Modiv Industrial proposes reverse stock split to tackle dormant accounts
- Modiv Industrial proposed a reverse stock split to enhance liquidity and reduce administrative costs.
- The proposed stock split is intended to convert dormant accounts into fractional shares.
- If enacted, the plan aims to facilitate cashing out these shares, ultimately benefiting shareholders.
On May 23, 2025, Modiv Industrial, Inc., a public REIT focused on acquiring industrial manufacturing real estate, issued a message from its CEO to clarify the rationale behind a proposed reverse stock split. This proposal seeks stockholder approval to give the company the option to implement a reverse stock split of common stock at a ratio between 1:500 and 1:1,500 before December 31, 2026. The aim of this measure is to reduce administrative costs and increase liquidity by addressing a significant number of dormant accounts holding fractional shares, which the company has identified as a pressing issue. Modiv's management explained that many of these accounts contain between 500 and 1,500 shares, and the plan entails a temporary large reverse stock split to convert those holdings into fractional shares. This will allow the company to facilitate cashing out or selling these fractional shares, reducing the number of dormant accounts and ultimately saving costs. A forward split will be executed afterward to revert the share price to a more standard level, preventing the long-term impact of high share prices that could arise from annual reverse splits. The company recognized that if stockholders approve the proposal, it does not obligate them to carry it out. There is a strong emphasis on transparency as Modiv hopes to encourage account holders to move their shares to brokerage firms. The intent is to address inefficiencies currently present by improving the overall management of individual accounts and significantly reducing the burden of dormant shares on their administrative processes. Feedback from stakeholders is welcomed, and the CEO expressed hopes that increased transparency and communication will provide clarity for shareholders as they consider the proposal. This communication represents a commitment to openness about company strategies and the potential impact on shareholders, fulfilling Modiv's mission to prioritize accountability and shareholder value.