathering we're that's all on the of So the I think that regards own is storm. be capable to environment in, our right

And there's one no beneficial other. the the to is detrimental so party something need to do that and to

a far think be that I easier deal. would then were to do case, it if the

with So off I that. start would say to

So dialogue the didn't with portfolios just months. few I parties has been well. quite start these these last know think the in We

have public. and We had on portfolios with these we've been since dialogues off

last, dialogue information really had have months our allows okay, enterprise. us that portfolios, model months that we X working the can about let's it, the their or think been in I tell up parties X to call see and we've the yes, specifically a you part the the so, to shared that combined sleeves. I roll have the or impact about, have so

about share and mechanics. governance actively We and have spoken cap prices rates

there that And dollar can spent. some been tell so I has legal you

it's just what REIT goes, been like it's -- of text we're a market." me this in risk better finger it's in had feels dial be I "This then can constructive. you the election me really I unique and if it's because That and a So another the yesterday wet -- literally geopolitical isn't wind. you. it a all But and probably the tell been quicksand CEO just a would very economic I must probability said, for could say cycle, risk But of

bit real lumpier very the one of got little I portfolio is excellence sort of assets great it's are but There's some in it. portfolios center a complementary. think

The portfolio similar more smaller has but diversification. is in other us size, to

think an component, industry I from make sense. they

candidly, their a -- good both leases. existing I -- shorter portfolios, think both walls, from they're they have they're but

So going you -- attorneys, again, what [ And go price -- XX, of actually say in throes all we're last NAREIT don't be XXth, the openly ] the it this keep been our quarter. at this the look, to going of mean, fact, one in the we I speaking market much. But we're going to until the It's about we're to just And because XX said is in candidly, probably working give be discussions, days, this quarter, of is into not to we next to to and to because probability yo-yo. want can't this. just I able just with we're talking north a f****** has a XX. share here in

So at with we'll and up come it, we'll something. hopefully, keep

Bryan Maher

I the XXX? helpful. I it the X Is XX? code All right. of net That's we in are mean you ] portfolios? of some these kind us think don't size entities? Is it the XXX? I [ZIP these talking But Is can what aspect? anything mean heard regarding commentary, about size of I give it

Aaron Halfacre

I give That's you great answer. a can't an very question.

Operator

Our next question is Mehta from Partners. the line Alliance Global of with Gaurav

Gaurav Mehta

follow to wanted I discussion. partnership on the up

the in -- do to think your portfolio? you owned be comparable you quality this assets the and would anticipate the partnerships, you looking partnership have what about of wholly As different to at

Aaron Halfacre

say is I very say would the I'd comparable. that that quality

being they're really I'd discern one Well, you be you sometimes talking -- thing say candidly. if quality. it the quality. I think I -- lower I can't them, say manufacturing, comparable I'd don't. sometimes think rated have credits, all If you was, I about to wouldn't wouldn't

stronger tenants, be shorter with leases. but Some might

assets. lumpier, Some tenants better with might stronger be bigger

come would X-way complementary. it direction Some I see is a in that the tenants -- they're to is might say it one or and be I thing fine more about, diversification. it were direction, either best perfectly from if that that but very

there's -- think well could sleep on me, I I to any combination. at night

the think they think I same.

been viable that political truly people dedicated long red], buyers done I we are related not one as -- in time, people this is of done for are least [ at don't a we're had besides the [ not people but space. I asset having the [indiscernible] think certainly think it it that the manufacturing fact conversation no a There who understand really to of a really is pureplay], class. that fact have yet. have

is if a matter portfolios be And natural think see anyway. state just a so Modiv eventually I they time. these they them end of selling because It's they -- would

think and I it participate I a so in would people and presumably there. And think which scale to equity there's a result. flow, institutional fit to getting And as this is less ownership, more create strategy more actually volatility with more that which inclusion complementary allow conducive index to and

very there And shift others. complementary. would just of mean ] at different to to talked they so at I And portfolios just a They're think couldn't in that where think I the was think there's door very -- battle at it a seems are they're caste I it given ] lot participant I length. very and open benefits. But we've this their strategic, forced time. [ [ be a the

we're successful a gotten we've that fourth size, wouldn't road. more ship and have that be so If that the and surprised wouldn't maybe. we a portfolio, And balance ] other with conversation [ someday here, down got I that's willing

exception are now there, most excuse were. in the acquired of of what think can't spirit, manufacturing and what So opportunities name. whatever Besides the about me. -- -- those, of private store the portfolios out manufacturing even from there portfolios owns with most hands. their is what I of it owns enough there's uniquely they from

And be longer think so is to term, public strategically. having currency something at a I looked

Gaurav Mehta

And talked portfolio. for of your equity exchange you possible about Okay. this

like So units? like stock common OP we or talking are

Aaron Halfacre

these players. I those protection. provides candidly. institution look at ubiquitously, One tax But are

ruling talking speaking, that about it nature of their equity by less money. But tax-sensitive the but of not sort they're be we're to So outlet. -- generally out, I and would speaking, I'm common generally clear,

Operator

closing hand are Instructions]. the for Thank his would questions, I Halfacre you. Aaron? There now [Operator comments. further over conference Aaron no to

Aaron Halfacre

guys our what we get -- lot of you Thanks, really the candid think doing. on uncomfortable to operator. in We be environments we're best Thanks, as dialed a operators trying transparency. I Trying are with think to can, everyone.

you If a decision you to make hear, like going you're don't what either way.

being I done. -- confident very I results. think we team have we're you ability to the markets. that to headed, can understand you what where you best thinking. I'm so predict If to transparent right have try no can things we're the We're we're the get delivering

And so like next to but this we're the on the you, Thanks, again everyone. earnings rolling with we're in and something company forward talking punches, release. to I you look to at think

Operator

conference Modiv Thank Industrial for your you. The of has now concluded. Thank participation. you

may your You disconnect now lines.

Modiv (MDV) 2 May 242024 Q1 Earnings call transcript