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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) August 1, 2019

 

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. [  ]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   MNR   New York Stock Exchange
6.125% Series C Cumulative Redeemable Preferred Stock   MNR-PC   New York Stock Exchange

 

 

 

 
 

 

Item 2.02 Results of Operations and Financial Condition.

 

Item 7.01 Regulation FD Disclosure.

 

On August 1, 2019, Monmouth Real Estate Investment Corporation issued a press release announcing the results for the third quarter ended June 30, 2019 and disclosed a supplemental information package in connection with its earnings conference call for the third quarter ended June 30, 2019. 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;
  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 third quarter ended June 30, 2019 and press release dated August 1, 2019.

 

  2
 

 

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 August 1, 2019  

 

  3
 

 

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Section 2: EX-99

 

 

 

 

 

 

Table of Contents

 

    Page
Consolidated Balance Sheets   3
Consolidated Statements of Income (Loss)   4
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 August 1, 2019   24

 

The statement of operations and supplemental statement of operations provided in this supplemental information package present funds from operations (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-Q.

 

 
Table of Contents 

 

Consolidated Balance Sheets

(in thousands except for per share amounts)

 

   As of   As of 
   June 30, 2019   September 30, 2018 
   (unaudited)     
ASSETS          
           
Real Estate Investments:          
Land  $236,497   $224,719 
Buildings and Improvements   1,603,423    1,494,859 
Total Real Estate Investments   1,839,920    1,719,578 
Accumulated Depreciation   (238,757)   (207,065)
Real Estate Investments   1,601,163    1,512,513 
           
Cash and Cash Equivalents   13,631    9,324 
Securities Available for Sale at Fair Value   171,040    154,921 
Tenant and Other Receivables   662    1,249 
Deferred Rent Receivable   10,762    9,656 
Prepaid Expenses   7,375    6,190 
Intangible Assets, net of Accumulated Amortization of $15,195 and $13,700, respectively   14,981    14,590 
Capitalized Lease Costs, net of Accumulated Amortization of $3,254 and $3,271, respectively   5,682    5,232 
Financing Costs, net of Accumulated Amortization of $1,277 and $995, respectively   219    500 
Other Assets   9,668    4,203 
TOTAL ASSETS  $1,835,183   $1,718,378 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Liabilities:          
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs  $734,095   $711,546 
Loans Payable   126,187    186,609 
Accounts Payable and Accrued Expenses   3,775    5,891 
Other Liabilities   17,354    16,426 
Total Liabilities   881,411    920,472 
           
COMMITMENTS AND CONTINGENCIES          
           
Shareholders’ Equity:          
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 16,400 Shares Authorized as of June 30, 2019 and September 30, 2018; 12,506 and 11,488 Shares Issued and Outstanding as of June 30, 2019 and September 30, 2018, respectively   312,660    287,200 
Common Stock, $0.01 Par Value Per Share: 188,040 Shares Authorized as of June 30, 2019 and September 30, 2018; 95,155 and 81,503 Shares Issued and Outstanding as of June 30, 2019 and September 30, 2018, respectively   952    815 
Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of June 30, 2019 and September 30, 2018; No Shares Issued or Outstanding as of June 30, 2019 and September 30, 2018   -0-    -0- 
Additional Paid-In Capital   640,160    534,635 
Accumulated Other Comprehensive Loss   -0-    (24,744)
Undistributed Income   -0-    -0- 
Total Shareholders’ Equity   953,772    797,906 
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY  $1,835,183   $1,718,378 

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION3
Table of Contents 

 

Consolidated Statements of Income (Loss)

(unaudited) (in thousands)

 

  

For The

Three Months Ended

  

For The

Nine Months Ended

 
    6/30/2019    6/30/2018    6/30/2019    6/30/2018 
INCOME:                    
Rental Revenue  $33,127   $29,256   $98,678   $85,559 
Reimbursement Revenue   6,345    5,480    19,247    17,002 
Lease Termination Income   -0-    -0-    -0-    210 
TOTAL INCOME   39,472    34,736    117,925    102,771 
                     
