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 June 30, 1999
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
June 30, 1999 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
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares or other units outstanding of each of the
issuer's classes of securities as of August 9 , 1999 was 7,262,125.
Page 1
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED JUNE 30, 1999
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 8-10
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to information required
regarding quantitative and qualitative disclosures about market
risk from the end of the preceding year to the date of this
Form 10-Q.
Part II - Other Information 11
Signatures 12
Page 2
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF JUNE 30, 1999 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
6/30/99 9/30/98
Real Estate Investments:
Land $ 9,885,814 $ 7,665,724
Buildings, Improvements and Equipment,
Net of Accumulated Depreciation of
$6,970,547 and $6,659,642,
respectively 48,174,095 42,952,713
Mortgage Loans Receivable 125,135 153,663
__________ __________
Total Real Estate Investments 58,185,044 50,772,100
__________ __________
Cash and Cash Equivalents 139,699 147,976
Securities Available for Sale at Fair
Value 12,318,431 2,050,500
Interest and Other Receivables 505,962 597,723
Prepaid Expenses 84,508 130,911
Lease Costs, Net of Accumulated
Amortization 139,839 196,320
Investment in Hollister '97, L.L.C. 1,010,000 1,010,000
Other Assets 714,879 677,315
__________ __________
TOTAL ASSETS $73,098,362 $55,582,845
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $31,598,577 $25,949,782
Loans Payable 4,740,324 1,335,382
Deferred Gain-Installment Sale 90,840 108,840
Other Liabilities 812,655 784,019
__________ __________
Total Liabilities 37,242,396 28,178,023
__________ __________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value
8,000,000 Shares Authorized, 7,179,745
and 5,703,544 Shares Issued and
Outstanding, respectively 71,797 57,035
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No Shares
Issued or Outstanding -0- -0-
Additional Paid-In Capital 35,185,578 27,375,711
Accumulated Other Comprehensive
Gain (Loss) 302,758 (27,924)
Undistributed Income 295,833 -0-
__________ __________
Total Shareholders' Equity 35,855,966 27,404,822
__________ __________
TOTAL LIAIBILITES AND SHAREHOLDERS' EQUITY $73,098,362 $55,582,845
========== ==========
</TABLE>
Unaudited
See Accompanying Notes to Financial Statements
Page 3
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THREE AND NINE MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
6/30/99 6/30/98 6/30/99 6/30/98
<S> <C> <C> <C> <C>
INCOME:
Rental and Occupancy Charges $2,019,749 $1,528,137 $5,957,049 $4,723,181
Interest and Other Income 241,567 72,717 479,608 448,392
_________ _________ _________ _________
Total Income 2,261,316 1,600,854 6,436,657 5,171,573
_________ _________ _________ _________
EXPENSES:
Interest Expense 687,773 407,053 1,856,840 1,323,890
Real Estate Taxes 153,304 67,407 580,578 256,672
Operating Expenses 179,210 71,496 520,309 389,087
Office and General Expenses 197,868 177,211 538,217 516,138
Depreciation 373,284 278,271 1,163,100 829,529
_________ _________ _________ _________
Total Expenses 1,591,439 1,001,438 4,659,044 3,315,316
_________ _________ _________ _________
INCOME BEFORE GAINS 669,877 599,416 1,777,613 1,856,257
Gain on Sale of Assets -
Investment Property 6,000 6,000 1,258,325 18,000
_________ _________ _________ _________
NET INCOME $ 675,877 $ 605,416 $3,035,938 $1,874,257
========= ========= ========= =========
NET INCOME PER SHARE
Basic and Diluted $ .11 $ .12 $ .47 $ .39
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 5,917,380 5,146,878 6,401,371 4,821,577
========= ========= ========= =========
Diluted 5,917,380 5,182,053 6,401,371 4,846,395
========= ========= ========= =========
</TABLE>
Unaudited
See Accompanying Notes to Financial Statements
Page 4
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $3,035,938 $1,874,257
Noncash Items Included in Net Income:
Depreciation 1,163,100 829,529
Amortization 80,789 59,287
Gain on Sales of Assets-Investment
Property (1,258,325) (18,000)
Gain on Sales of Securities Available
for Sale -0- (212,636)
Changes In:
Interest and Other Receivables 91,761 (30,750)
Prepaid Expenses 46,403 67,194
Other Assets and Lease Costs 50,621 (282,153)
Other Liabilities 28,636 422,528
_________ _________
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,238,923 2,709,256
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 28,528 30,144
Additions to Land, Buildings,
Improvements and Equipment (7,364,247) (5,750,389)
Purchase of Securities Available for
Sale (9,937,240) (465,766)
Proceeds from Sale of Securities
Available for Sale -0- 1,547,647
_________ _________
NET CASH USED BY INVESTING ACTIVITIES (17,272,968) (4,638,364)
__________ _________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 9,939,942 3,021,501
Principal Payments on Loans (6,535,000 (5,853,946)
Proceeds from Mortgages 6,850,000 3,900,000
Principal Payments on Mortgages (1,201,205) (3,501,254)
Financing Costs on Debt (112,493) -0-
Proceeds from Issuance of Class A Common
Stock 6,823,159 5,395,069
Dividends Paid (1,738,635) (1,090,739)
__________ _________
NET CASH PROVIDED BY FINANCING
ACTIVITIES 14,025,768 1,870,631
__________ _________
NET DECREASE IN CASH AND CASH
EQUIVALENTS (8,277) (58,477)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 147,976 269,291
__________ _________
END OF PERIOD $ 139,699 $ 210,814
=========== =========
</TABLE>
Unaudited
See Accompanying Notes to Financial Statements
Page 5
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICY
The interim financial statements furnished herein reflect
all adjustments which were, in the opinion of management,
necessary to present fairly the financial position, results of
operations and cash flows at June 30,1999 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, 1998 have been
omitted.
