Modiv Inc.

Good day and welcome to motive industrial ink second quarter 2025 conference call all participants will be in a listen only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by 0. On today's call management will provide prepared remarks and then we will open up the call for your questions to ask a question. Analysts may press star and then 1 on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the key and to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to John Rainey, chief operating officer and general counsel. Please go ahead, sir.

Thank you operator. Thank you everyone for joining us for mode of industrial second quarter 2025 earnings call. We issued our earnings release before market open this morning and it's available on our website. motive.com I'm here today with Aaron half acre chief executive officer and Ray Petini chief financial officer. As the operator noted, we issued our, we'll start today's call with prepared remarks and we'll open up the call for your questions. Before you before we begin, I would like to remind you that that today's comments will include forward looking statements under the federal securities laws for looking statements are identified by words such as will be. Intend believes expect anticipate or other comparable words and phrases statements that are not historical facts such as statements about our expected acquisitions or dispositions. And results of operations may vary materially from those contemplated by such forward looking statements. Discussion of the factors that could cause our results to differ materially from these forward looking statements are contained in our SEC filings, including our reports on form 10 K and 10 Q. But that I'd like to turn the call over to Aaron half acre.

Aaron. Thanks, John. Welcome everyone to the second quarter 2025 earnings release. I think in past practice, I'll just hand it over to Ray first and then then I'll add some comments and then we'll just kind of get into questions and I assume we'll have some this quarter.

Thank you, Aaron. I'll begin with an overview of our second quarter operating results. Revenue for the second quarter was 11.8 million compared with 11.4 million in the prior year period. This 4% increase primarily reflects the impact of to industrial manufacturing property acquisitions since June 30th 2024. Second quarter adjusted funds from operations or a FO was 4.8 million of 22% when compared with the 3.9 million in the year ago quarter. The 900,000 dollar increase in a FO reflects a 576,000 increase in cash rents a 217,000 decrease in G and a and a 126,000 decrease in preferred stock dividends. The increase in a FO for share increased 12% from 34 cents per share of the prior year period to 38 cents per share for the second quarter of 2025. The increase in a FO for share was less than the 22% increase in a FO due to 1.2 million increase in diluted shares outstanding. Which reflects 895,043 class X operating partnership units issued during the first quarter of 2025 and 344,119 class C operating partnership units issued in connection with the property acquisition in March 2025. Cash interest expense for the quarter was 255,000 dollars less than the comparable period of 2024 reflecting a decrease in the weighted average fixed rate, except by the respective swap agreements. From .53% at June 30th 2024 to .25% at June 30th 2025. Along with a decrease in unused commitment fees that resulted from our decision to reduce the size of our revolver. Now turning to our portfolio, our 43 property portfolio has an attractive weighted average lease term of 14.4 years. Though the majority of our tenant credits are private, approximately 29% of our tenants or their parent companies. Have an investment grade credit rating from a formally recognized credit rating agency of triple B minus or better. Analyze based rent for our 43 properties, so 39 million as of June 30th 2025. With 39 industrial properties representing 81% of a VR and 4 non core properties representing 19% of a VR. With respect to our balance sheet liquidity as of June 30th 2025 total cash and cash equivalents were 5.8 million and we have 30 million available to draw on a revolver. Our 280 million of debt outstanding consists of 31 million of mortgages on 2 properties. And 250 million of outstanding borrowings on our 280 million dollar credit facility. And we do not have any debt maturities until January 2027. Based on interest rate swap agreements, we entered into during January 2025. 100% of our indebtedness as of June 30th 2025 of a fixed industry with a weighted average industry of 4.27%. They said our leverage ratio of 48% at quarter end. As previously announced, our board of directors declared a cash dividend for common shares. Of 9.7 9.75 cents for the months of July, August and September 2025. Representing an annualized dividend rate of a dollar 17 per share of common stock. This represents the yield of 8.1%. Based on a 14 dollars and 44 cents closing price of our common stock is the longest 6 2025. I'll now turn the call

back over to Aaron. Thanks, Ray.

