HOLMDEL, N.J., Feb. 6, 2020 /PRNewswire/ -- Monmouth Real Estate
Investment Corporation (NYSE: MNR) reported Net Income Attributable
to Common Shareholders of $3.5
million or $0.04 per diluted
share for the three months ended December
31, 2019 as compared to Net Loss Attributable to Common
Shareholders of $32.4 million or
$0.36 per diluted share for the three
months ended December 31, 2018,
representing an increase of $35.9
million or $0.40 per diluted
share. The large increase in our net income was due to an
accounting rule change which became effective at the beginning of
our prior fiscal year, in which unrealized gains and losses in our
securities investments are reflected on our income statement.
During the three months ended December 31,
2019, we recognized a $3.6
million unrealized loss or $0.04 per diluted share as compared to a
$42.6 million unrealized loss or
$0.47 per diluted share for the three
months ended December 31, 2018.
Funds from Operations (FFO), which excludes unrealized and realized
gains or losses from our securities portfolio, for the three months
ended December 31, 2019 were
$19.3 million or $0.20 per diluted share versus $21.4 million or $0.24 per diluted share for the three months
ended December 31, 2018, representing
a $0.04 decrease in FFO per diluted
share. Adjusted Funds from Operations (AFFO), which also
excludes unrealized and realized gains or losses from our
securities portfolio, for the three months ended December 31, 2019 were $19.9 million or $0.21 per diluted share versus $21.0 million or $0.23 per diluted share for the three months
ended December 31, 2018, representing
a $0.02 decrease in AFFO per diluted
share. The $0.02 decrease in
AFFO per share was primarily attributable to the issuance of
$103.3 million in preferred equity
since the end of the prior year quarter not being fully
deployed, which increased our preferred dividend expense by
$1.7 million or $0.02 per diluted share, as well as a reduction
in dividend income of $1.1 million or
$0.01 per diluted share, partially
offset by an increase in Net Operating Income of $2.1 million or $0.02 per diluted share.
A summary of significant financial information for the three
months ended December 31, 2019 and
2018 (in thousands, except per share amounts) is as follows:
|
|
Three Months
Ended
December
31,
|
|
|
2019
|
|
2018
|
Rental
Revenue
|
$
|
34,870
|
$
|
32,617
|
Reimbursement
Revenue
|
$
|
6,830
|
$
|
5,605
|
Net Operating Income
(NOI) (1)
|
$
|
34,467
|
$
|
32,319
|
Total
Expenses
|
$
|
22,469
|
$
|
18,900
|
Dividend
Income
|
$
|
3,238
|
$
|
4,368
|
Unrealized Holding
Gains (Losses) Arising During the Periods
|
$
|
(3,635)
|
$
|
(42,627)
|
Net Income
(Loss)
|
$
|
9,625
|
$
|
(27,943)
|
Net Income (Loss)
Attributable to Common Shareholders
|
$
|
3,528
|
$
|
(32,364)
|
Net Income
(Loss)Attributable to Common Shareholders Per Diluted Common
Share
|
$
|
0.04
|
$
|
(0.36)
|
FFO (1)
|
$
|
19,322
|
$
|
21,429
|
FFO per Diluted
Common Share (1)
|
$
|
0.20
|
$
|
0.24
|
AFFO (1)
|
$
|
19,934
|
$
|
21,022
|
AFFO per Diluted
Common Share (1)
|
$
|
0.21
|
$
|
0.23
|
Dividends Declared
per Common Share
|
$
|
0.17
|
$
|
0.17
|
|
|
|
|
|
Weighted Avg. Diluted
Common Shares Outstanding
|
|
97,006
|
|
90,660
|
A summary of significant balance sheet information as of
December 31, 2019 and September 30, 2019 (in thousands) is as
follows:
|
|
December 31,
2019
|
|
September 30,
2019
|
Real Estate
Investments
|
$
|
1,686,099
|
$
|
1,616,934
|
Securities Available
for Sale at Fair Value
|
$
|
181,841
|
$
|
185,250
|
Total
Assets
|
$
|
1,947,127
|
$
|
1,871,948
|
Fixed Rate Mortgage
Notes Payable, net of Unamortized Debt Issuance Costs
|
$
|
784,048
|
$
|
744,928
|
Loans
Payable
|
$
|
80,000
|
$
|
95,000
|
Total Shareholders'
Equity
|
$
|
1,057,509
|
$
|
1,011,043
|
Michael P. Landy, President and
CEO, commented on the results for the first quarter of fiscal
2020,
"We are pleased with the continued growth and strong performance
of our high-quality property portfolio.
