UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securi-
ties Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission File Number 0-4258
Monmouth Real Estate Investment Corporation
(Exact name of registrant as specified in its charter)
Delaware 22-1897375
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
125 Wyckoff Road, Eatontown, NJ 07724
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (908) 542-4927
Securities registered pursuant to Section 12(b) of the Act:
Title of each class_____ Name of each exchange on which registered____
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - Class A, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
Indicate by check if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K X .
The aggregate market value of voting stock held by non-affiliates
of the Registrant was $20,260,031 (based on 3,241,605 shares of common
stock at the closing price of $6.25 per share) on November 15, 1996.
There were 3,872,548 shares of common stock outstanding as of
November 15, 1996.
Documents Incorporated by Reference: Exhibits incorporated by
reference are listed in Part IV, Item (a) (3).
<PAGE>
PART I
ITEM 1 - BUSINESS
Monmouth Real Estate Investment Corporation (the Company) is a
corporation operating as a qualified real estate investment trust under
Sections 856-858 of the Internal Revenue Code.
Currently, the Company derives its income primarily from real
estate rental operations. The Company has approximately 1,065,000
square feet of property, of which approximately 282,000 square feet, or
26%, is leased to the Keebler Company, and approximately 145,000 square
feet, or 14%, is leased to the Amway Corporation. During 1996 and
1995, rental income and occupancy charges from properties leased to the
Keebler Company and Amway Corporation approximated 53% and 57% of total
rental and occupancy charges, respectively.
The Company at September 30, 1996 had investments in fourteen
properties. (See Item 2 for detailed description of the properties.)
These properties are located in New Jersey, New York, Pennsylvania,
North Carolina, Mississippi, Massachusetts, Kansas, Iowa, Missouri and
Virginia. All properties are managed by a management company. Monsey,
New York and Monaca, Pennsylvania are not net-leased. The remaining
twelve properties are all leased on a net basis.
The Company does not have an advisory contract. Its properties
are managed by the David Cronheim Management Company under a management
contract which is in effect on a year to year basis. The David
Cronheim Management Company received $17,825 in 1996 and $10,540 in
1995 for the management of various properties. The David Cronheim
Company also received $21,777 in commissions in 1996 and $11,877 in
1995.
Page 2
<PAGE>
ITEM 1 - BUSINESS (CONT'D)
The Company competes with other investors in real estate for
attractive investment opportunities. These investors include other
"equity" real estate investment trusts, limited partnerships, syndica-
tions and private investors, among others.
The Company has a flexible investment policy concentrating its
investments in the area of net-leased industrial properties. The
Company's strategy is to obtain a favorable yield spread between the
yield from the net-leased industrial properties and mortgage interest
costs. With the current interest rates, this is increasingly
difficult. However, the Company continues to purchase net-leased
industrial properties, since management believes that there is a
potential for long-term capital appreciation through investing in
well-located industrial properties. There is the risk that, on
expiration of current leases, the properties can become vacant or
re-leased at lower rents. The results obtained by the Company by
re-leasing the properties will depend on the market for industrial
properties at that time. The Company will also invest in the securities
of other real estate investment trusts (REITs) and may, from time to
time, invest in mortgages. In 1997, the Company plans to acquire
$15,000,000 of net-leased industrial properties. The Company also
plans to acquire up to $5,000,000 in the securities of other REITs.
Under New Jersey Environmental Laws, inspections of the properties are
made and certificates of compliance are obtained upon the sale of
property or upon a change of tenancy. Therefore, there is no assurance
that, in connection with compliance with state environmental
regulations, substantial capital expenditures would not be incurred at
the time the Company desired to sell its properties or at the time of a
change of tenancy. Management is not aware of any material
environmental problems affecting the Company's properties.
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES
The Company operates as a real estate investment trust. Its
portfolio is primarily in equity holdings, some of which have been
long-term holdings carried on the financial statements of the Company
at depreciated cost. It is believed that their current market values
exceed both the original cost and the depreciated cost. The following
are photographs of the Company's equity holdings at September 30, 1996,
together with a brief description of each. (See Item 14, Schedule III
for additional information on Real Estate and Accumulated Depreciation
and Item 14, Note 7 of the Notes to the Financial Statements for a
discussion of encumbrances on these equity holdings).
Page 3
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
SOMERSET, NEW JERSEY
The Company owns a two-thirds interest in this Somerset, New
Jersey, shopping center. The remaining one-third interest is owned by
D & E Realty, an unrelated entity. All assets, liabilities, income and
expense are allocated to the owners based upon their respective owner-
ship percentages. The total rentable space in this shopping center
excluding the Taco Bell, Inc. property mentioned below, is
approximately 42,800 square feet. This shopping center was 100% oc-
cupied at September 30, 1996. Effective October 1, 1995, the main store
was leased on a net-net basis. This lease expires on September 30,
2000. The Company's portion of the annual rental income on this
facility is approximately $286,000. In addition 21,365 square feet of
land was leased to Taco Bell, Inc. on which a free-standing restaurant
was completed during 1993.
PICTURE OF PROPERTY
RAMSEY, NEW JERSEY
Ramsey Industrial Park, located on E. Crescent Avenue in Ramsey,
New Jersey is a 42,719 square foot building leased on a net-net basis
to Bogen Photo, Inc. This lease was extended by agreement to 2001. The
current annual rental income is approximately $224,000.
Page 4
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
MONSEY, NEW YORK
This steel and block building, located at 40 Robert Pitt Drive,
Monsey, New York, was purchased by the Company on September 30, 1980,
for $1,025,000. The 55,000 square foot building includes four ware-
houses of about 11,000 square feet each and 10,000 square feet of
offices in the front. The current annual rental income is
approximately $304,000. At September 30, 1996, this property was 93%
occupied.
PICTURE OF PROPERTY
MONACA, PENNSYLVANIA
The Moor Industrial Park is located in Monaca, Pennsylvania. It
consists of approximately 292,000 feet of rentable space located on 23
acres. The leases are all short term at relatively low rents. The
current annual rental income is approximately $374,000. At September
30, 1996, this property was 64% occupied. This property has 1,200 feet
of undeveloped river frontage.
Page 5
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES (CONT'D)
PICTURE OF PROPERTY
ORANGEBURG, NEW YORK
This 50,400 square foot warehouse facility, located in Orange-
burg, New York, was purchased by the Company on November 25, 1992 for a
purchase price of $3,650,000. This warehouse facility is leased to the
Keebler Company on a net-net basis. The average annual rental income
over the term of the lease is approximately $433,000. The lease
expires on November 30, 2000.
PICTURE OF PROPERTY
SOUTH BRUNSWICK, NEW JERSEY
This 144,520 square foot building, located in South Brunwswick,
New Jersey, was purchased from Equitable Life Assurance Society for
$5,100,000 on March 30, 1993. It is occupied by Amway Corporation as a
distribution center on a 5-year lease which has been extended to June,
1997. Average annual income over the term of the lease is
approximately $595,000.
Page 6
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
GREENSBORO, NORTH CAROLINA
This 40,560 square foot distribution center is the second such
facility leased to the Keebler Company. It is located in Greensboro,
North Carolina, and was purchased on April 15, 1993 for $2,165,000.
This net-net lease expires February 14, 2003. Annual rental income is
approximately $233,000.
PICTURE OF PROPERTY
JACKSON, MISSISSIPPI
This 26,340 square foot warehouse facility, located in Jackson,
Mississippi was purchased July 30, 1993 for a purchase price of
$1,435,000. This is the third in a series of warehouses occupied by
the Keebler Company on a net-net lease. The average annual rental
income over the term of the lease is approximately $169,000. This
lease expires September 30, 2003. This facility is currently
unoccupied. The Keebler Company has secured a tenant to sub-lease this
facility.
Page 7
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
FRANKLIN, MASSACHUSETTS
This 84,376 square foot warehouse facility, located in Franklin,
Massachusetts was purchased on October 20, 1993 for a purchase price of
$4,700,000. This is the fourth of the acquisitions of Keebler Company
net-leased warehouses. The average annual rental income over the term
of the lease is approximately $516,000. This lease expires on January
31, 2004.
PICTURE OF PROPERTY
WICHITA, KANSAS
This 44,136 square foot warehouse facility in Wichita, Kansas was
purchased on February 17, 1994 for a purchase price of $1,765,000.
This is the fifth of the acquisitions of Keebler Company net-leased
warehouses. The average annual rental income over the term of the
lease is approximately $195,000. This lease expires May 30, 2005.
Page 8
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
URBANDALE, IOWA
This 36,150 square foot warehouse facility in Urbandale, Iowa was
purchased on March 31, 1994 for the purchase price of $2,055,000. This
is the sixth of the acquisitions of Keebler Company net-leased
warehouses. The average annual rental income over the term of the lease
is approximately $225,000. This lease expires June 30, 2000. The
Keebler Company has sub-leased this facility.
