Edgar Filing: MONMOUTH REAL ESTATE INVESTMENT CORP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ___________________ 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) Identification No.)

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

(Address of Principal Executive Offices) (Zip Code)

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

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

Common Stock, $0.01 par value per share – New York Stock Exchange

7.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share, $25 liquidation value per share – New York Stock Exchange

7.875% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share, $25 liquidation value per share – New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ___Yes X No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

___Yes X No

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. X Yes ___ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

X Yes ___ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X_

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

Large accelerated filer Accelerated filer X

Non-accelerated filer Smaller reporting company

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

The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates of the registrant at March 31, 2015 was approximately $621,571,000 (based on the $11.11 closing price per share of common stock on March 31, 2015).

There were 63,084,752 shares of Common Stock outstanding as of December 1, 2015.

Documents Incorporated by Reference: None.

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TABLE OF CONTENTS

Item No.			Page No.
		Part I
1		Business.	3
1	A	Risk Factors.	7
1	B	Unresolved Staff Comments.	16
2		Properties.	17
3		Legal Proceedings.	25
4		Mine Safety Disclosures.	25

		Part II
5		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	26
6		Selected Financial Data.	29
7		Management’s Discussion and Analysis of Financial Condition and Results of Operations.	31
7	A	Quantitative and Qualitative Disclosures About Market Risk.	56
8		Financial Statements and Supplementary Data.	58
9		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	58
9	A	Controls and Procedures.	58
9	B	Other Information.	60

		Part III
10		Directors, Executive Officers and Corporate Governance.	61
11		Executive Compensation.	65
12		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	79
13		Certain Relationships and Related Transactions, and Director Independence.	81
14		Principal Accounting Fees and Services.	82

		Part IV
15		Exhibits, Financial Statement Schedules.	83

		Signatures	144

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PART I

ITEM 1 – BUSINESS

General Development of the Business

In this 10-K, “we”, “us”, “our”, “MREIC” or “the Company”, refers to Monmouth Real Estate Investment Corporation, together with its predecessors and subsidiaries, unless the context requires otherwise.

The Company is a corporation operating as a qualified real estate investment trust (REIT) under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the Code). The Company has been a REIT since 1969 and intends to maintain its qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Company will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that it distributes to its shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code.

The Company was established in 1968 as a New Jersey Business Trust (NJBT). In 1990, the NJBT merged into a newly formed Delaware corporation. On May 15, 2003, the Company changed its state of incorporation from Delaware to Maryland by merging with and into a Maryland corporation (the Reincorporation).

Narrative Description of Business

The Company’s primary business is the ownership of real estate. Its investment focus is to own well-located, modern industrial buildings, leased primarily to investment-grade tenants on long-term net-leases. In addition, the Company owns a portfolio of REIT investment securities which the Company generally limits to no more than approximately 10% of its undepreciated assets.

At September 30, 2015, the Company held investments in ninety-one properties totaling approximately 13,919,000 square feet with an occupancy rate of 97.7% (See Item 2 for a detailed description of the properties). These properties are located in twenty-eight states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. All of these properties are wholly-owned with the exception of the two properties in New Jersey in which the Company owns a majority interest. All properties in which the Company has investments are leased on a net basis except an industrial park in Monaca, Pennsylvania and the shopping center located in Somerset, New Jersey.

During fiscal 2015, the Company purchased ten industrial properties totaling approximately 2,729,000 square feet with net-leased terms ranging from seven to fifteen years resulting in a weighted average lease maturity of 11.9 years. Approximately 964,000 square feet, or 35%, is leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The purchase price for the ten properties was approximately $191,985,000 and they are located in Florida, Illinois, Indiana, Kentucky, Missouri, Ohio and Texas. These ten properties generate annualized rental income over the life of their leases of approximately $13,368,000. The funds for these ten acquisitions were provided by eight property level mortgage loans totaling approximately $122,173,000, draws on an unsecured line of credit and cash on hand. The eight mortgages have a weighted average fixed rate of 4.14% with a weighted average maturity of 13.7 years.

On September 18, 2015, the Company sold its 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. Under Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”), the sale resulted in a realized gain of approximately $5,021,000, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis.

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In the first quarter of fiscal 2016 to date, the Company purchased two industrial properties totaling approximately 506,000 square feet with net-leased terms of ten years each. Both properties are leased to FedEx Ground Package System, Inc. The purchase price for the two properties was approximately $50,386,000 and they are located in Louisiana and North Carolina. These two properties generate annualized rental income over the life of their respective leases of approximately $3,336,000. In addition, these two industrial properties purchased during fiscal 2016 to date, increased our current total leasable square feet to approximately 14,425,000 and our occupancy rate to 97.8%. The funds for these acquisitions were provided by two property level mortgage loans totaling $33,670,000, draws on an unsecured line of credit and cash on hand. The two mortgages are at fixed rates ranging from 3.87% to 4.08% and have a weighted average interest rate of 3.95%. Each of these mortgages is a fifteen year, self-amortizing loan.

In addition to the two properties purchased during the first quarter of fiscal 2016 to date, we have entered into agreements to purchase seven new build-to-suit, industrial buildings that are currently being developed in Florida, Kansas, Kentucky, Michigan, New York and Washington totaling approximately 1,869,000 square feet with net-leased terms ranging from ten to fifteen years resulting in a weighted average lease maturity of 14.1 years. Approximately 1,732,000 square feet, or 93%, is leased to FedEx Ground Package System, Inc. The purchase price for the seven properties is approximately $198,804,000. Subject to satisfactory due diligence, we anticipate closing these seven transactions during fiscal 2016 and fiscal 2017. In connection with four of the seven properties, the Company has entered into commitments to obtain four mortgages totaling approximately $92,116,000 at fixed rates ranging from 3.55% to 3.95%, with a weighted average interest rate of 3.81%. Each of these mortgages is a fifteen year, self-amortizing loan. The Company may make additional acquisitions in fiscal 2016 and fiscal 2017 and the funds for these acquisitions may come from mortgages, draws on our unsecured line of credit, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the Dividend Reinvestment and Stock Purchase Plan (DRIP), 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.

Currently, the Company derives its income primarily from real estate rental operations. Rental and Reimbursement Revenue (excluding Lease Termination Income in fiscal 2015, 2014 and 2013 of $238,625, $1,182,890 and $690,730, respectively) was $77,775,497, $64,672,341 and $54,607,086 for the years ended September 30, 2015, 2014 and 2013, respectively. Total assets were $915,991,942 and $743,756,700 as of September 30, 2015 and 2014, respectively.

As of September 30, 2015, the Company had approximately 13,919,000 square feet of property, of which approximately 6,002,000 square feet, or 43%, consisting of forty-seven separate stand-alone leases, were leased to FedEx Corporation (FDX) and its subsidiaries, (7% to FDX and 36% to FDX subsidiaries). These properties are located in twenty different states. As of September 30, 2015, the only tenants that leased 5% or more of the Company’s total square footage were FDX and its subsidiaries and ULTA, Inc., which leased approximately 671,000 square feet, comprising approximately 5% of the Company’s rental space.

During fiscal 2015, the only tenant that accounted for 5% or more of our rental and reimbursement revenue was FDX (including its subsidiaries). Our rental and reimbursement revenue from FDX and its subsidiaries totaled approximately $41,954,000, $35,007,000 and $29,241,000, or 54% (8% from FDX and 46% from FDX subsidiaries), 54% (10% from FDX and 44% from FDX subsidiaries) and 53% (12% from FDX and 41% from FDX subsidiaries) of total rent and reimbursement revenues for the fiscal years ended September 30, 2015, 2014 and 2013, respectively.

The Company’s weighted-average lease expiration was 7.2 and 6.7 years as of September 30, 2015 and 2014, respectively, and its average annualized rent per occupied square foot as of September 30, 2015 and 2014 was $5.48 and $5.51, respectively. The Company’s occupancy rate as of September 30, 2015 and 2014 was 97.7% and 95.9%, respectively.

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The Company competes with other investors in real estate for attractive investment opportunities. These investors include other equity real estate investment trusts, limited partnerships, syndications and private investors, among others. Competition in the market areas in which the Company operates is significant and affects the Company’s ability to acquire or expand properties, occupancy levels, rental rates, and operating expenses of certain properties. Management has built relationships with merchant builders which have historically provided the Company with investment opportunities that fit the Company’s investment policy. The amount of new construction of industrial properties on the national level has been increasing the past three years following several years of historically low levels of new supply. These levels of new supply, although increasing, still remain below historical norms. Demand for industrial space continues to be very strong. For further discussion of potential impact of competitive conditions on our business, see Item 1A: Risk Factors below.

The Company continues to invest in marketable securities of other REITs, which the Company generally limits to no more than approximately 10% of its undepreciated assets. The Company from time to time may purchase these securities on margin when the interest and dividend yields exceed the cost of the funds. As of September 30, 2015 and 2014, there were no draws against the margin. The REIT securities portfolio, to the extent not pledged to secure borrowings, provides the Company with additional liquidity and additional income. Such securities are subject to risks arising from adverse changes in market rates and prices, primarily interest rate risk relating to debt securities and market price risk relating to equity securities. From time to time, the Company may use derivative instruments to mitigate interest rate risk, however, this has not occurred during any periods presented. At September 30, 2015 and 2014, the Company had $54,541,237 and $59,311,403, respectively, of securities available for sale. The unrealized net gain (loss) on securities available for sale at September 30, 2015 and 2014 was $(5,441,603) and $121,356, respectively. For the fiscal years ended September 30, 2015, 2014 and 2013, the Company’s net realized gains from the sale of securities were $805,513, $2,166,766 and $7,133,252, respectively.

Investment and Other Policies

The Company’s investment policy is to concentrate its investments in the area of long-term net-leased industrial properties, leased primarily to investment-grade tenants. The Company’s strategy is to obtain a favorable yield spread between the income from the net-leased industrial properties and interest costs. In addition, management believes that investments in well-located industrial properties provide a potential for long-term capital appreciation. There is the risk that, upon expiration of leases, the properties will become vacant or will be re-leased at lower rents. The results obtained by the Company by re-leasing the properties will depend on the market for industrial properties at that time. The Company has renewed all six leases, or 100% of the gross leasable area that was scheduled to expire during fiscal 2015 at an increase in the weighted average lease rate of 6% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 1% on a cash basis.

The Company seeks to invest in well-located, modern buildings, leased pursuant to long-term net-leases, primarily to investment-grade tenants. In management’s opinion, the newly built facilities meet these criteria. The Company has a concentration of properties leased to FDX and FDX subsidiaries. This is a risk factor that shareholders should consider. FDX is a publicly-owned corporation and financial information related to FDX is available at the SEC’s website, www.sec.gov. The reference in this report to the SEC’s website is not intended to and does not include or incorporate by reference into this report the information on this website.

The Company currently has fourteen full-time employees and one part-time employee. One of the Company’s employees (Director of Investor Relations, promoted to Vice President of Investor Relations in June 2015) was shared with an affiliated entity, UMH Properties, Inc. (UMH) through September 30, 2015. Through September 30, 2015, the Vice President of Investor Relations’ salary was allocated 70% to the Company and 30% to UMH based on the time she worked for each entity. Effective October 1, 2015, the Vice President of Investor Relations began working solely for the Company at which point the Company no longer allocates any portion of her salary to UMH. In addition, the Company’s Chairman of the Board is also the Chairman of the Board of UMH. Effective as of October 1, 2015, other than the Company’s Chairman of the Board, the Company does not share any employees with UMH.

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Allocations of salaries and benefits were made based on the amount of the employees’ time that was dedicated to each affiliated company. Some general and administrative expenses are allocated between the Company and UMH based on use or services provided. In fiscal 2015, total shared expense, including salaries and rent billed by UMH to the Company, were $158,727. On August 22, 2014, the Company entered into a seven-year lease agreement to occupy 5,680 square feet for the Company’s new corporate office space. The lease became effective in January 2015, after which time, the Company ceased to share rent expense with UMH.

The Company may issue securities for property; however, this has not occurred to date. The Company may repurchase or reacquire its shares from time to time if, in the opinion of the Board of Directors, such acquisition is advantageous to the Company. No shares were repurchased or reacquired during fiscal 2015 and, as of September 30, 2015, the Company does not own any of its own shares.

Property Management

Currently, all ninety-one properties owned by the Company, with the exception of two properties that are located in Streetsboro, Ohio and Carlstadt, New Jersey, are self-managed by the Company.

The Company paid fees directly to local property management subagents in the amount of $306,487, $264,811 and $228,476 for fiscal years ended September 30, 2015, 2014 and 2013, respectively.

Until October 31, 2014, the Company’s two industrial properties in Olive Branch, Mississippi, were managed by Industrial Developments International (IDI). Management fees paid to IDI for the fiscal years ended September 30, 2015, 2014 and 2013 were $8,274, $49,476 and $42,550, respectively. These management fees were reimbursed to the Company by the tenants. Effective November 1, 2014, the Company began to self-manage these properties.

The Company’s industrial property in Streetsboro, Ohio is managed by GEIS Companies (GEIS). Management fees paid to GEIS for the fiscal years ended September 30, 2015, 2014 and 2013 were $50,112, $50,138 and $50,385, respectively. These management fees were reimbursed to the Company by the tenants.

The Company’s industrial property in Carlstadt, New Jersey is owned by Palmer Terrace Realty Associates, LLC. The Company owns 51% of Palmer Terrace Realty Associates, LLC. This property is managed by Marcus Associates, an entity affiliated with the owner of the 49% non-controlling interest. Management fees paid by Palmer Terrace Realty Associates, LLC to Marcus Associates for each of the fiscal years ended September 30, 2015, 2014 and 2013 totaled $15,804 each year.

Environmental Matters

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although generally our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, the Company may be required to satisfy such obligations. In addition, as the owner of such properties, the Company may be held directly liable for any such damages or claims irrespective of the provisions of any lease.

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From time to time, in connection with managing the properties or upon acquisition of a property, the Company authorizes the preparation of Phase I and, when necessary, Phase II environmental reports with respect to its properties. Based upon such environmental reports and the Company’s ongoing review of its properties, as of the date of this Annual Report, the Company is not aware of any environmental condition with respect to any of its properties which it believes would be reasonably likely to have a material adverse effect on its financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown; (2) changes in law; (3) the conduct of tenants; or (4) activities relating to properties in the vicinity of our properties, will not expose the Company to material liability in the future.

Contact Information

Additional information about the Company can be found on the Company’s website which is located at www.mreic.com. Information contained on or hyperlinked from our Web site is not incorporated by reference into and should not be considered part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (SEC). The Company makes available, free of charge, on or through its website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. You can also read and copy any materials the Company files with the SEC at its Public Reference Room at 100 F Street, NE, Washington, DC 20549 (1-800-SEC-0330). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Financial Information

Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources. For required financial information related to our operations and assets, please refer to our consolidated financial statements, including the notes thereto, included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report.

ITEM 1A – RISK FACTORS

The following risk factors address the material risks concerning our business. If any of the risks discussed in this report were to occur, our business, prospects, financial condition, results of operation and our ability to service our debt and make distributions to our shareholders could be materially and adversely affected and the market price per share of our stock could decline significantly. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Real Estate Industry Risks

Our business and financial results are affected by local real estate conditions in areas where we own properties. We may be affected adversely by general economic conditions and local real estate conditions. For example, an oversupply of industrial properties in a local area or a decline in the attractiveness of our properties to tenants and potential tenants could have a negative effect on us.

Other factors that may affect general economic conditions or local real estate conditions include but are not limited to:

population and demographic trends;

employment and personal income trends;

zoning, use and other regulatory restrictions;

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income tax laws;

changes in interest rates and availability and costs of financing;

competition from other available real estate.

We may be unable to compete with our larger competitors and other alternatives available to tenants or potential tenants of our properties. The real estate business is highly competitive. We compete for properties with other real estate investors and purchasers, including other real estate investment trusts, limited partnerships, syndications and private investors, some of whom may have greater financial resources, revenues and geographical diversity than we have. Furthermore, we compete for tenants with other property owners. All of our industrial properties are subject to significant local competition. We also compete with a wide variety of institutions and other investors for capital funds necessary to support our investment activities and asset growth. To the extent that we are unable to effectively compete in the marketplace, our business may be adversely affected.

We are subject to significant regulation that inhibits our activities and may increase our costs. Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties at a substantial cost and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We may incur additional costs to comply with any future requirements.

Our investments are concentrated in the industrial distribution sector and our business would be adversely affected by an economic downturn in that sector. Our investments in real estate assets are primarily concentrated in the industrial distribution sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry.

Risks Associated with Our Properties

We may be unable to renew or extend leases or re-let space as leases expire. While we seek to invest in well-located, modern buildings, leased to investment-grade tenants on long-term leases, a number of our properties are subject to short-term leases. When a lease expires, a tenant may elect not to renew or extend it. We may not be able to re-let the property on similar terms, if we are able to re-let the property at all. The terms of renewal, extension or re-lease (including the cost of required renovations and/or concessions to tenants) may be less favorable to us than the prior lease. If we are unable to re-let all or a substantial portion of our properties, or if the rental rates upon such re-letting are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions, may be adversely affected. We have established an annual budget for renovation and re-letting expenses that we believe is reasonable in light of each property’s operating history and local market characteristics. However, this budget may not be sufficient to cover these expenses.

Our business is substantially dependent on FedEx Corporation. FDX, together with its subsidiaries, is our largest tenant, consisting of forty-seven separate stand-alone leases located in twenty different states as of September 30, 2015. As of September 30, 2015, the Company had approximately 13,919,000 square feet of property, of which approximately 6,002,000 square feet, or 43%, were leased to FDX and its subsidiaries, (7% from FDX and 36% from FDX subsidiaries). Rental and reimbursement revenue from FDX and its subsidiaries is approximately 54% (8% from FDX and 46% from FDX subsidiaries) of total rental and reimbursement revenue for fiscal 2015. No other tenant accounted for 5% or more of the Company’s total Rental and Reimbursement revenue for the fiscal 2015. As a result of this concentration, our business, financial condition and results of operations, including the amount of cash available for distribution to our stockholders, could be adversely affected if we are unable to do business with FDX or FDX reduces its business with us or FDX and its subsidiaries were to become unable to make lease payments because of a downturn in its business or otherwise.

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We are subject to risks involved in single tenant leases. We focus our acquisition activities on real properties that are net-leased to single tenants. Therefore, the financial failure of, or other default by, a single tenant under its lease is likely to cause a significant reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property. In addition, we will be responsible for 100% of the operating costs following a vacancy at a single tenant building.

We may be affected negatively by tenant financial difficulties and leasing delays. At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in the demand for space at our industrial properties. As a result, our tenants may delay lease commencement, fail to make rental payments when due, or declare bankruptcy. Any such event could result in the termination of that tenant’s lease and losses to us.

We receive a substantial portion of our income as rents under long-term leases. If tenants are unable to comply with the terms of their leases because of rising costs or falling revenues, we, in our sole discretion, may deem it advisable to modify lease terms to allow tenants to pay a lower rental rate or a smaller share of operating costs, taxes and insurance. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to the tenant. We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply and, in some instances, may restrict the amount and recoverability of our claims against the tenant. A tenant’s default on its obligations to us for any reason could adversely affect our financial condition and the cash we have available for distribution.

We may be unable to sell properties when appropriate because real estate investments are illiquid. Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to vary our property portfolio promptly in response to changes in economic or other conditions. In addition, the Code may limit our ability to sell our properties. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service debt and make distributions to our shareholders.

Environmental liabilities could affect our profitability. We face possible environmental liabilities. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when hazardous or toxic substances were disposed on, or released from, the property. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As a current or former owner and operator of real estate, we may be required by law to investigate and clean up hazardous substances released at or from the properties we currently own or operate or have in the past owned or operated. We may also be liable to the government or to third parties for property damage, investigation costs and cleanup costs. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral. We are not aware of any environmental liabilities relating to our investment properties which would have a material adverse effect on our business, assets, or results of operations. However, we cannot assure you that environmental liabilities will not arise in the future and that such liabilities will not have a material adverse effect on our business, assets or results of operation.

Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties. We compete with other owners and operators of real estate, some of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire. As a result, our financial condition, cash flow and cash available for distribution, the market price of our preferred and common stock and our ability to satisfy our debt service obligations could be materially and adversely affected.

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Coverage under our existing insurance policies may be inadequate to cover losses. Weather conditions and natural disasters such as hurricanes, tornados, earthquakes, floods, droughts, fires and other environmental conditions can harm our business operations. We generally maintain insurance policies related to our business, including casualty, general liability and other policies, covering our business operations, employees and assets. However, we would be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots or acts of war. If an uninsured loss or a loss in excess of insured limits were to occur with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties and, in the case of debt, which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, we cannot assure you that we will not incur losses in excess of our insurance coverage, or that we will be able to obtain insurance in the future at acceptable levels and reasonable costs.

We may be unable to acquire properties on advantageous terms or acquisitions may not perform as we expect. We have acquired individual properties and portfolios of properties, and intend to continue to do so. However, we may be unable to acquire any of the properties that we may identify as potential acquisition opportunities in the future. Our acquisition activities and their success are subject to the following risks:

when we are able to locate a desired property, competition from other real estate investors may significantly increase the purchase price;

acquired properties may fail to perform as expected;

the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;

acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures;

we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected; and

· we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the seller. As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to resolve it, which could adversely affect our cash flow and financial condition.

Financing Risks

We face inherent risks associated with our debt incurrence. We finance a portion of our investments in properties and marketable securities through the incurrence of debt. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In addition, debt creates other risks, including:

rising interest rates on our variable rate debt;

inability to repay or refinance existing debt as it matures, which may result in forced disposition of assets on disadvantageous terms;

One or more lenders under our $130.0 million unsecured line of credit could refuse to fund their financing commitment to us or could fail, and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all;

refinancing terms that are less favorable than the terms of existing debt; and

inability to meet required payments of principal and/or interest.

We mortgage our properties, which subjects us to the risk of foreclosure in the event of non-payment. We mortgage many of our properties to secure payment of indebtedness and, if we are unable to meet mortgage payments, the property could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure of one or more of our properties could adversely affect our financial condition, results of operations, cash flow, and ability to service debt and make distributions and the market price of our preferred and common stock.

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We face risks related to “balloon payments” and refinancings. Certain mortgages will have significant outstanding principal balances on their maturity dates, commonly known as “balloon payments.” There can be no assurance that we will have the funds available to fund the balloon payment or that we will be able to refinance the debt on favorable terms or at all. To the extent we cannot either pay off or refinance this debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which could have an adverse impact on our financial performance and ability to service debt and make distributions.

We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each year to distribute to our shareholders at least 90% of our REIT taxable income, and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including (i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings and cash distributions; and (iv) the market price of our capital stock. Additional debt financing may substantially increase our debt-to-total capitalization ratio. Additional equity issuances may dilute the holdings of our current shareholders.

We may become more highly leveraged, resulting in increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions. We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Our governing documents do not limit the amount of indebtedness we may incur. Accordingly, our Board of Directors may authorize us to incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT. We could therefore become more highly leveraged, resulting in an increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions to shareholders.

Fluctuations in interest rates could materially affect our financial results. Because a portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. If the United States Federal Reserve increases short-term interest rates, this may have a significant upward impact on shorter-term interest rates, including the interest rates that our variable rate debt is based upon. Potential future increases in interest rates and credit spreads may increase our interest expense and therefore negatively affect our financial condition and results of operations, and reduce our access to the debt or equity capital markets.

Covenants in our loan documents could limit our flexibility and adversely affect our financial condition. The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we were to default under credit agreements or other debt instruments, our financial condition could be adversely affected.

Risks Related to our Status as a REIT

If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT. To qualify as a REIT, we must, among other things, satisfy two gross income tests, under which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to our leases to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. We believe that our leases will be respected as true leases for federal income tax purposes. However, there can be no assurance that the Internal Revenue Service (IRS) will agree with this view. If the leases are not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs, and we could lose our REIT status.

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Failure to make required distributions would subject us to additional tax. In order to qualify as a REIT, we must, among other requirements, distribute, each year, to our shareholders at least 90 percent of our taxable income, excluding net capital gains. To the extent that we satisfy the 90 percent distribution requirement, but distribute less than 100 percent of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4 percent nondeductible excise tax on the amount, if any, by which our distributions (or deemed distributions) in any year are less than the sum of:

· 85 percent of our ordinary income for that year;

· 95 percent of our capital gain net earnings for that year; and

· 100 percent of our undistributed taxable income from prior years.

To the extent we pay out in excess of 100 percent of our taxable income for any tax year, we may be able to carry forward such excess to subsequent years to reduce our required distributions for purposes of the 4 percent excise tax in such subsequent years. We intend to pay out our income to our shareholders in a manner intended to satisfy the 90 percent distribution requirement. Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the 90 percent distribution requirement and to avoid corporate income tax.

We may not have sufficient cash available from operations to pay distributions, and, therefore, distributions may be made from borrowings. The actual amount and timing of distributions will be determined by our Board of Directors in its discretion and typically will depend on the amount of cash available for distribution, which will depend on items such as current and projected cash requirements, limitations on distributions imposed by law or our financing arrangements and tax considerations. As a result, we may not have sufficient cash available from operations to pay distributions as required to maintain our status as a REIT. Therefore, we may need to borrow funds to make sufficient cash distributions in order to maintain our status as a REIT, which may cause us to incur additional interest expense as a result of an increase in borrowed funds for the purpose of paying distributions.

We may be required to pay a penalty tax upon the sale of a property. The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100 percent penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of real estate or other property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. It is our intent that we and our subsidiaries will hold the interests in the real estate for investment with a view to long-term appreciation, engage in the business of acquiring and owning real estate, and make occasional sales as are consistent with our investment objectives. We do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions.

We may be adversely affected if we fail to qualify as a REIT. If we fail to qualify as a REIT, we will not be allowed to deduct distributions to shareholders in computing our taxable income and will be subject to Federal income tax, including any applicable alternative minimum tax, at regular corporate rates. In addition, we might be barred from qualification as a REIT for the four years following disqualification. The additional tax incurred at regular corporate rates would reduce significantly the cash flow available for distribution to shareholders and for debt service. Furthermore, we would no longer be required to make any distributions to our shareholders as a condition to REIT qualification. Any distributions to shareholders would be taxable as ordinary income to the extent of our current and accumulated earnings and profits, although such dividend distributions would be subject to a top federal tax rate of 20% through 2015. Corporate distributees, however, may be eligible for the dividends received deduction on the distributions, subject to limitations under the Code.

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To qualify as a REIT, we must comply with certain highly technical and complex requirements. We cannot be certain we have complied, and will always be able to comply, with the requirements to qualify as a REIT because there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability to continue to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the Federal income tax consequences of qualification. We believe that we have qualified as a REIT since our inception and intend to continue to qualify as a REIT. However, we cannot assure you that we are qualified or will remain qualified.

There is a risk of changes in the tax law applicable to real estate investment trusts. Because the IRS, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of such legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our investors.

We may be unable to comply with the strict income distribution requirement applicable to REITs. As noted above, to maintain qualification as a REIT under the Code, a REIT must annually distribute to its shareholders at least 90% of its REIT taxable income, excluding the dividends paid deduction and net capital gains. This requirement limits our ability to accumulate capital. We may not have sufficient cash or other liquid assets to meet the 90% distribution requirements. Difficulties in meeting the 90% distribution requirement might arise due to competing demands for our funds or to timing differences between tax reporting and cash receipts and disbursements, because income may have to be reported before cash is received, because expenses may have to be paid before a deduction is allowed, because deductions may be disallowed or limited or because the IRS may make a determination that adjusts reported income. In those situations, we might be required to borrow funds or sell properties on adverse terms in order to meet the 90% distribution requirement and interest and penalties could apply which could adversely affect our financial condition. If we fail to satisfy the 90% distribution requirement, we would cease to be taxed as a REIT.

If we were considered to actually or constructively pay a “preferential dividend” to certain of our shareholders, our status as a REIT could be adversely affected. In order to qualify as a REIT, we must distribute annually to our shareholders at least 90% of our REIT taxable income, which does not equal net income as calculated in accordance with U.S. GAAP, determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends”. A dividend is not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. Currently, there is uncertainty as to the application of the law in certain circumstances and the IRS’s position regarding whether certain arrangements that REITs have with their shareholders could give rise to the inadvertent payment of a preferential dividend (e.g., the pricing methodology for stock purchased under a distribution reinvestment plan inadvertently causing a greater than 5% discount on the price of such stock purchased). There is no deminimis exception with respect to preferential dividends; therefore, if the IRS were to take the position that we inadvertently paid a preferential dividend, we may be deemed to have failed the 90% distribution test, and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure. While we believe that our operations have been structured in such a manner that we will not be treated as inadvertently paying preferential dividends, we can provide no assurance to this effect.

Notwithstanding our status as a REIT, we are subject to various federal, state and local taxes on our income and property. For example, we will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains; provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the shareholder level. We may be subject to other Federal income taxes and may also have to pay some state income or franchise taxes because not all states treat REITs in the same manner as they are treated for Federal income tax purposes.

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Other Risks

We may not be able to access adequate cash to fund our business. Our business requires access to adequate cash to finance our operations, distributions, capital expenditures, debt service obligations, development and redevelopment costs and property acquisition costs, if any. We expect to generate the cash to be used for these purposes primarily with operating cash flow, borrowings under secured and unsecured term loans, proceeds from sales of strategically identified assets and, when market conditions permit, through the issuance of debt and equity securities from time to time. We may not be able to generate sufficient cash to fund our business, particularly if we are unable to renew or extend leases, lease vacant space or re-lease space as leases expire according to expectations.

We are dependent on key personnel. Our executive and other senior officers have a significant role in our success. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely affect our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets.

We may amend our business policies without shareholder approval. Our Board of Directors determines our growth, investment, financing, capitalization, borrowing, operations and distributions policies. In addition, our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. Although our Board of Directors has no present intention to amend or reverse any of these policies, they may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in our policies. We cannot assure you that changes in our policies will serve fully the interests of all shareholders.

The market value of our preferred and common stock could decrease based on our performance and market perception and conditions. The market value of our preferred and common stock may be based primarily upon the market’s perception of our growth potential and current and future cash dividends, and may be secondarily based upon the real estate market value of our underlying assets. The market price of our preferred and common stock is influenced by their respective distributions relative to market interest rates. Rising interest rates may lead potential buyers of our stock to expect a higher distribution rate, which could adversely affect the market price of our stock. In addition, rising interest rates could result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions.

There are restrictions on the ownership and transfer of our capital stock. To maintain our qualification as a REIT under the Code, no more than 50% in value of our outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals, as defined in the Code to also include certain entities, during the last half of a taxable year. Accordingly, our charter contains provisions restricting the ownership and transfer of our capital stock. These restrictions may discourage a tender offer or other transaction, or a change in management or of control of us that might involve a premium price for our common stock or preferred stock or that our shareholders otherwise believe to be in their best interests, and may result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.

Our earnings are dependent, in part, upon the performance of our investment portfolio. As permitted by the Code, we invest in and own marketable securities of other REITs, which we generally limit to no more than approximately 10% of our undepreciated assets. To the extent that the value of those investments declines or those investments do not provide an attractive return, our earnings and cash flow could be adversely affected.

We are subject to restrictions that may impede our ability to effect a change in control. Certain provisions contained in our charter and bylaws and certain provisions of Maryland law may have the effect of discouraging a third party from making an acquisition proposal for us and thereby inhibit a change in control. These provisions include the following:

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Our charter provides for three classes of directors with the term of office of one class expiring each year, commonly referred to as a "staggered board." By preventing common shareholders from voting on the election of more than one class of directors at any annual meeting of shareholders, this provision may have the effect of keeping the current members of our Board of Directors in control for a longer period of time than shareholders may desire.

Our charter generally limits any stockholder from acquiring more than 9.8% (in value or in number, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our excess stock). While this provision is intended to assist us in qualifying as a REIT for federal income tax purposes, the ownership limit may also limit the opportunity for shareholders to receive a premium for their shares of common stock that might otherwise exist if an investor was attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise effect a change in control.

The request of shareholders entitled to cast a majority of the votes entitled to be cast at such meeting is necessary for shareholders to call a special meeting. We also require advance notice from shareholders for the nomination of directors or proposals of business to be considered at a meeting of shareholders.

Our Board of Directors may authorize and cause us to issue securities without shareholder approval. Under our charter, the board has the power to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as the Board of Directors may determine.

“Business combination” provisions that provide that, unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested shareholder” or an affiliate of an interested shareholder for five years after the most recent date on which the interested shareholder became an interested shareholder, and thereafter unless specified criteria are met. An interested shareholder is defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question. In our charter, we have expressly elected that the Maryland Business Combination Act not govern or apply to any transaction with our affiliated company UMH, a Maryland corporation.

The duties of directors of a Maryland corporation do not require them to, among other things (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any shareholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act to exempt any person or transaction from the requirements of those provisions, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the shareholders in an acquisition.

We cannot assure you that we will be able to pay distributions regularly. Our ability to pay distributions in the future is dependent on our ability to operate profitably and to generate cash from our operations and the operations of our subsidiaries and is subject to limitations under our financing arrangements and Maryland law. We cannot guarantee that we will be able to pay distributions on a regular quarterly basis in the future.

Future terrorist attacks and military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity. Among other things, it is possible that interest rates may be affected by these events. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. Terrorist acts could also result in significant damages to, or loss of, our properties.

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We and our tenants may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition.

We are subject to risks arising from litigation. We may become involved in litigation. Litigation can be costly, and the results of litigation are often difficult to predict. We may not have adequate insurance coverage or contractual protection to cover costs and liability in the event we are sued, and to the extent we resort to litigation to enforce our rights, we may incur significant costs and ultimately be unsuccessful or unable to recover amounts we believe are owed to us. We may have little or no control of the timing of litigation, which presents challenges to our strategic planning.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

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ITEM 2 - PROPERTIES

The Company operates as a REIT. Our portfolio is primarily comprised of real estate holdings, some of which have been long-term holdings carried on our financial statements at depreciated cost. We believe that their current market values exceed both the original cost and the depreciated cost.

The following table sets forth certain information concerning the Company’s real estate investments as of September 30, 2015:

							Mortgage
		Fiscal Year			Square		Balance
State	City (MSA)		Acquisition	Type		Footage		9/30/2015

AL	Huntsville		2005	Industrial		73,712	$	991,088
AZ	Tolleson (Phoenix)		2003	Industrial		283,358		6,043,710
CO	Colorado Springs		2006	Industrial		68,370		1,600,686
CO	Denver		2005	Industrial		69,865		1,354,284
CT	Newington (Hartford)		2001	Industrial		54,812		-0-
FL	Cocoa		2008	Industrial		144,138		5,364,157
FL	Ft. Myers		2003	Industrial		87,500		-0-
FL	Jacksonville (FDX)		1999	Industrial		95,883		1,706,962
FL	Jacksonville (FDX Ground)		2015	Industrial		297,579		19,494,453
FL	Lakeland		2006	Industrial		32,105		-0-
FL	Orlando		2008	Industrial		110,638		4,570,915
FL	Punta Gorda		2007	Industrial		34,624		2,111,294
FL	Tampa (FDX Gr)		2004	Industrial		170,779		7,313,195
FL	Tampa (FDX)		2006	Industrial		95,662		4,132,523
FL	Tampa (Tampa Bay Grand Prix)		2005	Industrial		68,385		-0-
GA	Augusta (FDX Gr)		2005	Industrial		59,358		974,351
GA	Augusta (FDX)		2006	Industrial		30,184		-0-
GA	Griffin (Atlanta)		2006	Industrial		218,120		7,026,763
IA	Urbandale (Des Moines)		1994	Industrial		36,270		-0-
IL	Burr Ridge (Chicago)		1997	Industrial		12,500		-0-
IL	Elgin (Chicago)		2002	Industrial		89,052		844,690
IL	Granite City (St. Louis, MO)		2001	Industrial		184,800		1,151,798
IL	Montgomery (Chicago)		2004	Industrial		171,200		-0-
IL	Rockford (B/E Aerospace, Inc.)		2015	Industrial		38,833		-0-
IL	Rockford (Sherwin-Williams Company)		2011	Industrial		66,387		-0-
IL	Sauget (St. Louis, MO)		2015	Industrial		198,773		10,233,837
IL	Schaumburg (Chicago)		1997	Industrial		73,500		-0-
IL	Wheeling (Chicago)		2003	Industrial		123,000		3,457,456
IN	Greenwood (Indianapolis)		2015	Industrial		671,354		23,987,008
IN	Indianapolis		2014	Industrial		327,822		13,161,911
KS	Edwardsville (Kansas City) (Carlisle Tire)		2003	Industrial		179,280		894,552
KS	Edwardsville (Kansas City) (International Paper)		2014	Industrial		280,000		11,340,664
KS	Topeka		2009	Industrial		40,000		1,590,945
KY	Buckner (Louisville)		2014	Industrial		558,600		17,347,243
KY	Frankfort (Lexington)		2015	Industrial		599,840		19,078,153
MD	Beltsville (Washington, DC)		2001	Industrial		144,523		5,164,724
MI	Livonia (Detroit)		2013	Industrial		172,005		8,068,751
MI	Orion		2007	Industrial		245,633		9,095,386
MI	Romulus (Detroit)		1998	Industrial		71,933		-0-
MN	Stewartville (Rochester) (1)		2013	Industrial		60,398		2,846,710
MN	White Bear Lake (Minneapolis/St. Paul)		2001	Industrial		59,425		-0-
MO	Kansas City (Bunzl Distribution Midcentral, Inc.)		2015	Industrial		158,417		7,107,312
MO	Kansas City (Kellogg Sales Company)		2007	Industrial		65,067		2,381,917
MO	Liberty (Kansas City)		1998	Industrial		95,898		-0-
MO	O' Fallon (St. Louis)		1994	Industrial		102,135		-0-

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		Fiscal Year			Square		Mortgage
							Balance
State	City (MSA)		Acquisition	Type		Footage		9/30/2015

MO	St. Joseph		2001	Industrial		382,880	$	417,435
MS	Olive Branch (Memphis, TN) (Anda)		2012	Industrial		234,660		9,302,178
MS	Olive Branch (Memphis, TN) (Milwaukee Tool)		2013	Industrial		615,305		14,312,846
MS	Ridgeland (Jackson)		1993	Industrial		26,340		-0-
MS	Richland (Jackson)		1994	Industrial		36,000		-0-
NC	Fayetteville		1997	Industrial		148,000		-0-
NC	Winston-Salem		2002	Industrial		106,507		-0-
NE	Omaha		1999	Industrial		89,115		-0-
NJ	Carlstadt (New York, NY) (2)		2001	Industrial		60,400		2,045,141
NJ	Somerset (3)		1970	Shopping Center		64,138		-0-
NY	Cheektowaga (Buffalo)		2000	Industrial		104,981		639,095
NY	Halfmoon (Albany)		2012	Industrial		75,000		3,886,331
NY	Orangeburg (New York)		1993	Industrial		50,400		-0-
OH	Bedford Heights (Cleveland)		2007	Industrial		82,269		2,862,734
OH	Cincinnati		2015	Industrial		63,840		-0-
OH	Lebanon (Cincinnati)		2012	Industrial		51,130		2,695,845
OH	Monroe (Cincinnati)		2015	Industrial		232,200		8,518,754
OH	Richfield (Cleveland)		2006	Industrial		131,152		3,414,645
OH	Streetsboro (Cleveland)		2012	Industrial		368,060		10,972,757
OH	West Chester Twp. (Cincinnati)		1999	Industrial		103,818		2,305,050
OK	Oklahoma City		2012	Industrial		158,340		4,863,512
OK	Tulsa		2014	Industrial		46,240		2,050,342
PA	Altoona (1)		2014	Industrial		122,522		4,376,801
PA	Monaca (Pittsburgh)		1988	Industrial		255,658		-0-
SC	Ft. Mill (Charlotte, NC)		2010	Industrial		176,939		2,468,015
SC	Hanahan (Charleston) (SAIC)		2005	Industrial		302,400		5,939,583
SC	Hanahan (Charleston) (FDX Gr)		2005	Industrial		91,776		1,339,490
TN	Chattanooga		2007	Industrial		60,637		1,774,568
TN	Lebanon (Nashville)		2011	Industrial		381,240		7,856,077
TN	Memphis		2010	Industrial		449,900		7,418,616
TN	Shelby County		2007	Land		N/A		-0-
TX	Carrollton (Dallas)		2010	Industrial		184,317		8,640,732
TX	Corpus Christi		2012	Industrial		46,253		-0-
TX	Edinburg		2011	Industrial		113,582		-0-
TX	El Paso		2006	Industrial		144,149		3,611,052
TX	El Paso		2011	Land		N/A		-0-
TX	Fort Worth (Dallas)		2015	Industrial		304,608		24,700,000
TX	Houston		2010	Industrial		91,295		3,531,824
TX	Lindale (Tyler)		2015	Industrial		163,378		6,723,881
TX	Spring (Houston)		2014	Industrial		181,176		9,692,678
TX	Waco		2012	Industrial		150,710		5,063,021
VA	Charlottesville		1999	Industrial		48,064		-0-
VA	Mechanicsville (Richmond) (FDX)		2001	Industrial		112,799		-0-
VA	Richmond (United Technologies)		2004	Industrial		60,000		-0-
VA	Roanoke (CHEP)		2007	Industrial		83,000		2,819,927
VA	Roanoke (FDX Gr)		2013	Industrial		103,402		5,758,502
WI	Cudahy (Milwaukee)		2001	Industrial		139,564		-0-
WI	Green Bay (1)		2013	Industrial		99,102		3,552,304
						13,918,963	$	373,991,174


(1) One loan is secured by the properties located in Green Bay, WI, Stewartville, MN and Altoona, PA. (2) The Company owns a 51% controlling equity interest. (3) The Company has a 67% controlling equity interest.

Table of Contents

The following table sets forth certain information concerning the principal tenants and leases for the Company’s properties shown above as of September 30, 2015:

State

City (MSA)

Tenant

Annualized Rent

Lease Expiration

Huntsville

FedEx Ground Package System, Inc.

412,000

/31/22

)

Tolleson (Phoenix)

Western Container Corp.

1,270,000

/30/17

Colorado Springs

FedEx Ground Package System, Inc.

644,000

/30/18

Denver

FedEx Ground Package System, Inc.

564,000

/31/18

Newington (Hartford)

Kellogg Sales Company

329,000

/28/17

Cocoa

FedEx Ground Package System, Inc.

1,104,000

/30/24

Ft. Myers

FedEx Ground Package System, Inc.

432,000

/31/16

)

Jacksonville

FedEx Corporation

518,000

/31/19

Jacksonville

FedEx Ground Package System, Inc.

1,992,000

/31/29

Lakeland

FedEx Corporation

155,000

/30/17

Orlando

FedEx Corporation

666,000

/30/17

Punta Gorda

FedEx Corporation

304,000

/30/17

Tampa

FedEx Ground Package System, Inc.

1,493,000

/30/24

)

Tampa

FedEx Corporation

603,000

/30/17

Tampa

Tampa Bay Grand Prix

285,000

/30/20

Augusta

FedEx Ground Package System, Inc.

453,000

/30/18

Augusta

FedEx Corporation

121,000

/30/22

Griffin (Atlanta)

Caterpillar Logistics Services, Inc.

1,169,000

/30/16

Urbandale (Des Moines)

Keystone Automotive Industries MN, Inc.

139,000

/31/17

Burr Ridge (Chicago)

Sherwin-Williams Company

160,000

/31/21

Elgin (Chicago)

Joseph T. Ryerson and Son, Inc.

506,000

/31/17

Granite City (St. Louis, MO)

Anheuser-Busch, Inc.

792,000

/31/16

)

Montgomery (Chicago)

Home Depot USA, Inc.

966,000

/30/20

)

Rockford

B/E Aerospace, Inc.

359,000

/30/27

Rockford

Sherwin-Williams Company

475,000

/31/23

Sauget (St. Louis, MO)

FedEx Ground Package System, Inc.

