UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30,December 31, 2018

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission File Number:001-33177

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

Juniper Business Plaza, 3499 Route 9 North, Suite 3-D, Freehold, NJ 07728

(Address of Principal Executive Offices)                           (Zip Code)

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 the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 (§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):

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]

Number of shares outstanding of the issuer’s common stock, $0.01 par value per share, as of AugustFebruary 1, 2018: 80,455,2172019: 92,696,488

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

AND SUBSIDIARIES

FOR THE QUARTER ENDED JUNE 30,DECEMBER 31, 2018

CONTENTS

ITEM 1. Financial Statements (Unaudited)

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30,DECEMBER 31, 2018 AND SEPTEMBER 30, 20172018

See Accompanying Notes to the Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – CONTINUED

AS OF JUNE 30,DECEMBER 31, 2018 AND SEPTEMBER 30, 20172018

See Accompanying Notes to the Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED JUNE 30,DECEMBER 31, 2018 AND 2017

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) - CONTINUED

FOR THE THREE AND NINE MONTHS ENDED JUNE 30,DECEMBER 31, 2018 AND 20172017– CONTINUED

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED JUNE 30,DECEMBER 31, 2018 AND 2017

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 AND 2017

See Accompanying Notes to the Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINETHREE MONTHS ENDED JUNE 30,DECEMBER 31, 2018 AND 2017

See Accompanying Notes to Consolidated Financial Statements

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30,DECEMBER 31, 2018

NOTE 1 – ORGANIZATION AND ACCOUNTING POLICIES

Monmouth Real Estate Investment Corporation, a Maryland corporation, together with its consolidated subsidiaries (we, our, us, the Company or MREIC), operates as a real estate investment trust (REIT) deriving its income primarily from real estate rental operations. We were founded in 1968 and are one of the oldest public equity REITs in the world. As of June 30,December 31, 2018, we owned 109113 properties with total square footage of approximately 20,535,000,21,647,000, which was 99.6%98.9% occupied, as compared to 108111 properties with total square footage of approximately 18,790,000,21,174,000, which was 99.3%99.6% occupied as of September 30, 2017.2018. These properties are located in 30 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 June 30,December 31, 2018, our weighted average lease maturity was approximately 7.88.0 years and our annualized average base rent per occupied square foot was $5.89.$6.22. As of June 30,December 31, 2018, the weighted average building age, based on the square footage of our buildings, was 8.88.6 years. We also own a portfolio of REIT investment securities, which we generally limit to no more than approximately 10% of our undepreciated assets (which is our total assets, excluding accumulated depreciation). Total assets excluding accumulated depreciation were $1,821,914,393$2,046,860,425 as of June 30,December 31, 2018. We held $167,594,279$145,810,088 in marketable REIT securities as of June 30,December 31, 2018, representing 9.2%7.1% of our undepreciated assets.

We have elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the Code), and we intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, we will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that we distribute to our shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. We are subject to franchise taxes in several of the states in which we own properties.

In December 2017, as part of the Tax Cuts and Jobs Act of 2017 (the Act)TCJA), Code Section 199A was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the Act,TCJA, subject to certain income limitations, an individual taxpayerstaxpayer and estates and trusts may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend.dividend or qualified dividend income.

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 our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30,December 31, 2018 are not necessarily indicative of the results that may be expected for the year ending September 30, 2018.2019. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in our annual report on Form 10-K for the fiscal year ended September 30, 2017.2018.

Use of Estimates

In preparing the financial statements in accordance with U.S. GAAP, we are required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods 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 agreement with us.

Two leases that were set to expire during fiscal 2018 were leased to Kellogg Sales Company (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 us that they would not be renewing these leases. On December 18, 2017, we sold our property, located in Kansas City, MO for $4,900,000, with net sale proceeds of approximately $4,602,000 and on December 22, 2017, we sold our property, located in Orangeburg, NY for $6,170,000, with net sale proceeds 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 of approximately $1,804,000, representing a 21% net gain over our historic undepreciated cost basis. In conjunction with the sale of these two properties, we simultaneously entered into a lease termination agreement for each property whereby we received a termination fee from Kellogg totaling approximately $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.

Only four of our 109 properties have leases that contain an early termination provision. These four properties contain approximately 184,000 total rentable square feet, representing less than 1% of our total rentable square feet. Our leases with early termination provisions are our 26,340 square foot location in Ridgeland (Jackson), MS, our 36,270 square foot location in Urbandale (Des Moines), IA, our 38,833 square foot location in Rockford, IL, and our 83,000 square foot location in Roanoke, VA. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include: the date termination can be exercised, the time frame that notice must be given by the tenant to us and the termination fee that would be required to be paid by the tenant to us. The total potential termination fee to be paid to us from the four tenants with leases that have a termination provision amounts to approximately $1,681,000.

Stock Compensation Plan

We account for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation”. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of stock awards and restricted stock awards is equal to the fair value of our stock on the grant date. The amortization of compensation costs for the awards of stock, stock option grants and restricted stock are included in General and Administrative Expenses in the accompanying Consolidated Statements of Income (Loss) and amounted to $96,969$129,026 and $174,709$130,763 for the three months ended June 30, 2018 and 2017, respectively and amounted to $339,139 and $441,054 for the nine months ended June 30,December 31, 2018 and 2017, respectively.

