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 December 31, 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
December 31, 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 January 18, 2000 was 7,904,618.
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
FOR THE QUARTER ENDED DECEMBER 31, 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 8-9
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 10
Signatures 11
Page 2
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<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND SEPTEMBER 30, 1999
12/31/99 9/30/99
ASSETS
<S> <C> <C>
Real Estate Investments:
Land $11,050,814 $11,050,814
Buildings, Improvements and Equipment,
Net of Accumulated Depreciation of
$7,819,519 and $7,406,901, respectively 52,061,259 52,421,455
Mortgage Loans Receivable -0- 125,135
__________ __________
Total Real Estate Investments 63,112,073 63,597,404
Cash and Cash Equivalents 182,745 1,242,457
Securities Available for Sale at Fair Value 12,707,335 12,324,709
Interest and Other Receivables 739,821 558,348
Prepaid Expenses 33,684 64,001
Lease Costs, Net of Accumulated Amortization 113,965 120,803
Investment in Hollister '97, L.L.C. 925,399 925,399
Other Assets 704,634 591,837
__________ __________
TOTAL ASSETS $78,519,656 $79,424,958
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Notes Payable $34,738,087 $35,237,759
Loans Payable 6,631,709 6,947,038
Deferred Gain-Installment Sale -0- 88,631
Other Liabilities 876,042 874,853
__________ __________
Total Liabilities 42,245,838 43,148,281
__________ __________
Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
16,000,000 Shares Authorized,
7,830,174 and 7,509,649 Shares Issued
and Outstanding, respectively 78,302 75,096
Common Stock-Class B-$.01 Par Value,
100,000 Shares Authorized, No Shares
Issued or Outstanding -0- -0-
Additional Paid-In Capital 38,309,749 36,924,039
Accumulated Other Comprehensive Loss (2,114,233) (722,458)
Undistributed Income -0- -0-
__________ __________
Total Shareholders' Equity 36,273,818 36,276,677
__________ __________
TOTAL LIAIBILITES AND SHAREHOLDERS' EQUITY $78,519,656 $79,424,958
========== ==========
Unaudited
See Accompanying Notes to Financial Statements
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<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
<S> <C> <C>
INCOME:
Rental and Occupancy Charges $2,295,288 $1,837,898
Interest and Other Income 393,702 80,960
_________ _________
Total Income 2,688,990 1,918,858
_________ _________
EXPENSES:
Interest Expense 778,513 541,339
Real Estate Taxes 336,732 139,043
Operating Expenses 158,372 132,589
Office and General Expenses 152,485 163,680
Depreciation 412,618 385,446
_________ _________
Total Expenses 1,838,720 1,362,097
_________ _________
INCOME BEFORE GAINS 850,270 556,761
Gain on Sale of Assets -
Investment Property 88,631 6,000
_________ _________
NET INCOME $ 938,901 $ 562,761
========= =========
NET INCOME PER SHARE
Basic and Diluted $.12 $.10
========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and Diluted 7,643,996 5,917,362
========= =========
Unaudited
See Accompanying Notes to Financial Statements
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<TABLE>
<CAPTION>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 938,901 $ 562,761
Noncash Items Included in Net Income:
Depreciation 412,618 385,446
Amortization 26,838 23,523
Gain on Sales of Assets-
Investment Property (88,631) (6,000)
Changes In:
Interest and Other Receivables (181,473) (85,335)
Prepaid Expenses 30,317 63,265
Other Assets and Lease Costs (132,797) (15,088)
Other Liabilities 1,189 225,528
__________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,006,962 1,154,100
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Installment Sales 125,135 12,044
Additions to Land, Buildings,
Improvements and Equipment (52,422) (5,602,630)
Purchase of Securities
Available for Sale (1,774,401) (1,004,264)
__________ __________
NET CASH USED BY INVESTING ACTIVITIES (1,701,688) (6,594,850)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Loans 2,350,000 2,005,503
Principal Payments on Loans (2,665,329) (1,935,382)
Proceeds from Mortgages -0- 4,100,000
Principal Payments on Mortgages (499,672) (367,160)
Financing Costs on Debt -0- (45,100)
Proceeds from Issuance of
Class A Common Stock 1,174,779 2,161,350
Dividends Paid (724,764) (514,386)
NET CASH (USED) PROVIDED BY FINANCING __________ __________
ACTIVITIES (364,986) 5,404,825
__________ __________
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,059,712) (35,925)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 1,242,457 147,976
__________ __________
END OF PERIOD $ 182,745 $ 112,051
========== ==========
Unaudited
See Accompanying Notes to Financial Statements
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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 December 31,1999 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, 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 months ended December 31, 1999 and 1998. Options for
320,000 shares were excluded for the three months ended December
31, 1999 and 1998 since they were anti-dilutive.
