UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Registrant’s telephone number, including area code(732) 577-9996

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities 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. Yes [X] [X]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 (sec. 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).

Yes [X] [X]No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

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. Yes [  ] No [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

Indicate the numberNumber of shares outstanding of eachthe issuer’s class of common stock, $0.01 par value per share, as of the latest practicable date:February 1, 2018: 77,692,113

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

AND SUBSIDIARIES

FOR THE QUARTER ENDED MARCHDECEMBER 31, 2017

C O N T E N T S

PART I:
FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCHDECEMBER 31, 2017 AND SEPTEMBER 30, 20162017

See Accompanying Notes to the Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – CONTINUED

AS OF MARCHDECEMBER 31, 2017 AND SEPTEMBER 30, 20162017

See Accompanying Notes to the Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCHDECEMBER 31, 2017 AND 2016

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCHDECEMBER 31, 2017 AND 2016 - CONTINUED

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCHDECEMBER 31, 2017 AND 2016

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIXTHREE MONTHS ENDED MARCHDECEMBER 31, 2017 AND 2016

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCHDECEMBER 31, 2017

NOTE 1 – ORGANIZATION AND ACCOUNTING POLICIES

Monmouth Real Estate Investment Corporation, a Maryland corporation, together with its consolidated subsidiaries (MREIC, the Company, or we), operates as a real estate investment trust (REIT) deriving its income primarily from real estate rental operations. As of MarchDecember 31, 2017, the Company owned one hundred108 properties with total square footage of approximately 16,554,000,19,096,000, which was 100%99.5% occupied, as compared to ninety-nine108 properties with total square footage of approximately 16,010,000,18,790,000, which was 99.6%99.3% occupied as of September 30, 2016.2017. 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. As of the quarter ended December 31, 2017, the Company’s weighted average lease maturity was approximately 7.9 years and its annualized average base rent per occupied square foot was $5.99. As of December 31, 2017, the weighted average building age, based on the square footage of the Company’s buildings, was 9.1 years. The Company also 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). Total gross real estate investments, excluding marketable REIT securities investments of $130,431,475, were $1,484,039,198 as of December 31, 2017.

The Company has elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the Code), and intends to maintain its qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Company will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that it distributes to its shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. The Company is subject to franchise taxes in several of the states in which the Company owns property.

In December 2017, the Tax Cuts and Jobs Act of 2017 (the Act), 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 Act, subject to certain income limitations, an individual taxpayer 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.

The interim Consolidated Financial Statements furnished herein have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP) applicable to interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended MarchDecember 31, 2017 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017.2018. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2016.2017.

Use of Estimates

In preparing the financial statements in accordance with U.S. GAAP, management is 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 and related disclosure of contingent assets and liabilities. Actual results could differ from these estimates and assumptions.

Reclassification

Certain prior period amounts in the accompanying Consolidated Financial Statements have been reclassified to conform to the current period’s presentation.

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.

Two leases that were set to expire during fiscal 2018 were leased to Kellogg Sales Company (Kellogg) at the Company’s 65,067 square foot facility located in Kansas City, MO through July 31, 2018 and at the Company’s 50,400 square foot facility located in Orangeburg, NY through February 28, 2018. Kellogg informed the Company that it will not be renewing its leases at these two properties. On December 18, 2017, the Company sold its property, located in Kansas City, MO for $4,900,000, with net sale proceeds to the Company of approximately $4,602,000 and on December 22, 2017, the Company sold its property, located in Orangeburg, NY for $6,170,000, with net sale proceeds to the Company of approximately $5,898,000. The sale of these two properties resulted in a realized gain of approximately $5,388,000, representing a 105% gain over the depreciated U.S. GAAP basis and a realized net gain on a historic cost undepreciated basis of approximately $1,804,000, representing a 21% net gain over the Company’s historic cost basis. In conjunction with the sale of these two properties, the Company simultaneously entered into a lease termination agreement for each property whereby the Company received a termination fee from Kellogg totaling approximately $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.

Of the Company’s one hundred108 properties, only fourfive locations have leases that contain an early termination provision. The Company’s leases with early termination provisions are the 26,340 square foot location in Ridgeland (Jackson), MS, the 38,33336,270 square feet location in Urbandale (Des Moines), IA, the 38,833 square foot location in Rockford, IL, the 83,000 square foot location in Roanoke, VA and the 102,135 square foot location in O’Fallon (St. Louis), MO. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include;include: date termination can be exercised, the time frame that notice must be given by the tenant to the Company and the termination fee that would be required to be paid by the tenant to the Company. The total potential termination fee ofto be paid to the fourCompany from the five leases with a termination provisionprovisions amounts to approximately $1,709,000.$1,756,000.

Stock Compensation Plan

The Company’s Stock Option and Stock Award Plan, adopted in 2007 and amended and restated in 2010 (the 2007 Plan), authorized the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock, $0.01 par value per share (common stock), including up to 100,000 shares of restricted stock awarded to any one participant in any one fiscal year. The 2007 Plan expired on March 26, 2017. On March 13, 2017, upon recommendation of the Compensation Committee of the Board, the Board approved the Amended and Restated 2007 Incentive Award Plan, or the “Plan”, conditioned upon shareholder approval. At the Company’s Annual Meeting on May 18, 2017, the Company’s common shareholders will be asked to consider and vote on a proposal to approve the Plan. The Plan constitutes an amendment and restatement of the 2007 Plan, which was initially approved by the Company’s shareholders on July 26, 2007, and was subsequently amended and restated and approved by the Company’s shareholders on May 6, 2010. 164,878 shares of common stock remained available for grant under the 2007 Plan and, if approved by the Company’s shareholders, the Plan will provide an additional 1,600,000 shares, for a total of 1,764,878 shares of common stock available for future grant of stock options, restricted stock, or other equity based awards, plus any shares subject to outstanding options that expire or are forfeited without being exercised.

