MDV

LLM Evaluations

Transcript Summary

Modiv Industrial (MDV) is executing a strategic pivot to become a pure-play industrial manufacturing REIT within 24 months. During the Q4 2025 earnings call, CEO Aaron Halfacre highlighted that while rental income and AFFO per share saw slight declines due to office lease expirations and share dilution, the company’s underlying industrial portfolio remains robust. Management disclosed that they recently declined an acquisition offer that lacked a "secure path forward," choosing instead to focus on asset recycling to maximize shareholder value. The company’s internal NAV of $22.19 per share significantly exceeds its trading price, a gap Halfacre believes can be closed by disposing of remaining office assets and short-WALT properties. Key upcoming activities include the Q2 closure of the Melbourne office sale and the potential recycling of a $70 million Kia dealership. With 100% of debt fixed at 4.15% and no maturities until 2028, MDV is well-positioned to wait for favorable market conditions. The leadership transition sees John Raney stepping into the CFO role as Ray Pacini retires. Analysts focused on the M&A environment, noting that Modiv's high-quality manufacturing tenancy makes it an attractive target in a consolidating sector.

5-year share-count history (top 10 holders by peak, incl. exited) + price

Filing Risk Scores

Modiv Industrial: Cash Depletion and Derivative Complexity Masking Structural Cash Flow Constraints