PICTURE OF PROPERTY
RICHLAND, MISSISSIPPI
This 36,000 square foot warehouse facility was purchased on March
31, 1994 for the purchase price of $1,400,000. This facility is 100%
net-leased to the Federal Express Corporation for an annual rental
income of approximately $140,000 over the term of the lease. This
lease expires on March 31, 2004.
Page 9
<PAGE>
ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES AND MORTGAGES (CONT'D)
PICTURE OF PROPERTY
O'FALLON, MISSOURI
On October 13, 1994, the Company purchased a 102,135 square foot
warehouse facility in O'Fallon, Missouri. This warehouse facility is
100% net-leased to PPG Industries, Inc. The purchase price was
$3,525,000. The average annual rental income over the term of the lease
is approximately $353,000. This lease expires June 30, 2001.
PICTURE OF PROPERTY
VIRGINIA BEACH, VIRGINIA
On May 10, 1996, the Company purchased a 67,926 square foot
warehouse facility in Virginia Beach, Virginia for approximately
$2,500,000. This warehouse facility is 100% net-leased to the Raytheon
Service Company. The annual rental income will be approximately
$307,000. This lease expires February 28, 2001.
Page 10
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of 1996 to a
vote of security holders through the solicitation of proxies or
otherwise.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The shares of Class A common stock of Monmouth Real Estate In-
vestment Corporation are traded on the National Association of Securities
Dealers Automated Quotation (NASDAQ symbol MNRTA). The per share range
of high and low market prices and distributions paid to shareholders
during each quarter of the last two years were as follows:
1996 1995
Market Price Market Price
Fiscal Qtr. High Low Distrib. Fiscal Qtr. High Low Distrib.
First 6 5-1/8 $.125 First 6-1/8 5 $.125
Second 6-1/4 5-1/4 .125 Second 5-3/4 5 .125
Third 6-3/8 5-9/16 .125 Third 6 5-1/4 .125
Fourth 6 5-3/8 .125 Fourth 5-3/4 4-7/8 .125
____ ____
$.50 $.50
==== ====
The over-the-counter market quotations reflect the inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.
On September 30, 1996, the closing price was 5-5/8.
As of September 30, 1996, there were approximately 925 sharehold-
ers of record with shares of Class A common stock of the Company.
It is the Company's intention to continue distributing quarterly
dividends. On September 25, 1996, the Company declared a dividend of
$.125 to be paid on December 16, 1996 to shareholders of record November
15, 1996.
Page 11
<PAGE>
<TABLE>
<CAPTION>
ITEM 6 - SELECTED FINANCIAL DATA
September 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Income $ 4,607,434 $ 4,240,859 $ 3,870,841 $3,398,116 $ 2,737,876
Total Expenses 3,233,584 3,293,692 2,856,210 2,134,666 1,598,339
Gains on Sales
of Assets-
Investment
Property 22,249 38,766 392,416 16,551 46,349
Net Income 1,396,099 985,933 1,407,047 1,280,001 1,185,886
Net Income
Per Share .39 .31 .49 .51 .51
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BALANCE SHEET DATA:
Total Assets $32,538,076 $30,289,860 $29,234,128 $22,550,291 $16,505,882
Long-Term
Obligations 14,197,529 14,522,503 13,681,614 7,708,382 5,833,656
Shareholders'
Equity 16,109,382 14,247,867 13,157,339 10,835,102 9,146,452
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INFORMATION:
Average Number
of Shares
Outstanding 3,584,364 3,212,064 2,878,951 2,536,034 2,304,506
Funds from
Operations* $2,159,146 $1,730,871 $1,640,707 $1,632,022 $1,319,079
Funds from
Operations*
Per Share .60 .54 .57 .64 .57
Cash Dividends
Per Share 0.50 0.50 0.50 0.50 0.50
*Defined as net income, excluding gains (or losses) from sales of assets,
plus depreciation.
</TABLE>
Page 12
<PAGE>
<TABLE>
<CAPTION>
ITEM 6 - SELECTED FINANCIAL DATA (CONT'D)
SUMMARY OF OPERATIONS BY PROPERTY
FOR THE YEARS ENDED SEPTEMBER 30,
1996 1995 1994
Net Rental Income
<S> <C> <C> <C>
Somerset, New Jersey $ 226,065 $ 58,814 $ 231,751
Morris Plains, New Jersey* -0- -0- 31,926
Ramsey, New Jersey 177,242 180,301 176,150
Monaca, Pennsylvania 145,356 142,576 184,907
Monsey, New York 201,997 237,034 166,558
Orangeburg, New York 176,241 155,360 102,753
South Brunswick, New Jersey 280,857 157,965 79,391
Greensboro, North Carolina 30,621 28,994 27,133
Jackson, Mississippi 67,227 61,474 53,956
Franklin, Massachusetts 224,684 206,608 166,112
Wichita, Kansas 24,052 21,936 17,205
Urbandale, Iowa 92,834 83,855 39,478
Richland, Mississippi 44,260 38,843 289
O'Fallon, Missouri 63,508 84,769 -0-
Virginia Beach, Virginia 27,854 -0- -0-
__________ __________ __________
Net Rental Income 1,782,798 1,458,529 1,377,609
Net Interest and Other Income 125,812 59,757 118,208
__________ __________ __________
TOTAL 1,908,610 1,518,286 1,495,817
Genl. & Administrative Expenses (534,760) (571,119) (481,186)
__________ __________ __________
Income Before Gains 1,373,850 947,167 1,014,631
Gain on Sale of Assets-
Investment Property 22,249 38,766 392,416
__________ __________ __________
NET INCOME $1,396,099 $ 985,933 $1,407,047
========== ========== ==========
* This property was sold during fiscal 1994.
</TABLE>
Page 13
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Monmouth Real Estate Investment Corporation (the Company) op-
erates as a real estate investment trust deriving its income primarily
from real estate rental operations. At September 30, 1996, the Company
increased shareholders' equity to $16,109,382 as compared to
$14,247,867 in 1995. The Company's net income was $1,396,099 in 1996 as
compared to $985,933 in 1995 and $1,407,047 in 1994.
The Company finances its purchases primarily through mortgages on
its acquisitions. The Company has a $1,000,000 line of credit for
acquisition purposes. On October 4, 1996, the Company entered into a
$5,000,000 term loan which may be used for working capital purposes and
which bears interest at 1/2% above prime rate. Principal and Interest
payments are due quarterly. This loan matures October 4, 2001.
The Company's ability to generate cash adequate to meet its needs
is dependent primarily on income from its real estate investments, the
sale of real estate investments, collection of mortgages receivable,
refinancing of mortgage debt, leveraging of real estate investments,
availability of bank borrowings, proceeds from the Dividend Reinvest-
ment and Stock Purchase Plan, and access to the capital markets.
Purchases of new properties, payments of expenses related to real
estate operations, capital improvements programs, debt service,
management and professional fees, and dividend requirements place de-
mands on the Company's liquidity.
The Company intends to operate its existing properties from the
cash flow generated by the properties. However, the Company's ex-
penses are affected by various factors, including inflation. Increases
in operating expenses raise the breakeven point for a property and, to
the extent that they cannot be passed on through higher rents, reduce
the amount of available cash flow which can adversely affect the market
value of the property.
The Company's focus is on equity investments. During the past
four years, the Company purchased ten net-leased warehouse facilities
at an aggregate cost of approximately $28,500,000. The Company
incurred a total of approximately $20,000,000 in debt relating to these
purchases.
The Company expects to make additional real estate investments
from time to time. The funds for such investments may come from bank
borrowings, proceeds received but not distributed on property sales,
refinancing of existing properties, and proceeds of the Dividend
Reinvestment and Stock Purchase Plan.
Page 14
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
Funds generated are expected to be sufficient to meet debt ser-
vice requirements and capital expenditures of the Company.
Cash provided from operations amounted to $2,183,561 in 1996 as
compared to $2,267,039 in 1995 and $1,256,811 in 1994.
At September 30, 1996, the Company had total liabilities of
$16,428,694 and total assets of $32,538,076. Accordingly, the Company
believes that it has the ability to meet its obligations and to
generate funds for new investments.
The Company has a Dividend Reinvestment and Stock Purchase Plan.
During 1996, a total of $2,292,469 in additional capital was raised.
The success of the Plan resulted in a substantial improvement in the
Company's liquidity and capital resources in 1996. It is anticipated
that a comparable level of participation will continue in the Plan in
fiscal 1997. Therefore, the Company anticipates that the Plan will
result in further increased liquidity and capital resources in 1997.
Results of Operations
The Company's activities primarily generate rental income. Net
income for the fiscal year ended September 30, 1996 was $1,396,099 as
compared to $985,933 in 1995 and $1,407,047 in 1994. Net rental income
for the fiscal year ended September 30, 1996 was $1,782,798 as compared
to $1,458,529 in 1995 and $1,377,609 in 1994. The following is a
discussion of the results of operations by location.