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. The amortization of compensation costs for stock option grants and restricted stock are included in General and Administrative Expenses in the accompanying Consolidated Statements of Income and amounted to $166,190$130,763 and $101,968$100,155 for the three months ended March 31, 2017 and 2016, respectively and amounted to $266,345 and $206,928 for the six months ended MarchDecember 31, 2017 and 2016, respectively.

During the sixthree months ended MarchDecember 31, 2017, andno options were granted. During the three months ended December 31, 2016, the following stock options, which vest one year after grant date, were granted under the Company’s 2007 Plan:

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal year indicated:

The weighted-average fair value of options granted during the sixthree months ended MarchDecember 31, 2016 was $1.45 per option.

During the three months ended December 31, 2017 and 2016, was $1.4912,500 and $0.74 per option, respectively.

During the six months ended March 31, 2017 and 2016, no-0- shares of restricted stock were grantedgranted. During the three months ended December 31, 2017, two participants exercised options awarded under the Company’s 2007 Plan. During the six months ended March 31, 2016, five participants exercised optionsPlan to purchase an aggregate of 180,00020,000 shares of common stock at a weighted average exercise price of $7.84$14.24 per share for total proceeds of $1,412,050.$284,800. During the sixthree months ended MarchDecember 31, 2017,2016, no options were exercised. As of MarchDecember 31, 2017, a total of 164,8781,740,542 shares were available tofor grant as stock options, or as restricted stock, or other equity based awards, plus any shares subject to outstanding options that expire or are forfeited without being exercised, and there were outstanding options to purchase 735,000 shares under the 2007 Plan. The 2007 Plan expired on March 26, 2017.650,000 shares. The aggregate intrinsic value of options outstanding as of MarchDecember 31, 2017 was $2,196,300.$3,981,900.

Recent Accounting Pronouncements

In January 2017,February 2016, the Financial Accounting Standards Board (“FASB”)(FASB) issued Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. ASU 2017-01 seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, intangible assets and consolidation. The adoption of ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective dates. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements and the timing of adoption.

In August 2016, the FASB issued 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, the 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(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 evaluatingcontinuing to evaluate the potential impact this standard may have on the consolidated financial statements and the timing of adoption. The most significant changes for the Company related to lessor accounting under ASU 2016-02 include bifurcating its revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since the Company’s revenue is primarily derived from leasing activities from long-term net leases and since the Company currently does not capitalize indirect costs for leases, the Company believes it will continue to account for its leases and related leasing costs in substantially the same manner as it currently does once the adoption of the ASU 2016-02 becomes effective.

In January 2016, the FASB issued 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 become effective for the Company’s fiscal year beginning October 1, 2018. The Company is currently in the process of evaluating the impact of the adoption on its 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. The Company anticipates that the most significant change for the Company, once ASU 2016-01 is adopted, will be the accounting for the Company’s investments in marketable securities classified as available for sale, which are currently carried at fair value with 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, these marketable securities will continue to be measured at fair value, however the changes in net unrealized holding gains and losses will be recognized through net income.

In April 2015,May 2014, the FASB issued ASU 2015-03, “Interest - Imputation2014-09, “Revenue from Contracts with Customers, which requires an entity to recognize the amount of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 requires debt issuance costs relatedrevenue to a recognized debt liabilitywhich it expects to be presentedentitled for the transfer of promised goods or services to customers”. The FASB issued further guidance in the balance sheet as a direct deductionASU 2016-12, “Revenue from the carrying amountContracts 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 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes 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 debt liability. In August 2015,Effective Date”. The new standard is effective for the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (Subtopic 835-30), which clarified that debt issuance costs relatedfirst interim period within annual reporting periods beginning after December 15, 2017. Therefore, the Company expects to line-of-credit arrangements may be presented as an asset and amortized overadopt the term of the line-of-credit arrangement regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted these standardsstandard effective October 1, 2016. As a result, debt issuance costs2018. The standard permits the use of either the retrospective or cumulative effect transition method, and the Company is evaluating which transition method it will elect. The Company is also in the process of evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company’s revenue is primarily derived from leasing activities and historically the Company’s property dispositions have been cash sales with no contingencies and no future involvement in the property. Since this standard applies to debt liabilitiesall contracts with customers except those that are within the scope of other guidance, such as leases, the Company does not line-of-credit arrangements are included as a direct deduction fromexpect the related debt liability and those related to line-of-credit arrangements continue to be included as an asset on the accompanying Consolidated Balance Sheets. The effectsadoption of this standard were applied retrospectively to all prior periods presented. The effect of the change in accounting principle was the reduction in the amount of $6,272,143 of the Fixed Rate Mortgage Notes Payable liabilityhave a significant impact on its consolidated financial statements and a corresponding reduction of the Financing Costs asset as of September 30, 2016 and a reclassification of Amortization of Financing Costs of $238,671 and $473,038 for the three and six months ended March 31, 2016, respectively to Interest Expense, net of Amortization of Financing Costs in our Consolidated Statement of Income.related disclosures.

Management does 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.

Segment Reporting & Financial Information

The Company’s primary business is the ownership and management of real estate properties. The Company seeks to investinvests in well-located, modern, single-tenant,single tenant, industrial buildings leased primarily to investment gradeinvestment-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”)(NOI) from property operations. NOI is defineda 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. 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 gradeinvestment-grade tenants or their subsidiaries.

NOTE 2 – NET INCOME PER SHARE

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 211,382 and 143,640 shares are included in the diluted weighted-average shares outstanding for the three months ended December 31, 2017 and 2016, respectively. For the diluted weighted-average shares outstanding for the three months ended December 31, 2017 and 2016, -0- and 215,000 options to purchase shares of common stock were antidilutive.

In addition, common stock equivalents of 163,494 and 79,411 shares are included in the diluted weighted average shares outstanding for the three months ended March 31, 2017 and 2016, respectively, and common stock equivalents of 151,544 and 71,223 shares are included in the diluted weighted average shares outstanding for the six months ended March 31, 2017 and 2016, respectively. For the diluted weighted average shares outstanding for the three months ended March 31, 2017 and 2016, 65,000 options to purchase shares of common stock were antidilutive. For the diluted weighted average shares outstanding for the six months ended March 31, 2017 and 2016, 280,000 and 65,000 options to purchase shares of common stock, respectively, were antidilutive.

