Monmouth Real Estate Investment Corporation Reports Results For The Third Quarter Ended June 30, 2015

Aug 05, 2015, 16:15 ET from Monmouth Real Estate Investment Corporation

FREEHOLD, N.J., Aug. 5, 2015 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Core Funds from Operations (Core FFO) of $9,044,000 or $0.15 per diluted share for the three months ended June 30, 2015 as compared to $7,895,000 or $0.16 per diluted share for the three months ended June 30, 2014.  Adjusted Funds from Operations (AFFO), for the three months ended June 30, 2015 was $8,884,000 or $0.15 per diluted share versus $5,934,000 or $0.12 per diluted share for the three months ended June 30, 2014.

A summary of significant financial information for the three and nine months ended June 30, 2015 and 2014 is as follows:

 

Three Months Ended

June 30,

2015

2014

Rental Revenue

$

17,256,000

$

13,384,000

Reimbursement Revenue

$

3,416,000

$

2,356,000

Lease Termination Income

$

-

$

1,183,000

Net Operating Income (NOI) (1)

$

16,960,000

$

12,877,000

Total Expenses

$

11,351,000

$

8,811,000

Interest and Dividend Income

$

873,000

$

942,000

Gain on Sale of Securities Transactions, net

$

-

$

907,000

Net Income

$

5,176,000

$

5,594,000

Net Income Attributable to Common Shareholders

$

3,024,000

$

3,442,000

Net Income Attributable to Common Shareholders Per Diluted Common Share

$

0.05

$

0.07

Core FFO (1)

$

9,044,000

$

7,895,000

Core FFO per Diluted Common Share (1)

$

0.15

$

0.16

AFFO (1)

$

8,884,000

$

5,934,000

AFFO per Diluted Common Share (1)

$

0.15

$

0.12

Weighted Avg. Diluted Common Shares Outstanding

59,638,000

50,760,000

 

Nine Months Ended

June 30,

2015

2014

Rental Revenue

$

48,892,000

$

41,039,000

Reimbursement Revenue

$

8,317,000

$

6,707,000

Lease Termination Income

$

239,000

$

1,183,000

Net Operating Income (NOI) (1)

$

47,554,000

$

39,406,000

Total Expenses

$

31,240,000

$

25,883,000

Interest and Dividend Income

$

2,871,000

$

2,877,000

Gain on Sale of Securities Transactions, net

$

377,000

$

1,483,000

Net Income

$

15,418,000

$

14,641,000

Net Income Attributable to Common Shareholders

$

8,963,000

$

8,186,000

Net Income Attributable to Common Shareholders Per Diluted Common Share

$

0.15

$

0.17

Core FFO (1)

$

26,096,000

$

21,806,000

Core FFO per Diluted Common Share (1)

$

0.45

$

0.46

AFFO (1)

$

24,818,000

$

19,112,000

AFFO per Diluted Common Share (1)

$

0.42

$

0.40

Weighted Avg. Diluted Common Shares Outstanding

58,504,000

47,634,000

 

A summary of significant balance sheet information as of June 30, 2015 and September 30, 2014 is as follows:

June 30, 2015

September 30, 2014

Net Real Estate Investments

$

781,958,000

$

636,923,000

Securities Available for Sale at Fair Value

$

48,855,000

$

59,311,000

Total Assets

$

876,511,000

$

743,757,000

Mortgage Notes Payable

$

365,066,000

$

287,796,000

Loans Payable

$

65,102,000

$

25,200,000

Total Shareholders' Equity

$

435,188,000

$

420,631,000

 

Michael P. Landy, President and CEO, commented on the results for the third quarter of fiscal 2015,

"The recent quarter represented significant progress across multiple fronts:

  • Increased AFFO per diluted share 25% year over year, to $0.15 for the current quarter.  We anticipate continued growth in per share AFFO as we continue to expand our portfolio with high quality properties. 
  • Increased Same Property NOI 7.8% on a U.S. GAAP basis and 5.6% on a cash basis.
  • Achieved 100% tenant retention rate on six leases for 780,000 square feet due to expire in fiscal 2015. These renewals resulted in a 6.3% increase in rents on a GAAP basis and an increase of 1.0% on a cash basis. The weighted average lease term for these six renewals was 3.8 years.
  • Acquired one brand new Class A built-to-suit property. This acquisition was 671,000 square feet, and was purchased at a cost of $37.5 million. This brings our total acquisitions for fiscal 2015 to 2.4 million square feet representing a 22% increase in our gross leasable area over the nine month period. Our current 13.6 million total square feet represents a 27% increase over the prior year period.
  • Entered into agreements to acquire eleven new Class A build-to-suit industrial properties, representing approximately 2.7 million square feet, for a total purchase price of approximately $290.7 million.  In keeping with our business model, these high-quality properties are leased to investment grade tenants pursuant to long-term, net-leases and are strategically situated at major airports, major transportation hubs, and manufacturing plants that are integral to our tenants' operations. These new properties are expected to generate annualized rental revenue of approximately $19.4 million and will benefit from an average lease term of approximately 13.4 years.  Subject to satisfactory due diligence, we anticipate closing these transactions upon completion of construction and occupancy over the next several quarters.
  • Completed two expansion projects for approximately $5.8 million, consisting of one building expansion of 38,428 square feet and one parking lot expansion.  These expansions result in an annual rent increase of $633,000 and a new ten year lease on the building expansion.  We are currently working on two expansion projects, consisting of one building expansion of 48,116 square feet and one parking lot expansion.  Expansion costs are expected to be $4.4 million.  Upon completion, these expansions will result in an annual rent increase of $447,000 and a new ten year lease for each property being expanded. 
  • Increased our end of period occupancy to 97.6% as compared to 94.3% in the prior year period. Our weighted average lease maturity at quarter end was 7.1 years as compared with 6.8 years in the prior year period.

Our 97.6% occupancy rate reflects the high caliber of our properties and our strong tenant base. We have already locked-in over $127 million in 15 year, fully self-amortizing financing, at a weighted average fixed interest rate of 3.77% to fund 64%, or six of the eleven future acquisitions in our pipeline. This very favorable financing, coupled with our strong balance sheet, provides us with excellent growth capacity. We look forward to building on the substantial growth that we have achieved to date by adding high quality properties and tenants to our portfolio while enhancing returns for our shareholders."

Monmouth Real Estate Investment Corporation will host its Third Quarter 2015 Financial Results Webcast and Conference Call on Thursday, August 6, 2015 at 10:00 a.m. Eastern Time.  Senior management will discuss the results, current market conditions and future outlook.

The Company's Third Quarter 2015 financial results being released herein will be available on the Company's website at www.mreic.com 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.com.  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, August 6, 2015.  It will be available until November 30, 2015, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10066693.  A transcript of the call and the webcast replay will be available at the Company's website, www.mreic.com.

Monmouth Real Estate Investment Corporation, founded in 1968 and one of the oldest public equity REITs in the U.S., specializes in net-leased industrial properties subject to long-term leases primarily to investment grade tenants.  The Company is a fully integrated and self-managed real estate company, whose property portfolio consists of ninety properties located in twenty-eight states, containing a total of approximately 13.6 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, 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 nine months ended June 30, 2015 and 2014:

 

 Three Months Ended

Nine Months Ended

6/30/2015

6/30/2014

6/30/2015

6/30/2014

Net Income Attributable to Common Shareholders

$3,024,000

$3,442,000

$8,963,000

$8,186,000

Plus: Depreciation Expense

5,061,000

3,991,000

14,298,000

11,779,000

Plus: Amortization of Intangible Assets

330,000

338,000

1,041,000

1,010,000

Plus: Amortization of Capitalized Lease Costs (*)

188,000

124,000

491,000

368,000

FFO Attributable to Common Shareholders

8,603,000

7,895,000

24,793,000

21,343,000

Plus: Acquisition Costs

441,000

-

1,303,000

463,000

Core FFO Attributable to Common Shareholders

9,044,000

7,895,000

26,096,000

21,806,000

Less: Lease Termination Income

-

(1,183,000)

(239,000)

(1,183,000)

Less: Gain on Sale of Securities Transactions, net

-

(907,000)

(377,000)

(1,483,000)

Plus: Stock Compensation Expense

97,000

85,000

284,000

257,000

Plus: Depreciation of Corporate Office Tenant Improvements

38,000

-

71,000

-

Plus: Amortization of Financing Costs

212,000

198,000

608,000

535,000

Less: U.S. GAAP Straight-line Rent Adjustment

(301,000)

65,000

(1,164,000)

(309,000)

Less: Recurring Capital Expenditures

(206,000)

(219,000)

(461,000)

(511,000)

AFFO Attributable to Common Shareholders

$8,884,000

$5,934,000

$24,818,000

$19,112,000

 

* In previous press releases, the Company has presented its calculation of FFO and Core FFO without excluding the effects of the amortization of Capitalized Lease Costs.  FFO and Core FFO for the three and nine months ended June 30, 2015 and 2014 has been presented above reflecting the effects of excluding the amortization of Capitalized Lease Costs.   

The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the nine months ended June 30, 2015 and 2014:

Nine Months Ended

6/30/2015

6/30/2014

Operating Activities

$28,282,000

$28,866,000

Investing Activities

(151,750,000)

(101,146,000)

Financing Activities

117,045,000

102,591,000

 

SOURCE Monmouth Real Estate Investment Corporation



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