SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported)
February 23, 2004
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland 0-4258 22-1897375
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
3499 Route 9N, Suite 3C, Freehold, NJ 07728
(Address of principal executive offices)
Registrant's telephone number, including area code(732) 577-9996
(Former name or former address, if changed since last report.)
Item 5. Other Events.
On February 23, 2004, Monmouth Real Estate Investment
Corporation (Registrant) purchased a 170,779 square foot
industrial building in Tampa, Florida, from Regional
Development Group, Inc. This industrial building is 100%
leased to FedEx Ground Package System, Inc., a subsidiary of
Federal Express Corporation, under a net lease for 15 years
(the FedEx lease). The purchase price was approximately
$17,700,000. Monmouth Real Estate Investment Corporation
paid cash of $400,000, borrowed approximately $4,500,000
against its security portfolio with Wachovia Securities and
obtained a mortgage of approximately $12,800,000. This
mortgage payable is at an interest rate of 6.0% and is due
2019. The property acquired is commercial rental property
and will continue to be used as such. Registrant will
account for this transaction as a purchase.
The following are the material factors to be considered
in assessing the property:
- Description of Property - The property acquired is
a 170,779 square foot industrial building located at 8411
Florida Mining Boulevard, Hillsborough County, Tampa,
Florida, on approximately 18 acres. The property includes
163,988 square feet of warehouse space and 6,791 square feet
of office space.
- Occupancy Rate and Number of Tenants -
Construction on the commercial rental property acquired was
completed in 2004. Commencing February 1, 2004, the
property was 100% occupied under a 15-year net lease
agreement with FedEx Ground Package System, Inc. This FedEx
lease agreement provides that operating expenses, including
property taxes, insurance, landscaping, utilities and
repairs in the ordinary course of business, be borne by the
tenant.
- Principal Business of Tenant - FedEx Ground
Package System, Inc. uses this property as a warehouse
facility. The Registrant believes that FedEx Ground Package
System, Inc. will continue to use this property as such.
- Principal Provisions of the FedEx Lease - The
following are the principal provisions of the FedEx lease:
Term Monthly Rent
2/01/04 - 1/31/19 $117,681
At the end of the lease term, the tenant has two (5)
year options. Base rent during the first option term shall
be $129,450 per month. Base rent during the second option
term shall be $135,922 per month.
The Seller assigned the lease to the Registrant.
Page 2
- Basis of Acquired Property for Depreciation - The
basis for depreciation is the purchase price of
the property. Approximately $12,700,000 of the
purchase price is attributable to building and
improvements, which will be depreciated over a 39 year
life on a straight-line basis (Modified Accelerated
Recovery System). The residual is attributable to land.
- Anticipated Capital Improvements - The Registrant
does not anticipate any significant capital improvements
during the term of the lease described above.
- Insurance Coverage - Insurance on the property is
the responsibility of the tenant.
Registrant knows of no other material factors relating
to the property acquired other than those discussed in this
Form 8-K.
The following is pro forma financial information. The
impact of the property acquired to the financial statements
of the Registrant is as follows:
ADJUSTMENTS TO STATEMENT OF INCOME
Rental and Occupancy Charges - Increase of
$1,412,000 based upon scheduled rent in accordance
with the FedEx lease terms.
Interest Expense - Increase of $892,000 based upon
a mortgage of $12,800,000 at 6.0% interest
with total monthly principal and interest
payments of $91,700, and a margin line increase
of $4,500,000, currently at 2.75%.
Depreciation Expense - Increase of $326,000 based
upon approximately 12,700,000 of the purchase
price being attributed to building and
improvements, and straight-line depreciation over
a 39 year life.
Net Income - Increase of $194,000 (rental and
occupancy charges less interest expense and
depreciation expense).
The effect of cash made available by operations
will be an increase of $520,000 (net income plus
depreciation).
Page 3
ADJUSTMENTS TO THE BALANCE SHEET AT DATE OF
PURCHASE
Land, Buildings, Improvements and Equipment -
Increase of $17,700,000, based on the purchase
price and closing costs.
Loans Payable - Increase of $4,500,000, the total
amount used on the margin line.
Mortgages Payable - Increase of $12,800,000, the
amount of the mortgage on the acquired property.
Cash - Decrease of $400,000, the cash paid on the
acquired property.
Registrant knows of no other financial statement
item which would be materially affected by the
acquired property.
Page 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
/s/ Anna T. Chew
ANNA T. CHEW
Chief Financial Officer
Date February 23, 2004