1,036,000

/31/29

Schaumburg (Chicago)

FedEx Corporation

515,000

/31/17

Wheeling (Chicago)

FedEx Ground Package System, Inc.

1,386,000

/31/17

Greenwood (Indianapolis)

ULTA, Inc.

2,644,000

/31/25

Indianapolis

FedEx Ground Package System, Inc.

1,533,000

/30/24

Edwardsville (Kansas City)

Carlisle Tire & Wheel Company

774,000

/31/18

Edwardsville (Kansas City)

International Paper Company

1,314,000

/31/23

Topeka

The Coca-Cola Company

332,000

/30/21

Buckner (Louisville)

Ralcorp Holdings, Inc.

2,146,000

/31/33

Frankfort (Lexington)

Jim Beam Brands Company

1,989,000

/31/25

Beltsville (Washington, DC)

FedEx Ground Package System, Inc.

1,426,000

/31/18

Livonia (Detroit)

FedEx Ground Package System, Inc.

1,194,000

/31/22

Orion

FedEx Ground Package System, Inc.

1,908,000

/30/23

Romulus (Detroit)

FedEx Corporation

370,000

/31/21

Stewartville (Rochester)

FedEx Ground Package System, Inc.

372,000

/30/23

White Bear Lake (Minneapolis/St. Paul)

Vacant

-0-

N/A

Kansas City

Bunzl Distribution Midcentral, Inc.

736,000

/30/21

Kansas City

Kellogg Sales Company

331,000

/31/18

)

Liberty (Kansas City)

Holland 1916 Inc.

337,000

/30/19

O' Fallon (St. Louis)

Pittsburgh Glass Works LLC

427,000

/30/18

(2)(16)

St. Joseph

Woodstream Corporation

896,000

/30/17

)

St. Joseph

Altec Industries, Inc.

349,000

/28/18

)

Olive Branch (Memphis, TN)

Anda Pharmaceuticals, Inc.

1,191,000

/31/22

Olive Branch (Memphis, TN)

Milwaukee Electric Tool Corporation

1,995,000

/30/23

Richland (Jackson)

FedEx Corporation

120,000

/31/24

Ridgeland (Jackson)

Graybar Electric Company

109,000

/31/19

)

Fayetteville

Vacant

-0-

N/A

)

Winston-Salem

Vacant

-0-

N/A

)

Omaha

FedEx Corporation

446,000

/31/23

Carlstadt (New York, NY)

SOFIVE, Inc.

512,000

/31/25

)

Table of Contents

State

City (MSA)

Tenant

Annualized Rent

Lease Expiration

Somerset

Various Tenants at Retail Shopping Center

546,000

Various

(10

)

Cheektowaga (Buffalo)

FedEx Ground Package System, Inc.

966,000

/31/19

Halfmoon (Albany)

RGH Enterprises, Inc.

590,000

/30/21

Orangeburg (New York)

Kellogg Sales Company

331,000

/28/18

)

Bedford Heights (Cleveland)

FedEx Corporation

408,000

/31/18

Cincinnati

The American Bottling Company

480,000

/30/29

Lebanon (Cincinnati)

Siemens Real Estate

467,000

/30/19

Monroe (Cincinnati)

UGN, Inc.

1,045,000

/28/30

Richfield (Cleveland)

FedEx Ground Package System, Inc.

1,490,000

/30/24

Streetsboro (Cleveland)

Best Buy Warehousing Logistics, Inc.

1,626,000

/31/22

West Chester Twp. (Cincinnati)

FedEx Ground Package System, Inc.

525,000

/31/23

Oklahoma City

FedEx Ground Package System, Inc.

1,022,000

/30/25

(11

)

Tulsa

The American Bottling Company

255,000

/28/24

Altoona

FedEx Ground Package System, Inc.

651,000

/31/23

Monaca (Pittsburgh)

NF&M International, Inc.

820,000

/31/24

(5)(12)

Monaca (Pittsburgh)

Datatel Resources Corporation

239,000

/30/17

(2)(5)

Ft. Mill (Charlotte, NC)

FedEx Ground Package System, Inc.

1,415,000

/31/23

Hanahan (Charleston)

Science Applications International Corporation

1,412,000

/30/19

)

Hanahan (Charleston)

FedEx Ground Package System, Inc.

675,000

/31/18

Chattanooga

FedEx Corporation

311,000

/31/17

Lebanon (Nashville)

CBOCS Distribution, Inc.

1,406,000

/30/24

Memphis

FedEx Supply Chain Services, Inc.

1,327,000

/31/19

Shelby County

N/A- Land

-0-

N/A

Carrollton (Dallas)

United Technologies Corporation

1,576,000

/11/19

Corpus Christi

FedEx Ground Package System, Inc.

458,000

/31/21

Edinburg

FedEx Ground Package System, Inc.

598,000

/31/21

(13

)

El Paso

FedEx Ground Package System, Inc.

1,320,000

/30/23

(14

)

El Paso

N/A- Land

-0-

N/A

(14

)

Fort Worth (Dallas)

FedEx Ground Package System, Inc.

2,362,000

/30/30

Houston

National Oilwell Varco, Inc.

741,000

/30/22

Lindale (Tyler)

FedEx Ground Package System, Inc.

725,000

/30/24

Spring (Houston)

FedEx Ground Package System, Inc.

1,577,000

/30/24

Waco

FedEx Ground Package System, Inc.

1,045,000

/31/25

(15

)

Charlottesville

FedEx Corporation

329,000

/31/17

Mechanicsville (Richmond)

FedEx Corporation

541,000

/30/23

Richmond

United Technologies Corporation

312,000

/31/16

)

Roanoke

CHEP USA, Inc.

473,000

/28/25

(17

)

Roanoke

FedEx Ground Package System, Inc.

755,000

/30/23

Cudahy (Milwaukee)

FedEx Ground Package System, Inc.

901,000

/30/17

Green Bay

FedEx Ground Package System, Inc.

468,000

/30/23

74,487,000

(1)

The Company has entered into a lease amendment that will become effective upon completion of a 14,941 square foot expansion of the building, which is expected to be completed in August 2016. At that time, annualized rent will increase from $412,255, or $5.59 per square foot, to $604,785 or $6.82 per square foot, and the lease term will be extended from August 31, 2022 to July 31, 2026.

(2)

Extension has been executed. See fiscal 2015 and fiscal 2016 renewal and extension chart.

(3)

The Company has entered into a lease amendment that will become effective upon completion of a parking lot expansion, which is expected to be completed in August 2016. At that time, annualized rent will increase from $1,493,325, or $8.74 per square foot, to $1,623,608, or $9.51 per square foot, and the lease term will be extended from June 30, 2024 to July 31, 2026.

(4)

Renewal is in discussion for leases expiring in fiscal 2016.

(5)

Property is leased to two tenants.

(6)

Lease has an early termination option which may be exercised if tenant gives six months notice at any time.

(7)

The Company entered into a 5.25 year lease agreement through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, will commence on March 1, 2016, with 2.5% annual increases thereafter.

(8)

The Company entered into a 5.25 year lease agreement through March 31, 2021. The lease is with Style Crest, Inc. and will commence on January 1, 2016. Initial annual rent of $356,798, representing $3.35 per square foot, will commence on April 1, 2016 with 3.0% annual increases thereafter.

Table of Contents

(9)

Estimated annual rent is the full annual rent per the lease. The Company consolidates the results of this property due to its 51% controlling equity interest.

(10)

The Company owns a 67% controlling equity interest. Estimated annual rent reflects the Company’s proportionate share of the total rent. The Company has recently entered into three leasing agreements that have become or will become effective subsequent to September 30, 2015, at which time the Company’s 64,138 square foot shopping center will be 100% occupied.

(11)

During June 2015, a 38,428 square foot expansion of the building was completed for a cost of approximately $3,332,000, resulting in a new 10 year lease which extended the current lease expiration date from March 31, 2022 to June 30, 2025. In addition, the expansion resulted in an increase in annual rent effective August 1, 2015 from $712,532, or $5.94 per square foot, to $1,048,250, or $6.62 per square foot.

(12)

During December 2014, a 62,260 square foot expansion of the building was completed for a cost of approximately $4,503,000, resulting in a new 10 year lease which extended the current lease expiration date from September 30, 2018 to December 31, 2024. In addition, the expansion resulted in an initial increase in annual rent effective January 1, 2015 from $381,805, or $3.39 per square foot, to $820,000, or $4.69 per square foot. Furthermore, annual rent will increase in year five of the lease effective January 1, 2020 to $841,600, or $4.81 per square foot, resulting in an annualized rent over the new ten year period of $830,800, or $4.75 per square foot.

(13)

The Company has entered into a lease amendment that will become effective upon completion of a 50,741 square foot expansion of the building, which is expected to be completed in October 2016. At that time, annualized rent will increase from $598,333, or $5.27 per square foot, to $1,052,037, or $6.40 per square foot, and the lease term will be extended from August 31, 2021 to September 30, 2026.

(14)

During June 2015, a parking lot expansion for the property was completed for a cost of approximately $2,472,000 resulting in an increase in annual rent effective July 1, 2015 from $1,045,610, or $7.25 per square foot, to $1,345,289, or $9.33 per square foot.

(15)

During August 2015, a 48,116 square foot expansion of the building was completed for a cost of approximately $4,125,000, resulting in a new 10 year lease which extended the current lease expiration date from May 29, 2022 to August 31, 2025. In addition, the expansion resulted in an increase in annual rent effective August 15, 2015 from $659,324, or $6.43 per square foot, to $1,078,383, or $7.16 per square foot.

(16)

Lease has an early termination option which may be exercised after January 1, 2016 but before December 31, 2016, on the condition that the Company is provided with six months notice and the tenant pays the Company a $213,462 termination fee. Additionally, the lease has an early termination option which may be exercised after January 1, 2017, on the condition that the Company is provided with six months notice and the tenant pays the Company a $106,731 termination fee.

(17)

Lease has an early termination option which may be exercised after August 2021, on the condition that the Company is provided with six months notice and the tenant pays the Company a $500,000 termination fee.

All improved properties were 100% occupied at September 30, 2015 except for the following:

Property	Square Footage	Occupancy

Fayetteville, NC (1)	148,000	0%
Winston-Salem, NC (2)	106,507	0%
Somerset, NJ (3)	64,138	84%
White Bear Lake, MN	59,425	0%

(1)

In September 2015, the Company entered into a 5.25 year lease agreement for its 148,000 square foot building located in Fayetteville, NC through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, will commence on March 1, 2016 with 2.5% annual increases thereafter.

(2)

In October 2015, the Company entered into a 5.25 year lease agreement for its 106,507 square foot building located in Winston-Salem, NC through March 31, 2021. The lease is with Style Crest, Inc. and will commence on January 1, 2016. Initial annual rent of $356,798, representing $3.35 per square foot, will commence on April 1, 2016 with 3.0% annual increases thereafter.

(3)

The Company has recently entered into three leasing agreements that have become or will become effective subsequent to September 30, 2015, at which time the Company’s 64,138 square foot shopping center will be 100% occupied.

The Company’s weighted-average lease expiration was 7.2 and 6.7 years as of September 30, 2015 and 2014, respectively.

Our average occupancy rates as of the years ended September 30, 2015, 2014, 2013, 2012 and 2011 were 97.7%, 95.9%, 96.0%, 95.2% and 97.1%, respectively. The average effective annualized rent per square foot for the years ended September 30, 2015, 2014, 2013, 2012 and 2011 was $5.48, $5.51, $5.53, $5.62 and $5.59, respectively.

Completed expansions that have resulted in increased rents over the fiscal years ended September 30, 2014 and 2015

E-Commerce has been a major catalyst driving increased demand for the industrial property type, causing an ongoing shift from traditional brick and mortar retail shopping to shopping on-line. Due to the increased demand for industrial space, we have been experiencing an increase in expansion activity at our existing properties.

Table of Contents

On December 21, 2012, the Company purchased approximately 4.1 acres of land adjacent to its property which is leased to FedEx Ground Package System, Inc. located in Orion, MI for $988,579 in order to construct a parking lot. In addition, a 52,154 square foot expansion of a building was completed in June 2013 for a cost of approximately $3,800,000 resulting in an increase in annual rent effective July 1, 2013 from $1,285,265, or $6.64 per square foot, to $1,744,853, or $7.10 per square foot. The parking lot expansion was completed in September 2013 for a total cost of approximately $1,500,000 resulting in an increase in annual rent effective October 1, 2013 to $1,908,221, or $7.77 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from June 30, 2017 to June 30, 2023.

In June 2013, Phase I of a 64,240 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Fort Mill, SC, which is located in the Charlotte, NC Metropolitan Statistical Area (“MSA”), was completed for a cost of approximately $3,483,000 resulting in an increase in annual rent effective July 1, 2013 from $1,023,745, or $9.08 per square foot, to $1,364,761, or $7.71 per square foot. Phase II of the expansion, which consisted of a parking lot expansion, cost approximately $426,000. Phase II was completed in November 2013, resulting in an increase in annual rent effective November 1, 2013 to $1,414,639, or $8.00 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from September 30, 2019 to October 31, 2023.

On July 11, 2013, the Company purchased approximately 14 acres of land adjacent to its property which is leased to FedEx Ground Package System, Inc. located in Richfield, OH, which is located in the Cleveland MSA, for $1,655,166 in order to construct a parking lot. The parking lot expansion was completed in October 2013 and cost approximately $3,142,000. As a result, effective November 1, 2013, the annual rent increased from $644,640, or $8.11 per square foot, to $1,124,384, or $14.15 per square foot. In addition, the Company completed a 51,677 square foot expansion of a building in August 2014, which cost approximately $3,655,000, at which time the annual rent increased to $1,489,907, or $11.36 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from October 31, 2016 to September 30, 2024.

In September 2013, a 51,765 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in El Paso, TX was completed for a cost of approximately $3,800,000 resulting in an increase in annual rent effective October 1, 2013 from $667,584, or $7.27 per square foot, to $1,045,610, or $7.25 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from September 30, 2015 to September 30, 2023. During June 2015, a parking lot expansion for the same property was completed for a cost of approximately $2,472,000 resulting in an increase in annual rent effective July 1, 2015 to $1,345,289, or $9.33 per square foot.

In June 2014, a parking lot expansion for a property leased to FedEx Ground Package System, Inc. located in Tampa, FL was completed for a cost of approximately $788,000 resulting in an increase in annual rent effective July 1, 2014 from $1,412,177, or $8.27 per square foot to $1,493,325, or $8.74 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from January 31, 2019 to June 30, 2024.

In July 2014, a 55,037 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Cocoa, FL was completed for a cost of approximately $3,734,000 resulting in an increase in annual rent effective September 25, 2014 from $738,504, or $8.29 per square foot to $1,111,908, or $7.71 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from November 19, 2016 to September 30, 2024.

In August 2014, a 66,253 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Spring, TX, which is located in the Houston MSA, was completed for a cost of approximately $4,345,000 resulting in an increase in annual rent effective September 24, 2014 from $1,146,099, or $9.97 per square foot to $1,580,572, or $8.72 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from August 31, 2023 to September 30, 2024.

Table of Contents

During December 2014, a 62,260 square foot expansion of a building leased to NF&M International, Inc. located in Monaca, PA was completed for a cost of approximately $4,503,000, resulting in a new 10 year lease which extended the current lease expiration date from September 30, 2018 to December 31, 2024. In addition, the expansion resulted in an initial increase in annual rent effective January 1, 2015 from $381,805, or $3.39 per square foot, to $820,000, or $4.69 per square foot. Furthermore, annual rent will increase in year five of the lease effective January 1, 2020 to $841,600, or $4.81 per square foot, resulting in an annualized rent over the new ten year period of $830,800, or $4.75 per square foot.

During June 2015, a 38,428 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Oklahoma City, OK was completed for a cost of approximately $3,332,000, resulting in a new 10 year lease which extended the current lease expiration date from March 31, 2022 to June 30, 2025. In addition, the expansion resulted in an increase in annual rent effective August 1, 2015 from $712,532, or $5.94 per square foot, to $1,048,250, or $6.62 per square foot.

During August 2015, a 48,116 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Waco, TX was completed for a cost of approximately $4,125,000, resulting in a new 10 year lease which extended the current lease expiration date from May 29, 2022 to August 31, 2025. In addition, the expansion resulted in an increase in annual rent effective August 15, 2015 from $659,324, or $6.43 per square foot, to $1,078,383, or $7.16 per square foot.

Fiscal 2015 renewals

Approximately 6% of the Company’s gross leasable area, consisting of six leases totaling 778,702 square feet, were scheduled to expire during fiscal 2015. The Company has renewed all six leases, or 100% of the gross leasable area that were scheduled to expire during fiscal 2015. The Company has incurred or expects to incur tenant improvement costs of approximately $665,200 and leasing costs of approximately $438,300 in connection with these six lease renewals. The table below summarizes the lease terms of the six leases which were renewed and includes both the tenant improvement costs and the leasing costs, which are presented on a per square foot (PSF) basis averaged 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 Commissions Cost PSF over Renewal Term (1)

Orangeburg, NY	Kellogg Sales Co.		50,400	$	7.00	$	7.00		2/28/15	$	6.50	$	6.50		2/28/18		3.0	$	0.21	$	0.26
Hanahan, SC	SAIC (2)		302,400		4.25		4.54		4/29/15		4.79		4.65		4/30/19		4.3		0.22		0.28
Montgomery, IL	Home Depot		171,200		5.11		5.27		6/30/15		5.70		5.48		6/30/20		5.0		-0-		-0-
O’Fallon, MO	Pittsburgh Glass Works		102,135		4.18		4.18		6/30/15		4.18		4.18		6/30/18		3.0		0.99		-0-
Kansas City, MO	Kellogg Sales Co.		65,067		5.38		5.38		7//31/15		5.00		5.00		7/31/18		3.0		0.22		0.20
Ft. Myers, FL	FedEx Ground		87,500		4.76		4.76		10/31/14		4.95		4.95		10/31/16		2.0		-0-		-0-
	Total		778,702
Weighted Average				$	4.76	$	4.91			$	5.06	$	4.95				3.8	$	0.22	$	0.15

(1)

Amount calculated based on the total cost divided by the square feet, divided by the renewal term.

(2)

In December 2014, the Company entered into a lease termination agreement with its tenant, Norton McNaughton of Squire, Inc. (Norton), whereby the Company received a lease termination fee of $238,625, terminating the lease effective January 31, 2015. Prior to the lease termination, Norton leased the Company’s 302,400 square foot building located in its Hanahan, SC location through April 29, 2015 at an annualized rent of approximately $1,389,000 or $4.54 per square foot. Prior to the lease termination, Norton sub-leased the Company’s space to Science Applications International Corporation (SAIC). In conjunction with the lease termination, the Company simultaneously entered into a lease agreement for four years and three months with SAIC from February 1, 2015 through April 30, 2019 at an initial annualized rent of approximately $1,406,000, or $4.65 per square foot, with 2% increases each year.

Table of Contents

The six lease renewals resulted in an additional weighted average lease term of 3.8 years and a U.S. GAAP straight-line weighted average lease rate of $5.06 per square foot. The renewed weighted average initial cash rent per square foot is $4.95. This compares to the former weighted average rent on a U.S. GAAP straight-line basis of $4.76 per square foot and the former weighted average cash rent of $4.91 per square foot, representing an increase in the weighted average lease rate of 6% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 1% on a cash basis.

During fiscal 2015, the Company completed work on three building expansions and one parking lot expansion, which resulted in extending the tenants’ lease expirations by approximately ten years from the date of completion for each of the three buildings that were expanded and increasing the tenants’ rent on each of the four expansions. Prior to the lease amendments being executed, these three properties had a remaining weighted average lease term of 5.7 years at the time of completion of the expansion work. By obtaining an additional ten years of lease term from the date of completion of the expansion work, an additional 4.3 years of weighted average term was added to these three leases. Commencing during fiscal 2015, these four lease amendments have resulted in an annual increase in base rent totaling approximately $1,503,000 on a U.S. GAAP straight-line basis and approximately $1,493,000 on a cash basis. The renewed U.S. GAAP straight-line weighted average lease rate for the properties that were expanded is $6.85 per square foot and the renewed weighted average initial cash rent per square foot is $6.83. This compares to the former weighted average rent of $5.84 per square foot on a U.S. GAAP straight-line basis and on an average cash rent basis, representing an increase in the weighted average lease rate of 17.29% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 16.95% on a cash basis.

The six leases that renewed, that were scheduled to expire in fiscal 2015, combined with the four leases that were amended due to expansions, resulted in an increase in the weighted average lease rate for these ten properties of 13.3% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 10.1% on a cash basis. In addition, the six leases that renewed combined with the three leases that were amended in connection with building expansions, resulted in an additional 4.0 years of weighted average term being added to these nine leases.

New leasing activity

During January 2015, the Company entered into a thirty-seven month lease agreement commencing February 1, 2015 with Altec Industries, Inc. to lease 126,880 square feet of the Company’s 382,880 square foot building located in St. Joseph, MO through February 28, 2018. This increased the occupancy of this building from 67% to 100%. Annual rent commenced March 1, 2015 for $348,920, or $2.75 per square foot. The remaining 256,000 square feet is currently being leased to Woodstream Corporation through September 30, 2017.

During September 2015, the Company entered into a 5.25 year lease agreement for its previously vacant 148,000 square foot building located in Fayetteville, NC through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, will commence on March 1, 2016 with 2.5% annual increases thereafter.

During October 2015, the Company entered into a 5.25 year lease agreement for its previously vacant 106,507 square foot building located in Winston-Salem, NC through March 31, 2021. The lease is with Style Crest, Inc. and will commence on January 1, 2016. Initial annual rent of $356,798, representing $3.35 per square foot, will commence on April 1, 2016 with 3.0% annual increases thereafter. Once this lease to Style Crest, Inc. becomes effective, the Company’s overall occupancy rate will increase to 99.5%.

Fiscal 2016 renewals

Approximately 2% of the Company’s gross leasable area, consisting of three leases totaling 325,656 square feet, is scheduled to expire during fiscal 2016. The Company has renewed one of these three leases, consisting of 80,856 square feet or 25% of the gross leasable area scheduled to expire during fiscal 2016. The Company has not incurred any tenant improvement costs or any leasing costs in connection with this lease renewal. The table below summarizes the lease terms of the one lease that was renewed and includes both the tenant improvement costs and the leasing costs which are presented on a per square foot (PSF) basis averaged over the renewal term.

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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

Leasing

Commissions Cost

PSF over

Renewal

Term

Monaca, PA

Datatel Resources

80,856

$2.87

11/30/15

$3.00

11/30/17

2.0

$-0-

The lease renewal resulted in an additional term of 2.0 years and an initial cash and U.S. GAAP straight-line lease rate of $3.00 per square foot. This compares to the former initial cash and U.S. GAAP straight-line lease rate of $2.87 per square foot, representing an increase in the lease rate of 4.5%. The two remaining leases renewals are under discussion.

On September 30, 2015, the Company had a weighted average lease maturity of 7.2 years with weighted average gross annualized rent scheduled to expire each year of 10.4%.

The following table presents certain information as of September 30, 2015, with respect to the Company’s leases expiring over the future fiscal years ended September 30^th:

Expiration of Fiscal Year Ended September 30th		Property Count		Total Area Expiring (Sq. Ft.)		Annualized Rent $		Percent of Gross Annualized Rent %

	Vacant (1)		3		324,250	$	-0-		0	%
	Shopping Center (2)		1		53,820		546,000		1	%
	2016		2		244,800		1,104,000		2	%
	2017		13		1,539,526		8,779,000		12	%
	2018		15		1,324,159		7,753,000		10	%
	2019		8		1,310,849		6,712,000		9	%
	2020		2		239,585		1,251,000		2	%
	2021		5		430,185		2,494,000		3	%
	2022		7		1,027,232		5,914,000		8	%
	2023		11		1,917,312		9,970,000		13	%
	2024		12		1,914,366		12,039,000		16	%
	2025		7		1,898,446		8,505,000		12	%
	2027		1		38,833		359,000		0	%
	2029		2		262,613		1,516,000		2	%
	2030		3		834,387		5,399,000		7	%
	2033		1		558,600		2,146,000		3	%
	Total (3)		91		13,918,963	$	74,487,000		100	%

(1)

Included in “Vacant” are two properties with respect to each of which the Company has recently entered into a 5.25 year lease agreement that has commenced or will commence subsequent to September 30, 2015. Both leases are for a combined total of 254,507 square feet and will generate a combined total of $831,000 in annualized rent.

(2)

Shopping Center represents a multi-tenanted property which has lease expirations ranging from month-to-month to 2029. The Company has recently entered into three leasing agreements that have become or will become effective subsequent to September 30, 2015, at which time the Company’s 64,138 square foot shopping center will be 100% occupied.

(3)

Included in 2018 is Datatel Resources and included in 2024 is NF&M International, which both occupy one property and therefore are counted as one property in the property count total. Included in 2017 is Woodstream Corporation and included in 2018 is Altec Industries, Inc., which both occupy one property and therefore are counted as one property in the property count total.

ITEM 3 – LEGAL PROCEEDINGS

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Since June 1, 2010, the common stock of Monmouth Real Estate Investment Corporation has been traded on the New York Stock Exchange (NYSE), under the symbol “MNR”. Previously, the common stock was traded on the NASDAQ Global Select Market. The per share range of high and low market prices and distributions paid to common shareholders during each fiscal quarter of the last two fiscal years ended September 30^th were as follows:

Fiscal 2015 Fiscal 2014

Market Price Market Price

Fiscal Qtr.	High		Low		Distrib.		Fiscal Qtr.	High		Low		Distrib.

First	$	11.62	$	10.10	$	0.15	First	$	9.67	$	8.75	$	0.15
Second		12.07		10.64		0.15	Second		9.99		8.78		0.15
Third		11.30		9.30		0.15	Third		10.08		8.65		0.15
Fourth		10.09		9.02		0.15	Fourth		11.10		9.87		0.15
					$	0.60						$	0.60

On December 1, 2015, the closing price of our common stock was $10.49.

Shareholder Information

As of December 1, 2015, there were 1,363 shareholders of record who held shares of common stock of the Company.

Distributions and Dividends

On October 1, 2015, the Company’s Board of Directors approved a 6.7% increase in the Company’s quarterly common stock dividend, raising it to $0.16 per share from $0.15 per share. The dividend is payable December 15, 2015, to shareholders of record at the close of business on November 16, 2015. This represents an annualized dividend rate of $0.64 per share. The Company has maintained or increased its cash dividend for twenty-four consecutive years. The Company paid the distributions from cash flows from operations. The Company’s common stock dividend policy is dependent upon the Company’s earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. It is the Company’s intention to continue making comparable quarterly distributions in the future.

Recent Sales of Unregistered Securities

None.

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Purchases of Equity Securities

On January 21, 2015, the Board of Directors reaffirmed its Share Repurchase Program (the Repurchase Program) that authorizes the Company to purchase up to $10,000,000 in the aggregate of the Company's common stock. The Repurchase Program was originally created on March 3, 2009 and is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program does not require the Company to acquire any particular amount of common stock, and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. As of September 30, 2015, the Company did not reacquire any of its shares of Common Stock. The maximum dollar value that may be purchased under the Repurchase Program as of September 30, 2015 is $10,000,000.

Equity Compensation Plan Information

The Company has a Stock Option and Stock Award Plan, adopted in 2007 and amended and restated in 2010 (the 2007 Plan) authorizing the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock including up to 100,000 shares of restricted stock awards in any one fiscal year. As of September 30, 2015, there were 546,646 shares available for grant as stock options or restricted stock under the 2007 Plan. During fiscal 2015, options to purchase 65,000 shares were granted with an exercise price of $11.16 and options to purchase 81,200 shares were exercised at a weighted average exercise price of $7.54 per share for total proceeds of $612,410. Subsequent to September 30, 2015 to date, options to purchase 95,000 shares were exercised at a weighted average exercise price of $8.09 per share for total proceeds of $768,300. In addition, during fiscal 2015, 47,000 shares of restricted common stock were granted with a fair value on the grant date of $9.96 per share and 11,000 shares of restricted common stock were granted with a fair value on the grant date of $9.52. See Note 10 in the Notes to the Consolidated Financial Statements included in this Form 10-K for a description of the plan. See Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Matters for a table of beneficial ownership of the Company’s common stock.

The following table summarizes information, as of September 30, 2015, relating to the equity compensation plan of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance:

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan(excluding Securities reflected in column (a))

Plan Category

(a)

(b)

(c)

Equity Compensation Plan Approved by Security Holders

635,000

8.68

546,646

Equity Compensation Plan not Approved by Security Holders

N/A

Total

635,000

8.68

546,646

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Comparative Stock Performance

The following line graph compares the total return of the Company’s common stock for the last five fiscal years to the FTSE NAREIT Composite Index (US), published by the National Association of Real Estate Investment Trusts (NAREIT), and the S&P 500 Index for the same period. The graph assumes a $100 investment in our common stock and in each of the indexes listed below on September 30, 2010 and the reinvestment of all dividends. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed. Our stock performance shown in the graph below is not indicative of future stock performance.

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ITEM 6 – SELECTED FINANCIAL DATA

The following table sets forth selected financial and other information for the Company for the periods and as of the dates indicated. This table should be read in conjunction with management’s discussion and analysis of financial condition and results of operations and all of the financial statements and notes thereto included elsewhere herein.

	September 30,
	2015	2014		2013	2012	2011
OPERATING DATA:
Rental and Reimbursement Revenue	$77,775,497	$64,672,341		$54,607,086	$50,368,931	$48,141,484
Real Estate Taxes and Operating Expenses	(12,490,019)	(11,317,479)		(9,228,610)	(8,832,027)	(9,635,499)
Net Operating Income - NOI	65,285,478	53,354,862		45,378,476	41,536,904	38,505,985
Lease Termination Income	238,625	1,182,890		690,730	3,222,283	-0-
Gain on Sale of Securities Transactions, net	805,513	2,166,766		7,133,252	6,044,065	5,238,203
Interest and Dividend Income	3,723,867	3,882,597		3,885,920	3,358,674	3,100,327
General & Administrative Expenses	(6,305,928)	(5,709,937)		(4,982,945)	(5,609,558)	(4,155,200)
Acquisition Costs	(1,546,088)	(481,880)	(514,699)		(667,799)	(425,157)
Interest Expense	(18,558,150)	(16,104,678)	(14,956,954)		(15,352,499)	(14,870,906)
Depreciation & Amortization Expense	(23,058,744)	(18,445,326)	(15,530,094)		(13,832,305)	(12,129,872)
Income from Continuing Operations	20,584,573	19,845,294	21,103,686		18,699,765	15,263,380
Gain on Sale of Real Estate Investment	5,021,242	-0-	-0-		-0-	-0-
Income (loss) from Discontinued Operations	-0-	-0-	291,560		(15,270)	154,818
Net Income	25,605,815	19,845,294	21,395,246		18,684,495	15,418,198
Preferred Dividends	(8,607,032)	(8,607,032)	(8,607,032)		(5,513,126)	(4,079,219)
Net Income Attributable to Common Shareholders	$16,998,783	$11,238,262	$12,788,214		$13,171,369	$11,338,979
Income from Continuing Operations Per Share Basic	$0.43	$0.40	$0.49		$0.47	$0.44
Diluted	0.43	0.40	0.49		0.47	0.44
Net Income Attributable to Common Shareholders Per Share
Basic	0.29	0.23	0.30		0.33	0.32
Diluted	0.29	0.23	0.30		0.33	0.32

BALANCE SHEET DATA:
Total Assets	$915,991,942	$743,756,700	$617,240,866		$574,507,702	$476,986,836
Real Estate Investments, Net	816,801,105	636,923,228	536,799,412		467,886,484	407,864,535
Mortgage Notes Payable	373,991,174	287,796,006	250,093,382		237,943,911	211,614,170
Loans Payable	85,041,386	25,200,000	22,200,000		5,200,000	16,860,950
8% Subordinated Convertible Debentures	-0-	-0-	-0-		8,615,000	8,915,000
Series A 7.625% Cumulative Redeemable Preferred Stock	53,493,750	53,493,750	53,493,750		53,493,750	53,493,750
Series B 7.875% Cumulative Redeemable Preferred Stock	57,500,000	57,500,000	57,500,000		57,500,000	-0-
Total Shareholders’ Equity	446,010,640	420,631,082	335,914,971		315,687,139	234,514,084

CASH FLOW DATA:
Net Cash Provided (Used) By:
Operating Activities	$38,062,285	$34,856,285	$27,463,529		$26,808,821	$22,126,819
Investing Activities	(194,469,735)	(131,809,697)	(60,373,084)		(80,640,038)	(30,365,918)
Financing Activities	148,006,698	105,023,561	20,663,209		72,105,267	7,801,354

	September 30,
OTHER INFORMATION:	2015		2014		2013		2012		2011

Average Number of Common Shares Outstanding
Basic		59,085,888		49,829,924		42,275,555		39,660,692		35,083,457
Diluted		59,201,296		49,925,036		42,432,354		39,819,621		35,131,718
Funds From Operations*	$	33,730,447	$	29,000,443	$	27,338,245	$	26,459,005	$	23,121,829
Core Funds From Operations*	$	35,276,535	$	29,482,323	$	27,852,944	$	27,126,804	$	23,546,986
Adjusted Funds From Operations*	$	33,976,958	$	25,843,710	$	19,521,972	$	17,685,624	$	18,027,197
Cash Dividends per Common Share	$	0.60	$	0.60	$	0.60	$	0.60	$	0.60

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* We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (FFO), which management believes 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 (loss) attributable to common shareholders, as defined by 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. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Core Funds From Operations (Core FFO) as FFO, excluding acquisition costs. We define Adjusted Funds From Operations (AFFO) as Core FFO, excluding stock compensation expense, depreciation of corporate office tenant improvements, amortization of financing costs, lease termination income, net gain or loss on sale of securities transactions, U.S. GAAP straight-line rent adjustments and less recurring capital expenditures. We define recurring capital expenditures as all capital expenditures, 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 REIT’s, FFO, Core FFO and AFFO may be considered by investors as supplemental measures to compare our operating performance to those of other REITs. FFO, Core FFO and AFFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. The items excluded from FFO, Core FFO and AFFO are significant components in understanding the Company’s financial performance.

FFO, Core FFO and AFFO (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 as a measure of operating performance or to Cash Flows from Operating, Investing and Financing Activities; and (iii) are not an alternative to cash flow as a measure of liquidity. FFO, Core FFO and AFFO, as calculated by the Company, may not be comparable to similarly titled measures reported by other REITs.

The following is a reconciliation of the Company’s U.S. GAAP Net Income to the Company’s FFO, Core FFO and AFFO for the fiscal years ended September 30^th:

		2015			2014			2013			2012			2011
Net Income Attributable to Common Shareholders	$	16,998,783		$	11,238,262		$	12,788,214		$	13,171,369		$	11,338,979
Plus: Depreciation Expense (including Discontinued Operations & excluding Corporate Office)		19,625,748			15,908,769			12,877,385			11,471,070			10,351,358
Plus: Amortization of Intangible Assets		1,370,654			1,347,936			1,543,298			1,477,356			1,186,392
Plus: Amortization of Capitalized Lease Costs (1)		756,504			505,476			475,142			330,990			245,100
(Gain) Loss on Sale of Depreciable Assets		(5,021,242	)		-0-			(345,794	)		8,220			-0-
FFO Attributable to Common Shareholders		33,730,447			29,000,443			27,338,245			26,459,005			23,121,829
Plus: Acquisition Costs		1,546,088			481,880			514,699			667,799			425,157
Core FFO Attributable to Common Shareholders		35,276,535			29,482,323			27,852,944			27,126,804			23,546,986
Plus: Stock Compensation Expense		448,895			347,002			329,148			593,811			163,150
Plus: Depreciation of Corporate Office Tenant Improvements		79,572			-0-			-0-			-0-			-0-
Plus: Amortization of Financing Costs		1,286,016			725,745			647,112			630,969			457,279
Less: Lease Termination Income		(238,625	)		(1,182,890	)		(690,730	)		(3,222,283	)		-0-
Less: Gain on Sale of Securities Transactions, net		(805,513	)		(2,166,766	)		(7,133,252	)		(6,044,065	)		(5,238,203	)
Less: U.S. GAAP Straight-line Rent Adjustment		(1,446,264	)		(600,745	)		(943,785	)		(553,474	)		(86,093	)
Less: Recurring Capital Expenditures		(623,658	)		(760,959	)		(539,465	)		(846,138	)		(815,922	)
AFFO Attributable to Common Shareholders	$	33,976,958		$	25,843,710		$	19,521,972		$	17,685,624		$	18,027,197

(1)

In previous filings, the Company has presented its calculation of FFO and Core FFO without excluding the effects of the amortization of Capitalized Lease Costs. FFO and Core FFO have been presented above reflecting the effects of excluding the amortization of Capitalized Lease Costs.

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ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements provide the Company’s current expectations or forecasts of future events. Forward-looking statements include statements about the Company’s 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 the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. 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 the Company. Some of these factors are described below and under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These and other risks, uncertainties and factors could cause the Company’s actual results to differ materially from those included in any forward-looking statements the Company 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 the Company to predict those events or how they may affect the Company. Except as required by law, the Company 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. Important factors that could cause actual results to differ materially from the Company’s expectations include, among others:

the ability of the Company’s tenants to make payments under their respective leases, our reliance on certain major tenants and the Company’s ability to re-lease properties that are currently vacant or that become vacant;
the Company’s ability to obtain suitable tenants for its properties;
changes in real estate market conditions, economic conditions in the industrial sector and the market in which the Company’s 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 Company’s ability to sell properties at an attractive price;
the Company’s ability to repay debt financing obligations;
the Company’s ability to refinance amounts outstanding under its credit facilities at maturity on terms favorable to us;
the loss of any member of the Company’s management team;
the Company’s ability to comply with debt covenants;
the Company’s ability to integrate acquired properties and operations into existing operations;
continued availability of proceeds from issuances of the Company’s debt or equity securities;
the availability of other debt and equity financing alternatives;
market conditions affecting the Company’s investment in marketable securities of other REIT’s;
changes in interest rates under the Company’s current credit facility and under any additional variable rate debt arrangements that the Company may enter into in the future;
the Company’s ability to successfully implement the Company’s selective acquisition strategy;
the Company’s 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;

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declines in the market value of the Company’s investment securities; and
the Company’s ability to qualify as a REIT for federal income tax purposes.

You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. The Company undertakes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise.

The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein.

Overview

The Company is a self-administered and self-managed REIT. The Company seeks to invest in well-located, modern industrial buildings, leased primarily to investment-grade tenants on long-term net-leases. At September 30, 2015, the Company held investments in ninety-one properties totaling approximately 13,919,000 square feet. Total real estate investments were $941,779,316 at September 30, 2015. These properties are located in twenty-eight states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. All of these properties are wholly-owned, with the exception of an industrial property in New Jersey, in which the Company owns a 51% controlling equity interest, and the shopping center in New Jersey, in which the Company holds a 67% controlling equity interest.

The Company’s weighted-average lease expiration was 7.2 and 6.7 years as of September 30, 2015 and 2014, respectively, and its average annualized rent per occupied square foot as of September 30, 2015 and 2014 was $5.48 and $5.51, respectively. At September 30, 2015 and 2014, the Company’s occupancy was 97.7% and 95.9%, respectively. During fiscal 2015, the Company acquired ten industrial properties totaling approximately 2,729,000 square feet for approximately $191,985,000.

The Company has a concentration of properties leased to FedEx Corporation (FDX). As of September 30, 2015, the Company had approximately 13,919,000 square feet of property, of which approximately 6,002,000 square feet, or 43%, consisting of forty-seven separate stand-alone leases, were leased to FDX and its subsidiaries, (7% to FDX and 36% to FDX subsidiaries). These properties are located in twenty different states. The percentage of rental and reimbursement revenue from FDX and its subsidiaries was 54% for the year ended September 30, 2015, consisting of 8% leased to FDX and 46% leased to FDX subsidiaries. No other tenant accounted for 5% or more of the Company’s total Rental and Reimbursement revenue for the fiscal 2015.

The Company’s revenue primarily consists of rental and reimbursement revenue from the ownership of industrial rental property. Rental and Reimbursement Revenue increased $13,103,156, or 20%, for the year ended September 30, 2015 as compared to the year ended September 30, 2014. Total expenses (excluding other income and expense) increased $6,885,886, or 20%, for the year ended September 30, 2015 as compared to the year ended September 30, 2014. The increases were due mainly to the revenue and expenses relating to the property acquisitions made during fiscal 2015.

Net Operating Income from property operations (NOI) is defined as recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities and repairs and maintenance. NOI increased $11,930,616, or 22%, for the fiscal year ended September 30, 2015 as compared to the fiscal year ended September 30, 2014 and increased $7,976,386, or 18%, for the fiscal year ended September 30, 2014 as compared to the fiscal year ended September 30, 2013. The increase from fiscal year 2014 to 2015 was due to the additional income related to ten industrial properties purchased during fiscal 2015. The increase from fiscal year 2013 to 2014 was due to the additional income related to six industrial properties purchased during fiscal 2014.

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The Company’s NOI for the fiscal years ended September 30, 2015, 2014 and 2013 is calculated as follows:

	2015			2014			2013

Rental Revenue	$	67,059,385		$	55,512,165		$	46,880,309
Reimbursement Revenue		10,716,112			9,160,176			7,726,777
Total Rental and Reimbursement Revenue		77,775,497			64,672,341			54,607,086
Real Estate Taxes		(8,362,135	)		(7,605,611	)		(5,864,834	)
Operating Expense		(4,127,884	)		(3,711,868	)		(3,363,776	)
NOI	$	65,285,478		$	53,354,862		$	45,378,476

In addition to the two properties purchased during the first quarter of fiscal 2016 to date, we have entered into agreements to purchase seven new build-to-suit, industrial buildings that are currently being developed in Florida, Kansas, Kentucky, Michigan, New York and Washington totaling approximately 1,869,000 square feet with net-leased terms ranging from ten to fifteen years resulting in a weighted average lease maturity of 14.1 years. Approximately 1,732,000 square feet, or 93%, is leased to FedEx Ground Package System, Inc. The purchase price for the seven properties is approximately $198,804,000. Subject to satisfactory due diligence, we anticipate closing these seven transactions during fiscal 2016 and fiscal 2017. In connection with four of the seven properties, the Company has entered into commitments to obtain four mortgages totaling approximately $92,116,000 at fixed rates ranging from 3.55% to 3.95%, with a weighted average interest rate of 3.81%. Each of these mortgages is a fifteen year, self-amortizing loan. The Company may make additional acquisitions in fiscal 2016 and fiscal 2017 and the funds for these acquisitions may come from mortgages, draws on our unsecured line of credit, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the DRIP, 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.

During the fiscal years ended September 30, 2015 and 2014, the Company completed twelve expansions at nine of its locations, consisting of eight building expansions and four parking lot expansions. Two of the parking lot expansions included the purchase of additional land. The eight building expansions resulted in approximately 438,000 additional square feet. Total costs for all nine property expansions were approximately $39,460,000 and resulted in total increased annual rent of approximately $4,007,000. Each completed expansion resulted in a new ten year lease extension for each property that was expanded. In addition, the Company currently has three property expansions in progress consisting of two building expansions and one parking lot expansion. Total expansion costs are expected to be approximately $7,765,000. Upon completion of the three expansions, annual rent will be increased by approximately $777,000 and each property will provide for a new ten year lease extension from the date of completion for each property being expanded. In addition, the two building expansions will provide additional rentable square feet of approximately 65,700.