During the ninethree months ended June 30,December 31, 2018, and 2017, the following stock options, which vest one year after grant date, were granted under our Stock Option Plan:

During the three months ended December 31, 2017, no stock options were granted.

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 ninethree months ended June 30,December 31, 2018 and 2017 was $1.84 and $1.49$1.19 per option, respectively.share subject to the option.

During the ninethree months ended June 30,December 31, 2018 and December 31, 2017, 12,50025,000 and -0-12,500 shares of restricted stock were granted.granted, respectively. During the ninethree months ended June 30,December 31, 2018, no options were exercised. During the three months ended December 31, 2017, two participants exercised options awarded under the Plan to purchase an aggregate of 40,00020,000 shares of common stock at a weighted averagean exercise price of $14.24 per share for total proceeds of $569,600. During the nine months ended June 30, 2017, no options were exercised.$284,800. As of June 30,December 31, 2018, a total of 1,672,7821,261,872 shares were available for grant as stock options, as restricted stock, or other equity based awards, plus any shares subject to outstanding options that expire or are forfeited without being exercised. As of June 30,December 31, 2018, there were outstanding options to purchase 695,0001,080,000 shares with an aggregate intrinsic value of $3,110,600.$1,002,300.

Recent Accounting Pronouncements

In FebruaryJanuary 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We are continuing to evaluate the potential impact this standard may have on our consolidated financial statements and the timing of adoption. The most significant changes related to lessor accounting under ASU 2016-02 include bifurcating revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since our revenue is primarily derived from leasing activities from long-term net leases and since we currently do not capitalize indirect costs for leases, we believe that we will continue to account for our leases and related leasing costs in substantially the same manner as we currently do 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 becomebecame effective for our fiscal year beginning October 1, 2018. We anticipate that theThe most significant change for us, once ASU 2016-01 iswas adopted, will bewas the accounting treatment for our investments in marketable securities that are classified as available for sale. The accounting treatment used for our Consolidated Financial Statements through Fiscal 2018 was that our investments in marketable securities, classified as available for sale, which are currentlywere carried at fair value, with net unrealized holding gains and losses being excluded from earnings and reported as a separate component of Shareholders’ Equity until realized and the change in net unrealized holding gains and losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities will continue to be measured at fair value, however the changes in net unrealized holding gains and losses will beare now recognized through net income.income on our Consolidated Statements of Income (Loss). On October 1, 2018, unrealized net holding losses of $24,744,579 were reclassed to beginning Undistributed Income (Loss) to recognize the unrealized losses previously recorded in “accumulated other comprehensive income” on our consolidated balance sheets.

In February 2016, the FASB issued ASU 2016-02, “Leases”. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessee and lessor accounting. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The most significant changes related to lessor accounting under ASU 2016-02 include bifurcating revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since our revenue is primarily derived from leasing activities from long-term net leases and since we currently do not capitalize indirect costs for leases, we believe that we will continue to account for our leases and related leasing costs in substantially the same manner as we currently do once the adoption of the ASU 2016-02 becomes effective. In addition, the guidance requires lessees to recognize assets and liabilities for operating leases with lease terms greater than twelve months on the balance sheet. Therefore, the most significant impact for us may be the recognition of our corporate office lease, while accounting where we are the lessor will remain substantially the same. Upon adoption, we may recognize an asset and lease liability equal to the present value of the minimum lease payments due under our corporate office lease. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. The amendment in ASU 2018-10 affects narrow aspects of the guidance issued earlier in ASU 2016-02 by removing certain inconsistencies and providing additional clarification related to the guidance issued earlier. We are currently evaluating the potential impact this standard may have on our consolidated financial statements and expect that the adoption of this standard will not have a significant impact on our consolidated financial statements and related disclosures. In December 2018, the FASB issued ASU 2018-20 “Narrow-Scope Improvements for Lessors”. Similar to ASU 2018-10, 2018-20 affects narrow aspects of the guidance issued earlier in ASU 2016-02 as well by providing additional clarification related to the guidance issued earlier. The most significant changes related to lessor accounting under ASU 2018-20 is the clarification of how to treat payments made by a lessee directly to a third party, such as real estate taxes paid by the lessee directly to the taxing authority, whereby items paid directly by the lessee to a third party should not be reflected in the lessors income statement and, thus, should not be bifurcated into revenue. A majority of our reimbursable expenses are paid by us and are billed back to our lessees. Therefore, these reimbursable expenses will continue to be presented separately by bifurcating these revenue and expense items in our Consolidated Statements of Income. We are currently evaluating the potential impact this standard may have on our consolidated financial statements and expect that the adoption of this standard will not have a significant impact on our consolidated financial statements and related disclosures other than, any of these types of payments made by a lessee directly to a third party will no longer be presented on a gross basis in our Consolidated Statements of Income, which will have a net zero effect on our Net Income Attributable to Common Shareholders. ASU 2016-02, 2018-10 and 2018-20 are effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2018. Therefore, we expect to adopt these standards effective October 1, 2019.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers”. The FASB issued further guidance in ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, that provides clarifying guidance in certain narrow areas and adds some practical expedients. ASU 2014-09 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 Effective Date”. The new standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Therefore, we expect to adoptadopted the standard effective October 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method, and we are evaluating which transition method we will elect. We are also in the process of evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. Our revenue is primarily derived from leasing activities and historically our property dispositions have been cash sales with no contingencies and no future involvement in the property. Since this standard applies to all contracts with customers except those that are within the scope of other guidance, such as leases, we do not expect the adoption of this standard todid not have a significant impact on our consolidated financial statements and related disclosures.

