Modiv Inc.

Thank you. Thank you. We'll be right back. © transcript Emily Beynon Thank you. Thank you. Thank you.

Good day, and welcome to Motive Industrial Inc. 4th Quarter 2025 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal your conference specialist by pressing the star key followed by zero. 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, then the number one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key. And to withdraw your question, please press star, then the number two. Please note this event is being recorded. And I would like to turn the conference over to Sarah Grisham, Chief Accounting Officer. Please go ahead.

Thank you, Operator, and thank you everyone for joining us for Motive Industrial's fourth quarter and full year 2025 earnings call. We issued our earnings release after market closed today, and it's available on our website at motive.com. I'm here today with Aaron Halfacre, Chief Executive Officer, Ray Pacini, Chief Financial Officer, and John Rainey, Chief Operating Officer and General Counsel. Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as, will, be, intend, believe, expect, anticipate, or other comparable words or phrases. Statements that are not historical facts, such as statements about our expected acquisitions and dispositions and business plans are also forward-looking statements. Our actual financial condition 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. With that, I would like to turn the call over to Aaron. Aaron, please go ahead.

Thanks, Sarah.

Hello, everyone. Hope you're doing well. Crazy times. So, I know I'm looking forward to this call. I'm sure you are, too. You know, let me start off by saying, you know, Tara just read the standard preamble that everyone has. It talks about forward-looking statements. And, you know, I spend the vast majority of my time thinking about forward things. But the historical things and the things that are measured, the accounting, are really important. And I just – this is a poignant time because this is going to be raised. Last earnings call, even though Ray's going to be with us for the remainder of the year, this last official earnings call and John's going to be taking over the helm. And I just really want to speak and thank our team. So Sarah, John, Winnie, Lamont, Jason, all the accounting team in particular, which is candidly more than half of our company. does such a good job and they make my job easier so I can spend all this time talking about the forward thinking things and dealing with these things that, you know, don't always have measurable outcomes. And that messy part of it that I do is that much easier because of how good they are. So I appreciate that they're all They're all here and just wanted to welcome Sarah to the call. Even though she's always been in the background, she's going to be part of the call now along with John going forward and, of course, Ray. So with that, let me sort of shift in gears. I'm sure we're going to have a whole host of interesting questions. I have no idea if I can answer your interesting questions, but I will do my best. But first, let's let Ray have the stage and do his thing.

Ray? Thank you, Aaron. I'll begin with an overview of our fourth quarter operating results. Rental income for the fourth quarter was $11 million, compared with $11.7 million in the prior year period. The decrease in rental income reflects expiration of our lease with Costco on our office property in Issaquah, Washington, which was sold to KB Home on December 15, 2025, and expiration of our lease with Solar Turbines on an office property in San Diego, California, which we plan to market or sale upon receiving approval from the City of San Diego for a lot split. Fourth quarter adjusted funds from operations, or AFFO, was $4 million compared to $4.1 million in the year-ago quarter. The $30,000 decrease in AFFO reflects a $554,000 decrease in cash rents, which was partially offset by a $299,000 decrease in cash interest expense $138,000 decrease in preferred stock dividends, a $40,000 decrease in property expenses, and a $15,000 decrease in G&A. AFFO per share decreased from 37 cents per share in the prior year period to 32 cents per share for the fourth quarter of 2025. The decrease in AFFO per share was primarily due to a 1.7 million share increase in diluted shares outstanding which reflects previously disclosed issuance of operating partnership units during the first quarter of 2025, along with the issuance of common shares in our ATM and distribution reinvestment plan. 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. With respect to our balance sheet and liquidity, As of December 31, 2025, total cash and cash equivalents were $14.4 million, and we have $30 million available to draw on a revolver. Our $262.1 million in consolidated debt outstanding consists of a $12.1 million mortgage on one property, excluding a $12.1 million mortgage on the Santa Clara property It was owned by tenants in common and therefore not consolidated as of December 31, 2025. And $250 million of outstanding borrowings on our $280 million credit facility. Following the January 2026 extension of our credit facility, we did not have any outstanding debt maturities until July 2028. Based on interest rate swap agreements we entered into in January 2026, 100% of our indebtedness as of December 31, 2025 held a fixed interest rate with a weighted average interest rate of 4.15% based on our leverage ratio of 45.1%, the quarter end, and the January amendment to our credit facility. I'll now turn the call back over to Aaron.

