UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X]☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedSeptember 30, 20162019
[ ] ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ___________________ to ____________________
Commission File Number:001-33177
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Maryland | 22-1897375 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
3499 Route 9 North, 101 Crawfords Corner Road, Suite 3-D, Freehold, 1405, Holmdel, NJ 0772807733
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code:(732)-577-9996732-577-9996
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share – New York Stock Exchange
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock | MNR | New York Stock Exchange | ||
6.125% Series C Cumulative Redeemable Preferred Stock | MNR-PC | New York Stock Exchange |
7.875% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share, $25 liquidation value per share – New York Stock Exchange
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share, $25 liquidation value per share – New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ]
☒ Yes [X] ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ]
☐ Yes [X] ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X]
☒ Yes [ ] ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X]☒ Yes [ ] ☐ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act:Act.
Large Accelerated Filer | Accelerated filer | ☐ | |||
Non-accelerated filer | Smaller reporting company | ||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [ ]☐ Yes [X] ☒ No
The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates of the registrant at March 31, 20162019 was approximately $715,934,000$1.2 billion (based on the $11.89$13.18 closing price per share of common stock on March 31, 2016)29, 2019).
There were 69,902,492 shares of Common Stockcommon stock outstanding as of November 15, 2016.2019.
Documents Incorporated by Reference: None.
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PART I
General Development of the Business
In this 10-K, “we”, “us”, “our”, “MREIC” or “the Company”, refers to Monmouth Real Estate Investment Corporation, together with its predecessors and subsidiaries, unless the context requires otherwise.
The Company isWe are a corporation operatingthat qualifies as a qualified real estate investment trust (REIT) under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the Code). The Company has been a REIT since 1969Our investment focus is to own well-located, modern, single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We were founded in 1968 and intendsare one of the oldest public equity REITs in the world. We intend to maintain itsour qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Companywe will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that it distributeswe distribute to itsour shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. We are subject to franchise taxes in several of the states in which we own properties.
The CompanyIn December 2017, as part of the Tax Cuts and Jobs Act of 2017 (the TCJA), Code Section 199A, was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, an individual taxpayer and estates and trusts may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or qualified dividend income.
We were established in 1968 as a New Jersey Business Trust (NJBT). In 1990, the NJBT merged into a newly formed Delaware corporation. On May 15, 2003, the Companywe changed itsour state of incorporation from Delaware to Maryland by merging with and into a Maryland corporation (the Reincorporation).corporation.
Narrative Description of Business
The Company’sOur primary business is the ownership of real estate. ItsOur investment focus is to own well-located, modern, single tenant,single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. In addition, the Company owns a portfolio of REIT investment securities which the Company generally limits to no more than approximately 10% of its undepreciated assets (which is the Company’s total assets excluding accumulated depreciation).
At September 30, 2016, the Company2019, we held investments in ninety-nine114 properties totaling approximately 16,010,00022.3 million square feet with an overall occupancy rate of 99.6%98.9% (See Item 2 for a detailed description of the properties). Subsequent to fiscal yearend 2019, effective November 1, 2019, we leased one of our previously vacant properties consisting of 60,000 square feet for 12.5 years, increasing our current overall occupancy rate to 99.2%. As of the fiscal yearend, our weighted-average lease expiration was 7.6 years, our annualized average base rent per occupied square foot was $6.20 and the weighted average building age, based on the square footage of our buildings, was 9.2 years. These properties are located in thirty30 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin. All of these properties are wholly-owned with the exception of the two properties in New Jersey in which the Company ownswe own a majority interest. All of our investment properties in which the Company has investments are leased on a net basis except for an industrial park in Monaca (Pittsburgh), Pennsylvania and theour only non-industrial asset, which is a shopping center, located in Somerset, New Jersey.
In addition, we opportunistically invest in marketable securities of other REITs. Historically, we have aimed to limit the size of our REIT securities portfolio to no more than approximately 10% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets.
As of September 30, 2019, we had 16 full-time employees and one part-time employee.
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During fiscal 2016, the Company2019, we purchased eightthree industrial properties totaling approximately 1,830,000824,000 square feet with net-leased terms ranging from ten10 to fifteen14 years resulting in a weighted average lease maturity of 12.311.6 years. Approximately 1,567,000All three properties are leased to investment-grade tenants or their subsidiaries, of which, 474,000 square feet, or 86%58%, is leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The aggregate purchase price for the eightthree properties was approximately $210,747,000 and they$138.6 million. These properties are located in Colorado, Florida, Kansas, Kentucky, Louisiana, North Carolina, PennsylvaniaGeorgia, Indiana and Washington.New Jersey. These eightthree properties are expected to generate annualized rental income over the life of their leases of approximately $14,076,000.$8.8 million. In connection with the three properties acquired during the 2019 fiscal year, we entered into three 15 year fully-amortizing mortgage loans. The funds for these eight acquisitions were provided by eight property levelprincipal amount of the three mortgage loans totaling $141,586,000, draws on an unsecured line of credit facility and cash on hand. The eight mortgages haveoriginally totaled $89.5 million with a weighted average interest rate of 3.85% and4.21%.
During fiscal 2019, we completed a weighted155,000 square foot building expansion at our property located in Monroe (Cincinnati), OH for a total project cost of $8.6 million. The expansion resulted in a new 15-year lease which extended the prior lease expiration date from February 2030 to February 2034. The expansion also resulted in an increase in initial annual rent effective March 1, 2019 of $821,000 from $980,000, or $4.22 per square foot, to $1.8 million, or $4.65 per square foot. In addition, the annual rent will increase by 2% per annum, resulting in an average annualized rent of $2.1 million over the 15-year term. In connection with this expansion, we obtained a 10.6 year, fully-amortizing second mortgage loan of $7.0 million at a fixed interest rate of 3.85%. The maturity of 14.9 years.the second mortgage loan coincides with the maturity of the property’s first fully-amortizing mortgage loan which is at a fixed interest rate of 3.77% and has a principal balance of $6.6 million as of the fiscal yearend.
Subsequent to the fiscal yearend 2019, on October 17, 2016, the Company10, 2019, we purchased a newly constructed 338,584616,000 square foot industrial building, situated on 78.6 acres, located in Hamburg, NY, which is in the BuffaloIndianapolis, IN Metropolitan Statistical Area (MSA). The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through March 2031.August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $35,100,000. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.03%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $2,308,000.$5.0 million.
In addition, subsequent to the fiscal yearend, on October 1, 2016, a 50,741 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Edinburg, TX was substantially completed for a cost of approximately $4,988,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, or $5.27 per square foot, to approximately $1,097,000, or $6.68 per square foot.
On October 27, 2016, the Company sold its only vacant building, (which increased our occupancy rate from 99.6% to 100.0%), consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value.
The industrial propertiesproperty purchased expanded and soldthus far during fiscal 2017 to date2020 increased our current total leasable square feet to approximately 16,340,000 and increased our occupancy rate to 100.0%.22.9 million.
In addition to the $81.5 million property purchased subsequent to theour fiscal yearend, as described above, we have entered into agreements to purchase eightfour, new build-to-suit, industrial buildings that are currently being developed in Florida, Michigan, North Carolina, Ohio (2) and South CarolinaUtah, totaling approximately 2,099,000997,000 square feet, each withfeet. These future acquisitions have net-leased terms ranging between tenfrom 10 to fifteen15 years with a weighted average lease maturityterm of 13.314.2 years. Approximately 1,267,000The total purchase price for these four properties is $150.5 million. Three of these four properties, consisting of 844,000 square feet, or 60%85%, isare leased to FDX andor its subsidiaries. All four properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The purchase price forreferences in this report to the eight properties is approximately $212,373,000.S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing three of these eight transactions during fiscal 20172020 and one during early fiscal 2018.2021. In connection with fiveone of the eightthese four properties, the Company haswe have entered into commitmentsa commitment to obtain five mortgages totaling $101,204,000 at fixed rates ranging from 3.60% to 4.20%,a 10 year, fully-amortizing mortgage loan of $9.4 million with a weighted averagefixed interest rate of 3.83%3.47%. Each of these mortgages will be a fifteen year, fully-amortizing loan. The Company
We may makehave additional acquisitions and expansions in fiscal 20172020 and fiscal 2018,2021, and the funds for these acquisitions may come from funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the Dividend Reinvestment and Stock Purchase Plan (DRIP), proceeds from the Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program), and proceeds from private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.
On October 1, 2019, our Board of Directors approved a cash dividend of $0.17 per share, to be paid on December 16, 2019, to common shareholders of record at the close of business on November 15, 2019, which represents an annualized common dividend rate of $0.68 per share. We intend to pay these distributions from cash flows from operations.
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We have maintained or increased our common stock cash dividend for 28 consecutive years. On October 1, 2015, our Board of Directors approved an increase in our quarterly common stock cash dividend from $0.15 per share to $0.16 per share representing a 6.7% increase in our quarterly cash dividend. Then again, most recently, on October 2, 2017, our Board of Directors approved an increase in our quarterly common stock cash dividend from $0.16 per share to $0.17 per share, representing a 6.3% increase in our quarterly cash dividend. These two dividend raises represent a total increase of 13%.
Our common stock dividend policy is dependent upon our earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. It is our intention to continue making comparable quarterly distributions in the future and to grow our distributions over time.
Currently, the Company derives itswe derive our income primarily from real estate rental operations. Rental and Reimbursement Revenue (excluding Lease Termination Income in fiscal 2016, 20152019, 2018 and 20142017 of $-0-, $238,625$210,000, and $1,182,890,$-0-, respectively) was $94,916,110, $77,775,497$158.5 million, $139.2 million and $64,672,341$116.4 million for the years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively. Total undepreciated assets (which is our total assets excluding accumulated depreciation) were $1,229,758,028$2.1 billion and $915,991,942$1.9 billion as of September 30, 20162019 and 2015,2018, respectively.
As of September 30, 2016, the Company2019, we had approximately 16,010,00022.3 million leasable square feet, of property, of which approximately 7,584,00010.4 million square feet, or 47%, consisting of fifty-three60 separate stand-alone leases, were leased to FDX and its subsidiaries (6%(5% to FDX and 41%42% to FDX subsidiaries). These properties are located in twenty-four25 different states. As of September 30, 2016,2019, the 60 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 8.7 years. As of September 30, 2019, the only tenantstenant that leased 5% or more of the Company’sour total square footage werewas FDX and(including its subsidiaries and Milwaukee Electric Tool Corporation, which leased approximately 862,000 square feet, comprising approximately 5%subsidiaries). None of the Company’s rental space.our properties are subject to a master lease or any cross-collateralization agreements.
During fiscal 2016,2019, the only tenant that accounted for 5% or more of the Company’sour rental and reimbursement revenue was FDX (including its subsidiaries). The Company’sOur rental and reimbursement revenue from FDX and its subsidiaries for the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively, totaled approximately $52,793,000, $41,954,000$94.9 million, $80.7 million and $35,007,000,$68.2 million, or 56% (7% from FDX and 49% from FDX subsidiaries), 54% (8% from FDX and 46% from FDX subsidiaries) and 54% (10% from FDX and 44% from FDX subsidiaries),as a percentage of total rent and reimbursement revenues.revenues, 60% (5% from FDX and 55% from FDX subsidiaries), 58% (7% from FDX and 51% from FDX subsidiaries) and 59% (7% from FDX and 52% from FDX subsidiaries).
In additionAs noted previously, subsequent to real estate property holdings, the Company held $73,604,894 in marketable REIT securities at September 30, 2016, representing 5.3% of the Company’s undepreciated assets (whichfiscal yearend 2019, on October 10, 2019, we purchased a newly constructed 616,000 square foot industrial building, net-leased to Amazon.com Services, Inc. which is the Company’s total assets excluding accumulated depreciation). These liquid real estate holdings are not included in calculating the tenant concentration ratios above and therefore further enhance the Company’s diversification.guaranteed by Amazon.com, Inc. As a result of this recent purchase, we currently have 22.9 million total leasable square feet, of which 1.4 million square feet, or 6% of our total leasable square feet, consisting of four separate stand-alone leases are leased to Amazon.com Services, Inc. These properties are located in four different states. We estimate that our rental and reimbursement revenue from Amazon.com Services, Inc. will be approximately 7% of our total rent and reimbursement revenues in fiscal 2020.
FDX and Amazon.com, Inc. are publicly-owned companies and financial information related to these entities are available at the securities portfolio providesSEC’s website, www.sec.gov. Both FDX and Amazon.com, Inc. are considered Investment Grade issuers by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to the Company with additional liquidity, diversification, incomeSEC’s website, S&P Global Ratings’ website and serves as a proxy for real estate when more favorable risk adjusted returnsMoody’s website are not available.intended to and do not include or incorporate by reference into this report the information of FDX, Amazon.com, Inc., S&P Global Ratings or Moody’s on such websites.
The Company’sOur weighted-average lease expiration was 7.47.6 years and 7.28.1 years as of September 30, 20162019 and 2015,2018, respectively, and itsour average annualized rent per occupied square foot as of September 30, 20162019 and 20152018 was $5.72$6.20 and $5.48,$6.01, respectively. The Company’sOur overall occupancy rate as of September 30, 20162019 and 20152018 was 99.6%98.9% and 97.7%99.6%, respectively. Subsequent to the fiscal yearend on October 27, 2016, the Company sold its only2019, effective November 1, 2019, we leased one of our previously vacant buildingproperties consisting of 60,000 square feet for $4,272,000 which increased12.5 years, increasing our current overall occupancy rate to 100.0%99.2%.
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The Company competesWe compete with other investors in real estate for attractive investment opportunities. These investors include other equity real estate investment trusts, limited partnerships, syndications and private investors, among others. Competition in the market areas in which the Company operateswe operate is significant and affects the Company’s ability to acquire or expand properties,acquisitions, occupancy levels, rental rates and operating expenses of certain properties. Management hasWe have built long-term relationships withwithin our tenant base as well as within the merchant builders whichbuilder community. These relationships have historically provided the Companyus with investment opportunities that fit the Company’sour investment policy. The amount of new construction of industrial properties on the national level has been increasing the past fourseven years following several years of historically low levels of new supply. These levels of new supply, although increasing, continue to be below historical norms. Driven to a large extent by the rampantcontinued growth in ecommerce sales, demand for industrial space remains very strong, driving national occupancy rates to an all-time high of 95% currently. For further discussion of potential impact of competitive conditions on our business, see Item 1A: Risk Factors below.
Industrial space demand is very closely correlated to Gross Domestic Product (GDP) growth. Despite ten years of unprecedented monetary stimulus, real annual GDP growth averaged less than 2.0% over this period. Economic growth has been strengthening this past year further increasing demand for industrial space. The Companymost significant demand driver for modern industrial real estate continues to invest in marketable securities of other REITs, whichbe ecommerce. Every year since the Company generally limits to no more than approximately 10% of its undepreciated assets, (which is the Company’s total assets excluding accumulated depreciation). The Company from time to time may purchase these securities on margin when the dividend and interest yields exceed the costturn of the funds. Ascentury, the percentage of September 30, 2016goods purchased on-line has increased at an average 16% annual growth rate. Today, excluding food, fuel, and 2015, there were no draws against the margin. The REIT securities portfolio,autos, approximately 19% of total retail sales have migrated from traditional store sales to the extent not pledged to secure borrowings, provides the Company with additional liquidityon-line sales and additional income. Such securities are subject to risks arising from adverse changeswe expect this growth in market rates and prices, primarily interest rate risk relatingshare to debt securities and market price risk relating to equity securities. From time to time, the Company may use derivative instruments to mitigate interest rate risk, however, this has not occurred during any periods presented. At September 30, 2016 and 2015, the Company had $73,604,894 and $54,541,237, respectively, of securities available for sale. The unrealized net gain (loss) on securities available for sale at September 30, 2016 and 2015 was $12,942,267 and $(5,441,603), respectively, resulting in an increasecontinue. We expect these favorable trends for the fiscal yearindustrial real estate sector to be a leading demand driver for the foreseeable future, as consumers continue to embrace the added efficiencies of $18,383,870. Foron-line consumption. The strong financial position of our tenants, together with the fiscal years ended September 30, 2016, 2015 and 2014,long duration of our leases, provides for high quality, reliable income streams throughout the Company’s net realized gains from the salebusiness cycle.
In October 2018, we completed a public offering of securities were $4,398,599, $805,513 and $2,166,766, respectively.
On September 13, 2016, the Company issued 5,400,0009.2 million shares of a 6.125% Series C Cumulative Redeemable Preferredour Common Stock (Series C Preferred Stock)(including the underwriters’ option to purchase 1.2 million additional shares) at an offeringa price of $25.00$15.00 per share, before underwriting discounts. This was our first common stock offering since 2014 and represented an 11.3% increase in an underwritten public offering. The Companyour outstanding common shares. We received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of $132.3 million.
On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the underwriting discountoffer and other estimated offering expenses,sale of approximately $130,543,000. On September 15, 2016, the Company used $45,000,000 of such net proceeds from the offering to reduce the amounts outstanding under its unsecured line of credit facility (the “Facility”) and on October 14, 2016, the Company used $53,493,750 of such net proceeds from the offering to redeem all of the 2,139,750 issued and outstanding shares of its 7.625%our 6.125% Series AC Cumulative Redeemable Preferred Stock, (7.625% Series A Preferred Stock). In addition, on October 14, 2016, the Company used $498,540 of such net proceeds from the offering to pay all dividends, accrued and unpaid, to and including the redemption date of the 7.625% Series A Preferred Stock. The Company intends to use the remaining proceeds to reduce the amounts outstanding under its Facility and to purchase properties and fund expansions of its existing properties in the ordinary course of business and for general corporate purposes.
On September 14, 2016, the Company announced that it intended to redeem all 2,139,750 issued and outstanding shares of its 7.625% Series A Preferred Stock. As discussed above, the Company redeemed the 7.625% Series A Preferred Stock on October 14, 2016 at$0.01 par value per share, with a redemption priceliquidation preference of $25.00 per share, plus all dividends accruedor our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and unpaidsale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million. Sales of shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and including the redemption date, in an amount equal to $0.23299 per share. As ofblock trades. We began selling shares through these programs on July 3, 2017. Since inception through September 30, 2016, the outstanding 7.625% Series A Preferred Stock has been reclassified out2019, we sold 5.5 million shares under these programs at a weighted average price of stockholder’s equity$24.81 per share, and is reflected as a liability at redemption value and has recognized a deemed dividendgenerated net proceeds, after offering expenses, of $2,942,149 on the Company’s consolidated statement$134.0 million, of income forwhich 2.4 million shares were sold during the fiscal year ended September 30, 2016, which represents2019 at a weighted average price of $24.49 per share, and generated net proceeds, after offering expenses, of $58.2 million. As of September 30, 2019, there is $59.8 million remaining that may be sold under the difference between redemption valuePreferred Stock ATM Program.
As of September 30, 2019, 13.9 million shares of the 6.125% Series C Preferred Stock were issued and carrying valueoutstanding.
Subsequent to the September 30, 2019, through November 25, 2019, we sold 1.4 million shares of our 6.125% Series C Preferred Stock under our Preferred Stock ATM Program at a weighted average price of $25.00 per share, and realized net proceeds, after offering expenses, of original deferred issuance costs.$35.3 million.
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Investment and Other Policies
The Company’sOur investment policy is to concentrate itsour investments in well-located, modern, single tenant,single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. The Company’sOur strategy is to obtain a favorable yield spread between the income from the net-leased industrial properties and interest costs. In addition, management believeswe believe that investments in well-located, modern industrial properties provide a potential for long-term capital appreciation. There is the risk that, upon expiration of leases, the properties will become vacant or will be re-leased at lower rents. The results obtained by the Company byfrom re-leasing the properties will depend on the market for industrial properties at that time. The Company has renewed all three leases, or 100%
In fiscal 2019, approximately 7% of theour gross leasable area, thatrepresenting 11 leases totaling 1.5 million square feet, was scheduledset to expire during fiscal 2016 atexpire. Seven of these 11 leases have been renewed, representing 1.1 million square feet, or 76% of the expiring square footage and have a weighted average lease term of 7.2 years. These seven lease renewals resulted in a U.S. GAAP straight-line weighted average lease rate of $4.81 per square foot. The renewed weighted average initial cash rent per square foot is $4.67. This compares to the former weighted average rent of $4.75 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $4.99 per square foot, resulting in an increase in the weighted average lease rate of 5.3%1.3% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 2.2%6.4% on a cash basis. Three of the four leases that did not renew were re-tenanted. The seven lease renewals, along with the three properties that were re-tenanted, resulted in a weighted average term of 7.6 years and an increase in the weighted average lease rate of 3.7% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 5.1% on a cash basis. The property that has not been re-tenanted, represents 105,000 square feet or 0.7% of our total gross leasable area and is currently being marketed.
The Company seeksWe seek to invest in well-located, modern, single tenant,single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. In management’s opinion, the newly builtrecently acquired facilities meet these criteria. The Company hasWe have a concentration of properties leased to FDX and FDX subsidiaries. This is a risk factor that shareholders should consider. FDX is a publicly-owned corporationcompany and financial information related to FDXthis entity is available at the SEC’s website,www.sec.gov. FDX is rated “BBB” by S&P Global Ratings (www.standardandpoors.com) and is rated “Baa2” by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings. The referencereferences in this report to the SEC’s website, isS&P Global Ratings’ website and Moody’s website are not intended to and doesdo not include or incorporate by reference into this report the information of FDX, S&P Global Ratings or Moody’s on this website.such websites.
The CompanyWe may issue securities for property; however, this has not occurred to date. The CompanyWe may repurchase or reacquire itsour shares from time to time if, in the opinion of the Board of Directors, such acquisition is advantageousin our best interest. On January 16, 2019, our Board of Directors authorized a $40.0 million increase to our previously announced $10.0 million Common Stock Repurchase Program (the “Program”), bringing the total available under the Program to $50.0 million. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. To date, we have not repurchased any common stock pursuant to the Company. No shares were repurchased or reacquired during fiscal 2016Program, and as of September 30, 2016,we may elect not to repurchase any common stock in the Companyfuture. The Program does not own any of its own shares.have a termination date and may be suspended or discontinued at our discretion without prior notice.
Property Management
Currently, all ninety-nine properties owned by the Company, withWith the exception of twothree properties, that are located in Streetsboro, Ohio and Carlstadt, New Jersey,all of our 114 properties are self-managed by the Company.us.
The CompanyWe paid fees directly to local property management subagents in the amount of $356,316, $306,487$468,000, $437,000 and $264,811$394,000 for fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively.
Until October 31, 2014, the Company’s two industrial properties in Olive Branch, Mississippi, were managed by Industrial Developments International (IDI). Management fees paid to IDI for the fiscal years ended September 30, 2016, 2015 and 2014 were $-0-, $8,274 and $49,476, respectively. These management fees were reimbursed to the Company by the tenants. Effective November 1, 2014, the Company began to self-manage these properties.
The Company’s industrial property in Streetsboro, Ohio is managed by GEIS Companies (GEIS). Management fees paid to GEIS for the fiscal years ended September 30, 2016, 2015 and 2014 were $50,082, $50,112 and $50,138, respectively. These management fees were reimbursed to the Company by the tenants.
The Company’s industrial property in Carlstadt, New Jersey is owned by Palmer Terrace Realty Associates, LLC. The Company owns 51% of Palmer Terrace Realty Associates, LLC. This property is managed by Marcus Associates, an entity affiliated with the owner of the 49% non-controlling interest. Management fees paid by Palmer Terrace Realty Associates, LLC to Marcus Associates were $15,804 for each of the fiscal years ended September 30, 2016, 2015 and 2014.
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Environmental Matters
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although generally our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, the Companywe may be required to satisfy such obligations. In addition, as the owner of such properties, the Companywe may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with managing the properties or upon acquisition of a property, the Company authorizeswe authorize the preparation of Phase I and, when necessary, Phase II environmental reports with respect to itsour properties. Based upon such environmental reports and the Company’sour ongoing review of itsour properties, as of the date of this Annual Report, the Company iswe are not aware of any environmental condition with respect to any of itsour properties which it believeswe believe would be reasonably likely to have a material adverse effect on itsour financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown; (2) changes in law; (3) the conduct of tenants; or (4) activities relating to properties in the vicinity of our properties, will not expose the Companyus to material liability in the future.
Contact Information
Additional information about the Companyus can be found on the Company’sour website which is located at www.mreic.reit.www.mreic.reit. Information contained on or hyperlinked from our Web siteWebsite is not incorporated by reference into and should not be considered part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (SEC). The Company makesWe make available, free of charge, on or through itsour website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.You can also read and copy any materials the Company files with the SEC at its Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internetinternet site (http:(http://www.sec.gov)www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Segment Reporting & Financial Information
The Company’s primary business is the ownership and management of real estate properties. The Company invests in well-located, modern, single tenant, industrial buildings leased primarily to investment grade tenants or their subsidiaries on long-term net leases. The Company reviews operating and financial information for each property on an individual basis and, therefore, each property represents an individual operating segment. The Company evaluates financial performance using Net Operating Income (“NOI”) from property operations. NOI is defined as recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities and repairs and maintenance. The Company has aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated as industrial properties subject to long-term net leases primarily to investment grade tenants or their subsidiaries.For required financial information related to our operations and assets, please refer to our consolidated financial statements, including the notes thereto, included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report.
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The following risk factors address the material risks concerning our business. If any of the risks discussed in this report were to occur, our business, prospects, financial condition, results of operation and our ability to service our debt and make distributions to our shareholders could be materially and adversely affected and the market price per share of our stock could decline significantly. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”
Real Estate Industry Risks
Our business and financial results are affected by local real estate conditions in areas where we own properties.We may be affected adversely by general economic conditions and local real estate conditions. For example, an oversupply of industrial properties in a local area or a decline in the attractiveness of our properties to tenants and potential tenants could have a negative effect on us.
Other factors that may affect general economic conditions or local real estate conditions include but are not limited to:
● | population and demographic trends; | |
● | employment and personal income trends; | |
● | zoning, use and other regulatory restrictions; | |
● | income tax laws; | |
● | changes in interest rates and availability and costs of financing; and | |
● | competition from other available real estate. |
We may be unable to compete with our larger competitors and other alternatives available to tenants or potential tenants of our properties. The real estate business is highly competitive. We compete for properties with other real estate investors and purchasers, including other real estate investment trusts, limited partnerships, syndications and private investors, some of whom may have greater financial resources, revenues and geographical diversity than we have. Furthermore, we compete for tenants with other property owners. All of our industrial properties are subject to significant local competition. We also compete with a wide variety of institutions and other investors for capital funds necessary to support our investment activities and asset growth. To the extent that we are unable to effectively compete in the marketplace, our business may be adversely affected.
We are subject to significant regulation that inhibits our activities and may increase our costs. Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties at a substantial cost and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We may incur additional costs to comply with any future requirements.
Our investments are concentrated in the industrial distribution sector and our business would be adversely affected by an economic downturn in that sector. Our investments in real estate assets are primarily concentrated in the industrial distribution sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry.
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Risks Associated with Our Properties
We may be unable to renew or extend leases or re-let space as leases expire. While we seek to invest in well-located, modern, single tenant,single-tenant, industrial buildings, leased to investment-grade tenants or their subsidiaries on long-term net leases, a number of our properties are subject to short-term leases. When a lease expires, a tenant may elect not to renew or extend it. We may not be able to re-let the property on similar terms, if we are able to re-let the property at all. The terms of renewal, extension or re-lease (including the cost of required renovations and/or concessions to tenants) may be less favorable to us than the prior lease. If we are unable to re-let all or a substantial portion of our properties, or if the rental rates upon such re-letting are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions, may be adversely affected. We have established an annual budget for renovation and re-letting expenses that we believe is reasonable in light of each property’s operating history and local market characteristics. However, this budget may not be sufficient to cover these expenses.
Our business is substantially dependent on FedEx Corporation. FDX, together with its subsidiaries, is our largest tenant, consisting of fifty-three60 separate stand-alone leases located in twenty-four25 different states as of September 30, 2016.2019. As of September 30, 2016, the Company2019, we had approximately 16,010,00022.3 million square feet of property, of which approximately 7,584,00010.4 million square feet, or 47%, were leased to FDX and its subsidiaries (6%(5% from FDX and 41%42% from FDX subsidiaries). Rental and reimbursement revenue from FDX and its subsidiaries is approximately 56% (7%60% (5% from FDX and 49%55% from FDX subsidiaries) of total rental and reimbursement revenue for fiscal 2016.2019. None of our properties are subject to a master lease or any cross-collateralization agreements. No other tenant accounted for 5% or more of the Company’sour total Rental and Reimbursement revenue for fiscal 2016.2019. As a result of this concentration, our business, financial condition and results of operations, including the amount of cash available for distribution to our stockholders, could be adversely affected if we are unable to do business with FDX or FDX reduces its business with us or FDX and its subsidiaries were to become unable to make lease payments because of a downturn in its business or otherwise.
As noted previously, subsequent to fiscal yearend 2019, on October 10, 2019, we purchased a newly constructed 616,000 square foot industrial building, net-leased to Amazon.com Services, Inc. which is guaranteed by Amazon.com, Inc. As a result of this recent purchase, we currently have 22.9 million total leasable square feet, of which 1.4 million square feet, or 6% of our total leasable square feet, consisting of four separate stand-alone leases are leased to Amazon.com Services, Inc. These properties are located in four different states. We estimate that our rental and reimbursement revenue from Amazon.com Services, Inc. will be approximately 7% of our total rent and reimbursement revenues in fiscal 2020.
FDX and Amazon.com, Inc. are publicly-owned companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. Both FDX and Amazon.com, Inc. are considered Investment Grade issuers by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to the SEC’s website, S&P Global Ratings’ website and Moody’s website are not intended to and do not include or incorporate by reference into this report the information of FDX, Amazon.com, Inc., S&P Global Ratings or Moody’s on such websites.
We are subject to risks involved in single tenant leasessingle-tenant leases..We focus our acquisition activities on real properties that are net-leased to single tenants.single-tenants. Therefore, the financial failure of, or other default by, a single tenantsingle-tenant under its lease is likely to cause a significant reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property. In addition, we will be responsible for 100% of the operating costs following a vacancy at a single tenantsingle-tenant building.
We may be affected negatively by tenant financial difficulties and leasing delays. At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in the demand for space at our industrial properties. As a result, our tenants may delay lease commencement, fail to make rental payments when due, or declare bankruptcy. Any such event could result in the termination of that tenant’s lease and losses to us.
We receive a substantial portion of our income as rents under long-term leases. If tenants are unable to comply with the terms of their leases because of rising costs or falling revenues, we in our sole discretion, may deem it advisable to modify lease terms to allow tenants to pay a lower rental rate or a smaller share of operating costs, taxes and insurance. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to the tenant. We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply and, in some instances, may restrict the amount and recoverability of our claims against the tenant. A tenant’s default on its obligations to us for any reason could adversely affect our financial condition and the cash we have available for distribution.
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We may be unable to sell properties when appropriate because real estate investments are illiquid.Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to vary our property portfolio promptly in response to changes in economic or other conditions. In addition, the Code may limit our ability to sell our properties. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service debt and make distributions to our shareholders.
Environmental liabilities could affect our profitability. We face possible environmental liabilities. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when hazardous or toxic substances were disposed on, or released from, the property. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As a current or former owner and operator of real estate, we may be required by law to investigate and clean up hazardous substances released at or from the properties we currently own or operate or have in the past owned or operated. We may also be liable to the government or to third parties for property damage, investigation costs and cleanup costs. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral. We are not aware of any environmental liabilities relating to our investment properties which would have a material adverse effect on our business, assets, or results of operations. However, we cannot assure you that environmental liabilities will not arise in the future and that such liabilities will not have a material adverse effect on our business, assets or results of operation.
Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties. We compete with other owners and operators of real estate, some of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire. As a result, our financial condition, cash flow and cash available for distribution, the market price of our preferred and common stock and our ability to satisfy our debt service obligations could be materially and adversely affected.
Coverage under our existing insurance policies may be inadequate to cover losses. Weather conditions and natural disasters such as hurricanes, tornados,tornadoes, earthquakes, floods, droughts, fires and other environmental conditions can harm our business operations. We generally maintain insurance policies related to our business, including casualty, general liability and other policies, covering our business operations, employees and assets. However, we would be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots or acts of war. If an uninsured loss or a loss in excess of insured limits were to occur with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties and, in the case of debt, which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, we cannot assure you that we will not incur losses in excess of our insurance coverage, or that we will be able to obtain insurance in the future at acceptable levels and reasonable costs.
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We may be unable to acquire properties on advantageous terms or acquisitions may not perform as we expect. We have acquired individual properties and intend to continue to do so. However, we may be unable to acquire any of the properties that we may identify as potential acquisition opportunities in the future. Our acquisition activities and their success are subject to the following risks:
● | when we are able to locate a desired property, competition from other real estate investors may significantly increase the purchase price; | |
● | acquired properties may fail to perform as expected; | |
● | the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates; | |
● | acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures; | |
● | we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected; and | |
● | we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the seller. As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to resolve it, which could adversely affect our cash flow and financial condition. |
Financing Risks
We face inherent risks associated with our debt incurrence. We finance a portion of our investments in properties and marketable securities through the incurrence of debt. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In addition, debt creates other risks, including:
● | rising interest rates on our variable rate debt; | |
● | inability to repay or refinance existing debt as it matures, which may result in forced disposition of assets on disadvantageous terms; | |
● | one or more lenders under our | |
● | refinancing terms that are less favorable than the terms of existing debt; and | |
● | inability to meet required payments of principal and/or interest. |
We mortgage our properties, which subjects us to the risk of foreclosure in the event of non-payment.We mortgage many of our properties to secure payment of indebtedness and, if we are unable to meet mortgage payments, the property could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure of one or more of our properties could adversely affect our financial condition, results of operations, cash flow, and ability to service debt and make distributions and the market price of our preferred and common stock.
We face risks related to “balloon payments” and refinancings. Certain mortgages will have significant outstanding principal balances on their maturity dates, commonly known as “balloon payments.” There can be no assurance that we will have the funds available to fund the balloon payment or that we will be able to refinance the debt on favorable terms or at all. To the extent we cannot either pay off or refinance this debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which could have an adverse impact on our financial performance and ability to service debt and make distributions.
We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each year to distribute to our shareholders at least 90% of our REIT taxable income, and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including (i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings and cash distributions; and (iv) the market price of our capital stock. Additional debt financing may substantially increase our debt-to-total capitalization ratio. Additional equity issuances may dilute the holdings of our current shareholders.
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We may become more highly leveraged, resulting in increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions.We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Our governing documents do not limit the amount of indebtedness we may incur. Accordingly, our Board of Directors may authorize us to incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT.debt. We could therefore become more highly leveraged, resulting in an increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions to shareholders.
Fluctuations in interest rates could materially affect our financial results.Because a portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. If the United States Federal Reserve increases short-term interest rates, this may have a significant upward impact on shorter-term interest rates, including the interest rates that our variable rate debt is based upon. Potential future increases in interest rates and credit spreads may increase our interest expense and affect our ability to obtain fixed rate debt at favorable interest rates and therefore negatively affect our financial condition and results of operations, and reduce our access to the debt or equity capital markets.
The interest rate on our unsecured line of credit facility is based on the London Interbank Offered Rate (“LIBOR”) or Bank of Montreal’s (BMO’s) prime lending rate. All indications are that the LIBOR reference rate will no longer be published beginning on or around the year 2021. At that point in time, our unsecured line of credit facility will no longer have the LIBOR reference rate available and the reference rate will need to be replaced or we will be required to use BMO’s prime lending rate as a reference rate, which historically has resulted in higher effective interest rates than the LIBOR reference rate. We have very good working relationships with our lenders and all indications we have received from our lenders is that their goal is to have a replacement reference rate under the unsecured line of credit facility. However, because this is the first time a reference rate for our unsecured line of credit facility will stop being published, we cannot be sure how a replacement rate event will conclude. Until we have more clarity from our lenders on how they plan on dealing with a replacement rate event, we cannot be certain of the impact to us.
Covenants in our loan documents could limit our flexibility and adversely affect our financial condition. The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we were to default under credit agreements or other debt instruments, our financial condition could be adversely affected.
Risks Related to our Status as a REIT
If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.To qualify as a REIT, we must, among other things, satisfy two gross income tests, under which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to our leases to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. The determination of whether a lease is a true lease depends upon an analysis of all the surrounding facts and circumstances. We believe that our leases will be respected as true leases for federal income tax purposes. However, there can be no assurance that the Internal Revenue Service (IRS) will agree with this view. If the leases are not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs, and we could lose our REIT status.
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Failure to make required distributions would subject us to additional tax.In order to qualify as a REIT, we must, among other requirements, distribute, each year, to our shareholders at least 90 percent of our taxable income, excluding net capital gains. To the extent that we satisfy the 90 percent distribution requirement, but distribute less than 100 percent of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4 percent nondeductible excise tax on the amount, if any, by which our distributions (or deemed distributions) and the amounts of income retained on which we have paid corporate income tax in any year are less than the sum of:
● | 85 percent of our ordinary income for that year; | |
● | 95 percent of our capital gain net earnings for that year; and | |
● | 100 percent of our undistributed taxable income from prior years. |
To the extent we pay out in excess of 100 percent of our taxable income for any tax year, we may be able to carry forward such excess to subsequent years to reduce our required distributions for purposes of the 4 percent excise tax in such subsequent years. We intend to pay out our income to our shareholders in a manner intended to satisfy the 90 percent distribution requirement. Differences in timing between the recognition of income and the related cash receipts, the effects of non-deductible capital expenditures, the creation of reserves or the effect of required debt amortization payments could require us to borrow money or sell assets (potentially during unfavorable market conditions) to pay out enough of our taxable income to satisfy the 90 percent distribution requirement and to avoid corporate income tax.
We may not have sufficient cash available from operations to pay distributions, and, therefore, distributions may be made from borrowings.The actual amount and timing of distributions will be determined by our Board of Directors in its discretion and typically will depend on the amount of cash available for distribution, which will depend on items such as current and projected cash requirements, limitations on distributions imposed by law or our financing arrangements and tax considerations. As a result, we may not have sufficient cash available from operations to pay distributions as required to maintain our status as a REIT. Therefore, we may need to borrow funds to make sufficient cash distributions in order to maintain our status as a REIT, which may cause us to incur additional interest expense as a result of an increase in borrowed funds for the purpose of paying distributions.
We may be required to pay a penalty tax upon the sale of a property.The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property, other than foreclosure property, held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100 percent penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of real estate or other property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. It is our intent that we and our subsidiaries will hold the interests in the real estate for investment with a view to long-term appreciation, engage in the business of acquiring and owning real estate, and make occasional sales as are consistent with our investment objectives. We do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions.
We may be adversely affected if we fail to qualify as a REIT.If we fail to qualify as a REIT, we The 100% tax will not be allowedapply to deduct distributions to shareholders in computing ourgains from the sale of property that is held through a taxable REIT subsidiary or other taxable corporation, although such income and will be subject to tax in the hands of the corporation at regular U.S. federal income tax including anyrates.
There is a risk of changes in the tax law applicable alternative minimum tax, at regular corporate rates. In addition, we might be barred from qualification as a REIT forto real estate investment trusts. Because the four years following disqualification. The additional tax incurred at regular corporate rates would reduce significantlyIRS, the cash flow available for distribution to shareholdersUnited States Treasury Department and for debt service. Furthermore, we would no longer be required to make any distributions to our shareholders as a condition to REIT qualification. Any distributions to shareholders would be taxable as ordinary income to the extent of our current and accumulated earnings and profits, although such dividend distributions would be subject to a topCongress frequently review federal income tax ratelegislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of 20% (and potentially a Medicaresuch legislative actions may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of 3.8%). Corporate distributees, however, may be eligible forus and/or our investors.
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The recently enacted Tax Cuts and Jobs Act of 2017, or the dividends receivedTCJA, has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their shareholders. Changes made by the TCJA that could affect us and our shareholders include:
● | temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026; | |
● | permanently eliminating the progressive corporate tax rate structure, with a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%; | |
● | permitting a deduction for certain pass-through business income, including dividends received by our shareholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will generally allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026; | |
● | reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%; | |
● | limiting our deduction for net operating losses to 80% of REIT taxable income (prior to the application of the dividends paid deduction); | |
● | generally limiting the deduction for net business interest expense in excess of 30% of a business’s adjusted taxable income except for taxpayers that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system for certain property); and | |
● | eliminating the corporate alternative minimum tax. |
You are urged to consult with your tax advisor with respect to the status of legislative, regulatory, judicial or administrative developments and proposals and their potential effect on the distributions, subject to limitations under the Code.an investment in our securities.
To qualify as a REIT, we must comply with certain highly technical and complex requirements. We cannot be certain we have complied, and will always be able to comply, with the requirements to qualify as a REIT because there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability to continue to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income tax consequences of qualification. We believe that we have qualified as a REIT since our inception and intend to continue to qualify as a REIT. However, we cannot assure you that we are qualified or will remain qualified.
There is a risk of changes in the tax law applicable to real estate investment trusts. Because the IRS, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of such legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our investors.
We may be unable to comply with the strict income distribution requirement applicable to REITs. As noted above, to maintain qualification as a REIT under the Code, a REIT must annually distribute to its shareholders at least 90% of its REIT taxable income, excluding the dividends paid deduction and net capital gains. This requirement limits our ability to accumulate capital. We may not have sufficient cash or other liquid assets to meet the 90% distribution requirements. Difficulties in meeting the 90% distribution requirement might arise due to competing demands for our funds or to timing differences between tax reporting and cash receipts and disbursements, because income may have to be reported before cash is received, because expenses may have to be paid before a deduction is allowed, because deductions may be disallowed or limited or because the IRS may make a determination that adjusts reported income. In those situations, we might be required to borrow funds or sell properties on adverse terms in order to meet the 90% distribution requirement and interest and penalties could apply which could adversely affect our financial condition. If we fail to satisfy the 90% distribution requirement, we would cease to be taxed as a REIT.
Notwithstanding our status as a REIT, we are subject to various federal, state and local taxes on our income and property. For example, we will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains; provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the shareholder level. We may be subject to other federal income taxes and may also have to pay some state income or franchise taxes because not all states treat REITs in the same manner as they are treated for federal income tax purposes. In addition, any taxable REIT subsidiary that we may form will be subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders.
15 |
Other Risks
We may not be able to access adequate cash to fund our business.Our business requires access to adequate cash to finance our operations, distributions, capital expenditures, debt service obligations, development and redevelopment costs and property acquisition costs, if any. We expect to generate the cash to be used for these purposes primarily with operating cash flow, borrowings under secured and unsecured term loans, proceeds from sales of strategically identified assets and, when market conditions permit, through the issuance of debt and equity securities from time to time. We may not be able to generate sufficient cash to fund our business, particularly if we are unable to renew or extend leases, lease vacant space or re-lease space as leases expire according to expectations.
We are dependent on key personnel.Our executive and other senior officers have a significant role in our success. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely affect our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets.
We may amend our business policies without shareholder approval.Our Board of Directors determines our growth, investment, financing, capitalization, borrowing, operations and distributions policies. In addition, our charter provides that our Board of Directors may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. Although our Board of Directors has no present intention to amend or reverse any of these policies, they may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in our policies. We cannot assure you that changes in our policies will serve fully the interests of all shareholders.
The market value of our preferred and common stock could decrease based on our performance and market perception and conditions.The market value of our preferred and common stock may be based primarily upon the market’s perception of our growth potential and current and future cash dividends, and may be secondarily based upon the real estate market value of our underlying assets. The market price of our preferred and common stock is influenced by their respective distributions relative to market interest rates. Rising interest rates may lead potential buyers of our stock to expect a higher distribution rate, which could adversely affect the market price of our stock. In addition, rising interest rates could result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions.
There are restrictions on the ownership and transfer of our capital stock.To maintain our qualification as a REIT under the Code, no more than 50% in value of our outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals, as defined in the Code to also include certain entities, during the last half of a taxable year. Accordingly, our charter contains provisions restricting the ownership and transfer of our capital stock. These restrictions may discourage a tender offer or other transaction, or a change in management or of control of us that might involve a premium price for our common stock or preferred stock or that our shareholders otherwise believe to be in their best interests, and may result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
Our earnings are dependent, in part, upon the performance of our investment portfolio.As permitted by the Code, we opportunistically invest in and own marketable securities of other REITs, whichREITs. Historically, we generallyhave aimed to limit the size of our REIT securities portfolio to no more than approximately 10% of our undepreciated assets, (which is ourwhich we define as total assets excluding accumulated depreciation).depreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of this fiscal year. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Going forward, to achieve our threshold investment goal, we will continually evaluate opportunities to optimize our REIT securities portfolio. To the extent that the fair value of those investments declinesdecline or those investments do not provide an attractive return, our earnings and cash flow could be adversely affected. As mentioned above, beginning with our fiscal year ended September 30, 2019, all changes in the fair value of the equity securities of other REITs that we own, whether realized or unrealized, were recognized as gains or losses in our consolidated statement of income. As a result, fluctuations in the fair value of those investments will impact our earnings even if we have not sold the underlying investments.
16 |
We are subject to restrictions that may impede our ability to effect a change in control. Certain provisions contained in our charter and bylaws and certain provisions of Maryland law may have the effect of discouraging a third party from making an acquisition proposal for us and thereby inhibit a change in control. These provisions include the following:
● | Our charter provides for three classes of directors with the term of office of one class expiring each year, commonly referred to as a “staggered board.” By preventing common shareholders from voting on the election of more than one class of directors at any annual meeting of shareholders, this provision may have the effect of keeping the current members of our Board of Directors in control for a longer period of time than shareholders may desire. | |
● | Our charter generally limits any stockholder from acquiring more than 9.8% (in value or in number of shares, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our excess stock). While this provision is intended to assist us in qualifying as a REIT for federal income tax purposes, the ownership limit may also limit the opportunity for shareholders to receive a premium for their shares of common stock that might otherwise exist if an investor was attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise | |
● | The request of shareholders entitled to cast a majority of the votes entitled to be cast at such meeting is necessary for shareholders to call a special meeting. We also require advance notice from shareholders for the nomination of directors or proposals of business to be considered at a meeting of shareholders. | |
● | Our Board of Directors may authorize and cause us to issue securities without shareholder approval. Under our charter, our Board of Directors has the power to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as the Board of Directors may determine. | |
● | “Business combination” provisions that provide that, unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested shareholder” or an affiliate of an interested shareholder for five years after the most recent date on which the interested shareholder became an interested shareholder, and thereafter unless specified criteria are met. An interested shareholder is defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question. In our charter, we have expressly elected that the Maryland Business Combination Act not govern or apply to any transaction with a related company, UMH Properties, Inc. | |
● | The duties of directors of a Maryland corporation do not require them to, among other things (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any shareholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act to exempt any person or transaction from the requirements of those provisions, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the shareholders in an acquisition. |
We cannot assure you that we will be able to pay distributions regularly.Our ability to pay distributions in the future is dependent on our ability to operate profitably and to generate cash from our operations and the operations of our subsidiaries and is subject to limitations under our financing arrangements and Maryland law. Under the Maryland General Corporation Law, or the MGCL, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as the debts became due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus, unless the charter permits otherwise, the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. Accordingly, we cannot guarantee that we will be able to pay distributions on a regular quarterly basis in the future.
17 |
Future terrorist attacks and military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity.Among other things, it is possible that interest rates may be affected by these events. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. Terrorist acts could also result in significant damages to, or loss of, our properties.
We and our tenants may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition.
Disruptions in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our capital stock.Over the last several years, the United States stock and credit markets have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks and debt securities to fluctuate substantially and the spreads on prospective debt financing to widen considerably. More recently, the financial crisis in Europe (including financial difficulties at several large European banks) has had a similar, although less pronounced, effect. Adding to the European credit crisis, in June 2016, voters in the United Kingdom elected to withdraw from the European Union in a national referendum. The referendum has created significant uncertainty about the future relationship between the United Kingdom and the European Union and has continued to have a material adverse effect on global economic conditions and the stability of global financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Continued uncertainty in the stock and credit markets may negatively impact our ability to access additional financing at reasonable terms, which may negatively affect our ability to acquire properties and otherwise pursue our investment strategy. A prolonged downturn in the stock or credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our investment strategy accordingly. These types of events in the stock and credit markets may make it more difficult or costly for us to raise capital through the issuance of the common stock, preferred stock or debt securities. The potential disruptions in the financial markets may have a material adverse effect on the market value of the common stock and preferred stock and the return we receive on our properties and investments, as well as other unknown adverse effects on us or the economy in general.
We are subject to risks arising from litigation.We may become involved in litigation. Litigation can be costly, and the results of litigation are often difficult to predict. We may not have adequate insurance coverage or contractual protection to cover costs and liability in the event we are sued, and to the extent we resort to litigation to enforce our rights, we may incur significant costs and ultimately be unsuccessful or unable to recover amounts we believe are owed to us. We may have little or no control of the timing of litigation, which presents challenges to our strategic planning.
We are subject to risks relating to cybersecurity. An information security or operational technology incident, including a cybersecurity breach, could have a material adverse impact on our business or reputation. As part of our regular review of potential risks, we have an Information Technology (“IT”) Manager who works with our IT service providers to identify and mitigate any such risks. We have established a Cybersecurity Subcommittee of our Board’s Audit Committee to review and provide high level guidance on cybersecurity related issues of importance to the Company. We carry cybersecurity insurance in amounts deemed reasonable by our insurance advisors.
Dividends on our capital stock do not qualify for the reduced tax rates available for some dividends.Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Although these rules do not adversely affect our taxation or the dividends payable by us, to the extent that the preferential rates continue to apply to regular corporate qualified dividends, investors who are individuals, trusts and estates may perceive an investment in us to be relatively less attractive than an investment in the stock of a non-REIT corporation that pays dividends, which could materially and adversely affect the value of the shares of, and per share trading price of, our capital stock.
ITEM 1B – UNRESOLVED STAFF COMMENTS
None.
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The Company operatesWe operate as a REIT. Our portfolio is primarily comprised of real estate holdings, some of which have been long-term holdings carried on our financial statements at depreciated cost. We believe that their current market values exceed both the original cost and the depreciated cost.
The following table sets forth certain information concerning the Company’sour real estate investments as of September 30, 2016:2019:
Mortgage | Mortgage | ||||||||||||||||||||||||||||||||
Fiscal Year | Square | Balance | Balance | ||||||||||||||||||||||||||||||
State | City (MSA) | Acquisition | Type | Footage | 9/30/2016 | City (MSA) | Fiscal Year Acquisition | Type | Square Footage | 9/30/2019 (in thousands) | |||||||||||||||||||||||
AL | Huntsville | 2005 | Industrial | 88,653 | $ | 140 | |||||||||||||||||||||||||||
AL | Huntsville | 2005 | Industrial | 88,653 | $ | 795,594 | Mobile | 2018 | Industrial | 362,942 | 17,802 | ||||||||||||||||||||||
AZ | Tolleson (Phoenix) | 2003 | Industrial | 283,358 | 5,299,383 | Tolleson (Phoenix) | 2003 | Industrial | 283,358 | 2,882 | |||||||||||||||||||||||
CO | Colorado Springs | 2006 | Industrial | 68,370 | 1,329,709 | ||||||||||||||||||||||||||||
CO | Colorado Springs | 2016 | Industrial | 225,362 | 18,576,282 | Colorado Springs | 2016 | Industrial | 225,362 | 15,632 | |||||||||||||||||||||||
CO | Denver | 2005 | Industrial | 69,865 | 1,059,646 | Denver | 2005 | Industrial | 69,865 | -0- | |||||||||||||||||||||||
CT | Newington (Hartford) | 2001 | Industrial | 54,812 | -0- | Newington (Hartford) | 2001 | Industrial | 54,812 | -0- | |||||||||||||||||||||||
FL | Cocoa | 2008 | Industrial | 144,138 | 5,063,864 | Cocoa | 2008 | Industrial | 144,138 | -0- | |||||||||||||||||||||||
FL | Davenport (Orlando) | 2016 | Industrial | 310,922 | 26,400,000 | Davenport (Orlando) | 2016 | Industrial | 310,922 | 22,274 | |||||||||||||||||||||||
FL | Ft. Myers | 2003 | Industrial | 87,500 | -0- | Daytona Beach | 2018 | Industrial | 399,440 | 18,224 | |||||||||||||||||||||||
FL | Jacksonville (FDX) | 1999 | Industrial | 95,883 | 1,384,194 | Ft. Myers | 2017 | Industrial | 213,672 | 12,510 | |||||||||||||||||||||||
FL | Jacksonville (FDX Ground) | 2015 | Industrial | 297,579 | 18,453,112 | Homestead (Miami) | 2017 | Industrial | 237,756 | 21,989 | |||||||||||||||||||||||
FL | Lakeland | 2006 | Industrial | 32,105 | -0- | Jacksonville (FDX) | 1999 | Industrial | 95,883 | -0- | |||||||||||||||||||||||
FL | Orlando | 2008 | Industrial | 110,638 | 4,342,604 | Jacksonville (FDX Ground) | 2015 | Industrial | 297,579 | 15,072 | |||||||||||||||||||||||
FL | Punta Gorda | 2007 | Industrial | 34,624 | 1,990,764 | Lakeland | 2006 | Industrial | 32,105 | -0- | |||||||||||||||||||||||
FL | Tampa (FDX Ground) | 2004 | Industrial | 170,779 | 6,633,049 | Orlando | 2008 | Industrial | 110,638 | -0- | |||||||||||||||||||||||
FL | Tampa (FDX) | 2006 | Industrial | 95,662 | 3,900,447 | Punta Gorda | 2007 | Industrial | 34,624 | -0- | |||||||||||||||||||||||
FL | Tampa (Tampa Bay Grand Prix) | 2005 | Industrial | 68,385 | -0- | Tampa (FDX Ground) | 2004 | Industrial | 170,779 | -0- | |||||||||||||||||||||||
FL | Tampa (FDX) | 2006 | Industrial | 95,662 | -0- | ||||||||||||||||||||||||||||
FL | Tampa (Tampa Bay Grand Prix) | 2005 | Industrial | 68,385 | -0- | ||||||||||||||||||||||||||||
GA | Augusta (FDX Ground) | 2005 | Industrial | 59,358 | 102 | ||||||||||||||||||||||||||||
GA | Augusta (FDX) | 2006 | Industrial | 30,184 | -0- | ||||||||||||||||||||||||||||
GA | Braselton (Atlanta) | 2018 | Industrial | 373,750 | 37,898 | ||||||||||||||||||||||||||||
GA | Augusta (FDX Ground) | 2005 | Industrial | 59,358 | 774,093 | Griffin (Atlanta) | 2006 | Industrial | 218,120 | -0- | |||||||||||||||||||||||
GA | Augusta (FDX) | 2006 | Industrial | 30,184 | -0- | Savannah (Shaw) | 2018 | Industrial | 831,764 | 30,304 | |||||||||||||||||||||||
GA | Griffin (Atlanta) | 2006 | Industrial | 218,120 | -0- | Savannah (FDX Ground) | 2019 | Industrial | 126,520 | 16,872 | |||||||||||||||||||||||
IA | Urbandale (Des Moines) | 1994 | Industrial | 36,270 | -0- | Urbandale (Des Moines) | 1994 | Industrial | 36,270 | -0- | |||||||||||||||||||||||
IL | Burr Ridge (Chicago) | 1997 | Industrial | 12,500 | -0- | Burr Ridge (Chicago) | 1997 | Industrial | 12,500 | -0- | |||||||||||||||||||||||
IL | Elgin (Chicago) | 2002 | Industrial | 89,052 | 349,658 | Elgin (Chicago) | 2002 | Industrial | 89,052 | -0- | |||||||||||||||||||||||
IL | Granite City (St. Louis, MO) | 2001 | Industrial | 184,800 | -0- | Granite City (St. Louis, MO) | 2001 | Industrial | 184,800 | -0- | |||||||||||||||||||||||
IL | Montgomery (Chicago) | 2004 | Industrial | 171,200 | -0- | Montgomery (Chicago) | 2004 | Industrial | 171,200 | -0- | |||||||||||||||||||||||
IL | Rockford (B/E Aerospace, Inc.) | 2015 | Industrial | 38,833 | -0- | Rockford (Collins Aerospace Systems) | 2015 | Industrial | 38,833 | -0- | |||||||||||||||||||||||
IL | Rockford (Sherwin-Williams Company) | 2011 | Industrial | 66,387 | -0- | Rockford (Sherwin-Williams Co.) | 2011 | Industrial | 66,387 | -0- | |||||||||||||||||||||||
IL | Sauget (St. Louis, MO) | 2015 | Industrial | 198,773 | 9,701,419 | Sauget (St. Louis, MO) | 2015 | Industrial | 198,773 | 7,956 | |||||||||||||||||||||||
IL | Schaumburg (Chicago) | 1997 | Industrial | 73,500 | -0- | Schaumburg (Chicago) | 1997 | Industrial | 73,500 | -0- | |||||||||||||||||||||||
IL | Wheeling (Chicago) | 2003 | Industrial | 123,000 | -0- | Wheeling (Chicago) | 2003 | Industrial | 123,000 | -0- | |||||||||||||||||||||||
IN | Greenwood (Indianapolis) | 2015 | Industrial | 671,354 | 22,760,488 | Greenwood (Indianapolis) | 2015 | Industrial | 671,354 | 18,780 | |||||||||||||||||||||||
IN | Indianapolis | 2014 | Industrial | 327,822 | 12,289,676 | Indianapolis | 2014 | Industrial | 327,822 | 9,454 | |||||||||||||||||||||||
IN | Lafayette | 2019 | Industrial | 350,000 | 16,932 | ||||||||||||||||||||||||||||
KS | Edwardsville (Kansas City) (Carlisle Tire) | 2003 | Industrial | 179,280 | 397,513 | Edwardsville (Kansas City) (Carlisle Tire) | 2003 | Industrial | 179,280 | -0- | |||||||||||||||||||||||
KS | Edwardsville (Kansas City) (International Paper) | 2014 | Industrial | 280,000 | 10,648,115 | Edwardsville (Kansas City) (International Paper) | 2014 | Industrial | 280,000 | 8,421 | |||||||||||||||||||||||
KS | Olathe (Kansas City) | 2016 | Industrial | 313,763 | 22,215,000 | Olathe (Kansas City) | 2016 | Industrial | 313,763 | 18,759 | |||||||||||||||||||||||
KS | Topeka | 2009 | Industrial | 40,000 | 1,363,023 | Topeka | 2009 | Industrial | 40,000 | 584 | |||||||||||||||||||||||
KY | Buckner (Louisville) | 2014 | Industrial | 558,600 | 16,694,846 | Buckner (Louisville) | 2014 | Industrial | 558,600 | 14,566 | |||||||||||||||||||||||
KY | Frankfort (Lexington) | 2015 | Industrial | 599,840 | 18,352,289 | Frankfort (Lexington) | 2015 | Industrial | 599,840 | 15,672 | |||||||||||||||||||||||
KY | Louisville | 2016 | Industrial | 137,500 | 7,288,891 | Louisville | 2016 | Industrial | 137,500 | 6,121 | |||||||||||||||||||||||
LA | Covington (New Orleans) | 2016 | Industrial | 175,315 | 12,468,713 | Covington (New Orleans) | 2016 | Industrial | 175,315 | 10,425 | |||||||||||||||||||||||
MD | Beltsville (Washington, DC) | 2001 | Industrial | 144,523 | -0- | Beltsville (Washington, DC) | 2001 | Industrial | 148,881 | -0- | |||||||||||||||||||||||
MI | Livonia (Detroit) | 2013 | Industrial | 172,005 | 7,503,400 | Livonia (Detroit) | 2013 | Industrial | 172,005 | 5,649 | |||||||||||||||||||||||
MI | Orion | 2007 | Industrial | 245,633 | 8,580,058 | Orion | 2007 | Industrial | 245,633 | -0- | |||||||||||||||||||||||
MI | Romulus (Detroit) | 1998 | Industrial | 71,933 | -0- | Romulus (Detroit) | 1998 | Industrial | 71,933 | -0- | |||||||||||||||||||||||
MN | Stewartville (Rochester) (1) | 2013 | Industrial | 60,398 | 2,612,978 | ||||||||||||||||||||||||||||
MI | Walker (Grand Rapids) | 2017 | Industrial | 343,483 | 18,365 | ||||||||||||||||||||||||||||
MN | White Bear Lake (Minneapolis/St. Paul) (4) | 2001 | Industrial | 59,425 | -0- | Stewartville (Rochester) (1) | 2013 | Industrial | 60,398 | 1,852 | |||||||||||||||||||||||
MO | Kansas City (Bunzl Distribution Midcentral, Inc.) | 2015 | Industrial | 158,417 | 6,958,091 | Kansas City | 2015 | Industrial | 158,417 | 6,457 | |||||||||||||||||||||||
MO | Liberty (Kansas City) | 1998 | Industrial | 96,687 | -0- | ||||||||||||||||||||||||||||
MO | O’Fallon (St. Louis) | 1994 | Industrial | 102,135 | -0- | ||||||||||||||||||||||||||||
MO | St. Joseph | 2001 | Industrial | 382,880 | -0- | ||||||||||||||||||||||||||||
MS | Olive Branch (Memphis, TN) (Anda Pharmaceuticals, Inc.) | 2012 | Industrial | 234,660 | 6,927 | ||||||||||||||||||||||||||||
MS | Olive Branch (Memphis, TN) (Milwaukee Tool) | 2013 | Industrial | 861,889 | 19,917 |
19 |
Mortgage | |||||||||||||||||||||||||||||
Fiscal Year | Square | Mortgage Balance | Balance | ||||||||||||||||||||||||||
State | City (MSA) | Acquisition | Type | Footage | 9/30/2016 | City (MSA) | Fiscal Year Acquisition | Type | Square Footage | 9/30/2019 (in thousands) | |||||||||||||||||||
MO | Kansas City (Kellogg Sales Company) | 2007 | Industrial | 65,067 | $ | 2,241,680 | |||||||||||||||||||||||
MO | Liberty (Kansas City) | 1998 | Industrial | 95,898 | -0- | ||||||||||||||||||||||||
MO | O’Fallon (St. Louis) | 1994 | Industrial | 102,135 | -0- | ||||||||||||||||||||||||
MO | St. Joseph | 2001 | Industrial | 382,880 | -0- | ||||||||||||||||||||||||
MS | Olive Branch (Memphis, TN) (Anda) | 2012 | Industrial | 234,660 | 8,750,368 | ||||||||||||||||||||||||
MS | Olive Branch (Memphis, TN) (Milwaukee Tool) | 2013 | Industrial | 861,889 | 25,000,000 | ||||||||||||||||||||||||
MS | Richland (Jackson) | 1994 | Industrial | 36,000 | -0- | Richland (Jackson) | 1994 | Industrial | 36,000 | $ | -0- | ||||||||||||||||||
MS | Ridgeland (Jackson) | 1993 | Industrial | 26,340 | -0- | Ridgeland (Jackson) | 1993 | Industrial | 26,340 | -0- | |||||||||||||||||||
NC | Concord (Charlotte) | 2016 | Industrial | 330,717 | 20,001,944 | Concord (Charlotte) | 2016 | Industrial | 330,717 | 16,654 | |||||||||||||||||||
NC | Fayetteville | 1997 | Industrial | 148,000 | -0- | Concord (Charlotte) | 2017 | Industrial | 354,482 | 23,492 | |||||||||||||||||||
NC | Winston-Salem | 2002 | Industrial | 106,507 | -0- | Fayetteville | 1997 | Industrial | 148,000 | -0- | |||||||||||||||||||
NC | Winston-Salem | 2002 | Industrial | 106,507 | -0- | ||||||||||||||||||||||||
NE | Omaha | 1999 | Industrial | 89,115 | -0- | Omaha | 1999 | Industrial | 89,115 | -0- | |||||||||||||||||||
NJ | Carlstadt (New York, NY) (2) | 2001 | Industrial | 60,400 | 1,408 | ||||||||||||||||||||||||
NJ | Carlstadt (New York, NY) (2) | 2001 | Industrial | 60,400 | 1,898,198 | Somerset (3) | 1970 | Shopping Center | 64,220 | -0- | |||||||||||||||||||
NJ | Somerset (3) | 1970 | Shopping Center | 64,138 | -0- | Trenton | 2019 | Industrial | 347,145 | 52,759 | |||||||||||||||||||
NY | Cheektowaga (Buffalo) | 2000 | Industrial | 104,981 | 343,548 | Cheektowaga (Buffalo) | 2002 | Industrial | 104,981 | -0- | |||||||||||||||||||
NY | Halfmoon (Albany) | 2012 | Industrial | 75,000 | 3,786,098 | Halfmoon (Albany) | 2012 | Industrial | 75,000 | -0- | |||||||||||||||||||
NY | Orangeburg (New York) | 1993 | Industrial | 50,400 | -0- | Hamburg (Buffalo) | 2017 | Industrial | 338,584 | 20,075 | |||||||||||||||||||
OH | Bedford Heights (Cleveland) | 2007 | Industrial | 82,269 | 2,685,791 | Bedford Heights (Cleveland) | 2007 | Industrial | 82,269 | -0- | |||||||||||||||||||
OH | Cincinnati | 2015 | Industrial | 63,840 | -0- | Cincinnati | 2015 | Industrial | 63,840 | -0- | |||||||||||||||||||
OH | Lebanon (Cincinnati) | 2012 | Industrial | 51,130 | 2,592,182 | Kenton | 2017 | Industrial | 298,472 | 10,874 | |||||||||||||||||||
OH | Monroe (Cincinnati) | 2015 | Industrial | 232,200 | 8,071,987 | Lebanon (Cincinnati) | 2012 | Industrial | 51,130 | -0- | |||||||||||||||||||
OH | Richfield (Cleveland) | 2006 | Industrial | 131,152 | 3,078,731 | Monroe (Cincinnati) | 2015 | Industrial | 387,000 | 13,626 | |||||||||||||||||||
OH | Streetsboro (Cleveland) | 2012 | Industrial | 368,060 | 10,446,469 | Richfield (Cleveland) | 2006 | Industrial | 131,152 | -0- | |||||||||||||||||||
OH | West Chester Twp. (Cincinnati) | 1999 | Industrial | 103,818 | 2,071,107 | Stow | 2017 | Industrial | 219,765 | 11,484 | |||||||||||||||||||
OH | Streetsboro (Cleveland) | 2012 | Industrial | 368,060 | 8,680 | ||||||||||||||||||||||||
OH | West Chester Twp. (Cincinnati) | 2000 | Industrial | 103,818 | -0- | ||||||||||||||||||||||||
OK | Oklahoma City (Amazon) | 2018 | Industrial | 300,000 | 18,206 | ||||||||||||||||||||||||
OK | Oklahoma City (Bunzl) | 2017 | Industrial | 110,361 | 5,124 | ||||||||||||||||||||||||
OK | Oklahoma City | 2012 | Industrial | 158,340 | 4,401,832 | Oklahoma City (FDX Ground) | 2012 | Industrial | 158,340 | 2,890 | |||||||||||||||||||
OK | Tulsa | 2014 | Industrial | 46,240 | 1,934,175 | Tulsa | 2014 | Industrial | 46,240 | 1,552 | |||||||||||||||||||
PA | Altoona (1) | 2014 | Industrial | 122,522 | 4,017,147 | Altoona (1) | 2014 | Industrial | 122,522 | 2,848 | |||||||||||||||||||
PA | Imperial (Pittsburgh) | 2016 | Industrial | 125,860 | 12,700,739 | Imperial (Pittsburgh) | 2016 | Industrial | 125,860 | 10,407 | |||||||||||||||||||
PA | Monaca (Pittsburgh) | 1988 | Industrial | 255,658 | -0- | Monaca (Pittsburgh) | 1977 | Industrial | 255,658 | -0- | |||||||||||||||||||
SC | Ft. Mill (Charlotte, NC) | 2010 | Industrial | 176,939 | 1,926,986 | Aiken (Augusta, GA) | 2017 | Industrial | 413,605 | 13,683 | |||||||||||||||||||
SC | Hanahan (Charleston) (SAIC) | 2005 | Industrial | 302,400 | 5,605,514 | Charleston (FDX) | 2018 | Industrial | 121,683 | 12,968 | |||||||||||||||||||
SC | Hanahan (Charleston) (FDX Ground) | 2005 | Industrial | 91,776 | 1,064,185 | Charleston (FDX Ground) | 2018 | Industrial | 265,318 | 28,356 | |||||||||||||||||||
SC | Ft. Mill (Charlotte, NC) | 2010 | Industrial | 176,939 | -0- | ||||||||||||||||||||||||
SC | Hanahan (Charleston) (SAIC) | 2005 | Industrial | 302,400 | -0- | ||||||||||||||||||||||||
SC | Hanahan (Charleston) (FDX Ground) | 2005 | Industrial | 91,776 | -0- | ||||||||||||||||||||||||
TN | Chattanooga | 2007 | Industrial | 60,637 | 1,551,081 | Chattanooga | 2007 | Industrial | 60,637 | -0- | |||||||||||||||||||
TN | Lebanon (Nashville) | 2011 | Industrial | 381,240 | 7,659,116 | Lebanon (Nashville) | 2011 | Industrial | 381,240 | -0- | |||||||||||||||||||
TN | Memphis | 2010 | Industrial | 449,900 | 6,667,886 | Memphis | 2010 | Industrial | 449,900 | 4,202 | |||||||||||||||||||
TN | Shelby County | 2007 | Land | N/A | -0- | Shelby County | 2007 | Land | N/A | -0- | |||||||||||||||||||
TX | Carrollton (Dallas) | 2010 | Industrial | 184,317 | 5,623 | ||||||||||||||||||||||||
TX | Carrollton (Dallas) | 2010 | Industrial | 184,317 | 7,960,781 | Corpus Christi | 2012 | Industrial | 46,253 | -0- | |||||||||||||||||||
TX | Corpus Christi | 2012 | Industrial | 46,253 | -0- | Edinburg | 2011 | Industrial | 164,207 | -0- | |||||||||||||||||||
TX | Edinburg | 2011 | Industrial | 113,582 | -0- | El Paso | 2006 | Industrial | 144,149 | -0- | |||||||||||||||||||
TX | El Paso | 2006 | Industrial | 144,149 | 3,259,726 | Ft. Worth (Dallas) | 2015 | Industrial | 304,608 | 19,342 | |||||||||||||||||||
TX | Fort Worth (Dallas) | 2015 | Industrial | 304,608 | 23,431,093 | Houston | 2010 | Industrial | 91,295 | 1,643 | |||||||||||||||||||
TX | Houston | 2010 | Industrial | 91,295 | 3,124,904 | Lindale (Tyler) | 2015 | Industrial | 163,378 | 5,242 | |||||||||||||||||||
TX | Lindale (Tyler) | 2015 | Industrial | 163,378 | 6,378,382 | Mesquite (Dallas) | 2017 | Industrial | 351,874 | 29,171 | |||||||||||||||||||
TX | Spring (Houston) | 2014 | Industrial | 181,176 | 9,126,834 | Spring (Houston) | 2014 | Industrial | 181,176 | 7,287 | |||||||||||||||||||
TX | Waco | 2012 | Industrial | 150,710 | 4,799,919 | Waco | 2012 | Industrial | 150,710 | 3,931 | |||||||||||||||||||
VA | Charlottesville | 1999 | Industrial | 48,064 | -0- | Charlottesville | 1999 | Industrial | 48,064 | -0- | |||||||||||||||||||
VA | Mechanicsville (Richmond) (FDX) | 2001 | Industrial | 112,799 | -0- | Mechanicsville (Richmond) | 2001 | Industrial | 112,799 | -0- | |||||||||||||||||||
VA | Richmond (United Technologies) | 2004 | Industrial | 60,000 | -0- | Richmond | 2004 | Industrial | 60,000 | -0- | |||||||||||||||||||
VA | Roanoke (CHEP) | 2007 | Industrial | 83,000 | 2,519,243 | Roanoke (CHEP USA) | 2007 | Industrial | 83,000 | -0- | |||||||||||||||||||
VA | Roanoke (FDX Ground) | 2013 | Industrial | 103,402 | 5,321,390 | Roanoke (FDX Ground) | 2013 | Industrial | 103,402 | 3,905 | |||||||||||||||||||
WA | Burlington (Seattle/Everett) | 2016 | Industrial | 210,445 | 19,881,817 | Burlington (Seattle/Everett) | 2016 | Industrial | 210,445 | 16,635 | |||||||||||||||||||
WI | Cudahy (Milwaukee) | 2001 | Industrial | 139,564 | -0- | Cudahy (Milwaukee) | 2001 | Industrial | 139,564 | -0- | |||||||||||||||||||
WI | Green Bay (1) | 2013 | Industrial | 99,102 | 3,260,401 | Green Bay (1) | 2013 | Industrial | 99,102 | 2,311 | |||||||||||||||||||
16,010,372 | $ | 483,748,153 | 22,250,880 | $ | 752,916 |
(1) | One loan is secured by the properties located in Green Bay, WI, Stewartville, MN and Altoona, PA. | |
(2) | ||
(3) | ||
20 |
The following table sets forth certain information concerning the principal tenants and leases for the Company’sour properties shown above as of September 30, 2016:2019:
State | City (MSA) | Tenant | Annualized Rent | Lease Expiration | City (MSA) | Tenant | Annualized Rent (in thousands) | Lease Expiration | ||||||||||||||||||
AL | Huntsville | FedEx Ground Package System, Inc. | $ | 605 | 07/31/26 | |||||||||||||||||||||
AL | Huntsville | FedEx Ground Package System, Inc. | $ | 590,000 | 07/31/26 | (1) | Mobile | Amazon.com Services, Inc. (Amazon.com, Inc.) | 2,025 | 11/30/28 | ||||||||||||||||
AZ | Tolleson (Phoenix) | Western Container Corp. (Coca-Cola) | 1,346,000 | 04/30/27 | (2) | Tolleson (Phoenix) | Western Container Corp. (Coca-Cola) | 1,377 | 04/30/27 | |||||||||||||||||
CO | Colorado Springs | FedEx Ground Package System, Inc. | 644,000 | 09/30/18 | ||||||||||||||||||||||
CO | Colorado Springs | FedEx Ground Package System, Inc. | 1,832,000 | 01/31/26 | Colorado Springs | FedEx Ground Package System, Inc. | 1,832 | 01/31/26 | ||||||||||||||||||
CO | Denver | FedEx Ground Package System, Inc. | 564,000 | 07/31/18 | Denver | FedEx Ground Package System, Inc. | 609 | 10/31/25 | ||||||||||||||||||
CT | Newington (Hartford) | Kellogg Sales Company | 329,000 | 02/29/20 | (2) | Newington (Hartford) | Kellogg Sales Company | 329 | 02/29/20 | |||||||||||||||||
FL | Cocoa | FedEx Ground Package System, Inc. | 1,112,000 | 09/30/24 | Cocoa | FedEx Ground Package System, Inc. | 1,112 | 09/30/24 | ||||||||||||||||||
FL | Davenport (Orlando) | FedEx Ground Package System, Inc. | 2,604,000 | 04/30/31 | Davenport (Orlando) | FedEx Ground Package System, Inc. | 2,613 | 04/30/31 | ||||||||||||||||||
FL | Ft. Myers | FedEx Ground Package System, Inc. | 433,000 | 06/30/17 | (2) | Daytona Beach | B. Braun Medical Inc. | 2,138 | 03/31/28 | |||||||||||||||||
FL | Jacksonville | FedEx Corporation | 518,000 | 05/31/19 | Ft. Myers | FedEx Ground Package System, Inc. | 1,418 | 08/31/27 | ||||||||||||||||||
FL | Jacksonville | FedEx Ground Package System, Inc. | 1,992,000 | 12/31/29 | Homestead (Miami) | FedEx Ground Package System, Inc. | 2,282 | 03/31/32 | ||||||||||||||||||
FL | Lakeland | FedEx Corporation | 155,000 | 11/30/17 | Jacksonville | FedEx Corporation | 535 | 05/31/29 | (1) | |||||||||||||||||
FL | Orlando | FedEx Corporation | 666,000 | 11/30/17 | Jacksonville | FedEx Ground Package System, Inc. | 1,998 | 12/31/29 | ||||||||||||||||||
FL | Punta Gorda | FedEx Corporation | 304,000 | 06/30/17 | (3) | Lakeland | FedEx Corporation | 155 | 11/30/27 | |||||||||||||||||
FL | Tampa | FedEx Ground Package System, Inc. | 1,614,000 | 07/31/26 | (4) | Orlando | FedEx Corporation | 666 | 11/30/27 | |||||||||||||||||
FL | Tampa | FedEx Corporation | 603,000 | 09/30/17 | (3) | Punta Gorda | FedEx Corporation | 284 | 06/30/27 | |||||||||||||||||
FL | Tampa | Tampa Bay Grand Prix | 289,000 | 09/30/20 | Tampa | FedEx Corporation | 603 | 11/30/27 | ||||||||||||||||||
FL | Tampa | FedEx Ground Package System, Inc. | 1,624 | 07/31/26 | ||||||||||||||||||||||
FL | Tampa | Tampa Bay Grand Prix | 302 | 09/30/20 | ||||||||||||||||||||||
GA | Augusta | FedEx Ground Package System, Inc. | 513 | 06/30/21 | ||||||||||||||||||||||
GA | Augusta | FedEx Corporation | 121 | 11/30/22 | ||||||||||||||||||||||
GA | Braselton (Atlanta) | FedEx Ground Package System, Inc. | 3,783 | 02/28/33 | ||||||||||||||||||||||
GA | Augusta | FedEx Ground Package System, Inc. | 453,000 | 06/30/18 | Griffin (Atlanta) | Rinnai America Corporation | 840 | 12/31/20 | ||||||||||||||||||
GA | Augusta | FedEx Corporation | 121,000 | 11/30/22 | Savannah | Shaw Industries, Inc. | 3,495 | 09/30/27 | ||||||||||||||||||
GA | Griffin (Atlanta) | Caterpillar Logistics Services, Inc. | 1,169,000 | 11/30/16 | (3) | Savannah | FedEx Ground Package System, Inc. | 1,755 | 10/31/28 | |||||||||||||||||
IA | Urbandale (Des Moines) | Keystone Automotive Industries MN, Inc. | 140,000 | 03/31/17 | (3) | Urbandale (Des Moines) | Foundation Building Materials, LLC | 176 | 12/31/27 | (2) | ||||||||||||||||
IL | Burr Ridge (Chicago) | Sherwin-Williams Company | 160,000 | 10/31/21 | Burr Ridge (Chicago) | Sherwin-Williams Company | 162 | 10/31/21 | ||||||||||||||||||
IL | Elgin (Chicago) | Joseph T. Ryerson and Son, Inc. | 506,000 | 01/31/20 | (2) | Elgin (Chicago) | Joseph T. Ryerson and Son, Inc. | 513 | 01/31/25 | (1) | ||||||||||||||||
IL | Granite City (St. Louis, MO) | Anheuser-Busch, Inc. | 806,000 | 11/30/21 | (2) | Granite City (St. Louis, MO) | Anheuser-Busch, Inc. | 832 | 11/30/21 | |||||||||||||||||
IL | Montgomery (Chicago) | Home Depot USA, Inc. | 978,000 | 06/30/20 | Montgomery (Chicago) | Home Depot USA, Inc. | 1,007 | 06/30/20 | ||||||||||||||||||
IL | Rockford | B/E Aerospace, Inc. | 360,000 | 06/30/27 | Rockford | Collins Aerospace Systems (United Technologies) | 365 | 06/30/27 | (3) | |||||||||||||||||
IL | Rockford | Sherwin-Williams Company | 477,000 | 12/31/23 | Rockford | Sherwin-Williams Company | 485 | 12/31/23 | ||||||||||||||||||
IL | Sauget (St. Louis, MO) | FedEx Ground Package System, Inc. | 1,036,000 | 05/31/29 | Sauget (St. Louis, MO) | FedEx Ground Package System, Inc. | 1,036 | 05/31/29 | ||||||||||||||||||
IL | Schaumburg (Chicago) | FedEx Corporation | 483,000 | 03/31/27 | (2) | Schaumburg (Chicago) | FedEx Corporation | 478 | 03/31/27 | |||||||||||||||||
IL | Wheeling (Chicago) | FedEx Ground Package System, Inc. | 1,386,000 | 05/31/17 | (3) | Wheeling (Chicago) | FedEx Ground Package System, Inc. | 1,272 | 05/31/27 | |||||||||||||||||
IN | Greenwood (Indianapolis) | ULTA, Inc. | 2,651,000 | 07/31/25 | Greenwood (Indianapolis) | ULTA, Inc. | 2,729 | 07/31/25 | ||||||||||||||||||
IN | Indianapolis | FedEx Ground Package System, Inc. | 1,533,000 | 04/30/24 | Indianapolis | FedEx Ground Package System, Inc. | 1,717 | 10/31/27 | ||||||||||||||||||
IN | Lafayette | Toyota Tsusho America, Inc. | 1,707 | 06/30/29 | ||||||||||||||||||||||
KS | Edwardsville (Kansas City) | Carlisle Tire & Wheel Company | 787,000 | 05/31/18 | Edwardsville (Kansas City) | Carlisle Tire & Wheel Company | 761 | 07/31/23 | ||||||||||||||||||
KS | Edwardsville (Kansas City) | International Paper Company | 1,326,000 | 08/31/23 | Edwardsville (Kansas City) | International Paper Company | 1,359 | 08/31/23 | ||||||||||||||||||
KS | Olathe (Kansas City) | FedEx Ground Package System, Inc. | 2,196,000 | 05/31/31 | Olathe (Kansas City) | FedEx Ground Package System, Inc. | 2,204 | 05/31/31 | ||||||||||||||||||
KS | Topeka | The Coca-Cola Company | 332,000 | 09/30/21 | Topeka | Heartland Coca-Cola Bottling Co., LLC (Coca-Cola) | 332 | 09/30/21 | ||||||||||||||||||
KY | Buckner (Louisville) | TreeHouse Private Brands, Inc. | 2,166,000 | 10/31/33 | Buckner (Louisville) | TreeHouse Private Brands, Inc. | 2,226 | 10/31/33 | ||||||||||||||||||
KY | Frankfort (Lexington) | Jim Beam Brands Company | 2,013,000 | 01/31/25 | Frankfort (Lexington) | Jim Beam Brands Company (Beam Suntory) | 2,071 | 01/31/25 | ||||||||||||||||||
KY | Louisville | Challenger Lifts, Inc. (Snap-on Inc.) | 835,000 | 06/07/26 | Louisville | Challenger Lifts, Inc. (Snap-on Inc.) | 845 | 06/07/26 | ||||||||||||||||||
LA | Covington (New Orleans) | FedEx Ground Package System, Inc. | 1,258,000 | 06/30/25 | Covington (New Orleans) | FedEx Ground Package System, Inc. | 1,265 | 06/30/25 | ||||||||||||||||||
MD | Beltsville (Washington, DC) | FedEx Ground Package System, Inc. | 1,426,000 | 07/31/18 | Beltsville (Washington, DC) | FedEx Ground Package System, Inc. | 1,455 | 07/31/28 | ||||||||||||||||||
MI | Livonia (Detroit) | FedEx Ground Package System, Inc. | 1,194,000 | 03/31/22 | Livonia (Detroit) | FedEx Ground Package System, Inc. | 1,194 | 03/31/22 | ||||||||||||||||||
MI | Orion | FedEx Ground Package System, Inc. | 1,908,000 | 06/30/23 | Orion | FedEx Ground Package System, Inc. | 1,908 | 06/30/23 | ||||||||||||||||||
MI | Romulus (Detroit) | FedEx Corporation | 370,000 | 05/31/21 | Romulus (Detroit) | FedEx Corporation | 370 | 05/31/21 | ||||||||||||||||||
MI | Walker (Grand Rapids) | FedEx Ground Package System, Inc. | 2,103 | 01/31/32 | ||||||||||||||||||||||
MN | Stewartville (Rochester) | FedEx Ground Package System, Inc. | 372,000 | 05/30/23 | Stewartville (Rochester) | FedEx Ground Package System, Inc. | 372 | 05/30/23 | ||||||||||||||||||
MN | White Bear Lake (Minneapolis/St. Paul) | Vacant | -0- | N/A | (6) | |||||||||||||||||||||
MO | Kansas City | Bunzl Distribution Midcentral, Inc. | 741,000 | 09/30/21 | ||||||||||||||||||||||
MO | Kansas City | Kellogg Sales Company | 325,000 | 07/31/18 | Kansas City | Bunzl Distribution Midcentral, Inc. | 758 | 09/30/21 | ||||||||||||||||||
MO | Liberty (Kansas City) | Holland 1916 Inc. | 341,000 | 06/30/19 | Liberty (Kansas City) | Dakota Bodies, LLC | 407 | 04/30/26 | (4) | |||||||||||||||||
MO | O’Fallon (St. Louis) | Pittsburgh Glass Works LLC | 427,000 | 06/30/18 | (7) | O’Fallon (St. Louis) | Pittsburgh Glass Works, LLC | 447 | 06/30/21 | |||||||||||||||||
MO | St. Joseph | Woodstream Corporation | 896,000 | 09/30/17 | (3)(5) | St. Joseph | Woodstream Corporation | 920 | 09/30/21 | (5) | ||||||||||||||||
MO | St. Joseph | Altec Industries, Inc. | 349,000 | 02/28/18 | (5) | St. Joseph | Altec Industries, Inc. | 374 | 02/28/23 | (5) | ||||||||||||||||
MS | Olive Branch (Memphis, TN) | Anda Pharmaceuticals, Inc. | 1,196,000 | 07/31/22 | Olive Branch (Memphis, TN) | Anda Pharmaceuticals, Inc. | 1,210 | 07/31/22 | ||||||||||||||||||
MS | Olive Branch (Memphis, TN) | Milwaukee Electric Tool Corporation | 2,934,000 | 07/31/28 | (8) | Olive Branch (Memphis, TN) | Milwaukee Electric Tool Corporation | 3,054 | 07/31/28 | |||||||||||||||||
MS | Richland (Jackson) | FedEx Corporation | 120,000 | 03/31/24 | Richland (Jackson) | FedEx Corporation | 120 | 03/31/24 | ||||||||||||||||||
MS | Ridgeland (Jackson) | Graybar Electric Company | 109,000 | 07/31/19 | (9) | Ridgeland (Jackson) | Graybar Electric Company | 112 | 07/31/20 | (1) | ||||||||||||||||
NC | Concord (Charlotte) | FedEx Ground Package System, Inc. | 2,078,000 | 07/31/25 | Concord (Charlotte) | FedEx Ground Package System, Inc. | 2,237 | 07/31/25 | ||||||||||||||||||
NC | Fayetteville | Victory Packaging L.P. | 470,000 | 02/28/21 | Concord (Charlotte) | FedEx Ground Package System, Inc. | 2,537 | 05/31/32 | ||||||||||||||||||
NC | Fayetteville | Victory Packaging, L.P. | 508 | 02/28/21 | ||||||||||||||||||||||
NC | Winston-Salem | Style Crest, Inc. | 392 | 03/31/21 | ||||||||||||||||||||||
NE | Omaha | FedEx Corporation | 446 | 10/31/23 | ||||||||||||||||||||||
NJ | Carlstadt (New York, NY) | SOFIVE, Inc. | 623 | 01/31/30 | (6) | |||||||||||||||||||||
NJ | Somerset | Various Tenants at Retail Shopping Center | 778 | Various | (7) | |||||||||||||||||||||
NJ | Trenton | FedEx Ground Package System, Inc. | 5,328 | 06/30/32 |
21 |
State | City (MSA) | Tenant | Annualized Rent | Lease Expiration | City (MSA) | Tenant | Annualized Rent (in thousands) | Lease Expiration | ||||||||||||||||||
NC | Winston-Salem | Style Crest, Inc. | $ | 361,000 | 03/31/21 | |||||||||||||||||||||
NE | Omaha | FedEx Corporation | 446,000 | 10/31/23 | ||||||||||||||||||||||
NJ | Carlstadt (New York, NY) | SOFIVE, Inc. | 537,000 | 01/31/25 | (10) | |||||||||||||||||||||
NJ | Somerset | Various Tenants at Retail Shopping Center | 780,000 | Various | (11) | |||||||||||||||||||||
NY | Cheektowaga (Buffalo) | FedEx Ground Package System, Inc. | 966,000 | 08/31/19 | Cheektowaga (Buffalo) | Vacant | $ | 0 | N/A | (8) | ||||||||||||||||
NY | Halfmoon (Albany) | RGH Enterprises, Inc. (Cardinal Health) | 596,000 | 11/30/21 | Halfmoon (Albany) | RGH Enterprises, Inc. (Cardinal Health) | 613 | 11/30/21 | ||||||||||||||||||
NY | Orangeburg (New York) | Kellogg Sales Company | 328,000 | 02/28/18 | Hamburg (Buffalo) | FedEx Ground Package System, Inc. | 2,318 | 03/31/31 | ||||||||||||||||||
OH | Bedford Heights (Cleveland) | FedEx Corporation | 408,000 | 08/31/18 | Bedford Heights (Cleveland) | FedEx Corporation | 438 | 08/31/28 | ||||||||||||||||||
OH | Cincinnati | The American Bottling Company (Dr Pepper Snapple) | 477,000 | 09/30/29 | Cincinnati | The American Bottling Company (Keurig Dr Pepper) | 484 | 09/30/29 | ||||||||||||||||||
OH | Lebanon (Cincinnati) | Siemens Real Estate | 473,000 | 04/30/19 | Kenton | International Paper Company | 1,256 | 08/31/27 | ||||||||||||||||||
OH | Monroe (Cincinnati) | UGN, Inc. | 1,050,000 | 02/28/30 | Lebanon (Cincinnati) | Siemens Real Estate | 461 | 04/30/24 | (1) | |||||||||||||||||
OH | Richfield (Cleveland) | FedEx Ground Package System, Inc. | 1,493,000 | 09/30/24 | Monroe (Cincinnati) | UGN, Inc. | 2,076 | 02/28/34 | (9) | |||||||||||||||||
OH | Streetsboro (Cleveland) | Best Buy Warehousing Logistics, Inc. | 1,641,000 | 01/31/22 | Richfield (Cleveland) | FedEx Ground Package System, Inc. | 1,493 | 09/30/24 | ||||||||||||||||||
OH | West Chester Twp. (Cincinnati) | FedEx Ground Package System, Inc. | 532,000 | 08/31/23 | Stow | Mickey Thompson (Cooper Tire) | 1,511 | 08/31/27 | ||||||||||||||||||
OH | Streetsboro (Cleveland) | Best Buy Warehousing Logistics, Inc. | 1,693 | 01/31/22 | ||||||||||||||||||||||
OH | West Chester Twp. (Cincinnati) | FedEx Ground Package System, Inc. | 548 | 08/31/23 | ||||||||||||||||||||||
OK | Oklahoma City | Amazon.com Services, Inc. (Amazon.com, Inc.) | 1,902 | 10/31/27 | ||||||||||||||||||||||
OK | Oklahoma City | Bunzl Distribution Oklahoma, Inc. | 729 | 08/31/24 | ||||||||||||||||||||||
OK | Oklahoma City | FedEx Ground Package System, Inc. | 1,048,000 | 06/30/25 | Oklahoma City | FedEx Ground Package System, Inc. | 1,048 | 07/31/25 | ||||||||||||||||||
OK | Tulsa | The American Bottling Company (Dr Pepper Snapple) | 257,000 | 02/28/24 | Tulsa | The American Bottling Company (Keurig Dr Pepper) | 264 | 02/28/24 | ||||||||||||||||||
PA | Altoona | FedEx Ground Package System, Inc. | 651,000 | 08/31/23 | Altoona | FedEx Ground Package System, Inc. | 651 | 08/31/23 | ||||||||||||||||||
PA | Imperial (Pittsburgh) | General Electric Company | 1,311,000 | 12/31/25 | Imperial (Pittsburgh) | General Electric Company | 1,328 | 12/31/25 | ||||||||||||||||||
PA | Monaca (Pittsburgh) | NF&M International, Inc. | 832,000 | 12/31/24 | (5) | Monaca (Pittsburgh) | NF&M International, Inc. | 837 | 12/31/24 | |||||||||||||||||
PA | Monaca (Pittsburgh) | Datatel Resources Corporation | 242,000 | 11/30/17 | (2)(5) | |||||||||||||||||||||
SC | Aiken (Augusta, GA) | Autoneum North America, Inc. | 1,717 | 04/30/32 | (10) | |||||||||||||||||||||
SC | Aiken (Augusta, GA) | Autoneum North America, Inc. | 490 | 06/30/20 | (10) | |||||||||||||||||||||
SC | Charleston | FedEx Corporation | 1,314 | 08/31/32 | ||||||||||||||||||||||
SC | Charleston | FedEx Ground Package System, Inc. | 2,704 | 06/30/33 | ||||||||||||||||||||||
SC | Ft. Mill (Charlotte, NC) | FedEx Ground Package System, Inc. | 1,415,000 | 10/31/23 | Ft. Mill (Charlotte, NC) | FedEx Ground Package System, Inc. | 1,598 | 08/31/28 | ||||||||||||||||||
SC | Hanahan (Charleston) | Science Applications International Corporation | 1,462,000 | 04/30/19 | Hanahan (Charleston) | Amazon Fulfillment Services, Inc. | 789 | 06/30/29 | (11) | |||||||||||||||||
SC | Hanahan (Charleston) | FedEx Ground Package System, Inc. | 675,000 | 07/31/18 | Hanahan (Charleston) | Science Applications International Corporation | 1,655 | 10/31/23 | (1) | |||||||||||||||||
TN | Chattanooga | FedEx Corporation | 311,000 | 10/31/17 | Chattanooga | FedEx Corporation | 319 | 10/31/22 | ||||||||||||||||||
TN | Lebanon (Nashville) | CBOCS Distribution, Inc. (Cracker Barrel) | 1,420,000 | 06/30/24 | Lebanon (Nashville) | CBOCS Distribution, Inc. (Cracker Barrel) | 1,461 | 06/30/24 | ||||||||||||||||||
TN | Memphis | FedEx Supply Chain Services, Inc. | 1,327,000 | 05/31/19 | Memphis | FedEx Trade Networks | 1,389 | 05/31/29 | (1) | |||||||||||||||||
TN | Shelby County | N/A- Land | -0- | N/A | Shelby County | N/A- Land | -0- | N/A | ||||||||||||||||||
TX | Carrollton (Dallas) | Carrier Enterprise, LLC (United Technologies) | 1,178 | 01/31/24 | (1) | |||||||||||||||||||||
TX | Carrollton (Dallas) | United Technologies Corporation | 1,576,000 | 01/11/19 | Corpus Christi | FedEx Ground Package System, Inc. | 436 | 08/31/21 | ||||||||||||||||||
TX | Corpus Christi | FedEx Ground Package System, Inc. | 463,000 | 08/31/21 | Edinburg | FedEx Ground Package System, Inc. | 1,097 | 09/30/26 | ||||||||||||||||||
TX | Edinburg | FedEx Ground Package System, Inc. | 598,000 | 09/30/21 | (12) | El Paso | FedEx Ground Package System, Inc. | 1,345 | 09/30/23 | |||||||||||||||||
TX | El Paso | FedEx Ground Package System, Inc. | 1,345,000 | 09/30/23 | Ft. Worth (Dallas) | FedEx Ground Package System, Inc. | 2,379 | 04/30/30 | ||||||||||||||||||
TX | Fort Worth (Dallas) | FedEx Ground Package System, Inc. | 2,362,000 | 04/30/30 | Houston | National Oilwell Varco, Inc. | 759 | 09/30/22 | ||||||||||||||||||
TX | Houston | National Oilwell Varco, Inc. | 746,000 | 09/30/22 | Lindale (Tyler) | FedEx Ground Package System, Inc. | 725 | 06/30/24 | ||||||||||||||||||
TX | Lindale (Tyler) | FedEx Ground Package System, Inc. | 725,000 | 06/30/24 | Mesquite (Dallas) | FedEx Ground Package System, Inc. | 3,199 | 03/31/32 | ||||||||||||||||||
TX | Spring (Houston) | FedEx Ground Package System, Inc. | 1,581,000 | 09/30/24 | Spring (Houston) | FedEx Ground Package System, Inc. | 1,581 | 09/30/24 | ||||||||||||||||||
TX | Waco | FedEx Ground Package System, Inc. | 1,078,000 | 08/31/25 | Waco | FedEx Ground Package System, Inc. | 1,078 | 08/31/25 | ||||||||||||||||||
VA | Charlottesville | FedEx Corporation | 329,000 | 08/31/17 | (3) | Charlottesville | FedEx Corporation | 329 | 08/31/27 | |||||||||||||||||
VA | Mechanicsville (Richmond) | FedEx Corporation | 541,000 | 04/30/23 | Mechanicsville (Richmond) | FedEx Corporation | 541 | 04/30/23 | ||||||||||||||||||
VA | Richmond | United Technologies Corporation | 319,000 | 11/30/18 | (2) | Richmond | Vacant | N/A | N/A | (12) | ||||||||||||||||
VA | Roanoke | CHEP USA, Inc. | 494,000 | 02/28/25 | (13) | Roanoke | CHEP USA, Inc. | 503 | 02/28/25 | (13) | ||||||||||||||||
VA | Roanoke | FedEx Ground Package System, Inc. | 755,000 | 04/30/23 | Roanoke | FedEx Ground Package System, Inc. | 755 | 04/30/23 | ||||||||||||||||||
WA | Burlington (Seattle/Everett) | FedEx Ground Package System, Inc. | 1,962,000 | 08/31/30 | Burlington (Seattle/Everett) | FedEx Ground Package System, Inc. | 1,962 | 08/31/30 | ||||||||||||||||||
WI | Cudahy (Milwaukee) | FedEx Ground Package System, Inc. | 901,000 | 06/30/17 | (3) | Cudahy (Milwaukee) | FedEx Ground Package System, Inc. | 827 | 06/30/27 | |||||||||||||||||
WI | Green Bay | FedEx Ground Package System, Inc. | 468,000 | 05/30/23 | Green Bay | FedEx Ground Package System, Inc. | 468 | 05/30/23 | ||||||||||||||||||
$ | 91,305,000 | $ | 136,457 |
(1) | ||
(2) | The lease has an early termination option which may be exercised after December 2025, on the condition that we are provided with six months notice and the tenant pays us a $93,000 termination fee. | |
(3) | ||
Lease has an early termination option which may be exercised after | ||
(4) | Entered into a new 7-year lease with Dakota Bodies, LLC, effective 5/1/2019. | |
(6) | ||
Estimated annual rent is the full annual rent per the lease. | ||
(7) | ||
(8) | Lease expired 8/31/19 and tenant did not renew because they moved their operations to our recently constructed 339,000 square foot facility also located in the Buffalo, NY MSA. | |
(10) | Represents one tenant that leases two separate structures located at the same property. | |
Entered into a new 10-year lease with Amazon Fulfillment Services, Inc., effective 7/1/2019. | ||
(12) | Tenant did not renew, subsequent to fiscal yearend, we entered into a new 12.5-year lease with Locke Supply Co., effective 11/1/2019 which will have a GAAP straight-line annualized rent of $325,000, representing $5.42 per square foot over the life of the lease. | |
(13) | Lease has an early termination option which may be exercised after August 2021, on the condition that |
22 |
AllAs of September 30, 2019, all but three of our improved properties were 100% occupied, at September 30, 2016 except for one property consisting ofresulting in a 59,425 square feet building situated on 4.78 acres located in White Bear Lake, MN.98.9% overall occupancy rate. Subsequent to fiscal yearend on October 27, 2016, the Company sold this property2019, effective November 1, 2019, we leased one of these previously vacant properties consisting of 60,000 square feet for $4,272,000 which increased12.5 years, increasing our current overall occupancy rate from 99.6% to 100.0%99.2%.
