UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

☐ 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)

Maryland		22-1897375
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ identification number)

101 Crawfords Corner Road, Suite 1405, Holmdel, NJ 07733

(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.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

MNR

New York Stock Exchange NYSE

6.125% Series C Cumulative Redeemable Preferred Stock

MNR-PC

New York Stock Exchange NYSE

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☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ 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:

Large ~~accelerated filer~~Accelerated Filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller Reporting Company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ ☐

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

Number of shares outstanding of the issuer’s common stock, $0.01 par value per share, as of May 1, ~~2020:~~2021: ~~97,883,098~~98,301,860

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

AND SUBSIDIARIES

FOR THE QUARTER ENDED MARCH 31, ~~2020~~2021

C O N T E N T S

		Page No

PART I	FINANCIAL INFORMATION

Item 1 -	Financial Statements (Unaudited):
	Consolidated Balance Sheets	3
	Consolidated Statements of Income (Loss)	5
	Consolidated Statements of ~~Shareholders’ Equity~~Comprehensive Income (Loss)	7
	Consolidated Statements of ~~Cash Flows~~Shareholders’ Equity	98
	Consolidated Statements of Cash Flows	10
	Notes to Consolidated Financial Statements	1011

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2125

Item 3 -	Quantitative and Qualitative Disclosures About Market Risk.	3239

Item 4 -	Controls and Procedures.	3239

PART II -	OTHER INFORMATION

Item 1 -	Legal Proceedings.	3340

Item 1A -	Risk Factors.	3340

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds.	3440

Item 3 -	Defaults Upon Senior Securities.	3440

Item 4 -	Mine Safety Disclosures.	3440

Item 5 -	Other Information.	3440

Item 6 -	Exhibits.	3540

SIGNATURES		3641

Table of Contents

PART I:

FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, ~~2020~~2021 AND SEPTEMBER 30, ~~2019~~2020

(in thousands except per share amounts)

	March 31, 2020			September 30, 2019
	(Unaudited)					March 31, 2021 (Unaudited)			September 30, 2020
ASSETS
Real Estate Investments:
Land	$	245,096		$	239,299	$	266,794		$	250,497
Buildings and Improvements		1,721,612			1,627,219		1,945,880			1,793,367
Total Real Estate Investments		1,966,708			1,866,518		2,212,674			2,043,864
Accumulated Depreciation		(272,372)			(249,584)		(321,047	)		(296,020	)
Real Estate Investments		1,694,336			1,616,934		1,891,627			1,747,844

Cash and Cash Equivalents		35,913			20,179		19,383			23,517
Securities Available for Sale at Fair Value		99,035	��		185,250		131,654			108,832
Tenant and Other Receivables		3,688			1,335		2,735			5,431
Deferred Rent Receivable		12,340			11,199		14,383			12,856
Prepaid Expenses		11,915			6,714		13,206			7,554
Intangible Assets, net of Accumulated Amortization of $16,701 and $15,686, respectively		16,456			14,970
Capitalized Lease Costs, net of Accumulated Amortization of $3,895 and $3,378, respectively		5,931			5,670
Financing Costs, net of Accumulated Amortization of $162 and $1,352, respectively		1,569			144
Intangible Assets, net of Accumulated Amortization of $18,461 and $17,330, respectively							20,563			16,832
Capitalized Lease Costs, net of Accumulated Amortization of $4,893 and $4,286, respectively							5,600			5,631
Financing Costs, net of Accumulated Amortization of $551 and $356, respectively							1,185			1,380
Other Assets		8,865			9,553		8,080			9,906

TOTAL ASSETS	$	1,890,048		$	1,871,948	$	2,108,416		$	1,939,783

See Accompanying Notes to the Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – CONTINUED

AS OF MARCH 31, ~~2020~~2021 AND SEPTEMBER 30, ~~2019~~2020

(in thousands except per share amounts)

	March 31, 2020		September 30, 2019
	(Unaudited)				March 31, 2021 (Unaudited)			September 30, 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	779,742	$	744,928	$	866,224		$	799,507
Loans Payable		75,000		95,000		75,000			75,000
Accounts Payable and Accrued Expenses		4,257		3,570		4,642			3,998
Other Liabilities		22,206		17,407		26,450			23,673
Total Liabilities		881,205		860,905		972,316			902,178

COMMITMENTS AND CONTINGENCIES		-		-		-

Shareholders’ Equity:
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 21,900 and 16,400 Shares Authorized as of March 31, 2020 and September 30, 2019, respectively; 17,169 and 13,907 Shares Issued and Outstanding as of March 31, 2020 and September 30, 2019, respectively		429,215		347,678
Common Stock, $0.01 Par Value Per Share: 200,000 and 188,040 Shares Authorized as of March 31, 2020 and September 30, 2019, respectively; 97,980 and 96,399 Shares Issued and Outstanding as of March 31, 2020 and September 30, 2019, respectively		980		964
Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of March 31, 2020 and September 30, 2019; NaN Shares Issued or Outstanding as of March 31, 2020 and September 30, 2019		0		0
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 26,600 and 21,900 Shares Authorized as of March 31, 2021 and September 30, 2020, respectively; 21,986 and 18,880 Shares Issued and Outstanding as of March 31, 2021 and September 30, 2020, respectively						549,640			471,994
Common Stock, $0.01 Par Value Per Share: 300,000 and 200,000 Shares Authorized as of March 31, 2021 and September 30, 2020, respectively; 98,301 and 98,054 Shares Issued and Outstanding as of March 31, 2021 and September 30, 2020, respectively						983			981
Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of March 31, 2021 and September 30, 2020; NaN Shares Issued or Outstanding as of March 31, 2021 and September 30, 2020						0			0
Additional Paid-In Capital		578,648		662,401		588,049			568,998
Accumulated Other Comprehensive Loss						(2,572	)		(4,368	)
Undistributed Income		0		0		0			0
Total Shareholders’ Equity		1,008,843		1,011,043		1,136,100			1,037,605

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	1,890,048	$	1,871,948	$	2,108,416		$	1,939,783

See Accompanying Notes to the Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020

(in thousands)

											1			2			3			4
	Three Months Ended		Three Months Ended		Six Months Ended			Six Months Ended		Three Months Ended						Six Months Ended
	3/31/2020		3/31/2019		3/31/2020			3/31/2019		3/31/2021			3/31/2020			3/31/2021			3/31/2020
INCOME:
Rental Revenue	$	35,114	$	32,934	$	69,983		$	65,551	$	39,246		$	35,114		$	76,091		$	69,983
Reimbursement Revenue		6,594		5,447		13,424			11,053		7,119			6,594			13,856			13,424
Lease Termination Income											0			0			377			0
TOTAL INCOME		41,708		38,381		83,407			76,604		46,365			41,708			90,324			83,407

EXPENSES:
Real Estate Taxes		5,029		4,163		10,064			8,203		5,604			5,029			10,922			10,064
Operating Expenses		1,634		1,673		3,831			3,537		2,039			1,634			3,775			3,831
General & Administrative Expenses		2,396		2,252		4,660			4,069		2,091			2,396			4,117			4,660
Non-recurring Strategic Alternative & Proxy Costs											1,993			0			2,239			0
Non-recurring Severance Expense		0		0		786			0		0			0			0			786
Depreciation		11,475		10,756		22,907			21,234		13,064			11,475			25,141			22,907
Amortization of Capitalized Lease Costs and Intangible Assets		767		721		1,521			1,423		879			767			1,687			1,521
TOTAL EXPENSES		21,301		19,565		43,769			38,466		25,670			21,301			47,881			43,769

OTHER INCOME (EXPENSE):
Dividend Income		3,404		3,515		6,642			7,882		1,587			3,404			3,195			6,642
Realized Gain on Sale of Securities Transactions											2,248			0			2,248			0
Unrealized Holding Gains (Losses) Arising During the Periods		(83,075)		15,568		(86,710)			(27,059)		19,186			(83,075	)		38,906			(86,710	)
Interest Expense, including Amortization of Financing Costs		(9,050)		(9,598)		(18,259)			(18,603)		(9,387	)		(9,050	)		(18,546	)		(18,259	)
TOTAL OTHER INCOME (EXPENSE)		(88,721)		9,485		(98,327)			(37,780)		13,634			(88,721	)		25,803			(98,327	)

NET INCOME (LOSS)		(68,314)		28,301		(58,689	)		358		34,329			(68,314	)		68,246			(58,689	)

Less: Preferred Dividends		6,764		4,480		12,862			8,901		8,416			6,764			16,587			12,862

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(75,078)	$	23,821	$	(71,551)		$	(8,543)	$	25,913		$	(75,078	)	$	51,659		$	(71,551	)

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020 – CONTINUED

										1			2			3			4
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended		Three Months Ended						Six Months Ended
	3/31/2020		3/31/2019		3/31/2020		3/31/2019		3/31/2021			3/31/2020			3/31/2021			3/31/2020

BASIC INCOME (LOSS) – PER SHARE
Net Income (Loss)	$	(0.70)	$	0.30	$	(0.60)	$	0	$	0.35		$	(0.70	)	$	0.70		$	(0.60	)
Less: Preferred Dividends		(0.07)		(0.04)		(0.13)		(0.09)		(0.09	)		(0.07	)		(0.17	)		(0.13	)
Net Income (Loss) Attributable to Common Shareholders - Basic	$	(0.77)	$	0.26	$	(0.73)	$	(0.09)	$	0.26		$	(0.77	)	$	0.53		$	(0.73	)

DILUTED INCOME (LOSS) – PER SHARE
Net Income (Loss)	$	(0.70)	$	0.30	$	(0.60)	$	0	$	0.35		$	(0.70	)	$	0.70		$	(0.60	)
Less: Preferred Dividends		(0.07)		(0.04)		(0.13)		(0.09)		(0.09	)		(0.07	)		(0.17	)		(0.13	)
Net Income (Loss) Attributable to Common Shareholders - Diluted	$	(0.77)	$	0.26	$	(0.73)	$	(0.09)	$	0.26		$	(0.77	)	$	0.53		$	(0.73	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Basic		97,864		92,978		97,370		91,728		98,298			97,864			98,200			97,370
Diluted		97,941		93,059		97,466		91,831		98,496			97,941			98,352			97,466

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020

(in thousands)

		1		2			3		4
	Three Months Ended					Six Months Ended
	3/31/2021		3/31/2020			3/31/2021		3/31/2020

Net Income (Loss)	$	34,329	$	(68,314	)	$	68,246	$	(58,689	)
Other Comprehensive Income:
Change in Fair Value of Interest Rate Swap Agreement		1,363		0			1,796		0
TOTAL COMPREHENSIVE INCOME (LOSS)		35,692		(68,314	)		70,042		(58,689	)
Less: Preferred Dividends		8,416		6,764			16,587		12,862
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	27,276	$	(75,078	)	$	53,455	$	(71,551	)

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020

(in thousands, except per share data)

Common
Stock Preferred
Stock
Series C Additional
Paid in
Capital Undistributed
Income (Loss) Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Equity
Balance December 31, 2019 $ 976 $ 391,643 $ 664,890 $ 0 $ 0 $ 1,057,509
Shares Issued in Connection with the DRIP (1) 7 0 8,612 0 0 8,619
Impact of Adoption of Accounting Standards Update 2016-01
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs 0 37,572 (437) 0 0 37,135
Shares Issued Through the Exercise of Stock Options 0 0 409 0 0 409
Shares Issued Through Restricted Stock Awards
Shares repurchased through the Common Stock Repurchase Plan (3) 0 (3,206) 0 0 (3,209)
Stock Compensation Expense 0 0 114 0 0 114
Distributions To Common Shareholders ($0.17 per share) 0 0 (91,734) 75,078 0 (16,656)
Distributions To Common Shareholders ($0.34 per share)
Net Income (Loss) 0 0 0 (68,314) 0 (68,314)
Preferred Dividends ($0.765625 per share)
Preferred Dividends ($0.3828125 per share) 0 0 0 (6,764) 0 (6,764)
Balance March 31, 2020 $ 980 $ 429,215 $ 578,648 $ 0 $ 0 $ 1,008,843

	Common Stock		Preferred Stock Series C		Additional Paid in Capital		Undistributed Income (Loss)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balance December 31, 2020	$	983	$	549,640	$	579,264	$	0		$	(3,935	)	$	1,125,952
Shares Issued in Connection with the DRIP (1)		0		0		89		0			0			89
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs
Shares repurchased through the Common Stock Repurchase Plan
Stock Compensation Expense		0		0		77		0			0			77
Distributions To Common Shareholders ($0.18 per share)		0		0		8,219		(25,913	)		0			(17,694	)
Stock Option Exercise		0		0		400		0			0			400
Net Income		0		0		0		34,329			0			34,329
Preferred Dividends ($0.3828125 per share)		0		0		0		(8,416	)		0			(8,416	)
Change in Fair Value of Interest Rate Swap Agreement		0		0		0		0			1,363			1,363
Balance March 31, 2021	$	983	$	549,640	$	588,049	$	0		$	(2,572	)	$	1,136,100

Common
Stock Preferred
Stock
Series C Additional
Paid in
Capital Undistributed Income (Loss) Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’ Equity
Balance December 31, 2018 $ 923 $ 288,311 $ 616,322 $ 0 $ 0 $ 905,556
Shares Issued in Connection with the DRIP (1) 15 0 18,488 0 0 18,503
Impact of Adoption of Accounting Standards Update 2016-01
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs 0 10,919 (643) 0 0 10,276
Shares Issued Through the Exercise of Stock Options 1 0 566 0 0 567
Shares Issued Through Restricted Stock Awards 0 0 0 0 0 0
Shares repurchased through the Common Stock Repurchase Plan
Stock Compensation Expense 0 0 215 0 0 215
Distributions To Common Shareholders ($0.17 per share) 0 0 7,995 (23,821) 0 (15,826)
Distributions To Common Shareholders ($0.34 per share)
Net Income (Loss) 0 0 0 28,301 0 28,301
Preferred Dividends ($0.765625 per share)
Preferred Dividends ($0.3828125 per share) 0 0 0 (4,480) 0 (4,480)
Balance March 31, 2019 $ 939 $ 299,230 $ 642,943 $ 0 $ 0 $ 943,112

	Common Stock			Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Balance December 31, 2019	$	976		$	391,643	$	664,890		$	0		$	0	$	1,057,509
Shares Issued in Connection with the DRIP (1)		7			0		8,612			0			0		8,619
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs		0			37,572		(437	)		0			0		37,135
Shares Issued Through the Exercise of Stock Options		0			0		409			0			0		409
Shares repurchased through the Common Stock Repurchase Plan		(3	)		0		(3,206	)		0			0		(3,209	)
Stock Compensation Expense		0			0		114			0			0		114
Distributions To Common Shareholders ($0.17 per share)		0			0		(91,734	)		75,078			0		(16,656	)
Net Income (Loss)		0			0		0			(68,314	)		0		(68,314	)
Preferred Dividends ($0.3828125 per share)		0			0		0			(6,764	)	$	0		(6,764	)
Balance March 31, 2020	$	980		$	429,215	$	578,648		$	0		$	0	$	1,008,843

(1)

Dividend Reinvestment and Stock Purchase Plan

See Accompanying Notes to the Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020

(in thousands, except per share data)

Common
Stock Preferred
Stock
Series C Additional
Paid in
Capital Undistributed
Income (Loss) Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders'
Equity
Balance September 30, 2019 $ 964 $ 347,678 $ 662,401 $ 0 $ $ 1,011,043
Impact of Adoption of Accounting Standards Update 2016-01
Shares Issued in Connection with the DRIP (1) 18 0 24,110 0 0 24,128
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 81,537 (1,249) 0 0 80,288
Shares Issued Through the Exercise of Stock Options 1 0 1,015 0 0 1,016
Shares repurchased through the Common Stock Repurchase Plan (3) 0 (3,206) 0 0 (3,209)
Shares Issued Through Restricted Stock Awards
Stock Compensation Expense 0 0 270 0 0 270
Distributions To Common Shareholders ($0.34 per share) 0 0 (104,693) 71,551 0 (33,142)
Distributions To Common Shareholders ($0.17 per share)
Net Income (Loss) 0 0 0 (58,689) 0 (58,689)
Preferred Dividends ($0.3828125 per share)
Preferred Dividends ($0.765625 per share) 0 0 0 (12,862) 0 (12,862)
Balance March 31, 2020 $ 980 $ 429,215 $ 578,648 $ 0 $ 0 $ 1,008,843

	Common Stock		Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balance September 30, 2020	$	981	$	471,994	$	568,998		$	0		$	(4,368	)	$	1,037,605
Shares Issued in Connection with the DRIP (1)		1		0		1,347			0			0			1,348
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs		0		77,646		(1,688	)		0			0			75,958
Shares repurchased through the Common Stock Repurchase Plan
Stock Compensation Expense		0		0		134			0			0			134
Distributions To Common Shareholders ($0.35 per share)		0		0		17,293			(51,659	)		0			(34,366	)
Stock Option Exercise		1		0		1,965			0			0			1,966
Net Income		0		0		0			68,246			0			68,246
Preferred Dividends ($0.765625 per share)		0		0		0			(16,587	)		0			(16,587	)
Change in Fair Value of Interest Rate Swap Agreement		0		0		0			0			1,796			1,796
Balance March 31, 2021	$	983	$	549,640	$	588,049		$	0		$	(2,572	)	$	1,136,100

