Monmouth Real Estate Reports Results For The Second Quarter Ended March 31, 2017
Monmouth Real Estate Reports Results For The Second Quarter Ended March 31, 2017
PR Newswire
FREEHOLD, N.J., May 3, 2017
FREEHOLD, N.J., May 3, 2017 /PRNewswire/ -- Monmouth Real Estate Investment Corporation (NYSE: MNR) reported Net Income Attributable to Common Shareholders of $4,843,000 or $0.07 per diluted share for the three months ended March 31, 2017 as compared to $4,980,000 or $0.08 per diluted share for the three months ended March 31, 2016, representing a decrease in Net Income Attributable to Common Shareholders per share of 13%. Core Funds from Operations (Core FFO) were $12,396,000 or $0.17 per diluted share for the three months ended March 31, 2017 as compared to $11,514,000 or $0.18 per diluted share for the three months ended March 31, 2016, representing a decrease in Core FFO per share of 6%. Adjusted Funds from Operations (AFFO), for the three months ended March 31, 2017 were $12,511,000 or $0.18 per diluted share versus $10,745,000 or $0.17 per diluted share for the three months ended March 31, 2016 representing an increase in AFFO per share of 6%.
A summary of significant financial information for the three and six months ended March 31, 2017 and 2016 is as follows:
|
Three Months Ended March 31, | ||||
|
2017 |
2016 | |||
|
Rental Revenue |
$ |
23,611,000 |
$ |
19,611,000 |
|
Reimbursement Revenue |
$ |
3,697,000 |
$ |
3,356,000 |
|
Net Operating Income (NOI) (1) |
$ |
23,168,000 |
$ |
19,188,000 |
|
Total Expenses |
$ |
13,785,000 |
$ |
12,538,000 |
|
Dividend and Interest Income |
$ |
1,439,000 |
$ |
1,380,000 |
|
Gain on Sale of Securities Transactions, net |
$ |
-0- |
$ |
879,000 |
|
Net Income |
$ |
8,425,000 |
$ |
7,132,000 |
|
Net Income Attributable to Common Shareholders |
$ |
4,843,000 |
$ |
4,980,000 |
|
Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.07 |
$ |
0.08 |
|
Core FFO (1) |
$ |
12,396,000 |
$ |
11,514,000 |
|
Core FFO per Diluted Common Share (1) |
$ |
0.17 |
$ |
0.18 |
|
AFFO (1) |
$ |
12,511,000 |
$ |
10,745,000 |
|
AFFO per Diluted Common Share (1) |
$ |
0.18 |
$ |
0.17 |
|
Dividends Declared per Common Share |
$ |
0.16 |
$ |
0.16 |
|
Weighted Avg. Diluted Common Shares Outstanding |
71,407,000 |
64,736,000 | ||
|
Six Months Ended March 31, | ||||
|
2017 |
2016 | |||
|
Rental Revenue |
$ |
46,892,000 |
$ |
38,676,000 |
|
Reimbursement Revenue |
$ |
7,598,000 |
$ |
6,550,000 |
|
Net Operating Income (NOI) (1) |
$ |
46,148,000 |
$ |
37,844,000 |
|
Total Expenses |
$ |
27,048,000 |
$ |
23,705,000 |
|
Dividend and Interest Income |
$ |
2,731,000 |
$ |
2,564,000 |
|
Gain on Sale of Securities Transactions, net |
$ |
806,000 |
$ |
887,000 |
|
Net Income |
$ |
18,279,000 |
$ |
14,071,000 |
|
Net Income Attributable to Common Shareholders |
$ |
10,999,000 |
$ |
9,767,000 |
|
Net Income Attributable to Common Shareholders Per Diluted Common Share |
$ |
0.16 |
$ |
0.15 |
|
Core FFO (1) |
$ |
26,253,000 |
$ |
22,526,000 |
|
Core FFO per Diluted Common Share (1) |
$ |
0.37 |
$ |
0.35 |
|
AFFO (1) |
$ |
25,450,000 |
$ |
21,470,000 |
|
AFFO per Diluted Common Share (1) |
$ |
0.36 |
$ |
0.34 |
|
Dividends Declared per Common Share |
$ |
0.32 |
$ |
0.32 |
|
Weighted Avg. Diluted Common Shares Outstanding |
70,608,000 |
63,828,000 | ||
A summary of significant balance sheet information as of March 31, 2017 and September 30, 2016 is as follows:
|
March 31, 2017 |
September 30, 2016 | |||
|
Net Real Estate Investments |
$ |
1,062,259,000 |
$ |
1,022,483,000 |
|
Securities Available for Sale at Fair Value |
$ |
99,405,000 |