EXPENSES:                    
Real Estate Taxes   5,092    4,488    15,144    13,593 
Operating Expenses   1,649    1,459    5,186    4,371 
General & Administrative Expenses   2,351    1,888    6,420    6,053 
Depreciation   10,833    9,162    32,067    26,504 
Amortization of Capitalized Lease Costs and Intangible Assets   721    614    2,144    1,741 
TOTAL EXPENSES   20,646    17,611    60,961    52,262 
                     
OTHER INCOME (EXPENSE):                    
Dividend Income   3,686    3,628    11,569    9,380 
Gain on Sale of Securities Transactions   -0-    -0-    -0-    111 
Unrealized Holding Gains (Losses) Arising During the Periods   (11,609)   -0-    (38,668)   -0- 
Interest Expense, including Amortization of Financing Costs   (9,275)   (8,279)   (27,879)   (23,640)
TOTAL OTHER INCOME (EXPENSE)   (17,198)   (4,651)   (54,978)   (14,149)
                     
INCOME FROM OPERATIONS   1,628    12,474    1,986    36,360 
                     
Gain on Sale of Real Estate Investments   -0-    2,097    -0-    7,486 
                     
NET INCOME   1,628    14,571    1,986    43,846 
                     
Less: Preferred Dividends   4,749    4,248    13,650    12,813 
                     
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(3,121)  $10,323   $(11,664)  $31,033 

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION4
Table of Contents 

 

FFO, AFFO, EBITDAre and Adjusted EBITDA Reconciliations

(unaudited) (in thousands)

 

   For The
Three Months Ended
   For The
Nine Months Ended
 
FFO, AFFO  6/30/2019   6/30/2018   6/30/2019   6/30/2018 
Net Income (Loss) Attributable to Common Shareholders (1)  $(3,121)  $10,323   $(11,664)  $31,033 
Plus: Unrealized Holding Losses Arising During the Periods (2)   11,609    -0-    38,668    -0- 
Plus: Depreciation Expense (excluding Corporate Office Capitalized Costs)   10,665    9,123    31,692    26,386 
Plus: Amortization of Intangible Assets   490    417    1,495    1,158 
Plus: Amortization of Capitalized Lease Costs   256    222    726    660 
Less: Gain on Sale of Real Estate Investments   -0-    (2,097)   -0-    (7,486)
FFO Attributable to Common Shareholders (3)   19,899    17,988    60,917    51,751 
Plus: Depreciation of Corporate Office Capitalized Costs   168    39    376    118 
Plus: Stock Compensation Expense   231    97    574    339 
Plus: Amortization of Financing Costs   319    315    956    911 
Less: Gain on Sale of Securities Transactions   -0-    -0-    -0-    (111)
Less: Lease Termination Income   -0-    -0-    -0-    (210)
Less: Recurring Capital Expenditures   (702)   (490)   (1,888)   (774)
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment   (527)   (601)   (1,352)   (1,357)
AFFO Attributable to Common Shareholders  $19,388   $17,348   $59,583   $50,667 

 

   For The
Three Months Ended
   For The
Nine Months Ended
 
EBITDAre, Adjusted EBITDA   6/30/2019    6/30/2018    6/30/2019    6/30/2018 
Net Income (Loss) Attributable to Common Shareholders (1)  $(3,121)  $10,323   $(11,664)  $31,033 
Plus: Preferred Dividends   4,749    4,248    13,650    12,813 
Plus: Interest Expense, including Amortization of Financing Costs   9,275    8,279    27,879    23,640 
Plus: Depreciation and Amortization   11,554    9,776    34,211    28,245 
Less: Gain on Sale of Real Estate Investments   -0-    (2,097)   -0-    (7,486)
EBITDAre   22,457    30,529    64,076    88,245 
Plus: Net Amortization of Acquired Above and Below Market Lease Revenue   26    26    77    77 
Plus: Unrealized Holding Losses Arising During the Periods   11,609    -0-    38,668    -0- 
Less: Gain on Sale of Securities Transactions   -0-    -0-    -0-    (111)
Adjusted EBITDA  $34,092   $30,555   $102,821   $88,211 

 

(1) Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income (Loss) Attributable to Common Shareholders between these periods are not comparable.
(2) Unrealized Holding Gains or Losses Arising During the Periods, if any, were previously reported as an adjustment to Core Funds From Operations (Core FFO).
(3) In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude unrealized gains and losses from our investments in marketable equity securities from our FFO calculation. Prior to the adoption of the FFO White Paper – 2018 Restatement, we utilized Core FFO, which we defined as FFO, excluding Unrealized Holding Gains or Losses Arising During the Periods.

