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 March 31, 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
March 31, 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 April 15, 2000 was
8,196,668.
Page 1
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED MARCH 31, 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
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF MARCH 31, 2000 AND SEPTEMBER 30, 1999
3/31/00 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
$8,238,261 and $7,406,901, respectively 55,009,998 52,421,455
Mortgage Loans Receivable
-0- 125,135
__________ __________
Total Real Estate Investments 66,755,812 63,597,404
Cash and Cash Equivalents 167,059 1,242,457
Securities Available for Sale at Fair Value 14,036,886 12,324,709
Interest and Other Receivables 717,938 558,348
Prepaid Expenses 51,437 64,001
Lease Costs, Net of Accumulated Amortization 100,123 120,803
Investment in Hollister '97, L.L.C. 925,399 925,399
Other Assets 589,979 591,837
__________ __________
TOTAL ASSETS $83,344,633 $79,424,958
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $37,226,459 $35,237,759
Loans Payable 7,852,411 6,947,038
Deferred Gain-Installment Sale -0- 88,631
Other Liabilities 877,466 874,853
__________ __________
Total Liabilities 45,956,336 43,148,281
__________ __________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value, 16,000,000
Shares Authorized, 8,172,597 and 7,509,649
Shares Issued and Outstanding, respectively 81,726 75,096
Common Stock-Class B-$.01 Par Value, 100,000 Shares
Authorized, No Shares Issued or Outstanding -0- -0-
Additional Paid-In Capital 39,630,226 36,924,039
Accumulated Other Comprehensive Loss (2,323,655) (722,458)
Undistributed Income
-0- -0-
__________ __________
Total Shareholders' Equity 37,388,297 36,276,677
__________ __________
TOTAL LIAIBILITES AND SHAREHOLDERS' EQUITY $83,344,633 $79,424,958
========== ==========
Unaudited
See Accompanying Notes to Financial Statements
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
3 Months 6 Months 3 Months 6 Months
Ended Ended Ended Ended
3/31/00 3/31/00 3/31/99 3/31/99
<S> <C> <C> <C> <C>
INCOME:
Rental and Occupancy
Charges $2,072,216 $4,367,504 $2,099,402 $3,937,300
Investment and Other
Income 481,197 874,899 157,081 238,041
_________ _________ _________ _________
Total Income 2,553,413 5,242,403 2,256,483 4,175,341
_________ _________ _________ _________
EXPENSES:
Interest Expense 825,377 1,603,890 627,728 1,169,067
Real Estate Taxes 26,571 363,303 288,231 427,274
Operating Expenses 176,674 335,046 208,510 341,099
Office and General Expenses 183,970 336,455 176,669 340,349
Depreciation 418,742 831,360 404,370 789,816
_________ _________ _________ _________
Total Expenses 1,631,334 3,470,054 1,705,508 3,067,605
_________ _________ _________ _________
INCOME BEFORE GAINS 922,079 1,772,349 550,975 1,107,736
Gain on Sale of Assets -
Investment Property -0- 88,631 1,246,325 1,252,325
_________ _________ _________ _________
NET INCOME $ 922,079 $1,860,980 $1,797,300 $2,360,061
========= ========= ========= =========
NET INCOME PER SHARE
Basic and Diluted $ .12 $ .24 $ .28 $ .38
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic and Diluted 7,978,326 7,810,581 6,389,558 6,151,882
========= ========= ========= =========
Unaudited
See Accompanying Notes to Financial Statements
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,860,980 $2,360,061
Noncash Items Included in Net Income:
Depreciation 831,360 789,816
Amortization 55,750 54,863
Gain on Sales of Assets-
Investment Property ( 88,631) (1,252,325)
Gain on Sales of Securities
Available for Sale (57,342) -0-
Changes In:
Interest and Other Receivables (159,590) 63,867
Prepaid Expenses 12,564 (27,932)
Other Assets and Lease Costs ( 33,212) (295,383)
Other Liabilities 2,613 18,813
__________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,424,492 1,711,780
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 125,135 20,225
Additions to Land, Buildings, (4,114,903) (5,598,000)
Improvements and Equipment
Purchase of Securities Available
for Sale (3,528,916) (4,952,012)
Proceeds from Sale of Securities
Available for Sale 272,884 -0-
__________ __________
NET CASH USED BY INVESTING ACTIVITIES ( 7,245,800) (10,529,787)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 4,118,288 4,739,104
Principal Payments on Loans (3,212,915) (2,035,382)
Proceeds from Mortgages 3,000,000 4,100,000
Principal Payments on Mortgages (1,011,300) ( 780,282)
Financing Costs on Debt -0- (54,620)
Proceeds from Issuance of
Class A Common Stock 2,348,977 4,241,616
Dividends Paid (1,497,140) (1,080,923)
__________ __________
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,745,910 9,129,513
__________ __________
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,075,398) 311,506
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 1,242,457 147,976
__________ __________
END OF PERIOD $ 167,059 $ 459,482
========== ==========
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 adjustments which were, in the opinion of management,
necessary to present fairly the financial position, results of
operations and cash flows at March 31, 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 six months ended March 31, 2000 and 1999. Options
for 320,000 shares were excluded for the three and six months
ended March 31, 2000 and 1999 since they were anti-dilutive.
NOTE 3 - COMPREHENSIVE INCOME
Total comprehensive income, including unrealized gains
(losses) on securities available for sale, for the three and six
months ended March 31, 2000 and 1999 is as follows:
March 31, 2000 March 31, 1999
Three Months $712,657 $1,365,698
Six Months 259,783 1,944,960
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, an 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 for $3,000,000. This
mortgage payable is at an interest rate of 8.25% and is due March
31, 2015.
