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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________to____________
Commission file number: 001-40814
MODIV INC.
(Exact name of registrant as specified in its charter)
Maryland
47-4156046
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
120 Newport Center Drive, Newport Beach, CA
92660
(Address of principal executive offices)(Zip Code)
(888) 686-6348
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class C Common Stock, $0.001 par value per share
MDV
New York Stock Exchange
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share
MDV.PA
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 


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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
As of October 31, 2022, there were 7,485,866 shares of Class C common stock outstanding.


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Modiv Inc.
FORM 10-Q
INDEX
2

Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbor provisions created thereby. For this purpose, any statements made in this Quarterly Report on Form 10-Q that are not historical or current facts may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “anticipates,” “believes,” “seeks,” “estimates,” “expects,” “intends,” “continue,” “can,” “may,” “plans,” “potential,” “projects,” “should,” “could,” “will,” “would” or similar expressions and the negatives of those expressions are intended to identify forward-looking statements. Such statements include, but are not limited to, any statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods.
The forward-looking statements included herein represent our management’s current expectations and assumptions based on information available as of the date of this report. These statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time-to-time with the Securities and Exchange Commission (the “SEC”). In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date of this report.
Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time-to-time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements. The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from our forward-looking statements:
We are focused on future acquisitions of industrial manufacturing properties while reducing the number of office properties in our portfolio, and therefore the prior performance of our real estate investments may not be indicative of our future results.
We are subject to disruptions in the financial markets and uncertain economic conditions that could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders.
We have substantial indebtedness, and may incur additional secured or unsecured debt, which may affect our ability to pay distributions, expose us to interest rate fluctuation risk, impose limitations on how we operate and expose us to the risk of default under our debt obligations.
The COVID-19 pandemic has caused significant disruption to our tenants' business operations which may impact our results of operations and cash flows in ways that remain unpredictable, and any future outbreak of other highly infectious or contagious diseases (e.g., monkeypox) could materially and adversely impact or disrupt our business operations, financial condition, results of operations, cash flows and performance.
The markets in which we operate continue to experience significant inflation, supply chain disruptions and increases in interest rates due to a number of factors including the continuing developments in the Russian war against Ukraine and sanctions which have been implemented by the United States and other countries against Russia have caused and may continue to cause significant uncertainty in the markets in which we operate.
Volatility in stock and bond markets, particularly the rapid rise in yields on U.S. Treasury securities, may negatively impact our operating results.
Listing on the New York Stock Exchange (the “NYSE”) does not guarantee an active and liquid market for our Class C common stock, and the market price and trading volume of our Class C common stock may fluctuate significantly.
Our 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share (“Series A Preferred Stock”), is senior to our Class C common stock, and the interests of our common stockholders could be diluted by the issuance of additional preferred stock and by other transactions in the future.
We may fail to continue to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, which could adversely affect our operations and our ability to make distributions.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
Downturns relating to certain geographic regions, industries or business sectors may have a significant adverse impact on our assets and our ability to pay distributions than if we had a diversified investment portfolio.
We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us.
Our properties may be subject to further impairment charges.
We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties, and we may be unable to acquire or dispose of, or lease, our properties on advantageous terms.
We could be subject to risks associated with bankruptcies or insolvencies of tenants, or from tenant defaults generally.
We may not be able to extend or refinance existing indebtedness before it becomes due.
Cost inflation may adversely affect our financial condition and results of operations.
Restrictions on share ownership contained in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
We may not be able to attain or maintain profitability and we may not generate cash flows sufficient to pay distributions to stockholders or meet our debt service obligations.
We may be affected by risks resulting from losses in excess of insured limits.
Risks of security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems, could adversely affect our business and results of operations.
Our forward-looking statements contained in this Quarterly Report on Form 10-Q should be read in light of the risk factors identified above and the additional risks and uncertainties described in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2021.
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.