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Revenues also include interest and dividend income and net realized gain on securities transactions. The Company holds a portfolio of marketable securities of other REITs with a fair value of $54,541,237 as of September 30, 2015. The Company generally limits its marketable securities investments to no more than approximately 10% of its undepreciated assets. The Company invests in REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. As of September 30, 2015 and 2014, there were no draws against the margin. The REIT securities portfolio provides the Company with additional liquidity and additional income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. As of September 30, 2015, the Company’s portfolio consisted primarily of 73% REIT common stocks and 27% REIT preferred stocks. The Company’s weighted-average yield on the securities portfolio for fiscal 2015 was approximately 7.6%. Interest and dividend income for fiscal 2015 was $3,723,867, which is in-line with interest and dividend income of $3,882,597 for fiscal 2014. During fiscal 2015, the Company realized $805,513 in gains on sales of securities transactions. The Company has unrealized losses of $5,441,603 in its REIT securities portfolio as of September 30, 2015. The dividends received from our securities investments continue to meet our expectations. The Company intends to hold these securities for investment on a long-term basis.

The Company had $12,073,909 in cash and cash equivalents and $54,541,237 in REIT securities as of September 30, 2015. The Company believes that funds generated from operations, the DRIP, the unsecured line of credit, together with the ability to finance and refinance its properties, will provide sufficient funds to adequately meet its obligations over the next several years.

The Company has a Dividend Reinvestment and Stock Purchase Plan (DRIP), in which participants can purchase stock from the Company at a price of approximately 95% of market value. Amounts received in connection with the DRIP, (including dividend reinvestments of $8,489,169, $7,624,528 and $6,781,345 for fiscal years ended 2015, 2014 and 2013, respectively), were $48,404,556, $38,090,334 and $31,119,351 for fiscal years ended 2015, 2014 and 2013, respectively.

Industrial space demand is very closely correlated to Gross Domestic Product (GDP) growth. Despite six years of unprecedented monetary stimulus, real annual GDP growth has averaged under 2.0% over this period. However, there has been significant demand for industrial space and national occupancy rates have been steadily increasing. One major catalyst driving increased demand for the industrial property type has been the ongoing shift from traditional brick and mortar retail shopping, to shopping on-line or “e-Commerce”. This favorable trend for the industrial real estate sector has been increasing for several years now and is expected to be a leading demand driver for many years to come. New home construction and sales of existing homes have vastly improved. Housing demand typically translates into greater demand for warehouse space. Additionally, automotive sales are at historic highs and low energy costs have resulted in a resurgence of domestic manufacturing plants. These catalysts have put upward pressure on rental rates in most major industrial markets. The financial position of our tenants, together with the long duration of our leases, should enable the Company to perform well despite the slow growth economic environment.

The Company intends to continue to increase its real estate investments in fiscal 2016 and 2017 through acquisitions and expansions of properties. The growth of the real estate portfolio depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties. Transaction costs, such as broker fees, transfer taxes, legal, valuation, and other professional fees related to acquisitions are expensed as incurred.

See PART I, Item 1 – Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant to the Company and the opportunities and challenges, and risks on which the Company is focused.

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Significant Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operation are based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires management 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 the Company’s consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Significant accounting policies are defined as those that involve significant judgment and potentially could result in materially different results under different assumptions and conditions. Management believes the following significant accounting policies are affected by our more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. For a detailed description of these and other accounting policies, see Note 1 in the Notes to the Company’s Consolidated Financial Statements included in this Form 10-K.

Real Estate Investments

The Company applies Financial Accounting Standards Board Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that a permanent impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.

Upon acquisition of a property, the Company allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, buildings and intangible assets, including above and below market leases and in-place leases. The Company allocates the purchase price to the fair value of the tangible assets of an acquired property generally determined by third party appraisal of the property obtained in conjunction with the purchase. Transaction costs, such as broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related to acquisitions are expensed as incurred.

The purchase price is further allocated to acquired above and below market leases based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term. In addition, any remaining amounts of the purchase price are applied to in-place lease values based on management's evaluation of the specific characteristics of each tenant's lease. Acquired above and below market leases are amortized to rental revenue over the remaining non-cancelable terms of the respective leases. The value of in-place lease intangibles is amortized to amortization expense over the remaining lease term. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, deferred rent, and the in-place lease value is charged to expense when there is a signed termination agreement, all of the conditions of the termination agreement are met, the tenant is no longer occupying the property and the termination consideration, if any, is probable of collection.

The Company conducted a comprehensive review of all real estate asset classes in accordance with ASC Topic 360, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable.

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The following are examples of such events or changes in circumstances that would indicate to management that there may be an impairment of a property:

A non-renewal of a lease and subsequent move out by the tenant;
A renewal of a lease at a significantly lower rent than a previous lease;
A significant decrease in the market value of a property;
A significant adverse change in the extent or manner in which a property is being used or in its physical condition;
A significant adverse change in legal factors or in the business climate that could affect the value of a property, including an adverse action or assessment by a regulator;
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a property;
A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a property; or
A current expectation that, more likely than not, a property will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

The process entails the analysis of property for instances where the net book value exceeds the estimated fair value. In accordance with ASC Topic 360, an impairment loss shall be recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The Company utilizes the experience and knowledge of its internal valuation team to derive certain assumptions used to determine an operating property’s cash flow. Such assumptions include re-leasing and renewal probabilities upon future lease expirations, vacancy factors, rental growth rates, and capital expenditures.

As part of our review of our property portfolio, we have evaluated our shopping center in Somerset, NJ which had an occupancy rate of 84% as of September 30, 2015, and noted that the sum of the discounted cash flows exceeded its historical net cost basis. In addition, the Company has entered into three separate leasing agreements that have become or will become effective subsequent to September 30, 2015, at which time the Company’s shopping center will be 100% occupied. We have also evaluated the three vacant industrial properties in our portfolio and noted that the sum of the discounted cash flows expected for potential leases of these properties exceeded their historical net cost basis. In addition, the Company has entered into two separate lease agreements for two of these vacant properties. One of the leases has commenced on December 1, 2015 and one of the lease agreements will commence January 1, 2016. Management considers on a quarterly basis whether the marketed rent (advertised) or the market rent has decreased or if any additional indicators are present which would indicate a significant decrease in net cash flows. Management typically will obtain an independent appraisal to assist in evaluating a potential impairment for a property that has been vacant for several years. We have also considered the properties which had lease renewals at rental rates lower than the previous rental rates and noted that the sum of the new discounted cash flows expected for the renewed leases exceeded these properties’ historical net cost basis.

The Company reviewed its operating properties in light of the requirements of ASC Topic 360-10 and determined that, as of September 30, 2015, the undiscounted cash flows over the holding period for these properties were in excess of their carrying values and, therefore, no impairment charges were required.

Securities Available for Sale

Investments in non-real estate assets consist primarily of marketable securities, which the Company generally limits to no more than approximately 10% of its undepreciated assets. Management individually reviews and evaluates our marketable securities for impairment on a quarterly basis, or when events or circumstances occur. Management considers, among other things, credit aspects of the issuer, amount of decline in fair value over cost and length of time in a continuous loss position. If a decline in fair value is determined to be other than temporary, a non-cash impairment charge is recognized in earnings and the cost basis of the individual security is written down to fair value as the new cost basis.

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The Company classifies its securities among three categories: Held-to-maturity, trading, and available-for-sale. The Company’s securities at September 30, 2015 and 2014 are all classified as available-for-sale and are carried at fair value based on quoted market prices. Gains or losses on the sale of securities are calculated based on the average cost method and are accounted for on a trade date basis. Unrealized holding gains and losses are excluded from earnings and reported as a separate component of Shareholders’ Equity until realized. The change in net unrealized holding gains (losses) is reflected as comprehensive income (loss).

Revenue Recognition and Estimates

Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as the Company is generally the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. These occupancy charges are recognized as earned. In addition, an estimate is made with respect to whether a provision for allowance for doubtful accounts receivable and loans receivable is necessary. The allowance for doubtful accounts reflects management’s estimate of the amounts of the recorded accounts receivable and loans receivable at the balance sheet date that will not be realized from cash receipts in subsequent periods. If cash receipts in subsequent periods vary from our estimates, or if the Company’s tenants’ financial condition deteriorates as a result of operating difficulties, additional changes to the allowance may be required. The Company did not have an allowance for doubtful accounts as of September 30, 2015.

Lease Termination Income

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

During the fiscal year ended September 30, 2015, the Company entered into a lease termination agreement with its tenant, Norton McNaughton of Squire, Inc. (Norton), whereby the Company received a lease termination fee of $238,625 in December 2014, terminating the lease effective January 31, 2015. Prior to the lease termination, Norton leased the Company’s 302,400 square foot building located in its Hanahan, SC location through April 29, 2015 at an annualized rent of approximately $1,389,000, or $4.54 per square foot. Additionally, prior to the lease termination, Norton sub-leased the Company’s space to Science Applications International Corporation (SAIC). In conjunction with the lease termination, the Company simultaneously entered into a lease agreement for four years and three months with SAIC from February 1, 2015 through April 30, 2019 at an initial annualized rent of approximately $1,406,000, or $4.65 per square foot, with 2% increases each year.

Lease Termination Income for the fiscal year ended September 30, 2014 consisted of $1,182,890 from the Company’s former tenant at its 83,000 square foot building located in Roanoke, VA. Lease Termination Income for the fiscal year ended September 30, 2013 consisted of $113,784 from the Company’s former tenant at its 388,671 square foot building located in St. Joseph, MO and $576,946 from the Company’s former tenant at its 160,000 square foot building located in Monroe, NC. Two of the properties associated with these lease termination fees are currently being leased to new tenants and the remaining property was subsequently leased to a new tenant then sold to that tenant. The Company is currently leasing its property located in St. Joseph, MO to two tenants, one tenant through September 30, 2017 and one tenant through February 28, 2018. The Company was leasing its building in Monroe, NC to a single tenant through September 18, 2015, at which time the Company sold the property to the tenant realizing a gain of approximately $5,021,000. In addition, as further described below, the Company is currently leasing its 83,000 square foot building in Roanoke, VA to a single tenant through January 31, 2025.

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The Company’s lease with its tenant, Graybar Electric Company (Graybar), at its 26,340 square foot building located in Ridgeland (Jackson), MS has an early termination option which may be exercised at any time on the condition that the Company is provided with six months of notice. The Company has not received notice nor does the Company anticipate that this tenant will exercise its early termination option. Annual rent on both the U.S. GAAP straight-line rent basis and on the cash basis for this location is $109,275, or $4.15 per square foot, and the lease expires in July 2019.

The Company’s lease with its tenant, CHEP USA, Inc. (CHEP) at its 83,000 square foot building located in Roanoke, VA has an early termination option which may be exercised after August 2021, on the condition that the Company is provided with six months of notice and CHEP pays the Company a $500,000 termination fee. The U.S. GAAP straight-line rent per annum for this location is $472,680, or $5.69 per square foot and the cash basis rent is $463,786, or $5.59 per square foot. The lease expires in January 2025.

The Company’s lease with its tenant, Pittsburgh Glass Works, LLC (PGW), at its 102,135 square foot building located in O’Fallon (St. Louis), MO has an early termination option which may be exercised after January 1, 2016 but before December 31, 2016, on the condition that the Company is provided with six months of notice and PGW pays the Company a $213,462 termination fee. Additionally, PGW has an early termination option which may be exercised after January 1, 2017, on the condition that the Company is provided with six months of notice and PGW pays the Company a $106,731 termination fee. Annual rent on both the U.S. GAAP straight-line rent basis and on the cash basis for this location is $426,924, or $4.18 per square foot and the lease expires in June 2018.

Other than the Company’s leases with Graybar, CHEP and PGW, the Company does not have any other leases that contain an early termination option.

Results of Operations

Occupancy and Rent per Occupied Square Foot

The Company’s weighted-average lease expiration was 7.2 and 6.7 years as of September 30, 2015 and 2014, respectively, and its average annualized rent per occupied square foot as of September 30, 2015 and 2014 was $5.48 and $5.51, respectively. At September 30, 2015 and 2014, the Company’s occupancy was 97.7% and 95.9%, respectively. All improved properties were 100% occupied at September 30, 2015 except for the following:

Property	Square Footage	Occupancy

Fayetteville, NC (1)	148,000	0%
Winston-Salem, NC (2)	106,507	0%
Somerset, NJ (3)	64,138	84%
White Bear Lake, MN	59,425	0%

(1)

The Company entered into a 5.25 year lease agreement for its 148,000 square foot building located in Fayetteville, NC through February 28, 2021. The lease commenced December 1, 2015 and is with Victory Packaging, L.P., a wholly-owned subsidiary of KapStone Paper and Packaging Corporation, a publicly-owned company. The initial annual rent of $469,160, representing $3.17 per square foot, will commence on March 1, 2016 with 2.5% annual increases thereafter.

(2)

The Company entered into a 5.25 year lease agreement for its 106,507 square foot building located in Winston-Salem, NC through March 31, 2021. The lease is with Style Crest, Inc. and will commence on January 1, 2016. Initial annual rent of $356,798, representing $3.35 per square foot, will commence on April 1, 2016 with 3.0% annual increases thereafter.

(3)

The Company has entered into three leasing agreements that have become or will become effective subsequent to September 30, 2015, at which time the Company’s 64,138 square foot shopping center will be 100% occupied.

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Fiscal 2015 renewals

Approximately 6% of the Company’s gross leasable area, consisting of six leases totaling 778,702 square feet, were scheduled to expire during fiscal 2015. The Company has renewed all six leases, or 100% of the gross leasable area that were scheduled to expire during fiscal 2015. The Company has incurred or expects to incur tenant improvement costs of approximately $665,200 and leasing costs of approximately $438,300 in connection with these six lease renewals. The table below summarizes the lease terms of the six leases which were renewed and includes both the tenant improvement costs and the leasing costs which are presented on a per square foot (PSF) basis averaged 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 Commissions Cost PSF over Renewal Term (1)

Orangeburg, NY	Kellogg Sales Co.		50,400	$	7.00	$	7.00		2/28/15	$	6.50	$	6.50		2/28/18		3.0	$	0.21	$	0.26
Hanahan, SC	SAIC (2)		302,400		4.25		4.54		4/29/15		4.79		4.65		4/30/19		4.3		0.22		0.28
Montgomery, IL	Home Depot		171,200		5.11		5.27		6/30/15		5.70		5.48		6/30/20		5.0		-0-		-0-
O’Fallon, MO	Pittsburgh Glass Works		102,135		4.18		4.18		6/30/15		4.18		4.18		6/30/18		3.0		0.99		-0-
Kansas City, MO	Kellogg Sales Co.		65,067		5.38		5.38		7/31/15		5.00		5.00		7/31/18		3.0		0.22		0.20
Ft. Myers, FL	FedEx Ground		87,500		4.76		4.76		10/31/14		4.95		4.95		10/31/16		2.0		-0-		-0-
	Total		778,702
Weighted Average				$	4.76	$	4.91			$	5.06	$	4.95				3.8	$	0.22	$	0.15

(1)

Amount calculated based on the total cost divided by the square feet, divided by the renewal term.

(2)

In December 2014, the Company entered into a lease termination agreement with its tenant, Norton McNaughton of Squire, Inc. (Norton), whereby the Company received a lease termination fee of $238,625, terminating the lease effective January 31, 2015. Prior to the lease termination, Norton leased the Company’s 302,400 square foot building located in its Hanahan, SC location through April 29, 2015 at an annualized rent of approximately $1,389,000 or $4.54 per square foot. Prior to the lease termination, Norton sub-leased the Company’s space to Science Applications International Corporation (SAIC). In conjunction with the lease termination, the Company simultaneously entered into a lease agreement for four years and three months with SAIC from February 1, 2015 through April 30, 2019 at an initial annualized rent of approximately $1,406,000 or $4.65 per square foot, with 2% increases each year.

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New leasing activity

Fiscal 2016 renewals

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

Leasing

Commissions Cost

PSF over

Renewal

Term

Monaca, PA

Datatel Resources

80,856

$2.87

11/30/15

$3.00

11/30/17

2.0

$-0-

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Acquisitions and Expansions During Fiscal 2015

Acquisitions

On October 3, 2014, the Company purchased a newly constructed 163,378 square foot industrial building located in Lindale, TX, which is in the Tyler MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through June 2024. The purchase price was $10,271,355. The Company obtained a 15 year self-amortizing mortgage of $7,000,000 at a fixed interest rate of 4.57%. Annual rental revenue over the remaining term of the lease is approximately $725,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $341,355 to an Intangible Asset associated with the lease in-place.

On October 10, 2014, the Company purchased a newly constructed 198,773 square foot industrial building located in Sauget, IL, which is in the St. Louis, MO MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through May 2029. The purchase price was $15,231,000. The Company obtained a 15 year self-amortizing mortgage of $10,660,000 at a fixed interest rate of 4.40%. Annual rental revenue over the remaining term of the lease is approximately $1,036,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $31,000 to an Intangible Asset associated with the lease in-place.

On October 14, 2014, the Company purchased a 38,833 square foot industrial building located in Rockford, IL, which was constructed in 2012. The building is 100% net-leased to B/E Aerospace, Inc. through June 2027. The property was acquired, all-cash, for a purchase price of $5,200,000. Annual rental revenue over the remaining term of the lease is approximately $359,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $100,000 to an Intangible Asset associated with the lease in-place.

On November 25, 2014, the Company purchased a newly constructed 158,417 square foot industrial building located in Kansas City, MO. The building is 100% net-leased to Bunzl Distribution Midcentral, Inc. through September 2021. The purchase price was $9,635,770. The Company obtained a 7 year mortgage, of $7,226,828, amortizing over 25 years at a fixed interest rate of 5.18%. Annual rental revenue over the remaining term of the lease is approximately $736,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $35,770 to an Intangible Asset associated with the lease in-place.

On December 12, 2014, the Company purchased a newly constructed 599,840 square foot industrial building located in Frankfort, KY, which is in the Lexington MSA. The building is 100% net-leased to Jim Beam Brands Company through January 2025. The purchase price was $28,000,000. The Company obtained a 10 year mortgage, of $19,600,000 at a fixed interest rate of 4.84% with an amortization schedule as follows: amortizing over 18 years during the first 30 months, amortizing over 14 years during the next 30 months, amortizing over 11 years during the next 30 months and amortizing over 8 years during the final 30 months. Annual rental revenue over the remaining term of the lease is approximately $1,989,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

On February 26, 2015, the Company purchased a newly constructed 297,579 square foot industrial building located in Jacksonville, FL. The building is 100% net-leased to FedEx Ground Package System, Inc. through December 2029. The purchase price was $30,645,954. The Company obtained a 15 year self-amortizing mortgage of $20,000,000 at a fixed interest rate of 3.93%. Annual rental revenue over the remaining term of the lease is approximately $1,992,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

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On March 13, 2015, the Company purchased a newly constructed 232,200 square foot industrial building located in Monroe, OH, which is in the Cincinnati MSA. The building is 100% net-leased to UGN, Inc. through February 2030. The purchase price was $13,416,000. The Company obtained a 15 year self-amortizing mortgage of $8,700,000 at a fixed interest rate of 3.77%. Annual rental revenue over the remaining term of the lease is approximately $1,045,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $479,000 to an Intangible Asset associated with the lease in-place.

On May 7, 2015, the Company purchased a newly constructed 671,354 square foot industrial building located in Greenwood, IN, which is in the Indianapolis MSA. The building is 100% net-leased to ULTA, Inc. through July 2025. The purchase price was $37,484,574. The Company obtained a 15 year self-amortizing mortgage of $24,286,230 at a fixed interest rate of 3.91%. Annual rental revenue over the remaining term of the lease is approximately $2,644,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

On August 14, 2015, the Company purchased a newly constructed 304,608 square foot industrial building located in Fort Worth, TX, in the Fort Worth Alliance Airport, which is in the Dallas MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through April 2030. The purchase price was $35,300,832. The Company obtained a 15 year self-amortizing mortgage of $24,700,000 at a fixed interest rate of 3.56%. Annual rental revenue over the remaining term of the lease is approximately $2,362,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

On September 25, 2015, the Company purchased a 63,840 square foot industrial building located in Cincinnati, OH, which was constructed in 2014. The building is 100% net-leased to The American Bottling Company through August 2029. The lease is guaranteed by the parent company, Dr Pepper Snapple Group, Inc. The property was acquired, all-cash, for a purchase price of $6,800,000. Annual rental revenue over the remaining term of the lease is approximately $480,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company allocated $50,000 to an Intangible Asset associated with the lease in-place.

FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, B/E Aerospace, Inc., ULTA Inc.’s ultimate parent, Ulta Salon, Cosmetics & Fragrance, Inc. and The American Bottling Company’s ultimate parent, Dr Pepper Snapple Group, Inc. are publicly-owned companies and financial information related to these entities is available at the SEC’s website, www.sec.gov. Jim Beam Brands Company’s ultimate parent, Suntory Beverage & Food Limited is a publicly-owned company and financial information related to this entity is available at the Tokyo Stock Exchange’s website, www.jpx.co.jp/english and Bunzl Distribution Midcentral, Inc.’s ultimate parent, Bunzl plc is a publicly-owned company and financial information related to this entity is available at the U.K. government’s website, https://www.gov.uk/government/organisations/companies-house. The references in this report to the SEC’s website, the Tokyo Stock Exchange’s website and the U.K. government’s website are not intended to and do not include or incorporate by reference into this report the information on those websites.

Disposition

On September 18, 2015, the Company sold its 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. The sale resulted in a realized gain of approximately $5,021,000, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis.

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Expansions

During June 2015, a parking lot expansion for a property leased to FedEx Ground Package System, Inc. located in El Paso, TX was completed for a cost of approximately $2,472,000 resulting in an increase in annual rent effective July 1, 2015 from $1,045,610, or $7.25 per square foot to $1,345,289, or $9.33 per square foot.

Comparison of Year Ended September 30, 2015 to Year Ended September 30, 2014

The following tables summarize the Company’s rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the purposes of the following discussion, same store properties are properties owned as of October 1, 2013 that have not been subsequently expanded or sold.

Acquired properties are properties that were acquired subsequent to September 30, 2013. Sixteen properties were acquired during fiscal 2015 and fiscal 2014. Acquired properties include the properties located in Buckner, KY; Edwardsville (Kansas City), KS; Spring (Houston), TX; Altoona, PA; Tulsa, OK and Indianapolis, IN, (all acquired in fiscal 2014) and Lindale (Tyler), TX; Sauget (St. Louis, MO), IL; Rockford, IL; Kansas City, MO; Frankfort (Lexington), KY; Jacksonville, FL; Monroe (Cincinnati), OH; Greenwood (Indianapolis), IN; Fort Worth (Dallas), TX and Cincinnati, OH (all acquired in fiscal 2015).

Nine property expansions were completed during fiscal 2015 and fiscal 2014. Expanded properties include the properties located in Ft. Mill (Charlotte, NC), SC; Richfield (Cleveland), OH; El Paso, TX; Tampa, FL (FedEx Ground); Cocoa, FL, Monaca, PA (NF&M); Oklahoma City, OK and Waco, TX. In addition, the property located in Spring (Houston), TX was expanded, however its activity is included in Acquired properties.

Sold property is one property located in Monroe, NC that was sold on September 18, 2015.

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As of September 30, 2015 and 2014, the occupancy rates of the Company’s total property portfolio were 97.7% and 95.9%, respectively.

Rental Revenues		2015		2014		$ Change	% Change

Same Store Properties	$	42,414,601	$	42,109,581	$	305,020	1	%
Acquired Properties		15,118,514		5,542,626		9,575,888	173	%
Expanded Properties		8,985,030		7,766,625		1,218,405	16	%
Sold Property		541,240		93,333		447,907	480	%

Total	$	67,059,385	$	55,512,165	$	11,547,220	21	%

The increase in rental revenues is mainly due to the increase from the newly acquired properties and expanded properties. Rental revenue from same store properties increased due to the increase in same store occupancy which increased 160 basis points from 94.5% as of September 30, 2014 to 96.1% as of September 30, 2015. In addition the rental revenue from same store properties increased due to an increase in rental rates for the renewed leases as described in the lease renewals and extensions table during fiscal 2015. The rental revenue from the sold property increased because the property was vacant prior to August 2014.

Reimbursement Revenues		2015		2014		$ Change	% Change

Same Store Properties	$	7,950,687	$	7,366,341	$	584,346	8	%
Acquired Properties		960,793		183,274		777,519	424	%
Expanded Properties		1,774,622		1,607,230		167,392	10	%
Sold Property		30,010		3,331		26,679	801	%

Total	$	10,716,112	$	9,160,176	$	1,555,936	17	%

Our single tenant properties are subject to net-leases which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, the Company is reimbursed by the tenants for these expenses. Therefore, the total increase in reimbursement revenues is partially offset by the increase in real estate taxes, increase in insurance expense and increase in operating expenses. In addition, the increase in reimbursement revenues for same store properties is partially due to the increase in same store occupancy which enabled us to be reimbursed by our tenants for these expenses on properties that were previously vacant. Same store occupancy increased 160 basis points from 94.5% as of September 30, 2014 to 96.1% as of September 30, 2015. The increase in reimbursement revenues is mainly due to increases in real estate taxes, insurance expenses and operating expenses from the newly acquired properties.

Real Estate Taxes		2015		2014		$ Change		% Change

Same Store Properties	$	6,180,550	$	6,164,615	$	15,935		0	%
Acquired Properties		667,355		99,470		567,885		571	%
Expanded Properties		1,440,506		1,263,916		176,590		14	%
Sold Property		73,724		77,610		(3,886	)	(5	)%

Total	$	8,362,135	$	7,605,611	$	756,524		10	%

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The increase in real estate taxes is mainly due to the increase from the newly acquired properties as well as increased assessment values on expanded properties.

Operating Expenses		2015		2014		$ Change		% Change

Same Store Properties	$	3,159,415	$	3,027,025	$	132,390		4	%
Acquired Properties		426,706		123,855		302,851		245	%
Expanded Properties		508,782		469,243		39,539		8	%
Sold Property		32,981		91,745		(58,764	)	(64	)%

Total	$	4,127,884	$	3,711,868	$	416,016		11	%

The increase in operating expenses is mainly due to the increase from the newly acquired properties.

Depreciation		2015		2014		$ Change	% Change

Same Store Properties	$	12,467,619	$	12,226,797	$	240,822	2	%
Acquired Properties		4,823,387		1,563,716		3,259,671	208	%
Expanded Properties		2,283,696		1,988,244		295,452	15	%
Sold Property		130,618		130,012		606	0	%

Total	$	19,705,320	$	15,908,769	$	3,796,551	24	%

The increase in depreciation expense is mainly due to the increase from the newly acquired properties. Depreciation expense from same store properties and expanded properties increased mainly due to additional tenant improvements being depreciated within fiscal 2015.

Interest Expense		2015		2014		$ Change		% Change

Same Store Properties	$	10,183,806	$	11,398,877	$	(1,215,071	)	(11	%)
Acquired Properties		4,985,596		1,614,254		3,371,342		209	%
Expanded Properties		1,858,525		2,009,346		(150,821	)	(8	)%
Sold Property		71,287		65,876		5,411		8	%
Loans Payable		1,458,936		1,016,325		442,611		44	%

Total	$	18,558,150	$	16,104,678	$	2,453,472		15	%

The increase in interest expense is mainly due to the acquisition of new properties. Interest expense for same store properties decreased mainly due to the decrease in the outstanding balances of the mortgages and the reduction in the weighted average interest rate. The reduction in the outstanding mortgages balance is due to the payoff of five loans during fiscal 2015 totaling $11,176,087 and regularly scheduled principal amortization payments made during fiscal 2015. The weighted average interest rate on the Company’s fixed rate debt as of September 30, 2015 was 4.85% as compared to 5.24% as of September 30, 2014. Loans payable interest expense increased due to the higher weighted average Loans Payable balance maintained during fiscal 2015 as compared to fiscal 2014.

Acquisition Costs

Acquisition costs increased $1,064,208, or 221% during fiscal 2015 as compared to fiscal 2014. The increase is due to the increase in acquisitions during fiscal 2015. Ten properties totaling approximately $191,985,000 were acquired during fiscal 2015 as compared to six properties totaling approximately $97,807,000 that were acquired during fiscal 2014.

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General and Administrative Expenses

General and administrative expenses increased $595,991, or 10%, during fiscal 2015 as compared to fiscal 2014. The increase is mainly due to an increase in compensation expense and additional personnel.

Amortization of Financing Costs

Amortization of financing costs increased $560,271, or 77%, during fiscal 2015 as compared to fiscal 2014. The increase is mainly due to the write off of the unamortized deferred loan costs totaling $466,634 associated with four loans that were repaid prior to maturity, one loan repaid prior to maturity in conjunction with the sale of the property located in Monroe, NC and the repayment of the former line of credit facility prior to its maturity.

Interest and Dividend Income

Interest and dividend income for fiscal 2015 was $3,723,867 which is in-line with interest and dividend income of $3,882,597 for fiscal 2014. This is mainly due to the relatively same average carrying value of the REIT securities portfolio during the fiscal year ended September 30, 2015 compared to during the fiscal year September 30, 2014. The REIT securities portfolio weighted average yield for fiscal 2015 was approximately 7.6% as compared to 7.4% for fiscal 2014.

Gain on Sale of Real Estate Investment

Gain on sale of real estate investment for fiscal 2015 represents the gain recognized from the sale of the Company’s 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. Under U.S. GAAP, the sale resulted in a realized gain of $5,021,242, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis. There were no sales of real estate investments during fiscal 2014.

Realized Gain on Sales of Securities Transactions, net

Realized gain on sales of securities transactions, net consisted of the following:

	2015			2014

Gross realized gains	$	880,424		$	2,222,424
Gross realized losses		(74,911	)		(55,658	)
Total Realized Gain on Sales of Securities Transactions, net	$	805,513		$	2,166,766

The Company had an accumulated net unrealized loss on its securities portfolio of $5,441,603 as of September 30, 2015.

Comparison of Year Ended September 30, 2014 to Year Ended September 30, 2013

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Acquired properties are properties that were acquired subsequent to September 30, 2012. Twelve properties were acquired during fiscal 2014 and fiscal 2013. Acquired properties include the properties located in Livonia (Detroit), MI; Olive Branch, MS (Milwaukee Electric Tool Corp.); Roanoke, VA; Green Bay, WI; and Stewartville (Rochester), MN, (all acquired in fiscal 2013) and Buckner, KY; Kansas City, KS; Spring (Houston), TX; Altoona, PA; Tulsa, OK and Indianapolis, IN, (all acquired in fiscal 2014).

Seven property expansions were completed during fiscal 2014 and fiscal 2013. Expanded properties include the properties located in Orion, MI; Ft. Mill (Charlotte, NC), SC; Richfield (Cleveland), OH; El Paso, TX; Tampa, FL (FedEx Ground) and Cocoa, FL. In addition, the property located in Spring (Houston), TX was expanded, however its activity is included in Acquired Properties.

As of September 30, 2014 and 2013, the occupancy rates of the Company’s total property portfolio were 95.9% and 96.0%, respectively.

Rental Revenues		2014		2013		$ Change		% Change

Same Store Properties	$	37,563,925	$	38,259,722	$	(695,797	)	(2	)%
Acquired Properties		10,186,377		2,676,932		7,509,445		281	%
Expanded Properties		7,761,863		5,943,655		1,818,208		31	%

Total	$	55,512,165	$	46,880,309	$	8,631,856		18	%

The increase in rental revenues is mainly due to the increase from the newly acquired properties and expanded properties. Rental revenue from same store properties decreased slightly mainly due to a reduction in rental rates for the renewed leases during fiscal 2014.

Reimbursement Revenues		2014		2013		$ Change	% Change

Same Store Properties	$	6,834,424	$	5,993,341	$	841,083	14	%
Acquired Properties		983,099		668,857		314,242	47	%
Expanded Properties		1,342,653		1,064,579		278,074	26	%

Total	$	9,160,176	$	7,726,777	$	1,433,399	19	%

Real Estate Taxes		2014		2013		$ Change	% Change

Same Store Properties	$	5,768,803	$	4,733,817	$	1,034,986	22	%
Acquired Properties		813,498		342,207		471,291	138	%
Expanded Properties		1,023,310		788,810		234,500	30	%

Total	$	7,605,611	$	5,864,834	$	1,740,777	30	%

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Real estate taxes from same store properties increased mainly due to the Company’s ability to obtain refunds that were received in 2013 and general increases in real estate tax rates.

Operating Expenses		2014		2013		$ Change	% Change

Same Store Properties	$	2,907,630	$	2,679,299	$	228,331	9	%
Acquired Properties		376,613		342,170		34,443	10	%
Expanded Properties		427,625		342,307		85,318	25	%

Total	$	3,711,868	$	3,363,776	$	348,092	10	%

Operating expenses from same store properties increased mainly due to increases in insurance premiums, professional fees and repairs and maintenance.

Depreciation		2014		2013		$ Change	% Change

Same Store Properties	$	11,003,160	$	10,709,739	$	293,421	3	%
Acquired Properties		3,024,199		695,946		2,328,253	335	%
Expanded Properties		1,881,410		1,458,857		422,553	29	%

Total	$	15,908,769	$	12,864,542	$	3,044,227	24	%

The increase in depreciation expense is mainly due to the increase from the newly acquired properties. Depreciation from same store properties increased slightly mainly due to additional tenant improvements being depreciated within fiscal 2014.

Interest Expense		2014		2013		$ Change		% Change

Same Store Properties	$	9,816,247	$	11,140,778	$	(1,324,531	)	(12	)%
Acquired Properties		3,116,684		903,039		2,213,645		245	%
Expanded Properties		2,155,424		2,299,984		(144,560	)	(6	%)
Loans Payable		1,016,323		613,153		403,170		66	%

Total	$	16,104,678	$	14,956,954	$	1,147,724		8	%

The increase in interest expense is mainly due to the acquisition of new properties. Interest expense for same store properties decreased mainly due to the decrease in the outstanding balances of the mortgages and the reduction in the weighted average interest rate. The reduction in the outstanding mortgage balance is due to the payoff of five loans during fiscal 2014 totaling $4,176,804 and regularly scheduled principal amortization payments made during fiscal 2014. The weighted average interest rate on the Company’s fixed rate debt as of September 30, 2014 was 5.24% as compared to 5.63% as of September 30, 2013. Loans payable interest expense increased due to the higher weighted average Loans Payable balance maintained during fiscal 2014 as compared to fiscal 2013.

General and Administrative Expenses

General and administrative expenses increased $726,992, or 15%, during fiscal 2014 as compared to fiscal 2013. The increase is mainly related to an increase in compensation expense.

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Interest and Dividend Income

Interest and dividend income for fiscal 2014 was $3,882,597 which is in line with interest and dividend income of $3,885,920 for fiscal 2013. This is mainly due to the relatively same average carrying value of the REIT securities portfolio during the fiscal year ended September 30, 2014 compared to during the fiscal year September 30, 2013. The REIT securities portfolio weighted average yield for fiscal 2014 was approximately 7.4% as compared to 7.0% for fiscal 2013.

Realized Gain on Sales of Securities Transactions, net

Realized gain on sales of securities transactions, net consisted of the following:

	2014			2013

Gross realized gains	$	2,222,424		$	7,176,022
Gross realized losses		(55,658	)		(42,770	)
Total Realized Gain on Sales of Securities Transactions, net	$	2,166,766		$	7,133,252

The Company had an accumulated net unrealized gain on its securities portfolio of $121,356 as of September 30, 2014.

Discontinued Operations

Discontinued Operations during the fiscal year ended September 30, 2013 included the operations for 4.5 months of the Company’s 40,560 square foot building located in Greensboro, NC, which was classified as Held for Sale and sold on February 19, 2013 for net sale proceeds of $1,413,891. Since this property, classified as Held for Sale, was sold prior to fiscal 2014, no activity is reflected as Discontinued Operations in fiscal 2014 or 2015.

The following table summarizes the components of discontinued operations for the fiscal year ended September 30, 2013:

		2013

Rental and Reimbursement Revenue	$	32,258
Real Estate Taxes		(28,474	)
Operating Expenses		(37,924	)
Depreciation & Amortization		(20,094	)
Loss from Operations of Disposed Property		(54,234	)
Gain on Sale of Real Estate Investment		345,794
Income from Discontinued Operations	$	291,560

Cash flows from discontinued operations for the fiscal year ended September 30, 2013 are combined with the cash flows from operations within each of the three categories presented. Cash flows from discontinued operations were as follows:

		2013

Cash flows from Operating Activities	$	(29,080	)
Cash flows from Investing Activities		1,413,891
Cash flows from Financing Activities		-0-

The absence of cash flows from discontinued operations did not materially affect future liquidity and capital resources.

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Off-Balance Sheet Arrangements and Contractual Obligations

The Company has not entered into any off-balance sheet arrangements. The following is a summary of the Company’s contractual obligations as of September 30, 2015:

Contractual Obligations		Total		Less than one year		1-3 years		3-5 years		More than 5 years

Mortgage Notes Payable	$	373,991,174	$	43,142,783	$	93,314,837	$	59,576,896	$	177,956,658
Interest on Mortgage Notes Payable		87,783,135		17,282,947		26,397,050		17,923,750		26,179,388
Loans Payable		85,041,386		250,732		4,790,654		80,000,000		-0-
Interest on Loans Payable		6,513,962		1,818,961		3,243,001		1,452,000		-0-
Purchase of Properties		249,189,515		196,067,977		53,121,538		-0-		-0-
Expansions of Existing Properties		7,765,000		7,765,000		-0-		-0-		-0-
Retirement Benefits		750,000		50,000		100,000		100,000		500,000
Total	$	811,034,172	$	266,378,400	$	180,967,080	$	159,052,646	$	204,636,046

Mortgage notes payable represents the principal amounts outstanding by scheduled maturity as of September 30, 2015. Interest is payable on these mortgages at fixed rates ranging from 3.45% to 8.12%, with a weighted average interest rate of 4.85%. As of September 30, 2015, the weighted average loan maturity of the mortgage notes payable is 9.0 years. This compares to a weighted average interest rate of 5.24% as of September 30, 2014 and a weighted average loan maturity of the mortgage notes payable of 7.8 years as of September 30, 2014. The above table does not include $33,670,000 of mortgage loans obtained in connection with the purchases of two properties totaling approximately $50,386,000 during the first quarter of fiscal 2016 to date at fixed interest rates ranging from 3.87% to 4.08%, with a weighted interest rate of 3.95%. In addition, the above table does not include commitments the Company has entered into to obtain four mortgage loans totaling $92,116,000 at fixed interest rates ranging from 3.55% to 3.95%, with a weighted average interest rate of 3.81%. Each of these four mortgage loan commitments are in connection with commitments to purchase four properties totaling approximately $135,279,000. Each of these six mortgages not included in the table above is a fifteen year, self-amortizing loan.

Loans Payable represents a $2,404,341 term loan at an annual interest rate of 4.90%, maturing November 29, 2016, a $2,637,045 term loan at a variable annual interest rate of prime plus 0.75% with a floor of 4.50%, maturing on March 9, 2017, and the draw on our unsecured line of credit facility (the “Facility”) of $80,000,000 as of September 30, 2015. The interest rate on the $2,637,045 term loan was 4.50% as of September 30, 2015.

The Facility provides for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions. The Facility matures in August 2019 and has a one-year extension option, at the option of the Company. Availability under the Facility, through December 31, 2016, is based on 70% of the value of the borrowing base properties and is based on 60% of the value of the borrowing base properties, thereafter. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the Net Operating Income ("NOI") generated by the Company's unencumbered, wholly-owned industrial properties. Borrowings under the Facility, up to the first 60% of the value of the borrowing base properties, bear interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company's leverage ratio. Borrowings under the Facility in excess of 60% of the value of the borrowing base properties bear interest at LIBOR plus 215 basis points to 295 basis points, depending on the company's leverage ratio. Based on the Company's current leverage ratio, borrowings under the Facility bear interest at LIBOR plus 170 basis points for borrowings up to 60% of the value of the borrowing base properties which was at an interest rate of 1.90% as of September 30, 2015 and LIBOR plus 245 basis points, for borrowings in excess of 60% of the value of the borrowing base properties, which was at an interest rate of 2.65% as of September 30, 2015. As of September 30, 2015 the weighted average interest rate on the $80,000,000 drawn down was 1.98%. The Company’s former $60,000,000 unsecured revolving line of credit was limited to 60% of the value of the borrowing base properties whose value was determined by applying a 7.5% capitalization rate to the NOI generated by the Company’s unencumbered properties. In addition, the former unsecured revolving line of credit bore interest at LIBOR plus 175 basis points to 250 basis points depending on the Company’s leverage ratio. Based on the Company’s current leverage ratio, borrowings under the former unsecured revolving line of credit would have borne interest at LIBOR plus 200 basis points.

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The contractual obligation for interest on Loans Payable amount is determined using an interest rate of 4.50% for the $2,637,045 term loan, 4.90% for the $2,404,341 term loan and 1.98% on the $80,000,000 unsecured line of credit. In addition, the above table does not include the Company’s obligation under its available margin loan, for which no amount was outstanding as of September 30, 2015.

Purchase of properties represents the purchase price of nine industrial properties totaling approximately 2,375,000 square feet. Two acquisitions amounting to approximately $50,386,000 and totaling approximately 506,000 square feet were completed during the first quarter of fiscal 2016 to date. The Company expects to close on the remaining seven properties amounting to approximately $198,804,000 and totaling approximately 1,869,000 square feet during the remainder of fiscal 2016 and 2017.

Expansions of existing properties represents the remaining costs expected to be incurred as of September 30, 2015 in connection with three property expansions in progress consisting of two building expansions and one parking lot expansion. Total expansion costs are expected to be approximately $7,765,000. Upon completion of the three expansions, annual rent will be increased by approximately $777,000 and each property will provide for a new ten year lease extension from the date of completion for each property being expanded. In addition, the two building expansions will provide additional rentable square feet of approximately 65,700.

Retirement Benefits of $750,000 represent the total future amount to be paid, on an undiscounted basis, relating to one executive officer, Mr. Eugene W. Landy, the Founder and Chairman of the Board of the Company. These benefits are based upon a specific employment agreement. The agreement does not require the Company to separately fund the obligation and therefore will be paid from the general assets of the Company. The Company has accrued these benefits on a present value basis over the term of the employment agreement.

Liquidity and Capital Resources

The Company operates as a real estate investment trust deriving its income primarily from real estate rental operations. The Company’s shareholders’ equity increased from $420,631,082 as of September 30, 2014 to $446,010,640 as of September 30, 2015, due the issuance of 4,975,500 shares of common stock in the amount of $48,404,556 through the DRIP, stock compensation expense of $448,895, exercise of stock options consisting of 81,200 shares for total proceeds of $612,410 and net income attributable to common shareholders of $16,998,783. The increases were partially offset by payments of cash distributions paid to common shareholders of $35,522,127 and an increase in Accumulated Other Comprehensive loss of $5,562,959. See further discussion below.

The Company’s ability to generate cash adequate to meet its needs is dependent primarily on income from its real estate investments and its securities portfolio, the sale of real estate investments and securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, proceeds from the DRIP, proceeds from public offerings and private placements, and access to the capital markets. Purchases of new properties, payments of expenses related to real estate operations, capital improvement programs, debt service, general and administrative expenses, and distribution requirements place demands on the Company’s liquidity.

The Company intends to operate its properties from the cash flows generated by the properties. However, the Company’s expenses are affected by various factors, including inflation. Increases in operating expenses raise the breakeven point for a property and, to the extent that they cannot be passed on through higher rent and rent reimbursements, reduce the amount of available cash flow which can adversely affect the market value of the property.

As of September 30, 2015, the Company had $12,073,909 in cash and cash equivalents and $54,541,237 in marketable securities subject to term loans of $5,041,386. In addition, as of September 30, 2015, the Company also had $50,000,000 available on its Facility. The Facility provides for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions.

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The Company has been raising equity capital through its DRIP, registered direct placements and the public sale of common and preferred stock and investing in net-leased industrial properties. The Company believes that funds generated from operations, the DRIP, and bank borrowings, together with the ability to finance and refinance its properties, will provide sufficient funds to adequately meet its obligations over the next few years.