	Common Stock		Preferred Stock Series C		Additional Paid in Capital		Undistributed Income (Loss)		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity		Common Stock			Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Balance September 30, 2018	$	815	$	287,200	$	534,635	$	0	$	(24,744)	$	797,906
Impact of Adoption of Accounting Standards Update 2016-01		0		0		0	$	(24,744)		24,744		0
Balance September 30, 2019													$	964		$	347,678	$	662,401		$	0		$	0	$	1,011,043
Shares Issued in Connection with the DRIP (1)		31		0		40,582		0		0		40,613		18			0		24,110			0			0		24,128
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs		92		0		132,246		0		0		132,338
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs														0			81,537		(1,249	)		0			0		80,288
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs		0		12,030		(748)		0		0		11,282
Shares Issued Through the Exercise of Stock Options		1		0		566		0		0		567		1			0		1,015			0			0		1,016
Shares repurchased through the Common Stock Repurchase Plan														(3	)		0		(3,206	)		0			0		(3,209	)
Shares Issued Through Restricted Stock Awards		0		0		0		0		0		0
Stock Compensation Expense		0		0		344		0		0		344		0			0		270			0			0		270
Distributions To Common Shareholders ($0.34 per share)		0		0		(64,682)		33,287		0		(31,395)		0			0		(104,693	)		71,551			0		(33,142	)
Distributions To Common Shareholders ($0.17 per share)
Net Income (Loss)		0		0		0		358		0		358		0			0		0			(58,689	)		0		(58,689	)
Preferred Dividends ($0.3828125 per share)
Preferred Dividends ($0.765625 per share)		0		0		0		(8,901)		0		(8,901)		0			0		0			(12,862	)		0		(12,862	)
Balance March 31, 2019	$	939	$	299,230	$	642,943	$	0	$	0	$	943,112
Change in Fair Value of Interest Rate Swap Agreement
Balance March 31, 2020													$	980		$	429,215	$	578,648		$	0		$	0	$	1,008,843

(1)

Dividend Reinvestment and Stock Purchase Plan

~~See Accompanying Notes to the Consolidated Financial Statements~~

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020

(in thousands)

					3/31/2021			3/31/2020
	Six Months Ended		Six Months Ended		Six Months Ended
	3/31/2020		3/31/2019		3/31/2021			3/31/2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(58,689)	$	358	$	68,246		$	(58,689	)
Noncash Items Included in Net Income (Loss):
Depreciation & Amortization		25,186		23,294		27,505			25,186
Deferred Straight Line Rent		(1,232)		(825)		(1,661	)		(1,232	)
Stock Compensation Expense		270		344		134			270
Securities Available for Sale Received as Dividend Income		(745)		(430)		(494	)		(745	)
Unrealized Holding Losses Arising During the Periods		86,710		27,059
Realized Gain on Sale of Securities Transactions						(2,248	)		0
Unrealized Holding (Gains) Losses Arising During the Periods						(38,906	)		86,710
Changes In:
Tenant & Other Receivables		(2,302)		(401)		2,747			(2,302	)
Prepaid Expenses		(5,201)		(4,041)		(5,652	)		(5,201	)
Other Assets & Capitalized Lease Costs		(1,380)		1,349		(654	)		(1,380	)
Accounts Payable, Accrued Expenses & Other Liabilities		5,237		3,511		5,409			5,237
NET CASH PROVIDED BY OPERATING ACTIVITIES		47,854		50,218		54,426			47,854

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Real Estate & Intangible Assets		(99,424)		(113,406)		(170,568	)		(99,424	)
Capital Improvements		(3,314)		(9,205)		(3,560	)		(3,314	)
Return of Deposits on Real Estate		1,300		200		5,000			1,300
Deposits Paid on Acquisitions of Real Estate		(200)		(1,550)		(3,210	)		(200	)
Proceeds from the Sale of Securities Transactions						16,327			0
Proceeds from Securities Available for Sale Called for Redemption		250		0		2,500			250
Purchase of Securities Available for Sale		0		(49,067)
NET CASH USED IN INVESTING ACTIVITIES		(101,388)		(173,028)		(153,511	)		(101,388	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net Repayments on Loans Payable		(20,000)		(56,850)		0			(20,000	)
Proceeds from Fixed Rate Mortgage Notes Payable		61,900		72,500		104,000			61,900
Principal Payments on Fixed Rate Mortgage Notes Payable		(27,191)		(29,929)		(37,196	)		(27,191	)
Financing Costs Paid on Debt		(2,078)		(443)		(569	)		(2,078	)
Proceeds from the Exercise of Stock Options		1,016		567		1,966			1,016
Proceeds from Underwritten Public Offering of Common Stock, net of offering costs		0		132,338
Proceeds from At-The-Market 6.125% Series C Preferred Stock, net of offering costs		80,288		11,282		75,958			80,288
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments		18,489		32,147		320			18,489
Shares repurchased through the Common Stock Repurchase Plan		(3,209)		0		0			(3,209	)
Preferred Dividends Paid		(12,445)		(8,839		(16,190	)		(12,445	)
Common Dividends Paid, net of Reinvestments		(27,502)		(22,929)		(33,338	)		(27,502	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		69,268		129,844		94,951			69,268

NET INCREASE IN CASH AND CASH EQUIVALENTS		15,734		7,034
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						(4,134	)		15,734
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		20,179		9,324		23,517			20,179
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	35,913	$	16,358	$	19,383		$	35,913

See Accompanying Notes to Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, ~~2020~~2021

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 March 31, ~~2020,~~2021, we owned ~~116~~121 properties with total square footage of ~~23.0~~24.6 million, as compared to ~~114~~119 properties with total square footage of ~~22.3~~23.4 million as of September 30, ~~2019.~~2020. Our occupancy rate at the end of the quarter was ~~99.4%~~99.7% as compared to ~~98.9%~~99.4% as of September 30, ~~2019.~~2020. Subsequent to quarter end, on April 15, 2021, we sold our 60,400 square foot building located in Carlstadt (New York, NY), NJ. As this property was one of our two joint venture holdings, we now have only one property that is not wholly-owned by MREIC (Somerset, NJ). Our properties are located in 3031 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, Utah, Virginia, Washington and Wisconsin. As of the quarter ended March 31, ~~2020,~~2021, our weighted average lease ~~maturity~~term was 7.4 years and our annualized average base rent per occupied square foot was $~~6.28~~6.51. As of March 31, ~~2020,~~2021, the weighted average building age, based on the square footage of our buildings, was ~~9.4~~9.9 years. ~~We also own a portfolio of REIT investment securities, and are in the process of gradually reducing the size of this portfolio to no more than approximately~~ 5% ~~of our undepreciated assets (which is our total assets, excluding accumulated depreciation). We held $99.0~~ ~~million in marketable REIT securities as of March 31, 2020, representing~~ ~~4.6%~~ ~~of our undepreciated assets. Total assets excluding accumulated depreciation were $2.2~~ ~~billion as of March 31, 2020.~~

The future effects of the evolving impact of the COVID-19 ~~pandemic~~Pandemic are uncertain however, at this time COVID-19 has not had a material adverse effect on our financial condition. We invest in modern single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net-leases. Our investments are exclusively situated in the continental United States, and are primarily located in strategic locations that are mission-critical to our tenants’ needs. In many cases our buildings are highly automated in order to better serve the omni-channel distribution networks that have become essential today. Approximately ~~80%~~ 83% of our revenue is derived from ~~investment grade~~investment-grade tenants, or their subsidiaries as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to S&P Global Ratings and Moody’s 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.

Our portfolio of modern, net-leased industrial properties continues to provide shareholders with reliable and predictable income streams. Our resilient occupancy rates and rent collection results during these challenging times highlight the mission-critical nature of our assets and underscore the essential need for our tenants’ operations. Furthermore, because our weighted average lease term is 7.4 years and our weighted average fixed rate mortgage debt maturity is 11.3 years, we expect our cash flow to remain resilient over long periods of time. Our overall occupancy rate and our base rent collections have remained strong throughout the COVID-19 Pandemic. Our overall occupancy rate has been over 99% throughout the Pandemic and was 99.7% during the current quarter. Our base rent collections have averaged 99.9% throughout the COVID-19 Pandemic and we expect future months to be consistent with this trend.

On May 4, 2021, we announced that, following a comprehensive strategic alternatives process, we entered into a definitive merger agreement with Equity Commonwealth, a New York Stock Exchange traded real estate investment trust, by which Equity Commonwealth will acquire MREIC in an all-stock transaction. See Note 10-Subsequent Events.

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Income Tax

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 TCJA), Section 199A was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, an individual taxpayer and estates and trusts may deduct 2020%% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or non-qualified dividend income.

We follow the provisions of ASC Topic 740, Income Taxes, that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on our evaluation, we determined that we have no uncertain tax positions and no unrecognized tax benefits as of March 31, 2021. We record interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of March 31, 2021, the fiscal tax years 2017 through and including 2020 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.

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 six months ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2020.~~2021. 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, ~~2019.~~2020.

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.

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 $~~114,000~~77,000 and $~~215,000~~114,000 for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively and amounted to $~~270,000~~134,000 and $~~344,000~~270,000 for the six months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

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During the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the following stock options, which vest one year after grant date, were granted under our Stock Option Plan:

~~SUMMARY OF STOCK OPTIONS OUTSTANDING~~ Summary of Stock Options Outstanding

Date of
Grant

Number of
Employees

Number of
Shares (in
thousands)

Option
Price

Expiration
Date
01/13/20 1 65 $ 14.55 01/13/28
01/10/19 1 65 $ 12.86 01/10/27
12/10/18 12 385 $ 13.64 12/10/26

Date of

Grant

Number of

Employees

Number of Shares (in thousands)

Option

Price

Expiration

Date

01/13/21

16.46

01/13/29

01/13/20

14.55

01/13/28

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:

Schedule of Stock Options, Valuation Assumptions

~~SCHEDULE OF STOCK OPTIONS, VALUATION ASSUMPTIONS~~

	Fiscal 2020		Fiscal 2019		Fiscal 2021			Fiscal 2020
Dividend yield		4.67%		5.03%		4.37	%		4.67	%
Expected volatility		18.40%		17.17%		20.17	%		18.40	%
Risk-free interest rate		1.76%		2.88%		0.80	%		1.76	%
Expected lives (years)		8		8		8			8
Estimated forfeitures		0		0		0			0

The ~~weighted-average~~weighted average fair value of options granted during the six months ended March 31, ~~2020~~2021 and ~~2019~~2020 was $~~1.24~~1.49 and $~~1.17~~1.24 per share subject to the option.

During the six months ended March 31, 2021 and 2020, 0 shares of restricted stock were granted. During the six months ended March 31, ~~2019,~~2021, three participants exercised options to purchase ~~25,000~~159,000 shares of ~~restricted~~common stock ~~were granted.~~at a weighted average price of $12.37 per share for total proceeds of $2.0 million. During the six months ended March 31, 2020, two participants exercised options to purchase 95,000 shares of common stock at a weighted average price of $10.69 per share for total proceeds of $1.0 million. ~~During the six months ended March 31, 2019, one participant exercised options to purchase~~ ~~65,000~~ ~~shares of common stock at a price of $8.72~~ ~~per share for total proceeds of $567,000. During the six months ended March 31, 2020, two participants forfeited options to purchase~~ ~~100,000~~ ~~shares of common stock at a weighted average price of $13.97. During the six months ended March 31, 2019,~~ 0 ~~options were forfeited.~~ As of March 31, ~~2020,~~2021, a total of 1.2 million shares were available for grant as stock, 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 March 31, ~~2020,~~2021, there were outstanding options to purchase ~~950,000~~856,000 shares with an aggregate intrinsic value of $~~473,000~~3.5 million.

Lease Termination Income

Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with us.

Effective October 1, 2020, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for our 75,000 square foot facility located in Halfmoon (Albany), NY whereby we received a termination fee in the amount of $377,000 representing approximately 50% of the then remaining rent due under the lease, which was set to expire in 1.2 years on November 30, 2021. We simultaneously entered into a 10.4 year lease agreement with United Parcel Service, Inc. (UPS) which became effective November 1, 2020. The lease agreement with UPS provides for five months of free rent, after which, on April 1, 2021, initial annual rent of $510,000, representing $6.80 per square foot, will commence, with 2.0% annual increases thereafter, resulting in a straight-line annualized rent of $541,000, representing $7.21 per square foot over the life of the lease, which expires March 31, 2031. This compares to the former U.S GAAP straight-line rent of $574,000, representing $7.65 per square foot and former cash rent of $8.19 per square foot, resulting in a decrease of $33,000, representing a 5.8% decrease on a U.S GAAP straight-line basis and a decrease of 17.0% on a cash basis. The new 10.4 year lease agreement with UPS provides for an additional 9.3 years of lease term versus the old lease with Cardinal Health.

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Only four of our 121 properties have leases that contain an early termination provision. These four properties contain 260,000 total rentable square feet, representing 1% of our total rentable square feet. Our leases with early termination provisions are our 36,000 square foot location in Urbandale (Des Moines), IA, our 39,000 square foot location in Rockford, IL, our 83,000 square foot location in Roanoke, VA and our 102,000 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: 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 $2.0 million.

Gains on Sale of Real Estate Investment

Gains on the sale of real estate investment is recognized when the profit on a given sale is determinable, and the seller is not obliged to perform significant activities after the sale to earn such profit.

Recent Accounting Pronouncements

In ~~February 2016, the~~April 2020, FASB issued ~~ASU 2016-02, “Leases.” ASU 2016-02 amends~~interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 Pandemic that allows entities to treat the concession as if it was a part of the existing ~~accounting standards for~~contract instead of applying lease ~~accounting, including requiring lessees~~modification accounting. This guidance is only applicable to ~~recognize most leases on their~~the COVID-19 Pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected this option relating to qualifying rent deferral and rent abatement agreements. For qualifying lease modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable balance ~~sheets and making targeted changes to lessee and lessor accounting. The standard requires~~until the deferred rent has been repaid. For qualifying lease modifications that include rent abatement concessions, this results in a ~~modified retrospective transition approach for all leases existing at, or~~direct reduction of rental income in the current period. As of March 31, 2021, we have entered into after, the date of initial application, with an option to use certain transition relief. The most significant changes related to lessor accounting under ASU 2016-02 include bifurcating revenue into lease and non-lease components and the new standard’s narrow definition of initial direct costs for leases. Since our revenue is primarily derived from leasing activities from long-term net-leases and since we previously did not capitalize indirect costs for leases, we continue to account for our leases and related leasing costs in substantially the same manner as we previously did prior to the adoption of the ASU 2016-02 on October 1, 2019. In addition, the guidance requires lessees to recognize assets and liabilities for operating leases with lease terms greater than twelve months on the balance sheet. Therefore, the most significant impact for us is the recognition of our corporate office lease, while accounting where we are the lessor remains substantially the same. Upon adoption, we calculated the asset and lease liability equal to the present value of the minimum lease payments due under our corporate office lease and determined that the asset and lease liability was immaterial to our Consolidated Financial Statements. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases.” The amendment in ASU 2018-10 affects narrow aspects of the guidance issued earlier in ASU 2016-02 by removing certain inconsistencies and providing additional clarificationrent deferral agreements related to the ~~guidance issued earlier. In December 2018,~~COVID-19 Pandemic representing approximately $438,000 of base rent otherwise owed during the ~~FASB issued ASU 2018-20 “Narrow-Scope Improvements for Lessors.” Similar to ASU 2018-10, 2018-20 affects narrow aspects~~months of April through October 2020 representing 31 basis points of our total annual base rent. As 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 clarificationquarter end, we have collected 85% of how to treat payments made by a lessee directly to a third party, such as real estate taxes paid by the lessee directly to the taxing authority, whereby items paid directly by the lessee to a third party should not be reflected in the lessors income statement and, thus, should not be bifurcated and included in revenue and operating expenses. A majority of our reimbursable expenses are paid by us and are billed back to our lessees. Therefore, these reimbursable expenses will continue to be presented separately by bifurcating these revenue and expense items in our Consolidated Statements of Income (Loss). We adopted these standards effective October 1, 2019 and the adoption of these standards did not have a significant impact on our consolidated financial statements and related disclosures. The only effect the adoption of these standards had on our consolidated financial statements and related disclosures effective October 1, 2019 are instances where certain types of payments are made by a lessee directly to a third party whereas these payments are no longer presented on a gross basis in our Consolidated Statements of Income, which have an immaterial effect on our reported revenue and a net zero effect on our Net Income Attributable to Common Shareholders. In addition, in order to conform to the current period’s presentation, Real Estate Taxes and Reimbursement Revenue for the three and six months ended March 31, 2019 were reduced by $~~925,000~~this $438,000 deferred rent amount. ~~and $1.8~~ ~~million, respectively, for the amount of Real Estate Taxes made by a lessee directly to a third party during the three and six months ended March 31, 2019.~~

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.

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Derivative ~~Financial~~ Instruments and Hedging Activities

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our variable rate debt. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of derivative financial instruments. Our primary strategy in entering into derivative contracts is to minimize the variability that changes in interest rates could have on its future cash flows. We generally employ derivative instruments that effectively convert a portion of our variable rate debt to fixed rate debt. We do not enter into derivative instruments for speculative purposes. As further ~~discussed~~described in “Note 5 – Debt”, onin November ~~15,~~ 2019 we ~~entered into a $75.0~~ million unsecured term loan. The term loan bears interest using the London Interbank Offered Rate (LIBOR) variable rate plus an applicable spread. To reduce floating interest rate exposure under the term loan, we also entered into an interest rate swap agreement ~~to fix LIBOR~~that has the effect of fixing the interest rate on ~~the entire~~our $75.0 million unsecured term loan (the “Term Loan”).

