Monmouth Real Estate Investment Corporation A Public REIT Since 1968 January 2019 Investor Presentation NYSE: MNR
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide Monmouth Real Estate Investment Corporation’s current expectations or forecasts of future events. Forward-looking statements include statements about Monmouth’s expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. You can identify forward-looking statements 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 Monmouth’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. 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 Monmouth. Some of these factors are described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as included in Monmouth’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 and its other periodic reports filed with the Securities and Exchange Commission, which are accessible on SEC’s Electronic Data Gathering, Analysis and Retrieval website, or “EDGAR” at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this presentation and in Monmouth’s SEC filings. These and other risks, uncertainties and factors could cause Monmouth’s actual results to differ materially from those included in any forward-looking statements it makes. 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 Monmouth to predict those events or how they may affect it. Except as required by law, Monmouth is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. This presentation may include references to “FFO”, “Core FFO” and “AFFO”, which are non-GAAP financial measures. A reconciliation of “FFO”, “Core FFO” and “AFFO” to the most comparable GAAP financial measures is included in our most recent Annual Report on Form 10-K and/or our Supplemental Information package as of September 30, 2018, furnished to shareholders on Form 8-K, and is available on our website at www.mreic.reit. 2
Select Properties Indianapolis MSA Oklahoma City MSA Phoenix MSA 3 Lexington MSA Kansas City MSA
Company Overview ▪ Single tenant, net-leased Industrial REIT specializing in well-located, modern properties subject to long-term leases primarily to investment grade tenants or their subsidiaries ▪ Property portfolio contains 21.6 million square feet, consisting of 113 properties with 98.9% occupancy ▪ Geographically diversified portfolio across 30 states with a focus on major seaports, major intermodal ports, and major airports ▪ Quality roster of investment grade tenants ▪ 80% of rental revenue from investment grade tenants or their Indianapolis MSA subsidiaries, including Amazon, Anheuser Busch, Beam Suntory, Coca-Cola, FedEx, Home Depot, International Paper, National Oilwell, Shaw Industries, Sherwin-Williams, Siemens, United Technologies and other high-quality companies ▪ Strong recent growth ▪ Monmouth successfully grew GLA by approximately 100% during the past five years ▪ In fiscal 2018, closed on seven properties with approximately 2.7 million square feet for $282.3 million ▪ Thus far in fiscal 2019, closed on two properties totaling approximately 474,000 square feet for $113.1 million Memphis MSA ▪ Current acquisition pipeline includes one property containing approximately 269,000 square with a total purchase price of $40.9 million ▪ Conservative capital structure ▪ 34.9% Net Debt to Total Market Capitalization ▪ 7.1x Net Debt/Adjusted EBITDA ▪ 2.4x Fixed Charge Coverage ▪ 11.7 years Weighted Average Debt Maturity 4 Source: MNR 10-K and subsequent press releases
Portfolio Overview Consistent Results Occupancy ▪ 113 properties geographically diversified across 30 states, totaling approximately 21.6 million square feet of GLA 99.6% 99.6% ▪ Highest occupancy rate in the Industrial REIT sector at 98.9% 100.0% 99.3% 98.9% ▪ Currently in our fourth consecutive year of above 98% occupancy 99.0% 97.7% ▪ Most modern industrial property portfolio 98.0% ▪ Youngest weighted average building age in the Industrial 97.0% 96.0% 95.9% REIT sector at 8.6 years 96.0% ▪ Average building size is approximately 192,000 square feet 95.0% ▪ Weighted average lease maturity is 8.0 years 94.0% ▪ Weighted average rent per square foot is $6.22 93.0% ▪ Simple business model 92.0% ▪ No off-balance sheet joint ventures 91.0% ▪ No in-house development division 90.0% ▪ No significant non-income producing land FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Current Tenant Retention 100.0% 100.0% 100.0% 100.0% 93.0% 92.0% 86.0% 90.0% 80.0% 69.0% 70.0% 60.0% 53.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% FY 2011 FY 2012 FY 2013 FY 2014* FY 2015 FY 2016 FY 2017 FY 2018** Charlotte MSA * Only 438,000 square feet, representing 4% of total GLA, came due in fiscal 2014. 60,400 sf of the 208,400 sf that did not renew was re-tenanted. ** Three buildings containing 184,000 total square feet, or 12% of the expiring square footage were sold 5 Source: MNR 10-K and subsequent press releases and one building containing 218,000 square feet, or 14% of the expiring square footage was re-tenanted.
Portfolio Growth Total GLA 21.8 21.2 22.0 Total Square Feet (in Millions) 18.8 20.0 18.0 16.0 16.0 13.9 14.0 11.2 12.0 9.6 10.0 8.0 6.0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E Total Real Estate Assets Total Real Estate Assets ($ in Billions) $2.0 $1.834 $1.720 $1.8 $1.6 $1.432 $1.4 $1.171 $1.2 $0.941 $1.0 $0.744 $0.8 $0.628 $0.6 $0.4 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E 6 Source: MNR 10-K and subsequent press releases
Capital Structure $3.0 $2.5 Total Market Capitalization ($ in Billions) $2.0 $1.5 $1.0 $0.5 $0.0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Common Equity Preferred Equity Debt 7 Source: MNR 10-K and subsequent press releases
Financial Highlights Gross Revenue ▪ Gross Revenue has grown at an average annual rate of 22% over the past five years $170 + 23% $150 + 19% $130 + 27% $ in Millions $110 + 19% $90 $70 $50 $30 $10 2014 2015 2016 2017 2018 Adjusted Funds from Operations per Share ▪ AFFO per share has grown at an average annual rate of 14% over the past five years + 14% $0.90 + 9% $0.80 + 23% $0.70 + 10% $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2014 2015 2016 2017 2018 8 Source: MNR 10-K and subsequent press releases
Ecommerce Trends and MNR’s Portfolio ▪ The entire retail industry continues to shift its focus from traditional brick and mortar stores to ecommerce platforms which has led to significant demand for large, modern industrial distribution centers ▪ U.S. ecommerce sales are expected to increase to over $525 billion in 2018 ▪ Excluding food, fuel, and auto, ecommerce represents approximately 16% of total U.S. retail sales ▪ Monmouth was early in anticipating consumer spending’s shift from traditional stores to internet sales ▪ Today, Monmouth’s vast FedEx holdings represent an integral part of the ecommerce ecosystem ECommerce Sales CAGR: 16.0% $600 $500 $400 $ in Billions $300 $200 $100 $- 2011 2012 2013 2014 2015 2016 2017 2018E 9 Source: U.S. Census Bureau
Global Retail Sales ▪ Global consumer habits continue to change resulting in ever greater market share taking place online ▪ Global ecommerce sales are expected to rise to $2.4 trillion this year 20 9% Online Sales (LHS) 8% In-Store Sales (LHS) % Online (RHS) 7% 15 6% $ in Trillions 5% 10 4% 3% 5 2% 1% 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 10 Source: Goldman Sachs
The “Golden Triangle” – It’s “All about Logistics!” Remaking the Supply-Chain – A GREAT story for Mid-Central & SE U.S. The GDP Golden Triangle Q. What is it about the “Golden Triangle” that makes it tops in GDP, Logistics & Supply-Chain? A. Best “Freightways!” MREIC’s Portfolio: 87 of 113 properties are located within the “Golden Triangle” The Golden Mfg & Logistics Triangle: SE (#1 @ 22%) + SW + Great lakes = 47% US GDP 11 Source: K.C. Conway, Director of Research, Chief Economist, Alabama Center for Real Estate
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