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NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On March 15, 2000, the Company paid $1,162,508 as a dividend
of $.145 per share to shareholders of record February 15, 2000.
Total dividends paid for the six months ended March 31, 2000
amounted to $2,273,932.
For the six months ended March 31, 2000, the Company
received $3,125,769 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 662,948 shares issued,
resulting in 8,172,597 shares outstanding.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the six months ended March 31, 2000 and
1999 for interest was $1,603,890 and $1,169,067, respectively.
During the six months ended March 31, 2000 and 1999, the
Company had dividend reinvestments of $776,792 and $646,806,
respectively, which required no cash transfers.
During the six months ended March 31, 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.
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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 by operating
activities of $2,424,492 for the current six months as compared
to $1,711,780 for the prior period. The Company raised
$3,125,769 from the issuance of shares of common stock through
its Dividend Reinvestment and Stock Purchase Plan (DRIP).
Dividends paid for the six months ended March 31, 2000 amounted
to $2,273,932.
Securities available for sale increased by $1,712,177
primarily as a result of additional purchases of $3,528,916
offset by sales of $215,542 and an increase in the unrealized
losses of $1,601,197. Management believes that this decline in
value is temporary in nature.
Mortgage notes payable increased by $1,988,700 during
the six months ended March 31, 2000. This increase was primarily
due to the additional mortgage of $3,000,000 on the new
acquisition offset by principal repayments of $1,011,300.
Loans payable increased by $905,373 during the six months
ended March 31, 2000. This increase was the result of additional
take-downs in the amount of $4,118,288 of the Company's revolving
credit line offset by repayments of $3,212,915.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges decreased for the three
months ended March 31, 2000 to $2,072,216 as compared to
$2,099,402 for the three months ended March 31, 1999. This
decrease was due primarily to the sale of the Monsey property and
additional occupancy charges associated with the reassessment of
a warehouse facility in Illinois in the second quarter of fiscal
1999. Rental and Occupancy charges increased for the six months
ended March 31, 2000 to $4,367,504 as compared to $3,937,300 for
the six months ended March 31, 1999. This increase was a result
of the new acquisitions made in 1999.
Interest and other income increased by $324,116 for the
three months ended March 31, 2000 as compared to the three months
ended March 31, 1999. Interest and Other Income increased by
$636,858 for the six months ended March 31, 2000 as compared to
the six months ended March 31, 1999. This was due primarily to
an increase in investment income as the result of the increase in
securities available for sale.
Interest expense increased by $197,649 for the three months
ended March 31, 2000 as compared to the three months ended March
31, 1999. Interest expense increased by $434,823 for the six
months ended March 31, 2000 as compared to the six months ended
March 31, 1999. This was primarily the result of additional
borrowings for the new acquisitions made during fiscal 2000 and
1999.
Page 8
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Real estate taxes decreased by $261,660 for the three months
ended March 31, 2000 as compared to the three months ended March
31, 1999. Real estate taxes decreased by $63,971 for the six
months ended March 31, 2000 as compared to March 31, 1999. This
was due primarily to the sale of the Monsey property as well as
the reassessment of a warehouse facility in Illinois during the
second quarter of fiscal 1999. Since the tenant's lease provides
for the payment of real estate taxes by the tenant, there was a
corresponding change in occupancy charges.
Depreciation expense increased by $14,372 for the three
months ended March 31, 2000 as compared to the three months ended
March 31, 1999. Depreciation expense increased by $41,544 for
the six months ended March 31, 2000 as compared to the six months
ended March 31, 1999. This was due to the real estate
acquisitions in the second half of fiscal 1999.
Gain on Sales of Assets - Investment Property decreased by
$1,246,325 for the three months ended March 31, 2000 as compared
to the three months ended March 31, 1999. Gain on Sales of Assets
- - Investment Property decreased by $1,163,694 for the six months
ended March 31, 2000 as compared to the six months ended March
31, 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 six
months ended March 31, 2000 and 1999, respectively, increased to
$2,692,340 for the six months ended March 31, 2000 from
$1,909,552 for the six months ended March 31, 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 by operating activities amounted to
$2,424,492 and $1,711,780 for the six months ended March 31, 2000
and 1999, respectively.
The Company owns twenty-two properties of which seventeen
carried mortgage loans totaling $37,226,459 at March 31, 2000.
The Company has been raising capital through its DRIP and
investing in net leased industrial properties and securities of
other real estate investment trusts. 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.
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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
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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
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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: May 10, 2000 By:/s/ Eugene W. Landy
Eugene W. Landy
President
Date: May 10, 2000 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 PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-3O-2000
<PERIOD-END> MAR-31-2000
<CASH> 167,059
<SECURITIES> 14,036,886
<RECEIVABLES> 717,938
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,973,320
<PP&E> 74,994,073
<DEPRECIATION> 8,238,261
<TOTAL-ASSETS> 83,344,633
<CURRENT-LIABILITIES> 8,729,877
<BONDS> 37,226,459
0
0
<COMMON> 81,726
<OTHER-SE> 37,306,571
<TOTAL-LIABILITY-AND-EQUITY> 83,344,633
<SALES> 0
<TOTAL-REVENUES> 5,331,034
<CGS> 0
<TOTAL-COSTS> 698,349
<OTHER-EXPENSES> 1,167,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,603,890
<INCOME-PRETAX> 1,860,980
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,860,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,860,980
<EPS-BASIC> .24
<EPS-DILUTED> .24
</TABLE>
