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) July 28, 1999
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 July 28, 1999, Monmouth Real Estate Investment Corporation
(Registrant) purchased a 95,883 square foot warehouse facility in
Jacksonville, Florida from Regional Development Group, Inc., an unrelated
entity. This warehouse facility is 100% net leased to Federal Express
Corporation. The purchase price was approximately $5,900,000.
Monmouth Real Estate Investment Corporation paid approximately
$200,000 in cash, used approximately $1,600,000 of its revolving line of
credit with Summit Bank and assumed a mortgage of approximately
$4,100,000. This mortgage payable is at an interest rate of 6.92% and is
due December 1, 2016. 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 95,883
square foot warehouse facility located at 3736 Salisbury Road, Jacksonville,
Florida.
* Occupancy Rate and Number of Tenants - The commercial rental
property acquired was constructed in 1998. Commencing May 30, 1998, the
property was 100% occupied under a 10-year net lease agreement with Federal
Express Corporation. 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 - Federal Express Corporation
uses this property as a distribution facility. Registrant believes that
Federal Express Corporation will continue to use this property as such.
* Principal Provisions of Lease - The following are the
principal provisions of the lease:
Term Monthly Rent
5/31/98 - 5/31/03 $ 42,167
6/01/03 - 5/31/08 $ 45,409
At the end of the lease term, the tenant has two (5) year options to
renew at the greater of 90% of the previous year's rent or the prevailing
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 80% 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 $528,000 based upon
amortization of the total rental payments for scheduled rent over
the remaining lease term.
Interest Expense - Increase of $407,000 based upon a mortgage of
$4,100,000 at 6.92% interest and total monthly principal and
interest payments of $35,490, and a revolving line of credit balance
increase of $1,600,000 at prime (currently 8%).
Depreciation Expense - Increase of $121,000 based upon 80% of the
purchase price being attributed to building and improvements, and
straight-line depreciation over a 39 year life.
Net Income - No change (rental and occupancy charges less interest
expense and depreciation expense).
The effect of cash made available by operations will be an
increase of $121,000 (net income plus depreciation).
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ADJUSTMENTS TO THE BALANCE SHEET AT DATE OF PURCHASE
Cash and Cash Equivalents - Decrease of $200,000, the amount of
cash used for the purchase.
Land and Buildings, Improvements and Equipment - Increase of
$5,900,000, based on the purchase price.
Notes Payable - Increase of $1,600,000, the amount used on the
revolving line of credit.
Mortgage Notes Payable - Increase of $4,100,000, 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 August 9, 1999
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