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION5
Table of Contents 

 

NOI Reconciliations

(unaudited) (in thousands)

 

   For The
Three Months Ended
   For The
Nine Months Ended
 
Net Operating Income  6/30/2019   6/30/2018   6/30/2019   6/30/2018 
Net Income (Loss) Attributable to Common Shareholders (1)  $(3,121)  $10,323   $(11,664)  $31,033 
Plus: Preferred Dividends   4,749    4,248    13,650    12,813 
Plus: General & Administrative Expenses   2,351    1,888    6,420    6,053 
Plus: Depreciation   10,833    9,162    32,067    26,504 
Plus: Amortization of Capitalized Lease Costs and Intangible Assets   721    614    2,144    1,741 
Plus: Interest Expense, including Amortization of Financing Costs   9,275    8,279    27,879    23,640 
Plus: Unrealized Holding Losses Arising During the Periods   11,609    -0-    38,668    -0- 
Less: Dividend Income   (3,686)   (3,628)   (11,569)   (9,380)
Less: Gain on Sale of Securities Transactions   -0-    -0-    -0-    (111)
Less: Gain on Sale of Real Estate Investments   -0-    (2,097)   -0-    (7,486)
Less: Lease Termination Income   -0-    -0-    -0-    (210)
Net Operating Income – NOI  $32,731   $28,789   $97,595   $84,597 

 

   For The
Three Months Ended
   For The
Nine Months Ended
 
Components of Net Operating Income Consists of:   6/30/2019    6/30/2018    6/30/2019    6/30/2018 
Revenues:                    
Rental Revenue  $33,127   $29,256   $98,678   $85,559 
Reimbursement Revenue   6,345    5,480    19,247    17,002 
Total Rental and Reimbursement Revenue   39,472    34,736    117,925    102,561 
                     
Expenses:                    
Real Estate Taxes   5,092    4,488    15,144    13,593 
Operating Expenses   1,649    1,459    5,186    4,371 
Total Real Estate Taxes and Operating Expenses   6,741    5,947    20,330    17,964 
Net Operating Income – NOI  $32,731   $28,789   $97,595   $84,597 

 

(1) Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income (Loss) Attributable to Common Shareholders between these periods are not comparable.

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION6
Table of Contents 

 

Financial Highlights

(unaudited) (in thousands except for per share amounts)

 

   For The   For The 
   Three Months Ended   Nine Months Ended 
   6/30/2019   6/30/2018   Change (%)   6/30/2019   6/30/2018   Change (%) 
                         
Weighted Average Common Shares Outstanding                              
Basic   94,399    79,414    18.9%   92,619    77,921    18.9%
Diluted   94,493    79,572    18.8%   92,719    78,099    18.7%
                               
Net Income (Loss) Attributable to Common Shareholders (1)  $(3,121)  $10,323    (130.2)%  $(11,664)  $31,033    (137.6)%
                               
Basic  $(0.03)  $0.13    (123.1)%  $(0.13)  $0.40    (132.5)%
Diluted   (0.03)   0.13    (123.1)%   (0.13)   0.40    (132.5)%
                               
Net Operating Income – NOI  $32,731   $28,789    13.7%  $97,595   $84,597    15.4%
                               
Basic  $0.35   $0.36    (2.8)%  $1.05   $1.09    (3.7)%
Diluted   0.35    0.36    (2.8)%   1.05    1.08    (2.8)%
                               
Funds From Operations – FFO (2)  $19,899   $17,988    10.6%  $60,917   $51,751    17.7%
                               
Basic  $0.21   $0.23    (8.7)%  $0.66   $0.66    0.0%
Diluted   0.21    0.23    (8.7)%   0.66    0.66    0.0%
                               
Adjusted Funds From Operations – AFFO  $19,388   $17,348    11.8%  $59,583   $50,667    17.6%
                               
Basic  $0.21   $0.22    (4.5)%  $0.64   $0.65    (1.5)%
Diluted   0.21    0.22    (4.5)%   0.64    0.65    (1.5)%
                               
Dividends Declared per Common Share  $0.17   $0.17        $0.51   $0.51      
                               
Dividend/AFFO Payout Ratio   81.0%   77.3%        79.7%   78.5%     

 

(1) Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income (Loss) Attributable to Common Shareholders between these periods are not comparable.
(2) In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude unrealized gains and losses from our investments in marketable equity securities from our FFO calculation. Prior to the adoption of the FFO White Paper – 2018 Restatement, we utilized Core FFO, which we defined as FFO, excluding Unrealized Holding Gains or Losses Arising During the Periods.