As of September 30, 2015, the Company owned ninety-one properties of which sixty-one are subject to mortgages. On August 27, 2015, the Company entered into an agreement to replace its existing $60,000,000 unsecured revolving line of credit, which was scheduled to mature in June 2016 with a new Facility. The Facility is syndicated with three banks led by BMO Capital Markets ("BMO"), as sole lead arranger, sole book runner, and Bank of Montreal as administrative agent, and includes JPMorgan Chase Bank, N.A. ("J.P. Morgan") and RBC Capital Markets ("RBC") as co-syndication agents. The Facility provides for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions. The Facility matures in August 2019 and has a one-year extension option, at the option of the Company. Availability under the Facility, through December 31, 2016, is based on 70% of the value of the borrowing base properties and is based on 60% of the value of the borrowing base properties, thereafter. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the NOI generated by the Company's unencumbered, wholly-owned industrial properties. Borrowings under the Facility, up to the first 60% of the value of the borrowing base properties, bear interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company's leverage ratio. Based on the Company's current leverage ratio, borrowings under the Facility bear interest at LIBOR plus 170 basis points for borrowings up to 60% of the value of the borrowing base properties which was at an interest rate of 1.90% as of September 30, 2015 and LIBOR plus 245 basis points, for borrowings in excess of 60% of the value of the borrowing base properties, which was at an interest rate of 2.65% as of September 30, 2015. As of September 30, 2015 the weighted average interest rate on the $80,000,000 drawn down was 1.98%.

The former $60,000,000 unsecured revolving line of credit was limited to 60% of the value of the borrowing base properties whose value was determined by applying a 7.5% capitalization rate to the NOI generated by the Company’s unencumbered properties. In addition, the former unsecured revolving line of credit bore interest at LIBOR plus 175 basis points to 250 basis points depending on the Company’s leverage ratio. Based on the Company’s current leverage ratio, borrowings under the former unsecured revolving line of credit would have borne interest at LIBOR plus 200 basis points.

In addition, as of September 30, 2015, the Company had Loans Payable of $5,041,386, which consisted of a $2,637,045 term loan secured by 500,000 shares of UMH common stock from The Bank of Princeton and a $2,404,341 term loan secured by 200,000 shares UMH 8.25% Series A preferred stock from Two River Community Bank.

The Company also uses margin loans from time to time for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. The interest rate charged on the margin loans is the bank’s margin rate and was 2.00% as of September 30, 2015 and 2014. The margin loans are due on demand and are collateralized by the Company’s securities portfolio. The Company must maintain a coverage ratio of approximately 50%. At September 30, 2015 and 2014, there were no amounts outstanding under the margin loans.

The Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through mortgages.

During fiscal 2015, the Company purchased ten industrial properties totaling approximately 2,729,000 square feet with net-leased terms ranging from seven to fifteen years, resulting in a weighted average lease maturity of 11.9 years. Approximately 964,000 square feet, or 35%, is leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The purchase price for the ten properties was approximately $191,985,000 and they are located in Florida, Illinois, Indiana, Kentucky, Missouri, Ohio and Texas. These ten properties generate annualized rental income over the life of their leases of approximately $13,368,000. The funds for these ten acquisitions were provided by eight property level mortgage loans totaling approximately $122,173,000, draws on an unsecured line of credit and cash on hand. The eight mortgages have a weighted average fixed rate of 4.14% with a weighted average maturity of 13.7 years.

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On September 18, 2015, the Company sold its 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. The sale resulted in a realized gain of approximately $5,021,000, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis.

In addition to the two properties purchased during the first quarter of fiscal 2016 to date, we have entered into agreements to purchase seven new build-to-suit, industrial buildings that are currently being developed in Florida, Kansas, Kentucky, Michigan, New York and Washington totaling approximately 1,869,000 square feet with net-leased terms ranging from ten to fifteen years resulting in a weighted average lease maturity of 14.1 years. Approximately 1,732,000 square feet, or 93%, is leased to FedEx Ground Package System, Inc. The purchase price for the seven properties is approximately $198,804,000. Subject to satisfactory due diligence, we anticipate closing these seven transactions during fiscal 2016 and fiscal 2017. In connection with four of the seven properties, the Company has entered into commitments to obtain four mortgages totaling approximately $92,116,000 at fixed rates ranging from 3.55% to 3.95%, with a weighted average interest rate of 3.81%. Each of these mortgages is a fifteen year, self-amortizing loan. The Company may make additional acquisitions in fiscal 2016 and fiscal 2017 and the funds for these acquisitions may come from mortgages, draws on our unsecured line of credit, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the DRIP, 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.

The Company also invests in marketable securities of other REITs as a proxy for real estate when more favorable risk adjusted returns are not available, for liquidity, and for additional income. The Company generally limits its marketable securities investments to no more than approximately 10% of its undepreciated assets. The Company from time to time may purchase these securities on margin when there is an adequate yield spread. During fiscal 2015, the Company’s securities portfolio decreased $4,770,166, due to the sale of securities with a cost of $15,395,967 and an increase in the net unrealized loss of $5,562,959 offset by purchases of $16,188,760. The Company recognized gains on sales of securities of $805,513 in addition to earning interest and dividend income of $3,723,867 during fiscal 2015. There was no margin loan balance as of September 30, 2015 and 2014, respectively.

Cash flows provided by operating activities were $38,062,285, $34,856,285 and $27,463,529 for fiscal years ended September 30, 2015, 2014 and 2013, respectively. The increase in cash flows provided from operating activities from fiscal 2014 to fiscal 2015 and from fiscal 2013 to fiscal 2014 is due to the increased income generated from acquisitions of properties and expanded operations.

Cash flows used by investing activities were $194,469,735, $131,809,697 and $60,373,084 for fiscal years ended September 30, 2015, 2014 and 2013, respectively. Cash flows used in investing activities in fiscal 2015 increased as compared to 2014 due mainly to an increase in purchase of real estate. Cash flows used in investing activities in fiscal 2014 increased as compared to 2013 due mainly to an increase in purchase of real estate and an increase in the purchase of securities in fiscal 2014 as compared to fiscal 2013.

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Cash flows provided by financing activities were $148,006,698, $105,023,561 and $20,663,209 for fiscal years ended September 30, 2015, 2014 and 2013, respectively. Cash flows from financing activities increased in fiscal 2015 as compared to 2014 due mainly to an increase in proceeds from mortgage loans in the amount of $59,268,058 and net draws on the line of credit of $60,000,000. Cash flows from financing activities increased in fiscal 2014 as compared to 2013 due mainly to the 8,050,000 shares of common stock issued in an underwritten public offering with net proceeds of approximately $65,113,000 in 2014. In addition, cash flows from financing activities increased in fiscal 2014 as compared to 2013 due to a $13,905,000 increase in proceeds from mortgages, a decrease of $11,648,153 in principal payments on mortgages and a $6,127,800 increase in net proceeds received from the issuance of common stock in the DRIP. In addition, the Company paid cash dividends (net of reinvestments), of $27,032,958, $21,906,902 and $18,634,530 for fiscal 2015, 2014 and 2013, respectively.

As of September 30, 2015, the Company had total assets of $915,991,942 and liabilities of $469,981,302. The Company’s total debt to total market capitalization as of September 30, 2015 and 2014 was approximately 39% and 31%, respectively. The Company’s net debt (net of cash and cash equivalents) to total market capitalization as of September 30, 2015 and 2014 was approximately 38% and 29%, respectively. The Company’s net debt, less securities (net of cash and cash equivalents and net of securities) to total market capitalization as of September 30, 2015 and 2014 was approximately 33% and 23%, respectively. The Company believes that it has the ability to meet its obligations and to generate funds for new investments.

The Company has a Dividend Reinvestment and Stock Purchase Plan (DRIP), in which participants can purchase stock from the Company at a price of approximately 95% of market value. Amounts received in connection with the DRIP, (including dividend reinvestments of $8,489,169, $7,624,528 and $6,781,345 for the fiscal years ended September 30, 2015, 2014 and 2013, respectively), were $48,404,556, $38,090,334 and $31,119,351 for the fiscal years ended September 30, 2015, 2014 and 2013, respectively.

During fiscal 2015, the Company paid total distributions of $35,522,127, or $0.60 per common share. Of the dividends paid, $8,489,169 was reinvested pursuant to the terms of the DRIP. On October 1, 2015, the Company’s Board of Directors approved a 6.7% increase in the Company’s quarterly common stock dividend, raising it to $0.16 per share from $0.15 per share. This represents an annualized dividend rate of $0.64 per share. The Company has maintained or increased its cash dividend for twenty-four consecutive years. The Company paid the distributions from cash flows from operations. Management anticipates maintaining the annual dividend rate of $0.64 per common share although no assurances can be given since various economic factors may reduce the amount of cash flow available to the Company for common dividends. All decisions with respect to the payment of dividends are made by the Company’s Board of Directors.

In fiscal 2015, the Company paid $8,607,032 in preferred stock dividends. The Company is required to pay cumulative dividends on the Series A Preferred Stock in the amount of $1.90625 per share per year, which is equivalent to 7.625% of the $25.00 liquidation value per share. The Company now has a total of 2,139,750 shares of Series A Preferred Stock outstanding, representing an aggregate liquidation preference of $53,493,750. The Company is required to pay cumulative dividends on the Series B Preferred Stock in the amount of $1.96875 per share per year, which is equivalent to 7.875% of the $25.00 liquidation value per share. As of September 30, 2015, the Company has a total of 2,300,000 shares of Series B Preferred Stock outstanding, representing an aggregate liquidation preference of $57,500,000.

During the year ended September 30, 2015, stock options to purchase 81,200 shares were exercised at a weighted average exercise price of $7.54 per share for total proceeds of $612,410. Subsequent to September 30, 2015 to date, options to purchase 95,000 shares were exercised at a weighted average exercise price of $8.09 per share for total proceeds of $768,300.

On an ongoing basis, the Company funds capital expenditures primarily to maintain its properties. These expenditures may also include expansions as requested by tenants, or various tenant improvements on properties which are re-tenanted. The amounts of these expenditures can vary from year to year depending on the age of the properties, tenant negotiations, market conditions and lease turnover.

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New Accounting Pronouncements

In September 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-16: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-16 to have a material effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in ASU 2015-03 are effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”) providing guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance on this matter, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on that line-of-credit arrangement. The Company is currently in the process of evaluating the impact the adoption of ASU 2015-03 and ASU 2015-15 will have on the Company’s financial position or results of operations.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 focuses to minimize situations under previously existing guidance in which a reporting entity was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownership of the majority of the legal entity's voting rights; or (3) the exposure to a majority of the legal entity's economic benefits. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 will be effective for periods beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2015-02 to have a material effect on the Company’s consolidated financial statements.

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In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 was anticipated to be effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption was not permitted. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), which delayed the effective date of ASU 2014-09 by one year making it effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements.

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. ASU No. 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. ASU No. 2014-08 is effective prospectively for fiscal years beginning after December 15, 2014, with earlier adoption permitted. The Company has decided to early adopt this standard effective with the interim period beginning January 1, 2014 and will continue to apply the guidance to future applicable disposals or discontinued operations, if any. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented.

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

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. The primary market risk to which management believes the Company is exposed is interest rate risk. The Company’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond the Company’s control contribute to interest rate risk.

The Company is exposed to interest rate changes primarily as a result of its unsecured line of credit, margin loans and long-term debt used to maintain liquidity and fund capital expenditures and acquisitions of the Company’s real estate investment portfolio. The Company’s interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company matches its assets, which are properties secured by long-term leases, with its liabilities, which are long term fixed rate loans.

Approximately $376,396,000 of the Company's long-term debt as of September 30, 2015 bears a fixed weighted average interest rate of 4.85%. Therefore, changes in market interest rates affect the fair value of these instruments. Based on the $80,000,000 currently drawn down on the Facility, if market rates of interest on the Company's variable rate debt increased or decreased by 1%, then the annual increase or decrease in interest costs on the Company's variable rate debt would be approximately $800,000 and the increase or decrease in the fair value of the Company's fixed rate debt as of September 30, 2015 would be approximately $12,000,000.

The following table sets forth information as of September 30, 2015, concerning the Company’s long-term debt obligations, including principal payments by scheduled maturity, weighted average interest rates and estimated fair value:

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			Mortgage					Loans
			Notes Payable					Payable

			Weighted					Weighted
Fiscal Year			Average					Average
Ending September 30,		Carrying Value	Interest Rate		Fair Value		Carrying Value	Interest Rate		Fair Value

2016	$	9,039,615	5.65%			$	-0-
2017		40,109,933	6.44%				5,041,386	4.69%
2018		17,966,763	6.02%				-0-
2019		22,436,032	6.62%				80,000,000	1.98%
2020		7,127,228	6.14%				-0-
Thereafter		277,311,603	4.34%				-0-
Total	$	373,991,174	4.85%	$	379,923,000	$	85,041,386	2.14%	$	85,066,000

On August 27, 2015, the Company entered into an agreement to replace its existing $60,000,000 unsecured revolving line of credit, which was scheduled to mature in June 2016, with a new Facility. The Facility is syndicated with three banks led by BMO, as sole lead arranger, sole book runner, and Bank of Montreal as administrative agent, and includes J.P. Morgan and RBC as co-syndication agents. The Facility provides for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions. The Facility matures in August 2019 and has a one-year extension option, at the option of the Company. Availability under the Facility, through December 31, 2016, is based on 70% of the value of the borrowing base properties and is based on 60% of the value of the borrowing base properties, thereafter. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the NOI generated by the Company's unencumbered, wholly-owned industrial properties. Borrowings under the Facility, up to the first 60% of the value of the borrowing base properties, bear interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company's leverage ratio. Borrowings under the Facility in excess of 60% of the value of the borrowing base properties bear interest at LIBOR plus 215 basis points to 295 basis points, depending on the company's leverage ratio. Based on the Company's current leverage ratio, borrowings under the Facility bear interest at LIBOR plus 170 basis points for borrowings up to 60% of the value of the borrowing base properties which was at an interest rate of 1.90% as of September 30, 2015 and LIBOR plus 245 basis points, for borrowings in excess of 60% of the value of the borrowing base properties, which was at an interest rate of 2.65% as of September 30, 2015. As of September 30, 2015 the weighted average rate interest on the $80,000,000 drawn down was 1.98%.

As of September 30, 2015, the Company had two loans totaling $5,041,386 consisting of a $2,404,341 term loan maturing November 29, 2016 at an annual interest rate of 4.90% and a $2,637,045 term loan maturing on March 9, 2017. Interest on this variable rate term loan accrues at prime plus 0.75% with a floor of 4.50% and the interest rate at September 30, 2015 was 4.50%.

The Company also invests in marketable securities of other REITs and is primarily exposed to market price risk from adverse changes in market rates and conditions. The Company generally limits its marketable securities investments to no more than approximately 10% of its undepreciated assets. All securities are classified as available for sale and are carried at fair value.

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The Company obtains margin loans, from time to time, which are secured by its marketable securities. There was no balance outstanding on the margin loan as of September 30, 2015 and 2014. The interest rate on the margin account is the bank’s margin rate and was 2.00% as of September 30, 2015 and 2014. In general, the Company may borrow up to 50% of the value of the marketable securities. The value of the marketable securities was $54,541,237 as of September 30, 2015.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data listed in Part IV, Item 15 (a) (1) are incorporated herein by reference and filed as part of this report.

The following is the Unaudited Selected Quarterly Financial Data:

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

THREE MONTHS ENDED


FISCAL 2015		12/31/14			3/31/15			6/30/15			9/30/15

Rental and Reimbursement Revenue	$	17,677,530		$	18,858,596		$	20,672,282		$	20,567,089
Lease Termination Income		238,625			-0-			-0-			-0-
Total Expenses		9,582,908			10,305,673			11,351,102			10,875,080
Other Income (Expense)		(2,909,595	)		(3,734,243	)		(4,145,322	)		(4,525,626	)
Gain on Sale of Real Estate Investment		-0-			-0-			-0-			5,021,242
Net Income		5,423,652			4,818,680			5,175,858			10,187,625
Net Income Attributable to Common Shareholders		3,271,894			2,666,922			3,024,100			8,035,867
Net Income Attributable to Common Shareholders per diluted share	$	0.06		$	0.04		$	0.05		$	0.14

FISCAL 2014		12/31/13			3/31/14			6/30/14			9/30/14

Rental and Reimbursement Revenue	$	15,661,155		$	16,345,305		$	15,739,870		$	16,926,011
Lease Termination Income		-0-			-0-			1,182,890			-0-
Total Expenses		8,416,291			8,656,172			8,810,586			9,345,828
Other Income (Expense)		(2,954,666	)		(2,931,891	)		(2,518,626	)		(2,375,877	)
Net Income		4,290,198			4,757,242			5,593,548			5,204,306
Net Income Attributable to Common Shareholders		2,138,440			2,605,484			3,441,790			3,052,548
Net Income Attributable to Common Shareholders per diluted share	$	0.05		$	0.05		$	0.07		$	0.06

Certain amounts in the Selected Quarterly Financial Data for the prior quarters have been reclassified to conform to the financial statement presentation for the current year.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

There were no changes in, or any disagreements with, the Company’s independent registered public accounting firm on accounting principles and practices or financial disclosure during the years ended September 30, 2015 and 2014.

ITEM 9A- CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

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Management, with the participation of our Chief Executive Officer and our Chief Financial and Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial and Accounting Officer concluded that our disclosure controls and procedures were effective as of September 30, 2015.

(b) Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Management assessed the Company’s internal control over financial reporting as of September 30, 2015. This assessment was based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework). Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2015.

PKF O’Connor Davies, a division of O’Connor Davies, LLP (“PKF O’Connor Davies”) the Company’s independent registered public accounting firm, has issued their report on their audit of the Company’s internal control over financial reporting, a copy of which is included herein.

(c) Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Monmouth Real Estate Investment Corporation

We have audited Monmouth Real Estate Investment Corporation’s internal control over financial reporting as of September 30, 2015, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework). Monmouth Real Estate Investment Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based upon the assessed risk and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, (3) receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Monmouth Real Estate Investment Corporation maintained in all material respects, effective internal control over financial reporting as of September 30, 2015 based on criteria established in Internal Control-Integrated Framework issued by COSO (2013 framework).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Monmouth Real Estate Investment Corporation as of September 30, 2015 and 2014, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2015 and our report dated December 9, 2015 expressed an unqualified opinion thereon.

/s/ PKF O’Connor Davies

a division of O’Connor Davies, LLP

New York, New York

December 9, 2015

(d) Changes in Internal Control over Financial Reporting

There have been no changes to our internal controls over financial reporting during the Company’s fourth fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B – OTHER INFORMATION

None.

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PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following are the Directors and Executive Officers of the Company as of September 30, 2015:

Name	Age	Present Position with the Company; Business Experience During Past Five Years; Other Directorships	Director Since	Class Type (1)

Anna T. Chew	57	Director. Interim Chief Financial Officer (March 2012 to July 2012). Chief Financial Officer (1991 to 2010). For UMH Properties, Inc., an affiliated company, Vice President and Chief Financial Officer (1995 to present) and Director (1995 to present). Ms. Chew is a Certified Public Accountant. Ms. Chew’s extensive public accounting, finance and real estate industry experience is primary, among other reasons, why Ms. Chew serves on our Board.	2007	I
Daniel D. Cronheim	61	Director. Attorney at Law (1979 to present). Certified Property Manager (2010 to present). President (2000 to present) of David Cronheim Mortgage Company, a privately-owned real estate investment banker. Executive Vice President (1997 to present) of Cronheim Management Services, Inc., a real estate management firm. Executive Vice President (1989 to present) and General Counsel (1983 to present) of David Cronheim Company, a real estate brokerage firm; Director, Chairman of Compensation Committee and Audit Committee (2000 to November 2013) of Hilltop Community Bank. Mr. Cronheim’s extensive experience in real estate management and the mortgage industry is primary, among other reasons, why Mr. Cronheim serves on our Board.	1989	I
Catherine B. Elflein	54	Independent Director (2). Certified Public Accountant. Senior Director – Risk Management (2006 to present) at Celgene Corporation, a biopharmaceutical company; Controller of Captive Insurance Companies (2004 to 2006) and Director – Treasury Operations (1998 to 2004) at Celanese Corporation. Ms. Elflein’s extensive experience in accounting, finance and risk management is primary, among other reasons, why Ms. Elflein serves on our Board.	2007	III
Brian H. Haimm	46	Independent Director (2). Chief Financial Officer and Chief Operating Officer (2006 to present) of Ascend Capital, a private equity firm. Mr. Haimm’s extensive experience in accounting, finance and the real estate industry is the primary reason, among others, why Mr. Haimm serves on our Board.	2013	II

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Name	Age	Present Position with the Company; Business Experience During Past Five Years; Other Directorships	Director Since	Class Type (1)

Neal Herstik	56	Independent Director (2). Attorney at Law, Gross, Truss & Herstik, PC (1997 to present). Mr. Herstik’s extensive legal experience and experience in the real estate industry are primary, among other reasons, why Mr. Herstik serves on our Board.	2004	II
Matthew I. Hirsch	56	Independent Director (2). Attorney at Law (1985 to present) Law Office of Matthew I. Hirsch; Adjunct Professor of Law, Widener University School of Law (1993 to present). For UMH Properties, Inc., an affiliated company, Director (2013 to present). Mr. Hirsch’s experience with real estate transactions, legal issues relating to real estate and the real estate industry are primary, among other reasons, why Mr. Hirsch serves on our Board.	2000	II
Eugene W. Landy	81	Founder and Chairman of the Board (1968 to present), President and Chief Executive Officer (1968 to April 2013) and Director. Attorney at Law. Partner of the Law Firm of Landy & Landy; Chairman of the Board (1995 to present). For UMH Properties, Inc., an affiliated company, Founder and Chairman of the Board, Director (1969 to present) and President (1969 to 1995). As our Founder and Chairman, Mr. Landy’s unparalleled experience in real estate investing is primary, among other reasons, why Mr. Landy serves on our Board.	1968	III
Michael P. Landy	53	President and Chief Executive Officer (April 2013 to present) and Director. Chief Operating Officer (2011 to April 2013), Executive Vice President (2009 to 2010), Executive Vice President-Investments (2006 to 2009), and Vice President-Investments (2001 to 2006). Member of New York University’s REIT Center Board of Advisors (2013 to present). For UMH Properties, Inc., an affiliated company, Director (2011 to present), Executive Vice President (2010 to 2012) and Vice President-Investments (2001 to 2010). Mr. Landy’s role as our President and Chief Executive Officer and extensive experience in real estate finance, investment, capital markets and operations management are primary, among other reasons, why Mr. Landy serves on our Board.	2007	III

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Name	Age	Present Position with the Company; Business Experience During Past Five Years; Other Directorships	Director Since	Class Type (1)

Samuel A. Landy	55	Director. Attorney at Law (1985 to present), Partner of the Law firm of Landy & Landy. For UMH Properties, Inc., an affiliated company, President and Chief Executive Officer (1995 to present), Vice President (1991 to 1995) and Director (1992 to present). Mr. Landy’s extensive experience in real estate investment and REIT leadership is primary, among other reasons, why Mr. Landy serves on our Board.	1989	III
Kevin S. Miller	46	Chief Financial Officer (July 2012 to present) and Chief Accounting Officer (May 2012 to present). Certified Public Accountant. Assistant Controller and Assistant Vice-President (2005 to May 2012) of Forest City Ratner, a real estate developer, owner and operator and a wholly-owned subsidiary of a publicly-held company, Forest City Enterprises, Inc.	N/A	N/A
Allison Nagelberg	50	General Counsel (2000 to present). Attorney at Law (1989 to present). Ms. Nagelberg also has a Master of Business Administration in Finance. For UMH Properties, Inc., an affiliated company, General Counsel (2000 to 2013).	N/A	N/A
Scott Robinson	45	Lead Independent Director (2). Managing Director, Oberon Securities (2014 to Present). Director, The REIT Center at New York University (2008 to present); Member of New York University’s REIT Center Board of Advisors (2013 to present). Managing Partner, Cadence Capital Group (2009 to 2013); Vice President, Citi Markets and Banking (2006 to 2008) at Citigroup; Senior REIT and CMBS analyst at Standard & Poor’s, (1998 to 2006). Mr. Robinson’s extensive experience in real estate finance and investment is primary, among other reasons, why Mr. Robinson serves on our Board.	2005	I

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Name

Age

Present Position with the Company; Business

Experience During Past Five Years; Other

Directorships

Director
Since

Class Type

(1)

Stephen B. Wolgin

Independent Director (2). Managing Director of U.S. Real Estate Advisors, Inc. (2000 to present), a real estate advisory services group based in New Jersey. Partner with the Logan Equity Distressed Fund (2007 to present). Prior affiliations with J.P. Morgan, Odyssey Associates, The Prudential Realty Group, Standard & Poor’s Corporation, and Grubb and Ellis.

For UMH Properties, Inc., an affiliated company, Director (2007 to present).

Mr. Wolgin’s extensive experience as a real estate and finance consultant and experience in the real estate industry are primary, among other reasons, why Mr. Wolgin serves on our Board.

2003

(1)

Class I, II, and III Directors have terms expiring at the annual meetings of the Company’s shareholders to be held in 2016, 2017 and 2018, respectively, and when their respective successors are duly elected and qualify.

(2)

Independent within the meaning of applicable New York Stock Exchange listing standards and SEC rules.

All officers serve at the pleasure of the Board of Directors, subject to the rights, if any, of any officer under any employment contract. Officers are elected by the Board of Directors annually and as may be appropriate to fill a vacancy in an office.

Family Relationships

There are no family relationships between any of the directors or executive officers, with the exception of Samuel A. Landy and Michael P. Landy who are the sons of the Company’s Founder, Eugene W. Landy, who is the Chairman of the Board and a Director of the Company.

Audit Committee

The Company has a separately-designated standing audit committee established in accordance with Section 3 (a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Brian H. Haimm (Chairman), Catherine B. Elflein, Stephen B. Wolgin, Matthew I. Hirsch and Scott Robinson. The Company’s Board has determined that Brian H. Haimm, Catherine B. Elflein, Scott L. Robinson and Stephen B. Wolgin are audit committee financial experts and that all members of the audit committee are independent as required by the listing standards of the NYSE. The audit committee operates under the Audit Committee Charter which can be found at the Company’s website at www.mreic.com. The charter is reviewed annually for adequacy.

Section 16(a) Beneficial Ownership Reporting Compliance

There have been no delinquent filers pursuant to Item 405 of regulation S-K, to the best of management’s knowledge.

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Code of Ethics

The Company has adopted the Code of Business Conduct and Ethics applicable to its Chief Executive Officer and Chief Financial Officer, as well as the Company’s other officers, directors and employees (the “Code of Ethics”). The Code of Ethics can be found at the Company’s website at www.mreic.com. The Code of Ethics is also available in print to any person without charge who requests a copy by writing or telephoning us at the following address and telephone number: Monmouth Real Estate Investment Corporation, Attention: Stockholder Relations, 3499 Route 9 North, Suite 3-D, Juniper Business Plaza, Freehold, New Jersey 07728, (732) 577-9996. The Company will satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding a waiver from any provision of the Code of Ethics for principal officers or directors by disclosing the nature of such amendment of waiver on our website.

ITEM 11 - EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview of Compensation Program

The Compensation Committee (for purposes of this analysis, the Committee) of the Board has been appointed to discharge the Board's responsibilities relating to the compensation of the Company's executive officers. The Committee has the overall responsibility for approving and evaluating the executive officer compensation plan, policies and programs of the Company. The Committee's primary objectives include serving as an independent and objective party to review such compensation plan, policies and programs. The Compensation Committee has not retained or obtained the advice of a compensation committee consultant for determining or recommending the amount of executive or director compensation.

Throughout this report, the individuals who served as the Company’s Chairman of the Board and the President and Chief Executive Officer and other Officers during fiscal 2015 included in the Summary Compensation Table presented below in Item 11 of this report, are sometimes referred to in this report as the named executive officers.

Compensation Philosophy and Objectives

The Committee believes that a well-designed compensation program should align the goals of the President and Chief Executive Officer with the goals of the shareholders, and that a significant part of the executives’ compensation, over the long term, should be dependent upon the value created for shareholders. In addition, all executives should be held accountable through their compensation for the performance of the Company, and compensation levels should also reflect the executives’ individual performance in an effort to encourage increased individual contributions to the Company's performance. The compensation philosophy, as reflected in the Company's employment agreements with its executives, is designed to motivate executives to focus on operating results and create long-term shareholder value by:

• establishing a plan that attracts, retains and motivates executives through compensation that is competitive with a peer group of other publicly-traded real estate investment trusts, or REITs;

• linking a portion of executives' compensation to the achievement of the Company's business plan by using measurements of the Company's operating results and shareholder return; and

• building a pay-for-performance system that encourages and rewards successful initiatives within a team environment.

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The Committee believes that each of the above factors is important when determining compensation levels for named executive officers. The Committee reviews and approves the employment contracts for the Chairman of the Board and the President and Chief Executive Officer, and other named executive officers, including performance goals and objectives. The Committee annually evaluates performance of the executive officers in light of those goals and objectives. The Committee considers the Company's performance, relative shareholder return, the total compensation provided to comparable officers at similarly-situated companies, and compensation given to the named executive officers in prior years. The Company uses the annual Compensation Survey published by NAREIT (the “Survey”) as a guide to setting compensation levels. Participant company data is not presented in a manner that specifically identifies any named individual or company. This Survey details compensation by position type and company size with statistical salary and bonus information for each position. The Compensation Committee compares the Company’s salary and bonus amounts to the ranges presented for reasonableness. The Committee believes executive compensation packages provided by the Company to its executive officers should include both base salaries and annual bonus awards that reward corporate and individual performance, as well as give incentives to executives to meet or exceed established goals.

Role of Executive Officers in Compensation Decisions

The Committee makes all final compensation decisions for the Company's named executive officers. The Chairman of the Board and the President and Chief Executive Officer review the performance of the other named executive officers and then present their conclusions and recommendations to the Committee with respect to base salary adjustments and annual cash bonus and stock option awards. The Committee exercises its own discretion in modifying any recommended adjustments or awards, but does consider the recommendations from management who work closely with the other named executive officers.

Role of Grants of Stock Options and Restricted Stock in Compensation Analysis

The Committee views the grant of stock options and restricted stock awards as a form of long-term compensation. The Committee believes that such grants promote the Company's goal of retaining key employees, and align the key employees’ interests with those of the Company's shareholders from a long-term perspective. The number of options or shares of restricted stock granted to each employee is determined by consideration of various factors including but not limited to the employees’ contribution, title, responsibilities, and years of service.

Role of Employment Agreements in Determining Executive Compensation

Each of the Company's currently employed named executive officers is a party to an employment agreement. These agreements provide for base salaries, bonuses and customary fringe benefits. The key elements of the Company’s compensation program for the named executive officers are base salary, bonuses, stock options and perquisites and other benefits. Each of these is addressed separately below. In determining initial compensation, the Committee considers all elements of a named executive officer’s total compensation package in comparison to current market practices and other benefits.

Shareholder Advisory Vote

One way to determine if the Company’s compensation program reflects the interests of shareholders is through their non-binding vote. At the Annual Meeting of Shareholders held on May 13, 2014, the Company’s shareholders approved by their advisory vote the compensation of the named executive officers.

Base Salaries

Base salaries are paid for ongoing performance throughout the year. In order to compete for and retain talented executives who are critical to the Company's long-term success, the Committee has determined that the base salaries of named executive officers should approximate those of executives of other equity REITs that compete with the Company for employees, investors and business, while also taking into account the named executive officers' performance and tenure, and the Company's performance relative to its peer companies within the REIT industry using the NAREIT Compensation Survey described above.

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Bonuses

In addition to the provisions for base salaries under the terms of their employment agreements, the Chairman of the Board, and the President and Chief Executive Officer, are entitled to receive annual cash bonuses for each year during the terms of each respective agreement. These bonuses are based on the achievement of certain performance goals set by the Committee as described below.

For the Chairman of the Board:



Growth in market cap	7.5	%	12.5	%	20	%
Bonus	$20,000		$45,000		$90,000

Growth in FFO/share	7.5	%	12.5	%	20	%
Bonus	$20,000		$45,000		$90,000

Growth in dividend/share	5	%	10	%	15	%
Bonus	$30,000		$60,000		$120,000

Total Bonus Potential	$70,000		$150,000		$300,000

For the President and Chief Executive Officer:



Growth in market cap	10	%	15	%	20	%
Bonus	$20,000		$40,000		$60,000

Growth in AFFO/share	15	%	20	%	25	%
Bonus (1)	$20,000		$45,000		$90,000

Growth in dividend/share	5	%	10	%	15	%
Bonus	$30,000		$60,000		$120,000

Total Bonus Potential	$70,000		$145,000		$270,000

(1)

Provided that FFO is in excess of the dividend

In addition to its determination of the executives’ individual performance levels for 2015, the Committee compared the executives’ total compensation for 2015 to that of similarly-situated personnel in the REIT industry using the NAREIT Compensation Survey described above. The Company’s salary and bonus amounts were compared to the ranges presented for reasonableness. The Company’s total compensation fell in the lowest range (25^th percentile) of this Survey.

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Bonuses awarded to the other named executive officers are recommended by the Chairman of the Board and the President and Chief Executive Officer and are approved by the Committee. The Committee believes that short-term rewards in the form of cash bonuses to senior executives generally should reflect short-term results and should take into consideration both the profitability and performance of the Company and the performance of the individual, which may include comparing such individual’s performance to the preceding year, reviewing the breadth and nature of the senior executives’ responsibilities and valuing special contributions by each such individual. In evaluating the performance of the Company annually, the Committee considers a variety of factors, including, among others, Funds From Operations (FFO), Adjusted Funds From Operations (AFFO), net income, growth in asset size, amount of space under lease and total return to shareholders. The Company considers FFO to be an important measure of an equity REIT’s operating performance and has adopted the definition suggested by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO to mean net income computed in accordance with U.S. GAAP, excluding gains or losses from sales of property, plus real estate related depreciation and amortization. The Company defines AFFO as FFO plus acquisition costs less recurring capital expenditures and excluding the following: lease termination income, gains or losses on securities transactions, stock compensation expense, amortization of financing and leasing costs, and straight-line rent adjustments. The Company considers FFO and AFFO to be meaningful additional measures of operating performance, primarily because they exclude the assumption that the value of its real estate assets diminishes predictably over time and because industry analysts have accepted these as performance measures.

Other factors considered include the employee’s title and years of service. The employee’s title generally reflects the employee’s responsibilities and the employee’s years of service may be considered in determining the level of bonus in comparison to base salary. The Committee has declined to use specific performance formulas with respect to the other named executive officers, believing that with respect to Company performance, such formulas do not adequately account for many factors, including, among others, the relative performance of the Company compared to its competitors during variations in the economic cycle, and that with respect to individual performance, such formulas are not a substitute for the subjective evaluation by the Committee of a wide range of management and leadership skills of each of the senior executives.

Stock Options and Restricted Stock

The employment agreement for the Chairman of the Board states that he will receive stock options to purchase 65,000 shares annually. For the other senior executives, the Chairman of the Board and the President and Chief Executive Officer make a recommendation to the Committee of specific stock option or restricted stock grants. In making its decisions, the Committee does not use an established formula or focus on a specific performance target. The Committee recognizes that often outside forces beyond the control of management, such as economic conditions, changing leasing and real estate markets and other factors, may contribute to less favorable near term results even when sound strategic decisions have been made by the senior executives to position the Company for longer term profitability. Thus, the Committee also attempts to identify whether the senior executives are exercising the kind of judgment and making the types of decisions that will lead to future growth and enhanced asset value, even if the same are difficult to measure on a current basis. For example, in determining appropriate stock option and restricted stock awards, the Committee considers, among other matters, whether the senior executives have executed strategies that will provide adequate funding or appropriate borrowing capacity for future growth, whether acquisition and leasing strategies have been developed to ensure a future stream of reliable and increasing revenues for the Company, whether the selection of properties, tenants and tenant mix evidence appropriate risk management, including risks associated with real estate markets and tenant credit, and whether the administration of staff size and compensation appropriately balances the current and projected operating requirements of the Company with the need to effectively control overhead costs.

In fiscal 2015, the Committee received the recommendations from the Chairman of the Board and the President and Chief Executive Officer for the amount of restricted stock and cash bonuses to be awarded. The factors that were considered in awarding the restricted stock and cash bonuses included the following progress that was made by the Company due to the efforts of management:

Achieved just under $1.2 billion in total market capitalization resulting in year over year growth of 17% in fiscal 2015

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Achieved over 13.9 million total rentable square feet resulting in year over year growth of 24% in fiscal 2015

Generated 11.5% year over year AFFO per share growth in fiscal 2015

Located and acquired ten industrial properties totaling approximately 2,729,000 square feet as per its investment strategy without placing undue burden on liquidity

During the fiscal years ended September 30, 2014 and 2015, completed nine property expansions totaling $39.5 million, generating over $4.0 million in additional rental revenue and are in the process of completing three additional property expansions totaling $7.7 million which will generate additional rental revenue of approximately $777,000

Entered into commitments to acquire nine industrial properties in fiscal 2016 and fiscal 2017 of which two were acquired during the first quarter of fiscal 2016 to date

Raised approximately $48.4 million through the DRIP during fiscal 2015

Renewed all six leases that were scheduled to expire in fiscal 2015, resulting in a 100% tenant retention rate and on terms resulting in an increase in the weighted average lease rate of 6.3% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 1.0% on a cash basis

Achieved 97.7% occupancy

Leased up a remaining previous partially vacant property and leased up two previously vacant properties whose leases have or will have become effective subsequent to the fiscal yearend, which will result in an increase in occupancy to 99.5%

Managed general and administrative costs to an appropriate level

Continued its conservative approach to management of the properties and maintained its cash dividends to shareholders

On October 1, 2015, the Company’s Board of Directors approved a 6.7% increase in the Company’s quarterly common stock dividend, raising it to $0.16 per share from $0.15 per share, representing an annualized dividend rate of $0.64 per share resulting in the Company being able to maintain or increase its cash dividend for twenty-four consecutive years.

After considering the recommendations of the Chairman of the Board and the President and Chief Executive Officer, the Committee allocated the individual awards to the named executive officers based on the named executive officers’ individual contributions to these accomplishments. Other factors considered in this allocation included the named executive officers’ responsibilities and years of service.

In addition, the awards were compared to each named executive officers’ total compensation and compared with comparable Real Estate Investment Trusts (REITS) using the annual Compensation Survey published by NAREIT as a guide for setting total compensation. The Company’s salary and bonus amounts were compared to the ranges presented for reasonableness. The Company’s total compensation fell in the lowest range (25^th percentile) of this Survey.

Perquisites and Other Personal Benefits

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The Company's employment agreements provide the named executive officers with perquisites and other personal benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers.

The named executive officers are provided the following benefits under the terms of their employment agreements: an allotted number of paid vacation weeks; eligibility for the executive, as well as spouse and dependents where applicable, in all Company sponsored employee benefits plans, including 401(k) plan, group health, accident, and life insurance, on terms no less favorable than applicable to any other executive; and supplemental disability insurance, at the Company's cost, as agreed to by the Company and the named executive officer. Attributed costs of the personal benefits described above for the named executive officers for the fiscal year ended September 30, 2015, are included in “All Other Compensation” of the Summary Compensation Table provided below under Item 11 of this report.

Payments upon Termination or Change in Control

In addition, the named executive officers’ employment agreements each contain provisions relating to change in control events and severance upon termination for events other than for cause or good reason (as defined under the terms of the employment agreements). These change in control and severance terms are designed to promote stability and continuity of senior management. Information regarding these provisions is included in “Employment Agreements” provided below in Item 11 of this report. There are no other agreements or arrangements governing change in control payments.

Evaluation

Mr. Eugene Landy is employed under an Amended Employment Agreement with the Company. In January 2015, based on the Committee’s evaluation of his performance, his base compensation under his amended contract was increased from $385,000 to $410,000 per year.

In evaluating Mr. Eugene Landy’s eligibility for an annual bonus, the Committee used the bonus schedule included in Mr. Eugene Landy’s Amended Employment Agreement as a guide.

The Compensation Committee also reviewed the progress made by Mr. Michael Landy, President and Chief Executive Officer. Mr. Michael Landy is employed under an employment agreement with the Company. His base compensation under this contract is $525,000 for fiscal 2015.

In evaluating Mr. Michael Landy’s eligibility for an annual bonus, the Compensation Committee used the bonus schedule included in Mr. Michael Landy’s employment agreement as a guide.

The Committee has also approved the recommendations of the Chairman of the Board and the President and Chief Executive Officer concerning the other named executive officers’ annual salaries, bonuses, restricted stock grants and fringe benefits.

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the board that the Compensation Discussion and Analysis be included in this report.

			Compensation Committee:
			Stephen B. Wolgin (Chairman)
			Brian Haimm
			Matthew I. Hirsch

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Summary Compensation Table

The following Summary Compensation Table shows compensation paid or accrued by the Company for services rendered during the fiscal years ended September 30, 2015, 2014, and 2013 to the named executive officers. There were no other executive officers whose aggregate compensation allocated to the Company for fiscal 2015 exceeded $100,000.

Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Non-Equity Incentive Plan Compensation ($)		Restricted Stock Awards (4)		Option Awards ($) (5)		Change in Pension Value And Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Eugene W. Landy		2015	$	403,750	$	24,808	$	-0-	$	59,320	$	60,315		$19,075 (1)		$47,000 (2)	$	614,268
Chairman of the Board		2014		357,500		27,500		90,000		-0-		34,549		30,625 (1)		42,000 (2)		582,174
		2013		275,000		-0-		-0-		-0-		39,991		59,838 (1)		36,750 (2)		411,579

Michael P. Landy		2015	$	525,000	$	100,192	$	-0-	$	158,920	$	-0-	$	-0-		$60,400 (3)	$	844,512
President and Chief		2014		500,000		82,500		60,000		-0-		-0-		-0-		55,200 (3)		697,700
Executive Officer		2013		326,813		67,500				-0-		-0-		-0-		48,350 (3)		442,663

Kevin S. Miller		2015	$	239,663	$	73,885	$	-0-	$	99,600	$	-0-	$	-0-		$10,400 (7)	$	423,548
Chief Financial and		2014		228,250		67,500		-0-		101,900		-0-		-0-		9,460		407,110
Accounting Officer		2013		215,000		67,500		-0-		98,700		-0-		-0-		1,260		382,460

Allison Nagelberg (6)		2015	$	312,656	$	60,601	$	-0-	$	49,800	$	-0-	$	-0-		$10,400 (7)	$	433,457
General Counsel		2014		252,656		52,500		-0-		-0-		-0-		-0-		7,140		312,296
		2013		181,563		50,000		-0-		-0-		-0-		-0-		-0-		231,563

Notes:

(1)

Accrual for pension and other benefits of $19,075, $30,625 and $59,838 for fiscal 2015, 2014 and 2013, respectively, in accordance with Mr. Landy’s employment agreement.

(2)

(3)

Represents Director’s annual board cash retainer fee of $31,000, $26,000 and $23,375 for fiscal 2015, 2014 and 2013, respectively, and Director’s meeting fees of $16,000, $16,000 and $13,375 for fiscal 2015, 2014 and 2013, respectively, and fringe benefits and discretionary contributions by the Company to the Company’s 401(k) Plan allocated to an account of the named executive officer and reimbursement of a disability policy.

(4)

The values were established based on the number of shares granted as follows, for fiscal 2015, 7/5/15 - $9.96 and 9/17/15 – $9.52 (see table below for detail), for fiscal 2014, 7/5/14 - $10.19, and for fiscal 2013, 7/5/13 - $9.87.

(5)

The fair value of the stock option grant was based on the Black-Scholes valuation model. See Note 10 to the Consolidated Financial Statements for assumptions used in the model. The actual value of the options will depend upon the performance of the Company during the period of time the options are outstanding and the price of the Company’s common stock on the date of exercise.

