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, 2000
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, 2000 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.)
3499 Route 9 North, Suite 3-C, Freehold, NJ 07728
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (732) 577-9997
125 Wyckoff Road, Eatontown, New Jersey 07724
-----------------------------------------------------------------
(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 July 15, 2000 was 8,352,993.
Page 1
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED JUNE 30, 2000
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>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF JUNE 30, 2000 AND SEPTEMBER 30, 1999
6/30/00 9/30/99
<S> <C> <C>
ASSETS
Real Estate Investments:
Land $11,745,814 $11,050,814
Buildings, Improvements and Equipment,
Net of Accumulated Depreciation of
$8,669,241 and $7,406,901,respectively 54,588,973 52,421,455
Mortgage Loans Receivable -0- 125,135
__________ __________
Total Real Estate Investments 66,334,787 63,597,404
Cash and Cash Equivalents 153,403 1,242,457
Securities Available for Sale at Fair Value 15,652,574 12,324,709
Interest and Other Receivables 734,953 558,348
Prepaid Expenses 60,296 64,001
Lease Costs, Net of Accumulated Amortization 89,253 120,803
Investment in Hollister '97, L.L.C. 925,399 925,399
Other Assets 734,638 591,837
__________ __________
TOTAL ASSETS $84,685,303 $79,424,958
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $36,673,137 $35,237,759
Loans Payable 8,379,678 6,947,038
Deferred Gain-Installment Sale -0- 88,631
Other Liabilities 895,432 874,853
__________ __________
Total Liabilities 45,948,247 43,148,281
---------- ----------
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,16,000,000
Shares Authorized, 8,315,793 and 7,509,649
Shares Issued and Outstanding,respetively 83,158 75,096
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No Shares Issued
or Outstanding -0- -0-
Additional Paid-In Capital 40,029,988 36,924,039
Accumulated Other Comprehensive Loss (1,376,090) (722,458)
Undistributed Income -0- -0-
__________ __________
Total Shareholders' Equity 38,737,056 36,276,677
__________ __________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $84,685,303 $79,424,958
========== ==========
</TABLE>
Unaudited
See Accompanying Notes to Financial Statements
Page 3
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2000 AND 1999
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
6/30/00 6/30/99 6/30/00 6/30/99
(S) <C> <C> <C> <C>
INCOME:
Rental and Occupancy Charges $2,100,008 $2,019,749 $6,467,512 $5,957,049
Interest and Other Income 468,208 241,567 1,343,107 479,608
--------- --------- --------- ---------
Total Income 2,568,216 2,261,316 7,810,619 6,436,657
--------- --------- --------- ---------
EXPENSES:
Interest Expense 846,981 687,773 2,450,871 1,856,840
Real Estate Taxes 23,643 153,304 386,946 580,578
Operating Expenses 124,872 179,210 459,918 520,309
Office and General 258,804 197,868 595,259 538,217
Depreciation 430,980 373,284 1,262,340 1,163,100
--------- --------- --------- ---------
Total Expenses 1,685,280 1,591,439 5,155,334 4,659,044
--------- --------- --------- ---------
INCOME BEFORE GAINS 882,936 669,877 2,655,285 1,777,613
Gain on Sale of Assets -
Investment Property -0- 6,000 88,631 1,258,325
--------- --------- --------- ---------
NET INCOME $ 882,936 $ 675,877 $2,743,916 $3,035,938
========= ========= ========= =========
NET INCOME PER SHARE
Basic and Diluted $ .11 $ .10 $ .35 $ .47
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic and Diluted 8,223,967 6,792,206 7,939,734 6,401,371
========= ========= ========= =========
</TABLE>
Unaudited
See Accompanying Notes to Financial Statements
Page 4
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30,2000 AND 1999
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $2,743,916 $3,035,938
Noncash Items Included in Net Income:
Depreciation 1,262,340 1,163,100
Amortization 101,742 80,789
Gain on Sales of Assets-Investment
Property (88,631 (1,258,325)
Gain on Sales of Securities Available
for Sale (57,342) -0-
Changes In:
Interest and Other Receivables ( 176,605) 91,761
Prepaid Expenses 3,705 46,403
Other Assets and Lease Costs (212,993) 50,621
Other Liabilities 20,579 28,6376
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,596,711 3,238,923
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 125,135 28,528
Additions to Land, Buildings,
Improvements and Equipment (4,124,858) (7,364,247)
Purchase of Securities Available for
Sale (4,197,039) (9,937,249)
Proceeds from Sale of Securities
Available for Sale 272,884 -0-
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (7,923,878) (17,272,968)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 5,118,288 9,939,942
Principal Payments on Loans (3,685,648) (6,535,000)
Proceeds from Mortgages 3,000,000 6,850,000
Principal Payments on Mortgages (1,564,622) (1,201,205)
Financing Costs on Debt -0- (112,493)
Proceeds from Issuance of Class A Common
Stock 2,655,638 6,823,159
Dividends Paid (2,285,543) (1,738,635)
--------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 3,238,113 14,025,768
--------- ----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(1,089,054) (8,277)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 1,242,457 147,976
--------- ---------
END OF PERIOD $ 153,403 $ 139,699
========= =========
</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, 2000 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, 1999 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. There were no options
included in the diluted weighted average shares outstanding for
the three and nine months ended June 30, 2000 and 1999. Options
for 320,000 shares were excluded for the three and nine months
ended June 30, 2000 and 1999 since they were anti-dilutive.
