Modiv Industrial Inc (MDV) 2025 Q2 法說會逐字稿

Good day and welcome to Motive Industrial Inc second quarter 2025 conference call. (Operator Instructions) I would now like to turn the conference over to John Raney, Chief Operating Officer and General Counsel. Please go ahead, sir.

Thank you, operator, and thank you everyone for joining us for Motive Industrial second quarter 2025 earnings call. We issued our earnings release before market opened this morning and it's available on our website at motive.com.

I'm here today with Aaron Hacer, Chief Executive Officer, and Ray Puccini, 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. Forward-looking statements are identified by words such as will be, intend, believe, 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. With that, I'd like to turn the call over to Aaron Halfacre.

Yeah, thanks, John. Welcome everyone to the second quarter of 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 two industrial manufacturing property acquisitions since June 30, 2024.

Second quarter adjusted funds from operations or AFFfo was $4.8 million, up 22% when compared to the $3.9 million in a year ago quarter.

The $900,000 increase in AFFfo reflects a $576,000 increase in cash rents, a $217,000 decrease in GNA, and a $126,000 decrease in preferred stock dividends.

AFO per share increased 12% from $0.34 per share in the prior year period to $0.38 per share for the second quarter of 2025.

The increase in AFLfo per share was less than the 22% increase in AFFfo due to a $1.2 million increase in diluted shares outstanding, which reflects 895,00043 Class X operating partnership units issued during the first quarter of 2025 and 344,119 Class C operating partnership units issued in connection with a property acquisition in March 2025.

Cash interest expense for the quarter was $255,000 less than the comparable period of 2024, reflecting a decrease in the weighted average fixed rate as set by the respective swap agreements from 4.53% in June 30, 2024 to 4.25% in June 30, 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 minus or better.

Annualized base rent for our 43 properties totals $39 million as of June 30th, 2025, with 39 industrial properties representing 81% of AVR and four non-core properties representing 19% of AVR.

With respect to our balance sheet and liquidity, as of June 30th, 2025, total cash and cash equivalents were $5.8 million, and we have $30 million available to draw in a revolver.

Our $280 million of debt outstanding consists of $31 million of mortgages on two 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 30, 2025 of the fixed interest rate with a weighted average interest rate of 4.27% based on our leverage ratio of 48% at quarter end.

As previously announced, our board of directors declared a cash dividend for common shares of 9.7.75 cents for the months of July, August, and September 2025, representing an annualized dividend rate of $1.17 per share of common stock.

This represents the yield of 8.1% based on the $14.44 closing price of our common stock in August 6, 2025.

I now turn the call back over to Earn.

Thanks Ray. I kind of said in the press release this quarter was a little boring. I would say for me personally it's probably a little frustrating. But I think hard work and patience can be frustrating at times.

And it was boring in a context, probably on a relative basis to others as well as to our past quarter, right? So we didn't choose to be very active this quarter. We obviously got the lease extension in Northrop. 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, obviously you, you've seen our share 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 16s and we've been in the 14s 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 disciplined. We're not going to issue, we didn't issue any at those prices, and we won't. And so it was a It was a quarter where there was a lot of volatility.

There was a lot of opportunities to buy. I think I probably purchased 4 or 5,000 shares myself.

It's ridiculously cheap. I mean, I don't, I think one of the analysts probably has the implied cap rate, but it's like in the mid 8s, and you, there's no way you can buy these properties.

He handled the low sevens or mid 7, some of them are high sixes, so it's just, it, it's comforting in that regard, but it's also frustrating. That's the troubles of being a small cap name. And again, patience begets patience, 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 you know it was a solid quarter. I think the decisions we've made repeatedly and consistently is why we had a large beat and so the decisions, even the absence of activity this quarter, my belief is that that'll pay dividends and when we're talking this time next year, right? And I think that's the pro process is just to be really patient, 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 retail tribe. It's increasingly an institutional tribe, but it's largely a retail tribe where people 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 would love to be able to do more things. I mean, that's, 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.(Operator Instructions) Gourav Mehta of Alliance Global Partner.

Yeah, thank you. Good morning.

Good morning, hey.

I wanted to ask you on some of the remarks that you made in the earning release about, asset recycling. It seems like the environment is getting better for you guys. Maybe get getting closer to sell some of those assets. Can you provide some more color on, I guess, in what you're seeing as far as recycling and then the $150 million dollar asset that you mentioned, what kind of is it going to be a 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.

The budget of an encore is in process, right? So as KB Homes is under contract to buy Costco. We expect them to, extend, at least one extension.

That one is, it's 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 the city.