I

kind of said in the press release

this quarter was. A little boring. I would say for me personally, it was probably a little frustrating. But, you know, I think hard work and patients can be frustrating at times. And it was boring in a context, probably on a relative basis to others and as well as to our past quarter, right? So we didn't. Choose to be very active this quarter. We obviously got the least extension in North. We've been working on some things. We certainly did. We're pursuing a particular property right now, but the process isn't doesn't fit neatly within a quarter. And, you know, obviously you saw you've seen a show price, I think. Almost to the day 60 days before the Russell inclusion when it's pretty much known and calculable that you're going to get in. We fell off a cliff. So we were in the 16th and we've been in the 14th now for about 90 days. So, you know, our exponential moving averages are now sort of set to those levels and we're not going to we're going to be displayed. We're not going to issue. We didn't issue any at those prices and we won't. And so it was a quarter where there was a lot of volatility. There was a lot of opportunities to buy. I think I probably purchased or a 4 or 5,000 shares myself. It's ridiculously cheap. I mean, I think some more money analysts probably has the implied cap rate, but it's like in the mid eights. And there's no way you can buy these properties. With any handle low sevens or mid sevens, some of them are high sixes. So it's just it's comforting and that's good. But it's also frustrating. That's the, the, the troubles of being a small cap name. And again, you know, patients begets patients. Right. And so we're playing a long game here. Not much to report. I'm sure we'll talk a little bit about Claire and the questions. I'm sure you'll talk about. Some of my comments that I've made and in the release and, but it was a solid quarter. I think the decisions we've made repeatedly and consistently. It's why we had a large fee. And so the decisions. Even the absence of activity this quarter, my belief is that that'll pay dividends in when we're talking this time next year. Right. And. And I think that's the process is just to be really patient to understand our strengths, understand our weaknesses, be able to maneuver nimbly and quickly as needed. I think there's a real need for what we're offering out there. And I think we're starting to consistently build a tribe. It's a regional tribe. It's increasingly an institutional tribe, but it's largely a retail tribe where people think they they like what we're doing. They like The no bullshit. They like the consistency. They like the effort and we're seeing traction there and we like that. So even though I'm a little frustrated with the quarter, I would love to be a bigger read. I'd love to be able to do more things. I mean, that's, you know, but I don't want to do stupid things. And you guys don't pay us to do stupid things. And so we're going to do smart things and we're going to keep doing them every day of the week. So with that, let's operator open it up to questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Remember, should you have a question, please press the star key followed by the number 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press the star key followed by the number 2. 1 moment please for your 1st question. Your 1st question comes from go of meta of alliance global partner. Your line is now open.

Yeah, thank you. Good morning. Good morning. Hey. I wanted to ask you on some of the remarks that you made in the earnings release about asset recycling. It seems like the environment is getting better for you guys. We're getting closer to sell some of those assets. Can you provide some more color on on, I guess, and what you're seeing as far as recycling and then. The 1 50 million dollar assets that you mentioned, you know, what kind of is it going to 20% non core that you would sell.

Yeah, it's a good question questions. So the assets that we would sell would be largely legacy assets. So these are they could be core and non core. It was a bucket of an encore is in process. Right? So, as you know, KB homes is under contracted by. Costco, we expect them to extend at least 1 extension. That 1 is self is in process. It's just a matter of timing there. And the reason why they extend is that they're just finalizing the paperwork with with the city. And it's a reminder that I think they're 1.7. Million hard money already and so that 1 is 1 of the non course. It's in the process of liquidating. We've mentioned the past. Oh, yes, has an option to to to purchase the property. They are in the throws of their Ray lengthy appraisal process. And so we don't think that would even self liquidate the earliest until next year anyway, just given the process. And this has always been known to us and always communicated. So those I'm not talking about those those candidly are not going to be. A creative spread. I mean, I can we can liquidate them. They'll produce cash, but you're probably treading water after you sell them and replace them. Some of the other ones we're talking about these are I'm not going to call them out specifically because we have to be strategic about when we take them to market. But there are some assets that don't quite fit our box. Most of them are industrial. They are legacy assets. They are, you know, they are. Would be very creative, so they would be selling in high five low sixes and we would redeploy redeploying these. You know, in the, in the sevens and so, and they're, they're fairly liquid and they're also properties that we've also received unsolicited offers in the past. And we've kind of gauged the end solicited offers because 1 is someone goes the other way to make you an offer. Then they may clearly find the property attracted. And then not everyone, not every problem. No one's doing that for Clara. So, so we understand the difference. And we've been able to note over periods of time how those those those cap rates that have been unsolicited have tightened. And so we think that, you know, kind of in the broader picture of this pivot point that I talked about that we're starting to see. A little bit more fluidity and people's desires to do things. And so now maybe or be approaching the time to start doing that. And so that's probably I think in fairness, talk about that as a big level that that called $150 million of proceeds, which I think, you know, could generate close to 100 basis points, if not more than 100 basis points of. Accretion has given us calm right because if we didn't have some of that and we're trading the 14th and we're not issuing and you know we're be like. Like really in a box right I don't feel the pressure to be in a box because I know I have these things like. We're shaving or still shaving off expenses we're getting tighter we're growing a before we're doing all the things that we need to do. We just may not be acquiring a tongue right now, which is like you know. The cocaine of the world and we're not doing that, but we feel comfortable that we have additional levers the bowl. So I don't feel any despair. I don't feel the frustration. I talked about earlier is just because I just like to grind. I like to do shit. Right. And that's the frustration. It's not like, oh, we don't have any options. We have options. We're being patient. We're being disciplined. I think that's why we don't worry about the share price right now. We're not reclaimed. I, you know, I believe that we will see that recover and I think the recycling of those assets will help do that. Me mentioning it means that we're poised we're thinking a lot about it. We've been thinking about it, but we're thinking the time is right. It does just to be clear, it does not mean I'm I've already launched something right. And if I do a recycling, you will know it. I will tell you when it's done, but I We're getting to that next stage, which I think is probably over the course of the next year or so that that makes them the right time to do that.

