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Section 1: 8-K

 

 

 

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) November 28, 2018

 

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

 

MARYLAND   001-33177   22-1897375
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

 

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 November 28, 2018, Monmouth Real Estate Investment Corporation issued a press release announcing the results for the fourth quarter and fiscal year ended September 30, 2018 and disclosed a supplemental information package in connection with its earnings conference call for the fourth quarter and fiscal year ended September 30, 2018. 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;

 

  2
 

 

  market conditions affecting the Company’s investment in marketable securities of other REIT’s;
  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 9.01Financial Statements and Exhibits.

 

  (d) Exhibits.
     
  99 Supplemental information package for the fourth quarter and fiscal year ended September 30, 2018 and press release dated November 28, 2018.

 

  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 November 28, 2018  

 

  4
 

 

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Section 2: EX-99

 

 

   
 

 

MREIC Logo black text

 

Table of Contents

 

  Page
Consolidated Balance Sheets 3
   
Consolidated Statements of Income 4
   
Net Income, FFO, Core FFO, AFFO, EBITDAre, Adjusted EBITDA 5
   
NOI Reconciliations 6
   
Financial Highlights 7
   
Same Property Statistics 8
   
Consolidated Statements of Cash Flows 10
   
Capital Structure and Leverage Ratios 11
   
Debt Maturity 13
   
Securities Portfolio Historic Performance 14
   
Property Table by Tenant 16
   
Property Table by State 17
   
Lease Expirations 18
   
Recent Acquisitions 19
   
Property Table 20
   
Definitions 23
   
Press Release Dated November 28, 2018 24

 

The statement of operations and supplemental statement of operations provided in this supplemental information package present funds from operations (FFO), core funds from operations (Core FFO), adjusted funds from operations (AFFO), net operating income (NOI), EBITDAre and Adjusted EBITDA, which are REIT industry financial measures that are not calculated in accordance with accounting principles generally accepted in the United States. Please see page 23 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-K.

 

 
Table of Contents

 

Consolidated Balance Sheets

 

   As of   As of 
  September 30, 2018   September 30, 2017 
ASSETS       
Real Estate Investments:          
Land  $224,719,083   $187,224,819 
Buildings and Improvements   1,494,859,336    1,244,691,715 
Total Real Estate Investments   1,719,578,419    1,431,916,534 
Accumulated Depreciation   (207,065,634)   (171,086,083)
Real Estate Investments   1,512,512,785    1,260,830,451 
           
Real Estate Held for Sale   -0-    14,631,633 
Cash and Cash Equivalents   9,324,585    10,226,046 
Securities Available for Sale at Fair Value   154,920,545    123,764,770 
Tenant and Other Receivables   1,249,434    1,753,054 
Deferred Rent Receivable   9,656,179    8,049,275 
Prepaid Expenses   6,189,796    5,434,874 
Intangible Assets, net of Accumulated Amortization of $13,699,519 and $13,404,318, respectively   14,589,756    10,010,165 
Capitalized Lease Costs, net of Accumulated Amortization of $3,271,481 and $3,393,187, respectively   5,231,845    4,180,907 
Financing Costs, net of Accumulated Amortization of $995,135 and $619,555, respectively   500,129    875,709 
Other Assets   4,202,832    3,280,871 
TOTAL ASSETS  $1,718,377,886   $1,443,037,755 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Liabilities:          
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs  $711,545,649   $591,364,371 
Loans Payable   186,608,676    120,091,417 
Accounts Payable and Accrued Expenses   5,891,172    4,450,753 
Other Liabilities   16,426,622    14,265,518 
Total Liabilities   920,472,119    730,172,059 
           
