Monmouth Real Estate Investment Corporation Reports Results For The Second Quarter Ended March 31, 2015
FREEHOLD, N.J., May 6, 2015 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Core Funds from Operations (Core FFO) of $8,418,000 or $0.14 per diluted share for the three months ended March 31, 2015 as compared to $7,043,000 or $0.15 per diluted share for the three months ended March 31, 2014. Adjusted Funds from Operations (AFFO), for the three months ended March 31, 2015 was $8,138,000 or $0.14 per diluted share versus $6,475,000 or $0.14 per diluted share for the three months ended March 31, 2014.
A summary of significant financial information for the three and six months ended March 31, 2015 and 2014 is as follows:
| Three Months Ended March 31, |
||||
| 2015 |
2014 |
|||
| Rental Revenue |
$ |
16,206,000 |
$ |
14,085,000 |
| Reimbursement Revenue |
$ |
2,653,000 |
$ |
2,260,000 |
| Lease Termination Income |
$ |
- |
$ |
- |
| Net Operating Income (NOI) (1) |
$ |
15,908,000 |
$ |
13,444,000 |
| Total Expenses |
$ |
10,306,000 |
$ |
8,656,000 |
| Interest and Dividend Income |
$ |
963,000 |
$ |
997,000 |
| Gain on Sale of Securities Transactions, net |
$ |
- |
$ |
425,000 |
| Net Income |
$ |
4,819,000 |
$ |
4,757,000 |
| Net Income Attributable to Common Shareholders |
$ |
2,667,000 |
$ |
2,605,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.04 |
$ |
0.05 |
| Core FFO (1) |
$ |
8,418,000 |
$ |
7,043,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.14 |
$ |
0.15 |
| AFFO (1) |
$ |
8,138,000 |
$ |
6,475,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.14 |
$ |
0.14 |
| Weighted Avg. Diluted Common Shares Outstanding |
58,463,000 |
46,845,000 |
||
| Six Months Ended March 31, |
||||
| 2015 |
2014 |
|||
| Rental Revenue |
$ |
31,636,000 |
$ |
27,656,000 |
| Reimbursement Revenue |
$ |
4,900,000 |
$ |
4,351,000 |
| Lease Termination Income |
$ |
239,000 |
$ |
- |
| Net Operating Income (NOI) (1) |
$ |
30,594,000 |
$ |
26,529,000 |
| Total Expenses |
$ |
19,889,000 |
$ |
17,072,000 |
| Interest and Dividend Income |
$ |
1,998,000 |
$ |
1,936,000 |
| Gain on Sale of Securities Transactions, net |
$ |
377,000 |
$ |
576,000 |
| Net Income |
$ |
10,242,000 |
$ |
9,047,000 |
| Net Income Attributable to Common Shareholders |
$ |
5,939,000 |
$ |
4,744,000 |
| Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.10 |
$ |
0.10 |
| Core FFO (1) |
$ |
17,052,000 |
$ |
13,911,000 |
| Core FFO per Diluted Common Share (1) |
$ |
0.29 |
$ |
0.30 |
| AFFO (1) |
$ |
15,933,000 |
$ |
13,177,000 |
| AFFO per Diluted Common Share (1) |
$ |
0.28 |
$ |
0.29 |
| Weighted Avg. Diluted Common Shares Outstanding |
57,937,000 |
46,081,000 |
||
A summary of significant balance sheet information as of March 31, 2015 and September 30, 2014 is as follows:
| March 31, 2015 |
September 30, 2014 |
|||
| Net Real Estate Investments |
$ |
745,306,000 |
$ |
636,923,000 |
| Securities Available for Sale at Fair Value |
$ |
52,506,000 |
$ |
59,311,000 |
| Total Assets |
$ |
855,420,000 |
$ |
743,757,000 |
| Mortgage Notes Payable |
$ |
347,169,000 |
$ |
287,796,000 |
| Loans Payable |
$ |
65,162,000 |
$ |
25,200,000 |
| Total Shareholders' Equity |
$ |
430,826,000 |
$ |
420,631,000 |
Michael P. Landy, President and CEO, commented on the results for the second quarter of fiscal 2015,
"The recent quarter represented significant progress across multiple fronts:
- During the quarter we acquired two brand new Class A built-to-suit properties. These acquisitions contain a total of 530,000 square feet, and were purchased at an aggregate cost of $44.1 million. This brings our total acquisitions for fiscal 2015 to 1.7 million square feet representing a 16% increase in our gross leasable area over the six month period. Our current 13.0 million total square feet represents a 21% increase over the prior year period.
