Monmouth Real Estate Investment Corporation Reports Results For The Second Quarter Ended March 31, 2016
FREEHOLD, N.J., May 4, 2016 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Core Funds from Operations (Core FFO) of $11,514,000 or $0.18 per diluted share for the three months ended March 31, 2016 as compared to $8,418,000 or $0.14 per diluted share for the three months ended March 31, 2015 representing an increase in Core FFO per share of 28.6%. Adjusted Funds from Operations (AFFO), for the three months ended March 31, 2016 was $10,745,000 or $0.17 per diluted share versus $8,138,000 or $0.14 per diluted share for the three months ended March 31, 2015 representing an increase in AFFO per share of 21.4%.
A summary of significant financial information for the three and six months ended March 31, 2016 and 2015 is as follows:
| Three Months Ended March 31, |
||||
| 2016 |
2015 |
|||
| Rental Revenue |
$ |
19,611,000 |
$ |
16,206,000 |
| Reimbursement Revenue |
$ |
3,356,000 |
$ |
2,653,000 |
| Net Operating Income (NOI) (1) |
$ |
19,188,000 |
$ |
15,908,000 |
| Total Expenses |
$ |
12,538,000 |
$ |
10,306,000 |
| Interest and Dividend Income |
$ |
1,380,000 |
$ |
963,000 |
| Gain on Sale of Securities Transactions, net |
$ |
879,000 |
$ |
- |
| Net Income |
$ |
7,132,000 |
$ |
4,819,000 |
| Net Income Attributable to Common Shareholders |
$ |
4,980,000 |
$ |
2,667,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.08 |
$ |
0.04 |
| Core FFO (1) |
$ |
11,514,000 |
$ |
8,418,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.18 |
$ |
0.14 |
| AFFO (1) |
$ |
10,745,000 |
$ |
8,138,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.17 |
$ |
0.14 |
| Weighted Avg. Diluted Common Shares Outstanding |
64,736,000 |
58,463,000 |
||
| Six Months Ended March 31, |
||||
| 2016 |
2015 |
|||
| Rental Revenue |
$ |
38,676,000 |
$ |
31,636,000 |
| Reimbursement Revenue |
$ |
6,550,000 |
$ |
4,900,000 |
| Lease Termination Income |
$ |
- |
$ |
239,000 |
| Net Operating Income (NOI) (1) |
$ |
37,844,000 |
$ |
30,594,000 |
| Total Expenses |
$ |
23,705,000 |
$ |
19,889,000 |
| Interest and Dividend Income |
$ |
2,564,000 |
$ |
1,998,000 |
| Gain on Sale of Securities Transactions, net |
$ |
887,000 |
$ |
377,000 |
| Net Income |
$ |
14,071,000 |
$ |
10,242,000 |
| Net Income Attributable to Common Shareholders |
$ |
9,767,000 |
$ |
5,939,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.15 |
$ |
0.10 |
| Core FFO (1) |
$ |
22,526,000 |
$ |
17,052,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.35 |
$ |
0.29 |
| AFFO (1) |
$ |
21,470,000 |
$ |
15,933,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.34 |
$ |
0.28 |
| Weighted Avg. Diluted Common Shares Outstanding |
63,828,000 |
57,937,000 |
||
A summary of significant balance sheet information as of March 31, 2016 and September 30, 2015 is as follows:
| March 31, 2016 |
September 30, 2015 |
|||
| Net Real Estate Investments |
$ |
883,004,000 |
$ |
816,801,000 |
| Securities Available for Sale at Fair Value |
$ |
68,647,000 |
$ |
54,541,000 |
| Total Assets |
$ |
999,655,000 |
$ |
915,992,000 |
| Mortgage Notes Payable |
$ |
406,426,000 |
$ |
373,991,000 |
| Loans Payable |
$ |
99,917,000 |
$ |
85,041,000 |
| Total Shareholders' Equity |
$ |
476,806,000 |
$ |
446,011,000 |
Michael P. Landy, President and CEO, commented on the results for the second quarter of fiscal 2016,
"Fiscal 2016 is shaping up to be another outstanding year for Monmouth. Our strong performance has continued through this most recent quarter. During the quarter we:
- Increased our occupancy rate 210 basis points over the prior year period and 80 basis points sequentially, to a sector leading 99.6%.
