Modiv Stock Earnings Reports

Key points for investors:

- Management did not deliver prepared remarks and focused on Q&A. CEO Aaron Halfacre expressed cautious optimism about the macro and capital markets while emphasizing a selective, grindy business approach.

- Market / capital markets: Management sees early signs of capital-market activity (including some private equity interest) but noted volatility and periodic pullbacks; they believe a change toward easing by the Fed would materially improve conditions.

- M&A pipeline: Activity picked up recently after a quiet late-summer/early-fall period; management is more selective than in prior years and is targeting assets with mid-to-high single-digit cap rates (roughly low- to mid-7% first-year cap rates seen in targets).

- Asset recycling / liquidity: Clara has been engaged with a broker and is held for sale (management expects sale by end of year or early January). The former Costco HQ sale is still under a purchase process with KB Home (extension currently through December 15, with one further extension possible). Management will continue deliberate, systematic asset recycling to fund opportunities but will be cautious about aggressive capital raises.

- One-time items: Other property income included a one-time $300k easement termination fee recognized in Q3.

- Operating expense / AFFO: The former Costco property is costing approximately $40k/month in incremental negative cash flow (extension/holding costs). Management expects modest reductions in property operating expense over time as non-core/leaky assets are recycled (roughly a $100k reduction cited as possible over time).

- Tenant fundamentals: Management reports tenants are generally stable; no material tenant-credit deterioration tied to tariff noise has been observed. Many tenants run on multi-year planning cycles and have de-risked supply chains since COVID.

- Capital strategy: Management is deliberately cautious about issuing external growth capital (equity, preferred) while valuations are depressed — they prefer to recycle assets and wait for clearer, more accommodative market conditions rather than opportunistically issue expensive perpetual preferred or dilute at weak prices.

- Timing / outlook: Management believes the company is durable and in a stronger place operationally than a year ago; however, share price timing is uncertain and tied to broader REIT/interest-rate dynamics. They will remain selective and opportunistic as markets normalize.