Monmouth Real Estate Investment Corporation Reports Results For The Third Quarter Ended June 30, 2016
FREEHOLD, N.J., Aug. 3, 2016 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Core Funds from Operations (Core FFO) of $12,752,000 or $0.19 per diluted share for the three months ended June 30, 2016 as compared to $9,044,000 or $0.15 per diluted share for the three months ended June 30, 2015 representing an increase in Core FFO per share of 26.7%. Adjusted Funds from Operations (AFFO), for the three months ended June 30, 2016 was $12,431,000 or $0.19 per diluted share versus $8,884,000 or $0.15 per diluted share for the three months ended June 30, 2015 representing an increase in AFFO per share of 26.7%.
A summary of significant financial information for the three and nine months ended June 30, 2016 and 2015 is as follows:
| Three Months Ended June 30, |
||||
| 2016 |
2015 |
|||
| Rental Revenue |
$ |
20,790,000 |
$ |
17,256,000 |
| Reimbursement Revenue |
$ |
3,324,000 |
$ |
3,416,000 |
| Net Operating Income (NOI) (1) |
$ |
20,499,000 |
$ |
16,960,000 |
| Total Expenses |
$ |
11,836,000 |
$ |
11,351,000 |
| Dividend and Interest Income |
$ |
1,486,000 |
$ |
873,000 |
| Gain on Sale of Securities Transactions, net |
$ |
272,000 |
$ |
- |
| Net Income |
$ |
8,231,000 |
$ |
5,176,000 |
| Net Income Attributable to Common Shareholders |
$ |
6,080,000 |
$ |
3,024,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.09 |
$ |
0.05 |
| Core FFO (1) |
$ |
12,752,000 |
$ |
9,044,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.19 |
$ |
0.15 |
| AFFO (1) |
$ |
12,431,000 |
$ |
8,884,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.19 |
$ |
0.15 |
| Dividends Declared per Common Share |
$ |
0.16 |
$ |
0.15 |
| Weighted Avg. Diluted Common Shares Outstanding |
66,462,000 |
59,638,000 |
||
| Nine Months Ended June 30, |
||||
| 2016 |
2015 |
|||
| Rental Revenue |
$ |
59,466,000 |
$ |
48,892,000 |
| Reimbursement Revenue |
$ |
9,874,000 |
$ |
8,317,000 |
| Lease Termination Income |
$ |
- |
$ |
239,000 |
| Net Operating Income (NOI) (1) |
$ |
58,342,000 |
$ |
47,554,000 |
| Total Expenses |
$ |
35,541,000 |
$ |
31,240,000 |
| Dividend and Interest Income |
$ |
4,050,000 |
$ |
2,871,000 |
| Gain on Sale of Securities Transactions, net |
$ |
1,159,000 |
$ |
377,000 |
| Net Income |
$ |
22,302,000 |
$ |
15,418,000 |
| Net Income Attributable to Common Shareholders |
$ |
15,847,000 |
$ |
8,963,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.24 |
$ |
0.15 |
| Core FFO (1) |
$ |
35,278,000 |
$ |
26,096,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.55 |
$ |
0.45 |
| AFFO (1) |
$ |
33,901,000 |
$ |
24,818,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.52 |
$ |
0.42 |
| Dividends Declared per Common Share |
$ |
0.48 |
$ |
0.45 |
| Weighted Avg. Diluted Common Shares Outstanding |
64,703,000 |
58,504,000 |
||
A summary of significant balance sheet information as of June 30, 2016 and September 30, 2015 is as follows:
| June 30, 2016 |
September 30, 2015 |
|||
| Net Real Estate Investments |
$ |
955,429,000 |
$ |
816,111,000 |
| Securities Available for Sale at Fair Value |
$ |
82,639,000 |
$ |
54,541,000 |
| Total Assets |
$ |
1,083,034,000 |
$ |
915,992,000 |
| Mortgage Notes Payable |
$ |
440,353,000 |
$ |
373,991,000 |
| Loans Payable |
$ |
125,854,000 |
$ |
85,041,000 |
| Total Shareholders' Equity |
$ |
501,251,000 |
$ |
446,011,000 |
Michael P. Landy, President and CEO, commented on the results for the third quarter of fiscal 2016,
"Our fiscal 2016 results thus far have been outstanding. This most recent quarter represents one of our strongest on record.
During the quarter we:
- Increased our occupancy rate 200 basis points over the prior year period, to a sector leading 99.6%.
- Increased our Core FFO per share to $0.19, representing a 27% increase over the prior year period.
- Increased our AFFO per share to $0.19, representing a 27% increase over the prior year period.
- Increased our Net Operating Income (NOI) 21% over the prior year period.
- Increased our Same Property NOI 2.4% on a GAAP basis and 2.7% on a cash basis over the prior year period.
- Acquired three brand new Class A built-to-suit properties with an aggregate total of 573,000 square feet, all leased to investment grade tenants with a weighted average lease term of 11.8 years for an aggregate purchase price of $70.8 million.
- Grew our acquisition pipeline to eight new Class A build-to-suit properties, representing 2.4 million square feet, for a total purchase price of approximately $256.6 million. These acquisitions are expected to generate annualized rental revenue of approximately $16.9 million and will benefit from an average lease term of approximately 14.6 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion of construction and occupancy over the next several quarters.
- Subsequent to quarter end, completed three property expansions totaling 261,000 square feet at an aggregate cost of approximately $13.4 million. The expansions resulted in a weighted average lease extension of 11.5 years and increased annual rent by approximately $1.2 million.
- Increased our gross leasable area (GLA) 11% to 15.1 million square feet over the prior year period. Our GLA is expected to grow to approximately 18.0 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.
- Generated substantial performance on our $82.6 million REIT securities portfolio which at quarter end had an unrealized gain of $11.9 million.
Mr. Landy stated, "Monmouth's business model is performing exceptionally well on all fronts this year. This period marks our fifth consecutive quarter of generating over 20% AFFO per share growth. The strength of our real estate portfolio is evidenced by our industrial sector leading occupancy rate of 99.6%, as well as our second consecutive year of achieving a 100% tenant retention rate. Monmouth's current AFFO dividend payout ratio of 84% represents a substantial margin of safety given the high quality of our tenant base and the long duration of our net-leases. Allocating capital opportunistically into REIT securities when they sell at compelling discounts to their net asset value has resulted in substantial unrealized gains of $11.9 million at quarter end. Our securities portfolio has continued to deliver outstanding performance subsequent to quarter end. We have an excellent acquisition pipeline consisting entirely of brand new Class A built-to-suit properties totaling $256.6 million currently under construction. We look forward to reporting continued progress for Monmouth in the near future."
Monmouth Real Estate Investment Corporation will host its Third Quarter FY 2016 Financial Results Webcast and Conference Call on Thursday, August 4, 2016 at 10:00 a.m. Eastern Time. Senior management will discuss the results, current market conditions and future outlook.
The Company's Third 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, August 4, 2016. It will be available until November 15, 2016, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10087173. 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-seven properties located in thirty states, containing a total of approximately 15.1 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. However, other REITs may use different methodologies to calculate FFO, Core FFO and AFFO and, accordingly, our FFO, Core FFO and AFFO may not be comparable to all other REITs. 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, 2016 and 2015:
| Three Months Ended |
Nine Months Ended |
|||||||
| 6/30/2016 |
6/30/2015 |
6/30/2016 |
6/30/2015 |
|||||
| Net Income Attributable to Common Shareholders |
$6,079,000 |
$3,024,000 |
$15,847,000 |
$8,963,000 |
||||
| Plus: Depreciation Expense (excluding Corporate Office) |
6,066,000 |
5,061,000 |
17,390,000 |
14,298,000 |
||||
| Plus: Amortization of Intangible Assets |
272,000 |
330,000 |
915,000 |
1,041,000 |
||||
| Plus: Amortization of Capitalized Lease Costs |
199,000 |
188,000 |
580,000 |
491,000 |
||||
| FFO Attributable to Common Shareholders |
12,616,000 |
8,603,000 |
34,732,000 |
24,793,000 |
||||
| Plus: Acquisition Costs |
136,000 |
441,000 |
546,000 |
1,303,000 |
||||
| Core FFO Attributable to Common Shareholders |
12,752,000 |
9,044,000 |
35,278,000 |
26,096,000 |
||||
| Plus: Stock Compensation Expense |
100,000 |
97,000 |
307,000 |
284,000 |
||||
| Plus: Depreciation of Corporate Office Tenant Improvements |
31,000 |
38,000 |
88,000 |
71,000 |
||||
| Plus: Amortization of Financing Costs |
240,000 |
212,000 |
713,000 |
608,000 |
||||
| Plus: Non-recurring other expense (1) |
100,000 |
- |
500,000 |
- |
||||
| Less: Lease Termination Income |
- |
- |
- |
(239,000) |
||||
| Less: Gain on Sale of Securities Transactions, net |
(272,000) |
- |
(1,159,000) |
(377,000) |
||||
| Less: U.S. GAAP Straight-line Rent Adjustment |
(350,000) |
(301,000) |
(1,172,000) |
(1,164,000) |
||||
| Less: Recurring Capital Expenditures |
(170,000) |
(206,000) |
(654,000) |
(461,000) |
||||
| AFFO Attributable to Common Shareholders |
$12,431,000 |
$8,884,000 |
$33,901,000 |
$24,818,000 |
||||
| (1) Consists of one-time payroll expenditures. |
||||||||
The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the nine months ended June 30, 2016 and 2015:
| Nine Months Ended |
|||
| 6/30/2016 |
6/30/2015 |
||
| Operating Activities |
$43,347,000 |
$28,282,000 |
|
| Investing Activities |
(169,805,000) |
(151,750,000) |
|
| Financing Activities |
121,271,000 |
117,045,000 |
|
SOURCE Monmouth Real Estate Investment Corporation
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