The Company’sOur weighted-average lease expiration was 7.47.6 years and 7.28.1 years as of September 30, 20162019 and 2015,2018, respectively.
Our weighted average occupancy rates as of the years ended September 30, 2019, 2018, 2017, 2016 and 2015 2014, 2013 and 2012 were 98.9%, 99.6%, 97.7%99.3%, 95.9%, 96.0%99.6% and 95.2%97.7%, respectively. The average effective annualized rent per square foot for the years ended September 30, 2019, 2018, 2017, 2016 and 2015 2014, 2013was $6.20, $6.01, $5.93, $5.72 and 2012 was $5.72, $5.48, $5.51, $5.53 and $5.62, respectively.
Completed expansions that have resulted in increased rents over the fiscal years ended September 30, 20152018 and 20162019
Ecommerce has been a major catalyst driving increased demand for the industrial property type, causing an ongoingtype. The shift from traditional brick and mortar retail shopping to shopping on-line.ordering goods on-line has resulted in record occupancy rates for industrial real estate throughout the U.S. Due to the increased demand for industrial space, we have been experiencing an increase in expansion activity at our existing properties.
During December 2014, a 62,260 square foot expansion of a building leased to NF&M International, Inc. located in Monaca (Pittsburgh), PA wasIn November 2017, we completed for a cost of approximately $4,503,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2018 through December 2024. In addition, the expansion resulted in an initial increase in annual rent effective January 1, 2015 from $381,805, or $3.39 per square foot, to $820,000, or $4.69 per square foot. Furthermore, annual rent will increase in year five of the lease effective January 1, 2020 to $841,600, or $4.81 per square foot, resulting in an annualized rent over the new ten year period of $830,800, or $4.75 per square foot.
During June 2015, a parking lot expansion of a building leased to FedEx Ground Package System, Inc. located in El Paso, TX was completed for a cost of approximately $2,472,000 resulting in an increase in annual rent effective July 1, 2015 from $1,045,610, or $7.25 per square foot to $1,345,289, or $9.33 per square foot. Prior to this parking lot expansion, during September 2013, a 51,765 square foot expansion of the building located at the same property was completed for a cost of approximately $3,800,000 resulting in an increase in annual rent effective October 1, 2013 from $667,584, or $7.27 per square foot, to $1,045,610, or $7.25 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the prior lease expiration date from September 2015 through September 2023.
During June 2015, a 38,428 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Oklahoma City, OK was completed for a cost of approximately $3,332,000, resulting in a new 10 year lease which extended the prior lease expiration date from March 2022 through June 2025. In addition, the expansion resulted in an increase in annual rent effective August 1, 2015 from $712,532, or $5.94 per square foot, to $1,048,250, or $6.62 per square foot.
During August 2015, a 48,116 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Waco, TX was completed for a cost of approximately $4,125,000, resulting in a new 10 year lease which extended the prior lease expiration date from May 2022 through August 2025. In addition, the expansion resulted in an increase in annual rent effective August 15, 2015 from $659,324, or $6.43 per square foot, to $1,078,383, or $7.16 per square foot.
On July 29, 2016, a 246,434 square foot expansion of a building leased to Milwaukee Electric Tool Corporation (“Milwaukee Tool”) located in Olive Branch, MS, which is located in the Memphis, TN MSA, was completed for a cost of approximately $9,785,000. This resulted in a new 12 year lease which extended the original lease expiration date from April 2023 through July 2028 and increased the building size from 615,455 to 861,889 square feet. In addition, the expansion resulted in an initial increase in annual rent effective on the date of completion of approximately $847,000 from approximately $1,943,000, or $3.16 per square foot, to approximately $2,790,000, or $3.24 per square foot. Furthermore, annual rent will increase each year by 1.5% resulting in an annualized rent over the new twelve year period of approximately $3,020,000, or $3.50 per square foot. In September 2016, in connection with the expansion, the Company refinanced its prior 3.76% interest rate mortgage with its existing lender of this property. At the time of the refinancing, the prior amortizing loan was approximately $13,158,000 and was set to mature in January 2023. The new loan is a 12 year fully-amortizing mortgage of $25,000,000 and will mature in October 2028. The interest rate of the new loan remained the same as the prior loan at a fixed interest rate of 3.76%.
On August 1, 2016, a parking lot expansion for a property leased to FedEx Ground Package System, Inc., located in Tampa, FL was completedIndianapolis, IN for a total project cost of approximately $1,303,000,$1.7 million, resulting in a new 10 year10-year lease which extended the prior lease expiration date from JuneApril 2024 through July 2026.to October 2027. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $131,000$184,000 from approximately $1,493,000,$1.5 million, or $8.74$4.67 per square foot, to approximately $1,624,000,$1.7 million, or $9.51$5.23 per square foot.
On August 1, 2016,In September 2018, we completed a 14,941 square footparking lot expansion offor a buildingproperty leased to FedEx Ground Package System, Inc., located in Huntsville, AL was completedFt. Mill, SC for a total project cost of approximately $1,925,000,$1.8 million, resulting in a new 10 year10-year lease which extended the prior lease expiration date from October 2023 to August 2022 through July 2026.2028. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $193,000$183,000 from approximately $412,000,$1.4 million, or $5.59$8.00 per square foot, to approximately $605,000$1.6 million, or $6.82$9.03 per square foot.
On October 1, 2016,In February 2019, we completed a 50,741155,000 square foot building expansion of the buildingfor a property leased to FedEx Ground Package System,UGN, Inc. located in Edinburg, TX was completedMonroe (Cincinnati), OH for a total project cost of approximately $4,988,000, resulting$8.6 million. The expansion resulted in a new 10 year15-year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, theFebruary 2030 to February 2034. The expansion also resulted in an increase in initial annual rent effective March 1, 2019 of $821,000 from the date of completion of approximately $499,000 from approximately $598,000,$980,000, or $5.27$4.22 per square foot, to approximately $1,097,000,$1.8 million, or $6.68$4.65 per square foot.
Fiscal 2016 renewals
Approximately In addition, the annual rent will increase by 2% per annum, resulting in an average annualized rent of $2.1 million over the 15-year term. In connection with this expansion, we obtained a 10.6 year, fully-amortizing second mortgage loan of $7.0 million at a fixed interest rate of 3.85%. The maturity of the Company’ssecond mortgage loan coincides with the maturity of the property’s first fully-amortizing mortgage loan which is at a fixed interest rate of 3.77% and has a principal balance of $6.6 million as of the fiscal yearend.
Fiscal 2019 Renewals
In fiscal 2019, approximately 7% of our gross leasable area, consisting of threerepresenting 11 leases totaling 325,6561.5 million square feet, was scheduledset to expire during fiscal 2016. The Company hasexpire. Seven of these 11 leases have been renewed, all three leases, resulting in a 100% tenant retention rate for fiscal 2016. The Company’s tenant retention rate in fiscal 2015 was also 100%. For tworepresenting 1.1 million square feet, or 76% of the three leases that were scheduled to expire during fiscal 2016, the Company did not incur any tenant improvement costs or any leasing costs. For the otherexpiring square footage and have a weighted average lease renewal, the Companyterm of 7.2 years.
We have incurred or expectswe expect to incur tenant improvement costs of approximately $210,000$2.9 million and leasing commission costs of approximately $133,000.$1.4 million in connection with these seven lease renewals. The table below summarizes the lease terms of the threeseven leases which were renewed andrenewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal term.
23 |
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commissions Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Monaca, PA | Datatel Resources | 80,856 | $ | 2.87 | $ | 2.87 | 11/30/15 | $ | 3.00 | $ | 3.00 | 11/30/17 | 2.0 | $ | -0- | $ | -0- | |||||||||||||||||||||
Granite City , IL | Anheuser- Busch, Inc. | 184,800 | 4.16 | 4.32 | 5/31/16 | 4.36 | 4.10 | 11/30/21 | 5.5 | 0.21 | 0.13 | |||||||||||||||||||||||||||
Richmond, VA | United Technologies | 60,000 | 4.99 | 5.24 | 5/31/16 | 5.33 | 5.24 | 11/30/18 | 2.5 | -0- | -0- | |||||||||||||||||||||||||||
Total | 325,656 | |||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 3.99 | $ | 4.13 | $ | 4.20 | $ | 4.04 | 4.1 | $ | 0.16 | $ | 0.10 |
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commission Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Somerset, NJ | Taco Bell | 21,365 | $ | 4.68 | $ | 4.68 | 10/14/18 | $ | 5.15 | $ | 5.15 | 10/14/23 | 5.0 | $ | -0- | $ | -0- | |||||||||||||||||||||
Carrollton (Dallas), TX | Carrier Enterprise | 184,317 | 8.20 | 8.55 | 01/31/19 | 6.24 | 6.00 | 01/31/24 | 5.0 | 0.20 | 0.39 | |||||||||||||||||||||||||||
Lebanon (Cincinnati), OH | Siemens Real Estate | 51,130 | 8.82 | 9.67 | 04/30/19 | 8.94 | 8.50 | 04/30/24 | 5.0 | 0.40 | 0.40 | |||||||||||||||||||||||||||
Hanahan (Charleston), SC | SAIC | 302,400 | 4.67 | 5.03 | 04/30/19 | 5.54 | 5.25 | 10/31/23 | 4.5 | 0.75 | 0.33 | |||||||||||||||||||||||||||
Memphis, TN | FedEx Trade Networks | 449,900 | 2.84 | 2.95 | 05/31/19 | 3.10 | 3.10 | 05/31/29 | 10.0 | 0.33 | 0.09 | |||||||||||||||||||||||||||
Jacksonville, FL | FedEx Express | 95,883 | 5.40 | 5.40 | 05/31/19 | 5.59 | 5.59 | 05/31/29 | 10.0 | 0.17 | 0.11 | |||||||||||||||||||||||||||
Ridgeland (Jackson), MS | Graybar Electric | 26,340 | 4.15 | 4.15 | 07/31/19 | 4.36 | 4.36 | 07/31/20 | 1.0 | 0.00 | 0.13 | |||||||||||||||||||||||||||
Total | 1,131,335 | |||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 4.75 | $ | 4.99 | $ | 4.81 | $ | 4.67 | 7.2 | $ | 0.36 | $ | 0.18 |
(1) | Amount calculated based on the total cost divided by the square feet, divided by the renewal term. |
The threeThese seven lease renewals resulted in a weighted average term of 4.17.2 years and a U.S. GAAP straight-line weighted average lease rate of $4.20$4.81 per square foot. The renewed weighted average initial cash rent per square foot is $4.04.$4.67. This compares to the former weighted average rent of $3.99$4.75 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $4.13$4.99 per square foot, representingresulting in an increase in the weighted average lease rate of 5.3%1.3% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 2.2%6.4% on a cash basis.
During September 2015,Our 92,000 square foot facility located in the CompanyCharleston, SC MSA was leased to FedEx Ground Package System, Inc. and renewed for only four months, until November 30, 2018, because the tenant moved their operations to our newly constructed 265,000 square foot facility also located in Charleston, SC. The new 265,000 square foot facility is leased to FedEx Ground Package System, Inc. for 15 years through June 2033. Effective July 1, 2019, we entered into a 5.25 yearnew ten-year lease agreement with Amazon.com Services, Inc. through June 30, 2029 for its previously vacant 148,000our 92,000 square foot building located in Fayetteville, NC through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, commenced on March 1, 2016 with 2.5% annual increases thereafter.
During October 2015, the Company entered into a 5.25 year lease agreement for its previously vacant 106,507 square foot building located in Winston-Salem, NC through March 31, 2021. The lease is with Style Crest, Inc. and commenced on January 1, 2016.facility. Initial annual rent of $356,798,is $688,000, representing $3.35$7.50 per square foot, commenced on April 1, 2016 with 3.0% annual increases thereafter. This results in a U.S. GAAP straight-line annualized rent of $789,000, representing $8.60 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent and former cash rent of $7.35 per square foot, resulting in an increase in the average lease rate of 17.0% on a U.S. GAAP straight-line basis and an increase of 2.0% on a cash basis. We have agreed to make certain improvements, including expanding the parking lot, which we expect to cost $1.75 million.
Our 96,000 square foot facility located in Liberty (Kansas City), MO was leased to Holland 1916, Inc. through June 30, 2019. In conjunction with terminating our lease with Holland 1916, Inc. two months early, effective May 1, 2019, we entered into a seven-year lease agreement with Dakota Bodies, LLC through April 30, 2026. Initial annual rent is $372,000, representing $3.85 per square foot, with 3.0% annual increases thereafter. This results in a U.S. GAAP straight-line annualized rent of $407,000, representing $4.21 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent of $3.46 per square foot and the former cash rent of $3.68 per square foot, resulting in an increase in the average lease rate of 21.7% on a U.S. GAAP straight-line basis and an increase of 4.6% on a cash basis.
Our 60,000 square foot facility located in Richmond, VA was leased to Carrier Enterprise, LLC through November 2018. Subsequent to the fiscal yearend, effective November 1, 2019, we entered into a new 12.5-year lease agreement with Locke Supply Co. through April 2032 for this facility. The lease agreement provides for six months of free rent, after which, on May 1, 2020, initial annual rent of $303,000, representing $5.05 per square foot will commence, with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $325,000, representing $5.42 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent of $5.36 per square foot and the former cash rent of $5.45 per square foot, resulting in an increase in the average lease rate of 1.1% on a U.S. GAAP straight-line basis and a decrease of 7.3% on a cash basis. We have agreed to make certain improvements, which we expect to cost $175,000.
24 |
The seven lease renewals, along with the three properties that were re-tenanted, result in a weighted average term of 7.6 years and an increase in the weighted average lease rate of 3.7% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 5.1% on a cash basis.
Our 105,000 square foot facility located in Cheektowaga (Buffalo), NY was leased to FedEx Ground Package System, Inc. until August 31, 2019. Prior to the lease expiring, the tenant informed us that they will not be renewing this space because they moved their operations to our recently constructed 339,000 square foot facility also located in the Buffalo, NY MSA. The recently constructed 339,000 square foot facility is leased to FedEx Ground Package System, Inc. for 15 years through March 2031. The lease for our 105,000 square foot facility is the only lease, of the 11 leases that were set to expire in fiscal 2019, that was not renewed or re-tenanted. This facility is currently being marketed and represents 7% of the fiscal 2019 expiring square footage and represents 0.5% of our current total gross leasable area.
On September 30, 2019, we had a weighted average lease maturity of 7.6 years with 7.9% of the weighted average gross annualized rent scheduled to expire each year. Our overall occupancy rate of our total property portfolio was 98.9% and 99.6% as of September 30, 2019 and 2018, respectively.
Fiscal 2017 renewals2020 Renewals
In fiscal 2017,2020, approximately 10%2% of our gross leasable area, representing thirteenfive leases totaling 1,539,526410,000 square feet, is set to expire. As of the date of this Annual Report, five of the thirteen leases have renewed. One of thethese five leases (which is with FedEx Ground Package System, Inc. for a property located in Ft. Myers, FL), has been renewed for only eight months because the tenant plans to move its operations from our 87,500 square foot facility to a newly constructed facility, which is also located in Ft. Myers, FL. Once the construction is complete, the Company is under contract to purchase this new facility, consisting of approximately 213,500 square feet, subject to satisfactory completion of due diligence and other customary closing conditions and requirements. In addition, once the construction is complete, this brand new facility will be leased for 10 years. Excluding the eight month lease renewal at the Ft. Myers, FL location, the four leases that have renewed thus far represent 500,722five years, representing 89,000 square feet, or 33%22% of the expiring square footage, andfootage.
We have a weighted average lease term of 8.0 years.
The Company has incurred or expectswe expect to incur tenant improvement costs of approximately $1,928,000$223,000 and leasing commission costs of approximately $587,000$77,000 in connection with four of the fivethis lease renewals.renewal. The table below summarizes the lease termsterm of the five leases which were renewed andlease that was renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal term.
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commission Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Elgin (Chicago), IL | Joseph T. Ryerson & Son, Inc. | 89,052 | $ | 5.68 | $ | 5.68 | 1/31/20 | $ | 5.78 | $ | 5.50 | 1/31/25 | 5.0 | $ | 0.50 | $ | 0.17 | |||||||||||||||||||||
�� | Total | 89,052 | ||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 5.68 | $ | 5.68 | $ | 5.78 | $ | 5.50 | 5.0 | $ | 0.50 | $ | 0.17 |
Property |
Tenant |
Square Feet | Forme U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commissions Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Ft. Myers, FL | FedEx Ground | 87,500 | $4.95 | $4.95 | 10/31/16 | $4.95 | $4.95 | 6/30/17 | 0.7 | $0.00 | $0.00 | |||||||||||||||||||||||||||
Elgin, IL | Joseph T. Ryerson | 89,052 | $ | 5.68 | $ | 5.68 | 1/31/17 | $ | 5.68 | $ | 5.68 | 1/31/20 | 3.0 | $ | 0.17 | $ | 0.17 | |||||||||||||||||||||
Newington, CT | Kellogg Sales Co. | 54,812 | $ | 6.00 | $ | 6.00 | 2/28/17 | $ | 6.00 | $ | 6.00 | 2/29/20 | 3.0 | $ | 0.30 | $ | 0.24 | |||||||||||||||||||||
Schaumburg, IL | FedEx Express | 73,500 | $ | 6.88 | $ | 7.00 | 3/31/17 | $ | 6.50 | $ | 6.50 | 3/31/27 | 10.0 | $ | 0.24 | $ | 0.13 | |||||||||||||||||||||
Tolleson, AZ | Western Container | 283,358 | $ | 4.33 | $ | 4.59 | 4/30/17 | $ | 4.78 | $ | 4.33 | 4/30/27 | 10.0 | $ | 0.58 | $ | 0.14 | |||||||||||||||||||||
Total (2) | 500,722 | |||||||||||||||||||||||||||||||||||||
Weighted Average (2) | $ | 5.13 | $ | 5.29 | $ | 5.33 | $ | 5.07 | 8.0 | $ | 0.48 | $ | 0.15 |
(1) | Amount calculated based on the total cost divided by the square feet, divided by the renewal term. | |
Excluding the eight-monthThis lease renewal at the Ft. Myers, FL location, the remaining four lease renewals results in a weighted average term of 8.0 years andhas a U.S. GAAP straight-line weighted average lease rate of $5.33$5.78 per square foot. The renewed weighted average initial cash rent per square foot is $5.07.$5.50. This compares to the former weighted average rent of $5.13$5.68 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $5.29$5.68 per square foot, representingresulting in an increase in the weighted average lease rate of 3.9%1.8% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 4.2%3.2% on a cash basis. The eight remaining leases that are set to expire during fiscal 2017 are under discussion.
25 |
On September 30, 2016, the Company had a weighted average lease maturity of 7.4 years with weighted average gross annualized rent scheduled to expire each year of 8.0%.
The following table presents certain information as of September 30, 2016,2019, with respect to the Company’sour leases expiring over the future fiscal years ended September 30th:
Expiration of Fiscal Year Ended September 30th | Property Count | Total Area Expiring (square feet) | Annualized Rent $ | Percent of Gross Annualized Rent % | Property Count | Total Area Expiring (square feet) | Annualized Rent (in thousands) | Percent of Gross Annualized Rent | |||||||||||||||||||||||
Vacant (1) | 1 | 59,425 | $ | -0- | 0 | % | 3 | 245,837 | $ | -0- | 0 | % | |||||||||||||||||||
Shopping Center (2) | 1 | 64,138 | 780,000 | 1 | % | 1 | 64,220 | 778 | 1 | % | |||||||||||||||||||||
2017 | 9 | 1,038,804 | 6,161,000 | 7 | % | ||||||||||||||||||||||||||
2018 | 15 | 1,324,159 | 7,760,000 | 8 | % | ||||||||||||||||||||||||||
2019 | 9 | 1,370,849 | 7,091,000 | 8 | % | ||||||||||||||||||||||||||
2020 | 4 | 383,449 | 2,102,000 | 2 | % | 5 | 418,782 | 2,240 | 2 | % | |||||||||||||||||||||
2021 | 7 | 684,692 | 3,335,000 | 4 | % | 10 | 1,206,723 | 5,516 | 4 | % | |||||||||||||||||||||
2022 | 7 | 1,138,320 | 6,339,000 | 7 | % | 7 | 1,138,320 | 6,463 | 5 | % | |||||||||||||||||||||
2023 | 10 | 1,302,007 | 8,019,000 | 9 | % | 13 | 1,668,804 | 9,522 | 7 | % | |||||||||||||||||||||
2024 | 11 | 1,743,587 | 10,579,000 | 12 | % | 13 | 1,887,034 | 11,710 | 9 | % | |||||||||||||||||||||
2025 | 9 | 2,404,478 | 11,989,000 | 13 | % | 9 | 2,433,130 | 12,281 | 9 | % | |||||||||||||||||||||
2026 | 5 | 748,154 | 6,182,000 | 7 | % | 8 | 1,078,913 | 8,347 | 6 | % | |||||||||||||||||||||
2027 | 3 | 395,691 | 2,189,000 | 2 | % | 11 | 2,304,616 | 12,612 | 9 | % | |||||||||||||||||||||
2028 | 1 | 861,889 | 2,934,000 | 3 | % | 11 | 2,571,915 | 13,902 | 10 | % | |||||||||||||||||||||
2029 | 2 | 262,613 | 1,513,000 | 2 | % | 8 | 1,739,634 | 9,720 | 7 | % | |||||||||||||||||||||
2030 | 4 | 1,044,832 | 7,366,000 | 8 | % | 4 | 873,032 | 6,962 | 5 | % | |||||||||||||||||||||
2031 | 2 | 624,685 | 4,800,000 | 5 | % | 3 | 963,269 | 7,135 | 5 | % | |||||||||||||||||||||
2032 | 7 | 2,071,983 | 18,480 | 13 | % | ||||||||||||||||||||||||||
2033 | 1 | 558,600 | 2,166,000 | 2 | % | 2 | 639,068 | 6,487 | 5 | % | |||||||||||||||||||||
2034 | 2 | 945,600 | 4,302 | 3 | % | ||||||||||||||||||||||||||
Total (3) | 99 | 16,010,372 | $ | 91,305,000 | 100 | % | 114 | 22,250,880 | $ | 136,457 | 100 | % | |||||||||||||||||||
(1) | “Vacant” represents | |
(2) | “Shopping Center” represents a multi-tenanted property which has lease expirations ranging from month-to-month to | |
(3) |
None.
ITEM 4 – MINE SAFETY DISCLOSURES
None.
26 |
ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Since June 1, 2010, the common stock of Monmouth Real Estate Investment Corporation, $0.01 par value per share (common stock), has been traded on the New York Stock Exchange (NYSE), under the symbol “MNR”.“MNR.” Previously, the common stock was traded on the NASDAQ Global Select Market. The per share range of high and low market prices and distributions paid to common shareholders during each fiscal quarter of the last two fiscal years ended September 30th were as follows:
Fiscal 2016 | Fiscal 2015 | |||||||||||||||||||||||||
Market Price | Market Price | |||||||||||||||||||||||||
Fiscal Qtr. | High | Low | Distrib. | Fiscal Qtr. | High | Low | Distrib. | |||||||||||||||||||
First | $ | 10.72 | $ | 9.50 | $ | 0.16 | First | $ | 11.62 | $ | 10.10 | $ | 0.15 | |||||||||||||
Second | 12.03 | 9.63 | 0.16 | Second | 12.07 | 10.64 | 0.15 | |||||||||||||||||||
Third | 13.26 | 11.22 | 0.16 | Third | 11.30 | 9.30 | 0.15 | |||||||||||||||||||
Fourth | 14.92 | 13.15 | 0.16 | Fourth | 10.09 | 9.02 | 0.15 | |||||||||||||||||||
$ | 0.64 | $ | 0.60 |
On November 15, 2016, the closing price of our common stock was $13.24.
Shareholder Information
As of November 15, 2016, there were 1,3592019, 1,259 shareholders of record who held shares of our common stock of the Company.stock.
Distributions and Dividends
On October 1, 2015, the Company’s Board of Directors approved a 6.7% increase in the Company’s quarterly common stock dividend, raising it to $0.16 per share from $0.15 per share. On October 3, 2016, the Company’s Board of Directors declared a cash dividend of $0.16 per share to be paid on December 15, 2016, to shareholders of record at the close of business on November 15, 2016. This represents an annualized dividend rate of $0.64 per share. The Company has maintained or increased its cash dividend for twenty-five consecutive years. The Company paid the distributions from cash flows from operations. The Company’s common stock dividend policy is dependent upon the Company’s earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. It is the Company’s intention to continue making comparable quarterly distributions in the future and to grow its distributions over time.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities
On January 16, 2019, our Board of Directors authorized a $40.0 million increase to our previously announced $10.0 million Common Stock Repurchase Program (the “Program”), bringing the total available under the Program to $50.0 million. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. To date, we have not repurchased any common stock pursuant to the Program and we may elect not to repurchase any common stock in the future. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. No shares were repurchased or reacquired during fiscal 2019 and, as of September 30, 2019, we do not own any of our own shares.
27 |
Purchases of Equity Securities
On January 19, 2016, the Board of Directors reaffirmed its Share Repurchase Program (the Repurchase Program) that authorizes the Company to purchase up to $10,000,000 in the aggregate of the Company’s common stock. The Repurchase Program was originally created on March 3, 2009 and is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program does not require the Company to acquire any particular amount of common stock, and the program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. As of September 30, 2016, the Company did not reacquire any of its shares of Common Stock. The maximum dollar value that may be purchased under the Repurchase Program as of September 30, 2016 is $10,000,000.
Equity Compensation Plan Information
The Company has a Stock Option and Stock Award Plan, adopted in 2007 and amended and restated in 2010 (the 2007 Plan) authorizing the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock, including up to 100,000 shares of restricted stock awards in any one fiscal year. As of September 30, 2016, there were 444,878 shares available for grant as stock options or restricted stock under the 2007 Plan. During fiscal 2016, options to purchase 65,000 shares were granted with an exercise price of $10.37 and options to purchase 245,000 shares were exercised at a weighted average exercise price of $7.69 per share for total proceeds of $1,883,300. In addition, during fiscal 2016, 40,000 shares of restricted common stock were granted with a fair value on the grant date of $13.64 per share. See Note 9 in the Notes to the Consolidated Financial Statements included in this Form 10-K for a description of the plan. See Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters for a table of beneficial ownership of the Company’s common stock.
The following table summarizes information, as of September 30, 2016, relating to the equity compensation plan of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance:
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan (excluding Securities reflected in column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity Compensation Plan Approved by Security Holders | 455,000 | $ | 9.46 | 444,878 | ||||||||
Equity Compensation Plan not Approved by Security Holders | N/A | N/A | N/A | |||||||||
Total | 455,000 | $ | 9.46 | 444,878 |
Comparative Stock Performance
The following line graph compares the total return of the Company’sour common stock for the last five fiscal years to the FTSE NAREIT Composite Index (US), published by the National Association of Real Estate Investment Trusts (NAREIT), and the S&P 500 Index for the same period. The graph assumes a $100 investment in our common stock and in each of the indexes listed below on September 30, 20112014 and the reinvestment of all dividends. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed. Our stock performance shown in the graph below is not indicative of future stock performance.
28 |
ITEM 6 – SELECTED FINANCIAL DATA(in thousands except per share amounts)
The following table sets forth selected financial and other information for the Company for the periods and as of the dates indicated. This table should be read in conjunction with management’s discussion and analysis of financial condition and results of operations and all of the financial statements and notes thereto included elsewhere herein.
September 30, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
OPERATING DATA: | ||||||||||||||||||||
Rental and Reimbursement Revenue | $ | 158,522 | $ | 139,162 | $ | 116,385 | $ | 97,755 | $ | 77,775 | ||||||||||
Real Estate Taxes and Operating Expenses | (27,327 | ) | (24,390 | ) | (20,154 | ) | (17,568 | ) | (12,490 | ) | ||||||||||
Net Operating Income - NOI | 131,195 | 114,772 | 96,231 | 80,187 | 65,285 | |||||||||||||||
Lease Termination Income | -0- | 210 | -0- | -0- | 239 | |||||||||||||||
Gain on Sale of Securities Transactions | -0- | 111 | 2,312 | 4,399 | 806 | |||||||||||||||
Unrealized Holding Gains (Losses) Arising During the Periods (1) | (24,680 | ) | -0- | -0- | -0- | -0- | ||||||||||||||
Dividend Income | 15,168 | 13,121 | 6,930 | 5,616 | 3,724 | |||||||||||||||
General and Administrative Expenses | (9,081 | ) | (8,776 | ) | (7,809 | ) | (7,936 | ) | (6,306 | ) | ||||||||||
Acquisition Costs | -0- | -0- | (179 | ) | (730 | ) | (1,546 | ) | ||||||||||||
Interest Expense (2) | (36,912 | ) | (32,350 | ) | (25,754 | ) | (22,953 | ) | (19,844 | ) | ||||||||||
Depreciation & Amortization Expense | (45,890 | ) | (38,567 | ) | (31,460 | ) | (26,088 | ) | (21,773 | ) | ||||||||||
Income from Operations | 29,800 | 48,521 | 40,271 | 32,495 | 20,585 | |||||||||||||||
Gain on Sale of Real Estate Investments | -0- | 7,485 | -0- | -0- | 5,021 | |||||||||||||||
Net Income | 29,800 | 56,006 | 40,271 | 32,495 | 25,606 | |||||||||||||||
Preferred Dividends | (18,774 | ) | (17,191 | ) | (14,862 | ) | (9,021 | ) | (8,607 | ) | ||||||||||
Redemption of Preferred Stock | -0- | -0- | (2,467 | ) | (2,942 | ) | -0- | |||||||||||||
Net Income Attributable to Common Shareholders (1) | $ | 11,026 | $ | 38,815 | $ | 22,942 | $ | 20,532 | $ | 16,999 | ||||||||||
Net Income Per Share (1) | ||||||||||||||||||||
Basic | $ | 0.32 | $ | 0.71 | $ | 0.56 | $ | 0.50 | $ | 0.43 | ||||||||||
Diluted | 0.32 | 0.71 | 0.56 | 0.50 | 0.43 | |||||||||||||||
Net Income Attributable to Common Shareholders Per Share (1) | ||||||||||||||||||||
Basic | 0.12 | 0.49 | 0.32 | 0.31 | 0.29 | |||||||||||||||
Diluted | 0.12 | 0.49 | 0.32 | 0.31 | 0.29 |
September 30, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
OPERATING DATA: | ||||||||||||||||||||
Rental and Reimbursement Revenue | $ | 94,916,110 | $ | 77,775,497 | $ | 64,672,341 | $ | 54,607,086 | $ | 50,368,931 | ||||||||||
Real Estate Taxes and Operating Expenses | (14,729,300 | ) | (12,490,019 | ) | (11,317,479 | ) | (9,228,610 | ) | (8,832,027 | ) | ||||||||||
Net Operating Income - NOI | 80,186,810 | 65,285,478 | 53,354,862 | 45,378,476 | 41,536,904 | |||||||||||||||
Lease Termination Income | -0- | 238,625 | 1,182,890 | 690,730 | 3,222,283 | |||||||||||||||
Gain on Sale of Securities Transactions, net | 4,398,599 | 805,513 | 2,166,766 | 7,133,252 | 6,044,065 | |||||||||||||||
Dividend and Interest Income | 5,616,392 | 3,723,867 | 3,882,597 | 3,885,920 | 3,358,674 | |||||||||||||||
General & Administrative Expenses | (7,936,124 | ) | (6,305,928 | ) | (5,709,937 | ) | (4,982,945 | ) | (5,609,558 | ) | ||||||||||
Acquisition Costs | (730,441 | ) | (1,546,088 | ) | (481,880 | ) | (514,699 | ) | (667,799 | ) | ||||||||||
Interest Expense | (21,836,811 | ) | (18,558,150 | ) | (16,104,678 | ) | (14,956,954 | ) | (15,352,499 | ) | ||||||||||
Depreciation & Amortization Expense | (27,203,918 | ) | (23,058,744 | ) | (18,445,326 | ) | (15,530,094 | ) | (13,832,305 | ) | ||||||||||
Income from Continuing Operations | 32,494,507 | 20,584,573 | 19,845,294 | 21,103,686 | 18,699,765 | |||||||||||||||
Gain on Sale of Real Estate Investment | -0- | 5,021,242 | -0- | -0- | -0- | |||||||||||||||
Income (loss) from Discontinued Operations | -0- | -0- | -0- | 291,560 | (15,270 | ) | ||||||||||||||
Net Income | 32,494,507 | 25,605,815 | 19,845,294 | 21,395,246 | 18,684,495 | |||||||||||||||
Preferred Dividends | (9,020,470 | ) | (8,607,032 | ) | (8,607,032 | ) | (8,607,032 | ) | (5,513,126 | ) | ||||||||||
Redemption of Preferred Stock | (2,942,149 | ) | -0- | -0- | -0- | -0- | ||||||||||||||
Net Income Attributable to Common Shareholders | $ | 20,531,888 | $ | 16,998,783 | $ | 11,238,262 | $ | 12,788,214 | $ | 13,171,369 | ||||||||||
Income from Continuing Operations Per Share | ||||||||||||||||||||
Basic | $ | 0.50 | $ | 0.43 | $ | 0.40 | $ | 0.49 | $ | 0.47 | ||||||||||
Diluted | 0.50 | 0.43 | 0.40 | 0.49 | 0.47 | |||||||||||||||
Net Income Attributable to Common Shareholders Per Share | ||||||||||||||||||||
Basic | 0.31 | 0.29 | 0.23 | 0.30 | 0.33 | |||||||||||||||
Diluted | 0.31 | 0.29 | 0.23 | 0.30 | 0.33 | |||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||
Total Assets | $ | 1,229,758,028 | $ | 915,991,942 | $ | 743,756,700 | $ | 617,240,866 | $ | 574,507,702 | ||||||||||
Real Estate Investments, Net | 1,022,483,326 | 816,111,266 | 636,710,590 | 536,770,636 | 467,865,198 | |||||||||||||||
Mortgage Notes Payable | 483,748,153 | 373,991,174 | 287,796,006 | 250,093,382 | 237,943,911 | |||||||||||||||
Loans Payable | 80,790,684 | 85,041,386 | 25,200,000 | 22,200,000 | 5,200,000 | |||||||||||||||
Preferred Stock Called for Redemption | 53,493,750 | -0- | -0- | -0- | -0- | |||||||||||||||
8% Subordinated Convertible Debentures | -0- | -0- | -0- | -0- | 8,615,000 | |||||||||||||||
7.625% Series A Cumulative Redeemable Preferred Stock | -0- | 53,493,750 | 53,493,750 | 53,493,750 | 53,493,750 | |||||||||||||||
7.875% Series B Cumulative Redeemable Preferred Stock | 57,500,000 | 57,500,000 | 57,500,000 | 57,500,000 | 57,500,000 | |||||||||||||||
6.125% Series C Cumulative Redeemable Preferred Stock | 135,000,000 | -0- | -0- | -0- | -0- | |||||||||||||||
Total Shareholders’ Equity | 597,858,098 | 446,010,640 | 420,631,082 | 335,914,971 | 315,687,139 | |||||||||||||||
CASH FLOW DATA: | ||||||||||||||||||||
Net Cash Provided (Used) By: | ||||||||||||||||||||
Operating Activities | $ | 54,699,500 | $ | 38,062,285 | $ | 34,856,285 | $ | 27,463,529 | $ | 26,808,821 | ||||||||||
Investing Activities | (227,845,089 | ) | (194,469,735 | ) | (131,809,697 | ) | (60,373,084 | ) | (80,640,038 | ) | ||||||||||
Financing Activities | 256,821,188 | 148,006,698 | 105,023,561 | 20,663,209 | 72,105,267 |
September 30, | ||||||||||||||||||||
OTHER INFORMATION: | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Average Number of Common Shares Outstanding | ||||||||||||||||||||
Basic | 65,468,564 | 59,085,888 | 49,829,924 | 42,275,555 | 39,660,692 | |||||||||||||||
Diluted | 65,558,284 | 59,201,296 | 49,925,036 | 42,432,354 | 39,819,621 | |||||||||||||||
Funds From Operations* | $ | 46,598,043 | $ | 33,730,447 | $ | 29,000,443 | $ | 27,338,245 | $ | 26,459,005 | ||||||||||
Core Funds From Operations* | $ | 50,270,633 | $ | 35,276,535 | $ | 29,482,323 | $ | 27,852,944 | $ | 27,126,804 | ||||||||||
Adjusted Funds From Operations* | $ | 45,865,343 | $ | 33,976,958 | $ | 25,843,710 | $ | 19,521,972 | $ | 17,685,624 | ||||||||||
Cash Dividends per Common Share | $ | 0.64 | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 |
Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income Attributable to Common Shareholders between these periods are not comparable. | ||
(2) | Amortization expense related to Financing Costs are included in “Interest Expense.” |
BALANCE SHEET DATA: | ||||||||||||||||||||
Total Assets | $ | 1,871,948 | $ | 1,718,378 | $ | 1,443,038 | $ | 1,223,486 | $ | 910,906 | ||||||||||
Real Estate Investments, net | 1,616,934 | 1,512,513 | 1,260,830 | 1,013,103 | 806,466 | |||||||||||||||
Fixed Rate Mortgage Notes Payable, net | 744,928 | 711,546 | 591,364 | 477,476 | 368,905 | |||||||||||||||
Loans Payable | 95,000 | 186,609 | 120,091 | 80,791 | 85,041 | |||||||||||||||
Preferred Stock Called for Redemption | -0- | -0- | -0- | 53,494 | -0- | |||||||||||||||
7.625% Series A Cumulative Redeemable Preferred Stock | -0- | -0- | -0- | -0- | 53,494 | |||||||||||||||
7.875% Series B Cumulative Redeemable Preferred Stock | -0- | -0- | -0- | 57,500 | 57,500 | |||||||||||||||
6.125% Series C Cumulative Redeemable Preferred Stock | 347,678 | 287,200 | 245,986 | 135,000 | -0- | |||||||||||||||
Total Shareholders’ Equity | 1,011,043 | 797,906 | 712,866 | 597,858 | 446,011 | |||||||||||||||
CASH FLOW DATA: | ||||||||||||||||||||
Net Cash Provided (Used) By: | ||||||||||||||||||||
Operating Activities | $ | 101,622 | $ | 85,529 | $ | 73,868 | $ | 54,700 | $ | 38,062 | ||||||||||
Investing Activities | (214,508 | ) | (332,513 | ) | (339,071 | ) | (227,845 | ) | (194,470 | ) | ||||||||||
Financing Activities | 123,741 | 246,083 | 179,680 | 256,821 | 148,007 |
29 |
September 30, | ||||||||||||||||||||
OTHER INFORMATION: | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Average Number of Common Shares Outstanding | ||||||||||||||||||||
Basic | 93,387 | 78,619 | 72,114 | 65,469 | 59,086 | |||||||||||||||
Diluted | 93,485 | 78,802 | 72,250 | 65,558 | 59,201 | |||||||||||||||
Funds From Operations* | $ | 81,197 | $ | 69,841 | $ | 54,442 | $ | 46,598 | $ | 33,730 | ||||||||||
Core Funds From Operations* | $ | 81,197 | $ | 69,841 | $ | 57,088 | $ | 50,271 | $ | 35,276 | ||||||||||
Adjusted Funds From Operations* | $ | 79,695 | $ | 68,375 | $ | 54,880 | $ | 45,865 | $ | 33,977 | ||||||||||
Cash Dividends per Common Share | $ | 0.68 | $ | 0.68 | $ | 0.64 | $ | 0.64 | $ | 0.60 |
* We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (FFO), which management believeswe believe is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT), represents net income (loss) 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, we have elected to exclude unrealized gains and losses from our investments in marketable equity securities from our FFO calculation. NAREIT created FFO as a non-U.S. GAAPnon-GAAP supplemental measure of REIT operating performance. We define Core Funds From Operations (Core FFO) as FFO, excludingplus acquisition costs and costs associated with the Redemption of Preferred Stock. We define Adjusted Funds fromFrom Operations (AFFO) as Core FFO, excluding stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, lease termination income, net gain or loss on sale of securities transactions, effect of non-cash U.S. GAAP straight-line rent adjustments non-recurring other expenses and lesssubtracting 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, Core FFO and AFFO may be considered by investors as supplemental measures to compare our operating performance to those of other REITs. FFO, Core 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, 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 are significant components in understanding the Company’sour financial performance.
FFO, Core 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 flowCash Flows from Operating, Investing and Financing Activities as a measure of liquidity. FFO, Core FFO and AFFO, as calculated by the Company,us, may not be comparable to similarly titled measures reported by other REITs.
30 |
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 fiscal years ended September 30th(in thousands):
2016 | 2015 | 2014 | 2013 | 2012 | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 20,531,888 | $ | 16,998,783 | $ | 11,238,262 | $ | 12,788,214 | $ | 13,171,369 | $ | 11,026 | $ | 38,815 | $ | 22,942 | $ | 20,532 | $ | 16,999 | ||||||||||||||||||||
Plus: Depreciation Expense (including Discontinued Operations & excluding Corporate Office) | 23,931,530 | 19,625,748 | 15,908,769 | 12,877,385 | 11,471,070 | |||||||||||||||||||||||||||||||||||
Plus: Unrealized Holding Losses Arising During the Periods | 24,680 | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||||||
Plus: Depreciation Expense (Excluding Corporate Office) | 42,518 | 36,018 | 29,478 | 23,931 | 19,626 | |||||||||||||||||||||||||||||||||||
Plus: Amortization of Intangible Assets | 1,178,744 | 1,370,654 | 1,347,936 | 1,543,298 | 1,477,356 | 1,986 | 1,613 | 1,072 | 1,179 | 1,370 | ||||||||||||||||||||||||||||||
Plus: Amortization of Capitalized Lease Costs | 955,881 | 756,504 | 505,476 | 475,142 | 330,990 | 987 | 880 | 855 | 956 | 756 | ||||||||||||||||||||||||||||||
(Gain) Loss on Sale of Depreciable Assets | -0- | (5,021,242 | ) | -0- | (345,794 | ) | 8,220 | |||||||||||||||||||||||||||||||||
Less: (Gain) / Plus: Loss on Sale of Real Estate Investments | -0- | (7,485 | ) | 95 | -0- | (5,021 | ) | |||||||||||||||||||||||||||||||||
FFO Attributable to Common Shareholders | 46,598,043 | 33,730,447 | 29,000,443 | 27,338,245 | 26,459,005 | 81,197 | 69,841 | 54,442 | 46,598 | 33,730 | ||||||||||||||||||||||||||||||
Plus: Acquisition Costs | 730,441 | 1,546,088 | 481,880 | 514,699 | 667,799 | -0- | -0- | 179 | 731 | 1,546 | ||||||||||||||||||||||||||||||
Plus: Redemption of Preferred Stock | 2,942,149 | -0- | -0- | -0- | -0- | -0- | -0- | 2,467 | 2,942 | -0- | ||||||||||||||||||||||||||||||
Core FFO Attributable to Common Shareholders | 50,270,633 | 35,276,535 | 29,482,323 | 27,852,944 | 27,126,804 | 81,197 | 69,841 | 57,088 | 50,271 | 35,276 | ||||||||||||||||||||||||||||||
Plus: Depreciation of Corporate Office Capitalized Costs | 502 | 158 | 157 | 124 | 80 | |||||||||||||||||||||||||||||||||||
Plus: Stock Compensation Expense | 926,465 | 448,895 | 347,002 | 329,148 | 593,811 | 784 | 434 | 625 | 926 | 449 | ||||||||||||||||||||||||||||||
Plus: Depreciation of Corporate Office Tenant Improvements | 123,492 | 79,572 | -0- | -0- | -0- | |||||||||||||||||||||||||||||||||||
Plus: Amortization of Financing Costs | 1,116,238 | 1,286,016 | 725,745 | 647,112 | 630,969 | 1,253 | 1,221 | 1,234 | 1,116 | 1,286 | ||||||||||||||||||||||||||||||
Plus: Non-recurring Other Expense (1) | 500,000 | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||||||
Plus: Non-recurring Other Expense (2) | -0- | -0- | -0- | 500 | -0- | |||||||||||||||||||||||||||||||||||
Less: Gain on Sale of Securities Transactions | -0- | (111 | ) | (2,312 | ) | (4,399 | ) | (805 | ) | |||||||||||||||||||||||||||||||
Less: Lease Termination Income | -0- | (238,625 | ) | (1,182,890 | ) | (690,730 | ) | (3,222,283 | ) | -0- | (210 | ) | -0- | -0- | (239 | ) | ||||||||||||||||||||||||
Less: Gain on Sale of Securities Transactions, net | (4,398,599 | ) | (805,513 | ) | (2,166,766 | ) | (7,133,252 | ) | (6,044,065 | ) | ||||||||||||||||||||||||||||||
Less: U.S. GAAP Straight-line Rent Adjustment | (1,709,821 | ) | (1,446,264 | ) | (600,745 | ) | (943,785 | ) | (553,474 | ) | ||||||||||||||||||||||||||||||
Less: Effect of non-cash U.S. GAAP Straight-line Rent Adjustment | (1,926 | ) | (1,973 | ) | (1,028 | ) | (1,710 | ) | (1,446 | ) | ||||||||||||||||||||||||||||||
Less: Recurring Capital Expenditures | (963,065 | ) | (623,658 | ) | (760,959 | ) | (539,465 | ) | (846,138 | ) | (2,115 | ) | (985 | ) | (884 | ) | (963 | ) | (624 | ) | ||||||||||||||||||||
AFFO Attributable to Common Shareholders | $ | 45,865,343 | $ | 33,976,958 | $ | 25,843,710 | $ | 19,521,972 | $ | 17,685,624 | $ | 79,695 | $ | 68,375 | $ | 54,880 | $ | 45,865 | $ | 33,977 |
(1) | |
(2) | Consists of one-time payroll expenditures in fiscal 2016. |
.
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ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Cautionary Statement Regarding Forward-Looking Statements
Statements contained in this Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”)(Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)(Exchange Act). Forward-looking statements provide the Company’sour current expectations or forecasts of future events. Forward-lookingIn particular, statements include statements about the Company’s expectations, beliefs, intentions, plans, objectives, goals, strategies, future events,relating to our liquidity and capital resources, portfolio performance and underlyingresults of operations contain forward-looking statements. Furthermore, all of the statements regarding future financial performance are forward-looking statements. We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Securities Act and Exchange Act for any such forward-looking statements. We caution investors that any forward-looking statements presented in this Form 10-K are based on management’s belief and assumptions made by, and other statements that are not historical facts.information currently available to, management. Forward-looking statements can be identified 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. Forward-looking statements include statements about our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts.
The forward-looking statements are based on the Company’sour beliefs, assumptions and expectations of itsour future performance, taking into account all information currently available to the Company.us. 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.us. Some of these factors are described below and under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.Operations.” These and other risks, uncertainties and factors could cause the Company’sour actual results to differ materially from those included in any forward-looking statements the Company makes.we make. 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 Companyus to predict those events or how they may affect the Company.us. Except as required by law, the Company iswe are not obligated to, and doeswe do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from the Company’sour expectations include, among others:
● | the ability of | |
● | our reliance on certain major | |
● | our ability to re-lease properties that are currently vacant or that become vacant; | |
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● | changes in real estate market conditions, economic conditions in the industrial sector, | |
● | the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations and illiquidity of real estate investments; | |
● | ||
● | ||
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● | the loss of any member of | |
● | ||
● |
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● | continued availability of proceeds from issuances of our debt or equity securities; | |
● | ||
the availability of other debt and equity financing alternatives; | ||
● | ||
changes in interest rates under | ||
● | ||
● | ||
● | changes in federal or state tax rules or regulations that could have adverse tax consequences; | |
● | declines in the market prices of | |
● |
You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. The Company undertakesWe undertake no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise.
The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein.
Overview
The CompanyMonmouth Real Estate Investment Corporation, founded in 1968, is one of the oldest public equity REITs in the world. We are a self-administered and self-managed REIT. The CompanyREIT that seeks to invest in well-located, modern, singlesingle- tenant industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases.net-leases. At September 30, 2016, the Company2019, we held investments in ninety-nine114 properties totaling approximately 16,010,00022.3 million square feet. Total real estate investments were $1,171,313,495$1.9 billion at September 30, 2016.2019. These properties are located in thirty30 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin. All of these properties are wholly-owned, with the exception of an industrial property in New Jersey, in which the Company ownswe own a 51% controlling equity interest, and thea shopping center in New Jersey, in which the Company holdswe own a 67% controlling equity interest.
The Company’sOur weighted-average lease expiration was 7.47.6 years and 7.28.1 years as of September 30, 20162019 and 2015,2018, respectively, and itsour average annualized rent per occupied square foot as of September 30, 20162019 and 20152018 was $5.72$6.20 and $5.48,$6.01, respectively. At September 30, 20162019 and 2015, the Company’s2018, our overall occupancy rate was 99.6%98.9% and 97.7%99.6%, respectively. Subsequent to fiscal yearend on October 27, 2016, the Company sold its only2019, effective November 1, 2019, we leased one of our previously vacant buildingproperties consisting of 60,000 square feet for $4,272,000 which increased12.5 years, increasing our current overall occupancy rate to 100.0%99.2%. During fiscal 2016, the Company acquired eight industrial properties totaling approximately 1,830,000 square feet for approximately $210,747,000.
The Company hasWe have a concentration of properties leased to FedEx Corporation (FDX). As of September 30, 2016, the Company2019, we had approximately 16,010,00022.3 million square feet of property, of which approximately 7,584,00010.4 million square feet, or 47%, consisting of fifty-three60 separate stand-alone leases, were leased to FDX and its subsidiaries (6%(5% to FDX and 41%42% to FDX subsidiaries). These properties are located in twenty-four25 different states. As of September 30, 2019, the 60 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 8.7 years. The percentage of rental and reimbursement revenue from FDX and its subsidiaries was 56%60% for the year ended September 30, 2016,2019, consisting of 7%5% leased to FDX and 49%55% leased to FDX subsidiaries. No other tenant accounted for 5% or more of the Company’sour total Rental and Reimbursement revenue for fiscal 2016.2019. None of our properties are subject to a master lease or any cross-collateralization agreements.
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In addition to real estate property holdings, the Company held $73,604,894 in marketable REIT securities at September 30, 2016, representing 5.3% of the Company’s undepreciated assets (which is the Company’s total assets excluding accumulated depreciation). These liquid real estate holdings are not included in calculating the tenant concentration ratios above and therefore further enhance the Company’s diversification. As a result, the securities portfolio provides the Company with additional liquidity, diversification, income and serves as a proxy for real estate when more favorable risk adjusted returns are not available.
The Company’sOur revenue primarily consists of rental and reimbursement revenue from the ownership of industrial rental property. Rental and Reimbursement Revenue increased $17,140,613,$19.4 million, or 22%14%, for the year ended September 30, 20162019, as compared to the year ended September 30, 2015.2018. Total expenses (excluding other income and expense) increased $7,368,782,$10.6 million, or 17%15%, for the year ended September 30, 20162019 as compared to the year ended September 30, 2015.2018. The increases were due mainly to the revenue and expenses relating to the property acquisitions made during fiscal 20152019 and 2016.2018.
Our Net Income Attributable to Common Shareholders decreased $27.8 million, or 72%, for the fiscal year ended September 30, 2019 as compared to the fiscal year ended September 30, 2018 and increased $15.9 million, or 69%, for the fiscal year ended September 30, 2018 as compared to the fiscal year ended September 30, 2017. The decrease in our Net Income Attributable to Common Shareholders from the fiscal year ended September 30, 2019 to the fiscal year ended September 30, 2018 was primarily due to the implementation of a new accounting rule requiring that unrealized gains and losses resulting from our securities investments be reflected on our income statement. During the fiscal year ended September 30, 2019, we recognized $24.7 million of unrealized losses. Prior to the adoption of the rule, unrealized gains and losses were reflected as a change in our shareholders’ equity. During the fiscal year ended September 30, 2018, we reported realized gains of $7.5 million from the sale of real estate investments and we reported $111,000 from the sale of securities transactions. Excluding all non-cash unrealized losses and realized gains, our Net Income Attributable to Common Shareholders for the fiscal year ended September 30, 2019 would have been $35.7 million as compared to $31.2 million for the fiscal year ended September 30, 2018, representing a 14% increase. The increase was due to the purchase of additional properties in fiscal 2019 and 2018.
We evaluate our financial performance using Net Operating Income (NOI) from property operations, (NOI)which we believe is defineda useful indicator of our operating performance. NOI is a non-GAAP financial measure that we define as Net Income Attributable to Common Shareholders plus Redemption of Preferred Stock, Preferred Dividends, General and Administrative Expenses, Acquisition Costs, Depreciation, Amortization of Capitalized Lease Costs and Intangible Assets, Interest Expense, including Amortization of Financing Costs, Unrealized Holding Losses Arising During the Periods, less Dividend Income, Gain on Sale of Securities Transactions, Gain on Sale of Real Estate Investments and Lease Termination Income. The components of NOI are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities, and repairs and maintenance. Other REITs may use different methodologies to calculate NOI and, accordingly, our NOI may not be comparable to all other REITs.
The following is a reconciliation of our Net Income Attributable to Common Shareholders to our NOI for the fiscal years ended September 30, 2019, 2018 and 2017 (in thousands):
2019 | 2018 | 2017 | ||||||||||
Net Income Attributable to Common Shareholders (1) | $ | 11,026 | $ | 38,815 | $ | 22,942 | ||||||
Plus: Redemption of Preferred Stock | -0- | -0- | 2,467 | |||||||||
Plus: Preferred Dividends | 18,774 | 17,191 | 14,862 | |||||||||
Plus: General and Administrative Expenses | 9,081 | 8,776 | 7,809 | |||||||||
Plus: Acquisition Costs | -0- | -0- | 179 | |||||||||
Plus: Depreciation | 43,020 | 36,176 | 29,635 | |||||||||
Plus: Amortization of Capitalized Lease Costs and Intangible Assets | 2,870 | 2,391 | 1,825 | |||||||||
Plus: Interest Expense, including Amortization of Financing Costs | 36,912 | 32,350 | 25,754 | |||||||||
Plus: Unrealized Holding Losses Arising During the Periods | 24,680 | -0- | -0- | |||||||||
Less: Dividend Income | (15,168 | ) | (13,121 | ) | (6,930 | ) | ||||||
Less: Gain on Sale of Securities Transactions | -0- | (111 | ) | (2,312 | ) | |||||||
Less: Gain on Sale of Real Estate Investments | -0- | (7,485 | ) | -0- | ||||||||
Less: Lease Termination Income | -0- | (210 | ) | -0- | ||||||||
Net Operating Income – NOI | $ | 131,195 | $ | 114,772 | $ | 96,231 |
(1) | Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income Attributable to Common Shareholders between these periods are not comparable. |
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The components of our NOI for the fiscal years ended September 30, 2019, 2018 and 2017 are as follows (in thousands):
2019 | 2018 | 2017 | ||||||||||
Rental Revenue | $ | 132,524 | $ | 115,864 | $ | 97,660 | ||||||
Reimbursement Revenue | 25,998 | 23,298 | 18,725 | |||||||||
Total Rental and Reimbursement Revenue | 158,522 | 139,162 | 116,385 | |||||||||
Real Estate Taxes | (20,711 | ) | (18,596 | ) | (15,267 | ) | ||||||
Operating Expense | (6,616 | ) | (5,794 | ) | (4,887 | ) | ||||||
NOI | $ | 131,195 | $ | 114,772 | $ | 96,231 |
NOI increased $14,901,332,$16.4 million, or 23%14%, for the fiscal year ended September 30, 20162019, as compared to the fiscal year ended September 30, 20152018 and increased $11,930,616,$18.5 million, or 22%19%, for the fiscal year ended September 30, 20152018 as compared to the fiscal year ended September 30, 2014.2017. The increase from fiscal year 20152018 to 20162019 was due to the additional income related to eightthree industrial properties purchased during fiscal 20162019 and the purchase of seven industrial properties during fiscal 2018. The increase from fiscal year 2017 to 2018 was due to the additional income related to seven industrial properties purchased during fiscal 2018 and the purchase of ten industrial properties during fiscal 2015. The increase from fiscal year 2014 to 2015 was due to the additional income related to ten industrial properties purchased during fiscal 2015.2017.
The Company’s NOI for the fiscal years ended September 30, 2016, 2015 and 2014 is calculated as follows:
2016 | 2015 | 2014 | ||||||||||
Rental Revenue | $ | 81,592,429 | $ | 67,059,385 | $ | 55,512,165 | ||||||
Reimbursement Revenue | 13,323,681 | 10,716,112 | 9,160,176 | |||||||||
Total Rental and Reimbursement Revenue | 94,916,110 | 77,775,497 | 64,672,341 | |||||||||
Real Estate Taxes | (10,455,401 | ) | (8,362,135 | ) | (7,605,611 | ) | ||||||
Operating Expense | (4,273,899 | ) | (4,127,884 | ) | (3,711,868 | ) | ||||||
NOI | $ | 80,186,810 | $ | 65,285,478 | $ | 53,354,862 |
For the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, gross revenue, which includes Rental Revenue, Reimbursement Revenue and Dividend and Interest Income totaled $100,532,502, $81,499,364$173.7 million, $152.3 million and $68,554,938,$123.3 million, respectively.
Subsequent to the fiscal yearend 2019, on October 17, 2016, the Company10, 2019, we purchased a newly constructed 338,584616,000 square foot industrial building, situated on 78.6 acres, located in Hamburg, NY, which is in the BuffaloIndianapolis, IN MSA. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through March 2031.August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $35,100,000. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.03%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $2,308,000.$5.0 million.
In addition, subsequent to the fiscal yearend, on October 1, 2016, a 50,741 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Edinburg, TX was substantially completed for a cost of approximately $4,988,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, or $5.27 per square foot, to approximately $1,097,000, or $6.68 per square foot.
On October 27, 2016, the Company sold its only vacant building, (which increased our occupancy rate from 99.6% to 100.0%), consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value.
The industrial propertiesproperty purchased expanded and soldthus far during fiscal 2017 to date,2020 increased our current total leasable square feet to approximately 16,340,000 and increased our occupancy rate to 100.0%.22.9 million.
In addition to the $81.5 million property purchased subsequent to theour fiscal yearend, as described above, we have entered into agreements to purchase eightfour, new build-to-suit, industrial buildings that are currently being developed in Florida, Michigan, North Carolina, Ohio (2) and South CarolinaUtah, totaling approximately 2,099,000997,000 square feet each withfeet. These future acquisitions have net-leased terms ranging between tenfrom 10 to fifteen15 years with a weighted average lease maturityterm of 13.314.2 years. Approximately 1,267,000The total purchase price for these four properties is $150.5 million. Three of these four properties, consisting of 844,000 square feet, or 60%85%, isare leased to FDX andor its subsidiaries. All four properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The purchase price forreferences in this report to the eight properties is approximately $212,373,000.S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing three of these eight transactions during fiscal 20172020 and one during early fiscal 2018.2021. In connection with fiveone of the eightthese four properties, the Company haswe have entered into commitmentsa commitment to obtain five mortgages totaling $101,204,000 at fixed rates ranging from 3.60% to 4.20%,a 10 year, fully-amortizing mortgage loan of $9.4 million with a weighted averagefixed interest rate of 3.83%3.47%. Each
During the three fiscal years ended September 30, 2019, 2018 and 2017, we completed a total of seven property expansions, consisting of three building expansions and four parking lot expansions. Three of the four parking lot expansions included the purchase of additional land. The three building expansions resulted in 220,000 additional square feet. Total costs for all seven property expansions were $21.0 million and resulted in total increased annual rent of $2.0 million. Six of these mortgages will be a fifteen year, fully-amortizing loan. The Company may make additional acquisitionscompleted expansions resulted in fiscal 2017 and fiscal 2018new ten-year lease extensions and the fundsone remaining completed expansion resulted in a new fifteen-year lease extension. The weighted average lease extension for these acquisitionsseven property expansions is 12.1 years.
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Revenues also include Dividend Income and Gain on Sale of Securities Transactions. We hold a portfolio of marketable securities of other REITs with a fair value of $185.3 million as of September 30, 2019, representing 8.7% of our undepreciated assets (which is our total assets excluding accumulated depreciation). We opportunistically invest in marketable securities of other REITs. Historically, we have aimed to limit the size of our REIT securities portfolio to no more than approximately 10% of our undepreciated assets. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. From time to time, we may comepurchase these securities on margin when there is an adequate yield spread. As of September 30, 2019, there were no amounts drawn down on our margin line and as of September 30, 2018, there was $26.6 million outstanding on the margin loan. As of September 30, 2019, our portfolio consisted primarily of 93% REIT common stocks and 7% REIT preferred stocks, all of which are listed on a national securities exchange. Our weighted average yield on the securities portfolio for fiscal 2019 was 8.5%. Dividend Income for fiscal 2019 was $15.1 million compared to $13.1 million for fiscal 2018. During fiscal 2019, we did not sell or redeem any securities and thus we did not realize any gains on sale of securities transactions. We have unrealized losses of $49.4 million in our REIT securities portfolio as of September 30, 2019. The dividends received from our securities investments continue to meet our expectations. We intend to hold these securities for investment on a long-term basis.
We had $20.2 million in Cash and Cash Equivalents and $185.3 million in REIT securities as of September 30, 2019. We believe that funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the Dividend ReinvestmentDRIP, proceeds from the Preferred Stock ATM Program, and Stock Purchase Plan (DRIP),proceeds from private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.
During the fiscal years ended September 30, 2016, 2015 and 2014, the Company completed fifteen expansions at thirteen of its locations, consisting of ten building expansions and five parking lot expansions. Two of the parking lot expansions included the purchase of additional land. The ten building expansions resulted in approximately 699,000 additional square feet. Total costs for all fifteen property expansions were approximately $52,474,000 and resulted in total increased annual rent of approximately $5,180,000. Fourteen completed expansions resulted in a new ten year lease extension for each property that was expanded and one completed expansion resulted in a new twelve year lease extension.
Revenues also include dividend and interest income and net realized gain on securities, transactions. The Company holds a portfolio of marketable securities of other REITs with a fair value of $73,604,894 as of September 30, 2016, representing 5.3% of the Company’s undepreciated assets (which is the Company’s total assets excluding accumulated depreciation). The Company generally limits its marketable securities investments to no more than approximately 10% of its undepreciated assets. The Company invests in REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. As of September 30, 2016 and 2015, there were no draws against the margin. The REIT securities portfolio provides the Company with additional liquidity and additional income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. As of September 30, 2016, the Company’s portfolio consisted primarily of 81% REIT common stocks and 19% REIT preferred stocks, all of which are listed on a national securities exchange. The Company’s weighted-average yield on the securities portfolio for fiscal 2016 was approximately 8.0%. Dividend and Interest income for fiscal 2016 was $5,616,392, and was $3,723,867 for fiscal 2015. During fiscal 2016, the Company realized $4,398,599 in gains on sales of securities transactions. The Company has unrealized gains of $12,942,267 in its REIT securities portfolio as of September 30, 2016. The dividends received from our securities investments continue to meet our expectations. The Company intends to hold these securities for investment on a long-term basis.
The Company had $95,749,508 in cash and cash equivalents and $73,604,894 in REIT securities as of September 30, 2016. The Company believes that funds generated from operations, the DRIP, the unsecured line of credit facility, together with the ability to finance and refinance its properties, will provide sufficient funds to adequately meet itsour obligations over the next several years.
The Company hasWe have a Dividend Reinvestment and Stock Purchase Plan (DRIP),DRIP, in which participants can purchase our stock from the Company at a price ofthat is approximately 95% of market value. Amounts received in connection with the DRIP (including dividend reinvestments of $8,369,146, $8,489,169$16.9 million, $12.9 million and $7,624,528$10.1 million for fiscal years ended 2016, 20152019, 2018 and 2014,2017, respectively), were $72,175,797, $48,404,556$74.0 million, $90.0 million and $38,090,334$91.9 million for fiscal years ended 2016, 20152019, 2018 and 2017, respectively.
In October 2018, we completed a public offering of 9.2 million shares of our common stock (including the underwriters’ option to purchase 1.2 million additional shares) at a price of $15.00 per share, before underwriting discounts. This was our first common stock offering since 2014 respectively.and represented an 11.3% increase in our outstanding common shares. We received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of $132.3 million.
On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sale of shares of our 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share, with a liquidation preference of $25.00 per share, or our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million. Sales of shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through these programs on July 3, 2017. Since inception through September 30, 2019, we sold 5.5 million shares under these programs at a weighted average price of $24.81 per share, and generated net proceeds, after offering expenses, of $134.0 million, of which 2.4 million shares were sold during the fiscal year ended September 30, 2019 at a weighted average price of $24.49 per share, and generated net proceeds, after offering expenses, of $58.2 million. As of September 30, 2019, there is $59.8 million remaining that may be sold under the Preferred Stock ATM Program.
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As of September 30, 2019, 13.9 million shares of the 6.125% Series C Preferred Stock were issued and outstanding.
Industrial space demand is very closely correlated to Gross Domestic Product (GDP) growth. Despite seventen years of unprecedented monetary stimulus, real annual GDP growth has averaged less than 2.0% over this period. However, thereEconomic growth has been significantstrong this past year further increasing demand for industrial space and national occupancy rates have continued to increase.space. The most significant demand driver for modern industrial real estate continues to be ecommerce. Every year since the turn of the century, the percentage of goods purchased on-line has increased at a 15%an average 16% annual growth rate. Today, excluding food, fuel, and autos, approximately 10%19% of total retail sales have migrated from traditional store sales to on-line sales. Thissales and we expect this growth in market share to continue. We expect these favorable trendtrends for the industrial real estate sector is expected to be a leading demand driver for the foreseeable future, as consumers continue to embrace the added efficiencies of on-line consumption. New home construction and sales of existing homes has also continued to strengthen. Housing demand typically translates into greater demand for warehouse space. Additionally, automotive sales remain at historic highs and low energy costs have resulted in increased domestic manufacturing. These catalysts have resulted in rising rental rates in most major industrial markets. The strong financial position of our tenants, together with the long duration of our leases, should enableprovides for high quality, reliable income streams throughout the Company to continue to perform well despite the slow growth macro-economic environment.business cycle.
The Company intendsWe intend to continue to increase itsour real estate investments in fiscal 20172020 and 20182021 through acquisitions and expansions of our properties. The growth of the real estate portfolio depends on the availability of suitable properties which meet the Company’sour investment criteria and appropriate financing. Competition in the market areas in which the Company operateswe operate is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties. Transaction costs, such as broker fees, transfer taxes, legal, valuation, and other professional fees related to acquisitions are expensed as incurred.
See PART I, Item 1 – Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant to the Companyus and the opportunities and challenges, and risks on which the Company iswe are focused.
Significant Accounting Policies and Estimates
The discussion and analysis of the Company’sour financial condition and results of operation are based upon the Company’sour consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires managementus to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the Company’sour consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Significant accounting policies are defined as those that involve significant judgment and potentially could result in materially different results under different assumptions and conditions. Management believesWe believe the following significant accounting policies are affected by our more significant judgments and estimates used in the preparation of the Company’sour consolidated financial statements. For a detailed description of these and other accounting policies, see Note 1 in the Notes to the Company’sour Consolidated Financial Statements included in this Form 10-K.
Real Estate Investments
The Company appliesWe apply Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other than temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.
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UponWe account for our property acquisitions as acquisitions of assets. In an acquisition of a property, the Company allocates the purchase price of the property based upon the fair value of the assets, acquired, which generally consist of land, buildings and intangible assets, including above and below market leases and in-place leases. The Company allocates the purchase pricecertain acquisition costs are capitalized to the fair value of the tangible assets of an acquired property generally determined by third party appraisal of the property obtained in conjunction with the purchase. Transaction costs, suchreal estate investments as broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related to acquisitions are expensed as incurred.
The purchase price is further allocated to acquired above and below market leases based on the present value of the difference between prevailing market rates and the in-place lease rates over the remaining term. In addition, any remaining amountspart of the purchase priceprice. In addition, acquisitions that do not meet the definition of a business combination are appliedaccounted for as asset acquisitions whereby the consideration incurred is allocated to in-place lease values basedthe individual assets acquired on management’s evaluation of the specific characteristics of each tenant’s lease. In-place leases that may have a customer relationship intangiblerelative fair value including (but not limited to) the nature and extent of the existing relationship with the tenant, the tenant’s credit quality and expectations of lease renewals are also considered. Acquired above and below market leases are amortized to rental revenue over the remaining non-cancelable terms of the respective leases. The value of in-place lease intangibles is amortized to amortization expense over the remaining lease term. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, deferred rent, and the in-place lease value is charged to expense when there is a signed termination agreement, all of the conditions of the termination agreement are met, the tenant is no longer occupying the property and the termination consideration, if any, is probable of collection.basis.
The CompanyWe conducted a comprehensive review of all real estate asset classes in accordance with ASC Topic 360,360-10, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable.
The following are examples of such events or changes in circumstances that would indicate to managementus that there may be an impairment of a property:
● | A non-renewal of a lease and subsequent | |
● | A renewal of a lease at a significantly lower rent than a previous lease; | |
● | A significant decrease in the market value of a property; | |
● | A significant adverse change in the extent or manner in which a property is being used or in its physical condition; | |
● | A significant adverse change in legal factors or in the business climate that could affect the value of a property, including an adverse action or assessment by a regulator; | |
● | An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a property; | |
● | A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a property; or | |
● | A current expectation that, more likely than not, a property will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. |
The process entails the analysis of property for instances where the net book value exceeds the estimated fair value. In accordance with ASC Topic 360,360-10, an impairment loss shall be recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The Company utilizesWe utilize the experience and knowledge of itsour internal valuation team to derive certain assumptions used to determine an operating property’s cash flow. Such assumptions include re-leasing and renewal probabilities upon future lease expirations, vacancy factors, rental growth rates, and capital expenditures.
As part of our review of our property portfolio, we evaluated the one vacant industrial property inany properties with vacancy at September 30, 2019, which consists of 246,000 square feet representing 1.1% of our portfolio and evaluate that the sum of thetotal rentable square feet. The discounted cash flows expected forfrom a potential lease applicable to the vacant portion of this propertythese properties exceeded its historical net cost basis. Management considersWe consider, on a quarterly basis, whether the marketed rent (advertised) or the market rent has decreased or if any additional indicators are present which would indicate a significant decrease in net cash flows. Management typically willWe may obtain an independent appraisal to assist in evaluating a potential impairment for a property thatif it has been vacant for several years. We have also considered the properties which had lease renewals at rental rates lower than the previous rental rates and noted that the sum of the new discounted cash flows expected for the renewed leases exceeded these properties’ historical net cost basis. On October 27, 2016, the Company sold its only vacant building consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value. As a result of this disposition,
We reviewed our occupancy increased from 99.6% to 100%.
The Company reviewed its operating properties in light of the requirements of ASC Topic 360-10 and determined that, as of September 30, 2016,2019, the undiscounted cash flows over the holding period for these properties were in excess of their carrying values and, therefore, no impairment charges were required.
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Securities Available for Sale
Investments in non-real estate assets consist primarily of marketable securities. We opportunistically invest in marketable securities whichof other REITs. Historically, we have aimed to limit the Company generally limitssize of our REIT securities portfolio to no more than approximately 10% of itsour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation). Managementdepreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of this fiscal year. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Going forward, to achieve our threshold investment goal, we will continually evaluate opportunities to optimize our REIT securities portfolio. We individually reviewsreview and evaluatesevaluate our marketable securities for impairment on a quarterly basis, or when events or circumstances occur. Management considers,We consider, among other things, credit aspects of the issuer, amount of decline in fair value over cost and length of time in a continuous loss position. If a decline in fair value is determined to be other than temporary, a non-cash impairment charge is recognized in earnings and the cost basis of the individual security is written down to fair value as the new cost basis.
The Company classifies itsWe classify our securities among three categories: Held-to-maturity,held-to-maturity, trading, and available-for-sale. The Company’sOur securities at September 30, 20162019 and 20152018 are all classified as available-for-sale and are carried at fair value based on quoted market prices. Gains or losses on the sale of securities are calculated based on the average cost method and are accounted for on a trade date basis. Unrealized
In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes became effective for our fiscal year beginning October 1, 2018. The most significant change for us, once ASU 2016-01 was adopted, was the accounting treatment for our investments in marketable securities that are classified as available for sale. The accounting treatment used for our Consolidated Financial Statements through fiscal 2018 was that our investments in marketable securities, classified as available for sale, were carried at fair value, with net unrealized holding gains and losses arebeing excluded from earnings and reported as a separate component of Shareholders’ Equity until realized. Therealized and the change in net unrealized holding gains (losses) isand losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities continue to be measured at fair value, however, the changes in net unrealized holding gains and losses are now recognized through net income on our Consolidated Statements of Income. On October 1, 2018, unrealized net holding losses of $24.7 million were reclassed to beginning Undistributed Income (Loss) to recognize the unrealized losses previously recorded in “accumulated other comprehensive income” on our consolidated balance sheets.
Revenue Recognition and Estimates
Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as the Company iswe are generally, the primary obligor and, with respect to purchasing goods and services from third-party suppliers, hashave discretion in selecting the supplier and bearsbear the associated credit risk. These occupancy charges are recognized as earned. In addition, an estimate is made with respect to whether a provision for allowance for doubtful tenant and other receivables is necessary. The allowance for doubtful accounts reflects management’s estimate of the amounts of the recorded tenant and other receivables at the balance sheet date that will not be realized from cash receipts in subsequent periods. If cash receipts in subsequent periods vary from our estimates, or if the Company’sour tenants’ financial condition deteriorates as a result of operating difficulties, additional changes to the allowance may be required. The CompanyWe did not have an allowance for doubtful accounts as of September 30, 20162019 or 2015.2018.
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Lease Termination Income
Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with us.
Two leases were set to expire during fiscal 2018 with Kellogg Sales Company (Kellogg) for our 65,000 square foot facility located in Kansas City, MO through July 31, 2018 and our 50,000 square foot facility located in Orangeburg, NY through February 28, 2018. Kellogg informed us that they would not be renewing these leases. On December 18, 2017, we sold our property, located in Kansas City, MO for $4.9 million, with net sale proceeds of $4.6 million, and on December 22, 2017, we sold our property, located in Orangeburg, NY for $6.2 million, with net sale proceeds of $5.9 million. The sale of these two properties resulted in a realized gain of $5.4 million, representing a 105% gain over the Company.
Duringdepreciated U.S. GAAP basis and a realized net gain of $1.8 million, representing a 21% net gain over our historic undepreciated cost basis. In conjunction with the fiscal year ended September 30, 2015, the Companysale of these two properties, we simultaneously entered into a lease termination agreement with its tenant, Norton McNaughton of Squire, Inc. (Norton),for each property whereby the Companywe received a lease termination fee from Kellogg totaling $210,000 which represents a weighted average of $238,625 in December 2014, terminating the lease effective January 31, 2015. Prior to the lease termination, Norton leased the Company’s 302,400 square foot building located in its Hanahan (Charleston), SC location through April 29, 2015 at an annualized rent of approximately $1,389,000, or $4.54 per square foot. Additionally, prior to the lease termination, Norton sub-leased the Company’s space to Science Applications International Corporation (SAIC). In conjunction with the lease termination, the Company simultaneously entered into a lease agreement for four years and three months with SAIC from February 1, 2015 through April 30, 2019 at an initial annualized rent of approximately $1,406,000, or $4.65 per square foot, with 2% increases each year.
Lease Termination Income for the fiscal year ended September 30, 2014 consisted of $1,182,890 from the Company’s former tenant at its 83,000 square foot building located in Roanoke, VA. Lease Termination Income for the fiscal year ended September 30, 2013 consisted of $113,784 from the Company’s former tenant at its 388,671 square foot building located in St. Joseph, MO and $576,946 from the Company’s former tenant at its 160,000 square foot building located in Monroe, NC. Two80% of the then remaining rent due under each respective lease.
Only three of our 114 properties associated with these lease termination fees are currently being leased to new tenants and the remaining property was subsequently leased to a new tenant then sold tohave leases that tenant. The Company is currently leasing its property located in St. Joseph, MO to two tenants, one tenant through September 30, 2017 and one tenant through February 28, 2018. The Company was leasing its building in Monroe, NC to a single tenant through September 18, 2015, at which time the Company sold the property to the tenant realizing a gain of approximately $5,021,000. In addition, as further described below, the Company is currently leasing its 83,000 square foot building in Roanoke, VA to a single tenant through January 31, 2025.
Of the Company’s ninety-nine properties, only three leases, representing 1.3% of the Company’s gross leasable area, contain an early termination provision, whichprovision. These three properties contain 158,000 total rentable square feet, representing less than 1% of our total rentable square feet. Our leases with early termination provisions are as follows: the Company’s lease with its tenant at its 26,340our 36,000 square foot location in Ridgeland (Jackson)Urbandale (Des Moines), MS, the Company’s lease with its tenant at itsIA, our 39,000 square foot location in Rockford, IL, and our 83,000 square foot location in Roanoke, VAVA. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include: the date termination can be exercised, the time frame that notice must be given by the tenant to us and the Company’s leasetermination fee that would be required to be paid by the tenant to us. The total potential termination fee to be paid to us from the three tenants with its tenant at its 102,135 square foot location in O’Fallon (St. Louis), MO.leases that have a termination provision amounts to $1.7 million.
Results of Operations
Occupancy and Rent per Occupied Square Foot
The Company’sOur weighted-average lease expiration was 7.47.6 years and 7.28.1 years as of September 30, 20162019 and 2015,2018, respectively, and itsour average annualized rent per occupied square foot as of September 30, 20162019 and 20152018 was $5.72$6.20 and $5.48,$6.01, respectively. At September 30, 20162019 and 2015, the Company’s2018, our overall occupancy rate was 99.6%98.9% and 97.7%99.6%, respectively.
AllAs of September 30, 2019, all but three of our improved properties were 100% occupied, at September 30, 2016 except for one property consisting ofresulting in a 59,425 square feet building situated on 4.78 acres located in White Bear Lake, MN.98.9% overall occupancy rate. Subsequent to fiscal yearend on October 27, 2016, the Company sold its only2019, effective November 1, 2019, we leased one of these previously vacant buildingproperties consisting of 60,000 square feet for $4,272,000 which increased12.5 years, increasing our current overall occupancy rate to 100.0%99.2%.
Fiscal 2016 renewals2019 Renewals
Approximately 2%In fiscal 2019, approximately 7% of the Company’sour gross leasable area, consisting of threerepresenting 11 leases totaling 325,6561.5 million square feet, was scheduledset to expire during fiscal 2016. The Company hasexpire. Seven of these 11 leases have been renewed, all three leases, resulting in a 100% tenant retention rate for fiscal 2016. The Company’s tenant retention rate in fiscal 2015 was also 100%. For tworepresenting 1.1 million square feet, or 76% of the three leases that were scheduled to expire during fiscal 2016, the Company did not incur any tenant improvement costs or any leasing costs. For the otherexpiring square footage and have a weighted average lease renewal, the Companyterm of 7.2 years.
We have incurred or expectswe expect to incur tenant improvement costs of approximately $210,000$2.9 million and leasing commission costs of approximately $133,000.$1.4 million in connection with these seven lease renewals. The table below summarizes the lease terms of the threeseven leases which were renewed andrenewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal term.
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commissions Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Monaca, PA | Datatel Resources | 80,856 | $ | 2.87 | $ | 2.87 | 11/30/15 | $ | 3.00 | $ | 3.00 | 11/30/17 | 2.0 | $ | -0- | $ | -0- | |||||||||||||||||||||
Granite City, IL | Anheuser- Busch, Inc. | 184,800 | 4.16 | 4.32 | 5/31/16 | 4.36 | 4.10 | 11/30/21 | 5.5 | 0.21 | 0.13 | |||||||||||||||||||||||||||
Richmond, VA | United Technologies | 60,000 | 4.99 | 5.24 | 5/31/16 | 5.33 | 5.24 | 11/30/18 | 2.5 | -0- | -0- | |||||||||||||||||||||||||||
Total | 325,656 | |||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 3.99 | $ | 4.13 | $ | 4.20 | $ | 4.04 | 4.1 | $ | 0.16 | $ | 0.10 |
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Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commission Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Somerset, NJ | Taco Bell | 21,365 | $ | 4.68 | $ | 4.68 | 10/14/18 | $ | 5.15 | $ | 5.15 | 10/14/23 | 5.0 | $ | -0- | $ | -0- | |||||||||||||||||||||
Carrollton (Dallas), TX | Carrier Enterprise | 184,317 | 8.20 | 8.55 | 01/31/19 | 6.24 | 6.00 | 01/31/24 | 5.0 | 0.20 | 0.39 | |||||||||||||||||||||||||||
Lebanon (Cincinnati), OH | Siemens Real Estate | 51,130 | 8.82 | 9.67 | 04/30/19 | 8.94 | 8.50 | 04/30/24 | 5.0 | 0.40 | 0.40 | |||||||||||||||||||||||||||
Hanahan (Charleston), SC | SAIC | 302,400 | 4.67 | 5.03 | 04/30/19 | 5.54 | 5.25 | 10/31/23 | 4.5 | 0.75 | 0.33 | |||||||||||||||||||||||||||
Memphis, TN | FedEx Trade Networks | 449,900 | 2.84 | 2.95 | 05/31/19 | 3.10 | 3.10 | 05/31/29 | 10.0 | 0.33 | 0.09 | |||||||||||||||||||||||||||
Jacksonville, FL | FedEx Express | 95,883 | 5.40 | 5.40 | 05/31/19 | 5.59 | 5.59 | 05/31/29 | 10.0 | 0.17 | 0.11 | |||||||||||||||||||||||||||
Ridgeland (Jackson), MS | Graybar Electric | 26,340 | 4.15 | 4.15 | 07/31/19 | 4.36 | 4.36 | 07/31/20 | 1.0 | 0.00 | 0.13 | |||||||||||||||||||||||||||
Total | 1,131,335 | |||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 4.75 | $ | 4.99 | $ | 4.81 | $ | 4.67 | 7.2 | $ | 0.36 | $ | 0.18 |
(1) | Amount calculated based on the total cost divided by the square feet, divided by the renewal term. |
The threeThese seven lease renewals resulted in a weighted average term of 4.17.2 years and a U.S. GAAP straight-line weighted average lease rate of $4.20$4.81 per square foot. The renewed weighted average initial cash rent per square foot is $4.04.$4.67. This compares to the former weighted average rent of $3.99$4.75 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $4.13$4.99 per square foot, representingresulting in an increase in the weighted average lease rate of 5.3%1.3% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 2.2%6.4% on a cash basis.
During September 2015,Our 92,000 square foot facility located in the CompanyCharleston, SC MSA was leased to FedEx Ground Package System, Inc. and renewed for only four months, until November 30, 2018, because the tenant moved their operations to our newly constructed 265,000 square foot facility also located in Charleston, SC. The new 265,000 square foot facility is leased to FedEx Ground Package System, Inc. for 15 years through June 2033. Effective July 1, 2019, we entered into a 5.25 yearnew ten-year lease agreement with Amazon.com Services, Inc. through June 30, 2029 for its previously vacant 148,000our 92,000 square foot building located in Fayetteville, NC through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, commenced on March 1, 2016 with 2.5% annual increases thereafter.
During October 2015, the Company entered into a 5.25 year lease agreement for its previously vacant 106,507 square foot building located in Winston-Salem, NC through March 31, 2021. The lease is with Style Crest, Inc. and commenced on January 1, 2016.facility. Initial annual rent of $356,798,is $688,000, representing $3.35$7.50 per square foot, commenced on April 1, 2016 with 3.0% annual increases thereafter. This results in a U.S. GAAP straight-line annualized rent of $789,000, representing $8.60 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent and the former cash rent of $7.35 per square foot, resulting in an increase in the average lease rate of 17.0% on a U.S. GAAP straight-line basis and an increase of 2.0% on a cash basis. We have agreed to make certain improvements, including expanding the parking lot, which we expect to cost $1.75 million.
Our 96,000 square foot facility located in Liberty (Kansas City), MO was leased to Holland 1916, Inc. through June 30, 2019. In conjunction with terminating our lease with Holland 1916, Inc. two months early, effective May 1, 2019, we entered into a seven-year lease agreement with Dakota Bodies, LLC through April 30, 2026. Initial annual rent is $372,000, representing $3.85 per square foot, with 3.0% annual increases thereafter. This results in a U.S. GAAP straight-line annualized rent of $407,000, representing $4.21 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent of $3.46 per square foot and the former cash rent of $3.68 per square foot, resulting in an increase in the average lease rate of 21.7% on a U.S. GAAP straight-line basis and an increase of 4.6% on a cash basis.
Our 60,000 square foot facility located in Richmond, VA was leased to Carrier Enterprise, LLC through November 2018. Subsequent to the fiscal yearend, effective November 1, 2019, we entered into a new 12.5-year lease agreement with Locke Supply Co. through April 2032 for this facility. The lease agreement provides for six months of free rent, after which, on May 1, 2020, initial annual rent of $303,000, representing $5.05 per square foot will commence, with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $325,000, representing $5.42 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent of $5.36 per square foot and to the former cash rent of $5.45 per square foot, resulting in an increase in the average lease rate of 1.1% on a U.S. GAAP straight-line basis and a decrease of 7.3% on a cash basis. We have agreed to make certain improvements, which we expect to cost $175,000.
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The seven lease renewals, along with the three properties that were re-tenanted, result in a weighted average term of 7.6 years and an increase in the weighted average lease rate of 3.7% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 5.1% on a cash basis.
Our 105,000 square foot facility located in Cheektowaga (Buffalo), NY was leased to FedEx Ground Package System, Inc. until August 31, 2019. Prior to the lease expiring, the tenant informed us that they will not be renewing this space because they moved their operations to our recently constructed 339,000 square foot facility also located in the Buffalo, NY MSA. The recently constructed 339,000 square foot facility is leased to FedEx Ground Package System, Inc. for 15 years through March 2031. The lease for our 105,000 square foot facility is the only lease, of the 11 leases that were set to expire in fiscal 2019, that was not renewed or re-tenanted. This facility is currently being marketed and represents 7% of the fiscal 2019 expiring square footage and represents 0.5% of our current total gross leasable area.
On September 30, 2019, we had a weighted average lease maturity of 7.6 years with 7.9% of the weighted average gross annualized rent scheduled to expire each year and our overall occupancy rate of our total property portfolio was 98.9% and 99.6% as of September 30, 2019 and 2018, respectively.
Fiscal 2017 renewals2020 Renewals
In fiscal 2017,2020, approximately 10%2% of our gross leasable area, representing thirteenfive leases totaling 1,539,526410,000 square feet, is set to expire. As of the date of this Annual Report, five of the thirteen leases have renewed. One of thethese five leases (which is with FedEx Ground Package System, Inc. for a property located in Ft. Myers, FL), has been renewed for only eight months because the tenant plans to move its operations from our 87,500 square foot facility to a newly constructed facility, which is also located in Ft. Myers, FL. Once the construction is complete, the Company is under contract to purchase this new facility, consisting of approximately 213,500 square feet, subject to satisfactory completion of due diligence and other customary closing conditions and requirements. In addition, once the construction is complete, this brand new facility will be leased for 10 years. Excluding the eight month lease renewal at the Ft. Myers, FL location, the four leases that have renewed thus far represent 500,722five years, representing 89,000 square feet, or 33%22% of the expiring square footage, andfootage.
We have a weighted average lease term of 8.0 years.
The Company has incurred or expectswe expect to incur tenant improvement costs of approximately $1,928,000$223,000 and leasing commission costs of approximately $587,000$77,000 in connection with four of the fivethis lease renewals.renewal. The table below summarizes the lease termsterm of the five leases which were renewed andlease that was renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal term.