COMMITMENTS AND CONTINGENCIES          
           
Shareholders’ Equity:          
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 16,400,000 and 12,400,000 Shares Authorized as of September 30, 2018 and 2017, respectively; 11,488,001 and 9,839,445 Shares Issued and Outstanding as of September 30, 2018 and 2017, respectively   287,200,025    245,986,125 
Common Stock, $0.01 Par Value Per Share: 188,039,750 and 192,039,750 Shares Authorized as of September 30, 2018 and 2017, respectively; 81,503,134 and 75,630,521 Shares Issued and Outstanding as of September 30, 2018 and 2017, respectively   815,031    756,305 
Excess Stock, $0.01 Par Value Per Share: 200,000,000 Shares Authorized as of September 30, 2018 and 2017; No Shares Issued or Outstanding as of September 30, 2018 and 2017   -0-    -0- 
Additional Paid-In Capital   534,635,290    459,552,701 
Accumulated Other Comprehensive Income (Loss)   (24,744,579)   6,570,565 
Undistributed Income   -0-    -0- 
Total Shareholders’ Equity   797,905,767    712,865,696 
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY  $1,718,377,886   $1,443,037,755 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 3 
Table of Contents  

 

Consolidated Statements of Income

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
   9/30/2018   9/30/2017   9/30/2018   9/30/2017 
INCOME:                    
Rental Revenue  $30,305,505   $26,367,855   $115,864,119   $97,659,778 
Reimbursement Revenue   6,295,189    4,789,059    23,297,730    18,725,527 
Lease Termination Income   -0-    -0-    210,261    -0- 
TOTAL INCOME   36,600,694    31,156,914    139,372,110    116,385,305 
                     
EXPENSES:                    
Real Estate Taxes   5,003,666    3,857,976    18,596,239    15,266,634 
Operating Expenses   1,422,724    1,251,936    5,793,878    4,887,922 
General & Administrative Expenses   2,723,788    2,501,693    8,776,579    7,809,546 
Acquisition Costs   -0-    -0-    -0-    178,526 
Depreciation   9,671,314    8,185,168    36,175,923    29,634,998 
Amortization of Capitalized Lease Costs and Intangible Assets   650,484    497,375    2,391,104    1,824,751 
TOTAL EXPENSES   19,471,976    16,294,148    71,733,723    59,602,377 
                     
OTHER INCOME (EXPENSE):                    
Dividend and Interest Income   3,740,054    2,299,911    13,120,465    6,930,564 
Gain on Sale of Securities Transactions   -0-    17,770    111,387    2,311,714 
Interest Expense, including Amortization of Financing Costs   (8,709,149)   (6,918,257)   (32,349,705)   (25,754,121)
TOTAL OTHER INCOME (EXPENSE)   (4,969,095)   (4,600,576)   (19,117,853)   (16,511,843)
                     
INCOME FROM CONTINUING OPERATIONS   12,159,623    10,262,190    48,520,534    40,271,085 
                     
Gain on Sale of Real Estate Investments   -0-    -0-    7,485,266    -0- 
                     
NET INCOME   12,159,623    10,262,190    56,005,800    40,271,085 
                     
Less: Preferred Dividends   4,377,262    3,536,103    17,190,456    14,861,686 
Less: Redemption of Preferred Stock   -0-    -0-    -0-    2,467,165 
                    
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  $7,782,361   $6,726,087   $38,815,344   $22,942,234 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 4 
Table of Contents  

 

Net Income, FFO, Core FFO, AFFO, EBITDAre, Adjusted EBITDA

(unaudited)