Thanks, Ray. Let's just operate. Let's just go to questions. This would be easier.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star four by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star four by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from the line of Gaurab Mepa from Alliance Global Partners. Please go ahead.

Yeah, thank you. I wanted to ask you, I think in the press release you talk about receiving multiple offers and spending some time on one of those and in the end not pursuing it. So I just want to get some more color on, you know, what those reasons were for not pursuing the offer.

um i figured you'd ask that and you know i don't really have an answer that i can give you other than to say that you know um we at that moment didn't see a secure path forward uh so we stepped back from discussions um and um you know i think I think fundamentally, the vast majority of the stuff there was good. It's just that our job is to protect our investors and to make sure that we have put forward the requests that we need to make sure that our investors are going to get what they're going to get. And it was just a process. I think... that it was a generally positive exchange. And sometimes these things happen where, you know, it's just like, you know, it's not quite flowing. So that's about all I could say. It doesn't give you much. But as it relates to that, we just, in that particular moment, we didn't see a secure path forward.

And so we stepped back from discussion. All right. Thanks for that, Kalar.

Maybe on on 2026. I was wondering, you know, as far as asset recycling, should we expect, you know, any, are you guys expecting to sell any assets this year? And then maybe some comments on the acquisition environment that you guys are seeing?

So, yeah, on a go-forward basis, recycling will, as I mentioned in January, will start to pick up in earnest. I'd say, you know, the stuff that's happened in the last two or three weeks might, it's going to, you know, cause, it's hard, right? It's hard for pipelines. It's hard for dispositions because you've got rates just gyrating all over. And that just really stings confidence for buyers and sellers in general. And I think, you know, appetite is always there, but it's hard. It's just hard. You know, if you're a buyer, you're pricing in a huge margin of safety. um because you know you could be wrong and if you're a seller you know you don't want to spell um and and you know do do a deal that you would regret literally 30 days later right and so the landscape has changed a lot so i think uh the near term is it's a little bit uh harder a little bit cloudier but it's not any candidly it's not any different than than before, but let's assume that the trend long-term, barring $200 barrels of oil, is that we will eventually find REITs returning to favor. I think all of us here on the call probably presumed this at some point. It's certainly been long in the tooth, and we would have liked to have seen it sooner, but this is a narrative we have. So, we will continue on our recycling. I think The way we're thinking about the recycling in this is a couple of different phases. The first phase is really looking at, like, we have some non-core assets, particularly office. Those are going to get, we're going to get rid of those, right? There's only two office properties we have. One is solar, which, as you know, went, or not solar, it's the property in San Diego that was formerly leased to Solar Turbines. They left the end of September. That's why we had a little bit of fall off, which has been inevitable in, you know, rents in the fourth quarter. That property is a great property to sell to an owner user. We've actually had quite a bit of interest for it. The interest has been above the appraised value of the property. The reason why we haven't sold it yet or the flip side, the reason why we haven't leased it is that it was or it is on the same technical parcel as our WSP property. So they're right next to each other. This is a property that was acquired by the prior legacy team. We've had it. We have been working through the bureaucratic process that is not uncommon in any county or city since 2021. Five years now trying to get that parcel split so that it has its own parcel and we can sell it separately. We are so close to that. We are at the final, you know, Very detailed scrutiny, like refiling parcel maps. I mean, the little things like ADA slopes on things. All that stuff is done. We're super close to that. Once we have that in hand, then we will take that property to market. The reason why we haven't leased it is because, look, I think the right user of that is an owner user or some sort of tenant who might want a five-year lease or might want a gross lease. we want long-term industrial manufacturing tenants on that lease basis you can't that's not going to fit that box that box has a better use so we will sell that one that's an office property technically it's really a flex space if you look at it now from when it was before it's like completely open clean shell it's ready to go right so that'll get sold my guess right now if you were to put a gun in my head that's like call it seven seven or seven to eight million dollars So it's not a huge number. The other office property is OES. OES has this purchase option. We've been talking to them. It's a blue, I mean, that's an investment grade tenant, but it's a government, right? We think that's a super sticky asset, but it's not an at-least manufacturing asset. So we're going