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commissions Cost PSF over Renewal Term (1) | ||||||||||||||||||||||||||||
Ft. Myers, FL | FedEx Ground | 87,500 | $ | 4.95 | $ | 4.95 | 10/31/16 | $ | 4.95 | $ | 4.95 | 6/30/17 | 0.7 | $ | 0.00 | $ | 0.00 | |||||||||||||||||||||
Elgin, IL | Joseph T. Ryerson | 89,052 | $ | 5.68 | $ | 5.68 | 1/31/17 | $ | 5.68 | $ | 5.68 | 1/31/20 | 3.0 | $ | 0.17 | $ | 0.17 | |||||||||||||||||||||
Newington, CT | Kellogg Sales Co. | 54,812 | $ | 6.00 | $ | 6.00 | 2/28/17 | $ | 6.00 | $ | 6.00 | 2/29/20 | 3.0 | $ | 0.30 | $ | 0.24 | |||||||||||||||||||||
Schaumburg, IL | FedEx Express | 73,500 | $ | 6.88 | $ | 7.00 | 3/31/17 | $ | 6.50 | $ | 6.50 | 3/31/27 | 10.0 | $ | 0.24 | $ | 0.13 | |||||||||||||||||||||
Tolleson, AZ | Western Container | 283,358 | $ | 4.33 | $ | 4.59 | 4/30/17 | $ | 4.78 | $ | 4.33 | 4/30/27 | 10.0 | $ | 0.58 | $ | 0.14 | |||||||||||||||||||||
Total (2) | 500,722 | |||||||||||||||||||||||||||||||||||||
Weighted Average (2) | $ | 5.13 | $ | 5.29 | $ | 5.33 | $ | 5.07 | 8.0 | $ | 0.48 | $ | 0.15 | |||||||||||||||||||||||||
Property | Tenant | Square Feet | Former U.S. GAAP Straight- Line Rent PSF | Former Cash Rent PSF | Former Lease Expiration | Renewal U.S GAAP Straight- Line Rent PSF | Renewal Initial Cash Rent PSF | Renewal Lease Expiration | Renewal Term (years) | Tenant Improvement Cost PSF over Renewal Term (1) | Leasing Commission Cost PSF over Renewal Term (1) | |||||||||||||||||||||||||||
Elgin (Chicago), IL | Joseph T. Ryerson & Son, Inc. | 89,052 | $ | 5.68 | $ | 5.68 | 1/31/20 | $ | 5.78 | $ | 5.50 | 1/31/25 | 5.0 | $ | 0.50 | $ | 0.17 | |||||||||||||||||||||
Total | 89,052 | |||||||||||||||||||||||||||||||||||||
Weighted Average | $ | 5.68 | $ | 5.68 | $ | 5.78 | $ | 5.50 | 5.0 | $ | 0.50 | $ | 0.17 |
(1) | Amount calculated based on the total cost divided by the square feet, divided by the renewal term. | |
Excluding the eight-monthThis lease renewal at the Ft. Myers, FL location, the remaining four lease renewals results in a weighted average term of 8.0 years andhas a U.S. GAAP straight-line weighted average lease rate of $5.33$5.78 per square foot. The renewed weighted average initial cash rent per square foot is $5.07.$5.50. This compares to the former weighted average rent of $5.13$5.68 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $5.29$5.68 per square foot, representingresulting in an increase in the weighted average lease rate of 3.9%1.8% on a U.S. GAAP straight-line basis and a decrease in the weighted average lease rate of 4.2%3.2% on a cash basis. The eight remaining leases that are set to expire during fiscal 2017 are under discussion.
Acquisitions, Expansions and ExpansionsDispositions During Fiscal 20162019
Fiscal 2019 Acquisitions
On November 13, 2015, the CompanyOctober 19, 2018, we purchased a newly constructed 330,717347,000 square foot industrial building, situated on 62.0 acres, located in Concord, NC, which is in the Charlotte MSA.Trenton, NJ. The building is 100% net-leased to FedEx Ground Package System, Inc. for ten15 years through July 2025.June 2032. The purchase price was $31,975,897. The Company$85.2 million. We obtained a 15 year, fully-amortizing mortgage loan of $20,780,000$55.0 million at a fixed interest rate of 3.87%4.13%. Annual rental revenue over the remaining term of the lease averages approximately $2,078,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$5.3 million.
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On December 2, 2015, the CompanyNovember 30, 2018, we purchased a newly constructed 175,315127,000 square foot industrial building, situated on 29.4 acres, located in Covington, LA, which is in the New Orleans MSA.Savannah, GA. The building is 100% net-leased to FedEx Ground Package System, Inc. for ten10 years through June 2025.October 2028. The purchase price was $18,410,000. The Company$27.8 million. We obtained a 15 year, fully-amortizing mortgage loan of $12,890,000$17.5 million at a fixed interest rate of 4.08%4.40%. Annual rental revenue over the remaining term of the lease averages approximately $1,258,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$1.8 million.
On March 8, 2016, the CompanyJuly 26, 2019, we purchased a newly constructed 125,860350,000 square foot industrial building, situated on 45.6 acres, located in Imperial, PA, which is in the Pittsburgh MSA.Lafayette, IN. The building is 100% net-leased to General Electric Company (GE)Toyota Tsusho America, Inc. (Toyota) for ten10 years through December 2025.June 2029. The purchase price was $20,032,864. The Company$25.5 million. We obtained a 1415 year, fully-amortizing mortgage loan of $13,000,000$17.0 million at a fixed interest rate of 3.63%4.25%. Annual rental revenue over the remaining term of the lease averages approximately $1,311,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $82,864$1.7 million.
Subsequent to an Intangible Asset associated with the lease in-place.
On April 8, 2016, the Company2019 fiscal yearend, on October 10, 2019, we purchased a newly constructed 210,445616,000 square foot industrial building, situated on 78.6 acres, located in Burlington, WA, which is in the Seattle/EverettIndianapolis, IN MSA. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through August 2030.2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $30,662,080. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $20,221,000$52.5 million at a fixed interest rate of 3.67%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $1,962,000.In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $451,400 to an Intangible Asset associated with the lease in-place.$5.0 million.
On June 9, 2016, the Company purchased a newly constructed 225,362 square foot industrial building located in Colorado Springs, CO. The building is 100% net-leased to FedEx Ground Package System, Inc. for ten years through January 2026.’s ultimate parent, FedEx Corporation, Toyota Tsusho America, Inc’s parent, Toyota Tsusho Corporation and Amazon.com, Inc. are publicly-owned companies that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The purchase price was $28,845,500. The Company obtainedreferences in this report to the S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites.
Fiscal 2019 Expansions
In February 2019, we completed a 15 year fully-amortizing mortgage of $18,730,000 at a fixed interest rate of 3.90%. Annual rental revenue over the remaining term of the lease averages approximately $1,832,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $345,500 to an Intangible Asset associated with the lease in-place.
On June 30, 2016, the Company purchased a newly constructed 137,500155,000 square foot industrial building expansion at our property located in Louisville, KY. The building is 100% net-leased to Challenger Lifts, Inc.Monroe (Cincinnati), a subsidiary of Snap-on Incorporated (“Snap-on”), for ten years through June 2026. The lease is guaranteed by Snap-on. The purchase price was $11,304,000. The Company obtained a 15 year fully-amortizing mortgage of $7,350,000 at a fixed interest rate of 3.74%. Annual rental revenue over the remaining term of the lease averages approximately $835,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On August 19, 2016, the Company purchased a newly constructed 310,922 square foot industrial building located in Davenport, FL, which is in the Orlando MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for fifteen years through April 2031. The purchase price was $37,780,000. The Company obtained a 15 year fully-amortizing mortgage loan of $26,400,000 at a fixed interest rate of 3.89%. Annual rental revenue over the remaining term of the lease averages approximately $2,604,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On August 26, 2016, the Company purchased a newly constructed 313,763 square foot industrial building located in Olathe, KS, which is in the Kansas City MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for fifteen years through May 2031. The purchase price was $31,737,000. The Company obtained a 15 year fully-amortizing mortgage loan of $22,215,000 at a fixed interest rate of 3.96%. Annual rental revenue over the remaining term of the lease averages approximately $2,196,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
Expansions
On July 29, 2016, a 246,434 square foot expansion of a building leased to Milwaukee Electric Tool Corporation (“Milwaukee Tool”) located in Olive Branch, MS, which is located in the Memphis, TN MSA, was completedOH for a total project cost of approximately $9,785,000. This$8.6 million. The expansion resulted in a new 12 year lease which extended the original lease expiration date from April 2023 through July 2028 and increased the building size from 615,455 to 861,889 square feet. In addition, the expansion resulted in an initial increase in annual rent effective on the date of completion of approximately $847,000 from approximately $1,943,000, or $3.16 per square foot, to approximately $2,790,000, or $3.24 per square foot. Furthermore, annual rent will increase each year by 1.5% resulting in an annualized rent over the new twelve year period of approximately $3,020,000, or $3.50 per square foot. In September 2016, in connection with the expansion, the Company refinanced its prior 3.76% interest rate mortgage with its existing lender of this property. At the time of the refinancing, the prior amortizing loan was approximately $13,158,000 and was set to mature in January 2023. The new loan is a 12 year fully-amortizing mortgage of $25,000,000 and will mature in October 2028. The interest rate of the new loan remained the same as the prior loan at a fixed interest rate of 3.76%.
On August 1, 2016, a parking lot expansion for a property leased to FedEx Ground Package System, Inc. located in Tampa, FL was completed for a cost of approximately $1,303,000, resulting in a new 10 year15-year lease which extended the prior lease expiration date from June 2024 through July 2026. In addition, theFebruary 2030 to February 2034. The expansion also resulted in an increase in initial annual rent effective March 1, 2019 of $821,000 from the date of completion of approximately $131,000 from approximately $1,493,000,$980,000, or $8.74$4.22 per square foot, to approximately $1,624,000,$1.8 million, or $9.51$4.65 per square foot.
On August 1, 2016, a 14,941 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Huntsville, AL was completed for a cost of approximately $1,925,000, resulting in a new 10 year lease which extended the prior lease expiration date from August 2022 through July 2026. In addition, the expansion resultedannual rent will increase by 2% per annum, resulting in an increase in annualaverage annualized rent effective fromof $2.1 million over the date15-year term. In connection with this expansion, we obtained a 10.6 year, fully-amortizing second mortgage loan of completion$7.0 million at a fixed interest rate of approximately $193,000 from approximately $412,000, or $5.59 per square foot, to approximately $605,000 or $6.82 per square foot.3.85%. The maturity of the second mortgage loan coincides with the maturity of the property’s first fully-amortizing mortgage loan which is at a fixed interest rate of 3.77% and has a principal balance of $6.6 million as of the fiscal yearend.
Comparison of Year Ended September 30, 20162019 to Year Ended September 30, 20152018
The following tables summarize our rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the Company’spurposes of the following discussion, Same Properties are properties owned as of October 1, 2017 that have not been subsequently expanded or sold.
Acquired Properties are properties that were acquired subsequent to September 30, 2017. Ten properties were acquired during fiscal 2019 and fiscal 2018. Acquired Properties include the properties located in Charleston, SC (FDX); Oklahoma City, OK; Savannah, GA; Daytona Beach, FL; Mobile, AL; Charleston, SC (FDX Ground) and Braselton (Atlanta), GA (all acquired in fiscal 2018) and Trenton, NJ; Savannah, GA and Lafayette, IN (all acquired in fiscal 2019).
During fiscal 2019 and 2018, there were three property expansions completed at the properties located in Indianapolis, IN; Ft. Mill, SC and Monroe (Cincinnati), OH. Expanded Properties include these properties that were expanded subsequent to September 30, 2017.
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Sold Properties consists of four properties sold during fiscal 2018 located in Kansas City, MO; Orangeburg, NY; Colorado Springs, CO and Ft. Myers, FL.
As of September 30, 2019 and 2018, the overall occupancy rate of our total property portfolio was 98.9% and 99.6%, respectively.
Rental Revenues ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 103,074 | $ | 103,692 | $ | (618 | ) | (1 | )% | |||||||
Acquired Properties | 24,506 | 7,430 | 17,076 | 230 | % | |||||||||||
Expanded Properties | 4,944 | 4,168 | 776 | 19 | % | |||||||||||
Sold Properties | -0- | 574 | (574 | ) | (100 | )% | ||||||||||
Total | $ | 132,524 | $ | 115,864 | $ | 16,660 | 14 | % |
The increase in rental revenues is mainly due to the increase from the newly Acquired Properties and Expanded Properties.
Reimbursement Revenues ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 22,891 | $ | 21,508 | $ | 1,383 | 6 | % | ||||||||
Acquired Properties | 2,285 | 671 | 1,614 | 240 | % | |||||||||||
Expanded Properties | 822 | 764 | 58 | 8 | % | |||||||||||
Sold Properties | -0- | 355 | (355 | ) | (100 | )% | ||||||||||
Total | $ | 25,998 | $ | 23,298 | $ | 2,700 | 12 | % |
Our single-tenant properties are subject to net leases, which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, we are reimbursed by the tenants for these expenses. Therefore, the increase in reimbursement revenues is offset by the increase in Real Estate Taxes and the increase in Operating Expenses, which includes insurance, repairs and maintenance and other operating expenses. In addition, the increase in reimbursement revenues is mainly due to the increase from the newly Acquired Properties. The increase in reimbursement revenues from Same Properties is due to the increase in Same Properties real estate taxes and operating expenses reimbursed to use from our tenants.
Real Estate Taxes ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 18,403 | $ | 17,363 | $ | 1,040 | 6 | % | ||||||||
Acquired Properties | 1,521 | 291 | 1,230 | 422 | % | |||||||||||
Expanded Properties | 787 | 730 | 57 | 8 | % | |||||||||||
Sold Properties | -0- | 212 | (212 | ) | (100 | )% | ||||||||||
Total | $ | 20,711 | $ | 18,596 | $ | 2,115 | 11 | % |
The increase in real estate taxes is mainly due to the newly Acquired Properties. The increase from Same Properties is mainly due to an increase in assessment values.
Operating Expenses ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 5,859 | $ | 5,312 | $ | 547 | 10 | % | ||||||||
Acquired Properties | 683 | 294 | 389 | 132 | % | |||||||||||
Expanded Properties | 74 | 78 | (4 | ) | (6 | )% | ||||||||||
Sold Properties | -0- | 110 | (110 | ) | (100 | )% | ||||||||||
Total | $ | 6,616 | $ | 5,794 | $ | 822 | 14 | % |
The increase in operating expenses is mainly due to the newly Acquired Properties.
Net Operating Income (NOI)* ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 101,702 | $ | 102,525 | $ | (823 | ) | (1 | )% | |||||||
Acquired Properties | 24,586 | 7,515 | 17,071 | 227 | % | |||||||||||
Expanded Properties | 4,907 | 4,125 | 782 | 19 | % | |||||||||||
Sold Properties | -0- | 607 | (607 | ) | (100 | )% | ||||||||||
Total | $ | 131,195 | $ | 114,772 | $ | 16,423 | 14 | % |
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The increase in NOI is mainly due to the newly Acquired Properties and Expanded Properties.
* The revenue and expense items related to property operations discussed above are components of NOI which are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses. NOI is a non-GAAP performance measure. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Overview” for a reconciliation of our Net Operating Income to our Net Income Attributable to Common Shareholders.
Depreciation ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 32,422 | $ | 32,068 | $ | 354 | 1 | % | ||||||||
Acquired Properties | 8,706 | 2,691 | 6,015 | 224 | % | |||||||||||
Expanded Properties | 1,390 | 1,221 | 169 | 14 | % | |||||||||||
Sold Properties | -0- | 38 | (38 | ) | (100 | )% | ||||||||||
Corporate Office | 502 | 158 | 344 | 218 | % | |||||||||||
Total | $ | 43,020 | $ | 36,176 | $ | 6,844 | 19 | % |
The increase in depreciation expense is mainly due to the newly acquired properties.
Interest Expense, excluding Amortization of Financing Costs ($ in thousands) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Same Properties | $ | 20,691 | $ | 23,070 | ($ | 2,379 | ) | (10 | )% | |||||||
Acquired Properties | 9,038 | 2,365 | 6,673 | 282 | % | |||||||||||
Expanded Properties | 685 | 788 | (103 | ) | (13 | )% | ||||||||||
Sold Properties | -0- | 38 | (38 | ) | (100 | )% | ||||||||||
Loans Payable | 5,245 | 4,868 | 377 | 8 | % | |||||||||||
Total | $ | 35,659 | $ | 31,129 | $ | 4,530 | 15 | % |
The increase in interest expense is mainly due to the acquisition of new properties. Interest expense for Same Properties decreased mainly due to the reduction in the outstanding fixed rate mortgage balance related to these properties. The outstanding fixed rate mortgage balance related to these properties was reduced mainly due to the payoff of five fixed rate mortgage loans totaling $12.5 million and regularly scheduled principal amortization payments made during fiscal 2019. In addition, the weighted average interest rate on our fixed rate debt decreased from 4.07% as of September 30, 2018 to 4.03% as of September 30, 2019.
General and Administrative Expenses
General and administrative expenses increased $305,000, or 3%, during fiscal 2019 as compared to fiscal 2018. The increase was primarily due to an increase in salaries and director fees which were due to a combination of increases in wage rates and headcount of employees and a combination of increases in director fees and headcount of directors. Additionally, there was an increase in stock compensation expense due to a grant of 385,000 shares to employees during fiscal 2019. General and administrative expenses, as a percentage of gross revenue, (which includes Rental Revenue, Reimbursement Revenue and Dividend Income), decreased by 10% to 5.2% for fiscal year 2019 from 5.8% for fiscal year 2018. General and administrative expenses, as a percentage of undepreciated assets (which is our total assets excluding accumulated depreciation), decreased by 7% to 43 basis points from 46 basis points for the fiscal years 2019 and 2018, respectively.
Dividend Income
Dividend Income increased $2.0 million, or 16%, during fiscal 2019 as compared to fiscal 2018. This is mainly due to the higher average carrying value of the REIT securities portfolio during the fiscal year ended September 30, 2019 as compared to during the fiscal year ended September 30, 2018. This increase was partially offset by a decrease in the weighted average yield of 8.5% during fiscal 2019 as compared to 9.5% for fiscal 2018.
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Realized Gain on Sales of Securities Transactions, net
We did not have any sales of Securities during fiscal 2019. Realized gain on sales of securities transactions, net consisted of the following (in thousands):
2019 | 2018 | |||||||
Gross realized gains | $ | -0- | $ | 112 | ||||
Gross realized losses | -0- | (1 | ) | |||||
Total Realized Gain on Sales of Securities Transactions, net | $ | -0- | $ | 111 |
We had an accumulated net unrealized loss on our securities portfolio of $49.4 million as of September 30, 2019.
Comparison of Year Ended September 30, 2018 to Year Ended September 30, 2017
The following tables summarize our rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the purposes of the following discussion, same properties are properties owned as of October 1, 20142016 that have not been subsequently expanded or sold.
Acquired propertiesProperties are properties that were acquired subsequent to September 30, 2014. Eighteen2016. Seventeen properties were acquired during fiscal 20162018 and fiscal 2015.2017. Acquired propertiesProperties include the properties located in Lindale (Tyler)Hamburg (Buffalo), NY; Ft. Myers, FL; Walker (Grand Rapids), MI; Mesquite (Dallas), TX; Sauget (St. Louis, MO)Aiken (Augusta, GA), IL; Rockford, IL; KansasSC; Homestead (Miami), FL; Oklahoma City, MO; Frankfort (Lexington), KY; Jacksonville, FL; Monroe (Cincinnati), OH; Greenwood (Indianapolis), IN; Fort Worth (Dallas), TXOK (Bunzl Distribution Oklahoma, Inc.); Concord (Charlotte) NC; Kenton, OH and Cincinnati,Stow, OH (all acquired in fiscal 2015)2017) and Concord (Charlotte)Charleston, SC (FDX); Oklahoma City, OK (Amazon.com Services, Inc.); Savannah, GA; Daytona Beach, FL; Mobile, AL; Charleston, SC (FDX Ground) and Braselton (Atlanta), NC; Covington (New Orleans), LA; Imperial (Pittsburgh), PA; Burlington (Seattle/Everett), WA; Colorado Springs, CO; Louisville, KY; Davenport (Orlando), FL and Olathe (Kansas City), KSGA (all acquired in fiscal 2016)2018).
SevenDuring fiscal 2018 and 2017, there were four property expansions were completed during fiscal 2016 and fiscal 2015. Expanded properties includeat the properties located in El Paso,Edinburg, TX; Huntsville, AL; Monaca (Pittsburgh), PA (NF&M); Oklahoma City, OK; Olive Branch (Memphis, TN), MS; Tampa, FL (FedEx Ground);Ft. Myers, FL; Indianapolis, IN and Waco, TX.
Sold property consistsFt. Mill, SC. Expanded Properties include these properties that were expanded subsequent to September 30, 2016, with the exception of onethe property located in Monroe, NC thatFt. Myers, FL. Since this property was acquired in fiscal 2017 and subsequently expanded, it is therefore included in Acquired Properties instead of being included in Expanded Properties.
Sold Properties consists of four properties sold on September 18, 2015.during fiscal 2018 located in Kansas City, MO; Orangeburg, NY; Colorado Springs, CO and Ft. Myers, FL and one property sold during fiscal 2017 located in White Bear Lake (Minneapolis/St. Paul), MN.
As of September 30, 20162018 and 2015,2017, the occupancy rates of the Company’sour total property portfolio were 99.6% and 97.7%99.3%, respectively. Subsequent to fiscal yearend, on October 27, 2016, the Company sold its only vacant building for $4,272,000 which increased our occupancy rate to 100.0%.
Rental Revenues | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Rental Revenues ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 52,789,077 | $ | 51,436,618 | $ | 1,352,459 | 3 | % | $ | 84,577 | $ | 84,905 | $ | (328 | ) | 0 | % | |||||||||||||||
Acquired Properties | 19,930,994 | 7,702,716 | 12,228,278 | 159 | % | 26,493 | 7,086 | 19,407 | 274 | % | ||||||||||||||||||||||
Expanded Properties | 8,872,358 | 7,378,811 | 1,493,547 | 20 | % | 4,221 | 4,046 | 175 | 4 | % | ||||||||||||||||||||||
Sold Property | -0- | 541,240 | (541,240 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 573 | 1,623 | (1,050 | ) | (65 | )% | ||||||||||||||||||||||||||
Total | $ | 81,592,429 | $ | 67,059,385 | $ | 14,533,044 | 22 | % | $ | 115,864 | $ | 97,660 | $ | 18,204 | 19 | % |
The increase in rental revenues is mainly due to the increase from the newly acquired propertiesAcquired Properties and expanded properties. Rental revenue from same properties increased due to the increase in same properties occupancy which increased 280 basis points from 96.6% as of September 30, 2015 to 99.4% as of September 30, 2016. In addition, the rental revenue from same properties increased due to an increase in rental rates for the renewed leases as described in the lease renewals and extensions table during fiscal 2016.Expanded Properties.
Reimbursement Revenues | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Reimbursement Revenues ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 9,809,086 | $ | 8,432,694 | $ | 1,376,392 | 16 | % | $ | 19,056 | $ | 17,260 | $ | 1,796 | 10 | % | ||||||||||||||||
Acquired Properties | 1,860,929 | 419,056 | 1,441,873 | 344 | % | 3,049 | 285 | 2,764 | 969 | % | ||||||||||||||||||||||
Expanded Properties | 1,653,666 | 1,834,352 | (180,686 | ) | (10 | )% | 838 | 751 | 87 | 12 | % | |||||||||||||||||||||
Sold Property | -0- | 30,010 | (30,010 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 355 | 429 | (74 | ) | (17 | )% | ||||||||||||||||||||||||||
Total | $ | 13,323,681 | $ | 10,716,112 | $ | 2,607,569 | 24 | % | $ | 23,298 | $ | 18,725 | $ | 4,573 | 24 | % |
46 |
Our single tenantsingle-tenant properties are subject to net leases, which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, the Company iswe are reimbursed by the tenants for these expenses. Therefore, the total increase in reimbursement revenues is partially offset by the increase in real estate taxes,Real Estate Taxes and the increase in Operating Expenses, which includes insurance, expenserepairs and increase inmaintenance and other operating expenses. In addition, the increase in reimbursement revenues for same properties is partiallymainly due to the increase from the newly Acquired Properties. The increase in reimbursement revenues from Same Properties is due to the increase in same properties occupancy which enabled us to be reimbursed by our tenants for these expenses on properties that were previously vacant. Same properties occupancy increased 280 basis points from 96.6% as of September 30, 2015 to 99.4% as of September 30, 2016. The increase in reimbursement revenues is mainly due to increases inProperties real estate taxes insurance expenses and operating expenses reimbursed to us from the newly acquired properties.our tenants.
Real Estate Taxes | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Real Estate Taxes ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 7,785,127 | $ | 6,756,066 | $ | 1,029,061 | 15 | % | $ | 15,275 | $ | 14,022 | $ | 1,253 | 9 | % | ||||||||||||||||
Acquired Properties | 1,302,240 | 203,630 | 1,098,610 | 540 | % | 2,314 | 183 | 2,131 | 1164 | % | ||||||||||||||||||||||
Expanded Properties | 1,368,034 | 1,328,715 | 39,319 | 3 | % | 795 | 710 | 85 | 12 | % | ||||||||||||||||||||||
Sold Property | -0- | 73,724 | (73,724 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 212 | 352 | (140 | ) | (40 | )% | ||||||||||||||||||||||||||
Total | $ | 10,455,401 | $ | 8,362,135 | $ | 2,093,266 | 25 | % | $ | 18,596 | $ | 15,267 | $ | 3,329 | 22 | % |
The increase in real estate taxes is mainly due to the newly acquired properties as well as increasedAcquired Properties. The increase from Same Properties is mainly due to an increase in assessment values on expanded properties.values.
Operating Expenses | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Operating Expenses ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 3,180,529 | $ | 3,410,422 | $ | (229,893 | ) | (7 | )% | $ | 4,791 | $ | 4,410 | $ | 381 | 9 | % | |||||||||||||||
Acquired Properties | 656,576 | 265,964 | 390,612 | 147 | % | 789 | 125 | 664 | 532 | % | ||||||||||||||||||||||
Expanded Properties | 436,794 | 418,517 | 18,277 | 4 | % | 104 | 88 | 16 | 18 | % | ||||||||||||||||||||||
Sold Property | -0- | 32,981 | (32,981 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 110 | 264 | (154 | ) | (59 | )% | ||||||||||||||||||||||||||
Total | $ | 4,273,899 | $ | 4,127,884 | $ | 146,015 | 4 | % | $ | 5,794 | $ | 4,887 | $ | 907 | 19 | % |
The increase in operating expenses is mainly due to the newly acquired properties.Acquired Properties.
Net Operating Income (“NOI”) | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Net Operating Income (NOI)* ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 51,632,507 | $ | 49,702,824 | $ | 1,929,683 | 4 | % | $ | 83,567 | $ | 83,734 | $ | (167 | ) | 0 | % | |||||||||||||||
Acquired Properties | 19,833,107 | 7,652,178 | 12,180,929 | 159 | % | 26,438 | 7,064 | 19,374 | 274 | % | ||||||||||||||||||||||
Expanded Properties | 8,721,196 | 7,465,931 | 1,255,265 | 17 | % | 4,160 | 3,998 | 162 | 4 | % | ||||||||||||||||||||||
Sold Property | -0- | 464,545 | (464,545 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 607 | 1,435 | (828 | ) | (58 | )% | ||||||||||||||||||||||||||
Total | $ | 80,186,810 | $ | 65,285,478 | $ | 14,901,332 | 23 | % | $ | 114,772 | $ | 96,231 | $ | 18,541 | 19 | % |
The increase in NOI is mainly due to the newly acquired propertiesAcquired Properties and expanded properties.Expanded Properties.
Depreciation | 2016 | 2015 | $ Change | % Change | ||||||||||||
Same Properties | $ | 15,404,749 | $ | 15,012,514 | $ | 392,235 | 3 | % | ||||||||
Acquired Properties | 6,338,685 | 2,554,254 | 3,784,431 | 148 | % | |||||||||||
Expanded Properties | 2,311,588 | 2,007,934 | 303,654 | 15 | % | |||||||||||
Sold Property | -0- | 130,618 | (130,618 | ) | (100 | )% | ||||||||||
Total | $ | 24,055,022 | $ | 19,705,320 | $ | 4,349,702 | 22 | % |
* The revenue and expense items related to property operations discussed above are components of NOI which are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses. NOI is a non-GAAP performance measure. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Overview” for a reconciliation of our Net Operating Income to our Net Income Attributable to Common Shareholders.
Depreciation ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||
Same Properties | $ | 25,537 | $ | 25,450 | $ | 87 | 0 | % | ||||||||
Acquired Properties | 9,223 | 2,400 | 6,823 | 284 | % | |||||||||||
Expanded Properties | 1,219 | 1,158 | 61 | 5 | % | |||||||||||
Sold Properties | 39 | 470 | (431 | ) | (92 | )% | ||||||||||
Corporate Office | 158 | 157 | 1 | 0 | % | |||||||||||
Total | $ | 36,176 | $ | 29,635 | $ | 6,541 | 22 | % |
47 |
The increase in depreciation expense is mainly due to the newly acquired properties. Depreciation expense from same properties and expanded properties increased mainly due to additional tenant improvements being depreciated within fiscal 2016.
Interest Expense | 2016 | 2015 | $ Change | % Change | ||||||||||||||||||||||||||||
Interest Expense, excluding Amortization of Financing Costs ($ in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||||||||
Same Properties | $ | 10,928,101 | $ | 12,654,443 | $ | (1,726,342 | ) | (14 | )% | $ | 16,344 | $ | 19,033 | $ | (2,689 | ) | (14 | )% | ||||||||||||||
Acquired Properties | 6,658,906 | 2,619,581 | 4,039,325 | 154 | % | 9,369 | 2,156 | 7,213 | 334 | % | ||||||||||||||||||||||
Expanded Properties | 1,618,910 | 1,753,903 | (134,993 | ) | (8 | )% | 509 | 588 | (79 | ) | (13 | )% | ||||||||||||||||||||
Sold Property | -0- | 71,287 | (71,287 | ) | (100 | )% | ||||||||||||||||||||||||||
Sold Properties | 38 | 144 | (106 | ) | (73 | )% | ||||||||||||||||||||||||||
Loans Payable | 2,630,894 | 1,458,936 | 1,171,958 | 80 | % | 4,869 | 2,599 | 2,270 | 87 | % | ||||||||||||||||||||||
Total | $ | 21,836,811 | $ | 18,558,150 | $ | 3,278,661 | 18 | % | $ | 31,129 | $ | 24,520 | $ | 6,609 | 27 | % |
The increase in interest expense is mainly due to the acquisition of new properties. Interest expense for same propertiesSame Properties decreased mainly due to the decrease in the outstanding balances of the mortgages and the reduction in the weighted average interest rate. The reduction in the outstanding mortgagesfixed rate mortgage balance isrelated to these properties. The outstanding fixed rate mortgage balance related to these properties was reduced mainly due to the payoff of fourfive fixed rate mortgage loans during fiscal 2016 totaling $14,739,654$12.5 million and regularly scheduled principal amortization payments made during fiscal 2016. The2018. In addition, the weighted average interest rate on the Company’sour fixed rate debt decreased from 4.18% as of September 30, 2016 was 4.48% as compared2017 to 4.85%4.07% as of September 30, 2015. Loans payable interest expense increased due to the higher weighted average Loans Payable balance maintained during fiscal 2016 as compared to fiscal 2015.2018.
Acquisition Costs
Acquisition costs that were expensed in the Consolidated Statement of Income decreased $815,647,$179,000, or 53%100% during fiscal 20162018 as compared to fiscal 2015. Eight properties totaling approximately $210,747,000 were acquired during fiscal 20162017. As a result of adopting ASU 2017-01, effective as comparedof April 1, 2017, as permitted under the standard, we no longer account for our property acquisitions as business combinations and instead we account for our property acquisitions as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized to ten properties totaling approximately $191,985,000 that were acquired during fiscal 2015. The decrease inreal estate investments as part of the purchase price as opposed to being expensed as Acquisition Costs during fiscal 2016 was primarily due to a broker feeunder the accounting treatment for business combinations previously used. Therefore, as of approximately $373,600 incurred for the purchase of one acquisition acquired during fiscal 2015 and also due to the higher number of properties acquired during fiscal 2015 as compared to the number of properties purchased during fiscal 2016.April 1, 2017, we no longer expensed any Acquisition Costs.
General and Administrative Expenses
General and administrative expenses increased $1,630,196,$967,000, or 26%12%, during fiscal 20162018 as compared to fiscal 2015.2017. The increase in fiscal 2016 was partially due to a one-time $400,000 cash signing bonus granted to the President and Chief Executive Officer in accordance with his amended employment agreement during fiscal 2016 and due to a one-time $100,000 severance payment made to a former employee during fiscal 2016. Additionally, during fiscal 2016, the Founder and Chairman of the Board was granted a discretionary award of 40,000 shares of restricted stock which will vest in equal annual installments over the next five years and has a grant date fair value of $13.64 per share, for a total grant date fair value of $545,600. Since the Founder and Chairman of the Board is of retirement age, the entire fair value of the grant was fully expensed at grant date. Furthermore, the amended employment agreements for the Founder and Chairman of the Board, as well as for the President and Chief Executive Officer, each includes certain performance goals that, once met, entitle them to receive annual cash bonuses. Certain levels of each performance goal were met during fiscal 2016, resulting in $345,000 of bonuses being accrued and expensed as of September 30, 2016. The remaining increase was primarily due to an increase in all employees’salaries and director fees which were due to a combination of increases in wage rates.rates and headcount of employees and a combination of increases in director fees and headcount of directors. General and administrative expenses, as a percentage of gross revenue, (which includes Rental Revenue, Reimbursement Revenue and Dividend and Interest Income), remains in-line, atdecreased by 8% to 5.8% for fiscal years 2016 and 2015.year 2018 from 6.3% for fiscal year 2017. General and administrative expenses, as a percentage of undepreciated assets (which is the Company’sour total assets excluding accumulated depreciation), remains in-line, at 58decreased by 4% to 46 basis points and 61from 48 basis points for the fiscal years 20162018 and 2015,2017, respectively.
Amortization of Financing CostsDividend Income
Amortization of financing costs decreased $169,778,Dividend Income increased $6.2 million, or 13%89%, during fiscal 20162018 as compared to fiscal 2015. During fiscal 2016, unamortized deferred loan costs were written off totaling $167,531 of which $160,124 was associated with one loan that was refinanced and $7,407 was associated with two loans that were paid off prior to maturity. This compares with unamortized deferred loan costs that were written off during fiscal 2015 totaling $479,674 of which $152,050 was associated with three loans that were repaid prior to maturity and $327,624 was associated with the repayment of the former line of credit facility prior to its maturity. The decrease in deferred loan costs written off in fiscal 2016 was partially offset by the increase in normal amortization expensed during fiscal 2016.
Dividend and Interest Income
Dividend and Interest Income increased $1,892,525, or 51%, during fiscal 2016 as compared to fiscal 2015.2017. This is mainly due to the higher average carrying value of the REIT securities portfolio during the fiscal year ended September 30, 20162018 as compared to during the fiscal year ended September 30, 2015. The2017. In addition, the REIT securities portfolio earned a higher weighted average yield forof 9.5% during fiscal 2016 was approximately 8.0%2018 as compared to 7.6%7.7% for fiscal 2015.2017.
Gain on Sale of Real Estate Investment
Gain on sale of real estate investment for fiscal 2015 represents the gain recognized from the sale of the Company’s 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. Under U.S. GAAP, the sale resulted in a realized gain of $5,021,242, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis. There were no sales of real estate investments during fiscal 2016.
Realized Gain on Sales of Securities Transactions, net
Realized gain on sales of securities transactions, net consisted of the following:following (in thousands):
2016 | 2015 | |||||||||||||||
2018 | 2017 | |||||||||||||||
Gross realized gains | $ | 4,403,724 | $ | 880,424 | $ | 112 | $ | 2,321 | ||||||||
Gross realized losses | (5,125 | ) | (74,911 | ) | (1 | ) | (9 | ) | ||||||||
Total Realized Gain on Sales of Securities Transactions, net | $ | 4,398,599 | $ | 805,513 | $ | 111 | $ | 2,312 |
The Company had an accumulated net unrealized gain on its securities portfolio of $12,942,267 as of September 30, 2016.
Comparison of Year Ended September 30, 2015 to Year Ended September 30, 2014
The following tables summarize the Company’s rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the purposes of the following discussion, same properties are properties owned as of October 1, 2013 that have not been subsequently expanded or sold.
Acquired properties are properties that were acquired subsequent to September 30, 2013. Sixteen properties were acquired during fiscal 2015 and fiscal 2014. Acquired properties include the properties located in Buckner (Louisville), KY; Edwardsville (Kansas City), KS; Spring (Houston), TX; Altoona, PA; Tulsa, OK and Indianapolis, IN, (all acquired in fiscal 2014) and Lindale (Tyler), TX; Sauget (St. Louis, MO), IL; Rockford, IL; Kansas City, MO; Frankfort (Lexington), KY; Jacksonville, FL; Monroe (Cincinnati), OH; Greenwood (Indianapolis), IN; Fort Worth (Dallas), TX and Cincinnati, OH (all acquired in fiscal 2015).
Nine property expansions were completed during fiscal 2015 and fiscal 2014. Expanded properties include the properties located in Ft. Mill (Charlotte, NC), SC; Richfield (Cleveland), OH; El Paso, TX; Tampa, FL (FedEx Ground); Cocoa, FL, Monaca (Pittsburgh), PA (NF&M); Oklahoma City, OK and Waco, TX. In addition, the property located in Spring (Houston), TX was expanded, however its activity is included in Acquired properties.
Sold property consists of one property located in Monroe, NC that was sold on September 18, 2015.
As of September 30, 2015 and 2014, the occupancy rates of the Company’s total property portfolio were 97.7% and 95.9%, respectively.
Rental Revenues | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 42,414,601 | $ | 42,109,581 | $ | 305,020 | 1 | % | ||||||||
Acquired Properties | 15,118,514 | 5,542,626 | 9,575,888 | 173 | % | |||||||||||
Expanded Properties | 8,985,030 | 7,766,625 | 1,218,405 | 16 | % | |||||||||||
Sold Property | 541,240 | 93,333 | 447,907 | 480 | % | |||||||||||
Total | $ | 67,059,385 | $ | 55,512,165 | $ | 11,547,220 | 21 | % |
48 |
The increase in rental revenues is mainly due to the increase from the newly acquired properties and expanded properties. Rental revenue from same properties increased due to the increase in same properties occupancy which increased 160 basis points from 94.5% as of September 30, 2014 to 96.1% as of September 30, 2015. In addition, the rental revenue from same properties increased due to an increase in rental rates for the renewed leases as described in the lease renewals and extensions table during fiscal 2015. The rental revenue from the sold property increased because the property was vacant prior to August 2014.
Reimbursement Revenues | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 7,950,687 | $ | 7,366,341 | $ | 584,346 | 8 | % | ||||||||
Acquired Properties | 960,793 | 183,274 | 777,519 | 424 | % | |||||||||||
Expanded Properties | 1,774,622 | 1,607,230 | 167,392 | 10 | % | |||||||||||
Sold Property | 30,010 | 3,331 | 26,679 | 801 | % | |||||||||||
Total | $ | 10,716,112 | $ | 9,160,176 | $ | 1,555,936 | 17 | % |
Our single tenant properties are subject to net leases which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, the Company is reimbursed by the tenants for these expenses. Therefore, the total increase in reimbursement revenues is partially offset by the increase in real estate taxes, increase in insurance expense and increase in operating expenses. In addition, the increase in reimbursement revenues for same properties is partially due to the increase in same properties occupancy which enabled us to be reimbursed by our tenants for these expenses on properties that were previously vacant. Same properties occupancy increased 160 basis points from 94.5% as of September 30, 2014 to 96.1% as of September 30, 2015. The increase in reimbursement revenues is mainly due to increases in real estate taxes, insurance expenses and operating expenses from the newly acquired properties.
Real Estate Taxes | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 6,180,550 | $ | 6,164,615 | $ | 15,935 | 0 | % | ||||||||
Acquired Properties | 667,355 | 99,470 | 567,885 | 571 | % | |||||||||||
Expanded Properties | 1,440,506 | 1,263,916 | 176,590 | 14 | % | |||||||||||
Sold Property | 73,724 | 77,610 | (3,886 | ) | (5 | )% | ||||||||||
Total | $ | 8,362,135 | $ | 7,605,611 | $ | 756,524 | 10 | % |
The increase in real estate taxes is mainly due to the newly acquired properties as well as increased assessment values on expanded properties.
Operating Expenses | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 3,159,415 | $ | 3,027,025 | $ | 132,390 | 4 | % | ||||||||
Acquired Properties | 426,706 | 123,855 | 302,851 | 245 | % | |||||||||||
Expanded Properties | 508,782 | 469,243 | 39,539 | 8 | % | |||||||||||
Sold Property | 32,981 | 91,745 | (58,764 | ) | (64 | )% | ||||||||||
Total | $ | 4,127,884 | $ | 3,711,868 | $ | 416,016 | 11 | % |
The increase in operating expenses is mainly due to the newly acquired properties.
Net Operating Income (“NOI”) | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 41,025,323 | $ | 40,284,282 | $ | 741,041 | 2 | % | ||||||||
Acquired Properties | 14,985,246 | 5,502,575 | 9,482,671 | 172 | % | |||||||||||
Expanded Properties | 8,810,364 | 7,640,696 | 1,169,668 | 15 | % | |||||||||||
Sold Property | 464,545 | (72,691 | ) | 537,236 | (739 | )% | ||||||||||
Total | $ | 65,285,478 | $ | 53,354,862 | $ | 11,930,616 | 22 | % |
The increase in NOI is mainly due to the newly acquired properties and expanded properties.
Depreciation | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 12,467,619 | $ | 12,226,797 | $ | 240,822 | 2 | % | ||||||||
Acquired Properties | 4,823,387 | 1,563,716 | 3,259,671 | 208 | % | |||||||||||
Expanded Properties | 2,283,696 | 1,988,244 | 295,452 | 15 | % | |||||||||||
Sold Property | 130,618 | 130,012 | 606 | 0 | % | |||||||||||
Total | $ | 19,705,320 | $ | 15,908,769 | $ | 3,796,551 | 24 | % |
The increase in depreciation expense is mainly due to the newly acquired properties. Depreciation expense from same properties and expanded properties increased mainly due to additional tenant improvements being depreciated within fiscal 2015.
Interest Expense | 2015 | 2014 | $ Change | % Change | ||||||||||||
Same Properties | $ | 10,183,806 | $ | 11,398,877 | $ | (1,215,071 | ) | (11 | )% | |||||||
Acquired Properties | 4,985,596 | 1,614,254 | 3,371,342 | 209 | % | |||||||||||
Expanded Properties | 1,858,525 | 2,009,346 | (150,821 | ) | (8 | )% | ||||||||||
Sold Property | 71,287 | 65,876 | 5,411 | 8 | % | |||||||||||
Loans Payable | 1,458,936 | 1,016,325 | 442,611 | 44 | % | |||||||||||
Total | $ | 18,558,150 | $ | 16,104,678 | $ | 2,453,472 | 15 | % |
The increase in interest expense is mainly due to the acquisition of new properties. Interest expense for same properties decreased mainly due to the decrease in the outstanding balances of the mortgages and the reduction in the weighted average interest rate. The reduction in the outstanding mortgages balance is due to the payoff of five loans during fiscal 2015 totaling $11,176,087 and regularly scheduled principal amortization payments made during fiscal 2015. The weighted average interest rate on the Company’s fixed rate debt as of September 30, 2015 was 4.85% as compared to 5.24% as of September 30, 2014. Loans payable interest expense increased due to the higher weighted average Loans Payable balance maintained during fiscal 2015 as compared to fiscal 2014.
Acquisition Costs
Acquisition costs that were expensed in the Consolidated Statement of Income increased $1,064,208, or 221% during fiscal 2015 as compared to fiscal 2014. The increase is due to the increase in acquisitions during fiscal 2015. Ten properties totaling approximately $191,985,000 were acquired during fiscal 2015 as compared to six properties totaling approximately $97,807,000 that were acquired during fiscal 2014.
General and Administrative Expenses
General and administrative expenses increased $595,991, or 10%, during fiscal 2015 as compared to fiscal 2014. The increase is mainly due to an increase in compensation expense and additional personnel.
Amortization of Financing Costs
Amortization of financing costs increased $560,271, or 77%, during fiscal 2015 as compared to fiscal 2014. The increase is mainly due to the write off of the unamortized deferred loan costs totaling $479,674, of which $152,050 was associated with three loans that were repaid prior to maturity and $327,624 was associated with the repayment of the former line of credit facility prior to its maturity.
Dividend and Interest Income
Dividend and Interest Income for fiscal 2015 was $3,723,867 which is in-line with Dividend and Interest Income of $3,882,597 for fiscal 2014. This is mainly due to the relatively same average carrying value of the REIT securities portfolio during the fiscal year ended September 30, 2015 compared to during the fiscal year September 30, 2014. The REIT securities portfolio weighted average yield for fiscal 2015 was approximately 7.6% as compared to 7.4% for fiscal 2014.
Gain on Sale of Real Estate Investment
Gain on sale of real estate investment for fiscal 2015 represents the gain recognized from the sale of the Company’s 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. Under U.S. GAAP, the sale resulted in a realized gain of $5,021,242, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis. There were no sales of real estate investments during fiscal 2014.
Realized Gain on Sales of Securities Transactions, net
Realized gain on sales of securities transactions, net consisted of the following:
2015 | 2014 | |||||||
Gross realized gains | $ | 880,424 | $ | 2,222,424 | ||||
Gross realized losses | (74,911 | ) | (55,658 | ) | ||||
Total Realized Gain on Sales of Securities Transactions, net | $ | 805,513 | $ | 2,166,766 |
The CompanyWe had an accumulated net unrealized loss on itsour securities portfolio of $5,441,603$24.7 million as of September 30, 2015.2018.
Off-Balance Sheet Arrangements
The Company hasWe have not entered into any off-balance sheet arrangements.
Contractual Obligations
The following is a summary of the Company’sour contractual obligations as of September 30, 2016:2019 (in thousands):
Contractual Obligations | Total | Less than one year | 1-3 years | 3-5 years | More than 5 years | Total | Less than one year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||||||||||||
Mortgage Notes Payable | $ | 483,748,153 | $ | 57,791,871 | $ | 91,344,821 | $ | 58,064,350 | $ | 276,547,111 | $ | 752,916 | $ | 53,394 | $ | 132,876 | $ | 125,533 | $ | 441,113 | ||||||||||||||||||||
Interest on Mortgage Notes Payable | 124,269,946 | 20,485,724 | 32,655,248 | 25,349,490 | 45,779,484 | 201,310 | 29,380 | 51,341 | 40,461 | 80,128 | ||||||||||||||||||||||||||||||
Loans Payable | 80,790,684 | 4,790,684 | -0- | 76,000,000 | -0- | 95,000 | 95,000 | -0- | -0- | -0- | ||||||||||||||||||||||||||||||
Interest on Loans Payable | 7,614,201 | 1,959,801 | 3,769,600 | 1,884,800 | -0- | 3,553 | 3,553 | -0- | -0- | -0- | ||||||||||||||||||||||||||||||
Purchase of Properties | 247,472,964 | 188,825,599 | 58,647,365 | -0- | -0- | 232,016 | 159,572 | 72,444 | -0- | -0- | ||||||||||||||||||||||||||||||
Expansions of Existing Properties | 1,002,491 | 1,002,491 | -0- | -0- | -0- | |||||||||||||||||||||||||||||||||||
Operating Lease Obligation | 4,489 | 274 | 847 | 881 | 2,487 | |||||||||||||||||||||||||||||||||||
Retirement Benefits | 700,000 | 50,000 | 100,000 | 50,000 | 500,000 | 550 | 50 | -0- | -0- | 500 | ||||||||||||||||||||||||||||||
Total | $ | 945,598,439 | $ | 274,906,170 | $ | 186,517,034 | $ | 161,348,640 | $ | 322,826,595 | $ | 1,289,834 | $ | 341,223 | $ | 257,508 | $ | 166,875 | $ | 524,228 |
Mortgage notes payable represents the principal amounts outstanding by scheduled maturity as of September 30, 2016.2019. Interest is payable on these mortgages at fixed rates ranging from 3.45% to 7.60%6.875%, with a weighted average interest rate of 4.48%4.03%. As of September 30, 2016,2019, the weighted average loan maturity of the mortgage notes payable is 10.511.3 years. This compares to a weighted average interest rate of 4.85%4.07% as of September 30, 20152018 and a weighted average loan maturity of the mortgage notes payable of 9.011.7 years as of September 30, 2015.2018. The Mortgage Notes Payable in the above table does not include a fifteenone 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.27%, which was obtained subsequent to the 2019 fiscal yearend in connection with the purchase of one property for $35,100,000$81.5 million. The cost of this acquisition, purchased subsequent to yearend, is included in the Purchase of Properties in the above table.
As of September 30, 2019, Loans Payable represented $95.0 million drawn down on our $200.0 million unsecured line of credit facility (the “Old Facility”). As further described below, subsequent to the fiscal yearend at2019, the Old Facility was replaced by a fixed interest ratenew facility (the “New Facility”) consisting of 4.03%. In addition, the above table does not include commitments the Company has entered into to obtain five mortgage loans totaling $101,204,000 at fixed interest rates ranging from 3.60% to 4.20%, with a weighted average interest rate$225.0 million unsecured line of 3.83%. Each of these five mortgage loan commitments are in connection with commitments to purchase five properties, currently under construction, totaling approximately $153,726,000. Each of these five mortgages will becredit facility (the “New Revolver”) and a fifteen year, fully-amortizing loan.
Loans Payable represents a $2,284,633new $75.0 million unsecured term loan at an annual interest rate of 4.90%(the “Term Loan”), which was paidresulting in full on October 28, 2016, a $2,506,051 term loan at a variable annual interest rate of prime plus 0.75% with a floor of 4.50%, maturing on March 9, 2017, and the draw on our Facility of $76,000,000 as of September 30, 2016. The interest rate on the $2,506,051 term loan was 4.50% as of September 30, 2016.
On September 30, 2016, the Company entered into a first amendment to its existing $130,000,000 Facility to exercise its existing $70,000,000 accordion feature (the Amendment), increasing the Facility to $200,000,000. The Amendment also adds an additional $100,000,000 accordion feature, bringing the total potential availability up to $300,000,000, subject to certain conditions.under both the New Revolver and the Term Loan of $300.0 million. In addition, the amendment extendedNew Revolver includes an accordion feature that will allow the maturity date, whichtotal potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The Old Facility was originally set to mature in August 2019 to now mature in September 2020 and haswith a one-year extension at our option at(subject to various conditions as specified in the optionloan agreement). During the fiscal year ended September 30, 2019, we had net paydowns of $65.0 million under the Company, subject to certain conditions.Old Facility. Availability under the Old Facility through December 31, 2016, is limited to 70% of the value of the borrowing base properties, and iswas limited to 60% of the value of the borrowing base properties thereafter.properties. The value of the borrowing base properties iswas determined by applying a 7.0% capitalization rate to the net operating incomeNOI generated by the Company’sour unencumbered, wholly-owned industrial properties. Borrowings underEffective in March 2018, the Facility, upcapitalization rate applied to the first 60% ofour NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties will,under the terms of the Old Facility. Borrowings under the Old Facility, at the Company’sour election, either i) bearbore interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company’sour leverage ratio, or ii) bearbore interest at BMO’s prime lending rate plus 40 basis points to 120 basis points, depending on the Company’sour leverage ratio. The Company’sOur borrowings as of September 30, 2016 were less than 60% of the value of the borrowing base properties and2019, based on the Company’sour leverage ratio as of September 30, 2016, borrowings under the Facility bear2019, bore interest at LIBOR plus 150170 basis points, which was at an interest rate of 2.03%3.74% as of September 30, 2016. As2019. In addition, we had a $100.0 million accordion feature, bringing the total potential availability under the Old Facility (subject to various conditions as specified in the loan agreement) up to $300.0 million.
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The $225.0 million New Revolver matures in January 2024, with two options to extend for additional six-month periods, at our option and has a $100.0 million accordion feature, bringing the total potential availability under the New Revolver (subject to various conditions as specified in the loan agreement) up to $325.0 million. Availability under the New Facility is limited to 60% of Septemberthe value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the Old Facility to 6.25% under the New Facility, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the New Revolver was lowered and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the New Revolver at LIBOR plus 145 basis points, which results in an interest rate of 3.21%. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan, at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 2016, $76,000,000 wasbasis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. We currently have $10.0 million drawn down.down under the New Revolver and $75.0 million outstanding under the Term Loan.
The contractual obligation for interestthe Interest on Loans Payable amount is determined using an interest rate of 4.50% for the $2,506,051 term loan, 4.90% for the $2,284,633 term loan and 2.03%3.74% on the $76,000,000 unsecured lineamount drawn down on the Old Facility of credit facility. In addition, the above table does not include the Company’s obligation under its available margin loan, for which no amount was outstanding as of September 30, 2016.$95.0 million.
Purchase of properties represents commitments the Company has entered into to purchase ninefive industrial properties totaling approximately 2,438,0001.6 million square feet. One acquisitionof the five properties, amounting to $35,100,000$81.5 million and totaling approximately 339,000616,000 square feet, was completedacquired subsequent to theour fiscal yearend. The Company expectsyearend on October 10, 2019. We expect to close on the four remaining eight properties, amounting to approximately $212,373,000$150.5 million and totaling approximately 2,099,000997,000 square feet, during the remainder of fiscal 20172020 and 2018,2021, subject to satisfactory completion of due diligence and other customary closing conditions and requirements.
Expansions of existing propertiesOperating lease obligation represents the remaining costs expected to be incurred as of September 30, 2016 in connection with a 50,741lease for our current 13,000 square foot expansion of a building leased to FedEx Ground Package System, Inc.corporate office located in Edinburg, TX that was substantially completed on October 1, 2016 for a total project cost of approximately $4,988,000, resulting in a new 10 year leaseHolmdel, NJ which extended the prior lease expiration date from September 2021is leased through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, or $5.27 per square foot, to approximately $1,097,000, or $6.68 per square foot.December 2029.
Retirement Benefits of $700,000$550,000 represent the total future amount to be paid, on an undiscounted basis, relating to one executive officer, Mr. Eugene W. Landy, the Founder and Chairman of the Board of the Company.Board. These benefits are based upon a specific employment agreement. The agreement does not require the Companyus to separately fund the obligation and therefore these amounts will be paid from theour general assets of the Company. The Company hasassets. We have accrued these benefits on a present value basis over the term of the employment agreement.
Liquidity and Capital Resources
The Company operatesWe operate as a real estate investment trustREIT deriving itsour income primarily from real estate rental operations. The Company’sOur shareholders’ equity increased from $446,010,640$797.9 million as of September 30, 20152018 to $597,858,098$1.0 billion as of September 30, 2016,2019, due to the issuance of 6,515,7505.6 million shares of common stock in the amount of $72,175,797$74.0 million through the DRIP, stock compensation expense of $926,465,$784,000, exercise of stock options consisting of 245,00065,000 shares for total proceeds of $1,883,300, net income attributable$567,000, Net Income Attributable to common shareholdersCommon Shareholders of $20,531,888,$11.0 million and the issuance of 5,400,0002.4 million shares issued in connection with an underwritten public offering of itsour 6.125% Series C Cumulative Redeemable Preferred Stock issued in connection with the Preferred Stock ATM Program, net of offering costs in the amount of $130,543,422 and net change in unrealized gain on investments of $18,383,870.$58.2 million. The increases were partially offset by payments of cash distributions paid to common shareholders of $42,034,183$63.7 million and by the reclassification from shareholders’ equity to a liabilitynet increase in unrealized loss on investments of the Company’s 7.625% Series A Cumulative Redeemable Preferred Stock that was called for redemption and was redeemed on October 14, 2016 in the amount, net of redemption costs, of $50,563,101.$24.7 million. See further discussion below.
The Company’sOur ability to generate cash adequate to meet itsour needs is dependent primarily on income from itsour real estate investments and itsour securities portfolio, the sale of real estate investments and securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, proceeds from the DRIP, proceeds from the Preferred Stock ATM Program, proceeds from public offerings and private placements of additional common or preferred stock or other securities, and access to the capital markets. Purchases of new properties, payments of expenses related to real estate operations, capital improvement programs, debt service, general and administrative expenses, and distribution requirements place demands on the Company’sour liquidity.
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The Company intendsWe intend to operate itsour properties from the cash flows generated by theour properties. However, the Company’sour expenses are affected by various factors, including inflation. Increases in operating expenses are predominantly bornborne by the tenant. To the extent that these increases cannot be passed on through rent reimbursements, these increases will reduce the amount of available cash flow which can adversely affect the market value of the property.
As of September 30, 2016, the Company2019, we had $95,749,508$20.2 million in cashCash and cash equivalentsCash Equivalents and $73,604,894$185.3 million in marketable securities subject to term loans of $4,790,684.securities. In addition, as of September 30, 2016, the Company also2019, we had $124,000,000$105.0 million available on itsunder our Facility. The Facility provides for up to $200,000,000$200.0 million in available borrowings with a $100,000,000$100.0 million accordion feature, bringing the total potential availability up to $300,000,000,$300.0 million, subject to certain conditions.
The Company hasWe have been raising equity capital through itsour DRIP, Preferred Stock ATM Program, registered direct placements, and the public sale of common and preferred stock and investingthrough our free cash flow generated from our investments in net-leased industrial properties. The Company believesWe believe that funds generated from operations, the DRIP, the Preferred Stock ATM Program and bank borrowings, together with the ability to finance and refinance itsour properties, will provide sufficient funds to adequately meet itsour obligations over the next few years.
In October 2018, we completed a public offering of 9.2 million shares of our common stock (including the underwriters’ option to purchase 1.2 million additional shares) at a price of $15.00 per share, before underwriting discounts. This was our first common stock offering since 2014 and represented an 11.3% increase in our outstanding common shares. We received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of $132.3 million.
As of September 30, 2016, the Company2019, we owned ninety-nine114 properties, of which sixty-four59 are subject to mortgages. On August 27, 2015, the Company replaced its prior $60,000,000 unsecured revolving lineCurrently, we have a New Facility consisting of credit with the Facility. The Facility is syndicated with three banks led by BMO Capital Markets (“BMO”), as sole lead arranger, sole book runner,a $225.0 million New Revolver and Bank of Montreal as administrative agent, and includes JPMorgan Chase Bank, N.A. (“J.P. Morgan”) and RBC Capital Markets (“RBC”) as co-syndication agents. The Facility provided for up to $130,000,000a $75.0 million Term Loan, resulting in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions. The Facility was set to mature in August 2019under both the New Revolver and had a one-year extension option, at the optionTerm Loan of $300.0 million. In addition, the Company. On September 30, 2016, the Company entered the Amendment pursuant to which the Company exercised the $70,000,000New Revolver includes an accordion feature under the Facility, bringing the maximum availability under the Facility to $200,000,000, and amended the Facility to provide an additional $100,000,000 accordion feature, bringingthat will allow the total potential availability upunder the New Facility to $300,000,000, subjectfurther increase to certain conditions, including, without limitation, obtaining commitments from additional lenders. In addition, the Amendment extended the maturity date of the Facility from August 27, 2019 to September 30, 2020, with a one-year extension option, at the option of the Company, subject to$400.0 million, under certain conditions. Availability under the New Facility through December 31, 2016, is limited to 70% of the value of the borrowing base properties, and is limited to 60% of the value of the borrowing base properties thereafter. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the net operating income generated by the Company’s unencumbered, wholly-owned industrial properties. Borrowings under the Facility, up to the first 60% of the value of the borrowing base properties, will, at the Company’s election, either i) bear interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company’s leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 40 basis points to 120 basis points, depending on the Company’s leverage ratio. The Company’s borrowings as of September 30, 2016 were less than 60% of the value of the borrowing base properties, and based on the Company’s leverage ratio as of September 30, 2016, borrowings under the Facility bear interest at LIBOR plus 150 basis points which was at an interest rate of 2.03% as of September 30, 2016. As of September 30, 2016, $76,000,000 wasWe currently have $10.0 million drawn down under the Facility.New Revolver and $75.0 million outstanding under the Term Loan.
In addition, as of September 30, 2016, the Company had Loans Payable of $4,790,684, which consisted of a $2,506,051 term loan at a variable annual interest rate of prime plus 0.75% with a floor of 4.50%, maturing on March 9, 2017 which is secured by 500,000 shares of UMH common stock from The Bank of Princeton and a $2,284,633 term loan at an annual interest rate of 4.90% which is secured by 200,000 shares UMH 8.25% Series A preferred stock from Two River Community Bank. The Two River Community Bank term loan was paid in full on October 28, 2016.
The CompanyWe also usesuse margin loans from time to time for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. At September 30, 2019, there were no amounts drawn down under the margin loan and as of September 30, 2018 there was $26.6 million drawn down under the margin loan. The interest rate charged on the margin loans is the bank’s margin rate and was 2.00%2.50% and 2.75% as of September 30, 20162019 and 2015.2018, respectively, and is currently at 2.25%. The margin loans are due on demand and are collateralized by the Company’sour securities portfolio. The CompanyWe must maintain a coverage ratio of approximately 50%. At September 30, 2016 and 2015, there were no amounts outstanding under the margin loans.
The Company’sOur focus is on real estate investments. The Company hasWe have historically financed purchases of real estate primarily through long-term, fixed rate, amortizing mortgages.
During fiscal 2016, the Company2019, we purchased eightthree industrial properties totaling approximately 1,830,000824,000 square feet with net-leased terms ranging from ten10 to fifteen14 years resulting in a weighted average lease maturity of 12.311.6 years. Approximately 1,567,000All three properties are leased to investment-grade tenants or their subsidiaries, of which, 474,000 square feet, or 86%58%, is leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The aggregate purchase price for the eightthree properties was approximately $210,747,000 and they$138.6 million. These properties are located in Colorado, Florida, Kansas, Kentucky, Louisiana, North Carolina, PennsylvaniaGeorgia, Indiana and Washington.New Jersey. These eightthree properties are expected to generate annualized rental income over the life of their leases of approximately $14,076,000.$8.8 million. In connection with the three properties acquired during the 2019 fiscal year, we entered into three, 15 year fully-amortizing mortgage loans. The funds for these eight acquisitions were provided by eight property levelthree mortgage loans totaling $141,586,000, draws the Facility and cash on hand. The eight mortgages haveoriginally totaled $89.5 million with a weighted average interest rate of 3.85% and4.21%.
During fiscal 2019, we completed a weighted155,000 square foot building expansion at our property located in Monroe (Cincinnati), OH for a total project cost of $8.6 million. The expansion resulted in a new 15-year lease which extended the prior lease expiration date from February 2030 to February 2034. The expansion also resulted in an increase in initial annual rent effective March 1, 2019 of $821,000 from $980,000, or $4.22 per square foot, to $1.8 million, or $4.65 per square foot. In addition, the annual rent will increase by 2% per annum, resulting in an average annualized rent of $2.1 million over the 15-year term. In connection with this expansion, we obtained a 10.6 year, fully-amortizing second mortgage loan of $7.0 million at a fixed interest rate of 3.85%. The maturity of 14.9 years.the second mortgage loan coincides with the maturity of the property’s first fully-amortizing mortgage loan which is at a fixed interest rate of 3.77% and has a principal balance of $6.6 million as of the fiscal yearend.
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Subsequent to the fiscal yearend 2019, on October 17, 2016, the Company10, 2019, we purchased a newly constructed 338,584616,000 square foot industrial building, situated on 78.6 acres, located in Hamburg, NY, which is in the BuffaloIndianapolis, IN MSA. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through March 2031.August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $35,100,000. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.03%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $2,308,000.$5.0 million.
In addition, subsequent to the fiscal yearend, on October 1, 2016, a 50,741 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Edinburg, TX was substantially completed for a cost of approximately $4,988,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, or $5.27 per square foot, to approximately $1,097,000, or $6.68 per square foot.
On October 27, 2016, the Company sold its only vacant building (which increased our occupancy rate from 99.6% to 100.0%) consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value.
The industrial propertiesproperty purchased expanded and soldthus far during fiscal 2017 to date,2020 increased our current total leasable square feet to approximately 16,340,000 and increased our occupancy rate to 100.0%.22.9 million.
In addition to the $81.5 million property purchased subsequent to theour fiscal yearend, as described above, we have entered into agreements to purchase eightfour, new build-to-suit, industrial buildings that are currently being developed in Florida, Michigan, North Carolina, Ohio (2) and South CarolinaUtah, totaling approximately 2,099,000997,000 square feet, each withfeet. These future acquisitions have net-leased terms ranging between tenfrom 10 to fifteen15 years with a weighted average lease maturityterm of 13.314.2 years. Approximately 1,267,000The total purchase price for these four properties is $150.5 million. Three of these four properties, consisting of 844,000 square feet, or 60%85%, isare leased to FDX andor its subsidiaries. All four properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The purchase price forreferences in this report to the eight properties is approximately $212,373,000.S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing three of these eight transactions during fiscal 20172020 and one during early fiscal 2018.2021. In connection with fiveone of the eightthese four properties, the Company haswe have entered into commitmentsa commitment to obtain five mortgages totaling $101,204,000 at fixed rates ranging from 3.60% to 4.20%,a 10 year, fully-amortizing mortgage loan of $9.4 million with a weighted averagefixed interest rate of 3.83%3.47%. Each of these mortgages will be a fifteen year, fully-amortizing loan. The CompanyWe may makehave additional acquisitions and expansions in fiscal 20172020 and fiscal 20182021, and the funds for these acquisitions may come from funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the Dividend Reinvestment and Stock Purchase Plan (DRIP), proceeds from the Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program), and proceeds from private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.
The CompanyWe also investsinvest in marketable securities of other REITs as a proxy for real estate when more favorable risk adjusted returns are not available, for liquidity, and for additional income. The Company generally limits its marketableHistorically, we have aimed to limit the size of our REIT securities investmentsportfolio to no more than approximately 10% of itsour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation). The Company from timedepreciation. As we announced earlier this year, it is now our goal to time may purchase thesegradually reduce the size of our REIT securities on margin when there is an adequate yield spread.portfolio to no more than 5% of our undepreciated assets. During fiscal 2016, the Company’s2019, our securities portfolio increased $19,063,657,$30.3 million, due to purchases of $55.0 million offset by the increase in the net unrealized gainloss of $18,383,870 and purchases of $19,055,956 offset by the sale of securities with a cost of $18,376,169. The Company recognized gains on sales of securities of $4,398,599 in$24.7 million. In addition, to earning Dividend and Interest Income of $5,616,392 during fiscal 2016. There2019 our securities portfolio earned dividend income of $15.1 million. In general, we may borrow up to 50% of the value of the marketable securities, which was no margin loan balance$185.3 million as of September 30, 2016 and 2015, respectively.2019. As of September 30, 2019, we did not have any borrowings under our margin line.
Cash flows provided by operating activities were $54,699,500, $38,062,285$101.6 million, $85.5 million and $34,856,285$73.9 million for fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively. The increase in cash flows provided from operating activities from fiscal 20152018 to fiscal 20162019 and from fiscal 20142017 to fiscal 20152018 is primarily due to the increased income generated from acquisitions of properties and expanded operations.
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Cash flows used in investing activities were $227,845,089, $194,469,735$214.5 million, $332.5 million and $131,809,697$339.1 million for fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively. Cash flows used in investing activities in fiscal 2016 increased2019 decreased as compared to 20152018 due mainly to an increasea decrease in the purchase of real estate and capital and land site improvements.purchase of securities available for sale. Cash flows used in investing activities in fiscal 2015 increased2018 decreased as compared to 20142017 due mainly to a decrease in the purchase of real estate and purchase of securities available for sale. This decrease was offset by an increase in purchaseproceeds from the sale of real estate.estate from the four properties that were sold during fiscal 2018.
Cash flows provided by financing activities were $256,821,188, $148,006,698$123.7 million, $246.1 million and $105,023,561$179.7 million for fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively. Cash flows from financing activities decreased in fiscal 2019 as compared to 2018 mainly due to net repayments of $26.6 million on the margin loan, net repayments on the Facility of $65.0 million and a reduction in proceeds from mortgages. This decrease was offset by proceeds from a common stock offering of $132.3 million that was completed in October 2018 and an increase in proceeds from the Preferred Stock ATM program. Cash flows from financing activities increased in fiscal 20162018 as compared to 20152017 mainly due mainly to an increase in proceeds from mortgage loans in the amount of $44,412,942 and the proceeds from the issuance of 5,400,000 shares of 6.125% Series C Cumulative Redeemable Preferred Stock (Series C Preferred Stock) with net proceeds of $130,543,422. Cash flows$66.5 million from financing activities increased in fiscal 2015 as compared to 2014 due mainly to an increase in proceeds from mortgage loans in the amount of $59,268,058payable and net draws onfrom the lineFacility of credit facility of $60,000,000.$50.0 million. In addition, the Companywe paid cash dividends (net of reinvestments), of $33,665,037, $27,032,958$46.9 million, $40.7 million and $21,906,902$36.2 million for fiscal 2016, 20152019, 2018 and 2014,2017, respectively.
As of September 30, 2016, the Company2019, we had total assets of $1,229,758,028$1.9 billion and liabilities of $631,899,930. The Company’s$860.9 million. Our total debt to total market capitalization as of September 30, 20162019 and 20152018 was approximately 34%33% and 39%35%, respectively. The Company’sOur net debt (net of cash and cash equivalents) to total market capitalization as of September 30, 20162019 and 20152018 was approximately 29%32% and 38%35%, respectively. The Company’sOur net debt, less securities (net of cash and cash equivalents and net of securities) to total market capitalization as of September 30, 20162019 and 20152018 was approximately 25% and 33%29%, respectively. The Company believesWe believe that it haswe have the ability to meet itsour obligations and to generate funds for new investments.
The Company hasWe have a Dividend Reinvestment and Stock Purchase Plan (DRIP),DRIP, in which participants can purchase our stock from the Company at a price of approximately 95% of market value. Amounts received in connection with the DRIP, (including dividend reinvestments of $8,369,146, $8,489,169$16.9 million, $12.9 million and $7,624,528$10.1 million for the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively), were $72,175,797, $48,404,556$74.0 million, $90.0 million and $38,090,334$91.9 million for the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively.
During fiscal 2016, the Company2019, we paid total distributions to holders of our common stock of $42,034,183,$63.7 million, or $0.64$0.68 per common share. Of the dividends paid, $8,369,146$16.9 million was reinvested pursuant to the terms of the DRIP.DRIP, representing a 26% participation rate. On October 1, 2015, the Company’s2019, our Board of Directors approved a 6.7% increase in the Company’s quarterly common stockcash dividend raising it to $0.16of $0.17 per share, from $0.15 per share. Thisto be paid on December 16, 2019, to common shareholders of record at the close of business on November 15, 2019, which represents an annualized common dividend rate of $0.64$0.68 per share. The Company has maintained or increased its cash dividend for twenty-five consecutive years. The Company paid theWe intend to pay these distributions from cash flows from operations. Management anticipates
We have maintained or increased our common stock cash dividend for 28 consecutive years. On October 1, 2015, our Board of Directors approved an increase in our quarterly common stock cash dividend from $0.15 per share to $0.16 per share representing a 6.7% increase in our quarterly cash dividend. Then again, most recently, on October 2, 2017, our Board of Directors approved an increase in our quarterly common stock cash dividend from $0.16 per share to $0.17 per share, representing a 6.3% increase in our quarterly cash dividend. These two dividend raises represent a total increase of 13%.
In October 2018, we completed a public offering of 9.2 million shares of our common stock (including the underwriters’ option to purchase 1.2 million additional shares) at a price of $15.00 per share, before underwriting discounts. This was our first common stock offering since 2014 and represented an 11.3% increase in our outstanding common shares. We received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of $132.3 million.
Our common stock dividend policy is dependent upon our earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. It is our intention to continue making comparable quarterly distributions in the future and to grow our distributions over time. We anticipate maintaining the annual dividend rate of $0.64$0.68 per common share although no assurances can be given since various economic factors may reduce the amount of cash flow available to the Companyus for common dividends. All decisions with respect to the payment of dividends are made by the Company’sour Board of Directors.Directors, subject to limitations under our financing arrangements and Maryland law.
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During fiscal 2016, the Company2019, we paid $8,607,032$18.5 million in preferred stock dividends and accrued $413,438$309,000 of preferred stock dividends.
On September 13, 2016, the CompanyMarch 9, 2017, we issued 5,400,0003.0 million shares of our 6.125% Series C Preferred Stock, at an offering priceliquidation preference of $25.00 per share, in an underwrittenat a public offering. The Company received netoffering price of $24.50 per share, for gross proceeds of $73.5 million, before deducting the underwriting discount and offering expenses. Net proceeds from the offering, after deducting the underwriting discountdiscounts and other estimated offering expenses, were $71.0 million. On June 7, 2017, we used $57.5 million of approximately $130,543,000. On September 15, 2016, the Company used $45,000,000 of such net proceeds from the offering to reduce the amounts outstanding under its Facility and on October 14, 2016, the Company used $53,493,750 of such net proceeds from the offering to redeem all of the 2,139,750our 2.3 million issued and outstanding shares of its 7.625%our 7.875% Series AB Preferred Stock. In addition, on October 14, 2016,
On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the Company used $498,540offer and sale of such net proceeds from the offering to pay all dividends, accrued and unpaid, to and including the redemption date of the 7.625% Series A Preferred Stock. The Company intends to use the remaining proceeds to reduce the amounts outstanding under its Facility and to purchase properties and fund expansions of its existing properties in the ordinary course of business and for general corporate purposes.
On September 14, 2016, the Company announced that it intended to redeem all 2,139,750 issued and outstanding shares of its 7.625%our 6.125% Series A Preferred Stock. As discussed above, the Company redeemed the 7.625% Series AC Cumulative Redeemable Preferred Stock, on October 14, 2016 at$0.01 par value per share, with a redemption priceliquidation preference of $25.00 per share, plus all dividends accruedor our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and unpaidsale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million. Sales of shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and including the redemption date, in an amount equal to $0.23299 per share. As ofblock trades. We began selling shares through these programs on July 3, 2017. Since inception through September 30, 2016, the outstanding 7.625% Series A Preferred Stock has been reclassified out2019, we sold 5.5 million shares under these programs at a weighted average price of stockholder's equity$24.81 per share, and is reflected as a liability at redemption value and the Company has recognized a deemed dividendgenerated net proceeds, after offering expenses, of $2,942,149 on the Consolidated Statement$134.0 million, of Income forwhich 2.4 million shares were sold during the fiscal year ended September 30, 2016, which represents2019 at a weighted average price of $24.49 per share, and generated net proceeds, after offering expenses, of $58.2 million. As of September 30, 2019, there is $59.8 million remaining that may be sold under the difference between redemption valuePreferred Stock ATM Program.
As of September 30, 2019, 13.9 million shares of the 6.125% Series C Preferred Stock were issued and carrying value net of original deferred issuance costs.outstanding.
The Company isWe are required to pay cumulative dividends on its 7.875% Series B Cumulative Redeemable Preferred Stock (Series B Preferred Stock) in the amount of $1.96875 per share per year, which is equivalent to 7.875% of the $25.00 liquidation value per share. As of September 30, 2016, the Company has a total of 2,300,000 shares of Series B Preferred Stock outstanding, representing an aggregate liquidation preference of $57,500,000.
The Company is required to pay cumulative dividends on theour 6.125% Series C Preferred Stock in the amount of $1.53125 per share per year, which is equivalent to 6.125% of the $25.00 liquidation value per share. As of September 30, 2016, the Company has2019, we have a total of 5,400,00013.9 million shares of 6.125% Series C Preferred Stock outstanding, representing an aggregate liquidation preference of $135,000,000.$347.7 million.
During the year ended September 30, 2016,2019, stock options to purchase 245,00065,000 shares were exercised at a weighted averagean exercise price of $7.69$8.72 per share for total proceeds of $1,883,300.$567,000.
On an ongoing basis, the Company fundswe fund capital expenditures, primarily to maintain itsour properties. These expenditures may also include expansions as requested by tenants, or various tenant improvements on properties which are re-tenanted. The amounts of these expenditures can vary from year to year depending on the age of the properties, tenant negotiations, market conditions and lease turnover. Our 114 properties, totaling 22.3 million square feet, have a weighted average building age, based on the square footage of our buildings, of 9.2 years.
During the three fiscal years ended September 30, 2016, 20152019, 2018 and 2014, the Company2017, we completed fifteena total of seven property expansions, at thirteen of its locations, consisting of tenthree building expansions and fivefour parking lot expansions. TwoThree of the four parking lot expansions included the purchase of additional land. The tenthree building expansions resulted in approximately 699,000220,000 additional square feet. Total costs for all fifteenseven property expansions were approximately $52,474,000$21.0 million and resulted in total increased annual rent of approximately $5,180,000. Fourteen$2.0 million. Six of these completed expansions resulted in a new ten yearten-year lease extension for each property that was expandedextensions and the one remaining completed expansion resulted in a new twelve yearfifteen-year lease extension. In addition, subsequent to the fiscal yearend, on October 1, 2016, a 50,741 square foot expansion of a building was completedThe weighted average lease extension for a cost of approximately $4,988,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, to approximately $1,097,000.these seven property expansions is 12.1 years.
New Accounting Pronouncements
In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.
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In March 2016, FASB issued ASU 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting”, which relates to the accounting for employee share-based payments. ASU 2016-09 addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, “Leases”. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.
In January 2016, the FASBFinancial Accounting Standards Board (FASB) issued ASUAccounting Standards Update (ASU) 2016-01, “Financial Instruments -– Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”.Liabilities.” ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes becomebecame effective for the Company’sour fiscal year beginning October 1, 2018. The Companymost significant change for us, once ASU 2016-01 was adopted, was the accounting treatment for our investments in marketable securities that are classified as available for sale. The accounting treatment used for our Consolidated Financial Statements through Fiscal 2018 was that our investments in marketable securities, classified as available for sale, were carried at fair value, with net unrealized holding gains and losses being excluded from earnings and reported as a separate component of Shareholders’ Equity until realized and the change in net unrealized holding gains and losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities continue to be measured at fair value, however, the changes in net unrealized holding gains and losses are now recognized through net income on our Consolidated Statements of Income. On October 1, 2018, unrealized net holding losses of $24.7 million were reclassed to beginning Undistributed Income (Loss) to recognize the unrealized losses previously recorded in “accumulated other comprehensive income” on our consolidated balance sheets.
In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessee and lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The most significant changes related to lessor accounting under ASU 2016-02 include bifurcating revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since our revenue is currentlyprimarily derived from leasing activities from long-term net-leases and since we previously did not capitalize indirect costs for leases, we continue to account for our leases and related leasing costs in substantially the same manner as we previously did prior to the adoption of the ASU 2016-02 on October 1, 2019. In addition, the guidance requires lessees to recognize assets and liabilities for operating leases with lease terms greater than twelve months on the balance sheet. Therefore, the most significant impact for us is the recognition of our corporate office lease, while accounting where we are the lessor remains substantially the same. Upon adoption, we calculated the asset and lease liability equal to the present value of the minimum lease payments due under our corporate office lease and determined that the asset and lease liability was immaterial to our Consolidated Financial Statements. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases.” The amendment in ASU 2018-10 affects narrow aspects of the guidance issued earlier in ASU 2016-02 by removing certain inconsistencies and providing additional clarification related to the guidance issued earlier. In December 2018, the FASB issued ASU 2018-20 “Narrow-Scope Improvements for Lessors.” Similar to ASU 2018-10, 2018-20 affects narrow aspects of the guidance issued earlier in ASU 2016-02 as well by providing additional clarification related to the guidance issued earlier. The most significant changes related to lessor accounting under ASU 2018-20 is the clarification of how to treat payments made by a lessee directly to a third party, such as real estate taxes paid by the lessee directly to the taxing authority, whereby items paid directly by the lessee to a third party should not be reflected in the processlessors income statement and, thus, should not be bifurcated and included in revenue and operating expenses. A majority of evaluating the impactour reimbursable expenses are paid by us and are billed back to our lessees. Therefore, these reimbursable expenses will continue to be presented separately by bifurcating these revenue and expense items in our Consolidated Statements of Income. We adopted these standards effective October 1, 2019 and the adoption of these standards did not have a significant impact on itsour consolidated financial statements and has not determined the effects of this update on the Company’s financial position, results of operations or cash flows and disclosures at this time.
In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. ASU 2015-16 eliminates the requirement to restate prior period financial statements for measurement period adjustments.related disclosures. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expectonly effect the adoption of ASU 2015-16these standards had on our consolidated financial statements and related disclosures effective October 1, 2019 are instances where certain types of payments are made by a lessee directly to a third party whereas these payments are no longer presented on a gross basis in our Consolidated Statements of Income, which have a materialan immaterial effect on the Company’s consolidated financial statements.our reported revenue and net zero effect on our Net Income Attributable to Common Shareholders.
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in ASU 2015-03 are effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”, providing guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance on this matter, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on that line-of-credit arrangement. The Company is currently in the process of evaluating the impact the adoption of ASU 2015-03 and ASU 2015-15 will have on the Company’s financial position or results of operations.
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In February 2015,May 2014, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments2014-09, “Revenue from Contracts with Customers, which requires an entity to recognize the Consolidation Analysis”. ASU 2015-02 focusesamount of revenue to minimize situations under previously existingwhich it expects to be entitled for the transfer of promised goods or services to customers.” The FASB issued further guidance in which a reporting entityASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” that provides clarifying guidance in certain narrow areas and adds some practical expedients. ASU 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP when it became effective. The effective date of ASU 2014-09 was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownershipextended by one year by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the majority ofEffective Date.” The new standard is effective for the legal entity’s voting rights; or (3) the exposure to a majority of the legal entity’s economic benefits. ASU 2015-02 affectsfirst interim period within annual reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 will be effective for periods beginning after December 15, 2015. Early adoption2017. Therefore, we adopted the standard effective October 1, 2018. Our revenue is permitted, including adoptionprimarily derived from leasing activities and historically our property dispositions have been cash sales with no contingencies and no future involvement in an interim period. The Company does not expectthe property. Since this standard applies to all contracts with customers except those that are within the scope of other guidance, such as leases, the adoption of ASU 2015-02 tothis standard did not have a material effectsignificant impact on the Company’sour consolidated financial statements.statements and related disclosures.
Management doesWe do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. The primary market risk to which management believes the Company iswe believe that we are exposed to is interest rate risk. The Company’sOur future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond the Company’sour control contribute to interest rate risk.
The Company isWe are exposed to interest rate changes primarily as a result of itsour unsecured line of credit facility, margin loans and long-term debt used to maintain liquidity and fund capital expenditures and acquisitions of the Company’sour real estate investment portfolio. The Company’sOur interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower itsour overall borrowing costs. To achieve itsour objectives, the Company matches itswe match our assets, which are properties secured by long-term leases, with itsour liabilities, which are long termlong-term fixed rate loans.
Approximately $486,033,000 of the Company’s long-term debt asAs of September 30, 20162019, $752.9 million of our long-term debt bears a fixed weighted average interest rate of 4.49%4.03%. Therefore, changes in market interest rates affect the fair value of these instruments. Based on the $76,000,000As of September 30, 2019, our variable rate debt consists of $95.0 million drawn down on the Facility as of September 30, 2016, ifFacility. If market rates of interest on the Company’sour variable rate debt increased or decreased by 1%, then the annual increase or decrease in interest costs on the Company’sour variable rate debt would be approximately $760,000$950,000 and the increase or decrease in the fair value of the Company’sour fixed rate debt as of September 30, 20162019 would be approximately $19,000,000.$33.0 million.
The following table sets forth information as of September 30, 2016,2019, concerning the Company’sour long-term debt obligations, including principal payments by scheduled maturity, weighted average interest rates and estimated fair value:value (in thousands):
Mortgage Notes Payable | Loans Payable | Mortgage Notes Payable | Loans Payable | |||||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||||||
Fiscal Year | Average | Average | Average | Average | ||||||||||||||||||||||||||||||||||||||||||||
Ending September 30, | Carrying Value | Interest Rate | Fair Value | Carrying Value | Interest Rate | Fair Value | Carrying Value | Interest Rate | Fair Value | Carrying Value | Interest Rate | Fair Value | ||||||||||||||||||||||||||||||||||||
2017 | $ | 28,574,458 | 6.41 | % | $ | 4,790,684 | 4.69 | % | ||||||||||||||||||||||||||||||||||||||||
2018 | 16,448,460 | 6.01 | % | -0- | ||||||||||||||||||||||||||||||||||||||||||||
2019 | 21,226,951 | 6.64 | % | -0- | ||||||||||||||||||||||||||||||||||||||||||||
2020 | 5,620,505 | 6.13 | % | 76,000,000 | 2.03 | % | $ | 243 | 5.52% | $ | 95,000 | 3.74% | ||||||||||||||||||||||||||||||||||||
2021 | 2,692,733 | 5.96 | % | -0- | 584 | 6.50% | -0- | |||||||||||||||||||||||||||||||||||||||||
2022 | 27,639 | 5.22% | -0- | |||||||||||||||||||||||||||||||||||||||||||||
2023 | 2,882 | 3.95% | -0- | |||||||||||||||||||||||||||||||||||||||||||||
2024 | 32,255 | 3.96% | -0- | |||||||||||||||||||||||||||||||||||||||||||||
Thereafter | 409,185,046 | 4.14 | % | -0- | 689,313 | 3.99% | -0- | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 483,748,153 | 4.48 | % | $ | 493,675,000 | $ | 80,790,684 | 2.19 | % | $ | 80,800,000 | $ | 752,916 | 4.03% | $ | 769,259 | $ | 95,000 | 3.74% | $ | 95,000 |
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On August 27, 2015,The $95.0 million Loans Payable in the Companytable above represents the amount drawn down under our $200.0 million Old Facility. As further described below, subsequent to the fiscal yearend 2019, the Old Facility was replaced its prior $60,000,000 unsecured revolving lineby a New Facility consisting of credit with the Facility. The Facility is syndicated with three banks led by BMO, as sole lead arranger, sole book runner,a $225.0 million New Revolver and Bank of Montreal as administrative agent, and includes J.P. Morgan and RBC as co-syndication agents. The Facility provided for up to $130,000,000a new $75.0 million Term Loan, resulting in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability upunder both the New Revolver and the Term Loan of $300.0 million. In addition, the New Revolver includes an accordion feature that will allow the total potential availability under the New Facility to $200,000,000, subjectfurther increase to $400.0 million, under certain conditions. The Old Facility was originally set to mature in August 2019 and had a one-year extension option, at the option of the Company. On September 30, 2016, the Company entered into the Amendment, pursuant to which the Company exercised the $70,000,000 accordion feature under the Facility, bringing the maximum availability under the Facility to $200,000,000, and amended the Facility to provide an additional $100,000,000 accordion feature, bringing the total potential availability up to $300,000,000, subject to certain conditions, without limitation, obtaining commitments from additional lenders. In addition, the Amendment extended the maturity date of the Facility from August 27, 2019 to September 30, 2020 with a one-year extension at our option at(subject to various conditions as specified in the optionloan agreement). During the fiscal year ended September 30, 2019, we had net paydowns of $65.0 million under the Company.Old Facility. Availability under the Old Facility through December 31, 2016, is limited to 70% of the value of the borrowing base properties, and iswas limited to 60% of the value of the borrowing base properties thereafter.properties. The value of the borrowing base properties iswas determined by applying a 7.0% capitalization rate to the net operating incomeNOI generated by the Company’sour unencumbered, wholly-owned industrial properties. Borrowings underEffective in March 2018, the Facility, upcapitalization rate applied to the first 60% ofour NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties will,under the terms of the Old Facility. Borrowings under the Old Facility, at the Company’sour election, either i) bearbore interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company’sour leverage ratio, or ii) bearbore interest at BMO’s prime lending rate plus 40 basis points to 120 basis points, depending on the Company’sour leverage ratio. The Company’s currentOur borrowings are less than 60%as of the value of the borrowing base properties andSeptember 30, 2019, based on the Company’s currentour leverage ratio borrowings under the Facility bearas of September 30, 2019, bore interest at LIBOR plus 150170 basis points, which was at an interest rate of 2.03%3.74% as of September 30, 2016. As2019. In addition, we had a $100.0 million accordion feature, bringing the total potential availability under the Old Facility (subject to various conditions as specified in the loan agreement) up to $300.0 million.
The $225.0 million New Revolver matures in January 2024, with two options to extend for additional six-month periods, at our option and has a $100.0 million accordion feature, bringing the total potential availability under the New Revolver (subject to various conditions as specified in the loan agreement) up to $325.0 million. Availability under the New Facility is limited to 60% of Septemberthe value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the Old Facility to 6.25% under the New Facility, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the New Revolver was lowered and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the New Revolver at LIBOR plus 145 basis points, which results in an interest rate of 3.21%. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan, at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 2016, $76,000,000 wasbasis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. We currently have $10.0 million drawn down under the Facility.New Revolver and $75.0 million outstanding under the Term Loan.
As of September 30, 2016, the Company had two loans totaling $4,790,684 consisting of a $2,284,633 term loan, (which was paid in full on October 28, 2016) at an annual interest rate of 4.90% and a $2,506,051 term loan maturing on March 9, 2017. Interest on this variable rate term loan accrues at prime plus 0.75% with a floor of 4.50% and the interest rate at September 30, 2016 was 4.50%.
The CompanyWe also investsinvest in marketable securities of other REITs and iswe are primarily exposed to market price risk from adverse changes in market rates and conditions. The Company generally limits its marketableHistorically, we have aimed to limit the size of our REIT securities investmentsportfolio to no more than approximately 10% of itsour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation).depreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. All securities are classified as available for sale and are carried at fair value.
The Company obtains We also use margin loans from time to time whichfor purchasing securities, for temporary funding of acquisitions, and for working capital purposes. The margin loans are secureddue on demand and are collateralized by itsour securities portfolio. In general, we may borrow up to 50% of the value of the marketable securities. ThereAt September 30, 2019, there was no balance outstanding onamount drawn down under the margin loan and as of September 30, 2016 and 2015.2018 there was $26.6 million outstanding under the margin loan. The interest rate on the margin account is the bank’s margin rate and was 2.00%2.50% and 2.75% as of September 30, 20162019 and 2015. In general, the Company may borrow up to 50% of the value of the marketable securities.2018, respectively, and is currently at 2.25%. The value of the marketable securities was $73,604,894$185.3 million as of September 30, 2016,2019, representing 5.3%8.7% of the Company’sour undepreciated assets (which is the Company’sour total assets excluding accumulated depreciation).
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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in Part IV, Item 15 (a) (1) are incorporated herein by reference and filed as part of this report.
The following is the Unaudited Selected Quarterly Financial Data:
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED (in thousands)
FISCAL 2019 | 12/31/18 | 3/31/19 | 6/30/19 | 9/30/19 | ||||||||||||
Rental and Reimbursement Revenue | $ | 39,147 | $ | 39,306 | $ | 39,472 | $ | 40,597 | ||||||||
Total Expenses | 19,825 | 20,490 | 20,646 | 21,337 | ||||||||||||
Unrealized Holding Gains (Losses) Arising During the Periods (1) | (42,627 | ) | 15,568 | (11,609 | ) | 13,988 | ||||||||||
Other Income (Expense) (1) | (47,264 | ) | 9,485 | (17,198 | ) | 8,554 | ||||||||||
Income from Operations | (27,943 | ) | 28,301 | 1,628 | 27,814 | |||||||||||
Income from Operations per diluted share | $ | (0.31 | ) | $ | 0.30 | $ | 0.02 | $ | 0.29 | |||||||
Net Income (Loss) (1) | (27,943 | ) | 28,301 | 1,628 | 27,814 | |||||||||||
Net Income per diluted share (1) | $ | (0.31 | ) | $ | 0.30 | $ | 0.02 | $ | 0.29 | |||||||
Net Income Attributable to Common Shareholders (1) | (32,364 | ) | 23,821 | (3,121 | ) | 22,690 | ||||||||||
Net Income Attributable to Common Shareholders per diluted share (1) | $ | (0.36 | ) | $ | 0.26 | $ | (0.03 | ) | $ | 0.24 |
FISCAL 2016 | 12/31/15 | 3/31/16 | 6/30/16 | 9/30/16 | ||||||||||||||||||||||||||||
FISCAL 2018 | 12/31/17 | 3/31/18 | 6/30/18 | 9/30/18 | ||||||||||||||||||||||||||||
Rental and Reimbursement Revenue | $ | 22,259,362 | $ | 22,966,838 | $ | 24,113,999 | $ | 25,575,911 | $ | 33,465 | $ | 34,344 | $ | 34,736 | $ | 36,617 | ||||||||||||||||
Lease Termination Income | 210 | -0- | -0- | -0- | ||||||||||||||||||||||||||||
Total Expenses | 11,167,093 | 12,537,914 | 11,835,546 | 13,942,992 | 16,991 | 17,643 | 17,611 | 19,488 | ||||||||||||||||||||||||
Unrealized Holding Gains (Losses) Arising During the Periods (1) | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||||||
Other Income (Expense) | (4,153,614 | ) | (3,296,977 | ) | (4,047,158 | ) | (1,440,309 | ) | (4,442 | ) | (5,056 | ) | (4,651 | ) | (4,969 | ) | ||||||||||||||||
Income from Operations | 12,242 | 11,645 | 12,474 | 12,160 | ||||||||||||||||||||||||||||
Income from Operations per diluted share | $ | 0.16 | $ | 0.15 | $ | 0.16 | $ | 0.15 | ||||||||||||||||||||||||
Gain on Sale of Real Estate Investment | 5,388 | -0- | 2,097 | -0- | ||||||||||||||||||||||||||||
Net Income | 6,938,655 | 7,131,947 | 8,231,295 | 10,192,610 | 17,630 | 11,645 | 14,571 | 12,160 | ||||||||||||||||||||||||
Net Income per diluted share | $ | 0.23 | $ | 0.15 | $ | 0.18 | $ | 0.15 | ||||||||||||||||||||||||
Net Income Attributable to Common Shareholders | 4,786,897 | 4,980,189 | 6,079,537 | 4,685,265 | 13,313 | 7,397 | 10,323 | 7,782 | ||||||||||||||||||||||||
Net Income Attributable to Common Shareholders per diluted share | $ | 0.08 | $ | 0.08 | $ | 0.09 | $ | 0.07 | $ | 0.17 | $ | 0.10 | $ | 0.13 | $ | 0.10 |
FISCAL 2015 | 12/31/14 | 3/31/15 | 6/30/15 | 9/30/15 | ||||||||||||
Rental and Reimbursement Revenue | $ | 17,677,530 | $ | 18,858,596 | $ | 20,672,282 | $ | 20,567,089 | ||||||||
Lease Termination Income | 238,625 | -0- | -0- | -0- | ||||||||||||
Total Expenses | 9,582,908 | 10,305,673 | 11,351,102 | 10,875,080 | ||||||||||||
Other Income (Expense) | (2,909,595 | ) | (3,734,243 | ) | (4,145,322 | ) | (4,525,626 | ) | ||||||||
Gain on Sale of Real Estate Investment | -0- | -0- | -0- | 5,021,242 | ||||||||||||
Net Income | 5,423,652 | 4,818,680 | 5,175,858 | 10,187,625 | ||||||||||||
Net Income Attributable to Common Shareholders | 3,271,894 | 2,666,922 | 3,024,100 | 8,035,867 | ||||||||||||
Net Income Attributable to Common Shareholders per diluted share | $ | 0.06 | $ | 0.04 | $ | 0.05 | $ | 0.14 |
Certain amounts in the Selected Quarterly Financial Data for the prior quarters have been reclassified to conform to the financial statement presentation for the current year.
(1) | Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income Attributable to Common Shareholders between these periods are not comparable. |
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ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in, or any disagreements with, the Company’sour independent registered public accounting firm on accounting principles and practices or financial disclosure during the years ended September 30, 20162019 and 2015.2018.