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
FFO, Core FFO, AFFO  9/30/2018   9/30/2017   9/30/2018   9/30/2017 
Net Income Attributable to Common Shareholders  $7,782,361   $6,726,087   $38,815,344   $22,942,234 
Plus: Depreciation Expense (excluding Corporate Office Capitalized Costs)   9,631,809    8,145,660    36,017,959    29,478,322 
Plus: Amortization of Intangible Assets   455,418    300,574    1,613,368    1,071,719 
Plus: Amortization of Capitalized Lease Costs   220,743    222,293    880,444    855,000 
Less: (Gain) / Plus: Loss on Sale of Real Estate Investments   -0-    -0-    (7,485,266)   95,336 
FFO Attributable to Common Shareholders   18,090,331    15,394,614    69,841,849    54,442,611 
Plus: Acquisition Costs   -0-    -0-    -0-    178,526 
Plus: Redemption of Preferred Stock   -0-    -0-    -0-    2,467,165 
Core FFO Attributable to Common Shareholders   18,090,331    15,394,614    69,841,849    57,088,302 
Plus: Stock Compensation Expense   94,756    183,652    433,895    624,706 
Plus: Depreciation of Corporate Office Capitalized Costs   39,505    39,508    157,964    156,676 
Plus: Amortization of Financing Costs   310,006    284,789    1,220,983    1,234,259 
Less: Lease Termination Income   -0-    -0-    (210,261)   -0- 
Less: Gain on Sale of Securities Transactions   -0-    (17,770)   (111,387)   (2,311,714)
Less: Effect of non-cash U.S. GAAP Straight-line Rent Adjustment   (615,441)   (103,135)   (1,972,588)   (1,027,927)
Less: Recurring Capital Expenditures   (211,335)   (311,875)   (985,424)   (883,864)
AFFO Attributable to Common Shareholders  $17,707,822   $15,469,783   $68,375,031   $54,880,438 

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
EBITDAre, Adjusted EBITDA  9/30/2018   9/30/2017   9/30/2018   9/30/2017 
Net Income Attributable to Common Shareholders  $7,782,361   $6,726,087   $38,815,344   $22,942,234 
Plus: Preferred Dividends   4,377,262    3,536,103    17,190,456    14,861,686 
Plus: Redemption of Preferred Stock   -0-    -0-    -0-    2,467,165 
Plus: Interest Expense, including Amortization of Financing Costs   8,709,149    6,918,257    32,349,705    25,754,121 
Plus: Depreciation and Amortization   10,321,798    8,682,543    38,567,027    31,459,749 
Less: (Gain) / Plus: Loss on Sale of Real Estate Investments   -0-    -0-    (7,485,266)   95,336 
EBITDAre   31,190,570    25,862,990    119,437,266    97,580,291 
Plus: Acquisition Costs   -0-    -0-    -0-    178,526 
Plus: Net Amortization of Acquired Above and Below Market Lease Revenue   25,677    25,492    102,708    101,968 
Less: Gain on Sale of Securities Transactions   -0-    (17,770)   (111,387)   (2,311,714)
Adjusted EBITDA  $31,216,247   $25,870,712   $119,428,587   $95,549,071 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 5 
Table of Contents  

 

NOI Reconciliations

(unaudited)

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
Net Operating Income  9/30/2018   9/30/2017   9/30/2018   9/30/2017 
Net Income Attributable to Common Shareholders  $7,782,361   $6,726,087   $38,815,344   $22,942,234 
Plus: Redemption of Preferred Stock   -0-    -0-    -0-    2,467,165 
Plus: Preferred Dividends   4,377,262    3,536,103    17,190,456    14,861,686 
Plus: General & Administrative Expenses   2,723,788    2,501,693    8,776,579    7,809,546 
Plus: Acquisition Costs   -0-    -0-    -0-    178,526 
Plus: Depreciation   9,671,314    8,185,168    36,175,923    29,634,998 
Plus: Amortization of Capitalized Lease Costs and Intangible Assets   650,484    497,375    2,391,104    1,824,751 
Plus: Interest Expense, including Amortization of Financing Costs   8,709,149    6,918,257    32,349,705    25,754,121 
Less: Dividend and Interest Income   (3,740,054)   (2,299,911)   (13,120,465)   (6,930,564)
Less: Gain on Sale of Securities Transactions   -0-    (17,770)   (111,387)   (2,311,714)
Less: Gain on Sale of Real Estate Investments   -0-    -0-    (7,485,266)   -0- 
Less: Lease Termination Income   -0-    -0-    (210,261)   -0- 
Net Operating Income – NOI  $30,174,304   $26,047,002   $114,771,732   $96,230,749 