(6)

Allison Nagelberg, the Company’s General Counsel, was an employee of UMH through December 31, 2013. During the 1^st quarter of fiscal 2014 and during fiscal year 2013, approximately 70% of her salary compensation cost was allocated to and reimbursed by the Company for her services, pursuant to a cost sharing arrangement between the Company and UMH. Effective January 1, 2014, Ms. Nagelberg became an employee of MREIC and her salary is no longer allocated between UMH and the Company.

(7)

Consists of fringe benefits and discretionary contributions by the Company to the Company’s 401(k) Plan allocated to an account of the named executive officer.

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Equity Compensation Plan Information

On July 26, 2007, the 2007 Stock Option and Stock Award Plan (the 2007 Plan) was approved by the Company’s shareholders authorizing the grant to officers, directors and key employees, of options to purchase up to 1,500,000 shares of common stock. On May 6, 2010, the Company’s shareholders approved an amendment and restatement of the 2007 Plan. The amendment and restatement made two significant changes: (1) the inclusion of directors as participants in the 2007 Plan, and (2) the ability to grant restricted stock to Directors, officers and key employees. The amendment and restatement also made other conforming, technical and other minor changes. The amendment also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.

Options to purchase 65,000 shares were granted in 2015 and options to purchase 81,200 shares were exercised during fiscal 2015. In addition, during fiscal 2015, 47,000 shares of restricted common stock were granted at a grant date fair value of $9.96 per share and 11,000 shares of restricted common stock were granted with a fair value on the grant date of $9.52. As of September 30, 2015, the number of shares remaining for future grant of stock options or restricted stock under the 2007 Plan is 546,646.

Options may be granted under the 2007 Plan any time up through March 26, 2017. No option granted under the 2007 Plan shall be available for exercise beyond ten years. Generally, options are exercisable after one year from the date of grant. The option price under the 2007 Plan may not be below the fair market value at date of grant. Canceled or expired options are added back to the “pool” of shares available under the 2007 Plan.

Under the 2007 Plan, the Compensation Committee determines the recipients of restricted stock awards; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s shareholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant is 100,000.

Grants of Plan-Based Awards

All restricted stock awards granted during fiscal year 2015 vest 1/5^th per year over a five year period and all dividends earned are reinvested in restricted stock. The following table sets forth, for the executive officers named in the Summary Compensation Table, information regarding individual grants of restricted stock and individual grants of stock options made under the 2007 Plan during the fiscal year ended September 30, 2015:

Name	Grant Date	Number of Shares of Restricted Stock	Number of Shares Underlying Options	Exercise Price of Option Award or Fair Value Per Share at Grant Date of Restricted Stock Award	Grant Date Fair Value
Eugene W. Landy	01/05/15	-0-	65,000 (1)	$11.16	$60,315 (2)
Eugene W. Landy	07/05/15	5,000	-0-	9.96	49,800
Eugene W. Landy	09/17/15	1,000	-0-	9.52	9,520
Michael P. Landy	07/05/15	15,000	-0-	9.96	149,400
Michael P. Landy	09/17/15	1,000	-0-	9.52	9,520
Allison Nagelberg	07/05/15	5,000	-0-	9.96	49,800
Kevin S. Miller	07/05/15	10,000	-0-	9.96	99,600

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(1)

These options expire 8 years from grant date.

(2)

This value was established using the Black-Scholes stock option valuation model. The following weighted-average assumptions were used in the model: expected volatility of 19.78%; risk-free interest rate of 1.97%; dividend yield of 5.38%; expected life of options of 8 years; and -0- estimated forfeitures. The fair value per share granted was $0.93. The actual value of the options will depend upon the performance of the Company during the period of time the options are outstanding and the price of the Company’s common stock on the date of exercise.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the Grants of Plan-Based Awards Table was paid or awarded to our named executive officers, are described above under “Compensation Discussion and Analysis” and below under “Employment Agreements.”

Option Exercises and Stock Vested

The following table sets forth summary information concerning option exercises and vesting of restricted stock awards for each of the named executive officers during the fiscal year ended September 30, 2015:

Fiscal Year Ended September 30, 2015
	Option Awards		Restricted Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise (1) ($)	Number of Shares Acquired on Vesting (#)	Value realized on Vesting ($)
Eugene W. Landy	16,375	$55,511	14,498	$141,273(2)
Michael P. Landy	9,825	24,857	7,842	76,204(3)
Allison Nagelberg	-0-	-0-	5,499	53,452(4)
Kevin S. Miller	-0-	-0-	4,398	43,804(5)

(1)

Value realized based on the difference between the closing price of the shares on the NYSE as of the date of exercise less the exercise price of the stock option.

(2)

Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of 4,714 shares vested on 7/5/15 at $9.96 per share; 5,389 shares vested on 8/2/15 at $9.99 per share; 4,156 shares vested on 9/6/15 at $9.21 per share and 239 shares vested on 9/14/15 at $9.24 per share.

(3)

Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of 2,833 shares vested on 7/5/15 at $9.96 per share; 2,368 shares vested on 8/2/15 at $9.99 per share; 2,402 shares vested on 9/6/15 at $9.21 per share and 239 shares vested on 9/14/15 at $9.24 per share.

(4)

Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of 1,959 shares vested on 7/5/15 at $9.96 per share; 1,714 shares vested on 8/2/15 at $9.99 per share and 1,826 shares vested on 9/6/15 at $9.21 per share.

(5)

Value realized based on the closing price of the shares on the NYSE as of the date of vesting made up of 4,398 shares vested on 7/5/15 at $9.96 per share.

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Outstanding Equity Awards at Fiscal Year End

The following table sets forth for the executive officers named in the Summary Compensation Table, information regarding stock options and restricted stock outstanding at September 30, 2015:

Fiscal Year Ended September 30, 2015
	Option Awards				Restricted Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable	Number of Securities Underlying Unexercised Options Unexercisable	Option exercise price ($)	Option expiration date	Number of Shares That Have Not Vested	Market Value Of Shares that Have Not Vested (2)
Eugene W. Landy					19,903 (3)	$194,054
(1)	-0-	65,000	$11.16	01/05/23
	65,000	-0-	8.94	01/03/22
	65,000	-0-	10.46	01/03/21
	65,000	-0-	9.33	01/03/20
	65,000	-0-	8.72	01/03/19
	65,000	-0-	7.22	01/05/18
	65,000	-0-	7.25	10/20/16
(7)	65,000	-0-	8.22	12/12/15

Michael P. Landy					24,564 (4)	$239,499
	25,000	-0-	$7.25	10/20/16
(8)	25,000	-0-	7.80	03/10/16

Allison Nagelberg	-0-	-0-	$-0-	-	10,826 (5)	$105,554

Kevin S. Miller	-0-	-0-	$-0-	-	25,756 (6)	$251,121

(1)

These options will become exercisable on January 5, 2016.

(2)

Based on the closing price of our common stock on September 30, 2015 of $9.75. Restricted stock awards vest over 5 years.

(3)

4,798 shares vest on July 5, 2016; 8,528 shares vest 1/2 on September 6^th over the next 2 years; 491 shares vest 1/2 on September 14^th over the next 2 years; 5,086 shares vest 1/5^th on July 5^th over the next 5 years and 1,000 shares vest 1/5^th on September 14^th over the next 5 years.

(4)

2,885 shares vest on July 5, 2016; 4,930 shares vest 1/2 on September 6th over the next 2 years; 491 shares vest 1/2 on September 14th over the next 2 years; 15,258 shares vest 1/5th on July 5th over the next 5 years and 1,000 shares vest 1/5th on September 14th over the next 5 years.

(5)

1,993 shares vest on July 5, 2016; 3,747 shares vest 1/2 on September 6^th over the next 2 years and 5,086 shares vest 1/5^rd on July 5^th over the next 5 years.

(6)

6,942 shares vest 1/3^th on July 5^th over the next 3 years; 8,642 shares vest 1/4^th on July 5^th over the next 4 years and 10,172 shares vest 1/5^th on July 5^th over the next 5 years.

(7)

These options were exercised on November 30, 2015.

(8)

These options were exercised on October 14, 2015.

Employment Agreements

Eugene W. Landy, the Company’s Chairman of the Board, executed an Employment Agreement on December 9, 1994, which was amended on June 26, 1997 (the “First Amendment”), on November 5, 2003 (the “Second Amendment”), on April 1, 2008 (the “Third Amendment”), on July 1, 2010 (the “Fourth Amendment”), on April 25, 2013 (the “Fifth Amendment”), and on December 20, 2013 (the “Sixth Amendment”) and on December 18, 2014 (the “Seventh Amendment”) – collectively, the “Amended Employment Agreement”. Pursuant to the Amended Employment Agreement, Mr. Eugene Landy’s base salary was $385,000 per year, effective January 1, 2014 and $410,000 per year effective January 1, 2015. He is entitled to receive pension payments of $50,000 per year through 2020; in fiscal 2015, the Company accrued $19,075 in additional compensation expense related to the pension benefits. Mr. Eugene Landy’s incentive bonus schedule is detailed in the Fourth Amendment and is based on progress toward achieving certain target levels of growth in market capitalization, funds from operations and dividends per share. Pursuant to the Amended Employment Agreement, Mr. Eugene Landy will receive each year, an option to purchase 65,000 shares of the Company’s common stock. Mr. Eugene Landy is entitled to five weeks paid vacation annually, and he is entitled to participate in the Company’s employee benefit plans.

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The Amended Employment Agreement provides for aggregate severance payments of $500,000, payable to Mr. Eugene Landy upon the termination of his employment for any reason in increments of $100,000 per year for five years. He is entitled to disability payments in the event of his disability (as defined in the Amended Employment Agreement) for a period of three years equal to his base salary. The Amended Employment Agreement provides for a death benefit of $500,000, payable to Mr. Eugene Landy’s designated beneficiary. Upon the termination of Mr. Eugene Landy’s employment following or as a result of certain types of transactions that lead to a significant increase in the Company’s market capitalization, the Amended Employment Agreement provides that Mr. Eugene Landy will receive a grant of 35,000 to 65,000 shares of the Company’s common stock, depending on the amount of the increase in the Company’s market capitalization; all of his outstanding options to purchase shares of the Company common stock will become immediately vested, and he will be entitled to continue to receive benefits under the Company’s health insurance and similar plans for one year. In the event of a change in control of the Company, Eugene W. Landy shall receive a lump sum payment of $2,500,000, provided that the sale price of the Company is at least $10 per share of common stock. A change of control is defined as the consummation of a reorganization, merger, share exchange, consolidation, or sale or disposition of all or substantially all of the assets of the Company. This change of control provision will not apply to any combination between the Company and UMH. Payment will be made simultaneously with the closing of the transaction, and only in the event that the transaction closes. The Amended Employment Agreement is terminable by the Company’s Board of Directors at any time by reason of Mr. Eugene Landy’s death or disability or for cause, which is defined in the Amended Employment Agreement as a termination of the agreement if the Company’s Board of Directors determines in good faith that Mr. Eugene Landy failed to substantially perform his duties to the Company (other than due to his death or disability), or has engaged in conduct the consequences of which are materially adverse to the Company, monetarily or otherwise. Upon termination of the Amended Employment Agreement, Mr. Eugene Landy will remain entitled to the disability, severance, death and pension benefits provided for in the Amended Employment Agreement.

Effective April 9, 2013, Michael P. Landy was appointed President and Chief Executive Officer. Effective October 1, 2013, the Company and Michael P. Landy entered into a three-year employment agreement, under which Mr. Landy received an annual base salary of $500,000 for fiscal year 2014 with increases of 5% for each of fiscal years 2015 and 2016, plus bonuses and customary fringe benefits. Mr. Landy’s incentive bonus schedule is based on progress toward achieving certain target levels of growth in market capitalization, adjusted funds from operations and dividends per share. Mr. Landy also receives four weeks’ vacation, annually. The Company reimburses Mr. Landy for the cost of a disability insurance policy such that, in the event of Mr. Landy’s disability for a period of more than 90 days, Mr. Landy will receive benefits up to 60% of his then-current salary. In the event of a merger, sale or change of voting control of the Company, excluding transactions between the Company and UMH, Mr. Landy will have the right to extend and renew this employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Mr. Landy may terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there is a termination of employment by the Company or by Mr. Landy for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Mr. Landy shall be entitled to the greater of the base salary due under the remaining term of the agreement or two years’ compensation at the date of termination, paid monthly over the remaining term or life of the agreement.

Effective January 1, 2013, the Company and Kevin S. Miller, Chief Financial and Accounting Officer, entered into a three-year employment agreement, under which Mr. Miller received an annual base salary of $220,000 for calendar year 2013 with increases of 5% for each of calendar years 2014 and 2015, plus bonuses and customary fringe benefits. Mr. Miller also receives four weeks’ vacation, annually. The Company reimburses Mr. Miller for the cost of a disability insurance policy such that, in the event of Mr. Miller’s disability for a period of more than 90 days, Mr. Miller will receive benefits up to 60% of his then-current salary. In the event of a merger, sale or change of voting control of the Company, excluding transactions between the Company and UMH, Mr. Miller will have the right to extend and renew this employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Mr. Miller may terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there is a termination of employment by the Company or by Mr. Miller for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Mr. Miller shall be entitled to one year’s base salary at the date of termination, paid monthly over the remaining term or life of the agreement.

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Effective January 1, 2014, the Company and Allison Nagelberg, General Counsel, entered into a three-year employment agreement, under which Ms. Nagelberg receives an annual base salary of $275,625 for calendar year 2014, $325,000 for calendar year 2015, and $341,250 for calendar year 2016, plus bonuses and customary fringe benefits. Ms. Nagelberg also receives four weeks’ vacation, annually. The Company reimburses Ms. Nagelberg for the cost of a disability insurance policy such that, in the event of Ms. Nagelberg’s disability for a period of more than 90 days, Ms. Nagelberg will receive benefits up to 60% of her then-current salary. In the event of a merger, sale or change of voting control of the Company, excluding transactions between the Company and UMH, Ms. Nagelberg will have the right to extend and renew this employment agreement so that the expiration date will be three years from the date of merger, sale or change of voting control, or Ms. Nagelberg may terminate the employment agreement and be entitled to receive one year’s compensation in accordance with the agreement. If there is a termination of employment by the Company or Ms. Nagelberg for any reason, either involuntary or voluntary, including the death of the employee, other than a termination for cause as defined by the agreement, Ms. Nagelberg shall be entitled to the greater of the base salary due under the remaining term of the agreement or one year’s compensation at the date of termination, paid monthly over the remaining term or life of the agreement. Prior to January 1, 2014, approximately 30% of Ms. Nagelberg’s compensation was allocated to UMH pursuant to a cost sharing agreement between the Company and UMH. Effective January 1, 2014, 100% of Ms. Nagelberg’s compensation has been allocated to the Company.

Potential Payments upon Termination of Employment or Change-in-Control

Under the employment agreements with our President and Chief Executive Officer and the other named executive officers listed below, our President and Chief Executive Officer and such other named executive officers are entitled to receive the following estimated payments and benefits upon a termination of employment or voluntary resignation (with or without a change-in-control). These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers, which would only be known at the time that they become eligible for payment and would only be payable if a termination of employment, or voluntary resignation, were to occur. The table below reflects the amount that could be payable under the various arrangements assuming that the termination of employment had occurred at September 30, 2015. Each of the employees named in the table below have restricted stock awards and/or stock option awards which are listed in the “Outstanding Equity Awards at Fiscal Year End” table previously disclosed. Restricted Stock Awards vest upon the termination of an employee due to death or disability. In addition, restricted stock awards vest on the date of an involuntary termination of employment with the Company if the employee has met the definition of Retirement. If the termination of employment is for any other reason, including voluntary resignation, termination not for cause or good reason resignation, termination for cause, or termination not for cause or good reason (after a change in control), the restricted stock awards are forfeited. Regarding the stock option awards, if the termination is for any reason other than a termination for cause, the stock option awards may be exercised until three months after the termination of employment. If the termination is for cause, the stock option awards are forfeited.

	Voluntary Resignation on 9/30/15	Termination Not for Cause Or Good Reason Resignation on 9/30/15	Termination For Cause on 9/30/15 (1)			Termination Not for Cause or Good Reason Resignation (After a Change-in-Control) on 9/30/15	Disability/ Death on 9/30/15
Eugene W. Landy	$525,684 (3)	$525,684 (3)		$507,885	(2)	$3,025,684 (4)	$1,755,684 (5)
Michael P. Landy	1,102,500 (6)	1,102,500 (6)		10,096	(1)	1,102,500 (6)	1,102,500 (6)
Kevin S. Miller	242,550 (7)	242,550 (7)		4,664	(1)	242,550 (7)	242,550 (7)
Allison Nagelberg	422,500 (8)	422,500 (8)		6,250	(1)	422,500 (8)	422,500 (8)

(1)

Consists of accrued vacation time.

(2)

Consists of severance payments of $500,000, payable $100,000 per year for 5 years and $7,885 of accrued vacation.

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(3)

Consists of severance payments of $500,000, payable $100,000 per year for 5 years plus the $17,799 estimated cost of continuation of benefits for one year following termination and $7,885 of accrued vacation.

(4)

Mr. Eugene W. Landy shall receive a lump-sum payment of $2,500,000 in the event of a change in control, provided that the sale price of the Company is at least $10 per share of common stock. In addition, if Mr. Eugene W. Landy’s employment agreement is terminated, he receives severance payments of $500,000, continuation of benefits for one year following termination and accrued vacation.

(5)

In the event of a disability, as defined in the agreement, Mr. Eugene W. Landy shall receive disability payments equal to his base salary for a period of three years, continuation of benefits for one year following termination and accrued vacation. He has a death benefit of $500,000 payable to Mr. Eugene W. Landy’s beneficiary.

(6)

Payments are calculated based on Mr. Michael P. Landy’s employment agreement, which is the greater of the base salary due under the remaining term of the agreement or two years’ compensation at the date of termination.

(7)

Payments are calculated based on Mr. Kevin S. Miller’s employment agreement, which is one year’s base salary.

(8)

Payments are calculated based on Ms. Allison Nagelberg’s employment agreement which is the greater of the base salary due under the remaining term of the agreement or one year’s compensation at the date of termination.

The Company retains the discretion to compensate any officer upon any future termination of employment or a change-in-control. The Compensation Committee has assessed our compensation program for the purpose of viewing and considering any risks presented by our compensation policies and practices that are likely to have a material adverse effect on us. As part of that assessment, management reviewed the primary elements of our compensation program, including base salary, annual bonus opportunities, equity compensation and severance arrangements. Management’s risk assessment included a review of the overall design of each primary element of our compensation program, and an analysis of the various design features, controls and approval rights in place with respect to compensation paid to management and other employees that mitigate potential risks to us that could arise from our compensation program. Following the assessment, management determined that our compensation policies and practices did not create risks that were reasonably likely to have a material adverse effect on us and reported the results of the assessment to the Compensation Committee.

Director Compensation

Effective September 1, 2013, Directors received a fee of $4,000 for each Board meeting attended, $500 for each Board telephone meeting attended, and an additional fixed annual fee of $26,000 payable quarterly. Directors appointed to board committees receive $1,200 for each committee meeting attended. Effective January 1, 2015, the Directors annual fee increased to from $26,000 to $31,000. All other fees remained the same.

The table below sets forth a summary of director compensation for the fiscal year ended September 30, 2015:

									Total Fees
	Annual Board		Meeting		Committee		Restricted Stock		Earned or Paid
Director	Cash Retainer		Fees		Fees		Awards (7)		in Cash

Anna T. Chew	$	31,000	$	16,000	$	-0-	$	9,520	$	56,520
Daniel D. Cronheim		31,000		16,000		-0-		9,520		56,520
Catherine B. Elflein (3)		31,000		16,000		4,800		9,520		61,320
Brian Haimm (2)(3)(4)		31,000		16,000		4,800		9,520		61,320
Neal Herstik (5)		31,000		16,000		-0-		9,520		56,520
Matthew I. Hirsch (2)(3)(4)(5)		31,000		16,000		4,800		9,520		61,320
Charles Kaempffer (1)		31,000		16,000		4,800		-0-		51,800
Samuel A. Landy		31,000		16,000		-0-		9,520		56,520
Scott L. Robinson (3)(6)		31,000		16,000		4,800		9,520		61,320
Eugene Rothenberg (1)		31,000		16,000		-0-		-0-		47,000
Stephen B. Wolgin (2)(3)(4)(5)		31,000		16,000		4,800		9,520		61,320
Total	$	341,000	$	176,000	$	28,800	$	85,680	$	631,480

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As of September 30, 2015, the aggregate number of unvested restricted shares of stock held by each director was as follows: Ms. Chew – 7,494; Mr. Cronheim – 1,755; Ms. Elfein - 1,755; Mr. Herstik - 1,755; Mr. Hirsch – 1,755; Mr. S. Landy – 1,755; Mr. Robinson – 1,755; Mr. Rothenberg – 755 and Mr. Wolgin – 1,755.

Mr. Eugene W. Landy and Mr. Michael P. Landy are inside directors. As such, their director compensation is included in the Summary Compensation Table.

(1)

Emeritus directors are retired directors who have a standing invitation to attend Board of Directors meetings but are not entitled to vote on board resolutions. However, they receive directors’ fees for participation in the board meetings.

(2)

These directors acted as chairs of the Board’s Audit, Compensation and Nominating Committees.

(3)

The Audit Committee for 2015 consists of Mr. Haimm (Chairman), Mr. Hirsch, Mr. Wolgin, Mr. Robinson and Ms. Elflein. The board has determined that Mr. Wolgin, Mr. Robinson, Mr. Haimm and Ms. Elflein are considered “audit committee financial experts” within the meaning of the rules of the SEC and are “financially literate” within the meaning of the listing requirements of the NYSE.

(4)

Mr. Haimm, Mr. Hirsch and Mr. Wolgin (Chairman) are members of the Compensation Committee.

(5)

Mr. Herstik, Mr. Hirsch (Chairman), and Mr. Wolgin are members of the Nominating Committee.

(6)

Mr. Robinson is the Lead Independent Director whose role is to preside over the executive sessions of the non-management directors.

(7)

Each Director received a grant of 1,000 shares of restricted common stock on September 17, 2015 which vests 1/5th every September 17th over the next five years. Fair value on the date of grant was $9.52 per share.

Pension Benefits and Nonqualified Deferred Compensation Plans

Except as provided in the specific agreements described above, the Company does not have pension or other post-retirement plans in effect for officers, directors or employees or a nonqualified deferred compensation plan. The present value of accumulated benefit of contractual pension benefits for Mr. Eugene W. Landy is $652,373 as of September 30, 2015. Payments made during the 2015 fiscal year were $50,000. He is entitled to receive pension payments of $50,000 per year through 2020. The Company’s employees may elect to participate in the 401(k) plan of UMH Properties, Inc.

Other Information

Daniel D. Cronheim is a director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $47,000, $42,000 and $36,750 for director’s fees in 2015, 2014 and 2013, respectively. The Company paid fees to The David Cronheim Mortgage Corporation, an affiliated company of CMSI, of $196,000, $140,000 and $241,500 in mortgage brokerage commissions in fiscal years 2015, 2014 and 2013, respectively.

Compensation Committee Interlocks and Insider Participation

During fiscal 2015, the Compensation Committee consisted of Messrs. Haimm, Hirsch and Wolgin. No member of the Compensation Committee is a current or former officer or employee of the Company. In fiscal 2015, none of our executive officers served on the compensation committee of any entity, or board of directors of any entity that did not have a compensation committee, that had one or more of its executive officers serving on our Compensation Committee. The members of the Compensation Committee did not otherwise have any relationships requiring related-party disclosure in the Company’s Proxy Statement.

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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table lists information with respect to the beneficial ownership of the Company’s common stock (the Shares) as of September 30, 2015 by:

each person known by the Company to beneficially own more than five percent of the Company’s outstanding Shares;

the Company’s directors;

the Company’s executive officers; and

all of the Company’s executive officers and directors as a group.

Unless otherwise indicated, the person or persons named below have sole voting and investment power over the Shares indicated and that person’s address is c/o Monmouth Real Estate Investment Corporation, Juniper Business Plaza, 3499 Route 9 North, Suite 3-D, Freehold, New Jersey 07728. In determining the number and percentage of Shares beneficially owned by each person, Shares that may be acquired by that person under options exercisable within sixty (60) days of September 30, 2015 are deemed beneficially owned by that person and are deemed outstanding for purposes of determining the total number of outstanding Shares for that person and are not deemed outstanding for that purpose for all other shareholders.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)			Percentage of Shares Outstanding (2)
Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355		5,611,682	(3)		9.03	%
BlackRock Inc. 40 East 52nd Street New York, NY 10022		3,617,853	(4)		5.82	%
Oakland Financial Corporation 34200 Mount Road Sterling Heights, MI 48310		3,120,040	(5)		5.02	%
Anna T. Chew		360,310	(6)		*
Daniel D. Cronheim		170,248	(7)		*
Catherine B. Elflein		10,481	(8)		*
Brian Haimm		11,500			*
Neal Herstik		12,098	(9)		*
Matthew I. Hirsch		74,066			*
Eugene W. Landy		1,895,144	(10)		3.05	%
Michael P. Landy		543,515	(11)		*
Samuel A. Landy		389,918	(12)		*
Kevin S. Miller		34,906	(13)		*
Allison Nagelberg		60,388	(14)		*
Scott Robinson		6,651			*
Katie Rytter		7,248	(15)		*
Stephen B. Wolgin		57,570	(16)		*
Directors and Officers as a group					5.85	%

* Less than 1%.

Except as noted below, none of the shares have been pledged as collateral.

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(1)

Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the Company believes that the persons named in the table have sole voting and investment power with respect to all Shares listed.

(2)

Based on the number of Shares outstanding on September 30, 2015, which were 62,123,454.

(3)

Based on Schedule 13F filed with the SEC, Vanguard Group, Inc., as of September 30, 2015, owns 5,611,682 Shares.

(4)

Based on Schedule 13F filed with the SEC, BlackRock Inc., as of September 30, 2015, owns 3,617,853 Shares.

(5)

Based on Schedule 13D filed with the SEC, Oakland Financial Corporation (“Oakland”) and its subsidiaries, as of November 12, 2015, own 3,120,040 Shares; Oakland owns 26,332 Shares, Liberty Bell owns 634 Shares, Cherokee owns 2,910,367 Shares, Erie Manufactured Home Properties, LLC, owns 106,219 Shares, Apache Ventures, LLC, owns 76,393 Shares, and Matthew T. Moroun owns 96 Shares. This filing with the SEC by Oakland indicates that Oakland shares voting and dispositive power with respect to those specific Shares with Liberty Bell, Cherokee, Erie Manufactured Homes and Apache Ventures, all of which are wholly-owned subsidiaries of Oakland. Matthew T. Moroun is the Chairman of the Board and sole shareholder of Oakland, Liberty Bell, Cherokee, Erie Manufactured Homes, and Apache Ventures.

(6)

Includes (a) 282,359 Shares owned jointly with Ms. Chew’s husband; (b) 50,000 Shares issuable upon exercise of stock options that are exercisable within 60 days of September 30, 2015; and (c) 27,951 Shares held in the UMH 401(k) Plan. Ms. Chew is a co-trustee of the UMH 401(k) Plan and has shared voting power, but no dispositive power, over the 151,001 Shares held by the UMH 401(k) Plan. She, however, disclaims beneficial ownership of all of the Shares held by the UMH 401(k) Plan, except for the 27,951 Shares held by the UMH 401(k) Plan for her benefit.

(7)

Includes (a) 80,000 Shares held in a trust for Mr. Cronheim’s two family members, who are minors, to which he disclaims any beneficial interest but he has sole dispositive and voting power and (b) 79,499 Shares pledged in a margin account.

(8)

Includes 3,500 Shares owned jointly with Ms. Elflein’s husband.

(9)

Includes 1,600 Shares owned by Mr. Herstik’s wife.

(10)

Includes (a) 97,914 Shares owned by Mr. Eugene Landy’s wife; (b) 225,427 Shares held in the Landy & Landy Employees’ Profit Sharing Plan of which Mr. Landy is a trustee and has shared voting and dispositive power; (c) 192,294 Shares held in the Landy & Landy Employees’ Pension Plan over which Mr. Landy has shared voting and dispositive power; (d) 13,048 Shares held in Landy Investments Ltd., over which Mr. Landy has shared voting and dispositive power; (e) 131,200 Shares held in the Eugene W. and Gloria Landy Family Foundation, a charitable trust, over which Mr. Landy has shared voting and dispositive power; (f) 33,183 Shares in Juniper Plaza Associates, over which Mr. Landy has shared voting and dispositive power; (g) 26,212 Shares held in Windsor Industrial Park Associates, over which Mr. Landy has shared voting and dispositive power; (h) 362,576 Shares pledged in a margin account; and (i) 344,116 Shares pledged as security for loans. Includes 455,000 Shares issuable upon the exercise of stock options that are exercisable within 60 days of September 30, 2015. Excludes 65,000 Shares issuable upon the exercise of a stock option not exercisable within 60 days of September 30, 2015.

(11)

Includes (a) 25,060 Shares owned by Mr. Michael Landy’s wife; (b) 142,689 Shares held in custodial accounts for Mr. Landy’s children under the New Jersey Uniform Transfer to Minors Act in which he disclaims any beneficial interest but has power to vote, (c) 53,000 Shares held in EWL Grandchildren Fund, LLC, of which he is co-manager (d) 17,047 Shares held in the UMH 401(k) Plan; and (e) 107,150 Shares pledged in a margin account. Includes 50,000 Shares issuable upon the exercise of stock options that are exercisable within 60 days of September 30, 2015.

(12)

Includes (a) 21,448 Shares owned by Mr. Samuel Landy’s wife; (b) 22,379 Shares in the Samuel Landy Family Limited Partnership; (c) Co-manager of 53,000 Shares held in EWL Grandchildren Fund, LLC; (d) 40,332 Shares pledged in a margin account; (e) 182,086 Shares pledged as security for a loan and (f) 61,365 Shares held in the UMH 401(k) Plan. Mr. Samuel Landy is a co-trustee of the UMH 401(k) Plan and has shared voting power, but no dispositive power, over the 151,001 Shares held by the UMH 401(k) Plan. He, however, disclaims beneficial ownership of all of the Shares held by the UMH 401(k) Plan, except for the 61,365 Shares held by the UMH 401(k) Plan for his benefit.

(13)

Includes 520 Shares held in the UMH 401(k) Plan for Mr. Miller.

(14)

Includes (a) 3,150 Shares owned by Ms. Nagelberg’s husband; (b) 1,552 Shares held in custodial accounts for Ms. Nagelberg’s children under the New Jersey Uniform Transfers to Minors Act with respect to which she disclaims any beneficial interest but she has sole dispositive and voting power and (c) 6,751 Shares held in the UMH 401(k) Plan.

(15)

Includes 440 Shares held in the UMH 401(k) Plan by the Company’s corporate controller, Ms. Rytter.

(16)

Includes 2,713 Shares owned by Mr. Wolgin’s wife. Mr. Wolgin also owns 4,500 shares of the Company’s 7.625% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock).

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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Daniel D. Cronheim is an inside Director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $47,000, $42,000 and $36,750 for Director’s fees in fiscal 2015, 2014 and 2013, respectively. The David Cronheim Mortgage Corporation, an affiliated company of CMSI, received $196,000, $140,000 and $241,500 in mortgage brokerage commissions in fiscal 2015, 2014 and 2013, respectively.

There are six Directors of the Company who are also Directors and shareholders of UMH. The Company holds common and preferred stock of UMH in its securities portfolio. See Note 7 of the Notes to the Consolidated Financial Statements included in this Form 10-K for current holdings.

On August 22, 2014, the Company entered into a seven-year lease agreement to occupy 5,680 square feet for the Company’s new corporate office space. The new corporate office space is located in a new separate suite located in the same building as the Company’s former corporate office space. The lease became effective January 12, 2015, at which time, the Company ceased to share rent expense with UMH. Rent for the Company’s new corporate office space is at an annual rate of $99,400 or $17.50 per square foot for years one through five and an annual rate of $100,820 or $17.75 per square foot for years six and seven. The Company is also responsible for its proportionate share of real estate taxes and common area maintenance. Mr. Eugene W. Landy, the Founder and Chairman of the Board of the Company, owns a 24% interest in the entity that is the landlord of the property where the Company’s new corporate office space is located.

No director, executive officer, or any immediate family member of such director or executive officer may enter into any transaction or arrangement with the Company without the prior approval of the Board of Directors. If any such transaction or arrangement is proposed, the Board of Directors will appoint a Business Judgment Committee consisting of independent directors who are also independent of the transaction or arrangement. This Committee will recommend to the Board of Directors approval or disapproval of the transaction or arrangement. In determining whether to approve such a transaction or arrangement, the Business Judgment Committee will take into account, among other factors, whether the transaction was on terms no less favorable to the Company than terms generally available to third parties and the extent of the executive officer’s or director’s involvement in such transaction or arrangement. While the Company does not have specific written standards for approving such related party transactions, such transactions are only approved if it is in the best interest of the Company and its shareholders. Additionally, the Company’s Code of Business Conduct and Ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify the Company’s General Counsel. Further, to identify related party transactions, the Company submits and requires our directors and executive officers to complete director and officer questionnaires identifying any transactions with the Company in which the director, executive officer or their immediate family members have an interest.

See identification and other information relating to independent directors under Item 10.

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ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES

PKF O’Connor Davies served as the Company’s independent registered public accountants for the years ended September 30, 2015 and 2014. A representative from PKF O’Connor Davies is expected to be present at the annual shareholders’ meeting in order to be available to respond to possible inquiries from shareholders’.

The following are fees billed by and accrued to PKF O’Connor Davies in connection with services rendered for the fiscal years ended September 30, 2015 and 2014:

		2015		2014
Audit Fees	$	203,450	$	204,780
Audit Related Fees		4,200		30,000
Tax Fees		47,500		51,444
All Other Fees		-0-		-0-
Total Fees	$	255,150	$	286,224

Audit fees include professional services rendered for the audit of the Company’s annual financial statements, management’s assessment of internal controls, and reviews of financial statements included in the Company’s quarterly reports on Form 10-Q.

Audit related fees include services that are normally provided by the Company’s independent auditors in connection with statutory and regulatory filings, such as consents and assistance with and review of documents filed with the Securities and Exchange Commission.

Tax fees include professional services rendered for the preparation of the Company’s federal and state corporate tax returns and supporting schedules as may be required by the Internal Revenue Service and applicable state taxing authorities. Tax fees also include other work directly affecting or supporting the payment of taxes, including planning and research of various tax issues.

All of the services performed by PKF O’Connor Davies for the Company during fiscal 2015 were either expressly pre-approved by the Audit Committee or were pre-approved in accordance with the Audit Committee Pre-Approval Policy, and the Audit Committee was provided with regular updates as to the nature of such services and fees paid for such services.

Audit Committee Pre-Approval Policy

The Audit Committee has adopted a policy for the pre-approval of audit and permitted non-audit services provided by the Company’s principal independent accountants. The policy requires that all services provided by our independent registered public accountants to the Company, including audit services, audit-related services, tax services and other services, must be pre-approved by the Audit Committee, and all have been so approved. The pre-approval requirements do not prohibit day-to-day normal tax consulting services, which matters will not exceed $10,000 in the aggregate.

The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining PKF O’Connor Davies’ independence.

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PART IV

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES

			PAGE(S)

(a) (1) The following Financial Statements are filed as part of this report:

(i) Report of Independent Registered Public Accounting Firm			87

(ii) Consolidated Balance Sheets as of September 30, 2015 and 2014			88-89

(iii) Consolidated Statements of Income for the years ended September 30, 2015, 2014 and 2013			90-91

(iv) Consolidated Statements of Comprehensive Income for the years ended September 30, 2015, 2014 and 2013			92

(v) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2015, 2014 and 2013			93-94

(vi) Consolidated Statements of Cash Flows for the years ended September 30, 2015, 2014 and 2013			95

(vii) Notes to the Consolidated Financial Statements			96-134

(a) (2) The following Financial Statement Schedule is filed as part of this report:

(i) Schedule III - Real Estate and Accumulated Depreciation as of September 30, 2015			135-143

All other schedules are omitted for the reason that they are not required, are not applicable, or the required information is set forth in the Consolidated Financial Statements or Notes hereto.

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ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES (CONT’D)

(a)(3)		Exhibits

(2)		Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession

2.1		Agreement and Plan of Merger dated March 24, 2003 by and between MREIC Maryland, Inc., a Maryland corporation ("Monmouth Maryland"), and Monmouth Real Estate Investment Corporation, a Delaware corporation ("Monmouth Delaware"), dated March 24, 2003 (incorporated by reference Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Commission on April 7, 2003, Registration No. 000-04258).
2.2		Agreement and Plan of Merger Among Monmouth Capital Corporation, Monmouth Real Estate Investment Corporation, and Route 9 Acquisition, Inc., dated as of March 26, 2007 (incorporated by reference Annex A to the Proxy Statement filed by the Registrant with the Securities and Exchange Commission on June 8, 2007, Registration No. 001-33177).

(3)		Articles of Incorporation and By-Laws

3.1		Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Form S-3 filed by the Registrant with the Securities and Exchange Commission on September 1, 2009, Registration No. 333-161668).
3.2		Articles Supplementary (incorporated by reference to Exhibit 3.3 to the Form 8-A12B filed by the Registrant with the Securities and Exchange Commission on December 1, 2006, Registration No. 001-33177).
3.3		Articles Supplementary (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on June 5, 2012, Registration No. 001-33177).
3.4		Articles of Amendment (incorporated by reference to Exhibit 5.03 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 28, 2014, Registration No. 001-33177).
3.5		Bylaws of the Company, as amended and restated, dated April 1, 2014 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 1, 2014, Registration No. 001-33177).
(4)		Instruments Defining the Rights of Security Holders, Including Indentures

4.1		Specimen certificate of common stock of Monmouth Real Estate Investment Corporation (incorporated by reference to Exhibit 4.1 to the Form 10-Q filed by the Registrant with the Securities and Exchange Commission on August 5, 2015, Registration No. 001-33177).
4.2		Specimen certificate representing the Series A Preferred Stock of Monmouth Real Estate Investment Corporation (incorporated by reference to Exhibit 4.1 to the Form 8-A12B filed by the Registrant with the Securities and Exchange Commission on December 1, 2006, Registration No. 001-33177).

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4.3

Specimen certificate representing the Series B Preferred Stock of Monmouth Real Estate Investment Corporation (incorporated by reference to Exhibit 4.3 to the form S-11/A filed by the Registrant with the Securities and Exchange Commission on May 29, 2012, Registration No. 333-181172).

(10)		Material Contracts

10.1	+	Employment Agreement with Mr. Eugene W. Landy dated December 9, 1994 (incorporated by reference to Form 10-K filed by the Registrant with the Securities and Exchange Commission on December 28, 1994).
10.2	+	First Amendment to Employment Agreement with Mr. Eugene W. Landy dated June 26, 1997 (incorporated by reference to the Exhibit 10.2 to the Form 10-K filed by the Registrant with the Securities and Exchange Committee on December 10, 2009, Registration No. 001-33177).
10.3	+	Second Amendment to Employment Agreement with Mr. Eugene W. Landy dated November 5, 2003 (incorporated by reference to Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Committee on April 1, 2004, Registration No. 000-04248).
10.4	+	Third Amendment to Employment Agreement of Eugene W. Landy, dated April 14, 2008 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 16, 2008, Registration No. 001-33177).
10.5	+	Fourth Amendment to Employment Agreement – Eugene W. Landy, dated July 13, 2010 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 13, 2010, Registration No. 001-33177).
10.6	+	Fifth Amendment to Employment Agreement – Eugene W. Landy, dated April 25, 2013 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 25, 2013, Registration No. 001-33177).
10.7	+	Sixth Amendment to Employment Agreement – Eugene W. Landy, dated December 20, 2013 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 20, 2013, Registration No. 001-33177).
10.8	+	Seventh Amendment to Employment Agreement – Eugene W. Landy, dated December 18, 2014 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 19, 2014, Registration No. 001-33177).
10.9	+	Employment Agreement – Kevin S. Miller, dated December 28, 2012 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 28, 2012, Registration No. 001-33177).
10.10	+	Employment Agreement - Michael P. Landy, dated September 23, 2013 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on September 24, 2013, Registration No. 001-33177 and incorporated by reference to Exhibit 99 to the Form 8-K/A filed by the Registrant with the Securities and Exchange Commission on September 26, 2013, Registration No. 001-33177).
10.11	+	Employment Agreement – Allison Nagelberg, dated January 6, 2014 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 7, 2014, Registration No. 001-33177).

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10.12	+	Monmouth Real Estate Investment Corporation’s 2007 Stock Option Plan, Amended and Restated (incorporated by reference to Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Committee on March 26, 2010, Registration No.001-33177).
10.13	+	Form of Indemnification Agreement between Monmouth Real Estate Investment Corporation and its Directors and Executive Officers (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 23, 2012).
10.14	+	Dividend Reinvestment and Stock Purchase Plan of Monmouth Real Estate Investment Corporation (incorporated by reference to Form S-3D filed by the Registrant with the Securities and Exchange Commission on June 26, 2015, Registration No. 333-205304).
10.15	+	Credit Agreement by and among Monmouth Real Estate Investment Corporation, the subsidiary guarantors party thereto, Bank of Montreal, as administrative agent, BMO Capital Markets, as sole lease arranger and sole book runner, and JPMorgan Chase Bank N.A. and Royal Bank of Canada, as co-syndication agents, dated as of August 27, 2015 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 28, 2015, Registration No. 001-33177).

(12)	*	Statement of Computation of Ratios.

(21)	*	Subsidiaries of the Registrant.

(23)	*	Consent of PKF O’Connor Davies, A Division of O’Connor Davies, LLP.

(31.1)	*	Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31.2)	*	Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

101.INS	++	XBRL Instance Document
101.SCH	++	XBRL Taxonomy Extension Schema Document
101.CAL	++	XBRL Taxonomy Extension Calculation Document
101.LAB	++	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	++	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	++	XBRL Taxonomy Extension Definition Linkbase Document

*	Filed herewith.
+	Denotes a management contract or compensatory plan or arrangement.
++	Pursuant to Rule 406T of Regulation S-T, this interactive date file is deemed not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, is deemed not “filed” for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Monmouth Real Estate Investment Corporation

We have audited the accompanying consolidated balance sheets of Monmouth Real Estate Investment Corporation (the “Company”) as of September 30, 2015 and 2014 and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2015. Our audit also included the financial statement schedule listed in the Index at Item 15(a)(2)(i). These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Monmouth Real Estate Investment Corporation at September 30, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 30, 2015 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December 9, 2015 expressed an unqualified opinion thereon.

