Modiv Inc. (“Modiv” or the “Company”) (NYSE:MDV), an internally
managed real estate investment trust (“REIT”) that actively
acquires, owns, and manages a portfolio of single-tenant net-lease
industrial manufacturing real estate properties, today announced
operating results for the first quarter ended March 31, 2023.
Key Highlights:
- First quarter revenue of $10.3 million increased 7.7%
year-over-year
- First quarter AFFO of $3.1 million, or $0.30 per diluted share,
compared with $3.0 million or $0.29 per diluted share in the
year-ago quarter
- $100.6 million across 10 industrial manufacturing properties
acquired year-to-date through May 12, 2023 at a blended initial cap
rate of 7.7% and a weighted average cap rate of 9.9%
- $294.4 million total debt outstanding as of May 12, 2023, with
a weighted average interest rate of 4.4% based on existing swaps
and consolidated leverage of 40% as of March 31, 2023.
- Industrial portfolio exposure now totals 37 assets representing
67% of pro forma NOI as of March 31, 2023, 14.5 years of WALT, and
2.4% average annual rental increases
- Focus now shifts to selling non-core portfolio of 16 legacy
retail and office assets.
Real Estate Acquisitions
The following is a summary of the 10 industrial manufacturing
properties acquired for a total of $100,642,000 year-to-date
through May 12, 2023.
On January 26, 2023, we acquired an industrial manufacturing
property located in Princeton, Minnesota leased to Plastic Products
Company, Inc. (“PPC”) for $6,387,052. PPC is a custom
thermoplastic, metal and ceramic injection molder that has been in
business since 1962. The property has a lease in place for a
remaining term of 5.75 years with a 20% rent increase on November
1, 2023 and annual rent escalations of 3% thereafter.
On March 31, 2023, we acquired an industrial manufacturing
property located in Savage, Minnesota leased to Stealth
Manufacturing (“Stealth”) for $5,526,310. Stealth has been
manufacturing burner tubes and related products for the hearth and
commercial cooking equipment industries for over 40 years. The
property is leased for a term of 20 years with annual rent
escalations of 2.5%.
On April 13, 2023, we acquired an industrial manufacturing
property located in Gap, Pennsylvania leased to Lindsay Precast,
LLC (“Lindsay”) for $16,543,624. Lindsay, an existing tenant of
Modiv, is an industry-leading precast concrete manufacturer and
steel fabricator with more than a 60-year operating history. The
lease of this property was added to our existing master lease of
four other Lindsay properties acquired in April 2022 and now makes
Lindsay our largest tenant as measured by annualized base rent. As
part of the Amended and Restated Master Lease Agreement, this
latest acquisition has a lease term of 24 years and annual rent
escalations of 2.2%. In connection with this acquisition, a second
master lease for the Lindsay properties acquired in April 2022 was
also amended and restated to include a non-refundable deposit of
$1,800,000 for future funding of improvements to the property in
North Carolina.
On April 13, 2023, we acquired an industrial manufacturing
property located in Reading, Pennsylvania leased to Summit Steel
& Manufacturing, LLC (“Summit Steel”) for $11,200,000 in an
“UPREIT” transaction wherein the seller received 287,516 units of
Class C limited partnership interest in the Operating Partnership
(“Class C OP Units”) valued at $5,175,288, based on an agreed-upon
value of $18.00 per share, and a cash payment of $6,024,712. Summit
Steel services its customers' needs by providing and utilizing its
innovative manufacturing processes and fabrication and welding
capabilities since 1992. Summit Steel's in-house capabilities
include: 2D and 3D laser cutting, bending/forming, computer
numerical control turning/milling, Swiss machining, centerless
grinding/polishing, powder coating, robotic and manual welding and
serve the aerospace, agricultural equipment, alternative energy,
automotive, consumer products, medical devices and equipment,
military and defense, recreational vehicles and original equipment
manufacturers industries. The property is leased for a term of 20
years with annual rent escalations of 2.9%.
