OPERATING PARTNERSHIP UNITS

9 Months Ended

Sep. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

OPERATING PARTNERSHIP UNITS

As of September 30, 2025 and December 31, 2024, there were 1,593,328 and 1,249,210 Class C OP Units outstanding that were not held by the Company, which are entitled to distributions, but have limited voting rights. After the Class C OP Units have been outstanding for at least one year, the holder may require the Operating Partnership to exchange all or a portion of such holder’s Class C OP Units for cash or, at the option of the Company, shares of Class C Common Stock on a one-for-one basis. On March 7, 2025, the Company acquired an industrial property whereby the seller received 344,119 Class C OP Units valued at $5.9 million, based on an estimated fair value of $17.00 per Class C OP Unit (see Note 3 for additional information).

On February 3, 2025, the Company entered into the Fourth Amended and Restated Limited Partnership Agreement (the “Amended OP Agreement”) of the Operating Partnership, to, among other things, incorporate prior amendments to the Third Amended and Restated Partnership Agreement, and designate and set forth the terms of the Class X OP Units. As of September 30, 2025, the Operating Partnership had awarded a total of 895,043 Class X OP Units to employees. Class X OP Units generally are entitled to receive the same current distributions that are paid on the Class C OP Units.

Prior to September 30, 2024, the Company had issued three types of units of limited partnership interest in the Operating Partnership (“Class M OP Units,” “Class P OP Units,” and “Class R OP Units”), which were not entitled to distributions and had no voting rights. During the nine months ended September 30, 2024, all of the Class M OP Units, Class P OP Units, and Class R OP Units automatically converted to Class C OP Units. Some of these units were then exchanged on a one-for-one basis for the Company's Class C Common Stock.

OP Unit and Stock Compensation Expense

Stock compensation expense for the OP Unit awards and for stock issued to the board of directors for the three and nine months ended September 30, 2025 and 2024, was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Class P OP Units	$	—	$	—	$	—	$	89
Class R OP Units	—		—		—		1,222
Class X OP Units	751		—		1,925		—
OP Units stock compensation expense	751		—		1,925		1,311
Class C Common Stock issued to the board of directors	60		75		180		210
Total stock compensation expense	$	811	$	75	$	2,105	$	1,521

As of September 30, 2025, total unrecognized compensation expense related to the Class X OP Unit awards was $11.5 million with a weighted average remaining term of 4.1 years.

Distributions and Allocations

Class C OP Units and Class X OP Units received the following distributions and allocations of net income (loss) during the three and nine months ended September 30, 2025 and 2024, as follows (in thousands):


	Three Months Ended September 30, 2025				Nine Months Ended September 30,
	2025		2024		2025		2024
Class C and Class X OP Units distributions paid	$	727	$	502	$	1,894	$	1,543
Class C and Class X OP Units net income (loss) allocation	$	29	$	(461)	$	(582)	$	388

- Definition

The entire disclosure for business combination.

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+ Details

MODIV INDUSTRIAL, INC. 10-Q