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 December 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
December 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:(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 January 30, 1998 was
4,657,588.
Page 1
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED DECEMBER 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 DECEMBER 31, 1997 AND SEPTEMBER 30, 1997
ASSETS
12/31/97 9/30/97
<S> <C> <C>
Real Estate Investments:
Land $ 6,411,724 $ 6,141,724
Buildings, Improvements and
Equipment, Net of Accumulated
Depreciation of $5,755,510
and $5,482,527, respectively 33,606,956 32,606,220
Mortgage Loans Receivable 184,490 195,583
___________ ___________
Total Real Estate Investments 40,203,170 38,943,527
Cash and Cash Equivalents 233,945 269,291
Securities Available for Sale at
Fair Value 1,650,418 3,250,147
Interest and Other Receivables 621,819 542,177
Prepaid Expenses 32,190 125,498
Lease Costs - Net of Accumulated
Amortization 120,003 100,602
Investment in Hollister '97, LLC 1,010,000 1,010,000
Other Assets 445,560 701,481
___________ ___________
TOTAL ASSETS $44,317,105 $44,942,723
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $21,864,343 $21,079,238
Loans Payable 428,948 3,190,510
Deferred Gain - Installment Sale 132,532 138,532
Other Liabilities 678,357 645,155
___________ ___________
Total Liabilities 23,104,180 25,053,435
___________ ___________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
8,000,000 Shares Authorized,
4,657,588 and 4,421,847 Shares
Issued and Outstanding, respectively 46,576 44,218
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No shares
Issued or Outstanding -0- -0-
Additional Paid-in Capital 20,914,894 19,450,137
Unrealized Holding Gain on
Securities Available for Sale 141,481 394,933
Undistributed Income 109,974 -0-
___________ ___________
Total Shareholders' Equity 21,212,925 19,889,288
___________ ___________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $44,317,105 $44,942,723
=========== ===========
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 MONTHS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
<S> <C> <C>
INCOME:
Rental and Occupancy
Charges $1,628,011 $1,250,158
Interest and Other
Income 271,558 47,773
__________ __________
TOTAL INCOME 1,899,569 1,297,931
__________ __________
EXPENSES:
Interest Expense 464,466 408,901
Real Estate Taxes 158,988 144,969
Operating Expenses 163,356 83,467
Office and General
Expenses 144,216 135,244
Depreciation 272,987 220,307
__________ __________
TOTAL EXPENSES 1,204,013 992,888
__________ __________
INCOME BEFORE GAINS 695,556 305,043
Gain on Sale of
Assets-Investment
Property 6,000 6,000
__________ __________
NET INCOME $ 701,556 $ 311,043
========== ==========
PER SHARE INFORMATION
Weighted Average Shares
Outstanding -
Basic 4,532,751 3,856,890
========== ==========
Diluted 4,537,163 3,856,890
========== ==========
Net Income Per Share-
Basic and Diluted $ 0.15 $ 0.08
========== ==========
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 THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 701,556 $ 311,043
Noncash Items Included in Net Income:
Depreciation 272,987 220,307
Amortization 60,001 43,637
Gain on Sales of Assets &
Investment Property (6,000) (6,000)
Gain on Sales of Securities
Available for Sale (190,233) -0-
Changes In:
Interest and Other Receivables (79,642) (19,210)
Prepaid Expenses 93,308 62,535
Other Assets and Lease Costs 191,519 (126,343)
Other Liabilities 33,202 89,320
__________ ___________
NET CASH PROVIDED BY OPERATING
ACTIVITIES 1,076,698 575,289
__________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 11,093 12,153
Additions to Land, Buildings,
Improvements and Equipment (1,543,723) (35,700)
Purchase of Securities
Available for Sale -0- (2,619,926)
Proceeds from Sale of
Securities Available for Sale 1,536,510 -0-
__________ ___________
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 3,880 (2,643,473)
__________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 278,437 5,000,000
Principal Payments on Loans (3,039,999) (1,750,000)
Proceeds from Mortgages 1,100,000 -0-
Principal Payments of Mortgages (314,895) (248,888)
Financing Costs on Debts (15,000) (27,500)
Proceeds from Issuance of Class A
Common Stock 1,194,121 460,683
Dividends Paid (318,588) (277,930)
___________ ___________
NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES (1,115,924) 3,156,365
___________ ___________
Net (Decrease) Increase in Cash
and Cash Equivalents (35,346) 1,088,181
Cash and Cash Equivalents at Beginning
of Period 269,291 244,394
___________ ___________
Cash and Cash Equivalents at End
of Period $ 233,945 $ 1,332,575
=========== ===========
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
December 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,
1997 have been omitted.