Somerset, New Jersey
During 1996, net rental income increased primarily as a re-
sult of the main store being fully occupied. During 1995,
net rental income decreased due to a decrease in occupancy
in the main store.
Morris Plains, New Jersey
Net rental income in 1996 and 1995 was -0- as the property
was sold on March 28, 1994, resulting in a realized gain of
$374,000.
Page 15
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
Ramsey, New Jersey
Net rental income remained relatively stable for 1996 and
1995.
Monaca, Pennsylvania
Net rental income remained relatively stable in 1996. The
decrease in net rental income during 1995 is the result of
decreased occupancy due to the loss of one tenant.
Monsey, New York
Net rental income remained relatively stable for 1996 as
compared to 1995. Net rental income increased $70,000
during 1995 as a result of increased occupancy and rates.
Orangeburg, New York
This warehouse facility was acquired during 1993. It is
net-leased to the Keebler Corporation (Keebler). Average
monthly rental income over the term of the lease is
$36,094. Net rental income remained relatively stable in
1996. Net rental income increased in 1995 due to the
inclusion of amortization of loan costs on a loan which was
refinanced that year.
South Brunswick, New Jersey
This warehouse facility was acquired during 1993. It is
net-leased to the Amway Corporation. Average monthly
rental income over the term of the lease is $49,555. Net
rental income increased $123,000 during 1996. This
increase was a result of a decrease in interest expense due
to principal repayments. Net rental income remained
relatively stable in 1995.
Greensboro, North Carolina
This warehouse facility was acquired during 1993. It is
net-leased to Keebler. Average monthly rental income over
the term of the lease is $19,435. Net rental income during
1996 and 1995 remained relatively stable.
Jackson, Mississippi
This warehouse facility was acquired during 1993. It is
net-leased to Keebler. Average monthly rental income over
the term of the lease is $14,073. Net rental income during
1996 and 1995 remained relatively stable.
Page 16
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
Franklin, Massachusetts
This warehouse facility was acquired during 1994. It is net-
leased to Keebler. Average monthly rental income over the
term of the lease is $43,027. Net rental income remained
relatively stable during 1996. Net rental income increased
during 1995, since 1995 represented a full year's income.
Wichita, Kansas
This warehouse facility was acquired during 1994. It is net-
leased to Keebler. Average monthly rental income over the
term of the lease is $16,242. Net rental income remained
relatively stable during 1996. Net rental income increased
during 1995, since 1995 represented a full year's income.
Urbandale, Iowa
This warehouse facility was acquired during 1994. It is net-
leased to Keebler. Average monthly rental income over the
term of the lease is $18,780. Net rental income remained
relatively stable during 1996. Net rental income increased
during 1995, since 1995 represented a full year's income.
Richland, Mississippi
This warehouse facility was acquired during 1994. It is net-
leased to the Federal Express Corporation. Average monthly
rental income over the term of the lease is $11,700. Net
rental income remained relatively stable during 1996. Net
rental income increased during 1995, since 1995 represented
a full year's income.
O'Fallon, Missouri
This warehouse facility was acquired during 1995. It is net-
leased to PPG Industries, Inc. Average monthly rental income
over the term of the lease is $29,376. Net rental income
decreased during 1996 due to an increase in depreciation
expense over 1995's half year convention.
Virginia Beach, Virginia
This warehouse facility was acquired during 1996. It is net-
leased to Raytheon Service Company. Average monthly rental
income over the term of the lease is $25,555.
The Company also generated income from its investments in
securities available for sale and mortgages receivable. The increase in
1996 was primarily due to a gain of $66,933 on the sale of securities
available for sale. The decrease in 1995 was primarily the result of a
decrease in mortgages receivable. During 1994, the Company no longer
made mortgage loans. The Company shifted from mortgage investments to
equity investments.
Page 17
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
General and administrative expenses remained relatively stable in
1996. General and administrative expenses increased during 1995
primarily as a result of increased professional fees.
The Company recognized a deferred gain from the Howell Township
installment sale of approximately $22,000, $39,000 and $18,000 for
1996, 1995 and 1994, respectively. In addition, the Company sold the
Morris Plains, NJ property during 1994 for a gain of approximately
$374,000.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in Part VI,
Item 14 are incorporated herein by reference and filed as part of this
report.
The following is the Unaudited Selected Quarterly Financial Data:
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
- --------------------------------------------------------------------------
FISCAL 1996 12/31/95 3/31/96 6/30/96 9/30/96
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Income $1,131,759 $1,129,264 $1,148,182 $1,198,229
Total Expenses 780,174 864,534 816,225 772,651
Gains on Sales of
Assets- Investment
Property 6,000 6,000 6,000 4,249
Net Income 357,585 270,730 337,957 429,827
Net Income per Share .10 .08 .09 .12
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
- --------------------------------------------------------------------------
FISCAL 1995 12/31/94 3/31/95 6/30/95 9/30/95
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Income $1,098,630 $1,044,997 $1,039,937 $1,057,295
Total Expenses 784,849 796,097 846,773 865,973
Gains on Sales of
Assets-Investment
Property 4,800 4,800 4,800 24,366
Net Income 318,581 253,700 197,964 215,688
Net Income per Share .10 .08 .06 .07
</TABLE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
DISCLOSURE
None
Page 18
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Principal Occupation Director Shares Percent
Name Age and Title Past Five Years Since Owned (1) of Stock
Ernest V. Bencivenga Financial Consultant; 1968 7,822 0.21%
(78) Treasurer and Director (1961
Treasurer and to present) and Secretary (1967
Director to present) of Monmouth Capital
Corporation; Director (1969
to present) and Secretary/
Treasurer (1984 to present) of
United Mobile Homes, Inc.
Anna T. Chew Certified Public Accountant; 1993 5,985 (2) 0.16%
(38) Controller (1991 to present)
Controller and and Director (1994 to present)
Director of Monmouth Capital Corporation;
Vice President (1995 to present),
Director (1994 to present),and
Chief Financial Officer (1991 to
1995) of United Mobile Homes, Inc.
Senior Manager (1987 to 1991)
of KPMG Peat Marwick.
Daniel D. Cronheim Attorney at Law, Daniel D. 1989 15,645 0.41%
(42) Cronheim, Esq. (1982 to
Director present); Executive Vice
President (1989 to present) and
General Counsel (1983 to present)
of David Cronheim Company.
Boniface DeBlasio Chairman of the Board 1968 10,788 0.28%
(75) (1968 to present) and
Director Director (1961 to present) of
Monmouth Capital Corporation.
Ara K. Hovnanian President (1988 to present) 1989 41 --
(37) and Director (1981 to
Director present) of Hovnanian
Enterprises, Inc., a publicly-
owned company specializing
in the construction of housing.
Charles P. Kaempffer Investor; Director (1970 1974 35,909 (3) .95%
(59) to present) of Monmouth
Director Capital Corporation; Director
(1969 to present) of United
Mobile Homes, Inc.
Page 19
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(CONT'D)
Principal Occupation Director Shares Percent
Name Age and Title Past Five Years Since Owned (1) of Stock
Eugene W. Landy Attorney at Law, Landy and 1968 351,495 (4) 9.25%
(63) Landy; President and
President, CEO Director (1961 to present) of
and Director Monmouth Capital Corporation;
Chairman of the Board (1995
to present), Director (1969
to present) and President
(1969 to 1995) of United Mobile
Homes, Inc.
Samuel A. Landy Attorney at Law (1987 to 1989 104,538 (5) 2.75%
(35) present) of Landy and Landy;
Director President (1995 to
present), Director (1991 to
present), and Vice President
(1991 to 1995) of United
Mobile Homes, Inc.;Director
(1994 to present) of Monmouth
Capital Corporation.
W. Dunham Morey Certified Public Accountant, 1968 45,946 (6) 1.21%
(74) W. Dunham Morey, CPA;
Director Director (1961 to present) of
Monmouth Capital Corporation.
Robert G. Sampson Investor; Director (1963 to 1968 67,774 (7) 1.78%
(71) present) of Monmouth Capital
Director Corporation; Director (1969 to
present) of United Mobile
Homes, Inc.; Director (1972 to
1993) of United Jersey Bank,
N.A. (formerly Franklin
State Bank); General Partner (1983
to present) of Sampco, Ltd., an
investment group.
Page 20
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT'D)
(1) Beneficial ownership, as defined herein, includes Class A Common
Stock as to which a person has or shares voting and/or investment
power.
(2) Held jointly with Ms. Chew's husband; includes 1,019 shares held
in Ms. Chew's 401(k) Plan.
(3) Includes (a) 13,540 shares owned by Mr. Kaempffer's wife; and (b)
1,080 shares in joint name with Mrs. Kaempffer.