The interest rate for borrowings under the ~~full duration~~Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. The re-pricing and scheduled maturity dates, payment dates, index and the notional amounts of the ~~term loan resulting in an all-in~~interest rate swap agreement coincides with those of ~~2.92%. This~~the underlying Term Loan. The interest rate swap agreement is ~~considered~~net settled monthly. The Company has designated this derivative as a ~~derivative financial instrument used to manage~~cash flow hedge and has recorded the fair value on the balance sheet in accordance with ASC 815, Derivatives and Hedging (See Note 7 for information on the determination of fair value). The effective portion of the gain or loss on this hedge will be reported as a component of Accumulated Other Comprehensive Loss on our ~~exposure to fluctuations~~Consolidated Balance Sheets. To the extent that the hedging relationship is not effective or does not qualify as a cash flow hedge, the ineffective portion is recorded in interest ~~rates on our term loan. Derivative financial instruments must be effective in reducing our~~expense. Hedges that received designated hedge accounting treatment are evaluated for effectiveness at the time that they are designated as well as through the hedging period. As of March 31, 2021, the Company has determined that this interest rate ~~risk exposure~~swap agreement is highly effective as a cash flow hedge. As a result, the fair value of this derivative of $2.6 million and $4.4 million as of March 31, 2021 and September 30, 2020, respectively, was recorded as a component of Accumulated Other Comprehensive Loss in ~~order to qualify for hedge accounting. When~~ the ~~terms of an underlying transaction are modified, or when~~Consolidated Balance Sheets, with the ~~underlying hedged item ceases to exist, all changes~~corresponding liability included in Other Liabilities. The change in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. We have not entered into, nor do we plan to enter into, derivative financial instruments for trading or speculative purposes. As of March 31, 2020, we believe we do not have any significant risk associated with non-performance of the financial institutions that are the counterparty to our derivative contract. Our interest rate swap agreement is ~~deemed effective~~reflected in the Consolidated Statement of Comprehensive Income and ~~is classified as a cash flow hedge. Therefore, charges or credits relating~~amounted to $1.4 million and $1.8 million for the ~~changes in fair values of our effective interest rate swap are made to Other Comprehensive Income. As of~~three and six months ended March 31, 2020, we have determined that the effect on our Consolidated Balance Sheet and Other Comprehensive Income relating to the fair value of our interest rate swap was immaterial to our Consolidated Financial Statements.2021.

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~~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~~weighted average number of common shares outstanding for the period 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 ~~77,000~~198,000 and ~~81,000~~77,000 shares are included in the diluted weighted average shares outstanding for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and common stock equivalents of ~~96,000~~151,000 and ~~103,000~~96,000 shares are included in the diluted weighted average shares outstanding for the six months ended March 31, ~~2020~~2021 and ~~2019.~~2020. For the diluted weighted average shares outstanding for the three months ended March 31, 2021 and 2020, ~~and 2019,~~ ~~315,000~~65,000 and ~~690,000~~315,000 options to purchase shares of common stock were antidilutive. For the diluted weighted average shares outstanding for the six months ended March 31, 2021 and 2020, ~~and 2019,~~ ~~195,000~~130,000 and ~~305,000~~195,000 options to purchase shares of common stock, respectively, were antidilutive.

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NOTE 3 –REAL ESTATE INVESTMENTS

Acquisitions

On ~~October 10, 2019,~~December 17, 2020, we purchased a newly constructed ~~616,000~~488,000 square foot industrial building, situated on ~~78.6~~ ~~acres, located in the Indianapolis, IN Metropolitan Statistical Area (MSA). The building is~~ ~~100%~~ ~~net-leased to Amazon.com Services, Inc. for~~ 15 ~~years through~~ ~~August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $81.5~~ ~~million. We obtained an~~ 18 ~~year, fully-amortizing mortgage loan of $52.5~~ ~~million at a fixed interest rate of~~ ~~4.27%. Annual rental revenue over the remaining term of the lease averages $5.0~~ ~~million.~~

~~On March 30, 2020, we purchased a newly constructed~~ ~~153,000~~ ~~square foot industrial building, situated on~~ ~~24.2~~99.0 acres, located in the Columbus, OH MSA. The building is 100% net-leased to ~~Magna Seating of America,~~FedEx Ground Package System, Inc. for 1015 years through ~~January 2030~~September 2035. The purchase price was $~~17.9~~73.3 million. We obtained a 1015 year, fully-amortizing mortgage loan of $~~9.4~~47.0 million at a fixed interest rate of ~~3.47%~~2.95%. Annual rental revenue over the remaining term of the lease averages $~~1.2~~4.6 million.

~~Amazon.com,~~On December 24, 2020, we purchased a newly constructed 658,000 square foot industrial building, situated on 129.9 acres, located in the Atlanta, GA MSA. The building is 100% net-leased to Home Depot U.S.A., Inc. ~~and Magna Seating~~for 20 years through November 2040. The purchase price was $96.7 million. We obtained a 17 year, fully-amortizing mortgage loan of ~~America,~~$57.0 million at a fixed interest rate of 3.25%. Annual rental revenue over the remaining term of the lease averages $5.5 million.

FedEx Ground Package System, Inc.’s ultimate parent, ~~Magna International~~FedEx Corporation and Home Depot U.S.A., Inc’s ultimate parent, Home Depot, Inc. are ~~publicly-owned~~publicly-listed companies and financial information related to these entities are 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 the www.sec.gov website.

We evaluated the property acquisitions which took place during the six months ended March 31, ~~2020,~~2021, 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 properties purchased during fiscal ~~2020~~2021 as asset acquisitions and allocated the total cash consideration, including transaction costs of approximately $~~49,000~~576,000, 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 properties acquired during the six months ended March 31, ~~2020~~2021 that is accounted for as an asset acquisition (in thousands):

Schedule of Properties Acquired During Period Accounted for Asset Acquisitions

~~SCHEDULE OF PROPERTIES ACQUIRED DURING PERIOD ACCOUNTED FOR ASSET ACQUISITIONS~~


Land	$	5,798	$	16,297
Building		91,124		149,408
In-Place Leases		2,502		4,863

The following table summarizes the operating results included in our ~~consolidated statements~~Consolidated Statements of ~~income (loss)~~Income for the properties acquired during the ~~three and~~ six months ended March 31, ~~2020~~2021 (in thousands):

Summary of Consolidated Statements of Income for Properties Acquired

	Three Months Ended 3/31/2021		Six Months Ended 3/31/2021

Rental Revenues	$	2,517	$	2,830
Net Income Attributable to Common Shareholders		957		1,233

~~SUMMARY OF CONSOLIDATED STATEMENTS OF INCOME FOR PROPERTIES ACQUIRED~~Expansions

During the six months ended March 31, 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million, which resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We will soon be starting the second phase of this parking expansion project at this location, which will increase the rental rate further and extend the lease term.

Three
Months
Ended
03/31/2020

Six
Months
Ended
03/31/2020

Rental Revenues $ 1,243 $ 2,370
Net Income Attributable to Common Shareholders 194 478

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Proforma information

The following unaudited pro-forma condensed financial information has been prepared utilizing our historical financial statements and the effect of the reduction of revenue and expenses that will no longer be generated from a property that was sold after March 31, 2021 and the effect of additional revenue and expenses generated from properties acquired and expanded during fiscal ~~2020~~2021 to date, and during fiscal ~~2019,~~2020, assuming that the property acquisitions, ~~and~~ completed expansions and the sale of one property had occurred as of October 1, ~~2018,~~2019, 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 and expansions. Furthermore, the net proceeds raised from our Dividend Reinvestment and Stock Purchase Plan (the DRIP) were used to fund property acquisitions and expansions and therefore, the weighted average shares outstanding used in calculating the ~~pro forma~~pro-forma Basic and Diluted Net Income ~~(Loss)~~ per Share Attributable to Common Shareholders has been adjusted to account for the increase in shares ~~raised through~~issued pursuant to the DRIP, as if all ~~the~~such shares ~~raised had occurred~~has been issued on October 1, ~~2018.~~2019. Additionally, the net proceeds raised from the issuance of additional shares of our ~~6.125%~~ 6.125 %Series C Cumulative Redeemable Preferred Stock, $0.01par value per share (6.125%Series C Preferred Stock), through our At-The-Market Sales Agreement Program were used to help fund property acquisitions and, therefore, the ~~pro forma~~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, ~~2018.~~

2019. The unaudited ~~pro forma~~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.

~~SCHEDULE OF PRO FORMA INFORMATION~~Schedule of Pro Forma Information

	Three Months Ended (in thousands, except per share amounts)
	3/31/2021				3/31/2020
	As Reported		Pro-forma		As Reported			Pro-forma

Rental Revenue	$	39,246	$	39,086	$	35,114		$	39,060

Net Income (Loss) Attributable to Common Shareholders	$	25,913	$	25,862	$	(75,078	)	$	(75,483	)

Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders	$	0.26	$	0.26	$	(0.77	)	$	(0.77	)

	Six Months Ended (in thousands, except per share amounts)
	3/31/2021				3/31/2020
	As Reported		Pro-forma		As Reported			Pro-forma

Rental Revenue	$	76,091	$	78,008	$	69,983		$	77,992

Net Income (Loss) Attributable to Common Shareholders	$	51,659	$	51,833	$	(71,551	)	$	(72,893	)

Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders	$	0.53	$	0.53	$	(0.73	)	$	(0.74	)

Three Months Ended
(in thousands, except per share amounts)

3/31/2020 3/31/2019
As Reported Pro-forma As Reported Pro-forma

Rental Revenue $ 35,114 $ 35,407 $ 32,934 $ 35,064

Net Income (Loss) Attributable to Common Shareholders $ (75,078) $ (74,933) $ 23,821 $ 22,517

Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders $ (0.77) $ (0.77) $ 0.26 $ 0.23

Six Months Ended
(in thousands, except per share amounts)

3/31/2020 3/31/2019
As Reported Pro-forma As Reported Pro-forma

Rental Revenue $ 69,983 $ 70,692 $ 65,551 $ 70,100

Net Income (Loss) Attributable to Common Shareholders $ (71,551) $ (71,065) $ (8,543) $ (9,968)

Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders $ (0.73) $ (0.73) $ (0.09) $ (0.10)

Tenant Concentration

We have a concentration of properties leased to FedEx Corporation (FDX) and FDX ~~subsidiary-leased properties,~~subsidiaries, consisting of 63 separate stand-alone leases covering 11.2 million square feet as of March 31, 2021 and 60 separate stand-alone leases covering 10.4 million square feet as of March 31, ~~2020 and 61 separate stand-alone leases covering~~ ~~10.5~~ ~~million square feet as of March 31, 2019. In this period~~2020. FDX is experiencing record demand due to the continued strong growth in ecommerce. Additionally, in periods of unprecedented turbulence, the services of FedEx are essential in keeping supply chains moving and in delivering critically needed ~~relief aid~~supplies throughout the world. As of March 31, ~~2020,~~2021, the 6063 separate stand-alone leases that are leased to FDX and FDX subsidiaries are located in 2526 different states and have a weighted average lease maturity of ~~8.2~~7.8 years. The percentage of FDX and its subsidiaries leased square footage to the total of our rental space was 46% (5% to FDX and 41% to FDX subsidiaries) as of March 31, 2021 and 45% (5% to FDX and 40% to FDX subsidiaries) as of March 31, ~~2020 and~~ 2020.

~~49%~~ (

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5% ~~to FDX and~~

~~44%~~ ~~to FDX subsidiaries) as of March 31, 2019.~~

As of March 31, ~~2020,~~2021, the only tenants, other than FDX and its subsidiaries, that leased 5% or more of our total square footage were ~~FDX and its~~ subsidiaries ~~and~~of Amazon.com, ~~Services, Inc.~~Inc (Amazon), which consists of ~~four~~five separate stand-alone leases for properties located in four different states, containing ~~1.4~~1.5 million total square feet, comprising ~~approximately~~ 6% of our total ~~rental~~leasable square feet. None of our properties are subject to a master lease or any cross-collateralization agreements.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 55% (5% to FDX and 50% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal ~~2020,~~2021, and was ~~60%~~58% (5% to FDX and ~~55%~~53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal ~~2019.~~2020. The only tenants, ~~estimated to~~other than FDX and its subsidiaries, that we estimate will comprise 5% or more of our total Rental and Reimbursement Revenue ~~during the six months ended March 31, 2020 were FDX and its~~for fiscal 2021 are subsidiaries ~~and Amazon.com Services, Inc.,~~of Amazon, which is estimated to be 7% of our Annualized Rental and Reimbursement ~~Revenue.~~Revenue for fiscal 2021 and was 6% for of our Annualized Rental and Reimbursement Revenue for fiscal 2020. For the six months ended March 31, ~~2019,~~ 2021, no ~~tenant,~~ other ~~than FDX and its subsidiaries,~~tenant accounted for 5% or more of our total Rental and Reimbursement Revenue.

FDX and ~~Amazon.com, Inc.~~Amazon are ~~publicly-owned~~publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. FDX and ~~Amazon.com, Inc.~~Amazon are rated “BBB” and “AA-”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A2”, respectively 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, Amazon.com, Inc., S&P Global Ratings or Moody’s on such websites.

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 $~~99.0~~131.7 million as of March 31, ~~2020, representing~~2021. We limit the size of this portfolio to no more than approximately ~~4.6~~5%% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. Total assets excluding accumulated depreciation were $~~2.2~~2.4 billion as of March 31, ~~2020. We are in the process of gradually reducing the size of this portfolio to no more than approximately~~ 5~~% of our undepreciated assets.~~2021. Our REIT securities portfolio provides us with diversification, income, ~~and is~~ a source of potential liquidity when ~~needed.~~needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our $131.7 million investment in marketable REIT securities as of March 31, 2021 represented 5.4% of our undepreciated assets. We normally hold REIT securities long-term and ~~have the ability and intent~~intend to hold these securities to recovery.

We recognized dividend income on our investments in securities of $~~3.4~~1.6 million and $~~6.6~~3.2 million for the three and six months ended March 31, ~~2020.~~2021. There have been no open market purchases ~~or sales~~ of securities during the six months ended March 31, ~~2020. One of our preferred stock investments was called for redemption at its liquidation value which was equal to our cost basis.~~2021. We owned a total of ~~1.3~~1.4 million common shares in UMH Properties, Inc. (UMH), a related REIT, as of March 31, ~~2020~~2021, at a total cost of $~~13.4~~14.4 million and a fair value of $~~14.0~~26.0 million, representing an ~~3.1~~81%~~% of the outstanding common shares of UMH.~~ unrealized gain. Dividends received from our UMH common shares are reinvested through UMH’s Dividend Reinvestment and Stock Purchase Plan. ~~In addition, as of~~During the six months ended March 31, ~~2020, we owned~~2021, UMH redeemed all of its outstanding ~~100,000~~8.00% ~~shares of UMH’s~~ ~~8.00~~% Series B Cumulative Redeemable Preferred Stock at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends, of which we owned 100,000 shares at a total cost of $2.5 million.

In addition to the $2.5 million of UMH 8.00% Series B Cumulative Redeemable Preferred Stock that was redeemed during the six months ended March 31, 2021, we also sold marketable REIT securities for gross proceeds totaling $16.3million with an original cost basis of $14.1 million, resulting in a ~~fair value~~realized gain of $2.2 million. ~~The total unrealized gain on our investment in UMH’s common and preferred stock as of March 31, 2020 was $~~

~~334,000~~.

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As of March 31, ~~2020,~~2021, we had total net unrealized holding losses on our securities portfolio of $~~136.1~~87.9 million. As a result of the adoption of ASU 2016-01, ~~effective October 1, 2018,~~ we ~~recorded a $24.7~~ ~~million adjustment to opening retained earnings. In addition, $83.1~~ ~~million and $86.7~~ ~~million of the net unrealized holding losses have been reflected as~~recognized Unrealized Holding Gains (Losses) Arising During the Periods in the accompanying Consolidated Statements of Income ~~(Loss)~~ for the three and six months ended March 31, ~~2020,~~2021 of $19.2 million and $38.9 million, respectively. The components of the Unrealized Holding Gains (Losses) Arising During the Periods included in the accompanying Consolidated Statements of Income are as follows:

SCHEDULE OF COMPONENTS OF THE UNREALIZED HOLDING GAINS (LOSSES)

	3/31/2021			3/31/2020			3/31/2021			3/31/2020
	Three Months Ended						Six Months Ended
	3/31/2021			3/31/2020			3/31/2021			3/31/2020
Unrealized Holding Gains (Losses)	$	21,434		$	(83,075	)	$	41,154		$	(86,710	)
Reclassification Adjustment for Net Gains Realized in Income		(2,248	)		0			(2,248	)		0
Unrealized Holding Gains (Losses) Arising During the Period	$	19,186		$	(83,075	)	$	38,906		$	(86,710	)

NOTE 5 – DEBT

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, amortization of financing costs included in interest expense was $~~322,000~~346,000 and $~~320,000~~322,000, respectively. For the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, amortization of financing costs included in interest expense was $~~758,000~~676,000 and $~~637,000~~758,000, respectively.

As of March 31, ~~2020,~~2021, we owned ~~116~~121 properties, of which 5962 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $~~787.6~~874.2 million. Subsequent to quarter end, on April 15, 2021, we sold our 60,400 square foot building located in Carlstadt (New York, NY), NJ and we paid off the mortgage in the amount of $1.1 million. The following is a summary of our Fixed Rate Mortgage Notes Payable as of March 31, ~~2020~~2021 and September 30, ~~2019~~2020 (in thousands):

SUMMARY OF FIXED RATE MORTGAGE NOTES PAYABLE

	3/31/2021						9/30/2020
	Amount			Weighted Average Interest Rate (1)			Amount			Weighted Average Interest Rate (1)
Fixed Rate Mortgage Notes Payable	$	874,175			3.87	%	$	807,371			3.98	%

Debt Issuance Costs	$	12,831					$	12,377
Accumulated Amortization of Debt Issuance Costs		(4,880	)					(4,513	)
Unamortized Debt Issuance Costs	$	7,951					$	7,864

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	866,224					$	799,507

3/31/2020 9/30/2019
Amount
Weighted Average
Interest
Rate (1)
Amount
Weighted Average
Interest
Rate (1)

Fixed Rate Mortgage Notes Payable $ 787,625 4.04% $ 752,916 4.03%

Debt Issuance Costs $ 11,935 $ 11,733
Accumulated Amortization of Debt Issuance Costs (4,052) (3,745)
Unamortized Debt Issuance Costs $ 7,883 $ 7,988

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs $ 779,742 $ 744,928

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

16(1)

Weighted average interest rate excludes amortization of debt issuance costs.

