Exhibit 99.2
 
NYSE: MDV
 




QUARTERLY SUPPLEMENTAL DATA
 
 
March 31, 2023

Modiv Inc.
Supplemental Information - First Quarter 2023

Table of Contents
  
     
About the Data
3
     
Company Overview
4
     
Financial Results
  
 
Consolidated Statements of Operations - Last Five Quarters
5
 
Property Portfolio - Statements of Operations - First Quarter of 2023
6
 
Consolidated Statements of Comprehensive (Loss) Income - Last Five Quarters
7
 
(Loss) Earnings Per Share - Last Five Quarters
8
 
FFO and AFFO - Last Five Quarters
9
 
Property Portfolio - FFO and AFFO - First Quarter of 2023
10
 
Adjusted EBITDA - Last Five Quarters
12
 
Leverage Ratio
13
Balance Sheets and Capitalization
  
 
Capitalization
14
 
Consolidated Balance Sheets
15
 
Property Portfolio - Balance Sheets - First Quarter of 2023
16
 
Debt Overview
17
 
Credit Facility and Mortgage Notes Covenants
18
     
Real Estate
  
 
Real Estate Acquisitions
19
 
Real Estate Dispositions
20
 
Top 10 Tenants
21
 
Property Type
21
 
Tenant Industry Diversification
22
 
Tenant Geographic Diversification
23
 
Lease Expirations
24
     
Appendix
  
 
Disclosures Regarding Non-GAAP and Other Metrics
25

2
About the Data
 
This data and other information described herein are as of and for the three months ended March 31, 2023 unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with Modiv Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 13, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, including the financial statements and management's discussion and analysis of financial condition and results of operations, filed on May 15, 2023.
 
Forward-Looking Statements
 
Information set forth herein contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. All of the forward-looking statements herein are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements. These factors include, but are not limited to, risks and uncertainties related to the COVID-19 pandemic and its related impacts on us and our tenants, general economic conditions, including but not limited to impacts of the Russian war against Ukraine, supply-chain disruptions, increases in the rate of inflation and interest rates, local real estate conditions, tenant financial health, and property acquisitions and dispositions and the timing of any acquisitions and dispositions. These and other risks, assumptions, and uncertainties are described in our filings with the SEC, which are available on the SEC’s website at www.sec.gov. You are cautioned not to place undue reliance on any forward-looking statements included herein. All forward-looking statements are made as of the date of this document and the risk that actual results, performance, and achievements will differ materially from the expectations expressed or referenced herein will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
 
3
Company Overview
Modiv Inc. (NYSE:MDV) (“Modiv”, the “Company”, “we”, “us” and “our”) is an internally managed real estate investment trust (“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.
 
Modiv strives towards a “best-in-class” corporate governance structure through a board of directors and management team with decades of institutional real estate industry experience.
 
Management Team:
  
Independent Directors:
     
Aaron S. Halfacre
  
Adam S. Markman
Chief Executive Officer and Director
  
Chairman of the Board
     
Raymond J. Pacini
  
Asma Ishaq
Chief Financial Officer and Secretary
    
     
Sandra G. Sciutto
  
Curtis B. McWilliams
Chief Accounting Officer
    
     
John C. Raney
  
Thomas H. Nolan, Jr.
Chief Legal Officer
    
     
William R. Broms
  
Kimberly Smith
Chief Investment Officer
    
     
   
Connie Tirondola
     
 
Investor Inquiries:
Margaret Boyce, Financial Profiles, Inc.
mboyce@finprofiles.com
310-622-8247
 
Transfer Agent:
Computershare Trust Company, N.A.
150 Royall Street
Canton, MA 02021
800-736-3001

4
Modiv Inc.
Consolidated Statements of Operations - Last Five Quarters

(Unaudited)
 
   
Three Months Ended
  
   
March 31,
2023
    
December 31,
2022
    
September 30,
2022
    
June 30,
2022
    
March 31,
2022
  
Rental income (a)
  
$
10,311,182
    
$
13,804,540
    
$
10,303,402
    
$
10,144,477
    
$
9,569,613
  
                                         
Expenses:
                                        