/s/ PKF O’Connor Davies

a division of O’Connor Davies, LLP

New York, New York

December 9, 2015

* * *

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30,

ASSETS	2015			2014

Real Estate Investments:
Land	$	134,160,315		$	109,858,989
Buildings and Improvements		807,619,001			634,068,423
Total Real Estate Investments		941,779,316			743,927,412
Accumulated Depreciation		(124,978,211	)		(107,004,184	)
Net Real Estate Investments		816,801,105			636,923,228

Cash and Cash Equivalents		12,073,909			20,474,661
Securities Available for Sale at Fair Value		54,541,237			59,311,403
Tenant and Other Receivables		783,052			1,312,975
Deferred Rent Receivable		5,205,295			3,759,031
Prepaid Expenses		3,931,616			2,764,795
Financing Costs, net of Accumulated Amortization of $3,247,014 and $3,710,149, respectively		5,987,911			4,356,264
Capitalized Lease Costs, net of Accumulated Amortization of $2,534,521 and $1,886,457, respectively		3,407,432			2,741,414
Intangible Assets, net of Accumulated Amortization of $11,153,855 and $9,740,983, respectively		6,115,134			6,490,881
Other Assets		7,145,251			5,622,048

TOTAL ASSETS	$	915,991,942		$	743,756,700

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONT’D)

AS OF SEPTEMBER 30,

LIABILITIES AND SHAREHOLDERS' EQUITY	2015			2014

Liabilities:
Mortgage Notes Payable	$	373,991,174		$	287,796,006
Loans Payable		85,041,386			25,200,000
Accounts Payable and Accrued Expenses		3,113,274			4,930,041
Other Liabilities		7,835,468			5,199,571
Total Liabilities		469,981,302			323,125,618

COMMITMENTS AND CONTINGENCIES

Shareholders' Equity:
Series A - 7.625% Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 2,139,750 Shares Authorized, Issued and Outstanding as of September 30, 2015 and 2014		53,493,750			53,493,750
Series B - 7.875% Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 2,300,000 Shares Authorized, Issued and Outstanding as of September 30, 2015 and 2014		57,500,000			57,500,000
Common Stock - $0.01 Par Value Per Share: 200,000,000 Shares Authorized; 62,123,454 and 57,008,754 Shares Issued and Outstanding as of September 30, 2015 and 2014, respectively		621,235			570,088
Excess Stock - $0.01 Par Value Per Share: 200,000,000 Shares Authorized as of September 30, 2015 and 2014, respectively; No Shares Issued or Outstanding as of September 30, 2015 and 2014		-0-			-0-
Additional Paid-In Capital		339,837,258			308,945,888
Accumulated Other Comprehensive Income (Loss)		(5,441,603	)		121,356
Undistributed Income		-0-			-0-
Total Shareholders' Equity		446,010,640			420,631,082

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	915,991,942		$	743,756,700

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED SEPTEMBER 30,

	2015			2014			2013
INCOME:
Rental Revenue	$	67,059,385		$	55,512,165		$	46,880,309
Reimbursement Revenue		10,716,112			9,160,176			7,726,777
Lease Termination Income		238,625			1,182,890			690,730
TOTAL INCOME		78,014,122			65,855,231			55,297,816

EXPENSES:
Real Estate Taxes		8,362,135			7,605,611			5,864,834
Operating Expenses		4,127,884			3,711,868			3,363,776
General & Administrative Expenses		6,305,928			5,709,937			4,982,945
Acquisition Costs		1,546,088			481,880			514,699
Depreciation		19,705,320			15,908,769			12,864,542
Amortization of Capitalized Lease Costs and Intangible Assets		2,067,408			1,810,812			2,018,440
TOTAL EXPENSES		42,114,763			35,228,877			29,609,236

OTHER INCOME (EXPENSE):
Interest and Dividend Income		3,723,867			3,882,597			3,885,920
Gain on Sale of Securities Transactions, net		805,513			2,166,766			7,133,252
Interest Expense		(18,558,150	)		(16,104,678	)		(14,956,954	)
Amortization of Financing Costs		(1,286,016	)		(725,745	)		(647,112	)
TOTAL OTHER INCOME (EXPENSE)		(15,314,786	)		(10,781,060	)		(4,584,894	)

INCOME FROM CONTINUING OPERATIONS		20,584,573			19,845,294			21,103,686

Gain on Sale of Real Estate Investment		5,021,242			-0-			-0-
Income from Discontinued Operations		-0-			-0-			291,560

NET INCOME		25,605,815			19,845,294			21,395,246

Less: Preferred Dividends		8,607,032			8,607,032			8,607,032

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	16,998,783		$	11,238,262		$	12,788,214

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED SEPTEMBER 30,

	2015			2014			2013
BASIC INCOME – PER SHARE
Income from Continuing Operations	$	0.43		$	0.40		$	0.49
Income from Discontinued Operations		0.00			0.00			0.01
Net Income		0.43			0.40			0.50
Less: Preferred Dividends		(0.14	)		(0.17	)		(0.20	)
Net Income Attributable to Common Shareholders	$	0.29		$	0.23		$	0.30

DILUTED INCOME – PER SHARE
Income from Continuing Operations	$	0.43		$	0.40		$	0.49
Income from Discontinued Operations		0.00			0.00			0.01
Net Income		0.43			0.40			0.50
Less: Preferred Dividends		(0.14	)		(0.17	)		(0.20	)
Net Income Attributable to Common Shareholders	$	0.29		$	0.23		$	0.30

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		59,085,888			49,829,924			42,275,555
Diluted		59,201,296			49,925,036			42,432,354

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED SEPTEMBER 30,

	2015			2014			2013

Net Income	$	25,605,815		$	19,845,294		$	21,395,246
Other Comprehensive Income (Loss):
Unrealized Holding Gains (Losses) Arising During the Period		(4,757,446	)		298,854			3,738,583
Reclassification Adjustment for Net Gains of Sales of Securities Transactions Realized in Income		(805,513	)		(2,166,766	)		(7,133,252	)
Total Comprehensive Income		20,042,856			17,977,382			18,000,577
Less: Preferred Dividends		8,607,032			8,607,032			8,607,032
Comprehensive Income Attributable to Common Shareholders	$	11,435,824		$	9,370,350		$	9,393,545

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2015, 2014, AND 2013

	Common Stock		Preferred Stock Series A		Preferred Stock Series B		Additional Paid in Capital
Balance September 30, 2012	$	406,967	$	53,493,750	$	57,500,000	$	198,902,485
Shares Issued in Connection with the DRIP (1)		32,433		-0-		-0-		31,086,918
Shares Issued Through the Exercise of Stock Options		1,564		-0-		-0-		1,300,099
Shares Issued Through Restricted Stock Awards		100		-0-		-0-		(100	)
Shares Issued Through the Conversion of Debentures		3,821		-0-		-0-		3,496,179
Stock Based Compensation Expense		-0-		-0-		-0-		329,148
Distributions To Common Shareholders		-0-		-0-		-0-		(12,627,661	)
Net Income		-0-		-0-		-0-		-0-
Preferred Dividends		-0-		-0-		-0-		-0-
Unrealized Net Holding Gain on Securities Available for Sale, Net of Reclassification Adjustment		-0-		-0-		-0-		-0-
Balance September 30, 2013		444,885		53,493,750		57,500,000		222,487,068
Shares Issued in Connection with the DRIP (1)		42,961		-0-		-0-		38,047,373
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs		80,500		-0-		-0-		65,032,186
Shares Issued Through the Exercise of Stock Options		1,642		-0-		-0-		1,325,527
Shares Issued Through Restricted Stock Awards		100		-0-		-0-		(100	)
Stock Based Compensation Expense		-0-		-0-		-0-		347,002
Distributions To Common Shareholders		-0-		-0-		-0-		(18,293,168	)
Net Income		-0-		-0-		-0-		-0-
Preferred Dividends		-0-		-0-		-0-		-0-
Unrealized Net Holding Gain on Securities Available for Sale, Net of Reclassification Adjustment		-0-		-0-		-0-		-0-
Balance September 30, 2014		570,088		53,493,750		57,500,000		308,945,888
Shares Issued in Connection with the DRIP (1)		49,755		-0-		-0-		48,354,801
Shares Issued Through the Exercise of Stock Options		812		-0-		-0-		611,598
Shares Issued Through Restricted Stock Awards		580		-0-		-0-		(580	)
Stock Based Compensation Expense		-0-		-0-		-0-		448,895
Distributions To Common Shareholders		-0-		-0-		-0-		(18,523,344	)
Net Income		-0-		-0-		-0-		-0-
Preferred Dividends		-0-		-0-		-0-		-0-
Unrealized Net Holding Loss on Securities Available for Sale, Net of Reclassification Adjustment		-0-		-0-		-0-		-0-
Balance September 30, 2015	$	621,235	$	53,493,750	$	57,500,000	$	339,837,258

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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 SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2015, 2014 AND 2013, CONT’D.

	Undistributed Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance September 30, 2012	$	-0-		$	5,383,937		$	315,687,139
Shares Issued in Connection with the DRIP (1)		-0-			-0-			31,119,351
Shares Issued Through the Exercise of Stock Options		-0-			-0-			1,301,663
Shares Issued Through Restricted Stock Awards		-0-			-0-			-0-
Shares Issued Through the Conversion of Debentures		-0-			-0-			3,500,000
Stock Based Compensation Expense		-0-			-0-			329,148
Distributions To Common Shareholders		(12,788,214	)		-0-			(25,415,875	)
Net Income		21,395,246			-0-			21,395,246
Preferred Dividends		(8,607,032	)		-0-			(8,607,032	)
Unrealized Net Holding Gain on Securities Available for Sale, Net of Reclassification Adjustment		-0-			(3,394,669	)		(3,394,669	)
Balance September 30, 2013		-0-			1,989,268			335,914,971
Shares Issued in Connection with the DRIP (1)		-0-			-0-			38,090,334
Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs		-0-			-0-			65,112,686
Shares Issued Through the Exercise of Stock Options		-0-			-0-			1,327,169
Shares Issued Through Restricted Stock Awards		-0-			-0-			-0-
Stock Based Compensation Expense		-0-			-0-			347,002
Distributions To Common Shareholders		(11,238,262	)		-0-			(29,531,430	)
Net Income		19,845,294			-0-			19,845,294
Preferred Dividends		(8,607,032	)		-0-			(8,607,032	)
Unrealized Net Holding Gain on Securities Available for Sale, Net of Reclassification Adjustment		-0-			(1,867,912	)		(1,867,912	)
Balance September 30, 2014		-0-			121,356			420,631,082
Shares Issued in Connection with the DRIP (1)		-0-			-0-			48,404,556
Shares Issued Through the Exercise of Stock Options		-0-			-0-			612,410
Shares Issued Through Restricted Stock Awards		-0-			-0-			-0-
Stock Based Compensation Expense		-0-			-0-			448,895
Distributions To Common Shareholders		(16,998,783	)		-0-			(35,522,127	)
Net Income		25,605,815			-0-			25,605,815
Preferred Dividends		(8,607,032	)		-0-			(8,607,032	)
Unrealized Net Holding Loss on Securities Available for Sale, Net of Reclassification Adjustment		-0-			(5,562,959	)		(5,562,959	)
Balance September 30, 2015	$	-0-		$	(5,441,603	)	$	446,010,640

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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

FOR THE YEARS ENDED SEPTEMBER 30,

	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	25,605,815		$	19,845,294		$	21,395,246
Noncash Items Included in Net Income:
Depreciation & Amortization		23,058,744			18,445,326			15,542,937
Stock Based Compensation Expense		448,895			347,002			329,148
Gain on Sale of Securities Transactions, net		(805,513	)		(2,166,766	)		(7,133,252	)
Gain on Sale of Real Estate Investments		(5,021,242	)		-0-			(345,794	)
Changes in:
Tenant, Deferred Rent & Other Receivables		(800,203	)		(922,107	)		(614,639	)
Prepaid Expenses		(1,166,821	)		(563,525	)		(772,816	)
Other Assets and Capitalized Lease Costs		(2,359,895	)		(1,086,846	)		(886,724	)
Accounts Payable, Accrued Expenses & Other Liabilities		(897,495	)		957,907			(50,577	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		38,062,285			34,856,285			27,463,529

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Real Estate & Intangible Assets		(192,187,485	)		(97,374,760	)		(66,397,561	)
Capital and Land Site Improvements		(10,541,656	)		(19,674,128	)		(14,031,430	)
Proceeds on Sale of Real Estate		8,846,686			-0-			1,413,891
Return of Deposits on Real Estate		3,100,000			2,050,000			720,000
Deposits on Acquisitions of Real Estate		(3,700,000	)		(3,250,000	)		(2,050,000	)
Purchase of Securities Available for Sale		(16,188,760	)		(27,840,200	)		(13,504,751	)
Proceeds from Sale of Securities Available for Sale		16,201,480			14,279,391			33,476,767
NET CASH USED BY INVESTING ACTIVITIES		(194,469,735	)		(131,809,697	)		(60,373,084	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Mortgage Notes Payable		122,173,058			62,905,000			49,000,000
Principal Payments on Mortgage Notes Payable		(35,977,890	)		(25,202,376	)		(36,850,529	)
Net Proceeds from Loans Payable		59,841,386			3,000,000			17,000,000
Repurchase of Subordinated Convertible Debentures		-0-			-0-			(5,115,000	)
Financing Costs Paid on Debt		(2,917,663	)		(2,070,790	)		(1,769,369	)
Proceeds from Underwritten Public Offering of Common Stock, net of offering costs		-0-			65,112,686			-0-
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments		39,915,387			30,465,806			24,338,006
Proceeds from the Exercise of Stock Options		612,410			1,327,169			1,301,663
Preferred Dividends Paid		(8,607,032	)		(8,607,032	)		(8,607,032	)
Common Dividends Paid, net of Reinvestments		(27,032,958	)		(21,906,902	)		(18,634,530	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		148,006,698			105,023,561			20,663,209

Net Increase (Decrease) in Cash and Cash Equivalents		(8,400,752	)		8,070,149			(12,246,346	)
Cash and Cash Equivalents at Beginning of Year		20,474,661			12,404,512			24,650,858

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	12,073,909		$	20,474,661		$	12,404,512

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Business

Monmouth Real Estate Investment Corporation (a Maryland corporation) and its subsidiaries (the Company) operate as a real estate investment trust (REIT), deriving its income primarily from real estate rental operations. As of September 30, 2015 and 2014, rental properties consisted of ninety-one and eighty-two property holdings, respectively. These properties are located in twenty-eight states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. In addition, the Company holds a portfolio of REIT securities which the Company generally limits to no more than approximately 10% of its undepreciated assets.

Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources.

Use of Estimates

In preparing the financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Principles of Consolidation and Non-controlling Interest

The consolidated financial statements include the Company and its wholly-owned subsidiaries. In 2005, the Company formed MREIC Financial, Inc., a taxable REIT subsidiary which has had no activity since inception. In 2007, the Company merged with Monmouth Capital Corporation (Monmouth Capital), with Monmouth Capital surviving as a wholly-owned subsidiary of the Company. All intercompany transactions and balances have been eliminated in consolidation.

At September 30, 2015, Monmouth Capital owns a 51% majority interest in Palmer Terrace Realty Associates, LLC (a New Jersey limited liability company) (Palmer Terrace). The Company consolidates the results of operations of Palmer Terrace. Non-controlling interest represents 49% of the members’ equity in Palmer Terrace and is included in Other Liabilities in the accompanying Consolidated Balance Sheet.

Buildings and Improvements

Buildings and improvements are stated at the lower of depreciated cost or net realizable value. Depreciation is computed based on the straight-line method over the estimated useful lives of the assets. These lives are 39 years for buildings and range from 5 to 39 years for improvements.

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The Company applies Financial Accounting Standards Board Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other-than-temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.

Gains on Sale of Real Estate

Gains on the sale of real estate investments are 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.

Acquisitions

The Company accounts for acquisitions in accordance with the provisions of ASC 805, Business Combinations (ASC 805) which requires transaction costs, such as broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related to acquisitions are expensed as incurred.

The purchase price is further allocated to acquired above and below market leases based on the present value of the difference between prevailing market rates and the in-place rates over the remaining lease term. In addition, any remaining amounts of the purchase price are applied to in-place lease values based on management's evaluation of the specific characteristics of each tenant's lease. Acquired above and below market leases are amortized to rental revenue over the remaining non-cancelable terms of the respective leases. The value of in-place lease intangibles is amortized to amortization expense over the remaining lease term. If a tenant terminates its lease early, the unamortized portion of the tenant improvements, leasing commissions, deferred rent and the in-place lease value is charged to expense.

Marketable Securities

Investments in securities available for sale primarily consist of marketable common and preferred stock securities of other REITs, which the Company generally limits to no more than approximately 10% of its undepreciated assets. These marketable securities are all publicly-traded and purchased on the open market, through private transactions or through dividend reinvestment plans. These securities may be classified among three categories: held-to-maturity, trading, and available-for-sale. The Company normally holds REIT securities on a long term basis and has the ability and intent to hold securities to recovery, therefore as of September 30, 2015 and 2014, the Company’s securities are all classified as available-for-sale and are carried at fair value based upon quoted market prices in active markets. Gains or losses on the sale of securities are based on average cost and are accounted for on a trade date basis. Unrealized holding gains and losses are excluded from earnings and reported as a separate component of Shareholders’ Equity until realized. The change in the unrealized net holding gains (losses) is reflected as Comprehensive Income (loss).

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The Company individually reviews and evaluates its marketable securities for impairment on a quarterly basis or when events or circumstances occur. The Company considers, among other things, credit aspects of the issuer, amount of decline in fair value over cost and length of time in a continuous loss position. The Company has developed a general policy of evaluating whether an unrealized loss is other than temporary. On a quarterly basis, the Company makes an initial review of every individual security in its portfolio. If the security is impaired, the Company first determines its intent and ability to hold this investment for a period of time sufficient to allow for any anticipated recovery in market value. Next, the Company determines the length of time and the extent of the impairment. Barring other factors, including the downgrading of the security or the cessation of dividends, if the fair value of the security is below cost by less than 20% for less than 6 months and the Company has the intent and ability to hold the security, the security is deemed to be temporarily impaired. Otherwise, the Company reviews additional information to determine whether the impairment is other than temporary. The Company discusses and analyzes any relevant information known about the security, such as:

Whether the decline is attributable to adverse conditions related to the security or to specific conditions in an industry or in a geographic area.

Any downgrading of the security by a rating agency.

Whether the financial condition of the issuer has deteriorated.

Status of dividends – Whether dividends have been reduced or eliminated, or scheduled interest payments have not been made.

Analysis of the underlying assets (including NAV analysis) using independent analysis or recent transactions.

The Company normally holds REIT securities on a long term basis and has the ability and intent to hold securities to recovery. The Company generally limits its marketable securities investments to no more than approximately 10% of its undepreciated assets. If a decline in fair value is determined to be other than temporary, an impairment charge is recognized in earnings and the cost basis of the individual security is written down to fair value as the new cost basis.

Cash and Cash Equivalents

Cash and cash equivalents include all cash and investments with an original maturity of three months or less. The Company maintains its cash in bank accounts in amounts that may exceed federally insured limits. The Company has not experienced any losses in these accounts in the past. The fair value of cash and cash equivalents approximates their current carrying amounts since all such items are short-term in nature.

Intangible Assets, Capitalized Lease Costs and Financing Costs

Intangible assets, consisting primarily of the value of in-place leases, are amortized to expense over the remaining terms of the respective leases. Upon termination of a lease, the unamortized portion is charged to expense. The weighted-average amortization period upon acquisition for intangible assets recorded during 2015, 2014 and 2013 was 13 years, 14 years and 10 years, respectively.

Costs incurred in connection with the execution of leases are capitalized and amortized over the term of the respective leases. Unamortized lease costs are charged to expense upon cancellation of leases prior to the expiration of lease terms. Costs incurred in connection with obtaining mortgages and other financings and refinancing are deferred and are amortized over the term of the related obligations. Unamortized costs are charged to expense upon prepayment of the obligation. Amortization expense related to these deferred leasing and financing costs were $2,042,520, $1,231,222 and $1,164,852 for the years ended September 30, 2015, 2014 and 2013, respectively. Included in amortization of financing costs for the fiscal year ended September 30, 2015 is the write off of unamortized deferred loan costs totaling $466,634 associated with four loans that were repaid prior to maturity, one loan repaid prior to maturity in conjunction with the sale of the property located in Monroe, NC (as further described in Note 3) and the repayment of the former line of credit facility prior to its maturity (as further described in Note 8). The Company estimates that aggregate amortization expense for existing assets will be approximately $1,621,000, $1,470,000, $1,247,000, $1,067,000 and $711,000 for the fiscal years 2016, 2017, 2018, 2019 and 2020, respectively.

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Revenue Recognition

The Company provides an allowance for doubtful accounts against the portion of tenant and other receivables, loans receivable and deferred rent receivable which are estimated to be uncollectible. For accounts receivable the Company deems uncollectible, the Company uses the direct write-off method. The Company did not have an allowance for doubtful accounts as of September 30, 2015.

Lease Termination Income

The Company’s lease with its tenant, Graybar Electric Company (Graybar), at its 26,340 square foot building located in Ridgeland (Jackson), MS has an early termination option which may be exercised at any time on the condition that the Company is provided with six months of notice. The Company has not received notice nor does the Company anticipate that this tenant will exercise its early termination option. Annual rent on both the U.S. GAAP straight-line rent basis and on the cash basis for this location is $109,275 or $4.15 per square foot, and the lease expires in July 2019.

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The Company’s lease with its tenant, CHEP USA, Inc. (CHEP), at its 83,000 square foot building located in Roanoke, VA has an early termination option which may be exercised after August 2021, on the condition that the Company is provided with six months of notice and CHEP pays the Company a $500,000 termination fee. The U.S. GAAP straight-line rent per annum for this location is $472,680 or $5.69 per square foot and the cash basis rent is $463,786 or $5.59 per square foot. The lease expires in January 2025.

The Company’s lease with its tenant, Pittsburgh Glass Works, LLC (PGW), at its 102,135 square foot building located in O’Fallon (St. Louis), MO has an early termination option which may be exercised after January 1, 2016 but before December 31, 2016, on the condition that the Company is provided with six months of notice and PGW pays the Company a $213,462 termination fee. Additionally, PGW has an early termination option which may be exercised after January 1, 2017, on the condition that the Company is provided with six months of notice and PGW pays the Company a $106,731 termination fee. Annual rent on both the U.S. GAAP straight-line rent basis and on the cash basis for this location is $426,924 or $4.18 per square foot and the lease expires in June 2018.

Other than the Company’s leases with Graybar, CHEP and PGW, the Company does not have any other leases that contain an early termination option.

Net Income Per Share

Basic Net Income per Share is calculated by dividing Net Income Attributable to Common Shareholders by the weighted-average number of common shares outstanding during the period. Diluted Net Income per Common Share is calculated by dividing Net Income attributable to Common Shareholders plus Interest Expense related to the Company's Convertible Subordinated Debentures (Debentures) by the weighted-average number of common shares outstanding plus the weighted-average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method, plus the number of shares resulting from the possible conversion of the Debentures during the period.

In addition, common stock equivalents of 115,408, 95,112 and 156,799 shares are included in the diluted weighted average shares outstanding for fiscal years 2015, 2014 and 2013, respectively. As of September 30, 2015, 2014 and 2013, options to purchase 65,000, 65,000 and 65,000 shares, respectively, were antidilutive.

Stock Compensation Plan

The Company accounts for awards of stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $448,895, $347,002 and $329,148 have been recognized in 2015, 2014 and 2013, respectively. Included in Note 10 to these consolidated financial statements are the assumptions and methodology used to calculate the fair value of stock options and restricted shares.

Income Tax

The Company has elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code. The Company will not be taxed on the portion of its income which is distributed to shareholders, provided it distributes at least 90% of its taxable income, has at least 75% of its assets in real estate investments and meets certain other requirements for qualification as a REIT. The Company is subject to franchise taxes in several of the states in which the Company owns property.

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The Company follows 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 its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of September 30, 2015. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of September 30, 2015, the fiscal tax years 2012 through and including 2015 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized holding gains or losses arising during the period on securities available for sale, less any reclassification adjustments for net gains of sales of securities transactions realized in income.

Reclassifications

Certain amounts in the consolidated financial statements for the prior years have been reclassified to conform to the financial statement presentation for the current year.

Discontinued Operations

The Company follows the provisions of ASC 360-10, Property Plant & Equipment (ASC 360-10). ASC 360-10 addresses financial accounting and reporting for the disposal of long-lived assets that are considered a component. A component is comprised of operations and cash flows that can clearly be distinguished, operationally and for financial reporting purposes, from the rest of the Company. ASC 360-10 requires that the results of operations and gains or losses on the sale of a component of an entity be presented in discontinued operations if both of the following criteria are met: (a) the operations and cash flows of the property have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and (b) the Company will not have any significant continuing involvement in the operations of the property after the disposal transaction. ASC 360-10 also requires prior period results of operations for these properties to be restated and presented in discontinued operations in prior consolidated statements of income.

New Accounting Pronouncements

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NOTE 2 – REAL ESTATE INVESTMENTS

The following is a summary of the cost and accumulated depreciation of the Company's land, buildings and improvements at September 30, 2015 and 2014:

SEPTEMBER 30, 2015	Property				Buildings &		Accumulated		Net Book
	Type		Land		Improvements		Depreciation		Value
Alabama:
Huntsville		Industrial	$	748,115	$	4,003,626	$	821,527	$	3,930,214
Arizona:
Tolleson (Phoenix)		Industrial		1,316,075		13,852,511		4,669,262		10,499,324
Colorado:
Colorado Springs		Industrial		1,270,000		5,925,115		1,336,829		5,858,286
Denver		Industrial		1,150,000		5,204,051		1,304,213		5,049,838
Connecticut:
Newington (Hartford)		Industrial		410,000		3,053,824		1,129,167		2,334,657
Florida:
Cocoa		Industrial		1,881,316		12,208,527		1,793,254		12,296,589
Ft. Myers		Industrial		1,910,000		3,107,447		913,073		4,104,374
Jacksonville (FDX)		Industrial		1,165,000		5,064,421		2,145,184		4,084,237
Jacksonville (FDX Gr)		Industrial		6,000,000		24,645,954		421,298		30,224,656
Lakeland		Industrial		261,000		1,705,211		406,472		1,559,739
Orlando		Industrial		2,200,000		6,341,237		1,307,147		7,234,090
Punta Gorda		Industrial		660,000		3,444,915		742,718		3,362,197
Tampa (FDX Gr)		Industrial		5,000,000		13,448,962		3,799,846		14,649,116
Tampa (FDX)		Industrial		2,830,000		4,735,717		1,135,794		6,429,923
Tampa (Tampa Bay Grand Prix)		Industrial		1,867,000		3,784,066		841,103		4,809,963
Georgia:
Augusta (FDX Gr)		Industrial		614,406		4,714,467		1,137,702		4,191,171
Augusta (FDX)		Industrial		380,000		1,567,032		321,283		1,625,749
Griffin (Atlanta)		Industrial		760,000		14,108,857		3,405,334		11,463,523
Illinois:
Burr Ridge (Chicago)		Industrial		270,000		1,414,201		613,666		1,070,535
Elgin (Chicago)		Industrial		1,280,000		5,646,956		1,976,098		4,950,858
Granite City (St. Louis, MO)		Industrial		340,000		12,046,675		4,171,237		8,215,438
Montgomery (Chicago)		Industrial		2,000,000		9,298,367		2,043,560		9,254,807
Rockford (B/E Aerospace)		Industrial		480,000		4,620,000		118,462		4,981,538
Rockford (Sherwin-Williams)		Industrial		1,100,000		4,451,227		512,938		5,038,289
Sauget (St. Louis, MO)		Industrial		1,890,000		13,310,000		341,282		14,858,718
Schaumburg (Chicago)		Industrial		1,039,800		3,927,839		1,932,902		3,034,737
Wheeling (Chicago)		Industrial		5,112,120		13,425,532		3,392,350		15,145,302
Indiana:
Greenwood (Indianapolis)		Industrial		2,250,000		35,234,574		376,438		37,108,136
Indianapolis		Industrial		3,500,000		20,446,000		608,611		23,337,389
Iowa:
Urbandale (Des Moines)		Industrial		310,000		1,851,895		1,042,050		1,119,845
Kansas:
Edwardsville (Kansas City)(Carlisle Tire)		Industrial		1,185,000		6,040,401		1,957,985		5,267,416
Edwardsville (Kansas City)(International Paper)		Industrial		2,750,000		15,538,753		757,934		17,530,819
Topeka		Industrial		-0-		3,679,843		613,406		3,066,437
Kentucky:
Buckner (Louisville)		Industrial		2,280,000		24,439,716		1,199,729		25,519,987
Frankfort (Lexington)		Industrial		1,850,000		26,150,000		558,761		27,441,239
Maryland:
Beltsville (Washington, DC)		Industrial		3,200,000		11,267,755		3,230,319		11,237,436
Michigan:
Livonia (Detroit)		Industrial		320,000		13,410,533		1,002,083		12,728,450
Orion		Industrial		4,649,971		18,229,798		3,080,057		19,799,712
Romulus (Detroit)		Industrial		531,000		4,069,532		1,691,732		2,908,800

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SEPTEMBER 30, 2015 (cont’d)	Property			Buildings &		Accumulated		Net Book
	Type	Land		Improvements		Depreciation		Value

Minnesota:
Stewartville (Rochester)	Industrial	$	900,000	$	4,320,000	$	221,538	$	4,998,462
White Bear Lake (Minneapolis/St. Paul)	Industrial		1,393,000		3,764,126		831,891		4,325,235
Mississippi:
Olive Branch (Memphis, TN)(Anda Distribution)	Industrial		800,000		13,750,000		1,145,833		13,404,167
Olive Branch (Memphis, TN)(Milwaukee Tool)	Industrial		2,550,000		24,952,797		1,592,066		25,910,731
Richland (Jackson)	Industrial		211,000		1,689,691		748,265		1,152,426
Ridgeland (Jackson)	Industrial		218,000		1,632,794		1,109,322		741,472
Missouri:
Kansas City (Bunzl)	Industrial		1,000,000		8,600,000		202,137		9,397,863
Kansas City (Kellogg)	Industrial		660,000		4,088,374		901,195		3,847,179
Liberty (Kansas City)	Industrial		723,000		6,650,618		2,973,407		4,400,211
O'Fallon (St. Louis)	Industrial		264,000		3,981,913		1,963,226		2,282,687
St. Joseph	Industrial		800,000		12,382,772		4,423,009		8,759,763
Nebraska:
Omaha	Industrial		1,170,000		4,767,281		1,984,805		3,952,476
New Jersey:
Carlstadt (New York, NY) (1)	Industrial		1,194,000		3,695,712		767,084		4,122,628
Freehold	Corporate Office		-0-		769,411		79,572		689,839
Somerset (2)	Shopping Center		34,316		2,660,928		1,318,964		1,376,280
New York:
Cheektowaga (Buffalo)	Industrial		4,796,765		6,164,058		1,370,655		9,590,168
Halfmoon (Albany)	Industrial		1,190,000		4,335,600		389,092		5,136,508
Orangeburg (New York)	Industrial		694,720		3,200,955		2,201,868		1,693,807
North Carolina:
Fayetteville	Industrial		172,000		4,712,522		2,229,107		2,655,415
Winston-Salem	Industrial		980,000		5,942,086		1,980,737		4,941,349
Ohio:
Bedford Heights (Cleveland)	Industrial		990,000		5,789,591		1,337,898		5,441,693
Cincinnati	Industrial		800,000		5,950,000		12,714		6,737,286
Lebanon (Cincinnati)	Industrial		240,000		4,212,425		375,609		4,076,816
Monroe (Cincinnati)	Industrial		1,800,000		11,137,000		166,579		12,770,421
Richfield (Cleveland)	Industrial		2,676,848		13,758,630		2,016,458		14,419,020
Streetsboro (Cleveland)	Industrial		1,760,000		17,840,000		1,601,026		17,998,974
West Chester Twp. (Cincinnati)	Industrial		695,000		5,033,690		1,768,517		3,960,173
Oklahoma:
Oklahoma City	Industrial		1,410,000		11,183,873		723,874		11,869,999
Tulsa	Industrial		790,000		2,958,031		145,342		3,602,689
Pennsylvania:
Altoona	Industrial		1,200,000		7,790,000		382,842		8,607,158
Monaca (Pittsburgh)	Industrial		401,716		7,367,252		2,023,850		5,745,118
South Carolina:
Ft. Mill (Charlotte, NC)	Industrial		1,670,000		13,743,307		1,597,480		13,815,827
Hanahan (Charleston) (SAIC)	Industrial		1,129,000		12,171,592		3,199,452		10,101,140
Hanahan (Charleston) (FDX Gr)	Industrial		930,000		6,684,653		1,550,717		6,063,936
Tennessee:
Chattanooga	Industrial		300,000		4,671,161		1,003,292		3,967,869
Lebanon (Nashville)	Industrial		2,230,000		11,985,126		1,229,231		12,985,895
Memphis	Industrial		1,240,887		13,380,000		1,886,931		12,733,956
Shelby County	Vacant Land		11,065		-0-		-0-		11,065

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SEPTEMBER 30, 2015 (cont’d)	Property			Buildings &		Accumulated		Net Book
	Type	Land		Improvements		Depreciation		Value

Texas:
Carrollton (Dallas)	Industrial	$	1,500,000	$	16,244,300	$	2,290,543	$	15,453,757
Corpus Christi	Industrial		-0-		4,764,500		427,583		4,336,917
Edinburg	Industrial		1,000,000		6,438,483		742,117		6,696,366
El Paso	Vacant Land		1,136,953		-0-		-0-		1,136,953
El Paso	Industrial		2,088,242		9,205,997		1,176,363		10,117,876
Fort Worth (Dallas)	Industrial		8,200,000		27,100,832		115,816		35,185,016
Houston	Industrial		1,730,000		6,353,107		913,317		7,169,790
Lindale (Tyler)	Industrial		540,000		9,390,000		240,769		9,689,231
Spring (Houston)	Industrial		1,890,000		17,337,523		738,390		18,489,133
Waco	Industrial		1,350,000		11,196,157		636,182		11,909,975
Virginia:
Charlottesville	Industrial		1,170,000		3,174,037		1,295,758		3,048,279
Mechanicsville (Richmond) (FDX)	Industrial		1,160,000		6,579,671		2,465,144		5,274,527
Richmond (United Technologies)	Industrial		446,000		4,314,769		1,049,842		3,710,927
Roanoke (CHEP)	Industrial		1,853,000		5,552,447		1,140,757		6,264,690
Roanoke (FDX Gr)	Industrial		1,740,000		8,460,000		497,115		9,702,885
Wisconsin:
Cudahy (Milwaukee)	Industrial		980,000		8,393,672		2,633,457		6,740,215
Green Bay	Industrial		590,000		5,980,000		306,667		6,263,333

Total as of September 30, 2015		$	134,160,315	$	807,619,001	$	124,978,211	$	816,801,105

SEPTEMBER 30, 2014	Property				Buildings &		Accumulated		Net Book
	Type		Land		Improvements		Depreciation		Value
Alabama:
Huntsville		Industrial	$	748,115	$	4,003,626	$	718,459	$	4,033,282
Arizona:
Tolleson (Phoenix)		Industrial		1,320,000		13,852,511		4,222,791		10,949,720
Colorado:
Colorado Springs		Industrial		1,270,000		5,925,115		1,183,773		6,011,342
Denver		Industrial		1,150,000		5,204,051		1,170,910		5,183,141
Connecticut:
Newington (Hartford)		Industrial		410,000		3,053,824		1,048,214		2,415,610
Florida:
Cocoa		Industrial		1,881,316		12,134,565		1,476,379		12,539,502
Ft. Myers		Industrial		1,910,000		3,107,447		830,758		4,186,689
Jacksonville		Industrial		1,165,000		5,064,421		1,994,416		4,235,005
Lakeland		Industrial		261,000		1,705,211		349,805		1,616,406
Orlando		Industrial		2,200,000		6,341,237		1,130,923		7,410,314
Punta Gorda		Industrial		660,000		3,444,915		654,316		3,450,599
Tampa (FDX Gr)		Industrial		5,000,000		13,442,815		3,443,461		14,999,354
Tampa (FDX)		Industrial		2,830,000		4,735,717		1,013,718		6,551,999
Tampa (Tampa Bay Grand Prix)		Industrial		1,867,000		3,784,066		741,549		4,909,517
Georgia:
Augusta (FDX Gr)		Industrial		614,406		4,714,467		1,016,983		4,311,890
Augusta (FDX)		Industrial		380,000		1,560,182		278,854		1,661,328
Griffin (Atlanta)		Industrial		760,000		14,108,857		3,043,565		11,825,292
Illinois:
Burr Ridge (Chicago)		Industrial		270,000		1,414,201		571,729		1,112,472
Elgin (Chicago)		Industrial		1,280,000		5,616,644		1,818,881		5,077,763

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SEPTEMBER 30, 2014 (cont’d)	Property			Buildings &		Accumulated		Net Book
	Type	Land		Improvements		Depreciation		Value

Granite City (St. Louis, MO)	Industrial	$	340,000	$	12,046,675	$	3,862,348	$	8,524,327
Montgomery (Chicago)	Industrial		2,000,000		9,298,367		1,804,234		9,494,133
Rockford	Industrial		1,100,000		4,440,000		398,461		5,141,539
Schaumburg (Chicago)	Industrial		1,039,800		3,927,839		1,829,183		3,138,456
Wheeling (Chicago)	Industrial		5,112,120		13,425,532		3,048,732		15,488,920
Indiana:
Indianapolis	Industrial		3,500,000		20,244,000		85,530		23,658,470
Iowa:
Urbandale (Des Moines)	Industrial		310,000		1,851,895		989,808		1,172,087
Kansas:
Edwardsville (Kansas City)(Carlisle Tire)	Industrial		1,185,000		6,040,401		1,757,878		5,467,523
Edwardsville (Kansas City)(International Paper)	Industrial		2,750,000		15,335,492		360,450		17,725,042
Topeka	Industrial		-0-		3,679,843		519,047		3,160,796
Kentucky:
Buckner (Louisville)	Industrial		2,280,000		24,353,125		572,403		26,060,722
Maryland:
Beltsville (Washington, DC)	Industrial		3,200,000		11,258,484		2,928,970		11,529,514
Michigan:
Livonia (Detroit)	Industrial		320,000		13,380,000		657,564		13,042,436
Orion	Industrial		4,644,950		18,229,798		2,611,640		20,263,108
Romulus (Detroit)	Industrial		531,000		3,952,613		1,588,306		2,895,307
Minnesota:
Stewartville (Rochester)	Industrial		900,000		4,320,000		110,769		5,109,231
White Bear Lake (Minneapolis/St. Paul)	Industrial		1,393,000		3,764,126		735,816		4,421,310
Mississippi:
Olive Branch (Memphis, TN)(Anda Distribution)	Industrial		800,000		13,750,000		793,269		13,756,731
Olive Branch (Memphis, TN)(Milwaukee Tool)	Industrial		2,550,000		24,818,816		954,570		26,414,246
Richland (Jackson)	Industrial		211,000		1,689,691		670,332		1,230,359
Ridgeland (Jackson)	Industrial		218,000		1,632,794		1,039,354		811,440
Missouri:
Kansas City	Industrial		660,000		4,088,374		792,307		3,956,067
Liberty (Kansas City)	Industrial		723,000		6,648,118		2,799,505		4,571,613
O'Fallon (St. Louis)	Industrial		264,000		3,664,456		1,841,402		2,087,054
St. Joseph	Industrial		800,000		12,328,850		4,097,368		9,031,482
Nebraska:
Omaha	Industrial		1,170,000		4,759,890		1,861,078		4,068,812
New Jersey:
Carlstadt (New York, NY) (1)	Industrial		1,194,000		3,644,592		692,084		4,146,508
Freehold	Corporate Office		-0-		212,638		-0-		212,638
Somerset (2)	Shopping Center		55,183		2,457,488		1,264,999		1,247,672
New York:
Cheektowaga (Buffalo)	Industrial		4,796,765		6,164,058		1,209,801		9,751,022
Halfmoon (Albany)	Industrial		1,190,000		4,335,600		277,923		5,247,677
Orangeburg (New York)	Industrial		694,720		3,104,155		2,087,391		1,711,484
North Carolina:
Fayetteville	Industrial		172,000		4,698,749		2,099,986		2,770,763
Monroe	Industrial		500,000		5,000,697		1,600,676		3,900,021
Winston-Salem	Industrial		980,000		5,942,086		1,827,027		5,095,059
Ohio:
Bedford Heights (Cleveland)	Industrial		990,000		5,785,141		1,156,672		5,618,469
Lebanon (Cincinnati)	Industrial		240,000		4,176,000		267,692		4,148,308
Richfield (Cleveland)	Industrial		2,665,751		13,861,436		1,669,399		14,857,788
Streetsboro (Cleveland)	Industrial		1,760,000		17,840,000		1,143,590		18,456,410

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SEPTEMBER 30, 2014 (cont’d)	Property			Buildings &		Accumulated		Net Book
	Type	Land		Improvements		Depreciation		Value

West Chester Twp. (Cincinnati)	Industrial	$	695,000	$	5,033,690	$	1,589,907	$	4,138,783
Oklahoma:
Oklahoma City	Industrial		1,410,000		8,194,165		491,859		9,112,306
Tulsa	Industrial		790,000		2,910,000		68,397		3,631,603
Pennsylvania:
Altoona	Industrial		1,200,000		7,790,000		183,098		8,806,902
Monaca (Pittsburgh)	Industrial		401,716		5,459,960		1,774,380		4,087,296
South Carolina:
Ft. Mill (Charlotte, NC)	Industrial		1,670,000		13,743,307		1,245,088		14,168,219
Hanahan (Charleston) (Norton)	Industrial		1,129,000		11,843,474		2,884,225		10,088,249
Hanahan (Charleston) (FDX Gr)	Industrial		930,000		6,684,653		1,377,244		6,237,409
Tennessee:
Chattanooga	Industrial		300,000		4,671,161		878,045		4,093,116
Lebanon (Nashville)	Industrial		2,230,000		11,985,126		921,920		13,293,206
Memphis	Industrial		1,240,887		13,380,000		1,543,854		13,077,033
Shelby County	Vacant Land		11,065		-0-		-0-		11,065
Texas:
Carrollton (Dallas)	Industrial		1,500,000		16,240,000		1,873,846		15,866,154
Corpus Christi	Industrial		-0-		4,764,500		305,417		4,459,083
Edinburg	Industrial		1,000,000		6,438,483		576,432		6,862,051
El Paso	Vacant Land		1,136,953		-0-		-0-		1,136,953
El Paso	Industrial		2,088,242		8,007,453		957,104		9,138,591
Houston	Industrial		1,730,000		6,350,828		746,453		7,334,375
Spring (Houston)	Industrial		1,890,000		17,336,108		293,838		18,932,270
Waco	Industrial		1,350,000		7,383,000		425,942		8,307,058
Virginia:
Charlottesville	Industrial		1,170,000		3,174,037		1,197,278		3,146,759
Mechanicsville (Richmond) (FDX)	Industrial		1,160,000		6,572,315		2,287,601		5,444,714
Richmond (United Technologies)	Industrial		446,000		4,295,005		871,171		3,869,834
Roanoke (CHEP)	Industrial		1,853,000		5,611,795		947,934		6,516,861
Roanoke (FDX Gr)	Industrial		1,740,000		8,460,000		280,192		9,919,808
Wisconsin:
Cudahy (Milwaukee)	Industrial		980,000		8,393,672		2,412,578		6,961,094
Green Bay	Industrial		590,000		5,980,000		153,333		6,416,667

Total as of September 30, 2014		$	109,858,989	$	634,068,423	$	107,004,184	$	636,923,228

(1)

The Company owns a 51% controlling equity interest.

(2)

The Company has a 67% controlling equity interest.

NOTE 3 – ACQUISITIONS, EXPANSIONS AND DISPOSITION

Fiscal 2015

Acquisitions

107

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108

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Expansions

109

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Disposition

On September 18, 2015, the Company sold its 160,000 square foot industrial building located in Monroe, NC for $9,000,000, with net sale proceeds to the Company of approximately $8,847,000. The property was sold to Charlotte Pipe and Foundry Company, the tenant that was leasing the property from the Company through July 31, 2017 at an annual rental rate of approximately $571,000. The Company purchased this property in 2001 and it had a historic cost basis of approximately $5,557,000 and a net book value (net of accumulated depreciation) of approximately $3,825,000. The sale resulted in a realized gain of approximately $5,021,000, representing a 131% gain over the depreciated U.S. GAAP basis and a realized gain on a historic cost of approximately $3,290,000, representing a 59% gain over the Company’s historic cost basis.

Since the sale of this property does not represent a strategic shift that has (or will have) a major effect on the Company’s operations and financial results, the operations generated from this property are not included in Discontinued Operations.