NOTE 2 - SECURITIES AVAILABLE FOR SALE
During the three months ended December 31, 1997, 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 at fair value at December 31, 1997 amounted to $1,650,418
which includes gross unrealized holding gains of $141,481.
NOTE 3 - ACQUISITIONS
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. The
property acquired is commercial rental property and will continue to be
used as such.
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On December 15, 1997, the Company paid $591,582 as a dividend of $.13
per share to shareholders of record November 17, 1997.
For the quarter ended December 31, 1997, the Company received
$1,467,115 from the Dividend Reinvestment and Stock Purchase Plan
(DRIP). There were 235,741 shares issued, resulting in 4,657,588 shares
outstanding.
Page 6
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NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the three months ended December 31, 1997 and 1996 for
interest was $464,466 and $408,901, respectively.
During the three months ended December 31, 1997 and 1996, the Company
had dividend reinvestments of $272,994 and $206,143, respectively,
which required no cash transfers.
NOTE 6 - NET INCOME PER SHARE
Effective December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share." Basic net income per share is calculated by dividing net
income by the weighted-average number of common shares outstanding
during the period. 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 4,412 for 1997 are included in the
diluted weighted average shares outstanding.
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
$1,076,698 for the current three months as compared to $575,289 for the
prior period. The Company raised $1,467,115 from the issuance of shares
of common stock through a Dividend Reinvestment and Stock Purchase Plan
(DRIP). Dividends paid for the three months ended December 31, 1997
amounted to $591,582.
Securities Available for Sale decreased by $1,599,729 due primarily to
sales of 1,346,277.
Mortgage notes payable increased by $785,105 during the three months
ended December 31, 1997 due to a new mortgage of $1,100,000 offset by
principal repayments of $314,895.
Loans payable decreased by $2,761,562 as a result of principal
repayments of $3,039,999 offset by an additional borrowing of $278,437
used for the new acquisition.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the quarter ended December
31, 1997 to $1,682,011 as compared to $1,250,158 for the quarter ended
December 31, 1996. This increase was due primarily to 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. The increase in rental and occupancy
charges was also due to acquisitions made in fiscal 1997 and 1998.
Interest and other income increased by $223,785 and for the three
months ended December 31, 1997 as compared to the three months ended
December 31, 1996. This was due primarily to the $190,233 gain on sale
of Securities Available for Sale.
Interest expense increased by $55,565 for the three months ended
December 31, 1997 as compared to the three months ended December 31,
1996. This was the result of the additional borrowings for the new
acquisitions made during fiscal 1997 and 1998.
Real estate taxes increased by $14,019 for the three months ended
December 31, 1997 as compared to the three months ended December 31,
1996. This was a result of new acquisitions.
Page 8
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Operating expenses increased by $79,889 for the three months ended
December 31, 1997 as compared to the three months ended December 31,
1996. This was primarily due to an increase in repairs and maintenance
and personnel costs at our Monaca, PA and Monsey, NY properties.
Office and general expenses remained relatively stable for the three
months ended December 31, 1997, as compared to the three months ended
December 31, 1996.
Depreciation expense increased by $52,680 for the three months ended
December 31, 1997, as compared to the three months ended December 31,
1996, due to the real estate acquisitions in fiscal 1997 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities increased during the three
months ended December 31, 1997 to $1,076,698 as compared to $575,289
generated during the three months ended December 31, 1996. This was
primarily due to the increase in net income. Additionally, there was a
decrease in other assets. Other assets at September 30, 1997 included
approximately $130,000 of deposits relating to the new acquisition.
The Company owns seventeen properties of which thirteen carried
mortgage loans totaling $21,864,343 at December 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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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: February 9, 1997 By: /s/Eugene W. Landy
EUGENE W. LANDY,
President
Date: February 9, 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 DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 233,945
<SECURITIES> 1,650,418
<RECEIVABLES> 621,819
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,538,372
<PP&E> 45,774,190
<DEPRECIATION> 5,755,510
<TOTAL-ASSETS> 44,317,105
<CURRENT-LIABILITIES> 1,107,305
<BONDS> 21,864,343
0
0
<COMMON> 46,576
<OTHER-SE> 21,166,349
<TOTAL-LIABILITY-AND-EQUITY> 44,317,105
<SALES> 0
<TOTAL-REVENUES> 1,905,569
<CGS> 0
<TOTAL-COSTS> 322,344
<OTHER-EXPENSES> 417,203
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 464,466
<INCOME-PRETAX> 701,556
<INCOME-TAX> 0
<INCOME-CONTINUING> 701,556
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 701,556
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