General and administrative (b)
    
1,908,055
      
2,252,304
      
1,838,388
      
1,615,182
      
2,106,183
  
Stock compensation expense
    
660,169
      
660,171
      
549,240
      
679,747
      
511,865
  
Depreciation and amortization
    
3,272,061
      
4,347,809
      
3,598,592
      
3,682,681
      
3,300,492
  
Interest expense (c)
    
4,018,792
      
2,826,490
      
2,514,838
      
1,197,154
      
1,568,175
  
Property expenses (d)
    
1,706,843
      
1,537,691
      
1,415,621
      
1,434,214
      
2,159,865
  
Impairment of real estate investment property (e)
    
3,499,438
      
2,080,727
      
—
      
—
      
—
  
Impairment of goodwill
    
—
      
—
      
—
      
—
      
17,320,857
  
Total expenses
    
15,065,358
      
13,705,192
      
9,916,679
      
8,608,978
      
26,967,437
  
                                         
Gain on sale of real estate investments
    
—
      
669,185
      
3,932,029
      
720,071
      
6,875,086
  
Operating (loss) income
    
(4,754,176
)
    
768,533
      
4,318,752
      
2,255,570
      
(10,522,738
)
                                         
Other income (expense):
                                        
Interest income
    
53,695
      
5,047
      
1,665
      
1,763
      
13,435
  
Income from unconsolidated investment in a real estate property
    
55,567
      
51,312
      
64,358
      
66,868
      
95,464
  
Loss on early extinguishment of debt (f)
    
—
      
—
      
—
      
—
      
(1,725,318
)
Other
    
65,993
      
(104,157
)
    
65,992
      
66,143
      
65,993
  
Other income (expense), net
    
175,255
      
(47,798
)
    
132,015
      
134,774
      
(1,550,426
)
                                         
Net (loss) income
    
(4,578,921
)
    
720,735
      
4,450,767
      
2,390,344
      
(12,073,164
)
Less: net (loss) income attributable to noncontrolling interest in Operating Partnership
    
(816,199
)
    
(42,508
)
    
528,540
      
219,214
      
(1,928,029
)
Net (loss) income attributable to Modiv Inc.
    
(3,762,722
)
    
763,243
      
3,922,227
      
2,171,130
      
(10,145,135
)
Preferred stock dividends
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
Net (loss) income attributable to common stockholders
  
$
(4,684,597
)
  
$
(158,632
)
  
$
3,000,352
    
$
1,249,255
    
$
(11,067,010
)
                                         
Net (loss) income per share attributable to common stockholders
                                        
                                         
Basic
  
$
(0.62
)
  
$
(0.02
)
  
$
0.40
    
$
0.17
    
$
(1.47
)
Diluted
  
$
(0.62
)
  
$
(0.02
)
  
$
0.35
    
$
0.14
    
$
(1.47
)
Weighted-average number of common shares outstanding
                                        
Basic
    
7,532,452
      
7,487,728
      
7,449,968
      
7,478,973
      
7,533,158
  
Diluted (g)
    
7,532,452
      
7,487,728
      
10,180,543
      
10,221,490
      
7,533,158
  
                                         
Distributions declared per common share (h)
  
$
0.2875
    
$
0.2875
    
$
0.2875
    
$
0.2875
    
$
0.3875
  
 
(a)
Rental income includes tenant reimbursements for property expenses and the fourth quarter of 2022 includes an early termination fee of $3,781,929 received from Sutter Health.
 
(b)
General and administrative expenses in the fourth quarter of 2022 include a $500,000 accrual for estimated costs of relocating our corporate offices to Reno, Nevada.
 
(c)
Interest expense in the first quarter of 2023 includes a $1,722,184 unrealized loss on swap valuations and a $746,853 increase over the first quarter of 2022 in interest expense incurred in excess of derivative cash settlements.
 
(d)
Property expenses are largely offset by tenant reimbursements included in rental income.
 
(e)
The impairment charge for the first quarter of 2023 relates to an office property located in Nashville, Tennessee leased to Cummins, Inc through February 29, 2024. We determined that an impairment charge was triggered by expectations of a shortened holding period and estimated the property's fair value based upon current market comparables. The impairment charge for the fourth quarter of 2022 relates to an office property located in Rocklin, California to reflect the net realizable value as a result of its reclassification to asset held for sale. The sale of this property is scheduled to close by May 31, 2023.
 
(f)
Loss on early extinguishment of debt for the first quarter of 2022 includes non-recurring charges for (i) $1,164,998 in non-cash write-offs of deferred financing costs upon refinancing 20 mortgages and the prior credit facility with the KeyBank credit facility and mortgage repayments related to four asset sales; (ii) $615,336 of mortgage prepayment fees; and (iii) $733,000 of swap termination fees related to four of the mortgages refinanced with the KeyBank credit facility which were more than offset by the related write-off of unrealized valuation gains of $788,016.
 
(g)
Diluted shares outstanding for periods when we reported a net loss do not include the OP Units since they would be anti-dilutive. Diluted shares outstanding in the second and third quarters of 2022 include Class C, Class M, Class P and Class R OP Units since we reported net income for those quarters.
 
(h)
Distributions declared during the first quarter of 2022 include a one-time 13th distribution for 2021 of $0.10 per share paid to stockholders of record on December 31, 2021 based on how many days they held their shares during 2021.
 
5
Modiv Inc.
Property Portfolio - Statements of Operations - First Quarter of 2023

(Unaudited)
   
Three Months Ended March 31, 2023
  
   
Industrial
Core
    
Tactical
Non-Core (1)
    
Other
Non-Core (2)
    
Non-Property
& Other (3)
    
Consolidated
  
Rental income
  
$
5,756,815
    
$
2,778,344
    
$
1,776,023
    
$
—
    
$
10,311,182
  
                                         
Expenses:
                                        
General and administrative
    
—
      
—
      
—
      
1,908,055
      
1,908,055
  
Stock compensation expense
    
—
      
—
      
—
      
660,169
      
660,169
  
Depreciation and amortization
    
1,924,868
      
806,415
      
540,778
      
—
      
3,272,061
  
Interest expense (4)
    
2,003,879
      
875,509
      
491,305
      
648,099
      
4,018,792
  
Property expenses
    
424,379
      
387,953
      
894,511
      
—
      
1,706,843
  
Impairment of real estate investment property
    
—
      
—
      
3,499,438
      
—
      
3,499,438
  
Total expenses
    
4,353,126
      
2,069,877
      
5,426,032
      
3,216,323
      
15,065,358
  
                                         
Operating income (loss)
    
1,403,689
      
708,467
      
(3,650,009
)
    
(3,216,323
)
    
(4,754,176
)
                                         
Other income:
                                        
Interest income
    
—
      
—
      
—
      
53,695
      
53,695
  
Income from unconsolidated investment in a real estate property
    
55,567
      
—
      
—
      
—
      
55,567
  
Other (5)
    
—
      
—
      
—
      
—
      
—
  
Total other income
    
—
      
—
      
—
      
65,993
      
65,993
  
     
55,567
      
—
      
—
      
119,688
      
175,255
  
                                         
Net income (loss)
    
1,459,256
      
708,467
      
(3,650,009
)
    
(3,096,635
)
    
(4,578,921
)
Less: net loss attributable to noncontrolling interest in Operating Partnership
    
—
      
—
      
—
      
(816,199
)
    
(816,199
)
Net income (loss) attributable to Modiv Inc.
    
1,459,256
      
708,467
      
(3,650,009
)
    
(2,280,436
)
    
(3,762,722
)
Preferred stock dividends
    
—
      
—
      
—
      
(921,875
)
    
(921,875
)
Net income (loss) attributable to common stockholders
  
$
1,459,256
    
$
708,467
    
$
(3,650,009
)
  
$
(3,202,311
)
  
$
(4,684,597
)
 
(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 the 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)
Non-Property & Other interest expense includes a net unrealized loss on interest rate swap valuation of $1,722,184 partially offset by derivative cash settlements of $1,074,085.
 
(5)
Other income reflects management fees earned for managing the TIC Interest.
 
6
Modiv Inc.
Consolidated Statements of Comprehensive (Loss) Income - Last Five Quarters

(Unaudited)
 
   
Three Months Ended
  
   
March 31,
2023
    
December 31,
2022
    
September 30,
2022
    
June 30,
2022
    
March 31,
2022
  
Net (loss) income
  
$
(4,578,921
)
  
$
720,735
    
$
4,450,767
    
$
2,390,344
    
$
(12,073,164
)
Other comprehensive (loss) income: cash flow adjustment
                                        
Unrealized holding (loss) gain on interest rate swap designated as a cash flow hedge (a)
    
—
      
(216,200
)
    
4,255,906
      
—
      
—
  
Amortization of unrealized holding gain on interest rate swap (b)
    
250,311
      
—
      
—
      
—
      
—
  
Comprehensive (loss) income
    
(4,328,610
)
    
504,535
      
8,706,673
      
2,390,344
      
(12,073,164
)
Net (loss) income attributable to noncontrolling interest in Operating Partnership
    
(816,199
)
    
(42,508
)
    
528,540
      
219,214
      
(1,928,029
)
Other comprehensive (loss) income attributable to noncontrolling interest in Operating Partnership:
                                        
Unrealized holding (loss) gain on interest rate swap designated as a cash flow hedge (a)
    
—
      
(34,942
)
    
637,429
      
—
      
—
  
Amortization of unrealized holding gain on interest rate swap (b)
    
37,141
      
—
      
—
      
—
      
—
  
Comprehensive (loss) income attributable to noncontrolling interest in Operating Partnership
    
(779,058
)
    
(77,450
)
    
1,165,969
      
219,214
      
(1,928,029
)
Comprehensive (loss) income attributable to Modiv Inc.
  
$
(3,549,552
)
  
$
581,985
    
$
7,540,704
    
$
2,171,130
    
$
(10,145,135
)
 
(a)
Reflects the change in fair value of the hedged derivative instrument for the six months ended December 31, 2022 that was designated as a cash flow hedge for financial accounting purposes beginning July 1, 2022.
(b)
Due to the $150 million Term Loan swap's failure to qualify as a cash flow hedge for the quarterly period ended March 31, 2023, the unrealized gain on interest rate swap derivative on the consolidated balance sheet is being amortized on a straight-line basis, as a reduction to interest expense, through the maturity date of the Term Loan. The interest rate swap derivative instrument failed to qualify as a cash flow hedge during the quarter ended March 31, 2023 because the swap was deemed ineffective due to the potential for a reduced term of the swap that could result from the one-time cancellation option on December 31, 2024 as compared with the maturity of the Term Loan. If there is a significant drop in interest rates in the future, this interest rate swap derivative could potentially qualify again as a cash flow hedge.

7
Modiv Inc.
(Loss) Earnings Per Share - Last Five Quarters

(Unaudited)
 
   
Three Months Ended
  
   
March 31,
2023
    
December 31,
2022
    
September 30,
2022
    
June 30,
2022
    
March 31,
2022
  
Numerator - Basic:
                              
Net (loss) income
  
$
(4,578,921
)
  
$
720,735
    
$
4,450,767
    
$
2,390,344
    
$
(12,073,164
)
Net loss (income) attributable to noncontrolling interest in Operating Partnership
    
816,199
      
42,508
      
(528,540
)
    
(219,214
)
    
1,928,029
  
Preferred stock dividends
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
Net (loss) income attributable to common stockholders
  
$
(4,684,597
)
  
$
(158,632
)
  
$
3,000,352
    
$
1,249,255
    
$
(11,067,010
)
                                         
Numerator - Diluted:
                                        
Net (loss) income
  
$
(4,578,921
)
  
$
720,735
    
$
4,450,767
    
$
2,390,344
    
$
(12,073,164
)
Less: preferred stock dividends
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
Net (loss) income attributable to common stockholders
  
$
(5,500,796
)
  
$
(201,140
)
  
$
3,528,892
    
$
1,468,469
    
$
(12,995,039
)
                                         
Denominator:
                                        
Weighted average shares outstanding - basic
    
7,532,452
      
7,487,728
      
7,449,968
      
7,478,973
      
7,533,158
  
Operating Partnership Units - Class C (a)
    
—
      
—
      
1,312,382
      
1,312,382
      
—
  
Operating Partnership Units - other (b)
    
—
      
—
      
1,418,193
      
1,430,135
      
—
  
Weighted average shares outstanding - diluted
    
7,532,452
      
7,487,728
      
10,180,543
      
10,221,490
      
7,533,158
  
                                         
(Loss) income per share attributable to common stockholders:
                                        
Basic
  
$
(0.62
)
  
$
(0.02
)
  
$
0.40
    
$
0.17
    
$
(1.47
)
Diluted
  
$
(0.62
)
  
$
(0.02
)
  
$
0.35
    
$
0.14
    
$
(1.47
)
 
(a)
We issued 1,312,382 Class C OP Units at an agreed upon value of $25.00 per unit in connection with our January 18, 2022 acquisition of a KIA auto dealership property in an “UPREIT” transaction. These units were not included in the computation of Diluted EPS for the quarters ended March 31, 2023, December 31, 2023 and March 31, 2022 because their effect would be anti-dilutive.
 
(b)
During the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, the weighted average dilutive effect of 1,506,307, 1,395,759 and 1,347,958 shares, respectively, related to other Operating Partnership units were excluded from the computation of Diluted EPS because their effect would be anti-dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended.
 
8
Modiv Inc.
FFO and AFFO - Last Five Quarters

(Unaudited)
 
   
Three Months Ended
  
   
March 31,
2023
    
December 31,
2022
    
September 30,
2022
    
June 30,
2022
    
March 31,
2022
  
Net (loss) income (in accordance with GAAP)
  
$
(4,578,921
)
  
$
720,735
    
$
4,450,767
    
$
2,390,344
    
$
(12,073,164
)
Preferred stock dividends
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
    
(921,875
)
Net (loss) income attributable to common stockholders and Class C OP Units
    
(5,500,796
)
    
(201,140
)
    
3,528,892
      
1,468,469
      
(12,995,039
)
FFO adjustments:
                                        
Depreciation and amortization of real estate properties
    
3,272,061
      
4,347,809
      
3,598,592
      
3,682,681
      
3,300,492
  
Amortization of lease incentives
    
88,570
      
88,752
      
176,296
      
75,655
      
71,394
  
Depreciation and amortization for unconsolidated investment in a real estate property
    
194,173
      
203,554
      
192,551
      
190,468
      
190,468
  
Impairment of real estate investment property
    
3,499,438
      
2,080,727
      
—
      
—
      
—
  
Gain on sale of real estate investments, net
    
—
      
(669,185
)
    
(3,932,029
)
    
(720,071
)
    
(6,875,086
)
FFO attributable to common stockholders and Class C OP Units
    
1,553,446
      
5,850,517
      
3,564,302
      
4,697,202
      
(16,307,771
)
AFFO adjustments:
                                        
Impairment of goodwill
    
—
      
—
      
—
      
—
      
17,320,857
  
Non-recurring corporate relocation costs
    
—
      
500,000
      
—
      
—
      
—
  
Stock compensation (a)
    
660,169
      
660,170
      
549,240
      
679,747
      
511,865
  
Deferred financing costs (b)
    
195,212
      
179,641
      
101,783
      
101,781
      
1,266,725
  
Non-recurring loan prepayment penalties
    
—
      
—
      
—
      
—
      
615,336
  
Swap termination costs
    
—
      
—
      
—
      
—
      
733,000
  
Due diligence expenses, including abandoned pursuit costs (c)
    
342,542
      
25,051
      
44,863
      
4,639
      
586,669
  
Deferred rents
    
(1,175,359
)
    
(643,784
)
    
(976,419
)
    
(981,083
)
    
(636,196
)
Unrealized (loss) gain on interest rate swaps
    
1,722,184
      
505,263
      
59,000
      
(589,997
)
    
(788,016
)
Amortization of (below) above market lease intangibles
    
(196,283
)
    
(142,626
)
    
(214,889
)
    
(317,354
)
    
(330,618
)
Other adjustments for unconsolidated investment in a real estate property
    
11,819
      
5,815
      
(188
)
    
(188
)
    
(188
)
AFFO attributable to common stockholders and Class C OP Units (d)
  
$
3,113,730
    
$
6,940,047
    
$
3,127,692
    
$
3,594,747
    
$
2,971,663
  
                                         
Weighted average shares outstanding:
                                        
Basic
    
7,532,452
      
7,487,728
      
7,449,968
      
7,478,973
      
7,533,158
  
Fully diluted (e)
    
10,351,141
      
10,195,869
      
10,180,543
      
10,221,490
      
10,193,498
  
FFO per share:
                                        
Basic
  
$
0.21
    
$
0.78
    
$
0.48
    
$
0.63
    
$
(2.16
)
Fully diluted
  
$
0.15
    
$
0.57
    
$
0.35
    
$
0.46
    
$
(2.16
)
AFFO per share:
                                        
Basic
  
$
0.41
    
$
0.93
    
$
0.42
    
$
0.48
    
$
0.39
  
Fully diluted (d)
  
$
0.30
    
$
0.68
    
$
0.31
    
$
0.35
    
$
0.29
  
 
(a)
Stock compensation expense includes (i) amortization of the value of Class P OP Units granted to our Chief Executive Officer and Chief Financial Officer on December 31, 2019; (ii) amortization of the value of Class R OP Units granted to all of our employees, including the Chief Executive Officer and Chief Financial Officer, on January 25, 2021; and (iii) stock granted to our independent directors each quarter as partial consideration for their service as directors.
 
(b)
Deferred financing costs for the first quarter of 2022 primarily reflect non-cash write-offs of such costs upon refinancing 20 mortgages with the KeyBank credit facility and mortgage repayments related to four asset sales.
 
(c)
Abandoned pursuit costs for the first quarter of 2023 primarily reflect the write-off of due diligence costs incurred during 2022 and 2023 for a potential acquisition of a portfolio of industrial manufacturing properties that we abandoned due to changes in market conditions. Abandoned pursuit costs for the first quarter of 2022 primarily reflect the write-off of due diligence costs incurred for a portfolio of 10 properties leased to Walgreens, which we abandoned due to inability to obtain the mortgage servicer's approval prior to the contract termination date and changes in market conditions.
 
(d)
AFFO for the fourth quarter of 2022 includes an early termination fee of $3,751,984 received from Sutter Health.
 
(e)
Includes the Class C, Class M, Class P and Class R OP Units to compute the weighted average number of shares for each of the five quarters ended March 31, 2023 presented above.
 
9
Modiv Inc.
Property Portfolio - FFO and AFFO - First Quarter of 2023

(Unaudited)
   
Three Months Ended March 31,
  
   
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
    
—
      
—
      
—
      
—
      
—
  
Deferred rents
    
13,673
      
83
      
328,786
      
—
      
342,542
  
Unrealized loss (gain) on interest rate swap valuation
    
(579,161
)
    
(604,781
)
    
8,583
      
—
      
(1,175,359
)
Amortization of (below) above market lease intangibles, net
    
—
      
—
      
—
      
1,722,184
      
1,722,184
  
Other adjustments for unconsolidated investment in a real estate property
    
(207,712
)
    
—
      
11,429
      
—
      
(196,283
)
AFFO attributable to common stockholders and Class C OP Unit holders
    
11,819
      
—
      
—
      
—
      
11,819
  
   
$
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
  
 
10
(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 located in Costco 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.
 

 (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.
 
(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.
 