NOTE 2 - NET INCOME 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
35,175 and 24,818 for the three and nine months ended June 30,
1998, respectively, are included in the diluted weighted average
shares outstanding. Options for 320,000 shares were excluded for
the three and nine months ended June 30, 1999 since they were
anti-dilutive.
NOTE 3 - COMPREHENSIVE INCOME
Total comprehensive income for the three and nine months
ended June 30, 1999 and 1998 is as follows:
June 30, 1999 June 30, 1998
Three Months $ 1,421,660 $ 551,623
Nine Months 3,366,620 1,558,405
NOTE 4 - REAL ESTATE INVESTMENTS
On December 11, 1998, the Company purchased an 88,140
square foot warehouse facility in Omaha, Nebraska from Jones
Development Company, LLC, an unrelated entity. This warehouse
facility is 100% net leased to Federal Express Corporation.
The purchase price, including closing costs, was approximately
$5,598,000. The Company paid approximately $600,000 in cash,
used approximately $900,000 of its revolving line of credit
with Summit Bank and obtained a mortgage of $4,100,000. This
mortgage payable is at an interest rate of 7.15% and is due
January 1, 2014.
Page 6
<PAGE>
On March 16, 1999 The Company sold the warehouse facility
located at 40 Robert Pitt Drive, Monsey, New York. The net
proceeds from this sale amounted to $2,246,253 and resulted in a
gain of $1,234,325. These funds were placed into an escrow
account. This sale was part of a tax free exchange (See Note 7).
On April 6, 1999, MREIC purchased a 49,900 square foot
warehouse facility in Albemarle County, Virginia for
approximately $3,900,000. This warehouse is 100% net-leased to
Federal Express Corporation. MREIC used $1,360,000 of its credit
line with Summit Bank. This line is at an interest rate of
prime. On June 1, 1999, the Company secured a $2,750,000 mortgage
at an interest rate of 6.90% which is due July 1, 2014
NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On June 15, 1999, the Company paid $1,012,376 as a
dividend of $.145 per share to shareholders of record May 17,
1999. The total dividends paid for the nine months ended June
30, 1999 amounted to $2,740,105.
For the nine months ended June 30, 1999, the Company
received $7,824,629 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 1,476,201 shares issued,
resulting in 7,179,745 shares outstanding.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the nine months ended June 30, 1999 and
1998 for interest was $1,856,840 and $1,323,890, respectively.
During the nine months ended June 30, 1999 and 1998, the
Company had dividend reinvestments of $1,001,470 and $824,783,
respectively, which required no cash transfers.
During the nine months ended June 30, 1999, proceeds from
the sale of investment property totaling $2,246,253 were directly
paid into an escrow account and required no cash transfers by the
Company. These proceeds were used to purchase investment
property.
NOTE 7 - SUBSEQUENT EVENTS
On July 28, 1999, the Company 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. The Company 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.
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 $3,238,923 for the current nine months as
compared to $2,709,256 for the prior period. The Company
raised $7,824,629 from the issuance of shares of common stock
through its Dividend Reinvestment and Stock Purchase Plan
(DRIP). Dividends paid for the nine months ended June 30, 1999
amounted to $2,740,105.
Total real estate investments increased by $7,412,944,
primarily due to the purchase of the warehouse facilities in
Omaha, Nebraska and Albemarle County Virginia, for approximately
$9,600,000, offset by the sale of the warehouse in Monsey, New
York.
Securities available for sale increased by $10,267,931
primarily as a result of additional purchases.
Mortgage notes payable increased by $5,648,795 during
the nine months ended June 30, 1999. This increase was the
result of new mortgages of $6,850,000 relating to the purchases
of the warehouse facilities, offset by principal repayments of
$1,201,205.
Loans payable increased by $3,404,942 during the nine month
ended June 30, 1999. This increase was primarily the result of
additional take-downs of the Company's revolving credit line
offset by repayments.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the three
months ended June 30, 1999 to $2,019,749 as compared to
$1,528,137 for the three months ended June 30, 1998. Rental
and occupancy charges increased for the nine months ended June
30, 1999 to $5,957,049 as compared to $4,723,181 for the nine
months ended June 30, 1998. These increases were due primarily
to acquisitions made during fiscal 1998 and 1999.
