Monmouth Real Estate Investment Corporation (NYSE: MNR) (“Monmouth”
or the “Company”) today disclosed that, as of the deadline for
receipt of such notices, it has received notice from Blackwells
Capital LLC (“Blackwells”) of its intention to nominate four
candidates to stand for election to the Company’s Board of
Directors and submit six non-binding proposals, and has received
notice from Land & Buildings Investment Management, LLC (“Land
& Buildings”) of its intention to nominate four candidates to
stand for election to the Company’s Board of Directors and submit
one non-binding proposal to be voted on at Monmouth’s 2021 Annual
Meeting of Stockholders.
As previously announced, the Monmouth Board is
reviewing a non-binding, unsolicited proposal from Blackwells to
acquire all of the outstanding common shares of the Company for
$18.00 per share. In addition, the Board and its Nominating and
Corporate Governance Committee will review Blackwells’ and Land
& Buildings’ notices of proposed director nominations and
stockholder proposals, and will make its recommendations to the
Board at the appropriate time.
The Company issued the following statement:
Experienced & Engaged
Board
Monmouth has a highly experienced and actively
engaged Board that has overseen consistently outstanding operating
and financial performance and total stockholder returns, and the
Board remains committed to acting in the best interests of the
Company and all stockholders.
Monmouth notes that over the past three years,
it has meaningfully strengthened the independence and diversity of
its Board with the addition of three new independent directors who
bring fresh perspectives and relevant backgrounds in REITs, risk
management, global commerce, security matters and real estate
finance and investment. Monmouth’s Board regularly evaluates
opportunities to enhance corporate governance, will carefully
consider the nominations and proposals put forth by stockholders
and, if appropriate, may propose its own recommendations.
Monmouth: The Single Best Performing
Industrial REIT by TSR
The Monmouth Board and management team have
taken decisive actions to drive the Company’s next phase of growth
and deliver value for stockholders. Notwithstanding the
unprecedented challenges caused by COVID-19, Monmouth’s operating
excellence has produced consistently high occupancies, strong
tenant retentions and rent collections as well as strong overall
growth.
Recent developments have only highlighted the
value of Monmouth’s assets and resiliency of its unique approach to
profitably serving its ecommerce-oriented tenants. During fiscal
2020, Monmouth has seen strong demand for its properties and has
the highest occupancy rate in the sector at 99.7%. The Company
expects the combination of its two recent acquisitions totaling
$170.0 million, a $169.3 million acquisition pipeline, substantial
parking expansions currently taking place and increased occupancy
to meaningfully contribute to its earnings per share and cash flow
growth in fiscal 2021 and beyond.
Monmouth’s disciplined approach and proven
business model have delivered to stockholders significant total
returns including 1,239%, 243%, 103% and 22% over the 20, 10, 5 and
1 year periods ending on December 18, 2020, respectively, the last
trading day preceding Blackwells’ announcement of its unsolicited
proposal. Over the past year, Monmouth was the single best
performing industrial REIT based on total return to stockholders
and has significantly outperformed the MSCI US REIT Index and
exceeded returns on the S&P500. Indeed, Monmouth has maintained
or increased its common stock cash dividend for 116 consecutive
quarters or 29 years, in addition to being one of the few REITs
that preserved its cash dividend during the Global Financial Crisis
of 2007-2008.
A State-Of-The-Art Industrial Portfolio
Fueled By Ecommerce
Over the past five years, the Company has
managed to substantially increase the size of its state-of-the-art
industrial portfolio on a cash flow accretive basis while also
strengthening its balance sheet. Since fiscal year 2015, Monmouth
successfully:
- Completed $1.26 billion in acquisitions, more than doubling the
size of the Company;
- Added 10.6 million square feet of GLA representing an increase
of 76%;
- Increased rental revenue by 111% or 16% per annum;
- Increased AFFO per share while expanding its equity market
capitalization to $1.7 billion;
- Increased dividends per share by 13.3% while significantly
improving dividend coverage;
- Reduced debt leverage by 15% to 6.0x Net Debt to Adjusted
EBITDA;
- Lowered debt costs by 18% to an average interest rate of less
than 4%; and
- Extended average debt maturities to 11 years, among the longest
in the REIT industry.
Following review by its Nominating and Corporate
Governance Committee, the Board will present its formal
recommendations with respect to the election of directors and any
other matters that may properly be brought before the 2021 Annual
Meeting. The 2021 Annual Meeting has not yet been scheduled.
Monmouth stockholders are not required to take action at this
time.
Venable LLP is serving as Monmouth’s legal
counsel, and CS Capital Advisors is acting as the Company’s
financial advisor.
Non-GAAP Financial Measures
This press release contains certain non-GAAP
financial measures. A reconciliation of these measures to the most
directly comparable GAAP measures is included in the attached
supplemental reconciliation schedule.
