MODIV INDUSTRIAL, INC. Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Modiv Industrial performed this year. My goal is to cut through the corporate jargon and break down the business so you can decide if it belongs in your portfolio.

1. What does this company do?

Modiv Industrial is a Real Estate Investment Trust (REIT). Think of them as a landlord for the economy. They own industrial manufacturing plants and warehouses, leasing them to businesses. Their goal is to collect steady rent and pay that income to you as monthly dividends. By the end of 2025, they generated about $52.4 million in annual rent from 42 properties across 15 states, totaling 4.1 million square feet.

2. Financial performance & Major Wins

Modiv is currently transforming its business. They are selling older office and retail buildings to focus entirely on industrial properties.

• The Portfolio: By the end of 2025, 82% of their rental income came from industrial sites. The remaining 18% consists of older assets they plan to sell.
• Stability: Their properties are 98% occupied, meaning almost all their space is rented.
• Long-Term Leases: Tenants are locked into leases with an average of 14 years remaining. This provides predictable income. Furthermore, 96% of these are "triple-net" leases. This means tenants pay for property taxes, insurance, and maintenance, which protects Modiv from rising costs.

3. Financial Health & Risks

Modiv uses a mix of cash and debt to grow, which creates specific trade-offs:

• The "Junior" Status: As a common shareholder, you are last in line. The company has $57.5 million in preferred stock and $260 million in debt that must be paid before common shareholders receive distributions.
• Dilution Risk: The company sometimes issues more shares to buy new properties. This reduces your ownership percentage. Additionally, former property sellers hold units that can be converted into common stock, which could increase the total share count and potentially lower the stock price.
• Interest Rate Sensitivity: Because they borrow money, higher interest rates are a risk. About 75% of their debt has a fixed rate, which helps. However, refinancing debt at today’s higher rates could increase costs and lower the cash available for dividends.
• Concentration Risk: Two major tenants provide about 25% of their total rent. If one of these tenants struggles, it would significantly hurt Modiv’s profit.
• Cybersecurity: The company relies on digital systems. A major hack could disrupt rent collection or property management, leading to lost income.

4. Future Outlook

Modiv is playing the long game. They plan to sell 12 to 15 non-core properties over the next two years to fund modern industrial sites. They want to be a reliable source of monthly income. They are also focusing on leases with built-in rent increases of 2% to 3% annually.

Investor’s Takeaway: When deciding if Modiv fits your goals, weigh their high occupancy and long-term, low-maintenance leases against the risks of debt and tenant concentration. Remember that dividends are never guaranteed; they depend on the company’s available cash and its ability to maintain a sustainable payout. Always check the current dividend yield and payout ratio before making your final move.