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) August 26, 1998
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 August 26, 1998, Monmouth Real Estate
Investment Corporation (Registrant) purchased a 98,200
square foot warehouse facility in Liberty, Missouri from The
Vail Group, LLC, an unrelated entity. This warehouse
facility is 100% net leased to Johnson Controls, Inc. The
purchase price was approximately $7,200,000. Monmouth Real
Estate Investment Corporation paid approximately $900,000 in
cash, used approximately $1,500,000 of its revolving line of
credit with Summit Bank and obtained a mortgage of
approximately $4,800,000. This mortgage payable is at an
interest rate of 7.07% and is due March 1, 2013. The
property acquired is 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 98,200 square foot warehouse facility
located at 2901 Heartland Drive in the Heartland Meadows
Industrial Park, Liberty, Missouri.
* Occupancy Rate and Number of Tenants - The
commercial rental property acquired was
constructed in 1997. Commencing December 18, 1997, the
property was 100% occupied under a 10-year net lease
agreement with Johnson Controls, 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 - Johnson Controls,
Inc. uses this property as a distribution center.
Registrant believes that Johnson Controls, 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
9/98-8/03 $64,478
9/03-12/07 51,964
At the end of the lease term, the tenant has two (5)
year options to renew, the first option at a rent equal to
$62,357, the second option at market rent.
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 90% 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 $705,000
based upon amortization of total rental payments
for scheduled rent over the remaining lease term
for scheduled rent.
Interest Expense - Increase of $460,000 based upon a
mortgage of $4,800,000 at 7.07% interest and total
monthly principal and interest payments of $44,175, and
a revolving line of credit balance increase of $1,500,000
at prime (currently 8.5%).
Depreciation Expense - Increase of $166,000 based upon
90% of the purchase price being attributed to building
and improvements, and straight-line depreciation over a
39 year life.
Net Income - Increase of $79,000 (rental and occupancy
charges less interest expense and depreciation expense).
The effect of cash made available by operations will be an
increase of $245,000 (net income plus depreciation).
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ADJUSTMENTS TO THE BALANCE SHEET AT DATE OF PURCHASE
Cash and Cash Equivalents - Decrease of $900,000, the
amount ofcash used for the purchase.
Land and Buildings, Improvements and Equipment -
Increase of $7,200,000, based on the purchase price.
Notes Payable - Increase of $1,500,000, the amount
used on the revolving line of credit.
Mortgage Notes Payable - Increase of $4,800,000, 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/Anna T. Chew
ANNA T. CHEW
Controller
Date September 8, 1998
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