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
Components of Net Operating Income Consists of:  9/30/2018   9/30/2017   9/30/2018   9/30/2017 
Revenues:                    
Rental Revenue  $30,305,505   $26,367,855   $115,864,119   $97,659,778 
Reimbursement Revenue   6,295,189    4,789,059    23,297,730    18,725,527 
Total Rental and Reimbursement Revenue   36,600,694    31,156,914    139,161,849    116,385,305 
                     
Expenses:                    
Real Estate Taxes   5,003,666    3,857,976    18,596,239    15,266,634 
Operating Expenses   1,422,724    1,251,936    5,793,878    4,887,922 
Total Real Estate Taxes and Operating Expenses   6,426,390    5,109,912    24,390,117    20,154,556 
Net Operating Income – NOI  $30,174,304   $26,047,002   $114,771,732   $96,230,749 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 6 
Table of Contents  

 
Financial Highlights

(unaudited)

 

   For The   For The 
   Three Months Ended   Twelve Months Ended 
   9/30/2018   9/30/2017   9/30/2018   9/30/2017 
                 
Weighted Average Common Shares Outstanding                    
Basic   80,691,790    74,634,201    78,619,440    72,114,078 
Diluted   80,888,874    74,800,497    78,802,208    72,249,691 
                     
Net Income Attributable to Common Shareholders  $7,782,361   $6,726,087   $38,815,344   $22,942,234 
                     
Basic  $0.10   $0.09   $0.49   $0.32 
Diluted   0.10    0.09    0.49    0.32 
                     
Net Operating Income – NOI  $30,174,304   $26,047,002   $114,771,732   $96,230,749 
                     
Basic  $0.37   $0.35   $1.46   $1.33 
Diluted   0.37    0.35    1.46    1.33 
                     
Funds From Operations – FFO  $18,090,331   $15,394,614   $69,841,849   $54,442,611 
                     
Basic  $0.22   $0.21   $0.89   $0.75 
Diluted   0.22    0.21    0.89    0.75 
                     
Core Funds From Operations - Core FFO  $18,090,331   $15,394,614   $69,841,849   $57,088,302 
                     
Basic  $0.22   $0.21   $0.89   $0.79 
Diluted   0.22    0.21    0.89    0.79 
                     
Core FFO Excluding Gain on Sale of Securities Transactions and Excluding Lease Termination Income  $18,090,331   $15,376,844   $69,520,201   $54,776,588 
                    
Basic  $0.22   $0.21   $0.88   $0.76 
Diluted   0.22    0.21    0.88   $0.76 
                     
Adjusted Funds From Operations – AFFO  $17,707,822   $15,469,783   $68,375,031   $54,880,438 
                     
Basic  $0.22   $0.21   $0.87   $0.76 
Diluted   0.22    0.21    0.87   $0.76 
                     
Dividends Declared per Common Share  $0.17   $0.16   $0.68   $0.64 
                     
Dividend/AFFO Payout Ratio   77.3%   76.2%   78.2%   84.2%

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 7 
Table of Contents  

 

Same Property Statistics

(unaudited)

 

    For The              
    Three Months Ended              
    9/30/2018           9/30/2017     Change     Change %  
                               
Total Square Feet / Total Properties     21,173,581 / 111               18,790,021 / 108       2,383,560       12.7 %
                                         
Occupancy Percentage at End of Period     99.6 %             99.3 %     30 bps       0.3 %
                                         
Same Property Square Feet / Number of Same Properties             16,927,532 / 98                          
                                         
Same Property Occupancy Percentage at End of Period     99.5 %             99.8 %     (30) bps       (0.3 )%
                                         
Same Property Net Operating Income (NOI) (GAAP)   $ 24,320,081             $ 24,127,404     $ 192,677     0.8 %
                                         
Reversal of Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment     (314,253 )             (203,251 )     (111,002 )        
Same Property Cash NOI   $ 24,005,828             $ 23,924,153     $ 81,675     0.3 %

 

Same Property Statistics includes all properties owned during the entire periods presented with the exclusion of properties expanded during the periods presented.