11
Modiv Inc.
Adjusted EBITDA - Last Five Quarters

(Unaudited)
 
   
Three Months Ended
  
   
March 31,
2023
    
December 31,
2022
    
September 30,
2022
    
June 30,
2022
    
March 31,
2022
  
Net (loss) income (in accordance with GAAP)
  
$
(4,578,921
)
  
$
720,735
    
$
4,450,767
    
$
2,390,344
    
$
(12,073,164
)
Depreciation and amortization of real estate properties
    
3,272,061
      
4,347,809
      
3,598,592
      
3,682,681
      
3,300,492
  
Depreciation and amortization for unconsolidated investment in a real estate property
    
194,173
      
203,554
      
192,551
      
190,468
      
190,468
  
Interest expense (a)
    
4,018,792
      
2,826,490
      
2,514,838
      
1,197,155
      
1,568,175
  
Loss on early extinguishment of debt (b)
    
—
      
—
      
—
      
—
      
1,725,318
  
Interest expense on unconsolidated investment in real estate property
    
95,486
      
98,073
      
98,624
      
98,135
      
97,645
  
Impairment of real estate investment property (c)
    
3,499,438
      
2,080,727
      
—
      
—
      
—
  
Impairment of goodwill
    
—
      
—
      
—
      
—
      
17,320,857
  
Stock compensation
    
660,169
      
660,171
      
549,240
      
679,747
      
511,865
  
Due diligence expenses, including abandoned pursuit costs
    
342,542
      
25,051
      
44,863
      
4,639
      
586,669
  
Gain on sale of real estate investments
    
—
      
(669,185
)
    
(3,932,029
)
    
(720,071
)
    
(6,875,086
)
Adjusted EBITDA (d)
  
$
7,503,740
    
$
10,293,425
    
$
7,517,446
    
$
7,523,098
    
$
6,353,239
  
                                         
Annualized adjusted EBITDA
    
30,014,960
    
$
41,173,700
    
$
30,069,784
    
$
30,092,392
    
$
25,412,956
  
                                         
Net debt:
                                        
Debt
  
$
214,436,983
    
$
197,515,009
    
$
201,365,536
    
$
201,425,173
    
$
165,509,220
  
Debt of unconsolidated investment in real estate property (e)
    
9,429,343
      
9,487,515
      
9,544,131
      
9,599,182
      
9,653,689
  
Cash and restricted cash
    
(13,280,104
)
    
(8,608,649
)
    
(5,726,888
)
    
(11,705,449
)
    
(25,344,063
)
Cash of unconsolidated investment in real estate property (e)
    
(420,947
)
    
(218,424
)
    
(341,007
)
    
(585,357
)
    
(458,948
)
   
$
210,165,275
    
$
198,175,450
    
$
204,841,772
    
$
198,733,549
    
$
149,359,898
  
                                         
Net debt / Adjusted EBITDA
    
7.0
x
    
4.8
x
    
6.8
x
    
6.6
x
    
5.9
x
 
(a)
Interest expense in the first quarter of 2023 includes a $1,722,184 unrealized loss on swap valuations and a $746,853 increase over the first quarter of 2022 in interest expense incurred in excess of derivative cash settlements.
 
(b)
Loss on early extinguishment of debt includes non-recurring charges for (i) $1,164,998 in non-cash write-offs of deferred financing costs upon refinancing 20 mortgages and the prior credit facility with the KeyBank credit facility and mortgage repayments related to four asset sales; (ii) $615,336 of mortgage prepayment fees; and (iii) $733,000 of swap termination fees related to refinancing four mortgages with the KeyBank credit facility and the related write-off of unrealized valuation losses of $788,016.
 
(c)
The impairment charge for the first quarter of 2023 relates to an office property located in Nashville, Tennessee leased to Cummins, Inc through February 29, 2024. We determined that an impairment charge was triggered by expectations of a shortened holding period and estimated the property's fair value based upon current market comparables. The impairment charge for the fourth quarter of 2022 relates to an office property located in Rocklin, California to reflect net realizable value as a result of its reclassification to asset held for sale. The sale of this property is scheduled to close by May 31, 2023.
 