Okay, thanks for that perspective. Maybe a follow up. I think you also made some comments about the lending market. It seems like you you are exploring even the term loan is not expiring till. 27 you have been exploring a different option. Just wondering, you know, I know you said there's lending available, but just wondering, you know, what kind of terms and rates are you seeing in the market.

Yeah, so, you know, I like to work. I'm just a very blue collar. I just like to work. I've never really developed any other habits other than running and working out a little bit, but I don't call. I don't. I just like to work. And so in a quarter where you have to be patient and there's not a lot of grinding stuff to do necessarily. I'm going to spend that time thinking You know, 12 and 18 and 24 and 36 months down and just iterating iterating what could go here. What could do there like some of the big as you guys all know, a big Fan of read capital market history. I know what we've done in the past, but I love this initiative been in it for a long time. So I spent a lot of time and look, there's certain things you know you know we're not reinventing the wheel here. And so during this quarter spent a lot of time. One of the natural things to do is to say, okay, we thought on our event horizon, we have You know, we have a terminal maturity or credit facility maturity. And so let's get started talking earlier we've talked to, you know, obviously Our banks and again we talked to others and look, we are seeing that The environment for a new term loan slash credit facility would be the same or better than what we had. And you know that I think that helps the fact that we've shown tremendous a flow growth over the last three years. You know that about the balance sheet has become very solid. We've, you know, remember when we put that first tone of term loan on we were, it was pre listing and we still had a shit ton of office. So we've really transformed. So I think the lenders feel good. And I think we're exploring the full gamut of of how to finance right because to me, I like data. I like optionality. I like to understand what are all the choices. What if I do this now. What does that mean later so We feel encouraged. We're going to be taking more steps towards that I think, you know, the wild card clearly for anyone here is is, you know, what are the broader, you know, what's the What's the fed can do right or we're going to see treasuries come down. We're going to see so for come down. We're going to see that that's going to drive the needle. They're like, you know, and look, you see it. You see the, you know, we're You know, you know, robustly levered small cat name and then, you know, you know, there's a there's a fed fart in the news and you know we we would saw Right. And so that's if we do find rates coming down, which I think, you know, everyone's going to make their own bets over the course of next 12 to 18 months and that's going to be a positive Right. But as in terms of the terms and the structure. We do not see anything negative in our conversations. And if something comes up that changes that well well then you're going to hear it from me. But right now we feel encouraged by it. And we are we are early. I think I don't feel any pressure about, you know, I know some people get really sort of Contemplative about maturities that are 18 months out, but I feel really good about this. We're in, you know, we got 14 plus Walt and that includes things like, you know, Two months on on solar and that included right, you know, the shortening of of Costco you remove those things are waltz more like an 18 or 19 year wall. So that real core portfolios solid with bumps and

growing and so it's very attractive to the lenders. Okay, thank you. That's all I had. Thanks.

Our next question comes from Craig from Lucid capital markets. Your line is now open.