On April 20, 2023, we acquired an industrial manufacturing
property located in Roscoe, Illinois leased to Pacific Bearing
Company (“PBC Linear”) for $20,000,000. PBC Linear manufactures a
broad spectrum of bearings and screw products to a diversified
customer base, as it has for 40 years. The property has a lease in
place for a remaining term of 20 years and 12.5% rent escalations
every five years.
On May 3, 2023, we acquired an industrial manufacturing property
located in Lansing, Michigan leased to Cameron Tool Company, LLC
(“Cameron Tool”) for $5,721,174. Cameron Tool has a 50-year
operating history in the tool and die space that services major
metal manufacturers that sell to the largest automotive original
equipment manufacturers as well as aerospace, defense, alternative
energy, and other markets. The property is leased for a term of 20
years with annual rent escalations of 2.5%.
On May 5, 2023, we acquired three industrial manufacturing
properties located in Detroit Lakes and Plymouth, Minnesota and
Ashland, Ohio leased to S.J. Electro Systems, LLC (“SJE”) for
$15,975,000. SJE was founded in 1975 and is a leading designer,
manufacturer and systems integrator of liquid level and flow
controls primarily serving residential, commercial and municipal
markets. The properties are leased for a term of 17 years with
annual rent escalations of 2.8%.
On May 11, 2023, we acquired an industrial manufacturing
property located in Alleyton, Texas and leased to Titan Production
Equipment, LLC (“Titan”) for $17,100,000. Titan is a company
engaged in the design, engineering, and fabrication of oil and gas
production equipment used to separate, process and treat
hydrocarbon steams at the wellhead, gathering and processing
stages. Titan services customers in the Permian, Haynesville,
Bakken, and Eagle Ford shale basins of Texas, Oklahoma, New Mexico,
and Louisiana, respectively. The property is leased for a term of
20 years with annual rent escalations of 2.9%.
Real Estate Disposition
As previously disclosed, we entered into an agreement with a
prospective buyer for the sale of our office property in Rocklin,
California formerly leased to Gap for a sales price of $5,466,960
on December 29, 2022. Effective April 21, 2023, we and the
prospective buyer entered into a third amendment to their agreement
which extended the buyer’s financing contingency to May 22, 2023
and the outside closing date to May 31, 2023 in exchange for the
buyer’s release of an additional non-refundable deposit of $75,000
which brought the total of non-refundable purchase deposits to
$195,000 which have been released to the Company. Additionally, the
buyer also reimbursed the Company $30,000 for its carrying costs on
the property. There can be no assurances that this disposition will
be completed.
Term Loan Commitment Drawdowns
On April 12, 2023 and April 18, 2023, we borrowed $60,000,000
and $20,000,000, respectively, under our $100,000,000 delayed draw
Term Loan commitment, bringing the total Term Loan balance
outstanding to the total commitment amount of $250,000,000. As of
May 12, 2023, we have the full $150,000,000 available under the
Revolver, subject to borrowing base requirements, and over $8.0
million of cash available on balance sheet.
Extension of Lease
Effective April 18, 2023, we extended the lease term of our
Levins property located in Sacramento, California from September 1,
2023 to December 31, 2024 with a 69% increase in annual rent from
$4.14 per square foot to $7.00 per square foot commencing September
1, 2023.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors
will be held on Monday, May 15, 2023, at 11:00 a.m. Eastern Time /
8:00 a.m. Pacific Time, to discuss the first quarter 2023 operating
results and answer questions.
Live conference call: 1-877-514-3620 at 8:00 a.m. Pacific
Time, Monday, May 15, 2023
Webcast: To listen to the webcast, either live or
archived, use this link
https://event.choruscall.com/mediaframe/webcast.html?webcastid=nztAFnkd
or visit the investor relations page of Modiv’s website at
www.modiv.com.
