Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Modiv Industrial Inc (MDV, Financial) maintained a stable adjusted funds from operations (AFFO) of $3.7 million, consistent with the previous year.
- The company successfully extended leases with WSP USA and LabCorp, contributing to an attractive weighted average lease term of 13.8 years for their portfolio.
- 100% of Modiv Industrial Inc (MDV)'s debt is at a fixed interest rate, providing stability against interest rate fluctuations.
- The company declared a cash dividend increase, reflecting confidence in its financial stability and commitment to returning value to shareholders.
- Modiv Industrial Inc (MDV) has a strong focus on industrial manufacturing, positioning itself as a unique player in the REIT market with a pure-play industrial manufacturing portfolio.
Negative Points
- Rental income decreased to $11.6 million from $12.5 million due to the disposition of properties, indicating potential challenges in maintaining revenue levels.
- Interest expense increased significantly due to unrealized non-cash net losses on swap valuations, impacting financial performance.
- The company faces challenges in raising capital due to low institutional ownership and limited stock liquidity, which could hinder growth opportunities.
- Modiv Industrial Inc (MDV) has a high leverage ratio of 48%, which may pose risks in a volatile interest rate environment.
- The company had to table a potentially accretive joint venture deal due to uncertainties and miscommunications, missing out on immediate growth opportunities.
Q & A Highlights
Q: Beyond the Jacksonville asset, how active is the pipeline today, and how are you feeling about it given your comments about rates and asset pricing?
A: Aaron Halfacre, CEO: I like the pipeline right now. Over the summer, it was pretty dry, but I'm seeing a few more opportunities now. Pricing for manufacturing assets is in the high seven to low eight cap range. There aren't many buyers out there, which makes sense given the current environment. We're being disciplined and mindful, especially since I don't want to take on more debt.
Q: Is the $6 million of ops the entire purchase price for the Jacksonville Op Unit asset, or is there a cash element that pushes the price over $6 million?
A: Aaron Halfacre, CEO: No, it's all in. That's it, there's no cash.
Q: How are you thinking about the Kia asset and when the right time is to sell it?
A: Aaron Halfacre, CEO: We still have some house cleaning to do with other assets. Kia is a high-quality asset with a long lease term and attractive rent bumps. As we get into a more stable rate environment, it might be a good time to sell. However, I don't have any immediate plans to sell it in 2025.
Q: What was the average price on the stock you bought back in the third quarter?
A: Aaron Halfacre, CEO: The average price was $14.80.
Q: Do you expect the new hedges you're looking at to have similar terms and rates as your expiring swaps?
A: Aaron Halfacre, CEO: We are engineering the new hedges to be at the same all-in rate or better. We won't include any cancellation features and will hedge exactly to the maturity date of our debt to avoid volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