(4) Includes (a) 62,659 shares owned by Mr. Landy's wife; (b) 151,908
shares held in the Landy & Landy, P.C. Profit Sharing Plan, of
which Mr. Landy is a Trustee with power to vote; and (c) 116,594
shares held in the Landy & Landy, P.C. Pension Plan, of which
Mr. Landy is a Trustee with power to vote. Excludes 34,875
shares held by Mr. Landy's adult children, in which he disclaims
any beneficial interest.
(5) Includes (a) 2,708 shares owned by Mr. Landy's wife, and (b)
19,812 shares held in custodial accounts for Mr. Landy's minor
children under the Uniform Gift to Minors' Act in which he dis-
claims any beneficial interest, but has power to vote, and (c)
5,535 shares held in Mr. Landy's 401(k) Plan.
(6) Includes 10,638 shares owned by Mr. Morey's wife.
(7) Includes 40,020 shares owned by the estate of Mr. Sampson's wife
and 6,000 shares held by Sampco, Ltd. in which he has a benefi-
cial interest.
The Directors as a class own 645,943 shares, which is 17% of the
outstanding shares.
Page 21
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows compensation paid
or accrued by the Company for services rendered during 1996, 1995 and
1994 to the Chief Executive Officer. There were no other executive
officers whose aggregate cash compensation exceeded $100,000:
Annual Compensation
Name and Principal Position Year Salary Bonus Other
Eugene W. Landy 1996 None None $173,203(1)
Chief Executive Officer 1995 None None $162,445
1994 None None $142,130
(1) Represents Director's fees of $3,200 paid to Mr. Landy, management
fees of $107,503, legal fees of $3,500 paid to the firm of Landy &
Landy and $59,000 accrual for pension and other benefits in accordance
with Mr. Landy's employment contract.
Employment Agreement
On December 9, 1994, the Company and Eugene W. Landy entered into
an Employment Agreement under which Mr. Landy receives an annual base
compensation (management fee) of $100,000 plus bonuses and customary
fringe benefits, including health insurance and five weeks vacation.
In lieu of annual increases in base compensation, there will be
additional bonuses voted by the Board of Directors. The Employment
Agreement is terminable by either party at any time subject to certain
notice requirements.
On severance of employment for any reason, Mr. Landy will receive
severance of $300,000 payable $100,000 on severance and $100,000 on the
first and second anniversaries of severance.
In the event of disability, Mr. Landy's compensation shall
continue for a period of three years, payable monthly.
On retirement, Mr. Landy shall receive a pension of $40,000 a
year for ten years, payable in monthly installments.
In the event of death, Mr. Landy's designated beneficiary shall
receive $300,000, $150,000 thirty days after death and the balance one
year after death.
The Employment Agreement terminates December 31, 1999.
Thereafter, the term of the Employment Agreement shall be automatically
renewed and extended for successive one-year periods.
Page 22
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION (CONT'D)
Other Information
The Directors received a fee of $800 for each Board Meeting
attended.
Except for specific agreements, the Company has no retirement
plan in effect for Officers, Directors or employees and, at present,
has no intention of instituting such a plan.
Cronheim Management Company received the sum of $17,825 in 1996
for management fees. David Cronheim Company received $21,777 in 1996
for commissions. These totals are based on amounts paid or accrued
during the fiscal year. Management believes that the aforesaid fees
are no more than what the Company would pay for comparable services
elsewhere.
Report of Board of Directors on Executive Compensation
Overview and Philosophy
The Company has a Compensation Committee consisting of two
independent outside Directors. This Committee is responsible for
making recommendations to the Board of Directors concerning
compensation. The Compensation Committee takes into consideration
three major factors in setting compensation.
The first consideration is the overall performance of the
Company. The Board believes that the financial interests of the
executive officers should be aligned with the success of the Company
and the financial interests of its shareholders. Increases in funds
from operations, the enhancement of the Company's equity portfolio, and
the success of the Dividend Reinvestment and Stock Purchase Plan all
contribute to increases in stock prices, thereby maximizing
shareholders' return.
The second consideration is the individual achievements made by
each officer. The Company is a small real estate investment trust
(REIT). The Board of Directors is aware of the contributions made by
each officer and makes an evaluation of individual performance based on
their own familiarity with the officer.
The final criteria in setting compensation is comparable wages in
the industry. In this regard, the REIT industry maintains excellent
statistics.
Page 23
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION (CONT'D)
Evaluation
The Company's funds from operations continue to increase. The
Committee reviewed the progress made by Eugene W. Landy, Chief
Executive Officer, in shifting the Company's focus from mortgage loans
to equity properties. The Committee also noted that Mr. Landy's
current compensation was less than the average salary received by Chief
Executive Officers of other REIT's. His base compensation under this
contract is $100,000 per year. The Committee has decided to grant Mr.
Landy a bonus of $10,000 in 1996.
Comparative Stock Performance
The following line graph compares the total return of the Company's
common stock for the last five fiscal years to the NAREIT All REIT
Total Return Index, published by the National Association of Real
Estate Investment Trusts (NAREIT), and the S&P 500 Index for the same
period. The total return reflects stock price appreciation and
dividend reinvestment for all three comparative indices. The
information herein has been obtained from sources believed to be
reliable, but neither its accuracy nor its completeness is guaranteed.
Monmouth Real
Estate Investment
Corporation NAREIT S&P 500
1991 100 100 100
1992 127 113 108
1993 162 147 124
1994 158 141 131
1995 152 158 159
1996 173 189 189
Page 24
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
On September 30, 1996, no person owned of record or was known by
the Company to own beneficially more than five percent of the shares of
the Corporation, except as follows:
Amount and Nature
Title of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership of Class
Class A Eugene W. Landy 351,495 9.25%
Common 20 Tuxedo Road
Stock Rumson, NJ 07760
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain relationships and related party transactions are
incorporated herein by reference to Item 14, Note 9 of the Notes to the
Financial Statements - Related Party Transactions.
Page 25
<PAGE>
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1)The following Financial Statements are filed as part of
this report:
Page(s)
(i) Independent Auditors' Report 28
(ii) Balance Sheets as of September 30, 1996 and 1995 29
(iii) Statements of Income for the years ended
September 30, 1996, 1995 and 1994 30
(iv) Statements of Shareholders' Equity
for the years ended September 30, 1996, 1995 and 1994 31
(v) Statements of Cash Flows for the years ended
September 30, 1996, 1995 and 1994 32
(vi) Notes to the Financial Statements 33 - 43
(a)(2)The following Financial Statement Schedule is
filed as part of this report:
(i) Schedule III - Real Estate and Accumulated Depreciation
as of September 30, 1996 44 - 46
Page 26
<PAGE>
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (CONT'D)
(a)(3)Exhibits
(3)Articles of Incorporation and By-Laws
(i)Reference is hereby made to the Certificate of
Incorporation of Monmouth Real Estate Investment
Corporation filed with the Securities and Exchange
Commission on April 3, 1990 on Form S-4 (Registration
No. 33-34103).
(ii)Reference is hereby made to the By-laws of Monmouth
Real Estate Investment Corporation filed with the
Securities and Exchange Commission on April 3, 1990
on Form S-4 (Registration No. 33-34103)
(10)Material Contracts
(a) Employment Agreement with Mr. Eugene W. Landy
dated December 9, 1994 is incorporated by reference
to that filed with the Company's Form 10-K filed
with the Securities and Exchange Commission on
December 28, 1994.
(b) Employment Agreement with Mr. Ernest V. Bencivenga
dated November 9, 1993 is incorporated by reference
to that filed with the Company's Form 10-K filed
with the Securities and Exchange Commission on
December 28, 1994.
(28)Additional Exhibits
Reference is hereby made to the Agreement and Plan of
Merger dated April 23, 1990 by and between Monmouth
Real Estate Investment Trust and Monmouth Real Estate
Investment Corporation filed with the Securities and
Exchange Commission on April 3, 1990 on Form S-4
(Registration No. 33-34103).
Report on Form 8-K
None
Page 27
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Monmouth Real Estate Investment Corporation:
We have audited the financial statements of Monmouth Real Estate
Investment Corporation as listed in the accompanying index. In
connection with our audits of the financial statements, we also have
audited the financial statement schedule as listed in the accompanying
index. These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Monmouth
Real Estate Investment Corporation as of September 30, 1996 and 1995,
and the results of its operations and its cash flows for the each of
the years in the three year period ended September 30, 1996 in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
As discussed in Note 1 to the financial statements, effective October
1, 1994, the Company changed its method of accounting for debt and
equity securities.
