Contingencies and Commitments

6 Months Ended

Mar. 31, 2013

Contingencies and Commitments [Abstract]

CONTINGENCIES AND COMMITMENTS

NOTE 10 – CONTINGENCIES AND COMMITMENTS

From time to time, the Company may be subject to claims and litigation in the ordinary course of business. Management does not believe that any such claim or litigation will have a material adverse effect on the consolidated balance sheet or results of operations.

The Company has entered into separate agreements to purchase eight new build-to-suit, industrial buildings that are currently being developed. These buildings are located in Kentucky, Minnesota, Missouri, Pennsylvania, Texas, Virginia and Wisconsin, totaling approximately 1,420,000 square feet, which will be net-leased to investment grade tenants for 10 or more years, of which approximately 862,000 square feet or 61% will be leased to FedEx Ground Packaging System. The aggregate purchase price for the eight properties is approximately $96,105,000. Subject to satisfactory due diligence, we anticipate closing these eight transactions during fiscal 2013 and fiscal 2014. The Company has made deposits totaling $1,800,000 on these acquisitions as of March 31, 2013, which is included in other assets as of March 31, 2013.

In connection with the Kentucky, Minnesota, Pennsylvania, Virginia and Wisconsin acquisitions, the Company entered into three separate commitments to obtain self-amortizing mortgages totaling $37,475,000 at fixed interest rates ranging from 3.84% to 4.17% for terms ranging between 13 and 20 years. The Company has currently paid commitment and loan processing fees totaling $434,250, of which $416,250 will be refunded at each respective closing, which are expected to take place during the third quarter of fiscal 2013 and the first quarter of fiscal 2014.

The Company has entered into separate agreements to expand three existing buildings leased to FedEx Ground Packaging System, Inc. by approximately 170,000 square feet. As of March 31, 2013, the Company has incurred expansion costs of approximately $3,900,000 (including $988,300 for the purchase of land, see Note 3). As of March 31, 2013, the total remaining expansion costs expected to be incurred during fiscal 2013 and fiscal 2014 amount to approximately $10,100,000. Total expansion costs for the buildings being expanded are expected to average $83 per square foot. Upon completion, the expansions will result in a new ten year lease extension for each building being expanded and the expansions will result in total increased annual rent of approximately $1,400,000 averaging $8.20 per square foot per annum.

The Company has entered into a commitment to renew and increase its $20 million unsecured revolving credit facility, which is set to mature in June 2013. The renewed credit facility will be increased to $40 million with an accordion feature up to $60 million. The renewed facility will mature in June 2016, has a one-year extension option, and will bear interest at LIBOR plus 175 basis points to 250 basis points depending on the Company’s leverage ratio. Based on the Company’s current leverage ratio, the facility will bear interest at LIBOR plus 200 basis points. The current $20 million facility does not have an extension option and interest is at LIBOR plus 200 basis points to 250 basis points depending on the amount drawn down on the facility, which is currently at LIBOR plus 200 basis points. The Company expects to close on its renewed credit facility during the third quarter of fiscal 2013.