MDV stock intrinsic value fair value estimate & owner earnings analysis

Modiv Industrial (NYSE: MDV) owns 42 mostly single-tenant properties, about 82% of its rent from industrial and manufacturing buildings, leased to 27 tenants under long-term net leases, where tenants generally cover property-level costs. At the end of 2025 the portfolio produced about $39.1 million of annual base rent, was 98% occupied, and had about 14.0 years of average remaining lease term. Two tenants matter most: Lindsay (nine industrial properties in six states, about 14% of base rent) and a Kia dealership property in Carson, California (about 11%). There are no lease expirations in 2026, only 2% of rent expires in 2027, and 61% of rent runs beyond 2035. The largest single-year block is 14% of rent expiring in 2034, which includes the California Office of Emergency Services lease in Rancho Cordova. That tenant holds a purchase option through December 31, 2026 and an early termination option from December 31, 2028. How we measured earnings. We use cash generated by operations, remove one-off swings in working capital, subtract stock and unit compensation as a real cost, and subtract only the spending needed to keep the buildings leased (improvements and leasing incentives), not acquisitions. On that basis owner earnings per share were about $0.53 in 2021, $1.05 in 2022, minus $0.06 in 2023, $1.33 in 2024 and $1.04 in 2025. 2023 was distorted by $11.2 million of one-time compensation from performance units that have since vested, so we set that year aside. The 2024 figure includes $6.2 million of interest-rate swap receipts from swaps that were cancelled in 2025. In 2025 the company reports swap settlements outside operating cash flow, and it paid nearly the same amount ($4.2 million) in premiums, so 2025 is the cleanest current-basis year. We anchor on about $1.04 per share, roughly $12.1 million a year, which is the median of 2021 to 2025 and matches 2025. We start in 2021 because that year the company began remaking its portfolio and financing; earlier years reflect a different business. Early 2026 data is consistent with this level: operating cash flow for the first half of 2026 was $7.6 million, or about $15.2 million annualized, close to the $15.0 million of 2025. Growth path. Owner earnings per share fell about 22% in 2025 (from $1.33 to $1.04), almost entirely because of the swap classification change described above, not a weaker business. We assume 0% growth in year one, not a rebound. The contracted rent schedule for existing leases is essentially flat: $37.3 million in 2026, $37.7 million in 2027, $38.0 million in 2028, $37.4 million in 2029 and $37.4 million in 2030. We credit no acquisitions or share-price-driven growth, since acquisitions were heavy in 2022 and 2023, funded mostly by new debt and units, and small since (the company sold $27.1 million of property in 2025 and acquired one property mainly for units). Senior claims. The 7.375% Series A preferred stock ($25 per share, 1,680,391 shares outstanding as of the annual report date, about $42.0 million, roughly $3.1 million of dividends a year) ranks ahead of common shareholders and is not deducted in owner earnings, so we subtract its $42.0 million liquidation value from each case. Debt interest is already inside owner earnings, so debt is not subtracted again. The main debt is a $250.0 million term loan, extended in January 2026 to July 18, 2028, with leverage of 45.1% at the end of 2025. Rates on it are fixed for 2026 at 4.15% using swaps for which the company paid a $2.7 million premium to obtain the rate below the prevailing market rate. Base case, $10.29 per share. Owner earnings stay at about $12.1 million for ten years, because contracted rents are flat and no growth is in the bag, and then decline 3% a year. The decline reflects aging single-tenant buildings whose renewals we cannot yet see. The company completed lease extensions with two tenants during 2025, the Fujifilm leases at Santa Clara were extended ten years to March 2036 with 3% annual rent increases, and occupancy is 98%, which support the earnings continuing rather than ending. After $42.0 million for the preferred stock and dividing by 11.68 million shares and units, this is $10.29. Bear case, $3.87 per share. Two evidenced pressures hit together. First, the term loan matures in July 2028; the $2.7 million premium paid this year suggests the market rate is about 1.1 percentage points above the current 4.15% fixed rate, which on $250 million costs about $2.75 million a year. Second, improvements, leasing incentives and related intangible additions have averaged about $3.2 million a year over 2021 to 2025 (with $6.9 million in 2023) against $0.5 million in 2025, so we return to the average. Owner earnings fall to about $9.4 million in 2026 and 2027, to about $8.0 million in 2028 and about $6.65 million from 2029, then decline 5% a year after 2035. After the preferred stock, that is $3.87 a share. Bull case, $13.69 per share. Two levers already visible execute. In January 2026 the company bought the remaining 27.3% of the Santa Clara property for $9.6 million cash (about $0.7 million more annual rent, which we count as roughly $0.4 million a year after allowing for the cash used), and scheduled rent increases lift contractual rent by about $0.8 million from 2026 to 2028 and renewals hold that level. Owner earnings reach about $13.3 million from 2028, then decline 1% a year after 2035, supported by a record of extensions and 98% occupancy. After the preferred stock that is $13.69. What was left out. We give no credit for new acquisitions, development of the vacant land next to the Florida property, a sale of the vacant former Solar Turbines site in San Diego, the OES purchase option, or lower interest rates, because none is contracted or a proven repeating process. What could make this wrong. Common distributions of $12.6 million in 2025 exceeded operating cash flow after preferred dividends ($15.0 million less $3.3 million, or $11.6 million), so the payout was not fully covered by operating cash flow. The company will also need to refinance $250 million by July 2028. Share and unit counts reported for early 2026 moved unevenly from quarter to quarter, and we could not reconcile that from the filings we reviewed, so per-share values use the 2025 average count. The margin-of-safety price of $6.00 keeps a wide margin above the bear case because of the refinancing, the uncovered payout, and the concentration of about 25% of rent in two tenants.