We do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.

Segment Reporting & Financial Information

Our primary business is the ownership and management of real estate properties. We invest in well-located, modern, single tenant, industrial buildings leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We review operating and financial information for each property on an individual basis and, therefore, each property represents an individual operating segment. We evaluate financial performance using Net Operating Income (NOI) from property operations. NOI is a non-GAAP financial measure, which we define as recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities and repairs and maintenance. We have aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated as industrial properties subject to long-term net leases primarily to investment-grade tenants or their subsidiaries.

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 plusfor the weighted-average number ofperiod and, when dilutive, the potential net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. In periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive.

In addition, common stock equivalents of 158,211154,323 and 171,719211,382 shares are included in the diluted weighted average shares outstanding for the three months ended June 30, 2018 and 2017, respectively, and common stock equivalents of 177,783 and 157,858 shares are included in the diluted weighted average shares outstanding for the nine months ended June 30,December 31, 2018 and 2017, respectively. For the diluted weighted average shares outstanding for the three months ended June 30,December 31, 2018 and 2017, 65,000130,000 and -0- options to purchase shares of common stock were antidilutive. For the diluted weighted average shares outstanding for the nine months ended June 30, 2018 and 2017, 65,000 options to purchase shares of common stock were antidilutive.

NOTE 3 – REAL ESTATE INVESTMENTS

On November 2, 2017,October 19, 2018, we purchased a newly constructed 121,683347,145 square foot industrial building, situated on 16.262.0 acres, located in Charleston, SC.Trenton, NJ. The building is 100% net-leased to FedEx Corporation (FDX),Ground Package System, Inc. for 15 years through AugustJune 2032. The purchase price was $21,872,170.$85,248,352. We obtained a 15 year, fully-amortizing mortgage loan of $14,200,000$55,000,000 at a fixed interest rate of 4.23%4.13%. Annual rental revenue over the remaining term of the lease averages approximately $1,315,000.$5,328,000.

On November 30, 2017,2018, we purchased a newly constructed 300,000126,520 square foot industrial building, situated on 12329.4 acres, located in Oklahoma City, OK.Savannah, GA. The building is 100% net-leased to Amazon.com Services,FedEx Ground Package System, Inc. for 10 years through October 2027. The lease is guaranteed by Amazon.com, Inc.2028. The purchase price was $30,250,000.$27,832,780. We obtained a 1015 year, fully-amortizing mortgage loan amortizing over 18 years, of $19,600,000$17,500,000 at a fixed interest rate of 3.64%4.40%. Annual rental revenue over the remaining term of the lease averages approximately $1,884,000.

On January 22, 2018, we 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. We 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 lease averages approximately $3,551,000.

On April 6, 2018, we purchased a newly constructed 399,440 square foot industrial building, situated on 27.5 acres, located in Daytona Beach, FL. The building is 100% net-leased to B. Braun Medical Inc. for 10 years through April 2028. The purchase price was $30,750,540. We obtained a 15 year fully-amortizing mortgage loan of $19,500,000 at a fixed interest rate of 4.25%. Annual rental revenue over the remaining term of the lease averages approximately $2,130,000.

On June 28, 2018, we purchased a newly constructed 362,942 square foot industrial building, situated on 31.3 acres, located in Mobile, AL. The building is 100% net-leased to Amazon.com Services, Inc. for 11 years through November 2028. The lease is guaranteed by Amazon.com, Inc. The purchase price was $33,688,276. We obtained a 14 year fully-amortizing mortgage loan of $19,000,000 at a fixed interest rate of 4.14%. Annual rental revenue over the remaining term of the lease averages approximately $2,020,000.$1,755,000.

FDX, Amazon.com, Inc. and Shaw Industries,FedEx Ground Package System, Inc.’s ultimate parent, Berkshire Hathaway, Inc. areFedEx Corporation is a publicly-owned companiescompany and financial information related to these entitiesthis entity is available at the SEC’s website,www.sec.gov. The references in this report to the SEC’s website are not intended to and do not include, or incorporate by reference into this report, the information on thewww.sec.gov website.