During the quarter, we:
- Increased our Gross Revenue by 6% over the prior year period to
$44.9 million;
- Increased our Net Operating income by 7% over the prior year
period to $34.5 million;
- Maintained a conservative AFFO dividend payout ratio of
81%;
- Increased our gross leasable area (GLA) by 6% over the prior
year period to 22.9 million square feet;
- Entered into commitments to acquire five new build-to-suit
properties containing 1.2 million total square feet for a total
cost of $178.5 million;
- Acquired one property leased to Amazon for 15 years for
$81.5 million comprising 616,000
square feet;
- Maintained a high occupancy rate of 99.2% throughout the
quarter and subsequent to the quarter end, leased a previously
vacant facility increasing current occupancy by 40 bps to
99.6%;
- Renewed two of the five leases scheduled to expire in fiscal
2020. The two lease renewals, comprising 157,000 square feet
resulted in a 15.0% weighted-average increase in GAAP rent, and
have a weighted-average lease term of 5.9 years;
- Entered into a $4.0 million
contract to sell one of the properties whose lease is scheduled to
expire in fiscal 2020. The sale is expected to result in a realized
gain of $1.8 million;
- Maintained a long weighted average lease maturity at 7.6
years;
- Maintained our weighted average debt maturity on our fixed-rate
mortgage debt at 11.5 years;
- Reduced our Net Debt to Adjusted EBITDA to 6.1x from 6.3x in
the prior year period."
"Thus far in fiscal 2020, we have acquired one building
comprising 616,000 square feet for a purchase price of $81.5 million. This property, located in the
Indianapolis MSA, is leased to Amazon for 15 years. Our
$178.5 million acquisition pipeline
currently contains five new build-to-suit properties comprising 1.2
million total square feet. These properties have a weighted-average
lease term of 13.4 years. In keeping with our business model, these
projects are all leased to investment grade tenants."
"At quarter end, our weighted-average lease maturity was 7.6
years and our weighted-average mortgage debt maturity was 11.5
years. We continue to maintain a conservative credit profile with
our Net Debt to Adjusted EBITDA at 6.1x, our Fixed Charge Coverage
at 2.3x, and our Net Debt to Total Market Capitalization at 32%.
Our occupancy rate has been over 98% for five consecutive years and
our weighted average lease maturity has provided over seven years
of lease term for the past six consecutive years, illustrating the
strength and visibility of our income streams."
"During the quarter, we renewed leases for two of the five
leases that are set to expire this fiscal year. These two lease
renewals represent 38% of the 410,000 square feet expiring this
year. These lease renewals have a weighted average lease term of
5.9 years, and a weighted average lease rate of $5.61 per square foot on a GAAP basis and
$5.28 on a cash basis. This
represents an increase of 15.0% on a GAAP basis and an increase of
2.3% on a cash basis. Of the three remaining properties, one
is under contract for sale and the other two are currently under
discussion with our existing tenants."
"U.S. industrial real estate has experienced a protracted period
of cap rate compression. It is estimated that industrial real
estate values have more than doubled during the past ten years and
have increased by 15% in the past year alone. Consequently, the
value of our properties has appreciated substantially. Our new
annual report is now featured on our website. This report
represents an excellent resource for understanding our Company and
our outlook. We strongly encourage you to read it. Please contact
our Investor Relations department if you would like to receive a
hard copy. We look forward to reporting continued progress
throughout the year."
Monmouth Real Estate Investment Corporation will host its
First Quarter FY 2020 Financial Results Webcast and
Conference Call on Friday, February
7, 2020 at 10:00 a.m. Eastern
Time. Senior management will discuss the results,
current market conditions and future outlook.
Our First Quarter FY 2020 financial results being released
herein will be available on our website at www.mreic.reit in the
Investor Relations section, under Filings and Reports.
To participate in the Webcast, select the 1Q2020
Webcast and Earnings Call "Link to Webcast" on the homepage of
our website at www.mreic.reit, in the Highlights section, which is
located towards the bottom of the homepage. Interested
parties can also participate via conference call by calling
toll free 1-877-510-5852 (domestically) or 1-412-902-4138
(internationally).
The replay of the conference call will be available at
12:00 p.m. Eastern Time on Friday,
February 7, 2020. It will be available until
May 7, 2020, and can be accessed by
dialing toll free 1-877-344-7529 (domestically) and 1-412-317-0088
(internationally) and entering the passcode 10137259. A
transcript of the call and the webcast replay will be available at
our website on the Investor Relations homepage,
www.mreic.reit.
Monmouth Real Estate Investment Corporation, founded in 1968, is
one of the oldest public equity REITs in the world. We
specialize in single tenant, net-leased industrial properties,
subject to long-term leases, primarily to investment-grade
tenants. Monmouth Real Estate is a fully integrated and
self-managed real estate company, whose property portfolio consists
of 115 properties containing a total of approximately
22.9 million rentable square feet, geographically diversified
across 30 states. In addition, we own 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 our current
expectations and involve various risks and uncertainties.