$ |
73,605,000 |
|
Total Assets |
$ |
1,220,220,000 |
$ |
1,223,486,000 |
|
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs |
$ |
477,598,000 |
$ |
477,476,000 |
|
Loans Payable |
$ |
26,000,000 |
$ |
80,791,000 |
|
Total Shareholders' Equity |
$ |
699,305,000 |
$ |
597,858,000 |
Michael P. Landy, President and CEO, commented on the results for the second quarter of fiscal 2017,
"Monmouth continues to make substantial progress. While Net Income Attributable to Common Shareholders per diluted share, (which includes depreciation expense), decreased 13% for the quarter, our AFFO per diluted share, (which does not include depreciation expense), increased to $0.18, representing a 6% increase over the prior year period. We had additional preferred dividend costs this quarter as the result of our recent follow-on offering. As the proceeds from this recent offering are fully put to work we expect our income to offset these costs. Additionally, our solid financial performance continued with the following achievements over the quarter:
- Increased our Gross Revenue by 18% from $24.3 million in the prior year period to $28.7 million in the current quarter,
- Increased our Net Operating Income by 21% from $19.2 million in the prior year period to $23.2 million in the current quarter, and
- Increased our Same Property Cash NOI 1.7% over the prior year period."
"Our property portfolio continued to deliver strong results as evidenced by the following accomplishments:
- Maintained our occupancy rate at 100%, representing a 40 basis point increase over the prior year period,
- Increased our weighted average lease maturity by 6%, from 7.0 years in the prior year period to 7.4 years at the end of the current quarter, and
- Renewed eight of the thirteen leases scheduled to expire in Fiscal 2017, comprising 1.2 million square feet of the total 1.5 million square feet coming due. The 80% tenant retention rate achieved thus far results in a weighted average lease term of 6.4 years. These eight lease renewals result in a 1.1% decrease in GAAP rents. Of the remaining five leases scheduled to expire this fiscal year, one lease was renewed on a short-term basis, and the tenant for one lease did not renew but is currently leasing our space on a month-to-month basis. The remaining three leases are currently under discussion."
"Our balance sheet strength was further enhanced during the quarter as the result of the following:
- Repaid seven mortgages totaling $19.8 million with interest rates ranging from 5.25% to 7.36%, unencumbering seven properties with total NOI of approximately $5 million,
- Reduced our Net Debt to Total Market Capitalization to 26.7% from 35.3%,
- Reduced our Net Debt to Adjusted EBITDA to 5.3x as of the current quarter from 6.7x as of the prior year quarter,
- Reduced the weighted average interest rate on our fixed rate debt to 4.37% as of the current quarter end from 4.61% as of the prior year quarter end,
- Extended the weighted average debt maturity on our fixed rate debt by 15% to 10.7 years as of the current quarter end from 9.3 years as of the prior year quarter end, and
- On March 9, 2017, issued an additional 3,000,000 shares of our 6.125% Series C Preferred Stock, at a public offering price of $24.50 per share resulting in a 6.25% yield. We intend to use a portion of the $71.0 million in net proceeds from this offering to redeem all of the outstanding shares of our 7.875% Series B Preferred Stock with a par value of $57.5 million. This 163 basis point reduction will result in over $900,000 in annual preferred dividend savings."