 

The 0.8% increase, amounting to $192,677 in Same Property NOI, consists of $178,175 attributable to increased Same Property NOI from occupied properties and by an increase in Same Property NOI from vacant properties of $14,502.

 

The 0.3% increase, amounting to $81,675 in Same Property Cash NOI, consists of $70,247 attributable to increased Same Property Cash NOI from occupied properties and by an increase in Same Property Cash NOI from vacant properties of $11,428.

 

Reconciliation of Same Property NOI to Total NOI

 

  

For The

Three Months Ended

         
   9/30/2018   9/30/2017   Change   Change % 
                 
Same Property NOI (GAAP)  $24,320,081   $24,127,404   $192,677    0.8%
                     
NOI of properties purchased subsequent to June 30, 2017 (seven properties for fiscal 2018 and three properties for fiscal 2017)   4,723,444    568,075           
                     
NOI of properties expanded subsequent to June 30, 2017 (two properties for fiscal 2018 and one property for fiscal 2017)   1,130,109    1,066,594           
 NOI of properties sold subsequent to June 30, 2017 (four properties for fiscal 2018)   670    284,929           
Total NOI  $30,174,304   $26,047,002   $4,127,302    15.8%

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 8 
Table of Contents  

 

Same Property Statistics

(unaudited)

 

    For The              
    Twelve Months Ended              
    9/30/2018           9/30/2017     Change     Change %  
                               
Total Square Feet / Total Properties     21,173,581 / 111               18,790,021 / 108       2,383,560       12.7 %
                                         
Occupancy Percentage at End of Period     99.6 %             99.3 %     30 bps       0.3 %
                                         
Same Property Square Feet / Number of Same Properties             15,065,707 / 91                          
                                         
Same Property Occupancy Percentage at End of Period     99.5 %             99.8 %     (30 bps )     (0.3 )%
                                         
Same Property Net Operating Income (NOI) (GAAP)   $ 83,566,781             $ 83,733,452     $ (166,671 )     (0.2 )%
                                         
Reversal of Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment     (967,710 )             (1,100,629 )     132,919          
Same Property Cash NOI   $ 82,599,071             $ 82,632,823     $ (33,752 )     0.0 %

 

Same Property Statistics includes all properties owned during the entire periods presented with the exclusion of properties expanded during the periods presented.

 

The 0.2% decrease, amounting to $166,671 in Same Property NOI, consists of $44,171 attributable to decreased Same Property NOI from occupied properties and by a decrease in Same Property NOI from vacant properties of $122,500 attributable to a 30 bps decline in Same Property Occupancy Percentage.

 

The $33,752 decrease in Same Property Cash NOI, consists of $132,509 attributable to increased Same Property Cash NOI from occupied properties offset by a decrease in Same Property Cash NOI from vacant properties of $166,261 attributable to a 30 bps decline in Same Property Occupancy Percentage.

 

Reconciliation of Same Property NOI to Total NOI

 

   For The
Twelve Months Ended
         
   9/30/2018   9/30/2017   Change   Change % 
                 
Same Property NOI (GAAP)  $83,566,781   $83,733,452   $(166,671)   (0.2)%
                     
NOI of properties purchased subsequent to September 30, 2016 (seven properties for fiscal 2018 and ten properties for fiscal 2017)   26,438,218    7,063,623           
                     
NOI of properties expanded subsequent to September 30, 2016 (two properties for fiscal 2018 and one property for fiscal 2017)   4,159,745    3,998,426           
                     