Although we believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions, we
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 our
annual report on Form 10-K and described from time to time in our
other filings with the SEC. We undertake 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, as defined by The
National Association of Real Estate Investment Trusts (NAREIT),
represents net income attributable to common shareholders, as
defined by accounting principles generally accepted in the United States of America (U.S. GAAP),
excluding extraordinary items, as defined under U.S. GAAP, gains or
losses from sales of previously depreciated real estate assets,
impairment charges related to depreciable real estate assets, plus
certain non-cash items such as real estate asset depreciation and
amortization. Included in the NAREIT FFO White Paper - 2018
Restatement, is an option pertaining to assets incidental to our
main business in the calculation of NAREIT FFO to make an election
to include or exclude mark-to-market changes in the value
recognized on these marketable equity securities. In
conjunction with the adoption of the FFO White Paper - 2018
Restatement, for all periods presented, we have elected to exclude
unrealized gains and losses from our investments in marketable
equity securities from our FFO calculation. Prior to the
adoption of the FFO White Paper – 2018 Restatement, we defined Core
Funds From Operations (Core FFO) as FFO, excluding Unrealized
Holding Gains or Losses Arising During the Periods. NAREIT
created FFO as a non-GAAP supplemental measure of REIT operating
performance. We define Adjusted Funds From Operations (AFFO)
as FFO, excluding stock based compensation expense, depreciation of
corporate office tenant improvements, amortization of deferred
financing costs, non-recurring severance expense, effect of
non-cash U.S. GAAP straight-line rent adjustments and subtracting
recurring capital expenditures. We define recurring capital
expenditures as all capital expenditures that are recurring in
nature, 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
believe that, as widely recognized measures of performance used by
other REITs, FFO and AFFO may be considered by investors as
supplemental measures to compare our operating performance to those
of other REITs. FFO and AFFO exclude historical cost
depreciation as an expense and may facilitate the comparison of
REITs which have a different cost basis. However, other REITs
may use different methodologies to calculate FFO and AFFO and,
accordingly, our FFO and AFFO may not be comparable to all other
REITs. The items excluded from FFO and AFFO are significant
components in understanding our financial performance.
FFO and AFFO are non-GAAP performance measures and (i) do not
represent Cash Flow from Operations as defined by U.S. GAAP; (ii)
should not be considered as an alternative to Net Income or Net
Income Attributable to Common Shareholders as a measure of
operating performance or to Cash Flows from Operating, Investing
and Financing Activities; and (iii) are not an alternative to Cash
Flows from Operating, Investing and Financing Activities as a
measure of liquidity. FFO and AFFO, as calculated by us, 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 (Loss) Attributable to Common Shareholders to the Company's
FFO and AFFO for the three months ended December 31, 2019 and 2018 (in thousands):
|
Three Months
Ended
|
|
|
12/31/2019
|
|
12/31/2018
|
|
Net Income (Loss)
Attributable to Common Shareholders
|
$3,528
|
|
$(32,364)
|
|
Plus: Unrealized
Holding Losses Arising During the Periods
|
3,635
|
|
42,627
|
|
Plus: Depreciation
Expense (excluding Corporate Office
Capitalized Costs)
|
11,380
|
|
10,438
|
|
Plus: Amortization of
Intangible Assets
|
508
|
|
500
|
|
Plus: Amortization of
Capitalized Lease Costs
|
271
|
|
228
|
|
FFO Attributable
to Common Shareholders
|
19,322
|
|
21,429
|
|
Plus: Depreciation of
Corporate Office Capitalized Costs
|
53
|
|
40
|
|
Plus: Stock
Compensation Expense
|
156
|
|
129
|
|
Plus: Amortization of
Financing Costs
|
435
|
|
317
|
|
Plus: Non-recurring
Severance Expense
|
786
|
|
-0-
|
|
Less: Recurring
Capital Expenditures
|
(218)
|
|
(557)
|
|
Less: Effect of
Non-cash U.S. GAAP Straight-line Rent
Adjustment
|
(600)
|
|
(336)
|
|
AFFO Attributable
to Common Shareholders
|
$19,934
|
|
$21,022
|
|
The following are the Cash Flows provided (used) by Operating,
Investing and Financing Activities for the three months ended
December 31, 2019 and 2018 (in
thousands):
|
Three Months
Ended
|
|
12/31/2019
|
|
12/31/2018
|
|
|
|
|
Operating
Activities
|
$19,098
|
|
$21,912
|
Investing
Activities
|
(81,967)
|
|
(153,079)
|
Financing
Activities
|
59,073
|
|
134,611
|
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SOURCE Monmouth Real Estate Investment Corporation