to enter this office. It's a balancing act. We've waited. If we'd sold it two years ago, You know, I'd probably sell them like a 10 cap. I mean, who wants to do that when you've got, you know, really good rent that's coming in? And so you have to be patient. But at some point you're like, okay, you got to shit or get off the pot. And so, you know, we'll clean that one up. And, you know, that'll happen ideally by the end of the year. We're going to be thoughtful about the timing. We're not going to force it, but it's moving forward to no longer to wait. So that's the obvious part. People ask about the Kia dealership. It's a non-core asset. The conundrum with that one, that is a layup to recycle, right? We've seen interest in that one, not offers, but interest at or below the cap rate that it's appraised at. It's a very attractive asset, but it's a big one. It's $70 million, call it. property. That was a 1031, I mean, excuse me, an upgrade transaction from five years ago. So we have a really low tax basis on that one. So it's super sensitive. And so if you're going to sell it, you have to make sure you already know what to buy. And to buy, you know, I don't want to buy a $70 million industrial manufacturing facility. I would be better served buying, you know, sort of three $23 million industrial manufacturing facilities. and rolling it into it, right? And so that will be an accretive transaction because, you know, we'll talk about the forward pipeline here in a bit. But, you know, that cap rate that it's selling at, or we would sell it, the Kia, is at least, at least, and if not more, 100 basis points tighter than what we can redeploy it in. So that would be generated. But we have to line that up because you can't just take it to market. You would get bids, undoubtedly. A lot of those bids would be fast-closing bids. And then you would be left with a short window to 1031 designate. So we'll be patient on that one in terms of non-core. That'll happen when we find the right target to roll it into. So setting that non-core aside, obviously we move the office. And then from there, we have a lot of short waltz. And our short waltz philosophy is that we will do our darndest to see if they will extend. We'll have conversations with them. we are starting those conversations, if they're willing to extend, and not just extend like, you know, two years, but really give us something that makes us decide we might want to keep it for longer term, or if they don't, realizing that, you know, let's just clean up the walls. Even though they're great tenants, I think our goal is, our vision is, let's get to a rock-solid portfolio long term, We understand that as leases get shorter and you see this in sort of O and W carry, that you get down to the option periods and CFOs and things like that typically just exercise five-year renewals, five-year renewals, they exercise their option periods. That's normal. But we have a period of time right now that we can positively take positive ARB by selling certain assets, even if they're short a wall, and creating more AFFO by reallocating them into a longer wall and having a more solid portfolio. we'll spend time this year looking at Northrop was one of those properties. We got an unsolicited offer that came in. It was worth our time. It was worth our energy. We gave them, we were patient with it. We were not in rush for them to do their due diligence. We were not in rush for them to close because we, we do need to roll it into a replacement property. Ideally. There's other uses for it too. And we'll get into that, but we could use that money fungibly, but, That was one that is an example. That's a property that, look, it's a short waltz. We got an offer that was compelling, and we took it. So that's on the plate. We will see more of that activity. Separate from that phase is we have a few industrial credits that I would probably like to recycle through. There's nothing wrong with them. They're perfectly fine. They're just smaller. They're less institutional. And so I think recycling those at the right time, and that might be this year, it might be early next year, will allow us to just clean ourselves up that much more. And when I say clean up, it doesn't mean we're dirty. It just means I want to polish it as best we can, because I think the process that we've been through with these, these offers and the interest, and it's helped us say, Hey, like, like if we do these things and extract the value for our shareholders, then, uh, we're going to be in a really solid position. Um, Outside of that, we have a few, and I mentioned this before in January, sort of some opportunistic assets that are great assets. They may not be manufacturing assets. There are certainly lower cap rate assets that, you know, at the right time, if we got ready or we had clearly identified things to buy, we would roll those as well, right? And so you will see more activity over the course of the year. Barring something bigger and strategic happening, you'll see more activity in the course of this year and next. Those weren't just words. Those were actions that we're going to take. I think the interesting thing about all this is they're all, as I mentioned before, they're all tax sensitive in terms of we have low basis. If we don't redeploy them in 1031, Investors are going to have taxable events, and that's not how you're supposed to manage your REITs. We're trying to be thoughtful about that. So the selling of the assets is actually pretty easy. You could happen pretty quickly, and a lot