FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( 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, 1998
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, 1998 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:(732)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, 1998 was 5,055,955.
Page 1
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED MARCH 31, 1998
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, 1998 AND SEPTEMBER 30, 1997
<S> <C> <C>
3/31/98 9/30/97
ASSETS
Real Estate Investments:
Land $ 6,411,724 $ 6,141,724
Buildings, Improvements and
Equipment, Net of Accumulated
Depreciation of $6,033,779
and $5,482,525, respectively 33,340,832 32,606,220
Mortgage Loans Receivable 176,955 195,583
___________ ___________
Total Real Estate Investments 39,929,511 38,943,527
Cash and Cash Equivalents 164,809 269,291
Securities Available for Sale at
Fair Value 1,860,379 3,250,147
Interest and Other Receivables 569,963 542,177
Prepaid Expenses 130,835 125,498
Lease Costs - Net of Accumulated
Amortization 209,187 100,602
Investment in Hollister'97 LLC 1,010,000 1,010,000
Other Assets 529,627 701,481
___________ ___________
TOTAL ASSETS $44,404,311 $44,942,723
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $20,330,704 $21,079,238
Loans Payable 150,948 3,190,510
Deferred Gain - Installment Sale 126,532 138,532
Other Liabilities 713,906 645,155
___________ ___________
Total Liabilities 21,322,090 25,053,435
___________ ___________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
8,000,000 Shares Authorized,
4,957,173 and 4,421,847 Shares
Issued and Outstanding, respectively 49,571 44,218
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No shares
Issued or Outstanding -0- -0-
Additional Paid-in Capital 22,843,702 19,450,137
Accumulated Other Comprehensive
Income 132,874 394,933
Undistributed Income 56,074 -0-
___________ ___________
Total Shareholders' Equity 23,082,221 19,889,288
___________ ___________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $44,404,311 $44,942,723
=========== ===========
Unaudited
See Accompanying Notes to Financial Statements
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
3 Months 6 Months 3 Months 6 Months
Ended Ended Ended Ended
3/31/98 3/31/98 2/31/97 3/31/97
<S> <C> <C> <C> <C>
INCOME:
Rental and Occupancy
Charges $1,567,033 $3,195,044 $1,133,621 $2,383,779
Interest and Other
Income 104,117 375,675 165,726 213,499
__________ __________ __________ __________
TOTAL INCOME 1,671,150 3,570,719 1,299,347 2,597,278
__________ __________ __________ __________
EXPENSES:
Interest Expense 452,371 916,837 359,304 768,205
Real Estate Taxes 30,277 189,265 65,231 210,200
Operating Expenses 154,235 317,591 106,955 190,422
Office and General
Expenses 194,711 338,927 145,557 280,801
Depreciation 278,271 551,258 220,434 440,741
__________ __________ __________ __________
TOTAL EXPENSES 1,109,865 2,313,878 897,481 1,890,369
__________ __________ __________ __________
INCOME BEFORE GAINS 561,285 1,256,841 401,866 706,909
Gains on Sale of
Assets-Investment
Property 6,000 12,000 6,000 12,000
__________ __________ __________ __________
NET INCOME $ 567,285 1,268,841 $ 407,866 $ 718,909
========== ========== ========== ==========
PER SHARE INFORMATION
Weighted Average
Shares Outstanding
Basic 4,778,005 4,655,064 3,974,097 3,915,142
========== ========== ========== ==========
Diluted 4,803,914 4,680,973 3,974,097 3,915,142
========== ========= ========== ==========
Net Income Per Share
Basic and Diluted $ 0.12 $ .27 $ 0.10 $ 0.18
========== ========== ========== ==========
Unaudited
See Notes to Financial Statements
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,268,841 $ 718,909
Noncash Items Included in Net Income:
Depreciation 551,258 440,741
Amortization 35,990 23,966
Gain on Sales of Assets -
Investment Property (12,000) (12,000)
Gain on Sales of Securities
Available for Sale (190,233) (73,285)
Changes In:
Interest and Other Receivables (27,786) 27,188
Prepaid Expenses (5,337) 47,956
Other Assets and Lease Costs 27,279 (122,605)
Other Liabilities 68,751 62,908
__________ __________
NET CASH PROVIDED FROM OPERATING
ACTIVITIES 1,716,763 1,113,778
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 18,628 18,382
Additions to Land, Buildings,
Improvements and Equipment (1,555,870) (95,982)
Purchase of Securities
Available for Sale (218,568) (2,619,926)
Proceeds from Sale of
Securities Available for Sale 1,536,518 460,320
__________ __________
NET CASH USED IN
INVESTING ACTIVITIES (219,300) (2,237,206)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 428,437 5,000,000
Principal Payments on Loans (3,467,999) (4,000,000)
Proceeds from Mortgages 1,100,000 -0-
Principal Payments of Mortgages (1,848,534) (501,652)
Financing Costs on Debt -0- (27,500)
Proceeds from Issuance of Class A
Common Stock 2,856,378 1,029,546
Dividends Paid (670,227) (560,530)
__________ __________
NET CASH (USED IN) PROVIDED FROM
FINANCING ACTIVITIES (1,601,945) 939,864
__________ __________
Net Decrease in Cash
and Cash Equivalents (104,482) (183,564)
Cash and Cash Equivalents at Beginning
of Period 269,291 244,394
___________ -----------
Cash and Cash Equivalents at End
of Period $ 164,809 $ 60,830
=========== ===========
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, 1998 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, 1997 have
been omitted.
Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in a
full set of general purpose financial statements. Under SFAS 130,
comprehensive income is divided into net income and other comprehensive
income. Other comprehensive income includes items previously recorded
directly in equity, such as unrealized gains or losses on securities
available for sale. Comparative financial statements provided for
earlier periods are required to be reclassified to reflect application
of the provisions of SFAS 130.
SFAS 130 requires total comprehensive income and its components to be
displayed on the face of a financial statement for annual financial
statements. For interim financial statements, SFAS 130 requires only
total comprehensive income to be reported and allows such disclosure to
be presented in the notes to the interim financial statements.
Total comprehensive income for the three and six month periods ended
March 31, 1998 and 1997 is as follows:
March 31, 1998 March 31, 1997
Three Months 558,678 406,186
Six Months 1,006,782 860,588
NOTE 2 - SECURITIES AVAILABLE FOR SALE
During the six months ended March 31, 1998, the Company sold $1,346,277
of securities available for sale for a gain of $190,233 which is
included in interest and other income. Total securities available for
sale at March 31, 1998 amounted to $1,860,379 which includes gross
unrealized holding gains of $132,874.
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NOTE 3 - REAL ESTATE INVESTMENTS
On December 18, 1997, the Company purchased a 12,477 square foot
warehouse facility in Burr-Ridge, Illinois from SK Properties II, LLC,
an unrelated entity. This warehouse facility is 100% net leased to
Sherwin-Williams Company. The purchase price, including closing costs,
was approximately $1,500,000. The Company paid approximately $120,000
in cash, used approximately $280,000 of its revolving line of credit
with Summit Bank and obtained a mortgage of $1,100,000. This mortgage
payable is at an interest rate of 8% and is due January 1, 2014.
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On March 16, 1998, the Company paid $621,185 as a dividend of $.13 per
share to shareholders of record February 17, 1998. For the six months
ended March 31, 1998, the Company paid $1,212,767.
For the quarter ended March 31, 1998, the Company received $1,931,803
from the Dividend Reinvestment and Stock Purchase Plan (DRIP). The
total received from the DRIP for the six months ended March 31, 1998
amounted to $3,398,918. For the six months ended March 31, 1998, there
were 535,326 shares issued, resulting in 4,957,173 shares outstanding.
NOTE 5 - NET INCOME PER SHARE
Effective December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share." Diluted net income per share is calculated by dividing net
income by the weighted-average number of common shares outstanding plus
the weighted-average number of net shares that would be issued upon
exercise of stock options pursuant to the treasury stock method.
Options in the amount of 25,909 for the three and six months periods
ended March 31, 1998 are included in the diluted weighted average
shares outstanding. There were no options outstanding for the
corresponding 1997 periods.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the six months ended March 31, 1998 and 1997 for
interest are $916,837 and $768,205, respectively.
During the six months ended March 31, 1998 and 1997, the Company had
dividend reinvestments of $542,540 and $416,929, 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
$1,716,763 for the current six months as compared to $1,113,778 for the
prior period. The Company raised $3,398,918 from the issuance of shares
of common stock through its Dividend Reinvestment and Stock Purchase
Plan (DRIP). Dividends paid for the six months ended March 31, 1998
amounted to $1,212,767.