The following table summarizes the operations of the Company’s 160,000 square foot industrial building located in Monroe, NC prior to its sale on September 18, 2015 which are included in the accompanying Consolidated Statements of Income for the fiscal year ended September 30:

		2015			2014			2013

Rental and Reimbursement Revenue	$	571,250		$	96,664		$	23,013
Lease Termination Income		-0-			-0-			576,946
Real Estate Taxes		(73,724	)		(77,610	)		(101,403	)
Operating Expenses		(32,981	)		(91,745	)		(67,415	)
Depreciation & Amortization		(240,865	)		(139,426	)		(154,902	)
Interest Expense		(71,287	)		(65,876	)		(101,596	)
Income (Loss) from Operations		152,393			(277,993	)		174,643
Gain on Sale of Real Estate Investment		5,021,242			-0-			-0-
Net Income (Loss)	$	5,173,635		$	(277,993	)	$	174,643

Fiscal 2014

Acquisitions

On October 22, 2013, the Company purchased a 46,240 square foot industrial building which was constructed in 2009 and is located in Tulsa, OK. The building is 100% net-leased to The American Bottling Company through February 2024. The lease is guaranteed by the parent company, Dr Pepper Snapple Group, Inc. The purchase price was $3,700,000. The Company obtained a 15 year self-amortizing mortgage of $2,250,000 at a fixed interest rate of 4.58%. Annual rental revenue over the remaining term of the lease is approximately $253,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

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On October 25, 2013, the Company purchased a newly constructed 558,600 square foot industrial building located in Buckner, KY, which is located in the Louisville metropolitan statistical area (MSA). The building is 100% net-leased to Ralcorp Holdings, Inc., a subsidiary of ConAgra Foods, Inc. through October 2033. The purchase price was $27,070,616. The Company obtained a 20 year self-amortizing mortgage of $18,475,000 at a fixed interest rate of 4.17%. Annual rental revenue over the remaining term of the lease is approximately $2,133,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has allocated $437,491 to an Intangible Asset associated with the lease in-place.

On October 31, 2013, the Company purchased a newly constructed 280,000 square foot industrial building located in Edwardsville, KS, which is located in the Kansas City MSA. The building is 100% net-leased to International Paper Company through August 2023. The purchase price was $18,818,825. The Company obtained a 10 year mortgage, of $12,550,000, amortizing over 15 years at a fixed interest rate of 3.45%. Annual rental revenue over the remaining term of the lease is approximately $1,304,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has allocated $733,333 to an Intangible Asset associated with the lease in-place.

On October 31, 2013, the Company purchased a newly constructed 122,522 square foot industrial building located in Altoona, PA. The building is 100% net-leased to FedEx Ground Package System, Inc. through August 2023. The purchase price was $8,990,000. The Company increased its $7,350,000 loan that was obtained in connection with two acquisitions the Company made on September 12, 2013 for the properties located in Green Bay, WI and Stewartville (Rochester), MN. The initial 12 year self-amortizing mortgage was increased by $5,000,000 to $12,350,000 and is at a fixed interest rate of 4.00%. Annual rental revenue over the remaining term of the lease is approximately $651,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

On November 19, 2013, the Company purchased a newly constructed 114,923 square foot industrial building located in Spring, TX, which is located in the Houston MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through August 2023. The purchase price was $15,281,318. The Company obtained a 10 year mortgage of $10,630,000, amortizing over 15 years at a fixed interest rate of 4.01%. Annual rental revenue over the remaining term of the lease is approximately $1,146,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset. On August 21, 2014, a 66,253 square foot expansion of the building was completed bringing the total square feet of the building to 181,176. The building expansion cost approximately $4,345,000 resulting in an increase in annual rent effective September 24, 2014 from $1,146,099, or $9.97 per square foot, to $1,580,572, or $8.72 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from August 31, 2023 to September 30, 2024.

On August 12, 2014, the Company purchased a newly constructed 327,822 square foot industrial building located in Indianapolis, IN. The building is 100% net-leased to FedEx Ground Package System, Inc. through April 2024. The purchase price was $23,744,000. The Company obtained a 10 year mortgage of $14,000,000, amortizing over 13 years at a fixed interest rate of 4.00%. Annual rental revenue over the remaining term of the lease was approximately $1,520,000. In connection with the acquisition, the Company completed its evaluation of the acquired lease. As a result of its evaluation, the Company has not allocated any amount to an Intangible Asset.

FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, The American Bottling Company’s ultimate parent, Dr Pepper Snapple Group, Inc., Ralcorp Holdings, Inc.’s., ultimate parent ConAgra Foods, Inc. and International Paper Company are publicly-owned companies and financial information related to these entities is available at the SEC’s website, www.sec.gov. The references in this report to the SEC’s website are not intended to and do not include or incorporate by reference into this report the information on those websites.

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Expansions

In June 2013, Phase I of a 64,240 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Fort Mill, SC, which is located in the Charlotte, NC MSA, was completed for a cost of approximately $3,483,000 resulting in an increase in annual rent effective July 1, 2013 from $1,023,745, or $9.08 per square foot, to $1,364,761, or $7.71 per square foot. Phase II of the expansion, which consisted of a parking lot expansion, cost approximately $426,000. Phase II was completed in November 2013, resulting in an increase in annual rent effective November 1, 2013 to $1,414,639, or $8.00 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from September 30, 2019 to October 31, 2023.

In June 2014, a parking lot expansion for a property leased to FedEx Ground Package System, Inc. located in Tampa, FL was completed for a cost of approximately $788,000 resulting in an increase in annual rent effective July 1, 2014 from $1,412,177, or $8.27 per square foot, to $1,493,325, or $8.74 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from January 31, 2019 to June 30, 2024.

In July 2014, a 55,037 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Cocoa, FL was completed for a cost of approximately $3,734,000 resulting in an increase in annual rent effective September 25, 2014 from $738,504, or $8.29 per square foot, to $1,111,908, or $7.71 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from November 19, 2016 to September 30, 2024.

In August 2014, a 66,253 square foot expansion of a building leased to FedEx Ground Package System, Inc. located in Spring, TX, which is located in the Houston MSA, was completed for a cost of approximately $4,345,000 resulting in an increase in annual rent effective September 24, 2014 from $1,146,099, or $9.97 per square foot, to $1,580,572, or $8.72 per square foot. In addition, the expansion resulted in a new 10 year lease which extended the current lease expiration date from August 31, 2023 to September 30, 2024.

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Pro forma information

The following unaudited pro forma condensed financial information has been prepared utilizing the historical financial statements of the Company and the effect of additional revenue and expenses from the properties acquired during the first quarter of fiscal 2016 to date (see Note 18) and properties acquired during fiscal 2015 and 2014 assuming that the acquisitions had occurred as of October 1, 2013, 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 Mortgage Notes Payable related to the new acquisitions and (c) Depreciation Expense related to the new acquisitions. In addition, Net Income Attributable to Common Shareholders excludes the Gain on Sale of Real Estate Investment recognized during the fiscal year ended September 30, 2015. Furthermore, the proceeds received from the May 28, 2014 public offering of 8,050,000 shares of the Company’s common stock were used to fund property acquisitions and therefore, the weighted average shares outstanding used in calculating the Basic and Diluted Net Income per Share Attributable to Common Shareholders has been adjusted to account for the offering proceeds used to fund acquisitions as if the offering had occurred as of October 1, 2013. The unaudited pro forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions reflected herein been consummated on the dates indicated or that will be achieved in the future.

	Fiscal Year 2015		Fiscal Year 2014
Rental Revenues	$	76,397,400	$	73,994,800
Net Income Attributable to Common Shareholders		13,797,200		15,505,100
Basic and Diluted Net Income per Share Attributable to Common Shareholders	$	0.23	$	0.28

NOTE 4 – INTANGIBLE ASSETS

Net intangible assets consist of the estimated value of the leases in-place at acquisition for the following properties and are amortized over the remaining term of the lease:

	September 30, 2015		September 30, 2014

Denver, CO	$	-0-	$	1,340
Hanahan, SC (Charleston) (Norton)		-0-		102,777
Augusta, GA (FDX Gr)		-0-		1,973
Richfield, OH (Cleveland)		51,472		91,321
Colorado Springs, CO		3,729		48,475
Griffin, GA (Atlanta)		84,665		149,515
Roanoke, VA (CHEP)		32,217		84,855
Wheeling, IL (Chicago)		125,060		358,512
Orion, MI		72,976		125,958
Topeka, KS		204,243		237,786
Carrollton, TX (Dallas)		22,260		28,824
Ft. Mill, SC (Charlotte, NC)		358,121		445,586
Lebanon, TN (Nashville)		181,988		202,590
Rockford, IL		164,284		183,752
Edinburg, TX		335,162		391,204
Corpus Christi, TX		135,735		158,676
Halfmoon, NY (Albany)		303,901		352,181
Lebanon, OH (Cincinnati)		334,215		427,491
Olive Branch, MS (Memphis, TN)(Anda Distribution)		1,270,266		1,462,074
Livonia, MI (Detroit)		444,730		513,154
Stewartville (Rochester), MN		35,847		40,424
Buckner, KY (Louisville)		395,565		417,439
Edwardsville, KS (Kansas City) (International Paper)		590,395		664,974
Lindale, TX (Tyler)		306,344		-0-

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	September 30, 2015		September 30, 2014

Sauget, IL (St. Louis, MO)	$	28,886	$	-0-
Rockford, IL (B/E Aerospace)		92,053		-0-
Kansas City, KS (Bunzl)		30,658		-0-
Monroe, OH (Cincinnati)		460,362		-0-
Cincinnati, OH		50,000		-0-
Total Intangible Assets, net	$	6,115,134	$	6,490,881

Amortization expense related to these intangible assets was $1,310,904, $1,305,336 and $1,500,700 for the years ended September 30, 2015, 2014 and 2013, respectively. The Company estimates that aggregate amortization expense for existing intangible assets will be approximately $1,320,000, $1,154,000, $887,000, $835,000 and $792,000 for each of the fiscal years 2016, 2017, 2018, 2019 and 2020, respectively.

NOTE 5 – SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

	2015		2014		2013
FDX and Subsidiaries	43	%	44	%	44	%
ULTA, Inc. (lease commenced fiscal 2015)	5	%	N/A		N/A
Milwaukee Electric Tool Corporation (lease commenced fiscal 2013)	N/A		5	%	6	%
Ralcorp Holdings, Inc. (lease commenced fiscal 2014)	N/A		5	%	N/A

NOTE 6 – DISCONTINUED OPERATIONS

Prior to the adoption of ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, Discontinued Operations during the fiscal year ended September 30, 2013 included the operations for 4.5 months of the Company’s 40,560 square foot building located in Greensboro, NC which was classified as Held for Sale and sold on February 19, 2013 for net sale proceeds of $1,413,891. Since this property, classified as Held for Sale, was sold prior to fiscal 2014, no activity is reflected as Discontinued Operations in fiscal 2014 or 2015.

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The following table summarizes the components of discontinued operations for the fiscal year ended September 30, 2013:

		2013

Rental and Reimbursement Revenue	$	32,258
Real Estate Taxes		(28,474	)
Operating Expenses		(37,924	)
Depreciation & Amortization		(20,094	)
Loss from Operations of Disposed Property		(54,234	)
Gain on Sale of Real Estate Investment		345,794
Income from Discontinued Operations	$	291,560

		2013

Cash flows from Operating Activities	$	(29,080	)
Cash flows from Investing Activities		1,413,891
Cash flows from Financing Activities		-0-

The absence of cash flows from discontinued operations did not materially affect future liquidity and capital resources.

NOTE 7 – SECURITIES AVAILABLE FOR SALE

The Company’s securities available for sale consist primarily consist of marketable common and preferred stock securities of other REITs. The Company generally limits its investment in marketable securities to be no more than approximately 10% of its undepreciated assets. The Company does not own more than 10% of the outstanding shares of any of these issuers, nor does it have a controlling financial interest.

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The following is a listing of investments in securities at September 30, 2015:

		Interest Rate/		Number of				Estimated Market
Description	Series	Dividend		Shares		Cost		Value

Equity Securities - Preferred Stock:
Campus Crest Communities, Inc.	A	8.00	%	10,000	$	250,000	$	243,300
CBL & Associates Properties, Inc.	D	7.375	%	30,000		745,840		750,900
Cedar Realty Trust, Inc.	B	7.25	%	30,600		718,317		727,975
Chesapeake Lodging Trust	A	7.75	%	20,000		500,000		520,000
Condor Hospitality	A	8.00	%	17,000		170,005		108,800
Corporate Office Properties Trust	L	7.375	%	26,688		658,957		680,544
Dynex Capital, Inc.	A	8.50	%	10,000		250,000		241,000
EPR Properties	F	6.625	%	15,000		352,908		369,750
General Growth Properties, Inc.	A	6.375	%	4,636		107,852		112,469
Grace Acquisitions I	B	8.75	%	29,000		3,480		696,000
Investors Real Estate Trust	B	7.95	%	20,000		500,000		515,200
iStar Financial, Inc.	D	8.00	%	3,468		71,502		83,406
iStar Financial, Inc.	E	7.875	%	3,400		54,116		80,410
iStar Financial, Inc.	F	8.00	%	20,000		429,846		470,200
iStar Financial, Inc.	I	7.50	%	41,383		872,236		953,464
Kilroy Realty Corporation	H	6.375	%	23,016		547,953		575,142
Pennsylvania Real Estate Investment Trust	A	8.25	%	44,000		1,100,885		1,150,600
Pennsylvania Real Estate Investment Trust	B	7.375	%	30,455		760,911		772,034
Summit Hotel Properties, Inc.	B	7.875	%	10,000		250,000		260,000
Sun Communities, Inc.	A	7.125	%	20,000		500,000		514,800
UMH Properties, Inc. (1)	A	8.25	%	200,000		5,000,000		5,136,000
Total Equity Securities - Preferred Stock					$	13,844,808	$	14,961,994

			Number of				Estimated Market
Description			Shares		Cost		Value

Equity Securities - Common Stock:
Getty Realty Corporation			50,000	$	997,632	$	790,000
Gladstone Commercial Corporation			65,000		1,102,608		917,150
Government Properties Income Trust			579,000		11,572,547		9,264,000
Mack-Cali Realty Corporation			130,000		3,039,545		2,454,400
Select Income REIT			586,500		13,247,860		11,149,365
Senior Housing Property Trust			402,300		7,643,503		6,517,260
UMH Properties, Inc. (1)			911,871		8,528,097		8,480,399
Total Equity Securities - Common Stock				$	46,131,792	$	39,572,574

	Interest Rate/		Number of				Estimated Market
	Dividend		Shares		Cost		Value

Modified Pass-Through Mortgage-Backed Securities:
Government National Mortgage Association (GNMA)	6.50	%	500,000	$	6,240	$	6,669

Total Securities Available for Sale				$	59,982,840	$	54,541,237

(1) Investment is an affiliate. See Note No. 12 for further discussion.

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The following is a listing of investments in securities at September 30, 2014:

		Interest Rate/		Number of				Estimated Market
Description	Series	Dividend		Shares		Cost		Value

Equity Securities - Preferred Stock:
Arbor Realty Trust, Inc.	B	7.75	%	7,000	$	175,000	$	169,750
Campus Crest Communities, Inc.	A	8.00	%	10,000		250,000		250,999
CBL & Associates Properties, Inc.	D	7.375	%	30,000		745,840		765,000
CBL & Associates Properties, Inc.	E	6.625	%	90,000		2,171,859		2,186,991
Cedar Realty Trust, Inc.	B	7.25	%	40,600		953,060		1,061,690
Chesapeake Lodging Trust	A	7.75	%	20,000		500,000		522,624
Corporate Office Properties Trust	L	7.375	%	26,688		658,957		695,222
DuPont Fabros Technology, Inc.	B	7.625	%	10,000		229,188		257,001
Dynex Capital, Inc.	A	8.50	%	20,000		500,000		500,800
EPR Properties	F	6.625	%	30,000		705,816		749,100
General Growth Properties, Inc.	A	6.375	%	30,000		697,925		738,000
Glimcher Realty Trust	I	6.875	%	30,000		697,268		772,200
Glimcher Realty Trust	H	7.50	%	40,000		1,000,000		1,037,600
Grace Acquisitions I	B	8.75	%	29,000		3,480		703,250
Investors Real Estate Trust	B	7.95	%	20,000		500,000		522,800
iStar Financial, Inc.	D	8.00	%	3,468		71,502		86,700
iStar Financial, Inc.	E	7.875	%	3,400		54,116		83,980
iStar Financial, Inc.	F	8.00	%	38,976		837,686		959,998
iStar Financial, Inc.	I	7.50	%	41,383		872,236		1,003,538
Kilroy Realty Corporation	H	6.375	%	40,000		952,342		992,000
Kimco Realty Corporation	I	6.00	%	20,000		461,125		499,000
Kite Realty Group Trust	A	8.25	%	14,000		344,147		368,900
Pebblebrook Hotel Trust	C	6.50	%	34,500		747,555		819,375
Pennsylvania Real Estate Investment Trust	A	8.25	%	44,000		1,100,885		1,163,800
Pennsylvania Real Estate Investment Trust	B	7.375	%	30,455		760,911		788,785
PS Business Parks	U	5.75	%	10,000		191,131		227,900
PS Business Parks	V	5.70	%	10,000		189,731		228,100
Resource Capital Corporation	B	8.25	%	28,200		705,000		675,672
Resource Capital Corporation	C	8.625	%	20,000		500,000		478,800
SL Green Realty Corporation	I	6.50	%	50,000		1,181,405		1,265,000
Stag Industrial, Inc.	B	6.625	%	40,000		901,256		992,400
Summit Hotel Properties, Inc.	B	7.875	%	20,000		500,000		538,000
Sun Communities, Inc.	A	7.125	%	20,000		500,000		514,600
Condor Hospitality (Formerly Supertel Hospitality, Inc.)	A	8.00	%	17,000		170,005		136,000
Taubman Centers, Inc.	J	6.50	%	60,000		1,379,109		1,519,200
Terreno Realty Corporation	A	7.75	%	20,000		500,000		533,000
UMH Properties, Inc. (1)	A	8.25	%	200,000		5,000,000		5,266,000
Urstadt Biddle Properties Inc.	F	7.125	%	55,000		1,375,000		1,416,542
Total Equity Securities - Preferred Stock					$	29,083,535	$	31,490,317

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			Number of				Estimated Market
Description			Shares		Cost		Value

Equity Securities - Common Stock:
Getty Realty Corporation			50,000	$	997,632	$	850,000
Gladstone Commercial Corporation			65,000		1,102,608		1,104,350
Government Properties Income Trust			270,000		6,577,044		5,915,700
Mack-Cali Realty Corporation			130,000		3,039,545		2,484,300
One Liberty Properties, Inc.			10,000		155,747		202,300
Select Income REIT			230,000		6,241,339		5,531,500
Senior Housing Property Trust			178,000		4,081,570		3,723,760
UMH Properties, Inc. (1)			842,176		7,903,294		8,000,672
Total Equity Securities - Common Stock				$	30,098,779	$	27,812,582

	Interest Rate/		Number of				Estimated Market
	Dividend		Shares		Cost		Value

Modified Pass-Through Mortgage-Backed Securities:
Government National Mortgage Association (GNMA)	6.50	%	500,000	$	7,733	$	8,504

Total Securities Available for Sale				$	59,190,047	$	59,311,403

(1) Investment is an affiliate. See Note No. 12 for further discussion.

The Company held ten securities that the Company determined were temporarily impaired investments as of September 30, 2015. The Company considers many factors in determining whether a security is other than temporarily impaired, including the nature of the security and the cause, severity and duration of the impairment. The following is a summary of temporarily impaired securities at September 30, 2015:

	Less than 12 Months					12 Months or Longer
				Unrealized					Unrealized
Description of Securities		Fair Value		Losses			Fair Value		Losses

Preferred stock	$	484,300	$	(15,700	)	$	108,800	$	(61,205	)
Common stock		15,914,809		(1,359,397	)		23,657,765		(5,199,821	)
Total	$	16,399,109	$	(1,375,097	)	$	23,766,565	$	(5,261,026	)

The following is a summary of the range of losses:

Number of Individual Securities		Fair Value		Unrealized Losses		Range of Loss

3	$	8,964,699	$	(63,397	)	0-10%
5		30,302,175		(6,303,889	)	11-20%
1		790,000		(207,632	)	21%
1		108,800		(61,205	)	36%
10	$	40,165,674	$	(6,636,123	)

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The Company normally holds REIT securities long term and has the ability and intent to hold these securities to recovery. The Company had total net unrealized losses on its securities portfolio of $5,441,603 as of September 30, 2015.

The Company did not have any margin loan balance as of September 30, 2015 and 2014. The margin loan balance, if any, would be collateralized by the securities portfolio.

Dividend income for the fiscal years ended September 30, 2015, 2014 and 2013 totaled $3,707,498, $3,863,136, and $3,861,374, respectively. Interest income for the fiscal years ended September 30, 2015, 2014 and 2013 totaled $16,369, $19,461 and $24,546, respectively.

The Company received proceeds of $16,201,480, $14,279,391 and $33,476,767 on sales or redemptions of securities available for sale during fiscal years 2015, 2014 and 2013, respectively. The Company recorded the following Realized Gain (Loss) on Securities Transactions, net:

	2015			2014			2013
Gross realized gains	$	880,424		$	2,222,424		$	7,176,022
Gross realized losses		(74,911	)		(55,658	)		(42,770	)
Gains on Sales of Securities Transactions, net	$	805,513		$	2,166,766		$	7,133,252

NOTE 8- MORTGAGE NOTES, LOANS PAYABLE AND CONVERTIBLE SUBORDINATED DEBENTURES

Mortgage Notes Payable:

Mortgage Notes Payable represents the principal amounts outstanding as of September 30, 2015. Interest is payable on these mortgages at fixed rates ranging from 3.45% to 8.12%, with a weighted average interest rate of 4.85%. This compares to a weighted average interest rate of 5.24% as of September 30, 2014. As of September 30, 2015, the weighted average loan maturity of the Mortgage Notes Payable was 9.0 years. This compares to a weighted average loan maturity of the Mortgage Notes Payable of 7.8 years as of September 30, 2014.

As described in Note 3, during fiscal year ended September 30, 2015, the Company entered into eight mortgages totaling $122,173,058 in connection with the acquisitions of properties in Lindale (Tyler), TX; Sauget (St. Louis, MO), IL; Kansas City, MO; Frankfort (Lexington), KY; Jacksonville, FL; Monroe (Cincinnati), OH; Greenwood (Indianapolis), IN and Fort Worth (Dallas), TX.

During the fiscal year ended September 30, 2015, the Company repaid the mortgages on the Tampa, FL; Romulus, MI; Edinburg, TX and Corpus Christi, TX in the amount of $10,651,515. In conjunction with the sale of the property located in Monroe, NC, as further described in Note 3, the Company prepaid its $524,572 mortgage associated with this property.

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The following is a summary of mortgage notes payable at September 30, 2015 and 2014:

Property			Fixed Rate		Maturity Date			Balance 9/30/15		Balance 9/30/14

Tampa, FL (TB Grand Prix)	(1	)	5.71	%	03	/01/15	$	-0-	$	2,250,952
St. Joseph, MO			8.12	%	03	/01/16		417,435		1,363,680
Beltsville, MD (Washington, DC)			7.53	%	05	/01/16		419,505		1,030,343
Beltsville, MD (Washington, DC)	(2	)	5.25	%	05	/01/16		4,745,219		5,030,789
Wheeling, IL (Chicago)			5.68	%	09	/05/16		3,457,456		3,927,826
Griffin, GA (Atlanta)			6.37	%	10	/01/16		7,026,763		7,449,942
Granite City, IL (St. Louis, MO)			7.11	%	11	/01/16		1,151,798		2,066,003
Jacksonville, FL (FDX)			6.92	%	12	/01/16		406,962		707,872
Jacksonville, FL (FDX)	(3	)	6.00	%	12	/01/16		1,300,000		1,300,000
Monroe, NC	(4	)	7.11	%	12	/01/16		-0-		912,017
El Paso, TX			5.50	%	01	/05/17		3,611,052		3,943,617
Bedford Heights, OH (Cleveland)			5.96	%	04	/01/17		2,862,734		3,029,464
Chattanooga, TN			5.96	%	05	/01/17		1,774,568		1,985,155
Elgin, IL (Chicago)			6.97	%	05	/01/17		844,690		1,306,487
Hanahan, SC (Charleston) (SAIC)			7.36	%	05	/01/17		5,939,583		6,249,976
Roanoke, VA			5.96	%	05	/30/17		2,819,927		3,101,629
Edwardsville, KS (Kansas City)(Carlisle Tire)			7.38	%	07	/01/17		894,552		1,356,358
Kansas City, MO (Kellogg)			6.11	%	08	/01/17		2,381,917		2,513,863
Orion, MI			6.57	%	08	/01/17		9,095,386		9,578,032
Cheektowaga, NY (Buffalo)			6.78	%	10	/01/17		639,095		915,321
Punta Gorda, FL			6.29	%	10	/01/17		2,111,294		2,224,495
Cocoa, FL			6.29	%	12	/01/17		5,364,157		5,646,188
Richfield, OH (Cleveland)			5.22	%	01	/01/18		3,414,645		3,733,511
Tampa, FL (FDX)			5.65	%	04	/01/18		4,132,523		4,351,880
West Chester Twp., OH (Cincinnati)			6.80	%	06	/01/18		2,305,050		2,523,655
Orlando, FL			6.56	%	10	/01/18		4,570,915		4,784,769
Tampa, FL (FDX Gr)			6.00	%	03	/01/19		7,313,195		7,953,829
Lebanon, OH (Cincinnati)	(5	)	5.55	%	05	/01/19		2,695,845		2,793,854
Lebanon, TN (Nashville)			7.60	%	07	/10/19		7,856,077		8,038,667
Ft. Mill, SC (Charlotte, NC)			7.00	%	10	/10/19		2,468,015		2,972,570
Denver, CO			6.07	%	11	/01/19		1,354,284		1,631,613
Hanahan, SC (Charleston) (FDX Gr)			5.54	%	01	/21/20		1,339,490		1,599,992
Augusta, GA (FDX Gr)			5.54	%	02	/01/20		974,351		1,163,840
Huntsville, AL			5.50	%	03	/01/20		991,088		1,176,143
Colorado Springs, CO			5.41	%	01	/01/21		1,600,686		1,857,423
Romulus, MI (Detroit)	(6	)	5.50	%	07	/01/21		-0-		2,455,862
Topeka, KS			6.50	%	08	/10/21		1,590,945		1,804,560
Edinburg, TX	(6	)	5.85	%	09	/30/21		-0-		4,019,887
Streetsboro, OH (Cleveland)			5.50	%	11	/01/21		10,972,757		11,470,944
Corpus Christi, TX	(6	)	5.85	%	11	/01/21		-0-		2,653,571
Kansas City, MO (Bunzl)			5.18	%	12	/01/21		7,107,312		-0-
Olive Branch, MS (Memphis, TN) (Anda Distribution)			4.80	%	04	/01/22		9,302,178		9,828,177
Waco, TX			4.75	%	08	/01/22		5,063,021		5,313,941
Houston, TX			6.88	%	09	/10/22		3,531,824		3,911,783
Tolleson, AZ (Phoenix)			3.95	%	11	/01/22		6,043,710		6,759,255
Olive Branch, MS (Memphis, TN) (Milwaukee Tool)			3.76	%	01	/01/23		14,312,846		15,425,608
Edwardsville, KS (Kansas City) (International Paper)			3.45	%	11	/01/23		11,340,664		12,009,761
Spring, TX (Houston)			4.01	%	12	/01/23		9,692,678		10,236,317
Memphis, TN			4.50	%	01	/01/24		7,418,616		8,136,372
Oklahoma City, OK			4.35	%	06	/01/24		4,863,512		5,305,575
Indianapolis, IN			4.00	%	09	/01/24		13,161,911		14,000,000
Frankfort, KY (Lexington)			4.84	%	12	/15/24		19,078,153		-0-

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Property			Fixed Rate		Maturity Date			Balance 9/30/15		Balance 9/30/14

Carrollton, TX (Dallas)			6.75	%	02	/01/25	$	8,640,732	$	9,276,421
Altoona, PA	(7	)	4.00	%	10	/01/25		4,376,801		4,722,377
Green Bay, WI	(7	)	4.00	%	10	/01/25		3,552,304		3,832,781
Stewartville, MN (Rochester)	(7	)	4.00	%	10	/01/25		2,846,710		3,071,475
Carlstadt, NJ (New York, NY)			5.25	%	05	/15/26		2,045,141		2,184,584
Roanoke, VA (FDX Gr)			3.84	%	07	/01/26		5,758,502		6,179,173
Livonia, MI (Detroit)			4.45	%	12	/01/26		8,068,751		8,609,540
Tulsa, OK			4.58	%	11	/01/28		2,050,342		2,161,318
Lindale, TX (Tyler)			4.57	%	11	/01/29		6,723,881		-0-
Sauget, IL (St. Louis, MO)			4.40	%	11	/01/29		10,233,837		-0-
Jacksonville, FL (FDX Gr)			3.93	%	12	/01/29		19,494,453		-0-
Monroe, OH (Cincinnati)			3.77	%	04	/01/30		8,518,754		-0-
Indianapolis, IN (Ulta)			3.91	%	06	/01/30		23,987,008		-0-
Fort Worth, TX (Dallas)			3.56	%	09	/01/30		24,700,000		-0-
Buckner, KY (Louisville)			4.17	%	11	/01/33		17,347,243		17,973,038
Halfmoon, NY (Albany)	(8	)	5.25	%	01	/13/37		3,886,331		3,981,931
Total Mortgage Notes Payable							$	373,991,174	$	287,796,006

(1)

Loan was prepaid in December 2014.

(2)

Interest rate was fixed at 6.65% for the first 3 years. Interest rate is adjusted every 3 years to the Federal Home Loan Bank of New York rate plus 325 basis points with a floor of 6.5%. Effective July 1, 2012, the interest rate was adjusted from 6.65% to 6.5%. Effective August 1, 2013, the 6.5% floor was removed and the interest rate was reduced to 5.25%.

(3)

Loan is interest only.

(4)

Loan was prepaid in conjunction with the sale of the property in September 2015.

(5)

Interest rate is fixed at 5.55% through December 31, 2016. On January 1, 2017 the interest rate resets to the lender’s prevailing rate.

(6)

Loan was prepaid in September 2015.

(7)

One loan is secured by Altoona, PA, Green Bay, WI and Stewartville (Rochester), MN.

(8)

Interest rate is fixed at 5.25% for the first 5 years. Commencing on January 13, 2017, the interest rate is adjusted every 5 years to the 5 year U.S. Treasury yield plus 265 basis points with a floor of 5.25%.

Principal on the foregoing debt at September 30, 2015 is scheduled to be paid as follows:

Year Ending September 30,	2016	$	43,142,783
	2017		51,095,000
	2018		42,219,837
	2019		37,362,896
	2020		22,214,000
	Thereafter		177,956,658
		$	373,991,174

The above table does not include $33,670,000 of mortgage loans obtained in connection with the purchases of two properties totaling approximately $50,386,000 during the first quarter of fiscal 2016 to date at fixed interest rates ranging from 3.87% to 4.08%, with a weighted interest rate of 3.95%. In addition, the above table does not include commitments the Company has entered into to obtain four mortgage loans totaling $92,116,000 at fixed interest rates ranging from 3.55% to 3.95%, with a weighted average interest rate of 3.81%. Each of these four mortgage loan commitments are in connection with commitments to purchase four properties totaling approximately $135,279,000. Each of these six mortgages is a fifteen year, self-amortizing loan.

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Loans Payable:

BMO Capital Markets

On August 27, 2015, the Company entered into an agreement to replace its existing $60,000,000 unsecured revolving line of credit facility, which was scheduled to mature in June 2016 with a new unsecured revolving line of credit facility (the "Facility"). The Facility is syndicated with three banks led by BMO Capital Markets ("BMO"), as sole lead arranger, sole book runner, and Bank of Montreal as administrative agent, and includes JPMorgan Chase Bank, N.A. ("J.P. Morgan") and RBC Capital Markets ("RBC") as co-syndication agents. The Facility provides for up to $130,000,000 in available borrowings with a $70,000,000 accordion feature, bringing the total potential availability up to $200,000,000, subject to certain conditions. The Facility matures in August 2019 and has a one-year extension option, at the option of the Company. Availability under the Facility, through December 31, 2016, is based on 70% of the value of the borrowing base properties and is based on 60% of the value of the borrowing base properties, thereafter. The value of the borrowing base properties is determined by applying a 7.0% capitalization rate to the Net Operating Income ("NOI") generated by the Company's unencumbered, wholly-owned industrial properties. Borrowings under the Facility, up to the first 60% of the value of the borrowing base properties, bear interest at LIBOR plus 140 basis points to 220 basis points, depending on the Company's leverage ratio. Borrowings under the Facility in excess of 60% of the value of the borrowing base properties bear interest at LIBOR plus 215 basis points to 295 basis points, depending on the company's leverage ratio. Based on the Company's current leverage ratio, borrowings under the Facility bear interest at LIBOR plus 170 basis points for borrowings up to 60% of the value of the borrowing base properties which was at an interest rate of 1.90% as of September 30, 2015 and LIBOR plus 245 basis points, for borrowings in excess of 60% of the value of the borrowing base properties, which was at an interest rate of 2.65% as of September 30, 2015. As of September 30, 2015 the weighted average interest rate on the $80,000,000 drawn down was 1.98%.

Two River Community Bank and The Bank of Princeton

The Company has total loans payable of $5,041,386 consisting of a $2,404,341 term loan secured by 200,000 shares of UMH Properties, Inc. (UMH) 8.25% Series A preferred stock from Two River Community Bank at an annual interest rate of 4.90%, maturing November 29, 2016 and a $2,637,045 term loan secured by 500,000 shares of UMH common stock from The Bank of Princeton at a variable annual interest rate of prime plus 0.75% with a floor of 4.50%, maturing on March 9, 2017. The interest rate on the $2,637,045 term loan with The Bank of Princeton was 4.50% as of September 30, 2015.

Margin Loans

The Company from time to time uses a margin loan for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. This loan is due on demand and is collateralized by the Company’s securities portfolio. The Company must maintain a coverage ratio of approximately 50%. The interest rate charged on the margin loan is the bank’s margin rate and was 2.00% as of September 30, 2015 and 2014. At September 30, 2015 and 2014, there were no draws against the margin loan.

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Convertible Subordinated Debentures

Pursuant to notice given on October 29, 2012, the Company’s subsidiary redeemed its 8% 2013 and 8% 2015 Debentures outstanding on November 30, 2012 for the full principal amount plus accrued interest to November 30, 2012. Between October 1, 2012 and November 30, 2012, $3,500,000 of the Debentures were converted to 382,091 shares of common stock and $5,115,000 of the Debentures were redeemed.

NOTE 9 - OTHER LIABILITIES

Other liabilities consist of the following as of September 30th:

	9/30/15	9/30/14
Rent paid in advance	$5,081,537	$3,130,899
Unearned reimbursement revenue	2,037,018	1,466,181
Tenant security deposits	434,554	376,733
Other	282,359	225,758
Total	$7,835,468	$5,199,571

NOTE 10 - STOCK COMPENSATION PLAN

On July 26, 2007, the 2007 Stock Option and Stock Award Plan (the 2007 Plan) was approved by the shareholders authorizing the grant to officers, directors and key employees, of options to purchase up to 1,500,000 shares of common stock. On May 6, 2010, the Company’s shareholders approved an amendment and restatement of the 2007 Plan. The amendment and restatement made two significant changes: (1) the inclusion of directors as participants in the 2007 Plan, and (2) the ability to grant restricted stock to directors, officers and key employees. The amendment and restatement also made other conforming, technical and other minor changes. The amendment also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.

Options or restricted stock may be granted any time as determined by the Company’s Compensation Committee up through March 26, 2017. No option shall be available for exercise beyond ten years. All options are exercisable after one year from the date of grant. The option price shall not be below the fair market value at date of grant. Canceled or expired options are added back to the “pool” of shares available under the Plan.

The Compensation Committee determines the recipients of each restricted stock award; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s shareholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant shall be 100,000.

Unless otherwise provided for in an underlying restricted stock award agreement, if a participant’s status as an employee or director of the Company is terminated by reason of death or disability, the restrictions will lapse on such date. Unless otherwise provided for in an underlying restricted stock award agreement, the Plan provides that if an individual’s status as an employee or director is terminated by reason of retirement following an involuntary termination (other than for “cause” as defined in the Plan), the restrictions will generally lapse, unless the restricted stock award is intended to constitute “performance based” compensation for purposes of Section 162(m) of the Internal Revenue Code. If a participant’s status as an employee or director terminates for any other reason, the Plan provides that a participant will generally forfeit any outstanding restricted stock awards, unless otherwise indicated in the applicable award agreement. Shares of restricted stock that are forfeited become available again for issuance under the Plan. The Compensation Committee has the authority to accelerate the time at which the restrictions may lapse whenever it considers that such action is in the best interests of the Company and of its shareholders, whether by reason of changes in tax laws, or a “change in control” as defined in the 2007 Plan or otherwise.

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The Company accounts for 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).

Stock Options

During fiscal 2015, 2014 and 2013, one employee was granted options to purchase 65,000 shares each fiscal year. The fair value of these options was $60,315, $34,549, and $39,991 in fiscal 2015, 2014, and 2013, respectively based on the assumptions below and is being amortized over a one-year vesting period. For the fiscal years ended September 30, 2015, 2014 and 2013, amounts charged to compensation expense related to stock options totaled $53,873, $35,910 and $37,955, respectively. The remaining unamortized stock option expense was $15,079 as of September 30, 2015 and that amount will be expensed in fiscal 2016.

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 fiscal 2015, 2014 and 2013:

	2015		2014		2013

Dividend yield	5.38	%	6.71	%	5.74	%
Expected volatility	19.78	%	19.07	%	18.84	%
Risk-free interest rate	1.97	%	2.45	%	1.18	%
Expected lives (years)	8		8		8
Estimated forfeitures	-0-		-0-		-0-

A summary of the status of the Company’s stock option plan as of September 30, 2015, 2014 and 2013 is as follows:

				2015					2014					2013
	2015 Shares			Weighted Average Exercise Price		2014 Shares			Weighted Average Exercise Price		2013 Shares			Weighted Average Exercise Price

Outstanding at beginning of year		651,200		$	8.29		750,370		$	8.19		859,430		$	8.05
Granted		65,000			11.16		65,000			8.94		65,000			10.46
Exercised		(81,200	)		7.54		(164,170	)		8.08		(156,375	)		8.32
Expired/Forfeited		-0-			-0-		-0-			-0-		(17,685	)		8.70
Outstanding at end of year		635,000			8.68		651,200			8.29		750,370			8.19

Exercisable at end of year		570,000					586,200					685,370

Weighted-average fair value of
options granted during the year				$	0.93				$	0.53				$	0.62

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The following is a summary of stock options outstanding as of September 30, 2015:

	Date of Grant	Number of Grants	Number of Shares		Option Price	Expiration Date

12	/12/07	1	65,000	$	8.22	12	/12/15
03	/10/08	3	80,000		7.80	03	/10/16
10	/20/08	4	100,000		7.25	10	/20/16
01	/05/10	1	65,000		7.22	01	/05/18
01	/03/11	1	65,000		8.72	01	/03/19
01	/03/12	1	65,000		9.33	01	/03/20
01	/03/13	1	65,000		10.46	01	/03/21
01	/03/14	1	65,000		8.94	01	/03/22
01	/05/15	1	65,000		11.16	01	/05/23
			635,000

The aggregate intrinsic value of options outstanding as of September 30, 2015, 2014 and 2013 was $816,800, $1,212,984 and $767,777, respectively. The intrinsic value of options exercised in fiscal years 2015, 2014 and 2013 was $333,369, $361,288, and $352,346, respectively. The weighted-average remaining contractual term of the above options was 3.1, 2.7 and 3.3 years as of September 30, 2015, 2014 and 2013, respectively.

Restricted Stock

In July 2015, the Company awarded 47,000 shares of restricted stock to twelve participants and in September 2015, the Company awarded 11,000 shares of restricted stock to eleven participants under the 2007 Plan. In July 2014, the Company awarded 10,000 shares of restricted stock to one participant under the 2007 Plan. In July 2013, the Company awarded 10,000 shares of restricted stock to one participant under the 2007 Plan. The grant date fair value of restricted stock grants awarded to participants was $572,840, $101,900 and $98,700 in fiscal 2015, 2014 and 2013, respectively. These grants vest in equal installments over five years. As of September 30, 2015, there remained a total of $933,887 of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the 2007 plan and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 3.5 years. For the fiscal years ended September 30, 2015, 2014 and 2013, amounts charged to compensation expense related to restricted stock grants totaled $395,022, $311,092 and $291,193, respectively.

A summary of the status of the Company’s non-vested restricted stock awards as of September 30, 2015, 2014 and 2013 are presented below:

				2015						2014						2013
	2015 Shares			Weighted-Average Grant Date Fair Value			2014 Shares			Weighted-Average Grant Date Fair Value			2013 Shares			Weighted-Average Grant Date Fair Value

Non-vested at beginning of year		108,200		$	9.96			131,666		$	9.85			150,682		$	9.79
Granted		58,000			9.88			10,000			10.19			10,000			9.87
Dividend Reinvested Shares		7,180			9.52			8,665			9.06			9,534			9.69
Vested		(49,884	)		(9.56	)		(42,131	)		(10.47	)		(38,550	)		(9.49	)
Non-vested at end of year		123,496		$	10.08			108,200		$	9.96			131,666		$	9.85

As of September 30, 2015, there were 546,646 shares available for grant as stock options or restricted stock under the 2007 Plan.

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NOTE 11 - INCOME FROM LEASES

The Company derives income primarily from operating leases on its commercial properties. In general, these leases are written for periods up to ten years or more with various provisions for renewal. These leases generally contain clauses for reimbursement (or direct payment) of real estate taxes, maintenance, insurance and certain other operating expenses of the properties. Minimum base rents due under non-cancellable leases as of September 30, 2015 are approximately scheduled as follows:

Fiscal Year		Amount
	2016	$	73,146,000
	2017		69,848,000
	2018		62,501,000
	2019		54,971,000
	2020		51,023,000
	thereafter		228,057,000
	Total	$	539,546,000

NOTE 12 - RELATED PARTY TRANSACTIONS

Daniel D. Cronheim is an inside Director of the Company and Executive Vice President of David Cronheim Company (Cronheim) and Cronheim Management Services, Inc. (CMSI). Daniel Cronheim received $47,000, $42,000 and $36,750 for Director’s fees in 2015, 2014 and 2013, respectively. The David Cronheim Mortgage Corporation, an affiliated company of CMSI, received $196,000, $140,000 and $241,500 in mortgage brokerage commissions in 2015, 2014 and 2013, respectively.

The industrial property in Carlstadt, New Jersey is owned by Palmer Terrace Realty Associates, LLC. The Company owns 51% of Palmer Terrace Realty Associates, LLC. This property is managed by Marcus Associates, an entity affiliated with the 49% non-controlling interest. Management fees paid to Marcus Associates for each of the fiscal years ended 2015, 2014 and 2013 totaled $15,804 each year.

There are six Directors of the Company who are also Directors and shareholders of UMH. The Company holds common and preferred stock of UMH in its securities portfolio. See Note 7 for current holdings.

Some general and administrative expenses are allocated between the Company and UMH based on use or services provided. Allocations of salaries and benefits were made based on the amount of the employees’ time that was dedicated to each affiliated company. These allocations are reviewed by our Audit Committee. Net shared expenses charged by UMH to the Company for the fiscal years ended September 30, 2015, 2014 and 2013 were $158,727, $394,927 and $588,452, respectively.

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NOTE 13 - TAXES

Income Tax

The Company has elected to be taxed as a Real Estate Investment Trust under the applicable provisions of the Internal Revenue Code under Sections 856 to 860 and the comparable New Jersey Statutes. Under such provisions, the Company will not be taxed on that portion of its taxable income distributed currently to shareholders, provided that at least 90% of its taxable income is distributed. As the Company has and intends to continue to distribute all of its income currently, no provision has been made for income taxes. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state, and local income taxes.

Federal Excise Tax

The Company does not have a Federal excise tax liability for the calendar years 2015, 2014 and 2013, since it intends to or has distributed all of its annual income.