Yeah, good morning, guys. You had a pretty sizable pickup in income recognized from your joint venture or your ticket interest. I should say, can you give us some

color there and what to expect going forward? Right. Yeah,

that that reflects the impact of extending the lease. The way straight line rent works is, you know, you're in the early years of a lease. You're picking up rent that's going to be received down the road. So, you know, that was a 10 year increase in the lease term with 3% annual bumps. So that's what's driving it.

Okay, I would say, I'd say that what you know, we're, as we've noted in prior quarters, you know, where we are an active dialogue and discussion with our tick partner. You know, it's, it's important for us that we, we, in a timely manner, end the tick. There's a variety of ways to end that tick. But, you know, ticks are ticks are a throwback of probably the, you know, pre GFC construct and you don't see a lot of ticks anymore. Even though they're somewhere around and there's just not as fluid for a week. And so our goal longer term. And I don't like it longer term is longer than, you know, this month is to get rid of that tech. And we will get that done one way or another. And so that will change a little bit of the dynamic, but there shouldn't be any more pickup after now that we signed the lease. I got it. That's

helpful. And changing gears, you know, you took the impairment charge looks like that was taken on the cholera equipment. I guess. Are you moving closer to maybe a sale there versus trying to lease it or or is that just to Yeah. How are you think you can get at that?

Yes. So we've had, you know, it's on the market and we've had, you know, a variety of things people going through. And so what I think what we've learned increasingly, one is I don't, I just don't know that I want to lease it. I just kind of, I think we want to sell it and free up our capital and get redeploy it. I think that what we've learned over time is that there's as many different types of growing technologies as there are growers as there are leafy greens. And so the growing technology that was in this equipment is now Progressively several years older and we're finding less of a market for it unless you find that particular growing style. So, so we decided to take the impairment Against that doesn't mean that, you know, we might not find a buyer that values it has some residual value, but we just figure that was a cleaner way to go. And yeah, our goal is to My idea of context is that properties gone if all if I have any powers within me to get rid of that property by the end of the year.

Got it. You know, when the tariffs first started being announced, you know, you had mentioned that your discussions with them indicated that they really thought the impact would be limited, but you I'm curious, kind of as they've been shifting around in the marketplace and you're looking at their financials. Are you seeing that case. Did you have the discussions with that with your tax.

Yeah, so we're just now gathering. There's always a little bit of lag. So we're just now gathering second quarter financials from them and doing analysis, but what's the ones that we've seen and You know, it's a good chunk of them. Yeah, it's what one I'd say to is we really haven't. I mean, the tariff dance is just kind of been You know, kicked down the street. The summer. And so we really not seen a ton of definitive terrorists until like you know what was early this week, last week. But the impact has been as we underwrote right that, you know, I think there's not been any cough squeeze. There's not been anything like that. I think what we have the commentary, we've noticed and it's not it's a forward looking so you don't see the numbers and some of them are saying that Some of the bigger capital decisions that their clients are may Opinion or deciding on are a little bit delayed because everyone's like everyone is waiting to see, well, what is the world look like. Right. And so that that seems Normal to me. And so

the

conversations are not that they're their clients

aren't

pulling the trigger. They're just not ready to pull the trigger yet. Right. So we haven't seen it. I think there's, you know, again, I still don't know exactly where Canada shakes out right on this, but you know I the countries that have announced we don't really have exposures to I think the China deal if it gets full of five the way we think it's gonna get so far. I think that's probably a win. And so I just don't see an issue on tariffs for for the particular set doesn't mean that they're not going to be impacted, but they're not going to be disproportionately impacted from what we can see.

Got it. I want to circle back to Costco, you know, that lease was scheduled to expire at the end of July. Can you give us a sense of the annual rent. They were paying and did you receive the first extension fee from KB home.

KB hasn't August 15 so we've been in conversations with him. They told us that they told us that they will be doing at least one extension. They may be doing two. And so they're targeting some possibly closing In December, and it the the reason is, is purely logistics with the city. It is not sort of a contemplative thing from what we've got it. It's just The city is got a process that personality been taking vacations and doing this and that and that process is taking longer than and you can't push a push a string so they They, they have another eight days before they need to officially to the extension. We expect them to do that. The rent ready. Do you have the rent on hand, but cost goes pay.

Yeah, it was running about 2.4 million.

Got it. Finally, for me, you know, late last year, you're looking at a number of transformational transactions. He didn't close, but, you know, they were still potentially out there and make back. Are you looking at anything out there that's similar or any other large portfolio transactions.