As of March 31, ~~2020,~~2021, interest payable on these mortgages were at fixed rates ranging from ~~3.45~~2.95%% to ~~6.875~~6.875%%, with a weighted average interest rate of ~~4.04~~3.87%%. This compares to a weighted average interest rate of ~~4.03~~3.98%% as of September 30, ~~2019~~2020 and ~~4.07~~4.04%% as of March 31, ~~2019.~~2020. As of March 31, ~~2020 and September 30, 2019,~~2021, the weighted average loan maturity of the Fixed Rate Mortgage Notes Payable was 11.3 years. This compares to a weighted average loan maturity of the Fixed Rate Mortgage Notes Payable of ~~11.6~~11.1 years as of September 30, 2020 and 11.3 years as of March 31, ~~2019.~~2020.

In connection with the two properties acquired during the six months ended March 31, ~~2020,~~2021, which are located in the ~~Indianapolis, IN MSA and in the~~ Columbus, OH ~~MSA~~and Atlanta, GA MSAs (as described in Note 3), we obtained ana 1815 year fully-amortizing mortgage loan and a 1017 year fully-amortizing loan, respectively. The two mortgage loans originally totaled $~~61.9~~104.0 million with a weighted average maturity of ~~16.8~~16.1 years and a weighted average interest rate of ~~4.15~~3.11%%.

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~~During the quarter ended March 31, 2020,~~On January 26, 2021, we fully ~~repaid two self-amortizing~~prepaid a $6.2 million mortgage ~~loans~~loan for our ~~properties~~property located in ~~Augusta, GA~~Kansas City, MO. The loan was originally set to mature on December 1, 2021 and ~~Huntsville, AL. These loans were at a weighted average~~had an interest rate of ~~5.52~~5.18%%. On February 26, 2021, we fully prepaid a $159,000 mortgage loan for our property located in Topeka, KS. The loan was originally set to mature on August 10, 2021 and had an interest rate of 6.50%.

On November 15, 2019, we entered into a new line of credit facility (the “New Facility”) consisting of a $225.0 million unsecured line of credit facility (the “Revolver”) and a new $75.0 million unsecured term loan (the “Term Loan”), resulting in the total potential availability under both the Revolver and the Term Loan of $300.0 million, which is an additional $100.0 million over the former line of credit facility. In addition, the Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The $225.0 million Revolver matures in January 2024 with two options to extend for additional six-month periods. Availability under the New Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial ~~properties~~properties.. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the former line of credit facility to 6.25%, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the Revolver was lowered by a range of 5 basis points to 35 basis points, depending on our leverage ratio, and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at Bank of Montreal’s (BMO) prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of ~~3.05~~1.56%%. As of the quarter end and currently, we do not have any amount drawn down under our Revolver, resulting in the full $225.0 million being currently available. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of ~~2.92~~2.92%%.

From time to time we may use a margin loan for temporary funding of acquisitions and for working capital purposes. This loan is due on demand and is collateralized by our securities portfolio. We must maintain a coverage ratio of approximately 5050%%. The interest rate charged on the margin loan is the bank’s margin rate and was ~~0.75~~0.75%% as of March 31, ~~2020~~2021 and ~~3.0% as of March 31, 2019.~~2020. At March 31, 2021 and 2020, there were 0 amounts drawn down under the margin ~~loan and there was $19.8~~ ~~million drawn down under the margin loan as of March 31, 2019.~~loan.

NOTE 6 – SHAREHOLDERS’ EQUITY

Our authorized stock as of March 31, ~~2020~~2021 consisted of ~~200.0~~300.0 million shares of common stock, of which ~~98.0~~98.3 million shares were issued and outstanding, ~~21.9~~26.6 million authorized shares of ~~6.125~~%6.125% Series C Preferred Stock, of which ~~17.2~~22.0 million shares were issued and outstanding, and 200.0 million authorized shares of Excess Stock, $0.01 par value per share, of which NaN were issued or outstanding.

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Common Stock

We raised $~~24.1~~1.3 million (including dividend reinvestments of $~~5.6~~1.0 million) from the issuance of ~~1.8~~87,000 ~~million~~ shares of common stock under our DRIP during the six months ended March 31, ~~2020. Of that amount, we raised $8.6~~ ~~million (including dividend reinvestments of $1.4~~ ~~million) from the issuance of~~ ~~678,000~~ ~~shares of common stock under our DRIP during the three months ended March 31, 2020.~~2021. During the six months ended March 31, ~~2020,~~2021, we paid $~~33.1~~34.4 million in total cash dividends, or $~~0.34~~0.35 per share, to common shareholders, of which ~~$5.6~~$1.0 million was reinvested in the ~~DRIP,~~DRIP.

On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share. This represents an annualized dividend rate of $0.72 per share. This increase represents the third dividend increase in the past five years, representing a total increase of 1720%~~% participation rate.~~. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. We are also one of the few REITs that is paying out a higher per share dividend today than prior to the Global Financial Crisis. On April 1, ~~2020~~,2021, our Board of Directors declared a dividend of $~~0.17~~0.18 per share to be paid June 15, ~~2020~~2021 to common shareholders of record as of the close of business on May ~~15, 2020~~17, 2021.

On February 6, 2020, we entered into ~~an Equity Distribution Agreement (Common~~a Common Stock ATM ~~Program)~~Program with BMO Capital Markets Corp., B. Riley FBR, Inc., D.A. Davidson & Co., Janney Montgomery Scott LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC (together the “Distribution Agents”) under which we may offer and sell shares of our common stock, $0.01 par value per share, having an aggregate sales price of up to $150.0 million from time to time through the Distribution Agents. Sales of the shares of Common Stock under the Agreement, if any, will be in “at the market offerings.” We implemented the Common Stock ATM program for the flexibility that it provides to opportunistically access the capital markets and to best time our equity capital needs as we close on acquisitions. To date, we have not raised any equity though our Common Stock Equity Program. ~~Based on current prevailing prices, we do not expect to utilize the Common Stock ATM program extensively at this time.~~

~~On January 16, 2020, our Board of Directors reaffirmed our~~Our Common Stock Repurchase Program (the “Program”) ~~that~~ authorizes us to purchase up to $50.0 million of shares of our common stock. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. ~~During March~~

Under the Program, during fiscal 2020, we repurchased ~~300,000~~400,000 shares of our common stock for $~~3.2~~4.3 million at an average price of $~~10.70~~ ~~per share. Subsequent to the quarter end, we repurchased~~ ~~100,000~~ ~~shares of our common stock for $1.1~~ ~~million at an average price of $10.66~~10.69 per share. These are the only repurchases made under the Program ~~thus far.~~to date and we may elect not to repurchase any additional common stock in the future. The remaining maximum dollar value that may be purchased under the Program as of March 31, 2021 is $45.7 million.

6.125% Series C Cumulative Redeemable Preferred Stock

During the six months ended March 31, ~~2020,~~2021, we paid $~~12.4~~16.2 million in Preferred Dividends, or $0.765625 per share, on our outstanding ~~6.125~~6.125%% Series C Preferred Stock for the period September 1, ~~2019~~2020 through February ~~29, 2020.~~28, 2021. As of March 31, ~~2020,~~2021, we ~~have~~had accrued Preferred Dividends of $~~2.2~~2.8 million covering the period March 1, ~~2020~~2021 to March 31, ~~2020.~~2021. 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~~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 April 1, ~~2020,~~2021, our Board of Directors declared a dividend of $0.3828125 per share to be paid June 15, ~~2020~~2021 to the ~~6.125~~6.125%% Series C Preferred shareholders of record as of the close of business on May ~~15, 2020~~17, 2021.

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At-the-Market Sales Agreement Program for our 6.125% Series C Cumulative Redeemable Preferred Stock

On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sale of shares of our ~~6.125~~6.125%% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million.

On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program that provides for the offer and sale from time to time of $125.0 million of our ~~6.125~~6.125%% Series C Preferred Stock, representing an additional $96.5 million, with $28.5 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on June 29, 2017.

On December 4, 2019, we replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018 with another Preferred Stock At-The-Market Sales Agreement Program that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $101.0 million, with $24.0 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018.

On November 25, 2020, we replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019 with another 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 up to $~~125.0~~150.0 million of our ~~6.125~~6.125%% Series C Preferred Stock, representing an additional $~~101.0~~149.3 million, with $~~24.0~~747 ~~million~~,000 being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on ~~August 2, 2018.~~ December 4, 2019.

Sales of shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker, or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through these programs on July 3, 2017. Since inception through March 31, ~~2020,~~2021, we sold ~~8.8~~13.6 million shares of our 6.125% Series C Preferred Stock under these programs at a weighted average price of $~~24.90~~24.91 per share, and generated net proceeds, after offering expenses, of $~~214.3~~332.4 million, of which ~~3.3~~3.1 million shares were sold during the six months ended March 31, ~~2020~~2021 at a weighted average price of $~~25.06~~24.88 per share, generating net proceeds after offering expenses of $~~80.3~~ ~~million. Of that amount, we sold~~ ~~1.5~~ ~~million shares during the three months ended March 31, 2020 at a weighted average price of $25.12~~ ~~per share, generating net proceeds after offering expenses of $37.1~~76.0 million. As of March 31, ~~2020,~~2021, there is $~~79.1~~108.3 million remaining that may be sold under the Preferred Stock ATM Program. No shares have been sold pursuant to the Preferred Stock ATM Program since December 2020.

As of March 31, ~~2020, 17.2~~2021, 22.0 million shares of ~~the~~our 6.125% Series C Preferred Stock were ~~issued and~~ outstanding.

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NOTE 7 - FAIR VALUE MEASUREMENTS

We follow ASC 825, Financial Instruments, for financial assets and liabilities recognized at fair value on a recurring basis. We measure certain financial assets and liabilities at fair value on a recurring basis, including Securities Available for Sale 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 March 31, ~~2020~~2021 and September 30, ~~2019~~2020 (in thousands):

SUMMARY OF FAIR VALUE OF FINANCIAL ASSETS

	Fair Value Measurements at Reporting Date Using
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of March 31, 2021:
Equity Securities – Preferred Stock	$	4,437		$	4,437	$	0		$	0
Equity Securities – Common Stock		127,216			127,216		0			0
Mortgage Backed Securities		1			1		0			0
Interest Rate Swap		(2,572	)		0		(2,572	)		0
Total Securities Available for Sale at Fair Value	$	129,082		$	131,654	$	(2,572	)	$	0

As of September 30, 2020:
Equity Securities – Preferred Stock	$	5,860		$	5,860	$	0		$	0
Equity Securities – Common Stock		102,971			102,971		0			0
Mortgage Backed Securities		1			1		0			0
Interest Rate Swap		(4,368	)		0		(4,368	)		0
Total Securities Available for Sale at Fair Value	$	104,464		$	108,832	$	(4,368	)	$	0

Fair Value Measurements at Reporting Date Using
Total
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

As of March 31, 2020:
Equity Securities – Preferred Stock $ 4,640 $ 4,640 $ 0 $ 0
Equity Securities – Common Stock 94,393 94,393 0 0
Mortgage Backed Securities 2 2 0 0
Total Securities Available for Sale at Fair Value $ 99,035 $ 99,035 $ 0 $ 0

As of September 30, 2019:
Equity Securities – Preferred Stock $ 13,167 $ 13,167 $ 0 $ 0
Equity Securities – Common Stock 172,081 172,081 0 0
Mortgage Backed Securities 2 2 0 0
Total Securities Available for Sale at Fair Value $ 185,250 $ 185,250 $ 0 $ 0

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 holdings 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~~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 March 31, ~~2020,~~2021, the Fixed Rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $~~823.1~~918.1 million and the carrying value amounted to $~~787.6~~874.2 million. When we acquired a property, we allocated the purchase price based upon relative fair value of all the assets and liabilities, including intangible assets and liabilities, relating to the properties acquired lease (See Note 3). Those fair value measurements were estimated based upon independent third-party appraisals and fell within level 3 of the fair value hierarchy.

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NOTE 8 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the six months ended March 31, ~~2020~~2021 and ~~2019~~2020 was $~~17.5~~17.9 million and $~~18.1~~17.5 million, respectively.

During the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, we had dividend reinvestments of $~~5.6~~1.0 million and $~~8.5~~5.6 million, respectively, which required no cash transfers.

NOTE 9 – CONTINGENCIES AND COMMITMENTS

We have entered into agreements to purchase ~~four~~six new build-to-suit, industrial buildings that are currently being developed in Alabama (2), Georgia, ~~North Carolina, Ohio,~~Tennessee, Texas and ~~Utah.~~Vermont. These ~~four~~six future acquisitions total ~~1.5~~1.8 million square feet, with net-leased terms ranging from 1510 to 2015 years ~~years, and with~~, resulting in a weighted average lease term of ~~17.2~~13.5 ~~years.~~years. The aggregate purchase price for these six properties is $~~229.6~~238.1 million. ~~Three~~Five of these ~~four~~six properties, consisting of approximately ~~844,000~~1.3 million square feet, or 5670%, are leased for 15 years ~~years~~ to ~~FDX and its subsidiaries.~~FedEx Ground Package System, Inc., with the remaining property, consisting of approximately 530,000 square feet or 30%, leased for 10 years to Mercedes Benz US International, Inc. All ~~four~~ properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The 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 ~~two~~three of these transactions during fiscal ~~2020~~2021, two in the first half of fiscal 2022 and ~~two~~one in the second half of ~~these transactions during~~ fiscal ~~2021.~~2022. In connection with ~~three~~five of ~~these four~~the six properties, we have entered into commitments to obtain ~~three~~five, 15 year ~~year~~, fully-amortizing mortgage loans, ~~for~~totaling $~~85.7~~128.1 million with fixed interest rates ranging from 2.5% to 3.05%, resulting in a weighted average fixed interest rate of ~~3.03~~2.74%.

We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are eight parking expansion projects underway which we expect to cost approximately $31.4 million. In addition, the first phase of a parking expansion project was completed during the prior quarter at our property located in Olathe (Kansas City), KS for a total project cost of $3.4 million. This first phase of the expansion resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We will soon be starting the second phase of this parking expansion project at this location, which will increase the rental rate further and extend the lease term. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at nine additional locations bringing the total recently completed and potential parking lot expansion projects to 18 currently.

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.

NOTE 10 – SUBSEQUENT EVENTS

As announced on May 4, 2021, following a comprehensive strategic alternatives process, we entered into a definitive merger agreement with Equity Commonwealth pursuant to which Equity Commonwealth will acquire the Company in an all-stock transaction. Under the terms of the merger agreement, our common stockholders will receive 0.67 shares of Equity Commonwealth stock for every share of our common stock they own. The transaction is expected to close during the second half of calendar 2021, subject to customary closing conditions, including the approval of common stockholders of both Equity Commonwealth and Monmouth.

On April 1, ~~2020,~~2021, our Board of Directors declared a dividend of $~~0.17~~0.18 per share to be paid June 15, ~~2020~~2021 to common shareholders of record as of the close of business on May ~~15, 2020~~17, 2021.

On April 1, ~~2020,~~2021, our Board of Directors declared a dividend of $0.3828125 per share to be paid June 15, ~~2020~~2021 to the 6.125% Series C Preferred shareholders of record as of the close of business on May ~~15, 2020~~.17, 2021.

~~In addition~~Subsequent to the March 31, 2021 quarter end, on April 15, 2021, we sold our ~~300,000~~60,400 ~~shares we repurchased of our common stock~~square foot building located in Carlstadt (New York, NY), NJ for $~~3.2~~13.0 million. Prior to the sale, we owned a 51% interest in this property. Our 51% portion of the sale proceeds resulted in a U.S. GAAP net realized gain of approximately $4.2 million, ~~at an average price~~representing a 206% gain over the depreciated U.S. GAAP basis and a net realized gain over our historic undepreciated cost basis of approximately $~~10.70~~ ~~per share during March 2020, subsequent to the quarter end we repurchased~~ ~~100,000~~ ~~shares of our common stock for $1.1~~3.6 million, ~~at an average price of $10.66~~ ~~per share. These are the only repurchases made under~~representing a 132% net gain over our ~~Common Stock Repurchase Program thus far.~~historic undepreciated cost basis.

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

Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. Forward-looking statements can be identified by their use of forward-looking words, such as “may,” “will,” “anticipate,” “expect,” “believe,” “intend,” “plan,” “should,” “seek” or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described below and are described under the above heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above and the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. These and other risks, uncertainties and factors could cause our actual results to differ materially from those included in any forward-looking statements we make. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from our expectations include, among others:

●

the ability of our tenants to make payments under their respective leases;

●

our reliance on certain major tenants;

●

our ability to re-lease properties that are currently vacant or that become vacant;

●

our ability to obtain suitable tenants for our properties;

●

changes in real estate market conditions, economic conditions in the industrial sector, the markets in which our properties are located and general economic conditions;

●

the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations and illiquidity of real estate investments;

	●	~~the effect of COVID-19 on our business and general economic conditions;~~
	●	our ability to acquire, finance and sell properties on attractive terms;

●

our ability to repay debt financing obligations;

●

our ability to refinance amounts outstanding under our debt obligations at maturity on terms favorable to us, or at all;

●

the loss of any member of our management team;

●

our ability to comply with debt covenants;

●

our ability to integrate acquired properties and operations into existing operations;

●

continued availability of proceeds from issuances of our debt or equity securities;

●

the availability of other debt and equity financing alternatives;

●

changes in interest rates, including the replacement of the LIBOR reference rate, under our current credit facility and under any additional variable rate debt arrangements that we may enter into in the future;

●

our ability to successfully implement our selective acquisition strategy;

●

our ability to maintain internal controls and procedures to ensure all transactions are accounted for properly, all relevant disclosures and filings are timely made in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected;

●

changes in federal or state tax rules or regulations that could have adverse tax consequences;

	●	declines in the market prices of our investment securities; ~~and~~

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●

the effect of COVID-19 on our business and general economic conditions;

●

our ability to qualify as a REIT for federal income tax ~~purposes.~~purposes;

●

potential adverse effects on our business as a result of a publicly announced proxy contest for the election of directors at our annual meeting or other shareholder activism;

	21●	inability to complete the proposed transaction with Equity Commonwealth because, among other reasons, one or more conditions to the closing of the proposed transaction may not be satisfied or waived;
	●	uncertainty as to the timing of completion of the proposed transaction;
	●	potential adverse effects or changes to relationships with Equity Commonwealth’s or Monmouth’s respective tenants, employees, service providers or other parties resulting from the announcement or completion of the proposed transaction;
	●	the outcome of any legal proceedings that may be instituted against the parties and others related to the merger agreement;
	●	possible disruptions from the proposed transaction that could harm Equity Commonwealth’s or Monmouth’s respective business, including current plans and operations;
	●	unexpected costs, charges or expenses resulting from the proposed transaction; and
	●	uncertainty of the expected financial performance of Equity Commonwealth following completion of the proposed transaction, including the possibility that the benefits anticipated from the proposed transaction will not be realized or will not be realized within the expected time period.