- We have entered into agreements to acquire nine new Class A build-to-suit industrial properties, representing approximately 2.7 million square feet, for a total purchase price of approximately $264.8 million. In keeping with our business model, these high-quality properties are leased primarily 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 $17.8 million and will benefit from an average lease term of approximately 12.8 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion of construction and occupancy over the next several quarters.
- We are currently working with our largest tenant FedEx on the expansion of three of our facilities, totaling 87,000 square feet. Upon completion these expansions will result in a new 10 year lease for each building being expanded.
- Our end of period occupancy increased to 97.5% as compared to 96.3% in the prior quarter. Our weighted average lease maturity at quarter end was 7.2 years as compared with 6.8 years in the prior year period.
- All six leases scheduled to expire this year totaling 780,000 square feet have been renewed, 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 an increase of 1.0% on a cash basis. The weighted average lease term for these six renewals was 3.8 years.
- Same Store NOI for the three months ended March 31, 2015 increased 3.7% on a U.S. GAAP basis and increased 2.6% on a cash basis.
- Reported AFFO of $0.14 per diluted share for the current quarter is in-line with AFFO reported during the corresponding quarter a year ago. We anticipate continued growth in our AFFO as we continue to expand our portfolio with high quality properties.
Our 97.5% occupancy rate reflects the high caliber of our properties and our strong tenant base. We recently locked-in over $100 million in 15 year financing at a weighted average interest rate of 3.75% to fund five of the nine 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 Second Quarter 2015 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Thursday, May 7, 2015 at 10:00 a.m. Eastern Time.
The Company's Second 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, May 7, 2015. It will be available until July 30, 2015, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10061578. 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-nine properties located in twenty-eight states, containing a total of approximately 13.0 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 an expansion at one of our current locations or a capital expenditure that is 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 Company's FFO, Core FFO and AFFO for the three and six months ended March 31, 2015 and 2014 are calculated as follows:
| Three Months Ended |
Six Months Ended |
||||||
| 3/31/15 |
3/31/14 |
3/31/15 |
3/31/14 |
||||
| Net Income Attributable to Common Shareholders |
$2,667,000 |
$2,606,000 |
$5,939,000 |
$4,744,000 |
|||
| Depreciation Expense |
4,752,000 |
3,975,000 |
9,237,000 |
7,788,000 |
|||
| Amortization of Intangible Assets |
364,000 |
338,000 |
711,000 |
671,000 |
|||
| Amortization of Capitalized Lease Costs (*) |
164,000 |
124,000 |
303,000 |
245,000 |
|||
| FFO Attributable to Common Shareholders |
7,947,000 |
7,043,000 |
16,190,000 |
13,448,000 |
|||
| Acquisition Costs |
471,000 |
- |
862,000 |
463,000 |
|||
| Core FFO Attributable to Common Shareholders |
8,418,000 |
7,043,000 |
17,052,000 |
13,911,000 |
|||
| Lease Termination Income |
- |
- |
(239,000) |
- |
|||
| Gain on Sale of Securities Transactions, net |
- |
(425,000) |
(377,000) |
(576,000) |
|||
| Stock Compensation Expense |
97,000 |
85,000 |
187,000 |
171,000 |
|||
| Depreciation of Corporate Office Tenant Improvements |
34,000 |
- |
34,000 |
- |
|||
| Amortization of Financing Costs |
203,000 |
168,000 |
396,000 |
338,000 |
|||
| U.S. GAAP Straight-lined Rent Adjustment |
(532,000) |
(184,000) |
(864,000) |
(375,000) |
|||
| Recurring Capital Expenditures |
(82,000) |
(212,000) |
(256,000) |
(292,000) |
|||
| AFFO Attributable to Common Shareholders |
$8,138,000 |
$6,475,000 |
$15,933,000 |
$13,177,000 |
|||
* 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 six months ended March 31, 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 six months ended March 31, 2015 and 2014:
| Six Months Ended |
|||
| 3/31/15 |
3/31/14 |
||
| Operating Activities |
$17,854,000 |
$17,933,000 |
|
| Investing Activities |
(109,555,000) |
(87,234,000) |
|
| Financing Activities |
96,728,000 |
67,600,000 |
|
SOURCE Monmouth Real Estate Investment Corporation
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