NOTE 3 – REAL ESTATE INVESTMENTS

Acquisitions

On October 17, 2016,November 2, 2017, the Company purchased a newly constructed 338,584121,683 square foot industrial building, situated on 16.2 acres, located in Hamburg, NY, which is in the Buffalo Metropolitan Statistical Area (MSA).Charleston, SC. The building is 100% net-leased to FedEx Ground Package System, Inc.Corporation (FDX) for fifteen15 years through March 2031.August 2032. The purchase price was $35,100,000.$21,872,170. The Company obtained a 15 year fully-amortizing mortgage loan of $23,500,000$14,200,000 at a fixed interest rate of 4.03%4.23%. Annual rental revenue over the remaining term of the lease averages approximately $2,309,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $250,000 to an Intangible Asset associated with the lease in-place.$1,312,000.

On DecemberNovember 30, 2016,2017, the Company purchased a newly constructed 213,672300,000 square foot industrial building, situated on 123 acres, located in Ft. Myers, FL.Oklahoma City, OK. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for ten10 years through September 2026.October 2027. The purchase price was $21,001,538.$30,250,000. The Company obtained a 1510 year fully-amortizing mortgage loan, amortizing over 18 years, of $14,500,000$19,600,000 at a fixed interest rate of 3.97%3.64%. Annual rental revenue over the remaining term of the lease averages approximately $1,365,000. In connection with$1,884,000.

The Company evaluated the acquisition,property acquisitions which took place during the three months ended December 31, 2017, 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, the Company completed its evaluationaccounted for the properties purchased in Charleston, SC and Oklahoma City, OK as asset acquisitions and allocated the total cash consideration, including transaction costs of approximately $378,000, to the individual assets acquired on a relative fair value basis. There were no liabilities assumed in these acquisitions. The financial information set forth below summarizes the Company’s purchase price allocation for these two properties acquired during the three months ended December 31, 2017 that are accounted for as asset acquisitions:

The following table summarizes the operating results included in the Company’s consolidated statements of income for the three months ended December 31, 2017 for the properties acquired during the three months ended December 31, 2017:

Subsequent to quarter end, on January 22, 2018, the Company purchased a newly constructed 831,764 square foot industrial building, situated on 62.4 acres, located in Savannah, GA. The building is 100% net-leased to Shaw Industries, Inc. for 10 years through September 2027. The purchase price was $57,483,636. The Company obtained a 14 year fully-amortizing mortgage loan of $33,300,000 at a fixed interest rate of 3.53%. Annual rental revenue over the remaining term of the acquired lease. As a result of its evaluation, the Company allocated $201,538 to an Intangible Asset associated with the lease in-place.averages approximately $3,470,000.

FedEx Ground Package System,FDX, Amazon.com Services, Inc.’s ultimate parent, FedEx Corporation (FDX) is aAmazon.com, Inc. and Shaw Industries, Inc.’s ultimate parent, Berkshire Hathaway, Inc. are publicly-owned companycompanies and financial information related to this entitythese entities 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. www.sec.gov. The references in this report to the SEC’s website, S&P Global Rating’s website and Moody’s website are not intended to and do not include or incorporate by reference into this report the information of FDX on suchthose websites.

Expansions

On OctoberNovember 1, 2016,2017, a 50,625 square footparking lot expansion of the buildingfor a property leased to FedEx Ground Package System, Inc., a subsidiary of FDX, located in Edinburg, TXIndianapolis, IN was completed for a total project cost of approximately $4,762,000,$1,683,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026.April 2024 to October 2027. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000$184,000 from approximately $598,000,$1,533,000, or $5.27$4.67 per square foot, to approximately $1,097,000,$1,717,000, or $6.68$5.24 per square foot.

Disposition and Real Estate classified as Held for Sale

DispositionTwo leases that were set to expire during fiscal 2018 were leased to Kellogg at our 65,067 square foot facility located in Kansas City, MO through July 31, 2018 and at our 50,400 square foot facility located in Orangeburg, NY through February 28, 2018. Kellogg informed the Company that they will not be renewing their leases at these two properties. On December 18, 2017, the Company sold its property, located in Kansas City, MO for $4,900,000, with net sale proceeds to the Company of approximately $4,602,000 and on December 22, 2017, the Company sold its property, located in Orangeburg, NY for $6,170,000, with net sale proceeds to the Company of approximately $5,898,000. The sale of these two properties resulted in a realized gain of approximately $5,388,000, representing a 105% gain over the depreciated U.S. GAAP basis and a realized net gain on a historic cost undepreciated basis of approximately $1,804,000, representing a 21% net gain over the Company’s historic cost basis. In conjunction with the sale of these two properties, the Company simultaneously entered into a lease termination agreement for each property whereby the Company received a termination fee from Kellogg totaling approximately $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.

OnReal Estate Held for Sale at December 31, 2017 consists of two properties that the Company has entered into agreements to sell. The two properties consist of an 87,500 square foot facility located in Ft. Myers, FL, which is currently vacant and an 68,370 square foot facility located in Colorado Springs, CO.

During the prior year quarter, 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 net proceeds of approximately $4,126,000.

Since the sale of this property doesthe properties located in White Bear Lake, MN, Kansas City, MO and Orangeburg, NY and the future sale of the two properties classified as Real Estate Held for Sale do not represent a strategic shift that has (or will have) a major effect on the Company’s operations and financial results, the operations generated from this propertythese properties are not included in Discontinued Operations.

The following table summarizes the operations of the Company’s 59,425 square foot industrial building located in White Bear Lake, MN prior to its sale on October 27, 2016 which isthat are included in the accompanying Consolidated Statements of Income for the three and six months ended MarchDecember 31, 2017 and 2016:2016 for the two properties that were sold during the current quarter, prior to their sale, one property sold during the prior year quarter, prior to its sale, and for the two properties that are classified as Real Estate Held for Sale in the accompanying Consolidated Balance Sheets.