You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. Although we have entered into the merger agreement with Equity Commonwealth, there can be no assurance that the merger and other transactions contemplated by the merger agreement will be completed.

Merger with Equity Commonwealth

As previously announced, in January 2021, our Board of Directors unanimously decided to explore strategic alternatives to maximize shareholder value. Following a comprehensive strategic alternatives process, on May 4, 2021, we entered into a definitive merger agreement with Equity Commonwealth under which, on the terms and subject to the conditions set forth in the merger agreement, the Company will merge with and into a new wholly-owned subsidiary of Equity Commonwealth, resulting in Equity Commonwealth acquiring the Company in an all-stock transaction. The merger agreement provides that, upon closing of the merger, our common stockholders will receive 0.67 shares of Equity Commonwealth stock for every share of our common stock they own. We ~~undertake no obligation~~plan to ~~update or revise any forward-looking statements as~~continue to pay our regular quarterly common stock dividend and our Series C Cumulative Redeemable Preferred Stock dividend until closing of the transaction. The transaction is expected to close during the second half of calendar 2021, subject to customary closing conditions, including approval by common stockholders of both Equity Commonwealth and the Company.

This proposed merger is the culmination of the comprehensive strategic alternatives review conducted by our Board. As part of the review, our Board of Directors, working with the Company’s legal and financial advisors, carefully considered a ~~result~~full range of ~~new information, future events or otherwise.~~strategic alternatives. The Company and its advisors engaged with and solicited proposals from a broad range of highly reputable strategic and financial counterparties, all with significant access to capital, comprising approximately 100 different potential buyers, including industrial, triple-net and other REITs, private equity sponsors, sovereign wealth funds and pension funds, among other domestic and international investors. At the conclusion of this process, the Board unanimously concluded that the merger with Equity Commonwealth is the best outcome to maximize long-term value for the Company’s stockholders.

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, ~~2019.~~2020.

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 six months ended March 31, ~~2020,~~2021, we purchased two new built-to-suit, net-leased, industrial properties, located in the ~~Indianapolis, IN~~Columbus, OH, and ~~Columbus, OH~~Atlanta, GA Metropolitan Statistical Areas (MSAs) totaling approximately ~~769,000~~1.1 million square feet, for ~~$99.4~~$170.0 million. The two properties are net-leased for terms of 15 and 20 years, respectively resulting in a weighted average lease term of 17.9 years and are expected to generate annualized rental income over the life of their leases of $10.1 million. In connection with the two properties acquired during the six months ended March 31, ~~2020,~~2021, we obtained ~~an 18~~a 15 year, fully-amortizing mortgage loan and a 1017 year, fully-amortizing ~~loan.~~mortgage loan, respectively. The two mortgage loans originally totaled ~~$61.9~~$104.0 million with a weighted average maturity of ~~16.8~~16.1 years and a weighted average fixed interest rate of ~~4.15%~~3.11%. As of March 31, ~~2020,~~2021, we owned ~~116~~121 properties with total square footage of ~~23.0~~24.6 million. These properties are located in 3031 states. Subsequent to quarter end, on April 15, 2021, we sold our 60,400 square foot building located in Carlstadt (New York, NY), NJ. As of the quarter ended March 31, ~~2020,~~2021, our weighted average lease ~~maturity~~term was 7.4 years, our occupancy rate was ~~99.4%~~99.7%, and our annualized average base rent per occupied square foot was ~~$6.28.~~$6.51. As of March 31, ~~2020,~~2021, the weighted average building age, based on the square footage of our buildings, was ~~9.4~~9.9 years. In addition, total gross real estate investments, excluding marketable REIT securities investments of ~~$99.0~~$131.7 million, were ~~$2.0~~$2.2 billion as of March 31, ~~2020.~~2021.

See PART I, Item 1 – Business in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2020 for a more complete discussion of the economic and industry-wide factors relevant to us and the opportunities, challenges, and risks on which we are focused.

The future effects of the ~~evolving impact of the~~ COVID-19 ~~pandemic~~Pandemic are uncertain, however, at this time ~~we believe that the fallout from~~ COVID-19 ~~will~~has not ~~have~~had a material adverse effect on our financial condition. We invest in modern single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net-leases. Our investments are exclusively situated in the continental United States, and are primarily located in strategic locations that are mission-critical to our tenants’ needs. In many cases our buildings are highly automated in order to better serve the omni-channel distribution networks that have become essential today. Approximately ~~80%~~83% of our revenue is derived from ~~investment grade~~investment-grade tenants, or their subsidiaries as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to S&P Global Ratings and Moody’s are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites.

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For many years, ecommerce demand has increased, and it has now become an integral part of the retail landscape. The COVID-19 ~~pandemic~~Pandemic has created an even greater move towards on-line shopping. ~~We believe~~As a result of state and local government-mandated shutdowns, public health guidance and changing consumer demand, ecommerce sales as a percentage of total retail sales has substantially increased during the past year. The COVID-19 Pandemic has also created a need for supply chain reconfiguration. It is estimated that ~~continued social distancing~~ecommerce sales require three times the warehouse space relative to brick and ~~other healthcare mitigation will increase~~mortar retail sales. Increased inventory stocking is currently taking place across many industries and it appears that this trend ~~of purchasing goods on-line for home delivery and that demand for U.S. warehouse and logistics space~~ will ~~increase further as a result. Additionally, global supply chains are expected to be reconfigured going forward~~continue in order to ~~have less reliance on specific regions. U.S. manufacturing~~accommodate surges in ~~many industries has been increasing in recent years~~demand.

Our portfolio of modern, net-leased industrial properties, continues to provide shareholders with reliable and ~~we expect that~~predictable income streams. Our resilient occupancy rates and rent collection results during these challenging times, highlight the ~~COVID-19 situation will accelerate this trend. Further,~~mission-critical nature of our assets and underscore the essential need for our tenants’ operations. Furthermore, because our weighted average lease ~~maturity~~term is 7.4 years and our weighted average fixed rate mortgage debt maturity is 11.3 years, we expect our cash flow to remain ~~stable~~resilient over long periods of time.

Our overall occupancy rate and our base rent collections have remained strong throughout the COVID-19 Pandemic. Our base rent collections have averaged 99.9% throughout the COVID-19 Pandemic and we expect future months to be consistent with this trend. Our overall occupancy rate and our base rent collections during the COVID-19 Pandemic were as follows:

Month Occupancy Percentage of Base Rent Collected
March 2020 99.4 % 100.0 %
April 2020 99.4 % 99.9 %
May 2020 99.4 % 99.9 %
June 2020 99.4 % 99.9 %
July 2020 99.4 % 99.9 %
August 2020 99.4 % 99.7 %
September 2020 99.4 % 99.8 %
October 2020 99.4 % 99.8 %
November 2020 99.4 % 99.9 %
December 2020 99.7 % 99.9 %
January 2021 99.7 % 99.9 %
February 2021 99.7 % 99.9 %
March 2021 99.7 % 99.9 %
April 2021 99.7 % 99.9 %

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 Preferred ~~Dividends,~~Dividend Expense, General and Administrative Expenses, Non-recurring Severance Expense, Depreciation, Amortization of Capitalized Lease Costs and Intangible Assets, Interest Expense, including Amortization of Financing Costs, Unrealized Holding (Gains) Losses Arising During the Periods, less Dividend Income 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.

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The following is a reconciliation of our Net Income ~~(Loss)~~ Attributable to Common Shareholders to our NOI for the three and six months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Three
Months
Ended

Three
Months
Ended

Six
Months
Ended

Six
Months
Ended
Three Months Ended Six Months Ended
3/31/2020 3/31/2019 3/31/2020 3/31/2019 3/31/2021 3/31/2020 3/31/2021 3/31/2020
Net Income (Loss) Attributable to Common Shareholders $ (75,078) $ 23,821 $ (71,551) $ (8,543) $ 25,913 $ (75,078 ) $ 51,659 $ (71,551 )
Plus: Preferred Dividends 6,764 4,480 12,862 8,901
Plus: Preferred Dividend Expense 8,416 6,764 16,587 12,862
Plus: General & Administrative Expenses 2,396 2,252 4,660 4,069 2,091 2,396 4,117 4,660
Plus: Non-recurring Strategic Alternative & Proxy Costs 1,993 -0- 2,239 -0-
Plus: Non-recurring Severance Expense 0 0 786 0 -0- -0- -0- 786
Plus: Depreciation 11,475 10,756 22,907 21,234 13,064 11,475 25,141 22,907
Plus: Amortization of Capitalized Lease Costs and Intangible Assets 767 721 1,521 1,423 879 767 1,687 1,521
Plus: Interest Expense, including Amortization of Financing Costs 9,050 9,598 18,259 18,603 9,387 9,050 18,546 18,259
Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods 83,075 (15,568) 86,710 27,059 (19,186 ) 83,075 (38,906 ) 86,710
Less: Dividend Income (3,404) (3,515) (6,642) (7,882) (1,587 ) (3,404 ) (3,195 ) (6,642 )
Less: Gain on Sale of Securities Transactions (2,248 ) -0- (2,248 ) -0-
Less: Lease Termination Income -0- -0- (377 ) -0-
Net Operating Income- NOI $ 35,045 $ 32,545 $ 69,512 $ 64,864 $ 38,722 $ 35,045 $ 75,250 $ 69,512

The components of our NOI for the three and six months ended March 31, ~~2020~~2021 and ~~2019~~2020 are as follows (in thousands):

Three
Months
Ended

Three
Months
Ended

Six
Months
Ended

Six
Months
Ended
Three Months Ended Six Months Ended
3/31/2020 3/31/2019 3/31/2020 3/31/2019 3/31/2021 3/31/2020 3/31/2021 3/31/2020
Rental Revenue $ 35,114 $ 32,934 $ 69,983 $ 65,551 $ 39,246 $ 35,114 $ 76,091 $ 69,983
Reimbursement Revenue 6,594 5,447 13,424 11,053 7,119 6,594 13,856 13,424
Total Rental and Reimbursement Revenue 41,708 38,381 83,407 76,604 46,365 41,708 89,947 83,407
Real Estate Taxes (5,029) (4,163) (10,064) (8,203) (5,604 ) (5,029 ) (10,922 ) (10,064 )
Operating Expenses (1,634) (1,673) (3,831) (3,537) (2,039 ) (1,634 ) (3,775 ) (3,831 )
Net Operating Income- NOI $ 35,045 $ 32,545 $ 69,512 $ 64,864 $ 38,722 $ 35,045 $ 75,250 $ 69,512
NOI from property operations increased ~~$2.5~~$3.7 million, or 8%10%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. NOI from property operations increased ~~$4.6~~$5.7 million, or 7%8%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019.~~2020. This increase was ~~primarily~~ due to the acquisition of ~~a 616,000~~two new built-to-suit, net-leased, industrial properties, located in the Columbus, OH and Atlanta, GA MSAs totaling approximately 1.1 million square ~~foot industrial facility~~feet purchased during the ~~first quarter~~six-month period ended March 31, 2021 and the fiscal 2020 acquisitions consisting of ~~fiscal 2020~~five new built-to-suit, net-leased, industrial properties, located in the Indianapolis, IN, MSA, and a 350,000 square foot industrial facility purchased during the last quarter of fiscal 2019 located in Lafayette, IN. In addition, we purchased two industrial facilities during the first quarter of fiscal 2019, which are now generating the full rental run rate. One of these acquisitions was a 347,145 square foot industrial facility located in Trenton, NJ and one was a 127,000 square foot industrial facility located in Savannah, GA. Furthermore, we completed a 155,000 square foot building expansion at our property located in the Cincinnati, OH MSA during the second quarter of fiscal 2019, which increased the rent upon completion of the expansion. As further described below, on March 30, 2020, we purchased a 153,000 square foot industrial facility located in the Columbus, OH, ~~MSA which will be generating the full rental run rate in our upcoming third quarter.~~Greensboro, NC, Salt Lake City, UT and Oklahoma City, OK MSAs totaling approximately 1.2 million square feet.

23
Acquisitions

On ~~October 10, 2019,~~December 17, 2020, we purchased a newly constructed ~~616,000~~488,000 square foot industrial building, situated on 78.6 acres, located in the Indianapolis, IN MSA. The building is 100% net-leased to Amazon.com Services, Inc. for 15 years through August 2034. The lease is guaranteed by Amazon.com, Inc. The purchase price was $81.5 million. We obtained an 18 year, fully-amortizing mortgage loan of $52.5 million at a fixed interest rate of 4.27%. Annual rental revenue over the remaining term of the lease averages $5.0 million.
~~On March 30, 2020, we purchased a newly constructed 153,000 square foot industrial building, situated on 24.2~~99.0 acres, located in the Columbus, OH MSA. The building is 100% net-leased to ~~Magna Seating of America,~~FedEx Ground Package System, Inc. for 1015 years through ~~January 2030.~~September 2035. The purchase price was ~~$17.9~~$73.3 million. We obtained a 1015 year, fully-amortizing mortgage loan of ~~$9.4~~$47.0 million at a fixed interest rate of ~~3.47%~~2.95%. Annual rental revenue over the remaining term of the lease averages ~~$1.2~~$4.6 million.
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On December 24, 2020, we purchased a newly constructed 658,000 square foot industrial building, situated on 129.9 acres, located in the Atlanta, GA MSA. The building is 100% net-leased to Home Depot U.S.A., Inc. for 20 years through November 2040. The purchase price was $96.7 million. We obtained a 17 year, fully-amortizing mortgage loan of $57.0 million at a fixed interest rate of 3.25%. Annual rental revenue over the remaining term of the lease averages $5.5 million.

~~Amazon.com, Inc. and Magna Seating of America,~~FedEx Ground Package System, Inc.’s ultimate parent, ~~Magna International~~FedEx Corporation and Home Depot U.S.A., Inc’s ultimate parent, Home Depot, Inc. are ~~publicly-owned~~publicly-listed companies and financial information related to these entities are 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 the www.sec.gov website.
Expansions
During the six months ended March 31, 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million, which resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We will soon be starting the second phase of this parking expansion project at this location, which will increase the rental rate further and extend the lease term.

Commitments
We have entered into agreements to purchase ~~four~~six new build-to-suit, industrial buildings that are currently being developed in Alabama (2), Georgia, ~~North Carolina, Ohio,~~Tennessee, Texas and ~~Utah.~~Vermont. These ~~four~~six future acquisitions total ~~1.5~~1.8 million square feet, with net-leased terms ranging from 10 to 15 ~~to 20~~ years, ~~and with~~resulting in a weighted average lease term of ~~17.2~~13.5 years. The aggregate purchase price for these six properties is ~~$229.6~~$238.1 million. ~~Three~~Five of these ~~four~~six properties, consisting of approximately ~~844,000~~1.3 million square feet, or ~~56%~~70%, are leased for 15 years to ~~FDX and its subsidiaries.~~FedEx Ground Package System, Inc., with the remaining property, consisting of approximately 530,000 square feet or 30%, leased for 10 years to Mercedes Benz US International, Inc. All ~~four~~ properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The 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 ~~two~~three of these transactions during fiscal ~~2020~~2021, two in the first half of fiscal 2022 and ~~two~~one in the second half of ~~these transactions during~~ fiscal ~~2021.~~2022. In connection with ~~three~~five of ~~these four~~the six properties, we have entered into commitments to obtain ~~three separate~~five, 15 year, fully-amortizing mortgage loans, totaling ~~$85.7~~$128.1 million with fixed interest rates ranging from 2.5% to 3.05%, resulting in a weighted average fixed interest rate of ~~3.03%~~2.74%.
We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are eight parking expansion projects underway which we expect to cost approximately $31.4 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at nine additional locations bringing the total recently completed and potential parking lot expansion projects to 18 currently.

Significant Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP). The preparation of these Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our Consolidated Financial Statements. Actual results may differ from these estimates under different assumptions or conditions.

On a regular basis, we evaluate our assumptions, judgments and estimates. We believe that there have been no material changes to the items that we disclosed as our significant accounting policies and estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for fiscal year ended September 30, ~~2019.~~2020.
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Changes in Results of Operations
As of March 31, ~~2020,~~2021, we owned 121 properties with total square footage of 24.6 million, as compared to 116 properties with total square footage of 23.0 million, as ~~compared to 113 properties with total square footage of 21.8 million, as~~ of March 31, ~~2019,~~2020, representing an increase in square footage of ~~5.6%~~7.0%. Subsequent to quarter end, on April 15, 2021, we sold our 60,400 square foot building located in Carlstadt (New York, NY), NJ. At quarter end, the Company’s weighted average lease term was approximately 7.4 years, as compared to ~~8.0~~7.4 years at the end of the prior year period. Our occupancy rate was 99.7% as of March 31, 2021, as compared to 99.4% as of March 31, 2020, ~~as compared to 98.9% as of March 31, 2019,~~ representing an increase of 5030 basis points. Our weighted average building age was 9.9 years as of March 31, 2021, as compared to 9.4 years as of March 31, ~~2020, as compared to 8.8 years as of March 31, 2019.~~2020.