of brokers are ready to go. If you put a property on there, you probably are sold in 60 days if you really wanted to, but comfortably 90. The problem is finding replacement properties quickly. that line up. And I'd say over the course of our journey, I've gotten and the team has gotten a lot more selective in the terms of you want really good manufacturing products. So the products that they're manufacturing has got to be really good. We've gotten that right. You want to make sure that the lease structure is really good. You want to make sure that the financials of that tenant are really good. You would ideally like that tenant to only have one source of manufacturing, which is your thing, or you have control all their manufacturing so that you can't get rejection in a bankruptcy proceeding, God willing, if it ever happens, but you're addressing that through credit. And you'd also really like to have good location as best as you can. And then on top of that, a good cap rate. Those are a lot of fine wish lists. And you can't be the princess and the pea about it. You have to really be compromise in marginal areas if you have to, but we don't have to right now, and we've been patient, but the pipeline has been episodic. It's been erratic. We started to see pipeline come out in January, and sometimes we're still waiting for the OMs, right? They're like, ah, and it's like the OMs haven't come out. Well, why? Because the person on the other end is concerned about selling, right? We might want to be bidding with a margin of safety. They're wanting to sell with security. that they know they're going to get, this is a stable ground, and that they go and go out in the market, they're going to execute on what they think they are, and in fact, they're going to just change on them. So it's a little bit of a weird time in that regard. And so we're looking at our box to buy box, making sure we're looking at a lot of things. I'd say price talk about overall is interesting. You know, if you go look at the $22.19 NAV per share we have, which, like, everyone has an NAV, right? Some people use a street analyst NAV. Most REITs have an internal NAV of some sort. Our internal NAV happens to be done by a blue chip appraisal firm, Fishman & Wakefield, and they've been doing it for, I don't know, six years. There's consistent history. We go piece it together. And so you're like, eh, appraisals are full of shit, right? They're not real. But they actually are pretty indicative. I would tell you that We have, I can think of three properties in our portfolio in the last six months where we have received unsolicited offers that are at or below the cap rate that is implied in our appraisals. So, you know, and we've all, I think we all understand, particularly now in this environment, that there's a fairly large disconnect between private real estate and public real estate. And public real estate is just taking it on the chin repeatedly. So we understand that. So that 2219 NAV, I think round numbers, it's an implied 6-8 cap rate. At first, you're just like, well, you're not trading anywhere near that, and we're not. And price talk, we've seen, and price talk is maybe like an appraisal. It is indicative of something. It doesn't mean it's transactional, but it's in the range of possible. There's a $200 million portfolio going out there today. It has a tendency that's very similar to our largest tendency in terms of the sector. And, you know, it's got, they're talking 675 on that one. We saw another property where someone was talking 675. Now that's broker talk. They're leading a little bit. Do I think it's going to trade there? Probably it's going to trade wider than that. Might be seven, might be seven and a quarter. But clearly you're seeing stuff between 675 and seven and a half. right now. You just got to find the right thing. Sometimes you'll find something that might, you know, if something is seven and a half and it's just dog doo-doo, you don't want to pay seven and a half. If something is great and it's a seven, then you can do it. But sometimes there's dog doo-doo that's six and 75 too. Everyone's trying to do their own thing. But I would say that the pipeline right now and it's a little bit of a strobe-like effect when you see it, sometimes it's there, sometimes it's not, when the light comes back on, is it's tighter than it was a year ago. It does feel tighter to me. Whereas a year ago, I was probably saying seven and a half to seven and three quarters. Now the talk has gotten tighter. I think that might be a little bit of the optimism that we saw three or four weeks ago. And, you know, now I'm not really hearing calls for the last two weeks, but I think everyone's kind of holding their breath, right? I mean, the first weekend with the conflict, we were like, oh, is this going to be like the last time where we just bombed them? And then we went back to our business. And then, no, it's now extended. And then, you know, we've gotten all, as a collective, gotten ADHD. We're like, oh, no, it's been an 18-day war. I mean, historically, we've had wars that lasted for years. So I don't know if you can hold your breath on this one. It might be over soon. It might not be. It's certainly volatile. And you've certainly got to stick to your knitting. But it's a long-winded way of saying that we see opportunity. We're looking at it. We're just being extremely thoughtful. It takes an inordinate amount of patience, which is very hard to do. It's very hard to do. It's not fun. It's not sexy. I wish I was an AI company.

