UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 3, 2017
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND | 001-33177 | 22-1897375 | ||
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(IRS Employer Identification Number) |
3499 Route 9N, Suite 3D, Freehold, NJ | 07728 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (732) 577-9996
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
[ ] | Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 142-12 under the Exchange Act (17 CFR 240.14a-12 |
[ ] | Pre-commencement communications pursuant to rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
On May 3, 2017, Monmouth Real Estate Investment Corporation issued a press release announcing the results for the second quarter ended March 31, 2017 and disclosed a supplemental information package in connection with its earnings conference call for the second quarter ended March 31, 2017. A copy of the supplemental information package and press release is furnished with this report as Exhibit 99 and is incorporated herein by reference.
The information in this report and the exhibit attached hereto is being furnished, not filed, for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Item 2.02 and Item 7.01 of Form 8-K will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Forward-Looking Statements
Statements contained in this report, including the documents that are incorporated by reference, that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995 (the “Exchange Act”). All statements, other than statements of historical facts that address activities, events or developments where the Company uses any of the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” or similar expressions, are forward-looking statements. These forward-looking statements are not guaranteed and are based on the Company’s current intentions and on the Company’s current expectations and assumptions. These statements, intentions, expectations and assumptions involve risks and uncertainties, some of which are beyond the Company’s control that could cause actual results or events to differ materially from those that the Company anticipates or projects, such as:
● | the ability of the Company’s tenants to make payments under their respective leases, its reliance on certain major tenants and the Company’s ability to re-lease properties that are currently vacant or that become vacant; | |
● | the Company’s ability to obtain suitable tenants for its properties; | |
● | changes in real estate market conditions, economic conditions in the industrial sector and the market in which the Company’s properties are located and general economic conditions; | |
● | the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations and illiquidity of real estate investments; | |
● | the Company’s ability to acquire, finance and sell properties on attractive terms; | |
● | the Company’s ability to repay debt financing obligations; | |
● | the Company’s ability to refinance amounts outstanding under its mortgages and credit facilities at maturity on terms favorable to us, or at all; | |
● | the loss of any member of the Company’s management team; | |
● | the Company’s ability to comply with debt covenants; | |
● | the Company’s ability to integrate acquired properties and operations into existing operations; | |
● | continued availability of proceeds from issuances of the Company’s debt or equity securities; | |
● | the availability of other debt and equity financing alternatives; | |
● | market conditions affecting the Company’s investment in marketable securities of other REIT’s; |
2 |
● | changes in interest rates under the Company’s current credit facility and under any additional variable rate debt arrangements that the Company may enter into in the future; | |
● | the Company’s ability to successfully implement the Company’s selective acquisition strategy; | |
● | the Company’s ability to maintain internal controls and procedures to ensure all transactions are accounted for properly, all relevant disclosures and filings are timely made in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected; | |
● | changes in federal or state tax rules or regulations that could have adverse tax consequences; | |
● | declines in the market prices of the Company’s investment securities; and | |
● | the Company’s ability to qualify as a REIT for federal income tax purposes. |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99 Supplemental information package for the second quarter ended March 31, 2017 and press release dated May 3, 2017.
3 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MONMOUTH REAL ESTATE INVESTMENT CORPORATION | |
/s/ Kevin S. Miller | |
Kevin S. Miller | |
Chief Financial and Accounting Officer | |
Date May 3, 2017 |
4 |
The statement of operations and supplemental statement of operations provided in this supplemental information package present funds from operations, core funds from operations, adjusted funds from operations, net operating income (NOI), Same Property NOI, Same Property cash NOI and Adjusted EBITDA which are REIT industry financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America. Please see page 19 for a definition of these supplemental performance measures. Please see the supplemental statement of operations reconciliation for a reconciliation of certain captions in the supplemental statement of operations reported in this supplemental information package to the statement of operations as reported in the Company’s filings with the SEC on Form 10-Q.
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 3 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 4 of 23
Net Income, FFO, Core FFO, AFFO, Adjusted EBITDA and NOI Reconciliations | |||||||
(unaudited) |
|||||||
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
FFO, Core FFO, AFFO | ||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,842,575 | $ | 4,980,189 | $ | 10,998,736 | $ | 9,767,086 | ||||||||
Plus: Depreciation Expense (excluding Corporate Office Tenant Improvements) | 7,099,906 | 5,756,944 | 14,053,686 | 11,324,405 | ||||||||||||
Plus: Amortization of Intangible Assets | 240,973 | 319,736 | 508,820 | 643,200 | ||||||||||||