We evaluated the property acquisitions which took place during the ninethree months ended June 30,December 31, 2018, to determine whether an integrated set of assets and activities meets the definition of a business, pursuant to ASU 2017-01. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. Accordingly, we accounted for the fivetwo properties purchased during fiscal 2018 in Charleston, SC; Oklahoma City, OK; Savannah, GA; Daytona Beach, FL and Mobile, AL2019 as asset acquisitions and allocated the total cash consideration, including transaction costs of approximately $875,000,$324,000, 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 our purchase price allocation for these fivetwo properties acquired during the ninethree months ended June 30,December 31, 2018 that are accounted for as asset acquisitions:

The following table summarizes the operating results included in our consolidated statements of income for the three and nine months ended June 30,December 31, 2018 for the fivetwo properties acquired during the ninethree months ended June 30,December 31, 2018:

Expansions

On November 1, 2017,Subsequent to the quarter end, we completed a parking lot154,800 square foot property expansion for aat our property leased to FedEx Ground Package System, Inc., a subsidiary of FDX, located in Indianapolis, IN was completedMonroe (Cincinnati), OH for a total project cost of approximately $1,683,000, resulting$9,072,000. The expansion resulted in a new 1015 year lease which extended the prior lease expiration date from April 2024February 2030 to October 2027. In addition, theJanuary 2034. The expansion also resulted in an increase in initial annual rent effective from the date of completion ofFebruary 1, 2019 by approximately $184,000$862,000 from approximately $1,533,000,$961,000, or $4.67$4.14 per square foot, to approximately $1,717,000,$1,823,000, or $5.24$4.71 per square foot. In addition, the annual rent will increase by 2% per annum.

Dispositions

TwoWe have not had any dispositions thus far in fiscal 2019. During fiscal 2018, there were two leases that were set to expire during fiscal 2018 were leased towith Kellogg Sales Company (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 us that they would not be renewing these leases. On December 18, 2017, we sold our property, located in Kansas City, MO for $4,900,000, with net sale proceeds of approximately $4,602,000 and, on December 22, 2017, we sold our property, located in Orangeburg, NY for $6,170,000, with net sale proceeds of approximately $5,898,000. In conjunction with the sale of these two properties, we simultaneously entered into a lease termination agreement for each property whereby we received a termination fee from Kellogg totaling approximately $210,000 which represents a weighted average of 80% of the then remaining rent due under each respective lease.

On June 1, 2018, we sold a 68,370 square foot building located in Colorado Springs, CO for $5,800,000, with net sale proceeds of approximately $5,465,000. Prior to the sale of this property, it was leased to FedEx Ground Package System, Inc. through September 2018. The tenant informed us that they would not be renewing this lease because they have moved their operations from our former 68,370 square foot facility to our newly constructed 225,362 square foot facility, which is also located in Colorado Springs, CO. On June 9, 2016, we purchased this newly constructed 225,362 square foot industrial building, which is leased to FedEx Ground Package System, Inc. for 10 years through January 2026.

On June 5, 2018, we sold an 87,500 square foot vacant building located in Ft. Myers, FL for $6,400,000, with net sale proceeds of approximately $6,119,000. Prior to this property becoming vacant, it was leased to FedEx Ground Package System, Inc. through June 2017. FedEx Ground Package System, Inc. vacated this property because they moved their operations from our former 87,500 square foot facility to our newly constructed 213,672 square foot facility, which is also located in Ft. Myers, FL. We purchased this newly constructed facility on December 30, 2016 and it is leased to FedEx Ground Package System, Inc. for 10 years through August 2027.

These four properties sold during fiscal 2018, resulted in a U.S. GAAP net realized gain of approximately $7,485,000, representing a 51% gain over the depreciated U.S. GAAP basis and a net realized gain over our historic undepreciated cost basis of approximately $1,160,000, representing a 6% net gain over our historic undepreciated cost basis.

During the prior year, in October 2016, we sold our 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 these fivetwo properties doesdid not represent a strategic shift that hashad a major effect on our operations and financial results, the operations generated from these properties arewere not included in Discontinued Operations.

The following table summarizes the operations of the two properties that were sold during the prior year quarter, prior to their sales, that are included in the accompanying Consolidated Statements of Income for the three and nine months ended June 30,December 31, 2018 and 2017 for the five properties sold during the periods presented, prior to their sales.2017.

Pro forma information

The following unaudited pro forma condensed financial information has been prepared utilizing our historical financial statements and the effect of additional revenue and expenses generated from property acquired and expanded during fiscal 20182019 to date, and during fiscal 2017,2018, assuming that the acquisitions and completed expansions had occurred as of October 1, 2016,2017, after giving effect to certain adjustments including: (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 our 6.125% Series C Cumulative Redeemable Preferred Stock less the redemptions of our 7.625% Series A Cumulative Redeemable Preferred Stock redeemed on October 14, 2016 and our 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(Loss) Attributable to Common Shareholders excludes the operations, including the exclusion of the fiverelated realized gain, of the four properties sold during fiscal 2018 and 2017.2018. Furthermore, the proceeds raised from theour Dividend Reinvestment and Stock Purchase Plan (the DRIP) were used to fund property acquisitions and expansions and therefore, the weighted average shares outstanding used in calculating the pro forma Basic and Diluted Net Income per Share Attributable to Common Shareholders has been adjusted to account for the increase in shares raised through the DRIP, as if all the shares raised had occurred on October 1, 2016.2017. Additionally, the net proceeds raised from the issuance of our 6.125% Series C Cumulative Redeemable Preferred Stock through our At-The-Market Sales Agreement Program were used to help fund property acquisitions and, therefore, the pro forma preferred dividend has been adjusted to account for its effect on pro forma Net Income (Loss) Attributable to Common Shareholders as if all the preferred stock issuances had occurred on October 1, 2017. The unaudited pro forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions and expansions reflected herein been consummated on the dates indicated or that will be achieved in the future.