NOTE 3 - COMPREHENSIVE INCOME (LOSS)
Total comprehensive income, including unrealized gains
(loss) on securities available for sale, for the three and nine
months ended June 30, 2000 and 1999 is as follows:
June 30, 2000 June 30, 1999
Three Months $1,830,501 $1,421,660
Nine months 2,090,284 3,366,620
NOTE 4 - REAL ESTATE INVESTMENTS
On November 5, 1999, the mortgage loan receivable on the
installment sale of the Bonim Associates property was fully
repaid. This resulted in the recognition of the remaining
deferred gain of $88,631.
On February 18, 2000, the Company purchased an 85,500 square
foot warehouse facility in Cincinnati, Ohio from Scannell
Properties #18, LLC, and unrelated entity. This warehouse
facility is 100% net leased to Federal Express Ground. The
purchase price, including closing costs, was approximately
$4,037,000. The Company paid approximately $149,000 in cash,
used approximately $888,000 of its Revolving Line of Credit with
Summit Bank and obtained a mortgage of $3,000,000. This mortgage
payable is at an interest rate of 8.25% and is due March 31,
2015.
Page 6
<PAGE>
NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On June 15, 2000, the Company paid $1,189,695 as a dividend
of $.145 per share to shareholders of record May 15, 2000.
Total dividends paid for the nine months ended June 30, 2000
amounted to $3,463,627.
For the nine months ended June 30, 2000, the Company
received $3,833,722 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 806,144 shares issued,
resulting in 8,315,793 shares outstanding.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the nine months ended June 30, 2000 and
1999 for interest was $2,450,871 and $1,856,840, respectively.
During the nine months ended June 30, 2000 and 1999, the
Company had dividend reinvestments of $1,178,084 and
$1,001,470, 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.
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board
(FASB) issued Interpretation No. 44 "Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of
APB Opinion No. 25". The interpretation clarifies certain issues
with respect to the application of Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees" (APB
Opinion No. 25). The interpretation results in a number of
changes in the application of APB Opinion No. 25 including, the
accounting for modifications to equity awards as well as
extending APB Opinion No. 25 accounting treatment to options
granted to outside directors for their services as directors. The
provisions of the interpretation were effective July 1, 2000 and
apply prospectively, except for certain modifications to equity
awards made after December 15, 1998. The initial adoption of the
interpretation did not have a significant impact on the Company's
financial statements.
Page 7
<PAGE>
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 by operating
activities of $3,596,711 for the current nine months as
compared to $3,238,923 for the prior period. The Company
raised $3,833,722 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, 2000
amounted to $3,463,627.
Securities available for sale increased by $3,327,865
primarily as a result of additional purchases of $4,197,039
partially offset by sales of $215,542 and an increase in the
unrealized loss of $653,632. Management believes that this
decline in value is temporary in nature. Net unrealized losses
on securities available for sale has declined by $947,565 or 41%
from $2,323,655 at March 31, 2000.
Mortgage notes payable increased by $1,435,378 during
the nine months ended June 30, 2000. This increase was primarily
due to the additional mortgage of $3,000,000 on the new
acquisition partially offset by principal repayments of
$1,564,622.
Loans payable increased by $1,432,640 during the nine months
ended June 30, 2000. This increase was the result of additional
take-downs in the amount of $5,118,288 of the Company's revolving
credit line partially offset by repayments of $3,685,648.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the three
months ended June 30, 2000 to $2,100,008 as compared to
$2,019,749 for the three months ended June 30, 2000. Rental
and Occupancy charges increased for the nine months ended June
30, 1999 to $6,467,512 as compared to $5,957,049 for the nine
months ended June 30, 2000. These increases were a result of the
new acquisitions made in 1999 and 2000 and additional occupancy
charges due to the reassessment of a warehouse facility in
Illinois partially offset by the sale of the Monsey property.