And it's a reminder that I think there are 1.7 million hard money already, and so that one is one of the noncores that's in the process of liquidating. We've mentioned in the past OES has an option to purchase the property. They are in the throes of their very 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 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 to market, but there are some assets that don't quite fit our box. Most of them are industrial, they're legacy assets, they are.

Would be very creative, so they would be selling in, high five, low sixes, and we will red redeploying these, in the sevens, and so, and 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 unsolicited offers because one, if someone goes out of their way to make you an offer then they they clearly find the property attractive and then not every pro, no one's doing that for Calera, so we understand the difference, and we've been able to note over periods of time how those cap rates that have been unsolicited have tightened.

And so we think that, 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 or be approaching the time to start doing that. And so that's probably, I think in fairness, we talked about that at a big level that called $150 million of proceeds, which I think, 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 in the 14, and we're not issuing. And we would be 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, we're still shaving off expenses, we're getting tighter, we're growing a low, we're doing all the things that we need to do. We just may not be acquiring a ton right now, which is like, the cocaine of the real world.

And we're not doing that, but we feel comfortable that we have additional lever to pull, 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, we're clumped. 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, but we've been thinking about it, but we're thinking the timing 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 are exploring even the term loan is not expiring until 207, you have been exploring a different options. Just wondering, I know you said there's lending available, but just wondering, what kind of terms and rates are you seeing in the, in the market.

Yeah, so, I like to work. I'm just, I'm 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 golf. 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 grindy stuff to do necessarily, I'm going to spend that time thinking.

12 and 18 and 24 and 36 months down and just iterating what could go here, what could be there, like I'm a big, as you guys all know, I'm a big A fan of capital market history. I know what we have done in the past, but I love this industry. I've been in it for a long time, so I spent a lot of time and like there's certain things, we're not reinventing the wheel here. And so during this quarter, I spent a lot of time.

One of the natural things to do is to say, okay, we've got on our event horizon, we have a term loan maturity, a credit facility maturity, and so let's get started talking earlier. We've talked to, obviously, our bank syndicate, 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 AFO growth over the last three years, the balance sheet has become very solid. We, remember when we put that first 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, we're exploring the full gamut 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, the wildcard clearly for anyone here is, what are the broader, what's the that going to do, right? Are we going to see treasury come down?

We're going to see sour come down. We're going to see that that's going to drive the needle, like, and like, you see it, you see the, we're, robustly levered small cap name and then, there's a Fed fart in the news and, we whips off, right? And so. That's if we do find rates coming down, which I think, everyone's going to make their own bets over the course of the next 12 to 18 months, and that's going to be a positive, right? But as in as it relates to the terms and the structure, we do not see anything negative in our conversations.

And if something comes up that changes that, well then you're going to hear it from me, but right now we feel encouraged by it, and we are early, I think. I don't feel any pressure about, 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, we've got 14 plus Walt, and that includes things like, Two months on solar and that included, like, the shortening of Costco.

You remove those things. Our walt's more like an 18 or 19 year walt, so the real core portfolio is solid with bumps and growing and so it's very attractive to the lenders.

Okay thank you that's all I have.

Thanks.

Craig Kucera, Lucid Capital Markets.

Yeah, good morning guys. You had a pretty sizable pick up, in income recognized from your joint venture, or your tech interests I should say. Can you give us some color there and what to expect going forward?

Right.

Hello.

Hello.

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

I would say, I'd say that what you know we're as we've noted in prior quarters, we're, we are an active dialogue and and discussion with our chick partner, it's it's important for us, that we.

In a timely manner, and the tick. There's a variety of ways to end that tick, but ticks are ticks are a throwback of probably the, pre-GFC construct, and you don't see a lot of ticks anymore, even though they thumb around and they're just not as fluid for a week. And so our goal longer term, and I don't again, longer term is longer than.

This month is to get rid of that tick 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 pick up after now that we signed the lease.

I got it. That's helpful. And changing gears, you took the impairment charge, looks like that was taken on the Calera equipment. I guess are you moving closer to maybe a sale there versus trying to lease it, or is that just to, how are you thinking?

Yeah, so we've had, it's on the market and we've had, 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 its equipment is now Progressively in several years older and we're finding less of a market for it, unless you find that particularly growing style. So we decided to take the impairment.

Against that, doesn't mean that, we might not find a buyer that values it, has some residual value, but we just figured that was a cleaner way to go. And yeah, our goal is to my ideal context is that property is gone, if all, if if I have any powers within me to get rid of that property by the end of the year.

Got it. When the tariffs first started being announced, 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 the 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 an analysis, but what from the ones that we have seen and, it's a good chunk of them. Yeah, it's, well one I'd say too is we really haven't, I mean the tariff dance is just kind of been.

Kicked down the street this summer and so we have really not seen a ton of definitive tariffs until like, earlier this week or last week, but the impact has been as we underwrote, right, that, I think there's not been any cop 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 it in the numbers, and some of them are saying that.