Plus: Amortization of Capitalized Lease Costs | 212,275 | 192,116 | 417,717 | 380,755 | ||||||||||||
Plus: Loss on Sale of Real Estate Investment | -0- | -0- | 95,336 | -0- | ||||||||||||
FFO Attributable to Common Shareholders | 12,395,729 | 11,248,985 | 26,074,295 | 22,115,446 | ||||||||||||
Plus: Acquisition Costs | -0- | 265,012 | 178,526 | 410,597 | ||||||||||||
Core FFO Attributable to Common Shareholders | 12,395,729 | 11,513,997 | 26,252,821 | 22,526,043 | ||||||||||||
Plus: Stock Compensation Expense | 166,190 | 101,968 | 266,345 | 206,928 | ||||||||||||
Plus: Depreciation of Corporate Office Tenant Improvements | 39,171 | 29,118 | 77,886 | 57,089 | ||||||||||||
Plus: Amortization of Financing Costs | 384,984 | 238,671 | 665,897 | 473,038 | ||||||||||||
Plus: Non-recurring other expense | -0- | 400,000 | -0- | 400,000 | ||||||||||||
Less: Gain on Sale of Securities Transactions | -0- | (878,962 | ) | (806,108 | ) | (887,342 | ) | |||||||||
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment | (286,617 | ) | (512,170 | ) | (629,856 | ) | (821,835 | ) | ||||||||
Less: Recurring Capital Expenditures | (188,390 | ) | (147,861 | ) | (376,802 | ) | (484,052 | ) | ||||||||
AFFO Attributable to Common Shareholders | $ | 12,511,067 | $ | 10,744,761 | $ | 25,450,183 | $ | 21,469,869 |
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
Adjusted EBITDA | ||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,842,575 | $ | 4,980,189 | $ | 10,998,736 | $ | 9,767,086 | ||||||||
Plus: Preferred Dividends | 3,582,036 | 2,151,758 | 7,279,796 | 4,303,516 | ||||||||||||
Plus: Depreciation & Amortization | 7,566,833 | 6,272,422 | 15,007,125 | 12,354,465 | ||||||||||||
Plus: Interest Expense, Including Amortization of Financing Costs | 6,537,264 | 5,555,607 | 12,700,483 | 10,902,254 | ||||||||||||
Plus: Acquisition Costs | -0- | 265,012 | 178,526 | 410,597 | ||||||||||||
Plus: Net Amortization of Acquired Above and Below Market Lease Revenue | 25,492 | 25,492 | 50,984 | 50,984 | ||||||||||||
Plus: Loss on Sale of Real Estate Investment | -0- | -0- | 95,336 | -0- | ||||||||||||
Less: Gain on Sale of Securities Transactions | -0- | (878,962 | ) | (806,108 | ) | (887,342 | ) | |||||||||
Adjusted EBITDA | $ | 22,554,200 | $ | 18,371,518 | $ | 45,504,878 | $ | 36,901,560 |
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
Net Operating Income | ||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,842,575 | $ | 4,980,189 | $ | 10,998,736 | $ | 9,767,086 | ||||||||
Plus: Preferred Dividends | 3,582,036 | 2,151,758 | 7,279,796 | 4,303,516 | ||||||||||||
Plus: General & Administrative Expenses | 2,078,538 | 2,221,445 | 3,521,001 | 3,557,409 | ||||||||||||
Plus: Acquisition Costs | -0- | 265,012 | 178,526 | 410,597 | ||||||||||||
Plus: Depreciation | 7,139,077 | 5,786,062 | 14,131,572 | 11,381,494 | ||||||||||||
Plus: Amortization of Capitalized Lease Costs and Intangible Assets | 427,756 | 486,360 | 875,553 | 972,971 | ||||||||||||
Less: Dividend and Interest Income | (1,439,182 | ) | (1,379,668 | ) | (2,731,333 | ) | (2,564,321 | ) | ||||||||
Less: Gain on Sale of Securities Transactions | -0- | (878,962 | ) | (806,108 | ) | (887,342 | ) | |||||||||
Plus: Interest Expense, including Amortization of Financing Costs | 6,537,264 | 5,555,607 | 12,700,483 | 10,902,254 | ||||||||||||
Net Operating Income - NOI | $ | 23,168,064 | $ | 19,187,803 | $ | 46,148,226 | $ | 37,843,664 |
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
Components of Net Operating Income consists of: | ||||||||||||||||
Revenues | ||||||||||||||||
Rental Revenue | $ | 23,610,830 | $ | 19,610,868 | $ | 46,891,686 | $ | 38,675,787 | ||||||||
Reimbursement Revenue | 3,697,361 | 3,355,970 | 7,598,116 | 6,550,413 | ||||||||||||
Total Rental and Reimbursement Revenue | 27,308,191 | 22,966,838 | 54,489,802 | 45,226,200 | ||||||||||||
Expenses | ||||||||||||||||
Real Estate Taxes | 2,851,862 | 2,675,677 | 5,758,843 | 5,047,813 | ||||||||||||
Operating Expenses | 1,288,265 | 1,103,358 | 2,582,733 | 2,334,723 | ||||||||||||
Total Real Estate Taxes and Operating Expenses | 4,140,127 | 3,779,035 | 8,341,576 | 7,382,536 | ||||||||||||
Net Operating Income - NOI | $ | 23,168,064 | $ | 19,187,803 | $ | 46,148,226 | $ | 37,843,664 |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 5 of 23
Financial Highlights |
|||||||
(unaudited) |
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||
Basic | 71,243,381 | 64,657,058 | 70,456,222 | 63,757,087 | ||||||||||||
Diluted | 71,406,875 | 64,736,469 | 70,607,766 | 63,828,310 | ||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,842,575 | $ | 4,980,189 | $ | 10,998,736 | $ | 9,767,086 | ||||||||
Basic | $ | 0.07 | $ | 0.08 | $ | 0.16 | $ | 0.15 | ||||||||
Diluted | 0.07 | 0.08 | 0.16 | 0.15 | ||||||||||||
Net Operating Income – NOI | $ | 23,168,064 | $ | 19,187,803 | $ | 46,148,226 | $ | 37,843,664 | ||||||||
Basic | $ | 0.33 | $ | 0.30 | $ | 0.65 | $ | 0.59 | ||||||||
Diluted | 0.32 | 0.30 | 0.65 | 0.59 | ||||||||||||
Funds From Operations – FFO | $ | 12,395,729 | $ | 11,248,985 | $ | 26,074,295 | $ | 22,115,446 | ||||||||
Basic | $ | 0.17 | $ | 0.17 | $ | 0.37 | $ | 0.35 | ||||||||
Diluted | 0.17 | 0.17 | 0.37 | 0.35 | ||||||||||||
Core Funds From Operations - Core FFO | $ | 12,395,729 | $ | 11,513,997 | $ | 26,252,821 | $ | 22,526,043 | ||||||||
Basic | $ | 0.17 | $ | 0.18 | $ | 0.37 | $ | 0.35 | ||||||||
Diluted | 0.17 | 0.18 | 0.37 | 0.35 | ||||||||||||
Core FFO Excluding Gains on Securities Transactions | $ | 12,395,729 | $ | 10,635,035 | $ | 25,446,713 | $ | 21,638,701 | ||||||||
Basic | $ | 0.17 | $ | 0.16 | $ | 0.36 | $ | 0.34 | ||||||||
Diluted | 0.17 | 0.16 | 0.36 | 0.34 | ||||||||||||
Adjusted Funds From Operations - AFFO | $ | 12,511,067 | $ | 10,744,761 | $ | 25,450,183 | $ | 21,469,869 | ||||||||
Basic | $ | 0.18 | $ | 0.17 | $ | 0.36 | $ | 0.34 | ||||||||
Diluted | 0.18 | 0.17 | 0.36 | 0.34 | ||||||||||||
Dividends Declared per Common Share | $ | 0.16 | $ | 0.16 | $ | 0.32 | $ | 0.32 |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 6 of 23
Same Property Statistics include all properties owned during the entire periods presented with the exclusion of properties expanded during these periods.