Tenant Concentration

We have a concentration of FDXFedEx Corporation (FDX) and FDX subsidiary-leased properties, consisting of 5861 separate stand-alone leases covering approximately 9,444,00010,465,000 square feet as of June 30,December 31, 2018 and 5859 separate stand-alone leases covering approximately 9,124,0009,513,000 square feet as of June 30,December 31, 2017. As of June 30,December 31, 2018, the 5861 separate stand-alone leases that are leased to FDX and FDX subsidiaries are located in 25 different states and have a weighted average lease maturity of 8.69.3 years. The percentage of FDX and its subsidiaries leased square footage to the total of our rental space was 46% (7%49% (5% to FDX and 39%44% to FDX subsidiaries) as of June 30,December 31, 2018 and 51%50% (8% to FDX and 43%42% to FDX subsidiaries) as of June 30,December 31, 2017. As of June 30,December 31, 2018, no other tenant accounted for 5% or more of our total rental space.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 56% (7%60% (5% to FDX and 49%55% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 20182019, and was 60% (7% to FDX and 53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2017.2018. No other tenant accounted for 5% or more of our total Rental and Reimbursement Revenue for the ninethree months ended June 30,December 31, 2018 and 2017.

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)(www.standardandpoors.com) and is rated “Baa2” by Moody’s (www.moodys.com)(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, we held $167,594,279$145,810,088 in marketable REIT securities at June 30,December 31, 2018, representing 9.2%7.1% of our undepreciated assets (which is our total assets excluding accumulated depreciation). These liquid real estate holdings are not included in calculating the tenant concentration ratios above and therefore further enhance our diversification. The securities portfolio provides us 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

Our Securities Available for Sale at Fair Value consists primarily of marketable common and preferred stock of other REITs with a fair value of $167,594,279$145,810,088 as of June 30,December 31, 2018. We generally limit our investment in marketable securities to no more than approximately 10% of our undepreciated assets (which is our total assets excluding accumulated depreciation). Total assets excluding accumulated depreciation were $1,821,914,393$2,046,860,425 as of June 30,December 31, 2018. We held $167,594,279$145,810,088 in marketable REIT securities as of June 30,December 31, 2018, representing 9.2%7.1% of our undepreciated assets. The REIT securities portfolio provides us 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 ninethree months ended June 30,December 31, 2018, we solddid not sell or redeemed securities with a cost basis of $2,508,562 and recognized a Gain on Sale of Securities Transactions of $111,387.redeem any securities. In addition, we recognized dividend income on our investment in securities of $3,625,002 and $9,373,467$4,331,260 for the three and nine months ended June 30,December 31, 2018. We also made purchases of $61,277,604$33,516,432 in Securities Available for Sale at Fair Value. Of this amount, we made total purchases of 45,81517,460 common shares of UMH Properties, Inc. (UMH), a related REIT, for a total cost of $617,443,$213,880, or an average cost of $13.48$12.25 per share, which were purchased through UMH’s Dividend Reinvestment and Stock Purchase Plan. We owned a total of 1,174,1311,205,680 UMH common shares as of June 30,December 31, 2018 at a total cost of $11,849,294$12,274,517 and a fair value of $18,022,907. We$14,950,430 representing 3.1% of the outstanding common shares of UMH. In addition, as of December 31, 2018 we own 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 $2,645,000.$2,551,000. The unrealized gain on our investment in UMH’s common and preferred stock as of June 30,December 31, 2018 was $6,318,613.$2,726,913.

As of June 30,December 31, 2018, we had total net unrealized holding losses on our securities portfolio of $8,368,968. $67,371,468. As a result of the adoption of ASU 2016-01, as of October 1, 2018, $42,626,889 of the net unrealized holding losses have been reflected as Unrealized Holding Losses Arising During the Period in the accompanying Consolidated Statements of Income (Loss) and the remaining $24,744,579 of the net unrealized holding losses have been reflected as a reclass to beginning Undistributed Income (Loss).

We consider 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. We normally hold REIT securities long-term and have the ability and intent to hold these securities to recovery. The following is a summary of the securities that weWe have determined that none of our security holdings are other than temporarily impaired and therefore all unrealized losses from these securities have been recognized as Unrealized Holding Losses Arising During the Period in our Consolidated Statements of Income (Loss). If we were to determine any of our securities to be other than temporarily impaired, aswe would record an impairment charge in our Consolidated Statements of June 30, 2018:Income (Loss).

The following is a summary of the range of losses:

NOTE 5 – DEBT

For the three months ended June 30,December 31, 2018 and 2017, amortization of financing costs included in interest expense was $314,527$317,113 and $283,573, respectively. For the nine months ended June 30, 2018 and 2017, amortization of financing costs included in interest expense was $910,977 and $949,470,$293,894, respectively.

