Aaron Halfacre, president and CEO of Modiv Industrial, Inc. (NYSE: MDV), was a guest on the latest episode of Nareit’s REIT Report podcast.
Halfacre discussed Modiv’s evolution toward focusing on industrial manufacturing facilities, after starting out as a diversified net lease REIT.
“We discovered that industrial manufacturing facilities were, like us, flying a bit below the radar and also, like us, providing investors with very attractive upside potential. The manufacturing sector has strong fundamentals, solid cap rates, healthy contractual rent bumps, long-term dependable leases, and somewhat of an inefficient transaction marketplace. All of that made it clear to us that we were onto something,” Halfacre said.
In the past 24 months, Modiv has acquired more than $200 million in industrial manufacturing assets, while completing the sale of the bulk of non-core assets.
Meanwhile, Halfacre noted that the United States is benefiting from pronounced investment in the manufacturing sector. The reshoring movement is bringing previously imported goods and manufacturing jobs back to U.S. shores, he said, and this effort is expected to continue over the next decade. “It really is an exciting time for manufacturing,” he said.
With a concentration on existing mission-critical manufacturing sites focused on producing infrastructure-based products, “we have expansive opportunities to scale Modiv into a much larger REIT just from the many high quality existing facilities already up and running within the U.S. today. We see a lot of opportunity to drive growth and shareholder value,” Halfacre said.