Pro forma information

The following unaudited pro forma condensed financial information has been prepared utilizing the historical financial statements of the Company and the effect of additional revenue and expenses generated from property acquired and expanded during fiscal 20172018 to date, and 2016,during fiscal 2017, assuming that the acquisitions and completed expansions had occurred as of October 1, 2015,2016, 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. In addition, the net proceeds raised from the issuance of the 6.125% Series C Cumulative Redeemable Preferred Stock less the redemptions of the Company’s 7.625% Series A Cumulative Redeemable Preferred Stock redeemed on October 14, 2016 and the Company’s 7.875% Series B Cumulative Redeemable Preferred Stock redeemed on June 7, 2017 were used to help fund property acquisitions and, therefore, the pro forma preferred dividend expense has been adjusted to account for its effect on Net Income Attributable to Common Shareholders as if all the preferred stock issuances and redemptions had occurred on October 1, 2016. In addition, Net Income Attributable to Common Shareholders excludes the operating expenses incurredoperations of the properties sold during fiscal 2018 and 2017 and 2016 forwhich were the one vacant property located in White Bear Lake, MN that was sold during the six months ended March 31, 2017 on October 27, 2016.2016, the property located in Kansas City, MO that was sold on December 18, 2017 and the property located in Orangeburg, NY that was sold on December 22, 2017 and excludes the two properties classified as Real Estate Held for Sale. Furthermore, the proceeds raised from the 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 Basic and Diluted Net Income per Share Attributable to Common Shareholders has been adjusted to account for the increase in shares raised through the DRIP, as if all the shares raised had occurred on October 1, 2015.2016. 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.

Tenant Concentration

The Company has a concentration of FDX and FDX subsidiary-leased properties, consisting of fifty-five59 separate stand-alone leases covering approximately 9,513,000 square feet as of December 31, 2017 and 55 separate stand-alone leases covering approximately 8,187,000 square feet as of March 31, 2017 and forty-nine separate stand-alone leases covering approximately 6,508,000 square feet as of MarchDecember 31, 2016. The fifty-five59 separate stand-alone leases that are leased to FDX and FDX subsidiaries have a weighted average lease maturity of 7.88.7 years. The percentage of FDX and its subsidiaries leased square footage to the total of the Company’s rental space was 50% (8% to FDX and 42% to FDX subsidiaries) as of December 31, 2017 and 49% (6% to FDX and 43% to FDX subsidiaries) as of March 31, 2017 and 45% (7% to FDX and 38% to FDX subsidiaries) as of MarchDecember 31, 2016. As of MarchDecember 31, 2017, the only tenants that leased 5% or more of the Company’s total square footage were FDX and its subsidiaries and Milwaukee Electric Tool Corporation, which leases one property through July 2028 consisting of approximately 862,000 square feet, which was approximately 5% of the Company’s rental space. As of MarchDecember 31, 2016,2017, no other tenant,tenants, other than FDX and its subsidiaries and Milwaukee Electric Tool Corporation, accounted for 5% or more of the Company’s total rental space.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 60% (7% to FDX and 53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2018 and was 59% (6% to FDX and 53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2017 and was 56% (7% to2017. No other tenant, other than FDX and 49% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2016. No other tenantits subsidiaries, accounted for 5% or more of the Company’s total Rental and Reimbursement Revenue for the sixthree months ended MarchDecember 31, 2017 and 2016.

FDX is a publicly-owned company and financial information related to this 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 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, S&P Global Ratings or Moody’s on such websites.

In addition to real estate property holdings, the Company held $99,405,410$130,431,475 in marketable REIT securities at MarchDecember 31, 2017, representing 7.2%7.8% 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. The securities portfolio provides the Company with additional liquidity, diversification and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available.

NOTE 4 – SECURITIES AVAILABLE FOR SALE AT FAIR VALUE

The Company’s Securities Available for Sale at Fair Value consists primarily of marketable common and preferred stock of other REITs with a fair value of $99,405,410$130,431,475 as of MarchDecember 31, 2017. The Company generally limits its investment in marketable securities to no more than approximately 10% of its undepreciated assets (which is the Company’s total assets excluding accumulated depreciation). The REIT securities portfolio provides the Company with additional liquidity, diversification and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available.

During the sixthree months ended MarchDecember 31, 2017, the Company sold or redeemed securities with a cost basis of $2,933,131$2,335,015 and recognized a Gain on Sale of Securities Transactions of $806,108.$100,153. In addition, the Company recognized dividend income on its investment in securities of $2,862,644 for the three months ended December 31, 2017. The Company also made purchases of $29,305,625$19,714,857 in Securities Available for Sale at Fair Value. Of this amount, the Company made total purchases of 113,68614,252 common shares of UMH Properties, Inc. (UMH), a related REIT, for a total cost of $1,526,915,$203,097, or a weighted average cost of $13.43$14.25 per share, of which 100,686 shares were purchased through UMH’s Dividend Reinvestment and Stock Purchase Plan. The Company owned a total of 1,103,0131,142,568 UMH common shares as of MarchDecember 31, 2017 at a total cost of $10,832,600$11,434,947 and a fair value of $16,776,822.$17,024,261. The Company owns 200,000 shares of UMH’s 8.25% Series A Cumulative Redeemable Preferred Stock at a total cost of $5,000,000 with a fair value of $5,178,000 and the Company owns 100,000 shares of UMH’s 8.00% Series B Cumulative Redeemable Preferred Stock at a total cost of $2,500,000 with a fair value of $2,678,130.$2,731,550. The unrealized gain on the Company’s investment in UMH’s common and preferred stock as of MarchDecember 31, 2017 was $6,300,352.$5,820,864.