Investment and Other Income increased by $226,641 for the
three months ended June 30, 2000 as compared to the three months
ended June 30, 1999. Investment and Other Income increased by
$863,499 for the nine months ended June 30, 2000 as compared to
the nine months ended June 30, 1999. This was due primarily to
an increase in investment income as the result of the increase in
securities available for sale.
Page 8
<PAGE>
Interest expense increased by $159,208 for the three months
ended June 30, 2000 as compared to the three months ended June
30, 1999. Interest expense increased by $594,031 for the nine
months ended June 30, 2000 as compared to the nine months ended
June 30, 1999. This was primarily the result of additional
borrowings for the new acquisitions and purchases of securities
available for sale made during fiscal 2000 and 1999.
Real estate taxes decreased by $129,661 for the three months
ended June 30, 2000 as compared to the three months ended June
30, 1999. Real estate taxes decreased by $193,632 for the nine
months ended June 30, 2000 as compared to June 30, 1999. This
was due primarily to the sale of the Monsey property as well as
the retroactive reassessment of a warehouse facility in Illinois
during the fiscal 1999. Since the tenantleases provide
for the payment of real estate taxes by the tenants, there
was a corresponding increase in occupancy charges.
Operating expenses decreased by $54,338 for the three months
ended June 30, 2000 as compared to the three months ended June
30, 1999. Operating expenses decreased by $60,391 for the nine
months ended June 30, 2000 as compared to the nine months ended
June 30, 1999. These decreases were due primarily to the sale of
the Monsey property.
Office and General Expenses increased by $60,936 for the
three months ended June 30,
2000 as compared to the three months ended June 30, 1999. Office
and General Expenses increased by $57,042 for the nine months
ended June 30, 2000 as compared to the nine months ended June 30,
1999. These increases were due primarily to an increase in
professional fees.
Depreciation expense increased by $57,696 for the three
months ended June 30, 2000 as compared to the three months ended
June 30, 1999. Depreciation expense increased by $99,240 for the
nine months ended June 30, 2000 as compared to the nine months
ended June 30, 1999. This was due to the real estate
acquisitions in fiscal 1999.
Gain On Sales Of Assets - Investment Property decreased by
$6,000 for the three months ended June 30, 2000 as compared to
the three months ended June 30, 1999. Gain on Sales of Assets -
Investment Property decreased by $1,169,694 for the nine months
ended June 30, 2000 as compared to the nine months ended June 30,
1999. This was due to the sale of the Monsey property in fiscal
1999 partially offset by the payoff of the installment sale
mortgage loan on the Bonim Associates property in fiscal 2000.
Funds from operations (FFO), is defined as net income,
excluding gains (or losses) from sales of depreciable assets,
plus depreciation. FFO which includes gains on the installment
sale of land in the amount of $88,631 and $12,000 for the nine
months ended June 30, 2000 and 1999, respectively, increased to
$4,006,256 for the nine months ended June 30, 2000 from
$2,952,713 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.
Page 9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities amounted to
$3,596,711 and $3,238,923 during the nine months ended June 30,
2000 and 1999, respectively.
The Company owns twenty-two properties of which seventeen
carried mortgage loans totaling $36,673,137 at June 30, 2000.
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.
The Company seeks to invest in well-located, modern
buildings leased to credit worthy tenants on long-term leases.
In management's opinion, newly built facilities leased to The
Federal Express Corporation (FDX) subsidiaries meet this
criteria. The Company is considering five FDX (or FDX
subsidiaries) leased properties for purchase. This could result
in a concentration of FDX and FDX subsidiary leased properties.
This is a risk factor that shareholders should consider. FDX is
a publicly-owned corporation and information on its financial
business operations is readily available to the Company's
shareholders. Because of the contingent nature of contracts to
purchase real property, the Company announces acquisitions only
on closing.
YEAR 2000
The Company has experienced no significant impact of its
operations or its ability to accurately process financial
information due to a Year 2000 related issue. In addition, the
Company has no information that indicates a significant tenant,
vendor or service provider may be unable to meet their rental
obligations, sell goods or provide services to the Company
because of Year 2000 issues. The Company will continue to
monitor its operations for Year 2000 related issues.
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 27,
2000 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 10, 2000 By: /s/ Eugene W. Landy
Eugene W. Landy
President
Date: August 10, 2000 By: /s/ Anna T. Chew
Anna T. Chew
Controller
Page 12