/s/ KPMG Peat Marwick LLP
Short Hills, New Jersey
November 22, 1996
Page 28
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF SEPTEMBER 30,
ASSETS 1996 1995
<S> <C> <C>
Real Estate Investments:
Land $ 4,929,924 $ 4,545,324
Buildings, Improvements and Equipment,
net of Accumulated Depreciation of
$4,494,322 and $3,657,061,respectively 25,294,699 23,966,469
Mortgage Loans Receivable 262,585 293,997
___________ ___________
Total Real Estate Investments 30,487,208 28,805,790
Cash and Cash Equivalents 244,394 144,019
Securities Available for Sale
at Fair Value 607,975 273,038
Interest and Other Receivables 552,091 581,247
Prepaid Expenses 123,669 114,815
Lease Costs-Net of Accumulated
Amortization 55,347 59,742
Other Assets 467,392 311,209
___________ ___________
TOTAL ASSETS $32,538,076 $30,289,860
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $15,216,610 $15,463,561
Loans Payable 500,000 -0-
Deferred Gains-Installment Sales 185,989 208,238
Other Liabilities 526,095 370,194
___________ ___________
Total Liabilities 16,428,694 16,041,993
___________ ___________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
8,000,000 Shares Authorized; 3,800,924
and 3,392,045 Shares Issued and
Outstanding in 1996 and 1995,
respectively 38,009 33,920
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No shares
Issued or Outstanding -0- -0-
Additional Paid-in Capital 16,044,359 14,155,207
Unrealized Holding Gains on
Securities Available for Sale 27,014 58,740
___________ ___________
Total Shareholders' Equity 16,109,382 14,247,867
___________ ___________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $32,538,076 $30,289,860
=========== ===========
See Accompanying Notes to the Financial Statements.
</TABLE>
Page 29
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT
CORPORATION
STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
1996 1995 1994
<S> <C> <C> <C>
INCOME:
Rental and Occupancy Charges $4,474,279 $4,168,549 $3,676,207
Interest and Other Income 133,155 72,310 194,634
__________ __________ __________
TOTAL INCOME 4,607,434 4,240,859 3,870,841
__________ __________ __________
EXPENSES:
Interest Expense 1,252,180 1,372,596 1,108,683
Management Fees 17,825 10,540 17,046
Real Estate Taxes 268,594 214,527 165,454
Professional Fees 342,417 314,335 241,611
Operating Expenses 302,752 340,204 447,407
Office and General Expense 166,287 229,386 233,133
Director Fees 31,300 28,400 16,800
Depreciation 852,229 783,704 626,076
__________ __________ __________
TOTAL EXPENSES 3,233,584 3,293,692 2,856,210
__________ __________ __________
Income Before Gains 1,373,850 947,167 1,014,631
Gains on Sale of Assets-
Investment Property 22,249 38,766 392,416
__________ __________ __________
NET INCOME $1,396,099 $ 985,933 $1,407,047
========== ========== ==========
PER SHARE INFORMATION:
Average Number of Shares
Outstanding 3,584,364 3,212,064 2,878,951
========== ========== ==========
Income Before Gains $ .38 $ .30 $ .35
Gain on Sales of Assets .01 .01 .14
__________ __________ __________
NET INCOME $ .39 $ .31 $ .49
========== ========== ==========
See Accompanying Notes to the Financial Statements.
</TABLE>
Page 30
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30
UnReal.
Holding
Gain on
Secur.
Additional Avail.
Common Stock Paid-In Undistrib. for
Number Amount Capital Income Sale
<S> <C> <C> <C> <C> <C>
Balance Sept. 30, 1993 2,710,934 $27,109 $10,451,362 $356,631 $ -0-
Shares Issued in
connection with the
Dividend Reinvestment
and Stock Purchase
Plan 355,068 3,551 2,345,422 -0- -0-
Distributions -0- -0- -0- (1,433,783) -0-
Net Income -0- -0- -0- 1,407,047 -0-
_________ ______ _________ _________ ______
Balance Sept. 30, 1994 3,066,002 $30,660 $12,796,784 $ 329,895 $ -0-
Shares Issued in
connection with the
Dividend Reinvestment
and Stock Purchase
Plan 326,043 3,260 1,647,314 -0- -0-
Distributions -0- -0- (288,891) (1,315,828) -0-
Net Income -0- -0- -0- 985,933 -0-
Unrealized Holding
Gains on Securities
Available for Sale -0- -0- -0- -0- 58,748
_________ ______ _________ _________ ______
Balance Sept. 30, 1995 3,392,045 $33,920 $14,155,207 $ -0- $58,740
Shares Issued in
connection with the
Dividend Reinvestment
and Stock Purchase
Plan 408,879 4,089 2,288,380 -0- -0-
Distributions -0- -0- (399,228)(1,396,099) -0-
Net Income -0- -0- -0- 1,396,099 -0-
Unrealized Holding
Gains on Securities
Available for Sale -0- -0- -0- -0- (31,726)
_________ ______ _________ ________ _______
Balance Sept. 30, 1996 3,800,924 $38,009 $16,044,359 $ -0- $27,014
========= ======= =========== ========= =======
See Accompanying Notes to the Financial Statements.
</TABLE>
Page 31
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
1996 1995 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,396,099 $ 985,933 $1,407,047
Noncash Items Included
in Net Income:
Depreciation 852,229 783,704 626,076
Amortization 73,122 160,449 200,246
Gains on Sales of Assets-
Investment Property (22,249) (38,766) (392,416)
Gains on Sales of Equity
Securities (66,933) -0- -0-
Changes In:
Interest & Other Receivables 29,156 (142,887) (72,234)
Prepaid Expenses (8,854) (209) (12,805)
Other Assets and Lease Costs (224,910) 520,096 (592,529)
Other Liabilities 155,901 (1,281) 93,426
__________ _________ __________
NET CASH PROVIDED FROM OPERATING
ACTIVITIES 2,183,561 2,267,039 1,256,811
__________ _________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 31,412 54,732 25,923
Collections on Loans -0- -0- 3,571,321
Proceeds from Sales of Investment
Property -0- -0- 469,568
Purchase of Securities
Available for Sale (514,380) -0- -0-
Proceeds from Sale of
Securities Available for Sale 214,650 -0- -0-
Additions to Land, Buildings,
and Improvements (2,565,059) (3,683,098) (10,137,115)
__________ _________ ___________
NET CASH USED IN INVESTING
ACTIVITIES (2,833,377) (3,628,366) (6,070,303)
__________ _________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Mortgages 1,500,000 2,500,000 15,085,014
Net Proceeds (Repayments) from
Short Term Borrowings 500,000 -0- (500,000)
Principal Payments of Mortgages (1,746,951) (2,494,749) (10,298,478)
Proceeds from Issuance of
Class A Common Stock 1,512,604 897,115 2,348,973
Dividends Paid (1,015,462) (851,260) (1,433,783)
__________ _________ ___________
NET CASH PROVIDED FROM
FINANCING ACTIVITIES 750,191 51,106 5,201,726
__________ _________ ___________
Net Increase (Decrease) in Cash 100,375 (1,310,221) 388,234
Cash and Cash Equivalents
at Beginning of Year 144,019 1,454,240 1,066,006
__________ _________ ___________
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 244,394 $ 144,019 $1,454,240
========== =========== ==========
See Accompanying Notes to the Financial Statements.
</TABLE>
Page 32
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Business
Monmouth Real Estate Investment Corporation (the Company)
operates as a real estate investment trust deriving its income
primarily from real estate rental operations. As of September 30, 1996
and 1995, rental properties consist of fourteen and thirteen
respectively, commercial holdings. These properties are located in New
Jersey, New York, Pennsylvania, North Carolina, Mississippi,
Massachusetts, Kansas, Iowa, Missouri and Virginia.
Use of Estimates
In preparing the financial statements, management is required
to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates.
Buildings, Improvements and Equipment
Buildings, improvements and equipment are stated at the lower
of depreciated cost or net realizable value. Depreciation is computed
based on the straight-line method over the estimated useful lives of
the assets. These lives range from 5 to 40 years.
Revenue Recognition
Rental income from tenants with leases having scheduled rental
increases are recognized on a straight-line basis over the term of the
lease.
Gains and Deferred Gains on Installment Sales
Gains on the sale of real estate investments are recognized by
the full accrual method when the criteria for the method are met. Gen-
erally, the criteria are met when the profit on a given sale is
determinable, and the seller is not obliged to perform significant ac-
tivities after the sale to earn the profit. Alternatively, when the
foregoing criteria are not met, the Company recognizes gains by the in-
stallment method. At September 30, 1996 and 1995, there was one de-
ferred gain related to the sale of the following real estate
investment:
Deferred Gain
Year of Sale Property 9/30/96 9/30/95
1986 Howell Township $185,989 $208,238
Page 33
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Securities Available for Sale
On October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). SFAS 115 addresses the
accounting and reporting requirements for investments in securities
that have readily determinable values and all investments in debt
securities. SFAS 115 requires the classification of securities among
three categories: held-to-maturity, trading and available-for- sale.