As of MarchDecember 31, 2017, the Company had total net unrealized holding gainslosses on its securities portfolio of $12,370,289.$4,142,572. The Company considers many factors in determining whether a security is other than temporarily impaired, including the nature of the security and the cause, severity and duration of the impairment. The Company normally holds REIT securities long-term and has the ability and intent to hold these securities to recovery. The following is a summary of the securities that the Company has determined to be temporarily impaired as of MarchDecember 31, 2017:

The following is a summary of the range of losses:

NOTE 5 – DEBT

For the three months ended MarchDecember 31, 2017 and 2016, amortization of financing costs included in interest expense was $384,984$293,894 and $238,671, respectively. For the six months ended March 31, 2017 and 2016, amortization of financing costs included in interest expense was $665,897 and $473,038,$280,913, respectively.

The following is a summary of our Fixed Rate Mortgage Notes Payable as of MarchDecember 31, 2017 and September 30, 2016:2017:

(1) Weighted average interest rate excludes amortization of debt issuance costs.

As of MarchDecember 31, 2017, interest payable on these mortgages were at fixed rates ranging from 3.45% to 7.60%, with a weighted average interest rate of 4.37%4.16%. This compares to a weighted average interest rate of 4.48%4.18% as of September 30, 20162017 and 4.60%4.44% as of MarchDecember 31, 2016. As of MarchDecember 31, 2017, the weighted average loan maturity of the Fixed Rate Mortgage Notes Payable was 10.711.5 years. This compares to a weighted average loan maturity of the Fixed Rate Mortgage Notes Payable of 10.511.6 years as of September 30, 20162017 and 9.310.7 years as of MarchDecember 31, 2016.

In connection with the two properties acquired during the sixthree months ended MarchDecember 31, 2017, which are located in Hamburg (Buffalo), NYCharleston, SC and Ft. Myers, FLOklahoma City, OK (as described in Note 3), the Company obtained two, fifteenone 15 year, fully-amortizing mortgage loans.loan and one, 10 year loan, amortizing over 18 years. The two mortgage loans originally totaled $38,000,000$33,800,000 with an original weighted average mortgage loan maturity of 12.1 years and have a weighted average interest rate of 4.01%3.89%.

During the sixthree months ended MarchDecember 31, 2017, the Company fully repaid nineone mortgage loans associated with eight ofloan for its propertiesproperty located in Jacksonville, FL; El Paso, TX; Lebanon, OH; Halfmoon, NY; Bedford Heights, OH; Hanahan, SC; Elgin, IL and Kansas City, MO,Richfield, OH, totaling approximately $21,174,000.$2,633,000.

Subsequent to the quarter end, on May 1, 2017, the Company fully repaid three mortgage loans associated with three properties located in Chattanooga, TN; Roanoke, VA and Orion, MI, totaling approximately $12,014,000.

During the six months ended March 31, 2017, the Company fully repaid its two term loans totaling $4,768,266. One loan totaling $2,284,633 had an interest rate of 4.90% and one loan totaling $2,483,633 had a variable annual interest rate of prime plus 0.75% with a floor of 4.50%. The interest rate on the date this loan was fully repaid was 4.50%.

As of MarchDecember 31, 2017, Loans Payable represented the amount drawn down on the Company’s $200,000,000 unsecured line of credit facility (the “Facility”), maturingFacility) in the amount of $110,000,000.

The Facility matures in September 2020 with a one year extension at the Company’s option (subject to various conditions as specified in the loan agreement). During the sixthree months ended MarchDecember 31, 2017, the Company repaid $50,000,000 under the Facility and the Company did not make anyhad no additional draws under Facility. As of March 31, 2017, $26,000,000 was drawn down under the Facility. Availability under the 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 7.0% capitalization rate to the NOI generated by the Company’s unencumbered, wholly-owned industrial properties. Borrowings under the Facility, 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 MarchDecember 31, 2017, based on the Company’s leverage ratio as of MarchDecember 31, 2017, bear interest at LIBOR plus 170 basis points, which was at an interest rate of 2.68%3.06% as of MarchDecember 31, 2017. In addition, the Company has a $100,000,000 accordion feature, bringing the total potential availability under the Facility (subject to various conditions as specified in the loan agreement) up to $300,000,000.

The Company also invests in equity securities of other REITs which provides the Company with additional liquidity, diversification and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. The Company from time to time may purchase these securities on margin, at an interest rate of 2.0%, when the interest and dividend yields exceed the cost of funds. In general, the Company may borrow up to 50% of the value of the marketable securities, which was $130,431,475 as of December 31, 2017. As of December 31, 2017, there were no draws against the margin.

NOTE 6 – SHAREHOLDERS’ EQUITY

The Company’s authorized stock as of MarchDecember 31, 2017 consisted of 193,289,750192,039,750 shares of common stock, of which 72,107,64077,209,110 shares were issued and outstanding, 2,300,000 shares of 7.875% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share (Series B Preferred Stock), of which all were authorized, issued and outstanding, 8,850,00012,400,000 authorized shares of 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (Series(6.125% Series C Preferred Stock), of which 8,400,00010,879,379 were issued and outstanding, and 200,000,000 authorized shares of Excess Stock, $0.01 par value per share, of which none were issued or outstanding.

Common Stock

On October 1, 2015,2, 2017, the Company’s Board of Directors approved a 6.7%6.25% increase in the Company’s quarterly common stock dividend, raising it to $0.17 per share from $0.16 per share, from $0.15 per share. Thisrepresenting the Company’s second dividend increase in three years. The increased dividend represents an annualized dividend rate of $0.64$0.68 per share. The Company has maintained or increased its cash dividend for twenty-five26 consecutive years.

The Company raised $42,349,721$25,531,430 (including dividend reinvestments of $4,536,751)$2,919,972) from the issuance of 3,186,6681,546,089 shares of common stock under its Dividend Reinvestment and Stock Purchase Plan (DRIP)DRIP during the sixthree months ended MarchDecember 31, 2017. During the sixthree months ended MarchDecember 31, 2017, the Company paid $22,613,315$13,016,721 in total cash dividends, or $0.16$0.17 per share, to common shareholders, of which $4,536,751$2,919,972 was reinvested in the DRIP.

On April 4, 2017,January 16, 2018, the Company declared a dividend of $0.16$0.17 per share to be paid JuneMarch 15, 20172018 to common shareholders of record as of the close of business on MayFebruary 15, 2017.2018.