That would be fun. But we're not. So sorry for the long-winded answer. I hope that helps. Thanks for those details. I appreciate it. That's all I had.

Thank you. And your next question comes from the line of Jay Cornrick from Cantor Fitzgerald. Please go ahead.

Hey, thanks. In line with a lot of your comments there, obviously a lot of questions on the macro perspective at the moment. And I guess if we could just wrap up all those comments you just made about the transaction front and how you're thinking about that going forward, do you still feel on track to get the portfolio to, you know, the a hundred percent pure play manufacturing industrial over the next 24 months, or does maybe the timeline shift just, you know, with everything that's going on at the moment?

I, yeah, I do good because I, I always like to over, uh, under-promise and over-deliver, whatever the phrase is. So that 24 months, I think if things are rosy and the market starts hitting its stride, that's a 12-month process, right? It can be a lot tighter. Again, the bottleneck is having the right assets to acquire, and the right assets to acquire will become much more evident when the market gets a little bit more stable. And theoretically, Just putting out, you know, our portfolio. I could, if I identified the right portfolio of assets as an example, and I had the right timing to buy them, that I could almost, in effect, do it in one fell swoop, right? So just mathematically, if you think about it, it's not going to happen likely because it's hard to find things, but it doesn't mean it can't happen. It doesn't mean we're not looking. But if you found a $100 million portfolio of assets that you liked that you could line up to purchase that met your box, and then you could take your assets out to market, they would all be reverse 1031 or forward 1031 designated exchange, and you're done in one fell swoop. It's the pipeline that matters. So, yes, I do think 24 months is very realistic and doable.

Okay, I appreciate that. And then just one follow-up, and I recognize that there's little commentary you can provide on the potential acquisition offers that you received. But can you maybe just from a different angle talk about what's perhaps brought you more on the radar of others more recently as an acquisition target, maybe relative to a year ago? Is it the state of interest rates? Is it the progress you've done on the asset recycling efforts? Is it something else? Just what do you think has brought you more into the limelight of others looking for a portfolio like yours? And how do you expect additional potential inbound moving forward?

That's a good question.