NOTE 3 - COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the three months
ended December 31, 1999 and 1998 is as follows: $(452,874) and
$579,262, respectively.
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.
NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On December 15, 1999, the Company paid $1,111,424 as a
dividend of $.145 per share to shareholders of record November
15, 1999.
For the three months ended December 31, 1999, the Company
received $1,561,439 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 320,525 shares issued,
resulting in 7,830,174 shares outstanding.
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NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the three months ended December 31,
1999 and 1998 for interest was $778,513 and $541,339,
respectively.
During the three months ended December 31, 1999 and 1998,
the Company had dividend reinvestments of $386,660 and
$308,889, respectively, which required no cash transfers.
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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 $1,006,962 for the current three months as
compared to $1,154,100 for the prior period. The Company
raised $1,561,439 from the issuance of shares of common stock
through its Dividend Reinvestment and Stock Purchase Plan
(DRIP). Dividends paid for the three months ended December 31,
1999 amounted to $1,111,424.
Securities available for sale increased by $382,626
primarily as a result of additional purchases of $1,774,401
offset by an increase in the unrealized loss of $1,391,775.
Management believes that this decline in value is temporary in
nature.
Mortgage notes payable decreased by $499,672 during the
three months ended December 31, 1999. This decrease was
primarily the result of principal repayments.
Loans payable decreased by $315,329 during the three months
ended December 31, 1999. This decrease was the result of
repayments of $2,665,329 offset by additional take-downs in the
amount of $2,350,000 of the Company's revolving credit line.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and occupancy charges increased for the three
months ended December 31, 1999 to $2,295,288 as compared to
$1,837,898 for the three months ended December 31, 1998. These
increases were due primarily to acquisitions made during fiscal
1999.
Interest and other income increased by $312,742 for the
three months ended December 31, 1999 as compared to the three
months ended December 31, 1998. 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 $237,174 for the three months
ended December 31, 1999 as compared to the three months ended
December 31, 1998. This was primarily the result of additional
borrowings for the new acquisitions made during fiscal 1999.
Real estate taxes increased by $197,689 for the three months
ended December 31, 1999 as compared to the three months ended
December 31, 1998. This was due to the new acquisitions made
during fiscal 1999 as well as the reassessment of a warehouse
facility in Illinois during the second quarter of fiscal 1999.
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 $27,172 for the three
months ended December 31, 1999 as compared to the three months
ended December 31, 1998. This was due to the real estate
acquisitions in fiscal 1999.
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Gain On Sales Of Assets - Investment Property increased by
$82,631 for the three months ended December 31, 1999 as compared
to the three months ended December 31, 1998. This was due to
the payoff of the installment sale mortgage loan on the Bonim
Associates property.
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 $6,000 for the three
months ended December 31, 1999 and 1988, respectively, increased
to $1,351,519 for the three months ended December 31, 1999 from
$948,207 for the three months ended December 31, 1998. 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
$1,006,962 and $1,154,100 during the three months ended December
31, 1999 and 1998, respectively.
The Company owns twenty-one properties of which sixteen
carried mortgage loans totaling $34,738,087 at December 31,
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 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.
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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: February 14, 2000 By: /s/ Eugene W. Landy
Eugene W. Landy
President
Date: February 14, 2000 By: /s/ Anna T. Chew
Anna T. Chew
Controller
Page 11
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<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 DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 182,745
<SECURITIES> 12,707,335
<RECEIVABLES> 739,821
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,663,585
<PP&E> 70,931,592
<DEPRECIATION> 7,819,519
<TOTAL-ASSETS> 78,519,656
<CURRENT-LIABILITIES> 7,507,751
<BONDS> 34,738,087
0
0
<COMMON> 78,302
<OTHER-SE> 36,195,516
<TOTAL-LIABILITY-AND-EQUITY> 78,519,656
<SALES> 0
<TOTAL-REVENUES> 2,777,621
<CGS> 0
<TOTAL-COSTS> 495,104
<OTHER-EXPENSES> 565,103
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 778,513
<INCOME-PRETAX> 938,901
<INCOME-TAX> 0
<INCOME-CONTINUING> 938,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 938,901
<EPS-BASIC> .12
<EPS-DILUTED> .12
</TABLE>