ITEM 9A-9A - CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and our Chief Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial and Accounting Officer concluded that our disclosure controls and procedures were effective as of September 30, 2016.2019.
(b) Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
Management assessed the Company’sour internal control over financial reporting as of September 30, 2016.2019. This assessment was based on criteria for effective internal control over financial reporting established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)(COSO) (2013 framework). Based on this assessment, management has concluded that the Company’sour internal control over financial reporting was effective as of September 30, 2016.2019.
PKF O’Connor Davies, LLP, the Company’sour independent registered public accounting firm, has issued their report on their audit of the Company’sour internal control over financial reporting, a copy of which is included herein.
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(c) Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
TheTo the Board of Directors and Shareholders of
Monmouth Real Estate Investment Corporation
Opinion on Internal Control over Financial Reporting
We have audited Monmouth Real Estate Investment Corporation’s (the “Company”) internal control over financial reporting as of September 30, 2016,2019, based on criteria established in Internal ControlIntegratedControl–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework)(COSO). Monmouth Real Estate Investment Corporation’sIn our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2019, based on criteria established in Internal Control–Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 30, 2019 and 2018, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2019, and our report dated November 25, 2019, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based uponon the assessed risk andrisk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, (3)and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (4)(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Monmouth Real Estate Investment Corporation maintained in all material respects, effective internal control over financial reporting as of September 30, 2016 based on criteria established in Internal Control-Integrated Framework issued by COSO (2013 framework)./s/ PKF O’Connor Davies, LLP
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Monmouth Real Estate Investment Corporation as of September 30, 2016 and 2015, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2016 and our report dated November 25, 2016 expressed an unqualified opinion thereon.2019
New York, New York
(d) Changes in Internal Control over Financial Reporting
There have beenbeen no changes to our internal controls over financial reporting during the Company’sour fourth fiscal quarter ended September 30, 20162019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
None.
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ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following are theour Directors and Executive Officers of the Company as of September 30, 2016:2019:
Name |
Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships |
Director | Class Type (1) | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships | Director Since | Class (1) | ||||||||||||
Kiernan Conway | 57 | Independent Director. (2) Director of Research and Corporate Engagement of the Alabama Center for Real Estate, and Chief Economist of the CCIM (Certified Commercial Investment Member) Institute (2017-present). Prior Senior Vice-President of Credit Risk Management for Sun Trust in Atlanta, GA (2014-2017). U.S. Chief Economist for Colliers International (2010-2014). Prior affiliations with Federal Reserve in Atlanta, GA, South Trust Bank, Cushman and Wakefield, Equitable Real Estate, Wells Fargo Bank and Deloitte and Touche. Mr. Conway’s extensive experience as an economist with expertise in real estate, real estate finance and logistics are the primary reasons, among others, why Mr. Conway was selected to serve on our Board. | 2018 | II | ||||||||||||||||
Anna T. Chew | 58 | Director.Interim Chief Financial Officer (March 2012 to July 2012). Chief Financial Officer (1991 to 2010).
For UMH Properties, Inc., a related company, Vice President and Chief Financial Officer (1995 to present) and Director (1995 to present).
Ms. Chew is a Certified Public Accountant. Ms. Chew’s extensive public accounting, finance and real estate industry experience is the primary reason, among others, why Ms. Chew was selected to serve on our Board. | 2007 | I | ||||||||||||||||
Daniel D. ronheim | 62 | Director.Attorney at Law (1979 to present). Certified Property Manager (2010 to present). President (2000 to present) of David Cronheim Mortgage Company, a privately-owned real estate investment banker. Executive Vice President (1997 to present) of Cronheim Management Services, Inc., a real estate management firm. Executive Vice President (1989 to present) and General Counsel (1983 to present) of David Cronheim Company, a real estate brokerage firm. Executive Committee (2012 to present), Secretary-Treasurer (2013 to 2015), Vice-President (2015 to 2016) and President (2016 to present) of The Institute of Real Estate Management (IREM) Chapter One (New Jersey). Member and instructor (2014 to present) of the New Jersey State Bar Association Land Use Committee. Member (1986 to 1993) and Chairman (1994 to present) of Borough of Watchung Zoning Board. Mr. Cronheim’s extensive experience in real estate management and the mortgage industry is the primary reason, among others, why Mr. Cronheim was selected to serve on our Board. | 1989 | I | ||||||||||||||||
Daniel D. Cronheim | 65 | Independent Director. (2) Attorney at Law (1979 to present). Certified Property Manager (2010 to present) from Institute of Real Estate Management (“IREM”). President (2000 to present) of David Cronheim Mortgage Corp., a privately-owned real estate investment bank. Executive Vice President (1997 to present) of Cronheim Management Services, Inc., a real estate management firm. Executive Committee (2012 to present), Secretary-Treasurer (2013-2015), Vice-President 2015-2016), and President (2016 to present) of IREM Chapter One (New Jersey). Member and instructor of the New Jersey State Bar Association Land Use Committee (2014 to present) and Legislative subcommittee chair (2018 to present). Mr. Cronheim’s extensive experience in real estate management and the mortgage industry is the primary reason, among others, why Mr. Cronheim was selected to serve on our Board.
| 1989 | I | ||||||||||||||||
Catherine B. Elflein | 55 | Independent Director (2).Certified Public Accountant. Senior Director – Risk Management (2006 to present) at Celgene Corporation, a biopharmaceutical company; Controller of Captive Insurance Companies (2004 to 2006) and Director – Treasury Operations (1998 to 2004) at Celanese Corporation. Ms. Elflein’s extensive experience in accounting, finance and risk management is the primary reason, among others, why Ms. Elflein was selected to serve on our Board. | 2007 | III | 58 | Independent Director. (2) Certified Public Accountant. Senior Director – Risk Management (2006 to present) at Celgene Corporation, a biopharmaceutical company; Controller of Captive Insurance Companies (2004 to 2006) and Director – Treasury Operations (1998 to 2004) at Celanese Corporation. Ms. Elflein’s extensive experience in accounting, finance and risk management is the primary reason, among others, why Ms. Elflein was selected to serve on our Board. | 2007 | III |
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Name | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships | Director Since | Class Type (1) | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships | Director Since | Class (1) | ||||||||||||
Brian H. Haimm | 47 | Independent Director (2).Chief Financial Officer and Chief Operating Officer (2006 to present) of Ascend Capital, a private equity firm. Mr. Haimm’s extensive experience in accounting, finance and the real estate industry is the primary reason, among others, why Mr. Haimm was selected to serve on our Board. | 2013 | II | 50 | Lead Independent Director. (2) Chief Financial Officer and Chief Operating Officer (2006 to present) of Ascend Capital Group International, LLC, a private equity firm. Mr. Haimm’s extensive experience in accounting, finance and the real estate industry is the primary reason, among others, why Mr. Haimm was selected to serve on our Board.
| 2013 | II | ||||||||||||
Neal Herstik | 57 | Independent Director (2).Attorney at Law, Gross, Truss & Herstik, PC (1997 to present). Mr. Herstik’s extensive legal experience and experience in the real estate industry is the primary reason, among others, why Mr. Herstik was selected to serve on our Board. | 2004 | II | 60 | Independent Director. (2) Attorney at Law, Gross, Truss & Herstik, PC (1997 to present). Mr. Herstik’s extensive legal experience and experience in the real estate industry is the primary reason, among others, why Mr. Herstik was selected to serve on our Board. | 2004 | II | ||||||||||||
Matthew I. Hirsch | 57 | Independent Director (2).Attorney at Law (1985 to present) Law Office of Matthew I. Hirsch; Adjunct Professor of Law, Delaware Law School of Widener University (1993 to present).
For UMH Properties, Inc., a related company, Director (2013 to present).
Mr. Hirsch’s experience with real estate transactions, legal issues relating to real estate and the real estate industry is the primary reason, among others, why Mr. Hirsch was selected to serve on our Board. | 2000 | II | 60 | Independent Director. (2) Attorney at Law (1985 to present), Law Office of Matthew I. Hirsch; Adjunct Professor of Law, Delaware Law School of Widener University (1993 to present).
For UMH Properties, Inc. (UMH), a related company, Director (2013 to present).
Mr. Hirsch’s experience with real estate transactions, legal issues relating to real estate and the real estate industry is the primary reason, among others, why Mr. Hirsch was selected to serve on our Board.
| 2000 | II | ||||||||||||
Eugene W. Landy | 82 | Founder and Chairman of the Board (1968 to present), President and Chief Executive Officer (1968 to April 2013) and Director.Attorney at Law. Partner of the Law Firm of Landy & Landy; Chairman of the Board (1995 to present).
For UMH Properties, Inc., a related company, Founder and Chairman of the Board, Director (1969 to present) and President (1969 to 1995).
As our Founder and Chairman, Mr. Landy’s unparalleled experience in real estate investing is the primary reason, among others, why Mr. Landy was selected to serve on our Board. | 1968 | III | 85 | Founder and Chairman of the Board (1968 to present), and Executive Director. President and Chief Executive Officer (1968 to April 2013). Attorney at Law. Chairman of the Board (1995 to present).
For UMH Properties, Inc., a related company, Founder and Chairman of the Board (1969 to present), and President (1969 to 1995).
As our Founder and Chairman, Mr. Landy’s unparalleled experience in real estate investing is the primary reason, among others, why Mr. Landy was selected to serve on our Board. | 1968
| III |
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Name | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships |
Director Since | Class Type (1) | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships | Director Since | Class (1) | ||||||||||||
Michael P. Landy | 54 | President and Chief Executive Officer (April 2013 to present) and Director.Chief Operating Officer (2011 to April 2013), Executive Vice President (2009 to 2010), Executive Vice President-Investments (2006 to 2009), and Vice President-Investments (2001 to 2006). Member of New York University’s REIT Center Board of Advisors (2013 to present).
For UMH Properties, Inc., a related company, Director (2011 to present), Executive Vice President (2010 to 2012) and Vice President-Investments (2001 to 2010).
Mr. Landy’s role as our President and Chief Executive Officer and extensive experience in real estate finance, investment, capital markets and operations management are the primary reasons, among others, why Mr. Landy was selected to serve on our Board. | 2007 | III | 57 | President and Chief Executive Officer (April 2013 to present) and Executive Director. Chief Operating Officer (2011 to April 2013), Executive Vice President (2009 to 2010), Executive Vice President-Investments (2006 to 2009), and Vice President-Investments (2001 to 2006). Member of New York University’s REIT Center Board of Advisors (2013 to present). Member of Nareit’s Advisory Board of Governors (2018 to present).
For UMH Properties, Inc., a related company, Director (2011 to present).
Mr. Landy’s role as our President and Chief Executive Officer and extensive experience in real estate finance, investment, capital markets and operations management are the primary reasons, among others, why Mr. Landy was selected to serve on our Board.
| 2007 | III | ||||||||||||
Samuel A. Landy | 56 | Director. Attorney at Law (1985 to present), Partner of the Law firm of Landy & Landy.
For UMH Properties, Inc., a related company, President and Chief Executive Officer (1995 to present), Vice President (1991 to 1995) and Director (1992 to present).
Mr. Landy’s extensive experience in real estate investment and REIT leadership is the primary reason, among others, why Mr. Landy was selected to serve on our Board. | 1989 | III | 59 | Director. Attorney at Law.
For UMH Properties, Inc., a related company, President and Chief Executive Officer (1995 to present), Vice President (1991 to 1995) and Director (1992 to present).
Mr. Landy’s extensive experience in real estate investment and REIT leadership is the primary reason, among others, why Mr. Landy was selected to serve on our Board.
| 1989 | III | ||||||||||||
Kevin S. Miller | 47 | Chief Financial Officer (July 2012 to present) and Chief Accounting Officer (May 2012 to present).Certified Public Accountant. Assistant Controller and Assistant Vice-President (2005 to May 2012) of Forest City Ratner, a real estate developer, owner and operator and a wholly-owned subsidiary of a publicly-held company, Forest City Realty Trust, Inc. | N/A | N/A | 50 | Chief Financial Officer (July 2012 to present) and Chief Accounting Officer (May 2012 to present) and Executive Director. Certified Public Accountant. Assistant Controller and Assistant Vice-President (2005 to May 2012) of Forest City Ratner, a real estate developer, owner and operator and a wholly-owned subsidiary of a publicly-held company, Forest City Realty Trust, Inc. Mr. Miller’s extensive experience in accounting, finance and the real estate industry is the primary reason, among others, why Mr. Miller was selected to serve on our Board.
| 2017 | I | ||||||||||||
Allison Nagelberg | 51 | General Counsel (2000 to present).Attorney at Law (1989 to present). Ms. Nagelberg also has a Master of Business Administration in Finance.
For UMH Properties, Inc., a related company, General Counsel (2000 to 2013). | N/A | N/A | 54 | General Counsel (2000 to present). Attorney at Law (1989 to present). Ms. Nagelberg also has a Master of Business Administration in Finance. Ms. Nagelberg is a member of the Rutgers Center for Real Estate Advisory Board (2017 to present). | N/A | N/A |
63 |
Name |
Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships |
Director | Class Type (1) | Age | Present Position with the Company; Business Experience During Past Five Years; Other Directorships | Director Since | Class (1) | ||||||||||||
Scott Robinson | 46 | Independent Director (2). Managing Director, Oberon Securities (2013 to Present); Clinical Professor of Finance and Director of the The REIT Center at New York University (2008 to Present); Managing Partner, Cadence Capital Group (2009 to 2013); Vice President, Citigroup (2006 to 2008); Senior REIT and CMBS analyst (1998 to 2006), Standard & Poor’s. Mr. Robinson’s extensive experience in real estate finance and investment is the primary reason, among others, why Mr. Robinson was selected to serve on our Board. | 2005 | I | ||||||||||||||||
Gregory T. Otto | 31 | Independent Director. (2) Chief Strategy Officer of Seabury Maritime, LLC (September 2019 to present); Maritime Professional (2011 to present) with experiences in maritime trade, logistics, and security. Consultant for Entegra Systems (2018 to present), focused on maritime business and security services. Previously employed with Paul F. Richardson & Associates in a similar capacity (2015 to 2017). Port Operations Coordinator and Ship’s Officer for Maersk Line (2011 to 2014). Lieutenant in the U.S. Naval Reserves (2011 to present), specializing in maritime intelligence. Mr. Otto’s experience in global commerce, intermodal logistics and security matters is the primary reason, among others, why Mr. Otto was selected to serve on our Board.
| 2017 | I | ||||||||||||||||
Scott L. Robinson | 49 | Independent Director. (2) Managing Director, Oberon Securities (2013 to present); Clinical Professor of Finance and Director of The REIT Center at New York University (2008 to present); Director (July 2018 to present) and Chairman of the Board (July 2019 to present), Full Stack Modular; Managing Partner, Cadence Capital Group (2009 to 2013); Vice President, Citigroup (2006 to 2008); Senior REIT and CMBS analyst (1998 to 2006), Standard & Poor’s. Mr. Robinson’s extensive experience in real estate finance and investment is the primary reason, among others, why Mr. Robinson was selected to serve on our Board. | 2005 | I | ||||||||||||||||
Stephen B. Wolgin | 62 | Lead Independent Director (2).Managing Director of U.S. Real Estate Advisors, Inc. (2000 to present), a real estate advisory services group based in New Jersey. Partner with the Logan Asset Backed Fund, LP (2007 to present). Prior affiliations with J.P. Morgan, Odyssey Associates, The Prudential Realty Group, Standard & Poor’s Corporation, and Grubb and Ellis.
For UMH Properties, Inc., a related company, Director (2007 to present).
Mr. Wolgin’s extensive experience as a real estate and finance consultant and experience in the real estate industry are the primary reasons, among others, why Mr. Wolgin was selected to serve on our Board. | 2003 | II | 65 | Independent Director. (2) Managing Director of U.S. Real Estate Advisors, Inc. (2000 to present), a real estate advisory services group based in New Jersey. Prior Partner with the Logan Asset Backed Fund, LP (2007 to 2017). Prior affiliations with J.P. Morgan, Odyssey Associates, The Prudential Realty Group, Standard & Poor’s Corporation, and Grubb and Ellis.
For UMH Properties, Inc., a related company, Director (2007 to present).
Mr. Wolgin’s extensive experience in real estate finance and investment are the primary reasons, among others, why Mr. Wolgin was selected to serve on our Board. | 2003 | II |
(1) | Class I, II, and III Directors have terms expiring at the annual meetings of | |
(2) | ||
Independent within the meaning of applicable New York Stock Exchange listing standards and SEC rules. |
All officers serve at the pleasure of the Board of Directors, subject to the rights, if any, of any officer under any employment contract. Officers are elected by the Board of Directors annually and as may be appropriate to fill a vacancy in an office.
Our Board is currently approximately 70% independent.
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Family Relationships
There are no family relationships between any of the directors or executive officers, with the exception of Samuel A. Landy and Michael P. Landy who are the sons of the Company’sour Founder, Eugene W. Landy, who is the Chairman of the Board and a Director of the Company.an Executive Director.
Audit Committee
The Company hasWe have a separately-designated standing audit committee (the “Audit Committee”) established in accordance with Section 3 (a)3(a)(58)(A) of the Exchange Act, (15 U.S.C. 78c(a)(58)(A)). Thewhose members of the audit committee are Brian H. Haimm (Chairman), Catherine B. Elflein, Stephen B. Wolgin,Gregory T. Otto, Matthew I. Hirsch and Scott L. Robinson. The Company’sOur Board has determined that Brian H. Haimm, Catherine B. Elflein and Scott L. Robinson and Stephen B. Wolgin are audit committee financial experts and that all members of the audit committee are independent as required by the listing standards of the NYSE. The audit committeeAudit Committee operates under the Audit Committee Charter, which can be found at the Company’sour website at www.mreic.reit.www.mreic.reit. The charter is reviewed annually for adequacy.
The Audit Committee oversees a cybersecurity subcommittee (the “Cybersecurity Subcommittee”), which operates under the Cybersecurity Subcommittee Charter, which can be found at our website at www.mreic.reit. The charter is reviewed annually for adequacy. The members of the Cybersecurity Subcommittee are Gregory T. Otto (Chairman) and Catherine B. Elflein.
Compensation Committee
We have a separately-designated standing compensation committee (the “Compensation Committee”), consisting of three of our independent directors: Brian H. Haimm (Chairman), Matthew I. Hirsch and Gregory T. Otto. Our Board has determined that all members of the Compensation Committee are independent as required by the listing standards of the NYSE. The Compensation Committee operates under the Compensation Committee Charter, which can be found at our website at www.mreic.reit. The Compensation Committee charter is reviewed annually for adequacy. The role of the Compensation Committee is discussed in greater detail below in the section on Executive Compensation.
Nominating and Corporate Governance Committee
We have a separately-designated standing nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”), consisting of three of our independent directors: Matthew I. Hirsch (Chairman), Gregory T. Otto and Scott L. Robinson. Our Board has determined that all members of the Nominating and Corporate Governance Committee are independent as required by the listing standards of the NYSE. The Nominating and Corporate Governance Committee operates under the Nominating and Corporate Governance Committee charter, which can be found at our website at www.mreic.reit. The Nominating and Corporate Governance Committee charter is reviewed annually for adequacy. Among its other responsibilities, the Nominating and Corporate Governance Committee identifies and evaluates candidates to be nominated as directors, which may include candidates put forward by shareholders. Qualifications considered by the Nominating and Corporate Governance Committee in evaluating nominees include, but are not limited to, a candidate’s judgment, skill, experience with businesses and organizations comparable to the Company, the interplay of the candidate’s experience with the experience of other Board members, the candidate’s independence according to the rules of the New York Stock Exchange, diversity, and the extent to which the candidate would be a desirable addition to the Board and any of its committees.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
There have been no delinquent filersfilings pursuant to Item 405 of regulation S-K, to the best of management’s knowledge.
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Code of Ethics
The Company hasWe have adopted the Code of Business Conduct and Ethics applicable to itsour Chief Executive Officer and Chief Financial Officer, as well as the Company’sour other officers, directors and employees (the “Code(Code of Ethics”)Ethics). The Code of Ethics can be found at the Company’sour website at www.mreic.reit.www.mreic.reit. The Code of Ethics is also available in print to any person without charge who requests a copy by writing or telephoning us at the following address and telephone number: Monmouth Real Estate Investment Corporation, Attention: Stockholder Relations, 3499 Route 9 North,Bell Works, 101 Crawfords Corner Road, Suite 3-D, Juniper Business Plaza, Freehold,1405, Holmdel, New Jersey 07728,07733, (732) 577-9996. The CompanyWe will satisfy any disclosure requirements under Item 5.05(c) of Form 8-K regarding a waiver from any provision of the Code of Ethics for principal officers or directors by disclosing the nature of such amendment of waiver on our website.website at www.mreic.reit.
Corporate Governance Materials
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Sustainability Report and the charters for the Audit Committee, Cybersecurity Subcommittee, Compensation Committee and Nominating and Corporate Governance Committee are published on the Corporate Governance page of the Investor Relations section on our website at www.mreic.reit. We have also adopted a Commitment to Environment and Society and our Vendor Code of Conduct available on the Investor Relations section of our website at www.mreic.reit. We are not including the other information contained on, or available through, our website as a part of, or incorporating such information by reference into, this 10-K. .
ITEM 11 - EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview of Compensation Program
The Compensation Committee (for purposes of this analysis,Compensation Discussion and Analysis, the “Committee”) of the Board has been appointed to implement and exercise the Board’s responsibilities relating to the compensation of the Company’sour executive officers.officers and directors. The Committee has the overall responsibility for evaluating and approving and evaluating theour executive officer compensation plan, policies and programs, of the Company.and does not delegate this responsibility to any other person(s). The Committee’s primary objectives include serving as an independent and objective party to review such compensation plan, policies and programs. The CompensationTo assist in the process, the Committee has, notfrom time to time, retained or obtained the advice of a compensation committee consultant for determining or recommendingas outlined below in the amountsection entitled Engagement of executive or director compensation.Compensation Consultant.
Throughout this report, the individuals who served as the Company’sour Chairman of the Board, and the President and Chief Executive Officer and other Officers during fiscal 2016officers included in the Summary Compensation Table presented below in Item 11 of this report, are sometimes referred to in this report as the namedNamed Executive Officers.
Since 1968, we have delivered consistent and reliable returns for our shareholders. Over the last 12 years, we have outperformed the MSCI US REIT Index by a wide margin of over two times. Our total shareholder return (TSR) over the last 12 fiscal years through September 30, 2019 was 264%, as compared to 115% for the MSCI US REIT Index during the same period. TSR includes both dividends reinvested and stock price appreciation. Historically, REIT dividends have accounted for approximately 65% of total shareholder return. We believe that it is essential that dividends be factored into evaluating a REIT’s economic performance. Our dividend has proven to be very reliable because our industrial properties are predominantly subject to long-term net leases to investment-grade tenants or their subsidiaries. On October 1, 2015, our Board of Directors approved a 6.7% increase in our quarterly common stock dividend, raising it to $0.16 per share from $0.15 per share. This represented an annualized dividend rate of $0.64 per share. On October 2, 2017, our Board of Directors approved a 6.3% increase in our quarterly common stock dividend, raising it to $0.17 per share from $0.16 per share. This represents an annualized dividend rate of $0.68 per share. These two dividend raises represent a total increase of 13%. We have maintained or increased our common stock cash dividend for 28 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. We are also one of the few REITs that is paying out a higher per share dividend today than prior to the Global Financial Crisis.
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The following table highlights important aspects of our executive officers.compensation program, which promote good governance and serve the interests of our shareholders.
Highlights
Cash bonus program for Chairman, CEO and CFO tied to objective financial performance goals
Total executive compensation for our Named Executive Officers is within the lowest range (25th percentile), of the 2019 Compensation Survey published by NAREIT, within the REIT industry for REITs with comparable data. We considered comparable data of Industrial REITs, of REITs with $1.5 billion to $3.0 billion in market capitalization and of REITs with less than 75 employees.
Clawback policy
Robust stock ownership guidelines:
● | CEO: 6x base salary | ||
● | Other Named Executive Officers: 2x base salary | ||
● | Directors: 3x annual cash fee | ||
● | Named Executive Officers retain (for a minimum of 24 months) at least 50% of the shares received upon vesting of restricted stock or the exercise of stock options (net of any shares sold or forfeited for payment of exercise price, tax or withholding) |
Annual say-on-pay vote
Compensation Committee has considered the report of an independent compensation consultant
No excessive perquisites or other benefits
No repricing or buyout of stock options
No excise tax gross-ups
Average total Director compensation is approximately half of the average total director compensation of Comparable REITs (as defined below)
The following charts illustrate our outperformance over a 12-year period as compared to the S&P 500 Index and the MSCI US REIT Index for the same period:
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The following chart illustrates our growth in capital structure over the last five years:
Compensation Philosophy and Objectives
The Committee believes that a well-designed compensation program should align the goalsinterests of the President and ChiefNamed Executive OfficerOfficers with the goalsinterests of theour shareholders, and that a significant part of the executives’ compensation, over the long term, should be dependent upon the value created for shareholders. In addition, all executives should be held accountable through their compensation for theour performance of the Company, and compensation levels should also reflect the executives’ individual performance in an effort to encourage increased individual contributions to the Company’sour performance. TheThis compensation philosophy, as reflected in the Company’sour employment agreements with itsour executives and the overall compensation program, is designed to motivate our executives to focus on operating results and create long-term shareholder value by:
● | establishing a | |
● | rewarding executives for individual accomplishments and achievements; | |
● | linking a portion of each executive’s compensation to the achievement of | |
● | building a pay-for-performance |
The Committee believes that the salaries and bonuses in the Company’s recently executedour executive employment agreements are consistent with the Committee’s philosophy and objectives.
The Committee believes that each of the above factors is important when determining compensation levels for named executive officers.Named Executive Officers. The Committee reviews and approves the employment contracts for the Chairman of the Board, and the President and Chief Executive Officer and the other named executive officers, includingNamed Executive Officers, and reviews and approves the performance goals and objectives.objectives applicable to their performance-based compensation. The Committee annually evaluates the performance of the executive officersNamed Executive Officers in light of those goals and objectives. The Committee considers the Company’sour performance, relative shareholder return, the total compensation provided to comparable officers at similarly-situatedsimilarly situated companies, and compensation given toearned by the named executive officersNamed Executive Officers in prior years. The Company uses the annual Compensation Survey published by NAREIT (the “Survey”) as a guide to setting compensation levels. Participant company data is not presented in a manner that specifically identifies any named individual or company. This Survey details compensation by position type and company size with statistical salary and bonus information for each position. The sub-sets presented in the Survey used by the Committee for comparison are the industrial property sector, entities with less than $1.5 billion in equity market capitalization and entities with less than 75 full-time employees. The Compensation Committee compares the Company’s salary and bonus amounts to the ranges presented for reasonableness.
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The Committee believes that the executive compensation packages provided by the Companythat we provide to its executive officersour Named Executive Officers should include both base salaries and annual bonus awards that reward corporate and individual performance, as well as give incentives to executives to meet or exceed established goals. As a result, an important portion of the Company’sour compensation program is comprised of discretionary bonuses and equity awards as determined by the Committee in recognition of individual accomplishments and achievements.achievements, as well as overall company performance.
Historically, the Committee has used the annual Compensation Survey published by NAREIT (Survey) as a guide to setting compensation levels. Total executive compensation paid by us fell within the lowest range (25th percentile) within the REIT industry for REITs with comparable data based upon the 2019 Compensation Survey published by NAREIT. Participant company data is not presented within the Survey in a manner that specifically identifies any named individual or company. This Survey details compensation by position type and company size with statistical salary and bonus information for each position. The subsets presented in the Survey which the Committee also uses for comparison purposes are the industrial property sector, entities with a total market capitalization between $1.5 billion and $3.0 billion and entities with less than 75 full-time employees. The Committee compares our salary and bonus amounts to the ranges presented in this Survey for reasonableness.
Role of Executive Officers in Compensation Decisions
The Committee makes all final compensation decisions forwith respect to our chief executive officer and recommends to the Company’s named executive officers.Board all compensation decisions with respect to our Named Executive Officers. The Chairman of the Board and the President and Chief Executive Officer review the performance of the other named executive officersNamed Executive Officers and then present their conclusions and recommendations to the Committee with respect to base salary adjustments, and annual cash bonusbonuses and stock optionoptions or restricted stock awards. The Committee exercises its own discretion in modifying and implementing any recommended adjustments or awards but does consider the recommendations from management who work closely with the other named executive officers.Named Executive Officers.
Role of Grants of Stock Options and Restricted Stock in Compensation Analysis
The Committee views the grant of stock options and restricted stock awards as a form of long-term compensation. The Committee believes that such grants promote the Company’sour goal of retaining key employees and align the key employees’ interests with those of the Company’sour shareholders from a long-term perspective. The number of options or shares of restricted stock granted to each employee, and the performance or time-based vesting criteria associated with each grant, is determined by consideration of various factors including but not limited to the employees’employee’s contribution, title, responsibilities, and years of service. The Committee takes outstanding awards of stock options and restricted stock into account in making its compensation determinations.
Role of Employment Agreements in Determining Executive Compensation
Each of the Company’sour currently employed named executive officersNamed Executive Officers is a party to an employment agreement. These agreements provide forestablish the base salaries, bonuses and customary fringe benefits.benefits for each Named Executive Officer. The key elementsemployment agreements also provide for certain severance benefits in the event the Named Executive Officer’s employment is terminated. The employment agreements also provide for certain severance benefits in the event of a change in control and to alleviate the Company’s compensation programfinancial impact of termination of employment, through base salary and health benefit continuation, with the intention of providing for thea stable work environment. In considering new or amended employment agreements with our named executive officers, are base salary, bonuses, stock options and other benefits,including those provided forthe Committee determines the events upon which severance is payable under the employment agreements with each Named Executive Officer are appropriate in light of the size of the potential payments and additional discretionary bonuses awarded by the Committeegoal of retaining a stable executive team in recognitionthe event of individual accomplishments and achievements.Eacha change of these is addressed separately below.control. In determining initial compensation, as incorporated into the employment agreements, the Committee considers all elements of a named executive officer’sNamed Executive Officer’s total compensation package in comparison to current market practices and other benefits. In reviewing and setting compensation for the Named Executive Officers, the Committee takes the terms of the employment agreements into consideration.
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Shareholder Advisory Vote
One way to determine if the Company’sour compensation program reflects the interests of shareholders is through their non-binding vote.advisory vote on our executive compensation practices. At the Annual Meeting of Shareholders held on May 13, 2014,16, 2019, approximately 78% of votes cast were voted in favor of our Say-On-Pay proposal, which we believe affirms our shareholders’ support of our approach to our executive compensation program.
We provide our shareholders with the Company’s shareholders approved by theiropportunity to vote annually on the advisory voteapproval of the compensation of our Named Executive Officers (Say-on-Pay proposal). The Committee will continue to consider the namedoutcome of our Say-on-Pay proposals when making future compensation decisions for our Named Executive Officers.
Engagement of Compensation Consultant
Pursuant to its charter, the Committee is authorized to retain the services of an executive compensation advisor, in its discretion, to assist with the establishment and review of our compensation programs and related policies. In August 2017, the Committee engaged FPL Associates (FPL) to provide additional market-based compensation data and to advise on industry trends and best practices. In order to help the Committee fairly evaluate our executive compensation in light of our relative economic performance, FPL prepared for the Committee a peer group of REITs with similar total capitalization, ranging between $1.4 billion and $4.0 billion (approximately 0.7x-2.0x Monmouth’s total capitalization at that time), and/or REITs that operate within the industrial REIT sector and with whom we compete for executive employees.
The peer group of comparable REITs (Comparable REITs) identified by FPL are as follows:
Agree Realty Corporation
EastGroup Properties*
Getty Realty Corporation
Hersha Hospitality Trust
LTC Properties, Inc.
Rexford Industrial Realty, Inc.*
STAG Industrial, Inc.*
Terreno Realty Corporation*
TIER REIT, Inc.
Urstadt Biddle Properties Inc.
*Denotes a peer that is in the Industrial sector
FPL compared our aggregate pay and performance to those of our peers over the prior three-year period. Based upon this analysis, FPL concluded that our aggregate pay at that time ranked at the lowest end of the aggregate pay provided by our peers, and that our performance by Total Shareholder Return was at the highest end of performance of our peers.
The Committee used this data as one tool in considering compensation for our Named Executive Officers for compensation decisions beginning in fiscal 2018. Information about peers includes but is not limited to: base salaries, annual bonuses, long-term equity incentives, composition ranges by position, governance practices, market trends and industry performance. The peer group compensation analyses prepared by FPL have been utilized by the Compensation Committee for informational purposes only and have not been, and will not be utilized for benchmarking purposes as we do not have formal benchmarking policies for comparing to our peers or the market. The Compensation Committee’s executive compensation determinations are subjective and the result of the Compensation Committee’s business judgment, which is informed by peer group data provided by FPL and will continue to be informed by the experiences of the members of the Compensation Committee. The Compensation Committee ultimately uses its own judgment in making final decisions regarding the compensation paid to our executive officers.
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Other than advising the Committee as described above, FPL did not provide any other services to us. The Committee has sole authority to hire, terminate and set the terms of engagement with FPL. The Committee has considered the independence of FPL, consistent with the requirements of NYSE, and has determined that FPL is independent. Further, pursuant to SEC rules, the Committee conducted a conflicts of interest assessment and determined that there are no conflicts of interest resulting from retaining FPL. FPL does not provide any services to our management and has no prior relationship with us prior to its engagement by the Committee. The Committee intends to reassess the independence of FPL or any other compensation consultant retained by the Committee at least annually.
Elements of Executive Officer Compensation
In addition to its determination of the Named Executives’ individual performance levels for fiscal 2019, the Committee compared the Named Executives’ total compensation for 2019 to that within the REIT industry in the Survey described above. For fiscal 2019, total executive compensation for our Named Executive Officers is within the lowest range (25th percentile), of the 2019 Compensation Survey published by NAREIT, within the REIT industry for REITs with comparable data. We considered comparable data of Industrial REITs, of REITs with $1.5 billion to $3.0 billion in market capitalization and of REITs with less than 75 employees. Our executive compensation structure includes the following objectives and core features:
Base Salaries
Base salaries are the principal fixed component of a Named Executive Officer’s compensation and are paid for performance of ongoing performanceday-to-day job responsibilities throughout the year. In order to compete for and retain talented executives who are critical to the Company’sour long-term success, the Committee has determined that the base salaries of named executive officersNamed Executive Officers should approximate those of executives of other equity REITs that compete with the Companyus for employees, investors and business, while also taking into account the named executive officers’Named Executive Officers’ performance and tenure, and the Company’sour performance relative to the performance reported for companies in the industrial property sector, entitiesREITs with less thantotal market capitalization between $1.5 billion in equity market capitalization and entities$3.0 billion and REITs with less than 75 full-time employees within the REIT industry in the Survey described above.
Bonuses
Performance-based Cash Bonus Awards
In addition to the provisions for base salaries under the terms of their employment agreements and discretionary cash bonuses awarded by the Committee in recognition of individual accomplishments and achievements, the Chairman of the Board, and the President and Chief Executive Officer and the Chief Financial and Accounting Officer are entitled to receive annual cash bonuses for each year during the terms of each respective employment agreement provided certain performance goals set by the Committee as described below are achieved.
For the Chairman of the Board:
Growth in market cap | 7.5 | % | 12.5 | % | 20 | % | 7.5% | 12.5% | 20% | |||||||||
Bonus | $ | 20,000 | $ | 45,000 | $ | 90,000 | $20,000 | $45,000 | $90,000 | |||||||||
Growth in FFO/share | 7.5 | % | 12.5 | % | 20 | % | 7.5% | 12.5% | 20% | |||||||||
Bonus | $ | 20,000 | $ | 45,000 | $ | 90,000 | $20,000 | $45,000 | $90,000 | |||||||||
Growth in dividend/share | 5 | % | 10 | % | 15 | % | 5% | 10% | 15% | |||||||||
Bonus | $ | 30,000 | $ | 60,000 | $ | 120,000 | $30,000 | $60,000 | $120,000 | |||||||||
Maximum Bonus Potential | $ | 300,000 | $300,000 |
For the President and Chief Executive Officer (effective through September 30, 2016):
Growth in market cap | 10 | % | 15 | % | 20 | % | ||||||
Bonus | $ | 20,000 | $ | 40,000 | $ | 60,000 | ||||||
Growth in AFFO/share | 15 | % | 20 | % | 25 | % | ||||||
Bonus (1) | $ | 20,000 | $ | 45,000 | $ | 90,000 | ||||||
Growth in dividend/share | 5 | % | 10 | % | 15 | % | ||||||
Bonus | $ | 30,000 | $ | 60,000 | $ | 120,000 | ||||||
Maximum Bonus Potential | $ | 270,000 |
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For the President and Chief Executive Officer (effective October 1, 2016):Officer:
Growth in market cap | 10 | % | 15 | % | 20 | % | 10% | 15% | 20% | |||||||||||||||
Bonus | $ | 40,000 | $ | 60,000 | $ | 80,000 | $40,000 | $60,000 | $80,000 | |||||||||||||||
Growth in AFFO/share | 5 | % | 10 | % | 15 | % | 20 | % | 5% | 10% | 15% | 20% | ||||||||||||
Bonus | $ | 50,000 | $ | 75,000 | $ | 100,000 | $ | 150,000 | $50,000 | $75,000 | $100,000 | $150,000 | ||||||||||||
Growth in dividend/share | 5 | % | 10 | % | 15 | % | 5% | 10% | 15% | |||||||||||||||
Bonus | $ | 150,000 | $ | 200,000 | $ | 250,000 | $150,000 | $200,000 | $250,000 | |||||||||||||||
Maximum Bonus Potential | $ | 480,000 | $480,000 | |||||||||||||||||||||
Based on meeting(1) Provided that FFO is equal to or in excess of the dividend
For the Chief Financial and Accounting Officer:
Growth in market cap | 10% | 15% | 20% | |||||
Bonus | $20,000 | $30,000 | $40,000 | |||||
Growth in AFFO/share | 5% | 10% | 15% | 20% | ||||
Bonus (1) | $25,000 | $37,500 | $50,000 | $75,000 | ||||
Growth in dividend/share | 5% | 10% | 15% | |||||
Bonus | $75,000 | $100,000 | $125,000 | |||||
Maximum Bonus Potential | $240,000 |
(1) Provided that FFO is equal to or in excess of the dividend
None of the performance targets set forth above, a $210,000 cash bonusgoals were met for thefiscal 2019 for our Chairman of the Board, was accrued as of September 30, 2016, which was paid in October 2016 and based on meeting the performance targets set forth above, a $135,000 cash bonus was accrued for the President and Chief Executive Officer as of September 30, 2016, which was paid in October 2016.and Chief Financial and Accounting Officer.
In addition to its determination of the executives’ individual performance levels for 2016, the Committee compared the executives’ total compensation for 2016 to that of similarly-situated personnel of other comparably sized REIT’s. Furthermore, the Committee compared the executives’ total compensation for 2016 to that within the REIT industry in the Survey described above. For fiscal 2016, the Company’s total compensation fell in the lowest range (25th percentile) within the REIT industry in the Survey described above.Discretionary Cash Bonus Awards
The Committee considers and approves discretionary cash bonuses to be awarded tofor the Chairman of the Board and the President and Chief Executive Officer.Officer annually. Discretionary cash bonuses awarded to the other named executive officersNamed Executive Officers are recommendedbased on recommendations made annually by the Chairman of the Board and the President and Chief Executive Officer, which are then considered and are approved by the Committee.Committee in its discretion. The Committee believes that short-term rewards in the form of discretionary cash bonuses to senior executives generally should reflect short-term results and should take into consideration both the profitability and our performance of the Company and the performance of the individual, which may include comparing such individual’s performance to that in the preceding year, reviewing the breadth and nature of the senior executives’executive’s responsibilities and valuing special contributions by each such individual. In evaluating theour performance annually, for purposes of the Company annually,discretionary cash bonuses, the Committee considers a variety of factors, including, among others, Funds From Operations (FFO), Adjusted Funds From Operations (AFFO), net income, growth in asset size, amount of space under lease and total return to shareholders. The Company considersWe consider FFO to be an important measure of an equity REIT’s operating performance and hashave adopted the definition suggested by NAREIT, which defines FFO to mean net income computed in accordance with U.S. GAAP, excluding gains or losses from sales of property and unrealized gains and losses from our investments in marketable securities, plus real estate related depreciation and amortization. The Company definesWe define AFFO as FFO plus acquisition costs and costs associated with the Redemption of Preferred Stock less recurring capital expenditures and excluding the following: lease termination income, gains or losses on securities transactions, stockstock-based compensation expense, amortization of financing and leasing commission costs, depreciation of corporate office tenant improvements, straight-line rent adjustments and non-recurring other expense. The Company considersWe consider FFO and AFFO to be meaningful additional measures of operating performance, primarily because they exclude the assumption that the value of itsour real estate assets diminishes predictably over time and because industry analysts have accepted these as performance measures.
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Other factors considered include the employee’s title and years of service. The employee’s title generally reflects the employee’s responsibilities and the employee’s years of service may be considered in determining the level of discretionary cash bonus in comparison to base salary. The Committee has declined in the past to use specific performance formulas with respect to the cash bonuses awarded to the other named executive officers,Named Executive Officers, believing that with respect to Companyour performance, such formulas do not adequately account for many factors, including, among others, theour relative performance of the Company compared to itsour competitors during variations in the economic cycle, and that with respect to individual performance, such formulas are not a substitute for the subjective evaluation by the Committee of a wide range of management and leadership skills of each of the senior executives.
In setting discretionary bonuses for fiscal 2016,2019, the Committee considered the performance of the Chairman of the Board and the President and Chief Executive Officer and received the recommendations from the Chairman of the Board and the President and Chief Executive Officer for the discretionary cash bonuses to be awarded to the other named executive officers.Named Executive Officers. The factors that wereCommittee also considered management’s report on our progress toward our fiscal 2019 achievements in awardingfinancial performance and strategic growth, and the discretionary cash bonuses included the following progress that was made by the Company due to the effortsrole of management:each Named Executive Officer in delivering these achievements:
Financial Performance
● | Growth in Net Income: Excluding all non-cash unrealized losses and realized gains, our Net Income Attributable to Common Shareholders for fiscal 2019 increased 14% over the prior year. | ||
● | Growth in Gross Revenue: Increased Gross Revenue for fiscal 2019 by 14% to $173.7 million. | ||
● | Growth in Net Operating Income (NOI)*: Increased NOI for fiscal 2019 by 14% to $131.2 million. | ||
● | |||
● | |||
● | |||
● | |||
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Portfolio Growth
● | Property Acquisitions: Located and acquired three, brand new, Class A industrial properties for $138.6 million in fiscal 2019, totaling 824,000 square feet, without placing undue burden on liquidity. All three properties are leased to Investment Grade tenants or their subsidiaries. | |
● | Property Expansions: Completed one 155,000 square foot building expansion during the fiscal year ended September 30, 2019, totaling $8.6 million, generating $821,000 in additional rental revenue and extending the lease maturity 15 years from the date of completion. | |
● | Growth in Gross Leasable Area: Achieved 5% year over year growth in gross leasable area for fiscal 2019, with 22.3 million total rentable square feet as of September 30, 2019. | |
● | Strong Tenant Occupancy: Achieved 98.9% overall occupancy rate as of September 30, 2019. | |
● | Commitments to Acquire Property: Entered into agreements to acquire five, brand new, Class A industrial properties in fiscal 2019, totaling 1.6 million square feet for a total cost of $232.0 million, of which one $81.5 million property was acquired subsequent to fiscal yearend 2019. |
Capital Markets Activity
● | Public Offering: Raised $132.3 million from our first common stock offering since 2014 with 9.2 million shares at $15.00 per share, representing 11.3% of our outstanding shares at the time of the offering. | |
● | At-The-Market Transaction: Since inception through September 30, 2019, sold 5.5 million shares of our 6.125% Series C preferred stock under our Preferred Stock At-The-Market Sales Agreement Program at a weighted average price of $24.81 per share, and generated net proceeds, after offering expenses, of $134.0 million, of which 2.4 million shares were sold during the fiscal year ended 2019 at a weighted average price of $24.49 per share, and generated net proceeds, after offering expenses, of $58.2 million. | |
● | Capital Raising through DRIP: Raised $74.0 million through our Dividend Reinvestment and Stock Purchase Plan (DRIP) during fiscal 2019. |
*NOI and AFFO are non-GAAP performance measures. See Financial Information on pages 30-31 for a discussion of our non-GAAP performance measures.
After considering our progress towards our fiscal 2019 financial performance and strategic growth achievements, as outlined above, as well as the individual performance of the Chairman of the Board, and the President and Chief Executive Officer and the other Named Executive Officers, and the recommendations of the Chairman of the Board and the President and Chief Executive Officer as to the other named executive officers,Named Executive Officers, the Committee allocatedestablished the individual discretionary cash bonus tobonuses for the named executive officersNamed Executive Officers based on our overall performance and the named executive officers’Named Executive Officers’ individual contributions to these accomplishments. Other factors considered in this allocationdetermining individual bonus amounts included the named executive officers’Named Executive Officers’ responsibilities and years of service. During fiscal 2016,2019, the Chairman of the Board received a discretionary cash bonusbonuses of $65,769. During fiscal 2016,$80,000, the President and Chief Executive Officer received discretionary cash bonuses of $501,202 which includes a $400,000$105,000, the Chief Financial and Accounting Officer received discretionary cash signing bonus in accordance with his amendedbonuses of $105,000 and restated Employment Agreement entered into on January 11, 2016.the General Counsel received discretionary cash bonuses of $80,000.
Stock Options and Restricted Stock
The employment agreement for the Chairman of the Board states that he will receive stock options to purchase 65,000 shares of stock annually. The employment agreementagreements for the President and Chief Executive Officer and for the Chief Financial and Accounting Officer states that hethey will be entitled to equity awards of up to 25,000restricted stock (25,000 shares of restricted stockfor the President and Chief Executive Officer and 12,500 shares for the Chief Financial and Accounting Officer) each year based on achievement of performance objectives as determined by the Compensation Committee.Committee including, but not limited to, AFFO per share growth, acquisitions and total return performance. In addition, the Compensation Committee has the discretion to make additional awards of stock options and restricted stock for outstanding performance. In recognition of Mr. Eugene Landy’s extraordinary contributions to the Company over the last five decades and, in particular, over the last year, on September 14, 2016, the Compensation Committee approved and granted a discretionary award of 40,000 shares of restricted common stock. The stock, which will vest in equal annual instalments over the next five years, has a grant date fair value of $13.64 per share, for a total grant date fair value of $545,600. When awarding these shares of restricted stock, the Compensation Committee took into account Mr. Eugene Landy’s recent contributions towards the progress that the Company made considered by the Committee in awarding discretionary cash bonuses, as further detailed above, under the heading “Bonuses”.
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For the other senior executives,Named Executive Officers, the Chairman of the Board and the President and Chief Executive Officer make a recommendation to the Committee offor specific stock optionoptions or restricted stock grants. In making its decisions, the Committee does not use an established formula or focus on a specific performance target. The Committee recognizes that often outside forces beyond the control of management, such as economic conditions, changing leasing and real estate markets and other factors, may contribute to less favorable near termnear-term results even when sound strategic decisions have been made by the senior executives to position the CompanyMonmouth for longer term profitability. Thus, the Committee also attempts to identify whether the senior executives are exercising the kind of judgment and making the types of decisions that will lead to future growth and enhanced asset value, even if the same are difficult to measure on a current basis. For example, in determining appropriate stock option and restricted stock awards, the Committee considers, among other matters, whether the senior executives have executed strategies that will provide adequate funding or appropriate borrowing capacity for future growth, whether acquisition and leasing strategies have been developed to ensure a future stream of reliable and increasing revenues for the Company,Monmouth, whether the selection of properties, tenants and tenant mix evidence appropriate risk management, including risks associated with real estate markets and tenant credit, and whether the administration of staff size and compensation appropriately balances theour current and projected operating requirements of the Company with the need to effectively control overhead costs, while continuing to grow the enterprise. NoThe only equity awards that were made to other named executive officersNamed Executive Officers during fiscal 2016.2019 were those paid to our Chairman of the Board, the President and Chief Executive Officer, the Chief Financial and Accounting Officer and the General Counsel as shown in Summary Compensation Table below and as awarded to Named Executive Officers who are also directors as part of our Director Compensation Plan. In addition, the Committee approved an extension of the exercise period with respect to 40,000 of the 65,000 shares that Mr. Eugene Landy had the option to acquire at an exercise price of $8.72 per share pursuant to an equity award granted to Mr. Eugene Landy in fiscal 2011, from January 3, 2019, to February 28, 2019.
Other Personal Benefits
The Company’s employment agreements provide the named executive officers with other personal benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of other personal benefits provided to the named executive officers.
The named executive officersNamed Executive Officers are provided the following benefits under the terms of their employment agreements: an allotted number of paid vacation weeks; eligibility for the executive, as well as spouse and dependents where applicable, in all Companyour sponsored employee benefits plans, including 401(k) plan, group health, accident, and life insurance, on terms no less favorable than applicable to any other executive; and supplemental disability insurance, at the Company’s cost, as agreed to by the Company and the named executive officer.our cost. Attributed costs of the personal benefits described above for the named executive officersNamed Executive Officers for the fiscal year ended September 30, 2016,2019, are included in “All Other Compensation” of the Summary Compensation Table provided below under Item 11 of this report.
Payments upon Termination or Change in Control
In addition, the named executive officers’Named Executive Officers’ employment agreements each contain provisions relating to change in control events. The employment agreements also contain severance or continuation of salary payments upon any termination of the named executive officers’Named Executive Officers’ employment, except in the case of Mr. Miller or Ms. Nagelberg, whose severance payments are for eventsonly upon a termination other than for cause (as defined under the terms of the employment agreements). These change in control and severance terms have been deemed reasonable by the Compensation Committee.Committee based on the tenure and performance of each Named Executive Officer. Information regarding these provisions is included in “Employment Agreements” provided below in this Annual Report. There are no other agreements or arrangements governing change in control payments.
Evaluation
Mr. Eugene Landy is employed under an Amended Employment Agreement with the Company. In January 2016, based on the Committee’s evaluation of his performance, his base compensation under his amended contract was increased from $410,000 to $430,500 per year.
In evaluating Mr. Eugene W. Landy’s, Mr. Michael P. Landy’s and Mr. Kevin S. Miller’s eligibility for an annual bonus,cash bonuses, the Committee used the bonus schedule included in Mr. Eugene Landy’stheir respective Amended Employment AgreementAgreements as a guide.
In recognition of Mr. Eugene Landy’s extraordinary contributions to the Company over the last five decadesguide and, in particular, overconsidering discretionary cash bonuses for all Named Executive Officers, considered the last year, as well as his contributions toward the Company’s progress as furtherfactors detailed above under the heading “Bonuses”, on September 14, 2016, the Compensation Committee determined to grant to Mr. Landy 40,000 shares of restricted common stock. The restricted stock, which will vest in equal annual installments over the next five years, has a grant date fair value of $13.64 per share, for a total grant date fair value of $545,600. In evaluating Mr. Eugene Landy’s eligibility for an annual bonus, the Compensation Committee used the bonus schedule included in Mr. Eugene Landy’s employment agreement as a guide and, in addition, considered the factors as further detailed above, under the heading “Bonuses” in considering Mr. Eugene Landy’s eligibility for a discretionary cash bonus.“Bonuses.”
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The Compensation Committee also reviewed the progress made by Mr. Michael P. Landy, President and Chief Executive Officer, as well as his contributions toward the progress that the Company haswe had made that enabled the Companyus to reach the milestones, as further detailed above,achievements discussed under the heading “Bonuses”.“Financial Performance” above. Mr. Michael Landy is employed under an employment agreement with the Company.us. His base compensation under this contract was $551,250 for fiscal 2016. Effectiveincreased effective October 1, 2016 Mr. Landy’s annual base compensation was increased to $750,000 and will increase by 5% each year through fiscal 2021. The amended employment agreement has an initial term of five years and is renewed automatically for a new five-year term on the first day of each calendar quarter after the effective date unless otherwise terminated, and contains provisions for continuation of salary payments through the expiration of the term of the agreement upon any termination of the Mr. Landy’s employment. Upon execution of the amended employment agreement in January 2016, Mr. Landy received a cash signing bonus of $400,000 in recognition of the substantial progress that the Company haswe have made under his leadership. InDuring 2016, when considering the new employment agreement and signing bonus, the Compensation Committee took into account the transformative changes thatthe Company has enjoyed over the past several years, which include the Company’s total market capitalization growing more than three-fold since fiscal 2010, and the company’s total assets nearly tripling as well since that time, while the Company’s general and administrative expenses only doubled over this period. In evaluating Mr. Michael Landy’s eligibility for an annual bonus,Since fiscal 2010 through fiscal 2019, our total market capitalization has grown by approximately 5.0x and our total assets have grown by approximately 4.0x, while our G&A expenses increased by only 2.3x over this period.
All Named Executive Officers were awarded their respective compensation based on their respective Employment Agreements and the Compensation Committee used the bonus schedule included in Mr. Michael Landy’s employment agreementmany contributions that they have made towards our progress, as a guide and, in addition, considered the factors discussedfurther detailed above, under the heading “Bonuses” in considering Mr. Michael Landy’s eligibility for a discretionary cash bonus.
“Financial Performance”. The Committee has also approvedconsidered the recommendations of the Chairman of the Board and the President and Chief Executive Officer concerning the other named executive officers’Named Executive Officers’ annual salaries, bonuses, and fringe benefits.
Effective January 1, 2016, Mr. Miller’s annual baseClawback Policy
In October 2017, the Committee adopted a clawback policy that provides that in the event of a material restatement of our financial results, other than a restatement caused by a change in applicable accounting rules or interpretations, the Committee will review the performance-based compensation was increasedof our Named Executive Officers, as defined in our Proxy Statement from $242,550year to $360,000year, for the calendar year ending December 31, 2016,three years prior to such material restatement. If the Committee determines that the amount of any performance-based compensation actually paid or awarded to a Named Executive Officer (Awarded Compensation) would have been lower if it had been calculated based on such restated financial statements (Actual Compensation) and will increase by 5% each calendar year through December 31, 2018. Mr. Miller’s employment agreement was also amendedthat such executive officer engaged in actual fraud or willful unlawful misconduct that materially contributed to provide that, upon a change of controlthe need for the restatement, then the Committee may direct us to recoup the after-tax portion of the Company, Mr. Miller may extenddifference between the Awarded Compensation and renew the amended employment agreementActual Compensation for three years from the dateNamed Executive Officers. The Committee has absolute discretion to administer and interpret this policy in our best interests.
Ownership Guidelines
In order to encourage our directors and Named Executive Officers to retain investments in us and help further align their interests with the interests of our stockholders, the Committee has adopted stock ownership guidelines applicable to our directors, our Chief Executive Officer and our other Named Executive Officers, recommending that they hold the following amounts of our stock:
Position | Stock Ownership Guideline | |
Chief Executive Officer | 6x base salary | |
Other NEOs | 2x base salary | |
Director | 3x annual cash fee | |
All NEOs | 50% of net shares received upon exercise/vesting of equity awards (24 month holding period) |
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For purposes of determining compliance with these ownership guidelines (other than the holding period for vested equity compensation), the value of each director’s or officer’s stock holdings will be calculated based on the closing price of a share of our common stock on the last trading day of our fiscal year, which was $14.41 on September 30, 2019. Shares owned by a director or officer include: shares owned outright by the director or officer or by his or her immediate family members residing in the same household; shares held in trust or under a similar arrangement for the economic benefit of the change of control,director or alternatively, terminate the amended employment agreement and receive the greaterofficer; restricted or unrestricted stock issued as part of the director or officer’s compensation, whether or not vested; shares acquired upon option exercise that the director or executive officer continues to own; and shares held for the director or executive officer’s account in a 401(k) or other retirement plan.
Our Chief Executive Officer Stock Ownership Policy was adopted in September 2015. As of September 30, 2019, Mr. Michael P. Landy, our President and Chief Executive Officer, owned stock valued at more than 12x his base salary due underand which is also approximately 2.0x our CEO stock ownership requirement. Our Director Stock Ownership policy was adopted effective September 12, 2017, and our other stock ownership policies were adopted effective October 1, 2017.
The aggregate stock ownership of our directors and officers represent 3.9% of our outstanding common stock, which currently represents the remaining termfourth largest block of the agreement or one year’s base salary at the date of termination. Mr. Miller was awarded his new amended employment agreement because of the many contributions he has made towards the Company’s progress, as further detailed above, under the heading “Bonuses”.shareholders behind three institutional investors and helps align our management’s interests with our shareholders’ interests.
Compensation Committee Report
The Compensation Committee of the Companyour Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the boardour Board of Directors that the Compensation Discussion and Analysis be included in this report.
Compensation Committee: | ||
Brian H. Haimm (Chairman) | ||
Matthew I. Hirsch Gregory T. Otto |
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Summary Compensation Table
The following Summary Compensation Table shows compensation (rounded to the nearest thousand)paid or accrued by the Companyus for services rendered during the fiscal years ended September 30, 2016, 2015,2019, 2018, and 20142017 to the named executive officers.Named Executive Officers. There were no other executive officersNamed Executive Officers whose aggregate compensation allocated to the Company forexceeded $100,000 during fiscal 2016 exceeded $100,000.2019.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Restricted Stock Awards (4) | Option Awards ($) (5) | Non-Equity Incentive Plan Compensation ($) | Change in PensionValue And Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (4) | Option Awards ($) (5) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value And Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Eugene W. Landy | 2016 | $ | 425,375 | $ | 65,769 | $ | 545,600 | $ | 48,340 | $ | 210,000 | $ | 16,601 (1) | $ | 49,500 (2) | $ | 1,361,185 | 2019 | $ | 431,000 | $ | 80,000 | $ | 5,000 | $ | 70,000 | $ | -0- | $ | 8,000 | (1) | $ | 68,000 | (2) | $ | 662,000 | ||||||||||||||||||||||||||||||||||
Chairman of the Board | 2015 | 403,750 | 24,808 | 59,320 | 60,315 | -0- | 19,075 (1) | 47,000 (2) | 614,268 | 2018 | 431,000 | 95,000 | 5,000 | 120,000 | 95,000 | 11,000 | (1) | 68,000 | 825,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 357,500 | 27,500 | -0- | 34,549 | 90,000 | 30,625 (1) | 42,000 (2) | 582,174 | 2017 | 431,000 | 66,000 | 17,000 | 105,000 | 90,000 | 14,000 | (1) | 59,000 | 782,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael P. Landy | 2016 | $ | 551,250 | $ | 501,202 | $ | -0- | $ | -0- | $ | 135,000 | $ | -0- | $ | 63,100 (3) | $ | 1,250,552 | 2019 | $ | 827,000 | $ | 105,000 | $ | 391,000 | $ | 77,000 | $ | -0- | $ | -0- | $ | 83,000 | (3) | $ | 1,483,000 | |||||||||||||||||||||||||||||||||||
President and Chief | 2015 | 525,000 | 100,192 | 158,920 | -0- | -0- | -0- | 60,400 (3) | 844,512 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2014 | 500,000 | 82,500 | -0- | -0- | 60,000 | -0- | 55,200 (3) | 697,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President and Chief Executive Officer | 2018 | 788,000 | 160,000 | 211,000 | -0- | 290,000 | -0- | 83,000 | 1,532,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 750,000 | 105,000 | 17,000 | -0- | 130,000 | -0- | 73,000 | 1,075,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin S. Miller | 2016 | $ | 330,637 | $ | 74,329 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 10,600 (7) | $ | 415,567 | 2019 | $ | 492,000 | $ | 105,000 | $ | 5,000 | $ | 65,000 | $ | -0- | $ | -0- | $ | 81,000 | (6) | $ | 748,000 | |||||||||||||||||||||||||||||||||||
Chief Financial and | 2015 | 239,663 | 73,885 | 99,600 | -0- | $ | -0- | -0- | 10,400 (7) | 423,548 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Officer | 2014 | 228,250 | 67,500 | 101,900 | -0- | -0- | -0- | 9,460 (7) | 407,110 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial and Accounting Officer | 2018 | 393,000 | 141,000 | 5,000 | -0- | -0- | -0- | 81,000 | 620,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 374,000 | 81,000 | 17,000 | 58,000 | -0- | -0- | 29,000 | 559,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allison Nagelberg | 2016 | $ | 337,188 | $ | 62,500 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 10,600 (7) | $ | 410,288 | 2019 | $ | 391,000 | $ | 80,000 | $ | -0- | $ | 54,000 | $ | -0- | $ | -0- | $ | 19,000 | (7) | $ | 544,000 | |||||||||||||||||||||||||||||||||||
General Counsel | 2015 | 312,656 | 60,601 | 49,800 | -0- | -0- | -0- | 10,400 (7) | 433,457 | 2018 | 372,000 | 92,000 | -0- | -0- | -0- | -0- | 11,000 | 475,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 252,656 (6) | 52,500 | -0- | -0- | -0- | -0- | 7,140 (7) | 312,296 | 2017 | 354,000 | 63,000 | -0- | 44,000 | -0- | -0- | 11,000 | 472,000 |
Notes:
(1) | Accrual for pension and other benefits of | |
(2) | ||
Represents | ||
(3) | ||
Represents | ||
(4) | ||
The restricted stock values were established based on the number of shares granted as follows, for fiscal | ||
(5) | ||
The fair value of the stock option grant was based on the Black-Scholes valuation model. See | ||
(6) | ||
(7) | Consists of $11,000 in discretionary contributions to our 401(k) Plan allocated to an account of the Named Executive Officer and $8,000 in reimbursement of a disability policy. |
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CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO, Mr. Michael P. Landy:
For Fiscal 2019:
- | The annual total compensation of the employee identified at the median of our company as of September 30, 2019 (other than the CEO) was $191,000; and | |
- | The annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Form 10-K, was $1.5 million. |
Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 7.8 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with the SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay ratios within our industry will also differ and may not be comparable depending on the size, scope, global breadth and structure of the company.
To identify the median employee of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments and estimates that we used were as follows:
- | To identify our median employee, we calculated fiscal 2019 compensation using each employee’s annual base salary, bonuses, value of equity awards and our contributions to applicable retirement plans; | |
- | We determined that, as of September 30, 2019, our employee population, excluding our CEO (“Employee Population”), consisted of 16 individuals; | |
- | With the exception of our CEO, we did not exclude any employees from our Employee Population; | |
- | All employees are located in the United States, and therefore we did not make any cost-of-living adjustments in identifying the median employee; and | |
- | Once the median employee was identified, we calculated the total compensation for our median employee using the same methodology we used to calculate Mr. Michael P. Landy’s total compensation in the Summary Compensation Table for the fiscal year 2019. |
Equity Compensation Plan Information
On July 26,At our Annual Meeting held on May 18, 2017, our common shareholders approved our Amended and Restated 2007 the 2007 Stock Option and StockIncentive Award Plan (the Plan) which extended the term of our 2007 Plan) was approved by the Company’s shareholders authorizing the grant to officers, directors and key employees, of options to purchase up to 1,500,000Incentive Award Plan for an additional 10 years, until March 13, 2027, added 1.6 million shares of common stock. On May 6, 2010,stock to the Company’s shareholders approved an amendmentshare reserve, expanded the types of awards available for grant under the Plan and restatement ofmade other improvements to the 2007 Plan. The amendment
Options to purchase 450,000 shares were granted in fiscal 2019 and restatement made two significant changes: (1) the inclusion of directors as participants in the 2007 Plan and (2) the ability to grant restricted stock to Directors, officers and key employees. The amendment and restatement also made other conforming, technical and other minor changes. The amendment also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.
Optionsoptions to purchase 65,000 shares were granted in 2016 and options to purchase 245,000 shares were exercised during fiscal 2016.2019. In addition, during fiscal 2016, 40,0002019, 25,000 shares of restricted common stock and 5,000 shares of unrestricted common stock were granted at a grant date fair value of $13.64 per share.granted. As of September 30, 2016,2019, the number of shares remaining for future grant under the Plan is 1.2 million.
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The Committee, in its capacity as Plan Administrator shall determine, among other things: the recipients of stockawards; the type and number of awards participants will receive; the terms, conditions and forms of the awards; the times and conditions subject to which awards may be exercised or become vested, deliverable or exercisable, or as to which any restrictions may apply or lapse; and may amend or modify the terms and conditions of an award, except that repricing of options or restrictedStock Appreciation Rights (SAR) is not permitted without shareholder approval.
No participant may receive awards during any calendar year covering more than 200,000 shares of common stock or more than $1.5 million in cash. Regular annual awards granted to non-employee directors as compensation for services as non-employee directors, during any of our fiscal years, may not exceed $100,000 in value of the date of grant, and the grant date value of any special or one-time award upon election or appointment to the Board of Directors may not exceed $200,000.
Awards granted pursuant to the Plan generally may not vest until the first anniversary of the date the award was granted, provided, however, that up to 5% of the Common Shares available under the 2007Plan may be awarded to any one or more Eligible Individuals without the minimum vesting period.
If an award made under the Plan is 444,878.
Options may be grantedforfeited, expires or is converted into shares of another entity in connection with a recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other similar event, or the award is settled in cash, the shares associated with the forfeited, expired, converted or settled award will become available for additional awards under the 2007 PlanPlan.
The term of any time as determined by the Compensation Committee up through March 26, 2017. Nostock option granted under the 2007 Plan shallor SAR generally may not be available for exercise beyond ten years. All options are exercisable after one yearmore than 10 years from the date of grant. The optionexercise price per common share under the 2007 Plan generally may not be below 100% of the fair market value of a common share at the date of grant. Canceled or expired options are added back to the “pool” of shares available under the 2007 Plan.
Under the 2007 Plan, the Compensation Committee determines the recipients of restricted stock awards; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s shareholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant is 100,000.
Grants of Plan-Based Awards
All restricted stock awards granted during fiscal year 20162019 vest 1/5th per year over a five yearfive-year period and all dividends paid on unvested shares are reinvested in additional shares of restricted stock.stock subject to the same vesting schedule. The following table sets forth, for the executive officers named in the Summary Compensation Table, information regarding individual grants of restricted stock and individual grants of stock options made under the 2007 Plan during the fiscal year ended September 30, 2016:2019 (dollars rounded to the nearest thousand):
Name | Grant Date | Number of Shares of Restricted Stock | Number of Shares Underlying Options | Exercise Price of Option Award or Fair Value Per Share at Grant Date of Restricted Stock Award | Grant Date Fair Value | |||||||||||||
Eugene W. Landy | 01/05/16 | -0- | 65,000 | (1) | $ | 10.37 | $ | 48,100 | (2) | |||||||||
Eugene W. Landy | 09/14/16 | 40,000 | -0- | 13.64 | 545,600 |
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Name | Grant Date | All Other Stock Awards; Number of Shares of Restricted Stock (1) | All Other Stock Awards; Number of Shares of Unrestricted Stock (2) | All Other Option Awards; Number of Shares Underlying Options (3) | Exercise Price of Option Award or Fair Value Per Share at Grant Date of Stock Award | Grant Date Fair Value | ||||||||||||||||
Eugene W. Landy | 1/10/19 | -0- | -0- | 65,000 | $ | 12.86 | $ | 70,000 | (4) | |||||||||||||
Eugene W. Landy | 1/16/19 | -0- | 94 | -0- | $ | 12.82 | $ | 1,000 | ||||||||||||||
Eugene W. Landy | 4/2/19 | -0- | 91 | -0- | $ | 13.24 | $ | 1,000 | ||||||||||||||
Eugene W. Landy | 6/18/19 | -0- | 86 | -0- | $ | 14.01 | $ | 1,000 | ||||||||||||||
Eugene W. Landy | 9/12/19 | -0- | 84 | -0- | $ | 14.34 | $ | 1,000 | ||||||||||||||
Michael P. Landy | 10/22/18 | 25,000 | -0- | -0- | $ | 15.45 | $ | 386,000 | ||||||||||||||
Michael P. Landy | 12/10/18 | -0- | -0- | 65,000 | $ | 13.64 | $ | 77,000 | (5) | |||||||||||||
Michael P. Landy | 1/16/19 | -0- | 94 | -0- | $ | 12.82 | $ | 1,000 | ||||||||||||||
Michael P. Landy | 4/2/19 | -0- | 91 | -0- | $ | 13.24 | $ | 1,000 | ||||||||||||||
Michael P. Landy | 6/18/19 | -0- | 86 | -0- | $ | 14.01 | $ | 1,000 | ||||||||||||||
Michael P. Landy | 9/12/19 | -0- | 84 | -0- | $ | 14.34 | $ | 1,000 | ||||||||||||||
Kevin S. Miller | 12/10/18 | -0- | -0- | 55,000 | $ | 13.64 | $ | 65,000 | (5) | |||||||||||||
Kevin S. Miller | 1/16/19 | -0- | 94 | -0- | $ | 12.82 | $ | 1,000 | ||||||||||||||
Kevin S. Miller | 4/2/19 | -0- | 91 | -0- | $ | 13.24 | $ | 1,000 | ||||||||||||||
Kevin S. Miller | 6/18/19 | -0- | 86 | -0- | $ | 14.01 | $ | 1,000 | ||||||||||||||
Kevin S. Miller | 9/12/19 | -0- | 84 | -0- | $ | 14.34 | $ | 1,000 | ||||||||||||||
Allison Nagelberg | 12/10/18 | -0- | -0- | 45,000 | $ | 13.64 | $ | 54,000 | (5) |
(1) | Represents restricted common stock which vests 1/5th every October 22nd over the next five years. Fair value on the date of grant was $15.45 per share. | |
(2) | Comprises an annual directors’ fee paid to Mr. Eugene W. Landy, Mr. Michael P. Landy and Mr. Kevin S. Miller in the form of 355 shares of unrestricted common stock each (1,065 shares total) valued at a weighted average price of $13.58 per share. | |
(3) | These options expire | |
(4) | ||
This value was established using the Black-Scholes stock option valuation model. The following weighted-average assumptions were used in the model: expected volatility of | ||
(5) | This value was established using the Black-Scholes stock option valuation model. The following weighted-average assumptions were used in the model: expected volatility of 17.02%; risk-free interest rate of 2.92%; dividend yield of 4.99%; expected life of options of eight years; and -0- estimated forfeitures. The fair value per share granted was $1.19. The actual value of the options will depend upon our performance during the period of time the options are outstanding and the price of our common stock on the date of exercise. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the Grants of Plan-Based Awards Table was paid or awarded to our named executive officers,Named Executive Officers, are described above under “Compensation Discussion and Analysis” and below under “Employment Agreements.”
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Option Exercises and Stock Vested
The following table sets forth summary information concerning option exercisesoptions exercised and vesting of restricted stock awards for each of the named executive officersNamed Executive Officers during the fiscal year ended September 30, 2016:2019 (dollars rounded to the nearest thousand):
Fiscal Year Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Fiscal Year Ended September 30, 2019 | Fiscal Year Ended September 30, 2019 | |||||||||||||||||||||||||||||||
Option Awards | Restricted Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise (1) ($) | Number of Shares Acquired on Vesting (#) | Value realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise (1) ($) | Number of Shares Acquired on Vesting (#) | Value realized on Vesting ($) | ||||||||||||||||||||||||
Eugene W. Landy | 130,000 | $ | 570,050 | 11,003 | $ | 153,058 | (2) | 65,000 | $ | 267,000 | 11,189 | $ | 161,000 | (2) | ||||||||||||||||||
Michael P. Landy | 50,000 | 131,250 | 9,250 | 127,270 | (3) | -0- | -0- | 7,101 | 105,000 | (3) | ||||||||||||||||||||||
Kevin S. Miller | -0- | -0- | 6,805 | 91,255 | (4) | -0- | -0- | 5,621 | 78,000 | (4) | ||||||||||||||||||||||
Allison Nagelberg | -0- | -0- | 5,106 | 70,844 | (5) | -0- | -0- | 1,224 | 17,000 | (5) |
(1) | Value realized based on the difference between the closing price of the shares on the NYSE as of the date of exercise less the exercise price of the stock option. | |
(2) | ||
Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of | ||
(3) | ||
Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of | ||
(4) | ||
Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of | ||
(5) | ||
Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of |
Outstanding Equity Awards at Fiscal Year End
The following table sets forth for the executive officers named in the Summary Compensation Table, information regarding stock options and restricted stock outstanding at September 30, 2016:2019 (dollars rounded to the nearest thousand):
Fiscal Year Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||
Fiscal Year Ended September 30, 2019 | Fiscal Year Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Option Awards | Restricted Stock Awards | Option Awards | Restricted Stock Awards | |||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option exercise price ($) | Option expiration date | Number of Shares That Have Not Vested | Market Value Of Shares that Have Not Vested (2) | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option exercise price ($) | Option expiration date | Number of Shares That Have Not Vested | Market Value Of Shares that Have Not Vested (3) | ||||||||||||||||||||||||||||||||
Eugene W. Landy | 49,989 | (3) | $ | 713,343 | 20,793 | (4) | $ | 300,000 | ||||||||||||||||||||||||||||||||||||
(1) | -0- | 65,000 | $ | 10.37 | 01/05/24 | |||||||||||||||||||||||||||||||||||||||
-0- | 65,000 | (1) | $ | 12.86 | 01/10/27 | |||||||||||||||||||||||||||||||||||||||
65,000 | -0- | 17.80 | 01/03/26 | |||||||||||||||||||||||||||||||||||||||||
65,000 | -0- | 11.16 | 01/05/23 | 65,000 | -0- | 15.04 | 01/04/25 | |||||||||||||||||||||||||||||||||||||
65,000 | -0- | 8.94 | 01/03/22 | 65,000 | -0- | 10.37 | 01/05/24 | |||||||||||||||||||||||||||||||||||||
65,000 | -0- | 10.46 | 01/03/21 | 65,000 | -0- | 11.16 | 01/05/23 | |||||||||||||||||||||||||||||||||||||
65,000 | -0- | 9.33 | 01/03/20 | 65,000 | -0- | 8.94 | 01/03/22 | |||||||||||||||||||||||||||||||||||||
65,000 | -0- | 8.72 | 01/03/19 | 65,000 | -0- | 10.46 | 01/03/21 | |||||||||||||||||||||||||||||||||||||
65,000 | -0- | 7.22 | 01/05/18 | 65,000 | -0- | 9.33 | 01/03/20 | |||||||||||||||||||||||||||||||||||||
Michael P. Landy | -0- | -0- | $ | -0- | - | 16,675 | (4) | $ | 237,952 | -0- | 65,000 | (2) | $ | 13.64 | 12/10/26 | 41,954 | (5) | $ | 605,000 | |||||||||||||||||||||||||
Kevin S. Miller | -0- | -0- | $ | -0- | - | 20,374 | (5) | $ | 290,737 | -0- | 55,000 | (2) | $ | 13.64 | 12/10/26 | 3,144 | (6) | $ | 45,000 | |||||||||||||||||||||||||
40,000 | -0- | $ | 14.24 | 12/09/24 | ||||||||||||||||||||||||||||||||||||||||
Allison Nagelberg | -0- | -0- | $ | -0- | - | 6,315 | (6) | $ | 90,115 | -0- | 45,000 | (2) | $ | 13.64 | 12/10/26 | 1,239 | (7) | $ | 18,000 | |||||||||||||||||||||||||
30,000 | -0- | $ | 14.24 | 12/09/24 |
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(1) | These options will become exercisable on January | |
(2) | These options will become exercisable on December 10, 2019. | |
Based on the closing price of our common stock on September 30, | ||
(4) | ||
(5) | 3,718 shares vest on July 5, 2020; 251 shares vest on September 14, 2020; 665 shares vest 1/3rd on September 14th over the next | |
(6) | 2,479 shares vest on July 5, 2020 and 665 shares vest 1/3 | |
(7) | ||
Employment Agreements
Eugene W. Landy, the Company’sour Chairman of the Board, executed an Employment Agreement on December 9, 1994, which was amended on June 26, 1997 (the “First Amendment”)(First Amendment), on November 5, 2003 (the “Second Amendment”)(Second Amendment), on April 1, 2008 (the “Third Amendment”)(Third Amendment), on July 1, 2010 (the “Fourth Amendment”)(Fourth Amendment), on April 25, 2013 (the “Fifth Amendment”)(Fifth Amendment), on December 20, 2013 (the “Sixth Amendment”)(Sixth Amendment), on December 18, 2014 (the “Seventh Amendment”)(Seventh Amendment) and on January 12, 2016 (the “Eighth Amendment”)(Eighth Amendment) – collectively, the “Amended Employment Agreement”.Agreement.” Pursuant to the Amended Employment Agreement, Mr. Eugene Landy’s base salary was $410,000 per year, effective January 1, 2015, and was increased pursuant to the Eighth Amendment to $430,500 per year, effective January 1, 2016. He is entitled to receive pension payments of $50,000 per year through 2020; in fiscal 2015, the Company2019, we accrued $19,075$8,000 in additional compensation expense related to the pension benefits. Mr. Eugene Landy’s incentive bonus schedule is detailed in the Fourth Amendment and is based on progress toward achieving certain target levels of growth in market capitalization, funds from operations and dividends per share. Pursuant to the Amended Employment Agreement, Mr. Eugene Landy will receive each year an option to purchase 65,000 shares of the Company’s common stock.Common Shares. Mr. Eugene Landy is entitled to five weeks paid vacation annually, and he is entitled to participate in the Company’sour employee benefit plans.
The Amended Employment Agreement provides for aggregate severance payments of $500,000, payable to Mr. Eugene Landy upon the termination of his employment for any reason in increments of $100,000 per year for five years. He is entitled to disability payments in the event of his disability (as defined in the Amended Employment Agreement) for a period of three years equal to his base salary. The Amended Employment Agreement provides for a death benefit of $500,000, payable to Mr. Eugene Landy’s designated beneficiary. Upon the termination of Mr. Eugene Landy’s employment, following, or as a result of, certain types of transactions that lead to a significant increase in the Company’sour market capitalization, the Amended Employment Agreement provides that Mr. Eugene Landy will receive a grant of 35,000 to 65,000 shares of the Company’s common stock,Common Shares, depending on the amount of the increase in the Company’sour market capitalization, all of his outstanding options to purchase shares of the Company common stockCommon Shares will become immediately vested, and he will be entitled to continue to receive benefits under the Company’sour health insurance and similar plans for one year. In the event of a change in control, of the Company,Mr. Eugene W. Landy shall receive a lump sum payment of $2,500,000,$2.5 million, provided that the sale price of the Company is at least $10 per share of common stock. A change of control is defined as the consummation of a reorganization, merger, share exchange, consolidation, or sale or disposition of all or substantially all of the assets of the Company.our assets. This change of control provision will not apply to any combination between the Companyus and UMH. Payment will be made simultaneously with the closing of the transaction, and only in the event that the transaction closes. The Amended Employment Agreement is terminable by the Company’sour Board of Directors at any time by reason of Mr. Eugene Landy’s death or disability or for cause, which is defined in the Amended Employment Agreement as a termination of the agreement if the Company’sour Board of Directors determines in good faith that Mr. Eugene Landy failed to substantially perform his duties to the Companyus (other than due to his death or disability), or has engaged in conduct the consequences of which are materially adverse to the Company,us, monetarily or otherwise. Upon termination of the Amended Employment Agreement, Mr. Eugene Landy will remain entitled to the disability, severance, death and pension benefits provided for in the Amended Employment Agreement.
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Effective April 9, 2013, Michael P. Landy was appointed President and Chief Executive Officer. Prior to April 9, 2013, Mr. Michael Landy was the Chief Operating Officer. Effective October 1, 2013, the Company and Michael P. Landy entered into a three-year employment agreement with us, under which Mr. Michael Landy received an annual base salary of $500,000 for fiscal year 2014 with increases of 5% for each of fiscal years 2015 and 2016, plus bonuses and customary fringe benefits. Mr. Landy’s incentive bonus schedule is based on progress toward achieving certain target levels of growth in market capitalization, adjusted funds from operations and dividends per share. Mr. Landy also receives four weeks’ vacation, annually. The Company reimburses Mr. Landy for the cost of a disability insurance policy such that, in the event of Mr. Landy’s disability for a period of more than 90 days, Mr. Landy will receive benefits up to 60% of his then-current salary. In the event of a merger, sale or change of voting control of the Company, excluding transactions between the Company and UMH, Mr. Landy will have the right to extend and renew this employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Mr. Landy may terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there is a termination of employment by the Company or by Mr. Landy for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Mr. Landy shall be entitled to the greater of the base salary due under the remaining term of the agreement or two years’ compensation at the date of termination, paid monthly over the remaining term or life of the agreement.
On January 11, 2016, the Companywe entered into an amended and restated Employment Agreement (“Employment Agreement”)(Employment Agreement) with Mr. Michael P. Landy, which became effective October 1, 2016. Upon signing the Employment Agreement, Mr. Michael Landy received a signing bonus of $400,000 in recognition of the substantial progress that the Company haswe have made under his leadership. Effective October 1, 2016, Mr. Michael Landy receives an annual base salary of $750,000 for fiscal year 2017 with increases of 5% for each of fiscal years 2018, 2019, 2020 and 2021, plus targeted bonuses and customary fringe benefits. The Employment Agreement has an initial term of five years, and is renewed automatically for a new five-year term on the first day of each calendar quarter after the effective date unless otherwise terminated. For fiscal years after 2021, Mr. Michael Landy’s base salary shall be set by the Compensation Committee of the Company’sour Board of Directors but will be no less than his base salary for the preceding year. Mr. Michael Landy will receive annual cash bonuses based on the Company’sour achievement of certain performance objectives as determined by the Compensation Committee: a) Growth in Market Cap of 10%, 15% or 20%, Mr. Michael Landy will receive $40,000, $60,000 or $80,000, respectively; b) Growth in AFFO per share of 5%, 10%, 15%, or 20%, Mr. Michael Landy will receive $50,000, $75,000, $100,000 or $150,000, respectively; and c) Growth in Dividend per Share of 5%, 10% or 15%, Mr. Michael Landy will receive $150,000, $200,000 or $250,000, respectively. Mr. Michael Landy will also be entitled to equity awards of up to 25,000 shares of restricted stock each year based on achievement of performance objectives as determined by the Compensation Committee. Mr. Michael Landy also receives four weeks’weeks vacation annually and he is entitled to customary fringe benefits including life insurance, health benefits and the right to participate in the Company’sour 401(k) retirement plan. The Company reimbursesWe reimburse Mr. Michael Landy for the cost of a disability insurance policy such that, in the event of Mr. Michael Landy’s disability for a period of more than 90 days, Mr. Michael Landy will receive benefits up to 60% of his then-current salary. Under the Employment Agreement, if Mr. Michael Landy’s employment is terminated for any reason, either voluntarily or involuntarily, including the death of Mr. Michael Landy or termination for cause, Mr. Michael Landy shall be entitled to the base salary plus base target bonuses due under the Employment Agreement for the remaining term of the Employment Agreement (as it has been renewed). The Employment Agreement also provides that, upon a change of control of the Company (as defined below), the Employment Agreement will automatically renew for five years from the date of the change in control and Mr. Michael Landy shall have the right to terminate the Employment Agreement and continue to receive the base salary plus base target bonuses and restricted stock awards he would have been entitled to receive during the remaining term of the Employment Agreement. In addition, provided that Mr. Michael Landy is actively employed by the Companyus as of the consummation of a change of control, Mr. Michael Landy shall be entitled to a transaction bonus consistent with the terms of any applicable transaction bonus plan that the Companywe may adopt. The term “Change of Control” under Mr. Michael Landy’s amended employment agreement means (i) a sale of substantially all of the Company’sour assets, not in the ordinary course, to an unaffiliated third party, (ii) the transfer, in one transaction or a series of transactions, to an unaffiliated third party, of outstanding shares of the Company’sour capital stock representing a majority of the then outstanding voting stock, (iii) a majority of the Company’sour Directors ceasing to be individuals who either were members of the Board immediately following the Company’sour 2014 Annual Meeting of Shareholders, or whose election as a director was approved by a majority of such incumbent directors or their approved successors, (iv) a merger or consolidation having the same effect as item (i), (ii) or (iii) above or (iv) any other event of a nature that would be required to be reported as a change of control in item 5.01 of Form 8-K under the Securities Exchange Act of 1934, as amended (or any successor provision thereto).
Effective January 1, 2013, the Company and2016, Kevin S. Miller Chief Financial and Accounting Officer, entered into a three-year employment agreement with us, under which Mr. Miller received an annual base salary of $220,000$360,000 for calendar year 20132016 with increases of 5% for each of calendar years 20142017 and 2015,2018, plus bonuses and customary fringe benefits. Effective January 1, 2019, Kevin S. Miller entered into a new three-year employment agreement with us, under which Mr. Miller also receivedwill receive an annual base salary of $520,000 for calendar year 2019 with increases of 5% for each of calendar years 2020 and 2021, plus bonuses and customary fringe benefits. Pursuant to the 2019 employment agreement, Mr. Miller will receive annual cash bonuses based on our achievement of certain performance objectives as determined by the Compensation Committee: a) Growth in Equity Market Cap of 10%, 15% or 20%, Mr. Miller will receive $20,000, $30,000 or $40,000, respectively; b) Growth in AFFO per diluted share of 5%, 10%, 15%, or 20%, Mr. Miller will receive $25,000, $37,500, $50,000 or $75,000, respectively, and c) Growth in Dividend per Share of 5%, 10% or 15%, Mr. Miller will receive $75,000, $100,000 or $125,000, respectively, and Mr. Miller will be entitled to equity awards of up to 12,500 shares of restricted stock each year based on achievement of performance objectives as determined by the Compensation Committee. Other than base salary and the provisions for cash bonuses based on our achievement of certain performance objectives, the provisions of Mr. Miller’s employment agreement dated January 1, 2019 are the same as the provisions of his employment agreement date January 1, 2016. Mr. Miller receives four weeks’weeks vacation, annually. The Company reimbursedWe reimburse Mr. Miller for the cost of a disability insurance policy such that, in the event of Mr. Miller’s disability for a period of more than 90 days, Mr. Miller will receive benefits up to 60% of his then-current salary. In the event of a merger, sale or change of voting control, of the Company, excluding transactions between the Company and UMH, Mr. Miller would have had the right to extend and renew this employment agreement so that the expiration date would have been three years from the date of merger, sale or change of voting control, or Mr. Miller could terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there were a termination of employment by the Company or by Mr. Miller for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Mr. Miller was entitled to one year’s base salary at the date of termination, paid monthly over the remaining term or life of the agreement.
Effective January 1, 2016, the Company and Kevin S. Miller, entered into a new three-year employment agreement, under which Mr. Miller will receive an annual base salary of $360,000 for calendar year 2016 with increases of 5% for each of calendar years 2017 and 2018, plus bonuses and customary fringe benefits. Mr. Miller also receives four weeks’ vacation, annually. The Company reimburses Mr. Miller for the cost of a disability insurance policy such that, in the event of Mr. Miller’s disability for a period of more than 90 days, Mr. Miller will receive benefits up to 60% of his then-current salary. In the event of a merger, sale or change of voting control of the Company, excluding transactions between the Companyus and UMH, Mr. Miller will have the right to extend and renew the employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Mr. Miller may terminate the employment agreement and be entitled to receive the greater of the base salary due under the remaining term of the agreement or one year’s base salary at the date of termination, paid monthly over the remaining term or life of the agreement. If there is a termination of employment by the Companyus or by Mr. Miller for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Mr. Miller shall be entitled to the greater of the base salary due under the remaining term of the agreement or one year’s base salary at the date of termination, paid monthly over the remaining term or life of the agreement. In August 2019, Mr. Miller entered into an Amended and Restated Employment Agreement (the “Amended Agreement”) to amend Mr. Miller’s Employment agreement that was originally effective on January 1, 2019. The Amended Agreement eliminates the “single-trigger” severance provisions of Mr. Miller’s employment agreement by modifying the circumstances under which a termination severance package would be paid to Mr. Miller. Under the Amended Agreement, a severance package will only be paid to Mr. Miller if there is a termination of employment by us without cause, a termination of employment by Mr. Miller for “good reason,” or his death or disability. The Amended Agreement defines “good reason” to mean the occurrence of any of the following, without Mr. Miller’s consent: (1) a material diminution in responsibilities, duties or authority; (2) a material reduction in base salary; (3) mandatory relocation of more than 50 miles; or (4) our breach of the Amended Agreement or any other material agreement between us and Mr. Miller.
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Effective January 1, 2014, the Company and2017, Ms. Allison Nagelberg General Counsel, entered into a new three-year employment agreement with us, under which Ms. Nagelberg receives an annual base salary of $275,625$358,313 for calendar year 2014, $325,0002017, with increases of 5% for each of calendar year 2015,years 2018 and $341,250 for calendar year 2016,2019, plus bonuses and customary fringe benefits. Under the employment agreement, Ms. Nagelberg also receives four weeks’weeks vacation, annually. The Company reimbursesWe reimburse Ms. Nagelberg for the cost of a disability insurance policy such that, in the event of Ms. Nagelberg’s disability for a period of more than 90 days, Ms. Nagelberg will receive benefits up to 60% of her then-current salary. In the event of a merger, sale or change of voting control, of the Company, excluding transactions between the Companyus and UMH, Ms. Nagelberg will have the right to extend and renew this employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Ms. Nagelberg may terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there is a termination of employment by the Companyus or Ms. Nagelberg for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Ms. Nagelberg shall be entitled to the greater of the base salary due under the remaining term of the agreement or one year’s compensation at the date of termination, paid monthly over the remaining term or life of the agreement.
Potential Payments upon Termination of Employment or Change-in-Control
Under the employment agreements with our President and Chief Executive Officer and the other named executive officersNamed Executive Officers listed below, our President and Chief Executive Officer and such other named executive officersNamed Executive Officers are entitled to receive the following estimated payments and benefits upon a termination of employment or voluntary resignation (with or without a change-in-control). These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers,Named Executive Officers, which would only be known at the time that they become eligible for payment and would only be payable if a termination of employment, or voluntary resignation, were to occur. The table below reflects the amount that could be payable under the various arrangements assuming that the termination of employment had occurred at September 30, 2016.2019. Each of the employees named in the table below have restricted stock awards and/or stock option awards which are listed in the “Outstanding Equity Awards at Fiscal Year End” table previously disclosed. Restricted Stock Awards vest upon the termination of an employee due to death or disability. In addition, restricted stock awards vest on the date of an involuntary termination of employment with the Companyor if the employee retires. If the termination of employment is for any other reason, including voluntary resignation, termination not for cause or good reason resignation, termination for cause, or termination not for cause or good reason (after a change in control), the restricted stock awards are forfeited. Regarding the stock option awards, if the termination is for any reason other than a termination for cause, the stock option awards may be exercised until three months after the termination of employment. If the termination is for cause, the stock option awards are forfeited. The table below reflects all dollar amounts in thousands.
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Voluntary Resignation on 9/30/16 | Termination Not for Cause Or Good Reason Resignation on 9/30/16 | Termination For Cause on 9/30/16 | Termination Not for Cause or Good Reason Resignation (After a Change-in-Control) on 9/30/16 | Disability/ Death on 9/30/16 | Voluntary Resignation on 9/30/19 | Termination Not for Cause Or Good Reason Resignation on 9/30/19 | Termination For Cause on 9/30/19 | Termination Not for Cause or Good Reason Resignation (After a Change-in-Control) on 9/30/19 | Disability/ Death on 9/30/19 | |||||||||||||||||||||||||||||||
Eugene W. Landy | $ | 527,958 | (3) | $ | 527,958 | (3) | $ | 508,279 | (2) | $ | 3,027,959 | (4) | $ | 1,819,459 | (5) | $ | 533 | (3) | $ | 533 | (3) | $ | 508 | (2) | $ | 3,033 | (4) | $ | 1,824 | (5) | ||||||||||
Michael P. Landy | 4,144,217 | (6) | 4,144,217 | (6) | 4,144,217 | (6) | 4,144,217 | (6) | 4,144,217 | (6) | 4,515 | (6) | 4,515 | (6) | 4,515 | (6) | 4,515 | (6) | 4,515 | (6) | ||||||||||||||||||||
Kevin S. Miller | 864,900 | (7) | 864,900 | (7) | 6,923 | (1) | 864,900 | (7) | 864,900 | (7) | 10 | (1) | 1,249 | (7) | 10 | (1) | 1,249 | (7) | 1,249 | (7) | ||||||||||||||||||||
Allison Nagelberg | 341,250 | (8) | 341,250 | (8) | 6,563 | (1) | 341,250 | (8) | 341,250 | (8) | 514 | (8) | 514 | (8) | 8 | (1) | 514 | (8) | 514 | (8) |
(1) | Consists of accrued vacation time, which would be payable in a lump sum payment. | |
(2) | ||
Consists of severance payments of $500,000, payable $100,000 per year for | ||
(3) | ||
Consists of severance payments of $500,000, payable $100,000 per year for | ||
(4) | ||
Mr. Eugene W. Landy shall receive a lump-sum payment of | ||
(5) | ||
In the event of a disability, as defined in the agreement, Mr. Eugene W. Landy shall receive disability payments equal to his base salary for a period of three years, continuation of benefits for one year following termination and accrued vacation. He has a death benefit of $500,000 payable in a lump sum to Mr. Eugene W. Landy’s beneficiary. | ||
(6) | ||
Payments are calculated based on Mr. Michael P. Landy’s amended and restated employment agreement, which became effective October 1, 2016, which is the base salary due under the remaining term of the agreement. | ||
(7) | ||
Payments are calculated based on Mr. Kevin S. Miller’s employment agreement, which is the greater of the base salary due under the remaining term of the agreement or one year’s base salary at the date of termination. | ||
(8) | ||
Payments are calculated based on Ms. Allison Nagelberg’s employment agreement, which is the greater of the base salary due under the remaining term of the agreement or one year’s compensation at the date of termination. |
The Company retains the discretion to compensate any officer upon any future termination of employment or a change-in-control. Compensation Risk
The Compensation Committee has assessed our compensation program for the purpose of viewing and considering any risks presented by our compensation policies and practices that are likely to have a material adverse effect on us. As part of that assessment, managementwe reviewed the primary elements of our compensation program, including base salary, annual bonus opportunities, equity compensation and severance arrangements. Management’sOur risk assessment included a review of the overall design of each primary element of our compensation program, and an analysis of the various design features, controls and approval rights in place with respect to compensation paid to management and other employees that mitigate potential risks to us that could arise from our compensation program. Following the assessment, managementwe determined that our compensation policies and practices did not create risks that were reasonably likely to have a material adverse effect on us and reported the results of the assessment to the Compensation Committee.