Full Earnings Call Transcript — Q4 • 2026-03-25

Operator: Good day, and welcome to Modiv Industrial, Inc. Fourth Quarter 2025 Conference Call. [Operator Instructions] On today's call, management will provide remarks and then we will open up the call for your questions. [Operator Instructions] Please note this event is being recorded. And I would now like to turn the conference over to Sara Grisham, Chief Accounting Officer. Please go ahead.
Sara Grisham: Thank you, operator, and thank you, everyone, for joining us for Modiv Industrial's Fourth Quarter and Full Year 2025 Earnings Call. We issued our earnings release after market close today, and it's available on our website at modiv.com. I'm here today with Aaron Halfacre, Chief Executive Officer; Ray Pacini, Chief Financial Officer; and John Raney, 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.
Aaron Halfacre: Thanks, Sara. Hello, everyone. I hope you're doing well. Crazy times. So I know I'm looking forward to this call. I'm sure you are, too. Let me start off by saying that Sara just read the standard preamble that everyone has that talks about forward-looking statements. And 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 point in time because this is going to be Ray's last earnings call, even though Ray is going to be with us for the remainder of the year, it's his last official earnings call, and John is going to be taking over the helm. And I just really want to speak and thank our team. So Sara, 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 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 here and just wanted to welcome Sara to the call, even though she's always been there 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 -- shifting 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?
Raymond Pacini: 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 for 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 $0.37 per share in the prior year period to $0.32 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 had $30 million available to draw on our revolver. Our $262.1 million of consolidated debt outstanding consists of a $12.1 million mortgage on one property, excluding a $12.1 million mortgage on the Santa Clara property that 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 do 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% at quarter end and the January amendment to our credit facility. I'll now turn the call back over to Aaron.
Aaron Halfacre: Thanks, Ray. Let's just -- operator, let's just go to questions, it'd just be easier.
Operator: [Operator Instructions] And your first question comes from the line of Gaurav Mehta from Alliance Global Partners.
Gaurav Mehta: I wanted to ask you, I think in your -- in the press release, you talked about receiving multiple offers and spending some time on one of those and not pursuing it. So I just want to get some more color on what those reasons were for not pursuing the offer.
Aaron Halfacre: I figured you'd ask that. And I don't really have an answer that I can give you other than to say that we, at that moment, didn't see a secure path forward. So we stepped back from discussions. And I think that -- I think fundamentally, there was -- the vast majority of the stuff there was good. It's just that we -- 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 it's just like 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 discussions.
Gaurav Mehta: All right. Maybe on 2026, I was wondering as far as asset recycling, should we expect 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?
Aaron Halfacre: So yes, on a go-forward basis, the recycling will -- as I mentioned in January, we will start to pick up in earnest. I'd say the stuff that's happened in the last 2 or 3 weeks might -- is going to 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 appetite is always there, but it's hard. It's just hard. If you're a buyer, you're pricing in a huge margin of safety because you could be wrong. And if you're a seller, you don't want to sell and do a deal that you would regret literally 30 days later, right? And so the landscape has changed a lot. So I think -- the near term, it's a little bit harder, a little bit cloudier, but it's not -- candidly, it's not any different 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 presume this at some point. It's certainly been long in the tooth, and we would have liked to see it sooner, but this is the narrative we have. So we will continue to honor our recycling. I think the way we're thinking about the recycling and this is a couple of different phases. The first phase is really looking at like we have some noncore assets, particularly office. Those are going to get -- we're going to get rid of those, right? There's only 2 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 at the end of September. That's why we had a little bit of falloff, which is inevitable in 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, 5 years now trying to get that parcel split in -- so that it has its own parcel and we can sell it separately. We are so close to that. We are at a final very detailed scrutiny like filing -- refiling parcel maps. I mean there could be 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 owner -- the right user of that is an owner user or some sort of tenant who might want a 5-year lease or might want a gross lease or -- 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 will get sold. My guess right now, if you were to put a gun to my head, that's like, call it, $7 million to $8 million, right? So it's not a huge number. The other office property is OES. OES has this purchase option. We're talking to them. They -- like it's a blue -- I mean that's an investment-grade tenant, but it's a government, right? That's got -- we think that's a super sticky asset, but it's not a net lease manufacturing asset. So we're going to -- and it is office. It's a balancing act we've waited. We don't -- if we sold it 2 years ago, I'd probably sell like a 10 cap. I mean who wants to do that when you've got really good rent that's coming in. And so we have to be patient. But at some point, you're like, okay, you got to should or get off the pot. And so we'll clean that one up. And that's -- that will happen ideally by the end of the year. I don't -- we're going to be thoughtful about the timing. We're not going to force it, but it's moving forward so no longer to wait. So that's the obvious part. People ask about the Kia dealership. It's a noncore asset. That one is -- the conundrum of 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 UPREIT transaction from about 5 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, I don't want to buy a $70 million industrial manufacturing facility. I would be better served buying sort of 3 $23 million industrial manufacturing facilities and rolling it into it, right? And so that will be an accretive transaction because we'll talk about the forward pipeline here in a bit. But that cap rate that it's selling at, we would sell the Kia is at least and if not more, 100 basis points tighter than what we can redeploy it. 