The 0.1% decrease, amounting to $20,054 in Same Property NOI, consists of $147,623 attributable to increased Same Property NOI from filling previously vacant properties offset by a decrease in Same Property NOI from occupied properties of $167,677.
The 1.7% increase, amounting to $302,220 in Same Property Cash NOI, consists of $148,046 attributable to increased Same Property Cash NOI from filling previously vacant properties and by an increase in Same Property Cash NOI from occupied properties of $154,174.
Reconciliation of Same Property NOI to Total NOI | ||||||||||||||||
Three Months Ended | ||||||||||||||||
3/31/2017 | 3/31/2016 | Change | Change % | |||||||||||||
Same Property NOI (GAAP) | $ | 18,012,762 | $ | 18,032,816 | $ | (20,054 | ) | (0.1 | )% | |||||||
NOI of properties purchased subsequent to October 1, 2015 (eight properties for fiscal 2017 and one properties for fiscal 2016) | 3,591,668 | 92,403 | ||||||||||||||
NOI of properties expanded subsequent to October 1, 2015 (four properties for fiscal 2017 and 2016) | 1,563,634 | 1,078,478 | ||||||||||||||
NOI of property sold subsequent to October 1, 2015 (one property sold during fiscal 2017) | -0- | (15,894 | ) | |||||||||||||
Total NOI | $ | 23,168,064 | $ | 19,187,803 | $ | 3,980,261 | 20.7 | % |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 7 of 23
Same Property Statistics | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
3/31/2017 | 3/31/2016 | Change | Change % | |||||||||||||||||||||||||||||||||||||||||
Total Square Feet / Total Properties | 16,553,910 | / | 100 | 14,550,855 | / | 94 | 2,003,055 | 13.8 | % | |||||||||||||||||||||||||||||||||||
Occupancy Percentage at Quarter End | 100.0 | % | 99.6 | % | 40 bps | 0.4 | % | |||||||||||||||||||||||||||||||||||||
Same Property Square Feet / Number of Same Properties | 12,886,242 | / | 86 | |||||||||||||||||||||||||||||||||||||||||
Same Property Occupancy Percentage at Quarter End | 100.0 | % | 100.0 | % | 0 bps | 0.0 | % | |||||||||||||||||||||||||||||||||||||
Same Property Net Operating Income (NOI) (GAAP) | $ | 34,516,046 | $ | 34,173,271 | $ | 342,775 | 1.0 | % | ||||||||||||||||||||||||||||||||||||
Reversal of Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment | (338,041 | ) | (778,609 | ) | 440,568 | |||||||||||||||||||||||||||||||||||||||
Same Property Cash NOI (Cash) | $ | 34,178,005 | $ | 33,394,662 | $ | 783,343 | 2.3 | % |
Same Property Statistics include all properties owned during the entire periods presented with the exclusion of properties expanded during these periods.
The 1.0% increase, amounting to $342,775 in Same Property NOI, consists of $490,389 attributable to increased Same Property NOI from filling previously vacant properties offset by a decrease in Same Property NOI from occupied properties of $147,614.
The 2.3% increase, amounting to $783,343 in Same Property Cash NOI, consists of $609,265 attributable to increased Same Property Cash NOI from filling previously vacant properties and by an increase in Same Property Cash NOI from occupied properties of $174,078.
Reconciliation of Same Property NOI to Total NOI | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | Change | Change % | |||||||||||||
Same Property NOI (GAAP) | $ | 34,516,046 | $ | 34,173,271 | $ | 342,775 | 1.0 | % | ||||||||
NOI of properties purchased subsequent to October 1, 2015 (ten properties for fiscal 2017 and three properties for fiscal 2016) | 8,592,414 | 1,561,380 | ||||||||||||||
NOI of properties expanded subsequent to October 1, 2015 (four properties for fiscal 2017 and 2016) | 3,153,803 | 2,169,971 | ||||||||||||||
NOI of property sold subsequent to October 1, 2015 (one property sold during fiscal 2017) | (114,037 | ) | (60,958 | ) | ||||||||||||
Total NOI | $ | 46,148,226 | $ | 37,843,664 | $ | 8,304,562 | 21.9 | % |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 8 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 9 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 10 of 23
Capital Structure and Leverage Ratios continued |
(unaudited) |
Fiscal Year | ||||||||||||||||||||
Three Months Ended | Six Months Ended | Ended | ||||||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | 9/30/2016 | ||||||||||||||||
Net Income | $ | 8,424,611 | $ | 7,131,947 | $ | 18,278,532 | $ | 14,070,602 | $ | 32,494,507 | ||||||||||
plus: Depreciation & Amortization | 7,566,833 | 6,272,422 | 15,007,125 | 12,354,465 | 26,087,680 | |||||||||||||||
plus: Interest Expense, including Amortization of Financing Costs | 6,537,264 | 5,555,607 | 12,700,483 | 10,902,254 | 22,953,049 | |||||||||||||||
plus: Acquisition Costs | -0- | 265,012 | 178,526 | 410,597 | 730,441 | |||||||||||||||
plus: Net Amortization of Acquired Above and Below Market Lease Revenue | 25,492 | 25,492 | 50,984 | 50,984 | 101,967 | |||||||||||||||
less: Gain on Sale of Securities Transactions | -0- | (878,962 | ) | (806,108 | ) | (887,342 | ) | -0- | ||||||||||||
Plus: Loss on Sale of Real Estate Investment | -0- | -0- | 95,336 | -0- | (4,398,599 | ) | ||||||||||||||
Adjusted EBITDA | $ | 22,554,200 | $ | 18,371,518 | $ | 45,504,878 | $ | 36,901,560 | $ | 77,969,045 | ||||||||||
Interest Expense, including Amortization of Financing Costs | $ | 6,537,264 | $ | 5,555,607 | $ | 12,700,483 | $ | 10,902,254 | $ | 22,953,049 | ||||||||||