The Company's securities are classified as available-for-sale
and are carried at fair value in 1996 and 1995. Gains or losses on the
sale of securities are based on identifiable cost and are accounted for
on a trade date basis. Unrealized holding gains and losses are
excluded from earnings and reported as a separate component of
Shareholders' Equity until realized.
Cash Equivalents
Cash equivalents consist of money market funds.
Earnings Per Share
Earnings per share is computed by dividing net income by the
weighted average number of shares outstanding during each period.
Income Tax
The Company has elected to be taxed as a Real Estate In-
vestment Trust (REIT) under Sections 856-858 of the Internal Revenue
Code. The Company will not be taxed on the portion of its income which
is distributed to shareholders, provided it distributes at lease 95% of
its taxable income, has at least 75% of its assets in real estate
investments and meets certain other requirements for qualification as a
REIT.
Reclassifications
Certain amounts in the financial statements for the prior
years have been reclassified to conform to the statement presentation
for the current year.
NOTE 2 - MORTGAGE LOANS RECEIVABLE
The following is a summary of the mortgage loans receivable at
September 30, 1996 and 1995:
Rate Maturity 9/30/96 9/30/95
Bonim Associates, Inc.
Howell Township Property 10% 1997 $262,585 $293,997
======== =========
Page 34
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 2 - MORTGAGE LOANS RECEIVABLE (CONT'D)
The original amount of the mortgage receivable with Bonim
Associates, Inc. was $514,000.
NOTE 3 - REAL ESTATE INVESTMENTS
The following is a summary of the cost and accumulated depre-
ciation of the Company's property and equipment at September 30, 1996
and 1995:
Buildings
Improvements Accumul.
September 30, 1996 Land and Equipment Deprec.
NEW JERSEY:
Ramsey Ind. Building $ 52,639 $1,123,839 $ 496,432
Somerset(1) Shopping Cntr. 55,182 1,062,395 648,406
South Brunswick Ind. Building 1,128,000 4,087,400 459,633
PENNSYLVANIA:
Monaca Ind. Building 330,773 1,672,262 779,931
NEW YORK:
Monsey Ind. Building 119,910 1,707,553 707,476
Orangeburg Ind. Building 694,720 2,977,372 366,307
NORTH CAROLINA:
Greensboro Ind. Building 327,100 1,853,700 203,565
MISSISSIPPI:
Jackson Ind. Building 218,000 1,233,500 125,645
Richland Ind. Building 211,000 1,195,000 76,600
MASSACHUSETTS:
Franklin Ind. Building 566,000 4,148,000 265,886
KANSAS:
Wichita Ind. Building 268,000 1,518,000 97,322
IOWA:
Urbandale Ind. Building 310,000 1,758,000 112,688
MISSOURI:
O'FALLON Ind. Building 264,000 3,302,000 126,867
VIRGINIA:
Virginia Beach Ind. Building 384,600 2,150,000 27,564
__________ ___________ __________
Total at September 30, 1996 $4,929,924 $29,789,021 $4,494,322
========== =========== ==========
(1) This represents the Company's 2/3 interest in a joint venture.
Page 35
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 3 - REAL ESTATE INVESTMENTS (CONT'D)
Buildings,
Improvements Accumul.
September 30, 1995 Land and Equipment Deprec.
NEW JERSEY:
Ramsey Ind. Building $ 52,639 $1,123,839 $ 468,592
Somerset (1) Shopping Cntr. 55,182 1,062,395 607,804
Eatontown Admin.Office -0- 14,968 14,519
South Brunswick Ind. Building 1,128,000 4,087,400 329,853
PENNSYLVANIA:
Monaca Ind. Building 330,773 1,667,537 707,931
NEW YORK:
Monsey Ind. Building 119,910 1,681,819 651,737
Orangeburg Ind. Building 694,720 2,977,372 271,775
NORTH CAROLINA:
Greensboro Ind. Building 327,100 1,853,700 144,680
MISSISSIPPI:
Jackson Ind. Building 218,000 1,233,500 86,481
Richland Ind. Building 211,000 1,195,000 45,960
MASSACHUSETTS
Franklin Ind. Building 566,000 4,148,000 159,532
KANSAS
Wichita Ind. Building 268,000 1,518,000 58,382
IOWA
Urbandale Ind. Building 310,000 1,758,000 67,613
MISSOURI
O'Fallon Ind. Building 264,000 3,302,000 42,202
__________ ___________ __________
Total at September 30, 1995 $4,545,324 $27,623,530 $3,657,061
========== =========== ==========
(1) This represents the Company's 2/3 interest in a joint venture.
Page 36
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 4 - ACQUISITIONS
On May 10, 1996, the Company purchased a 67,926 square foot
warehouse facility in Virginia Beach, Virginia. This warehouse
facility is 100% net-leased to the Raytheon Service Company (Raytheon).
The total purchase price, including closing costs, was $2,534,600. The
Company entered into a $1,500,000 mortgage loan with Life Savings Bank
at an interest rate of 8.5% (subject to an adjustment after five years
based on the US Treasury Index, plus 2.5%) which matures on June 1,
2021. The Company also used $1,000,000 of its line of credit with
Summit Bank (Summit), formerly United Jersey Bank, of which $700,000
was subsequently repaid.
On October 13, 1994, the Company purchased a 102,135 square foot
warehouse facility in O'Fallon, Missouri. This warehouse facility is
100% net-leased to PPG Industries, Inc. The total purchase price,
including closing costs, was $3,566,000. The Company obtained a
$2,500,000 mortgage on this property from Midwestern United Life
Insurance Company (Midwestern). This mortgage payable is at an
interest rate of 8.5% (subject to an adjustment after five years, at
Midwestern's option) and is due on November 1, 2007. Midwestern has
the right to accelerate the maturity to November 1, 2004. In addition
to this mortgage, the Company used $1,000,000 of its then existing line
of credit with NatWest NJ Bank. This line of credit was subsequently
repaid. The purchase of this warehouse facility was part of a tax-free
exchange in accordance with the Internal Revenue Code.
NOTE 5 - SECURITIES AVAILABLE FOR SALE
The following is a summary of securities available for sale at
September 30, 1996 and 1995:
9/30/96 9/30/95
Market Market
Description Cost Value Cost Value
Prudential Realty Trust
Income Shares $ -0- $ -0- $147,717 $ 197,438
HRE Properties 205,528 219,600 66,581 75,600
MGI Properties 122,125 131,250 -0- -0-
Mid America Realty Inv.Inc. 162,275 168,625 -0- -0-
Sizeler Properties Inv 8%
Convert Sub Debent. Due
7/15/2003 DTD 5/13/93 91,033 88,500 -0- -0-
__________ _________ _________ __________
Total $ 580,961 $ 607,975 $ 214,298 $ 273,038
========== ========= ========= ==========
On December 1, 1995, shares of Prudential Realty Trust were sold. The
Company received $214,650, resulting in a realized gain of $66,933.
This gain has been included in Other Income in the Financial
Statements.
Page 37
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 6 - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
The Company has approximately 1,065,000 feet of property, of
which approximately 282,000 square feet or 26% is leased to Keebler and
approximately 145,000 square feet or 14% is leased to the Amway
Corporation at September 30, 1996. Rental and occupancy charges from
Keebler totalled approximately $1,773,000, $1,772,000 and $1,547,000
for the years ended September 30, 1996, 1995 and 1994 respectively.
Rental and occupancy charges from the Amway Corporation totalled
approximately $595,000 for each of the years ended September 30, 1996,
1995 and 1994. During 1996, 1995 and 1994 rental income and occupancy
charges from properties leased to the Keebler Company and Amway
Corporation approximated 56%, 57% and 58% of total rental and occupancy
charges, respectively.
NOTE 7 - MORTGAGE NOTES PAYABLE
The following is a summary of the mortgages payable at September
30, 1996 and 1995:
Fiscal Balance
Mortgage Rate Maturity 9/30/96 9/30/95
Industrial Building
Orangeburg, New York 7% 2004 $2,158,097 $ 2,350,032
Industrial Building
South Brunswick, NJ P+1% 1998 1,470,000 2,445,000
Industrial Building
Jackson, Mississippi 8.5% 2008 703,964 737,116
Industrial Building
Greensboro, North Carolina 10% 1998 1,400,043 1,417,065
Industrial Building
Franklin, Massachusetts 7% 2004 2,456,910 2,675,422
Industrial Building
Wichita, Kansas 10.25% 2016 1,269,021 1,287,963
Industrial Building
Urbandale, Iowa 7% 2004 1,170,352 1,274,440
Industrial Building
Richland, Mississippi 7.5% 2004 813,606 877,066
Industrial Building
O'Fallon, Missouri 8.5% 2007 2,280,493 2,399,457
Industrial Building
Virginia Beach, VA 8.5% 2021 1,494,124 -0-
___________ ___________
Total Mortgage Notes Payable $15,216,610 $15,463,561
=========== ===========
Page 38
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 7 - REAL ESTATE MORTGAGE NOTES PAYABLE (CONT'D)
Principal on the foregoing debt is scheduled to be paid as
follows:
Years Ending September 30, 1997 $ 1,019,081
1998 3,565,273
1999 957,734
2000 1,031,811
2001 1,111,684
Thereafter 7,531,027
___________
Total $15,216,610
===========
Lines of Credit
The Company has a $1,000,000 line of credit with Summit at an
interest rate of prime plus 1%. This line of credit is secured by a
second mortgage on the South Brunswick Industrial Building and may be
used for any purpose. As of September 30, 1996, the Company utilized
$500,000 of this line.