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're -- we'll be patient on that one in terms of noncore. That will happen when we find the right target to roll it into. So setting that noncore aside, obviously, we move the office. And then from there, we have a lot of short WALTs. And our short WALT philosophy is that we will do our darnest to see if they will extend. We will have conversations with them. We are starting to have those conversations if they're willing to extend and not just extend like 2 years, like they can really give us something that makes us decide we might want to keep it for longer term or if they don't, realizing that let's just clean up the WALT. 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.Carey, that you get down to the option periods and CFOs and things like that typically just -- they just exercise 5-year renewals, 5-year renewals, they exercise their option periods. That's normal. But we have a period of time right now that we can positively -- have a positive arb by selling certain assets, even if they're shorter WALT and creating more AFFO by reallocating them into longer WALT and having a more solid portfolio. So 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 do need to roll it into a replacement property ideally. There's other uses for it, too. I won't get into that, but we could use that money fungibly, but that was one that is an example. That's a property that it's a short WALT. 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 are nothing wrong with them. They're perfectly fine. They're just smaller. They're less institutional. And so they would -- I think recycling those at the right time, and that might be this year, it might be early next will allow us to just clean ourselves up that much more. And when I say clean up, it doesn't mean more 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 offers and the interest and -- it's helped us say, hey, if we do these things and extract the value for our shareholders, then we're going to be in a really solid position. 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. They are certainly lower cap rate assets that 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 yes, we're not -- 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 we just -- that's not how you're supposed to manage the REIT. So we're trying to be thoughtful about that. But -- so the selling of the assets is actually pretty easy. You can happen pretty quickly and you -- a lot of brokers 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 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 product 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, make sure you 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 list, and you can't be the princess and the pea about it. You have to really be compromised 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. Some of it is just like we still -- sometimes we're still waiting for the OMs, right? They're like, and it's like the OEMs 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. But 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 weird time in that regard. And so we're looking at our box, the buy box, making sure we're looking -- we're looking at a lot of things. I'd say price talk about overall is interesting. 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. We have -- our internal NAV happens to be done by a blue-chip appraisal firm, Cushman & Wakefield, and they've been doing it for, I don't know, 6 years. there's consistent history if you go piece it together. And so you're like, appraisals are full of s***, right? They don't -- they're not real, but they actually are pretty indicative. I would tell you that we have -- I can think of 3 properties in our portfolio in the last 6 months where we have received unsolicited offers that are at or below the cap rate that is implied in our appraisals. So -- 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 $22.19 NAV, I think round numbers, it's an implied 6.8% cap rate. First, you think, well, you're not trading anywhere near that, and we're not. And price talk, we've seen and the 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 tenancy that's very similar to our largest tenancy in terms of the sector. And it's got -- they're talking 6.75% on that one. We saw another property where someone was talking 6.75%. 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 7%, might be 7.25%. But clearly, you're seeing stuff between 6.75% and 7.5% right now. You just got to find the right thing. Sometimes you'll find something that might -- if something is 7.5% and it's just dog doodoo, you don't want to pay 7.5%. If something is great and it's a 7%, then you can do it. But sometimes there's dog doodoo that 6.75% too. Everyone is trying to do their own thing. But I would say that the pipeline right now, and it's a little bit of a strobic effect when you see it, sometimes it's there, sometimes it's not, like back on, it's tighter than it was a year ago. It does feel tight to me. Whereas a year ago, I was probably saying 7.5% to 7.75%, now the talk has gotten tighter. I think that might be a little bit of the optimism that we saw 3 or 4 weeks ago. And now I'm not really hearing calls for the last 2 weeks, but I think everyone is 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 not extended. And then 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 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 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. It's -- 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.
Gaurav Mehta: I appreciate it. That's all I had.
Operator: And your next question comes from the line of Jay Kornreich from Cantor Fitzgerald.
Jay Kornreich: 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 the 100% pure-play manufacturing industrial over the next 24 months? Or does maybe the time line shift just with everything that's going on at the moment?
Aaron Halfacre: Yes, I do because I always like to underpromise and overdeliver 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? So 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. So -- and theoretically, just putting out our portfolio, I could -- if I identify 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 these things, but it doesn't mean it can't happen. It doesn't mean we are not looking. But if you found a $100 million portfolio of assets that you like that you could line up to purchase that met your box, and then you sold your -- you could take your assets out to market, they would all be reversed 1031 or forward 1031 designated exchange and you're done in one fell. It's the pipeline that matters. So yes, I do think 24 months is very realistic and doable.
Jay Kornreich: Okay. I appreciate that. And then just one follow-up. And I recognize that there's a 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 light of others looking for a portfolio like yours? And how do you expect additional potential inbounds moving forward?