About Modiv
Modiv Inc. is an internally managed REIT that acquires, owns,
and manages a portfolio of single-tenant net-lease real estate. The
Company actively acquires critical industrial manufacturing
properties with long-term leases to tenants that fuel the national
economy and strengthen the nation’s supply chains. Driven by an
investor-first focus, the Modiv name reflects its commitment to
providing investors with Monthly Dividends. As of May
15, 2023, Modiv had a $634 million real estate portfolio (based on
estimated fair value) comprised of 4.3 million square feet of
aggregate leasable area. For more information, please visit:
www.modiv.com.
Forward-looking Statements
Certain statements contained in this press release, other than
historical facts, may be considered forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to,
statements regarding our plans, strategies and prospects, both
business and financial. Such forward-looking statements are subject
to various risks and uncertainties, including but not limited to
those described under the section entitled “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 filed with the SEC on March 13, 2023. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this press release and in the Company’s other
filings with the SEC. Any forward-looking statements herein speak
only as of the time when made and are based on information
available to the Company as of such date and are qualified in their
entirety by this cautionary statement. The Company assumes no
obligation to revise or update any such statement now or in the
future, unless required by law.
Notice Involving Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this press release
and the supplemental financial and operating report included in our
Form 8-K dated May 15, 2023 contain and may refer to certain
non-GAAP financial measures. These non-GAAP financial measures are
in addition to, not a substitute for or superior to, measures of
financial performance prepared in accordance with GAAP. These
non-GAAP financial measures should not be considered replacements
for, and should be read together with, the most comparable GAAP
financial measures. Reconciliations to the most directly comparable
GAAP financial measures and statements of why management believes
these measures are useful to investors are provided below.
AFFO is a measure that is not calculated in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). See the Reconciliation of Non-GAAP Measures later
in this press release.
The Company defines “initial cap rate” for property acquisitions
as the initial annual cash rent divided by the purchase price of
the property. The Company defines “weighted average cap rate” for
property acquisitions as the average annual cash rent including
rent escalations over the lease term, divided by the purchase price
of the property.
MODIV INC. Consolidated Statements of Operations
For the Three Months Ended March 31, 2023 and 2022
(Unaudited) Three Months Ended March 31,
2023
2022
Rental income
$
10,311,182
$
9,569,613
Expenses: General and administrative
1,908,055
2,106,183
Stock compensation expense
660,169
511,865
Depreciation and amortization
3,272,061
3,300,492
Interest expense
4,018,792
1,568,175
Property expenses
1,706,843
2,159,865
Impairment of real estate investment property
3,499,438
-
Impairment of goodwill
-
17,320,857
Total expenses
15,065,358
26,967,437
Gain on sale of real estate investments, net
-
6,875,086
Operating loss
(4,754,176
)
(10,522,738
)
Other income (expense): Interest income
53,695
13,435
Income from unconsolidated investment in a real estate property
55,567
95,464
Loss on early extinguishment of debt
-
(1,725,318
)
Other
65,993
65,993
Other income (expense), net
175,255
(1,550,426
)
Net loss
(4,578,921
)
(12,073,164
)
Less: net loss attributable to noncontrolling interest in Operating
Partnership
(816,199
)
(1,928,028
)
Net loss attributable to Modiv Inc.