NOTE 8 - INCOME FROM LEASES
The Company derives income primarily from operating leases on its
commercial properties. In general, these leases are written for peri-
ods up to ten years with various provisions for renewal. These leases
generally contain clauses for reimbursement (or direct payment) of real
estate taxes, maintenance, insurance and certain other operating
expenses of the properties. Minimum rents due under noncancellable
leases at September 30, 1996 are scheduled as follows: 1997-
$4,060,446; 1998 - $3,333,832; 1999 - $3,055,200; 2000 - $2,998,317;
thereafter - $3,568,142.
NOTE 9 - RELATED PARTY TRANSACTIONS
Certain Directors and Officers of the Company are also Di-
rectors and Officers of United Mobile Homes, Inc. (United). The Company
made loans to United, all of which were repaid in fiscal 1994. Interest
income from United was $116,187 for the fiscal year ended September 30,
1994.
Eugene W. Landy received $3,200, $2,800 and $1,600 during the
years ended 1996, 1995 and 1994, respectively, as Director. The firm
of Landy & Landy received $111,003, $100,645 and $140,530 during the
year ended 1996, 1995 and 1994, respectively, as management and legal
fees. An accrual of $59,000 was made in 1996 and 1995 for pension and
other benefits in accordance with Mr. Landy's employment contract.
Additionally, the Board of Directors has granted to Mr. Landy a loan of
$100,000 at an interest rate of 10% due May 23, 1997. Principal and
accrued interest is payable at maturity.
Page 39
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 9 - RELATED PARTY TRANSACTIONS (CONT'D)
On December 9, 1994, the Company and Eugene W. Landy entered into
an Employment Agreement under which, on severance of employment for any
reason, Mr. Landy will receive severance of $300,000 payable $100,000
on severance and $100,000 on the first and second anniversaries of
severance.
In the event of disability, Mr. Landy's compensation shall
continue for a period of three years, payable monthly.
On retirement, Mr. Landy shall receive a pension of $40,000 a
year for ten years, payable in monthly installments.
In the event of death, Mr. Landy's designated beneficiary shall
receive $300,000, $150,000 thirty days after death and the balance one
year after death.
The Employment Agreement terminates December 31, 1999.
Thereafter, the term of the Employment Agreement shall be automatically
renewed and extended for successive one-year periods. The Employment
Agreement is terminable by either party at any time subject to certain
notice requirements.
Cronheim Management Company received the sum of $17,825, $10,540
and $17,046 for management fees during the years ended 1996, 1995 and
1994, respectively. David Cronheim Company received $21,777, $11,877
and $141,133 in commissions in 1996, 1995 and 1994, respectively.
Daniel Cronheim received $3,350, $2,800 and $1,600 for Director and
Committee fees in 1996, 1995 and 1994, respectively.
NOTE 10 - INCOME TAXES
Federal Income Tax
The Company has elected to be taxed as a Real Estate In-
vestment Trust under the applicable provisions of the Internal Revenue
Code and the comparable New Jersey Statutes. Under such provisions,
the Company will not be taxed on that portion of its taxable income
distributed currently to shareholders, provided that at least 95% of
its taxable income is distributed. As the Company intends to dis-
tribute all of its income currently, no provision has been made for
Federal income taxes.
Federal Excise Tax
The Company does not have an excise tax liability for the
calendar years 1996 and 1995 since it intends to or has distributed
all of its annual income.
Page 40
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 11 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company implemented a dividend reinvestment and stock
purchase plan (the "Plan") effective December 15, 1987. Under the
terms of the Plan, and subsequent offerings, shareholders who par-
ticipate may reinvest all or part of their dividends in additional
shares of the Company at approximately 95% of market price. According
to the terms of the Plan, shareholders may also purchase additional
shares, at approximately 95% of market price by making optional cash
payments monthly.
Amounts received , including dividend reinvestment of $779,865
and $753,459 in 1996 and 1995, respectively and shares issued in
connection with the Plan for the years ended September 30, 1996 and
1995 were as follows:
9/30/96 9/30/95
Amounts Received* $2,292,469 $1,650,574
Shares Issued 408,879 326,043
*These amounts are net of the 5% discount under the plan. The total
discount amounted to $79,889 and $80,473 during the fiscal year ended
September 30, 1996 and 1995, respectively.
NOTE 12 - DISTRIBUTIONS
The following cash distributions were paid to shareholders
during the years ended September 30, 1996 and 1995:
1996 1995
Quarter Ended Amount Per Share Amount Per Share
December 31 $ 431,342 $ .125 $385,717 $ .125
March 31 441,807 .125 396,685 .125
June 30 455,637 .125 405,352 .125
September 30 466,541 .125 416,965 .125
__________ ______ __________ ______
$1,795,327 $ .500 $1,604,719 $ .500
========== ====== ========== ======
The above amounts do not include discounts under the Dividend Re-
investment and Stock Purchase Plan.
On September 25, 1996, the Company declared a dividend of $.125
to be paid on December 16, 1996 to shareholders of record November 15,
1996.
Page 41
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 13 - CASH FLOW INFORMATION
Cash paid during the years ended September 30, 1996, 1995 and
1994 for interest is $1,252,180, $1,372,596 and $1,056,827
respectively.
During 1996, 1995 and 1994, the Company had $779,865, $753,459
and $-0-, respectively, of dividends which were reinvested that required
no cash transfers.
In 1996 and 1995, equity securities available for sale is shown
at fair value pursuant to the 1995 adoption of SFAS 115. The resultant
portfolio increases of $27,014 and $58,740, respectively, relating to
unrealized holding gains are shown as a separate component of
shareholders' equity.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to disclose certain information about
fair values of financial instruments, as defined in Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair Value
of Financial Instruments."
Limitations
Estimates of fair value are made at a specific point in time
based upon where available, relevant market prices and information
about the financial instrument. Such estimates do not include any
premium or discount that could result from offering for sale at one
time the Company's entire holdings of a particular financial
instrument. For a portion of the Company's financial instruments, no
quoted market value exists. Therefore, estimates of fair value are
necessarily based on a number of significant assumptions (many of which
involve events outside the control of management). Such assumptions
include assessments of current economic conditions, perceived risks
associated with these financial instruments and their counterparties,
future expected loss experience and other factors. Given the
uncertainties surrounding these assumptions, the reported fair values
represent estimates only and, therefore, cannot be compared to the
historical accounting model. Use of different assumptions or
methodologies is likely to result in significantly different fair value
estimates.
Page 42
<PAGE>
MOTES TO THE FINANCIAL STATEMENTS (CONT'D)
SEPTEMBER 30, 1996
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT'D)
The fair value of cash and cash equivalents and mortgage loans
receivable approximates their current carrying amounts since all such
items are short-term in nature. The fair value of securities available
for sale is based upon quoted market values. The fair value of mortgage
notes payable and loans payable approximate their current carrying
amounts since such amounts payable are at a current market rate of
interest.
NOTE 15 - SUBSEQUENT EVENTS
On October 4, 1996, the Company entered into a $5,000,000 term
loan with Summit, which may be used for acquisitions or working capital
purposes. This loan bears interest at Prime plus 1/2%. Principal
payments of $250,000 plus interest are due quarterly. This loan
matures on October 4, 2001. The outstanding balance on this loan is
$4,000,000 as of November 19, 1996.
Page 43
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1996
Column A Column B Column C Column D
________ ________ _________________ ________
Initial Cost
Buildings, Capitaliz.
Improve. Subsequent
Descrp. Encumbr. Land & Equip. to Acquis.
<S> <C> <C> <C> <C>
________ __________ _________ ___________ _________
Industrial Bldg.
Ramsey, NJ $ -0- $ 52,639 $ 291,500 $ 832,339
Shopping Cntr.
Somerset, NJ -0- 55,182 637,097 425,298
Industrial Bldg.
Monaca, PA -0- 330,773 878,081 794,181
Industrial Bldg.
Monsey, NY -0- 119,910 908,473 799,080
Industrial Bldg.
Orangeburg, NY 2,158,097 694,720 2,977,372 -0-
Industrial Bldg.