Aaron Halfacre: 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, right? So in our space, you obviously had the real germane thing you had sort of Fundamental, 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 opportunistic fund in '23, you've got a 3-year investment window maybe or you raised it in '24, you've got a 3-year deployment window that you had to get it deployed. At some point, people are starting to deploy and they were waiting and they're waiting. And I think we saw early signs -- 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 starting 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 rates 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 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. There are too many undercapitalized REITs out there and we are in one of those buckets. We understand people say why did you ever go public? Well, we -- at the time we were a nontraded REIT, and we knew that we didn't provide immediate liquidity, we would be gating and no one wants to gate as BREIT, ask Starwood REIT that thing. They're much bigger, so they can afford to do it, but no one wants to do 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 -- off the top of my head, I would think our share price is 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 2.5% in place. You've got manufacturing tenants that don't have obsolete -- arguably that the real estate is already obsolete in the sense that it's not whizbang. It's been doing this stuff for 40 or 50 years. It's really good durable real estate, and it's still here, right? 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 obsolescence value. You're buying a core income-producing value. And with the EBITDA 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 in the 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 the war, they typically rally, but they sold off, which base rates gone up. But if you think longer term that we'll 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 401(k)s and things like that, there's a natural demand for this nice pool of portfolio. We are synergistic, right? 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 would be fun to do that, but they're looking at the assets. And you can -- this portfolio, you can strip out -- it's pretty simple. You can strip out the G&A and it becomes accretive. 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 going to just give it away that might be a great payday for me because 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 $0.10 a share per month and get 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 allocation. I think the last element is, look, there are arguably 4 small cap industrial REITs that I can think of -- and maybe you can include ILPT in there, so maybe that's 5. But of those 5, ILPT and Gladstone are externally managed. So good luck with that, right, getting the whole of those. And the other 3 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 sector or you like the space, there's not a whole lot you can do, right? So that's where we're at.
Operator: [Operator Instructions] Your next question comes from the line of John Massocca from B. Riley Securities.
John Massocca: So I know you 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, I guess, maybe that kind of post 24-month time line that was kind of talked about in that update. Just kind of curious how that changes your mindset, if at all.
Aaron Halfacre: I think that -- 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 try and take it -- keep the upside for themselves and give you a few shekels. I think what this suggests to me is that barring someone closing that value gap -- and again, closing that value gap does not mean $22. Let's just all be clear. No one is going to do that. No investor in the right mind or buyer in the right mind is going to do that. But there's no upside, right? They don't -- they want it bad. They just buy a bond, right? So they need upside, but our investors need upside. And so there's -- it's a dance of where that is. But what it suggests to us is that if we didn't have -- like if you look at -- 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. I'm going to use that to get lower price. But what we have the ability to do is 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 people are dealing with inflation and bonds are doing this, it's crazy. And you're like, what do you expect if you went and ran a process now or in 6 months, right? 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. Let's 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 going to decrease in the dividend, but let's assume no increase either. That's $2.40 of income in the next 2 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 in an environment where your type of car that is for sale is in demand. And so doing so prematurely would suggest 1 of 2 things in my mind, would suggest doing so prematurely is running a shred 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 got -- we don't have weak stomach here. Or two, do 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 there an opportunity comes along that closes the value gap and you say, well, okay, 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 -- continue to get dividends and part in the REIT upside. There's a lot of different ways to look at this. 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 -- and if you did go into an offer unless it was an offer where you felt secure and there was no go-shop associated with it, you're effectively having a process there. So that's -- I think really thinking about it philosophically to think about what does the strat als process suggest. I think there's been a lot of REITs out there that have -- that are undergoing strat als processes, even if they're quiet or they're done some publicly. And 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?
John Massocca: Okay. That makes sense. Maybe on a more detailed level, and apologies if I missed this in the prepared material. What were the terms of -- or the potential terms of the Melbourne, Florida office sale? Or is that kind of TBD?
Aaron Halfacre: The terms are well known, but I'm not to us. And I -- 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 earned 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 that, 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 Kalera, and let's just all be honest, we took a loss on Kalera. 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. And once it closes, which my guess is we will -- well, we will absolutely tell you what happens on it once it closes.
John Massocca: Okay. And maybe with Kalera, the former Kalera property in mind, can you remind us what the kind of, I guess, cost of carry was for that in 4Q or kind of the OpEx costs associated with that asset in 4Q that's going to go away now that you sold it in January? Like roughly.
Aaron Halfacre: Ray, do you know roughly on top of -- it's not -- it wasn't terrible...
Raymond Pacini: Yes. I mean I think it was running about $20,000, $30,000 a month.
John Massocca: Okay, that's it for me. And Ray, appreciate all the help over the years that you've shown on these calls.
Operator: There are no further questions at this time. Please proceed.
Aaron Halfacre: Everyone, thank you so much. I know we came out a little bit later. That was because of the aforementioned offers. I don't like to come out as late, but it didn't seem -- we are a pebble in -- causing a ripple in the ocean that is raging right now. So I appreciate all that did join. Wishing you the best of luck for your families and your portfolios and talk to you again for next quarter. Thanks so much.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.