As of June 30,December 31, 2018, we owned 109113 properties, of which 6063 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $665,118,463.$780,147,204. The following is a summary of our Fixed Rate Mortgage Notes Payable as of June 30,December 31, 2018 and September 30, 2017:2018:

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

As of June 30,December 31, 2018, interest payable on these mortgages were at fixed rates ranging from 3.45% to 7.60%, with a weighted average interest rate of 4.11%4.08%. This compares to a weighted average interest rate of 4.18%4.07% as of September 30, 20172018 and 4.21%4.16% as of June 30,December 31, 2017. As of June 30,December 31, 2018, the weighted average loan maturity of the Fixed Rate Mortgage Notes Payable was 11.511.8 years. This compares to a weighted average loan maturity of the Fixed Rate Mortgage Notes Payable of 11.611.7 years as of September 30, 20172018 and 11.5 years as of June 30,December 31, 2017.

In connection with the fivetwo properties acquired during the ninethree months ended June 30,December 31, 2018, which are located in Charleston, SC, Oklahoma City, OK,Trenton, NJ and Savannah, GA Daytona Beach, FL and Mobile, AL (as described in Note 3), we obtained two 15 year fully-amortizing mortgage loans,loans. The two 14 year fully-amortizing mortgage loans and one 10 year loan amortizing over 18 years. The five mortgage loans originally totaled $105,600,000$72,500,000 with an original weighted average mortgage loan maturity of 13.6 years and a weighted average interest rate of 3.89%4.20%.

During the nine months ended June 30, 2018, we fully repaid the mortgage loans for four of our properties located in Colorado Springs, CO, Richfield (Cleveland), OH, Tampa, FL and West Chester Twp. (Cincinnati), OH, totaling approximately $8,649,000.

As of June 30,December 31, 2018, Loans Payable represented the amount drawn down on our $200,000,000 unsecured line of credit facility (the Facility) in the amount of $110,000,000 and the amount drawn down on our margin loan of $47,792,824.$15,814,547.

The Facility matures in September 2020 with a one year extension at our option (subject to various conditions as specified in the loan agreement). During the ninethree months ended June 30,December 31, 2018 we had no additional draws under the Facility.paid down our Facility by $50,000,000. 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 capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Effective, March 22, 2018, the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 7.0% to 6.5%, thus increasing the value of the borrowing base properties under the terms of the agreement. Borrowings under the Facility, will, at our election, either i) bear interest at LIBOR plus 140 basis points to 220 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 40 basis points to 120 basis points, depending on our leverage ratio. Our borrowings as of June 30,December 31, 2018, based on our leverage ratio, bear interest at LIBOR plus 170 basis points, which represented an interest rate of 3.79%4.22%. In addition, we have 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.

We also invest in equity securities of other REITs which provides us with additional liquidity, diversification and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. From time to time, we may purchase these securities on margin when the interest and dividend yields exceed the cost of funds. In general, we may borrow up to 50% of the value of the marketable securities, which was $167,594,279$145,810,088 as of June 30,December 31, 2018. As of June 30,December 31, 2018, we had $47,792,824$15,814,547 drawn against the margin at an interest rate of 2.00%3.0%.

NOTE 6 – SHAREHOLDERS’ EQUITY

Our authorized stock as of June 30,December 31, 2018 consisted of 192,039,750188,039,750 shares of common stock, of which 80,137,07092,335,115 shares were issued and outstanding, 12,400,00016,400,000 authorized shares of 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (6.125% Series C Preferred Stock), of which 11,099,46111,532,445 shares 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

OnIn October 2, 2017,2018, we completed a public offering of 9,200,000 shares of our BoardCommon Stock (including the underwriters’ option to purchase 1,200,000 additional shares) at a price of Directors approved a 6.25% increase in our quarterly common stock dividend, raising it to $0.17$15.00 per share, before underwriting discounts. We received net proceeds from $0.16 per share, representing our second dividend increase in three years. These two dividend raises represent a total increasethe offering, after deducting underwriting discounts and all other transaction costs, of 13%. The increased dividend represents an annualized dividend rate of $0.68 per share. We have maintained or increased our cash dividend for 26 consecutive years.approximately $132,338,000.

We raised $67,895,831$22,110,506 (including dividend reinvestments of $9,467,085)$4,515,081) from the issuance of 4,451,2891,606,981 shares of common stock under our DRIP during the ninethree months ended June 30,December 31, 2018. During the ninethree months ended June 30,December 31, 2018, we paid $39,842,168$15,569,911 in total cash dividends, or $0.17 per share, to common shareholders, of which $9,467,085$4,515,081 was reinvested in the DRIP.DRIP, representing a 29% participation rate.

On July 2, 2018,January 16, 2019, our Board of Directors declared a dividend of $0.17 per share to be paid September 17, 2018March 15, 2019 to common shareholders of record as of the close of business on AugustFebruary 15, 2018.2019.

