Contingencies and Commitments

3 Months Ended

Dec. 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 five new build-to-suit, industrial buildings that are currently being developed in Illinois, Indiana, Kentucky and Texas totaling approximately 1,595,000 square feet to be net-leased to investment grade tenants for terms ranging from ten to fifteen years. Four of the five buildings, representing approximately 996,000 square feet or 62%, will be leased to subsidiaries of FDX. The aggregate purchase price for the five properties will be approximately $113,454,000. The Company has made deposits totaling $800,000 on these acquisitions as of December 31, 2013, which is included in Other Assets in the accompanying Consolidated Balance Sheets as of December 31, 2013. Subject to satisfactory due diligence, we anticipate closing on three of the acquisitions during the remainder of fiscal 2014 and closing on two of the acquisitions during the first half of fiscal 2015. The Company intends to make additional acquisitions in fiscal 2014 and in fiscal 2015 and the funds for these acquisitions may come from mortgages, draws on our unsecured line of credit, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the DRIP, private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.

In connection with one of the five purchase commitments discussed above, related to a 328,000 square foot facility to be leased to a subsidiary of FDX, FedEx SmartPost, the Company has entered into a commitment to obtain a $14,000,000 mortgage at a fixed rate of 3.95%. The Company has currently paid commitment and loan processing fees totaling $302,466, of which $288,000 will be refunded at closing, which is expected to take place at the end of the second quarter or at the beginning of the third quarter of fiscal 2014.

The Company has also entered into separate agreements to expand three properties consisting of expanding two existing buildings (one by 51,667 square feet and one by 55,037 square feet) and expanding one parking lot. The three properties are leased to FedEx Ground Package System, Inc. Total expansion costs are expected to be approximately $8,234,000, consisting of approximately $7,434,000 in building expansion costs ($69.67 per square foot) and $800,000 in parking lot expansion costs. As of December 31, 2013, the Company has incurred expansion costs of approximately $1,450,000 and the total remaining expansion costs expected to be incurred during fiscal 2014 amount to approximately $6,784,000. Upon completion, the expansions will result in a new ten year lease extension for each property being expanded and will result in total increased annual rent of approximately $820,000.