S.Brunswick, NJ 1,470,000 1,128,000 4,087,400 -0-
Industrial Bldg.
Greensboro, NC 1,400,043 327,100 1,853,700 -0-
Industrial Bldg.
Jackson, MS 703,964 218,000 1,233,500 -0-
Industrial Bldg.
Franklin, MA 2,456,910 566,000 4,148,000 -0-
Industrial Bldg.
Witchita, KS 1,269,021 268,000 1,518,000 -0-
Industrial Bldg.
Urbandale, IA 1,170,352 310,000 1,758,000 -0-
Industrial Bldg.
Richland, MS 813,606 211,000 1,195,000 -0-
Industrial Bldg.
O'Fallon, MO 2,280,493 264,000 3,302,000 -0-
Industrial Bldg.
Virginia Bch, VA 1,494,124 384,600 2,150,000 -0-
___________ __________ ___________ __________
$15,216,610 $4,929,924 $26,938,123 $2,850,898
=========== ========== =========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III, CONTINUED
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1996
Column A Column E (1) (2) Column F
________ _________________________________ ________
Gross Amt at Which Carried
September 30, 1996 Accum.
Bldg, Equip Deprecia-
Descript. Land & Improv. Total tion
<S> <C> <C> <C> <C>
__________ __________ ___________ __________ __________
Industrial Bldg.
Ramsey, NJ $ 52,639 $1,123,839 $1,176,478 $ 496,432
Shopping Cntr.
Somerset, NJ 55,182 1,062,395 1,117,577 648,406
Industrial Bldg.
Monaca, PA 330,773 1,672,262 2,003,035 779,931
Industrial Bldg.
Monsey, NY 119,910 1,707,553 1,827,463 707,476
Industrial Bldg.
Orangeburg, NY 694,720 2,977,372 3,672,092 366,307
Industrial Bldg.
S.Brunswick, NJ 1,128,000 4,087,400 5,215,400 459,633
Industrial Bldg.
Greensboro, NC 327,100 1,853,700 2,180,800 203,565
Industrial Bldg.
Jackson, MS 218,000 1,233,500 1,451,500 125,645
Industrial Bldg.
Franklin, MA 566,000 4,148,000 4,714,000 265,886
Industrial Bldg.
Witchita, KS 268,000 1,518,000 1,786,000 97,322
Industrial Bldg.
Urbandale, IA 310,000 1,758,000 2,068,000 112,688
Industrial Bldg.
Richland, MS 211,000 1,195,000 1,406,000 76,600
Industrial Bldg.
O'Fallon, MO 264,000 3,302,000 3,566,000 126,867
Industrial Bldg.
Virginia Bch, VA 384,600 2,150,000 2,534,600 27,564
__________ ___________ ___________ __________
$4,929,924 $29,789,021 $34,718,945 $4,494,322
========== =========== =========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III, CONTINUED
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1996
Column A Column G Column H Column I
________ ________ ________ ________
Date of
Construc. Date Deprec.
Descrp. tion Acquired Life
<S> <C> <C> <C>
________ ________ ________ _______
Industrial Bldg.
Ramsey, NJ 1969 1969 7-40
Shopping Cntr.
Somerset, NJ 1970 1970 10-33
Industrial Bldg.
Monaca, PA 1977 1977* 5-31.5
Industrial Bldg.
Monsey, NY 1965 1980 30-31.5
Industrial Bldg.
Orangeburg,NY 1990 1993 31.5
Industrial Bldg.
S.Brunswick,NJ 1974 1993 31.5
Industrial Bldg.
Greensboro,NC 1988 1993 31.5
Industrial Bldg.
Jackson, MS 1988 1993 39
Industrial Bldg.
Franklin, MA 1969 1994 39
Industrial Bldg.
Witchita, KS 1974 1994 39
Industrial Bldg.
Urbandale, IA 1985 1994 39
Industrial Bldg.
Richland, MS 1986 1994 39
Industrial Bldg.
O'Fallon, MO 1989 1994 39
Industrial Bldg.
Virginia Bch, VA 1976 1996 39
*Buildings and improvements reacquired in 1986.
</TABLE>
Page 44
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONT'D)
(1)Reconciliation
FIXED ASSETS
9/30/96 9/30/95 9/30/94
<S> <C> <C> <C>
Balance-Beginning of Year $32,153,886 $28,470,788 $18,483,260
__________ ___________ ___________
Additions:
Acquisitions 2,534,600 3,566,000 9,974,000
Improvements 30,459 117,098 163,115
___________ ___________ ___________
Total Additions 2,565,059 3,683,098 10,137,115
___________ ___________ ___________
Deductions:
Cost of Real Estate Sold -0- -0- 149,587
___________ ___________ ___________
Balance-End of Year(1) $34,718,945 $32,153,886 $28,470,788
=========== =========== ===========
ACCUMULATED DEPRECIATION
9/30/96 9/30/95 9/30/94
Balance-Beginning of Year $ 3,642,542 $ 2,859,285 $ 2,287,310
___________ ___________ ___________
Depreciation 851,780 783,257 625,629
Deletions -0- -0- (53,654)
___________ ___________ ___________
Balance-End of Year $ 4,494,322 $ 3,642,542 $ 2,859,285
=========== =========== ===========
</TABLE>
MONMOUTH REAL ESTATE INVESTMENT
CORPORATIO
NOTES TO SCHEDULE III
SEPTEMBER 30,
<PAGE>
<TABLE>
<CAPTION>
(1) Reconciliation
1996 1995 1994
<S> <C> <C> <C>
Balance - Beginning of Year $32,153,886 $28,470,788 $18,483,260
___________ ___________ ___________
Additions:
Ramsey, New Jersey -0- 81,953 -0-
Somerset, New Jersey -0- 10,784 70,914
Monaca, Pennsylvania 4,725 21,361 60,778
Monsey, New York 25,734 3,000 26,907
Morris Plains, New Jersey -0- -0- 4,516
Orangeburg, New York -0- -0- -0-
South Brunswick, New Jersey -0- -0- -0-
Greensboro, North Carolina -0- -0- -0-
Jackson, Mississippi -0- -0- -0-
Franklin, Massachusetts -0- -0- 4,714,000
Wichita, Kansas -0- -0- 1,786,000
Urbandale, Iowa -0- -0- 2,068,000
Richland, Mississippi -0- -0- 1,406,000
O'Fallon, Missouri -0- 3,566,000 -0-
Virginia Beach, Virginia 2,534,600 -0- -0-
___________ ___________ ___________
Total Additions 2,565,059 3,683,098 10,137,115
___________ ___________ ___________
Retirement/Sales
Morris Plains, NJ -0- -0- (149,587)
___________ ___________ ___________
$34,718,945 $32,153,886 $28,470,788
=========== =========== ===========
(2) The aggregate cost for Federal tax purposes approximates
historical cost.
</TABLE>
Page 46
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
Date: Dec. 11, 1996 By: /S/Eugene W. Landy
Eugene W. Landy, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: Dec. 11, 1996 By: /S/Eugene W. Landy
Eugene W. Landy, President and Director
Date: Dec. 11, 1996 By: /S/Ernest V. Bencivenga
Ernest V. Bencivenga, Treasurer and
Director
Date: Dec. 11, 1996 By: /S/Anna T. Chew
Anna T. Chew, Controller and Director
Date: Dec. 11, 1996 By: /S/Daniel D. Cronheim
Daniel D. Cronheim, Director
Date: Dec. 11, 1996 By: /S/Boniface DeBlasio
Boniface DeBlasio, Director
Date: Dec. 11, 1996 By: /S/Ara K. Hovnanian
Ara K. Hovnanian, Director
Date: Dec. 11, 1996 By: /S/Charles P. Kaempffer
Charles P. Kaempffer, Director
Date: Dec. 11, 1996 By: /S/Samuel A. Landy
Samuel A. Landy, Director
Date: Dec. 11, 1996 By: /S/W. Dunham Morey
W. Dunham Morey, Director
Date: Dec. 11, 1996 By: /S/Robert G. Sampson
Robert G. Sampson, Director
Page 47
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MONMOUTH REAL ESTATE INVESTMENT CORPORATION AS OF
AND FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 244,394
<SECURITIES> 607,975
<RECEIVABLES> 552,091
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,528,129
<PP&E> 34,718,945
<DEPRECIATION> 4,494,322
<TOTAL-ASSETS> 32,538,076
<CURRENT-LIABILITIES> 1,026,095
<BONDS> 15,216,610
0
0
<COMMON> 38,009
<OTHER-SE> 16,071,373
<TOTAL-LIABILITY-AND-EQUITY> 32,538,076
<SALES> 0
<TOTAL-REVENUES> 4,629,683
<CGS> 0
<TOTAL-COSTS> 589,171
<OTHER-EXPENSES> 1,392,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,252,180
<INCOME-PRETAX> 1,396,099
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,396,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,396,099
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