So I think, look, we've seen REIT, M&A, the discount for public REITs to private real estate has been persistent. We started to see REITs get picked off. In some ways, you could argue, why hasn't there been more M&A volume? But there's still been a decent amount of M&A activity. So in our space, you obviously had the real germane thing. You had the fundamental REITs. which was not public, but they got taken out by Starwood. You had Plymouth taken out. You had Peakstone taken out. Broader than that, you got Alexander Baldwin. You just had the NSA deal. We've had a lot of different names get consumed. I think a lot of them were smaller cap names, which means that there's a greater buyer pool of people who can afford to take those out. So I think there's been a trend where for a while now, I mean, if you had raised a value-added or opportunistic fund in 23, You know, you've got a three-year investment window, maybe, or you raised it in 24. You've got a three-year, you know, deployment window that you've got to get it deployed. At some point, people are starting to deploy, and they're waiting, and they're waiting. And I think we saw early signs. Well, we started seeing signs as early as the third quarter of last year where activity started to pick up, and we've seen a fair number of those things. And so once that starts happening, people start looking, right? If you're once you decide you're a seller, then you're potentially a seller. So that attracts buyers. But if you're a buyer, you start to look for things to buy. Right. And so I think that's been the first thing. I think the near term volatility in races and global economic pictures, it's frustrating that on the margin. But again, I don't think it's changing directionally where things are at, is that people see attractive, positive leverage, long term, positive leverage opportunities in public real estate, either either public to public, or like we saw with public storage, or it's a public to private, right? And we've seen this at different times. And look, there are probably too many REITs out there. You know, there are too many under-capitalized REITs out there. We are one of those buckets. We understand, you know, so why did you ever go public? Well, the time we were a non-traded REIT, and we knew that if we didn't provide immediate liquidity, we would be you know, gating and no one wants to gate ask B read, ask Starwood, read that thing. They're much bigger so they can afford to do it, but no one wants to be that. So we provide liquidity for that generation of investors and we've recycled and we've just been in a rough time, but we've created a valuable portfolio. I don't, I can't, you know, off the top of my head, I would think our share price is it's a ridiculously wide cap rate to the assets. And so that's, what's attracting people. They're like, Hey, you've got 14 years, you've got two and a half percent in, uh, in place. You've got manufacturing tenants that don't have – arguably, the real estate is already obsolete in the sense that it's not whiz-bang. It's been doing this stuff for 40 or 50 years. It's really good, durable real estate, and it's still here. If you bought a 2018 vintage data center, it's already obsolete. You're already having to replace all the guts on it other than the shell of a box. If you bought a 1999 warehouse, it's obsolete. Right. Our stuff arguably is not that sexy. It's older real estate, but it doesn't have any more absolute value. You're buying a real core income producing value. And, you know, with with the EBITDA or rent coverage and the fixed charge coverage ratio of our tenancy, it's a strong portfolio. And if you look long term and think, hey, long term, not right now, though, because if you look at, you know, a futures market, the ZB or the UB in the long bond area, they've sold off. Right. Which is counterintuitive. In the short term, with war, they typically rally, but they've sold off, which would make trades going up. But if you think longer term, that will have a yield curve that suggests that long-duration assets with low leakage in terms of NOI, and particularly the advent that we can start putting private capital into retired 401ks and things like that, there's a natural demand for this nice pool of portfolio. We are synergistic, right? which I'll give you the color that the people looking at us, we're not looking for the team. They're looking at the assets. I wish they were looking for the team. It'd be fun to do that, but they're looking at the assets and you can, you know, this portfolio, you can strip out. It's pretty simple. You can strip out the GNA and it becomes a creative. We're not opposed to selling. We're just wanting to make sure it's the right value for our investors because we're not desperate. We're not, we're not going to just give it away that that might be a great payday for me. Because, you know, all I do is I have equity like everyone else, but we're going to do the right thing. And the right thing will come about. And in the meantime, we're going to pay that 10 cents a share per month and get it done. But so I think the interest is because there's really good value coupled with there's people who have money and they're starting to decide they want to make allocations. I think the last element is, look, there are arguably – four small-cap industrial REITs that I can think of. Maybe you can include ILPT in there, so maybe that's five. But of those five, ILPT and GLADS aren't externally managed, so good luck with that, right, getting a hold of those.

And the other three were Plymouth, Peakstone, and us. And clearly, we're the smallest.

And so I think that's part of it too. There's just like, if you want to pick up this specter and you like the space, there's not a whole lot you can do.

Right. So that's where we're at. Okay. Well, I'll help with commentary and perspective. So thanks. And I'll stop it there.

Okay. Thank you. Once again, that is star and one to ask a question. Your next question comes from the line of Jen Masuka from B Riley securities. Please go ahead.

Good afternoon.

So, I know we kind of talked a lot about the inbound interest after the January 20 update, but I guess given that you've seen that, does that maybe spark an interest in running a kind of strategic alternatives process earlier than that, you know, I guess it can be that kind of post 24-month timeline that was kind of talked about in that update? Just kind of curious how that changes your mindset, if at all. I think the interest suggests to me that people know there's value here and that they know that we can clean up the portfolio.

And look, again, the portfolio is not dirty, but if it's more polished, it's going to be more valuable. And so they see a window of opportunity. If they can take it out cheaper than what it will be in the future, That's their job. Their job is to take it, keep the upside for themselves, and, you know, and give you, you know, give you a few shackles. I think what this suggests to me is that, you know, barring someone closing that value gap, and closing that value gap does not mean $22. Let's just all be clear. No one's going to do that. No investor in their right mind or buyer in their right mind is going to do that. There's no upside, right? They want it bad. They just buy a bond. So they need upside, but our investors need upside. And so it's a dance of where that is. But what it suggests to us is that if we didn't have, you know, like if I'm going to go buy a used car and that car has got a little bit of rim rash in the back wheel or there's a little bit of scratch on it, I'm going to use that to get lower price.