24
Fiscal ~~2020~~2021 Renewals
In fiscal ~~2020,~~2021, approximately 2%5% of our gross leasable area, representing ~~five~~ten leases totaling ~~410,000~~1.2 million square feet, ~~was~~is set to expire. ~~Four~~Eight of these ~~five~~ten leases have been renewed thus far, for a weighted average term of 4.1 years, at a rental rate increase of 7.2% on a GAAP basis and ~~one~~an increase of ~~these properties consisting of 55,000 square feet, is currently being marketed. The four leases that have been renewed~~0.4% on a cash basis. These eight lease renewals represent ~~355,000~~1.1 million square feet, or ~~87%~~91% of the expiring square footage ~~and have a weighted average lease term of 4.2 years.~~for fiscal 2021.

We have incurred or we expect to incur leasing commission costs of $536,000 in connection with four of these lease renewals and we have incurred or we expect to incur tenant improvement costs of ~~$423,000 and leasing commission costs of $217,000~~$436,000 in connection with three of these ~~four~~ lease renewals. The table below summarizes the lease ~~terms~~term of the ~~four~~ leases that were renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal ~~term.~~
Property Tenant Square
Feet Former
U.S. GAAP Straight- Line Rent
PSF Former
Cash Rent
PSF Former
Lease
Expiration Renewal
U.S GAAP Straight- Line Rent
PSF Renewal
Initial
Cash Rent
PSF Renewal
Lease
Expiration Renewal
Term
(years) Tenant
Improvement
Cost
PSF over
Renewal
Term (1) Leasing
Commission Cost
PSF over
Renewal
Term (1)

Elgin (Chicago), IL Joseph T. Ryerson & Son, Inc. 89,052 $ 5.68 $ 5.68 1/31/20 $ 5.78 $ 5.50 1/31/25 5.0 $ 0.50 $ 0.17
Montgomery (Chicago), IL Home Depot USA, Inc. 171,200 5.70 5.93 6/30/20 6.30 6.30 12/31/22 2.5 0 0.28
Ridgeland (Jackson), MS Graybar Electric Company 26,340 4.36 4.36 7/31/20 4.62 4.44 7/31/25 5.0 0 0.14
Tampa, FL Tampa Bay Grand Prix 68,385 3.83 4.48 9/30/20 5.39 5.00 9/30/27 7.0 0.42 0
Total 354,977

Weighted Average $ 5.24 $ 5.47 $ 5.87 $ 5.71 4.2 $ 0.28 $ 0.15
~~(1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term.~~terms.

Property Tenant Square
Feet Former
U.S. GAAP Straight- Line Rent
PSF Former
Cash Rent
PSF Former
Lease
Expiration Renewal
U.S GAAP Straight- Line Rent
PSF Renewal
Initial
Cash Rent
PSF Renewal
Lease
Expiration Renewal
Term
(years) Tenant
Improvement
Cost
PSF over
Renewal
Term (1) Leasing
Commission Cost
PSF over
Renewal
Term (1)
Griffin (Atlanta), GA Rinnai America Corporation 218,120 $ 3.81 $ 3.93 12/31/20 $ 4.22 $ 4.22 12/31/22 2.0 $ -0- $ 0.13
Fayetteville, NC Victory Packaging, L.P. 148,000 3.33 3.50 2/28/21 3.40 3.25 2/28/25 4.0 -0- 0.20
Winston-Salem, NC Style Crest, Inc. 106,507 3.39 3.77 3/31/21 4.10 3.90 3/31/26 5.0 0.30 -0-
Augusta, GA FedEx Ground 59,358 8.64 8.64 6/30/21 8.64 8.64 6/30/23 2.0 -0- -0-
O’Fallon, MO Pittsburgh Glass Works, LLC 102,135 4.37 4.44 6/30/21 5.05 4.88 6/30/26 5.0 0.20 -0-
Corpus Christi, TX FedEx Ground 46,253 9.03 9.42 8/31/21 9.89 9.89 8/31/26 5.0 -0- -0-
Kansas City, MO Bunzl Distribution 158,417 4.65 4.86 9/30/21 4.44 4.26 9/30/26 5.0 -0- 0.27
St. Joseph, MO Woodstream Corporation 256,000 3.57 3.70 9/30/21 3.89 3.75 9/30/26 5.0 0.14 0.12
Total 1,094,790

Weighted Average $ 4.30 $ 4.47 $ 4.61 $ 4.49 4.1 $ 0.10 $ 0.12
(1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term.
These ~~four~~eight lease renewals ~~resulted in~~have a U.S. GAAP straight-line ~~weighted average~~ lease rate of ~~$5.87~~$4.61 per square foot. The renewed ~~weighted average~~ initial cash rent per square foot is ~~$5.71.~~$4.49. This compares to the former ~~weighted average~~ rent of ~~$5.24~~$4.30 per square foot on a U.S. GAAP straight-line basis and the former ~~weighted average~~ cash rent of ~~$5.47~~$4.47 per square foot, resulting in an increase ~~in the weighted average lease rate~~ of ~~12.0%~~7.2% on a U.S. GAAP straight-line basis and an increase ~~in the weighted average lease rate~~ of ~~4.4%~~0.4% on a cash basis.

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~~One of~~
Effective October 1, 2020, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for our ~~tenants, Kellogg Sales Company, which leased our 55,000~~75,000 square foot facility located in ~~Newington, CT through February 29, 2020, did not renew their lease. As reported~~Halfmoon (Albany), NY whereby we received a termination fee in the ~~prior quarter, this property~~amount of $377,000 representing approximately 50% of the then remaining rent due under the lease, which was ~~under contract~~set to be sold for $4.0 million, however, given the recent uncertain market conditions created by COVID-19, the purchaser terminated the contract during the due diligence period. This property is currently being marketed.
~~Effective January 7, 2020, we~~expire in 1.2 years on November 30, 2021. We simultaneously entered into a ~~new two-year~~10.4 year lease agreement with ~~Sonwil Distribution Center,~~United Parcel Service, Inc. ~~through January 31, 2022~~(UPS) which became effective November 1, 2020. The lease agreement with UPS provides for ~~our 105,000~~five months of free rent, after which, on April 1, 2021, initial annual rent of $510,000, representing $6.80 per square foot, ~~facility located~~will commence, with 2.0% annual increases thereafter, resulting in ~~Cheektowaga (Buffalo), NY. Annual~~a straight-line annualized rent ~~is $630,000,~~of $541,000, representing ~~$6.00~~$7.21 per square foot over the life of the lease, which expires March 31, 2031. This compares to the former U.S GAAP straight-line rent of $574,000, representing $7.65 per square foot and former cash rent of $8.19 per square foot, resulting in a decrease of $33,000, representing a 5.8% decrease on a U.S GAAP straight-line basis and a decrease of 17.0% on a cash basis. The new 10.4 year lease agreement with UPS provides for an additional 9.3 years of lease term versus the old lease with Cardinal Health.
Effective December 15, 2020, we entered into a 10.3 year lease with Hartford HealthCare Corporation for our previously vacant 55,000 square foot facility located in Newington (Hartford), CT, thereby increasing our current overall occupancy rate to 99.7%. The new lease has free rent for the first four months, after which initial annual rent will be $288,000, representing $5.25 per square foot with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $307,000, representing $5.60 per square foot over the life of the lease. Hartford HealthCare Corporation is rated “investment-grade” as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com).

Rental Revenue increased ~~$2.2~~$4.1 million, or 7%12%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. Rental Revenue increased ~~$4.4~~$6.1 million, or 7%9%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019.~~2020. These increases were ~~primarily~~ due to the acquisition of ~~a 616,000~~two new built-to-suit, net-leased, industrial properties located in the Columbus, OH and Atlanta, GA MSAs totaling approximately 1.1 million square ~~foot industrial facility purchased~~feet during the ~~first quarter~~six months ended March 31, 2021 and the increase was due to the fiscal 2020 acquisitions of ~~fiscal 2020~~five new built-to-suit, net-leased, industrial properties, located in the Indianapolis, IN, MSA, and a 350,000 square foot industrial facility purchased during the last quarter of fiscal 2019 located in Lafayette, IN. In addition, we purchased two industrial facilities during the first quarter of fiscal 2019, which are now generating the full rental run rate. One of these acquisitions was a 347,145 square foot industrial facility located in Trenton, NJ and one was a 127,000 square foot industrial facility located in Savannah, GA. Furthermore, we completed a 155,000 square foot building expansion at our property located in the Cincinnati, OH MSA during the second quarter of fiscal 2019, which increased the rent upon completion of the expansion. On March 30, 2020, we purchased a 153,000 square foot industrial facility located in the Columbus, OH, ~~MSA which will be generating the full rental run rate in our upcoming third quarter.~~Greensboro, NC, Salt Lake City, UT and Oklahoma City, OK MSAs totaling approximately 1.2 million square feet.
25

Our single-tenant properties are subject to net-leases, which require the tenants to reimburse us for the cost of Real Estate Taxes as well as certain Operating Expenses such as insurance and the majority of repairs and maintenance. Reimbursement Revenue increased ~~$1.1 million,~~$525,000, or ~~21%~~8%, Real Estate Tax Expense increased ~~$866,000,~~$575,000, or ~~21%~~11%, and Operating Expenses ~~decreased $39,000,~~increased $405,000, or 2%25% for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. For the six months ended March 31, ~~2020,~~2021, Reimbursement Revenue increased ~~$2.4 million,~~$432,000, or ~~21%~~3%, Real Estate Tax Expense increased ~~$1.9 million,~~$858,000, or ~~23%~~9%, and Operating Expenses ~~increased $294,000,~~decreased $56,000, or 8%1% as compared to the six months ended March 31, 2019. These increases in Reimbursement Revenue, Real Estate Taxes and Operating Expenses for the six months ended March 31, 2020 and these increases in Reimbursement Revenue and Real Estate Taxes for the three months ended March 31, 2020 were primarily due to our newly acquired properties.2020. Reimbursement Revenue as a percentage of Real Estate Taxes and Operating Expenses for the three months ended March 31, ~~2020~~2021 was 93% compared to 99% for the three months ended March 31, ~~2020 compared to 93% for the three months ended March 31, 2019.~~2020. Reimbursement Revenue as a percentage of Real Estate Taxes and Operating Expenses for the six months ended March 31, ~~2020~~2021 was 94% compared to 97% for the six months ended March 31, ~~2020 compared to 94% for the six months ended March 31, 2019.~~2020.

General and Administrative Expenses ~~increased $144,000,~~decreased $305,000, or 6%13%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. General and Administrative Expenses ~~increased $591,000,~~decreased $543,000, or ~~15%~~12%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019. These increases were primarily due to an increase in salaries, corporate office rent and professional fees.~~2020. General and Administrative Expenses, as a percentage of gross revenue (which includes Rental Revenue, Reimbursement Revenue and Dividend Income) was 4.4% for the three months ended March 31, 2021 as compared to 5.3% for the three months ended March 31, 2020 ~~as compared to 5.4%~~and was 4.4% for the ~~three~~six months ended March 31, ~~2019 and was~~2021 as compared to 5.2% for the six months ended March 31, ~~2020 as compared to 4.8% for the six months ended March 31, 2019.~~2020. Annualized General and Administrative Expenses, as a percentage of undepreciated assets (which is our total assets excluding accumulated depreciation) was 34 basis points for the six months ended March 31, 2021 as compared to 43 basis points for the six months ended March 31, ~~2020 as compared to 38 basis points for~~2020.
During the six months ended March 31, ~~2019.~~2021, we have incurred Non-recurring Strategic Alternative & Proxy Costs of $2.2 million related to the evaluation of strategic alternatives approved by our Board of Directors and the related proxy process.
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On December 23, 2019, our former General Counsel, Allison Nagelberg, announced her retirement effective December 31, 2019. In accordance with her severance package, during the first quarter of fiscal 2020, we incurred a one-time, Non-recurring Severance Expense of $786,000.

Depreciation increased ~~$719,000,~~$1.6 million, or 7%14%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. Depreciation increased ~~$1.7~~$2.2 million, or 8%10%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019.~~2020. Amortization of Capitalized Lease Costs and Intangible Assets increased ~~$46,000,~~$112,000, or 6%15%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. Amortization of Capitalized Lease Costs and Intangible Assets increased ~~$98,000,~~$166,000, or 7%11%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019.~~2020. These increases were primarily due to the acquisition of two industrial properties purchased during the first ~~quarter~~half of fiscal ~~2019, one~~2021 and five industrial ~~property~~properties purchased during ~~the last quarter of fiscal 2019 and one industrial property purchased during the first quarter of~~ fiscal 2020. In addition, the increases in depreciation and amortization expenses were also the result of ~~the building expansion completed during the second quarter of fiscal 2019 and~~ the capital improvements and leasing costs incurred over the last four quarters.

The recognition of Unrealized Holding Gains (Losses) Arising During the Periods was due to the adoption of ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” which became effective at the beginning of the prior fiscal year. With the adoption of ASU 2016-01, the changes in net unrealized holding gains and losses are recognized through net income. Therefore, the implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Unrealized Holding ~~Loss Arising During~~Gains arising during the three and six months ended March 31, ~~2020 was $83.1~~2021 were $19.2 million and $38.9 million, respectively and Unrealized Holding ~~Gain for~~Losses arising during the three ~~months ended March 31, 2019 was $15.6 million. Unrealized Holding Loss Arising During the~~and six months ended March 31, 2020 ~~was~~were $83.1 million and $86.7 million, ~~and~~respectively. The components of the Unrealized Holding ~~Loss for~~Gains (Losses) Arising During the ~~six months ended March 31, 2019 was $27.1 million.~~ Periods included in the accompanying Consolidated Statements of Income are as follows:
Three Months Ended Six Months Ended
3/31/2021 3/31/2020 3/31/2021 3/31/2020
Unrealized Holding Gains (Losses) $ 21,434 $ (83,075 ) $ 41,154 $ (86,710 )
Reclassification Adjustment for Net (Gains) Realized in Income (2,248 ) -0- (2,248 ) -0-
Unrealized Holding Gains (Losses) Arising During the Period $ 19,186 $ (83,075 ) $ 38,906 $ (86,710 )
We recognized dividend income on our investments in securities of ~~$3.4~~$1.6 million and ~~$3.5~~$3.4 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively, representing ~~an $111,000~~a $1.8 million decrease. We recognized dividend income on our investments in securities of ~~$6.6~~$3.2 million and ~~$7.9~~$6.6 million for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively, representing a ~~$1.2~~$3.4 million decrease. This decrease is due to reduced dividends from our REIT securities portfolio. The REIT securities portfolio’s weighted average yield for the six months ended March 31, ~~2020~~2021 was approximately ~~8.9%~~4.9% as compared to ~~8.5%~~8.9% for the six months ended March 31, ~~2019.~~2020. We held ~~$99.0~~$131.7 million in marketable REIT securities as of March 31, ~~2020,~~2021, representing ~~4.6%~~5.4% of our undepreciated assets.
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Interest Expense, including Amortization of Financing Costs, ~~decreased $548,000,~~increased by $337,000, or 6%4%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019.~~2020. Interest Expense, including Amortization of Financing Costs, ~~decreased $344,000,~~increased by $287,000, or 2%, for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, 2019. This decrease is primarily due to the decrease of both the outstanding balance and the interest rate of our Loans Payable balance. From March 31, 2019 to March 31, 2020, our Loans Payable balance was reduced by $54.8 million and our weighted average interest rate was reduced by 110 basis points. In addition, we2020. We had a decrease of 317 basis points in the weighted average interest rate of the Fixed Rate Mortgage Notes Payable, which decreased from ~~4.07% at March 31, 2019 to~~ 4.04% at March 31, ~~2020.~~2020 to 3.87% at March 31, 2021. The decrease in Interest Expense, including Amortization of Financing Costs, was partially offset by an increase in the Fixed Rate Mortgage Notes Payable balance, which increased ~~$25.3~~by $86.6 million from March 31, ~~2019~~2020 to March 31, ~~2020.~~2021.

Preferred ~~Dividends~~Dividend Expense increased ~~$2.3~~$1.7 million, or ~~51%~~24%, for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019~~2020 and increased ~~$4.0~~$3.7 million, or ~~44.5%~~29% for the six months ended March 31, ~~2020~~2021 as compared to the six months ended March 31, ~~2019.~~2020. These increases ~~are~~were due to the additional ~~$130.0~~$120.4 million of 6.125% Series C Cumulative Redeemable Preferred Stock issued between March 31, ~~2019~~2020 and March 31, ~~2020.~~2021.

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Changes in Financial Condition
We generated Net Cash from Operating Activities of ~~$47.9~~$54.4 million and ~~$50.2~~$47.9 million for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Real Estate Investments increased ~~$77.4~~by $143.8 million from September 30, ~~2019~~2020 to March 31, ~~2020.~~2021. This increase was mainly due to the purchase of two net-leased industrial properties, located in the ~~Indianapolis, IN~~Columbus, OH MSA and the ~~Columbus, OH~~Atlanta, GA MSA, totaling approximately ~~769,000~~1.1 million square feet, for ~~$99.4~~$170.0 million. The increase was partially offset by Depreciation Expense on Real Estate Investments for the six months ended March 31, ~~2020~~2021 of ~~$22.9~~$25.1 million.