Reconciliation Between U.S. GAAP Net Income and Taxable Income

The following table reconciles net income attributable to common shares to taxable income for the years ended September 30, 2015, 2014 and 2013:

		2015 Estimated (unaudited)			2014 Actual			2013 Actual
Net income applicable to common shareholders	$	16,998,783		$	11,238,262		$	12,788,214
Book / tax difference on gains realized from capital transactions		(805,513	)		(2,166,766	)		(6,618,553	)
Stock based compensation expense		448,895			347,002			329,148
Deferred compensation		-0-			-0-			-0-
Other book / tax differences, net		2,606,993			(150,831	)		(1,397,178	)
Taxable income before adjustments		19,249,158			9,267,667			5,101,631
Add/(Less): capital gains (losses)		(104,097	)		973,761			5,470,248
Estimated taxable income subject to 90% dividend requirement	$	19,145,061		$	10,241,428		$	10,571,879

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Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction

The following table reconciles cash dividends paid with the dividends paid deduction for the years ended September 30, 2015, 2014 and 2013:

		2015
		Estimated (unaudited)			2014 Actual			2013 Actual

Cash dividends paid	$	35,522,127		$	29,531,430		$	25,415,875
Less: Portion designated capital (gains) losses distribution		104,097			(973,761	)		(5,470,248	)
Less: Return of capital		(7,770,034	)		(9,856,777	)		(1,244,735	)
Estimated dividends paid deduction	$	27,856,190		$	18,700,892		$	18,700,892

NOTE 14 - SHAREHOLDERS’ EQUITY

Common Stock

The Company implemented a Dividend Reinvestment and Stock Purchase Plan (the DRIP) effective December 15, 1987, as amended. Under the terms of the DRIP and subsequent amendments, shareholders who participate may reinvest all or part of their dividends in additional shares of the Company at a discounted price (approximately 95% of market value) directly from the Company, from authorized but unissued shares of the Company common stock. According to the terms of the DRIP, shareholders may also purchase additional shares by making optional cash payments monthly.

Amounts received in connection with the DRIP and shares issued in connection with the DRIP for the fiscal years ended September 30, 2015, 2014 and 2013 were as follows:

	2015		2014		2013

Amounts received	$	48,404,556	$	38,090,334	$	31,119,351
Less: Dividend reinvestments		8,489,169		7,624,528		6,781,345
Amounts received, net	$	39,915,387	$	30,465,806	$	24,338,006

Number of Shares Issued		4,975,500		4,296,075		3,243,351

The following cash distributions were paid to common shareholders during the years ended September 30, 2015, 2014 and 2013:

		2015				2014				2013
Quarter Ended		Amount		Per Share		Amount		Per Share		Amount		Per Share

	December 31	$	8,598,414	$	0.15	$	6,815,308	$	0.15	$	6,134,523	$	0.15
	March 31		8,765,446		0.15		7,030,326		0.15		6,276,824		0.15
	June 30		8,952,767		0.15		7,182,521		0.15		6,414,273		0.15
	September 30		9,205,500		0.15		8,503,275		0.15		6,590,255		0.15
		$	35,522,127	$	0.60	$	29,531,430	$	0.60	$	25,415,875	$	0.60

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On May 28, 2014, the Company completed a public offering of 8,050,000 shares of the Company’s Common Stock (including the underwriters’ option to purchase 1,050,000 additional shares) at a price of $8.50 per share, before underwriting discounts. The Company received net proceeds from the offering, after deducting underwriting discounts and all other transaction costs, of approximately $65,113,000.

Preferred Stock

As of September 30, 2015, the Company has a total of 2,139,750 shares of Series A Preferred Stock outstanding representing an aggregate liquidation preference of $53,493,750.

The annual dividend of the Series A Preferred Stock is $1.90625 per share, or 7.625%, of the $25.00 per share liquidation value and is payable quarterly in arrears on March 15, June 15, September 15, and December 15. The Series A Preferred Stock has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Since December 5, 2011, at any time and, from time to time, the Series A Preferred Stock can be redeemed in whole, or in part, at the Company’s option, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption.

During any period of time that both (i) the Series A Preferred Stock is not listed on the New York Stock Exchange (NYSE) or The NASDAQ Stock Market and (ii) the Company is not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), but any shares of Series A Preferred Stock are outstanding, the Company will (a) increase the cumulative cash dividends payable on the Series A Preferred Stock to a rate of 8.625% per year of the $25.00 liquidation value per share, which is equivalent to $2.15625 per share per year, and (b) have the option to redeem the outstanding Series A Preferred Stock, in whole but not in part, within 90 days after the date upon which the shares of the Company cease to be listed and cease to be subject to such reporting requirements, for a redemption price of $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date. Holders of the Series A Preferred Stock generally have no voting rights, except if the Company fails to pay dividends for six or more quarterly periods, whether or not consecutive, or with respect to certain specified events.

The Company’s Board of Directors have declared and the Company has paid the following dividends on the Series A Preferred Stock for the fiscal years ended September 30, 2015, 2014 and 2013:

Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/14	11/17/14	12/15/14	$1,019,725	$0.4765625
1/21/15	2/17/15	3/16/15	1,019,726	0.4765625
4/1/15	5/15/15	6/15/15	1,019,725	0.4765625
7/1/15	8/17/15	9/15/15	1,019,726	0.4765625
			$4,078,902	$1.90625

Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/13	11/15/13	12/16/13	$1,019,725	$0.4765625
1/15/14	2/18/14	3/17/14	1,019,726	0.4765625
4/1/14	5/15/14	6/16/14	1,019,725	0.4765625
7/1/14	8/15/14	9/15/14	1,019,726	0.4765625
			$4,078,902	$1.90625

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Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/12	11/15/12	12/17/12	$1,019,725	$0.4765625
1/13/13	2/15/13	3/15/13	1,019,726	0.4765625
4/9/13	5/15/13	6/17/13	1,019,725	0.4765625
7/1/13	8/15/13	9/16/13	1,019,726	0.4765625
			$4,078,902	$1.90625

On October 1, 2015, the Company’s Board of Directors declared a quarterly dividend of $0.4765625 per share of its Series A Preferred Stock to be paid December 15, 2015 to shareholders of record as of the close of business on November 16, 2015.

As of September 30, 2015, the Company has a total of 2,300,000 shares of Series B Preferred Stock outstanding representing an aggregate liquidation preference of $57,500,000.

The annual dividend of the Series B Preferred Stock is $1.96875 per share, or 7.875% of the $25.00 per share liquidation value and is payable quarterly in arrears on March 15, June 15, September 15, and December 15. The Series B Preferred Stock has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to the Company’s qualification as a REIT, and as described below, the Series B Preferred Stock is not redeemable prior to June 7, 2017. On and after June 7, 2017, at any time and, from time to time, the Series B Preferred Stock will be redeemable in whole, or in part, at the Company’s option, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption.

Upon the occurrence of a Delisting Event, as defined in the Articles Supplementary (the “Articles Supplementary”) classifying and designating the Series B Preferred Stock, the Company may, at its option and subject to certain conditions, redeem the Series B Preferred Stock, in whole or in part, within 90 days after the Delisting Event, for a cash redemption price per share of Series B Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared), to, but not including, the redemption date.

Upon the occurrence of a Change of Control, as defined in the Articles Supplementary, the Company may, at its option and subject to certain conditions, redeem the Series B Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per share of Series B Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date.

The Company’s Board of Directors have declared and the Company has paid the following dividends on the Series B Preferred Stock for the year ended September 30, 2015, 2014 and 2013:

Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/14	11/17/14	12/15/14	$1,132,032	$0.4921875
1/21/15	2/17/15	3/16/15	1,132,033	0.4921875
4/1/15	5/15/15	6/15/15	1,132,032	0.4921875
7/1/15	8/17/15	9/15/15	1,132,033	0.4921875
			$4,528,130	$1.96875

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Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/13	11/15/13	12/16/13	$1,132,032	$0.4921875
1/15/14	2/18/14	3/17/14	1,132,033	0.4921875
4/1/14	5/15/14	6/16/14	1,132,032	0.4921875
7/1/14	8/15/14	9/15/14	1,132,033	0.4921875
			$4,528,130	$1.96875

Declaration Date	Record Date	Payment Date	Dividend	Dividend per Share

10/1/12	11/15/12	12/17/12	$1,132,032	$0.4921875
1/13/13	2/15/13	3/15/13	1,132,033	0.4921875
4/9/13	5/15/13	6/17/13	1,132,032	0.4921875
7/1/13	8/15/13	9/16/13	1,132,033	0.4921875
			$4,528,130	$1.96875

On October 1, 2015, the Company’s Board of Directors declared a quarterly dividend of $0.4921875 per share to be paid December 15, 2015 to shareholders of record as of the close of business on November 16, 2015.

Repurchase of Stock

NOTE 15 - FAIR VALUE MEASUREMENTS

The Company follows 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. The fair value of these certain financial assets was determined using the following inputs at September 30, 2015 and 2014:

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	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)
September 30, 2015:
Securities available for sale	$	54,541,237	$	54,541,237	$	-0-	$	-0-
September 30, 2014:
Securities available for sale	$	59,311,403	$	59,311,403	$	-0-	$	-0-

In addition to the Company’s investments in Securities Available for Sale at Fair Value, the Company is required to disclose certain information about fair values of its other financial instruments. Estimates of fair value are made at a specific point in time based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. For a portion of the Company’s other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties; future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only, and therefore cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates.

The fair value of Cash and Cash Equivalents approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable rate Loans Payable approximates their current carrying amounts since such amounts payable are at approximately a weighted-average current market rate of interest. The estimated fair value of fixed rate mortgage notes payable is based on discounting the future cash flows at a year-end risk adjusted borrowing rate currently available to the Company for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. At September 30, 2015, the fixed rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $379,923,000 and the carrying value amounted to $373,991,174. At September 30, 2015 the fixed rate Loans Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $5,066,000 and the carrying value amounted to $5,041,386. When the Company acquires a property, it is required to fair value all of the assets and liabilities, including intangible assets and liabilities, relating to the properties acquired lease (See Note 3). Those fair value measurements fall within level 3 of the fair value hierarchy.

NOTE 16 - CASH FLOW

During fiscal years 2015, 2014 and 2013, the Company paid cash for interest of $18,617,553, $16,191,170 and $15,339,168, respectively.

During fiscal years 2015, 2014 and 2013, the Company had $8,489,169, $7,624,528 and $6,781,345, respectively, of dividends which were reinvested that required no cash transfers.

During fiscal year 2013, $3,500,000 in principal amount of the 8% Subordinated Convertible Debentures were converted to 382,091 shares of common stock.

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NOTE 17 – CONTINGENCIES AND COMMITMENTS

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

In the first quarter of fiscal 2016 to date, the Company purchased two industrial properties totaling approximately 506,000 square feet with net-leased terms of ten years each. Both properties are leased to FedEx Ground Package System, Inc. The purchase price for the two properties was approximately $50,386,000 and they are located in Louisiana and North Carolina. These two properties generate annualized rental income over the life of their respective leases of approximately $3,336,000. In addition, these two industrial properties purchased during fiscal 2016 to date, increased our current total leasable square feet to approximately 14,425,000 and our occupancy rate to 97.8%. The funds for these acquisitions were provided by two property level mortgage loan totaling $33,670,000, draws on an unsecured line of credit and cash on hand. The two mortgages are at fixed rates ranging from 3.87% to 4.08% and have a weighted average interest rate of 3.95%. Each of these mortgages is a fifteen year, self-amortizing loan.

The Company currently has three property expansions in progress consisting of two building expansions and one parking lot expansion. Total expansion costs are expected to be approximately $7,765,000. Upon completion of the three expansions, annual rent will be increased by approximately $777,000 and each property will provide for a new ten year lease extension from the date of completion for each property being expanded. In addition, the two building expansions will provide total additional rentable square feet of approximately 65,700.

NOTE 18 – SUBSEQUENT EVENTS

Material subsequent events have been evaluated and are disclosed herein.

On November 13, 2015, the Company purchased a newly constructed 330,717 square foot industrial building located in Concord, NC, which is in the Charlotte MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through July 2025. The purchase price was $31,975,897. The Company obtained a 15 year self-amortizing mortgage of $20,780,000 at a fixed interest rate of 3.87%. Annual rental revenue over the remaining term of the lease is approximately $2,078,000.

On December 2, 2015, the Company purchased a newly constructed 175,315 square foot industrial building located in Covington, LA, which is in the New Orleans MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. through June 2025. The purchase price was $18,410,000. The Company obtained a 15 year self-amortizing mortgage of $12,890,000 at a fixed interest rate of 4.08%. Annual rental revenue over the remaining term of the lease is approximately $1,257,000.

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The two industrial properties purchased during fiscal 2016 to date totaling approximately 506,000 square feet brings the Company’s current total leasable square feet to approximately 14,425,000. In addition, as a result of leasing-up the two previously vacant properties, whose leases become effective subsequent to fiscal yearend, our occupancy rate will increase to 99.5% upon lease commencement.

NOTE 19 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is the Unaudited Selected Quarterly Financial Data:

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

THREE MONTHS ENDED


FISCAL 2015		12/31/14			3/31/15			6/30/15			9/30/15

Rental and Reimbursement Revenue	$	17,677,530		$	18,858,596		$	20,672,282		$	20,567,089
Lease Termination Income		238,625			-0-			-0-			-0-
Total Expenses		9,582,908			10,305,673			11,351,102			10,875,080
Other Income (Expense)		(2,909,595	)		(3,734,243	)		(4,145,322	)		(4,525,626	)
Gain on Sale of Real Estate Investment		-0-			-0-			-0-			5,021,242
Net Income		5,423,652			4,818,680			5,175,858			10,187,625
Net Income Attributable to Common Shareholders		3,271,894			2,666,922			3,024,100			8,035,867
Net Income Attributable to Common Shareholders per diluted share	$	0.06		$	0.04		$	0.05		$	0.14

FISCAL 2014		12/31/13			3/31/14			6/30/14			9/30/14

Rental and Reimbursement Revenue	$	15,661,155		$	16,345,305		$	15,739,870		$	16,926,011
Lease Termination Income		-0-			-0-			1,182,890			-0-
Total Expenses		8,416,291			8,656,172			8,810,586			9,345,828
Other Income (Expense)		(2,954,666	)		(2,931,891	)		(2,518,626	)		(2,375,877	)
Net Income		4,290,198			4,757,242			5,593,548			5,204,306
Net Income Attributable to Common Shareholders		2,138,440			2,605,484			3,441,790			3,052,548
Net Income Attributable to Common Shareholders per diluted share	$	0.05		$	0.05		$	0.07		$	0.06

Certain amounts in the Selected Quarterly Financial Data for the prior quarters have been reclassified to conform to the financial statement presentation for the current year.

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column B		Column C				Column D
								Capitalization
						Buildings and		Subsequent to
Description		Encumbrances		Land		Improvements		Acquisition

Industrial Buildings
Monaca, PA	$	-0-	$	401,716	$	878,081	$	6,489,171
Orangeburg, NY		-0-		694,720		2,977,372		223,583
Ridgeland, MS		-0-		218,000		1,233,500		399,294
Urbandale, IA		-0-		310,000		1,758,000		93,895
Richland, MS		-0-		211,000		1,195,000		494,691
O'Fallon, MO		-0-		264,000		3,302,000		679,913
Fayetteville, NC		-0-		172,000		4,467,885		244,637
Schaumburg, IL		-0-		1,039,800		3,694,320		233,519
Burr Ridge, IL		-0-		270,000		1,236,599		177,602
Romulus, MI		-0-		531,000		3,653,883		415,649
Liberty, MO		-0-		723,000		6,498,324		152,294
Omaha, NE		-0-		1,170,000		4,425,500		341,781
Charlottesville, VA		-0-		1,170,000		2,845,000		329,037
Jacksonville, FL (FDX)		1,706,962		1,165,000		4,668,080		396,341
West Chester Twp, OH		2,305,050		695,000		3,342,000		1,691,690
Richmond, VA (FDX)		-0-		1,160,000		6,413,305		166,366
St. Joseph, MO		417,435		800,000		11,753,964		628,808
Newington, CT		-0-		410,000		2,961,000		92,824
Cudahy, WI		-0-		980,000		5,050,997		3,342,675
Beltsville, MD		5,164,724		3,200,000		5,958,773		5,308,982
Granite City, IL		1,151,798		340,000		12,046,675		-0-
Winston-Salem, NC		-0-		980,000		5,610,000		332,086
Elgin, IL		844,690		1,280,000		5,529,488		117,468
Tolleson, AZ		6,043,710		1,316,075		13,329,000		523,511
Ft. Myers, FL		-0-		1,910,000		2,499,093		608,354
Edwardsville, KS (Carlisle)		894,552		1,185,000		5,815,148		225,253
Tampa, FL (FDX Gr)		7,313,195		5,000,000		12,660,003		788,959
Denver, CO		1,354,284		1,150,000		3,890,300		1,313,751
Hanahan, SC (SAIC)		5,939,583		1,129,000		11,831,321		340,271
Hanahan, SC (FDX Gr)		1,339,490		930,000		3,426,362		3,258,291
Augusta, GA (FDX Gr)		974,351		614,406		3,026,409		1,688,058
Huntsville, AL		991,088		748,115		2,724,418		1,279,208
Richfield, OH		3,414,645		2,676,848		7,197,945		6,560,685
Colorado Springs, CO		1,600,686		1,270,000		3,821,000		2,104,115
Tampa, FL (FDX)		4,132,523		2,830,000		4,704,531		31,186
Griffin, GA		7,026,763		760,000		13,692,115		416,742
Roanoke, VA (CHEP)		2,819,927		1,853,000		4,817,298		735,149
Orion, MI		9,095,386		4,649,971		13,053,289		5,176,509
Carlstadt, NJ		2,045,141		1,194,000		3,645,501		50,211
Wheeling, IL		3,457,456		5,112,120		9,186,606		4,238,926
White Bear Lake, MN		-0-		1,393,000		3,764,126		-0-
Cheektowaga, NY		639,095		4,796,765		3,883,971		2,280,087
Richmond, VA (Carrier)		-0-		446,000		3,910,500		404,269
Montgomery, IL		-0-		2,000,000		9,225,683		72,684
Tampa, FL (TB Grand Prix)		-0-		1,867,000		3,684,794		99,272
Augusta, GA (FDX)		-0-		380,000		1,400,943		166,089

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column B		Column C				Column D
								Capitalization
						Buildings and		Subsequent to
Description		Encumbrances		Land		Improvements		Acquisition

Lakeland, FL	$	-0-	$	261,000	$	1,621,163	$	84,048
El Paso, TX		3,611,052		2,088,242		4,514,427		4,691,570
Chattanooga, TN		1,774,568		300,000		4,464,711		206,450
Bedford Heights, OH		2,862,734		990,000		4,893,912		895,679
Kansas City, MO (Kellogg)		2,381,917		660,000		4,049,832		38,542
Punta Gorda, FL		2,111,294		660,000		3,444,915		-0-
Cocoa, FL		5,364,157		1,881,316		8,623,564		3,584,963
Orlando, FL		4,570,915		2,200,000		6,133,800		207,437
Topeka, KS		1,590,945		-0-		3,679,843		-0-
Memphis, TN		7,418,616		1,240,887		13,380,000		-0-
Houston, TX		3,531,824		1,730,000		6,320,000		33,107
Carrollton, TX		8,640,732		1,500,000		16,240,000		4,300
Ft. Mill, SC		2,468,015		1,670,000		10,045,000		3,698,307
Lebanon, TN		7,856,077		2,230,000		11,985,126		-0-
Rockford, IL (Sherwin-Williams)		-0-		1,100,000		4,440,000		11,227
Edinburg, TX		-0-		1,000,000		6,414,000		24,483
Streetsboro, OH		10,972,757		1,760,000		17,840,000		-0-
Corpus Christi, TX		-0-		-0-		4,764,500		-0-
Halfmoon, NY		3,886,331		1,190,000		4,335,600		-0-
Lebanon, OH		2,695,845		240,000		4,176,000		36,425
Olive Branch, MS (Anda)		9,302,178		800,000		13,750,000		-0-
Oklahoma City, OK		4,863,512		1,410,000		8,043,000		3,140,873
Waco, TX		5,063,021		1,350,000		7,383,000		3,813,157
Livonia, MI		8,068,751		320,000		13,380,000		30,533
Olive Branch, MS (Milwaukee Tool)		14,312,846		2,550,000		24,818,816		133,981
Roanoke, VA (FDX Gr)		5,758,502		1,740,000		8,460,000		-0-
Green Bay, WI		3,552,304		590,000		5,980,000		-0-
Rochester, MN		2,846,710		900,000		4,320,000		-0-
Tulsa, OK		2,050,342		790,000		2,910,000		48,031
Buckner, KY		17,347,243		2,280,000		24,353,125		86,591
Edwardsville, KS (International Paper)		11,340,664		2,750,000		15,335,492		203,261
Altoona, PA		4,376,801		1,200,000		7,790,000		-0-
Spring, TX		9,692,678		1,890,000		13,391,318		3,946,205
Indianapolis, IN (FDX Gr)		13,161,911		3,500,000		20,446,000		-0-
Sauget, IL		10,233,837		1,890,000		13,310,000		-0-
Tyler, TX		6,723,881		540,000		9,390,000		-0-
Kansas City, MO (Bunzl)		7,107,312		1,000,000		8,600,000		-0-
Frankfort, KY (Jim Beam)		19,078,153		1,850,000		26,150,000		-0-
Jacksonville, FL (FDX Gr)		19,494,453		6,000,000		24,645,954		-0-
Monroe, OH		8,518,754		1,800,000		11,137,000		-0-
Indianapolis, IN (Ulta)		23,987,008		2,250,000		35,234,574		-0-
Ft. Worth, TX		24,700,000		8,200,000		27,100,832		-0-
Cincinnati, OH		-0-		800,000		5,950,000		-0-
Rockford, IL (B/E Aerospace)		-0-		480,000		4,620,000		-0-
Shopping Center
Somerset, NJ		-0-		34,316		637,097		2,023,831
Vacant Land
Shelby County, TN		-0-		11,065		-0-		-0-
El Paso, TX		-0-		1,136,953		-0-		-0-
Corporate Office
Freehold, NJ		-0-		-0-		21,286		748,125
	$	373,991,174	$	134,160,315	$	725,213,989	$	82,405,012

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column E (1) (2)
		Gross Amount at Which Carried
		September 30, 2015
Description		Land		Bldg & Imp		Total

Industrial Buildings
Monaca, PA	$	401,716	$	7,367,252	$	7,768,968
Orangeburg, NY		694,720		3,200,955		3,895,675
Ridgeland, MS		218,000		1,632,794		1,850,794
Urbandale, IA		310,000		1,851,895		2,161,895
Richland, MS		211,000		1,689,691		1,900,691
O'Fallon, MO		264,000		3,981,913		4,245,913
Fayetteville, NC		172,000		4,712,522		4,884,522
Schaumburg, IL		1,039,800		3,927,839		4,967,639
Burr Ridge, IL		270,000		1,414,201		1,684,201
Romulus, MI		531,000		4,069,532		4,600,532
Liberty, MO		723,000		6,650,618		7,373,618
Omaha, NE		1,170,000		4,767,281		5,937,281
Charlottesville, VA		1,170,000		3,174,037		4,344,037
Jacksonville, FL (FDX)		1,165,000		5,064,421		6,229,421
West Chester Twp, OH		695,000		5,033,690		5,728,690
Richmond, VA (FDX)		1,160,000		6,579,671		7,739,671
St. Joseph, MO		800,000		12,382,772		13,182,772
Newington, CT		410,000		3,053,824		3,463,824
Cudahy, WI		980,000		8,393,672		9,373,672
Beltsville, MD		3,200,000		11,267,755		14,467,755
Granite City, IL		340,000		12,046,675		12,386,675
Winston-Salem, NC		980,000		5,942,086		6,922,086
Elgin, IL		1,280,000		5,646,956		6,926,956
Tolleson, AZ		1,316,075		13,852,511		15,168,586
Ft. Myers, FL		1,910,000		3,107,447		5,017,447
Edwardsville, KS (Carlisle)		1,185,000		6,040,401		7,225,401
Tampa, FL (FDX Gr)		5,000,000		13,448,962		18,448,962
Denver, CO		1,150,000		5,204,051		6,354,051
Hanahan, SC (SAIC)		1,129,000		12,171,592		13,300,592
Hanahan, SC (FDX Gr)		930,000		6,684,653		7,614,653
Augusta, GA (FDX Gr)		614,406		4,714,467		5,328,873
Huntsville, AL		748,115		4,003,626		4,751,741
Richfield, OH		2,676,848		13,758,630		16,435,478
Colorado Springs, CO		1,270,000		5,925,115		7,195,115
Tampa, FL (FDX)		2,830,000		4,735,717		7,565,717
Griffin, GA		760,000		14,108,857		14,868,857
Roanoke, VA (DHL)		1,853,000		5,552,447		7,405,447
Orion, MI		4,649,971		18,229,798		22,879,769
Carlstadt, NJ		1,194,000		3,695,712		4,889,712
Wheeling, IL		5,112,120		13,425,532		18,537,652
White Bear Lake, MN		1,393,000		3,764,126		5,157,126
Cheektowaga, NY		4,796,765		6,164,058		10,960,823
Richmond, VA (Carrier)		446,000		4,314,769		4,760,769
Montomgery, IL		2,000,000		9,298,367		11,298,367
Tampa, FL (TB Grand Prix)		1,867,000		3,784,066		5,651,066
Augusta, GA (FDX)		380,000		1,567,032		1,947,032
Lakeland, FL		261,000		1,705,211		1,966,211
El Paso, TX		2,088,242		9,205,997		11,294,239
Chattanooga, TN		300,000		4,671,161		4,971,161

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SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column E (1) (2)
		Gross Amount at Which Carried
		September 30, 2015
Description		Land		Bldg & Imp		Total

Bedford Heights, OH	$	990,000	$	5,789,591	$	6,779,591
Kansas City, MO		660,000		4,088,374		4,748,374
Punta Gorda, FL		660,000		3,444,915		4,104,915
Cocoa, FL		1,881,316		12,208,527		14,089,843
Orlando, FL		2,200,000		6,341,237		8,541,237
Topeka, KS		-0-		3,679,843		3,679,843
Memphis, TN		1,240,887		13,380,000		14,620,887
Houston, TX		1,730,000		6,353,107		8,083,107
Carrollton, TX		1,500,000		16,244,300		17,744,300
Ft. Mill, SC		1,670,000		13,743,307		15,413,307
Lebanon, TN		2,230,000		11,985,126		14,215,126
Rockford, IL (Sherwin-Williams)		1,100,000		4,451,227		5,551,227
Edinburg, TX		1,000,000		6,438,483		7,438,483
Streetsboro, OH		1,760,000		17,840,000		19,600,000
Corpus Christi, TX		-0-		4,764,500		4,764,500
Halfmoon, NY		1,190,000		4,335,600		5,525,600
Lebanon, OH		240,000		4,212,425		4,452,425
Olive Branch, MS (Anda)		800,000		13,750,000		14,550,000
Oklahoma City, OK		1,410,000		11,183,873		12,593,873
Waco, TX		1,350,000		11,196,157		12,546,157
Livonia, MI		320,000		13,410,533		13,730,533
Olive Branch, MS (Milwaukee Tool)		2,550,000		24,952,797		27,502,797
Roanoke, VA (FDX Gr)		1,740,000		8,460,000		10,200,000
Green Bay, WI		590,000		5,980,000		6,570,000
Rochester, MN		900,000		4,320,000		5,220,000
Tulsa, OK		790,000		2,958,031		3,748,031
Buckner, KY		2,280,000		24,439,716		26,719,716
Edwardsville, KS (International Paper)		2,750,000		15,538,753		18,288,753
Altoona, PA		1,200,000		7,790,000		8,990,000
Spring, TX		1,890,000		17,337,523		19,227,523
Indianapolis, IN (FDX Gr)		3,500,000		20,446,000		23,946,000
Sauget, IL		1,890,000		13,310,000		15,200,000
Tyler, TX		540,000		9,390,000		9,930,000
Kansas City, MO (Bunzl)		1,000,000		8,600,000		9,600,000
Frankfort, KY (Jim Beam)		1,850,000		26,150,000		28,000,000
Jacksonville, FL (FDX Gr)		6,000,000		24,645,954		30,645,954
Monroe, OH		1,800,000		11,137,000		12,937,000
Indianapolis, IN (Ulta)		2,250,000		35,234,574		37,484,574
Ft. Worth, TX		8,200,000		27,100,832		35,300,832
Cincinnati, OH		800,000		5,950,000		6,750,000
Rockford, IL (B/E Aerospace)		480,000		4,620,000		5,100,000
Shopping Center
Somerset, NJ		34,316		2,660,928		2,695,244
Vacant Land
Shelby County, TN		11,065		-0-		11,065
El Paso, TX		1,136,953		-0-		1,136,953
Corporate Office
Freehold, NJ		-0-		769,411		769,411
	$	134,160,315	$	807,619,001	$	941,779,316

(1)

See pages 139-143 for reconciliation.

(2)

The aggregate cost for Federal tax purposes approximates historical cost.

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SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column F	Column G	Column H	Column I
		Accumulated	Date of	Date	Depreciable
Description		Depreciation	Construction	Acquired	Life

Industrial Buildings
Monaca, PA	$	2,023,850	1977	1977	5-31.5
Orangeburg, NY		2,201,868	1990	1993	31.5
Ridgeland, MS		1,109,322	1988	1993	39
Urbandale, IA		1,042,050	1985	1994	39
Richland, MS		748,265	1986	1994	39
O'Fallon, MO		1,963,226	1989	1994	39
Fayetteville, NC		2,229,107	1996	1997	39
Schaumburg, IL		1,932,902	1997	1997	39
Burr Ridge, IL		613,666	1997	1997	39
Romulus, MI		1,691,732	1998	1998	39
Liberty, MO		2,973,407	1997	1998	39
Omaha, NE		1,984,805	1999	1999	39
Charlottesville, VA		1,295,758	1998	1999	39
Jacksonville, FL (FDX)		2,145,184	1998	1999	39
West Chester Twp, OH		1,768,517	1999	2000	39
Richmond, VA (FDX)		2,465,144	2000	2001	39
St. Joseph, MO		4,423,009	2000	2001	39
Newington, CT		1,129,167	2001	2001	39
Cudahy, WI		2,633,457	2001	2001	39
Beltsville, MD		3,230,319	2000	2001	39
Granite City, IL		4,171,237	2001	2001	39
Winston-Salem, NC		1,980,737	2001	2002	39
Elgin, IL		1,976,098	2002	2002	39
Tolleson, AZ		4,669,262	2002	2002	39
Ft. Myers, FL		913,073	1974	2002	39
Edwardsville, KS (Carlisle)		1,957,985	2002	2003	39
Tampa, FL (FDX Gr)		3,799,846	2004	2004	39
Denver, CO		1,304,213	2005	2005	39
Hanahan, SC (SAIC)		3,199,452	2002	2005	39
Hanahan, SC (FDX Gr)		1,550,717	2005	2005	39
Augusta, GA (FDX Gr)		1,137,702	2005	2005	39
Huntsville, AL		821,527	2005	2005	39
Richfield, OH		2,016,458	2006	2006	39
Colorado Springs, CO		1,336,829	2006	2006	39
Tampa, FL (FDX)		1,135,794	2006	2006	39
Griffin, GA		3,405,334	2006	2006	39
Roanoke, VA (CHEP)		1,140,757	1996	2007	39
Orion, MI		3,080,057	2007	2007	39
Carlstadt, NJ		767,084	1977	2007	39
Wheeling, IL		3,392,350	2003	2007	39
White Bear Lake, MN		831,891	2001	2007	39
Cheektowaga, NY		1,370,655	2002	2007	39
Richmond, VA (Carrier)		1,049,842	2004	2007	39
Montomgery, IL		2,043,560	2004	2007	39
Tampa, FL (TB Grand Prix)		841,103	1989	2007	39
Augusta, GA (FDX)		321,283	1993	2007	39

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SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

Column A		Column F	Column G	Column H	Column I
		Accumulated	Date of	Date	Depreciable
Description		Depreciation	Construction	Acquired	Life

Lakeland, FL	$	406,472	1993	2007	39
El Paso, TX		1,176,363	2005	2007	39
Chattanooga, TN		1,003,292	2002	2007	39
Bedford Heights, OH		1,337,898	1998	2007	39
Kansas City, MO (Kellogg)		901,195	2002	2007	39
Punta Gorda, FL		742,718	2007	2007	39
Cocoa, FL		1,793,254	2006	2008	39
Orlando, FL		1,307,147	1997	2008	39
Topeka, KS		613,406	2006	2009	39
Memphis, TN		1,886,931	1994	2010	39
Houston, TX		913,317	2005	2010	39
Carrollton, TX		2,290,543	2009	2010	39
Ft. Mill, SC		1,597,480	2009	2010	39
Lebanon, TN		1,229,231	1993	2011	39
Rockford, IL (Sherwin-Williams)		512,938	1998-2008	2011	39
Edinburg, TX		742,117	2011	2011	39
Streetsboro, OH		1,601,026	2012	2012	39
Corpus Christi, TX		427,583	2012	2012	39
Halfmoon, NY		389,092	2012	2012	39
Lebanon, OH		375,609	2012	2012	39
Olive Branch, MS (Anda)		1,145,833	2012	2012	39
Oklahoma City, OK		723,874	2012	2012	39
Waco, TX		636,182	2012	2012	39
Livonia, MI		1,002,083	1999	2013	39
Olive Branch, MS (Milwaukee Tool)		1,592,066	2013	2013	39
Roanoke, VA (FDX Gr)		497,115	2013	2013	39
Green Bay, WI		306,667	2013	2013	39
Rochester, MN		221,538	2013	2013	39
Tulsa, OK		145,342	2009	2014	39
Buckner, KY		1,199,729	2014	2014	39
Edwardsville, KS (International Paper)		757,934	2014	2014	39
Altoona, PA		382,842	2014	2014	39
Spring, TX		738,390	2014	2014	39
Indianapolis, IN (FDX Gr)		608,611	2014	2014	39
Sauget, IL		341,282	2015	2015	39
Tyler, TX		240,769	2015	2015	39
Kansas City, MO (Bunzl)		202,137	2015	2015	39
Frankfort, KY (Jim Beam)		558,761	2015	2015	39
Jacksonville, FL (FDX Gr)		421,298	2015	2015	39
Monroe, OH		166,579	2015	2015	39
Indianapolis, IN (Ulta)		376,438	2015	2015	39
Ft. Worth, TX		115,816	2015	2015	39
Cincinnati, OH		12,714	2014	2015	39
Rockford, IL (B/E Aerospace)		118,462	2012	2015	39
Shopping Center
Somerset, NJ		1,318,964	1970	1970	10-33
Vacant Land
Shelby County, TN		-0-	N/A	2007	N/A
El Paso, TX		-0-	N/A	2011	N/A
Corporate Office
Freehold, NJ		79,572	N/A	N/A	N/A
	$	124,978,211

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2015

(1)

Reconciliation

REAL ESTATE INVESTMENTS

		9/30/2015		9/30/2014		9/30/2013

Balance-Beginning of Year	$	743,927,412	$	627,894,827	$	548,312,703
Additions:
Acquisitions		190,948,360		96,433,935		65,799,761
Improvements		12,459,921		19,598,650		15,977,709
Total Additions		203,408,281		116,032,585		81,777,470
Deletions:
Sales		(5,556,377)		-0-		(2,195,346)
Total Deletions		(5,556,377)		-0-		(2,195,346)

Balance-End of Year	$	941,779,316	$	743,927,412	$	627,894,827

ACCUMULATED DEPRECIATION

		9/30/2015		9/30/2014		9/30/2013

Balance-Beginning of Year	$	107,004,184	$	91,095,415	$	79,345,279
Depreciation		19,705,320		15,908,769		12,864,542
Sales		(1,731,293)		-0-		(1,114,406)

Balance-End of Year	$	124,978,211	$	107,004,184	$	91,095,415

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO SCHEDULE III

SEPTEMBER 30,

(1) Reconciliation

	2015	2014	2013
Balance – Beginning of Year	$743,927,412	$ 627,894,827	$ 548,312,703
Additions:
Somerset, NJ	182,573	1,136,454	-0-
Freehold, NJ	556,773	183,862	7,490
Monaca, PA (1)	1,907,292	2,707,529	204,517
Orangeburg, NY	96,800	108,157	-0-
Ridgeland, MS	-0-	-0-	-0-
Urbandale, IA	-0-	-0-	-0-
Richland, MS	-0-	422,691	-0-
O’Fallon, MO	317,457	20,744	7,110
Fayetteville, NC	13,773	-0-	17,635
Schaumburg, IL	-0-	-0-	-0-
Burr Ridge, IL	-0-	65,333	55,106
Romulus, MI	116,919	-0-	-0-
Liberty, MO	2,500	26,620	-0-
Omaha, NE	7,391	-0-	240,485
Charlottesville, VA	-0-	-0-	271,519
Jacksonville, FL (FDX)	-0-	73,921	-0-
West Chester Twp, OH	-0-	77,555	589,882
Richmond, VA ( FDX)	7,356	14,152	5,100
St. Joseph, MO	53,922	11,980	-0-
Newington, CT	-0-	18,000	55,365
Cudahy, WI	-0-	-0-	-0-
Beltsville, MD	9,271	71,700	-0-
Granite City, IL	-0-	-0-	-0-
Monroe, NC	55,680	10,875	-0-
Winston Salem, NC	-0-	8,101	15,560
Elgin, IL	30,312	29,048	7,101
Tolleson, AZ	(3,925)	13,015	-0-
Ft. Myers, FL	-0-	13,321	26,677
Edwardsville, KS (Carlisle)	-0-	200,000	-0-
Tampa, FL (FDX Gr)	6,147	688,990	34,000
Denver, CO	-0-	-0-	-0-
Hanahan, SC (SAIC)	328,118	-0-	-0-
Hanahan, SC (FDX Gr)	-0-	7,983	-0-
Augusta, GA (FDX Gr)	-0-	-0-	-0-
Huntsville, AL	-0-	-0-	3,095
Richfield, OH (2)	(91,709)	4,655,309	3,663,145
Colorado Springs, CO	-0-	-0-	-0-
Tampa, FL (FDX)	-0-	-0-	-0-
Griffin, GA	-0-	-0-	-0-
Roanoke, VA (CHEP) (3)	(59,348)	649,101	-0-
Orion, MI	5,021	61,507	6,129,949
Carlstadt, NJ	51,120	-0-	-0-
Wheeling, IL	-0-	-0-	-0-
White Bear Lake, MN	-0-	-0-	-0-
Cheektowaga, NY	-0-	28,766	-0-
Richmond, VA (Carrier)	19,764	29,964	340,126
Montgomery, IL	-0-	-0-	-0-
Tampa, FL (Tampa Bay Grand Prix)	-0-	34,192	-0-
Augusta, GA (FDX)	6,850	13,250	-0-
Lakeland, FL	-0-	6,643	26,350
El Paso, TX (4)	1,198,544	323,326	3,152,719
Chattanooga, TN	-0-	-0-	203,890
Bedford Heights, OH	4,450	58,309	96,519
Kansas City, MO (Kellogg)	-0-	-0-	-0-
Punta Gorda, FL	-0-	-0-	-0-
Cocoa, FL	73,962	3,494,426	-0-
Orlando, FL	-0-	4,833	43,499
Topeka, KS	-0-	-0-	-0-

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NOTES TO SCHEDULE III, (CONT’D)

SEPTEMBER 30,

(1)

Reconciliation (cont’d)

	2015	2014	2013
Memphis, TN	-0-	20,887	-0-
Houston, TX	2,279	-0-	11,176
Carrollton, TX	4,300	-0-	-0-
Ft. Mill, SC	-0-	338,833	3,359,473
Lebanon, TN	-0-	-0-	-0-
Rockford, IL (Sherwin-Williams)	11,227	-0-	-0-
El Paso, TX (Land)	-0-	-0-	-0-
Edinburg, TX	-0-	24,483	-0-
Streetsboro, OH	-0-	-0-	-0-
Corpus Christi, TX	-0-	-0-	-0-
Halfmoon, NY	-0-	-0-	-0-
Lebanon, OH	36,425	-0-	-0-
Olive Branch, MS (Anda)	-0-	-0-	-0-
Oklahoma City, OK (5)	2,989,708	-0-	151,166
Waco, TX (6)	3,813,157	-0-	-0-
Livonia, MI	30,533	-0-	13,700,000
Olive Branch, MS (Milwaukee Tool)	133,981	-0-	27,368,816
Roanoke, VA (FDX Gr)	-0-	-0-	10,200,000
Green Bay, WI	-0-	-0-	6,570,000
Rochester, MN	-0-	-0-	5,220,000
Tulsa, OK	48,031	3,700,000	-0-
Buckner, KY	86,591	26,633,125	-0-
Edwardsville, KS (International Paper)	203,261	18,085,492	-0-
Altoona, PA	-0-	8,990,000	-0-
Spring, TX	1,415	19,226,108	-0-
Indianapolis, IN (FDX Gr)	202,000	23,744,000	-0-
Sauget, IL	15,200,000	-0-	-0-
Tyler, TX	9,930,000	-0-	-0-
Kansas City, MO (Bunzl)	9,600,000	-0-	-0-
Frankfort, KY (Jim Beam)	28,000,000	-0-	-0-
Jacksonville, FL (FDX Gr)	30,645,954	-0-	-0-
Monroe, OH	12,937,000	-0-	-0-
Indianapolis, IN (Ulta)	37,484,574	-0-	-0-
Ft. Worth, TX	35,300,832	-0-	-0-
Cincinnati, OH	6,750,000	-0-	-0-
Rockford, IL (B/E Aerospace)	5,100,000	-0-	-0-
Total Additions	203,408,281	116,032,585	81,777,470
Total Disposals	(5,556,377)	-0-	(2,195,346)
Balance – End of Year	$941,779,316	$743,927,412	$627,894,827

(1)

62,260 square foot building expansion was completed in December 2014.

(2)

Reversal of over accrual from prior year contract payable on expansion completed in FY 2014.

(3)

Received grant for improvements made in prior year.

(4)

Parking lot expansion completed June 2015.

(5)

38,428 square foot building expansion completed June 2015.

(6)

48,116 square foot building expansion completed August 2015.

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SIGNATURES

Pursuant to the requirements of Section 13 of 15 (d) 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
		(registrant)

Date: December 9, 2015	By:	/s/ Michael P. Landy
		Michael P. Landy, President, Chief Executive
		Officer and Director, its principal executive officer

Date: December 9, 2015	By:	/s/ Kevin S. Miller
		Kevin S. Miller, Chief Financial Officer, its principal
		financial officer and principal accounting officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: December 9, 2015	By:	/s/ Eugene W. Landy
		Eugene W. Landy, Chairman of the Board and Director

Date: December 9, 2015	By:	/s/ Michael P. Landy
		Michael P. Landy, President, Chief Executive Officer and Director

Date: December 9, 2015	By:	/s/ Anna T. Chew
		Anna T. Chew, Director

Date: December 9, 2015	By:	/s/ Daniel D. Cronheim
		Daniel D. Cronheim, Director

Date: December 9, 2015	By:	/s/ Catherine B. Elflein
		Catherine B. Elflein, Director

Date: December 9, 2015	By:	/s/ Brian Haimm
		Brian Haimm, Director

Date: December 9, 2015	By:	/s/ Neal Herstik
		Neal Herstik, Director

Date: December 9, 2015	By:	/s/ Matthew I. Hirsch
		Matthew I. Hirsch, Director

Date: December 9, 2015	By:	/s/ Samuel A. Landy
		Samuel A. Landy, Director

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Table of Contents

Date: December 9, 2015	By:	/s/ Scott L. Robinson
		Scott L. Robinson, Director

Date: December 9, 2015	By:	/s/ Stephen B. Wolgin
		Stephen B. Wolgin, Director