Preferred Dividends | 3,582,036 | 2,151,758 | 7,279,796 | 4,303,516 | 9,020,470 | |||||||||||||||
Total Fixed Charges | $ | 10,119,300 | $ | 7,707,365 | $ | 19,980,279 | $ | 15,205,770 | $ | 31,973,519 | ||||||||||
Interest Coverage | 3.5 x | 3.3 x | 3.6 x | 3.4 x | 3.4 x | |||||||||||||||
Fixed Charge Coverage | 2.2 x | 2.4 x | 2.3 x | 2.4 x | 2.4 x | |||||||||||||||
Net Debt | $ | 480,646,406 | $ | 491,066,045 | $ | 480,646,406 | $ | 491,066,045 | $ | 516,010,936 | ||||||||||
Net Debt Less Securities | 381,240,996 | 422,419,049 | 381,240,996 | 422,419,049 | 442,406,042 | |||||||||||||||
Preferred | 267,500,000 | 110,993,750 | 267,500,000 | 110,993,750 | 192,500,000 | |||||||||||||||
Annualized Adjusted EBITDA | 90,216,800 | 73,486,072 | 91,009,756 | 73,803,120 | 77,969,045 | |||||||||||||||
Net Debt / Adjusted EBITDA | 5.3 x | 6.7 x | 5.3 x | 6.7 x | 6.6 x | |||||||||||||||
Net Debt Less Securities / Adjusted EBITDA | 4.2 x | 5.7 x | 4.2 x | 5.7 x | 5.7 x | |||||||||||||||
Net Debt + Preferred / Adjusted EBITDA | 8.3 x | 8.2 x | 8.2 x | 8.2 x | 9.1 x | |||||||||||||||
Net Debt Less Securities + Preferred / Adjusted EBITDA | 7.2 x | 7.3 x | 7.1 x | 7.2 x | 8.1 x |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 11 of 23
Debt Matuity | |
(unaudited) |
Loans | % of | |||||||||||||||||||
Fiscal Year Ended | Mortgages | Payable | Total | Total | ||||||||||||||||
2017 | $ | 28,170,372 | $ | -0- | $ | 28,170,372 | 5.5 | % | ||||||||||||
2018 | 46,130,441 | -0- | 46,130,441 | 9.0 | % | |||||||||||||||
2019 | 47,564,829 | -0- | 47,564,829 | 9.3 | % | |||||||||||||||
2020 | 31,368,909 | 26,000,000 | 57,368,909 | 11.2 | % | |||||||||||||||
2021 | 31,916,923 | -0- | 31,916,923 | 6.3 | % | |||||||||||||||
Thereafter | 298,896,202 | -0- | 298,896,202 | 58.7 | % | |||||||||||||||
Total as of 3/31/2017 | (A) | $ | 484,047,676 | $ | 26,000,000 | $ | 510,047,676 | 100.0 | % | |||||||||||
Weighted Average Interest Rate | 4.37 | % | 2.68 | % | 4.28 | % | ||||||||||||||
Weighted Average Term | 10.65 yrs. | 3.50 yrs. | 10.29 yrs. |
(A) | Mortgages does not include unamortized debt issuance costs of $6,449,371. |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 12 of 23
(A) | NF&M International and Datatel Resources are located at one property and therefore are counted as one property in the Property Count total. | |
(B) | Woodstream Corporation and Altec Industries, Inc. are located at one property and therefore are counted as one property in the Property Count total. Other than these two properties indicated in footnotes (A) and (B) and the one retail property, all other properties are single-tenant. | |
(C) | Does not include unamortized debt issuance costs of $6,449,371. |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 13 of 23
(A) | Does not include unamortized debt issuance costs of $6,449,371. |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 14 of 23
(A) | Included in 2018 is Datatel Resources and included in 2025 is NF&M International which both occupy one property. Included in 2017 is Woodstream Corporation and included in 2018 is Altec Industries which both occupy one property. Other than these two properties and the one retail property, all other properties are single-tenant. | |
(B) | Does not include unamortized debt issuance costs of $6,449,371. |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 15 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 16 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 17 of 23
Property Table | ||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||
No |
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Tenant |
|
City (MSA) | |
State |
|
Fiscal
Year Acquisition |
|
Occup. |
|
|
Square Footage |
|
|
Annual Rent |
|
|
Rent
Per sf Occup. |
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Exp. Term in Years |
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Undepreciated Cost |
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60 | Holland 1916 Inc. | Liberty (Kansas City) | MO | 1998 | 100.0 | % | 95,898 | $ | 345,000 | $ | 3.60 | 2.2 | $ | 7,397,881 | $ | -0- | ||||||||||||||||||||
61 | FedEx Corporation | Jacksonville | FL | 1999 | 100.0 | % | 95,883 | 518,000 | 5.40 | 2.2 | 6,258,738 | -0- | ||||||||||||||||||||||||
62 | FedEx Corporation | Tampa | FL | 2006 | 100.0 | % | 95,662 | 603,000 | 6.30 | 0.5 | 7,603,154 | 3,779,410 | ||||||||||||||||||||||||
63 | FedEx Ground Package System, Inc. | Hanahan (Charleston) | SC | 2005 | 100.0 | % | 91,776 | 675,000 | 7.35 | 1.3 | 7,614,653 | 920,719 | ||||||||||||||||||||||||
64 | National Oilwell Varco, Inc. | Houston | TX | 2010 | 100.0 | % | 91,295 | 750,000 | 8.22 | 5.5 | 8,083,107 | 2,910,740 | ||||||||||||||||||||||||
65 | FedEx Corporation | Omaha | NE | 1999 | 100.0 | % | 89,115 | 446,000 | 5.00 | 6.6 | 5,944,691 | -0- | ||||||||||||||||||||||||
66 | Joseph T. Ryerson and Son, Inc. | Elgin (Chicago) | IL | 2002 | 100.0 | % | 89,052 | 506,000 | 5.68 | 2.8 | 6,932,916 | -0- | ||||||||||||||||||||||||
67 | FedEx Ground Package System, Inc. | Huntsville | AL | 2005 | 100.0 | % | 88,653 | 605,000 | 6.82 | 9.3 | 6,661,819 | 693,750 | ||||||||||||||||||||||||