(3,762,722
)
(10,145,136
)
Preferred stock dividends
(921,875
)
(921,875
)
Net loss attributable to common stockholders
$
(4,684,597
)
$
(11,067,011
)
Net loss per share attributable to common stockholders:
Basic and diluted
$
(0.62
)
$
(1.47
)
Weighted-average number of common shares outstanding: Basic
and diluted
7,532,452
7,533,158
Distributions declared per common stock
$
0.2875
$
0.3875
MODIV INC. Condensed Consolidated Balance Sheets
(Unaudited) As of March 31, December
31,
2023
2022
Assets Real estate investments:
Land
$
103,919,101
$
103,657,237
Building and improvements
338,027,128
329,867,099
Equipment
4,429,000
4,429,000
Tenant origination and absorption costs
20,085,465
19,499,749
Total investments in real estate property
466,460,694
457,453,085
Accumulated depreciation and amortization
(50,024,383
)
(46,752,322
)
Total investments in real estate property, net
416,436,311
410,700,763
Unconsolidated investment in a real estate property
9,997,292
10,007,420
Total real estate investments excluding real estate investments
held for sale, net
426,433,603
420,708,183
Real estate investments held for sale, net
5,255,725
5,255,725
Total real estate investments, net
431,689,328
425,963,908
Cash and cash equivalents
13,280,104
8,608,649
Tenant receivables
8,653,550
7,263,202
Above-market lease intangibles, net
1,808,483
1,850,756
Prepaid expenses and other assets
5,904,737
6,100,937
Interest rate swap derivative
3,485,684
4,629,702
Assets related to real estate investments held for sale
15,939
12,765
Total assets
$
464,837,825
$
454,429,919
Liabilities and Equity Mortgage
notes payable, net
$
44,338,481
$
44,435,556
Credit facility revolver
-
3,000,000
Credit facility term loan, net
168,140,752
148,018,164
Accounts payable, accrued and other liabilities
7,338,674
7,649,806
Below-market lease intangibles, net
9,724,717
9,675,686
Interest rate swap derivatives
1,327,342
498,866
Liabilities related to real estate investments held for sale
51,918
117,881
Total Liabilities
230,921,884
213,395,959
Commitments and contingencies 7.375% Series A
cumulative redeemable perpetual preferred stock, $0.001 par value,
2,000,000 shares authorized, issued and outstanding as of March 31,
2023 and December 31, 2022, respectively
2,000
2,000
Class C common stock, $0.001 par value, 300,000,000 shares
authorized; 7,822,940 shares issued and 7,568,322 shares
outstanding as of March 31, 2023, and 7,762,506 shares issued and
7,512,353 shares outstanding as of December 31, 2022
7,823
7,762
Class S common stock, $0.001 par value, 100,000,000 shares
authorized; no shares issued and outstanding as of March 31, 2023
and December 31, 2022
-
-
Additional paid-in-capital
279,565,984
278,339,320
Treasury stock, at cost, 254,618 and 250,153 shares held as of
March 31, 2023 and December 31, 2022, respectively
(4,211,300
)
(4,161,618
)
Cumulative distributions and net losses
(124,790,431
)
(117,939,176
)
Accumulated other comprehensive income
3,289,446
3,502,616
Total Modiv Inc. equity
153,863,522
159,750,904
Noncontrolling interest in the Operating Partnership
80,052,419
81,283,056
Total equity
233,915,941
241,033,960
Total liabilities and equity
$
464,837,825
$
454,429,919
Reconciliation of Non-GAAP Measures - FFO and AFFO For
the Three Months Ended March 31, 2023 and 2022
(Unaudited) Three Months Ended March 31,
2023
2022
Net loss (in accordance with GAAP)
$
(4,578,921
)
$
(12,073,164
)
Preferred stock dividends
(921,875
)
(921,875
)
Net loss attributable to common stockholders and Class C OP
Units
(5,500,796
)
(12,995,039
)
FFO adjustments: Depreciation and amortization of real
estate properties
3,272,061
3,300,492
Amortization of lease incentives
88,570
71,394
Depreciation and amortization for unconsolidated investment in a
real estate property
194,173
190,468
Impairment of real estate investment property
3,499,438
-
Gain on sale of real estate investments, net
-
(6,875,086
)
FFO attributable to common stockholders and Class C OP Units
1,553,446
(16,307,771
)
AFFO adjustments: Impairment of goodwill
-
17,320,857
Stock compensation
660,169
511,865
Deferred financing costs
195,212
1,266,725
Non-recurring loan prepayment penalties
-
615,336
Swap termination costs
-
733,000
Due diligence expenses, including abandoned pursuit costs
342,542
586,669
Deferred rents
(1,175,359
)
(636,196
)
Unrealized loss (gain) on interest rate swap valuation
1,722,184
(788,016
)
Amortization of above (below) market lease intangibles, net
(196,283
)
(330,618
)
Other adjustments for unconsolidated investment in a real estate
property
11,819
(188
)
AFFO attributable to common stockholders and Class C OP
Units
$
3,113,730
$
2,971,663
Weighted average shares outstanding: Basic
7,532,452
7,533,158
Fully Diluted (1)
10,351,141
10,193,498
FFO Per Share: Basic
$
0.21
$
(2.16
)
Fully Diluted
$
0.15
$
(2.16
)
AFFO Per Share Basic
$
0.41
$
0.39
Fully Diluted
$
0.30
$
0.29
(1) Includes the Class C, Class M, Class P and Class R OP
Units to compute the weighted average number of shares.