Securities Available for Sale ~~decreased $86.2~~increased by $22.8 million from September 30, ~~2019~~2020 to March 31, ~~2020.~~2021. The ~~decrease~~increase was primarily due to ~~a net increase in~~an Unrealized Holding ~~Losses~~Gain of ~~$86.7~~$38.9 million for the six months ended March 31, 2021. There were also sales and redemptions of securities during the six month period totaling $18.8 million which resulted in a realized gain of $2.2 million.

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs (Mortgage Notes Payable), increased ~~$34.8~~by $66.7 million from September 30, ~~2019~~2020 to March 31, ~~2020.~~2021. The increase was mostly due to the origination of two fully-amortizing mortgage loans for ~~$61.9~~$104.0 million, with a weighted average interest rate of ~~4.15%~~3.11%, obtained in connection with the two industrial properties purchased during the first half of fiscal ~~2020.~~2021. Details on these two fixed rate mortgages are as follows:

Property Mortgage amount (in thousands) Maturity Date Interest Rate
Indianapolis, IN $ 52,500 11/1/2037 4.27%
Columbus, OH 9,400 1/1/2030 3.47%
Property (MSA)
Mortgage
amount (in thousands)
Maturity Date
Interest
Rate

Columbus, OH $ 47,000 1/1/2036 2.95 %
Atlanta, GA $ 57,000 1/1/2038 3.25 %

The increase in Mortgage Notes Payable was also partially due to the amortization of financing costs associated with the Mortgage Notes Payable of approximately ~~$452,000.~~$482,000. This increase was partially offset by scheduled payments of principal of ~~$27.2 million.~~$37.2 million and we fully prepaid two Mortgage loans. One mortgage loan was a $6.2 million mortgage loan for our property located in Kansas City, MO that was originally set to mature on December 1, 2021 and had an interest rate of 5.18%. The second mortgage loan was a $159,000 mortgage loan for our property located in Topeka, KS that was originally set to mature on August 10, 2021 and had an interest rate of 6.50%. In addition, the increase in Mortgage Notes Payable was partially offset by the addition of deferred financing costs of approximately ~~$347,000~~$569,000, which is associated with two mortgages obtained in connection with two industrial properties purchased during the first ~~half~~quarter of fiscal ~~2020.~~2021.
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Excluding Debt Issuance Costs, the weighted average interest rate on the Fixed Rate Mortgage Notes Payable decreased ~~slightly~~ by 317 basis points from the prior year quarter, from ~~4.07% at March 31, 2019 to~~ 4.04% at March 31, ~~2020.~~2020 to 3.87% at March 31, 2021.

We are scheduled to repay a total of ~~$57.0~~$73.6 million in mortgage principal payments over the next 12 months. We ~~intend to~~may make these principal payments from the cash on hand, funds generated from Cash from Operations, the DRIP, the At-The-Market Sales Agreement Program (Preferred Stock ATM Program), the Equity Distribution Agreement (Common Stock ATM Program), and draws from the unsecured line of credit facility.

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Liquidity and Capital Resources
Net Cash Provided by Operating Activities was ~~$47.9~~$54.4 million and ~~$50.2~~$47.9 million for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Dividends paid on common stock for the six months ended March 31, 2021 and 2020 ~~and 2019~~ were ~~$33.1~~$34.4 million and ~~$31.4~~$33.1 million, respectively (of which ~~$5.6~~$1.0 million and ~~$8.5~~$5.6 million, respectively, were reinvested). We pay dividends from cash generated from operations.

As of March 31, ~~2020,~~2021, we held ~~$99.0~~$131.7 million in marketable REIT securities, representing ~~4.6%~~5.4% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. Total assets excluding accumulated depreciation were ~~$2.2~~$2.4 billion as of March 31, ~~2020.~~2021. In general, we may borrow up to 50% of the value of the marketable securities. The interest rate charged on the margin loan is the bank’s margin rate and was 0.75% as of March 31, ~~2020.~~2021. At March 31, ~~2020,~~2021, there ~~were~~was no ~~amounts~~amount drawn down under the margin loan. The marketable 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 in the private real estate markets. As of March 31, ~~2020,~~2021, we had net Unrealized Holding Losses on our portfolio of ~~$136.1~~$87.9 million as compared to net Unrealized Holding Losses of ~~$49.4~~$126.8 million as of September 30, ~~2019,~~2020, representing an ~~increase~~Unrealized Holding Gain of ~~$86.7 million.~~$38.9 million for the six months ended March 31, 2021. There have been no open market purchases ~~or sales~~ of securities during the six months ended March 31, ~~2020.~~2021. We recognized dividend income on our investments in securities of ~~$3.4~~$1.6 million and ~~$6.6~~$3.2 million for the three and six months ended March 31, ~~2020.~~2021. During the six months ended March 31, 2021, UMH Properties, Inc. (UMH), a related REIT, redeemed all of its outstanding 8.00% Series B Cumulative Redeemable Preferred Stock at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends, of which we owned 100,000 shares at a total cost of $2.5 million. In addition to the $2.5 million of UMH 8.00% Series B Cumulative Redeemable Preferred Stock that was redeemed during the six months ended March 31, 2021, we also sold marketable REIT securities for gross proceeds totaling $16.3 million with an original cost basis of $14.1 million, resulting in a realized gain of $2.2 million.

On November 15, ~~2019~~2020, we entered into a new line of credit facility (the “New Facility”) consisting of a $225.0 million unsecured line of credit facility (the “Revolver”) and a new $75.0 million unsecured term loan (the “Term Loan”), resulting in the total potential availability under both the Revolver and the Term Loan of $300.0 million, which is an additional $100.0 million over the former line of credit facility. In addition, the Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The $225.0 million Revolver matures in January 2024 with two options to extend for additional six-month periods. Availability under the New Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility, the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the former line of credit facility to 6.25%, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the Revolver was lowered by a range of 5 basis points to 35 basis points, depending on our leverage ratio, and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at Bank of Montreal’s (BMO) prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of ~~3.05%~~1.56%. As of the quarter end and currently, we do not have any amount drawn down under our Revolver, resulting in the full $225.0 million being currently available. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%.

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As of March 31, ~~2020,~~2021, we owned ~~116~~121 properties, of which 5962 carried mortgage loans with outstanding principal balances totaling ~~$787.6~~$874.2 million. Subsequent to quarter end, on April 15, 2021, we sold our 60,400 square foot building located in Carlstadt (New York, NY), NJ and we paid off the mortgage in the amount of $1.1 million. The 5759 unencumbered properties could be refinanced to raise additional funds, although covenants in our New Facility limit the amount of unencumbered properties that can be mortgaged. As of March 31, ~~2020,~~2021, Loans Payable represented $75.0 million outstanding under our Term Loan.

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As of March 31, ~~2020,~~2021, we had total assets of ~~$1.9~~$2.1 billion and liabilities of ~~$881.2~~$972.3 million. Our net debt (net of unamortized debt issuance costs and net of cash and cash equivalents) to total market capitalization as of March 31, ~~2020~~2021 was approximately ~~33%~~29% and our net debt, less marketable securities (net of unamortized debt issuance costs, net of cash and cash equivalents and net of marketable securities) to total market capitalization as of March 31, ~~2020~~2021 was approximately ~~29%~~24%. Our debt consists of ~~91%~~92% amortizing fixed rate debt with a weighted average interest rate of ~~4.04%~~3.87% and a weighted average loan maturity of 11.3 years. We believe that we have the ability to meet our obligations and to generate funds for new investments.
On January 14, 2021, our Board of Directors unanimously decided to explore strategic alternatives to maximize shareholder value. Following a comprehensive strategic alternatives process, we entered into a definitive merger agreement by which Equity Commonwealth (NYSE: EQC) will acquire Monmouth in an all-stock transaction. Under the terms of the merger agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own. Under the terms of the merger agreement, Monmouth plans to continue to pay its regular quarterly common stock dividend and its Series C Cumulative Redeemable Preferred Stock dividend between signing and closing of the transaction. The transaction is expected to close during the second half of calendar 2021, subject to customary closing conditions, including the approval of both Equity Commonwealth and Monmouth stockholders.

On February 6, 2020, we entered into a Common Stock ATM Program with BMO Capital Markets Corp., B. Riley FBR, Inc., D.A. Davidson & Co., Janney Montgomery Scott LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC (together the “Distribution Agents”) under which we may offer and sell shares of our common stock, $0.01 par value per share, having an aggregate sales price of up to $150.0 million from time to time through the Distribution Agents. Sales of the shares of Common Stock under the Agreement, if any, will be in “at the market ~~offerings.”~~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 Common Stock, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We implemented the Common Stock ATM program for the flexibility that it provides to opportunistically access the capital markets and to best time our equity capital needs as we close on acquisitions. To date, we have elected to not ~~raised~~raise any equity though our Common Stock Equity Program. ~~Based on current prevailing prices, we do not expect to utilize the Common Stock ATM program extensively at this time.~~

On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sale of shares of our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million.
On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million, with $28.5 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on June 29, 2017.
On December 4, 2019, we replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018 with another ~~new~~ Preferred Stock At-The-Market Sales Agreement Program ~~(Preferred Stock ATM Program)~~ that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $101.0 million, with $24.0 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018.
On November 25, 2020, we replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019 with another 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 up to $150.0 million of our 6.125% Series C Preferred Stock, representing an additional $149.3 million, with $747,000 being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019.
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Sales of shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker, or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through these programs on July 3, 2017. Since inception through March 31, ~~2020,~~2021, we sold ~~8.8~~13.6 million shares of our 6.125% Series C Preferred Stock under these programs at a weighted average price of ~~$24.90~~$24.91 per share, and generated net proceeds, after offering expenses, of ~~$214.3~~$332.4 million, of which ~~3.3~~3.1 million shares were sold during the six months ended March 31, ~~2020~~2021 at a weighted average price of ~~$25.06~~$24.88 per share, generating net proceeds after offering expenses of $80.3 million. Of that amount, we sold 1.5 million shares during the three months ended March 31, 2020 at a weighted average price of $25.12 per share, generating net proceeds after offering expenses of $37.1$76.0 million. As of March 31, ~~2020,~~2021, there is ~~$79.1~~$108.3 million remaining that may be sold under the Preferred Stock ATM Program. No shares have been sold pursuant to the Preferred Stock ATM Program since December 2020.

As of March 31, ~~2020, 17.2~~2021, 22.0 million shares of ~~the~~our 6.125% Series C Preferred Stock were ~~issued and~~ outstanding.

We raised ~~$24.1~~$1.3 million (including dividend reinvestments of ~~$5.6~~$1.0 million) from the issuance of ~~1.8 million~~87,000 shares of common stock under our DRIP during the six months ended March 31, ~~2020.~~2021. Of this amount, UMH ~~Properties, Inc. (UMH), a related REIT,~~ made total purchases of ~~69,000~~13,000 common shares under our DRIP for a total cost of ~~$869,000,~~$205,000, or a weighted average cost of ~~$12.59~~$15.68 per share. Of the amount raised during the three months ended March 31, 2020, we raised $8.6 million (including dividend reinvestments of $1.4 million) from the issuance of 678,000 shares of common stock under our DRIP during the three months ended March 31, 2020.
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During the six months ended March 31, ~~2020,~~2021, we paid ~~$33.1~~$34.4 million in total cash dividends, or ~~$0.34~~$0.35 per share to common shareholders, of which ~~$5.6~~$1.0 million was reinvested in the ~~DRIP,~~DRIP.
On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share. This represents a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share and represents an annualized dividend rate of $0.72 per share. This increase is the third dividend increase in the past five years, representing a ~~17% participation rate.~~total increase of 20%. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. We are also one of the few REITs that is paying out a higher per share dividend today than prior to the Global Financial Crisis. On April 1, ~~2020,~~2021, our Board of Directors declared a dividend of ~~$0.17~~$0.18 per common share to be paid on June 15, ~~2020~~2021 to common shareholders of record as of the close of business on May ~~15, 2020.~~17, 2021.

During the six months ended March 31, ~~2020,~~2021, we paid ~~$12.4~~$16.2 million in Preferred Dividends, or $0.765625 per share, on our outstanding 6.125% Series C Preferred Stock for the period September 1, ~~2019~~2020 through February ~~29, 2020.~~28, 2021. As of March 31, ~~2020,~~2021, we ~~have~~had accrued Preferred Dividends of ~~$2.2~~$2.8 million covering the period March 1, ~~2020~~2021 to March 31, ~~2020.~~2021. Dividends on the 6.125% Series C Preferred Stock are cumulative and payable quarterly at an annual rate of $1.53125 per share.
On April 1, ~~2020,~~2021, our Board of Directors declared a dividend of $0.3828125 per share to be paid June 15, ~~2020~~2021 to the 6.125% Series C Preferred shareholders of record as of the close of business on May ~~15, 2020.~~17, 2021.

We ~~use~~have used a variety of sources to fund our cash needs in addition to cash generated from operations. ~~We may sell~~In the past, we considered selling marketable securities from our investment portfolio, ~~borrow~~borrowing on our unsecured line of credit facility or securities margin loans, finance or refinance debt, or ~~raise~~raising capital through the DRIP, the Preferred Stock ATM Program, the Common Stock ATM Program or capital markets.

We have been raising capital through our DRIP, the Preferred Stock ATM Program, mortgage loans, draws on our unsecured line of credit, sale of marketable securities and funds generated from our investments in net-leased industrial properties. We may also raise capital through registered direct placements, public offerings of common and preferred stock and through our Common Stock ATM Program. We believe that funds generated from operations, from the DRIP, from the Preferred Stock ATM Program, as well as our ability raise funds from our Common Stock ATM Program, and our ability to finance and refinance our properties, and our availability under our unsecured line of credit, will provide sufficient funds to adequately meet our obligations over the next year.
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We have a concentration of properties leased to FedEx Corporation (FDX) and FDX ~~subsidiary-leased properties,~~subsidiaries, consisting of 63 separate stand-alone leases covering 11.2 million square feet as of March 31, 2021 and 60 separate stand-alone leases covering 10.4 million square feet as of March 31, ~~2020 and 61 separate stand-alone leases covering 10.5 million square feet as of March 31, 2019. In this period~~2020. FDX is experiencing record demand due to the continued strong growth in ecommerce. Additionally, in periods of unprecedented turbulence, the services of FedEx are essential in keeping supply chains moving and in delivering critically needed ~~relief aid~~supplies throughout the world. As of March 31, ~~2020,~~2021, the 6063 separate stand-alone leases that are leased to FDX and FDX subsidiaries are located in 2526 different states and have a weighted average lease maturity of ~~8.2~~7.8 years. The percentage of FDX and its subsidiaries leased square footage to the total of our rental space was 46% (5% to FDX and 41% to FDX subsidiaries) as of March 31, 2021 and 45% (5% to FDX and 40% to FDX subsidiaries) as of March 31, ~~2020 and 49% (5% to FDX and 44% to FDX subsidiaries) as of March 31, 2019.~~ 2020.
As of March 31, ~~2020,~~2021, the only tenants, other than FDX and its subsidiaries, that leased 5% or more of our total square footage were ~~FDX and its~~ subsidiaries ~~and~~of Amazon.com, ~~Services, Inc.~~Inc (Amazon), which consists of ~~four~~five separate stand-alone leases for properties located in four different states, containing ~~1.4~~1.5 million total square feet, comprising ~~approximately~~ 6% of our total ~~rental~~leasable square feet. None of our properties are subject to a master lease or any cross-collateralization agreements.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 55% (5% to FDX and 50% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal ~~2020,~~2021, and was ~~60%~~58% (5% to FDX and ~~55%~~53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal ~~2019.~~2020. The only tenants, ~~estimated to~~other than FDX and its subsidiaries, that we estimate will comprise 5% or more of our total Rental and Reimbursement Revenue ~~during the six months ended March 31, 2020 were FDX and its~~for fiscal 2021 are subsidiaries ~~and Amazon.com Services, Inc.,~~of Amazon, which is estimated to be 7% of our Annualized Rental and Reimbursement ~~Revenue.~~Revenue for fiscal 2021 and was 6% for of our Annualized Rental and Reimbursement Revenue for fiscal 2020. For the six months ended March 31, ~~2019,~~2021, no ~~tenant,~~ other ~~than FDX and its subsidiaries,~~tenant accounted for 5% or more of our total Rental and Reimbursement Revenue.

FDX and ~~Amazon.com, Inc.~~Amazon are ~~publicly-owned~~publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. FDX and ~~Amazon.com, Inc.~~Amazon are rated “BBB” and “AA-”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A2”, respectively 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, Amazon.com, Inc., S&P Global Ratings or Moody’s on such websites.

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During the six months ended March 31, 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million which resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We will soon be starting the second phase of this parking expansion project at this location, which will increase the rental rate further and extend the lease term.

We have entered into agreements to purchase ~~four~~six new build-to-suit, industrial buildings that are currently being developed in Alabama (2), Georgia, ~~North Carolina, Ohio,~~Tennessee, Texas and ~~Utah.~~Vermont. These ~~four~~six future acquisitions total ~~1.5~~1.8 million square feet, with net-leased terms ranging from 10 to 15 ~~to 20~~ years, ~~and with~~resulting in a weighted average lease term of ~~17.2~~13.5 years. The aggregate purchase price for these six properties is ~~$229.6~~$238.1 million. ~~Three~~Five of these ~~four~~six properties, consisting of approximately ~~844,000~~1.3 million square feet, or ~~56%~~70%, are leased for 15 years to ~~FDX and its subsidiaries.~~FedEx Ground Package System, Inc., with the remaining property, consisting of approximately 530,000 square feet or 30%, leased for 10 years to Mercedes Benz US International, Inc. All ~~four~~ properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The 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 ~~two~~three of these transactions during fiscal ~~2020~~2021, two in the first half of fiscal 2022 and ~~two~~one in the second half of ~~these transactions during~~ fiscal ~~2021.~~2022. In connection with ~~three~~five of ~~these four~~the six properties, we have entered into commitments to obtain ~~three separate~~five, 15 year, fully-amortizing mortgage loans, ~~for $85.7~~totaling $128.1 million with fixed interest rates ranging from 2.50% to 3.05%, resulting in a weighted average fixed interest rate of ~~3.03%~~2.74%.
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We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are eight parking expansion projects underway which we expect to cost approximately $31.4 million. In addition, the first phase of a parking expansion project was completed during the prior quarter at our property located in Olathe (Kansas City), KS for a total project cost of $3.4 million. This first phase of the expansion resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We will soon be starting the second phase of this parking expansion project at this location, which will increase the rental rate further and extend the lease term. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at nine additional locations bringing the total recently completed and potential parking lot expansion projects to 18 currently.