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION7
Table of Contents 

 

Same Property Statistics

(unaudited) (in thousands except for square feet)

 

  

For The

Three Months Ended

         
   6/30/2019       6/30/2018   Change   Change % 
Total Square Feet / Total Properties   21,802,835 / 113        20,534,513 / 109    1,268,322    6.2%
                          
Occupancy Percentage at End of Period   98.9%       99.6%   (70) bps    (0.7)%
                          
Same Property Square Feet / Number of Same Properties        19,363,781 / 105                
                          
Same Property Occupancy Percentage at End of Period   98.8%        99.6%   (80) bps    (0.8)%
                          
Same Property Net Operating Income (NOI) (GAAP)  $27,388        $27,594   $(206)   (0.7)%
                          
Reversal of Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment   (371)        (532)   161      
Same Property NOI (Cash)  $27,017        $27,062   $(45)   (0.2)%

 

Same Property Statistics include all properties owned during the entire periods presented with the exclusion of properties expanded during the periods presented. Historically, there have been many properties expanded in our portfolio and these expansions have resulted in very favorable economic returns. This factor should be taken into account when analyzing our Same Property results.

 

The 70 basis point decrease in Same Property NOI (GAAP) and the 20 basis point decrease in Same Property NOI (Cash) are primarily due to the 80 basis point decrease in Same Property Occupancy, partially offset by increased rent.

 

Reconciliation of Same Property NOI to Total NOI

(unaudited) (in thousands)

 

  

For The

Three Months Ended

         
   6/30/2019   6/30/2018   Change   Change % 
Same Property NOI (GAAP)  $27,388   $27,594   $(206)   (0.7)%
                     
NOI of properties purchased subsequent to March 31, 2018 (two properties purchased during fiscal 2019 and four properties purchased during fiscal 2018)   4,436    522           
                     
NOI of properties expanded subsequent to March 31, 2018 (one property expanded during fiscal 2019 and one property expanded during 2018)   907    612           
                     
NOI of properties sold subsequent to March 31, 2018 (two properties sold during the 3rd quarter of fiscal 2018)   -0-    61           
Total NOI  $32,731   $28,789   $3,942    13.7%

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION8
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Same Property Statistics

(unaudited) (in thousands except for square feet)

 

  

For The

Nine Months Ended

         
   6/30/2019       6/30/2018   Change   Change % 
Total Square Feet / Total Properties   21,802,835 / 113        20,534,513 / 109    1,268,322    6.2%
                          
Occupancy Percentage at End of Period   98.9%       99.6%   (70) bps    (0.7)%
                          
Same Property Square Feet / Number of Same Properties        17,782,512 / 101                
                          
Same Property Occupancy Percentage at End of Period   98.7%        99.5%   (80) bps    (0.8)%
                          
Same Property Net Operating Income (NOI) (GAAP)  $76,033        $76,797   $(764)   (1.0)%
                          
Reversal of Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment   (850)        (1,134)   284      
Same Property NOI (Cash)  $75,183        $75,663   $(480)   (0.6)%

 

Same Property Statistics include all properties owned during the entire periods presented with the exclusion of properties expanded during the periods presented. Historically, there have been many properties expanded in our portfolio and these expansions have resulted in very favorable economic returns. This factor should be taken into account when analyzing our Same Property results.

 

The 100 basis point decrease in Same Property NOI (GAAP) and the 60 basis point decrease in Same Property NOI (Cash) are primarily due to the 80 basis point decrease in Same Property Occupancy, partially offset by increased rent.

