Monmouth Real Estate Investment Corporation Reports Results For The First Quarter Ended December 31, 2014
FREEHOLD, N.J., Feb. 4, 2015 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Core Funds from Operations (Core FFO) of $8,634,000 or $0.15 per diluted share for the three months ended December 31, 2014 as compared to $6,868,000 or $0.15 per diluted share for the three months ended December 31, 2013. Adjusted Funds from Operations (AFFO), for the three months ended December 31, 2014 was $7,795,000 or $0.14 per diluted share versus $6,702,000 or $0.15 per diluted share for the three months ended December 31, 2013. On a sequential basis, AFFO per share for the three months ended December 31, 2014 increased 17% over the AFFO per share for the three months ended September 30, 2014.
A summary of significant financial information for the three months ended December 31, 2014 and 2013 is as follows:
| Three Months Ended |
||||
| 2014 |
2013 |
|||
| Rental Revenue |
$ |
15,430,000 |
$ |
13,571,000 |
| Reimbursement Revenue |
$ |
2,247,000 |
$ |
2,090,000 |
| Lease Termination Income |
$ |
239,000 |
$ |
- |
| Net Operating Income (NOI) (1) |
$ |
14,687,000 |
$ |
13,085,000 |
| Total Expenses |
$ |
9,583,000 |
$ |
8,416,000 |
| Interest and Dividend Income |
$ |
1,035,000 |
$ |
939,000 |
| Gain on Sale of Securities Transactions, net |
$ |
377,000 |
$ |
151,000 |
| Income from Continuing Operations |
$ |
5,424,000 |
$ |
4,290,000 |
| Net Income Attributable to Common Shareholders |
$ |
3,272,000 |
$ |
2,138,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.06 |
$ |
0.05 |
| Core FFO (1) |
$ |
8,634,000 |
$ |
6,868,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.15 |
$ |
0.15 |
| AFFO (1) |
$ |
7,795,000 |
$ |
6,702,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.14 |
$ |
0.15 |
| Weighted Avg. Diluted Common Shares Outstanding |
57,446,000 |
45,331,000 |
||
A summary of significant balance sheet information as of December 31, 2014 and September 30, 2014 is as follows:
| December 31, 2014 |
September 30, 2014 |
|||
| Net Real Estate Investments |
$ |
702,993,000 |
$ |
636,923,000 |
| Securities Available for Sale at Fair Value |
$ |
51,531,000 |
$ |
59,311,000 |
| Total Assets |
$ |
800,467,000 |
$ |
743,757,000 |
| Mortgage Notes Payable |
$ |
324,458,000 |
$ |
287,796,000 |
| Loans Payable |
$ |
40,190,000 |
$ |
25,200,000 |
| Total Shareholders' Equity |
$ |
424,031,000 |
$ |
420,631,000 |
Michael P. Landy, President and CEO, commented on the results for the first quarter of fiscal 2015,
"This was a very productive quarter for Monmouth and represents an excellent start to fiscal 2015. We are pleased to report continued improvement across multiple fronts:
- During the quarter we acquired five new Class A built-to-suit properties. These acquisitions contain a total of 1.2 million square feet, and were purchased at an aggregate cost of $68.3 million. Two of the properties are net leased to FedEx Ground and the remaining three are net leased to Jim Beam Brands, Bunzl Distribution, and B/E Aerospace, respectively, and have a weighted average lease term of 10.5 years.
- In addition, we have also entered into agreements to acquire nine new Class A build-to-suit industrial properties, representing approximately 2.8 million square feet, for a total purchase price of approximately $266.8 million. These new properties are expected to generate annualized rental revenue of approximately $18.1 million and will benefit from an average lease term of approximately 12.9 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion of construction and occupancy over the next several quarters.
- We recently completed a 62,000 square foot expansion of our building leased to NF&M International, Inc. located in Monaca, PA. This increased NF&M's total space from 113,000 square feet to 175,000 square feet. This expansion was completed for a cost of approximately $4.5 million and resulted in a new 10 year lease. Effective January 1st, this expansion resulted in an increase in annual rent from $382,000 or $3.39 per square foot to $830,800 or $4.75 per square foot. We have also entered into agreements to expand three of our properties by approximately 87,000 square feet pursuant to which we will invest a total of approximately $10.0 million. Upon completion, the expansions will result in a new ten year lease extension for each building being expanded and will result in increased annual rent of approximately $1.1 million.
- We have now renewed all six leases scheduled to expire this year totaling 780,000 square feet giving us a 100% tenant retention rate for fiscal 2015. These lease renewals resulted in a 6.3% increase in rents on a GAAP basis and a weighted average lease term of 3.8 years.
- End of period occupancy increased to 96.3% as compared to 95.9% in the prior quarter. Additionally, as a result of leasing up 127,000 square feet subsequent to quarter end, our current occupancy rate is now 97.4%.
- Our average lease maturity increased to 7.1 years at quarter end as compared to 6.8 years a year ago.
- AFFO of $0.14 per diluted share for the current quarter reflects an increase of 17% as compared to the prior quarter. Our gross leasable area increased 16% to 12.4 million square feet over the prior year period and is expected to grow to over 15.2 million square feet upon the completion of the above acquisitions and expansions.
We anticipate our substantial recent acquisition activity to generate additional AFFO growth going forward. Our successful leasing activity has resulted in a very strong current occupancy level of 97.4% that will also help generate continued positive results for Monmouth. We look forward to building on the meaningful 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 First Quarter 2015 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Thursday, February 5, 2015 at 10:00 a.m. Eastern Time.
The Company's First 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, February 5, 2015. It will be available until April 30, 2015, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10058061. 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 eighty-seven properties located in twenty-eight states, containing a total of approximately 12.4 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, amortization of deferred financing costs, recurring capital expenditures and straight-line rent adjustments. 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 Company's FFO, Core FFO and AFFO for the three months ended December 31, 2014 and 2013 are calculated as follows:
| Three Months Ended |
|||
| 12/31/2014 |
12/31/2013 |
||
| Net Income Attributable to Common Shareholders |
$3,272,000 |
$2,138,000 |
|
| Depreciation Expense |
4,484,000 |
3,813,000 |
|
| Amortization of Intangible Assets |
347,000 |
333,000 |
|
| Amortization of Capitalized Lease Costs (*) |
139,000 |
121,000 |
|
| FFO Attributable to Common Shareholders |
8,242,000 |
6,405,000 |
|
| Acquisition Costs |
392,000 |
463,000 |
|
| Core FFO Attributable to Common Shareholders |
8,634,000 |
6,868,000 |
|
| Lease Termination Income |
(239,000) |
- |
|
| Gain on Sale of Securities Transactions, net |
(377,000) |
(151,000) |
|
| Stock Compensation Expense |
90,000 |
86,000 |
|
| Amortization of Financing Costs |
193,000 |
169,000 |
|
| U.S. GAAP Straight-lined Rent Adjustment |
(332,000) |
(191,000) |
|
| Recurring Capital Expenditures |
(174,000) |
(79,000) |
|
| AFFO Attributable to Common Shareholders |
$7,795,000 |
$6,702,000 |
|
* 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 months ended December 31, 2014 and 2013 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 three months ended December 31, 2014 and 2013:
| Three Months Ended |
|||||||
| 12/31/2014 |
12/31/2013 |
||||||
| Operating Activities |
$8,361,000 |
$7,394,000 |
|||||
| Investing Activities |
(62,089,000) |
(87,173,000) |
|||||
| Financing Activities |
48,554,000 |
75,827,000 |
|||||
SOURCE Monmouth Real Estate Investment Corporation
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