Some of the bigger capital decisions that their clients are opining on or deciding are a little bit delayed because everyone's like everyone is waiting to see what does the world look like, right? And so that that seems normal to me and so the conversations are not that their 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.

Again, I still don't know exactly where Canada shakes out right on this, but.

I, the countries that have announced, I, we don't really have exposures to, I think the China deal if it gets solidified the way we think it's going to get vilified, I think that's probably a win.

And so I just don't see an issue on tariffs, for our particular set. It 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, 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 has until August 15, so we've been in conversations with them. They've 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 in in December, and it, the reason is purely logistics with the city it is not sort of a contemplative thing from what we've gathered, it's just the city has got a process they have personnel they've been taking vacations and doing this and that process is taking longer than, and you can't push a push a string. So, they have another 8 days before they need to, officially do the extension. We expect them to do that. The rent, ready, you have the rent on hand that Costco's paying.

Yeah, it was running about 2.4 million.

Got it. Finally for me, late last year you're looking at a number of transformational transactions you didn't close, but they were still potentially out there, and they come 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 parties, it just needs to be the right environment. And It feels like we could be getting closer to environments that are conducive to those. So, There are still conversations.

But they're more as well, the last, first half of the year, they've been sort of more checking in conversations, right? Because a lot of moving parts and it's just really hard for Teams and balance sheets across the spectrum to to pull triggers and make decisions without, maybe a few data points a little bit more solidified. So I'd say they're still on the table. I think they have to be too, right? Because we can't just.

Stroll down the lane and do this, little bitty stuff forever, right? We're too small of a reed, so we have to do something transformational at some point. I don't think it has to be today, but if we're, if we were a $150 million market cap re in five years, then you should shoot us.

Right, this is not 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, unless someone who's just, that's not us, right? We care about our shareholders. I, that's all I am as a shareholder, even though I, I'm the CEO, all my compensation is shares, right? So it's, and so we're completely aligned in that regard and so transformative 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.

Yeah.

John Massocca, B Riley.

Good morning. It's kind of a 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, I mean, do you think there's, maybe an opportunity given some of the loosening of capital broadly out there in the markets to maybe market motive in its entirety as kind of a portfolio and platform or either.

Or. So, I've talked about this before, look, we and I think I did it in the context when we released our appraisal. So every year we get our portfolio appraised. It's a tradition we have.

When we were pre-public as a non-trader, right, and where we were, I'm not like unlike a Blackstone Reed or Starwood Reed 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 arm's length in aprise zone. We continued 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? 23 $75.24 dollars, something like that.

And look, that's done by Cushman Wakefield, very respectable, but if you look at sort of, sonare sort of indices and work relative to nay, 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 GAAP definitively, then we have to listen. That's our duty. That's our job. Are we going to go solicit that? No. I don't think that would make the most sense right now because candly if I was going to solicit and go sort of and again but me it's just the board decision and I'm just one member of that board, is that.

Soliciting that would mean that we're waving the flag that we think that we capitulated and I don't want to see pre predatory.

Sort of.

Characters coming into play, right? I can remember back when we were at $9.53 and we got like fucking 3,000 shares trading. It was a mess, right? We were just, this was like late 2022. We had a lot of people sniffing then, but they wanted to go pay, $10 a share. It was like fly kite, right? Because in 4 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 cat breeds in particular, we're holding up relatively well. If you look at us compared to some of the other small cap breeds, and like, for various reasons, I look at like, I look at play and I look at good and I look at pine, and I look at front view, and I look at these guys and, we're other than when we fell off a cliff right before the Russell announcement, we, we've been holding up pretty well. And I think that resonates with the tribe. And so our view is we're going to keep climbing that mountain, we're going to keep delivering dividends, and we're going to TRY to close that value GAAP and smart money will know that if they want to close that value GAAP sooner, we're going to listen, right?

And so I think that's the approach we're going to take, because I think it, we, our investors deserve us to fight.

For them not to be, not to have hubris, not to be ego. I mean, 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 wheat 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.

Begging.

Okay.

And then how do you kind of think about understanding that kind of in the volatile kind of capital markets and, cost of capital moving around, you have to be mindful of that and the impact that acquisitions and and the like have on 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 I talked before about maybe being more attractive as something. For private capital to come in, come and look at.

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

So right, obviously you know you passed 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 sub scale and so how are 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, we'll only continue to be attractive, right? If we only do, if we 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, then those will always mean that we'll be traced. We could triple in size tomorrow and we're still bite size, right? So I think on the from public or private spectrum, we are going to be in that box of always someone's, appetizer.