I would say that Transformer transactions are still definitely on the table. I think for all for all parties, it just needs to be the right environment and,

you know, it feels like we could be getting closer to to environments that are conducive to those so There are still conversations, but they're, they're more as well. The last Two first half of the year. They've been sort of more checking in conversations. Right. Because a lot of moving parts and just really, you know, really hard for for Teams and balance sheets across the spectrum to pull triggers and make decisions with without, you know, maybe a few data points, a little bit more solidified. So I'd say they're still still on the table. I think they have to be to right because We can't just, you know, You know, scroll down the lane and do this, you know, little bitty stuff. Probably right. We're too small to read. So we have to do something transformational at some point. I don't think it has to be today. But if you know if we're if we were $150 million market cap rate in five years, then you should shoot us. Right. This is how this is not how the capital markets work right and they never do work that way. Right. Unless it's someone who's not interested in shareholders or someone who's just, you know, that's not us. Right. We care about our shareholders. That's all I am as a shareholder, even though I'm CEO all my compensation is shares. Right. So it's and so we're completely aligned in that regard. And so transformer transactions probably will never be done just not going to bring them up unless they are baked this time.

Got it. I appreciate

your candor. That's it for me.

Thanks.

Your next question comes from John from be Riley. Your line is now open.

Good morning. It's always kind of difficult question to ask in this context. I think given the answer you gave to the last question and some of the commentary on the earnings call. And do you think there is maybe an opportunity given some of the loosening of capital broadly out there in the markets to maybe market motive in its entirety is kind of a portfolio and platform or either or.

So I've talked about this before.

Look, you know, we, we. And I think I did it in the context when we released our appraisal. So every year we get our portfolio. It's a tradition we had. When we were pre public as a non trader week. Right. And where we were. I'm not like I'm like a Blackstone. I'm Reid or Starwood Reid where they have liquidity windows. That's what we used to have. We used to have. Sort of liquidity windows and we would have set arms length enterprise and we continue that tradition on even though there's a little bit of cost to it. I think it's been useful. And I think the last two years, it's been roughly $24 a share right 2375 24 something like that. And look, that's done by Christian Wakefield very respectable. But if you look at sort of So, You know, We know there's lags. So, look, I'm not here to suggest to you that I know for a fact that we're worth $24 a share. But I sure as fuck know we're worth more than 14. And we're going to work diligently to close that loop with the actions that we can take. And I've said, and I think I stated this in February, if someone comes over the top and can close that value gap. Defended really then we have to listen. That's our duty. That's our job. Are we going to go solicit that

I

don't think that would make the most sense right now because candidly if I was going to solicit and go sort of and again, but me is the board decision. And I'm just one member of that board is that, you know, Soliciting that would mean that we're waving a flag that we think that we capitulated and I don't want to see predatory Sort of Characters coming into play. Right. I can remember back when we were at $9 and 53 cents and we're getting like 3000 shares trading. It was a mess. Right. We were just this was our micro Late 2022 we had a lot of people sniffing in, but they wanted to go pay, you know, $10 a share. It was like Like height, right, because in four years of dividends. That's like half the value you're saying. And so we understand that this is a tough time. In the broader market small cap weeks in particular, you know, we're holding up relatively well if you look at us compared to some of the other small cap weeks and like for for various reasons. I look at like I look at playmys and I look at good and I look at pine and look at front view. I look at these guys and you know we're whole other than when we saw Cliff right before the Russell announcement. We've been holding up pretty well. And I think that resonates to try it. And so our view is we're going to keep climbing that mountain. We're keep delivering dividends and we're going to try to close that value gap and smart money will know that if they want to close that value gap sooner. We're going to listen. And so I think that's the approach we're going to take Because I think we are investors deserve us to fight. For them not to be not to have to versus not to be ego. I think like if I lose my job tomorrow. So be it. That's how I set this up. Right. So there's it's so hard to do things in read land. We're going to be smart about it and we're not going to be obstinate about it, but we're not also

going to be, you know, Begging. Okay,

and then how do you kind of think about the understanding that kind of in the volatile kind of capital markets and, you know, talks of capital moving around. You have to be mindful of that and the impact that acquisition. And the like have on bottom line results. But how are you thinking about maybe weighing that against right. The positive impacts of increased scale, either on your valuation of the public company, or maybe even based on what kind of talked before about maybe being more attractive as some things. You know, for private capital to come in and come and look at.

