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MI

MODIV INDUSTRIAL, INC. (MDV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 AFFO was $4.5M ($0.36 per diluted share), up 22% YoY, and management said it beat Wall Street consensus by $0.02 ($0.36 vs $0.34) with all five covering analysts below the print .
  • Company reported total revenue of $11.7M; S&P Global consensus was $11.7M*, and S&P’s standardized “actual” shows $11.94M*, highlighting a small data-definition discrepancy versus the 8‑K .
  • Balance sheet remains resilient: 100% fixed-rate debt at 4.27%, no maturities until Jan 2027, $8.3M unrestricted cash, $30M revolver availability, leverage ratio ~48% .
  • Portfolio quality: 43 properties, WALT 14.2 years, annualized base rent (ABR) $38.9M, ~28% of tenancy investment grade (BBB- or better) .
  • Near-term stock catalysts: demonstrated AFFO resilience and asset-recycling progress (Costco Issaquah sale timing and new held-for-sale asset), plus sustained $1.17 annualized dividend (8.1% yield on 10/16 close) .

What Went Well and What Went Wrong

What Went Well

  • AFFO beat and YoY growth: “AFFO…$4.5 million ($0.36 per diluted share), a 22% increase vs. year ago” with management stating it was $0.02 above consensus and above every individual estimate .
  • Liability structure and hedging: 100% fixed debt at 4.27% WAI, no maturities until Jan 2027; new swaps fixed SOFR at 2.45% in 2025, reducing cash interest expense ~$0.7M in 2025 .
  • Portfolio durability: WALT 14.2 years, ABR $38.9M, and ~28% investment-grade tenancy, supporting cash flow stability through cycles .

What Went Wrong

  • Rental revenue dipped sequentially (Costco lease expiration on 7/31/25) and property expenses still show some leakage; management noted ~$40K/month bleed at Issaquah pending closing .
  • FFO/share slightly below S&P consensus in Q3 (actual $0.33 vs consensus $0.342*) despite AFFO strength, reflecting non-GAAP addbacks mix and derivative amortization effects .
  • Macro uncertainty and small-cap REIT sentiment: management emphasized sector “morass/malaise” and capital-market volatility tempering acquisition quality and timing .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$11.793 $11.833 $11.687
Net Income to Common ($USD Millions)$0.002 $(2.818) $0.253
Diluted EPS (GAAP)$(0.01) $(0.32) $0.00 (rounded; company shows “—”)
FFO per Share/Unit (Diluted)$0.33 $0.36 $0.33
AFFO per Share/Unit (Diluted)$0.33 $0.38 $0.36
Adjusted EBITDA ($USD Millions)$9.378 $10.302 $10.095
Net Debt / Adjusted EBITDA (x)7.5x 6.9x 6.9x

Estimate comparison (SPGI consensus vs actual):

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)$11,719,750*$11,860,000*$11,732,000*
Revenue Actual ($USD, company-reported)$11,793,000 $11,833,000 $11,687,000
Revenue Actual ($USD, SPGI standardization)$11,872,000*$12,018,000*$11,936,000*
Primary EPS Consensus Mean ($USD)$(0.0867)*$0.03*$0.00*
Primary EPS Actual (GAAP) ($USD)$(0.0082)*$0.1009*$0.00 (rounded)
FFO/Share (REIT) Consensus Mean ($USD)$0.30*$0.378*$0.342*
FFO/Share Actual (Diluted) ($USD)$0.33 $0.36 $0.33
AFFO/Share Consensus (Company-stated) ($USD)N/AN/A$0.34
AFFO/Share Actual (Diluted) ($USD)$0.33 $0.38 $0.36

Values marked with * are retrieved from S&P Global.

Segment/KPI breakdown:

KPIQ3 2025
Properties (count)43
WALT (years)14.2
ABR ($USD Millions)$38.866
Investment-grade tenancy (% of ABR)~28%
Unrestricted Cash ($USD Millions)$8.3
Revolver Availability ($USD Millions)$30
Fixed-rate Debt (%)100%
Weighted Avg Interest Rate4.27%
Leverage Ratio47.7%
Vacant SF (excluded from totals)202,084 sf

Property type ABR mix (Q3 2025):

