Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
For the Quarter ended Commission File
March 31, 1997 No. 2-29442
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, New Jersey 07724
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:(908)542-4927
----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
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 and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was re-
quired to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___
Indicate by check mark whether the financial statements required
by instruction H have been reviewed by an independent public ac-
countant. Yes ___ No X
The number of shares or other units outstanding of each of the
issuer's classes of securities as of May 1, 1997 was 4,088,028.
Page 1
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED MARCH 31, 1997
C O N T E N T S
Page No.
Part I - Financial Information
Item 1 - Financial Statements (Unaudited):
Balance Sheets 3
Statements of Income 4
Statements of Cash Flows 5
Notes to Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-9
Part II- Other Information 10
Signatures 11
Page 2
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF MARCH 31, 1997 AND SEPTEMBER 30, 1996
<S> <C> <C>
3/31/97 9/30/96
ASSETS
Real Estate Investments:
Land $ 4,929,924 $ 4,929,924
Buildings, Improvements and
Equipment, Net of Accumulated
Depreciation of $4,935,063
and $4,494,322, respectively 24,949,940 25,294,699
Mortgage Loans Receivable 244,203 262,585
___________ ___________
Total Real Estate Investments 30,124,067 30,487,208
Cash and Cash Equivalents 60,830 244,394
Securities Available for Sale at
Fair Value 2,982,545 607,975
Interest and Other Receivables 524,903 552,091
Prepaid Expenses 75,713 123,669
Lease Costs - Net of Accumulated
Amortization 101,084 55,347
Other Assets 547,794 467,392
___________ ___________
TOTAL ASSETS $34,416,936 $32,538,076
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $14,714,958 $15,216,610
Loans Payable 1,500,000 500,000
Deferred Gain - Installment Sale 173,989 185,989
Other Liabilities 589,003 526,095
___________ ___________
Total Liabilities 16,977,950 16,428,694
___________ ___________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
8,000,000 Shares Authorized,
4,048,767 and 3,800,924 Shares
Issued and Outstanding, respectively 40,488 38,009
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No shares
Issued or Outstanding -0- -0-
Additional Paid-in Capital 17,488,355 16,044,359
Unrealized Holding Gain on
Securities Available for Sale 168,693 27,014
Undistributed Income (258,550) -0-
___________ ___________
Total Shareholders' Equity 17,438,986 16,109,382
___________ ___________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $34,416,936 $32,538,076
=========== ===========
Unaudited
See Accompanying Notes to Financial Statements
Page 3
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996
<S> <C> <C> <C> <C>
3 Months 6 Months 3 Months 6 Months
Ended Ended Ended Ended
3/31/97 3/31/97 3/31/96 3/31/96
INCOME:
Rental and Occupancy
Charges $1,133,621 $2,383,779 $1,124,490 $2,179,104
Interest and Other
Income 165,726 213,499 4,774 81,919
__________ __________ __________ __________
TOTAL INCOME 1,299,347 2,597,278 1,129,264 2,261,023
__________ __________ __________ __________
EXPENSES:
Interest Expense 359,304 768,205 299,576 615,960
Real Estate Taxes 65,231 210,200 111,013 158,697
Operating Expenses 106,955 190,422 117,356 198,868
Office and General
Expenses 145,557 280,801 140,260 278,525
Depreciation 220,434 440,741 196,329 392,658
__________ __________ __________ __________
TOTAL EXPENSES 897,481 1,890,369 864,534 1,644,708
__________ __________ __________ __________
INCOME BEFORE GAINS 401,866 706,909 264,730 616,315
Gains on Sale of
Assets-Investment
Property 6,000 12,000 6,000 12,000
__________ __________ __________ __________
NET INCOME $ 407,866 718,909 $ 270,730 $ 628,315
========== ========== ========== ==========
PER SHARE INFORMATION
Weighted Average
Shares Outstanding 3,974,097 3,915,142 3,532,600 3,485,835
========== ========== ========== ==========
Net Income Per Share $ 0.10 $ 0.18 $ 0.08 $ 0.18
========== ========== ========== ==========
Unaudited
See Notes to Financial Statements
Page 4
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 718,909 $ 628,315
Noncash Items Included in Net Income:
Depreciation 440,741 392,658
Amortization 23,966 56,658
Gain on Sales of Assets &
Investment Property (12,000) (12,000)
Gain on Sales of Securities
Available for Sale (73,285) (66,933)
Changes In:
Interest and Other Receivables 27,188 48,789
Prepaid Expenses 47,956 4,478
Other Assets and Lease Costs (122,605) (45,037)
Other Liabilities 62,908 93,692
__________ ___________
NET CASH PROVIDED FROM OPERATING
ACTIVITIES 1,113,778 1,100,620
__________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 18,382 16,778
Additions to Land, Buildings,
Improvements and Equipment (95,982) (4,724)
Purchase of Securities
Available for Sale (2,619,926) (37,754)
Proceeds from Sale of
Securities Available for Sale 460,320 214,650
__________ ___________
NET CASH PROVIDED FROM (USED IN)