"Our consistent record of qualitative growth is poised to continue as the result of the following:
- Subsequent to quarter end, we acquired a brand new Class A built-to-suit property with 343,000 square feet for a cost of $32.1 million, leased for 15 years to FedEx Ground. This facility will generate $2.1 million in annualized rental revenue.
- In addition, our acquisition pipeline grew over the quarter to eight brand new Class A build-to-suit properties, representing 2 million square feet, for a total purchase price of approximately $219.2 million.
- We have increased our gross leaseable area (GLA) by 16% over the prior year period to 16.9 million square feet currently. Our GLA is expected to grow to 18.9 million square feet upon completion of our acquisition pipeline."
Mr. Landy further stated, "As the result of an excellent business model and strong execution by the entire team, considerable progress continues to be made here at Monmouth. Our long-term results and our current 100% occupancy rate reflect the high-quality income streams that our assets generate. Management continues to capitalize on this protracted period of low interest rates by extending our debt maturities and by reducing our cost of capital throughout our capital structure. We have thoughtfully grown our asset base with a focus on housing the digital economy and an understanding of consumer spending and how it continues to evolve. Our Company is very well capitalized to continue building upon the substantial growth that we have achieved to date."
Monmouth Real Estate Investment Corporation will host its Second Quarter FY 2017 Financial Results Webcast and Conference Call on Thursday, May 4, 2017 at 10:00 a.m. Eastern Time. Senior management will discuss the results, current market conditions and future outlook.
The Company's Second Quarter FY 2017 financial results being released herein will be available on the Company's website at www.mreic.reit in the Investor Relations section, under Filings and Reports.
To participate in the Webcast, select the 2Q2017 Webcast and Earnings Call "Link to Webcast" on the homepage of the Company's website at www.mreic.reit, in the Highlights section, which is located towards the bottom of the homepage. Interested parties can also participate via conference call by calling toll free 877-510-5852 (domestically) or 412-902-4138 (internationally).
The replay of the conference call will be available at 12:00 p.m. Eastern Time on Thursday, May 4, 2017. It will be available until August 1, 2017, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10102329. A transcript of the call and the webcast replay will be available at the Company's website on the Investor Relations homepage, www.mreic.reit.
Monmouth Real Estate Investment Corporation, founded in 1968, is one of the oldest public equity REITs in the U.S. The Company specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 101 properties containing a total of approximately 16.9 million rentable square feet, geographically diversified across 30 states. In addition, the Company owns a portfolio of REIT securities.
Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company's current expectations and involve various risks and uncertainties. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can provide no assurance those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company's annual report on Form 10-K and described from time to time in the Company's other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
|
Notes: |
|
|
(1) |
Non-U.S. GAAP Information: FFO, as defined by The National Association of Real Estate Investment Trusts (NAREIT), to be equal to net income applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by 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. We define Core FFO as FFO plus acquisition costs. We define AFFO as Core FFO excluding lease termination income, gains or losses on securities transactions, stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, non-recurring other expense, the effect of non-cash U.S. GAAP straight-line rent adjustments and less recurring capital expenditures. We define recurring capital expenditures as all capital expenditures, excluding capital expenditures related to expansions at our current locations or capital expenditures that are incurred in conjunction with obtaining a new lease or a lease renewal. We define NOI from property operations as net income attributable to common shareholders, as defined by