Director Compensation
Effective September 1, 2013, Directors received aOur directors are entitled to an annual cash directors’ fee of $4,000$48,000, plus an additional amount to be paid in our unrestricted common stock valued at $5,000 for a total annual directors’ fee of $53,000. This annual directors’ fee will be paid quarterly. Our directors also receive a meeting attendance fee of $5,000 for each Board meeting attended in person, and $500 for each telephonic Board telephone meeting attended, and an additional fixed annual fee of $26,000 payable quarterly.attended. Directors appointed to boardBoard committees receive $1,200 for each committee meeting attended. Effective January 1, 2015, the Directors annual fee increased from $26,000 to $31,000. Effective September 12, 2016, the Directors annual fee increased from $31,000 to $41,000. All other fees remained the same.
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The table below sets forth a summary of director compensation for the fiscal year ended September 30, 2016:2019 (rounded to the nearest thousand):
Annual Board Cash | Meeting | Committee | Total Fees Earned or Paid | Annual Board Cash | Meeting | Committee | Unrestricted Stock | |||||||||||||||||||||||||||||
Director | Retainer | Fees | Fees | in Cash | Retainer | Fees | Fees | Awards (7) | Total Fees | |||||||||||||||||||||||||||
Anna T. Chew | $ | 33,500 | $ | 16,000 | $ | -0- | $ | 49,500 | ||||||||||||||||||||||||||||
Kiernan Conway | $ | 48,000 | $ | 20,000 | $ | -0- | $ | 5,000 | $ | 73,000 | ||||||||||||||||||||||||||
Daniel D. Cronheim | 33,500 | 16,000 | -0- | 49,500 | 48,000 | 20,000 | -0- | 5,000 | 73,000 | |||||||||||||||||||||||||||
Catherine B. Elflein | 33,500 | 16,000 | 4,800 | 54,300 | 48,000 | 20,000 | 5,000 | 5,000 | 78,000 | |||||||||||||||||||||||||||
Brian H. Haimm | 33,500 | 16,000 | 6,500 | 56,000 | 48,000 | 20,000 | 6,000 | 5,000 | 79,000 | |||||||||||||||||||||||||||
Neal Herstik | 33,500 | 16,000 | -0- | 49,500 | 48,000 | 20,000 | -0- | 5,000 | 73,000 | |||||||||||||||||||||||||||
Matthew I. Hirsch (2)(3)(4)(5) | 33,500 | 16,000 | 6,000 | 55,500 | ||||||||||||||||||||||||||||||||
Charles Kaempffer (1) | 15,500 | 8,000 | 2,400 | 25,900 | ||||||||||||||||||||||||||||||||
Matthew I. Hirsch (1)(3)(4)(5) | 48,000 | 20,000 | 6,000 | 5,000 | 79,000 | |||||||||||||||||||||||||||||||
Samuel A. Landy | 33,500 | 16,000 | -0- | 49,500 | 48,000 | 20,000 | -0- | 5,000 | 73,000 | |||||||||||||||||||||||||||
Gregory T. Otto (1)(2)(3)(4)(5) | 48,000 | 20,000 | 3,000 | 5,000 | 76,000 | |||||||||||||||||||||||||||||||
Scott L. Robinson | 33,500 | 16,000 | 4,800 | 54,300 | 48,000 | 20,000 | 5,000 | 5,000 | 78,000 | |||||||||||||||||||||||||||
Eugene Rothenberg (1) | 15,500 | 8,000 | -0- | 23,500 | ||||||||||||||||||||||||||||||||
Stephen B. Wolgin (2)(3)(4)(5)(6) | 33,500 | 16,000 | 6,000 | 55,500 | ||||||||||||||||||||||||||||||||
Stephen B. Wolgin | 48,000 | 20,000 | 4,000 | 5,000 | 77,000 | |||||||||||||||||||||||||||||||
Total | $ | 332,500 | $ | 160,000 | $ | 30,500 | $ | 523,000 | $ | 480,000 | $ | 200,000 | $ | 29,000 | $ | 50,000 | $ | 759,000 |
Mr. Eugene W. Landy, and Mr. Michael P. Landy and Mr. Kevin S. Miller are named executive employees of the Company.Named Executive Officers. As such, their director compensation is included in the Summary Compensation Table.
(1) | ||
(2) | The Cybersecurity Committee for 2019 consisted of Mr. Otto (Chairman) and Ms. Elflein. | |
These directors acted as chairs of the Board’s Audit, Cybersecurity, Compensation and Nominating and Governance Committees. | ||
(4) | ||
(5) | ||
(6) | ||
Mr. | ||
(7) | Comprises an annual directors’ fee paid in the form of 3,550 unrestricted shares of common stock valued at a weighted average price of $13.58 per share. |
Pension Benefits and Nonqualified Deferred Compensation Plans
Except as provided in the specific employment agreement for Mr. Eugene W. Landy, as described above, the Company doeswe do not have pension or other post-retirementpost-employment plans in effect for officers, directors or employees or a nonqualified deferred compensation plan. The present value of accumulated benefit of contractual pension benefits for Mr. Eugene W. Landy is $618,974$502,000 as of September 30, 2016.2019. Payments made during the 20162019 fiscal year were $50,000. HeMr. Eugene W. Landy is entitled to receive pension payments of $50,000 per year through 2020. The Company’sOur employees may elect to participate in theour 401(k) plan, of UMH Properties, Inc.which is administered by UMH.
Other Information
Daniel D. Cronheim is a director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $49,500, $47,000 and $42,000 for director’s fees in fiscal 2016, 2015 and 2014, respectively. The Company paid fees to The David Cronheim Mortgage Corporation, an affiliated company of CMSI, of $-0-, $196,000 and $140,000 in mortgage brokerage commissions in fiscal years 2016, 2015 and 2014, respectively.
Compensation Committee Interlocks and Insider Participation
During fiscal 2016,As of September 30, 2019, the Compensation Committee consisted of Messrs. Haimm (Chairman), Hirsch and Wolgin.Otto. No member of the Compensation Committee is a current or former officer or employee of the Company. In fiscal 2016,2019, none of our executive officers served on the compensation committee of any entity, or board of directors of any entity that did not have a compensation committee, that had one or more of its executive officers serving on our Compensation Committee. The members of the Compensation Committee did not otherwise have any relationships requiring related-party disclosure in the Company’s Proxy Statement.our Annual Report.
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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table lists information with respect to the beneficial ownership of the Company’sour common and preferred stock (the Common Shares) as of September 30, 20162019 by:
● | each person known by | |
● | our directors; | |
● | our executive officers; and | |
● | ||
all of |
Unless otherwise indicated, the address of the person or persons named below is c/o Monmouth Real Estate Investment Corporation, Juniper Business Plaza, 3499 Route 9 North,Bell Works, 101 Crawfords Corner Road, Suite 3-D, Freehold,1405, Holmdel, New Jersey 07728.07733, In determining the number and percentage of Shares beneficially owned by each person, Shares that may be acquired by that person under options exercisable within sixty (60) days of September 30, 20162019 are deemed beneficially owned by that person and are deemed outstanding for purposes of determining the total number of outstanding Common Shares for that person and are not deemed outstanding for that purpose for all other shareholders.
Name and Address | Amount and Nature Ownership (1) | Percentage of Common Shares Outstanding(2) | ||||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | 7,324,264 | (3) | 10.63 | % | ||||
BlackRock Inc. 40 East 52ndStreet New York, NY 10022 | 4,272,124 | (4) | 6.20 | % | ||||
Anna T. Chew | 362,411 | (5) | * | |||||
Daniel D. Cronheim | 170,950 | (6) | * | |||||
Catherine B. Elflein | 10,686 | (7) | * | |||||
Brian H. Haimm | 11,560 | (8) | * | |||||
Neal Herstik | 16,312 | (9) | * | |||||
Matthew I. Hirsch | 74,165 | (10) | * | |||||
Eugene W. Landy | 1,980,805 | (11) | 2.86 | % | ||||
Michael P. Landy | 580,781 | (12) | * | |||||
Samuel A. Landy | 343,821 | (13) | * | |||||
Kevin S. Miller | 38,133 | (14) | * | |||||
Allison Nagelberg | 70,203 | (15) | * | |||||
Scott Robinson | 6,857 | (16) | * | |||||
Katie Rytter | 8,129 | (17) | * | |||||
Stephen B. Wolgin | 60,570 | (18) | * | |||||
Directors and Executive Officers as a group | 3,735,383 | 5.39 | % |
Common Shares | Series C Preferred Shares | |||||||||||||||
Name and Address | Amount and Nature Ownership (1) | Percentage of Common Shares Outstanding (2) | Amount and Nature Ownership (1) | Percentage of Preferred Shares Outstanding (3) | ||||||||||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 (4) | 9,615,263 | 9.76 | % | |||||||||||||
BlackRock, Inc. 40 East 52nd Street New York, NY 10022 (5) | 8,597,437 | 8.92 | % | |||||||||||||
Wasatch Financial Advisors 505 Wakara Way, 3rd Floor Salt Lake City, UT 84108 (6) | 8,189,208 | 8.50 | % | |||||||||||||
Kiernan Conway | 436 | * | ||||||||||||||
Daniel D. Cronheim (7) | 175,728 | * | ||||||||||||||
Catherine B. Elflein (8) | 16,574 | * | ||||||||||||||
Brian H. Haimm (9) | 15,957 | * | ||||||||||||||
Neal Herstik (10) | 22,991 | * | 2,800 | * | ||||||||||||
Matthew I. Hirsch (11) | 79,323 | * | ||||||||||||||
Eugene W. Landy (12) | 2,091,605 | 2.16 | % | |||||||||||||
Michael P. Landy (13) | 698,199 | * | ||||||||||||||
Samuel A. Landy (14) | 357,289 | * | ||||||||||||||
Kevin S. Miller (15) | 89,566 | * | ||||||||||||||
Allison Nagelberg (16) | 123,192 | * | ||||||||||||||
Gregory T. Otto | 2,283 | * | ||||||||||||||
Scott L. Robinson (17) | 9,285 | * | ||||||||||||||
Stephen B. Wolgin (19) | 80,672 | * | 13,013 | * | ||||||||||||
Directors and Executive Officers as a group | 3,763,100 | 3.88 | % | 16,183 | * |
*Less than 1%.
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(1) | Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the Company believes that the persons named in the table have sole voting and investment power with respect to all Common Shares listed. | |
(2) | Based on the number of Common Shares outstanding on September 30, | |
(3) | Based on the number of Preferred Shares outstanding on September 30, 2019, which was 13,907,122. | |
(4) | Based on Schedule | |
Based on Schedule 13F filed with the SEC, BlackRock Inc. owns | ||
Includes (a) | ||
Includes (a) | ||
Includes | ||
Includes (a) | ||
Includes | ||
(12) | ||
Includes (a) | ||
Includes (a) | ||
Includes (a) | ||
Includes (a) | ||
Includes (a) | ||
(17) | Includes 916 shares of unvested restricted stock. | |
(18) | Includes (a) 916 shares of unvested restricted stock; (b) 4,436 Common Shares owned by Mr. Wolgin’s wife. The 13,013 shares of the Company’s 6.125% Series C Preferred Stock indicated in the table above includes (i)12,013 shares owned by Mr. Wolgin, of which 8,623 are pledged in a margin account and (ii) 1,000 shares owned by Mr. Wolgin’s wife. |
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Equity Compensation Plan Information
At our Annual Meeting held on May 18, 2017, our common shareholders approved our Amended and Restated 2007 Incentive Award Plan (the Plan) which extended the term of our 2007 Incentive Award Plan for an additional 10 years, until March 13, 2027, added 1.6 million shares of common stock to the share reserve, expanded the types of awards available for grant under the Plan and made other improvements to the 2007 Plan. As of September 30, 2019, there were 1.2 million shares available for grant as stock options, restricted stock and other equity-based awards under the Plan. During fiscal 2019, options to purchase 450,000 shares were granted with a weighted average exercise price of $13.53 and options to purchase 65,000 shares were exercised at an exercise price of $8.72 per share for total proceeds of $567,000. In addition, during fiscal 2019, 25,000 shares of restricted common stock were granted with a fair value on the grant date of $15.45 per share. In addition, during fiscal 2019, 5,000 unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $13.58 per share. See Note 9 in the Notes to the Consolidated Financial Statements included in this Form 10-K for a description of the plan. See Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters for a table of beneficial ownership of our common stock.
The following table summarizes information, as of September 30, 2019, relating to our equity compensation plan (including individual compensation arrangements) pursuant to which our equity securities are authorized for issuance:
Number of Securities (In Thousands) to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities (In Thousands) Remaining Available for Future Issuance Under Equity Compensation Plan (excluding Securities reflected in column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity Compensation Plan Approved by Security Holders | 1,080 | $ | 12.95 | 1,192 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | -0- | -0- | -0- | |||||||||
Total | 1,080 | $ | 12.95 | 1,192 |
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR DEPENDENCEINDEPENDENCE
There are no family relationships between any of theour directors or executive officers, of the Company, except that Samuel A. Landy, a director of the Company, and Michael P. Landy, President, Chief Executive Officer, and a director, of the Company, are the sons of Eugene W. Landy, the Chairman of the Board and a directoran Executive Director.
Five of the Company.
Daniel D. Cronheim is a director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $49,500, $47,000 and $42,000 for director’s fees in fiscal 2016, 2015 and 2014, respectively. The David Cronheim Mortgage Corporation, an affiliated company of CMSI, received $-0-, $196,000 and $140,000 in mortgage brokerage commissions in fiscal 2016, 2015 and 2014, respectively, from the Company.
Sixour 13 directors of the Company are also directors and shareholders of UMH. The Company holdsWe hold common and preferred stock of UMH in itsour securities portfolio. See Note 6 of the Notes to the Consolidated Financial Statements included in this Form 10-K for current holdings. During fiscal 2016, the Company2019, we made total purchases of 77,45668,000 common shares of UMH for a total cost of $777,588,$874,000, or a weighted average cost of $10.04$12.78 per share, of which 67,456 shares were purchased through UMH’s Dividend Reinvestment and Stock Purchase Plan. We owned a total of 1.3 million UMH common shares as of September 30, 2019 at a total cost of $12.9 million and a fair value of $17.7 million representing 3.1% of the outstanding common shares of UMH. In addition, the Company made total purchasesas of September 30, 2019, we owned 100,000 shares of UMH’s 8.00% Series B Cumulative Redeemable Preferred Stock at a total cost of $2,500,000.$2.5 million with a fair value of $2.6 million. The unrealized gain on our investment in UMH’s common and preferred stock as of September 30, 2019 was $4.9 million. During fiscal 2016,2019, UMH made total purchases of 120,098127,000 of our common shares of the Company through the Company’sour DRIP for a total cost of $1,348,141,$1.7 million, or a weighted average cost of $11.23$13.13 per share.
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The Company currently has thirteenAs of September 30, 2019, we had 16 full-time employees and one part-time employee. One of the Company’s employees (Director of Investor Relations, promoted to Vice President of Investor Relations in June 2015) was shared with UMH through September 30, 2015. Through September 30, 2015, the Vice President of Investor Relations’ salary was allocated 70% to the Company and 30% to UMH based on the time she worked for each entity. Effective October 1, 2015, the Vice President of Investor Relations began working solely for the Company at which point the Company no longer allocates any portion of her salary to UMH. In addition, the Company’sOur Chairman of the Board is also the Chairman of the Board of UMH. Effective as of October 1, 2015, otherOther than the Company’sour Chairman of the Board, the Company doeswe do not share any employees with UMH.
On August 22, 2014, the Company entered into a seven-yearEffective September 30, 2019, we terminated our lease agreementpertaining to occupy 5,680 square feet for the Company’s corporate office space. Theour former corporate office space is located in a new separate suite located in the same building as the Company’s former corporate office space. The lease became effective January 12, 2015, at which time, the Company ceased to share rent expense with UMH. Rent for the Company’s corporate office space is at an annual rate of $99,400 or $17.50 per square foot for years one through five and an annual rate of $100,820 or $17.75 per square foot for years six and seven. The Company is also responsible for its proportionate share of real estate taxes and common area maintenance.Freehold, NJ. Mr. Eugene W. Landy, the Founder and Chairman of the Board, of the Company, owns a 24% interest in the entity that is the landlord of thethis property where the Company’slocated in Freehold, NJ. UMH’s corporate office space is located.offices remain in Freehold, NJ. Effective September 18, 2019, MREIC moved its corporate offices to Holmdel, NJ.
No director, executive officer, or any immediate family member of such director or executive officer may enter into any transaction or arrangement with the Companyus without the prior approval of the Board of Directors. If any such transaction or arrangement is proposed, the Board of Directors will appoint a Business Judgment Committee consisting of independent directors who are also independent of the transaction or arrangement. This Committee will recommend to the Board of Directors approval or disapproval of the transaction or arrangement. In determining whether to approve such a transaction or arrangement, the Business Judgment Committee will take into account, among other factors, whether the transaction was on terms no less favorable to the Companyus than terms generally available to third parties and the extent of the executive officer’s or director’s involvement in such transaction or arrangement. While the Company doeswe do not have specific written standards for approving such related party transactions, such transactions are only approved if it is in our best interest or in the best interest of the Company and itsour shareholders. Additionally, the Company’sour Code of Business Conduct and Ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify the Company’sour General Counsel. Further, to identify related party transactions, the Company submitswe submit and requiresrequire our directors and executive officers to complete director and officer questionnaires identifying any transactions with the Companyus in which the director, executive officer or their immediate family members have an interest.
See identification and other information relating to independent directors under Item 10.
ITEM 14 - PRINCIPAL ACCOUNTINGACCOUNTANT FEES AND SERVICES
PKF O’Connor Davies, LLP served as the Company’sour independent registered public accountants for the years ended September 30, 20162019 and 2015.2018. A representative from PKF O’Connor Davies, LLP is expected to be present at the annual shareholders’ meeting in order to be available to respond to possible inquiries from shareholders’.shareholders.
The following are fees billed by and accrued to PKF O’Connor Davies, LLP in connection with services rendered for the fiscal years ended September 30, 20162019 and 2015:2018 (in thousands):
2016 | 2015 | 2019 | 2018 | |||||||||||||
Audit Fees | $ | 210,400 | $ | 203,450 | $ | 233 | $ | 225 | ||||||||
Audit Related Fees | 32,100 | 4,200 | 50 | 31 | ||||||||||||
Tax Fees | 54,400 | 47,500 | 53 | 51 | ||||||||||||
All Other Fees | -0- | -0- | -0- | -0- | ||||||||||||
Total Fees | $ | 296,900 | $ | 255,150 | $ | 336 | $ | 307 |
Audit fees include professional services rendered for the audit of the Company’sour annual financial statements, management’s assessment of internal controls, and reviews of financial statements included in the Company’sour quarterly reports on Form 10-Q.
Audit related fees include services that are normally provided by the Company’sour independent auditors in connection with statutory and regulatory filings, such as consents and assistance with and review of documents filed with the Securities and Exchange Commission.
Tax fees include professional services rendered for the preparation of the Company’sour federal and state corporate tax returns and supporting schedules as may be required by the Internal Revenue Service and applicable state taxing authorities. Tax fees also include other work directly affecting or supporting the payment of taxes, including planning and research of various tax issues.
All of the services performed by PKF O’Connor Davies, LLP for the Companyus during fiscal 20162019 were either expressly pre-approved by the Audit Committee or were pre-approved in accordance with the Audit Committee Pre-Approval Policy, and the Audit Committee was provided with regular updates as to the nature of such services and fees paid for such services.
Audit Committee Pre-Approval Policy
The Audit Committee has adopted a policy for the pre-approval of audit and permitted non-audit services provided by the Company’sour principal independent accountants. The policy requires that all services provided by our independent registered public accountants to the Company,us, including audit services, audit-related services, tax services and other services, must be pre-approved by the Audit Committee, and all have been so approved. The pre-approval requirements do not prohibit day-to-day normal tax consulting services, which matters will not exceed $10,000 in the aggregate.
The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining PKF O’Connor Davies, LLP’s independence.
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ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PAGE(S) | |||
(a) | (1) | The following Financial Statements are filed as part of this report: | |
(i) | Report of Independent Registered Public Accounting Firm | ||
(ii) | Consolidated Balance Sheets as of September 30, | ||
(iii) | Consolidated Statements of Income for the years ended September 30, | ||
(iv) | Consolidated Statements of Comprehensive Income for the years ended September 30, | ||
(v) | Consolidated Statements of Shareholders’ Equity for the years ended September 30, | ||
(vi) | Consolidated Statements of Cash Flows for the years ended September 30, | ||
(vii) | Notes to the Consolidated Financial Statements | ||
(a) | (2) | The following Financial Statement Schedule is filed as part of this report: | |
(i) | Schedule III - Real Estate and Accumulated Depreciation as of September 30, |
All other schedules are omitted for the reason that they are not required, are not applicable, or the required information is set forth in the Consolidated Financial Statements or Notes hereto.
92 |
ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES (CONT’D)
(a)(3) | Exhibits | |
(2) | Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession | |
2.1 |
| |
Agreement and Plan of Merger Among Monmouth Capital Corporation, Monmouth Real Estate Investment Corporation, and Route 9 Acquisition, Inc., dated as of March 26, 2007 (incorporated by reference Annex A to the Proxy Statement filed by the Registrant with the Securities and Exchange Commission on June 8, 2007, Registration No. 001-33177). | ||
(3) | Articles of Incorporation and By-Laws | |
3.1 | ||
| ||
Articles of Amendment, effective April 21, 2010 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission, on April 19, 2010, Registration No. 001-33177). | ||
Articles of Amendment, effective March 7, 2011 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission on March 3, 2011, Registration No. 001-33177). | ||
Articles of Amendment, effective January 26, 2012 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed | ||
| ||
3.5 | Articles of Amendment, effective May 27, 2014 (incorporated by reference to Exhibit 5.03 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 28, 2014, Registration No. 001-33177). |
93 |
3.11 | Bylaws of the Company, as amended and restated, dated April 1, 2014 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 1, 2014, Registration No. 001-33177). | |
(4) | Instruments Defining the Rights of Security Holders, Including Indentures | |
4.1 | ||
4.2 | ||
4.3 | * | Description of Securities | |
(10) | Material Contracts | ||
10.1 | |||
+ | Employment Agreement | ||
10.2 | |||
+ | |||
10.3 | |||
+ | |||
10.4 | |||
+ | |||
10.5 | |||
+ | |||
10.6 | |||
+ |
10.7 |
+ | |||
10.8 | + | ||
10.9 | + |
94 |
95 |
10.21 | |||
(21) | * | Subsidiaries of the Registrant. | |
(23) | * | Consent of PKF O’Connor Davies, LLP. | |
(31.1) | * | Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
(31.2) | * | Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
(32.1) | * | Certification of Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | ++ | |
101.SCH | ++ | |
101.CAL | ++ | |
101.LAB | ++ | |
101.PRE | ++ | |
101.DEF | ++ |
* | Filed herewith. | |
Denotes a management contract or compensatory plan or arrangement. | ||
++ | Pursuant to Rule 406T of Regulation S-T, this interactive date file is deemed not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, is deemed not “filed” for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections. |
96 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Monmouth Real Estate Investment Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Monmouth Real Estate Investment Corporation (the “Company”) as of September 30, 20162019 and 20152018, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2016. Our audit also included2019, and the financial statementrelated notes and schedule listed in the Index at Item 15(a)(2)(i) (collectively referred to as the “consolidated financial statements”). These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Monmouth Real Estate Investment Corporation atthe Company as of September 30, 20162019 and 2015,2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2016,2019, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We have also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of September 30, 20162019, based on criteria established in Internal Control-IntegratedControl–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(COSO), and our report dated November 25, 20162019, expressed an unqualified opinion.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, during fiscal 2019, the Company changed the manner in which it accounts for changes in net unrealized holding gains and losses on marketable securities.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion thereon.on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Acquisition of Real Estate Properties
As discussed in Note 3 to the consolidated financial statements, during fiscal 2019, the Company purchased three real estate properties for an aggregate purchase price of approximately $139 million. The Company determined that all three acquisitions are acquisitions of assets and that these acquisitions do not meet the definition of a business. As a result, the total cash consideration for the three acquisitions were allocated to land, building and an intangible asset related to in-place leases on a relative fair value basis.
Auditing both (1) the determination that these acquisitions were asset acquisitions and (2) the relative fair value allocation of the cost of the acquisitions involved a high degree of judgment, estimation and an increased extent of effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to acquisition accounting, including management’s review of third party valuation reports. Among other audit procedures performed, (1) we evaluated the assets acquired to determine that they did not meet the requirements of a business, (2) we evaluated the appropriateness of the relative fair value allocation, including the assumptions used by management and (3) we reviewed the fair values computed by the respective third party valuation firms. Our procedures included evaluating the reasonableness of the inputs and assumptions used in the third party valuation reports by determining whether these inputs and assumptions were consistent with other evidence obtained in other areas of the audit and by considering the consistency with external market and industry data. In connection with the third party valuation firms engaged by management, we evaluated the qualifications of each specialist and determined that the respective specialist possessed the necessary skill and knowledge related to property valuations. Additionally, we recomputed the relative fair value allocation for each asset acquisition.
/s/ PKF O’Connor Davies, LLP
November 25, 2019
New York, New York
We have served as the Company’s auditor since 2008.
* * *
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
AS OF SEPTEMBER 30,
(in thousands except per share amounts)
2019 | 2018 | |||||||||||||||
2016 | 2015 | |||||||||||||||
ASSETS | ||||||||||||||||
Real Estate Investments: | ||||||||||||||||
Land | $ | 165,375,315 | $ | 133,500,315 | $ | 239,299 | $ | 224,719 | ||||||||
Buildings and Improvements | 1,005,938,180 | 807,509,590 | 1,627,219 | 1,494,859 | ||||||||||||
Total Real Estate Investments | 1,171,313,495 | 941,009,905 | 1,866,518 | 1,719,578 | ||||||||||||
Accumulated Depreciation | (148,830,169 | ) | (124,898,639 | ) | (249,584 | ) | (207,065 | ) | ||||||||
Net Real Estate Investments | 1,022,483,326 | 816,111,266 | ||||||||||||||
Real Estate Investments | 1,616,934 | 1,512,513 | ||||||||||||||
Cash and Cash Equivalents | 95,749,508 | 12,073,909 | 20,179 | 9,324 | ||||||||||||
Securities Available for Sale at Fair Value | 73,604,894 | 54,541,237 | 185,250 | 154,921 | ||||||||||||
Tenant and Other Receivables | 1,444,824 | 783,052 | 1,335 | 1,249 | ||||||||||||
Deferred Rent Receivable | 6,917,431 | 5,205,295 | 11,199 | 9,656 | ||||||||||||
Prepaid Expenses | 4,830,987 | 3,931,616 | 6,714 | 6,190 | ||||||||||||
Financing Costs, net of Accumulated Amortization of $3,399,232 and $3,247,014, respectively | 7,518,066 | 5,987,911 | ||||||||||||||
Capitalized Lease Costs, net of Accumulated Amortization of $3,238,516 and $2,534,521, respectively | 4,165,268 | 3,407,432 | ||||||||||||||
Intangible Assets, net of Accumulated Amortization of $12,332,599 and $11,153,855, respectively | 5,816,153 | 6,115,134 | ||||||||||||||
Intangible Assets, net of Accumulated Amortization of $15,686 and $13,700, respectively | 14,970 | 14,590 | ||||||||||||||
Capitalized Lease Costs, net of Accumulated Amortization of $3,378 and $3,271, respectively | 5,670 | 5,232 | ||||||||||||||
Financing Costs, net of Accumulated Amortization of $1,352 and $995, respectively | 144 | 500 | ||||||||||||||
Other Assets | 7,227,571 | 7,835,090 | 9,553 | 4,203 | ||||||||||||
TOTAL ASSETS | $ | 1,229,758,028 | $ | 915,991,942 | $ | 1,871,948 | $ | 1,718,378 |
See Accompanying Notes to the Consolidated Financial Statements
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT’D)
AS OF SEPTEMBER 30,
2016 | 2015 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Mortgage Notes Payable | $ | 483,748,153 | $ | 373,991,174 | ||||
Loans Payable | 80,790,684 | 85,041,386 | ||||||
Preferred Stock Called for Redemption | 53,493,750 | -0- | ||||||
Accounts Payable and Accrued Expenses | 3,998,771 | 3,113,274 | ||||||
Other Liabilities | 9,868,572 | 7,835,468 | ||||||
Total Liabilities | 631,899,930 | 469,981,302 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Shareholders’ Equity: | ||||||||
7.625% Series A Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: -0- and 2,139,750 Shares Authorized, Issued and Outstanding as of September 30, 2016 and 2015, respectively | -0- | 53,493,750 | ||||||
7.875% Series B Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 2,300,000 Shares Authorized, Issued and Outstanding as of September 30, 2016 and 2015 | 57,500,000 | 57,500,000 | ||||||
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 5,400,000 and -0- Shares Authorized, Issued and Outstanding as of September 30, 2016 and 2015, respectively | 135,000,000 | -0- | ||||||
Common Stock - $0.01 Par Value Per Share: 194,600,000 and 200,000,000 Shares Authorized as of September 30, 2016 and 2015, respectively; 68,920,972 and 62,123,454 Shares Issued and Outstanding as of September 30, 2016 and 2015, respectively | 689,210 | 621,235 | ||||||
Excess Stock - $0.01 Par Value Per Share: 200,000,000 Shares Authorized as of September 30, 2016 and 2015; No Shares Issued or Outstanding as of September 30, 2016 and 2015 | -0- | -0- | ||||||
Additional Paid-In Capital | 391,726,621 | 339,837,258 | ||||||
Accumulated Other Comprehensive Income (Loss) | 12,942,267 | (5,441,603 | ) | |||||
Undistributed Income | -0- | -0- | ||||||
Total Shareholders’ Equity | 597,858,098 | 446,010,640 | ||||||
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | $ | 1,229,758,028 | $ | 915,991,942 |
(in thousands except per share amounts)
2019 | 2018 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs | $ | 744,928 | $ | 711,546 | ||||
Loans Payable | 95,000 | 186,609 | ||||||
Accounts Payable and Accrued Expenses | 3,570 | 5,891 | ||||||
Other Liabilities | 17,407 | 16,426 | ||||||
Total Liabilities | 860,905 | 920,472 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Shareholders’ Equity: | ||||||||
6.125% Series C Cumulative Redeemable Preferred Stock, $ Par Value Per Share: Shares Authorized as of September 30, 2019 and 2018; and Shares Issued and Outstanding as of September 30, 2019 and 2018, respectively | 347,678 | 287,200 | ||||||
Common Stock, $ | Par Value Per Share: Shares Authorized as of September 30, 2019 and 2018, respectively; and Shares Issued and Outstanding as of September 30, 2019 and 2018, respectively964 | 815 | ||||||
Excess Stock, $ Par Value Per Share: Shares Authorized as of September 30, 2019 and 2018; Shares Issued or Outstanding as of September 30, 2019 and 2018 | 0 | 0 | ||||||
Additional Paid-In Capital | 662,401 | 534,635 | ||||||
Accumulated Other Comprehensive Loss | 0 | (24,744 | ) | |||||
Undistributed Income | 0 | 0 | ||||||
Total Shareholders’ Equity | 1,011,043 | 797,906 | ||||||
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | $ | 1,871,948 | $ | 1,718,378 |
See Accompanying Notes to the Consolidated Financial Statements
99 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
2016 | 2015 | 2014 | ||||||||||
INCOME: | ||||||||||||
Rental Revenue | $ | 81,592,429 | $ | 67,059,385 | $ | 55,512,165 | ||||||
Reimbursement Revenue | 13,323,681 | 10,716,112 | 9,160,176 | |||||||||
Lease Termination Income | -0- | 238,625 | 1,182,890 | |||||||||
TOTAL INCOME | 94,916,110 | 78,014,122 | 65,855,231 | |||||||||
EXPENSES: | ||||||||||||
Real Estate Taxes | 10,455,401 | 8,362,135 | 7,605,611 | |||||||||
Operating Expenses | 4,273,899 | 4,127,884 | 3,711,868 | |||||||||
General & Administrative Expenses | 7,936,124 | 6,305,928 | 5,709,937 | |||||||||
Acquisition Costs | 730,441 | 1,546,088 | 481,880 | |||||||||
Depreciation | 24,055,022 | 19,705,320 | 15,908,769 | |||||||||
Amortization of Capitalized Lease Costs and Intangible Assets | 2,032,658 | 2,067,408 | 1,810,812 | |||||||||
TOTAL EXPENSES | 49,483,545 | 42,114,763 | 35,228,877 | |||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Dividend and Interest Income | 5,616,392 | 3,723,867 | 3,882,597 | |||||||||
Gain on Sale of Securities Transactions, net | 4,398,599 | 805,513 | 2,166,766 | |||||||||
Interest Expense | (21,836,811 | ) | (18,558,150 | ) | (16,104,678 | ) | ||||||
Amortization of Financing Costs | (1,116,238 | ) | (1,286,016 | ) | (725,745 | ) | ||||||
TOTAL OTHER INCOME (EXPENSE) | (12,938,058 | ) | (15,314,786 | ) | (10,781,060 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS | 32,494,507 | 20,584,573 | 19,845,294 | |||||||||
Gain on Sale of Real Estate Investment | -0- | 5,021,242 | -0- | |||||||||
NET INCOME | 32,494,507 | 25,605,815 | 19,845,294 | |||||||||
Less: Preferred Dividends | 9,020,470 | 8,607,032 | 8,607,032 | |||||||||
Less: Redemption of Preferred Stock | 2,942,149 | -0- | -0- | |||||||||
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 20,531,888 | $ | 16,998,783 | $ | 11,238,262 |
(in thousands)
2019 | 2018 | 2017 | ||||||||||
INCOME: | ||||||||||||
Rental Revenue | $ | 132,524 | $ | 115,864 | $ | 97,660 | ||||||
Reimbursement Revenue | 25,998 | 23,298 | 18,725 | |||||||||
Lease Termination Income | 0 | 210 | 0 | |||||||||
TOTAL INCOME | 158,522 | 139,372 | 116,385 | |||||||||
EXPENSES: | ||||||||||||
Real Estate Taxes | 20,711 | 18,596 | 15,267 | |||||||||
Operating Expenses | 6,616 | 5,794 | 4,887 | |||||||||
General and Administrative Expenses | 9,081 | 8,776 | 7,809 | |||||||||
Acquisition Costs | 0 | 0 | 179 | |||||||||
Depreciation | 43,020 | 36,176 | 29,635 | |||||||||
Amortization of Capitalized Lease Costs and Intangible Assets | 2,870 | 2,391 | 1,825 | |||||||||
TOTAL EXPENSES | 82,298 | 71,733 | 59,602 | |||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Dividend Income | 15,168 | 13,121 | 6,930 | |||||||||
Gain on Sale of Securities Transactions | 0 | 111 | 2,312 | |||||||||
Unrealized Holding Gains (Losses) Arising During the Periods | (24,680 | ) | 0 | 0 | ||||||||
Interest Expense, including Amortization of Financing Costs | (36,912 | ) | (32,350 | ) | (25,754 | ) | ||||||
TOTAL OTHER INCOME (EXPENSE) | (46,424 | ) | (19,118 | ) | (16,512 | ) | ||||||
INCOME FROM OPERATIONS | 29,800 | 48,521 | 40,271 | |||||||||
Gain on Sale of Real Estate Investments | 0 | 7,485 | 0 | |||||||||
NET INCOME | 29,800 | 56,006 | 40,271 | |||||||||
Less: Preferred Dividends | 18,774 | 17,191 | 14,862 | |||||||||
Less: Redemption of Preferred Stock | 0 | 0 | 2,467 | |||||||||
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 11,026 | $ | 38,815 | $ | 22,942 |
See Accompanying Notes to the Consolidated Financial Statements
100 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||
BASIC INCOME – PER SHARE | ||||||||||||||||||||||||
Net Income | 0.50 | 0.43 | 0.40 | $ | 0.32 | $ | 0.71 | $ | 0.56 | |||||||||||||||
Less: Preferred Dividends | (0.14 | ) | (0.14 | ) | (0.17 | ) | (0.20 | ) | (0.22 | ) | (0.21 | ) | ||||||||||||
Less: Redemption of Preferred Stock | (0.05 | ) | -0- | -0- | 0 | 0 | (0.03 | ) | ||||||||||||||||
Net Income Attributable to Common Shareholders – Basic | $ | 0.31 | $ | 0.29 | $ | 0.23 | $ | 0.12 | $ | 0.49 | $ | 0.32 | ||||||||||||
DILUTED INCOME – PER SHARE | ||||||||||||||||||||||||
Net Income | 0.50 | 0.43 | 0.40 | $ | 0.32 | $ | 0.71 | $ | 0.56 | |||||||||||||||
Less: Preferred Dividends | (0.14 | ) | (0.14 | ) | (0.17 | ) | (0.20 | ) | (0.22 | ) | (0.21 | ) | ||||||||||||
Less: Redemption of Preferred Stock | (0.05 | ) | -0- | -0- | 0 | 0 | (0.03 | ) | ||||||||||||||||
Net Income Attributable to Common Shareholders – Diluted | $ | 0.31 | $ | 0.29 | $ | 0.23 | $ | 0.12 | $ | 0.49 | $ | 0.32 | ||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands) | ||||||||||||||||||||||||
Basic | 65,468,564 | 59,085,888 | 49,829,924 | 93,387 | 78,619 | 72,114 | ||||||||||||||||||
Diluted | 65,558,284 | 59,201,296 | 49,925,036 | 93,485 | 78,802 | 72,250 |
See Accompanying Notes to the Consolidated Financial Statements
101 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
2016 | 2015 | 2014 | ||||||||||
Net Income | $ | 32,494,507 | $ | 25,605,815 | $ | 19,845,294 | ||||||
Other Comprehensive Income: | ||||||||||||
Unrealized Holding Gains (Losses) Arising During the Period | 22,782,469 | (4,757,446 | ) | 298,854 | ||||||||
Reclassification Adjustment for Net Gains of Sales of Securities Transactions Realized in Income | (4,398,599 | ) | (805,513 | ) | (2,166,766 | ) | ||||||
Total Comprehensive Income | 50,878,377 | 20,042,856 | 17,977,382 | |||||||||
Less: Preferred Dividends | 9,020,470 | 8,607,032 | 8,607,032 | |||||||||
Less: Redemption of Preferred Stock | 2,942,149 | -0- | -0- | |||||||||
Comprehensive Income Attributable to Common Shareholders | $ | 38,915,758 | $ | 11,435,824 | $ | 9,370,350 |
(in thousands)
2019 | 2018 | 2017 | ||||||||||
Net Income | $ | 29,800 | $ | 56,006 | $ | 40,271 | ||||||
Other Comprehensive Income: | ||||||||||||
Unrealized Holding Gains (Losses) Arising During the Period | 0 | (31,204 | ) | (4,060 | ) | |||||||
Reclassification Adjustment for Net Gains Realized in Income | 0 | (111 | ) | (2,312 | ) | |||||||
Total Comprehensive Income | 29,800 | 24,691 | 33,899 | |||||||||
Less: Preferred Dividends | 18,774 | 17,191 | 14,862 | |||||||||
Less: Redemption of Preferred Stock | 0 | 0 | 2,467 | |||||||||
Comprehensive Income Attributable to Common Shareholders | $ | 11,026 | $ | 7,500 | $ | 16,570 |
See Accompanying Notes to the Consolidated Financial Statements
102 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2015,2019, 2018, AND 20142017
(in thousands except per share amounts)
Common Stock | Preferred Stock Series A | Preferred Stock Series B | Preferred Stock Series C | Additional Paid in Capital | Common Stock | Preferred Stock Series B | Preferred Stock Series C | Additional Paid in Capital | ||||||||||||||||||||||||||||
Balance September 30, 2013 | $ | 444,885 | $ | 53,493,750 | $ | 57,500,000 | $ | -0- | $ | 222,487,068 | ||||||||||||||||||||||||||
Balance September 30, 2016 | $ | 689 | $ | 57,500 | $ | 135,000 | $ | 391,727 | ||||||||||||||||||||||||||||
Impact of Adoption of Accounting Standards Update 2016-01 | ||||||||||||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | ||||||||||||||||||||||||||||||||||||
Shares Issued in Connection with the DRIP (1) | 42,961 | -0- | -0- | -0- | 38,047,373 | 67 | 0 | 0 | 91,865 | |||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | 80,500 | -0- | -0- | -0- | 65,032,186 | |||||||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 75,000 | (3,997 | ) | |||||||||||||||||||||||||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 35,986 | (256 | ) | |||||||||||||||||||||||||||||||
Preferred Stock Called for Redemption | 0 | (57,500 | ) | 0 | 2,467 | |||||||||||||||||||||||||||||||
Shares Issued Through the Exercise of Stock Options | 1,642 | -0- | -0- | -0- | 1,325,527 | 0 | 0 | 0 | 469 | |||||||||||||||||||||||||||
Shares Issued Through Restricted Stock Awards | 100 | -0- | -0- | -0- | (100 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Stock Compensation Expense | -0- | -0- | -0- | -0- | 347,002 | 0 | 0 | 0 | 625 | |||||||||||||||||||||||||||
Distributions To Common Shareholders | -0- | -0- | -0- | -0- | (18,293,168 | ) | ||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($ per share) | 0 | 0 | 0 | (23,347 | ) | |||||||||||||||||||||||||||||||
Preferred Dividends ($1.53125 per share) | ||||||||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($0.68 per share) | ||||||||||||||||||||||||||||||||||||
Net Income | -0- | -0- | -0- | -0- | -0- | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Preferred Dividends | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Unrealized Net Holding Loss on Securities Availablefor Sale, Net of Reclassification Adjustment | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Balance September 30, 2014 | 570,088 | 53,493,750 | 57,500,000 | -0- | 308,945,888 | |||||||||||||||||||||||||||||||
Preferred Dividends ($ per share for the Preferred Stock Series B and $ per share for the Preferred Stock Series C) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Change in Unrealized Net Holding Gain (Loss) on Securities Available for Sale, Net of Reclassification Adjustment | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Balance September 30, 2017 | 756 | 0 | 245,986 | 459,553 | ||||||||||||||||||||||||||||||||
Balance October 01, 2017 | 756 | 0 | 245,986 | 459,553 | ||||||||||||||||||||||||||||||||
Shares Issued in Connection with the DRIP (1) | 49,755 | -0- | -0- | -0- | 48,354,801 | 58 | 0 | 0 | 89,970 | |||||||||||||||||||||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 41,214 | (1,120 | ) | |||||||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | ||||||||||||||||||||||||||||||||||||
Impact of Adoption of Accounting Standards Update 2016-01 | ||||||||||||||||||||||||||||||||||||
Shares Issued Through the Exercise of Stock Options | 812 | -0- | -0- | -0- | 611,598 | 1 | 0 | 0 | 569 | |||||||||||||||||||||||||||
Shares Issued Through Restricted Stock Awards | 580 | -0- | -0- | -0- | (580 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Stock Compensation Expense | -0- | -0- | -0- | -0- | 448,895 | 0 | 0 | 0 | 434 | |||||||||||||||||||||||||||
Distributions To Common Shareholders | -0- | -0- | -0- | -0- | (18,523,344 | ) | ||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($ per share) | 0 | 0 | 0 | (14,771 | ) | |||||||||||||||||||||||||||||||
Net Income | -0- | -0- | -0- | -0- | -0- | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Preferred Dividends | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Unrealized Net Holding Loss on Securities Availablefor Sale, Net of Reclassification Adjustment | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Balance September 30, 2015 | 621,235 | 53,493,750 | 57,500,000 | -0- | 339,837,258 | |||||||||||||||||||||||||||||||
Preferred Dividends ($ per share) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($0.64 per share) | ||||||||||||||||||||||||||||||||||||
Preferred Dividends ($1.5093750 per share for the Preferred Stock Series B and $1.4802083 per share for the Preferred Stock Series C) | ||||||||||||||||||||||||||||||||||||
Change in Unrealized Net Holding Gain (Loss) on Securities Available for Sale, Net of Reclassification Adjustment | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Balance September 30, 2018 | 815 | 0 | 287,200 | 534,635 | ||||||||||||||||||||||||||||||||
Balance October 01, 2018 | 815 | 0 | 287,200 | 534,635 | ||||||||||||||||||||||||||||||||
Impact of Adoption of Accounting Standards Update 2016-01 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Shares Issued in Connection with the DRIP (1) | 65,157 | -0- | -0- | -0- | 72,110,640 | 56 | 0 | 0 | 73,909 | |||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Series C Preferred Stock, net of offering costs | -0- | -0- | -0- | 135,000,000 | (4,456,578 | ) | ||||||||||||||||||||||||||||||
Preferred Stock Called for Redemption | -0- | (53,493,750 | ) | -0- | -0- | 2,930,649 | ||||||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | 92 | 0 | 0 | 132,246 | ||||||||||||||||||||||||||||||||
Shares Issued in Connection with Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs | ||||||||||||||||||||||||||||||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 60,478 | (2,279 | ) | |||||||||||||||||||||||||||||||
Shares Issued Through the Exercise of Stock Options | 2,450 | -0- | -0- | -0- | 1,880,850 | 1 | 0 | 0 | 566 | |||||||||||||||||||||||||||
Shares Issued Through Restricted Stock Awards | 400 | -0- | -0- | -0- | (400 | ) | ||||||||||||||||||||||||||||||
Cancellation of Shares Related to Forfeiture of Restricted Stock Awards | (32 | ) | -0- | -0- | -0- | 32 | ||||||||||||||||||||||||||||||
Stock Compensation Expense | -0- | -0- | -0- | -0- | 926,465 | 0 | 0 | 0 | 784 | |||||||||||||||||||||||||||
Distributions To Common Shareholders | -0- | -0- | -0- | -0- | (21,502,295 | ) | ||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($ per share) | 0 | 0 | 0 | (77,460 | ) | |||||||||||||||||||||||||||||||
Distributions To Common Shareholders ($0.64 per share) | ||||||||||||||||||||||||||||||||||||
Net Income | -0- | -0- | -0- | -0- | -0- | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Preferred Dividends | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Unrealized Net Holding Gain on Securities Availablefor Sale, Net of Reclassification Adjustment | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||||||
Balance September 30, 2016 | $ | 689,210 | $ | -0- | $ | 57,500,000 | $ | 135,000,000 | $ | 391,726,621 | ||||||||||||||||||||||||||
Preferred Dividends ($ per share) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Preferred Dividends ($1.5093750 per share for the Preferred Stock Series B and $1.4802083 per share for the Preferred Stock Series C) | ||||||||||||||||||||||||||||||||||||
Balance September 30, 2019 | $ | 964 | $ | 0 | $ | 347,678 | $ | 662,401 |
(1) | Dividend Reinvestment and Stock Purchase Plan |
See Accompanying Notes to the Consolidated Financial Statements
103 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2016, 20152019, 2018 AND 2014,2017, CONT’D.
(in thousands except per share amounts)
Undistributed Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||
Balance September 30, 2013 | $ | -0- | $ | 1,989,268 | $ | 335,914,971 | ||||||
Shares Issued in Connection with the DRIP (1) | -0- | -0- | 38,090,334 | |||||||||
Shares Issued in Connection with Underwritten PublicOffering of Common Stock, net of offering costs | -0- | -0- | 65,112,686 | |||||||||
Shares Issued Through the Exercise of Stock Options | -0- | -0- | 1,327,169 | |||||||||
Shares Issued Through Restricted Stock Awards | -0- | -0- | -0- | |||||||||
Stock Compensation Expense | -0- | -0- | 347,002 | |||||||||
Distributions To Common Shareholders | (11,238,262 | ) | -0- | (29,531,430 | ) | |||||||
Net Income | 19,845,294 | -0- | 19,845,294 | |||||||||
Preferred Dividends | (8,607,032 | ) | -0- | (8,607,032 | ) | |||||||
Unrealized Net Holding Loss on Securities Available for Sale, Net of Reclassification Adjustment | -0- | (1,867,912 | ) | (1,867,912 | ) | |||||||
Balance September 30, 2014 | -0- | 121,356 | 420,631,082 | |||||||||
Shares Issued in Connection with the DRIP (1) | -0- | -0- | 48,404,556 | |||||||||
Shares Issued Through the Exercise of Stock Options | -0- | -0- | 612,410 | |||||||||
Shares Issued Through Restricted Stock Awards | -0- | -0- | -0- | |||||||||
Stock Compensation Expense | -0- | -0- | 448,895 | |||||||||
Distributions To Common Shareholders | (16,998,783 | ) | -0- | (35,522,127 | ) | |||||||
Net Income | 25,605,815 | -0- | 25,605,815 | |||||||||
Preferred Dividends | (8,607,032 | ) | -0- | (8,607,032 | ) | |||||||
Unrealized Net Holding Loss on Securities Available for Sale, Net of Reclassification Adjustment | -0- | (5,562,959 | ) | (5,562,959 | ) | |||||||
Balance September 30, 2015 | -0- | (5,441,603 | ) | 446,010,640 | ||||||||
Shares Issued in Connection with the DRIP (1) | -0- | -0- | 72,175,797 | |||||||||
Shares Issued in Connection with Underwritten Public Offering of Series C Preferred Stock, net of offering costs | -0- | -0- | 130,543,422 | |||||||||
Preferred Stock Called for Redemption | (2,942,149 | ) | -0- | (53,505,250 | ) | |||||||
Shares Issued Through the Exercise of Stock Options | -0- | -0- | 1,883,300 | |||||||||
Shares Issued Through Restricted Stock Awards | -0- | -0- | -0- | |||||||||
Cancellation of Shares Related to Forfeiture of Restricted Stock Awards | -0- | -0- | -0- | |||||||||
Stock Compensation Expense | -0- | -0- | 926,465 | |||||||||
Distributions To Common Shareholders | (20,531,888 | ) | -0- | (42,034,183 | ) | |||||||
Net Income | 32,494,507 | -0- | 32,494,507 | |||||||||
Preferred Dividends | (9,020,470 | ) | -0- | (9,020,470 | ) | |||||||
Unrealized Net Holding Gain on Securities Available for Sale, Net of Reclassification Adjustment | -0- | 18,383,870 | 18,383,870 | |||||||||
Balance September 30, 2016 | $ | -0- | $ | 12,942,267 | $ | 597,858,098 |
Undistributed Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||
Balance September 30, 2016 | $ | 0 | $ | 12,942 | $ | 597,858 | ||||||
Impact of Adoption of Accounting Standards Update 2016-01 | ||||||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | ||||||||||||
Shares Issued in Connection with the DRIP (1) | 0 | 0 | 91,932 | |||||||||
Shares Issued in Connection with Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 71,003 | |||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 35,730 | |||||||||
Preferred Stock Called for Redemption | (2,467 | ) | 0 | (57,500 | ) | |||||||
Shares Issued Through the Exercise of Stock Options | 0 | 0 | 469 | |||||||||
Shares Issued Through Restricted Stock Awards | 0 | 0 | 0 | |||||||||
Stock Compensation Expense | 0 | 0 | 625 | |||||||||
Distributions To Common Shareholders ($ | per share)(22,942 | ) | 0 | (46,289 | ) | |||||||
Preferred Dividends ($1.53125 per share) | ||||||||||||
Distributions To Common Shareholders ($0.68 per share) | ||||||||||||
Net Income | 40,271 | 0 | 40,271 | |||||||||
Preferred Dividends ($ | per share for the Preferred Stock Series B and $ per share for the Preferred Stock Series C)(14,862 | ) | 0 | (14,862 | ) | |||||||
Change in Unrealized Net Holding Gain (Loss) on Securities Available for Sale, Net of Reclassification Adjustment | 0 | (6,371 | ) | (6,371 | ) | |||||||
Balance September 30, 2017 | 0 | 6,571 | 712,866 | |||||||||
Balance October 01, 2017 | 0 | 6,571 | 712,866 | |||||||||
Shares Issued in Connection with the DRIP (1) | 0 | 0 | 90,028 | |||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 40,094 | |||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | ||||||||||||
Impact of Adoption of Accounting Standards Update 2016-01 | ||||||||||||
Shares Issued Through the Exercise of Stock Options | 0 | 0 | 570 | |||||||||
Shares Issued Through Restricted Stock Awards | 0 | 0 | 0 | |||||||||
Stock Compensation Expense | 0 | 0 | 434 | |||||||||
Distributions To Common Shareholders ($ | per share)(38,815 | ) | 0 | (53,586 | ) | |||||||
Net Income | 56,006 | 0 | 56,006 | |||||||||
Preferred Dividends ($ | per share)(17,191 | ) | 0 | (17,191 | ) | |||||||
Distributions To Common Shareholders ($0.64 per share) | ||||||||||||
Preferred Dividends ($1.5093750 per share for the Preferred Stock Series B and $1.4802083 per share for the Preferred Stock Series C) | ||||||||||||
Change in Unrealized Net Holding Gain (Loss) on Securities Available for Sale, Net of Reclassification Adjustment | 0 | (31,315 | ) | (31,315 | ) | |||||||
Balance September 30, 2018 | 0 | (24,744 | ) | 797,906 | ||||||||
Balance October 01, 2018 | 0 | (24,744 | ) | 797,906 | ||||||||
Impact of Adoption of Accounting Standards Update 2016-01 | (24,744 | ) | 24,744 | 0 | ||||||||
Shares Issued in Connection with the DRIP (1) | 0 | 0 | 73,965 | |||||||||
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs | 0 | 0 | 132,338 | |||||||||
Shares Issued in Connection with Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs | ||||||||||||
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 58,199 | |||||||||
Shares Issued Through the Exercise of Stock Options | 0 | 0 | 567 | |||||||||
Stock Compensation Expense | 0 | 0 | 784 | |||||||||
Distributions To Common Shareholders ($ | per share)13,718 | 0 | (63,742 | ) | ||||||||
Distributions To Common Shareholders ($0.64 per share) | ||||||||||||
Net Income | 29,800 | 0 | 29,800 | |||||||||
Preferred Dividends ($ | per share)(18,774 | ) | 0 | (18,774 | ) | |||||||
Preferred Dividends ($1.5093750 per share for the Preferred Stock Series B and $1.4802083 per share for the Preferred Stock Series C) | ||||||||||||
Balance September 30, 2019 | $ | 0 | $ | 0 | $ | 1,011,043 |
(1) | Dividend Reinvestment and Stock Purchase Plan |
See Accompanying Notes to the Consolidated Financial Statements
104 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
(in thousands)
2016 | 2015 | 2014 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net Income | $ | 32,494,507 | $ | 25,605,815 | $ | 19,845,294 | ||||||
Noncash Items Included in Net Income: | ||||||||||||
Depreciation & Amortization | 27,203,918 | 23,058,744 | 18,445,326 | |||||||||
Stock Compensation Expense | 926,465 | 448,895 | 347,002 | |||||||||
Gain on Sale of Securities Transactions, net | (4,398,599 | ) | (805,513 | ) | (2,166,766 | ) | ||||||
Gain on Sale of Real Estate Investments | -0- | (5,021,242 | ) | -0- | ||||||||
Changes in: | ||||||||||||
Tenant, Deferred Rent & Other Receivables | (1,640,504 | ) | (800,203 | ) | (922,107 | ) | ||||||
Prepaid Expenses | (899,371 | ) | (1,166,821 | ) | (563,525 | ) | ||||||
Other Assets and Capitalized Lease Costs | (1,814,638 | ) | (2,359,895 | ) | (1,086,846 | ) | ||||||
Accounts Payable, Accrued Expenses & Other Liabilities | 2,827,722 | (897,495 | ) | 957,907 | ||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 54,699,500 | 38,062,285 | 34,856,285 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of Real Estate & Intangible Assets | (210,747,340 | ) | (192,187,485 | ) | (97,374,760 | ) | ||||||
Capital and Land Site Improvements | (21,566,561 | ) | (10,541,656 | ) | (19,674,128 | ) | ||||||
Proceeds on Sale of Real Estate | -0- | 8,846,686 | -0- | |||||||||
Return of Deposits on Real Estate | 2,950,000 | 3,100,000 | 2,050,000 | |||||||||
Deposits Paid on Acquisitions of Real Estate | (2,200,000 | ) | (3,700,000 | ) | (3,250,000 | ) | ||||||
Purchase of Securities Available for Sale | (19,055,956 | ) | (16,188,760 | ) | (27,840,200 | ) | ||||||
Proceeds from Sale of Securities Available for Sale | 22,774,768 | 16,201,480 | 14,279,391 | |||||||||
NET CASH USED IN INVESTING ACTIVITIES | (227,845,089 | ) | (194,469,735 | ) | (131,809,697 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from Mortgage Notes Payable | 153,428,485 | 122,173,058 | 62,905,000 | |||||||||
Principal Payments on Mortgage Notes Payable | (43,671,506 | ) | (35,977,890 | ) | (25,202,376 | ) | ||||||
Net (Repayments) Proceeds from Loans Payable | (4,250,702 | ) | 59,841,386 | 3,000,000 | ||||||||
Financing Costs Paid on Debt | (2,646,393 | ) | (2,917,663 | ) | (2,070,790 | ) | ||||||
Proceeds from Underwritten Public Offering of Preferred Stock, net of offering costs | 130,543,422 | -0- | -0- | |||||||||
Proceeds from Underwritten Public Offering of CommonStock, net of offering costs | -0- | -0- | 65,112,686 | |||||||||
Proceeds from Issuance of Common Stock in the DRIP, netof Dividend Reinvestments | 63,806,651 | 39,915,387 | 30,465,806 | |||||||||
Proceeds from the Exercise of Stock Options | 1,883,300 | 612,410 | 1,327,169 | |||||||||
Preferred Dividends Paid | (8,607,032 | ) | (8,607,032 | ) | (8,607,032 | ) | ||||||
Common Dividends Paid, net of Reinvestments | (33,665,037 | ) | (27,032,958 | ) | (21,906,902 | ) | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 256,821,188 | 148,006,698 | 105,023,561 | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 83,675,599 | (8,400,752 | ) | 8,070,149 | ||||||||
Cash and Cash Equivalents at Beginning of Year | 12,073,909 | 20,474,661 | 12,404,512 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 95,749,508 | $ | 12,073,909 | $ | 20,474,661 |
2019 | 2018 | 2017 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net Income | $ | 29,800 | $ | 56,006 | $ | 40,271 | ||||||
Noncash Items Included in Net Income: | ||||||||||||
Depreciation & Amortization | 47,142 | 39,788 | 32,694 | |||||||||
Stock Compensation Expense | 784 | 434 | 625 | |||||||||
Deferred Straight Line Rent | (1,926 | ) | (1,973 | ) | (1,028 | ) | ||||||
Unrealized Holding (Gains) Losses Arising During the Periods | 24,680 | 0 | 0 | |||||||||
Gain on Sale of Securities Transactions | 0 | (111 | ) | (2,312 | ) | |||||||
(Gain) Loss on Sale of Real Estate Investments | 0 | (7,485 | ) | 95 | ||||||||
Changes in: | ||||||||||||
Tenant & Other Receivables | 18 | 1,397 | 358 | |||||||||
Prepaid Expenses | (524 | ) | (755 | ) | (604 | ) | ||||||
Other Assets & Capitalized Lease Costs | 729 | (2,037 | ) | 15 | ||||||||
Accounts Payable, Accrued Expenses & Other Liabilities | 919 | 265 | 3,754 | |||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 101,622 | 85,529 | 73,868 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of Real Estate & Intangible Assets | (138,964 | ) | (283,403 | ) | (286,952 | ) | ||||||
Capital Improvements | (14,734 | ) | (9,084 | ) | (4,975 | ) | ||||||
Proceeds from Sale of Real Estate Investments | 0 | 22,083 | 4,126 | |||||||||
Return of Deposits on Real Estate | 200 | 450 | 3,400 | |||||||||
Deposits Paid on Acquisitions of Real Estate | (6,000 | ) | (200 | ) | (450 | ) | ||||||
Proceeds from Sale of Securities Available for Sale | 0 | 2,620 | 17,275 | |||||||||
Purchase of Securities Available for Sale | (55,010 | ) | (64,979 | ) | (71,495 | ) | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (214,508 | ) | (332,513 | ) | (339,071 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from Fixed Rate Mortgage Notes Payable | 96,500 | 175,160 | 188,809 | |||||||||
Principal Payments on Fixed Rate Mortgage Notes Payable | (63,350 | ) | (54,354 | ) | (73,595 | ) | ||||||
Net Draws (Repayments) from Loans Payable | (91,609 | ) | 66,517 | 39,301 | ||||||||
Financing Costs Paid on Debt | (662 | ) | (1,470 | ) | (2,190 | ) | ||||||
Redemption of 7.625% Series A Preferred Stock | 0 | 0 | (53,494 | ) | ||||||||
Redemption of 7.875% Series B Preferred Stock | 0 | 0 | (57,500 | ) | ||||||||
Proceeds from Underwritten Public Offering of 6.125% Series C Preferred Stock, net of offering costs | 0 | 0 | 71,003 | |||||||||
Proceeds from Underwritten Public Offering of Common Stock, net of offering costs | 132,338 | 0 | 0 | |||||||||
Proceeds from At-The-Market Preferred Equity Program, net of offering costs | 58,199 | 40,094 | 35,734 | |||||||||
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments | 57,079 | 77,100 | 81,806 | |||||||||
Proceeds from the Exercise of Stock Options | 567 | 570 | 469 | |||||||||
Preferred Dividends Paid | (18,465 | ) | (16,876 | ) | (14,500 | ) | ||||||
Common Dividends Paid, net of Reinvestments | (46,856 | ) | (40,658 | ) | (36,163 | ) | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 123,741 | 246,083 | 179,680 | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 10,855 | (901 | ) | (85,523 | ) | |||||||
Cash and Cash Equivalents at Beginning of Year | 9,324 | 10,225 | 95,748 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 20,179 | $ | 9,324 | $ | 10,225 |
See Accompanying Notes to the Consolidated Financial Statements
105 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 20162019
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Business
Monmouth Real Estate Investment Corporation, (aa Maryland corporation) andcorporation, together with its consolidated subsidiaries (the Company) operate(we, our, us, the Company or MREIC), operates as a real estate investment trust (REIT), deriving its income primarily from real estate rental operations. We were founded in 1968 and are one of the oldest public equity REITs in the world. As of September 30, 20162019 and 2015,2018, rental properties consisted of ninety-nine 114and ninety-one111 property holdings, respectively. These properties are located in thirty30 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin. In addition,As of September 30, 2019, our weighted average lease maturity was 7.6 years and our annualized average base rent per occupied square foot was $6.20. As of September 30, 2019, the Company holds a portfolioweighted average building age, based on the square footage of our buildings, was 9.2 years. We also opportunistically invest in marketable securities of other REITs. Historically, we have aimed to limit the size of our REIT securities which the Company generally limitsportfolio to no more than approximately 10% of itsour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation).depreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. Total assets excluding accumulated depreciation were $2.1 billion as of September 30, 2019. We held $185.3 million in marketable REIT securities as of September 30, 2019, representing 8.7% of our undepreciated assets.
Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources.
Use of Estimates
In preparing the financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)(U.S. GAAP), management iswe are required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.estimates and assumptions.
Segment Reporting & Financial Information
Our primary business is the ownership and management of real estate properties. We invest in well-located, modern, single-tenant, industrial buildings leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We review operating and financial information for each property on an individual basis and, therefore, each property represents an individual operating segment. We evaluate financial performance using Net Operating Income (NOI) from property operations. NOI is a non-GAAP financial measure, which we define as recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities and repairs and maintenance. We have aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated as industrial properties subject to long-term net leases primarily to investment-grade tenants or their subsidiaries.
Principles of Consolidation and Non-controlling Interest
The consolidated financial statements include the Company and itsour wholly-owned subsidiaries. In 2005, the Companywe formed MREIC Financial, Inc., a taxable REIT subsidiary which has had no activity since inception. In 2007, the Companywe merged with Monmouth Capital Corporation (Monmouth Capital), with Monmouth Capital surviving as aour wholly-owned subsidiary of the Company.subsidiary. All intercompany transactions and balances have been eliminated in consolidation.
106 |
At September 30, 2016, Monmouth Capital owns a 51% majority interest in Palmer Terrace Realty Associates, LLC (a New Jersey limited liability company) (Palmer Terrace). The Company consolidates the results of operations of Palmer Terrace. Non-controlling interest represents 49% of the members’ equity in Palmer Terrace and is included in Other Liabilities in the accompanying Consolidated Balance Sheet.
Buildings and Improvements
Buildings and improvements are stated at the lower of depreciated cost or net realizable value. Depreciation is computed based on the straight-line method over the estimated useful lives of the assets. These lives are 39 years for buildings and range from 53 to 39 years for improvements.
The Company appliesWe apply Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other-than-temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.
Gains (Losses) on Sale of Real Estate
Gains (losses) on the sale of real estate investments are recognized when the profit (loss) on a given sale is determinable, and the seller is not obliged to perform significant activities after the sale to earn such profit.profit (loss).
Acquisitions
The Company accountsWe account for our property acquisitions in accordance with the provisionsas acquisitions of ASC 805, Business Combinations (ASC 805) which requires transaction costs, such as broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related to acquisitions are expensed as incurred.
Uponassets. In an acquisition of a property, the Company allocates the purchase price of the property based upon the fair value of the assets, acquiredcertain acquisition costs are capitalized to real estate investments as if vacant, which generally consist of land, buildings and intangible assets, including above and below market leases and in-place leases. The Company allocates the purchase price to the fair value of the tangible assets of an acquired property generally determined by third party appraisal of the property obtained in conjunction with the purchase.
The purchase price is further allocated to acquired above and below market leases based on the present value of the difference between prevailing market rates and the in-place lease rates over the remaining term. In addition, any remaining amountspart of the purchase priceprice. In addition, acquisitions that do not meet the definition of a business combination are appliedaccounted for as asset acquisitions whereby the consideration incurred is allocated to in-place lease values basedthe individual assets acquired on management’s evaluation of the specific characteristics of each tenant’s lease. In-place leases that may have a customer relationship intangiblerelative fair value including (but not limited to) the nature and extent of the existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals are also considered. Acquired above and below market leases are amortized to rental revenue over the remaining non-cancelable terms of the respective leases. The value of in-place lease intangibles (including customer relationships) is amortized to amortization expense over the remaining lease term. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, deferred rent and the in-place lease value is charged to expense.basis.
Marketable Securities
Investments in securities available for sale primarily consist of marketable common and preferred stock securities of other REITs, whichREITs. Historically, we have aimed to limit the Company generally limitssize of our REIT securities portfolio to no more than approximately 10% of itsour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation).depreciation. As we announced earlier this year, it is now our goal to gradually reduce the size of our REIT securities portfolio to no more than 5% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of this fiscal year. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Going forward, to achieve our threshold investment goal, we will continually evaluate opportunities to optimize our REIT securities portfolio. These marketable securities are all publicly-traded and purchased on the open market through private transactions or through dividend reinvestment plans. These securities may be classified among three categories: held-to-maturity, trading, and available-for-sale. The CompanyWe normally holdshold REIT securities on a long termlong-term basis and hashave the ability and intent to hold securities to recovery, thereforerecovery. Therefore, as of September 30, 20162019 and 2015, the Company’s2018, our securities are all classified as available-for-sale and are carried at fair value based upon quoted market prices in active markets. Gains or losses on the sale of securities are based on average cost and are accounted for on a trade date basis. Unrealized holding gains and losses are excluded from earnings and reported as a separate component of Shareholders’ Equity until realized. The change in the unrealized net holding gains (losses) is reflected as Comprehensive Income (Loss).
107 |
The Company individually reviews and evaluates its marketable securities for impairment on a quarterly basis or when events or circumstances occur. The Company considers, among other things, credit aspects of the issuer, amount of decline in fair value over cost and length of time in a continuous loss position. The Company has developed a general policy of evaluating whether an unrealized loss is other than temporary. On a quarterly basis, the Company makes an initial review of every individual security in its portfolio. If the security is impaired, the Company first determines its intent and ability to hold this investment for a period of time sufficient to allow for any anticipated recovery in market value. Next, the Company determines the length of time and the extent of the impairment. Barring other factors, including the downgrading of the security or the cessation of dividends, if the fair value of the security is below cost by less than 20% for less than 6 months and the Company has the intent and ability to hold the security, the security is deemed to be temporarily impaired. Otherwise, the Company reviews additional information to determine whether the impairment is other than temporary. The Company discusses and analyzes any relevant information known about the security, such as:
The Company normally holds REIT securities on a long term basis and has the ability and intent to hold securities to recovery. If a decline in fair value is determined to be other than temporary, an impairment charge is recognized in earnings and the cost basis of the individual security is written down to fair value as the new cost basis.
Cash and Cash Equivalents
Cash and cash equivalents include all cash and investments with an original maturity of three months or less. The Company maintains its cash in bank accounts in amounts that may exceed federally insured limits. The Company has not experienced any losses in these accounts in the past. The fair value of cash and cash equivalents approximates their current carrying amounts since all such items are short-term in nature.
Intangible Assets, Capitalized Lease Costs and Financing Costs
Intangible assets, consisting primarily of the value of in-place leases, are amortized to expense over the remaining terms of the respective leases. Upon termination of a lease, the unamortized portion is charged to expense. The weighted-average amortization period upon acquisition for intangible assets recorded during 2016, 2015 and 2014 was 12 years, 13 years and 14 years, respectively.
Costs incurred in connection with the execution of leases are capitalized and amortized over the term of the respective leases. Unamortized lease costs are charged to expense upon cancellation of leases prior to the expiration of lease terms. Costs incurred in connection with obtaining mortgages and other financings and refinancings are deferred and are amortized over the term of the related obligations using the effective interest method. Unamortized costs are charged to expense upon prepayment of the obligation. Amortization expense related to these deferred leasing and financing costs were $2,072,120, $2,042,520 and $1,231,222 for the years ended September 30, 2016, 2015 and 2014, respectively. The Company estimates that aggregate amortization expense for existing assets will be approximately $1,936,000, $1,743,000, $1,550,000, $1,009,000 and $931,000 for the fiscal years 2017, 2018, 2019, 2020 and 2021, respectively.
Revenue Recognition
Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as the Company is generally the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. These occupancy charges are recognized as earned.
The Company provides an allowance for doubtful accounts against the portion of tenant and other receivables and deferred rent receivable which are estimated to be uncollectible. For accounts receivable the Company deems uncollectible, the Company uses the direct write-off method. The Company did not have an allowance for doubtful accounts as of September 30, 2016 and 2015.
Lease Termination Income
Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with the Company.
Of the Company’s ninety-nine properties, only three leases, representing 1.3% of the Company’s gross leasable area, contain an early termination provision, which are as follows: the Company’s lease with its tenant at its 26,340 square foot location in Ridgeland (Jackson), MS, the Company’s lease with its tenant at its 83,000 square foot location in Roanoke, VA and the Company’s lease with its tenant at its 102,135 square foot location in O’Fallon (St. Louis), MO.
Net Income Per Share
Basic Net Income per Share is calculated by dividing Net Income Attributable to Common Shareholders by the weighted-average number of common shares outstanding during the period. Diluted Net Income per Common Share is calculated by dividing Net Income attributable to Common Shareholders by the weighted-average number of common shares outstanding plus the weighted-average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method.
In addition, common stock equivalents of 89,720, 115,408 and 95,112 shares are included in the diluted weighted average shares outstanding for fiscal years 2016, 2015 and 2014, respectively. As of September 30, 2016, 2015 and 2014, options to purchase -0-, 65,000 and 65,000 shares, respectively, were antidilutive.
Stock Compensation Plan
The Company accounts for awards of stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $926,465, $448,895 and $347,002 have been recognized in 2016, 2015 and 2014, respectively. Included in Note 9 to these consolidated financial statements are the assumptions and methodology used to calculate the fair value of stock options and restricted shares.
Income Tax
The Company has elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code. The Company will not be taxed on the portion of its income which is distributed to shareholders, provided it distributes at least 90% of its taxable income, has at least 75% of its assets in real estate investments and meets certain other requirements for qualification as a REIT. The Company is subject to franchise taxes in several of the states in which the Company owns property.
The Company follows the provisions of ASC Topic 740, Income Taxes, that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of September 30, 2016. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of September 30, 2016, the fiscal tax years 2013 through and including 2016 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.
Comprehensive Income
Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized holding gains or losses arising during the period on securities available for sale, less any reclassification adjustments for net gains of sales of securities transactions realized in income.
Reclassifications
Certain amounts in the consolidated financial statements for the prior years have been reclassified to conform to the financial statement presentation for the current year.
New Accounting Pronouncements
In AugustJanuary 2016, the Financial Accounting Standards Board (“FASB”)(FASB) issued Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.
In March 2016, FASB issued ASU 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments”. ASU 2016-09 addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.
In February 2016, the FASB issued ASU 2016-02, “Leases”. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.
In January 2016, the FASB issued ASU(ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”.Liabilities.” ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes becomebecame effective for the Company’sour fiscal year beginning October 1, 2018. The Company is currentlymost significant change for us, once ASU 2016-01 was adopted, was the accounting treatment for our investments in marketable securities that are classified as available for sale. The accounting treatment used for our Consolidated Financial Statements through fiscal 2018 was that our investments in marketable securities, classified as available for sale, were carried at fair value, with net unrealized holding gains and losses being excluded from earnings and reported as a separate component of Shareholders’ Equity until realized and the change in net unrealized holding gains and losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities continue to be measured at fair value, however, the changes in net unrealized holding gains and losses are now recognized through net income on our Consolidated Statements of Income. On October 1, 2018, unrealized net holding losses of $24.7 million were reclassed to beginning Undistributed Income (Loss) to recognize the unrealized losses previously recorded in “accumulated other comprehensive income” on our consolidated balance sheets.
Cash and Cash Equivalents
Cash and cash equivalents include all cash and investments with an original maturity of three months or less. We maintain our cash in bank accounts in amounts that may exceed federally insured limits. We have not experienced any losses in these accounts in the processpast. The fair value of evaluating the impactcash and cash equivalents approximates their current carrying amounts since all such items are short-term in nature.
Intangible Assets, Capitalized Lease Costs and Financing Costs
Intangible assets, consisting primarily of the value of in-place leases, are amortized to expense over the remaining terms of the respective leases. Upon termination of a lease, the unamortized portion is charged to expense. The weighted-average amortization period upon acquisition for intangible assets recorded during 2019, 2018 and 2017 was 12 years, 12 years and 13 years, respectively.
Costs incurred in connection with the execution of leases are capitalized and amortized over the term of the respective leases. Unamortized lease costs are charged to expense upon cancellation of leases prior to the expiration of lease terms. Costs incurred in connection with obtaining mortgages and other financings and refinancings are deferred and are amortized over the term of the related obligations using the effective interest method. Unamortized costs are charged to expense upon prepayment of the obligation. Amortization expense related to these deferred leasing and financing costs were $2.2 million, $2.1 million and $2.1 million for the years ended September 30, 2019, 2018 and 2017, respectively. We estimate that aggregate amortization expense for existing assets will be $2.0 million, $1.8 million, $1.7 million, $1.6 million and $1.3 million for the fiscal years 2020, 2021, 2022, 2023 and 2024, respectively.
Revenue Recognition
Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as we are generally the primary obligor and, with respect to purchasing goods and services from third-party suppliers, have discretion in selecting the supplier and bears the associated credit risk. These occupancy charges are recognized as earned.
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When applicable, we provide an allowance for doubtful accounts against the portion of tenant and other receivables and deferred rent receivables, which are estimated to be uncollectible. For accounts receivables that we deem uncollectible, we use the direct write-off method. We did not have an allowance for doubtful accounts balance as of September 30, 2019 and 2018 and there were no write-off’s of any receivable accounts during the fiscal years ended 2019, 2018 and 2017.
Lease Termination Income
Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with us.
Only three of our 114 properties have leases that contain an early termination provision. These three properties contain 158,000 total rentable square feet, representing less than 1% of our total rentable square feet. Our leases with early termination provisions are our 36,000 square foot location in Urbandale (Des Moines), IA, our 39,000 square foot location in Rockford, IL, and our 83,000 square foot location in Roanoke, VA. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include: the date termination can be exercised, the time frame that notice must be given by the tenant to us and the termination fee that would be required to be paid by the tenant to us. The total potential termination fee to be paid to us from the three tenants with leases that have a termination provision amounts to $1.7 million.
Basic Net Income per Common Share is calculated by dividing Net Income Attributable to Common Shareholders by the weighted-average number of common shares outstanding during the period. Diluted Net Income per Common Share is calculated by dividing Net Income Attributable to Common Shareholders by the weighted-average number of common shares outstanding plus the weighted-average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method.
In addition, common stock equivalents of , and shares are included in the diluted weighted average shares outstanding for fiscal years 2019, 2018 and 2017, respectively. As of September 30, 2019, 2018 and 2017, options to purchase , and shares, respectively, were antidilutive.
Stock Compensation Plan
We account for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of stock awards and restricted stock awards is equal to the fair value of our stock on the grant date. The amortization of compensation costs for the awards of stock, stock option grants and restricted stock are included in General and Administrative Expenses in the accompanying Consolidated Statements of Income and amounted to $ , $ and $ have been recognized in 2019, 2018 and 2017, respectively. Included in Note 9 to these consolidated financial statements are the assumptions and methodology used to calculate the fair value of stock options and restricted shares.
Income Tax
We have elected to be taxed as a REIT under Sections 856-860 of the Code, and we intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, we will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that we distribute to our shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. We are subject to franchise taxes in several of the states in which we own properties.
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In December 2017, the Tax Cuts and Jobs Act of 2017 (the TCJA), Code Section 199A, was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, individual taxpayers and trusts and estates may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or qualified dividend income.
We follow the provisions of ASC Topic 740, Income Taxes, that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on our evaluation, we determined that we have no uncertain tax positions and no unrecognized tax benefits as of September 30, 2019. We record interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of September 30, 2019, the fiscal tax years 2016 through and including 2019 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.
Comprehensive Income
Comprehensive income is comprised of net income and other comprehensive income. Prior to our adoption of Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” on itsOctober 1, 2018, other comprehensive income consisted of unrealized holding gains or losses arising during the period on securities available for sale, less any reclassification adjustments for net gains of sales of securities transactions realized in income. Once we adopted ASU 2016-01, the changes in net unrealized holding gains and losses were no longer recognized through other comprehensive income and instead these changes are now recognized through net income on our Consolidated Statements of Income.
Reclassifications
Certain amounts in the consolidated financial statements for the prior years have been reclassified to conform to the financial statement presentation for the current year.
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Recent Accounting Pronouncements
In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes became effective for our fiscal year beginning October 1, 2018. The most significant change for us, once ASU 2016-01 was adopted, was the accounting treatment for our investments in marketable securities that are classified as available for sale. The accounting treatment used for our Consolidated Financial Statements through Fiscal 2018 was that our investments in marketable securities, classified as available for sale, were carried at fair value, with net unrealized holding gains and losses being excluded from earnings and reported as a separate component of Shareholders’ Equity until realized and the change in net unrealized holding gains and losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities continue to be measured at fair value, however, the changes in net unrealized holding gains and losses are now recognized through net income on our Consolidated Statements of Income. On October 1, 2018, unrealized net holding losses of $24.7 million were reclassed to beginning Undistributed Income (Loss) to recognize the unrealized losses previously recorded in “accumulated other comprehensive income” on our consolidated balance sheets.
In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessee and lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The most significant changes related to lessor accounting under ASU 2016-02 include bifurcating revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since our revenue is primarily derived from leasing activities from long-term net-leases and since we previously did not capitalize indirect costs for leases, we continue to account for our leases and related leasing costs in substantially the same manner as we previously did prior to the adoption of the ASU 2016-02 on October 1, 2019. In addition, the guidance requires lessees to recognize assets and liabilities for operating leases with lease terms greater than twelve months on the balance sheet. Therefore, the most significant impact for us is the recognition of our corporate office lease, while accounting where we are the lessor remains substantially the same. Upon adoption, we calculated the asset and lease liability equal to the present value of the minimum lease payments due under our corporate office lease and determined that the asset and lease liability was immaterial to our Consolidated Financial Statements. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases.” The amendment in ASU 2018-10 affects narrow aspects of the guidance issued earlier in ASU 2016-02 by removing certain inconsistencies and providing additional clarification related to the guidance issued earlier. In December 2018, the FASB issued ASU 2018-20 “Narrow-Scope Improvements for Lessors.” Similar to ASU 2018-10, 2018-20 affects narrow aspects of the guidance issued earlier in ASU 2016-02 as well by providing additional clarification related to the guidance issued earlier. The most significant changes related to lessor accounting under ASU 2018-20 is the clarification of how to treat payments made by a lessee directly to a third party, such as real estate taxes paid by the lessee directly to the taxing authority, whereby items paid directly by the lessee to a third party should not be reflected in the lessors income statement and, thus, should not be bifurcated and included in revenue and operating expenses. A majority of our reimbursable expenses are paid by us and are billed back to our lessees. Therefore, these reimbursable expenses will continue to be presented separately by bifurcating these revenue and expense items in our Consolidated Statements of Income. We adopted these standards effective October 1, 2019 and the adoption of these standards did not have a significant impact on our consolidated financial statements and has not determinedrelated disclosures. The only effect the effectsadoption of this updatethese standards had on the Company’sour consolidated financial position, resultsstatements and related disclosures effective October 1, 2019 are instances where certain types of operations or cash flowspayments are made by a lessee directly to a third party whereas these payments are no longer presented on a gross basis in our Consolidated Statements of Income, which have an immaterial effect on our reported revenue and disclosures at this time.a net zero effect on our Net Income Attributable to Common Shareholders.
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In September 2015,May 2014, the FASB issued ASU 2015-16, “Simplifying2014-09, “Revenue from Contracts with Customers, which requires an entity to recognize the Accountingamount of revenue to which it expects to be entitled for Measurement-Period Adjustments”.the transfer of promised goods or services to customers.” The FASB issued further guidance in ASU 2015-16 eliminates2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” that provides clarifying guidance in certain narrow areas and adds some practical expedients. ASU 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP when it became effective. The effective date of ASU 2014-09 was extended by one year by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the requirement to restate prior period financial statements for measurement period adjustments.Effective Date.” The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. ASU 2015-16standard is effective for the first interim andperiod within annual reporting periods beginning after December 15, 2015. Early adoption2017. Therefore, we adopted the standard effective October 1, 2018. Our revenue is permitted. The Company does not expectprimarily derived from leasing activities and historically our property dispositions have been cash sales with no contingencies and no future involvement in the property. Since this standard applies to all contracts with customers except those that are within the scope of other guidance, such as leases, the adoption of ASU 2015-16 tothis standard did not have a material effectsignificant impact on the Company’sour consolidated financial statements.statements and related disclosures.
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in ASU 2015-03 are effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” providing guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance on this matter, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on that line-of-credit arrangement. The Company is currently in the process of evaluating the impact the adoption of ASU 2015-03 and ASU 2015-15 will have on the Company’s financial position or results of operations.
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), “Amendments to the Consolidation Analysis”. ASU 2015-02 focuses to minimize situations under previously existing guidance in which a reporting entity was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownership of the majority of the legal entity’s voting rights; or (3) the exposure to a majority of the legal entity’s economic benefits. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 will be effective for periods beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2015-02 to have a material effect on the Company’s consolidated financial statements.
Management doesWe do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.