68 | FedEx Ground Package System, Inc. | Ft. Myers | FL | 2003 | 100.0 | % | 87,500 | 433,000 | 4.95 | 0.2 | 5,017,447 | -0- | ||||||||||||||||||||||||
69 | CHEP USA, Inc. | Roanoke | VA | 2007 | 100.0 | % | 83,000 | 497,000 | 5.99 | 7.9 | 7,405,447 | 2,362,965 | ||||||||||||||||||||||||
70 | FedEx Corporation | Bedford Heights (Cleveland) | OH | 2007 | 100.0 | % | 82,269 | 408,000 | 4.96 | 1.4 | 6,863,879 | -0- | ||||||||||||||||||||||||
71 | RGH Enterprises, Inc. | Halfmoon (Albany) | NY | 2012 | 100.0 | % | 75,000 | 601,000 | 8.01 | 4.7 | 5,525,600 | -0- | ||||||||||||||||||||||||
72 | FedEx Corporation | Schaumburg (Chicago) | IL | 1997 | 100.0 | % | 73,500 | 480,000 | 6.53 | 10.0 | 5,177,940 | -0- | ||||||||||||||||||||||||
73 | FedEx Corporation | Romulus (Detroit) | MI | 1998 | 100.0 | % | 71,933 | 370,000 | 5.14 | 4.2 | 4,667,506 | -0- | ||||||||||||||||||||||||
74 | FedEx Ground Package System, Inc. | Denver | CO | 2005 | 100.0 | % | 69,865 | 564,000 | 8.07 | 1.3 | 6,354,051 | 905,500 | ||||||||||||||||||||||||
75 | Tampa Bay Grand Prix | Tampa | FL | 2005 | 100.0 | % | 68,385 | 293,000 | 4.28 | 3.5 | 5,677,982 | -0- | ||||||||||||||||||||||||
76 | FedEx Ground Package System, Inc. | Colorado Springs | CO | 2006 | 100.0 | % | 68,370 | 644,000 | 9.42 | 1.5 | 7,204,472 | 1,188,636 | ||||||||||||||||||||||||
77 | Sherwin-Williams Company | Rockford | IL | 2011 | 100.0 | % | 66,387 | 479,000 | 7.22 | 6.8 | 5,551,227 | -0- | ||||||||||||||||||||||||
78 | Kellogg Sales Company | Kansas City | MO | 2007 | 100.0 | % | 65,067 | 325,000 | 4.99 | 1.3 | 4,800,474 | -0- | ||||||||||||||||||||||||
79 | Various Tenants at Retail Shopping Center | Somerset | NJ | 1970 | 100.0 | % | 64,220 | 735,000 | 11.45 | na | 3,072,880 | -0- | ||||||||||||||||||||||||
80 | The American Bottling Company (Dr Pepper Snapple) | Cincinnati | OH | 2015 | 100.0 | % | 63,840 | 479,000 | 7.50 | 12.5 | 6,750,000 | -0- | ||||||||||||||||||||||||
81 | FedEx Corporation | Chattanooga | TN | 2007 | 100.0 | % | 60,637 | 311,000 | 5.13 | 0.6 | 5,016,518 | 1,434,255 | ||||||||||||||||||||||||
82 | SOFIVE, Inc. | Carlstadt (New York, NY) | NJ | 2001 | 100.0 | % | 60,400 | 548,000 | 9.07 | 7.8 | 4,903,589 | 1,821,791 | ||||||||||||||||||||||||
83 | FedEx Ground Package System, Inc. | Stewartville (Rochester) | MN | 2013 | 100.0 | % | 60,398 | 372,000 | 6.16 | 6.2 | 5,220,000 | 2,492,467 | ||||||||||||||||||||||||
84 | United Technologies Corporation | Richmond | VA | 2004 | 100.0 | % | 60,000 | 320,000 | 5.33 | 1.7 | 4,768,309 | -0- | ||||||||||||||||||||||||
85 | FedEx Ground Package System, Inc. | Augusta | GA | 2005 | 100.0 | % | 59,358 | 453,000 | 7.63 | 1.2 | 5,354,035 | 669,735 | ||||||||||||||||||||||||
86 | Kellogg Sales Company | Newington (Hartford) | CT | 2001 | 100.0 | % | 54,812 | 329,000 | 6.00 | 2.9 | 3,478,966 | -0- | ||||||||||||||||||||||||
87 | Siemens Real Estate | Lebanon (Cincinnati) | OH | 2012 | 100.0 | % | 51,130 | 479,000 | 9.37 | 2.1 | 4,452,425 | -0- | ||||||||||||||||||||||||
88 | Kellogg Sales Company | Orangeburg (New York) | NY | 1993 | 100.0 | % | 50,400 | 328,000 | 6.51 | 0.9 | 3,895,675 | -0- | ||||||||||||||||||||||||
89 | FedEx Corporation | Charlottesville | VA | 1999 | 100.0 | % | 48,064 | 329,000 | 6.85 | 0.4 | 4,356,988 | -0- | ||||||||||||||||||||||||
90 | FedEx Ground Package System, Inc. | Corpus Christi | TX | 2012 | 100.0 | % | 46,253 | 469,000 | 10.14 | 4.4 | 4,764,500 | -0- | ||||||||||||||||||||||||
91 | The American Bottling Company (Dr Pepper Snapple) | Tulsa | OK | 2014 | 100.0 | % | 46,240 | 260,000 | 5.62 | 6.9 | 3,748,031 | 1,874,070 | ||||||||||||||||||||||||
92 | The Coca-Cola Company | Topeka | KS | 2009 | 100.0 | % | 40,000 | 332,000 | 8.30 | 4.5 | 3,679,843 | 1,243,400 | ||||||||||||||||||||||||
93 | Rockwell Collins, Inc. | Rockford | IL | 2015 | 100.0 | % | 38,833 | 362,000 | 9.32 | 10.3 | 5,100,000 | -0- | ||||||||||||||||||||||||
94 | Keystone Automotive Industries MN, Inc. | Urbandale (Des Moines) | IA | 1994 | 100.0 | % | 36,270 | 141,000 | 3.89 | month-to-month | 2,161,895 | -0- | ||||||||||||||||||||||||
95 | FedEx Corporation | Richland (Jackson) | MS | 1994 | 100.0 | % | 36,000 | 120,000 | 3.33 | 7.0 | 1,900,691 | -0- | ||||||||||||||||||||||||
96 | FedEx Corporation | Punta Gorda | FL | 2007 | 100.0 | % | 34,624 | 304,000 | 8.78 | 0.2 | 4,113,267 | 1,927,605 | ||||||||||||||||||||||||
97 | FedEx Corporation | Lakeland | FL | 2006 | 100.0 | % | 32,105 | 155,000 | 4.83 | 0.7 | 1,982,532 | -0- | ||||||||||||||||||||||||
98 | FedEx Corporation | Augusta | GA | 2006 | 100.0 | % | 30,184 | 121,000 | 4.01 | 5.7 | 1,977,779 | -0- | ||||||||||||||||||||||||
99 | Graybar Electric Company | Ridgeland (Jackson) | MS | 1993 | 100.0 | % | 26,340 | 109,000 | 4.14 | 2.3 | 1,858,594 | -0- | ||||||||||||||||||||||||
100 | Sherwin-Williams Company | Burr Ridge (Chicago) | IL | 1997 | 100.0 | % | 12,500 | 161,000 | 12.88 | 4.6 | 1,692,901 | -0- | ||||||||||||||||||||||||
Total as of 3/31/17 | 100.0 | % | 16,553,910 | $ | 95,810,000 | $ | 5.79 | 7.4 | $ | 1,224,196,253 | (C) | $484,047,676 | ||||||||||||||||||||||||
Acquisitions Subsequent to 3/31/17 | ||||||||||||||||||||||||||||||||||||