FFO is defined by the National Association of Real Estate
Investment Trusts (“Nareit”) as net income or loss computed in
accordance with GAAP, excluding extraordinary items, as defined by
GAAP, and gains and losses from sales of depreciable operating
property, plus real estate-related depreciation and amortization
(excluding amortization of deferred financing costs and
depreciation of non-real estate assets), and after adjustment for
unconsolidated partnerships, joint ventures, preferred
distributions and real estate impairments. Because FFO calculations
adjust for such items as depreciation and amortization of real
estate assets and gains and losses from sales of operating real
estate assets (which can vary among owners of identical assets in
similar conditions based on historical cost accounting and
useful-life estimates), they facilitate comparisons of operating
performance between periods and between other REITs. As a result,
we believe that the use of FFO, together with the required GAAP
presentations, provides a more complete understanding of our
performance relative to our competitors and a more informed and
appropriate basis on which to make decisions involving operating,
financing, and investing activities. It should be noted, however,
that other REITs may not define FFO in accordance with the current
Nareit definition or may interpret the current Nareit definition
differently than we do, making comparisons less meaningful.
Additionally, we use AFFO as a non-GAAP financial measure to
evaluate our operating performance. AFFO excludes non-routine and
certain non-cash items such as revenues in excess of cash received,
amortization of stock-based compensation, deferred rents,
amortization of in-place lease valuation intangibles, deferred
financing fees, gain or loss from the extinguishment of debt,
unrealized gains (losses) on derivative instruments, and write-offs
of due diligence expenses for abandoned pursuits. We also believe
that AFFO is a recognized measure of sustainable operating
performance by the REIT industry. Further, we believe AFFO is
useful in comparing the sustainability of our operating performance
with the sustainability of the operating performance of other real
estate companies. Management believes that AFFO is a beneficial
indicator of our ongoing portfolio performance and ability to
sustain our current distribution level. More specifically, AFFO
isolates the financial results of our operations. AFFO, however, is
not considered an appropriate measure of historical earnings as it
excludes certain significant costs that are otherwise included in
reported earnings. Further, since the measure is based on
historical financial information, AFFO for the period presented may
not be indicative of future results or our future ability to pay
our dividends.
By providing FFO and AFFO, we present information that assists
investors in aligning their analysis with management’s analysis of
long-term operating activities. For all of these reasons, we
believe the non-GAAP measures of FFO and AFFO, in addition to
income (loss) from operations, net income (loss) and cash flows
from operating activities, as defined by GAAP, are helpful
supplemental performance measures and useful to investors in
evaluating the performance of our real estate portfolio. However, a
material limitation associated with FFO and AFFO is that they are
not indicative of our cash available to fund distributions since
other uses of cash, such as capital expenditures at our properties
and principal payments of debt, are not deducted when calculating
FFO and AFFO. AFFO is useful in assisting management and investors
in assessing our ongoing ability to generate cash flow from
operations and continue as a going concern in future operating
periods. Therefore, FFO and AFFO should not be viewed as a more
prominent measure of performance than income (loss) from
operations, net income (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 regulatory
body has opined on the acceptability of the adjustments
contemplated to adjust FFO in order to calculate AFFO and its use
as a non-GAAP performance measure. In the future, the SEC or Nareit
may decide to standardize the allowable exclusions across the REIT
industry, and we may have to adjust the calculation and
characterization of this non-GAAP measure.