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Table of Contents
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
Modiv Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,
2022
December 31, 2021
Assets
Real estate investments:
Land$107,564,295 $61,005,402 
Buildings and improvements337,335,727 251,246,290 
Equipment4,429,000  
Tenant origination and absorption costs20,074,123 21,504,210 
Total investments in real estate property469,403,145 333,755,902 
Accumulated depreciation and amortization(44,025,915)(37,611,133)
Total investments in real estate property, net425,377,230 296,144,769 
Unconsolidated investment in a real estate property9,988,498 9,941,338 
Total real estate investments, net435,365,728 306,086,107 
Real estate investments held for sale, net 31,510,762 
Total real estate investments, net435,365,728 337,596,869 
Cash and cash equivalents5,726,888 55,965,550 
Restricted cash 2,441,970 
Receivable from early termination of lease 1,836,767 
Tenant receivables8,433,895 5,996,919 
Above-market lease intangibles, net1,939,305 691,019 
Prepaid expenses and other assets6,387,245 5,856,255 
Interest rate swap derivative4,786,903  
Assets related to real estate investments held for sale 788,296 
Goodwill, net 17,320,857 
Total assets$462,639,964 $428,494,502 
Liabilities and Equity
Mortgage notes payable, net$44,530,130 $152,223,579 
Mortgage notes payable related to real estate investments held for sale, net 21,699,912 
Total mortgage notes payable, net44,530,130 173,923,491 
Credit facility revolver6,775,000 8,022,000 
Credit facility term loan, net148,913,350  
Accounts payable, accrued and other liabilities9,658,378 11,844,881 
Below-market lease intangibles, net9,910,280 11,102,940 
Interest rate swap derivatives 788,016 
Liabilities related to real estate investments held for sale 383,282 
Total liabilities219,787,138 206,064,610 
Commitments and contingencies (Note 11)
7.375% Series A cumulative redeemable perpetual preferred stock, $0.001 par value, 2,000,000 shares authorized, issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
2,000 2,000 
Class C common stock, $0.001 par value, 300,000,000 shares authorized; 7,697,926 shares issued and 7,464,781 shares outstanding as of September 30, 2022 and 7,426,636 shares issued and outstanding as of December 31, 2021
7,698 7,427 
Class S common stock, $0.001 par value, 100,000,000 shares authorized; no shares and 63,768 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
 64 
Additional paid-in-capital277,079,074 273,441,831 
Treasury stock, at cost, 233,145 shares and no shares held as of September 30, 2022 and December 31, 2021, respectively
(3,957,752) 
Cumulative distributions and net losses(115,634,474)(101,624,430)
Accumulated other comprehensive income 3,618,477  
Total Modiv Inc. equity161,115,023 171,826,892 
Noncontrolling interests in the Operating Partnership81,737,803 50,603,000 
Total equity242,852,826 222,429,892 
Total liabilities and equity$462,639,964 $428,494,502 
See accompanying notes to condensed consolidated financial statements.
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Table of Contents
Modiv Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Rental income$10,212,418 $10,241,690 $30,255,185 $28,323,568 
Expenses:
General and administrative1,838,388 2,907,956 5,559,753 7,526,577 
Stock compensation expense549,240 743,609 1,740,852 2,115,341 
Depreciation and amortization3,598,592 3,814,503 10,581,765 11,817,529 
Interest expense2,514,838 1,831,545 5,280,167 5,711,330 
Property expenses2,063,892 1,681,059 6,794,369 5,302,292 
Reversal of impairment of real estate investment property   (400,999)
Impairment of goodwill  17,320,857  
Total expenses10,564,950 10,978,672 47,277,763 32,072,070 
Operating income (loss):
Gain on sale of real estate investments4,671,284 4,242,771 13,074,162 4,532,413 
Operating income (loss)4,318,752 3,505,789 (3,948,416)783,911 
Other income (expense):
Interest income1,665 1,270 16,863 1,370 
Income from unconsolidated investment in a real estate property64,358 75,403 226,690 222,705 
Gain on forgiveness of economic relief note payable   517,000 
Loss on early extinguishment of debt  (1,725,318) 
Other65,992 65,993 198,128 217,978 
Other income (expense), net132,015 142,666 (1,283,637)959,053 
Net income (loss)4,450,767 3,648,455 (5,232,053)1,742,964 
Less: net income (loss) attributable to noncontrolling interest in Operating Partnership528,540  (1,180,275) 
Net income (loss) attributable to Modiv Inc.3,922,227 3,648,455 (4,051,778)1,742,964 
Preferred stock dividends(921,875)(143,403)(2,765,625)(143,403)
Net income (loss) attributable to common stockholders$3,000,352 $3,505,052 $(6,817,403)$1,599,561 
Net income (loss) per share attributable to common stockholders:
Basic$0.40 $0.47 $(0.91)$0.21 
Diluted$0.35 $0.40 $(0.91)$0.18 
Weighted-average number of common shares outstanding:
Basic7,449,968 7,531,559 7,486,945 7,575,013 
Diluted10,180,543 8,750,875 7,486,945 8,763,112 
Distributions declared per common share$0.2875 $0.2625 $0.9625 $0.7875 
See accompanying notes to condensed consolidated financial statements.