INVESTING ACTIVITIES (2,237,206) 188,950
__________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 5,000,000 -0-
Principal Payments on Loans (4,000,000) -0-
Principal Payments of Mortgages (501,652) (1,263,392)
Financing Costs on Debt (27,500) -0-
Proceeds from Issuance of Class A
Common Stock 1,029,546 717,390
Dividends Paid (560,530) (492,936)
___________ ___________
NET CASH PROVIDED FROM (USED IN)
FINANCING ACTIVITIES 939,864 (1,038,938)
___________ ___________
Net Increase (Decrease) in Cash
and Cash Equivalents (183,564) 250,632
Cash and Cash Equivalents at Beginning
of Period 244,394 144,019
___________ ___________
Cash and Cash Equivalents at End
of Period $ 60,830 $ 394,651
=========== ===========
Unaudited
See Accompanying Notes to Financial Statements
Page 5
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICY
The interim financial statements furnished herein reflect all adjust-
ments which were, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows at
March 31, 1997 and for all periods presented. All adjustments made in
the interim period were of a normal recurring nature. Certain footnote
disclosures which would substantially duplicate the disclosures
contained in the audited financial statements and notes thereto
included in the Annual Report of Monmouth Real Estate Investment
Corporation (the Company) for the year ended September 30, 1996 have
been omitted.
NOTE 2 - SECURITIES AVAILABLE FOR SALE
During the six months ended March 31, 1997, the Company purchased
securities available for sale in the amount of $2,619,926. The Company
also sold $387,035 of securities available for sale for a gain of
$73,285 which is included in interest and other income. Total
securities available at fair value at March 31, 1997 amounted to
$2,982,545 which includes an unrealized holding gain of $168,693.
NOTE 3 - REAL ESTATE INVESTMENTS
On October 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" This
did not have a material impact on the financial position or results of
operations of the Company. If there is an event or change in
circumstances that indicates that the basis of an investment property
may not be recoverable, management assesses the possible impairment of
value through evaluation of the estimated future cash flows of the
property, on an undiscounted basis, as compared to the property's
current carrying value. A property's carrying value would be adjusted,
if necessary, to reflect an impairment in the value of the property.
NOTE 4 - LOANS PAYABLE
On October 4, 1996, the Company entered into a $5,000,000 term loan
with Summit Bank which may be used for acquisitions or working capital
purposes. The 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 of this loan was
$1,500,000 on March 31, 1997.
Page 6
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NOTE 5- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" (Statement 128). Statement 128 supersedes APB Opinion No.
15, "Earnings Per Share", and specifies the computation, presentation,
and disclosure requirements for earning per share (EPS) for entities
with publicly held common stock or potential common stock. Statement
128 replaces Primary EPS and Fully Diluted EPS with Basic EPS and
Diluted EPS, respectively. Statement 128 also requires dual
presentation of Basic and Diluted EPS on the face of the income
statement for entities with complex capital structures and a
reconciliation of the information utilized to calculate Basic EPS to
that used to calculate Diluted EPS. Statement 128 is effective for
financial statements periods ending after December 15, 1997. Earlier
application is not permitted. After adoption, all prior period EPS is
required to be restated to conform with Statement 128. The Company
expects that the adoption of Statement 128 will result in Basic EPS
being higher than Primary EPS and Diluted EPS will be approximately the
same as Fully Diluted EPS.
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure" (Statement 129) was issued in
February 1997. Statement 129 is effective for periods ending after
December 15, 1997. Statement 129 lists required disclosures about
capital structure that had been included in a number of separate
statements and opinions of authoritative accounting literature. As
such, the adoption of Statement 129 is not expected to have a
significant impact on the disclosures in financial statements of the
Company.
NOTE 6 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On March 17, 1997, the Company paid $493,386 as a dividend of $.125 per
share to shareholders of record February 17, 1997. For the six months
ended March 31, 1997, the Company paid $977,459.
For the quarter ended March 31, 1997, the Company received $779,649
from the Dividend Reinvestment and Stock Purchase Plan (DRIP). The
total received from the DRIP for the six months ended March 31, 1997
amounted to $1,446,475. For the six months ended March 31, 1997, there
were 247,843 shares issued resulting in 4,048,767 shares outstanding.
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the six months ended March 31, 1997 and 1996 for
interest are $742,705 and $615,960, respectively.