Securities Available for Sale decreased by $1,389,768 due primarily to
sales of $1,346,277.
Mortgage notes payable decreased by $748,534 during the six months
ended March 31, 1998. This decrease was the result of principal
repayents of $1,848,534 offset by a new mortgage of $1,100,000 relating
to the purchase of the Burr-Ridge, Illinois warehouse facility.
Loans payable decreased by $3,039,562 as a result of payments of
$3,467,999 offset by new borrowings of $428,437.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the quarter ended March 31,
1998 to $1,567,033 as compared to $1,133,621 for the quarter ended
March 31, 1997. Rental and occupancy charges increased for the six
months ended March 31, 1998 to $3,195,044 as compared to $2,383,779 for
the six months ended March 31, 1997. This increase was due primarily
to acquisitions made during fiscal 1997 and 1998 as well as a lease
extension from July 1, 1997 to December 31, 1997 on the South
Brunswick, NJ property at a monthly rental of $162,585. The previous
monthly rental was $54,195.
Interest and other income decreased by $61,609 for the three months
ended March 31, 1998 as compared to the three months ended March 31,
1997 due to a decrease in dividend income. During the first quarter of
1998, $1,346,277 of securities were sold. Interest and other income
increased by $162,176 for the six months ended March 31, 1998 as
compared to the six months ended March 31, 1997. This was due
primarily to the $190,233 gain on sale of Securities Available for
Sale.
Interest expense increased by $93,067 for the three months ended March
31, 1998 as compared to the three months ended March 31, 1997.
Interest expense increased by $148,632 from $768,205 for the six months
ended March 31, 1997 to $916,837 for the six months ended March 31,
1998. This was the result of additional borrowings for the new
acquisitions made during fiscal 1997 and 1998.
Real Estate taxes decreased by $34,954 and $20,935 for the three and
six months ended March 31, 1998, respectively, as compared to the three
and six months ended March 31, 1997. This was the result of the timing
of real estate taxes paid.
Page 8
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Operating expenses increased by $47,280 and $127,169 for the three and
six months ended March 31, 1998, respectively, as compared to the three
and six months ended March 31, 1997. This was primarily due to an
increase in repairs and maintenance and personnel costs at the Monaca,
PA and Monsey, NY properties.
Office and general expenses increased by $49,154 and $58,126 for the
three and six months ended March 31, 1998, respectively as compared to
the three and six months ended March 31, 1997. This was due to an
increase in professional fees.
Depreciation expense increased by $57,837 and $110,517 for the three
and six month periods ended March 31, 1998, respectively, as compared
to the three and six month periods ended March 31, 1997, due to the
real estate acquisitions in fiscal 1997 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities increased during the six
months ended March 31, 1998 to $1,716,763 as compared to $1,113,778
generated during the six months ended March 31, 1997. This was
primarily due to the increase in net income.
The Company owns seventeen properties of which twelve carried mortgage
loans totaling $20,330,704 at March 31, 1998. The Company has been
raising capital through its DRIP and investing in net leased industrial
properties. The Company believes that funds generated from operations,
the DRIP, together with the ability to finance and refinance its
properties will provide sufficient funds to adequately meet its
obligations over the next several years.
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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
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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 thereunto duly authorized.
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
Date: May 4, 1998 By:/s/Eugene W. Landy
Eugene W. Landy
President
Date: May 4, 1998 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, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 164,809
<SECURITIES> 1,860,379
<RECEIVABLES> 569,963
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,725,986
<PP&E> 45,786,335
<DEPRECIATION> 6,033,779
<TOTAL-ASSETS> 44,404,311
<CURRENT-LIABILITIES> 864,854
<BONDS> 20,330,704
0
0
<COMMON> 49,571
<OTHER-SE> 23,032,650
<TOTAL-LIABILITY-AND-EQUITY> 44,404,311
<SALES> 0
<TOTAL-REVENUES> 3,582,719
<CGS> 0
<TOTAL-COSTS> 506,856
<OTHER-EXPENSES> 890,185
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 916,837
<INCOME-PRETAX> 1,268,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,268,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,268,841
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