 

Reconciliation of Same Property NOI to Total NOI

(unaudited) (in thousands)

 

  

For The

Nine Months Ended

         
   6/30/2019   6/30/2018   Change   Change % 
Same Property NOI (GAAP)  $76,033   $76,797   $(764)   (1.0)%
                     
NOI of properties purchased subsequent to September 30, 2017 (two properties purchased during fiscal 2019 and seven properties purchased during fiscal 2018)   17,988    4,109           
                     
NOI of properties expanded subsequent to September 30, 2017 (one property expanded during fiscal 2019 and two properties expanded during 2018)   3,574    3,085           
                     
NOI of properties sold subsequent to September 30, 2017 (four properties sold during fiscal 2018)   -0-    606           
Total NOI  $97,595   $84,597   $12,998    15.4%

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION9
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Consolidated Statements of Cash Flows

(unaudited) (in thousands)

 

   For The 
   Nine Months Ended 
   6/30/2019   6/30/2018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Income  $1,986   $43,846 
Noncash Items Included in Net Income:          
Depreciation & Amortization   35,167    29,156 
Deferred Straight Line Rent   (1,352)   (1,357)
Stock Compensation Expense   574    339 
Unrealized Holding (Gains) Losses Arising During the Periods   38,668    -0- 
Gain on Sale of Securities Transactions   -0-    (111)
Gain on Sale of Real Estate Investments   -0-    (7,486)
Changes in:          
Tenant & Other Receivables   664    1,775 
Prepaid Expenses   (1,185)   (1,637)
Other Assets & Capitalized Lease Costs   173    (2,174)
Accounts Payable, Accrued Expenses & Other Liabilities   709    743 
NET CASH PROVIDED BY OPERATING ACTIVITIES   75,404    63,094 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of Real Estate & Intangible Assets   (113,406)   (174,919)
Capital Improvements   (11,594)   (4,542)
Proceeds from Sale of Real Estate Investments   -0-    22,083 
Return of Deposits on Real Estate   200    450 
Deposits Paid on Acquisitions of Real Estate   (6,400)   (700)
Proceeds from Sale of Securities Available for Sale   -0-    2,620 
Purchase of Securities Available for Sale   (54,787)   (61,278)
NET CASH USED IN INVESTING ACTIVITIES   (185,987)   (216,286)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Net Draws (Repayments) on Loans Payable   (60,422)   37,701 
Proceeds from Fixed Rate Mortgage Notes Payable   72,500    105,600 
Principal Payments on Fixed Rate Mortgage Notes Payable   (50,180)   (39,444)
Financing Costs Paid on Debt   (444)   (1,066)
Proceeds from the Exercise of Stock Options   567    570 
Proceeds from Underwritten Public Offering of Common Stock,
net of offering costs
   132,338    -0- 
Proceeds from At-The-Market 6.125% Series C Preferred Stock,
net of offering costs
   24,049    30,992 
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments   44,618    58,429 
Preferred Dividends Paid   (13,520)   (12,549)
Common Dividends Paid, net of Reinvestments   (34,616)   (30,375)
NET CASH PROVIDED BY FINANCING ACTIVITIES   114,890    149,858 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   4,307    (3,334)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   9,324    10,226 
CASH AND CASH EQUIVALENTS - END OF PERIOD  $13,631   $6,892 

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION10
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Capital Structure and Leverage Ratios

(unaudited) (in thousands except for per share amounts)

 

   As of   As of   As of 
   6/30/2019   6/30/2018   9/30/2018 
             
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs  $734,095   $657,083   $711,546 
Loans Payable   126,187    157,793    186,609 
Total Debt   860,282    814,876    898,155 
                
6.125% Series C Cumulative Redeemable Preferred Stock   312,660    277,487    287,200 
Common Stock, Paid-In-Capital & Other   641,112    511,427    510,706 
Total Shareholders’ Equity   953,772    788,914    797,906 
                
Total Book Capitalization   1,814,054    1,603,790    1,696,061 
                
Accumulated Depreciation   238,757    197,434    207,065 
Total Undepreciated Book Capitalization  $2,052,811   $1,801,224   $1,903,126 
                
Shares Outstanding   95,155    80,137    81,503 
Market Price Per Share  $13.55   $16.53   $16.72 
                