U.S. GAAP, plus preferred dividends, general & administrative expenses, acquisitions costs, depreciation, amortization of capitalized lease costs & intangible assets and interest expense, including amortization of financing costs, less dividend and interest income and gain on sale of securities transactions. The components of NOI consists of recurring rental and reimbursement revenue, less real estate taxes and operating expenses, such as insurance, utilities, and repairs and maintenance and other expenses. Adjusted EBITDA is calculated as net income attributable to common shareholders, as defined by U.S. GAAP, plus preferred dividends; depreciation and amortization; interest expense, including amortization of financing costs; acquisition costs; net amortization of acquired above and below market lease revenue and loss on sale of real estate investment, less gain on sale of securities transactions. FFO, Core FFO and AFFO per diluted common share are defined as FFO, Core FFO and AFFO divided by weighted average diluted common shares outstanding. FFO, Core FFO and AFFO per diluted common share, as well as NOI and Adjusted EBITDA, should be considered as supplemental measures of operating performance used by real estate investment trusts (REITs). FFO, Core FFO and AFFO per diluted common share exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have different cost basis. However, other REITs may use different methodologies to calculate FFO, Core FFO and AFFO per diluted share and, accordingly, our FFO, Core FFO and AFFO per diluted share may not be comparable to all other REITs. The items excluded from FFO, Core FFO and AFFO per diluted common share are significant components in understanding the Company's financial performance. |
FFO, Core FFO and AFFO per diluted common share (A) do not represent cash flow from operations as defined by accounting principles generally accepted in the United States of America; (B) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (C) are not alternatives to cash flow as a measure of liquidity. FFO, Core FFO and AFFO per diluted common share, as well as NOI, as calculated by the Company, may not be comparable to similarly titled measures reported by other REITs.
The following is a reconciliation of the Company's U.S. GAAP Net Income to the Company's FFO, Core FFO and AFFO for the three and six months ended March 31, 2017 and 2016:
|
Three Months Ended |
Six Months Ended | ||||||
|
3/31/2017 |
3/31/2016 |
3/31/2017 |
3/31/2016 | ||||
|
Net Income Attributable to Common Shareholders |
$4,843,000 |
$4,980,000 |
$10,999,000 |
$9,767,000 | |||
|
Plus: Depreciation Expense (excluding Corporate Office Tenant Improvements) |
7,100,000 |
5,757,000 |
14,054,000 |
11,324,000 | |||
|
Plus: Amortization of Intangible Assets |
241,000 |
320,000 |
509,000 |
643,000 | |||
|
Plus: Amortization of Capitalized Lease Costs |
212,000 |
192,000 |
417,000 |
381,000 | |||
|
Plus: Loss on Sale of Real Estate Investment |
-0- |
-0- |
95,000 |
-0- | |||
|
FFO Attributable to Common Shareholders |
12,396,000 |
11,249,000 |
26,074,000 |
22,115,000 | |||
|
Plus: Acquisition Costs |
-0- |
265,000 |
179,000 |
411,000 | |||
|
Core FFO Attributable to Common Shareholders |
12,396,000 |
11,514,000 |
26,253,000 |
22,526,000 | |||
|
Plus: Stock Compensation Expense |
166,000 |
102,000 |
266,000 |
207,000 | |||
|
Plus: Depreciation of Corporate Office Tenant Improvements |
39,000 |
29,000 |
78,000 |
57,000 | |||
|
Plus: Amortization of Financing Costs |
385,000 |
239,000 |
666,000 |
473,000 | |||
|
Plus: Non-recurring other expense |
-0- |
400,000 |
-0- |
400,000 | |||
|
Less: Gain on Sale of Securities Transactions |
-0- |
(879,000) |
(806,000) |
(887,000) | |||
|
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment |
(287,000) |
(512,000) |
(630,000) |
(822,000) | |||
|
Less: Recurring Capital Expenditures |
(188,000) |
(148,000) |
(377,000) |
(484,000) | |||
|
AFFO Attributable to Common Shareholders |
$12,511,000 |
$10,745,000 |
$25,450,000 |
$21,470,000 | |||
The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the six months ended March 31, 2017 and 2016:
|
Six Months Ended | |||
|
3/31/2017 |
3/31/2016 | ||
|
Operating Activities |
$30,846,000 |
$28,428,000 | |
|
Investing Activities |
(79,130,000) |
(86,279,000) | |
|
Financing Activities |
(24,513,000) |
55,711,000 | |
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SOURCE Monmouth Real Estate Investment Corporation
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