(d)
Adjusted EBITDA for the fourth quarter of 2022 includes an early termination fee of $3,781,929 received from Sutter Health.
 
(e)
Includes our approximate 72.71% pro rata share of the tenant-in-common's mortgage note payable and cash of our unconsolidated investment in real estate property.
 
12
Modiv Inc.
Leverage Ratio

(Unaudited)
 
We calculate our leverage ratio in conformance with the definition used in our KeyBank credit facility as set forth below.
 
   
March 31,
2023
    
December 31,
2022 (d)
  
Total Asset Value
            
Cash and cash equivalents
  
$
13,280,104
    
$
8,608,649
  
Borrowing base value
    
403,178,973
      
408,598,973
  
Other real estate value (a)
    
114,673,362
      
97,340,000
  
Pro-rata share of unconsolidated investment in a real estate property
    
28,785,118
      
28,582,595
  
Total asset value
  
$
559,917,557
    
$
543,130,217
  
                 
Indebtedness
                
Credit facility revolver
  
$
—
    
$
3,000,000
  
Credit facility term loan
    
170,000,000
      
150,000,000
  
Mortgage debt
    
44,436,983
      
44,515,009
  
Pro-rata share of unconsolidated investment in a real estate property
    
9,429,343
      
9,487,515
  
Total indebtedness
  
$
223,866,326
    
$
207,002,524
  
 
                
Leverage Ratio
    
40
%
    
38
%
 
(a)
The increase in other real estate value primarily reflects first quarter acquisitions which had not been added to the Borrowing Base as of March 31, 2023.
 
13
Modiv Inc.
Capitalization as of March 31, 2023

(Unaudited)


PREFERRED EQUITY
      
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock
  
$
50,000,000
  
% of Total Capitalization
    
13
%
         
COMMON EQUITY
        
Shares of Class C Common Stock
    
7,568,322
  
OP Units (Class M, Class P, Class R and Class C)
    
2,818,689
  
Total Class C Common Stock and OP Units
    
10,387,011
  
Price Per Share / Unit at March 31, 2023
  
$
10.63
  
IMPLIED EQUITY MARKET CAPITALIZATION
  
$
110,413,927
  
% of Total Capitalization
    
30
%
         
DEBT
        
Mortgage Debt
        
Costco Property
  
$
18,850,000
  
Taylor Fresh Foods Property
    
12,350,000
  
OES Property
    
13,236,983
  
Total Mortgage Debt
  
$
44,436,983
  
KeyBank Credit Facility
        
Revolver
  
$
—
  
Term Loan (a) & (b)
    
170,000,000
  
Total Credit Facility
  
$
170,000,000
  
TOTAL DEBT
  
$
214,436,983
  
% of Total Capitalization
    
57
%
% of Total Debt - Floating Rate Debt
    
—
%
% of Total Debt - Fixed Rate Debt (a) & (b)
    
100
%
% of Total Debt
    
100
%
ENTERPRISE VALUE
        
Total Capitalization
  
$
374,850,910
  
Less: Cash and Cash Equivalents
    
(13,280,104
)
Enterprise Value
  
$
361,570,806
  
 
(a)
On May 10, 2022, we purchased a five-year swap at 2.258% on our $150,000,000 term loan that results in a fixed interest rate of 3.858% when our leverage ratio is less than or equal to 40%. As part of this transaction, we sold a one-time option to terminate the swap on December 31, 2024, which reduced the swap rate. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio.
 
(b)
On October 26, 2022, we purchased another five-year swap at 3.440% on our $100,000,000 term loan commitment that will result in a fixed interest rate of 5.04% when our leverage ratio is less than or equal to 40%. As part of this transaction, we sold a one-time option to terminate the swap on December 31, 2024, which reduced the swap rate. Under our Credit Agreement, the interest rate will continue to vary based on our leverage ratio.

14
Modiv Inc.
Consolidated Balance Sheets

(Unaudited)
 
   
March 31,
2023
    
December 31, 2022
  
Assets
            
Real estate investments:
            
Land
  
$
103,919,101
    
$
103,657,237
  
Buildings 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