Equity Market Capitalization  $1,289,350   $1,324,665   $1,362,732 
Total Debt   860,282    814,876    898,155 
Total Preferred Stock   312,660    277,487    287,200 
Total Market Capitalization  $2,462,292   $2,417,028   $2,548,087 
                
Total Debt  $860,282   $814,876   $898,155 
less: Cash and Cash Equivalents   13,631    6,892    9,324 
Net Debt  $846,651   $807,984   $888,831 
less: Securities Available for Sale at Fair Value (Securities)   171,040    167,594    154,921 
Net Debt Less Securities  $675,611   $640,390   $733,910 
                
Net Debt / Total Undepreciated Book Capitalization   41.2%   44.9%   46.7%
Net Debt / Total Market Capitalization   34.4%   33.4%   34.9%
Net Debt Plus Preferred Stock / Total Market Capitalization   47.1%   44.9%   46.2%
Net Debt Less Securities / Total Undepreciated Book Capitalization   32.9%   35.6%   38.6%
Net Debt Less Securities / Total Market Capitalization   27.4%   26.5%   28.8%
Net Debt Less Securities Plus Preferred Stock / Total Market Capitalization   40.1%   38.0%   40.1%
                
Weighted Average Interest Rate on Fixed Rate Debt   4.03%   4.11%   4.07%
Weighted Average Term on Fixed Rate Debt   11.5 yrs.    11.5 yrs.    11.7 yrs. 
Weighted Average Lease Term   7.8 yrs.    7.8 yrs.    8.1 yrs. 

 

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Capital Structure and Leverage Ratios

(unaudited) (in thousands)

 

   For the Three Months Ended   For the Nine Months Ended   Fiscal Year Ended 
   6/30/2019   6/30/2018   6/30/2019   6/30/2018   9/30/2018 
Net Income (Loss) Attributable to Common Shareholders  $(3,121)  $10,323   $(11,664)  $31,033   $38,815 
Plus: Preferred Dividends   4,749    4,248    13,650    12,813    17,191 
Plus: Interest Expense, including Amortization of Financing Costs   9,275    8,279    27,879    23,640    32,350 
Plus: Depreciation and Amortization   11,554    9,776    34,211    28,245    38,567 
Less: Gain on Sale of Real Estate Investments   -0-    (2,097)   -0-    (7,486)   (7,486)
EBITDAre   22,457    30,529    64,076    88,245    119,437 
Plus: Net Amortization of Acquired Above and Below Market Lease Revenue   26    26    77    77    103 
Plus: Unrealized Holding Losses Arising During the Periods   11,609    -0-    38,668    -0-    -0- 
Less: Gain on Sale of Securities Transactions   -0-    -0-    -0-    (111)   (111)
Adjusted EBITDA  $34,092   $30,555   $102,821   $88,211   $119,429 
                          
Interest Expense, including Amortization of Financing Costs  $9,275   $8,279   $27,879   $23,640   $32,350 
Preferred Dividends   4,749    4,248    13,650    12,813    17,191 
Total Fixed Charges  $14,024   $12,527   $41,529   $36,453   $49,541 
                          
Interest Coverage   3.7 x    3.7 x    3.7 x    3.7 x    3.7 x 
Fixed Charge Coverage   2.4 x    2.4 x    2.5 x    2.4 x    2.4 x 
                          
Net Debt  $846,651   $807,984   $846,651   $807,984   $888,831 
Net Debt Less Securities   675,611    640,390    675,611    640,390    733,910 
Total Preferred Stock   312,660    277,487    312,660    277,487    287,200 
Annualized Adjusted EBITDA   136,368    122,220    137,095    117,615    119,429 
                          
Net Debt / Adjusted EBITDA   6.2 x    6.6 x    6.2 x    6.9 x    7.4 x 
Net Debt Less Securities / Adjusted EBITDA   5.0 x    5.2 x    4.9 x    5.4 x    6.1 x 
Net Debt + Preferred Stock / Adjusted EBITDA   8.5 x    8.9 x    8.5 x    9.2 x    9.8 x 
Net Debt Less Securities + Preferred Stock / Adjusted EBITDA   7.2 x    7.5 x    7.2 x    7.8 x    8.5 x 

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION12
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Debt Maturity

