MODIV INDUSTRIAL, INC. (MDV)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered $11.7M total income and AFFO of $4.1M ($0.37 per diluted share), with AFFO per share beating consensus by 22% and GAAP EPS for common shareholders at $0.07, up from $(0.30) in Q4 2023 .
• Rental income of $11.7M declined year over year on prior asset sales, but operating income rose to $5.3M as expenses fell; Adjusted EBITDA was $9,984K in Q4 .
• Management set a 2025 AFFO baseline of $1.37 per diluted share vs. Street $1.15 and executed rate hedges fixing the 2025 term loan at 4.25% (≈$0.7M cash interest savings) and reduced the revolver to $30M (≈$0.3M annual fee savings) .
• Dividend annualized to $1.17 for 2025 (monthly $0.0975), implying ~7.5% yield at the stated reference price; selective capital allocation and UPREIT Jacksonville development optionality are key near‑term catalysts .

What Went Well and What Went Wrong

• What Went Well

  • AFFO beat: Q4 AFFO $4.1M and $0.37 per diluted share, beating consensus by 22%; full‑year AFFO $14.99M ($1.34) exceeded Street by $0.08 per share .
  • Cost discipline and de‑risking: “achieving well over $1.4 million in cash savings for 2025,” rightsized revolver (saving ~$300K) and fixed 2025 term loan rate to 4.25% (saving ~$700K) .
  • Strategic selectivity: Small sale (Endicott, NY) and UPREIT Jacksonville acquisition with adjacent parcel development opportunity; “Prudent and disciplined activity – nothing more” .
  • Alignment: “for the next five years, I personally will not receive any salary or bonus” enhancing alignment with shareholders .

• What Went Wrong

  • Top‑line pressure: Rental income declined YoY on prior dispositions ($11.664M in Q4 2024 vs $12.289M in Q4 2023) .
  • EPS volatility: Q3 2024 GAAP basic EPS was $(0.18) driven by swap valuation impacts; while Q4 recovered to $0.07, non‑cash hedge effects create quarterly noise .
  • ABR trend: Annualized Base Rent modestly decreased to $39.638M as of Dec 31, 2024, and Costco/Solar expirations in 2025 weigh on forward ABR until recycled or sold .

Financial Results

Segment breakdown (ABR as of Dec 31, 2024):

KPIs (as of/for Q4 2024):

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This process has resulted in our achieving well over $1.4 million in cash savings for 2025…rightsizing our revolver…Also, for the next five years, I personally will not receive any salary or bonus.” – Aaron Halfacre, CEO .
• “One small $2 million asset sold last week, and one small $6 million asset being acquired this month…UPREIT…identify a compelling future development opportunity.” .
• “Fourth quarter AFFO of $4.1 million, or $0.37 per diluted share, beating consensus estimates by 22%.” .
• “Our internal AFFO modeling estimates us earning $1.37 per fully diluted share…by assuming we do nothing…” (vs Street $1.15) .

Q&A Highlights

• OES purchase option: appraisal process underway; potential budgeting decision for next year; earliest clarity by summer; option window through 2026 .
• Fujifilm TIC option: rent set at 95% of fair market value via mutual process; includes rent bumps mechanism .
• Northrop Grumman: continued lab buildouts and capital investment signal likely continued occupancy; renewal discussions later .
• G&A trajectory: Non‑cash stock comp ~ $2.5M annually amortized; cash G&A down on staff reductions and CEO moving from cash to stock .
• UPREIT Jacksonville: tenant interest in 60–100K sq ft build‑to‑suit; would partner with turnkey builder; three other similar land opportunities exist .
• Acquisition filters: prefer $10–$25M assets with durable manufacturing tenants; wary of PE‑led sales at tight cap rates; disciplined, debt‑averse posture .

Estimates Context

• Company reports Q4 AFFO per share beat of 22% vs consensus and FY 2024 AFFO beat of $0.08 per share .
• Attempt to retrieve Wall Street consensus from S&P Global for Q4 2024 EPS and revenue failed due to API quota limits; thus detailed EPS/revenue consensus comparisons are unavailable at this time. We rely on company‑stated beat metrics and will update consensus comparisons when S&P Global data access is restored.

Key Takeaways for Investors

• Near‑term: Q4 AFFO per share beat and dividend confirmation support total‑return profile; selective asset recycling (Endicott sale, Clara marketing) and UPREIT Jacksonville development could add incremental AFFO without stretching the balance sheet .
• Interest expense de‑risked: 2025 fixed rate at 4.25% adds ~$0.7M cash interest savings, while revolver downsizing saves ~$0.3M annually; expect less non‑cash hedge noise and improved cash coverage .
• 2025 baseline: Internal AFFO baseline of $1.37 (no acquisitions assumed) provides an above‑consensus starting point; upside optionality from development, selective recycling and possible JV re‑engagements .
• Portfolio quality: 13.8‑year WALT, industrial core 78% of ABR, and diversified tenants (Top‑20 at 88% of ABR) underpin durability; upcoming 2025 expirations (Costco/Solar) are planned disposition/redevelopment opportunities .
• Capital allocation: Accretive buyback/issuance mix and cost discipline (CEO comp shift, staff reductions) tighten AFFO coverage and align incentives; watch for measured equity raising tied to retail investors per commentary .
• Trading implications: Limited float and retail ownership can create outsized price moves; catalysts include progress on OES option, Clara sale/1031 redeployment, and Jacksonville development pre‑leasing .
• Medium‑term thesis: A pure‑play net‑lease manufacturing REIT with improving cash costs, long leases, and selective growth levers—execution on recycling and development can bridge ABR dips and lift AFFO trajectory versus the 2025 baseline .

Notice on non‑GAAP: AFFO and Adjusted EBITDA are supplemental measures with reconciliations provided; they exclude items such as stock‑based compensation, deferred rent, and unrealized derivative gains/losses, and should be evaluated alongside GAAP results .