NOI of properties sold subsequent to September 30, 2016 (four properties for fiscal 2018 and one property for fiscal 2017)   606,988    1,435,248           
Total NOI  $114,771,732   $96,230,749   $18,540,983    19.3%

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 9 
Table of Contents  

 

Consolidated Statements of Cash Flows

 

   For The 
   Twelve Months Ended 
   9/30/2018   9/30/2017 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Income  $56,005,800   $40,271,085 
Noncash Items Included in Net Income:          
Depreciation & Amortization   39,788,010    32,694,009 
Stock Compensation Expense   433,895    624,706 
Deferred Straight Line Rent   (1,972,588)   (1,027,927)
Gain on Sale of Securities Transactions   (111,387)   (2,311,714)
(Gain) Loss on Sale of Real Estate Investments   (7,485,266)   95,336 
Changes in:          
Tenant & Other Receivables   1,396,729    357,823 
Prepaid Expenses   (754,922)   (603,887)
Other Assets & Capitalized Lease Costs   (2,036,854)   15,353 
Accounts Payable, Accrued Expenses & Other Liabilities   265,745    3,753,082 
NET CASH PROVIDED BY OPERATING ACTIVITIES   85,529,162    73,867,866 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of Real Estate & Intangible Assets   (283,402,845)   (286,951,980)
Capital Improvements   (9,084,163)   (4,974,988)
Proceeds from Sale of Real Estate Investments   22,083,340    4,125,819 
Return of Deposits on Real Estate   450,000    3,400,000 
Deposits Paid on Acquisitions of Real Estate   (200,000)   (450,000)
Proceeds from Sale of Securities Available for Sale   2,620,166    17,274,946 
Purchase of Securities Available for Sale   (64,979,698)   (71,494,810)
NET CASH USED IN INVESTING ACTIVITIES   (332,513,200)   (339,071,013)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from Fixed Rate Mortgage Notes Payable   175,160,000    188,809,000 
Principal Payments on Fixed Rate Mortgage Notes Payable   (54,354,212)   (73,594,586)
Net Draws on Loans Payable   66,517,259    39,300,733 
Financing Costs Paid on Debt   (1,469,914)   (2,190,098)
Redemption of 7.625% Series A Preferred Stock   -0-    (53,493,750)
Redemption of 7.875% Series B Preferred Stock   -0-    (57,500,000)
Proceeds from Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs   -0-    71,003,093 
Proceeds from At-The-Market Preferred Equity Program, net of offering costs   40,093,650    35,733,885 
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments   77,100,433    81,805,937 
Proceeds from the Exercise of Stock Options   569,600    469,300 
Preferred Dividends Paid   (16,876,532)   (14,500,474)
Common Dividends Paid, net of Reinvestments   (40,657,707)   (36,163,355)
NET CASH PROVIDED BY FINANCING ACTIVITIES   246,082,577    179,679,685 
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (901,461)   (85,523,462)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR   10,226,046    95,749,508 
CASH AND CASH EQUIVALENTS - END OF YEAR  $9,324,585   $10,226,046 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 10 
Table of Contents  

 

Capital Structure and Leverage Ratios

(unaudited)

 

   As of   As of 
   9/30/2018   9/30/2017 
         
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs  $711,545,649   $591,364,371 
Loans Payable   186,608,676    120,091,417 
Total Debt   898,154,325    711,455,788 
           
6.125% Series C Cumulative Redeemable Preferred Stock   287,200,025    245,986,125 
Common Stock, Paid-In-Capital & Other   510,705,742    466,879,571 
Total Shareholders’ Equity   797,905,767    712,865,696 
           
Total Book Capitalization   1,696,060,092    1,424,321,484 
           
Accumulated Depreciation   207,065,634    177,372,518 
Total Undepreciated Book Capitalization  $1,903,125,726   $1,601,694,002 
           
Shares Outstanding   81,503,134    75,630,521 
Market Price Per Share  $16.72   $16.19 
           