101 | FedEx Ground Package System, Inc. | Walker (Grand Rapids) | MI | 2017 | 100.0 | % | 343,483 | 2,102,000 | 6.12 | 14.8 | 32,120,000 | 20,875,000 | ||||||||||||||||||||||||
Pro Forma Total | 100.0 | % | 16,897,393 | $ | 97,912,000 | $ | 5.79 | 7.5 | $ | 1,256,316,253 | $ | 504,922,676 |
(A) | Both tenants occupy one property. | |
(B) | Both tenants occupy one property. Other than these two properties indicated in footnotes (A) and (B) and the one retail property, all other properties are single-tenant. | |
(C) | Does not include unamortized debt issuance costs of $6,449,371. |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 18 of 23
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 19 of 23
May 3, 2017
Contact: Susan Jordan
732-577-9996
MONMOUTH REAL ESTATE REPORTS RESULTS FOR
THE SECOND QUARTER ENDED MARCH 31, 2017
FREEHOLD, NJ, May 3, 2017........ Monmouth Real Estate Investment Corporation (NYSE:MNR) reported Net Income Attributable to Common Shareholders of $4,843,000 or $0.07 per diluted share for the three months ended March 31, 2017 as compared to $4,980,000 or $0.08 per diluted share for the three months ended March 31, 2016, representing a decrease in Net Income Attributable to Common Shareholders per share of 13%. Core Funds from Operations (Core FFO) were $12,396,000 or $0.17 per diluted share for the three months ended March 31, 2017 as compared to $11,514,000 or $0.18 per diluted share for the three months ended March 31, 2016, representing a decrease in Core FFO per share of 6%. Adjusted Funds from Operations (AFFO), for the three months ended March 31, 2017 were $12,511,000 or $0.18 per diluted share versus $10,745,000 or $0.17 per diluted share for the three months ended March 31, 2016 representing an increase in AFFO per share of 6%.
A summary of significant financial information for the three and six months ended March 31, 2017 and 2016 is as follows:
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Rental Revenue | $ | 23,611,000 | $ | 19,611,000 | ||||
Reimbursement Revenue | $ | 3,697,000 | $ | 3,356,000 | ||||
Net Operating Income (NOI) (1) | $ | 23,168,000 | $ | 19,188,000 | ||||
Total Expenses | $ | 13,785,000 | $ | 12,538,000 | ||||
Dividend and Interest Income | $ | 1,439,000 | $ | 1,380,000 | ||||
Gain on Sale of Securities Transactions, net | $ | -0- | $ | 879,000 | ||||
Net Income | $ | 8,425,000 | $ | 7,132,000 | ||||
Net Income Attributable to Common Shareholders | $ | 4,843,000 | $ | 4,980,000 | ||||
Net Income Attributable to Common Shareholders Per Diluted Common Share | $ | 0.07 | $ | 0.08 | ||||
Core FFO (1) | $ | 12,396,000 | $ | 11,514,000 | ||||
Core FFO per Diluted Common Share (1) | $ | 0.17 | $ | 0.18 | ||||
AFFO (1) | $ | 12,511,000 | $ | 10,745,000 | ||||
AFFO per Diluted Common Share (1) | $ | 0.18 | $ | 0.17 | ||||
Dividends Declared per Common Share | $ | 0.16 | $ | 0.16 | ||||
Weighted Avg. Diluted Common Shares Outstanding | 71,407,000 | 64,736,000 |
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Rental Revenue | $ | 46,892,000 | $ | 38,676,000 | ||||
Reimbursement Revenue | $ | 7,598,000 | $ | 6,550,000 | ||||
Net Operating Income (NOI) (1) | $ | 46,148,000 | $ | 37,844,000 | ||||
Total Expenses | $ | 27,048,000 | $ | 23,705,000 | ||||
Dividend and Interest Income | $ | 2,731,000 | $ | 2,564,000 | ||||
Gain on Sale of Securities Transactions, net | $ | 806,000 | $ | 887,000 | ||||
Net Income | $ | 18,279,000 | $ | 14,071,000 | ||||
Net Income Attributable to Common Shareholders | $ | 10,999,000 | $ | 9,767,000 | ||||
Net Income Attributable to Common Shareholders Per Diluted Common Share | $ | 0.16 | $ | 0.15 | ||||
Core FFO (1) | $ | 26,253,000 | $ | 22,526,000 | ||||
Core FFO per Diluted Common Share (1) | $ | 0.37 | $ | 0.35 | ||||
AFFO (1) | $ | 25,450,000 | $ | 21,470,000 | ||||
AFFO per Diluted Common Share (1) | $ | 0.36 | $ | 0.34 | ||||
Dividends Declared per Common Share | $ | 0.32 | $ | 0.32 | ||||
Weighted Avg. Diluted Common Shares Outstanding | 70,608,000 | 63,828,000 |
A summary of significant balance sheet information as of March 31, 2017 and September 30, 2016 is as follows:
March 31, 2017 | September 30, 2016 | |||||||
Net Real Estate Investments | $ | 1,062,259,000 | $ | 1,022,483,000 | ||||
Securities Available for Sale at Fair Value | $ | 99,405,000 | $ | 73,605,000 | ||||
Total Assets | $ | 1,220,220,000 | $ | 1,223,486,000 | ||||
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs | $ | 477,598,000 | $ | 477,476,000 | ||||
Loans Payable | $ | 26,000,000 | $ | 80,791,000 | ||||
Total Shareholders’ Equity | $ | 699,305,000 | $ | 597,858,000 |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 20 of 23
Michael P. Landy, President and CEO, commented on the results for the second quarter of fiscal 2017,
“Monmouth continues to make substantial progress. While Net Income Attributable to Common Shareholders per diluted share, (which includes depreciation expense), decreased 13% for the quarter, our AFFO per diluted share, (which does not include depreciation expense), increased to $0.18, representing a 6% increase over the prior year period. We had additional preferred dividend costs this quarter as the result of our recent follow-on offering. As the proceeds from this recent offering are fully put to work we expect our income to offset these costs. Additionally, our solid financial performance continued with the following achievements over the quarter:
● | Increased our Gross Revenue by 18% from $24.3 million in the prior year period to $28.7 million in the current quarter, | |
● | Increased our Net Operating Income by 21% from $19.2 million in the prior year period to $23.2 million in the current quarter, and | |
● | Increased our Same Property Cash NOI 1.7% over the prior year period.” |
“Our property portfolio continued to deliver strong results as evidenced by the following accomplishments:
● | Maintained our occupancy rate at 100%, representing a 40 basis point increase over the prior year period, | |
● | Increased our weighted average lease maturity by 6%, from 7.0 years in the prior year period to 7.4 years at the end of the current quarter, and | |
● | Renewed eight of the thirteen leases scheduled to expire in Fiscal 2017, comprising 1.2 million square feet of the total 1.5 million square feet coming due. The 80% tenant retention rate achieved thus far results in a weighted average lease term of 6.4 years. These eight lease renewals result in a 1.1% decrease in GAAP rents. Of the remaining five leases scheduled to expire this fiscal year, one lease was renewed on a short-term basis, and the tenant for one lease did not renew but is currently leasing our space on a month-to-month basis. The remaining three leases are currently under discussion.” |
“Our balance sheet strength was further enhanced during the quarter as the result of the following:
● | Repaid seven mortgages totaling $19.8 million with interest rates ranging from 5.25% to 7.36%, unencumbering seven properties with total NOI of approximately $5 million, | |
● | Reduced our Net Debt to Total Market Capitalization to 26.7% from 35.3%, | |
● | Reduced our Net Debt to Adjusted EBITDA to 5.3x as of the current quarter from 6.7x as of the prior year quarter, | |
● | Reduced the weighted average interest rate on our fixed rate debt to 4.37% as of the current quarter end from 4.61% as of the prior year quarter end, | |
● | Extended the weighted average debt maturity on our fixed rate debt by 15% to 10.7 years as of the current quarter end from 9.3 years as of the prior year quarter end, and | |
● | On March 9, 2017, issued an additional 3,000,000 shares of our 6.125% Series C Preferred Stock, at a public offering price of $24.50 per share resulting in a 6.25% yield. We intend to use a portion of the $71.0 million in net proceeds from this offering to redeem all of the outstanding shares of our 7.875% Series B Preferred Stock with a par value of $57.5 million. This 163 basis point reduction will result in over $900,000 in annual preferred dividend savings.” |
“Our consistent record of qualitative growth is poised to continue as the result of the following:
● | Subsequent to quarter end, we acquired a brand new Class A built-to-suit property with 343,000 square feet for a cost of $32.1 million, leased for 15 years to FedEx Ground. This facility will generate $2.1 million in annualized rental revenue. | |
● | In addition, our acquisition pipeline grew over the quarter to eight brand new Class A build-to-suit properties, representing 2 million square feet, for a total purchase price of approximately $219.2 million. | |
● | We have increased our gross leaseable area (GLA) by 16% over the prior year period to 16.9 million square feet currently. Our GLA is expected to grow to 18.9 million square feet upon completion of our acquisition pipeline.” |
Mr. Landy further stated, “As the result of an excellent business model and strong execution by the entire team, considerable progress continues to be made here at Monmouth. Our long-term results and our current 100% occupancy rate reflect the high-quality income streams that our assets generate. Management continues to capitalize on this protracted period of low interest rates by extending our debt maturities and by reducing our cost of capital throughout our capital structure. We have thoughtfully grown our asset base with a focus on housing the digital economy and an understanding of consumer spending and how it continues to evolve. Our Company is very well capitalized to continue building upon the substantial growth that we have achieved to date.”
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 21 of 23
Monmouth Real Estate Investment Corporation will host its Second Quarter FY 2017 Financial Results Webcast and Conference Call on Thursday, May 4, 2017 at 10:00 a.m. Eastern Time. Senior management will discuss the results, current market conditions and future outlook.
The Company’s Second Quarter FY 2017 financial results being released herein will be available on the Company’s website at www.mreic.reit in the Investor Relations section, under Filings and Reports.
To participate in the Webcast, select the 2Q2017 Webcast and Earnings Call “Link to Webcast” on the homepage of the Company’s website at www.mreic.reit, in the Highlights section, which is located towards the bottom of the homepage. Interested parties can also participate via conference call by calling toll free 877-510-5852 (domestically) or 412-902-4138 (internationally).