On January 16, 2018, the2019, our Board of Directors reaffirmedauthorized a $40,000,000 increase to our Sharepreviously announced Common Stock Repurchase Program that authorizes(the “Program”), bringing the total available under the Program to $50,000,000. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to purchase upeconomic and market conditions, stock price, applicable legal requirements and other factors. To date, we have not repurchased any common stock pursuant to $10,000,000the Program and we may elect not to repurchase any common stock in the aggregate offuture. The Program does not have a termination date and may be suspended or discontinued at our common stock. We may repurchase our shares from time to time if, in the opinion of the Board of Directors, such acquisition is advantageous to us. No shares were repurchased during the nine months ended June 30, 2018 and, as of June 30, 2018, we do not own any of our own shares.discretion without prior notice.

6.125% Series C Cumulative Redeemable Preferred Stock

During the ninethree months ended June 30,December 31, 2018, we paid $12,548,850$4,414,770 in Preferred Dividends, or $1.1484375$0.3828125 per share, on our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share, with a liquidation preference of $25.00 per share (6.125% Series C preferred stock) for the period September 1, 20172018 through May 31,November 30, 2018. As of June 30,December 31, 2018, we have accrued Preferred Dividends of $1,416,337$1,471,588 covering the period JuneDecember 1, 2018 to June 30,December 31, 2018. Dividends on the 6.125% Series C Preferred Stock are cumulative and payable quarterly at an annual rate of $1.53125 per share. The 6.125% Series C Preferred Stock has no maturity date and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to our qualification as a REIT, or in connection with a change of control, the 6.125% Series C Preferred Stock is not redeemable prior to September 15, 2021. On and after September 15, 2021, at any time, and from time to time, the 6.125% Series C Preferred Stock will be redeemable in whole, or in part, at our 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 July 2, 2018,January 16, 2019, our Board of Directors declared a dividend of $0.3828125 per share to be paid September 17, 2018March 15, 2019 to the 6.125% Series C Preferred shareholders of record as of the close of business on AugustFebruary 15, 2018.2019.

On June 29, 2017, we entered into ana Preferred Stock At-The-Market Preferred EquitySales Agreement Program (Preferred Stock ATM Program) with B. Riley FBR, Inc. in which we may, from time to time,, or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sell additionalsale of shares of our 6.125% Series C Cumulative Redeemable Preferred Stock, with a liquidation preference of $25.00 per share, having an aggregate sales price of up to $100,000,000. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and sale from time to time of $125,000,000 of our 6.125% Series C preferred stock. Sales of shares of our 6.125% Series C preferred stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C preferred stock or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through the Preferred Stock ATM Programthese programs on July 3, 2017. During the nine months ended June 30,Since inception through December 31, 2018, we sold 1,260,0163,132,445 shares under our Preferred Stock ATM Programthese programs at a weighted average price of $25.08$25.04 per share, and realizedgenerated net proceeds, after offering expenses, of approximately $30,992,000.$76,831,000, of which 44,444 shares were sold during the three months ended December 31, 2018 at a weighted average price of $23.77 per share, and generated net proceeds, after offering expenses, of approximately $1,006,000. As of December 31, 2018, there is approximately $118,039,000 remaining that may be sold under the Preferred Stock ATM Program.

As of June 30,December 31, 2018, 11,099,46111,532,445 shares of the 6.125% Series C Preferred Stock were issued and outstanding.

Subsequent to the June 30, 2018 quarter end, through July 18, 2018, we sold 143,338 shares under our Preferred Stock ATM Program at a weighted average price of $24.00 per share, and realized net proceeds, after offering expenses, of approximately $3,386,000.

NOTE 7 - FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis, including Securities Available for Sale at Fair Value. Our financial assets consist mainly of marketable REIT securities. The fair value of these financial assets was determined using the following inputs at June 30,December 31, 2018 and September 30, 2017:2018:

In addition to our investments in Securities Available for Sale at Fair Value, we are required to disclose certain information about fair values of 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 our entire holdingholdings of financial instruments. For a portion of our 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 us for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. At June 30,December 31, 2018, the Fixed Rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to approximately $663,810,000$766,678,000 and the carrying value amounted to $665,118,463.$780,147,204.

NOTE 8 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the ninethree months ended June 30,December 31, 2018 and 2017 was approximately $23,016,000$8,879,000 and $17,975,000,$7,198,000, respectively.

During the ninethree months ended June 30,December 31, 2018 and 2017, we had dividend reinvestments of $9,467,085$4,515,081 and $7,229,654,$2,919,972, respectively, which required no cash transfers.

NOTE 9 – CONTINGENCIES AND COMMITMENTS

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

The Company hasWe have entered into agreements to purchase fourtwo new build-to-suit, industrial buildings that have recently been completed or are currently being developed in Georgia, New JerseyIndiana and SouthNorth Carolina, consisting oftotaling approximately 1,105,000882,000 square feet, with net-leased terms ranging from 10 toof 15 years with a weighted average lease term of 13.9 years.each. The aggregate purchase price for these properties is approximately $221,369,000. These four$122,414,000. One of these properties, are eachconsisting of approximately 613,000 square feet, or 69%, is leased to Amazon.com Services, Inc. The other property, consisting of approximately 269,000 square feet, or 31%, is leased to FedEx Ground Package System, Inc. Both of these properties are leased to tenants, or to subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to the S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing one of these transactions sometime during the remainder of fiscal 2018 and the firstfourth quarter of fiscal 2019.2019 and closing the other one during the first half of fiscal 2020. In connection with all fourone of these properties, we have entered into commitmentsa commitment to obtain four, 15an 18 year, fully-amortizing mortgage loans totaling $142,060,000loan of $52,500,000 with a weighted average fixed interest rate of 4.07%4.27%.