We intend to acquire additional net-leased industrial properties on long-term leases, primarily to investment grade tenants or their subsidiaries, and, when needed, expand our current properties. The funds may come from free cash flow from operations, mortgage loans, draws on our unsecured line of credit, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the DRIP, proceeds from the Preferred Stock ATM Program, private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements.
Funds From Operations and Adjusted Funds From Operations
We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (FFO), which we believe is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by the National Association of Real Estate Investment Trusts (Nareit), represents net income attributable to common shareholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), excluding extraordinary items, as defined under U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization. Included in the Nareit FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of Nareit FFO to make an election to include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude unrealized gains and losses from our investments in marketable equity securities from our FFO calculation. ~~Prior to the adoption of the FFO White Paper – 2018 Restatement, we defined Core Funds From Operations (Core FFO) as FFO, excluding Unrealized Holding Gains or Losses Arising During the Periods.~~ Nareit created FFO as a non-GAAP supplemental measure of REIT operating performance. We define Adjusted Funds From Operations (AFFO) as FFO, excluding stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, lease termination income, non-recurring strategic alternative & proxy costs, non-recurring severance expense, effect of non-cash U.S. GAAP straight-line rent adjustments and subtracting recurring capital expenditures. We define recurring capital expenditures as all capital expenditures that are recurring in nature, excluding capital expenditures related to expansions at our current locations or capital expenditures that are incurred in conjunction with obtaining a new lease or a lease renewal. We believe that, as widely recognized measures of performance used by other REITs, FFO and AFFO may be considered by investors as supplemental measures to compare our operating performance to those of other REITs. FFO and AFFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and AFFO and, accordingly, our FFO and AFFO may not be comparable to all other REITs. The items excluded from FFO and AFFO are significant components in understanding our financial performance.

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FFO and AFFO are non-GAAP performance measures and (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative to Net Income or Net Income Attributable to Common Shareholders as a measure of operating performance or to Cash Flows from Operating, Investing and Financing Activities; and (iii) are not an alternative to Cash Flows from Operating, Investing and Financing Activities as a measure of liquidity. FFO and AFFO, as calculated by us, may not be comparable to similarly titled measures reported by other REITs.

The following is a reconciliation of our U.S. GAAP Net Income (Loss) Attributable to Common Shareholders to our FFO and AFFO for the three and six months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Three
Months
Ended

Three
Months
Ended

Six
Months
Ended

Six
Months
Ended
Three Months Ended Six Months Ended
3/31/2020 3/31/2019 3/31/2020 3/31/2019 3/31/2021 3/31/2020 3/31/2021 3/31/2020
Net Income (Loss) Attributable to Common Shareholders $ (75,078) $ 23,821 $ (71,551) $ (8,543) $ 25,913 $ (75,078 ) $ 51,659 $ (71,551 )
Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods 83,075 (15,568 ) 86,710 27,059 (19,186 ) 83,075 (38,906 ) 86,710
Plus: Depreciation Expense (excluding Corporate Office

Capitalized Costs) 11,409 10,589 22,788 21,026 13,007 11,409 25,026 22,788
Plus: Amortization of Intangible Assets 508 505 1,016 1,005 600 508 1,132 1,016
Plus: Amortization of Capitalized Lease Costs 285 241 557 470 305 285 606 557
FFO Attributable to Common Shareholders 20,199 19,588 39,520 41,017 20,639 20,199 39,517 39,520
Plus: Depreciation of Corporate Office Capitalized Costs 66 167 118 208 57 66 116 118
Plus: Stock Compensation Expense 114 215 270 344 77 114 134 270
Plus: Amortization of Financing Costs 322 320 758 637 346 322 676 758
Plus: Non-recurring Strategic Alternative & Proxy Costs 1,993 -0- 2,239 -0-
Plus: Non-recurring Severance Expense 0 0 786 0 -0- -0- -0- 786
Less: Gain on Sale of Securities Transactions (2,248 ) -0- (2,248 ) -0-
Less: Lease Termination Income -0- -0- (377 ) -0-
Less: Recurring Capital Expenditures (717) (630) (936) (1,187) (403 ) (717 ) (563 ) (936 )
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment (632) (488) (1,232) (825 ) (1,043 ) (632 ) (1,661 ) (1,232 )
AFFO Attributable to Common Shareholders $ 19,352 $ 19,172 $ 39,284 $ 40,194 $ 19,418 $ 19,352 $ 37,833 $ 39,284

The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the six months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Six Months Ended Six Months Ended Six Months Ended
3/31/2020 3/31/2019 3/31/2021 3/31/2020

Operating Activities $ 47,854 $ 50,218 $ 54,426 $ 47,854
Investing Activities (101,388) (173,028) (153,511 ) (101,388 )
Financing Activities 69,268 129,844 94,951 69,268
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
There have been no material changes to information required regarding quantitative and qualitative disclosures about market risk from the end of the preceding fiscal year to March 31, ~~2020~~2021 (the date of this Quarterly Report on Form 10-Q).
ITEM 4. Controls and Procedures.
Our President and Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer) with the assistance of other members of our management, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our President and Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of such period.
Changes in Internal Control over Financial Reporting

There has not been any change in our internal controls over financial reporting during the quarter ended March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

32 39
Table of Contents

PART II:
OTHER INFORMATION

Item 1. Legal Proceedings. – None
Item 1A.
Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2020 (the “10-K”) and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2020 (the “10-Q”) which could materially affect the Company’s business, financial condition or future results. The risks described in the 10-K and the 10-Q are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. ~~There have been no material changes to the Risk Factors except as set forth below:~~
We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus (COVID-19). The COVID-19 pandemic is growing and its impacts are uncertain and hard to measure, but may have a material adverse effect on us.
We face various risks and uncertainties related to public health crises, including the recent and ongoing global COVID-19 pandemic, which has disrupted financial markets and significantly impacted worldwide economic activity to date and is likely to continue to do so. The future effects of the evolving impact of the COVID-19 pandemic as well as mandatory and voluntary actions taken to mitigate the public health impact of the pandemic are uncertain, however, they may have a material adverse effect on our financial condition.
The COVID-19 pandemic and social and governmental responses to the pandemic have caused, and are likely to continue to cause, severe economic, market and other disruptions worldwide. The extent to which COVID-19 and related actions impact our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, the success of governmental actions undertaken to support the economy during the pandemic and the duration and severity of direct and indirect economic effects of the illness and containment measures, among others. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.
To the extent the COVID-19 pandemic adversely affects our business, financial condition, liquidity, results of operations or prospects, it may also have the effect of heightening many of the other risks described in our 10-K under the heading “Risk Factors”.
33
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds. –- None

On January 16, 2020, our Board of Directors reaffirmed our Common Stock Repurchase Program (the “Program”) that authorizes us to purchase up to $50.0 million of shares of our common stock. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. During March 2020, we repurchased 300,000 shares of our common stock for $3.2 million at an average price of $10.70 per share pursuant to the Program, and subsequent to quarter-end, we repurchased 100,000 shares of our common stock for $1.1 million at an average price of $10.66 per share, for an aggregate to date of 400,000 shares of our common stock for $4.3 million at an average price of $10.69 per share. These are the only repurchases made under the Program to date. Repurchases executed under the Program were as follows:

Total Number
of Common
Stock Shares Purchased

Average
Price Paid
Per Share of
Common
Stock

Total Number of Common Stock Shares
Purchased as Part of
Our Common Stock
Repurchase Program

Maximum Dollar Value of Shares of Common Stock that May Yet be Purchased Under
Our Common Stock Repurchase Program
(in thousands)

January 2020 - - - $ 50,000
February 2020 - - - $ 50,000
March 2020 300,000 $ 10.70 300,000 $ 46,791
April 2020 100,000 $ 10.66 100,000 $ 45,724
Item 3. Defaults Upon Senior Securities. – None
Item 4. Mine Safety Disclosures. – None
Item 5.
Other Information. - None
The information in the following paragraph supersedes and replaces the information in the fifth paragraph under the caption “Material United States Federal Income Tax Considerations—Cash/Income Differences/Phantom Income” in our Registration Statement on Form S-3 (Commission File No. 333-226511):
Further, under the Tax Cuts and Jobs Act of 2017 (the “TCJA”), as revised by the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”), our deduction for net business interest expense generally will be limited to 50%, for our 2019 and 2020 taxable years, and 30%, for tax years beginning in 2021, of our adjusted taxable income (as defined in Section 163(j) of the Code, as revised by the TCJA and the CARES Act). If we are subject to this interest expense limitation, our REIT taxable income for a taxable year may be increased. Taxpayers that engage in certain real estate businesses may elect out of this rule, provided that such electing taxpayers must use an alternative depreciation system. We believe that we will be eligible to make this election. If we make this election, although we would not be subject to the interest expense limitation described above, our depreciation deductions may be reduced and, as a result, our REIT taxable income for a taxable year may be increased.
34
Item 6. Exhibits
31.1 Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).
31.2 Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).
32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer (Furnished herewith).
101 The following materials from our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020~~2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Shareholders’ Equity, ~~(iv)~~(v) the Consolidated Statements of Cash Flows and ~~(v)~~(vi) the Notes to Consolidated Financial Statements.
35 40
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MONMOUTH REAL ESTATE
INVESTMENT CORPORATION

Date: May 6, ~~2020~~2021 By: //s/ Michael P. Landy
Michael P. Landy, President and Chief Executive Officer,
its principal executive officer

Date: May 6, ~~2020~~2021 By: /s/ Kevin S. Miller
Kevin S. Miller, Chief Financial Officer, its principal
financial officer and principal accounting officer

36 41

Date of Grant	Number of Employees	Number of Shares (in thousands)	Option Price		Expiration Date
01/13/20	1	65	$	14.55	01/13/28
01/10/19	1	65	$	12.86	01/10/27
12/10/18	12	385	$	13.64	12/10/26

	Three Months Ended 03/31/2020		Six Months Ended 03/31/2020

Rental Revenues	$	1,243	$	2,370
Net Income Attributable to Common Shareholders		194		478

	3/31/2020				9/30/2019
	Amount		Weighted Average Interest Rate (1)		Amount		Weighted Average Interest Rate (1)
Fixed Rate Mortgage Notes Payable	$	787,625		4.04%	$	752,916		4.03%

Debt Issuance Costs	$	11,935			$	11,733
Accumulated Amortization of Debt Issuance Costs		(4,052)				(3,745)
Unamortized Debt Issuance Costs	$	7,883			$	7,988

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	779,742			$	744,928

	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of March 31, 2020:
Equity Securities – Preferred Stock	$	4,640	$	4,640	$	0	$	0
Equity Securities – Common Stock		94,393		94,393		0		0
Mortgage Backed Securities		2		2		0		0
Total Securities Available for Sale at Fair Value	$	99,035	$	99,035	$	0	$	0

As of September 30, 2019:
Equity Securities – Preferred Stock	$	13,167	$	13,167	$	0	$	0
Equity Securities – Common Stock		172,081		172,081		0		0
Mortgage Backed Securities		2		2		0		0
Total Securities Available for Sale at Fair Value	$	185,250	$	185,250	$	0	$	0

Month	Occupancy			Percentage of Base Rent Collected
March 2020		99.4	%		100.0	%
April 2020		99.4	%		99.9	%
May 2020		99.4	%		99.9	%
June 2020		99.4	%		99.9	%
July 2020		99.4	%		99.9	%
August 2020		99.4	%		99.7	%
September 2020		99.4	%		99.8	%
October 2020		99.4	%		99.8	%
November 2020		99.4	%		99.9	%
December 2020		99.7	%		99.9	%
January 2021		99.7	%		99.9	%
February 2021		99.7	%		99.9	%
March 2021		99.7	%		99.9	%
April 2021		99.7	%		99.9	%

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended		Three Months Ended						Six Months Ended
	3/31/2020		3/31/2019		3/31/2020		3/31/2019		3/31/2021			3/31/2020			3/31/2021			3/31/2020
Net Income (Loss) Attributable to Common Shareholders	$	(75,078)	$	23,821	$	(71,551)	$	(8,543)	$	25,913		$	(75,078	)	$	51,659		$	(71,551	)
Plus: Preferred Dividends		6,764		4,480		12,862		8,901
Plus: Preferred Dividend Expense										8,416			6,764			16,587			12,862
Plus: General & Administrative Expenses		2,396		2,252		4,660		4,069		2,091			2,396			4,117			4,660
Plus: Non-recurring Strategic Alternative & Proxy Costs										1,993			-0-			2,239			-0-
Plus: Non-recurring Severance Expense		0		0		786		0		-0-			-0-			-0-			786
Plus: Depreciation		11,475		10,756		22,907		21,234		13,064			11,475			25,141			22,907
Plus: Amortization of Capitalized Lease Costs and Intangible Assets		767		721		1,521		1,423		879			767			1,687			1,521
Plus: Interest Expense, including Amortization of Financing Costs		9,050		9,598		18,259		18,603		9,387			9,050			18,546			18,259
Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods		83,075		(15,568)		86,710		27,059		(19,186	)		83,075			(38,906	)		86,710
Less: Dividend Income		(3,404)		(3,515)		(6,642)		(7,882)		(1,587	)		(3,404	)		(3,195	)		(6,642	)
Less: Gain on Sale of Securities Transactions										(2,248	)		-0-			(2,248	)		-0-
Less: Lease Termination Income										-0-			-0-			(377	)		-0-
Net Operating Income- NOI	$	35,045	$	32,545	$	69,512	$	64,864	$	38,722		$	35,045		$	75,250		$	69,512

Property	Tenant	Square Feet		Former U.S. GAAP Straight- Line Rent PSF		Former Cash Rent PSF		Former Lease Expiration	Renewal U.S GAAP Straight- Line Rent PSF		Renewal Initial Cash Rent PSF		Renewal Lease Expiration	Renewal Term (years)		Tenant Improvement Cost PSF over Renewal Term (1)		Leasing Commission Cost PSF over Renewal Term (1)

Elgin (Chicago), IL	Joseph T. Ryerson & Son, Inc.		89,052	$	5.68	$	5.68	1/31/20	$	5.78	$	5.50	1/31/25		5.0	$	0.50	$	0.17
Montgomery (Chicago), IL	Home Depot USA, Inc.		171,200		5.70		5.93	6/30/20		6.30		6.30	12/31/22		2.5		0		0.28
Ridgeland (Jackson), MS	Graybar Electric Company		26,340		4.36		4.36	7/31/20		4.62		4.44	7/31/25		5.0		0		0.14
Tampa, FL	Tampa Bay Grand Prix		68,385		3.83		4.48	9/30/20		5.39		5.00	9/30/27		7.0		0.42		0
	Total		354,977

Weighted Average				$	5.24	$	5.47		$	5.87	$	5.71			4.2	$	0.28	$	0.15

Property	Mortgage amount (in thousands)		Maturity Date	Interest Rate
Indianapolis, IN	$	52,500	11/1/2037		4.27%
Columbus, OH		9,400	1/1/2030		3.47%

	Total Number of Common Stock Shares Purchased		Average Price Paid Per Share of Common Stock		Total Number of Common Stock Shares Purchased as Part of Our Common Stock Repurchase Program		Maximum Dollar Value of Shares of Common Stock that May Yet be Purchased Under Our Common Stock Repurchase Program (in thousands)
January 2020		-		-		-	$	50,000
February 2020		-		-		-	$	50,000
March 2020		300,000	$	10.70		300,000	$	46,791
April 2020		100,000	$	10.66		100,000	$	45,724

Item 3.		Defaults Upon Senior Securities. – None

Item 4.		Mine Safety Disclosures. – None

Item 5.		Other Information. - None The information in the following paragraph supersedes and replaces the information in the fifth paragraph under the caption “Material United States Federal Income Tax Considerations—Cash/Income Differences/Phantom Income” in our Registration Statement on Form S-3 (Commission File No. 333-226511): Further, under the Tax Cuts and Jobs Act of 2017 (the “TCJA”), as revised by the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”), our deduction for net business interest expense generally will be limited to 50%, for our 2019 and 2020 taxable years, and 30%, for tax years beginning in 2021, of our adjusted taxable income (as defined in Section 163(j) of the Code, as revised by the TCJA and the CARES Act). If we are subject to this interest expense limitation, our REIT taxable income for a taxable year may be increased. Taxpayers that engage in certain real estate businesses may elect out of this rule, provided that such electing taxpayers must use an alternative depreciation system. We believe that we will be eligible to make this election. If we make this election, although we would not be subject to the interest expense limitation described above, our depreciation deductions may be reduced and, as a result, our REIT taxable income for a taxable year may be increased.


Item 6.		Exhibits

31.1		Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).

31.2		Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer (Furnished herewith).

101		The following materials from our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020~~2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Shareholders’ Equity, ~~(iv)~~(v) the Consolidated Statements of Cash Flows and ~~(v)~~(vi) the Notes to Consolidated Financial Statements.

			MONMOUTH REAL ESTATE
		INVESTMENT CORPORATION

Date:	May 6, ~~2020~~2021	By:	//s/ Michael P. Landy
			Michael P. Landy, President and Chief Executive Officer,
			its principal executive officer




Date:	May 6, ~~2020~~2021	By:	/s/ Kevin S. Miller
			Kevin S. Miller, Chief Financial Officer, its principal
			financial officer and principal accounting officer