Property Portfolio
Information
The following is a breakdown of our FFO and AFFO by property
type for the three months ended March 31, 2023:
Three
Months Ended March 31, 2023 Industrial Core Tactical
Non-Core (1) Other Non-Core (2) Non-Property&
Other (3) Consolidated Net income (loss) (in
accordance with GAAP)
$
1,459,256
$
708,467
$
(3,650,009
)
$
(3,096,635
)
$
(4,578,921
)
Preferred stock dividends
-
-
-
(921,875
)
(921,875
)
Net income (loss) attributable to common stockholders and Class
C OP Unit holders
1,459,256
708,467
(3,650,009
)
(4,018,510
)
(5,500,796
)
FFO adjustments: Depreciation and amortization of real
estate properties
1,924,868
806,415
540,778
-
3,272,061
Amortization of lease incentives
17,177
-
71,393
-
88,570
Depreciation and amortization for unconsolidated investment in a
real estate property
194,173
-
-
-
194,173
Impairment of real estate investment property
-
-
3,499,438
-
3,499,438
FFO attributable to common stockholders and Class C OP Unit
holders
3,595,474
1,514,882
461,600
(4,018,510
)
1,553,446
AFFO adjustments: Stock compensation
-
-
-
660,169
660,169
Deferred financing costs
144,269
14,519
36,424
-
195,212
Due diligence expenses, including abandoned pursuit costs
13,673
83
328,786
-
342,542
Deferred rents
(579,161
)
(604,781
)
8,583
-
(1,175,359
)
Unrealized loss on interest rate swap valuation
-
-
-
1,722,184
1,722,184
Amortization of (below) above market lease intangibles, net
(207,712
)
-
11,429
-
(196,283
)
Other adjustments for unconsolidated investment in a real estate
property
11,819
-
-
-
11,819
AFFO attributable to common stockholders and Class C OP Unit
holders
$
2,978,362
$
924,703
$
846,822
$
(1,636,157
)
$
3,113,730
Weighted average shares outstanding: Basic
7,532,452
7,532,452
7,532,452
7,532,452
7,532,452
Fully diluted (4)
10,351,141
10,351,141
10,351,141
10,351,141
10,351,141
FFO Per Share: Basic
$
0.48
$
0.20
$
0.06
$
(0.53
)
$
0.21
Fully Diluted (5)
$
0.35
$
0.15
$
0.04
$
(0.39
)
$
0.15
AFFO Per Share: Basic
$
0.40
$
0.12
$
0.11
$
(0.22
)
$
0.41
Fully Diluted (5)
$
0.29
$
0.09
$
0.08
$
(0.16
)
$
0.30
(1)
We categorize Tactical Non-Core Assets as
those assets that offer compelling value-add or opportunistic
investment characteristics when measured over a near-term or
interim holding period. We currently hold three such assets: (i)
our tactical non-core acquisition of a leading KIA auto dealership
located in a prime location in Los Angeles County in January 2022,
which was structured as an UPREIT transaction resulting in a
favorable equity issuance of $32,809,550 Class C OP Units at a cost
basis of $25.00 per share; (ii) our recently executed 12 year lease
to the State of California's Office of Emergency Services (OES)
into one of our existing assets located in Rancho Cordova,
California that includes an attractive purchase option by the
tenant which we believe has a favorable probability of being
executed upon in the next 24 months; and (iii) our property leased
to Costco located in Issaquah, Washington which offers compelling
redevelopment opportunities following Costco's lease expiration
given its higher density infill location and the fact that the land
is zoned for additional uses to include flex/R&D and
multi-family.