We currently have two property expansionsentered into a new ten year lease for our future corporate office space located in progress consisting of one 154,800Holmdel, NJ. The new lease is for 13,239 square foot building expansionfeet and one parking lot expansion. Total expansion costs areis expected to be approximately $10,906,000. Upon completioncommence during our 4^th quarter of the two expansions, initialfiscal 2019, at which time we expect to assign our lease pertaining to our current corporate office space located in Freehold, NJ to UMH. Initial annual rent will be increased byfor our new corporate office is approximately $1,045,000. One expansion will provide for a new 10 year lease extension from the date of completion and one expansion will provide for a new 15 year lease extension from the date of completion.$410,000 or $31.00 per square foot.

NOTE 10 – SUBSEQUENT EVENTS

Material subsequent events have been evaluated and are disclosed herein.

On July 2, 2018,January 16, 2019, our Board of Directors declared a common dividend of $0.17 per share to be paid September 17, 2018March 15, 2019 to the common shareholders of record as of the close of business on AugustFebruary 15, 2018.2019.

On July 2, 2018,January 16, 2019, our Board of Directors declared a preferred dividend of $0.3828125 per share to be paid September 17, 2018March 15, 2019 to the 6.125% Series C Preferred shareholders of record as of the close of business on AugustFebruary 15, 2018.2019.

Subsequent to the June 30, 2018 quarter end, through July 18, 2018, we sold 143,338 shares undercompleted a 154,800 square foot property expansion at our Preferred Stock ATM Program atproperty located in Monroe (Cincinnati), OH for a weighted average price of $24.00 per share, and realized net proceeds, after offering expenses,total project cost of approximately $3,386,000.$9,072,000. The expansion resulted in a new 15 year lease which extended the prior lease expiration date from February 2030 to January 2034. The expansion also resulted in an increase in initial annual rent effective February 1, 2019 by approximately $862,000 from approximately $961,000, or $4.14 per square foot, to approximately $1,823,000, or $4.71 per square foot. In addition, the annual rent will increase by 2% per annum.

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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2018.

We operate as a real estate investment trust (REIT). We seek to invest in well-located, modern single-tenant industrial buildings leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We were founded in 1968 and are one of the oldest public equity REITs in the world. During the ninethree months ended June 30,December 31, 2018, we purchased fivetwo new built-to-suit, net-leased, industrial properties, located in Charleston, SC; Oklahoma City, OK;Trenton, NJ and Savannah, GA; Daytona Beach, FL; and Mobile, AL,GA totaling approximately 2,016,000474,000 square feet, for approximately $174,045,000$113,081,000 in the aggregate. In connection with the fivetwo properties acquired during the ninethree months ended June 30,December 31, 2018, we obtained two 15 year fully-amortizing mortgage loans two 14 year fully-amortizing mortgage loans and one 10 year loan amortizing over 18 years. The five mortgage loans originally totaled $105,600,000totaling $72,500,000 with an original weighted average mortgage loan maturity of 13.6 years and a weighted average interest rate of 3.89%4.20%. As of June 30,December 31, 2018, we owned 109113 properties with total square footage of approximately 20,535,000.21,647,000. These properties are located in 30 states. As of the quarter ended June 30,December 31, 2018, our weighted average lease maturity was approximately 7.88.0 years, our occupancy rate was 99.6%98.9% and our annualized average base rent per occupied square foot was $5.89.$6.22. As of June 30,December 31, 2018, the weighted average building age, based on the square footage of our buildings, was 8.88.6 years. In addition, total gross real estate investments, excluding marketable REIT securities investments of $167,594,279,$145,810,088, were $1,606,017,461$1,835,391,722 as of June 30,December 31, 2018.

NOI from property operations increased $4,875,649, or 18%, for the three months ended December 31, 2018 as compared to the three months ended December 31, 2017. This increase was primarily due to the acquisition of five industrial properties purchased during the last three quarters of fiscal 2018 and the two industrial properties purchased during the first quarter of fiscal 2019.

We evaluate our financial performance using Net Operating Income (NOI) from property operations, which we believe is a useful indicator of our operating performance. NOI is a non-GAAP financial measure that we define as Net Income Attributable to Common Shareholders plus Redemption of Preferred Stock, Preferred Dividends, General and Administrative Expenses, Acquisition Costs, Depreciation, Amortization of Capitalized Lease Costs and Intangible Assets, Interest Expense, including Amortization of Financing Costs, Unrealized Holding Losses Arising During the Period, less Dividend and Interest Income, Gain on Sale of Securities Transactions, Gain on Sale of Real Estate Investments and Lease Termination Income. The components of NOI are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities, and repairs and maintenance. Other REITs may use different methodologies to calculate NOI and, accordingly, our NOI may not be comparable to all other REITs.

The following is a reconciliation of our Net Income (Loss) Attributable to Common Shareholders to our NOI for the three and nine months ended June 30,December 31, 2018 and 2017: