Modiv Industrial (NYSE:MDV) discussed fourth-quarter and full-year 2025 results and provided an update on its portfolio repositioning and capital recycling plans during its earnings call. Management also addressed recent inbound interest in the company and outlined how it is thinking about dispositions and acquisitions amid a volatile interest rate and macro backdrop.
Fourth-quarter results and key drivers
Chief Financial Officer Ray Pacini said fourth-quarter rental income was $11.0 million, down from $11.7 million in the prior-year period. He attributed the decline primarily to two lease expirations: Costco at the company’s office property in Issaquah, Washington—sold to KB Home on December 15, 2025—and Solar Turbines on an office property in San Diego, California, which the company plans to market for sale after receiving city approval for a lot split.
AFFO per share declined to $0.32 from $0.37 in the prior-year quarter. Pacini said the per-share decline was primarily due to a 1.7 million increase in diluted shares outstanding, reflecting previously disclosed issuance of operating partnership units in the first quarter of 2025 and issuance of common shares through the ATM program and the distribution reinvestment plan.
Pacini added that interest expense for the quarter was $1.1 million higher than the comparable period of 2024, primarily due to amortization of off-market interest rate swaps.
Liquidity, debt, and interest rate positioning
As of December 31, 2025, Modiv reported $14.4 million in cash and cash equivalents and $30 million available under its revolver. Consolidated debt outstanding totaled $262.1 million, consisting of a $12.1 million mortgage on one property and $250 million drawn on its $280 million credit facility. Pacini noted an additional $12.1 million mortgage on the Santa Clara property was not consolidated at year-end because it was owned by tenants in common.
Following a January 2026 extension of the credit facility, Pacini said Modiv has no outstanding debt maturities until July 2028. Based on interest rate swap agreements entered into in January 2026, management said 100% of indebtedness as of December 31, 2025 was fixed-rate, with a weighted average interest rate of 4.15% based on a quarter-end leverage ratio of 45.1% and the January amendment to the credit facility.
Inbound interest and why one path was not pursued
During the Q&A, CEO Aaron Halfacre was asked about commentary in the press release regarding multiple offers and the decision not to pursue one of them. Halfacre said he could not provide extensive detail, but explained that the company “didn’t see a secure path forward” at that moment and stepped back from discussions. He described the exchange as generally positive, but emphasized the company’s responsibility to protect investors and ensure any path forward meets its requirements.
Halfacre also discussed why the company believes it has appeared on more acquirers’ radars. He pointed to the persistent disconnect between public REIT valuations and private real estate values, recent REIT M&A activity, and the view that Modiv’s portfolio represents a “good value” when compared with its trading price. Halfacre said parties looking at Modiv were primarily interested in the assets and noted that overhead could be stripped out to create an accretive outcome for an acquirer. He added the company is not opposed to selling, but is focused on achieving the “right value” for investors and said the company is “not desperate” to transact.
Asset recycling plans and timeline to a manufacturing-focused portfolio
Halfacre said management expects portfolio recycling activity to “start to pick up in earnest,” while acknowledging that recent interest rate volatility has complicated both acquisition and disposition pipelines by reducing confidence among buyers and sellers. He described the overall effort in phases and reiterated the company’s intention to move away from non-core assets—particularly office—while also addressing portfolio lease duration (WALT) through extensions or sales and redeployment into longer-duration assets.
On specific assets, Halfacre discussed:
- San Diego former Solar Turbines property: The company expects to sell the property once it receives a long-awaited parcel split approval (the building sits on the same technical parcel as another property). Halfacre said the company has seen interest “above the appraised value,” and estimated the asset could be roughly $7 million to $8 million, while noting it is not a large number relative to the broader portfolio.
- OES office property: Halfacre called the tenant investment-grade and “super sticky,” but said it is not a net lease manufacturing asset. He said the company intends to “clean that one up” and move it forward, ideally by year-end, while being thoughtful about timing.
- Kia dealership: Halfacre said it is a non-core asset and could be recycled, but described it as tax-sensitive due to a low basis. He said a sale would require identifying replacement properties in advance, because a fast-closing buyer could leave a short window to execute a 1031 exchange.
Halfacre also said the company is beginning conversations with short-WALT tenants about potential extensions and will evaluate sales where extensions are not attractive. He referenced Northrop as an example of a short-WALT property that received an unsolicited offer the company found compelling, while noting the importance of having a path to redeploy proceeds.
Asked whether Modiv remains on track to become a “pure play” manufacturing industrial REIT within 24 months, Halfacre said yes, and suggested that if market conditions improve and acquisition pipelines become clearer, the timeline could compress—potentially even allowing larger portfolio changes to happen more quickly if the right set of acquisitions could be lined up.
Strategic alternatives and near-term dispositions
Another analyst asked whether inbound interest could prompt Modiv to run a strategic alternatives process earlier than previously contemplated. Halfacre argued that launching such a process prematurely, particularly in a volatile rate environment, could shortchange investors. He said management believes it can “polish” the portfolio—removing non-core assets and improving its profile—potentially resulting in higher value, while investors continue to receive monthly dividends.
Halfacre also addressed a pending sale of an office property in Melbourne, Florida. He said terms were known but would not be disclosed until closing, adding that the buyer had posted slightly over $400,000 of hard earnest money. He said the transaction is scheduled to close in the second quarter. Halfacre added that Modiv does not yet have a replacement property identified for that sale, but said the company is not concerned about immediate tax sensitivity because a loss on the Calera property can help shelter gains. In response to a question about carrying costs for Calera in the fourth quarter, management said it ran roughly $20,000 to $30,000 per month.
Modiv’s management concluded the call by noting it reported results later than usual due to the recent offer-related activity, and said it would provide further updates next quarter.
About Modiv Industrial (NYSE:MDV)
Modiv Industrial, Inc (NYSE: MDV) is a publicly traded real estate investment trust that specializes in the acquisition, ownership and management of single-tenant industrial properties. The company’s portfolio is anchored by net-lease agreements with corporate and public sector tenants, providing stable, long-term cash flows. Modiv Industrial focuses on light manufacturing facilities, warehouse and distribution centers, and similar industrial real estate assets that serve as critical links in supply chains.
Modiv Industrial pursues a geographically diversified strategy, targeting properties in key U.S.