The replay of the conference call will be available at 12:00 p.m. Eastern Time on Thursday, May 4, 2017. It will be available until August 1, 2017, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10102329. A transcript of the call and the webcast replay will be available at the Company’s website on the Investor Relations homepage, www.mreic.reit.
Monmouth Real Estate Investment Corporation, founded in 1968, is one of the oldest public equity REITs in the U.S. The Company specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 101 properties containing a total of approximately 16.9 million rentable square feet, geographically diversified across 30 states. In addition, the Company owns a portfolio of REIT securities.
Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company’s current expectations and involve various risks and uncertainties. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can provide no assurance those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company’s annual report on Form 10-K and described from time to time in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Notes:
(1) | Non-U.S. GAAP Information: FFO, as defined by The National Association of Real Estate Investment Trusts (NAREIT), to be equal to net income applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization. We define Core FFO as FFO plus acquisition costs. We define AFFO as Core FFO excluding lease termination income, gains or losses on securities transactions, stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, non-recurring other expense, the effect of non-cash U.S. GAAP straight-line rent adjustments and less recurring capital expenditures. We define recurring capital expenditures as all capital expenditures, excluding capital expenditures related to expansions at our current locations or capital expenditures that are incurred in conjunction with obtaining a new lease or a lease renewal. We define NOI from property operations as net income attributable to common shareholders, as defined by U.S. GAAP, plus preferred dividends, general & administrative expenses, acquisitions costs, depreciation, amortization of capitalized lease costs & intangible assets and interest expense, including amortization of financing costs, less dividend and interest income and gain on sale of securities transactions. The components of NOI consists of recurring rental and reimbursement revenue, less real estate taxes and operating expenses, such as insurance, utilities, and repairs and maintenance and other expenses. Adjusted EBITDA is calculated as net income attributable to common shareholders, as defined by U.S. GAAP, plus preferred dividends; depreciation and amortization; interest expense, including amortization of financing costs; acquisition costs; net amortization of acquired above and below market lease revenue and loss on sale of real estate investment, less gain on sale of securities transactions. FFO, Core FFO and AFFO per diluted common share are defined as FFO, Core FFO and AFFO divided by weighted average diluted common shares outstanding. FFO, Core FFO and AFFO per diluted common share, as well as NOI and Adjusted EBITDA, should be considered as supplemental measures of operating performance used by real estate investment trusts (REITs). FFO, Core FFO and AFFO per diluted common share exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have different cost basis. However, other REITs may use different methodologies to calculate FFO, Core FFO and AFFO per diluted share and, accordingly, our FFO, Core FFO and AFFO per diluted share may not be comparable to all other REITs. The items excluded from FFO, Core FFO and AFFO per diluted common share are significant components in understanding the Company’s financial performance. |
FFO, Core FFO and AFFO per diluted common share (A) do not represent cash flow from operations as defined by accounting principles generally accepted in the United States of America; (B) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (C) are not alternatives to cash flow as a measure of liquidity. FFO, Core FFO and AFFO per diluted common share, as well as NOI, as calculated by the Company, may not be comparable to similarly titled measures reported by other REITs.
The following is a reconciliation of the Company’s U.S. GAAP Net Income to the Company’s FFO, Core FFO and AFFO for the three and six months ended March 31, 2017 and 2016:
Three Months Ended | Six Months Ended | |||||||||||||||
3/31/2017 | 3/31/2016 | 3/31/2017 | 3/31/2016 | |||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,843,000 | $ | 4,980,000 | $ | 10,999,000 | $ | 9,767,000 | ||||||||
Plus: Depreciation Expense (excluding Corporate Office Tenant Improvements) | 7,100,000 | 5,757,000 | 14,054,000 | 11,324,000 | ||||||||||||
Plus: Amortization of Intangible Assets | 241,000 | 320,000 | 509,000 | 643,000 | ||||||||||||
Plus: Amortization of Capitalized Lease Costs | 212,000 | 192,000 | 417,000 | 381,000 | ||||||||||||
Plus: Loss on Sale of Real Estate Investment | -0- | -0- | 95,000 | -0- | ||||||||||||
FFO Attributable to Common Shareholders | 12,396,000 | 11,249,000 | 26,074,000 | 22,115,000 | ||||||||||||
Plus: Acquisition Costs | -0- | 265,000 | 179,000 | 411,000 | ||||||||||||
Core FFO Attributable to Common Shareholders | 12,396,000 | 11,514,000 | 26,253,000 | 22,526,000 | ||||||||||||
Plus: Stock Compensation Expense | 166,000 | 102,000 | 266,000 | 207,000 | ||||||||||||
Plus: Depreciation of Corporate Office Tenant Improvements | 39,000 | 29,000 | 78,000 | 57,000 | ||||||||||||
Plus: Amortization of Financing Costs | 385,000 | 239,000 | 666,000 | 473,000 | ||||||||||||
Plus: Non-recurring other expense | -0- | 400,000 | -0- | 400,000 | ||||||||||||
Less: Gain on Sale of Securities Transactions | -0- | (879,000 | ) | (806,000 | ) | (887,000 | ) | |||||||||
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment | (287,000 | ) | (512,000 | ) | (630,000 | ) | (822,000 | ) | ||||||||
Less: Recurring Capital Expenditures | (188,000 | ) | (148,000 | ) | (377,000 | ) | (484,000 | ) | ||||||||
AFFO Attributable to Common Shareholders | $ | 12,511,000 | $ | 10,745,000 | $ | 25,450,000 | $ | 21,470,000 |
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 22 of 23
The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the six months ended March 31, 2017 and 2016:
Six Months Ended | ||||||||
3/31/2017 | 3/31/2016 | |||||||
Operating Activities | $ | 30,846,000 | $ | 28,428,000 | ||||
Investing Activities | (79,130,000 | ) | (86,279,000 | ) | ||||
Financing Activities | (24,513,000 | ) | 55,711,000 |
# # # # #
Second Quarter FY 2017 Supplemental of Monmouth Real Estate Investment Corp. Page 23 of 23
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