Repeat that question a little bit again, a little bit simpler. I didn't I couldn't follow you quite. What is the question? Well,

I guess, so, you know, right? Obviously, you know, you pass a lot of acquisitions. You're trying to make smart transactions given kind of where your cost of capital is. But there's also an argument to be made that right. Part of the reason why your cost of capital is where it is, because you're kind of some scale and so now you kind of weighing those two against each other. And I guess that also maybe impact your attractiveness based on kind of what we're previously talking about. Got it. Yeah.

So, I think our attractiveness. If we continue to do our job, which is to increase value will only continue to be attractive.

Right. If

we only do if you do what's right for the shareholders, which is don't make stupid decisions grow the money. Protect the money, protect the house, get it to be more valuable than those will always mean that will be attractive. We could triple in size tomorrow and we're still bite sized. Right. So I think I'm the from public or private spectrum. We are going to be in that box of always someone's, you know, appetizer. For a quarter or the, you know, the meal for the year to be on the side of the We're always going to be on that thing until such time that we are not. And to me, in this market. I think that unless you are a billion dollar market cap or larger your your on the food chain. Right. So, so I'm cognizant that our existence is going to be one where we are always going to be, you know, a lot of And people are always going to check on us until unless you know you know the read gods line up and we kind of suddenly are, you know, huge. But I don't have any ego to do that. I have my sole purpose is to increase the value. And so what we do during the Day to day is we make sure we take decisions that increase the value because if we, you know, recycle legacy assets and you know we have, I think, one or two double net leases that we didn't acquire If we start to strike if we recycle shorter wall stuff and we end up being a very, you know, iron clad battleship of You know, a waltz of 18 years and a clean balance sheet and we're operating well or smooth that's just going to make us Even more attractive and more valuable. And then the meantime, while we're doing that our investors are getting paid a dividend. So give you an example. Let's just say, you know, You know, while blue reed came tomorrow and said, we want to buy you for $15 a share will be like, well, that's not much of a premium. And, you know, and they're one of the day wanted to pay cash. I imagine our investors would say no, they'd say no, because Chances are in two or three years we could very least be worth 15 if not more. And we'd also have made over three And a half bucks worth of dividends. So that economic value becomes 18 or 19 or 20. And so I think for us. You know, we're going to stay our course. If we keep doing the right thing, we're going to continue to be more valuable. And it's just, you know, we the wheel get there. And, you know, I don't think it's a matter of, you know, we're not And I bring this up on the office thing. And even the office people are getting bids, but we're not office right we have actually a very attractive portfolio. We're, we're cognizant of that, but our mission is solely do right by our shareholders. If we do that, everything else would get taken care of.

Okay,

and then on a much more kind of micro basis. You know, the, the, the property in Washington with KB homes, is there any risk. That the city doesn't zone that for KB homes or some kind of regulatory reason that falls out. I'm just thinking is the delay purely kind of bureaucratic. Inactivity, or is there some kind of debate going on. In the municipality is to whether to green light that project or not.

So, purely the bureaucracy of the city. I mean, they have entitlement rights that the city can't can't disregard those. It's zone to

allow additional housing.

Yeah, the zoning is already there. This is, this is sort of a plan approval. I, I believe it's bureaucracy and logistics. That said, you know. There's always, I think until the, you know, what I do know for sure is there's one point seven that they can't get back. Do I have concerns that they're not going to close? I don't, but probabilistically there's some small probability waiting that that that is an outcome until it's done. Right. I think about all probabilistic waiting. I don't think it's I think it's, you know, it's a on tail. It's, you know, it's a lot of criticism that in that assumption, but I don't,

I don't think it's happening. Okay, that's it for me. Thank you very much. Great thanks.

No further questions at this time. I will now turn the call back over to Aaron half acre chief executive officer. Please continue.

Danny, it looks like we do have a question from Steve check. Do you want to go ahead and get that?

Yep. One more question from Steve chick of Sevis garden capital. Please. Your line is open.

Hey, thanks. Um, just to clarify on the hundred and fifty million of, you know, the cycle assets that you've kind of soft circled the the Costco property, the 25 million are expecting from Costco isn't in that. And can you kind of highlight how many properties that kind of refers to?