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Table of Contents
Modiv Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Net income (loss)$4,450,767 $3,648,455 $(5,232,053)$1,742,964 
Other comprehensive income:
Unrealized holding gain on interest rate swap designated as a cash flow hedge4,255,906  4,255,906  
Comprehensive income (loss)8,706,673 3,648,455 (976,147)1,742,964 
Net income (loss) attributable to noncontrolling interest in Operating Partnership528,540  (1,180,275) 
Other comprehensive income attributable to noncontrolling interest in Operating Partnership:
Unrealized holding gain on interest rate swap designated as a cash flow hedge637,429  637,429  
Comprehensive income (loss) attributable to noncontrolling interest in Operating Partnership1,165,969  (542,846) 
Comprehensive income (loss) attributable to Modiv Inc.$7,540,704 $3,648,455 $(433,301)$1,742,964 
See accompanying notes to condensed consolidated financial statements.
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Table of Contents
Modiv Inc.
Condensed Consolidated Statements of Equity
Three Months Ended September 30, 2022 and 2021
(Unaudited)
Preferred StockClass CAdditional
Paid-in
Capital
Cumulative
Distributions
and Net
(Losses) Income
Accumulated Other Comprehensive IncomeTotal
Modiv Inc.
Equity
Noncontrolling Interests in the Operating PartnershipTotal
Equity
Common StockTreasury Stock
SharesAmountsSharesAmountsSharesAmounts
Balance, June 30, 20222,000,000 $2,000 7,643,992 $7,644 $275,922,227 (187,430)$(3,253,902)$(116,491,382)$ $156,186,587 $80,949,131 $237,135,718 
Issuance of common stock - distribution reinvestments— — 43,617 44 663,175 — — — — 663,219 — 663,219 
Stock compensation expense— — 10,317 10 164,990 — — — — 165,000 — 165,000 
OP Units compensation expense— — — — 466,740 — — — — 466,740 — 466,740 
Offering costs— — — — (138,058)— — — — (138,058)— (138,058)
Repurchase of common stock— — — — — (45,715)(703,850)— — (703,850)— (703,850)
Dividends declared, preferred stock— — — — — — — (921,875)— (921,875)— (921,875)
Distributions declared, common stock— — — — — — — (2,143,444)— (2,143,444)— (2,143,444)
Distributions declared, Class C OP Units— — — — — — — — — — (377,297)(377,297)
Net income — — — — — — — 3,922,227 — 3,922,227 528,540 4,450,767 
Other comprehensive income— — — — — — — — 3,618,477 3,618,477 637,429 4,255,906 
Balance, September 30, 20222,000,000 $2,000 7,697,926 $7,698 $277,079,074 (233,145)$(3,957,752)$(115,634,474)$3,618,477 $161,115,023 $81,737,803 $242,852,826 

Preferred StockCommon StockAdditional
Paid-in
Capital
Cumulative
Distributions
and Net
(Losses) Income
Total
Modiv Inc.
