SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1997
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-4258 22-1897375
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
125 Wyckoff Road, Eatontown, NJ 07724
(Address of principal executive offices)
Registrant's telephone number, including area code (732) 542-4927
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On May 27, 1997, Monmouth Real Estate Investment
Corporation (Registrant) purchased a 148,000 square foot
warehouse facility in Fayetteville, North Carolina from
CK Fayetteville #1, LLC, an unrelated entity. This
warehouse facility is 100% net leased to Belk Enterprises,
Inc. The purchase price was approximately $4,600,000.
Monmouth Real Estate Investment Corporation paid
approximately $100,000 in cash, used approximately
$1,100,000 of its revolving line of credit with Summit Bank
and assumed an existing mortgage of approximately
$3,400,000. This mortgage payable is at an interest rate
of 7.8% and is due August 1, 2006. The property acquired
was commercial rental property and will continue to be
used as such.
The following are the material factors to be considered
in assessing the property:
* Description of Property - The property
acquired is a 148,000 square foot warehouse facility
located at Tom Starling Road and Interstate 95,
Fayetteville, North Carolina.
* Occupancy Rate and Number of Tenants - The
commercial rental property acquired was
constructed in 1996. Commencing June 4, 1996, the
property was 100% occupied under a 10-year net lease
agreement with Belk Enterprises, Inc. This net lease
agreement provides that operating expenses, including
property taxes, insurance, landscaping, utilities and
repairs in the ordinary course of business, be borne by
the tenant.
* Principal Business of Tenant - Belk Enterprises,
Inc. uses this property as a distribution center.
Registrant believes that the Belk Enterprises, Inc. will
continue to use this property as such.
* Principal Provisions of Lease - The following
are the principal provisions of the lease:
Term Monthly Rent
6/4/96-5/31/01 $ 36,830
6/1/01-5/31/06 41,475
At the end of the lease term, the tenant has two (5)
year options to renew at a rent based on the increase in the
consumer price index, but not less than $42,575 per month.
The Seller assigned the lease to Registrant.
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* Basis of Acquired Property for Depreciation - The
basis for depreciation is the purchase price of
the property. Approximately 96% of the purchase price
is attributable to building and improvements, which will
be depreciated over a 39 year life on a straight-line
basis (Modified Accelerated Recovery System). The residual
is attributable to land.
* Anticipated Capital Improvements - The Registrant
does not anticipate any significant capital improvements
during the term of the lease described above.
* Insurance Coverage - Insurance on the property is
paid for by the tenant. In the opinion of the registrant,
this coverage is adequate.
Registrant knows of no other material factors relating
to the property acquired other that those discussed in this
Form 8-K.
The following is pro forma financial information.
The impact of the property acquired to the financial
statements of the Registrant is as follows:
ADJUSTMENTS TO STATEMENT OF INCOME
Rental and Occupancy Charges - Increase of $473,000 based upon
amortization of total rental payments for scheduled rent over the
remaining lease term for scheduled rent.
Interest Expense - Increase of $360,000 based upon a mortgage of
$3,437,000 at 7.8% interest and total monthly principal and
interest payments of $28,841, and a revolving line of credit
balance increase of $1,100,000 at prime (currently 8.5%).
Depreciation Expense - Increase of $110,000 based upon 96% of the
purchase price being attributed to building and improvements,
and straight-line depreciation over a 39 year life.
Net Income - Increase of $3,000 (rental and occupancy charges less
interest expense and depreciation expense).
The effect of cash made available by operations will be an increase
of $113,000 (net income plus depreciation).
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ADJUSTMENTS TO THE BALANCE SHEET AT DATE OF PURCHASE
Cash and Cash Equivalents - Decrease of $100,000, the amount of
cash used for the purchase.
Land and Buildings, Improvements and Equipment - Increase of
$4,600,000, based on the purchase price.
Notes Payable - Increase of $1,100,000, the amount used on the
revolving line of credit.
Mortgage Notes Payable - Increase of $3,400,000, the amount of
the mortgage on the acquired property.
Registrant knows of no other financial statement item which would
be materially affected by the acquired property.
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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/ Eugene W. Landy
EUGENE W. LANDY
President
Date June 11, 1997