Equity Market Capitalization  $1,362,732,400   $1,224,458,135 
Total Debt   898,154,325    711,455,788 
Total Preferred Stock   287,200,025    245,986,125 
Total Market Capitalization  $2,548,086,750   $2,181,900,048 
           
Total Debt  $898,154,325   $711,455,788 
less: Cash and Cash Equivalents   9,324,585    10,226,046 
Net Debt  $888,829,740   $701,229,742 
less: Securities Available for Sale at Fair Value (Securities)   154,920,545    123,764,770 
Net Debt Less Securities  $733,909,195   $577,464,972 
           
Net Debt / Total Undepreciated Book Capitalization   46.7%   43.8%
Net Debt / Total Market Capitalization   34.9%   32.1%
Net Debt Plus Preferred Stock / Total Market Capitalization   46.2%   43.4%
Net Debt Less Securities / Total Undepreciated Book Capitalization   38.6%   36.1%
Net Debt Less Securities / Total Market Capitalization   28.8%   26.5%
Net Debt Less Securities Plus Preferred Stock / Total Market Capitalization   40.1%   37.7%
           
Weighted Average Interest Rate on Fixed Rate Debt   4.07%   4.18%
Weighted Average Term on Fixed Rate Debt   11.7 yrs.    11.6 yrs. 
Weighted Average Lease Term   8.1 yrs.    7.9 yrs. 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 11 
Table of Contents  

 

Capital Structure and Leverage Ratios

(unaudited)

 

  

For The

Three Months Ended

  

For The

Twelve Months Ended

 
   9/30/2018   9/30/2017   9/30/2018   9/30/2017 
Net Income  $12,159,623   $10,262,190   $56,005,800   $40,271,085 
Plus: Interest Expense, including Amortization of Financing Costs   8,709,149    6,918,257    32,349,705    25,754,121 
Plus: Depreciation and Amortization   10,321,798    8,682,543    38,567,027    31,459,749 
Less: (Gain) / Plus: Loss on Sale of Real Estate Investments   -0-    -0-    (7,485,266)   95,336 
EBITDAre   31,190,570    25,862,990    119,437,266    97,580,291 
Plus: Acquisition Costs   -0-    -0-    -0-    178,526 
Plus: Net Amortization of Acquired Above and Below Market Lease Revenue   25,677    25,492    102,708    101,968 
Less: Gain on Sale of Securities Transactions   -0-    (17,770)   (111,387)   (2,311,714)
Adjusted EBITDA  $31,216,247   $25,870,712   $119,428,587   $95,549,071 
                     
Interest Expense, including Amortization of Financing Costs  $8,709,149   $6,918,257   $32,349,705   $25,754,121 
Preferred Dividends   4,377,262    3,536,103    17,190,456    14,861,686 
Total Fixed Charges  $13,086,411   $10,454,360   $49,540,161   $40,615,807 
                     
Interest Coverage    3.6 x     3.7 x     3.7 x     3.7 x 
Fixed Charge Coverage    2.4 x     2.5 x     2.4 x     2.4 x 
                     
Net Debt  $888,829,740   $701,229,742   $888,829,740   $701,229,742 
Net Debt Less Securities   733,909,195    577,464,972    733,909,195    577,464,972 
Total Preferred Stock   287,200,025    245,986,125    287,200,025    245,986,125 
Annualized Adjusted EBITDA   124,864,988    103,482,848    119,428,587    95,549,071 
                     
Net Debt / Adjusted EBITDA    7.1 x     6.8 x     7.4 x     7.3 x 
Net Debt Less Securities / Adjusted EBITDA    5.9 x     5.6 x     6.1 x     6.0 x 
Net Debt + Preferred Stock / Adjusted EBITDA    9.4 x     9.2 x     9.8 x     9.9 x 
Net Debt Less Securities + Preferred Stock / Adjusted EBITDA    8.2 x     8.0 x     8.5 x     8.6 x 