(unaudited) (In thousands)

 

 

          Loans         % of 
Fiscal Year Ended     Mortgages   Payable     Total   Total 
                      
2019     $13,045   $16,187 (B)  $29,232    3.4%
2020      52,074    110,000 (C)   162,074    18.7%
2021      53,925    -0-      53,925    6.2%
2022      76,022    -0-      76,022    8.8%
2023      54,683    -0-      54,683    6.3%
Thereafter      492,338    -0-      492,338    56.6%
                          
Total as of 6/30/2019  (A)  $742,087   $126,187     $868,274    100.0%
                          
Weighted Average Interest Rate      4.03%   3.96%     4.02%     
Weighted Average Term      11.5 yrs.    1.1 yrs.      10.0 yrs.      

 

  (A) Mortgages does not include unamortized debt issuance costs of $7,992.
  (B) Represents margin debt which is due upon demand.
  (C) Represents the amount drawn down on a line of credit that has a one year extension option, which is not reflected above.

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION13
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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)%
As of 6/30/19   179,665,124    154,920,545    11,508,582    -0-          (38,667,665)   (27,159,083)   (15.12)%
                                    
Total            $57,081,410   $30,818,648   $(67,209,075)  $20,690,983    Avg. 12.05%

 

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

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION14
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)

∆ in BPS

  

MREIC vs.

S&P 500 Index

∆ 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    5.75    19.34    775    (584)
2014   9.58    13.26    19.73    (368)   (1015)
2015   (1.77)   9.47    (0.61)   (1124)   (116)
2016   47.33    19.83    15.43    2750    3190 
2017   4.71    0.54    18.61    417    (1390)
2018   (15.45)   3.74    17.91    (1919)   (3336)
As of 6/30/19   (15.12)   9.86    2.51    (2498)   (1763)
Average   12.05    12.67    13.44    (62)   (140)

 

Source: S&P Global Market Intelligence

 

  THIRD QUARTER FISCAL YEAR 2019 SUPPLEMENTAL INFORMATION15
Table of Contents 

 

Property Table by Tenant

(unaudited)

 

             Occupied   % of      % of Total   Rent Per        
Tenant      Property
Count
   Square
Footage
   Square
Footage
   Occupied
sf
   Annual
Rent
   Ann.
Rent
   sf
Occup.
   Undepreciated
Cost
    Mortgage
Balance
 
                                          
FedEx Ground Package System, Inc.        45    8,920,293    8,920,293    40.9%  $71,950,000    53.6%  $8.07   $1,019,136,977    $457,795,896 
FedEx Corporation        15    1,095,096    1,095,096    5.0%   6,719,000    5.0%   6.14    95,795,334     13,149,632 
FedEx Trade Networks, Inc.        1    449,900    449,900    2.1%   1,389,000    1.0%   3.09    15,246,877     4,420,741 
Total FedEx        61    10,465,289    10,465,289    48.0%   80,058,000    59.6%   7.65    1,130,179,188     475,366,269 
                                                    