On January 17, 2017,16, 2018, the Board of Directors reaffirmed its Share Repurchase Program that authorizes the Company to purchase up to $10,000,000 in the aggregate of the Company’s common stock. The Company may repurchase its shares from time to time if, in the opinion of the Board of Directors, such acquisition is advantageous to the Company. No shares were repurchased during the sixthree months ended MarchDecember 31, 2017 and, as of MarchDecember 31, 2017, the Company does not own any of its own shares.

7.625%6.125% Series A Cumulative Redeemable Preferred Stock

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 Cumulative Redeemable Preferred Stock, $0.01 par value per share (7.625% Series A Preferred Stock). The Company redeemed all of the outstanding shares of 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.

7.875% Series BC Cumulative Redeemable Preferred Stock

During the sixthree months ended MarchDecember 31, 2017, the Company paid $2,264,065$4,080,685 in Preferred Dividends, or $0.984375$0.3828125 per share, on its outstanding 6.125% Series BC Preferred Stock.Stock for the period September 1, 2017 through November 30, 2017. As of December 31, 2017, the Company has accrued Preferred Dividends of $1,388,254 covering the period December 1, 2017 to December 31, 2017. Dividends on the 6.125% Series BC Preferred Stock are cumulative and payable quarterly at an annual rate of $1.96875$1.53125 per share. The 6.125% Series BC Preferred Stock has no maturity date and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to the Company’s qualification as a REIT, 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, atconnection with a change of control, 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, but not including, the date of redemption. As discussed below, the Company intends to use the proceeds from the issuance of the 3,000,000 additional shares of its 6.125% Series C Preferred Stock to redeem all of the 2,300,000 outstanding shares of its 7.875% Series B Preferred Stock. Once the 7.875% Series B Preferred Stock is called for redemption (which cannot occur less than 30 days nor more than 60 days prior to the redemption date), the Company will recognize a preferred share redemption charge of approximately $2,467,000 related to the original issuance costs. On April 4, 2017, the Company declared a dividend of $0.4921875 per share to be paid June 15, 2017 to Series B preferred shareholders of record as of the close of business on May 15, 2017.

6.125% Series C Cumulative Redeemable Preferred Stock

On March 9, 2017, the Company issued an additional 3,000,000 shares of its 6.125% Series C Preferred Stock, liquidation preference of $25.00 per share, at a public offering price of $24.50 per share, for gross proceeds of $73,500,000 before deducting the underwriting discount and offering expenses. Net proceeds from the offering, after deducting underwriting discounts and other offering expenses were approximately $71,017,000. As discussed above, the Company intends to use the net proceeds from this offering to redeem all of the outstanding shares of its 7.875% Series B Preferred Stock, which are not redeemable prior to June 7, 2017. The remaining proceeds were used to reduce the amount outstanding under the Company’s revolving credit facility and will be used to purchase properties and fund expansions of existing properties in the ordinary course of its business and for general corporate purposes. Prior to the issuance of the additional 3,000,000 shares of the 6.125% Series C Preferred Stock on March 9, 2017, the Company had 5,400,000 of Series C Preferred Stock shares issued and outstanding. As of March 31, 2017, 8,400,000 shares of the 6.125% Series C Preferred Stock were issued and outstanding.

During the six months ended March 31, 2017, the Company paid $3,858,754 in Preferred Dividends, or $0.714584 per share, on its outstanding Series C Preferred Stock for the period September 13, 2016 through February 28, 2017. Dividends on the Series C Preferred Stock are cumulative and payable quarterly at an annual rate of $1.53125 per share. The 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’s qualification as a REIT, the 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’s option, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. On April 4, 2017,January 16, 2018, the Company declared a dividend of $0.3828125 per share to be paid JuneMarch 15, 20172018 to the 6.125% Series C preferredPreferred shareholders of record as of the close of business on MayFebruary 15, 2017.2018.

On June 29, 2017, the Company entered into an At-The-Market Preferred Equity Program (Preferred Stock ATM Program) with FBR Capital Markets & Co. in which the Company may, from time to time, offer and sell additional shares of its 6.125% Series C Preferred Stock, with a liquidation preference of $25.00 per share, having an aggregate sales price of up to $100,000,000. The Company began selling shares through the Preferred Stock ATM Program on July 3, 2017. During the three months ended December 31, 2017, the Company sold 1,039,934 shares under its Preferred Stock ATM Program at a weighted average price of $25.13 per share, and generated net proceeds, after offering expenses, of approximately $25,688,000.

As of December 31, 2017, 10,879,379 shares of the 6.125% Series C Preferred Stock were issued and outstanding.

Subsequent to the quarter end, through January 24, 2018, the Company sold 145,997 shares under its Preferred Stock ATM Program at a weighted average price of $25.04 per share, and realized net proceeds, after offering expenses, of approximately $3,595,000.

NOTE 7 - FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including Securities Available for Sale at Fair Value. The Company’s financial assets consist mainly of marketable REIT securities. The fair value of these financial assets was determined using the following inputs at MarchDecember 31, 2017 and September 30, 2016:2017:

In addition to the Company’s investments in Securities Available for Sale at Fair Value, the Company is required to disclose certain information about fair values of its 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’s entire holdings of a particular financial instrument. For a portion of the Company’s 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). 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 yearend risk adjusted borrowing rate currently available to the Company for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. At MarchDecember 31, 2017, the Fixed Rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to approximately $493,348,000$624,966,000 and the carrying value amounted to $484,047,676. When the Company acquires a property, it is required to fair value all of the assets and liabilities, including intangible assets and liabilities, relating to the properties acquired lease (See Note 3).$620,411,537. Those fair value measurements are estimated based on independent third party appraisals and fall within level 3 of the fair value hierarchy.

NOTE 8 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the sixthree months ended MarchDecember 31, 2017 and 2016 was approximately $12,108,000$7,198,000 and $10,430,000,$5,882,000, respectively.