Interest and other income increased by $168,850 for the
three months ended June 30, 1999 as compared to the three months
ended June 30, 1998. This was due primarily to the increase in
securities available for sale. Interest and other income
increased for the nine months ended June 30, 1999 by $31,216 as
compared to the nine months ended June 30, 1998. This was due
primarily to the increase in securities available for sale offset
by a gain on sale of securities available for sale of $190,233
for the prior period.
Interest expense increased by $280,720 for the three months
ended June 30, 1999 as compared to the three months ended June
30, 1998. Interest expense increased by $532,950
for the nine months ended June 30, 1999 compared to the nine
months ended June 30, 1998. This was the result of additional
borrowings for the new acquisitions made during fiscal 1998 and
1999.
Page 8
<PAGE>
Real estate taxes increased by $85,897 for the three months
ended June 30, 1999 as compared to the three months ended June
30, 1998. Real estate taxes increased by $323,906 for the nine
months ended June 30, 1999 as compared to the nine months ended
June 30, 1998. This was due to the new acquisitions made during
fiscal 1998 and 1999 as well as the reassessment of a warehouse
facility in Illinois. Since the tenant leases provide for the
payment of real estate taxes by the tenants, there was a
corresponding increase in occupancy charges.
Depreciation expense increased by $95,013 for the three
months ended June 30, 1999 as compared to the three months ended
June 30, 1998. Depreciation expense increased by $333,571 for
the nine months ended June 30, 1999 as compared to the nine
months ended June 30, 1998. This was due to the real estate
acquisitions in fiscal 1998 and 1999.
Gain On Sales Of Assets - Investment Property increased by
$1,240,325 for the nine months ended June 30, 1999 as compared to
the nine months ended June 30, 1998. This was primarily due to
the gain on sale of the warehouse facility in Monsey, New York.
Funds from operations (FFO), defined as net income,
excluding gains (or losses) from sales of depreciable assets,
plus depreciation increased from $2,685,786 for the nine months
ended June 30, 1998 to $2,940,713 for the nine months ended
June 30, 1999. FFO does not replace net income (determined in
accordance with generally accepted accounting principles) as a
measure of performance or net cash flows as a measure of
liquidity. FFO should be considered as a supplemental measure
of operating performance used by real estate investment trusts.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities amounted to
$3,238,923 and $2,709,256 during the nine months ended June 30,
1999 and 1998, respectively
The Company owns twenty properties of which fifteen carried
mortgage loans totaling $31,598,577 at June 30, 1999. 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.
YEAR 2000
The Company is currently in the process of implementing its
Year 2000 compliance plan. The Company has assessed all hardware
and software for Year 2000 readiness. The Company has developed
and is currently implementing renovation plans, including
hardware replacement and software upgrades, to ensure all
hardware and software is Year 2000 compliant. The Company has no
significant suppliers or vendors. The Company is in the process
of assessing the Year 2000 readiness of its major tenants.
Renovation and testing are scheduled to be completed during the
third quarter of 1999.
Page 9
<PAGE>
The Company has developed contingency plans for each of its
critical systems which includes moving many of the Company's
operations to a manual system. There can be no assurances given
that the Year 2000 compliance plan will be completed successfully
by the Year 2000, in which event the Company can incur additional
costs to implement its contingency plans. Management does not
anticipate that such costs would be significant to the Company.
The total costs associated with the Company's Year 2000 plan are
anticipated to be less than $20,000.
Successful and timely completion of the Year 2000 plan is
based on management's best estimates derived from various
assumptions of future events, which are inherently uncertain,
including the effectiveness of remediation and validation plans,
and all vendors and suppliers readiness.
Page 10
<PAGE>
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 -
The annual meeting of shareholders was held on April
22, 1999 to elect a Board of Directors for the ensuing
year and to approve the selection of independent
auditors. Proxies for the meeting were solicited
pursuant to Regulation 14 under the Securities and
Exchange Act of 1934.
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 11
<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: August 13, 1999 By: /s/Eugene W. Landy
Eugene W. Landy
President
Date: August 13, 1999 By: /s/Anna T. Chew
Anna T. Chew
Controller
Page 12
<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 JUNE 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 139,699
<SECURITIES> 12,318,431
<RECEIVABLES> 631,097
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,173,735
<PP&E> 65,030,456
<DEPRECIATION> 6,970,547
<TOTAL-ASSETS> 73,098,362
<CURRENT-LIABILITIES> 5,552,979
<BONDS> 31,598,577
0
0
<COMMON> 71,797
<OTHER-SE> 35,784,169
<TOTAL-LIABILITY-AND-EQUITY> 73,098,362
<SALES> 0
<TOTAL-REVENUES> 7,694,982
<CGS> 0
<TOTAL-COSTS> 1,100,887
<OTHER-EXPENSES> 1,701,317
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,856,840
<INCOME-PRETAX> 3,035,938
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,035,938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,035,938
<EPS-BASIC> .47
<EPS-DILUTED> .47
</TABLE>