NOTE 2 – REAL ESTATE INVESTMENTS
The following is a summary of the cost and accumulated depreciation of the Company’sour land, buildings and improvements at September 30, 20162019 and 2015:2018 (in thousands):
SEPTEMBER 30, 2016 | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Alabama: | ||||||||||||||||||
Huntsville | Industrial | $ | 748,115 | $ | 5,857,016 | $ | 936,862 | $ | 5,668,269 | |||||||||
Arizona: | ||||||||||||||||||
Tolleson (Phoenix) | Industrial | 1,316,075 | 15,508,151 | 5,115,610 | 11,708,616 | |||||||||||||
Colorado: | ||||||||||||||||||
Colorado Springs | Industrial | 1,270,000 | 5,934,472 | 1,490,351 | 5,714,121 | |||||||||||||
Colorado Springs | Industrial | 2,150,000 | 26,350,000 | 225,214 | 28,274,786 | |||||||||||||
Denver | Industrial | 1,150,000 | 5,204,051 | 1,437,516 | 4,916,535 | |||||||||||||
Connecticut: | ||||||||||||||||||
Newington (Hartford) | Industrial | 410,000 | 3,053,824 | 1,207,938 | 2,255,886 | |||||||||||||
Florida: | ||||||||||||||||||
Cocoa | Industrial | 1,881,316 | 12,246,133 | 2,113,243 | 12,014,206 | |||||||||||||
Davenport (Orlando) | Industrial | 7,060,000 | 30,720,000 | 131,282 | 37,648,718 | |||||||||||||
Ft. Myers | Industrial | 1,910,000 | 3,107,447 | 991,678 | 4,025,769 | |||||||||||||
Jacksonville (FDX) | Industrial | 1,165,000 | 5,081,404 | 2,295,680 | 3,950,724 | |||||||||||||
Jacksonville (FDX Ground) | Industrial | 6,000,000 | 24,645,954 | 1,053,246 | 29,592,708 | |||||||||||||
Lakeland | Industrial | 261,000 | 1,721,532 | 466,240 | 1,516,292 | |||||||||||||
Orlando | Industrial | 2,200,000 | 6,354,432 | 1,471,814 | 7,082,618 | |||||||||||||
Punta Gorda | Industrial | -0- | 4,113,265 | 833,789 | 3,279,476 | |||||||||||||
Tampa (FDX Ground) | Industrial | 5,000,000 | 14,696,102 | 4,161,734 | 15,534,368 | |||||||||||||
Tampa (FDX) | Industrial | 2,830,000 | 4,762,861 | 1,258,519 | 6,334,342 | |||||||||||||
Tampa (Tampa Bay Grand Prix) | Industrial | 1,867,000 | 3,810,982 | 941,848 | 4,736,134 | |||||||||||||
Georgia: | ||||||||||||||||||
Augusta (FDX Ground) | Industrial | 614,406 | 4,739,628 | 1,258,944 | 4,095,090 | |||||||||||||
Augusta (FDX) | Industrial | 380,000 | 1,591,732 | 367,357 | 1,604,375 | |||||||||||||
Griffin (Atlanta) | Industrial | 760,000 | 14,108,857 | 3,767,103 | 11,101,754 | |||||||||||||
Illinois: | ||||||||||||||||||
Burr Ridge (Chicago) | Industrial | 270,000 | 1,422,901 | 656,159 | 1,036,742 | |||||||||||||
Elgin (Chicago) | Industrial | 1,280,000 | 5,652,916 | 2,124,899 | 4,808,017 | |||||||||||||
Granite City (St. Louis, MO) | Industrial | 340,000 | 12,202,814 | 4,485,359 | 8,057,455 | |||||||||||||
Montgomery (Chicago) | Industrial | 2,000,000 | 9,298,367 | 2,282,887 | 9,015,480 | |||||||||||||
Rockford (B/E Aerospace) | Industrial | 480,000 | 4,620,000 | 236,923 | 4,863,077 | |||||||||||||
Rockford (Sherwin-Williams) | Industrial | 1,100,000 | 4,451,227 | 628,612 | 4,922,615 | |||||||||||||
Sauget (St. Louis, MO) | Industrial | 1,890,000 | 13,314,950 | 682,605 | 14,522,345 | |||||||||||||
Schaumburg (Chicago) | Industrial | 1,039,800 | 3,941,614 | 2,037,309 | 2,944,105 | |||||||||||||
Wheeling (Chicago) | Industrial | 5,112,120 | 13,425,532 | 3,735,969 | 14,801,683 | |||||||||||||
Indiana: | ||||||||||||||||||
Greenwood (Indianapolis) | Industrial | 2,250,000 | 35,250,391 | 1,280,020 | 36,220,371 | |||||||||||||
Indianapolis | Industrial | 3,500,000 | 20,446,000 | 1,132,868 | 22,813,132 | |||||||||||||
Iowa: | ||||||||||||||||||
Urbandale (Des Moines) | Industrial | 310,000 | 1,851,895 | 1,094,293 | 1,067,602 | |||||||||||||
Kansas: | ||||||||||||||||||
Edwardsville (Kansas City)(Carlisle Tire) | Industrial | 1,185,000 | 6,040,401 | 2,158,091 | 5,067,310 | |||||||||||||
Edwardsville (Kansas City)(International Paper) | Industrial | 2,750,000 | 15,544,108 | 1,172,549 | 17,121,559 | |||||||||||||
Olathe (Kansas City) | Industrial | 2,350,000 | 29,387,000 | 125,585 | 31,611,415 | |||||||||||||
Topeka | Industrial | -0- | 3,679,843 | 707,765 | 2,972,078 | |||||||||||||
Kentucky: | ||||||||||||||||||
Buckner (Louisville) | Industrial | 2,280,000 | 24,487,852 | 1,834,166 | 24,933,686 | |||||||||||||
Frankfort (Lexington) | Industrial | 1,850,000 | 26,150,000 | 1,229,274 | 26,770,726 | |||||||||||||
Louisville | Industrial | 1,590,000 | 9,714,000 | 83,026 | 11,220,974 | |||||||||||||
Louisiana: | ||||||||||||||||||
Covington (New Orleans) | Industrial | 2,720,000 | 15,690,000 | 335,256 | 18,074,744 |
SCHEDULE OF REAL ESTATE INVESTMENTS
SEPTEMBER 30, 2019 | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
Alabama: | ||||||||||||||||||||
Huntsville | Industrial | $ | 748 | $ | 5,914 | $ | 1,406 | $ | 5,256 | |||||||||||
Mobile | Industrial | 2,480 | 30,572 | 980 | 32,072 | |||||||||||||||
Arizona: | ||||||||||||||||||||
Tolleson (Phoenix) | Industrial | 1,316 | 15,508 | 6,659 | 10,165 | |||||||||||||||
Colorado: | ||||||||||||||||||||
Colorado Springs | Industrial | 2,150 | 27,170 | 2,310 | 27,010 | |||||||||||||||
Denver | Industrial | 1,150 | 5,214 | 1,839 | 4,525 | |||||||||||||||
Connecticut: | ||||||||||||||||||||
Newington (Hartford) | Industrial | 410 | 3,084 | 1,466 | 2,028 | |||||||||||||||
Florida: | ||||||||||||||||||||
Cocoa | Industrial | 1,881 | 12,246 | 3,080 | 11,047 | |||||||||||||||
Davenport (Orlando) | Industrial | 7,060 | 30,720 | 2,494 | 35,286 | |||||||||||||||
Daytona Beach | Industrial | 3,120 | 26,888 | 1,036 | 28,972 | |||||||||||||||
Ft. Myers (FDX Ground) | Industrial | 2,486 | 19,178 | 1,332 | 20,332 | |||||||||||||||
Homestead (Miami) | Industrial | 4,427 | 33,485 | 1,933 | 35,979 | |||||||||||||||
Jacksonville (FDX) | Industrial | 1,165 | 5,419 | 2,961 | 3,623 | |||||||||||||||
Jacksonville (FDX Ground) | Industrial | 6,000 | 24,827 | 2,799 | 28,028 | |||||||||||||||
Lakeland | Industrial | 261 | 1,782 | 625 | 1,418 | |||||||||||||||
Orlando | Industrial | 2,200 | 6,575 | 2,022 | 6,753 | |||||||||||||||
Punta Gorda | Industrial | 0 | 4,134 | 1,172 | 2,962 | |||||||||||||||
Tampa (FDX Ground) | Industrial | 5,000 | 14,702 | 5,302 | 14,400 | |||||||||||||||
Tampa (FDX) | Industrial | 2,830 | 5,035 | 1,669 | 6,196 | |||||||||||||||
Tampa (Tampa Bay Grand Prix) | Industrial | 1,867 | 3,811 | 1,246 | 4,432 | |||||||||||||||
Georgia: | ||||||||||||||||||||
Augusta (FDX Ground) | Industrial | 614 | 4,749 | 1,634 | 3,729 | |||||||||||||||
Augusta (FDX) | Industrial | 380 | 1,604 | 512 | 1,472 | |||||||||||||||
Braselton (Atlanta) | Industrial | 13,965 | 46,262 | 1,285 | 58,942 | |||||||||||||||
Griffin (Atlanta) | Industrial | 760 | 14,315 | 4,912 | 10,163 | |||||||||||||||
Savannah (Shaw) | Industrial | 4,405 | 51,621 | 2,206 | 53,820 | |||||||||||||||
Savannah (FDX Ground) | Industrial | 3,441 | 24,091 | 515 | 27,017 | |||||||||||||||
Illinois: | ||||||||||||||||||||
Burr Ridge (Chicago) | Industrial | 270 | 1,437 | 783 | 924 | |||||||||||||||
Elgin (Chicago) | Industrial | 1,280 | 5,697 | 2,599 | 4,378 |
112 |
SEPTEMBER 30, 2016 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Maryland: | ||||||||||||||||||
Beltsville (Washington, DC) | Industrial | $ | 3,200,000 | $ | 11,312,355 | $ | 3,536,076 | $ | 10,976,279 | |||||||||
Michigan: | ||||||||||||||||||
Livonia (Detroit) | Industrial | 320,000 | 13,442,030 | 1,350,345 | 12,411,685 | |||||||||||||
Orion | Industrial | 4,649,971 | 18,235,665 | 3,549,648 | 19,335,988 | |||||||||||||
Romulus (Detroit) | Industrial | 531,000 | 4,069,532 | 1,804,248 | 2,796,284 | |||||||||||||
Minnesota: | ||||||||||||||||||
Stewartville (Rochester) | Industrial | 900,000 | 4,320,000 | 332,308 | 4,887,692 | |||||||||||||
White Bear Lake (Minneapolis/St. Paul) | Industrial | 1,393,000 | 3,764,126 | 927,965 | 4,229,161 | |||||||||||||
Mississippi: | ||||||||||||||||||
Olive Branch (Memphis, TN)(Anda Distribution) | Industrial | 800,000 | 13,750,000 | 1,498,397 | 13,051,603 | |||||||||||||
Olive Branch (Memphis, TN)(Milwaukee Tool) | Industrial | 2,550,000 | 34,364,917 | 2,275,368 | 34,639,549 | |||||||||||||
Richland (Jackson) | Industrial | 211,000 | 1,689,691 | 826,199 | 1,074,492 | |||||||||||||
Ridgeland (Jackson) | Industrial | 218,000 | 1,640,591 | 1,177,386 | 681,205 | |||||||||||||
Missouri: | ||||||||||||||||||
Kansas City (Bunzl) | Industrial | 1,000,000 | 8,600,000 | 422,650 | 9,177,350 | |||||||||||||
Kansas City (Kellogg) | Industrial | 660,000 | 4,140,474 | 1,022,653 | 3,777,821 | |||||||||||||
Liberty (Kansas City) | Industrial | 723,000 | 6,674,881 | 3,152,489 | 4,245,392 | |||||||||||||
O’Fallon (St. Louis) | Industrial | 264,000 | 3,981,913 | 2,096,073 | 2,149,840 | |||||||||||||
St. Joseph | Industrial | 800,000 | 12,433,706 | 4,756,910 | 8,476,796 | |||||||||||||
Nebraska: | ||||||||||||||||||
Omaha | Industrial | 1,170,000 | 4,774,691 | 2,109,230 | 3,835,461 | |||||||||||||
New Jersey: | ||||||||||||||||||
Carlstadt (New York, NY) | Industrial | 1,194,000 | 3,709,589 | 849,584 | 4,054,005 | |||||||||||||
Somerset | Shopping Center | 34,316 | 3,038,565 | 1,399,343 | 1,673,538 | |||||||||||||
New York: | ||||||||||||||||||
Cheektowaga (Buffalo) | Industrial | 4,796,765 | 6,164,058 | 1,531,509 | 9,429,314 | |||||||||||||
Halfmoon (Albany) | Industrial | 1,190,000 | 4,335,600 | 500,262 | 5,025,338 | |||||||||||||
Orangeburg (New York) | Industrial | 694,720 | 3,200,955 | 2,319,253 | 1,576,422 | |||||||||||||
North Carolina: | ||||||||||||||||||
Concord (Charlotte) | Industrial | 4,305,000 | 27,670,897 | 650,384 | 31,325,513 | |||||||||||||
Fayetteville | Industrial | 172,000 | 5,269,876 | 2,458,876 | 2,983,000 | |||||||||||||
Winston-Salem | Industrial | 980,000 | 6,258,613 | 2,185,430 | 5,053,183 | |||||||||||||
Ohio: | ||||||||||||||||||
Bedford Heights (Cleveland) | Industrial | 990,000 | 5,873,879 | 1,521,396 | 5,342,483 | |||||||||||||
Cincinnati | Industrial | 800,000 | 5,950,000 | 165,278 | 6,584,722 | |||||||||||||
Lebanon (Cincinnati) | Industrial | 240,000 | 4,212,425 | 485,114 | 3,967,311 | |||||||||||||
Monroe (Cincinnati) | Industrial | 1,800,000 | 11,137,000 | 452,143 | 12,484,857 | |||||||||||||
Richfield (Cleveland) | Industrial | 2,676,848 | 13,758,630 | 2,373,693 | 14,061,785 | |||||||||||||
Streetsboro (Cleveland) | Industrial | 1,760,000 | 17,840,000 | 2,058,462 | 17,541,538 | |||||||||||||
West Chester Twp. (Cincinnati) | Industrial | 695,000 | 5,033,690 | 1,947,128 | 3,781,562 | |||||||||||||
Oklahoma: | ||||||||||||||||||
Oklahoma City | Industrial | 1,410,000 | 11,170,262 | 1,014,638 | 11,565,624 | |||||||||||||
Tulsa | Industrial | 790,000 | 2,958,031 | 227,268 | 3,520,763 | |||||||||||||
Pennsylvania: | ||||||||||||||||||
Altoona | Industrial | 1,200,000 | 7,808,650 | 583,052 | 8,425,598 | |||||||||||||
Imperial (Pittsburgh) | Industrial | 3,700,000 | 16,250,000 | 243,056 | 19,706,944 | |||||||||||||
Monaca (Pittsburgh) | Industrial | 401,716 | 7,404,507 | 2,331,288 | 5,474,935 | |||||||||||||
South Carolina: | ||||||||||||||||||
Ft. Mill (Charlotte, NC) | Industrial | 1,670,000 | 13,743,307 | 1,949,873 | 13,463,434 | |||||||||||||
Hanahan (Charleston)(SAIC) | Industrial | 1,129,000 | 12,211,592 | 3,577,226 | 9,763,366 | |||||||||||||
Hanahan (Charleston)(FDX Ground) | Industrial | 930,000 | 6,684,653 | 1,724,191 | 5,890,462 | |||||||||||||
Tennessee: | ||||||||||||||||||
Chattanooga | Industrial | 300,000 | 4,712,203 | 1,131,706 | 3,880,497 | |||||||||||||
Lebanon (Nashville) | Industrial | 2,230,000 | 11,985,126 | 1,536,542 | 12,678,584 |
SEPTEMBER 30, 2019 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
Granite City (St. Louis, MO) | Industrial | $ | 340 | $ | 12,358 | $ | 5,539 | $ | 7,159 | |||||||||||
Montgomery (Chicago) | Industrial | 2,000 | 9,303 | 3,004 | 8,299 | |||||||||||||||
Rockford (Collins Aerospace Systems) | Industrial | 480 | 4,620 | 592 | 4,508 | |||||||||||||||
Rockford (Sherwin-Williams Co.) | Industrial | 1,100 | 4,451 | 975 | 4,576 | |||||||||||||||
Sauget (St. Louis, MO) | Industrial | 1,890 | 13,315 | 1,708 | 13,497 | |||||||||||||||
Schaumburg (Chicago) | Industrial | 1,040 | 4,138 | 2,407 | 2,771 | |||||||||||||||
Wheeling (Chicago) | Industrial | 5,112 | 13,881 | 4,820 | 14,173 | |||||||||||||||
Indiana: | ||||||||||||||||||||
Greenwood (Indianapolis) | Industrial | 2,250 | 35,262 | 3,998 | 33,514 | |||||||||||||||
Indianapolis | Industrial | 3,746 | 21,758 | 2,830 | 22,674 | |||||||||||||||
Lafayette | Industrial | 2,802 | 22,277 | 96 | 24,983 | |||||||||||||||
Iowa: | ||||||||||||||||||||
Urbandale (Des Moines) | Industrial | 310 | 2,234 | 1,294 | 1,250 | |||||||||||||||
Kansas: | ||||||||||||||||||||
Edwardsville (Kansas City) (Carlisle Tire) | Industrial | 1,185 | 6,048 | 2,689 | 4,544 | |||||||||||||||
Edwardsville (Kansas City) (International Paper) | Industrial | 2,750 | 15,544 | 2,416 | 15,878 | |||||||||||||||
Olathe (Kansas City) | Industrial | 2,350 | 29,387 | 2,386 | 29,351 | |||||||||||||||
Topeka | Industrial | 0 | 3,680 | 991 | 2,689 | |||||||||||||||
Kentucky: | ||||||||||||||||||||
Buckner (Louisville) | Industrial | 2,280 | 24,528 | 3,755 | 23,053 | |||||||||||||||
Frankfort (Lexington) | Industrial | 1,850 | 26,150 | 3,241 | 24,759 | |||||||||||||||
Louisville | Industrial | 1,590 | 9,714 | 830 | 10,474 | |||||||||||||||
Louisiana: | ||||||||||||||||||||
Covington (New Orleans) | Industrial | 2,720 | 15,706 | 1,543 | 16,883 | |||||||||||||||
Maryland: | ||||||||||||||||||||
Beltsville (Washington, DC) | Industrial | 3,200 | 11,312 | 4,454 | 10,058 | |||||||||||||||
Michigan: | ||||||||||||||||||||
Walker (Grand Rapids) | Industrial | 4,034 | 27,621 | 1,771 | 29,884 | |||||||||||||||
Livonia (Detroit) | Industrial | 320 | 13,560 | 2,407 | 11,473 | |||||||||||||||
Orion | Industrial | 4,650 | 18,240 | 4,959 | 17,931 | |||||||||||||||
Romulus (Detroit) | Industrial | 531 | 4,418 | 2,182 | 2,767 | |||||||||||||||
Minnesota: | ||||||||||||||||||||
Stewartville (Rochester) | Industrial | 900 | 4,324 | 665 | 4,559 | |||||||||||||||
Mississippi: | ||||||||||||||||||||
Olive Branch (Memphis, TN)(Anda Pharmaceuticals, Inc.) | Industrial | 800 | 13,750 | 2,556 | 11,994 | |||||||||||||||
Olive Branch (Memphis, TN)(Milwaukee Tool) | Industrial | 2,550 | 34,365 | 4,929 | 31,986 | |||||||||||||||
Richland (Jackson) | Industrial | 211 | 1,690 | 1,057 | 844 | |||||||||||||||
Ridgeland (Jackson) | Industrial | 218 | 2,093 | 1,382 | 929 | |||||||||||||||
Missouri: | ||||||||||||||||||||
Kansas City (Bunzl) | Industrial | 1,000 | 9,003 | 1,147 | 8,856 | |||||||||||||||
Liberty (Kansas City) | Industrial | 724 | 6,813 | 3,669 | 3,868 | |||||||||||||||
O’Fallon (St. Louis) | Industrial | 264 | 3,986 | 2,492 | 1,758 | |||||||||||||||
St. Joseph | Industrial | 800 | 12,589 | 5,804 | 7,585 | |||||||||||||||
Nebraska: | ||||||||||||||||||||
Omaha | Industrial | 1,170 | 4,794 | 2,484 | 3,480 | |||||||||||||||
New Jersey: | ||||||||||||||||||||
Carlstadt (New York, NY) | Industrial | 1,194 | 4,103 | 1,123 | 4,174 | |||||||||||||||
Somerset | Shopping Center | 34 | 3,095 | 1,687 | 1,442 | |||||||||||||||
Trenton | Industrial | 8,336 | 75,652 | 1,940 | 82,048 | |||||||||||||||
New York: | ||||||||||||||||||||
Cheektowaga (Buffalo) | Industrial | 4,797 | 6,164 | 2,011 | 8,950 | |||||||||||||||
Halfmoon (Albany) | Industrial | 1,190 | 4,336 | 834 | 4,692 | |||||||||||||||
Hamburg (Buffalo) | Industrial | 1,700 | 33,394 | 2,560 | 32,534 | |||||||||||||||
North Carolina: | ||||||||||||||||||||
Concord (Charlotte) | Industrial | 4,305 | 28,740 | 3,158 | 29,887 |
113 |
SEPTEMBER 30, 2016 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Memphis | Industrial | $ | 1,240,887 | $ | 13,380,000 | $ | 2,230,008 | $ | 12,390,879 | |||||||||
Shelby County | Vacant Land | 11,065 | -0- | -0- | 11,065 | |||||||||||||
Texas: | ||||||||||||||||||
Carrollton (Dallas) | Industrial | 1,500,000 | 16,269,106 | 2,708,020 | 15,061,086 | |||||||||||||
Corpus Christi | Industrial | -0- | 4,764,500 | 549,750 | 4,214,750 | |||||||||||||
Edinburg | Industrial | 1,000,000 | 10,423,872 | 907,803 | 10,516,069 | |||||||||||||
El Paso | Industrial | 3,225,195 | 9,205,997 | 1,442,146 | 10,989,046 | |||||||||||||
Fort Worth (Dallas) | Industrial | 8,200,000 | 27,100,832 | 810,709 | 34,490,123 | |||||||||||||
Houston | Industrial | 1,730,000 | 6,353,107 | 1,080,294 | 7,002,813 | |||||||||||||
Lindale (Tyler) | Industrial | 540,000 | 9,390,000 | 481,538 | 9,448,462 | |||||||||||||
Spring (Houston) | Industrial | 1,890,000 | 17,393,798 | 1,183,663 | 18,100,135 | |||||||||||||
Waco | Industrial | 1,350,000 | 11,196,157 | 923,263 | 11,622,894 | |||||||||||||
Virginia: | ||||||||||||||||||
Charlottesville | Industrial | 1,170,000 | 3,178,499 | 1,393,226 | 2,955,273 | |||||||||||||
Mechanicsville (Richmond) (FDX) | Industrial | 1,160,000 | 6,598,181 | 2,644,156 | 5,114,025 | |||||||||||||
Richmond (United Technologies) | Industrial | 446,000 | 4,322,309 | 1,229,737 | 3,538,572 | |||||||||||||
Roanoke (CHEP) | Industrial | 1,853,000 | 5,552,447 | 1,329,033 | 6,076,414 | |||||||||||||
Roanoke (FDX Ground) | Industrial | 1,740,000 | 8,460,000 | 714,038 | 9,485,962 | |||||||||||||
Washington: | ||||||||||||||||||
Burlington (Seattle/Everett) | Industrial | 8,000,000 | 22,210,680 | 284,752 | 29,925,928 | |||||||||||||
Wisconsin: | ||||||||||||||||||
Cudahy (Milwaukee) | Industrial | 980,000 | 8,402,361 | 2,853,810 | 6,528,551 | |||||||||||||
Green Bay | Industrial | 590,000 | 5,980,000 | 460,000 | 6,110,000 | |||||||||||||
Total as of September 30, 2016 | $ | 165,375,315 | $ | 1,005,938,180 | $ | 148,830,169 | $ | 1,022,483,326 |
SEPTEMBER 30, 2015 | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Alabama: | ||||||||||||||||||
Huntsville | Industrial | $ | 748,115 | $ | 4,003,626 | $ | 821,527 | $ | 3,930,214 | |||||||||
Arizona: | ||||||||||||||||||
Tolleson (Phoenix) | Industrial | 1,316,075 | 13,852,511 | 4,669,262 | 10,499,324 | |||||||||||||
Colorado: | ||||||||||||||||||
Colorado Springs | Industrial | 1,270,000 | 5,925,115 | 1,336,829 | 5,858,286 | |||||||||||||
Denver | Industrial | 1,150,000 | 5,204,051 | 1,304,213 | 5,049,838 | |||||||||||||
Connecticut: | ||||||||||||||||||
Newington (Hartford) | Industrial | 410,000 | 3,053,824 | 1,129,167 | 2,334,657 | |||||||||||||
Florida: | ||||||||||||||||||
Cocoa | Industrial | 1,881,316 | 12,208,527 | 1,793,254 | 12,296,589 | |||||||||||||
Ft. Myers | Industrial | 1,910,000 | 3,107,447 | 913,073 | 4,104,374 | |||||||||||||
Jacksonville (FDX) | Industrial | 1,165,000 | 5,064,421 | 2,145,184 | 4,084,237 | |||||||||||||
Jacksonville (FDX Ground) | Industrial | 6,000,000 | 24,645,954 | 421,298 | 30,224,656 | |||||||||||||
Lakeland | Industrial | 261,000 | 1,705,211 | 406,472 | 1,559,739 | |||||||||||||
Orlando | Industrial | 2,200,000 | 6,341,237 | 1,307,147 | 7,234,090 | |||||||||||||
Punta Gorda | Industrial | -0- | 4,104,915 | 742,718 | 3,362,197 | |||||||||||||
Tampa (FDX Ground) | Industrial | 5,000,000 | 13,448,962 | 3,799,846 | 14,649,116 | |||||||||||||
Tampa (FDX) | Industrial | 2,830,000 | 4,735,717 | 1,135,794 | 6,429,923 | |||||||||||||
Tampa (Tampa Bay Grand Prix) | Industrial | 1,867,000 | 3,784,066 | 841,103 | 4,809,963 | |||||||||||||
Georgia: | ||||||||||||||||||
Augusta (FDX Ground) | Industrial | 614,406 | 4,714,467 | 1,137,702 | 4,191,171 | |||||||||||||
Augusta (FDX) | Industrial | 380,000 | 1,567,032 | 321,283 | 1,625,749 | |||||||||||||
Griffin (Atlanta) | Industrial | 760,000 | 14,108,857 | 3,405,334 | 11,463,523 |
SEPTEMBER 30, 2019 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
Concord (Charlotte) | Industrial | $ | 4,307 | $ | 35,736 | $ | 1,985 | $ | 38,058 | |||||||||||
Fayetteville | Industrial | 172 | 5,283 | 3,165 | 2,290 | |||||||||||||||
Winston-Salem | Industrial | 980 | 6,266 | 2,835 | 4,411 | |||||||||||||||
Ohio: | ||||||||||||||||||||
Bedford Heights (Cleveland) | Industrial | 990 | 6,308 | 2,090 | 5,208 | |||||||||||||||
Cincinnati | Industrial | 800 | 5,950 | 623 | 6,127 | |||||||||||||||
Kenton | Industrial | 855 | 17,876 | 927 | 17,804 | |||||||||||||||
Lebanon (Cincinnati) | Industrial | 240 | 4,212 | 813 | 3,639 | |||||||||||||||
Monroe (Cincinnati) | Industrial | 1,800 | 19,777 | 1,438 | 20,139 | |||||||||||||||
Richfield (Cleveland) | Industrial | 2,677 | 13,770 | 3,441 | 13,006 | |||||||||||||||
Stow | Industrial | 1,430 | 17,504 | 898 | 18,036 | |||||||||||||||
Streetsboro (Cleveland) | Industrial | 1,760 | 17,840 | 3,431 | 16,169 | |||||||||||||||
West Chester Twp. (Cincinnati) | Industrial | 695 | 5,039 | 2,484 | 3,250 | |||||||||||||||
Oklahoma: | ||||||||||||||||||||
Oklahoma City (FDX Ground) | Industrial | 1,410 | 11,196 | 1,892 | 10,714 | |||||||||||||||
Oklahoma City (Bunzl) | Industrial | 845 | 7,883 | 454 | 8,274 | |||||||||||||||
Oklahoma City (Amazon) | Industrial | 1,618 | 28,260 | 1,328 | 28,550 | |||||||||||||||
Tulsa | Industrial | 790 | 2,958 | 473 | 3,275 | |||||||||||||||
Pennsylvania: | ||||||||||||||||||||
Altoona | Industrial | 1,200 | 7,827 | 1,189 | 7,838 | |||||||||||||||
Imperial (Pittsburgh) | Industrial | 3,700 | 16,264 | 1,494 | 18,470 | |||||||||||||||
Monaca (Pittsburgh) | Industrial | 402 | 7,509 | 3,229 | 4,682 | |||||||||||||||
South Carolina: | ||||||||||||||||||||
Aiken (Augusta, GA) | Industrial | 1,362 | 19,678 | 1,135 | 19,905 | |||||||||||||||
Charleston (FDX) | Industrial | 4,639 | 16,880 | 831 | 20,688 | |||||||||||||||
Charleston (FDX Ground) | Industrial | 7,103 | 39,473 | 1,180 | 45,396 | |||||||||||||||
Ft. Mill (Charlotte, NC) | Industrial | 1,747 | 15,317 | 3,041 | 14,023 | |||||||||||||||
Hanahan (Charleston)(SAIC) | Industrial | 1,129 | 12,887 | 4,754 | 9,262 | |||||||||||||||
Hanahan (Charleston)(FDX Ground) | Industrial | 930 | 6,760 | 2,244 | 5,446 | |||||||||||||||
Tennessee: | ||||||||||||||||||||
Chattanooga | Industrial | 300 | 5,049 | 1,529 | 3,820 | |||||||||||||||
Lebanon (Nashville) | Industrial | 2,230 | 11,985 | 2,458 | 11,757 | |||||||||||||||
Memphis | Industrial | 1,235 | 14,879 | 3,297 | 12,817 | |||||||||||||||
Shelby County | Vacant Land | 11 | 0 | 0 | 11 | |||||||||||||||
Texas: | ||||||||||||||||||||
Carrollton (Dallas) | Industrial | 1,500 | 16,447 | 3,987 | 13,960 | |||||||||||||||
Corpus Christi | Industrial | 0 | 4,808 | 923 | 3,885 | |||||||||||||||
Edinburg | Industrial | 1,000 | 11,039 | 1,756 | 10,283 | |||||||||||||||
El Paso | Industrial | 3,225 | 9,206 | 2,244 | 10,187 | |||||||||||||||
Ft. Worth (Dallas) | Industrial | 8,200 | 27,133 | 2,896 | 32,437 | |||||||||||||||
Houston | Industrial | 1,661 | 6,502 | 1,632 | 6,531 | |||||||||||||||
Lindale (Tyler) | Industrial | 540 | 9,426 | 1,211 | 8,755 | |||||||||||||||
Mesquite (Dallas) | Industrial | 6,248 | 43,632 | 2,517 | 47,363 | |||||||||||||||
Spring (Houston) | Industrial | 1,890 | 17,427 | 2,527 | 16,790 | |||||||||||||||
Waco | Industrial | 1,350 | 11,201 | 1,786 | 10,765 | |||||||||||||||
Virginia: | ||||||||||||||||||||
Charlottesville | Industrial | 1,170 | 3,292 | 1,693 | 2,769 | |||||||||||||||
Mechanicsville (Richmond) | Industrial | 1,160 | 6,647 | 3,191 | 4,616 | |||||||||||||||
Richmond | Industrial | 446 | 4,460 | 1,666 | 3,240 | |||||||||||||||
Roanoke (CHEP USA) | Industrial | 1,853 | 5,610 | 1,899 | 5,564 | |||||||||||||||
Roanoke (FDX Ground) | Industrial | 1,740 | 8,460 | 1,365 | 8,835 | |||||||||||||||
Washington: | ||||||||||||||||||||
Burlington (Seattle/Everett) | Industrial | 8,000 | 22,321 | 2,000 | 28,321 | |||||||||||||||
Wisconsin: | ||||||||||||||||||||
Cudahy (Milwaukee) | Industrial | 980 | 8,827 | 3,550 | 6,257 | |||||||||||||||
Green Bay | Industrial | 590 | 5,979 | 921 | 5,648 | |||||||||||||||
Total as of September 30, 2019 | $ | 239,299 | $ | 1,627,219 | $ | 249,584 | $ | 1,616,934 |
114 |
SEPTEMBER 30, 2015 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Illinois: | ||||||||||||||||||
Burr Ridge (Chicago) | Industrial | $ | 270,000 | $ | 1,414,201 | $ | 613,666 | $ | 1,070,535 | |||||||||
Elgin (Chicago) | Industrial | 1,280,000 | 5,646,956 | 1,976,098 | 4,950,858 | |||||||||||||
Granite City (St. Louis, MO) | Industrial | 340,000 | 12,046,675 | 4,171,237 | 8,215,438 | |||||||||||||
Montgomery (Chicago) | Industrial | 2,000,000 | 9,298,367 | 2,043,560 | 9,254,807 | |||||||||||||
Rockford (B/E Aerospace) | Industrial | 480,000 | 4,620,000 | 118,462 | 4,981,538 | |||||||||||||
Rockford (Sherwin-Williams) | Industrial | 1,100,000 | 4,451,227 | 512,938 | 5,038,289 | |||||||||||||
Sauget (St. Louis, MO) | Industrial | 1,890,000 | 13,310,000 | 341,282 | 14,858,718 | |||||||||||||
Schaumburg (Chicago) | Industrial | 1,039,800 | 3,927,839 | 1,932,902 | 3,034,737 | |||||||||||||
Wheeling (Chicago) | Industrial | 5,112,120 | 13,425,532 | 3,392,350 | 15,145,302 | |||||||||||||
Indiana: | ||||||||||||||||||
Greenwood (Indianapolis) | Industrial | 2,250,000 | 35,234,574 | 376,438 | 37,108,136 | |||||||||||||
Indianapolis | Industrial | 3,500,000 | 20,446,000 | 608,611 | 23,337,389 | |||||||||||||
Iowa: | ||||||||||||||||||
Urbandale (Des Moines) | Industrial | 310,000 | 1,851,895 | 1,042,050 | 1,119,845 | |||||||||||||
Kansas: | ||||||||||||||||||
Edwardsville (Kansas City)(Carlisle Tire) | Industrial | 1,185,000 | 6,040,401 | 1,957,985 | 5,267,416 | |||||||||||||
Edwardsville (Kansas City)(International Paper) | Industrial | 2,750,000 | 15,538,753 | 757,934 | 17,530,819 | |||||||||||||
Topeka | Industrial | -0- | 3,679,843 | 613,406 | 3,066,437 | |||||||||||||
Kentucky: | ||||||||||||||||||
Buckner (Louisville) | Industrial | 2,280,000 | 24,439,716 | 1,199,729 | 25,519,987 | |||||||||||||
Frankfort (Lexington) | Industrial | 1,850,000 | 26,150,000 | 558,761 | 27,441,239 | |||||||||||||
Maryland: | ||||||||||||||||||
Beltsville (Washington, DC) | Industrial | 3,200,000 | 11,267,755 | 3,230,319 | 11,237,436 | |||||||||||||
Michigan: | ||||||||||||||||||
Livonia (Detroit) | Industrial | 320,000 | 13,410,533 | 1,002,083 | 12,728,450 | |||||||||||||
Orion | Industrial | 4,649,971 | 18,229,798 | 3,080,057 | 19,799,712 | |||||||||||||
Romulus (Detroit) | Industrial | 531,000 | 4,069,532 | 1,691,732 | 2,908,800 | |||||||||||||
Minnesota: | ||||||||||||||||||
Stewartville (Rochester) | Industrial | 900,000 | 4,320,000 | 221,538 | 4,998,462 | |||||||||||||
White Bear Lake (Minneapolis/St. Paul) | Industrial | 1,393,000 | 3,764,126 | 831,891 | 4,325,235 | |||||||||||||
Mississippi: | ||||||||||||||||||
Olive Branch (Memphis, TN)(Anda Distribution) | Industrial | 800,000 | 13,750,000 | 1,145,833 | 13,404,167 | |||||||||||||
Olive Branch (Memphis, TN)(Milwaukee Tool) | Industrial | 2,550,000 | 24,952,797 | 1,592,066 | 25,910,731 | |||||||||||||
Richland (Jackson) | Industrial | 211,000 | 1,689,691 | 748,265 | 1,152,426 | |||||||||||||
Ridgeland (Jackson) | Industrial | 218,000 | 1,632,794 | 1,109,322 | 741,472 | |||||||||||||
Missouri: | ||||||||||||||||||
Kansas City (Bunzl) | Industrial | 1,000,000 | 8,600,000 | 202,137 | 9,397,863 | |||||||||||||
Kansas City (Kellogg) | Industrial | 660,000 | 4,088,374 | 901,195 | 3,847,179 | |||||||||||||
Liberty (Kansas City) | Industrial | 723,000 | 6,650,618 | 2,973,407 | 4,400,211 | |||||||||||||
O’Fallon (St. Louis) | Industrial | 264,000 | 3,981,913 | 1,963,226 | 2,282,687 | |||||||||||||
St. Joseph | Industrial | 800,000 | 12,382,772 | 4,423,009 | 8,759,763 | |||||||||||||
Nebraska: | ||||||||||||||||||
Omaha | Industrial | 1,170,000 | 4,767,281 | 1,984,805 | 3,952,476 | |||||||||||||
New Jersey: | ||||||||||||||||||
Carlstadt (New York, NY) | Industrial | 1,194,000 | 3,695,712 | 767,084 | 4,122,628 | |||||||||||||
Somerset | Shopping Center | 34,316 | 2,660,928 | 1,318,964 | 1,376,280 | |||||||||||||
New York: | ||||||||||||||||||
Cheektowaga (Buffalo) | Industrial | 4,796,765 | 6,164,058 | 1,370,655 | 9,590,168 | |||||||||||||
Halfmoon (Albany) | Industrial | 1,190,000 | 4,335,600 | 389,092 | 5,136,508 | |||||||||||||
Orangeburg (New York) | Industrial | 694,720 | 3,200,955 | 2,201,868 | 1,693,807 | |||||||||||||
North Carolina: | ||||||||||||||||||
Fayetteville | Industrial | 172,000 | 4,712,522 | 2,229,107 | 2,655,415 |
SEPTEMBER 30, 2018 | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
Alabama: | ||||||||||||||||||||
Huntsville | Industrial | $ | 748 | $ | 5,914 | $ | 1,249 | $ | 5,413 | |||||||||||
Mobile | Industrial | 2,480 | 30,572 | 196 | 32,856 | |||||||||||||||
Arizona: | ||||||||||||||||||||
Tolleson (Phoenix) | Industrial | 1,316 | 15,508 | 6,145 | 10,679 | |||||||||||||||
Colorado: | ||||||||||||||||||||
Colorado Springs | Industrial | 2,150 | 27,170 | 1,594 | 27,726 | |||||||||||||||
Denver | Industrial | 1,150 | 5,204 | 1,704 | 4,650 | |||||||||||||||
Connecticut: | ||||||||||||||||||||
Newington (Hartford) | Industrial | 410 | 3,084 | 1,377 | 2,117 | |||||||||||||||
Florida: | ||||||||||||||||||||
Cocoa | Industrial | 1,881 | 12,246 | 2,758 | 11,369 | |||||||||||||||
Davenport (Orlando) | Industrial | 7,060 | 30,720 | 1,707 | 36,073 | |||||||||||||||
Daytona Beach | Industrial | 3,120 | 26,853 | 344 | 29,629 | |||||||||||||||
Ft. Myers (FDX Ground) | Industrial | 2,486 | 19,177 | 842 | 20,821 | |||||||||||||||
Homestead (Miami) | Industrial | 4,427 | 33,446 | 1,072 | 36,801 | |||||||||||||||
Jacksonville (FDX) | Industrial | 1,165 | 5,232 | 2,619 | 3,778 | |||||||||||||||
Jacksonville (FDX Ground) | Industrial | 6,000 | 24,736 | 2,323 | 28,413 | |||||||||||||||
Lakeland | Industrial | 261 | 1,782 | 574 | 1,469 | |||||||||||||||
Orlando | Industrial | 2,200 | 6,575 | 1,831 | 6,944 | |||||||||||||||
Punta Gorda | Industrial | 0 | 4,134 | 1,059 | 3,075 | |||||||||||||||
Tampa (FDX Ground) | Industrial | 5,000 | 14,702 | 4,922 | 14,780 | |||||||||||||||
Tampa (FDX) | Industrial | 2,830 | 5,027 | 1,515 | 6,342 | |||||||||||||||
Tampa (Tampa Bay Grand Prix) | Industrial | 1,867 | 3,811 | 1,144 | 4,534 | |||||||||||||||
Georgia: | ||||||||||||||||||||
Augusta (FDX Ground) | Industrial | 614 | 4,749 | 1,509 | 3,854 | |||||||||||||||
Augusta (FDX) | Industrial | 380 | 1,598 | 463 | 1,515 | |||||||||||||||
Braselton (Atlanta) | Industrial | 13,965 | 46,262 | 99 | 60,128 | |||||||||||||||
Griffin (Atlanta) | Industrial | 760 | 14,174 | 4,493 | 10,441 | |||||||||||||||
Savannah | Industrial | 4,405 | 51,621 | 882 | 55,144 | |||||||||||||||
Illinois: | ||||||||||||||||||||
Burr Ridge (Chicago) | Industrial | 270 | 1,423 | 741 | 952 | |||||||||||||||
Elgin (Chicago) | Industrial | 1,280 | 5,697 | 2,436 | 4,541 | |||||||||||||||
Granite City (St. Louis, MO) | Industrial | 340 | 12,358 | 5,184 | 7,514 | |||||||||||||||
Montgomery (Chicago) | Industrial | 2,000 | 9,303 | 2,762 | 8,541 | |||||||||||||||
Rockford (Collins Aerospace Systems) | Industrial | 480 | 4,620 | 474 | 4,626 | |||||||||||||||
Rockford (Sherwin-Williams Co.) | Industrial | 1,100 | 4,451 | 860 | 4,691 | |||||||||||||||
Sauget (St. Louis, MO) | Industrial | 1,890 | 13,315 | 1,366 | 13,839 | |||||||||||||||
Schaumburg (Chicago) | Industrial | 1,040 | 4,138 | 2,283 | 2,895 | |||||||||||||||
Wheeling (Chicago) | Industrial | 5,112 | 13,870 | 4,431 | 14,551 | |||||||||||||||
Indiana: | ||||||||||||||||||||
Greenwood (Indianapolis) | Industrial | 2,250 | 35,262 | 3,092 | 34,420 | |||||||||||||||
Indianapolis | Industrial | 3,746 | 21,759 | 2,240 | 23,265 | |||||||||||||||
Iowa: | ||||||||||||||||||||
Urbandale (Des Moines) | Industrial | 310 | 2,214 | 1,211 | 1,313 | |||||||||||||||
Kansas: | ||||||||||||||||||||
Edwardsville (Kansas City) (Carlisle Tire) | Industrial | 1,185 | 6,048 | 2,539 | 4,694 | |||||||||||||||
Edwardsville (Kansas City) (International Paper) | Industrial | 2,750 | 15,544 | 2,002 | 16,292 | |||||||||||||||
Olathe (Kansas City) | Industrial | 2,350 | 29,387 | 1,633 | 30,104 | |||||||||||||||
Topeka | Industrial | 0 | 3,680 | 896 | 2,784 | |||||||||||||||
Kentucky: | ||||||||||||||||||||
Buckner (Louisville) | Industrial | 2,280 | 24,528 | 3,114 | 23,694 | |||||||||||||||
Frankfort (Lexington) | Industrial | 1,850 | 26,150 | 2,570 | 25,430 | |||||||||||||||
Louisville | Industrial | 1,590 | 9,714 | 581 | 10,723 |
115 |
SEPTEMBER 30, 2015 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||
Winston-Salem | Industrial | $ | 980,000 | $ | 5,942,086 | $ | 1,980,737 | $ | 4,941,349 | |||||||||
Ohio: | ||||||||||||||||||
Bedford Heights (Cleveland) | Industrial | 990,000 | 5,789,591 | 1,337,898 | 5,441,693 | |||||||||||||
Cincinnati | Industrial | 800,000 | 5,950,000 | 12,714 | 6,737,286 | |||||||||||||
Lebanon (Cincinnati) | Industrial | 240,000 | 4,212,425 | 375,609 | 4,076,816 | |||||||||||||
Monroe (Cincinnati) | Industrial | 1,800,000 | 11,137,000 | 166,579 | 12,770,421 | |||||||||||||
Richfield (Cleveland) | Industrial | 2,676,848 | 13,758,630 | 2,016,458 | 14,419,020 | |||||||||||||
Streetsboro (Cleveland) | Industrial | 1,760,000 | 17,840,000 | 1,601,026 | 17,998,974 | |||||||||||||
West Chester Twp. (Cincinnati) | Industrial | 695,000 | 5,033,690 | 1,768,517 | 3,960,173 | |||||||||||||
Oklahoma: | ||||||||||||||||||
Oklahoma City | Industrial | 1,410,000 | 11,183,873 | 723,874 | 11,869,999 | |||||||||||||
Tulsa | Industrial | 790,000 | 2,958,031 | 145,342 | 3,602,689 | |||||||||||||
Pennsylvania: | ||||||||||||||||||
Altoona | Industrial | 1,200,000 | 7,790,000 | 382,842 | 8,607,158 | |||||||||||||
Monaca (Pittsburgh) | Industrial | 401,716 | 7,367,252 | 2,023,850 | 5,745,118 | |||||||||||||
South Carolina: | ||||||||||||||||||
Ft. Mill (Charlotte, NC) | Industrial | 1,670,000 | 13,743,307 | 1,597,480 | 13,815,827 | |||||||||||||
Hanahan (Charleston) (SAIC) | Industrial | 1,129,000 | 12,171,592 | 3,199,452 | 10,101,140 | |||||||||||||
Hanahan (Charleston) (FDX Ground) | Industrial | 930,000 | 6,684,653 | 1,550,717 | 6,063,936 | |||||||||||||
Tennessee: | ||||||||||||||||||
Chattanooga | Industrial | 300,000 | 4,671,161 | 1,003,292 | 3,967,869 | |||||||||||||
Lebanon (Nashville) | Industrial | 2,230,000 | 11,985,126 | 1,229,231 | 12,985,895 | |||||||||||||
Memphis | Industrial | 1,240,887 | 13,380,000 | 1,886,931 | 12,733,956 | |||||||||||||
Shelby County | Vacant Land | 11,065 | -0- | -0- | 11,065 | |||||||||||||
Texas: | ||||||||||||||||||
Carrollton (Dallas) | Industrial | 1,500,000 | 16,244,300 | 2,290,543 | 15,453,757 | |||||||||||||
Corpus Christi | Industrial | -0- | 4,764,500 | 427,583 | 4,336,917 | |||||||||||||
Edinburg | Industrial | 1,000,000 | 6,438,483 | 742,117 | 6,696,366 | |||||||||||||
El Paso | Industrial | 3,225,195 | 9,205,997 | 1,176,363 | 11,254,829 | |||||||||||||
Fort Worth (Dallas) | Industrial | 8,200,000 | 27,100,832 | 115,816 | 35,185,016 | |||||||||||||
Houston | Industrial | 1,730,000 | 6,353,107 | 913,317 | 7,169,790 | |||||||||||||
Lindale (Tyler) | Industrial | 540,000 | 9,390,000 | 240,769 | 9,689,231 | |||||||||||||
Spring (Houston) | Industrial | 1,890,000 | 17,337,523 | 738,390 | 18,489,133 | |||||||||||||
Waco | Industrial | 1,350,000 | 11,196,157 | 636,182 | 11,909,975 | |||||||||||||
Virginia: | ||||||||||||||||||
Charlottesville | Industrial | 1,170,000 | 3,174,037 | 1,295,758 | 3,048,279 | |||||||||||||
Mechanicsville (Richmond) (FDX) | Industrial | 1,160,000 | 6,579,671 | 2,465,144 | 5,274,527 | |||||||||||||
Richmond (United Technologies) | Industrial | 446,000 | 4,314,769 | 1,049,842 | 3,710,927 | |||||||||||||
Roanoke (CHEP) | Industrial | 1,853,000 | 5,552,447 | 1,140,757 | 6,264,690 | |||||||||||||
Roanoke (FDX Ground) | Industrial | 1,740,000 | 8,460,000 | 497,115 | 9,702,885 | |||||||||||||
Wisconsin: | ||||||||||||||||||
Cudahy (Milwaukee) | Industrial | 980,000 | 8,393,672 | 2,633,457 | 6,740,215 | |||||||||||||
Green Bay | Industrial | 590,000 | 5,980,000 | 306,667 | 6,263,333 | |||||||||||||
Total as of September 30, 2015 | $ | 133,500,315 | $ | 807,509,590 | $ | 124,898,639 | $ | 816,111,266 |
SEPTEMBER 30, 2018 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
Louisiana: | ||||||||||||||||||||
Covington (New Orleans) | Industrial | $ | 2,720 | $ | 15,690 | $ | 1,140 | $ | 17,270 | |||||||||||
Maryland: | ||||||||||||||||||||
Beltsville (Washington, DC) | Industrial | 3,200 | 11,312 | 4,151 | 10,361 | |||||||||||||||
Michigan: | ||||||||||||||||||||
Walker (Grand Rapids) | Industrial | 4,034 | 27,621 | 1,062 | 30,593 | |||||||||||||||
Livonia (Detroit) | Industrial | 320 | 13,442 | 2,047 | 11,715 | |||||||||||||||
Orion | Industrial | 4,650 | 18,240 | 4,489 | 18,401 | |||||||||||||||
Romulus (Detroit) | Industrial | 531 | 4,202 | 2,043 | 2,690 | |||||||||||||||
Minnesota: | ||||||||||||||||||||
Stewartville (Rochester) | Industrial | 900 | 4,320 | 554 | 4,666 | |||||||||||||||
Mississippi: | ||||||||||||||||||||
Olive Branch (Memphis, TN)(Anda Pharmaceuticals, Inc.) | Industrial | 800 | 13,750 | 2,204 | 12,346 | |||||||||||||||
Olive Branch (Memphis, TN)(Milwaukee Tool) | Industrial | 2,550 | 34,365 | 4,044 | 32,871 | |||||||||||||||
Richland (Jackson) | Industrial | 211 | 1,690 | 982 | 919 | |||||||||||||||
Ridgeland (Jackson) | Industrial | 218 | 1,667 | 1,313 | 572 | |||||||||||||||
Missouri: | ||||||||||||||||||||
Kansas City (Bunzl) | Industrial | 1,000 | 8,980 | 886 | 9,094 | |||||||||||||||
Liberty (Kansas City) | Industrial | 723 | 6,675 | 3,498 | 3,900 | |||||||||||||||
O’Fallon (St. Louis) | Industrial | 264 | 3,982 | 2,362 | 1,884 | |||||||||||||||
St. Joseph | Industrial | 800 | 12,564 | 5,452 | 7,912 | |||||||||||||||
Nebraska: | ||||||||||||||||||||
Omaha | Industrial | 1,170 | 4,775 | 2,358 | 3,587 | |||||||||||||||
New Jersey: | ||||||||||||||||||||
Carlstadt (New York, NY) | Industrial | 1,194 | 3,748 | 1,030 | 3,912 | |||||||||||||||
Somerset | Shopping Center | 34 | 3,077 | 1,590 | 1,521 | |||||||||||||||
New York: | ||||||||||||||||||||
Cheektowaga (Buffalo) | Industrial | 4,797 | 6,164 | 1,852 | 9,109 | |||||||||||||||
Halfmoon (Albany) | Industrial | 1,190 | 4,336 | 723 | 4,803 | |||||||||||||||
Hamburg (Buffalo) | Industrial | 1,700 | 33,150 | 1,700 | 33,150 | |||||||||||||||
North Carolina: | ||||||||||||||||||||
Concord (Charlotte) | Industrial | 4,305 | 28,740 | 2,314 | 30,731 | |||||||||||||||
Concord (Charlotte) | Industrial | 4,307 | 35,736 | 1,069 | 38,974 | |||||||||||||||
Fayetteville | Industrial | 172 | 5,280 | 2,931 | 2,521 | |||||||||||||||
Winston-Salem | Industrial | 980 | 6,266 | 2,618 | 4,628 | |||||||||||||||
Ohio: | ||||||||||||||||||||
Bedford Heights (Cleveland) | Industrial | 990 | 5,930 | 1,894 | 5,026 | |||||||||||||||
Cincinnati | Industrial | 800 | 5,950 | 470 | 6,280 | |||||||||||||||
Kenton | Industrial | 855 | 17,027 | 455 | 17,427 | |||||||||||||||
Lebanon (Cincinnati) | Industrial | 240 | 4,212 | 704 | 3,748 | |||||||||||||||
Monroe (Cincinnati) | Industrial | 1,800 | 15,725 | 1,023 | 16,502 | |||||||||||||||
Richfield (Cleveland) | Industrial | 2,677 | 13,770 | 3,083 | 13,364 | |||||||||||||||
Stow | Industrial | 1,430 | 17,504 | 449 | 18,485 | |||||||||||||||
Streetsboro (Cleveland) | Industrial | 1,760 | 17,840 | 2,973 | 16,627 | |||||||||||||||
West Chester Twp. (Cincinnati) | Industrial | 695 | 5,039 | 2,305 | 3,429 | |||||||||||||||
Oklahoma: | ||||||||||||||||||||
Oklahoma City (FDX Ground) | Industrial | 1,410 | 11,174 | 1,599 | 10,985 | |||||||||||||||
Oklahoma City (Bunzl) | Industrial | 845 | 7,884 | 253 | 8,476 | |||||||||||||||
Oklahoma City (Amazon) | Industrial | 1,618 | 28,261 | 604 | 29,275 | |||||||||||||||
Tulsa | Industrial | 790 | 2,958 | 391 | 3,357 | |||||||||||||||
Pennsylvania: | ||||||||||||||||||||
Altoona | Industrial | 1,200 | 7,823 | 986 | 8,037 | |||||||||||||||
Imperial (Pittsburgh) | Industrial | 3,700 | 16,250 | 1,076 | 18,874 | |||||||||||||||
Monaca (Pittsburgh) | Industrial | 402 | 7,509 | 2,957 | 4,954 |
116 |
SEPTEMBER 30, 2018 (cont’d) | Property | Buildings & | Accumulated | Net Book | ||||||||||||||||
Type | Land | Improvements | Depreciation | Value | ||||||||||||||||
South Carolina: | ||||||||||||||||||||
Aiken (Augusta, GA) | Industrial | $ | 1,362 | $ | 19,678 | $ | 631 | $ | 20,409 | |||||||||||
Charleston (FDX) | Industrial | 4,639 | 16,880 | 397 | 21,122 | |||||||||||||||
Charleston (FDX Ground) | Industrial | 7,103 | 39,473 | 169 | 46,407 | |||||||||||||||
Ft. Mill (Charlotte, NC) | Industrial | 1,747 | 15,327 | 2,655 | 14,419 | |||||||||||||||
Hanahan (Charleston)(SAIC) | Industrial | 1,129 | 12,281 | 4,343 | 9,067 | |||||||||||||||
Hanahan (Charleston)(FDX Ground) | Industrial | 930 | 6,685 | 2,071 | 5,544 | |||||||||||||||
Tennessee: | ||||||||||||||||||||
Chattanooga | Industrial | 300 | 4,839 | 1,389 | 3,750 | |||||||||||||||
Lebanon (Nashville) | Industrial | 2,230 | 11,985 | 2,151 | 12,064 | |||||||||||||||
Memphis | Industrial | 1,235 | 13,380 | 2,916 | 11,699 | |||||||||||||||
Shelby County | Vacant Land | 11 | 0 | 0 | 11 | |||||||||||||||
Texas: | ||||||||||||||||||||
Carrollton (Dallas) | Industrial | 1,500 | 16,319 | 3,555 | 14,264 | |||||||||||||||
Corpus Christi | Industrial | 0 | 4,808 | 797 | 4,011 | |||||||||||||||
Edinburg | Industrial | 1,000 | 11,039 | 1,473 | 10,566 | |||||||||||||||
El Paso | Industrial | 3,225 | 9,206 | 1,977 | 10,454 | |||||||||||||||
Ft. Worth (Dallas) | Industrial | 8,200 | 27,101 | 2,201 | 33,100 | |||||||||||||||
Houston | Industrial | 1,661 | 6,502 | 1,440 | 6,723 | |||||||||||||||
Lindale (Tyler) | Industrial | 540 | 9,426 | 967 | 8,999 | |||||||||||||||
Mesquite (Dallas) | Industrial | 6,248 | 43,633 | 1,399 | 48,482 | |||||||||||||||
Spring (Houston) | Industrial | 1,890 | 17,404 | 2,077 | 17,217 | |||||||||||||||
Waco | Industrial | 1,350 | 11,201 | 1,498 | 11,053 | |||||||||||||||
Virginia: | ||||||||||||||||||||
Charlottesville | Industrial | 1,170 | 3,286 | 1,588 | 2,868 | |||||||||||||||
Mechanicsville (Richmond) | Industrial | 1,160 | 6,632 | 3,007 | 4,785 | |||||||||||||||
Richmond | Industrial | 446 | 4,322 | 1,545 | 3,223 | |||||||||||||||
Roanoke (CHEP USA) | Industrial | 1,853 | 5,611 | 1,707 | 5,757 | |||||||||||||||
Roanoke (FDX Ground) | Industrial | 1,740 | 8,460 | 1,148 | 9,052 | |||||||||||||||
Washington: | ||||||||||||||||||||
Burlington (Seattle/Everett) | Industrial | 8,000 | 22,229 | 1,427 | 28,802 | |||||||||||||||
Wisconsin: | ||||||||||||||||||||
Cudahy (Milwaukee) | Industrial | 980 | 8,786 | 3,297 | 6,469 | |||||||||||||||
Green Bay | Industrial | 590 | 5,980 | 770 | 5,800 | |||||||||||||||
Total as of September 30, 2018 | $ | 224,719 | $ | 1,494,859 | $ | 207,065 | $ | 1,512,513 |
117 |
NOTE 3 – ACQUISITIONS, EXPANSIONS AND DISPOSITIONDISPOSITIONS
Fiscal 20162019 Acquisitions
Acquisitions
On November 13, 2015, the CompanyOctober 19, 2018, we purchased a newly constructed 330,717347,000 square foot industrial building, situated on 62.0 acres, located in Concord, NC, which is in the Charlotte Metropolitan Statistical Area (MSA).Trenton, NJ. The building is 100% net-leased to FedEx Ground Package System, Inc. for ten15 years through July 2025.June 2032. The purchase price was $31,975,897. The Company$85.2 million. We obtained a 15 year, fully-amortizing mortgage loan of $20,780,000$55.0 million at a fixed interest rate of 3.87%4.13%. Annual rental revenue over the remaining term of the lease averages approximately $2,078,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$5.3 million.
On December 2, 2015, the CompanyNovember 30, 2018, we purchased a newly constructed 175,315127,000 square foot industrial building, situated on 29.4 acres, located in Covington, LA, which is in the New Orleans MSA.Savannah, GA. The building is 100% net-leased to FedEx Ground Package System, Inc. for ten10 years through June 2025.October 2028. The purchase price was $18,410,000. The Company$27.8 million. We obtained a 15 year, fully-amortizing mortgage loan of $12,890,000$17.5 million at a fixed interest rate of 4.08%4.40%. Annual rental revenue over the remaining term of the lease averages approximately $1,258,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$1.8 million.
On March 8, 2016, the CompanyJuly 26, 2019, we purchased a newly constructed 125,860350,000 square foot industrial building, situated on 45.6 acres, located in Imperial, PA, which is in the Pittsburgh MSA.Lafayette, IN. The building is 100% net-leased to General Electric Company (GE)Toyota Tsusho America, Inc. (Toyota) for ten10 years through December 2025.June 2029. The purchase price was $20,032,864. The Company$25.5 million. We obtained a 1415 year, fully-amortizing mortgage loan of $13,000,000$17.0 million at a fixed interest rate of 3.63%4.25%. Annual rental revenue over the remaining term of the lease averages approximately $1,311,000. In connection with$1.7 million.
We evaluated the acquisition,property acquisitions which took place during the Company completed its evaluationtwelve months ended September 30, 2019, to determine whether an integrated set of assets and activities meets the definition of a business, pursuant to ASU 2017-01. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. Accordingly, we accounted for all three properties purchased during fiscal 2019 as asset acquisitions and allocated the total cash consideration, including transaction costs of $347,000, to the individual assets acquired lease. Ason a resultrelative fair value basis. There were no liabilities assumed in these acquisitions.
The financial information set forth below summarizes our purchase price allocation for these three properties acquired during the fiscal year 2019 that were accounted for as asset acquisitions (in thousands):
SUMMARY OF PURCHASE PRICE ALLOCATION FOR 2019 ASSETS ACQUISITIONS
Land | $ | 14,579 | ||
Building | 122,018 | |||
In-Place Leases | 2,367 |
The following table summarizes the operating results included in our consolidated statements of its evaluation,income for the Company allocated $82,864fiscal year ended September 30, 2019 for the three properties acquired during the twelve months ended September 30, 2019 (in thousands):
SUMMARY OF OPERATIONS RESULT FOR 2019 PROPERTIES ACQUISITION
Year Ended 9/30/2019 | ||||
Rental Revenues | $ | 7,073 | ||
Net Income Attributable to Common Shareholders | 1,723 |
Subsequent to an Intangible Asset associated with the lease in-place.
On April 8, 2016, the Company2019 fiscal yearend, on October 10, 2019, we purchased a newly constructed 210,445616,000 square foot industrial building, situated on 78.6 acres, located in Burlington, WA, which is in the Seattle/EverettIndianapolis, IN MSA. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through August 2030.2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $30,662,080. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $20,221,000$52.5 million at a fixed interest rate of 3.67%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $1,962,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $451,400 to an Intangible Asset associated with the lease in-place.$5.0 million.
On June 9, 2016, the Company purchased a newly constructed 225,362 square foot industrial building located in Colorado Springs, CO. The building is 100% net-leased to FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, Toyota Tsusho America, Inc’s parent, Toyota Tsusho Corporation and Amazon.com, Inc. are publicly-owned companies that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to the S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites.
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Fiscal 2019 Expansions
In February 2019, we completed a 155,000 square foot building expansion at our property located in Monroe (Cincinnati), OH for ten years through January 2026.a total project cost of $8.6 million. The purchase price was $28,845,500.expansion resulted in a new 15-year lease which extended the prior lease expiration date from February 2030 to February 2034. The Companyexpansion also resulted in an increase in initial annual rent effective March 1, 2019 of $821,000 from $980,000, or $4.22 per square foot, to $1.8 million, or $4.65 per square foot. In addition, the annual rent will increase by 2% per annum, resulting in an average annualized rent of $2.1 million over the 15-year term. In connection with this expansion, we obtained a 1510.6 year , fully-amortizing second mortgage loan of $18,730,000$7.0 million at a fixed interest rate of 3.90%3.85%. The maturity of the second mortgage loan coincides with the maturity of the property’s first fully-amortizing mortgage loan which is at a fixed interest rate of 3.77% and has a principal balance of $6.6 million as of the fiscal yearend.
Fiscal 2018 Acquisitions
On November 2, 2017, we purchased a newly constructed 122,000 square foot industrial building, situated on 16.2 acres, located in Charleston, SC. The building is 100% net-leased to FedEx Corporation (FDX), for 15 years through August 2032. The purchase price was $21.9 million. We obtained a 15 year fully-amortizing mortgage loan of $14.2 million at a fixed interest rate of 4.23%. Annual rental revenue over the remaining term of the lease averages approximately $1,832,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $345,500 to an Intangible Asset associated with the lease in-place.$1.3 million.
On JuneNovember 30, 2016, the Company2017, we purchased a newly constructed 137,500300,000 square foot industrial building, situated on 123.0 acres, located in Louisville, KY.Oklahoma City, OK. The building is 100% net-leased to Challenger Lifts,Amazon.com Services, Inc., a subsidiary of Snap-on Incorporated (“Snap-on”), for ten10 years through June 2026.October 2027. The lease is guaranteed by Snap-on.Amazon.com, Inc. The purchase price was $11,304,000. The Company$30.3 million. We obtained a 1510 year fully-amortizing mortgage loan, amortizing over 18 years, of $7,350,000$19.6 million at a fixed interest rate of 3.74%3.64%. Annual rental revenue over the remaining term of the lease averages approximately $835,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$1.9 million.
On August 19, 2016, the CompanyJanuary 22, 2018, we purchased a newly constructed 310,922832,000 square foot industrial building, situated on 62.4 acres, located in Davenport, FL, which is in the Orlando MSA.Savannah, GA. The building is 100% net-leased to FedEx Ground Package System,Shaw Industries, Inc. for fifteen10 years through April 2031.September 2027. The purchase price was $37,780,000. The Company$57.5 million. We obtained a 1514 year fully-amortizing mortgage loan of $26,400,000$33.3 million at a fixed interest rate of 3.89%3.53%. Annual rental revenue over the remaining term of the lease averages approximately $2,604,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.$3.6 million.
On August 26, 2016, the CompanyApril 6, 2018, we purchased a newly constructed 313,763399,000 square foot industrial building, situated on 27.5 acres, located in Olathe, KS, which is in the Kansas City MSA.Daytona Beach, FL. The building is 100% net-leased to FedEx Ground Package System,B. Braun Medical Inc. for fifteen10 years through May 2031.April 2028. The purchase price was $31,737,000. The Company$30.8 million. We obtained a 15 year fully-amortizing mortgage loan of $22,215,000$19.5 million at a fixed interest rate of 3.96%4.25%. Annual rental revenue over the remaining term of the lease averages approximately $2,196,000. In connection with$2.1 million.
On June 28, 2018, we purchased a newly constructed 363,000 square foot industrial building, situated on 31.3 acres, located in Mobile, AL. The building is 100% net-leased to Amazon.com Services, Inc. for 11 years through November 2028. The lease is guaranteed by Amazon.com, Inc. The purchase price was $33.7 million. We obtained a 14 year fully-amortizing mortgage loan of $19.0 million at a fixed interest rate of 4.14%. Annual rental revenue over the acquisition, the Company completed its evaluationremaining term of the lease averages $2.0 million.
On August 15, 2018, we purchased a newly constructed 265,000 square foot industrial building, situated on 48.9 acres, located in Charleston, SC. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through June 2033. The purchase price was $47.2 million. We obtained a 15 year fully-amortizing mortgage loan of $29.9 million at a fixed interest rate of 3.82%. Annual rental revenue over the remaining term of the lease averages $2.7 million.
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On September 6, 2018, we purchased a newly constructed 374,000 square foot industrial building, situated on 92.6 acres, located in Braselton, GA which is in the Atlanta Metropolitan Statistical Area (MSA). The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through February 2033. The purchase price was $61.1 million. We obtained a 15 year fully-amortizing mortgage loan of $39.7 million at a fixed interest rate of 4.02%. Annual rental revenue over the remaining term of the lease averages $3.8 million.
We evaluated the property acquisitions which took place during the twelve months ended September 30, 2018, to determine whether an integrated set of assets and activities meets the definition of a business, pursuant to ASU 2017-01. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. Accordingly, we accounted for all seven properties purchased during fiscal 2018 as asset acquisitions and allocated the total cash consideration, including transaction costs of $1.1 million, to the individual assets acquired lease. Ason a resultrelative fair value basis. There were no liabilities assumed in these acquisitions.
The financial information set forth below summarizes our purchase price allocation for these seven properties acquired during the fiscal year 2018 that were accounted for as asset acquisitions (in thousands):
SUMMARY OF PURCHASE PRICE ALLOCATION FOR 2018 ASSETS ACQUISITIONS
Land | $ | 37,330 | ||
Building | 239,891 | |||
In-Place Leases | 6,182 |
The following table summarizes the operating results included in our consolidated statements of its evaluation,income for the Company has not allocated any amount to an Intangible Asset.fiscal year ended September 30, 2018 for the seven properties acquired during the twelve months ended September 30, 2018 (in thousands):
SUMMARY OF OPERATIONS RESULT FOR 2018 PROPERTIES ACQUISITION
Year Ended 9/30/2018 | ||||
Rental Revenues | $ | 7,430 | ||
Net Income Attributable to Common Shareholders | 2,131 |
FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, General Electric CompanyFDX, Amazon.com, Inc. and Challenger Lifts,Shaw Industries, Inc.’s ultimate parent, Snap-on IncorporatedBerkshire Hathaway, Inc. are publicly-owned companies and financial information related to these entities is available at the SEC’s website,www.sec.gov. The references in this report to the SEC’s website are not intended to and do not include, or incorporate by reference into this report, the information on those websites.the www.sec.gov website.
Fiscal 2018 Expansions
On July 29, 2016, a 246,434 square foot expansion of a building leased to Milwaukee Electric Tool Corporation (“Milwaukee Tool”) located in Olive Branch, MS, which is located in the Memphis, TN MSA, was completed for a cost of approximately $9,785,000. This resulted in a new 12 year lease which extended the original lease expiration date from April 2023 through July 2028 and increased the building size from 615,455 to 861,889 square feet. In addition, the expansion resulted in an initial increase in annual rent effective on the date of completion of approximately $847,000 from approximately $1,943,000, or $3.16 per square foot, to approximately $2,790,000, or $3.24 per square foot. Furthermore, annual rent will increase each year by 1.5% resulting in an annualized rent over the new twelve year period of approximately $3,020,000, or $3.50 per square foot. In September 2016, in connection with the expansion, the Company refinanced its prior 3.76% interest rate mortgage with its existing lender of this property. At the time of the refinancing, the prior amortizing loan was approximately $13,158,000 and was set to mature in January 2023. The new loan is a 12 year fully-amortizing mortgage of $25,000,000 and will mature in October 2028. The interest rate of the new loan remained the same as the prior loan at a fixed interest rate of 3.76%.
On AugustNovember 1, 2016,2017, a parking lot expansion for a property leased to FedEx Ground Package System, Inc., located in Tampa, FLIndianapolis, IN was completed for a total project cost of approximately $1,303,000,$1.7 million, resulting in a new 10 year-year lease which extended the prior lease expiration date from JuneApril 2024 through July 2026.to October 2027. In addition, the expansion resulted in an increase in annual rent effective from the date of completion $184,000 from $1.5 million, or $4.67 per square foot, to $1.7 million, or $ per square foot.
On September 27, 2018, a parking lot expansion for a property leased to FedEx Ground Package System, Inc., located in Ft. Mill, SC was completed for a total project cost of $1.8 million, resulting in a new 10-year lease which extended the prior lease expiration date from October 2023 to August 2028. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $131,000$183,000 from approximately $1,493,000,$1.4 million, or $8.74$8.00 per square foot, to approximately $1,624,000,$1.6 million, or $9.51$ per square foot.
On August 1, 2016, a 14,941Fiscal 2018 Dispositions
Two leases were set to expire during fiscal 2018 with Kellogg Sales Company (Kellogg) for our 65,000 square foot expansionfacility located in Kansas City, MO through July 31, 2018 and our 50,000 square foot facility located in Orangeburg, NY through February 28, 2018. Kellogg informed us that they would not be renewing these leases. On December 18, 2017, we sold our property located in Kansas City, MO for $4.9 million, with net sale proceeds of $4.6 million, and on December 22, 2017, we sold our property located in Orangeburg, NY for $6.2 million, with net sale proceeds of $5.9 million. In conjunction with the sale of these two properties, we simultaneously entered into a lease termination agreement for each property whereby we received a termination fee from Kellogg totaling $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.
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On June 1, 2018, we sold a 68,000 square foot building located in Colorado Springs, CO for $5.8 million, with net sale proceeds of $5.5 million. Prior to the sale of this property, it was leased to FedEx Ground Package System, Inc. through September 2018. The tenant informed us that they would not be renewing this lease because they have moved their operations from our former 68,000 square foot facility to our newly constructed 225,000 square foot facility, which is also located in Huntsville, AL was completed for a cost of approximately $1,925,000, resulting in a new 10 year lease which extended the prior lease expiration date from August 2022 through July 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $193,000 from approximately $412,000, or $5.59 per square foot, to approximately $605,000 or $6.82 per square foot.
Fiscal 2015
Acquisitions
Colorado Springs, CO. On October 3, 2014, the CompanyJune 9, 2016, we purchased athis newly constructed 163,378225,000 square foot industrial building, located in Lindale, TX, which is in the Tyler MSA. The building is 100% net-leasedleased to FedEx Ground Package System, Inc. for ten10 years through January 2026.
On June 2024. The purchase price was $10,271,355. The Company obtained a 15 year fully-amortizing mortgage of $7,000,000 at a fixed interest rate of 4.57%. Annual rental revenue over the remaining term of the lease is approximately $725,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $341,355 to5, 2018, we sold an Intangible Asset associated with the lease in-place.
On October 10, 2014, the Company purchased a newly constructed 198,77388,000 square foot industrialvacant building located in Sauget, IL,Ft. Myers, FL for $6.4 million, with net sale proceeds of $6.1 million. Prior to this property becoming vacant, it was leased to FedEx Ground Package System, Inc. through June 2017. FedEx Ground Package System, Inc. vacated this property because they moved their operations to our newly constructed 214,000 square foot facility, which is also located in the St. Louis, MO MSA. The buildingFt. Myers, FL. We purchased this newly constructed facility on December 30, 2016 and it is 100% net-leasedleased to FedEx Ground Package System, Inc. for fifteen10 years through May 2029. The purchase price was $15,231,000. The Company obtained a 15 year fully-amortizing mortgage of $10,660,000 at a fixed interest rate of 4.40%August 2027. Annual rental revenue over the remaining term of the lease is approximately $1,036,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $31,000 to an Intangible Asset associated with the lease in-place.
On October 14, 2014, the Company purchased a 38,833 square foot industrial building located in Rockford, IL, which was constructed in 2012. The building is 100% net-leased to B/E Aerospace, Inc. for fifteen years through June 2027. The property was acquired, all-cash, for a purchase price of $5,200,000. Annual rental revenue over the remaining term of the lease is approximately $359,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $100,000 to an Intangible Asset associated with the lease in-place.
On November 25, 2014, the Company purchased a newly constructed 158,417 square foot industrial building located in Kansas City, MO. The building is 100% net-leased to Bunzl Distribution Midcentral, Inc. for seven years through September 2021. The purchase price was $9,635,770. The Company obtained a 7 year mortgage, of $7,226,828, amortizing over 25 years at a fixed interest rate of 5.18%. Annual rental revenue over the remaining term of the lease is approximately $736,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $35,770 to an Intangible Asset associated with the lease in-place.
On December 12, 2014, the Company purchased a newly constructed 599,840 square foot industrial building located in Frankfort, KY, which is in the Lexington MSA. The building is 100% net-leased to Jim Beam Brands Company for ten years through January 2025. The purchase price was $28,000,000. The Company obtained a 10 year mortgage, of $19,600,000 at a fixed interest rate of 4.84% with an amortization schedule as follows: amortizing over 18 yearsThese four properties sold during the first 30 months, amortizing over 14 years during the next 30 months, amortizing over 11 years during the next 30 months and amortizing over 8 years during the final 30 months. Annual rental revenue over the remaining term of the lease is approximately $1,989,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On February 26, 2015, the Company purchased a newly constructed 297,579 square foot industrial building located in Jacksonville, FL. The building is 100% net-leased to FedEx Ground Package System, Inc. for fifteen years through December 2029. The purchase price was $30,645,954. The Company obtained a 15 year fully-amortizing mortgage of $20,000,000 at a fixed interest rate of 3.93%. Annual rental revenue over the remaining term of the lease is approximately $1,992,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On March 13, 2015, the Company purchased a newly constructed 232,200 square foot industrial building located in Monroe, OH, which is in the Cincinnati MSA. The building is 100% net-leased to UGN, Inc. for fifteen years through February 2030. The purchase price was $13,416,000. The Company obtained a 15 year fully-amortizing mortgage of $8,700,000 at a fixed interest rate of 3.77%. Annual rental revenue over the remaining term of the lease is approximately $1,045,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $479,000 to an Intangible Asset associated with the lease in-place.
On May 7, 2015, the Company purchased a newly constructed 671,354 square foot industrial building located in Greenwood, IN, which is in the Indianapolis MSA. The building is 100% net-leased to ULTA, Inc. for ten years through July 2025. The purchase price was $37,484,574. The Company obtained a 15 year fully-amortizing mortgage of $24,286,230 at a fixed interest rate of 3.91%. Annual rental revenue over the remaining term of the lease is approximately $2,644,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On August 14, 2015, the Company purchased a newly constructed 304,608 square foot industrial building located in Fort Worth, TX, in the Fort Worth Alliance Airport, which is in the Dallas MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for fifteen years through April 2030. The purchase price was $35,300,832. The Company obtained a 15 year fully-amortizing mortgage of $24,700,000 at a fixed interest rate of 3.56%. Annual rental revenue over the remaining term of the lease is approximately $2,362,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.
On September 25, 2015, the Company purchased a 63,840 square foot industrial building located in Cincinnati, OH, which was constructed in 2014. The building is 100% net-leased to The American Bottling Company for fifteen years through August 2029. The lease is guaranteed by the parent company, Dr Pepper Snapple Group, Inc. The property was acquired, all-cash, for a purchase price of $6,800,000. Annual rental revenue over the remaining term of the lease is approximately $480,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $50,000 to an Intangible Asset associated with the lease in-place.
FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, B/E Aerospace, Inc., ULTA Inc.’s ultimate parent, Ulta Salon, Cosmetics & Fragrance, Inc. and The American Bottling Company’s ultimate parent, Dr Pepper Snapple Group, Inc. are publicly-owned companies and financial information related to these entities is available at the SEC’s website,www.sec.gov. Jim Beam Brands Company’s ultimate parent, Suntory Beverage & Food Limited is a publicly-owned company and financial information related to this entity is available at the Tokyo Stock Exchange’s website,www.jpx.co.jp/englishand Bunzl Distribution Midcentral, Inc.’s ultimate parent, Bunzl plc is a publicly-owned company and financial information related to this entity is available at the U.K. government’s website,https://www.gov.uk/government/organisations/companies-house. The references in this report to the SEC’s website, the Tokyo Stock Exchange’s website and the U.K. government’s website are not intended to and do not include or incorporate by reference into this report the information on those websites.
Expansions
In September 2013, a 51,765 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in El Paso, TX was completed for a cost of approximately $3,800,000 resulting in an increase in annual rent effective October 1, 2013 from $667,584, or $7.27 per square foot, to $1,045,610, or $7.25 per square foot. In addition, the expansionfiscal 2018, resulted in a new 10 year lease which extended the prior lease expiration date from September 2015 through September 2023. During June 2015, a parking lot expansion for the same property was completed for a cost of approximately $2,472,000 resulting in an increase in annual rent effective July 1, 2015 to $1,345,289, or $9.33 per square foot.
During December 2014, a 62,260 square foot expansion of a building leased to NF&M International, Inc. located in Monaca (Pittsburgh), PA was completed for a cost of approximately $4,503,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2018 through December 2024. In addition, the expansion resulted in an initial increase in annual rent effective January 1, 2015 from $381,805, or $3.39 per square foot, to $820,000, or $4.69 per square foot. Furthermore, annual rent will increase in year five of the lease effective January 1, 2020 to $841,600, or $4.81 per square foot, resulting in an annualized rent over the new ten year period of $830,800, or $4.75 per square foot.
During June 2015, a 38,428 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Oklahoma City, OK was completed for a cost of approximately $3,332,000, resulting in a new 10 year lease which extended the prior lease expiration date from March 2022 through June 2025. In addition, the expansion resulted in an increase in annual rent effective August 1, 2015 from $712,532, or $5.94 per square foot, to $1,048,250, or $6.62 per square foot.
During August 2015, a 48,116 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Waco, TX was completed for a cost of approximately $4,125,000, resulting in a new 10 year lease which extended the prior lease expiration date from May 2022 through August 2025. In addition, the expansion resulted in an increase in annual rent effective August 15, 2015 from $659,324, or $6.43 per square foot, to $1,078,383, or $7.16 per square foot.
Disposition
On September 18, 2015, the Company sold its 160,000 square foot industrial building located in Monroe, NC for $9,000,000, withU.S. GAAP net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. The sale resulted in a realized gain of approximately $5,021,000,$7.5 million, representing a 131%51% gain over the depreciated U.S. GAAP basis and a net realized gain on aover our historic undepreciated cost basis of approximately $3,290,000,$1.2 million, representing a 59%6% net gain over the Company’sour historic undepreciated cost basis.
Subsequent toConsolidated Statements of Income for the yearend, on October 27, 2016,three fiscal years ended September 30, 2019, 2018 and 2017 of properties sold during the Company sold its only vacant building, (which increased our occupancy rate from 99.6% to 100.0%), consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value.periods presented
Since the sale of thesethe four properties sold during fiscal 2018 (as discussed previously) and the one property sold during fiscal 2017, do not represent a strategic shift that has (or will have) a major effect on the Company’sour operations and financial results, the operations generated from these five properties are not included in Discontinued Operations.
There were no properties sold during fiscal 2019. The following table summarizes (in thousands) the operations of the Company’s 160,000 square foot industrial building located in Monroe, NCthese five properties, prior to its sale on September 18, 2015 and the 59,425 square foot industrial building located in White Bear Lake, MN prior to its sale on October 27, 2016 whichtheir sales, that are included in the accompanying Consolidated Statements of Income for the three fiscal yearyears ended September 30:30, 2019, 2018 and 2017:
2016 | 2015 | 2014 | ||||||||||
Rental and Reimbursement Revenue | $ | -0- | $ | 571,250 | $ | 96,664 | ||||||
Lease Termination Income | -0- | -0- | -0- | |||||||||
Real Estate Taxes | (115,090 | ) | (192,121 | ) | (204,729 | ) | ||||||
Operating Expenses | (42,869 | ) | (133,776 | ) | (192,006 | ) | ||||||
Depreciation & Amortization | (97,074 | ) | (336,939 | ) | (235,501 | ) | ||||||
Interest Expense | -0- | (71,287 | ) | (65,876 | ) | |||||||
Income (Loss) from Operations | (255,033 | ) | (162,873 | ) | (601,448 | ) | ||||||
Gain on Sale of Real Estate Investment | -0- | 5,021,242 | -0- | |||||||||
Net Income (Loss) | $ | (255,033 | ) | $ | 4,858,369 | $ | (601,448 | ) |
SCHEDULE OF DISPOSITION AND REAL ESTATE CLASSIFIED AS HELD FOR SALE
2019 | 2018 | 2017 | ||||||||||
Rental and Reimbursement Revenue | $ | 0 | $ | 929 | $ | 2,052 | ||||||
Lease Termination Income | 0 | 210 | 0 | |||||||||
Real Estate Taxes | 0 | (212 | ) | (352 | ) | |||||||
Operating Expenses | 0 | (110 | ) | (169 | ) | |||||||
Depreciation & Amortization | 0 | (79 | ) | (514 | ) | |||||||
Interest Expense | 0 | (38 | ) | (144 | ) | |||||||
Income from Operations | 0 | 700 | 873 | |||||||||
Gain (Loss) on Sale of Real Estate Investment | 0 | 7,485 | (95 | ) | ||||||||
Net Income | $ | 0 | $ | 8,185 | $ | 778 |
Pro forma information (unaudited)
The following unaudited pro forma condensed financial information has been prepared utilizing theour historical financial statements of the Company and the effect of additional revenue and expenses generated from the properties acquired and expanded subsequent to theour 2019 fiscal yearend (see Note 17), and from the properties acquired and expanded during fiscal 2016years 2019 and 20152018, assuming that these acquisitions and these completed expansions had occurred as of October 1, 2014,2017, after giving effect to certain adjustments includingincluding: (a) Rental Revenue adjustments resulting from the straight-lining of scheduled rent increases, (b) Interest Expense resulting from the assumed increase in Fixed Rate Mortgage Notes Payable and Loans Payable related to the new acquisitions, and (c) Depreciation Expense related to the new acquisitions.acquisitions and expansions. In addition, Net Income Attributable to Common Shareholders excludes the operating expenses incurredoperations, including the exclusion of the related realized gain, of the four properties sold during fiscal 2015 and 2016 for2018. Furthermore, the one vacant property, located in White Bear Lake, MN, that was sold during the first quarter of fiscal 2017, on October 27, 2016. Additionally, Net Income Attributable to Common Shareholders excludes the income generated from the one property sold in fiscal 2015 as well as the Gain on Sale of Real Estate Investment recognized from this sale during the fiscal year ended September 30, 2015. Furthermore, thenet proceeds raised from theour public offering of million shares of our Common Stock in October 2018 and from our Dividend Reinvestment and Stock Purchase Plan (the DRIP) were used to fund property acquisitions and expansions and therefore, the weighted average shares outstanding used in calculating the pro forma Basic and Diluted Net Income per Share Attributable to Common Shareholders has been adjusted to account for the increase in shares raised through the public offering and the DRIP, as if all the shares raised had occurred on October 1, 2014. 2017. Additionally, the net proceeds raised from the issuance of our 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (6.125% Series C Preferred Stock), through our At-The-Market Sales Agreement Program were used to help fund property acquisitions and, therefore, the pro forma preferred dividend has been adjusted to account for its effect on pro-forma Net Income Attributable to Common Shareholders as if all the preferred stock issuances had occurred on October 1, 2017.
The unaudited pro forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions and expansions reflected herein been consummated on the dates indicated or that will be achieved in the future.
Fiscal Year 2016 | Fiscal Year 2015 | |||||||
Rental Revenues | $ | 93,397,700 | $ | 91,599,000 | ||||
Net Income Attributable to Common Shareholders | 24,074,000 | 20,181,500 | ||||||
Basic and Diluted Net Income per Share Attributable to Common Shareholders | $ | 0.35 | $ | 0.29 |
SCHEDULE OF PRO FORMA INFORMATION
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Fiscal Year Ended (in thousands, except per share amounts) | ||||||||||||||||
2019 | 2019 | 2018 | 2018 | |||||||||||||
As Reported | Pro-forma | As Reported | Pro-forma | |||||||||||||
Rental Revenue | $ | 132,524 | $ | 139,380 | $ | 115,864 | $ | 139,439 | ||||||||
Net Income Attributable to Common Shareholders | $ | 11,026 | $ | 13,347 | $ | 38,815 | $ | 35,983 | ||||||||
Basic and Diluted Net Income per Share Attributable to Common Shareholders | $ | 0.12 | $ | 0.14 | $ | 0.49 | $ | 0.37 |
NOTE 4 – INTANGIBLE ASSETS
Net intangible assets consist of the estimated value of the acquired in-place leases in-placeand the acquired above market rent leases at acquisition for the following properties and are amortized over the remaining term of the lease:lease. Intangible Assets, net of Accumulated Amortization is made up of the following balances as of September 30, 2019 and 2018 (in thousands):
September 30, 2016 | September 30, 2015 | |||||||
Richfield, OH (Cleveland) | $ | 11,622 | $ | 51,472 | ||||
Colorado Springs, CO | -0- | 3,729 | ||||||
Griffin, GA (Atlanta) | 19,815 | 84,665 | ||||||
Roanoke, VA (CHEP) | -0- | 32,217 | ||||||
Wheeling, IL (Chicago) | -0- | 125,060 | ||||||
Orion, MI | 19,994 | 72,976 | ||||||
Topeka, KS | 170,700 | 204,243 | ||||||
Carrollton, TX (Dallas) | 15,697 | 22,260 | ||||||
Ft. Mill, SC (Charlotte, NC) | 270,656 | 358,121 | ||||||
Lebanon, TN (Nashville) | 161,385 | 181,988 | ||||||
Rockford, IL | 144,817 | 164,284 | ||||||
Edinburg, TX | 279,120 | 335,162 | ||||||
Corpus Christi, TX | 112,794 | 135,735 | ||||||
Halfmoon, NY (Albany) | 255,620 | 303,901 | ||||||
Lebanon, OH (Cincinnati) | 240,939 | 334,215 | ||||||
Olive Branch, MS (Memphis, TN)(Anda Distribution) | 1,078,458 | 1,270,266 | ||||||
Livonia, MI (Detroit) | 376,306 | 444,730 | ||||||
Stewartville (Rochester), MN | 31,271 | 35,847 | ||||||
Buckner, KY (Louisville) | 373,690 | 395,565 | ||||||
Edwardsville, KS (Kansas City)(International Paper) | 515,819 | 590,395 | ||||||
Lindale, TX (Tyler) | 271,334 | 306,344 | ||||||
Sauget, IL (St. Louis, MO) | 26,773 | 28,886 | ||||||
Rockford, IL (B/E Aerospace) | 84,106 | 92,053 | ||||||
Kansas City, KS (Bunzl) | 25,546 | 30,658 | ||||||
Monroe, OH (Cincinnati) | 428,411 | 460,362 | ||||||
Cincinnati, OH | 46,407 | 50,000 | ||||||
Pittsburgh, PA | 78,615 | -0- | ||||||
Burlington (Seattle/Everett), WA | 436,518 | -0- | ||||||
Colorado Springs, CO | 339,740 | -0- | ||||||
Total Intangible Assets, net | $ | 5,816,153 | $ | 6,115,134 |
SCHEDULE OF INTANGIBLE ASSETS UNDER LEASES IN-PLACE ACQUISITION
As of 2019 | As of 2018 | |||||||
Topeka, KS | $ | 69 | $ | 103 | ||||
Carrollton (Dallas), TX | 0 | 2 | ||||||
Ft. Mill (Charlotte, NC), SC | 0 | 92 | ||||||
Lebanon (Nashville), TN | 99 | 120 | ||||||
Rockford, IL (Sherwin-Williams Co.) | 85 | 105 | ||||||
Edinburg, TX | 109 | 166 | ||||||
Corpus Christi, TX | 44 | 67 | ||||||
Halfmoon (Albany), NY | 108 | 158 | ||||||
Lebanon (Cincinnati), OH | 0 | 54 | ||||||
Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals) | 520 | 703 | ||||||
Livonia (Detroit), MI | 171 | 239 | ||||||
Stewartville (Rochester), MN | 17 | 22 | ||||||
Buckner (Louisville), KY | 308 | 330 | ||||||
Edwardsville (Kansas City), KS (International Paper) | 292 | 367 | ||||||
Lindale (Tyler), TX | 166 | 201 | ||||||
Sauget (St. Louis, MO), IL | 20 | 23 | ||||||
Rockford, IL (Collins Aerospace Systems) | 61 | 68 | ||||||
Kansas City, MO | 10 | 15 | ||||||
Monroe, OH (Cincinnati) | 333 | 365 | ||||||
Cincinnati, OH | 36 | 39 | ||||||
Imperial (Pittsburgh), PA | 53 | 62 | ||||||
Burlington (Seattle/Everett), WA | 344 | 375 | ||||||
Colorado Springs, CO | 241 | 279 | ||||||
Hamburg (Buffalo), NY | 198 | 216 |
Amortization expense related to these intangible assets was $1,076,776, $1,310,904 and $1,305,336 for the years ended September 30, 2016, 2015 and 2014, respectively. The Company estimates that aggregate amortization expense for existing intangible assets will be approximately $960,000, $909,000, $866,000, $730,000 and $718,000 for each of the fiscal years 2017, 2018, 2019, 2020 and 2021, respectively.
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As of 2019 | As of 2018 | |||||||
Ft. Myers, FL | 164 | 184 | ||||||
Walker (Grand Rapids), MI | 415 | 449 | ||||||
Aiken (Augusta, GA), SC | 791 | 854 | ||||||
Mesquite (Dallas), TX | 683 | 738 | ||||||
Homestead (Miami), FL | 475 | 513 | ||||||
Oklahoma City, OK (Bunzl) | 200 | 240 | ||||||
Concord (Charlotte), NC | 539 | 581 | ||||||
Kenton, OH | 389 | 438 | ||||||
Stow, OH | 463 | 521 | ||||||
Charleston, SC (FDX) | 351 | 378 | ||||||
Oklahoma City, OK (Amazon) | 596 | 670 | ||||||
Savannah, GA (Shaw) | 1,247 | 1,403 | ||||||
Daytona Beach, FL | 685 | 766 | ||||||
Mobile, AL | 917 | 1,017 | ||||||
Charleston, SC (FDX Ground) | 622 | 667 | ||||||
Braselton (Atlanta), GA | 930 | 1,000 | ||||||
Trenton, NJ | 1,413 | 0 | ||||||
Savannah, GA (FDX Ground) | 334 | 0 | ||||||
Lafayette, IN | 472 | 0 | ||||||
Total Intangible Assets, net of Accumulated Amortization | $ | 14,970 | $ | 14,590 |
Amortization expense related to the intangible assets attributable to acquired in-place leases was $1.9 million, $1.5 million and $970,000 for the years ended September 30, 2019, 2018 and 2017, respectively. We estimate that the aggregate amortization expense for these existing intangible assets will be $1.8 million, $1.8 million, $1.6 million, $1.5 million, and $1.4 million for each of the fiscal years 2020, 2021, 2022, 2023 and 2024, respectively. The amount that is being amortized into rental revenue related to the intangible assets attributable to acquired above market leases was $103,000 for the years ended September 30, 2019 and 2018 and $102,000 for the year ended September 30, 2017. We estimate that the aggregate amount that will be amortized into rental revenue for existing intangible assets will be $103,000 for each of the fiscal years 2020 and 2021 and will be $34,000 for the fiscal year 2022.
NOTE 5 – SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
As of September 30, 2016, the Company2019, we had approximately 16,010,00022.3 million square feet of property, of which approximately 7,584,00010.4 million square feet, or 47%47%, consisting of fifty-three60 separate stand-alone leases, were leased to FedEx Corporation (FDX) and its subsidiaries, (6%(5% to FDX and 41%42% to FDX subsidiaries). These properties are located in twenty-four25 different states. As of September 30, 2016,2019, the 60 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 8.7 years. None of our properties are subject to a master lease or any cross-collateralization agreements. As of September 30, 2019, the only tenants that leased 5% or more of the Company’sour total square footage were FDX and its subsidiaries and Milwaukee Electric Tool Corporation, which leased approximately 862,000 square feet, comprising approximately 5% of the Company’s rental space. subsidiaries.
The tenants that leased more than 5% of total rentable square footage as of September 30, 2016, 2015,2019, 2018, and 20142017 were as follows:
2016 | 2015 | 2014 | ||||||||||
FDX and Subsidiaries | 47 | % | 43 | % | 44 | % | ||||||
Milwaukee Electric Tool Corporation (lease commenced fiscal 2013, expanded fiscal 2016) | 5 | % | N/A | 5 | % | |||||||
ULTA, Inc. (lease commenced fiscal 2015) | N/A | 5 | % | N/A | ||||||||
TreeHouse Private Brands, Inc. (lease commenced fiscal 2014) | N/A | N/A | 5 | % |
SCHEDULE OF CONCENTRATION OF RISK
2019 | 2018 | 2017 | ||||
FDX and Subsidiaries | 47% | 48% | 50% | |||
Milwaukee Electric Tool Corporation (lease commenced fiscal 2013, expanded fiscal 2016) | <5% | <5% | 5% |
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During fiscal 2016,2019, the only tenant that accounted for 5% or more of our rental and reimbursement revenue was FDX (including its subsidiaries). Our rental and reimbursement revenue from FDX and its subsidiaries for the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, respectively, totaled approximately $52,793,000, $41,954,000$94.9 million, $80.7 million and $35,007,000,$68.2 million, or 56% (7% from FDX and 49% from FDX subsidiaries), 54% (8% from FDX and 46% from FDX subsidiaries) and 54% (10% from FDX and 44% from FDX subsidiaries),as a percentage of total rent and reimbursement revenues. revenues, 60% (5% from FDX and 55% from FDX subsidiaries), 58% (7% from FDX and 51% from FDX subsidiaries) and 59% (7% from FDX and 52% from FDX subsidiaries). No other tenant accounted for 5% or more of the Company’sour total Rental and Reimbursement revenue for the fiscal years ended September 30, 2016, 20152019, 2018 and 2014.2017.
In additionAs noted previously, subsequent to real estate property holdings,fiscal yearend 2019, on October 10, 2019, we purchased a newly constructed 616,000 square foot industrial building, net-leased to Amazon.com Services, Inc. which is guaranteed by Amazon.com, Inc. As a result of this recent purchase, we currently we have 22.9 million total leasable square feet, of which 1.4 million square feet, or 6% of our total leasable square feet, consisting of four separate stand-alone leases are leased to Amazon.com Services, Inc. These properties are located in four different states. We estimate that our rental and reimbursement revenue from Amazon.com Services, Inc. will be approximately 7% of our total rent and reimbursement revenues in fiscal 2020.
NOTE 6 – SECURITIES AVAILABLE FOR SALE
Our Securities Available for Sale at Fair Value consists primarily of marketable common and preferred stock of other REITs with a fair value of $185.3 million as of September 30, 2019. Historically, we have aimed to limit the Company held $73,604,894 in marketablesize of our REIT securities at September 30, 2016, representing 5.3%portfolio to no more than approximately 10% of the Company’sour undepreciated assets, (which is the Company’swhich we define as total assets excluding accumulated depreciation). These liquid real estate holdings are not included in calculatingdepreciation. As we announced earlier this year, it is now our goal to gradually reduce the tenant concentration ratios above and therefore further enhance the Company’s diversification. As a result, thesize of our REIT securities portfolio to no more than 5% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides the Companyus with additional liquidity, diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available.
NOTE 6available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – SECURITIES AVAILABLE FOR SALE
The Company’s securities available for sale consist primarily consistOverall: Recognition and Measurement of marketable commonFinancial Assets and preferred stock securitiesFinancial Liabilities”, which took effect at the beginning of other REITs. The Company generally limits its investmentthis fiscal year. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Going forward, to be no more than approximately 10% of its undepreciated assets, (which is the Company’s totalachieve our threshold investment goal, we will continually evaluate opportunities to optimize our REIT securities portfolio. Total assets excluding accumulated depreciation). The Company does not own more than 10% of the outstanding shares of any of these issuers, nor does it have a controlling financial interest.
The Company normally holds REIT securities long term and has the ability and intent to hold these securities to recovery. The Company had total net unrealized gains on its securities portfolio of $12,942,267depreciation were $2.1 billion as of September 30, 2016.
The Company did not have any2019. Our $185.3 million investment in marketable REIT securities that were temporarily impaired as of September 30, 2016.2019 represented 8.7% of our undepreciated assets.
The Company did not have any margin loan balance as of September 30, 2016 and 2015. The margin loan balance, if any, would be collateralized by the securities portfolio.
Dividend income forDuring the fiscal yearsyear ended September 30, 2016, 2015 and 2014 totaled $5,607,403, $3,707,498, and $3,863,136, respectively. Interest income for the fiscal years ended September 30, 2016, 2015 and 2014 totaled $8,989, $16,369 and $19,461, respectively.
The Company2019, we did not sell or redeem any securities. We received proceeds of $22,774,768, $16,201,480$2.6 million and $14,279,391$17.3 million on sales or redemptions of securities available for sale during fiscal years 2016, 20152018 and 2014,2017, respectively. The Company
We recorded the following realized Gain on Sale of Securities Transactions, net:net for the fiscal years ended September 30 (in thousands):
2016 | 2015 | 2014 | ||||||||||
Gross realized gains | $ | 4,403,724 | $ | 880,424 | $ | 2,222,424 | ||||||
Gross realized losses | (5,125 | ) | (74,911 | ) | (55,658 | ) | ||||||
Gains on Sale of Securities Transactions, net | $ | 4,398,599 | $ | 805,513 | $ | 2,166,766 |
SCHEDULE OF GAIN (LOSS) ON SECURITIES TRANSACTIONS, NET
2019 | 2018 | 2017 | ||||||||||
Gross realized gains | $ | 0 | $ | 112 | $ | 2,321 | ||||||
Gross realized losses | 0 | (1 | ) | (9 | ) | |||||||
Gains on Sale of Securities Transactions, net | $ | 0 | $ | 111 | $ | 2,312 |
We recognized dividend income from our portfolio of REIT investments for the fiscal years ended September 30, 2019, 2018 and 2017 of $15.1 million, $13.1 million and $6.9 million, respectively. We also made purchases of $55.0 million in Securities Available for Sale at Fair Value during the fiscal year ended September 30, 2019. As of September 30, 2019, we had total net unrealized holding losses on our securities portfolio of $49.4 million. As a result of the adoption of ASU 2016-01, $24.7 million of the net unrealized holding losses have been reflected as Unrealized Holding Gains (Losses) Arising During the Periods in the accompanying Consolidated Statements of Income for the fiscal year ended September 30, 2019 and the remaining $24.7 million of the net unrealized holding losses have been reflected as a reclass to beginning Undistributed Income (Loss).
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We normally hold REIT securities long-term and have the ability and intent to hold these securities to recovery. We have determined that none of our security holdings are other than temporarily impaired and therefore all unrealized gains and losses from these securities have been recognized as Unrealized Holding Gains (Losses) Arising During the Periods in our Consolidated Statements of Income. If we were to determine any of our securities to be other than temporarily impaired, we would present these unrealized holding losses as an impairment charge in our Consolidated Statements of Income (Loss).
The following is a listing of our investments in securities at September 30, 2016:2019 (in thousands):
Interest Rate/ | Number of | Estimated Market | ||||||||||||||||||
Description | Series | Dividend | Shares | Cost | Value | |||||||||||||||
Equity Securities - Preferred Stock: | ||||||||||||||||||||
CBL & Associates Properties, Inc. | D | 7.375 | % | 30,000 | $ | 745,840 | $ | 750,300 | ||||||||||||
Cedar Realty Trust, Inc. | B | 7.25 | % | 30,600 | 718,317 | 786,417 | ||||||||||||||
Chesapeake Lodging Trust | A | 7.75 | % | 20,000 | 500,000 | 518,050 | ||||||||||||||
Dynex Capital, Inc. | A | 8.50 | % | 10,000 | 250,000 | 252,850 | ||||||||||||||
Investors Real Estate Trust | B | 7.95 | % | 20,000 | 500,000 | 516,000 | ||||||||||||||
iStar Financial, Inc. | D | 8.00 | % | 3,468 | 71,502 | 84,688 | ||||||||||||||
iStar Financial, Inc. | E | 7.875 | % | 3,400 | 54,116 | 83,300 | ||||||||||||||
iStar Financial, Inc. | F | 8.00 | % | 20,000 | 429,846 | 487,400 | ||||||||||||||
iStar Financial, Inc. | I | 7.50 | % | 41,383 | 872,236 | 1,005,607 | ||||||||||||||
Pennsylvania Real Estate Investment Trust | A | 8.25 | % | 44,000 | 1,100,885 | 1,128,380 | ||||||||||||||
Summit Hotel Properties, Inc. | B | 7.875 | % | 10,000 | 250,000 | 263,081 | ||||||||||||||
UMH Properties, Inc. (1) | A | 8.25 | % | 200,000 | 5,000,000 | 5,138,000 | ||||||||||||||
UMH Properties, Inc. (1) | B | 8.00 | % | 100,000 | 2,500,000 | 2,755,000 | ||||||||||||||
Total Equity Securities - Preferred Stock | $ | 12,992,742 | $ | 13,769,073 |
Number of | Estimated Market | |||||||||||||||
Description | Shares | Cost | Value | |||||||||||||
Equity Securities - Common Stock: | ||||||||||||||||
Gladstone Commercial Corporation | 65,000 | $ | 1,102,608 | $ | 1,210,950 | |||||||||||
Government Properties Income Trust | 700,000 | 12,585,316 | 15,834,000 | |||||||||||||
Select Income REIT | 586,500 | 13,112,908 | 15,776,850 | |||||||||||||
Senior Housing Property Trust | 670,000 | 11,558,116 | 15,215,700 | |||||||||||||
UMH Properties, Inc. (1) | 989,326 | 9,305,685 | 11,792,771 | |||||||||||||
Total Equity Securities - Common Stock | $ | 47,664,633 | $ | 59,830,271 | ||||||||||||
Interest Rate/ | Number of | Estimated Market | ||||||||||||||
Dividend | Shares | Cost | Value | |||||||||||||
Modified Pass-Through Mortgage-Backed Securities: | ||||||||||||||||
Government National Mortgage Association (GNMA) | 6.50 | % | 500,000 | $ | 5,252 | $ | 5,550 | |||||||||
Total Securities Available for Sale | $ | 60,662,627 | $ | 73,604,894 |
(1) Investment is in a related company. See Note No. 11 for further discussion.
