Latest news with #ModivIndustrial
Business Wire
16 hours ago
- Business
- Business Wire
Modiv Industrial Announces Second Quarter 2025 Results
DENVER--(BUSINESS WIRE)--Modiv Industrial, Inc. ('Modiv Industrial,' 'Modiv' or the 'Company') (NYSE:MDV), the only public REIT exclusively focused on acquiring industrial manufacturing real estate, today announced operating results for the second quarter ended June 30, 2025. Highlights: Second quarter 2025 revenue of $11.8 million and net loss attributable to common stockholders of $(2.8) million. Second quarter AFFO of $4.8 million, or $0.38 per diluted share, a 22% year-over year increase, beating consensus estimates. 5-year lease renewal with 2% annual escalations on our Northrop Grumman property located in Melbourne, Florida. The following is a statement from Aaron Halfacre, CEO of Modiv Industrial. 'I don't know about you but the second quarter of 2025 left me feeling a bit dizzy - like I spent too much time on a high speed merry-go-round. The sheer volume of events that happened over the quarter was mind-numbing. The bombing of Iran and the end of the Trump-Musk bromance feel like ancient history. Everyday seems to be a new sensational headline. Meanwhile, the Fed pissing match ensues, tariff speculation remains rampant, tech stocks and crypto continue to defy gravity, and the REIT sector seems stuck in a perpetual toilet swirl. Yet, here at Modiv, it was calm, steady and decidedly non-dizzying. In fact, you might call this quarter flat out boring. We stuck to our discipline, worked our patience and tended to the details. No flash, no bang, needed to deliver the 22% year-over year increase in quarterly results. Alas, the past won't make us any more money than it has, so let me share some thoughts on the future: Lending Thaw - Though our term loan doesn't mature until January 2027, we are a bit like Aesop's Ant always preparing for a future winter and, as such, we've been speaking to the bank lending market and our takeaway is that lenders have shifted from reluctantly lending toward a somewhat more normal willingness to lend. Both debt refinancing and new acquisition financing seem available to those who seek it. Hunting Wabbits - Market activity seems to confirm the thaw. Not only have there been a recent spat of large dollar single and multi-asset acquisitions by higher profile REITs, we have also seen numerous attractive note offerings. However, watching the big REITs do what they do isn't nearly as telling of a potential pivot point as it is to watch the activity of the more diminutive real estate enterprises. Be it the number of strategic alternative review announcements (e.g. GIPR, PGRE, FSP, ELME), the take private of City Office REIT (NYSE: CIO), or the Kawa bid on Orion (NYSE: ONL), we are starting to see early signs that people are willing to place their bets. Of relevance, to a net lease company like Modiv, are the two recent net lease platform acquisitions: the first being the acquisition of Elm Tree Funds by BlackRock (NYSE: BLK) and the second being the acquisition of Fundamental Income by Starwood Trust (NYSE: STWD). Long duration WALT portfolios appear to be in vogue. As a small cap REIT with 14+ WALT and a healthy balance sheet, our head is always on swivel and I shared our thoughts on M&A earlier this year. We are cognizant that there is a food chain (and where we sit on it), but we are a fierce small mammal, more honey badger than rabbit, so it remains to be seen if we are the hunted or the hunter. Recycling Green - With signs of tighter cap rates being observed in the acquisition markets and the numerous unsolicited overtures for our properties (and beyond), it is starting to feel like we might be entering the right stage to begin the next phase of our asset recycling program to generate even more greenbacks. Modiv has about $150 million of assets that we have long thought about recycling into more appropriate opportunities. Based on our deep analysis of the respective property markets, we believe these assets, if recycled as we intend, could produce at least 100 basis points of AFFO growth within 12+ months from a green light. Discipline over Dopamine - As we all know, history tends to repeat itself. Different actors, different stage, same story. We have seen these capital markets in the past. We know that the disciplined investors thrive because they know to control their emotions and work their plan. If you haven't noticed yet, MDV loves discipline. Until next quarter. Grit, grind, get it done!' 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, August 7, 2025, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time, to discuss the second quarter ended June 30, 2025 operating results and answer questions. Live conference call: 1-800-717-1738 or 1-646-307-1865 at 11:00 a.m. Eastern Time, Thursday, August 7, 2025 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 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: 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 related to our future financial performance, annualized dividend rates, future distributions and distributions declared by the Company's board of directors. 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, 2024 filed with the Securities and Exchange Commission (the 'SEC') on March 4, 2025. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the Company's other filings with the SEC. Any forward-looking statements herein speak only as of the time when made and are based on information available to the Company as of such date and are qualified in their entirety by this cautionary statement. The Company assumes no obligation to revise or update any such statement now or in the future, unless required by law. Notice Involving Non-GAAP Financial Measures In addition to U.S. GAAP financial measures, this press release and the supplemental financial and operating report included in our Form 8-K dated August 7, 2025 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. MODIV INDUSTRIAL, INC. Condensed Consolidated Balance Sheets (in thousands, except shares and per share data) (unaudited) June 30, 2025 Assets Real estate investments: Land $ 98,738 $ 98,009 Buildings and improvements 388,564 386,102 Equipment — 4,429 Tenant origination and absorption costs 13,638 13,194 Total investments in real estate property 500,940 501,734 Accumulated depreciation and amortization (66,176 ) (59,524 ) Total real estate investments, net, excluding unconsolidated investment in real estate property and real estate investments held for sale, net 434,764 442,210 Unconsolidated investment in a real estate property 9,262 9,324 Total real estate investments, net, excluding real estate investments held for sale, net 444,026 451,534 Real estate investments held for sale, net 22,372 22,372 Total real estate investments, net 466,398 473,906 Cash and cash equivalents 5,814 11,530 Tenant deferred rent and other receivables 20,820 18,460 Above-market lease intangibles, net 1,203 1,240 Prepaid expenses and other assets 2,514 2,693 Interest rate swap derivatives 2,103 — Total assets $ 498,852 $ 507,829 Liabilities and Equity Mortgage notes payable, net $ 30,516 $ 30,777 Credit facility term loan, net 249,231 248,999 Accounts payable, accrued and other liabilities 3,333 4,035 Distributions payable 2,027 1,994 Below-market lease intangibles, net 7,530 7,948 Other liabilities related to real estate investments held for sale — 26 Total liabilities 292,637 293,779 Commitments and contingencies 7.375% Series A cumulative redeemable perpetual preferred stock, $0.001 par value; $25.00 per share liquidation preference; 2,000,000 shares authorized; 1,725,000 outstanding as of June 30, 2025 and 2,000,000 outstanding as of December 31, 2024 2 2 Class C common stock, $0.001 par value, 300,000,000 shares authorized; 10,614,130 shares issued and 10,146,811 shares outstanding as of June 30, 2025, and 10,404,211 shares issued and 9,936,892 outstanding as of December 31, 2024 11 10 Additional paid-in-capital 334,096 349,479 Treasury stock, at cost, 467,319 shares held as of each June 30, 2025 and December 31, 2024 (7,112 ) (7,112 ) Cumulative distributions and net losses (162,761 ) (154,074 ) Accumulated other comprehensive income 1,367 1,841 Total Modiv Industrial, Inc. equity 165,603 190,146 Noncontrolling interests in the Operating Partnership 40,612 23,904 Total equity 206,215 214,050 Total liabilities and equity $ 498,852 $ 507,829 Expand MODIV INDUSTRIAL, INC. Reconciliation of Non-GAAP Measures - FFO and AFFO (in thousands, except shares and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net (loss) income (in accordance with GAAP) $ (2,633 ) $ 1,262 $ (1,804 ) $ 5,899 Preferred stock dividends (796 ) (922 ) (1,623 ) (1,844 ) Net (loss) income attributable to common stockholders and OP Unit holders (3,429 ) $ 340 (3,427 ) $ 4,055 FFO adjustments: Depreciation and amortization of real estate properties 3,828 4,137 7,646 8,270 Amortization of deferred lease incentives — 2 — (3 ) Depreciation and amortization for unconsolidated investment in a real estate property 189 189 378 379 Impairment of real estate investment property 4,000 — 4,000 — Gain on sale of real estate investments, net — — (84 ) (3,188 ) FFO attributable to common stockholders and OP Unit holders 4,588 4,668 8,513 9,513 AFFO adjustments: Stock compensation expense 810 67 1,294 1,446 Amortization of deferred financing costs 158 221 315 443 Amortization of deferred rents (1,269 ) (1,422 ) (2,572 ) (3,094 ) Amortization of unrealized holding gain, net of unrealized loss on non-designated or ineffective interest rate derivative instruments (253 ) 550 (503 ) (739 ) Amortization of off-market interest rate derivatives and reduction for accrued interest 1,034 — 2,109 — Amortization of (below) above market lease intangibles, net (212 ) (212 ) (424 ) (423 ) Loss on equity investments — 5 — 26 Other adjustments for unconsolidated investment in a real estate property (78 ) 24 (42 ) 47 AFFO attributable to common stockholders and OP Unit holders $ 4,778 $ 3,901 $ 8,690 $ 7,219 Weighted Average Shares/Units Outstanding: Fully diluted (1) 12,612,092 11,419,115 12,229,385 11,389,106 FFO Per Share/Unit: Fully diluted $ 0.36 $ 0.41 $ 0.70 $ 0.84 AFFO Per Share/Unit: Expand (1) Fully diluted shares/units outstanding includes the weighted average dilutive effect of 1,593,328 Class C OP Units and 895,043 Class X OP Units for the three months ended June 30, 2025, 1,469,750 Class C OP Units and 710,875 Class X OP Units for the six months ended June 30, 2025, and 1,977,630 and 2,386,287 Class C OP Units for the three and six months ended June 30, 2024, respectively. Class X OP Units were excluded from the weighted average shares/units outstanding in calculating earnings (loss) per share for the three and six months ended June 30, 2025 in the unaudited condensed consolidated statements of operations since they were anti-dilutive. Expand 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 Funds from Operations ('FFO'). FFO is defined as net income or loss computed in accordance with GAAP, excluding 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 investments, preferred dividends 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 Adjusted Funds from Operations ('AFFO') as a non-GAAP financial measure to evaluate our operating performance. AFFO excludes non-routine and certain non-cash items such as stock-based compensation, amortization of deferred rent, amortization of below/above market lease intangibles, amortization of deferred financing costs, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, amortization of off-market interest rate derivatives and reduction for accrued interest, and write-offs of due diligence expenses for abandoned pursuits. We also believe that AFFO is a recognized measure of sustainable operating performance in 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. 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. 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 or loss from operations, net income or 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 or loss from operations, net income (loss) or cash flows from operating activities and each should be reviewed in connection with GAAP measurements. Neither the SEC, Nareit, nor any other applicable 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. 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.
Business Wire
25-07-2025
- Business
- Business Wire
Modiv Industrial To Report Second Quarter 2025 Results on August 7, 2025
DENVER--(BUSINESS WIRE)--Modiv Industrial, Inc. ('Modiv' or the 'Company') (NYSE:MDV), the only public REIT exclusively focused on acquiring industrial manufacturing real estate properties, today announced that it will report financial results for the quarter ended June 30, 2025 before the market opens on Thursday, August 7, 2025. Management will host a conference call the same day at 11:00 a.m. Eastern Time to discuss the results. Live conference call: 1-800-717-1738 or 1-646-307-1865 at 11:00 a.m. Eastern Time, Thursday, August 7, 2025. Webcast: To listen to the webcast, either live or archived, use this link or visit the investor relations page of Modiv's website at 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:
Business Wire
18-06-2025
- Business
- Business Wire
Modiv Industrial Declares Quarterly Dividends for Preferred Shareholders
DENVER--(BUSINESS WIRE)--Modiv Industrial, Inc. ('Modiv Industrial,' 'Modiv' or the 'Company') (NYSE:MDV), the only public REIT exclusively focused on acquiring industrial manufacturing real estate properties, announced the declaration of a regular quarterly cash dividend of $0.4609375 per share on the Company's 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share (the 'Series A Preferred Stock'), for the second quarter of 2025 and the declaration of a regular monthly cash distribution of $0.0975 per share on the Company's Class C common stock, $0.001 par value per share (the 'Common Stock'), for each of July, August and September 2025, representing an annual distribution rate of $1.17. On May 6, 2025, the Board of Directors authorized a quarterly dividend payable to Series A Preferred Stockholders of record as of June 30, 2025, which will be paid on July 15, 2025. The quarterly dividend amount of $0.4609375 per share represents an annualized dividend rate of $1.84375 per share of Series A Preferred Stock. Additionally, the Board of Directors authorized monthly distributions payable to Common Stockholders of record as of July 31, 2025, August 29, 2025 and September 30, 2025, which will be paid on or about August 15, 2025, September 15, 2025 and October 15, 2025, respectively. The current monthly distribution amount of $0.0975 per share represents an annualized distribution rate of $1.17 per share of common stock, which is consistent with dividends that have been paid since January 31, 2025, and reflects a dividend yield of 8.07% based on Modiv Industrial's closing price of $14.49 on June 17, 2025. 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: Forward-looking Statements 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 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 related to annualized dividend rates, future distributions and distributions declared by the Company's board of directors. 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, 2024 filed with the Securities and Exchange Commission (the 'SEC') on March 4, 2025. 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.
Associated Press
23-05-2025
- Business
- Associated Press
Modiv Provides Clarity on Reverse Stock Split Proposal
DENVER--(BUSINESS WIRE)--May 23, 2025-- 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 issued the following message from the CEO to provide clarity regarding the rationale and impact of the reverse stock proposal set forth in the Company's proxy statement for its 2025 Annual Meeting of Stockholders: 'A few weeks ago, we filed our 2025 annual proxy statement. We have received a small number of inquiries regarding the reverse stock split proposal that we put forth. Given that there appears to be a pattern of confusion (not surprising given the legalese of the proxy), we decided to send this missive out so that everyone can hopefully receive a clearer explanation straight from the horse's mouth. I have attempted to present this in a digestible format but there is a lot of content to understand so please do not hesitate to email us, as needed, at the email address listed down below. Here it goes… Background – The fourth proposal in our proxy statement seeks stockholder approval to give the Company the right, but not the obligation, to implement a reverse stock split of our common stock only (not the Series A Preferred Stock) anywhere between 1:500 to 1:1,500 at any time prior to December 31, 2026. That's a very large reverse split, far greater than the 1:10 that any company can do without stockholder approval. Without full context, an investor might surmise that we want to make Modiv's share price $7,500 per share or higher – which would not be very retail investor friendly. I am here to tell you that is NOT the case at all and the reverse split (which would be followed by a forward split that I will describe a bit later) is purely an administrative function intended to reduce cost and potentially increase liquidity. Before I get into the sausage making of how it would work, let me step back and tell you why we are even seeking approval. For those new to our name and unaware of our history, we are the only direct-to-retail crowdfunded REIT to ever publicly list on a stock exchange and we did that in early 2022. However, our legacy enterprise first started raising capital directly (with no brokers/advisors) from individual retail investors as early as 2012 back when crowdfunding was hoping to be the next big thing and long before I joined in 2018. Thousands upon thousands of investors made very small investments, in some cases as small as $500. They were issued shares in the predecessor REIT and they collected dividends but the shares couldn't be freely traded and their ability to sell their shares was very limited. It was basically a very high risk start up that happened to buy real estate. When I joined, my job was to make the Company more mainstream or 'institutional' which included cleaning up the real estate portfolio, providing stockholders full liquidity, reducing headcount and wherever possible making the Company more efficient and less costly. It is from this original mission that the reverse stock split proposal is derived. When we listed the Company on the NYSE in February 2022, we needed a seasoned transfer agent to handle the litany of daily stockholder changes that would be occurring with a publicly traded stock. At that time, we chose Computershare, a globally recognized transfer agent that works with numerous publicly listed companies. When we onboarded all of our existing investors to the Computershare platform (originally it was all handled internally), there were nearly 10,000 separate accounts, each holding varying amounts of shares. Just for reference, that is a very large number of accounts for a company of our size and very atypical (befitting our history) as most newly public companies might have a small handful of accounts directly at the transfer agent with thousands of other accounts indirectly held at brokerage firms given that most companies raise their equity via investment bankers and brokers. Since we didn't raise our capital that way, we had a ton of accounts and the stockholders who owned these accounts were used to us being both their customer service agent and their investment (whereas most of you get your customer service from your broker not your stock investment). Computershare was able to put together a service offering for our existing stockholders but it came at a significant cost to the Company – a meaningful six digits expense every year. For those who have ever dealt with the vast majority of transfer agents, then you know they are good at transferring shares and keeping records but their 80's vintage COBOL-esque software systems don't provide a good brokerage account experience (as they never intended it to be). Suffice it to say that using a transfer agent account as a brokerage account is like using a rotary phone instead of your smart phone. That fact alone led to numerous accounts transferring out to 'street name' where they could hold their shares in their modern brokerage accounts. Further, over the past several years we have made repeated attempts to get investors to move away from the transfer agent into a brokerage account and we have also whittled down the service offering to reduce cost, but the cost still remains relatively high for a small company and every dollar matters to you the stockholders. As it stands today, we are hovering at a little over 4,000 accounts in total at our transfer agent with 3,500 of those accounts holding less than 1,500 shares and, further, a large number of those 3,500 accounts holding less than 500 shares. These accounts have not chosen to switch to brokerage firms and have been unresponsive to our communications. In fact, for many accounts we get returned mail when we send out 1099 tax forms, we get bounced emails when we try to reach them and many no longer have current phone numbers listed. These investors don't appear to be voting and don't appear to be logging in. It's as if they made an investment ten years ago and then simply forgot about it as time went on. I know, it sounds odd that someone would neglect that sum of money, but it appears to be the case as far as we can tell. Personally, I moved my shares over to my Schwab account within days of our NYSE listing. Right about now you might be thinking…why doesn't Modiv put the cost of the account back to the accountholder? We looked into that, and it is not allowed. If they don't move to a broker and if they have more than one share, then all of us will simply have to bear the cost of these accounts. For those accounts that were less than one share, we have already cashed them out, but we still have thousands of accounts with more than one share. However, we did figure out a way to clean it up, to save long term costs and potentially increase liquidity, and that is where the reverse stock split comes in. Sausage Making – In this section we will get into some of the nitty gritty detail of how the reverse split would work if approved (and if implemented). It is far more information than you will typically see a CEO share in a press release, but hopefully by now you have come to appreciate that we at Modiv value transparency and candor. Our name may be derived from the concept of MO nthly DIV idends, but it is just as applicable to think of us as a M utually O wned D ividend I nvestment V ehicle – with emphasis being on mutually owned in this instance. We are all in this together, it's all our monies, and I strongly believe that transparency and candor are of utmost importance in our pursuit of making our money grow. Let me caveat the following by saying that all of this information was not readily known to us as it is rather abstract, and it took us several months to piece this education together by talking to multiple people at our transfer agent as well as other sources to include external counsel and our designated market maker. I am hopeful that I have it all right, but if some transfer agent whiz out there knows the intricacies better, then shoot us an email. Given that we have the ability to cash out accounts that hold a fractional share (less than one share) by either paying cash from the Company's coffers or selling those fractions in the open market (thereby creating liquidity), we understood that the only way to solve the aforementioned excess dormant account issue, barring the accountholder either selling their shares or transferring to a brokerage firm, was to make all those accounts fractional shares. The only way to get fractional shares is to introduce a reverse stock split. Given that the vast majority of these seemingly dormant accounts hold somewhere more than 500 but less than 1,500 shares, we identified that a large reverse split, held in place for only a brief moment in time before reverting the share price back to a more normal share price via a forward split, is the most effective way to address this legacy administrative burden and cost issue. The thinking is…implement a large reverse split, address the new batch of fractional shares, implement a forward split, and then back to business with reduced cost and less administrative burden – all in one fell swoop. The inefficient alternative, that would not require a stockholder approval, would be to implement a 1:10 reverse split every year until such time that all the dormant accounts are addressed, but that would mean we would all live with a ridiculously high share price for a very long period of time and that is simply not palatable. So, if the proxy proposal is not approved, then no problem. We will just continue to bear the cost burden, but we felt it worthwhile to put it out there for your approval. I believe the confusion from our recent investor inquiries pertains to how the reverse split would impact all the smaller stockholders who hold their shares in a brokerage account. The short answer is that we do not believe there is a meaningful impact other than a temporarily higher share price. The reason we believe this is where it gets really in the weeds and it pertains to the three primary levels of stock ownership – 1) DTC level, 2) Participant level, and 3) Beneficial level. The Depository Trust Company (DTC) is a central securities depository system utilized by brokers, transfer agents, NYSE and Nasdaq. It is estimated that over 80% of all U.S. public equity is held at the DTC (the first level) on behalf of a multitude of participating financial institutions like Fidelity, Schwab, etc. (the second level) who, in turn, hold the equity for the benefit of countless investors like yourself (the third level). You can look this up on the internet, but each publicly listed company has a DTC account (i.e. Cede & Co) at their respective transfer agent that represents the aggregate ownership of all those shares held in 'street name.' The DTC level is represented by a single account, the participant level reflects a small number of accounts (e.g. typically a few accounts for each financial institution depending on how they separate their taxable, non-taxable and non-retail accountholders), and the beneficial level would be hundreds of thousands of accounts representing the accounts you and I see when we log into our brokerage accounts. At our transfer agent, amongst those ~4,000 accounts, is a single Cede & Co. account that represents the majority of our shares outstanding. Our transfer agent does not see your individual account at your broker, just those ~4,000 accounts. Further, all corporate actions happen initially at this first level. For example, when we issue a dividend payment, it goes to all ~4,000 accounts. The DTC account then distributes the money it receives automatically to the participant level accounts who in turn distribute your dividend into your individual account. If we were to implement a reverse split and instruct our transfer agent to only cash out fractional shares at the participant level (which is what has been recommended to us), then we would materially limit the number of accounts impacted by the reverse split. Let's walk through an example. Let's assume there are 100 participant level accounts (we won't know the exact amount until we make the inquiry with the DTC) as well as the ~4,000 individual accounts held at our transfer agent. Given that any single account can only have one fractional share, that means only a maximum of 100 fractional shares would be impacted for all the millions of our shares held at financial institutions and from the ~4,000 individual accounts held at our transfer agent, only those accounts holding less than one share would be closed out. By doing it this way, we specifically address this legacy cost burden without wiping out thousands of retail investors who bought shares through their brokerage account. As soon as the process of eliminating fractional shares is completed (we have been informed it could potentially take several days), we would then implement a forward split to bring our share price back to a more appropriate, non-elevated, stock price. The ending result would be a normal stock price, the elimination of the administrative burden of maintaining thousands of seemingly dormant accounts, and the annual cost savings that would ensue. I want to point out that even if the proposal is approved by all of you, that does not mean we would implement it. Our goal would be to make another final push to get as many of those seemingly dormant accounts moved over to brokerage firms (heck, maybe this press release will help that cause). Only after that last effort would we then consider implementing the reverse stock split, hence having until the end of next year to potentially implement this administrative function. Phew, that was a lot of stuff to write (and to digest). In a nutshell, if the reverse split is approved (and we are ok if you don't want it), then the final ending result would be a normal stock price, less dormant accounts at our transfer agent, and more money saved. Grit, grind, get it done!' Aaron Halfacre, CEO of Modiv Industrial. 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: 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 related to the reverse stock split, the forward stock split, annualized dividend rates, future distributions and distributions declared by the Company's board of directors. 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, 2024 filed with the Securities and Exchange Commission (the 'SEC') on March 4, 2025. 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. View source version on CONTACT: Inquiries: [email protected] KEYWORD: UNITED STATES NORTH AMERICA COLORADO INDUSTRY KEYWORD: PROFESSIONAL SERVICES CROWDFUNDING RESIDENTIAL BUILDING & REAL ESTATE COMMERCIAL BUILDING & REAL ESTATE FINANCE CONSTRUCTION & PROPERTY REIT SOURCE: Modiv Industrial, Inc. Copyright Business Wire 2025. PUB: 05/23/2025 06:30 AM/DISC: 05/23/2025 06:29 AM
Business Wire
23-05-2025
- Business
- Business Wire
Modiv Provides Clarity on Reverse Stock Split Proposal
DENVER--(BUSINESS WIRE)--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 issued the following message from the CEO to provide clarity regarding the rationale and impact of the reverse stock proposal set forth in the Company's proxy statement for its 2025 Annual Meeting of Stockholders: 'A few weeks ago, we filed our 2025 annual proxy statement. We have received a small number of inquiries regarding the reverse stock split proposal that we put forth. Given that there appears to be a pattern of confusion (not surprising given the legalese of the proxy), we decided to send this missive out so that everyone can hopefully receive a clearer explanation straight from the horse's mouth. I have attempted to present this in a digestible format but there is a lot of content to understand so please do not hesitate to email us, as needed, at the email address listed down below. Here it goes… Background – The fourth proposal in our proxy statement seeks stockholder approval to give the Company the right, but not the obligation, to implement a reverse stock split of our common stock only (not the Series A Preferred Stock) anywhere between 1:500 to 1:1,500 at any time prior to December 31, 2026. That's a very large reverse split, far greater than the 1:10 that any company can do without stockholder approval. Without full context, an investor might surmise that we want to make Modiv's share price $7,500 per share or higher – which would not be very retail investor friendly. I am here to tell you that is NOT the case at all and the reverse split (which would be followed by a forward split that I will describe a bit later) is purely an administrative function intended to reduce cost and potentially increase liquidity. Before I get into the sausage making of how it would work, let me step back and tell you why we are even seeking approval. For those new to our name and unaware of our history, we are the only direct-to-retail crowdfunded REIT to ever publicly list on a stock exchange and we did that in early 2022. However, our legacy enterprise first started raising capital directly (with no brokers/advisors) from individual retail investors as early as 2012 back when crowdfunding was hoping to be the next big thing and long before I joined in 2018. Thousands upon thousands of investors made very small investments, in some cases as small as $500. They were issued shares in the predecessor REIT and they collected dividends but the shares couldn't be freely traded and their ability to sell their shares was very limited. It was basically a very high risk start up that happened to buy real estate. When I joined, my job was to make the Company more mainstream or 'institutional' which included cleaning up the real estate portfolio, providing stockholders full liquidity, reducing headcount and wherever possible making the Company more efficient and less costly. It is from this original mission that the reverse stock split proposal is derived. When we listed the Company on the NYSE in February 2022, we needed a seasoned transfer agent to handle the litany of daily stockholder changes that would be occurring with a publicly traded stock. At that time, we chose Computershare, a globally recognized transfer agent that works with numerous publicly listed companies. When we onboarded all of our existing investors to the Computershare platform (originally it was all handled internally), there were nearly 10,000 separate accounts, each holding varying amounts of shares. Just for reference, that is a very large number of accounts for a company of our size and very atypical (befitting our history) as most newly public companies might have a small handful of accounts directly at the transfer agent with thousands of other accounts indirectly held at brokerage firms given that most companies raise their equity via investment bankers and brokers. Since we didn't raise our capital that way, we had a ton of accounts and the stockholders who owned these accounts were used to us being both their customer service agent and their investment (whereas most of you get your customer service from your broker not your stock investment). Computershare was able to put together a service offering for our existing stockholders but it came at a significant cost to the Company – a meaningful six digits expense every year. For those who have ever dealt with the vast majority of transfer agents, then you know they are good at transferring shares and keeping records but their 80's vintage COBOL-esque software systems don't provide a good brokerage account experience (as they never intended it to be). Suffice it to say that using a transfer agent account as a brokerage account is like using a rotary phone instead of your smart phone. That fact alone led to numerous accounts transferring out to 'street name' where they could hold their shares in their modern brokerage accounts. Further, over the past several years we have made repeated attempts to get investors to move away from the transfer agent into a brokerage account and we have also whittled down the service offering to reduce cost, but the cost still remains relatively high for a small company and every dollar matters to you the stockholders. As it stands today, we are hovering at a little over 4,000 accounts in total at our transfer agent with 3,500 of those accounts holding less than 1,500 shares and, further, a large number of those 3,500 accounts holding less than 500 shares. These accounts have not chosen to switch to brokerage firms and have been unresponsive to our communications. In fact, for many accounts we get returned mail when we send out 1099 tax forms, we get bounced emails when we try to reach them and many no longer have current phone numbers listed. These investors don't appear to be voting and don't appear to be logging in. It's as if they made an investment ten years ago and then simply forgot about it as time went on. I know, it sounds odd that someone would neglect that sum of money, but it appears to be the case as far as we can tell. Personally, I moved my shares over to my Schwab account within days of our NYSE listing. Right about now you might be thinking…why doesn't Modiv put the cost of the account back to the accountholder? We looked into that, and it is not allowed. If they don't move to a broker and if they have more than one share, then all of us will simply have to bear the cost of these accounts. For those accounts that were less than one share, we have already cashed them out, but we still have thousands of accounts with more than one share. However, we did figure out a way to clean it up, to save long term costs and potentially increase liquidity, and that is where the reverse stock split comes in. Sausage Making – In this section we will get into some of the nitty gritty detail of how the reverse split would work if approved (and if implemented). It is far more information than you will typically see a CEO share in a press release, but hopefully by now you have come to appreciate that we at Modiv value transparency and candor. Our name may be derived from the concept of MOnthly DIVidends, but it is just as applicable to think of us as a Mutually Owned Dividend Investment Vehicle – with emphasis being on mutually owned in this instance. We are all in this together, it's all our monies, and I strongly believe that transparency and candor are of utmost importance in our pursuit of making our money grow. Let me caveat the following by saying that all of this information was not readily known to us as it is rather abstract, and it took us several months to piece this education together by talking to multiple people at our transfer agent as well as other sources to include external counsel and our designated market maker. I am hopeful that I have it all right, but if some transfer agent whiz out there knows the intricacies better, then shoot us an email. Given that we have the ability to cash out accounts that hold a fractional share (less than one share) by either paying cash from the Company's coffers or selling those fractions in the open market (thereby creating liquidity), we understood that the only way to solve the aforementioned excess dormant account issue, barring the accountholder either selling their shares or transferring to a brokerage firm, was to make all those accounts fractional shares. The only way to get fractional shares is to introduce a reverse stock split. Given that the vast majority of these seemingly dormant accounts hold somewhere more than 500 but less than 1,500 shares, we identified that a large reverse split, held in place for only a brief moment in time before reverting the share price back to a more normal share price via a forward split, is the most effective way to address this legacy administrative burden and cost issue. The thinking is…implement a large reverse split, address the new batch of fractional shares, implement a forward split, and then back to business with reduced cost and less administrative burden – all in one fell swoop. The inefficient alternative, that would not require a stockholder approval, would be to implement a 1:10 reverse split every year until such time that all the dormant accounts are addressed, but that would mean we would all live with a ridiculously high share price for a very long period of time and that is simply not palatable. So, if the proxy proposal is not approved, then no problem. We will just continue to bear the cost burden, but we felt it worthwhile to put it out there for your approval. I believe the confusion from our recent investor inquiries pertains to how the reverse split would impact all the smaller stockholders who hold their shares in a brokerage account. The short answer is that we do not believe there is a meaningful impact other than a temporarily higher share price. The reason we believe this is where it gets really in the weeds and it pertains to the three primary levels of stock ownership – 1) DTC level, 2) Participant level, and 3) Beneficial level. The Depository Trust Company (DTC) is a central securities depository system utilized by brokers, transfer agents, NYSE and Nasdaq. It is estimated that over 80% of all U.S. public equity is held at the DTC (the first level) on behalf of a multitude of participating financial institutions like Fidelity, Schwab, etc. (the second level) who, in turn, hold the equity for the benefit of countless investors like yourself (the third level). You can look this up on the internet, but each publicly listed company has a DTC account (i.e. Cede & Co) at their respective transfer agent that represents the aggregate ownership of all those shares held in 'street name.' The DTC level is represented by a single account, the participant level reflects a small number of accounts (e.g. typically a few accounts for each financial institution depending on how they separate their taxable, non-taxable and non-retail accountholders), and the beneficial level would be hundreds of thousands of accounts representing the accounts you and I see when we log into our brokerage accounts. At our transfer agent, amongst those ~4,000 accounts, is a single Cede & Co. account that represents the majority of our shares outstanding. Our transfer agent does not see your individual account at your broker, just those ~4,000 accounts. Further, all corporate actions happen initially at this first level. For example, when we issue a dividend payment, it goes to all ~4,000 accounts. The DTC account then distributes the money it receives automatically to the participant level accounts who in turn distribute your dividend into your individual account. If we were to implement a reverse split and instruct our transfer agent to only cash out fractional shares at the participant level (which is what has been recommended to us), then we would materially limit the number of accounts impacted by the reverse split. Let's walk through an example. Let's assume there are 100 participant level accounts (we won't know the exact amount until we make the inquiry with the DTC) as well as the ~4,000 individual accounts held at our transfer agent. Given that any single account can only have one fractional share, that means only a maximum of 100 fractional shares would be impacted for all the millions of our shares held at financial institutions and from the ~4,000 individual accounts held at our transfer agent, only those accounts holding less than one share would be closed out. By doing it this way, we specifically address this legacy cost burden without wiping out thousands of retail investors who bought shares through their brokerage account. As soon as the process of eliminating fractional shares is completed (we have been informed it could potentially take several days), we would then implement a forward split to bring our share price back to a more appropriate, non-elevated, stock price. The ending result would be a normal stock price, the elimination of the administrative burden of maintaining thousands of seemingly dormant accounts, and the annual cost savings that would ensue. I want to point out that even if the proposal is approved by all of you, that does not mean we would implement it. Our goal would be to make another final push to get as many of those seemingly dormant accounts moved over to brokerage firms (heck, maybe this press release will help that cause). Only after that last effort would we then consider implementing the reverse stock split, hence having until the end of next year to potentially implement this administrative function. Phew, that was a lot of stuff to write (and to digest). In a nutshell, if the reverse split is approved (and we are ok if you don't want it), then the final ending result would be a normal stock price, less dormant accounts at our transfer agent, and more money saved. Grit, grind, get it done!' Aaron Halfacre, CEO of Modiv Industrial. 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: 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 related to the reverse stock split, the forward stock split, annualized dividend rates, future distributions and distributions declared by the Company's board of directors. 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, 2024 filed with the Securities and Exchange Commission (the 'SEC') on March 4, 2025. 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.