For a quarter or the meal for the year depending on the size of the other 5, 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 dollars dollar market cap or larger, you're on the food chain, right? So I'm cognizant that our existence is going to be one where we are always going to be, a lab. And people are always going to check on us until unless, the Greek gods line up and we kind of suddenly are, 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, recycle legacy assets and, we have, I think one or two double net leases that we didn't acquire, if we recycle shorter wall stuff and we end up being a very, ironclad battleship of a walt of 18 years and a clean balance sheet and we're operating well and we're smooth. That's just going to make us even more attractive and more valuable. And then in the meantime while we're doing that, our investors are getting paid a dividend. So I'll give you an example. Let's just say, Wild Bluere came tomorrow and said, we want to buy you for $15 a share. We'll be like, well, that's not much of a premium. And and they wanted to pay cash. I imagine our investors would say no. They'd say no because chances are in 2 or 3 years, we could very least be worth 15 if not more, and we'd also have made over 3.5 bucks worth of dividends. So that economic value becomes 18 or 19 or 20. And so I think for us. 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, either we'll get there and, I don't think it's a matter of, 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 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, 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 as to whether to green light that project or not?

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

It it it's zoned to allow additional housing.

Yeah, the zoning is already there. This is sort of a plan approval, I believe it's bureaucracy and logistics, that said.

It is, there's always, I think until the, what I do know for sure is there's 1.7 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 on sale. It's there's a lot of ketosis in that assumption, but I don't think it's happening.

Okay, that's it for me thank you very much.

Great, thanks.

There are no further questions at this time. I will now turn the call back over to Earn Hapacer, Chief Executive Officer. Please continue.

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

Yes, one more question from Steve Chick of CI Garden Capital LLC. Please, your line is open.

Hey hey, thanks. .

Just to clarify on the 150 million of recycled assets that you've kind of soft circled, the Costco property, the $25 million you're 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 I will not. Let's put that, I surely can, but I won't because, and the reason is that we, 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 anyone can go read up on us and so we like to preserve a little bit of adoptionality. Suffice to say they're 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, the Costco one, yeah, the Costco one is like.

It's great that they're buying it and as you recall, there was other home builders that bid on that process. They were the top bid. So this, the destiny of that property is to be, 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, they don't move the needle candidly after we pay back the loan, there's just not a ton of proceeds. It should be good to be free of it and move on because that was technically an office. But these other ones we're talking about are, these are things that we again received unsolicited offers for in the past. They would be construed as very liquid. And so that sensitivity on a recycling and so which no one's asked really is because these are legacy properties, they all have very low tax bases and so you have to think about them in terms of 1,031 exchanges. And to do a 1,031 exchange, so you don't incur a tax liability, which is a no no worry, is you have to be very thoughtful and very line things up. And so, part of that is, what is the, what do you replace them with is just as important. I think that the decision to sell them is an easy one to do. It is not one that will take long and I do not think that, we'll be wringing our hands worried about, 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's the other part of this equation that, we're starting to see come into play is that, you go back 4th quarter of last year, 1st quarter of this year, there was just not much inventory being, available to acquire, certainly not like we like. I mean, some deals are going down, 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 fall. It's also starting to see people say, hey, we're willing to 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 suffice to say legacy properties, valuable properties. Things that should move fast.

Okay, that's very helpful. And then second, if I could, in your comments about kind of the numerous unsolicited overtures, you'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.

You read it pretty accurately.

Okay, great.

Thank you.

But there was no, double entendres there, so.

Doesn't mean that it's increased, right? Sniffing, that's how I describe it.

Right.

Obviously if there's if there yeah if there's something that was, very specific and very formal, then that would be a different type of disclosure.

Right, okay, thanks.

.

All right, Danny, I think we're there. I will run with it now. Everyone, thank you so much. It's so much more enjoyable to just answer questions, 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 they 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 the job for me to have a dialogue with an analyst or or an investor is to Help create understanding. Again, our balance sheet is 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, What are my motivations? What are our proclivities? What are, what's our past history? How all these things that everyone has that makes up who they are, make the impact of decisions, right? And so as a reminder, I think I'm like an 8.9% shareholder of the company. I have put all my eggs in this basket. I watched this basket 24/7. 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, God bless her souls, she's not here anymore. My grandmother's money, right? And damned if I'm not going to screw that up. And so that's how we think about it. And, I think it's refreshing. It's refreshing to me, and I know increasingly we get comments from people that, Wall Street people are looking forward to seeing what Aaron's going to say because, look, I'm a bit uncharacteristic in my writing style and maybe my speaking style, but I hope it resonates. I'm preaching 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 comes in the next quarter. Thanks everyone.

Ladies and gentlemen, that concludes today's conference call.

Thank you for your participation. You may now disconnect.