Modiv (MDV) Tops Q4 EPS by 4c

Modiv (NYSE: MDV) reported Q4 EPS of $0.07, $0.04 better than the analyst estimate of $0.03. Revenue for the quarter came in at $11.73 million versus the consensus estimate of $11.55 million.

Comment's on 2025:

How should we think about 2025?

We have two primary active ways to grow AFFO – acquiring positive income producing assets and continuously improving expense efficiency. Knowing full well that a near-term patient, disciplined acquisition strategy was in place, we have spent a considerable amount of time over the recent months to identify even more ways to be even more efficient with every dollar of expenditure. The beauty of being a small and disciplined REIT is that we fully understand that every dollar really does matter, and we have the bandwidth to focus on every single dollar. Our internal efficiency efforts have positioned us to be a small, special forces caliber team that tightly communicates on every facet of process and expenditure. This process has resulted in our achieving well over $1.4 million in cash savings for 2025 to include interest expense savings, a material reduction in unused revolver fees, some service contract negotiations and a reduction in employee G&A. For example, we are now saving $300k annually by rightsizing our revolver to a level that is in line with our balance sheet discipline. Also, for the next five years, I personally will not receive any salary or bonus. My interests are now completely aligned with investors – growing the dividend, growing the share price, or, ideally, both.

Some of you might not have been following us in 2022 and don’t know this, but we provided guidance that year to be like the bigger REITs. We beat that guidance. Guess what? No one really cared. Bigger market forces were at play, and we had too small of a following. Our following has grown, including analyst coverage and institutional ownership, but I am still not a huge fan of guidance for a company like ours given the reason that we could literally be a materially different company overnight by doing one transformational deal (and, as you know, we are focused on trying to do transformational deals). That said, a few years have passed, our balance sheet has evolved, and I have noticed that analyst estimates have all started to drift. For example, based on the three current analyst estimates for Modiv’s 2025 AFFO, their consensus is $1.15 per fully diluted share. I don’t know about you, but that number looks anemic. So, to provide a bit of course adjustment in order that the collective community has a proper base line, I am here to let you know that our internal AFFO modeling estimates us earning $1.37 per fully diluted share (including the shares to be issued in the forthcoming UPREIT transaction) by assuming we do nothing but stare at our navel (e.g. zero net acquisition activity, no transformative deals, no additional efficiencies, etc.). You can take it with a grain of salt if you so choose, but if you want to bet on us doing nothing at all during the year, then you get a 2025 AFFO estimate that is 19% higher than the street consensus.

For earnings history and earnings-related data on Modiv (MDV) click here.

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