Property Type# PropertiesABR ($USD 000s)% of Portfolio ABR
Industrial core (incl. TIC)39$31,907 82%
Non-core4$6,959 18%
Total43$38,866 100%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common Dividend (monthly)Oct–Dec 2025$0.0975/share (annualized $1.17) $0.0975/share (annualized $1.17) Maintained
Debt MaturitiesThrough 2026None None Maintained
Rate StructureFY 2025100% fixed; swaps fix SOFR at 2.45% Same Maintained

No formal revenue/margin/OpEx/Tax guidance was provided in Q3 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Tariffs / supply chainQ1: Detailed tenant calls; minimal impact so far; preparedness post-COVID Tariff noise tempered; tenants operating normally; limited near-term impact Stable/benign operational impact
Capital markets / preferredsQ1: Repurchased 275k preferred YTD Debate on issuing perpetual preferred vs waiting for easing; preference for discipline Conservative stance; avoid dilutive capital
Asset recyclingQ2: Identified ~$150M of assets for recycling; potential +100 bps AFFO within 12+ months Added “Clara/Calera” to held-for-sale; expect sale by YE or early Jan; Costco sale timing aligned with permits Execution progressing
Acquisition pipeline / cap ratesQ2: “Lending thaw”; more deals observed Seeing more quantity recently; cap rates “seven handles” first-year; weighted average ~10% Improving quantity; selective quality
Costs/leakageQ2: Derivative amortization elevated; impairment in Saint Paul Property expense reduction of ~$100k expected over time as recycling advances Gradual improvement expected

Management Commentary

  • “AFFO…$4.5 million ($0.36 per diluted share), a 22% increase…$0.02 greater than the consensus estimate of $0.34…results exceeded every individual analyst estimate” .
  • “We weren’t sexy this quarter, we were boring, but boring can be profitable in the right market conditions.”
  • “Our 43 property portfolio has an attractive weighted average lease term of 14.2 years…approximately 28%…investment grade.”
  • “We do not have any outstanding debt maturities until January 2027, 100% of our indebtedness is fixed…weighted average interest rate of 4.27%…leverage ratio is 48%.”
  • Tagline: “Grit, grind, get it done!”

Q&A Highlights

  • Other property income included a one-time $300K fee from terminating easement rights related to a redevelopment project; fully recognized in Q3 .
  • Held-for-sale: broker engaged and “Clara/Calera” added; management targets sale by YE or early January .
  • Costco Issaquah sale: buyer (KB Home) extended to Dec 15; one remaining extension to Feb 15 possible; aim to time closing with demolition permit .
  • Acquisition cap rates: mainly “seven handles” first-year; weighted average cap rates around ~10%; pipeline quantity improved recently though quality remains selective .
  • Property expense outlook: ~$100K reduction over time as recycling removes leakage; Issaquah carries ~$40K/month bleed offset by extension fees until closing .
  • Same-store rent: not currently reported; lease escalators average ~2.5% annually; legacy assets have lower bumps .

Estimates Context

  • Revenue: Q3 consensus $11.73M* vs company-reported $11.69M; SPGI standardized actual shows $11.94M*, indicating a modest definitional gap.
  • EPS (GAAP): Q3 consensus $0.00* vs rounded actual $0.00; neutral result.
  • FFO/share: Q3 consensus $0.342* vs actual $0.33; modest miss.
  • AFFO/share: Company reported beat versus “sell-side consensus” at $0.34 (AFFO not available in SPGI table) .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • AFFO resilience continues; the quarter beat company-cited consensus and grew 22% YoY, supporting dividend coverage and an 8.1% yield at $1.17 annualized .
  • Balance sheet is well positioned (100% fixed-rate, no maturities until 2027), limiting rate-risk and preserving optionality for recycling and selective growth .
  • Asset recycling is an active lever: closing Issaquah/Costco and selling “Clara/Calera” can reduce leakage and modestly lower property expenses into 2026 .
  • Acquisition pipeline improving on quantity; cap rates are attractive (seven handles first-year, ~10% WA), but quality selectivity remains prudent in volatile markets .
  • Watch for definitional differences between company-reported revenue and SPGI standardized actual; use 8-K figures for operational analysis and SPGI for estimate comparisons .
  • Near-term trading: solid AFFO, dividend visibility, and de-risked debt profile are potential support pillars; execution on sales could catalyze sentiment.
  • Medium-term thesis: disciplined capital allocation, long WALT, and tenant quality (incl. investment-grade exposure) underpin durable cash flows while management waits for a more accommodative capital-market regime .