No, I cannot. Or will not. Let's put that I surely can, but I won't because I'm not sure if that's the right word. And the reason is, is that we will. If you're taking these properties to market, you want to preserve a little bit of the Because we are a public company, right? And then we can go read up on us. And so we'd like to preserve a little bit of adoptionality suffice to say their legacy properties. And they are properties that don't quite fit our box. But they're very attractive properties. That's what I will say. And it does not include the KB or the Costco. Excuse me. That one. Yeah, the Costco one is like, you know, It's great that they're buying it. And, you know, as you recall, there was other other home builders that did on that process. They were the top did so it this the destiny of that property is to be, you know, a housing for people in a housing constrained market. So we feel good about that. You know, I don't think the proceeds from that, you know, they don't move the needle. Can't have a after we pay back the loan. There's just not not a ton of proceeds. It should be good to be free of it and move on because that would office. But these other ones were talking about are these are things that we again receive unsolicited offers for in the past, they would be construed as very liquid. And so that sensitivity on on a recycling and so which no one's asked really is And what because these are legacy properties, they all have very low tax basis. And so you have to think about them in terms of 1031 exchanges. And to do a 1031 exchange. So you don't incur tax liability, which is a no no for me is you have to be very thoughtful and very line things up. And so, you know, part of that is, you know, what is the, what do you replace them with is just as important. I think that the decision to sell them is is an easy one to do. It is not one that will take long. And I do not think that, you know, we'll be wringing our hands worried about, you know, the resulting Cap rates that we get for them. I think the more thought comes in is, okay, how do we sequence and place them into something that's really going to make the portfolio more valuable. And so

that

the other part of this equation that you know we're starting to see come into play is that, you know, you go back Fourth quarter of last year for score this year. There was just not much inventory being available to acquire Certainly not like we like. I mean, some, some deals are getting done, but some of the deals look like crap. And it's like, I don't want to buy a crap deal just for a crap deal. So I think what we're seeing is a little bit of a fall is also starting to see people say, hey, we're willing to go put our properties out again. And so now it's giving us the other side of the equation because we could have sold these $150 million of properties a year ago. Probably wouldn't have suffered that much on the cap rate side, but we would have had trouble deploying and I think so it's a balancing act there. But so nice to say legacy properties valuable properties things that should be fast.

Okay, that's very helpful. And then the second if I could In your comments about kind of the the numerous unsolicited overtures they've received for your property. You kind of also you say and beyond. I'm just kind of curious. I don't want to look into that too closely. But I mean, does that mean the market around you or is it, are you, have you gotten overtures

That are beyond just sheer properties. You read it pretty accurately. Okay, great. Thank you. What there was no there was no

double entendre there so

doesn't

mean there doesn't increase

right Sniffing a tower describe it. Right. Obviously, if there's If there is. Yeah, there's something that was, you know, very, very specific and very formal, then that would be a different type of disclosure. Right. Okay. Thanks. Thanks. All right, Danny. I think we're there.

I will. I will run with it now. Everyone. Thank you so much. You know, it's so much more enjoyable to just answer questions. You know, I've been reading so many Frames releases the transcripts me I can't suffer going on people's calls anymore because all they do is read things and it just they just regurgitate what was in the queue. And I know that's protocol. I know that's probably the best way to go, but it just does not work with my personality. And so I prefer these questions because there's more insight. And, you know, the job for me to have a dialogue with an analyst or an investor is to help understand trade understanding again our balance sheets pretty straightforward. There's only 43 properties. Most of you guys have the numbers down. What you're trying to do is get into my head. Right. And to the head of Ray and the head of john and everyone here to see how do these people because, you know, What are my motivations. What are what are our work activities. What are our what's our past history how all these things that everyone has and makes up who they are. Make the impact of decisions. Right. And so as a reminder, I think I'm like an .9% shareholder of the company. I put all my eggs in this basket. I watched this basket 24 seven I love thinking about it all the time. I want to do I treat every dollar that's in there as if it was my like my grandmother's got God rest her soul. She's not here anymore. My grandmother's money. Right. And again, if I'm not going to screw that up. And so that's how we think about it. And, and, you know, I think it's refreshing. It's refreshing to me. And I know increasingly we get comments from people that, you know, Wall Street people are looking forward to seeing what Aaron's going to say because look, I'm a bit a bit uncharacteristic and in my writing style and maybe my speaking style, but I hope it resonates. I'm preaching to To deaf ears on one side and a tribe on the other. But let's just get this done. Great grind back to the grindstone and we'll see what we'll see what comes with the next quarter. Thanks, everyone.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.