About Monmouth Real Estate
Monmouth Real Estate Investment Corporation,
founded in 1968, is one of the oldest public equity REITs in the
world. 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 121 properties
containing a total of approximately 24.5 million rentable square
feet, geographically diversified across 31 states. The Company’s
occupancy rate as of this date is 99.7%.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities Exchange Act of
1934, as amended, and the Private Securities Litigation Reform Act
of 1995. Forward-looking statements provide the Company’s current
expectations or forecasts of future events. Forward-looking
statements include statements about the Company’s expectations,
beliefs, intentions, plans, objectives, goals, strategies, future
events, performance and underlying assumptions and other statements
that are not historical facts. You can identify forward-looking
statements by their use of forward-looking words, such as “may,”
“will,” “anticipate,” “expect,” “believe,” “intend,” “plan,”
“should,” “seek” or comparable terms, or the negative use of those
words, but the absence of these words does not necessarily mean
that a statement is not forward-looking. The forward-looking
statements are based on the Company’s beliefs, assumptions and
expectations of its future performance, taking into account all
information currently available to it. Forward-looking statements
are not predictions of future events. These beliefs, assumptions
and expectations can change as a result of many possible events or
factors, not all of which are known to the Company. Some of these
factors are described under the headings “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” as included in the Company’s Annual Report
on Form 10-K for the fiscal year ended September 30, 2020 and its
other periodic reports filed with the Securities and Exchange
Commission, which are accessible on the Securities and Exchange
Commission’s website at www.sec.gov. These factors should not
be construed as exhaustive and should be read in conjunction with
other cautionary statements that are included in the filings. These
and other risks, uncertainties and factors could cause the
Company’s actual results to differ materially from those included
in any forward-looking statements it makes. Any forward-looking
statement speaks only as of the date on which it is made. New risks
and uncertainties arise over time, and it is not possible for the
Company to predict those events or how they may affect it. Except
as required by law, the Company is not obligated to, and does not
intend to, update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. You
should not place undue reliance on these forward-looking
statements, as events described or implied in such statements may
not occur.
Important Additional Information and
Where to Find It
In connection with the solicitation of proxies
in connection with Monmouth’s 2021 Annual Meeting of Stockholders
(the “2021 Annual Meeting”), Monmouth intends to file a definitive
proxy statement, white proxy card and other relevant documents with
the Securities and Exchange Commission (the “SEC”). STOCKHOLDERS
ARE STRONGLY ENCOURAGED TO READ THE COMPANY’S DEFINITIVE PROXY
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), WHITE
PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Stockholders may obtain a free copy of the
definitive proxy statement, any amendments or supplements thereto,
and other documents that the Company files with the SEC at the
SEC’s website at www.sec.gov or the Company’s website at
https://investors.mreic.reit/ once such materials are
electronically filed with, or furnished to, the SEC.
Certain Information Regarding
Participants to the Solicitation
The Company, its directors and certain of its
executive officers and employees may be deemed participants in the
solicitation of proxies in connection with the 2021 Annual Meeting.
Information regarding the direct and indirect interests, by
security holdings or otherwise of the Company’s directors and
executive officers is set forth in the Company’s Annual Report on
Form 10-K filed with the SEC on November 23, 2020. To the extent
that such participants’ holdings in the Company’s securities have
changed since the filing of such Annual Report, such changes have
been reflected in SEC filings on Forms 3, 4 and 5, which can be
found on the SEC’s website at www.sec.gov or the Company’s website
at https://investors.mreic.reit/. Updated information regarding the
identities of potential participants, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the definitive proxy statement and other materials to be filed with
the SEC in connection with the 2021 Annual Meeting.
Contacts:
Investors:
Becky Coleridge 732-810-0907
Bruce Goldfarb/Chuck Garske/Teresa Huang Okapi Partners
212-297-0720 info@okapipartners.com
Media: Andrew Siegel/Jim Golden Joele Frank 212-355-4449
Non-GAAP Measure of Financial
Performance
Investors and analysts following the real estate
industry utilize earnings before interest, taxes, depreciation and
amortization for real estate (“Adjusted EBITDA”) and Net Debt to
Adjusted EBITDA, variously defined, as supplemental performance
measures. We consider Net Debt to Adjusted EBITDA, given its wide
use by and relevance to investors and analysts, an appropriate
supplemental performance measure. Net Debt to Adjusted EBITDA is
commonly used in various ratios as valuation of calculations used
to measure financial position, performance and liquidity. Net Debt
to Adjusted EBITDA, as currently calculated by us, may not be
comparable to similarly titled, but variously calculated, measures
of other REITs. As used herein, we calculate the following non-U.S.
GAAP measures as follows:
- Adjusted EBITDA is net income attributable to common
shareholders, as defined by U.S. GAAP, plus preferred dividends,
interest expense, including amortization of financing costs,
depreciation and amortization, net amortization of acquired above
and below market lease revenue and unrealized holding losses (minus
gains) arising during the periods.
- Net Debt is Total Debt, less Cash and Cash Equivalents.
- Net Debt to Adjusted EBITDA is Net Debt divided by Adjusted
EBITDA.
The following is a reconciliation of Total Debt
to Net Debt, Net Income (Loss) Attributable to Common Shareholders
to Adjusted EBITDA and Net Debt to Adjusted EBITDA:
|
|
As of 9/30/2020 ($ in thousands) |
|
|
|
|
|
Total Debt |
|
$ |
874,507 |
|
less: Cash and Cash
Equivalents |
|
|
23,517 |
|
Net Debt |
|
$ |
850,990 |
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
|
9/30/2020 ($ in thousands) |
|
Net Income (Loss)
Attributable to Common Shareholders |
|
$ |
(48,617 |
) |
Plus: Preferred Dividends |
|
|
26,474 |
|
Plus: Interest Expense,
including Amortization of Financing Costs |
|
|
36,376 |
|
Plus: Depreciation and
Amortization |
|
|
49,850 |
|
Plus: Net Amortization of
Acquired Above and Below Market Lease Revenue |
|
|
103 |
|
Less/Plus: Unrealized Holding
(Gains) Losses Arising During the Periods |
|
|
77,380 |
|
Adjusted EBITDA |
|
$ |
141,566 |
|
|
|
|
|
|
Net Debt / Adjusted
EBITDA |
|
|
6.0 |
x |
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