During the six months ended March 31, 1997 and 1996, the Company had
dividend reinvestments of $416,929 and $380,215, respectively, which
required no cash transfers.
Page 7
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
The Company generated net cash provided from operating activities of
$1,113,778 for the current six months as compared to $1,100,620 for the
prior period. The Company raised $1,446,475 from the issuance of shares
of common stock through a Dividend Reinvestment and Stock Purchase Plan
(DRIP). Dividends paid for the six months ended March 31, 1997 amounted
to $977,459.
Securities Available for Sale increased by $2,374,570 due to purchases
of $2,619,926 and an increase in unrealized holding gain of $141,679
offset by sales of $387,035.
Mortgage notes payable decreased by $501,652 during the six months
ended March 31, 1997. This decrease was the result of principal
repayments.
Loans payable increased by $1,000,000 as a result of a new term loan
with Summit Bank. The Company borrowed $5,000,000 from Summit Bank.
Total repayments to Summit Bank amounted to $4,000,000.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the quarter ended March 31,
1997 to $1,133,621 as compared to $1,124,490 for the quarter ended
March 31, 1996. Rental and occupancy charges increased for the six
months ended March 31, 1997 to $2,383,779 as compared to $2,179,104 for
the six months ended March 31, 1996. This increase was due primarily
to acquisitions made during fiscal 1996 as well as an increase in
occupancy charges. There was a corresponding increase in real estate
taxes.
Interest and other income increased by $160,952 and $131,580 for the
three and six month periods ended March 31, 1997, respectively, as
compared to the three and six months ended March 31, 1996. This was
due primarily to the purchase of Securities Available for Sale.
Interest expense increased by $59,728 for the three months ended March
31, 1997 as compared to the three months ended March 31, 1996.
Interest expense increased by $152,245 from $615,960 for the six months
ended March 31, 1996 to $768,205 for the six months ended March 31,
1997. This was the result of the new $5,000,000 loan with Summit Bank.
Operating expenses and office and general expenses remained relatively
stable for the three and six months ended March 31, 1997 as compared to
the three and six months ended March 31, 1996.
Depreciation expense increased by $24,105 and $48,083 for the three and
six month periods ended March 31, 1997, respectively, as compared to
the three and six month periods ended March 31, 1996, respectively, due
to the real estate acquisitions in fiscal 1996.
Page 8
<PAGE>
Real Estate taxes decreased by $45,782 for the three months ended March
31, 1997 as compared to the three months ended March 31, 1996. This
was the result of the timing of real estate taxes paid. There is a
corresponding decrease in occupancy charges offset by an increase in
rental charges. Real estate taxes increased by $51,503 for the six
months ended March 31, 1997 as compared to the six months ended March
31, 1996 as a result of the 1996 acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities increased during the six
months ended March 31, 1997 to $1,113,778 as compared to $1,100,620
generated during the six months ended March 31, 1996. The Company has
been raising capital through the DRIP and investing in net leased
industrial properties.
The Company owns fourteen properties of which ten carried mortgage
loans totaling $14,714,958 at March 31, 1997. The Company believes
that funds generated from operations, the Dividend Reinvestment and
Stock Purchase Plan, together with the ability to finance and refinance
its properties will provide sufficient funds to adequately meet its
obligations over the next several years.
Page 9
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PART II: OTHER INFORMATION
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
ITEM 1: LEGAL PROCEEDINGS - None
ITEM 2 CHANGES IN SECURITIES - None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5: OTHER INFORMATION - None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS - None
(b) REPORTS ON FORM 8-K - None
Page 10
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<PAGE>
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 thereunto duly authorized.
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
Date: May 8, 1997 By: /s/Eugene W. Landy
EUGENE W. LANDY,
President
Date: May 8, 1997 By: /s/Anna T. Chew
ANNA T. CHEW
Controller
Page 11
<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 PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 60,830
<SECURITIES> 2,982,545
<RECEIVABLES> 524,903
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,643,991
<PP&E> 34,814,927
<DEPRECIATION> 4,935,063
<TOTAL-ASSETS> 34,416,936
<CURRENT-LIABILITIES> 2,089,003
<BONDS> 14,714,958
0
0
<COMMON> 40,488
<OTHER-SE> 17,398,498
<TOTAL-LIABILITY-AND-EQUITY> 34,416,936
<SALES> 0
<TOTAL-REVENUES> 2,609,278
<CGS> 0
<TOTAL-COSTS> 400,622
<OTHER-EXPENSES> 721,542
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 768,205
<INCOME-PRETAX> 718,909
<INCOME-TAX> 0
<INCOME-CONTINUING> 718,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 718,909
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