But what we have the ability to do is, you know, clean that, polish that portfolio up.

And so that it's even more valuable. So if you flash forward in this environment, let's think about where we're at right now. We're in a super crazy rate environment, right? Where the people are yelling stat inflation and bonds are doing this and it's crazy. And you're like, what do you expect if you went and ran a process now or in six months? If you did it where you flash forward, you clean up your portfolio, you're humming, you're good. The rate environment is stable. Maybe it's lower, but it's certainly stable. You've clearly gotten what it is. You know you can extract more value and you've done that. And let's say that is in 24 months. We'll just put that hypothetical situation there. In that 24 months, our investors, assuming no change in our dividend, no increase or decrease in our dividend, which look, I'm not decreasing the dividend, but let's assume no increase either. That's $2.40 of income in the next two years and a higher value of your portfolio to execute. So you would try to buff out the scratches. You would try to get rid of the rim rash. You would get yourself an environment where your type of car that is for sale is in demand. And so doing so prematurely would suggest one of two things, in my mind, would suggest doing so prematurely is running a straddle process, to be clear. Which suggests either one, your leadership doesn't want to do it or can't stomach it. And look, it's not fun sometimes, but we don't have weak stomachs here. Or two, you think you can't do any better. Otherwise, why would you do that? Why would you shortchange the investor? You just wouldn't. If an opportunity comes along that closes the value gap and you say, well, okay, this is a pretty good, this is pretty good. This is going to give them a chance to redeploy their capital, or this is going to be another public currency where they can get, you know, continue to get dividends and participate in the read-up side. There's a lot of different ways to look at it. If someone could do that better, we're all ears, but it doesn't mean just because you've gotten interest that you should not sell, right? If you've gotten really, if you did go on for an offer, unless it was an offer where you felt secure and there was no There was no go shop associated with it. You're effectively having a process there. So I think that's a, I just think really thinking about it philosophically to think about what the, what is a straddle process suggest? I think there's been a lot of reach out there that have, that are undergoing straddle processes, even if they're quiet or they're done some publicly. And, you know, you know, there are, I don't know if this is the right time to do that. Why are you trying to sell right now? If you have to, if someone wants to, that's one thing. but why would you try to sell?

Okay, that makes sense. Maybe on a more detailed level, and apologies if I missed this in the prepared material, what were the terms or the potential terms of the Melbourne, Florida office sale, or is that kind of TBD?

The terms are well known, but I'm not to us. And as a respect to that buying party and respect to us, I like to keep those silent until after the fact. Suffice it to say is we have slightly over $400,000 of earnest money that's gone hard. And this has been a process. We've given them a long – this was not a fast deal. It was an organized, methodical one. And so once it closes, I'll inform you of what it was. And I'll tell you right now, just to be clear, what we don't have right now, and we're working on it, we don't have a replacement property identified yet. We don't need to worry about this one, so that's okay in terms of the tax sensitivity. Why is that? Well, because we're selling Clara, and let's just all be honest, we took a loss on Clara. And so that creates a tax loss that shelters the gain on this one. So we have a little bit of time to be thoughtful about the redeployment of that. But it's scheduled to close in the second quarter. Um, and once it closes, which, um, my guess is, you know, we'll, well, we will absolutely tell you what happened on it. Uh, once it closes.

Okay. Um, and then with Calera, the former Clara property in mind, can you might as what the kind of, I guess, cost of carry was for that in four Q or, or kind of the OpEx costs associated with that asset in four Q that's going to go away now that you sold it in January.

Like roughly? Ray, do you know roughly?

I thought it wasn't terrible.

Yeah. I mean, I think for the, I think it was running about, you know, 20, 30 grand a month.

Okay. That's it for me. And Ray, I appreciate all the help over the years, admission of these calls. Thanks.

Thank you. There are no further questions at this time. Please proceed.

everyone thank you so much uh you know i know we came out a little bit later that was because of you know the aforementioned uh offers uh don't like to come out as late but it didn't seem you know we are we are a pebble in uh causing a ripple in the ocean that is raging right now so appreciate all that did join wishing you the best of luck for your families and your portfolios and talk to you again next quarter thanks so much this concludes today's call thank you for participating you may all disconnect