Modiv Inc. (NYSE:MDV) Q3 2023 Earnings Conference Call November 13, 2023 11:00 AM ET

Company Participants

Margaret Boyce - Financial Profiles, Inc. ,Investor Relations

Aaron Halfacre - Chief Executive Officer, President and Director

Ray Pacini - Chief Financial Officer

Conference Call Participants

Barry Oxford - Colliers

Bryan Maher - B. Riley FBR

Rob Stevenson - Janney

Operator

Good day and welcome to Modiv Industrial Third Quarter 2023 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. On today's call, management will provide prepared remarks and then we will open the call up for your questions. Please note this event is being recorded.

I would now like to turn the conference over to Margaret Boyce, Investor Relations for Modiv Industrial. Please go ahead, ma’am.

Margaret Boyce

Thank you, Shomali, and thank you all for joining us for Modiv Industrial's third quarter 2023 earnings call. We issued our earnings release before market opened this morning and it’s available on web site @motive.com. I'm here today with Aaron Halfacre, Chief Executive Officer; and Ray Pacini, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we will open up the call for your questions.

Before we begin, I would like to remind you that, today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, and other comparable words and phrases. Statements that are not historical facts, such as statements about our expected acquisitions or dispositions, are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-K and 10-Q.

With that, I would now like to turn the call over to Aaron. Aaron, please go ahead.

Aaron Halfacre

Thank you, Margaret. Hello, everybody, and thank you for joining our third quarter conference call. I think third quarter results were solid. I'd like to think they were relatively trauma free. Let's just go straight to Ray to discuss financial results and I'll come back at the end before we take questions. Ray?

Ray Pacini

Thank you, Aaron. I'll begin with an overview of third quarter operating results. Revenue for the third quarter was $12.5 million, a 21% increase compared with the $10.3 million in the prior year period, and reflects the impact of the 12 industrial manufacturing acquisitions we completed during the first nine months of 2023 and the 14 non-core property dispositions in August 2023. Third quarter adjusted funds from operations, or AFFO, was $3.7 million, up 19% when compared with $3.1 million in the year ago quarter. The increase in AFFO was primarily due to the revenue increase and was partially offset by increases in straight-line rents and interest expense. On a per share basis, AFFO was $0.33 for this quarter, which is in line with consensus estimates, even after accounting for the increase in the weighted average number of fully diluted common shares outstanding. The %1.7 million non-cash loss on sale of real estate investments during the quarter includes a $1.9 million non-cash loss on the previously announced sale of 13 properties to Generation Income Properties which close on August 10, 2023, partially offset by $178,000 gain on the sale of the property previously leased to the EMC shop. The loss on the GIPR transaction reflects the difference between the $9.6 million estimated share value of the Series A redeemable preferred stock of GIPR compared to the $12 million nominal value received as partial consideration for the sale on August 10, 2023.