SUMMARY OF INVESTMENTS IN DEBT AND EQUITY SECURITIES
Description | Series | Interest Rate/ Dividend | Number of Shares | Cost | Fair Value | |||||||||||||||
Equity Securities - Preferred Stock: | ||||||||||||||||||||
CBL & Associates Properties, Inc. | D | 7.375 | % | 400 | $ | 7,967 | $ | 3,444 | ||||||||||||
Cedar Realty Trust, Inc. | B | 7.25 | % | 6 | 136 | 144 | ||||||||||||||
Dynex Capital, Inc. | A | 8.50 | % | 10 | 250 | 256 | ||||||||||||||
iStar Financial, Inc. | D | 8.00 | % | 10 | 232 | 261 | ||||||||||||||
iStar Financial, Inc. | I | 7.50 | % | 60 | 1,301 | 1,547 | ||||||||||||||
Pennsylvania Real Estate Investment Trust | D | 6.875 | % | 120 | 2,150 | 2,431 | ||||||||||||||
Pennsylvania Real Estate Investment Trust | B | 7.375 | % | 120 | 2,216 | 2,484 | ||||||||||||||
UMH Properties, Inc. (1) | B | 8.00 | % | 100 | 2,500 | 2,600 | ||||||||||||||
Total Equity Securities - Preferred Stock | $ | 16,752 | $ | 13,167 |
Description | Number of Shares | Cost | Fair Value | |||||||||
Equity Securities - Common Stock: | ||||||||||||
CBL & Associates Properties, Inc. | 4,000 | $ | 33,525 | $ | 5,160 | |||||||
Franklin Street Properties | 1,000 | 8,478 | 8,460 | |||||||||
Industrial Logistics Property Trust | 700 | 13,789 | 14,875 | |||||||||
Kimco Realty Corporation | 1,700 | 27,937 | 35,496 | |||||||||
Office Properties Income Trust | 659 | 37,892 | 20,192 | |||||||||
Pennsylvania Real Estate Investment Trust | 1,800 | 13,443 | 10,296 | |||||||||
Senior Housing Property Trust | 1,100 | 17,871 | 10,181 | |||||||||
Tanger Factory Outlet REIT Centers | 600 | 12,300 | 9,288 | |||||||||
VEREIT, Inc. | 3,500 | 27,891 | 34,230 | |||||||||
Washington Prime Group, Inc. | 1,500 | 11,860 | 6,210 | |||||||||
UMH Properties, Inc. (1) | 1,257 | 12,935 | 17,693 | |||||||||
Total Equity Securities - Common Stock | $ | 217,921 | $ | 172,081 |
Description | Interest Rate/ Dividend | Number of Shares | Cost | Fair Value | ||||||||||||
Modified Pass-Through Mortgage-Backed Securities: | ||||||||||||||||
Government National Mortgage Association (GNMA) | 6.50 | % | 500 | $ | 2 | $ | 2 | |||||||||
Total Securities Available for Sale | $ | 234,675 | $ | 185,250 |
(1) | Investment is in a related company. See Note No. 11 for further discussion. |
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The following is a listing of our investments in securities at September 30, 2015:2018 (in thousands):
Interest Rate/ | Number of | Estimated Market | ||||||||||||||||||
Description | Series | Dividend | Shares | Cost | Value | |||||||||||||||
Equity Securities - Preferred Stock: | ||||||||||||||||||||
Campus Crest Communities, Inc. | A | 8.00 | % | 10,000 | $ | 250,000 | $ | 243,300 | ||||||||||||
CBL & Associates Properties, Inc. | D | 7.375 | % | 30,000 | 745,840 | 750,900 | ||||||||||||||
Cedar Realty Trust, Inc. | B | 7.25 | % | 30,600 | 718,317 | 727,975 | ||||||||||||||
Chesapeake Lodging Trust | A | 7.75 | % | 20,000 | 500,000 | 520,000 | ||||||||||||||
Condor Hospitality | A | 8.00 | % | 17,000 | 170,005 | 108,800 | ||||||||||||||
Corporate Office Properties Trust | L | 7.375 | % | 26,688 | 658,957 | 680,544 | ||||||||||||||
Dynex Capital, Inc. | A | 8.50 | % | 10,000 | 250,000 | 241,000 | ||||||||||||||
EPR Properties | F | 6.625 | % | 15,000 | 352,908 | 369,750 | ||||||||||||||
General Growth Properties, Inc. | A | 6.375 | % | 4,636 | 107,852 | 112,469 | ||||||||||||||
Grace Acquisitions I | B | 8.75 | % | 29,000 | 3,480 | 696,000 | ||||||||||||||
Investors Real Estate Trust | B | 7.95 | % | 20,000 | 500,000 | 515,200 | ||||||||||||||
iStar Financial, Inc. | D | 8.00 | % | 3,468 | 71,502 | 83,406 | ||||||||||||||
iStar Financial, Inc. | E | 7.875 | % | 3,400 | 54,116 | 80,410 | ||||||||||||||
iStar Financial, Inc. | F | 8.00 | % | 20,000 | 429,846 | 470,200 | ||||||||||||||
iStar Financial, Inc. | I | 7.50 | % | 41,383 | 872,236 | 953,464 | ||||||||||||||
Kilroy Realty Corporation | H | 6.375 | % | 23,016 | 547,953 | 575,142 | ||||||||||||||
Pennsylvania Real Estate Investment Trust | A | 8.25 | % | 44,000 | 1,100,885 | 1,150,600 | ||||||||||||||
Pennsylvania Real Estate Investment Trust | B | 7.375 | % | 30,455 | 760,911 | 772,034 | ||||||||||||||
Summit Hotel Properties, Inc. | B | 7.875 | % | 10,000 | 250,000 | 260,000 | ||||||||||||||
Sun Communities, Inc. | A | 7.125 | % | 20,000 | 500,000 | 514,800 | ||||||||||||||
UMH Properties, Inc. (1) | A | 8.25 | % | 200,000 | 5,000,000 | 5,136,000 | ||||||||||||||
Total Equity Securities - Preferred Stock | $ | 13,844,808 | $ | 14,961,994 |
Description | Series | Interest Rate/ Dividend | Number of Shares | Cost | Fair Value | |||||||||||||||
Equity Securities - Preferred Stock: | ||||||||||||||||||||
CBL & Associates Properties, Inc. | D | 7.375 | % | 200 | $ | 4,808 | $ | 3,194 | ||||||||||||
Cedar Realty Trust, Inc. | B | 7.25 | % | 6 | 136 | 143 | ||||||||||||||
Dynex Capital, Inc. | A | 8.50 | % | 10 | 250 | 254 | ||||||||||||||
iStar Financial, Inc. | D | 8.00 | % | 3 | 71 | 86 | ||||||||||||||
iStar Financial, Inc. | I | 7.50 | % | 41 | 872 | 1,006 | ||||||||||||||
UMH Properties, Inc. (1) | B | 8.00 | % | 100 | 2,500 | 2,626 | ||||||||||||||
Total Equity Securities - Preferred Stock | $ | 8,637 | $ | 7,309 |
Number of | Estimated Market | |||||||||||||||||||||||||||
Description | Shares | Cost | Value | Number of Shares | Cost | Fair Value | ||||||||||||||||||||||
Equity Securities - Common Stock: | ||||||||||||||||||||||||||||
Getty Realty Corporation | 50,000 | $ | 997,632 | $ | 790,000 | |||||||||||||||||||||||
Gladstone Commercial Corporation | 65,000 | 1,102,608 | 917,150 | |||||||||||||||||||||||||
CBL & Associates Properties, Inc. | 4,000 | $ | 33,525 | $ | 15,960 | |||||||||||||||||||||||
Franklin Street Properties | 700 | 6,419 | 5,593 | |||||||||||||||||||||||||
Government Properties Income Trust | 579,000 | 11,572,547 | 9,264,000 | 1,580 | 26,156 | 17,838 | ||||||||||||||||||||||
Mack-Cali Realty Corporation | 130,000 | 3,039,545 | 2,454,400 | |||||||||||||||||||||||||
Industrial Logistics Property Trust | 100 | 2,117 | 2,301 | |||||||||||||||||||||||||
Kimco Realty Corporation | 1,200 | 20,338 | 20,088 | |||||||||||||||||||||||||
Pennsylvania Real Estate Investment Trust | 200 | 1,993 | 1,892 | |||||||||||||||||||||||||
Select Income REIT | 586,500 | 13,247,860 | 11,149,365 | 800 | 17,395 | 17,552 | ||||||||||||||||||||||
Senior Housing Property Trust | 402,300 | 7,643,503 | 6,517,260 | 900 | 15,463 | 15,804 | ||||||||||||||||||||||
VEREIT, Inc. | 3,100 | 25,016 | 22,506 | |||||||||||||||||||||||||
Washington Prime Group, Inc. | 1,300 | 10,542 | 9,490 | |||||||||||||||||||||||||
UMH Properties, Inc. (1) | 911,871 | 8,528,097 | 8,480,399 | 1,188 | 12,061 | 18,584 | ||||||||||||||||||||||
Total Equity Securities - Common Stock | $ | 46,131,792 | $ | 39,572,574 | $ | 171,025 | $ | 147,608 | ||||||||||||||||||||
Interest Rate/ | Number of | Estimated Market | ||||||||||||||||||||||||||
Dividend | Shares | Cost | Value | |||||||||||||||||||||||||
Modified Pass-Through Mortgage-Backed Securities: | ||||||||||||||||||||||||||||
Government National Mortgage Association (GNMA) | 6.50 | % | 500,000 | $ | 6,240 | $ | 6,669 | |||||||||||||||||||||
Total Securities Available for Sale | $ | 59,982,840 | $ | 54,541,237 |
Description | Interest Rate/ Dividend | Number of Shares | Cost | Fair Value | ||||||||||||
Modified Pass-Through Mortgage-Backed Securities: | ||||||||||||||||
Government National Mortgage Association (GNMA) | 6.50 | % | 500 | $ | 3 | $ | 4 | |||||||||
Total Securities Available for Sale | $ | 179,665 | $ | 154,921 |
(1) Investment is in a related company. See Note No. 11 for further discussion.
(1) | Investment is in a related company. See Note No. 11 for further discussion. |
126 |
NOTE 7- MORTGAGE NOTES AND LOANS PAYABLE
Mortgage Notes Payable:
As of September 30, 2019, we owned 114 properties, of which 59 carried Fixed Rate Mortgage Notes Payable represents thewith outstanding principal amounts outstanding as of September 30, 2016.balances totaling $752.9 million. Interest is payable on these mortgages at fixed rates ranging from 3.45% to 7.60%6.875%, with a weighted average interest rate of 4.48%4.03%. This compares to a weighted average interest rate of 4.85%4.07% as of September 30, 2015.2018. As of September 30, 2016,2019, the weighted average loan maturity of the Mortgage Notes Payable was 10.5 years.11.3 years. This compares to a weighted average loan maturity of the Mortgage Notes Payable of 9.011.7 years as of September 30, 2015.2018.
As described in Note 3, during fiscal year ended September 30, 2016, the Company2019, we entered into eightthree mortgages totaling $141,586,000 in connection with the acquisitions of properties in Concord (Charlotte), NC, Covington (New Orleans), LA, Imperial (Pittsburgh), PA, Burlington (Seattle/Everett), WA, Colorado Springs, CO, Louisville, KY, Davenport (Orlando), FLTrenton, NJ; Savannah, GA (FDX Ground) and Olathe (Kansas City), KS. In addition, also described in Note 3, in connection with the 246,434 square foot expansionLafayette, IN. These three mortgages consisted of the Company’s property located in Olive Branch, MS (Memphis, TN), the Company refinanced its prior 3.76% interest rate mortgage with its existing lender of this property. At the time of the refinancing, the prior amortizing loan was approximately $13,158,000 and was set to mature in January 2023. The new loan is a 12three 15 year fully-amortizing mortgage loans. These three mortgage loans originally totaled $89.5 million, with an original weighted average mortgage loan maturity of $25,000,00015.0 years and will mature in October 2028. Thea weighted average interest rate of the new loan remained the same as the prior loan at a fixed interest rate of 3.76%4.21%.
During the fiscal year ended September 30, 2016, the Company2019, we fully repaid the mortgages on Beltsville, MD; Granite City, IL; Griffin, GAmortgage loans for five of our properties located in Tampa, FL; Lebanon, TN; Hanahan, SC; Ft. Mill, SC and Wheeling, IL amounting to $14,739,654 atDenver, CO, totaling $12.5 million.
During the time they were repaid. In addition, the Companyfiscal year ended September 30, 2018, we fully repaid its fully amortizedthe mortgage on its propertyloans for five of our properties located in St. Joseph, MO.Colorado Springs, CO; Richfield (Cleveland), OH; Tampa, FL; West Chester Twp. (Cincinnati), OH and Orlando, FL, totaling $12.5 million.
The following is a summary of mortgage notes payable atour Fixed Rate Mortgage Notes Payable as of September 30, 20162019 and 2015:2018 (in thousands):
Property | Fixed Rate | Maturity Date | Balance 9/30/16 | Balance 9/30/15 | ||||||||||||
St. Joseph, MO | 8.12 | % | 03/01/16 | $ | -0- | $ | 417,435 | |||||||||
Beltsville, MD (Washington, DC) | 7.53 | % | 05/01/16 | -0- | 419,505 | |||||||||||
Beltsville, MD (Washington, DC) | 5.25 | % | 05/01/16 | -0- | 4,745,219 | |||||||||||
Wheeling, IL (Chicago) | 5.68 | % | 09/05/16 | -0- | 3,457,456 | |||||||||||
Griffin, GA (Atlanta) | 6.37 | % | 10/01/16 | -0- | 7,026,763 | |||||||||||
Granite City, IL (St. Louis, MO) | 7.11 | % | 11/01/16 | -0- | 1,151,798 | |||||||||||
Jacksonville, FL (FDX) | (1) | 6.92 | % | 12/01/16 | 84,194 | 406,962 | ||||||||||
Jacksonville, FL (FDX) | (1)(2) | 6.00 | % | 12/01/16 | 1,300,000 | 1,300,000 | ||||||||||
El Paso, TX | 5.50 | % | 01/05/17 | 3,259,726 | 3,611,052 | |||||||||||
Bedford Heights, OH (Cleveland) | 5.96 | % | 04/01/17 | 2,685,791 | 2,862,734 | |||||||||||
Chattanooga, TN | 5.96 | % | 05/01/17 | 1,551,081 | 1,774,568 | |||||||||||
Elgin, IL (Chicago) | 6.97 | % | 05/01/17 | 349,658 | 844,690 | |||||||||||
Hanahan, SC (Charleston) (SAIC) | 7.36 | % | 05/01/17 | 5,605,514 | 5,939,583 | |||||||||||
Roanoke, VA | 5.96 | % | 05/30/17 | 2,519,243 | 2,819,927 | |||||||||||
Edwardsville, KS (Kansas City)(Carlisle Tire) | 7.38 | % | 07/01/17 | 397,513 | 894,552 | |||||||||||
Kansas City, MO (Kellogg) | 6.11 | % | 08/01/17 | 2,241,680 | 2,381,917 | |||||||||||
Orion, MI | 6.57 | % | 09/01/17 | 8,580,058 | 9,095,386 | |||||||||||
Cheektowaga, NY (Buffalo) | 6.78 | % | 10/01/17 | 343,548 | 639,095 | |||||||||||
Punta Gorda, FL | 6.29 | % | 10/01/17 | 1,990,764 | 2,111,294 | |||||||||||
Cocoa, FL | 6.29 | % | 12/01/17 | 5,063,864 | 5,364,157 | |||||||||||
Richfield, OH (Cleveland) | 5.22 | % | 01/01/18 | 3,078,731 | 3,414,645 | |||||||||||
Tampa, FL (FDX) | 5.65 | % | 04/01/18 | 3,900,447 | 4,132,523 | |||||||||||
West Chester Twp., OH (Cincinnati) | 6.80 | % | 06/01/18 | 2,071,107 | 2,305,050 | |||||||||||
Orlando, FL | 6.56 | % | 10/01/18 | 4,342,604 | 4,570,915 | |||||||||||
Tampa, FL (FDX Ground) | 6.00 | % | 03/01/19 | 6,633,049 | 7,313,195 | |||||||||||
Lebanon, OH (Cincinnati) | (3) | 5.55 | % | 05/01/19 | 2,592,182 | 2,695,845 | ||||||||||
Lebanon, TN (Nashville) | 7.60 | % | 07/10/19 | 7,659,116 | 7,856,077 |
SUMMARY OF FIXED RATE MORTGAGE NOTES PAYABLE
9/30/19 | 9/30/18 | |||||||||||||||
Amount | Weighted Average Interest Rate (1) | Amount | Weighted Average Interest Rate (1) | |||||||||||||
Fixed Rate Mortgage Notes Payable | $ | 752,916 | 4.03 | % | $ | 719,768 | 4.07 | % | ||||||||
Debt Issuance Costs | $ | 11,733 | $ | 11,716 | ||||||||||||
Accumulated Amortization of Debt Issuance Costs | (3,745 | ) | (3,494 | ) | ||||||||||||
Unamortized Debt Issuance Costs | $ | 7,988 | $ | 8,222 | ||||||||||||
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs | $ | 744,928 | $ | 711,546 |
(1) | Weighted average interest rate excludes amortization of debt issuance costs. |
127 |
The following is a summary of our mortgage notes payable by property at September 30, 2019 and 2018 (in thousands):
Property | Fixed Rate | Maturity Date | Balance 9/30/16 | Balance 9/30/15 | ||||||||||||
Ft. Mill, SC (Charlotte, NC) | 7.00 | % | 10/10/19 | $ | 1,926,986 | $ | 2,468,015 | |||||||||
Denver, CO | 6.07 | % | 11/01/19 | 1,059,646 | 1,354,284 | |||||||||||
Hanahan, SC (Charleston) (FDX Ground) | 5.54 | % | 01/21/20 | 1,064,185 | 1,339,490 | |||||||||||
Augusta, GA (FDX Ground) | 5.54 | % | 02/01/20 | 774,093 | 974,351 | |||||||||||
Huntsville, AL | 5.50 | % | 03/01/20 | 795,594 | 991,088 | |||||||||||
Colorado Springs, CO | 5.41 | % | 01/01/21 | 1,329,709 | 1,600,686 | |||||||||||
Topeka, KS | 6.50 | % | 08/10/21 | 1,363,023 | 1,590,945 | |||||||||||
Streetsboro, OH (Cleveland) | 5.50 | % | 11/01/21 | 10,446,469 | 10,972,757 | |||||||||||
Kansas City, MO (Bunzl) | 5.18 | % | 12/01/21 | 6,958,091 | 7,107,312 | |||||||||||
Olive Branch, MS (Memphis, TN) (Anda Distribution) | 4.80 | % | 04/01/22 | 8,750,368 | 9,302,178 | |||||||||||
Waco, TX | 4.75 | % | 08/01/22 | 4,799,919 | 5,063,021 | |||||||||||
Houston, TX | 6.88 | % | 09/10/22 | 3,124,904 | 3,531,824 | |||||||||||
Tolleson, AZ (Phoenix) | 3.95 | % | 11/01/22 | 5,299,383 | 6,043,710 | |||||||||||
Edwardsville, KS (Kansas City) (International Paper) | 3.45 | % | 11/01/23 | 10,648,115 | 11,340,664 | |||||||||||
Spring, TX (Houston) | 4.01 | % | 12/01/23 | 9,126,834 | 9,692,678 | |||||||||||
Memphis, TN | 4.50 | % | 01/01/24 | 6,667,886 | 7,418,616 | |||||||||||
Oklahoma City, OK | 4.35 | % | 07/01/24 | 4,401,832 | 4,863,512 | |||||||||||
Indianapolis, IN | 4.00 | % | 09/01/24 | 12,289,676 | 13,161,911 | |||||||||||
Frankfort, KY (Lexington) | 4.84 | % | 12/15/24 | 18,352,289 | 19,078,153 | |||||||||||
Carrollton, TX (Dallas) | 6.75 | % | 02/01/25 | 7,960,781 | 8,640,732 | |||||||||||
Altoona, PA | (4) | 4.00 | % | 10/01/25 | 4,017,147 | 4,376,801 | ||||||||||
Green Bay, WI | (4) | 4.00 | % | 10/01/25 | 3,260,401 | 3,552,304 | ||||||||||
Stewartville, MN (Rochester) | (4) | 4.00 | % | 10/01/25 | 2,612,978 | 2,846,710 | ||||||||||
Carlstadt, NJ (New York, NY) | 5.25 | % | 05/15/26 | 1,898,198 | 2,045,141 | |||||||||||
Roanoke, VA (FDX Ground) | 3.84 | % | 07/01/26 | 5,321,390 | 5,758,502 | |||||||||||
Livonia, MI (Detroit) | 4.45 | % | 12/01/26 | 7,503,400 | 8,068,751 | |||||||||||
Olive Branch, MS (Memphis, TN) (Milwaukee Tool) | (5) | 3.76 | % | 10/01/28 | 25,000,000 | 14,312,846 | ||||||||||
Tulsa, OK | 4.58 | % | 11/01/28 | 1,934,175 | 2,050,342 | |||||||||||
Lindale, TX (Tyler) | 4.57 | % | 11/01/29 | 6,378,382 | 6,723,881 | |||||||||||
Sauget, IL (St. Louis, MO) | 4.40 | % | 11/01/29 | 9,701,419 | 10,233,837 | |||||||||||
Jacksonville, FL (FDX Ground) | 3.93 | % | 12/01/29 | 18,453,112 | 19,494,453 | |||||||||||
Imperial, PA (Pittsburgh) | 3.63 | % | 04/01/30 | 12,700,739 | -0- | |||||||||||
Monroe, OH (Cincinnati) | 3.77 | % | 04/01/30 | 8,071,987 | 8,518,754 | |||||||||||
Indianapolis, IN (Ulta) | 3.91 | % | 06/01/30 | 22,760,488 | 23,987,008 | |||||||||||
Fort Worth, TX (Dallas) | 3.56 | % | 09/01/30 | 23,431,093 | 24,700,000 | |||||||||||
Concord, NC (Charlotte) | 3.87 | % | 12/01/30 | 20,001,944 | -0- | |||||||||||
Covington, LA (New Orleans) | 4.08 | % | 01/01/31 | 12,468,713 | -0- | |||||||||||
Burlington, WA (Seattle/Everett) | 3.67 | % | 05/01/31 | 19,881,817 | -0- | |||||||||||
Louisville, KY | 3.74 | % | 07/01/31 | 7,288,891 | -0- | |||||||||||
Colorado Springs, CO | 3.90 | % | 07/01/31 | 18,576,282 | -0- | |||||||||||
Davenport, FL (Orlando) | 3.89 | % | 09/01/31 | 26,400,000 | -0- | |||||||||||
Olathe, KS (Kansas City) | 3.96 | % | 09/01/31 | 22,215,000 | -0- | |||||||||||
Buckner, KY (Louisville) | 4.17 | % | 11/01/33 | 16,694,846 | 17,347,243 | |||||||||||
Halfmoon, NY (Albany) | (6) | 5.25 | % | 01/13/37 | 3,786,098 | 3,886,331 | ||||||||||
Total Mortgage Notes Payable | $ | 483,748,153 | $ | 373,991,174 |
SUMMARY OF MORTGAGE NOTES PAYABLE
Property | Fixed Rate | Maturity Date | Balance 9/30/19 | Balance 9/30/18 | ||||||||||||||
Tampa, FL (FDX Ground) | (1) | 6.00 | % | 03/01/19 | $ | 0 | $ | 5,144 | ||||||||||
Lebanon, TN (Nashville) | (1) | 7.60 | % | 07/10/19 | 0 | 7,217 | ||||||||||||
Ft. Mill, SC (Charlotte, NC) | (1) | 7.00 | % | 10/10/19 | 0 | 725 | ||||||||||||
Denver, CO | (1) | 6.07 | % | 11/01/19 | 0 | 414 | ||||||||||||
Hanahan, SC (Charleston)(Amazon) | (1) | 5.54 | % | 01/21/20 | 0 | 466 | ||||||||||||
Augusta, GA (FDX Ground) | 5.54 | % | 02/01/20 | 102 | 339 | |||||||||||||
Huntsville, AL | 5.50 | % | 03/01/20 | 140 | 371 | |||||||||||||
Topeka, KS | 6.50 | % | 08/10/21 | 584 | 860 | |||||||||||||
Streetsboro, OH (Cleveland) | 5.50 | % | 11/01/21 | 8,680 | 9,300 | |||||||||||||
Kansas City, MO | 5.18 | % | 12/01/21 | 6,457 | 6,633 | |||||||||||||
Olive Branch, MS (Memphis, TN)(Anda Pharmaceuticals, Inc.) | 4.80 | % | 04/01/22 | 6,927 | 7,564 | |||||||||||||
Waco, TX | 4.75 | % | 08/01/22 | 3,931 | 4,235 | |||||||||||||
Houston, TX | 6.88 | % | 09/10/22 | 1,643 | 2,148 | |||||||||||||
Tolleson, AZ (Phoenix) | 3.95 | % | 11/01/22 | 2,882 | 3,720 | |||||||||||||
Edwardsville, KS (Kansas City)(International Paper) | 3.45 | % | 11/01/23 | 8,421 | 9,189 | |||||||||||||
Spring, TX (Houston) | 4.01 | % | 12/01/23 | 7,287 | 7,925 | |||||||||||||
Memphis, TN | 4.50 | % | 01/01/24 | 4,202 | 5,061 | |||||||||||||
Oklahoma City, OK (FDX Ground) | 4.35 | % | 07/01/24 | 2,890 | 3,416 | |||||||||||||
Indianapolis, IN | 4.00 | % | 09/01/24 | 9,454 | 10,437 | |||||||||||||
Frankfort, KY (Lexington) | 4.84 | % | 12/15/24 | 15,672 | 16,639 | |||||||||||||
Carrollton, TX (Dallas) | 6.75 | % | 02/01/25 | 5,623 | 6,456 | |||||||||||||
Altoona, PA | (2) | 4.00 | % | 10/01/25 | 2,848 | 3,253 | ||||||||||||
Green Bay, WI | (2) | 4.00 | % | 10/01/25 | 2,311 | 2,640 | ||||||||||||
Stewartville, MN (Rochester) | (2) | 4.00 | % | 10/01/25 | 1,852 | 2,116 | ||||||||||||
Carlstadt, NJ (New York, NY) | 5.25 | % | 05/15/26 | 1,408 | 1,580 | |||||||||||||
Roanoke, VA (FDX Ground) | 3.84 | % | 07/01/26 | 3,905 | 4,395 | |||||||||||||
Livonia, MI (Detroit) | 4.45 | % | 12/01/26 | 5,649 | 6,295 | |||||||||||||
Oklahoma City, OK (Amazon) | 3.64 | % | 12/01/27 | 18,206 | 19,014 | |||||||||||||
Olive Branch, MS (Memphis, TN)(Milwaukee Tool) | 3.76 | % | 10/01/28 | 19,917 | 21,723 | |||||||||||||
Tulsa, OK | 4.58 | % | 11/01/28 | 1,552 | 1,685 | |||||||||||||
Oklahoma City, OK (Bunzl) | 4.13 | % | 07/01/29 | 5,124 | 5,538 | |||||||||||||
Lindale, TX (Tyler) | 4.57 | % | 11/01/29 | 5,242 | 5,638 | |||||||||||||
Sauget, IL (St. Louis, MO) | 4.40 | % | 11/01/29 | 7,956 | 8,564 | |||||||||||||
Jacksonville, FL (FDX Ground) | 3.93 | % | 12/01/29 | 15,072 | 16,244 | |||||||||||||
Imperial, PA (Pittsburgh) | 3.63 | % | 04/01/30 | 10,407 | 11,200 | |||||||||||||
Monroe, OH (Cincinnati) | (3) | 3.77 | % | 04/01/30 | 6,626 | 7,126 | ||||||||||||
Monroe, OH (Cincinnati) | (3) | 3.85 | % | 04/01/30 | 7,000 | 0 | ||||||||||||
Greenwood, IN (Indianapolis) | 3.91 | % | 06/01/30 | 18,780 | 20,159 | |||||||||||||
Ft. Worth, TX (Dallas) | 3.56 | % | 09/01/30 | 19,342 | 20,754 | |||||||||||||
Concord, NC (Charlotte) | 3.87 | % | 12/01/30 | 16,654 | 17,813 | |||||||||||||
Covington, LA (New Orleans) | 4.08 | % | 01/01/31 | 10,425 | 11,134 | |||||||||||||
Burlington, WA (Seattle/Everett) | 3.67 | % | 05/01/31 | 16,635 | 17,757 | |||||||||||||
Louisville, KY | 3.74 | % | 07/01/31 | 6,121 | 6,525 | |||||||||||||
Colorado Springs, CO | 3.90 | % | 07/01/31 | 15,632 | 16,652 | |||||||||||||
Davenport, FL (Orlando) | 3.89 | % | 09/01/31 | 22,274 | 23,703 | |||||||||||||
Olathe, KS (Kansas City) | 3.96 | % | 09/01/31 | 18,759 | 19,957 | |||||||||||||
Hamburg, NY (Buffalo) | 4.03 | % | 11/01/31 | 20,075 | 21,329 | |||||||||||||
Ft. Myers, FL (FDX Ground) | 3.97 | % | 01/01/32 | 12,510 | 13,281 | |||||||||||||
Savannah, GA | 3.53 | % | 02/01/32 | 30,304 | 32,216 | |||||||||||||
Walker, MI (Grand Rapids) | 3.86 | % | 05/01/32 | 18,365 | 19,469 | |||||||||||||
Mesquite, TX (Dallas) | 3.60 | % | 07/01/32 | 29,171 | 30,928 |
128 |
Property | Fixed Rate | Maturity Date | Balance 9/30/19 | Balance 9/30/18 | ||||||||||
Aiken, SC (Augusta, GA) | 4.20 | % | 07/01/32 | $ | 13,683 | $ | 14,471 | |||||||
Homestead, FL (Miami) | 3.60 | % | 07/01/32 | 21,989 | 23,314 | |||||||||
Mobile, AL | 4.14 | % | 07/01/32 | 17,802 | 18,832 | |||||||||
Concord, NC (Charlotte) | 3.80 | % | 09/01/32 | 23,492 | 24,863 | |||||||||
Kenton, OH | 4.45 | % | 10/01/32 | 10,874 | 11,473 | |||||||||
Stow, OH | 4.17 | % | 10/01/32 | 11,484 | 12,130 | |||||||||
Charleston, SC (FDX) | 4.23 | % | 12/01/32 | 12,968 | 13,683 | |||||||||
Daytona Beach, FL | 4.25 | % | 05/31/33 | 18,224 | 19,188 | |||||||||
Charleston, SC (FDX Ground) | 3.82 | % | 09/01/33 | 28,356 | 29,860 | |||||||||
Braselton, GA (Atlanta) | 4.02 | % | 10/01/33 | 37,898 | 39,700 | |||||||||
Buckner, KY (Louisville) | 4.17 | % | 11/01/33 | 14,566 | 15,307 | |||||||||
Trenton, NJ | 4.13 | % | 11/01/33 | 52,759 | 0 | |||||||||
Savannah, GA (FDX Ground) | 4.40 | % | 12/01/33 | 16,872 | 0 | |||||||||
Lafayette, IN | 4.25 | % | 08/01/34 | 16,932 | 0 | |||||||||
Total Mortgage Notes Payable | $ | 752,916 | $ | 719,768 |
(1) | Loan was | |
(2) | ||
One self-amortizing loan is secured by Altoona, PA, Green Bay, WI and Stewartville (Rochester), MN. | ||
(3) | ||
Principal on the foregoing debt at September 30, 20162019 is scheduled to be paid as follows:follows (in thousands):
Year Ending September 30, | 2017 | $ | 57,791,871 | |||
2018 | 43,879,833 | |||||
2019 | 47,464,988 | |||||
2020 | 28,808,574 | |||||
2021 | 29,255,776 | |||||
Thereafter | 276,547,111 | |||||
$ | 483,748,153 |
SCHEDULE OF MATURITIES OF LONG-TERM DEBT
Year Ending September 30, | 2020 | $ | 53,394 | ||
2021 | 55,360 | ||||
2022 | 77,516 | ||||
2023 | 56,240 | ||||
2024 | 69,293 | ||||
Thereafter | 441,113 | ||||
Total | $ | 752,916 |
The above table does not include a fifteenan 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.27%, which was obtained subsequent to the 2019 fiscal yearend in connection with the purchase of onea property for $35,100,000 subsequent to the fiscal yearend at a fixed interest rate of 4.03%. In addition, the above table does not include commitments the Company has entered into to obtain five mortgage loans totaling $101,204,000 at fixed interest rates ranging from 3.60% to 4.20%, with a weighted average interest rate of 3.83%. Each of these five mortgage loan commitments are in connection with commitments to purchase five properties, currently under construction, totaling approximately $153,726,000. Each of these five mortgages will have fifteen year terms and consist of fully-amortizing loans.$81.5 million.
Loans Payable:
BMO Capital Markets
On August 27, 2015, the Company replaced its prior $60,000,000 unsecured revolving lineAs of credit, with a newSeptember 30, 2019, Loans Payable represented $95.0 million drawn down on our $200.0 million unsecured line of credit facility (the “Facility”“Old Facility”). TheAs further described below, subsequent to the fiscal yearend 2019, the Old Facility is syndicated with three banks ledwas replaced by BMO Capital Markets (“BMO”a new facility (the “New Facility”), as sole lead arranger, sole book runner, and Bank consisting of Montreal as administrative agent, and includes JPMorgan Chase Bank, N.A. (“J.P. Morgan”a $225.0 million unsecured line of credit facility (the “New Revolver”) and RBC Capital Markets (“RBC”) as co-syndication agents. The Facility provided for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature under the Facility, bringingnew $75.0 million unsecured term loan (the “Term Loan”), resulting in the total potential availability upunder both the New Revolver and the Term Loan of $300.0 million. In addition, the New Revolver includes an accordion feature that will allow the total potential availability under the New Facility to $200,000,000, subjectfurther increase to $400.0 million, under certain conditions. The Old Facility was originally set to mature in August 2019 and hadSeptember 2020 with a one-year extension option, at our option (subject to various conditions as specified in the optionloan agreement). During the fiscal year ended September 30, 2019, we had net paydowns of $65.0 million under the Old Facility. Availability under the Old Facility was limited to 60% of the Company. Onvalue of the borrowing base properties. The value of the borrowing base properties was determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Effective in March 2018, the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties under the terms of the Old Facility. Borrowings under the Old Facility, at our election, either i) bore interest at LIBOR plus 140 basis points to 220 basis points, depending on our leverage ratio, or ii) bore interest at Bank of Montreal’s (BMO’s) prime lending rate plus 40 basis points to 120 basis points, depending on our leverage ratio. Our borrowings as of September 30, 2016, the Company entered into2019, based on our leverage ratio as of September 30, 2019, bore interest at LIBOR plus 170 basis points, which was at an interest rate of 3.74% as of September 30, 2019. In addition, we had a first amendment (the “Amendment”) pursuant to which the Company exercised the $70,000,000 accordion feature under the Facility, bringing the maximum availability under the Facility to $200,000,000, and amended the Facility to provide an additional $100,000,000$100.0 million accordion feature, bringing the total potential availability under the Old Facility (subject to various conditions as specified in the loan agreement) up to $300,000,000, subject$300.0 million.
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The New Facility was arranged by BMO Capital Markets Corp, J.P. Morgan Chase Bank, N.A. (“JPMorgan”), and RBC Capital Markets (“RBC”), who served as joint lead arrangers and joint book runners. Bank of Montreal served as administrative agent and JPMorgan and RBC acted as co-syndication agents. The $225.0 million New Revolver matures in January 2024, with two options to certainextend for additional six-month periods, at our option and has a $100.0 million accordion feature, bringing the total potential availability under the New Revolver (subject to various conditions including, without limitation, obtaining commitments from additional lenders. In addition,as specified in the Amendment extended the maturity date of the Facility from August 27, 2019loan agreement) up to September 30, 2020, with a one-year extension option, at the option of the Company, subject to certain conditions. $325.0 million. Availability under the New Facility through December 31, 2016, is limited to 70% of the value of the borrowing base properties, and is limited to 60% of the value of the borrowing base properties thereafter.properties. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the net operating incomeNOI generated by the Company’sour unencumbered, wholly-owned industrial properties. BorrowingsUnder the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the Old Facility up to 6.25% under the first 60% ofNew Facility, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the New Revolver was lowered and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the Company’sNew Revolver at LIBOR plus 145 basis points, which results in an interest rate of 3.21%. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan, at our election, either i) bear interest at LIBOR plus 140130 basis points to 220200 basis points, depending on the Company’sour leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 4030 basis points to 120100 basis points, depending on the Company’sour leverage ratio. The Company’s current borrowings as of September 30, 2016 were less than 60% of the value of the borrowing base properties and based on the Company’s leverage ratio as of September 30, 2016, borrowings To reduce floating interest rate exposure under the Facility bear interest at LIBOR plus 150 basis points which was atTerm Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of 2.03% asthe Term Loan resulting in an all-in rate of September 30, 2016. As of September 30, 2016, $76,000,000 was2.92%. We currently have $10.0 million drawn down under the Facility.New Revolver and $75.0 million outstanding under the Term Loan.
Two River Community Bank and The Bank of Princeton
The Company has total loans payable of $4,790,684 consisting of a $2,284,633 term loan secured by 200,000 shares of UMH Properties, Inc. (UMH) 8.25% Series A preferred stock from Two River Community Bank at an annual interest rate of 4.90%, which was paid in full on October 28, 2016, and a $2,506,051 term loan secured by 500,000 shares of UMH common stock from The Bank of Princeton at a variable annual interest rate of prime plus 0.75% with a floor of 4.50%, maturing on March 9, 2017. The interest rate on the $2,506,051 term loan with The Bank of Princeton was 4.50% as of September 30, 2016.
Margin Loans
The Company fromFrom time to time useswe use a margin loan for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. This loan is due on demand and is collateralized by the Company’sour securities portfolio. The CompanyWe must maintain a coverage ratio of approximately 50%. The interest rate charged on the margin loan is the bank’s margin rate and was 2.00%2.50% and 2.75% as of September 30, 20162019 and 2015.2018, respectively, and is currently at 2.25%. At September 30, 2016 and 2015,2019 there were no draws against0 amounts drawn down under the margin loan and as of September 30, 2018 there was $26.6 million drawn down under the margin loan.
For the three fiscal years ended September 30, 2019, 2018 and 2017, amortization of financing costs included in interest expense was $1.3 million, $1.2 million and $1.2 million, respectively.
NOTE 8 - OTHER LIABILITIES
Other liabilities consist of the following as of September 30th:30 (in thousands):
9/30/16 | 9/30/15 | |||||||
Rent paid in advance | $ | 5,999,702 | $ | 5,081,537 | ||||
Unearned reimbursement revenue | 2,407,717 | 2,037,018 | ||||||
Deferred rent payable | 631,437 | -0- | ||||||
Tenant security deposits | 464,287 | 434,554 | ||||||
Other | 365,429 | 282,359 | ||||||
Total | $ | 9,868,572 | $ | 7,835,468 |
SCHEDULE OF OTHER LIABILITIES
9/30/19 | 9/30/18 | |||||||
Rent paid in advance | $ | 10,683 | $ | 9,401 | ||||
Unearned reimbursement revenue | 5,385 | 5,815 | ||||||
Tenant security deposits | 691 | 715 | ||||||
Other | 648 | 495 | ||||||
Total | $ | 17,407 | $ | 16,426 |
NOTE 9 - STOCK COMPENSATION PLAN
On July 26, 2007, the 2007 Stock Option and Stock Award Plan (the 2007 Plan) was approved by the shareholders authorizing the grant to officers, directors and key employees, of options to purchase up to 1,500,000 shares of common stock. On May 6, 2010, the Company’s shareholders approved an amendment and restatement of the 2007 Plan. The amendment and restatement made two significant changes: (1) the inclusion of directors as participants in the 2007 Plan and (2) the ability to grant restricted stock to directors, officers and key employees. The amendment and restatement also made other conforming, technical and other minor changes. The amendment also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.
Options or restricted stock may be granted any time as determined by the Company’s Compensation Committee up through March 26, 2017. No option shall be available for exercise beyond ten years. All options are exercisable after one year from the date of grant. The option price shall not be below the fair market value at date of grant. Canceled or expired options are added back to the “pool” of shares available under the 2007 Plan.
The Compensation Committee determines the recipients of each restricted stock award; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s shareholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant shall be 100,000.
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At our Annual Meeting held on May 18, 2017, our common shareholders approved our Amended and Restated 2007 Incentive Award Plan (the Plan) which extended the term of our 2007 Incentive Award Plan for in an underlying restrictedadditional 10 years, until March 13, 2027, added million shares of common stock award agreement, if a participant’s status as an employee or directorto the share reserve, expanded the types of the Company is terminated by reason of death or disability, the restrictions will lapse on such date. Unless otherwise providedawards available for in an underlying restricted stock award agreement,grant under the Plan provides that if an individual’s status as an employee or director is terminated by reason of retirement following an involuntary termination (other than for “cause” as defined inand made other improvements to the Plan), the restrictions will generally lapse, unless the restricted stock award is intended to constitute “performance based” compensation for purposes of Section 162(m) of the Internal Revenue Code. If a participant’s status as an employee or director terminates for any other reason, the Plan provides that a participant will generally forfeit any outstanding restricted stock awards, unless otherwise indicated in the applicable award agreement. Shares of restricted stock that are forfeited become available again for issuance under the2007 Plan.
The Compensation Committee, hasin its capacity as Plan Administrator, shall determine, among other things: the authorityrecipients of awards; the type and number of awards participants will receive; the terms, conditions and forms of the awards; the times and conditions subject to accelerate the time at which theawards may be exercised or become vested, deliverable or exercisable, or as to which any restrictions may lapse whenever it considersapply or lapse; and may amend or modify the terms and conditions of an award, except that such actionrepricing of options or Stock Appreciation Rights (SAR) is not permitted without shareholder approval.
best interestsdate of grant, and the grant date value of any special or one-time award upon election or appointment to the Board of Directors may not exceed $ . . Regular annual awards granted to non-employee directors as compensation for services as non-employee directors during any fiscal year may not exceed $ in value on the
Awards granted pursuant to the Plan generally may not vest until the first anniversary of the Company anddate the award was granted, provided, however, that up to of its shareholders, whether by reasonthe Common Shares available under the Plan may be awarded to any one or more Eligible Individuals without the minimum vesting period.
If an award made under the Plan is forfeited, expires or is converted into shares of changesanother entity in tax laws,connection with a recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other similar event, or the award is settled in cash, the shares associated with the forfeited, expired, converted or settled award will become available for additional awards under the Plan.
The term of any stock option or SAR generally may not be more than “change in control” as defined incommon share at the 2007 Plan or otherwise.date of grant. years from the date of grant. The exercise price per common share under the Plan generally may not be below of the fair market value of a
The Company accountsWe account for our stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period).
Stock Options
During fiscal 2016, 2015 and 2014,2019, thirteen employees were granted options to purchase shares. During fiscal 2018, one employee was granted options to purchase shares. During fiscal year.2017, eleven employees were granted options to purchase shares. The fair value of these options that were issued during the fiscal years 2019, 2018 and 2017 was $48,100, $60,315, , , and $34,549 in fiscal 2016, 2015, and 2014, respectively . The value of these options was determined based on the assumptions below and is being amortized over a vesting period. For the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, amounts charged to compensation expense related to stock options totaled $51,334, $53,873$ , $ and $35,910,$ , respectively. The remaining unamortized stock option expense was $12,085$94,000 as of September 30, 20162019 which will be expensed in fiscal 2017.2020.
2016 | 2015 | 2014 | ||||||||||
Dividend yield | 6.17 | % | 5.38 | % | 6.71 | % | ||||||
Expected volatility | 20.20 | % | 19.78 | % | 19.07 | % | ||||||
Risk-free interest rate | 2.09 | % | 1.97 | % | 2.45 | % | ||||||
Expected lives (years) | 8 | 8 | 8 | |||||||||
Estimated forfeitures | -0- | -0- | -0- |
SCHEDULE OF STOCK OPTIONS, VALUATION ASSUMPTIONS
2019 | 2018 | 2017 | ||||||||||
Dividend yield | 5.03 | % | 3.82 | % | 4.44 | % | ||||||
Expected volatility | 17.17 | % | 16.45 | % | 18.84 | % | ||||||
Risk-free interest rate | 2.88 | % | 2.37 | % | 2.26 | % | ||||||
Expected lives (years) | 8 | 8 | 8 | |||||||||
Estimated forfeitures | 0 | 0 | 0 |
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A summary of the status of the Company’sour stock option plan as of September 30, 2016, 20152019, 2018 and 20142017 is as follows:follows (shares in thousands):
SUMMARY OF STATUS OF COMPANY'S STOCK OPTION PLAN
2019 | 2018 | 2017 | ||||||||||||||||||||||
2019 Shares | Weighted Average Exercise Price | 2018 Shares | Weighted Average Exercise Price | 2017 Shares | Weighted Average Exercise Price | |||||||||||||||||||
Outstanding at beginning of year | 695 | $ | 12.17 | 670 | $ | 11.75 | 455 | $ | 9.46 | |||||||||||||||
Granted | 450 | 13.53 | 65 | 17.80 | 280 | 14.43 | ||||||||||||||||||
Exercised | (65 | ) | 8.72 | (40 | ) | 14.24 | (65 | ) | 7.22 | |||||||||||||||
Expired/Forfeited | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Outstanding at end of year | 1,080 | 12.95 | 695 | 12.17 | 670 | 11.75 | ||||||||||||||||||
Exercisable at end of year | 630 | 630 | 390 | |||||||||||||||||||||
Weighted-average fair value of options granted during the year | $ | 1.17 | $ | 1.84 | $ | 1.49 |
2016 | 2015 | 2014 | ||||||||||||||||||||||
2016 Shares | Weighted Average Exercise Price | 2015 Shares | Weighted Average Exercise Price | 2014 Shares | Weighted Average Exercise Price | |||||||||||||||||||
Outstanding at beginning of year | 635,000 | $ | 8.68 | 651,200 | $ | 8.29 | 750,370 | $ | 8.19 | |||||||||||||||
Granted | 65,000 | 10.37 | 65,000 | 11.16 | 65,000 | 8.94 | ||||||||||||||||||
Exercised | (245,000 | ) | 7.69 | (81,200 | ) | 7.54 | (164,170 | ) | 8.08 | |||||||||||||||
Expired/Forfeited | -0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||
Outstanding at end of year | 455,000 | 9.46 | 635,000 | 8.68 | 651,200 | 8.29 | ||||||||||||||||||
Exercisable at end of year | 390,000 | 570,000 | 586,200 | |||||||||||||||||||||
Weighted-average fair value of options granted during the year | $ | 0.74 | $ | 0.93 | $ | 0.53 |
The following is a summary of stock options outstanding as of September 30, 2016:2019:
Date of Grant | Number of Grants | Number of Shares | Option Price | Expiration Date | ||||||||
01/05/10 | 1 | 65,000 | 7.22 | 01/05/18 | ||||||||
01/03/11 | 1 | 65,000 | 8.72 | 01/03/19 | ||||||||
01/03/12 | 1 | 65,000 | 9.33 | 01/03/20 | ||||||||
01/03/13 | 1 | 65,000 | 10.46 | 01/03/21 | ||||||||
01/03/14 | 1 | 65,000 | 8.94 | 01/03/22 | ||||||||
01/05/15 | 1 | 65,000 | 11.16 | 01/05/23 | ||||||||
01/05/16 | 1 | 65,000 | 10.37 | 01/05/24 | ||||||||
455,000 |
SUMMARY OF STOCK OPTION OUTSTANDING
Date of Grant | Number of Grants | Number of Shares (in thousands) | Option Price | Expiration Date | ||||||||||
1 | ||||||||||||||
1 | ||||||||||||||
1 | ||||||||||||||
1 | ||||||||||||||
1 | ||||||||||||||
8 | ||||||||||||||
1 | ||||||||||||||
1 | ||||||||||||||
12 | ||||||||||||||
1 | ||||||||||||||
The aggregate intrinsic value of options outstanding as of September 30, 2016, 20152019, 2018 and 20142017 was $2,189,850, $816,800$ million, $ million and $1,212,984,$ million, respectively. The intrinsic value of options exercised in fiscal years 2016, 20152019, 2018 and 20142017 was $884,350, $333,369,$ , $ , and $361,288,$ , respectively. The weighted-average remaining contractual term of the above options was 4.2, 3.1 , and 2.7 as of September 30, 2016, 20152019, 2018 and 2014,2017, respectively.
Unrestricted Stock
Effective September 12, 2017, a portion of our quarterly directors’ fee was paid with our unrestricted common stock. During fiscal 2019, unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $ per share. During fiscal 2018, unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $ per share. During fiscal 2017, unrestricted shares of common stock were granted with a fair value on the grant date of $ per share.
Restricted Stock
In September 2016, the CompanyDuring fiscal 2019, we awarded 40,000 shares of restricted stock to one participant under the 2007our Plan. In July 2015, the CompanyDuring fiscal 2018, we awarded 47,000 shares of restricted stock to twelve participants and inone participant under our Plan. In September 2015, the Company2017, we awarded shares of restricted stock to eleven participants under the 2007 Plan. In July 2014, the Company awarded 10,000 shares of restricted stock to one participant under the 2007our Plan. The grant date fair value of restricted stock grants awarded to participants was $545,600, $572,840$386,000, $206,000 and $101,900$175,000 in fiscal 2016, 20152019, 2018 and 2014,2017, respectively. These grants vest in equal installments over . As of September 30, 2016,2019, there remained a total of $675,813$ of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the 2007 Plan and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 3.0 years. For the fiscal years ended September 30, 2016, 20152019, 2018 and 2014,2017, amounts charged to compensation expense related to restricted stock grants totaled $875,131, $395,022$258,000, $207,000 and $311,092,$261,000, respectively.
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2016 | 2015 | 2014 | ||||||||||||||||||||||
2016 Shares | Weighted-Average Grant Date Fair Value | 2015 Shares | Weighted-Average Grant Date Fair Value | 2014 Shares | Weighted-Average Grant Date Fair Value | |||||||||||||||||||
Non-vested at beginning of year | 123,496 | $ | 10.08 | 108,200 | $ | 9.96 | 131,666 | $ | 9.85 | |||||||||||||||
Granted | 40,000 | 13.64 | 58,000 | 9.88 | 10,000 | 10.19 | ||||||||||||||||||
Dividend Reinvested Shares | 6,771 | 11.08 | 7,180 | 9.52 | 8,665 | 9.06 | ||||||||||||||||||
Vested | (49,136 | ) | (10.06 | ) | (49,884 | ) | (9.56 | ) | (42,131 | ) | (10.47 | ) | ||||||||||||
Forfeited | (3,234 | ) | (11.38 | ) | -0- | -0- | -0- | -0- | ||||||||||||||||
Non-vested at end of year | 117,897 | $ | 11.35 | 123,496 | $ | 10.08 | 108,200 | $ | 9.96 |
SUMMARY OF NONVESTED RESTRICTED STOCK AWARDS
2019 | 2018 | 2017 | ||||||||||||||||||||||
2019 Shares | Weighted-Average Grant Date Fair Value | 2018 Shares | Weighted-Average Grant Date Fair Value | 2017 Shares | Weighted-Average Grant Date Fair Value | |||||||||||||||||||
Non-vested at beginning of year | $ | $ | $ | |||||||||||||||||||||
Granted | ||||||||||||||||||||||||
Dividend Reinvested Shares | ||||||||||||||||||||||||
Vested | ) | ) | ) | ) | ) | ) | ||||||||||||||||||
Forfeited | ||||||||||||||||||||||||
Non-vested at end of year | $ | $ | $ |
As of September 30, 2016,2019, there were 444,878 million shares available for grant as stock options or restricted stock under the 2007 Plan.
NOTE 10 - INCOME FROM LEASES
The Company derivesWe derive income primarily from operating leases on itsour commercial properties. At September 30, 2019, we held investments in 114 properties totaling 22.3 million square feet with an occupancy rate of 98.9%. Subsequent to fiscal yearend 2019, effective November 1, 2019, we leased one of our previously vacant properties consisting of 60,000 square feet for 12.5 years, increasing our current overall occupancy rate to 99.2%. In general, these leases are written for periods up to ten10 years or more with various provisions for renewal. These leases generally contain clauses for reimbursement (or direct payment) of real estate taxes, maintenance, insurance and certain other operating expenses of the properties.
As of September 30, 2016, the Company2019, we had a weighted average lease maturity of 7.4 years. Minimum7.6 years and our average annualized rent per occupied square foot was $6.20. Approximate minimum base rents due under non-cancellable leases as of September 30, 20162019 are approximately scheduled as follows:follows (in thousands):
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES
Fiscal Year | Amount | Amount | ||||||
2017 | $ | 87,518,000 | ||||||
2018 | 81,220,000 | |||||||
2019 | 73,506,000 | |||||||
2020 | 69,080,000 | $ | 132,947 | |||||
2021 | 67,604,000 | 130,863 | ||||||
2022 | 124,380 | |||||||
2023 | 119,725 | |||||||
2024 | 108,844 | |||||||
thereafter | 307,898,000 | 482,571 | ||||||
Total | $ | 686,826,000 | $ | 1,099,330 |
NOTE 11 - RELATED PARTY TRANSACTIONS
There are sixFive of our 13 directors of the Company who are also directors and shareholders of UMH. The Company holdsWe hold common and preferred stock of UMH in itsour securities portfolio. See Note 6 for current holdings. During fiscal 2016, the Company2019, we made total purchases of 77,456 common shares of UMH for a total cost of $777,588,$874,000, or a weighted average cost of $10.04$ per share, of which 67,456 shares were purchased through UMH’s Dividend Reinvestment and Stock Purchase Plan. We owned a total of million UMH common shares as of September 30, 2019 at a total cost of $12.9 million and a fair value of $17.7 million representing 3.1% of the outstanding common shares of UMH. In addition, the Company made total purchases as of September 30, 2019, we owned shares of UMH’s 8.00% Series B Cumulative Redeemable Preferred Stock at a total cost of $2,500,000.$2.5 million with a fair value of $2.6 million. The total unrealized gain on our investment in UMH’s common and preferred stock as of September 30, 2019 was $4.9 million. During fiscal 2016,2019, UMH made total purchases of 120,098 of our common shares of the Company through the Company’sour DRIP for a total cost of $1,348,141,$1.7 million, or a weighted average cost of $11.23$ per share.
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The Company currently has thirteenAs of September 30, 2019, we had 16 full-time employees and one part-time employee. One of the Company’s employees (Director of Investor Relations, promoted to Vice President of Investor Relations in June 2015) was shared with a related entity, UMH, through September 30, 2015. Through September 30, 2015, the Vice President of Investor Relations’ salary was allocated 70% to the Company and 30% to UMH based on the time she worked for each entity. Effective October 1, 2015, the Vice President of Investor Relations began working solely for the Company at which point the Company no longer allocates any portion of her salary to UMH. In addition, the Company’sOur Chairman of the Board is also the Chairman of the Board of UMH. Effective as of October 1, 2015, otherOther than the Company’sour Chairman of the Board, the Company doeswe do not share any employees with UMH.
Some general and administrative expenses are allocated between the Company and UMH based on use or services provided. These allocations are reviewed by our Audit Committee. Net shared expenses charged by UMH to the Company for the fiscal years endedEffective September 30, 2016, 2015 and 2014 were $55,196, $158,727 and $394,927, respectively.
On August 22, 2014, the Company entered into a seven-year2019, we terminated our lease agreementpertaining to occupy 5,680 square feet for the Company’s new corporate office space. The newour former corporate office space is located in a new separate suite located in the same building as the Company’s former corporate office space. The lease became effective January 12, 2015, at which time, the Company ceased to share rent expense with UMH. Rent for the Company’s new corporate office space is at an annual rate of $99,400 or $17.50 per square foot for years one through five and an annual rate of $100,820 or $17.75 per square foot for years six and seven. The Company is also responsible for its proportionate share of real estate taxes and common area maintenance.Freehold, NJ. Mr. Eugene W. Landy, the Founder and Chairman of the Board, of the Company, owns a 24% interest in the entity that is the landlord of thethis property where the Company’s newlocated in Freehold, NJ. UMH’s corporate office space is located.offices remain in Freehold, NJ. Effective September 18, 2019, MREIC moved its corporate offices to Holmdel, NJ.
Daniel D. Cronheim is a director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $49,500, $47,000 and $42,000 for director’s fees in fiscal 2016, 2015 and 2014, respectively. The David Cronheim Mortgage Corporation, an affiliated company of CMSI, received $-0-, $196,000 and $140,000 in mortgage brokerage commissions in fiscal 2016, 2015 and 2014, respectively.
The industrial property in Carlstadt, New Jersey is owned by Palmer Terrace Realty Associates, LLC. The Company owns 51% of Palmer Terrace Realty Associates, LLC. This property is managed by Marcus Associates, an entity affiliated with the 49% non-controlling interest. Annual management fees of $15,804 were paid to Marcus Associates for each of the fiscal years ended 2016, 2015 and 2014.
NOTE 12 - TAXES
Income Tax
The Company hasWe have elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code under Sections 856 to 860 and the comparable New Jersey Statutes. Under such provisions, the Companywe will not be taxed on that portion of itsour taxable income distributed currently to shareholders, provided that at least 90% of itsour taxable income is distributed. As the Company haswe have and intendsintend to continue to distribute all of itsour income, currently no provision has been made for income taxes. If the Company failswe fail to qualify as a REIT in any taxable year, itwe will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifieswe qualify for taxation as a REIT, the Companywe may be subject to certain state and local taxes on itsour income and property, and to federal income and excise taxes on itsour undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state, and local income taxes.
Federal Excise Tax
The Company doesWe do not have a Federal excise tax liability for the calendar years 2016, 20152019, 2018 and 2014,2017, since it intendswe intend to or hashave distributed all of itsour annual Federal taxable net income.
Reconciliation Between U.S. GAAP Net Income and Taxable Income
The following table reconciles net income attributableNet Income Attributable to common shares to taxable income for the years ended September 30, 2016, 20152019, 2018 and 2014:2017 (in thousands):
2016 Estimated | 2015 Actual | 2014 Actual | ||||||||||
(unaudited) | ||||||||||||
Net income applicable to common shareholders | $ | 20,531,888 | $ | 16,998,783 | $ | 11,238,262 | ||||||
Book / tax difference on gains realized from capital transactions | (4,398,599 | ) | (5,824,405 | ) | (2,166,766 | ) | ||||||
Stock compensation expense | 926,465 | 448,895 | 347,002 | |||||||||
Deferred compensation | -0- | -0- | -0- | |||||||||
Other book / tax differences, net | (232,914 | ) | 2,342,751 | (150,831 | ) | |||||||
Taxable income before adjustments | 16,826,840 | 13,966,024 | 9,267,667 | |||||||||
Add: capital gains | 3,774,099 | 5,000,683 | 973,761 | |||||||||
Estimated taxable income subject to 90% dividend requirement | $ | 20,600,939 | $ | 18,966,707 | $ | 10,241,428 |
SCHEDULE OF NET INCOME AND TAXABLE INCOME
2019 Estimated (unaudited) | 2018 Actual | 2017 Actual | ||||||||||
Net income attributable to common shareholders | $ | 11,026 | $ | 38,815 | $ | 22,942 | ||||||
Book / tax difference on gains realized from capital transactions | 0 | (7,596 | ) | (2,312 | ) | |||||||
Stock compensation expense | 784 | 434 | 625 | |||||||||
Deferred compensation | 0 | 0 | 0 | |||||||||
Other book / tax differences, net | 1,650 | (1,039 | ) | (1,596 | ) | |||||||
Taxable income before adjustments | 13,460 | 30,614 | 19,659 | |||||||||
Add: capital gains | 19,680 | 7,996 | 567 | |||||||||
Estimated taxable income subject to 90% dividend requirement | $ | 33,140 | $ | 38,610 | $ | 20,226 |
134 |
Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction
The following table reconciles cash dividends paid with the dividends paid deduction for the years ended September 30, 2016, 20152019, 2018 and 2014:2017 (in thousands):
2016 Estimated | 2015 Actual | 2014 Actual | ||||||||||
(unaudited) | ||||||||||||
Cash dividends paid | $ | 42,034,183 | $ | 35,522,127 | $ | 29,531,430 | ||||||
Less: Portion designated capital gains distribution | (3,774,099 | ) | (5,000,683 | ) | (973,761 | ) | ||||||
Less: Return of capital | (9,470,625 | ) | (2,939,882 | ) | (9,856,777 | ) | ||||||
Estimated dividends paid deduction | $ | 28,789,459 | $ | 27,581,562 | $ | 18,700,892 |
SCHEDULE OF CASH DIVIDENDS PAID AND DIVIDENDS PAID DEDUCTION
2019 Estimated | 2018 Actual | 2017 Actual | ||||||||||
Cash dividends paid | $ | 63,742 | $ | 53,586 | $ | 46,289 | ||||||
Less: Portion designated capital gains distribution | (19,680 | ) | (7,996 | ) | (567 | ) | ||||||
Less: Return of capital | (30,602 | ) | (14,976 | ) | (7,361 | ) | ||||||
Estimated dividends paid deduction | $ | 13,460 | $ | 30,614 | $ | 38,361 |
NOTE 13 - SHAREHOLDERS’ EQUITY
Common Stock
The CompanyWe have implemented a Dividend Reinvestment and Stock Purchase Plan (the DRIP) effective December 15, 1987, as amended.1987. Under the terms of the DRIP, and subsequent amendments,as subsequently amended, shareholders who participate may reinvest all or part of their dividends in additional shares of the Company at a discounted price (approximately of market value) directly from the Company,us, from authorized but unissued shares of the Companyour common stock. According to the terms of the DRIP, shareholdersShareholders may also purchase additional shares through the DRIP by making optional cash payments monthly.
2016 | 2015 | 2014 | ||||||||||
Amounts received | $ | 72,175,797 | $ | 48,404,556 | $ | 38,090,334 | ||||||
Less: Dividend reinvestments | 8,369,146 | 8,489,169 | 7,624,528 | |||||||||
Amounts received, net | $ | 63,806,651 | $ | 39,915,387 | $ | 30,465,806 | ||||||
Number of Shares Issued | 6,515,750 | 4,975,500 | 4,296,075 |
SCHEDULE OF SHARES ISSUED IN CONNECTION WITH DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
2019 | 2018 | 2017 | ||||||||||
Amounts received | $ | 73,965 | $ | 90,029 | $ | 91,932 | ||||||
Less: Dividend reinvestments | 16,886 | 12,928 | 10,126 | |||||||||
Amounts received, net | $ | 57,079 | $ | 77,101 | $ | 81,806 | ||||||
Number of Shares Issued | 5,601 | 5,816 | 6,633 |
2016 | 2015 | 2014 | ||||||||||||||||||||||
Quarter Ended | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||||||||||||||
December 31 | $ | 10,083,160 | $ | 0.16 | $ | 8,598,414 | $ | 0.15 | $ | 6,815,308 | $ | 0.15 | ||||||||||||
March 31 | 10,384,295 | 0.16 | 8,765,446 | 0.15 | 7,030,326 | 0.15 | ||||||||||||||||||
June 30 | 10,647,332 | 0.16 | 8,952,767 | 0.15 | 7,182,521 | 0.15 | ||||||||||||||||||
September 30 | 10,919,396 | 0.16 | 9,205,500 | 0.15 | 8,503,275 | 0.15 | ||||||||||||||||||
$ | 42,034,183 | $ | 0.64 | $ | 35,522,127 | $ | 0.60 | $ | 29,531,430 | $ | 0.60 |
SUMMARY OF CASH DISTRIBUTIONS TO COMMON SHAREHOLDERS
2019 | 2018 | 2017 | ||||||||||||||||||||||
Quarter Ended | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||||||||||||||
December 31 | $ | 15,570 | $ | 0.17 | $ | 13,017 | $ | 0.17 | $ | 11,184 | $ | 0.16 | ||||||||||||
March 31 | 15,825 | 0.17 | 13,303 | 0.17 | 11,429 | 0.16 | ||||||||||||||||||
June 30 | 16,064 | 0.17 | 13,523 | 0.17 | 11,698 | 0.16 | ||||||||||||||||||
September 30 | 16,283 | 0.17 | 13,743 | 0.17 | 11,978 | 0.16 | ||||||||||||||||||
$ | 63,742 | $ | 0.68 | $ | 53,586 | $ | 0.68 | $ | 46,289 | $ | 0.64 |
On October 1, 2015, the Company’sour Board of Directors approved a 6.7% increase in the Company’sour quarterly common stock dividend, raising it to $0.16 $per share from $0.15 $per share. This represented an annualized dividend rate of $per share. On October 2, 2017, our Board of Directors approved a 6.3% increase in our quarterly common stock dividend, raising it to $per share from $per share. This represents an annualized dividend rate of $0.64 $per share. The Company hasThese two dividend raises represent a total increase of 13%. We have maintained or increased itsour common stock cash dividend for twenty-five28 consecutive years. On October 3, 2016, the Company’s1, 2019, our Board of Directors declaredapproved a quarterlycash dividend of $0.16$ per share, of its common stock to be paid on , to shareholders of record as ofat the close of business on . This represents an annualized dividend rate of $ per share.
On May 28, 2014, the CompanyIn October 2018, we completed a public offering of 8,050,000 million shares of the Company’s Common Stockour common stock (including the underwriters’ option to purchase 1,050,000 million additional shares) at a price of $8.50$ per share, before underwriting discounts. The CompanyThis was our first common stock offering since 2014 and represented an 11.3% increase in our outstanding common shares. We received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of approximately $65,113,000.$132.3 million.
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Preferred Stock
On September 13, 2016, the Company issued 5,400,000 shares of a 6.125% Series C Cumulative Redeemable Preferred Stock (Series C Preferred Stock) at an offering price of $25.00 per share in an underwritten public offering. The Company received net proceeds from the offering, after deducting the underwriting discount and other estimated offering expenses, of approximately $130,543,000. On September 15, 2016, the Company used $45,000,000 of such net proceeds from the offering to reduce the amounts outstanding under its Facility and on October 14, 2016, the Company used $53,493,750 of such net proceeds from the offering to redeem all of the 2,139,750 issued and outstanding shares of its 7.625% Series A Cumulative Redeemable Preferred Stock
On September 14, 2016, we announced that we intended to redeem all 7.625% Series A Cumulative Redeemable Preferred Stock, $ par value per share (7.625% Series A Preferred Stock). In addition, on October 14, 2016, the Company used $498,540 of such net proceeds from the offering to payWe redeemed all dividends, accrued and unpaid, to and including the redemption date of the 7.625% Series A Preferred Stock. The Company intends to use the remaining proceeds to reduce the amounts outstanding under its Facility and to purchase properties and fund expansions of its existing properties in the ordinary course of business and for general corporate purposes. million issued and outstanding shares of our
On September 14, 2016, the Company announced that it intended to redeem all 2,139,750 issued and outstanding shares of its 7.625% Series A Preferred Stock. As discussed above, the Company redeemed the 7.625% Series A Preferred Stock on October 14, 2016 at a redemption price of $25.00$ per share, plus all dividends accrued and unpaid, up to and including the redemption date, in an amount equal to $0.23299$ per share. As
Prior to the redemption of September 30, 2016, the outstanding 7.625% Series A Preferred Stock, has been reclassified out of stockholder's equity and is reflected as a liability at redemption value and the Company has recognized a deemed dividend of $2,942,149 on the Consolidated Statement of Income for the fiscal year ended September 30, 2016, which represents the difference between redemption value and carrying value net of original deferred issuance costs.
Prior to its redemption, the annual dividend of the 7.625% Series A Preferred Stock was $1.90625$ per share, or 7.625%, of the $25.00$ per share liquidation value and was payable quarterly in arrears on March 15, June 15, September 15, and December 15.
The Company’sOur Board of Directors have declaredhas authorized and the Company haswe have paid the following dividends ondividend, representing the final dividend payment at time of redemption of the 7.625% Series A Preferred Stock for the fiscal years ended September 30, 2016, 2015 and 2014:2017 (in thousands except per share amounts):
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/15 | 11/16/15 | 12/15/15 | $ | 1,019,725 | $ | 0.4765625 | ||||||
1/19/16 | 2/16/16 | 3/15/16 | 1,019,726 | 0.4765625 | ||||||||
4/5/16 | 5/16/16 | 6/15/16 | 1,019,725 | 0.4765625 | ||||||||
7/1/16 | 8/15/16 | 9/15/16 | 1,019,726 | 0.4765625 | ||||||||
$ | 4,078,902 | $ | 1.90625 |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/14 | 11/17/14 | 12/15/14 | $ | 1,019,725 | $ | 0.4765625 | ||||||
1/21/15 | 2/17/15 | 3/16/15 | 1,019,726 | 0.4765625 | ||||||||
4/1/15 | 5/15/15 | 6/15/15 | 1,019,725 | 0.4765625 | ||||||||
7/1/15 | 8/17/15 | 9/15/15 | 1,019,726 | 0.4765625 | ||||||||
$ | 4,078,902 | $ | 1.90625 |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/13 | 11/15/13 | 12/16/13 | $ | 1,019,725 | $ | 0.4765625 | ||||||
1/15/14 | 2/18/14 | 3/17/14 | 1,019,726 | 0.4765625 | ||||||||
4/1/14 | 5/15/14 | 6/16/14 | 1,019,725 | 0.4765625 | ||||||||
7/1/14 | 8/15/14 | 9/15/14 | 1,019,726 | 0.4765625 | ||||||||
$ | 4,078,902 | $ | 1.90625 |
As of September 30, 2016, the Company has a total of 2,300,000 shares of
SCHEDULE OF DIVIDEND DECLARED AND PAID ON SERIES A PREFERRED STOCK
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
9/14/16 | 10/14/16 | 10/14/16 | $ | $ |
7.875% Series B Cumulative Redeemable Preferred Stock (Series
On May 5, 2017, we announced that we intended to redeem all 7.875% Series B Cumulative Redeemable Preferred Stock, $ par value per share (7.875% Series B Preferred Stock). We redeemed all of the outstanding representingshares of the 7.875% Series B Preferred Stock on June 7, 2017, at a redemption price of $ per share, totaling $57.5 million, plus accumulated and unpaid dividends for the period from June 1, 2017 up to and not including, the redemption date, in an aggregate liquidation preferenceamount equal to $ , totaling $75,000, for a total cash payment of $57,500,000.$25.0328125 per share, totaling $57.6 million. We recognized a deemed dividend of $2.5 million on the Consolidated Statement of Income for the fiscal year ended September 30, 2017, which represents the difference between redemption value and carrying value net of original deferred issuance costs. million issued and outstanding shares of our
ThePrior to its redemption, the annual dividend of the 7.875%Series B Preferred Stock is $1.96875was $ per share, or 7.875%, of the $25.00$ per share liquidation value and iswas payable quarterly in arrears on March 15, June 15, September 15, and December 15. The Series B Preferred Stock has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to the Company’s qualification as a REIT, and as described below, the Series B Preferred Stock is not redeemable prior to June 7, 2017. On and after June 7, 2017, at any time and, from time to time, the Series B Preferred Stock will be redeemable in whole, or in part, at the Company’s option, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption.
Upon the occurrence of a Delisting Event, as defined in the Articles Supplementary (the “Series B Articles Supplementary”) classifying and designating the Series B Preferred Stock, the Company may, at its option and subject to certain conditions, redeem the Series B Preferred Stock, in whole or in part, within 90 days after the Delisting Event, for a cash redemption price per share of Series B Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared), to, but not including, the redemption date.
Upon the occurrence of a Change of Control, as defined in the Series B Articles Supplementary, the Company may, at its option and subject to certain conditions, redeem the Series B Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per share of Series B Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date.
The Company’sOur Board of Directors have declaredhas authorized and the Company haswe have paid the following dividends on the Series B Preferred Stock for the fiscal years ended September 30, 2017 (in thousands except per share amounts):
SCHEDULE OF DIVIDEND DECLARED AND PAID ON SERIES B PREFERRED STOCK
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/3/16 | 11/15/16 | 12/15/16 | $ | 1,132 | $ | 0.4921875 | ||||||
1/17/17 | 2/15/17 | 3/15/17 | 1,132 | 0.4921875 | ||||||||
4/4/17 | 5/15/17 | 6/15/17 | 1,132 | 0.4921875 | ||||||||
5/5/17 | 6/7/17 | 6/7/17 | 76 | 0.0328125 | (1) | |||||||
$ | 3,472 | $ | 1.5093750 |
(1) | Represents final dividend payment at time of redemption of the 7.875% Series B Preferred Stock |
136 |
6.125% Series C Cumulative Redeemable Preferred Stock
On September 13, 2016, we issued 6.125% Series C Cumulative Redeemable Preferred Stock, $ par value per share (6.125% Series C Preferred Stock), at an offering price of $ per share in an underwritten public offering. We received net proceeds from the offering, after deducting the underwriting discount and other estimated offering expenses, of $130.5 million. On September 15, 2016, we used $45.0 million of such net proceeds from the offering to reduce the amounts outstanding under our Facility and on October 14, 2016, and as discussed above, we used $53.5 million of such net proceeds from the offering to redeem all of the million issued and outstanding shares of our 7.625% Series A Preferred Stock. In addition, on October 14, 2016, we used $499,000 of such net proceeds from the offering to pay all dividends, accrued and unpaid, up to and including the redemption date of the 7.625% Series A Preferred Stock. million shares of
On March 9, 2017, we issued an additional 6.125% Series C Preferred Stock, liquidation preference of $25.00 per share, at a public offering price of $ per share, for gross proceeds of $73.5 million before deducting the underwriting discount and offering expenses. Net proceeds from the offering, after deducting underwriting discounts and other offering expenses were $71.0 million. As discussed above, we used the net proceeds from this offering to redeem all of the outstanding shares of our 7.875% Series B Preferred Stock. million shares of our
On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sale of shares of our 6.125% Series C Cumulative Redeemable Preferred Stock, $ par value per share, with a liquidation preference of $25.00 per share, or our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million. Sales of shares of our 6.125% Series C preferred stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C preferred stock, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through these programs on July 3, 2017. Since inception through September 30, 2019, we sold million shares under these programs at a weighted average price of $ per share, and generated net proceeds, after offering expenses, of $134.0 million, of which million shares were sold during the fiscal year ended September 30, 2016, 2015 and 2014:
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/15 | 11/16/15 | 12/15/15 | $ | 1,132,032 | $ | 0.4921875 | ||||||
1/19/16 | 2/16/16 | 3/15/16 | 1,132,033 | 0.4921875 | ||||||||
4/5/16 | 5/16/16 | 6/15/16 | 1,132,032 | 0.4921875 | ||||||||
7/1/16 | 8/15/16 | 9/15/16 | 1,132,033 | 0.4921875 | ||||||||
$ | 4,528,130 | $ | 1.96875 |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/14 | 11/17/14 | 12/15/14 | $ | 1,132,032 | $ | 0.4921875 | ||||||
1/21/15 | 2/17/15 | 3/16/15 | 1,132,033 | 0.4921875 | ||||||||
4/1/15 | 5/15/15 | 6/15/15 | 1,132,032 | 0.4921875 | ||||||||
7/1/15 | 8/17/15 | 9/15/15 | 1,132,033 | 0.4921875 | ||||||||
$ | 4,528,130 | $ | 1.96875 |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/13 | 11/15/13 | 12/16/13 | $ | 1,132,032 | $ | 0.4921875 | ||||||
1/15/14 | 2/18/14 | 3/17/14 | 1,132,033 | 0.4921875 | ||||||||
4/1/14 | 5/15/14 | 6/16/14 | 1,132,032 | 0.4921875 | ||||||||
7/1/14 | 8/15/14 | 9/15/14 | 1,132,033 | 0.4921875 | ||||||||
$ | 4,528,130 | $ | 1.96875 |
On October 3, 2016, the Company’s Board2019 at a weighted average price of Directors declared a quarterly dividend of $0.4921875$ per share, to be paid December 15, 2016 to shareholdersand generated net proceeds, after offering expenses, of record as of the close of business on November 15, 2016.
$58.2 million. As of September 30, 2016,2019, there is $59.8 million remaining that may be sold under the Company has a totalPreferred Stock ATM Program.
As of 5,400,000September 30, 2019, million shares of the 6.125% Series C Preferred Stock outstanding representing an aggregate liquidation preferencewere issued and outstanding.
We have been and we intend to continue to use the proceeds raised through the Preferred Stock ATM Program to purchase properties and fund expansions of $135,000,000.our existing properties in the ordinary course of business and for general corporate purposes.
137 |
Our Board of Directors has authorized and we have paid the following dividends on our 6.125% Series C Preferred Stock for the fiscal years ended September 30, 2019, 2018 and 2017 (in thousands except per share amounts):
SCHEDULE OF DIVIDEND DECLARED AND PAID ON SERIES C PREFERRED STOCK
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/1/18 | 11/15/18 | 12/17/18 | $ | 4,415 | $ | |||||||
1/16/19 | 2/15/19 | 3/15/19 | 4,424 | |||||||||
4/2/19 | 5/15/19 | 6/17/19 | 4,681 | |||||||||
7/1/19 | 8/15/19 | 9/16/19 | 4,945 | |||||||||
$ | 18,465 | $ |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/2/17 | 11/15/17 | 12/15/17 | $ | 4,081 | $ | |||||||
1/16/18 | 2/15/18 | 3/15/18 | 4,221 | |||||||||
4/2/18 | 5/15/18 | 6/15/18 | 4,248 | |||||||||
7/2/18 | 8/15/18 | 9/17/18 | 4,327 | |||||||||
$ | 16,877 | $ |
Declaration Date | Record Date | Payment Date | Dividend | Dividend per Share | ||||||||
10/3/16 | 11/15/16 | 12/15/16 | $ | 1,792 | $ | |||||||
1/17/17 | 2/15/17 | 3/15/17 | 2,067 | |||||||||
4/4/17 | 5/15/17 | 6/15/17 | 3,216 | |||||||||
7/3/17 | 8/15/17 | 9/15/17 | 3,455 | |||||||||
$ | 10,530 | $ |
The annual dividend of the 6.125% Series C Preferred Stock is $1.53125$ per share, or 6.125% of the $25.00 per share liquidation value and is payable quarterly in arrears on March 15, June 15, September 15, and December 15. The 6.125% Series C Preferred Stock has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to the Company’sour qualification as a REIT, and as described below, the 6.125% Series C Preferred Stock is not redeemable prior to September 15, 2021. On and after September 15, 2021, at any time and, from time to time, the 6.125% Series C Preferred Stock will be redeemable in whole, or in part, at the Company’sour option, at a cash redemption price of $25.00$ per share, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption.
Upon the occurrence of a Delisting Event, as defined in the Articles Supplementary (the “Series(Series C Articles Supplementary”)Supplementary) classifying and designating the 6.125% Series C Preferred Stock, the Companywe may, at itsour option and subject to certain conditions, redeem the 6.125% Series C Preferred Stock, in whole or in part, within 90 days after the Delisting Event, for a cash redemption price per share of 6.125% Series C Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared), to, but not including, the redemption date.
Upon the occurrence of a Change of Control, as defined in the Series C Articles Supplementary, the Companywe may, at itsour option and subject to certain conditions, redeem the 6.125% Series C Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per share of 6.125% Series C Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date.
On October 3, 2016, the Company’s1, 2019, our Board of Directors declared a quarterly dividend for the period September 13, 20161, 2019 through November 30, 2016,2019, of $0.3317708$ per share to be paid December 15, 201616, 2019 to shareholders of record as of the close of business on November 15, 2016.2019.
138 |
Repurchase of Stock
On January 19, 2016, the16, 2019, our Board of Directors reaffirmed its Shareauthorized a $40.0 million increase to our previously announced $10.0 million Common Stock Repurchase Program (the Repurchase Program) that authorizes“Program”), bringing the Companytotal available under the Program to purchase up$50.0 million. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to $10,000,000economic and market conditions, stock price, applicable legal requirements and other factors. To date, we have not repurchased any common stock pursuant to the Program and we may elect not to repurchase any common stock in the aggregate of the Company’s common stock.future. The Repurchase Program was originally created on March 3, 2009 and is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program does not require the Company to acquire any particular amount of common stock,have a termination date and the program may be suspended modified or discontinued at any time at the Company’sour discretion without prior notice. The CompanyWe did not reacquire any of itsour shares of Common Stock during the fiscal year ended September 30, 2016,2019, nor does the Companydo we possess any reacquired shares of Common Stock as of September 30, 2016.2019. The maximum dollar value that may be purchased under the Repurchase Program as of September 30, 20162019 is $10,000,000.$50.0 million.
NOTE 14 - FAIR VALUE MEASUREMENTS
The Company followsWe follow ASC 825, Financial Instruments, for financial assets and liabilities recognized at fair value on a recurring basis. We measure certain financial assets and liabilities at fair value on a recurring basis, including securities available for sale. Our financial assets consist mainly of marketable REIT securities.
The fair value of these certain financial assets was determined using the following inputs at September 30, 20162019 and 2015:2018 (in thousands):
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
September 30, 2016: | ||||||||||||||||
Securities available for sale | $ | 73,604,894 | $ | 73,604,894 | $ | -0- | $ | -0- | ||||||||
September 30, 2015: | ||||||||||||||||
Securities available for sale | $ | 54,541,237 | $ | 54,541,237 | $ | -0- | $ | -0- |
SUMMARY OF FAIR VALUE OF FINANCIAL ASSETS
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
September 30, 2019: | ||||||||||||||||
Securities available for sale | $ | 185,250 | $ | 185,250 | $ | 0 | $ | 0 | ||||||||
September 30, 2018: | ||||||||||||||||
Securities available for sale | $ | 154,921 | $ | 154,921 | $ | 0 | $ | 0 |
In addition to the Company’sour investments in Securities Available for Sale at Fair Value, the Company iswe are required to disclose certain information about fair values of itsour other financial instruments. Estimates of fair value are made at a specific point in time based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company’sour entire holdings of a particular financial instrument. For a portion of the Company’sour other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management)our control). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties; future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only, and therefore cannot be compared to the historical accounting model. The use of different assumptions or methodologies is likely to result in significantly different fair value estimates.
The fair value of Cash and Cash Equivalents approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable rate Loans Payable approximates their current carrying amounts since such amounts payable are at approximately a weighted-average current market rate of interest. The estimated fair value of fixed rate mortgage notes payable is based on discounting the future cash flows at a year-end risk adjusted borrowing rate currently available to the Companyus for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. At September 30, 2016,2019, the fixed rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $493,675,000$769.3 million and the carrying value amounted to $483,748,153. At September 30, 2016 the fixed rate Loans Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $4,800,000 and the carrying value amounted to $4,790,684.$752.9 million. When the Company acquireswe acquired a property, prior to April 1, 2017, that was accounted for as a business combination, it iswas required to fair value all of the assets and liabilities, including intangible assets and liabilities, relating to the properties acquired lease (See Note 3). Those fair value measurements fallwere estimated based on independent third-party appraisals and fell within level 3 of the fair value hierarchy.
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NOTE 15 - CASH FLOW
During fiscal years 2016, 20152019, 2018 and 2014, the Company2017, we paid cash for interest of $21,967,741, $18,617,553$35.9 million, $31.3 million and $16,191,170,$24.3 million, respectively.
During fiscal years 2016, 20152019, 2018 and 2014, the Company2017, we had $8,369,146, $8,489,169$16.9 million, $12.9 million and $7,624,528,$10.1 million, respectively, of dividends which were reinvested that required no cash transfers.
NOTE 16 – CONTINGENCIES, COMMITMENTS AND COMMITMENTSLEGAL MATTERS
From time to time, the Companywe can be subject to claims and litigation in the ordinary course of business. Management doesWe do not believe that any such claim or litigation will have a material adverse effect on theour consolidated balance sheet or results of operations.
In addition to the $81.5 million property purchased subsequent to theour fiscal yearend, as described below, in Note 17, we have entered into agreements to purchase eightfour new build-to-suit, industrial buildings that are currently being developed in Florida, Michigan, North Carolina, Ohio (2) and South CarolinaUtah, totaling approximately 2,099,000 997,000 square feet each withfeet. These future acquisitions have net-leased terms ranging between ten from 10 to fifteen 15 years with a weighted average lease maturityterm of 13.3 years. Approximately 1,267,000 14.2 years. The total purchase price for these four properties is $150.5 million. Three of these four properties, consisting of 844,000 square feet, or 60%85%, isare leased to FDX andor its subsidiaries. All four properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The purchase price forreferences in this report to the eight properties is approximately $212,373,000.S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing three of these eight transactions during fiscal 20172020 and one during early fiscal 2018.2021. In connection with fiveone of the eightthese four properties, the Company haswe have entered into commitmentsa commitment to obtain five mortgages totaling $101,204,000 at fixed rates ranging from 3.60% to 4.20%,a 10 year, fully-amortizing mortgage loan of $9.4 million with a weighted averagefixed interest rate of 3.83%3.47%. Each
On September 18, 2019, we moved our headquarters to the Bell Works complex located in Holmdel, NJ. Our new headquarters comprises 13,000 square feet of these mortgagesoffice space and is leased for 10 years with two, five year extension options at fair market rent, as defined in the lease agreement. Initial annual rent is at a rate of $410,000 or $31.00 per square foot, with 2% annual escalations. The base rent includes our proportionate share of real estate taxes and common area maintenance and we will be responsible for increases in real estate taxes and common area maintenance above our 2019 base year actual amounts. In addition, we received four months of free rent and a fifteen year, fully-amortizing loan.tenant improvement allowance of $48.00 per square foot.
NOTE 17 – SUBSEQUENT EVENTS
Material subsequent events have been evaluated and are disclosed herein.
OnSubsequent to fiscal yearend 2019, on October 1, 2016, a 50,741 square foot expansion of the building leased to FedEx Ground Package System, Inc. located in Edinburg, TX was completed for a cost of approximately $4,988,000, resulting in a new 10, year lease which extended the prior lease expiration date from September 2021 through September 2026. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000 from approximately $598,000, or $5.27 per square foot, to approximately $1,097,000, or $6.68 per square foot.
On October 17, 2016, the Company2019, we purchased a newly constructed 338,584616,000 square foot industrial building, situated on 78.6 acres, located in Hamburg, NY, which is in the BuffaloIndianapolis, IN MSA. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for fifteen15 years through March 2031.August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $35,100,000. The Company$81.5 million. We obtained a 15an 18 year, fully-amortizing mortgage loan of $23,500,000$52.5 million at a fixed interest rate of 4.03%4.27%. Annual rental revenue over the remaining term of the lease averages approximately $2,308,000.$5.0 million.
On October 27, 2016, the Company sold its only vacant building (which increased our occupancy rate from 99.6% to 100.0%) consisting of a 59,425 square foot industrial building situated on 4.78 acres located in White Bear Lake, MN for approximately $4,272,000, which is the Company’s approximate U.S. GAAP net book carrying value.
The industrial properties purchased, expanded and sold during fiscal 2017 to date increased our current total leasable square feet to approximately 16,340,000 and increased our occupancy rate to 100.0%.
On September 14, 2016, the Company announced that it intended to redeem all 2,139,750 issued and outstanding shares of its 7.625% Series A Preferred Stock. The Company redeemed the 7.625% Series A Preferred Stock on October 14, 2016 at a redemption price of $25.00 per share, totaling $53,493,750, plus all dividends accrued and unpaid to and including the redemption date, in an amount equal to $0.23299 per share, totaling $498,540, for a total cash payment of $25.23299 per share, totaling $53,992,290. As of September 30, 2016, the outstanding 7.625% Series A Preferred Stock has been reclassified out of stockholder's equity and is reflected as a liability at redemption value and the Company has recognized a deemed dividend of $2,942,149 on the Consolidated Statement of Income for the fiscal year ended September 30, 2016, which represents the difference between redemption value and carrying value net of original deferred issuance costs.
On October 3, 2016, the Company’s Board of Directors declared a quarterly dividend of $0.16 per share of its common stock to be paid December 15, 2016 to shareholders of record as of the close of business on November 15, 2016.
On October 3, 2016, the Company’s Board of Directors declared a quarterly dividend of $0.4921875 per share to be paid December 15, 2016 to shareholders of record as of the close of business on November 15, 2016.
On October 3, 2016, the Company’s Board of Directors declared a quarterly dividend for the period September 13, 2016 through November 30, 2016, of $0.3317708 per share to be paid December 15, 2016 to shareholders of record as of the close of business on November 15, 2016.
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Subsequent to the fiscal yearend 2019, on November 15, 2019, we entered into New Facility consisting of a $225.0 million New Revolver and a new $75.0 million Term Loan, resulting in the total potential availability under both the New Revolver and the Term Loan of $300.0 million. In addition, the New Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The $225.0 million New Revolver matures in January 2024 with two options to extend for additional six-month periods, at our option.Availability under the New Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the Old Facility to 6.25% under the New Facility, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the New Revolver was lowered and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the New Revolver at LIBOR plus 145 basis points, which results in an interest rate of 3.21%. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan, at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. We currently have $10.0 million drawn down under the New Revolver and $75.0 million outstanding under the Term Loan.
Subsequent to the fiscal yearend, effective November 1, 2019, we leased one previously vacant property consisting of 60,000 square feet for 12.5 years, increasing our current overall occupancy rate to 99.2%.
Subsequent to the September 30, 2019, through November 25, 2019, we sold million shares of our 6.125% Series C Preferred Stock under our Preferred Stock ATM Program at a weighted average price of $ per share, and realized net proceeds, after offering expenses, of $35.3 million.
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NOTE 18 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is the Unaudited Selected Quarterly Financial Data:
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED (in thousands)
SCHEDULE OF SELECTED QUARTERLY FINANCIAL DATA
FISCAL 2019 | 12/31/18 | 3/31/19 | 6/30/19 | 9/30/19 | ||||||||||||
Rental and Reimbursement Revenue | $ | 39,147 | $ | 39,306 | $ | 39,472 | $ | 40,597 | ||||||||
Total Expenses | 19,825 | 20,490 | 20,646 | 21,337 | ||||||||||||
Unrealized Holding Gains (Losses) Arising During the Periods (1) | (42,627 | ) | 15,568 | (11,609 | ) | 13,988 | ||||||||||
Other Income (Expense) (1) | (47,264 | ) | 9,485 | (17,198 | ) | 8,553 | ||||||||||
Income from Operations | (27,943 | ) | 28,301 | 1,628 | 27,814 | |||||||||||
Income from Operations per diluted share | $ | (0.31 | ) | $ | 0.30 | $ | 0.02 | $ | 0.29 | |||||||
Net Income (Loss) (1) | (27,943 | ) | 28,301 | 1,628 | 27,814 | |||||||||||
Net Income per diluted share (1) | $ | (0.31 | ) | $ | 0.30 | $ | 0.02 | $ | 0.29 | |||||||
Net Income Attributable to Common Shareholders (1) | (32,364 | ) | 23,821 | (3,121 | ) | 22,690 | ||||||||||
Net Income Attributable to Common Shareholders per diluted share (1) | $ | (0.36 | ) | $ | 0.26 | $ | (0.03 | ) | $ | 0.24 |
FISCAL 2016 | 12/31/15 | 3/31/16 | 6/30/16 | 9/30/16 | ||||||||||||||||||||||||||||
Rental and Reimbursement Revenue | $ | 22,259,362 | $ | 22,966,838 | $ | 24,113,999 | $ | 25,575,911 | ||||||||||||||||||||||||
Total Expenses | 11,167,093 | 12,537,914 | 11,835,546 | 13,942,992 | ||||||||||||||||||||||||||||
Other Income (Expense) | (4,153,614 | ) | (3,296,977 | ) | (4,047,158 | ) | (1,440,309 | ) | ||||||||||||||||||||||||
Net Income | 6,938,655 | 7,131,947 | 8,231,295 | 10,192,610 | ||||||||||||||||||||||||||||
Net Income Attributable to Common Shareholders | 4,786,897 | 4,980,189 | 6,079,537 | 4,685,265 | ||||||||||||||||||||||||||||
Net Income Attributable to Common Shareholders per diluted share | $ | 0.08 | $ | 0.08 | $ | 0.09 | $ | 0.07 | ||||||||||||||||||||||||
FISCAL 2015 | 12/31/14 | 3/31/15 | 6/30/15 | 9/30/15 | ||||||||||||||||||||||||||||
FISCAL 2018 | 12/31/17 | 3/31/18 | 6/30/18 | 9/30/18 | ||||||||||||||||||||||||||||
Rental and Reimbursement Revenue | $ | 17,677,530 | $ | 18,858,596 | $ | 20,672,282 | $ | 20,567,089 | $ | 33,465 | $ | 34,344 | $ | 34,736 | $ | 36,617 | ||||||||||||||||
Lease Termination Income | 238,625 | -0- | -0- | -0- | 210 | 0 | 0 | 0 | ||||||||||||||||||||||||
Total Expenses | 9,582,908 | 10,305,673 | 11,351,102 | 10,875,080 | 16,991 | 17,643 | 17,611 | 19,488 | ||||||||||||||||||||||||
Unrealized Holding Gains (Losses) Arising During the Periods (1) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Other Income (Expense) | (2,909,595 | ) | (3,734,243 | ) | (4,145,322 | ) | (4,525,626 | ) | (4,442 | ) | (5,056 | ) | (4,651 | ) | (4,969 | ) | ||||||||||||||||
Income from Operations | 12,242 | 11,645 | 12,474 | 12,160 | ||||||||||||||||||||||||||||
Income from Operations per diluted share | $ | 0.16 | $ | 0.15 | $ | 0.16 | $ | 0.15 | ||||||||||||||||||||||||
Gain on Sale of Real Estate Investment | -0- | -0- | -0- | 5,021,242 | 5,388 | 0 | 2,097 | 0 | ||||||||||||||||||||||||
Net Income | 5,423,652 | 4,818,680 | 5,175,858 | 10,187,625 | ||||||||||||||||||||||||||||
Net Income (Loss) | 17,630 | 11,645 | 14,571 | 12,160 | ||||||||||||||||||||||||||||
Net Income per diluted share | $ | 0.23 | $ | 0.15 | $ | 0.18 | $ | 0.15 | ||||||||||||||||||||||||
Net Income Attributable to Common Shareholders | 3,271,894 | 2,666,922 | 3,024,100 | 8,035,867 | 13,313 | 7,397 | 10,323 | 7,782 | ||||||||||||||||||||||||
Net Income Attributable to Common Shareholders per diluted share | $ | 0.06 | $ | 0.04 | $ | 0.05 | $ | 0.14 | $ | 0.17 | $ | 0.10 | $ | 0.13 | $ | 0.10 |
(1) | Effective October 1, 2018 we adopted ASU 2016-01. This new accounting standard requires unrealized gains or losses on our securities investments to flow through our income statement. Periods shown here prior to October 1, 2018 do not include the effect of this accounting change and therefore Net Income Attributable to Common Shareholders between these periods are not comparable. |
Certain amounts in the Selected Quarterly Financial Data for the prior quarters have been reclassified to conform to the financial statement presentation for the current year.