During the sixthree months ended MarchDecember 31, 2017 and 2016, the Company had dividend reinvestments of $4,536,751$2,919,972 and $4,174,782,$2,077,156, respectively, which required no cash transfers.

NOTE 9 – CONTINGENCIES AND COMMITMENTS

From time to time, the Company may be subject to claims and litigation in the ordinary course of business. Management does not believe that any such claim or litigation will have a material adverse effect on the Consolidated Balance Sheets or results of operations.

In addition to the property purchased subsequent to the quarter end, as described below in Note 10, the Company has entered into agreements to purchase eighttwo new build-to-suit, industrial buildings that are currently being developed in Florida North Carolina, Ohio, Oklahoma,and South Carolina, and Texas, totalingconsisting of approximately 1,998,000660,000 square feet, with net-leased terms ranging from seven to fifteenof 10 and 15 years resulting inwith a weighted average lease maturityterm of 13.312 years. The aggregate purchase price for the eightthese properties is approximately $219,158,000. Five of the eight purchase commitments consisting of approximately 1,353,000$78,018,000. Approximately 261,000 square feet, or 68%40%, areis leased to investment grade tenants or their subsidiaries. Approximately 1,054,000 square feet, or 53%, are leased to FDX and its subsidiaries.FedEx Ground Package System, Inc. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing these eight transactions during the remainder of fiscal 20172018 and the first halfquarter of fiscal 2018.2019. In connection with the eighttwo properties, the Company has entered into commitments to obtain eighttwo mortgage loans totaling approximately $143,534,000$49,360,000 at fixed rates ranging from 3.60% to 4.45%of 3.82% and 4.25%, with a weighted average interest rate of 3.89%3.99%. SevenBoth of these mortgage loans are 15 year, fully-amortizing loansloans.

The Company is under contract to sell two properties consisting of (i) an 87,500 square foot vacant building located in Ft. Myers, FL, for $6,400,000, which is approximately $2,400,000 above the Company’s U.S. GAAP net book carrying value and oneis anticipated to close during the second quarter of fiscal 2018 (ii) a 68,370 square foot building located in Colorado Springs, CO for $5,800,000, which is approximately the Company’s U.S. GAAP net book carrying value and is anticipated to close during the third quarter of fiscal 2018. The completion of these mortgage loans is a 12 year, fully-amortizing loan, resulting in a weighted average loan term of 14.9 years.two sales are subject to customary closing conditions and requirements.

NOTE 10 – SUBSEQUENT EVENTS

Material subsequent events have been evaluated and are disclosed herein.

On April 4, 2017,January 16, 2018, the Company declared a common dividend of $0.16$0.17 per share to be paid JuneMarch 15, 20172018 to common shareholders of record as of the close of business on MayFebruary 15, 2017.2018.

On April 4, 2017,January 16, 2018, the Company declared a dividend of $0.4921875 per share to be paid June 15, 2017 to Series B preferred shareholders of record as of the close of business on May 15, 2017.

On April 4, 2017, the Company declared a dividend of $0.3828125 per share to be paid JuneMarch 15, 20172018 to Series C preferred shareholders of record as of the close of business on MayFebruary 15, 2017.2018.

On April 5, 2017,January 22, 2018, the Company purchased a newly constructed 343,483831,764 square foot industrial building, situated on 62.4 acres, located in Walker, MI, which is located in the Grand Rapids MSA.Savannah, GA. The building is 100% net-leased to FedEx Ground Package System,Shaw Industries, Inc. and is guaranteed by Shaw Industries Group, Inc., a wholly owned subsidiary of Berkshire Hathaway, Inc. for fifteen10 years through January 2032.September 2027. The purchase price was $32,120,000.$57,483,636. The Company obtained a 1514 year fully-amortizing mortgage loan of $20,875,000$33,300,000 at a fixed interest rate of 3.86%3.53%. Annual rental revenue over the remaining term of the lease averages approximately $2,102,000.$3,470,000.

Subsequent to the quarter end, on May 1, 2017,through January 24, 2018, the Company fully repaid three mortgage loans associated with three properties located in Chattanooga, TN; Roanoke, VAsold 145,997 shares under its Preferred Stock ATM Program at a weighted average price of $25.04 per share, and Orion, MI, totalingrealized net proceeds, after offering expenses, of approximately $12,014,000.$3,595,000.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview and Recent Activity

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and notes thereto provided elsewhere herein and the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.2017.

The Company operates as a Real Estate Investment Trustreal estate investment trust (REIT). The Company seeks to invest in well-located, modern single-tenant industrial buildings leased primarily to investment grade tenants or their subsidiaries on long-term net leases. During the sixthree months ended MarchDecember 31, 2017, the Company purchased two net-leased industrial properties, located in Hamburg (Buffalo), NYCharleston, SC and Ft. Myers, FL,Oklahoma City, OK totaling approximately 552,000422,000 square feet, for approximately $56,102,000.$52,122,000. In connection with the two properties acquired during the sixthree months ended MarchDecember 31, 2017, the Company entered into two, fifteenone, 15 year, fully-amortizing mortgage loans.loan and one 10 year mortgage loan, amortizing over 18 years. The two mortgage loans originally totaled $38,000,000$33,800,000 with an original weighted average loan maturity of 12.1 years and have a weighted average interest rate of 4.01%3.89%. As of MarchDecember 31, 2017, the Company owned one hundred108 properties with total square footage of approximately 16,554,000.19,096,000. These properties are located in thirty30 states. As of the quarter ended MarchDecember 31, 2017, the Company’s weighted average lease maturity was approximately 7.47.9 years, its occupancy rate was 100%99.5% and its annualized average base rent per occupied square foot was $5.79.$5.99. As of MarchDecember 31, 2017, the weighted average building age, based on the square footage of the Company’s buildings, was 10.09.1 years. In addition, total gross real estate investments, excluding marketable REIT securities investments of $99,405,410,$130,431,475, were $1,224,207,318$1,484,039,198 as of MarchDecember 31, 2017. Subsequent to quarter end, on April 5, 2017, the Company purchased a newly constructed 343,483 square foot industrial building located in the Grand Rapids, MI Metropolitan Statistical Area (MSA) for $32,120,000.