(2)
Other non-core assets includes 11 legacy retail properties and five
legacy office properties. We define legacy assets as those
inherited through prior mergers and acquisitions activity and such
assets that were acquired by different management teams utilizing
different investment objectives or underwriting criteria. Of the 16
assets, one office property was classified as held for sale as of
March 31, 2023 and is scheduled to close by May 31, 2023. We are
considering opportunities for disposition of the remaining 15
properties.
(3)
We do not allocate non-property expenses across our
property-specific segments; therefore, we report these expenses
separately under the Non-Property & Other caption in the table
above. Such expenses can include stock compensation expense,
general and administrative, interest rate hedges, and other
comprehensive items.
(4)
Weighted average fully diluted shares outstanding includes the
following: (i) 7,532,452 shares of Class C common stock;
(ii) 1,312,382 Class C OP Units issued on January 18, 2022
in connection with the acquisition of the KIA auto dealership
property discussed above. This does not include the 287,516 Class C
OP Units issued in April 2023 in conjunction with our acquisition
of the property in Reading, Pennsylvania leased to Summit Steel
& Manufacturing, LLC as described in Note 13 – Subsequent
Events to our accompanying unaudited condensed consolidated
financial statements; (iii) 1,189,964 shares of Class C
common stock that would result from conversion of 657,949.5 Class M
OP Units and 56,029 Class P OP Units assuming a conversion ratio of
1.6667 shares of our Class C common stock for each Class M OP Unit
and Class P OP Unit outstanding; and (iv) 316,343 shares of
Class C common stock that would result from conversion of Class R
OP Units. This does not include 474,515 additional
performance-based Class R OP Units that are eligible to be issued
by March 31, 2024, which are described in Note 11 – Operating
Partnership Units to our accompanying unaudited condensed
consolidated financial statements.
(5)
For the intraperiod allocation, we treat all component per share
amounts as fully-diluted to correspond with the consolidated FFO
and AFFO results reflected above.
MODIV INC.
Reconciliation of Non-GAAP Measures - Adjusted EBITDA For
the Three Months Ended March 31, 2023 and 2022
(Unaudited) Three Months Ended March 31,
2023
2022
Net loss (in accordance with GAAP)
$
(4,578,921
)
$
(12,073,164
)
Adjustments: Depreciation and amortization
3,272,061
3,300,492
Depreciation and amortization for unconsolidated investment in a
real estate property
194,173
190,468
Interest expense
4,018,792
1,568,175
Loss on early extinguishment of debt
-
1,725,318
Interest expense on unconsolidated investment in real estate
property
95,486
97,645
Impairment of real estate investment property
3,499,438
-
Impairment of goodwill
-
17,320,857
Stock compensation
660,169
511,865
Due diligence expenses, including abandoned pursuit costs
342,542
586,669
Gain on sale of real estate investments, net
-
(6,875,086
)
Adjusted EBITDA
$
7,503,740
$
6,353,239
Annualized Adjusted EBITDA
$
30,014,960
$
25,412,956
Net debt: Consolidated debt
$
214,436,983
$
165,509,220
Debt of unconsolidated investment in real estate property (a)
9,429,343
9,653,689
Consolidated cash and cash equivalents
(13,280,104
)
(25,344,063
)
Cash of unconsolidated investment in real estate property (a)
(420,947
)
(458,948
)
$
210,165,275
$
149,359,898
Net debt / Adjusted EBITDA 7.0x 5.9x (a)
Reflects the Company's 72.71% pro rata share of the
tenant-in-common's mortgage note payable and cash.
We define Net Debt as gross debt less cash and cash equivalents
and restricted cash. 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 non-cash compensation expenses 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230512005349/en/
Investor Inquiries: Margaret Boyce, Financial Profiles,
Inc. mboyce@finprofiles.com 310-622-8247
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