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column B | Column C | Column D | |||||||||||||
Capitalization | ||||||||||||||||
Buildings and | Subsequent to | |||||||||||||||
Description | Encumbrances | Land | Improvements | Acquisition | ||||||||||||
Industrial Buildings | ||||||||||||||||
Monaca (Pittsburgh), PA | $ | 0 | $ | 402 | $ | 878 | $ | 6,631 | ||||||||
Ridgeland (Jackson), MS | 0 | 218 | 1,234 | 859 | ||||||||||||
Urbandale (Des Moines), IA | 0 | 310 | 1,758 | 476 | ||||||||||||
Richland (Jackson), MS | 0 | 211 | 1,195 | 495 | ||||||||||||
O’Fallon (St. Louis), MO | 0 | 264 | 3,302 | 684 | ||||||||||||
Fayetteville, NC | 0 | 172 | 4,468 | 815 | ||||||||||||
Schaumburg (Chicago), IL | 0 | 1,040 | 3,694 | 444 | ||||||||||||
Burr Ridge (Chicago), IL | 0 | 270 | 1,237 | 200 | ||||||||||||
Romulus (Detroit), MI | 0 | 531 | 3,654 | 764 | ||||||||||||
Liberty (Kansas City), MO | 0 | 724 | 6,498 | 315 | ||||||||||||
Omaha, NE | 0 | 1,170 | 4,426 | 368 | ||||||||||||
Charlottesville, VA | 0 | 1,170 | 2,845 | 447 | ||||||||||||
Jacksonville, FL (FDX) | 0 | 1,165 | 4,668 | 751 | ||||||||||||
West Chester Twp. (Cincinnati), OH | 0 | 695 | 3,342 | 1,697 | ||||||||||||
Mechanicsville (Richmond), VA | 0 | 1,160 | 6,413 | 234 | ||||||||||||
St. Joseph, MO | 0 | 800 | 11,754 | 835 | ||||||||||||
Newington (Hartford), CT | 0 | 410 | 2,961 | 123 | ||||||||||||
Cudahy (Milwaukee), WI | 0 | 980 | 5,051 | 3,776 | ||||||||||||
Beltsville (Washington, DC), MD | 0 | 3,200 | 5,959 | 5,353 | ||||||||||||
Carlstadt (New York, NY), NJ | 1,408 | 1,194 | 3,646 | 457 | ||||||||||||
Granite City (St. Louis, MO), IL | 0 | 340 | 12,047 | 311 | ||||||||||||
Winston-Salem, NC | 0 | 980 | 5,610 | 656 | ||||||||||||
Elgin (Chicago), IL | 0 | 1,280 | 5,529 | 168 | ||||||||||||
Cheektowaga (Buffalo), NY | 0 | 4,797 | 3,884 | 2,280 | ||||||||||||
Tolleson (Phoenix), AZ | 2,882 | 1,316 | 13,329 | 2,179 | ||||||||||||
Edwardsville (Kansas City), KS (Carlisle Tire) | 0 | 1,185 | 5,815 | 233 | ||||||||||||
Wheeling (Chicago), IL | 0 | 5,112 | 9,187 | 4,694 | ||||||||||||
Richmond, VA | 0 | 446 | 3,911 | 549 | ||||||||||||
Tampa, FL (FDX Ground) | 0 | 5,000 | 12,660 | 2,042 | ||||||||||||
Montgomery (Chicago), IL | 0 | 2,000 | 9,226 | 77 | ||||||||||||
Denver, CO | 0 | 1,150 | 3,890 | 1,324 | ||||||||||||
Hanahan (Charleston), SC (SAIC) | 0 | 1,129 | 11,831 | 1,056 | ||||||||||||
Hanahan (Charleston), SC (Amazon) | 0 | 930 | 3,426 | 3,334 | ||||||||||||
Augusta, GA (FDX Ground) | 102 | 614 | 3,026 | 1,723 | ||||||||||||
Tampa, FL (Tampa Bay Grand Prix) | 0 | 1,867 | 3,685 | 126 | ||||||||||||
Huntsville, AL | 140 | 748 | 2,724 | 3,190 | ||||||||||||
Augusta, GA (FDX) | 0 | 380 | 1,401 | 203 | ||||||||||||
Lakeland, FL | 0 | 261 | 1,621 | 161 | ||||||||||||
El Paso, TX | 0 | 3,225 | 4,514 | 4,692 | ||||||||||||
Richfield (Cleveland), OH | 0 | 2,677 | 7,198 | 6,572 | ||||||||||||
Tampa, FL (FDX) | 0 | 2,830 | 4,705 | 330 | ||||||||||||
Griffin (Atlanta), GA | 0 | 760 | 13,692 | 623 | ||||||||||||
Roanoke, VA (CHEP USA) | 0 | 1,853 | 4,817 | 793 | ||||||||||||
Orion, MI | 0 | 4,650 | 13,053 | 5,187 | ||||||||||||
Chattanooga, TN | 0 | 300 | 4,465 | 584 | ||||||||||||
Bedford Heights (Cleveland), OH | 0 | 990 | 4,894 | 1,414 | ||||||||||||
Punta Gorda, FL | 0 | 0 | 4,105 | 29 | ||||||||||||
Cocoa, FL | 0 | 1,881 | 8,624 | 3,622 | ||||||||||||
Orlando, FL | 0 | 2,200 | 6,134 | 441 | ||||||||||||
Topeka, KS | 584 | 0 | 3,680 | 0 | ||||||||||||
Memphis, TN | 4,202 | 1,235 | 13,380 | 1,499 | ||||||||||||
Houston, TX | 1,643 | 1,661 | 6,320 | 182 | ||||||||||||
Carrollton (Dallas), TX | 5,623 | 1,500 | 16,240 | 207 |
Column A | Column B | Column C | Column D | |||||||||||||
Capitalization | ||||||||||||||||
Buildings and | Subsequent to | |||||||||||||||
Description | Encumbrances | Land | Improvements | Acquisition | ||||||||||||
Industrial Buildings | ||||||||||||||||
Monaca (Pittsburgh), PA | $ | -0- | $ | 401,716 | $ | 878,081 | $ | 6,526,426 | ||||||||
Orangeburg (New York), NY | -0- | 694,720 | 2,977,372 | 223,583 | ||||||||||||
Ridgeland (Jackson), MS | -0- | 218,000 | 1,233,500 | 407,091 | ||||||||||||
Urbandale (Des Moines),IA | -0- | 310,000 | 1,758,000 | 93,895 | ||||||||||||
Richland (Jackson), MS | -0- | 211,000 | 1,195,000 | 494,691 | ||||||||||||
O’Fallon (St. Louis), MO | -0- | 264,000 | 3,302,000 | 679,913 | ||||||||||||
Fayetteville, NC | -0- | 172,000 | 4,467,885 | 801,991 | ||||||||||||
Schaumburg (Chicago), IL | -0- | 1,039,800 | 3,694,320 | 247,294 | ||||||||||||
Burr Ridge (Chicago), IL | -0- | 270,000 | 1,236,599 | 186,302 | ||||||||||||
Romulus (Detroit), MI | -0- | 531,000 | 3,653,883 | 415,649 | ||||||||||||
Liberty, (Kansas City), MO | -0- | 723,000 | 6,498,324 | 176,557 | ||||||||||||
Omaha, NE | -0- | 1,170,000 | 4,425,500 | 349,191 | ||||||||||||
Charlottesville, VA | -0- | 1,170,000 | 2,845,000 | 333,499 | ||||||||||||
Jacksonville, FL (FDX) | 1,384,194 | 1,165,000 | 4,668,080 | 413,324 | ||||||||||||
West Chester Twp (Cincinnati), OH | 2,071,107 | 695,000 | 3,342,000 | 1,691,690 | ||||||||||||
Richmond, VA (FDX) | -0- | 1,160,000 | 6,413,305 | 184,876 | ||||||||||||
St. Joseph, MO | -0- | 800,000 | 11,753,964 | 679,742 | ||||||||||||
Newington (Hartford), CT | -0- | 410,000 | 2,961,000 | 92,824 | ||||||||||||
Cudahy (Milwaukee), WI | -0- | 980,000 | 5,050,997 | 3,351,364 | ||||||||||||
Beltsville (Washington DC), MD | -0- | 3,200,000 | 5,958,773 | 5,353,582 | ||||||||||||
Granite City (St. Louis, MO), IL | -0- | 340,000 | 12,046,675 | 156,139 | ||||||||||||
Winston-Salem, NC | -0- | 980,000 | 5,610,000 | 648,613 | ||||||||||||
Elgin (Chicago), IL | 349,658 | 1,280,000 | 5,529,488 | 123,428 | ||||||||||||
Tolleson (Phoenix), AZ | 5,299,383 | 1,316,075 | 13,329,000 | 2,179,151 | ||||||||||||
Ft. Myers, FL | -0- | 1,910,000 | 2,499,093 | 608,354 | ||||||||||||
Edwardsville (Kansas City), KS (Carlisle) | 397,513 | 1,185,000 | 5,815,148 | 225,253 | ||||||||||||
Tampa, FL (FDX Ground) | 6,633,049 | 5,000,000 | 12,660,003 | 2,036,099 | ||||||||||||
Denver, CO | 1,059,646 | 1,150,000 | 3,890,300 | 1,313,751 | ||||||||||||
Hanahan (Charleston), SC (SAIC) | 5,605,514 | 1,129,000 | 11,831,321 | 380,271 | ||||||||||||
Hanahan (Charleston), SC (FDX Ground) | 1,064,185 | 930,000 | 3,426,362 | 3,258,291 | ||||||||||||
Augusta, GA (FDX Ground) | 774,093 | 614,406 | 3,026,409 | 1,713,219 | ||||||||||||
Huntsville, AL | 795,594 | 748,115 | 2,724,418 | 3,132,598 | ||||||||||||
Richfield (Cleveland), OH | 3,078,731 | 2,676,848 | 7,197,945 | 6,560,685 | ||||||||||||
Colorado Springs, CO | 1,329,709 | 1,270,000 | 3,821,000 | 2,113,472 | ||||||||||||
Tampa, FL (FDX) | 3,900,447 | 2,830,000 | 4,704,531 | 58,330 | ||||||||||||
Griffin (Atlanta), GA | -0- | 760,000 | 13,692,115 | 416,742 | ||||||||||||
Roanoke, VA (CHEP) | 2,519,243 | 1,853,000 | 4,817,298 | 735,149 | ||||||||||||
Orion, MI | 8,580,058 | 4,649,971 | 13,053,289 | 5,182,376 | ||||||||||||
Carlstadt, NJ (New York, NY) | 1,898,198 | 1,194,000 | 3,645,501 | 64,088 | ||||||||||||
Wheeling (Chicago), IL | -0- | 5,112,120 | 9,186,606 | 4,238,926 | ||||||||||||
White Bear Lake (Minneapolis/St. Paul), MN | -0- | 1,393,000 | 3,764,126 | -0- | ||||||||||||
Cheektowaga (Buffalo),NY | 343,548 | 4,796,765 | 3,883,971 | 2,280,087 | ||||||||||||
Richmond, VA (Carrier) | -0- | 446,000 | 3,910,500 | 411,809 | ||||||||||||
Montgomery (Chicago), IL | -0- | 2,000,000 | 9,225,683 | 72,684 | ||||||||||||
Tampa, FL (TB Grand Prix) | -0- | 1,867,000 | 3,684,794 | 126,188 | ||||||||||||
Augusta, GA (FDX) | -0- | 380,000 | 1,400,943 | 190,789 | ||||||||||||
Lakeland, FL | -0- | 261,000 | 1,621,163 | 100,369 | ||||||||||||
El Paso, TX | 3,259,726 | 3,225,195 | 4,514,427 | 4,691,570 | ||||||||||||
Chattanooga, TN | 1,551,081 | 300,000 | 4,464,711 | 247,492 | ||||||||||||
Bedford Heights (Cleveland), OH | 2,685,791 | 990,000 | 4,893,912 | 979,967 | ||||||||||||
Kansas City, MO (Kellogg) | 2,241,680 | 660,000 | 4,049,832 | 90,642 | ||||||||||||
Punta Gorda, FL | 1,990,764 | -0- | 4,104,915 | 8,350 | ||||||||||||
Cocoa, FL | 5,063,864 | 1,881,316 | 8,623,564 | 3,622,569 |
143 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column B | Column C | Column D | |||||||||||||
Capitalization | ||||||||||||||||
Buildings and | Subsequent to | |||||||||||||||
Description | Encumbrances | Land | Improvements | Acquisition | ||||||||||||
Ft. Mill (Charlotte, NC), SC | $ | 0 | $ | 1,747 | $ | 10,045 | $ | 5,272 | ||||||||
Lebanon (Nashville), TN | 0 | 2,230 | 11,985 | 0 | ||||||||||||
Rockford, IL (Sherwin-Williams Co.) | 0 | 1,100 | 4,440 | 11 | ||||||||||||
Edinburg, TX | 0 | 1,000 | 6,414 | 4,625 | ||||||||||||
Streetsboro (Cleveland), OH | 8,680 | 1,760 | 17,840 | 0 | ||||||||||||
Corpus Christi, TX | 0 | 0 | 4,765 | 43 | ||||||||||||
Halfmoon (Albany), NY | 0 | 1,190 | 4,336 | 0 | ||||||||||||
Lebanon (Cincinnati), OH | 0 | 240 | 4,176 | 36 | ||||||||||||
Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) | 6,927 | 800 | 13,750 | 0 | ||||||||||||
Oklahoma City, OK (FDX Ground) | 2,890 | 1,410 | 8,043 | 3,153 | ||||||||||||
Waco, TX | 3,931 | 1,350 | 7,383 | 3,818 | ||||||||||||
Livonia (Detroit), MI | 5,649 | 320 | 13,380 | 180 | ||||||||||||
Olive Branch (Memphis, TN), MS (Milwaukee Tool) | 19,917 | 2,550 | 24,819 | 9,546 | ||||||||||||
Roanoke, VA (FDX Ground) | 3,905 | 1,740 | 8,460 | 0 | ||||||||||||
Green Bay, WI | 2,311 | 590 | 5,979 | 0 | ||||||||||||
Stewartville (Rochester), MN | 1,852 | 900 | 4,320 | 4 | ||||||||||||
Tulsa, OK | 1,552 | 790 | 2,910 | 48 | ||||||||||||
Buckner (Louisville), KY | 14,566 | 2,280 | 24,353 | 175 | ||||||||||||
Edwardsville (Kansas City), KS (International Paper) | 8,421 | 2,750 | 15,335 | 209 | ||||||||||||
Altoona, PA | 2,848 | 1,200 | 7,790 | 37 | ||||||||||||
Spring (Houston), TX | 7,287 | 1,890 | 13,391 | 4,036 | ||||||||||||
Indianapolis, IN | 9,454 | 3,746 | 20,446 | 1,312 | ||||||||||||
Sauget (St. Louis, MO), IL | 7,956 | 1,890 | 13,310 | 5 | ||||||||||||
Lindale (Tyler), TX | 5,242 | 540 | 9,390 | 36 | ||||||||||||
Kansas City, MO | 6,457 | 1,000 | 8,600 | 403 | ||||||||||||
Frankfort (Lexington), KY | 15,672 | 1,850 | 26,150 | 0 | ||||||||||||
Jacksonville, FL (FDX Ground) | 15,072 | 6,000 | 24,646 | 181 | ||||||||||||
Monroe (Cincinnati), OH | 13,626 | 1,800 | 11,137 | 8,640 | ||||||||||||
Greenwood (Indianapolis), IN | 18,780 | 2,250 | 35,235 | 27 | ||||||||||||
Ft. Worth (Dallas), TX | 19,342 | 8,200 | 27,101 | 32 | ||||||||||||
Cincinnati, OH | 0 | 800 | 5,950 | 0 | ||||||||||||
Rockford, IL (Collins Aerospace Systems) | 0 | 480 | 4,620 | 0 | ||||||||||||
Concord (Charlotte), NC | 16,654 | 4,305 | 27,671 | 1,069 | ||||||||||||
Covington (New Orleans), LA | 10,425 | 2,720 | 15,690 | 16 | ||||||||||||
Imperial (Pittsburgh), PA | 10,407 | 3,700 | 16,250 | 14 | ||||||||||||
Burlington (Seattle/Everett), WA | 16,635 | 8,000 | 22,211 | 110 | ||||||||||||
Colorado Springs, CO | 15,632 | 2,150 | 26,350 | 820 | ||||||||||||
Louisville, KY | 6,121 | 1,590 | 9,714 | 0 | ||||||||||||
Davenport (Orlando), FL | 22,274 | 7,060 | 30,720 | 0 | ||||||||||||
Olathe (Kansas City), KS | 18,759 | 2,350 | 29,387 | 0 | ||||||||||||
Hamburg (Buffalo), NY | 20,075 | 1,700 | 33,150 | 244 | ||||||||||||
Ft. Myers, FL | 12,510 | 2,486 | 18,400 | 778 | ||||||||||||
Walker (Grand Rapids), MI | 18,365 | 4,034 | 27,621 | 0 | ||||||||||||
Mesquite (Dallas), TX | 29,171 | 6,248 | 43,632 | 0 | ||||||||||||
Aiken (Augusta, GA), SC | 13,683 | 1,362 | 19,678 | 0 | ||||||||||||
Homestead (Miami), FL | 21,989 | 4,427 | 33,446 | 39 | ||||||||||||
Oklahoma City, OK (Bunzl) | 5,124 | 845 | 7,883 | 0 | ||||||||||||
Concord (Charlotte), NC | 23,492 | 4,307 | 35,736 | 0 | ||||||||||||
Kenton, OH | 10,874 | 855 | 17,027 | 849 | ||||||||||||
Stow, OH | 11,484 | 1,430 | 17,504 | 0 | ||||||||||||
Charleston, SC (FDX) | 12,968 | 4,639 | 16,848 | 32 | ||||||||||||
Oklahoma City, OK (Amazon) | 18,206 | 1,618 | 28,260 | 0 |
Column A | Column B | Column C | Column D | |||||||||||||
Capitalization | ||||||||||||||||
Buildings and | Subsequent to | |||||||||||||||
Description | Encumbrances | Land | Improvements | Acquisition | ||||||||||||
Orlando, FL | $ | 4,342,604 | $ | 2,200,000 | $ | 6,133,800 | $ | 220,632 | ||||||||
Topeka, KS | 1,363,023 | -0- | 3,679,843 | -0- | ||||||||||||
Memphis, TN | 6,667,886 | 1,240,887 | 13,380,000 | -0- | ||||||||||||
Houston, TX | 3,124,904 | 1,730,000 | 6,320,000 | 33,107 | ||||||||||||
Carrollton (Dallas), TX | 7,960,781 | 1,500,000 | 16,240,000 | 29,106 | ||||||||||||
Ft. Mill (Charlotte, NC), SC | 1,926,986 | 1,670,000 | 10,045,000 | 3,698,307 | ||||||||||||
Lebanon (Nashville), TN | 7,659,116 | 2,230,000 | 11,985,126 | -0- | ||||||||||||
Rockford, IL (Sherwin-Williams) | -0- | 1,100,000 | 4,440,000 | 11,227 | ||||||||||||
Edinburg, TX | -0- | 1,000,000 | 6,414,000 | 4,009,872 | ||||||||||||
Streetsboro (Cleveland), OH | 10,446,469 | 1,760,000 | 17,840,000 | -0- | ||||||||||||
Corpus Christi, TX | -0- | -0- | 4,764,500 | -0- | ||||||||||||
Halfmoon (Albany), NY | 3,786,098 | 1,190,000 | 4,335,600 | -0- | ||||||||||||
Lebanon (Cincinnati), OH | 2,592,182 | 240,000 | 4,176,000 | 36,425 | ||||||||||||
Olive Branch, MS (Memphis, TN) (Anda) | 8,750,368 | 800,000 | 13,750,000 | -0- | ||||||||||||
Oklahoma City, OK | 4,401,832 | 1,410,000 | 8,043,000 | 3,127,262 | ||||||||||||
Waco, TX | 4,799,919 | 1,350,000 | 7,383,000 | 3,813,157 | ||||||||||||
Livonia (Detroit), MI | 7,503,400 | 320,000 | 13,380,000 | 62,030 | ||||||||||||
Olive Branch, MS (Memphis, TN) (Milwaukee Tool) | 25,000,000 | 2,550,000 | 24,818,816 | 9,546,101 | ||||||||||||
Roanoke, VA (FDX Ground) | 5,321,390 | 1,740,000 | 8,460,000 | -0- | ||||||||||||
Green Bay, WI | 3,260,401 | 590,000 | 5,980,000 | -0- | ||||||||||||
Stewartville (Rochester), MN | 2,612,978 | 900,000 | 4,320,000 | -0- | ||||||||||||
Tulsa, OK | 1,934,175 | 790,000 | 2,910,000 | 48,031 | ||||||||||||
Buckner (Louisville), KY | 16,694,846 | 2,280,000 | 24,353,125 | 134,727 | ||||||||||||
Edwardsville (Kansas City), KS (International Paper) | 10,648,115 | 2,750,000 | 15,335,492 | 208,616 | ||||||||||||
Altoona, PA | 4,017,147 | 1,200,000 | 7,790,000 | 18,650 | ||||||||||||
Spring (Houston), TX | 9,126,834 | 1,890,000 | 13,391,318 | 4,002,480 | ||||||||||||
Indianapolis, IN (FDX Ground) | 12,289,676 | 3,500,000 | 20,446,000 | -0- | ||||||||||||
Sauget (St. Louis, MO), IL | 9,701,419 | 1,890,000 | 13,310,000 | 4,950 | ||||||||||||
Lindale (Tyler), TX | 6,378,382 | 540,000 | 9,390,000 | -0- | ||||||||||||
Kansas City, MO (Bunzl) | 6,958,091 | 1,000,000 | 8,600,000 | -0- | ||||||||||||
Frankfort (Lexington), KY | 18,352,289 | 1,850,000 | 26,150,000 | -0- | ||||||||||||
Jacksonville, FL (FDX Ground) | 18,453,112 | 6,000,000 | 24,645,954 | -0- | ||||||||||||
Monroe (Cincinnati), OH | 8,071,987 | 1,800,000 | 11,137,000 | -0- | ||||||||||||
Greenwood (Indianapolis), IN | 22,760,488 | 2,250,000 | 35,234,574 | 15,817 | ||||||||||||
Ft. Worth (Dallas), TX | 23,431,093 | 8,200,000 | 27,100,832 | -0- | ||||||||||||
Cincinnati, OH | -0- | 800,000 | 5,950,000 | -0- | ||||||||||||
Rockford, IL (B/E Aerospace) | -0- | 480,000 | 4,620,000 | -0- | ||||||||||||
Concord (Charlotte), NC | 20,001,944 | 4,305,000 | 27,670,897 | -0- | ||||||||||||
Covington (New Orleans), LA | 12,468,713 | 2,720,000 | 15,690,000 | -0- | ||||||||||||
Imperial (Pittsburgh), PA | 12,700,739 | 3,700,000 | 16,250,000 | -0- | ||||||||||||
Burlington (Seattle/Everett), WA | 19,881,817 | 8,000,000 | 22,210,680 | -0- | ||||||||||||
Colorado Springs, CO | 18,576,282 | 2,150,000 | 26,350,000 | -0- | ||||||||||||
Louisville, KY | 7,288,891 | 1,590,000 | 9,714,000 | -0- | ||||||||||||
Davenport (Orlando), FL | 26,400,000 | 7,060,000 | 30,720,000 | -0- | ||||||||||||
Olathe (Kansas City), KS | 22,215,000 | 2,350,000 | 29,387,000 | -0- | ||||||||||||
Shopping Center | ||||||||||||||||
Somerset, NJ | -0- | 34,316 | 637,097 | 2,401,468 | ||||||||||||
Vacant Land | ||||||||||||||||
Shelby County, TN | -0- | 11,065 | -0- | -0- | ||||||||||||
$ | 483,748,153 | $ | 165,375,315 | $ | 903,845,280 | $ | 102,092,900 |
144 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column B | Column C | Column D | |||||||||||||
Capitalization | ||||||||||||||||
Buildings and | Subsequent to | |||||||||||||||
Description | Encumbrances | Land | Improvements | Acquisition | ||||||||||||
Savannah, GA | $ | 30,304 | $ | 4,405 | $ | 51,621 | $ | 0 | ||||||||
Daytona Beach, FL | 18,224 | 3,120 | 26,854 | 34 | ||||||||||||
Mobile, AL | 17,802 | 2,480 | 30,572 | 0 | ||||||||||||
Charleston, SC (FDX Ground) | 28,356 | 7,103 | 39,473 | 0 | ||||||||||||
Braselton (Atlanta), GA | 37,898 | 13,965 | 46,262 | 0 | ||||||||||||
Trenton, NJ | 52,759 | 8,336 | 75,652 | 0 | ||||||||||||
Savannah, GA (FDX Ground) | 16,872 | 3,441 | 24,091 | 0 | ||||||||||||
Lafayette, IN | 16,932 | 2,802 | 22,277 | 0 | ||||||||||||
Shopping Center | ||||||||||||||||
Somerset, NJ | 0 | 34 | 637 | 2,458 | ||||||||||||
Vacant Land | ||||||||||||||||
Shelby County, TN | 0 | 11 | 0 | 0 | ||||||||||||
$ | 752,916 | $ | 239,299 | $ | 1,502,722 | $ | 124,497 |
Column A | Column E (1) (2) | |||||||||||
Gross Amount at Which Carried | ||||||||||||
September 30, 2016 | ||||||||||||
Description | Land | Bldg & Imp | Total | |||||||||
Industrial Buildings | ||||||||||||
Monaca (Pittsburgh), PA | $ | 401,716 | $ | 7,404,507 | $ | 7,806,223 | ||||||
Orangeburg (New York), NY | 694,720 | 3,200,955 | 3,895,675 | |||||||||
Ridgeland (Jackson), MS | 218,000 | 1,640,591 | 1,858,591 | |||||||||
Urbandale (Des Moines), IA | 310,000 | 1,851,895 | 2,161,895 | |||||||||
Richland (Jackson), MS | 211,000 | 1,689,691 | 1,900,691 | |||||||||
O’Fallon (St. Louis), MO | 264,000 | 3,981,913 | 4,245,913 | |||||||||
Fayetteville, NC | 172,000 | 5,269,876 | 5,441,876 | |||||||||
Schaumburg (Chicago), IL | 1,039,800 | 3,941,614 | 4,981,414 | |||||||||
Burr Ridge (Chicago), IL | 270,000 | 1,422,901 | 1,692,901 | |||||||||
Romulus (Detroit), MI | 531,000 | 4,069,532 | 4,600,532 | |||||||||
Liberty (Kansas City), MO | 723,000 | 6,674,881 | 7,397,881 | |||||||||
Omaha, NE | 1,170,000 | 4,774,691 | 5,944,691 | |||||||||
Charlottesville, VA | 1,170,000 | 3,178,499 | 4,348,499 | |||||||||
Jacksonville, FL (FDX) | 1,165,000 | 5,081,404 | 6,246,404 | |||||||||
West Chester Twp (Cincinnati), OH | 695,000 | 5,033,690 | 5,728,690 | |||||||||
Richmond, VA (FDX) | 1,160,000 | 6,598,181 | 7,758,181 | |||||||||
St. Joseph, MO | 800,000 | 12,433,706 | 13,233,706 | |||||||||
Newington (Hartford), CT | 410,000 | 3,053,824 | 3,463,824 | |||||||||
Cudahy (Milwaukee), WI | 980,000 | 8,402,361 | 9,382,361 | |||||||||
Beltsville (Washington, DC), MD | 3,200,000 | 11,312,355 | 14,512,355 | |||||||||
Granite City (St. Louis, MO), IL | 340,000 | 12,202,814 | 12,542,814 | |||||||||
Winston-Salem, NC | 980,000 | 6,258,613 | 7,238,613 | |||||||||
Elgin (Chicago), IL | 1,280,000 | 5,652,916 | 6,932,916 | |||||||||
Tolleson (Phoenix), AZ | 1,316,075 | 15,508,151 | 16,824,226 | |||||||||
Ft. Myers, FL | 1,910,000 | 3,107,447 | 5,017,447 | |||||||||
Edwardsville (Kansas City), KS (Carlisle) | 1,185,000 | 6,040,401 | 7,225,401 | |||||||||
Tampa, FL (FDX Ground) | 5,000,000 | 14,696,102 | 19,696,102 | |||||||||
Denver, CO | 1,150,000 | 5,204,051 | 6,354,051 | |||||||||
Hanahan (Charleston), SC (SAIC) | 1,129,000 | 12,211,592 | 13,340,592 | |||||||||
Hanahan (Charleston), SC (FDX Ground) | 930,000 | 6,684,653 | 7,614,653 | |||||||||
Augusta, GA (FDX Ground) | 614,406 | 4,739,628 | 5,354,034 | |||||||||
Huntsville, AL | 748,115 | 5,857,016 | 6,605,131 | |||||||||
Richfield (Cleveland), OH | 2,676,848 | 13,758,630 | 16,435,478 | |||||||||
Colorado Springs, CO | 1,270,000 | 5,934,472 | 7,204,472 | |||||||||
Tampa, FL (FDX) | 2,830,000 | 4,762,861 | 7,592,861 | |||||||||
Griffin (Atlanta) , GA | 760,000 | 14,108,857 | 14,868,857 | |||||||||
Roanoke, VA (DHL) | 1,853,000 | 5,552,447 | 7,405,447 | |||||||||
Orion, MI | 4,649,971 | 18,235,665 | 22,885,636 | |||||||||
Carlstadt, NJ (New York, NY) | 1,194,000 | 3,709,589 | 4,903,589 | |||||||||
Wheeling (Chicago), IL | 5,112,120 | 13,425,532 | 18,537,652 | |||||||||
White Bear Lake (Minneapolis/St. Paul), MN | 1,393,000 | 3,764,126 | 5,157,126 | |||||||||
Cheektowaga (Buffalo), NY | 4,796,765 | 6,164,058 | 10,960,823 | |||||||||
Richmond, VA (Carrier) | 446,000 | 4,322,309 | 4,768,309 | |||||||||
Montgomery (Chicago), IL | 2,000,000 | 9,298,367 | 11,298,367 | |||||||||
Tampa, FL (TB Grand Prix) | 1,867,000 | 3,810,982 | 5,677,982 | |||||||||
Augusta, GA (FDX) | 380,000 | 1,591,732 | 1,971,732 | |||||||||
Lakeland, FL | 261,000 | 1,721,532 | 1,982,532 | |||||||||
El Paso, TX | 3,225,195 | 9,205,997 | 12,431,192 | |||||||||
Chattanooga, TN | 300,000 | 4,712,203 | 5,012,203 | |||||||||
Bedford Heights (Cleveland), OH | 990,000 | 5,873,879 | 6,863,879 | |||||||||
Kansas City, MO | 660,000 | 4,140,474 | 4,800,474 | |||||||||
Punta Gorda, FL | -0- | 4,113,265 | 4,113,265 | |||||||||
Cocoa, FL | 1,881,316 | 12,246,133 | 14,127,449 | |||||||||
Orlando, FL | 2,200,000 | 6,354,432 | 8,554,432 |
145 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column E (1) (2) | |||||||||||
Gross Amount at Which Carried | ||||||||||||
September 30, 2019 | ||||||||||||
Description | Land | Bldg & Imp | Total | |||||||||
Industrial Buildings | ||||||||||||
Monaca (Pittsburgh), PA | $ | 402 | $ | 7,509 | $ | 7,911 | ||||||
Ridgeland (Jackson), MS | 218 | 2,093 | 2,311 | |||||||||
Urbandale (Des Moines), IA | 310 | 2,234 | 2,544 | |||||||||
Richland (Jackson), MS | 211 | 1,690 | 1,901 | |||||||||
O’Fallon (St. Louis), MO | 264 | 3,986 | 4,250 | |||||||||
Fayetteville, NC | 172 | 5,283 | 5,455 | |||||||||
Schaumburg (Chicago), IL | 1,040 | 4,138 | 5,178 | |||||||||
Burr Ridge (Chicago), IL | 270 | 1,437 | 1,707 | |||||||||
Romulus (Detroit), MI | 531 | 4,418 | 4,949 | |||||||||
Liberty (Kansas City), MO | 724 | 6,813 | 7,537 | |||||||||
Omaha, NE | 1,170 | 4,794 | 5,964 | |||||||||
Charlottesville, VA | 1,170 | 3,292 | 4,462 | |||||||||
Jacksonville, FL (FDX) | 1,165 | 5,419 | 6,584 | |||||||||
West Chester Twp. (Cincinnati), OH | 695 | 5,039 | 5,734 | |||||||||
Mechanicsville (Richmond), VA | 1,160 | 6,647 | 7,807 | |||||||||
St. Joseph, MO | 800 | 12,589 | 13,389 | |||||||||
Newington (Hartford), CT | 410 | 3,084 | 3,494 | |||||||||
Cudahy (Milwaukee), WI | 980 | 8,827 | 9,807 | |||||||||
Beltsville (Washington, DC), MD | 3,200 | 11,312 | 14,512 | |||||||||
Carlstadt (New York, NY), NJ | 1,194 | 4,103 | 5,297 | |||||||||
Granite City (St. Louis, MO), IL | 340 | 12,358 | 12,698 | |||||||||
Winston-Salem, NC | 980 | 6,266 | 7,246 | |||||||||
Elgin (Chicago), IL | 1,280 | 5,697 | 6,977 | |||||||||
Cheektowaga (Buffalo), NY | 4,797 | 6,164 | 10,961 | |||||||||
Tolleson (Phoenix), AZ | 1,316 | 15,508 | 16,824 | |||||||||
Edwardsville (Kansas City), KS (Carlisle Tire) | 1,185 | 6,048 | 7,233 | |||||||||
Wheeling (Chicago), IL | 5,112 | 13,881 | 18,993 | |||||||||
Richmond, VA | 446 | 4,460 | 4,906 | |||||||||
Tampa, FL (FDX Ground) | 5,000 | 14,702 | 19,702 | |||||||||
Montgomery (Chicago), IL | 2,000 | 9,303 | 11,303 | |||||||||
Denver, CO | 1,150 | 5,214 | 6,364 | |||||||||
Hanahan (Charleston), SC (SAIC) | 1,129 | 12,887 | 14,016 | |||||||||
Hanahan (Charleston), SC (Amazon) | 930 | 6,760 | 7,690 | |||||||||
Augusta, GA (FDX Ground) | 614 | 4,749 | 5,363 | |||||||||
Tampa, FL (Tampa Bay Grand Prix) | 1,867 | 3,811 | 5,678 | |||||||||
Huntsville, AL | 748 | 5,914 | 6,662 | |||||||||
Augusta, GA (FDX) | 380 | 1,604 | 1,984 | |||||||||
Lakeland, FL | 261 | 1,782 | 2,043 | |||||||||
El Paso, TX | 3,225 | 9,206 | 12,431 | |||||||||
Richfield (Cleveland), OH | 2,677 | 13,770 | 16,447 | |||||||||
Tampa, FL (FDX) | 2,830 | 5,035 | 7,865 | |||||||||
Griffin (Atlanta), GA | 760 | 14,315 | 15,075 | |||||||||
Roanoke, VA (CHEP USA) | 1,853 | 5,610 | 7,463 | |||||||||
Orion, MI | 4,650 | 18,240 | 22,890 | |||||||||
Chattanooga, TN | 300 | 5,049 | 5,349 | |||||||||
Bedford Heights (Cleveland), OH | 990 | 6,308 | 7,298 | |||||||||
Punta Gorda, FL | 0 | 4,134 | 4,134 | |||||||||
Cocoa, FL | 1,881 | 12,246 | 14,127 | |||||||||
Orlando, FL | 2,200 | 6,575 | 8,775 | |||||||||
Topeka, KS | 0 | 3,680 | 3,680 | |||||||||
Memphis, TN | 1,235 | 14,879 | 16,114 | |||||||||
Houston, TX | 1,661 | 6,502 | 8,163 | |||||||||
Carrollton (Dallas), TX | 1,500 | 16,447 | 17,947 |
146 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
REAL ESTATE AND ACCUMULATED GROSS DEPRECIATION
SEPTEMBER 30, 2019
(in thousands)
Column A | Column E (1) (2) | |||||||||||
Gross Amount at Which Carried | ||||||||||||
September 30, 2019 | ||||||||||||
Description | Land | Bldg & Imp | Total | |||||||||
Ft. Mill (Charlotte, NC), SC | $ | 1,747 | $ | 15,317 | $ | 17,064 | ||||||
Lebanon (Nashville), TN | 2,230 | 11,985 | 14,215 | |||||||||
Rockford, IL (Sherwin-Williams Co.) | 1,100 | 4,451 | 5,551 | |||||||||
Edinburg, TX | 1,000 | 11,039 | 12,039 | |||||||||
Streetsboro (Cleveland), OH | 1,760 | 17,840 | 19,600 | |||||||||
Corpus Christi, TX | 0 | 4,808 | 4,808 | |||||||||
Halfmoon (Albany), NY | 1,190 | 4,336 | 5,526 | |||||||||
Lebanon (Cincinnati), OH | 240 | 4,212 | 4,452 | |||||||||
Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) | 800 | 13,750 | 14,550 | |||||||||
Oklahoma City, OK (FDX Ground) | 1,410 | 11,196 | 12,606 | |||||||||
Waco, TX | 1,350 | 11,201 | 12,551 | |||||||||
Livonia (Detroit), MI | 320 | 13,560 | 13,880 | |||||||||
Olive Branch (Memphis, TN), MS (Milwaukee Tool) | 2,550 | 34,365 | 36,915 | |||||||||
Roanoke, VA (FDX Ground) | 1,740 | 8,460 | 10,200 | |||||||||
Green Bay, WI | 590 | 5,979 | 6,569 | |||||||||
Stewartville (Rochester), MN | 900 | 4,324 | 5,224 | |||||||||
Tulsa, OK | 790 | 2,958 | 3,748 | |||||||||
Buckner (Louisville), KY | 2,280 | 24,528 | 26,808 | |||||||||
Edwardsville (Kansas City), KS (International Paper) | 2,750 | 15,544 | 18,294 | |||||||||
Altoona, PA | 1,200 | 7,827 | 9,027 | |||||||||
Spring (Houston), TX | 1,890 | 17,427 | 19,317 | |||||||||
Indianapolis, IN | 3,746 | 21,758 | 25,504 | |||||||||
Sauget (St. Louis, MO), IL | 1,890 | 13,315 | 15,205 | |||||||||
Lindale (Tyler), TX | 540 | 9,426 | 9,966 | |||||||||
Kansas City, MO | 1,000 | 9,003 | 10,003 | |||||||||
Frankfort (Lexington), KY | 1,850 | 26,150 | 28,000 | |||||||||
Jacksonville, FL (FDX Ground) | 6,000 | 24,827 | 30,827 | |||||||||
Monroe (Cincinnati), OH | 1,800 | �� | 19,777 | 21,577 | ||||||||
Greenwood (Indianapolis), IN | 2,250 | 35,262 | 37,512 | |||||||||
Ft. Worth (Dallas), TX | 8,200 | 27,133 | 35,333 | |||||||||
Cincinnati, OH | 800 | 5,950 | 6,750 | |||||||||
Rockford, IL (Collins Aerospace Systems) | 480 | 4,620 | 5,100 | |||||||||
Concord (Charlotte), NC | 4,305 | 28,740 | 33,045 | |||||||||
Covington (New Orleans), LA | 2,720 | 15,706 | 18,426 | |||||||||
Imperial (Pittsburgh), PA | 3,700 | 16,264 | 19,964 | |||||||||
Burlington (Seattle/Everett), WA | 8,000 | 22,321 | 30,321 | |||||||||
Colorado Springs, CO | 2,150 | 27,170 | 29,320 | |||||||||
Louisville, KY | 1,590 | 9,714 | 11,304 | |||||||||
Davenport (Orlando), FL | 7,060 | 30,720 | 37,780 | |||||||||
Olathe (Kansas City), KS | 2,350 | 29,387 | 31,737 | |||||||||
Hamburg (Buffalo), NY | 1,700 | 33,394 | 35,094 | |||||||||
Ft. Myers, FL | 2,486 | 19,178 | 21,664 | |||||||||
Walker (Grand Rapids), MI | 4,034 | 27,621 | 31,655 | |||||||||
Mesquite (Dallas), TX | 6,248 | 43,632 | 49,880 | |||||||||
Aiken (Augusta, GA), SC | 1,362 | 19,678 | 21,040 | |||||||||
Homestead (Miami), FL | 4,427 | 33,485 | 37,912 | |||||||||
Oklahoma City, OK (Bunzl) | 845 | 7,883 | 8,728 | |||||||||
Concord (Charlotte), NC | 4,307 | 35,736 | 40,043 | |||||||||
Kenton, OH | 855 | 17,876 | 18,731 | |||||||||
Stow, OH | 1,430 | 17,504 | 18,934 | |||||||||
Charleston, SC (FDX) | 4,639 | 16,880 | 21,519 | |||||||||
Oklahoma City, OK (Amazon) | 1,618 | 28,260 | 29,878 |
147 |
Column A | Column E (1) (2) | |||||||||||
Gross Amount at Which Carried | ||||||||||||
September 30, 2016 | ||||||||||||
Description | Land | Bldg & Imp | Total | |||||||||
Topeka, KS | $ | -0- | $ | 3,679,843 | $ | 3,679,843 | ||||||
Memphis, TN | 1,240,887 | 13,380,000 | 14,620,887 | |||||||||
Houston, TX | 1,730,000 | 6,353,107 | 8,083,107 | |||||||||
Carrollton (Dallas), TX | 1,500,000 | 16,269,106 | 17,769,106 | |||||||||
Ft. Mill (Charlotte, NC), SC | 1,670,000 | 13,743,307 | 15,413,307 | |||||||||
Lebanon (Nashville), TN | 2,230,000 | 11,985,126 | 14,215,126 | |||||||||
Rockford, IL (Sherwin-Williams) | 1,100,000 | 4,451,227 | 5,551,227 | |||||||||
Edinburg, TX | 1,000,000 | 10,423,872 | 11,423,872 | |||||||||
Streetsboro (Cleveland), OH | 1,760,000 | 17,840,000 | 19,600,000 | |||||||||
Corpus Christi, TX | -0- | 4,764,500 | 4,764,500 | |||||||||
Halfmoon (Albany), NY | 1,190,000 | 4,335,600 | 5,525,600 | |||||||||
Lebanon (Cincinnati), OH | 240,000 | 4,212,425 | 4,452,425 | |||||||||
Olive Branch, MS (Memphis, TN) (Anda) | 800,000 | 13,750,000 | 14,550,000 | |||||||||
Oklahoma City, OK | 1,410,000 | 11,170,262 | 12,580,262 | |||||||||
Waco, TX | 1,350,000 | 11,196,157 | 12,546,157 | |||||||||
Livonia (Detroit), MI | 320,000 | 13,442,030 | 13,762,030 | |||||||||
Olive Branch, MS (Memphis, TN) (Milwaukee Tool) | 2,550,000 | 34,364,917 | 36,914,917 | |||||||||
Roanoke, VA (FDX Ground) | 1,740,000 | 8,460,000 | 10,200,000 | |||||||||
Green Bay, WI | 590,000 | 5,980,000 | 6,570,000 | |||||||||
Stewartville (Rochester), MN | 900,000 | 4,320,000 | 5,220,000 | |||||||||
Tulsa, OK | 790,000 | 2,958,031 | 3,748,031 | |||||||||
Buckner (Louisville), KY | 2,280,000 | 24,487,852 | 26,767,852 | |||||||||
Edwardsville (Kansas City), KS (International Paper) | 2,750,000 | 15,544,108 | 18,294,108 | |||||||||
Altoona, PA | 1,200,000 | 7,808,650 | 9,008,650 | |||||||||
Spring (Houston), TX | 1,890,000 | 17,393,798 | 19,283,798 | |||||||||
Indianapolis, IN (FDX Ground) | 3,500,000 | 20,446,000 | 23,946,000 | |||||||||
Sauget (St. Louis, MO), IL | 1,890,000 | 13,314,950 | 15,204,950 | |||||||||
Lindale (Tyler), TX | 540,000 | 9,390,000 | 9,930,000 | |||||||||
Kansas City, MO (Bunzl) | 1,000,000 | 8,600,000 | 9,600,000 | |||||||||
Frankfort (Lexington), KY | 1,850,000 | 26,150,000 | 28,000,000 | |||||||||
Jacksonville, FL (FDX Ground) | 6,000,000 | 24,645,954 | 30,645,954 | |||||||||
Monroe (Cincinnati), OH | 1,800,000 | 11,137,000 | 12,937,000 | |||||||||
Greenwood (Indianapolis), IN | 2,250,000 | 35,250,391 | 37,500,391 | |||||||||
Ft. Worth (Dallas), TX | 8,200,000 | 27,100,832 | 35,300,832 | |||||||||
Cincinnati, OH | 800,000 | 5,950,000 | 6,750,000 | |||||||||
Rockford, IL (B/E Aerospace) | 480,000 | 4,620,000 | 5,100,000 | |||||||||
Concord (Charlotte), NC | 4,305,000 | 27,670,897 | 31,975,897 | |||||||||
Covington (New Orleans), LA | 2,720,000 | 15,690,000 | 18,410,000 | |||||||||
Imperial (Pittsburgh), PA | 3,700,000 | 16,250,000 | 19,950,000 | |||||||||
Burlington (Seattle/Everett), WA | 8,000,000 | 22,210,680 | 30,210,680 | |||||||||
Colorado Springs, CO | 2,150,000 | 26,350,000 | 28,500,000 | |||||||||
Louisville, KY | 1,590,000 | 9,714,000 | 11,304,000 | |||||||||
Davenport (Orlando), FL | 7,060,000 | 30,720,000 | 37,780,000 | |||||||||
Olathe (Kansas City), KS | 2,350,000 | 29,387,000 | 31,737,000 | |||||||||
Shopping Center | ||||||||||||
Somerset, NJ | 34,316 | 3,038,565 | 3,072,881 | |||||||||
Vacant Land | ||||||||||||
Shelby County, TN | 11,065 | -0- | 11,065 | |||||||||
$ | 165,375,315 | $ | 1,005,938,180 | $ | 1,171,313,495 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 2019
(in thousands)
Column A | Column E (1) (2) | |||||||||||
Gross Amount at Which Carried | ||||||||||||
September 30, 2019 | ||||||||||||
Description | Land | Bldg & Imp | Total | |||||||||
Savannah, GA | $ | 4,405 | $ | 51,621 | $ | 56,026 | ||||||
Daytona Beach, FL | 3,120 | 26,888 | 30,008 | |||||||||
Mobile, AL | 2,480 | 30,572 | 33,052 | |||||||||
Charleston, SC (FDX Ground) | 7,103 | 39,473 | 46,576 | |||||||||
Braselton (Atlanta), GA | 13,965 | 46,262 | 60,227 | |||||||||
Trenton, NJ | 8,336 | 75,652 | 83,988 | |||||||||
Savannah, GA (FDX Ground) | 3,441 | 24,091 | 27,532 | |||||||||
Lafayette, IN | 2,802 | 22,277 | 25,079 | |||||||||
Shopping Center | ||||||||||||
Somerset, NJ | 34 | 3,095 | 3,129 | |||||||||
Vacant Land | ||||||||||||
Shelby County, TN | 11 | 0 | 11 | |||||||||
$ | 239,299 | $ | 1,627,219 | $ | 1,866,518 |
(1) | See pages | |
(2) | ||
The aggregate cost for Federal tax purposes approximates historical cost. |
148 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE OF ACCUMULATED DEPRECIATION LIFE
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column F | Column G | Column H | Column I | ||||||||||||
Accumulated | Date of | Date | Depreciable | |||||||||||||
Description | Depreciation | Construction | Acquired | Life | ||||||||||||
Industrial Buildings | ||||||||||||||||
Monaca (Pittsburgh), PA | $ | 2,331,288 | 1977 | 1977 | 5-31.5 | |||||||||||
Orangeburg (New York), NY | 2,319,253 | 1990 | 1993 | 31.5 | ||||||||||||
Ridgeland (Jackson), MS | 1,177,386 | 1988 | 1993 | 39 | ||||||||||||
Urbandale (Des Moines), IA | 1,094,293 | 1985 | 1994 | 39 | ||||||||||||
Richland (Jackson), MS | 826,199 | 1986 | 1994 | 39 | ||||||||||||
O’Fallon (St. Louis), MO | 2,096,073 | 1989 | 1994 | 39 | ||||||||||||
Fayetteville, NC | 2,458,876 | 1996 | 1997 | 39 | ||||||||||||
Schaumburg (Chicago), IL | 2,037,309 | 1997 | 1997 | 39 | ||||||||||||
Burr Ridge (Chicago), IL | 656,159 | 1997 | 1997 | 39 | ||||||||||||
Romulus (Detroit), MI | 1,804,248 | 1998 | 1998 | 39 | ||||||||||||
Liberty (Kansas City), MO | 3,152,489 | 1997 | 1998 | 39 | ||||||||||||
Omaha, NE | 2,109,230 | 1999 | 1999 | 39 | ||||||||||||
Charlottesville, VA | 1,393,226 | 1998 | 1999 | 39 | ||||||||||||
Jacksonville, FL (FDX) | 2,295,680 | 1998 | 1999 | 39 | ||||||||||||
West Chester Twp (Cincinnati), OH | 1,947,128 | 1999 | 2000 | 39 | ||||||||||||
Richmond, VA (FDX) | 2,644,156 | 2000 | 2001 | 39 | ||||||||||||
St. Joseph, MO | 4,756,910 | 2000 | 2001 | 39 | ||||||||||||
Newington (Hartford), CT | 1,207,938 | 2001 | 2001 | 39 | ||||||||||||
Cudahy (Milwaukee), WI | 2,853,810 | 2001 | 2001 | 39 | ||||||||||||
Beltsville (Washington, DC), MD | 3,536,076 | 2000 | 2001 | 39 | ||||||||||||
Granite City (St. Louis, MO), IL | 4,485,359 | 2001 | 2001 | 39 | ||||||||||||
Winston-Salem, NC | 2,185,430 | 2001 | 2002 | 39 | ||||||||||||
Elgin (Chicago), IL | 2,124,899 | 2002 | 2002 | 39 | ||||||||||||
Tolleson (Phoenix), AZ | 5,115,610 | 2002 | 2002 | 39 | ||||||||||||
Ft. Myers, FL | 991,678 | 1974 | 2002 | 39 | ||||||||||||
Edwardsville (Kansas City), KS (Carlisle) | 2,158,091 | 2002 | 2003 | 39 | ||||||||||||
Tampa, FL (FDX Ground) | 4,161,734 | 2004 | 2004 | 39 | ||||||||||||
Denver, CO | 1,437,516 | 2005 | 2005 | 39 | ||||||||||||
Hanahan (Charleston), SC (SAIC) | 3,577,226 | 2002 | 2005 | 39 | ||||||||||||
Hanahan (Charleston), SC (FDX Ground) | 1,724,191 | 2005 | 2005 | 39 | ||||||||||||
Augusta, GA (FDX Ground) | 1,258,944 | 2005 | 2005 | 39 | ||||||||||||
Huntsville, AL | 936,862 | 2005 | 2005 | 39 | ||||||||||||
Richfield (Cleveland), OH | 2,373,693 | 2006 | 2006 | 39 | ||||||||||||
Colorado Springs, CO | 1,490,351 | 2006 | 2006 | 39 | ||||||||||||
Tampa, FL (FDX) | 1,258,519 | 2006 | 2006 | 39 | ||||||||||||
Griffin (Atlanta), GA | 3,767,103 | 2006 | 2006 | 39 | ||||||||||||
Roanoke, VA (CHEP) | 1,329,033 | 1996 | 2007 | 39 | ||||||||||||
Orion, MI | 3,549,648 | 2007 | 2007 | 39 | ||||||||||||
Carlstadt, NJ (New York, NY) | 849,584 | 1977 | 2007 | 39 | ||||||||||||
Wheeling (Chicago), IL | 3,735,969 | 2003 | 2007 | 39 | ||||||||||||
White Bear Lake (Minneapolis/St. Paul), MN | 927,965 | 2001 | 2007 | 39 | ||||||||||||
Cheektowaga (Buffalo), NY | 1,531,509 | 2002 | 2007 | 39 | ||||||||||||
Richmond, VA (Carrier) | 1,229,737 | 2004 | 2007 | 39 | ||||||||||||
Montgomery (Chicago), IL | 2,282,887 | 2004 | 2007 | 39 | ||||||||||||
Tampa, FL (TB Grand Prix) | 941,848 | 1989 | 2007 | 39 | ||||||||||||
Augusta, GA (FDX) | 367,357 | 1993 | 2007 | 39 | ||||||||||||
Lakeland, FL | 466,240 | 1993 | 2007 | 39 | ||||||||||||
El Paso, TX | 1,442,146 | 2005 | 2007 | 39 | ||||||||||||
Chattanooga, TN | 1,131,706 | 2002 | 2007 | 39 | ||||||||||||
Bedford Heights (Cleveland), OH | 1,521,396 | 1998 | 2007 | 39 |
Column A | Column F | Column G | Column H | Column I | ||||||||||||
Accumulated | Date of | Date | Depreciable | |||||||||||||
Description | Depreciation | Construction | Acquired | Life | ||||||||||||
Industrial Buildings | ||||||||||||||||
Monaca (Pittsburgh), PA | $ | 3,229 | 1977 | 1977 | (3 | ) | ||||||||||
Ridgeland (Jackson), MS | 1,382 | 1988 | 1993 | (3 | ) | |||||||||||
Urbandale (Des Moines), IA | 1,294 | 1985 | 1994 | (3 | ) | |||||||||||
Richland (Jackson), MS | 1,057 | 1986 | 1994 | (3 | ) | |||||||||||
O’Fallon (St. Louis), MO | 2,492 | 1989 | 1994 | (3 | ) | |||||||||||
Fayetteville, NC | 3,165 | 1996 | 1997 | (3 | ) | |||||||||||
Schaumburg (Chicago), IL | 2,407 | 1997 | 1997 | (3 | ) | |||||||||||
Burr Ridge (Chicago), IL | 783 | 1997 | 1997 | (3 | ) | |||||||||||
Romulus (Detroit), MI | 2,182 | 1998 | 1998 | (3 | ) | |||||||||||
Liberty (Kansas City), MO | 3,669 | 1997 | 1998 | (3 | ) | |||||||||||
Omaha, NE | 2,484 | 1999 | 1999 | (3 | ) | |||||||||||
Charlottesville, VA | 1,693 | 1998 | 1999 | (3 | ) | |||||||||||
Jacksonville, FL (FDX) | 2,961 | 1998 | 1999 | (3 | ) | |||||||||||
West Chester Twp. (Cincinnati), OH | 2,484 | 1999 | 2000 | (3 | ) | |||||||||||
Mechanicsville (Richmond), VA | 3,191 | 2000 | 2001 | (3 | ) | |||||||||||
St. Joseph, MO | 5,804 | 2000 | 2001 | (3 | ) | |||||||||||
Newington (Hartford), CT | 1,466 | 2001 | 2001 | (3 | ) | |||||||||||
Cudahy (Milwaukee), WI | 3,550 | 2001 | 2001 | (3 | ) | |||||||||||
Beltsville (Washington, DC), MD | 4,454 | 2000 | 2001 | (3 | ) | |||||||||||
Carlstadt (New York, NY), NJ | 1,123 | 1977 | 2001 | (3 | ) | |||||||||||
Granite City (St. Louis, MO), IL | 5,539 | 2001 | 2001 | (3 | ) | |||||||||||
Winston-Salem, NC | 2,835 | 2001 | 2002 | (3 | ) | |||||||||||
Elgin (Chicago), IL | 2,599 | 2002 | 2002 | (3 | ) | |||||||||||
Cheektowaga (Buffalo), NY | 2,011 | 2000 | 2002 | (3 | ) | |||||||||||
Tolleson (Phoenix), AZ | 6,659 | 2002 | 2003 | (3 | ) | |||||||||||
Edwardsville (Kansas City), KS (Carlisle Tire) | 2,689 | 2002 | 2003 | (3 | ) | |||||||||||
Wheeling (Chicago), IL | 4,820 | 2003 | 2003 | (3 | ) | |||||||||||
Richmond, VA | 1,666 | 2004 | 2004 | (3 | ) | |||||||||||
Tampa, FL (FDX Ground) | 5,302 | 2004 | 2004 | (3 | ) | |||||||||||
Montgomery (Chicago), IL | 3,004 | 2004 | 2004 | (3 | ) | |||||||||||
Denver, CO | 1,839 | 2005 | 2005 | (3 | ) | |||||||||||
Hanahan (Charleston), SC (SAIC) | 4,754 | 2002 | 2005 | (3 | ) | |||||||||||
Hanahan (Charleston), SC (Amazon) | 2,244 | 2005 | 2005 | (3 | ) | |||||||||||
Augusta, GA (FDX Ground) | 1,634 | 2005 | 2005 | (3 | ) | |||||||||||
Tampa, FL (Tampa Bay Grand Prix) | 1,246 | 1989 | 2005 | (3 | ) | |||||||||||
Huntsville, AL | 1,406 | 2005 | 2005 | (3 | ) | |||||||||||
Augusta, GA (FDX) | 512 | 1993 | 2006 | (3 | ) | |||||||||||
Lakeland, FL | 625 | 1993 | 2006 | (3 | ) | |||||||||||
El Paso, TX | 2,244 | 2005 | 2006 | (3 | ) | |||||||||||
Richfield (Cleveland), OH | 3,441 | 2006 | 2006 | (3 | ) | |||||||||||
Tampa, FL (FDX) | 1,669 | 2006 | 2006 | (3 | ) | |||||||||||
Griffin (Atlanta), GA | 4,912 | 2006 | 2006 | (3 | ) | |||||||||||
Roanoke, VA (CHEP USA) | 1,899 | 1996 | 2007 | (3 | ) | |||||||||||
Orion, MI | 4,959 | 2007 | 2007 | (3 | ) | |||||||||||
Chattanooga, TN | 1,529 | 2002 | 2007 | (3 | ) | |||||||||||
Bedford Heights (Cleveland), OH | 2,090 | 1998 | 2007 | (3 | ) | |||||||||||
Punta Gorda, FL | 1,172 | 2007 | 2007 | (3 | ) | |||||||||||
Cocoa, FL | 3,080 | 2006 | 2008 | (3 | ) | |||||||||||
Orlando, FL | 2,022 | 1997 | 2008 | (3 | ) | |||||||||||
Topeka, KS | 991 | 2006 | 2009 | (3 | ) | |||||||||||
Memphis, TN | 3,297 | 1994 | 2010 | (3 | ) | |||||||||||
Houston, TX | 1,632 | 2005 | 2010 | (3 | ) | |||||||||||
Carrollton (Dallas), TX | 3,987 | 2009 | 2010 | (3 | ) |
149 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
Column A | Column F | Column G | Column H | Column I | ||||||||||||
Accumulated | Date of | Date | Depreciable | |||||||||||||
Description | Depreciation | Construction | Acquired | Life | ||||||||||||
Kansas City, MO (Kellogg) | $ | 1,022,653 | 2002 | 2007 | 39 | |||||||||||
Punta Gorda, FL | 833,789 | 2007 | 2007 | 39 | ||||||||||||
Cocoa, FL | 2,113,243 | 2006 | 2008 | 39 | ||||||||||||
Orlando, FL | 1,471,814 | 1997 | 2008 | 39 | ||||||||||||
Topeka, KS | 707,765 | 2006 | 2009 | 39 | ||||||||||||
Memphis, TN | 2,230,008 | 1994 | 2010 | �� | 39 | |||||||||||
Houston, TX | 1,080,294 | 2005 | 2010 | 39 | ||||||||||||
Carrollton (Dallas), TX | 2,708,020 | 2009 | 2010 | 39 | ||||||||||||
Ft. Mill (Charlotte, NC), SC | 1,949,873 | 2009 | 2010 | 39 | ||||||||||||
Lebanon (Nashville), TN | 1,536,542 | 1993 | 2011 | 39 | ||||||||||||
Rockford, IL (Sherwin-Williams) | 628,612 | 1998-2008 | 2011 | 39 | ||||||||||||
Edinburg, TX | 907,803 | 2011 | 2011 | 39 | ||||||||||||
Streetsboro (Cleveland), OH | 2,058,462 | 2012 | 2012 | 39 | ||||||||||||
Corpus Christi, TX | 549,750 | 2012 | 2012 | 39 | ||||||||||||
Halfmoon (Albany), NY | 500,262 | 2012 | 2012 | 39 | ||||||||||||
Lebanon (Cincinnati), OH | 485,114 | 2012 | 2012 | 39 | ||||||||||||
Olive Branch, MS (Memphis, TN) (Anda) | 1,498,397 | 2012 | 2012 | 39 | ||||||||||||
Oklahoma City, OK | 1,014,638 | 2012 | 2012 | 39 | ||||||||||||
Waco, TX | 923,263 | 2012 | 2012 | 39 | ||||||||||||
Livonia (Detroit), MI | 1,350,345 | 1999 | 2013 | 39 | ||||||||||||
Olive Branch, MS (Memphis, TN) (Milwaukee Tool) | 2,275,368 | 2013 | 2013 | 39 | ||||||||||||
Roanoke, VA (FDX Ground) | 714,038 | 2013 | 2013 | 39 | ||||||||||||
Green Bay, WI | 460,000 | 2013 | 2013 | 39 | ||||||||||||
Stewartville (Rochester), MN | 332,308 | 2013 | 2013 | 39 | ||||||||||||
Tulsa, OK | 227,268 | 2009 | 2014 | 39 | ||||||||||||
Buckner (Louisville), KY | 1,834,166 | 2014 | 2014 | 39 | ||||||||||||
Edwardsville (Kansas City), KS (International Paper) | 1,172,549 | 2014 | 2014 | 39 | ||||||||||||
Altoona, PA | 583,052 | 2014 | 2014 | 39 | ||||||||||||
Spring (Houston), TX | 1,183,663 | 2014 | 2014 | 39 | ||||||||||||
Indianapolis, IN (FDX Ground) | 1,132,868 | 2014 | 2014 | 39 | ||||||||||||
Sauget (St. Louis, MO), IL | 682,605 | 2015 | 2015 | 39 | ||||||||||||
Lindale (Tyler), TX | 481,538 | 2015 | 2015 | 39 | ||||||||||||
Kansas City, MO (Bunzl) | 422,650 | 2015 | 2015 | 39 | ||||||||||||
Frankfort (Lexington), KY | 1,229,274 | 2015 | 2015 | 39 | ||||||||||||
Jacksonville, FL (FDX Ground) | 1,053,246 | 2015 | 2015 | 39 | ||||||||||||
Monroe (Cincinnati), OH | 452,143 | 2015 | 2015 | 39 | ||||||||||||
Greenwood (Indianapolis), IN | 1,280,020 | 2015 | 2015 | 39 | ||||||||||||
Ft. Worth (Dallas), TX | 810,709 | 2015 | 2015 | 39 | ||||||||||||
Cincinnati, OH | 165,278 | 2014 | 2015 | 39 | ||||||||||||
Rockford, IL (B/E Aerospace) | 236,923 | 2012 | 2015 | 39 | ||||||||||||
Concord (Charlotte), NC | 650,384 | 2016 | 2016 | 39 | ||||||||||||
Covington (New Orleans), LA | 335,256 | 2016 | 2016 | 39 | ||||||||||||
Imperial (Pittsburgh), PA | 243,056 | 2016 | 2016 | 39 | ||||||||||||
Burlington (Seattle/Everett), WA | 284,752 | 2016 | 2016 | 39 | ||||||||||||
Colorado Springs, CO | 225,214 | 2016 | 2016 | 39 | ||||||||||||
Louisville, KY | 83,026 | 2016 | 2016 | 39 | ||||||||||||
Davenport (Orlando), FL | 131,282 | 2016 | 2016 | 39 | ||||||||||||
Olathe (Kansas City), KS | 125,585 | 2016 | 2016 | 39 | ||||||||||||
Shopping Center | ||||||||||||||||
Somerset, NJ | 1,399,343 | 1970 | 1970 | 10-33 | ||||||||||||
Vacant Land | ||||||||||||||||
Shelby County, TN | -0- | N/A | 2007 | N/A | ||||||||||||
$ | 148,830,169 |
Column A | Column F | Column G | Column H | Column I | ||||||||||||
Accumulated | Date of | Date | Depreciable | |||||||||||||
Description | Depreciation | Construction | Acquired | Life | ||||||||||||
Ft. Mill (Charlotte, NC), SC | $ | 3,041 | 2009 | 2010 | (3 | ) | ||||||||||
Lebanon (Nashville), TN | 2,458 | 1993 | 2011 | (3 | ) | |||||||||||
Rockford, IL (Sherwin-Williams Co.) | 975 | 1998-2008 | 2011 | (3 | ) | |||||||||||
Edinburg, TX | 1,756 | 2011 | 2011 | (3 | ) | |||||||||||
Streetsboro (Cleveland), OH | 3,431 | 2012 | 2012 | (3 | ) | |||||||||||
Corpus Christi, TX | 923 | 2012 | 2012 | (3 | ) | |||||||||||
Halfmoon (Albany), NY | 834 | 2012 | 2012 | (3 | ) | |||||||||||
Lebanon (Cincinnati), OH | 813 | 2012 | 2012 | (3 | ) | |||||||||||
Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) | 2,556 | 2012 | 2012 | (3 | ) | |||||||||||
Oklahoma City, OK (FDX Ground) | 1,892 | 2012 | 2012 | (3 | ) | |||||||||||
Waco, TX | 1,786 | 2012 | 2012 | (3 | ) | |||||||||||
Livonia (Detroit), MI | 2,407 | 1999 | 2013 | (3 | ) | |||||||||||
Olive Branch (Memphis, TN), MS (Milwaukee Tool) | 4,929 | 2013 | 2013 | (3 | ) | |||||||||||
Roanoke, VA (FDX Ground) | 1,365 | 2013 | 2013 | (3 | ) | |||||||||||
Green Bay, WI | 921 | 2013 | 2013 | (3 | ) | |||||||||||
Stewartville (Rochester), MN | 665 | 2013 | 2013 | (3 | ) | |||||||||||
Tulsa, OK | 473 | 2009 | 2014 | (3 | ) | |||||||||||
Buckner (Louisville), KY | 3,755 | 2014 | 2014 | (3 | ) | |||||||||||
Edwardsville (Kansas City), KS (International Paper) | 2,416 | 2014 | 2014 | (3 | ) | |||||||||||
Altoona, PA | 1,189 | 2014 | 2014 | (3 | ) | |||||||||||
Spring (Houston), TX | 2,527 | 2014 | 2014 | (3 | ) | |||||||||||
Indianapolis, IN | 2,830 | 2014 | 2014 | (3 | ) | |||||||||||
Sauget (St. Louis, MO), IL | 1,708 | 2015 | 2015 | (3 | ) | |||||||||||
Lindale (Tyler), TX | 1,211 | 2015 | 2015 | (3 | ) | |||||||||||
Kansas City, MO | 1,147 | 2015 | 2015 | (3 | ) | |||||||||||
Frankfort (Lexington), KY | 3,241 | 2015 | 2015 | (3 | ) | |||||||||||
Jacksonville, FL (FDX Ground) | 2,799 | 2015 | 2015 | (3 | ) | |||||||||||
Monroe (Cincinnati), OH | 1,438 | 2015 | 2015 | (3 | ) | |||||||||||
Greenwood (Indianapolis), IN | 3,998 | 2015 | 2015 | (3 | ) | |||||||||||
Ft. Worth (Dallas), TX | 2,896 | 2015 | 2015 | (3 | ) | |||||||||||
Cincinnati, OH | 623 | 2014 | 2015 | (3 | ) | |||||||||||
Rockford, IL (Collins Aerospace Systems) | 592 | 2012 | 2015 | (3 | ) | |||||||||||
Concord (Charlotte), NC | 3,158 | 2016 | 2016 | (3 | ) | |||||||||||
Covington (New Orleans), LA | 1,543 | 2016 | 2016 | (3 | ) | |||||||||||
Imperial (Pittsburgh), PA | 1,494 | 2016 | 2016 | (3 | ) | |||||||||||
Burlington (Seattle/Everett), WA | 2,000 | 2016 | 2016 | (3 | ) | |||||||||||
Colorado Springs, CO | 2,310 | 2016 | 2016 | (3 | ) | |||||||||||
Louisville, KY | 830 | 2016 | 2016 | (3 | ) | |||||||||||
Davenport (Orlando), FL | 2,494 | 2016 | 2016 | (3 | ) | |||||||||||
Olathe (Kansas City), KS | 2,386 | 2016 | 2016 | (3 | ) | |||||||||||
Hamburg (Buffalo), NY | 2,560 | 2017 | 2017 | (3 | ) | |||||||||||
Ft. Myers, FL | 1,332 | 2017 | 2017 | (3 | ) | |||||||||||
Walker (Grand Rapids), MI | 1,771 | 2017 | 2017 | (3 | ) | |||||||||||
Mesquite (Dallas), TX | 2,517 | 2017 | 2017 | (3 | ) | |||||||||||
Aiken (Augusta, GA), SC | 1,135 | 2017 | 2017 | (3 | ) | |||||||||||
Homestead (Miami), FL | 1,933 | 2017 | 2017 | (3 | ) | |||||||||||
Oklahoma City, OK (Bunzl) | 454 | 2017 | 2017 | (3 | ) | |||||||||||
Concord (Charlotte), NC | 1,985 | 2017 | 2017 | (3 | ) | |||||||||||
Kenton, OH | 927 | 2017 | 2017 | (3 | ) | |||||||||||
Stow, OH | 898 | 2017 | 2017 | (3 | ) | |||||||||||
Charleston, SC (FDX) | 831 | 2018 | 2018 | (3 | ) | |||||||||||
Oklahoma City, OK (Amazon) | 1,328 | 2018 | 2018 | (3 | ) |
150 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 20162019
(in thousands)
(1) Reconciliation
Column A | Column F | Column G | Column H | Column I | ||||||||||||
Accumulated | Date of | Date | Depreciable | |||||||||||||
Description | Depreciation | Construction | Acquired | Life | ||||||||||||
Savannah, GA | $ | 2,206 | 2018 | 2018 | (3 | ) | ||||||||||
Daytona Beach, FL | 1,036 | 2018 | 2018 | (3 | ) | |||||||||||
Mobile, AL | 980 | 2018 | 2018 | (3 | ) | |||||||||||
Charleston, SC (FDX Ground) | 1,180 | 2018 | 2018 | (3 | ) | |||||||||||
Braselton (Atlanta), GA | 1,285 | 2018 | 2018 | (3 | ) | |||||||||||
Trenton, NJ | 1,940 | 2019 | 2019 | (3 | ) | |||||||||||
Savannah, GA (FDX Ground) | 515 | 2019 | 2019 | (3 | ) | |||||||||||
Lafayette, IN | 96 | 2019 | 2019 | (3 | ) | |||||||||||
Shopping Center | ||||||||||||||||
Somerset, NJ | 1,687 | 1970 | 1970 | (3 | ) | |||||||||||
Vacant Land | ||||||||||||||||
Shelby County, TN | 0 | N/A | 2007 | N/A | ||||||||||||
$ | 249,584 |
(3) | Depreciation is computed based upon the following estimated lives: |
REAL ESTATE INVESTMENTSBuilding: 31.5 to 39 years; Building Improvements: 3 to 39 years; Tenant Improvements: Lease Term
9/30/2016 | 9/30/2015 | 9/30/2014 | ||||||||||
Balance-Beginning of Year | $ | 941,009,905 | $ | 743,714,774 | $ | 627,866,051 | ||||||
Additions: | ||||||||||||
Acquisitions | 209,867,577 | 190,948,360 | 96,433,935 | |||||||||
Improvements | 20,436,013 | 11,903,148 | 19,414,788 | |||||||||
Total Additions | 230,303,590 | 202,851,508 | 115,848,723 | |||||||||
Deletions: | ||||||||||||
Sales | -0- | (5,556,377 | ) | -0- | ||||||||
Total Deletions | -0- | (5,556,377 | ) | -0- | ||||||||
Balance-End of Year | $ | 1,171,313,495 | $ | 941,009,905 | $ | 743,714,774 |
ACCUMULATED DEPRECIATION
9/30/2016 | 9/30/2015 | 9/30/2014 | ||||||||||
Balance-Beginning of Year | $ | 124,898,639 | $ | 107,004,184 | $ | 91,095,415 | ||||||
Depreciation | 23,931,530 | 19,625,748 | 15,908,769 | |||||||||
Sales | -0- | (1,731,293 | ) | -0- | ||||||||
Balance-End of Year | $ | 148,830,169 | $ | 124,898,639 | $ | 107,004,184 |
151 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
SCHEDULE III
REAL ESTATE AND SUBSIDIARIESACCUMULATED DEPRECIATION
NOTES TO SCHEDULE III
SEPTEMBER 30, 2019
(in thousands)
(1) Reconciliation
REAL ESTATE INVESTMENTS
SCHEDULE OF REAL ESTATE INVESTMENT
9/30/2019 | 9/30/2018 | 9/30/2017 | ||||||||||
Balance-Beginning of Year | $ | 1,719,578 | $ | 1,431,916 | $ | 1,150,395 | ||||||
Additions: | ||||||||||||
Acquisitions | 136,598 | 277,253 | 282,509 | |||||||||
Improvements | 10,342 | 10,409 | 4,169 | |||||||||
Total Additions | 146,940 | 287,662 | 286,678 | |||||||||
Deletions: | ||||||||||||
Sales | 0 | 0 | (5,157 | ) | ||||||||
Total Deletions | 0 | 0 | (5,157 | ) | ||||||||
Balance-End of Year | $ | 1,866,518 | $ | 1,719,578 | $ | 1,431,916 |
ACCUMULATED DEPRECIATION
SCHEDULE OF ACCUMULATED DEPRECIATION
(1)Reconciliation
2016 | 2015 | 2014 | ||||||||||
Balance – Beginning of Year | $ | 941,009,905 | $ | 743,714,774 | $ | 627,866,051 | ||||||
Additions: | ||||||||||||
Somerset, NJ | 377,637 | 182,573 | 1,136,454 | |||||||||
Monaca (Pittsburgh), PA | 37,255 | 1,907,292 | 2,707,529 | |||||||||
Orangeburg (New York), NY | -0- | 96,800 | 108,157 | |||||||||
Ridgeland (Jackson), MS | 7,797 | -0- | -0- | |||||||||
Urbandale (Des Moines), IA | -0- | -0- | -0- | |||||||||
Richland (Jackson), MS | -0- | -0- | 422,691 | |||||||||
O’Fallon (St. Louis), MO | -0- | 317,457 | 20,744 | |||||||||
Fayetteville, NC | 557,354 | 13,773 | -0- | |||||||||
Schaumburg (Chicago), IL | 13,775 | -0- | -0- | |||||||||
Burr Ridge (Chicago), IL | 8,700 | -0- | 65,333 | |||||||||
Romulus (Detroit), MI | -0- | 116,919 | -0- | |||||||||
Liberty (Kansas City), MO | 24,263 | 2,500 | 26,620 | |||||||||
Omaha, NE | 7,410 | 7,391 | -0- | |||||||||
Charlottesville, VA | 4,462 | -0- | -0- | |||||||||
Jacksonville, FL (FDX) | 16,983 | -0- | �� | 73,921 | ||||||||
West Chester Twp (Cincinnati), OH | -0- | -0- | 77,555 | |||||||||
Richmond, VA (FDX) | 18,510 | 7,356 | 14,152 | |||||||||
St. Joseph, MO | 50,934 | 53,922 | 11,980 | |||||||||
Newington (Hartford), CT | -0- | -0- | 18,000 | |||||||||
Cudahy (Milwaukee), WI | 8,689 | -0- | -0- | |||||||||
Beltsville (Washington, DC), MD | 44,600 | 9,271 | 71,700 | |||||||||
Granite City (St. Louis, MO), IL | 156,139 | -0- | -0- | |||||||||
Monroe, NC | -0- | 55,680 | 10,875 | |||||||||
Winston Salem, NC | 316,527 | -0- | 8,101 | |||||||||
Elgin (Chicago), IL | 5,960 | 30,312 | 29,048 | |||||||||
Tolleson (Phoenix), AZ | 1,655,640 | (3,925 | ) | 13,015 | ||||||||
Ft. Myers, FL | -0- | -0- | 13,321 | |||||||||
Edwardsville (Kansas City), KS (Carlisle) | -0- | -0- | 200,000 | |||||||||
Tampa, FL (FDX Ground) (A) | 1,247,140 | 6,147 | 688,990 | |||||||||
Denver, CO | -0- | -0- | -0- | |||||||||
Hanahan (Charleston), SC (SAIC) | 40,000 | 328,118 | -0- | |||||||||
Hanahan (Charleston), SC (FDX Ground) | -0- | -0- | 7,983 | |||||||||
Augusta, GA (FDX Ground) | 25,161 | -0- | -0- | |||||||||
Huntsville, AL (B) | 1,853,390 | -0- | -0- | |||||||||
Richfield (Cleveland), OH | -0- | (91,709 | ) | 4,655,309 | ||||||||
Colorado Springs, CO | 9,357 | -0- | -0- | |||||||||
Tampa, FL (FDX) | 27,144 | -0- | -0- | |||||||||
Griffin (Atlanta), GA | -0- | -0- | -0- | |||||||||
Roanoke, VA (CHEP) | -0- | (59,348 | ) | 649,101 | ||||||||
Orion, MI | 5,867 | 5,021 | 61,507 | |||||||||
Carlstadt, NJ (New York, NY) | 13,877 | 51,120 | -0- | |||||||||
Wheeling (Chicago), IL | -0- | -0- | -0- | |||||||||
White Bear Lake (Minneapolis/St. Paul), MN | -0- | -0- | -0- | |||||||||
Cheektowaga (Buffalo), NY | -0- | -0- | 28,766 | |||||||||
Richmond, VA (Carrier) | 7,540 | 19,764 | 29,964 | |||||||||
Montgomery (Chicago), IL | -0- | -0- | -0- | |||||||||
Tampa, FL (Tampa Bay Grand Prix) | 26,916 | -0- | 34,192 | |||||||||
Augusta, GA (FDX) | 24,700 | 6,850 | 13,250 | |||||||||
Lakeland, FL | 16,321 | -0- | 6,643 | |||||||||
El Paso, TX | -0- | 1,198,544 | 323,326 | |||||||||
Chattanooga, TN | 41,042 | -0- | -0- | |||||||||
Bedford Heights (Cleveland), OH | 84,288 | 4,450 | 58,309 | |||||||||
Kansas City, MO (Kellogg) | 52,100 | -0- | -0- | |||||||||
Punta Gorda, FL | 8,350 | -0- | -0- | |||||||||
Cocoa, FL | 37,606 | 73,962 | 3,494,426 | |||||||||
Orlando, FL | 13,195 | -0- | 4,833 | |||||||||
Topeka, KS | -0- | -0- | -0- |
9/30/2019 | 9/30/2018 | 9/30/2017 | ||||||||||
Balance-Beginning of Year | $ | 207,065 | $ | 171,086 | $ | 143,006 | ||||||
Depreciation | 42,519 | 36,018 | 29,016 | |||||||||
Sales | 0 | (39 | ) | (936 | ) | |||||||
Balance-End of Year | $ | 249,584 | $ | 207,065 | $ | 171,086 |
152 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO SCHEDULE III (CONT’D)
SEPTEMBER 30, 2019
(in thousands)
(1)Reconciliation (cont’d)
2016 | 2015 | 2014 | ||||||||||
Memphis, TN | -0- | -0- | 20,887 | |||||||||
Houston, TX | -0- | 2,279 | -0- | |||||||||
Carrollton (Dallas), TX | 24,806 | 4,300 | -0- | |||||||||
Ft. Mill (Charlotte, NC), SC | -0- | -0- | 338,833 | |||||||||
Lebanon (Nashville), TN | -0- | -0- | -0- | |||||||||
Rockford, IL (Sherwin-Williams) | -0- | 11,227 | -0- | |||||||||
Edinburg, TX (C) | 3,985,389 | -0- | 24,483 | |||||||||
Streetsboro (Cleveland), OH | -0- | -0- | -0- | |||||||||
Corpus Christi, TX | -0- | -0- | -0- | |||||||||
Halfmoon (Albany), NY | -0- | -0- | -0- | |||||||||
Lebanon (Cincinnati), OH | -0- | 36,425 | -0- | |||||||||
Olive Branch, MS (Memphis, TN) (Anda) | -0- | -0- | -0- | |||||||||
Oklahoma City, OK (D) | (13,611 | ) | 2,989,708 | -0- | ||||||||
Waco, TX | -0- | 3,813,157 | -0- | |||||||||
Livonia (Detroit), MI | 31,497 | 30,533 | -0- | |||||||||
Olive Branch, MS (Memphis, TN)(Milwaukee Tool) (E) | 9,412,120 | 133,981 | -0- | |||||||||
Roanoke, VA (FDX Ground) | -0- | -0- | -0- | |||||||||
Green Bay, WI | -0- | -0- | -0- | |||||||||
Stewartville (Rochester), MN | -0- | -0- | -0- | |||||||||
Tulsa, OK | -0- | 48,031 | 3,700,000 | |||||||||
Buckner (Louisville), KY | 48,136 | 86,591 | 26,633,125 | |||||||||
Edwardsville (Kansas City), KS (International Paper) | 5,355 | 203,261 | 18,085,492 | |||||||||
Altoona, PA | 18,650 | -0- | 8,990,000 | |||||||||
Spring (Houston), TX | 56,275 | 1,415 | 19,226,108 | |||||||||
Indianapolis, IN (FDX Ground) | -0- | 202,000 | 23,744,000 | |||||||||
Sauget (St. Louis, MO), IL | 4,950 | 15,200,000 | -0- | |||||||||
Lindale (Tyler), TX | -0- | 9,930,000 | -0- | |||||||||
Kansas City, MO (Bunzl) | -0- | 9,600,000 | -0- | |||||||||
Frankfort (Lexington), KY | -0- | 28,000,000 | -0- | |||||||||
Jacksonville, FL (FDX Ground) | -0- | 30,645,954 | -0- | |||||||||
Monroe (Cincinnati), OH | -0- | 12,937,000 | -0- | |||||||||
Greenwood (Indianapolis), IN | 15,817 | 37,484,574 | -0- | |||||||||
Ft. Worth (Dallas), TX | -0- | 35,300,832 | -0- | |||||||||
Cincinnati, OH | -0- | 6,750,000 | -0- | |||||||||
Rockford, IL (B/E Aerospace) | -0- | 5,100,000 | -0- | |||||||||
Concord (Charlotte), NC | 31,975,897 | -0- | -0- | |||||||||
Covington (New Orleans), LA | 18,410,000 | -0- | -0- | |||||||||
Imperial (Pittsburgh), PA | 19,950,000 | -0- | -0- | |||||||||
Burlington (Seattle/Everett), WA | 30,210,680 | -0- | -0- | |||||||||
Colorado Springs, CO | 28,500,000 | -0- | -0- | |||||||||
Louisville, KY | 11,304,000 | -0- | -0- | |||||||||
Davenport (Orlando), FL | 37,780,000 | -0- | -0- | |||||||||
Olathe (Kansas City), KS | 31,737,000 | -0- | -0- | |||||||||
Total Additions | 230,303,590 | 202,851,508 | 115,848,723 | |||||||||
Total Disposals | -0- | (5,556,377 | ) | -0- | ||||||||
Balance – End of Year | $ | 1,171,313,495 | $ | 941,009,905 | $ | 743,714,774 |
(1) Reconciliation
RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
2019 | 2018 | 2017 | ||||||||||
Balance – Beginning of Year | $ | 1,719,578 | $ | 1,431,916 | $ | 1,150,395 | ||||||
Additions: | ||||||||||||
Monaca (Pittsburgh), PA | $ | 0 | $ | 25 | $ | 80 | ||||||
Ridgeland (Jackson), MS | 426 | 27 | 0 | |||||||||
Urbandale (Des Moines), IA | 20 | 267 | 95 | |||||||||
Richland (Jackson), MS | 0 | 0 | 0 | |||||||||
O’Fallon (St. Louis), MO | 4 | 0 | 0 | |||||||||
Fayetteville, NC | 4 | 0 | 10 | |||||||||
Schaumburg (Chicago), IL | 0 | 0 | 197 | |||||||||
Burr Ridge (Chicago), IL | 14 | 0 | 0 | |||||||||
Romulus (Detroit), MI | 217 | 65 | 67 | |||||||||
Liberty (Kansas City), MO | 137 | 0 | 0 | |||||||||
Omaha, NE | 19 | 0 | 0 | |||||||||
Charlottesville, VA | 6 | 99 | 8 | |||||||||
Jacksonville, FL (FDX) | 187 | 67 | 83 | |||||||||
West Chester Twp. (Cincinnati), OH | 0 | 0 | 5 | |||||||||
Mechanicsville (Richmond), VA | 14 | 7 | 27 | |||||||||
St. Joseph, MO | 25 | 74 | 56 | |||||||||
Newington (Hartford), CT | 0 | 0 | 30 | |||||||||
Cudahy (Milwaukee), WI | 41 | 384 | 0 | |||||||||
Beltsville (Washington, DC), MD | 0 | 0 | 0 | |||||||||
Carlstadt (New York, NY), NJ | 354 | 39 | 0 | |||||||||
Granite City (St. Louis, MO), IL | 0 | 0 | 155 | |||||||||
Winston-Salem, NC | 0 | 8 | 0 | |||||||||
Elgin (Chicago), IL | 0 | 0 | 45 | |||||||||
Cheektowaga (Buffalo), NY | 0 | 0 | 0 | |||||||||
Tolleson (Phoenix), AZ | 0 | 0 | 0 | |||||||||
Edwardsville (Kansas City), KS (Carlisle Tire) | 0 | 0 | 8 | |||||||||
Wheeling (Chicago), IL | 10 | 445 | 0 | |||||||||
Richmond, VA | 138 | 0 | 0 | |||||||||
Tampa, FL (FDX Ground) | 0 | 5 | 0 | |||||||||
Montgomery (Chicago), IL | 0 | 5 | 0 | |||||||||
Denver, CO | 10 | 0 | 0 | |||||||||
Hanahan (Charleston), SC (SAIC) | 606 | 36 | 34 | |||||||||
Hanahan (Charleston), SC (Amazon) | 75 | 0 | 0 | |||||||||
Augusta, GA (FDX Ground) | 0 | 0 | 9 | |||||||||
Tampa, FL (Tampa Bay Grand Prix) | 0 | 0 | 0 | |||||||||
Huntsville, AL | 0 | 0 | 57 | |||||||||
Augusta, GA (FDX) | 6 | 0 | 6 | |||||||||
Lakeland, FL | 0 | 61 | 0 | |||||||||
El Paso, TX | 0 | 0 | 0 | |||||||||
Richfield (Cleveland), OH | 0 | 12 | 0 | |||||||||
Tampa, FL (FDX) | 8 | 237 | 27 | |||||||||
Griffin (Atlanta), GA | 142 | 65 | 0 | |||||||||
Roanoke, VA (CHEP USA) | 0 | 58 | 0 | |||||||||
Orion, MI | 0 | 4 | 0 | |||||||||
Chattanooga, TN | 210 | 122 | 4 | |||||||||
Bedford Heights (Cleveland), OH | 378 | 0 | 56 | |||||||||
Punta Gorda, FL | 0 | 0 | 20 | |||||||||
Cocoa, FL | 0 | 0 | 0 | |||||||||
Orlando, FL | 0 | 220 | 0 | |||||||||
Topeka, KS | 0 | 0 | 0 | |||||||||
Memphis, TN | 1,499 | (7 | ) | 1 | ||||||||
Houston, TX | 0 | 15 | 65 | |||||||||
Carrollton (Dallas), TX | 128 | 0 | 50 |
153 |
SIGNATURESMONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO SCHEDULE III, (CONT’D)
SEPTEMBER 30, 2019
(in thousands)
(1)Reconciliation (cont’d)
2019 | 2018 | 2017 | ||||||||||
Ft. Mill (Charlotte, NC), SC | $ | (10 | ) | $ | 1,661 | $ | 0 | |||||
Lebanon (Nashville), TN | 0 | 0 | 0 | |||||||||
Rockford, IL (Sherwin-Williams Co.) | 0 | 0 | 0 | |||||||||
Edinburg, TX | 0 | 0 | 615 | |||||||||
Streetsboro (Cleveland), OH | 0 | 0 | 0 | |||||||||
Corpus Christi, TX | 0 | 36 | 7 | |||||||||
Halfmoon (Albany), NY | 0 | 0 | 0 | |||||||||
Lebanon (Cincinnati), OH | 0 | 0 | 0 | |||||||||
Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals) | 0 | 0 | 0 | |||||||||
Oklahoma City, OK (FDX Ground) | 21 | 0 | 4 | |||||||||
Waco, TX | 0 | 0 | 5 | |||||||||
Livonia (Detroit), MI | 118 | 0 | 0 | |||||||||
Olive Branch (Memphis, TN), MS (Milwaukee Tool) | 0 | 0 | 0 | |||||||||
Roanoke, VA (FDX Ground) | 0 | 0 | 0 | |||||||||
Green Bay, WI | 0 | 0 | 0 | |||||||||
Stewartville (Rochester), MN | 4 | 0 | 0 | |||||||||
Tulsa, OK | 0 | 0 | 0 | |||||||||
Buckner (Louisville), KY | 0 | 0 | 40 | |||||||||
Edwardsville (Kansas City), KS (International Paper) | 0 | 0 | 0 | |||||||||
Altoona, PA | 4 | 14 | 0 | |||||||||
Spring (Houston), TX | 22 | 11 | 0 | |||||||||
Indianapolis, IN | 0 | 498 | 1,060 | |||||||||
Sauget (St. Louis, MO), IL | 0 | 0 | 0 | |||||||||
Lindale (Tyler), TX | 0 | 29 | 7 | |||||||||
Kansas City, MO | 23 | 329 | 51 | |||||||||
Frankfort (Lexington), KY | 0 | 0 | 0 | |||||||||
Jacksonville, FL (FDX Ground) | 91 | 4 | 86 | |||||||||
Monroe (Cincinnati), OH | 4,052 | 4,588 | 0 | |||||||||
Greenwood (Indianapolis), IN | 0 | 0 | 12 | |||||||||
Ft. Worth (Dallas), TX | 32 | 0 | 0 | |||||||||
Cincinnati, OH | 0 | 0 | 0 | |||||||||
Rockford, IL (Collins Aerospace Systems) | 0 | 0 | 0 | |||||||||
Concord (Charlotte), NC | 0 | 0 | 1,069 | |||||||||
Covington (New Orleans), LA | 16 | 0 | 0 | |||||||||
Imperial (Pittsburgh), PA | 14 | 0 | 0 | |||||||||
Burlington (Seattle/Everett), WA | 92 | 0 | 18 | |||||||||
Colorado Springs, CO | 0 | 820 | 0 | |||||||||
Louisville, KY | 0 | 0 | 0 | |||||||||
Davenport (Orlando), FL | 0 | 0 | 0 | |||||||||
Olathe (Kansas City), KS | 0 | 0 | 0 | |||||||||
Hamburg (Buffalo), NY | 244 | 0 | 34,850 | |||||||||
Ft. Myers, FL | 0 | 41 | 21,623 | |||||||||
Walker (Grand Rapids), MI | 0 | 0 | 31,655 | |||||||||
Mesquite (Dallas), TX | 0 | 0 | 49,880 | |||||||||
Aiken (Augusta, GA), SC | 0 | 0 | 21,040 | |||||||||
Homestead (Miami), FL | 38 | 0 | 37,873 | |||||||||
Oklahoma City, OK (Bunzl) | 0 | 0 | 8,728 | |||||||||
Concord (Charlotte), NC | 0 | 0 | 40,043 | |||||||||
Kenton, OH | 849 | 0 | 17,882 | |||||||||
Stow, OH | 0 | 0 | 18,935 | |||||||||
Charleston, SC (FDX) | 0 | 21,519 | 0 | |||||||||
Oklahoma City, OK (Amazon) | 0 | 29,879 | 0 |
154 |
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO SCHEDULE III, (CONT’D)
SEPTEMBER 30, 2019
(in thousands)
(1)Reconciliation (cont’d).
2019 | 2018 | 2017 | ||||||||||
Savannah, GA | $ | 0 | $ | 56,026 | $ | 0 | ||||||
Daytona Beach, FL | 35 | 29,973 | 0 | |||||||||
Mobile, AL | 0 | 33,052 | 0 | |||||||||
Charleston, SC (FDX Ground) | 0 | 46,576 | 0 | |||||||||
Braselton (Atlanta), GA | 0 | 60,227 | 0 | |||||||||
Trenton, NJ | 83,988 | 0 | 0 | |||||||||
Savannah, GA (FDX Ground) | 27,532 | 0 | 0 | |||||||||
Lafayette, IN | 25,079 | 0 | 0 | |||||||||
Shopping Center | ||||||||||||
Somerset, NJ | 18 | 39 | 0 | |||||||||
Total Additions | $ | 146,940 | $ | 287,662 | $ | 286,678 | ||||||
Total Disposals | 0 | 0 | (5,157 | ) | ||||||||
Balance – End of Year | $ | 1,866,518 | $ | 1,719,578 | $ | 1,431,916 |
155 |
SIGNATURES
Pursuant to the requirements of Section 13 of 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MONMOUTH REAL ESTATE INVESTMENT | ||
CORPORATION | ||
(registrant) | ||
Date: November | By: | /s/ Michael P. Landy |
Michael P. Landy, President, Chief Executive | ||
Officer and Director, its principal executive officer | ||
Date: November | By: | /s/ Kevin S. Miller |
Kevin S. Miller, Chief Financial Officer, its principal | ||
financial officer and principal accounting officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: November | By: | /s/ Eugene W. Landy |
Eugene W. Landy, Chairman of the Board and Director | ||
Date: November | By: | /s/ Michael P. Landy |
Michael P. Landy, President, Chief Executive Officer and Director | ||
Date: November | By: | /s/ |
Date: November | By: | /s/ Kiernan Conway |
Kiernan Conway, Director | ||
Date: November 25, 2019 | By: | /s/ Daniel D. Cronheim |
Daniel D. Cronheim, Director | ||
Date: November | By: | /s/ Catherine B. Elflein |
Catherine B. Elflein, Director | ||
Date: November | By: | /s/ Brian H. Haimm |
Brian H. Haimm, Director | ||
Date: November | By: | /s/ Neal Herstik |
Neal Herstik, Director | ||
Date: November | By: | /s/ Matthew I. Hirsch |
Matthew I. Hirsch, Director | ||
Date: November | By: | /s/ Samuel A. Landy |
Samuel A. Landy, Director | ||
Date: November | By: | /s/ Gregory T. Otto |
Gregory T. Otto, Director | ||
Date: November 25, 2019 | By: | /s/ Scott L. Robinson |
Scott L. Robinson, Director | ||
Date: November | By: | /s/ Stephen B. Wolgin |
Stephen B. Wolgin, Director |
156 |