Milwaukee Electric Tool Corporation        1    861,889    861,889    4.0%   3,054,000    2.3%   3.54    36,914,917     20,374,512 
Shaw Industries, Inc.        1    831,764    831,764    3.8%   3,495,000    2.6%   4.20    56,025,945     30,788,426 
ULTA, Inc.        1    671,354    671,354    3.1%   2,729,000    2.0%   4.06    37,512,071     19,129,908 
Amazon.com Services, Inc. (Amazon.com, Inc.)        2    662,942    662,942    3.0%   3,927,000    2.9%   5.92    62,931,258     36,474,699 
Jim Beam Brands Company (Beam Suntory)        1    599,840    599,840    2.8%   2,071,000    1.5%   3.45    28,000,000     15,918,028 
International Paper Company        2    578,472    578,472    2.7%   2,615,000    1.9%   4.52    37,024,609     19,642,149 
TreeHouse Private Brands, Inc.        1    558,600    558,600    2.6%   2,226,000    1.7%   3.98    26,807,852     14,754,183 
B. Braun Medical Inc.        1    399,440    399,440    1.8%   2,138,000    1.6%   5.35    30,008,069     18,469,060 
UGN, Inc.        1    387,000    387,000    1.8%   2,076,000    1.5%   5.36    21,576,756     6,753,023 
CBOCS Distribution, Inc. (Cracker Barrel)        1    381,240    381,240    1.7%   1,461,000    1.1%   3.83    14,215,126     -0- 
Best Buy Warehousing Logistics, Inc.        1    368,060    368,060    1.7%   1,693,000    1.3%   4.60    19,600,000     8,838,337 
Coca-Cola        2    323,358    323,358    1.5%   1,709,000    1.3%   5.29    20,504,069     3,748,880 
Autoneum North America, Inc.   (E)    1    315,560    315,560    1.4%   1,717,000    1.3%   5.44    21,040,395     13,882,991 
Science Applications International Corporation        1    302,400    302,400    1.4%   1,655,000    1.2%   5.47    13,829,273     -0- 
Bunzl USA Holdings, Inc.        2    268,778    268,778    1.2%   1,487,000    1.1%   5.53    18,731,674     11,730,337 
Woodstream Corporation   (A)     1    256,000    256,000    1.2%   920,000    0.7%   3.59    8,935,160     -0- 
Anda Pharmaceuticals, Inc.        1    234,660    234,660    1.1%   1,210,000    0.9%   5.16    14,550,000     7,089,238 
United Technologies Corporation        2    223,150    223,150    1.0%   1,543,000    1.1%   6.91    23,000,735     5,836,756 
Mickey Thompson Performance Tires and Wheels (Cooper Tire)        1    219,765    219,765    1.0%   1,511,000    1.1%   6.88    18,934,065     11,647,817 
Rinnai America Corporation        1    218,120    218,120    1.0%   840,000    0.6%   3.85    15,061,573     -0- 
Anheuser-Busch, Inc.        1    184,800    184,800    0.8%   832,000    0.6%   4.50    12,697,848     -0- 
Carlisle Tire & Wheel Company        1    179,280    179,280    0.8%   761,000    0.6%   4.24    7,232,986     -0- 
NF&M International, Inc.   (B)     1    174,802    174,802    0.8%   837,000    0.6%   4.79    5,408,790     -0- 
Home Depot USA, Inc.        1    171,200    171,200    0.8%   1,007,000    0.7%   5.88    11,303,317     -0- 
Victory Packaging, L.P.        1    148,000    148,000    0.7%   508,000    0.4%   3.43    5,455,379     -0- 
Challenger Lifts, Inc. (Snap-On Inc.)        1    137,500    137,500    0.6%   845,000    0.6%   6.15    11,304,000     6,223,698 
Altec Industries, Inc.   (A)     1    126,880    126,880    0.6%   374,000    0.3%   2.95    4,428,488     -0- 
General Electric Company        1    125,860    125,860    0.6%   1,328,000    1.0%   10.55    19,964,283     10,608,104 
Keurig Dr Pepper        2    110,080    110,080    0.5%   748,000    0.6%   6.80    10,498,031     1,585,930 
Style Crest, Inc.        1    106,507    106,507    0.5%   392,000    0.3%   3.68    7,246,325     -0- 
Pittsburgh Glass Works, LLC        1    102,135    102,135    0.5%   447,000    0.3%   4.38    4,245,913     -0- 
Dakota Bodies, LLC        1    96,687    96,687    0.4%   407,000    0.3%   4.21    7,410,296     -0- 
National Oilwell Varco, Inc.        1    91,295    91,295    0.4%   759,000    0.6%   8.31    8,163,278     1,772,641 
Joseph T. Ryerson and Son, Inc.        1    89,052    89,052    0.4%   513,000    0.4%   5.76    6,977,442     -0- 
CHEP USA, Inc.        1    83,000    83,000    0.4%   503,000    0.4%   6.06    7,463,672     -0- 
Sherwin-Williams Company        2    78,887    78,887    0.4%   647,000    0.5%   8.20    7,244,128     -0- 
RGH Enterprises, Inc. (Cardinal Health)        1    75,000    75,000    0.3%   613,000    0.5%   8.17    5,525,600     -0- 
Tampa Bay Grand Prix        1    68,385    68,385    0.3%   302,000    0.2%   4.42    5,677,982     -0- 
Various Tenants at Retail Shopping Center