- Increased our AFFO per share to $0.17, representing a 21% increase over the prior year period.
- Increased our Net Operating Income (NOI) 21% over the prior year period.
- Increased our Same Property NOI 2.3% on a GAAP basis and 3.5% on a cash basis over the prior year period.
- Acquired for $20.0 million a brand new Class A built-to-suit property with 126,000 square feet leased for 10 years to General Electric Company. This mission critical facility is located near the Pittsburgh International Airport.
- Grew our acquisition pipeline to seven new Class A build-to-suit properties, representing 1.9 million square feet, for a total purchase price of approximately $197.9 million. These properties are all net-leased to investment grade tenants or their subsidiaries. These acquisitions are expected to generate annualized rental revenue of approximately $13.2 million and will benefit from an average lease term of approximately 13.5 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion of construction and occupancy over the next several quarters.
- Increased our expansion pipeline to 312,000 square feet at a cost of approximately $18.4 million. Upon completion, the expansions will result in a new ten year lease extension for three buildings and a new twelve year lease extension for one building being expanded. These expansions will result in increased annualized rent of approximately $1.8 million.
- Increased our gross leasable area (GLA) 12.3% to 14.6 million square feet over the prior year period. Our GLA is expected to grow to 17.0 million square feet upon the completion of the above acquisitions and expansions.
- Achieved a 100% tenant retention rate for fiscal 2016. This marks our second consecutive year of 100% tenant retention. The fiscal 2016 lease renewals resulted in a 5.3% increase in rents on a GAAP basis and represent a weighted average lease term of 4.1 years.
- Allocated capital opportunistically into discounted REIT securities resulting in an unrealized gain of $2.1 million at quarter end in addition to the $879,000 in gains realized during the quarter and the $1.4 million in dividend income these securities generated during the quarter.
- Subsequent to quarter end, we acquired for $30.7 million a brand new Class A built-to-suit property with 210,000 square feet leased for 15 years to FedEx Ground located in the Seattle/Everett MSA. This facility is located in close proximity to Boeing's large manufacturing plant in Everett, WA."
Mr. Landy stated, "This marks our fourth consecutive quarter of generating over 20% AFFO per share growth. The high quality of Monmouth's portfolio is best illustrated by our industrial sector leading occupancy rate of 99.6%, as well as the 100% tenant retention rate we have achieved for the second consecutive year now. With e-commerce sales growing five times faster than overall retail sales, demand for modern industrial space is expected to remain strong."
"The hard working team at Monmouth remains very focused on continuing to deliver positive long-term results. We look forward to building upon the substantial growth that has been achieved thus far."
Monmouth Real Estate Investment Corporation will host its Second Quarter FY 2016 Financial Results Webcast and Conference Call on Thursday, May 5, 2016 at 10:00 a.m. Eastern Time. Senior management will discuss the results, current market conditions and future outlook.
The Company's Second Quarter FY 2016 financial results being released herein will be available on the Company's website at www.mreic.reit in the "Financial Filings" section.
To participate in the Webcast, select the microphone icon in the Webcast section of the Company's homepage on the Company's website at www.mreic.reit. Interested parties can also participate via conference call by calling toll free 877-510-5852 (domestically) or 412-902-4138 (internationally).
The replay of the conference call will be available at 12:00 p.m. Eastern Time on Thursday, May 5, 2016. It will be available until July 30, 2016, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10080985. A transcript of the call and the webcast replay will be available at the Company's website, www.mreic.reit.
Monmouth Real Estate Investment Corporation, founded in 1968 is one of the oldest public equity REITs in the U.S. The Company specializes in single-tenant, net-leased industrial properties, subject to long-term leases, primarily to investment grade tenants. Monmouth Real Estate Investment Corporation is a fully-integrated and self-managed real estate company, whose property portfolio consists of ninety-five properties located in thirty states, containing a total of approximately 14.8 million rentable square feet. In addition, the Company owns a portfolio of REIT securities.
Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company's current expectations and involve various risks and uncertainties. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can provide no assurance those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company's annual report on Form 10-K and described from time to time in the Company's other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Notes:
(1) Non-U.S. GAAP Information: FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as net income applicable to common shareholders, excluding gains or losses from sales of depreciable assets, plus real estate-related depreciation and amortization. We define Core FFO as FFO plus acquisition costs. We define AFFO as Core FFO excluding lease termination income, gains or losses on securities transactions, stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, non-recurring other expense, U.S. GAAP straight-line rent adjustments and less recurring capital expenditures. We define recurring capital expenditures as all capital expenditures, excluding capital expenditures related to expansions at our current locations or capital expenditures that are incurred in conjunction with obtaining a new lease or a lease renewal. We define NOI as recurring rental and reimbursement revenues less real estate and other operating expenses. FFO, Core FFO and AFFO per diluted common share are defined as FFO, Core FFO and AFFO divided by weighted average diluted common shares outstanding. FFO, Core FFO and AFFO per diluted common share, as well as NOI, should be considered as supplemental measures of operating performance used by real estate investment trusts (REITs). FFO, Core FFO and AFFO per diluted common share exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have different cost basis. The items excluded from FFO, Core FFO and AFFO per diluted common share are significant components in understanding the Company's financial performance.
FFO, Core FFO and AFFO per diluted common share (A) do not represent cash flow from operations as defined by accounting principles generally accepted in the United States of America; (B) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (C) are not alternatives to cash flow as a measure of liquidity. FFO, Core FFO and AFFO per diluted common share, as well as NOI, as calculated by the Company, may not be comparable to similarly titled measures reported by other REITs.
The following is a reconciliation of the Company's U.S. GAAP Net Income to the Company's FFO, Core FFO and AFFO for the three and six months ended March 31, 2016 and 2015:
| Three Months Ended |
Six Months Ended |
||||||
| 3/31/2016 |
3/31/2015 |
3/31/2016 |
3/31/2015 |
||||
| Net Income Attributable to Common Shareholders |
$4,980,000 |
$2,667,000 |
$9,767,000 |
$5,939,000 |
|||
| Plus: Depreciation Expense (excluding Corporate Office) |
5,757,000 |
4,752,000 |
11,324,000 |
9,237,000 |
|||
| Plus: Amortization of Intangible Assets |
320,000 |
364,000 |
643,000 |
711,000 |
|||
| Plus: Amortization of Capitalized Lease Costs |
192,000 |
164,000 |
381,000 |
303,000 |
|||
| FFO Attributable to Common Shareholders |
11,249,000 |
7,947,000 |
22,115,000 |
16,190,000 |
|||
| Plus: Acquisition Costs |
265,000 |
471,000 |
411,000 |
862,000 |
|||
| Core FFO Attributable to Common Shareholders |
11,514,000 |
8,418,000 |
22,526,000 |
17,052,000 |
|||
| Plus: Stock Compensation Expense |
102,000 |
97,000 |
207,000 |
187,000 |
|||
| Plus: Depreciation of Corporate Office Tenant Improvements |
29,000 |
34,000 |
57,000 |
34,000 |
|||
| Plus: Amortization of Financing Costs |
239,000 |
203,000 |
473,000 |
396,000 |
|||
| Plus: Non-recurring other expense |
400,000 |
- |
400,000 |
- |
|||
| Less: Lease Termination Income |
- |
- |
- |
(239,000) |
|||
| Less: Gain on Sale of Securities Transactions, net |
(879,000) |
- |
(887,000) |
(377,000) |
|||
| Less: U.S. GAAP Straight-line Rent Adjustment |
(512,000) |
(532,000) |
(822,000) |
(864,000) |
|||
| Less: Recurring Capital Expenditures |
(148,000) |
(82,000) |
(484,000) |
(256,000) |
|||
| AFFO Attributable to Common Shareholders |
$10,745,000 |
$8,138,000 |
$21,470,000 |
$15,933,000 |
|||
The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the six months ended March 31, 2016 and 2015:
| Six Months Ended |
|||
| 3/31/2016 |
3/31/2015 |
||
| Operating Activities |
$28,428,000 |
$17,854,000 |
|
| Investing Activities |
(86,279,000) |
(109,555,000) |
|
| Financing Activities |
55,711,000 |
96,728,000 |
|
SOURCE Monmouth Real Estate Investment Corporation
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