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 12 
Table of Contents  

 

Debt Maturity 

(Unaudited)

 

 

          Loans         % of 
Fiscal Year Ended     Mortgages   Payable     Total   Total 
                      
2019     $60,151,223   $26,608,676 (B)   $86,759,899    9.6%
2020      48,605,542    160,000,000 (C)    208,605,542    23.0%
2021      50,098,257    -0-      50,098,257    5.5%
2022      72,031,353    -0-      72,031,353    7.9%
2023      50,522,349    -0-      50,522,349    5.6%
Thereafter      438,359,631    -0-      438,359,631    48.4%
                          
Total as of 9/30/2018  (A)  $719,768,355   $186,608,676     $906,377,031    100.0%
                          
Weighted Average Interest Rate      4.07%   3.74%     4.00%     
Weighted Average Term      11.7 yrs.    1.7 yrs.      9.6 yrs.      

 

  (A) Mortgages does not include unamortized debt issuance costs of $8,222,706.
  (B) Represents margin debt which is due upon demand. Subsequent to fiscal yearend, margin debt was paid off.
  (C) Represents the amount drawn down on a line of credit that has a one year extension option, which is not reflected above. Subsequent to fiscal yearend, $50,000,000 was paid down, which reduced our amount outstanding to $110,000,000.

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 13 
Table of Contents  

 

Securities Portfolio Historic Performance (Fiscal Year)

(unaudited)

 

 

Fiscal
Year
   Securities
Portfolio
Cost (A)
   Securities
Available
for Sale (A)
   Dividend
Income
   Net Realized
Gain on
Sale of
Securities
   Change in
Unrealized
Gain/
(Loss)(B)
   Total
Return
   Total
Return %
 
                                     
2010   $24,027,834   $27,824,665   $2,387,757   $2,609,149   $6,319,226   $11,316,132    47.10%
2011    32,401,668    42,517,725    2,981,534    5,238,203    (7,747,894)   471,843    1.46%
2012    41,896,896    44,265,059    3,144,837    6,044,065    3,015,774    12,204,676    29.13%
2013    56,301,236    61,685,173    3,861,374    7,133,252    (3,394,669)   7,599,957    13.50%
2014    43,462,472    45,451,740    3,863,136    2,166,766    (1,867,912)   4,161,990    9.58%
2015    59,190,047    59,311,403    3,707,498    805,513    (5,562,959)   (1,049,948)   (1.77)%
2016    59,982,840    54,541,237    5,607,403    4,398,599    18,383,870    28,389,872    47.33%
2017    60,662,627    73,604,894    6,919,973    2,311,714    (6,371,702)   2,859,985    4.71%
2018    117,194,205    123,764,770    13,099,316    111,387    (31,315,144)   (18,104,441)   (15.45)%
                                     
Total             $45,572,828   $30,818,648   $(28,541,410)  $47,850,066     Avg. 15.07

 

  (A) Fiscal Year beginning balance
  (B) Fiscal Year end balance

 

FOURTH QUARTER AND FISCAL YEAR END 2018 SUPPLEMENTAL INFORMATION 14 
Table of Contents  

 

Securities Portfolio Historic Performance (Fiscal Year)

(unaudited)

 

 

FISCAL YEAR   MREIC REIT Portfolio (%)   MSCI REIT Index (RMS)(%)  

S&P 500 Index

(%)

  

MREIC vs.

MSCI REIT Index (RMS)

Outperformance in BPS ∆

  

MREIC vs.

S&P 500 Index

Outperformance in BPS ∆

 
                      
2010    47.10    30.54    10.16    1656    3694 
2011    1.46    1.26    1.14    20    32 
2012    29.13    32.44    30.20    (331)   (107)
2013    13.50    6.63    21.59    687    (809)
2014    9.58    13.26    19.73    (368)   (1015)
2015    (1.77)   9.47    (0.61)   (1124)   (116)
2016    47.33