The Company’s revenue primarily consists of Rental and Reimbursement Revenue from the ownership of industrial rental properties.Company evaluates its financial performance using Net Operating Income (“NOI”)(NOI) from property operations, which is defineda non-GAAP financial measure that the Company defines as Net Income Attributable to Common Shareholders plus Redemption of Preferred Stock, Preferred Dividends, General &and Administrative Expenses, AcquisitionsAcquisition Costs, Depreciation, Amortization of Capitalized Lease Costs &and Intangible Assets, and Interest Expense, including Amortization of Financing Costs, less Dividend and Interest Income, Gain on Sale of Securities Transactions, Lease Termination Income and Gain on Sale of Securities Transactions.Real Estate Investments. 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 from property operations increased $3,980,261, or 21%,and, accordingly, our NOI may not be comparable to all other REITs.

The following is a reconciliation of the Company’s Net Income Attributable to Common Shareholders to the Company’s NOI for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 and increased $8,304,562, or 22%, for the six months ended March 31, 2017 as compared to the six months ended March 31, 2016. These increases were due to the additional income related to eight industrial properties purchased during fiscal 2016 and two industrial properties purchased during the six months ended March 31, 2017.

The Company’s NOI for the three and six months ended MarchDecember 31, 2017 and 2016 is calculated as follows:2016:

The components of the Company’s NOI for the three and six months ended MarchDecember 31, 2017 and 2016 is as follows:

NOI from property operations increased $4,462,756, or 19%, for the three months ended December 31, 2017 as compared to the three months ended December 31, 2016. This increase was due to the additional income related to ten industrial properties purchased during fiscal 2017 and two industrial properties purchased during the three months ended December 31, 2017.

Acquisitions

On October 17, 2016,November 2, 2017, the Company purchased a newly constructed 338,584121,683 square foot industrial building, situated on 16.2 acres, located in Hamburg, NY, which is in the Buffalo MSA.Charleston, SC. The building is 100% net-leased to FedEx Ground Package System, Inc.Corporation (FDX) for fifteen15 years through March 2031.August 2032. The purchase price was $35,100,000.$21,872,170. The Company obtained a 15 year fully-amortizing mortgage loan of $23,500,000$14,200,000 at a fixed interest rate of 4.03%4.23%. Annual rental revenue over the remaining term of the lease averages approximately $2,309,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $250,000 to an Intangible Asset associated with the lease in-place.$1,312,000.

On DecemberNovember 30, 2016,2017, the Company purchased a newly constructed 213,672300,000 square foot industrial building, situated on 123 acres, located in Ft. Myers, FL.Oklahoma City, OK. The building is 100% net-leased to FedEx Ground Package System,Amazon.com Services, Inc. for ten10 years through September 2026.October 2027. The purchase price was $21,001,538.$30,250,000. The Company obtained a 1510 year fully-amortizing mortgage loan, amortizing over 18 years, of $14,500,000$19,600,000 at a fixed interest rate of 3.97%3.64%. Annual rental revenue over the remaining term of the lease averages approximately $1,365,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $201,538 to an Intangible Asset associated with the lease in-place.$1,884,000.

Subsequent to the quarter end, on April 5, 2017,January 22, 2018, the Company purchased a newly constructed 343,483831,764 square foot industrial building, situated on 62.4 acres, located in Walker, MI, which is located in the Grand Rapids MSA.Savannah, GA. The building is 100% net-leased to FedEx Ground Package System,Shaw Industries, Inc. for fifteen10 years through January 2032.September 2027. The purchase price was $32,120,000.$57,483,636. The Company obtained a 1514 year fully-amortizing mortgage loan of $20,875,000$33,300,000 at a fixed interest rate of 3.86%3.53%. Annual rental revenue over the remaining term of the lease averages approximately $2,102,000.$3,470,000.

FedEx Ground Package System,FDX, Amazon.com Services, Inc.’s ultimate parent, FedEx Corporation (FDX) is aAmazon.com, Inc. and Shaw Industries, Inc.’s ultimate parent, Berkshire Hathaway, Inc. are publicly-owned companycompanies and financial information related to this entitythese entities is available at the SEC’s website,www.sec.gov. 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 of FDX on such website.those websites.

Expansions

On OctoberNovember 1, 2016,2017, a 50,625 square footparking lot expansion of the buildingfor a property leased to FedEx Ground Package System, Inc., a subsidiary of FDX, located in Edinburg, TXIndianapolis, IN was completed for a total project cost of approximately $4,762,000,$1,683,000, resulting in a new 10 year lease which extended the prior lease expiration date from September 2021 through September 2026.April 2024 to October 2027. In addition, the expansion resulted in an increase in annual rent effective from the date of completion of approximately $499,000$184,000 from approximately $598,000,$1,533,000, or $5.27$4.67 per square foot, to approximately $1,097,000,$1,717,000, or $6.68$5.24 per square foot.

Disposition

Two leases that were set to expire during fiscal 2018 were leased to Kellogg Sales Company (Kellogg) at the Company’s 65,067 square foot facility located in Kansas City, MO through July 31, 2018 and at the Company’s 50,400 square foot facility located in Orangeburg, NY through February 28, 2018. Kellogg informed the Company that it will not be renewing its leases at these two properties. On December 18, 2017, the Company sold its property, located in Kansas City, MO for $4,900,000, with net sale proceeds to the Company of approximately $4,602,000 and on December 22, 2017, the Company sold its property, located in Orangeburg, NY for $6,170,000, with net sale proceeds to the Company of approximately $5,898,000. The sale of these two properties resulted in a realized gain of approximately $5,388,000, representing a 105% gain over the depreciated U.S. GAAP basis and a realized net gain on a historic cost undepreciated basis of approximately $1,804,000, representing a 21% net gain over the Company’s historic cost basis. In conjunction with the sale of these two properties, the Company simultaneously entered into a lease termination agreement for each property whereby the Company received a termination fee from Kellogg totaling approximately $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.