Equity
Noncontrolling Interests in the Operating PartnershipTotal
Equity
Class CClass S
SharesAmountsSharesAmountsSharesAmounts
Balance, June 30, 2021 $ 7,490,414 $7,490 63,331 $63 $215,317,098 $(97,886,364)$117,438,287 $50,603,000 $168,041,287 
Issuance of common stock— — 67,904 68 217 1 1,749,795 — 1,749,864 — 1,749,864 
Issuance of preferred stock, net2,000,000 2,000 — — — — 47,568,374 — 47,570,374 — 47,570,374 
Stock compensation expense— — 3,647 4 — — 94,996 — 95,000 — 95,000 
OP Units compensation expense— — — — — — 648,609 — 648,609 — 648,609 
Offering costs— — — — — — (136,282)— (136,282)— (136,282)
Reclassification of common stock— — — — — — 9,316,023 — 9,316,023 — 9,316,023 
Repurchase of common stock— — (152,036)(152)— — (3,834,457)— (3,834,609)— (3,834,609)
Distributions declared, common stock— — — — — — — (1,981,725)(1,981,725)— (1,981,725)
Net income— — — — — — — 3,505,052 3,505,052 — 3,505,052 
Balance, September 30, 20212,000,000 $2,000 7,409,929 $7,410 63,548 $64 $270,724,156 $(96,363,037)$174,370,593 $50,603,000 $224,973,593 
See accompanying notes to condensed consolidated financial statements.
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Table of Contents
Modiv Inc.
Condensed Consolidated Statements of Equity
Nine Months Ended September 30, 2022 and 2021
(Unaudited)
Preferred StockCommon StockAdditional
Paid-in
Capital
Cumulative
Distributions
and Net
Losses
Accumulated Other Comprehensive IncomeTotal
Modiv Inc.
Equity
Noncontrolling Interests in the Operating PartnershipTotal
Equity
Class C and Class STreasury Stock
SharesAmountsSharesAmountsSharesAmounts
Balance, December 31, 20212,000,000 $2,000 7,490,404 $7,491 $273,441,831  $ $(101,624,430)$ $171,826,892 $50,603,000 $222,429,892 
Issuance of common stock -distribution reinvestments— — 152,606 153 2,866,693 — — — — 2,866,846 — 2,866,846 
Listed offering of common stock, net— — 40,000 40 114,460 — — — — 114,500 — 114,500 
Issuance of Class C OP Units for property acquisition— — — — — — — — — — 32,809,551 32,809,551 
Stock compensation expense— — 14,916 14 247,486 — — — — 247,500 — 247,500 
OP Units compensation expense— — — — 1,493,352 — — — — 1,493,352 — 1,493,352 
Offering costs— — — — (1,084,748)— — — — (1,084,748)— (1,084,748)
Repurchase of common stock— — — — — (233,145)(3,957,752)— — (3,957,752)— (3,957,752)
Dividends declared, preferred stock— — — — — — — (2,765,625)— (2,765,625)— (2,765,625)
Distributions declared, common stock— — — — — — — (7,192,641)— (7,192,641)— (7,192,641)
Distributions declared, Class C OP Units— — — — — — — — — — (1,131,902)(1,131,902)
Net loss— — — — — — — (4,051,778)— (4,051,778)(1,180,275)(5,232,053)
Other comprehensive income— — — — — — — — 3,618,477 3,618,477 637,429 4,255,906 
Balance, September 30, 20222,000,000 $2,000 7,697,926 $7,698 $277,079,074 (233,145)$(3,957,752)$(115,634,474)$3,618,477 $161,115,023 $81,737,803 $242,852,826 


Preferred StockCommon StockAdditional
Paid-in
Capital
Cumulative
Distributions
and Net
(Losses) Income
Total
Modiv Inc.
Equity
Noncontrolling Interests in the Operating PartnershipTotal
Equity
Class CClass S
SharesAmountsSharesAmountsSharesAmounts
Balance, December 31, 2020 $ 7,874,541 $7,874 62,860 $63 $224,288,417 $(92,012,686)$132,283,668 $50,603,000 $182,886,668 
Issuance of common stock— — 271,061 271 688 1 6,311,203 — 6,311,475 — 6,311,475 
Issuance of preferred stock, net2,000,000 2,000 — — — — 47,568,374 — 47,570,374 — 47,570,374 
Stock compensation expense— — 12,168 13 — — 296,237 — 296,250 — 296,250 
OP Units compensation expense— — — — — — 1,840,341 — 1,840,341 — 1,840,341 
Offering costs— — — — — — (946,914)— (946,914)— (946,914)
Reclassification of common stock— — — —